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Neil Gray (Airdrie and Shotts) (SNP)
Drew Hendry (Inverness, Nairn, Badenoch and Strathspey) (SNP)
Ben Bradley (Mansfield) (Con)
The Secretary of State for Justice and Lord Chancellor (Mr David Gauke)
The Government have made it a priority to ensure that there is a smooth legal transition both in our negotiations with the EU and in our domestic implementing legislation. I fully appreciate that Scotland and Northern Ireland have distinct legal systems, and that is why my Department has been working closely with the devolved Administrations, looking at how our legal and justice systems are affected by EU exit. The Government are clear that a good deal with the EU will be one that works for all parts of the United Kingdom.
Neil Gray
I welcome the new Secretary of State to his position, having shadowed him for a few months when he was Secretary of State for Work and Pensions.
The UK Government’s position papers on judicial co-operation in civil matters, data protection and judicial oversight have been dismissed by EU interlocutors as unsatisfactory, due to their lack of realism and detail. Does the Secretary of State intend to respond to that by producing more realistic and detailed proposals?
Mr Gauke
First, I thank the hon. Gentleman for his words. It is pleasing to know that, wherever I go, he follows.
Regarding the hon. Gentleman’s question, we are ambitious—we want to get the best deal. I appreciate that, in the course of negotiations, it is possible that our interlocutors will express an adverse opinion, but we will continue to engage and to be ambitious.
Drew Hendry
The Secretary of State has acknowledged Scotland’s distinct legal and judicial system. The role of Lord Advocate in overseeing the investigation and prosecution of crime means that, in Scotland, there is direct co-operation between Scottish law enforcement agencies and their European counterparts. Will the Minister give details of the consultations between his Department, and the Scottish Government and Scottish Law Officers in that regard?
Ben Bradley
Will the Minister update the House on plans in relation to foreign criminals in UK prisons and on whether, after we leave the EU, we might be able to return those who break our laws to their country of origin, rather the UK taxpayer footing the bill for their stay at Her Majesty’s pleasure?
Mr Gauke
Since 2010, we have removed more than 40,000 foreign national offenders from our prisons, immigration removal centres and indeed the community. There is a range of removal mechanisms that enable the return of foreign offenders to their home countries. The Government are now considering future criminal justice arrangements with the EU with the aim of continuing our close working relationship.
Kate Green (Stretford and Urmston) (Lab)
The Secretary of State will be aware that in family law there are mutual and reciprocal arrangements between EU countries to ensure that judgments are recognised and enforced. How does he envisage the interests of children being protected after we exit the EU and are no longer able to rely on those mutual arrangements?
Robert Neill (Bromley and Chislehurst) (Con)
I welcome my right hon. Friend to his post—it is nice to see a lawyer there. I hope that he has a lengthy tenure, if not quite as long as that of the last lawyer from Ipswich who was Lord Chancellor, and with a better ending.
Much of the debate has been concentrated on criminal justice co-operation. In his speech on being sworn in, my right hon. Friend rightly referred to the importance of the UK as a jurisdiction of choice in civil and commercial litigation. Will he make sure that that aspect is not lost in our negotiations, in particular the importance to London and the UK’s financial services sector of having contractual certainty?
Mr Gauke
I thank my hon. Friend. Given that the last Lord Chancellor from Ipswich was Cardinal Wolsey, who ran into some difficulties in negotiations with a powerful European supranational body, I should tread carefully. It is important that in our negotiations we try as best we can to provide the certainty my hon. Friend seeks.
Joanna Cherry (Edinburgh South West) (SNP)
I welcome the new Secretary of State for Justice to his place. Sir David Edward, a distinguished former judge in Scotland and at the European Court of Justice, has said that so far
“the UK Government has overlooked the significance of the separate Scottish legal system, the Scottish judicial system and the Scottish prosecution system in relation to justice and home affairs issues”
in their negotiations with the EU. Will the new Secretary of State undertake to meet me to discuss how those oversights might be rectified?
Mr Gauke
I am not sure that I would accept the hon. and learned Lady’s characterisation of the position as one of oversight. I made it clear in the very first answer I gave in this role that I fully appreciate that Scotland had a distinct legal system. However, I would certainly be delighted to discuss the matter with her further.
Joanna Cherry
I am grateful to the Secretary of State for agreeing to meet me, but that was not my characterisation; it was the characterisation of a senior judge in the Scottish courts and in the Court of Justice. The judge went on to describe the UK Government’s paper on enforcement and dispute resolution as
“an undergraduate essay which would have failed”.
He says that those who are writing the papers are not aware of the problems posed by the separate Scottish legal system and that they do not want to hear from the experts who have offered to help. This is a serious problem. Will the Secretary of State, in his new role, undertake to listen to those who know about the Scottish legal system and to take on board their concerns in his negotiations on these matters?
Mr Gauke
I want to ensure that we end up in a position that is good for the legal system and legal services in every part of the United Kingdom. That certainly includes Scotland, and of course I will want to engage with representations and representatives from all parts of the United Kingdom to ensure that we get the best possible deal.
Mr Philip Hollobone (Kettering) (Con)
After Brexit, can we do something that we cannot do now? In other words, if an EU national is found guilty of an imprisonable offence, will we be able to deport them to serve their sentence in prison in their own country and ban them from ever returning?
Mr Gauke
As I said to my hon. Friend the Member for Mansfield (Ben Bradley), we are considering future criminal justice arrangements with the European Union. We want close working relationships, but we also need to work together to ensure that foreign national offenders can be removed when possible.
Bob Blackman (Harrow East) (Con)
The Minister of State, Ministry of Justice (Rory Stewart)
I should like to begin by paying tribute to my hon. Friend the Member for Harrow East (Bob Blackman) for his work on the Homelessness Reduction Act 2017. With the agreement of colleagues from the Ministry of Housing, Communities and Local Government, the Act should come into operation in April. It is absolutely vital that every prisoner leaving custody has a home to go to.
Bob Blackman
I thank my hon. Friend and welcome him to his new position. As he rightly says, it is in our best interest that ex-offenders leaving prison do not reoffend. One of the key issues is to ensure that prison governors honour their commitment under the Homelessness Reduction Act to ensure that people are prepared for life outside prison. What action will he take to ensure that prison governors train offenders who are due to leave prison so that they do not reoffend?
Rory Stewart
There are two key things to do: first, to empower governors so that they have real flexibility and control over education budgets and career advice; and, secondly, to connect that to housing. There is an obligation under the Act that my hon. Friend has championed, and co-ordination with local authorities will be essential.
Ruth Cadbury (Brentford and Isleworth) (Lab)
Why has the number of women who become homeless on release doubled in only a year? Is this not more evidence of the Government failing prisoners and probation policies?
Rory Stewart
There are a number of complex issues relating to homelessness, but we absolutely agree that this is unacceptable and shocking. We need to work much more closely with the Ministry of Housing, Communities and Local Government, with local authorities and with prisons to ensure that we cut those numbers.
Derek Thomas (St Ives) (Con)
The Parliamentary Under-Secretary of State for Justice (Lucy Frazer)
The provision of legal aid to support the most vulnerable is an important part of our justice system. We spend £1.6 billion a year on legal aid, which is more than a fifth of the Ministry of Justice’s budget. In terms of accessing legal aid, there is an online tool at gov.uk to help people to check their entitlement to it.
Derek Thomas
I welcome that answer, but people in my constituency in west Cornwall find it hard to access the legal aid that they are entitled to. In fact, there is only one office there that holds a legal aid contract, and it deals only with family law. Will the Department assess how the changes in legal aid funding have affected rural people, and consider measures to address the shortage?
Lucy Frazer
Maintaining access to justice is extremely important, which is why the Legal Aid Agency regularly reviews the capacity of the legal aid market to cope with demand and takes action when regional shortfalls develop. Those in need of urgent advice in Cornwall and elsewhere can always use the civil legal aid specialist telephone service. In autumn 2017, the Legal Aid Agency began national tendering for new civil contracts to start in autumn 2018.
Ellie Reeves (Lewisham West and Penge) (Lab)
I have received hundreds of emails from people in my constituency who face eviction, live in overcrowded conditions or rent properties that are in dire need of repair. Does the Minister agree that early legal advice in housing matters needs to be restored urgently, and that it is unacceptable that large parts of the country have no housing legal aid providers at all?
Lucy Frazer
As the hon. Lady will know, the previous Lord Chancellor committed to a review of legal aid later this year, and I also commit to reviewing the situation later this year. Legal aid for housing is always available and can be accessed through the telephone gateway.
Yasmin Qureshi (Bolton South East) (Lab)
Judicial review is a key tool for ordinary people to challenge unjust and unlawful decisions by the state and other public bodies. Deep cuts to legal aid have undermined that ability, so will the Minister commit to reviewing legal aid funding for judicial review in the Government’s forthcoming legal aid review?
Lucy Frazer
As I have already mentioned, a legal aid review is taking place later this year. As a matter of principle, legal aid is available for judicial review in certain circumstances when certain conditions are met.
Iain Stewart (Milton Keynes South) (Con)
The Parliamentary Under-Secretary of State for Justice (Dr Phillip Lee)
The findings of a recent Ofsted inspection report on Oakhill secure training centre are completely unacceptable. We took urgent action to address Ofsted’s concerns. The Ministry of Justice’s monitoring team has been carrying out further scrutiny to investigate Ofsted’s findings.
Iain Stewart
The young people held in the centre often have complex, challenging needs and require considerable intervention to help their rehabilitation. By when can we hope to see some tangible improvement in that intervention?
Mr Speaker
Order. The right hon. Gentleman needs to focus his supplementary question exclusively on the Oakhill secure training centre in Milton Keynes.
David Hanson
Absolutely, Mr Speaker. Has the Minister taken any view on reducing the financial arrangements with G4S for running Oakhill or imposed any sanctions? What does it take to lose a contract?
Dr Lee
The right hon. Gentleman, as a previous Minister responsible for the institution, will acknowledge that the contract is subject to a series of obligations. It was signed in 2004 and lasts for 25 years. I am fully aware of the need to improve standards at Oakhill. I rule absolutely nothing out, and I have already met senior people at G4S to point that out.
Imran Hussain (Bradford East) (Lab)
Oakhill, which is run by G4S, was found last year to make use of high levels of force, but G4S is not the only private security company using high levels of force against vulnerable groups. Today’s report into the Sodexo-run Peterborough Prison shows that it has become the first women’s prison in years to be deemed not safe enough, with high levels of force and the overuse of strip searching, so is the Minister worried that profit is being put before prisoner safety?
Dr Lee
The children being held at Oakhill can sometimes be extremely challenging, and the staff have to be able to control them to protect not only themselves, but other children and staff. With reference to Sodexo and the report into Peterborough Prison, the situation is not acceptable. We have already engaged with Sodexo, particularly around strip searching, and I expect and have demanded improvements.
Tom Pursglove (Corby) (Con)
The Secretary of State for Justice and Lord Chancellor (Mr David Gauke)
It is critical that the voice of the victim is heard in the criminal justice system. The victims code is clear that victims are entitled to make a victim personal statement to explain in their own words, to a court or to the Parole Board, how the crime has affected them. We are spending £96 million this year to fund critical support services for victims of crime. Under the code, all victims are entitled to a needs assessment to determine what emotional and practical support they need.
Tom Pursglove
I know from a family in my constituency that making a victim impact statement, and having to do so regularly, is a very stressful and nerve-racking experience. What steps is he taking to ensure that in those situations the victim, rather than the offender, is the priority?
Mr Gauke
My hon. Friend has raised this with me before. We are committed to making sure that practical and emotional support is in place for victims throughout the criminal justice process, such as by providing independent sexual violence and domestic violence advisers. If victims wish to attend a parole hearing to present their victim personal statement, a Secretary of State representative is allocated to provide support and guidance on the day.
Paula Sherriff (Dewsbury) (Lab)
Steven Mullins was 12 years old when he was abducted, sexually assaulted and brutally murdered on his way home from school. His killer was released last month. Although the family submitted a victim impact statement, they feel extremely let down both by the Parole Board and by the victim liaison service, which have lost their letters, ignored their letters and left so many of their questions unanswered. It appears that a worrying pattern is emerging. Will the Minister please meet me and Mr and Mrs Mullins to give them some of the answers they deserve?
Mr Gauke
First, I express my sympathy with Mr and Mrs Mullins, who have experienced the most horrendous situation. In the context of another case, I have already made it clear that we need to look again at how the victim support process works. We want to look at that specific case and, more generally, at how we can improve the situation of victims. In this particular case, of course I am willing to meet the hon. Lady and Mr and Mrs Mullins to see if their concerns can be properly addressed.
Mr Iain Duncan Smith (Chingford and Woodford Green) (Con)
I welcome my right hon. Friend to his post. In 2009, my constituent Mr Samuel was acquitted of common assault following an unsuccessful prosecution centred on a fabricated witness statement by the police. Since then, his efforts to seek redress through the courts have been frustrated by a cover-up that I believe reaches right to the top of the Crown Prosecution Service. Will my right hon. Friend please accept a meeting with me at his earliest convenience to discuss the real issues concerning this case?
Richard Burgon (Leeds East) (Lab)
I welcome the Secretary of State to his post. Victims must be at the heart of our justice system, but we have seen failings in enabling victims to give their impact statements in the Worboys case. We have seen the police failing victims, and victims are asking why there were no further prosecutions. In fact, victims feel let down throughout the process. I ask the Secretary of State once again to support victims, and to help to restore their faith and that of the wider public in our justice system. Will he agree today to an independent end-to-end review of the whole handling of this case?
Mr Gauke
As I announced to the House on Friday, Dame Glenys Stacey has agreed to undertake a fact-finding review of what happened with regard to victims in the Worboys case. It is important that we get to the bottom of precisely what happened and whether processes were followed. I am aware of conflicting evidence on that point, so it is important that we pursue it. I quite understand why the hon. Gentleman suggests an end-to-end review, and indeed there are questions that need to be considered about what happened in 2008-09 and so on. As I have said before, at the moment I want to focus on the immediate questions in front of us in terms of support for victims and the Parole Board process.
Zac Goldsmith (Richmond Park) (Con)
The proposed release of John Worboys has absolutely horrified and terrified his many, many victims. Like me, they are appalled to learn today that he has been moved to London’s category A Belmarsh Prison. Will my right hon. Friend assure us that he will do everything in his power to ensure that Worboys is released with strict licence conditions that keep him out of Greater London?
Mr Gauke
My hon. Friend has been tireless on this matter in recent weeks. The precise conditions are operational matters that are decided at operational level, but let me reassure him that nearly a fortnight ago I wrote to the relevant authorities and stressed the need to ensure that the concerns of victims are at the heart of the process and that the most stringent conditions are applied.
Rosie Cooper (West Lancashire) (Lab)
The Minister of State, Ministry of Justice (Rory Stewart)
I visited Liverpool prison yesterday. The inspector’s report was genuinely disturbing, and of course that is reflected on the ground. There are some very good prison officers working there, but unfortunately the conditions are really shocking, particularly basic sanitation, with piles of garbage. We now have a new governor in place, millions of pounds are going into the infrastructure, and 172 places have been closed so that we can begin a proper refurbishment and maintenance programme. Most importantly, we must not allow this to happen again.
Rosie Cooper
These appalling conditions did not emerge overnight. Who will be held to account locally and nationally for failing to implement the recommendations of the many critical reports about the prison? How in 21st century Britain could this national disgrace be allowed to happen? Lack of adequate healthcare meant that lives were lost. What happened to the regulators and the leadership? Were they being paid while asleep?
Rory Stewart
Those are important questions that we will look at closely. We have published an action plan for Liverpool prison. There are two key things we need to do. The first is about leadership. The governor has now been replaced. The second is that we have put in place a new urgent notification process, so if anything like this happens again and inspectors raise it, we will be forced to reply within 28 days. But that is only the beginning, because this requires a complete change in culture that focuses on getting back to basics: cleaning the prison, reducing the violence, reducing the drugs and making sure the healthcare provision is in place.
Charlie Elphicke (Dover) (Ind)
Rory Stewart
This is a big question of management. There are many very hard-working people at Liverpool prison who take their jobs very seriously and work very long hours, but we have to balance that with a recognition that clearly there have been fundamental failings. People will be held to account. Above all, we need to work with the team at the prison to ensure that in future it is a clean and decent place, both to protect the public and to reduce reoffending.
Dan Carden (Liverpool, Walton) (Lab)
I welcome the Minister’s prompt visit to HMP Liverpool in his new role, and to Altcourse prison, which is in my constituency. His action plan states that there will be a full conditional survey and investment proposal for medium-term refurbishment. Given that Walton prison was built in 1855—some 15 years before this Palace was completed—is that the most realistic outcome for the future of the prison?
Rory Stewart
It is certainly true that there are challenges with older buildings, as we see with this place, but it is possible to keep them going—Westminster Hall was built in 1080. Stafford prison, which was built in the late 18th century, is a clean and decent prison. We will look carefully at the fabric, and in some cases there is reason to build a new wing. But in Liverpool prison we can make a huge difference simply with £2.5 million for new windows and for refurbishing individual cells.
Richard Burgon (Leeds East) (Lab)
The inspectors described the conditions at HMP Liverpool as the worst they have seen, citing rat infestations and filthy conditions. Prison maintenance at Liverpool was outsourced to Amey. This shows that the problems with outsourcing go way beyond Carillion, which mismanaged maintenance at 50 different prisons. Will the Secretary of State commit to a review looking at bringing prison maintenance back in house, in Liverpool and at all prisons, as Labour has pledged to do?
Rory Stewart
We will look carefully at the maintenance issues in Liverpool, but sadly the problems are not only to do with Amey; they are also to do with relationships between management and the contractors and how prisoners were, or were not, used to clean the estate. We have made a huge amount of difference in just the past five weeks by changing not the Amey contract but the management approach and the focus on cleanliness.
Richard Burgon
I thank the Minister for his answer on Amey and contractors, but it is hard to have faith that he will address the problems at Liverpool or, in fact, any prison, because it has recently come to light that his Government handed £40 million to Carillion in 2017, even after the then prisons Minister had expressed concerns in Parliament about Carillion’s performance in prisons. Will not poor maintenance in Liverpool continue to contribute to inhumane conditions while responsibility is left in the hands of private contractors who, in reality, put profit first?
Rory Stewart
We do not believe that this is fundamentally an ideological fight between the private and public sectors. Most of those people working for Carillion—70% of them—were public servants just three years ago, and most of those people working for Amey were public servants in the prison service. Most of the problems have been solved through basic management and leadership. There has been a deep clean, the yard units have been increased from five to 18, and the conditions have improved rapidly. In the end, a lot of this is about management, not a private/public debate.
Michael Fabricant (Lichfield) (Con)
Mrs Pauline Latham (Mid Derbyshire) (Con)
The Minister of State, Ministry of Justice (Rory Stewart)
We have been doing three things on education: first, we have been making sure that governors are empowered to bring in their own education providers; secondly, we have been setting minimum standards, particularly on English language learning; and thirdly, through the new futures network, we have been connecting people to jobs.
Michael Fabricant
I will!
My hon. Friend the Minister knows that 46% of prisoners have a literacy age of only 11. That proportion is three times the national average, which is still too high. Does he agree that that lack of literacy is often the reason why people go to prison in the first place? Will he explain in a bit more detail how we can reduce the illiteracy level so that we do not get reoffending?
Rory Stewart
As the Speaker implies in his reprimand to me, the causes of offending are many and multiple. Literacy is one of them, along with many issues relating to people’s health, education, social background and, indeed, our criminal justice system as a whole. Nevertheless, literacy is key to the reduction of reoffending because it is key to getting a good job. Good education provision in prisons, driven by governors, is going to be key to addressing this issue.
Mrs Latham
Can the Minister say anything more about the steps the Government are taking further to empower governors to deliver effective education and training in prisons?
Rory Stewart
Yes. We have empowered governors by having in place a new procurement contract, which means that we in the Ministry are going to do the central procurement bureaucracy, but the governors will be able to choose who they use to train and educate the prisoners. I saw a good example in Altcourse Prison in Liverpool of how governors are also going to be able to choose which companies to pair with. The excellent work on metal welding that I saw in Altcourse will really contribute to those prisoners getting jobs in the community.
Helen Jones (Warrington North) (Lab)
Does the Minister agree that whatever plans he comes up with will require there to be enough prison officers on the estate so that they can release prisoners from their cells and take them to education and training classes? Does he now accept that the Government’s dash to reduce the number of prison officers has seriously hampered the chances of preventing prisoners from reoffending?
Rory Stewart
Among the many challenges that face education in prisons is the issue of numbers, which is why we have now committed to having 2,500 more prison officers on the estate, and we are delivering that ahead of target. That will allow us to have in place the key-worker programmes, in which each officer will be paired with six prisoners to guide them through the process.
Mr Gregory Campbell (East Londonderry) (DUP)
Does the Minister accept that there are some good examples of literacy classes in prisons and reoffending rates thereby reducing? Will he undertake to ensure that best practice from throughout the United Kingdom is replicated so that reoffending rates fall across the UK?
Rory Stewart
That is absolutely true. An enormous number of programmes have huge success in reducing reoffending. For example, in Brixton prison, the Clink programme has reduced reoffending by 43%, but we can do much more to learn the lessons and have a proper standardised document that takes what works elsewhere and drives it through the entire system.
Andrew Selous (South West Bedfordshire) (Con)
In order to encourage more businesses to take on ex-offenders, the Government need to lead by example and not just by exhortation. The Ban the Box initiative was brought in across Government a few years ago to encourage that. How is ex-offender employment going within Government and the public sector?
Rory Stewart
First, I wish to pay tribute to my predecessor, my hon. Friend the Member for South West Bedfordshire (Andrew Selous), who did this job far better than I will be able to do. One of the things that he introduced, which is going very well at the moment, is working with the Ministry of Defence. We are providing basic supplies for British military troops. It is something that is providing not just employment to prisoners, but the training and vocational skills they require for future employment.
Tony Lloyd (Rochdale) (Lab)
Prisoners move round the prison system and, in the end, they come out of the prison system. One thing that consistently goes wrong is the lack of consistency in education and training between different institutions and in institutions once the prisoner leaves. The Minister has talked about power to the governor, but governors must work within the construct of the wider environment. What will he do to ensure that we have that consistency?
Rory Stewart
This is of course a balance between empowering the governor so that they can have a tailored programme that is flexible and works for the prison and having decent national standards. That will mean setting the curriculum at a national level, having the area managers engaged over the governors and also giving the governors the ability to have education that is relevant to their areas—skills that are relevant to the jobs outside the prison gates.
Alberto Costa (South Leicestershire) (Con)
The Secretary of State for Justice and Lord Chancellor (Mr David Gauke)
Public safety is the primary consideration in Parole Board decisions on releasing a prisoner. The law requires that the Parole Board may direct release only if it is satisfied that continued detention is no longer necessary for the protection of the public. Parole Board members are selected on account of their experience and ability to assess risk. Their decisions are based on a comprehensive assessment of the ongoing risk posed by the offender, using detailed reports produced by risk management professionals. More broadly, I have already announced that my Department will be carrying out a full review of the relevant processes and procedures in place for victims relating to Parole Board decisions, and we will consider whether they should be improved.
Alberto Costa
I welcome my right hon. Friend to his post. Both of us worked in the same City firm—Richards Butler—at different stages over a number of years. In light of the recent John Worboys case, my constituents have raised similar concerns with regard to the release of Colin Pitchfork who brutally raped and murdered two teenage girls in my constituency and pleaded not guilty. He was only found guilty as a result of DNA evidence, which was a first at the time. What assurances can my right hon. Friend provide for the safety of my constituents and others who have not been fully considered in this matter? Will he assure us that the Parole Board will take into account the safety of our citizens in regard to Mr Pitchfork’s release?
Mr Gauke
I thank my hon. Friend for his remarks. The safety of the public is the Parole Board’s overriding concern in considering whether a prisoner should be released, and that will be the Board’s concern when it comes to reviewing Pitchfork’s detention. I can confirm that the families of Pitchfork’s victims are receiving regular contact under the Probation Service Victim Contact Scheme. Specifically, they have been given the opportunity to submit a victim personal statement to the Parole Board and to make representations regarding licence conditions for any upcoming parole hearing.
Jim Shannon (Strangford) (DUP)
On the special protections in place for the release of sex offenders, does the Minister believe that releasing them to the same area that the attacks took place re-traumatises the victims and stirs up community anxiety?
Justine Greening (Putney) (Con)
In relation to the Parole Board’s review of public safety, for those of us with deeply concerned victims of John Worboys in our constituencies, can my right hon. Friend confirm that the Government will at least co-operate with the judicial review now being brought by victims?
Mr Gauke
In my statement to the House on Friday, I set out that I would not be pursuing a judicial review on behalf of the Government in this case, but I also made it very clear that I did not want to say or do anything that would in any way stand in the way of others who may have different routes into a judicial review. I maintain that position.
Neil Coyle (Bermondsey and Old Southwark) (Lab)
Gareth Johnson (Dartford) (Con)
The Parliamentary Under-Secretary of State for Justice (Dr Phillip Lee)
The Government want victims to get the support they need to cope with, and as far as possible recover from, the effects of crime. We are spending £96 million in 2017-18 to fund critical support services for victims of crime. That includes £7.2 million for nationally commissioned rape support services.
Neil Coyle
John Worboys lived in Rotherhithe in my constituency and is not welcome back. He has not served the sentence he was given and was not prosecuted for the vast majority of his crimes. How are the Government working with victims, police authorities and the Crown Prosecution Service to ensure that sex attackers are prosecuted for their crimes, and how is the Ministry of Justice better ensuring that victims’ rights are upheld in future parole decisions?
Dr Lee
The case of Worboys has troubled us all; it has troubled me personally—of course it has. In this particular case, Dame Glenys Stacey is investigating the review from a probation point of view. As the Secretary of State has already said, there are operational responsibilities with regard to where he is transferred to and the directions when he is released and where he can go. The Department is engaged with that on a daily basis.
Gareth Johnson
The biggest insult that can be given to a victim of crime is the imposition of a derisory sentence on the offender. Will my hon. Friend update the House on his plans to widen the scope of the unduly lenient sentence scheme, as set out in the Conservative party manifesto?
Gloria De Piero (Ashfield) (Lab)
We all know that, too often, victims are failed by the criminal justice system. That is presumably why, in 2015, the Conservatives matched Labour’s manifesto commitment to enshrine victims’ rights in a victims law. It is three years on. Can Ministers give me a single good reason why it has not happened?
Jeremy Quin (Horsham) (Con)
The Minister of State, Ministry of Justice (Rory Stewart)
I first pay tribute to my predecessor, my hon. Friend the Member for East Surrey (Mr Gyimah), for his extraordinary work on drones. We have done a range of work, ranging from Operation Trenton with the police, which took place in 2016, through to the conviction of over 28 individuals for drone-related offences.
Jeremy Quin
What particular extra support is given to those prisons with a high incidence of drone attacks? Will the Minister agree to meet me to discuss potential improvements to the relevant legislation?
Rory Stewart
We have established specialist teams for prisons that have particular vulnerabilities to drone attacks. I am very happy to meet my hon. Friend to discuss some of the legislative issues. I also believe that there is much more we can do on basic issues such as netting and grills, as well as focusing on high technology.
Richard Benyon (Newbury) (Con)
Drones are one of the ways in which mobile phones are got into prisons, where they can be used for criminality alongside drugs. What measures are being taken to use technology to limit the use of mobile phones in prison?
Rory Stewart
Two types of technology can be used on mobile telephones. One is jamming technology, and the second, which is more commonly used in prison, is a wand to detect mobile telephones. An astonishing number of phones—at over 20,000, there are far too many—are detected in prisons. We should be addressing this in two ways. The first is by making sure that they do not get in: these are closed environments and we should be able to massively reduce the amount coming in. The second is that, by putting phones in cells to allow people to talk to their families, we can monitor the calls and control the need for phones in the first place.
Andrew Lewer (Northampton South) (Con)
The Parliamentary Under-Secretary of State for Justice (Lucy Frazer)
The Ministry of Justice has plans for a £1 billion modernisation programme for the courts. This will streamline and simplify processes using technology, helping those who work in the courts and those who use them.
Andrew Lewer
Will the Minister give an assessment of the Department’s recent work in improving the performance of the alternative dispute resolution scheme, which is intended to help consumers resolve disputes with traders but also to ease the volume of work in the courtroom?
Lucy Frazer
My hon. Friend is right to highlight the importance and value of alternative dispute resolutions. Her Majesty’s Courts and Tribunals Service already runs a small claims mediation service to help parties resolve claims worth under £10,000 before a hearing. We are also working to offer an online mediation service for those who begin their claims online.
Cat Smith (Lancaster and Fleetwood) (Lab)
Under this Government hundreds of courts have closed, and I now see that Fleetwood court is on the latest consultation list. How do these court closures contribute to a positive experience for “those who work in the courts and those who use them”?
Lucy Frazer
Last year, nationally, court and tribunal services were used at only 58% of their available hearing capacity. Moreover, as I have outlined, we are planning to spend £1 billion on modernising the courts service by using technology to put some processes online and employ video evidence more effectively. In those circumstances, it is appropriate to consider the best use of the money that we spend on the legal services system, as we are doing through a consultation that will include the hon. Lady’s local magistrates court. We will listen closely. It is important to remember, however, that all the money saved through any court closures will be put back into the justice system, making sure that it works effectively for everybody in it.
Priti Patel (Witham) (Con)
The Secretary of State for Justice and Lord Chancellor (Mr David Gauke)
The Worboys case has made it clear to me that there are some aspects of the Parole Board’s decision-making process that need to be examined and improved. It is crucial that we preserve the independence of the Parole Board, but equally important that these decisions can be scrutinised and, in some circumstances, reconsidered. That is why I announced on Friday the expansion of the scope of the review of the Parole Board to include not just transparency of decision making, but whether, in what circumstances, and how outcomes can be challenged. I will not rush to conclusions. This is a complex area where the rightful concerns of victims will be considered but also balanced with the legal rights of offenders. We will have completed the review by Easter, and I will report thereafter.
Priti Patel
The Lord Chancellor will be aware of the case of my constituent who was left blinded in one eye and unable to work because of her abusive ex-partner. The offender was sentenced by our court to a pathetically small 22 months and released early, and the Crown Prosecution Service could not be bothered to pursue a compensation order. Will he personally review how this case has been handled, the soft sentence given, and the failures of the criminal justice system to support the victim?
Mr Gauke
I am grateful to my right hon. Friend for raising what certainly appears to be an extremely distressing case. We are looking at options to strengthen our response to domestic abuse and hope to bring forward proposals soon. I cannot comment on individual sentencing decisions, and prosecution decisions are made by the CPS. I will, however, look at the role that my Department had in this case and write to her in response to her specific questions.
Mrs Emma Lewell-Buck (South Shields) (Lab)
The Parliamentary Under-Secretary of State for Justice (Dr Phillip Lee)
It sounds like an appalling case. I ask the hon. Lady to write to me about it and I am happy to meet her.
Martin Vickers (Cleethorpes) (Con)
The Minister of State, Ministry of Justice (Rory Stewart)
We focus on making sure that we have a proper capital investment programme in place, so additional money has been allocated for the building of new prisons, two are currently being commissioned, and we currently have spare places in our prisons. To reassure my hon. Friend, it is absolutely vital that we have the places so that people can serve their sentence. Sentences should not be driven by availability of prison places.
Paul Blomfield (Sheffield Central) (Lab)
The Parliamentary Under-Secretary of State for Justice (Lucy Frazer)
It is very important that those who are most vulnerable get access to legal aid, and legal aid is available for those who are in need at the most critical moments in their life. The hon. Gentleman mentioned housing, and legal aid is available where there is homelessness or where disrepairs to the home seriously threaten an individual’s life or health. We are reviewing legal aid, and we will update the House accordingly.
Dr Matthew Offord (Hendon) (Con)
Dr Phillip Lee
I thank my hon. Friend for his question. I am aware of the situation, having met representatives of the Board of Deputies of British Jews and Muslim burial representatives in October 2016. Coroners are independent of the Government, but I do recognise that there are some sensitivities around this issue and that there have been some difficulties in communication between the coroner and certain parties. That is why I would be very happy to meet my hon. Friend and, indeed, those representatives again in the Department.
Ruth George (High Peak) (Lab)
Mr Gauke
First, as I said a moment or so ago, we are looking to say more about domestic violence in the near future. This is a matter that the Government take very seriously across the board. On legal aid, as the Under-Secretary of State, my hon. and learned Friend the Member for South East Cambridgeshire, has already pointed out, we are currently undertaking a review.
Julia Lopez (Hornchurch and Upminster) (Con)
We know that conversion to a radical brand of Islamist thinking too often occurs in a prison setting. Will the Minister update the House on the work being done to address this issue and set out the procedures to vet religious officials working with the vulnerable prison population?
Rory Stewart
This is a hugely important issue for Members on both sides of the House. We know absolutely that extremism—we can see this in France, and we of course saw it in Iraq—can be driven in a prison setting. The problem is not simply the 230 prisoners arrested for terrorist offences, but others who can be influenced when they are in a prison setting. We are working very hard with colleagues in the Home Office on this issue, and it will be a priority for the Secretary of State and me during our time in office.
Eleanor Smith (Wolverhampton South West) (Lab)
Dr Phillip Lee
Healthcare in prisons was a priority for me when I took over in July 2016: it was the first thing I started to ask about. The Ministry of Justice now has a much closer relationship with the Department of Health with regard to the provision of healthcare. We have made advances in the transfer of patients’ information—when prisoners come in, their patient data follow them—which was a problem in the past. I am under no illusions about the healthcare challenges still faced within the prison system, and that is why I will continue to work actively with the Department of Health, which is ultimately the Department responsible for the provision of those services.
Mr Philip Dunne (Ludlow) (Con)
I was pleased, along with other Shropshire and Telford MPs, to see last Friday that Telford magistrates court was not included in the list of courts to be consulted on, but will the Minister meet me and other Shropshire MPs to understand how important it is to retain the last magistrates court in our county?
Lucy Frazer
I would be very happy to meet my hon. Friend and other MPs from the area. There are two consultations taking place: one in relation to eight specific court closures, and a wider consultation on the future of our courts. I encourage my hon. Friend to participate in that, and to highlight any concerns he has about his local area or nationally.
Mary Glindon (North Tyneside) (Lab)
Lucy Frazer
As I have outlined, there is a £1 billion modernisation programme, which is very complex and which we need to get right. It involves a number of aspects that need scrutiny. PwC is replacing a number of smaller providers and fulfilling an important service.
Robert Neill (Bromley and Chislehurst) (Con)
Recent reports by Her Majesty’s inspectorate of prisons reveal a consistent failure by the Prison Service to act on recommendations made by the inspector in previous reports. Does the Minister agree that compliance with inspectorate reports should be the norm, rather than the exception?
Rory Stewart
Absolutely. Peter Clarke, the chief inspector of prisons, does an extraordinary job. We are doing two things to make sure that we implement those recommendations better. First, we have set up a special unit in the Ministry to follow up on every one of those recommendations. Secondly, we have introduced an urgent notification process, which requires us to reply within 28 days to any issues raised by the inspector.
Stephen Lloyd (Eastbourne) (LD)
Lucy Frazer
I would be very happy to meet the hon. Gentleman to discuss that issue.
Mr Philip Hollobone (Kettering) (Con)
Pakistani nationals make up one of the largest national groups in our prisons, but the prisoner transfer agreement with Pakistan has been suspended for the last eight years. As a matter of urgency, can we get it up and running again?
Rory Stewart
My hon. Friend will be aware that the prisoner transfer agreement was suspended because of the corrupt release of prisoners from Pakistani prisons. We are addressing that at the moment with the Government of Pakistan, and we continue to work very closely with officials in the Foreign Office, the Department for International Development and the Home Office to make sure that we continue to return a record number of foreign national offenders—4,000 last year—to the places from which they came.
Layla Moran (Oxford West and Abingdon) (LD)
In the 18 months prior to May 2017, three openly transgender women took their own lives while they were in custody in England. What is being done to ensure that staff have the right training and, critically, that prisoners have the right mental health support to head off such tragic events?
Dr Phillip Lee
The hon. Lady is right that such events are tragic. We are working extremely hard on training staff to recognise the particular needs of transgender offenders. The challenge for the system is that they are a relatively small number of people spread across a number of prisons. We are making some progress, but there is more to do.
Paul Scully (Sutton and Cheam) (Con)
It is good to hear the Minister offer to speak to Members around the House about the courts in their patch. When she does so, will she explain to them about modernisation and digitisation, and how those changes may improve access to courts?
Lucy Frazer
My hon. Friend makes an important point. First, this is a consultation, and I am very happy to engage with any colleagues who would like to discuss it, because we are listening. Secondly, the future of our courts is exciting, and transformation will take place through technology. Interestingly, in a document entitled “Transforming Our Justice System”, the then Lord Chief Justice, the then Lord Chancellor and the Senior President of Tribunals highlighted the fact that as our courts and tribunals are modernised, we will need fewer buildings.
Daniel Zeichner (Cambridge) (Lab)
I congratulate the hon. and learned Lady, my neighbour, on her appointment. She will have noticed the very strong and universally hostile reaction in Cambridge and Cambridgeshire to her plans to close the magistrates court. Can she reassure us that local people will be properly listened to, and better still, will she withdraw those plans today?
Lucy Frazer
As I have highlighted, these plans take place within the context of a £1 billion modernisation of the court system, and in circumstances where, nationally, courts and tribunal services are not used at capacity. As I have said, I will listen properly in the court closures consultation, although the Lord Chancellor will make the ultimate decision. I would like to point out that five sites identified in the last consultation on court closures remain open following the review. When strong cases are made, we will listen.
Andrew Selous (South West Bedfordshire) (Con)
When a prisoner is released, they are not even at base camp in their rehabilitation unless they have accommodation. Some local authorities actively discriminate against ex-offenders—for example, by claiming that they have no local connection because they have been sent to a prison a long way away. Fairness is what is required. Will the Minister challenge that behaviour with his counterparts in the Ministry of Housing, Communities and Local Government?
Rory Stewart
I pay tribute to my hon. Friend for his knowledge of this issue. There are three things we are doing to address this issue, but we can do much more. The first is having a statutory duty on governors to identify prisoners who are at risk of homelessness. The second is investing more in bail accommodation support services to provide temporary support and accommodation. The third is working with the Ministry of Housing, Communities and Local Government to make sure that, through the Housing First pilots, we can actually have homes available even for people with severe mental health needs. Housing is essential.
Sarah Jones (Croydon Central) (Lab)
One of my constituents has a young son who is serving a very long prison sentence. He often spends 23 out of 24 hours locked up in his cell. How does the Minister think that is affecting his mental health and his chances of rehabilitation on release?
Rory Stewart
Clearly, this is not good. Prisoners need decent, purposeful activity. If they are locked up in their cell for too long, they are obviously not having educational opportunities. We should aim, as the chief inspector of prisons made clear, to make sure that people are spending eight or 10 hours a day outside their cells. That is partly about numbers of staff, which is why we have brought 250 more staff into the Prison Service. It is also about better scheduling of educational and vocational provision. However, the situation the hon. Lady describes is not acceptable.
Liz McInnes (Heywood and Middleton) (Lab)
Following campaigns by victims’ families, the Government announced in October last year that they would bring in tougher sentences for those causing death or serious injury by dangerous driving, but still nothing has happened. Why the delay?
Liz Saville Roberts (Dwyfor Meirionnydd) (PC)
I would like to put on record my role as co-chair of the justice unions parliamentary group.
When north Wales’s only prison, HMP Berwyn, partially opened on 28 February last year, its regime of skills development and rehabilitation was lauded as pioneering, yet we now learn that, in its first six months, 27 staff members left, and I am told by the Prison Officers Association that morale is at rock bottom. I understand that, in the early months, prisoners assaulted staff on nine occasions, and only one was referred to police. How will the Minister improve offenders’ rehabilitation when recruitment, retention and, critically, staff safety at HMP Berwyn are in crisis?
Rory Stewart
I am very happy to speak in detail with the hon. Lady, who has put an enormous amount of passion and energy into studying issues in prisons in Wales. We believe there are some very positive signs now at HMP Berwyn, but we can talk those through. Recruitment figures have actually been very positive—we are ahead on the recruitment of 2,500 people across England and Wales—but I am very happy to sit down and talk about Berwyn in particular.
Several hon. Members rose—
Mr Speaker
While the hon. Member for Dwyfor Meirionnydd (Liz Saville Roberts) was ploughing through her question, the hon. Member for Hammersmith (Andy Slaughter) was doing his customary knee exercises, from which I hope he greatly profits. I call Mr Andrew Slaughter.
Andy Slaughter (Hammersmith) (Lab)
Thank you very much, Mr Speaker.
Has the Secretary of State seen the investigation published at the weekend by The Sun into new allegations of misconduct by the west London coroner, including bullying, sexism and homophobic conduct towards staff? Despite previous findings of serious misconduct, three-year delays in issuing death certificates, secret inquests being held at night and important case papers being lost, he has been cleared by the Secretary of State to return to work. Will the Secretary of State meet west London MPs and council leaders to discuss this crisis?
Chris Ruane (Vale of Clwyd) (Lab)
The number and percentage of women given custodial sentences has dropped in many areas of the country. In north Wales, the figure has increased by 57%. Will the Minister look into the reasons for this huge increase?
Dr Phillip Lee
I am very happy to. Will the hon. Gentleman please send me the information?
Rachael Maskell (York Central) (Lab/Co-op)
Some women in York have been taken to the family courts on multiple occasions by former partners. This process is clearly being used as a form of emotional abuse, and is highly costly to constituents and the state. What steps is the Minister taking to recognise court abuse, and what actions will she take now?
Lucy Frazer
Using the court process to further any abuse is completely unacceptable, particularly in relation to domestic abuse. The court can already take actions if it thinks that there is abuse of process, by restricting litigants’ ability to continue with further applications and further claims. New family court rules were introduced in November to make sure that vulnerable court users get the support they need in courtrooms.
Dr Lisa Cameron (East Kilbride, Strathaven and Lesmahagow) (SNP)
Individuals with autism spectrum disorder are some of the most vulnerable inmates in prison and are often subject to bullying, abuse and victimisation, with high rates of suicide. What progress is being made on autism accreditation in prisons?
Rory Stewart
This is a hugely important issue. I would very much like to sit down with the hon. Lady, because the Scottish Prison Service has a lot that it can teach us. It is doing a very good job on many of these issues, and I think we can learn a great deal from it.
Petition
(6 years, 2 months ago)
Commons ChamberRead Full debate Read Hansard Text
Helen Goodman (Bishop Auckland) (Lab)
The life of my constituent Alex Wright was literally shattered when a van drove into her living room and totally destroyed it. She had to move out for months while the house was rebuilt.
For years, the residents of Toft Hill have been calling for a bypass, and 950 people have signed this petition. This is not purely a local issue; it raises questions of national road policy. Currently the criteria focus on housing and congestion. We would like to see a rebalancing of the criteria towards northern concerns, such as economic development and quality of life.
The petition states:
The petition of residents of Toft Hill,
Declares that the A68 that runs through Toft Hill is unsuitable and unsafe for the volume and nature of vehicles, especially HGV Lorries; and further that the proximity of the primary school and proposed future development in the village would make this stretch of road more dangerous to local residents.
The petitioners therefore request that the House of Commons urges the Department for Transport to priorities a new relief road to alleviate the problems faced by residents of Toft Hill.
And the petitioners remain, etc.
[P002098]
Personal Independence Payment
(6 years, 2 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.
This information is provided by Parallel Parliament and does not comprise part of the offical record
Peter Grant (Glenrothes) (SNP)
(Urgent Question): To ask the Secretary of State for Work and Pensions to make a statement on the recent ruling by the High Court over the judicial review on the application of personal independence payments to persons with mental health problems.
The Secretary of State for Work and Pensions (Ms Esther McVey)
After careful consideration, I took the decision not to appeal the High Court’s judgment on this case. I informed the House of my decision immediately by tabling a written statement on Friday last week. The written statement set out my decision and the steps that my Department will now take to implement that judgment, although I welcome coming to the House today in addition to that.
I repeat once again my commitment to implementing this judgment in the best interests of our claimants and through working closely with disabled people and key stakeholders over the coming months. The Department for Work and Pensions will undertake an exercise to go through all affected cases in receipt of PIP and all decisions made following the judgment in the MH case to identify anyone who might be entitled to more as a result of the judgment. We will then write to the individuals affected and all payments will be backdated to the effective date in each individual’s claim.
In accepting the outcome of the High Court judgment, the Department does not agree with some of the details in it. The 2017 amending regulations were introduced in response to an upper tribunal case that broadened the interpretation of eligibility for mobility 1—the ability to plan and follow a journey. Our intention has always been to deliver the original policy intent through clarifying how symptoms of overwhelming psychological distress should be assessed. We are not appealing the outcome of the recent High Court judgment to provide certainty to our claimants.
Our next steps will build on the positive work that the Government are already undertaking: spending on the main disability benefits—PIP, the disability living allowance and the attendance allowance—has risen by £4.2 billion since 2010 and real terms spending on disability benefits will be higher every year to 2020 than in 2010. The Government have commissioned two expert-led reviews and invested a record £11.6 billion in mental health services. Access to Work’s mental health support service has been expanded with a two-year trial of targeted support for apprentices with mental health conditions. We have also accepted all the recommendations in the independent review by Lord Stevenson and Paul Farmer, including establishing a framework for large employers to voluntarily report on mental health and disability within their organisation.
With regard to the next steps following this judgment, the DWP will write to those who may be entitled to a higher rate of PIP. Where relevant, all payments will be backdated to the effective date in each individual claim.
PIP is a modern, dynamic and fairer benefit than its predecessor, DLA, and focuses the most support on those who are experiencing the greatest barriers to living independently. At the core of PIP’s design is the principle that awards of the benefit should be made according to the claimant’s overall level of need, regardless of whether they suffer from physical or non-physical conditions. The Government are committed to furthering rights and opportunities for all disabled people and we continue to spend over £50 billion a year to support people with disabilities and health conditions.
Peter Grant
I am grateful to the Secretary of State for attending the House today and welcome her to her recent appointment. It seems that Secretaries of State for Work and Pensions change with astonishing regularity, but the Government’s callous and chaotic attempt to attack the rights of the poor, sick and disabled continues unabated. Although the Secretary of State said that she is pleased to come to the House to make this statement, she did not take the two or three opportunities she had over the past few days to do so, without waiting for an urgent question. Instead, she waited for a month after the High Court decision and then submitted a written statement on a Friday morning, when she knew nobody would be here to read it.
The High Court has ruled yet again that the Government have been acting unlawfully in their incessant attack on the very people the DWP should be seeking to protect. We now know that up to 164,000 people will get higher disability payments—or, to put it another way, that the Government have unlawfully been seeking to withhold benefits from up to 164,000 people who are not only entitled to them but who need them if they are to have anything like the normal life that the more fortunate among us take for granted.
This is not the first time the Government have been overturned in the courts. We have previously seen the courts ruling against the Government on the imposition of benefits sanctions, where the Government were acting unlawfully, and before that on the iniquitous bedroom tax. That one is particularly poignant for my constituents just now because the man who stood up to the DWP over the bedroom tax and won, Davie Nelson, a Glenrothes man through and through, sadly died very suddenly last week. His family and friends will be pleased that others are continuing the campaign for social justice that Davie fought so bravely.
The Secretary of State has promised that her Department will now seek to identify anyone who should be receiving higher benefits. My office has estimated, on the basis of preliminary constituency casework, that there could be 71 people in my constituency alone not getting the money they are entitled to. Will she update us on how many people she now thinks have been underpaid? How long will it take to carry out the review? How much longer will these people have to wait to receive the money that they rely on and which is rightfully and lawfully theirs? Will she explain why her Department is amassing such an appalling record of defeats in the courts? Does that not tell the Government something about how they are making these cuts to benefits? Finally, will she now commit to delivering a social security system whose fundamental principle is not to work down to a budget but to protect and respect the dignity of those who rely on it, and not continue to punish people for having disabilities?
Ms McVey
There have been changes in the DWP. Some people have come back, having previously worked here and seen what the changes were, and I am back here, several years later, and hence was probably a good person to say that we would not be appealing the court case.
On the timetable, I made the judgment just a week and a half after being made Secretary of State. It took up most of my time. It was a Friday—and could not have been any other time—because that was the deadline I had to meet for the legal judgment. At the same time, I made sure, following all protocol, that there was a written statement on exactly what had been done.
The benefit was always intended to be a dynamic benefit. Hon. Members on both sides of the House understood that DLA was focused on physical disabilities, and all parties decided there needed to be a more dynamic benefit that reflected invisible disabilities, which we all know are very difficult to assess. The extra money and support went into acknowledging that.
There has been massive change, and also massive understanding, in terms of what is going on. When I stood here all those years ago in 2013 talking about what the budget would be, people said we were cutting it. I explained the matter very clearly, though it fell on deaf ears, and I was often vilified. People still said it was being cut, but it was not. When I arrived, the budget was just over £13 billion, and it has gone up every year since, and will continue to go up. That is in real terms. Much of the vilification, therefore, was not only unnecessary but deeply untrue, and that again is why I welcome the opportunity to come to the Dispatch Box to explain what is going on.
Changing benefits is not always easy. Expanding support is not always easy. We knew at the time we were taking on a very difficult change and that there would no doubt be legal challenges. When there are legal challenges, however, we must look at them, make a true and fair judgment and carry on along that path, and I believe that in this instance I made a fair judgment. Today, the Glasgow Herald welcomed the decision—although I accept that the piece in question picked on various other issues—and it was also welcomed by Paul Farmer, the chief executive of Mind. My hon. Friend the Minister for Disabled People, Health and Work has met her Scottish counterpart; they, too, welcome the decision and look forward to establishing closer working relationships and making plans for its implementation.
I hope that what I have said explains what we have done, and I hope that what we have done is welcomed by Members on both sides of the House. If the hon. Member for Glenrothes (Peter Grant) would like to talk to me about a specific case or constituent, my door is open, and I will meet him.
Mr Iain Duncan Smith (Chingford and Woodford Green) (Con)
I welcome my right hon. Friend to her post, and I welcome her knowledge in making this decision. In supporting her, I remind the House that it was our predecessor Labour Government who put off changes in disability living allowance deliberately before the election and that afterwards we were faced with the decision to make those necessary changes. More money is now spent on disability benefits year on year, and more people, including those with mental health conditions, will receive them. DLA never delivered that to those people before.
Ms McVey
I thank my right hon. Friend. He spent many years working on social issues and cases, and established the Centre for Social Justice. The change that he brought about was not just about changing the benefits, but about reaching out to people who are sometimes left alone. Some of those people did want to be helped to get back into work. They did want to talk about their hopes and aspirations. There are now over 600,000 more disabled people in work, because they chose that path towards self-determination and the fulfilment of their ambitions and hopes.
Debbie Abrahams (Oldham East and Saddleworth) (Lab)
Thank you for granting the urgent question, Mr Speaker, and I congratulate the hon. Member for Glenrothes (Peter Grant).
Any disabled person who listened to what was said by the Secretary of State will have been gobsmacked by the suggestion that there is a commitment to disabled people. The United Nations Committee on the Rights of Persons with Disabilities has described the Government’s action as a “human catastrophe”. The cuts that they have wrought on disabled people are an absolute disgrace.
As my hon. Friend the Member for Battersea (Marsha De Cordova) said when she raised a point of order yesterday, the Government sneaked out a written statement late on Friday, announcing that they would not appeal against the High Court judgment of 21 December, in effect reversing the emergency PIP regulations that they had introduced in February last year. Those regulations were introduced without a vote or a debate, despite two urgent questions and an emergency debate, and despite widespread concern about their impact. The Government’s own Social Security Advisory Committee was not consulted. I warned at the time:
“The move to undermine and subvert independent tribunal judgments is unprecedented, and ... marks very troubling behaviour by the Government on cases they lose that could weaken such social security tribunal judgments’ reach, influence and effectiveness in making independent decisions.”—[Official Report, 28 March 2017; Vol. 624, c. 145.]
I am pleased that the Secretary of State and her Department have finally seen sense, but there are a number of questions that the Secretary of State must answer—questions that have already been put by my hon. Friend the Member for Battersea. How many people does her Department estimate have been affected? How quickly will her Department be able to identify affected claimants, and by what process? Given the issues relating to letters from that Department, it is a little worrying if that is the only means.
How soon after identification will the Department make back payments? Will there be an appeal process for PIP claimants who are not contacted by the Department and who believe they should receive such payments? Will the Department compensate claimants who have fallen into debt and accrued interest charges? Will applicants be entitled to a reassessment if they were given the standard rate of the PIP mobility component after the February 2017 changes to PIP regulations, when the cause of the claim was “psychological distress”?
Finally, just how much public money has been spent by the Department on lawyers and legal advice seeking to defend the indefensible in the initial tribunal and the more recent court case?
This sorry debacle should serve as a warning to the Government of the dangers of seeking to undermine and subvert the decisions of our independent judiciary and the House of Commons.
Ms McVey
Can we start the dialogue on a firm and factual footing, which I set out before, and dispel the myth about the spend on disabled people? The facts speak for themselves: in real terms, the money has gone up. In this place, we are supposed to have the definitive facts of an argument, so I seek to give those here.
This was not about a policy change; it was about implementing the correct regulation after a court case. It came about after taking advice from and working with experts in the field on how to help people with severe psychological disorders. It was about support by prompting and by aid and assistance; at the time, it was not deemed to be something for people with severe learning disabilities, who might want a constant companion. That was how the regulations were set down, after advice was sought on the best approach, because this is a tailor-made benefit. However, the judgment in the case went the other way. We will work with MIND and with charities and stakeholders in the field to implement this as quickly as possible, but it is not just about speed; it has to be right and effective and to work for the people it is made for. That will take some time, but we will do it as quickly as possible.
Up to 220,000 people could be affected. That is why we are taking the process very seriously. We as a Department will reach out to those people, once we know exactly what we are doing. I reiterate that, according to figures from 27 October, 66% of PIP recipients with mental health conditions get the enhanced daily living component, compared with 22% who received the highest DLA care component; and 31% of PIP recipients with mental health conditions get the enhanced mobility rate, compared with just 10% of DLA recipients. Those facts speak for themselves. We know that this is a highly emotive issue, but it would be helpful if all MPs when working with their constituents offered them the help and guidance they need, and not ramp up some of the rhetoric and incorrect information we have heard here.
Finally, I was asked about legal costs. The cost in these cases was £181,000, but a Department as big as the DWP expects the costs of court cases to be that high, and they are comparable with those of other Departments engaged in similar judicial review cases.
Heidi Allen (South Cambridgeshire) (Con)
I am so pleased the new Secretary of State has decided to accept the court ruling, and I thank her very much indeed. As I and colleagues said last year, we should have listened to the message the courts were giving us. Accepting their ruling will be a significant step forward in achieving parity of esteem for mental and physical health. The Select Committee on Work and Pensions, of which I am a member, is about to publish a report on PIP and employment and support allowance. Will the Secretary of State seriously consider our recommendations on how to improve both those benefits? We all want the same thing—the best possible support for people who need it.
Ms McVey
I thank my hon. Friend, who is a vocal champion of people with disabilities, as is every other Conservative Back Bencher—and Members in all parts of the House. That is why this is sometimes such an emotive issue—everybody wants to be heard. I will indeed listen to her and take on board the recommendations of the Select Committee.
Neil Gray (Airdrie and Shotts) (SNP)
Thank you, Mr Speaker, for granting this important urgent question. I congratulate my hon. and assiduous Friend the Member for Glenrothes (Peter Grant) on securing it.
The High Court ruled that the UK Government’s PIP regulations were “blatantly discriminatory” against people with mental health impairments. That follows the damning report from the UN Committee on the Rights of Persons with Disabilities, which found “systematic violations” of disability rights. Although I welcome the Secretary of State’s acceptance of the High Court ruling—a position I hope the Government will adopt more regularly in response to High Court defeats on social security policy—I was worried by an aspect of her written statement, which was sneaked out on Friday. She said on Friday and again today that
“Although I and my Department accept the High Court’s judgment, we do not agree with some of the detail contained therein.”—[Official Report, 19 January 2018; Vol. 634, c. 30WS.]
Will she clarify that she will implement the ruling in full? Will she make an oral statement on the Floor of the House, so that we can consider whether the response follows the High Court ruling? Will she answer the pertinent questions put by my hon. Friend regarding the timescales—a matter she has not covered? Finally, in the light of the ruling and other external interventions, will the Government admit that their policies are causing harm and commit to widescale review of the social security system in the United Kingdom?
Ms McVey
We will implement the judgment in full, but we will work with stakeholders and charities to understand and implement what was said. When we said we did not agree with the detail, it was a reference to the language and terminology that went above and beyond a legal ruling and judgment, but we saw through that to the facts and that is why we decided not to appeal.
I reiterate that I am not the kind of person who sneaks anything out. I have come to this House and answered every question. I set out the timetable. The matter had to go to the Court for a decision on Friday. The House was not sitting by the time I made the decision, so I put out a written statement. I hope that all hon. Members understand that it is better to get a decision right than to rush just to answer in a different way. Nothing was sneaked out.
Again, I reiterate the support the Government give and have said they will give to people with mental health conditions. The Prime Minister has made that a key issue that she wants to deal with, and she and I came to that decision to do so.
Alex Burghart (Brentwood and Ongar) (Con)
I strongly welcome the Secretary of State’s decision, which will benefit a lot of disabled people. We all know that DLA was a far worse benefit for people with mental health problems than PIP. Will my right hon. Friend confirm that, even before the ruling, far more disabled people were receiving PIP than had ever received DLA?
Ms McVey
Absolutely. I thank my hon. Friend, who knows a great deal about this subject and is also a member of the Work and Pensions Committee. He has given the correct facts. We as a compassionate Conservative Government will do as much as we can to help people who need our help.
Frank Field (Birkenhead) (Lab)
I welcome the right hon. Lady to her place and I welcome her statement. Given the size of the task before her, with up to 220,000 people affected, may I again press her to give some sort of timetable for meeting that objective? Might she start by writing to the oldest claimants first, and might she put a monthly report in the House of Commons Library on progress to that end?
Ms McVey
The right hon. Gentleman is another champion for these causes. As he suggests, this is a mammoth task, and I will be working with experts in the field and doing things as sympathetically and effectively as possible. I will listen to all the advice that he has offered me.
Philip Davies (Shipley) (Con)
I very much support the Secretary of State’s decision, and I am sure that she is delighted that the Opposition parties called for an urgent question so that they could tell her how much they support her decision on the court case. Or at least I think that is what they were saying. I also very much welcome the fact that we are now spending far more money on people with disabilities than the last Labour Government did, which probably explains the anger with which the shadow Secretary of State gave her performance. Will my right hon. Friend look at measures to try to get the decision making on PIP right first time? In too many cases, the right decision is not made the first time, and I hope that she will look at that urgently, and early in her time in office.
Ms McVey
I thank my hon. Friend the Member for his comments. He always likes to see things in his own inimitable way, and he is quite right. Both sides of the House are meant to be supporting this decision, but listening to the tone and the noises coming from the Opposition Benches, it is difficult to believe that. He makes a fair point about getting the decisions right first time and helping the decision makers to get it right. There was an independent review—the Gray review—and we will be taking its advice on board.
Ruth George (High Peak) (Lab)
I, too, welcome the right hon. Lady to her post. I also welcome the decision that she has made. Bearing in mind the fact that many disability benefit claimants with mental health issues struggle to get out of the house, does she share my concern and that of the Work and Pensions Committee about the great discrepancies between contractors and between regions? There are discrepancies relating to the number of people being allowed a home visit for their benefits assessments. Will she please review this, to ensure that those people can get the benefits they deserve and not be sanctioned because they cannot leave their house?
Ms McVey
The hon. Lady has raised a good point about how some people are visited while others have to go in for assessment and support. That was part of the freedoms of contracting, so that we could get best practice. Were some people better seen at home? Were other people better seen in their local community? We constantly gauge and value that, and we will continue to do so.
Justin Tomlinson (North Swindon) (Con)
Building on this very positive announcement, we all need to do more to support people with mental health conditions, and one of the biggest challenges is identifying people with those conditions. The PIP process can play a crucial role in that. Will the Secretary of State therefore bring forward plans to enable us to signpost those identified for the additional targeted support that is available across all parts of the Government, so that they can get the maximum amount of help?
Steve McCabe (Birmingham, Selly Oak) (Lab)
How many staff in the Department for Work and Pensions will be directly deployed on the rectification process? I ask because the evidence is that the number of staff in the DWP used to complete any kind of task involving a complaint or a rectification is directly relevant to how long it takes them to complete the process.
Sir Desmond Swayne (New Forest West) (Con)
As for the comments from the United Nations, how do the figures that my right hon. Friend has given compare internationally?
Ms McVey
My right hon. Friend raises another good point. The UK is one of the most generous countries in the world when it comes to supporting its disabled people. In the G7, only Germany spends more. We spend what is deemed appropriate and available, which is more than £50 billion. I reiterate that we are one of the most generous countries in the world.
Ben Lake (Ceredigion) (PC)
Vulnerable people with severe mental health problems in my constituency have had to resort to a distressing appeals process in order to secure the support they are entitled to. This is wholly inappropriate. Pursuant to the answer that the Secretary of State gave to the hon. Member for Shipley (Philip Davies), may I ask when we can expect to see some progress from her Department to ensure that individuals are assessed for psychological conditions by mental health clinicians in the first instance?
Richard Drax (South Dorset) (Con)
I welcome my right hon. Friend to her place. We are all right behind her, whatever some people might say. From my experience as an MP in South Dorset, I suspect that the main problem relating to people slipping through the net is the lack of home visits. I agree with the hon. Member for High Peak (Ruth George) on this point. I suspect that such visits are more expensive, but I think that they would save money in the longer term because the assessment would be more accurate. Will my right hon. Friend look into this, to ensure that we hit the targets smack on, first time?
Ms McVey
I thank my hon. Friend for his kind words and support. Anyone in need of a home visit can have a home visit, and I will be looking at the communications relating to this, because perhaps people, including MPs, do not know that. This is something else that we need to work on.
Chris Stephens (Glasgow South West) (SNP)
We on the DWP Select Committee heard some alarming evidence and unconvincing answers from contractors about the number of staff who had specialist knowledge of mental health. Can the Secretary of State confirm that she will take this up with the contractors and carry out a review of the assessment process?
Ms McVey
I have indeed got a date in the diary to be on a PIP decision-making process. I met the contractors last week. I had obviously done that when I was last in the House, but I need to be updated to see exactly what is going on. I have had meetings on this, but the hon. Gentleman is right to suggest that there is nothing quite like going through the process myself.
Mary Robinson (Cheadle) (Con)
I am grateful to the Secretary of State for her statement. I recently visited my local jobcentre in Stockport and met the great work coaches there who are doing so much to help people back into work. Will she join me in congratulating them, and perhaps explain how this is going to help us in our quest to help a further 1 million people into work?
Ms McVey
My hon. Friend and neighbour rightly acknowledges the work that the work coaches do in her constituency and right across the country. The aim of the Government in carrying out this transformation was to get a tailor-made benefit service, whether through PIP or universal credit, so that the work coaches know who they are dealing with and therefore how they can help and support them in the best possible ways. The Government should be proud of what they are aiming to do.
Stephen Timms (East Ham) (Lab)
This was an ill-advised attempt to reduce the amount of benefit payable to people with mental health problems, and I am glad that it has been abandoned. Will the Secretary of State take steps to ensure that, in future, her Department complies with its obligations under the Equality Act 2010?
Ms McVey
The right hon. Gentleman is very knowledgeable on this subject, and we spent hours debating these issues across the Dispatch Box when I was last in the House. He knows as well as I do that we always aim to fulfil all obligations. If we do not, this is what happens: we get a court case and we have to deal with the consequences. I hope that I have dealt with them correctly today and received support across the House. I will not be seeking leave to appeal, and that is right on this occasion.
Michael Tomlinson (Mid Dorset and North Poole) (Con)
I, too, warmly welcome the Secretary of State to her post. I am visiting my local jobcentre in Poole on Friday, so will the Secretary of State set out how our new jobcentres will support my constituents and others across the country with mental health challenges into work?
Ms McVey
As I said to my hon. Friend the Member for Cheadle (Mary Robinson), this is about tailor-made and flexible support. We are putting in place more training so that people understand mental health conditions, and we are giving our work coaches and mental health assistants as much support as possible. As I say, this is about tailor-made and flexible support.
Chi Onwurah (Newcastle upon Tyne Central) (Lab)
The Secretary of State talks about the unnecessary vilification of her policies, but her Government were responsible for the vilification of so many mentally disabled people by presenting them as applying for benefits to which they were not entitled. I have seen the misery that such decisions caused many of my constituents, including those suffering from post-traumatic stress disorder as a consequence of sexual abuse. Will the Secretary of State now confirm the maximum amount of time that they will have to wait to have their cases reviewed?
Ms McVey
It is unfortunate when Opposition Members try to ratchet up the level of emotion in the Chamber, especially when the situation is as emotional as it is. Nobody has ever sought to vilify anyone, and we should get it on the record now that this is not about vilifying anybody—it is about the giving the right support to those who need it. Surely all of us want to focus resources and money on the most disabled people and on the disabled people who need that money. I hope that I can end on that note. The facts speak for themselves: we have spent more than Labour ever did.
Johnny Mercer (Plymouth, Moor View) (Con)
I welcome the Secretary of State’s decision. Does she agree that it is simply nonsense to suggest that the Government are not interested in this agenda? More money is going into the programme than ever. The life chances agenda, which has significantly challenged the welfare state that previously kept a lot of people out of work, is fundamentally changing our country, including communities such as Plymouth, for the better.
Ms McVey
My hon. Friend hits on an important point. The Conservative party and the law that it is bringing in are all about life chances. That is how we view the world. Social mobility, life chances, a foot on the ladder and a career ladder are what we aim to provide all the time.
This will sound like a bit of an advert, but I want to highlight the fact that the Minister for Disabled People holds PIP sessions that all MPs can attend. If anybody has anything that they want to bring to her, they can go to one of those sessions. The sessions take place regularly, and she is holding one today.
Gareth Snell (Stoke-on-Trent Central) (Lab/Co-op)
What we are hearing about today is a court judgment that found the Government’s policy wanting, but the Secretary of State has come to the House seeking plaudits for now not appealing that decision, and that is frankly unacceptable. While it is right for those who were not given the help and support that they needed to get a backdated payment, that payment does not remedy the trauma that they faced during the years when they did not have support. Will the Secretary of State offer an unequivocal apology from the Dispatch Box for the consequences of her Department’s policy? Whether intended or not, it was her Government’s decision that led to people struggling at home, and that is simply not right.
Ms McVey
That was another reason for making a written statement, as well as the time constraints and what we had to do to adhere to the legal ruling. I have not come here today for plaudits. I have come here to do what is right and to explain what is right. That is what I have done, and that is the key thing for all our constituents and the people who are watching this closely at home. We have made a decision. I believe that it has been accepted on both sides of the House, and we are going to get things right.
Peter Heaton-Jones (North Devon) (Con)
I warmly welcome this decision, and it is worth noting that this new Secretary of State made it after only eight working days in her role, which represents a decisive course of action. Is it not the case that the entire focus of the Department, which I know well, is on ensuring that those with mental disabilities and challenges have opportunities to access the workplace and lead independent lives? In making this decision, the Secretary of State has shown that that is her focus.
Jim Shannon (Strangford) (DUP)
I thank the hon. Member for Glenrothes (Peter Grant) for securing this urgent question, but I also thank the Secretary of State for her response and promise of action. In my office, transfers from DLA to PIP occupy a large proportion of my staff’s time. For people with severe anxiety, depression and emotional and mental health issues, some of whom are suicidal, the system has pushed them to the very edge, even when there has been copious evidence and information from consultants, GPs and family members. I ask that the staff who process applications do so with more knowledge, more understanding and certainly more compassion.
Michael Fabricant (Lichfield) (Con)
The shadow Secretary of State said that she was gobsmacked by my right hon. Friend’s response. I am gobsmacked by the vilification of my right hon. Friend on social media and by the threats from Opposition Members to string her up, which are more unacceptable. Just for clarification, will she let the House know precisely by how much disability payments have risen since this Government came to power?
Ms McVey
I am glad that “gobsmacked” has become part of the language of the House. My hon. Friend is gobsmacked, but I was obviously greatly dismayed by the comments from the Opposition and by the personal attacks that I have suffered. However, I know that people make personal attacks only when they do not have workable policies to put forward, so that shows that the Opposition have no workable policies. We do not need to link politics with violence.
In answer to my hon. Friend’s question, the increase has been £4.2 billion.
Stephen Lloyd (Eastbourne) (LD)
I thank you, Mr Speaker, for allowing this urgent question, and I also thank the hon. Member for Glenrothes (Peter Grant) for requesting it. The Government have decided not to appeal only now, after putting many claimants with mental health problems through a year of hell. Does the Secretary of State really believe that that was a kind or fair way of treating people with mental health issues?
Ms McVey
This is a key issue for the Government. The Prime Minister has made supporting people with mental health issues a key pledge, and we have put in an extra £11 billion. Coming to the House with this decision is a step in the right direction towards helping people as best we can.
Tom Pursglove (Corby) (Con)
I welcome my right hon. Friend’s appointment, and my constituents, including those who come to my weekly advice surgeries, will welcome her announcement. Will she update the House on what steps are being taken to disseminate information about what all this means to local advice services so that they can best advise their clients about the next steps and the way forward?
Ms McVey
I thank my hon. Friend, because the point really is about the practicalities of getting this right. It is about engaging with stakeholders and charities. It is about working with our Department to get this right. Mind has welcomed the decision, as have other charities, and it is working with us. Once we have worked through that, obviously we will disseminate it through the whole system.
Neil Coyle (Bermondsey and Old Southwark) (Lab)
The Secretary of State says that the Department will now be identifying the 164,000 disabled people who were wrongly denied the help to which they are entitled. Her Department also recently announced it is scrapping a target it previously denied existed—that of upholding 80% of initial decisions. When will the DWP be contacting the 83,000 disabled people who were potentially wrongly denied help under that equally dodgy practice?
Mr Philip Hollobone (Kettering) (Con)
I welcome my right hon. Friend to her post and congratulate her on her response to the urgent question. My constituents in Kettering would like to know whether there are more or fewer disabled people in work in 2018 than in 2010.
Ms McVey
There are considerably more people with disabilities in work than ever before, and particularly more than in 2010. That is true not just for people with disabilities but for all sorts of people, including young people and women. This Government have fundamentally achieved what we set out to do on life chances, social mobility and opportunities.
Dr Lisa Cameron (East Kilbride, Strathaven and Lesmahagow) (SNP)
I refer the House to my entry in the Register of Members’ Financial Interests. I welcome both the judgment and the response. However, this process has been extremely stressful for my constituents, many of whom have been plunged into poverty and absolute despair, with their mental health problems exacerbated along the way. What will the Secretary of State do to ensure that cognisance is taken of the opinion of professionals such as psychiatrists, who know what people are capable of doing and what support they need? How will she ensure that any further process does not add additional stress to those who have already been affected?
Ms McVey
As I have said in reply to many questions, we are actively recruiting more people, and we are doing more training on mental health conditions with our caseworkers. We have to make sure that we understand the judgment and that we work with partners to make sure that we can help people who come forward. I have heard the hon. Lady and, again, I would be happy to meet her if she would like to speak to me about anyone in particular.
Paul Scully (Sutton and Cheam) (Con)
It must be through gritted teeth that the Opposition have to rely on citing the views on human rights of Saudi Arabian, Russian and Chinese members of the UN Committee on the Rights of Persons with Disabilities. Meanwhile, Conservative Members do not want bluster; they want action and support. Will my right hon. Friend confirm the proportion of PIP recipients with mental health conditions who receive the higher rate of benefit compared with the figure under the DLA regime it replaced?
Ms McVey
I reiterate that 66% of PIP recipients with mental health conditions got the enhanced rate of the daily living component in October 2017, compared with 22% who were on the highest rate of the DLA care component in May 2013. Some 31% of PIP recipients with mental health conditions got the enhanced rate of the mobility component in October 2017, compared with 10% who received the higher rate of the DLA mobility component in May 2013. I hope that that is clear.
Chris Ruane (Vale of Clwyd) (Lab)
Two hundred sufferers of motor neurone disease have been interviewed by the Department in the past 18 months alone. In addition to their physical disability, many will have mental ill health, which is increased by the stress and anxiety of the interviews. Some MND sufferers die within a year of diagnosis. Will the Secretary of State prioritise this group of sufferers when reviewing those cases?
Julian Knight
Thank you, Mr Speaker. I had a one-in-two chance.
I warmly welcome my right hon. Friend the Secretary of State to her place and welcome her talk of engagement. Will she commit to providing specific guidance to MPs’ offices and council contact centres at the earliest possible opportunity?
Drew Hendry (Inverness, Nairn, Badenoch and Strathspey) (SNP)
Many disabled people in the highlands, particularly those with mental health conditions, are often refused PIP appeals, despite overwhelming evidence from their doctors. Does the Secretary of State agree it is wrong and discriminary—[Interruption.] Does she agree it is wrong—[Laughter]—to accept a private company’s decision over that of highly trained medical professionals who know their patients, and their conditions, well?
Jeremy Quin
And finally, Mr Speaker.
Will my right hon. Friend confirm that PIP claimants, including those who will benefit from her decision, which I warmly welcome, will not be subject to the benefit cap in respect of these payments, and that payments will continue to be untaxed and, indeed, will rise by the rate of inflation?
Sky/Fox Update
(6 years, 2 months ago)
Commons ChamberRead Full debate Read Hansard Text Read Debate Ministerial Extracts
The Secretary of State for Digital, Culture, Media and Sport (Matt Hancock)
I am here in my capacity as the quasi-judicial decision maker on the proposed merger between 21st Century Fox and Sky to update the House on the interim report issued today by the Competition and Markets Authority.
The decision-making role is one that my right hon. Friend the Member for Staffordshire Moorlands (Karen Bradley) discharged, having met her commitment, which was given many times in this House, to the greatest possible transparency and openness allowed by the process. Although I come fresh to this, I intend to follow that approach of being as open as possible while respecting the quasi-judicial nature of the decision.
As the House well knows, after the proposed acquisition was formally notified to the competition authorities last year, my right hon. Friend issued an intervention notice on media public interest grounds, namely of media plurality and the genuine commitment to broadcasting standards. That triggered a phase 1 investigation, requiring Ofcom to report on the specified public interest grounds and the CMA to report on jurisdiction.
Having received advice from Ofcom and the CMA, in September 2017, my right hon. Friend referred the proposed Sky/Fox merger to the CMA for a phase 2 investigation on both grounds. The original statutory deadline for the final report was 6 March 2018, but the CMA has today confirmed that it will be extended by a further eight weeks and that the revised deadline is 1 May.
Once I have received the final report, I must come to a decision on whether the merger operates or may be expected to operate against the public interest, taking into account the specified public interest considerations of media plurality and genuine commitment to broadcasting standards. Following receipt of the final report, I will have 30 working days to publish my decision on the merger, so if I receive the CMA’s report on 1 May, I will have until 14 June to publish my decision.
To be clear, the publication today is of the CMA’s provisional findings. I have placed a copy in the Library. On the need for genuine commitment to broadcasting standards, the CMA provisionally finds that the merger is not expected to operate against the public interest. On media plurality grounds, the CMA’s provisional finding is that the merger may be against the public interest. It cites concerns that the transaction could reduce the independence of Sky News and would reduce the diversity of viewpoints available to, and consumed by, the public. It also raises concerns that the Murdoch family trust would have increased influence over public opinion and the political agenda.
The CMA has identified three remedy approaches and seeks views from interested parties on them. The remedy approaches are: first, to prohibit the transaction; secondly, to undertake structural remedies—to recommend either the spin-off of Sky News into a new company, or the divestiture of Sky News—and thirdly, behavioural remedies, which could include, for example, enhanced requirements relating to the editorial independence of Sky News.
The CMA recognises that the proposed acquisition of Fox by Disney could address concerns set out in the provisional findings. However, the uncertainty about whether, when or how that transaction will complete means that the CMA has also set out potential approaches that include introducing remedies that would fall away subject to the Disney-Fox transaction completing. The CMA has invited written representations on the provisional report’s findings, and the potential remedy approaches, with 21st Century Fox, Sky and other interested parties, before producing a final report.
As such, and given the quasi-judicial nature of the process, I hope that the House will understand that I cannot comment substantively on the provisional report and must wait for the final report before commenting. However, I am aware of the keen interest across the House in this important matter, and I know that Members will be closely scrutinising the CMA’s provisional findings and will have views on them. The CMA’s investigation will continue in the coming weeks. It has set out the process for making representations on the remedy options outlined, and on the provisional findings, with deadlines of 6 and 13 February respectively. I am sure that today’s debate will provide helpful context for that work.
What I am able to confirm today is that I will undertake to keep the House fully informed and to follow the right and proper process, considering all the evidence carefully when the time comes to make my decision on receipt of the CMA’s final report. I commend this statement to the House.
Tom Watson (West Bromwich East) (Lab)
I thank the Secretary of State for advance sight of his statement. This proposed merger has gone on for longer than the Murdochs ever expected, and for that I want to pay tribute to the Secretary of State’s predecessor, the right hon. Member for Staffordshire Moorlands (Karen Bradley). She could have done what the Murdoch family expected by clearing a path for the bid to go ahead, but she took her quasi-judicial responsibility seriously. I hope that the new Secretary of State will have as strong a regard for his responsibilities and for the public interest as his predecessor. I can assure him that if he does the right thing, he will have the support of the Opposition.
The CMA says that if the Sky/Fox merger went ahead as proposed, it would be against the public interest. It would result in the Murdoch family having too much control over news providers in the UK, and too much influence over public opinion and the political agenda. Does the Secretary of State accept that assessment?
The CMA says that it is not concerned about the proposed merger on broadcasting standards grounds, but in order to reach a proper assessment of that we need to look at corporate governance issues through part 2 of the Leveson inquiry. The Government have not yet published their response to the consultation on that, so can the Secretary of State tell the House when they intend to do so, and will he give us plenty of notice?
The previous Secretary of State said last June that she was minded not to accept undertakings offered by Fox and Sky that were intended to safeguard the editorial independence of Sky News, which they put forward to mitigate Ofcom’s media plurality concerns. Does the new Secretary of State share his predecessor’s view of those undertakings? In November, Sky threatened to shut down Sky News if it proved to be a plurality obstacle in its bid. Will the Secretary of State reject any attempt by the Murdochs to blackmail him or the regulator by threatening Sky staff?
Just this weekend, “friends” of the Secretary of State were quoted in the newspapers as hinting at the outcome of a separate Department for Digital, Culture, Media and Sport review of gambling stakes and prizes. Will he undertake, in his quasi-judicial role, not to speak to his “friends” about his views on the takeover, and to discourage them from talking to the press about them?
When the Prime Minister took office 18 months ago, she stood on the steps of Downing Street and spoke directly to the country, saying:
“When we take the big calls, we’ll think not of the powerful, but you”.
This ambitious, thrusting new Secretary of State now has the opportunity to put her words into action. He can stand up to the rich and powerful, stand up to the Murdochs and act in the public interest. I hope that he will do the right thing.
Matt Hancock
I think that is the most cheerful response I have had from the hon. Gentleman, so I thank him for that. I will try to answer his questions in as much detail as possible. He asked a number of questions about the process. I am clear that we will follow due process; we will follow our statutory responsibilities and respect the quasi-judicial nature of the decision. My predecessor acted with great solidity and integrity in that regard, and I intend to do the same. In my previous role as Minister for Digital, I was outside the Chinese walls that the Department has on this subject, and therefore not involved in the internal discussions of the earlier stages. I will therefore follow the process by considering the CMA’s final report, once it is published, and all the relevant evidence and information, and then I will make the decision.
The hon. Gentleman also mentioned Leveson. Although we will no doubt have debates on the future sustainability of the press in the coming months, this is a separate process under existing law in which I have a quasi-judicial role; it is not intertwined with the debates that we will have on the primary legislation that was just passed by the other place and received its First Reading in this House this week. Those two questions are separate. The question before us today is one in which I will operate fully in my quasi-judicial role, as I am required to do by law.
Damian Collins (Folkestone and Hythe) (Con)
The Secretary of State rightly raised Disney’s proposed takeover of Fox. If Disney wholly acquired Sky, Sky would of course be completely separate from the Murdoch family trust and in the ownership of a completely different company. However, does he believe that the Fox takeover of Sky must first be considered on its own merits, and that the future acquisition of Fox by Disney is a separate matter?
Matt Hancock
The CMA’s report does address the fact that the proposed takeover by Disney is uncertain, and it sets out some details of potential options, given that uncertainty. Anybody can make written representations in the next three weeks, based on that interim report, and I will consider the question when I see the full report in the months to come.
Brendan O’Hara (Argyll and Bute) (SNP)
I thank the Secretary of State for advance sight of his statement. I have said many times in this place that plurality and diversity are vital components of an independent media, and therefore I welcome today’s findings by the CMA, which have put on the record the valid concerns that many people have about the further concentration of media ownership in fewer and fewer hands. Although the CMA has said that the deal, as it currently stands, does not meet the public interest test, I am pleased that it references a number of possible remedies.
We have heard reports that the owners of Sky might look to close down Sky News if it becomes an impediment in the takeover deal, with the possible loss of 500 jobs. Can the Secretary of State confirm that he will not allow employees of Sky to be used as pawns in any takeover when the final decision comes before him? If the takeover deal between Disney and Fox is likely to be green-lit, what impact will that have on his final decision, given Disney’s reported lack of interest in news broadcasting?
Matt Hancock
It is a matter of law that while consideration of the proposal is ongoing, Sky News cannot be shut down in advance of a decision—I can give the hon. Gentleman that assurance. He also made points about his views on the report published today; I shall reserve my judgement, see the final report and come to a conclusion based on that.
Mr John Whittingdale (Maldon) (Con)
I welcome the Secretary of State’s keeping the House informed, but of course he currently has no role. When the CMA presents the final report and he comes to address this matter, will he bear it in mind that, to date, no regulator that has carried out any objective assessment has found any reason to block the merger on the grounds of commitment to broadcasting standards, and also that the greatest disaster that could befall the plurality of the media in this country would be for Sky News, which is after all a loss-making enterprise, although extremely good, to be closed by its new owner?
Matt Hancock
Both those points are covered in the CMA report that was published today. If my right hon. Friend the former Secretary of State wishes to make to the CMA any further comments like those he just made, he has three weeks in which to do so, after which I will consider the final report in full.
Edward Miliband (Doncaster North) (Lab)
I warmly welcome the CMA’s strong set of findings on plurality. The CMA says explicitly that the deal would give the Murdoch family trust
“too much influence over public opinion and the political agenda.”
I pay warm tribute to the Secretary of State’s predecessor, the right hon. Member for Staffordshire Moorlands (Karen Bradley), because we would not be here had she not had the guts to stand up and say that this matter should be referred to the CMA. We all owe her a debt of gratitude for having done that.
I very much hope that the new Secretary of State, whom I welcome to his place, follows his predecessor’s lead. He can do that by doing two things. First, it is important that he and the CMA should not allow a back-door attempt by the Murdochs to get control of Sky through the so-called remedies process. The simple way to stop the deal going ahead is to prohibit it, not to have some carve out or complicated process. Secondly, it is relevant to the context, so I think the Secretary of State was wrong to attack the other place for what it did on Leveson 2, which was promised by David Cameron, by me and by people from all parts of this House to the victims of phone hacking. If the Secretary of State is to stand up to the Murdochs, he has to allow Leveson 2 to go ahead to get at the truth, because that is what the victims were promised.
Matt Hancock
It was enjoyable to hear a rendition of the right hon. Gentleman’s greatest hit on Leveson, but on the points relevant to today’s statement and the decision on this deal, I intend fully to exercise my quasi-judicial decision-making role by taking into account all relevant considerations, based on the CMA’s final report. It is in that straightforward and reasonable way that I intend to proceed.
Philip Davies (Shipley) (Con)
May I say to the Secretary of State that this is personal? This is basically about lefties—particularly the Labour party—who do not like Murdoch. If this involved any other media organisation, the shadow Secretary of State and the Labour party would have nothing at all to say. This is personal, and the Secretary of State should bear that in mind. After all, Ofcom is there to make sure that Sky News is impartial in its coverage, and I am sure that Ofcom can be trusted to deliver on that. In the light of this provisional judgment, can we now expect the CMA to call for the BBC to be broken up, given its dominance over news output in the UK?
Matt Hancock
The report does go into detail on the different level of media dominance of different parties and sets that out clearly, but obviously I will take forward the views of the CMA’s final report when it is published. My hon. Friend—like the former Secretary of State, my right hon. Friend the Member for Maldon (Mr Whittingdale)—has the opportunity to let the CMA know his views in writing in the next three weeks.
Sir Vince Cable (Twickenham) (LD)
As the CMA acknowledges the importance of Sky News to media plurality, as well as the risks and threat of a forced closure, might the Secretary of State conceivably have a role in facilitating white-knight investors?
Matt Hancock
The most important thing that we in the Government can do is to execute on the law as it stands. The law has clear constraints and must be operated properly, above board, with integrity, in the quasi-judicial capacity that it sets out.
Mr Philip Hollobone (Kettering) (Con)
My constituents in Kettering would like to know what Sky’s audience share is compared with the BBC and ITV.
Matt Hancock
The BBC’s audience share is the biggest, ITN is second and Sky is smaller than that. The details of that are covered in the report, which I am sure my hon. Friend’s constituents will find illuminating.
Ruth Cadbury (Brentford and Isleworth) (Lab)
I am honoured to have Sky and Sky News based in my constituency. Despite very serious instances of sexual and racial harassment at Fox News, the CMA has concluded that none of that, and none of the industrial-scale phone hacking at Murdoch’s UK papers, is relevant to broadcast standards. Does the Secretary of State really agree with the CMA and think that none of that is relevant to how companies that are completely controlled by the Murdochs behave?
Matt Hancock
My position is not to agree or to disagree with the CMA; it is to consider the final report that the CMA produces in a couple of months’ time.
Mr Ranil Jayawardena (North East Hampshire) (Con)
Given the fact that Sky’s audience share is dwarfed by that of both the BBC and ITV, will the Secretary of State confirm that the Government are committed to the high-quality journalism and the world-class British broadcasting sector that we know and love?
Matt Hancock
Yes. As my hon. Friend the Member for Kettering (Mr Hollobone) alluded to, the report does describe the market shares of the different broadcasters, including, of course, the BBC, which is the biggest. We are fully committed to ensuring a sustainable future for high-quality journalism. That is a policy question, and it is also a question of legislation that we will no doubt debate when the Data Protection Bill comes before the House, but it is separate from this decision, which is to be taken specifically within the rules and the law as it stands.
Jo Stevens (Cardiff Central) (Lab)
Five years after the phone hacking scandal broke, some civil cases regarding alleged criminality in the Murdoch empire are still ongoing. There will be victims who were very disappointed with the Secretary of State’s response to my right hon. Friend the Member for Doncaster North (Edward Miliband). The commencement of Leveson part 2 would be in the public interest, because it would finally reveal the full scale of hacking and the relationship between the press and the police. When will the Secretary of State follow the CMA’s lead and act to protect the public interest by commencing Leveson part 2?
Matt Hancock
These two questions are separate. We have a consultation on the Leveson issues. In policy terms, I really care about making sure that we have a sustainable future for high-quality journalism, but that is separate from this quasi-judicial decision, which has to be done within the existing law, and that is how I will take it.
Rebecca Pow (Taunton Deane) (Con)
I welcome the Secretary of State to his position and congratulate him on the transparency with which this process is being conducted. Does he agree that it was sensible to refer the merger of Sky and Fox to the CMA to avoid making it party political? Given the Government’s commitment to high standards in broadcasting, will the Secretary of State assure my constituents in Taunton Deane that the Government will continue to maintain high standards in broadcasting and journalism? I have a vested interest as a former broadcaster, but it is also what the people on the street want.
Matt Hancock
I am not sure that the high-quality journalism of “Farming Today” will ever be the same again without my hon. Friend. Undoubtedly, the importance of high-quality journalism, with a sustainable business model to fund it and plurality around it, are incredibly important policy questions. We will no doubt debate that in future, but it is a commitment to which I stick firmly.
Mr Speaker
Of course, “Farming Today”’s loss has been Taunton Deane’s gain, as we are all conscious.
Ian C. Lucas (Wrexham) (Lab)
In his statement, the Secretary of State said that he will consider “all the evidence carefully” in his quasi-judicial role. How is it possible for him to consider all the evidence unless he goes forward with Leveson 2—thereby honouring the promise given by a Conservative Prime Minister—and hears the evidence that remains unheard so that he can properly judge the Murdochs’ capability and competence for governance?
Matt Hancock
As I think I mentioned earlier, the question that the hon. Gentleman raises is not relevant to what we are discussing, because the latter is about exercising a quasi-judicial decision within the law as it stands. As I might have mentioned already, I intend to exercise that quasi-judicial decision-making role very clearly within the process as laid out in the law as it stands.
Point of Order
(6 years, 2 months ago)
Commons ChamberRead Full debate Read Hansard Text
Mr Speaker
We will move on, if there are no points of order. I did have an indication that there would be.
Gareth Snell (Stoke-on-Trent Central) (Lab/Co-op)
On a point of order, Mr Speaker.
Gareth Snell
Thank you for the prompt, Mr Speaker.
Last Thursday, I was made aware by the office of my constituency neighbour, the hon. Member for Stoke-on-Trent South (Jack Brereton), that he was meeting the Transport Secretary in my constituency before heading to events in his own patch. Subsequently, it transpired that, while visiting Stoke-on-Trent, the Secretary of State held meetings in my constituency with the hon. Gentleman about matters that pertain to my constituency. Unfortunately, the hon. Gentleman did not tell me that information and I was not made aware of it by the Secretary of State himself. When I queried it with both their offices, I was told that no such meeting took place, yet the Twitter account of Stoke-on-Trent Conservatives has plastered pictures of the meeting across the social media website, saying how wonderful it was. How might I remedy the situation, Mr Speaker, and stop it happening again?
Mr Speaker
I am very grateful to the hon. Gentleman for his point of order and for his characteristic courtesy in giving me advance notice of his intention to raise it. There is a sense in which it can credibly be said that he has found his own salvation. He asks me how he can, in a sense, achieve restitution for the situation from which he has been suffering—as he sees it. He has chosen to raise the matter in a point of order, and it has been registered with Members on the Treasury Bench. I confess that I am not familiar with the Twitter accounts concerned, still less have I surveyed them, but I will take it from him that this material is there.
All levity aside, perhaps I can reiterate what I said yesterday in response to a point of order from—if memory serves me correctly—the hon. Member for Ilford South (Mike Gapes), who was deprecating an unannounced visit by a Cabinet Minister to his constituency on, as I understand it, public business, of which he had no advance notice. Members intending to visit their colleagues’ constituencies on public business, as opposed to going to some private engagement, should give the colleague whose constituency they are visiting reasonable notice of the intention. This is not a matter of law, it is not even a rule, but it is a very strong convention in this place and I think it is a courtesy that we should observe. I do not know whether the hon. Member for Stoke-on-Trent Central (Gareth Snell) will make further inquiries, but I trust that this exchange will be heard by the Secretary of State. I hope that it will not be necessary for Members repeatedly to raise these matters on the Floor of the House. It should be possible for colleagues to operate in a mature and courteous way.
Pedicabs (London)
Tuesday 23rd January 2018
(6 years, 2 months ago)
Commons ChamberRead Full debate Pedicabs (London) Bill 2017-19 View all Pedicabs (London) Bill 2017-19 Debates Read Hansard Text
A Ten Minute Rule Bill is a First Reading of a Private Members Bill, but with the sponsor permitted to make a ten minute speech outlining the reasons for the proposed legislation.
There is little chance of the Bill proceeding further unless there is unanimous consent for the Bill or the Government elects to support the Bill directly.
For more information see: Ten Minute Bills
This information is provided by Parallel Parliament and does not comprise part of the offical record
Paul Scully (Sutton and Cheam) (Con)
I beg to move,
That leave be given to bring in a Bill to provide for the regulation of the carrying of passengers in Greater London by pedal cycles and power-assisted pedal cycles for hire or reward; and for connected purposes.
I welcome the Under-Secretary of State for Transport, my hon. Friend the Member for Wealden (Ms Ghani), to her place—literally, as I see that she is taking her place now.
I am pleased that enabling the regulation of pedicabs through this Bill has attracted the support of Members from all three parties represented in London in this place and from Members representing London constituencies. Support was so readily given from across the House that I was not even able to accommodate the hon. Member for Ilford North (Wes Streeting), who has done much work in his role as chairman of the all-party group on taxis, on which I also serve. Although we do not always agree on the solutions for taxis and private hire vehicles, we both know that there is much that we can work on together to improve our hail and ride and pre-booked transport services in a way that is both fair to providers and protects customers.
Both Transport for London and the Department for Transport have been keen to see the simple change proposed in my Bill. The current and previous Mayors of London and Westminster Council also support the move. A group of leading businesses and organisations have come together to push for change under the umbrella of the Regulate Pedicabs Coalition, including the London Taxi Drivers’ Association, the Mayfair residents group, the Hippodrome Casino, the New West End Company, the London Chinatown Chinese Association, as well as many other residents associations and theatre groups representing interests across the west end, so I hope that I am pushing against an open door.
Pedicabs and pedal rickshaws are currently unregulated in London—and solely in London. As a result, there is no requirement for insurance, fares are not fixed or consistent, and neither vehicle condition nor driver quality are assessed. The behaviour of some pedicab operators causes problems for businesses, as they block highways, harass customers and cause serious risk to visitors and workers. In fact, they are the only form of public transport in the capital that is not regulated in any way.
One provider, London Pedicabs, estimates that there are around 1,400 pedicabs on the roads and pavements of London. It states on its website that it has pushed hard to get pedicabs fully licensed and accountable, so, in my mind, we have a great opportunity to make this happen in the coming months by the leave of this House and the other place.
I have said that pedicabs are not insured and that neither drivers nor their vehicles are regulated. Injuries to passengers have become frequent and lives may be at risk. One man told the Evening Standard in 2016 how he had been knocked out and left with a broken cheekbone here in London after being hit by a rickshaw whose driver allegedly spat in the face of a member of staff in Covent Garden before pedalling away in a midnight hit and run.
I am not aware of any deaths of passengers in London as yet, but the fact that an off-duty soldier died after falling out of a pedicab in Edinburgh back in 2010 shows that it is very possible. Of course, accidents can happen whatever regime exists, but even the most basic checks will reduce the likelihood.
London is a global city with a positive international reputation. Some 20 million people come to our capital—my home town—every year. It vies with Bangkok each year to be the most visited city on the planet. Although London has so much to offer visitors, we should not take our tourism industry for granted. Making sure that visitors have a wonderful experience, feel safe, get value for money and have a great time is vital to keeping those figures up and ensuring that people share positive stories about their trips with their friends and keep coming back.
In 2016, an undercover filmmaker revealed examples of rickshaw drivers boasting about charging three Chinese tourists £350 each for a 35-minute ride, and about charging £200 to £300 to go the half mile from Oxford Circus to Piccadilly Circus. Groups of pedicabs frequently block streets, increasing traffic delays and pollution, while disrupting legitimate businesses in the west end. Many play loud music, and their drivers shout and swear and park in doorways and on pavements. Clearly not all do so, but, as on many occasions, there are enough to ruin the reputation of those simply trying to earn a living in a reasonable and conscientious way.
Many cities across the world have looked to regulate pedicabs. Despite different contexts, several themes recur, such as pedicabs’ legal status as bicycles, passenger safety concerns and fare transparency. New York and Rome failed in their attempts to introduce a blanket ban, but San Diego successfully introduced comprehensive regulation, which is what I am asking for today. San Diego City Council voted to strengthen regulations on pedicab operators following the death of a tourist in an accident. Pedicab operators there are required by law to display fares openly, and numbers are capped in high-traffic areas. They are banned from using metered parking spaces and drivers are required to carry proof of insurance and ensure that seatbelts are worn. Operators with criminal convictions are banned.
In 2016, the Government stated that they were concerned about passenger safety. They wanted to take dangerous pedicabs off the road and regulate pedicab drivers so that they are allowed to charge only reasonable fares and must meet minimum safety standards. They proposed that Transport for London be responsible for creating detailed rules, such as setting out what is a reasonable amount to charge for a short journey, and that the licensing scheme would operate in a similar way to the rules for taxis and private hire vehicles. In setting out the approach that TfL would take, the Mayor of London said:
“Every Londoner and visitor to our city deserves a world-class service, whatever mode of transport they use. And this move will allow us to ensure that pedicabs must make big improvements to the way they operate. They are going to need to match up to important safety standards and we will be able to crack down on any attempts to charge rip-off fares.”
I happily disagree with Sadiq Khan on many issues, but he is absolutely on the money on this one.
The Bill would enable TfL to develop a regulation system, but does not prescribe what that system should be. However, there is every indication that TfL will conduct a background check of the driver and a safety inspection of vehicles, which are usually bought or rented from a few providers; place a cap on fares or rates charged; and set out sensible rules as to where and how drivers can park and tout for business.
Under the current law, pedicabs can be licensed as hackney carriages in every part of England and Wales apart from London. In a legal anomaly, pedicabs are treated as stage carriages in London, rather than licensed hackney carriages, under section 4 of the Metropolitan Public Carriage Act 1869. The leading court case about pedicabs in London reaches the opposite conclusion to case law relating to the rest of England and Wales, and Mr Justice Pitchford, in Oddy v. Bugbugs Ltd, commented that, in his view,
“primary legislation will probably be required.”
That case was in 2003. The Greater London Assembly looked at the pedicab business as long ago as 2005. The 2014 Law Commission inquiry into taxi and private hire services made clear recommendations that pedicabs should be brought into a revised regulatory regime.
It is 15 years since the court case that brought this anomaly to our attention, and successive Governments have not found a suitable Bill to which to attach the proposed change, nor have we been able to get it through the private Members’ Bill maze. I am only too aware that Members can vote this Bill down, shout “Object”, or talk it out of time, but I hope that colleagues will understand that it simply irons out an anomaly and that it is supported across the political divide at every level of government. It will allow Transport for London to give consumers, whether they are Londoners or visitors, protection against excessive fares and safety protection through driver and vehicle checks, and to give others, including pedestrians, local businesses and nearby residents, some peace through reasonable and proportionate regulation. Before they pipe up at any stage with any objection, however principled, I ask Members to consider the ordinary Londoner, who may scratch their head at the glacial progress we have made on a simple point that has near-unanimous agreement.
Some people want to ban pedicabs entirely, but looking around London in the open air on a rickshaw gives people a chance to see the city in a way that few other modes of transport allow—although the weather needs to be better than it is at present. Instead, we can help reputable pedicab drivers to develop a good, popular and sustainable business through sensible regulation.
Some Government Members may be concerned that it is a Labour Mayor who would oversee the design and implementation of the regulatory system, but I caution against taking a partisan view. London has a mature system of regulation for public and private hire, an experienced team to enforce transgression through fixed penalty notices and, in the most serious cases, an operating ban. We also have the London Assembly to scrutinise Transport for London and the Mayor, and all of its members are accountable to Londoners through the ballot box.
I hope that I can count on the support of this House to tidy up the law in scrapping this legal anomaly, and to tidy up London’s west end by ensuring that responsible rickshaw drivers ply for business by offering a safe and reasonably priced service that does not obstruct others from going about their business. I commend this Bill to the House.
Question put and agreed to.
Ordered,
That Paul Scully, Julia Lopez, Stephen Hammond, Bob Blackman, Robert Neill, Dr Matthew Offord, Zac Goldsmith, Tom Brake, Mike Gapes, Jim Fitzpatrick, Ms Karen Buck and Mr Virendra Sharma present the Bill.
Paul Scully accordingly presented the Bill.
Bill read the First time; to be read a Second time on Friday 16 March, and to be printed (Bill 154).
Nuclear Safeguards Bill
Tuesday 23rd January 2018
(6 years, 2 months ago)
Commons ChamberRead Full debate Nuclear Safeguards Act 2018 View all Nuclear Safeguards Act 2018 Debates Read Hansard Text Read Debate Ministerial Extracts Amendment Paper: Consideration of Bill Amendments as at 23 January 2018 - (23 Jan 2018)
15:52 - The House divided: - Ayes: 255 / Noes: 294 - Question accordingly negatived.
16:59 - The House divided: - Ayes: 254 / Noes: 295 - Question accordingly negatived.
Dr Alan Whitehead (Southampton, Test) (Lab)
I beg to move, That the clause be read a Second time.
Madam Deputy Speaker (Dame Rosie Winterton)
With this it will be convenient to discuss the following:
New clause 2—Purpose—
“The purpose of this Act is to provide for a contingent arrangement for nuclear safeguarding arrangements under the terms of the Nuclear Non-Proliferation Treaty in the event that the United Kingdom no longer has membership or associate membership of EURATOM, to ensure that qualifying nuclear material, facilities or equipment are only available for use for civil activities (whether in the United Kingdom or elsewhere).”
This new clause would be a purpose clause, to establish that the provisions of the Bill are contingency arrangements if it proves impossible to establish an association with EURATOM after the UK’s withdrawal from the EU.
New clause 3—EURATOM: maintenance of nuclear safeguarding arrangements—
“No power to make regulations under this Act shall be exercised until the Secretary of State has laid before Parliament a report on his or her efforts to—
(a) seek associate membership of EURATOM, or
(b) otherwise maintain the implementation of nuclear safeguarding arrangements in the UK through EURATOM
after the UK has left the European Union.”
This new clause would require the Secretary of State to report to Parliament on his or her efforts to maintain the implementation of nuclear safeguarding arrangements through EURATOM after the UK has left the EU.
Amendment 3, in clause 1, page 2, line 14, at end insert—
“(3A) No regulations may be made under this section unless the Secretary of State has laid before both Houses of Parliament a statement certifying that, in his or her opinion, it is no longer possible to retain membership of EURATOM or establish an association with EURATOM that permits the operation of nuclear safeguarding activity through its administrative arrangements.”
This amendment would require the Secretary of State to certify, before making any regulations to provide for nuclear safeguarding regulations, that it was not possible to remain a member of EURATOM or have an association with it.
Amendment 2, page 3, line 3, at end insert—
“(11) Regulations may not be made under this section unless the Secretary of State has laid before both Houses of Parliament a report detailing his strategy for seeking associate membership of EURATOM or setting out his reasons for choosing to make nuclear safeguards regulations under this Act rather than seeking associate membership of EURATOM.”
This amendment would prevent the Secretary of State from using the powers under Clause 1 to set out a nuclear safeguards regime through regulations until a report has been laid before each House setting out a strategy for seeking associate membership of EURATOM or explaining why the UK cannot seek associate membership of EURATOM.
Amendment 7, in clause 4, page 5, line 6, at end insert—
“(5) No regulations may be made under this section until—
(a) the Government has laid before Parliament a strategy for maintaining those protections, safeguards, programmes for participation in nuclear research and development, and trading or other arrangements which will lapse as a result of the UK’s withdrawal from membership of and participation in EURATOM, and
(b) the strategy has been considered by both Houses of Parliament.”
This amendment would require the Secretary of State to lay a report before Parliament on the protection and trading arrangements that arise from membership of EURATOM, and his strategy for maintaining them prior to making regulations concerning nuclear safeguarding.
Dr Whitehead
The proposed new clauses and amendments appear in my name and those of my hon. Friends the Members for Salford and Eccles (Rebecca Long Bailey), who is the shadow Secretary of State, and for Sheffield Central (Paul Blomfield) and others.
First and foremost, I want to set down a marker on new clause 2, because it represents the dividing line between us and the Government on membership, associate or otherwise, of Euratom. This purpose clause makes explicit that this is a contingency Bill. In other words, it is being enacted to deal with circumstances that may never arise—namely, that we as a country have no future association or membership with Euratom that would enable us to continue to reap the benefits of association or membership in a way that I think is almost universally agreed.
I think that it is agreed—the Minister has stated as much during the passage of this Bill—that Euratom has served well our purposes as a nuclear nation over the past 40 years, and nuclear safeguarding has worked very well in inspecting and representing our obligations to international agencies such as the International Atomic Energy Authority.
It is clear that our interests as a country would be best served by continuing our membership of Euratom, which was founded by a different treaty from that which brought about the EU. Indeed, during evidence to the Public Bill Committee, we heard strong arguments along those lines from eminent lawyers who had been called as witnesses. However, we appear to be in the position of assuming that our future membership of Euratom is not possible, because essentially the Prime Minister, as a matter of choice, included exit from Euratom in her letter to the Commission informing it that we were invoking article 50.
Stephen Kerr (Stirling) (Con)
The treaty on Euratom membership is part of the set of treaties described in the treaty of Lisbon. Therefore, as we leave the European Union, we will, de facto, leave our membership of Euratom. It is as simple as that.
Dr Whitehead
I am afraid that it is not as simple as that. A considerable body of legal opinion states that, because Euratom was founded by a treaty other than the treaty of Rome—it was, in fact, founded before the EU came together—it can and should be dealt with separately. Although arrangements relating to association with and membership of various EU bodies have changed over time as a result of changes in EU regulations, that has not been the case with Euratom. The articles relating to associate membership and arrangements are identical to those that were in place when Euratom was founded. There is no case to answer as far as separate arrangements for Euratom are concerned.
Albert Owen (Ynys Môn) (Lab)
My hon. Friend is making a strong case for associate membership. He will recall a Westminster Hall debate that I held only last year, during which there was broad consensus on the issue, including among Conservative Members. I think that the Minister was the only Member who did not agree. The only reasons the Government have given relate to the legal position and the European Court of Justice. If Conservative Members were not whipped, they would understand the logic of the very sensible new clause.
Dr Whitehead
I thank my hon. Friend for making that strong point. I recall that even the hon. Member for Stone (Sir William Cash) suggested during that debate that associate membership of Euratom could be effective in continuing those arrangements, which have served us so well over many years.
Rebecca Pow (Taunton Deane) (Con)
The hon. Gentleman has referred to the International Atomic Energy Authority. The Government have made it clear that we will be seeking new arrangements with it and that they will follow exactly the same principles as the current arrangements—that is, the right to inspect civil nuclear facilities and to continue to receive all the safeguards and reports. We should be confident that this Government are going about the issue in a serious, sensible and meticulous way.
