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Oral Answers to Questions
(6 years, 9 months ago)
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Chris Davies (Brecon and Radnorshire) (Con)
Craig Tracey (North Warwickshire) (Con)
The Parliamentary Under-Secretary of State for Exiting the European Union (Mr Steve Baker)
We continue to work closely with the Secretary of State for Environment, Food and Rural Affairs on support for farmers. The Government will provide the same cash total in funds for farm support until the end of the Parliament to maintain stability for farmers as we seek to grow our world-leading food and farming industry in a sustainable way. Furthermore, the Government are currently consulting on future farming policy, seeking views on a range of possible paths to a brighter future for farming.
Chris Davies
I welcome the pledge from the Government to provide financial support for farmers in Wales, and of course in the rest of the UK, after Brexit. Does the Minister agree that this commitment will provide the stability to allow farmers to continue providing high- quality produce, without having a negative effect on the environment?
Mr Baker
I agree. British food enjoys a reputation for quality that has been built on high animal welfare standards and strong environmental protections. The Government’s proposals will support farmers to grow more, sell more and export more great British food, and ensure that we are the first generation to leave the environment in a better state than we inherited it.
Craig Tracey
Recently I met local National Farmers Union farmers in my constituency who are frustrated by the complexity of and frequent delays in the EU’s basic payment scheme. When working with the Environment Secretary, will the Minister encourage a simpler system that will see farmers paid on time once we leave the EU?
Mr Baker
Yes, we will give such encouragement. I know that my colleague the Secretary of State for Environment, Food and Rural Affairs has listened to concerns and is consulting on arrangements to simplify and improve the delivery of the common agricultural policy while we continue to participate in it. Outside the CAP, with a system based on simpler and more effective rules, we will be able to support farmers to grow more, sell more and export more great British food.
Neil Gray (Airdrie and Shotts) (SNP)
Why will the Minister not respect the desire of NFU Scotland to have the powers on agriculture devolved in full and then for a UK framework to be developed?
Alan Brown (Kilmarnock and Loudoun) (SNP)
Farmers need to know what a transitional deal is going to look like, what a trade deal is going to look like and about labour constraints. To go back to the question asked by my hon. Friend the Member for Airdrie and Shotts (Neil Gray), why will the Minister not listen to NFU Scotland and ensure that all agriculture powers are assigned to Scotland so that the Scottish Government can design a policy to suit Scottish farmers?
Mr Baker
Of course we are listening, and in the run-up to the March European Council we very much have the concerns of the devolved Governments in mind, but we must ensure that the internal market of the United Kingdom continues to function. We will go forward with those two tensions in mind.
Jeremy Lefroy (Stafford) (Con)
Stafford constituency has one of the largest areas for growing soft fruit, and indeed lettuces, in the country, meaning that we have less reliance on imports. However, those involved are very concerned about the great workers who come to harvest those crops. What assurances will the Minister give me that he is working together with his counterparts in the Department for Environment, Food and Rural Affairs to make sure that the supply of people to harvest those crops is still available after we leave? [Interruption.]
Mr Baker
We have commissioned the Migration Advisory Committee to give us advice on migration policy. As we have always said, this vote was not a vote to pull up the drawbridge, and we will ensure that policy reflects the needs of the United Kingdom’s economy, particularly the sector my hon. Friend mentioned.
Mr Speaker
The hon. Member for Huddersfield (Mr Sheerman) was wittering about strawberries in December, or something of that sort. Anyway, we look forward to hearing his views with force and eloquence later in our exchanges.
Sir Desmond Swayne (New Forest West) (Con)
Patrick Grady (Glasgow North) (SNP)
Stephen Gethins (North East Fife) (SNP)
The Secretary of State for Exiting the European Union (Mr David Davis)
Before I answer, may I take this opportunity to express my condolences to the family of Warren Hawksley, an erstwhile colleague of ours? He was a Maastricht rebel and a great friend of mine; he was very highly principled and very energetic—sometimes too energetic—in pursuit of his views, but, as I say, I express my condolences to his family.
Our immediate goal is to agree a strictly time-limited implementation period by the March European Council next week. This is crucial to helping us build a bridge from where we are to where we want to be on our exit. We have also been working hard to codify the joint report into legal text. We are confident that both of these aims are within reach. Finally, the March European Council is expected to issue the negotiating guidelines to the Commission to negotiate the future partnership. We are seeking to ensure that those guidelines are as broad and open as possible to allow the most constructive negotiation to deliver the close relationship we are aiming for.
Patrick Grady
Does the right hon. Gentleman foresee a scenario in which the deal negotiated is so mind-bogglingly positive that all the other European Union states want that kind of relationship as well, and the European Union itself implodes? Or does he accept that membership is the best possible relationship we can have with the European Union, so any new settlement will be disadvantageous compared with what we have now?
Mr Davis
Those who made a decision on the last part of the hon. Gentleman’s question were the British people—17.5 million of them—and they decided that that was not the case. Let me respond to the first part of his question, however, because he does have a serious point. Certainly in the institutions of the European Union, and in some member states, there are concerns that if we are too successful that will be tempting to others. I do not believe that that is a real fear, because we have unique circumstances—the English language, our historic traditions, our world network, our island status, our law—that other countries do not have. That is no fault of their own; they just do not have those advantages. That is what will allow us to make the best of this situation.
Stephen Gethins
I am aware that some in the right hon. Gentleman’s party have accused others in that party of fantasy politics. Does he believe that any transition period can be based on World Trade Organisation principles?
Mr Davis
It is fascinating to have a lecture from the SNP on fantasy politics. We are proposing a transition period based on existing arrangements and rules, so that the British people and companies—and, indeed, European people and companies—have only one transition to make.
Mrs Anne-Marie Trevelyan (Berwick-upon-Tweed) (Con)
It was disappointing to see the aggressive line in last week’s EU document on maintaining full access to our fishing waters. Will the Secretary of State assure me that the Department is being robust on behalf of my Northumbrian fishermen in any negotiations, to ensure that we regain control of our fishing waters before deciding whom to allow to fish in them?
Mr Davis
My hon. Friend is right, and it was a very odd linkage to make. The simple truth is that when we leave the European Union we will be an independent coastal state, and as a result we will control our own waters. As stated in DEFRA questions last week, we will continue negotiations with neighbouring states about catch—because fish move—quotas, and all the rest of it. However, we will control our own destiny.
Hilary Benn (Leeds Central) (Lab)
The UK is party to around 40 trade agreements negotiated by the EU, but at least two of those countries have indicated that they will seek concessions from the United Kingdom in return for rolling over those agreements during the transition period. Will the Secretary of State assure UK exporters that they will be able to continue to trade with those countries on the same basis as now and with the exact same benefits, and that we will not end up in a situation where those countries will have preferential access to our market, while UK businesses lose the same access to their markets?
Mr Davis
The right hon. Gentleman’s stance is fascinating, because the customs union proposal that the Labour party recently came up with induces exactly the risk that people will have access to our markets without our necessarily having complementary access to theirs. Indeed, that was the view espoused by the shadow Secretary of State for International Trade not long ago.
Mr David Jones (Clwyd West) (Con)
I wish my right hon. Friend every success in the negotiations which, as he said, will reach an important stage next week. Will he confirm that it remains the Government’s position that no deal is better than a bad deal, and that all necessary resources—financial and otherwise—will continue to be deployed with an eye to such an eventuality?
Mr Davis
Yes, and interestingly my right hon. Friend’s question links to that asked by the hon. Member for Glasgow North (Patrick Grady) about whether some people on the continent think that letting us get a good deal would be a bad thing for the future of the European Union. Were people to turn that into a punishment deal, plainly no deal would be better than that. We are, of course, allocating the necessary resources, as the Chancellor has said.
Tom Brake (Carshalton and Wallington) (LD)
The Secretary of State backs a 21-month transition period. Given that the Government’s own impact assessment points to every sector and region of the UK being damaged by Brexit, what discussions has he had with different sectors about the extra damage that a short, 21-month transition period could inflict on jobs here? Which sectors or companies have told him that a 21-month transition period is acceptable—the CBI, for example, which called for a three-year transition period, or the EEF, which called for at least two years?
Mr Davis
The first thing I would say is that there is no official Government document that makes that forecast. There is work in progress, but that is not an official Government forecast—indeed, we do not believe it. The simple truth is that, first off, the most important priority is to establish an implementation period as soon as possible, so that companies can have certainty. That is the view of the CBI, the British Chambers of Commerce, the Institute of Directors and pretty much every other business group there is.
Carol Monaghan (Glasgow North West) (SNP)
Hugh Gaffney (Coatbridge, Chryston and Bellshill) (Lab)
The Parliamentary Under-Secretary of State for Exiting the European Union (Suella Fernandes)
The Prime Minister reaffirmed her commitment to the Northern Ireland-Ireland border in her Mansion House speech, recognising the unique circumstances of Northern Ireland and our shared commitment to avoiding a hard border. The joint report, agreed in December, also made clear our intention to avoid a hard border and physical infrastructure, or related checks and controls, between Northern Ireland and Ireland. We have always been clear that we will not agree anything that threatens the constitutional or economic integrity of the United Kingdom.
Carol Monaghan
Given that the Government have said the border will remain friction free or frictionless, and that there will be no border in the Irish sea, the question many of us continue to ask is how can this happen?
Suella Fernandes
The Government have made clear their unwavering commitment to three guiding principles in relation to Northern Ireland and the Republic: there should be no hard border between north and south; the Belfast agreement must be honoured; and the constitutional and economic integrity of the United Kingdom must remain unimpaired. The Prime Minister set out, most recently in her Mansion House speech, how that might be achieved. We are also building on the options set out in the August position papers, which set out practical options for how we might take this forward.
Hugh Gaffney
How do the Government expect to avoid a hard border if they are ruling out any form of customs union?
Suella Fernandes
It is the unwavering commitment of the Government that the economic integrity of the United Kingdom remains intact. If the United Kingdom is leaving the customs union, so is Northern Ireland.
Michael Tomlinson (Mid Dorset and North Poole) (Con)
I am certain my hon. Friend has seen the paper “Smart Border 2.0”, which was prepared for the European Parliament’s constitutional affairs committee. It does not provide the whole solution, but it does show how technology will help to solve this problem. Does she agree that this will solve it and ensure the integrity of the United Kingdom?
Suella Fernandes
I thank my hon. Friend for his question. The report to which he refers is an interesting document, but it does not go as far as the commitment made by the United Kingdom. Our unwavering commitment is to not introduce any physical infrastructure at the border. We have explicitly ruled that out. The report is interesting, but it does not go all the way.
Vernon Coaker (Gedling) (Lab)
May I make a plea to the Minister to recognise that this is about much more than just the movement of goods or services? This is about a cultural issue and the movement of people—it is about all of that. The symbolism is enormous and the Minister needs to ensure that that is recognised, time after time in all the talks she has, to reassure the people of both parts of Ireland.
Suella Fernandes
The common travel agreement is absolutely fundamental to any future arrangement, ensuring and enabling the free flow of people across the border. It is vital that that forms part of any future arrangement.
Jenny Chapman (Darlington) (Lab)
I do not think that Ministers quite appreciate the level of concern across the House on this issue. Whenever I have visited the Irish border, I have come face to face with the reality of what the installation of any cameras or any infrastructure would mean. It would not last a day, Minister; it would not last a day. Why will the Secretary of State not even visit the border, so that he can appreciate why people are so concerned? I do not know whether she has been, but will she encourage the Secretary of State to do so?
Suella Fernandes
We do not underestimate the importance of this issue. My fellow Minister, the Under-Secretary of State for Exiting the European Union, my hon. Friend the Member for Worcester (Mr Walker), has been to the border and engaged regularly with Members from Northern Ireland and those involved in this issue. The Secretary of State has also been to the border, prior to his appointment to this position, and is very much apprised of the sensitivities and importance of this critical issue.
Jenny Chapman
I think that says all we need to hear. What we want to know is how can we ensure an open border without a customs union? We have looked everywhere we can think of to identify a border anywhere on earth that is open and has no customs union. The Prime Minister referred to the border between the United States and Canada. Can the Minister confirm that the Prime Minister has ruled that out as an option, and can she tell us where on earth there is a border that is open with no customs union?
Suella Fernandes
The hon. Lady really needs to go back and listen to what the Prime Minister said at Mansion House. She spent a lot of time looking at this issue and is very much interested in finding solutions. There are many proposals on the table that would be viable and workable, and the Government are in the process of considering them. A trusted trader scheme, exemptions, authorised economic operator arrangements —all these options are on the table and are subject to the negotiations.
Nic Dakin (Scunthorpe) (Lab)
Graham P. Jones (Hyndburn) (Lab)
The Parliamentary Under-Secretary of State for Exiting the European Union (Mr Steve Baker)
This is, of course, a topic of frequent interest. Leaving the EU allows us to consider how our economy is shaped and presents an opportunity to deliver a pro-competitive, pro-innovation industrial strategy that builds on our strengths, provides certainty and stands the test of time, so that we have a resilient economy, ready for the future.
Nic Dakin
To ensure that trade is fair as well as free, there are over 40 defence instruments in place regarding steel at the European level. The behaviour of the US Administration at the moment may well mean that increases. Can the Minister give confidence to the steel industry that these trade defence instruments will remain in place at the point of moving out of the European Union?
Mr Baker
This Government are very disappointed by the President’s intention to place tariffs on steel and aluminium. The UK fully supports open and free trade and measures to tackle unfair trade practices. As part of the preparations for the UK’s exit from the EU, we are committed to creating a trade remedies framework that is able to react efficiently and effectively. When the UK leaves the EU, we will remain a member of the World Trade Organisation. We will play a full part in promoting compliance with the rules-based trading system and, if necessary, make use of the WTO’s dispute resolution procedures in defence of our national interest—[Interruption.] The hon. Gentleman is barracking me from a sedentary position. I say to him that if we adopted Labour’s position, all our trade remedies would be the policies of the European Union and not of the United Kingdom.
Graham P. Jones
The chief executive of ADS— Mr Paul Everitt—which represents companies in the aerospace, defence, security and space sectors, has said:
“A customs union with the EU is a practical solution that would put businesses in the best possible position to compete after Brexit.”
If the Government care about manufacturing, will they reconsider their position on the customs union?
Mr Baker
Of course we are concerned about aerospace; it is one of our greatest industries. I remind the hon. Gentleman of what was said by his hon. Friend, the hon. Member for Brent North (Barry Gardiner). He said that retaining membership of a customs union would be “deeply unattractive”, because it would stop us negotiating our own trade deals:
“As a transitional phase, a customs union agreement might be thought to have some merit. However, as an end point it is deeply unattractive. It would preclude us from making our own independent trade agreements with our five largest export markets outside the EU”.
For all the hon. Member for Hyndburn (Graham P. Jones) says, his party is at sixes and sevens.
Mr Peter Bone (Wellingborough) (Con)
If China is illegally dumping steel in the United Kingdom, will the excellent Minister agree that it is better that the British Government decide what the remedy is, rather than the European Union?
Thangam Debbonaire (Bristol West) (Lab)
If the Secretary of State and the Government will not consider the customs union, what specific support will they give to the aerospace sector, which employs so many people in Bristol?
Mr Baker
I have good news for the hon. Lady. Both sides have agreed in principle that we should have a free trade agreement covering all sectors with zero tariffs. We believe that with a good-quality customs agreement we can achieve near-frictionless trade, and I believe that, taken together, those arrangements will ensure that our manufacturing industries, including aerospace, will have an ever brighter future.
Matthew Pennycook (Greenwich and Woolwich) (Lab)
The EEF—the voice of UK manufacturing and engineering—as well as ADS Group Limited, the CBI, the Institute of Directors and trade unions welcome Labour’s call for the negotiation of a comprehensive new UK-EU customs union post Brexit. Can the Minister name any significant manufacturing organisation or association that is on record as stating that either of the Government’s two customs propositions, set out in their future partnership paper in August last year, is remotely credible or workable?
Mr Baker
I remind the hon. Gentleman that his hon. Friend the Member for Brent North said that remaining in a customs union would be a “disaster”. What we need to do is stand up for the consumer interest, and that means taking control of our tariff policies while ensuring free and frictionless trade.
Andrew Lewer (Northampton South) (Con)
The Parliamentary Under-Secretary of State for Exiting the European Union (Mr Robin Walker)
We have committed ourselves to continued UK participation in the Erasmus+ programme until 2020, and we welcome the opportunity to give clarity to young people as well as the youth and education sectors. While no decisions have yet been made about the post-2020 participation, since the scope of that programme has not been agreed, the Prime Minister said in her recent speech that the Government would seek an ongoing relationship in respect of
“educational and cultural programmes, to promote our shared values and enhance our intellectual strength in the world”.
Andrew Lewer
Is the Department liaising with the European Parliament’s Committee on Culture and Education and its Chair, Petra Kammerevert, and the European Commission’s Directorate-General for Education, Youth, Sport and Culture to discuss how Erasmus+ applications that are submitted before the Brexit date will be implemented?
Mr Walker
I recognise my hon. Friend’s considerable expertise when it comes to the European Parliament. Ministers from our Department regularly engage with Members of the European Parliament. We have also met members of the Committee on Culture and Education to discuss a range of EU exit issues, and we will continue to seek opportunities to meet them. The Department for Education is the lead Department for Erasmus+ policy, and its officials are in regular touch with the Directorate-General for Education, Youth, Sport and Culture.
Alison Thewliss (Glasgow Central) (SNP)
Scotland has benefited from €64.8 million of funding for 658 projects since 2014. Coming out of Erasmus+ will mean not only a loss of money, but a loss of opportunity for young people in Scotland. How does the Minister intend to replace that?
Mr Walker
In her Mansion House speech, the Prime Minister said:
“There are many…areas where the UK and EU economies are closely linked—including…education and culture.”
It is clear that we have an ambition to discuss potential future participation in those areas; and, of course, the UK has a wide range of international programmes, which we can consider how to extend in the years to come.
Mr Simon Clarke (Middlesbrough South and East Cleveland) (Con)
The Secretary of State for Exiting the European Union (Mr David Davis)
As I said in my speech in Teesport, an implementation period will benefit both the European Union and the United Kingdom. It is in no one’s interest on either side for businesses to rush through contingency plans based on guesses about a future deal. That would cause delayed investment, a slowing of job creation and a stifling of the hard-won economic growth on which our continent depends.
Businesses have been clear about the importance of an implementation period, which will give them time to build new infrastructure and set up new systems to support our future partnership and allow for as free and frictionless trade as possible. The implementation period will allow them to make their decisions on the basis of knowledge about what the future deal will look like. It will ensure that our businesses are ready, because they will have to adjust to only one set of changes, and, importantly, it will allow European Governments to do the same.
Mr Clarke
I thank my right hon. Friend for that answer and for his visit to Teesport earlier this year, which was much appreciated. Two thirds of people in my constituency voted for Brexit. Can my right hon. Friend reassure them that any implementation period will indeed be time-limited and handled in a way that will provide for a smooth exit for business?
Mr Davis
Yes. A time-limited implementation period will ensure a smooth and orderly exit from the European Union. During the period, the United Kingdom and the European Union will continue to have access to each other’s markets on current terms by replicating the effects of the customs union and the single market, and businesses will be able to continue to operate on the same terms as now. That will provide vital certainty and stability as we move towards our future partnership.
Let us be clear: we are leaving the European Union on 29 March 2019, and only when the United Kingdom is no longer a member state will we be able to take advantage of our status as an independent trading nation.
Mr Barry Sheerman (Huddersfield) (Lab/Co-op)
The Parliamentary Under-Secretary of State for Exiting the European Union (Mr Steve Baker)
The manufacturing sector is of course a frequent topic of discussion among Cabinet members and colleagues across the Government. As the Prime Minister set out in her Mansion House speech, the UK will seek the broadest and deepest possible agreement with the EU, covering more sectors and co-operating more fully than in any free trade agreement anywhere in the world today. I am especially encouraged by the Chancellor’s spring statement, which confirmed that the manufacturing sector is enjoying its longest unbroken run of growth for 50 years.
Mr Sheerman
Why, every time there is a manufacturing question, does the Secretary of State hide behind his junior team? That is the fact of the matter: he does not want to confront manufacturing. Is it not the truth that there is a secret document in the Business Department that shows that, post Brexit, London will survive and thrive but the rest of the country—the north of England, manufacturing—will be in dire straits? That is the truth. Why does the Secretary of State not stand at the Dispatch Box and defend manufacturing?
Mr Baker
I lament the hon. Gentleman’s continual determination to talk down this country. I am happy to tell him that Unilever has today shown its long-term commitment to the UK by choosing to locate its two fastest-growing global business divisions in this country, safeguarding 7,300 jobs and £1 billion a year of investment. As the company has made clear, its decision to transfer a small number of jobs to a corporate headquarters in the Netherlands is part of its long-term restructuring and is not connected to the UK’s departure from the EU.
Clive Efford (Eltham) (Lab)
On the basis that it is subject to negotiation, the Government have refused to implement the agreed replacement to the regime for the inadequate 2004 clinical trial directive. This is essential for our pharmaceutical trade, because we face going off a cliff edge and not being able to participate in collaborative clinical trials with EU research institutions, so when is the Minister going to implement that replacement directive?
Mr Baker
As part of exit negotiations, the Government will discuss with the EU and member states how best to continue co-operation in the field of clinical trials. The UK has been working towards implementation of the new European clinical trials regulation since it was agreed in 2014. The application date of the CTR across the EU will be set by the European Commission, and if it is after our exit from the EU, it will not be part of the withdrawal Bill.
Mr Alister Jack (Dumfries and Galloway) (Con)
Sir Henry Bellingham (North West Norfolk) (Con)
Bob Blackman (Harrow East) (Con)
The Parliamentary Under-Secretary of State for Exiting the European Union (Suella Fernandes)
If the UK were to remain in the customs union, we would be unable to implement our own trade deals or set our own tariffs. The EU would be able to offer other countries access to our market, but we would not necessarily get access to other countries’ markets in return. This would not give us control over our trade policy and it would not respect the referendum result. We have a great chance for the first time in decades to develop a new trade policy by leaving the EU customs union.
Suella Fernandes
That is one of the big prizes of Brexit: the freedom and chance to develop and sign new free trade deals around the world outside the EU, and it is our commitment that once we leave the EU we will be able to enjoy that freedom to the fullest.
Sir Henry Bellingham
Is the Minister aware that there are a large number of small and medium-sized enterprises in Norfolk that are absolutely determined to increase their exports to new markets? These are dynamic, forward-thinking companies. Further to the question asked by my hon. Friend the Member for Dumfries and Galloway (Mr Jack), what progress is being made with the EU to ensure that we are actually able to negotiate bilateral treaties with third countries during the transition?
Suella Fernandes
It has been the clear commitment of this Government that during the implementation period we will be able to take concrete steps forward in negotiating and signing new free trade agreements with countries outside the EU, although of course they would not come into force until after the end of the implementation period. My hon. Friend is right that leaving the customs union and forging a new trade policy is a chance to open up to British businesses new markets that they have not previously had access to. That will help consumers, increase investment and only lead to prosperity.
Bob Blackman
I thank my hon. Friend for her answers. India currently enjoys a growth rate of 7.5% and is on course to be the fifth biggest economy in the world. Given our cultural links and shared history with our friends in India, does my right hon. Friend—my hon. Friend; I am getting ahead of myself—agree that we have an opportunity to forge a trade deal with India, which will be excellent news for the UK and India?
Suella Fernandes
My hon. Friend is absolutely right. India represents a great opportunity in trade for Britain and British consumers and for our Indian counterparts. It is no coincidence that the Prime Minister made a point of visiting India early on in her premiership. The Department for International Trade has recently completed a trade audit with India to look at the particular barriers, and the joint economic and trade committee has decided to look at four sectors—food, life sciences, IT and services—to see where opportunities can be explored.
Rachael Maskell (York Central) (Lab/Co-op)
At a recent meeting in this place, the director general of the CBI highlighted that Germany sells 4.7 times more to China than the UK does. Therefore, being in a customs union does not prevent countries from extending trade with global partners. Does the Minister agree with her?
Suella Fernandes
Well, being in the customs union also puts up prices for consumers in food, footwear and clothes. I am often surprised that the Opposition do not champion the benefits of leaving the customs union, which this Government are doing.
Paul Blomfield (Sheffield Central) (Lab)
I do not often cite the International Trade Secretary favourably, but he was right when he was in China with the Prime Minister in February and accepted that a customs union with the EU “self-evidently” does not prevent us from increasing bilateral trade with countries such as China. What assessment have the Government made of the comparative benefits for the UK of being in a customs union and not being in a customs union when it comes to trade with non-EU countries?
Suella Fernandes
As we have a trade deficit with the EU that is increasing—it is currently £70 billion—and a trade surplus with the rest of the world that is growing, our prospects for increased demand clearly come from the rest of the world, where some of the fastest-growing economies lie. Our future prosperity lies with trade both with the EU but, very importantly, with countries outside the EU.
Stephen Kerr (Stirling) (Con)
The Parliamentary Under-Secretary of State for Exiting the European Union (Mr Robin Walker)
The UK, Scottish and Welsh Governments have agreed a set of principles for how we approach the creation of common frameworks. We have made significant progress together over the past few months in our intensive discussions and analysis of what future frameworks should look like. The discussions have been guided by the principles agreed in October and report to the Joint Ministerial Committee on EU negotiations, which the Northern Ireland civil service also attends. I am sure that my hon. Friend will welcome the substantial amendment that we have tabled to clause 11 of the European Union (Withdrawal) Bill, under which the vast majority of powers returning from Brussels will flow directly to the devolved Administrations by default.
Stephen Kerr
I do indeed welcome the amendment to the clause 11 that has appeared in the other place, and I am grateful for this opportunity to agree with my hon. Friend. Will he assure the House that Brexit, far from undermining the devolution settlement, will in fact lead to a significant increase in decision-making powers in Holyrood and the other devolved Administrations?
Mr Walker
My hon. Friend is absolutely right. He has pressed us hard on this issue already. The analysis that we published last Friday shows that we are looking at legislative frameworks only in a small minority of areas, and legislation may be required only in relation to a few specific elements. In Scotland, our current analysis indicates that 83 out of 107 powers returning from Brussels will pass directly to Edinburgh on exit. Similarly, the majority of powers for Wales and Northern Ireland will flow directly to Cardiff and Belfast.
Peter Grant (Glenrothes) (SNP)
It is interesting that it took the Government six months to come up with a single amendment to a Bill that threatens to destroy the devolution settlement, but their colleagues in the Scottish Tory party took less than a week to come up with 100 wrecking amendments to a Bill designed to protect the settlement.
Given that the question was about the mechanisms to agree common policy frameworks, will the Minister clarify what the procedure will be if the European Union (Withdrawal) Bill goes through with the Government’s amendment to clause 11? Does the amendment guarantee that common policy frameworks must be agreed by all four nations working as a partnership of equals, or does it still give the UK Government the power to impose the frameworks against the will of the devolved nations?
Mr Walker
I am glad that the hon. Gentleman congratulates our Scottish colleagues on their work rate. We are, of course, still seeking consent for the Bill, and discussions to achieve that continue. The UK Government have responsibility for protecting the UK’s common market. We cannot have our ability to take action restricted, so we do not think it right for any devolved Administration effectively to have a veto on common frameworks. The UK and the devolved Administrations have always been clear that we will need common frameworks once we leave the EU to make it simple for businesses from different parts of the UK to trade with each other and to help the UK to fulfil its international obligations. The conversation is ongoing, and we will continue to work with the devolved Administrations to secure an outcome that is in the best interests of every part of the UK.
Peter Grant
I note the criticism of the Scottish National party, the Scottish Labour party, the Scottish Liberal Democrats, the Scottish Greens, the Scottish Government, the Welsh Government and the Government of Northern Ireland—and the Government of the Republic of Ireland, for that matter—for all failing to fall into step with the United Kingdom Government. Is it not a fact that, despite promises of a partnership of equals, the Government’s preferred legislation will still allow a power grab by Westminster against the devolved nations? It looks like a power grab; it reads like a power grab; and it certainly smells like a power grab. Why will the Government not admit that it is a power grab?
Mr Walker
It is absolutely clear that not a single power that the devolved Administrations currently have would be taken away or in any way affected by this Bill. We are talking about a significant increase in the powers, as they return from Brussels, for each of the devolved Administrations. I think that is something that all parties should welcome.
Andrew Bowie (West Aberdeenshire and Kincardine) (Con)
Yesterday, following the JMCEN, the First Minister of Scotland said of the Scottish Government:
“We can’t have our powers restricted or reduced”.
Does my hon. Friend recognise the irony in that, given that the only people who are willing to reduce the powers of the Scottish Parliament are those in the SNP, whose policy continues to be that those powers should remain in Brussels instead of coming back to the United Kingdom?
Mr Walker
My hon. Friend makes an excellent point. I continue to hope that we will all be able to come together to ensure that the powers of each of the devolved Administrations are increased through this process and that we will all be able to work together to secure the prosperity of the UK—Scotland, Wales, Northern Ireland and England.
Mr Philip Dunne (Ludlow) (Con)
The Parliamentary Under-Secretary of State for Exiting the European Union (Mr Steve Baker)
As the Secretary of State explained in December, we want to ensure that UK producers have the maximum freedom to trade with and operate in European markets and to let European producers do the same in the UK. At the same time, we have a unique opportunity to support a thriving and self-reliant farming sector that is more competitive, productive and profitable, to protect our precious natural environment for future generations and to deliver on our manifesto commitment to provide stability for farmers as we leave the EU.
Mr Baker
I will seek to provide that reassurance. As the Prime Minister outlined in her Mansion House speech, we want a deep and special partnership with the EU that allows the freest and most frictionless possible trade in goods, so we do not want the introduction of any tariffs or quotas, and we will want to ensure open markets for each other’s products, including agricultural products. We are confident that it is in our mutual interests to agree such an FTA.
Dr Philippa Whitford (Central Ayrshire) (SNP)
The Parliamentary Under-Secretary of State for Exiting the European Union (Mr Steve Baker)
We continue to work closely with the Department of Health and Social Care on delivering a smooth exit that works for the health and adult social care sectors. We value the huge contribution that EU nationals make to our public services. The agreement reached in principle in December and set out in our joint report will provide EU nationals with certainty about their rights.
Dr Whitford
With the likely effects on the workforce, data sharing, health research and drug access, does the Minister not agree that there should be a formal impact assessment of the effect on the health and social care sector of leaving the EU?
Mr Baker
I remind the hon. Lady that the latest figures from NHS Digital show that there were over 3,200 more EU nationals working in the NHS in September 2017 than before the referendum result. Formal impact assessments will, of course, be produced in the normal way in connection with legislation.
Mr Philip Hollobone (Kettering) (Con)
The Parliamentary Under-Secretary of State for Exiting the European Union (Mr Steve Baker)
We have been working closely with our colleagues. In England, the Marine Management Organisation is working with the Ministry of Defence and the Royal Navy, as well as the Border Force, the inshore fisheries and conservation authorities and other organisations to deliver fisheries protection and regulation, irrespective of whether an agreement has been reached when we leave the common fisheries policy.
Mr Hollobone
Remainers and leavers are united in the opinion that the very worst aspect of our EU membership is the common fisheries policy. When we leave the European Union, we leave the common fisheries policy. On that day, the armada of EU trawlers that have been plundering Britain’s historic fishing grounds since 1973 are not going to be happy that their best years are behind them. Will the Minister ensure that the Royal Navy has the resources it needs to protect our sovereign waters and ensure the rebirth and renaissance of the British fishing industry?
Mr Baker
My hon. Friend makes a serious point, with his usual force. We hope to reach an agreement in our mutual interests but, as the Prime Minister made clear in her Mansion House speech, we are leaving the common fisheries policy, and the UK will regain control over our domestic fisheries management rules and access to our waters. On enforcement, we will strengthen our surveillance capability and make sure that the appropriate capacity is in place to patrol our waters and enforce regulations, as required. This will be underpinned by a robust approach to risk-based assessments.
Mr Speaker
Thanks to the succinctness of colleagues, we got through every question.
Mr Philip Dunne (Ludlow) (Con)
The Secretary of State for Exiting the European Union (Mr David Davis)
In recent weeks, the Prime Minister has set out in more detail the two key pillars of our future partnership with the European Union. In Munich, she set out our clear desire to continue to work closely with our European partners on all aspects of our security policy, both internal and external. At Mansion House, she set out a clear path towards a comprehensive future economic partnership that recognises our unique starting point, our shared history and our common values, but that also respects the result of the referendum and ensures that as we leave the EU, we return control over our money, laws and borders to this House. In the coming months, we will be using the negotiations with the EU to deliver that.
Mr Davis
On the implementation period, we have made significant progress in a number of areas, and although negotiations are still ongoing, we are confident that we can reach an agreement on that at next week’s EU Council. As my hon. Friend will be aware, article 50 is clear that the withdrawal agreement shall be agreed in line with the framework for the future relationship. We expect new European Union guidelines covering the negotiation of the terms of our future relationship to be agreed at the March Council, as set out by the EU in December. The Prime Minister has set out a vision of the breadth and depth of the future relationship in a number of speeches, and we hope that the EU guidelines will be sufficiently flexible to allow the EU to think creatively and imaginatively about our future partnership. Indeed, I say to him that at least half the effort in the past three months has been aimed at ensuring that we get those flexible, open and broad guidelines by addressing that very issue with the 27 that make up the Council, as well as the Commission.
Keir Starmer (Holborn and St Pancras) (Lab)
In January last year, the Secretary of State stood at the Dispatch Box and assured the House:
“What we have come up with…is the idea of a comprehensive free trade agreement and a comprehensive customs agreement that will deliver the exact same benefits as we have”.——[Official Report, 24 January 2017; Vol. 620, c. 169.]
The Government stood by that assurance for 14 months, but then the Prime Minister’s Mansion House speech downgraded the Government’s ambitions to reduced access to European markets. What does the Secretary of State have to say for himself now?
Mr Davis
I would say two things to the right hon. and learned Gentleman. Of course, in a negotiation, we go in with the highest possible aspirations, and that is what we intended. Incidentally, he should read his own policy, which I recall has the same aspirations—not very effectively. What we are about is getting the best possible outcome for this country and that is what we will do.
Keir Starmer
We have had a lot of non-answers this morning, if I may say so, Mr Speaker. In addition to downgrading the ambition for the final deal, the Government are also delaying vital legislation in this House. We were expecting to consider the trade and customs Bill this week on Report and Third Reading but, apparently, they have been parked until May because the Government fear losing key votes. There is no sign of other vital legislation coming down the track. This should have been a busy period in Parliament. General debates on the EU are always interesting, but meaningful votes are better. What is going on?
Craig Tracey (North Warwickshire) (Con)
Mr Davis
My hon. Friend is exactly right. As the Under-Secretary of State for Exiting the European Union, my hon. Friend the Member for Fareham (Suella Fernandes), said earlier, that is one of the great prizes that will come out of our departure from the Union. Indeed, I am rather sorry that the right hon. and learned Member for Holborn and St Pancras (Keir Starmer) did not raise the issue of a customs union explicitly. I know that he has difficulties with his own leadership on these matters, so I thought I should find a leader of whom he did approve, Mr Tony Blair, who said:
“So the way I look at it is that the Labour party position is: it’s pulled up its anchor and it’s left the kind of, what looks like a safe port, but actually isn’t, of being in the same position as the Government…but they’d be very unwise to drop anchor at the customs union, because the truth is that doesn’t really resolve your problems. By the way, it doesn’t really resolve your problems in Northern Ireland, either.”
Mrs Emma Lewell-Buck (South Shields) (Lab)
The Parliamentary Under-Secretary of State for Exiting the European Union (Mr Steve Baker)
I have had extensive discussions with my right hon. Friend the Secretary of State for Housing, Communities and Local Government about the shared prosperity fund. I have heard the hon. Lady’s point and will take it up with him.
David Duguid (Banff and Buchan) (Con)
Mr Baker
My hon. Friend has become a relentless champion of the fisheries cause, as exemplified by his speech in the Chamber yesterday. He is a doughty champion of his constituents and of the fishing cause more widely. The Government share his impatience to leave the common fisheries policy. The view of the House has been made clear in questions on fisheries today. We will take that impatience to leave the CFP forward to our negotiations. As an independent coastal state, we will have control of our exclusive economic zone, be responsible for the management of natural marine resources in that area, and be able to control and manage access to UK waters, including fisheries.
Jo Platt (Leigh) (Lab/Co-op)
The Parliamentary Under-Secretary of State for Exiting the European Union (Mr Robin Walker)
We are not and we never have been. We have been clear from the start that we will protect all our workers’ rights.
Chris Davies (Brecon and Radnorshire) (Con)
Mr Baker
The Government recognise the importance of supporting smaller farms, including family farms, as we leave the common agricultural policy. Our consultation paper sets out our detailed proposals for a gradual transition during which we continue direct payments while applying reductions—for example, starting with those in receipt of the highest payments. The Government are seeking views on the proposals and inviting all those affected to contribute to the discussion. I hope that my hon. Friend will ask his constituents to play their part.
Mr Pat McFadden (Wolverhampton South East) (Lab)
While talking about Northern Ireland, the Under-Secretary of State for Exiting the European Union, the hon. Member for Fareham (Suella Fernandes), made the significant statement that the report by Mr Lars Karlsson did not meet the Government’s test of there being no physical border infrastructure. Will the Secretary of State repeat that statement and say that, in his view, the report does not meet that test?
Mr David Davis
That is an important question. I will certainly say to the right hon. Gentleman that it does not meet all our criteria. We want to maintain no physical structures at the border and no visible border—a very light-touch border. I remind him, however, that the border does exist as a financial border. There are different fiscal and excise policies north and south of the border, and we have to manage that now. We do so without the border being visible, and we will do that in the future.
Paul Masterton (East Renfrewshire) (Con)
If we leave the single market, we will also leave the passporting regime, as the Prime Minister has made clear. What steps is the Department taking to negotiate successor arrangements for UK financial services firms that access EU markets?
Mr Robin Walker
We are working closely with the Treasury to prepare for a comprehensive and ambitious arrangement on financial services. The Prime Minister gave an indication of that in her Mansion House speech, and we are very clear that it should be in the interests of both the UK and the EU to reach agreement in this area, not least to protect the financial stability of Europe.
Karin Smyth (Bristol South) (Lab)
I very much welcomed the Secretary of State’s most recent answer, but it would be helpful to understand whether all the Government’s requirements can be met without any infrastructure whatsoever. Last night, my hon. Friend the Member for Darlington (Jenny Chapman) made a generous offer when she said that she and I would take him to the Irish border so that he could see for himself how it works now. I absolutely support her in that offer, so will he join us on a visit to see how the border works?
Mr David Davis
I will not take the offer, I am afraid. The Under-Secretary of State for Exiting the European Union, my hon. Friend the Member for Fareham, referred to my previous look at the border. The purpose then—it was around the time of or just before the Belfast agreement—was to look at the issue of smuggling. [Interruption.] That was one occasion. This is an important issue—indeed, the very last conversation I had with Martin McGuinness was about exactly this—and I will do so when the time arises. The simple truth is that this border issue is resolvable if we have a free trade agreement and, if we have a customs agreement, it is resolvable by technical means as well.
Nigel Huddleston (Mid Worcestershire) (Con)
May I applaud the Government’s practical and sensible decision regarding their intention to remain part of the European Aviation Safety Agency after Brexit? Can we expect similar sensible and practical discussions around open skies?
Christian Matheson (City of Chester) (Lab)
There are several Airbus Beluga flights every day between manufacturing sites at Hamburg and Toulouse, and Chester. That complicated manufacturing and supply chain will be put at risk unless we get regulatory certainty soon. When will we get detailed regulatory certainty on manufacturing?
Anna Soubry (Broxtowe) (Con)
I have to confess that Broxtowe does not have many fishing men or women in the constituency. Well, it has some, but their activities tend to be confined to the Beeston canal. The fisheries and agricultural policies of the European Union are important. Will the Secretary of State confirm that Norway has complete control over its agriculture and fisheries policy as a member of the European Free Trade Association and the European economic area, and a successful member of the single market?
Mr Baker
Well, yes, but, of course, it is a rule taker. Its economy is substantially different from our own and it is outside the customs union. We just need to make sure that we follow a path that suits our economy, and that is the path set out by my right hon. Friend the Prime Minister.
Patrick Grady (Glasgow North) (SNP)
On what date were officials first instructed to begin drafting amendments to clause 11 of the European Union (Withdrawal) Bill?
Mr Robin Walker
We have been working on clause 11 of the Bill for some weeks and months; we have, of course, been discussing our approach with the devolved Administrations. It was always our ambition to achieve agreement on those amendments with the devolved Administrations.
Martin Vickers (Cleethorpes) (Con)
Last week, I met the chief executive of the Hull and Humber chamber of commerce, Ian Kelly, who expressed support for the concept of exploring free port status for the Humber ports. Is this yet another opportunity that the Government will have after Brexit?
The Parliamentary Under-Secretary of State for Exiting the European Union (Suella Fernandes)
With my fellow Minister, my hon. Friend the Member for Wycombe (Mr Baker), I was pleased to meet my hon. Friend the Member for Cleethorpes (Martin Vickers) to discuss the issue with the local port authority from his constituency. Although this is a very interesting opportunity that flows from taking control of our trade policy, it is one of many options that the Government are considering.
Mr Barry Sheerman (Huddersfield) (Lab/Co-op)
May I ask the Secretary of State directly whether he has seen the investigation from the Department for Business, Energy and Industrial Strategy that apparently shows the disastrous effect that Brexit will have on manufacturing all over the country, but particularly in the north and the regions? Has he seen it, and, if he has, is he colluding to keep it private?
Mr David Davis
I do not recognise the document that the hon. Gentleman is talking about.
Bob Blackman (Harrow East) (Con)
Will the Minister confirm that when we leave the European Union, it will be our policy to control our fishing waters, not to give free and unfettered access, as is currently demanded by the European Union?
Mr Baker
As the Secretary of State and I have both said, we will be leaving the common fisheries policy and taking control of our waters. My experience of fishermen is that they do wish to access European markets. We need to approach the fisheries negotiation in the same constructive spirit as other aspects of our negotiations but, yes, we will be taking control of our waters.
Alison Thewliss (Glasgow Central) (SNP)
Will the Government make it their policy to fully implement the international code of marketing of breastmilk substitutes following Brexit to protect our most vulnerable consumers from the predatory grasp of formula companies?
Mr Robin Walker
I did not quite hear the full detail of the hon. Lady’s question, but I can say that our focus on consumer protection is absolute. I spoke at the Which? conference earlier this week to show how we will put consumer rights at the heart of our approach to Brexit.
Mr Speaker
Ah! I have a choice between Bone and Hollobone. I call Mr Philip Hollobone.
Mr Hollobone
Does the promotion of leaker-in-chief and Brexit-phobic Martin Selmayr to the EU’s top civil service post help or hinder our stance, or make no difference at all?
Mr David Davis
As a matter of diplomatic policy, we never comment on internal operations in other Governments.
Mr Bone
Thank you for saving me up, Mr Speaker.
Hon. Members know that we will leave this dreadful European Union superstate in 379 days, but they might not know that that will also mark the end of the Secretary of State’s grand tour of Europe. He is in a unique position to advise the British people about which countries like us and which do not so that we will know which countries to go to after we leave. Will the Secretary of State tell us the answer?
Mr Davis
I am very tempted to give my hon. Friend the list from the last three weeks, which would take about five minutes. Two things have struck me while talking to all my European opposite numbers: all of them are sad that we are going; and they all want a strong future relationship. They all want to stay our friends and allies, and that is what we will deliver.
Royal Assent
Mr Speaker
I have to notify the House, in accordance with the Royal Assent Act 1967, that the Queen has signified her Royal Assent to the following Acts:
Finance Act 2018
Supply and Appropriation (Anticipation and Adjustments) Act 2018
Space Industry Act 2018
City of London Corporation (Open Spaces) Act 2018.
Petition
David Linden (Glasgow East) (SNP)
Ten years ago, we, the taxpayer, bailed out the Royal Bank of Scotland during the financial crisis. Now, the Royal Bank of Scotland is trying to bail from communities such as Stepps by closing down much-valued local branches. At the weekend, I joined community activists, councillors and the local Member of the Scottish Parliament, Fulton MacGregor, to gather signatures for this petition.
The petition states:
The petition of residents of Glasgow East,
Declares that the proposed closure of the Stepps branch of publicly-owned Royal Bank of Scotland will have a detrimental effect on local communities and the local economy.
The petitioners therefore request that the House of Commons urges Her Majesty’s Treasury, the Department for Business, Energy and Industrial Strategy and the Royal Bank of Scotland to take in account the concerns of petitioners and take whatever steps they can to halt the planned closure of the branches.
And the petitioners remain, etc.
[P002118]
Business of the House
(6 years, 9 months ago)
Commons ChamberRead Full debate Read Hansard Text Read Debate Ministerial Extracts
Valerie Vaz (Walsall South) (Lab)
Will the Leader of the House please update the House on the forthcoming business?
The Leader of the House of Commons (Andrea Leadsom)
The business for the week commencing 19 March will be:
Monday 19 March—Second Reading of the Secure Tenancies (Victims of Domestic Abuse) Bill [Lords] followed by general debate on Welsh affairs.
Tuesday 20 March—Consideration of a business of the House motion followed by proceedings on the Northern Ireland Budget (Anticipation and Adjustments) Bill.
Wednesday 21 March—Consideration of a business of the House motion followed by proceedings on the Northern Ireland (Assembly Members, Regional Rates and Energy) Bill.
Thursday 22 March—A general debate on the economy.
Friday 23 March—The House will not be sitting.
The business for the week commencing 26 March will include:
Monday 26 March—Second Reading of the Laser Misuse (Vehicles) Bill [Lords].
As part of this year’s celebration of the centenary of women’s suffrage, on Wednesday the Cabinet Office will be launching a campaign pack for parliamentarians to use as we visit schools in our constituencies to talk about the amazing achievements in the fight for equality.
This week is Shakespeare Week, and he has a solemn message for us in this House as we seek to stamp out bullying and harassment:
“Think’st thou that duty shall have dread to speak
When power to flattery bows?”
Let us hope that all’s well that ends well.
You might be aware, Mr Speaker, that I am a huge fan of England rugby, and we face a great challenge against Ireland on St Patrick’s Day this Saturday. I am proud of our strong United Kingdom. I would like to wish both teams a superb match, and also to wish everyone a very happy St Patrick’s Day.
Valerie Vaz
I thank the Leader of the House for giving us next week’s business. It is an interesting programme.
I am sure that the Leader of the House will know that the Bill to be debated next Monday consists of only one clause—actually, two clauses: the long title and the main clause. May we have the list of ministerial responsibilities, which has not yet been published? When will the debate on restoration and renewal finally be scheduled, as the European Union (Withdrawal) Bill is still in the other place and is not due to come back until, possibly, May?
The shadow Secretary of State for Education, my hon. Friend the Member for Ashton-under-Lyne (Angela Rayner), raised a point of order after the debate on Tuesday about the Government not pressing ahead with plans to phase out childcare vouchers for the next six months. I know that the Leader of the House has said that we have to wait 12 weeks before a Minister responds. However, we now have two time limits— 12 weeks and six months. Could we have a bit of clarity on this for our constituents?
Given that there is nothing scheduled after 26 March, could the Leader of the House please schedule an Opposition-day debate? Or perhaps we could have a debate on early-day motion 937, which deals with the statutory instrument abolishing nursing bursaries for postgraduate nursing students.
[That an humble Address be presented to Her Majesty, praying that the Education (Student Support) (Amendment) Regulations 2018 (S.I., 2018, No. 136), dated 5 February 2018, a copy of which was laid before this House on 6 February, be annulled.]
I have asked for this before. We thought that the Chancellor would make an announcement in the spring statement, but obviously as it was a spring statement he could not do that.
The Chancellor now describes himself as “Tiggerish”. If he has read the tweets of some of his Back Benchers, he will know that they are asking him to bounce out of the Cabinet. He may be Tiggerish about the growth forecast, but the OECD says that the UK’s economy is the slowest growing of all the G20 countries, so when he goes to Buenos Aires he will be last in the queue—and this is even before we leave the EU.
I want to share this really interesting point that the Prime Minister of Luxembourg made on the EU:
“We had a special relationship with the UK, before they were in with a lot of opt-outs and now they are out, they want a lot of opt-ins.”
I think that kind of sums up exactly where we are. I did not quite glean from the Secretary of State for Exiting the European Union whether he has actually visited Brussels. Will the Leader of the House place in the Library information on whether he has, or on when he last visited? He did not say that he had visited the Northern Ireland border within this millennium. Will the Leader of the House urge him to do so? Has the Prime Minister visited the Northern Ireland border?
In yesterday’s statement on the Green Paper on the integration strategy, Walsall was mentioned. I was a bit upset that the Secretary of State for Housing, Communities and Local Government did not alert me to the fact that he was going to mention Walsall as one of the key areas. People in my constituency have already contacted me about this because they resent the fact that Walsall is seen as a place that is not integrated. I heard at 10 o’clock this morning that the Secretary of State was visiting my constituency. It would have been helpful if he had spoken to me and I could have shown him some decent areas.
In July 2015, I raised at business questions, from the Back Benches, the ESOL—English for speakers of other languages—mandation funding from Walsall adult community college. We had to fight to get it back. My constituent, Ray Simmonds, is now offering training courses to women in childcare and in levels 1, 2 and 3 numeracy and literacy. He struggled to get a place to hold those training courses. He tried to get Pleck library, but that has been closed, as have over 500 other libraries, 300 children’s centres, and 500 playgrounds. My Sure Start Palfrey children’s centre, which was twice rated “outstanding” by Ofsted, has been outsourced to a private company. These are the places for social cohesion.
May we have a debate on the National Audit Office report which found that councils are spending less on services and more on social care, and that Government funding has fallen by 49.1% in real terms? The report also suggests that about 15 councils will be at risk of following Northamptonshire County Council in imposing emergency controls. It is the funding of the infrastructure of local government that helps with social cohesion. It is austerity that fuels division as people think there are not enough resources to go round and blame other people who seem to be taking them. May we, then, have a debate on the National Union of Teachers and Runnymede Trust report on visible and invisible barriers to black, Asian and minority ethnic teachers, or an urgent statement on the young black boy who was tied to a tree in Bath and hit by white boys as he was called names? There is no Government strategy to tackle that.
Finally, I do not want to end on a sad note, but I am afraid I have to, in acknowledging the passing of some very eminent people who have made a major contribution to our country. Brenda Dean, from the other place, was the first female general secretary of a British trade union, having joined a trade union as a teenager. Professor Stephen Hawking was 52 years a fellow of Gonville & Caius College, Cambridge. I have read “A Brief History of Time”—I will have to read it again—and I have visited the large hadron collider at CERN and seen how scientists from all the different countries collaborate. He was also part of the litigation to stop the accountable care organisations, which recently won a cost-capping case on judicial review. In his memory, we must ensure that the UK continues the fantastic collaboration in science with the rest of Europe. He said that a publicly provided NHS was the most efficient system, and so those who say we cannot afford the NHS are wrong; we cannot afford not to have an NHS. Finally, Sir Ken Dodd. I actually saw him at the Palladium when I was younger—a long, long time ago. We hope to see his like again. We will miss not only his jokes and songs, but the image of a man wielding a feather duster.
Andrea Leadsom
I join the hon. Lady in her tributes to Brenda Dean, Professor Stephen Hawking and, of course, Sir Ken Dodd—what a fantastic and humorous man he was. I also join her in paying tribute to Stephen Hawking’s commitment to an NHS free at the point of delivery. That is vital. There is consensus right across the House that the NHS should be free at the point of delivery, and that will always be the case under this Government.
The hon. Lady and I have had this discussion about ministerial responsibilities a number of times. I have chased the matter, and I am told that the list will be published with the next quarterly transparency round, next Friday—so let’s hope, hey? I am on her side on this. I shall also be updating the House Commission on Monday on when we will bring forward the restoration and renewal debate, and I have been speaking with parliamentary counsel about the drafting of the Bill. We need to get it ready and bring it forward as soon as possible. Again, she and I agree on that.
On Opposition-day debates, I hope that the hon. Lady will be pleased, as I was, that we had the day’s debate on some of the statutory instruments that the Opposition had prayed against. I was delighted, as no doubt she was not, that the Government managed to win, with decent majorities, each of the votes on the statutory instruments, one of which is very important for young people in expanding the number of young people receiving free school lunches by more than 50,000 by the time universal credit is rolled out. We had an Opposition day last week, for Plaid and the Democratic Unionist party, and others will be brought forward through the usual channels.
The hon. Lady talks about our new Tiggerish Chancellor. I was delighted to see this new Disney reference, and long may it last. She says that it is misplaced, but manufacturing output has now grown for nine consecutive months for the first time since records began in 1968; we have had the best two quarters of productivity growth since the financial crisis; we have the lowest year to date net borrowing since 2008; the number of first-time buyers is at an 11-year high; and employment is at a near record high. These are reasons to be optimistic and to believe in our fantastic economy.
I am delighted that the hon. Lady has such faith in my ability to determine where the Secretary of State for Exiting the European Union and the Prime Minister should go. It is very flattering of her to suggest that I can determine their travel arrangements, but I am not sure I can quite do that. She mentions the excellent work on the racial disparity audit and this Government’s determination to ensure that where there is inequality, we take strong measures to try to remove any barriers to the success of people of all races, all ethnic backgrounds and all religions in this country, so that they can progress. She mentions that her own area, Walsall, will be part of the initial pilot scheme. I welcome that, and I hope she does.
The hon. Lady also mentioned the horrifying story of a young black boy being tied to a tree. I think we all feel disgust and horror at that inappropriate and utterly awful experience, and I hope that we in this House are at all times united in stamping out any behaviour of that sort wherever we see it.
Bob Blackman (Harrow East) (Con)
It is the 346th anniversary of the declaration of indulgence by His Majesty King Charles II, which was the first attempt at allowing freedom of religion in this country—something we should all cherish. I crave your indulgence, Mr Speaker, in reporting back from the Backbench Business Committee. The Chair of the Committee, the hon. Member for Gateshead (Ian Mearns), is unfortunately not able to be with us; he is detained with urgent business.
The Backbench Business Committee now has eight unallocated debates that need time in the Chamber. Now that the Government have taken today and next Thursday, we will lose the opportunity to debate autism and victims of surgical mesh, which are subjects that Members across the House are very keen to debate. Could the Leader of the House ensure that we get Backbench Business time for those debates as soon as possible?
On my behalf, may I ask for a debate on child sex abuse and grooming of young children, particularly those in care? I have sat on the Select Committee on Communities and Local Government for seven years. We went through the Rotherham case in great detail and are now hearing about cases across the country. It is time we had a debate in Government time on that very important issue, so that all Members can voice their views and we can hear what the Government are going to do about it.
Andrea Leadsom
I am grateful to my hon. Friend for standing in for the Chairman of the Backbench Business Committee. I absolutely hear his request for Backbench Business days. I hope he will welcome the Government’s determination to provide Government time for a debate on International Women’s Day in such an important year, which in previous years has fallen to the Backbench Business Committee to table, and a debate on Welsh affairs, which unfortunately was a Backbench Business day that was cancelled due to the appalling weather. We also have a Government debate on the economy, which I know the Committee was keen to have. We are not ignoring the interests of Back-Bench Members in any way. Yesterday and today, we have general debates on the EU, which were strong requests from Back-Bench Members right across the House.
However, I hear my hon. Friend’s specific call for debates on autism and surgical mesh. I have constituents who have suffered profoundly from health issues relating to surgical mesh, and of course, I and all hon. Members will want to do everything we can to support people who suffer from autism. We will be bringing forward Backbench Business days as soon as business allows.
My hon. Friend also raises the issue of child sex abuse, which is beyond appalling. We heard this week about the appalling situation in Telford. I share his concern about that and will make representations on his behalf.
Pete Wishart (Perth and North Perthshire) (SNP)
I thank the Leader of the House for announcing the business for next week. Can I also pay my tributes to the three people mentioned—Brenda Dean, Professor Stephen Hawking and Ken Dodd? I think the best thing we could do in Ken Dodd’s memory would be to progress the cause of independence for Knotty Ash.
I also welcome national Shakespeare Week. We are all very much looking forward to our Shakespeare suppers. I was trying to think of the most appropriate thing for this Government—surely it can only be “A Comedy of Errors”, or “Is that a power grab I see before me?”
I am really surprised that the Leader of the House has not announced any debate on Russian relations. We have had two statements that have been heavily subscribed this week. There is a great deal of interest across the House, and this issue is only going to develop and get more critical. Before we rise for Easter, can she ensure that we have a debate on Russia?
Tomorrow will be a first, with two consecutive Scottish National party MPs’ private Members’ Bills being promoted by my hon. Friends the Members for Na h-Eileanan an Iar (Angus Brendan MacNeil) and for Glasgow South (Stewart Malcolm McDonald). These particularly good and worthy Bills are on reuniting refugee families and on ending the practice of unpaid internships. Will the Leader of the House do all she can to ensure that there is none of the usual awful, disruptive parliamentary practices that characterise so much of private Members’ days? Our constituents absolutely loathe such stuff, and they want those Bills to progress.
Can we have a proper debate about English votes for English laws? I think that everybody in this House knows that this is an appalling, divisive measure that socially balkanises this place on the basis of nationality. However, I think there are people in this House who are still confused about how it applies to them. For example, my Scottish Conservative friends, determined to exercise their prime function as unquestioning Lobby fodder, rushed through the Lobby on Tuesday to vote to take free meals out of the mouths of 1 million English bairns, only to discover that the votes did not count because of the English veto in the double-majority vote. The Scottish Tory dafties turned up to have their votes discounted in person. The Scottish Tories do nothing other than ask questions of a Parliament 400 miles away that cannot answer them, which is infuriating their constituents and is primarily responsible for plummeting relations. Given the glaikit looks on their coupons the other evening, we now know why they do that.
Andrea Leadsom
I am struggling to find something on which to agree with the hon. Gentleman—perhaps the independence of Knotty Ash would be the safest option.
The hon. Gentleman calls for a debate on Russia. The Government were extremely grateful yesterday for the very calm and supportive response of his party leader. The Government very much appreciated that sensible and measured response. I will certainly make representations and I am sure there will be opportunities for further discussion on this very serious subject.
Private Members’ Bills are, by definition, for private Members, and the Government certainly do not seek to interfere in the passage of and debates on such Bills. The hon. Gentleman mentions two very important Bills promoted by Scottish Members, one on the reunion of refugee families and the other on banning unpaid internships. Both proposals have a good deal of merit. The Government have very strong policies in each area. There was an interesting discussion on the radio this morning about the abuse of people applying for a job versus the merits of small businesses being able to check out in practical reality the skills that individuals claim to have. That debate will be useful for tomorrow’s proceedings on the Floor of the House.
The hon. Gentleman talked about English votes for English laws. I want to put on the record that it is absolutely not the case that free school dinners are being taken away from children. I deeply regret that Opposition Members, in their misrepresentation of the policy, have deliberately sought to mislead and to make vulnerable people feel yet more vulnerable. It is clear that 50,000 more children will be eligible for free school meals by the time universal credit is rolled out. It is of great regret to the Government that anyone should seek to misrepresent that.
Mr Speaker
I very gently say, on advice, to the Leader of the House that I know that she would not accuse Members of seeking deliberately to mislead the House, because that would be an accusation that touched on somebody’s integrity. That is not orderly, so I am sure she will want to withdraw that.
Sir David Amess (Southend West) (Con)
Will my right hon. Friend the Leader of the House find time for a debate on food labelling? I have been contacted by Diabetes UK and Compassion in World Farming, which feel very strongly that food labelling should be much clearer so that when customers buy food and drink, they can understand the effects it will have on their health and how farm animals are treated.
Andrea Leadsom
My hon. Friend raises an issue that is very important not just, as he says, for those with health problems, but for people who care about animal welfare to be able to see precisely how the food they are eating has been treated during its lifetime and, of course, the way it has been slaughtered. When we leave the European Union, we will no longer be subject to EU food-labelling regulations and we will be able to look at the issue as an independent United Kingdom.
Paula Sherriff (Dewsbury) (Lab)
Last Friday, I stayed out all night—sleeping rough at Huddersfield Town football stadium to raise money for local homelessness charities. We raised over £40,000 that night. Does the Leader of the House agree that we should encourage other football clubs to raise money locally in that way—perhaps, Mr Speaker, you could influence the mighty Gunners to do the same—and may we have a statement on how the Government’s plans to eradicate homelessness are going?
Andrea Leadsom
I congratulate the hon. Lady: that is an amazing thing to do. In my home town of Northampton, a fantastic homelessness centre does a sleep-out every year, and I am fully determined to do that myself one year. [Interruption.] Yes, exactly: I shall wrap up warm. I congratulate her and everybody involved on that amazing fundraising effort, which is excellent news.
As the hon. Lady will know, it is an absolute priority of the Government to make sure that we tackle the huge problem of homelessness and rough sleeping. We pledged in our manifesto to eliminate it by 2027, and to halve it by 2022. These are very difficult issues, and we have committed £1 billion to tackling rough sleeping and homelessness. It is not, however, just about money. We are also changing how councils approach the issue. We are implementing the Homelessness Reduction Act 2017, a private Member’s Bill that my hon. Friend the Member for Harrow East (Bob Blackman) introduced. We are also working very closely with councils to look at what more can be done in targeted ways to tackle the problems that result in homelessness and rough sleeping.
Mr Speaker
I join the Leader of the House in congratulating the hon. Member for Dewsbury (Paula Sherriff), whose message to colleagues will have been heard and digested.
Mr Gary Streeter (South West Devon) (Con)
Will my right hon. Friend seek to install a sense of urgency into Departments, perhaps starting with the Department for Transport? Once again, following heavy rainfall, the line from London to Plymouth has been cut—I hope, temporarily—due to flooding in the Exeter region. There is a plan to fix it, but it is taking far too long, and my constituents are fed up about it—and so am I. Will she please help?
Andrea Leadsom
My hon. Friend is a huge champion for his constituency, and he is quite right to raise this matter. I absolutely understand his frustration and that of his constituents. If he writes to me, I will be happy to fire a very small rocket towards the Department for Transport on his behalf.
Alan Brown (Kilmarnock and Loudoun) (SNP)
Constituents of mine bought a new biomass boiler, hoping to offset some of the cost by using the renewable heat incentive. The boiler was faultily installed, but after legal action, they got the boiler removed and their money back, and they have a new boiler installed. However, now that they have a replacement boiler, they have been told that they are no longer allowed to access the RHI, and to rub salt in the wounds, they have received a demand to pay back the £7,000 of RHI payments they had already received. May we have a debate on the RHI rules and the fact that customers trying to do the right thing by using green energy are being penalised through no fault of their own?
Andrea Leadsom
The hon. Gentleman has raised a very important point. We want to encourage everybody to take every opportunity to reduce carbon emissions and to turn our economy green. I am delighted that the UK enjoyed the greenest year ever for electricity in 2017. I urge him to raise his very specific constituency point at Business, Energy and Industrial Strategy questions.
Rachel Maclean (Redditch) (Con)
Since Tuesday’s debate on free school meals, I have received numerous emails attacking me for taking food out of the mouths of the poorest children in my constituency. I came into politics to improve the lives of my constituents, so I find this abhorrent, and having to create rebuttals is a waste of taxpayers’ money. Hon. Members will know that no child will lose free school meals as a result of these policies. May we have a debate about the way in which statements made in the Chamber can, unfortunately, when lifted out of context by the Labour party, be used on social media to manipulate public opinion, which ends up harming our most vulnerable constituents and achieving the opposite effect?
Andrea Leadsom
I completely agree with my hon. Friend, and she is right to raise that matter in the Chamber. No children will lose their free school dinners, and in fact there will be an increase of 50,000 in those who are eligible by the time universal credit is rolled out. You have said, Mr Speaker, that although the use of social media is broadly to be welcomed, Members should take care to ensure that the usage of selected clips of debates does not create a misleading impression about what has taken place. Unfortunately, however, your words were not heeded, and a misleading impression has been created. That is greatly to be regretted, and it does not help the integrity of this place when hon. Members deliberately seek to put out information that is incorrect—is that okay?
Mr Speaker
Yes, and I will not get drawn into arguments about policy. I stand by that statement in its entirety; it is entirely compatible and consistent with saying that people cannot accuse other Members of misleading the House. That first statement is absolutely correct: people should not use selective clips to give an incorrect, inaccurate, or erroneous account of proceedings.
Tom Brake (Carshalton and Wallington) (LD)
“All’s well that ends well” might not be the case for Northern Ireland—it is more a case of “Beware the Ides of March”. Will the Leader of the House make time available for a debate on the Foreign Secretary’s proposals for minimal border controls, and the impact of that on jobs and security in Northern Ireland?
Andrea Leadsom
The right hon. Gentleman will be aware that Government policy is to ensure that there is no hard border between Northern Ireland and the Republic of Ireland, and that when we leave the European Union we have a deal that works for all parts of the United Kingdom and does not seek to undermine or divide any part from any other part. When I read out next week’s business, he might have heard that there will be two days of debates pertaining to Northern Ireland, and he may wish to take the opportunity to speak in those.
Anna Soubry (Broxtowe) (Con)
May I refer back to the use of statistics? There is nothing wrong with a good, robust argument in this place, but if the Leader of the House, or any Minister, makes an assertion about facts, they can quite properly be challenged and brought back to this place, and made to account for any inaccuracy in the use of statistics as facts. That is not the same for right hon. and hon. Members, particularly on the Opposition Benches, and it does not enhance political debate for people to assert facts, week after week, almost day after day—this is a growing problem—without any accountability in the House. Is there anything that the Leader of the House can do? On Tuesday we had to rely on Channel 4’s FactCheck. The Library is an excellent source of information, but it is imperative that we all act with veracity and integrity, and are held accountable when we make assertions.
Andrea Leadsom
My right hon. Friend is right. You will recall, Mr Speaker, that I raised in the Chamber the issue of a private response that I gave to a Labour Member following a question that they asked me privately, but that they then tweeted, implying that I had somehow answered something else. I personally was extremely offended by that. My right hon. Friend is right: social media clips that are deliberately misleading and ignore facts to make political points undermine our Parliament and democracy, and it simply must not happen.
Mr Barry Sheerman (Huddersfield) (Lab/Co-op)
You might like to know, Mr Speaker, that I fully intended to spend the night with my hon. Friend the Member for Dewsbury (Paula Sherriff) at Huddersfield’s Premier League club’s stadium. However, while out walking on a cancer fundraiser the week before I got a terrible cold and had to withdraw from that wonderful night.
I have a serious request for the Leader of the House. Can a group of Members from all parties discuss ways that Members could be made more accountable and transparent? When someone stands up, on any side of the House, I have become rather tired of hearing them mumble, “I refer to my entry in the Register of Interests”. That is all they say, but if one looks at the Register of Members’ Financial Interests, some people have amazing business connections, large amounts of investment, and some own half a county and we are discussing agriculture during DEFRA questions. All we get is a little aside. I think the House is not transparent enough, and that when someone makes a speech they should fully declare their interests.
Andrea Leadsom
Mr Speaker, I am looking at you and wondering whether this is more a matter for the Chair than it is for the Leader of the House. I understand what the hon. Gentleman is saying very clearly. If he would like to write to me I would certainly be happy to take it up with the Procedure Committee to see whether this is an area we need to review.
Mr Speaker
The position is pretty clear. In a speech, a Member should declare an interest so that Members of the House are aware of it. There is no requirement to do so when asking a question. Each Member must take responsibility for his or her decision to declare. I would not want it to be thought that there is huge ambiguity about this. It may be that it takes time for some to be fully conversant with the required procedure, although that is not a problem that will afflict the hon. Gentleman as he approaches his 39th year of consecutive service in the House of Commons, but I hope people will appreciate how to go about this matter. It is certainly very important.
John Lamont (Berwickshire, Roxburgh and Selkirk) (Con)
This evening, I have the great pleasure of attending the 90th birthday celebrations of the Coldstream branch of the Women’s Institute. I am sure my right hon. Friend would be very welcome to join me. May we have a debate to pay tribute to the great work the Women’s Institute does, not just in Scotland but across the United Kingdom, to support women and local charities?
Andrea Leadsom
I am sure my hon. Friend will be very warmly received by the WI. He is a great champion for his constituency. I thank him for highlighting the incredible work of the WI, which has played a unique role as the largest voluntary women’s organisation in the country. In the century since its formation during the first world war, the WI has dedicated its time to a wealth of worthy causes. I hope all those celebrating the 90th anniversary of the Coldstream branch have a very enjoyable evening with him.
Emma Hardy (Kingston upon Hull West and Hessle) (Lab)
Antisocial behaviour is a growing concern across my constituency. People tell me that they feel intimidated and unsafe in their homes. Please may we have a debate in Government time on the need for increased funding for our police and for statutory youth provision to act as both a deterrent and a solution to the problem of antisocial behaviour?
Andrea Leadsom
The hon. Lady is right to raise the real problem of antisocial behaviour, which, while low level, can really wreck people’s lives, their enjoyment of their homes and so on. It is a very important subject. I am sure it would receive great support as a candidate for a Backbench Business debate in which Members from across the House could talk about their experiences.
Gareth Johnson (Dartford) (Con)
Each and every week across England and Wales some 80 dogs are stolen from their owners, causing huge distress to both the owners and the animals. During this Pet Theft Awareness Week, may we have a debate on what is a growing and nasty problem?
Andrea Leadsom
My hon. Friend has done a great deal to raise awareness of dog theft. It is a terrible crime. Any theft of property can be very distressing for victims, but the suffering will be much greater when it is a family pet. I commend him for raising this issue. The Government are very clear that when such a crime happens it must be reported to the police, whenever it happens, so that it can be investigated and the perpetrators brought to justice. He will know that the theft of a dog is a criminal offence under section 1 of the Theft Act 1968. We are determined to see it enforced.
Thangam Debbonaire (Bristol West) (Lab)
My constituents are frankly baffled at the way the Government keep pulling business and not replacing it with time to solve the pressing issues of the day: homelessness, lack of funding for schools and challenges in the NHS. Will the Leader of the House work with the Government to provide either Government time or further Opposition- day time for us to debate, and hopefully try to solve, some of these pressing issues?
Andrea Leadsom
As far as I am aware, the only business the Government have pulled was in response to a request from the Opposition on Monday evening. Due to the unprecedented number of urgent questions and very important statements, such as those on bullying and harassment, and a response to the Salisbury attack, the Opposition requested that the Government pull the business that night. That is the only business that has been pulled, so I am not entirely sure what the hon. Lady is talking about.
Mrs Anne-Marie Trevelyan (Berwick-upon-Tweed) (Con)
Last Saturday, I joined the Save Rothbury Cottage Hospital campaign group on a march to highlight the anxiety and frustration that the local community presently feels as we await the outcome of the Department of Health and Social Care independent review panel’s review. Our clinical commissioning group closed down the 12-bed ward in our community hospital 18 months ago, citing underuse. The challenge of rural funding for healthcare means that we are not investing fairly in the Coquet valley, England’s most sparsely populated community. We need to reinvest in these beds for palliative and convalescent care and to give consideration to the practical difficulties and costs of rural distance and poor transport links. Will the Leader of the House grant a debate in Government time to discuss rurality funding frameworks to enable CCGs to meet the needs of patients such as my constituents, who live in the most sparsely populated community?
Mr Speaker
Nobody can accuse the hon. Lady of excluding any consideration that might be thought relevant in any way, at any time and to any degree from her interrogation of the Leader of the House.
Andrea Leadsom
Mr Speaker, I think you have highlighted beautifully what a fabulous champion my hon. Friend is for her constituents. She is right to raise the challenge of sparsely populated areas and their need for healthcare to be as good as anywhere else in the country. I have some challenges with the local healthcare provision in a less populated area, and I appreciate fully what she is saying. I suggest that she might like to seek an Adjournment debate specifically to deal with the issues in Northumberland.
Kirsty Blackman (Aberdeen North) (SNP)
Last Friday, I was door-stepped by the entire primary 3 class at Hannover Street School, who wanted to tell me that Parliament’s use of plastic straws has doubled in three years. They are very concerned about that and would like to know what the Government and the Leader of the House are doing to tackle the issue.
Andrea Leadsom
Is it not fantastic to hear of year 3 students door-stepping the hon. Lady? I am sure she thoroughly enjoyed it. The Government are committed to tackling and reducing the use of plastics. All manner of efforts are being made, including the 5p charge for plastic bags, which has reduced the number of plastic bags in circulation by around 9 billion—an extraordinary number. There are the Government’s efforts on the blue belt around the overseas territories to try to protect those valuable marine locations from the impact of plastics. Closer to home, we know that litter very often ends up in our rivers and seas, and very much of it is plastic, so we have a new national litter strategy for England, which I was delighted to announce as the Secretary of State for Environment, Food and Rural Affairs.
Specifically on the hon. Lady’s point about plastic straws and their use in this place, the Administration Committee has taken this up. It is committed to reducing the use of single-use plastics, which includes plastic knives and forks as well as straws, and I can tell her that a number of hon. Members across this place have committed to a plastic-free Lent. I am sure she would be very welcome to join us, should she wish to do so.
Leo Docherty (Aldershot) (Con)
I commend my right hon. Friend for the hard work and determination she has shown to deal with bullying and harassment of all kinds in Westminster. Can we please have a statement on the bullying inquiry that she has proposed this week? Can she confirm that the inquiry will not look at individual cases but will instead look at whether the Respect policy as a whole is working for staff in this place?
Andrea Leadsom
I am grateful to my hon. Friend for his question, and I can give him a specific reassurance: the inquiry into the bullying of House staff that I will propose to the House of Commons Commission on Monday 19 March will not be carrying out investigations into individual cases. That is exactly why I expect it to attract the Commission’s full support. There are existing avenues open to anyone wishing to raise specific grievances, and individuals coming forward will be advised to use those where they apply, but the inquiry will look at whether they are functioning properly. My ambition is to stamp out bullying and harassment of any kind in this place. That is something that I imagine every single person here will wish to support.
Mr Jim Cunningham (Coventry South) (Lab)
May we have a statement or a debate on the dispute at universities at the moment? I have two universities in my constituency. This dispute has been dragging on for weeks, particularly in relation to pay and conditions, but more importantly, to lecturers’ pensions. May we have an update on that? Before the Leader of the House gets up to answer me, I am aware that there are Education questions on Monday, but I would rather have a proper statement to show that the matter is being taken seriously by the House.
Andrea Leadsom
I am very personally aware of this issue. My eldest son is facing his finals and, because of the picket line, has been denied the opportunity to go to his university even to use the resources, let alone to have any of the face-to-face tuition that he was due to have and for which he has paid. I am therefore extremely cross about the way in which innocent students are being punished during this dispute. I urge all parties to get together and find a resolution, so that a generation of graduates do not have to pay the price.
Jeremy Lefroy (Stafford) (Con)
Two weeks ago, I raised with my right hon. Friend the non-levy apprenticeship funding for Newcastle-under-Lyme, Stafford, Shrewsbury and other colleges. The situation is becoming serious, and I believe that our young people will be let down if we do not resolve it. May I urge the Leader of the House to ensure that we have a statement or a debate as soon as possible?
Andrea Leadsom
I know that my hon. Friend is very supportive of apprenticeships. I can tell him that the contracts for the delivery of non-levy apprenticeship training were awarded on the basis of an assessment by the Education and Skills Funding Agency of information that had been supplied and that the tenders were measured against clearly set criteria. Ofsted’s rating of providers was not considered to be part of the process, as new entrants do not have an Ofsted rating and would therefore have been disadvantaged. The Government have awarded more than 700 providers contracts worth a total of £490 million to deliver apprenticeship training for non-levy payers. However, as my hon. Friend will know, those that were not successful in the non-levy procurement process can still supply apprenticeship training to levy payers directly.
Chris Elmore (Ogmore) (Lab)
In the past week, three constituents have contacted me to express frustration about the fact that social security payments cannot be paid into their Post Office accounts. In the light of bank closures in my constituency and others, may we have a debate in Government time about the work and functions of the Post Office, so that we can resolve the issues and those payments from the Department for Work and Pensions can be paid into my constituents’ accounts?
Andrea Leadsom
When I was City Minister, I was delighted to sign the arrangement that allowed post offices to supply basic banking services for all UK banks to all personal account customers. The issue raised by the hon. Gentleman is news to me personally, but if he would like to write to me about it, I will certainly take it up with the Department.
Mr Peter Bone (Wellingborough) (Con)
I thought yesterday that the Prime Minister spoke not only for the Government but for the country over Russia, and I thought that the Leader of the Opposition was an apologist for Russia. The duty of every Member of Parliament is to put country first and party second. I congratulate the 18 Labour Members who supported the Government by signing early-day motion 1071, which states:
[That this House unequivocally accepts the Russian state’s culpability for the poisoning of Yulia and Sergei Skripal in Salisbury using the illegal novichok nerve agent; fully supports the statement made by the Prime Minister on 14 March 2018 in response to Russia’s illegal attack on the UK; further supports the Government’s sanctions against Russia resulting from this incident thus far, including the expulsion of 23 Russian diplomats; supports the decision not to send Government ministers or members of the Royal family to Russia until further notice; supports the Government’s call for a special meeting of the UN Security Council to discuss Russia’s use of chemical weapons on UK soil; and resolves to consider support for further proportionate actions to deter future acts of aggression by the Russian state.]
On this occasion, would it be possible for the Leader of the House to arrange for the early-day motion to be debated next week?
Andrea Leadsom
I entirely associate myself with my hon. Friend’s comments, and I will certainly refer them to the Government. There cannot be a debate, because the business for next week has already been arranged, but I encourage my hon. Friend to seek other means for the matter to be debated.
Gavin Newlands (Paisley and Renfrewshire North) (SNP)
The deregulation of buses has been disastrous for many of our towns and villages. It has been confirmed that services 8 and 19, operated by Mc Gill’s, will cease in 11 days’ time, and as a result there will no longer be a direct bus route to Paisley from villages such as Bridge of Weir, Houston and Brookfield. I look forward to the Scottish Government’s transport Bill, which I hope will deal with many of these issues, but may we have a debate on the impact on communities throughout the United Kingdom of the erosion of lifeline bus services since deregulation?
Andrea Leadsom
That is clearly an important point. Bus services are vital to many rural communities, enabling people to travel to work and to education centres, or simply to go and do the weekly shop. I am a huge fan of the bus sector, and I appreciate the importance of maintaining services. However, the hon. Gentleman has raised what I believe is an entirely devolved matter, so it would not be appropriate for me to comment further on the specifics.
Chris Green (Bolton West) (Con)
Following incidents at the Presidents Club dinner, there was significant media scrutiny and a related urgent question in the House to highlight justified concerns. Meanwhile minimal attention has been given to the events in Telford, where hundreds of children have been abused and raped. May we have a debate on the priorities and values of our broadcast media?
Andrea Leadsom
As my right hon. Friend the Prime Minister said yesterday, we have all been shocked by the horrific reports in Telford, where some of our most vulnerable citizens have been preyed upon by terrible criminals, and we should all be praising my hon. Friend the Member for Telford (Lucy Allan), who has been totally right to speak out as she has. I am very pleased that the authorities are now going to conduct an inquiry, and it is important that this work gets under way as quickly as possible, so we can get to the truth. My hon. Friend the Member for Bolton West (Chris Green) raises an important point about the relative lack of reporting on this subject versus other perhaps more gossipy types of scandal, and he is right to raise the concern about even-handed reporting.
Vicky Foxcroft (Lewisham, Deptford) (Lab)
The Leader of the House might have noticed that I have asked on several occasions for debates on youth violence and its root causes, and I have noted that we have not secured Government time for them. She often gives creative suggestions about how we might go about securing debates. One way we could do that is by having an Opposition day debate, and perhaps I could lobby our Front Benchers to discuss youth violence in an Opposition day debate, so please may we have time for Opposition day debates?
Andrea Leadsom
I pay tribute to the hon. Lady for her work in this area. She is supporting the Government in looking into such serious violence and will be aware that the Government’s new serious violence strategy is due to be published in the spring. It will look at ways to steer young people away from a life of crime, while putting in place measures to prevent and reduce the effect on victims of serious crime. She asked for an Opposition day and I can assure her, as I assured the hon. Member for Walsall South (Valerie Vaz), that Opposition days will be forthcoming in the usual way and in accordance with the Standing Orders of this House.
Chris Davies (Brecon and Radnorshire) (Con)
I am sure the whole House will be delighted to hear that Wales’s first zero-waste shop, “Natural Weigh”, opened its doors at the Corn Exchange on the high street of Crickhowell in my constituency earlier this month. May we have a debate on what more the Government can do to ensure more shops follow its example, and therefore help reduce the unnecessary amount of plastic packaging that is doing so much harm to our environment?
Andrea Leadsom
I congratulate my hon. Friend’s constituents on this great endeavour and wish them every success with it. The passion with which hon. Members across the House put forward ideas for reducing plastic waste shows that we as consumers as well as our constituents will be very keen to support such measures by retailers. He will be aware that the small retailers associations are now committed themselves to joining in the 5p charge for plastic bags, which will help, and I encourage all hon. Members to support their retailers who are doing so much to ensure we vote with our feet on this subject.
David Linden (Glasgow East) (SNP)
May we have a debate in Government time about the practices of housing developers such as Persimmon? On Monday, I did a walkabout with Councillor Elaine Ballantyne on the Lowlands estate in the Baillieston area. Residents of that new-build estate have been promised a railway bridge, bus routes, play parks, a motorway spur; all these things were promised in the sales centre, but have not been delivered. May we therefore have a debate to hold these developers to account?
Andrea Leadsom
The hon. Gentleman is right to raise those issues. We all have developments in our constituencies where there have been lots of promises, but then constituents are disappointed by the lack of action on them, and I am sure we all, as I do, write furious letters to developers asking them, “Where is this? Where is that? You promised the other.” So there is clearly an issue there. I encourage the hon. Gentleman to seek an Adjournment debate to deal with the specific issues in his constituency and commend him for raising this matter.
Martin Vickers (Cleethorpes) (Con)
On Tuesday, amusement arcade operators in Cleethorpes expressed their anger at the possible withdrawal of 1p and 2p coins, and they were later joined by the local hospice, St Andrew’s, and other local charities that also expressed their concern. They are now confused about what the Government’s policy is. May we have a statement to clarify whether the consultation is ongoing, and whether or not it will indeed include the possible withdrawal of 1p and 2p coins?
Andrea Leadsom
The Prime Minister’s spokesman has said that there are no proposals to scrap 1p or 2p coins. The call for evidence was simply intended to help the Government better understand the role of cash and digital payments. One element of that was whether the denominational mix of coins meets the public need. From the early reaction, it looks as if it does. It is safe to say that the penny has dropped. We have considered change, but we know that we like change, so we think we will probably keep change and have no change.
Rachael Maskell (York Central) (Lab/Co-op)
Since raising the York housing crisis in the Chamber, my inbox has been flooded with horrific stories of damp and mouldy housing in York, where landlords, both council and private, have completely failed my constituents. May we have a debate about the condition of housing, with particular regard to damp and mouldy homes, so that we can stamp out damp once and for all?
Andrea Leadsom
The hon. Lady raises an incredibly important issue, and there is no doubt that the Government are determined to help to ensure that all homes meet the right standards and that we stamp out issues such as damp and the other problems that so many tenants have. The Government support the Homes (Fitness for Human Habitation and Liability for Housing Standards) Bill introduced by the hon. Member for Westminster North (Ms Buck), and we are committed to protecting tenants’ rights and to giving tenants more security through our tenant fees Bill, which will ban unfair letting fees and other ways in which tenants are mistreated. The hon. Member for York Central (Rachael Maskell) makes an important point, and I am sure that there will be many opportunities to raise it in the coming months.
Patrick Grady (Glasgow North) (SNP)
When the results of the English votes for English laws Divisions were announced on Tuesday, the number of Members from English constituencies had been counted not by Tellers, but by the electronic devices in the Lobbies. Is it not time to drag this place into the late 20th century by introducing electronic voting for all Divisions?
Andrea Leadsom
Many of us find the Lobby a useful place to discuss matters pertaining to our constituents and to policy, and Divisions present a great opportunity to meet Ministers. I encourage the hon. Gentleman to hang around a bit to raise some of the issues that he often raises with me on a Thursday with the relevant Minister, which could not happen if he rushes through or votes electronically.
Mr Speaker
The hon. Gentleman will only be raising such matters with Ministers in the Lobby if he votes with them—[Laughter.] I cannot imagine that happening very often. Nevertheless, the Leader of the House has hope and has made her position and that of a great many Members very clear.
Clive Efford (Eltham) (Lab)
I am sure that I am not alone in being less than impressed with the answers given by the Foreign Secretary when he was quizzed on the “Today” programme this morning about what action the Government are taking to freeze the assets of people associated with the Putin regime as part of our response to what happened in Salisbury. I know that the Government cannot give us a running commentary on exactly what they are doing at the moment, but this House will want an account of what urgent action they took to freeze assets to prevent them from being moved. Will the Leader of the House convey that to the Government and make arrangements for such a statement in the near future?
Andrea Leadsom
This is a serious matter. This morning, the Foreign Secretary was making it clear that, unlike others, this country abides by the rule of law. It is not for Ministers simply to decide to freeze assets; we go by the law of the land. We are putting in place a review, within the law, of all those whom we suspect may have assets that we may wish to consider freezing, and Ministers will of course report exactly what is happening to the House as soon as they are able to do so.
Jessica Morden (Newport East) (Lab)
As universal credit is rolled out across more of the country, will the Leader of the House ensure that we have more regular opportunities to question Ministers and to tell them what is happening on the ground? In Newport, where the roll-out started in November, we have seen a threefold increase in food parcels, mostly attributed to universal credit, and Ministers need to hear that.
Andrea Leadsom
I want to be clear that universal credit is designed to make work pay and to help people get into work, and there is evidence that that is working. It is encouraging more people to seek work and to get work, and the idea is to reduce the complexity of the previous benefit system. The hon. Lady speaks as though it is making people worse off, but it is not; it is making people better off. The Government have listened carefully to the many representations from right across the House and have improved the roll-out of universal credit, taking things slowly to ensure that we get it right and that universal credit continues to result in more people finding work and having the security of a pay packet.
Drew Hendry (Inverness, Nairn, Badenoch and Strathspey) (SNP)
Can we have a debate in Government time on the responsibilities of the Foreign and Commonwealth Office? Three weeks ago today, I raised the urgent case of Liam Colgan, the Inverness man who went missing in Hamburg. I took the advice of the Leader of the House and wrote to Ministers, but three weeks later I have not had a response, despite having chased and chased, because of clearance and awaiting signature. The family is in trauma. Should Ministers not come to the House and explain this lack of urgency?
Andrea Leadsom
I am sorry to hear that. I recall the hon. Gentleman raising that case with me, and I am happy to chase the Foreign and Commonwealth Office on his behalf.
Neil Coyle (Bermondsey and Old Southwark) (Lab)
Two years ago, my constituent Malorie Bantala was attacked by her ex-partner and an accomplice. She was eight months pregnant, and they deliberately targeted her stomach, stamping on her until they caused the loss of the child. Malorie launched a campaign this Mothers’ Day, with the support of Women’s Aid and the Mother of the House, my right hon. and learned Friend the Member for Camberwell and Peckham (Ms Harman), to get the Infant Life (Preservation) Act 1929 updated. Will the Government provide time to debate this issue, to ensure that men who commit violence that causes the loss of a child are adequately prosecuted and given more appropriate, lengthier sentences?
Andrea Leadsom
All hon. Members will be appalled to hear of that situation; it is just terrible, and I am very sorry to hear about it. The hon. Gentleman will be aware that the Government have produced a draft Domestic Violence and Abuse Bill, and it would be very appropriate for him to submit this case to the consultation on the draft Bill, so that it can be considered along with all the other measures. Those measures show the Government’s determination to stamp out domestic violence, which is so often directed towards women and, I am afraid, towards pregnant women.
Alison Thewliss (Glasgow Central) (SNP)
The Equality and Human Rights Commission yesterday released a damning report on the cumulative impact of tax and welfare reforms. The report highlighted the fact that three quarters of households with three children, and three quarters of Pakistani households, are losing out as a result of welfare reforms. That is a huge concern for my constituents in Glasgow Central. May we have a debate in Government time about the need for equality impact assessments to make sure that Government policy is not racist?
Andrea Leadsom
The hon. Lady should welcome the work of my right hon. Friend the Prime Minister in the race disparity audit, which is the first attempt by any Government to try to measure whether there is disparity in the treatment of people according to their race, ethnicity or religion. That is absolutely vital. Almost 600,000 fewer children now live in workless households; there are now 200,000 fewer children in absolute poverty; and income inequality is lower than it was in any year of the last Labour Government. We are making progress, and we are committed to doing more. This Government are showing a determination to stamp out the kind of disparity that the hon. Lady talks about.
Diana Johnson (Kingston upon Hull North) (Lab)
I am sure the Leader of the House will be interested to know that the Culture, Place and Policy Institute at Hull University is today releasing its preliminary evaluation of Hull city of culture, which brought to the city £300 million of tourism value and 800 new jobs. More than nine out of 10 residents engaged in at least one cultural activity, and 56,000 children and young people engaged with the arts. That is not to mention the acres of positive publicity for the city. May we have a debate in Parliament about the value of public investment in culture, the success of Hull city of culture and the lessons that Coventry can learn when it takes up the city of culture baton in 2021?
Andrea Leadsom
The hon. Lady is a huge champion of Hull city of culture, which is just coming to an end. The statistics that she gives us are extremely reassuring to Members across the House, because they demonstrate what a huge success the programme has been. She is exactly right about the need to debate the lessons for Coventry, so that it, too, can take advantage of an excellent experience such as she has had. May I suggest that she raise the matter at Department for Digital, Culture, Media and Sport questions next Thursday?
Alex Norris (Nottingham North) (Lab/Co-op)
Last Friday, we held our constituency jobs fair and I am pleased to say that 956 local people came to it. Of course, we would hope that we would not need a jobs fair at all, but the number of people there is a sign of the impact of that event, and many people will get into work and training as a result. Will the Leader of the House give me guidance on finding an opportunity during House business for me to shower praise on Nottingham City Council, on the local Department for Work and Pensions team and the Rebalancing Nottingham North foundation, which I am proud to chair, for putting on the event and on the many people who made it such a success?
Andrea Leadsom
I certainly congratulate the hon. Gentleman on the enormous turnout he had at his local jobs fair. All hon. Members who have held jobs fairs have found that same enthusiasm, both from employers and from people looking for a job, which has been heart-warming. Of course, we have seen an extraordinary increase in employment, so that now we are near record highs for employment across the UK. We have had well over 30% increases in employment right across the UK, rising to increases of 42% in the east midlands and 38% in the west midlands, and in the south-east unemployment is down by 47%. We have some amazing jobs statistics to look at as a result of the measures we have put in place to see a thriving economy, with lower taxes for people and more people with the security of a wage packet to take home.
Peter Grant (Glenrothes) (SNP)
I am eternally grateful to you, Mr Speaker. May we have a statement from the Work and Pensions Secretary on the operation of the cold weather payments system? Constituents in most of my constituency were astonished to discover that it was not cold enough to trigger the payments during a week in which they were under 2 feet to 3 feet of snow, travel of any kind was impossible and they were subject to Scotland’s first ever red alert due to the danger from snow and ice. The problem is that the DWP does not measure the temperature in Glenrothes; it measures it 20 miles away in a coastal location almost 600 feet in altitude lower than parts of Collydean in my constituency. May we have a review, so that at least the residents of Glenrothes and Levenmouth will know that, while they have to deal with the same weather as everyone else, they will be entitled to the same financial support as everyone else?
Andrea Leadsom
The hon. Gentleman will be aware of the severe weather payments that are made available and of payments made to people who struggle to meet their own energy bills. Department for Work and Pensions questions are on Monday 26 March, a week on Monday, and his question would be an ideal one to raise then.
Building Safety
(6 years, 9 months ago)
Commons ChamberRead Full debate Read Hansard Text Read Debate Ministerial Extracts
The Secretary of State for Housing, Communities and Local Government (Sajid Javid)
With permission, Mr Speaker, I wish to make a statement on issues arising from the Metropolitan police investigation into the Grenfell tragedy.
The investigation has involved a thorough examination of every aspect of the tower, including front doors to flats within the property. Those doors include a glazed fire door manufactured around five years ago. Initial inspections indicate that the door is believed to have been designed to resist fire for up to 30 minutes, but when tested by the Metropolitan police, it failed after approximately 15 minutes. The Metropolitan police considered that this test result might have wider implications for public safety and alerted my Department.
The Government immediately sought advice from the independent expert panel on the test findings to see whether any action was required as a result. The expert panel is made up of a range of building and fire safety experts, and is chaired by Sir Ken Knight, the former London fire commissioner and former Government chief fire and rescue adviser.
The panel consulted representatives from the Metropolitan police, the Government’s chief scientific advisers and the National Fire Chiefs Council. Following that, the expert panel has advised that the risks to public safety remain low. There is no change to the fire safety advice that the public should follow. I, nevertheless, fully appreciate that this news will be troubling for many people, not least all those affected by the Grenfell tragedy. That is why, based on expert advice, we have begun the process of conducting further tests, and we will continue to consult the expert panel to identify the implications of those further tests. I have made it clear that the necessary tests and assessments must be carried out thoroughly, but at pace.
There is no evidence that this is a systemic issue. Data from between 2009 and 2017 shows that fire does not generally spread beyond the room of origin. I am also clear that my Department and the Metropolitan police will ensure that the bereaved and the survivors are kept informed of progress. I commit to updating the House when further information is available, and no later than the end of April.
I stress that, in carrying out the tests, conclusions should not be drawn about the nature or cause of the Grenfell tragedy. That is a matter for a separate police investigation that must be allowed to run its course. Members will be aware that Dame Judith Hackitt is undertaking an independent review of building regulations and fire safety to ensure that the regulatory system is sufficiently robust. Dame Judith has been made aware of these latest findings. Having accepted the initial recommendations that were set out in her interim report in December, we look forward to her final report, which is expected in the spring.
Nine months ago, we faced a loss of life and suffering on an unimaginable scale at Grenfell. Since then, the Government and others have made significant efforts to support survivors, find them new homes and help to keep people safe. However, I know that the matters I have raised today will prompt questions. I reiterate that on the basis of the expert advice that my Department has received, there is no evidence that risks to the public have changed.
I reassure hon. Members that all possible steps are being taken to properly investigate the issues and to take action where needed. Public safety is paramount and our position is clear: the events of 14 June 2017 must never be allowed to happen again. I commend the statement to the House.
Tony Lloyd (Rochdale) (Lab)
I thank the Secretary of State for early sight of his statement.
Nine months on, we all still live with the human tragedy of Grenfell and the realisation that we saw the systemic failure of our system of building checks and controls. We must keep that in mind because, as the Secretary of State said—I will always endorse these words—public safety has to be paramount. That also means, however, that there has to be transparency, accountability and a driving sense of urgency.
I welcome the transparency of the Secretary of State’s making this statement at the earliest possible stage. It is right and proper that this information is in the public domain, so I thank him. I think he would agree that if the Opposition demand accountability and that the Government demonstrate a sense of urgency, that can never be open to the charge of political point scoring.
I add my thanks for the work of the Metropolitan police. The Secretary of State told us that the “Metropolitan police considered that this test result might have wider implications for public safety” and consequently alerted the Department. I was a little surprised when he said that there is “no evidence that this is a systemic issue.” I was astounded when he went on to say: “Data from between 2009 and 2017 shows that fire does not generally spread beyond the room of origin.” That may be true, but we know that that was exactly what did happen in Grenfell Tower—the fire spread and spread and spread. We cannot have any sense of complacency.
The Secretary of State says that this issue is not “systemic”, but what assessment has been made of how many buildings might be affected? How many individual flats—how many people—have fire doors that simply do not do the job? If he does not already know those numbers—I suspect it is too early to know—what steps is he taking to ascertain them? This is the point at which the words “this is not systemic” begin to sound a little incredible. There may be a systemic problem, and we have to begin to recognise that if this is a wide-scale issue, we have that systemic problem.
We need a real sense of urgency on this, as indeed we do regarding other aspects of building control. Tower block residents up and down the country are entitled to know—not simply post Grenfell—the scale of the issues. I must say to the Secretary of State that that sense of urgency has not always been apparent in all the Government’s actions. Earlier this week, he was a little embarrassed when he was not able to answer a question that was put to him at Question Time about how many tower blocks are unsafe post Grenfell. He was not able to say how many private tower blocks up and down the country have the same aluminium composite material cladding that was used on Grenfell. We now need some urgency in providing those answers and bringing the information before the House. I hope that he can tell us when he will have that information and when we can begin to give people a sense of reassurance.
In a recent written answer to my right hon. Friend the Member for Wentworth and Dearne (John Healey), the shadow Housing Minister, the Department confirmed that no funding had yet been provided to any of the 41 local authorities that had contacted it. We were told at Question Time that no funding requests had been refused, but that is not quite the full truth if the reality is that no funding request had actually been acceded to. Again, perhaps the Secretary of State can update us and tell us when the local authorities, which really do want to get on with this work, will see the assistance from central Government to which he committed nearly nine months ago.
The upshot of all of this is that, nine months on, only seven of more than 300 tower blocks that had been identified as having dangerous cladding have had that cladding removed and replaced with something more acceptable. I must say to the Secretary of State that, nine months on, that is simply not good enough.
Sajid Javid
I thank the hon. Gentleman for his comments and I am very happy to answer all the points that he has made.
The hon. Gentleman rightly said—of course we all agree with this—that public safety is the No. 1 issue and is absolutely paramount in every way. He will know that ever since the tragedy, as well as through the police investigation and the work that is being done through the public inquiry, there have been lessons for public safety. He will remember that, right from the start, the expert panel was convened to provide the immediate emergency advice that was necessary, and that advice went out widely to the owners of both social and private sector buildings. The testing regime—the initial sample testing and then the large-scale testing—was set up, as was the independent review, which is now being carried out by Dame Judith Hackitt. I was quite deliberate in wanting to see an interim report so that we could act on some of the early lessons. I remind the hon. Gentleman that Dame Judith Hackitt’s interim report included a number of recommendations, which we have accepted, and we have now started to implement every single one of them. She is now working on her final report, which is due, as planned, in the spring. Again, that reflects our sense of urgency.
Once the expert panel and the police are comfortable that information can be publicly shared, it is right that we are transparent as quickly as possible. That is necessary to create public trust and to ensure that no one comes under any undue stress. Throughout the whole process, we have correctly been led by the experts—the expert panel and all the industry advisers who have been put in place—as well as by the work that has been done by the police.
Let me give the hon. Gentleman a bit more information about that. As well as the independent expert panel, the Government have consulted the National Fire Chiefs Council, the Government’s chief scientific advisers, the police, of course, and the London Fire Brigade. As a result, the expert panel has concluded that, so far, the risk to public safety remains low, that there is no change to fire safety advice, and that a programme of additional testing has to be commissioned to determine the root cause of the failed test. Such additional testing is required; it is going on now. As I said, it must be thorough and done at pace, but I am sure that the hon. Gentleman agrees that we should not rush it, meaning that we get either wrong or inappropriate results. It should be done properly. It should be led by the experts and only on their advice. That is exactly why I said in my statement that there is no evidence of a systemic problem—it is the advice of the experts so far. We are correctly taking their advice while we continue with further tests at pace.
The hon. Gentleman seemed to suggest that work was not being done at pace or urgently. I refute that. We have rightly worked as urgently as possible every step of the way, whether that is on today’s information or other information that has come to light since the fire. That includes work on the remediation of existing buildings with ACM cladding. So far, 301 buildings have been identified: 158 social buildings; 13 in the public sector; and 130 in the private sector. Almost 60% have begun the remediation work and, as the hon. Gentleman said, seven have completed that work. Public safety is paramount, so in every single case, interim steps were taken and measures were put in place immediately, with expert advice, often from the local fire brigade. Those measures remain in place. People can be comfortable that every measure is being taken to ensure that they remain safe.
Sir Peter Bottomley (Worthing West) (Con)
I think that the House will support what my right hon. Friend said about waiting to get the determination of those investigating regarding the causes.
We know about the liabilities and the risks. The hon. Member for Rochdale (Tony Lloyd) mentioned private leaseholders in private blocks. This week saw the first proper tribunal decision, regarding Citiscape in Croydon, which is owned by the Tchenguiz interests. Ordinary taxpaying residents there are being asked to pay tens of thousands of pounds, and the same thing is happening at New Capital Quay in Greenwich, Heysmoor Heights in Liverpool, and in another 129 blocks that I could name.
May I put it to my right hon. Friend that he ought to get together the Tchenguiz interests, William Waldorf Astor’s Long Harbour and Abacus interests, the builders, the leaseholders and their representatives in order to have a roundtable in the open? Instead of waiting two years until an inquiry is done, it is time to get these people together and talk about a simple deal whereby, for example, the builders put up a third, the freeholders put up a third and the Government/tenants put up a third to get the cladding removed and replaced.
Sajid Javid
I am very much aware of the legal judgment to which my hon. Friend refers, and we are carefully considering its implications. I have been clear all along—I have said this a number of times in the House and I will say it again—that whatever the legal situation might be, the private owners of buildings should take their lead from the public sector and take responsibility for the additional costs. They might want to look at insurance claims, warranties and legal action that they may be able to take. I also want to ensure that leaseholders get the advice that they need, which is why we have increased funding to the Leasehold Advisory Service.
Ms Karen Buck (Westminster North) (Lab)
Nine months after Grenfell and with new concerns emerging, it is no surprise that residents in high-rise buildings remain extremely concerned. A matter of possible reassurance for them was the retrofitting of sprinklers. My local authority of Westminster has advised that it is concerned about proceeding with retrofitting because it has no right of access to the one in three properties in private ownership in social housing blocks. This is a matter not of regulation, but of ensuring access. Will the Secretary of State advise how he can take this forward as a matter of urgency so that councils that wish to proceed with retrofitting are clearly able to do so?
Sajid Javid
I agree with the hon. Lady that, in the light of all the information that has come to light since the terrible tragedy, local authorities should quite rightly take whatever action is needed to keep residents safe in high-rise buildings. That is exactly what is expected of them and they have our full support. We have said that it is for the local authorities to make their own decisions on sprinklers, based on expert advice. If they decide to proceed, they will get the financial flexibility to support them. If other issues are getting in the way of doing that job, we will be happy to look at them. A number of local authorities have approached us, and we are working with them all and will help them all in every way.
Theresa Villiers (Chipping Barnet) (Con)
The fact that a number of high-rise office blocks in Barnet are being converted to residential use under permitted development rights, without the need for planning permission, leads some to fear that design standards will be compromised because of the absence of a planning process. Will the Government take action to ensure that fire safety standards are not compromised in these kinds of conversions?
Sajid Javid
I can assure my right hon. Friend that even when building work is carried out under permitted development rights, it still needs to be subject to building regulations, including all those around safety. There is no way that any builder can avoid that. I hope that that gives some reassurance to her residents. The building regulations are still very much in place, even when work is done under permitted development rights.
Helen Hayes (Dulwich and West Norwood) (Lab)
The Grenfell Tower fire laid bare profound injustices at the heart of the UK housing system, and every revelation from the investigation makes that picture starker and clearer. So far, the Government have not made available a single penny of new Government money for essential works to respond to and mitigate the risks revealed as a consequence of Grenfell. Unless the Government do so, they are simply meting out further injustice to leaseholders, who will face very large bills, and tenants, who will see much-needed major works pushed back. Will the Secretary of State take the opportunity of this latest revelation to commit new Government resources to address the impact of Grenfell Tower on fire safety across the country, and to right the wrongs at the heart of the UK housing system?
Sajid Javid
I would say two things. With regard to local authorities, we have made it very clear that we will provide them with the financial flexibility, if they need it, to do any necessary fire safety work. That has been clear from the start. On wider issues of social housing and some of the wider lessons to learn from this terrible tragedy, that is exactly why we will have a Green Paper. We are going through the process that has been put in place, and we will publish the Green Paper in due course after proper consultation.
Bob Blackman (Harrow East) (Con)
I commend my right hon. Friend not only for today’s statement, but for keeping the House updated on progress following this terrible tragedy.
Dame Judith Hackitt is looking at the review of building regulations. We, as the Housing, Communities and Local Government Committee, have asked that she looks particularly at part P of those regulations in detail, because at the moment there seems to be a lack of clarity about the use of combustible materials within high-rise buildings. Will my right hon. Friend commit to thoroughly reviewing building regulations, particularly taking into account the evidence that has emerged today? The reality is that while fires may normally be retained within a room, these were not normal circumstances, because there was an explosion caused by an electrical fire, and that could be replicated once again.
Sajid Javid
My hon. Friend is absolutely right to raise this. As he will know, Dame Judith Hackitt’s work is independent, but she takes this issue very seriously. He may know that in her interim report she recommended, as one of the immediate measures, a review of Approved Document B and work to clarify it. That work has already started within my Department and we hope to consult on this in the summer.
Jim Fitzpatrick (Poplar and Limehouse) (Lab)
This is obviously another worrying development that reinforces Dame Judith Hackitt’s interim findings of the cultural change needed across the board, which the Secretary of State referred to. We look forward to her conclusions, including, I hope, on the updating of fire guidance in Approved Document B.
What assistance can the Secretary of State offer to leaseholders who face bills of thousands of pounds for fire marshals and replacement cladding, and now perhaps for new fire doors, given that they have no responsibility for the predicament in which they find themselves? I draw attention to the question asked by the hon. Member for Worthing West (Sir Peter Bottomley). The Secretary of State’s exhortations to property management companies and freeholders are falling on deaf ears, and leaseholders are having to pick up the tab.
Sajid Javid
I thank the hon. Gentleman for welcoming Dame Judith Hackitt’s work.
I and the Government very much understand the situation that leaseholders are in. It is obviously a very difficult and distressing situation for many people—we understand that. I do not accept that what I and others have said about owners’ moral duty is falling on deaf ears. There have actually been a number of instances in which we have got involved and some of the private owners have listened. They do not wish to be public about that—that is their choice—but at least they have listened and helped the leaseholders. I want more to do the same. I am keeping the issue under review and looking to see what more we can do.
Julian Knight (Solihull) (Con)
We all in the House have been deeply moved by the dignity of the survivors of the Grenfell Tower disaster, the bereaved and the volunteers. Many of us have also had casework and individuals come to us with concerns about where they live. Will my right hon. Friend commit to continuing to do absolutely everything in his power to ensure they get the help, support and justice they deserve?
Sajid Javid
I am very happy, once again, to make that commitment. The work continues each day in my Department and across Government through the ministerial group set up to help the survivors of the Grenfell disaster. I am very happy to re-emphasise that commitment to my hon. Friend.
Mr Barry Sheerman (Huddersfield) (Lab/Co-op)
I have found the Secretary of State to be a very good communicator and very good at keeping the House informed, so any criticisms I now make should be heard with that in mind. I just do not understand the guidance he has given in response to a couple of questions I have asked. The fact is that many thousands of people in our country have a black cloud hanging over them. Be they leaseholders or freeholders, they cannot get it out of their minds, because they do not know how much they will be responsible for. I have begged him to get everyone together—the Government should put something in, too, because they changed the standard. Please can we get this sorted?
Sajid Javid
With respect to the hon. Gentleman, the issue of leaseholders and what can and cannot be done is fast changing. As he may know, a legal case was waiting to be heard and was only concluded a couple of days ago, and as I said earlier, we are studying the outcome. On his point about getting people together, we are in the process of setting up a roundtable with several interested parties, including representatives of leaseholders, which I think will help.
Jeremy Quin (Horsham) (Con)
I commend my right hon. Friend for swiftly updating the House. Many of our citizens are deeply concerned about fire risk and—I am afraid—sceptical of statements made by Governments of any colour. Will he remind the House of the quality and strength of the panel advising him on these important issues?
Sajid Javid
Yes, I am very happy to do that. The expert panel is chaired by Sir Ken Knight, the former London fire commissioner and the Government’s former chief fire and rescue adviser. Also on the panel are Dr Peter Bonfield, chief executive of the Building Research Establishment, Mr Roy Wilsher, chair of the National Fire Chiefs Council, and Miss Ann Bentley, global director of a leading construction company and a member of the Construction Leadership Council.
Christine Jardine (Edinburgh West) (LD)
The expert panel’s recommendation that no change in safety advice is necessary will come as a surprise to many people. Will the Government insist that Dame Judith Hackitt’s review of fire regulation assessments makes sure that every high-rise building assessment is published and made available in an accessible form to the public so that they can get the reassurance that I fear they will not have got from this report?
Sajid Javid
I hope that the public will be very reassured by the advice of the expert panel, not just because of the years of expertise represented on it, but—it is worth emphasising this—because it is working closely and consulting with the National Fire Chiefs Council, the Metropolitan police and the Government’s chief scientific officers. I hope that that gives more confidence to the public and the hon. Lady.
Chris Davies (Brecon and Radnorshire) (Con)
I thank the Secretary of State for his statement. I am sure the whole House will agree that it is vital that the victims of the Grenfell tragedy get justice. Does he agree that the only way to do this is to let the police investigation and the independent inquiry get on with their jobs?
Sajid Javid
We all in the House want to see justice for the victims of the Grenfell tragedy, which is why the live police investigation to which I referred earlier as well as the work of the public inquiry are so important. Both pieces of work have the Government’s full support.
Clive Efford (Eltham) (Lab)
I do not find the Secretary of State’s statement at all reassuring. Nine months on, he has come to the House to say that we have just discovered that the fire doors were defective and only lasted 15 minutes in the case of a fire, not 30 minutes. My constituents are told to stay put on the basis that those doors give the fire service time to come and rescue people in tower blocks. He says that this is not a systemic problem, but just what does that mean? Were these defective doors fitted in the knowledge that they only lasted 15 minutes? Is the manufacturer to blame? How widespread is this? Are the doors in the blocks in my constituency defective? I really find this statement defective. Can we have another statement from the Secretary of State to update us with the real facts of the situation?
Sajid Javid
There is a live police investigation going on. The hon. Gentleman should appreciate that it is an independent criminal investigation by the police, and it would not be appropriate for me to talk about certain things publicly, unless he is suggesting that we should jeopardise a live police investigation.
The hon. Gentleman rightly asks about the investigation —not the police investigation, but the work being led by the expert panel—and I am happy to give him more information. There is a documentary investigation into the fire doors, led by the police, to see whether it is a whole set of fire doors or a certain batch and where they might be in the country. There is a fire testing investigation taking place, led by my Department, to test a whole number of other doors to see how widespread this problem may be. There is also a visual inspection and declassification investigation going on into the materials. I hope the hon. Gentleman will appreciate that there is a lot of work to do, and it is right that we do this thoroughly and take the time to get it right.
Rachel Maclean (Redditch) (Con)
I thank the Secretary of State for providing the assurances that he has, which will be gratefully received by my constituents. He will know, as my neighbouring MP in Bromsgrove, that the people of Worcestershire have been deeply touched by this tragedy. It has affected people up and down the country. Can he give assurance to Redditch Borough Council by telling it whether there are any actions it needs to take immediately, in the light of these latest findings?
Sajid Javid
Soon after this terrible tragedy, my Department got in touch with every council in the country, including Redditch Borough Council, to inform them of what we knew at the time and any immediate measures that they must take. Since then, councils have been kept updated as we learn more information, including the information that we have talked about today.
Mrs Louise Ellman (Liverpool, Riverside) (Lab/Co-op)
Leaseholders at Heysmoor Heights in Liverpool are already facing bills of £18,000 each for the replacement of cladding. Who knows what this new announcement might mean for them and other people around the country? The original development company was dissolved four years ago, and the current owner is Guernsey-based Abacus Land 4 Ltd. It is still not known whether an insurance policy apparently taken out by the original developers will raise any funds at all to meet those costs. Leaseholders keep being told that they will be given an answer, but they have not had one yet. The Secretary of State keeps expressing some kind of sympathy for leaseholders caught in this situation, but what else can he do to help leaseholders in general and my constituents at Heysmoor Heights in Liverpool?
Sajid Javid
What the hon. Lady highlights is the complexity of some of these situations, which I am sure she appreciates. Despite that, we must, as she suggests, do whatever we can to help the individuals in these very difficult circumstances. That is why we are looking closely at the recent legal judgment; I believe it is the first time that a tribunal has looked at that kind of case. That is why we have provided more funding for the Leasehold Advisory Service, so that leaseholders can get more instant support. We are looking at what more can be done and are keeping the situation under review.
Mr Philip Hollobone (Kettering) (Con)
I have had the privilege of completing the two-year fire service parliamentary scheme, which Sir Ken Knight helped to set up. Being placed in a live carbonaceous fire with breathing apparatus, I had a small introduction to the horrors of fire and the bravery displayed by our firefighters every day of the week. Fire doors are absolutely crucial. What puzzles me about this inquiry and the statement is: who certifies that these doors are meant to last 30 minutes, if it has been demonstrated that they last half that time? Fifteen minutes may not seem very long to us in this Chamber, but for the people who are trapped behind the doors and can see fire through the glass, it is crucial. Who certifies the 30 minutes?
Sajid Javid
My hon. Friend speaks with experience and is absolutely right to ask that question. The door in question should have had resistance for 30 minutes. It must be tested against and meet the British standard, BS 476-22. There is a testing centre for such products, and testing centres must be accredited by the United Kingdom Accreditation Service. I do not want to make any judgments on what happened in this case, because it is subject to a live police investigation. The police have said that they are getting full co-operation from the manufacturer. It would be wrong of me to get into that, but I reassure my hon. Friend that the police are doing their work with that particular door and doors of that type, and we are doing the much wider necessary testing.
Karen Lee (Lincoln) (Lab)
Last night one of my parliamentary staff went on the Grenfell march, and afterwards he talked to somebody who has been living in a hotel room for the past nine months. Despite the Government’s promise to rehouse these people, the figures show that, nine months after the fire, only 60 of 208 households have permanent homes. I have heard the word “urgency” being used a lot this morning. When will the Government properly rehouse these people? Will the Secretary of State give a timescale? We hear reassuring noises, but these people are telling us that they are not seeing action on the ground. Will they be rehoused for the summer, for autumn or for Christmas?
Sajid Javid
I am very happy to update the hon. Lady. There were 151 homes lost to the fire, but new homes had to be found for 209 households. I think she knows why that number is higher. So far, 184 have moved out of emergency accommodation into either temporary or permanent accommodation. That leaves 25 households who have still not accepted temporary or permanent accommodation. I hope she will appreciate that, while it is absolutely right that we work at pace and help those families to move as quickly as possible into permanent or temporary accommodation, as they choose—by the way, more than 300 homes are now available on the letting system, which is more than enough—no family can be pushed or told that they must make a decision and that they have no choice. It must be done at their pace. I cannot go into the details, but there are complicating factors with a number of the 25 households who are yet to accept temporary accommodation. There are a number of issues and it would be inappropriate, from what I know, to force those families to make a decision if they are not ready.
Vicky Foxcroft (Lewisham, Deptford) (Lab)
I continue to deal with concerns regarding the construction of a tower block in my constituency. The concern is that, although the cladding meets the building regulations, it is not fire safe—in other words, when it has been tested, it has been deemed not to be fire safe. When are we going to get around to sorting out the building regulations to ensure that all of our tower blocks are safe and that everybody can feel safe in their homes?
Sajid Javid
I am not aware of the particular tower block mentioned by the hon. Lady, but if she wants to give me more information, I will happily take a closer look. If I understood her correctly, she said that the cladding has passed building regulation tests but the tower block is not deemed safe, but I am not aware of such a case. In every case to which I have referred, it is our view that none of the cladding on a number of buildings meets building regulations, which is exactly why it needs to be removed.
Matthew Pennycook (Greenwich and Woolwich) (Lab)
The Secretary of State is well aware of the messy and as yet unresolved situation of New Capital Quay in Greenwich and the plight of leaseholders. Last week the community found out about another development in Greenwich with dangerous cladding on some of the towers. I will not go into the details, but how on earth, nine months on, are we still finding out about additional private freehold developments with lethal material around some of their blocks?
Sajid Javid
Last August I wrote to every single local authority, asking them to carry out the work of finding all the private sector buildings in their area, and providing support for them. In fact, we have just given additional funding to help with that. All of them have acted with urgency and are working at pace. Some are still discovering buildings, because the work partly requires the co-operation of the private sector. We have spoken to many private sector institutions. It would be wrong to blame the local authorities; it is right that we work with them and give them all the support necessary to find these buildings.
Neil Coyle (Bermondsey and Old Southwark) (Lab)
Immediately after Grenfell, Southwark Council’s leader, chief exec and the three borough MPs wrote to the Secretary of State asking for help to retrofit sprinklers in more than 170 tower blocks in the borough. That was a clear request for financial support. It is simply disingenuous to claim that no request has been turned down. The Department dismissively said that it would assess the council’s means to do the work itself. Nine months on, how is that assessment coming along? Has it been designed, will it be published, and when will Southwark Council be given the resources to complete the works?
Sajid Javid
We have made it very clear that all local authorities, including Southwark Council, should determine for themselves the essential work required for fire safety—public safety is the No. 1 issue—and if they need financial flexibility to help them pay for it, that will not be turned down. We are in discussions with more than 40 local authorities, many in detail. We are working with them and I am not aware of us having turned down any discussions with a single local authority. We are happy to work with them all and make sure that they get the financial flexibility they need.
Dr Rupa Huq (Ealing Central and Acton) (Lab)
As west London near neighbours, residents in the London borough of Ealing can see Grenfell—the charred coffin in the sky—from bits of my constituency. I passed by it yesterday. My constituent John Metcalfe attended the silent march last night and says that there were massive numbers and the sense of injustice was overwhelming. The Minister has repeatedly said that public safety is paramount. What is he doing to instil public confidence—I will not say “regain”, because I do not think it was ever there—in the inquiry and the aftermath?
Sajid Javid
The hon. Lady is right to raise the issue of building more public confidence in the local community—not just the former residents of Grenfell Tower, but the immediate community. Much work has been done by the council, as well as by residents themselves, with Government support. For example, we have worked with and given support to Grenfell United, the group set up by victims of the tragedy. We will continue to do that, but I hope the hon. Lady will appreciate that it will take a long time—perhaps years—to build the right level of confidence. Part of that process is making sure that the community is listened to every step of the way and that it is treated respectfully. For example, I determined that it was very important that the bereaved were told last night the news that I have shared with the House today, so that they heard it in advance and did not hear about it first in Parliament. That is the way in which we continue to work with the community and help in every way we can.
Emma Dent Coad (Kensington) (Lab)
The Secretary of State’s comments on rehousing survivors do not equate with my experience: a great deal more than 25 households are still waiting for any kind of suitable offer. On the fire doors, I received a message just this morning from an elderly architect friend who worked as part of the team on the Grenfell Tower and estate. In his experience, the architects at the time specified fire doors that lasted one hour. Architects knew what they were doing in those days and they signed it off at the end. They were responsible from beginning to end. In those days, in the 1970s, fire doors were supposed to last for one hour. They are now down to 30 minutes. Can we please reconsider whether half an hour is enough in buildings of that size?
Sajid Javid
First, let me reiterate the latest figures I have. Of the 209 households originally from Grenfell Tower that need to be rehoused, 184 have accepted offers of temporary or permanent accommodation, which leaves 25 that have not accepted offers of either. There are now over 300 units available of different sizes and types, and in different locations, and family liaison officers and key workers are working with each family. As I said earlier, we will not rush this: it will be done at the pace that the survivors want. That is the correct process.
The hon. Lady asked me about the fire doors and whether one hour, versus half an hour, is correct. This is exactly one of the reasons why I have set up the independent building regulations and fire safety inquiry—the work being done by Dame Judith Hackitt—and I know that she will be looking at this issue.
Burma
(6 years, 9 months ago)
Commons ChamberRead Full debate Read Hansard Text Read Debate Ministerial Extracts
The Minister for Asia and the Pacific (Mark Field)
Thank you, Mr Deputy Speaker, for the opportunity to update the House on the desperate plight of Burma’s Rohingya in the week that the UN fact-finding mission on Burma has reported to the Human Rights Council with its interim findings.
The international community has repeatedly called on the Burmese authorities to allow the fact-finding mission to enter Burma. Regrettably, Burma continues to refuse access. Despite this, through interviewing Rohingya refugees in both Bangladesh and Malaysia, the interim report has revealed credible evidence of the widespread and systematic abuse, rape and murder of Rohingya people, and the destruction of their homes and villages, primarily by the Burmese military. This is not only a human tragedy; it is a humanitarian catastrophe. Since August 2017, nearly 680,000 Rohingya refugees have sought shelter in Bangladesh.
There have been some suggestions, including by the Foreign Affairs Committee, that the UK failed to see this crisis coming. With respect, I disagree with such a conclusion. Let us be clear about what has led to this current situation. The Rohingya have suffered persecution in Rakhine for decades. Such rights as they had have been progressively diminished under successive military Governments. They have been victims of systematic violence before, most recently in 2012 and in late 2016. On these more recent occasions, the Rohingya fled their homes—some to internally displaced person camps elsewhere in Rakhine, and some to other nations over land or sea. The outbreak of vicious hostility during the past six months is therefore only the latest episode in a long-lasting cycle of violence. We have been urging the Burmese civilian Government to take action to stop the situation deteriorating since they came to power two years ago. What was unprecedented and unforeseen about this most recent violence was its scale and intensity.
A recent report by the International Crisis Group has rightly noted that there is and can be no military solution alone to this crisis. The 25 August attack by Arakan Rohingya Salvation army militants on Burmese security forces, which triggered the latest phase, was clearly an unacceptable and deliberate provocation, but the Burmese military’s relentless response since then has been utterly appalling and entirely inexcusable. Its operations only last week on Burma’s border with Bangladesh were supposedly directed against another wave of ARSA militants. Whether or not that explanation is to be believed, the actual impact of the Burmese military’s actions was to terrorise thousands of Rohingya living in the area and to encourage ever more civilians to cross over into Bangladesh.
I once again commend the generosity of the Government and people of Bangladesh for opening their doors to these desperate refugees. The UK remains one of the largest bilateral aid donors to the crisis. We have committed some £59 million in the past six months to help ensure the refugees’ immediate wellbeing. This includes £5 million of matched funding for the very generous public donations by British citizens to the Disasters Emergency Committee appeal.
My right hon. Friend the International Development Secretary visited Bangladesh last November and announced the latest UK package of support, including for survivors of sexual and other violence. We anticipate that the multi-agency plan for the next phase of humanitarian support, from March to the end of the year, will be published imminently. As the International Development Secretary confirmed during her Bangladesh visit, the UK is and will remain committed to the Rohingya now and, I suspect, for many years to come. At the end of last year, the UK Government deployed British doctors, nurses and firefighters from our emergency medical teams to Bangladesh to tackle an outbreak of deadly diphtheria in the refugee camps.
In northern Rakhine—within Burma’s borders—where humanitarian access remains severely restricted, the UK is providing £2 million of support via the World Food Programme and a further £1 million via the Red Cross, one of the few international organisations that has access to that part of Burma. We stand ready to do more as soon as we are permitted full access.
We continue to work tirelessly in co-operation with international partners to find a solution to this crisis, focusing international attention and pressure on the Burmese authorities and security forces. Since the final week of August, the UK has repeatedly raised the crisis as an issue for debate at the UN Security Council, most recently on 13 February. The existence of the UN fact-finding mission is in no small part due to British diplomacy, and I have engaged and will continue to engage with its members.
In November, the UK was instrumental in securing the first UN Security Council presidential statement on Burma for a decade, which delivered a very clear message that the Burmese authorities should protect all civilians within Burma, create the conditions for refugees to return and allow full humanitarian access in Rakhine state. Late last month, I was privileged to attend the EU Foreign Affairs Council in Brussels, where a programme of sanctions against senior Burmese military figures was outlined. I am glad to say that this was approved unanimously, and we hope to bring this work to the attention of the UN Security Council soon.
I know that many hon. Members remain very deeply committed to helping to resolve the appalling situation faced by the Rohingya community, and I welcome that continued engagement. I visited both countries in September, and I returned to Burma in November. During those visits, I met displaced Rohingya, but also Hindu and Buddhist communities in Rakhine, and heard harrowing accounts of human rights violations and abuses. It was clear that the communities remain very deeply divided, and there is still a palpable sense of mutual fear and mistrust. At that time, I met State Counsellor Aung San Suu Kyi, the Minster for Defence and the deputy Foreign Minister to reiterate the urgent need to take action to end the violence and allow a path for the safe return of the refugees.
During his visit to Burma last month, my right hon. Friend the Foreign Secretary, in a meeting with Aung San Suu Kyi, pressed for the necessary steps to be taken to create the conditions conducive for the return of the refugees. He flew over Rakhine, and saw for himself the scale of the destruction—the ongoing destruction—of land and property there. He also visited Bangladesh, where he met Prime Minister Sheikh Hasina and Foreign Minister Ali, and visited the camps in Cox’s Bazar, where he heard distressing accounts from survivors, as well as their heartfelt hopes for a better future and their desire to return safely to Burma. Our visits have reinforced our determination to help resolve this appalling crisis.
I recognise that the House remains deeply committed to ensuring that the human rights of refugees, but particularly of the Rohingya, are protected, and we welcome the House’s resolution to that effect as recently as 24 January. Let me outline, if I may, some of the next steps. We believe that there are four immediate priorities. First, we must continue to address the humanitarian needs, especially the needs of victims of sexual violence, in both northern Rakhine and in Bangladesh. This includes assisting, as a matter of urgency, the humanitarian agencies working in the vicinity of Cox’s Bazar to help prepare for the approaching monsoon and cyclone season, which commences in a matter of weeks. We shall continue to work with international humanitarian agencies delivering aid in Rakhine state, and to support Bangladesh in its efforts to help those fleeing the violence.
Secondly, we must continue the patient work towards achieving a safe, voluntary and dignified return of refugees. We shall press for the United Nations High Commissioner for Refugees to oversee this process and ensure full verification of any returns on both sides of the border. As the globally mandated body, we believe the UNHCR remains the best equipped and most credible agency to oversee this very difficult process.
Thirdly, we must continue international progress towards bringing to justice the perpetrators of human rights violations, including sexual violence, in Rakhine. The international community has agreed to make the case to the Burmese authorities for a credible, transparent and independent inquiry. In my view, united international pressure will be essential in achieving that aim.
The UN fact-finding mission is a first and important step in what is likely to be a long road ahead. It produced its interim report on Monday, reflecting the violent, military-led, abhorrent actions against the Rohingya and other communities in Burma. We shall continue to support the mission’s important work, including urging Burma to allow it unrestricted access. We will also continue to provide support to build the capacity of the National Human Rights Commission of Bangladesh to investigate properly and document sexual violence among Rohingya refugees.
As Canada’s special envoy to Burma, Bob Rae—I saw him at the Foreign Office only a few weeks ago—said,
“those responsible for breaches of international law and crimes against humanity must be brought to justice”.
In my view, that applies to all involved: state and non-state actors, senior military personnel, and all individuals in authority. Yanghee Lee, the UN Special Rapporteur on human rights in Burma, recently stated that the conflict had the “hallmarks of genocide”.
I must tell the House, however, that the only path to prosecution for genocide or crimes against humanity is via the International Criminal Court. It is a legal process. Burma is not a party to the Rome statute, and must therefore either refer itself to the Court, or be referred by the UN Security Council. I fear that neither eventuality is likely in the short term, but that should not stop us supporting those who continue to collate and collect evidence for use in any future prosecution.
Finally, to achieve a long-term resolution to the crisis in Burma, even in these desperate circumstances, the UK should play a leading role in trying to support a democratic transition and the promotion of freedom, tolerance and diversity. To do that, we will continue to engage, and support attempts peacefully to resolve many of Burma’s internal conflicts, and to bring all parts of state apparatus under democratic, civilian control. We stand ready to lead the international community in ensuring the implementation of Kofi Annan’s report from the Advisory Commission on Rakhine State. That crucial programme is designed to deliver development for the benefit of all the people of Rakhine state, including the Rohingya, and address the underlying causes of the current crisis. Above all, that includes reviewing the punitive 1982 citizenship law, and making progress on ensuring citizenship for the Rohingya, who are otherwise regarded by many as stateless. We must give them confidence that they have a future as fully-fledged citizens of Burma.
The situation in Burma serves as the clearest possible example of why our Government will continue to uphold their commitments to early warning and preventing the risk of atrocity crimes, in the context of broader conflict-prevention and peacebuilding work. It is vital that lessons from this human tragedy are used to prevent similar situations from developing in the future. I stand ready to work with Members from across the House, and with NGOs that have a real passion in this area, on getting a framework in place for the future.
The UK Government intend to remain in the vanguard of international action and to support a full range of humanitarian, political and diplomatic efforts to help resolve this appalling situation. We shall continue to press Burma to facilitate the safe, voluntary and dignified return of the Rohingya Muslims under UNHCR oversight, and also to address, properly and fully, the underlying causes of the violence. We shall not and must not lose sight of the fact that the Rohingya community have suffered for generations and will need our continued support to live the lives they choose. Neither will we fail to take account of the wider picture in Burma and the potential that sustained movement towards an open, democratic society offers to all its people. We shall push forward with persistence, focus and energy—it is our international and moral duty to do so. I commend the statement to the House.
Helen Goodman (Bishop Auckland) (Lab)
I thank the Minister for that clear and comprehensive update on the situation of the Rohingya, and for giving me advance sight of his statement. No one can doubt the effort and commitment that he and his officials in the Foreign Office and on the ground are putting into resolving this issue.
I also welcome several specific aspects of the Minister’s update. First, the interim report of the UN fact-finding mission—both in its level of detail about the atrocities suffered by the Rohingya and in the unflinching language it uses to describe those genocidal acts—is a vital first step in building a case against the individuals responsible. Secondly, I welcome the public’s generosity, and the Government’s continued commitment to providing humanitarian relief to the Rohingya refugees trapped in Cox’s Bazar and elsewhere. I applaud the tireless work of British medical professionals seeking to stop the spread of disease in the camps.
Thirdly, I welcome the Minister’s words on the role of UNHCR in ensuring a safe, dignified and voluntary return, and a sustainable future for those refugees. The international community must continue to put pressure on the Government in Myanmar to allow UNHCR to dictate when and how it will be appropriate to begin that repatriation process. Fourthly, I welcome the Minister’s continued support for the Kofi Annan report, and the vital long-term reforms it sets out to give full rights and lasting protection to the Rohingya community in Myanmar. Democratic and civil society development did not improve as we hoped two years ago, and only this week I heard also about 100,000 displaced people in Kachin state.
I welcome the progress that the Minister mentioned on agreeing EU-wide sanctions against leading Myanmar generals. Only two weeks ago, Foreign Office Ministers were avoiding a debate and voting down Labour’s Magnitsky amendments. I was therefore pleased that the Prime Minister expressed a change of heart yesterday, not least because we noticed that the United States used Magnitsky provisions to sanction one of the generals, Maung Maung Soe.
The Minister spoke about the importance of providing support for the victims of sexual violence, and documenting the abuses that they have suffered, with a view to bringing prosecutions against those responsible at some future date. He will know the concern across the House that when we last received an update on Myanmar, it was confirmed that only two of the 70 sexual violence experts employed as part of the Government’s preventing sexual violence initiative in 2012 had been deployed to work on those cases. Have more of those staff now been deployed in the refugee camps? Are those two experts still there? How many people are now working to support victims and document their evidence? What percentage of the victims of sexual violence does he estimate have now received support and had their cases documented, whether by UK experts or other agencies working on this issue?
The Minister noted the impending monsoon season, and we are all aware of the risk that those heavy rains could turn the existing humanitarian crisis in the refugee camps into something even more catastrophic, including through the spread of waterborne disease. What assessment have the Minister’s officials, and their counterparts in the United Nations, made of the current shortfall in humanitarian funding to support the refugees, and of the expected shortfall if the monsoon season makes the crisis worse? If those numbers are as high as many of us fear, what emergency action will the Government take with our international partners to try to plug those gaps?
Finally, we must return to how we can best ensure the safe, voluntary and dignified repatriation of and a sustainable future for the Rohingya refugees, and how we can ensure that those responsible for the atrocities against them are brought to justice. I appreciate what the Minister has said about the pressure the United Kingdom has exerted behind the scenes at the United Nations in terms of setting up the fact-finding mission and obtaining the Security Council presidential statement. However, he will understand the long-standing view on the Labour Benches that it is time to go further and be more public in using the UK’s formal role as penholder on Myanmar on the United Nations Security Council to table resolutions on these vital issues: first, to table a resolution setting out the terms under which the repatriation process should proceed, and the future rights and protections that must be accorded to the Rohingya refugees, obliging the Myanmar authorities to accede to those terms. Secondly, at the appropriate time, a resolution should be tabled referring Myanmar to the International Criminal Court, so that the generals, who this week scandalously dismissed the UN’s claims of ethnic cleansing and genocide by saying the Rohingya had burned down their own houses, can be brought to account.
The Minister spoke with candour on that second point, admitting that such a resolution would be difficult to get past the Security Council. I ask him to expand on that. What steps have the Government taken to engage with Myanmar’s near neighbour China and did the Prime Minister raise this issue with the Chinese on her recent trip?
Many of us fear that, if we do not act quickly to break the stalemate, especially with the monsoon season coming, we will have these types of updates for too many months to come, and the humanitarian crisis the Minister described will only get worse.
Mr Deputy Speaker (Sir Lindsay Hoyle)
May I just give a little bit of advice to both Front Benchers? The speeches are meant to be 10 and five minutes. I think one was nearly 16 and the other was seven. I did not want to stop them, because this is a very important subject, but I would like us to keep to that in future.
Mark Field
Thank you, Mr Deputy Speaker. I think that the Speaker’s Office was made aware that we wanted to have a slightly longer statement.
I appreciate the hon. Lady’s kind words, which were broadly supportive of what we are trying to do. I am very keen, as far as we can, to work together on this issue. I appreciate that, inevitably, these issues can be partisan, but I think there is a way in which this House can express its strong views, not least given our penholder status. Let me touch, if I may, on some of the broader issues she raised.
On sexual violence, I will come back to the hon. Lady with details of how many civilian experts we have on the ground, what their situation is and what work is being done. We are confident that significant progress has been made. As she will be aware, Rohingya women and children remain very vulnerable to gender-based violence and sexual exploitation. The Department for International Development is to a large extent leading the way in supporting and working very closely with a range of organisations, even if they are not necessarily from the UK, to provide specialist help for survivors of sexual violence. This help includes some 30 child friendly spaces to support children with protective services, psychological and physiological support, 25 women’s centres, which are offering safe space and support to the activities of women and girls, and case management for the 2,190 survivors of sexual and gender-based violence. Some 53,510 women are being provided with midwifery care and we are helping to fund the provision of medical services, counselling and psychological support. If the hon. Lady will forgive me, I will come back to her in writing with further details of the issues she raised on that point.
The impending cyclone and monsoon season is a matter of grave concern. Working with international partners, the UK has already done a huge amount with agencies to ensure that a quarter of a million people will continue to have access to safe drinking water throughout the rainy season. We have also supported cholera, measles and diphtheria vaccination campaigns. We are putting some pressure on the Bangladeshi authorities to try to ensure that a little more space is cleared for further camps, if existing camps become uninhabitable. I should perhaps also say that, along with my colleague in the House of Lords, Lord Ahmad, I hope to meet the Bangladeshi Foreign Secretary immediately after this statement. He is the most senior civil servant, as the hon. Lady will understand, with foreign affairs responsibilities. I have met him on a couple of occasions, both in Dhaka and here in London. I will be meeting him at the Foreign and Commonwealth Office, and I undertake to discuss these urgent concerns about cyclone-related issues.
On returns, let me first confirm that at a meeting in China in February the Prime Minister made it very clear in private session with her counterparts the concerns we feel about this issue and have tried to get through the UN process.[Official Report, 28 March 2018, Vol. 638, c. 3MC.] I am hopeful that we will be able to continue to put pressure on—unfortunately, the veto is an issue in relation to not just China but Russia—not least with the interim report being finalised as this sad situation remains high profile. I had hoped to come to the House on Monday immediately after the interim report, but with all the other business, this has been the first available opportunity to be able to speak to the House. One of the biggest fears I think all of us have had—certainly, it is a fear shared by the Bangladeshi authorities—is that the eyes of the world will move away from the Rohingya and on to other issues. I believe they will return if things go as dismally as we fear they might during the cyclone season. We will keep the pressure on. I do not rule out the idea that we will work towards preparing a UN Security Council resolution to call the Burmese authorities to account.
The hon. Lady mentions Magnitsky. She is absolutely right that that provides an opportunity. However, it is probably fair to say that, unlike many former Russian citizens who are in this country, many senior Burmese figures do not have huge financial interests in this country in assets, wanting to arrive here for a visa or having children in schools. I do not think that if the Magnitsky amendment is passed into law it will be a silver bullet. I do not think it will make a massive difference in terms of sanctions against senior Burmese figures, but we will continue to work on it.
Finally, on the returns process, which other Members may wish to raise, the hon. Lady will be aware that the Governments of Bangladesh and Burma signed a repatriation agreement as long ago as 23 November. To be absolutely honest, it is not just the UK that thinks that northern Rakhine is simply not safe for returns. I think everybody shares that assessment. I spoke at great length with Lord Darzi, who is on the advisory commission, at the Foreign Office last week. He had been on the ground and spoke to people there. It is clear that we are, I fear, a considerable way from there being any possibility of safe, voluntary or dignified returns to Rakhine state.
Sir Desmond Swayne (New Forest West) (Con)
The Tatmadaw has form and we should not forget the plight of the Christian community in northern Kachin, to whom we owe a particular debt of honour. They have been dispossessed by violence and prevented from returning by mining interests, and there being a sinister link between the two.
Mark Field
My right hon. Friend makes an entirely fair point, which was alluded to by the hon. Member for Bishop Auckland. He is right. The issues around minority communities are not restricted to the Rohingya. The Rohingya are the largest single community to be treated in an appalling way by the Burmese authorities, but there are other minorities, Christian and others, who are being persecuted. We will continue to keep the pressure on the Burmese authorities.
Chris Law (Dundee West) (SNP)
I thank the Minister for advance sight of the statement. It goes without saying in this House that this humanitarian tragedy has reached an unthinkable scale and the atrocities are almost unspeakable. As he knows, only last week, I visited the mega-camp in Bangladesh with the International Development Committee. The enormity of what we saw, with almost 1 million people in three or four square miles, was unbelievable. I am lost for words in trying to explain just how big this humanitarian emergency is. Five hundred people are still coming across the border every week from Burma to Bangladesh and their stories are the same—of atrocities, loss, murder, rape, and the rest, as we have been hearing in previous months.
Right now, we face an imminent challenge and we are running out of time, weeks away from a monsoon impending and a potential cyclone. I want to hear more from the Minister about what specifically is being done on that. Flooding and imminent landslides could both lead to further devastating loss of life. The reckoning is that more than 200,000 will be affected, and obviously, there could be subsequent waterborne diseases. The UK Government plan to work towards returning refugees to Burma. I know that needs to be slow and considered, but we in the Scottish National party are cautious and share the view of the UN and aid groups that this could thrust the refugees back into danger. Last week, we even heard from a Bangladeshi Minister that it is unsafe for the Rohingya to return.
We welcome the report by the UN fact-finding mission in Burma, which adds to the overwhelming evidence that what has taken place is a human rights violation of the most serious kind, likely amounting to crimes under international law. Earlier, we heard the UN special rapporteur state that the conflict had the “hallmarks of genocide”. As I speak today, my city of Dundee is considering the withdrawal of the freedom of the city that was given to Aung San Suu Kyi for human rights and democracy and for upholding international law. For my constituents, that is profoundly important.
The Minister said that he does not agree with the conclusion of the Foreign Affairs Committee inquiry that the UK failed to see this crisis coming. However, this conclusion is backed by overwhelming evidence. The unchecked hate speech, lack of Government control over security forces, the presence of non-state and pseudo-non-state armed groups, growing nationalist support of the military and increased incidents of identity-based attacks were all serious indicators of the escalating violence against the Rohingya. The UK does not currently integrate an index of risk factors for identity-based violence, even though that would help to predict incidents of violent extremism, mass atrocities and institutional violence. I urge that the work on this index starts immediately, and I urge the Minister to announce today that he will begin the work on it.
Finally, will the Minister set out today what lessons have been learned from these events regarding atrocity prevention? How will these lessons be applied in Burma and elsewhere in future?
Mark Field
I thank the Scottish National party spokesman for his kind words about the work we are trying to do together across Parliament. On cyclone preparedness, the UK is working with a number of partners in Bangladesh on strengthening infrastructure and ensuring that at-risk households are provided with shelter materials. Part and parcel of the process is trying to persuade the Bangladeshi authorities. I will do that in the meeting this afternoon and express the strength of feeling that we need to open up more space, so that the confinement that the refugees are under, which could be calamitous if a cyclone hits part of that area, is restricted as far as possible.
I did not want to be in any way critical of what the Foreign Affairs Committee concluded, not least with its Chairman, my hon. Friend the Member for Tonbridge and Malling (Tom Tugendhat), sitting on the Benches behind me. We have not been quiet about this issue in Burma and the fact that the Rohingya were continually going to be under pressure. We would contend that it is not the case that this notion came out of blue sky.
Being candid, I think everyone had a sense of wishful thinking. My right hon. Friend the Member for New Forest West (Sir Desmond Swayne), who spoke earlier, had a DFID role and was a Minister at one time—I am not in any way blaming him, but the whole international community was so hopeful that after decades of military rule in Burma, going back to 1962 and, arguably, to the creation of the state in 1947-48, we would suddenly have a big surge towards democracy. The constitution that we in the international community were all party to seeing set up, I am afraid, provided massive difficulties almost from day one, when Aung San Suu Kyi became State Councillor. The power that was still in the hands of the military meant that we overlooked, for example, the Rohingya’s rights. They were not included in the census and were not allowed to vote in the first elections. In many ways, we recognise with hindsight that that gave succour to the Burmese military in thinking that they could get away with what they have now got away with. There was a lot of wishful thinking. With the best motivation in the world, we wanted to see some progress. After decades of the darkness of being a military dictatorship—almost a closed state—we looked upon any advancement as something that we should grasp hold of. That is a lesson we shall learn for the future.
I want to work with many non-governmental organisations —Protection Approaches is a good example —to work towards having a set of policies with which we can look at conflict prevention for the future. However, many hundreds of lives have been blighted and tens of thousands of lives have been ended by this dreadful event, and we know that this is still an ongoing situation. The best legacy that we can give to the Rohingya is not just to get a better life for them and ensure that they have citizenship and a stake in longer-term Burmese society, but to ensure that the sacrifices and hardship that they have gone through can be used as an example to make sure that the rest of the world makes those changes. Ultimately, that is a partly academic, practical exercise, and we need to work within the international community to bring that to pass.
Mr Philip Hollobone (Kettering) (Con)
I visited the Kutupalong Rohingya refugee camp in October last year, and I believe that I am right in saying that it is one of the largest and most congested refugee camps in the whole world. It is equivalent to a city the size of Bristol, yet it has no hospital, inadequate schooling facilities and very few roads. It seems that the biggest risk to the Rohingya is an outbreak of disease in this massive refugee camp, and that the No. 1 humanitarian priority is that the camp is broken up, with extra space found, so that if the worst comes to the worst, an outbreak could be contained.
Mark Field
My hon. Friend speaks with great knowledge about this matter and I very much agree with him. Clearly the international community will have to work with the Bangladeshi Government on that issue, but we are focused on it. We have a good track record on disease prevention. We can be very proud of the work that we did to nip the diphtheria outbreak in the bud, but I am by no means complacent that similar diseases such as cholera, as well as diphtheria, will not be prominent in the months to come.
Stephen Twigg (Liverpool, West Derby) (Lab/Co-op)
I thank the Minister for his comprehensive statement and echo his words in describing this as a “humanitarian catastrophe”. I also reinforce what the hon. Member for Kettering (Mr Hollobone) said about the sheer scale of the camp—it is 10 times the size of the Zaatari refugee camp in Jordan and double the size of the city of Liverpool. I welcome the fact that the Minister is meeting the Bangladeshi Foreign Minister this afternoon, but we really need to say to Bangladesh at the most senior level that more needs to be done to prepare for the rainy season, cyclones and the monsoon. I urge our Prime Minister to ask the Bangladeshi Prime Minister, Sheikh Hasina, to take a personal lead, because otherwise that humanitarian catastrophe will be multiplied in the weeks and months ahead.
Mark Field
I thank the hon. Gentleman for his words; he is absolutely right. I know that the International Development Committee, which he chairs, has done tremendous work. I only wish that it had been able to go to the other side of the border— that would have been very instructive—but the work it has done in Bangladesh is of tremendous importance.
We are both aware that the heavy rains and cyclones could have a severe impact on the nearly 1 million Rohingya who are already in Cox’s Bazar, as well as the host communities, because it is important to factor in the communities living in that part of Bangladesh. It is to the great credit of those communities and the authorities in Bangladesh that, hitherto, there have not been tensions between the two, but we cannot take that for granted. We are already working in great earnest with the Government of Bangladesh and humanitarian partners to improve preparedness. I will ensure that the hon. Gentleman’s concerns are passed on not just when I speak to our counterparts, but in our dealings with the Bangladeshi high commissioner to this country. I hope that he will feel able to play as strong a role as possible in making his robust case.
Bob Blackman (Harrow East) (Con)
I commend my right hon. Friend for his statement and thank him for keeping the House updated on the plight of the Rohingya Muslims. He also spoke about the plight of other minorities—the Hindus and Buddhists—and my right hon. Friend the Member for New Forest West (Sir Desmond Swayne) mentioned the Christian community. Will the Minister say more about what will be done, by both the United Nations and the British Government, to protect those minorities, who currently do not seem to have any defenders at all?
Mark Field
I think it is unfair to suggest that they have no defenders, although I accept that, understandably and rightly, the focus has been on the Rohingya, who are a larger group that has been excluded from that society as being stateless. The Hindu, Buddhist and Christian groups that are being persecuted—the Buddhists within Rakhine, rather than in Burma as a whole—have at least some citizenship rights.
We will do our level best. I know that my hon. Friend is aware of our work in relation to freedom of religion and belief. We feel very strongly about that issue, and not just in the context of Burma. One of our slight concerns relates to the other things that are happening in that part of the world. We are seeing the deterioration of human rights in Sri Lanka, and even in Thailand. There is suddenly a sense of the Buddhist community being against the Muslim community permeating in areas beyond the Burmese borders. That, I think, could lead to a calamitous state of affairs.
Mr Alistair Carmichael (Orkney and Shetland) (LD)
As the Minister has reminded us, the UN special rapporteur on the situation of human rights in Myanmar has described the conflict as having “the hallmarks of genocide”. It is therefore imperative that everything is done to bring the various actors to justice at its conclusion. The Minister was right to mention the challenges that we face in seeking that end, but there is an immediate issue. The best and most compelling evidence that will inform any future prosecutions is to be found now. What are the Government doing to ensure that every piece of evidence for future use is sought and acquired?
Mark Field
The right hon. Gentleman can be assured that we are doing our level best to ensure that there is a full collation of all the evidence to which he refers. We must be patient and recognise that this is a painstaking process. I wish that we could move more quickly to meet concerns about the process of dealing with genocide or crimes against humanity, but we are collecting the evidence very patiently and painstakingly and, when the moment arises, we shall be able to return to that process.
Tom Tugendhat (Tonbridge and Malling) (Con)
Let me first apologise, particularly to my hon. Friend the Member for Kettering (Mr Hollobone), for the fact that the Foreign Affairs Committee will not be presenting its latest report to the House this week, because no time has been allotted for Backbench Business. Let me also declare an interest: my father is among those who are currently training Burmese lawyers, and is serving as one of the judges sent to Burma by Her Majesty’s Government.
What is the Minister doing to work with the Association of Southeast Asian Nations? His work so far has been exemplary, and, indeed, the co-operation of the hon. Member for Bishop Auckland (Helen Goodman) has been fantastic—this is a joint effort—but does he agree that ASEAN has a particular role to play, and that Britain’s role, alongside ASEAN’s, could be game-changing?
Mark Field
I agree that ASEAN’s role could be game-changing. My hon. Friend will appreciate that there is, rightly, an approach that ASEAN countries want to work together, but there are clearly tensions. Owing to the differences between the positions of, for example, Indonesia on the one hand, and Malaysia and Thailand on the other, it is more difficult for them to adopt an agreed single line on this matter. I raise that issue at every opportunity when I meet ASEAN figures, both here and internationally. I shall be working with Singapore, which is chairing ASEAN this year, and there will be a big meeting at the end of the year. That is some way away, but I think that this will be an increasingly important issue to raise. I hope that there will also be an opportunity for it to be raised prominently at the Commonwealth Heads of Government meeting, at which three ASEAN members—Singapore, Malaysia and Brunei—will be present.
Richard Burden (Birmingham, Northfield) (Lab)
May I emphasise the urgency of addressing at the highest level the imminent threat from the monsoon rains and the cyclone season? Anyone who has seen the camps in Cox’s Bazar, as the International Development Committee did last week, will know that the flimsy plastic and bamboo shacks that are built on loose earth on deforested land will be simply swept away, and thousands of people could die. When the Minister raises this issue with the Foreign Minister of Bangladesh, may I urge him to stress that it is not simply the intention of bringing more land into play that is important? What is most important is action to achieve that end—and action within days or weeks, not months.
Mark Field
The hon. Gentleman has seen what is happening with his own eyes, and he is absolutely right. This could be a calamitous situation. The deforestation makes much of the land unviable, other than on an emergency short-term basis. I will do as the hon. Gentleman requests.
Stephen Timms (East Ham) (Lab)
I echo the Minister’s tribute to the people and Government of Bangladesh for the generosity that has been shown to the Rohingya refugees. What realistic prospect does he see of any significant numbers of returns to Rakhine state in, say, the next 12 months? He was right to highlight the pernicious effects of the 1982 citizenship law. Does he see any realistic prospect of that being reformed, as he rightly proposed in his statement?
Mark Field
As the right hon. Gentleman knows, the wheels of diplomacy sometimes move slowly, but that is not to suggest that we will not be patient and work towards this. I believe that there need to be returns soon. There is, of course, a political imperative: an election is coming up in Bangladesh, and I think that that is one of the reasons why the Bangladeshi authorities will be keen to see some movement towards returns. The fundamental point, however, is that we cannot accept returns—the international community will not accept them—unless they are “safe, dignified and voluntary”.
I strongly believe that it will take time to work through the issue of citizenship. It has been a running sore since Burma was created, and certainly since the 1982 compact. However, the single most obvious and fundamental aspect of the Kofi Annan report is that unless we get the issue of citizenship right, we will not achieve the reform in Rakhine that is required. We will therefore work with all our international partners to try to ensure that genuine progress is made as quickly as possible.
Mr Jim Cunningham (Coventry South) (Lab)
I think that we all appreciate that the Minister is doing a difficult and frustrating job. Is he satisfied that the Bangladeshi Government have the resources to deal with the situation, or will the Rohingya people have to be moved to safer ground? Can he give us an assurance in that regard?
Mark Field
To be candid, I cannot give such an assurance, but, again, we will be making the case. I think that everyone is well aware of climatic conditions such as monsoons and cyclones. Some of those conditions are very severe while others are less so, but in any event we are heading into that season, and the issue is therefore at the forefront of the minds of all concerned.
Carol Monaghan (Glasgow North West) (SNP)
I thank the Minister both for his comprehensive statement and for the work that has already been done in Bangladesh. When I met representatives of World Vision this week, they told me that they were extremely concerned about the number of bodies that are buried in shallow graves throughout the camps. The monsoon rains are imminent, and waterborne diseases could be spread if the bodies are exposed. What work is being done in that specific regard, both with the Bangladeshi authorities and with local communities?
Mark Field
To be candid—again—I am not sure exactly what work is being done, but I am sure that World Vision is working with many other non-governmental organisations on the ground, and that those concerns will have been raised with the Bangladeshi authorities. If that turns out not to be the case, the hon. Lady will have been able to raise the matter on the Floor of the House, and I will ensure that it is raised at the highest level.
Tony Lloyd (Rochdale) (Lab)
I welcome the Minister’s statement. I especially commend his point that returns must be voluntary, but that, of course, means that they are very unlikely to happen. It is unrealistic to suggest that 700,000 traumatised people could be told, “Please go back to face the guns and the rapists that sent you away in the first place.”
There will be pressure—the Bangladeshi authorities, who I think have behaved admirably, will understandably want to see returns—but should it not be recognised that if there are to be returns, there must be security guarantees, and that those guarantees must be properly underwritten? They will not be for the short term; they will be for decades to come.
Mark Field
The hon. Gentleman is absolutely right: we would not seek for returns to be anything other than voluntary, so we must be patient.
It is also worth pointing out that the Foreign and Commonwealth Office has been engaged in a concerted effort of lobbying other nations. Certainly since the Foreign Secretary arrived back, this is an issue that we raise not just with ASEAN states, but with countries such as China, Japan, Australia and New Zealand, to make it clear that we need collectively to work—potentially as a matter of great urgency—both on the humanitarian side, which is where I think the urgency will be needed, and on the diplomatic side, where we will have to be in it for the long haul. That is not being pessimistic; I am hopeful. I want things to work and I would love to see solutions sooner rather than later, but the hon. Gentleman makes the valid point for the whole House that this issue will, I suspect, be high profile for many years to come before there are the voluntary returns that we all want.
Sandy Martin (Ipswich) (Lab)
I thank the Minister for his comprehensive statement. Some of my constituents in Ipswich have relatives who are resident in Bangladesh and are providing voluntary aid and support in the camps there. While working on the ground in the camps, they do not always see where the money is being spent. What communications can the Government make available to reassure people in this country that the British aid being given in the camps is used effectively so that they will have the reassurance they need to make further donations to help the Rohingya people?
Mark Field
I pay tribute to the hon. Gentleman’s constituents. The great majority of Bangladeshi Britons come from the north-east of the country in Sylhet, rather than the area around Cox’s Bazar, although some are from near there. Although £59 million is a large sum in the context of international contributions, it does not take us very far when we are dealing with 600,000, 700,000 or 800,000 Rohingya. The message I ask the hon. Gentleman to take back to his constituents is that we are doing our absolute level best. We are working hard on the ground, but the sheer scale of what is required might give rise to a sense of hopelessness, and I ask the hon. Gentleman to implore his constituents not to turn away from this very real humanitarian calamity.
Nic Dakin (Scunthorpe) (Lab)
Thank you, Mr Deputy Speaker.
This humanitarian disaster shocks us all, but none are more affected than the Bangladeshi diaspora, as my hon. Friend the Member for Ipswich (Sandy Martin) pointed out. I welcome the fact that the Minister will meet Bangladesh’s Foreign Secretary soon after this statement. As well as urging Bangladesh to organise and prepare as well as possible for the cyclone and monsoon season, will he offer whatever additional support the UK can give to help with those preparations not only in terms of assistance, but as part of our leadership role as UN penholder on this matter?
Mark Field
I know that you have been asking for brevity in my responses, Mr Deputy Speaker, and without in any way being disrespectful to the hon. Gentleman, I can give a brief response to his question: we are very happy to do that, and we will continue to do so. I very much hope that we can continue to make huge humanitarian contributions, which will require more money from both us and the international community in the months and years ahead.
European Affairs
(6 years, 9 months ago)
Commons ChamberRead Full debate Read Hansard Text Read Debate Ministerial Extracts
The Financial Secretary to the Treasury (Mel Stride)
I am delighted to open the second day of this very important debate. At the outset I want to set out the status of our negotiations and reiterate this Government’s vision for a future economic partnership with the EU. I will in particular focus on the important issue of financial services within any future trade agreement, and remind the House that we have been very clear that the decision to leave the EU does not mean some loveless divorce or division. There is indeed no need for this, given that the economies of the UK and the EU are inextricably connected, and given our long and shared history of common values and shared challenges, and I have no doubt that any future economic partnership must recognise and reflect these facts.
We stand at the threshold of a new beginning with our European partners, and a renewal of our commitment to ensure the continued prosperity and stability of both the UK and the EU. Before I turn to our future economic partnership with Europe, it is important to set out just how far we have come, and what awaits us as we progress our discussions.
The agreement in December was a significant step forward. The joint report issued by the UK and the EU set out progress on three areas: a fair deal on citizens’ rights that enables families who have built their lives together in the EU and the UK to stay together; a financial settlement that honours the commitments we undertook as members of the EU, as we said we would; and an agreement in relation to Northern Ireland. We are confident that this collaborative spirit, which led to the December agreement, will endure as we take our approach forward into the next phase, including at the European Council next week.
Mr Chris Leslie (Nottingham East) (Lab/Co-op)
On this concept of a collaborative, open spirit, trying to find solutions and securing frictionless trade, the Minister will have seen today’s Sky News report that the Government are insisting on non-disclosure agreements with a variety of industry groups, transport bodies, hauliers and others in trying to find their way through. Why are the Government insisting on gagging business organisations in that way?
Mel Stride
It is standard practice for the Government to use non-disclosure agreements, and delivering a seamless post-Brexit border is a top priority for us. Non-disclosure agreements with key delivery partners for the border are crucial to the open exchange of information and opinion on options and scenarios, and they ensure that all planning negotiations and decisions are based on what is achievable and most appropriate for the UK to ensure a safe and secure border.
In respect of our future trading relationship, draft EU negotiating guidelines have been circulated to the EU for comment, and we expect final guidelines to be formally adopted next week at the March European Council. We trust that these will provide the flexibility to allow the EU to think creatively about our future relationship, and, looking ahead, we are confident that we will conclude a deal on the entire withdrawal agreement by the European Council in October. This confidence is not just grounded in our mutual interest of striking a deal, but also because we enter these negotiations from a point of striking similarity: our rules, regulations, and commitment to free trade and high standards are the same. So, as we build this new relationship, we are doing so from a common starting point.
The next milestone in the negotiations will be an agreement of an implementation period. We saw the implementation period prioritised in the Chancellor’s Mansion House speech and the Prime Minister’s Florence speech, alongside a frictionless customs arrangement and a comprehensive agreement on trade in goods and services. The implementation period is the essential first step to ensure that we can all experience an orderly exit from the EU, plan accordingly, and enjoy certainty during the transition.
John Redwood (Wokingham) (Con)
How can we possibly agree an implementation period when at the moment we do not have anything to implement?
Mel Stride
While being ingenious in his use of language, my right hon. Friend will I am sure agree with me that the purpose of the implementation period is to make sure we have a period of certainty for business, so that when we end up with our final withdrawal agreement we only have one set of changes to make from where we are now to where we will be at that point. That is the purpose of the implementation period.
Anna Soubry (Broxtowe) (Con)
I do not want to alarm you, Mr Deputy Speaker, but I completely agree with my right hon. Friend the Member for Wokingham (John Redwood), which may be a first in this sort of debate—[Interruption.] He is in a state of high shock. In all seriousness, this is an implementation period—the clue is in the name—but many of us fear that by October we will have achieved nothing more than a woolly set of heads of agreement and that there will be little to implement. How does the Minister see things panning out in reality?
Mel Stride
Whether it is a transition period, an implementation period or whatever period one seeks to term it, the important thing is to understand what the period is about, and we have always been clear about that. It is a period in which we will remain closely involved—similar to how we are at the moment—so that when we move into the post-transition or implementation period we have undergone just one set of changes and that we have certainty in the interim for British businesses, which is exactly what they have been telling us they would like.
Mr Bernard Jenkin (Harwich and North Essex) (Con)
I repeat these words:
“I propose that we aim for a trade agreement covering all sectors and with zero tariffs on goods. Like other free trade agreements, it should address services.”
Those are the words used by President Tusk in introducing the guidelines, which seem to accept the principle that there should be a comprehensive free trade agreement between the United Kingdom and the EU.
Mel Stride
My hon. Friend makes an important point and, as I will say later in my speech, there is every reason to move towards a comprehensive free trade agreement covering not just goods, but services.
Vicky Ford (Chelmsford) (Con)
Given that nearly half of our trade is with the EU and that 40% of that trade is in services, does the Minister agree that the level of services coverage in, for example, CETA is not deep enough or broad enough to recognise adequately the mutual trade between the UK and the EU in services?
Mel Stride
My hon. Friend raises an important point. We will be seeking a unique deal for our country that recognises the prime importance of financial services both to our country and to the European Union and of the provision of competitive finance to the EU’s businesses and consumers. She mentioned CETA, and the relevant point there is that the negotiations, which were led by Michel Barnier, recognised the importance of attempting to include areas such as financial services, which is exactly what we will seek in the negotiations that will now follow.
We have the reassurance that the UK and the EU both issued a published text on the approach to the implementation period that reflects the significant common ground between us. The text would codify an implementation period that preserves the current status quo for business and consumers, is time-limited but also provides a sufficient window for the EU and UK to put new processes and systems in place, and ensures continuity in the application of international agreements. As a third country, the UK will have the ability to use the period to negotiate and sign new trade deals, while reflecting the fact that we cannot bring these agreements into legal effect until after the end of the period. We will also introduce a new registration scheme for EU citizens arriving post-Brexit but during the implementation period, when EU citizens should be able to continue to visit, live and work in the UK as they do now.
Peter Grant (Glenrothes) (SNP)
The Minister has referred to the potential opportunities to negotiate new trade deals after we leave the European Union, and one of his colleagues has been keen to big up the prospect of the riches to be had from that. Can the Minister name any country in the world that has indicated it would be more likely to give a beneficial trade deal to the United Kingdom on our own than it would be to negotiate a deal with the world’s biggest single internal market?
Mel Stride
What I can tell the hon. Gentleman is that a large number of trade missions have been led by the Department for International Trade and its Secretary of State. We have had extremely encouraging discussions with a large number of important potential future trading partners with whom we may be seeking free trade agreements. As I have said, we will be able to negotiate deals within the implementation period, although they will not come into effect until we are beyond that point.
Rachel Maclean (Redditch) (Con)
Is the Minister aware of the article on the front page of The Times today, which says that Brussels has now agreed that Britain can sign free trade deals without the approval of the European Union? Will he update the House on the status of the situation? What does it mean for our free trade policy?
Mel Stride
I believe that my hon. Friend is right. I certainly read that article this morning, and if what it says is the case, that would be good and sensible news, because it would be entirely logical that we should be in a position to go out and negotiate free trade agreements during any implementation period, although we respect the fact that the deals would not be switched on until we were beyond that point.
Jonathan Edwards (Carmarthen East and Dinefwr) (PC)
As a part of the customs union, we have trade deals with 50-odd countries across the world, and I understand that they are worth some £140-odd billion per annum in UK trade exports. Will the priority during the implementation period be to renegotiate and sign deals with all those countries with which we currently have a trade deal? We know that some of them want to renegotiate the terms and want greater access to UK markets as a result. How many of those deals are we going to be able to renegotiate and sign before we actually leave the European Union?
Mel Stride
I reassure the hon. Gentleman that it is an absolute priority for the Government to ensure the consistency and continuity of the existing arrangements as they pertain between the European Union and other countries. I see no reason why we should not benefit from those arrangements, just as those countries will indeed benefit from arrangements with us as we go forward.
We have proposed practical solutions to help deliver a smooth departure from the EU. One such solution is the introduction of a joint committee to resolve issues or disputes that may arise during the implementation period. That approach is a common feature of international trade agreements. The joint committee would, for example, allow the UK to raise concerns regarding new laws that might be harmful to our national interest. We will also continue to discuss our involvement in relevant bodies as a third country during the period to ensure that EU rules and regulations continue to operate coherently.
It is in the interests of both the UK and EU to agree the precise terms of the implementation period as quickly as possible. We are close to delivering that, and we expect it to be formalised at the European Council meeting next week. The implementation period is key to forging the best possible future relationship, giving businesses and Government the time and certainty to plan for Brexit, and preparing the UK for its status as an independent trading nation. It will be a bridge from where we are now to where we want to be in the future—on exit, on day one, and beyond.
Looking further forward, it is crucial that talks progress so that we can agree the terms of our future relationship with the EU. We are now moving at pace to set the parameters of an economic partnership. As a Treasury Minister, I am particularly focused on how our economies will interact and grow together. As the Prime Minister said in her speech on 2 March, the UK is seeking the broadest and deepest possible agreement that covers more sectors and co-operates more fully than any other free trade agreement. A key component of any future agreement should be the inclusion of services, particularly financial services.
Jonathan Edwards
The Minister is being extremely generous in taking interventions. Taking him back to the implementation period and the negotiation of trade deals, will the priority be renegotiating the trade deals that we already have with all these third countries via the customs union or negotiating new trade deals with countries such as the United States and China?
Mel Stride
The hon. Gentleman will understand that both are an extremely high priority. We will be pursuing both avenues vigorously.
As my right hon. Friend the Chancellor made clear in his Canary Wharf speech last week, financial services is a sector that calls for close cross-border collaboration. The Chancellor also reiterated that it is simply not credible to suggest that a future deal could not include financial services. It is in the interests of both parties to ensure that the EU can continue to access and enjoy the significant benefits afforded by our financial services hub, because it is a regionally and globally significant asset, serving our continent and beyond, and near-impossible to replicate.
The UK can claim excellence in many areas, but in trade in financial services we are truly the global leader. We manage €1.5 trillion of assets on behalf of EU clients, and 60% of all EU capital markets activity is conducted here in the United Kingdom. Around two thirds of debt and equity capital raised by EU corporates is facilitated by banks right here in the UK. The huge economies of scale have led to London’s dominant position in EU financial services. As the Chancellor made very clear last week, we should be under no illusions about the significant costs if this highly efficient shared market is fragmented—costs that will ultimately fall to consumers and companies right across Europe.
Robert Neill (Bromley and Chislehurst) (Con)
My right hon. Friend is making a very important point. As the Chancellor set out, those costs are many billions of pounds. One example is the proposed relocation of clearing houses, with an effective cost of some £25 billion a year. Does my right hon. Friend agree in addition that it is critical to have continuity for the legal instruments that underpin financial services, and that continuity of access for legal services must therefore be inextricably linked?
Mel Stride
My hon. Friend raises an important point about the significance of financial services, not just to us but to our European partners. On his specific point about regulatory continuity, we are considering the detail of that at the moment. We will certainly look at the prospect of returning to the matter on Report of the relevant Bill.
The UK stands ready to engage on a future trade agreement—one that includes financial services. Our overarching vision is for an economic partnership—including a future trade agreement—that delivers the maximum possible benefits for both our economies in all sectors, respects the integrity of each other’s institutions and seeks to strengthen, not weaken, the prosperity of Europe as a whole. Despite that, some still question the possibility of reaching such an agreement or insist that a trade deal cannot include financial services. The Chancellor addressed those sceptics in his speech last week, when he said that
“every trade deal the EU has ever done has been unique”.
The existing models do not represent the best way forward; nor do they provide a useful precedent to form the basis of any future agreement. Joining the EEA would not give the UK enough control, and a CETA-style deal would present too low a level of market access. The EU and the UK come to the negotiating table from the unique position of having the same rules and regulations on day one, not to mention our deeply interconnected economies. Unlike when other countries negotiate free trade agreements, this is not about aligning two totally different systems. Any new trading agreement should reflect the starting point of deep and historic convergence. We understand that, over time, there will be points of inevitable divergence, so we recognise that any future agreement should set out a clear approach to that aspect.
Our country seeks the deepest and broadest agreement possible—a bold economic partnership that is of greater scope and ambition than any comparable arrangement in history. The ambition of our vision reflects the scale of our mutual interest, our shared history and all that we can achieve together as good friends and trusted neighbours. Leaving the European Union represents an opportunity to chart a prosperous future. Along with my colleagues in Government, I have the greatest faith in our country and in our ability to work with others to achieve a deal that provides and endures for us all.
Paul Blomfield (Sheffield Central) (Lab)
As we mark the halfway point of this general debate, it is worth reflecting on the fact that we have had a number of thoughtful contributions from Members on both sides of the House. Although I welcome any opportunity for Parliament to debate and, I hope, shape Brexit, no one is under any illusions about the fact that over these two days we are doing anything more than filling time to cover the Government’s legislative paralysis. It is just over a year until we leave the European Union. We have a mammoth legislative task ahead of us, but the Government are holding back the Customs Bill and the trade Bill because they are, understandably, afraid of defeat. They have yet to present Bills on migration, fisheries and agriculture; perhaps they are worried about some of the hard truths in those areas.
The Prime Minister was right to say at Mansion House that we need to face hard truths, on the basis of evidence. Not only do I agree with the Prime Minister, but I agree with her former deputy, the right hon. Member for Ashford (Damian Green), who said:
“If analysis is being produced then publish it. And frankly there will be a big political debate about it. Let’s have this argument in public—that’s what democracies do.”
The country faces critical decisions that will define how we live and our place in the world for generations to come. Honesty, openness and hard truths are the very least that people deserve.
That is why the Opposition pressed for the publication of impact assessments and the Treasury analyses of the future of the economy under the different available scenarios. Those analyses, which have now been published, make sobering reading. Ministers have said on several occasions—I think this was repeated yesterday—that the three options that the Treasury modelled do not reflect their desired outcome. But the Minister for Trade Policy, the right hon. Member for Chelsea and Fulham (Greg Hands), yesterday told the House that the Government were seeking an ambitious free trade agreement with the EU. I think that that was repeated this morning. The central model in the Treasury analysis was exactly such an agreement—it was described as the best possible free trade agreement—so it has been modelled. What did that model tell us? Over 15 years, such a free trade agreement with the EU would result in a 5% hit to the economy. That would mean 5% fewer jobs and 5% less money for public services. To paraphrase the right hon. Member for Broxtowe (Anna Soubry), this must be the first Government in history who are setting as their ambition reducing the size of the UK economy.
At Mansion House, the Prime Minister was honest about the fact that her plans would result in downgraded access to EU markets. What she did not make clear, and what her Cabinet has resisted making public, is just how damaging that version of Brexit would be to the economy. Initially—this feels like some time ago—we heard Ministers talk enthusiastically about their plans for an ambitious free trade agreement with the United States, which would compensate for the damage to our trade with the EU. But according to the Government’s own analysis, even if they achieved that deal, it would boost GDP by just 0.2%. Let us be clear that that would be in return for dismantling our food health and safety standards, among other US demands. We could end up with nothing but a hard border in Ireland if we diverged from EU agricultural standards, and a US deal would require us to do so. If the ongoing negotiations on open skies are anything to go by, the special relationship will not count for much in the cold, hard light of trade negotiations.
It is fascinating to watch how even the more extreme Brexiteers suddenly decide, as the hard truth of the difficulties involved in a US trade deal dawn on them, that the US is not that important after all. On 4 March, we witnessed the spectacle of the hon. Member for Esher and Walton (Dominic Raab)—he was speaking as a Government Minister on Radio 5 Live—dismissing the importance of a US deal and saying that
“the real opportunities of the future will be with…emerging markets”.
US trade deals, the Northern Ireland peace agreement and Treasury economic analyses have all been casually brushed aside by those who long for the deepest rupture with the EU. But Labour will not do that.
Jonathan Edwards
In The Times today, the Government made a song and dance about this apparent concession by the European Union that the UK would be able to negotiate and sign trade deals during the transitional phase. Does the hon. Gentleman honestly believe that the British Government and the British civil service are going to be able to renegotiate 70-odd EU free trade agreements that we already have through the customs union, negotiate new trade deals with the US and emerging markets or whoever they may be with, and carry out the gigantic task of renegotiating the trade arrangement with the EU?
Paul Blomfield
The hon. Gentleman is right to talk about the difficulties that would be faced, and there was naivety on the part of the Government in assuming that these deals can just be rolled forward. This is one of the arguments behind our approach and our policies on the customs union. We want to face the hard truths that the Prime Minister talked about at Mansion House and it is why we believe, along with the CBI and the EEF, that a new customs union with the EU is best for manufacturing and for our economy, and it is the only way of resolving the Northern Ireland border.
John Redwood
Is it not crystal clear to anyone who reads the Labour manifesto that Labour set out its bold vision for an independent UK trade policy—I agreed with some, but not all, of it—but that that would have been completely incompatible with staying in a customs union? It is completely misleading to suggest that it is compatible.
Paul Blomfield
We could draw some interesting conclusions from the Conservative manifesto at the last election, but we all need to face facts and perhaps the Government need to change views in the cold light of those facts. I always find it interesting to take interventions from the right hon. Gentleman. I do not know whether he is still advising—
Madam Deputy Speaker (Mrs Eleanor Laing)
Order. I think the Opposition spokesman is still dealing with the previous intervention, and he may in due course come to another intervention.
Paul Blomfield
Thank you, Madam Deputy Speaker. As I say, I always find it interesting when the right hon. Member for Wokingham (John Redwood) talks about the interests of the British economy. I do not know whether he is still advising readers, through the Financial Times, to get money out of the country.
John Redwood
As the hon. Gentleman well knows, I never did that, I made a clear statement to the House and he should apologise.
Paul Blomfield
Well, the right hon. Gentleman’s comment in the column in the Financial Times on 3 November 2017, under the heading
“Time to look further afield as UK economy hits the brakes”,
read:
“I sold out of the general share ETFs”—
exchange-traded funds—
“in the UK after their great performance for the year from early July 2016 when I saw the last Budget and heard the BoE’s credit warnings. The money could be better put to work in places where the authorities are allowing credit to expand a bit, to permit faster growth.”
So I am completely accurate in my quote.
John Redwood
The hon. Gentleman should look at the whole portfolio, which still had massively more in the UK than in the general global representation, and this was nothing to do with Brexit.
Paul Blomfield
I was simply questioning the right hon. Gentleman’s commitment to the economy, and he will note the headline—
Madam Deputy Speaker
Order. The hon. Gentleman, and all hon. Members, can question other Members’ political attitudes and what they say in this House. What we cannot have is one Member suggesting that another Member has said something, in writing or otherwise, which he says he did not say. [Interruption.] The hon. Member for Greenwich and Woolwich (Matthew Pennycook) will not question what I am saying. Mr Blomfield might like to consider just closing this down with a withdrawal of his remark about Mr Redwood.
Paul Blomfield
I thank you for that clarification, Madam Deputy Speaker. I apologise for any offence, but I was simply quoting from the Financial Times column by the right hon. Gentleman, which said:
“Time to look further afield as UK economy hits the brakes”.
Anna Soubry
I hope we can return to the subject we are meant to be debating today. The hon. Gentleman talks about manifestos, and of course his party failed to get elected on its one. Is he familiar with the Conservative manifesto, which some may say we have drifted away from to some considerable extent? It made it clear that the Government’s policy, should they be re-elected to govern our country, was that we would seek a customs arrangement.
Paul Blomfield
I was aware of that manifesto, and the right hon. Lady is right in what she says. I also reflect that the manifesto and the narrative surrounding it sought an overwhelming mandate for a hard Brexit, which the British people failed to give to the Conservative party.
Let me move on to explain why we believe a comprehensive customs union with the EU that replicates the current arrangements also does not weaken our opportunity to develop trade with the rest of the world—certainly not in services. As Germany has shown, we do not need trade deals to develop trade, for example, with China. As the International Trade Secretary acknowledged when he was there with the Prime Minister in February, membership of a customs union will not hold back bilateral trade. Where deals can be done, we think member- ship of a customs union gives us a stronger hand in trade negotiations, as part of a market of 650 million people, rather than just one of 65 million people, and in maintaining strong EU standards.
Members of this place and the Government must be honest about the fact that any trade agreement—
Vicky Ford
I am listening carefully to the hon. Gentleman and I understand that he is asking to have a customs union with the EU. I listened to the Leader of the Opposition’s speech less than three weeks ago, where he also asked for an exemption on state aid and competition law. Does the hon. Gentleman agree that no country has a customs union with the EU and also has an exemption on state aid and competition law—even Turkey has to apply all EU treaties in this regard?
Paul Blomfield
I recognise that the hon. Lady has enormous experience as a former MEP, but she did ask that question yesterday and my hon. Friend the Member for Greenwich and Woolwich (Matthew Pennycook) replied. I think she is confusing a customs union with a single market requirement—[Interruption.] Let me answer the point in any case. The Leader of the Opposition did raise a concern that we would want assurances on competition policy, but we are absolutely confident that those assurances would be very easy to get and would not be problematic. As I believe was pointed out yesterday, the Leader of the Opposition said on the Peston show in January that we are absolutely confident that nothing in our manifesto would be thwarted by state aid rules.
Vicky Ford
I ask the hon. Gentleman to withdraw his accusation that I am somehow confused. It is very clear in reading Turkey’s customs union arrangements that it has to comply with all EU treaty rules on state aid and EU law on competition.
Paul Blomfield
I thank the hon. Lady for that clarification, but we are not seeking a customs union comparable with Turkey’s. We are seeking a comprehensive customs union which replicates the current arrangements that we enjoy with the EU.
Let us move on to another area. We need to be honest about the central issue on which many of those who campaigned to leave focused their campaign and which influenced the votes of many—immigration. Taking back control of our borders was a powerful promise, creating expectations that the Government really have no plan or intention to deliver. The Government have had control of non-EEA immigration for the past eight years and in every one of those years it was greater than EEA migration.
The Government know that things will not be changing significantly. Two weeks ago, that ardent Brexiteer, the Secretary of State for Environment, Food and Rural Affairs, told the National Farmers Union that
“agriculture needs access to foreign workers.”
He promised to maintain that access, for both seasonal and permanent workers. He was echoing the Secretary of State for Exiting the European Union, who said in Estonia last year that it will take “years and years” for British citizens to fill the employment gaps, and that in the meantime Estonians would be welcome to come to work in the UK. At Mansion House, the Prime Minister talked about a future labour mobility scheme with the EU.
The difficulties of squaring the expectations unleashed by the leave campaign with the interests of the economy are no doubt the reason why the Government have delayed the immigration White Paper, yet again, and do not look set to have a new system in place by the time we depart in March 2019.
Peter Grant
When the hon. Gentleman referred to the numbers of non-EEA migrants, I was a bit concerned that he almost sounded as if he was sympathetic towards the Government’s obsession with treating immigration as a number that should be brought down rather than as something that benefits our nations economically and socially. Will he comment on the speech made by the Leader of the Opposition at the Scottish Labour party conference in Dundee last weekend, in which he referred to the EU as something that allowed low-paid workers to be brought into the UK, thereby driving down wages? Does the hon. Gentleman agree with a growing number of Labour Back Benchers that the Leader of the Opposition was wrong to say that and should apologise?
Paul Blomfield
We have always been clear—as indeed, have the Government—about the benefits of migration. That was not what the Leader of the Opposition said in Scotland. There is no evidence that migration drives down wages. There is an issue, which Labour would tackle—it has been in our manifesto for the past couple of elections—on the exploitation of European workers, and those from other countries, in the UK. We need tougher labour-market rules and enforcement to tackle those issues.
The Prime Minister was right to say in Munich and at Mansion House that she was ready to cross her red lines on the European Court of Justice in relation to security, because of the importance of security to this country. She is clearly right: security is vital. I think she was influenced by the fact that, as a former Home Secretary, she had an intimate understanding of the issues and recognised the consequences of failing to reach an accommodation. If security is vital to this country, as it is, is not the economy, too?
The Prime Minister was right to talk about hard truths, because the British people, whether they voted leave or remain, will not thank politicians who deliver a damaging Brexit on the basis of a false prospectus. The former Prime Minister John Major was right, too, when he said that it is right not only to speak truth to power, but to speak truth to the people. Let us face up to the hard facts: there will be no Brexit dividend for public services, as the Chancellor confirmed again on Tuesday; there will be no significant change to migration; there are no real red lines on the European Court of Justice; and there will be huge damage to the economy, according to the Government’s own analysis.
It does not have to be like that. If the Prime Minister had said, “This country voted to leave the European Union, but it was a close vote. It was a mandate to go, but not a mandate for a deep rupture”, and if she had said, “We will leave, but stay close: in a customs union, as close as possible to the single market, a member of the agencies and partnerships that we have built together over 44 years”, she would have had the overwhelming support of this House. Instead, she has let a tiny band of extreme Brexiteers in the European Research Group set the agenda. It is not too late: she could reach out to the majority of the House and the majority of the country to adopt a sensible approach—to adopt Labour’s approach—and I hope that she will.
Several hon. Members rose—
Madam Deputy Speaker (Mrs Eleanor Laing)
Order. There is plenty of time for debate this afternoon. I hope that we can manage the debate without a formal time limit, because that will allow natural debate to occur without restriction. That will work if Members speak for approximately 10 minutes each. If anybody speaks for much longer than that, we will have to have a time limit.
Mr Bernard Jenkin (Harwich and North Essex) (Con)
I shall proceed as quickly as possible. The hon. Member for Sheffield Central (Paul Blomfield) rather marred his speech by playing the man and not the ball. It is much better if we deal with the arguments, instead of imputing motives or sentiments that were at that very moment being disowned by my right hon. Friend the Member for Wokingham (John Redwood). That was rather unfortunate.
I wish to point out that the agenda is not being set by a small group of MPs; it is being set by the British people—more than 52% of the electorate. Those who argue against leaving the customs union or for staying in the single market are arguing against the right of the British people to take control of their own affairs. Let us make no bones about this: the Labour party has now adopted a position in favour of some kind of weaselly half-Brexit, which is not what the British people voted for. The Prime Minister said that she does not recognise any distinction between hard or soft Brexit; there is leaving the European Union or somehow staying in, which seems to be the position the Labour party has now adopted.
Let me set out two contexts. First, many who supported remain seem to believe that people who voted leave in the referendum were voting to turn their back on the world. They claim that the UK’s decision was driven by isolationist and xenophobic undercurrents and see the leave vote as representing intolerance, prejudice and a call for protectionism. Vote Leave did not campaign for that. We deliberately left the Vote Leave website up—Members can take a look if they like. Vote Leave did not argue for isolation, intolerance or economic protectionism. Those may be the views of a vociferous minority, but the Ashcroft polling that was undertaken at the time of the referendum found that for nearly half of leave voters, the biggest single reason for wanting to vote leave was
“the principle that decisions about the UK should be taken in the UK”.
Lest we forget, that is the first context. The debate was about taking back control—about democratic self-government and our country’s right to make its own laws, to decide its own taxation and spending and to choose how it engages with other countries on matters such as trade, foreign affairs and defence. It was about leaving a bloc that is not only in relative economic decline but increasingly in a state of economic and political crisis.
Sir William Cash
I very much agree with my hon. Friend. Had the speeches by Mr Juncker and President Macron about moving towards a more integrated Europe—a sovereign Europe, as President Macron says—been put to the British people before the referendum, we would have had a proportion of the vote vastly greater than 52%.
Mr Jenkin
I was going to make that point later in my speech, but shall no longer do so, for the sake of brevity.
The EU undermines democracy, prosperity and international co-operation. It is plagued by high unemployment, high debts, an ageing population that is much too dependent on state welfare, a dysfunctional euro, unaccountable political institutions and a democratic crisis. It puts up barriers to the combination of world-class universities, technological innovation and venture capital that is fundamental to the technological innovation on which the future of our economy depends.
Since the referendum, we have seen the landmark statements to which the Chairman of the European Scrutiny Committee, my hon. Friend the Member for Stone (Sir William Cash), referred. In fact, Martin Schulz, the former President of the European Parliament, wants a full united states of Europe by 2025. The formation of the euro, which was always a political project, transformed the EU, making full integration an imperative to try to prevent the eurozone from breaking up. In the end, the euro will fail anyway, because there is no political consent for the scale of fiscal transfers necessary to compensate for the huge internal trade imbalances.
The second context is economic. Shortly before the referendum, the Treasury forecast that a leave vote would inflict an economic shock on the UK, leading to reduced trade and foreign direct investment, recession, and the loss of 500,000 jobs. I am sorry to disappoint the hon. Member for Sheffield Central, but the Treasury’s analysis has proved to be manifestly wrong. It also ignored the long-term future of global trade and economic growth. Between 2016 and 2017, UK GDP increased by 1.7%, and economic growth continues to surpass expectations. Tax receipts are higher than expected, and the UK is running a current budget surplus for the first time since the year leading up to July 2002—long before the crash, and two years earlier than anticipated just last year. UK unemployment has continued to fall from 8.5% in late 2011 to 4.4% in late 2017, and the unemployment rate was recently at its lowest point since 1975.
Although some businesses are moving parts of their operations to other EU countries, the number of jobs being moved is significantly lower than expected. Foreign direct investment has continued to grow and, since the referendum vote, there has been a string of major inward investment decisions. In fact, the year of the referendum, 2016, turned out to be another record year for inward investment. We have seen Wells Fargo committing to a new £300 million London headquarters and Nissan announcing its new Qashqai and X-Trail models to be built in Sunderland, making Sunderland a super plant of 600,000 vehicles a year. In December 2017, GlaxoSmithKline revealed its plans to invest £40 million in the UK’s life sciences sector. At the beginning of this month, Siemens committed to building a £200 million train manufacturing plant in the UK if it wins orders for new rolling stock, and, just last week, Toyota announced that it will build the next generation of its Auris hatchback at its Burnaston plant in Derbyshire, including a £240 million upgrade of the plant.
That is not a matter for gloating or complacency, but it shows that inward investment is not dependent on membership of the EU. What about the longer-term prospects for trade and economic growth? In recent years, UK trade has shown a well-established trend, as the proportion of UK exports sent to the EU has been declining. It peaked at 54% of UK exports in 2006. By 2016, that had fallen to 43%. That decline in the importance of our EU trade has set in despite the UK being in the EU, in a customs union and in the single market. Conversely, over the same period, the non-EU share of UK exports has increased. For example, China’s share of UK exports grew from 1.6% in 2006, worth a mere £5.4 billion, to 3.3%, worth £16.8 billion, in 2016.
Trade has also grown significantly with the Commonwealth. UK exports to Commonwealth countries have increased from 8.8% of our exports, worth £21.5 billion, in 1999 to 8.9%, worth £48.5 billion, in 2016. The Commonwealth is a fast-growing market, reflecting much of our language, values and administrative and constitutional heritage, and therefore has great potential for the UK.
The EU is still the UK’s largest trading partner if taken as a bloc, but if we consider individual countries, the UK’s largest trading partner is the United States of America. It seems to have passed the hon. Member for Sheffield Central by that, while the UK has had a trade deficit with the EU every year since 1999—worth £82 billion in 2016—we achieved a £39 billion trade surplus with non-EU countries in 2016. Outside the EU and the customs union, the UK will be able to develop new trading relationships with many of these countries, but not under his party’s policy. Some of these opportunities, including the possibility of joining the Trans-Pacific Partnership and the strong prospects of a comprehensive free trade agreement with the US, including financial services, more than match the potential of our existing relationships with the EU.
The 11 TPP countries have a population of almost 500 million people and represent more than $10 trillion in economic output, which is 13.5% of the global total. The Commonwealth has a population of 2.3 billion people. A comprehensive trade deal with the US, which includes services, would give UK firms better access to its population of more than 320 million and to the world’s largest single economy. With the UK accounting for 7% of world service exports and the USA 15%, they would together account for over a fifth of the global total—a market of huge significance.
Outside the EU, the UK will also be better placed to develop trading opportunities with countries in Asia and Africa, where the most rapid growth is expected to occur in the future. When concluding free trade agreements, we can set our own negotiating priorities that best match our economic interests. The EU has historically represented the UK’s interests poorly not just because it is incredibly slow, but because, inevitably, the EU cannot prioritise UK trading interests such as access for services, which is, of course, of prime importance to our economy. EU negotiators have to take account of 28 states’ interests, which can be very different from our own, and to reflect the protectionist priorities of producer interests, such as the Italian shoe industry, French agriculture and the German chemicals manufacturers.
Vicky Ford
I am very much enjoying listening to my hon. Friend’s speech and hearing him talk about opportunities for trade outside the EU, but, bearing in mind that nearly half our trade is with the EU, that 40% of that is in services, and that services growth has been increasing year on year, does he not agree that we should try to do both? The EU economy is growing at the moment. We can grow our trade with the EU and with other parts of the world if we strike an amicable trading relationship with the EU as we leave.
Mr Jenkin
I could not agree more with my hon. Friend. We are on exactly the same page, and we can both support the Prime Minister’s negotiating objectives on that basis.
Returning to the UK the power to negotiate and sign trade deals will not only speed up trade negotiation for the UK, but enable the Government to negotiate in the UK national interest. The hon. Member for Glenrothes (Peter Grant) asked which countries we were talking about. The Department for International Trade is pursuing opportunities in countries around the world, and Australia and Brazil, to name just two, have already expressed an interest in concluding free trade agreements with the UK.
Peter Grant
I am grateful to the hon. Gentleman for giving way on that point. As a matter of accuracy, may I point out to him that I asked not what countries we hoped to do deals with, but for one country that has said that it will give the United Kingdom a better deal than it would give us as part of the European Union? To date, I have not received a single answer to that question. If he can he tell us now of one country that has said that it will give an isolated Britain on its own a better trade deal than a Britain that is part of the European Union, I am quite sure that his colleagues in the Department for International Trade would be delighted to speak to him.
Mr Jenkin
I think the hon. Gentleman is somewhat playing with words, because nobody will say what kind of deal they will give us until we are actually in the negotiations and making progress. He is asking a question to which he well knows the answer for his own political reasons.
In relation to our trade with the EU, the Prime Minister in her recent speech called for trade at the UK-EU border to be as frictionless as possible. The EU has agreed, as I mentioned earlier, that tariffs and quotas should be avoided and, in the draft negotiating guidelines published earlier this month, it also agreed to the principle of an EU-UK trade deal. Perhaps that is the answer to the hon. Gentleman’s question. There should also be mutual recognition of products and standards, which is no more than the kind of standard agreement that the UK has with many other countries with which it does not have a free trade agreement—incidentally, I think that that is what is meant by a customs arrangement. It means goods need approval in only one country to meet the required regulatory standards in other countries in normal circumstances.
Although we recognise that certain aspects of trade in services are intrinsically linked to the single market, we should note that services trade has nothing whatsoever to do with being in or out of a customs union, because tariffs are not charged on services. The Prime Minister is right to insist that barriers should be introduced only where absolutely necessary. There is no reason for the EU to prevent UK firms from setting up in the EU as we will continue to allow EU firms to set up here. We should agree on an appropriate labour mobility framework and on the recognition of qualifications to provide for the mobility of skilled labour. The Prime Minister also called for the UK and EU economies to remain closely linked in areas including energy, transport, digital, law, and science and innovation. That is perfectly achievable if there is good will on both sides.
The UK is committed to remaining a close friend and neighbour of the EU, and the Prime Minister has made that perfectly clear with a comprehensive economic partnership.
Trade is, of course, of great importance to the economy. In the UK, about 28% of what we produce is sold abroad, and this business activity supports millions of jobs. We also import much of what we consume, and trade allows consumers to access a wider variety of goods, at competitive prices, but the volume of trade is only marginally affected by agreements between countries. Neither the EU nor the UK has a trade agreement with the US, but the US is nevertheless our largest trading partner.
When discussing trade, we must remember that trade agreements are only one factor upon which our economic future depends. How we educate our people, how we regulate our economy, the flexibility of our labour market, and investment in infrastructure, science and technology are far more important to our prosperity than trade agreements. Domestic Government policies have a much bigger impact on economic performance than whether the UK is inside or outside a customs union with the EU. As the hon. Member for Sheffield Central himself pointed out, Germany exports to the rest of the world from within the EU, but with many countries, it does not even have a trade agreement, let alone a customs union agreement.
Let us get all this in proportion. It is far more significant that the UK’s departure from the EU will give us greater flexibility, more responsibility, more accountability and more control over how we manage our economy as we regain: the ability to set our own tariff schedules; the ability to set our own regulatory standards and decide how they should be applied; the unencumbered freedom to set VAT rates; the freedom to relax restrictions placed on UK public procurement; and policy flexibility over things like fishing and farming.
Vicky Ford
I think that my hon. Friend just said that he did not think that there was value in having trade agreements with other third countries. I would like to clarify that, for example, our trade with South Korea has more than doubled—increased by 100%, as the Foreign Secretary said—since the signing of a trade agreement between South Korea and the EU, of which we are a party.
Mr Jenkin
I am not discounting the value of free trade agreements. I am asking that we dispose of some prevalent misconceptions that our prosperity depends only on free trade agreements and being part of the customs union. It is actually relatively at the margins of the overall prosperity of our economy.
It is not necessary to be a very large country or part of a large trade bloc in order to be prosperous. Many very small states export a far higher proportion of their GDP across customs frontiers. For example, Switzerland’s exports are worth 66% of its GDP, and South Korea’s are worth 42%—far higher than the UK’s. Neither of these countries are in any kind of customs union, so they achieve this across traditional customs frontiers and their people have very high living standards. In fact, the EU is Switzerland’s main trading partner, and it is not even a member. Other small trading countries include Singapore, whose exports are actually far bigger, at 172% of GDP, and Hong Kong, whose exports are 187%, because it imports and exports such large volumes. But neither is part of a customs union or of any kind of single market; they just get on with it.
Control over our own laws offers far greater opportunities to develop our economy and export than the removal of customs checks when trading with other countries. The cost of customs processes is low and declining in comparison with other costs, such as anti-competitive regulation, behind-the-border barriers to trade and the reduction of tariff barriers. South Korea had substantial tariff barriers before the free trade agreement. We gain the opportunity to focus on those matters in trade negotiations, alongside investment in science and tech, educating our people, and ensuring flexible labour markets and a competitive tax regime. So much of the debate about leaving the EU lacks this perspective.
Even so, our future opportunities outside the EU are important. Even the European Commission expects 90% of global economic growth over the next 10 to 15 years to be generated outside Europe. The UK can flourish outside the EU, perhaps not with a Corbyn Government—that might be a bit of a problem—but certainly with a sensible Conservative Government. The only question is whether we all work hard to embrace these opportunities or continue trying to hide from them. Outside the EU, instead of pretending that we can insulate ourselves from a rapidly changing world and from the effects of technological and societal change, with a failing model of regulation and centralised power—without all that—we will have the freedom and flexibility to respond, adapt, survive and prosper.
Peter Grant (Glenrothes) (SNP)
I am grateful for the opportunity to contribute to this debate, although I note with sadness that, having set aside two days to debate European affairs, in reality we are all talking about the same European affair. This place has become consumed with Brexit to the extent that other vital matters in the continent of Europe that we would normally have found the time to debate at length are now hardly even mentioned in this place.
Where is the Chamber debate on the persecution of journalists and dissidents in Turkey? Where is the debate on the crackdown of almost neo-fascist proportions in Catalonia, where academics are now being ordered to hand over anything that they might have written in support of constitutional change and civilians are threatened with arrest for the crime of wearing a yellow scarf? Where is the debate on the worryingly regressive steps being taken in Hungary and Poland, so much so that an Irish court this week refused an extradition request to Poland because Ireland can no longer trust the Polish judicial system to give people a fair trial? Where is the debate on the instability that may engulf the Government of Slovakia—a country that was previously a frontier land for the iron curtain and that is now becoming something of a buffer zone between western Europe and the more worrying developments further east?
Had it not been for the appalling incident in Salisbury, it is unlikely that we would even have found time to debate the growing and brutal expansionism of Russia—whether its illegal actions in Ukraine, its equally illegal and covert actions in parts of Georgia or its increasingly threatening behaviour towards the Baltic states. None of these issues is getting anything like the attention in this place that they are entitled to. None is getting the attention that it would have had, had it not been for Brexit taking up so much of everybody’s time and an increasing proportion of the civil service budget in every Department in Whitehall.
I have only listed the European affairs business that we are not talking about. As a number of Labour Members mentioned during business questions today, a whole host of pressing and urgent social issues in these islands are not being debated or talked about. There is inadequate parliamentary scrutiny, and there is inadequate or non-existent legislation to address these problems because everything has been sacrificed on the altar of Brexit. It might not be so bad if, by sacrificing everything to talk about Brexit, there were some signs that we were getting it right. But all the signs are that, having started off getting it wrong by calling the wrong referendum at the wrong time in the wrong circumstances and on the wrong date, things have gone from bad to worse. The catalogue of disastrous misjudgments from the Prime Minister and her predecessor would be hilarious if the consequences were not so disastrous for us economically and, perhaps more importantly, socially.
The referendum was promised to heal divisions within the Conservative party. That has worked well, hasn’t it? The date of the referendum was set because the then Prime Minister was worried that it would have been engulfed by further controversy if there was another summer of refugee disasters in the Mediterranean. It was also deliberately designed to cut across local and national election campaigns in many parts of the United Kingdom. With indecent haste after the referendum and after the Conservative leadership non-contest, the Prime Minister unilaterally—without consultation, as far as I could see—announced the red lines of leaving the customs union and leaving the single market. Those are two lines with which the Prime Minister has painted herself into a corner, and she now wants to blame the Europeans for being unwilling to knock down the walls to get her out of that corner.
John Redwood
The hon. Gentleman made a very good point that there are lots of interesting European issues that are not to do with Brexit. We have a general debate on European affairs, so why does he not talk about them?
Peter Grant
I have raised them all. If it were possible for me to speak quickly enough to debunk even half the nonsense on Brexit that we get from Government Members, I might be able to speak about some of the other issues. The record will show that the Scottish National party has made a number of attempts to raise these issues including, for example, the situation in Catalonia, but we have been pushed back by Her Majesty’s Government at every opportunity.
Having made bad worse by inserting red lines on the customs union and on the single market, the Prime Minister decided to waste three months of negotiating time and six months of parliamentary scrutiny time by having an election to guarantee a three-figure Conservative majority, so that everything else could just be steamrollered through without opposition. That worked even better than the referendum that the Government had to bring the Conservative party together.
As I said, this would be funny if the consequences for 60 million people on these islands, and potentially for several hundred million people in other parts of Europe, were not so grave. They are so grave that the Government still do everything in their power to prevent us and the people we represent from knowing just how bad their own analysis shows that the situation will become. Before the most recent Brexit papers had been fully published, one of the reasons we were told not to be too worried about them was that they only talked about the direct impact of different Brexit scenarios and did not take account of the massive benefit of all the new trade deals we were going to get. Supposedly, everybody would be falling over one another to trade with us after Brexit.
As the hon. Member for Sheffield Central (Paul Blomfield) pointed out, the Government’s analysis indicates that maybe we can increase GDP by as much as 0.75% because of those deals. We could be looking at a Brexit deficit of between 7% and 9% of GDP, depending on just how hard the hard Brexiteers are able to push Brexit. A 0.75% mitigation of that will not do an awful lot of good in the communities that will be devastated by this downturn in our economy.
Bob Stewart (Beckenham) (Con)
May I ask the hon. Gentleman where he got those figures from?
Peter Grant
I got them from Her Majesty’s Government. If the hon. Gentleman wants to tell me that we should never believe anything that Her Majesty’s Government’s civil servants tell us, that is a debate in itself. Those were the figures that were released, with significant protest, by Her Majesty’s Government to the Brexit Committee. I highly recommend the document to him.
Having had the analysis done at significant expense, those who instructed it to be carried out now seem to want to downplay it—to discredit it. I am pleased that we are no longer hearing, certainly from Ministers, any suggestion that there was anything incompetent, unprofessional or negligent in the performance of those who produced the figures. Of course, those who think that the Treasury’s figures are wildly too pessimistic have had the opportunity to produce their own. We might even find somebody who produces figures that give the lie not only to the Treasury but to the Scottish Government and to any number of other professional bodies. Those bodies do not always agree on the exact figures, but few, if any, are producing a scenario that looks anything other than deeply, deeply damaging for our economy and for the social cohesion of our four nations.
During the Minister’s speech, he took an intervention from one of his colleagues about an article in The Times. Interestingly, his answer seemed to suggest that it was only when they read it in The Times that the Government knew that there had been some softening of the attitude in Brussels towards our ability to negotiate trade deals. Perhaps the Minister could clarify that when he winds up. Would it not be typical of the shambolic nature of the Government in conducting these negotiations if they were getting their information from the front pages of Rupert Murdoch’s newspapers rather than from direct face-to-face contact with our European friends and allies?
When the Government were asked to name a single country that is saying that it would give us a better trade deal out of the EU than within the EU, yet again not a single country was named that is willing to do so. There is a lot of ambitious and grand talk of all the countries that want to trade with us—a wish list, a pie-in-the-sky list. There is, as yet, absolutely no reason to believe that any of these countries will give us a better deal than we could get by staying exactly where we are. We need to remember that what the Government ask for ain’t necessarily what they are going to get, because there are 27 other Governments over there who are just as determined and just as entitled to look after the interests of the people they represent.
The hon. Member for Harwich and North Essex (Mr Jenkin) used the tired old argument that we have a trade deficit with the EU and a trade surplus with the rest of the world, and we should therefore concentrate on the rest of the world. I leave aside the fact that some of us do manage to have a trade surplus with the European Union. The logical consequence of that argument is that, if the rest of the world has a huge trade deficit with us, why in the name of goodness would they want to continue trading with us? It is not because Europe is bad at industry and manufacturing that it has a trade surplus with us—it is because it is better at it than we are. The cradle of the industrial revolution has allowed others to overtake us in investment and reinvestment and improving manufacturing efficiency.
Peter Grant
I will give way in a moment.
That is why the Germans can manage to have a trade surplus when we cannot. It is not because they are cheating or because the rules are loaded in their favour; it is because they use more of the profits of their industry to invest in it rather than hiving them off to some kind of offshore tax haven where they are never seen again.
Mr Jenkin
I am glad that the hon. Gentleman had the opportunity to add his rather more socialist point. The problem with the regulatory regime in the European Union is that the whole system is not geared towards our interests and our economy, not least because Germany enjoys a very artificially depressed currency. The Germans have by far the biggest trade surplus as a consequence, and their currency never appreciates because they are in the euro. That has cemented in a completely unfair disadvantage, institutionalised by the European Union.
Peter Grant
So modern industrialised nations that are in the euro do better than those that are not in the euro. That is an interesting argument for the hon. Gentleman to make. I am not saying that I would necessarily agree with its inevitable conclusion, but he does seem to be tying himself in knots very effectively.
I must come back to the comment with which I challenged the Labour spokesperson, because it is very important. When we are talking about the rights of citizens, whether they have lived here their entire lives, come here from other countries, or gone from here to other countries, we should be absolutely uncompromising in celebrating immigration as a good thing. Yes, it sometimes means that bad people come here, but thousands, millions, tens of millions of times more often it means that good people can come here and that our people can go to other places. The exchange of ideas, for example, is something that we cannot put a price on. As well as talking about free movement of people, I want us to be talking about free movement of ideas, because that is what is at stake more than anything else.
To suggest that immigration is responsible for the low-paid, insecure jobs on these islands lets the Government off the hook. Last week, the Leader of the Opposition told an audience—not a very big audience, admittedly—in Dundee:
“We cannot be held back—inside or outside the EU—from …preventing employers being able to import cheap agency labour, to undercut existing pay and conditions in the name of free market orthodoxy.”
I am disappointed that Labour Front Benchers have not apologised for that and invited their leader to withdraw, as a lot of their Back Benchers have. It is not the European Union that is responsible for low pay on these islands; it is successive Governments who eventually introduced a minimum wage but left us with one that is still not enough for people to live on. It is not the European Union that allows employers and agencies to exploit vulnerable, desperate workers; it is domestic legislation. Coming out of the protection of EU employment law is not going to make it easier for vulnerable employees to speak up for themselves. The gig economy—the low-pay economy—is not going to improve by our coming out of the European Union. Indeed, I worry that it will get significantly worse. If anybody thinks that the Conservatives want to come out of EU employment legislation to improve workers’ rights, they really need to look back at the past 100 years of employment law history on these islands.
As I said, it is unfortunate that Brexit has become an all-consuming obsession for the Government, and now for this Parliament, but it is inevitable, because if we get it wrong, as the Government seem determined to do, generation after generation will be paying the price socially and economically. We discovered that we have moved on from the previous Government policy—that the EU can “go whistle” for any payment—to talking about payment for part of the deal of about £37 billion, which we will still be paying if and when I am 104 years old. Possibly some right hon. and hon. Members here will not be around to see that. That is how long it will take simply to pay for a bad deal.
I have hardly even mentioned the potential catastrophe in Ireland. I am deeply concerned that Ministers still seem quite taken with the “Smart Border 2.0” proposal that was published a few weeks ago. “Smart Border 2.0” explicitly says that it relies on automatic barriers, infrastructure, surveillance cameras and staffed checkpoints at the border of Northern Ireland and the Republic of Ireland. If the Minister says nothing else in summing up, I hope he will say clearly—and in such a way that none of his Back Benchers can try again—that the “Smart Border 2.0” proposals are so inconsistent with the Government’s commitments and so incompatible with the Northern Ireland peace process and the Good Friday agreement that, although an interesting idea, they will go no further, that the Government will take them no further and certainly that the EU will take them no further when it is listening to the Government of the Republic of Ireland.
Alison Thewliss (Glasgow Central) (SNP)
My hon. Friend makes a good point about the practicalities of the Northern Irish border. Does he agree that the practicalities for the many people whose properties straddle the border are not being addressed at all in this argument?
Peter Grant
Absolutely. It was so long ago that neither the Brexit Secretary nor the Foreign Secretary can remember the last time they visited the Irish border. That is a failing that both of them have to put right quite soon. I did not understand just how important a non-border was until I went there with the Brexit Committee and we could not find the border between two sovereign states. That is what borders should be these days. They should not be easy to see on a map or physical barriers; they should be physical routes for the exchange of people and, as I mentioned, ideas.
To date, nobody has put forward a proposal that allows the Government’s red lines of leaving the customs union and single market to be compatible with the other red line of honouring the spirit and the letter of the Northern Ireland Good Friday agreement. That irreconcilability cannot be allowed to continue. If the Government cannot come up with their own very clear and detailed proposals within the next few weeks to reconcile those irreconcilable red lines, the red lines of leaving the customs union and single market will have to go, because the red line of continuing the peace process in Ireland cannot be sacrificed in any circumstances. I appeal to the Minister to give assurances that no proposal involving staffed checkpoints on the Irish border will be given any credibility or consideration in these negotiations.
John Redwood (Wokingham) (Con)
My business interests are declared in the Register of Members’ Financial Interests, but I do not plan to talk about them today.
Before the referendum, I made a speech in the House saying that we had become a puppet Parliament. All too often, regulations came from the EU that we could do nothing about, because they acted directly. In many other cases, even if we had been outvoted or were not happy about a proposition, a directive instructed the House to put through massive and complex legislation whether it wished to or not. We had a situation in which the Front Benchers of the main parties, alternating in government as they tended to do, went along with this. The convention was that the Opposition did not really oppose, because they knew that Parliament was powerless and that the decision had been made elsewhere, whether the British people liked it or not. That even extended to tax matters, such as a number of VAT issues, including areas where we cannot change VAT as we would like, and to corporation tax issues, which included occasions when we thought that we had levied money on companies fairly, but the EU decided otherwise and made us give it back.
Many British people shared my concern, and that was why we all went out together and voted in large numbers to take back control. The British people wanted to trust their British Parliament again. Of course they will find times when they dislike the Government, individual MPs and whole parties, but they can live with that, because they can get rid of us. They know that come the election, if we cease to please, they can throw one group out and put in place a group who will carry out their wishes. They said very clearly to our Parliament in that referendum, “Take back control; do your job.”
A recent example is that of Her Majesty’s Government presenting a very long and complex piece of legislation to completely transform our data protection legislation. Because it was based entirely on new EU proposals, it went through without any formal opposition. The Opposition obeyed the convention and did not vote against it or try very hard to criticise it. I am sure that if the proposal had been invented in Whitehall and promoted actively by UK Ministers, the Opposition would have done their job, found things to disagree with and made proposals for improvement. We will have this “puppet Parliament” effect all the time that we are under control from Brussels.
Jonathan Edwards
Given the scenario that the right hon. Gentleman is putting forward, is it not the truth that the Welsh and Scottish Parliaments will also be puppet Parliaments post Brexit?
John Redwood
No, that is not true. In their devolved areas, they have genuine power, which they exercise in accordance with their electors’ wishes, but of course this is the sovereign United Kingdom Parliament, and the devolved powers come from the sovereign Parliament, as the hon. Gentleman well understands, which is presumably why he likes being here.
Sir William Cash
Will my right hon. Friend also bear in mind the manner in which laws are made in Europe? They are made behind closed doors in the Council of Ministers with no proper record of who votes, how and why—we are outvoted more than any other country—and then those laws come here and are imposed upon us in this Parliament.
John Redwood
I quite agree.
We wish to take back control. We will be a very different and much better country when this Parliament can settle how much tax we levy, how we levy it, how we spend money, how we conduct ourselves and what kind of laws we have.
My main remarks for the Minister and his colleagues on the Treasury Bench, however, concern the conduct of the negotiations. Like the Minister, I wish the Government every success. I hope that they get a really good deal—I look forward to seeing where they get to—but the EU is trying to make the process as difficult as possible by insisting on conducting the negotiations in reverse order. It says first that we have to agree to pay it a whole load of money that we do not owe. It then says that we have to agree a long transition period that coincides with its further budget periods, so that it can carry on levying all that money, and that is before we get on to what really matters: the future relationship and the questions of whether there be a comprehensive free trade agreement, what it will cover, and if it will be better than just leaving under WTO terms.
In order to have a successful negotiating position, the Government have rightly sketched out a couple of important propositions. The first is that nothing is agreed until everything is agreed. That is fundamental, and I urge Ministers to understand that they must not sign any withdrawal agreement unless and until there is a comprehensive agreement that is credible and that can be legally upstanding, because there is no point paying money for nothing. There would only be any point in giving the EU all that money if there was a comprehensive agreement that the Government and the country at large could be proud of, and which enough leave voters could agree with as well as remain voters.
The second thing that the Government have rightly said is that no deal is better than a bad deal. That, again, is fundamental to the negotiations. I have never made any bones about this, because I said before the referendum that no deal was quite a likely outcome, and a fine outcome. For me, no deal is a lot better than staying in the EU: it would give us complete control over our money, meaning we could start spending it on our priorities; it would give us complete control over our laws, meaning we could pass the laws and levy the taxes that we wanted; it would give us complete control over our borders, meaning we could have the migration policy of our choosing; and it would give us the complete right and freedom to negotiate a trade policy with the EU and anybody else. That would depend, of course, on the good will of the other side as well, but I would far rather be in that position than part of a customs union in which I had little influence and that was extremely restrictive against others. There is therefore an awful lot going for no deal.
The Minister and his colleagues must stick to the proposition that they will recommend a deal to the House only if it is manifestly better than no deal. They need to keep reminding the EU negotiators that no deal offers Britain most of what it wanted when it voted to take back control.
Anna Soubry
Will my right hon. Friend confirm whether he has seen the Government analysis—apparently it involves excellent modelling and is far better than anything they did in the run-up to the EU referendum—showing that if we were to crash out without a deal and rely on WTO tariffs, our projected increase in productivity and economic growth would be reduced by 7.7%? Is that what his remain-voting constituents—the majority—voted for?
John Redwood
No, of course it is not, but that is not true. I have written at great length about that elsewhere. Unfortunately, I do not have time to go into a detailed rebuttal of those proposals, but we know that the Treasury modelling got entirely the wrong answer for the first 18 months after the referendum. Its short-term forecast, which should be easier to make, was massively wrong and predicted a recession. I and a few others put our forecasting reputation on the line during the referendum by saying that there would be growth after an out vote, rather than what the Treasury forecast. We were right.
I assure my right hon. Friend that I have not voted for anything that will make us poorer. We will be growing well, as long as we follow the right domestic policies. It is complete nonsense to say that there will be that kind of hit. It implies that we lose over half our exports to the European Union, and it is not a proper reflection of what would happen to our trade adjustment were anything that big to happen. I want to concentrate on the customs union.
John Redwood
I am sure that my hon. Friend wants me to concentrate on the customs union, because she shares my wish that the Government will be well supported if the Opposition decide to have a third go at voting through a customs union or customs union membership.
I remind the House that we have twice had big votes in the Commons in which Members have voted by a very large majority against our staying in the or a customs union. One was on an amendment to the Queen’s Speech motion, and the other was on an amendment to the European Union (Withdrawal) Bill. I hear that some Labour Members may have changed their minds and want to vote again. I am a democrat, and the Opposition have their own ways of doing what they want to do, but I urge them not to vote to stay in the customs union.
Above all, are Labour Members not at all worried about poverty in emerging markets? Do they not think it is wrong that we place huge tariffs on poor countries’ tropical produce—produce that we cannot grow for ourselves? Would it not be great, when we are outside the EU customs union, to be able to take down those tariffs and give those countries more hope of promoting themselves by good trade, while at the same time benefiting our customers because they would be able to buy cheaper tropical products? Can we not do good trade deals with those emerging market countries across the piece? The tariff barriers are too high, and we could make mutually advantageous changes if we were free to do so. I urge the Labour party to remember its roots in campaigning against poverty and to join me in saying that the best way to get the world out of poverty is to get down the high tariffs on emerging market countries that the EU imposes, which I certainly do not agree with.