Dr Whitehead
The hon. Lady makes the case for our new clause. If the Government are going about their business in a sensible and coherent way—I note the Secretary of State’s statement on 11 January on how the Government intend to go about conducting relationships with Euratom—it would be a good idea to place that procedure into the Bill, so that we can be clear about what we are about, what we want to achieve and how we will do so.
After all, it has been stated that this is a contingency Bill. We want to know what it is a contingency against and therefore how it should be framed in terms of what we should be doing in contemplating whether to bring it into operation. If we had either membership of Euratom or an associate form of membership, which might be fairly similar to that enjoyed currently by Ukraine but with a number of additional factors, this Bill would not be needed. The arrangements with Euratom would continue to be in place, rendering the Bill superfluous. We need to be clear about what we are debating.
James Heappey (Wells) (Con)
The shadow Minister knows that he and I often agree on stuff, but I wonder whether today he might concede this point. At worst, his new clauses would merely render the Bill superfluous if we manage to achieve associate membership of Euratom, but at best we are providing the contingency plan that gives industry the certainty that it says that it so much wants. The Bill is therefore relevant and necessary in that sense, even if it may ultimately prove to be superfluous because we achieve Euratom membership.
Dr Whitehead
Yes, indeed. I suspect that the hon. Gentleman and I are going to agree substantially on this. We regard the Bill as necessary in the context of the possibility that, after Brexit, no arrangements can be brought about with Euratom, either associate membership or full membership. The Bill will then ensure that the nuclear industry is clear about its future and that the arrangements for our international obligations can be properly carried out in the absence of those arrangements. We have indeed been constructive and helpful during the Bill’s whole passage through Parliament. However, that does not detract from our thinking that a number of its procedural elements should be strengthened in relation to what we do while it is gestating and coming to potential fruition after the point at which the things that we are doing may not have had any success.
The hon. Gentleman will see that in some of our amendments we are also trying to make sure that Parliament is fully informed of what processes are under way while we get to the position that the Bill could, or could not, come into operation. That is important for Parliament’s sake. After all, we are in new territory with regard to this Bill, and we therefore have to do a number of new things in legislation that fit the bill for our future arrangements. That is essentially the beginning and end of what we are trying to do through this group of amendments.
Richard Graham (Gloucester) (Con)
I am puzzled why new clause 1 is necessary. All its ingredients are issues that form part of the transition negotiations that our country is going through with the European Commission. It therefore seems bizarre to try to legislate that
“conditions under which the UK is a member of EURATOM before exit day shall continue to apply”
during the transition. On that basis, we would be legislating for all sorts of things that form part of the negotiations to continue during the transition. What would the hon. Gentleman say to that?
Dr Whitehead
The hon. Gentleman has slightly got ahead of me, because I started by talking about new clause 2, and I am about to start talking about new clause 1. He thinks that new clause 1 may be superfluous. I would suggest that because this Bill is about procedure as much as fact, the new clause sets out a procedure that we need to undertake in the event of certain things not happening, and it is important that a number of those possible events are covered in the Bill. Should it not prove possible to remain a member of Euratom, for various reasons, it is important to consider the idea of a transition period after which we would then be in a position to fully carry out our obligations to the IAEA and other agencies separate from Euratom. That, indeed, is what the Bill is essentially trying to bring about. The Bill is predicated on the notion that membership or association with Euratom will not be possible, and it is therefore necessary to recreate the arrangements for nuclear safeguarding that have served us so well in a solely domestic form and thereby enabled us to negotiate separate voluntary arrangements with the IAEA and, indeed, separate bilateral agreements with a number of other countries, including the United States, Australia, Japan, and Canada.
Rachel Maclean (Redditch) (Con)
I accept that there was a vast amount of legal argument on our membership, or not, of Euratom. Indeed, it is not a simple point. However, we have now triggered our leaving Euratom. The treaties are uniquely joined, so it is a fact that we have left Euratom and will no longer be members. As we go forward with negotiations, putting the word “contingent” into the Bill would create uncertainty for our partners in the EU, given that the negotiations are two-sided. Those negotiations have yet to progress, so we need this Bill to be a clear signal or statement to our EU partners to achieve what we want. I fear that having the word “contingent” in the Bill will muddy the waters in our negotiations with our partners. Does the hon. Gentleman agree?
Dr Whitehead
I would have thought that the Bill, in whatever form it eventually emerges, demonstrates the opposite. Yes, there are a number of negotiations to be undertaken. We do not yet know the results of those negotiations. We have not left Euratom, which, it is generally agreed, has served our purposes very well. The new clause would enable us to signal, in the event of all those negotiations not working, that we are nevertheless still able to fulfil our obligations to the IAEA and to show it that we have a regime in place that does the business with regard to nuclear safeguarding from the point of view of the IAEA’s concerns. Putting forward this Bill as a contingency measure, as the Secretary of State said was the case, is important in the uncertain position we are in at the moment. Nevertheless, we will need certainty, over a relatively short period, with the bodies that are responsible for policing and organising the nuclear non-proliferation treaties and the whole arrangements relating to nuclear safeguarding. I think, if I may say so, that that is the right way to do it as far as putting a Bill before the House is concerned. The Opposition do not dispute that: we think it is right to have the Bill as a contingency. Our concern, however, is whether there are sufficient elements to the process part of the Bill to ensure that it works as well as it could. That is really the point of difference on the Bill at the moment.
Richard Graham
The hon. Gentleman knows that this is incredibly important to him and several of his colleagues, and it is incredibly important to me, with EDF Energy’s operational headquarters for nuclear in my constituency and Horizon just down the road, so we are all coming from the same point. His specific proposal—I am talking about new clause 1 again—is very specific. It even mentions a period of two years, although the transition period that is being negotiated may well come to an end at the end of 2020. In effect, he is asking the Government to legislate on something over which they do not have control. Surely the better approach is to plan for the contingency, as he has already agreed, and recognise that the other elements—Euratom and other agencies—are all subject to a negotiation that this House cannot, by its nature, control.
Dr Whitehead
That is a little strange in that the Prime Minister referred to transition periods for the overall EU negotiations in her Florence speech, and the Secretary of State did so strongly in his written statement on 11 January. If the hon. Gentleman wants to be assured, as far as the nuclear industry is concerned, that there will be a seamless transition at the point at which we are no longer a member of Euratom, I would have thought he ought to be strongly in favour of aspiring to a transition period. As he knows and we know, the process of recreating in the UK all the things that have been done by Euratom for 40 years—we will discuss that later—will be extremely difficult, lengthy and problematic. It will certainly, in the opinion of many people, be extremely difficult to achieve in the period ahead if we corral those negotiations and are to complete them by March 2019. If he thought about it for a moment, he would recognise that the last thing we could conceivably want is a period of, in effect, nuclear shutdown, or of defaulting on our international obligations because we are not ready to carry them out on Brexit. That is why a transition period may be so important.
Richard Graham
Yes, of course we all want a transition period, which is precisely a part of the negotiations. What I struggle to understand is that the scenario the hon. Gentleman describes is in effect not within our control. The transition we are seeking is being negotiated—in fact, the Minister and other Front Benchers have made it absolutely clear several times that we want to continue the relationship with Euratom as deeply as possible—but I cannot see the need, in a legislative context, for his proposed new clause 1. In fact, I do not believe it would be possible for any Government conceivably to agree to it.
Dr Whitehead
I repeat my suggestion that, because the Bill is about process as much as content, it is important that it is guided by the sort of considerations we want to take place in order to achieve, as we are all agreed, the best outcome—[Interruption.] Indeed, yes, the best outcome. We must make sure that the negotiations not only proceed with the best outcome in mind, but cover the fact that it may be the case—again, this is out of our control—that if we stick to a position, with the provisions of the Bill, in which everything essentially stops in March 2019, that would be just catastrophic for our nuclear industry and our international nuclear safeguarding obligations. We must get this right, and we must have continuity of arrangements inside or outside Euratom. It is in those circumstances that a transition period is suggested.
The arrangements for the founding of Euratom and its articles suggest that a period of transition for negotiating our way out of Euratom may not be identical to the period for the arrangements for negotiating our way out of the EU as a whole. It is quite possible to conceive the circumstances in which we do not have a transition period beyond March 2019 for negotiating our general withdrawal from the EU, but we do have a transition period for negotiating our way out of Euratom. It is at the least strongly arguable that that may be the case in the future, and it is another reason why such a provision should be in the Bill.
Trudy Harrison (Copeland) (Con)
I feel I must pull up the hon. Gentleman because he has twice referred to Euratom having been around for 40 years, but it began in 1957. It was born out of the civil nuclear industry that began in my constituency of Copeland when Calder Hall was first constructed. I thought that I should make it clear that this was from Britain and by Britain back in 1957. We have actually had it for 70 years, although there was the merger in 1967.
Dr Whitehead
I was referring to the length of time that we have been a member of Euratom, not the length of time that Euratom has been around. Indeed, the hon. Lady will know that when Euratom was founded, the UK was not a member of it. I am sure she will also know that the founders of Euratom, particularly one of them—Mr Spaak—wrote a substantial report at the time of the founding of Euratom that strongly envisaged, setting out in chapter and verse, how an associate relationship of Euratom with the UK could come about. The arrangements that Mr Spaak considered in the report for associate membership are identical to those that exist today. I thank the hon. Lady for reminding us that Euratom has been around a lot longer than the period during which the UK’s relationship with Euratom has existed, but I am sure she will agree that even at the outset of Euratom, an association with the UK was envisaged before the UK joined to facilitate nuclear exchange, nuclear development and—although the nuclear non-proliferation treaty was not around at the time—joint endeavours in civil and defence nuclear work.
I fear, Madam Deputy Speaker, that I have tested the patience of the House, particularly, given the number of interventions I have taken, because of the necessity of ensuring that I responded to them fully. I will end by telling the House that we need to remember that this Bill covers just one aspect of our relationship with Euratom over the period during which we have been a member of it. Our relationship with Euratom also includes participation in nuclear research, the transportation of nuclear materials, the development of nuclear arrangements, the trading of nuclear materials and a number of other arrangements, all of which will lapse on our exit from participation in Euratom and all of which will need to be secured for the future. They are not the subject of the Bill, but they will have to be dealt with at some stage if we are not to have a close association with Euratom after Brexit. Amendment 7 would provide for at least an understanding that we will move forward to secure working arrangements for a future outside Euratom, not just making provision for our treaty obligations concerning nuclear safeguarding.
The Opposition think that the suite of connected amendments to the Bill will strengthen it enormously so that it is a fully fit-for-purpose contingency arrangement. I therefore commend these new clauses and amendments to the House.
Trudy Harrison
New clause 1 concerns me, because it seems to me to be a delaying tactic. As I have mentioned, Euratom and the IAEA were really formed in 1957, when Calder Hall was built in my constituency. There are now 70-something businesses operating in the nuclear industry in my constituency alone. I have spoken to each and every one of them, as well as to Sellafield, the Low Level Waste Repository and the National Nuclear Laboratory. They all say that it is absolutely critical that we get on with the job swiftly and provide certainty so that when we leave the European Union on 29 March 2019, we know exactly where we are.
I come back to the point that Euratom was formed in 1957, and I find it somewhat disappointing that Opposition Members are not crediting our country with the ability to do what is necessary. I have been reassured by the Minister on several occasions about the timescales, and about the process that is already in place for recruiting new safeguards inspectors to the Office for Nuclear Regulation. There are clear synergies inherent in having the ONR, which is the overarching umbrella organisation, working on safeguarding, security and safety.
When it comes to the transition, the Prime Minister has already said that there will be a transition arrangement after we leave the European Union on 29 March 2019. Therefore, the most important thing is to get on with the job, and the Bill enables us to do just that.
Stephen Kerr
Does my hon. Friend agree that in the new clause, great uncertainty is built into the very thing—the contingency—that was intended to give certainty to people such as those in her constituency?
Trudy Harrison
That is exactly my point. This is about certainty and getting on with the job. Not having the Bill in place would be absolutely catastrophic for my constituency and the whole county of Cumbria.
Rachel Reeves (Leeds West) (Lab)
I know that the hon. Lady cares hugely about this issue, because it matters a great deal for her constituency. She and I have been in meetings with the Office for Nuclear Regulation, in which it has said very clearly that it will not be able to meet Euratom standards for safety inspections by March 2019. Indeed, even to meet IAEA standards will be very challenging. Does she not agree that new clause 1 would provide certainty, rather than the other way around, because it would ensure that in March 2019 we were in a transition period in which we could still rely on Euratom to perform the inspections that are so crucial in her constituency?
Trudy Harrison
It is not just my constituency, though; this is about the whole country. Today, more than 20% of our electricity is provided by nuclear power stations. The hon. Lady is not quite correct. My memory of the meeting she mentions is that we were told we would have sufficient aspects in place to be able to have the regime, there or thereabouts, to continue with our existing—[Interruption.]
Rachel Maclean
As the hon. Member for Leeds West (Rachel Reeves) will know, Dr Golshan said in evidence to the Select Committee:
“My current project plan is that we establish a regime that intends to meet UK international obligations when we leave”.
That is achievable. She said that there were challenges, but not that they were insurmountable. She added that she intended to
“build upon that to achieve a system that is equivalent to Euratom.”
So my hon. Friend is correct.
Trudy Harrison
I thank my hon. Friend. It is important that we hold the Minister and the Department to account, and that we focus on the critical path of recruiting the right number of staff into the ONR and ensuring that the regime is in place when we leave. We need to get on with the job, and the 70-something businesses in my constituency absolutely want us to do that.
Alex Norris (Nottingham North) (Lab/Co-op)
The hon. Lady and I were both in the evidence-gathering sitting of the Bill Committee, in which Dr Golshan said that
“we will not be able to replicate Euratom standards on day one.”––[Official Report, Nuclear Safeguards Public Bill Committee, 31 October 2017; c. 7, Q9.]
Is this perhaps a matter of fact, rather than a question of confidence in Britain? In taking this course of action without the safeguard that my hon. Friend the Member for Southampton, Test (Dr Whitehead) has proposed, we will leave ourselves without the coverage that we need.
Trudy Harrison
I have already said that I believe the transition period will happen, as the Prime Minister has indicated. New clause 1 is a delaying tactic, and that is absolutely not what the industry needs. We need certainty, and we need it today. I am pleased that the Department is already acting to recruit to the ONR safeguarding inspectors, who will also have responsibility for safety and security. That seems to me to provide vital synergies of shared knowledge and shared experience across the board in the nuclear sector.
Albert Owen
I want to speak briefly in support of new clause 1. We have debated whether there will be negotiations during the transition period, but I hope that the Minister will respond to this question when he winds up: does he intend to negotiate associate membership of Euratom? We are asking for associate membership, but we have been given no clear idea of whether he intends to seek such membership. We all want the safeguards to be in place from day one. Negotiating over Euratom standards is not in our gift, but we now have in place the highest standards in the world and co-operation with other world leaders.
Stephen Kerr
Having sat through a number of evidence sessions with me, as a fellow member of the Business, Energy and Industrial Strategy Committee, the hon. Gentleman well knows that there is no such thing as associate membership of Euratom. The Minister has repeatedly said that the Government intend to seek some form of close association with Euratom—I do not want to dwell on the semantics, but that is obviously a different thing—and to maintain a continuity of relationship with it. The new clause is therefore totally unnecessary, given the Prime Minister’s commitment to a two-year implementation period.
Albert Owen
I often agreed with the hon. Gentleman in Committee, but I think that he is completely wrong on that point. There is such a thing as associate membership—of Euratom, and of the European Union—and there are different levels of membership.
Albert Owen
Yes, there is. We need to negotiate from a position of clarity and strength, and I do not see us doing so. Without the proposed commitment in the Bill, I do not see the Government saying that they intend to go for third-party or associate membership of Euratom. We have not even seen the legal opinion that the Government were given about the need to leave Euratom in the first place. I support the need for nuclear safeguarding, and I will support the Bill on Third Reading, but new clause 1 is sensible, because it suggests that the Government should approach Euratom members and ask for associate membership, to give us the continuity and certainty that we want.
Ben Bradley (Mansfield) (Con)
The hon. Gentleman says that he wants continuity and certainty, but can he not understand the difficulty involved in writing into the Bill the outcome of negotiations that have not yet happened? How can Parliament effectively write into law that we are going to have a transitional period when the negotiations have not yet happened?
Albert Owen
The Government say that we need a transitional period for EU withdrawal, and it is obvious to me that we also need one for Euratom. The Government have said that we need to leave Euratom at the same time as we leave the European Union, but I stress again—I hope that the Minister will clarify the position—that nobody other than the Government has seen the legal advice that tells us that we need to exit Euratom. My hon. Friend the Member for Southampton, Test (Dr Whitehead) was absolutely right to say that there is universal support for the idea of our having associate membership. I have not met anyone who works in the industry who says that we should move away from Euratom. If we do, they—the workers; Prospect, the union; many of the experts who gave evidence to us; and the Nuclear Industry Association, which is the umbrella body—feel that we should have associate membership. The new clause therefore speaks on behalf of the industry in the first instance, and we as legislators should listen to what the industry is saying; we should not listen to the Government’s ideological grounds. The only reason why the Government want to leave Euratom is that they do not want to be under the European Court of Justice—that is the crux of it.
James Heappey
The hon. Gentleman, like me, will have received the briefing from the Nuclear Industry Association. Paragraph 5, on legal implications, clearly says that the treaties are entwined—that is the EU’s position and the UK Government’s position—and that it is not possible to remain a member of Euratom while leaving the EU.
Albert Owen
Well, let us clear this up now. I invite the Minister to say on behalf of the Government whether it is his intention—or their intention, if he is not in his post at the time—to negotiate associate membership. Yes or no? Otherwise, we are just guessing that the Government will negotiate some form of associate or third-party membership. I need to know these things from the Government, because we do not have anything in front of us. What we have today is a group of new clauses and amendments that would give us the certainty that we need. The industry is crying out for that, so I want to hear from the Minister.
Albert Owen
I am sure that the hon. Gentleman cannot speak on behalf of the Minister, but I will be interested to hear what he has to say.
Richard Graham
It strikes me as bizarre that the hon. Gentleman and his colleagues are taking their current line. I can only assume that that is either because they want to try to make the political point that the Government and the Conservative party do not want to have a future relationship with Euratom, which is clearly wrong—the Minister will confirm that when he speaks—or because the hon. Gentleman wants to score a political point with an industry that I know is dear to his heart by suggesting that, somehow, he is being more supportive by trying to write into law something that cannot be written into law. What is needed today—we will hear this from the Minister—is absolute confirmation of the Government’s intention to continue to have as close a relationship with Euratom as possible. That is what will be negotiated. It cannot be legislated for, otherwise we would do the same thing for all the many other organisations in Europe with which we might want to have a future relationship. All of that will be covered in the transition talks in Brussels.
Albert Owen
I am grateful to the hon. Gentleman. He knows me quite well, and I do not think he would accuse me of scoring political points. I have said consistently since before the Bill was introduced that we need clarity, whether we have full membership of Euratom, associate membership, or a third-party agreement.
Albert Owen
At this stage, I do not know what will happen, but I am going to find out from the Minister now.
Richard Harrington
I must apologise for my hesitancy when the hon. Gentleman asked me a question. I was not sure whether I was allowed to intervene on him, so I had intended to reply in my speech. Just to make matters clear, however, it is a statement of fact that the Government have served the article 50 notice to leave Euratom, the argument being that the two treaties were so interleaved that we had to. Secondly, there is no such thing as associate membership. Some countries have agreements on certain matters—associate membership on research and development, for example, in the case of Ukraine—but there is no legal category of associate membership. Thirdly, the Government intend to seek as close an association with Euratom as is possible. If it is acceptable to the hon. Gentleman—I attended his Westminster Hall debate, and I have listened very carefully to what he has said today—I will continue my remarks at the end of this debate.
Albert Owen
I am grateful, because that is helpful, but there is associate membership—it is just in different sections, whether that is research and development or various other—[Laughter.] There is. Conservative Members laugh, but when we had a debate in Westminster Hall, both sides were in agreement that we needed to strengthen our relationship through an associate or alternative membership.
Rachel Reeves
Like other hon. Members, my hon. Friend has a close constituency interest in this issue. Ukraine has associate membership for the research and development programme. One thing my hon. Friend and I are particularly interested in is whether we are seeking to have what Ukraine has: associate membership specifically for research and development.
Albert Owen
That is an important point. However, let me repeat that it is not Labour Back Benchers who are asking for this; it is the industry itself. We need to listen to the industry. Its members are not stupid. They know the technical and legal differences between associate membership and part-associate membership. What they want is certainty. If someone is in a position of strength, they do not go into negotiations, one against the rest, and say, “What are you going to give us?” We have to go to the negotiations with a firm belief that we want a strong associate membership, but I have not heard the Government say that, even in the Minister’s intervention.
James Heappey
I think that we are all pulling in the same direction, but we need to be careful about the language. There is not an on-the-shelf associate membership that we can just pick up and run with. There are associated countries, and there are countries that have associate arrangements, but those are bespoke, and thus far all of them have required the free movement of people and a contribution to the EU budget. It is therefore likely that whatever our associated membership might be, it will be different from that of countries that already have an associated membership. However, those countries are not “associate members”, in the sense that there is an associate membership class.
Albert Owen
I think the hon. Gentleman is agreeing with me, but we do not know our position or what our starting point is.
I would like to hear from the Minister—he will have enough time—that the British Government, on behalf of the nuclear industry, are looking for certainty. To say that they are looking for something as close as associate membership is not good enough. Are we looking for a specific British agreement with the rest of Euratom that gives us the same certainty as we have now? If so, we should support the new clause, because it strengthens the hand of the Government, rather than weakens it.
We should look at the comparison with the European Union (Withdrawal) Bill and phase 1, at the 11th hour waiting for the Irish to reach some sort of agreement. We cannot do that with Euratom and nuclear, because of its nature. Let us be absolutely firm. We are all pulling in the same direction. We want the best for the British nuclear industry. The nuclear industry wants an associate membership, so let us fight for it.
Mr Ranil Jayawardena (North East Hampshire) (Con)
Although I have not spoken on the Bill to date, I have been following its progress from afar. I rise, unsurprisingly perhaps, in opposition to the proposals that have been tabled by the hon. Member for Southampton, Test (Dr Whitehead). As his county colleague, I have a great deal of time for him, but on this occasion I have to say, with regret, that I believe that the measures would delay the implementation of the vital nuclear safeguarding measures that are facilitated by the Bill and extend lobbying for associate membership of Euratom.
Notwithstanding the uncertainty, instability and safeguarding risks that these new clauses and amendments implicitly condone, the association they appear to grasp at seems to be ideologically driven. Those who still worship membership of the customs union or the single market above all else should see the impossible implications of the measures.
Euratom, which was established by the Euratom treaty, as we have already heard, is uniquely joined to the European Union. It has the same membership. Its budget is part of the general budget of the EU. Importantly, it also makes use of the same institutions and entities: the Commission, the Council and, contrary to everything that we voted leave for—to take back control—the European Court of Justice. That is why this Bill, which will create our own version of things, is so crucial. Providing certainty as we leave is crucial, whatever the deal.
I note that the measures seek some association, but that is no silver bullet. As we have heard already, there is no such thing as associate membership, and hon. Members do not have to trust me on that. If we cannot trust the views of a former president of the Union of European Federalists, who can we trust? I speak, of course, of the former Liberal Democrat MEP, Andrew Duff, and he wrote:
“Euratom is therefore a fundamental building block of the European Union and not an accessory. It cannot be separated out from the rest of the Union. Joining the EU means joining Euratom; leaving the EU means leaving Euratom…There is no such thing as associate membership of Euratom.”
Layla Moran (Oxford West and Abingdon) (LD)
I simply say that that is not the Liberal Democrat party’s position, even though Andrew Duff may indeed at one point have been a Liberal Democrat MEP.
Mr Jayawardena
My life is greatly enhanced by that clarification. Let me turn to another source that the hon. Lady might put greater trust in—Professor David Phinnemore of Queen’s University Belfast. He agreed with the former Liberal Democrat MEP:
“Andrew Duff has been quick to point out, correctly, that there is in fact no such thing as ‘associate membership’ of Euratom or, indeed, of the EU for that matter. Non-member states can only be ‘associates’ of the EU.”
That is an academic’s view, as well as an MEP’s view.
The hon. Member for Ynys Môn (Albert Owen), in an exchange with my hon. Friend the Member for Wells (James Heappey), considered the notion of associated country status. Switzerland has associated country status. That is different from associate membership; it covers only research and development, and as my hon. Friend made clear, it is contingent on free movement. People in this country have said in a referendum that free movement must be controlled. Given the impossibility of the deal that the new clauses seek time to negotiate—to say nothing of its undesirability—it is pure folly to mandate years of uncertainty in a nuclear safeguarding transition period. I contend, rather, that the safeguards, inspections of nuclear facilities and monitoring that the amendments purport to support would be harmed more by a safeguarding transition period—especially since, once we have left the European Union, our Euratom membership cannot apply—than by moving forward immediately to new safeguards.
Albert Owen
Is the hon. Gentleman honestly telling the House that the British public do not want experts from other countries to move freely in the nuclear industry? We are talking about not just nuclear installations but research centres in this country that need international co-operation.
Mr Jayawardena
Although I like the hon. Gentleman very much and value his contributions to the House, I think he is missing the point and trying to undermine what the British people have clearly told us politicians. It is uncontrolled immigration that they seek to remedy.
Mr Edward Vaizey (Wantage) (Con)
I hate to rise to disagree with my hon. Friend, but the British people did not vote to leave Euratom. It is a separate treaty and it was not on the ballot paper. We are aware that we are leaving Euratom because of a technicality. I am also aware that if the Government Front-Bench team could wave a magic wand, they would remain in Euratom. Can we please not wrap up our departure from Euratom into some kind of Brexit dream of sticking it to the continent? We want free movement of our nuclear workers, not least because we are building a multibillion-pound nuclear power station at Hinkley Point.
Mr Jayawardena
In disagreeing with me, my right hon. Friend has made my point: specific deals can be done to make sure that the people that this country needs and wants to see here in Britain can come here.
Mr Jayawardena
I will make some progress first.
The people we want to see in Britain—those who can contribute to our society, our economy and our communities—should be able to come here and contribute to our national life and national industries. Indeed, that is how we will continue to make sure that our nuclear industry goes from strength to strength.
Rebecca Pow
I knew he would, because my hon. Friend knows that my constituency is adjacent to the enormous new nuclear power station that is being built. We will get a large knock-on effect on employment, and indeed we have the first nuclear degree at the University Centre Somerset, which is in my constituency and the adjacent constituency. Does he agree that we need to keep these brains coming and ensure that this industry is growing and booming as we go forward? We are encouraging young people to go into it, and they want to know that there is a safe future.
Mr Jayawardena
My hon. Friend has guessed what is coming later in my remarks. I will come on to the future, but I want to focus now on the importance of nuclear, which I think everyone agrees is of key strategic importance to the United Kingdom. I am therefore pleased that Her Majesty’s Government have been clear that they aim to seek to maintain close and effective arrangements for civil nuclear co-operation with Europe and the rest of the world.
As we leave the European Union and enter, in my view—I accept that it might not be everyone’s view—an exciting and prosperous new phase in our kingdom’s history, where we are free to do what we need to do to put our people first and seek trade deals with friends around the world, it is through the cultivation of open, willing and free global markets, interested in innovation from Britain and the revenues that that trade will bring, that we will help to stabilise and boost the UK economy. In this new industrial revolution—perhaps the fourth industrial revolution, as has been championed by my hon. Friend the Member for Havant (Alan Mak)—nuclear power will form a vital part of the UK’s long-term energy mix.
In that context, I want to inform the House of how little of our energy comes from nuclear. Some 72.3% of France’s energy comes from nuclear, compared with 54.1% of Slovakia’s, 51.7% of Belgium’s, 51.3% of Hungary’s and 40% of Sweden’s. We are at less than half that percentage. I would be delighted to be told that I am wrong—I would be delighted if it were higher—but I am informed that it is less than 20%. Nuclear power, as a source of electricity to power millions of homes and businesses for decades to come, is not only clean, low-carbon energy, but reliable. It will also secure our energy, environmental and economic futures. It is therefore absolutely critical to get the regulation of it right.
We have heard about the deal to secure our first new nuclear power station for a generation. It will be built without resort to the public purse and will mean the creation of 26,000 new jobs. It is the sort of industry we want to incentivise in this country to create good new jobs for young people now and in the future. It will also mean energy security, as I have said, which is absolutely critical for our kingdom’s future prosperity, so it is critical that the right safeguards are in place.
It is important that the nuclear safeguards provided under the Bill are distinct from both nuclear safety measures and nuclear security measures. Those measures, which are respectively intended to prevent accidents and to put in place physical protection measures at nuclear sites—are not under the purview of the Bill. They are unaffected by our leaving the EU, because they are not responsibilities provided primarily by Euratom. Euratom has no role in setting security standards or in regulating or inspecting security arrangements in our civil nuclear sector.
Nuclear safety and security are regulated by the Office for Nuclear Regulation—very effectively to date, I might add—and it is the ONR that will assume responsibility for running our effectively equivalent domestic nuclear safeguards regime created under the Bill. That is why, again, I believe that the Bill should stand unamended. Furthermore—international safety and security considerations have been mentioned— the UK will remain a member of the International Atomic Energy Agency, of which we were one of the founding members in July 1957 and remain one of the board members. Our leading role in the IAEA, our work developing and complying fully with international standards and obligations on nuclear safety and security, and our commitment to responsible nuclear non-proliferation thus demonstrate that the UK has no intention of retreating from international standards in our new domestic safeguards regime.
Rachel Reeves
I am sure that the hon. Gentleman is aware of this, but I clarify to the House that IAEA standards are not as high as Euratom’s. The Office for Nuclear Regulation has said that it will not be able to meet Euratom’s standards on day one of our exit from the European Union, so that would mean a dilution of the standards that we have today. Does the hon. Gentleman understand and acknowledge that?
Mr Jayawardena
My point about the IEA—I mean the IAEA; what a tongue-twister!—was not about the standards it provides. It was that we will remain part of the IAEA and will continue to comply fully with the international standards set out and our obligations in relation to nuclear safety and security.
Layla Moran
My constituency lies on the boundary of the Culham centre. The point the staff there are making to me is that this is about not just funding but being able to access the crucial networks of researchers and get the right talent in the right places. Does the hon. Gentleman concede that this will suffer in the short term, unless we get certainty now?
Mr Jayawardena
I will perhaps answer the hon. Lady’s point in a roundabout way. When I visited Switzerland—I should refer Members to my entry in the Register of Members’ Financial Interests—I was impressed to understand that Switzerland, despite having never been part of the EU, was one of the largest recipients of joint funding, because it had the brains to excel at driving technological innovation forward. One of the other biggest recipients of such funding was the UK. A third was Israel, which has never been part of the EU and has very few agreements of the sort that Switzerland has with the EU. Switzerland has some agreements with the EU, and we are leaving the EU. All three nations have great expertise and should continue to strive to ensure access to the networks that this technology and these innovations rely on.
Another such project is the international thermonuclear experimental reactor, a project to build a magnetic fusion device. The agreement was signed multilaterally by China, the EU, India, Japan, South Korea, Russia and the US. It is absolutely right that the UK continues to support such projects. I also understand that the Government have announced an £86 million investment to establish a nuclear fusion technology platform with the aim of supporting UK industry in obtaining contracts for just such projects.
We need to underpin that commitment and funding with some clarity today, however, which is why an additional transition period would be the worst of both worlds. The unique legal status of the EU and Euratom during that period would mean we would not be part of Euratom but would simply be seeking an association with it, or indeed an R&D-only association contingent on free movement and the European Court of Justice—if we are to base our position on Switzerland and refer to it in the wrong terms, as some Opposition Members have done. At the same time, however, we would be unable to enact our own safeguarding measures to underpin all that is good about our nuclear industry—the innovation we have supported and the jobs our young people deserve. I do not believe the new clause stacks up, and I will not be supporting it today.
John Woodcock (Barrow and Furness) (Lab/Co-op)
It is a pleasure to rise to speak in favour of new clause 1. As far as I could follow the argument of the hon. Member for North East Hampshire (Mr Jayawardena) at the end there, he was saying that it would create instability to have an increased transition period for a treaty that has served the UK well for 40 years and that we want to replicate in as much detail as possible in the future arrangements. That is Alice in Wonderland logic and not the kind of rigour we ought to bring to this incredibly serious debate.
This fellow Andrew Duff, a former Liberal Democrat MEP, has been mentioned several times in the Chamber. It is, to my mind, the first time a former Liberal Democrat MEP has been taken as a great authority on any matter by Conservative Members, and possibly by his own party as well. I want to briefly and gently warn Conservative Members on the wisdom of taking former leaders’ pronouncements as general facts. For obvious reasons, I do not seek to dwell on my own party’s predicament on the matter, or that of the Liberal Democrats, given the recent well-publicised difficulties of their former leader in matters of faith. Are we to agree, however, with every pronouncement from Lord Hague, a former leader of the Conservative party, on issues on which he remains an expert? Are we to agree without question that Brexit will undoubtedly diminish Britain’s influence on the world stage, as he has made clear? No, of course we are not, so can we please put that argument to one side and move on to the substance of the debate.
John Woodcock
The hon. Gentleman bored the Chamber senseless for three times as long—by my count—as was necessary.
John Woodcock
Of course I will give way, as long as the hon. Gentleman does not go on for quite as long as he did last time.
Mr Jayawardena
I am sorry if I bored the hon. Gentleman, but he might not have been listening fully.
John Woodcock
I did try.
I would never accuse the Minister of complacency—he is not a complacent man—and I know that as Energy Minister he is giving much time to this matter, but although I do not think there is complacency from Ministers themselves, I am profoundly worried about the capacity in the system to deliver the new arrangements by the time set out. I agree with my neighbour, the hon. Member for Copeland (Trudy Harrison), on so much and we have worked together, but the idea that it is okay to be there or thereabouts in March 2019, at the time of transfer, is, I am afraid, bunkum. A level of certainty has to be written into our nuclear safeguarding regulatory arrangements.
Many Labour Members want our membership of Euratom to continue, howsoever it might be delivered in the future. The alternative at the moment is to rely on a Department for Business, Energy and Industrial Strategy that is bursting at the seams with all the things it has to deliver on Britain’s exit from the EU. I had a conversation a few months ago with someone whom I knew from my time as an adviser and who remains in the system. What he had to say about the number of staff looking at the Euratom issue in particular was frightening. There is not remotely the level of assurance that the House ought to expect if it is to give its blessing to the Government and not seek to write into the Bill a commitment to a transition period, which is eminently sensible while we try to work out whether we can stay for good.
Some Members have said that there is no certainty because a negotiation is in progress, but the new clause gives a degree of strength to Ministers, enabling them to say, “Parliament has willed that there needs to be a transition arrangement. Our Act—which is, of course, a contingency Act—makes clear that there must be contingency arrangements, and that is what we require from these negotiations.”
Rebecca Pow
Might I suggest that the new clause actually seeks to confuse? It appears to specify what should happen during the transition period, but it is unclear whether it is specifying what the United Kingdom should seek to be negotiating, or whether it is attempting to mandate the terms. It seems to be the opposite of what the Prime Minister set out in her excellent Florence speech. All the Opposition are doing is confusing the issue, which is leading to a lack of clarification for the nuclear industry which wants, needs and deserves it.
John Woodcock
The hon. Lady may be confused, but we are not, and the industry is not. The industry is strongly urging the Government—as they will know, if they are listening—and all Members to get behind a transition period while we examine the position, to decide whether we can reverse the wrongheaded decision to leave Euratom that was made—in all probability, unnecessarily—when article 50 was served. The alternative is to face a dire cliff edge that could do deep damage to civil nuclear production throughout the United Kingdom. I understand that the Minister is due to visit Sellafield for the first time later this week—
John Woodcock
Well, I hope that when the Minister does come up to Sellafield, he will put his voice and the full voice of his Department behind the campaign that the hon. Member for Copeland (Trudy Harrison) and I are shaping to improve our transport infrastructure. It will take him an absolute age to get there, but I hope that when he is there, he will listen closely to what people say. I hope that he will listen to those in my constituency and that of the hon. Lady who will be relying on the new civil nuclear jobs that will come through the NuGen project in Moorside and think again about how our Parliament can strengthen his hand in creating a seamless transition from the existing arrangements to something which we strongly believe needs to look identical. New clause 1 would do that and, even at this late stage, Members in all parts of the House ought to support it.
Rachel Maclean
I rise to speak on this Third Reading debate in the full knowledge that I am not a nuclear expert; nor do I have a considerable nuclear presence in my constituency. However, like millions of other people up and down the country, I rely on nuclear energy to keep my lights on.
Madam Deputy Speaker (Dame Rosie Winterton)
Order. I should point out to the hon. Lady that this is not the Third Reading debate. We are dealing with the new clauses and amendments.
Rachel Maclean
Thank you for that clarification, Madam Deputy Speaker. I shall turn directly to new clause 1. I do not support the new clause, because it seeks to introduce a transition period to delay the UK’s departure from Euratom. When the proposal was tabled in Committee as new clause 2, we engaged in detailed scrutiny. I applaud the forensic questioning by the hon. Members for Southampton, Test (Dr Whitehead) and for Sheffield Central (Paul Blomfield), who probed the Minister in great detail. We heard numerous lengthy arguments about why the new clause was unnecessary.
Drew Hendry (Inverness, Nairn, Badenoch and Strathspey) (SNP)
I am delighted to be here with the Minister, who is a genial and hard-working man. I know that he will try to answer some of my questions, and I hope his answers are clear.
When the Secretary of State launched the Bill, he said it was “straightforward”, but the amendments are required because there is nothing straightforward about leaving Euratom. The Scottish National party is concerned about the whole process. The hon. Member for Copeland (Trudy Harrison) talked about us being “there or thereabouts”, but that is not good enough when it comes to nuclear safeguards. As it stands, the Bill is a safeguards Bill without any safeguards; there is no contingency for anything going wrong, yet Ministers have failed to convince not just hon. Members in this Chamber, but industry and the people. Leaving Euratom will result in more cost and less value, and the opinion of many in the industry is that it will be impossible to set up an equivalent UK authority within the timescales outlined. That is the view of industry, the Office for Nuclear Regulation, the Nuclear Industry Association and the Nuclear Decommissioning Authority, all of which gave evidence to the BEIS Committee. I was delighted to hear the Chair of that Committee, the hon. Member for Leeds West (Rachel Reeves), point out the great concern about the Government’s ability to do as they propose. All the nuclear industry and all those bodies do not want us to leave Euratom; either they see no benefit in our doing so, or they are actively concerned about the consequences.
Ministers have simply ignored the difficulties and the overwhelming evidence before them. They have plodded ahead, and when asked “How?” they use their favourite word: hope. They hope that things will be in place—that agreements, funding and people will be available. Despite the impending loss of influence in developing policy in Europe on future nuclear decisions, the unanswered questions about cost, the difficulties in training or even recruiting replacement inspectors, they plod ahead. As the Minister said in response to questions on these matters in the Select Committee, “They don’t really know and we don’t really know.”
There are a lot of unknowns in the Bill, which is why it is imperative to amend it. The ONR says plainly that it might need more than a two-year transition period after 2019, yet the Government still provide no assurance.
Stephen Kerr
The hon. Gentleman says the Government give no assurance, but the Prime Minister, in her Florence speech, was explicit about the Government’s agenda in respect of a two-year implementation period. I cannot help concluding that the reason the hon. Gentleman advances this line of argument is that he has a destructive attitude toward the whole process, and his ultimate aim is to create a constitutional and ongoing sense of crisis. In fact, the Bill guarantees some continuity, including the two-year period.
Drew Hendry
The hon. Gentleman, like many of his colleagues in Scotland, likes to try to go to a happy place when faced with harsh realities. The fact is that a two-year transition period is viewed by virtually nobody as a responsible timescale in which to get up and running.
Drew Hendry
No, I am going to make some progress.
The UK, as it presses ahead with the folly of Hinckley C, will need thousands of workers, many skilled in the nuclear industries.
Drew Hendry
No, I am going to make some progress. I may come back to the hon. Lady, but we will have to see.
Many of those workers will need to be skilled in the nuclear industries, yet current policy does not support the ability to get those workers if there is no concession on the movement of people, but achieving even that is put into a harsh light when it comes to getting highly specialist staff to meet the new safeguarding functions. Those positions are already challenging to fill. Nuclear inspectors do not live on every street—in fact, they are very rare—and they are in global demand. The Minister says that such staff are required only in the tens, but can he tell me today how many are in place? I offer him the opportunity to intervene. He was asked in November about recruitment. I am trying to get his attention, Madam Deputy Speaker. Will he tell us how the first phase has gone? I will offer him another opportunity to intervene and tell us how many recruits are in place. Is it 15? Is it 10? Is it five? Is it one? Is it none? How many nuclear safeguard inspectors have been set up?
Prospect and Unite the union have given evidence, and Ms Ferns from Prospect said:
“A reasonable approximation is several years—it is not a matter of months but years for people to be able to do that job…It is a small talent pool…even in the best of times.”
Many Members today have cited the testimony of Dr Mina Golshan, the deputy chief inspector and the director of the Sellafield decommissioning, fuel and waste division in the Office for Nuclear Regulation. She has said:
“I have been very clear from the outset in previous evidence sessions, and in discussions with industry as well as BEIS, that it would be unrealistic for us to expect to achieve an equivalent regime to what is in place currently by the time we officially leave Euratom, and that is March 2019.”
The BEIS Committee report, “Leaving the EU: implications for the civil nuclear sector”, states:
“To deliver the new domestic regime the ONR will need to double the number of its inspectors by 2019, and triple its numbers by 2021. Skilling-up the new recruits on time will present additional challenges, as even existing specialists will require 12-18 months of training to become an inspector, and generalists may need five years.”
Those are hefty timescales.
Let us look at the cost. So far, the Government have earmarked £10 million for all the operations in Euratom, yet we can already see that there are going to be much more expensive consequences for the UK. That £10 million figure is dwarfed by the £50 million of Euratom funding that the UK receives for the Joint European Torus project—JET—so it will be interesting to hear from the Minister how that funding is going to be replaced. Leaving Euratom and the JET project has been described as “bonkers” by Steven Cowley, a physicist at the University of Oxford and a former director of the Culham centre for fusion energy, which hosts JET. He is absolutely right. Can the Minister tell us how that funding will be maintained?
Can the Minister also tell us about our future in ITER, the project to build the world’s largest tokamak? The ITER agreement was signed in 2006 by China, the EU, India, Japan, South Korea, Russia and the US, and the building of the tokamak has been under way in France since 2010. The official start of ITER’s operation is scheduled for December 2025. Euratom also funds DEMO, a demonstration fusion power reactor planned to follow ITER by 2050. The UK is a key participant in ITER and sends information, results and design studies from its JET programme to the French site. This co-operation will continue throughout the Brexit process, but it is unclear what the impact of Brexit will be on this co-operation and the continuation of these programmes. Perhaps the Minister can advise us on that. We need to know all this information. Without it, we will need safeguards in place.
The hon. Member for North East Hampshire (Mr Jayawardena), who is no longer in its place, mentioned medical isotopes. He said that it was scaremongering to say that they would no longer be available, and that treaties would be in place to allow access to them. However, the critical point is not whether people can get the isotopes; it is that they have a very short half-life. Sometimes they have to be used within hours of being produced in order to maintain their effectiveness. If they are sitting at a border point because there is no customs agreement, they will be completely useless. Will the Minister tell us how we are going to put in place the necessary customs arrangements to prevent that from happening?
Layla Moran
The issue is that we are leaving the single market and the customs union. Does the hon. Gentleman agree that, even if we have a customs arrangement, the fact that we are leaving the single market is what will cause the delays? As he rightly points out, the half-life of those radioisotopes will mean that fewer people will be able to be treated by them.
Drew Hendry
Without alternative arrangements to allow the free movement of such goods across borders, there will be considerable complication and delay, which could affect patients.
As it stands, it is a risk too far to leave Euratom without cast-iron guarantees. I respect the Minister and heard his messages of hope about having people in place. I heard him say that he would like to ensure that that will happen, but we have had no guarantees about the set-up or whether it will be in place. There are no figures and no definite timescales, and we have heard nothing from the industry to suggest that it is satisfied. Without cast-iron guarantees to protect such things, we know that the new arrangement will cost us more, deliver less and diminish our influence. Given the evidence, it is hard to see even how it could be delivered.
Ben Bradley
I am again a bit disappointed to hear wildly misleading statements from those on the Opposition Benches, including the hon. Member for Inverness, Nairn, Badenoch and Strathspey (Drew Hendry), about medical isotopes, which are nothing to do with this Bill.
Stephen Kerr
The hon. Member for Inverness, Nairn, Badenoch and Strathspey (Drew Hendry) accused Government Members, and Scottish Conservatives in particular, of seeking to find a happy place. Does my hon. Friend agree that that could never be said of the hon. Member for Inverness, Nairn, Badenoch and Strathspey? He is more inclined to find a depressing place, which I do not recognise in my native land of Scotland.
Ben Bradley
I thank my hon. Friend, who will know much more than me about SNP Members and their outlook on life.
Our relationship with Euratom is a subject for negotiation. The Government have been clear that they will seek continuity, and they obviously want standards to remain as high as possible. How that connects directly with Euratom is not for this Bill; it is for negotiation directly with the EU. The exact nature of the relationship will of course be closely connected to trade, customs and countless other arrangements.
In Committee, we saw Labour’s attempts to get either a commitment to Euratom, which cannot be given in this Bill, or associate membership, which does not exist and this Bill cannot create. We need to build our own framework so that we are prepared to incorporate whatever kind of relationship with Euratom results from the negotiation. The Government have been clear that that is the most helpful and connected relationship that we can have, so we cannot lay out in this forum what that will look like. We need certainty and structure and to have our own plans in place—not just on paper, but well developed and physically in place—so that we can have continuity regardless of what happens further down the line, meaning that we need to crack on with things now to be ready in time. We heard evidence in Committee about the time needed to put things in place, so we need to crack on now.
I do not understand where the hon. Member for Ynys Môn (Albert Owen) was coming from in his speech. While very eloquent, he did not seem to grasp that we cannot write into the Bill things that have not yet happened or are not yet agreed. We cannot include a transitional period, and the Government cannot accept an amendment that foresees a future negotiation with another party, the result of which we just do not know. We need to be ready on exit day. We need to ensure that we cannot be taken by surprise and that continuity is ensured.
Albert Owen
I understand that the hon. Gentleman is on message, but the message is wrong. The words that I used in my contribution, which was echoed by SNP Members, were not mine, but those of the industry and the experts within it. For once, will the Government start listening to those who understand the industry, rather than bantering about who on which side of the House might be wrong?
Ben Bradley
I am sure the Minister will agree that we need to support the industry and that we need to do what the industry asks. My point is nothing other than that. My point is that we cannot make that decision in this Bill. It is for the negotiation to decide at a later date.
New clause 1 neglects to recognise that an implementation period is subject to negotiation and must be agreed directly with the EU—we cannot do it unilaterally. The idea of implementation before withdrawal also does not fit with broader plans and discussions that have been mooted for transition out of the EU after withdrawal in March 2019. It simply does not fit. The Government clearly cannot include in a Bill the outcome of a discussion that has not happened.
We need to decide the basic framework now and act accordingly.
Mr Jim Cunningham (Coventry South) (Lab)
We understand that there are certain things the Government cannot say about the negotiations, but ultimately we want to know the outcome of those negotiations before withdrawal so that Parliament can have a view on it, rather than the Government operating a Henry VIII clause.
Ben Bradley
I do not know the hon. Gentleman’s background, but I guess, by the sounds of it, it probably is not business.
We cannot fix the plan for withdrawal and implementation in stone now. The Labour party wants to build into the Bill a clause saying that the Bill is contingency only. Our relationship with Euratom is subject to negotiation. No one has written anything off. We want a positive relationship, but we might have to develop and rely on our own framework, and the work to put it in place needs to happen now. An amendment to say that the Bill is merely a contingency would achieve the opposite of its intention by reducing impetus and leading to delays in the process of getting our safeguards in place, which is only bad for the industry and for all the things the hon. Member for Southampton, Test (Dr Whitehead) tried to raise.
That is why I oppose new clause 1, and I hope to speak later about my support for the Bill more broadly.
Alex Norris
I enjoyed serving on the Public Bill Committee, and I rise to speak in support of new clauses 1 and 2, and amendment 3.
On new clause 1, while I have slightly buried the lead by referencing this earlier, it needs full consideration in this place. Members need to know the judgment of Dr Golshan, who is responsible at the ONR for recreating Euratom in this country:
“Our aim, currently, is to have a system in place that enables the UK to fulfil its international obligations by March 2019, which is when we intend to leave Euratom. I have been very clear in the past—I will repeat it here—that we will not be able to replicate Euratom standards on day one.”––[Official Report, Nuclear Safeguards Public Bill Committee, 31 October 2017; c. 7, Q9.]
Members should reflect on that, whatever the political knockabout, because it makes a compelling case for a transition period. Otherwise we will be saying that our nuclear safeguards regime should not be as good as it is today, and I have not heard anyone suggesting that—I do not believe that it would be tolerable.
A week is a long time in politics, and three months is a lifetime in the Brexit process—perhaps it just feels like that—but over that period we have seen the Government move on this point. Conservative Members asked how we can talk about this hypothetical idea. Well, the Secretary of State for Business, Energy and Industrial Strategy himself said less than two weeks ago that the Government want Euratom to be involved in the implementation period. Now is the time to make good on that.
In a similar vein, on new clause 2, if I had £1 for every time someone mentioned in Committee that this is a contingency Bill, I would be able to meet the Foreign Secretary’s new financial commitment to the NHS. The Under-Secretary of State for Business, Energy and Industrial Strategy, the hon. Member for Watford (Richard Harrington), would be a particularly significant donor, having mentioned that many times.
If this is a contingency Bill, we really should say what it is contingent on, and we should say that in the Bill. Otherwise it is not a contingency Bill, but a Bill that will be law until the Minister decides on the 19.52 train home that it is not law any more. That is not a satisfactory way to legislate.
Finally, on amendment 3, one issue that has developed since Second Reading is whether we actually have to do any of this. Ministers clearly said on Second Reading that leaving Euratom is legally necessary as part of leaving the EU. We tested that in Committee. I asked two senior lawyers in this area, Jonathan Leech and Rupert Cowan from Prospect Law, whether triggering article 50 necessitates leaving Euratom and if they would have advised the Government to follow this path. To the first question they answered “No” and “Absolutely not” respectively. Jonathan Leech’s answer to the second question was:
“The advice would be that you do not have to accept this and it may not be in your interests to do so.”––[Official Report, Nuclear Safeguards Public Bill Committee, 31 October 2017; c. 12, Q23.]
That is significant, and it is a departure from where we were on Second Reading.
I represent a leave constituency, and I am always mindful of that when dealing with anything relating to Brexit. I have spent a lot of time knocking on doors and have heard every conceivable argument for remaining or leaving. Funnily enough, I never heard the argument—I suspect no one in this Chamber did—that our membership of Euratom is undesirable, or that there is a desire for a diminution of our nuclear safeguards regime. There is not much of a case for doing this if we do not have to. If we are doing it only because of an arbitrary red line drawn up in Downing Street that we could cross while still delivering Brexit, we are fools to do so. Either way, as amendment 3 states, Ministers ought to come to this place to justify their approach, because once again this is not a decision for the 19.52 train.
Lots of work has gone into the Bill and I have enjoyed participating in its consideration. I believe that we should all support the Opposition proposals, because they would make the Bill better and then we might not need it at all.
Richard Harrington
I thank all Members who have contributed to the debate. Those who have heard our consideration of the Bill for the first time today will not realise, given that most of our discussion has been about one or two new clauses, that many other aspects were discussed in Committee. I pay tribute to the Opposition Members who have participated, as well Government Members, and particularly the hon. Members for Southampton, Test (Dr Whitehead), for Inverness, Nairn, Badenoch and Strathspey (Drew Hendry), and for Sheffield Central (Paul Blomfield), whose cameo Brexit role has been well appreciated. Many points were dealt with by consensus in Committee and in our discussions afterwards. Today’s debate has focused on new clause 1, but I will also speak to the other new clauses and amendments in the group.
The overall strategy for withdrawal from Euratom, and our ambitions for our future relationship with it, were the subject of a comprehensive written statement made by my right hon. Friend the Secretary of State on 11 January. I think that most Members on both sides of the House would agree that, as I have stated publicly in Committee and privately afterwards, we are seeking the closest and most effective association with Euratom. We are therefore putting in place all the measures necessary to ensure that the UK can operate as an independent and responsible nuclear state from day one.
As Members will be fully aware, the nature of our future relationship with Euratom is part of the next phase of negotiations, which is yet to start. The written statement set out the principles upon which our strategy is based, many of which have been discussed today: to aim for continuity with current relevant Euratom arrangements; to ensure that the UK maintains its leading role in European nuclear research; and to ensure that the nuclear industry in the UK has the necessary skilled workforce. We will be seeking: a close association with Euratom’s research and training programme, which includes the JET project and the international thermonuclear experimental reactor project; continuity of open trade arrangements to ensure that the nuclear industry can continue to trade across EU borders; and maintenance of close and effective co-operation with Euratom on nuclear safety.
Richard Harrington
It is a pleasure to give way to the Chair of the Business, Energy and Industrial Strategy Committee.
Rachel Reeves
I thank the Minister and particularly the Secretary of State for the written ministerial statement published on 11 January, which gave much more clarity on the Government’s aims and ambitions in this area. On the seventh day of consideration of the European Union (Withdrawal) Bill by the Committee of the whole House, Ministers gave a commitment to publish a timetable with milestones that the Government will need to achieve to meet the objectives set out in the written statement. When does the Department plan to publish that timetable, because I really think it is crucial? Can we also have an update on progress towards a voluntary agreement with the IAEA for safeguarding inspections, and on how discussions are going regarding the nuclear co-operation agreements, which are crucial to getting the association we need?
Richard Harrington
If the hon. Lady will have a bit of patience, I will come to those points, all of which are valid, later in my speech. Progress on many of those points will be included in the quarterly statements, which are the result of discussions in Committee.
I have been through the important points covered in the written statement, so let me turn to the point about associate membership made by the hon. Member for Ynys Môn (Albert Owen)—I learned how to pronounce his constituency in the Westminster Hall debate; I hope he realises that I am showing off now—and others. As I have already stated at the Dispatch Box, we cannot be an associate member of Euratom because there is no such concept in the treaty as it stands. We have had a lot of discussions about whether we could. The hon. Member for Leeds East—
Richard Harrington
I am sorry; I come from Leeds, so I should have known the difference.
The hon. Member for Leeds West (Rachel Reeves) mentioned Ukraine, which has been mentioned many times. Ukraine has association agreements on specific parts of Euratom’s activities, with research and development being the classic one. We must work within the existing legal framework, which allows for close association but not this theoretical category of associate membership.
Albert Owen
I am grateful to the Minister and the Secretary of State for the clarifications they have given today and previously in writing. I understand what the Minister is saying, but my point is that we are in uncharted waters. We need to get on the front foot, and the best way to do that is by acting on behalf of the UK nuclear industry, which is asking for associate membership. Will the Minister therefore please assure us that he will fight for an associate type of membership?
Richard Harrington
With all due respect to the hon. Gentleman, this quite amuses me, because last week I was berated for being a mouthpiece for the nuclear industry—something with which I was pleased to agree, by the way. The important point is that the language of whether we can have associate membership or not is not important; the important thing is what we come up with. People inside and outside the House can call it what they want, but effectively we all want the same thing. It is just not correct to call it associate membership, however, because there is no such thing. I have made that clear absolutely beyond doubt, as has the Secretary of State.
Dr Whitehead
In the light of what the Minister has just said, will he confirm that in his view an associated status in relation to nuclear safeguards would be distinctly possible?
Richard Harrington
I hope and believe that a very close association to do with nuclear safeguards absolutely will be possible, but I do not think it helps just to bandy language between one side and the other. We all know what we want, and I am delighted that everybody—it seems to me—on the Opposition and Government Benches wants exactly the same thing. We have all made our points about the language, but I think we all want the same thing. That is very unusual in this House and it really is a credit to everybody.
It is essential that projects and investments are not adversely affected by our withdrawal from the EU and can continue to operate in the certainty that nuclear safeguards arrangements will be in place. That is why we are putting in place arrangements for a new domestic nuclear safeguards regime, regulated by the Office for Nuclear Regulation, as well as negotiating new bilateral agreements with the IAEA and nuclear co-operation agreements with priority third countries. Those arrangements are not dependent on the EU negotiations and the UK Government’s work is well advanced.
The Bill and the regulations that will be made under its powers are crucial. They will enable us to establish a domestic nuclear safeguards regime to meet international safeguards and nuclear non-proliferation standards when Euratom safeguards arrangements no longer apply in the UK. As Members have noted, it will take time to develop and implement the new regime, so it is absolutely imperative that we maintain the momentum of the work needed to deliver it in the timescale required. However well meaning the new clauses and amendments are—I accept in good faith the reasons why they were tabled—the reality is that they could delay our domestic preparations and lead to uncertainty in our discussions with international partners. There can be no question of our waiting until we know the outcome of negotiations before we put in place our own arrangements. The implications of not having the right systems operating from when Euratom safeguards arrangements no longer apply are too serious for the industry and for our position in the international safeguards regime.
On the implementation period, we intend to ensure continuity for the nuclear industry and to avoid the possibility of a cliff edge for the industry on the date of exit. Members will be aware—if they were not listening at the time, this has been mentioned several times already today, so they will be aware now—that the Prime Minister set out in her Florence speech her desire for an implementation period after the UK ceases to be a member of the EU. If the European Commission agrees to an implementation period of around two years, the UK will not be a member state of the European Union during that period. None the less, the acquis will continue to apply, which means that, for the duration of that implementation period, the UK will expect to continue to pay into the EU, to be bound by its rules and to benefit from access to its market. The European Commission’s draft guidelines are explicit that, in its view, this acquis would include Euratom matters. The implication of that—I accept that it is an implication because it has to be tested in negotiations—is that the current Euratom regime could continue to apply during any transition period.
I have to reiterate that a transition period prior to our withdrawal, as proposed by new clause 1, is not a situation envisaged in the proposals for the implementation period. Both parties to the discussions agree that it would helpful to have the matter agreed as speedily as possible—again, there is no disagreement over that—so as to provide the certainty that we need. Whatever the outcome of the talks about an implementation period, let me emphasise that the UK’s overarching objective remains to maintain as close and effective an association with Euratom for the long term as possible.
New clause 1, which was tabled by the hon. Member for Southampton, Test, proposes not an implementation period after exit, but a transitional period before exit. That would delay the UK’s exit from Euratom, but that situation is not envisaged in the proposals for the implementation period, or in the article 50 notification that has already been passed by Parliament.
Let me briefly raise quarterly reporting, which I mentioned in reply to the question asked by the hon. Member for Leeds West. It is very important to give Parliament clarity about the progress that the Government are making. That was why my right hon. Friend the Secretary of State made a commitment in the written statement to provide quarterly updates on progress, which will include updates on the negotiations and progress made by the ONR on establishing the UK’s domestic safeguard regime.
I hope that those arguments will persuade Opposition Members not to press the amendments and new clauses to a Division.
Dr Whitehead
We will not be pressing any measure to a vote, except for new clause 1, which has been debated in a very unsatisfactory way this afternoon. We are not convinced by the responses that we have received, so we will be pressing it to a Division.
Question put, That the clause be read a Second time.
Dr Whitehead
I beg to move amendment 1, page 1, line 22, at end insert—
“(c) ensuring that inspections of nuclear facilities and materials for the purpose of nuclear safeguards continue at the level previously established by UK membership of EURATOM.”
This amendment would aim to ensure that nuclear safeguarding inspections continue at the same level subsequent to leaving EURATOM as they were when the UK was a member of EURATOM.
Madam Deputy Speaker (Dame Rosie Winterton)
With this it will be convenient to discuss the following:
Amendment 4, page 2, line 41, leave out from “must” to the end of line 44 and insert—
“(a) consult—
(i) the ONR,
(ii) the National Audit Office, and
(iii) such other persons (if any) as the Secretary of State considers it appropriate to consult, and
(b) lay before Parliament a statement declaring that he or she is satisfied that the staffing and financial resource available to the ONR is sufficient for the purpose of assuming responsibility for nuclear safeguarding in the United Kingdom.”
This amendment would require the Secretary of State to declare that the ONR has the resources necessary to take on extra responsibilities for nuclear safeguarding in the UK.
Amendment 5, in clause 2, page 4, line 13, at end insert—
“(1A) The Secretary of State may only exercise powers under this section at the point at which amendment of any of the legislation in subsection (1) becomes necessary in order to complete the process of transposition of responsibility for nuclear safeguarding from EURATOM to the Office for Nuclear Regulation, and for no other purpose.
(1B) Upon exercising the power set out in subsection (1), the Secretary of State shall lay before both Houses of Parliament a report on the operation of the power.”
This amendment would limit circumstances under which the Secretary of State may exercise certain powers in this section and requires a report to be laid before Parliament.
Amendment 6, in clause 4, page 4, line 41, at end insert
“, but not before the Secretary of State has published draft regulations relating to each of the other provisions of this Act under which the Secretary of State may make regulations.”
This amendment would ensure that draft regulations specified in the Bill are published before the provisions of the Act come into force.
Dr Whitehead
In speaking to these amendments, I want to draw attention to further events that have taken place between the end of the Committee stage and today’s Report stage. I say “further events” because they are separate from the very welcome statement that the Secretary of State has made on what we may do about negotiating an association with Euratom, which I think has helped our proceedings considerably. Another matter that might have helped proceedings considerably had it taken place a little earlier was our having the impact assessment on the Bill that we have now received.
As I am sure hon. Members know, impact assessments should, under Cabinet Office rules, ideally be produced before Bills are discussed. To be honest, it is pretty bad that it has taken so long for the impact assessment to arrive, particularly as it arrived after our deliberations in Committee had concluded. I would say that it is particularly bad following an examination of what the impact assessment actually says—it might have helped our proceedings in Committee had we been able to look at it at that time.
Predominantly, the assessment works on the basis of costing various options relating to what a future inspection regime would look like. Indeed, there are or could be choices, as we have heard, about that inspection regime, which is, after all, at the heart of the Bill. How are we going to replicate in the closest possible detail the inspection arrangements that franked our probity as a nuclear nation in international agreements on non-proliferation and nuclear safeguarding? We have been signed up to those arrangements all these years, but we have hitherto engaged with them through the agency of Euratom, rather than independently. As we know, duties in relation to safeguarding ultimately end in agreements made between nuclear states and the International Atomic Energy Agency.
The inspection regime we envisage for the future could vary, because the level of inspection—such as the number of inspections and the depth of inspection needed to satisfy the minimum criteria of the IAEA—could be at a lower level than we have been used to under the Euratom regime. We might envisage a bronze standard inspection regime whereby we scrape by in our future relationship with the IAEA, or we could ensure that the inspection regime, overseen by the ONR, will be as good and as thorough as that carried out by Euratom inspectors in the past. As the impact assessment says, that would be marginally more expensive.
I am pleased that the latter option is strongly advocated in the impact assessment, because it seems to me that we should not seek in future to get by on the lowest level we can get away with. Instead, we should assure ourselves of our own integrity on the matter, and assure others likewise—both the IAEA and the countries with which we will be making bilateral agreements—that we are doing it absolutely properly. That will entail seeking to continue with inspections at the high level laid down in Euratom’s arrangements. That is what amendment 1 is about. It is designed to place in the Bill exactly what the impact assessment states we should do—to ensure that we will go forward at that level.
The Minister may well say—I hope he does—that we are committed to maintaining that level of inspection regardless of whether it is written in the Bill. But there is a problem with that: when we go independent, will we have the resources to carry out inspections to that level, or will we need an extended period in which we are allowed to scrape by with the minimum, because that is all we will be able to do?
At the beginning of the Bill Committee we heard from an excellent witness, Dr Golshan, the deputy chief inspector at the ONR. She gave us a fairly stark statement of reality, which members of the Committee have shared this afternoon. Those hon. Members will all recall Dr Golshan indicating clearly that when we leave Euratom,
“we will not be able to replicate Euratom standards on day one.”––[Official Report, Nuclear Safeguards Public Bill Committee, 31 October 2017; c. 7, Q9.]
In amendment 1, we set out an aim for the Bill: that we cleave to the Euratom standards as soon as possible and assure ourselves that we have the resources to do so.
There is a wider context. What resources will the ONR have to enable it to carry out the substantial new tasks that we set it in this legislation? The ONR is mainly funded through charges to the nuclear industry. That is how it generally recovers the money for its operations, but it also receives some grant funding. Essentially, that funding pays for the nuclear safeguarding work, while the charges on the nuclear industry pay for the ONR’s other functions, which are not the subject of this Bill.
That distinction is important, because the Government intend to halve the grant to the ONR in the period to 2020. At the outset of the negotiations, we face the prospect of the ONR being able to do less work than it does at the moment. If it is to continue to do as much as it does now, it will probably have to levy substantially higher charges on the industry to make up for the loss of the grant up to 2020. At the same time, if the Bill progresses, we are plainly saying that the ONR will have to undertake a whole lot of new work that it has not budgeted for, that has not been in its terms of reference for a long time and that will clearly require a lot more resource. As we heard in oral evidence to the Committee, that is no mean amount of additional work for the ONR to undertake.
To enable it to carry out all its functions, Euratom employs about 160 staff, 25%—or 40—of whom focus on UK installations. One can reasonably assume that the ONR would have to add a similar number of people to its complement of staff if it were to take on the work done by Euratom on nuclear safeguarding. The safeguards unit in the ONR comprises eight professional staff. Between now and March 2019, therefore, the ONR will have to find roughly 32 staff—qualified, highly skilled and trained nuclear inspectors—from somewhere to take over that responsibility. That is in addition to all the other things that the ONR will have to put in place, such as IT systems and administration resources, to allow it to take on that role.
Another excellent witness who contributed to our proceedings in Committee was Sue Ferns, from the union Prospect. She stated that training safeguards inspectors could take up to five years. We are faced with the prospect of needing 32 such people within 18 months. She said, of the role of an inspector:
“This is a warranted role; this is not just working in the industry. It is not just about knowledge, but experience and commanding the confidence of the companies and the organisations that you deal with, so there are very specific aspects to that role.”––[Official Report, Nuclear Safeguards Public Bill Committee, 31 October 2017; c. 35, Q69.]
She also alluded to the relatively small pool in which we are fishing. Not only do we have to fish in the pool, but we have to do so accurately, and we have to attract a good proportion of those people if we are to fill the gap. Consequently, she put a considerable question mark against whether it is possible for the ONR to be ready, as we would like it to be, for the tasks that we are going to give it.
I accept that a number of people in the nuclear industry have many of the qualities that could make them nuclear inspectors—indeed, as the hon. Member for Copeland (Trudy Harrison) said in Committee, there are many such people in the industry—so it may not be necessary to fully train everybody for five years. Nevertheless, it will be a very steep cliff to climb to get those 32 inspectors, at least, in place for whenever we take over inspections from Euratom. I sincerely hope, as I am sure all Members do, that those matters can be resolved. It may be a question of making sure that the ONR is funded to the extent that it can properly undertake that activity of fishing in a small pool—perhaps, as I mentioned in Committee, with pound notes attached to the end of its fishing line.
Stephen Kerr
I begin by paying tribute to the hon. Member for Southampton, Test (Dr Whitehead). I still consider myself to be a relatively new Member, but I had the privilege to serve on the Public Bill Committee. It was a masterclass in how to oppose constructively, so I pay tribute to him and the skillset that he undoubtedly brings to his portfolio and to the added value that he brings to the legislative process. I am glad to say that because it is meant genuinely and sincerely. I understand from his comments that he will not press amendment 6 to a vote. On amendment 1, however, we have heard it repeated ad nauseam that there will be no reduction in or diminution of standards for the inspection criteria on nuclear safeguards. I am disposed to believe these commitments, which have been given in all manner of forums and contexts.
Amendment 4 deals with the allocation of resources to ensure that the ONR can meet its extra responsibilities for nuclear safeguarding in the UK. I believe, having listened to the Minister’s undertakings and to the witnesses from the ONR both in Committee and before the BEIS Select Committee, that there is more than adequate evidence of the Government’s commitment to ensuring that the inspectorate is appropriately resourced and has the required staffing levels and so forth.
Trudy Harrison
Does my hon. Friend know that the ONR has already begun the process of recruiting safeguarding inspectors?
Stephen Kerr
I am grateful for that information.
One of the many highlights of the first three months I have enjoyed as a member of the Select Committee was our visit to the Hinkley Point C project, an immensely impressive project that I would encourage Members on both sides to witness. It is an incredible undertaking—nothing short of a feat of modern engineering—and something we should all take great pride in. I was disappointed to hear the rather flippant comments about it from the hon. Member for Inverness, Nairn, Badenoch and Strathspey (Drew Hendry). It is a vital strategic project that will safeguard our nuclear security, so it was disappointing to hear him dismiss it, although I understand that SNP Members, as committed nationalists, are against all things nuclear, which is much to be regretted, particularly from a Scottish viewpoint.
One of the highlights of the trip was our visit to Bridgwater and Taunton College to see the partnering there on nuclear skills, whether nuclear construction or engineering. It was immensely encouraging to see so many young workers—men and women—preparing through apprenticeships for a career in nuclear. One of the most upsetting things about hearing Members speak negatively about such a vital and strategically important industry is the impact it has on young people. We had an excellent debate in the House just over a week ago on space. We talked about the space programme in the UK being recognised and understood—we learned it was worth about £16 billion and that 6% of the global spend on space was in the UK—and what a spaceport in Scotland, in Ayrshire, would do to excite the imaginations of our young men and women in relation to the possibilities of a career in that area.
The same is true of nuclear. We need young men and women to see nuclear as a viable career, and there, at Bridgwater and Taunton College, we saw the evidence of the investment in skills and capabilities that is essential for the future of the UK’s nuclear industry. There are very exciting career prospects for those who commit themselves to a career in the nuclear industry, and that is to be encouraged; we need those skills. I am confident that the immediate provisions are being made, in the short term but also in the intermediate term, to ensure that those skills and capabilities will exist, and we shall be able to staff the ONR with an inspectorate and all the other skilled specialists we will need over time, although, on the basis of the evidence we received, I admit that that would not be completely in place by the date of departure.
Drew Hendry
I am delighted to have given the hon. Gentleman so much material today. He seems to be fascinated by my words. He will concede, however, that I was talking in the context of our being foolish and reckless enough to leave both the EU and Euratom.
Stephen Kerr
That is interesting editing. I cannot recall word for word exactly what was said before and immediately after what the hon. Gentleman said, but I think that I clearly heard him say that it was possible, in these new circumstances, to negotiate new arrangements. We must indeed accept that we will need new arrangements, and that they will need to be negotiated. As was said earlier, we cannot take something like associate membership off the shelf—I think Members will have to accept that such an arrangement does not currently exist—but I agree with him that anything is negotiable. I come from a background of sales negotiation, and that was one of the mantras by which we lived: “everything is negotiable”.
I think that when wise adult heads are brought to bear, definite win-win outcomes are possible, as they are in the context of the Bill and its subject matter. I hope very much that the Government will use their powers under the European Union (Withdrawal) Bill and the powers that this Bill will confer on them to bring the appropriate measures to life at the right time, so that we can secure the continuity and the prosperity of the UK’s nuclear energy business.
Drew Hendry
As we have heard many times, and as the evidence has borne out, the industry is clearly desperate for the standards that we currently enjoy through Euratom to be maintained. We have heard time and again that the industry would prefer us to remain in Euratom or to have associate membership, but if that does not happen, which seems to be the direction in which we are going today, it has said that it would like the new standards to be the same as those of Euratom.
It is vital for us to secure a commitment that the UK agency will be able not only to cope with the new work but to obtain the necessary resources, at the levels that are required through Euratom. However, as I said earlier, I do not believe that that is achievable, given the challenges. Crucially, there are still not enough people with enough experience. No matter how much the hon. Member for Stirling (Stephen Kerr) wants to persuade children that science is a good idea, I do not think we have yet found a way to compress five years into two, and it will not be possible in that period to gain the experience nuclear inspectors require.
Two requirements still need to be met: one is for complete transparency in the process, so that those who have expressed concern and the industry can know what is happening; the other is, through the amendments, to get a guarantee that arrangements will be in place that ensure that nuclear safeguards are operated to the same standards as now. I am anti-nuclear and proud that my party is, too, but we have to protect people’s interests where the nuclear industry is concerned. Too many of us in the highlands remember the mess left at Dounreay. Anyone who wants to know what can go wrong in the nuclear industry should go up there and learn about what was left on the beaches and the radioactive material moved about in welly boots because the equipment had rusted, before the correct standards were put in place through Euratom.
Mr Vaizey
I cannot support the amendments, although I have a great deal of sympathy with the position set out by the hon. Member for Southampton, Test (Dr Whitehead). The amendment I tabled with colleagues from both sides of the House to the European Union (Withdrawal) Bill sought to ensure that the Government consulted fully on implementing a Euratom-like regime after we left, so I understand why he has tabled amendments to ensure that the Government are transparent in their dealings. I did not press my amendment to a vote because the Secretary of State and his very able Minister were clear about their responsibilities to keep the House informed about the arrangements being put in place to replicate what we have in Euratom; indeed, they published a written statement shortly after that debate and before the debate on Report, and they have committed to come to the House quarterly to make clear the progress being made. None the less, as I say, I have a great deal of sympathy for the Opposition’s argument.
I support the Bill because it puts in place some of the structures we will need to replace the arrangements we had as a member of Euratom. I have listened to much of the debate and heard some fine speeches, but however brilliant the speeches, I cannot help thinking that the entire debate takes place in a slightly Alice in Wonderland world. Over many months, I have made no secret of the fact that it is a source of deep and profound frustration for me and many colleagues that we are leaving Euratom. As I said in an intervention, we are leaving Euratom on a technicality. I urge any colleagues who are passionate about Brexit and the apparent freedom and greatness that it will bring back to this country not to try to wrap Euratom up in that thesis.
Euratom is a treaty that works extremely well. The UK is one of the world’s leading civil nuclear powers. Our industry is highly respected and essential to the development not only of current nuclear power, but of nuclear fusion, which is where my interest comes in, owing to the research institute at Culham. Under the Bill, we will engage over the next 18 months in a simple exercise of replicating almost as exactly as we can the arrangements we now enjoy under Euratom. We are not taking back control. We are not regaining sovereignty. We are not going out into the world as a global power. We are simply going to replicate perfectly serviceable arrangements that already exist, and we are doing so on a technicality. I am not making any particular criticism. This is simply an observation of the collateral damage that Brexit has caused to a particular sector. It will be expensive and time-consuming.
As I have said, I wanted to speak to the amendments to make it clear why I was not supporting them and to take the opportunity to thank Secretary of State and the Minister for all their work. They have been candid and open with me and the Chairman of the BEIS Committee and with other concerned hon. Members on both sides of the House about the work they are doing to try to limit any damage to our nuclear industry. They really have worked tirelessly on this issue. From my perspective—other Members might not agree—I think that they have listened and taken on board our concerns.
Antoinette Sandbach (Eddisbury) (Con)
Does my right hon. Friend agree that, if there were an opportunity for us to seek some sort of associate membership of Euratom once we have left, we should attempt to do that? That would minimise the cost to the UK taxpayer, unlike having to completely replicate the regime over here. I also echo his thanks to the Secretary of State and his ministerial team for the way in which they have approached this matter.
Mr Vaizey
I understand what my hon. Friend is seeking, but the point has already been made that there is in effect no real associate membership of Euratom at the moment. Ukraine and Switzerland have what is described as associate membership, but it is certainly nowhere close to the kind of arrangements that we have with Euratom now. The Government intend to have as close a relationship as possible with Euratom, whether we call it associate membership or anything else, and we will have to put in place our agreements with the other nuclear states with which we currently enjoy a relationship under Euratom—notably Australia, Canada, Japan and the United States of America. That work is under way, although the timing of the implementation of those agreements is unfortunately not in our gift. It is in the gift of other legislatures that might not be as efficient as this august legislature, but I know that we want to replicate those agreements.
I am particularly pleased that the Prime Minister did not follow the example of Watford, the football team of my hon. Friend the Minister, and change the manager unnecessarily in the past two weeks. I am extremely pleased that he remains in his place scoring goals for the nuclear industry, and I look forward to co-operating with him for many years to come.
Madam Deputy Speaker (Mrs Eleanor Laing)
Does no one else wish to speak? I call the Minister.
Richard Harrington
I am as speechless as you are on this occasion, Madam Deputy Speaker. Maybe hon. Members on both sides of the House said all that they wanted to say on the first group of amendments. I was also speechless at the compliments that have been paid to me very justifiably—[Laughter.] The compliments were justifiable in the case of the Secretary of State, although they were rather exaggerated in my case. I do hope that the Hansard reporters can sort out my language on that; otherwise the Watford Observer will be interested not just in the comments on the Watford football team’s change of management but in what could be distortions of what I have just said about the compliments paid to the Secretary of State.
I should like to move on. I seriously thank hon. Members for their amendments in this group. They address a range of practical issues around the Bill and the implementation of the nuclear safeguards regime. I shall turn first to amendment 1, which is a very good place to start, as the famous song says. It is important that we have made a commitment to this effect on several occasions. As I have said, and as the Secretary of State has said in his written statement, the Government are committed to ensuring that the new regime
“is as comprehensive and robust as that currently provided by Euratom.”
It will not be a light version of it.
On inspections, the Nuclear Safeguards Bill is the essential first step in setting up a domestic nuclear safeguards regime. The detail of the regime, including further details in respect of the powers for safeguard inspectors, will be provided in the regulations that underpin the Bill. The pre-consultation draft regulations that were published on Friday provided details of the ONR’s role in respect of nuclear safeguards, and it is important to note that the inspections only form one part of the overall safeguard regime.
Drew Hendry
I am grateful to the Minister for pointing that out, but can he give us an indication of what proportion of experienced staff, versus trainees, he intends to have within two years?
Richard Harrington
I am afraid I cannot give the hon. Gentleman that information, not because I do not want to give it to him, but because I do not want inadvertently to mislead him. If I may, I will drop him a line over the next couple of days with the exact information, as I have just done on the number of people recruited to date, as mentioned in the first group of amendments—I think the figure was 11. I do not want to give a rough estimate on such an important question.
The recruitment campaign has been launched and will continue throughout this year.
I will briefly address the issue of timing, not of this speech, but of the assessment of readiness to implement a domestic safeguards regime on withdrawal, because it has been raised by several hon. Members. I have made it clear on several occasions that the Government are committed to establishing a robust domestic nuclear safeguards regime of a standard broadly equivalent to Euratom standards in order to retain public and trading partner confidence in the nuclear industry, about which we are very proud. We are working closely with the ONR to ensure it will be in a position to regulate this new regime.
Based on current progress, I believe we will be in a position to deliver a domestic regime to international standards by March 2019, if required, and that such a regime will be able to satisfy the International Atomic Energy Agency and our international trading partners.
John Woodcock
I listened carefully to what the Minister has just said, and he seems to be setting up the UK to follow a minimum of the IAEA standards, and not necessarily the higher Euratom standards. Is that the case?
Richard Harrington
No. I do not accept the hon. Gentleman’s version of what I have said. We want a Rolls-Royce standard, the best possible standard we can have.
The negotiations on implementation are due to begin in the spring and, as hon. Members know, we will be reporting to the House regularly on progress.
Let me turn to the Henry VIII power. The hon. Member for Southampton, Test (Dr Whitehead) has mentioned his dislike for Henry VIII powers. This is a tiny Henry VIII power—a Henry VIII who has been on a diet for a long time—that is limited to amending references in the Nuclear Safeguards and Electricity (Finance) Act 1978, the Nuclear Safeguards Act 2000 and the Nuclear Safeguards (Notification) Regulations 2004 in order to accommodate safeguards agreements with the IAEA. Those amended references will enable the IAEA to carry out its activities in the UK, including by providing legal cover for the UK activities of its inspectors. We have to be able to update that legislation so that it contains the correct references for new safeguards arrangements with the IAEA, which have not yet been made but will be in the near future. Without amendment, the existing provisions will become ineffective when the current agreements no longer apply, which would leave us in breach of any new international safeguards regime.
The detailed amendments will not be known until the agreements are in place, so the power that we are asking for is essential if we are to ensure that the UK has a safeguards regime that complies with its future international obligations when Euratom’s safeguards arrangements no longer apply. It is a very narrow power and I do not think that it is relevant to the general discussions that the House has had on Henry VIII powers. I hope that Members on both sides of the House are satisfied and that they will not seek to press their amendments.
Dr Whitehead
I have listened carefully to the Minister this afternoon and would like to thank him for the constructive way he took the Bill through Committee. My personal view is that that is how we should legislate in practice. He has played a substantial part in making the process as good as it could be. However, just as I do not blame him personally for the fact that his football team recently scored a completely illegal goal—it was hand-balled—against my team and deprived it of two points, I do not blame him for the way the Bill has been constructed. He has attempted to justify parts of it that he is unable to amend, but nevertheless their construction, in my view, remains deeply unsatisfactory.
I am happy to withdraw amendment 1 and not to press the amendments that relate to the staffing and funding of the ONS—the Secretary of State has committed himself to reporting quarterly on progress with Euratom, which was the subject of one of our amendments in Committee, for which I am grateful—but I will press amendment 5 to a vote, because it relates to the Henry VIII clauses, which are a fundamental defect in the structure of the Bill. We wish to put it on the record that we would not wish such arrangements to be proceeded with under other circumstances. I beg to ask leave to withdraw amendment 1.
Amendment, by leave, withdrawn.
Clause 2
Power to amend legislation relating to nuclear safeguards
Amendment proposed: 5, page 4, line 13, at end insert—
‘(1A) The Secretary of State may only exercise powers under this section at the point at which amendment of any of the legislation in subsection (1) becomes necessary in order to complete the process of transposition of responsibility for nuclear safeguarding from EURATOM to the Office for Nuclear Regulation, and for no other purpose.
(1B) Upon exercising the power set out in subsection (1), the Secretary of State shall lay before both Houses of Parliament a report on the operation of the power.”—(Dr Whitehead.)
This amendment would limit circumstances under which the Secretary of State may exercise certain powers in this section and requires a report to be laid before Parliament.
Question put, That the amendment be made.
The Secretary of State for Business, Energy and Industrial Strategy (Greg Clark)
I beg to move, That the Bill be now read the Third time.
May I begin by thanking right hon. and hon. Members on both sides of the House for their constructive contributions during the Bill’s parliamentary stages to date? I thank everyone who has worked on it, including those who served on the Bill Committee, the House authorities, the experts who gave oral evidence in Committee, my indefatigable officials, who have worked very hard and effectively on the Bill, and the organisations that took the time to provide expert written evidence.
May I also thank and commend the Under-Secretary of State for Business, Energy and Industrial Strategy, my hon. Friend the Member for Watford (Richard Harrington), for his skill and application in steering the Bill through the House? There is no need for him to sing his own praises; they should be sung loudly and clearly from this Front Bench, and I think that that sentiment is shared by Members on both sides of the House.
May I also join in the commendation of the efforts of the hon. Members for Southampton, Test (Dr Whitehead) and for Sheffield Central (Paul Blomfield), who have been thoughtful and insightful, and who helped to improve the Bill during the Committee stage? As my hon. Friend the Minister said, they have applied the principles of constructive opposition to their scrutiny of this very important Bill, and that has helped to bring it to this stage in our proceedings.
Let me briefly remind the House why the Bill is so necessary and firmly in the national interest. The nuclear sector is not only important to the future of energy in this country, but has important applications in research and industry. My Department has been working very closely with the industry to make sure that our shared interests are reflected in arrangements as we leave Euratom. The Bill helps to provide the required certainty and clarity to support our ambitions.
As I said on Second Reading, the Bill ensures that when the United Kingdom is no longer a member of Euratom, we will have in place a legal framework that enables us to establish a domestic nuclear safeguards regime that meets international nuclear safeguards and non-proliferation standards. Nuclear safeguards, as the House now well knows, are the reporting and verification processes that nuclear states use to demonstrate to the international community that civil nuclear material is not diverted into military or weapons programmes. The Bill ensures that the United Kingdom can put in place the regime to enable the Office for Nuclear Regulation to oversee nuclear safeguards following withdrawal from Euratom.
To ensure continued international verification and oversight of our safeguards, we are, as my hon. Friend the Minister made clear throughout our proceedings, in discussions with the International Atomic Energy Agency to agree replacement voluntary safeguards agreements that reflect the UK’s withdrawal from Euratom. The Bill gives us the ability to implement those new safeguards and the domestic regime that underpins them.
John Woodcock
Following the Minister’s earlier answer, I was not entirely clear whether the Government are committed to Euratom standards from day one of this new regime, or looking at the de minimis of the International Atomic Energy Agency?
Greg Clark
We have been very clear. We see no problem with the standards that have obtained in Euratom, so our aim is to have complete continuity with those standards. I hope that the hon. Gentleman welcomes that.
Our intention is that the new regime should reflect the high standards that we expect. We want to establish a robust regime that provides coverage and effectiveness equivalent to that currently provided by Euratom. That is our objective. It is clear that we need continuity and that we must work to avoid any break in our civil nuclear safeguards regime if we want to continue the success and prosperity of our industry.
As has been evidenced in today’s proceedings, we have listened to concerns raised throughout the passage of the Bill in the House. In the context of both this Bill and the EU (Withdrawal) Bill, we responded to a number of questions by publishing on 11 January a written statement that outlines the Government’s strategy and objectives in relation to Euratom. Our strategy is twofold: first, to seek through our negotiations with the European Commission a close association with Euratom; and, secondly and simultaneously, to put in place all necessary measures to ensure that the UK can operate as an independent and responsible nuclear state from day one.
After hearing the concerns raised in Committee by the hon. Member for Southampton, Test and the hon. Member for Sheffield Central about enhancing parliamentary scrutiny, I have made a commitment to report back to Parliament every three months by way of further written statements about overall progress on Euratom, including in respect of negotiations. As we indicated in Committee, we remain committed to the open and transparent approach that has characterised our discussions on the Bill so far, including when we developed the regulations that set out the detail of the domestic civil nuclear safeguards regime.
In response to various amendments tabled in Committee, we have committed to continuing dialogue with the industry, the devolved Administrations and civil society. A series of stakeholder events and workshops will take place, in addition to the public consultation on the regulations that we intend will take place later in the year. Working closely with the ONR, we are in the process of producing two sets of draft regulations. In response to suggestions in Committee that the House would benefit from early scrutiny of the regulations, a pre-consultation draft of the regulations, with an explanatory covering note, was provided to Parliament, as the hon. Member for Southampton, Test said. The draft regulations will go through a full consultation so that they can be exhaustively examined, so we expect them to continue to evolve in response to comment from, and consideration by, stakeholders and, of course, Parliament itself. We make a commitment to work with Members on both sides of the House and people outside Parliament to make sure that the regulations reflect the best possible advice.
The swift progress of the Bill, and the supportive discussions in the House about it, have aided our negotiations with the EU, the IAEA and third countries. We have already held several rounds of discussions on Euratom issues in the first phase of the negotiations with the EU, and there has been good progress. Negotiations with the IAEA on future voluntary agreements for the application of civil nuclear safeguards have also been constructive, and substantial progress has been made. It is expected that these new agreements will be put to the IAEA board of governors for ratification later this year. Negotiations on nuclear co-operation agreements have also proceeded significantly. In particular, constructive progress has already been made in negotiations with key partners, such as the United States, Canada, Australia and Japan.
In the light of all this, I am grateful to the House for the scrutiny it has given to the Bill and the expert eye it has cast over it. The broad cross-party consensus that we have seen sends an important signal to our international partners that the United Kingdom will absolutely remain a leading and responsible nuclear state. It allows us to reassure the United Kingdom’s very important nuclear industry and the nuclear research community that we absolutely remain committed to supporting them to maintain the United Kingdom’s status as a world leader. Taking early action to have ready a domestic civil nuclear safeguards regime is both responsible and in the national interest, and I therefore commend the Bill to the House.
Rebecca Long Bailey (Salford and Eccles) (Lab)
This is an important and necessary Bill, as the Secretary of State confirmed, to ensure that a contingency is available should the Government’s negotiations with the European Union and Euratom fail. That was why we did not oppose it on Second Reading, and it is why we will not oppose it on Third Reading tonight.
That does not mean, however, that we do not continue to have concerns about the Government’s approach and about whether there was any necessity at all for the Bill. On Second Reading, I made the case that it should be possible—or would have been possible—to retain the UK’s membership, or to secure a close association with Euratom that would allow the continuation of nuclear safeguarding. The Opposition still think that continued membership of Euratom or a close associate status is both achievable and necessary for the most efficient continued working of a whole raft of procedures relating to the nuclear industry, not just to safeguarding.
I am pleased that the Government seem to have acknowledged that negotiating a close association would be the best outcome for our nuclear industry and that Bill does not constitute a replacement for all Euratom’s functions. The Secretary of State’s written statement on 11 January set out that the Government’s strategy was to
“seek a close association with Euratom and to include Euratom in any implementation period negotiated as part of our wider exit discussions”.
It went on to say that the
“exact nature of the period will be subject to forthcoming negotiations”.—[Official Report, 11 January 2018; Vol. 634, c. 9-10WS.]
Given that statement, I wonder why the Government did not accept a number of Labour’s proposals: new clause 1, which would simply have asked the Secretary of State to “seek to secure” a transition period during which the UK could secure an association with Euratom, or indeed build any domestic capability; and new clause 2, which would have established that the provisions of the Bill are contingency arrangements if it proves impossible to establish an association with Euratom.
I point out that we could have been more legally robust in our language, especially in new clause 1. We could, for example, have used the words “best endeavours”, but we appreciate the issues that the Secretary of State faces and would have given him the opportunity simply of saying that he would try to secure a transitional period. We are sad that new clause 1 was not accepted today, but none the less I appreciate that the Secretary of State has listened somewhat to Labour’s concerns and promised to report back every three months about overall progress on Euratom in the EU negotiations. As three months from the first statement will be 11 April, which is in the middle of the Easter recess, I look forward to receiving an update on 29 March.
My Front-Bench colleagues have argued that a transitional agreement is vital if we are to ensure that the UK is physically able to provide a functioning domestic safeguarding regime. The evidence taken by the Public Bill Committee highlighted that particular concern of the industry. Dr Golshan of the ONR said:
“given our membership of Euratom, it has not been necessary for the UK and ONR to build capacity and resilience in this area.”
She added:
“a transitional arrangement will be extremely helpful.”
That is not least because the training of inspectors takes several years, as outlined by the representatives of Prospect and Unite the union. Indeed, when she was asked about training, Dr Golshan said:
“We have started that process, but it is a long road and I am not going to sit here and pretend that it is all going to be a smooth run.”––[Official Report, Nuclear Safeguards Public Bill Committee, 31 October 2017; c. 5-9, Q3, 8 and 16.]
We have ongoing concerns about the timely replacement of inspectors, so we urge Ministers to agree a transitional arrangement to prevent full obligations from being placed on an unready ONR. The Government did not see fit to accept amendment 4, which would have required the Secretary of State to declare that the ONR had the resources necessary to take on extra responsibilities for nuclear safeguarding in the UK, but I hope they will listen to this plea.
I will say a little word on the powers that the Bill will hand to the Government—the very small Henry VIII provisions, as they were referred to previously. The Minister did not see fit to accept our amendments that attempted to curtail the executive powers conferred by the Bill, but he promised to publish regulations ahead of Report. He did indeed publish those regulations, but not until Friday afternoon—beyond the deadline to table any further amendments to the Bill. I would just like to put on record that although I welcome the publication of the regulations, the timing was rather cheeky and not altogether in the spirit of the constructive approach that both sides have taken to the Bill.
I associate myself with the words of the Secretary of State in thanking all who have spoken throughout our consideration of the Bill, as well as all members of the Public Bill Committee. I want to thank the Front-Bench teams, including the Secretary of State and the Minister. I think it is fair to say that they have been in listening mode. I especially thank my Labour colleagues, not least my hon. Friend the Member for Southampton, Test (Dr Whitehead), who have worked diligently on the finer details of all things relating to nuclear safeguarding. Finally, I want to thank the Public Bill Office and the Clerks for all their tremendous support, as ever.
James Heappey
I sense that the Bill is accelerating towards the other place, so I will not speak for long. I congratulate Front Benchers on both sides of the House and all who have spoken in our debates. As with so many debates on energy in this place, there has been broad consensus, with disagreement about small details around the edges. It is pleasing to be part of such a constructive approach to an important area of policy without partisan divides getting in the way, as they sometimes do in other areas of policy.
The nuclear industry has cultivated a small but perfectly formed and enthusiastic band of representatives in this place. Colleagues on both sides of the House have enjoyed the industry’s hospitality and benefited from its briefing in order that we might understand the issue, which is important for the industry, and have scrutinised the legislation in the House to ensure that it meets the industry’s aims.
I am glad that the Bill has not been amended today, because I think it does exactly what it should be doing in the first place. It is vital that we maintain the safeguards and reputation of the nuclear industry. It is an industry in which even the smallest mistake is unacceptable, and we in this country have a fine reputation for delivering almost immaculate standards of safety, so it is right that Members on both sides of the House want to be reassured that, when dealing with the important issue of our membership of Euratom, absolutely no compromises are made over safeguarding and the safety of the industry.
The Government have been clear, as has the EU, that the treaties of the EU and Euratom are so intertwined that it is impossible to remain a member of Euratom while leaving the EU. Some Opposition Members, who are no longer in their places, made the point earlier that we should at least seek to remain in Euratom. I do not disagree—I think that would be the best possible outcome—but what I do disagree with is the idea that, in amending the Bill to secure that commitment, we should take a bit of a long shot on what has been unachievable for many other countries that are not within the EU, at the cost of providing the industry with what it has been so clear with us that it wants. I am glad that we have not done that, and I have every confidence that the Secretary of State and his team will seek, if not full membership, the closest possible thing to it that is allowable while meeting the terms of our wider Brexit ambitions. I am also glad that, since I spoke on Second Reading, when there was a great deal of rather unfortunate debate about things such as medical isotopes, such fake news has disappeared from the debate and we are all now much clearer about what the Bill does and does not impact on.
The nuclear industry is of huge importance to this country and my constituency. My hon. Friend the Member for North East Hampshire (Mr Jayawardena), in his lengthy remarks earlier, mentioned the importance of nuclear to our energy mix. He is not in the Chamber to hear the answer to his question, but I believe that about 25% of our energy needs today are provided by nuclear, either within the United Kingdom or through our interconnection with France. That is an important contribution, and until we can fully unlock the potential of energy storage, demand response and other flexibility measures, that provision of base-load is absolutely essential to the industrial powerhouse of our nation, so we should support the industry.
We must also ensure—this is the one constituency point I want to cheekily make on Third Reading, Madam Deputy Speaker—that the industrial opportunity of the new nuclear programme genuinely benefits the places in which that nuclear fleet is being built. We must ensure that not just things such as catering companies, accommodation and transport, but meaningful engineering, technology and high skills-based industries, are included in the supply chain for the construction of the new nuclear fleet. Somerset needs more than a fantastic caterer as a legacy of the construction of Hinkley.
The only other point that has come out today that needs to be underlined is that the chairwoman of the Business, Energy and Industrial Strategy Committee and other Opposition Members said that there was some debate about whether the ONR would be ready on day one to deliver the standards that Euratom has required of our industry. My response to their concern is not that we should legislate to mitigate the threat, but that we should encourage those on the Front Bench to lean on the ONR and support it in every way possible to ensure that it has the capacity to deliver such safeguarding on the first day of its responsibilities.
That is all that I wish to say, apart from congratulating Ministers on their stewardship of the Bill. The Secretary of State, who I am delighted is still in the Chamber, the Minister for Energy and Clean Growth and the Under-Secretary are enthusiastic fellow travellers on our route to a zero-carbon energy system. I am glad that they have brought this important piece of legislation through the House, and I am glad that it will not be opposed on Third Reading. I look forward to working with Front Benchers and colleagues on both sides of the House on other energy policy Bills in the future.
Drew Hendry
If power over these issues, as they affect Scotland, were in the purview of the Scottish Parliament, I am certain that Scotland would be staying within Euratom. However, here we are, and this Bill is going through this House. The Minister knows that I respect him on this issue; he has tried to engage with me very positively, and I thank him for doing that.
I would like to say that the Government and the Secretary of State have written in some checks, but I see no evidence of any. However, I do see hopes, promises and assurances. In the fullness of time, the Government will be judged on what happens to nuclear safeguards when their agency is set up and on how well it performs. For the sake of the industry, the safeguards and the people involved in it, I hope that it is a success.
Trudy Harrison
The Bill is absolutely essential to the nuclear industry. Without it, after we leave the European Union, our nuclear industry would collapse. As I said earlier, it would be economically crushing not to have a safeguards regime in place. That would have catastrophic implications for every part of the country, which would be felt across the whole sector.
Following the construction and successful commissioning of the world’s first nuclear power station—Calder Hall, in my constituency, back in 1957—Euratom was formed by the Euratom treaty. It was as important then as it is now to apply civil nuclear safeguards in the UK. The UK has committed, as a member of the International Atomic Energy Agency, to have nuclear safeguards in place—a clear demonstration to the international community that civil nuclear material is used only for civil activities.
The Bill enables the UK to set up a domestic safeguards regime to meet our international commitments on safeguards and nuclear non-proliferation standards. Without the Bill, the movement of materials, fuel—including spent fuel—and components, and even the conversations about materials, fuel and components, could not take place.
Euratom provides the basis for the regulation of civilian nuclear activity in the UK, including fuel supply, waste management and co-operation between nuclear states. It implements a system of safeguards, controls the supply of fissile materials in Euratom member states, guarantees high safety standards and funds international research into nuclear fission and fusion. It is also critical for nuclear co-operation across the world.
In a community such as mine, where the income of 55% of the population depends directly or indirectly on work in the nuclear industry, and in our country, where more than 20% of energy is generated by nuclear power plants, not having measures in place as we leave the EU and Euratom would be unthinkable. An effective safeguards regime is necessary for Sellafield’s operations, for the low level waste repository’s business, for the national nuclear laboratory’s research and for the development of Moorside, the new-build nuclear power plant that is expected to be constructed adjacent to Sellafield. All of that is in Copeland.
I have visited 70-something businesses in my constituency, including large global operations now based in Copeland—some of the biggest names in international industry—and our many small and medium-sized enterprises to listen to their concerns and ambitions for the future. Each and every one is wholly dependent on being able to trade globally. Those businesses are not just critical to that sector, but integral to the socioeconomic fabric of daily life. Of the 1,020 apprenticeships that were started last year, the vast majority were in industry and engineering connected with our nuclear sector. But it goes further: those companies are proud, passionate parts of our society, donating to charities, supporting local organisations and providing enormous socioeconomic benefits. I am proud to say that tomorrow, Sellafield is sponsoring “A Taste of Cumbria” in the Jubilee Room here in Parliament, such is its commitment to its community and county.
I cannot emphasise sufficiently strongly how vital the Bill is for Copeland and Cumbria, and indeed for the whole country. I was delighted that the Government committed further to the Joint European Torus and the international thermonuclear experimental reactor projects. The Bill is equally necessary for research and development and for science and innovation.
Our nuclear industry is an international marketplace, which means that we need in place not only domestic regulations but bilateral agreements with countries such as the US, Japan, Kazakhstan and Canada—the list goes on. We cannot even begin to discuss bilateral agreements without there being a domestic safeguards regime in place. We need one to carry out decommissioning work across the country and to consider exporting the skills and products being developed. It is estimated that overseas reactor decommissioning will total £250 billion over coming decades, according to the Government’s “The UK’s Nuclear Future” document.
The Calder Hall reactor I referred to earlier now requires decommissioning. This is a fantastic opportunity for the sector not just to benefit from the skills and experience gained from decommissioning but to leverage wider UK, European and worldwide decommissioning. The iconic golf ball structure at Sellafield, the Windscale advanced gas-cooled reactor, was the prototype power reactor for the 14 EDF Energy AGRs, which currently supply about one fifth of the UK’s electricity. Its core heat exchangers and associated equipment have all been safely decommissioned and removed, thanks to Government-funded projects, demonstrating that a power reactor can be successfully decommissioned.
I hope that Calder Hall can be decommissioned as a priority and a new breed of small modular reactors installed in its place to ensure that we are at the forefront of nuclear technological developments once again. Small modular reactors and advanced modular reactors offer the chance for UK nuclear expertise and manufacturing to lead the world, but we need the Bill to ensure that we are globally compliant with safeguarding, in addition to security and safety.
On the role of the ONR, it is important to understand the differences between safeguarding, security and safety, all of which are critical to the secure and compliant running of our civil nuclear industry. Currently, the ONR has responsibility for safety and oversees the civil nuclear constabulary with regard to security. Bringing responsibility for safeguarding under this one organisation would seem to bring benefits of shared knowledge and skills and combined experience. The ONR is an independent regulator that was made a statutory public body under the Energy Act 2013, which sets out its role, functions and powers.
International oversight will be a key part of the future regime, so I am pleased that the UK is seeking to conclude new arrangements with the IAEA. It is absolutely vital that the IAEA retain its right to inspect all civil nuclear facilities and continue to receive all current safeguards reporting. That will ensure that international verification of our safeguards activity continues to be robust. We must retain our reputation for excellence to ensure that companies in other countries, such as KEPCO in South Korea, which we anticipate will become the new owner of NuGen, want to do business with us.
Our country is a pioneer and global leader in this area and has an enviable safety record. The Centre of Nuclear Excellence in my constituency and all the businesses and livelihoods that are utterly reliant upon an effective safeguarding regime need this Bill. I hope that the UK will continue to play a leading role in the development of international nuclear security and safety standards, including through the IAEA, and I commend the Government’s work thus far. In particular, I would like to thank the Secretary of State, the Minister and his team for answering questions put to me by my community and businesses, including some that have trained up Euratom safeguards inspectors—such is the level of expertise in Copeland. I commend the Bill and I thank you, Madam Deputy Speaker, for the opportunity to speak.
Layla Moran
I find it hard to believe that we have finally got to this point, having attended every sitting on the Bill, apart from the Public Bill Committee. As a former physics teacher, I must say that it has been wonderful to hear so many Members talk about all things physics. That is always a pleasure.
The Liberal Democrats and I will, of course, be supporting the Bill, but I do have some questions that I hope the Minister will answer. I echo what has been said across the House about the constructive way in which the Bill has gone through. I appreciate that. As a relatively new Member, this is how I imagined Bills would pass—with lots of conversations, concessions and so forth—so I thank him for that.
It seems to me that the House has achieved broad consensus on most parts of the Bill, and that the Bill is necessary as a contingency measure. I am all for having a contingency planning mechanism to deal with matters that are out of our control, but I think it worth my saying again that we did not have to be in this position. We did not have to leave Euratom—or, at least, the legal case is still being contested. If the Government have been told otherwise and it is set in stone, I ask them to release the legal advice, which would put that argument to bed.
My constituents, many of whom work in the industry, are still crying out for certainty and clarity, but time is running out. I know that the Minister disagrees with the Liberal Democrats’ position of wishing to stay in Euratom, but I urge him to reconsider. So much about the Brexit process seems to be groupthink at its worst. We can still change our mind, but if we are not going to do that, we should at the very least make the crucial admission that this is about the red line of the European Court of Justice. That is the critical issue: that is the main red line that we are not allowed to cross. It was a choice, not a fact, that that was a consequence of the referendum.
If the Government cannot or will not change their mind, I am reassured by what the Secretary of State said in a written statement earlier this month about seeking the closest possible associate membership, and by his warm words about the Joint European Torus and the international thermonuclear experimental reactor—not least because those contracts will be worth billions to the UK over the next few decades and are vital to the local economy, particularly in the Abingdon area of my constituency. He also seeks
“open trade arrangements for nuclear goods”,
the ability to ensure that materials cross borders “without disruption”, and
“maintaining close…cooperation…on nuclear safety.”
It is true that Euratom does not directly govern the issue of radioisotopes, but the Minister will be well aware that I am still deeply concerned about the issue. The institution of “a” customs union, rather than “the” customs union, will put blocks at the border, and, because of the short half-lives involved, there will be disruption unless we are very clear about how we will mitigate it.
I look forward to the regular updates that the Minister has said he will give, but has he considered increasing their frequency, at least to begin with? One of my main concerns is that while the Brexit negotiations will continue until the start of next year, Austria will take over the presidency of Euratom very soon, and the heavy lifting really ought to be done before it takes the helm, because there will some problems for us. Will the Minister consider giving more frequent, earlier updates to let us know how the negotiations are going before Austria takes over? The issue is causing a huge amount of consternation throughout the industry, and throughout the House.
As the Minister knows, to ensure that the JET has a future we need to guarantee the 2018-19 work programme by the middle of this year. Again, I should like some updates on how we are to achieve that. It is not just about the money; it is also about ensuring that nuclear scientists have full access to the schemes in the future, not just in the next two years but in the next five and 10. We also need some assurances, albeit not from the Minister’s Department, about the movement of nuclear scientists. Those assurances are not yet written in stone, but this matters to the scientists, because they are extremely saleable.
I accept that the Bill is needed, because it is better for us to be safe than sorry, but I wish that we did not have to do this at all.
Maggie Throup (Erewash) (Con)
I congratulate the ministerial team on their successful navigation, which has allowed the Bill to reach this stage. It is a key piece of legislation that will safeguard Britain’s international reputation as a responsible nuclear state once we have left Euratom. I believe that there is potential for significant inward investment in the UK in the post-Brexit era. We heard from my hon. Friend the Member for Copeland (Trudy Harrison) about the impacts that the nuclear industry already has in this country, but I think that we can do more.
The Government have been clear throughout the passage of the Bill that they will work to establish a close and effective working relationship with Euratom once the UK leaves the organisation, including close association on matters such as research, training and trade. Ministers have made no secret of their ambitions for the nuclear sector, and I support those ambitions. We have an opportunity for some of the UK’s leading companies to be at the forefront of world-leading new nuclear technology.