The Minister must remind Labour Members that no deal is better than a bad deal, and that no deal allows us to take back control of all the things that he and I promised to take back control of. He must also remember that we do not owe the EU any money. It would be fatally wrong to pay it loads of money if everything else does not work in the way we want.
Vicky Ford
Will my right hon. Friend confirm that he agrees with the Prime Minister that we should look for a deal that covers many sectors that are not covered by the WTO, such as aviation, data exchange and having a mutual recognition of financial services, so that trade in those areas can easily continue?
John Redwood
I am afraid that I am out of time, so I cannot go into detail on all these matters. I believe that we should negotiate strongly and positively. I wish my right hon. Friend the Prime Minister every success, but I wish to strengthen her hand by saying that out there in the country, the message is, “Get on with it.” If that means leaving with no deal, that is absolutely fine.
Mr Chris Leslie (Nottingham East) (Lab/Co-op)
There is a quote to place on the side of a big red bus, which I hope the right hon. Member for Wokingham (John Redwood) will drive around the streets of Wokingham in the years to come—especially if we do end up with no deal, which he seems to be advocating is absolutely fine, and the UK crashes out of our long-standing alliance with our friends and nearest and greatest trading partners and we end up with, as the Treasury forecasts, a hit of 8% to our GDP by 2033.
Mr Leslie
The right hon. Gentleman shakes his head. Those on the Front Benches will be noting that figures from Her Majesty’s Treasury have been disputed by their own Back Benchers.
It is important that we talk about European affairs. The right hon. Member for Wokingham advocated taking back control as though he on his own, isolated from all around him, can thrive and prosper without relationships and links with the outside world. It is tempting to envisage him locked in this room on his own, with the doors closed, just to see how he would thrive without the sort of relationships and sustenance that others provide.
So too, for the British economy, there is this fallacy about our independent sovereignty—that as a small island, we can cope on our own, without the rest of the world. These days, in the 21st century and in a modern economy, we rely on the rest of the world, and they also benefit from our engagement with them. We risk serious self-harm if we try to pretend that detaching ourselves from those alliances and relationships and going for the very first time towards less market access, as the Prime Minister advocates, is somehow going to make us better off. It will not; it will make us poorer.
Mr Jim Cunningham (Coventry South) (Lab)
The right hon. Member for Wokingham (John Redwood) is talking about a world that is long gone, in actual fact. We are a big wide world. I remember when the right hon. Gentleman was a Minister; his judgment was faulty then, and it is as faulty now. He goes on about taking powers back from Europe. The last two days have proved that we are not getting our powers back from Europe under his terms. What is happening now is that the Government are trying to tell us what to do without votes.
Mr Leslie
We have to recognise that in so many areas of policy—not just economic or trade policy—we benefit from these alliances and relationships. They do need to be worked on, and we need to somehow give and take a little bit. That is the nature of the global neighbourhood in which we live.
It would be remiss if I did not at this point voice my appreciation for the statements from France and Germany, which have shown their solidarity and fraternity with the United Kingdom in respect of the Russian chemical attack in Salisbury. We are talking about European affairs, and it is important that Europe stands together at an important moment such as this.
But Brexit is bound to dominate this sort of debate, and there are a number of aspects that I want to pick up on. The first is the question of frictionless borders and the trade arrangements that we absolutely have to maintain, not just for our own economic continuance but because of the Good Friday agreement and the need to avoid anything that could diminish the peace settlement in Northern Ireland.
The phase 1 agreement that the Government signed up to said that if they cannot come up with alternative arrangements, full alignment will be the way forward. My understanding is that the Secretary of State for Exiting the European Union has this morning admitted that the notion of a technological option—the “smart borders” option—is just not viable. It is not going to work because it requires hard infrastructure at the borders. You will know, Madam Deputy Speaker, that there are 275 crossing points on the border between Northern Ireland and the Republic of Ireland. The notion of having hard infrastructure—cameras, inspection posts and who knows what else—is clearly not compatible with the Good Friday agreement, so the Government have ruled that option out.
The only option that therefore exists is some sort of magical deal whereby the UK agrees to administer the external tariff arrangements for the rest of the European Union while simultaneously administering our own separate tariff arrangements for goods that are destined just within the UK. That does not happen anywhere else in the world. As well as being a complete bureaucratic nightmare, it would require reciprocity from our European partners with regard to our arrangements. They would have to administer a dual-tariff system for goods destined for the UK and those destined for Europe. It is just not going to happen. When the Under-Secretary of State for Exiting the European Union, the hon. Member for Wycombe (Mr Baker) winds up the debate, he would do well to admit that the phase 1 agreement that he signed up to now means full regulatory alignment and, of course, that a customs union is the best and simplest way to achieve that.
The Government are trying their best and scrabbling around, asking the road haulage industry, trade bodies and other cargo and freight companies, “What are your volumes of traffic and what’s happening in trade?”, and making them sign non-disclosure agreements, to try to gag them if they dare to speak, even to their own trade body members, about their conversations with Ministers. That just shows how desperate the situation is.
Peter Grant
Has the hon. Gentleman considered the possibility that the reason the Government want non-disclosure agreements in every discussion is that the next time Labour Front Benchers table a Humble Address motion, they will use the fact that they have signed up to a non-disclosure agreement to prevent Parliament or anybody else from finding out what on earth is going on?
Mr Leslie
It is very tempting to table a series of motions to keep extracting documents from the Government. For all the bluster of the Chancellor’s spring statement, I still regard the best documents published by the Treasury for quite some time, albeit reluctantly, to be the 30 PowerPoint slides that show, among other things, a £55 billion black hole in our public finances by 2033 if we opt for the middle scenario—the FTA-style scenario—and cuts to our public services that would result in the imposition of at least another decade or more of austerity. My hon. Friend the Member for Sheffield Central (Paul Blomfield) made an excellent speech and I say to him and my other Front-Bench colleagues that, having got the Labour party to support a customs union, the logic of all their arguments points to supporting retaining our participation in the single market, to avoid that austerity in years to come.
I want to finish on the arguments relating to the single market. We need to remember that the UK is an 80% service sector economy. While being in the customs union is good for the 20% of the economy that is based on physical or manufactured goods, 80% of our economy is based on services. That is why the single market matters—because it applies particularly to trade in services. Many trades and services will not be tariffed, taxed or diminished—they may be banned altogether, particularly in the field of financial services, which the Financial Secretary mentioned in his opening remarks. Financial services alone represent 11% of our economy and contribute £66 billion in revenue to our Exchequer every single year. That £66 billion pays for the schools and hospitals in the constituencies of all hon. Members, but, again, the Government are scrabbling around and trying to find some sort of mutual agreement on financial services. Just getting it referenced in a flimsy, two-sided A4 document on the future trade relationship will definitely not suffice.
Sir William Cash
Will the hon. Gentleman explain why it is that we have an £82 billion deficit with the other 27 members of the European Union, according to the Office for National Statistics?
Mr Leslie
In some areas we buy more of their goods than we sell, and in others we sell more goods than we buy. We have a significant surplus in financial services. We do financial services particularly well in this country. The Investment Association is exceptionally worried about the lack of co-operation agreements, which is a particularly technical term. We currently have such agreements by virtue of our membership of the European Union, but they will lapse on exit day. To what extent are the British Government seeking new or rolled-over co-operation agreements with each of the other 27 member states—perhaps the Under-Secretary of State can get advice on this from his officials by the time he winds up—so that the activities of some financial services are even legal in those countries?
The single market is also about goods, because some goods contain services aspects. Medical products require certification in order to be sold around the European Union. On the automotive sector, the Society of Motor Manufacturers and Traders has referred to the dangers of non-tariff barriers: regulatory alignment or divergence could be thrown into chaos if we leave the single market. I think about the single market benefits that consumers in the UK gain because they have safe products, a right of redress and enforcement on consumer goods. That is why the single market matters, and there are other issues besides.
Robert Neill
The hon. Gentleman is making an important point. An obvious example are goods that are sold with an insurance policy attached, which is a classic case of an area in which we are world beaters. Once we start to disentangle one part of the financial ecosystem, then we of course damage the whole lot, whether in trade with the EU or elsewhere.
Mr Leslie
The hon. Gentleman gives a perfect illustration. Let us imagine a driver, with insurance cover, departing from Belfast and crossing the border. At present, doing so does not require any particular change by the time he or she arrives in Dublin. After exit day, however, the applicability of the insurance product might be null and void, and it will certainly require adaptation. This is not just about physical goods or the transfer of manufactured products, because some of these invisible products matter massively as well. If there was a car accident during that journey from Belfast to Dublin, where does the liability rest and who will enforce it? All such questions have been left entirely unanswered as the Government barrel headlong towards March 2019.
Of all the things that a single market would affect, the Good Friday agreement is the one I feel most strongly about, because I cannot see a solution to that particular problem that does not require the UK staying in and participating in the single market and the customs union. I say to all Members, including my Front Benchers and especially Conservative Members, that we cannot just assume that a customs arrangement for hard goods crossing borders will be adequate to maintain the principles maintained in the Good Friday agreement.
The red lines chosen by the Prime Minister were hers; they were not on the ballot paper in the referendum. Indeed, Daniel Hannan MEP and others have said that nobody even questioned the single market during the referendum campaign. It is now for Parliament to say politely to the Prime Minister that those red lines are not correct. If the Government have the courage to take forward the trade Bill and the Customs Bill, and certainly when the European Union (Withdrawal) Bill comes back from the House of Lords, they will have to confront the fact that there is a majority in Parliament for a customs union and, I believe, for a single market. Let us get on with it, and sort this problem out.
Anna Soubry (Broxtowe) (Con)
It is an absolute pleasure to follow the hon. Member for Nottingham East (Mr Leslie). On this, we are absolutely as one. It has been a consistent feature not only of the debate in the run-up to the referendum, but in everything that has followed, that there has been so much agreement between those of us on these Government Back Benches and those on the Opposition Back Benches. If I may say so, Opposition Front Benchers are also increasingly recognising the strength of the argument that Opposition Back Benchers and some Government Back Benchers have been making. We also have the agreement of SNP and Plaid Cymru Members; that is about it, unfortunately.
The point is very clear: this issue—the biggest issue that our nation has had to wrestle with in 40 years, and certainly since the second world war—has, on the one hand, divided our country and that division continues, but, on the other hand, has also brought together people from different political parties. We have put aside our party differences, because on this we are as one, and we have put our country first. I pay tribute to all the Members who have spoken out—often in the face of death threats, appalling emails and criticisms, and indeed unpleasantness even from within our own political parties—as doing so has not always been easy. However, it is very important that we do so because this is about our country and of course our constituents—it is not about us—and it is even more about our children and our grandchildren. As hon. Members have said, it is about making sure we get this right because the consequences will affect generations to come.
My view is that people in this country are undoubtedly getting utterly fed up with Brexit. I was going to say that they do not understand it, and that is not a criticism, but when we sit here talking about the finer details of “a” or “the” customs union “arrangement” or “agreement”, and when we delve into the detail of WTO tariffs on bananas, cars or beer—goodness me—people do not want to be involved. That is not because they do not care about our country—of course they care, desperately—but they elect us to this place so that we get on with that sort of stuff, and so that we put the country first and do the best thing for our constituents. They should not have, in effect, to micromanage the politics and detail of all the economic consequences and things that flow from that; they trust us to do it, but when they look at this place, I do not think they are particularly impressed by what they see.
In reality, the two major parties are almost together, although thankfully a difference is now emerging, which I will deal with in a moment. The Opposition have the good sense to come out in favour of a/the customs union—it does not matter what we call it; we now know that it delivers exactly the same arrangement that we currently have. [Interruption.] Sorry, “a” customs union, but I am not interested in the words. All I am interested in is what it delivers, and that is the only difference between the Labour party and the Front Bench of the Government who I obviously support. There is very little between them. Yet, as I have said before in this place, if we were to have a free vote, I have no doubt that the majority of Members would vote in favour of a/the customs union—we all know what we mean because we know what it would deliver, which is the continuation of peace and prosperity in Northern Ireland and the avoidance of a hard border. It would also convey many other benefits.
I also have no doubt that Members would vote in favour of us retaining our membership of the single market by being a member of EFTA, and I do not think that the people of this country are particularly impressed by the fact that that is not happening. They voted for us to speak up on behalf of them and their interests, and we should not be held back by three-line Whips and by an attitude that still exists in our society—led mainly by certain sections of the media—that anyone who has the temerity to speak out about or against the decision that was made in the EU referendum is in some way a “traitor” or a “mutineer”. It is an outrage! We come here to speak freely on behalf of our constituents.
Sir Robert Syms (Poole) (Con)
Is not a referendum the biggest free vote? Everybody participated; nobody was whipped. There were weeks and weeks of argument, and a decision was made.
Anna Soubry
That is a really interesting point. Of course we had a referendum, but can we just get real about this? First, 52% of those who voted did so for us to leave the European Union, but not one of them to my knowledge—certainly in my constituency—voted to be poorer. Of course, 48% of people voted for us to remain in the European Union, and they have a right to a say in what now happens. Too many people, including perhaps on the Government Benches, do not understand that a considerable portion of that 48% have accepted the vote, but now feel utterly excluded, sidelined and pushed to one side as we move forward to deliver the result in the interests of everybody in our country.
Peter Grant
The right hon. Lady is making, as always, an impassioned and well-informed speech. The ballot paper contained a question about membership of the European Union, but there has never been a referendum on membership of the customs union or the single market. Nobody knows for certain what people want regarding those institutions.
Anna Soubry
I completely agree; the hon. Gentleman is absolutely right. I take grave exception to the idea that across the length and breadth of this country people were sitting in pubs, cafés, bars or whatever discussing the finer points of the merits or otherwise of the customs union and the single market. The truth is that there are Members of this House who do not know what the customs union is, and there are Members of this House who do not understand what the single market is.
I am not going to name people, but I have had very good conversations with right hon. and hon. Friends about EFTA. I have explained, for example, that members of EFTA can retain their own fisheries and agriculture policies. There are colleagues who have said to me, “Good heavens, I didn’t know that. How very interesting. Can you tell me now about immigration?” So then I explain about articles 112 and 113, and so on and so forth, and about the brakes that could be put on immigration. These conversations have occurred only in the past three or four months, 18 months after the referendum and nearly a year after we triggered article 50. That is why I will say it again: when history records what happened in the run-up to and after the referendum, it will not be in any form of glowing testimony. On the contrary, I think we will all be painted very badly, apart from those right hon. and hon. Members who at least stood up and spoke out. If I dare say it, I think we have been increasingly proved right.
I think people are fed up. They want us to get on with it. They do not quite know what “it” is. Some people actually think we have already left the European Union. But they know that it is getting very difficult and very complicated. I believe that people are becoming increasingly worried and uneasy. It is the dawning of Brexit reality. They know that the deal, which they were told would take a day and a half, or a week and a half, will now take, if not for ever, then a very long time. When I say “for ever”, I mean that, if the Government continue to stick to their timetable, it will not be concluded until way after we have left the European Union. We will get very loose heads of agreement by way of a political statement attached to the withdrawal agreement, which this place will vote on sometime this October or November. People are beginning to realise that they have been sold a bit of a pup.
Only last week, I spoke to a constituent who voted leave who told me, in no uncertain terms—she was quite angry about it—that she had no idea about the implications for the Irish border of not getting this right. People of a particular generation really get it and understand this. Frankly, we are old enough to remember the troubles in all their ghastliness. We also remember the border. Some of us are old enough to remember customs border checks, when we had to go through a particular channel. We remember being terrified that the cigarettes or a bottle of whatever—I certainly would never have done any of these things, of course—might suddenly be uncovered by a customs officer, but that means absolutely nothing to huge swathes of our country. Older people, however, remember the troubles and they know how important it is that the border does not return. They understand how critical not having a border between Northern Ireland and the Republic of Ireland has been to the peace process. They are now not just worried about the return of the border, they are quite cross about it. They are getting cross not just because they do not want it, but because they feel that none of this was discussed and explained before the referendum.
As I have said, we are now having the debate that we should have had before the EU referendum. I am looking towards those on the Scottish National party Benches. The debate held in Scotland in the run-up to the independence referendum was a long, long proper debate. If I may say so as an outsider, every single issue pertinent to the debate was properly teased out and discussed. I do not think anybody could have complained that they did not know the consequences.
Jonathan Edwards
The right hon. Lady is making an excellent point. In Scotland, the Scottish Government produced a White Paper—650 pages long—outlining completely what they were proposing. During the European referendum, the leave campaign produced a poster on a bus. That is why we are in the mess we are in now.
Anna Soubry
I might not quite go that far, but the hon. Gentleman makes a really important point. I was a member of the Government that decided we would have a referendum. To be very blunt, I am now quite ashamed of the fact that I made a decision that we should have a referendum without the proper debate that we clearly should have had and without the long run-up. More than that, this is the conclusion that I think the British people have also reached: how on earth did a responsible Government put in front of us, the people of this country—notwithstanding how brilliant we are—an alternative that we now see will cause our country so much harm? During the referendum campaign, when “Project Fear” was at its full height—the campaign was very poor on both sides, but “Project Fear” in particular was madness and nonsense—I think that subconsciously, people thought to themselves, “No responsible Government would put something to us as an alternative to their preferred option that would deliver all this stuff, when actually, it will harm our economy, and even undermine or threaten our security and the future of peace in Northern Ireland. They wouldn’t do that.” Of course, now we know that that is exactly what that option was, but we have moved on, as I must too.
Anna Soubry
I will make one last point—no, I will take the intervention, because it is probably more relevant to what I just said.
Alison Thewliss
I thank the right hon. Lady for the speech that she is giving, because it is another good one. The point has been made about the very short period running up to the referendum, when people had to make a very big decision on the basis of very scant information. Does she agree that it was far too short to counteract the decades of misinformation, and that we have a real responsibility as politicians to get more information and more facts out to constituents, so that they can understand the basis on which they are going to make decisions?
Anna Soubry
The hon. Lady makes a very good point. Look, some people would argue that it is a miracle that 48% voted for the EU. Anybody who plays or watches cricket knows that before a game, they roll the pitch. We have taken a JCB digger to the pitch for the past 40 years. It is astonishing. On both sides, we have all blamed the EU for all our misfortunes: if something was difficult, we just blamed the EU. Then, of course, in a very short period, we said, “You know that thing that we said was really rather rubbish—actually, it is really rather wonderful. Would you go out and positively vote for it?”
The other dawning of the Brexit reality was in the excellent speech that the Prime Minister delivered a few weeks ago. In it, she faced up to the reality in a highly commendable way—her tone was right and I agreed with much of her content. However, the reality of what she said was this: in admitting that there would be, for example, no passporting for financial services and that we would have reduced access to the market, what she was saying—as others have observed—is that for the first time, I think, in the history of any Government in any country in the world, we are actively going to pursue a course, knowing that it will make us less prosperous than we are under the current arrangements. That is the view of Her Majesty’s Government. I hope as we go forward that perhaps the Government, in that spirit of reality, will also understand that this can and must be stopped. We cannot pursue a course that will make the people of this country less prosperous.
We are meant to be talking about the economic side of our EU relations and affairs, so I will make this observation. The OBR’s predictions were to be welcomed because they were better than its previous predictions about our prospects of growth. I observe, as many others have, that we benefit at the moment from a strong labour market. We are almost at the point of having record levels of employment, which means, of course, that we have more money in the coffers by way of taxation and national insurance. In the financial and insurance sectors, we have seen pay rises of some 7%, and as many have observed, services comprise 80% of our economy.
We know that consumer spending has risen, and that, too, would account for the increased money in the coffers, because it means that our VAT receipts have gone up again. The weakness of sterling means that the companies whose foreign earnings are important to them have seen the worth of those earnings go up.
We must take all those factors into account to understand why it is the view of many that, notwithstanding the OBR’s better forecast, our country is actually experiencing some of the slowest growth in the G20. We think we are doing well, but when we compare ourselves to other G20 countries, we see that we are not doing anywhere near as well as we should be. I have given an explanation of why we are not where we thought we might be, but the point, of course, is that if we were not leaving the European Union, we would be doing considerably better and our prospects would be considerably higher.
Let us be clear about this. Investments are already being delayed, and we know that unless we get this transition in place, a number of important businesses will leave our shores. We also know that business wants certainty, and, in my opinion, the certainty that it is crying out for is the certainty of knowing that we will stay in both the customs union and the single market. No one should underestimate the real risks that our country faces. If we do not get this right, businesses will simply leave. We have already seen examples of that. There are Japanese companies that were promised by Margaret Thatcher, one of the finest proponents of the single market, that our country would never leave the single market. They have invested billions of pounds in real, skilled jobs in our country. Anyone who speaks to those companies—as many of us do—should ask them how they see the prospect of our leaving the single market and the customs union, and, indeed, the European Union. The fact is that instead of investing here, they will invest in other European countries, because we were the bridgehead into the EU.
I have dealt with the Government’s analysis in my interventions, and I know that you are urging me to speed up, Madam Deputy Speaker, but I have not had an opportunity for some time to make a long speech about this matter, which is dear to my heart, so I hope you will forgive me. I hear you—or, rather I see you—and I take the hint. I am about to make my concluding remarks. However, these things need to be said.
The Government, quite rightly and responsibly, asked civil servants in all Departments to look at the different options that were available and to analyse the economic benefits that they might or might not convey. I urge Members to read the papers. They should go into the darkened room, or even better, get hold of those papers, because the Exiting the European Union Committee has had the good sense to publish them. This is new modelling—the best available framework, prepared by civil servants who act with complete independence and, as usual, have exercised the huge skills that they possess. They recognise all manner of variances. They believe that these analyses are the very best, and they are keen to sing the praises of the modelling.
What does that modelling reveal? It reveals that even if the House and the Government were sensible enough to accept the single market and the customs union, membership of the European economic area after we had left the EU would cause our projected growth to fall by 1.6%, a free trade arrangement would reduce it by 4.8%, and World Trade Organisation rules—the cliff edge urged by some Conservative Members; the most irresponsible of all options—would involve a reduction of 7.7%. Moreover, those models do not include the value of the customs union.
I want to conclude—you will be pleased to know, Madam Deputy Speaker—by expressing some views on trade deals. It concerns me greatly that the British public are not being properly and fully informed about them. I say with respect to those on the Treasury Bench that it is very important that they are absolutely up front with people and stop putting forward the chasing of what are effectively unicorn deals. We enjoy 50 free trade deals by virtue of our membership of the EU. The idea that we will not get a deal with Australia is madness, because of course the EU will soon be doing a deal with Australia, and who do we think they will be doing a deal with first, the EU or the UK? The EU of course. So we will benefit from all these free trade deals in any event; we are not getting anything different by leaving the EU.
It is very unfortunate that we are not explaining the facts on free trade arrangements—the 50 or so we currently have by virtue of our membership of the EU, and the other arrangements we also enjoy by virtue of our membership. As this analysis shows, the reality is that even if we get every single free trade deal that is available, that still will not make good the loss to our economy of leaving the EU.
So—finally, Madam Deputy Speaker—people must wake up and realise that our EU colleagues will miss us and they want us to stay, and if we leave and a future generation wants us to return we will not be able to re-join on such good terms as we currently have. The EU will not miss us because of our trade—they will find new markets; we must get real on that—but they will miss us because of what our country has always brought to the EU: we are the voice of sanity; we are the check on the excesses; we are the ally that many seek to keep the EU—
Anna Soubry
My hon. Friend shakes his head, but, with great respect, he should go and speak, as many of us have done, to ambassadors and senior members of Government. They are genuinely upset that our country is leaving, because of the loss from that and the damage and harm it will do to the EU and because of the great role our country has played in many respects in the best part of the EU’s work, which is the advancement of free trade.
I believe that the people of this country are looking for some way out of this mess, because it is a mess, and it is up to us as politicians to provide the leadership. This place cannot overturn the referendum result; the people began this and it is for the people to finish it. However, the people are now entitled to have their say on the final deal—I have no doubt about that—because their future is what is most important and increasingly, as the reality dawns and they understand the full detail of what we have done, it is not that they are regretting their vote, but they do not like what they see on offer as the future out of the EU. So let us be clear: let the people have a final say on the final deal.
Several hon. Members rose—
Madam Deputy Speaker (Mrs Eleanor Laing)
I appreciate that, as the right hon. Member for Broxtowe (Anna Soubry) said, she had a lot of points to cover. It is also obvious to me that nobody except the right hon. Member for Wokingham (John Redwood) has taken the least notice of my exhortation to take about 10 minutes. If I were to impose a time limit now, it would be seven minutes, but I am still going to try to proceed without a time limit, and I hope that Members will tailor their remarks accordingly. I do not suffer if somebody makes a long speech—more than twice as long as the 10 minutes I recommended—but other colleagues do.
Heidi Alexander (Lewisham East) (Lab)
So here we are again. Another day, another debate on Europe—nearly two years after the referendum and at a time when we face enormous challenges both here and abroad. The inescapable truth about Brexit is that our Government are involved in the biggest exercise of reinventing the wheel that this country has ever seen. When a nerve agent has been used in Salisbury to try to kill a former spy, and when we are expelling the largest number of Russian state personnel from our soil for 30 years, I am sure that I am not the only one who regrets that our first foreign policy objective is our departure from the European Union, but we are where we are. Rather than endlessly raking over the referendum, or making the case as to why the public should have a final say on the deal, we need to focus on finding a way through this that limits the damage to our economy, maintains peace in Northern Ireland, protects opportunities for the next generation, and leaves our alliance with the rest of Europe as strong as possible.
We need to start, though, by being honest. If we go out on to the doorstep, we will struggle to find someone who would vote differently in a referendum today from how they voted two years ago. Yes, there might be an increased willingness to listen to a different point of view and, yes, there is an overwhelming sense that the Prime Minister is making a dog’s breakfast of the negotiations, but for all the talk of bringing people together, our country is still divided.
I do not want to live in a country that is dominated by divisions over Brexit for a decade. I do not want to sit in a Parliament that fails to get to grips with the real problems facing this country—housing; how we care for the elderly; how we upskill our population—simply because we are pursuing fantasy trade deals elsewhere. I do not want to listen to any more interminable speeches from Ministers that leave us none the wiser as to what their policy is and which do nothing to clear the fog that exists in Brussels or in the public consciousness here. We have to make this easier for ourselves. We need to cut the complexity, and that means staying in the single market by staying in the European economic area and staying part of a European customs union. The sooner the Government wake up to that fact, the sooner we might make some proper progress.
The Prime Minister bleats on about her deep and special relationship and about her desire for a bespoke deal but, as the clock ticks on, there is no sign of that. Last year, she admitted that she needed more time to sort out future trading arrangements. She calls it an implementation period and Brussels calls it a transition period, but I call it cutting yourself more slack to work out what on earth to do. There is no guarantee that we will get a transition period, but assuming that we do, and assuming Parliament votes for it as part of a skeleton withdrawal agreement—that is a big if—we will be legally out of the EU next year. Our trading arrangements will stay the same until the end of 2020, but what then?
At the moment, this is like reading a seven-year-old’s letter to Father Christmas. We see an unrealistic wish list combined with tantrum-like demands. The Prime Minister wants a customs partnership, but not a customs union. She wants no tariffs on goods traded between the UK and the EU, but does not want to sign up to the common set of standardised tariffs that apply to goods coming into the EU from outside. She does not want a border in Northern Ireland to check where goods have come from and nor does she want one down the Irish Sea. She wants a special tracking system for goods coming into the UK that would then be onward bound for Europe. She talks about technology and authorised economic operators, but the customs experts and freight handlers remain unconvinced.
On the standards that goods would need to meet in order to be sold to the EU, the Prime Minister wants us to sign up to the rules in some areas, but not all, and she wants to reserve the right to change the arrangements in future. She wants to be in some of the regulatory agencies that supervise and enforce the rules, but only if a UK court rules on related matters. Even then, she is not sure whether she wants to be part of just the European Medicines Agency, the European Chemicals Agency and the European Aviation Safety Agency, or if she wants to be part of others, too. She does not have an answer on services, the area in which we enjoy a trade surplus with the EU, but rather talks about creativity and ambition in finding solutions. There is no trade deal anywhere in the world that gets close to guaranteeing the access we have to Europe for our services industry. Our major export to the EU is financial services; Canada’s is pearls and semi-precious metals. The idea that we base our future trading arrangements on a Canadian-style free trade agreement while ruling out being part of the EEA is absolute madness.
I am a London Labour MP, and I sometimes baulk at the obscene wealth that I see on display in our city. However, I also know that the wealthy bankers, lawyers and hedge fund managers not only have money, but spend it. For every one of them, there are probably four or five jobs in events management, hospitality, retail and security, and those jobs are done by my constituents. I cannot bear the thought of our great city losing out to Paris, Frankfurt or New York, but mark my words: if we do not get a good deal on services, over the next 10 years—this will not happen overnight—jobs and economic activity will drift away.
I cannot see how we can get this magical deal. Even if the EU wanted to offer us a good deal on services, the most favoured nation clauses in the trade agreements that are already in place with other countries would mean that whatever the EU gave to us, it would have to offer to others, too. If we stayed in the European economic area, we could get around that.
I do not think that anyone really appreciates the extent to which our country depends on EU labour. It speaks volumes that two years after the referendum, the Government have no answer to what the post-Brexit immigration system will look like. Last week, I met the HR director of a major restaurant group. It has about 300 restaurants in the UK, and I discovered that 61% of its chefs are from the EU. When I walk from Lewisham to Catford, I see huge signs outside small domiciliary care agencies that are desperate for staff, and that is before we even talk about the recruitment and retention crisis in the NHS. I do not know how many times I have to say this, but we have an ageing population. We control immigration from countries that account for 90% of the world’s population. We need people to come here to work. Fewer EU migrants means fewer taxpayers and fewer people spending money in our shops.
I have reflected quite a lot recently on why I care so much about Europe. If I am honest, it is intensely personal. We seem to forget that freedom of movement works two ways. People can come here, but we can also go and live in other European countries. I grew up in a working-class family. My dad is an electrician and my mum is a dinner lady, and I was the first person in my family to go to university. I dreamed of travelling the world when I was young, but I knew that the bank of mum and dad was not an option. I lived for a year in Austria and worked as a holiday rep. I fell in love with the country and ended up married to someone who is half Austrian.
I genuinely feel that the ease with which I could go and live in another European country allowed me to live my dreams. It gave me opportunities, and I do not want the next generation to be denied those opportunities. Anyone listening to Nigel Farage would think that the EU was the preoccupation of the middle classes—it is not. I think that we need to stay in a customs union and in the single market to maintain a close relationship with Europe. We should be prepared to preserve the principle of freedom of movement within that, even if we administer the process slightly differently.
We have to dial down the rhetoric on all this because I worry about where it will all end. Just think of the newspaper front pages that we have seen in the last year. Where do the bellicose language, blame and brinkmanship get us? My grandfather and my husband’s grandfather fought on opposing sides in the second world war. Mine walked across Europe after he was liberated from a prisoner of war camp, and my husband’s absconded from Scandinavia and made his way home to Austria. The borders that criss-cross my family’s history should not go back up, and we should not take opportunities away from the next generation.
We should not fool ourselves into believing that there is a golden economic future without a close relationship with the EU, and the Government need to be honest about that. They need to be honest about the fact that the political choices they have made in the past two years are not automatic consequences of the referendum. They need to rub out their red lines and do the right thing for the economy, the next generation and our place in the world. I believe that that means remaining part of the single market and a customs union.
Several hon. Members rose—
Madam Deputy Speaker (Mrs Eleanor Laing)
Order. The hon. Member for Lewisham East (Heidi Alexander) did very well on her 10 minutes, but I give in—we need to have a formal time limit of eight minutes.
Giles Watling (Clacton) (Con)
I will endeavour to be as brief as I can, Madam Deputy Speaker. It is a great honour to follow the hon. Member for Lewisham East (Heidi Alexander), who made her points with great passion and eloquence. I find myself in an interesting position in this debate, because I was well known in my area as a remainer. I was shaking my head earlier because I believe we will still have a very close relationship with Europe. However, 70% of my constituents voted leave, and this was of course 10 months before 62% of them voted for me—Members may extrapolate from that what they will. Perhaps it was because I was a remainer and a Eurosceptic—you can be both.
The aforementioned interesting position in which I find myself is that, although I am a remainer, I am, above all, a democrat. Therefore, I am now determined to follow through on Brexit; we were given a very clear message, not only by my constituents, but by the UK as a whole. It was always going to be a rocky path and, as we have seen, it has been beset by those who might want to make the UK take another path or even, as has been said, hold a second referendum. That would be a serious mistake and take us back to the dark days of destructive populism, and I am sure none of us wants to poke that particular hornet’s nest again.
As we all know, referendums are, by their very nature, divisive. Let us take the example of the referendum in Scotland, a wonderful country where I have had the great pleasure of working on many occasions and in many places. There was always that united joshing at the token Sassenach—that was me, and it was a position I enjoyed very much. It was a part I had to play. Interestingly, shortly after that referendum, I returned to Scotland, where I was working in Glasgow, and found that the Scots were now at each other’s throats in Sauchiehall Street and the token Sassenach was largely ignored. We have now had our EU referendum and the results have had very similar effects, so I reiterate that we do not want a second, even more divisive, referendum.
The only sensible way forward is to ensure a clean break with Europe, while ensuring that we get the best deal possible—a unique deal, as the Minister said. I refer to a bespoke deal that suits the very special relationship that we already have with our European neighbours. Leaving the EU cannot mean long-term membership of the EU’s single market or the customs union. That would mean complying with the EU’s rules and regulations, with the UK having very little or no say over them at all. By remaining a member of the single market and customs union, the UK would, in effect, not be leaving the EU at all. It would mean less control for the UK, not more, and that is not what my constituents or the UK as a whole voted for.
My constituents voted to step out on to the world stage, taking the lead and taking advantage of new opportunities. I am pleased that we are building the economic base that will help our country compete in the world market. I am pleased to say that in withdrawing from the EU, the UK will be leaving the common fisheries policy, a policy that has had a profound impact both on the UK’s coastal communities and on the sustainability of our fish stocks. As an MP for a coastal community—the wonderful, glorious sunshine coast of Clacton, Walton and Frinton—I believe it is imperative that the Government do not give ground to the EU on this issue, especially now that Donald Tusk has requested that reciprocal access to our fishing waters be maintained.
I am also delighted that, according to press reports today, EU negotiators have accepted our demands to pursue an independent trade policy while remaining inside the customs union and single market, but only during the transitory or, as the Minister said, implementation period. Then, we come out of the single market and customs union, and, as we have done so many times before, strike out on our own to a bright new future. That bright new future can be achieved only if we give our negotiators a free hand to do the deal. Those who have challenged the deal makers to declare their hand in Parliament before any deal is struck demonstrate a fundamental ignorance of the whole process of negotiations. The 27 countries of Europe must not be given the luxury of knowing exactly where our bottom line is. That would clearly negate any negotiation. I say to Opposition Members that it is really a case of “Don’t tell ’em, Pike!”
We made a mistake when just before Christmas we narrowly voted for Parliament to have final approval of any deal. That weakened our negotiators’ hand. The EU is now aware that, whatever deal is struck, it might not be approved; thus, it might feel that it can strike a harder bargain. Furthermore, if I may be allowed a small analogy, if I come to buy your car, Madam Deputy Speaker, whatever odd sticker you might have in the windscreen, we both want something: I want your car and you want my cash. At the outset, we must both be prepared to walk away. That is the point that my right hon. Friend the Member for Wokingham (John Redwood) made, and that, as we all know, is how business works. To sum up with another analogy, one does not play poker and show one’s hand.
I, too, have lived and worked in Vienna in Austria, which is a lovely place; I had a long-term contract to work in Rome—it was five years, I think; and like many of us, I have holidayed all over Europe. Members would imagine that those experiences would make me a classic Europhile, and they did. But I reflected on the fact that I have also worked in America, Egypt, the far east, the Arabian states and Africa. So what does that make me now? A globophile? I think it does. The opportunities to live, work, trade and play all over the world will still be with us but, because we are leaving the EU, we will have control of our own borders. Perhaps more importantly, we will still be able to attract people from all over the world to be a part of the great British economy.
Finally, I declare myself to be wearing two hats in this debate: one as an optimist and the other as an animal lover. I have been an animal lover all my life. I own a house full of yappy dogs and in the 1990s I was part of a team that broke up a puppy-farming ring in Wales. I now see an optimistic future in which we can dramatically strengthen our animal rights laws when we are no longer constrained by the EU. The UK has higher animal welfare standards than any other country in Europe, and the Government have delivered a slew of animal welfare initiatives over the past months alone—for instance, an ivory ban to help end elephant poaching; CCTV in slaughterhouses; an increase in the maximum sentence for animal cruelty; a ban on electric-shock collars; a ban on microbeads; and the cutting down of single-use plastics that harm our fish, birds and sea mammals, just to name a few.
EU law should not be a benchmark for animal welfare. People can keep farm animals in unspeakably cruel conditions in Europe without breaking a single EU law. It would be depressing if that were the standard that we set for ourselves. I wish to focus on strengthening animal rights as we go through Brexit, and I see a good opportunity as we consider a ban on live animal exports as a part of our trade policy. I truly believe that we will, in the end, get a good deal. If we hold our nerve, the future can be very bright indeed.
Mrs Madeleine Moon (Bridgend) (Lab)
It was wonderful to hear the speech by the right hon. Member for Broxtowe (Anna Soubry). I cannot say how much I agree with her about how much this House knows that what we are working towards will be an absolute unmitigated disaster for our constituents. Every one of us in the House, apart from the tiny minority who are driving this disastrous move forward, is absolutely clear that we are going to leave our country and our constituents poorer. It will be a disaster.
I have to say to the hon. Member for Clacton (Giles Watling) that it is nonsense to say that when the facts change, one does not change one’s opinion. Were that true, there would be no divorce. It would mean saying to every woman in the House, “You would never be able to take back that dress that you thought was wonderful when you first saw it but that looked an absolute unmitigated disaster when you got it home.” The facts are changing and we are finally getting to the truth of the disaster of where we are going, so it is right that we go back to the people and say, “Do you want to change your mind? Is this the right direction?”
The impact on London will be tremendous, as we have heard from my hon. Friend the Member for Lewisham East (Heidi Alexander), but I cannot begin to talk about how disastrous it will be for Wales. May I start with the issue of gross value added? Gross value added is one of those terms that does not really resonate with constituents, but let us look at what it means in Wales. In 2016, it was £59.6 billion. The Government’s projections mean that Wales would lose about £5.7 billion in the event of no deal, and around £3.3 billion if we secure a trade agreement. That is over a period of about 15 years, but it will have a huge impact on the Welsh economy. It is not the most vibrant economy, but it will have a devastating impact.
I could throw lots of figures about, but one that impacts on families across my constituency is inflation. Inflation remains at 3%. Wages are not going up, but prices are, and my families are becoming worse off. The cost of food and other goods is soaring as a result of the fall in the value of the pound, which remains about 15% below pre-referendum levels. That is a visible and very real impact on the daily lives of my constituents. Having seen that impact, my constituents deserve the right to another opportunity to decide whether this is a bet that they want to take given that, even under the Government’s own policies and analysis, it will bring further poverty, further disaster and limited opportunities for their children.
I have talked to many of my constituents about how they voted. Some of them say, yes, they got a great result. They got the result that they wanted out of the referendum; they got rid of David Cameron—job done. That is what they have actually said to me. It was not about Europe; it was about austerity. They hated what was happening to their families. They hated the fact that so many of them were heading off to food banks. Some of them say, yes, it was about immigration, but really it was about the wages that they were getting and the 1% pay rise that, year on year, meant that they and their families were falling behind.
For many of them, it was about taking back control. They would say to me, “These unelected bureaucrats”, and I would say, “Well, okay, but tell me the name of the director of education in Bridgend County Borough Council.” They would say, “What? I don’t know, Mrs Moon.” Well, that is an unelected bureaucrat. It is not who the bureaucrats are that we need to know; it is who the politicians are. It is the politicians who hold those bureaucrats to account and it is the politicians who make the decisions. It is about knowing who our politicians are and getting behind them that is the important part of democracy.
A grim time lies ahead. Most businesses constantly approach MPs to say that if we leave the customs union there will be severe consequences, which makes me really, really nervous. I have two major employers at two ends of my constituency: the Ford engine plant and Tata Steel. The impact on both the car industry and the steel industry will be devastating when we leave the European Union. I cannot begin to talk about the impact that job losses in those two industries will have on my constituents. I cannot begin to talk about the loss of future opportunities for the children in my constituency. I have fantastic schools and I am so proud of the bright, alert, really eager youngsters for whom we should, as a country, be promoting a future of opportunity, instead of which I hear fantasies about wonderful trade deals with countries that will never, ever bring the benefits—I ask Members to read the submission from Tata Steel—that access to the European markets currently brings to Tata Steel.
Anna Soubry
The hon. Lady is making a very important speech. I suggest that my hon. Friend the Member for Clacton (Giles Watling) visits her constituency, and talks to Ford and Tata Steel in order to understand the importance of frictionless supply chains, membership of the customs union and membership of the single market in the very real industrial world that the hon. Lady and her constituents inhabit.
Mrs Moon
I thank the right hon. Lady for saying that, because I have those conversations all the time.
When I trotted over to DExEU to read the wonderful insight reports that we were meant to see, I was absolutely appalled by the poor quality of analysis that would be devastating for the people I represent. I will not vote for anything in this House that I think will damage the people I represent. I feel awful guilt—the right hon. Member for Broxtowe also mentioned this—about having voted for that referendum without insisting that we had all these debates before we took it to the people. I recently attended one of my local Women’s Institutes, where a lady said to me, “We shouldn’t have been asked to vote, should we? I didn’t really know what I was voting for. I went with what everybody else was saying, but I didn’t really understand the consequences, and now I’m worried about my grandchildren.” We should all be worried about those grandchildren.
So here we are. It is really quite obvious that we are not going to have frictionless trade. If we leave the single market and the customs union, we are going to make sure that our families are worse off. Europe is on our doorstep. We can get from here into the centre of Europe in a matter of hours. The EU has 37 trade deals with more than 65 countries around the world, covering 15% to 17% of the UK’s trade in goods. The EU has trade deals in place with more countries than the US, which has 20; China, which has 23; and Australia, which has 19. And yet, what are we going to do? We are going to throw that away.
Finally, I am a Member of the NATO Parliamentary Assembly. Every time I attend a meeting, colleagues there tell me of their fear of the consequence of Britain’s departure for the stability of Europe. Every time I see them they ask me, “Is there any chance?” I just hope to God that we wake up in time and say, “Yes, there’s a chance.”
Robert Neill (Bromley and Chislehurst) (Con)
I have a lot of sympathy with what has been said by the hon. Member for Bridgend (Mrs Moon) and my right hon. Friend the Member for Broxtowe (Anna Soubry). I will put my case slightly differently and, perhaps, a little more succinctly.
I take the view that this country made an error. It was a democratic error, but it was an error. And because we are democrats, we have to live with the consequence of the error until such time as I hope may one day be the case, when the future generation reverses that error in some way. However, I am also a realist and know that that is not likely to happen any time soon. Therefore, we must ensure that we respect the outcome of the referendum—like it or not—but that we do so in a way that mitigates, to the greatest extent possible, the damage that will inevitably flow from it. The Prime Minister at her Mansion House speech was frank and honest, as I have always found her to be, about the fact that there is damage and that we must therefore mitigate the risk.
I do not do my politics in belief and faith; that is appropriate for the confessional, but not government and litigation. I do my politics in hard-headed reality, which is why I want to talk about services. Financial services underpin the economy of this country. We are a service economy or we are nothing. The position on services is worrying. My constituents are dependent on services, as 36% of them work in the financial and professional services sector—the 16th highest proportion in the country. Other hon. Members have already set out the massive contribution that the financial services make to our economy, beyond any other.
Anything that damages financial services damages the economy, the tax take, our public services, and the lives of every man and woman in this country. It directly damages the lives of my constituents. I will not support anything that materially damages the lives, the wellbeing and the services of my constituents. I want to help the Prime Minister to avoid that happening. To do that, I want to give her flexibility. As soon as she expresses realism, seeks flexibility and recognises that there must be compromise, some of my hon. Friends promptly appear with another pot of red paint. They are the ones who make her life harder, not those of us who support her in the realism and honesty that she set out in her Mansion House speech.
Let us then look specifically at what needs to be done to achieve the result that we need for financial services. First, we have to find for the City of London, if possible—it is a big if, and whether it will be achieved I know not, but let us set it out very clearly—a means, where mechanisms exist, to enable maximum access for financial services firms and for the legal services firms that underpin them: the two go together. There has to be an early transitional arrangement, or implementation—what’s in a name?—to ensure day-one continuity.
Secondly, there has to be—I want to hear from Ministers how we take this forward and a reassurance that it is central to their view—mutual market access built on the existing position of regulatory convergence. Moving away from that would damage market access; it is not in this country’s interest. That should be based on a commitment—frankly, an ongoing commitment—to mutual recognition and regulatory co-operation, with a joint UK-EU mechanism to ensure that regulation and principles of supervision are monitored as they evolve over time.
There would have to be a dispute resolution mechanism. We can call it a court or a tribunal—I do not much mind. We ought to think about the costs of a plethora of arbitration tribunals, although perhaps remaining within EFTA, or the EEA, will give us a ready-made dispute reconciliation mechanism through the EFTA court. It might be unwise to rule that out.
Anna Soubry
Is my hon. Friend concerned about the cost of all the provisions that will have to be made to govern all these various sectors and to manage all these new arrangements? Would he like the Government to produce, before any final meaningful vote in this place, the actual costs of delivering the Brexit deal?
Robert Neill
My right hon. Friend makes an entirely fair point. We should do that, because there is going to be an administrative cost that will ultimately be borne by consumers and taxpayers.
The industry itself has done analysis of the costs in some areas of financial services. For example, the wholesale banking industry estimates that if there is regulatory fragmentation, it is likely that $30 billion to $40 billion of extra capital will need to be raised. The London Stock Exchange Group calculates that changing the location of clearing houses—we must try to retain euro clearing, which is critical for the sector—will have a potential cost of some $25 billion, not just to us but to the EU27. It is in our mutual interest, on both sides, to get an agreement. No analysis of costs has been done: we should be honest about that and do so. We have to get these agreements.
We must ensure, too, that there is the ability to hire talent across the board and to move it seamlessly. It has to be possible that people can move staff from an office in Brussels, Paris or Frankfurt to London without any hold-up or delay—not even the need for the slightest bit of paperwork. That has to be achieved sensibly. Again, it is in our interest because otherwise we damage the ecosystem of the global financial hub that London is. As the Chancellor rightly acknowledged in his speech last week, the depth of the London capital markets frees not only businesses but sovereign debt for the EU27 nations. Too much rigidity from either side makes that difficult and puts it at risk.
The other thing that underpins this is the legal structure that goes with the professional services. Our legal services are second to none. We are the venue of choice for international litigation and dispute arbitration. That itself is a great gainer of income for this country. The legal services sector was worth £26 billion to the economy in 2015-16—1.5% of GDP—and is responsible for about £4 billion of exports, about 55% of which goes to the EU.
Fly-in fly-out arrangements are critical to that. We need an arrangement whereby, post the establishment directive, lawyers can have their qualifications mutually recognised in the EU27 states, can move seamlessly from one office to another, have the professional standing to advise their clients in EU27 countries and—this is very important but not often mentioned—have their client legal privilege recognised and protected, which can happen only where a lawyer’s qualification is recognised. Without a deal on that, British lawyers will not be able to advise clients or firms in EU27 countries—because professional privilege will not apply—appear in their courts or have the right to arrive in those countries and be present for negotiations with clients in important commercial contracts. It is critical, therefore, that we do not forget the need to get the legal services sector absolutely squared off in our future arrangements.
We must ensure the recognition and enforcement of judgments. A derivative contract—something we lead the world in—is worth while only so long as it can be enforced. We must ensure that they and all other commercial contracts have certainty of enforcement, not only over the transition period, but going forward, as they are typically written for three to five years. At the moment, we do that with one simple EU directive. It would be most unfortunate if we had to replicate that with each country plus those with which the EU has reciprocal arrangements. We can mitigate that by immediate action to join the Hague convention, but that is a back-up, not an ideal situation; we have to go further. I ask the Minister to detail what meetings he and his departmental officials have had with the Bar Council, the Law Society and, where appropriate, the senior judiciary to discuss the practical steps we need to take to safeguard the position of Britain’s legal services sector going forward and how it underpins the broader financial and professional services sector.
Several hon. Members rose—
Madam Deputy Speaker (Dame Rosie Winterton)
Order. Because there have been quite a lot of interventions, I now have to reduce the time limit to six minutes. I am sorry. Hon. Members should bear it in mind, however, that even that will be tight.
Deidre Brock (Edinburgh North and Leith) (SNP)
Brexit—what a success it’s been, eh? The restoration of greatness is upon this sceptred isle. Except, it’s not. When we finally got some sight of what the Government thought might be the economic impact of Brexit, it was horrific. It was even more horrific given that the Government had exhibited some worrying signs of being massively optimistic about Brexit, when more sober heads could not see much reason to be optimistic at all.
Geographical analysis suggests that we are getting the rather unpleasant end of a sharp stick and sectoral analysis suggests that the stick is sharper than it should be. The Financial Times, as we have heard, estimated the cost as being about the same as the side of a red bus. We should not take a journalist’s word for it, though; the right hon. Member for Broxtowe (Anna Soubry) spoke of the OBR’s improved forecasts, but we should recognise that its growth forecasts for this year, next year and the year after are about a third down on the forecasts made in March 2016 for the same years.
The Scottish Affairs Committee has been taking evidence on the impact of Brexit on the immigration Scotland needs, so I will confine most of my remarks to that. There simply is not any organisation coming to the Committee and saying it thinks it is a good idea that we are leaving the EU or that there are fabulous opportunities waiting for us just around the corner. We are hearing from no one who thinks that our economy is going to be bolstered by losing access to the customs union and the single market and definitely no one who thinks that cutting immigration is a good thing.
CBI Scotland says that the Brexit referendum was the stepping-off point for its members putting the prospect of new immigration rules and the uncertainty that has surrounded the status of EU workers at the top of their concerns. The CBI also said that EU nationals make a vital contribution to the Scottish economy.
The same argument was made by the National Farmers Union of Scotland, which pointed to the thousands of agricultural workers from the rest of the EU who keep Scotland’s farms working. I assume that there are many similar stories to be told elsewhere. Jonnie Hall of the NFUS pointed out that our veterinary services in Scotland depend greatly on people who are trained in other EU countries, and that our haulage industry depends on drivers from elsewhere in Europe. Associated industries all rely on EU citizens coming here and working to make sure that our agricultural products get to market.
Skilled jobs need to be done, and we do not have enough skilled people in the UK to do them. It is not a case of employers importing cheap labour to undercut workers here, as the leader of the Labour party suggested in Dundee last week. It is a case of there not being the workers here to do the jobs that need doing. We have already heard stories of crops rotting in the fields because there were not the workers to pick them, as a result of EU citizens not coming to work the fields, and that is before the restrictions bite.
As Jonnie Hall pointed out, the damage is being done before the promised sunny uplands come into view. He said:
“We have experience of our members who have very, very high-value crops in the field that have simply rotted over the winter because there has not been the labour to pick the vegetables. We are always being told by Mr Gove that we will be driving an agricultural industry that is based on new technology. We are yet to discover the technology that can recognise and pick the right crop at the right time as effectively as a human being can.”
The food and drink industries are major players in Scotland’s economy, and this is the agriculture sector telling us that we need immigration to be easy to administer and freely available. Losing the freedom of movement of EU citizens is a disaster for agriculture, and farmers need a replacement quickly.
The NFUS has come up with a solution that might assist. Mr Hall told us that the NFUS has had conversations with the Scottish Government, the Department for Environment, Food and Rural Affairs and other Departments, but the door it simply cannot open is the Home Office’s—the one door it really needs to open. That needs to be fixed, and I hope the Minister can at least give some assurance of assistance.
Our food prices are already being adversely affected by the weakness of the pound and increasing import costs. Families the length and breadth of these islands cannot afford price increases caused by scarcities because farmers cannot get their crops in from the fields. Our agricultural economy needs to be protected and nurtured, and that needs freedom of movement. I am reminded of a speech given by the then Environment Secretary, the current Leader of the House, in a speech in Paris in October 2016, when she said that we would address the economic chaos of Brexit by selling food around the world. Unless she meant that we would offer countries a pick-your-own deal, I am not sure we can sell food that stays in the fields.
The same story is coming through from other sectors. Academia, scientific research and financial services all rely heavily on EU citizens as well as the EU marketplace to make the economy work. Without freedom of movement, we have economic meltdown. Taking back control appears to be the equivalent of being a child sitting in the back of the car with a toy steering wheel—you have the impression of power, but it is just a plastic wheel spinning round and round.
There has been far too much overconfidence from the Government and not nearly enough hard work and proper dedication to the task. Brexit is a disaster and will continue to be the most costly and damaging political decision any Government have made in modern times unless we stop it. Let us end it. For pity’s sake and for the sake of the people we represent, let us find a proper accommodation in the EU.
Leo Docherty (Aldershot) (Con)
In my brief remarks, I will consider the security situation with regard to European affairs and the impact that it can and should have on our defence spending.
My approach to Russia, which is the most urgent security challenge when it comes to European affairs, would be one of peace through strength. We must consider that attitude at a time when our own military strength has been significantly reduced following the fiscal challenges of 2010 onwards. Concurrently, we have had the rise of a resurgent Russia, with 1 million men under arms, that invaded Georgia in 2008, has invaded Ukraine and Crimea and has recently prosecuted this outrageous attack in Salisbury. We need to be very clear-eyed about that and realise that we need to regain this ground if we are to have a credible deterrent.
The strategic defence and security review 2015 laid out a very good plan for regaining that ground, but the bottom line is that if we want a strong, capable military, we have to pay for it. We need to urgently address the £2 billion black hole in the SDSR 2015 plan. The Treasury is seized of the importance of that in terms both of national security and of our security posture in Europe.
The issue is also urgently important because we have an enhanced forward presence. We have 800 soldiers in Estonia. General Sir Richard Shirreff, the former Deputy Supreme Allied Commander Europe, has said that investment in their capabilities is important because without it they will remain a political token and that
“without proper command and control and the artillery, engineers, attack helicopters and logistics to turn individual battalions into an effective fighting brigade, and spread over four countries, those four battalions would be picked off piecemeal should Russia attack.”
The need for urgent investment is very clear indeed.
Of course, we prosecute our defence posture in Europe through NATO. We must also urgently make the argument to our allies about the need for them, like us, to spend at least 2% of their GDP on defence. We are one of only five countries that do that. If NATO is to be a credible deterrent to a resurgent Russia, that needs to change.
NATO is not without its problems, but we must express a collective political will in NATO if it is to be credible. It is alarming that in 2015 the Leader of the Opposition called for NATO to be “closed down” and for it to
“give up, go home and go away.”
It is on the record that he has refused to say whether he would defend a NATO ally if it was invaded by Russia. That is astonishing, because a collective deterrent and collective defence is the fundamental basis of NATO, as stated in article 5.
On another outrageous Russian foreign policy act, namely the invasion of Crimea, an adviser to the Leader of the Opposition is on the record as saying that, in his view, it was not an invasion but an annexation that was “clearly defensive” and that
“western aggression and lawless killing is on another scale entirely from anything Russia appears to have contemplated, let alone carried out—removing any credible basis for the US and its allies to rail against Russian transgressions.”
If NATO is to be the basis of our collective deterrent, we need to express political will and political conviction.
On Crimea, I will conclude by quoting a former Prime Minister of Great Britain who understood the importance of peace through strength and of deterring Russian expansionism and aggression through a credible military force. Speaking in 1858, Lord Palmerston knew a thing or two about dealing with Russia, because back then, of course, we were engaged in the Crimean conflict. He said:
“The policy and practice of the Russian Government has always been to push forward its encroachments as fast and as far as the apathy or want of firmness of other Governments would allow it to go, but always to stop and retire when it met with decided resistance”.
We must provide that decided resistance, and we must not allow the voices of apathy or those who want firmness in their political conviction to our collective security to undermine that. I hope that that attitude of peace through strength will guide not just our investment in our defence and our engagement with Europe, but our security policy as a whole.
Justin Madders (Ellesmere Port and Neston) (Lab)
There is an old saying that nature abhors a vacuum. Similarly, business abhors uncertainty, and in no industry is that more true than in the automotive sector. As the Government’s sector report makes clear, investment decisions and sourcing choices in the industry are often made by European or global headquarters, and the continued uncertainty about training arrangements are making it ask serious questions about whether it will invest in this country in the future.
Uncertainty across a sector can have a real impact, particularly in communities such as mine where the sector represents a big chunk of the jobs market. The Vauxhall Motors factory in my constituency is currently facing huge uncertainty. Until recently, it employed 1,800 people directly, with many more jobs in the supply chain, so there is no doubt that it is of pivotal importance to the area I represent. How such companies fare in the post-Brexit world will decide how I and my constituents judge the Government’s handling of the negotiations, because when it comes to the crunch, what happens on people’s doorsteps is what really matters to them.
The key choices about Vauxhall’s future rest in the hands of its owners, PSA, which is based in France. We know from decisions already made that it shows no sentiment. We have already lost about 700 jobs since it took over, and these job losses are extremely serious. We are told that they are a reaction to market conditions, with a decline in sales of the Astra. Market conditions are not of course within the gift of the Government, but what is within their gift are the conditions within which business can trade, and this is where the Government really need to start listening to the industry—and acting. Traditionally, the automotive sector makes investment decisions about three to five years in advance, so decisions about investment in a post-Brexit world will be made shortly. The current model in production in Ellesmere Port is due to be discontinued at about the same time in 2021. The chief executive of PSA recently told the BBC:
“We cannot invest in a world of uncertainty”,
so now is the time for the Government to provide them with that certainty.
The automotive sector, as we know, is one of the most productive and successful we have, directly or indirectly employing over 800,000 people and generating almost 10% of the country’s manufacturing output. We know that about half of all UK car production is exported to the EU, and that figure rises to 70% to 80% for vehicles produced at the Vauxhall plant in my constituency. The Business, Energy and Industrial Strategy Committee recently found that
“leaving the EU without a deal would undoubtedly be hugely damaging to the UK automotive sector, more so than to other European countries.”
It concluded:
“Overall, no-one has argued there are advantages to be gained from Brexit for the automotive industry for the foreseeable future.”
Now that we are leaving the EU, it is important to recognise that this is one of our most vulnerable sectors, and there is no upside for it. We therefore need to do everything possible to safeguard jobs and investment. History shows us that once manufacturing jobs are lost, they very rarely come back. So far the response from the Government has been inadequate and complacent, and the sense of denial is palpable.
Of course, it was never meant to be this way. Both during and after the referendum, too many people have exaggerated the simplicity of all this. The Brexit Secretary assured us that we would soon be able to access
“a very, very large trade area, much bigger than the European Union, probably ten times the size”,
despite the fact that if it was that big, it would cover an area twice the size of the planet. The Foreign Secretary promised us that without
“the job-destroying coils of EU bureaucracy we can survive and thrive as never before.”
The International Trade Secretary said that securing a UK-EU trade deal would be
“one of the easiest in human history”.
Yet even with such esteemed and self-confident people negotiating on our behalf, we still do not know— 629 days after the referendum—what the deal will be.
When Cabinet Ministers are pressed on these issues, I have seen them bluffing complacently with dangerous fantasies about the promised green and pleasant land that will apparently emerge before our eyes without any effort being invested. The Prime Minister in her Mansion House speech said that new trading arrangements would need good will to succeed, but that sounds more like crossing one’s fingers and hoping for the best. My constituents’ jobs need more than that and the people who employ them need more than that to invest, so the Government need to understand that the once proud automotive heritage will be lost to the past unless we can secure its future. This is an industry that will survive and flourish only if we are prepared to fight for it. Even if it turns out to be the simple negotiation that the International Trade Secretary promised us, he needs to realise that for there to be an automotive sector in this country that will continue to trade with the rest of the world, it needs to be protected now, so the Government must act.
For me, a commitment to a customs union is the only sensible way to restore certainty and confidence, not some vague and ill-defined customs partnership that may or may not be the same as it is now. We know the argument about how a customs union will have an impact on future trade deals elsewhere, but I do not think that getting a couple of quid off trainers from China is actually a price worth paying for the destruction of the UK car industry. In response to a written question from me about which non-EU countries had been identified as the best ones for future trade deals in the automotive sector, the Minister for Trade Policy said:
“We are working with a number of other countries to explore the best ways to develop our current trade and investment relationships”.
That did not tell me anything, including about whether there are any such opportunities outside the EU.
If it is a choice between preserving trade with up to 80% of our existing customers, as against perhaps getting some new business with some unspecified countries at some unspecified time in the future, I know what every person with an ounce of common sense will choose. The choice for the Government is clear, and if they make the wrong one, we will never forgive them and we will never forget.
Chris Green (Bolton West) (Con)
It is a pleasure to follow the hon. Member for Ellesmere Port and Neston (Justin Madders), who made a really important speech on defending the car industry. I appreciate the ongoing concerns about Vauxhall in his constituency and the impact that that may have on jobs. I also understand that the Astra model is drawing to the end of its life, and the Vauxhall plant in Ellesmere Port needs to gear up for the next model that comes along. We must do all we can to ensure that the British car industry is ready for the next Astra model and for many other firms. The infrastructure that goes into the car industry is so important, and we have made progress in recent years. Just two or three years ago, we became a net exporter of cars for the first time since the ’70s, and that progress was founded on the other qualities of our United Kingdom. That is why Nissan and Toyota are investing in the United Kingdom.
There are many different arguments in the Brexit debate, and I understand why my right hon. Friend the Member for Broxtowe (Anna Soubry) said earlier that the tone of the debate is not what it could and, indeed, should be. A significant part of the reason for that is the interpretation that some people choose to make of other people’s arguments. It is better and healthier for people to make their own case and their own arguments and to enable others to compare those contrasting arguments and see which is best.
People continue to raise a point about the red bus touring the country and swaying the votes of so many people. In the run-up to the referendum, I held numerous events in and around my constituency to listen to people’s concerns, but I did not meet one person from the leave side of the argument who said, “I’ve been convinced to vote to leave the European Union because of the red bus.” People no more switched their view because of that bus than they did because of Labour’s pink bus in 2015. We must be cautious about ascribing motivations to other people.
By and large, I believe that people made their judgment and voted on whether to leave the European Union based on their experiences over the past 40-plus years, whether under a Conservative, Labour or coalition Government. People have seen that the European Union has been failing to reform over that time. We do not have in the European Union a sufficiently responsive organisation that can adapt quickly to the increasingly rapidly changing world we face.
The ability to adapt is key in any dynamic economy. Artificial intelligence, increasing automation and many different things are coming along the line, and if we are able, independently, to make laws and regulations to suit our needs in the United Kingdom, as opposed to having regulations and laws that suit the needs of the European Union, with its different competing interests, we will be in a far better place to face the ever-changing world.
A key part of that is immigration. The contribution by the hon. Member for Lewisham East (Heidi Alexander) was really important and she highlighted her relationship with Austria. Just as we want a close relationship with Austria, Germany, Italy and many other European Union countries, we ought to reflect on what Barbara Castle, the former MP for Blackburn, said many years ago. She suggested that we ought not to put Italians, Germans and the French above Malayans, Australians or Indians, and we ought to be seeking that equality.
There is a certain toxicity to the debate on immigration in the United Kingdom. I loathe that; it is repugnant. I believe that we can have an immigration system post Brexit that objectively looks at the qualities, values, experiences, abilities and talents of those people who we want in the United Kingdom and optimise an immigration policy that works for Britain. The British people will then increasingly see how positive our independence from the European Union can be.
In conclusion, I want to highlight an area that has in the past few months been absolutely fascinating. The Secretary of State for Environment, Food and Rural Affairs has made incredible strides in demonstrating the progress we can make and deliver on in relation to animal welfare post Brexit. I believe the British people did not have confidence in belonging to the European Union, but that with a good negotiation, deal and ongoing relationship, we may have confidence in our ongoing partnership with our European friends post Brexit.
Jonathan Edwards (Carmarthen East and Dinefwr) (PC)
In the time available, I would like to touch on a number of points that are relevant to the debate, starting with what has been its main crux this afternoon: the future trading relationship between the EU and the UK.
Yesterday, the European Parliament passed a resolution on the framework of the future trade relationship, which will feed into next week’s EU summit and the EU negotiating position. It reiterates the position taken by Plaid Cymru from the very first day since the referendum result: the best course of action would be for us to stay in the single market and the customs union. That is the only realistic solution to avoid a hard border on the island of Ireland and—this of equal concern to me—a hard border in Wales at the ports of Holyhead, Fishguard and Pembroke Dock. The EU has frozen talks until the British Government come up with a solution to this problem, but it is on a plate for the British Government, if they would only listen to the evidence.
This is perhaps an opportunity to discuss the Labour party’s policy on a customs union, which is completely different—it is more or less a souped-up trade deal. A customs union is what Turkey has. It does not benefit from all the international trade agreements that the EU currently has. We have had a long discussion today about the 50 or 60 trade areas that they entail, which are cumulatively worth about £140 billion to UK trade. We would lose that. The other factor with a customs union is that while the UK would lose the benefit of the deals with third countries that are currently aspects of the EU customs union, those countries would be able to import into the UK. I had thought that Labour’s solution was a way of dealing with the problem of Northern Ireland, but Turkey needs lorry parks on the border with Hungary and Romania to deal with its border issues. That would be the case in Northern Ireland, so the proposal would not deal with the major issue of the border on the island of Ireland.
The National Institute of Economic and Social Research says that the cost to households in the UK will be about £600 per annum. Rabobank has put the cost of a no-deal Brexit at £11,500 per person. I think that the biggest cost relates to our public services. Some 20% of doctors working in the Welsh NHS come from the European Union. A number have already left. Some 45% of EU doctors in Wales have said they are considering leaving and another 12% have already made plans to go. Last week, I attended a summit with Hywel Dda University health board in my constituency about huge reorganisation plans for the health service in the west of my country. The closure of hospitals is on the table because staff cannot be recruited and retained, and Brexit will make that problem far worse.
Plaid Cymru recently won a vote on the Floor of the House for the first time in our 50-year history of service in the House of Commons on a motion on protecting EU citizenship for UK subjects. Now that the British Government have been mandated by the House of Commons, I look forward to them making progress on that. Indeed, yesterday’s resolution in the European Parliament reaffirmed Plaid Cymru’s position.
David Linden (Glasgow East) (SNP)
Throughout the entire process of Brexit, people have been talking about taking back control and respecting the sovereignty of the House. I am sure that, like me, my hon. Friend is therefore looking forward to the UK Government adhering to that motion, which was passed unanimously by this House.
Jonathan Edwards
We look forward, as I am sure my comrades in the SNP do, to holding the Government to account on the result of last week’s very important debate.
With regard to a meaningful vote, Members should not be in a position in which we can vote for either a bad deal or no deal. That position was outlined in the other place yesterday when my colleague, Lord Wigley, raised this issue. That strengthens the argument put forward by a number of Members, in particular the right hon. Member for Broxtowe (Anna Soubry), who made the case for a second referendum on the terms of the deal.
I disagree slightly with the argument of the hon. Member for Lewisham East (Heidi Alexander) that there has been no change in public opinion, and I speak from my experience. When I was at the hairdressers in Ammanford on Friday, I spoke to many people who voted out. They were pleading with me to sort out the mess that we now face and said that they would now vote differently. On Saturday morning, when I was buying tiles with my wife in Cross Hands for the bathroom in our home, everybody there said exactly the same thing. I think there has been a big change in public opinion. If people were given the opportunity to vote on the facts before them, there would be a change of opinion.
The next issue I want to discuss is the prospect of no deal. We often hear from pro-Brexit MPs that that should be a bargaining position to hold against the European Union. As the hon. Member for Bridgend (Mrs Moon) excellently set out, a no-deal scenario for Wales would be absolutely catastrophic, and I see no reason to reiterate her points.
I will conclude on perhaps one of the biggest issues, which relates to Brexit’s constitutional implications: the power grab that is now facing and impacting on the Welsh Government, the Scottish Government, the National Assembly for Wales and the Scottish Parliament.
Jonathan Edwards
I fully agree. We have had two referendums in Wales to enshrine our constitutional settlement, but we have a British Government who are driving a sledgehammer through that settlement. I enjoyed the phrase “puppet Parliament” that was used by the right hon. Member for Wokingham (John Redwood). The reality is that if clause 11 of the European Union (Withdrawal) Bill goes through unamended, and unless the British Government accept the recommendations of the Welsh Government and the Scottish Government, our respective Parliaments would be puppet Parliaments within the British state.
That brings me to the new UK internal market that will have to be created following Brexit. Of course, we currently have the EU internal market, which deals with issues of trade within the British state. As somebody who supports Welsh independence, I recognise that there will have to be a UK internal market, if we end up leaving the EU single market, but the challenge at hand is who constructs that UK internal market. Will that be done on the basis of the political reality that we face in the British state—a multipolar state with four national Governments—or will it done through direct rule from Westminster? That is about not only the construction of the internal market, but how it is regulated.
Let me finish on this point: Westminster plays about with the constitutional settlements of Scotland and Wales at its peril. Unless respect is shown to the Welsh Government and to the people of Wales and the people of Scotland, instead of the disrespect agenda that we have at the moment, we will be discussing not Brexit in the years to come, but “Wexit” and “Scexit”.
Several hon. Members rose—
Mr Speaker
Order. I am sorry, but on account of recent interventions, the time limit for the remaining Back Benchers will have to be reduced to five minutes each, because otherwise the Front Benchers will not have adequate time to wind up. That is the consequence of interventions that some people might think are superfluous, but others will think are essential.
Kevin Foster (Torbay) (Con)
I was going to conclude slightly early anyway, Mr Speaker, out of courtesy, so that another Member could make their speech.
It has been interesting to listen to much of this debate this afternoon. Some right hon. and hon. Members have held their positions on this issue for a very long time, but for me, this is about trying to set out briefly—in the five minutes I have—the vision we should have for the future.
It seems a long time ago when we think back to the end of the cold war and the iron curtain across Europe. The idea of free trade and a free market zone spreading into the east of Europe—potentially even to Russia—was something that people started to debate and think about. Of course, some 10 or 14 years back, we saw the European Union expanding to many countries that had been decimated by communism. They have now been able to become free democracies and have started to become prosperous. The difference is that what then came was another attempt to try to turn the European Union into a federal state, for example through the creation of its own currency. I remember at university 20 years ago people arguing that London would be decimated and that people would move out if we did not join the euro. I remember buying a book by my right hon. Friend the Member for Wokingham (John Redwood) that argued that that was a load of nonsense. I did vote remain in the referendum two years ago—on balance, I felt that that was the right option at the time—but we now need to look at how we deliver on the outcome of the referendum vote.
I do not think that my vision of free trade and the removal of barriers between countries and economies should end merely because we intend to leave a particular political structure, and I do not think that we should focus entirely on the 27 other members of the EU. I have always felt that in the long run, subject to all the usual caveats about preserving our national sovereignty and about our ability to decide key public policy matters regarding health and welfare standards, we should seek to unite the economies of north America and Europe in particular, along with, potentially, those of other countries that are developed and have moved on.
Free trade cannot be a one-way process. It cannot be what we started to see a few years ago in Africa: a one-way trip of dumping subsidised products on to developing world markets to put people who were trying to compete with us on a level playing field out of business. One of the reasons why I have always supported free trade is the principle that it must work both ways, although that can sometimes lead to a more difficult argument.
Brexit gives us a chance to review our agricultural policies, which date from an era when we were concerned about whether we would be able to feed ourselves if the next convoy coming across the Atlantic was torpedoed. That consideration is now completely irrelevant. Nevertheless, there are some difficult discussions to have. As we move away from subsidies—there will be those who have become quite comfortable as a result of particular subsidies—we must discuss how we can shift from a system based on production to one that is based more on sustainability and diversification, perhaps with a greater focus on smaller producers than on large agribusinesses.
I welcomed what my hon. Friend the Member for Aldershot (Leo Docherty) said about security. If I had a little more time, I might dwell slightly more on that subject, and on the fact that European affairs could well be dominated by what Russia decides to do over the next few years. We should be clear about one key fact: someone who is Russian, or of Russian descent, is not automatically a supporter of Vladimir Putin. It does a great disservice to many people who were oppressed in that country and fled to safer nations to take Putin’s line that someone with a Russian passport must be a supporter of united Russia. Many such people are not, and many have paid for that with their lives.
Sadly, Putin seems to be starting to tread the well-worn path that has led Europe to conflict in the past. If he decides to continue down that path, we must make it very clear that we will be resolute in standing with our allies across Europe to ensure that any provocation or further attempts to destabilise countries in the way in which Putin has destabilised Ukraine would be met with a united and firm response. That is why what the Prime Minister did this week was absolutely right. We must also look towards the south, where other threats to European stability and security may arise, especially given the growth of instability in parts of sub-Saharan Africa, which is an aspect of what drives migrant flows towards our southern shores.
I do not have much time left, so let me conclude by stressing that Brexit is about leaving a political structure, not a continent. It is about viewing our neighbours not as opponents, but as future allies.
Ruth Cadbury (Brentford and Isleworth) (Lab)
It is a pleasure to follow so many eloquent—and some long—contributions.
I wonder how many arch-Brexiteers have actually spoken to people who work in or run businesses to learn about the impacts of not only Brexit but uncertainty about Brexit, and how it is affecting decisions in their constituencies at this moment. I have done that, and I am going to share just two examples with the House. One is a specific small company, and the other is in a major sector. I would have covered more, but have had to cut and cut my speech as the second half of the afternoon has progressed.
The owner of a small and medium-sized enterprise, a research company, wished to remain anonymous, but wanted me to know his position. He wrote to me:
“I run a small business and have already lost out because of Brexit (due to the drop in sterling putting up the cost of our cloud computing by 20% and uncertainty over future research funding). There are lots of detailed questions for my business that I have no idea how to answer, and I don’t have armies of lawyers and accountants to work out for me. So much for the Tories cutting red tape. Such as, if there is a hard Brexit, will there be an uninterrupted service from all the cloud computing currently supplied via companies based in Ireland? Will I be able to access all my data and information on day one—or need new customs clearance or change my data protection set up? Will cloud computing be treated as an import with tariffs—and therefore add to my operating costs and accounting costs as I grapple with new HMRC rules? These are things that could tip my very small, struggling, business over the edge. I’m sure we’re not the only vulnerable SME.”
He goes on:
“More generally, MPs say they will protect jobs. In my sector income”—
rather than jobs—
“is already moving judging by conversations I am having with partners and in my networks. Contingency plans are already being enacted by SMEs. I know of companies who have set up offices in mainland EU and are starting to channel work through there, even if it is UK-based staff doing it, for now. I am being paid in Euro for some work that previously would have been in sterling, which exposes me to risks I can’t offset. This is all completely legal. Two of my most talented EU colleagues have left the UK because they ‘don’t feel welcome’—they both lived here as children but having become parents themselves believe the situation is too uncertain to keep their roots here…In my view, the loss to Britain will be this invisible drip-drip of lost talent and money rather than announcements of big job losses by big employers and will only become apparent when it is too late.”
Secondly, my constituency is home to a large number of broadcast organisations—household names such as Sky, and myriad others, many whose main market is not even in the UK—and many of my constituents work in broadcasting, including a few household names. The UK dominates Europe’s broadcasting sector due to the availability of skilled employees and English being the dominant language in the industry. Thanks to the country of origin principle, hundreds of international media organisations are based here and can broadcast to anywhere in the EU without restriction. The trade organisation COBA—the Commercial Broadcasters Association—fears:
“International broadcasters based here would, reluctantly, be forced to restructure their European operations”,
particularly with a hard Brexit. It said a month ago that Brexit could cost the TV market £1 billion per year in investment, put at risk thousands of jobs in the UK broadcasting sector, and undermine the sector’s long-term global competitiveness. It says:
“Like many sectors, broadcasters cannot wait until the cliff edge of March 2019 to make decisions about the future of their European businesses.”
So even if no deal is not the Government’s intention now, these companies are having to make a risk assessment, divert management resources into contingency planning and make a decision on whether the risk of no deal is too great—they will jump ship anyway, taking jobs and investment with them. This means additional cost on otherwise unnecessary contingency planning and diversion of management time and energy, or just cutting and running.
These are the real impacts of Brexit now. If we multiply this by tens of sectors and hundreds of thousands of businesses making millions of decisions about their future, we see that this is what is leading to the UK tumbling down the international growth tables. It undermines Government income that funds our vital public services and, as looks increasingly likely, makes our constituents poorer. The Government must wake up, and focus not on the outliers in their own party, but on the economic prospects of the UK and its place in the world.
Bill Esterson (Sefton Central) (Lab)
First, I apologise to the House for missing the start of the debate, which was entirely beyond my control.
I also thank my hon. Friends for their contributions: my hon. Friends the Members for Nottingham East (Mr Leslie), for Lewisham East (Heidi Alexander), for Bridgend (Mrs Moon), for Ellesmere Port and Neston (Justin Madders) and for Brentford and Isleworth (Ruth Cadbury). I will just mention the comment of my hon. Friend the Member for Lewisham East, who described the Government’s approach and their fantasy trade deals as a dog’s breakfast; I have to say that my dog would turn up his nose at these fantasy trade deals on offer from the Government.
It cannot be right that the Government have so little regard for the sovereignty of this House that they provide little more than a two-day general debate and offer no meaningful vote, when most of this debate was always going to be about the single biggest issue to face this country in generations. As my hon. Friend the Member for Greenwich and Woolwich (Matthew Pennycook) told us in his opening remarks yesterday, the Government are attempting to look like they are doing something when in fact they are not only doing nothing, but have no idea what they even should be doing. Instead of filling two days of parliamentary time on this general debate, the Government should be bringing back the Trade Bill and the Taxation (Cross-border Trade) Bill and introducing the other Bills that they promised, including those on fisheries and agriculture.
Yesterday, the Minister for Trade Policy, the right hon. Member for Chelsea and Fulham (Greg Hands), congratulated the Government on bringing forward the trade and customs Bills and suggested that
“they have been designed to prepare us for every eventuality, although they will be needed regardless of the outcome of our negotiations with the EU. They will give us a strong trade remedies regime.”—[Official Report, 14 March 2018; Vol. 637, c. 915.]
However, they have not prepared us for every eventuality. In fact, they prepare us for no eventuality whatsoever as they fail to set out any legislative procedure for future trade agreements or for the protections of our rights and standards. As for the trade remedies authority, it has been described by the Manufacturing Trade Remedies Alliance, the industry body representing our manufacturing sector, as being the weakest in the world. The Opposition recognised the need for a trade remedies authority in our reasoned amendment on Second Reading. In Committee, we tried to strengthen the powers and the contribution that the authority will need to make, but the Government voted against and defeated every single one of our amendments. The Government know that they are in trouble with those Bills, which is why they are afraid to bring them back here. As many right hon. and hon. Members have pointed out, significant matters remain unresolved, and no credible solution has been presented by the Government, but they are none the less eager to rule options out.
The UK’s trade with the EU accounts for 44% of our total exports—some £229 billion. A further 16% of our exports go to those 70 or so countries that are party to some form of a trade agreement with the EU, including South Korea, Norway and Switzerland. In short, the majority of our trade is with EU or countries with which the EU has a trade agreement. The EU is of course the largest trading bloc in the world, and it is inconceivable that any trade agreement that the UK might be able to conclude with countries outside the EU would make up for the potential loss of trade once we leave. Of course, the UK will have to conclude new agreements with those countries that have an agreement with the EU, and the Government have attempted to spin the Trade Bill as being simply about that.
However, some of the agreements may well be significantly different from existing arrangements. South Korea, Chile and the other countries involved may well want an agreement with the UK after we leave the EU, but the question is why those countries would want to agree to the same terms that we currently enjoy as EU members. Furthermore, they will want to ensure that there is no overall disruption to their current trade with the EU. Of course, they will want a clear picture of what our future agreement with the EU looks like. Everybody is out for the best they can get for themselves. Every opportunity to take a little more and give a little less will be capitalised upon.
We already know that some of these countries, such as South Korea and Chile, have told the EU that they want to revise terms of their existing deals once the UK has left. Meanwhile, other countries have publicly called for changes to their trade with the UK after Brexit, calling for divergence from EU standards or liberalisation of tariff rate quotas. They do not want the same terms as before; they want better terms—for them, not for the UK. It will come down to who has the upper hand and the benefit of experience in trade talks.
Investors want to know whether they will be able to continue to participate in European supply chains and how rules of origin will apply after Brexit. Will they have to complete arduous customs declarations and advanced screening applications? Will their goods be held up at ports and train stations? It is clear that the Government have absolutely no idea what to do about the border on the island of Ireland. The Government have repeatedly told us that they will not have a hard border, nor will they have a border at sea. They have told us there will be no infrastructure on the border, yet they have also suggested that a digital border will be put in place and have hinted that it will involve CCTV and automatic number-plate recognition technology. Quite how CCTV and ANPR can exist without infrastructure, I do not know; that is a step even further in the Secretary of State’s blue-sky thinking. That proposition is untried and untested, and it has been dismissed categorically by businesses, the Irish Government and the European Union. Even if that were not the case, it would require a substantial systems overhaul across the European Union as well as in the UK, and HMRC has already said that it would not be in a position to roll that out by the time the UK leaves the EU.
Further, the success of any border arrangement, if such an arrangement could be found, would depend entirely on the extent to which UK regulations and standards were compatible with those of the EU. Those are fundamental questions, but despite 20 months having passed since the referendum result and a year since article 50 was triggered, the Government are no further on with answers to them.
Many of those issues would be substantially resolved if, as the Opposition have suggested, the Government were to negotiate a new, bespoke, comprehensive UK-EU customs union. Such a customs union would allow existing trade arrangements to be rolled over with minimal changes. That is what the Government say that they want. Disruption to trade, such as changes to rules of origin requirements and diagonal cumulation, would also be avoided.
Under Labour’s suggested approach, we would work alongside the EU in new trade arrangements. It is shocking that the Government have drawn a red line of not being in a customs union, without modelling the effects either way. If we agreed an EU-UK customs union, the EU would be enhanced by having the strength of the world’s sixth-largest economy joining it in negotiations, and we would be strengthened by negotiating alongside the largest trading bloc in the world.
Our approach would also remove the need for customs checkpoints and accompanying infrastructure on roads between Northern Ireland and the Republic of Ireland. Our approach recognises that the EU is the largest market in the world, and that we are stronger in future negotiations alongside it. The Labour party seeks solutions to the problems that the Government have presented to the country.
The Parliamentary Under-Secretary of State for Exiting the European Union (Mr Steve Baker)
I am grateful for the opportunity to respond to today’s debate, and I thank all right hon. and hon. Members who have taken part. I have very much enjoyed closely following the debate and the valuable contributions that have been made, and I am sorry that I will not be able to acknowledge them all in the eight minutes that remain.
I want to acknowledge the range of advice that the Government have been given, from my right hon. Friend the Member for Wokingham (John Redwood), who made a strong case for no deal, to my right hon. Friend the Member for Broxtowe (Anna Soubry), who made a strong argument for the customs union and EFTA, to which I will return in a moment. I was also grateful to my hon. Friend the Member for Clacton (Giles Watling) for representing his constituents by supporting the Prime Minister’s centre ground position.
The Prime Minister has been very clear that the UK will leave the EU on 29 March 2019, a date that is fixed as a matter of international and UK law under the article 50 process. That position respects the vote of the people in the referendum on 23 June 2016 to leave the EU, and there will not be a second referendum. As the Prime Minister set out in her Mansion House speech, our decision to leave the EU does not mark an ending; it marks a new beginning for our relationship with our European allies. We want the closest possible partnership. It is pragmatic common sense that we should work together to deliver the best outcome for both sides, and that is what we are doing.
I want to take a little time to talk about some of the solutions that have been proposed in relation to off-the-shelf models. As we have emphasised, we do not want an off-the-shelf solution or an existing model; we want the greatest possible tariff-free and barrier-free trade with our European neighbours, as well as to negotiate our own free trade agreements around the world, particularly in relation to our comparative advantage in services.
We want to ensure that UK companies have the maximum freedom to trade with and operate in European markets, and we want to let European businesses do the same in the UK. But we have always said that we are not looking for a Norway-style deal or a Canada-style deal. There is no point starting from scratch as we build our new relationship, because, unlike a country such as Canada, we start from the position of already having the same rules and regulations as the EU. Seeking a Norway-style agreement based on participation in the EEA agreement would not pass the first test that the Prime Minister set out for our future economic partnership with the EU. It would deliver control of neither our borders, nor our laws.
On borders, remaining in the EEA agreement would mean that we had to continue to accept all four freedoms of the single market, including freedom of movement. On laws, continued participation in the EEA agreement would mean the UK having to adopt at home, automatically and in their entirety, new EU rules, over which in future we will have little influence and no vote. This would not deliver the British people’s desire to have more direct control over the decisions that affect their daily lives.
Membership of EFTA, in and of itself, does not deliver any market access to the EU; it is a trading bloc between four European countries, Switzerland, Norway, Iceland and Liechtenstein. Three of those countries participate in the EU’s single market through the EEA agreement, while Switzerland participates in some areas through a series of bilateral agreements with the EU. Therefore, joining EFTA does not say anything about our future economic partnership with the EU. Although we want to maintain our deep and historical relationships with the EFTA states, the UK is in many ways different from those countries. Our population is about 65 million, whereas the EFTA states together comprise about 14 million people. In 2015, the EFTA bloc’s collective GDP amounted to £710 billion, which compares with the UK’s £1.9 trillion. So the UK’s participation in EFTA would fundamentally change the nature of that group and would not be an appropriate model for our future relationship with the EU or with those countries.
Anna Soubry
I was making the case for the single market and the EEA, and I am sure the Minister would agree that that is not an extreme position to hold.
Mr Baker
I listened carefully to the words my right hon. Friend used and I am sure the record will show that she referred to EFTA, but I am glad she has clarified that, in saying she supports EFTA, she means EFTA as an EEA member. But I stand by the remarks I just made. I hope she will not mind my saying to her gently that from the perspective of many who want to leave the EU, saying that we want to solve the problems of leaving the EU by staying in the EU’s internal market, with all that that entails for non-member states, and staying within the EU’s customs union, so that we have to accept the EU’s common commercial policy, appears to suggest that we must solve the problems of the EU by, de facto, staying within it. That is how it comes across to many people who wish sincerely to leave the EU. I did listen carefully to her—[Interruption.] The hon. Member for Nottingham East (Mr Leslie) mentions transition, and of course we have set out the case for the implementation period.
I must press on, because I want particularly to pick up a point relating to borders and migration.
Mr Baker
I want to make this point, but if I have time, I will give way to the hon. Lady. Remaining in the EEA agreement would mean having to continue to accept all four freedoms of the single market, including freedom of movement. Although it is true that Liechtenstein has unique arrangements on the movement of people, the UK is in many respects different from Liechtenstein, a country whose population is less than almost every UK constituency. We can safely anticipate that this exemption afforded to a micro-state would not be afforded to the UK.
I very much regret that, with only two minutes to go, I will have dramatically to shorten my speech. On the customs union, Turkey’s customs union with the UK does not cover certain sectors that would be vital to the UK economy and it does not guarantee frictionless trade across the whole economy, because of course a customs union alone does not solve some of the—[Interruption.] Opposition Front Benchers are saying that this is not what they are looking for. They are looking to be in the customs union and remain harmonised with the regulations of the EU—that is the implication of their position. The implication of their position is that they do not wish to leave the EU. They want the EU to control our tariffs. They would be happy for it to control our laws. They would be happy to accept free movement. This is not what people voted for.
We must not lose sight of our ultimate aim to build a new comprehensive partnership that sees us stay the closest of friends and allies. As the Prime Minister has set out, our vision is of a UK that is a champion of free trade, based on a high standard, thriving as a global Britain which forges a bold and ambitious comprehensive economic partnership with our neighbours in the EU and reaches out beyond to foster trade agreements with nations across the globe. As we approach this March Economic Council, both sides in these negotiations have agreed that we want a common fight against terrorism and crime; we want participation and co-operation on research, innovation, culture and education; we want to avoid the absurdities of the interruption of flights; and we want a trade agreement covering all sectors, with zero tariffs on goods and addressing services. We shall succeed.
Question put and agreed to.
Resolved,
That this House has considered European Affairs.
Royal Bank of Scotland closure in Stepps
David Linden (Glasgow East) (SNP)
Ten years ago, we, the taxpayer, bailed out the Royal Bank of Scotland during the financial crisis. Now, the Royal Bank of Scotland is trying to bail from communities such as Stepps by closing down much-valued local branches. At the weekend, I joined community activists, councillors and the local Member of the Scottish Parliament, Fulton MacGregor, to gather signatures for this petition.
The petition states:
The petition of residents of Glasgow East,
Declares that the proposed closure of the Stepps branch of publicly-owned Royal Bank of Scotland will have a detrimental effect on local communities and the local economy.
The petitioners therefore request that the House of Commons urges Her Majesty’s Treasury, the Department for Business, Energy and Industrial Strategy and the Royal Bank of Scotland to take in account the concerns of petitioners and take whatever steps they can to halt the planned closure of the branches.
And the petitioners remain, etc.
[P002118]
CERN Pensions: UK Tax Treatment
(6 years, 9 months ago)
Commons ChamberRead Full debate Read Hansard Text Read Debate Ministerial Extracts
Sir Robert Syms (Poole) (Con)
I rise to discuss the UK tax treatment of CERN pensioners, but the subject goes rather wider than purely CERN. I mention CERN only because I have two or three constituents who are quite exercised by recent changes.
George Osborne brought in a change to do away with the concession whereby people with foreign pensions were taxed on 90% of their income, pushing that up to 100% in 2017-18. That has had a material effect on several of my constituents, but there must be people who worked for a number of organisations who are affected by the tax change when they land pensions back into the United Kingdom. I shall talk a little about CERN, but also about one or two other international organisations, because the more I look into this issue, the more complex it becomes.
CERN was set up by UNESCO in 1954 as an international organisation, based in Geneva, to carry out fundamental research in high-energy physics. The UK was among its 12 founding members; today, there are 22 member states. The host nations are Switzerland and France, and most of those who work at CERN on a day-to-day basis live in either Switzerland or France, in or around the vicinity of Geneva. CERN served as a model for successful European collaboration, and several similar organisations, working in fields such as space research, have since been created, based on its structure.
On retiring, CERN staff receive pensions in Swiss francs. They are not ungenerous pensions—some are in six figures—because these people are extremely able, talented scientists who have committed themselves to science. CERN staff can either stay in one of the host states or move elsewhere. Many member states offer favourable tax treatment to attract such staff to their country. They range from Austria, which allows CERN staff to retire tax-free, to Spain, Malta and Sweden, where low rates have been negotiated, typically in the order of 10%.
The UK never gave any kind of special privileges to CERN retirees, but there was provision under our tax law that 90% of foreign pensions would be taxed. If someone is on a six-figure pension and the first £8,000 or £10,000 is disregarded, bringing them down in all the various tax brackets, that concession is worth having. CERN pensioners, who are particularly bright, have to decide where they are going to land themselves and their families when they have finished working. Many wish to move back to the UK, and they previously saw the UK Government’s more modest concession as attractive enough for them to retire to places such as Poole.
I make one very important point about CERN pensioners: they have not benefited from UK tax concessions in any way. They do not get the 25% tax-free cash payment that a UK taxpayer gets. Effectively, they have earned their pension by working abroad for an international organisation in which we have a big interest. They have come back to the UK and then been given a slightly better tax position, probably in recognition of the fact that many people who have foreign pensions do not benefit from the reduced rate available to those who contribute to pensions in this country.
Pensioners of other international organisations that are similar to CERN do receive special concessions from the UK Treasury. I understand that there are organisations that represent those who have worked for the UN, or its various agencies, and that discussions are going on about the appropriate rate. I also know that there are discussions about pensioners from the World Bank. A number of European organisations work under similar terms and conditions as CERN. Known as the co-ordinated organisations, they include: the Council of Europe; the European Centre for Medium-Range Weather Forecasts; the European Space Agency; the European Organisation for the Exploitation of Meteorological Satellites; the North Atlantic Treaty Organisation; and the Organisation for Economic Co-operation and Development. The International Service for Remunerations and Pensions, which is based in Paris, is responsible for the pay and rations of all those bodies. As I understand it, the civil servants who work for these co-ordinated organisations are taxed on only 50% of their salaries.
There are therefore examples of concessionary rates for organisations in which Britain participates, and my constituents have a very simple request: if the UK Treasury is not going to tax them on 50% of their income, which I somehow doubt that it will, they wish to go back to the 90% rate with which they were happy. Many decided to move back to the United Kingdom on the basis of that proposition. I stress that, because some of the pensions are high, over 20 years, the amount in question represents probably a couple of million pounds’ worth of sterling. We should bear in mind that the money is landed back in the UK in Swiss francs, and that it is not only taxed but spent in the United Kingdom.
There is actually a very strong economic argument for making a pitch to people with good international salaries to come back to the UK to retire in order to feed the very important column that is UK invisible earnings. My constituents thought that they would be taxed at only 90%, but feel that the rules have changed, so they would like the UK Government to reconsider.
When I asked the House of Commons Library what happened to civil servants who retired from the EU, I was told very politely that the EU taxed them and kept the money. I am very surprised that Her Majesty’s Revenue and Customs—it must be letting the side down—does not have any say over EU civil servants who retire back to the UK. I suspect that that is one of those fine points of detail that will be dealt with in the withdrawal negotiations. If those people were given a preferential arrangement, I would be extremely surprised if the UK Government were to change that and make those people’s pensions taxable at 100%.
This complex area involves a number of tax treaties and several international organisations, all of which operate to a different range of rules. My essential point is that a few of my constituents who worked hard in the scientific sector and earned good pensions thought that they had a proposition that meant that they were taxed at 90%, but now feel somewhat aggrieved that the previous Chancellor has pushed their rate up to 100%. As I have said, that was not the most generous tax proposition—those of other countries are far more generous—but that rate was attractive enough to get these people to move to places such as Poole. I hope that the UK Government will consider the options. Given that this is a complex area, I wonder if the Minister might be willing to meet me and a few CERN pensioners to discuss the matter more fully so that we can get to the bottom of whether they are being treated fairly and reasonably.
Finally, I congratulate the Minister on taking his post. He is among the Members on these Benches who I always thought was destined for high things. He had to start somewhere, and Economic Secretary to the Treasury is a fine and important post.
The Exchequer Secretary to the Treasury (Robert Jenrick)
I can always count on my hon. Friend the Member for Spelthorne (Kwasi Kwarteng) to put me in my place.
I thank my hon. Friend the Member for Poole (Sir Robert Syms) for highlighting this issue. I want to say how proud we are of the pioneering work carried out at CERN and of the work of all those who have retired and returned to the UK. Poole is a beautiful place to retire to, by the seaside.
It seems appropriate to be talking, if only tangentially, about CERN’s work in the week in which we lost that great physicist, Stephen Hawking. One of the few scientific bets that he lost in his career was that the Higgs boson would never be found, so even somebody of his genius can get things wrong every now and again.
The Government are committed to a fair and consistent tax system. This is especially important in pensions, as the Government promote saving through tax incentives and allowances. We want those incentives to work and to be fairly distributed. My hon. Friend outlined the history of the issue before us today. As he said, the Government reviewed this regime at autumn statement 2016, and announced that the UK tax treatment of foreign pensions would be changed to be closely aligned with that of UK pensions. Following that, the Finance Act 2017 legislated so that, with effect from 6 April 2017, 100% of income from foreign pensions has been liable to UK tax; it was previously 90%. This aligns the tax treatment of UK pensioners with the treatment of those who earn their pension overseas, ensuring a fair system. At the outset when contributions are made towards a pension—whether that pension is UK or foreign—they are usually free of any tax paid in the UK. With this change, the tax treatment of contributions and payments are now consistent.
My hon. Friend raised a series of points on which I hope to provide some clarity. He was kind enough to speak to me before this debate and mention a number of international organisations where British citizens work and make a valuable contribution, including the OECD, NATO, the United Nations and others. My hon. Friend noted that pensioners from these international organisations or organisations of a similar type are reimbursed, for example, 50% of their income tax payments. It important to say that this does not arise as a result of any country’s tax rules. It is not because of a particular deal made by the United Kingdom with any of these organisations, but because of the specific provisions within the pension scheme of that international organisation.
It would be CERN’s decision whether it wanted to make a similar provision in its pension scheme either for the future, or to reopen and reassess their past practice for CERN pensioners who had retired, were drawing on their pensions and are now my hon. Friend’s constituents. Any payments received by UK residents are subject to UK tax, including reimbursement. That is the case for all international organisations. I will return to the EU, which, as is so often the case, has special treatment.
The UK only supports special tax treatment for international organisations when the employees have worked for the organisation in the UK, which I hope my hon. Friend will understand is a somewhat different situation for tax purposes. Aside from the EU, the UK has no bilateral agreements in relation to the tax treatment of international organisations with other countries. We do with the EU, which is our only exception, and that is common practice across the Union.
My hon. Friend mentioned international comparisons. We understand that other major economies are typically taking a similar approach to the UK with respect to taxing pensions. Countries such as France, Germany and Switzerland all tax occupational pensions such as CERN’s and the foreign income of their residents. There may be other examples such as those that he raised and spoke to me about earlier. Of course, I am happy to look into that. It may be a topic that we could discuss were we to meet. Certainly, our major international competitors and the countries from which, one presumes, a majority of CERN’s employees are drawn take an approach similar to the one that we have taken.
In our correspondence prior to this debate, my hon. Friend suggested that the Government could introduce a 25% tax relief on CERN pensions to mirror the tax-free lump sum. I understand that that would be an attractive proposition for CERN pensioners. However, the tax-free lump sum is not an allowance. If a qualifying lump sum is not paid, this relief is not available. These lump sums can be paid free of UK tax whether built up in a foreign or a UK pension if the qualifying conditions are met. Allowing for 25% tax relief outside of these circumstances would, we believe—I hope that my hon. Friend will understand this—undermine these qualifying conditions, which apply to all pensioners.
I hope that my comments have at least explained the rationale behind the Government’s policy. I appreciate the concerns that my hon. Friend raises. I assure him that the Government have not sought to target individuals unfairly or to impact on the work undertaken by those at CERN or, indeed, by any other of our citizens who choose to live and work abroad. As he says, this is an incredibly important and increasingly prevalent aspect of the modern labour force, with increasing globalisation and a global market for the most talented individuals, certainly in the scientific and research world.
The changes we made in 2017 stopped people from transferring their pensions abroad to avoid UK tax. That was a consideration, but it was not the primary motivation. Our primary motive was to do this as part of a wider move towards consistency and fairness in pensions and taxation. The Government recognise that those in receipt of foreign pensions do face additional costs in accessing their pension. That was the original motivation behind the 90% rate that was introduced, I believe, in the 1970s. However, we have taken the view that it is not for Government to compensate these individuals for their choice to work outside the UK or to enable them to use this as a UK tax break. It is the Government’s role to encourage a fair and sustainable tax regime in the UK. The changes that we made have equalised the system, from which only overseas-based employees were previously able to benefit.
I again thank my hon. Friend for raising this issue. I also thank his constituents and others who may be paying attention to this debate for the ground-breaking work that they have done at CERN, which the Government and, I think, all Members are rightly proud of. We are proud that UK citizens have played a part in that and that they have chosen to return home to the UK for their well-earned retirement. The Government are delighted to welcome home British expatriates who have worked abroad to spend their retirement in places such as Poole. We recognise that that plays an increasingly important part in our economy.
I hope that my hon. Friend’s constituents will appreciate the Government’s rationale for making these changes over the past few years. We took a decision to treat all UK pensions consistently. Such judgments are difficult ones, and do involve winners and losers, but we appreciate the views of his constituents, and I would be happy to meet him and them in person, if it would help to further the conversation, and to listen to their specific concerns and see what, if anything, we can do.
Sir Robert Syms
I thank the Minister for that offer. This is a complex area, and I think that my constituents would be grateful for at least a brief meeting just to go through some of their concerns, outside the public spotlight.
Robert Jenrick
I thank my hon. Friend. This is a complicated area. I hope that my comments today have provided some answers to him and his constituents, but of course I would be happy to meet him and to bring along Treasury officials, who might be able to shed further light on this matter and answer their questions in greater detail. They are understandable and important questions, because they concern the financial security his constituents can enjoy in later life.
I hope that this evening’s debate has provided some answers and that the meeting that follows will provide more. We believe that the previous approach was fair. It was driven by a desire for consistency and fairness for all British pensioners, and we hope that right hon. and hon. Members can support that as a principle. Once again, I thank my hon. Friend for raising this important matter.
Question put and agreed to.
Domestic Gas and Electricity (Tariff Cap) Bill (Third sitting)
Thursday 15th March 2018
(6 years, 9 months ago)
Public Bill CommitteesRead Full debate Domestic Gas and Electricity (Tariff Cap) Act 2018 View all Domestic Gas and Electricity (Tariff Cap) Act 2018 Debates Read Hansard Text Read Debate Ministerial Extracts Amendment Paper: Public Bill Committee Amendments as at 15 March 2018 - (15 Mar 2018)
The Chair
We will now recommence line-by-line consideration of the Bill. There are the usual words about turning off your mobile phones. I can see at least one cup containing what is a banned substance as far as the House of Commons is concerned—
The Chair
It is water! I do apologise. It was the Clerk who drew it to my attention. We have to obey the rules, but water is very acceptable. Thank you.
Clause 8
Extension and termination of tariff cap conditions
Alan Brown (Kilmarnock and Loudoun) (SNP)
I beg to move amendment 2, in clause 8, page 5, line 36, at end insert—
“(3A) In the case that the tariff cap is extended to have effect for the year 2023, the Secretary of State must publish a statement before the end of that calendar year outlining whether the Secretary of State considers it appropriate to introduce further legislation to introduce a new tariff cap to have effect beyond the date outlined in this Act.”
This amendment would require, in the event that the tariff is extended until 2023, the Secretary of State to publish a statement outlining whether he or she considers it appropriate to bring forward further legislation to introduce a new tariff cap to have effect beyond 2023.
It is a pleasure to serve under your chairmanship, Sir Edward. At our last sitting I made a joke about being brief in my comments, but I will be super-brief this time.
The whole reason for the Bill is the admission that the retail energy market is not working in terms of providing effective competition for consumers and allowing them to access the best-priced tariffs. I recognise that the Government have made it clear that the proposed cap mechanism is temporary for that reason and is to allow the market to remedy itself. Because this is a temporary cap, clause 8 is the sunset clause, which in effect states that the cap must end by the end of 2023.
I have tabled my simple amendment because, as we know, the market is not working, but there is no guarantee that it will remedy itself in the time proposed, although we hope it will. There is a risk that there will still be no effective competition in 2023, so the amendment suggests that if we get to that final year of the temporary cap, the Government should make a statement outlining whether they believe it appropriate to introduce further legislation for a new tariff cap with effect beyond 2023.
The amendment is to ensure that the Government update Parliament about where matters are at, and imposes that duty on the Secretary of State. It is a very simple amendment, so my comments have been super-brief. I look forward to hearing what the Minister has to say.
The Minister for Energy and Clean Growth (Claire Perry)
Good morning, Sir Edward. It is a pleasure, as always, to serve under your august chairmanship, and I am impressed with your X-ray eyes seeing the coffee cup. It is, once again, a pleasure to welcome fellow travellers on our Committee.
I was of course interested in what the hon. Member for Kilmarnock and Loudoun said—in essence getting back to that long-term question that we have all been discussing as to what “good” looks like. In 2023 how will we know whether the cap can be removed? Interestingly, the hon. Gentleman is in a way seeking to bind the hands of a future Government with his amendment, by putting in place, when the cap is finally removed—I think we all agree with the sunset clause—the need to opine as to whether further legislation should be introduced.
My hope is to persuade the hon. Gentleman to withdraw the amendment, so I shall set out a couple of reasons why he should, although I think we all agree that we support the cap. We want the cap to be in place for the period it takes to restore effective competition in the market. We also agree that we do not want permanent caps to run in the market, because we want it to move towards a more competitive position. The Bill is an intelligent intervention to speed up that journey.
Frankly, the Government have no wish for a price cap to be a permanent feature of our energy market. We debated that point briefly last week. I think there is strong consensus in the Committee—if I have not misjudged it—that the cap should have a sunset clause. In order for a sunset clause to be effective, there should be an end date to the legislation. Of course, as we discussed last week, that does not simply mean we will pass the Bill quickly through both Houses—as I hope we will—and have the cap in place by the end of the year, as Ofgem has assured us is possible; we will also all be working alongside Ofgem to ensure that the conditions for effective competition are in place by the 2023 deadline. I think we would all want to see those conditions in place well before that date.
Ultimately, we want a fully working and competitive market that is transparent, innovative and adaptive, that promotes competition as the best driver of value and service to customers, and that has a regulator with the powers and appetite to regulate actively should a situation arise, as it has done, where we do not believe some groups of customers get that value and service.
We discussed last week the roll-out of smart meters—where we have seen good progress but we need to go further and faster—and moving to faster and more reliable switching. I am very interested in Ofgem’s midata proposals, which will make switching an almost seamless process. Indeed, my hon. Friend the Member for Weston-super-Mare (John Penrose), who was so instrumental in creating the Bill, told me about his latest app, Flipper, which enables someone’s supplies of various services to be transferred almost seamlessly, with their consent, to the best value tariff, based on what tariff they are looking for.
There are plenty of opportunities for consumers to benefit from that improved competition, but we have discussed the fact that, although some of us are active switchers and are aware of those opportunities, some of us are too time-poor to do that. Worryingly, there is a large group of customers who are on bad-value tariffs and either do not know it or are sufficiently disengaged from the market not to do anything about it. That is why we brought forward the Bill and why it is extremely important to test the initiatives that the Competition and Markets Authority proposed to improve engagement with so-called disengaged customers.
We have discussed incredibly exciting technological changes, such as the move to distributed energy, the increase in renewable energy and people’s ability almost to create their own energy network, which includes them, local businesses and other local energy consumers. New business models will also come into the sector. I was interested to hear the evidence of some of the more innovative new entrants about where they want to go with the market. They mentioned half-hourly settlement and payments to people who do not consume energy at certain times. There is an enormous range of adaptations, and of course smart metering will unlock even more.
We are all determined to have a fully competitive and fair energy market, but I think we are all of a mind that the cap should be a temporary measure. I pay tribute once again to my hon. Friend the Member for Stirling, who serves with great effect on the Business, Energy and Industrial Strategy Committee, to which we all owe a great debt of gratitude. The Committee said that there is a risk that if the price cap became a longer- term fixture it
“would put the Government unduly in charge of setting energy prices for the foreseeable future.”
Caroline Flint
I thank the right hon. Lady for giving way and congratulate her on receiving Privy Counsellor status—she joins a merry band of us. I accept the argument for a temporary price cap, but does she accept that we should look closely during this period at whether any other structural reform of the energy market is needed to ensure that there is even wider competition and hunger for customers, rather than complacency?
Claire Perry
I could not agree more. I thank the right hon. Lady for her kind congratulations. I feel it is an undeserved honour, but it is amazing. She is absolutely right. One of the reasons we were minded to bring forward the Bill was that we have a competitive energy market, with more than 60 companies that would like to sell us energy—either combined heat and power or, in some cases, just power—but we gifted incumbency to a large number of companies when we took what I thought were sensible steps to privatise the energy system. That brought in more than £60 billion of new capital and caused prices to fall and power cuts to halve, but the companies that were gifted incumbency have not had to work for customers. It was interesting to hear from new entrants about how they are determined to shake up that complacency.
I think the right hon. Lady also alluded to practices further up the energy system—or further down; I am not sure whether it starts at the top or the bottom—and particularly profits in the distribution sector and overall network costs, which have come down but arguably could come down further. Work has been done in that area, but I am determined that the whole sector, from generation right to the customer’s meter, should be highly efficient, that efficiency and customer service should be rewarded, and that we ensure we have not created a shield of incumbency that allows companies to persist with bad customer practices. This is the start. We may not need legislation to get there, so we may not have the pleasure of—
Vicky Ford
I thank my right hon. Friend for giving way and wish her many congratulations from the Government side of the Committee, too. On incumbency and the investment that she mentioned, is it not extremely important that the price cap is set at a level that continues to encourage investment the whole way through the energy chain and into the new infrastructure we need? That is one of the reasons it is so important to signal that this is not a permanent cap; it is an incentive to increase competition and to ensure that the market continues to be dynamic and that infrastructure continues to be invested in.
Claire Perry
My hon. Friend brings her great knowledge of these markets on a broader European scale to make a telling and vital point. The need to maintain investment in the industry, which we must have as we go through what is possibly the most exciting revolution in our energy markets for decades, is included in the Bill for exactly that reason. Clause 1(6)(d) speaks to exactly that point: we must ensure that we still have the financial investment in the industry that we so desperately need.
Having talked about the need to keep on improving efficiency, and having accepted the view of the Select Committee that the price cap should be only a temporary measure—reflecting a cross-party view that the Government should not be unduly involved in setting energy prices— I hope that I have persuaded the hon. Member for Kilmarnock and Loudoun that his amendment is unnecessary and provides an obligation on a future Secretary of State to impose another price cap. A future Government may decide to do that—who am I to suggest what legislation a future Government might introduce? However, I do not feel that the amendment is appropriate; it creates disincentives and uncertainty in a market where we have to have certainty to generate investment. On that basis, I hope he might be persuaded to withdraw his amendment.
Alan Brown
The Minister finished as she started, by talking about binding future Governments. I suggest that most legislation, in one form or another, binds future Governments. It is for future Governments to make changes to the legislation if it does not suit their policy at the time. Binding future Governments is not a reason not to table an amendment or to withdraw an amendment.
Again, the amendment is not about making the cap permanent. It acknowledges that the cap is temporary, but if, for whatever reason, we get to 2023 and we still do not think that there is effective competition in the marketplace, it puts a duty on the Secretary of State to explain what the Government will do to address that, including possibly introducing new legislation.
On what “good” looks like in the future, if the Government had accepted an amendment setting out the criteria for what effective competition will look like—such as the Labour amendment that suggested a whole list of criteria that should be considered to determine and measure that—we would know what “good” looks like in the future. That might also help to generate the effective competition that we are discussing.
That said, to go back to my original point, I am not trying to say that the cap should not be temporary. Following my comments to the Minister, I do not see any point in pressing the amendment to a vote, so I beg to ask leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Dr Alan Whitehead (Southampton, Test) (Lab)
I beg to move amendment 11, in clause 8, page 5, line 36, at end insert—
“(3A) In the case that the tariff cap is extended to have effect for the year 2023, the Secretary of State must publish a report before the end of that calendar year on further measures that can be taken to ensure that conditions are in place for effective competition for domestic supply contracts.
(3B) The report under subsection (3A) must include, but is not limited to—
(a) the merits of establishing pooled trading arrangements which matches energy sellers and buyers on the day-ahead and near-term markets; and
(b) the potential impact of such an arrangement on competition for domestic supply contracts.”
It is a pleasure to serve under your chairmanship, Sir Edward. Before I proceed, I ought to say two things. First, I congratulate the right hon. Member for Devizes on her elevation to the Privy Council. In terms of nomenclature, I am not entirely clear whether I should refer to her as the Minister or the right hon. Minister in the future.
Dr Whitehead
I think I will just continue with “the Minister”—or Claire, depending on the circumstances under which we meet.
Secondly, the hon. Member for Kilmarnock and Loudoun mentioned that he is a man of few words. I may well be a man of even fewer words today, because I am suffering somewhat, and my voice may not last for the whole proceedings. That could be a great boon for the Committee.
Caroline Flint
My hon. Friend is making an important point. To sum it up, the big six are both generators and retailers. The case is that they generate energy, sell it to themselves and then sell it on to us, without us really being clear about what the true price is. But does he agree that the advantage of a more transparent pool is for those independent generators to have a marketplace in which they can sell their energy, as well as those smaller retailers that would like to operate in a much more open and transparent way? I am glad to say that that was the policy when I was shadow Secretary of State for Energy and Climate Change. If, like other policy areas, it seems to be more popular these days, more strength to his elbow.
Dr Whitehead
I thank my right hon. Friend for that encapsulation of how the pool works and for her important point that a pool system would allow independent generators to trade on exactly the same basis as those vertically integrated generators, and, equally importantly, independent retailers bidding into the market would be able to bid in transparently, on the basis that they would know what the price was at that particular point. There would be hands on the table and the price would be clear for everybody. The whole trading process would be thoroughly transparent, to the particular advantage of how the market works in its new incarnation as a large number of independent retailers and generators operating alongside the more integrated generators and those large inheritors of customers from, essentially, the days of the Central Electricity Generating Board.
James Heappey (Wells) (Con)
I am not sure that I am that enthusiastic about this idea for further intervention, on two grounds. First, the big six are increasingly separating out their supply and generation businesses, because it makes commercial sense for them to do so, and I am therefore not sure that we are tackling a problem that will continue to exist. Secondly and more importantly, in one of the most successful green finance models that is coming through the cheapest cost of capital tends to be when generation is built with a contract directly to a supplier. I wonder if the hon. Gentleman has considered what impact this measure might have on that very cheapest cost of capital that seems to be available for quite significant amounts of generation capacity coming onstream.
Dr Whitehead
I will make two points in response. I hope that the hon. Gentleman will be enthused by the merits of the pool when he looks into it—knowing, as I do, how deeply he does look into these matters on a regular basis. Although it is true that a number of companies are dividing themselves in different ways from the model that there used to be, it is by no means clear that in the complete vertical integration of those companies those divisions all face in one direction. In some instances, such as the recent merger of SSE and Innogy, retail has been put together in one company. In other instances, companies are breaking themselves up into what might be called a good company and a bad company, in terms of the different forms of generation, without distinguishing between vertical integration and generation. Indeed, there are further moves abroad. For example, E.ON in Germany has effectively taken over elements of Innogy, which may have effects back on SSE and Innogy in the UK. A variety of things are happening in the market, some of which point towards different forms of vertical integration and some of which, as the hon. Gentleman says, point in the direction of demerger.
That is not necessarily the central point about how a pool operates. Even if there are circumstances under which there is rather less vertical integration, the fact that the pool is bringing complete transparency on all trades to the table means that everybody in the market is absolutely on the same level as far as both those trades and the retail element, whereby people are bidding in, are concerned. As the hon. Gentleman knows, a number of newer companies will largely be bidding into the day-ahead market. They may be considerably disadvantaged in not knowing what has happened with trades down the curve when bidding into that market. Having that transparency right across the piece is, in principle, a very powerful lever to ensure that the market works well regarding retail trading.
Secondly, the pool system is not a fanciful notion that some people might think is a good idea but that has never worked in practice. Probably the most successful trading arrangement in Europe at the moment is Nord Pool, which does precisely this across the whole of Scandinavia. It does not have the negative effects that the hon. Member for Wells suggests it might in terms of cost of capital and investment, but stabilises that market across the whole of Scandinavia and produces transparency across borders.
In any event, a pool system is something that this we ought to look at for this country. What this amendment does is rather less than that. It asks whether the Minister thinks that, under circumstances in which it has not been possible to frank the market for returning to competitive purposes by 2023, other instruments should be introduced to get us beyond the end of the temporary pool and out of that temporary price cap, which is what we all want. That will be on the basis that we between us will have not just done a good job of running a cap but changed how the market works, so that the cap does not have to be in place subsequently and we do not need to return to the idea of one in the future.
That is what the amendment intends to do. I think it is a relatively modest ask of the Minister. I am sure that, if she is not promoted, she will be in her post in 2023—if there is a Conservative Government. At that point, she would simply have to produce a small report setting out how the pool system might work. Then we will look to see whether we can take that forward at that point as a key measure, to ensure that competition returns to the markets after the end of the temporary price cap.
Claire Perry
I have listened with interest to the hon. Gentleman and done a bit of research.
The first part of the amendment asks that an additional report is published setting out additional measures for competition. We had a fruitful discussion of this issue on Tuesday, and talked about the fact that there will be a comprehensive report. There is a duty on the Secretary of State to make this transparent, so it will be obvious that the conditions for competition that have been recommended by Ofgem at that point are clear. We discussed at length whether we need to specify, and the will of the Committee was that that was not the case. So the first part of the amendment is not needed, because we will have a transparent report, we will be able to see what “good” looks like—a phrase many of us have used—and we should be able to satisfy ourselves of that.
The second part of the amendment relates to pooled trading. I understand that the hon. Gentleman is a bit of an expert on that, so I felt that I should go away and look at such things. His argument is that having pooled trading arrangements could be an option that should be included in the assessment of competition, and that the report should cover that. He will know that pooled trading arrangements were in place historically. Indeed, I believe it was the first Blair Government that removed those conditions.
Claire Perry
The hon. Gentleman is going to correct me on that. Good—I like a bit of correction on history.
Dr Whitehead
The Minister is absolutely right that there was a pooled system in place, but it was a one-way pool, not a two-way pool. Furthermore, there were only two generating companies at that time, so the circumstances were very different, and it was not a full pool in any event.
Claire Perry
I accept that helpful piece of information. But when it was cancelled and replaced with alternative arrangements, the real issue was that prices did not fall as far as they should. The rocket and feathers effect was in full cry. I have not been able to find a pub called “The Rocket and Feathers” anywhere in the country, so we cannot go out and celebrate the successful passage of the Bill with a drink in an aptly named pub. However, the new arrangements were put in place back in 2001 and extended in 2005.
The CMA, in its very comprehensive review of market competition, compared the principle of bilateral trading relationships, which the hon. Gentleman has eloquently expounded, with a pool approach. Its view was that the evidence did not support a move to such a pooling system, primarily because there is sufficient liquidity in the market—Ofgem reviews the liquidity arrangements—and there is price transparency for all the pool participants already. The CMA’s conclusion was that if we all accept that we need to move to a more competitive market, the evidence does not suggest a move to bilateral pooled trading relationships.
I have set out that Ofgem has wide powers to say what “good” looks like, on the basis of which it will make its recommendation to the Secretary of State about whether the cap should be lifted. I think that covers the first part of the amendment. I am persuaded by the CMA’s report that, given that the arrangements are working, there is insufficient merit in examining the merits of the pooled market, and there would not be sufficient gain from introducing that system. It should not be a specific requirement, as detailed by the clause.
There may be other opportunities to debate this structural point. On the point made by the right hon. Member for Don Valley when discussing the previous amendment, I hope that there will be opportunities over the next few years to talk in depth about what other arrangements need to be made in the market to improve the efficiency of the entire supply chain. However, hopefully in this case the hon. Member for Southampton, Test will consider withdrawing his amendment, as it is not needed in the Bill at this time.
Dr Whitehead
I am not persuaded that this notion is not needed in the Bill in the eventuality of the cap going to 2023. However, I am reasonably persuaded that it would not be a good idea to press the amendment to a Division this morning, because the purpose of the amendment was essentially to allow us to debate the question of the possibility of a pool. I have not persuaded the Minister this morning that it would be a good idea for future trading arrangements. However, given the assiduous work that she has already done in looking at how a pool might work, I hope that she will continue with her studies, and will perhaps be persuaded in the fullness of time that it is actually a rather good idea for the long term, and ought to be pursued—if not by this Government, then by the next. I beg to ask leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Clause 8 ordered to stand part of the Bill.
Clause 9
Consequential modification of standard supply licence conditions
Question proposed, That the clause stand part of the Bill.
Claire Perry
I am not going to delay the Committee on non-controversial clauses, but I feel it is important to state briefly the purpose of each clause, so that we are all clear in supporting them. Clause 9 gives Ofgem the power to modify the standard supply licence conditions after the tariff cap ceases to have effect under clause 8. On the point made by hon. Member for Kilmarnock and Loudoun, we are giving the regulator powers, as it sees fit, beyond the extension of the price cap, to modify the licence as it has already. The effect is that Ofgem can continue to modify the standard supply licence conditions as it deems appropriate, following the removal of the tariff cap, but of course those modifications must be published and it must state their potential impacts.
Question put and agreed to.
Clause 9 accordingly ordered to stand part of the Bill.
Clause 10
Amendments of the Utilities Act 2000
Question proposed, That the clause stand part of the Bill.
Claire Perry
This is simply a clause containing a whole load of technical gubbins. I commend it to the Committee.
The Chair
It is a pity we cannot have that sort of debate on every clause.
Question put and agreed to.
Clause 10 accordingly ordered to stand part of the Bill.
Clause 11
Interpretation
Question proposed, That the clause stand part of the Bill.
Claire Perry
This clause is a lot of definitional gubbins. It is extremely important—I do not wish in any way to reduce the hard work of the Bill drafting committee—but it does not require a long speech.
Question put and agreed to.
Clause 11 accordingly ordered to stand part of the Bill.
Clause 12
Extent and commencement
Question proposed, That the clause stand part of the Bill.
Claire Perry
This clause confirms the geographical extent of the Bill. It will come into force in England, Wales and Scotland, but not Northern Ireland. I am sure the Committee knows that there are separate arrangements for energy supply in Northern Ireland, including existing price controls on incumbent suppliers. We have made reference to that cap in our debates. The Act will come into force on the day it is passed, to make sure that we achieve the crucial momentum in the implementation period.
Question put and agreed to.
Clause 12 accordingly ordered to stand part of the Bill.
Clause 13 ordered to stand part of the Bill.
New Clause 2
Duty to consider the needs of customers in rural areas
“(1) When exercising its duties under section 1, the Authority must have regard to the need to protect customers in rural areas.
(2) When exercising their duties under sections 7 and 8, the Authority and the Secretary of State must have regard to—
(a) whether effective competition exists for customers in rural areas, and
(b) additional protection in place for customers in rural areas.”.—(Alan Brown.)
This new clause requires the Secretary of State and the Authority to have regard for customers in rural areas when exercising their powers in setting, reviewing and terminating the cap.
Brought up, and read the First time.
Alan Brown
I beg to move, That the clause be read a Second time.
We know that part of the problem with existing tariffs is that certain groups of people are more likely to be adversely affected. New clause 2 would make the duty to consider the needs of customers in rural areas absolutely explicit. To recap what I think we are all aware of, people who reside in rural areas are more likely to have lower incomes; they are more likely to be off the gas grid, which leads to overall higher energy costs; and, particularly in Scotland, they are more likely to have properties that are much more difficult to make energy-efficient, thereby increasing their ongoing energy costs.
Digital connectivity is an issue predominantly in rural issues, which means that is difficult to undertake regular switching. Rural areas also still suffer from notspots for mobile coverage, which is an impediment to getting a smart meter. If we really believe that smart meters will help revolutionise the market and help people get lower tariffs, we need to eliminate the notspots. The Scottish Government have just announced a £25 million fund to provide more coverage in rural areas, but that is perhaps not something they should need to step up to the plate on. Challenger companies are also less likely to tackle the rural issue, so the incumbents—the big six—often have almost a monopoly in some rural areas. That is another barrier to competition.
To cap it all in terms of the disadvantages for rural customers, people in the Scottish highlands and islands have to pay 4p a unit more for electricity usage. Rubbing salt into their wounds, anything generated in more rural areas has higher transmission charges placed on the generation companies, and customers in those areas pay a higher distribution levy. That is a real injustice for those in rural areas. And, of course, the Government have removed contract for difference auction capabilities for onshore wind in rural areas, which compounds the whole feeling of injustice.
The new clause would therefore require the Secretary of State and the regulator to have regard to customers in rural areas in exercising their powers when setting, reviewing and terminating the cap. The clause itself is self-explanatory. Again, I am interested to hear what the Minister has to say.
Claire Perry
The new clause seeks to add a clause to the Bill to create duties on Ofgem and the Secretary of State to consider the needs of customers in rural areas and to consider additional protections for them.
The hon. Gentleman spoke about this on Second Reading, and many of us who represent very rural constituencies understand exactly what he is saying. I have been really pleased to learn that, in the north of Scotland, the Government have confirmed their commitment to the hydro benefit replacement scheme, which is worth an average of £41 annually per household in the region.
The hon. Gentleman will be aware that costs are in some cases the function of geography—there is this unfortunate thing that it costs more to get electricity down to certain parts of the country. In my own region, the south-west, the peninsular effect creates some unfortunate energy price increases for those living at the end of the grid, as it were. That is something we have long had to live with. I am not saying that that is acceptable, but to date it has been a function of the pricing of energy distribution.
The other issue for many of those representing rural areas, including mine, is that people rely on heating oil or liquefied petroleum gas deliveries, because we are off the grid. Not only can that be a costly proposition, given the spike in heating oil prices, but it is a problem in terms of carbon emissions. As the hon. Gentleman knows from the clean growth strategy, I am determined to phase out fossil fuel heating—not in a way that penalises existing customers—starting with new builds from 2025, and really trying to come up with cost-effective alternatives in future.
When we have the consultation on the energy company obligation, which will be happening shortly, I am minded to review how much we direct towards customers in rural areas. As the hon. Gentleman knows, and as I know only too well from my constituency, fuel poverty is not an urban phenomenon. Many of our constituents live in old homes, which are not suitable for more modern forms of energy efficiency—[Interruption.] My hon. Friend the Member for Hitchin and Harpenden is putting up his hand to say that his house is like that. These homes are a problem, particularly for those on low incomes; in my constituency the average income is well below the national average, and many of our homes are simply very old. That is why, what I would like to do with ECO, to be forthcoming, is to see how we can deliver more help to rural households and how we can focus that help more on innovation so that we can create more of a route to market for important new technologies that could help.
We have an open market in the supply of heating oil—it has been looked at, and the conclusion was that it is competitive and working. LPG customers have the LPG orders introduced by the CMA, which set a maximum contract length. Under the fuel poor network extension scheme, Ofgem sets a target for gas distribution companies to connect an additional 91,000 low-income homes to the gas grid by 2021. So there is work afoot to reduce some of the disbenefits of living in some of the most beautiful parts of the world, such as the constituency of the hon. Member for Kilmarnock and Loudoun.
I have mentioned additional help, but I suppose the question is whether we should specify in the Bill that more should be done. My argument is that the new clause is not necessary, because the Bill already explicitly requires Ofgem to protect all existing and future standard variable and default customers, including consumers in rural areas. Furthermore, Ofgem’s role as the regulator under the existing gas and electricity Acts confirms that it has a duty to protect the interests of all existing and future customers. It should specifically have regard to the interests of individuals living in rural areas, among other things.
There are already protections at various levels of the law and in the Ofgem regulations for those customers for whom the hon. Gentleman so rightly speaks. I therefore do not believe that the new clause is necessary, but I remain apprised of the issue he raised, which many of us face: how we help people who live in rural areas, who do not have the same options as those who live in urban areas, whether in terms of heating, lighting or broadband. I hope that he is content with that explanation and is minded to withdraw his new clause.
Alan Brown
I welcome what the Minister said about ensuring that ECO is rolled out and that people who live in rural areas are prioritised. I realise that a cap in itself is not a means to an end in terms of ensuring effective competition and particularly helping people in rural areas, and that other Government policies are required to do that. Although, as the Minister said, the regulator needs to have due concern for all consumers, the new clause was intended to re-press the need for the Government and the regulator always to remember the disadvantages that people in rural areas face. It is clear that the Minister is well aware of those issues from her own constituency. For that reason, I beg to ask leave to withdraw the clause.
Clause, by leave, withdrawn.
New Clause 3
Assessment of extension of the tariff cap to small businesses
“(1) Within three months of the passing of this Act, the Secretary of State shall lay a report before each House of Parliament assessing the merits of extending the tariff cap to small business customers.”—(Dr Whitehead.)
Brought up, and read the First time.
Dr Whitehead
I beg to move, That the clause be read a Second time.
This is a simple and brief new clause that would require the Secretary of State, immediately after the passage of the Bill, to lay a report before both Houses assessing the merits of extending the tariff cap to small business customers. I do not think I need to emphasise that the Bill’s title gives the game away about what the tariff cap will cover: the Domestic Gas and Electricity (Tariff Cap) Bill applies to domestic customers and to no one else. That rather gainsays the idea that, in many instances, small businesses have far more similarities with domestic customers than with large companies, which may have wholly different arrangements for dealing with their electricity supply—they may engage in private wires or bilateral long-term contracts, or have their own generating plant—from small businesses, which in effect hug pretty closely to the principles for domestic customers.
It seems a little invidious that the cut-off point for the price cap is the end of the domestic customer level. I am sure no hon. Member present is in this position, but it is quite possible for a very large house with multiple activities going on in it to consume a lot more electricity than a high street retailer or a small business. A number of small businesses will find that their electricity bills are not capped even though, to all intents and purposes, they are indistinguishable from domestic customers as far as their patterns of use, means of purchase and so on are concerned.
The new clause would require the Secretary of State, shortly after the Bill’s passage, to think about whether it might be appropriate to bring small businesses under the cap as it progresses, with a proper definition of which small businesses are in and which small businesses—those at the larger end—are out, so that the cap’s benefits can be extended to that particularly hard-pressed sector of the UK economy, and so that a proper relationship can be established between who is doing what so far as their energy purchases are concerned and who should benefit from a cap as a result of doing those things.
This is a simple, straightforward amendment, which I hope the Minister will consider carefully.
Claire Perry
I am extremely interested in new clause 3. I will not delay the Committee too much, but the hon. Gentleman is absolutely right to have observed the issue faced by many small businesses. Indeed, it was observed by the last Conservative Government when they commissioned the CMA report. That report also looked at what was happening in the small business sector. It was a really important question.
As the hon. Gentleman mentioned, there is a huge variety of SMEs. They consume energy in entirely different ways and have different supply contracts. Many of them are on a domestic tariff. A question I have asked—I am not sure I know the answer—is what triggers the move from a domestic to a business tariff. If I do not have the answer by the end of this speech, I will happily write to the hon. Gentleman. It is an important question. [Interruption.] My civil servants are scribbling furiously. Of course, those businesses will be protected by the tariff.
As the hon. Gentleman mentioned, companies that are not supplied via a domestic tariff generally have fixed-term, fixed-price contracts that they negotiate through a broker, and those contracts are based on a range of different factors. In my constituency, I am aware—this has come up in the question around energy efficiency, which is a particular problem we need to try to crack with the small business sector—that many small businesses, particularly service companies, occupy premises where energy is just part of the price they pay. There are real disincentives for those landlords to shop around for a more competitive energy price, because it might reduce some of the benefit they get from selling those services as a bundle. It is an interesting question.
The CMA reviewed the small business market and found that a combination of features lead to a weak customer response. My argument on that—I have discussed this with small businesses—is that if someone is making payroll every month, looking to export to new markets and thinking about what they might have to do with the changes to our technical relationship with the EU, they do not necessarily always default to looking at energy costs, even though that might be economically rational, as electricity or power prices might be 5% of an overall cost base. According to the CMA, that weak customer response provides energy suppliers with unilateral market power over inactive customers—those words always make me feel very uncomfortable when we are talking about a supposedly competitive market.
The CMA has already recommended remedies, and those are being implemented. We have ended auto-rollover contracts with restrictions, including termination fees. That was implemented by the Energy Market Investigation (Microbusinesses) Order 2016. We are making prices more transparent, and we are having a price comparison website, which has already been implemented by the CMA through an order in June 2017. Early reports suggest that that has not been fully taken up by suppliers.
We are establishing a programme of prompts with information for consumers to engage, which is similar to the remedy for domestic customers in terms of the least engaged groups. That is ready for implementation, but no date has been set. In a similar way to what we are doing on domestic remedies, we are establishing a database of inactive customers that will be made available to rival suppliers and switching sites. Ofgem has not yet implemented that recommendation.
There has been some progress on transparency and auto-rollover contracts. The recent welcome action Ofgem announced to end back-billing beyond 12 months will also benefit small businesses and should help significantly with the cash-flow drain that a large backdated bill could cause.
Ofgem has a business consumer survey under way that we expect to get sight of this summer. It should give us more insight into the experience of business consumers. Ofgem plans to review consumer protections in the small business market.
While I invite the hon. Gentleman to withdraw the new clause on the basis that the Bill focuses on domestic customers, where we already have more information, I am extremely interested in the problem of how we might provide better customer service and pricing availability to small business customers. I am perfectly happy to commit to looking at the problem very seriously and to have a proper and open discussion, as the hon. Gentleman and I tend to do, about what more might be done. I would send a very strong signal that, if at some future point a price cap mechanism might help small businesses, that is not something I would turn away lightly.
The hon. Gentleman has re-identified an excellent problem, if you like, in the energy markets. As I said to the right hon. Member for Don Valley earlier, the Bill is part of the intention to make a competitive market work well for all consumers. I will continue to engage closely with this problem, and I hope the hon. Gentleman will be content to withdraw the new clause on that basis.
Dr Whitehead
I thank the Minister for that positive response to the overall suggestion. I appreciate that the Bill sticks fairly closely to domestic tariffs, and that is perhaps how we should leave it for present purposes, but I hope that the principle that has been raised, about that almost imperceptible gap, on occasion, between where domestic tariffs finish—
Claire Perry
I can inspire the entire Committee with the assiduousness with which my brilliant team is able to answer my questions. A company chooses the business rate. Those in commercial and retail premises have to choose a business tariff, but, of course, a home business, of which there are millions and millions, can be on a domestic tariff. In a way, there is a sort of self-selection mechanism, but if the business moves into commercial premises, it does have to default on to a business tariff. I hope that clarifies the confusion I raised.
Dr Whitehead
I thank the Minister for that clarification, but it emphasises the fact that a small business may be in circumstances where it is renting part of a building or is part of a business park, the negotiation of the energy supply is out of its hands and it is paying a set amount for that electricity, but that is not done on domestic rates, even though the extent of the business means the electricity may be well within what is normally paid for by a domestic consumer.
The Minister is absolutely right to identify the issue for small businesses, and I hope that will underline the seriousness with which she will take the issue forward. She indicated that she does want to give it further thought and to look at circumstances where the point of departure may be less abrupt in the future. On that basis, with the trust that she will assiduously pursue this, I beg to ask leave to withdraw the clause.
Clause, by leave, withdrawn.
New Clause 4
Ongoing relative tariff differential
“(1) The Secretary of State shall, during the term of the tariff cap conditions being in place, develop, ready for implementation, a relative tariff differential.
(2) A relative tariff differential is a requirement on supply licence holders that the difference between the cheapest advertised rate and the most expensive standard variable or default rate shall be no more than a specified proportion of the cheapest advertised rate.
(3) The Authority will be responsible for setting the proportion referred to in subsection (2).
(4) The relative tariff differential shall take effect on the termination of the tariff cap conditions.”—(Dr Whitehead.)
Brought up, and read the First time.
Dr Whitehead
I beg to move, That the clause be read a Second time.
This new clause is one that I feel particularly strongly about and that I hope the Minister can take on board, not necessarily with an immediate indication that the exact clause might be accepted but perhaps with an indication that she will look carefully at the principles it outlines and consider whether a similar amendment may be necessary and possible on Report. I say that partly because I appreciate that some of the wording is not what we would want to see in the final Bill. I particularly draw attention to the word “ongoing”. I am sorry that I have committed that word to paper, because it really should not exist as an English word; perhaps we can think of a better clause title. However, I want to talk briefly about what the new clause suggests.
Caroline Flint
It is worth exploring what might happen down the road when the temporary price cap ends. I am in favour of an absolute price cap rather than a relative price cap. I am listening very carefully to what my hon. Friend is saying and I have read the new clause, but may I say this to him in a friendly way? My concern is that there is a danger that what he is putting forward may inadvertently create a relative price cap and I am against that because a company could set its highest tariff very high so that, even if there were a 6% differential, it would be a differential between a high tariff and a really high tariff. I am totally at one with him on ensuring that another set of bad practices does not come in when the temporary price cap ends, but is there not a danger that that might be the unintended consequence of his new clause?
Dr Whitehead
I thank my right hon. Friend for that important point about trying to look at the consequences of what may happen when the price cap ends. Indeed, the new clause considers precisely what circumstances will be in place at that point. In essence, its purpose is to require the Secretary of State to produce a report on what might happen to relative tariff differentials in the period after the price cap ends. I suggest that that may be one of the pillars of a return to reasonable market conditions when the cap ends. If that pillar and other matters relating to the market working well were in place, and had been franked by Ofgem as being in place, the relative tariff range limitation device might come into place at that point.
In those circumstances, it would make no sense for an energy company to start with a very high tariff, because it would simply lose a whole pile of customers. Indeed, in circumstances where companies have done that, for various reasons, they have bled a very large number of customers. We can see that in some of Centrica’s activities, for example. It seems to me that in circumstances where the market was otherwise working reasonably well, the market itself would determine whether companies could hoick their original offer tariff really high to take advantage of a restricted tariff level. That may simply not be a viable strategy for them to adopt under those circumstances. At the same time, however, companies that had offered a competitive tariff would not have the option of transferring customers to a non-competitive tariff if they did not switch.
That is particularly important given that all the evidence we have so far shows that, whatever we do and whatever remedies or new instruments are put in place, it is unlikely that we will ever have a market in which everyone actively switches. It is extremely likely that the system will continue to operate on the basis of a majority of people one way or another not switching and a minority of people switching, sometimes very actively. Yes, perhaps that switching would keep the market in order, but the market nevertheless would still carry a large number of people who did not switch.
In the past, people not switching has led to the maintenance of SVTs and default tariffs. Even when measures are applied, such as Ofgem’s experiments with getting people to switch on the terms of the CMA’s recommendations—a number of pilots have been carried out, including letters from energy companies or from Ofgem informing people about how they might switch —a good number of people do not switch. We have a reasonable responsibility—indeed, a duty—to consider what will happen to that body of people even after we apply all the other remedies to the market. It seems to me that this particular remedy for the period after the absolute price cap ends may actually address that issue of sticky customers continuing not to switch.
Let me give hon. Members an idea of what is happening in the market today. As we might expect, among the 60-plus companies making a tariff offer in the market, there is an upwards curve in basic tariffs. The annual cost of a dual fuel tariff ranges from about £800 to £1,200 for some of the green tariffs we discussed. If we look at those companies’ tariff ranges—I will not mention names—we see that one company that starts at the lower end with an initial tariff offer of a little over £800 has a tariff range of up to £1,150, another company that offers an initial tariff of just over £900 has a tariff range of up to £1,200, and a company that starts at just under £900 has a tariff range of up to £1,150. That indicates that, at the moment, the slope of a company’s initial tariff bears no relation to its tariff range. Indeed, some companies have very good tariff ranges—Members might be surprised to hear some of their names—whereas other companies, which Members might have a rather more benign view of, actually have huge tariff ranges. So the question of tariff range and how that may affect sticky customers is a question not just of there being bad companies doing this and good companies not doing it, but of it being reasonably endemic across the range of companies offering a relatively low initial tariff but having a very high tariff range structure in their arrangements.
Claire Perry
I agree with the right hon. Member for Don Valley that it is absolutely right to think about what might happen when the cap goes off into the sunset, as we have done extensively. I am always interested to listen to the hon. Member for Southampton, Test but I slightly feel—unless I have misjudged this—that we are going over territory that we have covered extensively, in particular on Second Reading. We have heard many arguments about the absolute versus the relative tariff and, in effect, he is proposing a perpetual relative tariff—[Interruption.] Perpetual or ongoing, perhaps we are dancing on the head of a pin—
Claire Perry
Okay, but there is a relative tariff or a relative cap that is ready to go. The hon. Gentleman said on Second Reading:
“It should be clear that we want this price cap to come in. We believe it should be an absolute and not a relative price cap”.—[Official Report, 6 March 2018; Vol. 637, c. 271.]
I agree with him, as does Ofgem and as does the Select Committee, which made it very clear that it felt that a relative cap would simply be gamed.
As the right hon. Member for Don Valley mentioned, there is also the problem that companies will simply lift up their skirts and raise their whole tariff. The hon. Member for Southampton, Test may say that companies would then lose their customers, but we come back to the question of whether people will actually move. Yes, companies may lose those hyper-price-sensitive switchers who are very engaged, but they may not lose the customers we are really here to help today—those who are more vulnerable and not as savvy.
The hon. Gentleman is right to say that Centrica lost more than 800,000 customers, but 650,000 of them were due to a collective switch—one big deal. So only 150,000 of a very substantial customer base, the majority of whom are still on SVTs, actually shifted, despite the price rise. The numbers are therefore not quite as unequivocal as he suggests.
He is also right to raise the issue of ongoing protection for vulnerable consumers. We will all be pleased that, regardless of the price cap, Ofgem has already introduced a safeguarding tariff for those on prepayment meters, an additional 1 million customers. Those customers have saved about £120 to date relative to what they would have paid. The tariffs that they are paying have come down relative to the uncapped SVTs on the market. That absolute cap mechanism, therefore, is working. Even when the safeguarding tariff put in place by the CMA or the price cap in the Bill comes to an end, Ofgem will continue to have the powers to take further steps to protect vulnerable customers as it sees fit.
We are all here because we want the market to be in a competitive place on the expiration of the tariff cap under the sunset clause. The hon. Member for Southampton, Test may say that that is a triumph of optimism over practicality but, in essence, if we believe the market will be more competitive and we do not believe that the relative price cap is the way to address any remaining issues of uncompetitiveness, I find it difficult to see why we should put his new clause into the Bill, running all the risks we talked about on Second Reading—which have been explained eloquently by others—of the variable tariff cap not being an effective way to establish competition. We will have had a temporary absolute cap in place. We will have sent the very clear signal. That will have operated. I can see a situation where a relative cap could undo some of that good work and we would suddenly see prices zooming upwards because there was the opportunity to do so.
I appreciate the hon. Gentleman thinking hard, as always, about what “good” will look like, and I share his desire to continue to work together on ensuring that this cap delivers, but I hope he will withdraw the new clause on the basis that it is not necessary and could have bad unintended consequences.
Dr Whitehead
I simply do not accept what the Minister says about bad unintended consequences. I do not think that is realistic. Conversely, having something like this in place would be a positive driver of a return to not only good market conditions but proper protections for those operating tariff arrangements under those otherwise good market conditions. It is important that, in the ending of the absolute cap, we get both sides right. It is not just a question of the market working well. It is a question of people in that market who have disadvantageous circumstances being protected properly as it goes forward.
Claire Perry
Would the hon. Gentleman accept that those arguments could be made today about whether we are introducing an absolute or relative cap? We have all agreed quite strongly that an absolute cap provides those protections. If he were proposing that Ofgem has an absolute cap ready to go, we could raise some of the questions we discussed earlier about future uncertainty in the market. I felt that until today we had all considered carefully, but rejected, the structure of a relative cap as a hypothesis—as opposed to an actual absolute cap, which we have—that would not deliver the results we want: vital protections for vulnerable customers.
Dr Whitehead
Yes, indeed. That is why I have been pains to say that this is not a relative cap. It was not a relative cap when it was proposed, although it was branded as one, but can actually be a pillar of an instrument for market return. I do not want to pursue the new clause today; but, for reasons that the Minister and I perhaps need to talk about, it would be a good idea to bring something like it back on Report. I think we probably will. I beg to ask leave to withdraw the motion.
Clause, by leave, withdrawn.
Question proposed, That the Chair do report the Bill to the House.
Claire Perry
May I thank you for your wise chairmanship, Sir Edward? I also thank Ms McDonagh, who chaired the Committee on Tuesday; the Clerks of the Committee, who have kept us assiduously on the straight and the narrow; and the House staff and Hansard reporters, who always do such an amazing job.
I extend fervent thanks to all members of the Committee. We have had an extremely constructive and helpful debate and have probed many aspects of the Bill. I also thank the witnesses who gave evidence and from whose wisdom we have benefited. I think that covers it, apart from thanking my excellent civil servants for their help in drafting the Bill and their excellent answers to questions. We will continue to draw deeply from that well, but at this stage I thank everybody for taking the Bill—hopefully successfully—through Committee.
Dr Whitehead
Like the Minister, I thank everyone who has taken part in this stage of the Bill’s passage. We have had a genuinely constructive debate, in which we have all been facing in the right direction. I particularly thank the Clerks for their assiduous work and for their help with tabling Opposition amendments; unfortunately we do not have an entire civil service on our side, so we must seek other help, but we have not been failed.
I hope that the Bill will now progress to its remaining stages with consensus that the tariff will be an absolute cap, and with good support from all sides of the House for the result that we all want.
Alan Brown
Without going on for too long, may I, too, thank the Clerks and the Chair? I thank the Minister for listening—I hope—and congratulate her on her appointment to the Privy Council. Like the hon. Member for Southampton, Test, I look forward to seeing the tariff cap in place, competition in the marketplace and consumers being saved money.
The Chair
On behalf of us all, I congratulate the Minister on her great honour; we are all absolutely delighted. On my own behalf and my fellow Chair’s, I thank all hon. Members who have taken part, particularly Dr Whitehead and the Minister. For an unreconstructed Thatcherite libertarian marketeer like me, it has certainly been a useful re-education camp on the benefits of intervention in the marketplace.
Question put and agreed to.
Bill accordingly to be reported, without amendment.
Data Protection Bill [ Lords ] (Morning sitting)
(6 years, 9 months ago)
Public Bill CommitteesRead Full debate Read Hansard Text Read Debate Ministerial Extracts
The Committee divided: - Ayes: 8 / Noes: 10 - Question accordingly negatived.
Darren Jones (Bristol North West) (Lab)
I beg to move amendment 152, in schedule 6, page 179, line 17, leave out paragraph 2 (as inserted by paragraph 49) and insert—
“2 The Commissioner must, in carrying out the Commissioner’s functions under this Regulation, incorporate with any modifications which he or she considers necessary in any guidance or code of practice which the Commissioner issues, decisions, advice, guidelines, recommendations and best practices issued by the European Data Protection Board established under Article 68 of the GDPR.
2A The Commissioner must, in carrying out the Commissioner’s functions under this Regulation, have regard to any implementing acts adopted by the Commission under Article 67 of the GDPR (exchange of information).”
It is a pleasure to serve under your chairmanship, Mr Streeter. I declare my interests as set out in the Register of Members’ Financial Interests.
Amendment 152, like the amendments we tabled on Tuesday, would assist the Government in securing a finding of adequacy from the European Commission so that, if the UK leaves the European Union, we can continue to exchange data with it. As the Committee knows, I like to refer to my version of the general data protection regulation as much as to the Bill, even though it is not the subject of our debate today.
I welcome the Government’s commitments on the Floor of the House to seeking something “akin to” adequacy, then adequacy, and then something “beyond adequacy”. I thank the Minister , the hon. Member for Stourbridge, for her response to my question on Second Reading about wanting “beyond adequacy” to represent a useful position for our Information Commissioner on the European data protection board. Some of us have concerns about that because of the practicalities of what happens with third countries. Indeed, I asked the Information Commissioner herself about it at an evidence session of the Select Committee on Science and Technology, and she confirmed that third countries traditionally have little influence on the article 29 working party—the predecessor of the EDPB—even if they have a seat at the table.
I think our shared view is that in seeking “beyond adequacy”, we want not only to have a seat at the table as a potential third country but to have influence. In order to have that influence, we need to go slightly above and beyond what other third countries do and show close co-operation between the UK and the European Union.
Article 45 of the GDPR sets out guidelines on how the European Commission will assess and agree decisions on adequacy. It has to be happy that our legal framework is in line with its own. Of course, there will be an initial conversation as part of trade negotiations with the European Union. Under paragraph 3, the Commission is then to undertake
“a periodic review, at least every four years”
to ensure that we continue to be compliant. Paragraph 4 refers to ongoing monitoring of developments in third countries in their application of data protection laws and privacy rights.
As I have said on Second Reading and in previous debates on data protection laws, my concern is that we should lockstep the developments in our legislation, guidance and codes of conduct to show that they are still in line with the leading European Union legislative framework for data protection, so that we can continue to flow important amounts of data. Some 70% of our data flow is with the EU, and the UK accounts for a huge proportion—around 11%—of global data flow. We must maintain that. Under article 50 of the GDPR, in deciding on adequacy, the European Commission must seek
“mechanisms to facilitate the effective enforcement of legislation”.
This is our opportunity to show the European Union that we are committed to data protection principles. Amendment 152 would tweak the wording of paragraph 2 of article 61 of the applied GDPR. I was pleased to see that paragraph; in earlier debates I raised some concerns that—for political reasons that I will not go into today—the Bill might not go as far as admitting that we need to track and implement EU law in the area. However, I want to strengthen the paragraph 2 wording, which says that our Information Commissioner must
“have regard to”
various things that happen at European Union level, including
“decisions, advice, guidelines, recommendations and best practices issued by the European Data Protection Board”.
The amendment seeks to strengthen that slightly, while recognising that the Government, and probably also the Information Commissioner, would like a little flexibility.
Liam Byrne (Birmingham, Hodge Hill) (Lab)
This is a wise and carefully crafted amendment. Does my hon. Friend agree that it is especially needed because the Government have rather unwisely decided not to incorporate article 8 into British law, which means there is a risk of courts in Europe and Britain interpreting data protection regimes differently, leading to divergence in future?
Darren Jones
I agree. I am attempting not to get too much into the party politics in a bid to seek the Government’s agreement to the amendment, but there is an important distinction to be made. We have a layering of risks in seeking to achieve adequacy. On Tuesday we debated at length the Government’s decision to repeal fundamental rights of the European charter, which we know from European guidelines is something they look to. We will come to issues of national security today, which is also an issue for third countries, as we have seen with Canada.
This small amendment would help mitigate some of that risk by making it clear to our friends in the European Union that we in Britain are proud about the influence we had in drafting the general data protection regulation, which is a world-leading set of laws and rules for the future of our digital economy, and we continue to want to play a part in that, to help lead the conversation in the world and at European Union level. In co-operation with our friends in Europe, we seek to maintain that. While the Government may wish for divergence in other areas, I take the view that they do not in this area because we have been at the forefront of developments.
The amendment seeks only to tweak what is already in the Bill. As Members will see, it says that we would
“incorporate, with any modifications which he or she”—
that is the Information Commissioner—
“considers necessary in any guidance or code of practice… decisions…issued by the European Data Protection Board”.
There is a nuanced difference; the Bill as drafted speaks of having “regard to”, while the amendment speaks of incorporating, with any modifications that the Information Commissioner feels fit. It may seem like I am getting stuck in semantics—I do quite like to do that—but the amendment would deliver an important tone to the European Commission. On passing the Bill, we would be saying that when we are negotiating on data, where we have a shared interest at European and UK level, we want to get it right, and we will have gone beyond the basics of adequacy of other third countries because of our close relationship. We will hopefully have a seat on the European data protection board, where we seek to have influence, and we will take that responsibility seriously and, therefore, we will incorporate decisions of the board into the guidance of UK laws to lockstep our development in the area. As I said, it is made clear in the general data protection regulation that that is to be monitored on a continuous basis and more formally on a periodic basis.
I would not want us to lose adequacy in the future by diverging from European Union law. I want us to have an influential position on the European data protection board, which means being involved in the detail and taking the obligation of carrying that through on our side of the fence. The amendment seeks to bring that tone of co-operation and would help us and the Government in seeking adequacy so that we can secure these important data flows into the future.
Liam Byrne
It is a privilege to serve under your chairmanship, Mr Streeter. I rise to support my hon. Friend on his excellent, very helpful amendment. Earlier in the week we had a debate about the wisdom of incorporating article 8 into the Bill. I want to underline that we now have two different foundations for privacy that will operate post-Brexit in Europe and in the UK. The law is not fixed in aspect; it is a dynamic body of thought and ideas, and in the years to come there is a risk that courts in Europe and in the UK will diverge in how they interpret those fundamental principles.
That risk is all the more profound in this area of public policy because technology is moving so quickly. Therefore, if the Government wanted to do away with the risk to any future adequacy agreements, they would look for any and every opportunity to create bridges between the EU data protection regime and the British regime. The more bridges that are put in place, and the more girders that yoke us together in this field of public policy, the better.
Companies will consider whether regulatory harmonisation in data protection will continue when they make investment decisions in the technology space in the UK. I am afraid that that is now a fact of economic life. The simpler and faster the Government can help companies take those decisions, by putting beyond dispute and doubt any future adequacy agreement, the better. It is in our common interest to try to create stronger links than the Bill offers. I hope that the Government will accept the amendment.
The Minister of State, Department for Digital, Culture, Media and Sport (Margot James)
It is a pleasure to serve under your chairmanship, Mr Streeter. I thank the hon. Member for Bristol North West, who has great knowledge of these issues and has put his thoughts on his amendment very well to the Committee. As the Prime Minister said in her Mansion House speech, the ability to transfer data across international borders is crucial to a well-functioning economy, and that will remain the case after we leave the European Union. We are committed to ensuring that uninterrupted data flows between the UK and the EU continue. One way we can help to ensure that we have the foundations for that relationship is to continue to apply our exceptionally high standards for the protection of personal data.
Amendment 152 relates to the applied GDPR, which exists to extend GDPR standards to personal data processed for purposes outside the scope of EU law that may be otherwise left unregulated. The amendment is to schedule 6 of the Bill, which creates the applied GDPR by modifying the text of the GDPR so that it makes sense for matters outside the scope of EU law. The extension of GDPR standards is vital, because having a complete data protection regulatory framework will provide the UK with a strong foundation from which to protect people’s personal data and secure the future free flow of data with the EU and the rest of the world. Applying consistent standards ensures that those bodies—mostly public authorities—who process personal data, both in and out of the scope of EU law, experience no discernible operational difference when doing so.
However, the applied GDPR, although very close, is not identical to the GDPR known as the real GDPR. The differences are primarily the inevitable result of extending text designed for the EU to matters over which the UK and other member states retain competence. Reference to member states becomes a reference to our country; reference to the supervisory authorities becomes a reference to the Information Commissioner, and so on. Similarly, the applied GDPR, as a purely domestic piece of regulation, is outside the scope of the functions of the European data protection board and the EU Commission.
Decisions and guidance issued by the European Data Protection Board will have an important bearing on the GDPR as implemented in the UK. To ensure that the interpretation of the applied element of the GDPR remains consistent with the interpretation of the real GDPR, it is right that the Information Commissioner should have regard to decisions and guidance issued by the European Data Protection Board in carrying out her functions, as the UK regulator and enforcer of the applied GDPR. However, the amendment goes further, by requiring her to incorporate them into her guidance and codes of practice. The effect of that is to extend the ambit of the European data protection board so that, uniquely among member states, it would have within its purview processing outside the scope of EU law, when that processing was undertaken in the UK.
We do not agree that such an extension is required for the UK to achieve the relationship that we are seeking. By contrast, the current requirement in paragraph 49 of the schedule, for the commissioner to have regard to decisions and guidance issued by the European Data Protection Board in carrying out her functions means that she can and, in some cases, should incorporate into her guidance what she recognises as relevant and necessary. We are confident that that, founded on the commissioner’s discretion, remains the best approach. On that basis, I hope that the hon. Member for Bristol North West feels able to withdraw his amendment.
Daniel Zeichner (Cambridge) (Lab)
It is a pleasure to serve under your chairmanship, Mr Streeter. I listened closely to the Minister—I am struggling with the real and the applied GDPRs, as I am sure we all are—and the sense I get is that that will lead to potential divergence, which could have further consequences. We have reached an important point in the discussion. If we have divergence a few years down the line, does that not put adequacy at risk?
Margot James
I reassure the hon. Gentleman that divergence, if it occurs, will apply only to the applied GDPR, which is outside the scope of EU law, and therefore may well apply in a similar sense to member states as well as to us, when we become a third country.
Darren Jones
I thank the Minister for her useful reply. She is right, of course, that the applied GDPR is different from the real GDPR. As I said, I am seeking to establish a beyond-adequacy outcome, which is the Government’s intention, according to their comments on Second Reading.
From other third countries, we know that adequacy decisions look at areas of non-EU competence—we will get into the detail of that later in the context of national security and the ongoing conversations with Canada; we already had a conversation on Tuesday about fundamental rights. Under the regulation, the European Commission has the power to look at the whole legislative environment in a third country, even where it is not an area of EU competence. That is an important point to be clear on.
The relationship may be unique compared with other third countries, but we are in a unique position as we leave the European Union. If we want to have strong, sustainable, ongoing adequacy, it is important that we take steps to establish that.
Liam Byrne
The Minister seemed to rest her argument on the need to preserve the Information Commissioner’s discretion, which implies that she is trying to protect the commissioner’s ability to go her own way. That will not help us to secure, lock down or nail to the floor an adequacy agreement in years to come. It will put an adequacy agreement at risk.
Darren Jones
My right hon. Friend is exactly right. Of course, the Information Commissioner is an excellent commissioner. We are privileged to have Elizabeth in the role here in the UK, not least with her experience, as a Canadian, of being in a third country. That is why I put some flexibility into my amendment—to recognise that situations may arise about which we cannot hypothesise today in which the commissioner will need some flexibility. Under my amendment, she has the power to add modifications that she considers necessary. The Government’s concerns about the lack of flexibility are not reflected in the drafting of my amendment, as I have tried to deal with that.
The idea that the amendment increases the European data protection board’s power is incorrect, because this is UK law, not European Union law. The amendment merely says that we will go only slightly further, with flexibility, by recognising that in the decisions that we want to be a part of—that is a really important point here—and to influence, we will take the obligations as well as the responsibilities, should we be invited to.
Daniel Zeichner
Could the Bill not also put the Information Commissioner in an extraordinarily difficult position? Decisions that she may make in the future could have huge political consequences. I would be surprised if she wanted to take that on.
Darren Jones
I agree with my hon. Friend. The reality may be that under the wording in the Bill, the Information Commissioner has no choice but to apply and incorporate the European data protection board’s decisions if it is to keep up and maintain adequacy.
That is why the amendment is not something to worry about. It seeks to do what will probably happen in practice, but it puts our commitment to that relationship in the Bill. When we say to Europe that, uniquely, unlike any other third country and despite not being a member of the European Union, we want to have a position of influence on the EDPB, we can also say that we recognise that no one else has that level of influence, but in seeking to have it, we have made commitments to that future relationship in UK legislation.
I do not think any other Members here are members of the European Scrutiny Committee, but I spent the whole of yesterday afternoon losing votes on amendments to a report, and I rather enjoyed myself, so I will press this amendment to a vote.
Question put, That the amendment be made.
Margot James
I beg to move amendment 115, in schedule 6, page 180, line 2, leave out sub-paragraph (b) and insert—
“(b) in paragraph 2, for ‘Member States’ substitute ‘The Secretary of State’;
(c) after that paragraph insert—
‘3 The power under paragraph 2 may only be exercised by making regulations under section (Duty to review provision for representation of data subjects) of the 2018 Act.’”
This amendment is consequential on NC2.
The Chair
With this it will be convenient to discuss the following:
Government amendments 63 to 68.
Amendment 154, in clause 183, page 106, line 24, at end insert—
“(4A) In accordance with Article 80(2) of the GDPR, a person who satisfies the conditions in Article 80(1) and who considers that the rights of a data subject under the GDPR have been infringed as a result of data processing, may bring proceedings, on behalf of the data subject and independently of the data subject’s mandate—
(a) pursuant to Article 77 (right to lodge a complaint with a supervisory authority),
(b) to exercise the rights referred to in Article 78 (right to an effective judicial remedy against a supervisory authority),
(c) to exercise the rights referred to in Article 79 (right to an effective judicial remedy against a controller or processor).
(4B) An individual who considers that rights under the GDPR, this Act or any other enactment relating to data protection have been infringed in respect of a class of individuals of which he or she forms part may bring proceedings in respect of the infringement as a representative of the class (independently of the mandate of other members of the class), and—
(a) for the purposes of this subsection ‘proceedings’ includes proceedings for damages, and any damages recovered are to be distributed or otherwise applied as directed by the court,
(b) in the case of a class consisting of or including children under the age of 18, an individual may bring proceedings as a representative of the class whether or not the individual’s own rights have been infringed,
(c) the court in which proceedings are brought may direct that the individual may not act as a representative, or may act as a representative only to a specified extent, for a specified purpose or subject to specified conditions,
(d) a direction under paragraph (c) may (subject to any provision of rules of court relating to proceedings under this subsection) be made on the application of a party or a member of the class, or of the court’s own motion, and
(e) subject to any direction of the court, a judgment or order given in proceedings in which a party is acting as a representative under this subsection is binding on all individuals represented in the proceedings, but may only be enforced by or against a person who is not a party to the proceedings with the permission of the court.
(4C) Subsections (4A) and (4B)—
(a) apply in respect of infringements occurring (or alleged to have occurred) whether before or after the commencement of this section,
(b) apply to proceedings begun before the commencement of this section as if references in subsections (4A) and (4B) to bringing proceedings included a reference to continuing proceedings, and
(c) are without prejudice to the generality of any other enactment or rule of law which permits the bringing of representative proceedings.”
This amendment would create a collective redress mechanism whereby a not-for-profit body, organisation or association can represent multiple individuals for infringement of their rights under the General Data Protection Regulation.
Amendment 155, in clause 205, page 120, line 38, at end insert—
“(ca) section 183 (4A) to (4C);”
This amendment would create a collective redress mechanism whereby a not-for-profit body, organisation or association can represent multiple individuals for infringement of their rights under the General Data Protection Regulation.
Government amendments 73 and 74.
Government new clause 1—Representation of data subjects with their authority: collective proceedings.
Government new clause 2—Duty to review provision for representation of data subjects.
Margot James
These Government amendments concern the issue of class representation for data protection breaches. Article 80(1) of the GDPR enables a not-for-profit organisation to represent a data subject on their behalf, if the data subject has mandated them to do so. The Bill gives effect to the same right in clause 183. Where a not-for-profit organisation wants to bring a claim on behalf of multiple people, as things stand it will need to make multiple applications to the court. That is not efficient, and it would be better if all the claims could be made in a single application.
New clause 1 gives the Secretary of State the power to set out provisions allowing a non-profit organisation to bring a claim on behalf of multiple data subjects under article 80(1). We have taken the practical view that that will be an effective way for a non-profit group to seek a remedy in the courts on behalf of a large number of data subjects. The Bill does not give effect to article 80(2), which allows not-for-profit bodies to represent individuals without their mandate. We believe that opt-out collective proceedings should be established on the basis of clear evidence of benefit, with a careful eye on the pitfalls that have befallen so-called class-action lawsuits in other jurisdictions. The Government have, however, listened to the concerns raised and accept that further consideration should be given to the merits of implementing the provisions in article 80(2).
New clause 2 provides a statutory requirement for the Secretary of State to conduct a review of the operation of article 80(1), which will consider how it and the associated provisions in the Bill have operated in practice and assess the merits of implementing article 80(2) in the future. The review will involve consultation among relevant stakeholders, such as the Information Commissioner, businesses, privacy groups, the courts, tribunals and other Departments. The new clause requires the Secretary of State to conduct the review and present its findings to Parliament within 30 months of the Bill’s coming into force. That is necessary to provide enough time for there to be sufficient evidence to scrutinise the options provided in article 80(1) in the civil courts. Were the review period to be substantially shorter, it would increase the likelihood of there being a paucity of evidence, which would undermine the effectiveness and purpose of the review. Upon the conclusion of the review period, the Secretary of State will have the power, if warranted, to implement article 80(2), allowing non-profit organisations to exercise the rights awarded to data subjects under articles 77, 78, 79 and 82 on their behalf without first needing their authorisation to do so.
Amendments 63 to 68, 73, 74 and 115 are consequential amendments that tidy up the language of the related clause, clause 183. They provide additional information about the rights of data subjects that may be exercised by representative bodies. I commend the amendments to the Committee.
Liam Byrne
I will speak to amendments 154 and 155, which are in my name and those of my hon. Friends. The broad point I want to start with is a philosophical point about rights. If rights are to be real, two things need to be in place: first, a level of transparency so that we can see whether those rights are being honoured or breached; and, secondly, an efficient form of redress. If we do not have transparency and an effective, efficient and open means of redress, the rights are not real, so they are theoretical.
We think there are some unique circumstances in the field of data protection that require a slightly different approach from the one that the Government have proposed. The Government have basically proposed an opt-in approach with a review. We propose an opt-out approach. We think that the argument is clear cut, so we do not see why the Government have chosen to implement something of a half-measure.
The Bill gives us the opportunity to put in place an effective, efficient and world-leading form of redress to ensure that data protection rights are not breached. The reality is that large-scale data breaches are now part and parcel of life. They affect not only the private sector but the private sector, which is partnering with Government. We have seen a number of data breaches among Government partners where financial information has been leaked. The reality is that data protection breaches around the world are growing in number and size.
What is particularly egregious is that many private sector companies admit to the scale of a data breach only many years after the offence has taken place. Yahoo! is a case in point. It had one of the biggest data breaches so far known, but it took many months before the truth came out. That has been true of Government partners, too. Sometimes a lesser offence is admitted to. There is muttering about a particular problem and then, as the truth unfolds, we hear that a massive data breach has taken place. The reality is that these firms are by and large going unpunished. Although the Bill proposes some new remedies of a significant scale, unless those remedies can be sought by ordinary citizens in a court, they frankly are not worth the paper they are printed on.
To underline that point, I remind the Committee that often we look to the Information Commissioner to take the lead in prosecuting these offences. My hon. Friend the Member for Bristol North West was right to celebrate the strength of our current Information Commissioner, but the Government have not blessed the Information Commissioner with unlimited resources, and that will not change in the foreseeable future. What that means is that in the last year for which we have information—2016-17—the Information Commissioner issued only 16 civil monetary penalties for data breaches. That is a very small number. We think we need a regime that allows citizens to bring actions in court. That would multiply the power of the Information Commissioner.
Article 80 of the GDPR addresses that problem in a couple of ways, and the Minister has alluded to them. Article 81 basically allows group or class actions to be taken, and article 82 says that the national law can allow representative bodies to bring proceedings. The challenge with the way in which the Government propose to activate that power is that the organisation bringing the class action must seek a positive authorisation and people must opt in. The risk is that that will create a burden so large that many organisations will simply not step up to the task.
Brendan O'Hara (Argyll and Bute) (SNP)
It is a pleasure to serve under your chairmanship this afternoon, Mr Streeter.
I support amendment 154. We strongly recommend that if the Government are, as they claim to be, serious about providing the best possible data protection regime to achieve the gold standard that they often talk about for UK citizens, they should look again at the issue of collective redress and make provision for suitably qualified non-profit organisations to pursue data protection infringements and breaches of their own accord, as provided for by the GDPR.
The right hon. Member for Birmingham, Hodge Hill rightly said that the amendments would allow representative bodies to bring such cases, but would also allow individuals to opt out. Currently there is not a level playing field. If the Bill is not amended, the already uneven playing field will become impossibly uneven for individuals whose rights are breached or infringed—probably by a tech giant.
Collective redress was one of the most controversial and hotly debated issues when the Bill was in the House of Lords. The Government resisted all attempts to change it there. There have been slight amendments since then, and an understanding has been reached, but I feel that what the Government propose does not go nearly far enough to address the concerns expressed by Scottish National party and Labour Members.
Anna Fielder, a former chair of Privacy International, wrote:
“Weak enforcement provisions were one of the widely acknowledged reasons why the current data protection laws, in the UK and elsewhere in Europe, were no longer fit for purpose in the big data age. As a result, it has been more convenient for organisations collecting and processing personal information to break the law and pay up if found out, than to observe the law — as profits made from people’s personal information vastly outweighed even the most punitive of fines.”
That is the situation we are in, and it is incumbent on legislators to level the playing field—not to make it even more uneven. However, as the Bill currently stands, it only enables individuals to request that such suitably qualified non-profit organisations take up cases on their behalf, rather than allowing the organisations themselves to highlight where they believe a breach of data protection law has occurred.
All too often, as has been pointed out on numerous occasions, individuals are the last people to know that their data has been unlawfully and in many cases illegally used. They depend on suitably qualified non-profit organisations, which are there to conduct independent research and investigations, to inform them that that is the case. Indeed, there was a very striking example recently in Germany, where the consumer federation took one of the tech giants to court over a number of platform breaches of current German data protection law, and it won. However, there are numerous examples across the world of organisations and groups highlighting bad or illegal practices that would hitherto probably have gone unnoticed here.
Privacy International recently published a report on the use and possible abuse of personal data connected to the rental car market. Which? has carried out research on online toys that are widely available in this country, which could pose serious child safety risks. The Norwegian consumer council has done similar work on toys, as well as exposing unlawful practices by health and dating apps.
Across the world, there are groups that do collective redress work very successfully in Belgium, Italy, Portugal, Spain, Sweden, Canada and Australia. I urge the Government to reconsider the matter and to see the great consumer benefits and protections that would come from accepting amendment 154. It would give not-for-profit organisations the right to launch complaints with a supervisory authority, as well as seeking judicial remedy, when it considered that the rights of a data subject under the GDPR had been breached.
I repeat that at the moment we have an uneven playing field. If the Bill goes through unamended it will become an impossible playing field for consumers, so I urge the Government to accept the amendment.
Darren Jones
I promise not to speak at every opportunity today, Mr Streeter; I am conscious that it is a Thursday and that Members have constituencies to get to, but on this point I will just add my support to the amendment tabled by my right hon. Friend the Member for Birmingham, Hodge Hill.
The Bill puts us in a position that we should not have been in in the first place. The Government’s original view was that they were not going to implement article 80 of the GDPR; they have now gone one step in that direction, and I support the aim that we go the whole hog.
I recognise from my work previous to being an MP that a lot of tech companies are not evil; they want to do the right thing and go about being successful as businesses. It was partly my job in the past to look at these areas of law on behalf of companies, and to work with campaigning groups, regulators and others. It was about being an internal voice to make sure that there was the correct balance within businesses was correct between considering consumers and being pro-business. This amendment would help to facilitate that conversation, because if bodies such as Which? that are private enforcers on behalf of consumers had these legal rights, then of course there would be an obligation on businesses to have ongoing dialogue and relationships. They would have to make sure that consumers’ concerns were at the forefront and that they were doing things in the right way.
The balance to be struck is really important. The Information Commissioner’s Office, for example, has lost quite a lot of staff to other companies recently. The Minister’s Department had to increase the salary bands for ICO staff to try to keep them there. In other sectors of the regulated economy, having private enforcers on behalf of consumers as a collective group works perfectly well for existing regulators.
In the telecommunications sector, in which I have worked in the past, there is Ofcom, which regulates the telecom sector, but there is also Which?, working as a private enforcer under the Consumer Rights Act 2015, which can act on behalf of consumers as a group. That works perfectly well and as my right hon. Friend said, private enforcers will not just start bringing these super-complaints every week, because the risk would be too high. They will only bring these super-complaints when they have failed in their dialogue and have no choice.
Stuart C. McDonald (Cumbernauld, Kilsyth and Kirkintilloch East) (SNP)
It is a pleasure to serve under your chairmanship, Mr Streeter. We have had three excellent speeches already in support of amendments 154 and 155, so I will not try to replicate them. As the right hon. Member for Birmingham, Hodge Hill said, this is one of the pivotal debates on the Bill. I would like to be positive, but all I can bring myself to say about the Government’s new clause and amendments is that they are marginally better than nothing. However, they do not go far enough and they will leave the UK significantly behind other EU countries in terms of collective redress and the pursuit of the gold standard of data protection. They will leave the Bill falling short of what the Government themselves promised on effective redress.
Only amendments 154 and 155 will provide a comprehensive opt-out regime and enable adults and children who are victims of data breaches properly to vindicate their rights to proper protection of their personal data. The amendments will provide a mechanism whereby serious breaches of data protection, which can affect the most vulnerable in society, are seriously addressed and result in real change that will benefit thousands if not millions of consumers across the UK.
The Bill provides a hugely significant opportunity to legislate for a cost-effective and efficient mechanism for redress in cases of mass data breaches, which we all know are increasingly common and which the Information Commissioner’s Office has limited resources to deal with. The measure is essential to make the Bill fit for purpose and I wholeheartedly support both amendments.
The Chair
Before I call the Minister to respond, it might help the Committee to know that, although we are properly debating Opposition amendments 154 and 155 at the moment, if they are to be put to a Division, that cannot happen until we reach clause 183. However, that does not prevent the Minister from indicating she might accept them at this stage. That is entirely up to her.
Margot James
I thank right hon. and hon. Members for their contributions. We certainly agree with the need for a transparent system of rights over people’s personal data and a system of enforcement of those rights. We could not agree more with the thinking behind that, but we need to pause for thought before implementing article 80(2). The GDPR represents significant change, but we should test the effectiveness of the new enforcement scheme, including, as we have already discussed, article 80(1), before we make further changes of the type proposed this morning under amendments 154 and 155.
Amendment 154 applies article 80(2) with immediate effect and gold-plates it. We have a number of concerns with that approach. First, we are wary of the idea that data subjects should be prevented from enforcing their own data rights simply because an organisation or, in this instance, an individual they had never met before, got there first. That is not acceptable. It contradicts the theme of the Bill and the GDPR as a whole, which is to empower individuals to take control of their own data. As yet we have no evidence that that is necessary.
Liam Byrne
Let us take Uber—one of the most recent of the 200 data breaches listed on Wikipedia. In that case, 57 million records were leaked. How is one of those drivers going to take Uber to court to ensure justice?
Margot James
The GDPR places robust obligations on the data controller to notify all data subjects if there has been a breach that is likely to result in a high risk to their rights. That example is almost unprecedented and quite different—
Liam Byrne
It is not unprecedented. Look at the Wikipedia page on data breaches. There are 200 of them, including Uber, Equifax, AOL, Apple, Ashley Madison, Betfair—the list goes on and on. I want an answer to a very simple question. How is a humble Uber driver, who is busting a gut to make a living, going to find the wherewithal to hire a solicitor and take Uber to court? What is the specific answer to that question?
Margot James
If a data subject is sufficiently outraged, there is nothing to stop them contacting a group such as Which? and opting into a group action. Furthermore, a range of enforcement options are open to the ICO. It can issue enforcement notices to compel the controller to stop doing something that is in breach of people’s data rights. As I said, there is nothing to stop a data subject opting into a group action.
Liam Byrne
There is only one major precedent for the kind of scenario the Minister has sketched out today, which is Various Claimants v. Wm Morrisons Supermarket plc—a case she knows well. That case illustrates the difficulties of opt-in. It is by far the largest group of data protection claimants ever put together. Even then, the total number of people who could be assembled was 5,000 out of 100,000 people whose data rights were breached. That was incredibly difficult and took a huge amount of time. Even if the claim succeeds, the 95% of people not covered by the claim will not receive justice. I am not quite sure what new evidence the Minister is waiting for so that she has enough evidence to activate the kind of proposals we are talking about today.
Margot James
As I said, the GDPR represents significant change. We believe we should test the effectiveness of the new enforcement scheme before we make further changes of the kind the right hon. Gentleman is suggesting. The Morrisons case was effective. The collective redress mechanism—group litigation orders—was used and was effective. The Information Commission will have new powers under the Bill to force companies to take action when there has been a breach of data.
There are other problems with amendment 154. First, like the right hon. Member for Birmingham, Hodge Hill, we are concerned about children’s rights. We would be concerned if a child’s fundamental data rights were weighed up and stripped away by a court without parents or legal guardians having had the opportunity to make the decision to seek redress themselves or seek the help of a preferred non-profit organisation. Once that judgment has been finalised, there will be no recourse for the child or the parent. They will become mere observers, which is unacceptable and makes a travesty of the rights they are entitled to enforce on their own account.
Secondly, we must remember that the non-profit organisations referred to in the amendment are, by definition, active in the field of data subjects’ rights. Although many will no doubt have data subjects’ interests at heart, some may have a professional interest in achieving a different outcome—for example, chasing headlines to promote their own organisation. That is why it is essential that data subjects are capable of choosing the organisation that is right for them or deciding not to partake in a claim that an organisation has advertised. The amendment would also allow an individual to bring a collective claim on behalf of other data subjects without their consent.
Brendan O'Hara
Does the Minister not accept, as I said earlier, that individuals are often the last people to know that their data has been breached and their rights have been infringed? For collective rights in hugely complicated areas, there must be a presumption that those rights are protected, and the Bill does not do that. I do not believe it reflects the principle that individuals are often the last people to know, and that they are the ones who need protecting.
Margot James
The Information Commissioner has powers to force companies to notify data subjects of any breach of data, and there is a legal requirement on companies so to do.
The amendment would allow an individual to bring a collective claim on behalf of other data subjects without their consent. We oppose it because it does not give people the protection of knowing that the entity controlling their claim is a non-profit organisation with a noble purpose in mind. I am pleased to say that, as I outlined this morning, the Government’s position was supported in the other place by the Opposition Front Benchers and the noble Baroness Kidron.
Liam Byrne
I am incredibly disappointed with the Minister’s response, and I am not quite sure I believe that she believes what she has been reading out. I hope that between now and Report, or whenever the amendment is pressed to a vote, she will have the opportunity to consult Which? and her officials. The reality is that for complex public policy decisions, whether relating to organ donation or auto-enrolment pensions, we have well-established procedures for opting out, rather than opting in. There has been strong cross-party support for that over the past seven or eight years, and it reflects a reality in new economic thinking. Behavioural economics shows that opt-out is often better than opt-in.
If the Government pursue that line of argument on Report, in the other place and through to Royal Assent, we will not permit the Minister ever again to refer to the Bill as a gold standard in data protection. It is a shoddy, tarnished bronze. She has sought to ensure that the legal playing field is tilted in the favour of large organisations and tech giants, and away from consumers and children. That will lead to a pretty poor state of affairs. We now have enough precedents to know that the regime she is proposing will not work. This is not a theoretical issue; it has already been tested in the courts. Her proposal will not fix the asymmetry that potentially leaves millions of people without justice.
The idea that the Minister can present the Morrisons case as some kind of success when 95% of the people whose data rights were breached did not receive justice because they did not opt in to the class action betrays it all. She is proposing a system of redress that is good for the few and bad for the many. If that is her politics, so be it, but she will not be able to present the Bill as the gold standard if she persists with that argument.
The Chair
As I said, we will deal with the Opposition amendments later in our proceedings.
Amendment 115 agreed to.
Schedule 6, as amended, agreed to.
Clauses 23 and 24 ordered to stand part of the Bill.
Clause 25
Manual unstructured data used in longstanding historical research
Amendment made: 17, in clause 25, page 15, line 40, leave out “individual” and insert “data subject”.—(Margot James.)
Clause 25 makes provision about the processing of manual unstructured data used in longstanding historical research. This amendment aligns Clause 25(1)(b)(i) with similar provision in Clause 19(2).
Clause 25, as amended, ordered to stand part of the Bill.
Clause 26
National security and defence exemption
Question proposed, that the clause stand part of the Bill.
Louise Haigh (Sheffield, Heeley) (Lab)
It is a pleasure to serve under your chairmanship once again, Mr Streeter. I think it was about 18 months ago that we were in this very room, debating the Bill that became the Digital Economy Act 2017. We discussed at length the trade-off between the rights of data subjects, privacy, transparency and the need for Government access to data. In that context we were debating the rights of viewers of online pornography, rather than matters of national security. I note that the Government have had to delay the introduction of the regulations, because they failed to get to grips with the issues that we raised in Committee. I do not envy the new Minister, or, indeed, my right hon. Friend the shadow Minister, their task of attempting to get things right. It was one of the low points of my political career when I had to negotiate with the present Secretary of State for Digital, Culture, Media and Sport on what sexual acts would be blocked. I wish them both luck in taking the matter forward, and am glad I am dealing only with national security issues in the Bill that we are considering today.
As we come to crucial clauses that give Ministers and the security services a great deal more latitude, it is important for the Opposition to lay out key principles on national security certificates. Of course we support the legitimate interests of the intelligence services, as dictated by their statutory functions, including the safeguarding of national security. Of course we recognise that protecting citizens from harm often means striking a difficult balance between operational requirements and the rights of individuals who may fall within the scope of the investigations. We know that the security services take that seriously.
It is the Opposition’s duty, however, to scrutinise the Government’s approach, to ensure that any powers that explicitly allow the setting aside of citizens’ data rights under the Bill are proportionate and necessary, and that they will be overseen through appropriate safeguards. Clauses 26 and 27 provide for a national security certification regime allowing restriction of and exemption from a wide range of rights under the GDPR and the Bill on the basis of national security, and for defence purposes.
The Government state that national security falls outside the scope of EU law and, therefore, the GDPR, and that therefore any processing of personal data relating to national security will be governed by the applied GDPR. Article 4(2) of the treaty on the European Union provides that national security remains the sole responsibility of each member state. Despite that, EU data protection legislation provides for derogations for national security. If national security were entirely outside the scope of the EU treaty, such derogations would be unnecessary, so, as the Joint Committee on Human Rights argued, the provisions imply the retention of some level of EU scrutiny over derogations from EU data protection rights on the grounds of national security. It is thus not at all clear that the Government’s assertions about blanket national security exemptions are correct.
Furthermore, there is no clear definition of which entities will be covered by the extremely broad exemptions under subsection 1, which refers to “national security” and “defence purposes”. I am concerned that a measure allowing broad exemptions to the rights of citizens does not stipulate which entities will be entitled to jettison those rights. As was debated at length in the other place, there are no clear definitions of national security, or of the extended exemption for defence purposes, which goes beyond the Data Protection Act 1998, in the Bill or the explanatory notes. As the right hon. and learned Member for Rushcliffe (Mr Clarke) remarked during the passage of the Investigatory Powers Act 2016,
“National security can easily be conflated with the policy of the Government of the day.”—[Official Report, 15 March 2016; Vol. 607, c. 850.]
As the Joint Committee on Human Rights concluded,
“it is unclear why the authorities require such a breadth of exemptions from their obligations under the data protection regime.”
Before we move on to discuss our amendments to clause 26, I should be grateful if the Minister could assure us about the definitions of “national security” and “defence purposes” and in particular which entities they apply to.
The Parliamentary Under-Secretary of State for the Home Department (Victoria Atkins)
It is a pleasure to serve under your chairmanship, Mr Streeter. Clause 26 creates an exemption for certain provisions in the Bill only if that exemption is required for the purpose of safeguarding national security or for defence purposes. Where processing does not meet these tests, the exemption cannot apply. It is possible to exempt from most but not all the data protection principles the rights of data subjects, certain obligations on data controllers and processors, and various enforcement provisions, where required to safeguard national security or for defence purposes. In relation to national security, the exemption mirrors the existing national security exemption provided for in section 28 of the 1998 Act. The statutory framework has long recognised that the proportionate exemptions from the data protection principles and the rights of data subjects are necessary to protect national security. The Bill does not alter that position.
The exemption for defence purposes is intended to ensure the continued protection, security and capability of our armed forces and of the civilian staff who support them—not just their combat effectiveness, to use the outdated language of the 1998 Act. In drafting this legislation, we concluded that this existing exemption was too narrow and no longer adequately captured the wide range of vital activities that are undertaken by the Ministry of Defence and its partners. We have seen that all too obviously in the last two weeks.
Victoria Atkins
If the right hon. Gentleman is going to disagree with me that combat effectiveness would be a very narrow term to describe the events in Salisbury, of course I will give way.
Liam Byrne
I actually wanted to ask about interpreters who support our armed forces. There is cross-party consensus that sometimes it is important to ensure that we grant leave to remain in this country to those very brave civilians who have supported our armed forces abroad as interpreters. Sometimes, those claims have been contested by the Ministry of Defence. Is the Minister confident and satisfied that the Ministry of Defence would not be able to rely on this exemption to keep information back from civilian staff employed as interpreters in support of our armed forces abroad when they seek leave to remain in this country?
Victoria Atkins
I cannot possibly be drawn on individual applications for asylum. It would be wholly improper for me to make a sweeping generalisation on cases that are taken on a case-by-case basis. I refer back to the narrow definition that was in the 1998 Act and suggest that our enlarging the narrow definition of combat effectiveness would mean including the civilian staff who support our brave troops.
The term “defence purposes” is intended to be limited in both application and scope, and will not encompass all processing activities conducted by the Ministry of Defence. Only where a specific right or obligation is found to incompatible with a specific processing activity being undertaken for defence purposes can that right or obligation be set aside. The Ministry of Defence will continue to process personal information relating to both military and civilian personnel in a secure and appropriate way, employing relevant safeguards and security in accordance with the principles of the applied GDPR. It is anticipated that standard human resources processing functions such as the recording of leave and the management of pay and pension information will not be covered by the exemption.
Liam Byrne
I am sorry to press the Minister on this point, and she may want to write to me as a follow-up, but I think Members on both sides of the House have a genuine interest in ensuring that interpreters who have supported our troops abroad are able to access important information, such as the terms of their service and the record of their employment, when making legitimate applications for leave to remain in this country—not asylum—or sometimes discretionary leave.
Victoria Atkins
I am very happy to write to the right hon. Gentleman about that. The exemption does not cover all processing of personal data by the Ministry of Defence, but I am happy to write to him on that subject.
It may assist the Committee if I give a few examples of processing activities that might be considered to fall into the definition of defence purposes requiring the protection of the exemption. Such processing could include the collation of personal data to assist in assessing the capability and effectiveness of armed forces personnel, including the performance of troops; the collection and storage of information, including biometric data necessary to maintain the security of defence sites, supplies and services; and the sharing of data with coalition partners to support them in maintaining their security capability and the effectiveness of their armed forces. That is not an exhaustive list. The application of the exemption should be considered only in specific cases where the fulfilment of a specific data protection right or obligation is found to put at risk the security capability or effectiveness of UK defence activities.
The hon. Member for Sheffield, Heeley asked for a definition of national security. It has been the policy of successive Governments not to define national security in statute. Threats to national security are constantly evolving and difficult to predict, and it is vital that legislation does not constrain the security and intelligence agencies’ ability to protect the UK from new and emerging threats. For example, only a few years ago it would have been very difficult to predict the nature or scale of the threat to our national security from cyber-attacks.
Clause 26 does not provide for a blanket exemption. It can be applied only when it is required to safeguard national security or for defence purposes.
Daniel Zeichner
What weight does the Minister give to the written evidence that the Committee received from the Information Commissioner’s Office? It is obviously expert on this issue, and it addresses some of the points she made. It concludes that there is no threshold for when “defence purposes” are to be used, and that there is no guidance
“for when it is appropriate to rely on the exemption.”
What weight does the Minister give to that, and what is her response to the concern raised by the Information Commissioner’s Office?
Victoria Atkins
Again, surely it is for the Executive—elected officials—to take responsibility for decisions that are made by data controllers in the Ministry of Defence. Obviously, the Department has considered the Information Commissioner’s representations, but this is not a blanket exemption. The high threshold can be met only in very specific circumstances.
Question put and agreed to.
Clause 26 accordingly ordered to stand part of the Bill.
Clause 27
National security: certificate
Louise Haigh
I beg to move amendment 161, in clause 27, page 17, line 2, leave out subsection (1) and insert—
“A Minister of the Crown must apply to a Judicial Commissioner for a certificate, if exemptions are sought from specified provisions in relation to any personal data for the purpose of safeguarding national security.”
This amendment would introduce a procedure for a Minister of the Crown to apply to a Judicial Commissioner for a National Security Certificate.
The Chair
With this it will be convenient to discuss the following:
Amendment 162, in clause 27, page 17, line 5, at end insert—
“(1A) The decision to issue the certificate must be—
(a) approved by a Judicial Commissioner,
(b) laid before Parliament,
(c) published and publicly accessible on the Information Commissioner’s Office website.
(1B) In deciding whether to approve an application under subsection (1), a Judicial Commissioner must review the Minister’s conclusions as to the following matters—
(a) whether the certificate is necessary on relevant grounds,
(b) whether the conduct that would be authorised by the certificate is proportionate to what it sought to be achieved by that conduct, and
(c) whether it is necessary and proportionate to exempt all provisions specified in the certificate.”
This amendment would ensure that oversight and safeguarding in the application for a National Security Certificate are effective, requiring sufficient detail in the application process.
Amendment 163, in clause 27, page 17, leave out lines 6 to 8 and insert—
“(2) An application for a certificate under subsection (1)—
(a) must identify the personal data to which it applies by means of a detailed description, and”.
This amendment would require a National Security Certificate to identify the personal data to which the Certificate applies by means of a detailed description.
Amendment 164, in clause 27, page 17, line 9, leave out subsection (2)(b).
This amendment would ensure that a National Security Certificate cannot be expressed to have prospective effect.
Amendment 165, in clause 27, page 17, line 9, at end insert—
“(c) must specify each provision of this Act which it seeks to exempt, and
(d) must provide a justification for both (a) and (b).”
This amendment would ensure effective oversight of exemptions of this Act from the application for a National Security Certificate.
Amendment 166, in clause 27, page 17, line 10, leave out “directly” and insert
“who believes they are directly or indirectly”
This amendment would broaden the application of subsection (3) so that any person who believes they are directly affected by a National Security Certificate may appeal to the Tribunal against the Certificate.
Amendment 167, in clause 27, page 17, line 12, leave out
“, applying the principles applied by a court on an application for judicial review,”
This amendment removes the application to the appeal against a National Security Certificate of the principles applied by a court on an application for judicial review.
Amendment 168, in clause 27, page 17, line 13, leave out
“the Minister did not have reasonable grounds for issuing”
and insert
“it was not necessary or proportionate to issue”.
These amendments would reflect that the Minister would not be the only authority involved in the process of applying for a National Security Certificate.
Amendment 169, in clause 27, page 17, line 16, at end insert—
“(4A) Where a Judicial Commissioner refuses to approve a Minister’s application for a certificate under this Chapter, the Judicial Commissioner must give the Minister of the Crown reasons in writing for the refusal.
(4B) Where a Judicial Commissioner refuses to approve a Minister’s application for a certificate under this Chapter, the Minister may apply to the Information Commissioner for a review of the decision.
(4C) It is not permissible for exemptions to be specified in relation to—
(a) Chapter II of the applied GDPR (principles)—
(i) Article 5 (lawful, fair and transparent processing),
(ii) Article 6 (lawfulness of processing),
(iii) Article 9 (processing of special categories of personal data),
(b) Chapter IV of the applied GDPR—
(i) GDPR Articles 24 – 32 inclusive,
(ii) GDPR Articles 35 – 43 inclusive,
(c) Chapter VIII of the applied GDPR (remedies, liabilities and penalties)—
(i) GDPR Article 83 (general conditions for imposing administrative fines),
(ii) GDPR Article 84 (penalties),
(d) Part 5 of this Act, or
(e) Part 7 of this Act.”
This amendment would require a Judicial Commissioner to intimate in writing to the Minister reasons for refusing the Minister’s application for a National Security Certificate and allows the Minister to apply for a review by the Information Commissioner of such a refusal.
Louise Haigh
With our amendments we seek to provide some oversight of and protections against the very broad definitions in this part of the Bill. I am afraid we are not content with the Minister’s assertions in her response on the previous clause.
As they currently stand, national security certificates give Ministers broad powers to remove individuals’ rights with absolutely no oversight. If this is a matter for the Executive, as the Minister has just said, they must be subject to oversight and accountability when making such decisions, and as it stands there is absolutely none at all. The rights at risk from the exemption are the right to be informed when personal data is collected from individuals, which is in article 13 of the GDPR; the right to find out whether personal data against them is being processed, in article 15; and the right to object to automated decision making, in articles 21 and 22. Furthermore, the Information Commissioner’s inspection, authorisation and advisory powers are set aside, which is why she and her office raised concerns, as my hon. Friend the Member for Cambridge set out.
It is not difficult to envisage examples of why those exemptions may be necessary. The Minister has laid some of them out: for instance, during the course of an ongoing national security investigation, the right of an individual to be informed that their data is being processed would not be appropriate. With these exemptions, there will inevitably be a need for appropriate safeguards to protect the rights of citizens. We are not yet convinced that the Bill contains them. That is what these amendments seek to tackle.
Brendan O'Hara
It may come as no surprise that I rise to speak in support of amendments 161 to 169. They are intended to challenge the Government’s plan to introduce a national security certification regime that will allow the restriction of and exemptions from a wide range of fundamental rights on the basis of national security and defence. Although it is absolutely right that, as a country, the UK has the ability to act in its own national security interest, I and many others are worried that the scale and scope of what is proposed in the Bill goes much further than the 1998 Act by widening the national security definition to include a further and, I would suggest, undefined range of defence purposes.
The Minister gave three or four examples earlier, but stressed that it was not an exhaustive list. Given the broad and indefinite nature of those national security exemptions, we are concerned that they do not meet the test of being both necessary and proportionate. How much confidence can we have that an individual’s fundamental rights will be best protected when the exemptions will be signed off by a Government Minister with little or no judicial oversight? It is also concerning that there appears to have been little or no attention to the harmful impact of exempting vast amounts of information from data protection safeguards by relying upon national security certificates.
As we heard earlier, the list of rights that are exempted, set out in clause 26, includes the right to be informed when data is being collected, the right to find out when personal data is being processed and the right to object to automated decision making. Those exemptions are to be exercised by a certificate, which, as I say, will be signed by a Minister, who will certify that an exemption from those rights and obligations is necessary for the purpose of safeguarding national security.
That means that, as the Bill is currently drafted, people’s rights could be removed by a politician without any form of judicial oversight. That cannot be right. We would argue most strongly that there has to be judicial oversight of any such decision, to prevent the removal of individual data protection rights from being permitted purely at the say-so of a Government Minister. I ask the Minister, how do the Government define national security and defence purposes in the context of the Bill? I certainly was not satisfied with the explanation we heard earlier on. I believe that these undefined terms are unnecessarily open-ended and broad, and open to vague interpretation. They could very well result in the removal of an individual’s rights unnecessarily. The lack of a clear definition of national security and defence purposes also means that people will be unable to foresee or understand when their rights will be overridden by the application of these exemptions. Surely that is incompatible with an individual citizen’s fundamental rights.
These exemptions, on the surface, are not limited to the UK’s intelligence and security services. As we heard when debating part 2 of the Bill, which deals with general processing, they broadly permit public authorities, and even private corporations on occasion, to invoke national security and defence as a reason to cast aside privacy rights. Can the Minister explain if, how, and under what circumstances a public authority or private company could invoke national security and defence as a reason to cast aside privacy rights?
That brings me to necessity and proportionality, which are fundamental principles when looking at exemptions from data protection, and which will be examined extremely closely by the European Commission and its legal team when it decides on the UK’s suitability for adequacy after Brexit. The principles of necessity and proportionality are enshrined in the European convention on human rights. A Minister must take them into account when they consider restricting or limiting an individual’s rights, such as those under article 8, the right to privacy.
As the Bill stands, no conditions or tests are imposed on a Minister’s decision to withdraw an individual’s personal data protection rights by issuing a national security certificate. There is no limitation on how a national security certificate should run or how long it should operate for. There is no obligation to review the ongoing necessity of having a live certificate. In effect, a certificate is open-ended and indefinite. My concern is that that may allow the state to use a certificate for activities for which it was not considered relevant or appropriate by the Minister when it was first issued or signed.
That loophole cannot be considered proportionate or necessary. The certificates have to be time-limited. That does not mean that once a certificate has expired it cannot be re-certified, but it would ensure that certificates that are no longer necessary or that have been used beyond their original remit do not continue indefinitely. Perhaps the Minister could explain why she thinks such a system could not work, and why it would not be in the best interest of the state and of protecting an individual’s rights.
As with everything we do, including everything we have done in this area in the past couple of years, the Bill has to be seen against the backdrop of Brexit. Not only do we have to comply with the GDPR, but we have to do so in a way that means the United Kingdom will achieve the vital, much sought after adequacy decision from the European Commission. We also have to keep our laws consistent with EU law to maintain that adequacy status. I fear that the widespread use of exemptions and, perhaps more worryingly, the undefined range of defence purposes could deal a severe blow to the UK achieving an adequacy decision from the European Commission.
Can the Minister tell me whether the Government have been given cast-iron guarantees that the new and undefined range of defence purposes will be consistent with EU law, to allow us not just to achieve adequacy but to maintain adequacy post Brexit?
The Chair
I will call the Minister to respond, but before she responds to that point, she wishes to correct the record in relation to a previous point, which I am happy to permit.
Victoria Atkins
On reflection, I would not wish the hon. Member for Cambridge to understand my earlier answer to mean that a Minister makes a decision on defence purposes. I apologise to him if that was not clear. It is the data controller at the Ministry of Defence who makes that decision. The data controller is accountable to Ministers and in due course to domestic courts. I hope that clarifies that.
The Chair
It is up to the Committee what time we adjourn for lunch, of course, and the Minister may wish to speak quite rapidly.
The Lord Commissioner of Her Majesty's Treasury (Nigel Adams)
Much as I would like the Minister to speak rapidly, I will move the Adjournment.
Ordered, That the debate be now adjourned.—(Nigel Adams.)
Data Protection Bill [ Lords ] (Third sitting)
(6 years, 9 months ago)
Public Bill CommitteesRead Full debate Read Hansard Text Read Debate Ministerial Extracts
The Committee divided: - Ayes: 8 / Noes: 10 - Question accordingly negatived.
Darren Jones (Bristol North West) (Lab)
I beg to move amendment 152, in schedule 6, page 179, line 17, leave out paragraph 2 (as inserted by paragraph 49) and insert—
“2 The Commissioner must, in carrying out the Commissioner’s functions under this Regulation, incorporate with any modifications which he or she considers necessary in any guidance or code of practice which the Commissioner issues, decisions, advice, guidelines, recommendations and best practices issued by the European Data Protection Board established under Article 68 of the GDPR.
2A The Commissioner must, in carrying out the Commissioner’s functions under this Regulation, have regard to any implementing acts adopted by the Commission under Article 67 of the GDPR (exchange of information).”
It is a pleasure to serve under your chairmanship, Mr Streeter. I declare my interests as set out in the Register of Members’ Financial Interests.
Amendment 152, like the amendments we tabled on Tuesday, would assist the Government in securing a finding of adequacy from the European Commission so that, if the UK leaves the European Union, we can continue to exchange data with it. As the Committee knows, I like to refer to my version of the general data protection regulation as much as to the Bill, even though it is not the subject of our debate today.
I welcome the Government’s commitments on the Floor of the House to seeking something “akin to” adequacy, then adequacy, and then something “beyond adequacy”. I thank the Minister , the hon. Member for Stourbridge, for her response to my question on Second Reading about wanting “beyond adequacy” to represent a useful position for our Information Commissioner on the European data protection board. Some of us have concerns about that because of the practicalities of what happens with third countries. Indeed, I asked the Information Commissioner herself about it at an evidence session of the Select Committee on Science and Technology, and she confirmed that third countries traditionally have little influence on the article 29 working party—the predecessor of the EDPB—even if they have a seat at the table.
I think our shared view is that in seeking “beyond adequacy”, we want not only to have a seat at the table as a potential third country but to have influence. In order to have that influence, we need to go slightly above and beyond what other third countries do and show close co-operation between the UK and the European Union.
Article 45 of the GDPR sets out guidelines on how the European Commission will assess and agree decisions on adequacy. It has to be happy that our legal framework is in line with its own. Of course, there will be an initial conversation as part of trade negotiations with the European Union. Under paragraph 3, the Commission is then to undertake
“a periodic review, at least every four years”
to ensure that we continue to be compliant. Paragraph 4 refers to ongoing monitoring of developments in third countries in their application of data protection laws and privacy rights.
As I have said on Second Reading and in previous debates on data protection laws, my concern is that we should lockstep the developments in our legislation, guidance and codes of conduct to show that they are still in line with the leading European Union legislative framework for data protection, so that we can continue to flow important amounts of data. Some 70% of our data flow is with the EU, and the UK accounts for a huge proportion—around 11%—of global data flow. We must maintain that. Under article 50 of the GDPR, in deciding on adequacy, the European Commission must seek
“mechanisms to facilitate the effective enforcement of legislation”.
This is our opportunity to show the European Union that we are committed to data protection principles. Amendment 152 would tweak the wording of paragraph 2 of article 61 of the applied GDPR. I was pleased to see that paragraph; in earlier debates I raised some concerns that—for political reasons that I will not go into today—the Bill might not go as far as admitting that we need to track and implement EU law in the area. However, I want to strengthen the paragraph 2 wording, which says that our Information Commissioner must
“have regard to”
various things that happen at European Union level, including
“decisions, advice, guidelines, recommendations and best practices issued by the European Data Protection Board”.
The amendment seeks to strengthen that slightly, while recognising that the Government, and probably also the Information Commissioner, would like a little flexibility.
Liam Byrne (Birmingham, Hodge Hill) (Lab)
This is a wise and carefully crafted amendment. Does my hon. Friend agree that it is especially needed because the Government have rather unwisely decided not to incorporate article 8 into British law, which means there is a risk of courts in Europe and Britain interpreting data protection regimes differently, leading to divergence in future?
Darren Jones
I agree. I am attempting not to get too much into the party politics in a bid to seek the Government’s agreement to the amendment, but there is an important distinction to be made. We have a layering of risks in seeking to achieve adequacy. On Tuesday we debated at length the Government’s decision to repeal fundamental rights of the European charter, which we know from European guidelines is something they look to. We will come to issues of national security today, which is also an issue for third countries, as we have seen with Canada.
This small amendment would help mitigate some of that risk by making it clear to our friends in the European Union that we in Britain are proud about the influence we had in drafting the general data protection regulation, which is a world-leading set of laws and rules for the future of our digital economy, and we continue to want to play a part in that, to help lead the conversation in the world and at European Union level. In co-operation with our friends in Europe, we seek to maintain that. While the Government may wish for divergence in other areas, I take the view that they do not in this area because we have been at the forefront of developments.
The amendment seeks only to tweak what is already in the Bill. As Members will see, it says that we would
“incorporate, with any modifications which he or she”—
that is the Information Commissioner—
“considers necessary in any guidance or code of practice… decisions…issued by the European Data Protection Board”.
There is a nuanced difference; the Bill as drafted speaks of having “regard to”, while the amendment speaks of incorporating, with any modifications that the Information Commissioner feels fit. It may seem like I am getting stuck in semantics—I do quite like to do that—but the amendment would deliver an important tone to the European Commission. On passing the Bill, we would be saying that when we are negotiating on data, where we have a shared interest at European and UK level, we want to get it right, and we will have gone beyond the basics of adequacy of other third countries because of our close relationship. We will hopefully have a seat on the European data protection board, where we seek to have influence, and we will take that responsibility seriously and, therefore, we will incorporate decisions of the board into the guidance of UK laws to lockstep our development in the area. As I said, it is made clear in the general data protection regulation that that is to be monitored on a continuous basis and more formally on a periodic basis.
I would not want us to lose adequacy in the future by diverging from European Union law. I want us to have an influential position on the European data protection board, which means being involved in the detail and taking the obligation of carrying that through on our side of the fence. The amendment seeks to bring that tone of co-operation and would help us and the Government in seeking adequacy so that we can secure these important data flows into the future.
Liam Byrne
It is a privilege to serve under your chairmanship, Mr Streeter. I rise to support my hon. Friend on his excellent, very helpful amendment. Earlier in the week we had a debate about the wisdom of incorporating article 8 into the Bill. I want to underline that we now have two different foundations for privacy that will operate post-Brexit in Europe and in the UK. The law is not fixed in aspect; it is a dynamic body of thought and ideas, and in the years to come there is a risk that courts in Europe and in the UK will diverge in how they interpret those fundamental principles.
That risk is all the more profound in this area of public policy because technology is moving so quickly. Therefore, if the Government wanted to do away with the risk to any future adequacy agreements, they would look for any and every opportunity to create bridges between the EU data protection regime and the British regime. The more bridges that are put in place, and the more girders that yoke us together in this field of public policy, the better.
Companies will consider whether regulatory harmonisation in data protection will continue when they make investment decisions in the technology space in the UK. I am afraid that that is now a fact of economic life. The simpler and faster the Government can help companies take those decisions, by putting beyond dispute and doubt any future adequacy agreement, the better. It is in our common interest to try to create stronger links than the Bill offers. I hope that the Government will accept the amendment.
The Minister of State, Department for Digital, Culture, Media and Sport (Margot James)
It is a pleasure to serve under your chairmanship, Mr Streeter. I thank the hon. Member for Bristol North West, who has great knowledge of these issues and has put his thoughts on his amendment very well to the Committee. As the Prime Minister said in her Mansion House speech, the ability to transfer data across international borders is crucial to a well-functioning economy, and that will remain the case after we leave the European Union. We are committed to ensuring that uninterrupted data flows between the UK and the EU continue. One way we can help to ensure that we have the foundations for that relationship is to continue to apply our exceptionally high standards for the protection of personal data.
Amendment 152 relates to the applied GDPR, which exists to extend GDPR standards to personal data processed for purposes outside the scope of EU law that may be otherwise left unregulated. The amendment is to schedule 6 of the Bill, which creates the applied GDPR by modifying the text of the GDPR so that it makes sense for matters outside the scope of EU law. The extension of GDPR standards is vital, because having a complete data protection regulatory framework will provide the UK with a strong foundation from which to protect people’s personal data and secure the future free flow of data with the EU and the rest of the world. Applying consistent standards ensures that those bodies—mostly public authorities—who process personal data, both in and out of the scope of EU law, experience no discernible operational difference when doing so.
However, the applied GDPR, although very close, is not identical to the GDPR known as the real GDPR. The differences are primarily the inevitable result of extending text designed for the EU to matters over which the UK and other member states retain competence. Reference to member states becomes a reference to our country; reference to the supervisory authorities becomes a reference to the Information Commissioner, and so on. Similarly, the applied GDPR, as a purely domestic piece of regulation, is outside the scope of the functions of the European data protection board and the EU Commission.
Decisions and guidance issued by the European Data Protection Board will have an important bearing on the GDPR as implemented in the UK. To ensure that the interpretation of the applied element of the GDPR remains consistent with the interpretation of the real GDPR, it is right that the Information Commissioner should have regard to decisions and guidance issued by the European Data Protection Board in carrying out her functions, as the UK regulator and enforcer of the applied GDPR. However, the amendment goes further, by requiring her to incorporate them into her guidance and codes of practice. The effect of that is to extend the ambit of the European data protection board so that, uniquely among member states, it would have within its purview processing outside the scope of EU law, when that processing was undertaken in the UK.
We do not agree that such an extension is required for the UK to achieve the relationship that we are seeking. By contrast, the current requirement in paragraph 49 of the schedule, for the commissioner to have regard to decisions and guidance issued by the European Data Protection Board in carrying out her functions means that she can and, in some cases, should incorporate into her guidance what she recognises as relevant and necessary. We are confident that that, founded on the commissioner’s discretion, remains the best approach. On that basis, I hope that the hon. Member for Bristol North West feels able to withdraw his amendment.
Daniel Zeichner (Cambridge) (Lab)
It is a pleasure to serve under your chairmanship, Mr Streeter. I listened closely to the Minister—I am struggling with the real and the applied GDPRs, as I am sure we all are—and the sense I get is that that will lead to potential divergence, which could have further consequences. We have reached an important point in the discussion. If we have divergence a few years down the line, does that not put adequacy at risk?
Margot James
I reassure the hon. Gentleman that divergence, if it occurs, will apply only to the applied GDPR, which is outside the scope of EU law, and therefore may well apply in a similar sense to member states as well as to us, when we become a third country.
Darren Jones
I thank the Minister for her useful reply. She is right, of course, that the applied GDPR is different from the real GDPR. As I said, I am seeking to establish a beyond-adequacy outcome, which is the Government’s intention, according to their comments on Second Reading.
From other third countries, we know that adequacy decisions look at areas of non-EU competence—we will get into the detail of that later in the context of national security and the ongoing conversations with Canada; we already had a conversation on Tuesday about fundamental rights. Under the regulation, the European Commission has the power to look at the whole legislative environment in a third country, even where it is not an area of EU competence. That is an important point to be clear on.
The relationship may be unique compared with other third countries, but we are in a unique position as we leave the European Union. If we want to have strong, sustainable, ongoing adequacy, it is important that we take steps to establish that.
Liam Byrne
The Minister seemed to rest her argument on the need to preserve the Information Commissioner’s discretion, which implies that she is trying to protect the commissioner’s ability to go her own way. That will not help us to secure, lock down or nail to the floor an adequacy agreement in years to come. It will put an adequacy agreement at risk.
Darren Jones
My right hon. Friend is exactly right. Of course, the Information Commissioner is an excellent commissioner. We are privileged to have Elizabeth in the role here in the UK, not least with her experience, as a Canadian, of being in a third country. That is why I put some flexibility into my amendment—to recognise that situations may arise about which we cannot hypothesise today in which the commissioner will need some flexibility. Under my amendment, she has the power to add modifications that she considers necessary. The Government’s concerns about the lack of flexibility are not reflected in the drafting of my amendment, as I have tried to deal with that.
The idea that the amendment increases the European data protection board’s power is incorrect, because this is UK law, not European Union law. The amendment merely says that we will go only slightly further, with flexibility, by recognising that in the decisions that we want to be a part of—that is a really important point here—and to influence, we will take the obligations as well as the responsibilities, should we be invited to.
Daniel Zeichner
Could the Bill not also put the Information Commissioner in an extraordinarily difficult position? Decisions that she may make in the future could have huge political consequences. I would be surprised if she wanted to take that on.
Darren Jones
I agree with my hon. Friend. The reality may be that under the wording in the Bill, the Information Commissioner has no choice but to apply and incorporate the European data protection board’s decisions if it is to keep up and maintain adequacy.
That is why the amendment is not something to worry about. It seeks to do what will probably happen in practice, but it puts our commitment to that relationship in the Bill. When we say to Europe that, uniquely, unlike any other third country and despite not being a member of the European Union, we want to have a position of influence on the EDPB, we can also say that we recognise that no one else has that level of influence, but in seeking to have it, we have made commitments to that future relationship in UK legislation.
I do not think any other Members here are members of the European Scrutiny Committee, but I spent the whole of yesterday afternoon losing votes on amendments to a report, and I rather enjoyed myself, so I will press this amendment to a vote.
Question put, That the amendment be made.
Margot James
I beg to move amendment 115, in schedule 6, page 180, line 2, leave out sub-paragraph (b) and insert—
“(b) in paragraph 2, for ‘Member States’ substitute ‘The Secretary of State’;
(c) after that paragraph insert—
‘3 The power under paragraph 2 may only be exercised by making regulations under section (Duty to review provision for representation of data subjects) of the 2018 Act.’”
This amendment is consequential on NC2.
The Chair
With this it will be convenient to discuss the following:
Government amendments 63 to 68.
Amendment 154, in clause 183, page 106, line 24, at end insert—
“(4A) In accordance with Article 80(2) of the GDPR, a person who satisfies the conditions in Article 80(1) and who considers that the rights of a data subject under the GDPR have been infringed as a result of data processing, may bring proceedings, on behalf of the data subject and independently of the data subject’s mandate—
(a) pursuant to Article 77 (right to lodge a complaint with a supervisory authority),
(b) to exercise the rights referred to in Article 78 (right to an effective judicial remedy against a supervisory authority),
(c) to exercise the rights referred to in Article 79 (right to an effective judicial remedy against a controller or processor).
(4B) An individual who considers that rights under the GDPR, this Act or any other enactment relating to data protection have been infringed in respect of a class of individuals of which he or she forms part may bring proceedings in respect of the infringement as a representative of the class (independently of the mandate of other members of the class), and—
(a) for the purposes of this subsection ‘proceedings’ includes proceedings for damages, and any damages recovered are to be distributed or otherwise applied as directed by the court,
(b) in the case of a class consisting of or including children under the age of 18, an individual may bring proceedings as a representative of the class whether or not the individual’s own rights have been infringed,
(c) the court in which proceedings are brought may direct that the individual may not act as a representative, or may act as a representative only to a specified extent, for a specified purpose or subject to specified conditions,
(d) a direction under paragraph (c) may (subject to any provision of rules of court relating to proceedings under this subsection) be made on the application of a party or a member of the class, or of the court’s own motion, and
(e) subject to any direction of the court, a judgment or order given in proceedings in which a party is acting as a representative under this subsection is binding on all individuals represented in the proceedings, but may only be enforced by or against a person who is not a party to the proceedings with the permission of the court.
(4C) Subsections (4A) and (4B)—
(a) apply in respect of infringements occurring (or alleged to have occurred) whether before or after the commencement of this section,
(b) apply to proceedings begun before the commencement of this section as if references in subsections (4A) and (4B) to bringing proceedings included a reference to continuing proceedings, and
(c) are without prejudice to the generality of any other enactment or rule of law which permits the bringing of representative proceedings.”
This amendment would create a collective redress mechanism whereby a not-for-profit body, organisation or association can represent multiple individuals for infringement of their rights under the General Data Protection Regulation.