During the Bill’s passage, Ministers have been consistent in reassuring the House that leaving Euratom in no way diminishes the UK’s nuclear ambition. The announcement by the Under-Secretary of State for Business, Energy and Industrial Strategy, my hon. Friend the Member for Watford (Richard Harrington), in December of a new £86 million fund to establish a national fusion technology platform demonstrates the Government’s continued commitment to nuclear research and development, which will be welcomed by a number of my constituents who work in the nuclear sector.
The launch of the small modular reactor competition in 2016 is another example of the importance the Government attach to the UK’s civil nuclear industry to provide a secure, clean and affordable source of domestic electricity that can also be exported overseas. The UK small modular reactor consortium, led by Rolls-Royce, estimates that the design, development and production of a fleet of small modular reactors would create up to 40,000 skilled nuclear supply chain jobs and add over £100 billion to our economy. As my hon. Friend the Member for Taunton Deane (Rebecca Pow) said, our young people need to know that there is a future in the industry; they need that certainty to start on their career pathway. As the centre of Rolls-Royce’s nuclear operation in the UK, Derby has the potential to become a world leader in new nuclear technology, with the potential benefits extending across the wider region, including to my constituency. I will therefore follow closely the progress of the small modular reactor competition in the coming weeks and months.
The Bill will strengthen the UK as an independent global nuclear power, reflecting the Government’s ambitions for the sector.
Rebecca Pow
I am pleased to follow my hon. Friend the Member for Erewash (Maggie Throup) and all other colleagues who have spoken today in what I am sure everyone agrees has been a fascinating cross-party discussion. I want to contribute to debate because the Bill deals with a crucial issue that affects every single one of us and the safety of our nation. Getting the agenda and the legal framework right as we take the historic step of exiting the EU is imperative, because leaving the EU means also leaving Euratom—the European Atomic Energy Community—the body that sets the nuclear safeguards regime.
The Bill gives us the tools to ensure that an effective nuclear safeguards regime is established, enabling us to continue to meet international standards for nuclear safety, while maintaining the UK’s reputation as a responsible nuclear state. I have raised the question how we cope with leaving Euratom since the start of the discussions on EU withdrawal, always stressing that leaving the EU must not result in a weakening of our nuclear safeguards, on which we all rely and which are instantly recognisable on the global stage. I have often referred to the matter in wider speeches on the environment, because it is all related to the environment and is so important to us all.
I am confident that the Government have made it clear that future nuclear safeguards arrangements will continue to provide the quality, safety and robustness provided under Euratom and that we will continue to co-operate on standards. Our domestic regime will meet our international commitments on safeguards and nuclear non-proliferation standards. It is clear that the amendments proposed today—I listened carefully to the speeches made—would add nothing and lead only to delay and even obfuscation, especially the amendments relating to the transition period and an association with Euratom, which, as many colleagues have pointed out, simply is not possible.
The ONR, which already regulates nuclear safety and security, is the obvious route. It is also important to keep legislation relating to nuclear safeguards updated as they change on the international stage. The Bill will give the Secretary of State powers to do just that by updating existing international agreements once new agreements are reached.
Our nuclear industry is second to none on the world stage. It has a fine reputation, which we must maintain. Our standards have been a major draw in attracting investors to the nuclear industry in this country. Obviously, I am going to cite the Hinkley Point example, with its Chinese investment. One of the reasons that the Chinese want to engage with us is that we have very high standards on nuclear. That shows us off well on the wider stage and reflects well on us. Hinkley Point is the largest development site in the whole of Europe. I liken it to a James Bond film set. It is absolutely unbelievable how huge the development is. It needs to be seen to be believed. In energy terms, the power station will deliver 7% of our baseload energy, and it is low carbon, which is exactly the kind of energy that we are promoting, alongside all the other renewables. It is a clean source of energy.
Hinkley Point is not in my constituency but adjacent to it, and it has a massive knock-on effect for the people in Taunton Deane, from managers to engineers and from bus drivers to the caterers mentioned by my hon. Friend the Member for Wells (James Heappey). Ultimately, 26,000 people will be employed on the site. The industry is spawning many other jobs and creating a whole generation of nuclear businesses. My hon. Friend the Member for Erewash mentioned that she had a similar situation in her constituency with her micro-nuclear plants.
The first nuclear degree is operating partly from University Centre Somerset, which is in Taunton in my constituency. It is sponsored by EDF and the Ministry of Defence. It is critical that the industry should grow and enable all the young people who are doing this training to have a future. That is why the Bill is so important. We need the right checks and balances, so that we can go forward into a really positive future and be a world-leading industry. In mirroring Euratom, we are going to regulate civilian nuclear activity in the UK, including fuel supply, waste management—mentioned by my hon. Friend the Member for Copeland (Trudy Harrison)—and co-operation between nuclear states, which will be essential. I am confident that, through the ONR, we will achieve that, as well as new agreements with the IAEA.
I want briefly to touch on the subject of radioisotopes, because it has been raised with me by constituents. I welcome the cross-party work that is going on to ensure that there is no interruption in the continuity of supply of radioisotopes as we exit the EU. The Government are rightly listening on this. There seems to have been a lot of scaremongering, which is frankly not helpful. On nuclear research, the UK is a world leader in promising nuclear fusion technologies and we must maintain that lead. We must have the arrangements that the Government are negotiating, so that we can continue to participate on the world stage and attract the right nuclear brains to this country. I fully support the Bill. Nuclear safety and security are issues that deserve the utmost attention, and I am sure that the Bill will achieve its aims and set the Rolls-Royce standards mentioned by the Minister. I am optimistic that we will get the right system in place to keep us all safe.
Stephen Kerr
I shall make just a few brief comments. I paid my compliments earlier to the hon. Member for Southampton, Test (Dr Whitehead), and I also want to pay tribute to the Minister, who has conducted the passage of this Bill with great aplomb, dignity and good humour. That has been much appreciated. Like the hon. Member for Oxford West and Abingdon (Layla Moran), I have attended all the debates on the Bill in the Chamber and in Committee. As a member of the Business, Energy and Industrial Strategy Committee, under the very able chairmanship of the hon. Member for Leeds West (Rachel Reeves), I have also had the benefit of attending several hearings at which we received evidence on this subject.
Leaving Euratom is actually a matter of some regret for me and probably for many Members on both sides of the House. I am not one of those people who supports the Government’s programme of leaving the European Union without appreciating that some aspects of being part of the EU have been intensely beneficial to the United Kingdom, and nuclear safeguarding is without question one of those areas. I therefore hope that Members will recognise that the Bill is a plan B in case we are unable to remain in some way associated with Euratom.
Euratom is at the heart of our nuclear industry and has not only the skills and expertise but the experience to be of service to our nuclear industry, which is a complex field. Nuclear energy is a vital part of our energy mix, offering baseload capacity for the energy market. As such, the Bill is vital to ensure that we meet our international obligations as we leave the EU. Although such things form a vital part of the reasoning behind safeguarding in this industry, it is not a luxury; nor is it simply a health and safety matter. Our international obligations under non-proliferation treaties make our leadership in this area as a world power a significant issue, and as a leader, the UK must meet its obligations. We secure the moral authority to stand up to rogue states and to nations that have a different view of non-proliferation through our safeguarding regime. We must not forget just how much safety concerns matter in this sector. The consequences of getting something wrong would have ramifications not only for us, but perhaps for generations to come. Having a strong safeguarding regime in place, which is what the Bill provides, is absolutely vital for the health and prosperity of the industry and of our economy. I therefore unreservedly support the Bill on Third Reading.
Question put and agreed to.
Bill accordingly read the Third time and passed.
Telecommunications Infrastructure (Relief from Non-Domestic Rates) Bill (Programme) (No. 2)
Motion made, and Question put forthwith (Standing Order No. 83A(7)),
That the following provisions shall apply to the Telecommunications Infrastructure (Relief from Non-Domestic Rates) Bill for the purpose of supplementing the Order of 10 July 2017 (Telecommunications Infrastructure (Relief from Non-Domestic Rates) Bill (Programme)):
Consideration of Lords Amendments
(1) Proceedings on consideration of Lords Amendments shall (so far as not previously concluded) be brought to a conclusion one hour after their commencement at today's sitting.
Subsequent stages
(2) Any further Message from the Lords may be considered forthwith without any Question being put.
(3) The proceedings on any further Message from the Lords shall (so far as not previously concluded) be brought to a conclusion one hour after their commencement.—(Jo Churchill.)
Question agreed to.
Telecommunications Infrastructure (Relief from Non-Domestic Rates) Bill
Tuesday 23rd January 2018
(6 years, 2 months ago)
Commons ChamberRead Full debate Telecommunications Infrastructure (Relief from Non-Domestic Rates) Act 2018 View all Telecommunications Infrastructure (Relief from Non-Domestic Rates) Act 2018 Debates Read Hansard Text Read Debate Ministerial Extracts Amendment Paper: HL Bill 65-TR-I Marshalled list for Third Reading (PDF, 65KB) - (5 Dec 2017)
Madam Deputy Speaker (Mrs Eleanor Laing)
I must draw the House’s attention to the fact that financial privilege is engaged by Lords amendments 1 to 13. If any Lords amendment is agreed to, Mr Speaker will cause the customary entry waiving Commons financial privilege to be entered in the Journal.
I also remind the House that certain of the motions relating to the Lords amendments will be certified as relating exclusively to England and Wales, as set out on the selection list. If the House divides on any certified motion, a double majority will be required for the motion to be passed.
Clause 1
Relief from local non-domestic rates: occupied hereditaments
The Parliamentary Under-Secretary of State for Housing, Communities and Local Government (Rishi Sunak)
I beg to move, That this House agrees with Lords amendment 1.
Rishi Sunak
It is an honour to begin my first Bill as a Minister. The Government have been and remain relentless in our pursuit of seeing every home in Britain provided with a decent broadband connection. My right hon. Friend the Member for Wantage (Mr Vaizey) is not in his place, which is a first for a broadband debate in this Chamber in recent times, but thanks to the good work he started, by the end of last year around 95% of premises had superfast broadband.
Under the universal service obligation introduced by this Government, every home in Britain will gain access to a high-speed connection within the next three years. That goal is indispensable to creating a cohesive, modern and economically vibrant Britain, and this Bill is another important step in ensuring we achieve just that.
At the autumn statement in 2016 the Chancellor announced a rate relief scheme for new telecom fibre. The relief will apply for five years, retrospectively from 1 April 2017, and it forms part of a wider package of support for digital infrastructure worth £1.1 billion.
The Bill provides us with the powers needed to introduce the relief scheme, and the relief itself will be introduced by technical regulations. In September 2017 we published detailed draft regulations for consultation. My Department is now considering responses to that consultation and is holding further discussions with stakeholders on the details. I am pleased to report to the House that the responses have been very positive, and I can therefore confirm that we will be ready to introduce the relief scheme shortly after the Bill receives Royal Assent.
As hon. Members will recall, the Bill received wide- spread support when it was considered by the House last year, and that support continued through the debates in the Lords. The Lords amendments make a helpful improvement by ensuring the five-year relief period appears in the Bill, as Opposition parties called for and as welcomed by my ministerial colleague Lord Bourne of Aberystwyth. The amendments will give telecom operators the added assurance that the relief scheme will operate for five years.
The amendments will still allow us to extend the period of the rate relief beyond five years, if we wish, through secondary legislation. Stakeholders wished to see that ability retained in the Bill, and it means that if the Chancellor wants to repeat or extend the relief scheme, we can do so quickly without a further Bill but still with the approval of Parliament. As a tax measure, it will of course be for the Chancellor to decide in the future if such a repetition or extension is desirable.
I commend the amendments to the House.
Jim McMahon (Oldham West and Royton) (Lab/Co-op)
I congratulate the new Minister on his promotion. I look forward to working with him on matters of common interest such as local government finance, which is a niche subject that does not always attract wide attention, but it is important, and it is important that we see reform. I made that offer to his predecessor, and most of the issues are not partisan at all. They are technocratic but essential, and if there is room for us to work together, we should seek to do so.
I am pleased to see the Bill return having been amended in the Lords, and I am pleased that the Government have received the amendments in the way they have. As we have seen in our debates, this is not necessarily a subject that gets Members excited or that results in mass attendance, but the people who do attend understand how important it is. This financial relief is intended to ensure that as many parts of England and Wales as possible benefit from high-speed fibre broadband. A financial incentive is an important mechanism for achieving some of that.
We were very probing in Committee and, unsurprisingly, we will be looking to see how the Bill works in practice. In particular, can we ensure that this is not just a tax relief for the big providers and that it gets to the smaller providers, too? Can we ensure it has a net effect on the extension of fibre broadband, or will it basically provide a subsidy for installations that would have happened regardless? Have we been able to reach a position where the providers themselves are satisfied that the Bill goes some way towards balancing the revaluation that they met with a degree of concern? I read recently in the Financial Times that BT and Virgin had hinted at the possibility of considering legal action against the revaluation, and I am interested to know the outcome.
Fundamentally, the Bill does two things. First, it rescues an element of the Finance Bill that fell when the election was called. The Bill contained many important reforms that were not contentious or party political but would have allowed local government finance to catch up with the changing times. I encourage the Minister to look at other provisions in the Bill to see what else could be brought forward to benefit local government.
Secondly, the measure proves that the Government can look at financial incentives for business growth, but business rates, of course, cover a wide range of business activity. It has been a long-standing criticism that we have not yet managed to address the impact of the treatment of plant and machinery, for instance, on business investment in new technologies and in new plant and machinery in those premises.
That has also been a concern on our high streets. When banks and building societies close, they are often the only provider of a cash machine in town. When a local convenience store agrees to take on the cash machine, it generally finds itself in a worse position at the end, despite providing a community service, because the turnover at the cashpoint will count towards its rateable value.
I raise those two points because I think there is a demand in industry and the community to ensure that business rates add value to our communities, rather than detract from them. As we embark on Brexit, we need to ensure that our country is in the most robust position possible to attract investment and ensure that we have strong infrastructure.
Finally, I pay tribute to Members in the other place, particularly Lord Kennedy, who spent a great deal of time on the issue and was involved in amendment 2. Let us see whether it makes a difference on the ground, because we pass legislation here not for the sake of it, but to make a material difference to public policy and the community. I will be waiting with interest to see whether this has a net effect on infrastructure investment.
Rishi Sunak
I thank the hon. Member for Oldham West and Royton (Jim McMahon) for his kind words of welcome. He has a long and distinguished track record in local government, and I very much look forward to working with him in the constructive manner he outlined. He made a couple of points that I would like to address briefly. The first point was about who is eligible for the relief. As he knows, it is available for any company deploying new fibre. One of the expectations and hopes for the relief is that it will bring more alternative and smaller providers into the market. We will be watching that closely, as I know he will, because we would all welcome a broader diversity of suppliers.
The hon. Gentleman made a good point about the relief being gamed, and ensuring that it is targeted specifically at new fibre deployments. That was raised in the Commons stages by my right hon. Friend the Member for Wantage (Mr Vaizey), and indeed in the other place by Baroness Harding of Winscombe. I am pleased to tell the hon. Gentleman that, following those exchanges, my Department worked extensively with Gamma Telecom and Ofcom to conduct a detailed study of the potential for the relief to be gamed. The results of that analysis clearly support the conclusion that, based on the evidence available to date, neither the Government nor Ofcom expect the rate relief for new fibre to give rise to gaming in the system. Without going into the details, simply the cost of deploying new fibre, withdrawing dark fibre, opening up the ducts and then reconnecting everything would in almost all cases be more expensive that the saving from business rates.
The hon. Gentleman mentioned other measures in the Local Government Finance Bill and the importance of ensuring that we have a business rates system that supports economic growth. I wholeheartedly agree with him and am keen to use the opportunity for the business rates reset, the revaluation and the fair funding formula to ensure that our financial system does indeed support local authorities in their aspirations to grow their local economies.
I put on record my thanks to Members in the other place and, of course, the officials who brought me up to speed on the legislation incredibly quickly. I also thank my predecessor in this role, my hon. Friend the Member for Nuneaton (Mr Jones), who did so much to get the Bill to the point at which we are in a position to approve it. As I have said, demands on broadband are doubling every couple of years. It is vital that we stay ahead of that need and move quickly to implement the relief scheme that has been promised. I am delighted that we are making good progress on the draft regulations, which will be implemented swiftly. I am grateful to Members in this House and in the other place for the swift progress we have made. This is only one small part of the Government’s strategy, but it is an important one called for by all stakeholders.
Lords amendment 1 agreed to, with Commons financial privilege waived.
Lords amendments 2 to 13 agreed to, with Commons financial privilege waived.
Independent Parliamentary Standards Authority
(6 years, 2 months ago)
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The Leader of the House of Commons (Andrea Leadsom)
I beg to move,
That an Humble Address be presented to Her Majesty, praying that Her Majesty will appoint Jackie Smith to the office of ordinary member of the Independent Parliamentary Standards Authority for a period of five years with effect from 19 February 2018.
The motion gives the House the opportunity to debate the recommendation agreed by the Speaker’s Committee for the Independent Parliamentary Standards Authority. The appointment has arisen following the conclusion of the term of Elizabeth Padmore. Members may be aware that the Speaker’s Committee has produced a report on this matter—its second report of 2017—in relation to the motion.
It may help if I set out the key points for the record. IPSA board members are appointed under the Parliamentary Standards Act 2009. Under that Act, the Speaker is responsible for overseeing the selection of candidates for appointment to IPSA, and the names of any candidates to be members of IPSA must be approved by the Speaker’s Committee for IPSA. The 2009 Act states that at least one of IPSA’s members must be a person who has held, but no longer holds, high judicial office, within the meaning of part 3 of the Constitutional Reform Act 2005; that at least one of IPSA’s members must be a person who is qualified under schedule 3 to the National Audit Act 1983 to be an auditor for the National Audit Office; and that one of IPSA’s members—the parliamentary member—must be a person who has been, but is no longer, a Member of the House of Commons.
On this occasion, the vacancy on the board of IPSA was for a person not subject to any particular statutory requirements, to replace the outgoing board member, Elizabeth Padmore. Although Mr Speaker is not regulated by the Office of the Commissioner for Public Appointments in making this appointment, he chooses to follow its recommended best practice in his supervision of appointments. As is normal for such appointments, Mr Speaker appointed a panel that conducted the shortlisting and interviewing of candidates. The panel was chaired by Mark Addison, the former civil service commissioner. The other members of the panel were: Ruth Evans, chair of IPSA; Shrinivas Honap, lay member of the Speaker’s Committee for IPSA; Meg Munn, former Member of Parliament for Sheffield, Heeley; and Michael Whitehouse, former chief operating officer at the National Audit Office.
The candidate recommended by the appointment board is Ms Jackie Smith, chief executive and registrar at the Nursing and Midwifery Council. The board considers that Ms Smith has been a successful chief executive, known for turning around organisations and delivering performance in a complex political environment. She also has extensive experience in regulation. As required under the 2009 Act, the appointment was approved by the Speaker’s Committee at its meeting in December.
If the appointment is made, Ms Smith will serve on IPSA for five years. Should the House support this appointment, I wish the individual well as she takes up her new post. I commend this motion to the House.
Valerie Vaz (Walsall South) (Lab)
I thank the Leader of the House for what she has said. I wish to thank the independent panel appointed by Mr Speaker—the independent chair, Mark Addison; Ruth Evans, the IPSA chair; Shrinivas Honap, the lay member of the Speaker’s Committee for IPSA; Meg Munn, former MP for Sheffield, Heeley; and Michael Whitehouse, former chief operating officer of the National Audit Office—for its assiduous work in identifying possible candidates. I also wish to thank the outgoing IPSA board member, Elizabeth Padmore, for all her work.
The panel has been independent, transparent and diligent in its work. It was the panel’s unanimous view, which was endorsed by the Committee, to appoint Jackie Smith, who, as the Leader of the House has said, is currently the chief executive and registrar at the Nursing and Midwifery Council, and so has had experience in dealing with an organisation of more than 800 staff over five locations across the four countries of the United Kingdom. She was also head of investigation and lay affiliate for standards and fitness to practise at the General Medical Council. Ms Smith’s experience in regulation and delivering performance will serve her well.
The Opposition endorse the appointment of Jackie Smith to the Speaker’s Committee for the Independent Parliamentary Standards Authority, and wish her well in her new role. She will be there from 19 February 2018 to 18 February 2023.
Question put and agreed to.
Electoral Commission
(6 years, 2 months ago)
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18:35 - The House divided: - Ayes: 46 / Noes: 77 - Question accordingly negatived.
The Leader of the House of Commons (Andrea Leadsom)
I beg to move,
That an Humble Address be presented to Her Majesty, praying that Her Majesty will appoint Professor Sir Ian Kennedy as an Electoral Commissioner with effect from 1 February 2018 for the period ending 31 January 2022.
As with the previous debate, the motion before us gives the House the opportunity to debate a recommendation that has been agreed, this time by the Speaker’s Committee on the Electoral Commission.
Electoral commissioners are appointed under the Political Parties, Elections and Referendums Act 2000, as amended by the Political Parties and Elections Act 2009. Under the Act, the Speaker’s Committee has a responsibility to oversee the selection of candidates for appointment to the Electoral Commission. Commissioners are appointed for a fixed term, but the Committee may recommend their re-appointment, where that is appropriate.
Hon. Members may know that the Speaker’s Committee has produced its third report of 2017 in relation to the motion. The Speaker’s Committee is not regulated by the Office of the Commissioner for Public Appointments, but it has chosen to follow its recommended best practice in its supervision of appointments. The OCPA code of practice for appointments to public bodies, which was published in April 2012, provides that no reappointment may be made without a satisfactory performance appraisal.
The Speaker’s Committee was required to recruit a new electoral commissioner to replace the outgoing electoral commissioner, Toby Hobman. His term of office expired on 31 December 2017. Mr Hobman had been a commissioner since 2010, serving two terms.
As is normal for these appointments, Mr Speaker appointed a panel to conduct the shortlisting and interviewing of candidates. The panel was chaired by Joanna Place, chief operating officer at the Bank of England. The other panel members were Sir John Holmes, the chair of the Electoral Commission, and the hon. Member for Houghton and Sunderland South (Bridget Phillipson), a member of the Speaker’s Committee on the Electoral Commission.
The independent panel was unanimous in its recommendation that Professor Sir Ian Kennedy be appointed. Sir Ian served as the first chair of the Independent Parliamentary Standards Authority from 2009 until 2016. Between 2002 and 2009, he was chairman of the Healthcare Commission, which was the first body to regulate the NHS. He has also chaired a number of reviews and inquiries across a spectrum of public life, including into xenotransplantation for the Department of Health, and into rabies and quarantine for the then Ministry of Agriculture.
The panel’s recommendation was endorsed by the Speaker’s Committee. Once the Committee has reached a decision, statute requires that the Speaker consults the leaders of political parties represented at Westminster on proposed appointments. The statutory consultation provides an opportunity for the party leaders to comment, but they are not required to do so. The responses to consultation can be found in the appendix to the Speaker’s Committee’s report. No objections to Sir Ian’s appointment were received.
If this appointment is made, Sir Ian will serve as an electoral commissioner for four years. If the motion is agreed, I wish him well in his post. I commend the motion to the House.
Valerie Vaz (Walsall South) (Lab)
May I thank the Leader of the House for her comments? I also thank the chair of the independent panel, Joanna Place, and the other panel members, namely Sir John Holmes, the chair of the Electoral Commission, and my hon. Friend the Member for Houghton and Sunderland South (Bridget Phillipson), who is a member of the Speaker’s Committee on the Electoral Commission, for their work in identifying the candidates and going through the selection process. My thanks also go to the outgoing commissioner, Toby Hobman, who has served two terms since 2010.
The unanimous view of the panel was that Professor Sir Ian Kennedy should be appointed as an electoral commissioner. Sir Ian has been involved in public life for more than three decades. The Opposition therefore agree with the independent panel’s recommendation on the appointment of Professor Sir Ian Kennedy from 1 February 2018 to 31 January 2022.
James Duddridge (Rochford and Southend East) (Con)
I will be brief, because I know that the House wants to move on quickly.
I oppose the motion. The Electoral Commission is an incredibly important body, and I ask Members to reflect on why the issue has been brought to the House. It is because it is for the full House to make a decision, rather than relying on our Front Benchers and the official channels.
I do not believe that Sir Ian Kennedy would be an appropriate appointment to the Electoral Commission. This gentleman is 76 now; he would be 80 at the end of his term. When he served on the Health Commission, he claimed £15,000 on taxis from north London to the job. Although our expenses system desperately needed to be reformed, I do not think that a single Member thinks that the Independent Parliamentary Standards Authority is a system lacking in bureaucracy that could not be well reformed. I do not think he did a good job there. The Electoral Commission requires somebody who understands politics. All its existing members either understand politics—and he does not get that—or understand the media and have an idea of how to project the commission’s broader work. We are being asked to vote on this motion because we can legitimately have an opinion. I believe that that opinion should be that he is not a fit and proper person to serve, and I ask Members to vote in the No Lobby this evening.
Bridget Phillipson (Houghton and Sunderland South) (Lab)
Thank you, Madam Deputy Speaker, for calling me to speak. As the only Member of this House to serve on the appointments panel, and as a member of the Speaker’s Committee, I should like to make a short contribution setting out a bit more about the process mentioned by the Leader of the House and my hon. Friend the Member for Walsall South (Valerie Vaz).
I reiterate that the recruitment process that was followed was the same open, fair and transparent process that has been used in the past to recruit all electoral commissioners. It is also worth stressing that this appointment represents one of 10 places on the board, four of whom were nominated by the main political parties. As the Leader of the House set out, the appointments panel was composed of Joanna Place, the chief operating officer at the Bank of England, who served as our independent chair; Sir John Holmes, the chair of the Electoral Commission; and me, as the representative of the Speaker’s Committee on the Electoral Commission.
With the support of independent consultants, and following an open advertisement, a long list and short list were drawn up. Five very strong candidates were selected for interview, and following a comprehensive and lengthy interview process, the panel concluded that Professor Sir Ian Kennedy was the strongest candidate, and unanimously recommended his appointment. The Speaker’s Committee in turn then agreed with that recommendation. As we have heard, the leaders of all the main parties were consulted, and no objections were received.
I seek to reassure the House that this was a fair, open and transparent process that followed all the usual steps that should be followed and that were followed in previous processes. I am confident in the rigorous process that was followed, and as a panel we stand by our decision to recommend the appointment of Sir Ian Kennedy.
John Spellar (Warley) (Lab)
Like other colleagues, I shall not detain the House for long. Many relevant points have already been made by the hon. Member for Rochford and Southend East (James Duddridge).
I think that there is concern about this appointment. Quite apart from more general questions as to the role of the Electoral Commission and whether it is a body that has been losing its way, which is a wider debate for another day, we do need to look at this. Let us be frank: Sir Ian Kennedy, many colleagues feel, largely created the dreadful, anti-elected-Member, vindictive attitude that has permeated so much of IPSA, which has basically taken as its premise that it is there to make life difficult for Members of Parliament.
I have to say in all honesty to my hon. Friend the Member for Houghton and Sunderland South (Bridget Phillipson), who is an excellent Member of Parliament—I do not say that in any patronising way, but in a genuine way—that if Sir Ian Kennedy was the best candidate, I do wonder about the process through which we are undertaking appointments. We ought to look at how other countries run such electoral commissions. They have serving politicians who actually understand the current electoral system, rather than, as we do so often with such bodies in this country, putting it out to the great and the good, and the relentless quangocrats. When people read out the long list of quangos on which they have served, I regard it as a criticism rather than a commendation that they have constantly been on these public bodies, rather than, as used to be the case, people from industry on one side and from trade unions on the other who had much broader experience.
Why Sir Ian Kennedy, the arch-quangocrat? The hon. Member for Rochford and Southend East mentioned Sir Ian Kennedy’s record at the Healthcare Commission. Many of those who were here at the time remember the disdain with which IPSA, his organisation, treated Members who had difficult transport issues, family housing issues or disabilities. In the case of new Members who might have been inclined to give more slack to the organisation, I know that many of them, and their staff, have found dealing with it incredibly difficult, due to the amount of staff time that that takes, and its great obstructionism and very limited access. That stemmed from the culture imbued there at the start.
With that record, I do not think that Sir Ian Kennedy has shown the qualities and comprehension appropriate to this position, which involves dealing with those in elected office. Frankly, I hope that we will reject this appointment and do better next time.
Kirsty Blackman (Aberdeen North) (SNP)
I am one of the new members of the Speaker’s Committee on the Electoral Commission, as well as of the Speaker’s Committee for IPSA. It has been really illuminating to be part of those bodies and, in particular, to look at the rigorous appointment procedures that are gone through in advance of somebody being recommended to the House.
I am honestly quite baffled by some of the contributions that we have heard. I am shocked that anybody would suggest that somebody was too old to sit on this body, given the number of people just along the corridor who are significantly older than Professor Sir Ian Kennedy. Although I have used that line in criticising the House of Lords, I do not think that Members who support the House of Lords are in a position to do so.
The other thing I am confused about is why people seem to be unhappy about the gentleman’s extreme length of experience. In any other circumstances, people would be saying that such experience was really impressive and that he could really bring something to the table.
It is pretty clear that there is a significant personal element to how some Members feel about this issue. Owing to the way the process has worked, when the matter has come to the House before, there has not been a debate, so people have just been able to shout “No” without making it clear why they believe that the appointment should not happen. Having been part of the Speaker’s Committee on the Electoral Commission, it honestly feels to me that the process was very rigorous. Any outside observer would think that a rigorous process had been undertaken, and that Professor Sir Ian Kennedy was therefore the right person to be appointed to the role.
Question put.
Business without Debate
(6 years, 2 months ago)
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Mr Deputy Speaker (Sir Lindsay Hoyle)
With the leave of the House, we will take motions 7 to 9 together.
Motion made, and Question put forthwith (Standing Order No. 118(6)),
Environmental Protection
That the draft Environmental Permitting (England and Wales) (Amendment) Regulations 2018, which were laid before this House on 11 December, be approved.
Savings Accounts
That the draft Help-to-Save Accounts Regulations 2018, which were laid before this House on 11 December, be approved.
Education
That the draft Higher Education (Access and Participation Plans) (England) Regulations 2018, which were laid before this House on 4 December, be approved.—(Chris Heaton-Harris.)
Question agreed to.
Toft Hill Bypass
(6 years, 2 months ago)
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Helen Goodman (Bishop Auckland) (Lab)
The life of my constituent Alex Wright was literally shattered when a van drove into her living room and totally destroyed it. She had to move out for months while the house was rebuilt.
For years, the residents of Toft Hill have been calling for a bypass, and 950 people have signed this petition. This is not purely a local issue; it raises questions of national road policy. Currently the criteria focus on housing and congestion. We would like to see a rebalancing of the criteria towards northern concerns, such as economic development and quality of life.
The petition states:
The petition of residents of Toft Hill,
Declares that the A68 that runs through Toft Hill is unsuitable and unsafe for the volume and nature of vehicles, especially HGV Lorries; and further that the proximity of the primary school and proposed future development in the village would make this stretch of road more dangerous to local residents.
The petitioners therefore request that the House of Commons urges the Department for Transport to priorities a new relief road to alleviate the problems faced by residents of Toft Hill.
And the petitioners remain, etc.
[P002098]
Neuroblastoma
(6 years, 2 months ago)
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Kwasi Kwarteng (Spelthorne) (Con)
I am honoured to be called to speak in this Adjournment debate. It is a great honour, as a Member of Parliament, to be able to make representations in this House on local cases, and this particular case is something I have been very much affected by. I have met the parents of the young boy concerned, and I would be grateful if the House allowed me to explain the nature of the case I am here to plead this evening. I wanted to hold this debate on funding for the treatment of children who are diagnosed with neuroblastoma, a specific form of childhood cancer. It is very debilitating, arises in immature nerve cells and is the third most common type of childhood cancer, affecting about 100 children every year in Britain.
Members may be familiar with the case of Bradley Lowery, a young boy from Sunderland who struck up a friendship with the England footballer, Jermain Defoe, after appearing as a Sunderland mascot. Bradley suffered from neuroblastoma and his cheerfulness and great courage touched the hearts of so many people. Very sadly, Bradley passed away last year. He was only six years old, but in his short life he touched the hearts of millions.
It can be very difficult to spot the early symptoms of neuroblastoma, as they can be vague and mistaken for other childhood conditions. There are options to deal with the illness, but the case I briefly want to describe involves a young boy, Alfie Ward, who is now 15, and who lives in my constituency in Ashford. He is now battling this disease for the third time. The problem we have is that the NHS, under its current dispensation and policy, funds treatment only in the first instance. However, as Alfie started nursery, having battled the disease and survived this appalling affliction, it became apparent that it had come back.
At this point, I want to make the case for the NHS to review its policy on not funding relapses. As I understand it, about half the people who suffer from this appalling illness relapse, if they recover. It seems very harsh to adopt a policy whereby people can be funded the first time that they are affected by the illness, but not for subsequent relapses. In Alfie’s case, he has been denied treatment. As I said, this is the third time that he has had the illness. Now he, his family and his parents are under the extreme pressure of having to raise something like £600,000 so that he can get treatment.
In wrapping up my remarks, I want to say that £600,000 is a huge amount of money. It is to their eternal credit that Alfie’s parents, who I have met—
Jim Shannon
I could not let the debate go by without commenting on a young gentleman in Northern Ireland. Some things in Northern Ireland cross the barricade, and one of those was the touching story of young Oscar Knox, whose battle with neuroblastoma touched people from every part of the Province and in whose memory I stand in this House today. Does the hon. Gentleman agree that we must do more to fund the treatment of this cancer in the United Kingdom of Great Britain and Northern Ireland, instead of parents having to try to raise money to help their children? We must look towards more treatment options as well. Does he agree with that? I know the answer.
Kwasi Kwarteng
I am delighted that the hon. Gentleman has made representations from his part of the country. People face this problem across the country. It is not widely known, because the absolute numbers are not great, but the suffering is severe. We absolutely have to try to think of a way to reach an accommodation on funding, because £600,000 is a huge amount to raise.
Mr Jim Cunningham (Coventry South) (Lab)
I congratulate the hon. Gentleman on bringing this very serious issue to the House, and I am sure that many people in Coventry and the west midlands would support him too. It is tragic to pick up a newspaper and read about families trying to raise money for treatment abroad that they cannot get in this country. We wish him well in his endeavours to get some justice for his constituents.
Kwasi Kwarteng
I am touched by the hon. Gentleman’s remarks. It is delightful to see cross-party agreement on this. It is a great honour to raise this issue—it goes to the heart of what one does as a constituency MP. I have met Alfie’s parents and have been incredibly impressed by the way they have conducted themselves, and by their bravery and courage. They are totally devoid of self-pity. They have just got on with it and raised a great deal of money, and I am hopeful that they will reach their target.
In the case of relapses, however, the obligation should not fall on the shoulders of parents and friends to go through what is a very stressful experience. We have all raised money for various causes in our time, and it is a stressful and time-consuming endeavour. As a society, we have to consider ways in which the NHS or the National Institute for Health and Care Excellence can fund treatment for relapses so that the parents of young boys such as Alfie Ward do not have to go through that kind of suffering and pressure simply to give their son a fighting chance of life.
I am grateful to have secured this debate, on an issue that has been raised by other people, and it is a privilege to have raised it in this forum. I look forward to hearing what the Minister has to say.
The Parliamentary Under-Secretary of State for Health (Steve Brine)
I congratulate my hon. Friend and parliamentary office neighbour, the Member for Spelthorne (Kwasi Kwarteng), on securing this debate on such an important issue.
It is a privilege to be cancer Minister—I hear some of the worst and some of the best. We know that cancer is a disease that will affect most of us, either directly or indirectly, at some point. I suspect it will affect everybody in the House tonight. That is particularly true, and somewhat inevitable, as the population ages, but it is especially heartbreaking, is it not, when cancer afflicts children and teenagers, as it has his constituent Alfie? I have young children myself, and I cannot help but think about that.
Neuroblastoma is an uncommon cancer—there are about 95 cases in the whole of the UK each year—but it has one of the lowest survival rates of all the childhood cancers, and that is why raising awareness of it is vital and why I thank my hon. Friend for bringing it to the attention of the House. As he says, it is always a privilege to speak here and to raise issues on behalf of constituents.
I will come in a minute to how we are prioritising investment, which is so important, in research and improving access to drugs for cancer, particularly those that are less survivable. First I would like to pay tribute to the Bradley Lowery Foundation—my hon. Friend mentioned Bradley—which is providing fantastic support to Alfie’s family, for which I thank it. As a football fan myself—okay, I am a Spurs fan—I saw several times how Bradley’s smile lit up many football grounds, including his own in Sunderland, before he sadly lost his own battle against neuroblastoma, as my hon. Friend said. His legacy is the tremendous awareness of this rare cancer that he raised in his short life. He encouraged a huge amount of fundraising for treatment and research that will help so many children. I often think, whether we live for 100 years or 100 minutes, we all in some way change the world we are born into, and that is certainly true of Bradley’s life.
In England, we want something that is very difficult but quite simple to convey: we want to have access to the best cancer services in the world, especially for children and young people who have to face this disease so early in their lives. That is why the Government—this Prime Minister, the previous Prime Minister, the Secretary of State and I—have prioritised cancer services. Since 2010, we have seen year-on-year increases in the number of people surviving. At the end of last year, this country had its best survival figures ever, which is of course something to be pleased about, but just one person who is battling cancer will not feel like that.
We know that there is a huge amount more to be done. NHS England is leading the health and care system in implementing every one of the 96 cancer strategy’s recommendations with the aim of achieving our ambition to save a further 30,000 lives a year by 2020—although if we can do more, we should. NHS England has committed some £600 million to support the delivery of the strategy. No one will hear me speak about cancer without mentioning early diagnosis, which is the most crucial factor that we know of in successfully treating neuroblastoma or any other cancer.
In 2016, some £200 million was made available to the new cancer alliances, challenging them to encourage innovative ways in which to diagnose cancer earlier and to improve the care for those living with cancer. That is so important. Members will have seen the television campaign by Cancer Research UK, which includes the words “A mum with cancer is still a mum.” Many people are battling cancer, but they are still living their lives. It is always important to say that. The funds are also intended to ensure that all cancer patients receive the care that is right for them, and we are rolling out one-stop shops throughout the country. We have invested some £130 million in upgrading and replacing radiotherapy equipment, to ensure that patients have the best and latest equipment regardless of where they live.
Cancer services for children and young people, including the treatment of neuroblastoma, are specially commissioned by NHS England. Neuroblastoma is often treated with radiotherapy. In 2013, a £23 million fund was used to improve access to intensity modulated radiotherapy, a precise form of radiotherapy that can be directed more accurately at cancers and allows a higher dose of radio- therapy to be given with, hopefully, fewer side effects. That is particularly important to very young children, who may have weaker immune systems and who are less resilient to more invasive treatments.
Jim Shannon
I thank the Minister for his endeavours. It is always a pleasure to listen to his response to any constituency issue. In England, responsibility clearly lies with him, but is there any possibility of discussions with the regional Governments with a view to joint working, whatever their role might be? I think of young Oscar Knox in Northern Ireland, and that is really my reason for making the suggestion.
Steve Brine
I am glad that the hon. Gentleman is here. He raised the same point last week during the Westminster Hall debate on blood cancers, to which I responded. As he had to leave before I did so, I will repeat what I said then. Obviously, once devolved government returns to Stormont and there is a Health Minister in the Northern Ireland Executive, I shall be happy to meet him or her, and I am sure that the hon. Gentleman would like to be involved in that meeting. We shall then be able to talk about some of the successes that we have had in England and some of the things that I am sure we can learn from Northern Ireland.
An even more precise form of radiotherapy that can be used in neuroblastoma treatment is proton beam therapy. It sounds like something out of the future, and in many ways it is, but the future is coming. In 2012, the Government provided some £250 million for the building of two PBT centres in England, at University College Hospital here in the capital and at the Christie cancer centre in Manchester. I had the privilege of visiting the Christie last year—I happened to be there in the autumn, for some reason—to see its new PBT facilities, which are incredible and which will be providing treatment for patients later this year. As a result, the NHS will no longer need to send young patients to the United States—which has caused great upheaval to patients and their families, has had an impact on patient outcomes and has, of course, involved huge expense to the families and the NHS—for this cutting-edge treatment.
My hon. Friend the Member for Spelthorne spoke about guidance from the National Institute for Health and Clinical Excellence. We want the very best new innovative treatments, such as the promising antibody therapy we have heard about today, to be available on the NHS. NICE is the independent body that provides guidance on whether drugs and other treatments represent a clinically effective and cost-effective use of resources in the NHS—a publicly funded health system. I am advised that NICE is currently considering two antibody-based treatments for neuroblastoma. It is appraising Dinutuximab-beta for use in high-risk neuroblastoma, but the appraisal has been delayed as NICE awaits additional evidence from the drug company. Final guidance on the use of any drug can be issued only after careful consideration of all the available evidence and extensive engagement with stakeholders. That has to be the right approach, however frustrating it is. Another drug used in the treatment of high-risk neuroblastoma is dinutuximab or Unituxin. NICE’S appraisal of this drug, which is in the same family as Dinutuximab-beta but is distinctly different, has also been suspended as demand for the drug in the United States has exceeded expectations and is outstripping the company’s ability to meet global need.
I stress that just because drugs are not routinely available to patients on the NHS that does not preclude their use. Clinicians can make a case on a patient’s behalf for exceptional funding if they believe a particular treatment would deliver the best clinical outcomes. I understand that Alfie’s consultant is looking at doing that. Individual funding requests made by a supporting clinician are always a potential route for access to treatments that are not currently commissioned by the NHS. NHS England is not aware of any IFR in Alfie’s case, but I will be happy to make it so, working with my hon. Friend, following tonight’s debate.
Despite the strides we have made in increasing overall cancer survival rates, we recognise that there are some cancers where progress has been far too slow. That is why our focus for these cancers is on research and innovation, and ensuring that proven innovations, once they are discovered, are adopted swiftly across the health service in England. I am pleased to say that the Government are fully supportive of the Less Survivable Cancers Taskforce, which I launched last summer here in the House, specifically to address the survivability gap between the least and the most survivable cancers. I met the taskforce just before Christmas to discuss how we can work together to raise awareness of the symptoms of cancer and how we can ensure that less survivable cancers have better access to research funding. That is a promising workstream. The taskforce is a cutting-edge group and I look forward to working with it.
Cancer Research UK is also funding research to better understand childhood cancers such as neuroblastoma. In September 2016, the Government announced the largest ever investment in health research infrastructure—£816 million over five years from April 2017 for 20 National Institute for Health Research biomedical research centres in England. That was a big step, and I am sure hon. Members recall the Prime Minister’s announcement. That includes £61.5 million in the biomedical research centre at the Royal Marsden Hospital here in London and the Institute of Cancer Research. The NIHR spent £137 million on cancer research in 2016-17—an increase from just over £100 million in 2010-11. That investment in cancer research is of huge importance and constitutes the largest in a disease area.
Mary Glindon (North Tyneside) (Lab)
I am not sure whether this has any bearing on the subject of the debate, but will the accelerated access review help to bring some of these potential new treatments forward more quickly?
Steve Brine
The accelerated access review is an important piece of work, and I will be happy to write to the hon. Lady in more detail than I have time to go into now. It is about bringing treatments quickly to the market for patients’ use once they are approved, instead of having to take a rather arduous and tortuous route.
I want to put on record that we want the NHS to be the best in the world at treating childhood cancers and all cancers. We can only imagine the pain that Alfie’s family are going through, and they have our prayers and our support. I hope my hon. Friend the Member for Spelthorne will agree that the Government are working hard, even in difficult economic times, to implement the cancer strategy, to invest in research and to continue the investment in cancer treatment to ensure that we can lead the world in the fight against cancer and make this a reality by making life better for people like Alfie.
Question put and agreed to.
Draft Transfer of Responsibility for Relevant Children (Extension to Wales, Scotland and Northern Ireland) Regulations 2017
(6 years, 2 months ago)
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The Minister for Immigration (Caroline Nokes)
I beg to move,
That the Committee has considered the draft Transfer of Responsibility for Relevant Children (Extension to Wales, Scotland and Northern Ireland) Regulations 2017.
It is a pleasure to serve under your chairmanship, Mr Hosie. In introducing this secondary legislation the Government are seeking to extend the scope of the national transfer scheme to Wales, Scotland and Northern Ireland. The scheme, which was launched by the Government in July 2016, makes it easier for local authorities to transfer legal responsibility for unaccompanied asylum-seeking children to another participating local authority. It is designed to encourage a fairer distribution of unaccompanied children in local authorities across the UK, so that a small number of local authorities are no longer asked to look after a disproportionate number of unaccompanied children and safeguard the best interests of the children concerned.
The national transfer scheme is underpinned by provisions in part 5 of the Immigration Act 2016. Section 69 of that Act creates a mechanism in England to transfer responsibility for caring for unaccompanied children from one local authority to another local authority. Section 70 enables the Secretary of State to direct local authorities to provide information about their support to children in their care. Section 71 enables the Secretary of State to direct a local authority that refuses to comply with a request to accept an unaccompanied asylum-seeking child to supply written reasons explaining their refusal. Finally, section 72 enables the Secretary of State to require local authorities to co-operate in the transfer of unaccompanied children from one local authority to another.
Those provisions currently apply only to English local authorities, which means that local authorities in Wales and Scotland, and health and social care trusts in Northern Ireland, have not yet participated in the scheme. In extending the scope of the transfer provisions in the Act, the regulations provide the legal framework for local authorities in Wales, Scotland and Northern Ireland to accept transfers under the scheme.
I want to make it clear that the national transfer scheme was designed as a voluntary scheme, and we hope that local authorities in Scotland and Wales, and health and social care trusts in Northern Ireland, will feel able to participate. My officials have worked closely with their counterparts in the devolved Administrations and with local government associations in Scotland and Wales to take account of the unique circumstances in each nation. As I have mentioned, there are provisions in the Act for the Secretary of State to mandate the scheme. The Government want the scheme to remain a collaborative effort between central, local and devolved government, and it is in that vein that we have worked with partners across the UK to develop proposals to extend the scheme.
The national transfer scheme has made significant progress since it was launched in July 2016, and we are extremely grateful for the support provided by local authorities that are looking after unaccompanied children. Until the end of September 2017, 555 unaccompanied children had successfully been transferred. That is a significant achievement, but there is more to do. There are more than 4,500 unaccompanied children in English local authorities, and a handful of local authorities continue to look after a disproportionate number. If we are to achieve a fairer distribution of caring responsibilities across the UK, we need local authorities from all parts of the country to be able to participate in the scheme so that all children can be afforded the best possible care and support.
We know that there is support for the national transfer scheme across the country, and that is why it is important for this legislation to come into force, so that we are able to build on the excellent work of local authorities in every part of the UK in caring for asylum-seeking and refugee children and ensure that the scheme is a truly national scheme.
Carolyn Harris (Swansea East) (Lab)
It is a pleasure to serve under your chairmanship, Mr Hosie. The Opposition welcome the measures, but it is no secret that we are not thrilled with the Government’s attitude to refugees, particularly unaccompanied child refugees. Our major issues of contention centre on the Dubs amendment, which, despite receiving cross-party support, has been restrictive and has not been implemented in the spirit in which it was introduced. When safe and legal routes are blocked for those children, they are left with terrible choices that often involve people traffickers. Those children have been identified as the most vulnerable in the world, and often include girls who are susceptible to sex traffickers. A number local authorities across Britain have repeatedly expressed their willingness to accept more child refugees, and every measure that allows them to do that is a positive step towards meeting our moral and legal responsibilities towards those children. The more councils that pitch in, the better. Local councils are of course the best placed to support refugees who arrive in the UK. These measures may assist, but they do not go far enough. The Government must do more to ensure that local authorities have the resources they need to meet their obligations.
Stuart C. McDonald (Cumbernauld, Kilsyth and Kirkintilloch East) (SNP)
It is good to see you in the Chair, Mr Hosie. I congratulate the Minister on her recent appointment and wish her all the best. She takes up the immigration portfolio at an interesting time. It is good to be able to start on a positive note. The Scottish National party fully supports the statutory instrument and it is good to see that there has been close partnership working with the Scottish Government on this. It is right that responsibility for unaccompanied asylum-seeking children is shared fairly around the constituent parts of the United Kingdom. A fair share of responsibility might be an argument we could turn to in a different context and the migration crisis more generally.
Will the Minister have a look at the Scottish Government’s guardianship service for unaccompanied minors north of the border? Peer reviews have said that it has been successful and made a real difference to unaccompanied children, who have to deal with rules and legal challenges and issues. If she will have a look at that and see whether there is scope to roll it out in the rest of the United Kingdom, that would be a good first step in her new role.
Caroline Nokes
I welcome the support from across the room for this change. We all acknowledge that it is an important principle that we should enable local authorities from across the devolved nations to play a part in the scheme. I thank both the hon. Members who spoke today. The issue of unaccompanied asylum seeking children has been debated many times in this place, and I know that it is a subject about which many of us feel very strongly.
We have a proven track record of offering sanctuary to those in need of protection, and our record in supporting children affected by conflict and persecution is no different. In the year ending September 2017, the UK granted asylum or another form of leave to almost 9,000 children and we have granted leave to nearly 49,000 children since 2010. As of September 2017, a total of 9,394 people had resettled in the UK under the vulnerable persons resettlement scheme.
The hon. Member for Cumbernauld, Kilsyth and Kirkintilloch East raised an important question about the guardianship scheme that is in operation in Scotland and asked whether we would consider looking at an independent guardian for unaccompanied asylum seeking children in the rest of the United Kingdom. By virtue of being looked after, these children are provided with a professional social worker and an independent reviewing officer to oversee their care arrangements, as well as access to an independent advocate and visitor. All unaccompanied asylum seeking children in England are referred to the Refugee Council’s children’s panel, and they are also entitled to legal assistance in pursuing their asylum claim. We believe that those arrangements ensure that children are provided with the independent support and advice that they need, and we currently have no plans to introduce a guardianship scheme.
The Opposition spokesman, the hon. Member for Swansea East, raised the issue of funding. She will be aware that in 2016 we significantly increased the amount of funding available to local authorities to enable them to support these young people. It is important to emphasise that one of my predecessors as Minister for Immigration undertook that we would complete a review, and we are evaluating that now. We keep the issue uppermost in our minds, and I have had regular contact, even just in the past two weeks, with local authority leaders, the Local Government Association and the Convention of Scottish Local Authorities . They are not slow in making their views known to me.
I welcome the extension of the scheme. It plays an important part in our commitment to refugee children. Last week, as part of the UK-France treaty, we agreed to change the date to 18 January 2018—last Thursday—to enable us to fulfil our obligations under the Dubs amendment. I regard those children as very important. I want to see the 480 children we have committed to look after brought here. That will enable us to work more closely with France, Greece and Italy to fulfil our obligations and be proud that we have achieved that.
Question put and agreed to.
Draft European Parliamentary Elections Act 2002 (Amendment) Regulations 2018
Draft European Parliamentary Elections (Amendment) Regulations 2018
(6 years, 2 months ago)
General CommitteesRead Full debate Read Hansard Text Read Debate Ministerial Extracts
The Parliamentary Secretary, Cabinet Office (Chloe Smith)
I beg to move,
That the Committee has considered the draft European Parliamentary Elections Act 2002 (Amendment) Regulations 2018.
The Chair
With this it will be convenient to consider the draft European Parliamentary Elections (Amendment) Regulations 2018.
Chloe Smith
It is a pleasure to serve under your chairwomanship, Mrs Moon.
The purpose of the regulations is to make changes to the procedure for filling MEP vacancies in Great Britain and Gibraltar to reduce the likelihood that a European parliamentary by-election will be required in the run-up to the UK leaving the European Union. Following the referendum, the UK will be leaving the EU. The Prime Minister is clear that the United Kingdom will cease to be a member of the EU on 29 March 2019. After the UK has left the EU, we will no longer have Members of the European Parliament, and we will no longer participate in European parliamentary elections. While the UK remains a member of the EU, however, we are obliged to make arrangements to fill any MEP vacancies that may arise—for example, due to the resignation or death of a sitting MEP.
Electoral law provides that in Great Britain and Gibraltar a vacant MEP seat will stay with the party that won the seat at the previous European parliamentary general election, and it is filled with reference to the unelected candidates on that party’s list of candidates at that election in the region where the vacancy arises. If it is not possible to fill a vacant seat from the winning party’s list because there is nobody else left on it who is willing or suitable to take up the seat, a by-election is held to fill the vacancy. I should say that a different system applies in Northern Ireland, and I will cover that later.
To date, no by-elections have been needed to fill a vacancy as it has been possible to fill vacant seats from the relevant party list. We consider, though, that in some areas there is now a significant risk of a by-election being necessary due to the number and circumstances of the candidates remaining on some party lists. For example, in the east midlands region, there are two candidates remaining on each of the lists for the Conservatives and UKIP. The cost of a by-election would be around £10 million. In the north-east, there is one candidate remaining on the Labour party list. The cost of a by-election there would be around £5 million.
In Scotland, there are four candidates on the SNP list, although it is not clear whether they would all be willing or able to take up a vacant seat. Two are MPs, and an MP cannot also be an MEP. The cost of a by-election in Scotland would be around £13 million. I am sure that Members understand why those figures vary; it is not because of the parties I have mentioned, but because of the circumstances of the regions. As a further example, UKIP won a seat in Wales in 2014. Although there are three persons on its reserve list, we think there might be difficulties in filling any vacancy that might arise, which could lead to a by-election being necessary. The cost of a by-election in Wales would be around £7 million.
I am sure Members are beginning to see the point of the regulations. As this European Parliament gets closer to its end, existing MEPs might consider standing down from the role to pursue opportunities elsewhere, which will increase the risk of a by-election being necessary if it is not possible to fill vacant seats from those candidates on the relevant party lists.
The Government consider that, in the circumstances, there is strong justification for taking action to reduce the likelihood of a by-election occurring before the UK leaves the EU. As I have indicated, there would be significant financial costs to the public purse in holding a by-election. Given that the UK will be leaving the EU, the turnout at such a poll could be low and electors might query the value of holding it.
The statutory instruments therefore make sensible, precautionary changes to the process for filling vacant MEP seats. They will reduce the likelihood of any costly by-elections in Great Britain. The instruments provide that if a vacancy cannot be filled from the list of candidates for the party that won the seat at the previous round of elections, the party that holds the vacant seat may instead nominate a person to fill the vacancy and be returned as an MEP for that party.
Turning to the detail of the proposed changes, the European Parliamentary Elections Act 2002 (Amendment) Regulations 2018 amend the regulation-making powers in section 5 of the European Parliamentary Elections Act 2002 concerning the procedure for filling vacant MEP seats. Using the new powers, the European Parliamentary Elections (Amendment) Regulations 2018 amend the European Parliamentary Elections Regulations 2004, which set out provisions governing the conduct of European parliamentary elections in Great Britain and Gibraltar.
The proposed changes in the European Parliamentary Elections (Amendment) Regulations 2018 address the position whereby a vacancy has arisen and it is not possible for the regional returning officer to fill the vacant MEP seat from the list of the party that won the seat in the region at the previous election.
As I briefly mentioned, under the proposed changes, where the outgoing MEP stood for a registered party, the RRO will still initially seek to fill the vacancy through approaching in turn the reserve candidates on the party’s list of candidates for the relevant region. If the RRO is unable to fill the vacancy from the party list because that list is exhausted, that will no longer trigger a by-election. Instead, the RRO must ask the nominating officer of the party that previously won the seat to nominate a person to fill the vacant seat and be returned as an MEP for that party. The person must meet the existing requirements to be an MEP—for example, in terms of age and nationality.
Under the proposed changes, the nominating officer must respond within 28 days to the RRO, giving the name of the person who is to fill the vacant seat. In the event of the nominating officer being unable to nominate a person within 28 days, a by-election will be held to fill the vacancy. We think it extremely unlikely that a party will not be able to nominate a person to fill the vacancy within the 28 days and so cause a by-election. The regulations make similar provision for independent candidates and jointly nominated candidates.
Alex Cunningham (Stockton North) (Lab)
Can the Minister help me a little? Pardon my ignorance of this matter, but people are elected as part of a party list, yet they can apparently resign from the party and retain their seat in the European Parliament. Is it the case that the regulations will not affect that situation? Can a person no longer be a member of a party but still retain their seat, despite the fact that the public, as in the case of the north-east of England, voted for a party and that person has resigned and is now an independent? In that case, will that person retain their seat, meaning that the provisions do not have to be put in place?
Chloe Smith
I am grateful to the hon. Gentleman in two ways: for giving me the chance to finish my cough sweet—he will be able to hear I am struggling somewhat—and for giving me the instance that he had in mind when he raised his question. I believe his point is correct: the regulations do not change that existing scenario. If Members want to discuss what will happen if a person, under a future scenario, became an independent, for example, and so ceased to represent the party for which they originally took their seat, we can do so, but I do not believe the regulations change the particular instance the hon. Gentleman has in mind.
The changes are modelled on the process that Parliament previously agreed for filling MEP vacancies in Northern Ireland; it has been successfully used to fill a vacant seat there. I should explain that the single transferable vote is used for European parliamentary elections in Northern Ireland, which differs from the system used in Great Britain. Under STV, there are no party lists and in the event of a vacancy the nominating officer of the party that previously won the seat will nominate the person to be the new MEP. They will then be returned to the seat by the chief electoral officer for Northern Ireland.
We have consulted on the instruments with the Electoral Commission and others, such as the Society of Local Authority Chief Executives, the Association of Electoral Administrators and the Government of Gibraltar. There is general agreement among those whose views were sought on the instruments that it is desirable to avoid a European parliamentary by-election across a region just before the UK leaves the EU.
Our law provides that if a vacancy occurs less than six months before the next European parliamentary election, the seat remains vacant until that election and it is not necessary for a by-election to be held. We are maintaining that position, but without the changes there would be a period of almost a year when it would be necessary to hold a by-election if a vacant seat could not be filled from the candidates on the relevant party list.
In summary, the statutory instruments make sensible and proportionate changes to the process for filling vacant MEP seats. The changes are designed to reduce the likelihood of any costly European parliamentary by-elections being required in Great Britain before the UK leaves the EU. I commend the regulations to the Committee.
Deidre Brock (Edinburgh North and Leith) (SNP)
It is a great pleasure to serve under your chairmanship, Mrs Moon.
I certainly empathise with the intent behind this move: who would want to continue incurring the cost of elections for a Chamber that will have no further relevance in a few months’ time? There are the obvious additional benefits for the Conservative party, too, in that local difficulties such as Belinda Don and Alex Story can be easily swept under the carpet. Jilted candidates cannot make too much of a fuss if the principle of nomination rather than election has been established, can they? That, though, runs counter to democracy. The idea that a party, or indeed an individual in the case of independents, can simply nominate a new parliamentarian is not one that sits easily with me, and I suspect it will not sit easily with many people.
I accept that the d’Hondt system used on a list appoints rather than elects people to a casual vacancy, but at least those who were on the lists at the general election were put before the voting public. If we run down the route of nominating a party favourite who was not on the lists for the election in question, we are in danger of endorsing the idea that people can become parliamentarians without being subjected to any public scrutiny. The electorate will not have had the chance to endorse—or, more pertinently, to reject— them at the ballot box.
The Minister might be interested to know that the Scottish Parliament operates a d’Hondt system for the additional Member lists for regional MSPs, so if a list is exhausted, the seat lies vacant until the following election. That has happened. The death of Margo MacDonald in 2014 after being elected as an independent on her own list meant that her seat lay vacant for two years, before being filled at the 2016 Holyrood general election.
Personally, I would like to see Ministers take this away and have another think. It would surely be better to be short an MEP or two than to take the democracy out of the system—potentially take the democracy out of the system altogether. However, that is not what is on offer here today and I gather I will be in the minority, so I simply place on record my concerns about possible abuses of the system, and I request that the Minister keep a sharp eye out for such possible practices in future.
Cat Smith (Lancaster and Fleetwood) (Lab)
It is a pleasure to serve under your chairmanship, Mrs Moon. I welcome the Minister to her post. We share not only a first initial and a surname, but now a policy brief. I am sure there will be no confusion whatever.
As the Minister said, the regulations allow for vacant seats in the European Parliament to be filled by the sitting party’s nomination, or in the case of independent parties, substitution. That is what we are discussing. The purpose of the regulations is to reduce the likelihood of a by-election in the run-up to 2019. As we prepare to leave the EU, our country needs certainty and stability, not confusion and chaos. A European Parliament by-election between now and our departure from the EU is certainly not in the interest of the public purse.
While we do not oppose the adoption of the regulations, given the huge cost of an EU by-election and the fact that we are leaving the EU, there are some points that I would like to place on record. My concern is that the proposals give far too much power to political party machines, further adding to our country’s democratic deficit. That will allow party leaders to nominate whoever they want, overlooking the confidence of the people and the list of names that was placed before the people at the last election to take place in this country.
I do not want to comment too much on private party matters. The fiasco concerning the replacement of two Conservative MEPs in the north-east, which went public last summer and during which the candidate next on the nomination list was overlooked, shows that the Conservative party is expert in this regard. Does this perhaps explain why the Government are so keen to introduce the regulations—to save further embarrassment later? Unlike the Conservative party, the Opposition are truly democratic and we recognise the huge contribution of our many Labour party members—of course, we do not know how many Conservative party members there are—in the decision making of our party.
The proposals are also timely, given what we all suspect is the imminent or possible collapse of UKIP. I am sure the Minister will be aware that MEPs elected under a particular party label have left the party to become independents in the last few days. If such a person subsequently resigns as an MEP, what is the position? Does the replacement come from the party under whose banner the first person was elected? I would like to hear the Minister’s comments on that.
Those are a few of my concerns regarding the proposals, but, as I have said, the Opposition will not oppose the regulations, given the huge cost of an EU by-election and the fact that we will be leaving the EU.
Chloe Smith
I appreciate the Committee’s comments and welcome its support for the regulations. Of course, I will keep a close eye on the brief, as the hon. Member for Edinburgh North and Leith asks—that is absolutely my intention in taking up this new role. I thank the hon. Member for Lancaster and Fleetwood for her welcome, and I look forward to working with all the Opposition spokespeople on such issues.
As the hon. Lady set out, this is the right thing to do at this moment because it gives us stability as we consider the UK’s exit from the EU. I do not intend to dwell on the party political points that have been made, except to remind the hon. Lady that it was a Labour Government who brought in the process for filling MEP vacancies in Northern Ireland, which forms the basis of the proposed model, as I outlined. I do not think that we have a party political argument worth having, but we do have something worth looking at in the public interest—the cost of holding by-elections and the appetite for votes that might be regarded as having little value as we approach the UK’s exit from the EU.
To answer the point made by the hon. Member for Stockton North about politicians who become independents —that point was, I think, repeated—such a person could remain as an independent. If they in turn subsequently vacated the seat, the original party from which they moved—the party that could be seen to have won the original election—would fill the seat, so the process that we are talking about would pass back to the hands of the original party, even if a person had become an independent in the meantime.
That is well in line with the principles of democracy that we should be looking to, because the people had their choice at the original election, albeit under the list system, and they chose between the parties. That choice is emphasised in these regulations.
I commend the regulations to the Committee and thank it for its support.
Question put and agreed to.
draft European Parliamentary Elections (Amendment) Regulations 2018
Resolved,
That the Committee has considered the draft European Parliamentary Elections (Amendment) Regulations 2018.—(Chloe Smith.)
Space Industry Bill [ Lords ] (First sitting)
Tuesday 23rd January 2018
(6 years, 2 months ago)
Public Bill CommitteesRead Full debate Space Industry Act 2018 View all Space Industry Act 2018 Debates Read Hansard Text Read Debate Ministerial Extracts Amendment Paper: Public Bill Committee Amendments as at 23 January 2018 - (23 Jan 2018)
The Committee divided: - Ayes: 2 / Noes: 10 - Question accordingly negatived.
The Committee divided: - Ayes: 7 / Noes: 10 - Question accordingly negatived.
The Committee divided: - Ayes: 7 / Noes: 10 - Question accordingly negatived.
The Chair
We are now sitting in public and the proceedings are being broadcast. Before we begin, everyone should ensure that their electronic devices are turned off or switched to silent mode. Tea and coffee are not allowed during sittings because they are hot drinks. I also remind Members that they need to declare any relevant interests publicly. They can do that now, if they wish, or when they first rise to speak. Does anyone wish to declare any interests?
David Morris (Morecambe and Lunesdale) (Con)
I do not know whether it is relevant or not, but I am the chairman of the all-party parliamentary group on space.
The Chair
Thank you.
Today we will consider the programme motion on the amendment paper, then a motion to enable the reporting of written evidence for publication.
Ordered,
That—
(1) the Committee shall (in addition to its first meeting at 9.25 am on Tuesday 23 January) meet—
(a) at 2.00 pm on Tuesday 23 January;
(b) at 11.30 am and 2.00 pm on Thursday 25 January;
(c) at 9.25 am and 2.00 pm on Tuesday 30 January;
(2) proceedings on consideration of the Bill in Committee shall be taken in the following order: Clauses 1 to 12; Schedule 1; Clauses 13 to 17; Schedule 2; Clause 18; Schedule 3; Clauses 19 to 21; Schedule 4; Clause 22; Schedule 5; Clauses 23 to 40; Schedule 6; Clauses 41 and 42; Schedule 7; Clause 43; Schedule 8; Clauses 44 and 45; Schedule 9; Clauses 46 to 59; Schedule 10; Clauses 60 and 61; Schedule 11; Clauses 62 to 66; Schedule 12; Clauses 67 to 71; new Clauses; new Schedules; remaining proceedings on the Bill;
(3) the proceedings shall (so far as not previously concluded) be brought to a conclusion at 5.00 pm on Tuesday 30 January. —(Joseph Johnson.)
The Chair
Therefore the deadline for amendments to be considered at the first two line-by-line sittings has passed. The deadline for amendments to be considered at the third line-by-line sitting is the rise of the House on Thursday.
Ordered,
That, subject to the discretion of the Chair, any written evidence received by the Committee shall be reported to the House for publication.—(Joseph Johnson.)
The Chair
We now begin line-by-line consideration of the Bill. Today’s selection list is available in the room and on the Bill website. It shows how selected amendments have been grouped together for debate. Grouped amendments are generally on the same or a similar issue. A Member who has put their name to the lead amendment is called first. Other Members are free to catch my eye to speak on all or any of the amendments in that group. A Member may speak more than once in a single debate.
At the end of a debate on a group of amendments, I shall call the Member who moved the lead amendment again. Before they sit down, they need to indicate whether they wish to withdraw the amendment or press it to a Division. If a Member wishes to press any other amendments or new clause in a group to a vote, they need to let me know. I shall work on the assumption that the Minister wishes the Committee to reach a decision on all tabled Government amendments.
Please note that decisions on amendments do not take place in the order that they are debated, but in the order that they appear on the amendment paper. In other words, debate occurs according to the selection list, and decisions are taken when we come to the clause that the amendment affects.
I shall use my discretion to decide whether to allow a separate stand part debate on individual clauses and schedules following debates on relevant amendments. I hope that that explanation is helpful.
The Committee has just agreed a programme motion, which will be reproduced on the amendment paper from tomorrow. The motion sets out the order in which we will consider the Bill.
Clause 1 ordered to stand part of the Bill.
Clause 2
Duties and supplementary powers of the regulator
Karl Turner (Kingston upon Hull East) (Lab)
I beg to move amendment 13, in clause 2, page 2, line 25, at end insert—
“(ea) the effect on the environment and on local communities of activities connected with the operation of spaceflight activities or the operation of a spaceport as licensed under this Act;”
This amendment adds impact on the environment and local community activities to the list of areas the regulator should take into account when exercising functions under this Act.
The Chair
With this it will be convenient to discuss Government new clause 1—Grant of licences: assessments of environmental effects.
Karl Turner
It is a pleasure to serve under your chairmanship, Mr Bone. The amendment adds impact on the environment and local community activities to the list of areas the regulator should take into account when exercising functions under the Bill.
I am grateful that the Government listened to my colleagues in the other place, tabled new clause 1 and agreed to undertake assessments of environmental effects before the regulator grants certain licenses. I pay tribute to my Front-Bench colleagues in the other place, who did a great deal of work to improve the Bill by persuading the Government to make a number of crucial concessions.
I do not intend to press the amendment to a vote, but I would like to ask the Minister whether he will set out on the record exactly how the proposed operator licensing regime and its regulation powers will work in relation to existing planning laws and processes. Concerns were raised in the other place that the regulator or persons with an operator license will be able to overrule or disregard any existing planning regulations, laws and processes when it comes to potential spaceport or spaceflight operations in the UK.
As I indicated, I am happy to withdraw the amendment if the Minister is prepared to clear up any ambiguity surrounding existing planning procedures and the development the UK’s space industry. I hope he listens not only to the concerns that we raise in Committee but to the expert contributions in the other place.
The Minister of State, Department for Transport (Joseph Johnson)
It is a pleasure to serve under your chairmanship on this important Bill, Mr Bone. I echo the hon. Gentleman’s thanks to Members in the other place for the collegiate and helpful way in which they developed the Bill into its current state.
I recognise the hon. Gentleman’s concerns about environmental protection and the impact on local communities of spaceflight activities and the operation of spaceports under the Bill. As he said, similar issues were raised in the other place. Following constructive debates in the other place on environmental issues, the Government reviewed the compatibility of the existing planning and environmental framework with spaceflight activities. During that review, certain situations were identified where the existing framework may not provide the environmental protection that we all wish to be required of spaceflight activities. Discussions have since taken place across Government to address that potential gap, resulting in the tabling of Government new clause 1.
New clause 1 will place a mandatory requirement on an applicant for either a launch or a spaceport licence to submit an assessment of the environmental effects of their proposed activity as a precondition of receiving a licence. That duty will ensure that appropriate assessments of environmental effects are conducted by the operator or spaceport licensee and considered by the regulator prior to the determination of an application for a licence.
As hon. Members are aware, there is already a comprehensive body of environmental and planning legislation with which spaceports and spaceflight operators will need to comply, independently of the requirements in the Bill. As such, the new clause seeks to ensure that appropriate assessments are undertaken without placing a disproportionate burden on applicants. To achieve that, it allows for existing equivalent environmental assessments to be considered where appropriate. That will be the case only where the regulator is satisfied that there has been no material change of circumstance since the previous assessment was prepared.
I hope I have reassured hon. Members of the Government’s intention to ensure that spaceport and operator licences are granted only following a robust assessment of the environmental effects of the activities those licences permit. New clause 1 goes even further than the hon. Gentleman’s amendment 13. It adds to the duty on the regulator in clause 2(2)(e) to take into account any environmental objectives set by the Secretary of State, including those set by the Environment Agency.
We also amended schedule 1 in the other place to include an indicative licence condition that, if included in a licence, would require assessments of the impact of noise and emissions from spaceflight activities. I hope in the light of the Government new clause that the Committee will agree that the Bill contains robust environmental protections, and I ask the hon. Gentleman to withdraw his amendment.
Dr Philippa Whitford (Central Ayrshire) (SNP)
I, too, welcome the amendment and the Government’s new clause to strengthen the environmental protections. Those hoping to establish spaceports are still concerned about exactly what is expected of them. It is about trying to get the right balance between protecting the community and allowing spaceports to develop. The sooner the regulations and expectations are clear, the more likely it is that spaceports will go ahead. At the moment, it is hard to expect them to invest if there is still the risk that, at some point, they simply will be ruled out by one of the environmental regulations.
Karl Turner
I beg to ask leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Clause 2 ordered to stand part of the Bill.
Clauses 3 to 6 ordered to stand part of the Bill.
Clause 7
Provision of range control services
Question proposed, That the clause stand part of the Bill.
Dr Whitford
Again, I welcome any clarification, sooner rather than later, about who is envisaged as providing the range control services. It is clearly stated and welcome that the provider should be independent from those operating the spaceport or the flight. Would it be air traffic control? Who exactly is identified? The problem with the Bill is still that there is a lot of vague gaps that have not been filled in, which is causing anxiety.
Joseph Johnson
I thank the hon. Lady for her question on range controls. Clause 7 requires that range control services must be provided either by the Government or by licensed providers. At present, only one part of the Government—the Ministry of Defence—is able to provide range control services. Range safety for existing military ranges is regulated by the Defence Safety Authority, but our intention is that, for spaceflight, those services will be provided on a commercial basis. Indeed, a driving purpose of the Bill is to enable commercial and not state-sponsored or institutional spaceflight. Since range control services are one of the key mechanisms through which we will protect the public during spaceflight activities, any provider must hold a licence. That will help to ensure the regulator that only fit-and-proper persons can act as a range control service provider. I hope that clarifies the situation.
Dr Whitford
Is the Government’s expectation clear to the companies that are already developing? Are they able to have the security to set up what is, in essence, yet another completely new industry to service the space launch industry?
Joseph Johnson
In our Launch UK programme, we have made it clear that range control is one of the opportunities for which we are seeking interest from industry. To that extent, the private sector is aware that this is one of the big opportunities that the Bill will enable.
Question put and agreed to.
Clause 7 accordingly ordered to stand part of the Bill.
Clause 8 ordered to stand part of the Bill.
Clause 9
Grant of operator licences: safety
Karl Turner
I beg to move amendment 14, in clause 9, page 7, line 37, leave out “to (4)” and insert “and (3)”.
This amendment changes the requirements the regulator must satisfy in order to grant an operator licence to UK Space Port operators.
The amendment is merely a probing amendment, and I do not intend to speak to it for very long. We would like the Government to ensure that the regulator must not grant an application to a potential operator unless it has carried out a thorough risk assessment and meets the prescribed requirements as laid out in the Bill. I would like to press the Minister and seek further details on how the relationship between the Health and Safety Executive and the Civil Aviation Authority or UK Space Agency will work, and how best practices will be shared.
A lengthy debate in the other place highlighted the concerns. I am grateful to the Minister in the other place, who indicated that he would go away and work with officials. Concerns were raised, mainly by my Front-Bench colleagues in the other place and by me in the Commons on Second Reading, about how the Health and Safety Executive will work with the regulators. The Government stated that there would be a memorandum of understanding, but we are still in the dark when it comes to details.
I seek assurances from the Minister that regulators have the expertise and resources necessary to ensure that the general public are kept safe when it comes to the potential development of our space industry. I also reiterate that, so far, we have little detail on how the UK Space Agency and the CAA are going to share best practice. We would be grateful if the Minister could shed any more light on that.
Joseph Johnson
I will certainly attempt to do so. The hon. Gentleman raises the important issue of the safety requirements that regulators must take into account when deciding applications for a spaceflight operator licence under clause 9. The Bill makes it clear that safety regulation will be at the heart of the regulation of spaceflight, spaceports and associated activities. Clause 2 sets out the core duties of the regulator and establishes that ensuring the health and safety of the public is the primary duty.
Clause 9 imposes very clear requirements on both the applicant for a spaceflight operator licence and the regulator in deciding that application. Clause 9 requires that applicants for a spaceflight operator licence assess the risks to health and safety posed by the spaceflight activity. Clause 9 makes a necessary differentiation between the assessments carried out for those who voluntarily agreed to participate in spaceflight activities, which would include any crew or other spaceflight participant, and others who are not taking part in any prescribed capacity—the general public. For people taking part in spaceflight activities, details of the risk assessment required under subsection (2) will form a critical part of the informed consent form that clause 16 requires the volunteers to sign before they are allowed to participate in those activities.
The other key aspect to the clause is managing risks to the general public. Even after all steps have been taking to reduce risks to as low as is reasonably practicable, subsection (4)(b) means that the regulator will not issue a licence if the residual risk to public health and safety remains unacceptably high. If amendment 14 were passed, that protection for the general public would be removed, although I understand that, as the hon. Gentleman said, it is a probing amendment.
Subsection (5) enables the making of regulations to make provision about the matters that operators must take into account and other requirements to be met in carrying out risk assessments. Paragraphs (b) and (c) address the risk to public safety, the steps to be taken to ensure that risks are as low as reasonably practicable, and how acceptable levels of risk are to be determined. The regulations will also prescribe the factors that must be taken into account in determining acceptable levels of risk. Subsection (6) enables regulations setting out information that applicants must provide so that the regulator may be satisfied that an applicant has done what it is required to do under the licence.
Dr Whitford
This is one of the key areas in the Bill where spaceport and launch operators do not know what is expected of them. I understand that the Government wish to consult, but the sooner that it is clarified the better. Regulations coming forward two years after Royal Assent—that comes from a comment in the Lords, and would mean the summer of 2020, when the Government had hoped to launch—would throw complete planning blight over the industry. It is not possible to borrow money to develop launch vehicles or a spaceport without any idea what standard has to be reached.
On clause 9(9) and thinking about passengers, one of the industries that will develop is space tourism. Clearly, the public must be protected as far as possible. In the past, those involved in launch or space abilities have been incredibly fit and trained people. For those going as tourists, that will not be the case. It will be important that we carefully lay down what level of health expectation or physical training is required, because we do not want the early years of the industry to be marred by deaths in space.
Joseph Johnson
I will respond to two of the points made by hon. Members. On early visibility of licence requirements, to get the industry feeling confident that it has a clear set of rules to work with, we will continue to engage with it as we develop the detailed regulations to ensure that the legislation facilitates and supports development in the sector and provides operators with the confidence to move forward with their plans. In addition, as has been said, regulators will be holding extensive pre-licensing discussions with potential operators in order for them to provide more detailed guidance.
Karl Turner
I thank the Minister for his response and I beg to ask leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Clause 9 ordered to stand part of the Bill.
Clause 10
Grant of spaceport licence
Karl Turner
I beg to move amendment 15, in clause 10, page 8, line 27, leave out ‘satisfied that’.
This amendment ensures that two defined criteria steps are properly defined for granting an application for a space port licence.
The amendment is intended to make the legislation clearer about the regulator not granting an application for a spaceport licence “unless satisfied that”—this is from the Bill—
“the applicant has taken all reasonable steps to ensure that risks to public safety arising from the operation of the spaceport are as low as reasonably practicable, and…any prescribed criteria or requirements are met.”
Speaking purely as a lawyer, I thought the legislation would be clearer to remove “satisfied that”, but on reflection that is probably just semantical. I therefore beg to ask leave to withdraw the amendment.
Joseph Johnson
If the amendment has been withdrawn, I would just beg to move that the clause stands part of the Bill.
The Chair
Ah! You are getting a little ahead of yourself, Minister.
Amendment, by leave, withdrawn.
Clause 10 ordered to stand part of the Bill.
Clause 11
Terms of licences
Karl Turner
I beg to move amendment 16, in clause 11, page 8, line 37, leave out subsection (2).
This amendment removes the specified limit they must pay in damages to an uninvolved third party in the event of an accident in operator licences.
The Chair
With this it will be convenient to discuss the following:
Amendment 5, in clause 11, page 8, line 37, leave out “may” and insert “must”.
This amendment places a definite cap on the amount of a licensee’s liability.
Amendment 6, in clause 11, page 9, line 12, at end insert—
“(7) Within 12 months of this Act coming into force the Secretary of State must lay a report before Parliament setting out plans on what an appropriate maximum limit would be on the amount of the licensee’s liability under subsection (2).”.
This amendment would ensure that the Secretary of State decides on what level the mandatory cap for the licensee’s liability is.
Karl Turner
The amendment relates to the terms of spaceport and space operator licences. I propose to remove the specified limit that must be paid in damages to an uninvolved third party in the event of an incident in the operator’s licences. Clause 11 concerns the terms that may or must be included in a licence issued under the Bill authorising spaceflight activities, the operation of a spaceport or the provision of a range control services.
Colleagues in the other place were concerned about the particular wording of this section. We have heard that the amount of liability may be capped. The Minister will correct me if I am wrong, but I think it was mentioned on Second Reading in the Commons that a limit of £20 million had been suggested. I would like the Minister to clarify the issue of the cap, and that is why we have re-tabled the amendment. Although I declare an interest as a lawyer, I did not practise personal injury law and this is not my area of expertise. However, it seems to me that £20 million would cover two very serious non-fatal incidents. It would not be anywhere near enough to cover costs such as living costs and other issues that would arise from serious injury.
I want to know from the Minister, if he is prepared to tell me, whether there is a limit on how much the operator or the Government must pay in damages to an uninvolved third party in the event of an incident. It is also not clear who pays if the losses exceed the proposed cap. Are the Government the insurer of last resort? In the unlikely event of a catastrophic incident, would the Government meet the excess above any cap?
We are certainly not opposed to a cap. We just want some clarity on the issue. Therefore, I would be grateful if the Minister could clear up some of these concerns, which were also raised in the other place, where they were very well put.
The Chair
As we will also debate amendments 5 and 6 now, it seems appropriate to have the stand part debate too.
Dr Whitford
My amendment is completely the opposite of the Labour amendment. As things stand, the Government basically take liability for injury and accident and the operator has to indemnify the Government to cover that risk. What we are looking for is a change in subsection (2) from “may” to “must”. The Outer Space Act 1986 makes that clear. At the moment, the liability limit is €60 million, not £20 million. Without some form of cap on the operator’s liability, it is impossible for operators to get insurance. Therefore, they will simply continue to operate outside the UK under the Outer Space Act, somewhere with a limit of €60 million, rather than in the UK with unlimited liability, for which they simply cannot get insurance.
Amendment 6 deals with the level of cap for the kind of launches that are likely to occur from the UK. Further on in the Bill, we would want to have perhaps a per launch cap rather than per satellite, as it is now. With CubeSats and nanosatellites launched in clusters, the liability cap would be absolutely untenable. Consultation is needed. There may be a later reference to launches that could be defined as green or amber, and it may be that different caps are set for that kind of launch as an overall approach. However, there has to be an ultimate limit and that should not be higher than the current €60 million.
The clause mentions the different aspects of launch, and those are the spaceport, the range control and the launch operator, and later there will be the satellite operator. I have tabled an amendment to a later clause to define the liabilities of those groups, with very clear margins, so that there are no gaps that a victim of an accident could fall between.
Joseph Johnson
Clause 11(2) provides a power for a licensee’s liability to indemnify the Government under clause 35 to be capped in an operator licence. Amendment 16 would remove that vital power. Under both this Bill and the Outer Space Act 1986, operators have a liability to indemnify the Government against claims for damage or loss from foreign states and their nationals. That is to ensure that we meet our obligations under the UN space treaties.
However, satellite operators have previously raised concerns that such a liability is a barrier to operating in the space industry. Operators found that the unlimited liability made it difficult to raise finance or to insure against. The Government have therefore responded to those concerns.
The unlimited liability provisions under the Outer Space Act were amended by the Deregulation Act 2012 and since then licences issued under that Act for the procurement of an overseas launch and the in-orbit operation of a satellite benefit from a cap, which is set out in licence conditions.
The UK Space Agency publishes the usual level of cap in its guidance, which currently sets the cap at €60 million for standard missions. Crucially, however, the level is not set by statute, so the cap can be varied depending on the risk of the activity in question. Some activities currently regulated under the Outer Space Act, notably procuring the launch of a space object and the operation of a satellite in orbit taking place from the UK, will be regulated under this Bill in future, and it is the intention to continue to exercise the discretion to cap the liability to indemnify Government in these licences.
Therefore, following Royal Assent of this Bill, amendment 16 would reverse current Government policy and disadvantage satellite operators in the UK. Conversely, amendment 5 seeks to ensure that all operator licences must cap the liability to indemnify the Government under clause 35. Amendment 6 would then go on to ensure that the level of this cap would be set out in a report to Parliament.
I understand clearly that the intent of these amendments is to support operators in the UK and the Government welcome support for that principle, which is why we have included this power in the Bill. However, these amendments are premature. The cap on the indemnity to the Government under the Outer Space Act was based on many years of licensing the procuring of the launch of space objects and of the operation of satellites in orbit. Indeed, it was not put in place until more than 25 years after that Act gained Royal Assent. The costs and benefits of capping liability for those activities were fully considered and were subject to a full consultation with industry. We intend to take a similar approach to considering capping a launch operator’s liability to Government under this Bill, as launch is a new activity in the UK and poses more risks for the UK as a launching state.
As I said on Second Reading, we intend to announce a call for evidence on all issues relating to insurance and liabilities early this year, following Royal Assent. That will allow us to start to assess the appropriateness of a cap for this new and potentially riskier activity, balancing the economic benefits of such activity with the need to protect the taxpayer.
On that basis, I hope that the hon. Member for Kingston upon Hull East will withdraw the amendment.
Karl Turner
I beg to ask leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Dr Whitford
I wish to press amendment 5, which would change the wording from “may” to “must”. There is still room to consult on the level of the cap, but the industry requires a Government commitment that there will be a liability cap.
Joseph Johnson
We intend to explore that carefully in the consultation, taking into account the fact that launching in the UK is a riskier activity than procuring the launch overseas. It poses a higher level of risk to the UK taxpayer, and we need to consider it very carefully.
Dr Whitford
I assume the Government recognise that other launching states, such as Australia, France and the US, all have liability caps. If there is no cap, that will simply kill the launch industry dead in this country. I will not push to a vote amendment 6, which would set the cap at a particular level, but the Government should accept the principle that there will be a cap. I would be happy if the Government plan to bring forward such a measure before the third day, but simply to leave the wording as “may” leaves too much doubt.
Amendment proposed: 5, in clause 11, page 8, line 37, leave out “may” and insert “must”.—(Dr Whitford.)
This amendment places a definite cap on the amount of a licensee’s liability.
Question put, That the amendment be made.
Karl Turner
I beg to move amendment 17, in clause 12, page 9, line 41, at end insert—
“(ea) must consult the Environment Agency or (as appropriate) the Northern Ireland Environment Agency, the Scottish Environment Protection Agency or Natural Resources Wales;
“(eb) must consult any relevant local planning authority;”
This amendment ensures that the devolved Administrations are consulted in regards to respective Environment Agency bodies.
The Chair
With this it will be convenient to discuss amendment 18, in clause 12, page 10, line 4, at end insert—
‘(9) In subsection (6) a “relevant local planning authority” means a local planning authority with jurisdiction over any location which would be significantly affected by the licence application.”
This amendment defines ‘relevant local planning authorities’.
Karl Turner
I will be brief, Mr Bone. The amendments aim to tighten up some of the ambiguous wording in the Bill. They are intended to ensure that if space activities were to be established under any of the devolved Administrations of Scotland, Northern Ireland and Wales, their respective environment agency bodies would be consulted before any decision was made on granting an operator licence in their jurisdictions. Will the Minister assure us that he will ensure that the regulator will properly consult the Northern Ireland Environment Agency, the Scottish Environment Protection Agency or Natural Resources Wales, as well as any relevant local planning authority, before an operator can be granted a UK spaceport licence?
I tabled amendment 18 with the aim of properly defining a “relevant local planning authority”. We believe that the Bill is too vague and have expanded on its wording to ensure that a local planning authority is defined as an
“authority with jurisdiction over any location which would be significantly affected by the licence application”.
I have seen the Minister’s collegiate approach to the Committee and hope that he will note Opposition concerns, and I shall be happy to withdraw the amendment if he addresses the important points I have raised.
Stephen Doughty (Cardiff South and Penarth) (Lab/Co-op)
It is always a pleasure to serve under your chairmanship, Mr Bone.
I support the amendments and hope that the Minister can answer some questions. I am speaking with a constituency interest, as Natural Resources Wales is in my constituency. As that constituency borders England, and has a maritime border, issues such as those we are considering are of regular concern to my constituents. A recent example was the building of the new Hinkley Point nuclear power station on the other side of the Bristol channel. Various significant concerns were raised about the granting of licences for the disposal of mud, which is being removed from the Hinkley Point site to the Welsh side of the channel.
I do not want to get into the specifics of that example, but as there is a question of potentially hazardous materials and the potential for cross-border contamination within the UK, I agree that the matters should be the subject of proper consultation with the devolved authorities, given the likely consequences of anything untoward happening.
Dr Whitford
I welcome the amendment. My hon. Friend the Member for Glasgow North West and I certainly support it, because three of the potential sites are in Scotland, and one is in Wales. However, as we have discussed, the industry could grow and while there is not currently a site in Northern Ireland, there could be in future. It is important that the devolved Governments should be respected and consulted.
The Government introduced new clause 1 on environmental impact right at the start, when we considered clause 2, and it is crucial that they should respect the devolved Governments’ environmental agencies and local planning considerations.
Joseph Johnson
I thank hon. Members for raising important issues on consultation with relevant environmental and planning bodies. The regulator will identify what assessments of environmental effects are appropriate, during the pre-application process. In reviewing those assessments and deciding whether conditions should be attached to a licence, the regulator may wish to have an input from various environmental bodies. However, requiring consultation with the relevant environment agency and local planning authority before deciding what conditions to attach to a licence is not necessary, and may end up being disproportionate.
For example, once the industry has developed, multiple launches may occur under a separate but almost identical licence. In such a case it would be disproportionate for the regulator to have to consult the environment agency and local planning authority for each new licence. It is also worth noting that clause 2 requires the regulator to take into account any environmental objectives set by the Government, which would include any issued by the environment agency.
The existing planning, regulatory and environmental framework will continue to apply, and environmental bodies will have a say, in accordance with their statutory remit, at the relevant stages, such as when planning permission is applied for. I hope that in the light of the Government amendment and the provisions already in the Bill, Members will agree that robust assessments of environmental effects will be conducted and considered prior both to the granting of a licence and to the imposition of conditions under the Bill. I would therefore ask the hon. Member for Kingston upon Hull East to withdraw amendment 17.
Dr Whitford
I wonder whether the Government would consider including consultation with these agencies within the environmental impact assessment in clause 2, as amended by new clause 1. The Minister talks about consulting with the Environment Agency but, obviously, in the devolved administrations there are three other environment agencies and they should have their place.
Joseph Johnson
I would not want the Committee to think that we have not been engaging closely with the devolved Administrations in the development of the Bill, because we have, and over a considerable period. We have worked with Scotland, Wales and Northern Ireland at official level to ensure that all the devolved Administrations are content with provisions in the Bill. I have been out in Northern Ireland myself to discuss the opportunities this Bill presents to businesses there.
Karl Turner
While these amendments intend to ensure that the respective environmental bodies would be consulted were space activities to be established in any of the devolved Administrations—Scotland, Northern Ireland and Wales—I do not think the Government have gone anywhere near far enough on that. On that basis, I want to push the amendment to a vote.
Question put, That the amendment be made.
Dr Whitford
On the matter of informed consent, I highlight the written evidence submitted to us around what will be defined as informed consent and the possible need to explain complex issues and whether there would be potential for exposing technical information, which, under the US’s ITAR—International Traffic in Arms Regulations—agreement, would be a problem. That is not particularly something I want to bring forward, but we have received a written submission on informed consent.
Joseph Johnson
Informed consent is an important part of the Bill. We will be developing detailed regulations on informed consent, including the information that operators must provide to individuals before they sign consent forms.
Question put and agreed to.
Clause 17 accordingly ordered to stand part of the Bill.
Schedule 2 agreed to.
Clause 18 ordered to stand part of the Bill.
Schedule 3 agreed to.
Clauses 19 to 21 ordered to stand part of the Bill.
Schedule 4 agreed to.
Clause 22
Security regulations
Question proposed, That the clause stand part of the Bill.
Stephen Doughty
I want to ask the Minister a few questions regarding the clause. I apologise if they have been covered already in other parts of the debate.
Clearly, the security of space for our operations is crucial. These activities will be of significant interest to terrorist organisations or others who would wish to cause harm. This is a problem shared not only in this country but across Europe and the world. Currently, we have sensitive information-sharing systems with the Five Eyes countries and our European neighbours. Given the context of Brexit and the absence of guarantees on the existence of a security treaty and so on—these are issues we have covered at great length in the Home Affairs Committee—will the Minister discuss the consideration given to sharing information with our European partners, in particular regarding the safety and security of operations and those who would wish to target them? On the one hand, any new technology or operation could lead us towards a cautious and very secure approach, but there may also be some issues, whether in relation to the cyber or physical aspects of these operations, such as using locations that have not traditionally been used before for civil aviation or other aerospace activities.
We need to take every precaution necessary, particularly with regard to the increasing threat from not only terrorist organisations and non-state actors, but Russia and other countries that would seek to carry out cyber-attacks—North Korea, for example. Many allegations have been made about attacks on other parts of the UK’s infrastructure, including the NHS, and I see no reason why they would not choose to attack such a high-profile area as space activity.
Will the Minister say a little about how we will ensure the most thorough sharing of information? Will he also give us some guarantees? For example, does he believe that a security treaty will be needed with our European neighbours to ensure that data on individuals can be shared adequately enough to deal with those concerns?
Joseph Johnson
National security and the security of spaceports is, indeed, a vital key element of the Bill. The Bill contains measures to secure against unauthorised access to and interference with space craft, spaceports and any associated infrastructure. It also enables the Secretary of State and regulators to take action where necessary in the interests of national security. The hon. Gentleman will be interested to know that the Bill extends existing civil aviation security powers to regulate spaceplanes and spaceports and introduces broadly similar arrangements for operations to launch objects into orbit, but tailors them to the sensitive nature of satellites and reflects the fact that vertical operations will not be manned.
As with aviation security, the Government will work closely with key partners in Europe and around the world to ensure that security remains paramount in the development of the Bill and the industry. We will continue to work with international partners in all appropriate forums to review and, if necessary, to develop and strengthen measures to ensure that transport generally, and in this case the space flight sector, is cyber-secure.
Stephen Doughty
Will the Minister be specific on the importance of having legal agreements in place for the sharing of relevant information on the matter—the importance, for example, of a security treaty of some sort, in particular with our European partners who are not covered by the Five Eyes agreements? Does he agree that that is crucial?
Joseph Johnson
Should we identify a need for additional legislation, the Bill provides us with the power to adopt appropriate regulatory measures and the ability to issue directions, where necessary and proportionate, to specific entities.
Question put and agreed to.
Clause 22 accordingly ordered to stand part of the Bill.
Schedule 5 agreed to.
Clause 23
Spaceport byelaws
Question proposed, That the clause stand part of the Bill.
Stephen Doughty
Will the Minister say a bit about the measures the Government plan to put in place to deal with drones and unmanned aerial vehicles, particularly in relation to their operation around spaceports? There are substantial restrictions on their operation around civil aviation activities in the UK, but a wide range of drones can be commercially purchased and many operators are unaware of the consequences of using them, near to not only airspace but other activities. Will he comment on that, given the particularly sensitive nature of space flight activities and the risk that could be caused by, for example, an incursion into the space around a launch or training activities?
The clause crucially mentions road traffic enactments and the parking of vehicles. We know of terrorist organisations that have attempted to park vehicles near UK airports in the past and it is crucial to retain the physical security around those sites. Given the ability to launch and remotely control drones from great distances, what thought has been given to whether any additional restrictions will be needed or whether the existing regulations for the use of drones will apply in byelaws for space flight operation centres?
Joseph Johnson
The clause enables the Secretary of State to make security-related regulations and to provide guidance on how they may be complied with. The hon. Gentleman asked specifically about drones. He might be aware that the Government announced at the end of November that it is their intention to introduce drone legislation in the spring. The Government will be publishing a draft drone Bill, which will look to extend police powers to extend drone misuse and to mandate the use of safety applications in the UK. We will also be looking at an amendment to the air navigation order to introduce legislation and leisure pilot tests. I hope that addresses his concerns.
Stephen Doughty
Is it therefore the Minister’s intention that when that legislation comes forward it will specifically look at, and make it clear that it applies to, operations around spaceports and space activities? Further, will it be made clear that it concerns not only drones, but—although we are not largely talking here about manned space flight—the use of laser pointers and so on, which we know is a regular problem around airports and which might impede the operation of staff working at those sites or perhaps blind technical equipment being used for space launch activities? Will it be clear that the new legislation applies equally to spaceport activities?
Joseph Johnson
The hon. Gentleman will be interested to know that we will be introducing draft legislation. Should he detect any shortcoming in its application and should he continue to have concerns about whether the spaceport and spaceflight activity enabled by the Bill would have risks posed to it by drone activity, there will be plenty of opportunities in the development of that legislation for Members to point that out to Government.
Neil Coyle (Bermondsey and Old Southwark) (Lab)
When will the draft legislation come forward? Given that the police have indicated they do not have the resources to investigate crimes such as shop lifting, bike thefts and mobile phone thefts, will it include resources to ensure that the police can adequately deliver those new responsibilities?
Stephen Doughty
Will the draft legislation also identify new resources to ensure that this responsibility of the police, as well as others, can be adequately enforced?
Joseph Johnson
On the timing, we announced at the end of November that we would introduce the draft legislation in the spring. Spring is slightly movable. We are not quite in spring, I would say, in the middle of January. Later this year—later on this spring—we will bring forward that legislation. The hon. Gentleman will obviously want us to get the legislation right. We are working carefully in the Department to ensure that it is fit for purpose and covers all the situations that he has rightly been bringing to the attention of the Committee.
Stephen Doughty
I want to ask the Minister one further question and would appreciate his indulgence. He refers to the enforcement of the byelaws by a constable. Does he expect, for example, that the responsibilities around any spaceport enforcement of byelaws will be down to the local and geographical police constabulary, or does he expect that the responsibility will be undertaken by one of the non-geographical forces, such as British Transport Police or the MOD police or the Civil Nuclear Constabulary?
The only reason I ask is because, as is often the case and as I have experienced in my own constituency, when there are major national sites of interest—for example, I have the National Assembly and some other major locations of national significance in my area—there is a tendency, given the additional security requirements around those locations, sometimes to divert resources from local policing activities.
Given the existing strains on police forces, community policing and so on, I am a little concerned in that we all want those byelaws to be enforced and security to be absolutely maintained. For example, will consideration be given to additional resources for a police force where a spaceport is located and licensed to ensure that it can cope with those responsibilities and carry them out without being diverted from day to day crime fighting and other police activities?
The Chair
Order. The way in which the Committee is being carried out is completely in order. The Opposition are being very kind to the Minister in not interrupting to him while he is speaking, but his inspiration sometimes takes a little bit longer to come—it might be that interventions are easier for the Minister than the way we are doing it. [Interruption.] I see it is now working perfectly well.
Joseph Johnson
I am quite happy either way, Mr Bone.
Clause 27 enables the Secretary of State to issue directions in relation to the security of spaceflight activities and national security. Clause 24 provides for a licensee to request further specific advice from regulators or the Secretary of State about compliance with security requirements of a particular activity, service, site, facility or other matter. The byelaw powers are modelled on airport byelaws, and they would be locally policed and locally resourced.
Question put and agreed to.
Clause 23 accordingly ordered to stand part of the Bill.
Clauses 24 to 27 accordingly ordered to stand part of the Bill.
Clause 28
Power to give directions: international obligations of the UK
Question proposed, That the clause stand part of the Bill.
Stephen Doughty
Significant concern has been expressed about the future participation of the UK in various space industry international obligations, particularly European obligations. Perhaps the Minister could say a little bit about that—I will go on at length here so he can get some inspiration. Perhaps he could also talk about what assessment has been made of the impacts of leaving the European Union on our participation in, for example, Copernicus, Galileo, Egnos, GovSatCom, Iris, and in Space Situational Awareness and Space Surveillance and Tracking.
For those unfamiliar with those, Copernicus deals with earth observation missions, Galileo and Egnos with navigation—the European equivalent to GPS in some respects—GovSatCom deals with communications, and Iris deals with air traffic management, which we discussed along with aspects of air safety regulations in the last debate. Space Situational Awareness and Space Surveillance and Tracking deal with space debris. Those issues to not come up on a day-to-day basis but, given the cross-border nature of operations, it is crucial that we continue co-operating with our European neighbours, in particular on space debris, given the likely trajectories of launches from the UK and the likely descent paths of items falling from launches and so on. Those things are designed and planned in such a way as to avoid the descent of dangerous materials, but given the increasing number of launches and the increasing number of vehicles being launched into space, and with technology going up through space launch methods, getting that stuff right is obviously important.
We do not want to find ourselves getting into a dispute with our European neighbours after something falls off something we have launched. That is why international agreements on space activities are so crucial, particularly with our European neighbours. Will the Minister say something about the assessment that has been made of our existing international obligations and obligations that we could be in the process of entering into if we stay in the European Union, and their implications?
Joseph Johnson
The Government recognise the enormous benefits of European collaboration in space, and indeed in research and innovation generally. We published a science and innovation discussion paper as well as an external security discussion paper in September 2017 that set out the Government’s clear wish to discuss options for future arrangements in the EU space programmes, including Galileo, Copernicus, Agnos and others. The decision that concluded phase 1 of the exit negotiations in December provides certainty that UK businesses can continue to bid for and win contracts to build, operate and help develop the EU space programme, which we have played a huge part in over the years.
The Government continue to invest in the success of the UK space sector. We recently invested more than £100 million in new satellite test facilities at Harwell and manufacture and test facilities for rocket engines at Westcott in Buckinghamshire. As the hon. Gentleman knows, that is in addition to the substantial UK investment in the European Space Agency, which is a non-EU body, of around £300 million per year.
Stephen Doughty
I thank the Minister for his answer on some of those agencies. Again, I have a particular interest in this as declared in the Register of Members’ Financial Interests. Airbus Defence and Space is in the next door constituency and a number of my constituents work there. I know they and many other members of UK space bodies have concerns about future participation in these agencies.
I welcome what the Minister said on the principles with respect to the agencies, but he did not mention specifically the more technical space debris agencies and other agencies. Rather than detain him now, could he write to the Committee and outline how he sees our international obligations functioning under all of the agencies I mentioned?
Joseph Johnson
I am happy to provide further details about our common approach to space debris, if that would be helpful, and undertake to do so.
Question put and agreed to.
Clause 28 accordingly ordered to stand part of the Bill.
Clauses 29 to 31 ordered to stand part of the Bill.
Clause 32
Power to authorise entry etc in emergencies
Karl Turner
I beg to move amendment 19, in clause 32, page 23, line 31, at end insert—
‘(4A) An enforcement authorisation must be referred to a justice of the peace for evaluation within 48 hours, following the 48 hour period under subsection (7) in which the enforcement authorisation remains in force.”
This amendment provides that an urgent enforcement authorisation must be referred to a justice of the peace for evaluation within 48 hours, following the 48-hour period under Clause 32(7) of the Bill, during which the enforcement authorisation remains in force.
The amendment provides that an urgent enforcement authorisation must be referred to a justice of the peace for evaluation within 48 hours following the 48-hour period under subsection (7), during which the enforcement authorisation remains in force. The amendment aims to clear up any ambiguity surrounding clauses 31 and 32, which grant warrants authorising entry or direct action and powers to authorise entry in emergencies.
Clause 32(2) permits a named person to do anything necessary for protecting national security, securing compliance with international obligations or protecting health and safety. My colleagues in the other place raised concerns about emergency warrants and such vague wording. The power conferred by clause 32 is very extensive and broad. It contains no thorough judicial oversight. The Minister is well aware that the House of Commons Science and Technology Committee also expressed concerns about this aspect of the Bill, which was obviously mentioned in detail in the other place.
We welcome the fact that the Government reduced the authorisation period from one month to 48 hours, which limits the Secretary of State’s power to a degree. However, we still have concerns that such significant and wide-ranging powers will be exercisable without anticipatory or rapid post hoc judicial involvement.
Currently, there is not enough in the Bill to check whether the powers granted under clause 32 will be appropriately or proportionately used by the authorised person. The Minister in the other place stated that the amendment would “impose unhelpful bureaucracy”. We believe that judicial oversight of emergency warrants is crucial to ensure that such excessive powers are not abused, and we do not believe that we are asking for anything unreasonable. Having checks in place to ensure that this extensive power is not misused will improve the Bill. It is not, as stated by the Minister in the other place, “unhelpful bureaucracy”. I hope the Minister can give assurances that the Government are listening to those concerns and will take them on board.
Dr Whitford
I rise to support the amendment. Clause 31 refers to the seeking of warrants from justices of the peace, where there is time to do so. Clearly, there will be situations where that is not reasonable and therefore we accept that there is a need to allow emergency entry— 48 hours should be sufficient to allow that warrant to be reviewed by a justice of the peace. We welcome that the Government reduced emergency entry from a month to 48 hours, but it is perfectly reasonable that it should be looked at by a justice of the peace within two days.
Joseph Johnson
I thank the hon. Member for Kingston upon Hull East and for Central Ayrshire for raising the issue of emergency powers. The clause confers on the Secretary of State the power to grant an enforcement authorisation to carry out any specified action in the most urgent cases, such as a serious risk to national security, compliance with our international obligations or people’s health and safety. The amendment tabled by the hon. Gentleman would seek to require that such an enforcement authorisation be evaluated by a justice of the peace within 48 hours of the 48 hours that the authorisation has been in force.
The Government have listened carefully at all stages of the discussion of the provision and addressed concerns before the Bill was brought to the House. Before the Bill’s introduction, the Science and Technology Committee raised concerns about the length of time for which an enforcement authorisation would remain in place. In response to that helpful intervention, we reduced the time for which an enforcement authorisation can remain in place from one month to 48 hours.
The Opposition in the other place attempted to introduce amendments similar to that tabled by the hon. Gentleman. The amendments are not clear on the purpose that a post hoc evaluation by a justice of the peace would serve—the order would have already been spent and the specified action taken. It is also not clear what is expected to follow from any such evaluation. However, the Government have reflected further on the amendments and the intentions underpinning them. Officials have carried out extensive discussions with colleagues across Whitehall, including in the Ministry of Justice, the chief magistrate’s office and the Home Office, which is responsible for the powers of entry gateway process. None of the discussions resulted in the suggestion that the power should be amended as the amendment proposes. An important reason for that is that there is no known precedent of a justice of the peace conducting an evaluation of an emergency power once it has been exercised.
Let me reassure hon. Members that there are adequate safeguards in the Bill with respect to the exercise of this significant power. Such an authorisation can be granted only to a named person who the Secretary of State is satisfied is suitably qualified to carry out the necessary action. Each time the power is used, the authorisation must be in writing, must specify the action required and will remain in force for only 48 hours from the time it is granted.
In response to concerns previously raised about the exercise of this power without sanction by an independent judicial authority, it is important to note that the decision of the Secretary of State to issue an enforcement authorisation could be challenged by judicial review. I would also point out that this power is more conservative and requires more stringent authorisation than other comparable powers of entry, such as those of nuclear inspectors or health and safety inspectors who are provided with a standing authorisation and may act at their discretion. The power would be used only in the most serious and urgent cases, but it is necessary to ensure that those involved in spaceflight activities and third parties are adequately protected should such situations arise.
Mark Garnier (Wyre Forest) (Con)
The Minister is being very helpful. One of the interesting points that lies behind some of the concerns is about who advises the Secretary of State that the intervention needs to be made in the first place. Will the Minister give a little more flavour of the process whereby advice is given that leads to an intervention order? That may give some comfort to the Opposition.
Joseph Johnson
The enforcement authorisations would be a last resort where the regulatory bodies in question felt that it was absolutely imperative to have one in the interests of our national security, or for the pursuit of our international obligations, or the health and safety of individuals in and around the spaceport or elsewhere in the UK. It is very much a power of last resort. Given the nature of the activities being undertaken at spaceports, everyone should be able to see the need for such provisions.
Karl Turner
I hear what the Minister says, but he seems to be saying that, because there is no precedent for a justice of the peace to review such warrants, it is not necessary. He also said that judicial review is available, but he must appreciate that the threshold to succeed in judicial review is very high and that it is extremely costly to the party bringing the proceeding. Frankly, he has not gone anywhere near far enough, and for that reason I am pressing the amendment to a Division.
Question put, That the amendment be made.
Space Industry Bill [ Lords ] (Second sitting)
Tuesday 23rd January 2018
(6 years, 2 months ago)
Public Bill CommitteesRead Full debate Space Industry Act 2018 View all Space Industry Act 2018 Debates Read Hansard Text Read Debate Ministerial Extracts Amendment Paper: Public Bill Committee Amendments as at 23 January 2018 - (23 Jan 2018)
The Committee divided: - Ayes: 2 / Noes: 10 - Question accordingly negatived.
The Chair
We resume line-by-line consideration of the Space Industry Bill. We are sitting in public and the proceedings are being broadcast. Before we begin, will everyone ensure that all electronic devices are turned off or switched to silent mode? Teas and coffees are not allowed during sittings.
Clause 33
Liability of operator for injury or damage etc
Karl Turner (Kingston upon Hull East) (Lab)
I beg to move amendment 20, in clause 33, page 24, line 2, leave out subsection (1).
This amendment relates to situations where the operator has no liability in order that those living around the spaceports have adequate powers to protect themselves from noise and nuisance.
It is a pleasure to serve under your chairmanship, Mr Bailey. The amendment relates to situations where the operator has no liability, and seeks to ensure that people living around spaceports have adequate powers to protect themselves from noise nuisance. The Bill originally contained no proper provisions to protect people living close to spaceports or under potential flightpaths from noise. The word “noise” was not even included in the Bill. It now is, but only once. Again, I pay tribute to my colleagues in the other place, particularly my Front-Bench colleagues, who managed to secure that vital concession.
I welcome the Government’s insertion of an assurance that licences can include a condition that an assessment must be done of the noise and emissions that activity will cause, and of the impact on local communities. To say that aircraft noise is rather loud would be an understatement. I can imagine the noise and nuisance if we ended up regularly launching rockets in the UK. Will the Minister therefore give us an assurance that he will look closely at what powers people who live around potential UK spaceports have to protect themselves from such noise nuisance?
The Minister of State, Department for Transport (Joseph Johnson)
I appreciate that there are concerns about the possibility that spaceflight activities may have an adverse effect on local people. Clause 33 is designed to balance the right to quiet enjoyment of land against the right to carry out a commercial activity, to ensure that there is only minimal encroachment of rights where the operator acts in accordance with the law.
Subsection 1 is replicated from section 76(1) of the Civil Aviation Act 1982, which provides a similar protection for aircraft operators. Amendment 20 would remove the protection for spaceflight operators. However, the Government believe that subsection (1) is appropriate to enable spaceflight operators to carry out activities from the UK. Such a provision is necessary to prevent an operator who acts lawfully from being sued by a third party who considers that his or her right to quiet enjoyment of land is being affected.
Where carrier aircraft are used as part of spaceflight activities, local people will continue to have no such claims against aircraft operators because of the protection in section 76 of the Civil Aviation Act, so the amendment would have little practical effect on spaceports that are adapted aerodromes, such as the potential spaceports at Newquay and Prestwick. However, it should be stressed that such a protection does not apply if an operator does not comply substantially with all the requirements imposed on them.
The protection from claims of nuisance and trespass does not prevent anyone who suffers injury or damage arising from spaceflight activities from bringing a claim against an operator under the strict liability course of action provided for in subsection (2). With that assurance, I ask the hon. Gentleman to consider withdrawing his amendment.
Karl Turner
I am grateful to the Minister for those assurances. On that basis, I beg to ask leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Dr Philippa Whitford (Central Ayrshire) (SNP)
I beg to move amendment 7, in clause 33, page 24, line 31, leave out “may” and insert “must”.
This amendment places a definite cap on the amount of a licensee’s liability.
The Chair
With this it will be convenient to discuss the following:
Amendment 8, in clause 33, page 24, line 36, at end insert—
“(5A) The limit on the amount of the licensee’s liability as referenced in subsection (5) must not exceed €60 million for each launch.”
Amendment 9, in clause 33, page 24, line 36, at end insert—
“(5A) Regulations under subsection (5) must provide for—
(a) the maximum limit on the amount of a particular licensee’s liability to be based on each launch undertaken by the operator;
(b) the maximum limit on the amount of a licensee’s liability to vary depending on the classification type of each launch.
(5B) The classification type for each launch as in subsection (5A) is defined as the level of risk attached to each launch and will be determined by the regulator in accordance with the regulations.”
This amendment allows for a mandatory cap for the licensee’s liability to be based on each launch rather than per satellite and would ensure the cap on the amount of a licensee’s liability can vary depending on the type of launch depending on its risk classification.
Amendment 10, in clause 33, page 24, line 37, leave out “may” and insert “must”.
This amendment places a definite cap on the amount of a licensee’s liability.
Dr Whitford
This group of amendments comes back to the issue of liability for operators and, in particular, the need to set some form of cap on their liabilities so that they can get insurance.
Amendment 7 would change “may” to “must” in subsection 5. As I said earlier, that is not to set the limit, but to raise the principle of one. Later, as we will see when we come to Government amendments to clause 34, the Government themselves change “may” to “must”, implying that there is a cap that they are paying above. Similarly, in clause 33(6) we would also change “may” to “must”.
It needs to be stated that the maximum limit would not go above the €60 million that satellite launchers currently have to indemnify elsewhere. However, what has been described in the Bill and in the explanatory notes is that the launch activities carried out in the UK may be quite different, as the Minister just talked about with regard to noise nuisance. In horizontal take-off, we are talking about an aeroplane carrying a small rocket that will launch cube satellites and micro-satellites such as Unicorn.
As I said earlier, the current limit of €60 million per satellite, and therefore the launch of micro-satellites, would be untenable. Therefore, we need to consider in the consultation making the amount per launch, or per cluster, as opposed simply to per satellite. The Government need to reassure us that they accept the principle of a limited liability and of a liability cap.
There is also the discussion in the paper of describing launches as having a green or amber risk—obviously, those at red risk would not get a licence. Therefore, it could be done by class as opposed to launch by launch. Horizontal take-off vehicles launching cube satellites and micro-satellites might be given a different classification than a vertical take-off vehicle carrying large satellites, as has been the case elsewhere.
This cluster of amendments simply intends to bring back this basic principle that the industry has raised with me, and I am sure with other Members. It has also submitted in writing again that the failure to commit to setting a liability cap whereby industry indemnifies the Government up to a certain level means that companies will not manage to get insurance and they simply will not launch from the UK.
Carol Monaghan (Glasgow North West) (SNP)
To add to the comments of my hon. Friend, this issue could affect where future developments take place in the space industry. Jurisdictions such as Singapore do not require satellites—Glasgow has strength in satellites—to be built locally. However, other jurisdictions require satellites to be built in the local area or in the country.
If cube satellite businesses do not get a mandatory liability cap within this Bill, there is a danger that future development will be affected, and a danger that, when those businesses are looking to expand or develop satellites for future use, they will do so where they can get one. That would be where they can insure and launch satellites. It is absolutely crucial that we get this issue sorted at this stage.
Joseph Johnson
We discussed an operator’s liability to indemnify the Government against claims from foreign states and their nationals in clause 35. In addition, clause 33 places a strict liability on the operator to compensate third parties in the UK who suffer injury or damage as a result of space flight activity. This is necessary because the Bill allows spaceflight activities to take place from the UK. The intention is to provide easy recourse to compensation for the uninvolved general public in the UK on the same basis as compensation available to foreign nationals.
Clause 33(5) provides a power to make regulations to limit an operator’s liability arising out of spaceflight activities. As we have discussed, the Government intend to issue a call for evidence to consider whether such a cap is appropriate. The amendments seek to require the Government to make regulations that specify a cap on liability in an operator’s licence based on the risk profile of the launch.
The proposal is to set an upper limit on that cap in secondary legislation of €60 million. That figure, as we have discussed, reflects the existing cap on an operator’s liability to indemnify the Government in a licence for a standard mission issued under the Outer Space Act 1986, which was set following considerable experience of satellite licensing. There is no reason to believe that that is also an appropriate level at which to cap a launch vehicle operator’s liability to third parties in the UK, since that activity is likely to be inherently more risky.
Creating inflexibility in legislation is also not helpful. The existing Government indemnity liability cap of €60 million for satellite operators is set by a policy decision and can be varied as appropriate—the figure is not laid down in the Outer Space Act for that reason. The UK Space Agency is considering its approach to risk management of satellite licensing, including the implications for liabilities and insurance requirements. That flexibility is vital if regulation is to keep up with a rapidly changing space sector. The UK Space Agency intends to issue further guidance on that new approach later this year.
As that demonstrates, legislative flexibility is better for both industry and the Government, because it allows the regulator to determine case by case whether to cap liability and the level of any cap. That should encourage operators to design their missions to reduce injury and damage as much as possible, leading to safer launches and reduced costs for them.
Joseph Johnson
Let me turn to some of the hon. Lady’s specific points before she intervenes—I may anticipate what she is about to ask.
A mandatory cap on liability and mandatory Government compensation embedded in primary legislation could potentially breach state aid rules. That could also cause difficulties in respect of future trading rules applying to the UK, although those are of course as yet unknown. For that reason, it is important to retain the flexibility to deal with the issue by way of secondary legislation. In that way, this and future Governments will have a power to introduce and vary a cap to ensure that it is in line with our legal obligations. It can also be varied in the light of changes in the market or in our trading commitments.
The amendment to clause 33(4)(a) means that the Government—the hon. Member for Central Ayrshire commented on this—must compensate a claimant only in the event of a cap. That amendment does not mean that there is a cap on the face of the Bill.
Dr Whitford
As I said in my remarks, it is the principle a cap as opposed to the amount. I totally understand the need for consultation, because the type of space industry being discussed is different from space industries elsewhere, where vertical rockets are launched. I am still not clear why the Government are unwilling to commit to a cap in principle when that is what the industry is crying out for.
Joseph Johnson
I will repeat what I said before. As soon as the Bill receives Royal Assent we will start the process of a call for evidence to determine whether there is a need for a cap and the level at which any such cap might be set.
Dr Whitford
I beg to move amendment 11, in clause 33, page 24, line 39, at end insert—
“(7) Within 6 months of this Act coming into force the Secretary of State must lay a report before Parliament setting out divisions of responsibility and the level of liability for parties’ spaceflight activities, including—
(a) the Spaceport;
(b) the launch operator; and
(c) the satellite operator.”
This amendment places a requirement on the Secretary of State to publish clear guidelines with regards to responsibility and liability for parties involved in spaceflight activities.
This is a probing amendment to highlight the fact that in the past the space industry was very much state-driven, state-paid-for and state-covered, and now we are moving to a commercial situation where a spaceport, a launch company and a satellite company will be totally different entities. Therefore, I seek clarification in the consultation of exactly where the handover of liability is from one to the other and what responsibilities they have. We would not want to see people arguing at the edges and bystanders, other companies or satellite companies ending up not being compensated for a mission that failed.
Joseph Johnson
I thank the hon. Lady for raising the important matter of the respective responsibilities and liabilities that spaceports, launch operators and operators of satellites will have. The full scope of a licensee’s responsibilities will be set out in the Bill, in regulations made under the Bill and in the terms of specific licences granted by the regulator. In broad terms, it is envisaged that the Bill will enable the regulator to license four types of activity initially: operation of a spaceport, spaceflight activities involving launch of a spacecraft, operation of a satellite and provision of range control services.
The Bill sets out certain high-level responsibilities and obligations on licensees. Most obligations are on persons carrying out spaceflight activities. I shall refer to them as spaceflight operators for convenience, although that term is not used in the Bill. Those include persons carrying out launch and operating a satellite. It is considered that activities of the spaceflight operator are the most likely to cause injury or damage to third parties.
In the case of spaceflight operators, clause 9 imposes obligations to assess the risk to health and safety posed by the spaceflight activity, to comply with the risk assessment requirements and to take all reasonable steps to reduce risks to the general public so that they are as low as reasonably practicable.
Under clause 16, the spaceflight operator must not allow individuals to take part in a spaceflight activity unless they meet criteria prescribed in regulations and have signed a consent form signifying that they understand and accept the risks of taking part in the spaceflight activity. Under clause 17, the spaceflight operator must not allow unqualified individuals to take part in or otherwise be engaged with the spaceflight activity.
Clause 33 places a strict liability on a spaceflight operator to provide the uninvolved general public with a straightforward remedy for compensation for injury or damage caused by their spaceflight activities. This strict liability would apply to any injury or damage caused in the UK or its territorial waters, and to an aircraft in flight or persons and property on board such aircraft. It applies to damage that is caused by a craft or space object being used for spaceflight activities.
Spaceflight operators also have an obligation under clause 35 to indemnify the Government for any claims brought against the Government for loss or damage caused by their spaceflight activities. Other bodies that may be carrying out functions on behalf of the Government also benefit from the indemnity.
On the responsibilities and liabilities of spaceport operators, clause 10 requires that applicants for a spaceport licence must take all reasonable steps to ensure that risks to public safety of operating the spaceport are as low as reasonably practicable. In addition, the applicant will need to fulfil any criteria and requirements set out in regulations. In the case of providers of range control services, they will be governed by the provisions of clauses 5, 6 and 7 and regulations made under those clauses.
In addition to the Bill, further detailed obligations and responsibilities for all types of licence holders will be prescribed in regulations: for example, safety requirements under clause 18 and security requirements under clause 21. Those regulations will be supplemented by detailed guidance.
The regulations will set out licensing and ongoing requirements and any oversight of operations to ensure that spaceflight activities and spaceports are operated safety. In addition to general responsibilities and liabilities imposed by the Bill, and regulations made under it, the terms of individual licences will specify the particular activities authorised under that licence and the responsibilities that go with them. Individual licences will also be subject to licence conditions tailored to their application, examples of which are set out in schedule 1.
I hope I have reassured the hon. Lady that the Bill, combined with the regulations to be made under it and the terms of individual licences, will provide the necessary clarity on the responsibilities and liabilities that come with being a licence holder under the Bill. The Government intend to consult publicly an all initial draft statutory instruments and statutory guidance. All draft regulations will be accompanied by a full explanation of their intent. Furthermore, reflecting the importance that the Government place on consultation, we have amended the Bill to impose a statutory duty to carry out public consultation before making any regulations under the affirmative resolution procedure. I therefore ask her to withdraw her amendment.
Stephen Doughty (Cardiff South and Penarth) (Lab/Co-op)
As ever, it is a pleasure to serve under your chairmanship, Mr Bailey. I want to underline the point that has been made as it applies well to what we are talking about—the wording that relates to liabilities, given their legal implications. It also applies to clause 68.
The Minister will be aware that UKspace, the space trade association, has raised concerns about the terminology used, which in this circumstance and in other parts of the Bill is not necessarily consistent with that used in the industry. To give an example of the confusion, the industry uses “launch systems” or “launch services” to refer to the launching of satellites, whereas the Bill appears to use “spacecraft” for that. The industry uses the word “spacecraft” to refer to man-made objects that are to be delivered into space—also known as “the payload.”
I do not want to get into a big semantic debate but, particularly when we are talking about where liabilities lie—whether with a launch operator or a satellite operator, or with a spacecraft, a launch system or launch services—I want an assurance from the Minister that there will be clear guidance, understood by the industry, the public and the courts when it comes to interpreting the Bill’s provisions.
Joseph Johnson
I am happy to repeat the assurance I gave a second ago. We will consult publicly on all the initial draft statutory instruments and the statutory guidance that will give effect to the provisions. I hope that that process will address any remaining areas of uncertainty about terminology, to which the hon. Gentleman refers.
Dr Whitford
I look forward to seeing the regulations. I beg to ask leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Clause 33 ordered to stand part of the Bill.
Clause 34
Power of Secretary of State to indemnify
Joseph Johnson
I beg to move amendment 1, in clause 34, page 25, line 15, leave out “may” and insert “must”.
This amendment concerns the case where a person is caused injury or damage by spaceflight activities carried out by a licensee whose liability to that person is capped by regulations under clause 33(5). It converts the Secretary of State’s power to indemnify that person in respect of any shortfall into a duty to do so.
Joseph Johnson
The Bill is designed to ensure that spaceflight activity is as safe as possible, and risks to third parties are minimised as far as possible. However, no activity is entirely without risk and we have to account for that. If injury or damage arise, it is right that affected third parties should have easy recourse to compensation. That policy does not change if an operator has a capped liability.
As we discussed, clause 33(5) provides a power to make regulations that enable a regulator to specify a cap on an operator’s liability for injury or damage arising out of their spaceflight activities to prescribed persons, or in prescribed circumstances. Those persons and circumstances would be set out in regulations, but we envisage that a cap would be on an operator’s liability to the uninvolved general public who suffer injury or damage as a result of spaceflight activities. As that liability can be capped, clause 34(3), as drafted, provides the Secretary of State with a power to indemnify a claimant in situations where injury or damage caused by spaceflight activities exceeds an apparatus capped liability amount.
Having listened carefully to the debate in the other place, the Government agree that it is right to go further, and the amendments turn the power under clause 34(3) into a duty, and ensure that the Government must pay the remaining compensation above that amount. I am sure that that will be welcomed by hon. Members, as it reflects the desire on both sides of the House to ensure that third parties will rightly never miss out.
Amendment 1 agreed to.
Amendments made: 2, in clause 34, page 25, line 22, after first “or” insert “duty under subsection”.
This amendment is consequential on amendment 1.
Amendment 3, in clause 34, page 25, line 26, after “may” insert “or must”.
This amendment is consequential on amendment 1.
Amendment 4, in clause 34, page 25, line 29, after “or” insert “duty under subsection”.—(Joseph Johnson.)
This amendment is consequential on amendment 1.
Clause 34, as amended, ordered to stand part of the Bill.
Clauses 35 to 37 ordered to stand part of the Bill.
Clause 38
Powers to obtain rights over land
Question proposed, That the clause stand part of the Bill.
Dr Whitford
I really just want to speak to clause 38(4), and the rights created under that. Again, this refers to the devolved nations, which currently have four of the five sites being discussed, although obviously future sites may well be scattered right across the UK. We are looking, again, for some consultation in the event of rights being taken over land that would be with the devolved Government. I have an amendment on that later, but I wanted to refer to it during debate on the clause itself.
Joseph Johnson
I can set out some context for the hon. Lady that might clarify the issue. Some concern was expressed in the other place about the provisions, but I assure the Committee that the Government are taking a responsible and balanced approach. We have sought to address those concerns by amending the Bill.
In clause 38 in particular, we made it clear on the face of the Bill that an order will be made only when the Secretary of State considers it appropriate, rather than when it is expedient, as the Bill said originally. Powers are restricted to what is required and proportionate for securing safe space flight operations. There are no powers in the Bill for a spaceport licence holder, launch operator or range control service provider to purchase land compulsorily.
The clause allows for the creation of orders granting rights over land. Such orders may be necessary to ensure that utilities and other supporting infrastructure can be installed and maintained—for radar or surveillance, for example. Space flight from the UK will be conducted on a commercial basis, so we expect operators to negotiate access in the vast majority of cases. Such an order, therefore, would be created only as a last resort, where a negotiation with the landowner had failed to produce a mutually agreeable outcome. Schedule 6 sets out further provision for such circumstances, including how notice for such orders should be given and how proposed orders can be objected to.
Question put and agreed to.
Clause 38 accordingly ordered to stand part of the Bill.
Clauses 39 and 40 ordered to stand part of the Bill.
Schedule 6 agreed to.
Clause 41 ordered to stand part of the Bill.
Clause 42
Challenges to and commencement of orders
Dr Whitford
I beg to move amendment 12, in clause 42, page 31, line 12, at end insert—
‘(4) An order under section 38 or 40 cannot be made in relation to a spaceport or prospective spaceport without the consent of—
(a) the Scottish Ministers, in relation to the use of land in Scotland;
(b) the Welsh Ministers, in relation to the use of land in Wales;
(c) the Northern Ireland devolved authority, in relation to the use of land in Northern Ireland.
(5) In this section, a “Northern Ireland devolved authority” means the First Minister and deputy First Minister acting jointly, a Northern Ireland Minister or a Northern Ireland department.”
This amendment would ensure that consent of devolved administrations is sought prior to the Secretary of State exercising their powers under Clauses 38 and 40.
This is the formal amendment on the point that I made in relation to clause 38 about a requirement to consult on land enforcement orders with the devolved powers in Northern Ireland, Wales and Scotland.
Joseph Johnson
I thank the hon. Lady for tabling this amendment, allowing me again to address the subject of land powers, in the specific context of the devolved Administrations. I reassure her and other Committee members that there has been considerable engagement with the devolved Administrations as the provisions have been developed.
Officials have been engaging with the devolved Administrations since early 2014, when they met the Welsh and Scottish Governments to discuss ambitions to create a UK spaceport. Representatives from the devolved Administrations have since been invited to launch UK events across the country, bringing together many of those interested in becoming involved in the operations or supply chains of spaceports or space flight activities.
Alongside this general engagement, we have worked with Scotland, Wales and Northern Ireland at official level to ensure that the devolved Administrations are content with all provisions in the Bill. Specifically, on land powers, we have agreed an approach that the devolved Administrations have confirmed they are content with.
Before the introduction of the Bill, we discussed the land provisions with the Scottish Government, the Lands Tribunals for Scotland and Northern Ireland, and Registers of Scotland. We have since consulted the Scottish Civil Justice Council on the practical implications of orders under clauses 38 and 40. These organisations have confirmed that they are content with the implications for their processes and have not requested amendment to the current drafting of the clauses. Orders made on Welsh land would be subject to the same registration process as those in England, and any tribunals that were to be involved would be the same ones as for England.
The previous Minister of State for Transport spoke with the Scottish Government Minister for Transport to update him on the progress of the Bill and the proposed amendments ahead of Report in the other place. In addition, my officials continue to engage with the devolved Administrations of Wales, Scotland and Northern Ireland as the Bill makes its progress through the parliamentary process.
Going back to the clauses to which the hon. Lady’s amendment refers, I should say that an opportunity for those in the devolved Administrations to raise any concerns about a specific order is provided in schedule 6. The schedule requires that notice of a proposal to make an order under clause 38 or a land order under clause 40 must be published in local newspapers and served on the local authority. However, we expect that spaceport or launch operators, or range control service providers, will work closely with local landowners and local authorities as they develop their plans for sites and launches.
We also expect that, rather than orders under clauses 38 and 40 being necessary, operators will negotiate with landowners for access to land or for restrictions on the use of land or water near a spaceport site. Representatives of the companies hoping to develop the first spaceports have confirmed that they have indeed been working closely with local landowners and local authorities as they progress their plans.
I should also emphasise that orders that may be made under clauses 38 and 40 are compatible with the existing body of planning legislation and will not restrict the ability of local planning authorities to take planning decisions. Should Ministers in the devolved Administrations wish to call in any planning decision relating to the development of a spaceport site, their right to do so will not be affected by any provision in this Bill.
I hope that the hon. Lady is reassured that the powers in clauses 38 and 40 will not impact on the ability of local planning authorities or Ministers in Scotland, Wales or Northern Ireland to take planning decisions as they would usually. I hope she is reassured that the devolved Administrations, as well as any persons served with a notice, will be able to object to the making of orders through the process set out in schedule 6. I therefore ask the hon. Lady to consider withdrawing amendment 12.
Dr Whitford
I thank the Minister for that detailed explanation. I beg to ask leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Clause 42 ordered to stand part of the Bill.
Schedule 7 agreed to.
Clause 43 ordered to stand part of the Bill.
Schedule 8 agreed to.
Clauses 44 and 45 ordered to stand part of the Bill.
Schedule 9 agreed to.
Clauses 46 to 59 ordered to stand part of the Bill.
Schedule 10 agreed to.
Clauses 60 and 61 ordered to stand part of the Bill.
Schedule 11 agreed to.
Clauses 62 to 66 ordered to stand part of the Bill.
Schedule 12 agreed to.
Clause 67
Regulations: general
Karl Turner
I beg to move amendment 21, in clause 67, page 43, line 40, leave out subsection (6) and insert—
‘(6) A statutory instrument containing (whether alone or with other provision)—
(a) regulations under section 4(2),
(b) regulations under section 5(2),
(c) regulations under section 7(4),
(d) regulations under section 7(6),
(e) regulations under section 9,
(f) regulations under section 12(7),
(g) regulations under section 18,
(h) regulations under section 22,
(i) regulations under section 34(5),
(j) regulations under section 35(3)(a),
(k) regulations under section 58,
(l) regulations under section 64, or
(m) regulations that create offences,
is subject to the super-affirmative resolution procedure.
(6A) For the purposes of this Act the “super-affirmative procedure” is as follows.
(6B) The Minister must lay before Parliament—
(a) a draft resolution, and
(b) an explanatory document.
(6C) The explanatory document must—
(a) introduce and give reasons for the resolution,
(b) explain under which power or powers in this Act the provision contained in the resolution is made, and
(c) give a detailed explanation of provisions included in the resolution.
(6D) The Minister must have regard to—
(a) any representations,
(b) any resolution of either House of Parliament, and
(c) any recommendations of a committee of either House of Parliament charged with reporting on the draft resolution,
made during the 40-day period with regard to the draft resolution.
(6E) If, after the expiry of the 40-day period, the Minister wishes to make a resolution in the terms of the draft, he must lay before Parliament a statement—
(a) stating whether any representations were made under subsection (6D)(a), and
(b) if any representations were so made, giving details of them.
(6F) The Minister may after the laying of such a statement make a resolution in the terms of the draft if it is approved by a resolution of each House of Parliament.
(6G) However, a committee of either House charged with reporting on the draft resolution may, at any time after the laying of a statement under subsection (6E) and before the draft resolution is approved by that House under subsection (6F), recommend under this subsection that no further proceedings be taken in relation to the draft resolution.
(6H) Where a recommendation is made by a committee of either House under subsection (6G) in relation to a draft resolution, no proceedings may be taken in relation to the draft resolution in that House under subsection (6F) unless the recommendation is, in the same Session, rejected by resolution of that House.
(6I) If, after the expiry of the 40-day period, the Minister wishes to make a resolution consisting of a version of the draft resolution with material changes, he must lay before Parliament—
(a) a revised draft resolution, and
(b) a statement giving details of—
(i) any representations made under subsection (6D)(a), and
(ii) the revisions proposed.
(6J) The Minister may after laying a revised draft resolution and statement under subsection (6I) make a resolution in the terms of the revised draft if it is approved by a resolution of each House of Parliament.
(6K) However, a committee of either House charged with reporting on the revised draft resolution may, at any time after the revised draft resolution is laid under subsection (6I) and before it is approved by that House under subsection (6J), recommend under this subsection that no further proceedings be taken in relation to the revised draft resolution.
(6L) Where a recommendation is made by a committee of either House under subsection (6K) in relation to a revised draft resolution, no proceedings may be taken in relation to the revised draft resolution in that House under subsection (6J) unless the recommendation is, in the same Session, rejected by resolution of that House.
(6M) In this section the “40-day period” means the period of 40 days beginning with the day on which the draft resolution was laid before Parliament under subsection (6B).”
The amendment provides for the use of the super-affirmative procedure rather than, when applicable, the affirmative procedure for considering regulations and secondary legislation. The super-affirmative procedure provides that a Minister must lay a draft resolution and explanatory document before both Houses and take account of any representations.
The amendment provides for the use of the super-affirmative procedure rather than, when applicable, the affirmative procedure for considering regulations and secondary legislation. As we know, the super-affirmative procedure provides that a Minister must lay a draft order and an explanatory document before both Houses and take account of any representations.
I do not intend to speak for long to the amendment, because it was previously debated at some length in the other place. It is about parliamentary scrutiny. It aims to change the Bill so that a significant statutory instrument arising from the delegated powers consistently go through a super-affirmative procedure, which will mean that it is debated in both Houses, rather than the negative procedure, when it would automatically become law without proper parliamentary debate or scrutiny.
I will set out the case why such statutory instruments should be under the affirmative procedure each and every time they are brought forward. The Opposition have expressed great concern that the Government are attempting to evade proper parliamentary scrutiny on clause 67. Let me be clear that we support the Bill, but it is a skeleton Bill. It is already difficult to scrutinise properly in its current format. My colleagues in the other place raised the point that crucial regulations will not even be consulted on until next year, and will not come before Parliament for nearly two years at the very earliest.
I accept that we must consider rapid technological change and advances in the space industry—those points were made by the Minister in the other place—but how can we make sure that we get the proper legislative framework in place for the space industry, which is constantly developing? The Government and future Governments in years to come still need to be held to account, and Parliament needs to scrutinise legislation properly. I am sure that everyone in this Committee Room wants the United Kingdom’s space industry to grow. However, that should not come at the expense of parliamentary scrutiny. Will the Minister assure us that he will consider the points raised and set out the Government’s position for future statutory instruments under the Bill?
Dr Whitford
The amendment is, as the hon. Gentleman referred to, about the potential delay for the industry from considering regulations. I seek assurances from the Minister that the timescale of two years that seems to be being discussed is erroneous, because otherwise we will not be launching anything in 2020. That timescale seemed to be referred to in the House of Lords—the hon. Gentleman also referred to it—but it would kick the industry into the long grass again. This process started in 2014 and we are in 2018. There had been an aspiration to be ready to launch from the UK in 2020, if the vehicles are ready. There is an urgency and I seek reassurance that we are getting on with it.
Joseph Johnson
Hon. Members may be aware—my noble Friend mentioned this—that a similar amendment was tabled in the other place. The Government reflected on the concerns of noble Lords and amended the Bill to impose a statutory duty to carry out a public consultation before making any regulations under the affirmative resolution procedure. The Bill now includes a requirement for a report by the Secretary of State on the consultation to be laid before Parliament. As my noble Friend the Minister made clear in the other place, a public consultation would invite a response from all interested parties. Subsequent regulations that materially change the substance of the original regulations would also be subject to public consultation.
The amendment tabled by the hon. Member for Kingston upon Hull East goes much further than that by imposing the super-affirmative procedure on affirmative regulations. As I have said, the Government have listened and taken on board the concerns raised in the other place, and the Bill now ensures that there is the enhanced scrutiny of affirmative regulations. The amendment would lead to a duplication of effort.
I assure hon. Members that it is the Government’s intention to continue to build on the open collaboration that has taken place throughout the development of this legislation—from publishing the Bill in draft, to the publication of policy scoping notes, to committing to formally consult on the draft regulations prior to laying them. As the hon. Member for Middlesbrough (Andy McDonald) noted on Second Reading, the Government have taken a very open attitude in developing this legislation and in engaging with hon. Members and noble Lords in the other place to ensure we have a successful Bill. We want that to continue as we go on to the next stages of secondary legislation, consultation on guidance and so forth.
The question from the hon. Member for Central Ayrshire on the timing of the laying of statutory instruments is a novel and complex challenge. I know she appreciates that that requires detailed policy development, building in parallel internal expertise to enable us to deliver an effective regulatory regime. There is a wealth of best practice in the industry and we need to work with stakeholders to identify how we can best design the regulatory framework and the subsequent legislation on the basis of being informed adequately by those discussions. I can confirm that it is the Government’s intention to formally consult as soon as the draft statutory instruments are available.
I hope that that has assured hon. Members that the approach will continue as we develop secondary legislation, and that the hon. Gentleman will withdraw the amendment.
Karl Turner
I beg to ask leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Clause 67 ordered to stand part of the Bill.
Clauses 68 to 71 ordered to stand part of the Bill.
New Clause 1
Grant of licences: assessments of environmental effects
“(1) This section applies to—
(a) a spaceport licence;
(b) an operator licence authorising launches of spacecraft or carrier aircraft.
(2) The regulator may not grant an application for a licence to which this section applies unless the applicant has submitted an assessment of environmental effects.
(3) In this section “assessment of environmental effects”—
(a) in relation to a spaceport licence, means an assessment of the effects that launches of spacecraft or carrier aircraft from the spaceport in question, or from launches of spacecraft from carrier aircraft launched from the spaceport, are expected to have on the environment;
(b) in relation to an operator licence authorising launches of spacecraft or carrier aircraft, means an assessment of the effects that those launches are expected to have on the environment.
(4) If or to the extent that the regulator directs, the requirement imposed by subsection (2) to submit an assessment of environmental effects may be met by submitting—
(a) an equivalent assessment prepared previously in compliance with a requirement imposed by or under another enactment, or
(b) an assessment of environmental effects prepared in connection with a previous application.
The regulator may make a direction under this subsection only if satisfied that there has been no material change of circumstances since the previous assessment was prepared.
(5) The regulator must take into account the assessment of environmental effects (including any assessment submitted as mentioned in subsection (4) in deciding—
(a) whether to grant a licence to which this section applies;
(b) what conditions should be attached to such a licence under section 12.
(6) The regulator must issue guidance about—
(a) the form, contents and level of detail of an assessment of environmental effects;
(b) the time for submitting an assessment of environmental effects;
(c) the circumstances in which the regulator will or may give a direction under subsection (4).
Guidance under paragraph (a) may specify matters that are to be dealt with in an assessment of environmental effects only if the regulator so requires in a particular case.”—(Joseph Johnson.)
This new clause requires assessments of environmental effects to be carried out before the regulator can grant certain licences, and makes further provision about such assessments.
Brought up, read the First and Second time and added to the Bill.
New Clause 2
Potential impact of leaving the European Union on the United Kingdom’s space industry
“(1) The Secretary of State must carry out an assessment of the potential impact that leaving the European Union will have on the United Kingdom’s space industry.
(2) The assessment under subsection (1) must make reference to the following areas—
(a) membership of the European Space Agency;
(b) the impact of the UK’s exit from the EU on research and development and access to funding, including Horizon 2020;
(c) the free movement to the UK from the EU of those who work in the space industry;
(d) the UK’s participation in the Galileo and Copernicus programmes; and
(e) the impact of the UK leaving the Single Market on supply chains within the space industry. (3) The Secretary of State must lay a report of the assessment under subsection (1) before Parliament within one year of this Act passing, and once in each calendar year following.”—(Dr Philippa Whitford.)
This new clause would ensure the Government prepares and publishes an impact assessment of the potential impact on the space industry as a result of the UK leaving the EU.
Brought up, and read the First time.
Dr Whitford
I beg to move, That the clause be read a Second time.
In light of the process of leaving the European Union, the clause seeks, as was referred to by hon. Members earlier, to consider the impact. We have looked at the impact assessments, particularly at the aerospace assessment, when we had the opportunity to view what are called the Brexit papers, and what we saw was a description of the aerospace industry and comments from the industry, but not the impact.
Although the European Space Agency is separate to the EU, it receives significant funding from it. With the new clause, therefore, we seek assurances that the UK will still be able to be part of the agency, to be active in it and, as the Minister said earlier, to be able to bid for contracts under Copernicus or Galileo for satellite work, in which the UK is a leading player. The clause simply calls for an assessment of the impact on the developing space industry of leaving the EU, to ensure that, as negotiations go forward, the Government set themselves to achieve the best deal for the space industry.
Joseph Johnson
As the hon. Lady knows, the UK has played a major part in developing the main EU space programmes, Galileo and Copernicus, which have supported the rapid growth of the UK space sector and contributed directly to our prosperity. The UK is recognised for its specialist capability in the area of earth observation, and has been especially involved in the development of the Galileo security modules and encryption, which are integral to a secure and resilient earth observation system. The Government recognise that, which is why the future partnership papers I referred to earlier, which were published in September 2017, set out that, given the unique nature of the space programmes’ applications to security as well as to science and innovation, and the extent of the UK’s involvement, the EU and the UK should discuss all options for future co-operation, including new arrangements subsequent to our departure from the European Union.
Dr Whitford
Does the Minister therefore foresee the UK continuing to pay funds? If so, will they be paid directly to the ESA or via the EU? Obviously, the EU is a significant funder of the ESA.
Joseph Johnson
The European Space Agency delivers a number of programmes for the European Union, but we continue to be a member of the ESA in our own right and, as I said, we are contributing record amounts—more than €1.4 billion in the current budget period.
Neil Coyle (Bermondsey and Old Southwark) (Lab)
For absolute clarity, is the Minister suggesting that payments via the EU could still be possible, in contrast with the Foreign Secretary’s position on that matter?
Joseph Johnson
I am not going to parse comments by others that I have not seen, but I can confirm that we remain a full member of the European Space Agency in our own right, we are contributing record amounts to its budget, and we have every expectation of continuing to be a full member of that organisation long into the future.
On the new clause’s requirement to undertake an assessment, the Secretary of State for Exiting the European Union provided the relevant Committees with reports for many sectors, including one for the UK space sector, on 27 November. As the hon. Member for Central Ayrshire said, that report contained a description of the sector, the current EU regulatory regime, existing frameworks for the facilitation of trade between countries in the sector, and sector views.
Vicky Ford (Chelmsford) (Con)
This is my first Bill Committee, so bear with me, Mr Bailey. The new clause suggests that the Secretary of State should have to make an annual assessment of the impact of our leaving the EU on research and development, including Horizon 2020, every year well after 2020, but Horizon 2020 clearly finishes in 2020. Does the Minister agree that it seems illogical to assess something that has already finished?
Joseph Johnson
I obviously note the point about the duration of Horizon 2020, which does indeed end at the end of 2020, but we have committed as a Government to exploring all options for future participation in the next set of framework programmes, which will start after 2020. We have every hope that those discussions will conclude successfully, because those research programmes deliver huge value to our science and research communities and to our universities all over the country, including in Scotland.
On that basis, I ask the hon. Member for Central Ayrshire to consider withdrawing her new clause.
Dr Whitford
I beg to ask leave to withdraw the motion.
Clause, by leave, withdrawn.
Bill, as amended, to be reported.
Trade Bill (First sitting)
Tuesday 23rd January 2018
(6 years, 2 months ago)
Public Bill CommitteesRead Full debate Trade Bill 2017-19 View all Trade Bill 2017-19 Debates Read Hansard Text Amendment Paper: Public Bill Committee Amendments as at 23 January 2018 - (23 Jan 2018)
The Chair
Before we begin, I have a few preliminary points to make. Please switch electronic devices to silent. Tea and coffee are not allowed during sittings. We will first consider the programme motion on the amendment paper. We will then consider a motion to enable the reporting of written evidence for publication and a motion to allow us to deliberate in private about our questions before the oral evidence sessions. In view of the limited time available, I hope we can take those matters without too much debate or delay. Date Time Witness Tuesday 23 January Until no later than 10.25 am Global Justice Now; Computer and Communications Industry Association; Christopher Howarth, former Senior Political Analyst, Open Europe Tuesday 23 January Until no later than 11.25 am CBI; International Chambers of Commerce UK; Unite the Union; FSB Tuesday 23 January Until no later than 2.45 pm Dr Lorands Bartels, University of Cambridge; Dr Roiger Hestermeyer, King’s College London; Hansard Society Jude Kirton Darling MEP Tuesday 23 January Until no later than 3.30 pm George Peretz QC, Monckton Chambers; Professor Alan Winters, UK Trade Policy Observatory; Law Society Scotland Tuesday 23 January Until no later than 4.15 pm British Ceramic Confederation; UK Steel Manufacturing Trade Remedies Alliance; British Chambers of Commerce Tuesday 23 January Until no later than 5.00 pm UK Finance; British Retail Consortium Standard Chartered Bank Thursday 25 January Until no later than 12.00 pm Devro plc; Scotch Whisky Association Food Standards Scotland Thursday 25 January Until no later than 1.00 pm Business for Scotland; British Furniture Association Hologic Date Time Witness Tuesday 23 January Until no later than 10.25 am Global Justice Now; Nick Ashton-Hart, Trade Policy Consultant and Associate Fellow, Geneva Centre for Security Policy; Christopher Howarth, former Senior Political Analyst, Open Europe Tuesday 23 January Until no later than 11.25 am CBI; International Chambers of Commerce UK; Unite the Union; FSB Tuesday 23 January Until no later than 2.45 pm Dr Lorands Bartels, University of Cambridge; Dr Roiger Hestermeyer, King’s College London; Hansard Society Jude Kirton Darling MEP Tuesday 23 January Until no later than 3.30 pm George Peretz QC, Monckton Chambers; Professor Alan Winters, UK Trade Policy Observatory; Law Society Scotland Tuesday 23 January Until no later than 4.15 pm British Ceramic Confederation; UK Steel Manufacturing Trade Remedies Alliance; British Chambers of Commerce Tuesday 23 January Until no later than 5.00 pm UK Finance; British Retail Consortium Standard Chartered Bank Thursday 25 January Until no later than 12.00 pm Devro plc; Scotch Whisky Association Food Standards Scotland Thursday 25 January Until no later than 1.00 pm Business for Scotland; British Furniture Association Hologic
I first call the Minister to move the programme motion, which was decided by the Programming Sub-Committee yesterday.
Motion made, and Question proposed,
That—
(1) the Committee shall (in addition to its first meeting at 9.25 am on Tuesday 23 January) meet—
(a) at 2.00 pm on Tuesday 23 January;
(b) at 11.30 am and 2.00 pm on Thursday 25 January;
(c) at 9.25 am, 2.00 pm and 5.30 pm on Tuesday 30 January;
(d) at 11.30 am on Thursday 1 February.
(2) the Committee shall hear oral evidence in accordance with the following Table:
(3) proceedings on consideration of the Bill in Committee shall be taken in the following order: Clauses 1 to 3; Schedules 1 to 3; Clauses 4 and 5; Schedule 4; Clauses 6 to 12; new Clauses; new Schedules; remaining proceedings on the Bill;
(4) the proceedings shall (so far as not previously concluded) be brought to a conclusion at 2.00 pm on Thursday 1 February. —(Greg Hands.)
Manuscript amendment made: In the table on page 2 of the amendment paper, in the first entry for Tuesday 23 January, leave out
“Computer and Communications Industry Association”
and insert
“Nick Ashton-Hart, Trade Policy Consultant and Associate Fellow, Geneva Centre for Security Policy”.—(Greg Hands.)
Main Question, as amended, put and agreed to.
Ordered,
That—
(1) the Committee shall (in addition to its first meeting at 9.25 am on Tuesday 23 January) meet—
(a) at 2.00 pm on Tuesday 23 January;
(b) at 11.30 am and 2.00 pm on Thursday 25 January;
(c) at 9.25 am, 2.00 pm and 5.30 pm on Tuesday 30 January;
(d) at 11.30 am on Thursday 1 February.
(2) the Committee shall hear oral evidence in accordance with the following Table:
(3) proceedings on consideration of the Bill in Committee shall be taken in the following order: Clauses 1 to 3; Schedules 1 to 3; Clauses 4 and 5; Schedule 4; Clauses 6 to 12; new Clauses; new Schedules; remaining proceedings on the Bill;
(4) the proceedings shall (so far as not previously concluded) be brought to a conclusion at 2.00 pm on Thursday 1 February.
Resolved,
That, subject to the discretion of the Chair, any written evidence received by the Committee shall be reported to the House for publication.—(Greg Hands.)
The Chair
Copies of written evidence that the Committee receives will be made available in the Committee Room.
Resolved,
That, at this and any subsequent meeting at which oral evidence is to be heard, the Committee shall sit in private until the witnesses are admitted.—(Greg Hands.)
The Chair
Before we start our formal session, I invite members of the Committee to declare any relevant interests.
Mr Mark Prisk (Hertford and Stortford) (Con)
I am trade envoy to the Nordic and Baltic nations, and to Brazil.
The Chair
Q
Will the witnesses please introduce themselves for the record?
Nick Dearden: I am Nick Dearden, director of Global Justice Now.
Nick Ashton-Hart: I am Nick Ashton-Hart from the Geneva Centre for Security Policy.
Christopher Howarth: I am Christopher Howarth, former senior political analyst at Open Europe, and now senior researcher in the House of Commons.
Barry Gardiner (Brent North) (Lab)
Q
Nick Ashton-Hart: Thank you for inviting me—this is a first for me. To answer the first question, it depends very much on whether it is in the interests of the counterparties to those agreements to roll them over without modification. Since those agreements were created for a number of member states other than just us, those partner countries will go through a process of evaluating the net trade benefit to them of applying those terms to us alone. Where they have an interest in changing the terms to their benefit, they will seek to do so, because that is what Trade Ministries do—they seek economic benefit for their country, and they expect you to seek it for yours. Unless the trade benefits for them are exactly the same for us alone as they are for 28 other countries, they are going to ask for changes in their interests.
If the shoe were on the other foot, I suspect we can all imagine that it would be hard for our Trade Ministry officials to come to you all and say, “Well, we have just copied an agreement with a large trading bloc for one country’s benefit because it is in a hurry.” I suspect we will find that this will take some time—trade agreements always do.
The Chair
Before anyone else answers, may I ask Members and witnesses to speak up so that we get everything on the record? That would be perfect. Sorry—the acoustics in this room are terrible.
Barry Gardiner
Q
Nick Dearden: We are really concerned about the lack of scrutiny and accountability in the Bill. Global Justice Now, and a number of other organisations, worked on the Transatlantic Trade and Investment Partnership for a long time. We had some concerns about that agreement—not with the potential tariff areas, but with the non-tariff areas. In modern trade deals, non-tariff aspects make up the bulk of the agreement. That means everything from regulation—we probably all now know more than we would like about chlorinated chickens, but that is just one symbol of the regulatory aspects of trade deals that really concern the public, and I think many parliamentarians, too. Intellectual property, which has a direct correlation to the price of medicines and the price that the NHS may bear for them, through to local government procurement and e-commerce can also be added to that.
Modern trade deals touch on huge areas of public policy, which should be within the scope of Parliament to control. We are concerned that the Bill does not allow for that scope. As Nick said, it is difficult for us to imagine that many of these deals will be a straight cut and paste. That is why the explanatory notes allow for substantial changes to be made to the deals, but without the requisite scrutiny that we believe Members deserve and require if we are to have proper control of our trade policy.
Barry Gardiner
Chair, I know that others on my side wish to come in, but those on the other side may wish to speak.
Bill Esterson (Sefton Central) (Lab)
Q
Nick Dearden: Certainly. We think there should be several stages. First, before the negotiations, Parliament or a parliamentary Committee should give consent to those negotiations and should have some role in setting out the broad framework or objectives. We also think that at that stage the Government should have a responsibility to conduct and publish impact assessments and public consultations. It is set out in great detail how those should be conducted in the European Union and the United States.
As the negotiations are proceeding, Parliament should be able to scrutinise Ministers on what they are negotiating. It should be able to see negotiating texts. We think there should be a presumption that negotiating texts should be transparent to everybody, but even if there are specific reasons why they cannot be, they should certainly be transparent to MPs. If the Government want to change their mandate, they should have to come back to Parliament or to a parliamentary Committee to ask for that.
When negotiations are finalised, there should be a guaranteed debate and, at the least, an up-or-down vote. That would make a huge difference, because at the moment at none of those stages does Parliament have any control: it is not allowed to know what is going on in the negotiations; it has no role in setting the mandate; it is not allowed to see the negotiating texts; it is not guaranteed a debate; and it cannot vote against a trade deal. We think that what I have suggested would bring us into line with other modern democracies.
I will give a very small example. CETA, which still has not had a proper debate in the House, has been discussed in detail for days by the Wallonian Assembly in Belgium. They take seriously the regulatory aspects of trade deals and we think that, post-Brexit, we need to be looking at a similar model.
Bill Esterson
Q
Nick Dearden: We know that post-Brexit we want to be doing a trade deal with the European Union and the United States, so they are good places to start. Both political entities have set out in detail a number of ways in which they negotiate and give Congress or Parliament power over trade deals. In the United States, a 700-strong citizen advisory board is allowed to see all the texts. They have to have very specific public consultations. At the very least, Congress gets an up-or-down vote at the end, and if it does not fast-track trade deals, it gets substantially more power than that.
In the European Union, the Parliament gets to feed into a mandate—the Council gets to set a mandate. Various parliamentary Committees get to look at, scrutinise and give recommendations to the Executive for how a trade deal would affect jobs, the economy, the environment, human rights, or whatever else we may be concerned about. At the end, the Parliament is given a proper debate and an up-or-down vote.
On top of that, as I have already said, many trade deals are required to go back to member Parliaments for them to have a say, too. If you look at how Denmark, Germany, the Netherlands or Finland operate, they already exercise far more scrutiny over external EU trade deals than the UK does.
Mr Prisk
Q
Nick Dearden: There are various ways in which you could do it. One of the ways is to have a Committee set up particularly to scrutinise the Government on this. When the time comes to enter negotiations on a deal, it will discuss with the Government what their priorities are and they will say, “We think this is acceptable and this is not acceptable.” It will be brought in from the very beginning.
I think that is important, because the Secretary of State has said a number of times, “I really want to avoid a TTIP-style situation, where we end up with a deal in discussion that has lost public support and lost a lot of parliamentary support.” To do that, we must have that buy-in from the very beginning, and that must require some degree of parliamentary discussion about what the objectives for this country should be in a trade deal with country X.
Mr Prisk
Q
Nick Dearden: That would probably depend on exactly when proper trade negotiation starts and we are properly discussing a trade deal.
Mr Prisk
Q
Nick Dearden: You can look at how it happens in Denmark, for example, because they do exactly that. They have a parliamentary Committee that sets a mandate at the initiation of trade talks. I understand that obviously the Government are talking to loads of different countries at any one time about possible trade, but within each of the countries they are talking to, they must have objectives. It is for Parliament to scrutinise, set and agree to those objectives.
At the moment, I do not feel that we have that ability. We are talking to a lot of countries; we have 16 trade working groups currently set up between the Secretary of State and other countries. We know, because we have read it in the media, that various negotiations are ongoing with some of those countries, but Parliament, and we as civil society, have no right to know what is being discussed, when it is being discussed and with whom. That is a profound democratic deficit. At the very least, if these are formal working groups involved in trade discussions, we should know what they are talking about, to whom and when.
Mr Prisk
Q
Nick Dearden: I would say at the very least, at this point in time, for each of the trade working groups that has been set up, there should be a mandate set by parliamentary Committees.
Mr Prisk
Q
Nick Dearden: There is something to be said for that if you look at previous trade agreements such as TTIP—how they have worked and how people have felt about them. There is a big populist backlash going on around the world at the moment, part of which is a result of people feeling there is a democratic deficit in the trade agreements being signed.
We have lots of ideas for how we could construct a trade agreement and how we would want to do it, and I should say now that we are absolutely not against trade; even with TTIP, we were not against the tariff aspects of that trade agreement. When it comes to public policy, it is different. Again, I am not against international co-operation, in trade agreements or other agreements, but there has to be a democratic basis for how those things are decided.
Mr Prisk
Q
Nick Dearden: They might be or they might not. It depends how they are done, who they are done with and what the terms are. If you have two very different types of country, in terms of wealth and power, obviously there can be a big problem because some people have a much bigger negotiating hand than others. That is what we have seen with economic partnership agreements, which is why we would prefer, for example, to give tariff-free access to goods coming from those countries rather than do a reciprocal agreement, which also puts what we believe to be unsustainable and unhelpful conditions on the African country concerned.
Mr Prisk
My concern is not with the follow-on scrutiny of events that happened, but more the idea that somehow Parliament should require our existing teams in negotiations to seek approval before they start those conversations. That is my concern, but I will not delay the Committee any longer.
Barry Gardiner
Q
Nick Ashton-Hart: I would also say on the point about when terms of reference are set and whether our ambassadors need permission before they go and talk, I worked with most of our trading partners in Geneva and dozens of other countries. There are a lot of commonalities in how legislatures interact with Trade Ministries. Generally, the Trade Ministry will say, “We want to achieve these objectives over the course of this Parliament or this year,” and that is done in consultation with the relevant parliamentary Committees.
Ambassadors explore ideas with countries all the time; they do not need a mandate to do that. When it becomes clear that there is interest in formalising something, a process goes on in the capital to say, “Okay, what is our net benefit to be achieved?” To do a deal of any configuration with country X, the economics teams in the Ministry would go away and say, “Where is the net trade-generative agreement here? What sectors would we have to include? What likely trade-offs would we have to do with the other side?”
But that process would generally be informed by a consultation with the stakeholders in the industrial sectors that have most to gain or lose, the unions in those sectors and the like, so that before you even get into a negotiation, you know where your benefits lie, you have your stakeholders signed up to what you are trying to achieve and the other side knows that you have those things.
As I pointed out in my comments, the reason why you see so many leaks in trade negotiations is that it is in the interest of one party or another to put pressure on the other in their capital. Leaks do not happen by accident; they are deliberate.
Mr Prisk
I think we are familiar with that!
Nick Ashton-Hart: You are familiar with how that dynamic works. It is no different in trade negotiations.
What I have described is pretty much a common process everywhere in the world, and it is not accidental; it is because the political economy demands that you have the backing, as a negotiator, at home when you are sitting across the table from your counterparties and that they know that you have that. They can watch your processes of consent and agreement and evaluate where your weaknesses are—where there are buttons they can push, but also where you are likely to need support. People know that you have to get to a sustainable deal also, and sometimes you have to do a concession at the right time to solve a problem in a domestic constituency for your counterparty, provided that it is in your interest to do so.
Tom Pursglove (Corby) (Con)
Q
Nick Dearden: I do not have a complete list of all of them, but I do know that we have very serious concerns about the economic partnership agreements with African countries, for example, because of some of the conditions that are placed on those countries. We have particular concerns, because we worked on it, with the CETA agreement with Canada, again related to the so-called non-tariff barriers in that agreement.
One problem is that no matter what we thought about the agreements when they were originally negotiated, they are going to look different when it comes to being translated into or replaced by a UK-Canada or UK-African country agreement; they are just going to be different deals. Given that, I think it only right that there be some degree of scrutiny. It says in the Bill, “Well, we aim for these deals to be as similar as possible.” I understand that, but it may well be that some of the deals will be more similar than others.
For the deals that are more similar, I think it would be right and proper for Parliament to say, “Okay, fine. We will wave that one through. We understand that that is continuity.” But for other deals—what a substantial amendment or change in the deal would look like is not defined—we believe that Parliament should have proper scrutiny and proper ratification powers. That is particularly important for deals that have not even been through the proper ratification process in the European Union—examples involve Singapore, Japan and Vietnam. Those deals may all be replaced by UK deals, but they have not been through the proper process as yet in the European Union, and we do not want to see a situation in which they are taken on just because we are so rushed that we do not have time to really think about the consequences of the deals.
Tom Pursglove
Q
Nick Dearden: As a campaigning organisation, we are likely to pick up only those deals—
Tom Pursglove
Q
Nick Dearden: I would say we are supportive of trade, but it depends on how it is done. Absolutely. For example, I would say that an awful lot of trade that has happened in the European Union over the last 40 years —not all of it, because some of it we would be concerned about—has raised standards. It has raised standards for producers and for consumers, and that is positive. In the European Union, there is at least a balancing of trade and economic interests with social interests and environmental interests and with democratic scrutiny and accountability, so it is possible to do that.
Judith Cummins (Bradford South) (Lab)
Q
Nick Ashton-Hart: There are so many moving parts. Assuming that there is a date, that we know it, and that all counterparties have a few years’ advance warning of it—the date that matters is a date on which existing agreements will no longer be available to us—we would have to look at their approval process and count backwards to find the date by which we would have to conclude our negotiations with them. That is the only way that you would know what your actual hard finishing date was for any of those agreements. I do not know if that analysis has been done by the Department for International Trade—I am hoping that it has done some of it, and I am guessing that it probably has. Say it takes two years, and we have two years. We are not going to finish an agreement tomorrow, so that means that that deal will not be done in time. What percentage of our GDP, and of our exports and imports, is that deal, which will not be available?
That is the first thing that you would have to do is know how much negotiating time you have, and with which parties. You would then have to prioritise deals based on their economic importance to us. I am not sure what the decision tree is within the Ministry—I am sure that there must be one—for what it prioritises. The only way that you all will have a clear picture of the deadlines is to work backwards. I have seen no discussion at all of how long it takes our counterparties to conclude approving an agreement, but it can be a considerable time, depending on the country. I imagine it would be very difficult. The short answer is that it is hard for me to imagine that there are even enough people to negotiate that many deals simultaneously with that many parties, unless you had several years to do it.
Martin Vickers (Cleethorpes) (Con)
Q
Nick Dearden: It probably is, yes, because there may be countries where, for example, the human rights situation is so bad that any trade deal that you do is effectively reinforcing and giving succour to a regime to which we would not want to give succour.
Martin Vickers
Q
Nick Dearden: For example, there are serious human rights abuses in Turkey at the moment. The Prime Minister, as many people know, was the first political leader to visit Donald Trump in the United States after he was elected. After visiting President Trump, she went to President Erdoğan of Turkey, and a trade deal was part of the negotiations there. At that time, she also sold £100 million-worth of weapons to Turkey. That was an inappropriate thing to do, and it was connected with our ability to conduct a trade deal with that country, post Brexit. You may disagree with that, of course, but at the very least, there should be parliamentary control over those kinds of actions and activities. I do not think that just because they are in the international realm, they should be negotiated under royal prerogative; they have an impact on policy here. MPs should be apprised of that and should authorise it.
Martin Vickers
Q
Nick Dearden: That is a really important point. On the public policy aspects of trade deals, traditionally we thought that we did not need to worry about whether we ratified the trade deal, because Parliament would have the power to authorise implementing legislation for the various things that we needed to do to put the trade deal into effect. There is a problem with that: once a trade deal is signed and ratified, it really makes no difference whether Parliament enacts that legislation or not—we are committed to it under international treaty. It is too late to say no. Normally, we do not intend to say no—we have done the deal—but if there was a real dispute, and Parliament said, “We have a problem with that”, we would have real difficulty in stopping it, because we had already agreed to do it.
Various things that impact on public policy are never brought forward for implementation as legislation anyway. One of the things that people were particularly concerned about with TTIP, as you probably know, was the investment protection tribunals that allow overseas companies to sue Governments for various things—for what they regard as unfair treatment, for the indirect expropriation of assets and so on. There is a lot of public concern about those bodies, because people feel that this infringes on democratic sovereignty and accountability, yet those things never need to be signed off by Parliament. They just exist in the trade deal, from day one, so Parliament does not have a say in whether things that have been proved to have tangible impacts on public policy come into effect. That is one example of why it is important for the ratification process to be seen as directly impinging on public policy, and why scrutiny and accountability are necessary.
Faisal Rashid (Warrington South) (Lab)
Q
Nick Ashton-Hart: Several. I think first for the agreements you wish to transition you would look at the net economic benefit of transitioning them. You would then have to look at what likely changes the other party would be asking for—they would be doing the same analysis—and what changes you would ask for. You have to assume the worst. You have to assume the other party is going to ask for changes, and you have to assume that you will need to ask for some also. If you get lucky and you do not have to do any of that, that is great, but you cannot do this on hope. You have to do it on the worst-case scenario.
I think at that point you would have to bring in stakeholders to help you make that analysis. The expertise to do this is not all in government. It never is. It is also in the private sector and in academia. At the point where you had that you would know the basis on which you were transitioning the arrangements. This is not a trivial undertaking. Because of the regulatory impacts that newer deals, especially, have, you would also have to look at the consequences of certain changes to other arrangements.
For example, if there are most-favoured nation clauses in a deal that you wish to transition, as there often are, and if any changes are made to that arrangement when you transition it, it can impact all the other deals that have MFN clauses. This is now being discussed publicly, related to whether the EU could do an expanded services deal with us, and who would automatically get the benefits of it. For example, a Canadian deal would provide that the EU would have to give the benefits they give us to several other parties, Japan and Canada included.
We are in the same situation because there are MFN clauses in these agreements that we wish to transition, so you have to analyse the net economic benefit to you of the deal in question, but also the consequences of any changes to other deals that you want to transition, because you can guarantee that, for any MFN clause in any other deal, the parties that you are going to negotiate with will be looking at what you are giving in these other discussions and of course expecting to receive in them also.
There is a good reason why trade arrangements are slow, and there are not many going at one time. It is because this is an enormous number of moving parts to try to manage at one go—for us but also for the other Trade Ministries, because deals with us are not the only deals that they have going or that they are working on. If I were you, I would be asking the Ministry: “Look, what is your plan for dealing with these different eventualities?”
Faisal Rashid
Q
Nick Ashton-Hart: I think it is essential, aside from the benefits in terms of being a democracy that is looked up to by others as an example, and not wanting to set an example that is far below the minimum level of accountability in any other developed economy, which is what we would be doing—we would be setting a precedent here that should concern everyone.
Secondarily, it is in our interest to do that, because there is going to be a political hue and cry about various provisions in probably all the 40-plus deals. There is going to be something that someone does not like about them. That is the nature of trade agreements. Some sectors win and some lose. Losers complain and winners keep quiet mostly, because they do not want to provoke people who won. The objective is to have a net benefit, but that does not mean that within that there are not winners and losers.
There is going to be controversy associated with these arrangements. Having effective and robust consultation now will help insulate the negotiating process and provide a rationale for all of you, the Members, to go to your constituencies and say, “Look, there is a reason why we are doing it this way. We have had an oversight process. Here is what the country will get out of this.” For those districts or constituencies that will be negatively impacted by a deal, you will be able to go to your constituents and say, “Okay, on this one we may not do so well, but we will do well on this and this and this, and the net benefit to all of us is positive.” The consultation process provides all of you with the ammunition you need to explain why at a real level—the firm level and the sectoral level—transitioning the arrangements in the way that they will be agreed is in your constituents’ interests and the national interest.
Without that dialogue, you do not have that ammunition. Every time you are hit with a news story, you will have to go and ask the Ministry concerned, “How do I counter this?” Being reactive all the time on trade policy has a very unhappy history of negative views of trade in general, and of deals in particular. Criticism does not have to be true to stick, as I am sure we are all familiar. I would say—Nick might disagree—that there was some criticism of TTIP and provisions that were alleged would be in the deal, such as things that affected NHS procurement, which were actually excluded from the negotiating mandate. The fact that those criticisms were levelled did not stop there being a political cost to the negotiation as a whole from the allegation that those provisions would be inbuilt. On a pragmatic basis, there is a very strong argument for a robust consultation process, but the negotiators themselves are going to need information that is in the private sector and in academia as part of their negotiating arguments, and without a robust consultation process they will not have access to those.
The Chair
Can I say, before I go on to the next person, that I have at least six people who still want to ask a question and we have a maximum of 23 minutes, so can people bear that mind?
Mrs Kemi Badenoch (Saffron Walden) (Con)
Q
Christopher Howarth: It is important, getting back to the Trade Bill, that it only gives a power for existing trade agreements. These trade agreements are already in force and companies already rely upon them. When we talk about impact assessments, the biggest impact assessment is that these agreements are already in force or have already gone through a scrutiny process and may come into force, such as CETA. Obviously, in leaving the European Union, we are moving to a different scrutiny system. Before, they could be decided by the Commission, the European Parliament by qualified majority voting or, in the cases of mixed agreements, you would have to get unanimity, occasionally from devolved Administrations as well. We are moving to a new system, but these agreements are already in force.
The relationship with the European Union (Withdrawal) Bill is that we are keeping retained legislation and we are keeping the EU standards, so if there are any amendments to these agreements, they have to be in line with the regulations—the food safety and environmental standards—that are being retained in UK law. The scope for actually changing things is quite narrow. These have been through a scrutiny process. They are in force. This Bill is necessary, in my opinion, so that the people who rely on these agreements can be sure that they will be transferred over in time.
Mrs Badenoch
Q
Christopher Howarth: Trade agreements do traditionally take a very long time. In this case, they are already in force and we already have texts. Small amendments may need to be made around quotas—in some of the agreements we need to agree with the European Union and the counterparty how to split the quotas up—but the texts by and large have been agreed. In the future we may wish to come back to them to improve them or to fit them more to UK interests, but these agreements do exist. Trade agreements traditionally take a long time. I refer you to Parkinson’s law: that trade agreements tend to expand to the amount of time available to negotiate them. If you give trade negotiators 10 years to negotiate an agreement, it will probably take 10 years. In this case we have a fixed deadline, and I assume both sides will want to fit the negotiations and the necessary functions to that.
Barry Gardiner
Q
Christopher Howarth: I think it is true to say that the agreements the European Union made were fitted around European Union interests and that if the UK were starting from scratch, we may have had other interests. The EU interests would protect French farmers and the French audio-visual industry. You would get a price on the other side, say with Canadian agriculture. If the UK was doing it, we might do it differently. That is probably a discussion that would take longer and we would come back to later, and these agreements would probably stay exactly as they are. On the scrutiny side, we had a sort of mirror of this debate in the European Union (Withdrawal) Bill negotiation and discussions in Parliament. There may be some—
Barry Gardiner
Q
Christopher Howarth: There may be some minor changes, potentially around the EU agreements and our relationship with the European Union. If there is an EU-agreed quota in an agreement with a third country—in terms of how we split that up, how we change that or the wording of the agreement—then there may be references that need changing in the agreements. There may be minor changes, but I imagine the substance of the agreements will stay pretty much as they are.
Barry Gardiner
Q
Christopher Howarth: Indeed, it might be an opportunity for the UK to get a better deal, because if we are a more liberal economy and we have more to offer, we may be able to get better access.
Barry Gardiner
Q
Christopher Howarth: Yes, but speed will probably be the overarching thing that dictates that they will remain as they are for the foreseeable future. We may come back to that at a later date.
Iain Stewart (Milton Keynes South) (Con)
Q
Christopher Howarth: The timeframe that we are working on at the moment is that we will leave the European Union on 29 March 2019, so that will be two years, then three years after that. That is a substantial time in which to negotiate. The United States and Australia negotiated a full agreement in roughly two years. Some countries take longer, some less, but that would be a substantial amount of time to revisit and improve agreements.
Iain Stewart
Q
Christopher Howarth: The countries that the European Union has agreements with—South Korea, South Africa, Mexico—are major trading partners. Something that has not been mentioned so far is the plurilateral World Trade Organisation government procurement agreement, which gives British businesses access to over £1 trillion of Government contracts around the world. As a liberal country that tends to accept contracts from other countries, it is important that we get reciprocal rights for British businesses to other countries. Remaining part of that plurilateral agreement, which the Bill allows, would be important for British businesses when seeking Government contracts abroad.
Nick Smith (Blaenau Gwent) (Lab)
Q
Christopher Howarth: I work for a group of mostly Conservative MPs.
Nick Smith
Q
Nick Ashton-Hart: I am not really an expert in how the Australian Government do their consultations, so I cannot describe them in detail. I can describe how the trade officials who I deal with view them. From my conversations with trade officials over the past six or seven years, most of them find the oversight process challenging. The Australians are no exception to that.
For example, in the discussions on the flow of data that have taken place at the WTO and in the trade in services agreement negotiation, of which Australia is a part and which the US and Australia created, a significant portion of all the issues that delayed all the services parts—all the digital elements—of TISA were related to the flow of data and to the Australian negotiators’ view of what they could get their oversight processes to consent to in relation to it. A comprehensive change to their data protection regulation came into force about four years ago, and its structure made it impossible to evaluate how it would work in a plurilateral context because of how it applied liability when private information was given to non-nationals. That meant that they were unable to make an offer or respond to other offers for a considerable period of time—about 18 months, I think—as a result of their oversight process at home. That was in relation to just one part of the plurilateral negotiation.
That example has held true. I have seen it happen with probably half a dozen countries on various issues over time. If there is a political problem in one area, it generally gums up everything else because it is often not convenient for you to say, “I have a problem in Parliament at home, so I cannot talk to you about x and y.” Instead, you would say, “We are still consulting on that.” Meanwhile, you will ask for something impossibly difficult, knowing that the other party will then get stuck. Once your problem goes away, you can withdraw the thing that is causing things to stick over here, because this is the political economy. You do not want to be negotiating on your weaknesses. You want to negotiate on someone else’s, so you have to create them if you have a negotiating bloc.
Alan Brown (Kilmarnock and Loudoun) (SNP)
Q
Christopher Howarth: It is probably a matter of practicalities. There are a number of these around the world and starting negotiations with all of them at the same time is probably impractical. That is not to say that these agreements were not based on EU interests; UK interests are slightly different. There are things we would have prioritised to gain access for British companies and there were some defensive interests that were not relevant to the UK. Taking an example: citrus fruit or things we do not produce in this country. There were things we would have done differently.
These are probably questions to come back to at a later date. At the moment, it is about trying to make sure these agreements still exist when we leave the European Union, so it is the practicalities of getting these agreements moved over into the UK’s name and out of the EU’s name, putting the UK’s signature on them.
Alan Brown
Q
Christopher Howarth: If one of the European Union’s agreements has a quota in it, as the UK leaves, the counterparty might wish to continue to be able to export the same amount into the European Union and the UK. So it would be a three-way negotiation, which would involve splitting the quota up, with different countries taking different views as to what the fair way to do that would be.
Alan Brown
Q
Christopher Howarth: Yes, it would need splitting up. You either do it with the counterparty via the WTO and you would need to discuss it with the European Union as well.
Alan Brown
Q
Nick Ashton-Hart: It depends very much on the nature of the deals in question and how recent they are. All the deals tend to be more focused on tariffs and the like, whereas it is somewhat simpler. Where it involves services, yes, even though these agreements are in force now, as was explained, you still have to accept that what France wanted from that deal when it was negotiated, what Germany wanted, what we wanted: these are not the same as what we and the other party want now. There are things such as protections for certain industries that we do not protect, but the other party will say, “Can we take that out?” and we might say, “Okay, but then we want this over here.”
Human nature is such that, if you are given a chance to negotiate on something and it is of serious monetary value, you are going to ask for a better deal than you got last time. If we buy cars, we do this. We don’t go and buy the car and say, “We will pay full price”—although some people might—or a house or the like. Countries do not do this. So you have to assume that normal human behaviour is not going to be thrown out of the window simply because we are in a hurry to transition our arrangements over to someone else. You have to assume that human nature will still apply and the other country is still going to behave as a rational negotiating partner, which is to seek their advantage from our need for speed.
The only way then to proceed is to say, “Okay, let’s look at these deals as they apply to us now and let’s consider: what is the other side likely to ask for? What is it in their interests to ask for and is it in our interests to agree to it, because it is expeditious, or because it is in our interests, or both?” You have to treat this as a negotiation, not as a replication.
Barry Gardiner
Q
Nick Ashton-Hart: I cannot imagine that the constituencies of this country would see it any other way. This is a substantial portion of our GDP; it is a substantial portion of our export and import. How can you say to people that you passed up an opportunity to make things better, when that was part of the premise under which we are doing this whole exercise in the first place? And our other counterparties certainly will not see our need for speed as anything other than an advantage to them, because it is. We are the ones in a hurry. Japan is 1.8% of our exports or something like that.
The Chair
May I just say that I have at least two, and possibly three people who still want to catch my eye, and we have a maximum of four minutes left? So perhaps a short question and a short answer would help.
Gillian Keegan (Chichester) (Con)
Q
Nick Ashton-Hart: If people are trading with us now under an arrangement, there is an incentive for them to see that it continues. I am not suggesting that that is not true. What I am suggesting is that it is an opportunity for the other parties to ask for things that they wanted last time and did not get, or that the passage of time of those agreements—age—means that it is appropriate to ask now. I am saying that everyone needs to bring home some benefit for something.
Gillian Keegan
Q
Nick Ashton-Hart: I am saying that I have never seen or heard of a Trade Ministry not asking for some improvement when any deal is being renegotiated, because that is how you are seen to be doing your job.
Gillian Keegan
Q
The Chair
May I move on finally to Anna McMorrin, because she has been waiting patiently, for probably the last question?
Anna McMorrin (Cardiff North) (Lab)
Q
Nick Ashton-Hart: It depends on the nature of the agreement. If it is a situation where a quota has to be split, then yes. We see this in Geneva now, where the quotas at WTO level are being split up, or even our closest trading partners are arguing over whether one plus one equals one. In other areas, it is not necessarily the case. It really depends on the way the original agreement was made, and who else might benefit from a change to it through an MFN clause, or the like.
Anna McMorrin
Q
Nick Ashton-Hart: Where there are rules that we are accepting from the EU, then of course we have less flexibility to make a change if it is asked for by the other side; that would conflict, of course.
The Chair
Order. That brings us to the end of the time allocated for the Committee to ask questions. I thank witnesses for their evidence, and I thank Nick Dearden and Nick Ashton-Hart for their written evidence; I am sure that we are all grateful for it.
Examination of Witnesses
James Ashton-Bell, Chris Southworth, Tony Burke and Martin McTague gave evidence.
The Chair
Q
For this sitting, we have until 11.25 am. Would each of the witnesses please introduce themselves for the record?
James Ashton-Bell: I am James Ashton-Bell, head of international trade and investment at the Confederation of British Industry.
Chris Southworth: Chris Southworth, secretary-general of the International Chamber of Commerce here in the UK.
Martin McTague: I am Martin McTague, national policy director for the Federation of Small Businesses.
Matt Western (Warwick and Leamington) (Lab)
Q
Chris Southworth: There are four key elements within the Bill that are broadly in the right direction of travel around setting up a trade remedies Bill, sharing data and so on, but there are missing elements—I think we agree with a much wider community of non-governmental organisations and unions—where we need a more inclusive approach to dealing with trade, more democratic oversight and more policy connectivity. We are speaking in a context of G20, where there is a very public commitment to developing a free trade model that works for everyone. That is missing in the current Trade Bill.
Matt Western
Q
James Ashton-Bell: I think we start from the place that the Bill does a lot of really important things for business, in terms of providing continuity. Continuity is absolutely key in all business leaders’ minds when it comes to our trade relationship with the EU, but also with third countries and the World Trade Organisation. The Bill goes a long way toward providing assurances with regard to the WTO on things like procurement, ensuring—as you have heard—that trade remedies are available and provisions for replication of free trade agreements that we currently enjoy through the EU.
I think business is looking for more in the longer term, and there is a broader question about whether or not this is the right vehicle to use to create the kinds of structure that they need around consultation. Any major trade country in the world has extensive and formalised ways of engaging with civil society to ensure that they get the maximum amount of input into trade policy that they need. The question of whether or not this is the right legislative vehicle to create such a structure and such a process is one that I will leave to Members, but business is looking for those kinds of structure, and if not now, when?
Matt Western
Q
James Ashton-Bell: Yes.
Matt Western
Q
Martin McTague: Our clear priority is the transition process. It is vitally important that there is no cliff edge at this very early stage. Our members, and the small business community as a whole, see this as an enabling Bill, something that will help a smooth transition, so in principle we welcome it.
Matt Western
Q
Chris Southworth: There is a general recognition across the international community since the EU referendum—of course, that was followed by Trump and further issues across the G7—that the existing models for handling trade need to change. That is because there is a disconnect within society and over wider communities and regions, particularly in the lower-skilled areas, where they have not benefited from the growth of trade.
Everybody is looking for exemplars. Some countries have more structured set-ups, such as the US and New Zealand, where it is much less around the ad hoc consultation and engagement that we have in the UK. That is one key point to make. There are definitely lessons to learn from elsewhere, including the EU, I have to say. The propositions in the Trade Bill are a lesser option than what already exists within the EU. Although the EU itself can improve, there are elements of their structures that would work well for the UK, going forward. That is a key point to make.
The Chair
May I interrupt to welcome Tony Burke, who is the assistant general secretary of Unite the Union? We are very grateful to you.
Tony Burke: Apologies for being delayed. St Pancras and King’s Cross tubes were closed. I have done some fleet footwork to get here.
Matt Western
Q
James Ashton-Bell: I support everything that Chris has just said. For us, we look at the spectrum of different formal ways of engaging civil society. At one extreme you have the United States, which has an incredibly elaborate set of technical committees, numbering several hundred different members of civil society, to provide technical assistance to officials. At the other extreme there are less formalised systems for economies that tend to be a little bit less complex and tend to be significantly smaller than ourselves.
Business would come down somewhere along the lines of being closer to the US model than something less formalised for a less complicated economy that is also quite a bit smaller. Does that mean we need everything that the US model has? No, absolutely. We need a UK-specific bespoke model but it would probably be quite elaborate, to ensure that it takes in every business and wider civil society from across every region of the UK, across every size and shape of organisation and across all the different types of technical expertise, which crosses many different policy issues—everything from intellectual property to issues of data.
Matt Western
Q
James Ashton-Bell: I struggle to understand how any Government, engaging in trade policy, be it at multilateral or bilateral level, would be able to get the best possible outcome for that negotiation unless they were using the full strength of their economy, pooling from the best minds that exist within and outside Government.
Matt Western
Q
Martin McTague: It is difficult to draw parallels with any other country withdrawing from a 40-year relationship. The view that we have taken in the past is that consultation has worked well, inasmuch as the small business community, which we think is a vital part of the economy, has been listened to, and we would hope that that would happen in future. However, there is a temptation, because the bigger corporates sometimes have more access to Government, that small business does not really get listened to. This component, we think, is absolutely vital in the development of the policy.
Mr Prisk
Q
Martin McTague: At the moment our view is that the early stages of development of TRA look encouraging, but we know they are a consultation. We know that they are looking at a variety of different options, and we are willing to wait for the consultation process before we get into a committed decision.
Chris Southworth: The principles are there in terms of setting up a trade role and it is as much to do with the speed around that. I would echo the same thoughts: there needs to be a lot more consultation around them and there needs to be clearer evidence of learning best practice from others. We are not the only country proposing a Trade Remedies Authority. I would start with the idea that having a trade remedies authority and the core concepts that exist in this Bill feel broadly right.
Mr Prisk
Q
Chris Southworth: Yes, I would have thought so. I do not think there should be any opposition to the idea that one may need to evolve in time. The UK has to re-learn how it does trade as an independent country, so we will not get it 100% right in the beginning. It should be able to evolve over time, and if there is a better way of doing it, then do it.
James Ashton-Bell: I take a slightly different view. As to what is in the Bill at present, our internal analysis of the Trade Remedies Authority is that there is a fundamental question, and we are looking for an answer to it: that question is about who makes the ultimate decisions about when to take action and when not to take action.
Having an independent organisation to advise on the data that exists—or does not exist, in many cases—is useful. The EU has found time and again that it does not have access to the kind of data information it needs to draw the kinds of concrete conclusions that it would like to draw. Given that scenario, it is useful to have an independent organisation to make those choices and to be clear about what information is and is not there.
When you have things like the economic interest test that is currently being floated as part of this authority, which in essence allows for the identification of particularly problematic trade behaviour from a third country and for it not to be actioned by the Government or authority, it means that there will be a decision at some point not to take action. If there is not enough information, then that in itself becomes a subjective decision about which parts of the economy are worth protecting using these particular tools, and it is argued that, if a subjective decision is going to be made, then it needs to most certainly be made by a Minister who is accountable for making those choices.
Tony Burke: Right from the get-go, the Manufacturing Trade Remedies Alliance, which consists of three trade unions and a number of trade associations including UK Steel, chemicals industries and ceramics among others, pressed strongly to get a trade remedies clause or a structure in there. We were able to put forward our proposals in advance of the discussions taking place at this level. One of the things that we would say from the trade union point of view is that it is absolutely essential that the TRA has a trade union voice—a worker’s voice—on it, particularly at non-executive level. We should also obviously be subject to International Labour Organisation conventions that protect workers in that remedies arrangement. We are supported by the employers on this. From our point of view, the situation in Unite is that we have many members in manufacturing who have suffered at the hands of dumping: steel, tyres, ceramic, chemicals and pharma. It is a big concern for us. We would see that we need a remedies authority that is transparent, and that has trade union and employer representation. At the end of the day, Parliament has to have consent over any decisions made.
Mr Prisk
Q
Tony Burke: As it stands, but we do not see the transparency that we would like to see, and we also have a view about what appears to be an ability for the Minister to appoint people. We believe that working people and companies should have an opportunity to have a say, and also for trade unions to bring a case. This is important. We have learned from America. We have worked closely with the steelworkers’ union in the United States. They as a trade union in America do bring cases to protect their members in steel, rubber, paper making and industries like that.
Barry Gardiner
Q
James Ashton-Bell: My organisation does not have a defined position on that blank sheet of paper you have just described, but to follow your rationale, and consistent with what I have said so far, bigger organisations do not have a monopoly on understanding how trade impacts the economy. In anything where you are making choices about trade and how it will impact the wider economy, you should have a wide and balanced group of people advising Government, or an independent authority, about how to make those choices. That means, indeed, that small business are very much equal to big business, and workers also, because workers are just as impacted as the businesses themselves.
Chris Southworth: I just want to clarify my point. It is exactly the same: the representation is a critical point. An independent body, yes, but there must be representation within that independent body to represent all the important voices, which includes all those here, but I would also include NGOs and civil society, who have equal interest in the implications of trade. They must be at the table and that has to be in everyone’s interest, including business—big, small and medium.
Martin McTague: Barry, it will not come as a massive surprise to you that, yes, I do agree that small business should be a serious voice on this. It is nice to know that James supports me. That is a welcome change. [Interruption.] It is something that we have clearly got unanimity on.
Mrs Badenoch
Q
Chris Southworth: Ultimately, it is about having a rounded decision made by an independent body. That political oversight is critical—James is completely right. Ultimately, it is going to come down to a political decision whether a decision is made one way or the other. If you operate in an organisation like the World Trade Organisation, then all these voices come into play. It is incredibly important that the decisions prior to any engagement in a global environment are made in a good way that is inclusive. The role of Parliament is critical in that too.
Mrs Badenoch
Q
Chris Southworth: Trade is slow, it is technical, and it is difficult. It involves implications for people’s lives and for businesses of all shapes and sizes in every region. There isn’t a component of public or professional life that is not impacted by trade. It is important that everyone has their say, so that when the negotiations begin, the negotiators and all the stakeholders are confident on what those positions are. It is equally important that, during the negotiation when important points come up that are difficult and tricky, which they always are at that stage, there is also an opportunity to come back and say, “What do you think? Do you agree with this, because we are going to have to make a compromise?” That could mean an implication for Welsh farmers, businesses in the midlands, or local communities in Sheffield. It could mean all of those things.
Mrs Badenoch
Q
Chris Southworth: Again, you need to come down with a political decision at some stage on whether or not it is right in terms of timing. The key point is: has there been proper consultation beforehand and has every stakeholder had the chance to voice their views in a proper structured format, not throughout the consultations, but in a proper structured way? That is the important point. Ultimately, there is always a sensibility around trade remedies, particularly if you are talking about things such as steel dumping. That has huge implications for a lot of people, particularly in geographies that tend to be vulnerable, so there is a difficult decision to be made. It is important that everyone has a chance to have their say about what that decision should be.
Mrs Badenoch
Q
Tony Burke: I think we would agree with everything that was said about the make-up of the board. It has to be wide-ranging and it has to have expertise. On the point you raised: when we put our evidence in from the Manufacturing Trade Remedies Alliance—industry and the unions—we wanted a system that worked. Don’t forget, we have not done this for a long, long time. We needed to make sure that we got it right. There were some folks’ voices saying, “Let’s have a fast-track. Look at America, it takes a long, long time”. We said, “No, if you do fast-track, you could get it wrong”. You need to have a system that works, step by step, but is widely consulted on, as has been said.
We may have problems in a particular industry, where we have to bring expertise in and we need to have people in that discussion at the remedies authority who know exactly what they are talking about and are able to demonstrate it. They can be very complex. When we look at the US system, it takes a very long time and moves very slowly. We do not want to rush it, but we need something that works and is as wide as possible. As I said earlier, I do not think impartiality comes into it, providing there was oversight from Parliament.
Faisal Rashid
Q
Martin McTague: We believe it has been taken into account at this early stage, but a lot more consultation needs to take place. We have a position and we are developing that position on exactly how this will affect smaller businesses. At this stage, it is not a developed position.
Faisal Rashid
Q
Martin McTague: It is only in conversations with officials that we believe that a lot of those consultations have been accepted, or at least understood. We are not at a position now where we are taking a firm line on this issue.
Faisal Rashid
Q
Martin McTague: I can come back to you with concrete examples, but I do not have them at my fingertips.
Chris Southworth: No, I do not think it has been satisfactory at all, certainly for the international community, which is what I represent. When I asked the question of officials, “Who have you actually consulted?” I was told, “The USA and Japan.” That is completely inadequate in terms of the countries that the UK is trading with. Their voice—they also have SMEs, also in supply chains, also funding livelihood—is equally important. This is going to affect other people’s countries and communities. So it was completely inadequate and haphazard. If you happen to name a name, that person will get consulted. If that person happens to be missed, we do not know, and they are completely missed off the consultation. That is not a way to consult on trade. It is slapdash.
Faisal Rashid
Q
Chris Southworth: As I understand it from the explanatory notes and the Secretary of State’s speech on Second Reading, there is no intention of consulting within the Bill—that all comes later, whenever that is. It was not clear in any of the communications whether that would be a further Bill or a paper. It all sounds distinctly like it will be something informal, which I would argue is completely the wrong approach. Bear in mind that the Bill is the first opportunity for Government to tell the world, not just the UK, how they will create a free trade model that works for everyone. This is the moment to set out the stall on what that structure for engagement will be. It is all missing in the Bill. There is nothing in it.
Faisal Rashid
If there is no new Trade Bill, those Henry VIII powers stay.
Chris Southworth: I go back to my point that, if I were living in Scotland, Northern Ireland, Wales, the Yorkshire Dales—where I am from—Sheffield or the north, I would be concerned about where my voice is coming into this process. We are talking about rolling over the terms of 88 countries. That is a lot of countries, and they are not all EU. It is extremely unlikely to happen. I would want to have a say in that process, not to wait.
Tony Burke: When the Manufacturing Trade Remedies Alliance put forward its document, which it had worked considerably hard to produce over a long time, we were surprised at the speed at which the whole thing moved. There were areas that we had gone through in great detail to prepare.
As I have said, there was unanimity on things such as International Labour Organisation conventions, trade union representation and industry representation, and on some of the real technical detail as well, which we could not go into today. We would be happy to revisit that document. I understand that the other folk from the MTRA are giving evidence to a different Committee today, and I think they will say very much the same thing. We have no problem in going through it again and picking out some of the key issues from the point of view not just of trade unions but of industry.
Some trade associations on that body are very concerned about what could happen to their industries. They will be putting forward those points of view today. The speed at which it was done was far too fast. The view seemed to be that that was it, even though people had spent a lot of time putting the arguments together.
Tom Pursglove
Q
Tony Burke: The big danger is that, if we do not have one that works on day one, we could be subject to what we have already seen in the past few years. Steel has been subject to the most horrendous situation for the past two or three years—lots of jobs have been lost. The industry came together to try to make sure that it holds together, but without a trade remedies structure in place, the big fear is that we would be subject to the dumping of steel again, particularly from countries such as China, although I am not singling it out. That is one of the issues.
There are other constituencies where we talk to colleagues—MPs and others—and our members. The tyres industry, for instance, is very concerned about the dumping of cheap tyres on the market, which would undermine our premium brands and well-paid skilled jobs. We need something in place. Of course, as I have said, we have not had anything for 40 years and it will take some time to work through, but it is important to have a wider group of people who can push the arguments for various industries.
My fear, and the fear of our members in steel in Corby and other steel areas, is that, if we do not have trade remedies in place, we could be faced with horrendous dumping on the basis that, in respect of what is happening and what has been said, there is massive over-capacity. Steel in particular is being sold at cheaper rates than it costs to produce.
Tom Pursglove
Q
Tony Burke: You have to have something in place. Certainly, many of our members in the steel industry have followed this and are extremely concerned about what could happen and about market economy status being granted to China. Those are the key issues, and they will expect us to keep pushing the issues wherever we can to get this right. It was said earlier on. We do not want to just harp on steel—there are lots of other industries—but it is one area where we have had a really bad time. Many of our members in the steel industry understand the arguments and would expect us to come back to the issues again whenever we could.
Tom Pursglove
Q
Tony Burke: We have not got to that situation directly in talking to our shop stewards and reps. We have been talking with our parliamentary colleagues who have steel in their constituencies, and our union reps are talking to them, so there would be concern.
Judith Cummins
Q
Tony Burke: No. We have been working with the Manufacturing Trade Remedies Alliance, which includes a number of trade associations—as I have said, steel, chemicals, fertilisers and so on—and I think there has been a coming together. We would have preferred a longer period, obviously, to go through this in detail—a longer period to argue for the things that we put forward in our document, which were generally accepted by everybody. To answer your question, the only way we are going to be able to make sure that the voice of working people is heard is to have representation on that body directly from the trade unions.
Chris Southworth: I would make an additional point. I completely support that point, but if there is one thing we have learned over the last year and a half, it is that we have to accept that there is generally a low understanding of trade, and trade itself has moved on significantly in the last 40 years; the world we live in today is not the same as it was 40 years ago, either. I think that extra diligence in relation to consultation and informing the public, and business for that matter—businesses are in the same position, surprising as that may sound—is a good idea.
Bill Esterson
Q
James Ashton-Bell: Specifically when it comes to trade remedies, I think the most important place to start is: where have mistakes been made and where have processes not delivered outcomes, either in a timely way or in terms of the right kind of outcomes for the wider economy? I know there is a lot that officials have been looking at to learn what not to do from the EU, because everyone agrees that that system is not perfect. Much of that thinking has coloured some of what has gone into this Bill. There are aspects of the US system that do not work. No one has a system that we have found you can hold up as an absolutely perfect system. There are always going to be different balances that have to be made, but the fact that officials working on this have looked at the US, Canadian, EU, Japanese and Swiss systems means that they have certainly made a good effort to try to learn from others’ mistakes, and that is an excellent place to start.
Bill Esterson
Q
James Ashton-Bell: Getting to some very technical areas that, as the Bill stands, would be covered by secondary legislation—so the devil will be in the detail—for me the central question is who ultimately makes decisions about whether to take action, where to take action and what is a proportionate action to take. The reason I say that is because taking action in a case of using trade remedies and defence is a highly political move and a highly economic move. It is never without controversy and, as I mentioned before, never with absolutely perfect information and data to make an objective decision.
Having very clear reporting structures and decision-making structures about who is the ultimate arbiter is key. Having lots of time for everyone to feed in as much information across the wider economy is key. So have as much information as you can at the beginning, but have a very clear process for using that information and have clear decision making to ensure that the outcome is someone’s responsibility and that they will be held accountable for it. It feeds into our wider industrial strategy; it is not just a trade issue.
Bill Esterson
Q
James Ashton-Bell: The mistakes are usually procedural. I am not going to pronounce on individual decisions because, as I said, they are never made without controversy, and for me to pronounce on another country’s individual trade remedy decisions would put me in a very difficult place. In terms of process, some have commented that in the American system, they can be very rushed and not all information or all stakeholders are taken into account. In other instances, such as with the EU, the process can be so long that they do not actually take action early enough to ensure that you can fix the problem when it is a problem. Procedure is absolutely core to most of the problems that occur when designing a system like this.
Chris Southworth: I have a difficult situation, which is a real one: the market status of China. That was very live last year or the year before. You have a classic situation there where we clearly want to be supportive to China as it comes on board as a global leader. China itself knows perfectly well that it wants to wind down steel production and that it is over-producing, but you cannot just wind down the Chinese economy overnight—that will take 10 years to do, as Europe did with its mountains in the past.
Where is the balance? In the meantime, the impact is on steel communities in the UK, across Europe and other parts of the world—we are not on our own—but who decides what that balance is? There is an implication either way on either the political relationship with China and supporting the Chinese economy, or local communities here in the UK. Someone has to come down and say, “Okay, this is where we are going to be.” That may potentially evolve: you may want to take several positions over a period of time so that you get to the end goal that you collectively want, but that must involve the people who will be impacted by those decisions.
Bill Esterson
Q
Chris Southworth: I have already made the point, and broadly speaking I support the comments made here that you have to have something on day one. Do not be afraid to evolve that over time, but you have to have something in place that feels broadly right. Having listened to the conversations here, I would say that the stakeholder representation needs to be looked at, but the basic structure is there to work with—get on with it.
Bill Esterson
Q
Tony Burke: I agree with some of my comrades here. Everybody has got to look around the world at different systems. In Unite, we are focusing on the US system primarily because of our relationship with the United Steelworkers union in the States, which, as I have mentioned before in other areas, almost does this for a living. It has officials on the hill working on this all the time, and at times it is very time consuming and costly. So if there are many mistakes, they can either be rushed in the States, as has been said, or be very slow and very costly. We are looking for a system that works and that can be easily understood. I do not know whether you want to extend the debate into the market economy status for China. I will resist the temptation, but I have to say that that is a major issue for us in our industries.
Martin McTague: The only thing I would add is that in the States there is a temptation—there seems to be plenty of evidence that it happens—for the bigger, more concentrated industries to get dealt with more quickly. What you have got is that the more fragmented industries that are supplied by lots of smaller companies do not get dealt with effectively.
Gillian Keegan
Q
Tony Burke: The EU system was slow. At times, when we had the situation that I mentioned—going back to steel, when we had a crisis—we were quite concerned about the glacial pace of getting the whole thing moving and recognising what was happening. We are looking for the TRA in the UK to be, as I said, one that we can move forward on, and for decisions to be made that will assist companies and industries fairly quickly, without being too rushed—you need to take opportunities to listen to what people have got to say and take the best advice and evidence.
Gillian Keegan
Q
James Ashton-Bell: My only comment would be, based on what is in the Bill, that it feels like there is a good framework to start with, and to work from that to create a better version of what the EU currently has, but much of whether or not that will be successful will be defined in secondary legislation, I believe. Based on what I have seen, we have a good starter for 10; we now need to build on it and ensure that more consultation responses on some of the more controversial issues are taken into account, and then translate that into secondary legislation.
Chris Southworth: I would support those comments. I would not be too quick to dismiss the EU; they are very difficult decisions to make across 27 countries. The decisions themselves are incredibly diverse, as well as the 27 countries being diverse. There are very difficult decisions when you are talking about these kinds of issues around trade remedies.
Gillian Keegan
Q
James Ashton-Bell: Correct.
Chris Southworth: I agree.
Martin McTague: The principle is that we want to get this thing up and running as quickly as possible—efficiently and possibly more efficiently—while taking into account some of the interests of smaller businesses. I think that that is clearly understood, and we support the points that James made earlier, but do we need it? Is it something that essentially has to be there on day one? I do not think there is any doubt.
Barry Gardiner
Q
Chris Southworth: Again, I think it all goes back to consultation and scrutiny. If people have an opportunity to look at the measures or issues properly, you are more likely to head those issues off. I agree that we do not want to become the second best option, or the optimal option for the wrong reasons, if you know what I mean. At the end of the day, these are people’s livelihoods, so it is very important, but it comes back to the same premise throughout this conversation: consultation, proper scrutiny across the stakeholders with Government and then coming to a conclusion as to what is right.
Barry Gardiner
Q
Chris Southworth: If we are going to create a free trade model that works for everyone, the answer is absolutely yes. There must be those considerations and there must be that input from the range of stakeholders. It has to be the right way forward. It is the only way forward, because what we definitely know is that what we have at the moment does not work. The backlash to that model is sufficient to make everybody sit up in their seats and say, “That doesn’t work, let’s try and be better.” The answer to your question is yes.
James Ashton-Bell: I agree with that. We do not have a defined position as an organisation on this, but I would say that we do have a defined position that trade, industrial strategy and your wider domestic agenda are inherently linked and should never be seen as running in parallel or separate. Given those concerns, we would say that you would never take a decision on anything to do with trade defences without taking into account every impact on your wider economy before making that choice.
Tony Burke: I agree. The question of taking the environment into account is important, but so is this question of social impact. When you look at what could happen with the dumping of goods and how that affects particular companies or industries that centre around certain areas, I think it is absolutely essential. As colleagues have said here, you have to take into account an industrial strategy that ensures that all regions and industries—particularly foundation industries—are protected as best as we can possibly do it. We definitely would need to include the environment, but social impact on localities and industries is very important.
Barry Gardiner
Protect Mr Pursglove’s constituents.
Martin McTague: The only thing I can add to that is that I do not see anything in the Bill that prevents you from doing that. This is something that we would support in secondary legislation.
Barry Gardiner
Q
Tony Burke: Are you referring directly to the MTRA’s evidence, Mr Gardiner?
Barry Gardiner
Well—
Tony Burke: Yes. Well, as I said earlier on, one of the issues was that we have done a tremendous amount of work on this and lots of wide consultation. We came up with our proposals and we were quite surprised that almost overnight that was what we were going to do. What was the feeling? The industries represented on there were somewhat taken aback that it was done so quickly, and concerned—as would be expected—about whether their voices would be listened to. From the union’s point of view, that was very much the same. We thought that we had done one hell of a lot and put the arguments there very clearly, and obviously some of the key issues for us, such as ILO standards and employment protections, were not there. Hopefully we can try to revisit them and get them in at some point.
Barry Gardiner
Q
Tony Burke: I believe that was the case, but then I will stand corrected. I remember it all happening.
Barry Gardiner
Q
James Ashton-Bell: The thing I can say is that the optics were not ideal.
Barry Gardiner
You should go into the diplomatic service.
James Ashton-Bell: We start from a position that much of what is in this Bill is a framework. The framework itself can be argued to a greater or lesser extent as non-controversial. The controversy starts arising when you start putting in the detail that is not currently in the Bill as it stands and, from our perspective, more importantly, what is not in the Bill at all and probably should be. Those are bigger questions.
On that basis, we know a number of conversations happened in the run-up to publishing this Bill, particularly around the issue of dumping. The elements that went into the Bill seemed to be the ones that were the least controversial and could be built around with more detail. Presentationally, was it the right thing to do? Maybe not, but I have more confidence that there is opportunity for the House to alter this legislation to fill in on the more controversial element.
Chris Southworth: My overall impression is twofold: too fast, and not enough consultation of the international business community, bearing in mind we are talking trade here. This is not public health in Yorkshire or somewhere. This is trade. We must be talking to our trading partners, who are just as perplexed and confused about what is going on over here as anybody else. I don’t think they were consulted enough, partly because of the speed and partly because there was not enough communication as to what the UK is trying to do. That would be my answer.
Martin McTague: The best way to answer this is that small business as a whole is completely split down the middle. If I speak to the average leave voter, they would say “Why don’t you get on with it?” This isn’t fast enough for them. The average remainer will consider it a recklessly rushed process. We are not reaching a conclusion—it depends on which perspective is looking at this. That is largely the view we are getting from small businesses.
Barry Gardiner
But however quickly you take the process, you would want—
Martin McTague: How quickly you take the process is either perceived as being far too fast or reckless.
The Chair
I have at least three people still seeking to catch my eye and we have a maximum of eight minutes. If we can have short questions and short answers, and if a panellist does not feel they have anything to add to someone else’s answer, perhaps we can skip on, just to try and get as many people’s questions in as possible.
Alan Brown
Q
Chris Southworth: Overall—not just the Trade Remedies Authority—I would be concerned if I were in the devolved Administrations. There is specifically no opportunity for the devolved Administrations—or the regions, I have to say—to feed into decisions on trade. I would be very concerned about that, particularly in the devolved Administrations, where there are vulnerabilities on a whole range of different industries.
Alan Brown
Q
Chris Southworth: My point is back to James. What is missing in the Bill is clear direction on what the Government are going to do to create a new, more inclusive structure to include all the stakeholders. That is the central point to all of the content of the Bill and every other Bill relating to trade, going forward. We must do things differently and it is all missing. There is not even a reference to it. There are references to things that will be very agitating, such as Henry VIII powers—the ability to overrule. That, to the outside world, will look like an aggravating factor, I would have thought, when we need to do the opposite and be more inclusive.
On the world stage, I have to say, the UK Government are exemplary on this. We are pushing out the message very publicly, as the Secretary of State was doing in Argentina just before Christmas time at the World Trade Organisation ministerial conference, around inclusive trade—the need to do trade for everyone and to make it work for everyone. It was exemplary. We were the most vocal Government around it, actually, but back home, when you look at the Bill, you think “That doesn’t make sense.” That was my reaction to it.
Alan Brown
Q
James Ashton-Bell: I agree with that.
Faisal Rashid
Q
Tony Burke: As it stands, no.
Chris Southworth: Look at what you have got today. That is what you get when you do not get proper consultation and involvement in trade. That is what we are dealing with right now: huge social division, division and disparity across the regions, industries vulnerable. You get all of that. That is what we are dealing with. That is what you have if you do not make change. That is why the Bill needs to demonstrate change.
James Ashton-Bell: The reason we have been calling for a very formalised form of consultation is twofold. One, there are many examples in history—many countries have designed very elaborate free trade agreements that businesses do not use because they were not designed with business in mind. That is a waste of everyone’s time and our negotiating effort.
The second reason is that we find in many instances, as we saw when trying to ratify CETA, through Belgium, or with TTIP, if you do not have an inclusive process that is incredibly formalised and elaborate, you actually lose public support. Having the right advocates to push the deal across the line is something that is good for the economy. It needs to be grounded in fact to ensure that it is good, and also something that has consensus and that we can actually stand behind.
Tony Burke: Again, I am in danger of agreeing with a lot of folks in what they are saying at the moment. Regarding what has just been said, if you look at CETA and TTIP, there was massive opposition from across the spectrum. It is important that we get this right, and inclusivity is the key. We had no involvement in discussions with regard to the UK in those trade agreements and I think the same thing could happen again if we are not careful. We cannot just go casting around trying to pick one off the shelf. This is going to be a very complex issue, so everybody needs to be on board.
Martin McTague: We have regarded this as an enabling piece of legislation. It is a framework. I can say that the area where TTIP really came alive for small businesses was when they introduced the small business chapter, which meant the real concerns of small businesses had a basis on which they could discuss those issues and get them properly grounded.
Matt Western
Q
James Ashton-Bell: I do not believe the Bill as a vehicle can deliver a good Brexit in any scenario. There are too many Bills and pieces of legislation that are necessary to deliver a good Brexit. This is one piece of the puzzle. There is a lot of detail that is not in here. Our position is not necessarily that that has to be in here. There are other pieces, like the consultation issue, that we believe need to be formalised in legislation. That could happen at a later date.
Our concern is that to deliver a good Brexit we are going to have so many pieces of legislation in a very truncated period of time. A lot of pressure will be put on Parliament to rush through legislation without properly scrutinising it, or legislation will not make it through. Either way, we get a bad outcome. Our question comes back to the one I started with. If there are essential elements for your trade policy, if they are not in this Bill, why not, because you have it in front of the House anyway?
The Chair
Order. That brings us to the end of our time allotted to the Committee to ask questions. I thank our witnesses on behalf of the Committee for their evidence, in particular Mr Burke, for the tortuous journey he had getting here.
Trade Bill (Second sitting)
Tuesday 23rd January 2018
(6 years, 2 months ago)
Public Bill CommitteesRead Full debate Trade Bill 2017-19 View all Trade Bill 2017-19 Debates Read Hansard Text Read Debate Ministerial Extracts Amendment Paper: Public Bill Committee Amendments as at 23 January 2018 - (23 Jan 2018)
The Chair
For those of you who do not know, I am James Gray. I am a stand-in for Joan Ryan, who unfortunately has, I think, a family problem of one sort or another. I shall be in the Chair for this afternoon’s proceedings. I mentioned earlier on that, contrary to normal practice, I voted on Second Reading in favour of the Bill, but I do not think that that affects my ability to be dispassionate. A Chair who had not voted on the Bill could not be found, so that is why I am in the Chair—I hope that is all right. With that, let us have the witnesses in, please.
Examination of Witnesses
Dr Lorand Bartels, Dr Holger Hestermeyer, Jude Kirton-Darling and Dr Brigid Fowler gave evidence.
The Chair
Q
Dr Fowler: I am Brigid Fowler, from the Hansard Society.
Jude Kirton-Darling: I am Jude Kirton-Darling, a Labour Member of the European Parliament for the north-east of England, and a member of the European Parliament Committee on International Trade.
Dr Hestermeyer: I am Holger Hestermeyer, the Shell reader in international dispute resolution at King’s College London.
Dr Bartels: I am Lorand Bartels, a reader in international law at the University of Cambridge, and senior counsel at Linklaters.
The Chair
I do not know whether you have a thought to do so, or would like to do so, but you would be more than welcome to make a short introductory statement if you wish. If not, we will move straight on to questions, starting with Barry Gardiner.
Barry Gardiner (Brent North) (Lab)
Q
Dr Hestermeyer: The first thing to note—in fact, it is even in the Government’s comments on the Bill—is that the deals will be technically new international agreements, so they will be technically separate. As to their content, first, there are the technical details that will need to be changed—for example, rules of origin, which define when a product benefits from a trade deal. Those are quantities, so they will say, “50% of a car has to be from the EU.” That, of course, no longer fits; it will have to be the UK, and the numbers will have to be changed too, because a UK car is substantially now 44% UK-content. We will not benefit from the deals if we do not change the numbers. Those are technical issues, but they are vital.
There are some deals that are structurally so different that, quite frankly, I wonder whether we really want to reproduce them one-on-one. For example, Norway, Iceland and Liechtenstein are in the European economic area—as was recently explained, in the sidecar to the single market. Do we really want to reproduce those deals by statutory instrument? It seems peculiar to me that we would want that. Turkey, for example, is in a customs union with the European Union. Do we want a customs union with the European Union? We might say yes or no, but I wonder whether a statutory instrument is really the way to take those decisions. Switzerland has a whole number of agreements, some of them linked by what is called a guillotine clause, free movement. Do we want that? That probably could not be reproduced even if we did want it, so that is also a no.