Amendment 155, in clause 205, page 120, line 38, at end insert—
“(ca) section 183 (4A) to (4C);”
This amendment would create a collective redress mechanism whereby a not-for-profit body, organisation or association can represent multiple individuals for infringement of their rights under the General Data Protection Regulation.
Government amendments 73 and 74.
Government new clause 1—Representation of data subjects with their authority: collective proceedings.
Government new clause 2—Duty to review provision for representation of data subjects.
Margot James
These Government amendments concern the issue of class representation for data protection breaches. Article 80(1) of the GDPR enables a not-for-profit organisation to represent a data subject on their behalf, if the data subject has mandated them to do so. The Bill gives effect to the same right in clause 183. Where a not-for-profit organisation wants to bring a claim on behalf of multiple people, as things stand it will need to make multiple applications to the court. That is not efficient, and it would be better if all the claims could be made in a single application.
New clause 1 gives the Secretary of State the power to set out provisions allowing a non-profit organisation to bring a claim on behalf of multiple data subjects under article 80(1). We have taken the practical view that that will be an effective way for a non-profit group to seek a remedy in the courts on behalf of a large number of data subjects. The Bill does not give effect to article 80(2), which allows not-for-profit bodies to represent individuals without their mandate. We believe that opt-out collective proceedings should be established on the basis of clear evidence of benefit, with a careful eye on the pitfalls that have befallen so-called class-action lawsuits in other jurisdictions. The Government have, however, listened to the concerns raised and accept that further consideration should be given to the merits of implementing the provisions in article 80(2).
New clause 2 provides a statutory requirement for the Secretary of State to conduct a review of the operation of article 80(1), which will consider how it and the associated provisions in the Bill have operated in practice and assess the merits of implementing article 80(2) in the future. The review will involve consultation among relevant stakeholders, such as the Information Commissioner, businesses, privacy groups, the courts, tribunals and other Departments. The new clause requires the Secretary of State to conduct the review and present its findings to Parliament within 30 months of the Bill’s coming into force. That is necessary to provide enough time for there to be sufficient evidence to scrutinise the options provided in article 80(1) in the civil courts. Were the review period to be substantially shorter, it would increase the likelihood of there being a paucity of evidence, which would undermine the effectiveness and purpose of the review. Upon the conclusion of the review period, the Secretary of State will have the power, if warranted, to implement article 80(2), allowing non-profit organisations to exercise the rights awarded to data subjects under articles 77, 78, 79 and 82 on their behalf without first needing their authorisation to do so.
Amendments 63 to 68, 73, 74 and 115 are consequential amendments that tidy up the language of the related clause, clause 183. They provide additional information about the rights of data subjects that may be exercised by representative bodies. I commend the amendments to the Committee.
Liam Byrne
I will speak to amendments 154 and 155, which are in my name and those of my hon. Friends. The broad point I want to start with is a philosophical point about rights. If rights are to be real, two things need to be in place: first, a level of transparency so that we can see whether those rights are being honoured or breached; and, secondly, an efficient form of redress. If we do not have transparency and an effective, efficient and open means of redress, the rights are not real, so they are theoretical.
We think there are some unique circumstances in the field of data protection that require a slightly different approach from the one that the Government have proposed. The Government have basically proposed an opt-in approach with a review. We propose an opt-out approach. We think that the argument is clear cut, so we do not see why the Government have chosen to implement something of a half-measure.
The Bill gives us the opportunity to put in place an effective, efficient and world-leading form of redress to ensure that data protection rights are not breached. The reality is that large-scale data breaches are now part and parcel of life. They affect not only the private sector but the private sector, which is partnering with Government. We have seen a number of data breaches among Government partners where financial information has been leaked. The reality is that data protection breaches around the world are growing in number and size.
What is particularly egregious is that many private sector companies admit to the scale of a data breach only many years after the offence has taken place. Yahoo! is a case in point. It had one of the biggest data breaches so far known, but it took many months before the truth came out. That has been true of Government partners, too. Sometimes a lesser offence is admitted to. There is muttering about a particular problem and then, as the truth unfolds, we hear that a massive data breach has taken place. The reality is that these firms are by and large going unpunished. Although the Bill proposes some new remedies of a significant scale, unless those remedies can be sought by ordinary citizens in a court, they frankly are not worth the paper they are printed on.
To underline that point, I remind the Committee that often we look to the Information Commissioner to take the lead in prosecuting these offences. My hon. Friend the Member for Bristol North West was right to celebrate the strength of our current Information Commissioner, but the Government have not blessed the Information Commissioner with unlimited resources, and that will not change in the foreseeable future. What that means is that in the last year for which we have information—2016-17—the Information Commissioner issued only 16 civil monetary penalties for data breaches. That is a very small number. We think we need a regime that allows citizens to bring actions in court. That would multiply the power of the Information Commissioner.
Article 80 of the GDPR addresses that problem in a couple of ways, and the Minister has alluded to them. Article 81 basically allows group or class actions to be taken, and article 82 says that the national law can allow representative bodies to bring proceedings. The challenge with the way in which the Government propose to activate that power is that the organisation bringing the class action must seek a positive authorisation and people must opt in. The risk is that that will create a burden so large that many organisations will simply not step up to the task.
Brendan O'Hara (Argyll and Bute) (SNP)
It is a pleasure to serve under your chairmanship this afternoon, Mr Streeter.
I support amendment 154. We strongly recommend that if the Government are, as they claim to be, serious about providing the best possible data protection regime to achieve the gold standard that they often talk about for UK citizens, they should look again at the issue of collective redress and make provision for suitably qualified non-profit organisations to pursue data protection infringements and breaches of their own accord, as provided for by the GDPR.
The right hon. Member for Birmingham, Hodge Hill rightly said that the amendments would allow representative bodies to bring such cases, but would also allow individuals to opt out. Currently there is not a level playing field. If the Bill is not amended, the already uneven playing field will become impossibly uneven for individuals whose rights are breached or infringed—probably by a tech giant.
Collective redress was one of the most controversial and hotly debated issues when the Bill was in the House of Lords. The Government resisted all attempts to change it there. There have been slight amendments since then, and an understanding has been reached, but I feel that what the Government propose does not go nearly far enough to address the concerns expressed by Scottish National party and Labour Members.
Anna Fielder, a former chair of Privacy International, wrote:
“Weak enforcement provisions were one of the widely acknowledged reasons why the current data protection laws, in the UK and elsewhere in Europe, were no longer fit for purpose in the big data age. As a result, it has been more convenient for organisations collecting and processing personal information to break the law and pay up if found out, than to observe the law — as profits made from people’s personal information vastly outweighed even the most punitive of fines.”
That is the situation we are in, and it is incumbent on legislators to level the playing field—not to make it even more uneven. However, as the Bill currently stands, it only enables individuals to request that such suitably qualified non-profit organisations take up cases on their behalf, rather than allowing the organisations themselves to highlight where they believe a breach of data protection law has occurred.
All too often, as has been pointed out on numerous occasions, individuals are the last people to know that their data has been unlawfully and in many cases illegally used. They depend on suitably qualified non-profit organisations, which are there to conduct independent research and investigations, to inform them that that is the case. Indeed, there was a very striking example recently in Germany, where the consumer federation took one of the tech giants to court over a number of platform breaches of current German data protection law, and it won. However, there are numerous examples across the world of organisations and groups highlighting bad or illegal practices that would hitherto probably have gone unnoticed here.
Privacy International recently published a report on the use and possible abuse of personal data connected to the rental car market. Which? has carried out research on online toys that are widely available in this country, which could pose serious child safety risks. The Norwegian consumer council has done similar work on toys, as well as exposing unlawful practices by health and dating apps.
Across the world, there are groups that do collective redress work very successfully in Belgium, Italy, Portugal, Spain, Sweden, Canada and Australia. I urge the Government to reconsider the matter and to see the great consumer benefits and protections that would come from accepting amendment 154. It would give not-for-profit organisations the right to launch complaints with a supervisory authority, as well as seeking judicial remedy, when it considered that the rights of a data subject under the GDPR had been breached.
I repeat that at the moment we have an uneven playing field. If the Bill goes through unamended it will become an impossible playing field for consumers, so I urge the Government to accept the amendment.
Darren Jones
I promise not to speak at every opportunity today, Mr Streeter; I am conscious that it is a Thursday and that Members have constituencies to get to, but on this point I will just add my support to the amendment tabled by my right hon. Friend the Member for Birmingham, Hodge Hill.
The Bill puts us in a position that we should not have been in in the first place. The Government’s original view was that they were not going to implement article 80 of the GDPR; they have now gone one step in that direction, and I support the aim that we go the whole hog.
I recognise from my work previous to being an MP that a lot of tech companies are not evil; they want to do the right thing and go about being successful as businesses. It was partly my job in the past to look at these areas of law on behalf of companies, and to work with campaigning groups, regulators and others. It was about being an internal voice to make sure that there was the correct balance within businesses between considering consumers and being pro-business. This amendment would help to facilitate that conversation, because if bodies such as Which? that are private enforcers on behalf of consumers had these legal rights, then of course there would be an obligation on businesses to have ongoing dialogue and relationships. They would have to make sure that consumers’ concerns were at the forefront and that they were doing things in the right way.
The balance to be struck is really important. The Information Commissioner’s Office, for example, has lost quite a lot of staff to other companies recently. The Minister’s Department had to increase the salary bands for ICO staff to try to keep them there. In other sectors of the regulated economy, having private enforcers on behalf of consumers as a collective group works perfectly well for existing regulators.
In the telecommunications sector, in which I have worked in the past, there is Ofcom, which regulates the telecom sector, but there is also Which?, working as a private enforcer under the Consumer Rights Act 2015, which can act on behalf of consumers as a group. That works perfectly well and as my right hon. Friend said, private enforcers will not just start bringing these super-complaints every week, because the risk would be too high. They will only bring these super-complaints when they have failed in their dialogue and have no choice.
Stuart C. McDonald (Cumbernauld, Kilsyth and Kirkintilloch East) (SNP)
It is a pleasure to serve under your chairmanship, Mr Streeter. We have had three excellent speeches already in support of amendments 154 and 155, so I will not try to replicate them. As the right hon. Member for Birmingham, Hodge Hill said, this is one of the pivotal debates on the Bill. I would like to be positive, but all I can bring myself to say about the Government’s new clause and amendments is that they are marginally better than nothing. However, they do not go far enough and they will leave the UK significantly behind other EU countries in terms of collective redress and the pursuit of the gold standard of data protection. They will leave the Bill falling short of what the Government themselves promised on effective redress.
Only amendments 154 and 155 will provide a comprehensive opt-out regime and enable adults and children who are victims of data breaches properly to vindicate their rights to proper protection of their personal data. The amendments will provide a mechanism whereby serious breaches of data protection, which can affect the most vulnerable in society, are seriously addressed and result in real change that will benefit thousands if not millions of consumers across the UK.
The Bill provides a hugely significant opportunity to legislate for a cost-effective and efficient mechanism for redress in cases of mass data breaches, which we all know are increasingly common and which the Information Commissioner’s Office has limited resources to deal with. The measure is essential to make the Bill fit for purpose and I wholeheartedly support both amendments.
The Chair
Before I call the Minister to respond, it might help the Committee to know that, although we are properly debating Opposition amendments 154 and 155 at the moment, if they are to be put to a Division, that cannot happen until we reach clause 183. However, that does not prevent the Minister from indicating she might accept them at this stage. That is entirely up to her.
Margot James
I thank right hon. and hon. Members for their contributions. We certainly agree with the need for a transparent system of rights over people’s personal data and a system of enforcement of those rights. We could not agree more with the thinking behind that, but we need to pause for thought before implementing article 80(2). The GDPR represents significant change, but we should test the effectiveness of the new enforcement scheme, including, as we have already discussed, article 80(1), before we make further changes of the type proposed this morning under amendments 154 and 155.
Amendment 154 applies article 80(2) with immediate effect and gold-plates it. We have a number of concerns with that approach. First, we are wary of the idea that data subjects should be prevented from enforcing their own data rights simply because an organisation or, in this instance, an individual they had never met before, got there first. That is not acceptable. It contradicts the theme of the Bill and the GDPR as a whole, which is to empower individuals to take control of their own data. As yet we have no evidence that that is necessary.
Liam Byrne
Let us take Uber—one of the most recent of the 200 data breaches listed on Wikipedia. In that case, 57 million records were leaked. How is one of those drivers going to take Uber to court to ensure justice?
Margot James
The GDPR places robust obligations on the data controller to notify all data subjects if there has been a breach that is likely to result in a high risk to their rights. That example is almost unprecedented and quite different—
Liam Byrne
It is not unprecedented. Look at the Wikipedia page on data breaches. There are 200 of them, including Uber, Equifax, AOL, Apple, Ashley Madison, Betfair—the list goes on and on. I want an answer to a very simple question. How is a humble Uber driver, who is busting a gut to make a living, going to find the wherewithal to hire a solicitor and take Uber to court? What is the specific answer to that question?
Margot James
If a data subject is sufficiently outraged, there is nothing to stop them contacting a group such as Which? and opting into a group action. Furthermore, a range of enforcement options are open to the ICO. It can issue enforcement notices to compel the controller to stop doing something that is in breach of people’s data rights. As I said, there is nothing to stop a data subject opting into a group action.
Liam Byrne
There is only one major precedent for the kind of scenario the Minister has sketched out today, which is Various Claimants v. Wm Morrisons Supermarket plc—a case she knows well. That case illustrates the difficulties of opt-in. It is by far the largest group of data protection claimants ever put together. Even then, the total number of people who could be assembled was 5,000 out of 100,000 people whose data rights were breached. That was incredibly difficult and took a huge amount of time. Even if the claim succeeds, the 95% of people not covered by the claim will not receive justice. I am not quite sure what new evidence the Minister is waiting for so that she has enough evidence to activate the kind of proposals we are talking about today.
Margot James
As I said, the GDPR represents significant change. We believe we should test the effectiveness of the new enforcement scheme before we make further changes of the kind the right hon. Gentleman is suggesting. The Morrisons case was effective. The collective redress mechanism—group litigation orders—was used and was effective. The Information Commission will have new powers under the Bill to force companies to take action when there has been a breach of data.
There are other problems with amendment 154. First, like the right hon. Member for Birmingham, Hodge Hill, we are concerned about children’s rights. We would be concerned if a child’s fundamental data rights were weighed up and stripped away by a court without parents or legal guardians having had the opportunity to make the decision to seek redress themselves or seek the help of a preferred non-profit organisation. Once that judgment has been finalised, there will be no recourse for the child or the parent. They will become mere observers, which is unacceptable and makes a travesty of the rights they are entitled to enforce on their own account.
Secondly, we must remember that the non-profit organisations referred to in the amendment are, by definition, active in the field of data subjects’ rights. Although many will no doubt have data subjects’ interests at heart, some may have a professional interest in achieving a different outcome—for example, chasing headlines to promote their own organisation. That is why it is essential that data subjects are capable of choosing the organisation that is right for them or deciding not to partake in a claim that an organisation has advertised. The amendment would also allow an individual to bring a collective claim on behalf of other data subjects without their consent.
Brendan O'Hara
Does the Minister not accept, as I said earlier, that individuals are often the last people to know that their data has been breached and their rights have been infringed? For collective rights in hugely complicated areas, there must be a presumption that those rights are protected, and the Bill does not do that. I do not believe it reflects the principle that individuals are often the last people to know, and that they are the ones who need protecting.
Margot James
The Information Commissioner has powers to force companies to notify data subjects of any breach of data, and there is a legal requirement on companies so to do.
The amendment would allow an individual to bring a collective claim on behalf of other data subjects without their consent. We oppose it because it does not give people the protection of knowing that the entity controlling their claim is a non-profit organisation with a noble purpose in mind. I am pleased to say that, as I outlined this morning, the Government’s position was supported in the other place by the Opposition Front Benchers and the noble Baroness Kidron.
Liam Byrne
I am incredibly disappointed with the Minister’s response, and I am not quite sure I believe that she believes what she has been reading out. I hope that between now and Report, or whenever the amendment is pressed to a vote, she will have the opportunity to consult Which? and her officials. The reality is that for complex public policy decisions, whether relating to organ donation or auto-enrolment pensions, we have well-established procedures for opting out, rather than opting in. There has been strong cross-party support for that over the past seven or eight years, and it reflects a reality in new economic thinking. Behavioural economics shows that opt-out is often better than opt-in.
If the Government pursue that line of argument on Report, in the other place and through to Royal Assent, we will not permit the Minister ever again to refer to the Bill as a gold standard in data protection. It is a shoddy, tarnished bronze. She has sought to ensure that the legal playing field is tilted in the favour of large organisations and tech giants, and away from consumers and children. That will lead to a pretty poor state of affairs. We now have enough precedents to know that the regime she is proposing will not work. This is not a theoretical issue; it has already been tested in the courts. Her proposal will not fix the asymmetry that potentially leaves millions of people without justice.
The idea that the Minister can present the Morrisons case as some kind of success when 95% of the people whose data rights were breached did not receive justice because they did not opt in to the class action betrays it all. She is proposing a system of redress that is good for the few and bad for the many. If that is her politics, so be it, but she will not be able to present the Bill as the gold standard if she persists with that argument.
The Chair
As I said, we will deal with the Opposition amendments later in our proceedings.
Amendment 115 agreed to.
Schedule 6, as amended, agreed to.
Clauses 23 and 24 ordered to stand part of the Bill.
Clause 25
Manual unstructured data used in longstanding historical research
Amendment made: 17, in clause 25, page 15, line 40, leave out “individual” and insert “data subject”.—(Margot James.)
Clause 25 makes provision about the processing of manual unstructured data used in longstanding historical research. This amendment aligns Clause 25(1)(b)(i) with similar provision in Clause 19(2).
Clause 25, as amended, ordered to stand part of the Bill.
Clause 26
National security and defence exemption
Question proposed, that the clause stand part of the Bill.
Louise Haigh (Sheffield, Heeley) (Lab)
It is a pleasure to serve under your chairmanship once again, Mr Streeter. I think it was about 18 months ago that we were in this very room, debating the Bill that became the Digital Economy Act 2017. We discussed at length the trade-off between the rights of data subjects, privacy, transparency and the need for Government access to data. In that context we were debating the rights of viewers of online pornography, rather than matters of national security. I note that the Government have had to delay the introduction of the regulations, because they failed to get to grips with the issues that we raised in Committee. I do not envy the new Minister, or, indeed, my right hon. Friend the shadow Minister, their task of attempting to get things right. It was one of the low points of my political career when I had to negotiate with the present Secretary of State for Digital, Culture, Media and Sport on what sexual acts would be blocked. I wish them both luck in taking the matter forward, and am glad I am dealing only with national security issues in the Bill that we are considering today.
As we come to crucial clauses that give Ministers and the security services a great deal more latitude, it is important for the Opposition to lay out key principles on national security certificates. Of course we support the legitimate interests of the intelligence services, as dictated by their statutory functions, including the safeguarding of national security. Of course we recognise that protecting citizens from harm often means striking a difficult balance between operational requirements and the rights of individuals who may fall within the scope of the investigations. We know that the security services take that seriously.
It is the Opposition’s duty, however, to scrutinise the Government’s approach, to ensure that any powers that explicitly allow the setting aside of citizens’ data rights under the Bill are proportionate and necessary, and that they will be overseen through appropriate safeguards. Clauses 26 and 27 provide for a national security certification regime allowing restriction of and exemption from a wide range of rights under the GDPR and the Bill on the basis of national security, and for defence purposes.
The Government state that national security falls outside the scope of EU law and, therefore, the GDPR, and that therefore any processing of personal data relating to national security will be governed by the applied GDPR. Article 4(2) of the treaty on the European Union provides that national security remains the sole responsibility of each member state. Despite that, EU data protection legislation provides for derogations for national security. If national security were entirely outside the scope of the EU treaty, such derogations would be unnecessary, so, as the Joint Committee on Human Rights argued, the provisions imply the retention of some level of EU scrutiny over derogations from EU data protection rights on the grounds of national security. It is thus not at all clear that the Government’s assertions about blanket national security exemptions are correct.
Furthermore, there is no clear definition of which entities will be covered by the extremely broad exemptions under subsection 1, which refers to “national security” and “defence purposes”. I am concerned that a measure allowing broad exemptions to the rights of citizens does not stipulate which entities will be entitled to jettison those rights. As was debated at length in the other place, there are no clear definitions of national security, or of the extended exemption for defence purposes, which goes beyond the Data Protection Act 1998, in the Bill or the explanatory notes. As the right hon. and learned Member for Rushcliffe (Mr Clarke) remarked during the passage of the Investigatory Powers Act 2016,
“National security can easily be conflated with the policy of the Government of the day.”—[Official Report, 15 March 2016; Vol. 607, c. 850.]
As the Joint Committee on Human Rights concluded,
“it is unclear why the authorities require such a breadth of exemptions from their obligations under the data protection regime.”
Before we move on to discuss our amendments to clause 26, I should be grateful if the Minister could assure us about the definitions of “national security” and “defence purposes” and in particular which entities they apply to.
The Parliamentary Under-Secretary of State for the Home Department (Victoria Atkins)
It is a pleasure to serve under your chairmanship, Mr Streeter. Clause 26 creates an exemption for certain provisions in the Bill only if that exemption is required for the purpose of safeguarding national security or for defence purposes. Where processing does not meet these tests, the exemption cannot apply. It is possible to exempt from most but not all the data protection principles the rights of data subjects, certain obligations on data controllers and processors, and various enforcement provisions, where required to safeguard national security or for defence purposes. In relation to national security, the exemption mirrors the existing national security exemption provided for in section 28 of the 1998 Act. The statutory framework has long recognised that the proportionate exemptions from the data protection principles and the rights of data subjects are necessary to protect national security. The Bill does not alter that position.
The exemption for defence purposes is intended to ensure the continued protection, security and capability of our armed forces and of the civilian staff who support them—not just their combat effectiveness, to use the outdated language of the 1998 Act. In drafting this legislation, we concluded that this existing exemption was too narrow and no longer adequately captured the wide range of vital activities that are undertaken by the Ministry of Defence and its partners. We have seen that all too obviously in the last two weeks.
Victoria Atkins
If the right hon. Gentleman is going to disagree with me that combat effectiveness would be a very narrow term to describe the events in Salisbury, of course I will give way.
Liam Byrne
I actually wanted to ask about interpreters who support our armed forces. There is cross-party consensus that sometimes it is important to ensure that we grant leave to remain in this country to those very brave civilians who have supported our armed forces abroad as interpreters. Sometimes, those claims have been contested by the Ministry of Defence. Is the Minister confident and satisfied that the Ministry of Defence would not be able to rely on this exemption to keep information back from civilian staff employed as interpreters in support of our armed forces abroad when they seek leave to remain in this country?
Victoria Atkins
I cannot possibly be drawn on individual applications for asylum. It would be wholly improper for me to make a sweeping generalisation on cases that are taken on a case-by-case basis. I refer back to the narrow definition that was in the 1998 Act and suggest that our enlarging the narrow definition of combat effectiveness would mean including the civilian staff who support our brave troops.
The term “defence purposes” is intended to be limited in both application and scope, and will not encompass all processing activities conducted by the Ministry of Defence. Only where a specific right or obligation is found to incompatible with a specific processing activity being undertaken for defence purposes can that right or obligation be set aside. The Ministry of Defence will continue to process personal information relating to both military and civilian personnel in a secure and appropriate way, employing relevant safeguards and security in accordance with the principles of the applied GDPR. It is anticipated that standard human resources processing functions such as the recording of leave and the management of pay and pension information will not be covered by the exemption.
Liam Byrne
I am sorry to press the Minister on this point, and she may want to write to me as a follow-up, but I think Members on both sides of the House have a genuine interest in ensuring that interpreters who have supported our troops abroad are able to access important information, such as the terms of their service and the record of their employment, when making legitimate applications for leave to remain in this country—not asylum—or sometimes discretionary leave.
Victoria Atkins
I am very happy to write to the right hon. Gentleman about that. The exemption does not cover all processing of personal data by the Ministry of Defence, but I am happy to write to him on that subject.
It may assist the Committee if I give a few examples of processing activities that might be considered to fall into the definition of defence purposes requiring the protection of the exemption. Such processing could include the collation of personal data to assist in assessing the capability and effectiveness of armed forces personnel, including the performance of troops; the collection and storage of information, including biometric data necessary to maintain the security of defence sites, supplies and services; and the sharing of data with coalition partners to support them in maintaining their security capability and the effectiveness of their armed forces. That is not an exhaustive list. The application of the exemption should be considered only in specific cases where the fulfilment of a specific data protection right or obligation is found to put at risk the security capability or effectiveness of UK defence activities.
The hon. Member for Sheffield, Heeley asked for a definition of national security. It has been the policy of successive Governments not to define national security in statute. Threats to national security are constantly evolving and difficult to predict, and it is vital that legislation does not constrain the security and intelligence agencies’ ability to protect the UK from new and emerging threats. For example, only a few years ago it would have been very difficult to predict the nature or scale of the threat to our national security from cyber-attacks.
Clause 26 does not provide for a blanket exemption. It can be applied only when it is required to safeguard national security or for defence purposes.
Daniel Zeichner
What weight does the Minister give to the written evidence that the Committee received from the Information Commissioner’s Office? It is obviously expert on this issue, and it addresses some of the points she made. It concludes that there is no threshold for when “defence purposes” are to be used, and that there is no guidance
“for when it is appropriate to rely on the exemption.”
What weight does the Minister give to that, and what is her response to the concern raised by the Information Commissioner’s Office?
Victoria Atkins
Again, surely it is for the Executive—elected officials—to take responsibility for decisions that are made by data controllers in the Ministry of Defence. Obviously, the Department has considered the Information Commissioner’s representations, but this is not a blanket exemption. The high threshold can be met only in very specific circumstances.
Question put and agreed to.
Clause 26 accordingly ordered to stand part of the Bill.
Clause 27
National security: certificate
Louise Haigh
I beg to move amendment 161, in clause 27, page 17, line 2, leave out subsection (1) and insert—
“A Minister of the Crown must apply to a Judicial Commissioner for a certificate, if exemptions are sought from specified provisions in relation to any personal data for the purpose of safeguarding national security.”
This amendment would introduce a procedure for a Minister of the Crown to apply to a Judicial Commissioner for a National Security Certificate.
The Chair
With this it will be convenient to discuss the following:
Amendment 162, in clause 27, page 17, line 5, at end insert—
“(1A) The decision to issue the certificate must be—
(a) approved by a Judicial Commissioner,
(b) laid before Parliament,
(c) published and publicly accessible on the Information Commissioner’s Office website.
(1B) In deciding whether to approve an application under subsection (1), a Judicial Commissioner must review the Minister’s conclusions as to the following matters—
(a) whether the certificate is necessary on relevant grounds,
(b) whether the conduct that would be authorised by the certificate is proportionate to what it sought to be achieved by that conduct, and
(c) whether it is necessary and proportionate to exempt all provisions specified in the certificate.”
This amendment would ensure that oversight and safeguarding in the application for a National Security Certificate are effective, requiring sufficient detail in the application process.
Amendment 163, in clause 27, page 17, leave out lines 6 to 8 and insert—
“(2) An application for a certificate under subsection (1)—
(a) must identify the personal data to which it applies by means of a detailed description, and”.
This amendment would require a National Security Certificate to identify the personal data to which the Certificate applies by means of a detailed description.
Amendment 164, in clause 27, page 17, line 9, leave out subsection (2)(b).
This amendment would ensure that a National Security Certificate cannot be expressed to have prospective effect.
Amendment 165, in clause 27, page 17, line 9, at end insert—
“(c) must specify each provision of this Act which it seeks to exempt, and
(d) must provide a justification for both (a) and (b).”
This amendment would ensure effective oversight of exemptions of this Act from the application for a National Security Certificate.
Amendment 166, in clause 27, page 17, line 10, leave out “directly” and insert
“who believes they are directly or indirectly”
This amendment would broaden the application of subsection (3) so that any person who believes they are directly affected by a National Security Certificate may appeal to the Tribunal against the Certificate.
Amendment 167, in clause 27, page 17, line 12, leave out
“, applying the principles applied by a court on an application for judicial review,”
This amendment removes the application to the appeal against a National Security Certificate of the principles applied by a court on an application for judicial review.
Amendment 168, in clause 27, page 17, line 13, leave out
“the Minister did not have reasonable grounds for issuing”
and insert
“it was not necessary or proportionate to issue”.
These amendments would reflect that the Minister would not be the only authority involved in the process of applying for a National Security Certificate.
Amendment 169, in clause 27, page 17, line 16, at end insert—
“(4A) Where a Judicial Commissioner refuses to approve a Minister’s application for a certificate under this Chapter, the Judicial Commissioner must give the Minister of the Crown reasons in writing for the refusal.
(4B) Where a Judicial Commissioner refuses to approve a Minister’s application for a certificate under this Chapter, the Minister may apply to the Information Commissioner for a review of the decision.
(4C) It is not permissible for exemptions to be specified in relation to—
(a) Chapter II of the applied GDPR (principles)—
(i) Article 5 (lawful, fair and transparent processing),
(ii) Article 6 (lawfulness of processing),
(iii) Article 9 (processing of special categories of personal data),
(b) Chapter IV of the applied GDPR—
(i) GDPR Articles 24 – 32 inclusive,
(ii) GDPR Articles 35 – 43 inclusive,
(c) Chapter VIII of the applied GDPR (remedies, liabilities and penalties)—
(i) GDPR Article 83 (general conditions for imposing administrative fines),
(ii) GDPR Article 84 (penalties),
(d) Part 5 of this Act, or
(e) Part 7 of this Act.”
This amendment would require a Judicial Commissioner to intimate in writing to the Minister reasons for refusing the Minister’s application for a National Security Certificate and allows the Minister to apply for a review by the Information Commissioner of such a refusal.
Louise Haigh
With our amendments we seek to provide some oversight of and protections against the very broad definitions in this part of the Bill. I am afraid we are not content with the Minister’s assertions in her response on the previous clause.
As they currently stand, national security certificates give Ministers broad powers to remove individuals’ rights with absolutely no oversight. If this is a matter for the Executive, as the Minister has just said, they must be subject to oversight and accountability when making such decisions, and as it stands there is absolutely none at all. The rights at risk from the exemption are the right to be informed when personal data is collected from individuals, which is in article 13 of the GDPR; the right to find out whether personal data against them is being processed, in article 15; and the right to object to automated decision making, in articles 21 and 22. Furthermore, the Information Commissioner’s inspection, authorisation and advisory powers are set aside, which is why she and her office raised concerns, as my hon. Friend the Member for Cambridge set out.
It is not difficult to envisage examples of why those exemptions may be necessary. The Minister has laid some of them out: for instance, during the course of an ongoing national security investigation, the right of an individual to be informed that their data is being processed would not be appropriate. With these exemptions, there will inevitably be a need for appropriate safeguards to protect the rights of citizens. We are not yet convinced that the Bill contains them. That is what these amendments seek to tackle.
Brendan O'Hara
It may come as no surprise that I rise to speak in support of amendments 161 to 169. They are intended to challenge the Government’s plan to introduce a national security certification regime that will allow the restriction of and exemptions from a wide range of fundamental rights on the basis of national security and defence. Although it is absolutely right that, as a country, the UK has the ability to act in its own national security interest, I and many others are worried that the scale and scope of what is proposed in the Bill goes much further than the 1998 Act by widening the national security definition to include a further and, I would suggest, undefined range of defence purposes.
The Minister gave three or four examples earlier, but stressed that it was not an exhaustive list. Given the broad and indefinite nature of those national security exemptions, we are concerned that they do not meet the test of being both necessary and proportionate. How much confidence can we have that an individual’s fundamental rights will be best protected when the exemptions will be signed off by a Government Minister with little or no judicial oversight? It is also concerning that there appears to have been little or no attention to the harmful impact of exempting vast amounts of information from data protection safeguards by relying upon national security certificates.
As we heard earlier, the list of rights that are exempted, set out in clause 26, includes the right to be informed when data is being collected, the right to find out when personal data is being processed and the right to object to automated decision making. Those exemptions are to be exercised by a certificate, which, as I say, will be signed by a Minister, who will certify that an exemption from those rights and obligations is necessary for the purpose of safeguarding national security.
That means that, as the Bill is currently drafted, people’s rights could be removed by a politician without any form of judicial oversight. That cannot be right. We would argue most strongly that there has to be judicial oversight of any such decision, to prevent the removal of individual data protection rights from being permitted purely at the say-so of a Government Minister. I ask the Minister, how do the Government define national security and defence purposes in the context of the Bill? I certainly was not satisfied with the explanation we heard earlier on. I believe that these undefined terms are unnecessarily open-ended and broad, and open to vague interpretation. They could very well result in the removal of an individual’s rights unnecessarily. The lack of a clear definition of national security and defence purposes also means that people will be unable to foresee or understand when their rights will be overridden by the application of these exemptions. Surely that is incompatible with an individual citizen’s fundamental rights.
These exemptions, on the surface, are not limited to the UK’s intelligence and security services. As we heard when debating part 2 of the Bill, which deals with general processing, they broadly permit public authorities, and even private corporations on occasion, to invoke national security and defence as a reason to cast aside privacy rights. Can the Minister explain if, how, and under what circumstances a public authority or private company could invoke national security and defence as a reason to cast aside privacy rights?
That brings me to necessity and proportionality, which are fundamental principles when looking at exemptions from data protection, and which will be examined extremely closely by the European Commission and its legal team when it decides on the UK’s suitability for adequacy after Brexit. The principles of necessity and proportionality are enshrined in the European convention on human rights. A Minister must take them into account when they consider restricting or limiting an individual’s rights, such as those under article 8, the right to privacy.
As the Bill stands, no conditions or tests are imposed on a Minister’s decision to withdraw an individual’s personal data protection rights by issuing a national security certificate. There is no limitation on how a national security certificate should run or how long it should operate for. There is no obligation to review the ongoing necessity of having a live certificate. In effect, a certificate is open-ended and indefinite. My concern is that that may allow the state to use a certificate for activities for which it was not considered relevant or appropriate by the Minister when it was first issued or signed.
That loophole cannot be considered proportionate or necessary. The certificates have to be time-limited. That does not mean that once a certificate has expired it cannot be re-certified, but it would ensure that certificates that are no longer necessary or that have been used beyond their original remit do not continue indefinitely. Perhaps the Minister could explain why she thinks such a system could not work, and why it would not be in the best interest of the state and of protecting an individual’s rights.
As with everything we do, including everything we have done in this area in the past couple of years, the Bill has to be seen against the backdrop of Brexit. Not only do we have to comply with the GDPR, but we have to do so in a way that means the United Kingdom will achieve the vital, much sought after adequacy decision from the European Commission. We also have to keep our laws consistent with EU law to maintain that adequacy status. I fear that the widespread use of exemptions and, perhaps more worryingly, the undefined range of defence purposes could deal a severe blow to the UK achieving an adequacy decision from the European Commission.
Can the Minister tell me whether the Government have been given cast-iron guarantees that the new and undefined range of defence purposes will be consistent with EU law, to allow us not just to achieve adequacy but to maintain adequacy post Brexit?
The Chair
I will call the Minister to respond, but before she responds to that point, she wishes to correct the record in relation to a previous point, which I am happy to permit.
Victoria Atkins
On reflection, I would not wish the hon. Member for Cambridge to understand my earlier answer to mean that a Minister makes a decision on defence purposes. I apologise to him if that was not clear. It is the data controller at the Ministry of Defence who makes that decision. The data controller is accountable to Ministers and in due course to domestic courts. I hope that clarifies that.
The Chair
It is up to the Committee what time we adjourn for lunch, of course, and the Minister may wish to speak quite rapidly.
The Lord Commissioner of Her Majesty's Treasury (Nigel Adams)
Much as I would like the Minister to speak rapidly, I will move the Adjournment.
Ordered, That the debate be now adjourned.—(Nigel Adams.)
Data Protection Bill [Lords] (Fourth sitting)
(6 years, 9 months ago)
Public Bill CommitteesRead Full debate Read Hansard Text Read Debate Ministerial Extracts
The Committee divided: - Ayes: 7 / Noes: 10 - Question accordingly negatived.
The Chair
By the miracle of assistance from the Clerks, I am aware that we have had a debate this morning and that the Minister is now to respond to that debate, which I did not hear, but which I am sure was a full one.
Clause 27
National security: certificate
Amendment proposed (this day): 161, in clause 27, page 17, line 2, leave out subsection (1) and insert—
“A Minister of the Crown must apply to a Judicial Commissioner for a certificate, if exemptions are sought from specified provisions in relation to any personal data for the purpose of safeguarding national security.”.—(Louise Haigh.)
This amendment would introduce a procedure for a Minister of the Crown to apply to a Judicial Commissioner for a National Security Certificate.
Question again proposed, That the amendment be made.
The Chair
I remind the Committee that with this we are discussing the following:
Amendment 162, in clause 27, page 17, line 5, at end insert—
“(1A) The decision to issue the certificate must be—
(a) approved by a Judicial Commissioner,
(b) laid before Parliament,
(c) published and publicly accessible on the Information Commissioner’s Office website.
(1B) In deciding whether to approve an application under subsection (1), a Judicial Commissioner must review the Minister’s conclusions as to the following matters—
(a) whether the certificate is necessary on relevant grounds,
(b) whether the conduct that would be authorised by the certificate is proportionate to what it sought to be achieved by that conduct, and
(c) whether it is necessary and proportionate to exempt all provisions specified in the certificate.”.
This amendment would ensure that oversight and safeguarding in the application for a National Security Certificate are effective, requiring sufficient detail in the application process.
Amendment 163, in clause 27, page 17, leave out lines 6 to 8 and insert—
“(2) An application for a certificate under subsection (1)—
(a) must identify the personal data to which it applies by means of a detailed description, and”.
This amendment would require a National Security Certificate to identify the personal data to which the Certificate applies by means of a detailed description.
Amendment 164, in clause 27, page 17, line 9, leave out subsection (2)(b).
This amendment would ensure that a National Security Certificate cannot be expressed to have prospective effect.
Amendment 165, in clause 27, page 17, line 9, at end insert—
“(c) must specify each provision of this Act which it seeks to exempt, and
(d) must provide a justification for both (a) and (b).”.
This amendment would ensure effective oversight of exemptions of this Act from the application for a National Security Certificate.
Amendment 166, in clause 27, page 17, line 10, leave out “directly” and insert
“who believes they are directly or indirectly”.
This amendment would broaden the application of subsection (3) so that any person who believes they are directly affected by a National Security Certificate may appeal to the Tribunal against the Certificate.
Amendment 167, in clause 27, page 17, line 12, leave out
“, applying the principles applied by a court on an application for judicial review,”.
This amendment removes the application to the appeal against a National Security Certificate of the principles applied by a court on an application for judicial review.
Amendment 168, in clause 27, page 17, line 13, leave out
“the Minister did not have reasonable grounds for issuing”
and insert
“it was not necessary or proportionate to issue”.
These amendments would reflect that the Minister would not be the only authority involved in the process of applying for a National Security Certificate.
Amendment 169, in clause 27, page 17, line 16, at end insert—
“(4A) Where a Judicial Commissioner refuses to approve a Minister’s application for a certificate under this Chapter, the Judicial Commissioner must give the Minister of the Crown reasons in writing for the refusal.
(4B) Where a Judicial Commissioner refuses to approve a Minister’s application for a certificate under this Chapter, the Minister may apply to the Information Commissioner for a review of the decision.
(4C) It is not permissible for exemptions to be specified in relation to—
(a) Chapter II of the applied GDPR (principles)—
(i) Article 5 (lawful, fair and transparent processing),
(ii) Article 6 (lawfulness of processing),
(iii) Article 9 (processing of special categories of personal data),
(b) Chapter IV of the applied GDPR—
(i) GDPR Articles 24 – 32 inclusive,
(ii) GDPR Articles 35 – 43 inclusive,
(c) Chapter VIII of the applied GDPR (remedies, liabilities and penalties)—
(i) GDPR Article 83 (general conditions for imposing administrative fines),
(ii) GDPR Article 84 (penalties),
(d) Part 5 of this Act, or
(e) Part 7 of this Act.”.
This amendment would require a Judicial Commissioner to intimate in writing to the Minister reasons for refusing the Minister’s application for a National Security Certificate and allows the Minister to apply for a review by the Information Commissioner of such a refusal.
The Parliamentary Under-Secretary of State for the Home Department (Victoria Atkins)
Thank you, Mr Hanson. It is a pleasure to serve under your chairmanship again.
I will first provide some context for this part of the Bill. The provisions in the Bill relating to national security exemptions and certificates are wholly in line with the provisions in the Data Protection Act 1998 and its predecessor, the Data Protection Act 1984. What we are doing in the Bill is preserving an arrangement that has been on the statute book for more than 30 years and has been operated by successive Governments.
The national security exemption is no different in principle from the other exemptions provided for in the Bill. If it is right that certain provisions of data protection legislation can be disapplied for reasons of, for example, crime prevention or taxation purposes, or in pursuit of various regulatory functions, without external approval, surely it is difficult to take issue with the need for an exemption on the grounds of national security on the same basis.
Louise Haigh (Sheffield, Heeley) (Lab)
The Minister is absolutely right that the provisions mirror those in the DPA. That is exactly why we take issue with them. They mirror unacceptable preventions of rights in the tribunal appeal process, but do not mirror the rights in the Investigatory Powers Act 2016. Why were safeguards put in place in that Act, but will not apply in this Bill?
Victoria Atkins
If I understand the hon. Lady’s argument correctly, she has presented the judicial commissioners as permitting, for example, warrant to be granted. Having sat through the Joint Committee on the Draft Investigatory Powers Bill and then the Public Bill Committee, I can tell her that I am afraid that is not how that Act works. What happens is that the Secretary of State grants the warrant and then that decision is overseen by the judicial commissioner. I will come on to the difference between the Investigatory Powers Act and this Bill in due course, because the terminology used draws on that in the Investigatory Powers Act, but that Act is very different from this Bill, which is about the processing of data, in its engagement with people and their rights.
Darren Jones (Bristol North West) (Lab)
Will the Minister give way on that point?
Victoria Atkins
If I may, I will make some progress. Along with existing provisions in section 28 of the 1998 Act, clause 27 provides for a certificate signed by a Minister of the Crown certifying that exemption from specified data protection requirements is required for the purposes of safeguarding national security. There are equivalent provisions in parts 3 and 4 of the Bill. Such a certificate is conclusive evidence of that fact, for example in any legal proceedings. That is the point about the certificates—they only come into play if the exemption or restriction is actually applied.
The certificate provides evidence that the exemption or restriction is required for the purpose of safeguarding national security. It therefore has relevance only in the event that, first, the exemption or restriction is applied to the data in question and, secondly, there is a need to rely on the certificate as conclusive evidence in proceedings to establish that the exemption or restriction is required for the statutory purpose.
Louise Haigh
But what the national security certificate does not require is a statement of what data is being processed or the exemptions under which the Ministry of Defence or the intelligence services require it. That is what our amendments seek to introduce. If the Bill proceeds unamended, national security certificates would require only very broad details and no information on what data was being processed. It would therefore not be very likely that a tribunal would be able to oppose the decision on the basis of a judicial review.
Victoria Atkins
I have a copy of a live certificate granted by the then Secretary of State, David Blunkett, on 10 December 2001. In the certificate, he sets out in summary the reasons why the certificate has been granted, including:
“The work of the security and intelligence agencies of the Crown requires secrecy.”
I assume hon. Members do not disagree with that. Another reason is:
“The general principle of neither confirming nor denying whether the Security Service processes data about an individual, or whether others are processing personal data for, on behalf of with a view to assist or in relation to the functions of the Security Service, is an essential part of that secrecy.”
Again, I assume that hon. Members do not disagree with that. As I said, this is a live certificate that has been given to the Information Commissioner, and is in the public domain for people to see and to check should they so wish. Those reasons are given in that certificate.
Louise Haigh
That is wonderful, but the Bill does not require that. It is great that my noble Friend Lord Blunkett put that on his national security application, but the Bill does not require that in law, so I am afraid that it is not a sufficient argument against the amendments that we have tabled.
Victoria Atkins
What we are doing is transposing the requirements of the Data Protection Act 1998 into the Bill. It is difficult to see a situation in which a national security certificate will be granted on the basis that the work of the security and intelligence agencies of the Crown does not require secrecy.
Peter Heaton-Jones (North Devon) (Con)
Is there not a bigger, more general overall point here, which is that we should not be considering doing anything in Committee that risks making it more difficult for the security services to protect us? This week of all weeks, surely that should be uppermost in our minds.
Victoria Atkins
Very much so—indeed, this debate ran through the passage of the Investigatory Powers Act 2016, which was one of the most scrutinised pieces of legislation. Senior parliamentarians who served on the Committee on that Act during long careers in this House, including the then Minister, my right hon. Friend the Member for South Holland and The Deepings (Mr Hayes), said that it was an incredibly well scrutinised Bill. There was constant debate about the battle, or tension, between ensuring the national security of our country in the most transparent way possible, and the fact that by definition there has to be some secrecy and confidentiality about the ways in which the security agencies work.
What was important in the debates on that Act, as it is in those on the current Bill, was making it clear that the idea that rogue civil servants or security agents can run around with people’s information with no checks is very wrong. We are replicating in the Bill the system that has been used for the past 30 years, because we consider that that system has the appropriate and necessary safeguards in the often very fast-moving context of a national security situation.
Victoria Atkins
I will make a little progress, then I will take more interventions.
To be absolutely clear, a national security exemption is applied not by a Minister but by a data controller. Data controllers—be they the intelligence services, the Ministry of Defence or any other body—are well placed to make the determination, given that they will have a detailed understanding of the operational context and the extent to which departure from the requirement of the general data protection regulation—or parts 3 or 4 of the Bill as the case may be—is necessary to safeguard national security. In short, a data controller decides whether the national security exemption should be applied in a particular case, and the certificate is the evidence of the need for such an exemption in the event that someone challenges it.
Victoria Atkins
I will give an example first, because I think it is so important. I fear that a bit of misunderstanding has crept in. Let us take the example of a subject access request. Mr Smith asks an intelligence service whether it is processing personal data concerning him and, if so, for information about that data under clause 94. The intelligence service considers whether it is processing personal data, which it will have obtained under its other statutory powers, such as the Regulation of Investigatory Powers Act 2000 or the Investigatory Powers Act 2016.
If the agency determines that it is processing personal data relating to Mr Smith, it then considers whether it is able to disclose the data, or whether a relevant exemption is engaged. For the agency, the key consideration will be whether disclosing the data would damage national security, for example by disclosing sensitive capabilities or alerting Mr Smith to the fact that he is a subject of investigation. If disclosure does not undermine national security and no other exemption is relevant, the intelligence service must disclose the information. However, if national security would be undermined by disclosure, the agency will need to use the national security exemption in relation to processing any personal data relating to Mr Smith.
If the intelligence service does not process any personal data relating to Mr Smith, it will again have to consider whether disclosing that fact would undermine national security, for example by revealing a lack of capability, which could be exploited by subjects of investigation. That is why, on occasion, when such requests are made, a “neither confirm nor deny” response may be necessary, because either confirming or denying may in itself have ramifications, not only in relation to Mr Smith but in relation to other aspects of national security.
Mr Smith may complain to the Information Commissioner about the response to his request for information. The intelligence service may then be required to demonstrate to the commissioner that the processing of personal data complies with the requirements of part four of the Bill, as set out in clause 102, and that it has responded to the request for information appropriately.
If, in legal proceedings, Mr Smith sought to argue that the national security exemption had been improperly relied upon, a national security certificate could be used as conclusive evidence that the national security exemption was required to safeguard national security. Any person who believed they were directly affected by the certificate could of course appeal against it to the upper tribunal, as set out in clause 111.
Liam Byrne (Birmingham, Hodge Hill) (Lab)
The Minister is setting out the mechanics of the system with admirable clarity. The point in dispute, though, is not the mechanics of the process but whether the data controller is able—unilaterally, unchecked and unfettered—to seek a national security exemption. Anyone who has worked with the intelligence agencies, either as a Minister or not, knows that they take parliamentary oversight and the defence of parliamentary supremacy extremely seriously.
What we are seeking with this amendment is to ensure that a data controller does not issue a national security certificate unchecked, and that instead there is an element of judicial oversight. The rule of law is important. It should be defended, protected and enhanced, especially when the data collection powers of the intelligence services are so much greater than they were 30 years ago when data protection legislation was first written.
Victoria Atkins
The Government fully accept that national security certificates should be capable of being subject to judicial oversight. Indeed, the current scheme—both under the 1998 Act and this Bill—provides for just that. However, the amendments would radically change the national security certificate regime, because they would replace the existing scheme with one that required a Minister of the Crown to apply to a judicial commissioner for a certificate if an exemption was sought for the purposes of safeguarding national security, and for a decision to issue a certificate to be approved by a judicial commissioner.
This, again, is the debate that we had when we were considering the Investigatory Powers Act 2016. There were some who would have preferred a judicial commissioner to make the decision about warrantry before the Secretary of State. However, Parliament decided that it was not comfortable with that, because it would have meant a great change. For a member of the judiciary to certify on national security issues, rather than a member of the Executive—namely the Prime Minister or a Secretary of State—would have great constitutional implications.
There were great debates about the issue and the House decided, in its wisdom, that it would maintain the constitutional tradition, which is that a member of the Executive has the ultimate responsibility for national security, with, of course, judicial oversight by judicial commissioners and by the various tribunals that all these powers are subject to. The House decided that the decision itself must be a matter for a Minister of the Crown, because in the event—God forbid—that there is a national security incident, the House will rightly and properly demand answers from the Government of the day. With the greatest respect, a judicial commissioner cannot come to the Dispatch Box to explain how the Government and those assisting them in national security matters have responded to that situation. That is why we have this fine constitutional balance, and why we have adopted in the Bill the regime that has been in place for 30 years.
Louise Haigh
Does the Minister accept that in response to the case of Watson and others against the Government, the Government conceded that additional safeguards, including a far more robust system of independent oversight, were necessary? That test of judicial review is simply not sufficient as oversight. It cannot contest the merits of the case and applies only to the very limited, narrow appeal right of judicial review. It is just not sufficient.
Victoria Atkins
I will come on, if I may, to the judicial review test. I have quite a lot about that.
Victoria Atkins
I am grateful to have more time for my officials to scribble a response.
Darren Jones
I am happy to help the Minister. She keeps referring to the framework that has been in place for the last 30 years. That has been a time when we have been a member of the European Union. In reviewing this situation, the House of Lords European Union Committee made the point that under the treaty on the functioning of the European Union, there is absolute jurisdiction for national member states to take decisions on national security. That is not an EU area of jurisdiction. The treaty says that we are protected as a member of the EU, but if we leave the European Union we are not protected by that exemption under the treaty. That is why, for third countries, the European Commission looks at the whole legislative framework. Do we not risk the adequacy decision by taking this approach? In the future, we will not have the answer of saying that it is an issue of exemption from the European Commission.
Victoria Atkins
National security must always be a matter for any member state in the EU, but also once we leave the EU. Sorry, I may have misunderstood the hon. Gentleman, but how we deal with national security is, of course, a matter for the state.
Darren Jones
I am happy to clarify for the Minister. The status quo is that the European Union will not look at areas of national security because they are the jurisdiction of member states. When we leave the European Union, the Commission will look at the entirety of legislation around data protection and privacy rights, because there are no exemptions that it needs to take into account. The noble Lords made the point that our
“data protection standards would be assessed without the benefit of the protection afforded by the national security exemption”
under the treaty. Do we not risk our adequacy by taking these exemptions?
Victoria Atkins
No, because those who have drafted the Bill have sought, at all times, to comply with the law enforcement directive and with the modernised, draft Council of Europe convention 108. The Bill very much meets those standards, not just on law enforcement but across parts 3 and 4.
Liam Byrne
I have spoken to the outgoing Council of Europe information commissioner about the issue, and he has put on the record his grave reservations about the regime that we have in place, because we simply do not have the right kind of judicial oversight of the information gathering powers that are now available to our intelligence services. Our intelligence services are very good, and they need to be allowed to do their job, but they will be allowed to do that job more effectively—and without additional risks to our adequacy—if there is some kind of judicial oversight in the right timeframe of the decisions that are taken.
Victoria Atkins
That is where the distinction between obtaining information and processing it is so important. The gathering that the right hon. Gentleman refers to falls under the Investigatory Powers Act 2016. Retaining it and processing it in the ways that the Bill seeks to provide for is the data protection element. The 2016 Act has all the extra judicial oversights that have been passed by the House.
Liam Byrne
Quite helpfully, we are coming to the nub of the question. It is now incumbent on the Minister to lay out for the Committee why the oversight regime for obtaining information should be so remarkably different from the regime for processing it.
Victoria Atkins
The obtaining of information is potentially intrusive and often extremely time-sensitive. For the processing of information, particularly in the case of a subject access request, once we have met the criteria for obtaining it, separate judicial oversight through the upper tribunal is set out in the Bill, as well as ministerial oversight. They are two separate regimes.
There is extra oversight in the 2016 Act because obtaining information can be so intrusive. The right hon. Gentleman will appreciate that I cannot go into the methodology—I am not sure I am security-cleared enough to know, to be honest—but obtaining information has the potential to be particularly intrusive, in a way that processing information gathered by security service officials may not be.
Liam Byrne
I reassure the Minister that I went through the methodologies during my time at the Home Office. The justification that she still needs to lay out for the Committee—she is perhaps struggling to do so—is why there should be one set of judicial oversight arrangements for obtaining information and another for processing it. Why are they not the same?
Victoria Atkins
There might be many reasons why we process information. The end result of processing might be for national security reasons or law enforcement reasons—my officials are scribbling away furiously, so I do not want to take away their glory when they provide me with the answer.
I have an answer on the Watson case, raised by the hon. Member for Sheffield, Heeley, which dealt with the retention of communications by communications service providers. Again, that is an entirely different scenario from the one we are talking about, where the material is held by the security services.
Amendment 161 goes further than the 2016 Act, because it places the decision to issue a certificate with the judicial commissioner. As I have said, national security certificates come into play only to serve in legal proceedings as conclusive evidence that an exemption from specified data protection requirements is necessary to protect national security—for example, to prevent disclosure of personal data to an individual under investigation, when such disclosure would damage national security. The certificate does not authorise the required use of the national security exemption, which is properly a matter for the data controller to determine.
Amendments 163 and 164 relate to the form of a national security certificate. Amendment 163 would require a detailed rather than general description of the data identified on a national security certificate, but we believe this change to be unnecessary and unhelpful, given that much data can be adequately described in a general way. Amendment 164, which would prevent a certificate from having prospective effect, appears to be dependent on the prior judicial authorisation scheme proposed in amendments 161 and 162, and again contrasts with the prospective nature of certificates currently under the Data Protection Act 1998.
Prospective certificates of the type issued under the 1998 Act are the best way of ensuring that the use of the national security exemption by the intelligence services and others is both sufficiently foreseeable for the purposes of article 8 of the European convention on human rights, and accountable. The accountability is ensured by the power to challenge certificates when they are issued, and that is something that has real teeth. The accountability is strengthened by the provision in clause 130 for the publication of certificates. The documents we are discussing will therefore be in the public domain—indeed, many of them are already. But it will now be set out in statute that they should be in the public domain.
Amendments 166 to 168 relate to the appeals process. Amendment 166 would broaden the scope for appealing a national security certificate from a person “directly affected” by it to someone who
“believes they are directly or indirectly affected”
by it. I wonder whether the Opposition did any work on the scope of the provision when drafting it, because the words “indirectly affected” have the potential to cause an extraordinary number of claims. How on earth could that phrase be defined in a way that does not swamp the security services with applications from people who consider that they might be indirectly affected by a decision relating to a national security matter? I do not see how that can be considered practicable.
Louise Haigh
As I have already said, the issue is that the judicial review process for appeal is incredibly narrow and limited. Under section 28 of the DPA, where an individual requests to access his or her data that is subject to a certificate, they will merely be informed that they have been given all the information that is required under the Act. They would not be informed that their data is being withheld on the grounds of a national security certificate. That means that it is impossible for them to know whether they even have the right to appeal under a judicial review, and they do not have the information available to allow them to take that judicial review case forward. That is why the amendment is drafted in this way. If the Minister would like, she can suggest some alternative wording that would solve the problem.
Victoria Atkins
We get to the nub of the problem. Is the hon. Lady seriously suggesting that the security services should notify someone who puts in an access request that they are the subject of an investigation? That is the tension facing the security services. That is why we have internationally met standards, with regard to article 108 of the convention, which the Bill complies with. That is why we have to build in all these safeguards, to try to ensure that those people who intend ill will to this country do not benefit from our natural wish to be as transparent as possible when dealing with people’s personal data.
Louise Haigh
I have already explained that there would of course be an exemption for not informing individuals if they were under surveillance or being processed, but there are not sufficient oversights, safeguards or appeals. In the absence of any of those three, the Minister has to accept that there are absolutely no checks and balances on the exemptions listed under the clause.
Victoria Atkins
There most certainly are: they have the right to appeal to the upper tribunal.
Victoria Atkins
Yes. The upper tribunal reviews the material and applies the judicial review test. Again, we had this debate in relation to the Investigatory Powers Act 2016, which Parliament passed, in relation to the test that applied in the later appeal stages, following the grant of a warrant. This Bill has been drafted to comply with the modernised convention 108 of the Council of Europe. This is why it is in this way. It reflects the past 30 years’-worth of practice but meets international standards as they exist at the moment, which I hope reassures the hon. Member for Bristol North West.
Peter Heaton-Jones
On the specific narrow point, is it not the case that clause 130 already provides for the publication of certificates, so the amendment is simply not necessary? On the wider point—at the risk of repeating my earlier one—I fear that we are at risk of stumbling into a law of unintended consequences where we will make it more difficult for our security services to do the job that we want them to do. While we have been sitting here, I saw on my phone that the international community has recognised that what happened in Salisbury is the first recorded attack using a nerve agent on a European country since 1945. Let us remember that.
Victoria Atkins
That is a particularly sobering development. I know that we all feel the gravity of our responsibilities when considering the Bill in the context of national security today. I am grateful to my hon. Friend.
Matt Warman (Boston and Skegness) (Con)
The Minister and I served on the Draft Investigatory Powers Bill Joint Committee and we had many debates on this subject. It struck me that the House was at its best when we passed the Investigatory Powers Bill on Third Reading, with the support of the Labour party, having had these debates. It is frustrating that today of all days, as my hon. Friend says, we should go over that ground again having already reached a useful consensus.
Victoria Atkins
On the judicial review point, the test was debated at length in the Joint Committee, in the Public Bill Committee and on the Floor of the House. The House passed that Act with cross-party consensus, as my hon. Friend has said, so I do not understand why we are having the same debate.
Liam Byrne
Anyone who has spent time working with our intelligence agencies knows that they see their mission as the defence of parliamentary democracy. They believe in scrutiny and oversight, which is what we are trying to insert in the Bill. The reason the Investigatory Powers Bill was passed in that way was because we were successful in ensuring that there were stronger safeguards. The Minister has been unable to explain today why the safeguarding regime should be different for the processing of data as opposed to the obtaining of data. We have heard no convincing arguments on that front today. All that we are seeking to do is protect the ability of the intelligence agencies to do their job by ensuring that a guard against the misuse of their much broader powers is subject to effective judicial oversight, and not in public but in a court.
Victoria Atkins
For the security services to have obtained data under the Investigatory Powers Act, they will have passed through the various safeguards that Parliament set out in that Act. Once that data is obtained, it follows that the permission that the judicial commissioner will have reviewed will still flow through to the processing of that information. Our concern here is certain requirements of the data protection regime. The decision to disseminate information under that regime must rest with the intelligence agencies, with oversight. The Bill provides for those decisions to be appealed. That is as it should be. It should not be for a judicial commissioner to take over the decision of the data controller, who is processing applications and information in real time, often in situations that require them to act quickly. Likewise, whether to grant a certificate, which will be in the public domain, must be a decision for a member of the Executive, not the judiciary.
I assume that no work has been done to measure the scope of amendment 166, but allowing the clause to cover people indirectly affected could have enormous consequences for the security services, which already face great pressures and responsibilities.
Amendments 167 and 168 would remove the application of judicial review principles by the upper tribunal when considering an appeal against a certificate. They would replace the “reasonable grounds for issuing” test with a requirement to consider whether issuing a certificate was necessary and proportionate. Again, that would be an unnecessary departure from the existing scheme, which applies the judicial review test and has worked very well for the past 30 years.
In applying judicial review principles, the upper tribunal can consider a range of issues, including necessity, proportionality and lawfulness. As we set out in our response to the report of the House of Lords Constitution Committee, that enables the upper tribunal to consider matters such as whether the decision to issue the certificate was reasonable, having regard to the impact on the rights of the data subject and the need to safeguard national security. The Bill makes it clear that the upper tribunal has the power to quash the certificate if it concludes that the decision to issue it was unreasonable.
I hope that I have answered the concerns of the right hon. Member for Birmingham, Hodge Hill about how certificates are granted and about the review process when a subject access request is made and the certificate is applied. We must recognise that the Bill does not weaken a data subject’s rights or the requirements that must be met if an exemption is to be relied on; it reflects the past 30 years of law. Perhaps I missed it, but I do not think that any hon. Member has argued that the Data Protection Act 1998 has significant failings.
Liam Byrne
As the Minister well knows, the debate internationally is a result of the radical transformation of intelligence agencies’ ability to collect and process data. There is an argument, which has been well recognised in the Council of Europe and elsewhere, that where powers are greater, oversight should be stronger.
Victoria Atkins
Yes, and that is precisely why Parliament passed the Investigatory Powers Act 2016.
Victoria Atkins
The safeguards that apply once the information has been obtained—
The Chair
Order. I realise that the right hon. Gentleman feels strongly about the issue, but if he wishes to intervene, he must stand. If not, he must remain quiet and take it on the chin.
Victoria Atkins
The Government have listened to the concerns of the House of Lords. We added clause 130 in the Lords to provide for the publication of national security certificates by the Information Commissioner, so that they would be easily accessible to anyone who wished to mount a subject access request, and could be tested accordingly. In her briefing to noble Lords about the Bill, the Information Commissioner said that the clause was
“very welcome as it should improve regulatory scrutiny and foster greater public trust and confidence in the use of national security certificate process.”
It will also ensure that any person who believes that they are directly affected by a certificate will be better placed to exercise their appeal rights.
The Bill’s approach to national security certificates is tried and tested. We rely on those 30 years of experience of the regime being in place. In her written submission to the Committee, the Information Commission has not raised any issues in respect of the provisions in clause 27.
I hope that I have reassured the hon. Member for Sheffield, Heeley. I suspect from the interventions that she may well press the amendment to a vote, but I invite her to withdraw it. We have scrutinised this matter, and the Government are clear that the Bill reflects the past 30 years of the regime. It has worked and the Information Commissioner has not raised any concerns about clause 27.
Louise Haigh
I am afraid that the Minister is correct; she has not reassured Opposition Members. The amendment is not about putting obstacles in the way of our intelligence agencies going about their operational capabilities—that is the last thing we want to do—but the Minister has been unable to give us a clear argument as to why there should be stronger safeguards on the collection of data than on processing. That the Home Office would like to have the data is not a sufficient argument.
Victoria Atkins
Please do not trivialise the matter. It is not the case that the Home Office would like the data; this is national security. This is the regime that our security services use at the moment. It is the regime they need. That is why the Government are pressing the issue. Again, I would have thought that this week of all weeks is the week to back our security services, not to put more barriers in their way.
Louise Haigh
The intelligence agencies, as my right hon. Friend the Member for Birmingham, Hodge Hill has said, take parliamentary oversight and scrutiny seriously. The safeguards and oversights are not built into the Bill in the way they were in the Investigatory Powers Act 2016. There is no clear argument why those safeguards should be in place for collection, but not for processing. The Minister has constantly relayed that that decision is based on 30 years’-worth of data but, as has already been said, the scope for the collection and processing of data is so far transformed, even from when the Data Protection Act was written in 1998, that the oversights and safeguards need to be transformed as well. That is why we are proposing these amendments.
The Joint Committee on Human Rights has suggested that the exemptions put forward in the Bill are not legal and introduce arbitrary interferences into people’s privacy rights. It is this Committee’s responsibility to ensure that the amendments pass. That is not trivialising the issue, but ensuring that there is a proper debate about security and the individual’s data subject rights. That is why we will press the amendment to a vote.
Question put, That the amendment be made.
The Chair
Members will note that there are a number of clauses on the selection list to which no amendments have been tabled. I propose to start grouping such clauses together in order to speed progress. However, Members still have the right to tell me that they wish to speak to, or vote on, an individual clause.
Clauses 28 and 29 ordered to stand part of the Bill.
Clause 30
Meaning of “competent authority”
Amendments made: 18, in clause 30, page 19, line 4, after “specified” insert “or described”.
This amendment changes a reference to persons specified in Schedule 7 into a reference to persons specified or described there.
Amendment 19, in clause 30, page 19, line 10, leave out from “add” to end of line and insert
“or remove a person or description of person”.—(Margot James.)
This amendment makes clear that regulations under Clause 30 may identify a person by describing a type of person, as well as by specifying a person.
Clause 30, as amended, ordered to stand part of the Bill.
Schedule 7 agreed to.
Clauses 31 to 34 ordered to stand part of the Bill.
Clause 35
The first data protection principle
Question proposed, That the clause stand part of the Bill.
Liam Byrne
Very briefly, subsection (1) includes the phrase
“must be lawful and fair”.
Could the Minister say a little more about the word “fair”? What definition is she resting on, and who is the judge of it?
Victoria Atkins
“Lawful” means any processing necessary to carry out a particular task, where that task is authorised either by statute or under common law. It would cover, for example, the taking and retention of DNA and fingerprints under the Police and Criminal Evidence Act 1984, or the police’s common law powers to disclose information required for the operation of the domestic violence disclosure scheme.
The Government recognise the importance of safeguarding sensitive personal information about individuals. Subsections (3) to (5) therefore restrict the processing of sensitive data, the definition of which includes information about an individual’s race or ethnic origin, and biometric data such as their DNA profile and fingerprints.
Further safeguards for the protection of sensitive personal data are set out in clause 42. The processing of sensitive personal data is permitted under two circumstances. The first is where the data subject has given his or her consent. The second is where the processing is strictly necessary for a law enforcement purpose and one or more of the conditions in schedule 8 to the Bill has been met. Those conditions include, for example, that the processing is necessary to protect the individual concerned or another person, or is necessary for the administration of justice. In both cases, the controller is required to have an appropriate policy document in place. We will come on to the content of such policy documents when we debate clause 42.
Liam Byrne
I am grateful for the Minister’s extensive definition, given in response to a question I did not ask. I did not ask for the definition of “lawful” but for the definition of “fair”.
Victoria Atkins
I am so sorry; I thought it was apparent from my answer. “Fair” is initially a matter for the data controller, but ultimately the Information Commissioner has oversight of these provisions and the commissioner will cover that in her guidance.
Question put and agreed to.
Clause 35 accordingly ordered to stand part of the Bill.
Schedule 8
Conditions for sensitive processing under Part 3
Amendment made: 116, in schedule 8, page 184, line 32, at end insert—
“Safeguarding of children and of individuals at risk
3A (1) This condition is met if—
(a) the processing is necessary for the purposes of—
(i) protecting an individual from neglect or physical, mental or emotional harm, or
(ii) protecting the physical, mental or emotional well-being of an individual,
(b) the individual is—
(i) aged under 18, or
(ii) aged 18 or over and at risk,
(c) the processing is carried out without the consent of the data subject for one of the reasons listed in sub-paragraph (2), and
(d) the processing is necessary for reasons of substantial public interest.
(2) The reasons mentioned in sub-paragraph (1)(c) are—
(a) in the circumstances, consent to the processing cannot be given by the data subject;
(b) in the circumstances, the controller cannot reasonably be expected to obtain the consent of the data subject to the processing;
(c) the processing must be carried out without the consent of the data subject because obtaining the consent of the data subject would prejudice the provision of the protection mentioned in sub-paragraph (1)(a).
(3) For the purposes of this paragraph, an individual aged 18 or over is “at risk” if the controller has reasonable cause to suspect that the individual—
(a) has needs for care and support,
(b) is experiencing, or at risk of, neglect or physical, mental or emotional harm, and
(c) as a result of those needs is unable to protect himself or herself against the neglect or harm or the risk of it.
(4) In sub-paragraph (1)(a), the reference to the protection of an individual or of the well-being of an individual includes both protection relating to a particular individual and protection relating to a type of individual.”—(Victoria Atkins.)
Schedule 8 makes provision about the circumstances in which the processing of special categories of personal data is permitted. This amendment adds to that Schedule certain processing of personal data which is necessary for the protection of children or of adults at risk. See also Amendments 85 and 117.
Schedule 8, as amended, agreed to.
Clauses 36 to 40 ordered to stand part of the Bill.
Clause 41
Safeguards: archiving
Amendment made: 20, in clause 41, page 23, line 34, leave out “an individual” and insert “a data subject”.—(Victoria Atkins.)
Clause 41 makes provision about the processing of personal data for archiving purposes, for scientific or historical research purposes or for statistical purposes. This amendment aligns Clause 41(2)(b) with similar provision in Clause 19(2).
Question proposed, That the clause, as amended, stand part of the Bill.
Liam Byrne
We had a good debate on what I think was a shared objective across the Committee: to ensure that those running our big national archives—whether they are large or small organisations—should not be jeopardised by frivolous claims or, indeed, a multiplicity of claims from individuals who might seek to change the records held there in one way or another. I mentioned to the Minister in an earlier debate that we were anxious, despite the reassurances she sought to give the Committee, that a number of organisations, including the BBC, were deeply concerned about the Bill’s impact on their work. They were not satisfied that the exemptions and safeguards in the Bill would quite do the job.
My only reason for speaking at this stage is to suggest to Ministers that if they were to have discussions with some of those organisations about possible Government amendments on Report to refine the language, and provide some of the reassurance people want, that would attract our support. We would want to have such conversations, but it would be better if the Government could find a way to come forward with refinements of their own on Report.
Victoria Atkins
I am happy to explore that. The reason for the clause is to enable processing to be done to create an archive for scientific or historical research, or for statistical purposes. The reason law enforcement is mentioned is that it may be necessary where a law enforcement agency needs to review historic offences, such as allegations of child sexual exploitation. I would of course be happy to discuss that with the right hon. Gentleman to see whether there are further avenues down which we should proceed.
Liam Byrne
I am grateful to the Minister for that response. I am happy to write to her with the representations that we have received, and perhaps she could reflect on those and write back.
Question put and agreed to.
Clause 41, as amended, accordingly ordered to stand part of the Bill.
Clause 42
Safeguards: sensitive processing
Amendment made: 21, in clause 42, page 24, line 29, leave out “with the day” and insert “when”.—(Victoria Atkins.)
This amendment is consequential on Amendment 71.
Clause 42, as amended, ordered to stand part of the Bill.
Clauses 43 to 46 ordered to stand part of the Bill.
Clause 47
Right to erasure or restriction of processing
Victoria Atkins
I beg to move amendment 22, in clause 47, page 28, line 20, leave out second “data”.
This amendment changes a reference to a “data controller” into a reference to a “controller” (as defined in Clauses 3 and 32).
I can be brief, because this drafting amendment simply ensures that clause 47, as with the rest of the Bill, refers to a “controller” rather than a “data controller”. For the purposes of part 3, a controller is defined in clause 32(1) so it is not necessary to refer elsewhere to a “data controller”.
Amendment 22 agreed to.
Clause 47, as amended, ordered to stand part of the Bill.
Clause 48 ordered to stand part of the Bill.
Clause 49
Right not to be subject to automated decision-making
Question proposed, That the clause stand part of the Bill.
Liam Byrne
We had a good debate on possible amendments to the powers of automatic decision making earlier and this is an important clause in that it creates a right not to be subject to automated decision making. Clause 49(1) states:
“A controller may not take a significant decision based solely on automated processing unless that decision is required or authorised by law.”
I hope Ministers recognise that
“required or authorised by law”
is an incredibly broad set of questions. I would like to provoke the Minister into saying a little more about what safeguards she believes will come into place to ensure that decisions are not taken that jeopardise somebody’s human rights and their right to appeal and justice based on those human rights. It could be that the Minister decides to answer those questions in the debate on clause 50, but it would be useful for her to say a little more about her understanding of the phrase “significant decision” and a little more about what kind of safeguards will be needed to ensure that decisions that are cast in such a broad way do not impact on people in a negative way.
Victoria Atkins
Clause 49 establishes the right for individuals not to be subject to a decision based exclusively on automated processing, where that decision has an adverse impact on the individual. It is important to protect that right to enhance confidence in law enforcement processing and safeguard individuals against the risk that a potentially damaging decision is taken without human intervention. The right hon. Gentleman asked about the definition of a significant decision. It is set out in the Bill.
We are not aware of any examples of the police solely using automated decision-making methods, but there may be examples in other competent authorities. The law enforcement directive includes that requirement, so we want to transpose it faithfully into statute, and we believe we have captured the spirit of the requirement.
Louise Haigh
There is the example of Durham police force—an excellent police force in many regards—using automated decision making to decide who does and does not remain in custody, and when people receive their charge. A human is involved in that decision-making process at the moment, but the Bill would enable that to be taken away and allow it to be done purely on an automated basis. I am sure the Minister understands our concerns about removing humans from that decision-making process.
Victoria Atkins
I have to say that I am not familiar with that example. I look to my officials—
The Chair
Order. The hon. Lady has on a number of occasions referred to her officials. She should remember at all times that, as far as the Committee is concerned, there are no officials in this room, even though self-evidently there are.
Victoria Atkins
I wonder whether that is captured in the spirit of the Bill. Forgive me, Mr Hanson. This is my first Bill Committee as a Minister and I was not aware of that. Many apologies.
I am not familiar with that example. It would be a very interesting exercise under the PACE custody arrangements. I will look into it in due course. These protections transpose the law enforcement directive, and we are confident that they meet those requirements.
Question put and agreed to.
Clause 49 accordingly ordered to stand part of the Bill.
Clause 50
Automated decision-making authorised by law: safeguards
Amendments made: 23, in clause 50, page 30, line 11, leave out “21 days” and insert “1 month”.
Clause 50(2)(b) provides that where a controller notifies a data subject under Clause 50(2)(a) that the controller has taken a “qualifying significant decision” in relation to the data subject based solely on automated processing, the data subject has 21 days to request the controller to reconsider or take a new decision not based solely on automated processing. This amendment extends that period to one month.
Amendment 24, in clause 50, page 30, line 17, leave out “21 days” and insert “1 month”.—(Victoria Atkins.)
Clause 50(3) provides that where a data subject makes a request to a controller under Clause 50(2)(b) to reconsider or retake a decision based solely on automated processing, the controller has 21 days to respond. This amendment extends that period to one month.
Question proposed, That the clause, as amended, stand part of the Bill.
Liam Byrne
I remain concerned that the safeguards the Government have proposed to ensure people’s human rights are not jeopardised by the use of automated decision making are, frankly, not worth the paper they are written on. We know that prospective employers and their agents use algorithms and automated systems to analyse very large sets of data and, through the use of artificial intelligence and machine learning, make inferences about whether people are appropriate to be considered to be hired or retained by a particular company. We have had a pretty lively debate in this country about the definition of a worker, and we are all very grateful to Matthew Taylor for his work on that question. Some differences emerged, and the Business, Energy and Industrial Strategy Committee has put its views on the record.
The challenge is that our current labour laws, which were often drafted decades ago, such as the Sex Discrimination Act 1975 and the Race Relations Act 1965, are no longer adequate to protect people in this new world, in which employers are able to use such large and powerful tools for gathering and analysing data, and making decisions.
We know that there are problems. We already know that recruiters use Facebook to seek candidates in a way that routinely discriminates against older workers by targeting job advertisements. That is not a trivial issue; it is being litigated in the United States. In the United Kingdom, research by Slater and Gordon, a group of employment lawyers, found that one in five bosses admits to unlawful discrimination when advertising jobs online. Women and people over 50 are most likely to be stopped from seeing an advert. Around 32% of company executives admitted to discriminating among those over 50; 23% discriminated against women; and 62% of executives who had access to profiling tools admitted to using them to actively seek out people based on criteria such as age, gender and race. Female Uber drivers earn 7% less than men when pay is determined by algorithms. A number of practices in the labour market are disturbing and worrying, and they should trouble all of us.
The challenge is that clause 50 needs to include a much more comprehensive set of rights and safeguards. It should clarify that the Equality Act 2010 and protection from discrimination applies to all new forms of decision making that engage core labour rights around recruitment, terms of work or dismissal. There should be new rights about algorithmic fairness at work to ensure equal treatment where an algorithm or automated system takes a decision that impinges on someone’s rights. There should be a right to explanation where significant decisions are taken based on an algorithm or an automated decision. There is also a strong case to create a duty on employers, if they are a large organisation, to undertake impact assessments to check whether they are, often unwittingly, discriminating against people in a way that we think is wrong.
Over the last couple of weeks, we have seen real progress in the debate about gender inequalities in pay. Many of us will have looked in horror at some of the news that emerged from the BBC and at some of the evidence that emerged from ITV and The Guardian. We have to contend with the reality that automated decision-making processes are under way in the labour market that could make inequality worse rather than better. The safeguards that we have in clause 50 do not seem up to the job.
I hope the Minister will say a bit more about the problems that she sees with future algorithmic decision making. I am slightly troubled that she is unaware of some live examples in the Home Office space in one of our most successful police forces, and there are other examples that we know about. Perhaps the Minister might say more about how she intends to improve the Bill with regard to that issue between now and Report.
Victoria Atkins
I will pick up on the comments by the right hon. Gentleman, if I may.
In the Durham example given by the hon. Member for Sheffield, Heeley, I do not understand how a custody sergeant could sign a custody record without there being any human interaction in that decision-making process. A custody sergeant has to sign a custody record and to review the health of the detainee and whether they have had their PACE rights. I did not go into any details about it, because I was surprised that such a situation could emerge. I do not see how a custody sergeant could be discharging their duties under the Police and Criminal Evidence Act 1984 if their decision as to custody was based solely on algorithms, because a custody record has to be entered.
Louise Haigh
I thank the Minister for allowing me to clarify. I did not say that it was solely an algorithmic decision already. Durham is using an algorithm known as the harm assessment risk tool. A human makes a decision based on the algorithm’s recommendations. The point I was making was that law enforcement is using algorithms to make very important decisions that limit an individual’s right to freedom, let alone the right to privacy or anything else, but the Bill will enable law enforcement to take that further. I appreciate what the Minister is saying about PACE and the need for a custody sergeant, but the Bill will enable law enforcement to take that further and to remove the human right—
Victoria Atkins
This has been a moment of genuine misunderstanding. Given how the hon. Lady presented that, to me it sounded as if she was saying that the custody record and the custody arrangements of a suspect—detaining people against their will in a police cell—was being done completely by a computer. That was how it sounded. There was obviously an area of genuine misunderstanding, so I am grateful that she clarified it. She intervened on me when I said that we were not aware of any examples of the police solely using automated decision making—that is when she intervened, but that is not what she has described. A human being, a custody sergeant, still has to sign the record and review the risk assessment to which the hon. Lady referred. The police are using many such examples nowadays, but the fact is that a human being is still involved in the decision-making process, even in the issuing of penalties for speeding. Speeding penalties may be automated processes, but there is a meaningful element of human review and decision making, just as there is with the custody record example she gave.
There was a genuine misunderstanding there, but I am relieved, frankly, given that the right hon. Member for Birmingham, Hodge Hill was making points about my being unaware of what is going on in the Home Office. I am entirely aware of that, but I misunderstood what the hon. Lady meant and I thought she was presenting the custody record as something that is produced by a machine with no human interaction.
Victoria Atkins
Line-by-line scrutiny, but I was acting in good faith on an intervention that the hon. Member for Sheffield, Heeley made when I was talking about any examples of the police solely using automated decision making.
Liam Byrne
May I ask for your guidance on this question? We are in a Bill Committee that is tasked with scrutinising the Bill line by line. Is it customary for Ministers to refuse to give way on a matter of detail?
The Chair
Ultimately, whether the Minister gives way is a matter for the Minister—that is true for any Member who has the Floor—but it is normal practice to debate aspects of legislation thoroughly. Ultimately, however, it remains the choice of the Minister or any other Member with the Floor whether to give way.
Victoria Atkins
I think it is fair to say that I have given way on interventions, but the right hon. Gentleman seemed to be seeking to argue with me as to my understanding of what his colleague, the hon. Member for Sheffield, Heeley, had said. Frankly, that is a matter for me to understand.
The Chair
Order. We are debating clause 50 of the Bill, so may I suggest that in all parts of the Committee we focus our minds on the clause?
Victoria Atkins
I have lost track of which point the right hon. Gentleman wants me to give way on.
Liam Byrne
Let me remind the Minister. What we are concerned about on the question of law enforcement is whether safeguards that are in place will be removed under the Bill. That is part and parcel of a broader debate that we are having about whether the safeguards that are in the Bill will be adequate. So let me return to the point I made earlier to the Minister, which is that we would like her reflections on what additional safeguards can be drafted into clauses 50 and 51 before Report stage.
Victoria Atkins
Clause 49 is clear that individuals should not be subject to a decision based solely on automated processing if that decision significantly or adversely has an impact on them, legally or otherwise, unless required by law. If that decision is required by law, clause 50 specifies the safeguards that controllers should apply to ensure that the impact on the individual is minimised. Critically, that includes informing the data subject that a decision has been taken and giving that individual 21 days in which to ask the controller to reconsider the decision, or to retake the decision with human intervention.
A point was made about the difference between automated processing and automated decision making. Automated processing is when an operation is carried out on personal data using predetermined fixed parameters that allow for no discretion by the system and do not involve further human intervention in the operation to produce a result or output. Such processing is used regularly in law enforcement to filter large datasets down to manageable amounts for a human operator to use. Automated decision making is a form of automated processing that allows the system to use discretion, potentially based on algorithms, and requires the final decision to be made without human interference. The Bill seeks to clarify that, and the safeguards are set out in clause 50.
Question put and agreed to.
Clause 50, as amended, accordingly ordered to stand part of the Bill.
Clause 51
Exercise of rights through the Commissioner
Victoria Atkins
I beg to move amendment 25, in clause 51, page 31, line 2, leave out from first “the” to end of line 3 and insert
“restriction imposed by the controller was lawful;”.
This amendment changes the nature of the request that a data subject may make to the Commissioner in cases where rights to information are restricted under Clause 44(4) or 45(4). The effect is that a data subject will be able to request the Commissioner to check that the restriction was lawful.
Victoria Atkins
These technical amendments are required to ensure that the provisions in clause 51 do not inadvertently undermine criminal investigations by the police or other competent authorities. Under the Bill, where a person makes a subject access request, it may be necessary for the police or other competent authority to give a “neither confirm nor deny” response, for example in order to avoid tipping someone off that they are under investigation for a criminal offence. In such a case, the data subject may exercise their rights under clause 51 to ask the Information Commissioner to check that the processing of their personal data complies with the provisions in part 3. It would clearly undermine a “neither confirm nor deny” response to a subject access request if a data subject could use the provisions in part 3 to secure confirmation that the police were indeed processing their information.
It is appropriate that the clause focuses on the restriction of a data subject’s rights, not on the underlying processing. The amendments therefore change the nature of the request that a data subject may make to the commissioner in cases where rights to information are restricted under clause 44(4) or clause 45(4). The effect of the amendments is that a data subject will be able to ask the commissioner to check that the restriction was lawful. The commissioner will then be able to respond to the data subject in a way that does not undermine the original “neither confirm nor deny” response.
Liam Byrne
This is a significant amendment—I understand the ambition behind the clause—so it is worth dwelling on it for a moment. I would like to check my understanding of what the Minister said. In a sense, if an investigation is under way and the individual under investigation makes a subject access request to the police and gets a “neither confirm nor deny” response, the data subject will be able to ask the Information Commissioner to investigate. Will the Minister say a little more about what message will go from the police to the Information Commissioner and the content of the message that will go from the Information Commissioner to the data subject? I have worked on such cases in my constituency. Often, there is an extraordinary spiral of inquiries and the case ultimately ends up in a judicial review in court. Will the Minister confirm that I have understood the mechanics accurately and say a little more about the content of the messages from the police to the Information Commissioner and from the Information Commissioner to the person who files the request?
Victoria Atkins
I can help the right hon. Gentleman in one respect: he has understood the mechanics. I am afraid that I cannot give him examples, because it will depend on the type of criminal offence or the type of investigation that may be under way. I cannot possibly give him examples of the information that may be sent by the police to the Information Commissioner, because that will depend entirely on the case that the police are investigating.
Liam Byrne
Perhaps I can pose the question in a sharper way. I do not think that is entirely the case. It must be possible for the Minister to be a little more specific, and perhaps a little more knowledgeable, about the content of the message that will go from the Information Commissioner to the data subject. Will that be a standard message? Will it be in any way detailed? Will it reflect in any way on the information that the police provide? Or will it simply be a blank message such as “I, the Information Commissioner, am satisfied that your information has been processed lawfully”? I do not think the Information Commissioner is likely to ask for too much detail about the nature of the offence, but she will obviously ask whether data has been processed lawfully. She will want to make checks in that way. Unless the Information Commissioner is able to provide some kind of satisfactory response to the person who has made the original request, we will end up with an awful administrative muddle that will take of lot of the courts’ time. Perhaps the Minister could put our minds at rest on that.
Victoria Atkins
The Information Commissioner will get the information but, by definition, she does not give that information to the subject, because law enforcement will have decided that it meets the criteria for giving a “neither confirm nor deny” response from their perspective. The commissioner then looks at the lawfulness of that; if she considers it to be lawful, she will give the same response—that the processing meets part 3 obligations.
Amendment 25 agreed to.
Amendment made: 26, in clause 51, page 31, line 11, leave out from first “the” to end of line 12 and insert “restriction imposed by the controller was lawful;” —(Victoria Atkins.)
This amendment is consequential on Amendment 25.
Clause 51, as amended, ordered to stand part of the Bill.
Clause 52 ordered to stand part of the Bill.
Clause 53
Manifestly unfounded or excessive requests by the data subject
Amendments made: 27, in clause 53, page 31, line 39, leave out “or 47” and insert “,47 or 50”.
Clause 53(1) provides that where a request from a data subject under Clause 45, 46 or 47 is manifestly unfounded or excessive, the controller may charge a reasonable fee for dealing with the request or refuse to act on the request. This amendment applies Clause 53(1) to requests under Clause 50 (automated decision making). See also Amendment 28.
Amendment 28, in clause 53, page 32, line 4, leave out “or 47” and insert “,47 or 50”.—(Victoria Atkins.)
Clause 53(3) provides that where there is an issue as to whether a request under Clause 45, 46 or 47 is manifestly unfounded or excessive, it is for the controller to show that it is. This amendment applies Clause 53(3) to requests under Clause 50 (automated decision making). See also Amendment 27.
Question proposed, That the clause, as amended, stand part of the Bill.
Liam Byrne
We have just agreed a set of amendments that, on the face of it, look nice and reasonable. We can all recognise the sin that the Government are taking aim at, and that the workload of the Information Commissioner’s Office and of others has to be kept under control, so we all want to deter tons of frivolous and meaningless requests. None the less, a lot of us have noticed that, for example, the introduction of fees for industrial tribunals makes it a lot harder for our constituents to secure justice.
I wonder, having now moved the amendment successfully, whether the Minister might tell us a little more about what will constitute a reasonable fee and what will happen to those fees. Does she see any relationship between the fees being delivered to her Majesty’s Government and the budget that is made available for the Information Commissioner? Many of us are frankly worried, given the new obligations of the Information Commissioner, about the budget she has to operate with and the resources at her disposal. Could she say a little more, to put our minds at rest, and reassure us that these fees will not be extortionate? Where sensible fees are levied, is there some kind of relationship with the budget that the Information Commissioner might enjoy?
Victoria Atkins
Clause 35 establishes the principle that subject access requests should be provided free of charge in most cases. That will be the default position in most cases. In terms of the fees, that will not be a matter to place in statute; certainly, I can write to the right hon. Gentleman with my thoughts on how that may develop. The intention is that in the majority of cases, there will be no charge.
Question put and agreed to.
Clause 53, as amended, accordingly ordered to stand part of the Bill.
Clause 54
Meaning of “applicable time period”
Amendments made: 29, in clause 54, page 32, line 14, leave out “day” and insert “time”.
This amendment is consequential on Amendment 71.
Amendment 30, in clause 54, page 32, line 15, leave out “day” and insert “time”.—(Victoria Atkins.)
This amendment is consequential on Amendment 71.
Clause 54, as amended, ordered to stand part of the Bill.
Clauses 55 to 63 ordered to stand part of the Bill.
Clause 64
Data protection impact assessment
Louise Haigh
I beg to move amendment 142, in clause 64, page 37, line 2, leave out “is likely to” and insert “may”.
The Chair
With this it will be convenient to discuss the following:
Amendment 143, in clause 64, page 37, line 2, leave out “high”.
Amendment 144, in clause 64, page 37, line 15, leave out “is likely to” and insert “may”.
Amendment 145, in clause 64, page 37, line 15, leave out “high”.
Amendment 146, in clause 65, page 37, line 19, leave out subsection (1) and insert—
“(1) This section applies where a controller intends to—
(a) create a filing system and process personal data forming part of it, or
(b) use new technical or organisational measures to acquire, store or otherwise process personal data.”
Amendment 147, in clause 65, page 37, line 23, leave out “would” and insert “could”.
Amendment 148, in clause 65, page 37, line 23, leave out “high”.
Amendment 149, in clause 65, page 37, line 44, at end insert—
“(8) If the Commissioner is not satisfied that the controller or processor (where the controller is using a processor) has taken sufficient steps to remedy the failing in respect of which the Commissioner gave advice under subsection (4), the Commissioner may exercise powers of enforcement available to the Commissioner under Part 6 of this Act.”
New clause 3—Data protection impact assessment: intelligence services processing—
“(1) Where a type of processing proposed under section 103(1) may result in a risk to the rights and freedoms of individuals, the controller must, prior to the processing, carry out a data protection impact assessment.
(2) A data protection impact assessment is an assessment of the impact of the envisaged processing operations on the protection of personal data.
(3) A data protection impact assessment must include the following—
(a) a general description of the envisaged processing operations;
(b) an assessment of the risks to the rights and freedoms of data subjects;
(c) the measures envisaged to address those risks;
(d) safeguards, security measures and mechanisms to ensure the protection of personal data and to demonstrate compliance with this Part, taking into account the rights and legitimate interests of the data subjects and other persons concerned.
(4) In deciding whether a type of processing could result in a risk to the rights and freedoms of individuals, the controller must take into account the nature, scope, context and purposes of the processing.”
New clause 4—Prior consultation with the Commissioner: intelligence services processing—
“(1) This section applies where a controller proposes that a particular type of processing of personal data be carried out under section 103(1).
(2) The controller must consult the Commissioner prior to the processing if a data protection impact assessment prepared under section [Data protection impact assessment: intelligence services processing] indicates that the processing of the data could result in a risk to the rights and freedoms of individuals (in the absence of measures to mitigate the risk).
(3) Where the controller is required to consult the Commissioner under subsection (2), the controller must give the Commissioner—
(a) the data protection impact assessment prepared under section [Data protection impact assessment: intelligence services processing], and
(b) any other information requested by the Commissioner to enable the Commissioner to make an assessment of the compliance of the processing with the requirements of this Part.
(4) Where the Commissioner is of the opinion that the intended processing referred to in subsection (1) would infringe any provision of this Part, the Commissioner must provide written advice to the controller and, where the controller is using a processor, to the processor.
(5) The written advice must be provided before the end of the period of 6 weeks beginning with receipt of the request for consultation by the controller or the processor.
(6) The Commissioner may extend the period of 6 weeks by a further period of one month, taking into account the complexity of the intended processing.
(7) If the Commissioner extends the period of 6 weeks, the Commissioner must—
(a) inform the controller and, where applicable, the processor of any such extension before the end of the period of one month beginning with receipt of the request for consultation, and
(b) provide reasons for the delay.
(8) If the Commissioner is not satisfied that the controller or processor (where the controller is using a processor) has taken sufficient steps to remedy the failing in respect of which the Commissioner gave advice under subsection (4), the Commissioner may exercise powers of enforcement available to the Commissioner under Part 6 of this Act.”
Louise Haigh
The amendments in my name, and in the names of my right hon. and hon. Friends, are all designed to strengthen the requirement to conduct impact assessments, and to require permission from the Information Commissioner for the purposes of data processing for law enforcement agencies. Impact assessments are a critical feature of the landscape of data protection, particularly where new technology has evolved. It is vital that we have in place enabling legislation and protective legislation to cover new technologies and new methods of data collection and processing.
Since the introduction of the Data Protection Act 1998, the advance of technology has considerably increased the ability of organisations to collect data, as we have discussed. The impact assessment as envisaged allows for an assessment to be conducted where there are systematic and extensive processing activities, including profiling, and where decisions have legal effects, or similarly significant effects, on individuals. In addition, an assessment can be conducted where there is large-scale processing of special categories of data, or personal data in relation to criminal convictions or offences, and where there is a high risk to rights and freedoms—for example, based on the sensitivity of the processing activity.
Given the breadth and reach of new technology, it is right that impact assessments are conducted where the new technology may present a risk, rather than a “high risk”, as envisaged in the Bill. That is what we seek to achieve with the amendments. New technology in law enforcement presents a unique challenge to the data protection and processing environment. The trialling of technology, including facial recognition and risk assessment algorithms, as already discussed, has not been adequately considered by Parliament to date, nor does it sit easily within the current legal framework. I do not doubt that such technologies have a significant role to play in making law enforcement more effective and efficient, but they have to be properly considered by Parliament, and they need to have adequate oversight to manage their appropriate use.
Facial recognition surveillance was mentioned in Committee on Tuesday. The Minister was right to say that it is being trialled by the Metropolitan police, but it has been trialled for three years running. I suggest that it is no longer a trial. It is also being used by South Wales police and other police forces across the country, particularly when policing large events. The Metropolitan police use it in particular for Notting Hill carnival.
In September last year, the Policing Minister made it clear in response to a written question that there is no legislation regulating the use of CCTV cameras with facial recognition. The Protection of Freedoms Act 2012 introduced the regulation of overt public space surveillance cameras. As a result, the surveillance camera code of practice was issued by the Secretary of State in 2013. However, there is no reference to facial recognition in the Act, even though it provides the statutory basis for public space surveillance cameras.
Neither House of Parliament has ever considered or scrutinised automated facial recognition technology. To do so after its deployment—after three years of so-called trialling by the Metropolitan police—is unacceptable, particularly given the technology’s significant and unique impact on rights. The surveillance camera commissioner has noted that “clarity regarding regulatory responsibility” for such facial recognition software is “an emerging issue”. We urgently need clarity on whether the biometric commissioner, the Information Commissioner or the surveillance camera commissioner has responsibility for this use of technology. Our amendments suggest that the Information Commissioner should have scrutiny powers over this, but if the Minister wants to tell me that it should be any of the others, we will be happy to support that.
Liam Byrne
I rise briefly to support my hon. Friend’s excellent speech. The ambition of Opposition Members on the Committee is to ensure that the Government have in place a strong and stable framework for data protection over the coming years. Each of us, at different times in our constituencies, have had the frustration of working with either local police or their partners and bumping into bits of regulation or various procedures that we think inhibit them from doing their job. We know that at the moment there is a rapid transformation of policing methods. We know that the police have been forced into that position, because of the pressure on their resources. We know that there are police forces around the world beginning to trial what is sometimes called predictive policing or predictive public services, whereby, through analysis of significant data patterns, they can proactively deploy police in a particular way and at a particular time. All these things have a good chance of making our country safer, bringing down the rate of crime and increasing the level of justice in our country.
The risk is that if the police lack a good, clear legal framework that is simple and easy to use, very often sensible police, and in particular nervous and cautious police and crime commissioners, will err on the side of caution and actually prohibit a particular kind of operational innovation, because they think the law is too muddy, complex and prone to a risk of challenge. My hon. Friend has given a number of really good examples. The automatic number plate recognition database is another good example of mass data collection and storage in a way that is not especially legal, and where we have waited an awfully long time for even something as simple as a code of practice that might actually put the process and the practice on a more sustainable footing. Unless the Government take on board my hon. Friend’s proposed amendments, we will be shackling the police, stopping them from embarking on many of the operational innovations that they need to start getting into if they are to do their job in keeping us safe.
Stuart C. McDonald (Cumbernauld, Kilsyth and Kirkintilloch East) (SNP)
I will speak briefly in support of amendments 142 to 149, as well as new clauses 3 and 4. As it stands, clause 64 requires law enforcement data controllers to undertake a data protection impact assessment if
“a type of processing is likely to result in a high risk to the rights and freedoms of individuals”.
That assessment would look at the impact of the envisaged processing operations on the protection of personal data and at the degree of risk, measures to address those risks and possible safeguards. If the impact assessment showed a high risk, the controller would have to consult the commissioner under clause 65.
It is important to be clear that the assessment relates to a type of processing. Nobody is asking anyone to undertake an impact assessment every time the processing occurs. With that in mind, the lower threshold for undertaking an assessment suggested in the amendments seems appropriate. We should be guarding not just against probable or high risks, but against any real risk. The worry is that if we do not put these tests in place, new forms of processing are not going to be appropriately scrutinised. We have had the example of facial recognition technology, which is an appropriate one.
New clauses 3 and 4 do a similar job for the intelligence services in part 4, so they also have our support.
Darren Jones
I rise to support the amendments in the name of my hon. Friend the Member for Sheffield, Heeley. I had the pleasure of cross-examining Baroness Williams of Trafford, who is the Minister responsible for some of these issues, on the Select Committee on Science and Technology in our inquiry on the biometric strategy and why there has been such a delay in the Government publishing that document. We had grave concerns about the delay in the strategy, but also about the way in which IT systems and servers in different forces act in different ways, which make things potentially very difficult.
The amendments would add safeguards to legitimate purposes—to prevent them from going too far. They should be welcomed by the Government and included in the Bill. There are a number of situations where, in this developing area of technology, which could be very useful to us as a country, as my hon. Friends have said, we need to ensure that the appropriate safeguards are in place. On facial recognition, we know from information received by the Science and Technology Committee that there is too high a number of facial records on the police national database and other law enforcement databases, when there is no legitimate reason for them to be there. We understand that it is difficult to delete them, but that is, with respect, not a good enough answer.
The Select Committee also heard—I think I mentioned this in an earlier sitting—that we have to be careful about the data that the Government hold. The majority of the adult population already has their facial data on Government databases, in the form of passport and driving licence imagery. When we start talking about the exemptions to being able to share data between different Government functions and law enforcement functions, and the exemptions on top of that for the ability to use those things, we just need to be careful that it does not get ahead of us. I know it is difficult to legislate perfectly for the future, but these safeguards would help to make it a safer place.
I will mention briefly the IMSI-catchers, because that covers my constituency of Bristol North West. It was the Bristol Cable, a local media co-operative of which I am a proud member—I pay £1 a month, so I declare an interest—that uncovered some of the issues around IMSI-catchers with bulk collection of information. It is really important that when we are having debates, as we have had with algorithms and artificial intelligence, we recognise that human intervention and the understanding of some of these systems is sometimes difficult. There are very few people who understand how algorithms actually work or how the systems actually work. As they become more advanced and learn and make decisions by themselves, the idea of human intervention or a human understanding of that is increasingly difficult.
In a situation where human resource is extremely stretched, such as in the police service, the tendency will understandably be to rely on the decisions of the systems within the frameworks that are provided, because there is not time to do full human intervention properly. That is why the safeguards are so important—to prevent things getting ahead of us. I hope the Government support the amendments, which I think are perfectly sensible.
Victoria Atkins
I have just a small correction. The hon. Member for Sheffield, Heeley said in error that the Home Office were holding on to the photographs. It is not the Home Office. It is individual police forces that hold that.
Louise Haigh
No, it is on the police national computer. That falls under the responsibility of the Home Office, not individual forces.
Victoria Atkins
That is run by the police. I do not want the misapprehension to be established that there is an office in the Home Office in Marsham Street where these photographs are held on a computer. It is on the police national computer, which is a secure system that people have to have security clearance to get into. It is not completely accurate to say that the Home Office has possession of it.
Louise Haigh
I would be grateful if the Minister can confirm that all the examples we raised today will fall under the “high risk” category in the Bill.
Victoria Atkins
I will deal with the definition of high risk in a moment. Clause 64 separates out the processing most likely significantly to affect an individual’s rights and freedom, which requires an additional level of assessment to reflect the higher risk. The amendments would water down the importance of those assessments. That is not to say that consideration of the impact on rights and freedoms can be overlooked. It will, of course, remain necessary for the controller to carry out that initial assessment to determine whether a full impact assessment is required. Good data protection is not achieved by putting barriers in the way of processing. It is about considering the risk intelligently and applying appropriate assessments accordingly.
On the question of high risk, officers or data controllers will go through that process when considering whether a data protection impact assessment is correct. I will write to the hon. Lady to clarify whether the bodies and lists she mentioned will be defined as high risk. The fact is that they are none the less regulated by various organisations.
Matt Warman
The crucial point—I do not think the Opposition disagree with it—is that, although some things contain an element of risk, there are also huge benefits. Surely nobody wishes to do anything that prevents law enforcement from using hugely advantageous new technology, which will allow it to divert its resources to even more valuable areas.
Victoria Atkins
Indeed. A pertinent example of that is the development of artificial intelligence to help the police categorise images of child sexual exploitation online. That tool will help given the volume of offences now being carried out across the world. It will also help the officers involved in those cases, because having to sit at a computer screen and categorise some of these images is soul-breaking, frankly. If we can use modern technology and artificial intelligence to help categorise those images, that must surely be a good thing.
Louise Haigh
There is absolutely no argument over that. As a former special constable myself, I have no wish to put obstacles in the way of law enforcement. There is a particular need to develop technology to help digital investigations, and I think the Government have been delaying that. Human failures in those investigations have led to the collapse of several trials over the past couple of months.
The Minister says that the surveillance camera commissioner has a role. The commissioner has said that there needs to be further clarity on regulatory responsibility. It is not clear whether it is the surveillance camera commissioner, the biometrics commissioner or the Information Commissioner who has responsibility for facial recognition software. Does she accept that the Government urgently need to provide clarity, as well as guidance to the National Police Chiefs Council and police forces, about the use of this potentially invasive software?
Victoria Atkins
Specifically on clause 64, which is about the data protection impact assessment, the judgment as to whether the proposed processing is high risk must be a matter for the controller. On the face of it, many of the systems that the hon. Lady described in her speech will involve high risk, but with respect the decision is not for me to make as a Minister on my feet in Committee. We must allow data controllers the freedom and responsibility to make those assessments. They are the ones that make the decisions and what flows from that in terms of processing.
If the hon. Lady will write to me on the more general, wider point about oversight of the surveillance camera commissioner and so on, I would be happy to take that up outside of Committee.
Louise Haigh
The issue about whether it is high risk is of course a matter for the data controller, but we are scrutinising this Bill, and the Minister is asking us to support a test of high risk. I am sure the whole Committee would agree that all the cases that have been suggested today involve an incredibly high risk. They involve deprivation of liberty and invasion of privacy. The idea that we would accept a definition of high risk that does not cover those examples is too much for the Opposition to support. That is why the amendment exists. We need to test exactly what the Government envisage in the definition of high risk.
Victoria Atkins
May I just clarify whether the hon. Lady intends to amend her amendment to list the various categories she listed in her speech? I have been very clear that high risk is defined as including processing where there is a particular likelihood of prejudice to the rights and freedoms of data subjects. I would be very cautious about listing examples in the Bill through an amendment, because as we have all acknowledged, criminality and other things develop over time. It would be very bold to put those categories in the Bill.
Louise Haigh
No one is suggesting that such examples should go in the Bill. I appreciate this is the Minister’s first Bill Committee, but the job of the Opposition is to test the definitions in the Bill and ensure that it is fit for purpose. My concern is that the definition of high risk is set too high to cover law enforcement agencies and will allow egregious breaches of individuals’ data rights, privacy rights and right to liberty. It is our job as the Opposition—there is nothing wrong with us exercising this role—to ensure that the Bill is fit for purpose. That is what we are seeking to do.
Victoria Atkins
I am extremely grateful to the hon. Lady for clarifying her role. My answer is exactly as I said before. High risk includes processing where there is a particular likelihood of prejudice to the rights and freedoms of data subjects. That must be a matter for the data controller to assess. We cannot assess it here in Committee for the very good reason put forward by members of the Committee: we cannot foresee every eventuality. Time will move on, as will technology. That is why the Bill is worded as it is, to try to future-proof it but also, importantly, because the wording complies with our obligations under the law enforcement directive and under the modernised draft Council of Europe convention 108.
Liam Byrne
Does the Minister not have some sympathy with the poor individuals who end up being data controllers for our police forces around the country, given the extraordinary task that they have to do? She is asking those individuals to come up with their own frameworks of internal guidance for what is high, medium and low risk. The bureaucracy-manufacturing potential of the process she is proposing will be difficult for police forces. We are trying to help the police to do their job, and she is not making it much easier.
Victoria Atkins
Clause 65(2) states:
“The controller must consult the Commissioner prior to the processing if a data protection impact assessment prepared under section 64 indicates that the processing of the data would result in a high risk”.
There are many complicated cases that the police and others have to deal with. That is why we have guidance rather than putting it in statute—precisely to give those on the frontline the flexibility of understanding, “This situation has arisen, and we need to calibrate the meaning of high risk and take that into account when we look at the prejudices caused to a person or a group of people.” That is precisely what we are trying to encompass. Presumably, that is what the Council of Europe and those involved in drafting the law enforcement directive thought as well.
Of course, there will be guidance from the Information Commissioner to help data controllers on those assessments, to enable us to get a consistent approach across the country. That guidance will be the place to address these concerns, not on the face of the Bill.
Louise Haigh
Can the Minister confirm that the Metropolitan police consulted the Information Commissioner before trialling facial recognition software? I appreciate that she might not be able to do so on her feet, so I will of course accept it if she wishes to write to me.
Victoria Atkins
I am afraid that I will have to write to the hon. Lady on that.
The intention behind this part of the Bill is not to place unnecessary barriers in the way of legitimate processing. Nor, we all agree, should we place additional burdens on the commissioner without there being a clear benefit. These provisions are in the Bill to address the need for an intelligent application of the data protection safeguards, rather than assuming that a one-size-fits-all approach results in better data protection.