You might say, “All this is insignificant,” but if you add up the numbers, the EEA is 2% of UK trade, according to the Government’s assessment of the Bill; Turkey is 1.3% and Switzerland is 3.1%. That amounts to roughly half the trade we are talking about, or half the 15% that the Government assessment arrived at for those agreements. I do not think that will be rolled over, because I am not sure we would want it, quite apart from the technical issues that will arise and the question of whether other states and our partners will say, “We also want something.”
Dr Bartels: I would rather focus on the implementation aspects. Obviously, the question of which agreements the Government choose to roll over is a political decision; it depends on negotiations and so on. My reading of the Bill is that it talks about the implementation of those agreements. What is important there is to identify the scope of the agreements that can then be implemented.
One point of interest is that the Bill extends to agreements that have been signed but not ratified as of Brexit day. I think we can safely say that that is likely to be the comprehensive economic and trade agreement with Canada, the agreement with Japan and others as well; and if the EU agreement is provisionally applied at the same time, some might think that they are in force and ratified. In fact, I found the language in some of the documents around this area blurred the point a little bit, but there is a fundamental difference in international law between a signed and provisionally applied agreement and a ratified agreement. The Bill is quite extensive when it comes to signed agreements.
There are other points to do with the definition of the sorts of agreements that are covered here, such as a free trade agreement, which is here defined to include a free trade agreement and a customs union agreement by reference to World Trade Organisation definitions. Then, interestingly, we have in clause 2(2)(b),
“an international agreement that mainly relates to trade, other than a free trade agreement.”
I do not know whether you would like me to say anything about that now. It could be quite broad. I noticed one idea in some of the amendments, which was that it could be further defined as including a strategic partnership agreement, the language used for the framework agreement sitting on top of CETA, and mutual recognition agreements.
I must say that I think the amendment is very comprehensive; for a start, the strategic partnership agreement is not even tangentially about trade, so it could not really be described as an agreement about trade. The point of it is political and human rights conditionality and so on. In that sense, the definition is over-inclusive. It is also under-inclusive, in the sense that mutual recognition agreements are only one type of agreement relating to trade that one might legitimately want to include here. For instance, one would also have customs co-operation agreements as an obvious agreement that should be rolled over and implemented.
The broader point is that, despite what I said about the strategic partnership agreement, it is an outlier in this respect. A lot of agreements have to do with trade. Environmental agreements have trade aspects; the Montreal protocol on substances that deplete the ozone layer is all about banning trade in ozone-depleting substances. The convention on international trade in endangered species is all about trade in endangered species.
Therefore, I think the definition is a little bit unclear. One could say, “Well, it’s agreements that just liberalise trade,” but that is a problem too, because FTAs do not just liberalise trade. They have intellectual property provisions, which might arguably in some way promote trade, but more likely investment. Certainly, they are not the first thing that you think about when thinking about a trade liberalising agreement. There are provisions in the FTAs in addition to intellectual property: competition law, labour and environmental protection provisions are in all the modern EU agreements that we have talked about. Essentially, this gives the Government the ability to implement labour standards provisions, which include not exactly sanctions, but obligations that need to be performed. Frankly, these two Bills strike me as very old-fashioned; they do not seem up to date with the reality of modern trade agreements.
Jude Kirton-Darling: I will follow on directly from that last thought, from my experience inside the European Parliament as an MEP, scrutinising trade policy at EU level. Of course, our MEPs have done that job for the last few decades. From our perspective, what really is missing from the Bill is the parliamentary scrutiny dimension. No-one on the panel has mentioned that so far. In terms of process, compared with the parliamentary scrutiny powers that British MEPs have today in the European Parliament, the Bill is an enormous step back in democratic oversight of trade agreements.
To add to what has already been said from a legal perspective about what these trade deals are, any kind of roll-over is likely to come up against the offensive interests of our trading partners. We have already seen that what was supposed to be quite a technical question of the division of tariff-rate quotas going to the World Trade Organisation has turned into an enormous political issue, with countries who supposedly are our friends and allies defending very actively their offensive interests in relation to tariff-rate quotas.
Once we start opening trade deals up to technical tinkering, whether that is a number here or a point there, our trading counterparts will also use that opportunity to try to get a bit more leeway for their interests. It is likely that these deals will be very different at the end of the process from what we have at the beginning. That parliamentary scrutiny—the role of MPs in ensuring that there is democratic oversight—is absolutely crucial but entirely missing from the legislation.
Dr Fowler: If the question is which of these agreements will change significantly, my answer is, we do not know that. Other people who are much more expert than me in the details of trade agreements would have better sight of that, but as someone who looks at what is coming to and through the Westminster Parliament, we simply do not know at the moment. On that basis, I make two points.
First, Parliament needs to be happy that it has procedures in place to deal with agreements that might be changed significantly. Even the Government have indicated that that is a possibility—they use language about substantive change in the Bill documents. Secondly is the point about transparency and possibly some kind of reporting function, which does not have to go into the Bill; it could be done through other means. However, I feel that, given the number of these agreements that have to be dealt with in the amount of time that we are talking about, some kind of regular reporting transparency about exactly what is going on would be useful to Parliament.
The Chair
Thank you; that was very useful. It is not necessary for all four members of the panel to answer all the questions. You may want to target them, because we have half an hour left and we want to make the best use of our time.
Mr Mark Prisk (Hertford and Stortford) (Con)
Q
Dr Bartels: One of the features of the package that you have been presented with is a split between fiscal and non-fiscal measures that can be adopted. I am not entirely convinced that that is a very sensible division of tasks. For instance, because of that division, what seems to be missing is the ability to impose quotas—not tariff-rate quotas but quantity quotas—as safeguard measures, which is permissible under WTO law and is done. Because of the split, nothing on those measures is set out in this agreement, and the other agreement only deals with duties, so you are limited to tariff-rate quotas. That is one overall observation. I could say other things about the treatment of developing countries in the other Bill, which I find under-complex, to use a German term that my colleague is fond of.
More directly to your question—again, this links to what I am saying about the split—the major issue when it comes to the Trade Remedies Authority here is that we do not have it in a context that enables appeals. I know that in the other Bill there is a reference to the possibility of an appeals mechanism. The United States is very big on appeals—it is very elaborate. Of course, one can disagree with the way in which the United States conducts itself—we have all paid some attention to the Bombardier dispute and the United States’ interpretation of its WTO obligations—but at least formally speaking there is a sequence of decision making that includes a court, appeals and so on established there, and we do not have that here. It is very, let us say, basic at this point.
On the rest of it, reading this together with the other Bill, I would say in general terms it looks fairly standard. There are some choices you can make when setting up a Trade Remedies Authority, such as the duties that can be imposed and whether you go for a lesser duty rule or not—we seem to be doing that here. One can make a political choice on that, but in general terms, other than the point on appeals of decisions, and connected with that the relationship between the authority and the Secretary of State, which here is extremely close and in other systems might be a little more arm’s length, I think the detail of what the authority can do is fairly standard.
Mr Prisk
Does anyone want to add to that?
Jude Kirton-Darling: I would add one thing. I heard the evidence this morning in which there was quite a lot of discussion of the EU trade defence instruments and the EU system, and some of it was a little bit out of date. During the steel crisis, quite a number of reforms came in to modernise and speed up trade defence inside the EU, mainly led by the European Parliament. That is one of the key elements missing from the Bills: the role of Parliament in terms of oversight and scrutiny.
If I think about the role of MEPs when it comes to trade defence instrument questions, we have the right to veto proposed duties and to scrutinise all of the Commission’s proposals, we have access to all of the documents in relation to investigations, and we can demand closed-door meetings with Commission officials to really get into the detail of those investigations. It seems to me that lots of that scrutiny is missing from the proposals on the table. That scrutiny gives a quality to the process of ensuring balanced trade defence instruments that are effective.
Mr Prisk
Q
Jude Kirton-Darling: There is a clear role for stronger scrutiny. Inside the legislation, there is no obligation on the Secretary of State or the new Trade Remedies Authority to engage directly with Parliament through, for example, a specific Committee of Parliament. In future, that could be the International Trade Committee—an amendment could be tabled to ensure that link and that scrutiny—but at the moment that is not in the proposals. It is a missing link, if you think about what we already benefit from in the current system, of which we are a member.
I would hate to give the impression that what we have is perfect; that is not what I am trying to say. Today, in the European Parliament’s Committee on International Trade, MEPs have voted on a modernisation package to try to rectify some of the weaknesses in the EU’s regime. If you are thinking about what to improve on, our system is not perfect, but, at the same time, MEPs—your counterparts—have a clear role in the process, which is entirely missing from the proposals tabled.
Anna McMorrin (Cardiff North) (Lab)
Q
Dr Bartels: One can look at what is covered in modern trade agreements according to two poles, and then there is a sort of meeting in the middle. On one side, you have the pure market access issues, where you are reducing duties—you are liberalising trade—in certain economic sectors. Those sectors are going to be affected negatively and are not going to be happy about it, because there is competition that they were not used to. To do that, you need to be able to trade sectors off against one another. There is a reason for confidentiality with that traditional sort of trade negotiation. Not everybody would agree—you might say that someone whose job is at risk should get a right to know what is being negotiated—but there is at least a traditional and strong argument there for confidentiality.
On the other side, you have purely regulatory issues, such as the question of what you think in your system of the precautionary principle for health and safety. That sort of principle would normally be dealt with through the normal democratic process, and I cannot see any reason why that should be changed and negotiators should be given the ability to haggle that away, particularly if they are doing that in secret. In the middle, you have rules that are regulatory but arguably are also protectionist, so the trade negotiators would say, “We should be able to negotiate those away in secrecy.” It is hard to know where to draw the line, but it is certainly useful to conceive of what is in a trade agreement according to those two poles.
None of that means that this should be limited purely to the Executive, even when there is confidentiality on market access. Many other countries have systems where parliamentarians have some rights to see what is being negotiated and to be kept apprised of negotiations as they go. The European Union, for instance, is extremely advanced when it comes to that; there are strict limitations in terms of going into and coming out of the room, no phones are allowed, and so on. The US Congress has similar arrangements. There is a palette of options to enable parliamentary involvement, even within the framework of confidentiality. I am not sure that the Bill is the right place to address that sort of issue, but there is certainly nothing like that in the Bill.
Anna McMorrin
Q
Dr Bartels: It is true, but it is generally more true in certain sectors. It is true, for instance, in sanitary and phytosanitary standards. It is usually not the standards themselves that are protectionist. There are examples of standards, such as the beef hormone standards, that I can say are protectionist because WTO cases have said they are protectionist—I just need to cite Geneva on those—but it is often done by having overly complicated conformity assessment requirements, and so on. There is definitely room for regulations that purport to be there simply to protect the public also to be protectionist. Usually, you have both aspects in the same regulation. But even in that sort of situation, I still think that the regulatory dimension is sufficient for there to be at least some type of domestic scrutiny over haggling that away.
The Chair
Q
Dr Hestermeyer: There are certainly examples of standards being used only for protectionist purposes, but it is far more common for standards that one side sets to be perceived as protectionist by the other. Let us take hormone beef. There is real concern on the part of a lot of European consumers that hormone beef is not healthy. There is no direct scientific evidence to show that that is true, but the concern is nevertheless there. So the standard reflects the democratic choice of the populace—whether we think it is adequate or not. That is important to see. With any standard set, some sides will say, “This is protectionism,” and it is also rhetoric to attack the standard.
Jude Kirton-Darling: I guess the last point missing from that is that if we look at where trade agreements and trade policy have been controversial in recent years, it is when the perception is that standards held very dearly by the public for exactly those reasons are perceived to be negotiated away behind closed doors, with only a certain number of vested interests having access to the process. That is one more reason why having an open process, with parliamentary scrutiny and engagement, gives credibility to any final agreement, which at the end of the day has to have public support, after the negotiations. You build in societal acceptance through the process by engaging Parliament in an active way.
Dr Fowler: I would very much endorse that. If it is the case that some degree of secrecy or privacy is an advantage in one respect, there is probably a trade-off in terms of not being able to have that societal buy-in that might be wanted at the end of the process. There is a trade-off and losses if it is all done in private.
Tom Pursglove (Corby) (Con)
Q
Dr Bartels: I will kick off. Yes, I would agree with that, but I would also say that what is important about the Bill is that it gives the Government the power to change those agreements. They are, legally, new agreements, and that is recognised specifically in the Bill and in the explanatory memorandum, where no bones are made about saying that new obligations might be undertaken, so it would not be the same agreement that is subject to scrutiny. What is important here is to work out whether there are any limits on the Government’s ability to undertake new agreements—or new obligations in what are named as existing agreements—and implement those obligations, and if they do that, whether that is then sufficiently being scrutinised by Parliament.
Dr Hestermeyer: I would like to go back to my first answer and take as an example the Turkey agreement. I do not think that we would want the kind of customs union that Turkey has, but currently the Henry VIII power would allow implementation of any agreement that we then make with Turkey, even if in the end it looked completely different. That is the first problem with this scrutiny process.
The second problem, as Lorand identified at the beginning, is that some agreements have been signed but not ratified, so the scrutiny part of ratification has not yet happened. They have not been fully scrutinised.
The third element is that I do not think that the Ponsonby rule, as qualified, is sufficient because, first, it allows only delay and not a straight up-or-down vote; and secondly, it requires scheduling of an actual debate and vote. With Government control of parliamentary timetables, there is no guarantee that it cannot be indefinitely delayed. Even theoretically, therefore, that is not possible.
Jude Kirton-Darling: I fully agree with previous speakers.
The Chair
In which case, you may just nod.
Dr Fowler: I would agree with that. In terms of existing scrutiny through the European scrutiny system, one point is that it is imperfect. As we know, the European Scrutiny Committee here spends a lot of time trying to get time on the Floor of the House and trying to ensure that it sees documents in time and to arrange things so that it can have a meaningful say. Then there is the problem of the agreements that will not have been fully through the European scrutiny process before they come back again. Then there are the CRAGA problems—it seems that no one quite knows how the CRAGA provisions would work. That may be because no one in either House has ever tried to do anything under them, but it seems to me that part of this process ought to be that agreements are going to come before Parliament that it might want to do something about, and merely as a minimalist position—
The Chair
I am sorry to interrupt. May I just say that there is a gentleman in the gallery who may not take photographs? Please carry on.
Dr Fowler: If you wanted to take a minimalist view, merely as a bit of constitutional housekeeping, it seems to me that there is scope for at least clarifying how the CRAGA provisions would be used, before possibly going into strengthening the powers.
Faisal Rashid (Warrington South) (Lab)
Q
Dr Fowler: As you will know, under the negative procedure, Parliament has the power to pray against an instrument. In order to do that, first, Members need to use the early-day motion procedure, which is obscure and many Members do not even know about. Secondly, and more importantly, there is the issue of trying to get time on the Floor of the House. There have been cases where Members have wished to pray against a negative instrument and time has not been granted on the Floor of the House within the scrutiny period, so it has simply been impossible to annul a negative instrument before it came into force. That is one problem with the current system.
Faisal Rashid
Q
Dr Fowler: Inasmuch as the Trade Bill provides for use of the negative procedure, yes, that would be fair. I am sure there would not necessarily be any wish to do that on the part of any Government, but as the procedures currently stand, Back Benchers cannot be sure that they can get time on the Floor of the House if they want it.
Judith Cummins (Bradford South) (Lab)
Q
Dr Fowler: At the moment that procedure happens through the European scrutiny system because of the EU’s competence to conduct trade policy. The main instrument is the so-called scrutiny reserve, under which the Government deposits relevant documents with the European Scrutiny Committees in both Houses and they scrutinise them. The relevant Minister is not supposed to sign up to things in the EU Council if the relevant documents are still held under scrutiny. That works every time a new set of documents is tabled along the process.
The system can be quite effective but there is a difficulty about timing, and getting time on the Floor of the House. There is a difficulty if something has to move quickly at EU level, and then the Government quite often uses what is called the scrutiny override where it just says, “We had to go ahead with this.” Then there is also the difficulty about trying to schedule appropriate debates in Committee or on the Floor of the House.
Jude Kirton-Darling: My only addition would be that currently, one of our frustrations as MEPs is about what happens when some things that we have scrutinised heavily at European level, pass to the national level. We see the level of scrutiny in the German Parliament, in the Belgian Parliament, in Scandinavian Parliaments, where there are very detailed scrutiny processes—often going on at the same time as we are scrutinising at European level, so we get feedback from those Parliaments during the process—and we do not feel, in many cases, that same process from Westminster. So, regardless of what happens in terms of Brexit, it is one of the ways in which Westminster could do more to scrutinise trade in any case, and that would be a benefit for everybody.
Dr Hestermeyer: Just as a reminder, the scrutiny override was used for CETA. To compare that, under German law, for example, Parliament gets involved very early on. There was a change in the constitution and then an additional statute was passed, so Parliament gets involved very early on and can make binding statements for the Government, which will then be taken into account by the Government also in the Council. That way, there is a large impact of parliamentary statements in governmental positions, because in the end, the Government will have to defend measures in the Council.
Martin Vickers (Cleethorpes) (Con)
Q
Jude Kirton-Darling: Unfortunately, no.
Martin Vickers
I thought you might say that.
Jude Kirton-Darling: Globally, our voice will be very much reduced by Brexit. Currently, we negotiate together with our neighbouring countries and that collective weight is leveraged in negotiations with trading partners, which, unfortunately, we will lose as a result of Brexit. The benefit of that parliamentary engagement from the national level from other countries creates that societal acceptance, in many cases, of European trade deals. We saw that where there is poor parliamentary engagement, societal acceptance is called into question. The biggest example—it may be a very small region of Europe—was the case of Wallonia and the CETA negotiations, where, through the powers they have as a regional Parliament, they were able, even if they were a small region in Europe, to leverage quite significant improvements in the CETA deal to address some of the concerns they had about that deal. That is where the Parliament is working effectively to really ensure they scrutinise trade deals.
After Brexit there will be a case, if there are improved scrutiny powers included in this Bill and in the accompanying measures toward this Bill, that could mean that MPs would be able to be far more effective in terms of trade policy. My basic answer is that we will be weaker post Brexit because we lose our place and we will become, in effect, a rule-taker rather than a rule-maker when it comes to international trade negotiations.
Martin Vickers
Q
Dr Hestermeyer: On a technical-legal point on mixed trade agreements, all trade agreements except for Kosovo, if I am not mistaken, were mixed trade agreements. The Council decides by common accord, which means that the UK alone could prevent agreement.
Martin Vickers
Q
Dr Hestermeyer: There might be political pressures but I am not a politician; I am just a lawyer, so on a legal position. Obviously, that is the past; that is not the future.
Alan Brown (Kilmarnock and Loudoun) (SNP)
Q
Jude Kirton-Darling: In my experience of the European Parliament’s level of scrutiny, what we have at European level legally is quite limited. Inside the treaty we have a right to accept or veto trade deals at the end of the negotiations. That is included in the Bill, but the second element which we have which is not included in the Bill, which we use much more effectively, is that we have the right to be kept informed throughout the negotiations. That is a legal obligation inside the European treaties. That effectively then gives Members of the European Parliament a hook on which is placed the whole of parliamentary scrutiny at a European level.
You could amend the Trade Bill to include a hook in the same way, which would then allow you to develop some kind of working statute which could evolve over time. These processes evolve over time—improve, I hope, over time—with more transparency as trust is built between institutions. However, you need that legal hook at the beginning. Within the European Parliament, as a result of the hook, we have monitoring groups on every single negotiation that the EU is undertaking and established trade agreements. We have monitoring groups which meet behind closed doors on a regular basis with the chief negotiators, in which MEPs can scrutinise and ask any question. We have access to the majority of documents. During the negotiations you will have heard about the TTIP reading room. We had access to all the EU side of the negotiation documents. Crucially, in that reading room, we also had the read-outs from the European negotiating team of the process of each round of negotiations. To put it into context, you had the legal text of the EU negotiating position and, through the read-out, you could see where the room for manoeuvre was with the US side of the negotiations. Those documents give you the capacity then really to question.
The Chair
Thank you. At quarter to three, I will stop you talking, even if you are mid-sentence.
Bill Esterson (Sefton Central) (Lab)
Q
Dr Fowler: First, Parliament needs to be very clear whether it is happy that the Bill only covers the replicated agreement. You might want to decide that you are happier with these agreements and then do something stronger for the completely new agreements that the UK will be negotiating. I believe that is something that the Secretary of State has indicated he would be open to, but I suggest that Parliament might want to get that nailed down in some way at this stage.
As I have mentioned before, the main issues are the weakness of the CRAGA procedure at the moment—
Bill Esterson
Q
Dr Fowler: For example, you might simply want to have an affirmative motion, a motion for resolution, rather than the negative power that is applicable at the moment. That might be one option that the Government need to bring a motion for affirmative resolution. That is one possibility. Even more important is the preceding stage, which is processes around the signature of the new agreements, particularly where they might have been changed significantly from the existing EU ones. Again, there are things that Parliament could do about transparency, possibly having an approval motion, or recreating some kind of scrutiny reserve, possibly through a Committee. There are all sorts of institutional options, but I think the House might want to look at a set of processes around signature that the House might want to look at.
The Chair
We have a few seconds—I take the opportunity to thank our panel. You have been extremely clear and interesting and will greatly add to Members’ understanding of the Bill. Thank you very much for your evidence. Perhaps if you would like to shuffle off in one direction, the next lot will shuffle in.
Examination of Witnesses
Professor Alan Winters, Michael Clancy and George Peretz gave evidence.
The Chair
Q
Michael Clancy: Thank you, Mr Chairman. My name is Michael Clancy. I am the director of law reform at the Law Society of Scotland.
George Peretz: I am George Peretz. I am a QC practising for Monckton Chambers in London on EU and international and all sorts of other bits of law.
Professor Winters: I am Alan Winters, professor of economics at the University of Sussex and director of the UK Trade Policy Observatory.
Barry Gardiner
Q
Professor Winters: In general, they have been a pretty poor piece of policy. As far as the UK is concerned, I would suggest that we might want to consider rolling them over for two or three years, but I would hope that that two or three-year period was then used to try to devise a more satisfactory regime. They encourage distortions in the developing countries. The developing countries are put through the agony of trying to negotiate together, which is very costly and time-absorbing for them, and rather ineffective. What we need to do is to try to find a much simpler way of allowing developing countries access to the British market than the current EPAs.
Barry Gardiner
Q
Professor Winters: By and large, countries find it very difficult to resist the offer of tariff-free access to a market. If they were put in a position where they were told it was the equivalent of the EPA or nothing indefinitely, my guess is that most would shrug and accept the EPA, but given one quarter of a chance, they would want to talk to us about a more reasonable and satisfactory—and in the end more efficient—process of market access.
Mr Prisk
Q
Professor Winters: The Trade Remedies Authority is something we clearly need. Without seeing a lot more details about exactly how it operated, I would not want to say whether it is robust, but I would like to emphasise three things about it. One is, I understand, Government policy; I think the others are not.
The so-called lesser duty rule is important for safeguards and anti-dumping. That is essentially the rule that says the duty you put on goods that are allegedly dumped is the lower of the amount of dumping—the dumping or injury margin—required to make good the British industry. That is a good rule to have.
The two things I am less clear are there at the moment are, first, a very strong degree of transparency. Its operations need to be, with the exception of commercial confidence, pretty much out in the open. The second is that experience through decades in nearly every country suggests that these trade remedies are captured by producer interests. They are complex, they are triggered by the producers complaining that they cannot manage or that they are being cheated, and the whole process essentially favours them.
The really important thing is that, exactly like the House of Commons, you need an opposition. I would urge that we try to supplement the Trade Remedies Authority with an officially sanctioned and resourced group to represent the consumer interest, to do the analysis and actually have the right of audience at the TRA to make the case.
George Peretz: If I may add to that, of course the trade remedies provisions are spread across this Bill and the customs Bill. If one looks at the customs Bill to find out where the appeal mechanism is—as a barrister, my first thoughts go to what the appropriate appeal mechanism is—all you find is a power of the Secretary of State to make appropriate regulations.
It is my personal view that that is somewhat unsatisfactory. There are a number of important questions that arise about appeals, one of which is very important, and that is what the appropriate standard of review is. Is it a merits review, which enables a specialist appeal court to correct the decision maker on questions of fact as well as questions of law, or is it simply a judicial review mechanism, where all the court is doing is saying, “Is this a reasonable decision, whether it is right or wrong?”? It is a very important decision to make and it seems to me that that is one that ought to be made by Parliament in primary legislation and not by the Secretary of State or the Executive in a statutory instrument. That is a decision for you.
The appeals mechanism is important. I said slightly flippantly that it was because I am a barrister, but it is the experience of all regulatory processes that what actually happens at the regulatory stage is often very conditioned and influenced by the form of an appeal. Any sensible regulator will, during the process, have their eye on what the appeal route is, who can appeal and what the level of scrutiny of their decision is going to be.
If you have a very robust form of appeal mechanism, which is open to both parties— the complaining industry but also a range of interest groups whose interests might be affected by the imposition of duty—and if they are allowed routes to appeal that will encourage the regulator, in this case the TRA, to take robust decisions. That is robust in the sense of fully reasoned decisions that will sustain detailed scrutiny, to ensure that all parties are properly heard so that they are fully aware of where the objections to what they are proposing to do are and can properly evaluate them. You get better decision making out of all of that.
I sent the secretary to this Committee a copy of a briefing paper I did for the UK Trade Forum website, which is there if any of you want to read it. It expands a bit on that point but I would emphasise the appeal mechanism. There are other issues about the trade remedies. I have probably spoken for long enough but if people have other questions they could ask about them.
Michael Clancy: I read your blog; it is very good. The other thing that I would say is that the tenure should be made more independent by having term limits. That is quite important in reinforcing independence and impartiality. We have had experience in Scotland of the whole system of judicial appointments being reworked for temporary sheriffs because they did not have a stated term and were subject to the whim of the appointing Ministers. That would be my addition to this discussion.
George Peretz: The provisions for the appointment of members of the Trade Remedies Authority are very similar to the provisions for appointments to the Competition and Markets Authority, which as anyone who has watched the press this morning knows takes very important decisions about the economy. There is a difference with the Trade Remedies Authority, and the argument why you might need a more constraining set of rules governing whom the Secretary of State might appoint. At the moment the Secretary of State appoints the majority and the rest are staff members. There may be an argument for a more constraining set of rules, particularly if the Trade Remedies Authority is—as the customs Bill contemplates—itself given the remit of applying a wide range of economic interest tests as the trade remedies body. That means that even if the TRA accepts that there is a legal basis for opposing a trade remedy, then as a matter of economic interest to the UK it is able to say, “We are not going to do so here because, for example, the consumer interest outweighs the interest of the particular producers affected.”
That seems to me to be a political position: it is balancing the interests of jobs in a particular area of the country against the interests of consumers across the country, to put it crudely. If the TRA is, as the customs Bill contemplates, itself going to be taking that kind of decision, then there is a case for saying that its composition ought to be balanced by statute and that it ought to reflect a variety of different perspectives. In that sense its role is much more political than that of the Competition and Markets Authority.
The Chair
We have half an hour left. Incidentally, Mr Peretz’s evidence is available in written format in the Committee Room.
Anna McMorrin
Q
Professor Winters: Yes, I’m afraid that I do see complications of a technical nature and, in a sense, of a political nature as well. The technical complications concern rules of origin to begin with. Every trade agreement essentially has rules of origin that determine whether a good qualifies for zero-tariff entry. A typical rule of origin says that 50% of the value must be contributed from the country claiming the duty-free access. If we take a good that is exported to Korea that is made in the UK but with a 40% input from the EU and 30% input from the USA, it gets into Korea tariff-free because the UK plus the EU27 contribution is at 70% larger than the rule of origin requires. If we are outside and by ourselves we have only 30% of the content—the value of that good—and we would not get into Korea tariff-free if the Koreans applied the same rule.
Equally, there are cases coming the other way of goods that are exported to the EU where, for instance, Korea could export a good directly into the EU27 because it has a free trade agreement for a good produced in Korea. But if they send it into the UK and we insert it into something that we then seek to send to the EU, then it might not get in because Korean content will not count towards the UK content to meet the EU’s rule of origin.
What do you do about all this? You essentially have to do something called diagonal cumulation. Korea, the UK and the EU essentially have to agree that each of them retreat from its rule of origin the content of the other two as the defining origin. In that specific case, it would restore the status quo. That needs to be negotiated with the Koreans and the EU.
Other places where we have technical problems are in the splitting up of tariff-rate quotas. For instance, there are tariff-rate quotas in the agreement with Canada: that is an agreement to import a particular volume of goods tariff-free. This has to be settled on an EU28 basis, and now it has to be divided between the UK and the EU27. On occasions, there are clauses of these agreements that refer back to a body of law in the parties. In the financial services agreement with Korea, there is a reference to accepting goods into the Korean market that were introduced into the European market without asking any further questions as long as they are consistent with existing law and do not entail a modification of existing law. That existing law—if that clause makes any sense at all—was law when the agreement was signed; it is EU law. If we tried to introduce even an equivalent law, we would have to argue the case that it needs to be treated as such for us to get access to Korea for financial services. Those are the technical reasons why there are serious problems.
Politically, we need a deal. If the transition is handled in any way that is fairly straightforward—although George has a proposal that is complicated but perhaps gets around it—it is possible that the transition will allow Korean goods into the UK tariff-free, but not UK goods into Korea tariff-free. Therefore, we really need a deal, and if you really need a deal, that is not the time to be negotiating.
Anna McMorrin
Q
Michael Clancy: Under the Scotland Act 1998, paragraph 7 of schedule 5, international agreements, including trade agreements, are not within the competence of the Scottish Parliament. In that sense there is no formal role in agreeing international agreements. That being said, one of the things we have sought to promote throughout this process, with the European Union (Withdrawal) Bill, this Bill and associated measures, is that there should be some form of whole-of-governance conversation about getting things right. As we know, this Bill will affect the competence of Scottish Ministers and allow orders to be made that may amend, for instance, Acts of the Scottish Parliament, and measures from Wales and Northern Ireland too.
There is clearly an issue about how the Sewel convention or legislative consent convention is interpreted in respect of that. Under devolution guidance note 10, any proposals in UK Parliament legislation that seek to alter the legislative competence of the Parliament or of Scottish Ministers require the consent of the Parliament. That also applies to the National Assembly for Wales and the Northern Ireland Assembly. Therefore, there is an issue. Today in the Scottish Parliament there is a debate about legislative consent in respect of the European Union (Withdrawal) Bill, and the Finance and Constitution Committee of the Scottish Parliament is currently consulting on the legislative consent memorandum on this Bill, where the Scottish Government have indicated that they would not recommend that the Parliament pass it.
It is a matter of political debate and discussion, and something that I know both the Scottish and UK Governments have in their sights in the concordat they are thinking about. That includes a framework for dealing with trade matters. There is a role, but I do not know it yet, because neither the Scottish nor the UK Government have told us what it is.
Iain Stewart (Milton Keynes South) (Con)
Q
Professor Winters: Information is very important, not least in my trade, for analysing what goes on. The case for collecting reasonable amounts of information, as long as it is cheap to do so, is very strong indeed, subject to the standard confidentiality requirements. I confess, on reading the Bill it did not strike me that there were obvious things that were missing, but I would not want to assert that I read it sufficiently carefully to say that nothing is missing. It is important that the Government have the right to collect information, and that information should be made as widely available as possible. The Government clearly need to make policy, but there needs to be public debate, too; it is not just the Government who need to discuss policy issues. I did not interpret this as being part of the Bill, but in general, information other than private or commercially confidential information really should be made available to a wide community of people to enable them to analyse policy.
Iain Stewart
Q
Professor Winters: I am not sure that I can comment on the practicalities. They certainly want a large amount of information. My general rule would be that that needs to be information that firms collect anyway in the normal course of their business, and that it should be a simple matter to transfer it to HMRC.
Faisal Rashid
Q
Professor Winters: Yes. I gave the example of rules of origin and tariff-rate quotas. Those very clearly have to be negotiated with the EU, because the EU is intimately involved in them, and they have to be negotiated with the partner. We cannot just arrive in Korea and say, “Here it is. We don’t want to talk about it.” They very clearly have trilateral dimensions, which I guess need to be sequenced and taken seriously.
Remember that there is a further wrinkle: these are going to be new trade agreements and we are going to have to notify them to the WTO. Although the WTO procedure for reviewing regional trading arrangements does not require us to ask permission, the WTO secretariat will make a good deal of information available to members, and other members may wish to clarify things to discuss and even, ultimately, to dispute. It is actually somewhat broader than trilateral, but you cannot avoid a tripartite discussion on quite a lot of aspects.
Faisal Rashid
Q
Professor Winters: I would not hold myself up as an authority on exactly what was promised, but it does not deliver a satisfactory framework for negotiating new trade agreements. There are many different models, but experience from around the world suggests that one needs a good deal of consultation, input and legislative oversight of trade agreements. You cannot have a position where Parliament can unpick a trade agreement that has been concluded. If Parliament claimed that right, no one would negotiate with us. That means that Parliament and the devolved Administrations need to have an important role in setting mandates, and there need to be consultation and information during the process. Civil society would certainly claim that it, too, ought to be consulted, and I would advocate that, to the extent that one can generate one, there should be a discussion publicly.
Trade policy comes along in treaties. It is intrusive. It affects people’s livelihoods. It is a very good thing that we are talking about trade policy now in a way that we have not for decades—since before the EU existed, in fact.
George Peretz: I would add as a footnote that one of the best short things I have seen written about this is a piece by Stephen Harper, the former Prime Minister of Canada. He is not generally known as a politician who always wanted to do everything by consensus, but it is simply an explanation of how the Canadian side prepared itself for the CETA negotiations. It very much emphasises the need to consult with everybody in Canada, to bring the provinces together as well as all industry, trade unions, all the political parties and other actors to try to get as much consensus as possible on what Canada was trying to achieve at the outset of the process, before it started. It is a very good piece from somebody whose perspective on it is interesting.
Barry Gardiner
Q
Michael Clancy: That is a very difficult question to answer without getting into uncomfortably hot waters.
Barry Gardiner
You could write to the Committee.
Michael Clancy: Let’s give it a shot, shall we? The important thing is that the UK Government are the negotiator of these international agreements. Parliament is the body that then ratifies agreements made by the sovereign power, exercised by Government. Therefore, in that sense, it is quite difficult to see how the devolved Parliaments would be able to exercise any form of consent reserve in respect of the making of an agreement and the ratification of an agreement.
The issue is that the parliamentary oversight of the agreement is deficient in this place and it is even more restrained when it comes to the devolved legislatures. That is the issue I would like people to focus on. Clearly something needs to be done to enhance oversight here. Earlier, we heard Brigid Fowler explain that the Constitutional Reform and Governance Act 2010 provisions are inadequate. Why are they inadequate? Because they have only got this perpetualisation of the 21-day period, and this Bill does not allow for any form of implementation order other than a negative procedure order. Therefore, there is an issue about that.
The read across to the European Union (Withdrawal) Bill and the sifting procedure that the Procedure Committee advanced and had accepted into the Bill—Mr Walker’s amendment last week or the week before—raises issues about what the relationship is between orders under this Bill and those under the EUWB. Why does this Bill amend the EUWB? Why not have amendments brought forward for that Bill, reflecting this Bill? I am sure that parliamentary draftspeople have an amour propre in respect of such things, but an ordinary individual—a rather rustic lawyer like myself—is not going to catch it immediately. These are the issues we ought to look at: parliamentary oversight, extending across these islands, and how we write something that attains the intention of Parliament.
If I might just cross over, I do not think the Bill is meant to implement new agreements; it is meant to transpose existing agreements. That is quite an important facet to dwell on. Although, if one scoots to the explanatory notes, one sees in paragraph 44 that there may be
“technical changes to the agreement”
and in paragraph 53 it says:
“It may also be necessary to substantively amend the text”
of the provisions. The question, therefore, is what is an existing agreement and how far does it have to be changed for it to change from being an existing agreement to a different agreement. That is a question that I do not care to essay on at the moment.
Mrs Kemi Badenoch (Saffron Walden) (Con)
Q
George Peretz: If I might go first, one can see the difficulty. It is a commonplace of the legislation on Brexit generally that there is a lot to do in a very short space of time. There is certainly a case for doing things by statutory instrument that ordinarily one might be very reluctant to see done in that way, simply because of the process of time and the time it takes to get primary legislation through.
We were discussing a few minutes ago general policy in relation to how Parliament should scrutinise future trade negotiations. It is entirely a fair point to say that the Bill is not about that. There may well be a case for the Government to produce a Bill about that, but that is a different question. This Bill is not about that, but about the roll-over.
We have touched on the difficulties. You have a number of difficulties in scope: what an international trade agreement is goes beyond trade and customs agreements. As I think Holger Hestermeyer pointed out, technically the definition includes the EEA agreement and the Turkey customs union agreement. If you think the Government have rather wide powers to implement the EEA agreement—one assumes the Government have no intention of using it that way—it is quite a wide power to give them.
There are questions about scope and about whether negative procedure is right, and there is the question Michael touched on about what is an existing agreement. The cynic in me as a lawyer tends to say from general experience that if you go to the other party to a contract and say, “I need to change this contract,” the normal response of a well-informed and well-advised counterparty is, “Well, yes, but let’s take the opportunity to get some other things in it.” So things are often not that simple. You may have quite wide and important changes being made, but I do not think there is a right legal answer. It is a question for you to think about as to whether this is an appropriate power to give the Government, given the need to do things quickly.
Mrs Badenoch
Q
Michael Clancy: We do not have enough time—there are 430-odd days between now and 29 March 2019. Trying to get through primary legislation, if we were to scrap this and go for another Bill, would be problematic to say the least. The intergovernmental conference in October is really the defining factor that we have to aim at. Then there are all these orders, which are going to be put through. If one waits until this Bill gets the Royal Assent before the orders start to be consulted on, there are difficulties about that. I am afraid that I would be for looking to keep this Bill and to move it along and see what improvements can be made to it to make it a much better and more robust piece of legislation.
Professor Winters: May I comment? In principle—I am not a lawyer and cannot really comment on how one can do this—essentially there is the very short-term, immediate problem of all these things that have to be done, but we do not want that to define the long-term by default. I think we need to have a very clear understanding from the body politic in general. The trade policy is an important instrument for a sovereign country to operate. It can be done well or it can be done badly, and we do need to continue to review it and go back to some of these things, so that even if we have to patch something up in the near future, which as near as dammit is the status quo, that should not say it is therefore closed forever. We need to go with our partners and say, “We need to reopen this.”
Bill Esterson
Q
George Peretz: Not all WTO law is clear, but what is pretty clear is that we could not simply automatically carry over existing trade remedies imposed by the EU and say, “These remedies will apply to the UK now that it is a separate WTO jurisdiction”—if I can use that term loosely. We cannot do that for one very simply reason: it is a condition of all trade remedies that there is a domestic injury. A domestic injury is defined, and the UK is obviously not the same as the EU. It is potentially an issue that applies the other way around, incidentally, but that it a problem for the EU rather than for us.
As far as I understand it, the Department for International Trade is feeling its way to dealing with this problem. As a first step, it is asking industries that benefit from an existing trade remedy to set out why they think it should continue and to explain what the domestic injury is. There is probably also a need for the UK to discuss with the European Commission what the position is. After all, in its investigation of all these remedies, the Commission will have built up a case file that will include quite a lot of information about what the injury is, some of which will be pinned down geographically. It will be able to say that that is evidence of an injury in the UK. Perhaps that could be used to justify carrying on the remedy after we have left the EU, but it would have to be the judgment of the new Trade Remedies Authority whether that evidence was good enough to withstand domestic scrutiny and appeals and, ultimately, a possible WTO challenge. There is a very difficult set of issues there, which will be a challenge for DIT and the TRA.
Craig Whittaker (Calder Valley) (Con)
Q
George Peretz: I do not claim to be a great expert in parliamentary procedure, and I am not sure that I can add very much to what Brigid Fowler said about that—she is an expert on parliamentary procedure.
Plainly, there is an opportunity to challenge a statutory instrument that uses the negative resolution procedure, but clearly it is less likely to be challenged—just look at the statistics—than a piece of primary legislation, because one fundamental point about any statutory instrument is that the vote is simply an all-or-nothing vote on the instrument. There is no ability to have the primary legislation to say, “We agree with most of this clause but we don’t like clause 5, therefore we would like to amend that.” It is take-it-or-leave-it. The problem with a lot of this is that you will be told that the clock is running and you need to decide very quickly what to do.
Professor Winters: There is very little time, so be realistic about what the cost of a challenge would be and the pressures that that would generate.
Michael Clancy: It is the balance between speed and scrutiny—that is the whole point. To get that right is quite difficult with a negative or indeed an affirmative resolution procedure. Although theoretically each of these could be debated, I think it would be very difficult to get each of these debated. There simply is not enough time to do that—we are told that there are between 800 and 1,000 orders in relation to the EUWB. I do not know how many of them might be here—63 existing trade treaties, maybe more, and other things as well. That is the difficulty.
What are the defects? The defects are that we have an alternative procedure of super-affirmative if we need extra time to look at something—that is where the sift comes in. If the sift identifies a particular order as being important, it might then get better scrutiny, and better scrutiny might mean the affirmative resolution procedure on a super-affirmative basis. We do not know that the sift applies to these orders because the sift is not mentioned in this Bill. Will it be? Are you going to propose amendments? Is the Government going to take that forward to this Bill? That is another story for another day perhaps.
Then there is the issue—I think it is in one of the Hansard Society papers—of the difficulty, in fact the incapability, of amending these orders. They have to be taken back by the Minister and re-presented. That induces time and delay, and we are running out time and inducing delay.
Craig Whittaker
Q
Michael Clancy: That is true, but the ultimate test is overturning the order. We saw that the last time an order was overturned in the other place—it resulted in the Strathclyde review because it was such an outrage, so we have to be careful about that, because it may have more political impact than we would imagine.
The Chair
We are having trouble with time and scrutiny as well. We have only two minutes left for Matt Western.
Matt Western (Warwick and Leamington) (Lab)
Q
Professor Winters: Because the roll-over is not straightforward. Maybe you can say that this is an implicit recognition that it is not entirely straightforward and that there will have to be changes. Some might be purely technical, but some are clearly going to be substantive.
It is precisely because it is difficult, contentious and requires negotiations, that the Henry VIII powers are so important, because it is the Minister, their designated authority or delegate who will make those decisions.
Matt Western
Q
Professor Winters: The division of tariff-rate quota on cheese into Canada, or which bit of law financial services access to Korea will refer to. There are, I have no doubt, plenty of others.
Matt Western
Q
George Peretz: I am not sure I have much to add to that very complete answer to the question.
Does it require Henry VIII powers? It probably does require them because you have to amend primary legislation. The questions about the degree of scrutiny and so on, are, I think, questions for you, but the need for a pretty fast procedure to amend our law to deal with what will quite often be technical points that involve changes seems fairly clear.
Alan Brown
Q
Michael Clancy: When I get elected?
The Chair
With that, can I thank all three of our witnesses for their extremely interesting evidence? You have covered a lot of ground in a short space of time. We are most grateful to you all for that.
Examination of Witnesses
Tom Reynolds, Gareth Stace and Cliff Stevenson gave evidence.
The Chair
I have a couple of quick admin points. I understand that there may be a Division in the House at 3.45 pm. If there is, I will suspend the Committee for 15 minutes until 4 o’clock and we will add an extra 15 minutes at the end to make up for it.
Mr Stace, I gather that you have to give evidence to the Taxation (Cross-border Trade) Bill Committee and you may therefore have to leave this session early. Is that right?
Gareth Stace: That is correct. If that were possible, I would be grateful.
The Chair
It is possible. Just tip us a wink when you have to go and we will say goodbye.
Gareth Stace: I think one of your Clerks is going to escort me.
The Chair
Perfect. I call Barry Gardiner. [Interruption.] Well, failing that, I call Mark Prisk.
The Chair
No, the Opposition failed, so we will give the Government a try. I call Mark Prisk.
Mr Prisk
Q
Gareth Stace: Let me start with what would need to change in the Bill. We would like to see more detail in the Bill. The Bill sets out powers to create an independent arm’s length authority—the Trade Remedies Authority—to advise the Secretary of State, but there is no detail. There is little detail of the powers that it might have or of the scope of its remit. I am sure that will come in secondary legislation or after that, but as you quite rightly said, industries that are or have been subject to dumping and unfair trade practices are quite nervous about what is going to happen in the UK, and the more detail we have, the better. That is why at this stage we are quite nervous about what might or might not come out down the line.
Mr Prisk
Q
Gareth Stace: Yes, an appeals process—there is no detail in the Bill—is not even set out as: “The appeals process will be this, this and this.” We do not even know what the basis of appeals might be, because we do not know how the TRA will define subsidy, injury and dumping. We do not even have something to base that on.
Tom Reynolds: It is clear that we need a TRA, and it is certainly welcome that the Bill establishes one. I want to rebut a point made by an earlier witness, who said that trade remedies are invariably captured by producer interests. That certainly has not been the experience in the European system. I am sure that Gareth agrees that that was apparent in the steel crisis—the trade remedy system was slow to react to the producer interest.
We have to read the Bill alongside the Taxation (Cross-border Trade) Bill. My feeling is that the rules for the TRA, which are set out in that other Bill, tip the balance the other way, against the producer interest. There are areas where that Bill and the way that it works with this Bill can be improved, which I would be happy to explore with the Committee.
Mr Prisk
Q
Tom Reynolds: There are really four points. The public interest test and the economic interest test is of concern because, as Gareth has already pointed out, the lack of detail means it could operate in any number of ways. Our fear is that it might include an over-simplistic cost-benefit analysis that appears very seductive in its indication that the benefit for producers may be outweighed by the damage to the consumers, when it does not show the full story and perhaps the long-term impact to the consumer that removal of a competitive environment for domestic producers creates if the trade remedies are insufficient to keep production here in the UK.
A big concern for ceramics—the country of concern that is dumping into the European Union at the moment is China—is how you calculate the dumping margin in instances where the domestic price cannot be used because it is subject to such state distortion. That detail is crucial to the effectiveness of the trade remedies system.
There are other issues, such as the lesser duty rule—it was touched on earlier. For the proper operation of the lesser duty rule, we would need to see the detail and how you calculate injury. That is crucial. Pushing all of this into the long grass just adds a lot of uncertainty and concern for producers.
Cliff Stevenson: Because the Bill is simply setting up a framework for the TRA and not really having anything more substantive than that, there are only small points that you might look at, but there are some important points. For example, the composition of the members of the TRA is critical because trade remedies is a highly political area of policy where there are very different views. Some see trade remedies as purely protectionist and would abolish them completely, and some see trade remedies as an essential competition policy-type tool to correct multilateral distortions.
I am in the second group. I believe that, in the absence of multilateral competition rules, trade remedies are the only thing we have that allows state distortions and other unfair practices to be addressed. Within the EU, we do not need anti-dumping or anti-subsidies law because we have really good competition and state aid law.
What we want from this legislation—you have to see the two Bills together—is a coherent, robust system that could redress those problems. In terms of this Bill, the composition of the members is very important to look at because, if all the members thought trade remedies were protectionist, we would never get any trade remedies through—or all members might believe that trade remedies were essential. You would want to ensure that there is some balance in there.
There are some other smaller issues that could be significant. For example, regarding the provision that the TRA should report to Parliament annually, I think there could be a little bit more detail on what it might report on, so that, if the TRA was being biased one way or the other, by being obliged to provide certain statistics, such as number of cases opened, measures adopted and so on, it could be assessed.
Barry Gardiner
Q
Cliff Stevenson: Yes, what would definitely be of importance is to have a substantial report submitted to Parliament on an annual basis. In the Taxation (Cross-border Trade) Bill, there is a provision on reporting. There is already a proposal for there to be an annual report. The EU anti-dumping regulation is quite specific about what the European Commission must report to the European Parliament in terms of the statistics it must provide. A little more detail ensuring that certain things were provided in this report would be useful.
Tom Reynolds: The question about Parliament’s ongoing role with the Trade Remedies Authority is an interesting one, but so is Parliament’s role in setting up the rules for the system. The point made by Jude Kirton-Darling earlier on about the level of involvement of MEPs in scrutinising and offering amendments on, for instance, the new anti-dumping methodology and the TDI modernisation, which was mentioned, has been integral in improving that legislation from the Commission’s original proposals. I would be more comfortable if there was a more rigorous approach for parliamentarians to get involved in the setting of the rules for the system as well.
Bill Esterson
Q
Gareth Stace: Do you mean the board?
Bill Esterson
Yes.
Gareth Stace: The board needs to represent interests. From my point of view, I would like to see someone from industry and someone from the trade unions on that board to provide that balance, clarity and expertise as well. That could be set out in primary legislation. It is not there now.
Tom Reynolds: One of the most successful acts of Parliament in setting up a non-departmental public body over the years has been the Health and Safety at Work etc. Act 1974, which stipulates that the Secretary of State, in making appointments to the commission—now the HSE board—must consult with organisations for three of the members. There could be representatives of the employers, and three of the representatives could be from the trade unions. That sort of model might lend itself well to the establishment of the Trade Remedies Authority and the appointments made to the non-exec board.
Gareth Stace: However, we would not want anything that you would add to it that would then create more work and delay measures in place or delay the investigations that would take place by the authority.
Bill Esterson
Q
Gareth Stace: There is a whole range of “if we don’t get this right”. If we get this very wrong, we become the dumping ground—not just in Europe, but for the rest of the world. Think of the steel sector, which thrives on free, liberalised trade. That is what we are. Over a third of all steel produced travels across borders globally.
Also, something crucial, in particular for the steel sector, is that in 1994 we agreed as a sector with Governments to abolish all customs tariffs for steel for developed countries. There are no tariffs. So when you think about us coming out of the EU, whatever agreement or not is put in place, we as steel will not be subject to customs tariffs. That is not an issue for us—non-tariff barriers are an issue for us, but not tariff barriers. That enabled us to be even more liberalised in terms of trade. What supports that? Trade remedies support that: they are the safety valve that enables free trade to take place. Sometimes the debate turns the other way round, as if trade remedies were there to provide protectionism. We would say that if there were not a strong trade remedies regime in the UK or anywhere else in the world then you would see a rise in protectionism, with weak trade remedies.
There is a whole range of things that could go wrong. When the investigations take place in the end, will they find that there is no injury or dumping for whatever reason, even if there is? If they do find that there has been injury or dumping, what are the tariff levels that are set? Are they high enough to stop the illegal trade in the UK—the dumped steel that is against WTO rules? If the endgame is not that those tariffs are high enough, then we have a problem.
Bill Esterson
Q
Tom Reynolds: We have a very similar experience. We are a sector that thrives on international trade: we export over half a billion pounds’ worth of products each year. We are not protectionist. However, as the Government have rightly pointed out, free trade does not mean trade without rules, and unfortunately some of our trading partners do not play by those rules. Examples from our sector include cases involving tiles and tableware. In the case of tiles, imports rose from a fairly stable level of around £4 million worth of tiles a year from China up to 2004, and rocketed in less than a decade to over £30 million worth of imports from China. If you were to look at volume, it was an even sharper rise.
The European Union introduced anti-dumping measures in 2011, which were not enormous—they are not the 230% tariffs that the United States has looked at. They were between 13% for co-operating companies in China, up to just short of 70% for non-co-operating companies. The introduction of those measures allowed our UK industry to stabilise and invest. As a result, employment has gone up by 40% in the sector, with even further boosts to the supply chain as well. All that could be at risk if we get things wrong.
It is worth noting that in 2011 the UK Government voted against the tiles measures in Council. That was understandable because the UK’s role within the European Union was as a liberal counterweight across the 28 member states. As we forge an independent trade policy we have a different role, but some of the most experienced civil servants and experts are steeped in that heritage of the UK being the liberal counterweight within the European Union. That is why we come back to this point about a non-exec board being a watchdog, ensuring a balanced system in the UK. It is an integral part of getting things right.
Bill Esterson
Q
Tom Reynolds: It is not something that the BCC or the Manufacturing Trade Remedies Alliance has made a submission on; it is something that we would have to consider, and maybe we can write to the Committee.
Faisal Rashid
Q
Cliff Stevenson: Obviously, the wording is not effective at the moment in terms of ensuring that there is a balanced composition of those members. If you look elsewhere and compare, the closest major trade remedy regime to the UK’s proposed system is Australia’s. It has a separate anti-dumping commission that works in a similar way to how the Trade Remedies Authority would work, but there is a big difference in the sense that it is headed up by one person, an anti-dumping commissioner: there is not a committee or a group of members in the way that is proposed for the UK.
One concern I slightly have with this is that it is an extra level of decision making. There is no detail on how the members might make a decision—whether they would vote if they disagreed—and that could hold up investigations, which are always subject to very severe time limits given the amount of work that has to be done.
In the US and Canada, for example, there are examples of independent bodies such as the United States International Trade Commission, which does the injury determination for the cases. It is a completely independent body that has six commissioners who vote at the end of the investigation. If there is a positive finding of injury and three out of six vote in favour, it will be an affirmative determination. In that case, where there is a quasi-judicial system where it is completely separate and not under any political control, there are these commissioners taking a vote on the basis of the technical information.
Gareth Stace: You have to look at what the TRA and the whole system is trying to achieve. Why is it being set up? It is being set up because we are leaving the EU. Is that an opportunity to have a system that is fleet of foot, quite simple and employs fewer people than the European Commission does?
That is why a year ago we, as UK Steel, said that actually what this arm’s-length, independent body could be doing is just looking at the dumping margin, because that is a really simple, straightforward—almost—calculation. It is what they do in the US, which is seen as a champion of free trade, and we want to create strong links with the US going forward. There was that opportunity to do that, and so the make-up of the TRA and the committee would not be as important as if it was then doing the injury calculation—that is much more of a black box. You stick a load of numbers in, and you hope that something will come out. You twiddle some dials as well, and the tariffs come out of that. So you probably do then need some independent committee to look at it, but how much are they going to influence—[Interruption.]
The Chair
Order. There is a Division in the House, so I suspend the Committee until 10 minutes past 4.
The Chair
Welcome back. We are going to change the order of questioning slightly, because Mr Stace has to go and give evidence to our sister Bill Committee.
Barry Gardiner
Q
Gareth Stace: I think it would. You are not going to say to the USA, “Hey look, can we do a really great free trade agreement with you? Look, our trade remedies is really weak and yours is really strong so can you weaken yours and then we will do a great deal?” They will not do that. They will keep their regime and hope that ours is weak, and they will then see more trade coming from them to us.
It is the same when we think about the zero tariff for steel with developed countries. When India exports steel to the UK, it is at zero tariff; when we supply steel to India a tariff is applied. So when we say to India, “Can we do a free trade agreement with you? Hey, you know, we could do zero tariff”, India will say, “We already have zero tariff, so why would we want to do anything else?” What would add something would be having a strong trade remedies regime in place.
If we had a weak regime, what would that mean? We talked about that before. It would mean a loss of jobs, and in the steel sector I do not want to talk about loss of jobs, because we saw a lot of that in 2015-16. But we would also see a rapid rise in imports. In rebar—reinforcing bar that goes into construction—in one year China had zero per cent. of the UK market. It did not import anything, and within four years, because there were no duties in place, China had 43% of the UK market. Then, once duties came in, the percentage went back to zero.
I know I have to go, but I want to make just one point about the lesser duty rule, which I am sure will be raised later. I know it is not in the Bill but it is very important, in that there is talk that if we did not have a lesser duty rule prices would rise and the consumer would be disadvantaged. Let me put that into context. In the hot-rolled flat case we had recently, the injury margin was 17.5% and the dumping margin was 29%. There is a difference there of 11%. If we think of a luxury car priced at €45,000, not applying the lesser duty rule in that case would increase the price of that car by a whopping €16.50. Everyone is saying that if we did not apply it in the UK it would be dreadful—consumer prices would rise and it would be awful—but €16 is all it would increase the price of a €45,000 car by.
The Chair
Mr Stace, thank you very much indeed for doing two Committees in one afternoon. That is very noble work. Thank you for your evidence to us. I think someone is going to escort you off to the other Committee.
Judith Cummins
Q
Cliff Stevenson: In principle, I think it is not necessarily a bad idea—that if you have an organisation full of trade expertise, you might use it for other purposes as well. I mentioned Canada earlier. The Canadian international trade tribunal, the independent entity that makes determinations on injury, can also be given other tasks and produce expert reports. So I do not think it is a bad idea in principle that the TRA may do other things. The concern would be about resourcing.
Trade remedy investigations are highly resource-intensive. They are incredibly detailed. Gareth mentioned earlier about the dumping calculation being easy. In a sense, what he was saying is that it is straightforward, the steps are very clear—but it is a massive calculation with thousands of data entries on a spreadsheet or in a model. To the extent that there would be a concern, it would be to ensure that there was sufficient capacity ring-fenced for the different functions. Principally, it seems to me that the Trade Remedies Authority’s purpose is the administration of the trade remedy regime. That would be the only issue I would raise.
Matt Western
Q
Tom Reynolds: One example I can give you is from MTRA partner sectors, the chemicals fertiliser sector, around the long-term implications for the consumer if adequate trade remedies are not installed. In Ireland, for instance, the domestic manufacturing industry for fertilisers sadly went by the wayside, because the anti-dumping measures were not introduced in time to provide a defence for their industry. As it became a less attractive market because of less competition, the prices started to rise for all the previously dumped exports, so the lack of competitive environment in Ireland ended up costing farmers more for their fertilisers.
Cliff Stevenson: Obviously, it depends on the product, because when you are talking about products used in another industry, such as in the case of steel, even a fairly substantial anti-dumping duty, if you work it through to the final price to the retailer of the downstream product, is going to have a much smaller effect. Obviously, in the case of a consumer product, where the product goes directly to the consumer, the impact of the duty would be exactly at the level of the duty, so that is certainly true.
It is important always to consider what the purpose of trade remedies is. They are about remedying a distortion, an anti-competitive situation or a subsidy. In that way, any time you increase a duty the users, the importers, or the consumers of that product are going to face the negative impact of the increase in duty. What is really important to remember about trade remedies is that they are not about protecting domestic industry, I do not believe. They are about restoring effective competition. That is a key point. Even if a consumer product does increase in price, in the long term the consumer is better off if effective competition is maintained.
The Chair
Are there any questions? No. May I thank you both very much for your very useful evidence? I am sorry that a Division disturbed the middle of your session—these things happen in Parliament. It was very kind of you to come, so thank you very much. If the next witnesses are here, perhaps they would like to take the stand.
Examination of Witnesses
Anastassia Beliakova, Stephen Jones, William Bain and Edward Bowles gave evidence.
The Chair
Q
Edward Bowles: I am Edward Bowles, managing director at Standard Chartered Bank.
Stephen Jones: I am Stephen Jones, chief executive of UK Finance.
Anastassia Beliakova: I am Anastassia Beliakova, head of trade policy at the British Chambers of Commerce.
William Bain: I am William Bain, international trade and Europe policy adviser for the British Retail Consortium.
Barry Gardiner
Perhaps I can kick off with—sorry, is it Mr Jones who is from Standard Chartered?
Barry Gardiner
Mr Bowles is from Standard Chartered and Mr Jones from UK Finance. Is that right?
Edward Bowles: Correct.
Barry Gardiner
Q
The BRC has identified, among others, the agreements involving Norway and Turkey as the most significant of our EU FTAs. Of course, the Government have already indicated that there will be an end to free movement, which rules out simply replicating the Norway model, and that we will leave the customs union, which rules out simply rolling over the Turkish model, so what elements of the agreements—not just those two, but the others—do you consider it most important to replicate on substantially the same terms?
William Bain: The key provisions are those on tariffs, because if the UK leaves the European Union, it is not part of the EU’s common external tariff system, and we could then face higher tariffs on imported goods. A great deal depends on the kind of transitional arrangements that are adopted, but the kind of additional MFN tariffs that would apply would be 12% in relation to clothing from Turkey, 13% in relation to soft fruit from Chile and Peru and 27% on imported processed canned tuna from the Seychelles. Those would, I think, lead retailers and consumers to face considerable price pressures, so the main element that we would want to see is replication of the zero-tariff or low-tariff provisions on imports.
The other key areas that are very difficult in terms of replication and, we believe, may require a degree of assistance from the European Union are in relation to rules of origin. For example, with the Canada trade agreement, there is a complex rule of origin. The same is true in relation to South Korea. I think that diagonal cumulation is involved in the rules of origin in respect of the CARIFORUM trade agreements.
These are areas where it seems that time is running out, the clock is ticking, and a solution needs to be found if British business and British consumers are not to face a large cliff edge in March 2019.
Anastassia Beliakova: Absolutely. Rules of origin are a headache for businesses, and if we consider that there is the likelihood, in the roll-over of existing trade agreements, that they may have to comply with tougher rules of origin or that some of the benefits that they currently get by counting both EU and UK origin as single origin might be lost, that is very concerning. For about one in seven of our members, the existence of a free trade agreement is the determining factor in whether they export to or import from a country. I urge the Government to give stronger assurances for those agreements, as Mr Bain has mentioned, that already provide for, or have clauses mentioning, diagonal cumulation, but also to look at all the EU trade agreements and particularly those that have the greatest economic significance for the UK, and open up those discussions to provide for that as they are rolled over into UK-third country FTAs.
Iain Stewart
Q
Anastassia Beliakova: Not at first glance. However, the wider picture around trade data is that trade data is imperfect. It is particularly lacking when it comes to services, of course, and when it comes to intra-EU trading data. That is where we currently have significant gaps. If, in the future, there can be a more robust collection of data and stronger assessments of UK-third country trade, that would be helpful.
Stephen Jones: I have nothing to add.
Edward Bowles: Obviously, the collection of data is largely in respect of goods that cross borders. It is very difficult to do that for services, so I would have thought that a way of more robustly measuring cross-border flows of services would be quite an important thing to look at, so that you can get a better grip on revenue as much as anything else. Largely, it is more on the goods side than it is on the services side.
Faisal Rashid
Q
Edward Bowles: The great thing about having economists is that they are independent of those of us who do jobs outside of research. Razia is an expert in her own right and would be the best placed person to speak to those issues.
In fact, they are not really trade agreements; they are economic partnership agreements that the EU has with most African, sub-Saharan and, indeed, subcontinent markets. It is certainly true that they have undergone a high degree of revision under the current Commission’s administration. I am not aware, frankly, of any overwhelming dissatisfaction. I attended a recent meeting only two months ago between quite a lot of these markets and Cecilia Malmström, so things do seem to be moving in a good direction. The question is what the UK’s approach would be to that and how much it might be minded to depart, if at all, from the approach. The starting point must be simply to mirror the current arrangements, as was said on Second Reading and in the Government’s response to the consultation on the Trade Bill.
Faisal Rashid
Mr Jones, would you like to add anything?
Stephen Jones: No, I have nothing specific to add in relation to Africa in general.
On a more generic point in relation to the Trade Bill, it is obviously focused on existing trade agreements and economic partnership agreements. From a services perspective, we need to look beyond that and reflect on arrangements that exist beyond that, which are critical to the cross-border flow of trade in services, because there are very few provisions and services agreements in trade treaties that relate to services. There are lots of mutual recognitions and memorandums of understanding that relate to infrastructure, to recognition and co-operation between supervisors, to the flow of data and to the recognition of exchanges, but which do not exist within the context of a trade agreement. They nevertheless facilitate cross-border trade in services that already exists between the EU—including the UK—and other jurisdictions. It is very important that we do not lose sight of those specific provisions, but seek to mirror them so far as the financial services industry is concerned, simply because the existing trade treaty provision is so poor in services.
Bill Esterson
Stephen Jones, you are the UK Finance representative. Sorry, it has been a long day. Can I ask about the written evidence you gave to the Procedure Committee, where you indicated the benefits of a triage or sifting process and stated how you might apply those when looking at new trade agreements? For the purposes of the phrase “new trade agreements”, given some of the evidence we have heard today, can we include anything that changes the agreements that are part of this Bill? Can you explain what you think the merit of such an approach would be, how you might apply it, and the importance of such a sifting process?
Stephen Jones: Given the time available in the context of Brexit, from the perspective of the financial services industry, clearly continuity, speed and the correct process and scrutiny to transpose the existing trade arrangements that the EU has with the rest of the world to the UK are incredibly important for continuity. That does not directly benefit the financial services industry. It benefits mostly the customers of the financial services industry, but in that context it is very important.
To the extent that your question relates to prioritising whether one should seek to amend the agreements in order to ensure more robust coverage of services within the context of those agreements, I think that in the first phase that is unrealistic. There is not enough time. What we need is as much certainty as we can get. Business in general needs as much certainty as it can get in terms of the transposition of the existing EU arrangements.
In terms of the ongoing amendment of those treaties to seek to extend them and prioritise what should be done—the sifting process, if you like, for services—we can develop a modus operandi in terms of markets that are important. However, as I say, there are significant factors beyond trade agreements that influence the ability to conduct cross-border business between the UK and the rest of the world. Those are a susceptibility to inward investment; strong regulatory and supervisory co-operation; aspects of data protection and the willingness to mutually recognise the cross-border sharing of data; and infrastructure, with the recognition on a cross-border basis of critical market infrastructure in each jurisdiction, such that member firms in each place are able to access and utilise the infrastructure in the other country. To the extent that that can be captured within a trade agreement, that is great.
To date, that has failed and our focus very much is on an ambition for the UK with the EU to seek to build an ambitious free trade agreement that has not been attempted in services anywhere else in the world. But we believe it should be attempted in the current context, simply because of the importance of the cross-dependencies that already exist and the fact that we are starting with a fully converged rulebook, which is extremely unusual in a trade negotiation context. So we believe that there is the prospect of an ambitious mutual recognition-based trade agreement in services between the UK and the EU and that potentially should be the first focus, to the extent that we are talking about prioritisation of negotiation of trade agreements.
Bill Esterson
Q
Stephen Jones: I think we are talking about beyond transition. From a transition perspective, the only realistic thing that we believe can be achieved is a prolongation of the acquis, which is a full adoption of the existing rule book lock, stock and barrel. The chances of seeking to amend or renegotiate that in the time that is available are wholly unrealistic, and what is far more important is certainty through the transition period. The only way you can deliver that certainty is simply to take forward the existing rule book.
Bill Esterson
Q
Stephen Jones: In terms of the prolongation of the acquis—that is, the adoption of rules on day one—in a sense those rules are already on for the purposes of transition. Those rules have already been adopted by the UK. I recognise the sovereignty of Parliament and the importance of scrutiny, but to the extent that the rules are not being changed we are simply extending arrangements that continue to exist. The Bill’s provisions relating to Ministers’ 10-year power to use secondary legislation to renegotiate those rules strike me as pretty broad-brush, and they potentially should benefit from greater parliamentary scrutiny than is currently contemplated.
Bill Esterson
Q
Stephen Jones: Broadly, I do not think it is realistic to expect changes. In that context, the secondary legislation ministerial power provisions are broadly acceptable, but beyond that, to the extent that arrangements are adapted to the UK as an independent country with its own trade policy, I would suggest that they merit parliamentary scrutiny.
Bill Esterson
Q
William Bain: The nature of the transition impinges on terms in the Bill, and the retail industry is keen to have a standstill transition in all elements—in terms of the current customs rules, the current tariff rules and the current SPS rules—but it also applies to the trade facilitation that we get from the bilateral trade agreements, which fit into part 1 of the Bill. I cannot stress how important it is to the retail sector, which imports products from countries like Chile, Peru, South Africa and Turkey, that we do not have a discontinuity in our trading arrangements at any stage after 29 March 2019. There are some connections and points of commonality with the kind of transitional deal that is done, but in a sense this is a slightly separate question. It really demands clear attention from the Government in order to get the job done by 29 March next year.
Barry Gardiner
Q
We are talking about 100 separate agreements between the EU and Switzerland alone, some of which include free movement of people. There are going to be some major changes, such as those we talked about with Turkey and the customs union, and with Norway, free movement of people and the four freedoms. Do you not think, given that you have already recommended a sift Committee in one form, that a similar sort of mechanism for trying to distinguish between what is and what is not vital, and what should have parliamentary scrutiny, is a sensible way to proceed?
Stephen Jones: Yes, sorry; forgive me for the lack of clarity. My reference was really to the existing provisions between the UK and the EU in relation to financial services. In my assessment, for the purposes of transition and of business services in financial services, the chances of change, and therefore of the need for sift, are zero. There just is not the time. In the context of other areas, where there is an assessment that change is possible, the sift Committee strikes me as a very sensible mechanism to prioritise and assess those changes and the degree of scrutiny that is required.
Mr Prisk
Q
Anastassia Beliakova: It is absolutely critical. Our members are operating on the assumption that during a transition period there will be continuity in our trading arrangements not just with the EU but with all the other markets with which we have a trade agreement of some sort. The working assumption is that they should not be making any changes currently or planning for significant changes in trading conditions in March 2019. Of course we are still waiting for greater clarity from the EU on this over the coming months, but I cannot stress enough that in the immediate future the continuity in our trading relationship with the EU during transition is critical. Our continuity, looking further ahead, with the other markets, is also something that our members want to count on.
Mr Prisk
Q
Stephen Jones: Continuity is very important, particularly through the transition period and on an ongoing basis. We believe that there is an opportunity for a free trade agreement in services between the UK and the EU that prolongs many of the existing arrangements, which are beneficial on a cross-border basis, particularly in markets for wholesale financial services and markets affecting professional counterparties and market-based counterparties, where cross-border provision, passporting and mutual recognition are important to the efficient working of trade not just in financial services but in goods—not just in the UK but in the EU as well.
The economic case for maintaining much of the existing arrangement is significant, but we are, as you know, working with a negotiation envelope as far as the EU is concerned that appears to require change—to require the UK to have less access than previously, in a visible sense. So we need to be seen, I guess, within the context of that envelope, to prioritise what is important for both sides in financial services. In our assessment it is more of the capital, derivative, centralised clearing and—outside my remit but clearly very important—insurance and reinsurance markets, which are professional-to-professional markets operating on a seamless and cross-border basis across Europe, the disruption of which would be quite significant. In those circumstances maintaining as much as we can of the existing establishment regulatory supervisory arrangements around those business activities will be important for the UK economy, but equally for the continental European economy as well.
Mr Prisk
Mr Bowles, is that your take as well?
Edward Bowles: There are two things I want to say. One is that the lead time involved for change for a regulated industry—and it is not just financial services but, my guess is, pharmaceuticals and manufacturing, among others—is so long that, to give you an idea, to create a subsidiary where you do not have one, even in a market where you may have a branch, is a minimum 18-month project plan timeframe from beginning to end, and in some cases longer depending on the breadth of products you are dealing with and the number of regulatory approvals involved. Therefore, a degree of clarity around the future timeframe and the continuity in that timeframe is critical. Otherwise you end up creating a high degree of uncertainty, not just for the regulated entities but for all their clients—thousands of clients who would be forced, with scrambling and redocumentation, to look to a different legal entity and to price and measure risk in a different way from the way they are used to doing it with the current entity.
Continuity is key, but the working assumption, as Stephen said, is that there will be change. The question is when that change will come, and whether it will be in one step or more than one step. Will we have sufficient clarity that when we deliver the end state it will be the final end state? That is why the transitional period is critical to get us to the point where the framework gives us a high degree of visibility over what the end state might be.
Mr Prisk
Q
Stephen Jones: I defer to Mr Bowles on this—given his experience with TTIP and equivalent regimes.
Edward Bowles: Obviously a high degree of dialogue is done regulator to regulator, so we are a supervised entity not merely in the home state where we may have our domicile and headquarters but in all markets where we have operation. In fact, your first point of call would be the nature of the relationship in terms of supervisory co-operation between those two entities, and what it is that you are permitted to do, and where any disputes may arise about what you are doing in those markets. In fact, the TRA is probably much less relevant to a highly regulated and supervised industry like financial services than to some others, in which there are fewer regulator-to-regulator forums that would determine the methods and modes of operation.
Stephen Jones: I would just add that the concept of dumping in financial services is, therefore, not strictly relevant.
Nick Smith (Blaenau Gwent) (Lab)
Q
Edward Bowles: Thank you for the question. Standard Chartered has been UK-headquartered for the last 155 years, but 85% of our revenues are from Asia, Africa and the middle east. In respect of most of those countries, there are no FTAs, either with the UK or, indeed, with almost any other markets. I was quite involved in my 10 years at Standard Chartered with the negotiations between the EU and Korea, the EU and Singapore and the EU and Vietnam and, most latterly, with those on TTIP, and on India in between times—that has been a slightly less successful product in negotiating terms. The fact is that we have FTAs with some of those markets and some of them are incredibly advanced. Korea and Singapore are incredibly advanced markets. You are dealing with very sophisticated regulators, politicians and others. They completely understand what the UK would be seeking to achieve in any renegotiation post the roll-over of the current FTAs.
There is certainly scope, I think, in some of those FTAs for tweaking, shall we say, and data offshoring would be one of the issues that I am sure the UK would want to look at. The negotiations take a long time. Korea was seven years. Singapore is not yet in force but we have just had a European Court of Justice ruling in relation to one aspect of it that will enable it to come into force soon, but it has been eight years overall. We can cut and paste them, but then the question is, “What are the incentives on each side—which will probably be asymmetric in terms of interests—for tweaking, and what will be the appetite and the timeframe over which you could do it?” My guess is that you would want to do it expeditiously, but the degree of consultation and engagement with other interested industries, politicians, civic sectors and so on, would inevitably build in a longer time.
For other markets that are rather less developed perhaps than Singapore and Korea, it would take longer, because if there is no existing FTA you are looking at a degree of transparency around their regulatory framework and around the concessions they inevitably will be asked to make, and the question is: “What is the quid pro quo for them?” India is a classic example. You have visas, and immigration is one of their core demands. It has always been one of the core issues that has bedevilled the EU-India FTA negotiations and that will be no less the case, I am sure, with the UK than it is with India.
Judith Cummins
Q
William Bain: Indeed. There is a good quantity of imported fish, from Norway and Iceland, that UK consumers buy. In particular, there is South Africa in terms of products like wine and some citrus, Chile and Peru in terms of soft fruits, and Morocco in terms of fruit, vegetables and some clothing. And there is principally Turkey in terms of clothing. There are many members of the BRC that source clothing in Turkey, which can be given to consumers for sale in this country on good terms. One of the fundamental issues is that, at the moment, that is under a customs union: is there going to be a functioning customs union between the UK and Turkey on 30 March 2019? I think that speaks to some of the process issues that come up in part 1 of the Bill. We know that there will be an interaction between the CRAG process of bringing a concluded treaty before this House, then interacting with the processes that have to be gone through in part 1 of the Bill.
Unless we have things like letters of intent ready to be signed at 11.1 pm on 29 March 2019, and unless we have the EU involved—what seems on the face of it to be bilateral is, in many cases, a trilateral negotiation—we will have a gap. That gap will cause uncertainty for business. Ultimately, it could cause gaps on the shelves and a lack of choice and availability. It is a serious issue for investment and for consumers.
Barry Gardiner
Q
At the moment, we may not be in control of that process. We know that we would like it to be very simple, but it may not be. Given that, should the scrutiny not be in place for Parliament either to assist procedure or, using some other mechanism, to say, “Yes, this is important, and we need to make sure that we, as Parliament, deal with it in the appropriate democratic way”?
Edward Bowles: I would say be careful what you wish for, and I do not say that completely comedically. It would very much depend upon the scale of the market that you are interacting with, and the significance of it. The experience that I had of TTIP was one where the lack of initial transparency, of engagement with civic sector societies, and of disclosure of the mandate for the first 15 months of the negotiations very much allowed the debate to be run by outside interests that felt disenfranchised. Effectively, that stymied the political will to take the negotiation further forward even before the new President was elected.
It was absolutely clear that there are lessons to be learned from a negotiation of that scale, ambition and impact for the UK’s economy, to make sure that you have the right level of engagement, transparency, scrutiny and so on in an ongoing manner. For a much smaller market, I dare say that, given the time involved, it may not necessarily warrant a full-scale similar application of scrutiny because, frankly, the relative impact for the UK economy, and therefore for consumers, healthcare and so on, would be much less. Judge each of them on their merits.
Anastassia Beliakova: To follow up on what Mr Bowles said, the TTIP example certainly shows us how critical it is to have appropriate stakeholder engagement mechanisms. At the moment, the Bill is meant to deal just with continuity of existing agreements that have already had the relevant scrutiny from the European Parliament and have passed through the European Scrutiny Committee here. However, if there are very substantial changes or if we are talking about completely new agreements, provisions certainly need to be made for appropriate scrutiny in Parliament, and for stakeholder engagement for business, civil society and non-governmental organisations. It might make sense for that to have some form of statutory underpinning so that there is input that is not contingent on the political environment, which may change. As has been said, negotiations take a long time, sometimes even up to a decade, and during those negotiations you still need to be able to test both the public views and the impacts. I would urge for these kinds of mechanisms to be put in place where new agreements are implemented.
Faisal Rashid
Q
Anastassia Beliakova: Consultation is absolutely critical. If there are changes through these agreements that would alter the benefits that businesses currently see, our members would want to be consulted. At the moment, there is a question as to how the UK will set out on having an independent trade policy. We are conducting a study with the London School of Economics on that topic, which I would be happy to share once it is published.
There is a balance of interests between continuation—ensuring that there is no gap between the current benefits and some new measures that will be implemented—and appropriate scrutiny. That has to be considered on a case-by-case basis when it comes to the existing agreements. For any new negotiations, however, there needs to be a more clearly set out process.
William Bain: There are two important points to make. First, if we look at the guidelines adopted by the European Council on 15 December and the drafts that are circulating in Brussels for the draft directive to be adopted next Monday, it is very doubtful that the EU will permit the UK to vary these agreements at all. It will basically be small changes that will require the UK to still be subject to its current obligations under these agreements. That is all that the EU will be prepared to accept.
Another important point is that if the mechanism for the transition is that the UK is under the common commercial policy and the EU common external tariff, the UK will be applying all the EU’s external tariffs vis-à-vis third countries. That means that Canada and South Korea will get the advantage of relatively low-tariff trade into the UK market, but unless we get the EU on board to help us with the transitioning process, we will not get the advantages of access to the Canadian and South Korean markets. That is the absolute imperative of why this task has to be completed—so that we can have certainty and continuity for business.
The Chair
The imminence of another Division tempts me to think that we ought to finish, unless it is a very short question.
Faisal Rashid
Q
Stephen Jones: It is a rhetorical question, I think.
The Chair
A rhetorical question that Hansard will have noted. I thank our four witnesses very much for your evidence. You were very good value for money considering you were not paid to be here. Thank you for taking time out—it was most useful for the Committee.
Ordered, That further consideration be now adjourned. —(Craig Whittaker.)
Taxation (Cross-border Trade) Bill (First sitting)
(6 years, 2 months ago)
Public Bill CommitteesRead Full debate Read Hansard Text Read Debate Ministerial Extracts
The Chair
Before we begin, will everyone ensure that their phones are switched to silent, including me, and remove all signs of illicit tea and coffee? We have three motions to consider, which we can hopefully do formally. We are considering the programme motion, a motion to enable the reporting and publication of evidence, and a motion to allow us to deliberate in private about questions before the oral evidence session. Date Time Witness Tuesday 23 January Until no later than 10.25 am British Chambers of Commerce; Agency Sector Management; Association of Freight Software Suppliers Tuesday 23 January Until no later than 11.25 am Jeremey White, Barrister; Customs Associates Ltd; Fairtrade; Which? Tuesday 23 January Until no later than 2.45 pm Trades Union Congress; Unite; GMB; Public and Commercial Services Union Tuesday 23 January Until no later than 3.15 pm Hansard Society Tuesday 23 January Until no later than 4.15 pm UK Chamber of Shipping; British International Freight Association; British Ports Association Tuesday 23 January Until no later than 5 pm UK Steel; Chemical Industries Association; British Ceramic Confederation
Ordered,
That—
(1) the Committee shall (in addition to its first meeting at 9.25 am on Tuesday 23 January) meet—
(a) at 2.00 pm on Tuesday 23 January;
(b) at 11.30 am and 2.00 pm on Thursday 25 January;
(c) at 9.25 am and 2.00 pm on Tuesday 30 January;
(d) at 11.30 am and 2.00 pm on Thursday 1 February;
(2) the Committee shall hear oral evidence in accordance with the following Table:
(3) proceedings on consideration of the Bill in Committee shall be taken in the following order: Clauses 1 to 3; Schedules 1 and 2; Clauses 4 to 10; Schedule 3; Clauses 11 to 13; Schedules 4 and 5; Clauses 14 to 20; Schedule 6; Clauses 21 to 29; Schedule 7; Clauses 30 to 43; Schedule 8; Clauses 44 to 50; Schedule 9; Clauses 51 to 56; new Clauses; new Schedules; remaining proceedings on the Bill;
(4) the proceedings shall (so far as not previously concluded) be brought to a conclusion at 5.00 pm on Thursday 1 February.—(Mel Stride.)
Resolved,
That, subject to the discretion of the Chair, any written evidence received by the Committee shall be reported to the House for publication.—(Mel Stride.)
Resolved,
That, at this and any subsequent meeting at which oral evidence is to be heard, the Committee shall sit in private until the witnesses are admitted.—(Mel Stride.)
The Chair
The deadline for amendments to be considered at the first line-by-line sitting of the Committee was the rise of the House yesterday and the next deadline will be the rise of the House on Thursday for the Committee’s sitting a week today. Copies of written evidence that the Committee receives will be made available in the Committee Room.
The Chair
Good morning, witnesses. Thank you for coming along. We are now resuming our public sitting. We are going to hear evidence from the British Chambers of Commerce, the British Retail Consortium, Agency Sector Management and the Association of Freight Software Suppliers. I remind Members that all questions should be limited to matters within the scope of the Bill and that we have to stick to the timings set out in the programme motion, so we will have to conclude this session by 10.25 am. Will the witnesses start by introducing themselves for the record?
William Bain: Good morning, Ms Buck. I am Willie Bain from the British Retail Consortium. It is very nice to be back.
Anastassia Beliakova: Good morning, Ms Buck. I am Anastassia Beliakova. I am head of trade policy at the British Chambers of Commerce.
Peter MacSwiney: Good morning, I am Peter MacSwiney from Agency Sector Management.
Gordon Tutt: Good morning everyone, I am Gordon Tutt from the Association of Freight Software Suppliers.
Peter Dowd (Bootle) (Lab)
Q
Anastassia Beliakova: An issue that our members have raised—this was something that we heard from members even before the whole Brexit question arose—is staffing capacity and in particular the ability to help businesses with day-to-day questions that they may have. That is particularly important when businesses apply for various trade facilitations, such as inward processing relief, or for various forms of certification, such as to be an authorised economic operator. There used to be a helpline at HMRC that is no longer available. Businesses would find it helpful if that were reintroduced. Another concern they have raised is that there is an evidenced shortage of staff dedicated to goods checks. That has been ongoing for a number of years, and questions are being asked about whether there is sufficient resource and focus allocated to goods checks and support. Those questions will become much more acute with all the coming changes.
Peter MacSwiney: There are always questions raised about the Customs Declaration Service, which is the replacement for the customs handling of import and export freight programme. I have said many times that I still believe that between CDS and CHIEF, the computer system will have sufficient capacity to handle the declarations. To pick up on Anastassia’s point, to enable goods to move freely through the border post-Brexit we will have to rely on advance information and bulk entries done with some form of simplified procedure. As far as I can see, Border Force is not engaging very much with trade. What it wants the processes to be and what data elements it wants are still unclear. Customs seems to be getting bogged down with the authorisation process. All of that could do with being streamlined.
Gordon Tutt: Our association members have customers who cover a wide range of different trade sectors. One of the common problems we have is getting approvals processed quickly. That is particularly worrying. One of the recent changes that has been mooted is that before a trader can have their approval granted, they will have to have their software contracts in place. Most traders would not want to go to the cost and trouble of organising and paying a software contract if they did not know they would get the approval. It puts the cart before the horse. Having said that, we are expecting to have discussions with HMRC through the Joint Customs Consultative Committee sub-group on how we can best streamline the whole approval process.
William Bain: One of the key things that our members have said to us is that the last big change they were asked to adjust to, which was the introduction of the Union customs code, took companies three years to get ready for. There is good engagement with HMRC, but there is concern about the capacity of the new CDS system to handle perhaps 255 million customs declarations a year, depending on the kind of deal that is or is not negotiated in the next few months.
Peter Dowd
Q
Peter MacSwiney: The lines of communication are in place. I do not think there is enough time to have any real meaningful discussions. I think the original view from the trade was that a five-year transitional period would be a minimum. Even if we get two years, it is difficult to see what we could achieve in that timeframe.
Gordon Tutt: From a technical perspective, we always work on a general rule that it takes two years from the time that we have the full technical specifications to the time we can actually implement. That gives you an idea of where we are at the moment. We are working closely with HMRC’s technical teams on the CDS development. It is not an easy task. We are looking at a replacement to a service and a system that both the Government and the trade are highly dependent on. Clearly, we want to make sure that we get that absolutely right. We believe that Customs has taken some very sensible approaches, but we probably need to further mitigate the risk by enabling CHIEF to continue for a longer period, thereby allowing the transition from the current service to CDS over a longer period of time.
Chris Davies (Brecon and Radnorshire) (Con)
Q
Gordon Tutt: First, yes, you are right—it is an enabling Bill. It is very good that much of it is already contained in the Union customs code, so it actually provides a really good basis for future UK legislation. It also avoids an awful lot of new requirements on trade, particularly on our side of the systems, because it adopts much of the concepts of the technology and the data that are already maintained in the UCC legislation.
Anastassia Beliakova: To add to that, yes, of course it is an enabling Bill. We and our members welcome the fact that it aims to replicate the UCC as much as possible because, as has already been mentioned, a lot of effort and time have been put into adhering to the new aspects of the Union customs code. However, what we have noticed is that some elements of the code have not been addressed in the Bill.
For instance on origin, the means of defining origin have been set out. However, origin declaration has not been mentioned. That is just as important, if not more so in some aspects, than rules of origin, when it comes to international trade. There are various means in which businesses now declare origin. Sometimes it is through sub-certification; sometimes it is through certificates of origin. We published a paper last week—there are copies available for the Committee—that shows that businesses are worried about compliance issues after Brexit. They want to know that there will be certainty going forward and support for them with that. We would view it as quite important to have at least one clause in primary legislation ensuring continuity in the means of origin declaration, which is further elaborated in secondary legislation.
Chris Davies
Q
William Bain: It is a very flexible Bill—it has extensive powers to make delegated legislation. It does throw up some other issues that the BRC would like to see resolved during this process. For example, to get as free a flow of goods as possible, we not only need a deal with the EU on customs arrangements, we also need it on things such as transit, security, haulage and particularly VAT.
One of our concerns is that the way the Bill is drafted at the moment throws up some issues about doing business in the future. For example, companies may have to register in every EU member state in which they provide services and in many member states in which they take goods to and from the UK. That is something that we would strongly urge the Committee to look at as the Bill proceeds.
Peter MacSwiney: I will stick to the system issue, if you like. I echo what Anastassia has said. The phrase “free circulation” is still in there. I do not see how that applies. Origins should be the criteria. You said it is a very flexible Bill—it is. Our members have some concerns that it allows HMRC to make it up as it goes along. That is a worry.
I am also concerned about some of the references to electronic systems and to things being delivered by a customs information paper or a public notice. At Heathrow, for instance, public notice 216 applies, which I think was written in the mid ’80s. We have been trying to rewrite it for the last 10 years probably. It suddenly popped up last year having been rewritten with no consultation and did not show any significant changes.
I have a real concern about who will be responsible for determining day-to-day processes such as the presentation of goods, which the Bill mentions—what is that? It cannot be the physical presentation in the post-Brexit world, because there will be too much of it, so the inventory systems have the concept of presentation against an electronic record. Those things really need to be thought out.
Kirsty Blackman (Aberdeen North) (SNP)
Q
William Bain: Yes, that is a huge concern because companies will have a big cash flow hit. The movement of goods within the European Union has been treated as VAT-free up to now. If the UK is treated as a third country afterwards, companies ostensibly will face an up-front cash payment. There are policies—domestic and in terms of the negotiations—that could mitigate that. The Government could introduce a deferment scheme, as is the case in Spain. They could look at other domestic policies to tackle it. More fundamentally, they could look at a form of self-assessment for VAT, which would obviate the need for up-front payments.
Some international solutions could be looked at. As I pointed out earlier, whatever happens domestically, UK companies will still face the burden of having to register for VAT purposes in each member state where they offer services and in most member states where they provide goods. That requires an international solution such as staying in the EU VAT area—even though that might involve treaty change—the establishment of a new common VAT area, or some other strong VAT co-operation. The domestic element and the negotiation element are both required to sort the problem out in the round.
Anastassia Beliakova: VAT and future potential VAT cash flow issues are a serious concern for our members. To echo the points already made, international measures that are not contingent on negotiations could be adopted. Deferment schemes are one. There are already deferment schemes in the UK, but they could be more generous. For instance, they ask businesses to provide bank guarantees, which is yet another cash flow issue for businesses. Some companies can waive it, but only after they have had a clean record of VAT payments for three years, which not all SMEs, for instance, could provide.
Another potential solution is to consider postponed accounting, which in effect is what we already have as members of the EU VAT area. The Government could consider setting out policy that would introduce postponed VAT accounting for imports from all third countries. That would alleviate future concerns in relation to Brexit and simplify existing procedures quite significantly.
Peter MacSwiney: The Joint Customs Consultative Committee has requested a return to postponed accounting; that is not popular with the Treasury, of course.
Kirsty Blackman
Q
William Bain: We are less concerned with the process than with the outcomes. The reality is that we need an operational statute book on 30 March 2019. As I say, some issues not dealt with in the Bill are very relevant to the process of getting goods in and out of the country and to the customs process in the round. We would appreciate some further treatment of those issues, such as haulage permits or what you do with people driving trucks into the country, who need permission to move from Belgium into the UK. Some issues that we think are important in the customs process could be addressed by the Bill.
Peter MacSwiney: The JCCC was keen that the legislation should reflect how business actually works. That was why we requested some input into the primary legislation, which was refused. The problem you have potentially is the interpretation of the law. You have two options: if the law categorically states, “You can do this”, that is fine—but if the law does not categorically state that you cannot do it, can you still do it? Those may sound like very similar points of view, but actually they are not. It depends very much on the interpretation of the authorities as to how much flexibility they will allow trade. There could be a clearer guide on the facilitative, rather than being prescriptive of the letter of the law.
Kirsty Blackman
Q
Anastassia Beliakova: The Bill, as has already been said, is very facilitative of all possible future options. Because none of them seem to have been narrowed down at the moment, it is very difficult for businesses to prepare. There is the working assumption that imports VAT is something that they will have to deal with once we leave the EU VAT area, but again that has not been fully clarified. Hence, with this kind of situation, businesses are still waiting for further clarity.
Gordon Tutt: On a technical level, when it comes to having the legislation and the systems ready, the time period to take on not only the technical changes but the additional volume and participants that may be required is very challenging. We should learn a lesson from the implementation of the UCC, which was introduced without very much thought about how it could be introduced within the timescale; subsequently, the concept of transitional regulation was introduced to allow trade and the member states—the customs authorities—to have time to adopt the changes. Our legislation in the UK perhaps needs to reflect better the ability to introduce transitional elements, where required, in a controlled manner.
Peter MacSwiney: Our concern, on behalf of our customers—predominantly freight forwarders—is that they are only just beginning to realise the extent of the changes. They are also just beginning to wake up to the fact that they are going to have to talk to their customers. From that point of view, I do not think they are particularly prepared at all.
William Bain: We have good lines of engagement with HMRC. We are having a meeting at the BRC with customs and tax experts from our member companies on Thursday, so we welcome that, but clearly there is only so much you can do when you do not know what the trading conditions will be the day after Brexit. We do not have clarity as yet on the transition. That is critical for business, in terms of the investment decisions being made in the first quarter of this year, and it is also about getting enough staff trained up and the IT systems changed and ready. All of those things take time, and getting the earliest possible clarity on as much of the terms of the transition as possible would be welcome—as early as possible.
The Chair
I would love to call Grahame Morris, but I cannot, because he has lost his voice. Anneliese will ask a question for him.
Anneliese Dodds (Oxford East) (Lab/Co-op)
Thank you, Ms Buck. The question that Mr Morris asked me to ask on his behalf is, if anything, even more pertinent after something that Mr Bain said. In the general area of customs—we are talking not only about duties, charges and processes strictly for customs, but about issues to do with migration, security, veterinary checks and haulage—I wondered, on behalf of Mr Morris, whether members of the panel would expand on what changes might be needed there. Are those being taken sufficiently in the round with matters strictly dealt with in the Bill?
William Bain: It is particularly important for food retailers because we deal with perishable items. I will use the anecdote, which is true, that a retailer can put in an order for orange juice. It comes via Zeebrugge and Dover and is on the shelves the following day. Our companies deal with just-in-time supply contracts and sourcing mechanisms. If you put friction into that process, you can introduce a day’s delay. For example, at Tilbury, I understand that if your crate has not arrived by 3 o’clock, it is processed the next day. You have to refrigerate it overnight. Those things add extra costs. They increase the possibility of food waste. They increase the possibility of having gaps on the shelves and products not being there when consumers want to buy them.
Meat products are a particularly huge issue. If we leave the European Union sanitary and phytosanitary rules system, you have to check meat items as they leave the country they are being exported from—let us say from France—and you also have to check them when they arrive in the UK. That will add huge friction into the process, and that is something that the food retail sector in particular has been very critical of. It also affects non-foods.
There are many furniture stores among our membership that import items—flat-packs—from the rest of the EU. If there are long delays at customs, that affects the ability of those goods to get to consumers as well. So non-food and food are concerned about the possibilities of more friction in the system.
Anastassia Beliakova: There are two considerations here: what businesses need to prepare for and what happens at the border. A lot has been said about CDS, which is a critical part of the picture, but that is just one element. We have been trying to draw attention to the fact that origin declaration, which is separate from customs declaration, also needs to be clarified.
When it comes to getting goods through the border—the just-in-time, the ferry coming in and so on—you need several systems working together. You need the customs declaration in place and already authorised. That needs to happen before the truck arrives and rolls off. There needs already to be an interlink with the relevant agencies—whether for food, plant and so on—who have already approved all this. This needs various means of declaration, and several IT systems need to work together and be integrated with the relevant port systems and make sure that there are no further delays. So we think there are some other elements that have not been covered sufficiently in the debate.
Peter MacSwiney: We have some pretty slick systems in place now for traditional freight. We do not really have any port systems in the ro-ro ports. We do not have any space and any procedures that lend themselves to goods being stopped and looked at this side of the channel. I think absolutely it has to work on advance information on a permission to load basis on the other side. Once you have that, the goods would have to roll freely through the ro-ro ports specifically on the basis that they are eligible to be entered into the UK, and the fiscal processes should take place after that. After they have gone through the border, they are accounted for separately.
Gordon Tutt: In terms of the systems we have currently for undertaking customs procedures, we probably have some of the most advanced systems in the world for doing these transactions. We have a lot of advantages over other countries in that we have got integration with our community systems providers in the ports, who can provide advance information. Customs and the Border Force to some extent use that information now. We have advance notification through the various systems internationally.
Where we seem to fail in this country is not with the revenue and the customs systems; it is actually with the other Government Departments. It might surprise you that within the airline arrivals, some of the notifications are still done on paper. That is not because trade and the port and community systems do not have the systems to provide this information—it is purely that those Departments do not have the ability to accept that information electronically. If we are to avoid delaying goods unnecessarily, where we have known, trusted traders bringing goods which present no risk fiscally or from a security point of view, that information should be passed freely to these other Government Departments, thereby avoiding any unnecessary delays.
Peter MacSwiney: The processes at Heathrow and Gatwick—both are run by the same community system provider—are different, and within the specific airports the transit sheds operate different procedures as well, so it absolutely could do with being streamlined.
Julian Sturdy (York Outer) (Con)
Q
Anastassia Beliakova: There are two considerations. The first is ensuring that businesses know that in future they can continue to rely on what they currently use to declare origin. At the British Chambers of Commerce, we facilitated 650,000 shipments through the use of certificates of origin last year. That is worth £22 billion to the UK economy—it is really critical. In the future, we do not know whether the existing means of declaring origin will continue. It is really important that businesses are told that they can.
It is also important from a strategic perspective for the UK Government, when we perhaps enter into new negotiations. If other countries ask for their means of declaring origin to be written into the agreement, that would cause significant compliance issues and would mean that there were far too many complicated rules for businesses to comply with. If there were provision in the legislation for the existing means of declaring origin, there would be a much stronger basis for the UK in future negotiations to make a case for the existing means to continue.
Julian Sturdy
Q
Anastassia Beliakova: The intention of the Department for International Trade is now to roll over existing EU trade agreements, most of which accept preferential certificates of origin as a means of showing that the goods come from the EU. If in the future those agreements are not rolled over and there is not the same provision for the same means of declaring origin, that means that companies will not be able to get the reduced duty rate when they export to that market—or, indeed, import from it.
Emma Hardy (Kingston upon Hull West and Hessle) (Lab)
Good morning—it is nice to see you all here. Earlier this week, the director general of the CBI said that the UK should seek to negotiate a comprehensive customs union with the EU. Having listened to all the complications that you have just outlined, would you support that proposal?
William Bain: The BRC is less concerned at this stage with the means of delivering frictionless and tariff-free trade with the EU, but what we do see is the overwhelming priority of the Government to focus on securing that. Our biggest market is the European Union, and it is likely to remain so for many decades to come.
To put it into perspective, our members say that 79% of food imports come from the European Union. That shows the sensitivity of sourcing contracts and supply contracts. For example, some retailers offer ready meals with cheddar from the Republic of Ireland in them, so it is used as an ingredient in products. If we do not get a deal that ensures tariff-free trade with the EU, the tariff on Irish cheddar is 44.5%. On beef from Ireland, it is 38.9%. On Dutch tomatoes, it is nearly 29%. That will have a serious impact on consumers, which is why we have said that, above all, by whatever mechanism they achieve it, the Government should aim for frictionless trade and zero-tariff trade with the European Union. Otherwise, consumers will face a big hit to their living standards.
Anastassia Beliakova: The same principle of having as little friction as possible in future trade with the EU is, of course, very critical for our members. On the specific question of the customs union, we are currently surveying our members—literally as we speak, or at least in the next few days—so, as and when those results are available, I will be very happy to share them with the Committee.
Peter MacSwiney: All the efforts over the last few years have been to remove bureaucracy. SITPRO made it its mission in life to try and simplify trade, and now we are introducing an inhibition to trade in the form of a customs entry. Taking what William said, of course duty plays a part, but even if there is a duty-free element you still have to do a customs entry, and it is hard to see where the benefit of that is. So, I would say that some form of customs union would be useful and beneficial.
Gordon Tutt: From a systems point of view—obviously, we are a vested interest here—the more declarations that are done, the more money for our members. That is why we take a very neutral position on this. But clearly, as my colleagues have said, there are a whole range of issues here, particularly in the movement of goods, which traditionally posed no threat. That goes in both directions—both into the UK and leaving the UK. We need to find a mechanism to allow those goods to move freely, without hindrance and without additional cost to trade.
Nic Dakin (Scunthorpe) (Lab)
Q
Gordon Tutt: Having experienced some of the European legislation in recent years, particularly the way the UCC was written, I do not see that the current UK proposal is any more onerous than what we have seen coming out of Brussels—in fact, in some ways it is a lot clearer. And we do have the confidence here in the UK; again, I can only speak on behalf of my members. We have a very good rapport with customs and with other Government agencies, in that we can actually discuss the detail and get clear understanding, and intervention where it is necessary. So, I am not unduly concerned with what is being proposed.
Peter MacSwiney: I think of the point we made earlier. As Gordon has just said, the engagement is good but the timescales are not.
William Bain: The key point, Mr Dakin, is that obviously companies want to know what the impact on them and the wider industry will be. Having legislation with an impact assessment is very helpful, in being able to explore the pinch points—whether on customs, VAT or the staffing implications. The retail industry wants to see this legislation as early as possible, and to engage with Government about it. We know that this legislation is not amendable in this House or in the House of Lords, so it is even more important that industry has a very strong engagement with it at the earliest opportunity.
Nic Dakin
Q
Anastassia Beliakova: We already provide a lot of advice to businesses when it comes to trade. That is due to our role in trade facilitation with certificates of origin, but we also help with any queries that companies have regarding compliance with origin or local regulations in other markets. We also support businesses with any questions regarding taxation.
We hear from our members that they want to know what they should be preparing for. At the moment, the kind of guidance that we can provide is not prescriptive. It is more, “These are the various areas that you could consider”. One of them, of course, is VAT; another is origin declaration; and a third one is various rules of origin and existing trade agreements that the UK has by its membership of the EU. But because businesses don’t know what they don’t know, and we are working between assuming that everything will continue as it is and anticipating further changes, we would like to work even more closely with HMRC and Government more widely to provide support as and when changes become clear.
Peter MacSwiney: The current infrastructure is good. The Joint Customs Consultative Committee and the sub-groups are a decent forum. We are all members of one or more of those groups, and that works pretty well. I would like to see more engagement from the Border Force with the end user. It seems to be more focused on intergovernmental negotiations and discussions, rather than coming out to the wider trade.
Gordon Tutt: Most trade associations attending the JCCC are also, through either their own trade associations or affiliate trade associations, part of the trade contact group that discusses arrangements with TAXUD—the taxation and customs union directorate-general—for customs legislation in the EU. We are working closely with our European trade associations to try to ensure that there is a commonality in approach, to avoid unnecessary disruption to trade both from the UK and from the EU.
William Bain: The practical benefit is the experience across different industries and sectors in dealing with the movement of goods and services and being able to identify the potential difficulties with compliance.
One further point on the movement of goods is that at the moment there are 30 separate Government agencies that deal with this process. We are not expecting the Government to rationalise those or shuffle them in some way, but we would urge that the level of integration and co-operation between them should increase as we move towards Brexit day and, if there is a transitional period, any expiry of it, because dealing with 30 separate agencies is onerous for business.
Anneliese Dodds
Q
Secondly, regarding HMRC capacity, we have obviously seen a big reduction in headcount and changes with all the offices becoming regional hubs. Are there other alterations that you would make to HMRC’s set-up to facilitate the big challenges coming down the road with these new systems?
Gordon Tutt: May I begin by answering the first question? Within the UCC legislation, which is carried over into the new UK legislation, there is a recognition of the role of the authorised economic operator. That is quite important, but it means that there will be potentially hundreds, if not thousands, of UK companies that may wish to become AEOs to gain the benefits once we leave the EU.
The problem is that unless you have a proven record of customs transactions, you cannot apply to become an AEO, so in some ways we are going to disadvantage traders that are probably acting completely in accordance with regulations, are good taxpayers and are honest and trustworthy companies. None of that is taken into consideration. We have had some discussions with HMRC and it is almost as though we might need something like a provisional AEO status so that those companies, which pose no risk, can take on some of the benefits, such as guarantee waivers and being able to operate the self-assessment schemes, where there is no risk either to the Treasury or to the safety and security of the country. That is a key point.
I would add that the provisions of the self-assessment scheme, which are part of the UCC regulations and will be carried over into UK law, can also perhaps provide some answers to some of the problems that we have not successfully been able to find solutions to.
Anastassia Beliakova: On AEO, the issue is actually your second point of HMRC capacity, and the way the process is run in the UK. AEO is an international system. It is recognised by standards at the World Customs Organisation, so there are certain aspects that a country that has this scheme must adhere to.
However, the process of approving companies—just how long that takes, and all those practical aspects—is up to the customs authority of each country to implement. We have heard time and again from our members that that takes far too long. I have an example of a company that had already been approved for AEO but it took 12 months for them to get the reapproval, although they did not have to go through the exact same process again. It should have been much faster.
I have spoken to customs authorities in other countries such as Austria. There, owing to their much more customer-service-focused approach—and, it has to be said, they do have many more customs officers—it takes a company about three months from the start to the very end of the process. Yet they are no less rigorous than we are. We are very stringent in our approach, and if we want to help more companies achieve this status, the practicalities need to be rethought.
William Bain: That is a key issue. AEO status is part of the solution, but it is no silver bullet for the customs issues that companies are likely to face. There are 10 times fewer AEO companies in the UK compared with Germany; penetration among small and medium-sized enterprises is particularly low. There is a lot of work that Government could do to make the process of applying easier but, as was said earlier, there has to be a history of previous customs transactions. I believe it is three years before companies can apply.
The other thing that is necessary in any withdrawal agreement solution is that there should be mutual recognition between the UK and EU AEO systems. The EU has already done that with America, China and some other countries. That is critical.
On HMRC resources, I revert to an earlier point: that Dover and Eurotunnel do not have capacity to conduct SPS—Sanitary and Phytosanitary Certificate—checks. If we end up outside of the EU SPS regime and we have to check fresh meat and plant products coming into the country, there is not the capacity to do that at Dover. You have to find an offsite solution and that will draw further on HMRC resources—to have veterinary staff in position to perform these checks. That will increase the burden on the HMRC budget.
The Chair
Emma Hardy has a quick, mini-supplementary, four people want to ask another question, and we have 14 or 13 minutes—just to give you an idea of how to manage the time.
Emma Hardy
Q
Peter MacSwiney: It is hard to see the transition period being less than five years, in all honesty, based on experience of introducing systems over the past 20 years. Introducing a system is one thing, but educating the trade and getting the processes in place really does take a long time. It is hard to see that being done in much less than that.
Gordon Tutt: I would support Peter on that. We should not make the same mistakes as with the UCC. There are elements of that that cannot be introduced, even within the current transitional arrangements. We need to be mindful that it takes a long time to get the systems in place and, more importantly, to make sure that they have the connectivity to other trade systems around the world that are often providing this information. Five years sounds awful—and that is the worst case scenario. But if you work on a basis of five years, you can introduce elements much quicker, but some elements could take up to five years to introduce.
Jonathan Reynolds (Stalybridge and Hyde) (Lab/Co-op)
Q
Peter MacSwiney: I think it would probably do the job. I have said it before and I will say it again: on this side of the channel, we will get our systems and processes sorted out, because that is what we do. I do not think it will address the issues on the other side of the channel. That is likely to be a bigger problem than what happens in the UK.
William Bain: The key issue for moving goods between the rest of the European Union and the UK is partly customs, but also regulation. The Bill puts in place different eventualities on customs, but it does not answer the questions on the regulatory framework, so that has to be dealt with. Also, these other issues about what happens to the common transit convention, to security agreements and to haulage permits and driver permits all affect the flow of goods. If those are not dealt with in this Bill, we encourage the Committee to explore how they can be dealt with otherwise.
The Chair
Q
Gordon Tutt: There is everything in the Bill that we need in terms of whatever the solution is. There are already provisions within that legislation to allow flexibility, to prevent goods from being detained at the border and to allow them to be moved up into inland examination points under controlled mechanisms. That already exists within that legislation.
Mike Hill (Hartlepool) (Lab)
Q
Anastassia Beliakova: I believe the figure has been cited as being 130,000 businesses who are dealing with customs declarations for the first time—that is, those estimated to be currently trading just with the EU. Of course, there will be businesses of different sizes. If you are a very large business, you will be working directly with the new system’s CDS and then you need time to integrate into that. If you are a smaller business, you are dependent on the provisions that your intermediaries, your freight forwarders, have put in place. A whole host of businesses will be affected that depend on a number of different bodies and Government putting the right measures in place with sufficient notice.
Peter Dowd
Q
Anastassia Beliakova: It would be very difficult to assess, because there are a number of factors. One is just the cost of a customs declaration. That will perhaps be more challenging for a smaller business that is trading ad hoc. If you are a large business trading at big volumes, the cost will be quite marginal for you.
But then there are other considerations. There is the time issue. Are you going to factor in any potential delays? If so, does that mean you have to provide for more warehousing facilities? Does that mean you have to keep an inventory? All those things are very difficult to quantify for a median figure, but they are things we know our members are starting to consider—some quite actively.
William Bain: If you move away from a just-in-time supply and sourcing mechanism, you have to look at stockpiling. That means you have to look at extra warehousing capacity. You have to change IT systems in terms of VAT and customs. All that comes at a cost for businesses, at a time in which we see the pressures in terms of footfall and retail spending.
Peter MacSwiney: As a software supplier, we support about 350 companies in probably 800 locations. We estimate that making the necessary changes, just to roll out our system, is going to cost in excess of £250,000 over the next two years. I do not know whether that is any help to you.
Gordon Tutt: One of the other issues is underwritten by the fact that some of the changes being introduced to the software systems would have been required anyway as part of the requirements to meet the UCC—new data set, new message types, more engagement in terms of electronic transactions. In addition, we are already working on CHIEF replacement, so the costs of that are already borne as part of the decision to replace CHIEF. As high as these costs are for some of the software suppliers and some of the trade sector, some of that cost would have already existed had we decided to remain within the EU.
Kirsty Blackman
Q
Peter MacSwiney: I think there is a structural issue. It is the view, certainly at the airports, that freight is the poor relation where the Border Force is concerned.
Anastassia Beliakova: I would say it is both. It is very difficult to assess within the Border Force how much emphasis is given to goods checks versus checks on people. We have heard from members that it seems as if the focus has definitely shifted over the years. It is therefore an area that would require either a change of focus with more focus to goods, or more people dedicated just on goods checks, from our perspective.
The Financial Secretary to the Treasury (Mel Stride)
Q
Would you describe HMRC’s engagement with yourselves—your own organisation, in the context of the discussions and the issues we have gone over today—as having been good, average or poor? Starting with Gordon.
Gordon Tutt: Very good.
Peter MacSwiney: I endorse that.
Anastassia Beliakova: Very good.
William Bain: Good, but we need answers on what is going to happen.
Mel Stride
That is more than one word—you can tell who the former politician is. My final question has clearly been identified. Naturally, there are many challenges and uncertainties out there. Some come from the sheer fact that we have decided to leave the EU and the short time frame, for example, for decisions. Many of the issues we have described come out of the negotiations and the uncertainty about where we may land in that respect.
However, what the Bill is doing and the focus of this Committee is to make sure that we are as close as we can be to existing arrangements and, secondly, that we have the flexibility to be nimble enough to move and adjust our configuration to accommodate wherever we land on day one. Very quick answers down the line: in essence, in broad terms, do you think the Bill is about right?
Gordon Tutt: Yes, I do.
Peter MacSwiney: I think it probably is, but it needs to focus on implementation and people must have the attitude that they are using it to facilitate trade and not to inhibit it.
Anastassia Beliakova: Yes, but more clarity on policy is needed, particularly on VAT.
William Bain: We would advise that it also deals with the other issues we have spoken about today which affect the flow of goods in and out of the UK.
The Chair
I also thank the witnesses very much for their attendance. We will now close the session and move on to the next panel.
Examination of Witnesses
Sue Davies, Jeremy White, Barbara Scott and Helen Dennis gave evidence.
The Chair
Q
Helen Dennis: I am Helpen Dennis and I work at the Fairtrade Foundation.
Jeremy White: I am Jeremy White from the Pump Court Tax Chambers. I am here today as the customs duties spokesman of the Chartered Institute of Taxation.
Sue Davies: Hello, I am Sue Davis from Which?
Jonathan Reynolds
Q
Sue Davies: I want to say at the start that from the perspective of Which? we focus on making sure that we get the best outcome for consumers from Brexit. We took a neutral position on the referendum, and that also applies to trade policy. Our interest in the Bill lies in making sure that it is as explicit as possible, within that, on how consumer interests will be taken into account.
In relation to what is in the Bill and what is dealt with by subsequent legislation, we want to make sure that any changes are limited to technical matters, and that anything with wider policy significance—particularly given the sensitivities of trade issues to some extent—is dealt with openly, so that we can see and weigh up its pros and cons. We feel that some aspects of the Bill need to be strengthened to make the consumer interest more explicit. There is recognition in the Bill, for example, of the need to take into account consumer interest when setting import duties. We also strongly support the inclusion of what is called the economic test in relation to trade remedies, because we want to make sure that we have a thorough understanding before we potentially raise consumer prices in order to support particular industries. There are aspects of the Bill that we think are important, but we also think that there could be greater clarity to make sure we see how the consumer impact will be assessed.
Helen Dennis: On the delegated powers issue: across the board we do have some concerns, more so with the Trade Bill and the process for agreeing future trade deals than are necessarily within this legislation. Here, we do have a lot of delegated powers around setting tariffs, establishing rules of origin. We are thinking about it from the perspective of developing countries, where in some instances there is a high dependency on the UK market and where there are products with tight margins, so changes to tariffs could make or break the livelihoods of producers. If you were to ask for a vote on every single tariff change, that would not be workable, so this is about finding the right balance in terms of moving forward.
It is a question to throw back to parliamentarians: to consider the role that parliamentarians feel they should have around parliamentary scrutiny, consideration of different tariff changes and rules of origin—the things we were discussing earlier. The Government have set out quite an ambitious vision about trade for development, for example in their trade White Paper, in which they want to use trade policies to improve access for developing countries. At the moment, however, we do not see those improvements in this legislation, because the focus is on continuity and maintaining the status quo for now, but we do not want to lose sight of future improvements and future discussions. I would say that actually, as things stand at the moment, there should probably be a process whereby Members of Parliament can call things in or request further scrutiny, but that is part of the wider discussion about trade policy going forward, including how the Houses want to be involved in that and how public consultation is built into it. It is something that needs to be thought about in tandem with the ongoing discussions about the Trade Bill, as well.
Jeremy White: I have a problem with the structure of the Bill, the consequence of which is that parliamentary scrutiny will be excessively difficult. I can illustrate that with this visual aid that I have brought in, which is a handbook that I edit. This is the regulatory framework for customs duties in the Union—the Union Customs Code—and its guidance. The UCC and its implementing provisions are about this wide, very finely typed—about 1,300 pages. The rest—this part here—is the necessary European and national guidance on the matter.
Therefore, when we think about the implementing provisions, of which we have maybe 15 or 20 pages of detail in the Bill, which are meant to be implemented by this, we know that the statutory instruments are going to be an enormous burden. The problem is that the Bill is overly ambitious. It fails to distinguish between those provisions that I will call just charges and the machinery—the regulatory framework. This book does not concern the charges, the tariff schedules, the trade instruments or the preferential agreements. They are in another book, of about the same size. I am not concerned about those, and the Bill would deal with them.
The trouble is that it brings into force the repeal of the UCC, in effect, on exit day. That being so—it is hard-wired into the Bill—its commencement provision requires there to be statutory instruments of this magnitude on exit day. The problem is that since the destruction of the Bill is a recast, they will be recast into other, English language. Such an approach might be appropriate for a no-deal arrangement with the EU, but it creates burdens of cost and risk in respect of any trading activity that follows afterwards, particularly if we have any transition period at all or are subject to obligations under the leaving treaty—I will call it the leaving treaty, but whatever it is—to preserve the regulatory framework of the UCC.
To be realistic, we cannot expect the EU to be in favour of or agree to any kind of regulatory framework that is different from the UCC. The UCC is what they have budgeted for. At the moment, it is in an implementation phase; we will probably come to that in other questions, and the problems of the timetable for its implementation now that, yesterday, the Commission has endorsed a report following the revised road map for the implementation of the UCC, which I could cover later.
The primary point then is that if we have a complete recast on exit day, anybody who is involved in trade, particularly if we have obligations to retain the same effects as the UCC, will have to be looking at both the UCC and the English implementation at the same time for every single piece of endeavour—almost every importation. As I said, the scrutiny will not just be on the basis of whether the legislation achieves its objective with respect to any changes from the UCC; it will also have to look at it on the basis of whether it preserves the effect of the UCC that was intended. That is an enormous burden, and I would say that it makes parliamentary scrutiny unnecessarily and excessively difficult.
Kirsty Blackman
Q
Jeremy White: That is an important point. The CIOT’s report brings out some evidence of some members having already amended their supply chains in order to cope with arrangements, because of the uncertainty. Uncertainty is a burden that trade faces at the moment, and it has to make decisions about it, so you are right. The CIOT has noticed that clients—enterprises that are members—are changing their supply chains because of the uncertainty, so anything that the Bill can do to reduce uncertainty would be good. For example, if the Bill can, by its commencement provisions, instead allow the withdrawal Bill to operate—therefore the UCC is automatically incorporated—and then exercise the powers to modify that application, that will reduce a lot of uncertainty and there will be no need to read this book—the UCC—and the English version. This book has to be read anyway, and this, and there will be a very small amount of variation where we want to improve on the UCC for the United Kingdom.
This is about uncertainty and cost, and what enterprises want to do. Everything can be resolved by law and by allocating resources to the issues, but that just increases cost, besides the parliamentary scrutiny being a burden for Parliament and for those who want to assist it—charities such as the CIOT and so on. Businesses themselves will see this as an issue of cost that it is unnecessary for them to incur.
Kirsty Blackman
Q
Helen Dennis: There is certainly that intention in the legislation, and that is good to see. Certainly, bringing forward a UK preference scheme and guaranteeing in law the duty-free, quota-free access for the least developed countries is all very positive. It takes the best bits of current EU policy and brings them over into UK policy. What we are grappling with at the moment is those countries that do not qualify for that access, which are not LDCs but still have developing country status in some way; they may have an economic partnership agreement or a free trade agreement. We do not yet have absolute clarity and guarantees that their market access will be preserved in the same way. There is definitely a stated intention from Government, but not a guarantee.
I would say we have heard more than we have seen. Obviously, the next six months or so are going to be critical. What we have heard were potential discussions about people changing their sourcing—away from Kenya to Ethiopia, for example—in relation to cut flowers, and discussion about trading routes: things that currently come via other EU countries into the UK, whether that is flowers via the Netherlands or tea or coffee that is processed in Germany. There is lots of complexity around every commodity. I would say that at the moment there has been more hearing than seeing action, but I think the next few months will be crucial.
The challenge of one of the points that we have been trying to make with quite a short submission about this is that because we do not have an absolute guarantee at the moment that the transition of the economic partnership agreements and free trade agreements will occur in March 2019, although we know that the Government are working hard on it, we want to ensure that the preference scheme is able to accommodate additional countries that may not be listed in the schedules at the moment, as a kind of fall-back option in case we cannot transition those free trade agreements and so on over in time. Obviously, we want to avoid the cliff edge for developing countries just as we want to avoid the cliff edge for UK business.
The Chair
We welcome Barbara Scott to the panel. Barbara, would you like to introduce yourself?
Barbara Scott: My apologies for the Metropolitan line this morning. I am the director of Customs Associates. I am an independent customs consultant and have been for many years, advising businesses on importing and exporting, currently for trade outside the Union.
Anneliese Dodds
Q
I have an additional question about the distorted economies. We have very little detail about how distorted economies will be dealt with in the Bill. Do you have any comments on that, given that there are severe human rights concerns in many of those economies about certain elements of production, including modern slavery?
Helen Dennis: You are right to say that the three tiers of the EU preference scheme are not cited in the legislation. At the moment, in the Generalised Scheme of Preferences, there is Everything But Arms duty-free and quota-free access for the least developed countries, and there is broad GSP and something called GSP-plus, which countries can access if they have ratified certain human rights agreements and conventions. That highlights that the Bill is being kept incredibly loose. We have had discussions with officials at the Department for International Trade about this, and the stated intention is probably to cut and paste the preference scheme.
At one point, I thought that there would probably be some wider discussions about the shape of the preference scheme: whether we would go for one tier, two tiers or three tiers, whether we wanted to roll over the human rights conditionality, and more. I do not know whether it is to do with the time, resources and everything that needs to be done in the next year, but the preference seems to be, essentially, to cut and paste for now, and to look at those improvements later. You are right to say that that is not in the legislation, so the detail of rules of origin and the different tiers of a preference scheme are just more issues that the Secretary of State would bring forward in regulations. It was implied in the first question whether that is satisfactory. Do members want to have a say in shaping a preference scheme and on whether there should be human rights conditionality? That is an important question that needs considering.
On your second question about distorted economies, there probably are divergent opinions—certainly in civil society and non-governmental organisations—about the use of trade agreements and tools to enforce human rights obligations. Obviously, everyone wants to see that, but trade is quite a blunt tool for doing that. Its application at EU level is still fairly recent, so there probably is not enough evidence yet to see whether the GSP-plus has the desired effect. I am not an expert, but I know that after the Rana Plaza tragedy in Bangladesh, the United States was able to use trade policy to move forward some of those conversations about labour conditions and rights in Bangladesh. There are ways in which trade policy can be used for those discussions, but whether they are applied as conditions in trade agreements is a question for discussion.
Chris Davies
Q
Jeremy White: Good lawyers—and even good editors—work only for their clients, not for themselves. Barbara is a colleague of mine, and you should ask her that question, too. We are interested only in making sure that the Bill is fit for purpose. Our charity is made up of lawyers and consultants, and we all agree that although the Bill is not designed to do something bad, it tries to do too much. We applaud its ambition and, to a point, its flexibility, but let me make a couple of pleas for special items.
On the replacement of VAT on acquisitions being dealt with in a VAT return, we see flexibility in the Bill and in the announcements of HMRC and the Treasury. That can be replaced by postponed accounting of import VAT. That kind of flexibility is good. When we look at the flexibility that we would like to see in respect of some of the special procedures and information systems, we think, “Yes, that will be good.” In particular, guarantee waivers—taking a different view from the EU on guarantees—are a good thing. The Bill would give us that structure, and we applaud that.
Our problem is with the cost that would follow, both in terms of parliamentary scrutiny and for the trade, if we commenced a UK recast. Having to look at both the UK recast and the Community law would create an unnecessary cost. As I said, we are not concerned about parts of the current law such as tariff schedules and trade instruments, which we know will have to be recast. Each paragraph of the Chartered Institute of Taxation report is quite dense—a number of people were fighting to get their arguments in, and some of it is a bit too dense—but one talks about international obligations. We do not want the flexibility of a UK approach that is inconsistent with our international obligations, because that would just lead to more cost. Although we might, in individual cases, obtain a result that we liked based on a simple reading of the English recast, it might be incompatible with either a Community obligation or an international obligation, and we would end up with everything having to be reversed on appeal and the whole enterprise being more expensive.
The problem with an unnecessary recast is that it would produce an amount of uncertainty. It is that, not the flexibility, that we object to. If I put my own hat on, you are right that I would never be able to retire, because, instead of being paid once for reading this version, I would have to be paid twice—once for reading this version and once for reading the English recast—in any case I was involved in.
Chris Davies
Q
Jeremy White: To go right back to the beginning, this is not personal. I am definitely arguing against my personal interest, as you pointed out. You are right.
Peter Dowd
Q
Barbara Scott: Sure. I presume that Jeremey has already mentioned the fact that the new draft Bill moves away from the Union customs code. We had been told that the Union customs code would be the way forward for UK legislation, so we were surprised to see the new draft Bill presented in this way. If it is to be changed—personally, I do not see how we can change something in such a short period, given that the Union customs code took 10 years to put in place—how can we present something new that is a strong and proper piece of legislation? We will not be able to do that in the time available, which is all the more reason for picking up the Union customs code and tweaking it.
If we are going to change things, why produce something that to me looks like going back to the legislation that we had? Perhaps those drafting the Bill started by looking at legislation before the Union customs code, or even the Community customs code, because a lot of the wording is not modern. Perhaps that is the way that this has always been done, but it seems to me that we could at least use plain English that people understand, and present it in a clearer way. The wording of the Union customs code is sometimes a bit odd, but it is written in clear English that most traders and non-lawyers can understand. If we are to change this legislation, it would have been nice to have seen something a lot more fitting for today. A totally new customs regime is coming in, and if it is to be different, this would have been an opportunity to make it a shining star for Britain.
Peter Dowd
Q
“new UK legislation is needed to create a separate UK Customs regime.”
I think everyone acknowledges that.
“However, we believe the Government’s approach, of providing Ministers with exceptional (yet apparently permanent) powers to create a Customs regime from scratch, with minimum parliamentary involvement or scrutiny, in a very short space of time, is unnecessary.”
Why? What is wrong with that? The Financial Secretary is a very reasonable person, and I am sure that nobody would want to pull the wool over anybody’s eyes. What is the problem with that idea?
Jeremy White: Parliamentary scrutiny will be excessively difficult. That is the problem. We are talking about how to get this amount of material recast and properly analysed, with time to debate anomalies, difficulties, or even the uncertainty of it all. There are risks to the Revenue as well, besides business cost. The Revenue might think that it has a proper charge, but the problem with customs machinery as something that is modified or recast is that often the customs debts themselves result from a time when goods were on duty suspension. That is where customs duties are in two parts. First, there is a charge in the thing, in rem, on importation, and then the goods are on duty suspension until there is a charge, in persona, against a person who is then liable for the debt.
In the time between those two events, the goods are subject to all this regulatory machinery. Uncertain or defective provisions that could be subject to litigation will affect the Revenue itself. We will say what we think the legislation is—it will have its explanatory notes and its public notices—but once you have let it go, it is up to the judges to decide what it means, and traders and advisers might come up with a clever, nuanced interpretation of the Bill and statutory instruments that was completely outside your intention. So avoid that uncertainty, that litigation and that cost simply by allowing the withdrawal Bill to incorporate the UCC—as we thought it would—and then enact just the sensible few amendments or modifications that are necessary of the UCC. As I say, I am arguing only for that, not for the whole body of the customs legislation, some of which it is probably best to recast, subject to compliance with EU and international obligations.
Peter Dowd
Q
“The explanatory notes to the Bill state that the new standalone regime will be ‘largely based on EU law’ and that it is intended that the customs regime ‘will continue to operate in much the same way as it does today’.”
I want to tease out a little more on that. Do you think that aspiration will be delivered by the Bill?
Jeremy White: Not with its current commencement provision, no.
Peter Dowd
Q
“We are concerned that taxpayers’ rights in relation to an effective appeals process are retained. This Bill could be”—
you do not say “will be”—
“a backwards step in relation to an effective appeals process, because it affords such wide discretion to HMRC. We wish to see the adoption of clear unambiguous legal requirements for customs matters, which minimise commissioners’ discretion.”
Could you tease that out a bit more? That is in paragraph 6.1 of the Chartered Institute of Taxation’s evidence.
Jeremy White: A thorn in the flesh of the people who contributed to that section was clause 23, and in particular where certain results—particularly approvals—are treated as never having been granted if HMRC considers that approval would not have been granted if a deficiency was known at the time it was granted. That is just one example. There are a number of parts of the Bill where this construction is used whereby one authority—an administrative authority, a parliamentary authority or a Minister—considers that kind of discretion.
Yes, that is a useful construction in English for granting a power to make an instrument, but when it comes to affecting a trader’s relationship and whether they can be in business or not because they have got an authorisation, it should then be subject to the ordinary appeal to the simple, low-cost traders’ tribunal that we have learned to admire. All of the other authorisation-type decisions that HMRC could make are subject to appeal, and they are preserved properly by the Bill. The trouble is the Bill then adds in a few more, using a construction such as “considers” and “discretions”. It is bad enough now that sometimes we have to tell a client, “Sorry, you’re going to have to pay the money to go to the High Court and challenge the Ministers or HMRC on the basis of judicial review,” which is very expensive, discourages litigation and often discourages people from obtaining a remedy for their dispute.
This should not be controversial. It should be, “Yes. That is the right thing to do.” If we were able to add to a shopping list, we would say, “Can we please have all of the current disputes going on in the High Court in customs matters dealt with in a tribunal as well, please?” but that may be asking too much. If the scope of the Bill is wide enough for that and you could amend it to get that in, that would be good. We should not really have customs issues going to the High Court at all. They should all be dealt with in the first-tier tribunal tax chamber.
Mark Menzies (Fylde) (Con)
Q
Helen Dennis: A lot has been said about value addition and its potential post-Brexit. Our view is probably that the tariffs are not the key issue here. We already have duty-free, quota-free access for the least developed countries. If we take a country such as Colombia, or a GSP-plus country such as Bolivia, it is able to access the market with roasted coffee as well, duty free, but as I said before, with the free trade agreements, they may not all transition over necessarily. The biggest issue in terms of trade policy and development continues to be subsidy rather than EU tariffs. There are other issues, such as rules of origin or just getting the investment in roasting and processing facilities, that are more of an obstacle to moving into that kind of value-added activity.
Having said that, there is still scope for improving the tariffs. That goes back to the point about how we and the Government do that. Do we say that the Secretary of State has that power and authority, every three years or so, to revise the preference scheme to extend product coverage and potentially country coverage, and so on? Is that a conversation that happens through regulations under delegated powers, or is it something that a Committee of the House or another grouping, or Parliament in its entirety, would want to discuss, debate and have a vote on? There are lots of issues to unpack. I would certainly agree with the premise of your question, but some of the detail on that particular issue around coffee roasting does not impact as many countries as is sometimes talked about.
Mark Menzies
Q
Helen Dennis: I agree with you on that. There are certain products that we work with, such as bananas and sugar, that are not covered by the GSP. There may be products that we would want to include within a new preference scheme, and we would want to have the opportunity to bring those proposals forward. The Bill certainly does that, by granting the power to the Secretary of State to make those decisions.
The one thing I would want to flag up is that a decision about tariffs affecting one country impacts on other countries. It is important that when those matters are being brought forward, a thorough impact assessment is done of the impact not only directly on that economy but on neighbouring or other competitor countries. If we go back to Colombia for example, it is a big exporter of cut flowers. There is competition between east Africa and some of the Latin American countries. There is no right or wrong answer, but if we are going to make tariff changes, we need to make sure that we have thoroughly considered the potential impacts.
When the Bill lists the things that the Secretary of State or Chancellor must have regard to, at the moment there is nothing that relates to development impact. From our perspective, we would like to see something added there, so that we are thinking about UK interests and consumers, of course, but we are also thinking about development impact when we make changes.
Douglas Chapman (Dunfermline and West Fife) (SNP)
Q
Barbara Scott: I work a lot with SMEs who currently find it very hard to understand the Community legislation on customs and international trade law. It is complex and there are a lot of different strands to it. Trade is complex. Things are different depending on what you are doing, whether coffee from Colombia or bicycle parts from China. The legislation and the effect on business is very different, unlike other laws, such as VAT or corporation tax, which generally impact in the same way on most businesses.
This is a huge step change for SMEs and particularly for those who have only traded within the EU. It will be a tough challenge for HMRC to reach out to those people, get them involved and explain how the new legislation will work. There is clearly going to have to be a lot of propaganda and information out there. It is a huge challenge for the state.
Jeremy White: And there is a cost. The SMEs will have to employ agents, because they will not be able to employ in-house staff. I have been told that SMEs will sell out to someone who does have the assistance. The only frictionless trade known to man is customs union. Anything else is costly and can only be managed—just—with all the simplified procedures of the UCC in operation, plus all the information systems that are there to support them. That is big money.
Barbara Scott: When we talk to customs about this, we are constantly hearing, yes, they are being given more resources and will be employing more staff, but can business afford to do that—suddenly to employ new people and understand these new processes? It is a huge cost. People ask, “What is that cost?” It is very difficult to measure. I do not think anyone has attempted to do so yet. It will be a very difficult time for SMEs in particular.
Sue Davies: I cannot comment on SMEs but I want to make the point that if there are additional costs for businesses, they will feed through and lead to increased prices for consumers. That is why it is really important that we have as efficient a system as possible, which still maintains the right level of protection for consumers.
Mike Hill
Q
Jeremy White: Uncertainty always produces that, doesn’t it? A little bit of background: all my professional life has been using EU-type rules, EU language and structure. Through all its iterations—when I was a Government lawyer working on the implementation of the Community customs code, then when we began to do work on the Union customs code, then I went back to practice—it is still very similar. It is well known that the opportunities for avoidance are few. There have been some, obviously, in terms of customs valuation. There have been customs valuation schemes in the past. Most of them have been dealt with.
This is just an example—we do not know, and it could be handled very well—but in a recast there is always an opportunity of bringing in some uncertainty. Is this exactly the same provision as we had before? Will it prevent a customs valuation scheme? The answer to that is that we do not know because all we have seen in the Bill is a very small, framework principle rule provision, but it still does not adopt exactly the language of the World Trade Organisation customs valuation agreement. That would be beneficial—that is another point in our report. The way it works is this. All the customs authorities in the world are obviously interested in preventing evasion and avoidance. They have their own legislation, they have got together for a world agreement on how customs valuation should be—taxation based on movements of goods—that is adopted generally, and their Supreme Courts have ruled on it for many years now, or at least since everyone adopted the same since 1994. We have all that body of work, help and certainty. If we then have an English law recast that abandons that language, we do not take the benefit of leveraging off of any of the international law or any of the international judgments.
The answer to your question—that was really all background—is that we do not know until we see what the statutory instrument looks like, if we still go down this road. It would be better not to, but if we do still go down the road of the recast for all purposes, we will see what the statutory instrument says. I would have thought that the advice will be that the statutory instrument has to adhere to the WTO customs valuation agreement.
The Chair
We have a little over 10 minutes to go and three people to ask any further questions.
Nic Dakin
Q
Sue Davies: We think it absolutely critical that we have the economic interest test. We completely recognise that there will be cases where we need to consider whether we put remedies in place, but it is really important that when the decision is made to do that, there has also been a full assessment of what the impact would be ultimately on the end consumers. As some of the products or sectors that have involved remedies up to now have often been inputs or intermediaries into other sectors, which will then feed through to consumers, we need to ensure that we are looking at what the short-term impacts could be while also thinking longer term. We were really pleased to see the economic impact test referred to. We think it could be more explicit about the public interest side and the need for a consumer impact assessment, but otherwise we could be going down an unnecessarily protectionist route that could have consequences we are not sure about, because remedies can remain in place for quite a while.
Correspondingly, I appreciate that you are not considering the Trade Bill, but we think that the composition of the Trade Remedies Authority, which will be included in the Trade Bill, and the way that it operates, are also critical, so that we ensure it is transparent and includes consumer interest—for example, consumer representation on its board—so that when it is looking at the need for remedies we all understand exactly how it has traded off those different interests. But we think it would be simplistic and potentially damaging to consumers if we do not have the test in the Bill.
Nic Dakin
Q
Sue Davies: We have the economic significance of affected industries and consumers and the likely impact on affected industries and consumers, which enable a wider public policy consideration. For example, there have been remedies in everything from salmon to solar panels in the past. We have got the likely impact on particular geographical areas, which is about regional aspects, and the likely consequences on the competitive environment. So there is a wider competition check, and that is where it will be important to make sure that the Competition and Markets Authority is consulted.
We think the criteria are right. It is how it is done. At the moment it says, “They can take account of the following so far as relevant,” whereas we think it is really important that there is a transparent impact assessment, so we think the wording there could be clearer about how it is doing that modelling in assessing the impact. We felt that the criteria seemed sensible.
Barbara Scott: What also needs to be in there is perhaps timings. At the moment, when we have trade remedies under the EU legislation, it takes an inordinate amount of time to put them in place. If we can have something in our legislation that is timeframed and more clear, with a shorter timeframe, that will be a big plus.
Kirsty Blackman
Q
Barbara Scott: Currently, we have a bit of a divide between HMRC and Customs and how it operates processes such as economic operators, which Border Force does not come online with. No matter what we do to facilitate authorised economic operators—I detest that term—Border Force will still carry out the same controls whether a trade is authorised or not authorised. That really is something that discourages businesses from actually becoming an AEO.
There is a lot of talk about our not having a high number of AEOs in this country. That is because UK Customs has looked at trade facilitation as far as it can, and was quite facilitative to business before we even had an AEO system. For larger traders, there was a lot of facilitation allowed, whereas perhaps some other EU countries, particularly before the UCC, were not so facilitative and have used that AEO process to be more facilitative, which is why traders in, say, Germany have become authorised and in the UK they have not.
The benefits of AEO currently are very small, which is why I was pleased to see within this Bill that there are opportunities for having different levels of AEO. That could be a particular help to small businesses that cannot get over the extremely high bar that exists at the moment. Something that is smaller—a sort of bronze star for SMEs—might be better than the gold star that a multimillion-pound business can afford to obtain.
Mel Stride
Q
Jeremy White: Technically, I think you would be safe if you amended the commencement provision. At the moment, the way that it operates on exit day is that the repeal in schedule 7 of the taxation Bill automatically repeals the effect of the withdrawal Bill, which would otherwise preserve the UCC as retained EU direct legislation. You would have to effect the taxation commencement provision. That would have to be amended, so that on exit day it no longer immediately repealed the UCC. Then the withdrawal Bill would operate.
Clearly, we would identify some modifications that are required, some deficiencies, and we would have power under regulations, under the withdrawal Bill, to make regulations amending an unnecessary effect or remedying a deficiency. There would also be power under regulations under the taxation Act itself to make regulations. Those regulations would have to be enforced on exit day.
Mel Stride
Q
Jeremy White: At the moment, I think it is schedule 7 of the Bill that itself does the business to repeal the effect of the withdrawal Bill.
Mel Stride
Q
Jeremy White: That is right. If you had a qualified commencement provision, so that schedule 7 did not take effect straightaway but had to have a commencement provision, so instead of Royal Assent you had a commencement provision, you would still have the flexibility, if sadly it became appropriate, in a no-deal situation, immediately to bring this into effect. That would be possible.
Someone is still going to have to do the work. As Barbara outlined, someone in HMRC and the Treasury will have to do the work for all of these scenarios for the regulatory framework. Even if they wanted to have a recast, now is not a good time.
To pick up for a second or two on the preference agreements on replication, everything there that will be done will have to be proved. There will have to be proofs of origin. We have got a serious problem outlined, because of the Commission’s adoption yesterday of the road map to put back the information systems, which could have included common databases, as we have in other free trade agreements, particularly with China and Switzerland, that that computer system would not be available in the EU until 2025. In the earlier session you were told that a transition to 2025 is better, even legally technically for getting what we want by way of free trade agreements being replicated and being frictionless. If they are not replicated and not frictionless, then we have to be back to all of the paper certificates. We know that we will have to on the anti-dumping—we will have to employ our own police force to investigate in other countries; we will need reciprocal agreements. At the moment we benefit from the Community policing. There will be no police force—no OLAF. That is a serious problem we face on implementation in this area.
Mel Stride
Q
Jeremy White: You could allow schedule 7, part 1 to take effect. That would repeal the UCC and you could have an affirmative instrument that applied it; yes. You could use that structure.
Mel Stride
Q
Jeremy White: Except for the fact that the affirmative instrument, the SI, would have to repeal those parts of the Bill that make specific provision already. The trouble is that it is not just repealing the UCC. There are 33 pages of provision in the Bill that would have to be repealed by the affirmative statutory instrument, which will be messy. It could work, but it is better to amend the commencement provision, I would say, so that part 1 and schedule 7 do not commence as they do now.
The Chair
Order. We have now come to the end of the allotted time for the Committee. I thank all four of the witnesses very much for their attendance.
Taxation (Cross-border Trade) Bill (Second sitting)
(6 years, 2 months ago)
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The Chair
Good afternoon. We will now hear oral evidence from the Trades Union Congress, Unite, GMB and the Public and Commercial Services Union. We have until 2.45 pm for questions to these witnesses, whom I welcome. I will give them a few minutes to introduce themselves before they answer Members’ questions.
Kathleen Walker Shaw: Good afternoon, everyone. My name is Kathleen Walker Shaw. I am the European officer for the British trade union GMB.
Alan Runswick: I am Alan Runswick. I am a member of the group executive committee of the Public and Commercial Services Union, which represents 35,000 members who work for Her Majesty’s Revenue and Customs, and I work for HMRC.
Ben Richards: Good afternoon. My name is Ben Richards. I work as an international officer for Unite the union.
Rosa Crawford: Good afternoon. My name is Rosa Crawford. I am policy officer in the international department covering trade at the Trades Union Congress.
The Chair
Thank you very much for that. If the gentlemen—or ladies—are finding this room warm and they would like to remove their jackets, they should feel free to do so. I call Peter Dowd.
Peter Dowd (Bootle) (Lab)
Q
Ben Richards: Our view is that, particularly in the scenario we will move into after Brexit, having an effective trade remedies regime for the UK is vital to protecting our manufacturing industries and the members we represent in those industries.
One of the major problems we have with the Bill is that, because so much of the crucial detail is being put into regulations, it is hard to assess properly at this stage whether it gives adequate protections. Certainly, from reading the Bill as it is now, our view as Unite is that it does not appear to give even the same protections as we currently enjoy in the EU regime, and we want to see a stronger trade remedies regime introduced in the UK in future.
Kathleen Walker Shaw: I work for the GMB, which has a number of members across a number of manufacturing sectors. I have to say that when I read the proposals in the Bill, I was extremely alarmed by how weak the remedies were in terms of anti-dumping cases. This is a complex area of trade law, and we know from the European experience, where there is a very robust system, that you cannot take your eye off the ball when you are pursuing those cases. They are very data, document and resource-heavy cases to bring forward.
I just feel that the provisions in the Bill do not fulfil the promise we were given that British jobs, British industry and the British economy would thrive post-Brexit. I feel that huge risks would be taken with our ability to protect and promote British industry and British jobs if the proposals were not amended.
Rosa Crawford: If I could add some specific concerns that we have, there is a compulsory lesser-duty rule in the Bill, which would mean that anti-dumping measures were not adequate. There is ample evidence that the lesser-duty rule is not efficient. Indeed, at EU level, the rules have been reformed to take away compulsory use of the lesser-duty rule, yet it is in the Bill, which would not provide adequate protection against dumping. There is also an economic interest test and a public interest test in the Bill. Those would allow the Secretary of State to veto recommendations by the trade remedies authority that trade remedies should be applied. We regard that as an overreach of the Secretary of State’s power that will not lead to an effective trade remedies mechanism being established.
Also, building on what Ben from Unite was saying, we are seeing a whole area of trade remedies in the Bill left to secondary legislation. China, a non-market economy, has clearly been one of the worst offenders in the last few years and has affected steel and other sectors in which we have significant numbers of members. There has been a real negative impact on jobs, and there is nothing in the primary legislation about how they will be dealt with. Again, for that we would need to see there being an effective trade remedies mechanism post-Brexit.
Peter Dowd
Q
Ben Richards: One of the things that we have been doing, as Unite, with the GMB, the TUC and our sister union, Community, is working very closely with employer organisations from a number of key sectors, in forming the Manufacturing Trade Remedies Alliance. That is in industries such as paper, steel, chemicals, tyres and in a number of other industries as well.
What is clear in our experience, certainly from Unite members, is that we have just gone through the steel crisis, which immediately threw up a crucial or fundamental issue for the UK’s manufacturing industries, but it feeds into many other areas. Our members in the paper industry are particularly concerned. There are also the rubber tyre and ceramics industries as well as many others, which are represented not only by Unite but by the GMB, Community and many other TUC unions.
Kirsty Blackman (Aberdeen North) (SNP)
Q
Alan Runswick: My specific area of expertise is Her Majesty’s Revenue and Customs, but I do know a little about Border Force, which has suffered cutbacks in staffing over the period. I am also aware that Border Force is the first line, as it were; if you go through a port or airport, you will see Border Force there. I used to work for HM Customs and Excise, actually, but transferred into that. Certainly there are now huge areas of the coastline that do not have any protection, effectively, by the civil service.
The other major concern for us is that Border Force is the first line of defence but its powers are limited; for many things, it then has to contact HMRC staff, which it calls in to take the next step, as it were. The clock is already ticking under the Police and Criminal Evidence Act 1984, once Border Force has made some sort of intervention.
One of the major issues that we are facing now is that HMRC is already under quite considerable pressure because of the staff cuts over the last decade. However, just as Brexit is happening, the Department is planning to shrink back from its current estate into just 13 regional centres and five specialist sites, leaving the majority of the ports and airports very large distances indeed from the nearest HMRC office. The time that it would take to travel—if you are called out, any time of day or night—to assist Border Force in dealing with smuggling, interventions and that kind of thing will clearly be a major issue for delivery of working between HMRC and Border Force.
For example, there will be no HMRC office north of Glasgow and Edinburgh—nothing in Scotland except Glasgow and Edinburgh. There will be no HMRC office in the south-west other than in Bristol, which in fact is hardly the south-west; if any of you know the south-west, you will realise that. There will be no HMRC office along the south coast dealing with this kind of intervention. So HMRC is closing offices in places such as Southampton and so on—indeed it is closing this work on the east coast around the ports of Felixstowe and Harwich, with the closure of the Ipswich office.
So we think that there will be a real struggle to deliver the work that HMRC does with Border Force in that situation. My union believes that HMRC should pause the office closure programme until it is clear what the Government will need HMRC to do in a post-Brexit situation.
Kirsty Blackman
Q
Alan Runswick: First, I need to say that my union does not have a position in principle on whether the country should leave or remain and specifically does not have a position on whether we should remain in the single market or the customs union. We are neutral on those questions. In terms of the impact on jobs, we are concerned about the uncertainty of the position and what the future might hold. Are you talking specifically about jobs in the civil service, or jobs in general across the economy?
Kirsty Blackman
In general.
Alan Runswick: As far as the economy is concerned, I would defer to my colleagues here on that position. The position in the civil service is clearly going to be massively impacted depending on whether Britain remains in the customs union or joins a customs union, or what the terms might be if there is no customs union. That is a huge period of uncertainty as far as we are concerned. The jobs and delivery impact of that from my union’s point of view is that it is impossible to say what would be needed.
At the moment, HMRC are actually making people redundant. As offices close, staff are being laid over and years of experience are being lost, at a time when our chief executive is forecasting that we might need to recruit 3,000 to 5,000 extra people. It is complete madness as far as we are concerned to make experienced staff redundant because they are not in the “right area”, when we might need to recruit people. So there is a jobs impact within HMRC. In terms of the wider economy, I defer to my colleagues from the other trade unions.
Kathleen Walker Shaw: A major concern of a lot of unions involved in manufacturing, as well as the concerns about properly protecting and supporting industries in terms of remedies, is that so many of our industries that export or import components or elements of their production are reliant on just-in-time processes. With many products, the margins are so tight that even the slightest delay or friction in terms of the movement of goods will put us out of competition.
As Alan rightly pointed out, we do not know what the Government’s objectives are in terms of future customs relationships with the EU or beyond. In our conversations with other unions that work on borders or in shipping, we are trying to get a picture of where the lock points are. In terms of policy, we are pushing to guarantee smooth administration and as little friction as we can in terms of the movement of the goods, to preserve the just-in-time production processes that so many industries rely on. That is not just about being competitive—in the food sector for instance, it is about getting food there in a state in which it can be sold. We cannot give fixed numbers because we are dealing with the unknown, but it is important not to underestimate the multi-chain effect of things going wrong and policy not being the right one in terms of border administration.
Some of you may have already seen that some groupings of German and French federations have done assessments of what various types of Brexit might cost. Some of the figures from the German employers federations in terms of the added costs of a not positive Brexit agreement are eye-watering. We wish that we had a little bit more of that investigation going on at Government level as well. We have to know what we are facing. At the moment we are living with the fear of what we know through working at hands-on level with the production structures across a number of industries.
Rosa Crawford: Can I just add a perspective from across the union movement, because obviously the TUC represents a majority of trade unions in the UK? Our position is that any future deal with the EU must protect jobs and must protect rights. We have said that the Government were acting recklessly to take a customs union and single market membership off the table at this early stage in the negotiations. We know that it is important to protect rights and to ensure that UK workers do not fall behind those in the EU. We should have single market membership as an option on the table, because that provides an assurance of rights backed by the European Court of Justice.
Ensuring barrier-free, frictionless trade is a very important part of our position and our statement of intent for any post-Brexit deal. Customs union membership is one way of achieving that, but what we see in the legislation is only the possibility under clause 31 of joining a customs union. The terms are not clear and we would need to see the detail. While we are clear that there are risks in not having a relationship that ensures tariff-free, barrier-free, frictionless trade and great costs associated with adding customs checks, which my colleagues have talked about, we have not seen any detail of what the Government are offering. We need to see that detail to protect jobs and our members’ livelihoods going forward.
The Chair
I am going to call Emma Hardy. I ask witnesses to make their answers a little shorter, because several Members wish to ask questions.
Emma Hardy (Kingston upon Hull West and Hessle) (Lab)
Q
Ben Richards: We represent members in the transport industry. In its current form, it is very hard to know whether the Bill will prevent excessive delays in importing freight, simply because we see so much of the detail being pushed to secondary legislation. That is where we would want to have these sorts of conversations to give evidence and have the discussion. One of our major concerns is that the real crux of the detail of our future system is being left to secondary legislation, where we and you will not have the opportunity to engage in detailed debates about exactly those issues.
Emma Hardy
Q
Ben Richards: It goes back to what Rosa was just talking about with the need to have a frictionless aspect to trade. That may be through a type of customs union arrangement, but in the Bill as it stands it is simply not clear. It is very hard to say whether this is the right or wrong way, but we know that with the automotive industry, in which we have tens of thousands of members, on average each part in a car built in the UK crosses a European border and our border anywhere from five to six times. Even a delay of five or 10 minutes added into the just-in-time production systems could create significant problems for such industries.
Alan Runswick: Briefly, on processing, my union is unable to say whether the new Customs Declarations System will be able to cope with the vast increase in the volume of declarations that would come under one of the scenarios we have, because we do not know that it will be that scenario. Similarly, some scenarios will require a big increase in staffing, as has already been mentioned, and those people have to be trained as well. Nobody knows yet what the rules will be. There is a great uncertainty about that position, and that means we have to be very concerned about whether HMRC could cope with the new situation to assist with frictionless trade.
Mark Menzies (Fylde) (Con)
Q
Rosa Crawford: This is something that the trade remedies alliance, which Ben from Unite mentioned, has been working on with manufacturers associations. We have produced evidence on that and we could supply it to the Committee.
I know there has been specific research on the use of the lesser duty rule in the case of solar panels. We have been in discussion with officials on that. There is an argument that the lesser duty rule applied to the import of solar panels allowed a balance with affordable solar panels. The specific discussion was on social housing and allowing those panels to be provided to social housing, but there was also a measure of action taken against unfair trade practice. Talking to colleagues working in the glass associations and other manufacturer associations, they saw those solar panels as being of a lower quality. I am not speaking from a technical point of view, but they had enough information to judge that those solar panels were of a lower quality.
When we think about the importance of using high-quality materials in social housing—obviously in the shadow of the Grenfell disaster—with solar panels just one aspect of that, that judgment always needs to be made about the low price and the quality of the product. Obviously, there is an implication for support for British industry and what you do to the British industry that could have made a higher-quality panel, and for investment around skills and training to bring in those panels.
Mark Menzies
Q
Rosa Crawford: There will be other examples that I can supply to the Committee. The trade remedies alliance will be happy to provide those.
Ben Richards: On specific cases, that is why we are working collectively with the employers organisations. The trade unions and employers are working together because our interests are combined here. Particularly in relation to the lesser duty rule, it is very interesting that very few other World Trade Organisation members use such a rule as this. Indeed, the European Union in its trade remedies regime is moving towards making the use of the lesser duty rule much more conditional, because it has seen weaknesses in having a mandatory lesser duty rule. In the changes that are taking place at the moment in the EU trade remedies regime, there are some important developments in relation to the lesser duty rule over there.
Kathleen Walker Shaw: May I add a supplementary point on the concern for the lesser duty rule? The problem with that particular form of remedy, because you are creating a sort of cap on the level of remedy, is that it is based on the assessment of injury, which is a difficult thing to do accurately. The difficulty that we have, as I say, particularly with industries that are working on moderate profit margins, is that those industries could be put out of business by the fact of the injury being assessed at a perhaps inaccurate level.
A lot of these fledgling industries that we are looking at, such as clean energy—solar panels is a good example—are new forms of industry that we want to see develop in the UK, and the Government have on more than one occasion identified them as being great growth industries. However, China also likes the look of that market, as does Vietnam. If we are not prepared to protect British industry to grow those new industries, then by overuse of the lesser duty rule we are cutting them up before the roots have started to take in the ground. It is a consideration for us more widely to look at the lesser duty rule in terms of our economic ambitions for UK manufacturing industry into the future, because we are in a position of “cake and eat it” there on a lot of young industries.
The Financial Secretary to the Treasury (Mel Stride)
Q
Kathleen Walker Shaw: My union is of a school that believes that, in terms of remedies, we should be looking to a much broader assessment of what is taken into consideration, so we have welcomed the recent movement at the European level on trade defence measures and consideration of environmental and social issues. That is a bit of progress. We would have liked more of that progress. What we do not want to see is a narrowing of trade defence instruments that cut out the scope for that. Guaranteeing consumers good prices is one thing, but keeping the quality of good manufacturing in the UK is something very close to home for our members—obviously not just of our union, but all colleagues here. It is an issue of getting that balance.
The EU trade defence mechanisms and its anti-dumping rules are still within the WTO rules. For us to be going bargain basement on WTO is perhaps not the safest bet for dealing with a post-Brexit economy. We would like to see robust trade remedies that protect our industries from unfair competition, rather than working on the margins of the risk of putting good, competitive industries in the UK out of business.
Mel Stride
Q
Kathleen Walker Shaw: It goes back to the point that it is very difficult to assess that accurately.
Mel Stride
Q
Kathleen Walker Shaw: Our great concern with the Bill in its current form is that the provisions are not there to guarantee that. As our colleagues have said, the resources in terms of Government trade experts are not there to guide us through. For the best part of more than 15 years, we have not dealt with trade. You will need the resources to get those injury claims accurately assessed, and we have no confidence that the provisions are there in the Bill to guarantee that.
Rosa Crawford: I think this links with the issue of who is making the assessment. We have a concern about the parallel Bill to the one we are considering here: the Trade Bill, which sets out the provisions to create the Trade Remedies Authority. There is nothing in that Bill that indicates who will be on that authority. For trade unions, it is important that we have equal representation of trade unions and employer representatives, because we are directly involved in those sectors and we believe that trade remedies should be assessed using the insights of those directly affected in those sectors. It is unfortunate that from the Trade Bill we do not have confidence that we will have that representation, but we hope that we will see it developing in the legislation.
If trade unions were asked honestly to assess the lesser duty rule—if we had that discussion and we were genuinely taken into the process—that would be a very different conversation. At the moment, through this Bill we are being given a compulsory lesser duty rule without having seen any evidence that suggests that we need it and it is desirable. I would flip it round and say, why do we need the lesser duty rule and how are trade unions involved in the assessment of its effectiveness? Consumers are also workers who are employed in some of these industries, and they will not benefit from having unfair trade practice disadvantage them and the quality of their goods. That is something we must bear in mind.
Mel Stride
Q
Rosa Crawford: I refer to the specific case about solar panels, and I am happy to provide more information. The trade remedies alliance has done additional research that we can supply to the Committee, so there is evidence that we can supply that it has not been effective.
Nic Dakin (Scunthorpe) (Lab)
Q
Ben Richards: Not that I am aware of, and I think that what happened with that steel crisis is one of the reasons our members do not have confidence in what is in the Bill at the moment. Even with the reservations that we have about the way EU trade remedies worked, as Kathleen spoke about, the EU was trying to deal with that situation. Unfortunately, our members felt that it was their own Government who were holding back the process of imposing sufficient remedies at a European level to deal with the situation of Chinese steel dumping.
Nic Dakin
Q
Kathleen Walker Shaw: The introduction of the economic interest test in itself, and then a further public interest test that the Secretary of State would then make a final decision on, is a confusion. First of all, the economic interest test is not defined clearly enough in our view, in terms of what it is assessing. The public interest test is just not defined at all. We have to assume that that would be an issue of national security, but a concern that we have about the economic interest test in terms of the procedure as laid out—it is still very vague in some of these areas—is that it would come before interim measures. If you are an industry that is suffering from anti-dumping, you do not want to be waiting for the conduction of an economic interest test—we still do not know the nuts and bolts of how that will happen—while somebody is roasting your fingers in an anti-dumping case. By the time you get to the interim measures, said British company may not be there any more. Having that where it is in the process is very flawed. Having it at all has a serious question mark over it, in terms of its broadness and definition. It is something that you cannot pin down.
Another concern that I have is the—
The Chair
Can I just ask that you keep it short? We have three more Members to get some questions in.
Kathleen Walker Shaw: Sorry. The lack of scrutiny, in terms of parliamentary process, over the economic and public interest elements of it is a huge worry to us regarding the Bill.
The Chair
I have Anneliese Dodds, Jonathan Reynolds and Peter Dowd, and we must finish by 2.45 pm.
Anneliese Dodds (Oxford East) (Lab/Co-op)
Q
Rosa Crawford: A step forward would be to use as a baseline the new rules that the EU has adopted, whereby non-market economies are not regarded as reliable in having a price indication for the goods that they export. Rather, an analogue country of a similar level of development would be used to judge whether an unfair pricing practice was used. We hope that that will allow the EU to take stronger measures against countries—not just China, but Vietnam and other countries that are using undue levels of Government influence to set prices at a low level.
In the current UK legislation, we do not see any approach like that. Indeed, we know that the UK Government have been holding back EU attempts to take stronger measures against China and other non-market economies. I think we can be forgiven for not quite believing it when we are told that in the secondary legislation we will have adequate measures to deal with non-market economies. We do not have an indication that the Government are likely to introduce secondary legislation on that.
Ben Richards: A key new development within the European Union is that, when they are assessing an analogue country, where there is more than one, they can now also take social and environmental factors into account. That is obviously absolutely crucial, because if a country is abusing labour rights or environmental regulations, that is also trade distortion, and should be taken into account in our trade remedies regime.
Kathleen Walker Shaw: There are two more points that are vital in terms of dealing with the distortions in the UK within the Bill framework, the first of which is the timing of it. To expedite these procedures at a time when they can actually help the companies while they remain competitive and able to see off the challenge was a problem that we had in the steel crisis, as some of you will be aware. Even the EU timetables at that time were dragging on too long and exacerbating some of the problems that we had across the steel industry, so the speed with which we can move the procedures is vital. The placing of the economic interest test in there makes me doubt that we will be able to do that.
Again, setting the tariffs at a level at which they will have the effect of adding the effective protection that we need was something that we struggled with agreement on at European level. The European Commission was going to set the levels on certain types of steel much higher than the UK Government. In the end, it became a political process rather than an economic process of what was required to protect and maintain the competitiveness of British industries and other European industries in that case.
Jonathan Reynolds (Stalybridge and Hyde) (Lab/Co-op)
Q
My worry on the public and economic tests is that, even in something like the steel crisis, there were people arguing for the benefits of very cheap steel coming into UK for construction and so forth. If those tests are not drafted correctly, frankly, we do not have any trade remedies at all. If we are going to have them in the Bill, how can we draft them to ensure that they are robust and fair? Who should be involved in the Trade Remedies Authority to ensure that that is the case?
Ben Richards: We need an opportunity to have that debate, which we will not have at all with the Bill as it is currently drafted. It will simply be written into secondary legislation—we will not have that ability. We have four or five minutes left to have a discussion about how it should be drawn up. It would take us another couple of hours. That is what we want, as a trade union movement: an involvement in these discussions and debates.
We have huge concerns about the way in which the appointments are being made to the Trade Remedies Authority. In effect, in the way that the Bill is currently written, we are not seeing one economic interest test but three. To give you a one-sentence answer about how it should be is very difficult: we want to engage in that debate. We want to have a role in that process in the future to ensure that our members are confident that those decisions are being taken with their interests in mind.
Kathleen Walker Shaw: On the Trade Remedies Authority, its structure is very important. We would like to see it set up in line with the Health and Safety Commission, where we have three employers, three trade unions and three other interests. I am a bit concerned that we are limiting that to nine, because I have a strong concern that devolved Administrations need to be involved in that process as well.
I would also like to see the Bill developed to give a role for parliamentary scrutiny—for the TRA to be liaising with structures within wider parliamentary scrutiny—on the European economic area IT, and on the decisions of the TRA, and to remove the power of the Secretary of State to veto a decision of the collective scrutiny of Parliament and the TRA on remedies. In that way, we might be some way to getting to the bottom of a justified and effective remedy.
Peter Dowd
Q
Kathleen Walker Shaw: You are picking at a wound there. I was the poor person that drafted our response to the trade White Paper. I spent a lot of evenings doing that and I was more than a little concerned when I submitted that paper—less than eight hours later, the Bills were published. For people who take policy and their engagement with Government and Parliament very seriously, it was difficult not to feel the contempt with which that response that I spent hours sweating over to place before Parliament was received.
Consultation over the trade and customs Bills is vital because the Government have to get this right. There is no margin for getting this wrong. The future of Brexit hangs on these two bills: trade and the taxation cross-border. That is what our success or failure post-Brexit will hang on. I am very nervous about it, but I am more nervous about the fact that the Government are pretending that they are consulting us and they are not. We are very serious people and we want to be taken seriously. We want to help you to get the trade Bill and the cross-border trade Bill right, but we can do that only if we are a serious part of the process.
We have been engaging, but we have not been listened to. It is not enough for the Government to say, “We have consulted”, because if you miss off, “But we haven’t listened to a word you’ve said”, the quality and the integrity of that consultation is brought into severe question. It will not stop us from being delighted at being invited to come and have these conversations with you—we are not making this up, particularly Alan, who works for HMRC.
Alan Runswick: On delivery, my union wrote to Jon Thompson, the chief executive of HMRC, immediately after the referendum result to say that it was a game changer, that he needed to pause the office closure programme, stop making people redundant and evaluate this new situation. We have not even mentioned, and we will not get to, the issue of import VAT for business and for delivery. As well as customs duties, there will be a big increase in import VAT transactions. They will need to be processed, and staff will need to run a compliance regime under the new situation, to counter evasion and avoidance.
We also feel that we have not been properly consulted. We have been trying to engage the Department in serious talks about delivery, how staff can be recruited and trained and how we can retain the existing skills. We most definitely feel that we have not had those serious discussions about how HMRC can be made fit for purpose in the new Brexit position.
The Chair
There are no further questions from Members, so I thank the witnesses for their evidence this afternoon.
Examination of Witness
Joel Blackwell gave evidence.
The Chair
Good afternoon. We will now hear oral evidence from the Hansard Society until 3.15 pm. Mr Blackwell, would you like to introduce yourself and tell us a little about yourself?
Joel Blackwell: It is a pleasure to be in front of the Committee. I am a senior researcher at the Hansard Society. We are a non-partisan, independent research charity that seeks to promote representative democracy in the UK and across the world. In particular, we do a lot of work on parliamentary procedure and the legislative process.
In 2014, I co-authored the first comprehensive study of delegated legislation in more than 80 years, called “The Devil in the Detail: Parliament and Delegated Legislation”. I am here in the capacity of having a keen interest in research in the delegated legislation processes, particularly Parliament’s role in the scrutiny of statutory instruments.
Mr William Wragg (Hazel Grove) (Con)
Q
Joel Blackwell: That is a good question. In 2014, with our “The Devil is in the Detail” report, we wanted to tell the story of delegated legislation. The research that we did, as far back as the Statute of Proclamations, but particularly in the 20th century, showed that many reports had been published that raised big concerns with the way that the House of Commons in particular scrutinises statutory instruments. In 1933, the Donoughmore Committee reported on the inadequate procedures in place and the inadequate scrutiny of SIs by Parliament. We wanted to raise the point that the issues raised by that Committee in 1933 had not been resolved.
There has been a problem in the past, particularly in the House of Commons, with engagement with the scrutiny of delegated legislation. Part of that could be because it is very technical and can be, dare I say it, quite boring at times.
Mr Wragg
Q
Joel Blackwell: Exactly. We think that the lack of engagement has been primarily because of the inadequate procedures in the House of Commons—particularly two things. The first is the way that MPs, if they want to debate a negative instrument, have to use the early-day motion procedure. Secondly, we think the Delegated Legislation Committees for debating under the affirmative procedure are inadequate. We think that has been the issue with engagement thus far.
Mr Wragg
Q
Joel Blackwell: It is a very complex, convoluted process. During our research, which started in 2011 and culminated in the report in 2014, that was a big issue for parliamentarians and, more importantly, for individuals and businesses that are supposed to adhere to the rules and regulations that are being brought forward in Parliament. Complexity is a problem, but I think it is more to do with the processes, particularly in the House of Commons.
Mr Wragg
Q
Joel Blackwell: It is bringing forward old questions that are yet to be addressed, despite numerous parliamentary Committees trying to, and then putting them on the “hard to do” pile. Knowing that the Brexit Bills are going to have to be framework Bills—based on the fact that the legislation for Brexit is going to need some speed and flexibility—the Hansard Society thinks that this is a perfect opportunity to highlight the problems and for parliamentarians to get to grips with them, when challenged and faced with one of the most complex legislative tasks that Parliament has seen.
The Chair
Thank you. There are five Committee members who wish to pose a question. I would ask that you keep your answers as concise as possible, so that everyone gets a chance to touch on the point that matters to them.
Anneliese Dodds
Q
The question that I wanted to ask was, do you think there might be a role for sunset clauses in relation to some pieces of delegated legislation?
Joel Blackwell: I warmly welcome the House of Lords Delegated Powers and Regulatory Reform Committee report, which took the unusual step of publishing its report on this Bill while it was still in the Commons, as it did with the European Union (Withdrawal) Bill. Usually it waits until its introduction in the Lords. The report raised the issue of sunset clauses, which are very important in terms of the links between making changes to EU law in the European Union (Withdrawal) Bill and doing that through clauses 42, 45, 47 and 51. It makes valid comments on the potential of those powers. The powers are not required to be used in perpetuity, and sunset clauses, such as the ones inserted for clauses 7, 8 and 9, would bring some consistency, and that makes perfect sense. We would support the view of the Delegated Powers Committee on that point.
Kirsty Blackman
Q
Joel Blackwell: The negative procedure is the default procedure for scrutiny of delegated legislation, and in this Bill that represents that fact; the majority are subject to the negative procedure. Again, referring to the Delegated Powers Committee report, we would agree with the clauses they highlight that they think are negative and should be affirmative, particularly the ones that are what we call Henry VIII powers amending primary legislation. That Committee has always said that there needs to be a compelling reason why a negative procedure would be adequate for Henry VIII powers. Reading the delegated powers note, I cannot see a compelling reason; I think they should be made affirmative.
Emma Hardy
Q
Joel Blackwell: Of course. At the moment, the Chair of the Procedure Committee, Charles Walker, has tabled amendments that would introduce a sifting mechanism for clauses 7, 8 and 9 of the European Union (Withdrawal) Bill, which means that for those SIs laden with those powers that are subject to the negative power, a new European statutory instruments Committee—in the House of Commons only at the moment—would have the ability to recommend an upgrade if it thinks it more appropriate that the negative should be subject to the affirmative procedure.
At the moment that is only a recommendation; the Government is not obliged to follow that recommendation, and we have concerns about that. We proposed in September our variation of a sifting committee, which would combine the sifting mechanism with Committee scrutiny. That is in keeping with what we call the strengthened scrutiny procedure, but many others call the super-affirmative procedure: if you see a power in a Bill that you think is extremely wide—particularly if it involves numerous policy areas and Government Departments—you would say, “The affirmative is probably not rigorous enough; we would like a more rigorous procedure than the affirmative.”
You would create what we call a strengthened scrutiny procedure, which is in essence Committee scrutiny work. It is not just sifting; sifting is one element of that super-affirmative, but it potentially involves the ability to table conditional amendments as a Committee, and the Government being obliged to listen to those recommendations. That was the Committee we wanted to see—a Committee with teeth. At the moment, we do not think the amendments tabled by the Chair of the Procedure Committee go very far, and we would like to see more amendments tabled to the Bill, particularly in the Lords, that would give that Committee more bite, in keeping with strengthened scrutiny procedures.
Nic Dakin
Q
Joel Blackwell: It is a good question. Referring back to Ms Blackman’s question, I think all Henry VIII powers should be subject to the affirmative procedure unless the Government give a compelling reason, and we do not think that that has happened in the Delegated Powers Committee note. The six Henry VIII powers contained in this Bill are not as wide as clauses 7, 8 and 9 of the European Union (Withdrawal) Bill or the clauses we have seen in the Legislative and Regulatory Reform Act 2006 and the Public Bodies Act 2011. They are constrained merely by the fact that this Bill is focusing particularly on taxation, border trade, customs arrangements and what-have-you. So I think, in keeping with the views of the Delegated Powers Committee, that the affirmative procedure would be sufficient in this context.
However, parliamentarians, particularly in the House of Commons, have made it clear over the last few months that there are issues with the scrutiny of delegated legislation—more so than they have since we have been doing our research. In particular, there seems to be a view that they would like to have more meaningful and effective oversight over Brexit SIs. The sifting committee was intended to be part of that, but at the moment the sifting committee will only look at clauses 7,8 and 9 of the European Union (Withdrawal) Bill and will not touch the other Brexit-related Bills. If it is still the view of the House of Commons that they would like to look at all Brexit-related SIs then you could, for example, insert into Standing Orders that the new European statutory instruments Committee looks at clauses 42, 45, 47 and 51 of this Bill if it so wishes.
Mel Stride
Q
Joel Blackwell: A Member of either House who wants to pray against or seek to annul a negative instrument has to do so within a 40-day period. That is one of the restrictions: you have to do it within 40 days, otherwise you have the situation that arose with the personal independence payment regulations and the student fees regulations. The Opposition wanted to debate those regulations but the 40-day period had ended, so they used Opposition day debates in another Session. They had to hold the debates on “revoke” motions, and there was the issue of whether those would be statutorily binding if the Government were defeated. It turned out that the Government did not vote at that point. So there is that limit.
We think the negative procedure is fundamentally flawed, because in order to debate a negative SI, an MP has to use an early-day motion, for which no fixed time is allocated. That means that whether a negative instrument is debated is purely in the hands of the Government. We would like to see that changed. In “Taking Back Control”, we proposed that a new sift and scrutiny committee should be created, and that that power should be given to that committee. You would have to tweak Standing Orders to ensure that the debate was heard, but that is our view.
Mel Stride
Q
Joel Blackwell: Yes, absolutely. The negative procedure plays an important role. There is legislation that is extremely technical and almost administrative in nature, for which the negative procedure is appropriate. In our view, the scrutiny procedures in the Commons—not in the Lords—are inadequate. Our position is not that the negative procedure should not exist, but that something needs to be done to improve MPs’ ability to debate those SIs.
Peter Dowd
Q
Joel Blackwell: I do not think I would agree in those terms. There are serious constitutional issues raised by the withdrawal Bill and the related Brexit Bills. This is not the first time that the Government have used Henry VIII powers. This is not the first time, nor will it be the last time, that we see framework legislation, or skeleton legislation. In all honesty, the use of delegated legislation is unavoidable in legislating for Brexit. Framework legislation is probably unavoidable for Bills that deal with issues such as welfare and indirect tax law, particularly if they are subject to change and involve highly complex and technical detail. The key is parliamentary oversight of that.
There are numerous ways that you can constrain powers in Bills. We have seen some attempts to do that in the House of Commons, and no doubt we will see that happen in the House of Lords with the European Union (Withdrawal) Bill. Fundamentally, though, although you can try to tightly define powers or to insert a list of actions that you are not able to use SIs for, you are ultimately going to have to confront the inadequate procedures for scrutinising negative and affirmative instruments in the House of Commons; otherwise, it will not matter. If you really want to take back control and have meaningful and effective oversight of delegated legislation, you have to focus on improving the negative and affirmative procedures in the House of Commons.
Peter Dowd
Q
Joel Blackwell: I am not sure it is a significant shift; the problem has always been that the balance between Parliament and the Executive in the control of delegated legislation has always been on the side of the Executive. We have always argued, and have argued in this report, that you need to redress that balance, and part of that would be to improve the scrutiny procedures that I have mentioned. I would not say that there has been a fundamental shift from this Bill onwards. There has always been an issue regarding the balance of power in the use and scrutiny of delegated legislation.
Peter Dowd
Are you saying, therefore, that this is neither a quantitative nor a qualitative shift of power from Parliament to—
The Chair
I think that question has been posed in three different ways, so unless Mr Blackwell has anything else to say, I am not sure he can add to it.
Joel Blackwell: No.
The Parliamentary Under-Secretary of State for International Trade (Graham Stuart)
Q
Joel Blackwell: It is important that Members take note of the delegated powers Committee’s concerns on particular issues that it has highlighted. I do think that there is an issue with the use of the made affirmative procedure for cases that do not seem to me to be urgent; that procedure is used for reasons of urgency and should be confined to that. I have never been entirely clear or comfortable with the use of the first instance affirmative procedure. If it has been viewed that a provision should be subject to the affirmative procedure for the first time, it should be subject to the affirmative procedure all the time. The two Henry VIII powers are subject to the negative procedure as well. So there are issues with the Bill.
In terms of saying that the Bill is fine, yes, you have to use framework legislation for issues like this. What concerns the Hansard Society is when framework Bills are laid before Parliament and contain no detail whatsoever on the powers that they wish to confer on Ministers. The lack of an opportunity for the Government to provide draft regulations alongside scrutiny of this Bill, for example, will be a matter of concern, and is something we raised about the Welfare Reform Act 2012. So there are issues with framework Bills.
If there is a huge lack of detail on what the Government intend to do with delegated powers, what usually happens is that you get situations that we would like to avoid where you have clause 7 of the European Union (Withdrawal) Bill that is so wide that there are issues regarding the balance of power between Parliament and the Executive.
Jonathan Reynolds
Q
Joel Blackwell: That is a question I have been posing to myself for the last few days. Honestly, no. We have to be careful, knowing that the procedures for the scrutiny of delegated legislation in the Commons are inadequate, that we do not just fall back on using a strengthened, enhanced or super-affirmative procedure for everything when the affirmative procedure would be appropriate. We need to play the ball rather than the man, to use a football analogy. You have to look at the powers that are brought in front of you and decide there and then whether the scrutiny period is appropriate.
The problem with this Bill, and with other supply Bills, is that the vehicle to highlight inappropriateness in the degree of scrutiny and the appropriateness of delegated powers is the House of Lords Delegated Powers and Regulatory Reform Committee, and there is no counterpart in the House of Commons. The Bill just highlights the lack of that counterpart. But no, looking at the powers, I do not think that the strengthened scrutiny procedure would be useful in this case.
Mr Wragg
Q
Joel Blackwell: Having said that I do not think the strengthened scrutiny procedure would be appropriate for any of the powers, they are wide powers. If we look at clause 51 in particular, the wording is very similar to that used for clause 7, so I think there are similarities. What has been highlighted is that people would like, potentially, to use a Committee to look at all Brexit statutory instruments and at the moment that will not happen. You could insert a change into the Standing Orders that would allow you to do that, which is something to consider.
Kirsty Blackman
Q
Joel Blackwell: I think that the Hansard Society would like to see an equivalent Delegated Powers and Regulatory Reform Committee, first off, in the lower House—or some MP in the composition of a Joint Committee or what have you. That would be a good opportunity.
I think that delegated powers notes are extremely useful documents. This one is 174 pages long. There are well over 150 delegated powers in the Bill. Some of the justifications I am struggling with, particularly as regards the use of urgency and non-urgency. I think time is an issue here, particularly if you do not have the backstop of further scrutiny by a Chamber—the second House—that is usually very good at looking at delegated legislation and has taking the lead on it in the past.
When we were doing a similar Bill, which became the Welfare Reform Act 2012, a call by many MPs on the Public Bill Committee at the time was that it would be really useful if they had draft regulations alongside the scrutiny of the Bill. You could do things like that to improve scrutiny of delegated powers but, fundamentally, the lack of representation, the fact that you would have to wait for the Bill to get to the House of Lords for a report to be published, is an issue.
Perhaps one way around that is that the House of Lords Delegated Powers Committee does what it has done for this Bill and the European Union (Withdrawal) Bill, and publishes, as usual practice, the Bill as soon as it enters the House of Commons.
Anneliese Dodds
Q
Joel Blackwell: On the first point, with regards to sub-delegation or tertiary legislation and this use of public notice, the fact that they will not be subject to any parliamentary scrutiny is concerning. We basically reiterate the points made in the Delegated Powers and Regulatory Reform Committee: that if public notices can do the same as regulations they should be subject to parliamentary scrutiny, just as regulations would be. Sub-delegation is an issue for us because there is a lack of parliamentary scrutiny. In some cases it might not be appropriate, but it should still be considered as usual practice, and at the moment it appears not to be.
With regard to the Trade Remedies Authority, the Hansard Society has not really considered that yet. My colleague Brigid has probably, as I speak, just finished on the Trade Bill, so I am happy to write to the Committee about our points on that.
Peter Dowd
Q
Joel Blackwell: The fact that it is usually not subject to any parliamentary scrutiny is of concern to us.
Mel Stride
Q
Joel Blackwell: It is a good point. Specifically on this Bill, it is the fact that it says it can do what regulations could do and that would be an issue. In terms of guidance codes of practice, they are laid before Parliament and that is not the case for this Bill. You would not necessarily have to clog up the system with things that are extremely administrative in nature, but there is the fact that Parliament is delegating a legislative power to the Government and if you can do what is done in regulations, it would make sense that they should be subject to the same level of parliamentary scrutiny as those regulations.
The Chair
Kirsty Blackman, this will probably have to be the last question, depending on how lengthy the answer is.
Kirsty Blackman
Q
Joel Blackwell: I am afraid I am not a lawyer, so I am not particularly comfortable answering that question, but there is an issue with regards to the hierarchy of primary and delegated legislation. As much certainty as possible is a big thing for lawyers.
The Chair
Are there any further questions from the Committee? No. Thank you for your time and services this afternoon, Mr Blackwell.
Examination of Witnesses
Tim Reardon, Robert Windsor and Richard Ballantyne gave evidence.
The Chair
For the record, could you gentlemen please briefly introduce yourselves to the Committee?
Robert Windsor: I am the director of the British International Freight Association and my primary responsibility is to do with policy and compliance.
Tim Reardon: Good afternoon. I am from the UK Chamber of Shipping, which is the trade association for shipping companies based in the UK, carrying goods and passengers into and out of the country. My role there is as policy director looking after, among other things, the industry’s relations with Customs and Excise.
Richard Ballantyne: Good afternoon. I am the chief executive of the British Ports Association. My role and association covers all areas of ports policy. I have to apologise: I am not a technical or customs expert, but I am here in the spirit of co-operation and to help you where I can.
Mike Hill (Hartlepool) (Lab)
Q
Tim Reardon: Our members are carriers of goods. The obligation to submit a customs declaration falls on the importer—it does not necessarily fall on the carrier, although the carrier can do it as part of the service that he offers to his customer. Our concern is that unless the process for submitting and processing those declarations does not interrupt the physical movement of the goods, then the movement of the goods off our ships, through the terminal and into the domestic market will be interrupted. Similarly, leaving the country we would want to be able to ensure that those vehicles, particularly in a ferry context, are able to drive straight through the docking gate, through the terminal and on to the ships in the same seamless way as they do now.
Richard Ballantyne: Following Tim’s points, it is probably fair to say that the majority of UK port authorities are relatively calm about Brexit, but we have the operational interest. Tim alluded to the ro-ro ferry terminals, such as Dover, Holyhead, Portsmouth and many others, which provide and facilitate around 10,000 lorry movements a day between the UK and the EU. It is a substantial part of trade. The operational impact—how those customs processes will be facilitated at the border—is a big concern for a large portion of my membership.
The Chair
The witnesses are free to answer if you would like to add something, but do not feel obliged to.
Robert Windsor: My members are heavily involved in the provision of customs entries. I am sure that you have seen the figures of what the new numbers could be—they are substantial. It would depend largely on the type of customs entry—whether it was a simplified or non-simplified entry that had to be submitted at the frontier—and on how that will impact on trade.
Back in 1992, we had 125 members in the Dover area alone doing customs entries. We now have 24 members and they take care of all aspects of it. My members are quite categorically saying that we cannot go back to 1992: that would gum up the thing completely, and the impact on my members would be more staff, facilities, time taken for training, and how all that will work. There is the big impact of the re-imposition of VAT on goods coming in to the country, because if you have a duty deferment with customs, you have to fund it. The point is that you fund two months’ deferment, not one. Those elements are definitely concerning my members.
Kirstene Hair (Angus) (Con)
Q
Richard Ballantyne: It is a concern. You can imagine that a lot of the Government’s attention is on the Dover corridor, and probably rightly so—that is where the main challenge is.
Going back to my opening statements, if we remove ro-ro for one minute, for a lot of bulk shipments—Robert may correct me if I am wrong—where there is one commodity on a shipment, there is a bit more time, and the environment is one where shipping agents are usually helping out, submitting information that then is facilitated to HMRC. We hope that either those agents or inventory linking as part of the Union customs code, which is coming forward, would mean that smaller ports such as Montrose are not disadvantaged.
There are concerns that there could be certain delays at the border—we would not want to see that, but perhaps the sensitivity at a bulk handling port or a port with break bulk is less than at a ro-ro terminal, where lorries basically want to get out as soon as possible. If they are stuck in a terminal, backlogs and queues start and the operational challenges associated with that.
Anneliese Dodds
Q
Robert Windsor: My members are very concerned about that. The Dover straits corridor is causing particular concern because it is a 24/7 activity—those lorries are coming in all the time. There have been issues with staffing at those areas. You have to differentiate between Border Force activity, which tends to be frontier, and the work done at the national clearance hub based in Salford. They provide 24/7 cover but, in air and sea, you could basically say that from about 6 o’clock or 7 o’clock in the evening there is a noticeable decline in the workload. If you put ro-ro coming in through Dover with a customs declaration, there will be less of a decline in the work being undertaken there.
It is not just Border Force that we have to consider. A lot of foodstuffs potentially could do with some sort of inspection. Even if there is a risk-based system, a certain proportion of that may still require inspection. Multiple Government agencies at a national level and a local level will face this impact. It will have an impact on my members because you will require more people to work in what is regarded as an out-of-hours situation. That will have a considerable impact on costs.
Kirsty Blackman
Q
Tim Reardon: From our perspective, it would depend on what the nature of the customs union was—whether it provided for goods to move freely between the UK and the EU without any form of declaration, or whether it related only to customs fiscal controls. For example, if the agreement did not also cover animal and plant health standards, you would end up with a significant chunk of the traffic still being controlled. Only stuff that did not contain foods or anything like that would be within the scope of that customs union agreement.
Clearly, if the effect of any agreed union was to replicate the existing arrangements, we would expect no disruption to the movement of goods, but to achieve that it would need to be a very broadly drawn union agreement that extended beyond purely customs fiscal issues.
Richard Ballantyne: I run an association. We are not a political organisation, so we took no side in the referendum. Statements such as, “We think the UK should or should not be in the customs union” are difficult for me to make. What I would say, which is a bit of a cop-out, is that we are looking for a deal that might be able to secure as many of the current benefits that we have through customs union membership as possible. That is a basic, raw point for us. It is all about trade facilitation, so any kind of arrangement that continues the frictionless transport of goods between the EU and the UK is essential. That is felt most at the roll-on, roll-off ferry terminals that we have mentioned.
Robert Windsor: BIFA’s position is always that we should maintain something as close to the present arrangements as possible. That would be a customs union that is as close as we can possibly get.
That is important for two reasons. People tend to focus on import work, but we venture that exports are actually more important. If we can have an agreement that the EU27, as they will be, find acceptable, we feel that that is important. That gets particularly important when you put a truck into France. If you have an accepted agreement, it can pass through other member states. That is one of the things we are concerned about. If you have a shipment going from here to Poland, for instance, it may have to transit two or three member states. We think it is very important to have something that would permit that. My colleagues are absolutely right that it is not just the fiscal stuff; it is all the agreements that are not in it about access to the market, truck regulations and all those sorts of things.
Kirsty Blackman
Q
Tim Reardon: It is very much a concern. Dover has by far the biggest number of vehicle units entering and leaving the UK. It is the biggest gateway to the UK— 2.6 million trucks passed across that terminal last year. That compares with, for example, 750,000 between Dublin and Holyhead and Liverpool collectively, or 750,000 across the north channel between Northern Ireland and Great Britain. There are big flows out of the Humber and the Thames, but we tend to use Dover as a shorthand because it is where the problem is. It is the UK’s biggest gateway for roll-on, roll-off freight.
Chris Davies (Brecon and Radnorshire) (Con)
Q
Tim Reardon: Certainly. There is not a straightforward comparison because, by and large, the types of ships that come from our near neighbours are different from those that come from further afield, but in principle a vessel arriving from one of our European neighbours needs nobody’s permission to come here because its movement is free. The port to which it goes does not need to have approval from anybody to handle it, because it falls within the scope of free movement within the European Union. In theory, the ship could pole up anywhere around the coast and do what it wanted to do. In practice, of course, it goes to a place that has facilities to handle it. Just as the ship is free to come and go as it pleases, so the goods and vehicles on board are not subject to control and can drive straight off the ships ramp, through the terminal and out through the dock gate, unless one of the control agencies has intelligence that leads it to want to make an exceptional intervention in that movement.
By contrast, a vessel coming into the UK from outside the European Union can arrive only at a port that has been approved by Her Majesty’s Revenue and Customs to receive traffic from outside the European Union. It is required to tell Revenue and Customs that it is unloading cargo on to the quay, and to tell it what that cargo is. That cargo is then not permitted to leave the confines of the port until Revenue and Customs has given permission for it to go. You have a contrast between essentially a completely free arrangement, as you would have for any domestic traffic—a ferry between Hampshire and the Isle of Wight, for example. Traffic goes, the ship goes, and there is no intervention on it anywhere unless the police have a reason to stop it. Compare that with an international arrival from outside the European Union where every single stage requires somebody’s permission.
Chris Davies
Q
Tim Reardon: The process of unloading—
Chris Davies
Q
Tim Reardon: Our real concern—I will take Holyhead as an example—is that the ability to discharge the ship depends on a flow of traffic through the terminal. There typically is not space in any ferry terminal to discharge a complete ship, park its traffic there and reload it. The terminal’s ability to handle the traffic is predicated on the traffic flowing continually through it. As soon as that flow is interrupted, you end up with the backlog that Richard mentioned a moment ago, and the whole process is slowed.
Chris Davies
Q
Tim Reardon: It would depend on what the agreement said, but on the experience of ones that exist elsewhere, that is extremely unlikely. The effect of a free trade agreement tends to be to reduce, perhaps to zero, the customs duty that an importer has to pay. It tends not to make a material difference to the administrative process of getting that unit across the quay.
Richard Ballantyne: My members would be relatively calm about free trade agreements, actually. I thought when we had the vote, and in the time after, that a lot of ports would be getting concerned about potential tariffs on a lot of commodities. There are one or two high-profile exceptions where there are relatively high tariffs, such as the automobile trade—new cars and trade cars—but a lot of the trade and the ports are reporting that tariffs are relatively low. As, operationally, they are collected away from the border—they are not a condition of entry —they are not seen as a direct issue for port authorities. Obviously, if they have an impact on trade, ports will be interested.
Just to bring up a very general point, you may find it useful to know that roughly 500 million tonnes of freight is handled at UK ports. That is 95% of UK international trade. About 20% of that is roll-on, roll-off ferry traffic, which by definition and by its nature is overwhelmingly—99.5%, I think—with other EU ports. Then you have the container sector, which accounts for about 10% or 11% of tonnage and is probably about 70% from third-country sources—countries outside the EU. The other big area is bulk commodities—liquid bulks and dry bulks—which, from memory, account for about 40%.
Nic Dakin
Q
Robert Windsor: I will take the lead on that, because the freight borders are heavily engaged in this. CDS has been an ongoing project for about three and a half years. Customs did quite a lot of research with industry on what its requirements were. They have been doing a development stage, which, I have to be honest, is highly technical and way beyond anything that I can understand, although software suppliers and the community service providers have been part of the technical workshops on it. They are now starting to talk directly to us and, as a trade association, we are receiving quarterly updates on the project. I really do not want to comment on whether we think it is going to succeed or be delivered on time, because at the moment it is still under development. Part of the problem that they have, which is not of the team’s making, is that some of the data elements are still to be defined within the Union customs code, such as the format of a unique consignment reference. That matter still needs to be resolved.
Richard Ballantyne: This is a technical area, and Robert and his colleagues will be concentrating on that, but all three of us sit on the Joint Customs Consultative Committee, which is HMRC’s main stakeholder committee, and there are opportunities to get briefings on CDS. I feel personally that if we want the information, it is there.
Tim Reardon: What I would say on CDS is that it is an importers and exporters system. As carriers, we have very little interface with it, but our engagement with Revenue and Customs has been constant and continual since the referendum result, when it became apparent that there was a significant new element of uncertainty about whether the 40% of the UK’s international trade that arrives and leaves in trucks on ferries was going to be able to continue doing as it did.
Richard Ballantyne: Yes, at a very general level, ports touch many Government Departments in terms of policy regulation, and of all the Departments, HMRC has been the most forthcoming since the referendum. The amount of engagement has been quite unprecedented. That is not necessarily to speak negatively about the other Departments, but HMRC has really taken the lead.
Peter Dowd
Q
Robert Windsor: The Joint Customs Consultative Committee meets three times a year, and it covers areas of strategy that are impacting on importers, exporters, freight forwarders, shipping lines, whatever. Since Brexit, the JCCC has established sub-committees specifically dealing with Brexit as an issue and that group, if I remember correctly, meets about four times a year.
The Chair
Before we go too far down a route that is not to do with this Bill, I hope that you can get your remarks back on track. I know you are answering Mr Dowd’s question, but the discussion seems to be somewhat off the message.
Richard Ballantyne: This Bill, this legislation, will be considered by that group.
Peter Dowd
Q
Robert Windsor: There was consultation about the White Paper but there has been no consultation about the actual Bill as it has come out.
Tim Reardon: The clauses of the Bill were not exposed to consultation at all before the Bill was published, as far as I am aware, and certainly not through the forum of the JCCC.
Richard Ballantyne: No—we are all on circulation lists so we get the information directly but, as you both say, it has not been formally considered, although part of that is because this has been quite a quick process. When we had the proposals to update CEMA—the Customs and Excise Management Act 1979—which I think was four or five years ago, there was time and consideration at the JCCC, so perhaps we had a better experience last time .
Peter Dowd
Q
“The Government’s White Paper…outlined an intention to apply a requirement for the goods in such vehicles to be declared prior to shipment so that, on arrival in the port, they can pass straight through in all but exceptional circumstances”.
You go on:
“Schedule 7, paragraph 28, appears to create powers for such an arrangement but is expressed in notably vague terms: their practicability will depend absolutely on detail that is absent.”
How significant is that at this stage, given that we are 15 months away from Brexit? When do you think that you will actually need the detail, especially in light of the fact that you have not been consulted on the Bill in the first place?
Tim Reardon: We would have liked it about four years ago, to be honest. The Bill—that particular paragraph in the schedule—provides for the concept that nothing may be shipped unless the vehicle operator has checked that a declaration has been put in. As a concept, that is unobjectionable, and it has the potential to work, but the devil is entirely in the detail.
Who will the vehicle operator be deemed to be, for example? The Bill widens the definition of a vehicle beyond what anyone in this room I would imagine understands a vehicle to be, so it is no longer simply a thing on wheels but a ship maybe, a train or an aircraft—all of those fall within the scope of “vehicle”. The vehicle operator is any one of those parties in the chain. What is the process by which that business will be required to establish that something has happened? All of those things are critical details to work out whether the thing can work or not.
The issue for us is that it is impossible to tell purely from the powers in the Bill that we will end up with a system that works. We might, and I have absolutely no doubt that everyone’s intention is to create a system that works, but it is impossible to say on the basis of something that is as vaguely drawn as the Bill that it will work. If this is the sole stage of the process where any scrutiny is applied, then clearly one has to take a great deal on trust and faith.
Peter Dowd
Q
Tim Reardon: To be honest, the answer depends on how different where we end up is from where we are now, because what takes time is changing of business processes, construction and reprogramming of IT systems and—worst-case scenario—civil works in terminal infrastructure development. All those things have lead times. How long the lead time needs to be depends entirely on what it is you are trying to do and how much you are trying to change from the current practical reality. Until we can define how different the end state is from where we are now, then—to be honest—it is impossible to put a timeframe on how long it will take to get there.
Richard Ballantyne: To follow on from that, all three of us were at a meeting this morning on border processes and so on, and one of the things we were talking about is the fact that the operators—the port operators, the carriers, the customs providers and other specialists—will not want to make any investments until they know exactly what the detail of the deal is and when that is firmed up.
The Chair
I call Kirsty Blackman. I am aware the Minister responding to the debate in the Chamber is on his feet, so we may well be interrupted for a vote; it will be up to the Committee to decide whether it wishes to resume with this panel after the vote.
Kirsty Blackman
Q
Richard Ballantyne: Not easily, but some will have slightly more space than others, and they may have facilities down the road that could be turned into use. We hope it does not come to that. We are working with Government to push forward some kind of arrangement that is not conditional on checks that cause such delays. That is not good for freight, or for prices of goods and products, and things that manufacturers use, and things that end up in shops.
Kirsty Blackman
Q
Tim Reardon: We hear a lot of talk about it, but I think on every route that has published its traffic stats for last year the freight volumes have risen from what they were in 2016. First, of course, that is a national success story; it is an indication of economic health. It is great for all the businesses that we all represent, which handle that traffic, but of course it means that the system overall is increasingly full. There is not a great deal of spare capacity cumulatively across the UK.
The issue is more than just space on the terminal. The road network serves two or three main gateway points into and out of the UK. There needs to be a really good-quality landside connection from the terminal, to enable it to flourish; it needs more than just space on the berth. It would be very, very difficult to flick a switch and say, “Actually, the traffic will go somewhere else”.
Richard Ballantyne: Towards the end of last year, there was a new direct service from Zeebrugge to Dublin for roll-on roll-off traffic, and there was a lot of noise about, “Look! That’s a consequence of Brexit”, but when you actually looked into that investment, it was probably made before the referendum. There may be people looking at further direct calls from the Republic of Ireland to continental Europe, but as of yet we have not seen them.
Robert Windsor: Many of my members are multinationals —European-based forwarders. I know that there are discussions about this issue, which is inevitable given the situation, but we have not seen anything move yet, as such. What we are receiving is a lot of inquiries from European-based freight forwarders with no UK base who are inquiring whether they can establish in the UK because they obviously see an opportunity the other way round.
Richard Ballantyne: The warehousing industry is looking at potential new sites because they see that there could be further interruptions to trade flows, where they would need more storage.
Anneliese Dodds
Q
Richard Ballantyne: The British Ports Association is part of the European Sea Ports Organisation, which has a meeting tomorrow on Brexit that I am going to. It includes some of the main UK-facing ports, such as Dublin, Zeebrugge, Calais and beyond. It has been quite difficult. Some of those ports are state-owned, and it is quite difficult for the UK Government to talk with them, although there have been a number of information-type visits looking at customs arrangements as they are and what the operational situation will look like post-Brexit. We have good conversations.
In terms of what is going on with the customs authorities in those countries, it is varied. There is a French customs taskforce—that is an internal taskforce—that I think the ports there are plugged into. I went to see the French ports association to talk about Brexit, and it seemed on top of things, but it is a difficult one. There is a lot of mystery there. Just as the UK Government cannot divulge all the discussions they are having, the ports cannot divulge everything to us. They have to remember that negotiations are being led through the European Commission, so that is the correct avenue.
Peter Dowd
Q
Richard Ballantyne: As you know, the ports industry in the UK is market-led and market-driven. We have three types of port: local authority-owned ports, which operate on a commercial basis in competition with private ports; full private sector ports, or equity ports; and the trust ports, which are Dover, Aberdeen, London and so on, and they are still run on a private basis and pay corporation tax on any profits they make. Significantly, all of them are financially and strategically independent of Government decisions. That has worked. Effectively, the Government have delegated the authority to run the ports because they understand that you need technical experts to manage such things as safety and the commercial arrangements.
In terms of what is going on at the moment, the Government do influence the connections to ports. Ports have publicly owned road and rail connections. Following a lot of lobbying from my association and others, the Department for Transport is undertaking a port connectivity study, which is not about spending any money on connections but about assessing the state of the road and rail connectivity of the UK ports industry, and how we get ports more on the radar when big investment decisions like the road investment strategy and rail strategies are made and Treasury spending budgets are allocated. It is about us, perhaps, rising up. There has been a lot of big-ticket passenger-focused spend, such as HS2, Heathrow and Crossrail. Freight has felt a bit of a poor relation. We are working to improve that, but unfortunately freight does not vote, so it is a challenge for us.
Emma Hardy
Q
Richard Ballantyne: The Department is considering a lot of feedback from the ports. I know Sir John Randall, a former Member of this House, oversaw that as an independent chair. The officials are now working on the final detail. I hope it will make a number of recommendations, and it should be out within the next month. As I say, I think Sir John went to visit Hull.
Emma Hardy
He probably got stuck on the way there. That is good news, thank you.
Peter Dowd
Q
“It has been commented that the Bill is not as precise as Members would have hoped for”—
I suspect you were a diplomat in a different life—
“in terms of either the areas covered by the legislation or in certain cases the powers vested in the authorities. Also from our understanding this document will have to be read with other documents such as CEMA and secondary legislation which still has to be written which has the potential to cause confusion and thus perhaps hinder compliance from Trades perspective.”
To what extent will compliance be hindered? How extensive, how comprehensive, how problematic will that compliance be?
Robert Windsor: It is always more difficult where you have more than one source to draw the compliance requirements from. One of the things that my members have been used to are the codified laws and regulations that have come from Europe, in particular customs codes and things like that. They got more complex as time went on. Basically, there was a single point of reference, so people would go to that and at that point they would pretty much know what was written, how it could be interpreted in different member states—[Interruption.]
The Chair
Order. We are quorate. As has been explained, Mr Stace is giving evidence at another Committee and will be joining us somewhat later. We will now hear oral evidence from UK Steel, the Chemical Industries Association and the British Ceramic Confederation. This sitting will finish at 5 o’clock. Can I ask the witnesses who are here to introduce yourselves for the record?
Dr Laura Cohen: I am Laura Cohen, chief executive of the British Ceramic Confederation. I also chair the Manufacturing Trade Remedies Alliance, a group of seven manufacturing associations, three trade unions and the TUC with an interest in trade remedies.
Ian Cranshaw: Good afternoon. I am Ian Cranshaw, from the Chemical Industries Association. I am the head of international trade and the head of business development.
Peter Dowd
Q
Dr Laura Cohen: The EU has a number of trade remedies in place, the transition of which is being considered by the Department for International Trade at the moment. In the ceramics sector, which I am probably best placed to talk about, we have two measures in place, in tableware and in tiles. These are EU anti-dumping tariffs against Chinese-manufactured products. In tableware, until 2004, Chinese imports had been fairly steady, at around £20 million a year. They then rocketed to £160 million a year. The anti-dumping tariff was introduced in 2013. The Chinese imports have held steady, but even that has allowed our members to stabilise and invest, and employment has increased by 20% to 5,000 UK jobs since 2013.
On tiles, there were about £2 million to £4 million of imports in 2004, and that increased pretty rapidly to £30 million. Anti-dumping duties started in 2011, and they have now fallen back to about half that. Please note, we have just had a renewal in Europe of the measures, on 22 November 2018, following an expiry review. The dumping margin had increased during that period. UK manufacturing employment has increased by 40% to 1,000-plus UK jobs since 2011, so that is good news for UK jobs, but both measures really benefited the UK supply chain, not least the kaolin and ball clay industry in Devon and Cornwall, which employs about 1,500 people. That is part of the 2,500 jobs in the materials supply section of our membership.
Just to bring this example to life, the Minister, Mel Stride, met British Ceramic Tile in his constituency, which has about 400 manufacturing jobs, last week, and it reinforced the message. The Minister also has two Imerys clay quarries at Newbridge and Ringslade in his constituency, which supply the sector.
I just wanted to point out something about the renewal. The Chinese spare capacity increased between 2011 and 2016 by more than four times the entire European Union consumption. The European Commission was very concerned by this development. The extra capacity is propped up by state distortion. I do not say that lightly, because the evidence is quite clear. In December 2017, the European Commission produced a report on the Chinese economy which found gross subsidies and state interference in the manufacturing industry. I quote from the report. The first parts show:
“The overall picture that emerges concerning the framework in which economic activity takes place in China is one where the State continues to exert a decisive influence on the allocation of resources and on their prices.”
The second part of the almost 500-page report says:
“The analysis shows that the allocation and pricing of the various factors of production is influenced by the State in a very significant manner. The third part…examines a number of sectors. These include steel, aluminium, chemicals and ceramics. The sectors have been selected because they are the ones that have featured most in the EU’s anti-dumping investigations since the conclusion of the Uruguay Round. Taking the perspective of individual sectors allows a closer look at the specific rules and dynamics in that sector, but this examination also echoes the findings in the preceding two parts, i.e. the significant distortions resulting from the specific features of the Chinese economy and those found in relation to the various factors of production.”
The report noted that the State Council in China combines the implementation of the belt and road strategy, to actively conquer markets such as Europe. Therefore, anti-dumping remedies are there when competitors do not play by the rules.
The Chair
That was a very comprehensive answer. I hope we can condense further answers slightly.
Peter Dowd
Q
Ian Cranshaw: I may not go into the same detail that Laura did—I am sure I will receive some encouraging signs.
Just looking at some of the bigger numbers so that we all know how many trade remedies we are talking about, I think the EU has something like 130: 50-plus in steel alone; 27 in chemicals; and I think Laura mentioned a couple in ceramics. Again, you need to drill down and understand what the UK’s standing is in those 27 in chemicals across Europe. I believe there is just one where we have gone out, and I know there is a call for evidence by the Department for International Trade of all UK standing in all of the wider remedies in place. That puts it into context.
Again, I would hold my hand up and say that we are all on quite new ground in this area, apart from UK Steel, which has been incredibly active over the past couple of years. I held a roundtable with some member companies a year ago and got all of the major players in the UK chemical industry. That is interesting, because more than 70% of UK production is by companies headquartered overseas—so that was not necessarily UK companies.
It was very interesting that, when I talked to one of the German companies about trade remedies and trade defence instruments—I will not mention the name, but you will probably work it out—its perspective was, “Well, we have no trade remedy experience or personnel in the UK at all.” Nor did the trade association. We have happily contributed to EU development of policy, but actually, in leading on this, we had no expertise.
The German company pondered for a moment and said, “Actually, if in the future we had to raise a trade issue with the EU—us accusing it or it accusing us of dumping or subsidy—the UK transplant would have to ask our headquarter operation for advice and policy in the expertise in which to raise a concern or complaint to the WTO.” That was quite interesting. I am not sure if I answered the question, but that was a specific example.
Peter Dowd
Q
Dr Laura Cohen: A remedy is addressing unfair competition when overseas manufacturers are not playing by the rules. The ceramics industry and the tiles industry, such as in the Minister’s constituency, has invested very heavily in state-of-the-art, energy-efficient manufacturing with digital printing technology. Given a level playing field, it can take on the world. All we want is a level playing field, and trade remedies allow us to ensure we can get that free trade.
The Chair
Before we go any further, I would like to welcome Mr Gareth Stace, director of UK Steel. I know that you have been very busy on another Committee, so I am glad you have joined us. Do you want to come in on this? You got the drift of the question.
Gareth Stace: Yes. Apologies for arriving late, and thank you.
I would like to look at it from a different angle in terms of using what is the trade remedy and what are protections. The steel sector thrives on free, liberalised trade. A third of all steel produced in the world is traded across borders. We actually have zero tariffs—that is, zero customs tariffs—for steel between developed countries. What does that do? It enables us to be even more liberalised in our free trade. Trade remedies is a safety valve to enable that free trade to take place. I would say that, without trade remedies, we will actually see a rise in protectionism—it is not that with trade remedies we will see a rise in protectionism. Trade remedies allow for free trade to take place; it is not the other way round.
Ian Cranshaw: Within the Manufacturing Trade Remedies Alliance, which we are a member of, we actually do not use the phrase “protection”. There is a global rule-kit of trade, and all we are asking for is that people play by those rules and, if they do not, remedies come in. I was here listening to some of the earlier evidence and there was a balance of the consumer or the producer. Our view has always been that it is in the interests of all parties that inappropriate trade practices are removed—just play by the rules.
Peter Dowd
Q
Dr Laura Cohen: We have three major concerns with the Bill that we think, taken together, will give much lower duties than the EU, and that will attract dumped products from around the world. Those three main concerns at a high level are: first, the measurement of the dumping margin—the calculations and the methodology —particularly where there are distorted economies, and the absence of a methodology in the Bill; secondly, the combinations of various economic interests tests and public interests tests, and I will go into more detail on those; and thirdly, this lesser duty rule, and that is very much an alliance position. Overall, the effectiveness of trade remedies depends so much on the detail of the legislation that is completely absent in the Bill.
Much detail may be in secondary legislation eventually, as we heard from the Hansard Society, but that may be without much parliamentary input: it is likely to be a negative procedure. Even worse, much may be in guidance written by officials with hardly any parliamentary scrutiny at all. Important changes going through the European Parliament and the EU in trade remedies legislation have had extensive scrutiny, and important amendments have been made by MEPs and ex-MEPs, often working across parties. We need a similar level of political oversight in the UK system, but to do that the Bill needs alterations in those three areas. We are concerned because businesses, jobs and investment are at stake. I can go into more detail on those, or my colleagues can.
The Chair
We have quite a few questions, so maybe somebody can come back to you on that point if they need to. Mr Stace, did you wish to come in at this point?
Gareth Stace: There is a lost opportunity in the Bill in terms of looking at what is happening in the EU, which Laura has highlighted, particularly on changes that are taking place at EU-level on how it tackles the lesser duty rule—the UK Government have firmly said, “No, we are not going to follow that; we are going to do something different”—and how it treats non-market economies or economies that subsidise their industries. The Government are saying, “Yeah, we will follow that,” but because the detail is not really there, as Laura said, are they going to follow it to the letter, which would be great, or just broadly in principle? That is that whole thing of everything—I am sure you had already heard that before I arrived.
The problem with this Bill, and also with the Trade Bill, is that the proof will always be in the pudding. The Government can promise anything they like, but more than a third of all tariffs in place affect the steel sector and it hits us hard, therefore, if this system, when it comes out, is not appropriate for what it is trying to do. That is why we, in this primary legislation stage, are putting that in so much detail. Why are we doing that? Because we just do not know whether it will be in the secondary legislation or the guidance. That is not our fault; we have to set out our case in full now, at this stage. If the Government said to us, “Honestly, trust us completely and utterly. It will be in secondary or it will be in guidance, to the letter of what you are asking for,” then great, but at the moment we are sitting here very much in the dark. When we talk about day one from when we leave the EU, is that day one next year or day one in 2021? We do not know. If it is next year, we should be planning right now for doing something very different very soon.
Ian Cranshaw: One of the issues is the fact that these things cannot be rushed. We know that they are very complicated. The trade defence instruments modernisation programme in Europe took more than four years, and that is just in modernising a regime that has been in place for 40 years. One of the important concessions we got out of the EU somehow in the chemical sector, which we refer to as an enabling industry or a foundation industry, was about the importance of raw materials. On raw materials, the EU said, “Okay, if the raw material cost is 17% of the overall product cost, we will take in the raw material cost because we are aware of distortions that take place across many markets.”
We have one UK producer, which is specific in the UK, for which the energy cost is 40% of the total costs of the individual company, so it is hugely important. Its remedy is against Russia and gas coming out of Russia. Russia not only subsidises that industry, but does not observe the same environmental standards as we do. It has had every opportunity to do so, but it does not. There is a wider responsibility at play and that goes back to the comment earlier about it being in everyone’s interest to get this right.
Kirsty Blackman
Q
Gareth Stace: No.
Dr Laura Cohen: No.
Ian Cranshaw: No.
Kirsty Blackman
Q
Gareth Stace: Those remedies might well be challenged, in the sense that anyone can challenge anything, but that does not mean that they should not be rolled over. It is our firm view that the UK Government can roll over all the remedies that are applicable to the UK within World Trade Organisation rules, and we have set that out very clearly to the UK Government.
We have heard lawyers. I gave evidence to the International Trade Committee, and there was a lawyer saying that it could not happen, but when we explained it to her she thought, “Ah yes, actually it could happen.” We need to remember that if they could not roll over from the EU to the UK because the calculations were wrong, because it is just the UK and not the EU, they would also all be invalid in the EU, because they are based on 28 member states and there would be only 27. I think they can easily roll over and will then be reviewed when those cases expire after five years.
Dr Laura Cohen: In our association, we appreciate the way in which the Department for International Trade is going about the consultation at the moment, just checking UK interest. Certainly, we are gathering evidence from our members on tiles and tableware, but the consultation is also forcing us to check the three or four other sectors where we think there could be some UK manufacturing interest. That is particularly in the technical ceramics and refractory areas, which are quite diverse and complex, and we need to take enough time to explore those properly.
Nic Dakin
Q
Dr Laura Cohen: I want to explain that the EU uses a Union interest test as a sanity check, to balance the possible conflicting interests of member states. The wording of the rules around that test are crucial. For example, in the tiles renewal that I just talked about, the Official Journal text says:
“In weighing and balancing the competing interests, the Commission gave special consideration to the need to eliminate the trade distorting effects of injurious dumping and to restore effective competition.”
It is essential, if the UK is doing that sort of test, that such clarity of purpose is in the Bill that you are considering. It is not at present.
I would argue, as my colleagues said earlier, that addressing dumping is always in the long-term consumer interest because it restores a competitive market. We would expect the Competition and Markets Authority to take strong action if UK companies were not playing by the rules. In the absence of international competition laws, strong trade remedies are the best we have. The EU is only one of five countries or areas out of 32 main anti-dumping users in using that type of test. In Brazil and Canada, it is a conditional test used in certain circumstances only.
What is the UK proposing? First, I want to state that the WTO does not require a public interest test. It appears in the Bill as if the UK is proposing something very new to replace the Union test. That seems to run counter to the principle that global free trade cannot mean trade without rules. As some of the previous witnesses said, three opportunities are provided to stop remedies against rule breakers. The text in the Bill suggests the three stages, the first of which is an economic interest test by the TRA. The research commissioned by the Department for International Trade strongly hints that that may contain a cost-benefit analysis and/or an economic model. No other country uses that approach. The USA tried it and stopped. The Union interest test is just a sanity check. Secondly, if the Secretary of State does not like the result by the TRA, he or she may overrule it with their own economic interest test. Finally, that may be overruled again by the Secretary of State’s public interest test. A recent article in The Telegraph—we can provide a link if the Committee wishes—alluded to the implications of a potential UK-China free trade agreement and inward investment being weighed up in such a test. If true, that would be highly alarming.
Those second and third tests are not carried out in the EU. They add a lot of uncertainty to the process, particularly with a very unclear presumption at present in favour of adoption of duties in the Bill text. No wonder some UK manufacturers are scared witless by this. I think you heard similar emotion from the unions. Manufacturers have enough uncertainty around Brexit to cope with, without the fear that if they bring a case, despite dumping and injury being found there will be three chances for that ruling not to be implemented, and they might have all sorts of legal challenge. We heard this morning that the Bill is not even clear if we can do that.
Mel Stride
Q
Can I just go into the area of the lesser duty rule in a little more detail? To the extent that the lesser duty rule functions as proposed, and it does provide remedy for injury caused through dumping to those producers who have been affected, why would you want to go further than that in terms of a potential remedy? Why would you want to go beyond that particular threshold? The argument from consumer groups is that that will then start disproportionately to damage consumers and those businesses that use those imports within their own production processes.
Dr Laura Cohen: I am going to let Gareth answer first. Then I will come back and refer to what the unions were talking about; I have some evidence from the alliance.
Gareth Stace: It seems that we are constraining ourselves in the UK when we do not need to. One of the aims of Brexit was to strip things away, make things more simple and have fewer people employed working on these things; much of what we have seen in both Bills seems to add layer upon layer that is probably not needed. The lesser duty rule is used quite a lot in various different regimes, but it is not used in the US at all. We want to create strong links with the US in terms of trade, so that seems a bit odd.
We could say yes, but I could not tell you that if we did not have the lesser duty rule, we would have seen less dumping in recent years. The lesser duty rule has not meant that new cases did not stop dumping. The point I would like to make is this: we are always told that the lesser duty rule ensures that the consumer is not ripped off—that prices do not rise significantly because tariffs are imposed at too high a rate.
I have an example. In the hot rolled coil case recently—hot rolled flat is used for car bodies and washing bodies, but I am using the example of the car—the injury margin was 17.5% and the dumping margin was 29%. That is a difference of 11%. So the 17.5% was applied, not the 29%. If we think of a luxury car that cost €45,000, because this is a European example, if the lesser duty rule was not applied in this case, it would increase the value of the €45,000 car by €16. We are not suddenly going to see runaway costs and the poor old consumer having to pay lots and lots more. We are going to have a robust system that ensures that we have free liberalised trade continuing as a safety valve. In that case, it increases the cost by €16 on €45,000.