Amendment 149 would insert a new subsection (8) to clause 65, which would permit the commissioner to exercise powers of enforcement if she was not satisfied that the controller or processor had taken sufficient steps to act on her opinion that intended processing would infringe the provisions in part 3. It is worth noting that the purpose of clause 65 is to ensure consultation with the commissioner prior to processing taking place. It is therefore not clear what enforcement the commissioner would be expected to undertake in this instance, as the processing would not have taken place. If, however, the controller sought to process the data contrary to the commissioner’s opinion, it would be open to her to take enforcement action in line with her powers already outlined in part 6.
I do not know, Mr Hanson, whether we have dealt with new clauses 3 and 4.
The Chair
New clauses 3 and 4 are being considered as part of this group, but would not be voted on until after the consideration of the clauses of the Bill have been completed. If you wish to respond to them, Minister, you can do so now.
Victoria Atkins
I am grateful; I will deal with them now. New clauses 3 and 4 would place additional obligations on the intelligence services. New clause 3 would require the intelligence services to undertake a data protection impact assessment in cases where there is
“a risk to the rights and freedoms of individuals”,
whereas new clause 4 would require the intelligence services to have prior consultation with the Information Commissioner when proposing processing. Neither new clause reflects the unique form of processing undertaken by the intelligence services, its sensitive nature and the safeguards that already exist.
I should stress that the “data protection by design” requirements of clause 103 are wholly consistent with draft modernised Council of Europe convention 108, which was designed to apply to the processing of personal data in the national security context, and which therefore imposes proportionate requirements and safeguards. Under clause 103, in advance of proposing particular types of processing, the intelligence services will be obliged to consider the impact of such processing on the rights and freedoms of data subjects. That requirement will be integrated into the design and approval stages of the delivery of IT systems that process personal data, which is the most effective and appropriate way to address the broad aim. Furthermore, clause 102 requires the controller to be able to demonstrate, particularly to the Information Commissioner, that the requirements of chapter 4 of part 4 of the Bill are complied with, including the requirement in clause 103 to consider the impact of processing.
Louise Haigh
I remain concerned that the Bill leaves gaps that will enable law enforcement agencies and the police to go ahead and use technology that has not been tested and has no legal basis. As my right hon. Friend the Member for Birmingham, Hodge Hill said, that leaves the police open to having to develop their own guidance at force level, with all the inconsistencies that would entail across England and Wales.
The Minister agreed to write to me on a couple of issues. I do not believe that the Metropolitan police consulted the Information Commissioner before trialling the use of photo recognition software, and I do not believe that other police forces consulted the Information Commissioner before rolling out mobile fingerprint scanning. If that is the case and the legislation continues with the existing arrangements, that is not sufficient. I hope that before Report the Minister and I can correspond so as potentially to strengthen the measures. With that in mind, and with that agreement from the Minister, I beg to ask leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Clause 64 ordered to stand part of the Bill.
Clauses 65 and 66 ordered to stand part of the Bill.
Clause 67
Notification of a personal data breach to the Commissioner
Question proposed, That the clause stand part of the Bill.
Liam Byrne
The Committee is looking for some guidance and for tons of reassurance from the Minister about how the clause will bite on data processors who do not happen to base their operations here in the United Kingdom. This morning we debated the several hundred well-known data breaches around the world and highlighted some of the more recent examples, such as Yahoo!—that was probably the biggest—and AOL. More recently, organisations such as Uber have operated their systems with such inadequacy that huge data leaks have occurred, directly infringing the data protection rights of citizens in this country. The Minister will correct me if I am wrong, but I am unaware of any compensation arrangements that Uber has made with its drivers in this country whose data was leaked.
Even one of the companies closest to the Government—Equifax, which signed a joint venture agreement with the Government not too long ago—has had a huge data breach. It took at least two goes to get a full account from Equifax of exactly what had happened, despite the fact that Her Majesty’s Government were its corporate partner and had employed it through the Department for Work and Pensions. All sorts of information sharing happened that never really came to light. I am not sure whether any compensation for Equifax data breaches has been paid to British citizens either.
My point is that most citizens of this country have a large amount of data banked with companies that operate from America under the protection of the first amendment. There is a growing risk that in the years to come, more of the data and information service providers based in the UK will go somewhere safer, such as Ireland, because they are worried about the future of our adequacy agreement with the European Commission. We really need to understand in detail how the Information Commissioner, who is based here, will take action on behalf of British citizens against companies in the event of data breaches. For example, how will she ensure notification within 72 hours? How will she ensure the enforcement of clause 67(4), which sets out the information that customers and citizens must be told about the problem?
This morning we debated the Government’s ludicrous proposals for class action regimes, which are hopelessly inadequate and will not work in practice. We will not have many strong players in the UK who are able to take action in the courts, so we will be wholly reliant on the Information Commissioner to take action. I would therefore be grateful if the Minister reassured the Committee how the commissioner will ensure that clause 67 is enforced if the processor of the data is not on our shores.
Victoria Atkins
The right hon. Gentleman refers to companies not on these shores, about which we had a good deal of discussion this morning. Clause 67 belongs to part 3 of the Bill, which is entitled “Law enforcement processing”, so I am not sure that the companies that he gives as examples would necessarily be considered under it. I suppose a part 3 controller could have a processor overseas, but that would be governed by clause 59. Enforcement action would, of course, be taken by the controller under part 3, but I am not sure that the right hon. Gentleman’s examples are relevant to clause 67.
Liam Byrne
I am grateful to the Minister for that helpful clarification. Let me phrase the question differently, with different examples. The Home Office and many police forces are outsourcing many of their activities, some of which are bound to involve data collected by global organisations such as G4S. Is she reassuring us that any and all data collected and processed for law enforcement activities will be held within the boundaries of the United Kingdom and therefore subject to easy implementation of clause 67?
Victoria Atkins
The controller will be a law enforcement agency, to which part 3 will apply. I note that clause 200 provides details of the Bill’s territorial application should a processor be located overseas, but under part 3 it will be law enforcement agencies that are involved.
Liam Byrne
Where G4S, for example, is employed to help with deportations, the Minister is therefore reassuring us that the data controller would never be G4S. However, if there were an activity that was clearly a law enforcement activity, such as voluntary removal, would the data controller always be in Britain and therefore subject to clause 67, even where private sector partners are used? The Minister may outsource the contract, but we want to ensure that she does not outsource the role of data controller so that a law enforcement activity here can have a data controller abroad.
Victoria Atkins
I appreciate the sentiment behind the amendment. If the Home Office outsources processing to an overseas company, any enforcement action would be taken against the Home Office as the controller. The right hon. Gentleman has raised the example of G4S in the immigration context, so I will reflect on that overnight and write to him to ensure that the answer I have provided also covers that situation.
Question put and agreed to.
Clause 67 accordingly ordered to stand part of the Bill.
Clause 68 to 71 ordered to stand part of the Bill.
Clause 72
Overview and interpretation
Question proposed, That the clause stand part of the Bill.
Liam Byrne
I want to flag up an issue that we will stumble across in a couple of stand part debates: the safeguards that will be necessary for data sharing between this country and elsewhere. We will come on to the safeguards that will be necessary for the transfer of data between our intelligence agencies and foreign intelligence agencies. Within the context of this clause, which touches on the broad principle of data sharing from here and abroad, I want to rehearse one or two arguments on which Ministers should be well briefed and alert.
Our intelligence agencies do an extraordinary job in keeping this country safe, which sometimes involves the acquisition and use of data that results in the loss of life. All Committee members will be familiar with the drone strike that killed Reyaad Khan and Ruhul Amin, and many of us will have heard the Prime Minister’s assurances in the Liaison Committee about the robust legal process that was gone through to ensure that the strike was both proportionate and legal.
The challenge—the public policy issue that arises under chapter 5 of the Bill—is that there is a number of new risks. First, there is the legal risk flagged up by the Court of Appeal in 2013, when justices said that it was not clear that UK personnel will be immune from criminal liability for their involvement in a programme that involves the transfer of intelligence from an intelligence service here to an American partner and where that American partner uses that information to conduct drone strikes that involve the loss of life. Confidence levels differ, but we in the Committee are pretty confident about the legal safeguards around those kinds of operations in this country. We can be less sure about the safeguards that some of our partners around the world have in place. The Court of Appeal has expressed its view, which was reinforced in 2016 by the Joint Committee on Human Rights. The Committee echoed the finding that
“front-line personnel…should be entitled to more legal certainty”
than they have today.
This section of the Bill gives us the opportunity to ensure that our intelligence services are equipped with a much more robust framework than they have today, to ensure that they are not subject to the risks flagged by the Court of Appeal or by the Joint Committee on Human Rights.
Victoria Atkins
We are still on part 3, which deals with law enforcement processing. It does not relate to processing by security services. We will come to that when we debate amendment 159 to clause 109, so I reserve the right to respond to those observations on that amendment in due course.
The Chair
There is no amendment before the Committee. We are on clause 72. The right hon. Member for Birmingham, Hodge Hill made some comments, which I did not rule out of order. The Minister has indicated that she will respond to the wider issue of concerns about drones and national security at a later date. That is a matter for her. If the right hon. Gentleman is happy with that, and if the Minister is content, I will put the question that the clause stand part of the Bill.
Question put and agreed to.
Clause 72 accordingly ordered to stand part of the Bill.
Clauses 73 to 86 ordered to stand part of the Bill.
Ordered, That further consideration be now adjourned.—(Nigel Adams.)
Westminster Hall
(6 years, 9 months ago)
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Backbench Business
(6 years, 9 months ago)
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Psychosis: Early Intervention
(6 years, 9 months ago)
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Norman Lamb (North Norfolk) (LD)
I beg to move,
That this House has considered access and waiting time standards for early intervention in psychosis.
It is a great pleasure to serve under your chairmanship, Mrs Moon, for what I think is the first time. I thank the Backbench Business Committee for facilitating this debate on an issue of real importance and something I care about a lot. I will start with the origins of early intervention in psychosis and then raise my specific concerns about the progress made under the Government’s programme.
The approach dates back to the 1990s. In 1999, the Labour Government decided to give a significant national push to the development of early intervention in psychosis services. There was a mental health policy implementation guide of that date, and at that time the service was to focus on those aged 14 to 35, the years when psychosis was most likely to emerge. Once an individual started their treatment, there was to be a three-year programme. Critical to that was small case loads, so that the professionals in multidisciplinary teams could work closely with the individuals involved. It also involved family interventions. In a 10-year period, the national case load grew to 22,500 for what was widely seen as a valuable innovation.
The National Institute for Health and Care Excellence review of psychosis and schizophrenia in 2014 concluded that early intervention services,
“more than any other services developed to date, are associated with improvements in a broad range of critical outcomes, including relapse rates, symptoms, quality of life and a better experience”
for service users. I will return to that later, but an excellent annual report by the Southern Region EIP programme—for the south of England—specifically highlighted the impact on employment rates. When these services have proper investment, people who experience a first episode of psychosis can often be got into employment or education at far higher levels that has traditionally been the case with generic mental health services. That is an enormous prize to be won, when we think about quality of life and sense of self-worth, and indeed the cost of the condition to the state—so, lots of praise for the impact of early intervention services.
The Schizophrenia Commission said that early intervention services were the “great innovation” of the last 10 years, referring to multidisciplinary working, recovery ethos, co-production, working with people with the condition and achieving high standards. Professor Louis Appleby has described the service as the
“jewel in the crown of the NHS mental health reform because…service users like it…people get better”—
that is important—and
“it saves money”,
which is also critical.
On that point, we know from analysis that for every £1 properly invested in early intervention in psychosis, there is a return of £15 over subsequent years. Of course, one of the complications is that the return is not just concentrated in reduced use of the NHS, but comes through getting people off benefits and into work, bringing in tax revenues and reducing the number of people who end up going through the criminal justice system. For all those reasons—the impact on individuals and the extraordinary return on investment—this seems like a very good thing to do. However, as the NHS’s finances started to get tighter, there was clearly disinvestment in many places—it varied around the country, but it was happening.
My insight, as Minister responsible for mental health from September 2012, was that two particular elements of the way that the NHS works end up massively disadvantaging mental health. First, there are a set of politically demanding access standards in physical health, such as the four-hour A&E standard, the cancer waiting time standards and the 18-week referral to treatment standards. I do not know if it still happens, but in my time at the Department of Health, every Monday morning all the great and the good of the NHS sat around the Secretary of State’s table with a spreadsheet for every hospital in the country, looking at performance against those waiting time standards—in physical health. There was nothing for mental health—a complete imbalance of rights of access.
Then there is payment by results, which is actually payment for activity. It means that when patients get referred to an acute hospital, that hospital receives more income. There have been adjustments and reforms over the years, but the basic principle of incentivising activity in acute hospitals, which is not matched in mental health, combined with those exacting access standards, puts enormous pressure on the system to drive people into acute hospitals to meet those standards. That has the effect of sucking money into acute hospitals. Even during the last five to seven years of tight finances in the NHS, income for acute hospitals has continued to increase, but income for mental health and community services, which do not have those financial incentives, has stayed level or, in places, decreased.
I felt we had to start addressing those perverse incentives that were disadvantaging mental health, which amount to discrimination against people who experience mental ill health. Why should the treatment for someone who experiences psychosis be in any way inferior to the treatment of someone suffering from cancer or any other physical condition? In 2014, we decided across government to publish a vision called “Achieving Better Access to Mental Health Services by 2020”, a joint publication by the Department of Health and NHS England. The vision was to achieve comprehensive maximum waiting time standards in mental health by 2020—if only. The plan was to start with two standards: a six-week standard for access to the IAPT—improved access to psychological therapies—service and a two-week standard for early intervention in psychosis.
Critically, this was not just a two-week standard. When the Government report on whether they are meeting the standard, the focus tends to be on whether more than 50% of people start their treatment within two weeks, which was the standard set at the start. However, the standard was in two parts: to start treatment within two weeks and then to have access to the full evidence-based, NICE-approved treatment package. I will focus on that element because, depressingly, evidence shows that the system is falling far short of what it should be doing.
I want to focus on a freedom of information survey conducted over this financial year to try to establish the position across the country, looking not just at how long people wait but, critically, at whether they get access to the full evidence-based treatment package. The evidence that emerges from that survey is deeply disturbing. First, only 29% of trusts across the country stated that they were meeting the full NICE-approved, evidence-based treatment package. That is 29% on a standard that the Government say is being met. It is not being met. Even 29% is generous, because within that I think there were two trusts that were delivering the service only up to the age of 35, whereas the standard says that people up to the age of 65 should be included. Across the country, people are simply not getting access to the evidence-based treatment that we know works and delivers such an extraordinary return on investment.
I suppose I would put it this way. Can we imagine a cancer service saying to patients, “We’ll give you half the chemotherapy or radiotherapy treatment,” or, “I’m sorry, but there are no professionals available to deliver this part of your treatment”? There would be an outcry. It would be impossible for the Government to get away with it. The Daily Mail would be apoplectic. We know that the result would be that the standard would be met, one way or another—but here, day by day across the NHS, this standard for mental health is routinely being missed in a wholly unacceptable way.
Luciana Berger (Liverpool, Wavertree) (Lab/Co-op)
I thank the right hon. Gentleman for his important speech and his comments. Does he agree that there is a particular challenge in mental health, in that, in the wake of the Health and Social Care Act 2012, parity of esteem is enshrined in law, and we should be not just aspiring to, but achieving equality for mental health? This is just another indicator of how far we are from achieving that goal.
Norman Lamb
I totally agree. The 2012 Act is clear that there should in effect be equal treatment between mental health and physical health, but the evidence shows it is not being delivered. I fully understand that it takes time to get there with a new programme, but it is the way it is being implemented that gives me greatest cause for concern. I will focus on how we are falling short of that standard.
In the south region, there is a brilliant programme; it is always important in these debates to recognise that there are sometimes areas of fantastic practice that should be applauded. In the south of England, an amazing woman called Sarah Amani is the programme manager, and there is a full implementation programme. My argument to the Minister is that what is happening in the south should be happening everywhere. The programme produces annual reports, so it is completely open and transparent about the progress it is making and the obstacles that lie in its way.
I should have mentioned that our survey showed that across the country not much more than 50% of the total amount that NHS England says must be invested per patient is being spent per patient on delivering the service. If we are only spending a bit more than 50% of the amount we need to spend, it will fall short. What NHS England in the south is doing is admirable. It highlights that in many areas things have improved over the last year in its region, because it is driving that, but it also says:
“There is four-fold variation between the most and least funded EIP teams in the South of England.”
A fourfold variation would never happen with the cancer service. Furthermore:
“None of the providers have investment recommended to provide a NICE concordant package of care”.
In the best region of the country, no provider is meeting what it needs to spend to deliver the full package of care.
On workforce, the report says:
“Recruitment has been in part hindered by lack of extra investment and compounded by a national reduction in the number of qualified staff, particularly nurses”.
On intelligence, it says:
“Although all mental health providers use Electronic Health Record (EHR) systems, the majority (13 out of 16) of providers have yet to automate reporting, resulting in clinicians having to manually troll through whole caseloads for multiple data requests.”
In this day and age, that should not be necessary. There should be a system across the country to enable us to monitor performance against that important standard. When we go through the elements of the NICE-approved treatment package, such as cognitive behavioural therapy for psychosis, across the best region in the country there is enormous variation in the amount of therapy available to people. Some trusts provide what is required, but most fall short.
If we then look at comprehensive physical health checks, there is a target of 90%. We know that people with severe and enduring mental ill health die 15 to 20 years younger than other people, and that part of that can be addressed by having physical health checks. There is a Commissioning for Quality and Innovation standard established for 90% of people with severe and enduring mental ill health to have physical health checks. Across the south of England it is 56%, not 90%. Individual placement and support is a critical element of getting into work, with loads of evidence to support its effectiveness; 30% in the south of England have access to individual placement and support. Going back to what I have said, we must look at the results that flow if we make the investment. It is not only morally wrong but economically stupid to avoid making that investment.
I come now to the evidence on outcomes. The programme can show that where it does the work, hospital admissions are substantially reduced. The evidence is clear for anyone looking at the report to see. The report then looks at employment and education, where it is achieving substantially better rates of employment than generic mental health services, at 46%. Fascinatingly, it even analyses the relationship between investment and outcomes, so it can show that the more we invest in these evidence-based interventions, the better the outcomes. What a surprise: more people get into work, more people get into education and lives are transformed.
The report then talks about securing investment. Bear in mind that I am not quoting a politician but an internal document, led by the Oxford Academic Health Science Network:
“If the Five Year Forward View commitment of £40 million for EIP teams in 2015-16 had been honoured, EIP teams in the South of England would have seen a total growth in budgets of around £15 million. Instead, in 2015-16 the South region EIP teams saw a meagre increase of £3 million.”
That is £3 million instead of £15 million. The report continues:
“Between 2016-18, this trend of lack of investment has continued with a £3.5 million increase in EIP team budgets compared to the £15 million that was expected. Of the 16 providers delivering EIP in the South of England, none have the £8,250 investment per patient recommended to deliver a NICE concordant package of care. The South of England has a poor track record of investment in EIP services”.
That is the best region in the country. It leaves me feeling frustrated that such a prize—such an opportunity—is being squandered through lack of investment and lack of effective implementation.
I then look to the midlands. I have received an email from someone who is working on early intervention in psychosis in the west midlands, which reads as follows:
“There is wide variation in service quality, data reporting, outcomes, resourcing and resource allocation. This has not been made public, presumably because it is politically inexpedient to do so…Many trusts have chosen to disband EIP teams as a cost saving exercise (in Nottingham), or to allow caseloads to rise from 1:15 to 1:30”—
the whole essence of this approach is low case loads, so that people can get the personal attention that they need—
“not provide enough of the NICE mandated therapies, to not appoint psychologists or enough support workers, leading to expensive but ineffective teams…There is currently no governance or accountability in place, which enables the triangulation of proper resources, recommended service levels and outcomes.”
No governance or accountability in place across the midlands. That leaves me totally bewildered. Would this ever have happened when they implemented the cancer standards in the last decade? Of course not. Yet that is what has happened.
“There are systems in place in the north…and in the south…to provide the mechanism by which the accuracy of data, resourcing, services and outcomes can be verified and addressed…The Midlands region of England (west, central, east midlands, and East of England) are the only areas without any established regional development programmes and therefore have no reliable mechanism to prevent the inexorable decline of standards in EIP.”
That is from the frontline and, it seems to me, ought to be taken extremely seriously.
In a presentation given recently in February, in the west midlands, a west midlands clinician said:
“We are really struggling to provide an EI service that meets the NICE quality standards. Most of the focus of the Trust has been on meeting the two week access standard, which we have done most of the time. We did get some additional money, but it was non-recurring. Caseloads are way above the national average and we are really struggling”.
It then goes through the various elements of the NICE-approved programme.
“Referral rates are very high and we are discharging people sooner than we should.”
That should not be happening in a programme that the Government ought to be really proud of. It is a gem that ought to be nurtured and developed in order to get the very best from it.
When we published the survey that we did earlier this year, the response from NHS England was deeply disappointing. The official was quoted as saying:
“10,000 people each year are now receiving treatment through the early intervention in psychosis programme, with over three-quarters of patients getting treatment within two weeks…The analysis inevitably gives only a partial and dated picture of progress in these services.”
Well, I do not think that public bodies should be making misleading statements like that, because the analysis was full and complete across the whole country. It was not dated in any way. But this quote from NHS England—an anonymous quote—was designed to discredit the analysis. Rather than discrediting the analysis, it seems to me that a public body should be acknowledging the problem and addressing how it will try to solve it. This sort of denial approach is unhelpful. I wrote to the UK Statistics Authority, because I think it is inappropriate for public bodies to respond to analyses in that way.
Before I finish I want to deal with some asks of the Government. This is part of the five-year forward view. The Government have stated that it is a clear priority, so I want the Government to make it a priority. I want the Government to look at the implementation of this programme and to recognise that in some regions, nothing is happening to drive the implementation of these national standards. Personally, I think that it is intolerable that someone with psychosis in Dudley, in the west midlands, gets a raw deal compared with someone in the south of England, but that is what is happening now, because NHS England has no implementation programme in the west midlands, or across the entire midlands, including my own region—the East of England.
First, it needs sufficient investment. Given that there is a return on investment of £15 for every £1 spent, my plea to the Government is to make the investment because they will see a return on it, and benefit from improved employment rates and everything else. Secondly, address the staff shortages that are clearly—according to our survey—holding back services all over the place. It really means that Health Education England needs to create a credible plan to address the workforce shortages in early intervention in psychosis services, so that no area falls short because it cannot recruit the right people to deliver the service. Again I ask, would it happen in cancer? Of course not.
Thirdly, end the outrageous age discrimination. A quarter of the trusts that responded to our survey still have a limit of 35 on the service that is delivered, which means that anyone over the age of 35 is not getting access to the evidence-based treatment programme. Fourthly, get back on track with the two-week standard. We are also seeing that even though the standard is being met, the performance is deteriorating. The figures for early this year are worse than the whole of last year, suggesting increasing pressure on services around the country. That is important for the Government to address as well.
Fifthly, the standard applies not only to people who experience a first episode of psychosis, but to people who are at risk of psychosis; but many services simply say, “We don’t deliver a service to those people.” Of course, that is the best early intervention. If we can intervene before the psychosis has occurred, everyone benefits massively, particularly the individual concerned. In many areas, though, there is simply no service, despite the standard being very clear about what is required. Sixthly, the Government need, as I have said, to fund implementation programmes for every region, modelled on the plan and programme in the south of England, so that everywhere gets access to the same level of service.
Finally, our vision of comprehensive maximum waiting time standards in mental health by 2020 was published not just by Lib Dems, but by Conservatives. It was the Government’s vision. The point of it was to end such discrimination in a publicly funded service. It is not justifiable to have rights of access to treatment for physical health services, but not for mental health services. Why should people be left waiting, sometimes for months on end, for access to treatment? Treatment should be based on evidence and clinical need. But that vision, it seems to me, although included in the “Five Year Forward View”, is not being funded. There is no resource available to implement it. So my plea to the Government is: return to that vision. It was a good vision in 2014.
I will end by making this point: nothing that the Government could do would have a bigger impact on the wellbeing of our communities than to end the under-investment in mental health services. The best example, where the evidence is at its strongest, where you can reduce the flow of people into long-term support from secondary mental health services, is early intervention in psychosis services. There is an enormous prize to be had, but it needs investment and attention, which is lacking at the moment.
Dr Paul Williams (Stockton South) (Lab)
It is a pleasure to serve under your chairmanship, Mrs Moon. I congratulate the right hon. Member for North Norfolk (Norman Lamb) on securing this debate. It is a subject that we are both passionate about, as are many people in this room. I pay tribute to the commitment that he made to mental health services during his time as a Minister and beyond.
Psychosis can be a terribly destructive condition. When it starts in adolescence, as it does for most people, people can lose out on schooling, relationships with friends and family are strained and the foundation on which the rest of people’s lives will be built is severely tested. Psychosis is not just about the symptoms—the delusions, hallucinations and suspiciousness that people feel. It is a social condition too. It often leads to a withdrawal from society—avoiding friends, avoiding leaving the house, losing schooling and losing work—and that is why it is such a pernicious condition. It can harm somebody’s life chances. It is a condition that leads to lost opportunities.
I am pleased that the right hon. Gentleman has drawn parallels between psychosis and cancer. We have not conferred, but I am also going to do so. We see how good cancer services are. It is important to have that comparator and to hold mental health services to the same standards as physical health services. We should think about psychosis in the same way as physical health services think about cancer. As soon as somebody shows signs of psychosis, they should have rapid—two-week—access to expert diagnostics. If the diagnosis is made, it is right that they get a superb package of care to give them the best possible chance of recovery. That care includes psychological therapies, medication, help with their physical health and, of course, rehabilitation.
If somebody receives that rapid package of care and support, there is half a chance that they will get back into education, employment or an apprenticeship. The rest of their life will be radically different. However, if they do not get that care, support and treatment, the figure for that drops to between 7% and 12%. That is what happens to people who do not get that package. If there was a pathway for cancer that improved survival and recovery from 10% to 50%, we would all know about it and fight for it. I am pleased that within this room there is the same passion and commitment to early intervention in psychosis.
The right hon. Gentleman outlined some of the costs to society of untreated and unmanaged psychosis, but I have a few things to add. Some 65% of all admissions to in-patient mental health units are for psychosis. The police spend increasing amounts of time detaining people under section 136, many of whom have psychosis. A lot of homelessness is associated with psychosis, and many prisoners have or had psychosis. As well as costs to society, there are also big costs to the individual. A person with a severe mental health problem such as psychosis will die, on average, 20 years younger than someone who does not. They are not dying of the psychosis; they are dying of physical health problems that are caused by their underlying mental health problems.
It is important that we are having this debate, but it is unfortunate too. In September 2016, the right hon. Gentleman led a similar debate on this very subject, and 18 months on we are learning that many of the things raised in that debate are still not happening. During that debate, the then Minister said:
“To improve access to NICE-recommended psychological therapies, we have to ensure that there are the staff numbers and the appropriate skills mix to deliver the full range of treatment to those who need it.”—[Official Report, 7 September 2016; Vol. 614, c. 163WH.]
Yet the survey conducted for the right hon. Gentleman’s recent report highlighted some worrying trends around resources and staff numbers. Many patients are not receiving the full range of treatments and interventions that should be included in the specialist EIP care package. Many trusts say that they simply do not have the staff and resources to meet demand.
I return to the analogy with cancer. The Government’s ambition is that 50%, rising to 60% by 2020, of people aged 14 to 65 experiencing a first episode of psychosis should have access to a NICE-compliant care package. If we were to replace the word “psychosis” with “cancer”, there would be outrage at that target. Why should it not be 90% or 95%? Why should the ambition not be 100%? If we were talking about cancer, we would already be hiring the radiologists, laboratory scientists, surgeons, nurses and technicians that we need for the pathway. I want to give credit where credit is due. Setting a 50% standard is at least a step towards achieving parity of esteem, but that ambition is clearly not yet a reality.
NHS England’s data show that more than 60% of patients start treatment within two weeks of referral. However, if we look at the data in a different way and ask people who have started treatment how long they waited, the figures paint a very different picture. In January 2018, even though 722 patients had started treatment within two weeks of referral, 1,344 patients were still waiting to start treatment, and more than 700 had been waiting more than two weeks. We are talking about figures, but those figures represent people—more than 700 people who were waiting in January of this year. Often these are young people who are not going to school because of new mental health problems that could be managed. During that time relationships are breaking down, people are losing their jobs and people’s life chances are being harmed.
There is regional disparity as well. The north of England, where my constituency of Stockton South is, has the lowest proportion of pathways completed within two weeks of referral and the highest number of total referrals still awaiting treatment. It seems that we have not yet put sufficient resources into our mental health services for the psychologists, occupational therapists, mental health nurses and care co-ordinators who are important to implement this pathway. I have to say that the staff who are working in this area are doing amazing work and transforming lives. I would like to thank them for what they do, but this now needs to be taken to another level and delivered to a much greater scale.
The right hon. Gentleman’s research shows that mental health trusts invest, on average, just half the amount that NHS England estimates is needed to provide EIP in line with NICE guidelines. As he stated, only 29% of trusts say that they are able to offer their patients the full NICE package of care. I urge the Minister to acknowledge that service providers still have ground to make up, and to recognise that they need greater support and resources to do so.
I really hope that the Minister responds with a plan to make things better for the people who we all know are still not getting the service that they need. I have no doubt of her personal commitment to improving mental health services, but she must match rhetoric with ensuring that commissioners are actually putting significant amounts of extra money into mental health services on the ground, and that providers are turning that cash into services that meet the needs of these priority patients. If this were cancer instead of psychosis, we would be doing it—let’s make parity of esteem a reality.
Luciana Berger (Liverpool, Wavertree) (Lab/Co-op)
It is a pleasure to serve under your chairmanship, Mrs Moon. I congratulate the right hon. Member for North Norfolk (Norman Lamb) on proposing this debate to the Backbench Business Committee—a proposal for which I was a signatory—and securing this important and timely discussion.
The right hon. Gentleman and I have shared many platforms in supporting joint campaigns, and we have debated often the state of our mental health services. We have come to expect from him a level of forensic detail, commitment to improvement and genuine compassion for those with severe mental illness, and today he has not disappointed. We may have very small differences in approach or policy, but he and I share a big-picture commitment to world-class mental health services in this country; to genuine, tangible parity of esteem—real equality—between physical and mental health services; and to a transformation in the way that we view mental illness, talk about mental illness and treat those with mental health conditions.
As with many other forms of mental illness, all the experience and evidence point to the fact that the best time to intervene in cases of psychosis is as soon as possible. The work of Professor Patrick McGorry in Australia and proponents of early intervention in the UK clearly shows that early intervention can have a huge impact on the health of the individual patient, with more chance of them living with conditions in a managed way and ultimately more chance of their recovery.
I echo some of the right hon. Gentleman’s points about the benefits of getting back into employment and the importance of accessing individual placement and support. That is a well-evidenced measure that has already made a tangible difference to many people living with mental ill health. I will reflect on the experience in my area, Merseyside, where Mersey Care provides the majority of mental health services, including early intervention in psychosis. It did an audit of all the patients that it looks after in both the community and in-patient services. It is staggering that just 3% of their patients are in any form of employment. If we compare that figure with people in physical health services, the inequality—the massive disparity—when it comes to mental health is a great concern. That strikes at the heart of the issues that we are discussing.
It should not surprise hon. Members that the earlier we treat any condition, be that a mental or physical health condition, the more likely we are to get a positive result. In terms of system reform in the health service, early intervention clearly fits into the mantra of prevention being better than cure. I have said it before, but I will say it again: if people are not convinced of how important this is by the moral and social reasons, the financial and economic consequences of not contending with mental health sooner should be enough.
For the NHS to be sustainable in the long term, when it will increasingly have to contend with lifestyle-related diseases, we need a seismic shift from treating diseases and conditions when they present in crisis in their most acute forms to a system that allows us to detect them in their earliest stages, to manage them with early interventions and to do everything to avoid certain conditions in the first place, although that is not always possible. That is as true of mental illness as it is of cancer, cardiovascular disease and coronary heart disease.
The issue is not just health outcomes, but the impact that psychosis has on the totality of an individual’s life and their opportunity to be involved in education, employment and training, to maintain relationships with family and friends, to own a home or maintain a tenancy, to be able to go to work and to not be in our criminal justice system. Those outcomes have far-reaching and long-term consequences that are not contained solely within the Department of Health and Social Care, although a Health Minister will respond to today’s debate.
With that in mind, in February 2016, the Labour Front Bench, including me as the then shadow Minister for Mental Health, welcomed the inclusion of the access and waiting time standard for early intervention in psychosis in “The Five Year Forward View for Mental Health”. The commitment was that NHS England should ensure that by April 2016, 50% of people experiencing a first episode of psychosis had access to a NICE-approved care package within two weeks of referral, rising to at least 60% by 2020-21.
It is important to reiterate that laudable target and ambition. It was modest, but it was an important first step and it was welcomed across the House, so it is with heavy hearts that we review progress since then, and realise that the system is failing to reach the target stipulated in the “The Five Year Forward View for Mental Health”.
Once again, we should recognise the detailed work of the right hon. Member for North Norfolk in unearthing the emerging picture from across the country. Every Minister’s worst nightmare is the ex-Minister armed with the tools of freedom of information requests and parliamentary questions, and who knows the darkest secrets at the heart of the Department.
We now know that the access and waiting time standard for early intervention in psychosis is not being met. Too many providers cannot offer the full NICE-approved package of care. There is variation across the country, with, as ever, the poorest people in the poorest parts of the country receiving the poorest levels of service. That real inequality is a social justice issue.
I echo the concerns expressed by my hon. Friend the Member for Stockton South (Dr Williams) about the figures for his constituency in the north of England. The north of England commissioning region has the lowest proportion of completed pathways and the highest number of total referrals still awaiting treatment—two thirds. That should be a serious concern for us all. The inverse care law, first identified some 40 years ago, is alive and kicking when it comes to mental health services.
The latest picture published by NHS England shows that far from the steady progress we all desire, the proportion of patients in the early stages of psychosis that started treatment within the two-week target was lower in January than it was in May 2016. In the first 10 months of 2017-18, 9.1% fewer patients started EIP treatment within the two-week target, compared with the first 10 months of 2016-17.
Behind those figures, as other hon. Members have indicated, are real people who are suffering the early manifestations of psychosis, which can be extremely disturbing for them and for their friends and family. I have had the privilege of visiting a number of in-patient units, not just in my constituency but across the country, and I have heard first hand about patients’ experiences. The longer they have to wait, the greater the negative impact can be on their condition and on their chance of recovery.
The Royal College of Psychiatrists points out that if people do not receive help early enough, they are more likely to experience poor physical health, lower levels of social functioning, and poorer occupational and educational outcomes. That is a serious concern for us all, which is why we are here this afternoon.
We also have to think about what happens in the future. I am grateful to YoungMinds for its analysis of the sustainability and transformation partnerships, due out next month, which shows that less than a quarter of STP plans demonstrate an explicit commitment and clear plan to meet the EIP target for 2020-21. It is not just about what has happened in the past and looking at the results retrospectively, but about what will happen in the coming years. The Government have endeavoured to have STPs, and the EIP target should be at the heart of what they are doing. Unfortunately, it is not, despite the fact that the implementation of that waiting time target is one of the nine requirements for STPs, as set out in the NHS planning guidance.
I will turn to an area that is of particular interest to me. In the year since the birth of my child, I have been even more aware of the need to support the mental health of new mums. Around 85% of new mothers experience some change in their mood, and for around 10% to 15% of them, that might mean more serious symptoms of anxiety and depression. More than 1,400 women experience post-partum psychosis each year in the UK, which is between 1 and 2 in every 1,000 mothers. I was struck that a woman is between 30% and 40% more likely to experience a period of psychosis in the year after childbirth—more than at any other point in her life.
Post-partum psychosis can take many forms, including hallucinations, depression, delusions and mania. It can be extremely distressing for mothers, their partners, their wider families, and of course, the child. I have had the opportunity to visit two mother and baby units across the country to hear from mums first hand. The condition does not discriminate. It can affect women of any background, colour and income, and it can have serious and far-reaching consequences.
The National Childbirth Trust, the Maternal Mental Health Alliance and others have specifically highlighted the paucity of provision of mental health services for new mothers and the effectiveness of the six-week check in identifying the early stages of mental ill health, including psychosis. In the mix of the debate, I hope the Minister will be able to comment on that.
Dr Paul Williams
I, too, have read the National Childbirth Trust’s report, “The Hidden Half”. It says that despite it being a vulnerable time for women, more than half of women who experience post-natal mental health problems say that they were not asked about them by any health professional. Will my hon. Friend join me in calling for that to be added to the GP contract so that GPs routinely provide a six-week check for the mother, as part of the six-week check for the baby?
Luciana Berger
I thank my hon. Friend for raising that important report and the campaign, which I have considered as well. The National Childbirth Trust makes an important point about the connection that GPs have with new mums and their babies. I recall that my GP did ask me about my mental wellbeing and how I felt, but that is not the case for every mum. It is something that we should consider, along with ensuring that every contact counts when it comes to new mums and their babies—be that with the health visitor, a midwife who might come to the home or someone in the hospital. We need to look at the whole spectrum of engagement to ensure that we consider the mental health of mum and baby every step of the way.
I mentioned mother and baby units, which are incredibly important. For anyone who does not know, they are an opportunity to ensure that if the mum is experiencing a period of psychosis or another serious mental illness, they are still able to be with their child. The units offer extremely specialised care and incredible attention from clinicians, who do a remarkable job of ensuring attachment so that mums are not disconnected from their babies, even if they have to be moved across the country.
Mother and baby units are very important for recovery rates. I have asked several parliamentary questions about them, but I want to ask more in the context of this debate because of their importance to mums who experience post-partum psychosis. In January, I asked the Secretary of State, in a written question,
“how many mother and baby beds commissioned by NHS England Specialised Services in 2016/17 are (a) available and (b) in use.”
I asked that because although we know that beds have been commissioned, it is not clear whether they are available or in use. The figures that I received in response to a previous question showed a decrease of one in the number of beds available across the country since 2010. I ask the Minister the same question again, publicly, because her response in January was:
“The information requested is not available.”
I do not think that it is a difficult question to answer. In the context of this debate, it is a very important one, so I hope the Minister’s officials will provide her with an answer today. Post-partum psychosis, no less than any other kind, requires early identification and early intervention, but we are not doing enough to treat or support post-partum psychosis alongside other forms.
Let me conclude with some brief questions that I hope the Minister will address. First, what steps is her Department taking to address mental health inequalities and the waiting times postcode lottery, particularly in cases of early episodes of psychosis?
Secondly, how can the Minister guarantee that money allocated for mental health services is actually reaching the frontline in all the areas in which it is needed? There are many examples of mental health budgets being raided to pay for other parts of the NHS.
Thirdly, does the Minister agree with the Royal College of Psychiatrists that we need to improve the financial data available for early intervention in psychosis services? Without it, we cannot be sure that services are properly investing in EIP.
Fourthly, does the Minister believe that frontline mental health services have adequate numbers of staff—including psychiatrists, mental health nurses and therapists—to meet the targets set out in the five year forward view? I echo the praise of other hon. Members for our frontline clinicians, who do an incredible job under very challenging circumstances but are severely stretched, as we hear time and again. They cannot meet the workforce challenge alone.
Lastly, what steps will the Minister take to drastically improve early intervention in cases of post-partum psychosis, especially at the six-week check for new mothers, so that we can support women in the first weeks after the birth of their baby?
I congratulate the right hon. Member for North Norfolk again on securing the debate. Let us hope that our deliberations this afternoon will lead to concrete improvements and swift action from the Government to prevent unnecessary psychosis, intervene early to prevent unnecessary suffering, and help as many people as possible across the country towards a meaningful path to recovery.
Mrs Madeleine Moon (in the Chair)
I will call the first Front-Bench speaker at 2.30 pm.
Helen Whately (Faversham and Mid Kent) (Con)
I have been trying to think about how to put the experience of psychosis into words. Having observed it rather than experienced it personally, I suspect that I will not do it justice. From my observation, however, it is a devastating thing to experience: it is debilitating, frightening, bewildering and enormously destructive to someone’s life, aims and prospects. Its impact on people’s lives is severe, as other hon. Members have described.
In the past, a diagnosis of psychosis was essentially a life sentence, but now early intervention and treatment can lead to recovery. People can get their lives back on track—we are not in the dark old days when if someone had a mental illness, that was it. People can and should recover, but getting early treatment is crucial.
I will be brief, not only because you said that the winding-up speeches would begin at half-past 2, Mrs Moon, but because the issue has been covered comprehensively by the right hon. Member for North Norfolk (Norman Lamb), who has such huge knowledge and has clearly done an enormous amount of groundwork; by the hon. Member for Stockton South (Dr Williams), who brings to the debate his expertise as a doctor; and by the hon. Member for Liverpool, Wavertree (Luciana Berger), who does a huge amount of work in the area. I will therefore make only three points.
First, I express my appreciation to the Government, and to the Minister, for their enormous commitment to mental health and their huge focus on improving mental healthcare, achieving parity of esteem and ensuring that far more people have access to treatment, starting from a really low base. They set out that commitment in the “Five Year Forward View”, the most comprehensive strategy for mental health, and have demonstrated it with an increase in mental healthcare funding and with greater transparency. The fact that we can even have this debate, and that there are targets for waiting times and access to mental health, represents great progress from the time described by the right hon. Member for North Norfolk, when targets and transparency were making a huge difference to the quality of physical healthcare but there was no information about the quality of mental healthcare or access to it. We now have a developing, albeit early, set of data about access to mental healthcare. There is a long way to go, and that includes getting much more data about progress through treatment and outcomes, but the access data has at least given us a start. I welcome the fact that we are in a better place with mental healthcare, and that there is a great commitment to improvement.
My second point, however, is about the worrying trend in the treatment of people with psychosis. The direction of travel seems to be towards a decline in early access to treatment—not just in percentage terms, which could be explained by rising demand, but as an absolute number. The data cited by the right hon. Member for North Norfolk shows the gap between the treatment that some patients receive and the full recommended amount. A large number receive only some treatment, so we cannot hope for the recovery and outcomes that the full NICE-recommended package would offer.
My third point is that we need to know the reason for this worrying trend, which goes against our ambition to treat more people and help them to recover, and against the Government’s commitment to mental health. What is going on? Why do we appear to be going in the wrong direction? We have heard some possible reasons this afternoon, including lack of governance and accountability; lack of focus in many parts of the country, although there is clearly huge variation; underfunding of treatment packages, despite the overall backdrop of more money going into mental health; and shortage of workforce. Under the “Five Year Forward View”, there were meant to be 60 extra psychiatrists to provide early intervention in psychosis, but it is not clear—perhaps the Minister will tell us—whether those posts have been filled. It is clear to all hon. Members who work on mental health issues that the workforce is facing a huge challenge in recruitment and retention.
Is there a lack of ambition to provide early access to treatment for psychosis? Even achieving the 2020-21 target of 60% would leave 40% of people without much-needed treatment; we could argue that that is too low an ambition, especially as we know how effective treatment can be. I welcome the Government’s commitment, but it is worrying that the direction of travel seems not to be positive, so it would be extremely helpful if the Minister gave us some insight into what is going on and what steps are being taken to ensure that people get treatment that works.
Neil Gray (Airdrie and Shotts) (SNP)
Thank you for calling me, Mrs Moon. I should perhaps have said earlier that I would take only a short amount of time in my winding-up speech, particularly as we are discussing a devolved issue. I hope that the hon. Member for Faversham and Mid Kent (Helen Whately) did not have to cut what was a very good speech short. I should perhaps have indicated to you, Mrs Moon, that I only intended to take a short amount of time, to enable everyone to get the full coverage.
It is a pleasure to speak with you in the chair, Mrs Moon, on this very important subject. I congratulate the right hon. Member for North Norfolk (Norman Lamb) on securing the debate and pay tribute to his awareness-raising and campaigning work on this important issue over a great number of years, as has been mentioned. I also commend him for his detailed and comprehensive speech and, as I have indicated, for bringing people together today in search of consensual debate, especially when we consider that the topic is health, which normally divides political opinion. On this occasion it has rather united political opinion, so I commend him for that.
The right hon. Gentleman’s powerful speech was supported by others. The hon. Member for Stockton South (Dr Williams) spoke of the stark reality that sadly faces people who do not get access to early intervention following diagnosis with psychosis. He spoke with experience and knowledge of this issue, and added greatly to the debate. The hon. Member for Liverpool, Wavertree (Luciana Berger) has also worked tirelessly for a number of years on this issue. The statistic she cited—that just 3% of those with psychosis in her area are in employment—is quite frankly staggering. She also spoke of the prevalence of mental health vulnerability for women after childbirth. For me, those two issues alone, among all the others, highlight the importance of getting this right across all areas and why we all need to do more in all areas of this country, and all Governments should do that.
Luciana Berger
Forgive me, but in my remarks I was due to pass on a contribution by the hon. Member for Belfast East (Gavin Robinson), who wanted it made known on the parliamentary record that there is no mother and baby unit in Northern Ireland. Although the issue is not devolved, he wanted that point about the availability of support for new mums to be made in the context of this debate.
Neil Gray
I thank the hon. Lady for that intervention; it is clearly important that that is put on the record.
Also, as I have already indicated, the hon. Member for Faversham and Mid Kent made a very honest speech. Her observations from her clinical experience highlighted how destructive psychosis is, so I pay tribute to her for her contribution. I hope that the Minister will respond not only to hers, but to all the points raised by right hon. and hon. Members.
This issue is important, because when the Prime Minister entered Downing Street on 13 July 2016, she listed a number of “burning injustices” that she hoped to address, in order to make Britain
“a country that works for everyone”,
among which was the injustice that
“If you suffer from mental health problems, there’s not enough help to hand.”
Clearly, such rhetoric is to be welcomed, as is the Prime Minister’s promise that parity of esteem would be introduced in dealing with mental health services in the NHS in England. However, as demonstrated in I think all the speeches today, we have not really got to the point of matching that rhetoric with actions and outcomes. I think there was a universal acknowledgement in today’s speeches that not enough is being done.
Today’s debate focuses specifically on psychosis and the waiting-time standards for early intervention in this area. As we are all too aware, mental health in general often comes with many stigmas and misconceptions attached, and that is nowhere more apparent than in relation to the subject of today’s debate. In psychosis, people experience symptoms of paranoia, and often delusional belief systems that take them outwith reality—that was covered so well by the hon. Member for Stockton South. It affects sufferers socially and in terms of their work, education and overall health. Although only a small proportion of the population are impacted by psychosis, particularly compared with other mental health issues, its impact on the individual and those around them can be devastating, and sufferers require long-term support and help to recover.
As my hon. Friend the Member for East Kilbride, Strathaven and Lesmahagow (Dr Cameron), who is herself a clinical psychologist, pointed out in a similar Westminster Hall debate in September 2016, behavioural family therapy is also extremely important. Psychosis affects not just the person who suffers, but their whole family and social circle. People can suddenly find themselves in a caring role, and research indicates that spending 10 hours or more a week as a carer can be a challenge to someone’s wellbeing.
As the subject of today’s debate and the contributions of many Members have made clear, early intervention is key to ensuring that the support and recovery process can be as successful as possible, for both the individual and those around them. In Scotland, the Scottish National party Government have made mental health one of their main priorities, and they will continue to place a high importance on mental health services. A key part of that prioritisation in relation to psychosis has been focusing on prevention and early intervention, particularly for infants, children and young people—it has already been said why that is important—who are the groups most likely to be impacted by the first episodes of psychosis.
Analysis undertaken by the King’s Fund recommended that
“Providing high-quality care to patients requires two things: first, that NHS trusts have the revenue to recruit and retain the correct mix of staff, and second that these staff exist and want to work for the NHS. Our analysis highlights that there are underlying issues with the supply and availability of key staffing groups in mental health. Investing in the skills, job satisfaction and wellbeing of our current workforce should be a priority, but we must also invest to ensure sufficient workforce capacity.”
In Scotland, the Government have attempted to address those important staffing and funding issues by increasing NHS mental health spending from £651 million in 2006-07 to £937 million in 2016-17, which has enabled the aim of placing an additional 800 mental health workers in key settings by 2022 to remain on course.
However, I am not trying to argue that there is no room for improvement in Scotland—clearly there is—and that everything is as good as it can be. Clearly, there is more that we could and should do. The Scottish Government are aware that there is room for improvement and their “Mental Health Strategy 2017-2027” has identified a number of areas where further improvements can be made. In particular, the strategy acknowledges that
“Working to improve mental health care is not just the preserve of the NHS or the health portfolio.”
Instead, improving mental health care requires improving a wide range of public services, such as education and justice, as well as addressing other important societal problems, such as poverty and employment, all of which have a relationship with mental health and a role to play in improving health outcomes.
Again, I commend the right hon. Member for North Norfolk, and I hope that the Minister, when she replies, will reflect on all the comments from the right hon. Gentleman and from others, and respond to the examples given from the frontline and to the asks that he and others from different parties have made today.
Barbara Keeley (Worsley and Eccles South) (Lab)
As has already been said, and I will echo it, it is a pleasure to speak in this debate with you in the Chair, Mrs Moon.
I also join others in congratulating the right hon. Member for North Norfolk (Norman Lamb) on securing this important debate, and on the way that he opened it. In addition, I thank my hon. Friends the Members for Stockton South (Dr Williams) and for Liverpool, Wavertree (Luciana Berger), as well as the hon. Member for Faversham and Mid Kent (Helen Whately), and the hon. Member for Airdrie and Shotts (Neil Gray), the Scottish National party spokesperson, for their contributions.
Experience of psychosis can be frightening for those affected by it, and for their families. The hon. Member for Faversham and Mid Kent talked about how debilitating and frightening that experience of psychosis can be.
A story that came to my attention was from a woman called Louise, who wrote a blog for Mind, the mental health charity. In that blog, she described her experience of psychosis. She said:
“While everyone was celebrating the Olympics, I was sectioned and spent a week in hospital. I had started to hear voices and was living in a very strange world. Being in hospital was a terrifying experience and I couldn’t understand why I was there or what had happened to me. I thought the nurses were trying to kill me and I refused medication. Eventually, I accepted the drugs and I did recover. I was released after a week and received treatment in the community.”
The interesting thing about that story and blog is that Louise goes on to say:
“Even a year on, I still find it hard to accept that this happened to me: an independent, strong career woman.”
I wanted to touch on this story because it demonstrates how psychosis affected somebody who was
“an independent, strong career woman”.
The story shows, even in those few words, how debilitating and frightening a first experience of psychosis can be.
Given that, and we have heard about it extensively in this debate, it is clear that early intervention and access to treatment for psychosis is a really vital issue: a moral issue, an emotional issue, a financial issue, and an issue of investment. It is about helping people when they are at their most vulnerable and supporting them to recover.
From this debate alone, the evidence is clear that early intervention can significantly improve a patient’s mental health recovery. That has been highlighted by all the contributions we have heard today. One of the most important benefits of early intervention—this has not yet been mentioned—is the finding in studies that it can reduce the risk of a young person who is experiencing psychosis attempting suicide. That is clearly an important thing. As we have heard, the care packages approved by NICE can also have an impact beyond the mental health recovery of a patient, impacting on their physical health and their chances of remaining in employment. Each part is vital. A key statistic comes from the mental health charity Rethink. It found that 35% of young people in early intervention in psychosis care are in employment, as compared with just 12% of young people in standard mental health care. The right hon. Member for North Norfolk discussed that.
The access and waiting time standard for early intervention in psychosis is not being met, partly because the official figures are for patients who have started treatment. As my hon. Friend the Member for Stockton South discussed, YoungMinds has stated that in January 2018, even though 722 patients had started treatment within two weeks of referral, 1,344 patients were still waiting to start treatment, and 727 of them had been waiting more than two weeks since referral. We are getting a partial picture from NHS England. We were all sent a briefing this morning that said that the access standards are being met, but they clearly are not if they are not taking account of patients who are waiting. The figures for January 2018 also showed that 401 patients had been waiting more than six weeks and still not started treatment, and 217 patients had been waiting for more than 12 weeks without starting treatment. As is familiar when we are looking at issues around mental health, it is the people waiting for long periods who we have to reflect on.
We have also heard about the regional variations. This has been an important debate for highlighting them. The right hon. Member for North Norfolk reported in detail on performance in the south region, which is the best-performing region. YoungMinds reported that the north of England is the worst-performing region. It has the lowest proportion of pathways completed within two weeks of referral.
It is clear that the Government have not invested in the staffing and resources needed to deliver the full package of NICE-evidenced support and treatments. It is clear that many local areas are facing challenges in implementing the early intervention in psychosis access and waiting time standard because of those substantial variations. What is the Minister’s assessment of how those challenges can be overcome? That is one of the most important questions from today.
We have had a briefing this morning from NHS England on the NICE-recommended interventions and the scoring matrix to be used, including on carer support. The hon. Member for Airdrie and Shotts mentioned carers, but I will discuss the subject a bit more fully. Psychosis can cause considerable distress not only for the person experiencing it, but for their family members who are carers. Why are the targets for carer support so low within that NICE evidence package? The figures that NHS England sent to us this morning show 38% of carer support taken up against targets of 25%, 50% and 75% for 2017-18. Take-up of support by fewer than four out of 10 carers is a poor achievement, given the impact that psychosis can have on unpaid carers.
I do not want to miss the opportunity to question the Government about the shameful way they have been treating carers in recent months. I have raised this before with the Minister, but the Government have abandoned their promised carers strategy after 6,500 carers gave up their time to contribute to the consultation. I know it is not her responsibility any more, but it was at the time, and she gave this reply to me in December. She said that,
“it is very important to pull together exactly what support there is at present and then respond to that, and we will publish our action plan in January”.—[Official Report, 7 December 2017; Vol. 632, c. 1239.]
It is now the middle of March, and we have no carers strategy and no carers action plan. Will the Minister raise the matter with her colleague the Minister for Care, the hon. Member for Gosport (Caroline Dinenage)? I suggest that the Government stop treating carers in this shabby way. In terms of this debate, will the Minister look at the low targets for carer support in the targets for early intervention in psychosis? Will she set a more ambitious target to provide higher levels of support to carers of people experiencing psychosis?
My hon. Friend the Member for Liverpool, Wavertree rightly raised the issue of perinatal mental ill health. As we have just had International Women’s Day, I wanted to refer to the 2003 women’s mental health strategy. It was a comprehensive strategy for women’s mental health issues from the previous Labour Government. I was glancing at the document on my iPad, and section 8.8 is about women with perinatal mental ill health. What has happened to the previous Labour Government’s comprehensive women’s mental health strategy? Does the Minister agree that perinatal mental ill health and other aspects of women’s mental ill health merit a gender-specific approach? Will the Government start to think about implementing that?
I want to briefly touch on one further area of concern—the lack of good-quality data. All of us involved in these debates on mental health have to spend a large amount of time asking parliamentary questions that do not get answers because the data are not there. The right hon. Member for North Norfolk is to be commended for his freedom of information survey. In 2016, Public Health England produced a report into data around psychosis and found what the Centre for Mental Health has described as “massive inequalities” in care, which is just what we have been hearing about in this debate. The report found that the proportion of people who have experienced psychosis who have a comprehensive care plan ranges from around 4% in some local areas to 94% in others. The evidence was there in 2016 that massive variations existed.
As the Centre for Mental Health put it:
“The report is as remarkable, however, for the data it cannot present as for what it can. There is very little information about the lives of people with psychosis and how far the services available help them to recover”.
The report was unable to give any information about the prescribing of anti-psychosis medication. Shockingly, it found that there were no known recent robust estimates of local numbers of people with psychosis. How can we deal with recruitment and staffing issues and the resources plan that Members have talked about if that is the state of the data?
I appreciate that there have been some improvements in mental health data in recent years, but it has been very slow progress and there are still many gaps. The Government talk about parity of esteem between mental and physical health, but it is hard to imagine a situation where we did not know the number of people in a local area being diagnosed with different cancers. That situation just would not arise. When I meet campaigners who work on mental health issues, the lack of readily available data is a constant and major concern.
The former Under-Secretary of State for Health, Nicola Blackwood, liked to talk about accountability through transparency. She said:
“One of the ways in which we are ensuring that money reaches the frontline is through driving accountability through transparency. Mental health services have lagged behind the rest of the NHS in terms of data and our being able to track performance. That is why the NHS will shortly publish the mental health dashboard, which will show not only performance but planned and actual spend on mental health.”—[Official Report, 27 October 2016; Vol. 616, c. 513.]
We still have that severe problem. Despite the publication of the mental health dashboard, we have a far less clear picture for mental health data than we do for physical health. We will never be able to plan, resource or move through these issues unless we do. What is the Minister doing, and planning to do, to make better data available across mental health services, particularly for psychosis?
I briefly return to Louise’s story. She was lucky. She said in her blog that she received good-quality treatment. Despite going through some difficult times, when she wrote the blog she was positive about her future, her relationships and her career. She was looking forward to starting a family. If we want to live in a society that has more positive stories like Louise’s, we have to begin to take a much more preventive approach to mental health. Getting the right support can lead to brighter days.
The Parliamentary Under-Secretary of State for Health (Jackie Doyle-Price)
It is fitting that you are in the Chair for this debate, Mrs Moon, given your interest in these matters. I am grateful to the right hon. Member for North Norfolk (Norman Lamb) for securing this debate. It is always with some mixed feelings that I face him across the Chamber, not least for the reasons that the hon. Member for Liverpool, Wavertree (Luciana Berger) pointed out. However, this has been an extremely well-informed debate on both sides. I have not disagreed with very much of what has been said. It is great to respond to such a passionate debate, among people who genuinely care about the issue.
The right hon. Gentleman is absolutely right that improving access and waiting times for early intervention in psychosis must be a top priority. I will set out some of the things that we are doing, which I hope will reassure him of the direction of travel. He is rightly holding us to account on where we are. I quite agree that it is not good enough, and assure all Members who have participated in today’s debate that I am not complacent in any way about any of this.
First, I want to set the context. The hon. Member for Liverpool, Wavertree often challenges me that we have not achieved parity of esteem. I do not pretend that we yet have, but we have embarked on a genuinely transformational programme to raise the treatment of mental health issues to parity with physical health. However, that is essentially a cultural change, which will take time.
I want to set out that we do have a plan, to reassure the hon. Member for Stockton South (Dr Williams). We have now got to the stage in that plan where we have to be a lot more outcome focused, and really get to the grit of what is happening on the ground. As the right hon. Member for North Norfolk set out, there is widespread regional variation. We have to ensure that we are not only increasing access, but doing so in a consistent way. There are lots of challenges in doing that. People have raised the issue of the workforce. Obviously, we cannot magic up a workforce overnight, but there are plans to address that issue.
The right hon. Gentleman mentioned the Secretary of State’s weekly meetings where we interrogate health officials. I assure him that we are reviewing each individual mental health trust to scrutinise their performance, and the Care Quality Commission advises us on a weekly basis about that performance. I assure him that it is improving—it has massively improved, in fact—but there is still more to be done.
When we bring in standards and targets, the risk is always that we build in perverse incentives, and that institutions can game the system. Until the data we collect is embedded properly, there will be some risk of that, but we have to be on it. I acknowledge the right hon. Gentleman’s pivotal role in introducing those standards, and all his work in Government to drive this agenda. Having inherited his mantle, I look forward to him continuing to challenge me to deliver what he set in train.
Given that time is short, I want to home in on what we are doing to implement the waiting time for early intervention. The latest data that we have shows that we are exceeding the target of 50% for access to early intervention in psychosis services, with more than 70% of patients starting treatment within two weeks in the most recent quarter. I know that the right hon. Gentleman has rightly raised concerns about his freedom of information request on mental health trusts. Only 29% of 49 trusts that returned the request could expressly confirm that they were able to deliver the full NICE-concordant packages of care to their patients. To reassure him, the moment at which he made his request was at the start of the programme.
Jackie Doyle-Price
It was measuring the kick-start of the programme. I would hope that if the right hon. Gentleman repeated that in a year’s time, he would get a very different picture. I assure him that we are making progress, but I invite him to continue his scrutiny, because sunlight is the best disinfectant, as I often say.
The hon. Member for Stockton South asked whether we had a plan. We do. The issue is that our plan is often based on inputs and structures. It is only when we get the kind of analysis that the right hon. Member for North Norfolk applies that we can see whether an input is really delivering the outcome that we want. Using our tools of leadership, we are now ensuring that we are holding everyone’s feet to the fire to deliver those standards, and that we are actually implementing the plan that we have in place.
To give some detail on what that plan is, we are investing an initial recurrent £40 million per annum for EIP in clinical commissioning group baselines. That will rise to £70 million recurrently by 2021. I have heard the message loud and clear from all hon. Members that they want to be reassured that that money is reaching the frontline. We will go away and think about how we can best illuminate that. We are funding clinical networks in all regions to provide clinical leadership for implementation, and to support local efforts across the country. Those networks provide a great deal of support on sharing best practice, training and innovation. Quite often, sharing best practice can be the best way of driving improvement.
We are investing in a national team to co-ordinate regional teams and to support the monitoring of delivery through the regions. We are developing the data set to illustrate how much progress we are making and how the interventions are being delivered to people. That will allow commissioners and providers to prioritise how they develop and improve their services in line with the National Institute for Health and Care Excellence guidance. What is especially welcome is that there is now a recognition of the link between mental and physical health in NHS England’s work, although we have to continue to build on that.
The hon. Member for Liverpool, Wavertree rightly raised the issue of support for new mums. I am glad to hear that she has visited mother and baby units, as I have. Seeing the reality of that treatment shows how important that service is. We continue to prioritise investment in tackling post-partum psychosis. We are investing £365 million into those services, and are currently looking at issuing contracts for four new mother and baby units. She asked me some specific questions about the number of beds. I will write to her on that, because although it might seem like a simple question, it is slightly more complex. As she has rightly highlighted, it is a very vulnerable time for new mothers. We must ensure that we have services available across the country, as we still have some geographical discrepancies in the level of provision. I highlight the fact that we are putting more support for new mums in the community, based around the whole ethos of early intervention. I think that is extremely important.
I could say an awful lot more, but I promise hon. Members that all those who spoke in today’s debate have given me many things to think about, and I will reflect on them. I look forward to debating all these measures regularly. It remains the Government’s priority to deliver a step change in how we provide services for poor mental health. That is a cultural change, and it will take time. That is why we have it as a five-year forward view. We will make the investment in additional staffing resources to deliver that step change, but I have no doubt that all hon. Members in this room will continue to hold my feet to the fire to make sure that we deliver.
Norman Lamb
I thank the Minister for that response. I ask her to write to all hon. Members who have taken part in today’s debate, responding to each of the issues that have been raised, so that we get clear answers on them all. I would highlight two points. First, regional implementation plans are critical in making things happen. Secondly, a point was made earlier about the sustainability and transformation partnerships. If a significant proportion of them simply do not include a commitment to meeting the standard by 2020, that is basically a recipe for disaster. That has to be addressed.
I thank the other two Front-Bench spokespeople for their really excellent contributions. The point that was made about suicide was absolutely right: we can reduce the suicide rate through this programme in particular. I also thank the three Back-Bench contributions, which were all really excellent and well informed, and covered such important ground. In the Minister’s response, I would like her to deal particularly with the YoungMinds point about the calculation of how long people are waiting. I would like her to address the issue about only a quarter of STPs making that commitment by 2020, and the issue of post-partum psychosis that was correctly raised by the hon. Member for Liverpool, Wavertree (Luciana Berger).
Finally, I join others in expressing my appreciation for some incredibly inspiring staff who work in these services, and who demonstrate how lives can be transformed through doing the right thing with the necessary investment. The plea to the Minister is to make sure that the investment and implementation are there to take advantage of this opportunity.
Question put and agreed to.
Resolved,
That this House has considered access and waiting time standards for early intervention in psychosis.
GKN: Proposed Takeover by Melrose
(6 years, 9 months ago)
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Mr Adrian Bailey (West Bromwich West) (Lab/Co-op)
I beg to move,
That this House has considered the proposed takeover of GKN by Melrose.
I start by saying what a pleasure it is to serve under your chairship, Mr Stringer. I think it appropriate to mention as a matter of interest that, as a trustee of the Industry and Parliament Trust, a few years ago I undertook a secondment at GKN and witnessed some of its activities throughout the world at first hand. It is also appropriate that I mention Professor David Bailey of Aston University for the work he has done on this issue, which in part informs my comments today. I know there are other speakers with specific constituency interests who want to participate in the debate, so I will try to leave plenty of time following my introduction for them to make appropriate and relevant contributions.
I sought this debate because of the strategic interest of the issue for British manufacturing, but also because of its wider implications for long-termism, investment and responsible capitalism. In a former incarnation, when I was Chair of the former Business, Innovation and Skills Committee, we held inquiries into the Kraft-Cadbury takeover and the proposed Pfizer-AstraZeneca takeover. They flushed out many of the relevant issues. They are now even more relevant and are highlighted by this proposed takeover. Although GKN may be a rather different sort of manufacturer from Kraft and Cadbury, or Pfizer and AstraZeneca, the issues are very similar.
Following the deliberations of the Select Committee on those issues and its recommendations, there was an enhancement of the takeover code, particularly in the context of post-offer undertakings, which arose from Kraft reneging on the commitments it had made to Cadbury during the course of negotiations. I am pleased to say that that issue was highlighted in the inquiry by my hon. Friend the Member for Leeds West (Rachel Reeves) on this particular takeover. I note that my hon. Friend commented this morning that Melrose, in the context of this takeover, has refused to commit itself to the sort of post-offer undertakings that would be legally binding and potentially give reassurance to GKN shareholders.
Mr Bob Seely (Isle of Wight) (Con)
Does the hon. Gentleman agree that in many cases Melrose aims to own businesses for only between three and five years, and during that time seeks to maximise shareholder value, selling on the parts of those businesses that it sees as underperforming, sometimes without regard to the long-term benefit of the business and its individual plants? Therefore, a takeover by Melrose may mean a break-up of GKN. Does he share my concerns and those of others like me, who are fearful for the GKN plants in their constituencies? There is one in the Isle of Wight.
Graham Stringer (in the Chair)
Order. I would remind Members that interventions should be brief.
Mr Bailey
The hon. Gentleman has put his finger on an issue that I will develop at some length during my speech. He is absolutely correct.
Perhaps I should state that, from a philosophical or ideological point of view, I am not anti-private sector. I am not anti-City. I recognise that globalisation is a potential force for good, even though it does throw up some considerable challenges and needs to be managed. I feel, however, that the role of Government must be to ensure that where vital national interests are at stake, the private sector is regulated in such a way that those interests prevail over what are often the short-term or illusory interests of the shareholders involved or the myriad City professionals and advisers that tend to make a lot of money from takeover bids. Some of the issues that arise from this proposed takeover bid are specific to GKN and Melrose, but others throw up broader, national issues.
GKN is a company of enormous strategic importance to the British economy. In 2015, it made sales of more than £16 billion worldwide and contributed £1.36 billion to our economy. It is one of the major—perhaps the major—tier 1 providers within the automotive and aerospace industries.
Mr Jim Cunningham (Coventry South) (Lab)
My hon. Friend has brought a timely debate. I have worked in defence industries. The Secretary of State has got to look at this in the context of the national interest, because the real danger is that the Americans will hive it off piece by piece. The hon. Member for Isle of Wight (Mr Seely) is right when he says that Melrose only keeps businesses for about five years, makes a profit for shareholders and is gone. This is probably one of the last bastions of Britain’s independent defence industries. More importantly, there are 6,000 jobs at stake. No doubt Melrose has its eye on the pension scheme as well—most of them do.
Mr Bailey
My hon. Friend anticipates some of the points in my speech. I agree with him completely.
GKN holds the position as one of the world’s greatest tier 1 providers in part because of the number of portfolios it holds worldwide with other joint venture companies, as well as with British companies, but also because of its research, development and technological advances, particularly in the automotive and aerospace industries. The UK aerospace sector is the largest in Europe, second globally to the USA. It supports more than 210,000 well-paid jobs in this country and delivers £29 billion in exports, generating £32 billion in turnover each year. GKN, as the only large tier 1 supplier, has a strategic role in the growth of the sector and, as I said earlier, it makes a total contribution to the UK economy of more than £1.3 billion.
GKN’s identity as a sector leader is largely based on the large amount it invests into research, development and technological advances. The distinctive focus on research has for decades been the cornerstone of the company. By its very nature, research and development involves long-term investment projects. The benefits of such programmes are often enjoyed only decades or even longer after the investment has started.
Typically, the motor industry has a product cycle of seven to 10 years, but at the moment major car manufacturers are looking for long-term partners to invest in future generations of electric vehicles. Because of its long-standing association with those companies, GKN is currently well placed to be a partner in such ventures. The aerospace sector has a product cycle of 20 to 40 years, again highlighting the importance of a company investing long term with the companies it serves. Since 2000 GKN has invested more than £561 million. That has created long-term, well-paid, highly skilled jobs that are of particular benefit to our regional as well as our national economies.
Rachel Maclean (Redditch) (Con)
I agree with the speech the hon. Gentleman is making and his excellent points. Will he touch on the issue of the productivity gap between the south-east and the midlands? We are midlands MPs, so is he concerned about that in relation to the takeover?
Mr Bailey
Absolutely. The hon. Lady puts her finger on a very important point. Productivity in the motor and aerospace industries is way ahead in manufacturing overall, and in other types of business as well. Anything that damages such industries will damage the level of productivity in our economy, which we all know is a matter of considerable concern.
GKN not only invests in research and development in its own companies, but partners universities up and down the country—Leeds, Manchester, Warwick, Nottingham and Sheffield, for instance—again helping to underpin regional economies, driving research excellence and giving students the level of skills that they need and an involvement in manufacturing that is absolutely crucial for developing our future skills base. As the hon. Member for Isle of Wight (Mr Seely) mentioned, the Melrose business model appears to be fundamentally incompatible with that approach.
I was chided by the Melrose chief executive for calling Melrose a hedge fund company. It says it is not; it says it is a turnaround company. In the Business, Innovation and Skills Committee it was called an asset-stripping company. Whatever we call it, it has a short-term strategy reminiscent of the way in which hedge funds work. It aims to buy and sell companies within a window of between three and five years. Despite protestations that it does keep companies for the longer term, one example that must be considered is that of Brush of Loughborough, a UK company that makes gas turbines. It was taken over by Melrose 10 years ago and is failing. Melrose has been unable to sell it on in its desired turnaround window because of the huge structural change in the sector owing to the move away from fossil fuels. Melrose has failed to invest in development to mitigate the changes and save employment within the company. It has already halved its workforce and has recently announced another 270 job cuts.
Although Melrose has invested £230 million in research and development in various companies over the past five years, the significant thing is that that is less than it paid its top 20 executives in the past year alone. That does not seem to be indicative of a company that is committed and wedded to long-term investment in research and development.
Many Members will have seen the announcement from Tom Williams of Airbus. The Financial Times has today published an interview with Tom Williams, the chief executive of Airbus, which is one of GKN’s biggest customers. He said it would be “practically impossible” to give new work to the engineering group if Melrose succeeded in its hostile bid. He cited the lack of “strategic vision” and the lack of long-term investment owing to the short-term ownership model. We could not detect a more telling intervention and substantiation of the point being made. We must remember that Airbus is only one customer of GKN, but Airbus’s public statement sends a signal to many other strategic customers of GKN.
Another cause for concern is the relative size of the companies. Last year alone GKN had revenue in excess of £10 billion, compared with just over £1 billion at Melrose, which proposes to finance its bid by borrowing £3.5 billion.
In addition, GKN employs 60,000 people across 30 countries, a level of personnel management that Melrose has no comparable experience of. As part of its takeover bid, Melrose has revealed plans to sack the entire board of GKN. Melrose as a company would double in size, but with no commitments to further capacity and an absence of the management expertise that has historically been part of GKN. Furthermore, Melrose has never taken over a company that specialises in aerospace manufacturing, which is perhaps one of the most concerning issues of all.
GKN’s prominence in the aerospace sector means it has a unique stake in the maintenance of our national security. As a leading world tier 1 supplier, it operates on a lot of UK defence platforms. As its order book with the Ministry of Defence is relatively small, Melrose has claimed that that issue is not significant. It ignores the fact that many of GKN’s customers are foreign companies that provide defence equipment that is subsequently procured by this country, so there is a much greater strategic involvement than the figures quoted by Melrose suggest.
GKN’s military aerospace involvement includes Lockheed Martin, Lightning, Raptor, Boeing, Eagle, Hornet, Harrier II, Eurofighter, Typhoon, Panavia, Tornado, Saab, Gripen and the new B-21 engine—a huge range of engines and vital components in a vast range of our defence components and needs for the future. Significantly, our own Defence Secretary felt the need to raise this issue with the Department as he no doubt responds to concerns that lie within the industry. I hope the Minister will refer to that when he sums up.
The US Government are highly likely to review any takeover via their Committee on Foreign Investment. The UK has a clear interest and should do the same. The public interest test applies under the national security element of section 58 of the Enterprise Act 2002, and the UK Government have the power to consider whether the takeover is in the public interest.
Mr Cunningham
Earlier, I mentioned the fact that GKN is one of the few companies that now gives Britain its independence in defence terms. It has been known for years—and if we think about it, it is a matter of the national interest—that, for example, Pratt & Whitney has always been after Rolls-Royce. That gives an indication of what is likely to happen at GKN if Melrose takes it over and asset-strips it. American companies will come in, and we will no longer have an independent role to play in manufacturing our own defence equipment.
Mr Bailey
My hon. Friend anticipates, with great foresight, some of the potential developments if the takeover were allowed to happen.
I believe that there are broader issues, however. The GKN takeover is a case that goes well beyond defence. It is relevant to our productivity, as the hon. Member for Redditch (Rachel Maclean) said, to our economy and research capabilities, and to the jobs and pensions of about 6,000 people in the UK. I am not here to argue that GKN is a perfect company and perfectly managed—that issue is widely acknowledged; but in view of the contribution that it makes to our industry as a whole, the highly paid and highly skilled jobs that it provides, its innovative research-led developments in key sectors of the economy and its commitment to maintaining a strong manufacturing industry in the UK, its future development needs to be carefully thought through, balancing the interests of shareholders with the vast number of other stakeholders involved.
Neither the takeover, nor a hastily contrived reorganisation in response to it, is the best way to deal with the problems. A solution centred on preserving shareholder value at the expense of all else would be disastrous for regions, such as the west midlands, that depend on manufacturing, and for productivity and the economy. The far-reaching implications of the proposed bid should prompt the Secretary of State to look at widening his powers of intervention on takeovers to include broader considerations of public interest. I appreciate that it was a Labour Government who withdrew that consideration, in the Enterprise Act 2002, but since then the global nature of the world economy has changed rapidly. Welcome adjustments were made to the takeover code relating to post-offer undertakings following the Kraft-Cadbury takeover. However, it is time to re-examine the situation, and to seek a more robust set of criteria that acknowledge the integrated investment and research-led nature of the 21st-century global economy, to ensure that the globalisation that benefits many areas does not decimate others. That could be done by broadening the criteria for defining the public interest, from the existing four, by increasing the percentage of shareholders who have to vote in favour of a takeover, or in other ways. It is time that the question was re-examined, to get a more robust set of criteria, which would preserve vital national interests.
In answer to a question on 7 February, the Prime Minister said at column 1494 that she would act in the “national interest”; and in August 2016 she launched her Cabinet Committee focusing on delivering one of her Government’s top three priorities—an economy that works for everyone, with a strong industrial strategy at its heart. The case of the GKN takeover provides the Prime Minister with a chance to prove the strength of her commitment to her self-defined mission to make Britain a country that works for all.
Several hon. Members rose—
Graham Stringer (in the Chair)
Order. Five Back-Bench Members want to speak, and the arithmetic is straightforward. I intend to call the Scottish National party spokesperson at 4 o’clock, so I hope that people will respect that time.
Rachel Maclean (Redditch) (Con)
It is a pleasure to speak under your chairmanship, Mr Stringer. I will of course stick to the timing, but if I stray over, please do not hesitate to call me to order. It is a great pleasure to follow the hon. Member for West Bromwich West (Mr Bailey). I heartily congratulate him on securing this extremely important debate. I agree with virtually everything he said, and it is a pleasure to have that experience about a speech made from across the Chamber. I see other midlands MPs in their places; we have many common interests in this important matter.
GKN has a 250-year history and has played a significant part in the manufacturing heritage of the midlands for many years, since it was established as an ironworks in 1759. In Redditch we are proud to host the global headquarters of that multinational business. As the local MP, I have engaged with it through visits and through discussions of how it will continue to work proactively in the local community, of which it is a great supporter. That is a responsible approach and GKN is leading by example.
Unfortunately, when GKN announced its results in 2017, although the latest annual sales figures were up, its trading margins had started to fall. It was evidently vulnerable and it set out to launch a new strategy to boost the company. Once it became clear to me that GKN was under threat of a hostile takeover, I spoke without delay to the company bosses and was told in no uncertain terms that all 260 employees in Redditch, many of whom are my constituents, would lose their jobs if Melrose were to be successful in its takeover. It is for those 260 people that I speak today. As the hon. Member for West Bromwich West has said, they are among a small number around the world. I welcome the Government’s recent move to strengthen the takeover rules, following the report from the Takeover Panel. It is welcome, and is in line with the Prime Minister’s manifesto commitments. I ask the Minister to update us on the consultations and proposals. My constituents and GKN employees would welcome further clarity.
The hon. Member for West Bromwich West, who spoke so well, covered most of the points that I wanted to make, and I shall confine my remarks to a few key areas. I agree that the takeover appears to be opportunistic, and there is great concern that the offer would undervalue GKN’s business culture, which it fought hard to build up for many years. GKN has invested heavily in research and development expenditure, skills and engineering jobs, all of which are badly needed in the UK, particularly in the midlands. Its work and portfolio have been built up with years of experience, which are not matched in Melrose. We in the midlands are proud of our record—our heritage—of making things.
GKN may have lost its way, up to a point, in recent years. Perhaps it is not performing to the full extent of its capability, but it has a focus on a long-term business model. That is a welcome contrast to the short-termism of Melrose, which is not seen as a sustainable long-term investor in the best interest of the company. Indeed, GKN’s former CEO, Nigel Stein, resisted splitting up the firm because he felt that the expanding aerospace business provided a degree of security against the typically cyclical nature of its auto side. It made sense to grow, given the increasing overlap of aerospace and automotive, and the fact that a bigger business is better able to resist takeovers—witness what happened to Cadbury after it separated from Schweppes.
I have written to the Secretary of State and have met him to put those concerns to him. I fully understand that, as he has explained to me, he is unable to comment directly on the matter, owing to the quasi-judicial nature of his role. I understand that any comments that he made could be construed as affecting the course of the takeover and could undermine and invalidate it. However, I am calling on the Minister who is responding to this debate to provide any further clarity he can. The Business, Energy and Industrial Strategy Committee, led by its excellent Chair, the hon. Member for Leeds West (Rachel Reeves), is looking at the matter and would, I am sure, welcome clarity. I see that a fellow Committee member, the hon. Member for Inverness, Nairn, Badenoch and Strathspey (Drew Hendry), is present for the debate. It was interesting today when GKN’s biggest customer announced its view. I believe it is quite rare for not only a customer, but the board of pension trustees and the entire board of directors to reject a bid in that way.
I want to touch on one matter that I believe is in the takeover code, which is that a company that is going to take over a company must provide assurances as to what it will do. Melrose has tried to provide assurances to our Select Committee and in the public arena, and it has sent letters to me—I do not know whether the other members have received them. It has pledged to keep GKN’s headquarters in the UK and maintain the same levels of research and development funding, but we do not know what those pledges are based on and what is behind them. How can we be certain that they will be adhered to and delivered? That is a matter of great concern to GKN and people in Redditch. Since GKN’s sale of its Driveline business to Dana, there has been a lot of turbulence inside the company. A number of issues are affecting GKN employees in Redditch and are causing them to worry.
In Melrose’s defence, it has said that it is a people-focused company with an outstanding track record on pension schemes, and it has indicated that GKN’s current schemes will be safe. It has said that it invests more in R&D than GKN does, and that its actions are in line with the Government’s industrial strategy. It has said all those things—I am putting them on the record to be fair to it—but I want to see more evidence of that because the weight of evidence is not currently in its favour. We must find a balance between a short-term cash injection and a long-term strategic overhaul, and it must be managed by those with knowledge of and expertise in this industry.
I believe, as the hon. Member for West Bromwich West said, that the Government are responsible for supporting the growth and productivity of this sector and for creating the right business environment. That would have so many benefits for our economy in the midlands, for our productivity and for the whole skills piece. We are encouraging young people in our communities to set out a path for themselves in the fantastic science, technology, engineering and maths subjects. We have skills gaps in those sectors in our country, including in the midlands. GKN is a great example of a company that has brought on young people and promoted such careers, but I fear for the future of that.
The evidence in front of me does not convince me that this takeover bid is in the best interests of the company, the country’s long-term industrial strategy and the shareholders. There are important questions to be answered about how we define our national interest and defence.
Richard Burden (Birmingham, Northfield) (Lab)
I thank my hon. Friend the Member for West Bromwich West (Mr Bailey) for securing this important debate. I echo the serious concerns that he and the hon. Member for Redditch (Rachel Maclean) raised about the bid for the proposed takeover by Melrose of GKN. GKN employees raised similar concerns when I recently met them at a lobby organised by Unite the union just a couple of weeks ago, and they are echoed in my constituency, where GKN Aerospace employs 220 people and is a world leader in commercial and military flight-deck transparencies. It provides toughened glass for flight-deck windows, and specialist safety glass to more than 50 programmes. There is no better illustration of why this takeover bid has national security implications than GKN Aerospace’s military involvement at Kings Norton.
I do not need to remind the Minister of the importance of the UK’s aerospace industry. That is why we need to take the concerns raised by the industry seriously. ADS, the leading organisation representing the aerospace sector, warned that what happens to GKN is of critical importance to the wider sector. My hon. Friend the Member for West Bromwich West rightly mentioned the unprecedented intervention of the chief operating operator of Airbus, who said yesterday:
“It would be practically impossible for us to give any new work to GKN under such an ownership model when we don’t know who will be the long-term investor.”
GKN is also a key strategic player in the automotive sector. Driveline does pioneering work on components for the ultra-low-emission vehicles of the future. I am aware that GKN’s management is proposing to split off that part of the company through the merger of Driveline and the United States firm Dana. On the positive side, there is the prospect that that will create an engineering powerhouse in the automotive sector on a global scale. I very much hope it achieves that prospect, but I do not want to be starry-eyed about it. Ministers should seek assurances from GKN and Dana about the long-term commitment of the new merged company to the UK, including on jobs and our research and development base.
Also, if GKN Aerospace is left as a stand-alone company, I endorse west midlands industry analyst Professor David Bailey’s call—my hon. Friend is right to pay tribute to his work on this issue—for the Government to consider taking a golden share to protect the public interest in the company for the long term.
None of that makes me any warmer about the Melrose alternative. Melrose claims—the hon. Member for Redditch mentioned this—that it will
“return GKN to be an engineering and manufacturing powerhouse”,
but its track record of taking over and selling on companies does not give me confidence that its takeover bid is in the interests of the long-term future of GKN or British industry, whether in the aerospace or automotive sectors. That is why there is such cross-party opposition to the takeover bid in this House. I am pleased that Birmingham City Council’s leader, Councillor Ian Ward, and its cabinet member for jobs and skills, Councillor Brett O’Reilly, have warned about the consequences of the Melrose bid for the industrial base of Birmingham and the wider west midlands. I am pleased that they have been joined by the West Midlands Mayor, who has added his voice on the subject.
Industry analysts have observed that such a takeover bid would not be allowed to go ahead in France or Germany. That is yet another reminder, if we needed one, of why the UK’s takeover laws need urgent reform, including the public interest test, against which takeovers are assessed, and the majorities needed to approve takeovers. Why cannot we require a majority of 75% in this country, as Germany does? We must ensure that institutions whose interests are intrinsically short-term, such as hedge funds, are not able to decide on issues that affect the long-term future of key, strategic companies in our economy.
That is for the future, but GKN’s extensive role in the UK defence industry indicates, as my hon. Friend the Member for West Bromwich West said, that this takeover bid raises national security issues, which means that the Government already have the grounds and the responsibility to intervene under section 58 of the Enterprise Act 2002. No doubt the Minister will say that, because the Secretary of State has a quasi-judicial role on these matters, he is prevented from saying much today, but I put this to him: it is not what Ministers say about this takeover bid that is important; it is what they do. They should intervene and block it.
Mhairi Black (Paisley and Renfrewshire South) (SNP)
I congratulate the hon. Member for West Bromwich West (Mr Bailey) on securing this debate. I echo many of the comments that have been made. It is clear that there is a consensus that GKN is at the cutting edge of the UK Government’s industrial strategy and plays a key part in that. We have heard that it is involved in sensitive programmes, and that it provides technology for a US defence company. I say that because the Royal Air Force has ordered 138 of the F-35B fighter jets made by that company. That is worth noting. The lifespan of some of those products could be up to 50 years from initial development, and that requires continuous maintenance. We already know that the London-based company Melrose has a record of buying companies, holding on to them for a few years and then stripping them. Given the nature of the technologies we are talking about, it makes no national sense to allow a hostile takeover to happen.
GKN operates in more than 30 countries and has 58,000 employees, including 6,000 in the UK. Even the workers are expressing concerns that a takeover by Melrose could leave the Government’s industrial strategy in tatters and see GKN sold off piecemeal, bit by bit, with jobs cut or shipped abroad. The warnings could not be clearer. Even the Secretary of State for Defence recently said before the Select Committee that he felt it would have been remiss of him to fail to express concerns. The merger could see parts of the business that provide components for military equipment falling below standards. The Committee on Foreign Investment in the United States, a US regulator relevant to military implications, must give approval, but GKN has warned that it does not believe that Melrose will be able to obtain that approval within the required time. As the hon. Member for Birmingham, Northfield (Richard Burden) said, we are talking about a potential and unnecessary risk to national security.
Under the Enterprise Act 2002, a number of authorities have the statutory power to intervene in takeovers. The power can, rightly, be exercised only on certain specified grounds. There are three main grounds on which certain authorities can stop takeovers. The Secretary of State for Business, Energy and Industrial Strategy may intervene on the grounds of national security and of financial stability. We have already established that national security is an issue, or at least an argument, but there is also a clear argument for financial stability.
As if the scale of what is at stake were not argument enough to act, flinging in the political chaos and uncertainty surrounding our political future due to Brexit ensures that the stable continuation of a major employer is more important than ever. We only need to look at the pensions aspect. The chief executive of the Pensions Regulator wrote to the Work and Pensions Committee to express grave concerns about the GKN pension scheme. We are trying to promote pensions and to convince people to ensure that they are secure in later life, because we recognise there is ticking time bomb, which could be disastrous, but at the end of December the GKN pensions deficit officially stood at £700 million. GKN warned that Melrose’s intention to ramp up the debt would lower its ability to support the pension scheme. That seems to be totally counterproductive, given the language continually used about pensions in particular.
Surely, before any progress can be allowed, Melrose must submit its takeover plans to the Pensions Regulator to show that the security of the retirement scheme will remain intact, and that is even without all the other arguments I have given. The reality is that the Government have the power, the reasons and the support to act. The question is, do they have the will?
Jack Dromey (Birmingham, Erdington) (Lab)
It is a pleasure to serve under your chairmanship, Mr Stringer.
Guest, Keen and Nettlefolds has a ring to it, and GKN is an iconic engineering company, a British success story with a history stretching back over 259 years, founded in south Wales. Three years ago, I remember a man who had worked 44 years for GKN calling it “as British as the royal family”.
Here in Britain, GKN employs 6,000 people across major sites in Filton near Bristol, Birmingham and, in particular, the Isle of Wight. It now employs 58,000 people worldwide, with companies and joint ventures in more than 30 countries. Crucially, GKN undertakes the largest portion of its research and development work in the UK, with the majority of aerospace R&D taking place in Filton and automotive R&D in Abingdon.
I welcome the all-party approach to this issue, and the hon. Member for Redditch (Rachel Maclean) is right to say that we talk with pride about GKN, its workers and what it does—so do I. The Driveline factory is in my constituency—800 excellent men and women who serve the industry and the nation well.
The takeover puts a great British engineering icon into jeopardy, because of not only the history of Melrose but what is happening with some of GKN’s major customers. Reference has already been made to the revelations made only yesterday in the Financial Times about what Airbus has made abundantly clear. In the words of its chief operating officer:
“The nature of our industry is one that requires a commitment to long-term investment and strategic vision...The industry does not lend itself to shorter-term financial investment which naturally reduces R&D budgets and limits vital innovation.”
As my hon. Friend the Member for West Bromwich West (Mr Bailey) rightly said, typically we are talking about development lines and R&D strategies that stretch over 20 or 30 years, and the Airbus chief operating officer went on:
“It would be practically impossible for us to give any new work to GKN under such an ownership model when we don’t know who will be the long-term investor.”
He is right and—I can say this with confidence—others will follow in the days to come.
As the hon. Member for Isle of Wight (Mr Seely) said earlier, Melrose has a chequered past with regards to the companies it has owned. For example, Melrose owned Dynacast from 2005 to 2011, during which time it moved much production overseas to—in its words—“cheaper countries”. Melrose closed its Alcester site the same year that it took over the company and had no UK presence between 2005 and 2008. In July 2008 it acquired the FKI group, of which manufacturing firm Brush is part. Melrose began selling off parts of the group in 2009 and sold off about 15 businesses between 2009 and 2014. It implemented severe job cuts at the Brush plant in Loughborough, taking the number of employees down from 1,200 to 600, with a further 270 redundancies announced this year, again moving production overseas and hollowing out a once great company.
One of the workforce’s big concerns, which I share, is pensions. As the hon. Member for Redditch said, like many UK companies GKN has a significant pensions deficit that it is working hard to reduce. By agreement with its workforce and their trade unions, in 2017 the GKN group pension scheme was closed to future accruals. A contribution of £250 million was paid into the scheme. Crucially, on assessment of the company’s pensions covenant, the scheme was found to be the “high end of good”. No concern was expressed about GKN’s ability to deal with the pensions problem.
Significantly, however, Melrose has not given the guarantee it was asked for. On the contrary, its whole approach has been to increase debt significantly. The consequences of that will be to weaken the strength of the covenant and to put at risk the pension scheme. In the aftermath of tragedies such as Carillion and British Steel, the last thing we need at an iconic British engineering company is such a problem befalling the workers of GKN.
To turn to the defence issue, GKN Aerospace has 52 manufacturing locations across 14 countries and turnover of £3.5 billion, much of it defence work. Reference has been made to GKN Aerospace and what it does here and abroad. It supports the British armed forces, such as with the Typhoon, the F-35, the P-8, the A400M, the Chinook, the Apache and the MQ-9. Equally, many of the other platforms that GKN Aerospace is a part of support the armed forces of NATO allies. GKN is a strategic supplier of defence platforms, making canopies for the Typhoon, for example, or being a strategic supplier for the F-35. In factories all over Britain, its role in support of our armed forces and that of our NATO allies is critical.
In a former life, I was chairman of the defence unions and worked closely with the Ministry of Defence. Time and again at events and at first hand, I saw GKN on the ground with that intimate relationship with the Ministry of Defence and our allies. That is why I say to the Minister that he has the power to intervene. The Secretary of State has the power to intervene under section 52 of the Enterprise Act 2002.
Another reason I think this issue is important is that one of the last battles I fought in my former life was the battle against Kraft’s takeover of Cadbury. No one in Britain wanted it. Cadbury was a profitable, iconic British company that was taken over by a debt-laden American multinational. Guarantees were given, but the first guarantee about the Bristol plant was broken and it was closed. Sadly and inevitably, that led to a debate about tightening up the rules on corporate takeovers.
The Government have made some faltering progress in the right direction, but they have gone nowhere near far enough. The Prime Minister has committed to look at the rules and to change them so that we do not have such bids ever again succeeding. Having said that, and however important the future debate is on general takeover regimes, the Government have the powers here and now. They have the grounds. If there is a will, there is a way. I earnestly hope that the Government will respond to the very substantial all-party concern that has been expressed in this place.
I feel a particular passion because I used to represent the people concerned. I have been into the GKN Driveline plant and others; I have seen men and women who are the salt of the earth, with 25, 30, 35 or 40 years’ service, following their mums and dads. I have been into their homes; they have GKN awards and certificates up on their walls. They are proud of who they are and what they do. This country is proud of GKN, and the last thing we want to see is for GKN, that great British engineering icon, to become history.
Wayne David (Caerphilly) (Lab)
It is a pleasure to serve under your chairmanship, Mr Stringer. I congratulate my hon. Friend the Member for West Bromwich West (Mr Bailey) on securing this vital debate. As has already been said, GKN has a long and proud history dating back to 1759, when Guest established the ironworks in Dowlais, in Merthyr, south Wales. I suggest that there is no better pedigree than that. Today, the company has developed and expanded so that it operates in 30 countries and employs 6,000 people in the United Kingdom, many in well-paid jobs.
Let us be clear about the nature and the intent of this takeover bid. Melrose is a hedge fund operator, despite what it might say, and an asset stripper, despite its protestations. As other hon. Members have said, that was clearly laid bare by the statement made by Airbus, which has been widely reported and quoted today. The response of the GKN chairman, Mike Turner is interesting. He said:
“The comments from Airbus that stress the need for long-term investment and strategic vision in our industry emphasise our firmly held belief that Melrose is not an appropriate owner of GKN. Its management lacks the relevant experience and its short-term business model”—
he is being very polite—
“is inappropriate for GKN’s customers and investors.”
That sets out the situation very clearly and succinctly.
I want to focus on the implications for the defence sector in this country. There is a very genuine and real concern about the defence implications of this takeover. GKN is a major defence partner to Boeing and to Airbus, and it supplies and maintains UK defence equipment for the RAF and the Army. Importantly, GKN is very involved with the Typhoon aircraft production; the Chinook and Black Hawk helicopter programmes; the very important F-35 joint fighter aircraft programme, which is coming on-stream now in this country; and the A400M aircraft produced by Airbus. If the GKN takeover comes about, we are likely to see a big question mark over the nature of the successor company’s involvement. Make no mistake: Melrose’s track record shows clearly that it has no interest whatever and no expertise at all in anything related to defence. We are likely to see sell-offs of its defence interests, and that would have major defence implications for this country.
I welcome the Chair of the Defence Committee, the right hon. Member for New Forest East (Dr Lewis), to the debate. He has said that the takeover puts a question mark over the ownership of intellectual property. If that section of GKN is sold to another firm that is located in another country, the intellectual property goes with it. Who knows what country it may end up in? More than theoretically, it is quite possible that some of the intellectual property rights will go to countries that are not friendly to the United Kingdom.
The Secretary of State for Business, Energy and Industrial Strategy has a moral reason to be very concerned about the situation, and he has the practical means to intervene. As has been said, under section 42 of the 2002 Act, he can intervene on the grounds of public interest and in section 58 of the Act, public interest in these circumstances can be defined as placing in jeopardy our national security. If the Secretary of State chooses not to intervene now, it may be too late to ever intervene again. The Secretary of State can intervene only if the turnover of a business that is threatened by takeover is greater than £75 million, or the business has more than 25% of market share. It is possible that once the sale of the company takes place, the sale of the company’s assets through downsizing will mean that the Government do not have the legal base to intervene to protect our national interest. That is why I believe that the Government must act.
The Secretary of State for Defence indicated in his evidence to the Defence Committee that he is very concerned about the situation. On 6 March he put his concerns in writing to the shadow Secretary of State for Defence, my hon. Friend the Member for Llanelli (Nia Griffith). He said:
“Both GKN’s existing Board and Melrose have publicly indicated their intentions to restructure, and potentially sell, some elements of the business. I recognise that this will be unsettling for staff who might be affected but the impact of either of these proposals on defence and aerospace jobs is currently unclear.”
It may be unclear to him, but it is not unclear to many others.
I urgently ask that the concerns are delved into in some detail and depth as then they will be apparent for all to see. I hope the Government will bite the bullet and necessarily intervene, to stop this hugely damaging takeover.
Drew Hendry (Inverness, Nairn, Badenoch and Strathspey) (SNP)
It is a pleasure to serve under your chairmanship, Mr Stringer. I congratulate the hon. Member for West Bromwich West (Mr Bailey) on securing this important debate on a strategic issue. He raised the long-term aspects of GKN ownership, and gave a warning about the short-term or illusory interest that might be shown towards shareholder gain. He also gave a warning about the relative sizes of the companies and reflected on GKN’s sheer breadth of manufacturing interest in aerospace and automotive.
The hon. Member for Redditch (Rachel Maclean) rightly raised concerns about possible local jobs losses due to the takeover; she indicated that it is very important that pensions protections should be put forward, and I will come back to that subject later in my speech.
It is certainly worth underlining the need to invest in young people and in the future by investing in science, technology, engineering and maths skills. It would be remiss of me not to say that that should very much include girls and young women. It should be noted that GKN has committed to young people and STEM subjects. The hon. Lady clearly is not convinced by the proposed takeover by Melrose.
The hon. Member for Birmingham, Northfield (Richard Burden) mentioned the range of assurances that are required about jobs and research and development, which I will come back to. He certainly seems to have no confidence in Melrose. He rightly raised the concern of other local politicians who are involved, including the council leaders and the Mayor. Importantly, he touched on the need for urgent reform of the takeover rules. Perhaps that needs to be looked at a bit more urgently. He also touched on the German model. We know that German manufacturing has been extraordinarily successful because it has been able to take a more long-term view and make long-term investments.
My hon. Friend the Member for Paisley and Renfrewshire South (Mhairi Black) got straight to the nub of the issue with what she said about the UK Government’s strategic positioning and industrial strategy. She rightly warned that without the proper resources and investment in manufacturing, the industrial strategy is very much at risk.
The Parliamentary Under-Secretary of State for Business, Energy and Industrial Strategy (Andrew Griffiths)
On that point, let me reassure the hon. Gentleman that the Government are committed to supporting the sectors that he talks about. We are investing £1.95 billion in aerospace and £1 billion in automotive research.
Drew Hendry
I am grateful for the Minister’s intervention. It is good to know that that is the intention, but as hon. Members around the Chamber mentioned, that investment could be lost with GKN. Members will be interested to know what assurances he can give that that money will actually stay in the UK’s economy.
My hon. Friend the Member for Paisley and Renfrewshire South clearly pointed out the grounds on which the Minister could intervene—I understand that he has difficulties in terms of what he can say about national security and financial stability—and mentioned the uncertainties of Brexit as context for the need to ensure that investment and stability are maintained. Importantly, she also mentioned that the chief executive of the Pensions Regulator wrote to raise his concerns about the long-term prospects for GKN’s pension scheme.
The hon. Member for Birmingham, Erdington (Jack Dromey) rightly talked about workers in his constituency, Airbus’s warning about taking a short-term approach and the need for a long-term strategic vision. He gave dire warnings from history about the severe jobs cuts at Dynacast and the FKI group. He, too, mentioned the GKN pension deficit. I must say that I am not as assured as he is about the pension fund. Whichever company is in control—GKN or Melrose—must ensure that it is properly funded so that people do not lose out. He underlined the fact that the Government have the powers, should they choose to use them in this case, and rightly talked about his pride in GKN.
The hon. Member for Caerphilly (Wayne David) concentrated heavily on the fact that Melrose is trying to buy a major player in an industry in which it has no experience. He warned about the potential loss of defence and intellectual property, which the Minister should consider very carefully. His point that this may be the last chance to look at that was poignant, and it should be considered. Several hon. Members mentioned that the benefits of automotive and aerospace are realised over decades. A long-term approach is not only required but demanded by the people who will depend on the jobs, by the companies that will need the skills and by the public purse, and therefore the public services, which will be funded by the tax that is paid. Again, the Government should concentrate heavily on that.
I share the concerns expressed by Members around the Chamber about the rights of workers in these companies and their jobs, and about the fact that we should seek to maintain industrial and engineering capabilities, jobs and skills. I underline again the concerns that were raised about the pension scheme: any diminution of the company’s ability to pay pensions would be deeply troubling. I will not go over the points that other hon. Members made, but that is critical: people who have given their lifetimes to working in the industry should not be abandoned when the time comes for them to draw their pensions. GKN has pointed out that its pension fund has been driven down by Brexit and currency fluctuations. Hon. Members’ national security concerns must also be taken seriously, especially given the intervention on that subject by the Minister’s colleague, the Secretary of State for Defence. The Government must carefully consider all the contributions we have heard in deciding whether they will intervene.
Chi Onwurah (Newcastle upon Tyne Central) (Lab)
It is a pleasure to serve under your chairmanship, Mr Stringer. I thank my hon. Friend the Member for West Bromwich West (Mr Bailey) for calling this important debate and acknowledge the many impressive contributions by Members on both sides of the Chamber. We heard that GKN is one of the world’s oldest and most prestigious engineering firms. As an engineer myself, I can imagine people’s pride at knowing they are following in such an illustrious tradition. I appreciate the pride of the hon. Member for Redditch (Rachel Maclean) and my hon. Friend the Member for Caerphilly (Wayne David) at having GKN in their constituencies, and that of other Members, too.
GKN is at the centre of the fourth industrial revolution, boasting of strengths in defence, aerospace, automotive, batteries and the internet of things. My hon. Friend the Member for West Bromwich West set out the significance of its economic contribution, and my hon. Friend the Member for Birmingham, Erdington (Jack Dromey) emphasised the significance of its investment in R&D in the United Kingdom. As the shadow Minister for industrial strategy and a chartered engineer, I believe that all those factors make GKN an important part of our future innovation economy. As my hon. Friends the Members for Birmingham, Northfield (Richard Burden) and for Caerphilly emphasised, it plays an important part in our national security, too.
Members on both sides of the Chamber critiqued the Melrose bid. Unite, which represents most GKN workers, has called the bid “predatory” and Melrose an “asset-stripper”. It calls for the Government to halt the bid, as does the Chair of the Business, Energy and Industrial Strategy Committee, my hon. Friend the Member for Leeds West (Rachel Reeves). Melrose contests that, but admits that it would cut GKN’s management, deliver a “fundamental” culture change, sell sections of the company and boost the firm’s profitability through what its CEO calls
“the catharsis of a change of control.”
It sounds like Melrose is an advocate of Schumpeterian creative destruction, but with little regard for what is destroyed or, indeed, created. In practical terms, that could mean the closure of sites and divisions across the UK, the loss of jobs, a threat to pensions, as we heard, and the disappearance of crucial engineering expertise.
As my hon. Friend the Member for Birmingham, Erdington emphasised, Melrose’s record does little to assuage those concerns. It does not make purchases for the long term. The biggest example is its stewardship of Brush Turbogenerators, bought as part of FKI in 2008. Since then, the firm has had five different managing directors, and just last month it announced that it would cut up to 270 jobs in Loughborough and shift production overseas, despite the fact that last year Melrose paid out bonuses worth £160 million to only four people. My hon. Friend the Member for Redcar (Anna Turley) remarked earlier this week that meeting representatives from Melrose was like “meeting neoliberalism in person.”
However troubling we might find Melrose’s practices, this is not about just one company; it is about how our economy works. The Secretary of State for Business, Energy and Industrial Strategy hosted and attended the first meeting of the University College London commission for mission-oriented innovation and industrial strategy, chaired by world-leading economist Mariana Mazzucato. In her new book, she argues that the “two faces of financialisation” are at the heart of capitalism’s fundamental failure. The first is the way in which the financial sector has stopped resourcing the real economy—making stuff. Instead of investing in companies that make stuff, finance is financing finance.
The second aspect is the financialisation of the real economy, with industry driven by short-term returns, which results in less reinvestment of profits and rising burdens of debt in a vicious cycle, which makes industry ever more driven by short-term considerations. Such finance is not neutral but changes the nature of what it finances. As we have seen in Melrose’s approach to managing Brush, its short-termism has led it to neglect the difficult, costly business of maintaining sunk assets such as factories or developing new technologies, such as those we heard about in the automotive sector. Melrose’s expenditure on R&D is proportionally less than a fifth of GKN’s.
Melrose’s track record indicates that it will focus on strategies such as offshoring jobs that neglect people and places but provide an immediate financial return. A Melrose takeover would therefore lead to the financialisation of GKN, placing UK jobs under threat and eroding our industrial base. That was very much the point made by Tom Williams, the chief operating officer of Airbus, when he said it would be practically impossible for his company to give new work to GKN after a Melrose takeover.
The debate is not about Melrose alone but about how our country’s economy works. As the Leader of the Opposition said last month at the EEF conference:
“The next Labour Government will be the first in 40 years to stand up for the real economy. We will take decisive action to make finance the servant of industry, not the masters of all.”
In the immediate term, as Members on both sides have said, there are powers that the Government can use to stop the Melrose takeover. When I mentioned that in the Chamber to the Secretary of State, he said, correctly, that according to the Enterprise Act 2002 he could intervene
“only in mergers that raise public interest concerns on the grounds of national security, financial stability or media plurality.”—[Official Report, 13 March 2018; Vol. 637, c. 711.]
As others, including Unite and the BEIS Committee have made clear, the proposed takeover raises national security concerns, given GKN’s close involvement with sensitive defence projects. While the Minister cannot answer in detail, will he answer in principle whether the Government believe that Melrose’s proposed takeover could raise public interest concerns on the grounds of national security? Will he explain what process the Government will go through in reaching a conclusion?
The Secretary of State also praised his Government’s corporate governance reforms, which
“have ensured that GKN had longer to prepare its defence, preventing the kind of smash and grab raid that Cadbury’s was subjected to under the previous Government”.—[Official Report, 13 March 2018; Vol. 637, c. 711.]
That has been mentioned in the debate. Kraft’s takeover of Cadbury in January 2010 did prompt changes to the takeover code in 2011 and further amendments to the takeover regime with the Enterprise and Regulatory Reform Act 2012, which set up the Competition and Markets Authority. I served on the Bill Committee, when Labour proposed amendments to strengthen the new CMA and broaden the scope of the public interest test. For example, one amendment would have allowed the Secretary of State to consider the effects of the proposed merger on the long-term competitiveness of the UK economy as part of the public interest test.
I sat and watched as the Government voted down amendment after amendment that would have provided them with a framework to act. Will the Government now explore and legislate for the expansion and broadening of the public interest test, which they failed to do six years ago? That would not be without precedent—for example, the financial stability clause, added in 2008 during the financial crisis. Can we tighten the financial stability test to include considerations of long-term financial viability, as suggested by the hon. Member for Paisley and Renfrewshire South (Mhairi Black)?
Only this morning, Unilever announced that it will relocate its headquarters from London to Rotterdam. One key factor in that decision was the greater protection afforded to the company by Dutch takeover law. Will the Government look at improving the protection offered by takeover rules to British companies?
Both Dana and Melrose have questions to answer with regard to the future of pension schemes that GKN is currently responsible for. Will the Minister explain what assessment has been made of the schemes and what assurances the Government have sought?
The Secretary of State talks of building an economy for the long term, just as his predecessor did. This is a litmus test for his industrial strategy. It cannot hold if time and time again our most successful and innovative companies are taken over and then taken apart. Investing in innovation is a long-term bet; Melrose is a short-term player. Do the Government have the will to build a high-skill, high-wage, high-productivity economy, or is casino capitalism what our future holds?
Graham Stringer (in the Chair)
Before I call the Minister, I ask him to leave three minutes at the end to allow Adrian Bailey to sum up.
The Parliamentary Under-Secretary of State for Business, Energy and Industrial Strategy (Andrew Griffiths)
It is a great pleasure to serve under your chairmanship, Mr Stringer. I think that gives me nine minutes to cover the points and address the issues raised by hon. Members, so, to coin a phrase, I will crack on. I congratulate the hon. Member for West Bromwich West (Mr Bailey) not only on securing the debate but on the thoughtful, clear tone in which he made his contribution. He has no constituency interest but raises this issue because he cares passionately about the UK economy and our manufacturing industry in particular. I applaud him for that.
The context is important. The hon. Member for Newcastle upon Tyne Central (Chi Onwurah) said we want to be a nation of makers, and it is important to recognise that we have just seen the longest consecutive period of growth in manufacturing in the UK for 50 years. I am therefore pleased to report to the House that manufacturing is in rude health. The United Kingdom is a successful open economy and the Government’s industrial strategy, which has been discussed at length today, will build on our strengths and address our weaknesses to create a Britain fit for the future.
A key part of the UK’s dynamic economy is our mergers regime. Mergers and takeovers can bring benefits to both consumers and the UK economy. I can report to hon. Members that the UK has the third-highest foreign direct investment stock in the world, behind only the US and China. That investment means jobs in growing sectors and opportunities to develop skills, and it helps companies deliver products and services at competitive prices. Mergers and takeovers also provide important opportunities for companies to grow and innovate. Many of the UK’s most successful companies have grown through mergers and takeovers, both in the UK and abroad.
The UK’s merger regime is highly regarded the world over due to its design. The regime, based on transparent rules administered consistently by expert bodies, recognises that decisions are primarily a matter for the shareholders and restricts the role of Ministers to transactions that raise public interest concerns. As a result, the regime offers clarity for businesses and maintains investor confidence.
For example, the takeover code, administered by the independent Takeover Panel, provides a robust framework to ensure that takeovers of listed companies are conducted in an orderly manner with fair treatment of the shareholders. The Takeover Panel has repeatedly strengthened the code. Its most recent changes, which came into effect on 8 January 2018, require bidders to make earlier and fuller disclosure of takeover plans and to give companies subject to a bid more time to prepare their response—the question that the hon. Member for Newcastle upon Tyne Central raised earlier. Those changes have applied to the bid by Melrose.
Dr Julian Lewis (New Forest East) (Con)
I apologise for coming late to the debate. While what the Minister says is absolutely beyond question, does he accept that where the defence of the realm is concerned, certain other considerations must also apply?
Andrew Griffiths
I thank my right hon. Friend, who as always makes a salient and sensible contribution to the debate. I agree with him wholeheartedly that the defence of our nation is the most important point in any of these decisions.
As hon. Members have heard, the Enterprise Act 2002 grants Ministers statutory powers to intervene in mergers that give rise to public interest concerns only on the grounds of national security, financial stability or media plurality. The hon. Member for Paisley and Renfrewshire South (Mhairi Black) raised the issue of that financial stability. It is the financial stability of the country’s economy as a whole. This Government take very seriously our responsibility to protect national security in particular, and we are robust in assessing any possible public interest concerns and carefully considering when those powers should be exercised. If necessary, they will be exercised.
I appreciate that there has been much speculation about the potential use of those powers in this case. However, as we heard earlier, public interest interventions are quasi-judicial in nature. It is therefore important that Ministers act, and are seen to act, impartially, on the basis of an open mind and of the evidence available. For that reason, it is not appropriate for me to comment on their use in this individual case. As hon. Members might expect, my right hon. Friend the Secretary of State and I have taken a close interest in events. He has spoken to the chief executive officers of both GKN and Melrose to understand their intentions and to make it clear that he wants an open line with the companies, consistent with his potential statutory role in the process.
The bid, however, is primarily a commercial matter for the parties concerned, and we wait to see how things develop. GKN shareholders now have until 29 March to decide whether to accept the Melrose bid. It has become clear that, regardless of whether the takeover by Melrose is successful, GKN will not be the same company we know today. Beyond the potential sale of the Driveline, both GKN and Melrose have outlined plans to sell the powder metallurgy business and other non-core businesses. There remains the distinct possibility that, irrespective of which party ultimately controls GKN after the resolution of the bid, it will choose to sell all or parts of GKN’s current business to foreign companies.
On 13 March, Melrose wrote to the Business, Energy and Industrial Strategy Committee at its request, setting out the company’s position on pensions and post-offer undertakings. In addition to the conversations held between the Government and the parties involved, the hon. Member for Newcastle upon Tyne Central, who raised the question of Unite, will be pleased to know that the Secretary of State has been in close contact with the union.
I know that some hon. Members have concerns about GKN’s pension schemes. Individual cases are a matter for the independent Pensions Regulator, but the Government are aware that the parties are in discussions with the pension trustees, who have made their expectations clear. The hon. Member for West Bromwich West raised the issue of R&D investment; Melrose has told the Business, Energy and Industrial Strategy Committee that it supports R&D and will maintain the level of investment in R&D that GKN has spent in the past, which I think was 2.2% of sales between 2014 and 2016.
The hon. Gentleman also mentioned the question of how France and Germany could block takeovers. The reality is that they cannot. The UK’s takeover rules are based on EU takeover rules, which apply to all European countries and limit the ability of national Governments to block mergers unless they are based on national security, financial stability or media plurality grounds. France and Germany would also be unable to block a takeover of that kind due to EU takeover rules.
My hon. Friend the Member for Redditch (Rachel Maclean) is a doughty fighter for her constituents, and I know how passionate she is about this issue. She asked whether we are confident about the assurances Melrose has given about the UK headquarters. Under the takeover code, companies can make legally binding post-offer undertakings, and that is an important element. The hon. Member for Paisley and Renfrewshire South raised the question of pensions. Of course, it is a matter for the Pensions Regulator and it would be inappropriate for me to comment; however, the Government understand that the Pensions Regulator is in discussion with all parties.
The hon. Member for Inverness, Nairn, Badenoch and Strathspey (Drew Hendry)—I hope I got that right—asked what assurances we can give that Government R&D investment will stay in the UK. I can tell him that Government grants to support R&D are awarded on the basis of R&D carried out in this country, so the conditions of any contract with Government would mean that those responsibilities would transfer to the new company.
Drew Hendry
I appreciate the Minister’s giving way in the limited time he has. I want to make it clear that my concern was that the investment, and therefore the resulting intellectual property, might be lost elsewhere.
Andrew Griffiths
I understand the point that the hon. Gentleman makes.
Finally, my hon. Friend the Member for Redditch asks what the Government are doing to further strengthen the codes. I will highlight that the Government are exploring proposals to strengthen our powers to scrutinise investment for national security purposes, which would bring our regime in line with those of other developed countries. The national security and infrastructure investment review that my hon. Friend talked about closed in January, and the Government will publish its firm proposals in a White Paper this year.
The Government will continue to monitor the situation very closely over the days and weeks ahead, and I can assure hon. Members that we will always act in the best interests of the country.
Mr Bailey
My experience of parliamentary scrutiny of takeover bids, from Kraft and Cadbury to Pfizer and AstraZeneca and, I hope, this one, is that, irrespective of the outcome, the fact that Parliament has scrutinised it has benefited the outcome—first, by holding the Government to account, and secondly, by holding the participant companies to account.
I make no apologies for having the debate, because I feel it is performing an essential role of Parliament. Today’s debate has demonstrated that, by demonstrating the unanimous strength of opinion on both sides of this House on the issues arising from this particular takeover bid, and the earnest desire that the Government use all the powers they have to intervene in the best interests of not just GKN but our economy, our productivity, our employment, our pensions and so on.
I understand the quasi-judicial role that the Government have in this matter and how that might inhibit any public pronouncement, but in this debate we have spoken clearly and demanded action. The debate reflects the opinion of Parliament in general, and I ask the Minister to act in the best interests of GKN and our economy.
Written Statements
(6 years, 9 months ago)
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Baseline Profit Rate 2018-19
(6 years, 9 months ago)
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The Secretary of State for Defence (Gavin Williamson)
I am today announcing that I have set the baseline profit rate for single source defence contracts at 6.81%, in line with the rate recommended by the Single Source Regulations Office (SSRO). I have also accepted the methodology used by the SSRO to calculate this figure. Element 2017 rates 2018 rates Baseline Profit Rate (BPR) (% on contract cost) 7.46% 6.81% Fixed Capital Servicing Rate (% on Fixed Capital employed) 4.84% 4.38% Working Capital Servicing Rate (% on positive Working Capital employed) 1.37% 1.21% Working Capital Servicing Rate (% on negative Working Capital employed) 0.59% 0.53% SSRO Funding Adjustment -0.025% -0.024%
I am also announcing new capital servicing rates and an SSRO funding adjustment as recommended by the SSRO, which can be found at table 1 below. These rates have also been published in the London Gazette, as required by the Defence Reform Act 2014.
All of these new rates will come into effect from 1 April 2018.
Table 1: Recommended Rates agreed by the Secretary of State for Defence.
[HCWS550]
School Condition Allowance
(6 years, 9 months ago)
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The Minister for School Standards (Nick Gibb)
My hon. friend the Under-Secretary of State for the School System (Lord Agnew) has made the following written ministerial statement:
Today, I am announcing the allocation of £1.4 billion in 2018-19 to maintain and improve the condition of the education estate. Investing in our school buildings is a key part of the Government’s plan to ensure that every child has the opportunity of a place at a good school, whatever their background.
For the financial year 2018-19, the £1.4 billion of funding includes approximately:
£0.7 billion for local authorities, voluntary aided partnerships, larger multi-academy trusts and academy sponsors, to invest in their own condition priorities.
£0.5 billion for academies and sixth-form colleges through the condition improvement fund—the outcomes of bids to this fund will be announced later this year.
£0.2 billion of devolved formula capital to be allocated directly to schools later in 2018.
To provide stability for schools while we review the approach to capital funding for 2019-20, we have continued the existing capital funding approach for the financial year 2018-19.
In addition, £100 million of revenue generated from the soft drinks industry levy will be provided in 2018-19 for the healthy pupils capital fund. This fund is intended to improve children’s and young people’s physical and mental health—for example, by improving playgrounds and sports facilities, or kitchens, dining or medical facilities. The healthy pupils capital fund is being allocated alongside 2018-19 school condition funding.
Details of today’s announcement will be published on the gov.uk website, and copies will be placed in the Library of the House.
[HCWS546]
Hong Kong: Sino-British Joint Declaration
(6 years, 9 months ago)
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The Secretary of State for Foreign and Commonwealth Affairs (Boris Johnson)
The latest six-monthly report on the implementation of the Sino-British Joint Declaration on Hong Kong was published today, and can be found as an on line attachment. It covers the period from 1 July to 31 December 2017. The report has been placed in the Library of the House. A copy is also available on the Foreign and Commonwealth Office website: www.gov. uk/government/organisations/foreign- commonwealth-office. I commend the report to the House.
Attachments can be viewed online at: http://www.parliament. uk/business/publications/written-questions-answers-statements/written-statement/Commons/2018-03-15/HCWS544/.
[HCWS554]
Commission for Countering Extremism
(6 years, 9 months ago)
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The Secretary of State for the Home Department (Amber Rudd)
I am today confirming Ms Sara Khan’s appointment to the role of lead commissioner of the Government’s new Commission for Countering Extremism. All necessary pre-employment checks have been completed.
Ms Khan’s appointment follows a rigorous and transparent competition carried out in accordance with the Cabinet Office’s governance code on public appointments. I am delighted that Ms Khan will drive forward the vital work of the Commission for Countering Extremism. Ms Khan’s extensive experience in countering extremism and defending the rights of women and girls, and her determination to confront and challenge extremism wherever it resides makes her ideally suited to this role.
Extremism causes a wide range of harms, including the promotion of hatred and division, discrimination against women and girls, the encouragement of isolation, and the rejection of our democratic system and the rule of law. The Commission for Countering Extremism will have a clear remit to identify extremism in all its forms, whether online or in our communities.
As we consider new approaches to tackling extremism, I believe that there is much that can be learnt from how society sought to tackle racism in the last century. In particular how the state and civil society worked together to take on and challenge a set of attitudes and beliefs that have no place in this country.
I have agreed with Ms Khan that her early priorities will include:
Engaging widely and openly on extremism and Britain’s values across the public sector, communities, civil society, and with legal and academic experts.
Producing a strategic assessment of the threat we face from extremism, and the current response.
Advising Ministers on the Commission’s future structures, work programme and the appointment of further commissioners. This advice will in part be informed by the lead commissioner’s engagement with stakeholders.
The Commission will also produce an annual report on its work.
Alongside this statement, I have today published a charter for the Commission, which sets out its relationship with the Government and the public. The Commission for Countering Extremism will initially be established as a non-statutory expert committee of the Home Office. It will operate independently, at arm’s length from Government.
The Commission will play a crucial role in supporting the Government and their partners to tackle the scourge of extremism and stand up for the shared values of the mainstream majority. I look forward to working with Ms Khan on this shared agenda.
[HCWS547]
Justice and Home Affairs: Post-Council Statement
(6 years, 9 months ago)
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The Minister for Policing and the Fire Service (Mr Nick Hurd)
The EU Justice and Home Affairs Council of Ministers met on 8 and 9 March in Brussels. I represented the UK for Interior day.
Interior day (8 March) began with a discussion on co-operation between common security and defence policy operations and EU JHA agencies. Ministers endorsed an initiative to more effectively co-ordinate the activity and improve the exchange of information between JHA agencies and EU security and defence missions in third countries.
This was followed by an exchange of views on the implementation of the directive on the use of passenger name record (PNR) data. Member states provided updates on progress of their implementation. I intervened to reiterate the UK’s existing capability for processing PNR data, and offered to share expertise with other member states.
Ministers then discussed co-operation with the western Balkans on security and counter-terrorism, with reference to the European Commission’s western Balkans strategy, which was published in February. The Government is supportive of the EU’s efforts to building stronger co-operation in this region. The Government are committed to working closely with European partners on this issue and will be hosting the western Balkans summit 2018 in July, at which security will form a strong element.
Over lunch, Ministers discussed progress made on combating the threat posed by terrorist use of the internet, including engagement with industry and the work of the EU internet forum. The Government remain committed to preventing terrorist use of the internet and are supportive of both the EU internet forum and the Global Internet Forum to Counter Terrorism in tackling this issue. I conveyed the Government’s development, announced by the Home Office in February, of new technology to automatically detect terrorist content on any online platform and offered to share the tool with European partners.
In the afternoon, there was a discussion on the increasing role of JHA agencies in counter-terrorism with a focus on the potential future strategic direction of these agencies. The Government welcome the growing role of JHA agencies in helping member states counter terrorism and recognise the need to maximise the effectiveness of existing systems. I reiterated the UK’s commitment to appropriate data sharing with Europol and supported improved co-operation between JHA agencies and third countries, as long as human rights and data protection safeguards are in place.
Ministers then discussed the proposed regulation on establishing a framework for inter-operability between EU information systems for enhancing external border management and internal security. Member states agreed to aim for conclusion of Council negotiations by the end of June to allow agreement with the European Parliament by the end of 2018. I intervened to underline the importance of all EU member states and Schengen states having access to information from all EU databases under this system.
On migration, member states generally agreed with the presidency’s priorities on the way forward, including strengthening the external border, improving returns and co-operation with third countries. I announced that the UK will be resettling up to 100 of the most vulnerable refugees evacuated from Libya, and that the UK has also now resettled over 10,000 vulnerable refugees affected by the Syrian crisis since 2014. I also announced that the Government have renewed our offer to continue specialist deployments to Greece.
Justice day (9 March) began with a discussion on the recast of the Brussels IIa regulation, which focussed on how to best ensure adequate resourcing of central authorities, which play a key role in judicial co-operation on matters of parental responsibility. The presidency concluded, in line with the position taken by the UK and a majority of member states that adequate resourcing for central authorities was important, but that the level of resourcing should be left to the member states.
A general approach was reached on the proposed directive on combating fraud and counterfeiting of non-cash means of payment. The UK has not opted in to this directive.
There was an update on the preparatory steps needed to be taken to ensure that the European public prosecutor’s office (EPPO) becomes operational in 2020. The UK is clear that it will not participate in the EPPO.
There was also a policy debate on work to improve law enforcement access to cross-border e-evidence. The Commission will publish a legislative proposal in April. The discussion focused on ensuring that EU and US law is complementary and member states supported the exploration of an EU-US agreement on e-evidence. The UK intervened to recognise the importance of addressing the obstacles to obtaining e-evidence.
Over lunch, representatives from member states discussed radicalisation in prisons, agreeing on the importance of continuing to share experience and best practice.
The Commission also presented recommendations concerning illegal content on online platforms that were published on 1 March and highlighted the link with the code of conduct on countering illegal hate speech online.
[HCWS548]
Local Government
(6 years, 9 months ago)
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The Secretary of State for Housing, Communities and Local Government (Sajid Javid)
On 9 January, I announced to the House the appointment of Max Caller CBE as inspector to conduct an independent inspection of Northamptonshire County Council (NCC) to better understand the NCC’s compliance with its best value duty.
The inspector has today sent me his report which he has also copied to the council. I am placing a copy of that report in the Libraries of both Houses and a copy can be found online at:
https://www.gov.uk/government/publications/northamptonshire-county-council-best-value-inspection.
The report contains challenging findings:
The inspector has identified that the council has failed to properly comply with its best value duty for some time. This is not because of lack of funds: as the report states, the council’s “Mind the Gap” analysis
“does not demonstrate that NCC has been particularly badly treated by the funding formula”.
The report sets out in some detail the governance failings which have culminated in the council’s chief finance officer issuing a section 114 notice to stop new spending and KPMG’s advisory notice on the council’s budget. It concludes
“living within budget constraints is not part of the culture of NCC”.
These findings appear very serious indeed both for the council and its residents. The inspector has made recommendations for how improvement can be secured. He rules out the option of an internally led strategy and suggests that commissioners should be appointed in the short term to ensure the proper running of the council and delivery of services for its taxpayers, while proposals for restructuring are developed as a longer term solution.
I am grateful to the inspector and his team for the thoroughness of their work and the clarity of their conclusions. I will now consider in detail their report’s findings and proposals for the future. I will make another statement to the House setting out my proposals for next steps, including whether or not to exercise my powers of intervention under section 15 of the 1999 Act, in due course.
[HCWS545]
Employment and Support Allowance
(6 years, 9 months ago)
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The Secretary of State for Work and Pensions (Ms Esther McVey)
On 14 December 2017 my predecessor provided a statement to the House on how the Department will be undertaking work to correct underpayments that may have occurred as a result of how a proportion of incapacity benefit claims were transitioned to employment and support allowance between 2011 and 2014. I wanted to take this opportunity to update the House on how this work is progressing.
My Department will be reviewing close to 300,000 cases, of which just under a quarter have been underpaid. We have begun contacting individuals and making payments. We are actively recruiting staff and have scaled up the team undertaking the work from 10 to 50 in December last year, which will grow further to 400 from April, allowing us to deal with the situation at pace.
I know many Members will want to provide reassurance to their constituents who think they may have been affected. I can assure the House that my Department will be contacting all those identified as potentially impacted. We have been engaging with external organisations that often provide support and advice to our claimants, so that they too can be confident that we have a robust process in place, and can provide individual advice should they be contacted.
Today I can confirm that, based on departmental analysis, we will be prioritising any individuals whom we know from our systems to be terminally ill. Thereafter we will work through the cases identified as most likely to have been underpaid according to our systems. We have also undertaken an equality analysis to support this prioritisation approach.
Once an individual is contacted, and the relevant information gathered, they can expect to receive appropriate payment within 12 weeks. I can also confirm that once contacted, individuals will be provided with a dedicated free phone number on which they can make contact with the Department.
Like my predecessor, I am committed to ensuring that all cases are reviewed and paid by April 2019.
[HCWS549]
Grand Committee
National Minimum Wage (Amendment) Regulations 2018
(6 years, 9 months ago)
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Lord Henley
That the Grand Committee do consider the National Minimum Wage (Amendment) Regulations 2018.
The Parliamentary Under-Secretary of State, Department for Business, Energy and Industrial Strategy (Lord Henley) (Con)
My Lords, I beg to move that the National Minimum Wage (Amendment) Regulations 2018, which were laid before the House on 5 February 2018, be approved. The purpose of the regulations is to increase the national living wage and all of the national minimum wage rates from April 2018. The regulations also include an increase in the accommodation offset rate, which is the only benefit in kind that counts towards minimum wage pay.
The national living wage has had a real, positive impact on the earnings of the lowest paid: between April 2015 and April 2017 those at the fifth percentile of the earnings distribution saw their wages grow by almost 7% above inflation. This is faster than at any other point in the earnings distribution and, according to the Resolution Foundation, wage inequality, as measured by the ratio between the top decile and the bottom decile of the earnings distribution, fell in all regions of the United Kingdom between 2015 and 2017 thanks to the national living wage. Increasing the minimum wage is one more way in which the Government’s industrial strategy is boosting people’s earning power and seeking to raise productivity throughout the United Kingdom.
From next month the national living wage for those aged 25 and over will increase by 33p to £7.83, which is a 4.4% increase. The 33p increase in April will mean that a full-time worker on the national living wage will see their pay increase by over £600 over the year. The national living wage is on course to reach the Government’s target of 60% of median earnings by 2020.
The 21 to 24 year-old rate will increase by 33p, meaning those in that age group will be entitled to a minimum of £7.38—an annual increase of 4.7%. Those aged between 18 and 20 will be entitled to a minimum of £5.90—an annual increase of 5.4%—and those aged 16 and 17 will be entitled to a minimum of £4.20, an annual increase of 3.7%. Finally, apprentices aged under 19, or those aged 19 and over in the first year of their apprenticeship, will be entitled to £3.70, which is the largest annual increase of all the rates at 5.7%.
All of these above-inflation increases represent real pay rises for the lowest-paid workers in the United Kingdom. For younger workers on the national minimum wage, it is the largest and fastest increase in more than 10 years. The Government’s green-rated impact assessment estimates that more than 2 million people will directly benefit from these regulations.
All of the rates in the regulations have been recommended by the independent and expert Low Pay Commission. The LPC brings together employer and worker representatives to reach a consensus when making its recommendations. The Government asked the Low Pay Commission to recommend the rate of the national living wage so that it reaches 60% of median earnings in 2020, subject to sustained economic growth.
For the national minimum wage, the LPC has recommended rates that increase the earnings of the lowest-paid young workers without damaging their employment prospects by setting it too high. I thank the LPC for the extensive research and consultation that has informed these rate recommendations, all of which was set out in its 2017 report, published in November.
The Government recognise that, as the minimum wage rises, there is a higher risk of non-compliance as a larger share of the workforce is covered by the minimum wage. The Government are committed to cracking down on employers who fail to pay the national minimum wage. We are clear that anyone entitled to be paid the minimum wage should receive it. Consequently, the Department for Business, Energy and Industrial Strategy has increased funding for HMRC national minimum wage enforcement to £25.3 million this year—up from £13 million in 2015. HMRC follows up on every complaint it receives, even those which are anonymous. These include those made to the ACAS helpline, via the online complaint form or from other sources.
In 2016 HMRC recovered pay arrears in excess of £10.9 million for more than 98,000 workers. Those employers who underpay their workers the minimum wage face public naming by the Government. Indeed, last Friday BEIS named 179 employers who had underpaid a total of £1.1 million to 9,200 workers.
Sustainable increases in minimum wage rates depend on strong employment growth. Over the past year the UK labour market has reached a record high employment rate, and the lowest unemployment rate since the 1970s. Evidence has long told us that investing in human capital is crucial for the long-term productivity of the workforce. The industrial strategy sets out our long-term vision for increasing productivity, including through raising the minimum wage and so boosting the earning power of the lowest-paid workers. Through these regulations the Government are building an economy that works for everyone. I commend the regulations to the Committee.
Lord Stevenson of Balmacara (Lab)
My Lords, I thank the Minister very much for his introduction. I will not go back over the recent history of the introduction of the national minimum wage, because I think it is now a settled agreement between all the parties that it is a good thing. It works for all sections of society, but particularly for the lower paid, and we have evidence before us that shows that.
While we are in congratulatory mode, I thank the LPC, as the Minister did, for its work. It is often unsung and not very visible, but it is well rooted in the interest it has in this area and I know that Ministers value the work that it does. I also congratulate the team responsible for the paper before us. It is a bit of a shock to have to read back through some of the stuff one thought one had forgotten a long time ago about microeconomics and the impact of some of the very narrow points raised in the 51 pages or so of the supplementary work, which I am sure the Minister has in his mind and can quote extensively from memory. It is a very good read and very interesting. It agonises a lot about issues that we do not need to detain the Committee with, but it is important that that work is done. I appreciate the fact that it is there and we should publicly recognise the contribution made by it.
Having said that, while I give an alpha plus for the work that has been done, I give it a beta minus for presentation. I came to this slightly late, otherwise I would have raised it earlier, but it is unfortunate that some of the pagination has been lost in the form that the document comes to us. The pagination matters because, for instance, on page 15 of the copy we have from the Printed Paper Office there is a box that should be on one page but which has gone on to several pages. It makes it very difficult to pick up where we are on that. On page 17 there is a rather complicated and important wage distribution graph that is only really readable in colour, although it is printed in black and white. It therefore does not make sense. You have to spend quite a lot of time working out which of the confidence limits percentages are being referred to in the text. If they had been colour coded one would have been able to do so. I am not complaining about this; I am just pointing out that intelligibility would be improved if we could think more about a reader who is not directly involved.
I will make three points—but before I do, I will say that this is the third time that I have responded to this particular instrument, so I am quite familiar with the process, and in particular the rather neat shuffle that took place this time last year, or maybe six months ago, when we moved from October to April. Last time the instrument came partly under the national minimum wage and partly under the living wage. It did the work of assessment and thinking in terms of the minimum wage but prefigured how we would move to the living wage. This is a simpler and more straightforward document than we had the last time we went through this.
Having said that, we have lost a little bit of the context for the decisions that are quite important in this area, which is that the move from the minimum wage to the national living wage is one of significant increases over a relatively short period of time to jump-start an increase in funds at the lower end of the pay spectrum. We absolutely welcome that, but I have lost the thinking of why we are doing it over three years. Also, the Minister used the phrase “subject to satisfactory economic growth”. Well, economic growth is not very satisfactory. For reassurance’s sake, may I have a confirmation that there are no red lights about the future of this and that, as far as we are able to say at this stage, we are still on track to do this oddly phrased equal bite, or single bite, or whatever it is called—it is called the “straight line bite path”—movement from the current position to hit 60% of the median earnings in October 2020, and that there is nothing I have missed in this that would suggest there is any doubt about whether we will do that, subject obviously to the overriding concern about economic growth? It is important to give reassurance if we are at that stage.
Another minor point is that the percentage increases in individual hourly rates are good. One could perhaps make a little too much of 5.7% arising from a 20p per hour rate increase for apprentices, but nevertheless it is valuable in itself. However, the rates are significantly higher than they would have been otherwise and indeed contrast with the reduction in real wages which we are seeing elsewhere in the economy—so to that extent it is doubly welcome.
Having said that, the LPC has recommended, and as far as I can see the Government have accepted without comment, a much bigger increase in the disregard for accommodation rates. I wonder if the Minister could give me some thoughts on that. This is a sensible way of treating those who have accommodation benefits. I do not dispute the principle, but the particularity of squeezing cash in the pocket or the purse, as it were, by raising the disregard for accommodation at a higher rate than the increase in pay seems a little unfair. Is there any context around that in documentation that we have not seen? I would be grateful if the Minister could tell me that today. If not, I will be happy to receive a letter.
Lord Stoneham of Droxford (LD)
My Lords, I have two or three points to make on these regulations. We welcome the move to increase the rates and we support that policy. Obviously, evidence over the past few months has shown that the economy is slowing. We have some quite serious problems in the retail sector and cutbacks in catering, with a lot of chains in financial difficulty. The other sector I would like to mention—here I must declare an interest as the chair of Housing & Care 21, a housing association with considerable care interests—is the whole care sector, which is under huge pressure. Obviously, this is a further burden in terms of costs—and not just for the operators because, given that the health service does not protect a lot of people in this sector, those costs are coming straight out of the pockets of consumers. I hope that the Government are paying some attention to these sectors and I should like to ask the Minister what they are doing.
A key issue is the degree to which productivity will increase in order to absorb some of the significant costs that are being imposed on these low-wage sectors. What are the Government doing? We have various estimates of productivity, but what initiatives are the Government taking to encourage productivity growth in these sectors? What case studies are they implementing to judge the impact of labour costs in these sectors? What policy initiatives are being speeded up—particularly, I hope, in the care sector—to address the fact that the sector is very labour-intensive and that inevitably the costs will impact directly on some very needy people who are not catered for by the National Health Service? The Government’s delay in producing their social care policies is a major consideration as this policy of increasing the living wage continues towards the Government’s targets.
Finally, as we seek to improve to improve rates of low pay, the best scenario in which to do it is one in which the economy is growing well, living standards are increasing and we have no undue pressures. We know, however, that we are now facing a period of low growth and that, because of the movement in the exchange rate and the rise in costs—particularly those imposed by these measures—living standards will be squeezed. On top of that, the Government will impose on the economy the huge costs of Brexit. The Prime Minister has admitted that Brexit will affect jobs and standards of living, regardless. I would therefore like to know what specific measures and initiatives the Government are taking to deal with these problems, which could undermine their low-pay strategy.
Lord Henley
My Lords, I thank both noble Lords for their helpful contributions to this debate and their broad welcome for these regulations. I will deal with the regulations and their attached documentation, and the concerns of the noble Lord, Lord Stevenson, that they were not set out exactly as they should be. I will ask the officials to send him a more readable version. More importantly, we take note of what he said. I will make sure that we do somewhat better at setting these documents out and making them clear to the noble Lord and other noble Lords taking part.
The noble Lord was also rather worried about why I used the expression “subject to economic growth”. The important point here is that the Low Pay Commission makes its recommendations in the light of an array of matters, and—as the noble Lord will know—it includes representatives of employers, employees and others. Ultimately, it makes recommendations and it is for the Government to make the decision. Those who are somewhat higher up in the Government—the Chancellor and others—have to take into account the effect on the economy of the Low Pay Commission’s recommendations, though we hope that it will also have considered the effect its recommendations might have on increasing unemployment by making it less affordable to employ people. The matter is, therefore, considered by the Low Pay Commission but, more importantly, my right honourable friend the Chancellor and others consider what lies ahead.
I join the noble Lord, Lord Stoneham, in wishing to see greater growth, but—as my right honourable friend the Chancellor set out recently—we are seeing steady growth over the coming years and I see no particular red lights in this area. We are still on track to achieve the target that we wanted to achieve—I think the noble Lord asked about this—which is 60% of median earnings by 2020. The Low Pay Commission will take all evidence into account in trying to get there.
The noble Lord also asked about the bigger change in the disregard for accommodation. Again, the Low Pay Commission took evidence to determine that off-set and its report summarises its view that the rate is a fair balance of the employer’s and the worker’s interests. Obviously I am happy to write to the noble Lord in greater detail on that if he so wishes.
I move on to the comment of the noble Lord, Lord Stoneham, that this imposes particular pressure on certain sectors. He singled out one that he knows particularly well, the care sector, for which we accept it can be difficult, and similarly for retail and other areas where wages tend to be on the lower side. That is why we are very grateful that there are representatives of employers on the Low Pay Commission to make sure that that point is made. There is no point raising rates too far if it will increase unemployment or create difficulties for certain businesses. Obviously it means that there will be extra costs for businesses but, as I think the noble Lord will accept, we want to make sure that workers are fairly rewarded.
There are certain things that Governments can do to recognise the increased costs for businesses. We give employers up to £3,000 off their employer NICs bill through the employment allowance. Last year more than 1 million employers benefited from that, saving some £2 billion. That will apply in all sectors. We cut corporation tax, as the noble Lord will be aware, from 28% to 19%, and that again benefits a large number of firms. As the noble Lord will remember, my right honourable friend announced reductions to business rates in the Budget.
I appreciate that things can still be difficult. The point behind having the Low Pay Commission, with representatives from both sides and others, is to make sure that we try to take all factors into account and, I hope, achieve greater balance. The noble Lord would like me to discuss the Government’s care policies more generally, but I do not think I am the right person or that this is the right place for me to do that at this stage, so I shall restrain myself from being tempted to take up his offer. No doubt he will find other opportunities to raise this matter with others in due course.
With what I take to be the support of both noble Lords, I commend these regulations to the Committee.
Works Detrimental to Navigation (Powers and Duties of Inspectors) Regulations 2018
(6 years, 9 months ago)
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Lord Henley
That the Grand Committee do consider the Works Detrimental to Navigation (Powers and Duties of Inspectors) Regulations 2018.
The Parliamentary Under-Secretary of State, Department for Business, Energy and Industrial Strategy (Lord Henley) (Con)
My Lords, I beg to move that the draft Works Detrimental to Navigation (Powers and Duties of Inspectors) Regulations 2018, which were laid before Parliament in January 2018, be approved.
We are moving on to a somewhat different and more technical subject, and I am very pleased to see the noble Lord, Lord Bradshaw, in his place. He will presumably bring a great deal of technical expertise to this debate. The regulations will provide inspectors in BEIS’s Offshore Petroleum Regulator for Environment and Decommissioning, which I will refer to as OPRED, with powers to conduct inspections to assess compliance by operators of offshore hydrocarbon installations with the conditions of consents to locate as granted under Part 4A of the Energy Act 2008.
OPRED inspectors travel to offshore installations to monitor compliance with our offshore environmental regulatory framework. However, they do not have powers to conduct inspections to assess operator compliance with consents to locate conditions. The regulations will close that gap in enforcement capabilities by enabling inspectors to board offshore installations to assess operator compliance with the consents to locate regime, inspect and investigate any legislative breaches, and take enforcement action where required.
Consents to locate are required before offshore activities likely to cause danger to navigation are carried out. A condition of consents to locate is the need for operators to maintain navigational aids, such as lighting, foghorns and other signage, to warn shipping of the presence of offshore installations. Part 4A of the 2008 Act gives the Secretary of State powers to make inspection regulations for enforcing the consents to locate regime and create criminal offences. Regulation 3 of the regulations contains powers to allow inspectors to undertake examinations and investigations and Regulation 6 sets out the offences and penalties that would apply to a failure to co-operate with inspectors. Inspectors would normally conduct checks on the consents to locate regime when undertaking routine visits to offshore installations to determine operator compliance with other environmental legislation.
The regulations are needed due to an increasing trend from 2015 onwards whereby non-compliances by some operators with the consents to locate conditions, primarily the obligation to maintain functioning navigational aids, have not been remedied timeously despite OPRED’s efforts. Although most operators initially responded to incidents of malfunctioning navigational aids by deploying temporary collision-avoidance measures, notably the use of guard vessels around installations, and eventually resolved breaches after protracted negotiations, this is not an ideal situation. Notwithstanding the instigation by operators of temporary solutions, the risk to shipping of a collision with an offshore installation at night, or during times of poor visibility, remains until functioning navigational systems are reinstated.
Without powers to access offshore installations and conduct inspections, we are reliant upon operator good will or evidence from third parties, namely the general lighthouse authorities and the Maritime and Coastguard Agency, in order to gather evidence to establish whether consents to locate requirements have been breached and to encourage operators to revert to compliance. The regulations would provide inspectors with powers to investigate and enforce an expedient return to compliance by operators, thus reducing the risk of offshore collisions occurring.
While the risk of a collision with shipping remains low and to date there have been no incidents of shipping colliding with UK offshore installations as a consequence of failed navigational aids, the human, environmental and economic impacts of a collision would be significant. There are invariably lengthy time lags before the resolution of non-compliances—in one instance it took four months before compliance was restored—which increases the risk of collisions at night or in adverse weather conditions.
The regulations will contribute to our aim of ensuring that offshore hydrocarbon activities are carried out in a safe, clean and environmentally sound manner. In 2017, OPRED conducted a consultation with the offshore sector on the regulations. Two responses were received seeking simple clarification. We replied to both consultees addressing their comments and agreeing to publish updated regulatory guidance once the regulations entered into force.
One substantive issue arose from the consultation regarding the provisions that would allow inspectors to take original documents as evidence in an investigation. To enforce the consents to locate regime effectively, it was our opinion that obtaining original documents would fulfil the legal obligation to gather the best evidence available should we need to pursue criminal proceedings against non-compliant operators. We decided to retain the power to seize original documents in the regulations, but took account of industry concerns by caveating it with limitations on the use of the power.
The objective of the regulations will be to achieve a high level of operator compliance with the consents to locate regime through inspections and the investigation of breaches, the use of enforcement notices instructing operators to take timely actions and the imposition of penalties. Given the need for the regulations, it would be useful if they entered into force on the day after they are made. I commend these regulations to the Committee.
Lord Bradshaw (LD)
My Lords, I would like to inquire into some of the background. I do not know whether the Minister has these details but, first, may we know how many real incidents there have been? Secondly, how many inspectors are there and what is the chance that a person who is not complying will actually be caught?
The system which the Government have in mind will obviously cost some money. I do not know whether they intend to expand the inspectorate or whether this is another duty to be laid upon the existing inspectors. Is there going to be any extra cost or extra inspectors? Can we also be clear whether this applies only to any obstruction which has an association with the hydrocarbon industry, or are other places such as old windfarm foundations covered in these regulations?
The Minister mentioned non-compliance. There is also some mention in the documentation of non-compliance, so is he able to tell us how much of it there was, or is, and why it is necessary to produce this further legislation? Can I please get some idea of the penalties which fall upon people who do not comply? For example, apart from fining them, is there any way in which they will be denied a licence in future to punish them, as it were, for not having cleared up any obstructions which they left behind them in the sea? I fully support what the Minister has said about the need to take precautions because the consequences of a ship spilling the oil which it might be carrying or injuring people are quite significant.
There is one other thing. Are these obstacles, if I may call them that, added continuously to the charts used by people who use the sea, and can ships therefore be forewarned that such obstructions are there? I would be grateful if the Minister can fill me in a bit on the background to this.
Lord Stevenson of Balmacara (Lab)
My Lords, like the noble Lord, Lord Bradshaw, I am supportive of the intention behind these regulations and have no wish to delay them in any sense. Before I start, I should like to say how nice it is to have had three Lords Chairman officiating over our modest debate. I am sure it must be a very interesting chance for the Lord Speaker to shine a spotlight into the activities of your Lordships’ House in a way that is not often possible.
Lord Stevenson of Balmacara
Real life and marine life as well, as we are going to discover.
I have three main points but they are not at all major. First, as I think the Minister said, these regulations have been in force since 2009 as part of the implementation of the 2008 Act. Yet there seems to have been a sudden rush of activity since 2015, according to the Explanatory Memorandum. Can he give a little more detail about what is going on here? Is there some new interest in the area, arising from some activity which we were not aware of and, if so, why is all this litter being left around and causing difficulty to ships? I would be interested in the background if that is possible.
Secondly, I do not think the Explanatory Memorandum makes the case very well for OPRED’s lack of ability to force operators to return expediently to compliance. The powers now in these regulations would allow them to get more information in the form of paper and other documents. That would somehow seem to inform them better but I do not quite see how it will make anybody do anything they are not currently doing. I would be grateful if my puzzlement on that could be met with a bit more information.
In that respect, there was a four-week targeted consultation. I am not saying it is true of this occasion, but whenever I see the words “targeted consultation”, I wonder whether very many people have been involved. Given that there were only two responses from what seems to be a very large sector of our economy with many companies—indeed the Explanatory Memorandum states later on that there is a large number of small companies involved—maybe there could be a few words about whether, in the department’s view, the consultation was as effective as it could have been. There were only two responses, neither of which was significant in terms of what we are told here, but they did manage to persuade OPRED that there should be a change in relation to the power to seize original documents. Paragraph 8.3 says that OPRED decided to take,
“account of industry concerns by caveating it with sensible limitations on the use of the power”,
but does not say what those limitations are. Again, perhaps the Minister could just explain them.
However, my main concern is timing. Members of the department will be aware that every time BEIS comes in with a regulation, I think I have made a point of pointing out that the Government have accepted, as have previous Governments, that there should be adherence where possible to the common commencement dates of 6 April and 1 October. These common commencement dates are there for the benefit of businesses and to make sure that regulations do not sprinkle upon them like rain from the heavens but are brought up at two points in the year when they can anticipate that there will be regulations, plan for them and expect them to be implemented in an appropriate way. There may be some reason for the commencement date, but these regulations seem to be coming into force in a rather ad hoc way. They come into force the day after they are made. The Explanatory Memorandum comments that,
“the critical need for, and core objective of, the instrument”,
means that the regulations,
“will enter into force on the day after they are made and, if feasible, either prior to, or (if apposite) beyond, the next Common Commencement Date of 6 April 2018”.
It happens that 6 April 2018 is not very far away, so it would not have been very difficult, and certainly given the pressures on all concerned not impossible, for these regulations to come in on 6 April. There may be good reasons for bringing them in a few days before then, and I would be interested to hear what they are, but I worry more generally that the department does not, much as I would wish it to, try to work to the common commencement dates. I am sure the Minister will accept that they are important. They have been advertised and adhered to now for, I think, 15 years. It is something we should respect if we can. I would be grateful for his comments.
Lord Henley
My Lords, we will try to stick to common commencement dates where appropriate, but as I think the noble Lord suggested, there has already been some concern that a degree of time has been taken getting these regulations ready. We therefore felt that this is one of those occasions when not sticking to the common commencement dates would be appropriate. Bearing in mind that there is always the risk of an accident, we thought it appropriate to move as quickly as possible. For that reason again, we thought that a relatively short, targeted consultation—going to what we thought would be the appropriate people—was appropriate. As a result, we obviously missed out the noble Lord.
Lord Stevenson of Balmacara
I just wanted to be sure that “targeted” did not mean two people on this occasion.
Lord Henley
I will take advice, but I am fairly sure it was a number greater than two. I do not know what it was, but on this occasion we did not need a general consultation including the noble Lord and others. We are talking about a fairly specific field that many of us do not know a great deal about. I will come to some of his other points later on, but will deal with points raised by the noble Lord, Lord Bradshaw, first and give him a little more background and detail about the amount of non-compliance there has been.
On average there are at least 49 incidents a year on offshore installations, a proportion of which seem to be in the southern North Sea, which is obviously a fairly busy shipping route. Nine offshore installations had components of their main or subsidiary lighting systems repeatedly fail completely, meaning that parts of the installations were not visible at night or at times of poor visibility due to intense fog. Thirty-two offshore installations had other types of repeated malfunctions relating to other navigational aids, including lights not flashing in unison and dim lighting systems causing reduced visibility from a distance. Five installations had fog signals that were repeatedly inaudible or not functioning, while the radar communications systems on three offshore installations repeatedly failed. Those are the numbers involved and reflect the scale of the issue. I hope that is useful to the noble Lord.
I will have to write to him about the number of inspectors and whether we think that that number needs to be increased. The important point is that the inspectors are already doing their job, but we are giving them extra powers to make sure that there is proper enforcement. He also asked about the appropriate penalties if operators are prosecuted under these regulations. An operator guilty of an offence as set out in Regulation 6 would be liable on summary conviction in England and Wales to an unlimited fine and on summary conviction in Scotland and Northern Ireland to a fine not exceeding the statutory maximum, which is £10,000 in Scotland and £5,000 in Northern Ireland. I hope that the noble Lord does not ask me why the fines are different among the nations, but if he has any concerns I will write to him about it. Conviction on indictment leads to an unlimited fine, which would usually be for an amount greater than the fine on summary conviction. I might be wrong, but that is probably the explanation for the difference between England and Wales and Scotland and Northern Ireland. In Scotland and Northern Ireland there is summary conviction or on indictment whereas in England and Wales there seems to be only summary conviction.
The noble Lord, Lord Stevenson, asked why after 2015 it became more difficult for operators to rectify promptly breaches of consents to locate obligations. Some have asked whether it coincided with the drop in the price of oil at the time. The reason it has become more difficult to get smaller operators to rectify breaches is not entirely clear. Contributing factors may have been the low oil price which has put pressure on operators, but whatever happens the situation is clearly unsatisfactory, given the critical nature of navigation aids, hence the need to put these regulations on to the statute book as quickly as possible. I appreciate that some will argue that we have taken our time to do this, but it is important to get on with them now.
I again thank both noble Lords for their contributions. I think that I have largely dealt with the points, but if I have missed any, I will write. I commend these regulations to the Committee.
Criminal Justice and Police Act 2001 (Powers of Seizure) Order 2018
(6 years, 9 months ago)
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Lord Henley
That the Grand Committee do consider the Criminal Justice and Police Act 2001 (Powers of Seizure) Order 2018.
The Parliamentary Under-Secretary of State, Department for Business, Energy and Industrial Strategy (Lord Henley) (Con)
My Lords, I congratulate the noble Lord, Lord Stevenson, who is still with us for the third item of business. I am grateful for the feedback from the Secondary Legislation Scrutiny Committee regarding the explanatory material accompanying this draft order. We always strive to provide sufficient information for noble Lords to gain a clear understanding of an instrument’s policy objective and intended implementation. Furthermore, my department will take account of the comments of noble Lords made in this Committee when preparing explanatory memoranda for future instruments.
Insider trading and price manipulation in the wholesale energy markets is a crime and ultimately consumers and businesses pay the price for such behaviour in the form of higher bills. It is therefore important that the energy regulator in Great Britain, Ofgem, has sufficient powers to investigate and punish those behaving in such a way and that that acts as a deterrent. Insider trading and market manipulation in the wholesale energy markets are prohibited by the wholesale energy market integrity and transparency regulation—REMIT —which has been in force since December 2011.
In June 2013, the Government made civil enforcement regulations for REMIT—the Electricity and Gas (Market Integrity and Transparency) (Enforcement etc.) Regulations 2013—which give Ofgem powers to impose unlimited financial penalties, access to information and the power to enter the premises of a regulated person under a warrant. In March 2015 the Government strengthened that regime by making further regulations to create criminal offences of intentionally or recklessly breaching the prohibitions on insider trading and market manipulation.
The 2013 regulations give the regulator the power, under warrant, to enter premises to search for, and seize, information and documents that appear to be relevant. However, there are cases where Ofgem may have difficulty exercising this power of seizure. Investigating officers may be presented with a large volume of documents. Identifying documents relating to suspicious transactions among many documents of a similar nature can be akin to finding a needle in a haystack. Ofgem currently has no power to take away an entire body of documents to sift them for relevance off premises. In some cases, this may mean that vital evidence is missed.
Section 50 of the Criminal Justice and Police Act 2001 addresses this problem. It enables a person exercising a power of seizure to remove material from the premises being searched to determine whether it is something which the person is entitled to seize if it would not be reasonably practicable to determine that on the premises. The power in Section 50 applies where a person is exercising a power of seizure listed in Schedule 1 to the Criminal Justice and Police Act. More than 60 such powers are already listed in the schedule. The effect of this order is to extend this power to Ofgem when it is searching premises to investigate breaches of REMIT. The Government believe this would be a measured and sensible extension of Ofgem’s powers, which will help to ensure it can take effective enforcement action.
The Government sought views in December 2015 through consultation on whether Ofgem’s powers should be strengthened to bring them into line with this provision. Industry stakeholders, perhaps not surprisingly, believed that the additional powers offered to Ofgem were disproportionate. Others, including consumer groups, were neutral or in favour of the provision. The Government believe that effective regulation in this area is essential and that sufficient safeguards will be in place to meet stakeholder concerns. The Government do not believe that costs will be unreasonable.
The power will apply only where a court has granted Ofgem a warrant to search premises. When Ofgem exercises this power it will be under a statutory duty to sift information as soon as reasonably practicable after seizing it and return anything which it was not entitled by the warrant to seize. Additionally, a person who is the owner of a document can apply to the court for the return of such material.
We believe that this additional power will aid Ofgem in its investigation of market abuse and that the safeguards should ensure that it is not used unnecessarily. I commend the order to the Committee. I beg to move.
Lord Stevenson of Balmacara (Lab)
My Lords, I thank the Minister for his full introduction to this order. Again, we have no significant concerns about the order itself because it is an appropriate way forward. Indeed, it seems to be needed, based on the description we have had.
As the Minister has said, the Secondary Legislation Scrutiny Committee reported on the order in order to draw it to the attention of the House on the grounds of a policy likely to be of interest. The committee’s main concern seems to be about the rather extended time taken to go from the initial idea booted around in the consultation paper in December 2015 to the final decision to move forward on a part of what was consulted on—only a part—as late as earlier this year. The Minister said that the issues raised will be taken back with everything else, but he did not give us an explanation about that issue. The letter from the department that covered it is also rather vague. It is mainly to do with the fact that internal government processes got in the way of the smooth running of the overall proposal and that the decision was taken quite late simply to go ahead with these REMIT proposals. More information about that would be of interest.
My concern is slightly different. The consultation that was carried out was broader than the REMIT, but the Explanatory Memorandum focuses on those issues. I take it that the references in Article 8 of the Explanatory Memorandum are around that. It says in paragraph (8.2):
“Some energy companies expressed support for the initially proposed “seize and sift” powers, but the majority of companies and representative groups”—
so it is not quite as the noble Lord mentioned—
“argued that these were disproportionate, unnecessary or gave Ofgem too much leeway on which information to remove”.
In other words, they were about the powers. It seems to me that the majority of companies did not agree with the proposal. They felt that the existing powers would be sufficient and that seeing papers on sight, sifting through them there and taking information away in that form would be sufficient for their processes. In paragraph (8.3) however, the department’s response states:
“Having taken account of the consultation responses, BEIS considers that the aim of the policy … justifies the additional burdens identified by industry”.
They were complaining not about the burdens, but the powers. The Explanatory Memorandum is completely silent on whether these powers are appropriate. It seems that the Government have decided to ignore the consultation and go ahead. Will the Minister comment on that? He is not wrong in the sense that the ends may justify the means, but the process would have left a number of companies a bit bruised, given the very short time available and the lack of any individual consultation. They would be entitled to feel that they have not been taken account of properly.
Finally, I have to come back to the matter of the implementation date. This is a new group of civil servants and I can expand on my worries. Other noble Lords will realise that I have raised this matter before. This order may be cited from, and comes into force on, the “twenty-first day after the day on which it is made”. It will have a considerable impact on a small number of companies operating in the electricity and gas field. It is therefore not inappropriate to think that the order should start from the common commencement date: 6 April. If you do the maths, 21 days takes you just beyond 6 April. It would be not inappropriate if the Minister decided to suggest, even with the regulation in this form, that 6 April would have been a better date, and I appeal to his better judgment to make the necessary changes if he can.
Lord Bradshaw
In considering this order we should consider the enormous public dissatisfaction with some of the regulated industries that we have seen for a long time. I think I am correct that the regulators have often been caught out saying that prices should be allowed to rise by a certain amount, and immediately after the announcement, companies’ share prices have risen. To me, this means that the regulator has misjudged the situation. Bodies such as Ofgem are extremely powerful, and from the point of view of the consumer and the general public it is important that a very close watch is kept on their activities. I am happy to support what is in this paper because the balance of advantage between consumer and supplier is tilted very much one way, and this will tilt it back the other way.
Lord Henley
My Lords, I think that I am grateful to the noble Lord, Lord Bradshaw, for his comments. It is always difficult to get the balance right in these matters, which is what we are trying to do in a number of other pieces of legislation—as the noble Lord will be aware—that are before another place at the moment.
It is important that we ensure that Ofgem has the appropriate powers to look after the consumer interest. Obviously, we take very seriously the idea of any extension of powers that we might grant to Ofgem or any other body, and that is why, under the Police-and-whatever-it-is Act 2001, we have to make an order if we want to do that. They are affirmative orders and we have to come to the House to argue the case for them. That is what I am doing.
The noble Lord, Lord Stevenson, was slightly worried about the consultation and whether we listened to the consultees. What I said in my opening remarks was that the industry and stakeholders, perhaps not surprisingly, believed the additional powers were disproportionate, but I added that others, including consumer groups—this is the point that the noble Lord, Lord Bradshaw, picked up—were neutral or in favour of the provision. The Government have to consider these matters very carefully.
Lord Stevenson of Balmacara
Just to be clear, paragraph 8.2 of the Explanatory Memorandum does not say what the Minister just said. It may just be that the expression needs to be changed, but it states,
“the majority of companies and representative groups”.
I think “representative groups” includes consumer groups. The Minister said there were others, but we do not have the detail. They,
“argued that these were disproportionate, unnecessary or gave Ofgem too much leeway”.
Lord Henley
It does not just include consumer groups. The point I was making was that consumer groups in particular were neutral or in favour. Having listened to the consultation, the Government came to their conclusions and decided what was necessary. We considered that the powers were very important and we considered bringing them in with appropriate safeguards. I think that is what we have done.
The noble Lord was concerned about the timing of the order. I am glad that it was not just me listening to him. As he said, there is a collection of officials listening behind me, and I hope this will suffuse through the department so that all of us—Ministers as well as officials—can be aware of his concern that as far as possible we stick to the appropriate dates. Obviously, there will be other occasions when we cannot. I have no power to make amendments now. The noble Lord probably guessed that, since he made the suggestion. Since I have general agreement that this order should go through, I repeat that the department could possibly do better in future. I will keep my beady eye on these matters and see to it that we do as well as possible. As I said at the beginning, we will continue to take the Committee’s views into account in future.
Lord Stevenson of Balmacara
I go back to my original point and ask the Minister, for my comfort and satisfaction, to write with a bit more explanation about the make-up of the responses that were received. May I also welcome the Minister to the small band of people who believe in common commencement dates?
Lord Henley
The noble Lord will get a reputation for having a bee in his bonnet about common commencement dates and will, no doubt, be teased by his colleagues as “Lord Common Commencement Dates” for ever. I will certainly write to him in greater detail on the other matter. I am grateful for the support from both noble Lords.
Passport (Fees) Regulations 2018
(6 years, 9 months ago)
Grand CommitteeRead Full debate Read Hansard Text Read Debate Ministerial Extracts
Baroness Williams of Trafford
That the Grand Committee do consider the Passport (Fees) Regulations 2018.
The Minister of State, Home Office (Baroness Williams of Trafford) (Con)
My Lords, the purpose of this statutory instrument is to set passport fees for the first time under the primary charging powers provided by the Immigration Act 2016, which allow the Home Office to reflect not only the costs of considering an application and issuing a passport but any other function of the Secretary of State in connection with UK passports. This includes the costs associated with British citizens leaving and entering the UK.
Over the last year the average turnaround time for the vast majority of the estimated 7 million passport applications that HM Passport Office handled was in the region of seven days. This excellent performance has resulted in high levels of customer satisfaction. The Institute of Customer Service has once again ranked HMPO as the top performing public services organisation in its recent customer satisfaction index survey. The service has improved its customer satisfaction index scores over each of the last five years and, for the first time, also appears in the top-50 list of high-scoring organisations on the customer satisfaction index survey, along with Amazon and John Lewis.
The full costs associated with processing applications and issuing passports are funded by income from fees charged for passport services, but the number of passengers arriving at the UK border continues to rise, with about 130 million passengers currently arriving each year, of whom about 70 million are UK passport holders. This leads to a significant cost for the Home Office, which is currently largely funded by the Exchequer.
Reflecting the costs to the Home Office associated with passengers leaving and entering the UK in passport fees means that we can reduce the burden on the Exchequer and move towards operating on a “user pays” basis for the overall service provided by the Government to UK passport holders. It is obviously important that we recover any additional costs in a balanced way that incentivises the use of a more efficient online application process, which we intend to become the standard passport application channel. So, while we propose to increase most passport fees, people who submit their application online will, for the first time, be charged a lower fee than if they submit their application via post. This reflects the fact that it currently costs more to process a postal application. It also supports the wider commitment to improve online services to meet the needs and expectations of customers who increasingly use digital channels to access government services.
We intend to increase the fees for an online adult passport by only £3, which is broadly in line with inflation. This will mean that the current adult fee will be £75.50, which is still below the £77.50 fee charged for an adult passport between 2009 and 2012. An online child passport fee will increase by the same amount and will be set at £49. Fees for adult and child passports applied for via post will each increase by £12.50 to £85 and £58.50 respectively, to reflect the additional cost of processing postal applications.
With more than 90% of adults in the UK having access to the internet and third parties being permitted to apply on a person’s behalf, the vast majority of people should face no obstacle to applying for their passport online. However, Her Majesty’s Passport Office is developing further help for those who wish to apply online but need some additional advice or support to do so. It is working to deliver an assisted digital leaflet for relevant support groups to enable them to help their clientele to apply online. This will also ensure that their online application route is built in such a way as to be extremely simple to use and to be compatible with various aids, such as screen readers, that people might use to make their interactions with the passport service easier. An advice line is available for those who wish to discuss their requirements with representatives of the organisation.
The Committee will be aware that HMPO provides excellent priority services for applicants who wish their applications to be processed faster, or who prefer to apply in person. It is right that applicants should pay more for a priority service and we intend to move the fees for those services towards full-cost recovery sooner than for online or postal services, given their optional nature and the additional benefits that a customer receives by using them.
Finally, within these regulations we are holding a new and specific power that allows the Home Office to consider waiving fees for replacement passports where they have been lost or destroyed during an incident considered a national emergency or crisis, or where the UK Government have activated exceptional assistance measures overseas. This will allow the Government to ensure that they can provide the appropriate level of support to vulnerable people in emergency situations and crises.
We are committed to ensuring that this Government continue to move towards a position where the border, immigration and citizenship system is funded by those who directly use it. Moving to a position where passport application fees include the costs of UK passengers leaving and entering the UK is part of this. The additional income raised from the proposed increase in fees will help to protect vital front-line services and ensure that we continue to operate a world-class border system. I commend the regulations to the Committee.
Lord Kennedy of Southwark (Lab Co-op)
My Lords, I thank the noble Baroness, Lady Williams of Trafford, for explaining to the Grand Committee the purpose behind these regulations this afternoon.
First, I have absolutely no problem with full-cost recovery. Generally speaking, it is not a bad thing to aim for in a variety of services. I have been calling for it for planning applications for a very long time, but the Government have stubbornly refused it. Perhaps the Minister would be kind enough to mention to her noble friend Lord Bourne of Aberystwyth and the Ministry of Housing, Communities and Local Government that this is a good thing to do, because I cannot get that government department to consider doing even one council pilot on full-cost recovery. They just will not have it—so if the Home Office is doing it, perhaps they will look at a pilot.
Having said that, the rise of £12.50 in one go is a little steep. It may have been better to phase it in over time. Inflationary rises in the cost of services are what we have come to expect and I generally accept them. I do not have a problem with there being two levels of fees, taking account of the costs of processing applications. I get that point. But while I know the Minister referred to the “vast majority”, we are still talking about millions of people who are not in that vast majority. They are not e-enabled for a variety of reasons. They might not have access to a computer or have the skills to use the facilities; equally, they may have a computer and the skills but be in an area where the broadband coverage is so poor that they cannot do it anyway. The Minister might suggest in a moment that they should go to a library, but she will know that the number of libraries in Britain is much reduced from what it was 30, 20 or even 10 years ago. So that will not always be the solution to the problem—again, there is an issue there.
The power to have the fee waiver is sensible and I am very supportive of it. But one thing that the Government should guard against is an issue that exists in a variety of local government services. It is that if you are an ordinary, decent and law-abiding citizen, why do you have to pay more for services just because you are poor? I noticed that that was not addressed in the impact assessment. There is lots about what the Government are going to do, but I cannot find any reference to why somebody poor has to pay more. That issue needs to be looked at across government. It goes across business, too, and other areas, and it irritates me.
I know this is nothing to do with the noble Baroness, but if you go to an area that is not as wealthy as somewhere else, you find that the less wealthy area has no cash machines and that you have to pay £3 or £4 to get your £10 note out. If you are a genuine, ordinary, decent, law-abiding person, why is it that, just because you have less money than someone else or live in a poorer area, you have to pay more? The Government should always be mindful of that as a policy issue across a range of things. Having said that, I have no particular issue with the regulations and I am happy to agree to them.
Lord Stoneham of Droxford (LD)
My Lords, I thank the Minister for her explanation of these regulations and we are broadly supportive of the idea, in particular the move to online and the proposal for a price incentive to encourage people to apply in that way. I am sensitive to the concern about people who do not have online access, but I expect that the Government will take appropriate action to make sure that they are supported.
I wish to make three points. First, if this was the private sector, one would have peak and trough pricing. I should like to know what the peaks and troughs for passport applications are. In the summer there are always problems when people want to renew their passports, and presumably there is a lull in the winter when fewer people are travelling. One of the costs to the public sector, that of retaining peak staffing, could be assuaged if more people are encouraged to apply for their passports when the demand is lower. Have the Government considered that and are there great peaks in the workflow?
Secondly, while I understand that people must pay the cost of issuing a passport, what proportion of the costs of maintaining our borders and our consular activities overseas are we aiming to meet through passport renewal? We all know that there is a national interest in our borders and in having consular services overseas because they perform other functions besides looking after British passport holders, so obviously a key proportion of the costs of those services should come out of general taxation rather than simply being met by people who apply for passports. What proportion of the costs of these services will this measure contribute and what is the Government’s ultimate aim here?
Finally, one thing that Brexit will do is to increase the cost of our borders because it will require extra people to man them. Are those renewing their passports going to have to pay for the cost of Brexit or will it come out of general taxation? My view is that it is the Government who are creating this extra cost; they should therefore pay for it out of taxation. They should not be trying to put the extra costs of Brexit on to those who apply for passports. We should not forget that the economy benefits hugely from tourism so it is in our interest to improve the current border controls, which many people regard as slow and inefficient. What are the Government doing to make improvements in, for example, the flow of people through our border controls, which I am sure they have an interest in since they are now seeking an additional source of revenue to pay for them?
Baroness Williams of Trafford
I thank both noble Lords for their questions. I turn first to the contribution of the noble Lord, Lord Stoneham. He asked about peak and trough pricing, but then suggested that the extra costs of maintaining the border should be met through general taxation. We have considerably improved the technology and intelligence around our border and we think that we will be able to meet any additional burdens created through Brexit. The fees application regulations before us are not about Brexit; they are about putting in train something that was decided in the Immigration Act 2016, and thus I think before Brexit was even a twinkle in the general public’s eye.
As to what proportion of money will go to the border, we expect that about 40% of the current full cost to the Home Office of UK passengers leaving and entering the UK will be funded by passport fees after these increases. We did consider peak and trough schemes, and looked at variable pricing, but the cost of that would outweigh the benefits.
Baroness Williams of Trafford
That was the analysis—the costs would outweigh the benefits of doing it.
The noble Lord, Lord Kennedy, asked about the £12.50 increase. That of course is for the paper application. The analysis shows that a premium service is more expensive, paper being not the cheapest way to deliver passports or indeed other items. That is reflected in that fee increase. As for full-cost recovery, the noble Lord and I have had many an exchange on such local government matters. He asked me to take it to MHCLG. I will, but I suspect the reason for not having full-cost recovery, as with all local government things, is so that things do not become overpriced. MHCLG always sets them under full-cost recovery, but I shall certainly take that back.
The noble Lord, Lord Kennedy, also asked about digital inclusion, particularly for poorer people and people without access to libraries. The Government totally recognise this point. The digital strategy uses 3,000 libraries across England to provide a trusted network of accessible locations with trained staff and volunteers, free wi-fi, computers and other technology. In addition, people can use a friend’s or colleague’s computer to do this. Just because you have not got a computer in your home, that does not disfranchise you from applying online.
I reiterate my support for the noble Lord, Lord Kennedy, about being charged at cash machines. It is something that really irritates me. I accept that sometimes the only cash machine in a location is a paid-for one and that some of the fees really are quite outrageous. I think that is about it. Have I answered everything or does the noble Lord, Lord Kennedy, want to come in?
Lord Kennedy of Southwark
I know this is slightly straying off the regulations before us today, but that irritates me. Like the noble Baroness, I can obviously go somewhere else and not use the machine, but sometimes people do not have that ability or that benefit. It is the same of course with people who have to go to the newsagents to get electricity for their meters. There is an issue here. Why do we accept that if you are poor but law abiding, hard-working and doing your best, you have to pay more for things when other people have them more cheaply? That is a general issue and a general point.
Lord Stoneham of Droxford
Before the Minister sits down, can I go back to the two points I raised? I would like to see the peaks and troughs, and presumably monthly figures are available. I would be quite interested to see them. Secondly, I do not think that the Government should easily be able to get away with the assumption that there is no cost from Brexit when it comes to border controls. That is almost fantastical and I do not think anybody would believe it. It would be useful to know how many of the 130 million people going through our borders actually have EU passports as opposed to UK ones. We know the quantity of people who are doing that. I go back to my original question. If you assume that passport renewals will pay for 40% of the border costs and if the costs go up because of Brexit, does that mean we will have higher proportionate passport renewal costs over time in order to keep to that percentage?
Baroness Williams of Trafford
I cannot answer some of those questions but I know that HMPO will have done an analysis of the figures. I was trying to say, but I do not think I was doing it very articulately, that we have a variety of technological, intelligence and other methods of predicting people crossing the border and of looking for the needle in the haystack, which is the person who is crossing the border illegally or someone who might be on our watch list. Our technology and intelligence have improved significantly. We have e-gates and other methods such as heartbeat monitors at the border. I do not disagree with the noble Lord that volumes might go up, but we have better methods of predicting and detecting illegal crossings of the border. On the other point about numbers, I will write to the noble Lord.
Motion agreed.
Committee adjourned at 3.26 pm.
House of Lords
Royal Assent
Thursday 15th March 2018
(6 years, 9 months ago)
Lords ChamberRead Full debate Read Hansard Text Amendment Paper: Consideration of Bill Amendments as at 21 February 2018 - (21 Feb 2018)
Brexit: Fashion Industry
(6 years, 9 months ago)
Lords ChamberRead Full debate Read Hansard Text Read Debate Ministerial Extracts
Lord Clement-Jones
To ask Her Majesty’s Government what assessment they have made of the impact on the fashion and other design-based industries of the potential loss of European unregistered design rights for United Kingdom-generated designs following Brexit.
The Parliamentary Under-Secretary of State, Department for Business, Energy and Industrial Strategy (Lord Henley) (Con)
My Lords, as expressed in the United Kingdom technical note on other separation issues, where the UK does not have existing domestic legislation to protect certain types of rights, it will establish new schemes. This will preserve the full scope of the unregistered Community design right in the United Kingdom.
Lord Clement-Jones (LD)
My Lords, the hard exit from the EU means the loss of EU unregistered Community design rights and of vital protection for designers who first disclosed their design in the UK. This is just the way to lose London Fashion Week. We have discussed the problems with loss of country of origin rights for our broadcasters. Is this not yet another example of why the creative industries want us to remain in the single market?
Lord Henley
My Lords, I am not going to get into the wider debate about the EU at this stage, but what I can say, to expand on my Answer, is that we will bring forward various statutory instruments in this country to further our rights here. The negotiations will take place with the EU as part of the leaving process, which we hope will deal with these matters, but there are also, as the noble Lord is fully aware, what I think I can call inclarities in the current EU regulations, which obviously need to be sorted out by the EU itself.
Lord Howarth of Newport (Lab)
My Lords, in framing new law for the period following Brexit, will the Government be mindful that intellectual property rights create monopolies? Will they therefore reflect carefully on the appropriate balance within the UK’s future intellectual property regime between the producer interest and the consumer interest and make sure that they are not unduly influenced by producer lobbies?
Lord Henley
My Lords, obviously we will take account of all those who have an interest. The noble Lord is right to draw that to my attention. He will be aware that we went through a major reform of intellectual property rights with the 2014 Act, which I think was discussed at length in this House—fortunately, I was not involved. I am not sure that the noble Lord would want to go through that process again, but there are some minor changes that need to be made as a result of leaving.
Lord Foster of Bath (LD)
My Lords, not only will we need reciprocal arrangements with the European Union with regard to intellectual property, including unregistered design rights, but does the Minister accept that we will also need them with regard to enforcement of intellectual property rights, currently carried out in part by Europol? How will that enforcement be carried out?
Lord Henley
My Lords, again, that will be a matter for discussion as part of the leaving process.
Baroness Goudie (Lab)
My Lords, we have a problem of indecision. Organisations such as fashion week will disappear from London. The amount of GDP that fashion week brings to this country is enormous. As we are not doing very well in other parts of the world, we really need it to continue. Will the Government assure those industries that they are welcome here, and do so quite quickly, otherwise they will look to go to Paris and Milan, because they are asking and baiting them to come?
Lord Henley
My Lords, the noble Baroness is taking a rather pessimistic view of things, but we are aware of those risks. When one thinks of the strengths of the industry in this country, I think it is very unlikely to leave overnight. We will be in discussion with people such as those at the British Fashion Council and listen to their particular concerns. As I said, we will continue with our negotiation as part of the leaving process.
Lord Howell of Guildford (Con)
Did my noble friend notice the highly successful Commonwealth fashion event the other week, which demonstrated that London fashion was roaring ahead regardless of Brexit? It involved wider-world influences in a highly successful and satisfactory way.
Lord Henley
My Lords, sadly, I missed that, but I am very grateful to my noble friend for bringing it not only to my attention but, more importantly, to the attention of the House.
Baroness Hayter of Kentish Town (Lab)
My Lords, as a dedicated follower of fashion—that gives away one’s age, does it not?—I would add that although the IP itself is important, we also need our lawyers to continue to represent any of our designers when they appear in courts in other countries. We also need the models and others to be able to move across borders so that they can perform or show their wares. Will the Minister give some assurance that, in the discussions on Brexit and the ability to move for work, this will be uppermost in their minds?
Lord Henley
Yes, my Lords, we will take the point about lawyers into account, and I will make sure that the noble Baroness’s concerns are brought to the attention of my honourable and right honourable colleagues. As regards others such as models moving abroad, I think that there will probably be no problem whatever, because there will be a particular attraction to making sure that English models and all others involved in the fashion industry are able to work in Europe and sell their wares.
Lord Tebbit (Con)
My Lords, I wonder whether my noble friend can tell me whether we have any problem with the Americans, for example, behaving in a dastardly, unfair way, as Lib Dem Peers fear our European friends would behave if we were not in the EU.
Lord Henley
My Lords, I think I had better confine myself purely to questions about fashion rather than other areas, but on that particular subject I can agree with my noble friend.
Lord Wallace of Saltaire (LD)
My Lords, does the noble Lord’s department have an estimate yet of how many statutory instruments will be required to fulfil the pledge he has just given us? Will those statutory instruments be by the affirmative or the negative procedure?
Lord Henley
My Lords, on the overall number of statutory instruments that will be required, different people have put forward different estimates of very large numbers. As regards this particular subject, as far as I know, we need just one statutory instrument. There might be more, and I will write to the noble Lord if that is the case. Whether they will be affirmative or negative is again something that I cannot answer at this stage, but I will write to the noble Lord if a decision has been made.
The Minister of State, Ministry of Defence (Earl Howe) (Con)
My Lords, I have taken a note of the speakers who have contributed, and it is the turn of the Conservatives.
Lord Lawson of Blaby
My Lords, I congratulate my noble friend on his excellent Answer to the original Question. The Liberal Democrats’ refusal to accept this clearly portrays a lack of confidence in this country’s ability to govern itself. Does he think that that is simply a lack of confidence in this country, or that it might be because the Liberal party will never be in government again?
Lord Henley
I did serve in government with the Liberal Democrat party in the past. Whether that will happen again is a matter for speculation, but I suspect it is unlikely that I would be part of that, and one would hope that the Liberals would not be part of it either.
Children: Missed Education
(6 years, 9 months ago)
Lords ChamberRead Full debate Read Hansard Text Read Debate Ministerial Extracts
Baroness Massey of Darwen
To ask Her Majesty’s Government how they plan to respond to the National Children’s Bureau report, Children Missing Education, published on 31 January; and what plans they have to improve the collection of national-level data on such children.
The Parliamentary Under-Secretary of State, Department for Education (Lord Agnew of Oulton) (Con)
My Lords, in September 2016 we introduced a duty on schools and local authorities to work jointly when carrying out inquiries to establish the whereabouts of children to ensure that they are safe and receiving suitable education. We have a commitment to review the impact of these regulations by September 2019. The review will take into account the points raised in the National Children’s Bureau report issued in January this year.
Baroness Massey of Darwen (Lab)
I thank the Minister for that response. He will be aware that almost 50,000 children were missing from education between 2017 and 2018. How will the Government build an accurate picture of who these children are, where they live and what their needs are? How will they form a strategy to deal with this problem when there is no national data on these children?
Lord Agnew of Oulton
My Lords, we believe that part of the reason for the awareness of more children being home educated is as a result of the duties we placed on schools in the 2016 guidance, which I mentioned in my first Answer. The next stage is to ensure that local authorities are using all their existing powers to investigate cases of where home education might be occurring or where children are missing. Yesterday, in our integration strategy, we announced further measures on that.
Baroness Nicholson of Winterbourne (Con)
My Lords, will the Minister confirm that these children will form a high priority for the teaching of English, reading and writing, given that they are most likely to be among the three-quarters of a million people in the United Kingdom who do not speak our native language?
Lord Agnew of Oulton
Obviously, children who are missing from education are one of the highest priority categories that we have to worry about. In the integration strategy document announced yesterday, we launched a consultation on the guidance and enforcement of independent school standards—a lot of children can end up in such small schools—and guidance on unregistered schools, which will deal with similar issues.
Baroness Garden of Frognal (LD)
My Lords, some groups particularly at risk of missing education include disabled children, those with special educational needs, young offenders and children in care. Surely these young people should be known to social services, the police, doctors or other authorities. Will the Minister tell us what the Government are doing to encourage these authorities to liaise with the education authority to ensure that these children get the education that they need and deserve for a better life?
Lord Agnew of Oulton
My Lords, it is already a requirement following the issue of our guidelines in 2016 that, for any child registered as SEN, permission must be sought from the local authority to move them to home education. We are strengthening that guidance, as announced yesterday, and have indicated that we will carry out an exclusion review, which will of course begin with these vulnerable children.
Lord Touhig
My Lords, I apologise to the noble Baroness; I did not see her standing up. In England and Wales, 70% of children excluded from school have learning difficulties. Many exclusions are not even officially recorded—they are soft exclusions. We are in danger of creating an underclass of young people who are lacking basic education, are alienated from society and might become criminalised. Unlike the point made by my noble friend Lady Massey, this data is known and is available. What are the Government doing about it?
Lord Agnew of Oulton
My Lords, it is important first to differentiate between temporary and permanent exclusions; the ones of concern are, I think, the permanent exclusions. The figures on that have not increased dramatically in the past few years—it has gone up from 0.07% to 0.08%. However, as I mentioned in my earlier Answer to the noble Baroness, we have announced an exclusion review, which will look at many of these issues. The other point I would like to raise is that we have opened a number of alternative provision free schools over the past few years, and they are dealing with some of these issues.
Lord Laming (CB)
My Lords, does the Minister accept that some of these children will be denied any form of education and, perhaps even more serious, those who are being denied it are also being excluded from the safeguarding arrangements in this country and therefore are exceptionally vulnerable to abuse, neglect and exploitation?
Lord Agnew of Oulton
My Lords, I accept that this is a vulnerable group of children, but local authorities have a number of powers of intervention. The guidance that we will be issuing shortly will clarify that to ensure that they aware of all the tools that they have available to them.
Lord Polak (Con)
My Lords, we are a tolerant and diverse society in which home schooling plays a part. However, there should be a register of these institutions to ensure better safeguarding, and certainly premises should be looked at from a health and safety point of view. Who is driving the agenda for secularisation? Will the Minister remind Ofsted that the humanists are not the only minority group with opinions? Does he agree it is bizarre that it is they who are the most intolerant and are being evangelical in wanting everyone to conform to their views?
Lord Agnew of Oulton
My Lords, we try to represent a broad coalition in education. I am proud that we live in one of the most tolerant and inclusive countries in the world—as I said in an article in the Times today—and we have to meet the concerns of all people. The humanists have to be reasonable, as do any of the other religious groups, and my job is to ensure that we reach a compromise for all concerned and that children are safe.
Lord Watson of Invergowrie (Lab)
The Minister referred to home education in his Answer to my noble friend Lady Massey, although that is not mentioned in the Question. He avoided the Question on the collection of data, which is important. The Government do not collect data on the number of children whose parents claim they are being educated at home or elsewhere. The same is true of national statistics on unregistered schools, which are an increasing problem. No one knows how many children are being educated in unregistered schools, although Ofsted estimates it is as many as 6,000. Surely the time is now right for the Government to place a legal obligation on parents to register children not attending school, as proposed by my noble friend Lord Soley in his Bill which is going through your Lordships’ House. Will the Minister signify his support for that?
Lord Agnew of Oulton
My Lords, as I made clear at Second Reading, we are aware of these concerns and have been motivated by the Bill of the noble Lord, Lord Soley. We shall watch its progress in Committee with interest. I am not able at this stage to give a unilateral commitment on registration, but I am sympathetic to the arguments made by the noble Lord opposite. We have to be aware of the nuancing around this. For example, if we insist on registration, what do we do about the parents who refuse to register? If that does not solve the problem, they remain missing. What do we do with parents like the one who said in the newspapers the other day that she would go to prison rather than co-operate in any way? This is an open area for discussion, and I have an open mind.
Schools: Outdoor Classroom Day
(6 years, 9 months ago)
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Baroness Miller of Chilthorne Domer
To ask Her Majesty’s Government how they plan to support Outdoor Classroom Day, to be held on 17 May; and whether they intend to increase the opportunities for children to learn in an outdoor environment.
The Parliamentary Under-Secretary of State, Department for Education (Lord Agnew of Oulton) (Con)
My Lords, learning outside the classroom can provide children with stimulating experiences, building on knowledge gained through formal lessons. Teachers may take opportunities within the national curriculum for such learning, and events such as this serve a useful purpose in raising awareness for outdoor learning. We leave it to teachers to use their professional judgment to decide how to plan and deliver their lessons, including whether to participate in events such as Outdoor Classroom Day.
Baroness Miller of Chilthorne Domer (LD)
My Lords, I thank the Minister for his positive response and for recognising that there are benefits. However, does he accept that the benefits are much greater than he has suggested? Several studies have shown that academic achievement is raised, behaviour is improved and everything across the range of children’s activities benefits from substantial time spent in outdoor learning? Does he agree with Sir David Attenborough, the patron of Learning through Landscapes, which runs Outdoor Classroom Day in the UK, that unless children understand nature they will not be able to protect it when it is their generation’s turn to do so? Will he ensure that his department introduces a minimum time for children to spend outdoors in a quality, natural environment?
Lord Agnew of Oulton
My Lords, I very much agree with the noble Baroness that connection to nature is vital. I grew up on a farm. At 14 years old I was sent out by the farm manager to do some straw burning on my own and I ended up needing 13 fire engines to deal with the issue. I learned on that day that you do not light a fire with the wind behind you and that if you cut a firebreak it needs to be commensurate with the strength of the wind. I learned that smoke is as dangerous as fire. So you do not have to convince me. We are moving forward: in the January environment plan we announced £10 million of funding for initiatives including school visits to natural environments, the nature-friendly schools programme and an expansion in care farm places, which I hope I can expand on in a moment.
Baroness Byford (Con)
My Lords, is the Minister aware of the enormous work that is done between the farming community and local schools, in particular with the agricultural societies that are all around the country? They host open days at their shows to which schoolchildren, particularly those of primary school age, are encouraged to go. One difficulty is the cost of getting a bus to transport the children, but it is a very good scheme. There is a lot going on apart from on the day that my noble friend Lady Miller mentioned.
Lord Agnew of Oulton
My Lords, I agree with my noble friend. Open Farm Sunday is a very good example of this. Last year, 270,000 visitors visited more than 350 farmers on one day and it is happening again this year. Indeed, it happened with my own farm manager on his farm. He had 4,000 visitors, mostly children. Such initiatives are educating children about life in the countryside.
Baroness Massey of Darwen (Lab)
My Lords, should outdoor education not form part of personal, social and health education in schools, which has recently become mandatory, developing, for example, self-esteem and self-confidence, as well as knowledge about fire and so on? Should this not be considered by the Government as part of their scheme?
Lord Agnew of Oulton
My Lords, we have recently initiated a consultation on personal, social and health education. The call for evidence closed on 12 February and we expect to consult on draft guidance by the summer of this year. I will certainly take on board the comments of the noble Baroness to ensure that we are including such useful things as she suggested.
The Countess of Mar (CB)
My Lords, the Minister briefly mentioned care farms. Does he agree that they are an ideal way of encouraging children who have become disaffected with school and, indeed, disaffected with society, bringing them back into society when they are not suited to desk learning? They can learn through such things as looking after animals, growing plants and working in forestry. This is an ideal way of bringing them back from the desert they have found themselves in.
Lord Agnew of Oulton
The noble Countess is correct. Preparing for these Questions is always a somewhat anxiety-inducing exercise, but it is a way to learn about how Britain works. I admit that a week ago I had never heard of care farms and now I discover that there are 230 in England and that some 300,000 children are visiting them. We have committed to trebling that number of children. There is strong evidence to show that they can help children with mental issues; they can help to improve mood, and reductions in depression and anxiety can flow from these farms, so I was hugely encouraged to discover them.
Lord Storey (LD)
My Lords, has the Minister heard of forest schools? There is a strong movement of forest schools in the UK: given the Minister’s own formative experience of outdoor education, how can we encourage the development of more forest schools? Maybe there is an opportunity, with the Government’s announcement of the northern forest, to ensure that its development includes outdoor education opportunities for young people.
Lord Agnew of Oulton
My Lords, again, forest schools were a new discovery for me this week. I gather that we have some 400 of them in the country and that they play a very useful role in education about the outdoors for children. I can refer the noble Lord to one organisation that I used to be a trustee of 10 years ago. It is called the Country Trust and its purpose is to organise visits, particularly from inner-city schools, to farms and indeed to forests. So I support the sentiments of the noble Lord and anything we can do to encourage this is good.
Online Hate Speech
(6 years, 9 months ago)
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The Lord Bishop of Gloucester
To ask Her Majesty’s Government what action they are taking to combat hate speech online.
The Minister of State, Home Office (Baroness Williams of Trafford) (Con)
My Lords, this Government abhor all forms of hate speech. It is clear that what is illegal offline is also illegal online. That is why we are taking a cross-government approach through the hate crime action plan, which will be refreshed this year. We are funding an online hate crime hub, building digital resilience and have successfully worked with industry and partners internationally to agree the removal of illegal content within 24 hours.
The Lord Bishop of Gloucester
My Lords, we know that websites and apps have brought many benefits, but at a cost. From my own visits to schools, I am particularly concerned about the hate speech that young people are exposed to online, including through anonymous apps like Sarahah. What are the Government doing to ensure that the age verification checks on apps are effective? How are the Government working with smaller developers to ensure that their platforms are not used to propagate threats and hate speech?
Baroness Williams of Trafford
The right reverend Prelate raises a very important issue in the online space for children and young people, because we know that they spend a significant amount of time online. The Government are working extensively with platforms on matters such as age verification, and on things like bullying and trolling online that young people are exposed to that can blight their lives.
Lord Paddick (LD)
My Lords, on the basis that the House cannot get enough of the European Union at the moment, I ask whether the Minister has seen the Reuters article dated 19 January entitled “Social media companies Facebook, Twitter, Google’s YouTube have accelerated removals of online hate speech in the face of a potential European Union crackdown”. Does she agree that pressure brought to bear on social media companies by the 28 countries of the European Union is likely to be far more effective than the UK dealing with these companies alone?
Baroness Williams of Trafford
I hope I can assure the noble Lord that in fact the UK does not come from a position of thinking that it can deal with these things alone. It is not just a European problem; it is a global problem. On the European point, one of the key aims of the EU code of conduct on countering illegal hate speech online is to increase the proportion of illegal hate speech online that is reported within 24 hours. We fully support that.
Lord Kennedy of Southwark (Lab Co-op)
When did the noble Baroness last speak to the internet providers and other companies on these matters, to have this disgusting material removed from their sites? As the right reverend Prelate said, small developers are a particular concern. Does she believe that all companies do everything possible to get this material down?
Baroness Williams of Trafford
I had the opportunity to speak to internet providers at the G6 when we were discussing this very issue. Both the UK and France were strong on pushing for illegal content to be taken down within 24 hours. I have had other opportunities to speak to internet platforms on the same thing. I agree with the noble Lord that some of the smaller companies maybe do not have the technologies, but they should partner with some of the large companies. Yes, I have spoken on several occasions to them.
Baroness Warsi (Con)
Does my noble friend agree with me that all Members of this House should be working to eradicate all forms of hate speech? I note that the noble Lord, Lord Pearson, is desperate to get into this question. Maybe if he has the opportunity to do so, he would explain whether he thinks it appropriate for Members to host the likes of Tommy Robinson within the precincts of this House at a time when there is an increased risk in relation to hate crime and Members of the other House have been receiving hate letters.
Baroness Williams of Trafford
I could not agree more with my noble friend that this is not just a governmental or societal issue. As legislators for this country, we have a strong leadership role to take, and it dismays me when I see certain quite extreme people invited into the Palace of Westminster to propagate their hate.
Lord Pearson of Rannoch
My Lords, I have been mentioned. I shall stick to the Question. Does hate speech include criticising Islam or any of the world’s great religions as opposed to insulting their adherents? Does our legislation make that distinction and, if not, should it not do so?
Baroness Williams of Trafford
There is a clear distinction. Expressing one’s own opinion can offend people; there is a right to offend. However, there is no right to propagate speech that goes to a particular characteristic, whether that be race, religion, disability or sexuality, and promotes hatred against that person.
Lord Watts (Lab)
My Lords, will the Government consider introducing an education programme for this House so that we can address some of the bigotry that we regularly hear here?
Baroness Williams of Trafford
I am rather depressed to say to the noble Lord that it is not just here that we hear what I would call religious illiteracy, sometimes going into the area of downright misleading comments; it is within our legislature, the media and online. Through all strands of society, we need to tackle this.
Lord Reid of Cardowan (Lab)
My Lords, following on from the question on education, will the Minister accept that this will not be resolved merely by technical control of platforms? That may be necessary, but it is not sufficient. Can she assure the House that among the things taught at primary schools and upwards is the stark fact that, in the chequered history of this country, the most glorious hours were spent and the greatest sacrifices made in defeating an ideology that at its core had racial, homophobic and political hatred, and that you abandon the history of this country in its greatest hours by indulging in any of those? Our young people should know that.
Baroness Williams of Trafford
The noble Lord makes an extremely good point. We need to be clear about opinions and the right to free speech. This country fought long and lost many lives in that very battle against religious and racial hatred.
Arrangement of Business
Lord McAvoy (Lab)
My Lords, the Official Opposition have concerns about the level and quality of scrutiny of the European Union (Withdrawal) Bill. It cannot help scrutiny to have late-night finishes such as 2.37 am on Monday and 11.33 pm last night. There are practical alternatives involving nights when the House is clearly going to finish early, as has already been suggested. Could the Government Chief Whip agree to meet the usual channels to discuss these practical alternatives? Does Brexit always have to mean breakfast?
Lord Taylor of Holbeach (Con)
My Lords, I am grateful for the opportunity to thank the House and the usual channels for their co-operation in trying to get this legislation through the House. I am of course very happy to meet the usual channels in general, including the noble Lord and the Convenor of the Cross Benches. We have regular meetings where we try to agree on a deadline that we are going to meet, but unfortunately sometimes we do not quite get there. We did not get there last night but we all agreed to a revised deadline that suited everyone.
Lord Taylor of Holbeach
We agreed that we would get to discuss Amendment 208 last night, which we satisfactorily achieved. On the question of individual days, obviously I am quite prepared to talk to noble Lords about how we deal with the situation, but we are a self-governing House and we have no guillotine or selection of amendments, so if we take a long time to discuss matters then I regret that we have to sit until we have done the business.
Procedure Committee
The Senior Deputy Speaker
That the 3rd Report from the Select Committee: Private Notice Questions timing; Noting overdue Government responses to select committee reports in House of Lords Business (HL Paper 97) be agreed to.
The Senior Deputy Speaker (Lord McFall of Alcluith)
My Lords, the report proposes a small but important change to the timing for submission of Private Notice Questions to correct an unintended consequence of the current rules. The change would mean that on days such as yesterday, when the House sits before 1 pm but Oral Questions remain at the usual time in the afternoon, the deadline for submitting a Private Notice Question in writing to the Lord Speaker remains at 12 noon rather than being brought forward to 10 am.
The report also sets out for information a proposal agreed by the Procedure Committee to list in House of Lords Business the names of government departments that have failed to respond to reports of Lords Select Committees, and Joint Committees, within two months. This change will take effect when the House returns from the Easter Recess. I hope that noble Lords will support these proposed changes.
Integrated Communities
(6 years, 9 months ago)
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The Parliamentary Under-Secretary of State, Ministry of Housing, Communities and Local Government and Wales Office (Lord Bourne of Aberystwyth) (Con)
My Lords, with the permission of the House I would like to repeat a Statement made in the other place by my right honourable friend the Secretary of State for Housing, Communities and Local Government yesterday. The Statement is as follows:
“With permission, Mr Speaker, I would like to make a Statement on the Government’s ambitious proposal to build strong, integrated communities, where people—whatever their background—live, work, learn and socialise together, based on shared rights, responsibilities and opportunities.
The Integrated Communities Strategy Green Paper, published today, sets out a bold programme to deliver this vision. Britain is a great place to live. We are one of the world’s most successful multi-ethnic, multi-faith societies and should take huge pride in this diversity. But, as we have seen this week with the abhorrent “punish a Muslim” letters, there is a determination among some to drive people apart. I should like to express my support for all those who have received these hateful letters, including the honourable Members for Bethnal Green and Bow, for Ealing Central and Acton, for Manchester, Gorton, and for Bedford.
While there is a lot to be proud of, there is also more to do to ensure that a diverse society does not mean a divided society. The truth is that in too many parts of our country, the norm is mistrust, anxiety and prejudice—things that prevent people taking full advantage of the opportunities that living in Britain offers. We can no longer duck this issue if we are to ensure that this is a country that works for everyone.
To that end, we have identified five factors that drive segregation in our communities. First, too many schools are segregated, even where the local population is very diverse, and unregulated settings outside school can also, on occasion, expose children to harmful views. Secondly, there is residential segregation. In 2011, 41% of ethnic minorities lived in wards where white British people were a minority—an increase from 25% just 10 years ago. This reduces opportunities for people to mix and form meaningful relationships with those from different backgrounds.
Thirdly, disproportionately high levels of unemployment and economic inactivity reduce social mobility and can increase isolation—59% of women of Bangladeshi and Pakistani ethnicity are inactive in the labour market, compared with a quarter of their white peers.
Fourthly, according to the last census, as many as 770,000 adults in England could not speak English well or at all. Without a good understanding of our language, it is difficult for anyone to take full advantage of the opportunities available to them. I know from personal experience just how much of a difference it made for my mother when she learned to speak English more than a decade after moving here from Pakistan.
Fifthly, there is a lack of meaningful mixing between people from different backgrounds. Evidence suggests that black, white and Asian Britons take up only around half the opportunities open to them to mix socially with people of a different ethnicity from themselves, all of which adds up to a conflict between religious, personal and cultural attitudes and British values and causes increased tensions within and between communities, with women and girls often at the greatest disadvantage.
The Green Paper sets out a framework of national priority actions to address these drivers of poor integration and a localised approach to delivering them. In doing so, it sets out how we will facilitate recent migrants’ integration into their communities and improve communities’ ability to adapt to migration. Success will depend on strong leadership at a national and local level. To ensure that the Government lead by example, I am asking all Whitehall departments to review their policies and to identify areas where they could do more to support integration. My right honourable friend the Home Secretary, for example, will review the “Life in the UK” test to see whether it could be amended to strengthen its focus on the values and principles of the United Kingdom by which we expect all people to live.
On education, the Green Paper includes proposals to ensure that every child receives an education that prepares them for life in modern Britain. This means giving them the opportunity to mix and form lasting relationships with those from different backgrounds, and making sure that they receive a rounded education that promotes British values across the curriculum. To protect children and young people from being exposed to views that undermine our shared values, my right honourable friend the Secretary of State for Education will be publishing proposals to strengthen the enforcement policy for independent schools that are failing to meet the required standard. He will also review whether Ofsted’s powers can be strengthened in relation to unregistered schools. We will stand up against any undue pressure on or harassment of school leaders who, having consulted, set reasonable policies that promote integration.
On employment, the Green Paper outlines how Jobcentre Plus will trial new approaches to breaking down the barriers to employment and supporting people from isolated communities into work. However, the truth is that you must be able to speak English not only to find a job and prosper, but to play a full role in society. This is why we propose developing a new strategy for English language in England and launching a new community-based English language programme.
The Green Paper also takes a robust approach to hate crime—a vile attack not just on individuals but on the tolerant and generous values that underpin British society. It proposes strengthening local partnerships so that they can identify and adopt the most effective approaches to tackling hate crime and encourage more people to report it. But it is clearly not enough to stamp out hate; we need to build hope and stronger communities, which the Green Paper aims to do through initiatives such as the integration innovation fund. This fund will allow organisations to bid to test out approaches to bring people together around shared activities and community spaces.
None of these measures dilutes the Government’s commitment to protecting people’s legitimate rights to free speech and to practise their religion within the law. Indeed, the Green Paper reaffirms the commitment. But we cannot and will not shy away from challenging cultural practices that are harmful, particularly for women and girls. The recent news about the abuses in Telford highlights just how important this is. We will also expand our Strengthening Faith Institutions programme to help a wider range of faith institutions to tighten up their governance structures, including through promoting the participation of women and young people. We will also support the training of faith leaders to practise in the British context by ensuring that they understand the British legal system, British culture and our shared values. The recent independent review of sharia law also recommended amending marriage legislation to ensure that civil marriages are conducted before or at the same time as the religious marriage ceremony. The Government share the concerns raised in the review and are supportive in principle of this recommendation. My right honourable friend the Secretary of State for Justice will therefore explore the legal and practical challenges of limited reform to the law to reflect this.
We recognise that issues play out differently in different places and for different people, so we are going to work with five very different parts of the country—Blackburn with Darwen, Bradford, Peterborough, Walsall and Waltham Forest—to develop local integration strategies and learn how we can best address the challenges on the ground. The overall aim is to develop a set of integration measures at local and national level so that we can assess what really works. It is a sign of a mature, confident society that it can discuss these issues without lazy stereotyping or over-sensitivity. I look forward to a constructive debate with all those in this House and beyond who want to focus on what unites rather than divides us, guided by the evidence and an acknowledgement that we all have a role to play—both new arrivals in making a new life here, and existing communities in supporting them.
As the proud son of immigrants whose parents worked hard to get on and give something back, I want everyone in Britain to enjoy the same opportunities—to celebrate where they come from while playing a full and proper role in British society; to see people from all backgrounds mixing freely and without fear; and to ensure that everyone, regardless of whether they are a new arrival or can trace their ancestry back to the Norman conquest, feels proud to call this country their home. The Green Paper proposes an ambitious programme of action across government to help us achieve just that. I commend this Statement to the House”.
Lord Kennedy of Southwark (Lab Co-op)
My Lords, I thank the noble Lord, Lord Bourne of Aberystwyth, for repeating the Statement delivered yesterday in the other place by his right honourable friend the Secretary of State. I draw the attention of the House to my relevant interests as a councillor and a vice-president of the Local Government Association.
I endorse the Minister’s comments on the disgusting “punish a Muslim” letters. I hope that the perpetrators of this evil hate crime are caught and punished. Such an act has no place in our society. The success of our communities has been their diversity. I am the son of immigrants who came here in the 1950s from Ireland to make a life for themselves. Immigrants from all over the world have contributed to our communities and make our country a much better place.
I am pleased to hear that the Government are committing money to the English for Speakers of Other Languages programme, though perhaps the Minister can comment on the figures from the House of Commons Library, which show that between 2009-10 and 2015-16, funding for such programmes fell from £220 million to £90 million. So although the new funding mentioned in the Statement is welcome, it will not replace the money that the Government previously took away.
In her report, Dame Louise Casey stated:
“The problem has not been a lack of knowledge but a failure of collective, consistent and persistent will to do something about it or give it the priority it deserves at both a national and local level”.
That is why it is disappointing that the Government have not announced a new policy but another consultation on a potential policy following a report they received in 2016. It is now March 2018.
On education, mixing with children from other backgrounds and religions throughout life is one of the best ways of preventing barriers being erected. I agree that children should not only be learning about British values, but living them as well. I very much hope that the Government’s Statement signals a new commitment; if so, I welcome what I have heard today, but they need to ensure rigorous assessment and evaluation of the pilots as other aspects of the Statement progress.
I have a few questions for the Minister, which I hope he can answer. If not, I am sure he will write to me and other Members of the House. Can he tell us what equality impact assessments on the funding have been made for the five pilot areas he outlined in the Statement? We heard about an aspiration to work with local authorities, which is very good. What role does the Minister believe they can play in this strategy? Perhaps he can outline that for the House. What discussions has he had with his ministerial colleagues in the Department for Education about the role of education and making sure that ethnic minorities can benefit here, particularly on issues such as childcare and so on, and how they can make sure that those minorities fully benefit from the programme?
I am also aware that the Minister’s right honourable friend the Communities Secretary wrote in an article in the Guardian that,
“there are too many communities that are still very segregated and therefore divided”.
I am conscious that he has been in post for two years now. Perhaps the Minister can outline what he thinks those divisions are and what has happened in the last two years to deal with some of those barriers.
As I said, I welcome the Statement and I hope that it goes the right way to solve the variety of problems here. I hope the noble Lord can answer those points, but if he cannot, I am sure he will come back to me in the normal way.
Baroness Pinnock (LD)
My Lords, I draw attention to my interests in the register as a councillor in West Yorkshire and a vice-president of the Local Government Association. I start by endorsing the condemnation of the abhorrent letters received by many people—among them, one of my friends.
There is much to be welcomed in this Statement on the integration strategy Green Paper. The Government are at last thinking about the issues and the remedies. Before I comment on some of the main headlines in the Statement, I will draw attention to the thinking at the heart of this policy proposal. The Statement defines integrated communities as ones where,
“people—whatever their background—live, work, learn and socialise together”.
That is a sweeping statement. Within the majority white community, this is patently not the case and never has been, which is why I question that broad assertion. Perhaps what the Green Paper needs to focus on is those elements of our common life in this country that enable each individual to play a full part rather than to attempt a forced integration, which seems by its very nature to frown on differences. I support the Statement when it says that,
“a diverse society does not mean a divided society”,
but the language used to describe the current position and the changes desired is very important, and something is lacking in some parts of the Statement and the Green Paper. Will the Minister reflect on that word “integration” and on whether “cohesive communities” may better describe the aim of the proposals?
The Government have listed five relevant areas for action if our diverse communities are to be more cohesive. Some of us in leadership roles in local government took action when funding was more available. Noble Lords may be aware that I was leader of Kirklees Council— just south of Bradford, which was mentioned in the Statement—which has had its share of difficult situations emanating from communities that were not in touch with each other. We tried a number of schemes, many of which showed successful outcomes. I hope the Government may seek to introduce some of them in the listed areas. They included: school twinning, where children met together to share activities such as art and sport; cookery classes for women from different ethnic backgrounds, where they could share recipes, which was very successful; a programme of sporting activities organised by a community group, with a community cup at the end of it, which was hugely popular and successful in bringing children and young people together, mainly to play football; and an interfaith programme, which was mainly focused on schools but also open to adults, and involved visits to mosques, gurdwaras and churches.
Of course, all these additional activities need funding, and as funding disappeared, so, sadly, did the activities. But a few remain. There is an annual cricket match between Christian church leaders and Muslim imams, and interfaith activity continues, led by a Church of England bishop and a Muslim leader. These activities did much to bring people together. Can the Minister say whether the Government are seeking to promote these sorts of activities and, crucially, whether funding will be provided at adequate levels?
I will draw attention to two areas in the Statement, the first of which is language. People who are unable to be fluent in English are at a disadvantage, and their lives are more isolated and restricted. The Government of course made the decision that support for the teaching of English as a second language was no longer needed, and slashed the funding. How schools manage to be effective in the classroom when the children are not able to speak, let alone read or write, English is a marvel to me. ESOL spending must be increased, and be sufficient to meet needs. Perhaps the Minister may be able to commit to that extent of new funding.
The other area I want to focus on is low skills—a critical factor both for white boys and young men and for those from minority ethnic backgrounds. In Bradford, this is the source of much of the inter-community distrust. FE colleges have a key role to play in enabling young people to acquire relevant skills so they can join in and have employment, which gives them some hope for their future.
There is much that must be done if the aim of the Green Paper is to be achieved. I welcome the integration and innovation fund, as long as it is adequate to meet the need. Unless it is, integrated communities will remain a distant prospect, with all the risks that that leaves behind.
Lord Bourne of Aberystwyth
My Lords, I thank the noble Lord, Lord Kennedy, and the noble Baroness, Lady Pinnock, for their contributions and questions, and I shall try to deal with the points they have raised. First, I thank them for their support in condemning the dreadful and abhorrent “punish a Muslim” letter that we have seen. There are, understandably, a lot of people who feel vulnerable and frightened, and I hope we can send out messages to all our faiths, and to people of no faith, to be protective of Muslims, particularly on 3 April. The signs are that many will, quite rightly, defy that dreadful threat and not stay indoors. We particularly need to give reassurance about how awful and gut-wrenching the vast majority of the people of this country find those letters.
I shall pick up some points made by the noble Lord and the noble Baroness and try to deal with them generically, so far as I can. First, I extend thanks on behalf of everybody for the work of Dame Louise Casey in this area. Of course, we have built on her work, and she has made a massive contribution to thinking on this subject.
English language provision is very important. I have seen that it has been transformational; I have seen and visited English language classes in the East End of London, in Whitechapel, and have seen the difference they are making, particularly for Bangladeshi women who have had their lives transformed. That does not just mean the possibility of getting a job, though it is partly that, but the ability to go out of the home and mix with other people. I totally accept the importance of this up and down the country. Of course, this is partly an issue of funding, but not totally. When I looked at the funding for Near Neighbours, I saw that some programmes were able to do far more than others. We will need to look into that, too.
The consultation has been mentioned, and it is important that we get communities to talk about these things and contribute to the consultation, which will range widely over many areas. For example, we are looking at education and issues relating to marriage. The consultation is open until 5 June.
The noble Lord, Lord Kennedy, raised particular points about education and what will happen in the five trailblazer areas. Obviously, although they have some similar challenges the areas are all very different. We will want to speak to and work constructively and intimately with those five authorities, but the work is not limited to those five: we want the work to go wider, to all local authorities, which will be contacted about the Government’s proposals and the consultation. Again, we would encourage people to participate in that consultation. I hope the noble Lord will forgive me if I write on any points that I have not covered.
The noble Baroness, Lady Pinnock, talked about forced integration but I have to say that I do not recognise that. Perhaps I may give an example of something which in no sense involves force but just provides opportunities for integration and mixing. When I visited Bradford, I met up with the Bangla Bantams from the Bangladeshi community. They now support the football team and are an intimate part of it. That had not been the case until the dreadful fire—and what an awful fire it was. However, because they lived close to the ground, people who were then without mobile phones—this was the pre-mobile age—went to their homes and said, “Can we use your phone?”, because it had been such a dreadful fire. Friendships and relationships were formed and now, a generation on, it is very natural for people from that community to be a part of the network that supports the football team. That is one example of something that happens, in a sense, by accident—an awful accident—but those are the sorts of opportunities that need to be fostered and encouraged.
The innovation fund to which the noble Baroness referred will very much be open to individual bids for the sorts of opportunities that she was talking about. Often when going round the country, we find that the things that bring people together are food, sport and music. She referred to a cricket match. In Chelmsford there is an annual cricket match between the local mosque and the cathedral, and again that has built up a relationship in the town between different people. These things are very important and need to be fostered. It is not just about that but those sorts of opportunities help to encourage integration.
I hope noble Lords will forgive me if I have missed any points. If I have, I will pick them up in a write-round letter to all those who participate in the Statement and I will ensure that a copy is placed in the Library.
Baroness Deech (CB)
My Lords, may I ask the Minister what more the Government can do to further integration in higher education? The Government have abolished maintenance grants, and that means, for example, that if you are a child growing up in a rather segregated secondary school in some of the trailblazer areas, you cannot afford to leave that area and go to another university where you will be able to mix with people from different backgrounds; you are stuck in that one area for ever. And I am sorry to say that hate speech is still flourishing on our campuses. The CPS and the Equality and Human Rights Commission are doing next to nothing to stop it and prosecute, as the case may be. Segregation, to some extent, and extremist and hate speech are going on in our universities. We have to make sure that our future leaders are fully integrated.
Lord Bourne of Aberystwyth
My Lords, I thank the noble Baroness very much indeed. She raised two separate points and I will bring them up in the order in which she made them. On her first point about mixing at tertiary level in universities, I think she said that ideally a university would be away from the home city, as integration would be more likely. It is a point well made. I am sure that my right honourable friend the Secretary of State for Education, who is taking a central part in this integration strategy, will want to contribute and will have thoughts on that. In relation to hate speech, the noble Baroness will know that my honourable friend Sam Gyimah in the Department for Education is taking this matter forward. It is a serious concern that some campuses—although by no means all—impose totally unreasonable, unrealistic and unhelpful restrictions on free speech. That is not what universities should be about, and it is very much in the Government’s eyeline to do something about that.