Mel Stride
Q
Gareth Stace: One of the things that we were talking about right from the beginning of this process was that calculating the dumping margin is a really easy process. It can be done fairly quickly. It does not need a lot of people to do it and does not need a lot of work from industry and the Government. Calculating the injury margin does. It is a bit of a black box—you do not know what is going to come out of it—whereas the dumping margin is very transparent.
We said right from the beginning that if you have a clean sheet of paper, why not just go for the easiest and quickest system, so that you could get provisional measures in place very quickly? In the US, they get them in in 45 days, whereas in Europe until very recently, it has been after nine months. There is a really good opportunity to do that. I am not sitting here saying that we have to have 29%, not 17.5%—the point is that it is not a huge difference.
If the Trade Remedies Authority did the dumping calculation and then said, “Well, actually, it is 29%; we think it could probably be effective at perhaps a bit less,” it has the flexibility to do that—you would have the economic interest test and the public interest test to weigh that up—rather than having a fixed system that says, “I do not care what the dumping margin is; we are going to ignore it and are only going to go for the injury margin.”
The Chair
Mr Cranshaw wants to come in at this point. I have five or six other people who want to ask questions. I ask Committee members to make their questions as condensed as possible, but still factual. I call Mr Cranshaw.
Ian Cranshaw: The chemicals sector exports a massive proportion of our product. We are an import-export business, so free trade is something that we have always encouraged. We are free traders: 60% of our product goes to the EU, 75% of raw materials come in—it is products that cross borders multiple times, and integrated supply chains. We do want that. Sorry, I had not actually got to my point. Can I come back on that?
Dr Laura Cohen: I want to support what Gareth said. These are subjective and time-consuming calculations. As we heard from the unions, these will require stipulating what profits industries should make. They can only underestimate injury because they do not cover, for example, whether there is a general subsidy in the country that is doing the dumping.
It is not compulsory in the WTO: only nine out of 32 main anti-dumping—AD—users have them. Australia and, imminently, the EU will have conditional use. The UK has no such provision and is not even thinking about pasting it into the Bill. Out of 32 main AD users, only three—the EU, the Eurasian Economic Commission and Brazil—have both a public interest test and a lesser duty rule. The EU is moving to a conditional lesser duty rule, and Brazil has a conditional public interest test. Why does the UK want to be such an outlier?
Mel Stride
Q
Gareth Stace: Picking up on Laura’s earlier points about the economic interest test and public interest test, at the moment there are six tests. Six! You only need two: an economic interest test that a TRA does, which the Secretary of State looks at and takes note of; and, I agree, you need a public interest test at the end, because there may be those extraordinary circumstances where it is or is not in the public interest to apply or not apply tariffs. But we only need two, not six—not five economic interest tests and one public interest test. That would speed up the process.
The Chair
I am going to Anneliese Dodds next. We must finish at 5 o’clock and I am conscious that there are several people wanting to get in.
Anneliese Dodds
Q
Dr Laura Cohen: Particularly on the methodology, I will suggest two provisions that are not mutually exclusive; the UK needs to alter the Bill to include them both. The first provision is how the dumping margin will be calculated in highly distorted economies such as China. The UK should be stating clearly that there should be a special methodology for non-market economies. That would allow the UK to keep that option open for China until the WTO jurisprudence is clear. Indeed, that needs to be in place anyway for countries such as Tajikistan and Vietnam.
The second provision is a methodology that constructs what is called a normal value wherever price distortions occur. That is the EU’s new approach, which takes into account a number of price distortions, including several non-market economy indicators and an absence of labour or environmental standards. That can be used against a country, including former non-market economies such as Russia, which I know has been a problem in the chemicals sector. Indeed, the pasting in of EU legislation is an important principle of Brexit, as is being done in the EU (Withdrawal) Bill, and this part should be done as a default.
Gareth Stace: In the EU, that became law on 20 December. The UK Government are saying that they will broadly follow it. It would be the easiest thing to say, “That is what happens in the EU on those sorts of economies, and we will do the same”—done! They do not need to invent anything else.
Ian Cranshaw: It is a theoretical debate that we have been having with the DIT about where the risk is. Is the risk in following the new methodology that the EU is introducing or in the approach that the DIT are now taking in going with something that we have been delivering for x number of years, so that they believe they are following something we already have? The EU is moving in a different direction. From our industry the concern was that many of our companies here are EU-based or EU-headquartered, so they want something consistent. Then you have the political debate that we are leaving the EU because we want more flexibility. That is more of a political decision.
Emma Hardy
Q
Dr Laura Cohen: First, do you need them at all? It is not compulsory under the World Trade Organisation. Secondly, we should definitely have the text that is in the EU: weighing and balancing the competing interests, and special consideration to the need to eliminate the trade-distorting effects of injurious dumping and to restore effective competition. That would help.
Emma Hardy
To put that into the Bill.
Dr Laura Cohen: Into the Bill. Can I give an example on the tiles review? This goes back some of the evidence given this morning. The European Commission contacted more than 1,000 known importers and users of tiles. Only 11 companies replied to the sampling form. No user or user association came forward. After the review was published, the Tile Association, which includes UK retailers and tilers as well as overseas manufacturers, published in its magazine an article saying that when they had surveyed their members a year ago,
“A sizeable majority of respondents were in favour of the tariffs continuing and also believed that the level of tariff was about right.”
The EU—an example similar to Gareth’s—as part of its calculation had said that this would add about €1 to a square metre of tiles. It is not a large amount.
Gareth Stace: We do not have any detail of what that economic interest test is going to be. It could be there on the face of the Bill in primary legislation; it could be wishful thinking that it might be elsewhere. It cannot be that the Government do not know what that might be. We set out in July in a paper here exactly what we felt the economic interest test should be and the weighting it should apply to producers, users and importers and so on. We set it out in firm detail there, so there is no reason why it could not have been in the primary legislation.
Graham Stuart
Q
Dr Laura Cohen: We could have much lower duties.
Graham Stuart
So we may not.
Dr Laura Cohen: Given that the lesser duty rule in the EU is becoming conditional, that is one strand of it and may give rise to lower duties. We have no clarity about the methodology for working out the dumping margin, particularly where there are distortive economies, and the EU has that clarity. The triple test—the economic interest test by the TRA followed by the economic interest test by the Secretary of State, followed by the public interest test, actually may result in no duties. It is very unlikely that the duties are going to be higher than the EU and quite likely, given what is in the Bill at the moment, that they will be lower.
Graham Stuart
Q
Dr Laura Cohen: We do not know what the economic interest test is going to be, but there are two further opportunities over and above what is currently in the EU for overruling it. We have had some concerns, which we shared with Government, about the economic research published by the Department for International Trade on Friday 5 January, which could help determine how that is carried out. We can share that with the Committee after this meeting if that would be helpful.
Graham Stuart
Q
Dr Laura Cohen: We do not need one under the WTO, but if we do, it is about keeping it really simple, with a presumption in favour of eliminating the trade-distorting effects of injurious dumping, and restoring effective competition.
Graham Stuart
Q
Dr Laura Cohen: All three tests should have that presumption.
Ian Cranshaw: The specific issue is the language: there is not that specific phrase. There is a presumption in favour of duties written into the Bill, and we would like to see that specifically written much clearer than it currently is. That would reassure many of our companies.
Nic Dakin
Q
Gareth Stace: The timescales are not set out clearly enough. I do not want to go over old ground, but the hoops to go through at all the different stages will only lengthen that process. I am sure that will happen, calculating injury and dumping, but if was just dumping, that would happen very quickly.
I might have said already that in the US, provisional measures come in after 45 days and in the EU they come after nine months, which is coming down to seven. The UK has the opportunity to say that we will do it at six months, and we always—unless there are circumstances where it is not appropriate—apply retrospective duties of three months. So you get provisional duties coming after three months, which sends a very strong message to the market: do not dump your illegally traded goods here in the UK.
Ian Cranshaw: I think we would all be disappointed if we could not expedite the EU system, when it has to canvass views across 28 member states. We would have to canvass views in just the UK, so if we cannot bring that nine months—soon to be seven months—down further, an opportunity will have been missed.
Dr Laura Cohen: There is a tremendous opportunity here for Brexit. If an industry is suffering injury and dumping, it is really important that it gets sorted out quickly.
Peter Dowd
Q
Gareth Stace: From my point of view of steel, this time last year we had written five very detailed papers that DIT officials have been very pleased to receive. We have had very good engagement with them, so I could not actually fault that. We probably have had some difference of opinion, so although I heard, “We agree with 95% of what you are putting out,” I said, “That’s fine, but it’s the 5% that is crucial.” Like everything with Brexit, the issue is around that 5% and we do not understand the detail around that.
We continue to engage with DIT, but we have provided all the information we can; there is nothing more we can provide. That is why we are disappointed: in the face of this Bill in primary legislation, we have not seen the detail that the Government had the opportunity to put in.
Dr Laura Cohen: From our sectors, I echo what Gareth has said. As an association, we have had really good engagement with DIT officials. BCC has had four meetings as an association with Ministers or Secretaries of State in the past year. That is really appreciated. However, we have made our case very clearly and I do not know what else we can say. We need to ensure that businesses, investment and jobs get the best possible deal from Brexit.
Ian Cranshaw: As a group, we met Greg Hands. The Minister gave us a considerable amount of time. He had been briefed well and he understood our issues, but he just did not accept them—he had a different view. That is fine; we have to go away and refine our position and give the evidence that was required. Some of the evidence that he called on we would call less than proven.
We know that there was a discussion earlier about the make-up of the TRA and who helped formulate the Government view. They say that for the review on trade remedies they went to a very liberal think-tank and asked what the view is on this, so of course they got a very predictable response. We would have questioned whether they had taken in some of the advice and evidence from business, as they might have got a rounder view of what was required.
Gareth Stace: It was not a liberal think-tank, but a company that represents the Chinese steel sector against the EU. They could have chosen many; why did they choose that company?
The Chair
That is not for me to answer. There are no further questions from Members, so I thank the witnesses for their very comprehensive evidence this afternoon.
Ordered, That further consideration be now adjourned. —(David Rutley.)
Westminster Hall
(6 years, 2 months ago)
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Skills Devolution (England)
(6 years, 2 months ago)
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Catherine West (Hornsey and Wood Green) (Lab)
I beg to move,
That this House has considered skills devolution in England.
What a pleasure it is to serve under your chairmanship, Mr Bailey. I hope to have the pleasure of hearing your speech later. I am grateful to the Backbench Business Committee for granting this debate on skills devolution in England. I am especially grateful to the Members here from outside London, as I am keen to hear about the reality in their constituency regarding how we can tackle the national skills gap as flexibly as possible.
Across our country, we face an enormous challenge in ensuring that we have the skills that we need to operate the economy, and that we are doing all we can to enable people to secure such skills, and support them in doing so. The issue is particularly acute in London, where my constituency is, but it also exists in the larger cities throughout the country and, indeed, in the regions, and the situation has worsened since 2010, when further education colleges faced cuts—they now receive 50% less funding. The centralised skills system needs to be looked at again, in London and in all parts of England. I will set out the problems seen by us on the all-party parliamentary group for London—and by the all-party group for Greater Manchester, with which we have done work on this—and the recommendations outlined in our report, “Bridging the Skills Gap”, which I recommend colleagues read.
Significant steps have been taken since the devolution project started in 2000, but there is a pressing case for specific devolution in this area, and a need to explore ways in which such devolution can be achieved in regions that do not have devolved Assemblies or metro mayors. Although recent economic growth has led to substantial reductions in the numbers of people on jobseeker’s allowance, an estimated 628,000 Londoners are not in work but would like to be—enough people to fill the city of Nottingham twice over—and youth unemployment is high. In 2016, 9.4% of 16 to 24-year-olds in London were unemployed, compared with 3.6% of 25 to 64-year-olds. For both adults and young people, that represents a huge waste of human potential.
The problem is very unevenly spread across London, a city of 8 million people; there are constituencies where very high numbers of young people face larger problems from unemployment and a lack of skills. Almost a quarter of all vacancies in London—23%—are due to a lack of applicants with the right skills. In addition, almost half of firms—42%—are not confident they will be able to recruit people with the higher-level skills that their organisation needs over the next five years. In the London borough of Haringey, where my constituency is located, 35% of 19-year-olds do not have a level 3 qualification, yet London is an increasingly highly skilled economy. There is a clear skills mismatch.
My local college, the College of Haringey, Enfield and North East London, now merged with City and Islington College and with Westminster Kingsway—mergers that took a lot of energy and money out of the sector when we could least afford it—tells me that many students were held back following the sharp reduction in funding. That has led to too many Londoners being in low-paid and often insecure employment, and there has been an increase in the number of low-paid jobs in the capital.
Karin Smyth (Bristol South) (Lab)
To highlight my hon. Friend’s point, in my constituency we send the lowest number of young people on to higher education in the country, despite having two universities in the city, and Bath and Exeter nearby. It is critical that the further education sector pick up such youngsters and support them in their skills and education, not just in London but in places like Bristol.
Catherine West
This needs to be looked at specifically in Bristol, where we have seen such a sharp increase in the population of under-30s.
Many people, once in work, fail to get salary and career progression, and 700,000 Londoners are paid less than the London living wage; that has a real impact on families. Recent research by Trust for London shows that people are more likely to be in insecure employment in the capital or in other large cities than elsewhere in the UK.
The population of London continues to grow rapidly—by 1.3 million since 2005—and the demand for basic skills provision grows alongside it. That population growth has increased demand for specific areas of skills provision, such as English for speakers of other languages, or ESOL; the Workers Educational Association has done excellent work in that area. Founded in 1903 and working for a
“A better world—equal, democratic and just”,
the WEA serves people within a two-mile radius and we can see the importance of that local provision throughout the country, not just in cities. However, our cities need to grow their own talent and get businesses to invest more in skills. Levels of business investment are unfortunately at an all-time low and we need a flexible and responsive skills system to respond effectively to the challenges the capital faces. They are urgent challenges and, if ignored, could significantly hamper economic growth, not just in the capital but elsewhere.
There has been criticism from business. Mr Quinn, chief executive of Balfour Beatty, has said that the apprenticeship levy system is very “Yes Minister”, which says something about where we are in thinking through how to enhance the human potential in our economy.
The skills system does not provide the flexibility and responsiveness needed, because providers are often incentivised and rewarded solely on the basis of the quantity of learners achieving a qualification, not according to the quality of the outcomes from getting that qualification, such as higher earnings. The system is market-based and is built on learner choice, but careers advice in London is patchy and inconsistent, which limits learners’ ability to make informed choices and understand the opportunities in the London economy. When I speak to headteachers, they talk about teachers often not being able to put aside valuable time to perform the crucial role of helping students decide which subjects to choose—say, whether to take a foreign language—not just at A-level or when they go on from school, but right back in year 8 or 9, so that they can have ready the skills that we so desperately need in workplaces.
Employers do not engage enough with the skills system to ensure that vocational courses are relevant to their needs. The creation of a Greater Manchester employment and skills board has resulted in the co-designing of apprenticeship courses that can be delivered locally, improving local responsiveness to skills shortages. That was replicated in Sheffield’s city deal and in several other cities, increasing the engagement of small and medium enterprises and delivering on local skills priorities.
It might be too early to tell what impact the apprenticeship levy has had, as it was introduced only in April 2017. I am sure that the Minister has a bit of time to get across that brief—her predecessors had not quite caught up with it. I am sure she will tell us her plans for the levy’s review. April 2017 is not that far back, but I am sure that the Department has plans to review its introduction and effect. Initial statistics from the Department for Education indicate a sharp drop in the number of apprenticeship starts across the UK. Between May and July 2017, they had decreased by 59.3% from the same period in the previous year—in numbers, from 117,800 to just 48,000. I am sure we would all agree, across this Chamber, that that is a crucial area that needs the Government’s attention.
Employers in the public and private sectors report issues with the system’s inflexibility, and it appears that many organisations will fail to spend significant amounts of their levy contributions. It seems highly unlikely that the Government’s aim of 3 million apprenticeship starts by 2020 will be achieved. That is another example of the skills system failing to respond adequately to the current and future needs of our economy.
The skills system in the UK is very centralised, leaving London with few tools at its disposal to cope with London-specific issues, such as the higher demand for English as a second language, historically low levels of apprenticeships and the reliance on incoming labour in key sectors. The picture is potentially worse in other fast-growing cities, such as Coventry and Exeter, which my hon. Friend the Member for Bristol South (Karin Smyth) mentioned; they do not have the same system of devolution that we have in the capital. I am hoping to hear more about those regions of the UK later in the debate.
The system simply does not respond well enough to our growing cities’ needs and priorities. Coventry, for example, is in part of the country that is seeing greater economic growth, although that is coming from a lower base. Our skills system is not matching that growth and is falling behind. The OECD predicts that without significant improvement, the UK will fall to 28th out of 33 OECD countries for intermediate skills by 2020. That would see the UK overtaken by Ireland, Israel and Belgium.
London faces myriad challenges: a rapidly rising population; an over-reliance on migrant labour; skills gaps in many key sectors; low numbers of apprenticeships and an inflexible apprenticeship system; patchy careers guidance; and poor match-up between skills spending and outcomes. The forthcoming devolution of the adult education budget represents an important first step in creating a more efficient skills system, but the Government must be bolder and go further and faster on skills devolution to have the impact needed. Devolving greater powers on skills to London and the metro mayors would enable cities to create a system that meets employer need, not just learner demand.
What about the impact of Brexit? Businesses have met an increasingly large share of their labour needs through immigration. Nearly one in three of London’s workforce is non-UK born, and 90% of London’s businesses recruit EU citizens. Workers from the EU play a vital role in many of the capital’s key sectors, including construction, financial services, hospitality and health and social care. In London, in construction, hospitality and the tech sector, just under a third of all workers are EU nationals. Any fall in EU immigration following Brexit or during the uncertainty that Brexit is producing has a significant impact on not only London, but the UK. We know that London’s economy is a driver of things and has knock-on effects on other regions. Many agricultural areas are over-dependent on the supply of EU labour. The outcome of the discussions and negotiations over Brexit could have a knock-on effect.
The capital attracts highly skilled graduates from across the UK. A significant drop in EU labour could increase that trend, undermining the Government’s industrial strategy and attempts to rebalance the national economy. There is a genuine desire across the House of Commons for every region to grow and for London not to attract all the high-achieving graduates. That could happen for a period, perhaps, but there is a real need to rebalance our economy.
The drop in EU labour could also have a knock-on effect on other key policy areas, such as the need to build more affordable homes in London. A chronic shortage of skills in construction, for example, will create higher project costs and diminish the ability of the sector to deliver the new homes required to tackle the chronic housing shortage facing the capital and the rest of the country. We can think of best practice in public procurement: in many boroughs and city regions, the local authorities are getting much better at using public procurement to ensure that for every £1 million that is spent, say, we get one or two apprentices back from the providers of that crucial capital work. That is mainly in construction and the renovation and refurbishment of social homes, but also in other areas.
All the factors I have outlined suggest that London government and the metro mayoralties need the ability to take a strategic, all-age, whole systems approach to skills. There should be greater engagement with employers and better access to and use of data. The system should allow a more localised approach that works at two levels. In the capital, for example, we should tackle pan-London issues while also having more targeted activity at a sub-regional level to take into account the variations of skills, needs and demand across cities.
The all-party parliamentary group’s report set out eight key principles that should underpin a future skills system. They were:
“1. It must be labour-market led, and include high quality labour market intelligence that captures the needs of individuals, employers and local economies informing learner choice and the provider offer.
2. It must have strong employer engagement in order to identify skills needs and sector priorities.
3. It must have strong local accountability, with joint governance agreed between the GLA and London boroughs via sub-regional partnerships.”
In that regard, we know that other sub-regional areas function much better than London. With a population of 8 million, it is very hard to match the economic partnerships with the various areas. In other sub-regions, we should be able to do much better on local accountability and buy-in from local authorities. The report continued:
“4. It must be outcome-focused, with strategic coordination across all aspects of post-16 professional and technical education to drive better outcomes. The system should focus on and reward delivery of positive outcomes covering jobs, earnings, progression”—
I emphasise that point; too many people are sitting in entry-level jobs way into their 40s and 50s, unable to get that progression that is so crucial—
“personal development and wellbeing outcomes.
5. It must include stronger incentives to encourage provision that meets London’s economic needs and supports progression.
6. It must be flexible to enable London government to have the ability to commission provision based on analysis of need.
7. It must include effective, impartial information and advice to ensure learners can make informed choices that will lead to future employment opportunities.
8. It must take a whole systems approach to ensure that skills policy and commissioning are effectively aligned.”
What would that mean in practice? The Government need to go further, faster, to give local government and metro mayors the levers to address the considerable skills challenges I have set out. They should consider devolving all 16-to-18 provision to combined authorities in other parts of England. The Government should provide commissioning freedom and the ability to set outcomes and incentives for the whole skills system. That would better serve the progression and economic priorities of different areas in England. The Government should give London government control over all vocational capital investments, such as 14-to-19 capital provision and institutes of technology, alongside existing further education capital responsibilities. That would capitalise on local ambition, expertise and intelligence, and align adult education and 14-to-19 capital investment.
The Government should devolve careers funding streams to London government, so that it can build a seamless, single, integrated careers service. The concept of a careers service is something that many people in local government would love to see return, so that they can match aspirations and assist parents, who are so key to helping young people decide what to do next. It would also allow older people to get back into the workplace—or change what they do, now that we are all meant to be working until we are 70. [Interruption.] You have loads of time, Minister. Through those things, we can have a proper system that we can be proud of.
We would like the devolution of careers funding streams to a local level, to build a seamless, single, integrated careers service. The Government should devolve the capital’s future share of the UK’s shared prosperity fund to London government, and ensure that future skills funding settlements take into account each area’s unique needs. We also need short-term flexibilities around the apprenticeship levy. In the longer term, we need to devolve the levy to London. That will be quite a difficult trick to master for a new system, but we need it to be as flexible as possible, so that we can use the resource quickly and build in the ability to develop that longer-term devolution. We could get longer-term value by getting together with local areas to work out the best way forward.
The other voice that needs to be listened to is that of small and medium-sized enterprises. They provide many of the job starts for young people, and older people entering the labour market who need their skills updated. It is difficult for SMEs to communicate with Government, Members of Parliament and the wider system, so that relationship with SMEs must be developed in a special way. We want more flexibility in the levy; for example, it could allow an increase in the amount of levy funding that employers can pass on to their suppliers. That is currently capped at 10%. Local authority areas increasingly use their contracts to have suppliers generate apprenticeship opportunities, but capping that at 10%, particularly in the short term, might mean we are not getting as much value as we could in our timeframe. In 2016-17, for example, London boroughs created 60% of their apprenticeships through contracts and suppliers, as I mentioned earlier.
The Greater London Authority and the Institute for Public Policy Research, a think-tank, have developed a proposal for a skills and progression pilot project, which I recommend the Department look at. A strand of the proposed pilot is to work with employers to pool the 10% that can be passed on to non-levy-paying employers, and support them in developing good-quality apprenticeships through that. The pilot wants to test out increasing the 10% cap as well. There is a strong push for that proposal. In the longer term, the Government should consider full devolution of the apprenticeship levy, as has happened in Scotland and Wales. Obviously, London and other key areas would need to bid and make the case for that, but the Government should not rule that out.
A recent Chartered Institute of Personnel and Development survey found that 53% of employers who pay the apprenticeship levy would prefer a training levy; just 17% support the apprenticeship levy in its current form. I am keen to hear the Minister’s feedback on that proposal.
In conclusion, the proposals might seem radical and far-reaching, but London, Manchester, Birmingham and other major UK cities are experiencing severe skills challenges that could be exacerbated significantly by Brexit. The Government need to act now and allow the skills system to deliver in flexible, responsive ways that the current centralised system does not. The Mayor of London has already indicated that London government is keen to work with central Government to deliver on this agenda, and there is a clear appetite from many of the elected mayors to do the same, as there is from leaders of local areas. I hope we can all work together to improve skills outcomes for all learners and businesses across England.
[Ian Paisley in the Chair]
Priti Patel (Witham) (Con)
It is an honour to serve under your chairmanship this morning, Mr Paisley. I congratulate the hon. Member for Hornsey and Wood Green (Catherine West) on securing this important debate and on her thoughtful speech, which covered the whole gamut of skills policy. She had some good initiatives and suggestions for how we can start to address the ongoing skills shortage across our country and our economy in a wide range of sectors.
I remember often discussing young people here in 2010. We talked about a generation excluded from employment and about the employability barriers facing them. We had a system that was simply not functioning and not getting them the engagement that they needed to help them get the skills necessary to join the workforce. During those years, when we had had a recession too, we found that older workers were finding it difficult to retain their jobs and also to find new employment as the economy changed. There was more part-time employment as demands across the economy fundamentally shifted. One of the things that I feel strongly about, which the country and our Government should focus on, is the agility that is required to sustain the flexible economy. We must ensure that people of all ages, all skills and all backgrounds can still remain active in the labour market. To do that, we need to look at education.
Jack Lopresti (Filton and Bradley Stoke) (Con)
My right hon. Friend is making a strong case on the economic benefits of addressing the skills shortage, but there is also a moral case to do with social mobility, aspiration and allowing people to fulfil their potential in society generally.
Priti Patel
My hon. Friend is absolutely right. I will come on to the ladder of opportunity, the moral obligation and responsibility, and the progression pay that the right hon. Member for Hornsey and Wood Green mentioned earlier. In fact, we have a good economy right now, but we are faced with a shortage of people in the key sectors that cover the health and wellbeing of our economy: construction, nursing, social care, engineering and a whole range of other sectors. Full-time employment and part-time and temporary employment are all incredibly vital to our labour market.
We have record levels of employment, but we should look beyond that to the next generation and ensure that, while they are at school, they are engaged and nurtured to think about the world of work. The Government have the Careers & Enterprise Company and other models of engagement, but that is simply not good enough in terms of overall coverage—engagement with schools and the requirement on our education establishments to open their doors to businesses, so that they may talk to young people about careers, and to bring into schools sectors that reflect the local economy.
I feel strongly about the role and significance of devolution. In my short apprenticeship as the Employment Minister in the Department for Work and Pensions, I oversaw some of the devolution deals around the Work programme. I worked with the combined authority in Manchester and on other devolution deals. Employment programmes and employability were a major factor in giving devolution to local authorities up and down the country. At the heart of that success is working with the private sector, not just the public sector, to ensure that the private sector and the needs of the local economy are fully reflected in devolution deals. Importantly, the combined authority and local authority models require an absolute understanding of what is going on in the local economy, where the skills shortages are and where future demand might come from. There is also a need to look at succession planning and how businesses can work with their workforce.
Jim Shannon (Strangford) (DUP)
In Northern Ireland we have recognised it is important to address the issue of skills shortages and to go into secondary schools. Some people have suggested we should even go into primary schools, although I am not sure that is entirely appropriate. We have also addressed the skills shortage in engineering. We should encourage ladies and girls to look to engineering as a possible job for the future, because they can do it as well as we men.
Ian Paisley (in the Chair)
Order. Interventions should be short and not made into speeches.
Priti Patel
The hon. Member for Strangford (Jim Shannon) is absolutely right. Young girls should be encouraged and should have the opportunity to look at the careers that they might not even consider to be suitable for them. In STEM subjects—science, technology, engineering and maths—engineering is a classic example.
If I may, I will share with the House a little bit about Essex and how we are approaching the skills issue locally. Essex is famously the county of entrepreneurs. Firms based in my constituency have a proud and strong record of creating jobs and local employment. Businesses in my constituency are almost entirely small and medium-sized businesses and they have now created 25% more jobs leading to more than 30,000 people in employment. They are doing well, but they could do even better. They want to see the barriers to recruitment, employability and access to the labour market brought down. They want people with the right kinds of skills. They want change because we have seen that a deficit in skills standards is one of the biggest barriers to growth locally, and to productivity in our wider economy.
On Friday I attended a skills forum organised by the excellent Essex Chambers of Commerce and Industry, which was also attended by my equally brilliant colleague, my right hon. Friend the Member for Harlow (Robert Halfon). In that business-led forum the spotlight was on skills and on the barriers that prevent businesses recruiting people. It particularly looked at the barriers around the skills and training programmes in Essex and the demands and challenges for the future workforce who are being trained. We need highly trained people, but the lack of flexibility within the training and provider landscape was clearly on display in the discussions that we had.
What stood out in the skills forum, and in my previous meetings and engagement with local businesses, was that they want to be at the heart of the decisions that are made on skills policies, and they want to be involved in designing and shaping courses. They want to play their part in offering job training opportunities. However, there are many barriers and restrictions on their doing that. They are best placed to understand the needs of their businesses and the local economy in a way that no Government with a centralised approached and no local authority can fully understand until those businesses are a full part of the discussion. The devolution of skills to local authorities can be successful only if businesses play a leading role in developing that skills agenda, including working with the education establishments and the courses in those areas.
Over the years, I have received endless complaints from businesses about the time it takes for new courses to be approved. They also complain, as I have mentioned, about barriers put up by the public sector to engagement with businesses. It can take years, with hundreds of hours of input from business and trade organisations, for new courses to be signed off. That equally applies to relevant courses. On Friday, I met representatives from a business who said that finding a course that was specific to their business was near-impossible. They just wanted a course, for a young person who wanted to be on an apprenticeship scheme, that covered the basic employability skills.
There is so much more that can be done, and I welcome the many creative suggestions in the all-party parliamentary group report. We need to ensure that there is flexibility, and that businesses are at the heart of the devolution agenda. I strongly support the idea of devolution in skills coming to the county of Essex. I think that we would benefit from that, in some of the ways that have been suggested today. Devolving skills, and focusing on skills in the workforce, is important not just to businesses, but to individual workers. The skills deficit has a drag not only on our economy, but on the life chances of people who want to work. We have so much untapped potential across our workforce, and there is a great opportunity for the Government to lift the lid on the talents of those people who are struggling to access the labour market.
One way that we can do that, as the hon. Member for Hornsey and Wood Green mentioned, is through the apprenticeship levy. We need to look at how we can unlock the potential of the levy and use the funds it raises to support the upskilling of a whole generation who are simply not accessing the levy. I also suggest using the funds to upskill agency and temporary workers. More than 1 million people go to work every day to do agency and temporary work. That model offers a great deal of flexibility, but those workers make an enormous contribution to our economy; their net contribution stands at something like £35 billion. There is growing concern that the funds that agencies put into the apprenticeship levy cannot be used to train and upskill workers on their books. Somewhere in the region of 2,000 to 2,500 businesses are paying the levy, and the rules on the spending of funds raised by the apprenticeship levy are so rigid that it is almost impossible to use that money to invest in agency or temporary workers.
We have a very good record in Government when it comes to revitalising apprenticeship schemes, and we should be proud of that. The levy has a critical role to play in providing a great pathway. We know that the current pathways are not suitable for everyone, and we need more flexibility when it comes to the levy and apprenticeship schemes. Many workers need to go on shorter, practical courses to take the next step to move on in their career. Examples include courses in food hygiene and fork-lift truck driving, which are not covered by the apprenticeship levy. The flexibility of the levy could be increased to support some of those courses, so that we can support more people to get back into work and get better pay progression, and give them long-term employment opportunities.
If we are to deliver a fair society that invests in people and provides opportunity for those who want a hand up so that they can reach their full potential, why on earth would we not do this? We have a fantastic opportunity to provide greater training support; existing employment programmes are far too rigid and inflexible to do so. A very good way in which we could do that, I suggest, is that the Minister, working across the Department for Work and Pensions footprint, could give people who are on universal credit, and who are limited in their hours of work, the freedom and flexibility to access the levy, to get on some of these courses, and to get skilled up so that they can progress.
We are on the cusp now. The levy is new, but it represents a fantastic opportunity. Devolution of skills is surely a success for our region, and it deserves to receive more encouragement.
Stephen Timms (East Ham) (Lab)
Welcome to the Chair, Mr Paisley. The Government have said that they want skills devolution, and the right hon. Member for Witham (Priti Patel) has supported that aim. Indeed, I think George Osborne announced that skills would be devolved to a number of mayoral combined authorities, but progress has been woefully slow, so I very much welcome the fact that my hon. Friend the Member for Hornsey and Wood Green (Catherine West) has secured today’s debate.
There are still lots of operational details about how that devolution will be achieved. I very much hope that the Minister will be able to give us some detail about when devolution will happen in London and the other mayoral combined authorities, because the need is now pressing. I welcome the report from the all-party parliamentary group for London, and congratulate my hon. Friend the Member for Croydon North (Mr Reed) and the hon. Member for Bromley and Chislehurst (Robert Neill) on bringing it forward. I welcome the sense of urgency that the report conveys about what it describes, absolutely rightly, as “an enormous skills challenge” in London.
There is a striking degree of agreement in London about what needs to be done. My hon. Friend the Member for Hornsey and Wood Green set out a number of priorities. The London Chamber of Commerce and Industry, in its most recent quarterly survey, for the third quarter of 2017, found that 60% of businesses in London that tried to recruit encountered difficulty finding people with the right skills. That is the highest—that is to say, the worst—proportion since it started collecting those figures four years ago. The right hon. Member for Witham mentioned the Essex Chambers of Commerce and Industry. The London Chamber of Commerce and Industry explicitly endorses the recommendation in the all-party parliamentary group’s report to devolve all 16-to-18 provision to London, and to give the capital greater control over policy and commissioning.
Life is difficult for many in London today. Employment is high, which is a very good thing, but jobs are often insecure and uncertain. Housing costs are high and rising quite fast, and wages are not keeping pace. More and more people are in the position characterised by the Prime Minister as “just about managing.” Some forecasters currently estimate that 3 million jobs could be lost to automation in the next generation. Automation is a huge driver of the need for reskilling. Furthermore, in the background to all of that is the perennial UK challenge on productivity. UK productivity fell from 9% below the OECD average in 2007 to 18% below it in 2015. We have to overcome that long-term challenge. The report is also absolutely right to highlight, as my hon. Friend the Member for Hornsey and Wood Green did in her opening speech, that a drop in European Union migration will have a disproportionate impact on London, because so many workers in London are from other parts of the European Union. Lots of London’s key sectors have big EU-born workforces, and Brexit is bound to make the problems of skills shortages worse and increase the importance of achieving solutions.
Those challenges are particularly acute in east London—the part of London that I represent. In October, the Mayor of London published research showing that east London is the fastest-growing area of the capital. Some 110,000 additional jobs have been created in the six Olympic boroughs since 2012—three times the number predicted in 2013. I very much agree with what the Mayor said in October:
“Businesses, universities and cultural institutions are flocking here and the centre of gravity in London is moving east.”
That trend in our part of London further highlights the importance of the skills challenge.
The report published by the all-party parliamentary group for London highlights a number of issues specific to the capital, such as,
“a much higher demand for English for Speakers of Other Languages”.
My hon. Friend the Member for Hornsey and Wood Green mentioned that as one of the concerns, and I very much agree with her on that. It is widely recognised that the ability to speak English is key to integration and community cohesion, and yet funding for it in London has been dramatically cut. The joint briefing for this debate from London Councils and the Greater London Authority makes the point:
“London’s population has grown from 7.4 million in 2005 to 8.9 million in 2017, but funding for English for Speakers of Other Languages has reduced in real terms by 60% since 2009.”
My hon. Friend the Member for Blackpool South (Gordon Marsden), who will be winding up for the Opposition in this debate, pointed out last October, in a parliamentary briefing on delivering skills for London organised by the Learning Revolution Trust—a charity linked with Newham College in my constituency—that annual ESOL funding had been cut from £203 million in 2010 to £90 million. Refugee Action says that about half of ESOL providers report waiting lists of six months or more.
I hope that we can recognise the importance of ESOL and do something to address the current lack of funding. I pay tribute to the work in my borough, Newham, of ESOL Exchange, which will mark its 10th anniversary next month. It is a network of people and organisations working together to improve ESOL in Newham, managed by the Aston-Mansfield Community Involvement Unit. It provides a web-based directory of formal and informal ESOL provision of all kinds across our borough, in order to make it as accessible as possible. Helping people in east London speak English proficiently is a very important part of the skills challenge.
I pay tribute to the Learning Revolution Trust, a charity that aims to reduce the financial barriers to education faced by many people today in east London. It typically provides modest financial support to people, perhaps midway through a course, for example to help with childcare costs, and has helped more than 300 young people since it was established in 2012. It has made an important contribution.
My hon. Friend the Member for Hornsey and Wood Green and the right hon. Member for Witham both mentioned apprenticeships, which are key. It seems to me, however, that the programme has been botched in the past year or two. The Association of Colleges has reported, based on data from 91 further education colleges last November, that the number of apprentices had fallen 39% compared with the previous year. It suggests that, even though £2.6 billion is being collected through the apprenticeship levy, the Government might actually end up spending less on apprenticeships this year than last year, because the cuts in funding for the apprenticeship programme from taxation have been greater than the extra amount going in through the apprenticeship levy.
The right hon. Member for Witham rightly drew attention, in a very courteous way, to some of the flaws in the design of the levy. Those flaws are serious. As my hon. Friend the Member for Hornsey and Wood Green suggested, it would be great if the Minister would tell us that there will be some sort of review of how the levy is going. I have not heard any suggestion of that yet, but I do think a review is urgently needed. It is now absolutely clear that the target of 3 million apprenticeship starts by 2020 will be missed. FE Week published an informative graph in November, showing that achievements towards that target were behind target up to a year ago, and then, almost a year ago when the levy was introduced, they went massively off-target. There is really no prospect now of the ground being made up. It would be very good to hear from the Minister what plans there are to try to get the apprenticeships programme back on track.
The call for devolution, which is across the board now, of powers on skills should be not just heeded—the Government have recognised that—but delivered. I hope we shall hear from the Minister what steps will be taken to do that.
Julia Lopez (Hornchurch and Upminster) (Con)
It is an honour to serve under your chairmanship, Mr Paisley. I commend the hon. Member for Hornsey and Wood Green (Catherine West) on securing what is a welcome and increasingly urgent debate.
As we leave the European Union, we will need our domestic workforce to be ever more dynamic, innovative and flexible, not just to maximise the new opportunities to our economy from trade and technology, but to reduce our reliance on a vast overseas workforce. Access to a pool of half a billion EU workers has for too long allowed businesses to obtain cheap, skilled and hard-working employees without having to properly invest in the domestic skills base. It has similarly allowed the Government to duck some of the shortcomings of our own education and skills systems by effectively piggy-backing on the investments of other nations in their people.
Economic migration to the UK will not and should not stop once we have left the EU. London, where I am an MP, is an economic powerhouse that needs to have access to the global talent pool, but if we are to fulfil our own industrial strategy and maximise opportunities for home-grown workers, we need to turbo-charge our approach to skills and get businesses, schools, colleges and Government to work together in a far more interconnected way. The current framework for improving skills is far too centralised and inflexible, unable to deliver workers to fill London’s vacancies as quickly as those vacancies are created, and failing to provide lifelong learning to keep existing workers sufficiently up to date.
Two weeks ago, I visited my local jobcentre, where the team is doing a quite remarkable job in getting people into work. However, one of the groups they find hardest to place is the over-50s, who need to be given time and confidence to adapt to the changing workplace. Meanwhile, one in five London families are stuck in in-work poverty, so attention also needs to be paid to providing clear progression pathways into higher paid work. We require a new spirit of collaboration that leads to increased interaction between our schools, businesses and public services.
I am very excited by what I see in my own constituency. Hon. Members have referred to the critical importance of investment in STEM subjects. On Friday, I visited the Coopers’ Company and Coborn School, which has a dedicated STEM coordinator, Nick, who is doing some amazing work in increasing uptake in science, maths and tech subjects by connecting the school to the academic community and to businesses. Too often such work is reliant on dynamic individuals and organisations, without whom the workstream would not be able to progress.
I am also particularly excited by a five-week, focused course being run by Havering College in my constituency, working with Transport for London. Committed students in the boot-camp style course at this railway academy are guaranteed a job interview with the prospect of employment as railway engineers. Half a million pounds-worth of rail equipment donated by TfL has been installed at the college and students are getting hands-on experience to learn about the rail industry. That is the kind of joined-up skills approach we shall need to see much more of, not least as it helps to provide workers for critical infrastructure projects such as Crossrail. The programme has also helped long-term unemployed and ex-offenders with few or no qualifications to access full-time employment.
It is probably now time to give London the powers that will enable it to prioritise those kinds of skills investments: getting people into work and delivering critical infrastructure in the capital. Devolution of skills provision would also support the capital to develop Londoners’ employability and skillset, targeting and scaling up skills efforts to ensure that everyone who grows up in London can access employment in a changing and increasingly competitive labour market. Compared with international peers and other parts of the UK, London has much lower fiscal and political autonomy, and it is highly dependent on national policies and funding—74% of Greater London Authority and borough expenditure is based on intergovernmental transfers. That makes it very difficult to plan for the long term.
There are two areas where the Government could now look at devolving additional power, since City Hall will soon take control of London’s adult education budget: unspent apprenticeship levy funds and the 16-to-18 further education skills budget. Those issues will be key to meeting the demands of London’s changing labour market. With a wider range of powers, London would be in a strong position to create a system that meets employer need, not just learner demand, and capitalise on local labour market intelligence. It would enable stronger employment engagement to identify skill needs and sector priorities, which can only be done effectively at local level. The provision of higher level professional and technical education could be driven up and clear progression pathways created for learners. I look forward to hearing the Minister’s perspective on those and the other technical and skills issues raised today.
Mr Adrian Bailey (West Bromwich West) (Lab/Co-op)
I say with even greater feeling than normal what a pleasure it is to serve under your chairmanship, Mr Paisley.
I thank my hon. Friend the Member for Hornsey and Wood Green (Catherine West) for securing this debate. Her contribution was thought provoking and adds to an ongoing debate on this serious issue. I describe it as serious because successive Governments have wrestled with the problem of the national provision and accountability of skills funding and the effectiveness of local delivery. Certainly the Government’s own initiative of the apprenticeship levy will not, as far as we can tell at this moment, solve or resolve those historical tensions and problems. We need to look at the issue from a fresh perspective. Now is a good time to do that.
In the Government’s regionalisation agenda—we talk about the northern powerhouse, the midlands engine and so on and so forth—skills is an essential driver of economic growth in a region. To devolve economic power to the regions without devolving the provision of skills in effect leaves a vital part of economic infrastructure out of regional control. I am here to advocate increased devolution of skills, in particular in an area such as mine, which now has a new metro Mayor, Andy Street, who has pledged to enhance economic growth in the area and to see what can be done with local provision of skills funding in order to enhance the initiatives already in place.
Nothing could be more appropriate at this time. Only last week the local chamber of commerce in my constituency warned of acute skills shortages. My area is the historic Black country, which in years gone by was the workhouse of the world, when Britain was an international manufacturing powerhouse. Despite all the reduction in manufacturing as a proportion of our economy, the Black country still enjoys that role—it is a vital part of the engineering and motor manufacturing supply chain, which drives one of the most successful parts of our economic profile, the motor industry, vital to both productivity and our balance of payments.
There are more foundries not only in the Black country but in my constituency than there are in any other constituency in the country, and they are suffering from an acute skills shortage. Those foundries have survived the globalisation drive because they had unique skills and a quality not deliverable in any other part of the world. However, they now have an acute skills shortage. First, they have a problem with the age profile—the average age group in most of those foundries is of people in their 50s—and, secondly, they have survived largely by recruiting from eastern Europe, and if that supply is in any way diminished, the existing skills problem would be enhanced.
In the last quarter of 2017, 82% of businesses in the Black country were reporting recruitment problems. It is estimated that we will need to reduce the number of the workforce with no qualifications by 50,000 over the next 15 years just to bring us in line with the national average, and that the Black country will need a 70% increase in the number of apprentices to meet basic demand. That is a monumental task, but our local area is seeking to address it.
In my constituency, in Tipton, the Elite Centre for Manufacturing Skills is being built. It is a joint venture between Dudley College of further education, the University of Wolverhampton and the historic metal casting company Thomas Dudley. The centre is designed to recruit and attract young people from the area to obtain not only apprenticeship but degree-level qualifications in the range of skills necessary to the local foundry industry. That is an example of a local initiative in which local businesses engage with the academic sector and Government, knowing what is needed locally and delivering the sort of courses and expertise to get the right balance of skills needs in the area.
Unfortunately, if we look at the national picture, central Government policy engages with the regions only on its terms, seeking insights of the problem but not giving direction, and seeking advice but not giving local agencies the funding to be able to deliver on their unique insight and expertise. A particularly bad example of that came to my notice in December.
The BCTG—Black Country Training Group—executive director Chris Luty got in touch with me and other Members of Parliament in the area because the group had lost its apprenticeship funding from the Education and Skills Funding Agency. BCTG is the largest provider of apprenticeships in the Black country. It had tendered for its Government funding to be renewed and, to the astonishment of Chris Luty, was unsuccessful. That meant that all the contracts with SMEs in the Black country would have to be closed, leaving a huge gap in local skills provision for small companies in the area that are vital to the supply chain for Britain’s motor industry.
In all, BCTG has recruited 4,000 apprentices, 750 since last May alone. That is the sort of scale it operates on and demonstrates the gap that would have been left had it not been able to secure the funding. I wrote to the Minister and so did other Black country MPs. To the Government’s credit, they realised that that was an error and changed their decision.
The reason given for the original decision, however, is illustrative:
“The review was conducted by a member of the Agency’s staff who possesses the appropriate technical expertise in the provision of apprenticeship training but who had not previously evaluated your tender.”
If that is not a classic case of Sir Humphrey-speak, I cannot think of a better one. It is outrageous for an organisation so key to the delivery of a vital driver of economic growth in the regions to make such a mistake. That sentence highlights the need for a change in approach to the devolution of skills to the regions.
I realise that other people wish to speak so I will bring my remarks to a close. Enhanced devolution of skills to the new bodies that are being set up affords the possibility and potential of enabling regional and even sub-regional needs to be correctly identified, backed up by initiatives from local businesses working with whatever partners are available to analyse the needs and to address them with the appropriate training and level of funding.
At the end of the day, if we are to be successful, we have to find another way of doing that. The brutal fact is that at the moment we invest billions of pounds into education and skills training but in so many of our vital industries we still have key shortages. I am sure that what is happening in my area is very similar to what is happening in many other areas. Finding mechanisms to devolve skills funding to local agencies is the key to unleashing the skills potential of so many young people and meeting the needs of local industries in a way that has not been done for many years.
Ian Paisley (in the Chair)
Before I call the next person to speak, I remind hon. Members that Front Bench speeches will begin at 10.40 am. I call Rachael Maskell.
Rachael Maskell (York Central) (Lab/Co-op)
Thank you for calling me to speak in this really important debate, Mr Paisley. I congratulate my hon. Friend the Member for Hornsey and Wood Green (Catherine West) on the excellent, comprehensive way that she set out the challenges ahead. I agree with my hon. Friend the Member for West Bromwich West (Mr Bailey) about the importance of seeing the issue in the wider context of the local economy, and I will touch on that in my speech.
Although in York we do not have a devolution deal yet—I trust that the Minister will progress that with expedience—there is a real skills gap in our local economy. We are conscious that we are falling behind as other economies accelerate, such as those of London and the south-east. There is the north-south divide, but there is now an east-west divide, too, because of the progress being made in Manchester with the devolved settlement. That is why it is so important that we move forward on all devolution issues, not least skills.
York’s economy has changed massively over the years. We had a strong industrial base in the confectionary industry and in rail manufacturing, but that has really reduced. The low-wage, low-skilled economy has taken over. We have a very high cost of living but very low wages—some of the lowest in Yorkshire. There is real disparity, which causes pressure and mismatches in our city, where the tourism, hospitality and retail sectors dominate.
I have talked to the Secretary of State for Business, Energy and Industrial Strategy about the urgent need to address the skills deficit in the city. I have been out talking to businesses across the city; they consistently raise that mismatch—particularly the fact that business and IT skills do not come into the economy, and that schools do not prepare children for the modern world of work. Last Friday, I visited York St John University, which wants to help to address the skills gap. I have also visited York College, an outstanding college in my constituency that understands the challenges of the local economy.
I want to raise the issue of co-ordination, which other hon. Members have raised. Businesses, schools, colleges and local enterprise partnerships need to come to one place to discuss the real needs of the economy and how to address skills gaps. I will give a couple of quick examples of that. Engineering is a really important part of York, which is a rail city, but the university offers courses in electrical engineering only. Although the city council has identified rail engineering as part of the footprint, we are not providing the skills in the city for that. The National Railway Museum is about to embark on a new project for a gallery about the future of engineering, to engage girls and boys across the city and the country, but if we cannot follow through on ensuring the learning, that future cannot be delivered.
The digital creative sector is another part of our footprint where there is not that connectivity. There are fantastic facilities and there is a university course, and there are business start-ups, but after that, people have to move out of the local area. We need to be able to grow those skills right through to development and address the real gaps in the economy. The same goes for the bio and agri-tech sectors, where the gap needs to be bridged between academia and applied research. There are real gaps.
We need to be careful about how we balance skills acquisition. Clearly, we see a national education service as important in allowing people to enter the economy at different points in their learning and drive those skills forward, whether from the workplace or from school. We need to make sure that we strike the fine balance between addressing national and local needs in the economy.
There are real challenges in schools. We are not preparing our kids for the world of work young enough. They learn how to pass exams, but not about the life skills that are needed. Business talks about children being “screen deep” in IT skills, but not having the skills needed for the digital economy. T-level assessments have real problems, particularly for agriculture, because the assessments have to take place at a particular time of year, but the agriculture sector revolves around the seasons. Tree surgery, for instance, needs to be done at the appropriate time, not at a time that kills trees. I put that on the Minister’s desk to address. We have real opportunities to engage schools in acquiring the skills that the economy needs for the future. We desperately need a review of the curriculum to ensure that we are addressing those needs, starting at primary school.
I am conscious that other colleagues want to make contributions. Finally, my local college has made a plea to me, as have other further education institutes. If the adult skills budget is devolved, the procurement activities could seriously disadvantage colleges and prospective students. Lessons must be learned from the recent procurement of the non-levy apprenticeship budget, which other hon. Members have spoken about. I trust that the Minister will take that on board.
Karin Smyth (Bristol South) (Lab)
It is pleasure to serve under your chairmanship, Mr Paisley. I thank my hon. Friend the Member for Hornsey and Wood Green (Catherine West) for bringing this debate forward. There has been a great deal of agreement on this important issue.
I was a member of the Public Accounts Committee in the last Session. Colleagues will be aware that the Committee has done a lot of work on the interplay between devolution in cities, skills growth and the further education sector, and the need for more accountability regarding those decisions. It had a discussion about LEPs yesterday. That whole agenda needs to be much more cohesive, and people need to understand about local accountability for the way that taxpayers’ money is spent.
Further education colleges, such as City of Bristol College, which I visited again on Friday, remain part school, part training provider, part higher education college and part community college. That last function is really important to us in south Bristol. As my hon. Friend the Member for Hornsey and Wood Green said, there is competition between schools. In south Bristol alone, there are more than 500 surplus school places, plus the college. The schools are all in competition with private schools, a university technical college and a sixth-form college. That dilutes not only the pool of youngsters going into those establishments, but the money and the opportunity to link up skills. Ultimately, it must dilute the quality. We need a strategic delivery function that does that much better.
The system is complex for youngsters, and for parents. I have spoken to the Minister about that and her Department is working on it. Parents are crucial—as partners, in supporting young people through a complicated system, in giving them opportunities, and in ensuring quality of provision, so that when we support our youngsters into their very different pathways, we are sure about the quality and the reliability of the courses.
I want to mention the collapse of Carillion last week. City of Bristol College stepped in, via the training board, to provide last-minute places. That highlights the importance of sustainability in further education, so that institutions can pick up that work. I will write to the Minister to make sure that the college gets the money to follow those young people, whom the college has done great work in supporting. We cannot allow that quality to be diluted any further.
Gordon Marsden (Blackpool South) (Lab)
It is a great pleasure to serve under your chairmanship, Mr Paisley. I congratulate my hon. Friend the Member for Hornsey and Wood Green (Catherine West) on securing the debate. It has been excellent, thoughtful, positive and full of ideas, and she has led the field.
I am afraid that I do not have time to do full justice to the multifaceted points that my hon. Friend made. She mentioned the co-design of courses and the role of local authorities and their contractors and suppliers. She put forward ambitious and interesting ideas about how we might devolve all 16-to-18 provision, and she mentioned careers funding. I am conscious from my links and discussions with various groups in London—my right hon. Friend the Member for East Ham (Stephen Timms) referred to this, too—that there is huge appetite in London for devolution, for all the reasons that she explained.
I also praise the right hon. Member for Witham (Priti Patel), who drew on local experience to inform her thoughtful comments. I was particularly interested in what she said about careers. I think she used the words “not good enough in their spread”. I do not want to criticise what the Careers & Enterprise Company is trying to do, but one of the central issues in this debate is resources—resources in the centre, and how those resources are distributed. I think that there is some common ground in the Chamber on that issue. Interestingly, she also drew on her DWP experience. In my experience, having spent a long time holding this portfolio and others, if we do not get the mix right between the Department for Education and the DWP, we will not make the progress in this area that we all want to make. That is particularly true in areas such as traineeships.
My right hon. Friend the Member for East Ham mentioned the need for urgency from the Government. He rightly drew attention to productivity issues and to ESOL, which is key. The hon. Member for Filton and Bradley Stoke (Jack Lopresti), in an interesting intervention, made the point that this debate is about not just an economic issue but a moral responsibility. On ESOL, we have a moral responsibility to refugees, people who have settled here and given their work to this country, and many other disadvantaged groups in this area.
The hon. Member for Hornchurch and Upminster (Julia Lopez) made some thoughtful comments about initiatives in her constituency and devolution for London. My hon. Friend the Member for West Bromwich West (Mr Bailey), the extremely experienced former Chair of the Business, Innovation and Skills Committee, mentioned skills shortages; the incident that he raised with respect to a lack of proper supervision points to what we have been saying for the past two years about the capacity of the Education and Skills Funding Agency and the Department to handle such things. The fallout from the machinery of government changes is still causing problems.
My hon. Friend the Member for York Central (Rachael Maskell) rightly drew attention to the skills gaps in her local economy and the importance of issues in the service sector, which I will touch on. My hon. Friend the Member for Bristol South (Karin Smyth) used her experience on the Public Accounts Committee to make some telling points, including one that she has made to me on several occasions about parents being crucial.
We are entering a period of extreme uncertainty regarding our skills base because of the challenges of Brexit, automation, cuts to the adult skills budget, and so on. If we do not have a progressive integrated policy, those things will soon make it impossible for us to build highly skilled local economies or address our productivity crisis. Research commissioned by the Local Government Association reveals that the skills gap is worsening. The LGA says that by 2024 we will lack 4 million high-skilled people to take up available jobs, and will have 2 million too many people with intermediate skills and more than 6 million too many low-skilled people. The Open University has said similar things, and the recent British Chambers of Commerce quarterly economic survey also touched on this issue.
As I said when I hosted the launch of the Learning Revolution Trust’s “Delivering skills for London” report in November, we have to accept and embrace the fact that, for many adults, working models and expectations will continue to change radically. That means that there will be more self-employment, more juggling of multiple part-time jobs, more engagement with small businesses, and more demands on individuals with more complex family structures and needs. I pay tribute to the Learning Revolution Trust for that report, which brought together colleges, council leaders and local players in just the way that they need to be brought together.
We must not forget the people who are often missed out. That report referred to the issue of employing people with disabilities—particularly learners with learning difficulties or disabilities, and people with special educational needs and disabilities. The Maynard review made really important proposals in that area. Will the Minister say specifically what collaboration and co-operation is happening in that respect, particularly with DWP and BEIS? Without their involvement, it will be difficult to take this forward. Add to that the public policy challenges for generations and our exit from the European Union—a lot has been said today about Brexit—and it is clear that the skills system needs to be one of our highest priorities if we are going to escape a shortage of labour when we leave the EU, and when people from the EU who are currently here leave. In that context, we must look at devolving skills budgets.
The Minister will know that in November, England’s seven metro mayors—four Conservative and three Labour mayors—called on the Government to devolve that power much faster. The Minister’s colleague, the West Midlands Mayor, Andy Street—I quote from the Local Government Chronicle—said:
“I believe now is the time for government to go a step further and provide us with the tools to tackle the challenges and seize the opportunities we each face.”
Such requests are piling up across the board.
The all-party parliamentary group for London’s report has been dealt with in great detail. I was privileged to speak at its launch last July. I congratulate my hon. Friend the Member for Croydon North (Mr Reed) and the hon. Member for Bromley and Chislehurst (Robert Neill) on the way that they chair the APPG. My hon. Friend the Member for Hornsey and Wood Green talked about its recommendations, so I will not repeat those, but I will say that, although the report focuses on one city, this discussion can be applied to regions across the country.
While we look at how apprenticeships are funded and how they might be part of the mix, we should explore traineeship funding at local level, too. Later today, I will meet the Association of Employment and Learning Providers and around 40 training providers to discuss a way forward for a programme that they believe the Government have neglected. We need to find ways to use traineeships as a contact point for getting on to apprenticeships and meeting local needs and demands. Another area that my hon. Friend the Member for Hornsey and Wood Green and my right hon. Friend the Member for East Ham touched on is ESOL.
We must remember when we look at local funding that European structural funds have traditionally supported the expansion of apprenticeships and small businesses in areas of the country with strong local enterprise partnerships. The Government have guaranteed funding in this area for the moment, but they have given no guarantee about what will happen when we come out of the EU. Can the Minister tell us what she and her officials are doing to make that clear to No. 10 and her colleagues in the Brexit team? The sum that is potentially available, £725 million, simply cannot be lost from the process.
This call for devolution is not new, and neither are the benefits that would come from it. Back in 2013, my hon. Friend the Member for City of Durham (Dr Blackman-Woods) and I wrote a Smith Institute pamphlet about how the Government and Whitehall had been far too slow to grasp the nexus between skills and sectoral delivery, as well as place delivery. I wrote:
“Put bluntly the age of relying on Government micromanagement and mandarins to deliver what we need in this area has reached a bit of a dead-end.”
I added that
“to encompass new low carbon and hi-tech industries…Such initiatives cannot any longer simply come out of Whitehall”.
The Minister will of course remember what Lord Heseltine said about that issue in his famous 2013 report, “No stone unturned: in pursuit of growth”.
I am hugely conscious of what we need to do for councils, such as mine in Blackpool and that of my hon. Friend the Member for York Central, that were able to create their own apprenticeships in the early 2010s but now, because of funding cuts, are not able to do so. The LGA has put forward an important vision in Work Local, which the Minister should look at as well as IPPR North’s recommendations.
Our national education service talks about how important accountability is:
“the appropriate democratic authority will set, monitor and allocate resources”.
Skills devolution is not just the smart thing to do in the community but the way forward. If local authorities, mayors and combined authorities have the capacity, competence and aptitude to take it forward, the Government need to take a far stronger and more thoughtful look at that.
The Minister for Apprenticeships and Skills (Anne Milton)
It is a pleasure to serve under your chairmanship, Mr Paisley. I congratulate the hon. Member for Hornsey and Wood Green (Catherine West) on securing the debate. We do not have enough time to cover everything. It has been a fantastic debate, and it is useful for me to hear from individual Members. As the shadow Minister said, there is a lot of cross-party agreement on the subject. It is not terribly party political.
The hon. Lady talked about the significant skills gap. I was recently at the WorldSkills competition and conference, and of particular note was that Ministers from about 55 countries all around the world were saying the same thing. This is not a uniquely British problem. There is a skills gap around the world. If we look ahead 10 or 20 years, we cannot think of the jobs that will be available. This is a fast-changing climate.
To give some background on how serious the situation is, the skills for life survey in 2011 reported that 43% of people were found to have literacy skills below level 2 —a good pass at GCSE—and 78% had numeracy skills below that level. Of the respondents, 15% were found to have the literacy skills of an 11-year-old or lower—an estimated 5 million people—and 49% were at that level for numeracy. Therefore, it is estimated that 17 million people have the numeracy skills of an 11-year-old or lower.
According to a 2017 Lloyds bank report, 11.5 million people in the UK are classified as not having basic digital skills. However, increasing numbers of young people are now leaving compulsory education with good standards of English and maths. In 2016, just over 71% of 19-year-olds held a level 2 qualification in both English and maths—the highest figure on record. However, we have a cohort of adults who lack those basic skills.
The hon. Lady was quite right that historically employers’ investment in skills has been poor. Employers and businesses have been bad at investing in the skills of their workforce, and the levy is one way of making sure that that is no longer the case. They pay into an account that must be used for training and assessment.
The hon. Lady also mentioned careers. I hope she has time to read the careers strategy I launched late last year—I spent a lot of time on it. Careers advice has been delivered poorly—I say that not least from my own experiences at school—and the strategy specifically mentions some of the issues she raised. She talked about patchy careers advice. What is the point of education if not to give young people the right start in life? Education is not an end in itself but a launch pad for life. We therefore need careers to become integral to what happens in schools. The largest word on the cover of the careers strategy is skills, because that is what it is about. I am not terribly fond of the word “careers”, because it invokes images that no longer apply. It is about jobs and skills.
It was a pleasure to see my right hon. Friend the Member for Witham (Priti Patel) contribute to the debate. I know how passionately she feels about this subject. As an aside, my hon. Friend the Member for Filton and Bradley Stoke (Jack Lopresti) mentioned the moral case, as did the shadow Minister. I could not feel more strongly that we have a moral imperative to get this right. It is not just about business and the skills needed; it is about making sure that people have a job path and manage to reach their potential in life. It should not matter where they come from, who they are or who they know. Everybody should have the same opportunity.
I urge Members to go into schools and talk about their careers advice, and to look at the careers strategy. There are a lot of requirements—there needs to be a lead on the governing body—and the spine that runs through the strategy is the Gatsby benchmarks.
My right hon. Friend mentioned two examples in Essex. I met a fantastic company in Essex, with 1,000 employees and 54 apprentices at any one time. That company is doing what we need employers to do. If it has a skills shortage, it recruits locally and takes apprentices from level 2 up to level 7, catering in some areas specifically for people with special needs and people on the autism spectrum. It is brilliant.
All the changes brought in have put the Institute for Apprenticeships and employers centre stage. Someone mentioned how the work is led by employers, and in a way it has been devolved to them. They, along with the IFA, can set up the new standards and fill those gaps. My right hon. Friend mentioned the training programmes needed, and that is one way of dealing with that.
Flexibility on the levy came up in the debate. Yes, I am open to extending the levy’s use, but it has been in place for less than a year. We will allow transfers. For me, the levy is something I will review constantly and see how it is spent—it will not be about having a review. What matters is not that we just get apprentices. I want high-quality apprenticeships and the money from the levy to go to where it is needed. There is a lot of money sloshing around in the system, and what matters is that it is not gamed or misspent but spent on the purpose for which it is intended.
On small and medium-sized enterprises, the Government will pay 90% of their training costs, and I believe for SMEs with fewer than 50 employees we pay 100%, so there is nothing to stop them taking on apprentices. The opportunity is there.
Gordon Marsden
I have personal experience of this. The Minister says that the Government pay 90% of SMEs’ costs, but that is only for 16 to 18-year-olds. It would be useful if they were to look at the market for 19 to 24-year-olds as well.
Anne Milton
The shadow Minister raises an important point. There are so many issues I would like to raise—I have all these lovely notes about all the things we are doing. The best response I can give to hon. Members is that it might be useful to set up, along with officials from the Department, a session to let them know what is going on and to get their feedback. That would be a useful way of moving forward, particularly on where we support SMEs, because they are an important part of every local economy.
Although I have lots of things to talk about, I have to conclude. The national retraining scheme, which we have launched, is one of them. We have put £64 million of new funding into early initiatives. I could talk about the skills advisory panels, which will be important in looking at the regional skills issues mentioned by the hon. Member for West Bromwich West (Mr Bailey). I commend what is going on at Dudley College and the local initiatives there. That is exactly the sort of scheme we want to see, and which I am seeing.
T-levels are not in place yet. I wish they were, but they are coming down the road soon. They are part of a consultation. We are also changing completely the approach to careers, and—I am skimming through my notes now—there is the devolution of 25% of the adult education budget. The areas where it is being devolved to have asked for more time, but it will be devolved in 2019-20.[Official Report, 30 January 2018, Vol. 635, c. 4MC.]
None of the skills improvements we want to see will happen through Government action alone. Schools need to see students’ future, not just a set of exam results, as mainstream to their work. Employers need to play their part in building a skilled workforce, and we need a really strong FE sector and those important, independent training providers. That is critical. Parents also need to see that what their children need is a set of skills, not only—and not always—a university degree.
Question put and agreed to.
Resolved,
That this House has considered skills devolution in England.
Rail Services (Bedfordshire)
(6 years, 2 months ago)
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Mr Gavin Shuker (Luton South) (Lab/Co-op)
I beg to move,
That this House has considered rail services in Bedfordshire.
I am grateful to serve under your chairmanship, Mr Paisley. Rail services in Bedfordshire is a wide-ranging subject. Six Members of Parliament represent Bedfordshire, and I am pleased that two of them have been able to attend this short debate. With your permission, Mr Paisley, and that of the Minister, I hope to allow time for them to say a few words about services in their areas.
Rail services in Bedfordshire, and their context, have changed markedly in my time as a Member of Parliament. I grew up in Luton, and throughout that time there was the looming spectre—in a positive way—of Thameslink 2000, now the Thameslink programme. That major upgrade programme was given the go-ahead to totally transform the midland main line as it comes in and goes through the Snow Hill tunnel down to Brighton and the south. The programme has developed significantly since I have been an MP, and it will reach its culmination in the next couple of years when all services are switched on. That major investment programme was developed by the Labour and coalition Governments, and it is now under the Conservative Government. I fully welcome it because it provides much-needed capacity on that vital commuter route.
There have been recent developments in rail services in Bedfordshire in a number of different areas, but there are also long-standing issues that the Department must engage with to bring about service improvements for passengers, and those cannot be overlooked as we reach the end of the programme. In particular, we need vital ministerial action and instruction now as the franchise process on East Midlands Trains goes forward.
If I may, I will speak about two or three local issues that affect Luton residents, and then I will address the vital issue of stopping services on East Midlands Trains. In March 2016 I had the opportunity to raise in an Adjournment debate the long-standing issue of the rebuild of Luton railway station. At the time, I noted that it had been 2,179 days since the issue had last been raised in the House, and I regret to inform Members that in the past two years, the situation has not moved on much.
Luton railway station is in the top 10% of all stations in terms of passenger numbers, but it is old, tired, and inaccessible. In 2009, it was recognised as one of the 10 worst railway stations in the country. The response from the then Labour Government was to award it funding through the Better Stations programme, but that money was pulled after the May 2010 general election. That money was a crucial pot—alongside other pots—that leveraged in cash to get the rebuild. As a result, there is a total lack of disabled facilities to allow people to get to the platforms, and the geography of Luton means that, north and south, the primary access point into the town centre is through the train station, which effectively acts as a wall and barrier for many residents who wish to get to the centre of town with pushchairs or heavy baggage. The centre around the railway station has changed and redeveloped massively, but the same tired station still exists, and as we know, first appearances matter.
If the Minister had been unfortunate enough to start her journey at Luton railway station today, as I did, she would have seen boarded up windows, and the amusingly entitled “water feature” that means that water continues to pour on to platforms. If the single lift was out of action, she would probably have struggled to get access to the platform with her ministerial boxes. Those problems need tackling. A number of abortive schemes have been brought forward, but despite the £6 billion or £7 billion investment from the Thameslink programme, accessibility has diminished as a direct result of that programme. As we go to 12-car running, those with mobility issues must now take a taxi to Luton Airport Parkway, or go on a circuitous route that adds about 15 or 20 minutes to their journey.
The Minister is new to her position, and I hope she will bring a fresh wave of enthusiasm to this issue. Within control period 6, will she specify a rebuild of Luton railway station that befits a town that serves a quarter of a million residents and a wider conurbation? As she knows, the East Midlands franchise is coming up for renewal, and there have been significant moves by the owner of Luton airport, the shareholder, the residents of Luton, and the airport’s operator and board to get the Government to include four fast trains an hour to Luton airport within that franchise.
London Luton airport is a rapidly growing airport in the south-east and the fifth-largest airport by passenger numbers in the UK. It is growing by about 15% a year, and it has great ambitions to take up much of the slack in terms of much-needed airport capacity in the south-east. It is the only London airport without an express train service, and of all London airports it has the lowest percentage of passengers who access it by rail. Some 160 fast East Midlands trains—it will be more under the new franchise—pass daily through Luton Airport Parkway, yet only 10% of them stop. That is a major issue, not least because the new service that connects the terminal to the train station—a major £200 million investment by the people of Luton—will be connected in the next few years. Journey times from St Pancras to the airport gate to check in could be as short as 30 minutes, which is a game changer for connectivity, but that will work only if four fast trains an hour connect the service. London Luton airport is integral to the emerging east-west corridor between Oxford and Cambridge, and to connecting services to the east midlands and the north, and I would like to see progress on that.
Despite the culmination of the Thameslink upgrade programmes over the next year—including physical infrastructure—just before Christmas we learned that there will be a phased introduction of new services of up to 24 trains per hour. Although I understand the desire of the operators to phase in that process, we have had a long time to plan for this. The communication strategy for this has been deeply disappointing, and it is not sufficient just to dump that news on Members of Parliament and commuters shortly before the introduction of a new timetable. This change is so significant that it could have been viewed from space, yet for some reason we learn at the final, gasping moments of the programme, that the full implementation of the timetable will be delayed by two to three years.
Finally, the change from May 2018 to the East Midlands franchise will mean that,
“from 20 May 2018 until the completion of the midland main line upgrade in 2020, East Midlands Trains peak-time services will no longer call at Bedford or Luton. As a result, no EMT services arriving into St Pancras between 07:00 and 10.00, or leaving St Pancras between 16.00 and 19.00, will stop at Luton or Bedford.”
That is a major change and major disruption for many of my constituents who rely on taking a direct train to London, and even more so for those north of Bedford, coming, from example, from Corby or Kettering to work further down the line in Bedford or Luton—and the disruption is happening over a long time. I think that I speak on behalf of all six Bedfordshire Members of Parliament—a group including Conservative, Labour and independent Members—when I say we are deeply disappointed by the way in which things have been communicated, and the shortness of the time window off the back of what even the Rail Minister has acknowledged was a less than perfect consultation exercise on the introduction of the new franchise from 2020. To be told that we shall lose services on East Midlands Trains at exactly the moment when we require them was deeply disappointing.
In the hastily organised meeting chaired by the right hon. Member for North East Bedfordshire (Alistair Burt), where we talked to the operators GTR and East Midlands Trains, and officials from the Department, I asked one simple question: who made the decision? It may not come as a surprise to the Minister, even at this stage of her time in the Department, that a long conversation ensued, with not much clarity at the end of it.
Accountability is vital with such major timetable changes. We all acknowledge, pragmatically, that timetable changes cannot now be reversed for May this year, but my simple ask is that the period of disruption be kept to a minimum. I understand that there are mitigation measures in place, under which GTR will operate additional services that stop at Bedford, Luton and then St Albans—which gets the lion’s share of everything—before going on to St Pancras, but we are used to, and many people’s working patterns are built around, long-distance services and slower commuting services. That is a mix that has served those towns well, and I should like a commitment that East Midlands Trains will again stop during peak hours at Luton and Bedford in the new franchise, and that all efforts will be made to move the changeover date so that it is much earlier. I understand that as the sixth path on East Midlands Trains is introduced, that should not be too difficult. I understand that there may be an issue as to rolling stock, but it is not beyond the wit of the Department to ensure that we do not wait three years.
It would be deeply disappointing, and would undermine the trust of all parties that have supported the £7 billion Thameslink upgrade programme, if the net result were to be more services and seats but a worse user experience for a number of commuters coming from different parts of the network, including Luton, Bedford and Bedfordshire. I make a plea to the Minister to engage fully in the issues affecting rail services in Bedfordshire, to make sure that we deliver for passengers.
Ian Paisley (in the Chair)
I shall call the other Members who want to speak, but I ask them to take literally one minute, as I want the Minister to have as much time as possible to respond, and we must conclude at 11.30.
Andrew Selous (South West Bedfordshire) (Con)
It is a pleasure to serve under your chairmanship, Mr Paisley. I am grateful to my neighbour, the hon. Member for Luton South (Mr Shuker), for letting me speak and I look forward to hearing what the Minister—whom I warmly congratulate on her new post—has to say.
I have three quick points to make—mindful of your admonition about time, Mr Paisley. West Midlands Trains serves Leighton Buzzard in my constituency. I learned recently that it is about to invest another £70 million in train maintenance and will provide an extra 10,000 seats to London each day, which will be available during the daily peak times. That will happen over the next few years but, more importantly, there will be two extra class 319 carriages to help commuters from Leighton Buzzard in the next few weeks. That is vital, with the extra housing growth that we have in Bedfordshire.
Secondly, I completely back the points that the hon. Member for Luton South made about the withdrawal of commuter services on East Midlands Trains from Bedford and Luton. That will cause major disruption to my constituents and there are worries that it is a bit of a stitch-up by some long-distance commuters who have been plotting it for a while; there are even worries about the locations of the consultants’ offices. I note that they are in Nottingham, Derby and London; perhaps they would be advantaged by the changes. I call on the Minister to ensure fair play.
Last, I also completely back the point about the need for four fast direct trains an hour from London St Pancras to Luton Airport Parkway. Luton is the country’s fifth-biggest airport and if we get things right it will be the one that is quickest to get to from central London. Let us get the cars off the roads and give people a good experience.
Mohammad Yasin (Bedford) (Lab)
It is a pleasure to serve under your chairmanship, Mr Paisley. I congratulate my hon. Friend the Member for Luton South (Mr Shuker) on securing this important debate. I shall not be as brief as the hon. Member for South West Bedfordshire (Andrew Selous), but I will try my best.
Rail users who use train services from Bedford have been betrayed. We were promised that electrification of the midland main line would mean faster, greener, more reliable train journeys, and associated economic benefits. Instead, electrification has been cancelled and we are now losing our fast peak-time East Midlands Trains service. The announcement just before Christmas was a big shock. In October, the previous Rail Minister wrote to me that London to Corby passengers would have 50% more seats in the peak than they do now. The letter, which I have with me, also said:
“Passengers will also continue to be served by around the same number of East Midlands Fast trains during peak hours as they are now”.
That turned out not to be true. Throughout the time that we were focusing on the East Midlands rail franchise consultation, the timetable changes were being pulled together. I should be grateful if the Minister would tell us today when the Department first became aware of the timetable changes and why the changes to Bedford rail services were communicated so late in the day. Why will there be no consultation? People are really shocked that there is no consultation.
These changes are huge. Passengers have only a matter of months to rearrange their lives around the loss of these well-used services. Many people moved to the area specifically because they thought it would be easy to commute to work in London or to the north. However, that will no longer be so; it has really upset their timetables and their lives.
Members of the local commuters association stood at Bedford station last week and counted passengers alighting from and joining peak evening trains at Bedford between 4.30 pm and 7.30 pm: 1,711 passengers left the train at Bedford and 130 joined it to travel north. No doubt a count in the morning would offer very similar figures. That means that about 4,000 people travel during peak hours from Bedford station. People are anxious about how they will balance work and family commitments. They tell me they will not be able to get back from London on time to relieve babysitters. Those travelling in from the north tell me they will drive from now on.
Dr Sheena Whyte wrote to me:
“My husband and I chose to live in Bedford because this enables us to work in Leicester and London respectively. Without a direct commuter service between Bedford and Leicester at peak times, the ability of my husband to attend his lecturing role at De Montfort University becomes almost impossible”.
That is typical of many of the letters I receive. People have chosen Bedford because of rail connectivity. We keep hearing about all the extra capacity, but rail use in Bedford is up 20% since 2010, so extra seats were needed anyway. It is said that under the proposals 1,200 seats will be gained, but we are losing 2,000 seats from East Midlands Trains. It is unbelievable: Bedford rail users’ fares rose again in January, and I hope the Minister will urge the train companies to offer some form of compensation to them.
The Thameslink trains that people will be forced to use are not fit for a long commute. Many people use the journey to do work, and they cannot do that on the current Thameslink trains. I hope that the Minister will tell us when all Thameslink services will be retrofitted to include tables, power points and wi-fi.
I intend to host an event in Parliament for rail users as soon as possible, and my office has been in touch with the Rail Minister’s team to try to arrange a date. I hope that the new Minister will confirm today that she is willing to attend that meeting and speak to my constituents.
The Parliamentary Under-Secretary of State for Transport (Ms Nusrat Ghani)
It is a pleasure to serve under your chairmanship, Mr Paisley, in my first ever Westminster Hall debate. To prevent any confusion, I must say that I am not the Rail Minister. The Rail Minister, the hon. Member for Orpington (Joseph Johnson), is in the Space Industry Bill Committee, so I will do my best to respond to all the hon. Members here today.
I will start by thanking all hon. Members who have contributed to the debate. I congratulate the hon. Member for Luton South (Mr Shuker) on securing the debate and thank him for allowing other hon. Members to voice their concerns. As a proud Lutonian, I have many family members in Luton who have given me an update on their travel journeys since I have been in the Department for Transport.
I have listened carefully to all the representations about the immediate plans for rail services through Bedfordshire and it is clear that hon. Members and their constituents have lost patience. It is also clear that public trust, or at least confidence, has suffered. That is in part because of the lack of consultation about plans to introduce new but important changes to services across Bedfordshire. I will say more about that shortly.
I apologise to passengers and to local businesses who will be inconvenienced by the planned service alterations in May. I recognise the short-term pain that those changes will cause to commuters and businesses. I can assure hon. Members that the Government, Network Rail and the train companies are doing everything possible to mitigate the impact of these changes on rush hour passengers. For example, we are currently exploring the potential for running an additional “peak-busting” East Midlands Trains service direct between Bedford and St Pancras.
I want to be clear about two things. The enhancements that we are delivering on Thameslink and the midland main line are essential to sustaining the long-term prosperity of Bedfordshire and the east midlands. I know that the hon. Member for Luton South is chair of the all-party parliamentary group for Thameslink, so he knows much more than I do about that, but I gathered from his speech that he is convinced that the investments are being made for the right reason. The passengers, businesses and communities who will have to cope with some service reductions are the very people who will benefit in the future from newer, faster trains, more services, more seats and more destinations.
I also highlight that we are dealing with challenges associated with success and not failure. More people are travelling on trains than by any other form of transport.
Mohammad Yasin
May I correct the Minister? It will not be extra seats but fewer seats for commuters travelling from Bedford. We are losing 2,000 seats when we lose the EMT train service and gaining 1,200. There will be fewer seats available, not more.
Ms Ghani
The paper I have in front of me tells me that there will be 2,000 seats available. I am aware of the note that the hon. Gentleman sent through to the Department; unfortunately, there was a change of Minister, so that note has been passed on to the new Rail Minister. I know the hon. Gentleman has requested a meeting with his passengers and constituents, and I believe the new Rail Minister will honour that and have the meeting to explain further the impact of the changes on the hon. Gentleman’s constituents in the short term and the benefits for them in the long term. That note has been passed on, and no doubt the Minister will be present at the meeting that the hon. Gentleman wishes to convene.
I recognise that these statements will be of little comfort to hard-pressed commuters who face the prospect of travelling on fewer trains, even if they will be more certain of a seat for their journey during that time. However, the reality is that demand for rail travel is exceeding supply. The Thameslink programme and the upgrade of the midland main line represent only two examples of the major investments that this Government are making across the country to give passengers the rail services they demand.
Last year we announced our intention to commit some £48 billion to improving the reliability of the rail network between 2019 and 2024—all this in addition to the £55 billion already planned for HS2. However, the clear and unavoidable cost to passengers of delivering all those improvements is that there is often an impact on current services in the interim.
I will go back to the question of consultation, which was raised by the hon. Member for Luton South. May 2018 represents one of the largest timetable changes in recent rail history, affecting services across the south-east of England and beyond. The hon. Gentleman also quoted the Rail Minister’s comment that solutions are not always perfect, but that we need to make the changes to increase capacity and reliability on the line. I am rushing through, because we have a short time, but I hope to get to everyone’s points.
In the meantime, let us not forget that the £7 billion Thameslink programme was designed to transform the rail services that are so important to constituents and to the long-term prosperity of Bedfordshire. The upgrade of the midland main line is planned from May 2018 to 2020, and unfortunately Bedford and Luton town will lose East Midlands services in the peak while the upgrade is delivered. However, the Department has agreed to fund East Midlands Trains to lease three additional high-speed trains. In addition, as part of the timetabled development work, East Midlands Trains has found a way to maintain its existing calls at Luton Airport Parkway in the peak, enabling airport passengers from north of Bedford to continue to enjoy a direct service.
However, during that time they will benefit from more frequent Thameslink services. Those services will provide over 2,000 extra peak-time seats from Bedford and over 3,000 from Luton each morning. At Luton, that is far in excess of the number of seats on EMT trains that will no longer be able to call there—most, if not all of which are already occupied. That will be welcome news to some passengers, I am sure. Thameslink will also provide an alternative fast service with fewer stops, delivering journeys of around 45 minutes between Bedford and London, and of around 30 minutes between Luton and London. For some passengers, the convenience of a regular direct Thameslink service to the heart of London will make for an easier commute.
The hon. Member for Luton South mentioned accessibility to platforms and trains. That is within my portfolio, and having done some research I have been assured that Thameslink has better facilities on its trains, better access to toilets, better wi-fi and wider doors, and step-free access to platforms at Bedford but not at Luton. I am more than happy to sit down with the hon. Gentleman to work out what more we can do to apply pressure to ensure accessibility is available to all.
As I said, I recognise that that will be of little comfort to some passengers during the midland main line upgrade. The situation for them will be resolved from 2020, which coincides with our exciting plans for the new East Midlands franchise, on which, I am delighted to say, we conducted a full and thorough public consultation. That consultation is now closed; I thank all those who contributed to the discussion on our proposals. The contributions are being evaluated and we will release our response soon, alongside the invitation to tender for bidders.
Our plans for the East Midlands franchise invite proposals for a brand-new fleet of longer, quieter, more comfortable and more efficient trains, which will provide additional seating with improved on-board facilities on long-distance services. Together with the investment in the midland main line upgrade, a fleet of high-quality electric trains will provide up to 50% more seats in the peak on the fast, direct service between Corby, Kettering, Wellingborough, Bedford, Luton and Luton Airport Parkway, and London St Pancras by December 2020. The next operator of the franchise will also have to bring forward exciting and innovative plans to improve customer service and the provision of information to passengers, and offer tickets that serve flexible travel patterns and improve value for money.
As part of a strategic vision for the railways that puts passengers first, we will also require new ways of working under the next franchise. Therefore, in keeping with our strategy for the railways published last November, the new East Midlands franchise will bring to an end the historic separation of track and train. That separation is no longer suitable for meeting the challenges of today’s intensively used rail network. In its place we will introduce a “one team” approach that will embed shared incentives between Network Rail and the new operator to ensure that passenger interests come first in all decision making. I hope all hon. Members will agree that that vision for the new franchise will ensure that East Midlands services play a full role in securing the long-term economic prosperity of the region.
I thank all hon. Members for contributing to the debate, which has been stimulating. I hope I have answered most questions; if there are any that I have not answered, I am sure that the Rail Minister will most certainly follow up in writing, if not in the meeting that the hon. Member for Bedford (Mohammad Yasin) wishes to convene. I also hope that I have left hon. Members in no doubt that we recognise the importance of Bedfordshire’s prosperity to our national success. For that reason, we have invested and continue to invest at historic levels in enhancements to rail network, trains and services. A railway fit for the 21st century is our vision, and we are rolling out the plans to get us there. Unfortunately, sometimes that comes with unavoidable short-term consequences, for which I have apologised. I assure hon. Members that the Department will continue to work hard with Network Rail and the train operators to mitigate those as far as possible.
I will close with one of the lines used by the hon. Member for Luton South: the £75 billion that we want to deliver must deliver improved quality of service for our passengers and value for money.
Question put and agreed to.
Shipbuilding Strategy
(6 years, 2 months ago)
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Luke Pollard (Plymouth, Sutton and Devonport) (Lab/Co-op)
I beg to move,
That this House has considered the National Shipbuilding Strategy.
It is a pleasure to see you in the Chair, Ms McDonagh, and good to see many experienced hands from defence debates assembling for yet another one. It is also a pleasure to welcome the Minister to his place and to the wonderful world of defence procurement.
I declare two interests. First, I introduce this debate not only as the Member of Parliament for Plymouth, Sutton and Devonport—Plymouth is a proud military city in uncertain times because of the possibility of defence cuts—but as a vice-chair of the all-party parliamentary group on shipbuilding and ship repair. It is good to see so many members of that small but illustrious group—a band of brothers and our sister from Berwick-upon-Tweed—in their places today. Secondly, as a proud GMB and Unite member, I have had the input of those unions into the debate, for which I am grateful. The combined skills and experience of shipbuilders, engineers and master craftsmen and women contribute hugely to the debate, and it is in defence of those jobs and skills and that industry that many of us are here today.
I am sure that the Minister’s new officials have brought him up to speed, but it might be useful if I recapped briefly why shipbuilding and this debate are so important at the moment. First, though, every hon. Member, on both sides of the Chamber, wishes him and the new Secretary of State for Defence well in their battle with the Treasury to secure more funding.
The UK spends too little on defence, and that has consequences for what the Ministry of Defence can spend on shipbuilding, ship repair and ship procurement, capabilities and weapons systems. The excellent report by the Select Committee on Defence, “Shifting the goalposts? Defence expenditure and the 2% pledge”, shows that the last Labour Government spent on average 2.5% of GDP on defence, and the figure did not fall below 2.3%. Many hon. Members, on both sides of the House, would like a return to that level of spending.
With defence inflation running at a greater level than consumer prices index inflation, the extra bit that the Treasury affords defence is being eaten away as the real-terms value of defence procurement is put under more pressure. I think I speak for most hon. Members when I say that we strongly oppose, on a cross-party basis, cuts to our amphibious ships based in Devonport, in the constituency that I represent, and plans to merge the Royal Marines, but that should be taken as a given in this debate.
That is the backdrop, but the military context is important as well. We live in very uncertain times. Russia is expanding her horizons, has invaded European countries and has largely got away with it. China has ambitions across the Pacific. And the Royal Navy’s ability to command the waves is severely constrained by a shortage of manpower, a privatised recruitment system that is not delivering, and ships tied up because of faults, personnel shortages and a lack of resources. There is a focus on the carriers and continuous at sea deterrence, but the rest of the Royal Navy is suffering, and my argument is that this House will not stand for it.
The national shipbuilding strategy was much delayed, but was at least a good start. It accepted in full Sir John Parker’s recommendations, so I am not sure why it took so long to be produced. Defence aerospace is not as fortunate as shipbuilding, because at least we have a strategy. Britain is good at shipbuilding, and the many warships on sea trials, in dock being built and being planned are testament to our naval heritage and the up-to-date skills of a superb workforce right across the UK. I hope that today’s debate will illustrate to the new Minister and his officials not that that plan is wrong per se, but that with scrutiny we can make it more robust and more valuable to industry and our armed forces.
I want to highlight two principal areas in asking for revisions to the document. One is the procurement of the Royal Fleet Auxiliary’s vessels, especially the new fleet solid support ships, and the other is the configuration, capabilities, roles and realities of the proposed Type 31e frigate. As I said, the first issue is the new RFA solid support ships. The proposed three ship orders, with the vessels coming in at 40,000 tonnes apiece, would match the 120,000-tonne construction contract for the new carriers so ably delivered by British workers across the UK and assembled in Scotland.
I personally favour a restricted tender for the ships, so that only UK shipyards could build them, as they will be carrying arms, munitions and supplies, but I concede that international competition is the most likely option that the Minister will choose for them. In such circumstances, not only must the UK industry be encouraged to submit a bid and not actively discouraged by the MOD, but we must ensure that the procurement does what the procurement for the MARS—military afloat reach and sustainability—tankers did not: it must truly value the social, employment and economic impact of the work for shipbuilding and supply chain communities right across the country.
Mr Stephen Hepburn (Jarrow) (Lab)
I am sure that my hon. Friend is aware that shipbuilding industries throughout the world are very heavily subsidised, in one way or another, by their Government. That does not happen in this country. Does my hon. Friend think that we could get a better, more level playing field if the Government addressed their mind to that?
Luke Pollard
I thank my hon. Friend for that intervention; I agree with him. In fact, our hon. Friend the Member for Glasgow North East (Mr Sweeney) has raised the concern that state aid from the South Korean Government was potentially part of the consideration of the value of the MARS tankers contract, which went to South Korea. That £452 million contract was potentially subsidised by the South Korean Government, who are building skills and employment in Daewoo shipyards in that country. Excluding a little bit of final outfitting in the UK, those jobs have been outsourced and offshored.
Contracts to build ships for the Royal Navy and Royal Fleet Auxiliary should be onshored. The ships should be home grown, British designed and British made, using British steel and British technologies, and preserving Britain’s sovereign defence capabilities to design, build and equip complex and important ships for our own use and for export. The MOD could give its friends in the Treasury the good news that between 34% and 36% of the contract value would be flowing back into its coffers in tax and national insurance—bad news potentially for Kim Dong-yeon, the South Korean Finance Minister, but good news for our Chancellor of the Exchequer, who I am sure is following this debate closely and with avid interest. He is, after all, a big fan of the armed forces.
If UK shipyards build elements of the ships, it could help to fill gaps in the order books of yards right across the UK and contribute to what I believe should sit alongside the shipbuilding strategy: a clear running order of contracts over the next 30 years for the Royal Navy and RFA; a pipeline of work; a reason to invest in world-class design and production facilities, not just on the Clyde, but in reanimated yards such as Appledore in north Devon and those of Harland and Wolff and Cammell Laird. Ipsos MORI research commissioned by the Department for Business, Energy and Industrial Strategy found that 100 shipyard jobs lead to an additional 32 jobs in the manufacturing sector within a 60-km area, so there is a multiplier effect from investment in UK shipbuilding.
Dr David Drew (Stroud) (Lab/Co-op)
Does my hon. Friend accept that at the other end of the scale, the commercial end, there are also very profitable yards? There are two in Stroud, funny as that may seem, at Sharpness and Saul. It is important that we understand that the whole shipbuilding industry needs support, but also recognise that it is a very integrated industry. Does my hon. Friend agree?
Luke Pollard
I thank my hon. Friend for that intervention. I do agree. The great strength of this debate on the national shipbuilding strategy is that we can praise the contribution not only of those yards that might be seen on the 10 o’clock news—the ones with the very large cranes and very large warships—but also all the supply chains to the smallest yards, and all those businesses that supply the kit that goes on the ships. That makes the UK a formidable power when it comes to shipbuilding. I am glad that the shipbuilding strategy hints at that, but perhaps it could go a little further in celebrating it.
That brings me to the second point, and recognising that many hon. Members want to speak, I will be brief. In my maiden speech in the House of Commons in June 2017, I called for more, and more capable, frigates. The Type 31e is not exactly what I had in mind. I am concerned that the shipbuilding strategy embeds the reduction of truly world-class frigates from 13 to eight. The Type 26 is a fine global combat ship, although one of the City class should be named after Plymouth—a campaign started by my Conservative predecessor and continued proudly by me. It is a good ship and a good programme that will serve UK interests well, but there are too few of the ships—to be precise, five too few.
The top-up light frigates have an ill defined military role, a confused capability and a price tag that gives this the potential to be the Snatch Land Rover of the Royal Navy—a comment by the Royal United Services Institute’s director of military sciences. I have a different name for that class: corvettes. I am genuinely concerned that over the next few years this class of ship will be the focus of much critiquing, as it fails to hit established frigate standards and looks less capable than the Type 23 frigates that the ships replace.
Mr Kevan Jones (North Durham) (Lab)
On the point about an undefined task, we had it from the Minister—I have had it in a written answer—that the ship will not be able to do any NATO tasks, and it will not be able to do any carrier protection work, so can my hon. Friend suggest what the role of this vessel will actually be, apart from being a glorified fishing protection vessel?
Luke Pollard
My hon. Friend is spot on. The confusion about the role of this warship is at the heart of the problem with the shipbuilding strategy. It looks like we put the cart before the horse in defining a price tag but not a role. It is essential that in the next couple of months the Ministry of Defence comes forward with that, to provide all defence-leaning Members of Parliament, on both sides of the House, with a reason to celebrate this warship, not critique it, because I worry that the critique will not support it and help its attractiveness as an export product. We should turn those weaknesses of the Type 31 into its strengths and promote a corvette class, not a poorer frigate. That would give the Royal Navy two carriers, two amphibious assault ships retained and not cut, six destroyers, eight proper frigates, five corvettes and the new offshore patrol vessels. That is still too few ships, but a line we should not go below, or accept further cuts or reductions against.
The shipbuilding strategy suggests that UK yards will build five Type 31s as replacement for the Duke class, and pitch for competition for 40 to export. As Darth Vader warned Director Krennic in “Rogue One”—a film I am sure we have all watched:
“Be careful not to choke on your aspirations”.
I truly want to believe the MOD when it says that there is a market abroad for 40 Type 31s, built in Britain, but I cannot see where that might be.
Chris Stephens (Glasgow South West) (SNP)
Given that we do not know the capability, and given the comments made by the hon. Member for North Durham (Mr Jones), is there not a question as to who we would export these Type 31 frigates to? Does the hon. Member for Plymouth, Sutton and Devonport (Luke Pollard) agree that the view of many in the shipbuilding industry is—to quote his hero Darth Vader again—that we want these ships, not excuses?
Luke Pollard
As a Luke, I am not sure Darth Vader is quite my hero, but the point the hon. Gentleman makes is a good one. There are 14 other ship manufacturers globally providing a light frigate option of between 2,000 and 4,000 tonnes. That is an awful lot of competition when the customers are ill defined. Let us look at some of those competitors for the Type 31 frigate: there is the French and Italian FREMM class; the Spanish Navantia F-105; the Danish StanFlex; Germany’s F-125 Baden-Württemberg class; and South Korea’s Incheon class, let alone the myriad cheaper platforms built by China and other far-eastern nations.
Mr Kevan Jones
It is a fact that Britain last exported a frigate over 40 years ago. When I raised that with the new procurement Minister at Defence questions, all I got was an accusation of talking down the British shipbuilding industry. Does my hon. Friend agree that as a matter of urgency the MOD needs to clarify exactly where it sees the market for these 40 frigates?
Luke Pollard
I agree with my hon. Friend. Clarity around the role, capabilities and market for the Type 31 is absolutely critical in building a strong case—a marketing dossier—that says, “British Members of Parliament support this ship and will actively go out and sell it,” because I am concerned that we cannot even advocate for the Type 31 for UK military use, let alone military use for those abroad.
Mr Paul Sweeney (Glasgow North East) (Lab/Co-op)
Does my hon. Friend agree that an increasing pattern in the procurement of ships around the world for naval purposes is that the proposition for bidders, such as Fincantieri and BAE Systems, is that those ships will be part of an industrial offer to the customer country, in that they will be built in their country, so the potential for build in the UK for export is extremely limited, and part of the competitive drive is to move that work into the country purchasing the ships as part of an industrial offer?
Luke Pollard
My hon. Friend perfectly sums up where this is going. It is clear that we need to look at what those jobs will be. Will they just be in design, or will they be in build in the UK?
We need to recognise that the Royal Navy needs to sell the best in-class version of the Type 31 if it is to be a compelling export product; it should be a floating showcase, an example par excellence, not a cut-back, scaled-down, bargain-basement, cheap as possible, poorly-armed, combat-light, barely acceptable platform. We need clarity on whether the export version will be built here or abroad. Britain is building ships. Britain is building corvettes and offshore patrol vessels. Babcock is building the Irish navy OPVs at Appledore: the Samuel Beckett-class OPV is lightly equipped, but capable. BAE Systems is building OPVs: the Batch 2 river-class ships and the Khareef class for Oman. They have similar armaments, but with the ability to add Exocets and a medium helicopter. Those ships could well form the basis for the Type 31 Arrowhead or Leander-class options—extended OPVs, rather than frigates in their own right.
My hon. Friend the Member for Glasgow North East mentioned customers and where they will be. Australia and Canada are looking to procure new frigates in the coming months, but they are more in the market for a Type 26 all-rounder anti-submarine warfare frigate, rather than Type 31s. I appreciate that the Minister has inherited someone else’s homework and ambitions, but where will the 40 export orders come from and can the Type 31 really win 40 orders? I am naturally cautious about suspiciously round numbers, and this shipbuilding strategy suggests not only a suspiciously round £250 million per ship, but that there will be 40 exports. As aspirations go, it is good to be bold, but I would prefer us to be realistic about the delivery of this ambition, especially against the backdrop of post-Brexit uncertainty and volatility in the value of sterling.
As with the national security review, I fear that the national shipbuilding strategy puts the cart before the horse. We know the price tag, but not the capabilities. We know the final bill, but not what foes will be faced, what waters will be patrolled or what role it will have. Clarity is our ally if we are to make a strategy that is truly joined up and deliverable. In very uncertain times for our armed forces, this strategy should offer us hope of long-term thinking. I say to the Minister that the paralysis and the pitched battles of the national security review are understandable, but they do not have to lead to the paralysis announcements from the MOD.
I encourage the Minister to announce the base porting arrangements for the Type 26s and the Type 31s, providing clarity for future investment in base ports. Devonport offers a genuine world-class base, as he would expect me to say. I also encourage him to announce that the fleet support ship contract will be open to UK bids, and that no UK shipbuilder will be discouraged from entering by the MOD in order to curry favour for other contracts, especially the Type 31. I also encourage the Minister to announce that the social, economic and employment impact of the contracts will be assessed as part of the contract decision making process. Bring forward greater detail about the Type 31—its capabilities, roles and operations—and be clear about how it will be built in the UK.
There is a huge opportunity to be ambitious here, an opportunity to build and sustain a revitalised shipbuilding industry providing good, well paid and high-skilled employment across the country, backing British supply chain jobs, creating apprenticeships and, importantly, providing the Royal Navy and the Royal Fleet Auxiliary Service with the ships they need for Britain’s sea power to rule the waves once again. A strong defence is worth fighting for, and we know that a strong defence cannot be done on the cheap.
Dr Julian Lewis (New Forest East) (Con)
It is a pleasure to contribute to this debate under your chairmanship, Ms McDonagh, and to follow the hon. Member for Plymouth, Sutton and Devonport (Luke Pollard), who has done a service—not for the first time—to the House of Commons, by bringing key defence issues for our consideration.
Having said that, I am going gently to disagree with the hon. Gentleman. I did not know what line he was going to take until I heard his speech this afternoon and I shall be a little heretical myself, because there is a track record on this question of what we ought to do in terms of designing replacement frigates, particularly lighter replacement frigates.
The context in which one wishes to set this is the relentless decline in the size of the frigate and destroyer fleet. The House will probably not need reminding that we had more than 60 frigates and destroyers at the time of the Falklands campaign. By the time that my cohort came into the House of Commons in 1997, that number had come down to 35 frigates and destroyers.
The incoming Blair Government conducted the strategic defence review of 1997-98. That was where the twin concepts of the carrier strike force and the amphibious force making up the sea base, which would be able to exert land and air power from the sea in any particular theatre of warfare across the globe, was born. As a price for bringing forward the idea of the two super carriers, a modest cut in the number of frigates and destroyers was put forward, from 35 to 32 vessels. We all know what happened next: the 32 came down to 31; the 31 came down to 25; and the 25 then came down to the present woefully inadequate total of 19. That is the issue that the hon. Gentleman quite rightly wishes to address. If there had not been any changes in the method of warship design, I would have signed up entirely to his argument from beginning to end.
But the one factor that I wish people to take away from my contribution to this debate is the concept of a template warship. The phrase “modular build” is the one that we need to keep in mind.
I talked about the way in which the numbers of frigates and destroyers were reduced. Part of that process was the way we went about replacing the destroyer fleet. At the time we started introducing the Type 45 we were down to 12 destroyers, and the original idea was that those 12 destroyers would be replaced with 12 Type 45 destroyers. We know what happened then: the same process —the 12 went down to eight, and eventually we ended up with six. Why did that happen? It happened because of our insistence, and the Royal Navy’s understandable concern, that the new warships should be top of the range, ab initio, in every respect that can be thought of. When we do that and we keep adding, in the long course of a period of design and build, more and more requirements to a new warship, inevitably the price goes up and the number of units we can afford to build comes down.
I was fortunate enough to see the Type 45 destroyers close up at a very early stage. Being taken on a tour of the ship, I was struck by the fact that a very large area in the forward part of the ship was devoted to the ship’s gymnasium. Why did the Type 45 destroyer have such a large gymnasium? The answer I was told was that the space that was going to serve as a very large gymnasium was earmarked for the future, so that when we could afford to add a suite of tactical Tomahawk cruise missiles—surface-to-surface, long-range missiles, which we could not afford to equip the Type 45 destroyers with at the time—we would be able to remove the paraphernalia of the gymnasium and insert a module into that area, thus installing this massive upgrade in the weapons system at some future stage in the ship’s life. Warships are rightly designed to have a long lifespan; we are told that the new carriers, for example, are meant to last us for the next 50 years. So how much better is it—the answer is hugely better—to design them from the outset so that instead of having to rip the ship apart halfway through its life to upgrade it, we can easily add to its capacity?
In 2009, I published an article that got me into a lot of trouble. In the RUSI Defence Systems journal in February 2009, I said what was perhaps the unsayable: that if we were ever going to get the future frigate fleet back up to the sort of numbers we needed, we would have to design it in such a way that it was as “cheap as chips”. The First Sea Lord of the day, Admiral Sir Jonathon Band, who is a great man, was not at all happy with that phrase. But I did not use the phrase lightly; I used it because now we have this technique of plug-and-play, of modular build. If we could design a template warship that had all sorts of empty compartments in it from the outset, and if we could get a large number of hulls into the water from the outset, by a process of incremental acquisition, we could arm them up so that, over a period of years, they would become more and more capable.
I see the hon. Member for Plymouth, Sutton and Devonport nodding as a sign, I hope, of some approval of the line that I am taking. We are not disagreeing about ends; we are slightly disagreeing about means. I do not wish to see the Type 31e become more and more expensive before even the first one has been completed. I wish to see a hull design—I look to the Minister to tell us how that is progressing—that will enable us to maximise the number of hulls and to spread the cost of a really high-capability warship, which the hon. Gentleman rightly wants to see and I want to see at the end of the process, over a longer period of years. That is so that, when the defence budget gets the uplift that it needs—and we all hope it will if the Secretary of State for Defence is successful in his so far heroic but incomplete campaign to take on the Treasury—we can hope to start to reverse the terrible downward spiral in the number of frigates and destroyers that had rendered our fleet incapable of doing its duty. The Royal Navy, as we know, is very strong on doing its duty, and we need to give it the tools and the warships to finish that job, whatever job it is confronted with in the uncertain future.
Jim Shannon (Strangford) (DUP)
It is always a pleasure to speak in debates, Ms McDonagh.
May I first congratulate the hon. Member for Plymouth, Sutton and Devonport (Luke Pollard) on setting the scene so well, and the right hon. Member for New Forest East (Dr Lewis), the Chair of the Defence Committee, on his special contribution? I am very pleased to make a contribution, and in debates such as this I always refer to the fact that as an ex-serviceperson—on the land, of course—I have an interest in the support of service personnel and wish to see that we do our best, whether it be for the RAF, the Royal Navy or the Army. This debate gives us a chance to focus on the Royal Navy. My hon. Friend the Member for Belfast East (Gavin Robinson) is doing the armed forces parliamentary scheme with the Royal Navy and is also on the Defence Committee. We are very privileged to have his contribution in that Committee, and hopefully in this debate as well.
I am proud to be from a party—the Democratic Unionist party—that pushed the last Government hard into increasing the spend on defence by 1%. As we try to do, we used our influence in a very constructive fashion to make sure that defence issues are the top priority for Government. We have also got some feedback on that, as my hon. Friend will know. We have some commitment to defence spend in Northern Ireland in relation to reserves—this debate is not about that, of course—and capital spend. Those are some of the good things that we are doing positively in relation to Northern Ireland with the Ministry of Defence.
The reason for that defence spend is clear. While it is great to have money spent locally, the fact is that no matter where in the United Kingdom of Great Britain and Northern Ireland someone lives, they will benefit from armed forces that are well trained, well fed and well equipped. That is the reason we are here. The summary in the national shipbuilding strategy, which I am not going to read because I am sure that Members have it in front of them, is clear that the Royal Navy needs to have the eight Type 26 frigates and the strategy for the Type 31e frigates as well. Again, the hon. Member for Plymouth, Sutton and Devonport referred to that.
I believe that we benefit by having been able to send aid over after the recent Hurricane Irma and during the crisis period. Our Royal Navy was already there and able to respond. We benefit by being able to meet our responsibilities throughout the world with a fleet that is capable, and we further know that we can defend these islands and our British colonies when needed. Better than our knowing that we can do that, the rest of the world also knows—it is important that it does—that we can and will do so if and when the need arises.
I will tell this story, not flippantly but to have an illustration on the record. I once had a teacher who advocated picking out a pupil at the start of the year to be introduced to Cain and Abel. The premise was that he had a cane and was able to use it. He then demonstrated that to the class at the first opportunity—I was a recipient of it on many occasions in the ’60s—and we knew from then on that we did not want ever to meet Cain and Abel again. That is perhaps rather simplistic, but it illustrates why it is important that the Royal Navy has the ability to be our Cain and Abel wherever it may be in the world. I am not advocating the use of blunt force to make a statement; I am saying that we have proven in the past that our abilities are numerous, and that we have the premier armed forces in the world. We also need to underline the fact that that is not simply a historical fact; it is a present-day reality. For that, we need facilities that are capable and that make the grade. Every one of us in this debate, whatever angle we come from, will want to impress that on the Minister, whom I am pleased to see in his place; I am also pleased to see the shadow Minister in his. Hopefully, we will all make constructive contributions to this debate, so that we can move forward in a positive way.
I read an interesting article on the topic on the website Save the Royal Navy that gave a concise view of where we are and where we are headed in terms of our shipbuilding strategy and defence capability:
“When the Tide class oil tankers were ordered in 2012 (a remnant of the Military Afloat Reach and Sustainability (MARS) project), no British company had bid for the construction work. There were two main reasons: most UK yards were occupied working on the QEC aircraft carriers blocks, but they also knew they would not be able to compete on price with foreign state-subsidised shipyards. The controversial decision to look abroad made sense at the time, the MoD got four ships at a bargain £452 million and no British shipbuilder could claim they would go under without the work. (£150 million was spent in the UK with BMT who designed the ships together with A&P Falmouth, who are fitting them with additional military equipment). Five years later, the landscape has changed significantly”,
which is why this debate is important.
“The QEC construction project is in its final phase, but one of its very positive legacies has been to help stimulate a modest revival in commercial shipbuilding, and there are now yards hungry for further naval work.”
In a past life as a member of the Ulster Defence Regiment back in the ’70s, I guarded the Samson and Goliath cranes in the old Harland and Wolff shipyard, which made a significant contribution to shipbuilding in Northern Ireland. On the border of my constituency, within that of my hon. Friend the Member for Belfast East, the shipbuilding giant was at one stage the biggest employer of men in both our constituencies, with some 35,000 workers at its peak in the 1920s.
Harland and Wolff has not produced a ship in about 14 years, although it continuously built and provided ships over a period of time. The last to leave Queen’s Island was the £40 million Anvil Point, at the start of 2003. The 22,000-tonne ferry was the second of two vessels built for the Ministry of Defence. Harland and Wolff is teaming up with other companies such as Thales, also in my hon. Friend’s constituency, to bid for a £1.25 billion contract. I believe that they have not only the ability but the drive and desire to deliver the best that can be given. They are invested in securing every bolt and screw, not simply for the sake of their reputations but for the sake of their own children and grandchildren, who may well serve their country on the ship.
Gavin Robinson (Belfast East) (DUP)
I am grateful for the lettered references to me in glowing terms. Harland and Wolff in my constituency is one of many shipbuilders seized with the aspiration associated with the national shipbuilding strategy. Does my hon. Friend agree that it would be helpful for the Minister to clarify the distinction between UK content and UK benefit? What is intended, and what surety can UK shipbuilders take from that distinction?
Jim Shannon
Everything that I said about my hon. Friend was absolutely true, so he can take my comments as such, but his intervention was specific to the Minister, to whom we look for a helpful response. My hon. Friend outlined some of the issues in the briefing document that we had beforehand about building only in the UK and skills. We need skills not only in the Royal Navy but in the shipbuilding programme. Costs can never be ignored; it comes down to how we do it best. I understand that we are considering exports for the ships and frigates that we are building, but it seems that that may not have been realised yet. Quantity or quality is a difficult debate. What is best? We certainly want quality, but perhaps we need quantity to go along with that.
To return to the Royal Navy’s ability to fulfil all its missions, let us consider some of the things that we are aware that the Royal Navy does today. Fisheries protection will become more apparent when we leave the European Union on 31 March 2019. All our seas will be back in our control, and when they are, we will need to police them to ensure that other countries do not take advantage of places where they once fished, but where they will only be able to fish if they have an agreement with us. We must put that on record. The Navy has a role in the Falkland Islands and in anti-piracy in eastern Africa, as well as in dealing with refugees in the Mediterranean. The demands on the Royal Navy are immense; we should keep that in mind.
I am suddenly conscious of time, so I will finish with this. It is vital for the local economy that shipbuilding is done in-house and not outsourced, and the collaboration of local and UK mainland companies seeks to do that. I believe that that trumps the freedom of trade thought process, with which I agree to an extent, although I do not believe that it precludes the fact that charity begins at home. It is not charity, of course; it is having business, workers, jobs and contracts at home. If we have the capability to produce, which we clearly do, then that work can and must be carried out right here at home.
Mr Paul Sweeney (Glasgow North East) (Lab/Co-op)
Thank you for giving me the opportunity to speak in this debate, Ms McDonagh. I thank my hon. Friend the Member for Plymouth, Sutton and Devonport (Luke Pollard) for his comprehensive contribution, in which he outlined the key concerns about the national shipbuilding strategy, and the right hon. Member for New Forest East (Dr Lewis) for outlining his longer term perspective on the attrition of the capability of the Royal Navy’s frigate and destroyer fleet, which the national shipbuilding strategy ought to aspire to address as an outcome.
I first encountered the man who wrote the report that spurred the creation of the national shipbuilding strategy, John Parker, about three years ago when he attended Glasgow University to deliver a speech on his history of working in the shipbuilding industry. He had a great reputation as a managing director at Harland and Wolff shipbuilders in the 1980s, where he started as an apprentice and grew up through the ranks. There was an international discussion about the long-term decline of British capability, from the global world leader in the shipbuilding industry that it once was to a marginal player now even in Europe, never mind the rest of the world.
I asked him three years ago when I was working at BAE Systems what his greatest regret was in his career. He stood up and said, “My greatest regret is that Europe is building 90% of the world’s cruise ships, and Britain, with such a great heritage of building world-beating ocean liners and passenger ships, is building none. There are high-wage, highly equipped shipyards in Europe building these vessels, and Britain isn’t building one of them.”
As managing director of Harland and Wolff when it was under the ownership of the British Shipbuilders Corporation—the industry was nationalised until the late 1980s—he recognised the emerging market for cruise ships, which were once again becoming a popular recreational pursuit. Harland and Wolff developed proposed designs for cutting-edge new cruise ships and went to the Government for funding to build them for Carnival, now the biggest cruise company in the world, but the Government said that they were not interested in the design. They wanted to hold a fire sale, get rid of the assets and remove shipbuilding from public ownership. They were not interested in any further investment in what they saw as a dying industry.
In the very same year—1987, the year before Harland and Wolff and Govan shipyard were sold off—Meyer Werft in Germany, a family-owned business, got funding from the German state investment bank to build a completely new, undercover shipyard and then the world’s first modern cruise ship. Today, that shipyard dominates the global market for cruise ship and complex shipbuilding in Europe, building about two 100,000-plus-tonne ships every year. That contrasting approach is symptomatic of a broader malaise that we face when it comes to industrial policy and planning in Britain.
Chris Stephens
Will the hon. Gentleman outline what the devastating economic consequences were of that decision on cities such as ours, Glasgow, as well as Belfast and elsewhere in the UK?
Mr Sweeney
The impact was absolutely devastating, and we saw the wider impact in Govan as well, which was a commercial shipyard up until 1999 when Kvaerner pulled out. That Norwegian oil company rebuilt the yard in the early 1990s for commercial oil tankers and gas carriers. The result of that collapse was disastrous. Sir John Parker said that just as we had got British shipbuilders match-fit, ready to compete, the rug was pulled from under them. Just as the industry was ready to re-enter the market and be a globally competitive player, it was wrecked. That is the sad legacy of the collapse of British merchant shipbuilding to the point where we are entirely reliant today upon the Ministry of Defence to sustain what is left of British shipbuilding capability. That is partly why I am concerned about the national shipbuilding strategy, if it is restricted in its entirety to naval shipbuilding and not the wider issue of how we re-establish a market foothold in commercial shipbuilding. The two are intrinsically linked.
If we are to achieve a competitive advantage we ought to broaden our horizons and re-establish how we deliver a resurgence in British commercial shipbuilding capability. That was Sir John Parker’s biggest regret. That is what drove his frustration at that time, and a lot of that is what underpins the recommendations in his report. He talks about a vicious cycle of changing requirements, which the right hon. Member for New Forest East mentioned, and a year-zero approach every time we have a new MOD shipbuilding programme which duplicates effort and introduces unnecessary costs. It is so bespoke in its approach to designing ships that it introduces unnecessary costs, which render British shipyards uncompetitive, even in the naval sphere, never mind the commercial sphere.
Ruth Smeeth (Stoke-on-Trent North) (Lab)
I thank my hon. Friend the Member for Plymouth, Sutton and Devonport (Luke Pollard) for securing this debate. My hon. Friend the Member for Glasgow North East (Mr Sweeney) has just hit the nail on the head. Does he agree that the lack of a steady drumbeat of orders to ensure our industrial base has caused this problem, and that the wonderful words of the shipbuilding strategy are not being delivered by the Government?
Mr Sweeney
I absolutely agree. We see a cognitive dissonance between the vision of the outcome desired and the prescription to deliver that vision and commitment, which are not in alignment. They are not going to deliver it. That is the tragedy of it. We all want to see the national shipbuilding strategy succeed. We are trying to deliver our own collective understanding of what is best for the British industrial capability into this document, so that we achieve the outcome of a globally competitive and effective shipbuilding industry in the UK again.
My hon. Friend mentioned a feast and famine approach to British shipbuilding, which has long been an issue, particularly as the commercial capability has fallen away. I look in stark contrast at the American approach to shipbuilding. The Arleigh Burke destroyer programme plans to build 77 ships. Those ships have been consistently under construction with the same hull since 1988. They have been built since the year before I was born, and it still plans to build more. That is a consistency of approach that we ought to think about adopting in the UK. It would essentially be a continuation of the Type 23 frigate programme, but adapting its technology and capability and maintaining the learning curves achieved over a 30-year build programme. That would be a huge opportunity for British shipbuilding. Why do we insist on stopping every time we build six Type 45s and starting from scratch on a Type 26 when a Type 45 platform could have been adapted to deliver the same capability as a Type 26? The approach is wrong-headed.
The Type 45 project has 13 different types of watertight doors. Why do we have such a huge level of variance in the programmes? We have no standardisation, no grip on the design, no standard approach to delivery, and no innovation in adopting new products and defence standards. We have no resilience or innovation in defence when it comes to an entrepreneurial way of delivering ships. If we were to benchmark it against how Meyer Werft build a complex cruise ship, the lead time between specification to delivery of the ship is minuscule compared with what we do with the equivalent ship of, say, our Type 26 platform. It is years and it is unacceptable. We need to seriously grip that if we want to drive down costs, deliver value in the naval shipbuilding industry and achieve the outcomes in terms of numbers for the Royal Navy that we desire.
The prescription is chaotic. It talks about a vision for having more
“certainty about the Royal Navy’s procurement plans”,
yet it wants to introduce a competitive programme for a Type 31. That goes right back to the early 1990s with the Type 23 programme, when Swan Hunter was competing with Yarrow shipbuilders on the Clyde, and what happened? None of those shipyards could invest in modern facilities and modern practices that would deliver the benefits in terms of timescale and minor efficiencies that would allow the ships to be built for value for money. It ended with the collapse of Swan Hunter and a drip-feeding of orders. There were huge redundancies in the shipping industry and huge uncertainty. This is a recipe to return to that model that was deeply flawed in the 1990s and led ultimately to the loss of British shipbuilding capability. That is why we are appealing today for a commitment to uphold what was originally planned in the terms of business agreement, which was extinguished.
A letter of 19 October from the Under-Secretary of State for Defence, the right hon. Member for Bournemouth East (Mr Ellwood), said that the terms of agreement was extinguished. It committed to a single world-class site for complex warship building on the Clyde and investing in that shipyard facility to make it world class, upper quartile. That would deliver the benefits industrially to allow us to deliver a national shipbuilding programme for frigates and destroyers, which would ensure that they had a consistency of build that would deliver the long-term benefits, learning curves and efficiencies. It would drive down the cost of the ships and allow them to be built at volume, which, as the right hon. Member for New Forest East mentioned, is necessary to sustain a larger Royal Navy fleet. That is how we should do this. It is not about spreading it around, which will not work.
The Royal Fleet Auxiliary programme has better potential because it has a lower gross compensated tonnage and is a less complex ship, although it is still complex. If the tonnage of 40,000 tonnes each was spread around the remaining UK shipyards, that would provide the bedrock of capacity to sustain all the shipyards around the UK, while having the designated complex war shipyard on the Clyde. That is what happens with the Canadian and Australian shipyards and it is what happens in the United States. That is the approach we ought to have. Why has the national shipbuilding strategy not taken account of international benchmarks? Why has it not got a commercial shipbuilding focus as well to develop a longer term model based on European norms? Why are we not committed to building British ships, including the Royal Fleet Auxiliary ships, in the UK? I could go on for much longer because I am closely associated with the topic.
In summary, I have outlined what we want to see changed in order to make the national shipbuilding strategy worthy of the name it deserves. We need world-class UK shipbuilding back, and the way to do it is to adopt those suggested improvements.
Chris Stephens (Glasgow South West) (SNP)
It is a pleasure to see you in the Chair, Ms McDonagh. I thank the hon. Member for Plymouth, Sutton and Devonport (Luke Pollard) for securing this debate. During the defence debate less than two weeks ago in the Chamber, every single Member of the all-party group on shipbuilding and ship repair complained that we had applied for debates since the publication of the national shipbuilding strategy. All of a sudden, at the very next ballot, the hon. Member for Plymouth, Sutton and Devonport secured one, so I thank him for that. I hope he will accept my apology to him in relation to Darth Vader. I actually misspoke. I did not mean to say “his hero”. What I meant to say was “their hero”, because Darth Vader is a Conservative icon and not of any other political party. I can see nods coming from the Conservative Benches.
The history of how we have got to this point is important, particularly for those of us who represent the best shipbuilders in the world: the shipyard workers on the Clyde, and those in the Govan shipyard in particular. In 2014 they were promised that 13 Type 26 frigates would be built there, plus a frigate factory. Ever since, there has been a real concern that there has been a row-back by the Ministry of Defence. The frigate factory was cancelled. Then, in November 2015, during the national strategic defence review, there were no longer 13 Type 26 frigates, but eight. We were told not to worry and remain happy because instead of five Type 26 frigates, there will be five Type 31 frigates, which the Clyde will build and will be exportable. I will come back to that later.
Sir John Parker’s report was an honest attempt to deal with the feast and famine that we have heard about from the hon. Member for Glasgow North East (Mr Sweeney), but it contained several historical inaccuracies that concern me because the national shipbuilding strategy seems to be based on those historical inaccuracies, which is that two different types of ships have never been built in the same shipyard. That is not the case. Anybody who had worked at Yarrow’s would tell us that that was not the case, because, while they were building ships for the Royal Navy, they were building a different type of ship for the Malaysian navy. If the Government are basing their decision on such an historical inaccuracy, it is up to us Members of Parliament to tell them that it is an historical inaccuracy, and perhaps they might want to comment on that and put that right.
Mr Sweeney
I thank the hon. Gentleman for his comments, particularly about the frigate factory. Does he agree that the major issue was the fact that financing could not be achieved, because of fragmentation of the programme? If that had been gripped in the same way as programmes such as HS2 or the London Olympics, and the budget had been assured through its whole life, there would have been a business case to finance, through commercial means, the investment necessary to build a world-class shipyard on the Clyde.
Chris Stephens
I agree entirely. My Glasgow comrade is absolutely correct. That was one of the significant reasons for the frigate factory being cancelled.
My concern about the national shipbuilding strategy has been expressed by others: it is that we are going back to 1980s thinking and introducing competition. One of two things can happen when we start to introduce competition on that basis. Shipyards will try to undercut. As we heard earlier from my Glasgow comrade, that meant the collapse of Swan Hunter. It would be inevitable if we went back to the days of competition. Alternatively, companies would get together and the prices of ships would increase.
I think I am being fair and moderate in my remarks when I say that we are now at a place where the announcement of the national shipbuilding strategy was a presentational dog’s breakfast. The then Secretary of State, the right hon. Member for Sevenoaks (Sir Michael Fallon), claimed six times in the Chamber that there was a frigate factory on the Clyde. While he was on his feet in the Chamber making that claim, GMB officials were taking Scottish journalists around the proposed site, which was rubble and ash. There is no frigate factory on the Clyde. It was a presentational disaster for the Government.
I add my support to that expressed already for the argument that there is no need for the Royal Fleet Auxiliary Service ships to go to international competition. The reason no British yard has yet asked to be considered is that they believe the work will be sent out internationally; that is inevitable. As has been said, there would be clear economic benefits from building those ships not just for the local economies of the places where they could be built, in a modular format, but from the tax and national insurance take.
I also want to add to concerns expressed about the Type 31 frigate. It seems to me that the price is setting the capability of that ship, vessel or whatever we call it. The suggestion that it could be built for £250 million has already been described as a conspiracy of optimism. We need to know its capability and its role and purpose within the Royal Navy. To put it more simply: is it a complex naval warship? If it is, it should be built on the Clyde, which has been designated by the Government as a specialist shipyard to build complex naval warships.
Mr Sweeney
The hon. Gentleman says that the Clyde has that designation, but in reality, under the terms of business agreement, it was extinguished in 2014, although that has not been explained. Why did the rationale change? It makes sense to build all the complex warships on one integrated site where all the learning curves, benefits and efficiencies are concentrated. Why has that changed?
Chris Stephens
I think that is a question for the Minister. We need to know the reason, and I shall explain why. I understand that the only country with more than one specialist shipyard is the United States of America. That is probably no surprise given the size of the US Navy. We need to know such things, because recently there was an accident at sea involving a US Navy ship. If it had been built to commercial standards rather than by a specialist yard the collision with another ship would have been a real disaster. The model elsewhere, especially in Europe, is that one specialist shipyard builds complex naval warships.
There is a contract for three Type 26 frigates on the Clyde and I ask the Minister to confirm that the other five will be built there. There is a feeling in the yards and the trade unions that represent the workers that there has been a roll-back on delivering on promises.
I echo the points that the hon. Member for Glasgow North East made about shipyard construction. If the Ministry of Defence is concerned about economies and efficiencies and similar issues, it has a role to play in investing in shipyards and speaking to companies. The Clyde should have a frigate factory, and there is a role for the MOD to play in that.
The national shipbuilding strategy needs a bit more work. This is the first opportunity that hon. Members have had since the statement to raise concerns, and I hope that the Minister has listened carefully and will be able to respond to many of the points we have made.
Douglas Chapman (Dunfermline and West Fife) (SNP)
It is a pleasure to serve under your chairmanship, Ms McDonagh. I thank the hon. Member for Plymouth, Sutton and Devonport (Luke Pollard) for his significant move in bringing the debate to the Chamber today.
Shipbuilding, as hon. Members know, is a key part of our industrial base. Although the industry has undergone much change in recent years, including to the number of people involved in it, it is still a key element of our industrial heritage. The national shipbuilding strategy that was introduced last September gave some rays of hope to the industry more generally. Sir John Parker recognised that a steady drumbeat of orders was crucial if investment in technology and skills was to make new-build projects more competitive, and that the sharing of risks between yards would give flexibility and speed to help in meeting our aspirations to renew our, albeit diminished, naval fleet. On that last point, there has been a debate about the sense of sharing work between yards, and perhaps that is a debate for another day. The proof of the pudding, for the national shipbuilding strategy, will be in the eating. Already the signs are not good.
There is no clear sign that a drumbeat of orders will be forthcoming at a sufficient pace to give some surety to the industry. As workers on the Clyde are all too aware, we have already witnessed the number of Type 26 frigates being reduced from 13 to eight, and then the placing of an order for just three. My good friend the Chair of the Defence Committee, the right hon. Member for New Forest East (Dr Lewis), cited the example of the Type 45s, which started at 12, were reduced to eight and ended up as six. The direction of travel in MOD thinking is a matter of some concern. The only drumbeat that is evident to me is the one to which Type 23s will come out of service, starting in 2023 with HMS Argyll and ending 13 years later, in 2035, with HMS St Albans. That is a steady drumbeat for the withdrawal of ships from service; we need one for a process going in the opposite direction. Indeed, the previous First Sea Lord said that that time scale for the Type 23s was not extendable. If we are to maintain 19 surface frigates and destroyers at sea or in a state of readiness, something needs to give from the Minister’s office.
Mr Sweeney
The hon. Gentleman mentioned sustaining the drumbeat. Does he agree that there is an unnecessary constraint on that because of the arbitrary in-year spend profile that the MOD is lumbered with? The key to unlocking that is the Treasury, which can adapt its method of financing huge generational programmes for things such as complex warships. Those are unique in relation to the way the Government buy kit. The undertaking is huge and unique and should be financed in a way appropriate to the project.
Douglas Chapman
I know that the hon. Gentleman is very experienced in such matters and I am sure that he has considered it long and hard for a number of years, both as an industry professional and as an MP. It is obvious, given the amount of investment being put in, that it must be done in the long term, and looking at the project overall rather than as its component parts. I agree with the hon. Gentleman.
The Government’s watchword has been that we must live within our means. The Tory manifesto in 2017 spoke of meeting the NATO target of at least 2% of GDP going on defence spending, and increasing defence spending by at least 0.5% over inflation each year. According to the Institute for Fiscal Studies, it has been cut in real terms since 2010-11 by some 13%. That has resulted in a massive black hole of around £20 billion. Big-ticket items such as F-35s are purchased in US dollars, and only one carrier can be used at a time. Last night, Max Hastings said on “Newsnight” that the Dreadnought has an outdated capability.
All that has contributed to the black hole with which the Ministry of Defence currently has to cope. Such things have pride of place in the Government’s strategy, but in the current financial climate it is a case of pride coming before a fall because the budget for them—and for many other things, such as the P-8s, which are also purchased in US dollars—is simply unsustainable. Decisions that would offer hope and a future to the likes of the Clyde, Rosyth, Appledore and Tyneside are delayed, and we miss the chance to synchronise the drumbeat that would secure jobs, skills and investment.
If we are to “live within our means” as the Government mantra suggests, the MOD either needs to find more money, or something else has to give. The SNP would choose to get rid of nuclear weapons. Think of the opportunity-cost benefit if Trident, or Dreadnought—call it what you will—was not a consideration in our defence budget. How much would that release for more conventional forces? How many more surface ships could we start to build to create a real drumbeat of orders? How much more money for cyber, land forces and the Royal Air Force? Is it not madness that we have a NATO ally with nuclear weapons just 20 miles off our coastline? In trying to satisfy the most pro-nuclear lobby in the House, could not that capability be shared between those two adjacent NATO nations, instead of their both paying top dollar for it? If we can share a tapestry, as I believe we are about to do, who knows what other things we could share on a larger scale? If we are to meet the key dates for bringing the Type 26s and Type 31s into service, something has to give. The Government cannot keep delaying orders, lengthening the pace of decision making, and not making savings in the budget to allow contracts to be signed, sealed and delivered.
SNP Members long for the day when Scotland becomes an independent country that is responsible for its own defences. Small nation Norway has a shipbuilding industry order book as long as your arm, and it has also bought into F-35 and P-8 capability. That can be done even with a small nation budget. Last week, small nation Denmark agreed to increase its defence budget by some 20% to meet the threats that the Danish people might face now and in the future. Small, well-equipped, effective, flexible, good partner nations can play their part in the defence of Europe both individually and through NATO.
Finally, while Scotland is still a constituent part of the UK, I urge the Minister to make surface shipbuilding his priority. In my constituency, workers at Rosyth have delivered carriers and a wide range of refit projects on time and to budget. We now have an opportunity to deliver the Type 26s, Type 31s and the fleet solid support ships. The message is simple: let us make the national shipbuilding strategy a working document that encourages the engineering talent of our nation to get on with the job, at pace, and with that vital steady drumbeat.
Wayne David (Caerphilly) (Lab)
It is a pleasure to serve under your chairpersonship, Ms McDonagh, and I congratulate my hon. Friend the Member for Plymouth, Sutton and Devonport (Luke Pollard) on securing this important debate and delivering such a fine opening address.
We have had a good debate—I genuinely mean that. We heard an excellent and thought-provoking contribution from the Chair of the Defence Committee, the right hon. Member for New Forest East (Dr Lewis), and good contributions from my hon. Friend the Member for Glasgow North East (Mr Sweeney), the hon. Members for Strangford (Jim Shannon) and for Glasgow South West (Chris Stephens), and a particularly ambitious speech from the hon. Member for Dunfermline and West Fife (Douglas Chapman).
Last year the Government published the national shipbuilding strategy, and the importance of naval shipbuilding should not be underestimated. Approximately 15,000 people are directly employed in UK shipbuilding because of spending by the Ministry of Defence, and at least 10,000 additional jobs are in the wider British supply chain. Some months before the publication of the national shipbuilding strategy in November 2016, Sir John Parker published his independent report on the UK’s national strategy for shipbuilding. Many people thought that that would become the national shipbuilding strategy, but—for reasons that are unclear even to this day—the NSS was a response to Sir John Parker’s report.
Those two important publications gave a degree of coherence and a sense of direction to the industry. We were, however, disappointed by the lack of emphasis on many of the points on which Sir John Parker developed coherent arguments. In particular, we would have liked an explicit recognition of the significant contribution that shipbuilding can make to the development of regional economies, and for that to have been put at the heart of the national shipbuilding strategy. That important point in Sir John’s report is not really reflected in the Government’s national strategy.
Today we have heard about the multiplier effect and investment in shipbuilding—that point was coherently expressed by my hon. Friend the Member for Plymouth, Sutton and Devonport. My hon. Friend the Member for Glasgow North East pointed out that our shipbuilding strategy must be part of a broader strategy that goes beyond the defence sector, and that can happen if we have the right perspective to develop it in such a way.
As we have heard, the new Type 31e and Type 26 frigates—albeit eight rather than 13, as we were initially led to believe—will be replacing the Type 23 frigates as they leave service. I have a number of questions about that ongoing programme. Some of them have already been touched on by other Members, but other questions are new. First, the MOD has said that there should be a cap of £250 million per Type 31e frigate. Why has that cap been fixed, and why at that figure? We need to know, because we have been reassured by people in the Navy that that amount may well be sufficient, but there are also plenty of experts who say that this insufficient and arbitrary figure has been plucked from thin air. Nick Childs, a naval specialist for the International Institute for Strategic Studies, has raised specific concerns about the level of capability and stated that,
“the naval staff seems to think it can get a vessel of about 3,500 tonnes, with an adequate military capability, for the £250m target price. That will be a challenge”.
That is an understatement. It certainly will be a challenge, and many industry experts say that it is frankly impossible. If it is impossible, what contingency measures will the Government take?
Chris Stephens
Does the hon. Gentleman share my concerns, and those of others who have spoken in this debate, that the price is dictating the capability of this frigate, instead of the capability being sorted out first, followed by the price?
Wayne David
That is precisely the concern with including the arbitrary figure of £250 million. I hope that the Minister will be able to dispel those concerns and clarify the situation.
Secondly, the national shipbuilding strategy correctly states that there is a potential export market for light frigates—the Type 31e. Much of that is for the purchase of a light frigate designed for construction in the market, not by means of traditional production. How is the Government’s exporting enthusiasm for that going? How many orders have they received? How many do they now think are likely? That key question was also raised by my hon. Friend the Member for Plymouth, Sutton and Devonport.
My third point is that, sadly, less than half the steel in the new Type 26s will be British. That is a crying shame, and I hope the Government will ensure that as the shipbuilding strategy develops, it is increasingly seen as an integral part of industrial strategy in this country, and that there will be complementarity with other parts of British industry.
My fourth question is about delays to the Type 26 programme. There is a great deal of concern among the workforce. Apprentices have been laid off and have had to find training elsewhere. Can the Minister say anything about that?
We are all proud to have seen the launch of the Queen Elizabeth carrier, which was formally commissioned into the fleet in December. We now look forward to the launch of the Prince of Wales carrier. The construction and fitting of both vessels has taken a great deal of commitment and dedication from a well-skilled workforce.
It is important to ensure that those skills are not lost but continually put to good use, which is why we should focus on fleet solid support ships. The contract for three new FSS ships will be subject to international competition. The decision is due in early 2020. I am concerned that that stipulation may put off domestic competitors, as the hon. Member for Glasgow South West suggested. That follows the awarding of a contract for four tankers under the military afloat reach and sustainability—MARS—project to Daewoo, a South Korean company that is widely believed to have been given a tremendous amount of state aid that made its bidding far more attractive than it should have been.
We hope that those ships will be built in Britain because that would secure the maintenance of the skills that have been built up in the industry, and support local economies. It would also help to enhance the national shipbuilding strategy’s domestic capability and to make real the renaissance in shipbuilding that Sir John Parker refers to in his report.
On sovereign capability, I ask the Minister to comment on the report that appeared in yesterday’s Western Mail. It suggested that the Ministry of Defence will award a contract for mechanised infantry vehicles to the Germans without any competition. I give the Minister the opportunity to deny that story.
The Parliamentary Under-Secretary of State for Defence (Guto Bebb)
Will the hon. Gentleman give way?
Wayne David
I will give the Minister plenty of time to respond.
Finally, I hope that the Government will demonstrate a real commitment to the Royal Navy and naval shipbuilding. This country has a proud maritime history—it had the largest and strongest Navy in the world at one time. That time is a long way behind us, but the challenge now is to ensure that our Navy can successfully meet the new threats and dangers that our country faces.
Siobhain McDonagh (in the Chair)
I remind the Minister that we hope the sponsor of the debate will have a few minutes at the end to sum up.
The Parliamentary Under-Secretary of State for Defence (Guto Bebb)
It is a pleasure to serve under your chairmanship, Ms McDonagh. I thank hon. Members in all parts of the Chamber for their warm welcome. It is an honour to have been appointed to this position, but I suspect that I face a difficult task. In the debates on defence that I have attended thus far, I have found a wealth of experience and knowledge from hon. Members about these issues. There is also a significant amount of cross-party agreement, although not always. In my jousts with the hon. Member for Caerphilly (Wayne David) on Welsh issues, we did not experience more constructive debates of this nature.
On the hon. Gentleman’s question about the Western Mail story, that was speculation. It was nothing to do with the national shipbuilding strategy. There was a clear statement from the Ministry of Defence that no decision has been taken. I can say no more than that, but I hope that that keeps the issue at bay for the time being.
This has been an interesting and constructive debate. I congratulate the hon. Member for Plymouth, Sutton and Devonport (Luke Pollard) on securing it, and on his constructive speech. Of course, he highlighted his concerns about the national shipbuilding strategy, but it is only right to acknowledge that, as the Minister, I view the reasons why he raised the issues, and the way in which he did that, as a constructive contribution to the debate.
I hope that I will be able to answer many of the hon. Gentleman’s questions. He mentioned the importance of the national shipbuilding strategy in giving opportunities to young people in his constituency and, as we have heard from other hon. Members, across the United Kingdom. I cannot fail to be anything other than impressed when I meet apprentices, whether they are working on building new ships or on maintaining our Hawk aircrafts. The Ministry of Defence and I are very proud that young people have the opportunity to work in the defence sector. We are the largest creator of apprenticeship opportunities in the United Kingdom. I am sure we all agree on that.
The hon. Gentleman also said that he considers the Type 26 destroyer to be a good ship. I hope to be able to say that it is being built in a very good yard by experienced workmen on the Clyde. Again, there is agreement on that.
My right hon. Friend the Member for New Forest East (Dr Lewis), the Chair of the Defence Committee, made a thought-provoking speech. In my eight years in the House, he has always spoken with passion, commitment and an independence of mind when it comes to defence. I am sure that that independence of mind and that willingness to challenge will haunt me, as it has haunted other Defence Ministers over the eight years in which I have seen him perform. No one can doubt his commitment to the defence of this country and the wellbeing of our armed forces, or to his independent, cross-party chairing of the Defence Committee, which represents what is best about the Select Committee system.
I also acknowledge my right hon. Friend’s history lesson and his firm defence of the concept behind the Type 31 frigates programme. His description of the programme’s rationale was clear, and he was listened to with understanding by other hon. Members. His speech included the basis of the points that I will make in due course about Type 31s.
I enjoyed the contribution of the hon. Member for Strangford (Jim Shannon). As a Welshman, I am pleased that there has been a significant Celtic contribution to the debate. Scotland, Wales and Northern Ireland have contributed fully, because we understand the importance of defence to all parts of the United Kingdom.
Even the hon. Member for Dunfermline and West Fife (Douglas Chapman) acknowledged that, while Scotland remains part of the United Kingdom—long may that continue, in my view—we all appreciate and acknowledge its contribution to our defence in terms of capacity on the Clyde, our nuclear capability in Scotland and the contribution of Scots to our armed forces. I thank him for his contribution.
Other hon. Members intervened in the debate. The hon. Member for North Durham (Mr Jones), who is no longer in his place, is correct that at Defence questions a week ago, I responded in a robust fashion to his comment that our country had not exported any warships for 40 years. It is important to engage constructively with what we are trying to achieve through the national shipbuilding strategy. The aim is to ensure that we find ourselves in a position where we are exporting our warships to other parts of the world. It has been acknowledged across the Chamber that the capability, capacity, skills, ingenuity and innovation all exist in this country. When the hon. Gentleman raised that issue, I thought it was important to point out that the way we sell that capability, that capacity and those skills to the rest of the world is by talking our industries up, not down. I will not apologise for the comment I made at Defence questions.
I will turn to the body of my speech, because I have an obligation to try to respond to the debate. We have to step back and ask ourselves what the rationale behind the development of the national shipbuilding strategy was. Although people have asked questions and asked for clarity, even the most challenging comments have acknowledged that it is an attempt to move the issue forward constructively, and to ensure that our country’s capability and capacity are reflected more coherently. Hon. Members may not agree with every single statement in the strategy—there is clearly a debate to be had about it—but the fact that we are moving forward with a strategy is something that most hon. Members clearly seem to welcome.
It is important to understand the context. The Government have always recognised the need to retain operational advantage and freedom of movement in sectors that are critical to national security. That is an issue that I have come across since my appointment to the Ministry of Defence. Indeed, it was an issue that I came across in my time as a Wales Office Minister, which lasted for almost two years, because in that period, as the hon. Member for Caerphilly will be aware, I visited numerous defence establishments in Wales. That issue of national security, and having a national defence capacity, is something that I understand, as do hon. Members from all parties. Shipbuilding is an important part of that and is integral to our fortunes.
The aim was to ensure that we examined the shipbuilding sector, and identified how best to develop a shipbuilding strategy that would reflect our needs, the demands of our Navy in the future, and the potential to create a more coherent and successful shipbuilding sector. Sir John Parker’s report was upbeat and positive. It talked of the renaissance in British shipbuilding that is happening in many smaller yards and smaller businesses within our shipbuilding industry. The report looked at the issue of shipbuilding in a wider context than only defence. Obviously, from a shipbuilding strategy point of view, it was absolutely imperative that we learned from history, and understood what must be protected in the UK national interest, and where we can support capacity in the shipbuilding sector by supporting businesses that can provide us with the warships that we require. The strategy also provided the opportunity to train and support businesses and individuals who can contribute to a further expansion of our shipbuilding capacity.
In my new role as Minister with responsibility for defence procurement, I would very much like to meet the all-party group on shipbuilding and ship repair, because, from an MOD perspective, the shipbuilding strategy must clearly consider the issue of producing warships and defence capability, as well as the wider implications for the economy, which I am very interested in. I have seen the direct benefits of defence spending to the economy in Wales. I would very much appreciate the opportunity to talk to the hon. Member for Plymouth, Sutton and Devonport about issues that I could potentially learn about in relation to his work with the all-party group. In my time in this place, I have learned that all-party groups make a huge difference; I have no doubt about that. They are a constructive forum in which colleagues work on a cross-party basis, and I would be very grateful for the opportunity to discuss these issues in more detail with him.
The recommendations in Sir John’s report were accepted in full by the Government, as they applied to our responsibilities, and that created the national shipbuilding strategy that we now have. I would argue that that strategy examines three main issues. The first is better planning; we heard the history in numerous contributions. I am taken by the idea that my history degree might not be as redundant in this new role as I had thought, because learning from history is one of the things that we have to do if we are to improve the way in which the MOD procures.
The strategy gives planning a great deal of attention, so that we can give industry greater certainty and predictability. It sets out the key procurements of the next five years, from the purchase of eight Type 26 global combat ships to the new Type 31 ships. The hon. Member for Glasgow South West (Chris Stephens) asked what the commitment is in relation to the Type 26. The commitment in our strategic defence and security review of 2015 and in the recent NSBS is very clear: it is a commitment to eight ships. That is a commitment that will protect—
Mr Gary Streeter (in the Chair)
The Minister will now continue his excellent summary.
Guto Bebb
It is a pleasure to serve under your chairmanship, Mr Streeter.
As I was explaining, the strategy is about planning. We are talking about the purchase of eight Type 26 global combat ships, the new Type 31 frigates and the next generation of fleet solid support ships. There has been a discussion on the competitive tendering for the fleet solid support ships, but that is in accordance with the strategy, which looks to ensure that warship capability is built within the UK, but that we are also open to go out to competition.
Chris Stephens
Will the Minister confirm that the eight Type 26 frigates will be built on the Clyde? Will he also remove the ban on Royal Navy personnel addressing the all-party parliamentary group on shipbuilding and ship repair on the national shipbuilding strategy?
Guto Bebb
I regret that I did not hear the second part of the intervention, but the commitment on the purchase of the eight Type 26s was clear, and I will be on the Clyde on Thursday.
The second element of the strategy is design. It is about taking a new approach to design and construction. We want to challenge outdated naval standards and introduce new ones. In effect, I am repeating the comments of the Chairman of the Defence Committee, my right hon. Friend the Member for New Forest East, but it is about forcing through advances in design, identifying new materials and looking at new manufacturing methods to try to make our shipbuilding industry even more competitive, which is part and parcel of ensuring that we have export markets.
The issue of the export markets for the Type 31 has been touched on by many Members. The figure of 40 frigates is the potential market that was identified for this type of frigate in 14 countries. That was part of market research that was undertaken. We have never argued that there are 40 potential orders for the United Kingdom; what we are saying is that there are 40 potential orders for that type of ship that will be open to competition from the United Kingdom.
Dr Julian Lewis
Given what the Minister has said about the design, and given what we know we need the design to do, can he confirm that this will be British design done in Britain and not abroad?
Guto Bebb
The value of the strategy is in ensuring that we have a British-owned design. The whole strategy is building on the manner in which the aircraft carriers were built successfully—the block-building capacity. That is the strategy we have undertaken, and it will pay dividends.
The third element is exports.
Guto Bebb
I cannot, I am afraid; I only have three minutes left. We identified that the export market is crucial. Having the export market allows us to look at cost controls and the ability to create savings within the programme. It also allows the United Kingdom to show once again that we have the ability to design and deliver ships internationally. For the MOD, the whole effort in identifying the support for the shipbuilding strategy is about building capacity and ensuring we are in a position to target other markets. I hope that Members will join the Ministry of Defence and the Government in ensuring that the advantages of the Type 26 are made known to potential customers in all parts of the world.
The other issue I want to touch on is a key success for the strategy, which is the partnership approach. To return to Sir John Parker’s original point, the strategy hinges on the strength of the partnership between the Government and the sector. It is about our collective ability not simply to improve productivity and develop the product that the international market wants to buy, but to continue to develop the skills and the talent to keep the industry firing on all cylinders. That is exactly what Members have been asking for, it is absolutely what I want to contribute in my role in the Ministry of Defence, and it is the purpose of the shipbuilding strategy. Where we need to refine or take on board the advice and guidance given to us by colleagues, we will do that, because the aim of the strategy is to ensure that we leave the shipbuilding sector in a better place than we found it. I am confident we can do that, but we need support from all parts of the House.
I hope we are building on firm foundations. We are looking to move to the future with a strategy that is not starting from scratch, but builds on our strengths and reputation, while identifying that we have to rectify the fact that we have not sold a warship in 40 years. We have to be confident that what we have to offer is cutting edge. It is about working with the industry, which has a reputation to live up to and has contributed so much in so many parts of the United Kingdom. We need to ensure that the industry is capable of producing ships of value to the UK and the Navy while competing internationally and making a cutting-edge contribution at the world level.
Members have touched on the economic contribution that the strategy can make. I am very aware of that. Ipsos MORI has conducted research that highlights what we need to do. It is available on the Department for Business, Energy and Industrial Strategy website. I am aware that I need to allow the hon. Member for Plymouth, Sutton and Devonport time to sum up the debate, so I will finish. I genuinely believe that we are moving forward constructively. As a Minister, I want to work with Members to ensure that the strategy delivers for the United Kingdom and our Navy.
Luke Pollard
It is good to have a second Plymouth MP here in a Defence debate. I am grateful for the contributions we have heard from all parts of Westminster Hall. I hope it is the start of a productive conversation between the Minister and the all-party group on shipbuilding in particular, but also with Members.
The importance of a drumbeat of orders has been reinforced time and again, and the Minister has heard that. Clarity on the capability of the Type 31s is key, and I would be grateful if the Minister removed the ban on Royal Navy personnel speaking at the all-party group. I would also be grateful if, one year on from the Sir John Parker review, the Minister looked at how the review could be reinforced with feedback from Members of Parliament representing shipbuilding and ship repair communities across the country. There is a collective will in the House to make it work, and the honest conversation we can have here will be an important part of that.
Question put and agreed to.
Resolved,
That this House has considered the National Shipbuilding Strategy.
Stamp Duty Reform
(6 years, 2 months ago)
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John Stevenson (Carlisle) (Con)
I beg to move,
That this House has considered reform of stamp duty.
I am delighted to serve under your chairmanship, Mr Streeter, and to have secured the opportunity for the House to debate and discuss stamp duty and its possible reform. I will be speaking in this debate as a politician, but also partly as a practitioner—I am a solicitor who is still in practice. I do not think I have to declare an interest, but I nevertheless think it important that it is on the record.
As everyone knows, property is a huge issue in this country. We like to think of ourselves as a property-owning democracy, and it has certainly been the long-standing ambition of the Conservative party that we see our country as a property-owning democracy, but we should not forget the significant private rented sector, which represents around 20% of the market. It is important to acknowledge the part that it and social housing play in the mix. In many respects, the key issue in housing policy is to get the mix between property ownership, the private rented sector and social housing right.
The other big issue in housing is supply, and in many respects that could be a debate in itself. That issue is clearly of concern to the Government. In my view, we should be looking for a national housing framework with a more flexible local policy. I can give a very simple example: the Carlisle housing market is different from the Lake District housing market, which is different from the Manchester and London housing markets. I acknowledge that is very much a separate debate.
Another issue is property taxes. That is extremely important, especially for public policy. Property taxes are very much part of our tax system. Council tax raises £32 billion a year. Business rates raise £30 billion. Capital gains tax raises £9 billion, and a lot of that is on property. Inheritance tax, much of which goes on property, raises £5 billion. We also have VAT on improvements, income tax on rental income and stamp duty land tax, which raises £13 billion. A huge amount of money is raised from property taxes, and in many respects I understand that—most Governments quite like property taxes, because it is difficult to hide a property.
What is the purpose of ownership? Why is it a good thing? In many respects, it creates the ambition and aspiration of many people to own their own home. They feel they have an investment. It is also a way for many people to save. It gives them a stake in society—they feel they own something and can take responsibility for it. In a survey, the Yorkshire Building Society found that 71% of young adults say that owning their own house makes them feel grown up. It is about ownership and feeling responsible.
Home ownership is a positive thing for the individual and society in general. We must recognise, however, that not everyone will own their own home, so the mix of properties between social housing, the private rented sector and so on is extremely important. We also need to remember that older property owners like to think of property as something they can pass on to their children. They have worked hard throughout their lives. It is an asset that they have enjoyed, but they want the benefit to pass to the next generation. Ownership is beneficial at so many different levels.
What is the purpose of this debate? In many respects, it is about just one element of the property debate. First, I want to look at the reforms to our present system of stamp duty. As an aside, I have a proposal to close a potential tax evasion issue and raise additional tax. I will be interested in the Minister’s response on both those things.
Today, as in the past, the buyer of a property has responsibility for paying stamp duty. They have to pay that tax. Stamp duty is effectively a buyer’s tax. My proposal is simple: change the tax to a sales transaction tax, so that the responsibility for paying stamp duty transfers from the buyer to the seller. I appreciate that that proposal also touches on tax rates, but I want to leave that aside. Each Chancellor has to decide tax rates on an annual basis. My purpose concerns the fundamental principle of who pays the tax.
Kevin Hollinrake (Thirsk and Malton) (Con)
I congratulate the hon. Gentleman on introducing the debate; he has a lot of experience in these matters. Most people understand that the problems with the housing market are on the supply side, not the demand side. We need to build and deliver more homes. Would it not be a disincentive for people to put their houses on the market if we effectively charge them to sell those houses?
John Stevenson
I am grateful for my hon. Friend’s intervention, and accept that we probably have a slightly different view on this subject. I fully accept that the supply of housing is a fundamental problem in our housing market. As I said earlier, that could be seen as a separate debate. For the purpose of today’s debate, I believe that shifting the responsibility for the tax from the buyer to the seller would be beneficial, and hopefully I will explain why.
From the Treasury’s perspective, other than that it would be a change of regime, it is tax-neutral; effectively it would make no difference to the amount of tax that the Treasury raises. I therefore think that the Treasury must look at the issue from a different perspective: is this beneficial to the housing market and to the people who are buying or selling the property? I believe that it will help first-time buyers and give support to those moving up the property ladder. Potentially, it will improve the housing market overall. I emphasise that this is not just the proposal of a random MP; it has a lot of support from the industry, and in particular the Yorkshire Building Society, with which I have had many discussions on this issue.
First, let us take first-time buyers. The changes in the Budget were undoubtedly extremely welcome. The Budget helped a large number of first-time buyers, taking many of them out of the tax regime. That is of course welcome, but there was a cost to it, which I think is reckoned to be in the region of £600 million. There are also some practical issues, such as how we identify who is a first-time buyer and make sure that the correct person is claiming the relief.
Lloyd Russell-Moyle (Brighton, Kemptown) (Lab/Co-op)
The Office for Budget Responsibility says that the changes that came through will cost £3.2 billion, with an estimate that around £150,000 will be spent on every additional first-time buyer under the programme. Those are the OBR’s figures, and that change by the Tory Government will be particularly useless without the supply side. Does the hon. Gentleman’s proposal for the tax to be on the seller’s side have any benefit, beyond the loss of income that the Government are now facing, with no real benefit to first-time buyers?
John Stevenson
I am saying that moving the liability from buyer to seller should be neutral to the Treasury. It is up to the Treasury what level of rates it applies, and that changes over time. I did not want to go down that route; I was looking more at the principle of who pays the tax.
If we do move it, it will mean that all first-time buyers will not have to pay any tax at all. It will be very simple to understand who is a first-time buyer. At present, first-time buyers have to find a deposit, the costs and the stamp duty, even though the mortgage only covers the purchase price. The change would therefore help first-time buyers, because they would not have to look for money to pay the stamp duty land tax. If there were a small increase in the price, that would be covered by the mortgage. Interestingly enough, according to a Yorkshire Building Society survey, 44% of first-time buyers say that saving up for the required deposit and stamp duty is very challenging.
Dr Dan Poulter (Central Suffolk and North Ipswich) (Con)
I congratulate my hon. Friend on introducing today’s debate. He is making a very considered speech and suggesting a practical solution to a very real problem. In that context, does he agree that with so many people in the private rented sector—20% of the housing market— saving for a deposit is a major issue for many working families, who are currently paying rent, or indeed a mortgage, and want to upsize their property? That is why this scheme has some merit.
John Stevenson
My hon. Friend is absolutely right: it is saving up for the deposit that is so challenging for many young people nowadays. Added to that are the solicitors’ costs and the stamp duty costs, which can sometimes make it too difficult for first-time buyers to raise the adequate amount. Incorporating that into the mortgage would be much better, from the purchaser’s perspective. One of the important points that the Yorkshire Building Society makes is that the mortgage would cover the costs if there were a small increase in the price of the property.
Melanie Onn (Great Grimsby) (Lab)
I congratulate the hon. Gentleman on securing the debate. I just seek some clarity about what level of cost of home the stamp duty relief, transferring to the seller from the buyer, would operate on, in the light of the Government’s stamp duty relief for first-time buyers. At what price range will that start to support the first-time buyers he is talking about at the moment?
John Stevenson
The hon. Lady is absolutely right: the changes that the Government introduced undoubtedly helped many first-time buyers. I fully acknowledge that, and they have gone a long way to taking most first-time buyers out of potential stamp duty. There are some practical issues about identifying who is a first-time buyer. What I am suggesting simplifies the process. It takes every first-time buyer out of the tax regime, and I will come on to some of the other benefits that I foresee.
If somebody wants to move up the chain by selling their smaller house and moving on to a bigger house, because they have a growing family or for other reasons, they would benefit quite significantly from the change. They would still have to pay stamp duty, but it would be on only the lower-valued property. The higher-valued property would not be paid for by them. There would be a clear saving for somebody who was moving up the housing ladder. That would help growing families who wanted to move to a larger property.
We now come to the specific question of who pays. As I have suggested, it should be the seller. People often say, “There will be an immediate increase in prices.” I am not convinced about that. I think that the market will adjust naturally. Indeed, when stamp duty was increased by 3% for the purchase of second homes, I do not think that we saw a rigid decline of 3% in house prices. I suspect that the market will adjust and take care of the potential—I believe small—increase.
Overall, I think it will help the market. We have to realise that those who will pay—that is, sellers—are often in a better position to pay the tax. Many of the people who will be selling will have benefited from many years of increasing house prices, so will have sizeable equity in their property and be more capable of dealing with an increase in the price.
Lloyd Russell-Moyle
This is a genuine question: is there a danger that the hon. Gentleman’s proposal could disincentivise people who wish to downsize? One of our big problems is people who are currently under-occupying houses, while others are unable to get houses with enough bedrooms. Is there a danger of disincentivising people, or has he thought about a way out?
John Stevenson
I take the hon. Gentleman’s point. My view is that if somebody wants to downsize they will probably go ahead, but more importantly the people who are upsizing will get the advantage, and will therefore be interested in the market. I will come to an issue about the housing market, particularly in London at the top end, where I think that the tax regime is causing problems as we speak.
I believe that those who own their property are in a better position to pay the tax when they sell. We also have to look at people who have second homes. They are probably in a much better position to pay the tax because they have an asset that, again, will probably have increased in value. Touching on the hon. Gentleman’s point about individuals and families who are downsizing, quite often properties are sold as part of an estate, when somebody in the family has died. The property probably does not have a mortgage on it, so it will be a windfall for the family. They are therefore in a much stronger position to deal with the payment of that tax.
There are one or two practical issues as well. At present, it is the buyer’s solicitors’ responsibility to pay the tax. I believe that that should continue. Obviously, within the legal profession there would be a mechanism whereby, when the property was sold, they would ensure that they had sufficient money to cover that tax when the property was registered. I also accept that there would have to be a transitional period, because people who have paid tax on a property that they have bought in the last few years would find it a bit hard to subsequently have to pay the stamp duty when they sold the property. I believe that would be manageable. There would be no great change to procedure, it would be effective and I do not think it would affect the market significantly.
What it would do is to improve the market of first-time buyers for those moving up the chain. If we look at the very top end of the market, there seems to be a problem now in London, where very expensive properties are struggling to be sold. Quite often, that is because buyers are unwilling to pay the very high stamp duty required. Changing the rules means there is a possibility of freeing up the top end of the market to some extent, because the seller who wants to get rid of the property would be able to pay the tax, which might encourage the buyer into the market to pay the very high prices.
Another small additional benefit that I would like to raise with the Minister is about the stamp duty land tax form. This might be slightly legalistic and anorakish, but it might nevertheless have a benefit for Government.
At present, when someone submits an SDLT form, the national insurance number of the buyer goes on the form. I suggest that we change that slightly, so that the seller’s NI number also goes on the form. Why? It would give Her Majesty’s Revenue and Customs an opportunity to check two things: capital gains tax and payment of income tax. That is particularly relevant to people who have second, third or fourth properties and is not related to the principal private residence.
I believe that there may be some uncollected tax, because it is possible for people to avoid paying income tax on a rental property, or capital gains tax. Ensuring that the seller’s national insurance number is also on the form would be a great way for HMRC to cross-check to make sure that, over the period of ownership, the seller has paid income tax, as well as to confirm whether capital gains tax is due when the property is sold.
The proposal has strong support from the industry. It is an idea that I have supported throughout my time as a Member of Parliament. Many members of my profession support the idea. Building societies, particularly the Yorkshire Building Society, have been very vocal in support. My hon. Friend the Member for Thirsk and Malton (Kevin Hollinrake) may be an exception, but many estate agents agree. It is a policy whose time is coming. In the Budget, the Chancellor took first-time buyers out of the tax altogether. It is one more step to reform the tax in the way I suggest.
I welcome the changes that the Chancellor brought in in the Budget. The increase in thresholds was welcome. Previous changes, such as sliding scales, were very sensible. There is an opportunity for the Chancellor to innovate further and change this aspect of our tax system. I do not expect the Minister to announce changes to policy today, but I hope he will consider my idea. Will he look at the issue? Will he meet representatives of the industry to discuss it? Will he carry out a consultation on it? Out of interest, does he agree with my idea?
On the national insurance suggestion, will the Minister look at that and give feedback? I am sure Treasury officials would be able to analyse whether the suggestion would be beneficial. Will he look at whether there has been a loss, or a potential loss, in income tax or capital gains tax from people who have owned second properties?
Property really does matter in this country. I completely understand the importance of getting the supply right. Types of ownership and the mix are so important, but so are changes to our tax regime. As I said at the outset, property taxes raise a huge amount of tax in this country—it is probably one of the biggest areas of tax for our Exchequer. This is an opportunity to make a small but significant change to that regime. I look forward to hearing the Minister’s response.
The Exchequer Secretary to the Treasury (Robert Jenrick)
It is a pleasure to speak under your chairmanship, Mr Streeter—I almost said Mr Speaker there; perhaps that is a Freudian slip. I am grateful to my hon. Friend the Member for Carlisle (John Stevenson) for organising this debate and for bringing to it his customary thoughtful style and experience as a solicitor. I was also a solicitor before coming to this House, although not a property one. I am aware of some of the experiences that he has had and in my prior life, before being appointed as a Minister, I was very interested in the property market and some of the questions that he has raised today. I will try to respond to as many of those as possible, but let me first raise some of the background to stamp duty and the Government’s recent reforms, because it is fair to say that there has been a great deal of activity in the area over the last few years.
Stamp duty as we know it was introduced in 2003. It replaced the former stamp duty regime, which my hon. Friend will remember from his time as a solicitor and required the physical stamping of documents. It raises over £11 billion a year, which makes an important contribution to our public services, as he said—we should remember that in the context of this debate—including £8.6 billion a year from residential property transactions. Although we continue to seek ways to reform stamp duty, we have to bear in mind its importance to the Treasury and our public services.
Over the last few years, stamp duty has played a significant part in a number of different budgets, and the Government’s objectives when considering it and its impact on residential property purchases have been above all to support first-time buyers, and to sustain the tax base. We are trying to keep the tax as simple as possible and to reduce it where possible. We are aware of the distortions that the tax can inevitably lead to, which deters people from moving home, from downsizing and from upscaling, and the effect that has on quality of life. Buying a home and changing where a person lives is obviously one of the most important decisions that they make, and we want to make sure that, where possible, the tax system does not interfere in that. We see it as an important lever in the housing market, but not the only lever. The housing market requires supply-side reforms as well as tax changes, and any reform of stamp duty can only be one potentially small element in our housing policies.
With those priorities in mind, the Government have taken a succession of significant actions to reform how stamp duty works. In 2010, the stepped structure of stamp duty through the most widely applicable price bracket created distortions in the housing market, which everyone was familiar with, particularly people such as my hon. Friend the Member for Thirsk and Malton (Kevin Hollinrake) who have worked as estate agents. We wanted to iron out some of those problems for both sellers and buyers. The stepped increases in rates meant, for example, that those moving up the housing ladder were met with large increases in tax when properties fell into higher brackets.
In 2014, we took action to reform stamp duty on residential properties at the autumn statement, which many hon. Members will remember. We changed the stepped increases to a variable rate that increased with the price of the property purchased. That was an important and successful reform and led to about 98% of people liable for stamp duty finding their bills reduced. There were new, higher rates for properties of the highest value, which increased the tax paid by so-called prime and super-prime properties particularly focused on areas of central London, but the vast majority of homebuyers in our constituencies across the country were better off as a result of the changes.
Since becoming a Minister, I have asked to see the figures on transactions in the higher price brackets. There has been quite a significant amount of press coverage of that. At present, the Treasury does not believe that there has been a material change in the number of transactions at the highest price brackets, but we will continue to keep that under review, bearing in mind the public interest.
In April 2016, we introduced higher rates of stamp duty on additional properties, which was designed to tip the scales in favour of first-time buyers and away from those who want to purchase second homes or invest in buy-to-let. Of course, it is perfectly acceptable for people to want to do that. We understand that and do not want to make it impossible for people to enjoy a second home or to invest in buy-to-let property for their pension and their future or for their children and grandchildren, but we did believe that it was important to make changes to help others to get on the property ladder.
Since those changes were introduced, more than 400,000 people have bought their first home and first-time buyers make up an increasing proportion of those in the mortgaged property market. However, it remains very challenging for young people to get on the property ladder—we all acknowledge that—and therefore in 2017 we made the largest change so far, which was to remove stamp duty for first-time buyers.
At the autumn Budget, we permanently abolished stamp duty for first-time buyers who were purchasing a property for £300,000 or less. First-time buyers purchasing a house for between £300,000 and £500,000 will save £5,000 and, to ensure that the relief is targeted at those who need it the most, purchases above £500,000 will not benefit. We appreciate that in parts of the country properties are of such a high value that the benefit is more limited, but even in London the average amount of stamp duty paid by first-time buyers has been halved, so the change is still significant and an improvement for anyone trying to get into the property market for the first time.
To turn specifically to the points made by my hon. Friend the Member for Carlisle, his suggestion about transferring stamp duty from the buyer to the seller was thoughtful and one that, he will not be surprised to hear, the Treasury has given thought to. We have done considerable research into it. It would be a significant step and therefore one that we should take only if the benefits are clear. The legal liability for stamp duty rests with the purchaser, but evidence suggests that the cost of stamp duty is reflected in the value of the property. That is of particular concern with respect to my hon. Friend’s suggestion, because it means that switching the formal liability to the seller would be likely to have a limited effect on the overall cost of purchasing a house. My hon. Friend’s argument would have been stronger before we changed stamp duty for first-time buyers. Now the vast majority—80%—of first-time buyers have no stamp duty and 95% benefit from our changes. Before those changes, of course his proposal would have made a significant difference.
Another point, made by the hon. Member for Brighton, Kemptown (Lloyd Russell-Moyle), with respect to those downsizing, would be of concern to us, because there might be a reason for people not to downsize when we want those who are a bit older with larger homes to consider moving into smaller homes—if they wish to, of course—freeing up properties for the next generation. We will give the suggestion thought, and I am happy to meet anyone about it, but it is not something that we are considering at present.
The other suggestion made by my hon. Friend the Member for Carlisle, on the stamp duty land tax form, was interesting. I would like to take it up with him and hear more. I am happy to meet him with my officials to take it forward. I think Her Majesty’s Revenue and Customs would be interested in considering the idea.
I have only a minute or so remaining, so I will conclude. The Treasury is extremely committed to improving the housing market. Members on all sides of the House appreciate the fact that our housing market is broken and needs fundamental reform. We see tax as an element of that, and I hope that over the past several years right hon. and hon. Members have seen a number of significant interventions to make that better. One argument is that we now need to move into a period of stability with respect to stamp duty, so that those selling and buying homes and those operating in the market have the confidence to make choices in the future. We will, however, consider future options, and we will do everything we can with the Ministry of Housing, Communities and Local Government to ensure that we continue to increase the supply of homes throughout the country, particularly focused on first-time buyers.
Question put and agreed to.
Democracy in Hong Kong
(6 years, 2 months ago)
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Fiona Bruce (Congleton) (Con)
I beg to move,
That this House has considered democracy in Hong Kong.
Last year marked the 20th anniversary of the handover of Hong Kong to China. Pursuant to the 1984 Sino-British joint declaration, the United Kingdom has a responsibility to ensure that the legal, economic and social rights and freedoms guaranteed to the people of Hong Kong under the Basic Law, Hong Kong’s constitution, which was derived from the joint declaration, are protected. The UK also has a responsibility to ensure that the one country, two systems principle on which Hong Kong was handed over to China by the UK is respected.
In 1996, one year before the handover, then Prime Minister John Major said:
“If there were to be any suggestion of a breach of the Joint Declaration we would have a duty to pursue every legal and other avenue available to us.”
More recently, the House of Commons Select Committee on Foreign Affairs has stated that,
“the UK has both a legal right and a moral obligation to monitor the implementation of the principles established in the”
joint declaration.
I note that the Government’s six-monthly reports are a vital part of that, and I welcome the fact that the most recent report was significantly more robust than previous ones, stating as it did that recent developments in Hong Kong on issues such as democracy and the exercise of rights and freedoms, including freedom of expression and of the press, had “caused concern”. I also welcome the public assurances made only yesterday by our consul general in Hong Kong, Andrew Heyn, that Britain will continue to speak up about pressures it feels that the one country, two systems concept is under.
I am pleased to see the Minister who will be responding to the debate in his place, because he is respected in this House as a man who has a keen respect for human rights and freedoms. I have called for this debate to ask him what “meaningful action”—to borrow a phrase from Lord Ashdown, former leader of the Liberal Democrats, who has recently returned from a visit to Hong Kong and whose subsequent report I will refer to later—the UK Government are taking to ensure that the principles of the joint declaration are protected and respected in the light of increasing concerns about challenges over recent years to the rule of law, human rights and democracy in Hong Kong. I will refer to some of those challenges. Furthermore, many of the concerns are referred to in a detailed recommendation entitled, “Hong Kong, 20 years after handover”, which was published by the European Parliament in the past few days.
It is fair to say that for much of the past 20 years, China has by and large respected one country, two systems, but the dramatic signs over the past four or five years, and in particular over the past 12 months, are a cause for increasing concern. The 2015 abduction of the Causeway Bay booksellers—one, British citizen Lee Bo, from Hong Kong territory itself—simply, it appeared, for having published books critical of Chinese authority, caused international consternation about the apparent erosion of Hong Kong’s autonomy.
I pause for a moment from the main body of my speech to put on record the fact that, while four of the five abducted booksellers were released over the following months, two years on the fate of one, Gui Minhai, a Swedish citizen, remains unclear. He has been denied access to legal counsel and has not been officially charged, tried or allowed to return home. I pause to mention that because this week, dramatically, The New York Times reported that he was snatched on Saturday from a train bound for Beijing, where he was heading for a medical examination, apparently by plain-clothed Chinese police. What steps has the United Kingdom taken to raise his case, and to urge the Chinese authorities to allow him to leave China, reuniting him with his family, including daughter Angela, who studies in Cambridge and whom I have met? She campaigns valiantly for her father’s release.
The January 2017 abduction from a Hong Kong hotel of Chinese billionaire Xiao Jianhua has caused similar concern. A further cause of grave, indeed international consternation was the disqualification not long ago of six democratically elected Hong Kong legislators, including the youngest ever member of the Legislative Council, Nathan Law, whom I had the privilege of meeting here in November 2016. Those legislators were removed from their seats because they were accused of failing to take their oaths properly. Some of the individuals, it is true, were disrespectful and inappropriate in how they took their oaths, but Nathan Law took his oath perfectly properly, merely adding to the end some words of Mahatma Gandhi. To be disqualified for quoting Gandhi is extraordinary. For a court to disqualify these young men instead of the legislature giving them a chance to retake their oaths properly is alarming. They now face demands to repay salaries and expenses that they legitimately earned while fulfilling their duties as legislators.
Last August, a further injustice occurred when Joshua Wong, Alex Chow and Nathan Law, who were student leaders of the peaceful umbrella movement in 2014, were sentenced to prison terms of six, seven and eight months respectively. Twenty four hours after their sentencing, a letter signed by 25 international figures, including me, the hon. Member for Hornsey and Wood Green (Catherine West), who is here today, and many leading politicians, diplomats and academics, was published, which expressed concern at this as a miscarriage of justice, a threat to Hong Kong’s rule of law and basic human rights and a blow to the one country, two systems principle. It was followed by a letter by 12 senior international lawyers, many of them Queen’s counsel, who argued that the imprisonment of these young men was not only a threat to the rule of law, but a breach of the principle of double jeopardy in Hong Kong and a violation of the International Covenant on Civil and Political Rights, which applies to Hong Kong. They noted
“serious concerns over the independence of the judiciary”.
I am pleased that a few weeks later, Joshua, Nathan and Alex were granted bail, released from prison and permitted to appeal, but whatever happens with their cases on appeal, the serious issues raised by the decision to jail them in the first place should not be ignored. I would like to think that the international consternation expressed at their treatment, and undoubtedly noted by the Chinese authorities, contributed to their release. That is why I share the view of the last Governor of Hong Kong, Lord Patten, when he said our Government’s Ministers should speak out publicly, not only privately, and that those who believe that raising difficult issues with China, such as human rights, would affect trade are “mistaken”.
Joshua, Nathan and Alex are far from alone. According to expert Kong Tsung-gan in a recent article in Hong Kong Free Press,
“at the heart of the government strategy to keep pro-democracy groups on the defensive and to intimidate ordinary people into not participating in the movement are the 39 legal cases (criminal and civil) it has brought against 26 pro-democracy leaders, as well as prosecutions of dozens of grassroots activists.”
I understand that, at present, more than 50 democracy activists face court proceedings and potentially prison under public order offences, in cases that past precedent indicates would normally have been punished with non-custodial penalties—community service or a fine. Some 16 peaceful demonstrators have been jailed for between six and 13 months already.
“As never before,”
writes Kong Tsung-gan,
“the government is using the courts to criminalise and delegitimise the pro-democracy movement.”
He argues that although some cases—such as those I have quoted—have received international attention, more focus should be given to the “overall pattern”.
In a further example of the erosion of democratic procedures, in December last year, the Legislative Council introduced procedural changes regarding elected legislators’ authority. The powers of the Legislative Council chairman to close down debates were increased. Inevitably, that will reduce the ability of pro-democracy groups, which represent the majority of Hong Kong’s people, to properly scrutinise legislation and hold the Executive to account. A new law imposed on Hong Kong by China now criminalises disrespect of the national anthem. Some Hong Kong football fans have booed China’s national anthem during football matches. One can argue whether it is appropriate to disrespect a national anthem, but is it right to criminalise such action with a penalty of up to three years in prison? Disturbingly, I understand that these new laws can be applied retrospectively.
Journalists now face physical threats. Hong Kong has fallen to 73rd place in Reporters Without Borders’ 2017 World Press Freedom Index—down from 18th in 2002. Academic freedom is being curtailed, too, with recent reports of controversial academic figures being removed from posts or having promotions blocked, of state-appointed figures governing universities, and of a growing push to limit freedom of speech there.
Another illustration of the erosion of Hong Kong’s autonomy, and one that directly affects the freedoms of the United Kingdom, was the decision to deny British human rights activist Benedict Rogers entry to Hong Kong in October last year. I take the opportunity to thank Foreign Office Ministers for expressing concerns to the Chinese authorities about the denial to Mr Rogers, after I raised questions in the House at the time. Does the Minister have any update regarding this? In late 2017, several Taiwanese scholars were also refused entry to Hong Kong.
The year ended with yet another example of the increasing erosion of Hong Kong's authority: the Chinese Government’s decision to enforce mainland Chinese law at the new West Kowloon high-speed rail terminus in Hong Kong. Under the arrangement, Hong Kong will effectively surrender its jurisdiction across a quarter of the new express rail terminus, where immigration procedures will be performed by mainland law enforcement agents with powers of search and arrest. I understand that Chinese national law will apply at the rail terminus. Thousands demonstrated in Hong Kong against these plans on new year’s eve. In the view of many experts, that effectively introduces one country, one system.
I understand that the National People’s Congress standing committee decided that the co-location arrangement is constitutional, thereby usurping the function of the courts, which under the Basic Law of Hong Kong should have exclusive rights to adjudicate cases. The Hong Kong Bar Association has said it is “appalled” by this decision, and stated:
“Such an unprecedented move is the most retrograde step to date in the implementation of the Basic Law, and severely undermines public confidence in ‘one country, two systems’ and the rule of law”
in Hong Kong. Does the Minister share the concerns of the Hong Kong Bar Association?
In December, Mr Speaker hosted the launch in Speaker’s House of a new organisation set up in this country to monitor, report and advocate for Hong Kong’s freedoms and autonomy—Hong Kong Watch. I had the privilege of attending the launch of that organisation, which was founded by Benedict Rogers and others. I commend its work to the House and encourage Members on all sides to engage with Hong Kong Watch. It has a highly distinguished cross-party group of patrons, including Sir Malcolm Rifkind, Lord Ashdown, Lord Alton of Liverpool and Sir Geoffrey Nice, QC. The seniority of those individuals in their respective spheres of public life underlines that the concerns I am expressing are shared by respected public figures across political parties in this country and beyond, and that they cannot be ignored.
Indeed, Lord Ashdown recently visited Hong Kong as a patron of Hong Kong Watch. He published a report, which he presented at a meeting in the House of Lords last week, which I attended. The report is entitled, “Hong Kong 20 Years on: Freedom, Human Rights and Autonomy Under Fire”. I urge the Minister to read it if he has not already done so, and to respond to the concerns and recommendations in it. Lord Ashdown states:
“Over the past five years the freedoms guaranteed to the people of Hong Kong in its mini-constitution, the Basic Law, have been increasingly eroded. In Hong Kong, the rule of law is under pressure, human rights are undermined, and the city appears no closer to democracy. Legislators, legal experts and activists that I spoke to expressed concerns about the direction of travel: the situation appears likely to worsen in the coming years unless the people of Hong Kong and international governments unify to protect the rights of those living there.”
What concerned me particularly, as I listened to Lord Ashdown presenting his report last week, was what he said of his recent visit, compared with previous visits to Hong Kong over the years.
Fiona Bruce
I will shortly draw my remarks to a conclusion. I was about to quote Lord Ashdown. Following his recent visit to Hong Kong, he said that
“something has happened to cause the almost irrepressible sprit of Hong Kong to be dampened down”.
It is profoundly concerning to hear claims from China that the joint declaration is viewed by some as a historical document of no relevance. Does the Minister agree that it is still relevant now and right up to 2047, that it is a joint declaration by both Britain and China in which both signatories have responsibilities and obligations, and that, as an international treaty lodged at the United Nations, China’s adherence to those obligations under the treaty ought to be taken as an indication of its reliability in adhering to all its international treaty obligations?
Does the Minister agree that, as Lord Ashdown said,
“it is in the interests of Britain, China and Hong Kong to continue to uphold the rights enshrined at the handover”?
Does he also agree that Britain has, as Lord Patten said,
“a right and a moral obligation to continue to check on whether China is keeping its side of the bargain”
publicly as well as privately? If so, what are the Government doing to fulfil that obligation?
We must heed the plea of Anson Chan, Hong Kong’s former Chief Secretary, and Martin Lee, founder of Hong Kong’s Democratic party, who told the Conservative party human rights commission, which I have the privilege to chair:
“We need the UK to speak up forcefully in defence of the rights and freedoms that distinguish Hong Kong so sharply from the rest of China. If it does not lead, then the future of one country, two systems is at best troubled and at worst doomed.”
I hope we will step up to our responsibilities, speak up for Hong Kong and live up to the promise made by Sir John Major 22 years ago that Hong Kong should never have to walk alone.
Several hon. Members rose—
Mr Gary Streeter (in the Chair)
Colleagues, five Back Benchers are seeking to catch my eye. The wind-up speeches will begin at 5.40 pm, so you have about five minutes each.
Catherine West (Hornsey and Wood Green) (Lab)
It is a pleasure to serve under your chairmanship, Mr Streeter. I congratulate the hon. Member for Congleton (Fiona Bruce) on her excellent introduction and her commitment over the long term to the people of Hong Kong. As a former shadow Minister for Asia and as a patron of Hong Kong and deputy chair of the all-party parliamentary China group, I congratulate others for joining in the debate and for expressing our concern about human rights, democracy and individual freedoms.
As we reflect on the past 20 years, it is important to pay tribute to the Hong Kong Government for the significant steps forward they have taken since handover, from minimum wage legislation to anti-corruption drives, clean water initiatives and huge investments in public infrastructure projects. As we look forward to the next 20 years, we should pause to remember the past 20, and how important the principles of the joint declaration are for the flourishing of Hong Kong’s economy and society. The dynamism and entrepreneurial spirit of the Hong Kong people has allowed Hong Kong to flourish under the joint declaration. There is no reason why that should not continue.
The UK-Hong Kong relationship has deepened. More than 600 UK businesses with registered offices in Hong Kong, an export market worth £8.6 billion and a UK investment stake of more than £33 billion are clear signs that trade is booming. In terms of academic and cultural exchange, more Hong Kong students are enrolling at UK universities than ever before, which is an achievement to celebrate. In part, the relationships we form with students, young people and young democrats redouble our efforts to commit ourselves to a more socially just society based on individual freedoms and human rights.
We are all aware of the high-profile cases raised in connection with the topic of the debate, including the arrests of the booksellers. It is interesting that today’s papers highlight the case of Gui Minhai, the Swedish national who does not understand why he has been arrested. It is unclear whether he has any legal support. Conversations are going on between Sweden and China, but that case emphasises how surprising such acts can be. At one moment, one can be debating a good trade relationship and things can feel so normal, but in another situation things can seem so strange. When we try to develop a good relationship with China along trade lines, we must be brave and talk about the issues that are important to us.
On 28 March 2017, I asked the Minister’s predecessor as Minister for Asia, the hon. Member for Reading West (Alok Sharma), how confident he was that the Hong Kong Government were committed to genuinely democratic elections. He stated that it was the Government’s view that the best way to secure the future of one country, two systems was through a transition to universal suffrage. I would be grateful if this Minister would give us an indication of the timescale or of what progress might have been made in tackling that fundamental issue of universal suffrage.
Secondly, the issue of functional constituencies continues to be an area of concern when it comes to creating a system of fair and genuine democratic representation. I recognise that the functional constituencies are somewhat a hangover from pre-handover days, but I should be grateful if the Minister would clarify the Government’s position on whether they should play a lasting role in the democracy of Hong Kong, and whether he has discussed the issue with his counterparts in Hong Kong or Beijing.
Thirdly, I wonder what action the Minister has taken to raise the jailing of Hong Kong journalists. The tension between democracy and governance, journalism and the free expression of speech is obviously something that means a great deal to many of us in the Chamber. Could the Minister please give us an update on what progress is being made to discuss genuine freedom of speech in Hong Kong? Of course, Hong Kong has always treasured that; it has always had a lively bookselling tradition and a lively journalistic environment. As we move into an increasingly globalised age, such questions are also crucial around social media. I should be grateful if the Minister would give me an idea of his views on that.
I have one minute to go. Marking the anniversary of the handover, the Foreign Secretary issued a very carefully worded statement, in which he made no specific reference to the persisting cases or concerns outlined by hon. Members today. As a guarantor of the joint declaration, a treaty lodged at the United Nations, it is our responsibility to ensure that its principles are upheld, working with our Chinese counterparts. Following the delegation of young LegCo Members last year, hosted by Lord Collins of Highbury from the other place, I pledged to those young representatives that I would continue to press our Government to ensure that the spirit of the joint declaration is upheld. I hope that, through debates like these, we can continue to be vigilant, to promote human rights, democracy and individual freedom on behalf of Hongkongers.
Richard Graham (Gloucester) (Con)
It is a pleasure, as chair of the all-party parliamentary group on China, including Hong Kong, to join the debate. I congratulate my hon. Friend the Member for Congleton (Fiona Bruce) on securing it. In many ways, this debate is a continuation of others we have had. I last spoke on this subject in this Chamber in March 2016; we were then considering the 38th biannual report on Hong Kong. It is perhaps timely to review again progress on the implementation of the Sino-British joint declaration of 1984, just over 20 years since the handover of Hong Kong.
In the 38th biannual report, the Foreign and Commonwealth Office noted that the system of one country, two systems has in very many areas “continued to function well”, but it noted specific concerns about rights and freedoms, including academic freedom and the freedom of the press. In the 41st report, the most recent one that we have, the Foreign Secretary’s introduction confirmed his strong belief that the joint declaration
“remains as valid today as it did when it was signed by both the Government of the UK and of China over thirty years ago”,
that it was legally binding, that it continues to be enforced and that he had unequivocally raised the issue, both publicly and privately, with the Chinese Government.
In a sense, the updated report is largely a continuation of the earlier one. Anyone objectively looking at the progress of Hong Kong over the last 35, 20 or even five years would have to note considerable elements of progress in the way that Hong Kong continues to surprise—its environmental campaigns, its increased social welfare understanding, and its ability to continue to do dynamic things in its trade with the rest of the world, brilliantly exemplified by the presentation given at the annual dinner of the Hong Kong Trade and Development Corporation in London last autumn.
Our co-operation with Hong Kong, which stretches to cover much more than trade and investment, encompassing the 3.7 million British passport holders in Hong Kong, strong education links and—above all, perhaps—the rule of law, has continued strongly. It will be, I suspect, raised to a new level in March, when our Department for International Trade works with Hong Kong on the GREAT festival of innovation, which will I think be the Department’s largest promotional activity in the far east this year. It will focus on technology in a whole number of different ways, and will be a strong example of how Britain and Hong Kong are still immensely relevant to each other.
None the less, the issue of the freedom and democracy of Hong Kong is incredibly important. Although those concerns remain strong, I note that Hong Kong Watch’s report says that academic freedom is “alive, and generally well,” with the caveat that there should be vigilance against changes to those freedoms. My belief is that in engaging with Hong Kong—many of whose residents are old friends of the UK in a number of ways—and with the People’s Republic of China, part of the issue is the tone we strike. Having something called “Hong Kong Watch” is valuable, in the sense that it will continue to look closely at the six freedoms articulated in the joint declaration, but it also has an element of moral superiority to it, which we must be careful about.
For example, in an email to me a few days ago, a Hongkonger resident in the UK accused China of breaking solemn commitments to respect Hong Kong’s freedoms and “British way of life”, before going on to talk about the Iranian-style fake election of the chief executive and
“Governor-like powers to rule Hong Kong.”
We cannot have it both ways. The fact of the matter is that the British Governor there was not elected in any way whatsoever, and he did have significant powers to rule Hong Kong. That was part of the British way of life in Hong Kong at that time.
Things have moved on. The key thing I would like to leave the Minister to ruminate on today is the importance of shared rule of law for all three parties. When Hong Kong is operating at its best, in a way that can raise huge amounts of capital and provide great services for the Chinese programme of one belt, one road, we, with Hong Kong and China, can use the advantages of a strong rule of law to benefit everyone.
Sammy Wilson (East Antrim) (DUP)
I remember when the discussions were going on about the future of Hong Kong. There was particular interest in Northern Ireland. I was a member of the Chinese chamber of commerce in Northern Ireland; a lot of the members came from Hong Kong or had families there and were very concerned about the future. Of course, Chris Patten had been a member of the Administration in Northern Ireland when the Anglo-Irish agreement was signed and we were moving toward discussions about the future of Northern Ireland, which culminated in the Belfast agreement. Given that the Government had expressly stated that they had no economic, strategic or selfish interests in Northern Ireland, there was a certain affinity with people in Hong Kong who were facing an uncertain future.
Thankfully, despite all the fears about Britain’s exit, or Brexit, from Hong Kong—people thought capital would flee from Hong Kong, industry would be decimated, people would want to leave and the whole economic dynamics of the Hong Kong economy would be affected—that did not happen. Perhaps there are lessons for today from those kinds of warnings.
The commitment was made to the people of Hong Kong that although China would now have control, it would be one country but two systems. Nothing would change for 50 years. Freedoms they had experienced would be guaranteed. As has been shown this afternoon, if we look at the way in which deteriorations in human rights and freedoms have manifested, especially recently, whether we are talking about the abduction of booksellers and businessmen, interference with the judiciary, attacks on journalists or the way in which protestors have been treated, there has quite clearly been an erosion of the freedoms that people were promised. It is significant that the man who did the deal has said that perhaps we should have done more. Chris Patten has expressed concerns about what is going on in Hong Kong.
The one thing that the Chinese do not like—this is quite clear in all dealings with them—is public criticism. We saw that when we were asked to ensure that protesters were kept off the streets of London during the state visit of the Chinese Premier; it showed how, for the Chinese, public criticism rankles. It is important that where these deficiencies are identified, our Government speak out against them, not only privately but publicly. There are some people who say that we look to China as one of our big export markets, and that there are trade implications to speaking out. I do not believe that. One need only look at how in the past Presidents of the United States, for example, have publicly criticised China, and it has not led to the kind of sanctions that one would expect. The one ask I have of the Government is this: let us not be mealy-mouthed in ensuring that the protections that we gave and promised to the people of Hong Kong are delivered.
Colin Clark (Gordon) (Con)
It is an honour to serve under your chairmanship, Mr Streeter. Scotland has had strong links with Hong Kong historically and commercially, in politics, science and modern trade. There can be no doubt that over the last 20 years Hong Kong has thrived as a result of its proximity to China, while enjoying access to financial markets around the world.
Scottish universities, including Aberdeen and Edinburgh Universities, have very strong links to Hong Kong, and they share our concerns. Last year was a special year for the special administrative region, and much was made in Hong Kong and China of the significance of the 20th anniversary of the handover from the British. As the right hon. Member for East Antrim (Sammy Wilson) said, at the time, Britain left in a clear agreement that Hong Kong’s special status under the one country, two systems understanding would be protected, along with a commitment to the rule of law and Hong Kong’s autonomy, as my hon. Friend the Member for Congleton (Fiona Bruce) eloquently explained.
However, in recent years we have seen worrying signs that the commitment is wavering. It does not benefit China and the ruling Communist party to flex their muscles when it comes to Hong Kong. The economic importance of Hong Kong to China should very much temper their response. But all this shows a worrying disregard for the joint declaration. The United Kingdom has a clear right to monitor and comment on the declaration, given that that was one of the major preconditions for the handover of Hong Kong. The commitment to the rule of law and autonomy were agreed for a period of at least 50 years. It is worrying that, only halfway through, we are deeply concerned that those principles appear to be at risk.
I hope that the Government will recognise the concerns expressed in the Chamber today and speak out where necessary. China is a friend to the United Kingdom and a country with which we enjoy a prosperous and beneficial relationship, but friends must be able to be honest with one another and have difficult conversations on issues on which we disagree. Like the right hon. Member for East Antrim, I recognise the economic success of Hong Kong and want to see it flourish. The last 20 years have defined the Hong Kong of today. If it is to continue to flourish for the next 20 years, its democracy, autonomy and rule of law must not only be protected, but enhanced so that they are worthy of any great international city, which Hong Kong most certainly is.
Jim Shannon (Strangford) (DUP)
I thank the hon. Member for Congleton (Fiona Bruce) for her contribution. She is clearly a lady with a big heart, and she presented the case very well. Well done to her. Last week in the Holocaust debate, I quoted a poem:
“First they came… and I did not speak out.”
I recognise that we are not talking about the same thing today, but there is a similarity that we should speak out about. Looking at the situation in Hong Kong and the response to date, I am uncomfortable, as other hon. Members have said that they are.
I often say that I am proud to be a Member of Parliament in the greatest seat of democracy in the world. It is an honour that I do not take lightly. While I am standing here representing my constituents, I am mindful that with great power comes great responsibility. I am sorry to say—please do not interpret my words as an attack on anyone in this place—that we are not living up to our responsibility when it comes to Hong Kong. It is good to see the Minister in his place. I believe there is no better person to respond to this debate, and I mean that with all sincerity. I look forward to his response.
We all know the background: Hong Kong was handed back to China in 1997 following the 1984 agreement between China and Britain. China agreed to govern Hong Kong on the principle of one country, two systems, and the city would be able to enjoy a high degree of autonomy, except on foreign and defence affairs, for 50 years, as the hon. Member for Gordon (Colin Clark) said very clearly. I am not a mathematician, but we have not reached the end of those 50 years. If a loan had been defaulted on, we would not write it off; where there is a prison sentence, we would not allow early release; yet here we appear to have backed off. As I often say, “so sad, too bad.” The abuse of human rights, the right to worship and the right to express oneself in a democratic process—we have a responsibility to these people, and we are not fulfilling it.
As chair of the all-party parliamentary group for international freedom of religion or belief, I take very seriously any form of persecution, and I am constantly asking the Government—as the Minister knows—to step in and speak out on behalf of these people. People who have arranged peaceful protests are being imprisoned. Three and a half years ago, I served on the armed forces parliamentary scheme run by the Royal College of Defence Studies. One of the representatives there was the chief of Hong Kong police. He told me about the number of protests, because I was interested to hear how things were going, and he illustrated to me that protests were able to go ahead. Today they are not. Today people are under the cosh. Today, they can face a jail sentence. We have to step out against that.
Avery Ng, the chairman of the League of Social Democrats, told The Guardian:
“It is ridiculous for the Chinese government to claim that the joint declaration is a historical document. You don’t sign a contract and claim that it is historical the second day after the contract was signed.”
How true that is! He continued:
“I believe the UK government has legal, moral and political responsibility to come out and say the right thing.”
I agree with those sentiments, and while I do not believe that we have humiliated ourselves—I do not say that for one second—we have not draped ourselves in honour, either.
Yes, we would appreciate a good relationship with China to enhance trade, especially in a post-Brexit Britain, but we cannot sell ourselves, our integrity or our obligations off to achieve this. Our products are top-quality. Our relationship has gradually built up. While I firmly believe that organising a boycott of Chinese products would be counterproductive and the wrong thing to do, I do not believe that we have lost the ability to speak out about our former colony, and to instigate a real and meaningful discussion regarding these cases and what they mean for the people of Hong Kong.
Last sentence, Mr Streeter. I am asking the Foreign and Commonwealth Office for more than a strongly worded email. Let us discuss this face-to-face and make the case for those who are not being allowed to speak out for themselves. I often say that we speak for those who have no voice.
Mr Gary Streeter (in the Chair)
I remind hon. Members that Opposition Front Benchers have five minutes each, and the Minister has 10 minutes. That should allow a few moments for Fiona Bruce to respond at the end.
Peter Grant (Glenrothes) (SNP)
I am grateful for the opportunity to start summing up the debate. In the interest of brevity I will not go through everyone who has contributed. It is quite clear that everyone who has spoken is concerned about the plight of the people of Hong Kong, and not just because of the United Kingdom’s history in the region. It is perfectly legitimate in any democratic society to have concern for human rights everywhere; human rights are there because people are human beings, not because of where they live or which political system they work under.
I have a concern, as I think we all do, that the Government of China, through the authorities in Hong Kong, as we see in so many other places, use the excuse of law and order or of protecting national security to clamp down on what would be seen in any reasonable society as possibly awkward or inconvenient, but perfectly legitimate, peaceful and lawful, disturbances by people doing no more than exercising their right to disagree with the Government of the day, to make public statements and to take part in public protests against, or in favour of, that Government’s policies. Let me make that clear, as I have done in a number of other human rights debates that I have taken part in here. The Chinese Government and the authorities in Hong Kong have the right to maintain their own society. They do not have the right to use that as an excuse for completely arbitrary arrests and detentions.
I hope that the Minister will indicate what the Government’s intentions are for after we leave the European Union. China will clearly be a big target for one of these wonderful new trade deals that we will get. How can we be sure that that will not be obtained at the cost of our watching brief on human rights in China? It has to be said that the United Kingdom’s record on dictatorships in places such as Saudi Arabia and Bahrain is not good. Far too often, trade interests triumph over human rights. More recently, we have even seen that in Spain: there have been arbitrary arrests for taking part in the wrong kind of political demonstration in Spain in the past few months, and the Government have been very slow and reluctant to criticise them. The United Kingdom’s authority in speaking to the Chinese Government about human rights abuses in Hong Kong would be much greater if we were prepared to speak as firmly to our so-called friends in some other human rights abusing regimes across the world. We do not have to go to Hong Kong to see people being denounced as enemies of the people simply for expressing unpopular or contradictory views.
I am grateful to the hon. Member for Gloucester (Richard Graham), who is no longer in his place, for reminding us that part of the reason why there is little democracy in Hong Kong now is because there was practically none for 150 of the 155 years that Britain was in charge. Out of a population of several million, how many citizens of Hong Kong were asked who they wanted as Governor before Chris Patten took over? None, or practically none. The first real attempt to democratise Hong Kong was introduced by Chris Patten in 1992, exactly 150 years into British rule there. Sometimes we really do need to look at ourselves in the mirror. We should ask why democracy in Hong Kong suddenly became important when Britain was about to hand over control, but did not seem that important when Britain was in control.
Some of the structural, institutional reasons why human rights are sometimes not properly observed are British legacies. The reason that universities can clamp down with complete impunity on academics or students who speak out of turn is because the Chief Executive of Hong Kong is the de facto principal—the boss—of every university in the city. The Chinese did not do that; Britain did that. That was what Britain set up. Half the legislature is elected not by the citizens but by the big business interests. The Chinese did not do that; Britain did that. Let us face it: in this place, half the legislature and more is not elected.
We should by all means comment, criticise and use all forms of diplomatic and political pressure to try to persuade the Government of China that human rights are in everybody’s interests, not only in Hong Kong but in mainland China, but we should do it with a degree of humility. Sometimes we should do it with a degree of shame, when we remind ourselves that Britain’s first insistence on taking control of Hong Kong was not done in the interests of Hong Kong’s citizens, but was done to protect the interests of the opium barons. Although the hon. Member for Gordon (Colin Clark) has mentioned some of Scotland’s positive connections with Hong Kong, it is to our national shame that it was a couple of Scottish entrepreneurs who set up a company purely to sell opium into China to undermine the Chinese economy. Today, we should by all means press the Chinese Government to respect human rights, but we should do it with a sense of humility, because a lot of the problems in Hong Kong just now can be traced back to the British history of colonialism in Asia and elsewhere.
Helen Goodman (Bishop Auckland) (Lab)
It is a pleasure to serve under your chairmanship this afternoon, Mr Streeter.
As hon. Members have said, one of the privileges of serving in our free Parliament is the ability, and the possibility, to defend the freedoms of those in other countries where things are more difficult. Last year was the 20th anniversary of the joint declaration, and I would just like to remind the Chamber of one of the key paragraphs in it, which says:
“Rights and freedoms, including those of the person, of speech, of the press, of assembly, of association, of travel, of movement, of correspondence, of strike, of choice of occupation, of academic research and of religious belief will be ensured by law in the Hong Kong Special Administrative Region.”
Those are fundamental rights, and Her Majesty’s Opposition totally support the principle of one country, two systems and we totally accept our legal responsibilities as a guarantor of that declaration and of those rights.
I want to pay special tribute to the hon. Member for Congleton (Fiona Bruce) for the way that she introduced this debate. Her speech was excellent and set out the whole picture very clearly. I have to say that she is fearless in defending those whose human rights are abused, however inconvenient it is and wherever we see it. I also congratulate my hon. Friend the Member for Hornsey and Wood Green (Catherine West) on her considerable work on Hong Kong in recent years.
The situation is obviously getting more difficult, as the Government report acknowledges, and we have to ask what is to be done in this situation. We should remind China of a couple of things. One is that while we agree that calls for independence are not ones that we support, clamping down on protests and on free speech, and appearing not to wish to see civil society flourish, can only increase those pressures. That will not reduce those protests. As Lord Ashdown said, will the Chinese enhance their own soft power if they undermine Hong Kong’s freedoms? That is a very powerful point.
I am interested to know what the Government are going to do and what they are going to say to the Chinese. I think that the Prime Minister will have a meeting with President Xi in the next few months. Is the intention to raise these issues? The Government have been objective and open in assessing the situation, but what further do they think that they can do? I would also like the Government to assure us that in the post-Brexit pressure for trade regimes, we will not abandon our commitments and responsibilities to human rights. Taking on board what the hon. Member for Glenrothes (Peter Grant) said about humility, and notwithstanding what happened when we were running Hong Kong, what steps do the Government think it is possible to make to move to universal suffrage, and what is their view on the legality of the immigration checkpoint on the new railway?
The title of the debate is “Democracy in Hong Kong”. Most of the focus has been on individual human rights, and at this juncture I think that is the right focus.
The Minister for Asia and the Pacific (Mark Field)
I pay tribute to my hon. Friend the Member for Congleton (Fiona Bruce) for her work as chair of the Conservative party human rights commission. I value her deep interest in Hong Kong and a range of other matters. Forgive me if I reply to some specific issues in writing subsequent to this debate; I hope that all Members will understand, particularly the hon. Member for Bishop Auckland (Helen Goodman). We are concerned about the checkpoint issue, not least because it has been raised by the Law Society of Hong Kong, but I will return to the detailed points made by the hon. Member for Hornsey and Wood Green (Catherine West) after this debate.
I have rather more sympathy than I can probably say publicly for much of what the hon. Member for Glenrothes (Peter Grant) said. It is a conversation that I had with my officials earlier, and I am glad he was not a fly on the wall for that. He will appreciate that although he makes some valid points about the past, we also need to look to the future. It is my responsibility now to make things work for the future and to ensure that the joint declaration is properly enforced, and I intend to do so.
I stress that the UK Government are acutely aware of our historic responsibilities to Hong Kong, and indeed to future generations of Hongkongers, to uphold the joint declaration. We remain absolutely committed to monitoring and ensuring the faithful implementation of that document, and to the principle of one country, two systems. The joint declaration of 1984 is a legally binding treaty registered at the United Nations. It clearly applies to both signatories, remains in force, and is relevant to today’s Hongkongers and those of future generations. We have been unequivocal about our position on that issue both publicly, including in our six-monthly reports to Parliament, and in private with the Chinese Government.
We judge that one country, two systems has generally functioned well. It provides Hong Kong with the essential foundations for success as a global financial centre and a prosperous world city. Those foundations are Hong Kong’s capitalist economic system, its high degree of autonomy, its system of common law and independent judiciary and the protection of rights and freedoms. To return to one thing that the hon. Member for Bishop Auckland said, I take seriously the three prongs of my responsibility as the Minister for Asia and the Pacific: prosperity; security, defence and intelligence; and human rights. Please be assured that there is and must be no trade-off between human rights, whether in Hong Kong or in any other part of the world, and any Brexit-related trade matters. I know that there will be ongoing debates in the House, but please be assured that that is my position as Minister and that of the Foreign and Commonwealth Office.
The Government’s most recent six-monthly report makes it clear that we cannot ignore the fact that important areas of the one country, two systems framework are coming under increasing pressure. However, I reassure the House that we consistently and unashamedly raise those concerns with the Chinese and the Hong Kong authorities. I appreciate that such engagement may not always be obvious or visible, although of course it is very obvious in the six-monthly reports, but be assured that those representations continue to be made.
Personally, I believe that more can often be achieved through quiet diplomatic engagement than through megaphone diplomacy, but we are willing to comment publicly and robustly where we feel that it is appropriate. For example, I raised our concerns about the pressure on one country, two systems during my visit to Beijing and Hong Kong last August, and I was encouraged to hear Chinese Ministers confirm their support for the doctrine. That support was echoed by Hong Kong Chief Executive Carrie Lam in my discussions with her. She pledged to implement the principle of one country, two systems, to uphold the Basic Law and to safeguard the rule of law.
However, I also accept that confidence in that doctrine is being undermined by ever more frequent reports of mainland security officials operating in Hong Kong and continuing concerns raised about the exercise of some of the rights and freedoms guaranteed by the joint declaration. Many people will have followed the media coverage last year when three high-profile pro-democracy activists, Joshua Wong, Nathan Law and Alex Chow, were sentenced to imprisonment. We were further concerned when we heard that the British national Ben Rogers had been denied entry to Hong Kong in October last year. He is a champion of democracy and human rights, well known to Members of all parties. The Prime Minister spoke about his case in the House, we summoned the Chinese ambassador to the Foreign Office to discuss it and the Secretary of State for Communities and Local Government raised the issue with the Hong Kong Secretary for Labour and Welfare during his visit to Hong Kong in November.
I wrote to the Hong Kong Chief Executive Carrie Lam setting out our position on all four of those cases. Her response was consistent with previous public comments made by the Hong Kong authorities on the issue. If the people of Hong Kong and the watching world are to have continued confidence in one country, two systems, it is vital that the high degree of autonomy and the rights and freedoms enshrined in the Basic Law and guaranteed in international law by the joint declaration are respected. As I said earlier, we will not shy away from that. I know that the Prime Minister mentioned it when she met President Xi at the G20 summit in July, and as the hon. Member for Bishop Auckland rightly pointed out, we will no doubt discuss it when the next visit takes place.[Official Report, 25 January 2018, Vol. 635, c. 1MC.]
Let me be clear: ongoing commitment to those doctrines is not interference by the west in Chinese affairs. Maintaining confidence in one country, two systems and the rule of law is crucial for both Hong Kong’s own interests and China’s, including the city’s role as a financing hub for the belt and road initiative. Our interest is also driven by our wish to see Hong Kong prosper well into the future. We firmly believe that Hong Kong’s economic system, which is uniquely trusted to bring huge new opportunities into China from all corners of the globe, will only flourish if its people enjoy the freedom and safeguards that will promote their talents and enterprise.
Turning to political reform, I welcome the Chief Executive’s commitment to addressing that challenge in Hong Kong, which was a focus of her policy address last October. As we have said and will continue to say in the six-monthly reports, we believe that political reform, including on universal suffrage and functional constituencies, will better equip Hong Kong to tackle the challenges that it faces, as well as giving the people of Hong Kong confidence for the future.
On independence, our position is also clear. We do not consider it to be a realistic option for Hong Kong. That is the other side of one country, two systems. Indeed, any move toward independence undermines the concept. Again, we will call that out, because we believe that the system as it stands is the best possible guarantor for Hong Kong’s long-term stability and prosperity.
As I have outlined, Hong Kong matters hugely to the UK, and not just because of our shared history. Hong Kong is also an important trade and investment partner, both bilaterally and due to its pivotal role as a gateway to the belt and road initiative. I am perhaps a little more optimistic than my hon. Friend the Member for Congleton. Twenty years after the handover of Hong Kong to China, the UK’s commitment to the joint declaration and one country, two systems remains as robust as ever. I am very confident that the relationship between the UK and Hong Kong, a relationship that will also include China, will continue to deepen in the coming months and years to come.
Where we identify disagreements, such as in the case of Ben Rogers, we shall continue to raise our concerns. We shall continue to stress to the Chinese and Hong Kong authorities that for confidence in one country, two systems to be maintained, Hong Kong must enjoy the full measure of its high degree of autonomy and rule of law, as set out in the joint declaration and enshrined in the Basic Law.
Fiona Bruce
I thank colleagues for contributing to this debate, and I thank those who have joined me in raising concerns about recent challenges to democracy and human rights in Hong Kong. I also thank the Minister for his considered response, and for the clear assurances that he has given of the UK Government’s ongoing commitment to ensuring that the principles, rights and freedoms enshrined in the joint declaration and the Basic Law are adhered to.
In speaking of such matters, I know that we all share a genuine concern for the wellbeing of the people of Hong Kong, for their flourishing future and for a positive relationship between our two countries. I hope that our deliberations will aid all those things.
Question put and agreed to.
Resolved,
That this House has considered democracy in Hong Kong.
Written Statements
(6 years, 2 months ago)
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Carillion
(6 years, 2 months ago)
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The Minister for the Cabinet Office and Chancellor of the Duchy of Lancaster (Mr David Lidington)
On Monday 15 January 2018 I notified the House of the steps taken by the Government in regards to the compulsory liquidation of Carillion plc.
Throughout this unfolding situation the Government have prioritised the continued delivery of public services. Taxpayers should not, and will not, bail out a private sector company for private sector losses or allow rewards for failure.
The failure of this company has understandably caused concern for many people over their jobs, their pensions and their local services. The court has appointed an official receiver from the Insolvency Service who has taken control of the delivery of public services contracts and we are supporting them to do so. We will support the official receiver to provide these services until a suitable alternative is found, either through another contractor or through in-house provision.
I would like to provide further reassurance that all employees working on public services should continue to turn up to work, as they have been doing since the announcement of the liquidation, confident in the knowledge that they will be paid for the work they are providing.
In order to safeguard our public services, we have been implementing contingency plans that have been developed since July 2017. Since I last updated the House, there has been no significant disruption to service delivery in schools, hospitals, prisons, defence and other public services as staff have continued to provide services. We have been engaging with all devolved Administrations with exposure to Carillion to ensure that robust contingency plans are being implemented.
A number of Carillion’s joint venture partners such as Kier, Eiffage, Balfour Beatty, KBR, Amey and Galliford Try have committed to stepping into the respective public sector contracts to ensure continuity of these vital services. Public sector construction sites have been secured and construction will begin following the appointment of a new contractor. I would like to express my thanks to all those who have worked hard to ensure the continuity of public services.
Over 90% of Carillion’s private sector facilities management service customers have indicated that they will provide funding for the official receiver to maintain interim services while new suppliers can be identified to deliver these, ensuring the retention and employment of staff on these contracts. In addition, we are making sure the usual level of support from Government to affected employees is available from Jobcentre Plus, the Department for Business, Energy and Industrial Strategy, the Pension Protection Fund (PPF), HMRC and also dedicated websites from the Insolvency Service.
At present, seven Carillon pensions schemes, covering 6,000 members, have moved to the pensions protection fund assessment period, this occurs automatically when all the sponsoring employers become insolvent. The remaining 21,000 members are in schemes which have at least one sponsor not in insolvency, and are therefore not in the Pension Protection Fund (PPF).
Where pensions have moved into the PPF, the PPF is making sure current pensioners continue to receive their pensions at 100% of their usual rate, and are assessing the eligibility of Carillion’s pension schemes to enter the PPF to protect current employees’ future pensions. We have also set up a special additional helpline with the Pensions Advisory Service for members of Carillion’s pension schemes (0800 7561012). We have responded to over 500 calls to the Pensions Advisory Service line since it opened last week.
The Construction Industry Training Board (CITB) has worked with the Education and Skills Funding Agency to ensure funding is available to support former Carillion apprentices. Over 1,400 apprentices have been contacted and the CITB is offering every former Carillion apprentice a face-to-face session with CITB Apprenticeships to find out their individual learning needs. To date, the CITB have matched 400 Carillion apprentices to new employers, and they continue to assess the industry offers they have received to find placements for the remaining Carillion apprentices.
HMRC will provide practical advice and guidance to affected businesses in Carillion’s supply chain through its business payment support service (BPSS). The BPSS connects businesses with HMRC staff who can offer practical help and advice on a wide range of tax problems, providing a fast and sympathetic route to agreeing the best way forward and addressing immediate concerns with practical solutions. HMRC has also offered to provide affected families with cash support through the tax credit system and has published details on how to contact them to arrange.
The Secretary of State for Business, Energy and Industrial Strategy (Greg Clark), the Economic Secretary to the Treasury (John Glen) and the Parliamentary Under-Secretary of State for Business, Energy and Industrial Strategy (Andrew Griffiths) met with several banks on 17 January 2018 to seek assurances that they will support small businesses affected by Carillion’s liquidation. Lenders are contacting customers and, where appropriate, are putting in place emergency measures, including overdraft extensions, payment holidays and fee waivers to ensure those facing short-term issues can be helped to stay on track. Three lenders have made a fund of £225 million available to support small businesses exposed to Carillion’s liquidation. Furthermore, the Secretary of State for Business, Energy and Industrial Strategy has set up a taskforce to monitor and advise on mitigating the impacts of Carillion’s liquidation on construction firms, particularly SMEs and those working in the sector. He chaired the first meeting of the taskforce on 18 January 2018 and will be holding a further series of meetings with stakeholders in the coming weeks.
The official receiver has also taken immediate action to stop severance and bonus payments to former directors. The Secretary of State for Business, Energy and Industrial Strategy has written to the Insolvency Service and the official receiver asking that the statutory investigation into the conduct of Carillion’s directors is fast-tracked and extended in scope to include previous directors. He has also asked the Financial Reporting Council to conduct an investigation into the preparation of Carillion’s accounts past and present, as well as the company’s auditors.
Officials in my Department have been in touch with various Members’ offices last week following their queries through the dedicated helplines we set up. I shall be holding drop-in sessions for Members to meet with Cabinet Office Ministers and relevant officials to answer any further queries. Alongside ministerial colleagues, I will keep the House updated on this ongoing situation.
[HCWS422]
Armed Forces Pay
(6 years, 2 months ago)
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The Parliamentary Under-Secretary of State for Defence (Mr Tobias Ellwood)
I would like to thank all hon. and right hon. Members for their contributions to the Opposition day debate about armed forces pay held on 1 November 2017. The passionate and constructive comments of Members regarding pay, allowances, pensions and accommodation clearly demonstrated this House’s support for our armed forces.
The armed forces are among the most extraordinarily talented and hardworking people in our society. We can all be rightly proud that we have the most professional and effective armed forces in the world. The Government are committed to ensuring that the overall package they, and other public sector workers receive, reflects the value we place on their work.
The 2015 spending review and autumn statement budgeted for 1% average basic pay and progression pay awards. However, the Government recognise that in some parts of the public sector, more flexibility may be required, particularly in areas of skill shortage and in return for improvements to public sector productivity. There continues to be a need for pay discipline over the coming years to ensure the affordability of the public services and the sustainability of public sector employment.
Armed forces’ pay levels are recommended by the independent Armed Forces Pay Review Body. The Government value hugely the role of the pay review bodies, and with a more flexible pay policy it is more important than ever that their recommendations are based on independent advice and robust evidence. They are in the process of considering evidence to inform their recommendations for the 2018 report which we look forward to receiving in due course.
[HCWS423]
Security Industry Authority: Annual Report and Accounts
(6 years, 2 months ago)
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The Minister for Policing and the Fire Service (Mr Nick Hurd)
The 2016-17 annual report and accounts for the Security Industry Authority (HC 744) is being laid before the House today and published on www.gov.uk. Copies will be available in the Vote Office.
[HCWS424]
Prime Minister’s Trade Envoys
(6 years, 2 months ago)
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The Secretary of State for International Trade and President of the Board of Trade (Dr Liam Fox)
The Prime Minister has approved two new appointments to the Trade Envoy programme. My right hon. Friend the Member for North East Hampshire (Mr Jayawardena) has been appointed as the Trade Envoy for Sri Lanka, and my right hon. Friend the Member for Solihull (Julian Knight), as the Trade Envoy for Mongolia. These new Trade Envoys take the total number to 30 parliamentarians covering 59 markets.
The Trade Envoy programme is an unpaid and voluntary cross-party network, who support the UK’s ambitious trade and investment agenda in global markets. They have contributed to business wins worth around £19.5 billion.
[HCWS421]