The Lord Bishop of Portsmouth
My Lords, there is a great deal in this Statement and in the strategy that I welcome. It promises a big and positive difference in what the Government are doing to improve integration. It is good to see in the Green Paper initiatives such as the Near Neighbours Catalyst leadership programme, to which the Minister has recently referred. It is good to see that singled out for praise. However, there is some anxiety that Catalyst and other valuable Near Neighbours activity might have to come to an end as a result of a reduction in overall funding for Near Neighbours and the for the small grants fund. I am sure that that is far from the Government’s intention, and I wonder whether the Minister can give an assurance that he will look at the impact of any funding changes as part of the assessment of this new strategy.
Lord Bourne of Aberystwyth
My Lords, I can certainly assure the right reverend Prelate that we will be very mindful about any changes to funding. The Near Neighbours projects that I have seen—and I have seen a lot of them—have been doing excellent work and providing excellent value, so when we look at funding, as government departments do from time to time, we will bear that very much in mind.
Lord Hodgson of Astley Abbotts (Con)
My Lords, I thank my noble friend for repeating the Statement. I draw the attention of the House to the fact that I am chairing a Select Committee of your Lordships’ House looking into citizenship and civic engagement, and we are due to report next month. Quite a lot of our work washes over into the areas that my noble friend has mentioned. One of the challenges that we have identified is that, unsurprisingly, there is no quick fix; what is needed is sustained, consistent application of government policies. Too often, initiatives in the past do not appear to have outlived the Minister who initiated them. Can the Minister, as he explained this wide-ranging programme, tell the House which department and which Minister are going to be responsible for making sure that this whole ambitious programme is driven through?
Lord Bourne of Aberystwyth
My Lords, I thank my noble friend very much indeed for his comments and for the work that he does in chairing that excellent Select Committee. Without hesitation, I can say that the person who is driving this forward is, of course, my right honourable friend the Secretary of State, Sajid Javid. He is not doing it alone, as he indicated in the Statement, because it involves many other government departments. It is cross-government and involves education in particular. We also mentioned the Ministry of Justice in relation to the situation regarding marriage. But I assure the House that the person who is driving it—and he is driving it very hard and is committed to it—is my right honourable friend Sajid Javid.
Lord Blunkett (Lab)
My Lords, I pay tribute to the noble Lord, Lord Hodgson, on whose committee I am pleased to serve under his excellent chairmanship. I also draw attention to a non-pecuniary interest on the register. If I may bowl the Minister a bit of a googly—I suspect that he might agree with me, but he certainly will not want to say so—there is a bit of a paradox in the very welcome updating of the Life in the UK Test and the extraordinarily out-of-date booklet that goes with it, which actually ensures that those who seek naturalisation have learnt something about British citizenship while their children and, to pick up the words of the Statement, those whose heritage goes back to Norman times, do not have a mention at all in terms of education for citizenship in this document. Will the Minister inquire whether a cleaner in Downing Street could find the two or three pages that obviously got ripped out inadvertently before the document was published?
Lord Bourne of Aberystwyth
My Lords, I thank the noble Lord, Lord Blunkett, very much indeed. I know that he plays a vital part on that Select Committee and I join in his praise of the chairman, the noble Lord, Lord Hodgson. On his question, I have great sympathy with the point he is making. I was asked by a friend to provide some testing of model questions—which did not come with model answers, rather curiously—one of which was, “Was Richard III left-handed or right-handed?”. I had absolutely no idea at all and still have no idea. I do not know whether noble Lords can help me, but it struck me as a rather strange question relating to British life. It obviously needs a little attention.
Baroness Warsi (Con)
My Lords, I apologise to my noble friend for coming in as he was already on his feet at the start of the Statement. He may recall that an issue arose during Questions, and I was speaking to the House authorities about that.
I welcome the Statement, and I particularly welcome the divide in the Green Paper between integration and counterterrorism, something that many of us have been calling for for some time. I also welcome the reinstatement of a commitment to the teaching of English as a second language and, it is hoped, funding for the same. Will the Minister assure the House that the policy responses post the Green Paper will be evidence based, will take place after broad engagement and will be applied consistently across all communities? Will he also be mindful of the fact that, when we talk about separated communities, we draw a distinction between those communities, very small in number, which may seek to live separate lives and those which have no choice about where they live? Will he also deal with the issue of resources?
Finally, I congratulate the Green Paper on finally dealing with an issue that has been on the books since at least 2011, certainly from my time in government: the need for religious marriages to be part and parcel of legal marriages. The proposal is for a person to conduct a legal marriage in a civil ceremony before a religious ceremony is conducted. Rather than having this two-tier system, will the Minister look at proposals where both marriages could be conducted at the same time so that more places of worship where such marriages take place are formally authorised to conduct civil marriages, too?
Lord Bourne of Aberystwyth
My Lords, I thank my noble friend both for her questions and for her undying contribution to this area of national life, which is significant—everywhere I go I find that to be the case. I thank her heartily for the work that she does. Yes, the Government will ensure that the policy response is evidence based and that the approach is broad—hence the broad nature of the consultation—and consistently applied. Yes, we are making integration available to people; at the end of the day, we cannot force it. The vast majority of people in this country, of whatever background, race or religion, want that opportunity of mixing, which I think will be readily taken up when it is available.
I thank my noble friend for what she said about religious marriages and moving the discussion on. I am grateful to her for exaggerating my powers in this regard. The Ministry of Justice will look at this area, but, just like other areas, it is open for consultation, and I feel sure that my noble friend will make her views known on that and other areas.
Lord Ouseley (CB)
My Lords, I welcome the opportunity to comment on this proposal and the specifics contained in the consultative document. However, integration is a two-way process. We have to accept that we have been around the houses for many years—2001 being the most recent occasion, when many reports came out to point the way to how we might deal with some of these problems in places such as Bradford and Oldham. It is important for it to be recognised that responsible leadership has not been consistent nationally and locally on these matters, particularly in challenging bias, xenophobia and hatred. Levels of hatred are now rising considerably in all aspects of our society—we have talked extensively about that already today. Do the five areas that have been identified for action represent the ambition that the Minister talked about, because the issue of integration and cohesion applies right across the country in all areas? I hope that the Government will look again at that and see it as very important.
My second question goes to an example given by the Minister about the Bangla Bantams. He indicated how that initiative came about through an accident and due to the fire. But it was more than that—this is where I draw Members’ attention to my own record in the register and my association with an organisation called Kick It Out, which was set up back up in 1993 to try to use football to tackle some of the problems of racism and all forms of discrimination. The Bradford Bantams was one of many organisations that came about as a result not only of a fire but of hard work, with communities around their football club seeking to draw in people from all backgrounds to participate and mix with and learn about one other. Will sport play an important part, as I already see happening? Investment from football into communities is one of the few sources of investment taking place without public funds that tries to bring together young people of all backgrounds, faiths, ages and sexes to play, participate, learn and be involved as the future generation in taking forward this agenda in an integrated way.
Lord Bourne of Aberystwyth
I thank the noble Lord very much indeed and recognise the great role that he has played in this area over many years, just as he has referred to integration policies over many years. Of course, it is fair to make the point that the position in the country has also changed in that time, and the challenges are somewhat different, but I accept the great importance of ensuring that we have a consistent approach over time. There is broad—almost total—agreement across political parties, different communities, different religions and people of no religion as to how we should move forward. Once we have that agreement and framework from the consultation, we should be able to move forward.
I also echo what the noble Lord said about hate crime. There is something of a paradox, in that hate crime has no doubt increased in an awful way in some cases, but there is also more readiness to report it, which we all welcome. At the same time as the statistics are going up because there is an increase, they are also going up because there is better reporting. We continue to encourage that: people are more ready to report hate crime, and so they should be.
The five trailblazer areas are not the sum total of the Government’s ambition by any means, and I apologise if the Statement or my replies made it seem so. That is not the case. They are five areas where we especially want to see how policies work out because they have particular challenges in their different parts of the country, but this is a national policy for a national challenge: let that message go out.
The noble Lord rightly referred to the role of sport, the excellent Kick It Out campaign and the role of many football clubs, including my club, Leicester City. I only referred to the Bangla Bantams because the fire was perhaps a catalyst, but I accept that an awful lot of hard work went on to make the club happen. It happens in football and in other sports—athletics and so on—and that is also something that the Government are looking to encourage.
Lord Cormack (Con)
My Lords, I shall ask my noble friend one simple question and then make a point. First, could he give us an idea of the timescale for the five pilot areas, accepting that they are pilot areas, and how he will report back to the House?
Just as it is very important indeed that people should know the English language well, will my noble friend also accept—the noble Lord, Lord Blunkett, referred to Norman ancestry and all the rest of it—that people who are to become fully integrated into British society should have a reasonable knowledge of British history? Will he talk to bodies such as the Royal Historical Society, of which I happen to be a fellow, the Historical Association and others about devising for those who are being integrated into our community a history syllabus that enables them to have a reasonable chronological knowledge of the history of this country? Without that, they cannot feel fully part of it.
Lord Bourne of Aberystwyth
I thank my noble friend Lord Cormack very much indeed. The five areas that I mentioned—Blackburn with Darwen, Bradford, Peterborough, Walsall and Waltham Forest—are where we will be developing local integration strategies to address the particular problems of those areas. As the money that we have announced, the £50 million, is for the end of the CSR period, I think it will be a two-year programme. I will write to my noble friend if I am wrong on that.
On my noble friend’s point about British history, no one is better qualified to ensure that this happens than him. As someone who goes distinctly wobbly before the Tudors, I will ensure that the Home Secretary is aware of his interest, and he may want to contribute to the consultation, because this is something that the Home Office will be picking up.
Baroness Manzoor (Con)
My Lords, I support the Statement and the Green Paper, which are very welcome. I have two questions. One thing that my father used to say was, “Education, education, education”, and it is of paramount importance that we ensure that everyone has a decent education in the schools in those five areas but also more widely. I am delighted that more money, £50 million, is going to be spent, but particularly that it identifies women and girls. While we are looking at this agenda, we are also looking at issues of poverty generally in these areas, because it contributes to disadvantage. Perhaps the Minister could say a few words around these issues.
Lord Bourne of Aberystwyth
I thank my noble friend very much. I seem to remember somebody other than her parent said “Education, education, education”. I assume it was somebody else. I am sure it was. My Lords, it is central to the strategy, as is the role of women and girls, and particular issues faced by some communities in relation to the English language, so she is right to give emphasis to that point.
My noble friend’s points on poverty and disadvantage were again well made. We know from the Race Disparity Audit, which is going on in parallel to this, that there are disadvantaged communities that are not ethnic minority communities, so that has to be picked up as well. There certainly are disadvantaged communities among ethnic minorities, but some disadvantaged communities are not. Those two strands are going forward together.
Lord Brooke of Alverthorpe (Lab)
My Lords, I welcome the report. I would like to refer particularly to chapter 6, where I sense a weakness. “Education, education, education” is very good indeed but, if there is no employment at the end of it, it can lead to disillusionment and further problems, so I am very much in favour of “Investment, investment, investment”. Could the noble Lord give some indication of the kind of investment incentives they may be offering to try to make business go into places such as Blackburn, Bradford and Walsall, where we have high levels of unemployment in all aspects of the community there? That is one way we can find our way out of it. God only knows how Brexit is going to provide investment in those areas in the future. As we are focusing on these areas, could he say what additional incentive he may have been considering to get extra investment in those areas?
Lord Bourne of Aberystwyth
My Lords, I thank the noble Lord very much. I should first say that I hope to go to all of these different areas during the consultation, in so far as Brexit debates here and purdah allow, to see exactly what is happening in those different parts of the country. I have been to most of them over the last few months anyway. In Blackburn with Darwen, there is a considerable amount of very effective work going on renewing the town. There is excellent work being done around the cathedral and that area, and a business hotel recently opened in the centre of the town. There is work that we do, but he is right that we have to ensure that it is not just about providing education. Perhaps it is education in the wider sense here; we need to be aware of the importance of apprenticeships as well. We will be in discussions with those five areas, looking at their integration strategies and how we can develop job opportunities. The innovation fund, outside of those five areas, may also make a big contribution.
Building Safety Update
(6 years, 9 months ago)
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The Parliamentary Under-Secretary of State, Ministry of Housing, Communities and Local Government and Wales Office (Lord Bourne of Aberystwyth) (Con)
My Lords, with the permission of the House, I will repeat a Statement made by my right honourable friend the Secretary of State for Housing, Communities and Local Government, in the other place earlier today, on building safety. The Statement is as follows:
“Mr Speaker, with permission, I wish to make a Statement on issues arising from the Metropolitan Police investigation into the Grenfell tragedy. This investigation has involved a thorough examination of every aspect of the tower, including front doors to flats within the property. These doors include a glazed fire door manufactured around five years ago. Initial inspections indicate the door is believed to have been designed to resist fire for up to 30 minutes, as required by building regulations guidance, but when tested by the Metropolitan Police it failed after approximately 15 minutes. The Metropolitan Police considered that this test result might have wider implications for public safety and alerted my department.
The Government immediately sought advice from the independent expert panel on the test findings and to see whether any action was required as a result. This expert panel is made up of a range of building and fire safety experts, and chaired by Sir Ken Knight, former London Fire Commissioner and former government Chief Fire and Rescue Adviser. The panel consulted with representatives from the Metropolitan Police, the Government’s Chief Scientific Advisers and the National Fire Chiefs Council. Following this, the expert panel has advised that the risks to public safety remain low. There is no change to the fire safety advice that the public should follow.
I nevertheless fully appreciate that this news will be troubling for many people, not least all those affected by the Grenfell tragedy. That is why, based on expert advice, we have begun the process of conducting further tests and will continue to consult the expert panel to identify the implications of those tests. I have made it clear that the necessary tests and assessments must be carried out thoroughly but at pace. There is no evidence that this is a systemic issue. Data between 2009 and 2017 shows fire does not generally spread beyond the room of origin. I am also clear that my department and the Metropolitan Police will ensure that the bereaved and survivors are kept informed of progress. I commit to updating the House when further information is available, and no later than the end of April.
I should stress that, in carrying out these tests, conclusions should not be drawn about the nature or cause of the Grenfell tragedy. That is a matter for the separate police investigation. It must be allowed to run its course.
Honourable Members will be aware that Dame Judith Hackitt is undertaking an independent review of building regulations and fire safety to ensure that the regulatory system is sufficiently robust. Dame Judith has been made aware of these latest findings, and, having accepted the initial recommendations set out in her interim report in December, we look forward to her final report, which is expected in the spring.
Nine months ago, we faced a loss of life and suffering on an unimaginable scale at Grenfell. Since then, significant efforts have been made by the Government and others to support survivors, find them new homes and keep people safe. However, I know that the matters I have raised today will raise questions. I want to reiterate that on the basis of expert advice my department has received, there is no evidence that risks to the public have changed. I want to reassure honourable Members that all possible steps are being taken to properly investigate the issues and to take action where needed. Public safety is paramount. Our position is clear: the events of 14 June 2017 must never be allowed to happen again”.
My Lords, that concludes the Statement.
Lord Kennedy of Southwark (Lab Co-op)
My Lords, I thank the noble Lord for repeating the Statement delivered earlier in the other place. I refer the House to my relevant interests as a local councillor and a vice-president of the Local Government Association.
I appreciate the Government updating the House, but it is important that when we have these Statements on Grenfell we always recognise not only the terrible suffering that took place but the wonderful efforts of all the emergency services, both on the night itself and afterwards, and the support from the local community, faith groups and charities, which have carried on working since that night to help rebuild that community. We should pay tribute to them all every time we have these Statements—we owe them so much for the work that they have done.
The noble Lord is right: we are nine months on from that dreadful tragedy and it must never be allowed to happen again. We must make sure that we do everything we can to ensure that that is a reality. It is very worrying, therefore, to find out that a door which it was suggested would survive for 30 minutes failed in less than half that time. These doors are supposed to give people time while they wait for the authorities to come and rescue them. To find out that it failed in half the time is very worrying indeed. It exposes serious problems with the door itself and raises questions, which I know Dame Judith is looking at in her review, on the health and safety regulations that are designed to keep people safe, but which have failed here.
It is good that we no longer hear the “red tape” nonsense that we did in the past. Clearly, this is not about red tape: it is about keeping people alive and saving lives. It is important that we do not hear such comments ever again. It is troubling for many people that these doors failed. The Government need to ensure that we move at a quicker pace to get all these matters dealt with and resolved quickly. People are concerned about this and it is always in their minds.
The Metropolitan Police investigation is a separate matter. As the Minister said, they need time and space to investigate and deal with the matters properly and to bring them to a conclusion.
I have a number of questions for the Minister which I hope he will be able to answer today. If he cannot I know that he will write to me and other Members of the House and cover both the points he made and wider points. Can he explain why, nine months on from the fire, we still do not know how many private tower blocks are covered in cladding similar to that used in Grenfell Tower? I do not know whether the House is aware of the figure, but I am not. I believe up to 41 local authorities have contacted the department in regard to fire safety works. How many have funding from the department for this work? I think it may be none or very few.
I am conscious that soon after the fire the Prime Minister fixed a deadline of three weeks for everyone who was affected to be found a home nearby. We are now nine months on and I would be grateful if the Minister could tell the House how many families have been found a permanent place. The last time we debated this he told us that it was 60 out of the 208 households but it would help if he can give updated figures on how many have been found a permanent place and the numbers in temporary accommodation. Again, we need to get these matters resolved as soon as possible.
I am pleased that the noble Lord said that we will be updated as testing goes on—it is important that, as other issues come to light, we update people—but, in relation to these doors and other matters, what is the process for alerting local authorities and the manufacturers? I know the name of the door, but how many of them are there elsewhere? People need to know this and that they have failed. I know the Minister said that there is a low risk—but there is still a risk—and that most fires are contained within the place where they start. However, the fire was not contained where it started in Grenfell Tower and people are worried. Can the Minister tell the House what the Government do to alert manufacturers and other private companies in order to protect people in the future? I will leave it there and I look forward to the Minister’s responses.
Lord Shipley (LD)
My Lords, I remind the House that I am vice-president of the Local Government Association. I share the concerns of the noble Lord, Lord Kennedy, and the tribute he paid to all those affected by the Grenfell tragedy.
I refer the Minister to paragraph 10 of the Statement in which it is said that there is no change to the fire safety advice that the public should follow. Does that mean that the stay-put policy for tenants in high-rise blocks is seen to be the right policy? I suspect that many people who live in high-rise blocks doubt that that should be the case.
Secondly, should the Government insist that fire regulation assessments for every high-rise building are published and made available in an accessible form for the public to read? At present, fire regulation assessments may not necessarily be public documents. If the Government are now going to say that a stay-put policy is appropriate, it follows that fire regulation assessments should be publicly available for the tenants and residents of such blocks.
I was struck by paragraph 14 of the Statement, which states that there is no evidence that this is a systemic issue. In one sense all the evidence suggests that that may be true. It probably is true that the data between 2009 and 2017 shows that fire does not generally spread beyond the room of origin. That may be generally true but, of course, sometimes it is not true and in the case of Grenfell it was not true. There is a huge amount of evidence being collected by all those working to prevent Grenfell happening again and it is pretty clear to me from what I have read in documents published by the Minister’s own department, the latest update being about a fortnight ago, that we need to move much more quickly than the Government seem to be working: there is an issue of public confidence in fire safety regulations and I fear that the Government are too slow in their resolution of some of these problems.
The public want to know whether the Government will enforce compulsory, regular electrical safety checks in high-rise blocks as a matter of policy. My final point is that there is a huge issue arising now about who is going to pay the bill for all the remedial works that are required. There is a huge amount of publicity around private leaseholders, some of whom are likely to have a fee to pay for the fire wardens who are currently in their blocks. More generally, because cladding has been put on to a large number of blocks and is having to be taken off, there is an issue as to who is paying the bill for the private leaseholders. I am not sure that it is sufficient for the Government to say simply that the solution is for private leaseholders to sue the council, the local housing authority or some other party; I fear that it is not.
Finally, the Government have consistently said that they will fund essential and necessary works to high-rise blocks. Will the Minister confirm that that remains their policy?
Lord Bourne of Aberystwyth
My Lords, I thank the noble Lords, Lord Kennedy and Lord Shipley, for the points they have raised and for the way in which they raised them. I share their true, undying respect and admiration for all those who, on the night of Grenfell and ever since, have made such a massive contribution in relation to that dreadful disaster. It has been truly awesome and we owe an undying debt to people who have helped in that way. I shall try to deal with some of the points and, in so far as I cannot, I will certainly write to noble Lords and make sure that a copy is placed in the Library.
First, I am not sure about the number of private tower blocks; I will need to write to the noble Lord about the outstanding position there. On funding for local authorities, which was raised by both noble Lords, I can confirm that the Government’s aim—it will be our number one aim and we will ensure it happens—is that nothing will not be done by reason of lack of finance. Safety is the priority. Discussions are ongoing with a number of authorities about the possibility of meeting some costs. I will provide a more detailed update, if I may.
Of the 209 families that we are undertaking to rehouse from Grenfell Tower and Grenfell Walk—noble Lords may remember that it is more than the initial number of households because some are splitting— 184 have found accommodation, some temporary and some permanent. I am not sure of the precise numbers of those who have moved in and those who have not. Another important point to make is that some of those who initially opt for temporary accommodation subsequently decide to go permanent. There is an element of flux between the different categories, and that is perhaps the most significant one. Again, I will provide an update there, if I may.
On the more specific issue in the Statement about fire safety and fire safety advice, the advice that remains unchanged—I say to the noble Lord, Lord Shipley—is to keep fire doors shut to help prevent the spread of fire and smoke. That is central, as is understanding the fire safety advice for your building and, if in doubt, discussing this with your landlord or building owner; it should be advertised. I very much take his point about ensuring that this local assessment is known by people. That is no doubt something that the Dame Judith Hackitt review will be looking at, and of course we will look at that with a degree of urgency as soon as the review reports—the final stage of which is in the spring—because these matters are urgent. I accept what the two noble Lords have said about the importance of that.
Regarding this particular exercise on what happened in the block, I should say first that this was discovered as a result of the Metropolitan Police investigation—because of course there is no access to the site at the moment because it is a crime scene. As soon as we became aware of it, we took the appropriate action to consult the relevant committees, fire chiefs and so on. In consequence of that, my right honourable friend the Secretary of State has said that we need to move this on apace and look at it more widely in the context of fire doors elsewhere. It is a particular batch that is being looked at. There is no indication at the moment that it is wider than that, but we are now moving forward apace to ensure that, in consequence of what the Secretary of State has said, we look at other fire doors to see if it is any wider than that. I think that that is the appropriate thing to do. In the meantime, it is worth stating that this is somewhat different from the cladding. Whereas there was every prospect, at least in some cases, that the cladding could be an accelerant to a fire, here we are talking about something that impedes the fire. The issue in relation to this single door was that it was about half what it should have been; it did not impede it enough. In consequence of that, we are doing the other testing. As this is something that will now move on apace, I would like to write to noble Lords ahead of Easter with an update on this, and of course there is the undertaking from the Secretary of State that he will report back in the other place before the end of Easter. I would expect to repeat that exercise here.
Baroness Brinton (LD)
My Lords, I echo the comments that the Minister and other colleagues have made about the sympathy that goes to those who have survived the Grenfell Tower fire, and also the resilience they have shown in trying to move on with their lives afterwards. I declare an interest as a member of the All-Party Parliamentary Fire Safety and Rescue Group. Anybody who has an interest in fire safety realises that compartmentalisation is absolutely vital to the safety of a building. This is now the third breach of compartmentalisation that has become apparent: first it was the cladding, then the block in Camden where we know there was a breach of compartmentalisation from putting in new gas central heating arrangements, and now there are concerns about this fire door. Compartmentalisation is absolutely at the heart of the stay-put policy. I think we need reassurance that the slight complacency in the Statement that this is not a general issue, is absolutely not the case. It is easy to talk about a “batch” of fire doors, but how big is the batch? Have there been tests on other fire doors of different makes to check that they still meet the 30-minute compartmentalisation fire resistance?
Dame Judith Hackitt, in her interim report, talked about two key findings: improving the process, competence and enforcement of regulations, and improving testing, marketing and the quality assurance of products. I know that the Government have been saying that they will wait until Dame Judith Hackitt reports with her full report, but this particular incident means that we have to move forward now to look at compartmentalisation. This affects not just high-rise blocks but every rented block of flats in the country as well. Can the Minister assure us that there will be a Statement as soon as possible on whether it is just this one type of fire door or a more general problem, and also if it is possible to track where those doors have been placed, or whether there has to be a general request to go out and identify them.
Lord Bourne of Aberystwyth
My Lords, I thank the noble Baroness for the very important role that she fulfils in the All-Party Parliamentary Fire Safety and Rescue Group, which is absolutely vital. There is certainly no intention of complacency on the part of the Government. There is, however, a need to balance this with what we know at the moment. I quite appreciate that the avenues of investigation that the noble Baroness referred to are totally appropriate. We will ensure—I know this will be happening anyway; Dame Judith Hackitt will be watching very closely what is said in both Houses of Parliament regarding her review—that she has all the content of this Statement in front of her, and she will be looking at that.
I appreciate what the noble Baroness is saying, but it will not be long before we get that final report and I feel it would be premature to look just at the interim report when some of this will be picked up in the final one. By the nature of it, I am sure this will also be looked at in the context of Grenfell by the Moore-Bick inquiry that is going on.
The noble Baroness asked for an assurance that there would be a Statement. I can give her that assurance; my right honourable friend in the other place has indicated that he would do so at the latest by the end of April. I echo that because these are important areas. There is no intention of complacency, and I appreciate the point being made that we need to look at this holistically.
Viscount Younger of Leckie (Con)
Order, my Lords. There is time for a number of noble Lords to get in, but on this side we need to decide which noble Lord would like to speak first.
Lord Naseby
My Lords, I declare an interest as the founder of the all-party parliamentary group on building and other housing groups. First, are Her Majesty’s Government going to issue a directive to every manufacturer of fire doors that they lodge within seven days certificates for those doors that they come up to standard? Secondly, are these particular fire doors to be withdrawn from sale across the whole of the UK? Thirdly, will the Minister confirm that the procedures for testing fire doors across Scotland, Northern Ireland, Wales and England are identical? If they are not, what action is being taken to consult with the other parts of the UK to ensure that we have an identical standard across this nation?
Lord Bourne of Aberystwyth
My Lords, I am very grateful to my noble friend for those questions. First, I am very grateful for his suggestion of getting up to standard; that is a question that Dame Judith Hackitt will want to look at, and something of that nature appears to be very sensible. In relation to the question of withdrawing from sale, I can confirm that these doors are no longer on sale anywhere in the country, or indeed anywhere in the world as would be the case. In relation to the testing of fire doors in other parts of the UK, I believe the procedures are identical. If I am wrong or indeed right on that, I will confirm it in my write-round letter.
Baroness Donaghy (Lab)
My Lords, why did the consultation have such a narrow base? There is no mention of the Fire Brigades Union, the Health and Safety Executive or even the Local Government Association. Might it not have given a different view if those bodies had been consulted?
I am troubled by the Statement. Paragraph 25 says there is no evidence that risks to the public have changed but paragraph 28 says it must never be allowed to happen again. I wonder what steps are going to be taken to fill the gap between those two. What must never be allowed to happen again? How are the Government going to go about it if in this case there is no evidence of risk to the public?
I am also a bit concerned about something that I mentioned very much earlier. I know it is not connected with this report but the issue of white goods in multi-storey buildings seems to have gone very quiet. There seem to have been some hints that white goods, and the standard of them, may have had something to do with this. Maybe whether they are allowed into multi-storey buildings has to be looked at.
Lastly, I am concerned that so many different inquiries will be coming out at different times from different people. I want some assurance that there is a checklist of all the points raised, to ensure that all the things that are necessary to do are fulfilled by someone.
Lord Bourne of Aberystwyth
My Lords, I thank the noble Baroness for the relevant and very fair questions she raises. I think she was asking about what we do now but, first, in relation to the consultation, clearly at that stage there was an understandable intention to keep the information fairly tight in order to realise whether we had a problem on our hands. That was the reason for that. There were many people who would have had appropriate knowledge and interest to whom we could have gone. Certainly we will speak to these people now.
In relation to the broader point about Grenfell, of course it is a very complex situation with many different circumstances. However, there is a broad universal view that we must not let it happen again, which informs everything we are doing. It has many different facets to it. The noble Baroness referred to one of them: the white goods identified by many as a cause of the fire. There is an ongoing criminal investigation, so we have to be very careful about what we say in that regard, but she makes a very valid point. If I may, I will update her on what is happening in my letter.
A point I often make is that there seem to be an awful lot of inquiries, but that is because the issue is so complex. There is a quite separate criminal investigation which the Government and political parties have no input in framing. But it is very important, as is the inquiry into the fire itself and the broader circumstances, led by the judge, and we have this one here—the Dame Judith Hackitt review on building regulations and fire safety. Again that is important and, of course, we have the independent expert panel, which has been very important. Although there are many different bodies, which I shall outline in my letter so that people are aware of exactly where we are in relation to each of them, they each have a part to play, although there may be some overlapping here and there.
Baroness Harris of Richmond (LD)
My Lords, is the noble Lord aware of the real problem in the private blocks of flats that the cost being quoted for residents to have the cladding taken off and replaced is around £30,000 per person? That is absolutely unconscionable. What are the Government doing about making sure that there is some help for these people?
Lord Bourne of Aberystwyth
My Lords, the noble Baroness speaks for many people when she makes that point, which is a fair one. We have all seen this week the particular block in Croydon. There is some concern about this and my right honourable friend has said that, morally, it should be picked up by the landlords. If I may and as it has concerned many of us, I should like to update noble Lords on where we are on this issue in my letter, which I appreciate will be very wide-ranging.
Lord Porter of Spalding
My Lords, I declare my interests in the register as chairman of the Local Government Association and leader of South Holland District Council. I will contain my remarks purely to the issue of the doors today. If I spread into the wider Grenfell issues and my opinion of the expert panel, I will probably stray into unparliamentary language.
The manufacturer claimed it had the ability to produce 50,000 units a year, that the doors complied with Part M of the building regulations and that they had been approved by the BRE. Given all that, what can my noble friend the Minister say to assure the House that we can have faith in the advice from the expert panel that this is not such a major issue?
Lord Bourne of Aberystwyth
My Lords, I am grateful to my noble friend who, understandably, has taken great interest in issues relating to Grenfell and the role of local government. In relation to the particular manufacturer he refers to, as I have said, these doors are no longer being manufactured. I can state that categorically. We are obviously looking at the issue of compliance.
Other doors have been tested and found to be deficient, but not nearly as deficient as this one, so that is another issue. There are difficulties in relation to Grenfell, because most of the fire doors were of course destroyed, which has presented a problem for testing. It is also a restricted site because of it being a crime scene. Nevertheless, we are obviously checking very closely to see exactly where these doors have been tested, as they are required to be, to ensure compliance. This will satisfy what the Secretary of State has rightly said about the need to look at this at pace and to test other doors beyond Grenfell to see whether they are compliant or not. At the moment, from the evidence that we have, it appears to be a single batch.
Lord Bassam of Brighton (Lab)
My Lords, I suppose I ought to draw attention to my register of interests, which no longer contains a reference to my local government experience, but I was the chair of a housing committee for a couple of years and ran our city council for 13 years. If I had heard the noble Lord’s Statement about these doors and I lived in a high-rise block, I would feel decidedly uneasy. I am rather worried about these doors. My recollection is that, at Grenfell, there was a major refurbishment that led to the cladding being put on the outside of the building. Is it the noble Lord’s understanding that these doors were part of the general refurbishment of the block at that time? If it is the case that these doors have been widely used elsewhere, why are the Government not simply putting all local authorities on alert and asking them to investigate and to test the fire safety doors in high-rise blocks? That would be a very practical and sensible step to take.
When I worked for the old Association of Metropolitan Authorities back in the 1980s and 1990s, we used to send letters weekly to our constituent member local councils, which contained guidance on the appropriate action to be taken by local authorities following central government announcements. Would it not be wise for the Government to work with the Local Government Association and local authorities and alert them to some of the findings from the fire tests on this particular batch of doors? If it is the case that they have been widely distributed—the noble Lord has a lot of knowledge about these particular doors—then residents living in high-rise blocks need assurance that proper fire tests will be carried out locally as well.
Lord Bourne of Aberystwyth
My Lords, in relation to the fire doors within Grenfell Tower itself, it appears that they were installed in 2013, as far as we can determine. On the point that the noble Lord made about testing more widely, this is exactly what we are doing but, until we have done those tests, which are going on at pace, we need to be careful about issuing anything that will cause more concern than is necessarily appropriate. What we need to determine is whether this is just a single batch from that period, and it is through conducting these tests very quickly that we will be able to do that. We are doing this on expert advice, working with fire chiefs and the expert panel. I will take back the point that the noble Lord made about working with local government; that sounds eminently sensible to me and I am sure it is something that we will want to do. As noble Lords would expect, we want to be an evidence-based Government; we are doing this at pace, but making sure that we are doing it thoroughly and appropriately.
Lord Marlesford (Con)
My Lords, is the Minister satisfied that Dame Judith Hackitt, in her inquiry, is taking on the full experience and best practice in the United States in these matters. They have much wider and longer experience of high-rise buildings. Has she specifically commissioned any inquiry into the best practice in the USA?
Lord Bourne of Aberystwyth
My Lords, I thank my noble friend. I am not sure about whether Dame Judith Hackitt has commissioned any work to look at what is happening overseas or indeed in the USA. She has massive experience in this area and I would be very surprised if she is not looking at what happens in other countries—the USA and elsewhere. I will make sure that she has the benefit of my noble friend’s comments, but I would be surprised if she were not doing so.
The Earl of Lytton (CB)
My Lords, I welcome this announcement from the Minister and, in doing so, I declare my interests as a vice-president of the LGA and, more particularly, my practice as a chartered surveyor in the building and construction sector. I join other noble Lords in expressing concern that there are components—whether they be doors or something else—in buildings that are not meeting the standards that are claimed for them. That is a very serious matter that needs to be followed up with great rigour.
On the doors in particular, there are of course questions about the fireproofing of the door panel itself and its frame, but there are also more discrete fireproofing systems, such as smoke seals, intumescent paint and, of course, self-closers. I remember teasing a fire officer years ago, perhaps rather unfairly, by saying that the chief use in a particular building of the two-gallon water extinguishers seemed to be propping open the one-hour self-closing fire doors. There is this issue about the “desire line”—if I can use that term. How people use buildings is a very important factor in all this; we do not want to have fire doors propped open with bicycles, suitcases or anything else that might itself cause an obstruction but, more particularly—as the noble Baroness, Lady Brinton, said—might imperil the very basis of the compartmentalisation. If we allow that to happen, because self-closers are inconvenient or because there are too many doors, we need to look into that. I hope that the Minister can reassure us that that is being looked into at the same time.
Lord Bourne of Aberystwyth
My Lords, I thank the noble Earl and recognise his vast and detailed experience as a chartered surveyor. In drawing this debate to a close, I say first that I share the concern that he has expressed, but I think that we need to keep a sense of balance regarding what we know at the moment, which is that it could well be just this batch. But the Government are of course concerned and we are moving this forward at pace.
To echo the point made by the noble Baroness, Lady Brinton, I also think that we have to look at all aspects of this in the round—that is absolutely appropriate. The Dame Judith Hackitt review gives us the context for doing that; she really does know what she is talking about and understands this country. Those points are very valid, and so is restating some common-sense advice, as the noble Earl has just done, on ensuring that fire doors are closed. Too often, one enters residential buildings where the fire doors are propped open, particularly in the summer months. We need to bear down on that and ensure that it does not happen. I take on board all the points that have been made and the concern expressed. I will write to noble Lords on all the points that have arisen and ensure that, in addition, we have a statement before the end of April so that all those points are dealt with.
Meanwhile, importantly—this will have particular resonance on Grenfell—officials have been out very early to speak people in Grenfell. The Minister for Grenfell survivors, Nick Hurd, has also been in touch and a letter is going out. This is very much at the forefront of our minds. This was happening ahead of the Statement being given in the Commons to make sure that the process was being carried forward, because it will raise particularly horrid memories and connotations for the people at Grenfell.
Revised Draft Airports National Policy Statement
(6 years, 9 months ago)
Lords ChamberRead Full debate Read Hansard Text Read Debate Ministerial Extracts
Baroness Chisholm of Owlpen
That this House takes note of the Revised Draft Airports National Policy Statement: new runway capacity and infrastructure at airports in the South East of England.
Baroness Chisholm of Owlpen (Con)
My Lords, I start by sharing the apologies of my noble friend Lady Sugg, who is under a three-line Whip today by her mother. She is at the Palace receiving an honour, so obviously there was no way that my noble friend was going to be able to miss that today.
My noble friend and I welcome this debate on the Government’s revised draft airports National Policy Statement, or NPS. It might be helpful if I put today’s debate into context in terms of the process the Government have followed to date. The Airports Commission reported in July 2015 and, following detailed consideration of its findings and further work, the Government announced their preference for the Heathrow north-west runway scheme in October 2016. Since then, we have published a draft airports NPS and conducted two periods of public consultation, receiving over 80,000 responses in total. We are now carefully considering those responses. It is worth emphasising that we are still in a period of consideration following public consultation and no final decisions on the airports NPS have been taken. Should the Government decide to proceed, any proposed airports NPS would be laid before Parliament and an opportunity provided for debate in both Houses.
What is the purpose of the NPS? The concept of an NPS was introduced by the Planning Act 2008, which was enacted following the Heathrow terminal 5 inquiry, which lasted nearly four years. The draft airports NPS has a specific purpose. If adopted, it would provide planning guidance for the promoter of the additional runway. It sets out at a strategic level the need for development and establishes clear, high-level policies by which an application for development consent for the additional runway would be decided.
It might be helpful if I say what the draft NPS does not do. It does not give permission for a new runway. Development consent would be sought following the preparation of a more detailed design by the scheme promoter and would require public examination of the proposals in the light of the policies set out in the NPS. It is then the role of the Secretary of State, taking into account the advice of the planning inspectorate, to determine whether to grant development consent.
Clearly, there is a need for expansion. The UK currently has the third-largest aviation sector in the world—second only to the United States and China—contributing more than £22 billion to UK GDP. In 2016, UK airports handled 268 million passengers—up 7% on 2015—and 2.4 million tonnes of freight. Our airports continue to grow their business, with more passengers passing through their doors each year. Heathrow is the busiest two-runway airport in the world. Evidence shows that unless we take action, all five of London’s main airports will be completely full by the mid-2030s.
Let me set out why a new north-west runway at Heathrow is the Government’s preference for additional capacity in the south-east. Our analysis shows that a new north-west runway would deliver benefits of up to £74 billion to passengers and the wider economy over 60 years. Of the shortlisted schemes assessed by the Airports Commission, the north-west runway scheme at Heathrow delivers the greatest benefits soonest. An expanded Heathrow would offer the greatest choice and frequency of vital long-haul routes. It would secure the UK’s status as a global aviation hub, enhancing our ability to compete with other European and Middle Eastern airports. It would provide new domestic connections —moving from eight to 14 domestic routes—and greater frequency, enabling the nations and regions to benefit from onward connections to long-haul destinations.
I mentioned freight earlier. Heathrow handles more freight by value than all other UK airports combined. Heathrow has superior connections to the rest of the UK through road, rail and domestic flights. Expansion is also expected to generate up to 114,000 additional jobs in the local area by 2030, and Heathrow Airport has pledged 5,000 additional apprenticeships.
I want to emphasise that the draft NPS makes it clear that expansion at Heathrow would be allowed to proceed only if accompanied by a world-class package of compensation along with mitigation measures to reduce impacts. Without going through all the measures, let me give noble Lords a flavour of the proposals. On community compensation, the proposed package includes above-statutory levels of compensation for property owners. Heathrow Airport Limited has pledged that home owners in compulsory and voluntary purchase zones would receive 125% of unblighted market value, plus stamp duty and costs. The airport has also pledged in excess of £700 million to noise-insulate residential properties, fully insulating homes most affected and providing a contribution of £3,000 towards noise insulation for qualifying homes further from the airport. They have also promised to set aside an additional £40 million to noise-insulate schools and community buildings. The draft NPS also requires the creation of a community compensation fund worth up to £50 million per year to benefit local communities.
Moving on to environmental mitigation, as we all know, noise is a major concern for communities around Heathrow. Under the Government’s draft proposals, the scheme promoter would be expected to deliver a number of mitigating measures to reduce the impact of aircraft noise. In addition to the comprehensive noise insulation package, these are expected to include a new six and a half-hour ban on scheduled night flights. This ban would help address noise from early morning arrivals at the airport—one of the most frequently expressed concerns of local communities. Expansion would also result in more reliable periods of respite. The draft NPS makes it clear that the Government expect noise mitigation measures to limit, and where possible reduce, the impact of aircraft noise compared to the 2013 baseline assessed by the Airports Commission.
The Government have consistently made it clear that expansion at Heathrow would be allowed to go ahead only if it could be delivered in compliance with legal obligations on air quality. It is the Government’s view, based on expert analysis, that the Heathrow north-west runway scheme can be delivered in compliance with those legal obligations, with a suitable package of policy and mitigation measures. Importantly, that analysis does not take account of any of the additional measures the scheme promoter would take to address emissions. For example, the NPS proposes a public transport mode share for passengers of at least 50% by 2030, and Heathrow plans to consider a low-emission zone.
Finally, the Government have also considered the impact of the updated aviation demand forecasts on carbon emissions. Our analysis provides further support for the Airports Commission’s assessment that any of the three schemes, including the Heathrow north-west runway, could be delivered within the UK’s obligations under the Climate Change Act.
I appreciate that there are many views on airport expansion and my noble friend and I look forward to hearing them in the debate. I beg to move.
Lord McKenzie of Luton (Lab)
My Lords, I thank the noble Baroness for introducing the debate and for her explanation of the NPS. I welcome the debate to range over the revised draft airports National Policy Statement and the issues it raises.
I agree with the analysis of the importance of aviation to the UK economy and the need for new airport capacity. Heathrow is the busiest two-runway airport in the world. While declaring my support for Heathrow expansion, subject to safeguards, I am mindful of the perspective of London Luton Airport—a major contributor to aviation provision in the south-east—which is also reaching capacity as currently configured. I hope noble Lords will forgive me if I divert to another airport from time to time. I draw attention to my interest in the register as an advisory member of the board of London Luton Airport, a council company that owns the airport assets.
By way of history, Luton Airport was originally run as a committee of Luton Borough Council but was required to transfer its undertaking into a separate company by the Airports Act 1986—the handiwork, I believe, of the noble Lord, Lord Spicer. This was at the same time as the British Airports Authority was required to restructure into a main holding company with seven separate operating companies: Heathrow, Gatwick, Stansted, Edinburgh, Glasgow, Aberdeen and Southampton. Along the way, the Scottish airports were privatised and the BAA, which subsequently had to divest itself of Gatwick, Stansted and Edinburgh, was sold to Ferrovial.
London Luton—progressively known as Luton International and then London Luton Airport—travelled a different path to ownership and development from most airports when Luton Council entered into a public-private partnership through its wholly owned company with a third-party consortium. The airport has, perhaps unusually, enjoyed considerable support from its local community. Indeed, a local election was lost by the party which sought to privatise the airport, for a derisory sum, and which has never since—at least so far—regained control of the council.
In common with much else we debate at present, we should be mindful of the impact of Brexit on aviation and therefore airports policy. The liberalisation of air transport, with the ability of carriers to fly wholly within and wholly between other EU states and between a base and any other EU airports, has had a significant beneficial effect, added to by the advent of low-cost, short-haul flights across Europe and the growth of such airlines as easyJet and Ryanair.
There is clearly an imperative for the Government to negotiate continuing access to this liberalised regime on one basis or another, ranging from staying in the European common aviation area, a UK open skies deal with Europe or a single bilateral agreement with the EU. The issues of access to airspace and the implications for airfares, as well as safety regulation, also need to be resolved. Assuming that Brexit becomes a reality, we would argue strongly for our staying in the European common aviation area and remaining in the European Aviation Safety Agency. My initial questions to the Minister are: what progress is being made on all of this and what are the expected outcomes; and to what extent have these issues—or any of them—been taken into account in passenger number predictions, especially for Heathrow?
We should recognise that Conservative policy on the expansion of Heathrow has flip-flopped in recent times. Before the 2010 general election the party was opposed to a third runway and a sixth terminal at Heathrow. Its 2010 manifesto referred to stopping the third runway and linking Heathrow directly to the high-speed rail network. The coalition Government talked of cancelling the third runway at Heathrow, and the owners of Heathrow announced that they would abandon plans for a third runway. However, concerned lobbying persuaded the Government to look again, thankfully, hence the long-grass device of the Airports Commission.
Initially, the Government announced that they accepted the case put by the commission for more capacity in the south-east but had not decided where. Eventually, on 25 October 2016, after being pressed by constant questioning in Parliament—noble Lords will remember those exchanges in this House—the Secretary of State announced that the Government would support a third runway at Heathrow and bring forward a draft NPS. All in all, this is a disgraceful example of how the vital infrastructure needs of our country should not be handled. Political considerations were to the fore, as capacity at our most important airport was squeezed. The commission eventually unanimously recommended a new north-west runway at Heathrow combined with a significant package of measures to address environmental concerns. In making this decision, it gave weight to economic and employment benefits, as we heard: long-haul flights and connections; domestic connectivity; lower fares; surface access links; and support for freight. I support the strength of the position it has taken.
The consultation process at various stages has become a bit convoluted. In February 2017 the Government produced a draft airport National Policy Statement for a 16-week consultation. However, following their commitment to update their evidence base on airport capacity and their air quality plan, they then produced a revised draft airports National Policy Statement for yet further consultation. This sits along a range of other documents, including the Aviation Policy Framework and UK airspace policy. The Government have also announced the setting up of an Independent Commission on Civil Aviation Noise.
Can the Minister tell us where these further consultations leave the timetable for expansion at Heathrow and whether they expect any further adjustments to the NPS because of data changes? When might we expect the final airports National Policy Statement to be laid before Parliament, and will it be subject to a vote in both Houses? I think the answer already given to that is yes. Can the Minister summarise for us the key differences in those two consultation outcomes?
So far as the airports policy framework is concerned, it is important that we recognise that there is no one-size-fits-all and that the unique position of each airport is considered on its merits. Indeed, that is what the NPS does fairly. It is also important that the DfT understands the need to support the growth plans of other airports in the period before a new runway at Heathrow is delivered and that it recognises the contribution that these can make to capacity requirements —I speak particularly of London Luton Airport. I believe we can be reassured that Luton’s plans—which I will outline—are consistent with the development of Heathrow, but is this the view of the DfT and the Government?
London Luton Airport plays a vital role in the local and sub-regional economies, as well as contributing to the national aviation strategy. It is the fifth-busiest and one of the fastest-growing airports in the UK, and estimated to provide 22,000 jobs and £1.4 billion to local GDP by 2030. It plays a different role and serves different markets from Heathrow in the aviation sector. Its expansion can develop runway capacity and meet the specific needs of its catchment area—which of course includes London—for short-haul, point-to-point journeys. It supports the government aviation strategy in agreeing that more intensive use can be made of existing airport capacity, alongside the provision of a new runway at Heathrow. It looks to the Government to support its ambition.
At present, its passenger capacity planning permission is set at 18 million passengers per year from 2014, which was expected to be sufficient to meet demand through to 2026-27. There is a £160-million redevelopment programme to create this capacity. However, that capacity is expected to be fully utilised by 2020-21, so the focus is now on looking to maximise use of the existing runway and to maximise the benefit for the local and sub-regional economy, consistent always with managing the environmental impacts in a responsible and sustainable way. The assessment is a possible capacity of 36 to 38 MPPA, or 240,000 aircraft movements per year, with no new runway.
In their call for evidence on its aviation strategy the Government acknowledged the importance of surface access to airports and the need to link road, rail and air. A new £220-million fixed-rail link between Luton Airport Parkway—funded by Luton Borough Council—and the airport terminal will be a significant improvement on the current bus link. But transport links could be improved if the DfT were to stipulate that four fast trains per hour should call at Luton Airport Parkway as part of the base specification for the new east midlands rail franchise. Consultants have analysed that this would add minimal time to the semi-fast Nottingham services each hour, take some 70,000 car journeys off the road and save some 500 tonnes of CO2. It would create an integrated transport hub as conceived in the NPS and the aviation strategy. I am aware that this matter has been raised before, and perhaps the Minister can tell us whether any progress has been made.
We readily recognise the importance of the aviation sector in our economy, which directly supports some 230,000 jobs and contributes £20 billion per year. We further recognise that the opportunity to deliver the potential for the sector is being affected by capacity constraints at some airports, and Heathrow is the premier example. The Minister will be aware of the controversy engendered by the Government’s upping of the expected contribution of an expanded Heathrow to £74 billion over the 60-year period, and that the NPS shows this below the contribution which could come from Gatwick expansion over the longer term. Perhaps the Minister will comment on that point.
Decisions to expand airports properly involve delicate assessments of the environmental and community impacts of new build, especially runways. That is why my party has rightly laid out the four tests to be met for Heathrow, covering: how the increased capacity will be met; the need to reduce CO2 emissions from aircraft to help us meet our legal climate change obligations; the effective management of noise and environmental impacts; and the need for the benefits of expansion to be shared.
As part of the appraisal of sustainability for the north-west runway scheme, it is noted that there are a range of mitigating or supporting measures, which the Minister mentioned, to enhance the positives and mitigate the negative impacts of a proposal. There is reference to the growth of greenhouse gas emissions, but there is little detail other than that the promoter has put forward a number of commitments, which the Government expect to be honoured. This is a bit thin. Perhaps the Minister can say more in his reply. He dealt with the issue of a package to address the problems of noise.
There is a need to make progress at Heathrow as it heads for full capacity. There is also the need to press ahead with expansion at Luton as it approaches the current 18 mppa planning constraint.
Lord Spicer (Con)
My Lords, the noble Lord has been a great champion of Luton Airport—and good luck to him. He has admitted that Luton is pretty well full up itself now, so there is a bit of a problem there. I agreed with him when he said that the whole of airport policy was a perfect example of how not to run a government policy. The only qualification I would make is that all three parties have had their hands in this policy, so there is no party-political benefit involved; it is just that the way in which it has been handled in general is a great shame.
The report before us is in many ways rather good. It contains the best euphemism that I have so far seen to describe the present state of affairs: it says that the UK faces a “capacity challenge”. But there is one snag with the report: it is 20 years too late. It should have been done 20 years ago, when the first signs of pressure on London’s airports were already beginning to emerge. We already faced a doubling of passenger throughput every 10 years.
If we go back 30 years—which happens to be the point at which I was Minister for Aviation—we must recognise that Heathrow and the other London airports were the envy of the world. This was where all the airlines wanted to have slots. I remember that we restored grandfather rights to Michael Bishop, as he then was—he is now the noble Lord, Lord Glendonbrook—with British Midland, and how pleased he was. His whole company was pretty well set up on the basis of those grandfather rights at Heathrow; they were like gold dust.
The question arises: why have we come to where we are? In the halcyon days of London’s airport system a lot was done to support it. I seem to remember that I cut the first sod—I think that was what it was called—at Stansted Airport, Heathrow got permission to build another two terminals and Gatwick got one. We doubled the ATMS limits, we had an open skies policy, which brought great benefit to the airports, and we privatised them, which gave them access to capital. We did everything at that time to back them up.
Since then, despite the pleas of several noble Lords—such as the noble Lord, Lord Naseby, and the noble Lord, Lord Soley, who told me last night he had a very important engagement; he desperately wanted to be here today but he has not been able to make it—for the airports, including Luton, nothing much has happened. We have had commissions and inquiries, we have had government statements, and we have even had jokes. One of those was about Ministers who kept on saying “shortly”, because they thought that was the Cornish for “now or never”. In fact the correct Cornish word should have been “dreckly”; it is a great joke in Cornwall that they used the wrong word.
We have had all that, but we have not had any action, and Heathrow, for example, has moved down from being by far the world’s number one international airport to the second league. If we wanted to give a runway batting order, we would say Heathrow 2, Beijing 3 and Schiphol 6. Because Schiphol now has six runways, it is not terribly surprising that Heathrow is fading in the airport league, to the great detriment of this country.
May I take up your Lordships’ time by giving you one anecdote that sums the whole thing up for me? When I did not know that I was coming to this House, my wife and I decided to rent out our house in Westminster, which we had had when I was a Member of the House of Commons. The tenant was a Chinese gentleman whose title was chief executive of China Oil (Africa) Ltd. I got quite friendly with this man, and one day I asked him, “Why do you run your Rhodes-type operation—your empire, which you have taken over from us—from my humble house in the middle of London?” He said, “There’s one reason for that. It’s because I can get more quickly between Kenya and Zambia and the other various parts of my ‘empire’, as you call it”—he did not accept that term, and called me an imperialist—“by coming back to Heathrow and flying back from there, flying backwards and forwards between my various responsibilities. That is, until we do something in Beijing. Then I shall move out straightaway. And by the way, I may be using your humble house, but I’ve got very big offices round the corner; we have a big operation here. I shall move out the moment I discover that Beijing has better opportunities than Heathrow”.
Sure enough, two or three years ago he started to pile up Chinese goods. When the Chinese are going home they buy up Chinese goods to take home; apparently that is a clever thing to do. He piled up all those white goods in my house; then he was on his way, and that was that. That was a salutary experience for me, and a clear example of the effect of the rundown of Heathrow compared with other airports around the world, which generates business elsewhere and not with us.
The question is: what do we do about it? I think we have effectively run out of time now to do anything simple. Schiphol is such an attraction for many new routes and new businesses that it is quite difficult for us. We have gone past the point at which we can compete properly with Schiphol. The only thing to do is to be quite radical. This is not just a question of an extra runway here or there, for Heathrow or wherever. We now have to think of London as a total system, which will mean a tremendous regurgitating of the space control systems.
We need an airport with two runways to the north of London; that would have to be Stansted. We need one to the south, which would have to be Gatwick. By the way, Luton would have to be included in this too. We need one to the west, which would be Heathrow, and then perhaps, just to please Mr Johnson, we would have one runway down the Thames, which would serve the eastern side. We have to think radically, because we are now thinking about 2030. We cannot possibly be thinking about a date much closer than that: it is just not going to happen.
The Minister today gave the least cheerful government response to this issue that I have heard in recent times. She was, probably accurately, reflecting the fact that it will take ages to get through all the planning process, especially as the Government have not even decided to do anything properly yet. We have to think realistically and to have an adequate time horizon, which will be getting towards 2030, and then have a really radical scheme to meet the needs of the 2030s.
Baroness Jones of Moulsecoomb (GP)
My Lords, I listened with horror as the noble Baroness the Minister laid out the Government’s rather quaint and old-fashioned plan for Heathrow expansion, with its overoptimistic, fantastical mitigation factors, and felt that the Government have not learned any lessons from all the court cases they have been taken through on issues such as climate change. The fact is that the so-called benefits of Heathrow expansion cannot possibly measure up to the disbenefits for the bulk of society—not just for the people around the airport but for the bulk of us, who will end up paying for a lot of the measures that Heathrow would like to see implemented.
For starters, Heathrow expansion will contribute to air pollution. It will negate all the measures that the current Mayor of London is putting in place in and around London. It will be impossible to keep within his plans if the expansion goes ahead. Heathrow is already a pollution hotspot that breaches legal limits. The plans include schemes that have yet to be identified and laid out clearly, and they make all sorts of optimistic claims about public transport use. I am not sure whether the Minister laid this out but I would like to hear by how much Heathrow Airport is planning to subsidise public transport. Quite honestly, you cannot expect Transport for London and London taxpayers, as well as taypayers all over the UK, to pay for this extension of public transport.
What is definitely planned is expanded car parking, with at least 40,000 to 60,000 extra vehicles a day on the roads. Air pollution from Heathrow with this expanded road capacity will shorten people’s lives—there is absolutely no way round it.
Noise from Heathrow currently impacts on 1.5 million people—a figure based on World Health Organization standard levels. It does not just impact on those around the airport. It is marvellous that a lot of insulation will be installed in houses around the airport, but, quite honestly, everybody in London is impacted at some point by the noise levels from flights overhead. We were told that £40 million will be available to insulate some local schools, but it is an absolutely paltry sum which will be nowhere near enough. Added to that is the fact that children obviously have to go outside to play, and they will be playing in dirtier air and noisier playgrounds. I do not see how Heathrow Airport can justify any expansion.
A fully operational, three-runway airport, open from 5.30 am, could mean that night flights jump by a third. The safeguards that should be in the NPS are simply not there, and the final decision about flight paths will not be taken until after the NPS has been signed off. Therefore, how can the Government be sure that any of those mitigating factors will be valid? Currently, 102,000 people live around Heathrow and are exposed to very high levels of noise. They are up to 20% more likely to suffer a stroke or have heart disease. Again, the noise reduction from insulation might be very effective when they are in their houses, but what about when they want to go to the shops or travel locally? Insulation will not help them then. I guess that headphones might help if Heathrow Airport would like to supply a pair to every single resident.
The NPS forecast is that there will be five domestic routes, down from the current eight, which means that regional airport capacity will shrink. That is an optimistic forecast that ignores what will happen if a future Government enforce a cap on climate change gases and aviation is hit by increased charges. If unmanaged, Heathrow expansion will increase climate change gases by a third. How can the Government feel that that is justified?
Will the UK economy benefit from Heathrow expansion? In fact, it probably will not, but the owners of Heathrow will. Over half the new passengers will never leave the Heathrow shopping mall, as they will be on international connecting flights. The benefit might go to a few shops but the general population will not benefit from more jobs and more sales.
The NPS also includes tunnelling the M25 and diverting some major roads. I would like to know just how much Heathrow Airport is putting into that expense. I would like some clear figures, because it has been very difficult to get them. The upgrading of trains on South Western Railway and Southern rail are mere aspirations, yet there are meant to be an extra 200,000 trips per day by public transport, a lot of them relying on the Metropolitan line and the Elizabeth line, which are already being expanded to cope with other over- crowding problems.
I would like to quote from a BBC article by Roger Harrabin which has been published today. It concerns a report produced by four Commons Select Committees —the Environment, Food and Rural Affairs Committee, the Health Committee, the Transport Committee and the Environmental Audit Committee—which have been rather critical of some of the Government’s actions. They want a new clean air Act and a clean air fund financed by the motor industry. These will impact on Heathrow expansion because, even before that happens, Heathrow will again be in breach of all sorts of legal limits. I would love to read out the whole article because it is fascinating. Roger Harrabin says:
“The report—the first time that four committees are thought to have collaborated—urges the Treasury to take greater account of the costs of air pollution when setting tax and spend policy”.
But of course, allowing Heathrow expansion to go ahead is something that the Government will also have to take into account, given that air pollution will almost certainly increase. It already has a huge impact on the NHS, which is having to deal with people’s heart and breathing problems, and it will have an impact in the future because of the thousands of children whose lungs have already been stunted by air pollution and who will need care from the NHS far into the future.
The Government’s long-term target of abolishing cars driven only by petrol and diesel by 2040 is also rather feeble. The article points out that India has made the same pledge but for 2030. There is also the fact that replacing cars with more cars is not necessarily the answer. Electric cars can also be polluting if their source of electricity is not renewable.
Finally, the article states that,
“recent reports have drawn a possible link between attention deficit disorder, dementia and air pollution”.
Therefore, again, not only is air pollution having an impact now but it will do so far into the future.
I end by pointing out that there is no guarantee that air pollution will not get worse. In fact, we can probably guarantee that it will. There is no guarantee that regional airports and jobs will not go into decline as Heathrow favours international routes—perhaps the Minister could comment on that in his reply. There is no guarantee that taxpayers will not be landed with a multibillion pound bill for new transport infrastructure to support Heathrow Airport. There is no guarantee that several hundred thousand residents in the south-east—not just around the airport—will not find that their sleep is even more disturbed than it is now. And there is no guarantee that climate change will not get worse as a result of Heathrow expansion. Quite honestly, this national policy statement on Heathrow is a joke. It displays an old-fashioned way of thinking about the problems that we face, and it really is time that the Government started to think in a very much greener way.
Lord Naseby (Con)
My Lords, I declare an interest as a former pilot who has taken a detailed interest in aviation matters, in the UK in particular.
Fifty-one years ago, my noble friend Lord Vinson and I produced a pamphlet entitled Helping the Exporter. I looked at it again last night and it re-emphasised the need, even then, for Heathrow Airport to expand, with, in particular, the building of a special exhibition centre adjacent to it to help our exporters. That was a long time ago and a lot has happened since. The people who really suffer from a lack of expansion are the whole of our nation which is, is by and large, a manufacturing and trading nation. I represented the largest industrial town in Europe—Northampton. The manufacturers there need to export, and we need them to export to provide livelihoods for the people of our nation. However, they are desperately constrained in that regard.
I welcome what has been done at Luton Airport. Indeed, I live on the flightpath of that airport and have done so for close on 50 years. I have no objections to the expansion of Luton Airport. As I take a wider interest in this issue, I am consistently asked by my former constituents, “Why is it that we in this country seem totally incapable of ever making a decision on almost any major infrastructure project, but particularly on London airports?” My noble friend Lord Spicer tried hard to make a major contribution on aviation, but we have fallen behind Schiphol, Frankfurt, Amsterdam, Dubai, Doha, Istanbul, and a couple of others. Why can we not get a grip on these things? We are losing out.
I thank my noble friend on the Front Bench for the fact that the report has arrived today. It has taken 18 months to produce but it is here. On behalf of my former constituents and all those who have an interest in exporting, I say to my noble friend and his colleague, who understandably is not present, “Please get on with this”. Of course, we understand that there has to be consultation and noise is one of the key determinants of the problem. However, nobody ever mentions that by the time the third runway is built, the average commercial aircraft that will fly in and out using the third runway will be 50% less noisy on take-off and 20% less noisy on landing.
The other afternoon I went to Twickenham to see England, for once, beat the Welsh. Aircraft came over and you could hardly hear them, so if that noise is reduced by 20% for landings you will hardly hear them. Of course, those who live directly underneath the flightpath will be affected. That is why it is vital to pay compensation to the close on 800 homes that will be affected. At last, the pleas a number of us have made that when anybody’s home is compulsorily purchased to benefit the rest of society, they should get not the market price for their property but the market price plus 25%, have been heeded. That is the way the French have done it for decades, and it works. Of course, those people should be helped and, of course, help should be given in the other areas referred to in the report.
This has gone on for far too long. I recognise the skills of certain local MPs, who have built up a plethora of reasons why this should not happen and that should not happen. One of them resigned and did not succeed very well after that. Certainly, he was not successful in becoming the London mayor. Others are vociferous too. My noble friend said that there had been 80,000 responses to the consultation, and that the relevant staff are still looking through some of these responses. Of course, I have no objection to consultations but I ask the Government to please remember that the people of this country took a decision on Brexit. That means that we have to export, which requires us to have the ability to export. Given the financial and manufacturing dimensions of that decision, it is vital that our means of exporting abroad are lined up and ready to go.
I wish to cite four of the conclusions reached by Her Majesty’s Government in this very good, if rather long, report. There are four short but absolutely key conclusions. The report states:
“Expansion via the Heathrow Northwest Runway scheme would provide the biggest boost to connectivity, particularly in terms of long haul flights”.
It continues:
“Expansion via the Heathrow Northwest Runway … would provide benefits to passengers and to the wider economy sooner”,
than any other scheme, and that:
“Heathrow Airport is better connected to the rest of the UK by road and rail. Heathrow … already has good road links via the M25, M4, M40 and M3, and rail links via the London Underground … and Heathrow Express”,
and, in future, Crossrail and HS2. The report also concludes:
“The Heathrow Northwest Runway scheme delivers the greatest support for freight”,
in other words, manufactured goods.
Therefore, my plea to my noble friend on the Front Bench is that within 12 months both he and my noble friend who is unable to be with us today come back to this House and tell us that they have consulted fully, have come to a decision and are putting a proposal before both Houses. That would bring joy to all our manufacturers up and down the country, wherever they may be located.
Lord Berkeley (Lab)
My Lords, I am grateful to the House for allowing me to make a short contribution in the gap. I could express a lot of views on airports but today I shall concentrate on the NPS and airport costs. I support everything that my noble friend Lady Jones has said. I too believe that the NPS is out of date because it comes with baggage which dates from when just one company owned all the major airports around London. We still have this anomaly whereby one company seeks to control and regulate Heathrow’s development but none of the others. All five of these airports are now in separate ownership. One could question why they need this type of regulation at all in terms of the detail that the NPS goes into. My understanding has always been that the Government’s policy is that the five airports should compete with one another. Perhaps the Minister will comment on whether there should be a bigger review of the NPS soon to ensure that it sticks to airport policy and does not get into the minutiae of what happens at Heathrow.
My problem, which I want to share with the House, is that, in terms of costs, Heathrow is being regulated as a monopoly in a very similar way to how Network Rail is regulated. The regulator’s role is to make sure that a company stays within its costs and that these are passed on to customers in an equitable way. That is fine but it does not address whether the costs are necessary to produce the outcome that the promoter, or Network Rail, or Heathrow Airport wants. Mr Walsh obviously has a vested interest in the actions of the CAA. He says that the fault lies with the CAA, which,
“rewards the inefficient use of capital : the more it spends on capital projects, the cost of which can be passed on to airlines, the more it makes for its shareholders”.
My solution is to bring competition to Heathrow. Perhaps the Minister would like to consult the CAA and consider whether the five or six terminals that may be built at Heathrow should not be sold off into separate competing operations, and leave the BAA in charge of infrastructure, which should involve not only the runways, the services and the air traffic control, but the access, which many noble Lords have spoken about. The question then becomes: who pays for the access? Can the Minister say who is going to pay for all these lovely new rail accesses that are planned for Heathrow? It now has the worst proportion of passengers coming by rail of all the airports around London, I think, and it would be wonderful if the new accesses happened. But who is going to pay for them? On the same basis, can we have Heathrow Express removed from that structure so that customers do not have to pay £27 for a single journey, as I think it says in the briefing? I am sure that contributes some way to the number of people driving to Heathrow.
There is a long way to go on this, but I would be very interested to hear the Minister’s response.
Baroness Kramer (LD)
My Lords, obviously the draft airports NPS will be the basis for the Government’s decision on the development consent application for a north-west runway at Heathrow Airport. I confess that I live under the flight path, so I suffer daily—I was woken this morning at 5.30, which has been very frustrating after the late hours that we have been here. I have long opposed expansion at Heathrow, well before ever becoming engaged in politics, on national as well as local issues.
It is often taken as given that there is a strong economic case for expansion at Heathrow, but that is exceedingly questionable. I am sure the Minister will be aware that the Davies commission agreed that it was clearly stated that the case for a third runway at Heathrow depended on a hub model of aviation prevailing over point-to-point. However, the shift in the industry is clearly towards point-to-point because, frankly, passengers hate changing planes. I say to the noble Lord, Lord Spicer, that his Chinese tenant is the exact example. People put up with this problematic hubbing, having to change planes and wait for hours in terminals for a second flight, until there is the opportunity to fly direct.
We are in an era where flying direct is becoming dominant. That is one reason for the rise of airports all across the various continents, and for a very fundamental change in the pattern of aviation that passengers themselves are demanding. What we have is a hub airport at Heathrow that is primarily and almost solely functioning on an outdated concept. The passenger forecast for the third runway is that there will be 41 million additional passengers a year, but that 22 million of them will simply be changing planes at Heathrow. I pick up the point made by the noble Baroness, Lady Jones: those 22 million contribute absolutely nothing to our national economy. A large part of the investment and the cost that we are carrying is to support literally half the passengers, who bring no specific benefit.
The economic case is also based on an assumption of a direct correlation between GDP growth and an increase in passenger numbers, particularly at Heathrow. That is very simplistic. We got a glimpse into how simplistic it was during the work of the Davies commission when it released the technical documents. I give credit to Justine Greening MP, who, at that time, through a number of FOIs, was able to get more information on the cost-benefit analysis, and it was clear that there really was nothing. Many people think that somehow there had been work with businesses in London to work out what the future demand would be; there was none. They thought that there had been a look at historical correlations; there were none. It is simply meant to be a given that as GDP goes up, there is a corresponding increase in demand for flights out of Heathrow. I say this with a warning, because the rail industry has had to cope with the fact that what it assumed was an unbreakable link between GDP growth and passenger demand for rail has now been clearly broken. For example, in London, the Tube has seen its passenger numbers this year down by almost 4 million. So the economic case is extremely simplistic and very unreliable.
None of the analyses ever included the negative impact on businesses from noise, poor air quality and, above all, traffic congestion, so the work has been inadequate. But, interestingly, even in that inadequate work, the latest piece of work done by the Government shows that a second runway at Gatwick is a better generator of long-term economic benefit than a third runway at Heathrow—a point made by the noble Lord, Lord McKenzie of Luton.
A number of key airlines, including BA—Willie Walsh’s name was quoted just now by the noble Lord, Lord Berkeley—have turned against the project because of the charges which they know they will have to pay and then have to pass on in ticket prices. No-one I talk to believes the cost of £17 million, which is often thrown around as the right number for this project. That number completely fails to include any realistic costing of the plans to move and then reinstate the M25 or, alternatively, to tunnel it. Until we get some reasonable costings, it is going to be very difficult to assess this, but £17 million is way too low, and any contractor will tell you that. To break even—even on that understated price—Heathrow will need to require the new runway to operate at 38% capacity from day one. The only way to achieve that kind of increase in flights at Heathrow is to lure flights—especially high-value flights by US airlines—away from Gatwick, Stansted and Birmingham, and possibly even farther afield, which would seriously compromise the viability of those other airports. This issue has never been properly examined and it bodes very ill for regional development.
Heathrow will incur a huge debt load as a result of building the third runway, and the pressure to service that debt means that Heathrow will inevitably focus its new capacity on long-haul popular destinations, where planes can be filled very quickly. That means New York and other near-US destinations, not flights to new developing markets in Africa and Asia. Even the NPS forecasts that the airport will reduce its network of domestic flights to serve, at best, only five domestic airports, compared with the eight that it serves today.
The noble Baroness, Lady Jones, talked extensively and so well on climate change. To meet the carbon targets in the Climate Change Act 2008, the third runway would require off-setting cuts across our regional airports. Passenger numbers would need to be cut by 36% in the south-west, by 11% in Scotland, by 14% in the north-west and by 55% in the West Midlands. Without that, carbon emissions from aviation would constitute 25% of our carbon emissions allowance by 2050. Again, the noble Baroness, Lady Jones, described that far more effectively than I can.
Of course, there are local issues. Getting passengers to and from the airport is a nightmare, both because of the impact on air quality and because of road and rail congestion. NOx emissions and particulates are severe around Heathrow even today, and legal limits are regularly breached. All the local access roads are heavily congested, so dispersal is not even possible. Even the London mayor’s plans for ultra-low emission zones does not solve the problem. In fact, this basically destroys the effectiveness of any of those plans, as the noble Baroness, Lady Jones, described. She talked about the health impacts of poor air quality, something we are becoming more and more aware of. So there are serious consequences to the air quality impact of a third runway.
The Government have promised that a third runway will lead to no more cars on the road—they do not say that about freight; we will have freight on the road but no more cars. Frankly, that is impossible. Every scheme to provide more rail access from London to Heathrow falls to pieces either because it requires tunnelling on a major scale at a huge cost or because it triggers the level-crossing problem. I will explain the level-crossing problem. In my former constituency of Richmond Park, the position of the River Thames, Richmond Park and the railway lines means that several thousand people can get in or out of the area only by using one of four roads that have level crossings. The rail lines are so busy that the level crossings are often down for 50 minutes out of the hour. A train service to Heathrow, which all agree—if passengers were willing to use it —would have to be a fast train running every 15 minutes with no more than one stop, would in effect close those level crossings completely, trapping the local population.
Transport for London has estimated that providing surface transport to support a third runway would cost £18 million, of which Heathrow has said it would pay £1 million, with the rest to fall on the taxpayer. That includes not a penny for resolving the level crossing problem. No engineer has found any solution to that, so we are talking about the impossible.
Last but not least, noise is a fundamental issue. I was astonished to hear praise for a six-and-a-half hour night flight ban. That ends at 5.30 am, and the traffic between 6 am and 7 am is what drives the community most insane. Also, the airlines constantly fly exceptions, created by some circumstance of weather or another, that always breach their current limits, and that will undoubtedly continue. It is an ongoing problem.
The noble Lord, Lord Naseby, talked about much quieter planes, but the problem is flights coming over in a constant stream so that there is never any relief from the level of noise, so even making planes quieter does not necessarily deal with that problem. There is an additional problem: Heathrow with a third runway will be running planes on two parallel runways. As the noble Lord knows, noise fans, so in the area between those two runways, the fan effect of two planes flying at the same time will be extraordinary. The operation of those two runways at the same time means that areas once affected only by take-off will now have take-off and landing.
Lord Naseby
I am not sure where the noble Baroness gets her information from. If one got the information for, let us say, two fighter jets taking off together, one would see that the increase in incremental noise is very small. Surely, since those are fair noisier than the aircraft that I was talking about, her facts are totally wrong.
Baroness Kramer
I will ask the Richmond Society to forward to the noble Lord the detailed modelling that has been done to show the impact of double noise on a significant section of the population. He may find that rather interesting.
Opposition to Heathrow comes from the overwhelming majority of residents in south-west London living under the flight path, four local councils and MPs of all political colours that represent that area. My party, the Liberal Democrats, and the Greens have consistently opposed expansion. When any of us hear of the mitigations, we apply that against our own experience. I lived in the area when Heathrow applied for the fourth terminal and we were assured there would be nothing more. Then came the fifth terminal, and we were assured again that anyone was foolish to suggest there would be a third runway. Then came a third runway and we were told, of course, there would be no sixth terminal. Now we hear of a sixth terminal to go with the third runway. This pattern continues regularly. In the same way, the mitigations—noise is a good example —never live up to their billing. Sitting outside—most people have the right to sit in their garden—is not helped by noise insulation inside a house; that works only provided all the windows and doors are closed, with the consequence that quality of life is severely affected.
Lord Berkeley
I am grateful to the noble Baroness. She quite rightly talked about more and more terminals. Does she have a view on the view expressed by the noble Lords, Lord Spicer and Lord Naseby, that we should be talking about probably four runways, if not five, to keep up with Dubai and Amsterdam?
Baroness Kramer
I think the noble Lord, Lord Spicer, was perhaps more honest than most. A lot of the PR that comes from Heathrow and much of the aviation industry suggests that every new increment will always be the last and it never is, because there is always a rationale and always money to be made from continually trying to expand capacity, particularly when the underlying strategy is to strip flights out of other airports in the UK. That ownership is no longer held in common has added great fire to that underpinning strategy.
I hope that the Government will reconsider again the whole notion of a third runway at Heathrow; there are other and better options. I understand that it is in some ways a sop to business because business tends just to assume that a third runway would be good without looking into the detail. This seemed a way to pacify businesses infuriated by Brexit.
Lord Spicer
The noble Baroness is making a very interesting speech, but how will we get in and out of the country—we are an island—as the population becomes larger and we do not expand our airports?
Baroness Kramer
My Lords, there are many regional airports—I personally look at Birmingham as the most obvious way to expand and it is part of our regional strategy. There are many alternatives to the third runway at Heathrow that were not considered by the Davies commission. There are mechanisms. Rail will be taking a different part of the strain domestically in future, so we are part of a changing pattern.
I do not want to keep the House longer.
Baroness Kramer
Birmingham is eager to have a third runway, and there is a logic for it being there.
Heathrow has reached its limit. Frankly, it is time that the Government recognised that and looked for a better strategy.
Lord Tunnicliffe (Lab)
My Lords, it is with some trepidation that I rise to participate in this debate, partly because of the passions that have been expressed and partly because I have a bit of a ragged speech having had some trouble working out what this document does. I thank the noble Baroness the Minister for her explanation, but can the Minister who is responding further clarify the legal structure that we are debating a part of here? There must be some primary legislation somewhere that allows the Secretary of State to consent to the demolition of 783 houses; he cannot be doing it on his executive privilege. I assume that this document, along with the Planning Act 2008 and some other Act fit together in a way that gives him that power. It is important to understand how that power is exercised because I think that Minister said, albeit not in so many words, that in the final analysis it was at the Secretary of State’s discretion, because he receives a report and then makes a decision. I think I heard her say that we would get a second bite of this cherry in the autumn. By then, I would like to be fully up to speed—I have to say that chasing it up through Google has consumed many hours of my time to no great effect.
The Labour Party’s position on Heathrow needs to be stated without too much comment. My noble friend Lord McKenzie has already done it, but it has to come from the party spokesman from the Front Bench so I will read it out. The Labour Party supports the expansion of airport capacity in the south-east subject to our four tests being met. Is there robust and convincing evidence that the required increased aviation capacity will be delivered with Sir Howard Davies’ recommendation? Can the recommended expansion in capacity go hand-in-hand with efforts to reduce CO2 emissions from aviation and allow us to meet our legal climate change obligations? Have local noise and environmental impacts been adequately considered and will they be managed and minimised? Will the benefits of expansion be felt in every corner of the country, not just the South East of England, and will regional airports be supported too? It is against those tests that we will comment in greater depth when we get our second bite. I must apologise to my noble friend Lord McKenzie that, as far as I know, the Labour Party does not have four similar tests for the expansion of London Luton.
I should like to make two or three small points about the document. I start with paragraph 1.15:
“The policies in the Airports NPS will have effect in relation to the Government’s preferred scheme, having a runway length of at least 3,500m and enabling at least 260,000 additional air transport movements per annum”.
There is a certain nostalgia for me in this part of the document, because for eight years I flew as a co-pilot operating jet aeroplanes off the two runways at Heathrow. I looked up how long they were, and they were surprisingly long: 3,900 metres for one and 3,655 metres for the other. They always seemed a great deal too long, because I spent so much time taxiing down the parallel taxiways to get to the end.
Heathrow is now consulting on a scheme with the third runway being 3,200 metres long. That is all over the web. If it presents a scheme for 3,200 metres, does paragraph 1.15 mean that the document is invalid? It seems to say that the only scheme that the Government will consider is one for 3,500 metres. My personal experience is that 3,000 metres is more than enough for virtually all modern jet aeroplanes. Have the Government got themselves in a trap where their provisions and the newly preferred scheme by Heathrow are incompatible?
My next detailed point, which has been referred to by several noble Lords, especially my noble friend Lord Berkeley and the noble Baroness, Lady Kramer, concerns paragraph 5.18:
“Where a surface transport scheme is not solely required to deliver airport capacity and has a wider range of beneficiaries, the Government, along with relevant stakeholders, will consider the need for a public funding contribution alongside an appropriate contribution from the airport on a case by case basis”.
That would seem to me to be a promise of public money. Because the Government have examined the Davies report and said that they broadly support it, they must at some point have evaluated how much public money that paragraph commits them to spending. It is a surprisingly light amount of text for what I should have thought could be a substantial amount of money. I never got that sort of money out of the Government with so little text.
The general tone of the document seems to be, “Obey all these different laws about all these different things but, if it is all too difficult, ask the Secretary of State for discretion”. In a lot of places, it is not very tight. One paragraph that is pretty tight—I should like to know if the Minister agrees—is paragraph 5.41:
“The Secretary of State will consider air quality impacts over the wider area likely to be affected, as well as in the vicinity of the scheme. In order to grant development consent, the Secretary of State will need to be satisfied that, with mitigation, the scheme would be compliant with legal obligations”.
That would seem to me to say that, if it does not meet the air quality requirements, the scheme is dead. Can the Minister confirm that? He will know that, in many parts of the capital, we do not meet air quality requirements, and many people are sceptical that this can be achieved at Heathrow. The key question is: is this an area where the Secretary of State would not have discretion? Would it in fact kill the scheme dead?
My final point is on the important area of community engagement. It is referred to in the document on page 84. I have nothing against page numbers, but it feels as though it is a bit of an afterthought. It states:
“The applicant must engage constructively with the community engagement board throughout the planning process, with its membership (including an independent chair), and with any programme(s) of work the community engagement board agrees to take forward”.
This seems very narrow and very soft. Can the Minister say anything to firm up this commitment and make it broader, because the key stakeholders who must be drawn into the scheme as much as is reasonably practical are the local communities, and particular emphasis should be placed on community engagement?
Lord Young of Cookham (Con)
My Lords, it falls to me as co-pilot to land this debate, which had a smooth take-off with my noble friend Lady Chisholm at the controls. I hope to land on schedule. During the flight, we had in the cockpit two qualified pilots, two former Transport Ministers and a number of aviation experts. All said that they had been on this flight before several times and were used to being stacked for long periods. The journey was smooth, but with some turbulence as we flew over Richmond and Moulsecoomb, and there was a request to divert to Luton.
This has been an excellent debate, and I welcome the informed scrutiny that this House has, as usual, provided. I will try to answer the many questions raised; if I cannot, I will write. As I said, the speakers have been well qualified. For my part, I was Secretary of State for Transport for two years, with responsibility for airport policy, but my recollection is that I was constrained from articulating it for fear of prejudicing the inquiry into Terminal 5, which was under way at the time. At the time, I was Member of Parliament for Ealing Acton, so the future of Heathrow has always been an interest that has generated concern: concern about noise from some constituents but, I must say, counterbalanced by the employment generated for others, either those directly working at Heathrow or those working for businesses whose success depended on proximity to Heathrow. I suspect that there is that same tension in many other parts of west and south-west London.
There is a wide range of views on this subject. That is why we have undertaken one of the largest consultations ever and were keen to ensure that all the consultations were full and fair, giving everyone an opportunity to have their say. In response to the final point made by the noble Lord, Lord Tunnicliffe, I hope that that engagement with the community will continue as we move to the next stage in the planning process.
I was asked about consultation by the noble Lord, Lord McKenzie. I should like to write to him about the timings, but we are carefully considering the responses to the consultations—both the one under way and the separate one undertaken by Heathrow. We do not expect any further contributions to the Government’s consultation, but that is dependent on our analysis of consultation responses. We anticipate a debate in both Houses ahead of the Summer Recess, and the Government are committed to a vote in the other place.
The noble Lord, Lord McKenzie, asked me about the EU safety agencies, which is an important issue. We want to explore with the EU the terms on which the UK could remain part of the EU agencies that he mentions, such as the European Aviation Safety Agency.
The process of parliamentary review that we are participating in is a vast improvement on the years of public inquiry into the need for schemes that bogged down infrastructure before the Planning Act was introduced, and I shall say a word about that in a moment. My noble friends Lord Spicer and Lord Naseby made it clear at the outset that we have delayed far too long in resolving the calls for additional runway capacity in the south-east. The Government are anxious to bring this decades-long debate to a satisfactory conclusion. The revised aviation passenger demand forecasts show the need for additional capacity in the south-east is even greater than previously thought.
The opportunities and challenges that Brexit brings only strengthen the need for investment to improve links with the rest of the world. Across the economy our national infrastructure needs modernisation. That is why we are pressing ahead with the delivery of HS2, rail investment, broadband, road schemes, energy infrastructure and this proposal for a 3.5 kilometre additional runway. The noble Lord, Lord Tunnicliffe, asked me whether anything less than that would invalidate the NPS, and the answer is, yes, it would.
The noble Lord also asked under what powers the Secretary of State could acquire the properties he referred to. The answer is that the Planning Act 2008 enables compulsory purchase, but the draft NPS rightly holds Heathrow to its public commitment to provide 125% of unblighted market value for the homes of those subject to compulsory purchase.
The Government are clear that they expect the number of domestic airports with connections to Heathrow to increase. Heathrow Airport Limited has set out a number of pledges to help strengthen existing routes and deliver new routes to the regions and nations of the UK. These include discounted charges for domestic passengers. Air routes in the first instance are a commercial decision for airlines and are not in the gift of an airport operator. The aviation strategy—I will say a word about that in a moment—will consider the level of connectivity our nations and regions require to support economic growth, whether the market is able to provide this and what the role is for Government support.
There was a lot of interest in surface access and who pays for what. Heathrow is already well connected, with links to the M4 and M25, access to the Tube via the Piccadilly Line, and rail services from Paddington. In addition, later in 2018 Crossrail services will start to the airport, replacing the existing two-train-per-hour Heathrow Connect service. From December 2019, six Crossrail trains per hour will run from the airport directly to central London. TfL plans to upgrade the Piccadilly Line with new trains, more capacity and a faster, more frequent service. From 2026, HS2 will connect to the airport via an interchange at Old Oak Common, providing an express route to the Midlands and the north. A western rail link is planned to allow passengers to travel directly to the airport from Reading and Slough. The scheme is currently being designed in detail before seeking its own planning powers. Building is underway to upgrade the M4 to a smart motorway between junctions 3 and 12 to provide additional capacity.
As my right honourable friend the Secretary of State for Transport has said, we can see great potential in a southern rail connection to the airport, which would enable journeys via Woking, Waterloo and Clapham Junction. That would be of great benefit to those coming up from the south-west. We have already had initial approaches from a number of would-be private sector promoters that are interested in developing this.
On the question of Transport for London, we do not agree that airport expansion would require £15 billion to £20 billion of new infrastructure improvements on top of the billions we are already investing in improved transport. TfL’s number includes a range of other projects in London, which may or may not be needed in the future to deal with general population growth unrelated to airport expansion. The revised draft airports NPS sets out targets for the public transport modal share of journeys made to and from the airport by both passengers and staff.
HAL has pledged to meet the costs of any surface access proposals that are essential to deliver airport expansion. This would include works on the M25, A4 and A3044, as well as a contribution to the cost of the rail schemes. The plans for the runway to cross the M25 would be subject to the proper planning process and would be designed to minimise disruption to other users during construction.
On the question of the Government’s contribution, which was raised by a number of noble Lords, the Government would only consider contributing to surface access costs where they were not needed purely for airport expansion and they benefited non-airport users, as may be the case for the proposed western and southern rail access schemes, for example. The CAA will decide how the costs of any capacity-related surface access schemes will be treated as part of the regulatory settlement, including which of these costs would be recoverable from airport users.
Moving on to some of the other issues, the noble Baroness, Lady Jones, asked about car parking. Heathrow is currently consulting on its proposed plans. Any application for development consent must include details of how the applicant will increase the proportion of journeys made to the airport by public transport, walking and cycling to achieve a public transport modal share of at least 50% by 2030 and at least 55% by 2040.
The noble Baroness also raised an issue regarding the Environmental Audit Committee. By ending the sale of conventional new diesel and petrol cars and vans from 2040, the UK is going further than almost every other European nation. Air pollution has improved significantly since 2010, but we recognise that there is more to do, which is why we have a £3.5 billion plan to reduce harmful emissions. We will carefully consider the Joint Committee’s report and respond in due course.
Environmental and health impacts were again mentioned by a number of noble Lords. The Government take account of the WHO guidelines in developing policy. It is important to note that they refer to noise from all sources, not just aviation. The draft airports NPS makes clear that the Government would expect noise mitigation measures to limit, and where possible reduce, the impact of aircraft noise compared to the 2013 baseline assessed by the Airports Commission. The details around the operation of any scheduled night flight ban, including the exact timings, would be determined at a later stage in consultation with local communities and relevant stakeholders, in line with the requirements of the International Civil Aviation Organization’s balanced approach to noise management. I will ensure that they take on board the point made by the noble Baroness, Lady Kramer, on behalf of those who live in and around Richmond.
It is the Government’s view, based on expert analysis, that the Heathrow north-west runway scheme can be delivered in compliance with legal air quality obligations, with a suitable package of policy and mitigation measures. To answer the question of the noble Lord, Lord Tunnicliffe, and to be absolutely clear, expansion will be allowed to go ahead at Heathrow only if it can be delivered within air quality obligations.
I turn to the impact of noise for those living underneath the flight paths. Airspace modernisation will give the opportunity to make the most of quieter modern aircraft, referred to by my noble friend Lord Naseby, and will also provide more predictable periods of relief from noise, as well as reducing the need for stacking. The CAA has introduced a new and more rigorous process from 2 January this year. Looking ahead, the design of new flight paths is technical and can take some time. Again, I will ensure that the comments made in this debate are taken on board.
On the question of benefits and economics raised by the noble Baroness, Lady Kramer, the Heathrow north-west runway is expected to deliver the greatest benefits to the UK economy, because it will deliver the largest increase in connectivity, particularly long-haul flights. This gives UK firms the opportunity to access markets around the world. International transfer passengers make this connectivity increase possible by supplementing local demand to make more flights viable. More flights means more capacity to carry goods to markets around the world. Details around the operation of the night flights ban will, as I said a moment ago, be determined at a later stage in close consultation with local communities. Once a ban is in place, compliance with the rules will be mandatory and not discretionary.
On the question of costs raised by the noble Baroness, Lady Kramer, and the noble Lord, Lord Berkeley, the revised draft airports NPS requires the promoter to demonstrate that the scheme is cost efficient and sustainable, and seeks to minimise costs to airlines, passengers and freight owners over its lifetime. The Government have set out a clear expectation for HAL to work with airlines and the CAA to drive down the costs for the benefit of passengers, with the aim of keeping landing charges as close as possible to current levels. Beyond landing charges, the increased competition between airlines operating at the airport is expected to result in lower ticket prices for passengers.
HAL has already identified options for expansion, which it says have the potential to reduce the overall cost of expansion by £2.5 billion. On deliverability—or whether or not this can be done—Heathrow Airport is privately owned and any expansion will be privately financed and must be delivered without hitting passengers in the pocket. The Airports Commission concluded that the north-west runway scheme at Heathrow was commercially viable and financeable without government support, including where an additional 10% capital expenditure was required. The Government have considered this analysis and are content that the scheme is viable.
On the other points made by the noble Lord, Lord Berkeley, we are aware of the alternative proposals for expansion at Heathrow which he mentioned. We would encourage any third parties to engage with the economic regulator, the CAA and HAL with a view to reaching a possible commercial agreement. He also touched on the broader issue of the aviation strategy, looking beyond Heathrow. Our new aviation strategy will indeed look beyond the current debate on a new runway at Heathrow. It will set out an ambitious long-term vision for the sector which will support economic growth across the whole of the UK. It will consider how we can make best use of existing capacity at all airports around the country, including Luton, looking at any future need for new capacity away from Heathrow while tackling environmental impacts.
Going through the hundreds of pages of briefing that I was generously given, I was struck by one reply from Caroline Low, who gave evidence to the Transport Select Committee on 4 December last year. It concisely explains the reasons for the Government’s preference: “In terms of maintaining a global hub, regional connectivity, the number of flights and destinations, and passenger benefits, where Heathrow sits in the country it comes out every time on top”.
The Government are still considering the responses they have received and parliamentary scrutiny is ongoing. We will take on board all the comments made during this debate, and I will write to any noble Lord whose queries I have not answered.
Lord Tunnicliffe
Will the noble Lord be kind enough to send me a letter telling me which section of that very long Act relates to the compulsory purchase?
Lord Young of Cookham
It is an Act that his Government generously put on the statute book, but I will of course write to him with details of the section that gives the Secretary of State those powers.
Lord Berkeley
Will the Minister very quickly tell us who Caroline Low is? From thousands of responses, why did he choose hers?
Lord Young of Cookham
Because it summarised in one sentence the case for Heathrow. Caroline Low works for the Department for Transport and is obviously a very able civil servant who can summarise an argument concisely, which is exactly what a Minister looks for.
Subject to any revisions to the Government’s proposals in the light of this process, we plan to bring forward a final airports NPS by the end of June. I hope on the basis of what my noble friend and I have said today, your Lordships will feel able to support the airports National Policy Statement.
Economy: Spring Statement
(6 years, 9 months ago)
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Lord Bates
That this House takes note of the economy in the light of the Chancellor of the Exchequer’s Spring Statement.
The Minister of State, Department for International Development (Lord Bates) (Con)
My Lords, this debate, which I have the privilege of leading, represents two firsts. First, it is the first in a new format of Spring Statements, which represent a single fiscal event. This was announced by the Chancellor in 2016 and aims to restrict tax and spending announcements to a single event in the autumn, which will allow more time for consultation and for planning by businesses and families. Secondly, today we have the privilege of listening to the maiden speech of the right reverend Prelate the Bishop of Lincoln. I am looking forward to that contribution almost as much as my noble friend Lord Cormack, who is of course a champion in this place for all matters to do with the great city of Lincoln.
The Spring Statement reports on a Britain that continues to grow, to create jobs and to outperform expectations. It is the next step in the plan set out in the Autumn Budget to build a Britain that is fit for the future and an economy that works for everyone. Our economy has been resilient, beating expectations and growing for five years straight—this is a fundamental strength which can help build the economy to meet the challenges that lie ahead. The Office for Budget Responsibility forecast reflects continued robust performance and has revised up the outlook for the economy this year, with growth slightly higher in 2018 than previously expected. Employment continues to rise, and has now risen by 3 million since 2010, the equivalent of 1,000 people finding work every day. This progress has been shared across the UK: since 2010, all nations and regions have seen higher employment and lower unemployment. The lowest paid have seen their wages grow by almost 7% above inflation since April 2015, and the OBR expects inflation to fall over the next 12 months, meaning that real-wage growth is expected to increase over the course of the year.
This Statement points to our mission to repair the public finances, with debt set to fall from next year onwards. Thanks to the hard work of the British people, today’s forecast shows that our plan to get back to living within our means is working. The deficit has been cut by three-quarters: from a post-war high of 9.9% of GDP in 2009-10 to 2.3% in 2016-17, its lowest level since before the financial crisis. The OBR forecasts that, next year, debt will begin to fall and will continue to fall in every year of the forecast, the first sustained fall in debt for 17 years.
While this is good news, borrowing and debt remain too high. We need to keep debt falling: it leaves us vulnerable to future economic shocks; we spend about £50 billion a year on debt interest payments, which is more than the amount we spend on the police and the Armed Forces combined; and it is not fair on the next generation to foot the bill for our current spending. We continue to take a balanced approach to public spending by reducing the debt, investing in Britain’s future, reducing taxes for hard-working families and putting money into public services.
If the public finances continue to reflect the improvements seen in the Spring Statement and the economy continues to be on a strong footing, at Budget 2018 the Government would have the capacity to enable further increases in spending on our vital public services and the long-term investment in Britain’s future. At the Autumn Budget the Government announced £25 billion of spending, including £6.3 billion for our NHS, and supporting households and businesses by investing in the UK’s potential in the long and medium term. Next month, working families will see another increase in their personal tax allowance, inflation-busting increases in the national minimum wage and the national living wage, and a freeze on fuel duty.
I turn now to the specific OBR forecasts. The OBR delivered its second report of the fiscal year 2017-18 on Tuesday. It points to the fact that the economy grew by 1.7% in 2017, compared to the 1.5% forecast at the Budget. Forecast growth is unchanged in 2019-20 at 1.3%, before picking up to 1.4% in 2021 and 1.5% in 2022. The OBR also expects inflation—currently above target at 3%—to fall back to target over the next 12 months. Borrowing is now forecast to be £45.2 billion this year, £4.7 billion lower than was forecast in November last year, and £108 billion lower than in 2010.
The Spring Statement reflects and supports the Government’s balanced approach to public finances by getting our debt levels down to secure our economy against future shocks, and freeing up taxpayers’ money for our vital public services rather than servicing ever-greater debt interest.
Since the Autumn Statement 2016, £60 billion of new public spending has been committed to support our public services. These measures take public investment in schools, hospitals and infrastructure in this Parliament to its highest sustained level in 40 years. Our fiscal strategy is driven by a balanced approach which will ensure that this country has robust and enduring economic growth to prepare us for the future.
Our economy reflects the potential of markets to develop talent and create opportunity because free markets provide jobs for millions, create wealth and form the bedrock of our tax revenues that underpin our vital public services. We will continue to support British businesses and champion free enterprise and free trade around the world. In this respect the Chancellor announced in the Spring Statement that the Autumn Budget 2017 moved to triennial revaluations of business rates from 2022, and it was confirmed that we will be bringing forward the next revaluation to 2021, with triennial reviews starting from then onwards.
The persistent challenge of productivity was also addressed in the Spring Statement. Notwithstanding the strong productivity numbers in the past two quarters, the Chancellor launched a call for evidence to understand how we can boost the productivity of the UK’s least productive businesses, among other pressing issues. As part of the Government’s modern industrial strategy, announcements were made to ensure that Britain remains at the forefront of new technology such as high-speed broadband. The Chancellor announced the first allocations of a £190 million local full-fibre challenge fund announced in the autumn Budget and confirmed £25 million for the first 5G testbeds.
A central part of a thriving economy and business environment is, of course, the people who work within it. The Spring Statement also told us that the Government are prioritising skills and training so that people can access and capitalise on available opportunities. The Chancellor reiterated the commitment of over £500 million a year to T-levels, the most ambitious post-16 reforms in 70 years, and £50 million of support is available to employers to prepare for its rollout.
We are also undertaking the largest road-building programme since the 1970s and embarking on the largest investment in our railways since Victorian times. We are making solid progress on plans to deliver the Cambridge-Milton Keynes-Oxford corridor and we are devolving powers and budgets to elected mayors across the northern powerhouse and midlands engine. We are in negotiations for city deals with Stirling and Clackmannanshire, Tay Cities, Borderlands, north Wales, mid Wales and Belfast, and we have invited proposals from cities across England for the £814 million fund that was announced in the Budget to deliver on their local transport priorities as part of our plan to spread growth and opportunity across all parts of the United Kingdom, because we know that investment in critical economic infrastructure and skills feeds through into the productivity bottom line.
The Spring Statement echoed a commitment to tackle the challenges in the housing market, and the Chancellor has set out measures this week to help it happen—an investment programme of £44 billion to raise housing supply to 300,000 a year by the mid-2020s. The Chancellor announced new updates to the Government’s housing strategy. The Government will work with 44 authorities which have bid into the £4.1 billion housing infrastructure fund to unlock homes in areas of high demand. It was announced that the West Midlands has committed to deliver 215,000 homes by 2030-31, and London will receive an additional £1.7 billion to deliver a further 26,000 affordable homes, including homes for social rent. It is estimated that 60,000 first-time buyers have already benefited from the stamp duty relief introduced in last year’s Autumn Budget.
The Chancellor also reported progress on aspects of tax policy, including multiple tax consultations, both published and impending. We have published the consultation on improving the way in which the tax system supports self-funded training by employees and the self-employed, and the Chancellor has asked the ONS to look at developing a more sophisticated measure of human capital so that future investment can be better targeted. In the autumn the Government published a paper on taxing large digital businesses in the global economy, and the Spring Statement follows this up with a publication that explores potential solutions.
The Government published a consultation on the new VAT collection mechanism and a call for evidence on how to encourage digital payments while ensuring that cash remains available for those who need it. The call for evidence will also seek views on how the tax system or charges can reduce the amount of single-use plastic waste in our society. Further consultations have also been announced, including a call for evidence on whether the red diesel tax relief on non-road mobile machinery discourages the purchase of cleaner alternatives.
The Spring Statement sets out how, through targeted measures, we are restoring the UK’s public finances for the benefit of our economy, for our public services, for our taxpayers and to ensure that we have an economy which is fit for the future. I commend the Spring Statement to the House.
Lord Young of Norwood Green (Lab)
Why did the Minister omit the paragraph on page 8 of my report dealing with the commitment to delivering 3 million apprenticeship starts?
Lord Bates
I think the noble Lord may be confused. This is not a repeat of the Statement given in the other place earlier in the week. It is a new speech addressed to a specific debate. It is not a repetition of a Statement but is part of a debate on the state of the economy and the OBR. I hope that helps clarify the position. However, I will be happy to deal with that point when I wind up the debate.
Lord Haskel (Lab)
My Lords, I feel sorry for the Minister. It must be embarrassing having to speak to a Statement the words of which are largely irrelevant to most people’s concerns. The Chancellor speaks of light at the end of the tunnel. Stagnant wages have eroded the public belief that this light can lead to broad-based prosperity. People believe that all it now does is add to inequality.
The Treasury said that the Spring Statement is not a Budget but a response that it is obliged to make to updated OBR forecasts, so what is the point of this Statement? We need a Statement that speaks to public anxieties and insecurities. That is why we are here. We are not here to have a selective debate about many economic forecasts. For instance, the Chancellor spoke of improved productivity. He must have been referring to output per hour because output per worker is virtually unchanged.
What are all these anxieties and insecurities that we ought to be dealing with? First and foremost must be the crisis in public services, services delivered by Whitehall and, perhaps more importantly, those delivered by local authorities. We all know that austerity has left these services much reduced, with most local authorities—of all parties—in severe financial difficulties. This means that local government is facing an even bigger funding gap by 2020. Already it is unable to fulfil its statutory duty on nearly half the children’s services it has to provide. More than 1 million elderly people are living with their care needs unmet, and local authorities are finding it difficult to recruit staff because pay does not meet rising costs.
The public want to hear what the Government are going to do to end this crisis. Yes, local government can put up car parking charges and can keep more of business rates, but this is minor. It needs to be allowed to do things such as charge more on expensive properties or second homes, or be able to borrow more to build more council houses. Perhaps we will have to pay social insurance to help fund the care of the elderly. We may even have to have road pricing. We are a relatively low-taxed country and some forms of higher taxation may indeed be inevitable. We need solutions not debates.
Meanwhile, in April spending and social security cuts will affect 11 million families. Three-quarters of the scheduled welfare cuts have yet to take place. Small improvements reported in the Statement are not going to compensate. What we need in the Spring Statement are some ideas of how we are going to deal with this. For instance, do we really need a cut in the banking levy? The Chancellor wants to consult about VAT on internet sales and on tax paid by the big technology companies. We have been consulting on this, to my knowledge, for five years. What we want to know is what is to be done. The Chancellor wants to consult on terms of payment. To my knowledge, we have been consulting on this for 25 years. I ask the Minister: who else is there left to consult? We now have a Small Business Commissioner. It is his job to deal with this and stop companies delaying payments as a matter of policy to conserve their cash flow—companies such as Carillion which use this policy to conserve their cash and pay in 120 days. Again, it is action we need, not consultation.
The other major anxiety is about jobs. Real wages are falling because wage growth is lower than inflation. Yes, the GDP was higher than the 1.5% predicted but it still leaves wage earners worse off. Yes, there is growing employment but much of it is insecure. Good jobs demand new skills, new attitudes and new investment. Instead of just updating OBR figures, why cannot all these anxieties and all these consultations be given a lot more meaning and effect by putting them in the context of our industrial strategy? That strategy was designed to deal with these issues, to improve our productivity, our investment, our infrastructure and our skills.
Hundreds—perhaps thousands—of people responded to the Government’s Green Paper and helped contribute towards the industrial strategy that is intended to promote our economic growth and improve our standard of living and our quality of life. Yet the Statement is virtually silent on this. Instead of reporting on the OBR forecast, why do the Government not use the Spring Statement to give us a progress report on the industrial strategy? That would have a lot more meaning for people. This is what is relevant to people’s concerns, particularly at this time when it is becoming ever more apparent that, whatever the outcome of the negotiations, Brexit is going to make us worse off by knocking a couple of per cent off our GDP.
We have been told several times that the Chancellor needs to keep a reserve in case Brexit goes wrong. Of course, we all know the answer to that. The real problem is that the economy is not doing as well as it should. So can we please have more concentration on the industrial strategy and less on austerity, because one seems to be cancelling out the other? In this Statement there are no big ideas as to how we are going to deal with these problems. We need a Spring Statement that explains how we can maintain the fair society and the strong economy that we all seek.
Lord Taverne (LD)
My Lords, what I find extraordinary about this Government is their complacency. I do not accuse the noble Lord, Lord Bates, of complacency, but I am surprised because I would not have expected it from Philip Hammond. He told us in his Spring Statement that we have now turned the corner and there is light at the end of the tunnel. However, as those two respected think tanks, the IFS and the Resolution Foundation, reveal, his plans reek of complacency. In the words of Paul Johnson, director of the IFS:
“The reality of the … fiscal challenges facing us ought to be at the very top of the news agenda”.
I suppose I should declare an interest, because in 1971 I was the first director of the IFS when it was launched. Indeed, I am proud to have acted as midwife to this infant, which has grown into such a formidable institution. I should also mention that in 1961 I was Member of Parliament for Lincoln and therefore I look forward with particular pleasure to the maiden speech of the right reverend Prelate the Bishop of Lincoln.
Let me refer to the findings of the Resolution Foundation, which was, after all founded by a very distinguished Conservative ex-Minister, the noble Lord, Lord Willetts, generally known as David “Two Brains” Willetts. It says that the plans of the Government depend profoundly on further deep cuts in public spending. There will be a further £2.5 billion of cuts to benefits for those of working age in the next financial year and even bigger cuts the year after. The poorest fifth of households will be the hardest hit. Will the Government be able to enforce such extreme hardships?
Indeed, I believe that there is more bad news in the pipeline—more bad Brexit news—than is generally expected. The Government still rely on proposals for a new trade deal that they hope to negotiate. These may bring temporary unity to the Conservative Party, but such proposals are almost certain to be rejected by the 27. For instance, in her Mansion House speech Mrs May suggested that in its new trade deal the UK should act on the EU’s behalf when goods are imported into the UK from the rest or the world and collect the EU tariffs and pass them on to Brussels. It would be a system that exists in no trade agreement anywhere else. When this was reasonably described as “magical thinking” by officials in Brussels, the alternative held out was the Government’s notorious plan for invisible, frictionless borders. Anyone who listened to or read the speeches in yesterday’s debate on Ireland, particularly the excellent speeches by the noble Lords, Lord Hain and Lord Patten, the noble Baroness, Lady Kennedy, and, especially, the noble and right reverend Lord, Lord Eames, must realise quite how hare-brained and damaging these proposals are. No one outside Britain regards them as credible.
In fact, without a dramatic U-turn by the Government, can they propose any trade deal that is realistic and has a chance of being acceptable to our EU partners? For that matter, how can there be a deal with Ireland if we stay outside the customs union, as the Government intend? If we stay outside, there is no way to avoid a hard border in Ireland and it is clear that the 26 will give their full support to Dublin. If it becomes more generally regarded as possible or likely that there may be no deal, the reactions in the market, the effect on the pound and on investment, will make our economic prospects infinitely worse. And this may come sooner rather than later: particularly in the case of financial services, the moment of truth may be nearer than we think. I recommend that people look at the speech of my noble friend Lady Kramer in the middle of the night in last Monday’s debate.
Lastly, I have another fundamental criticism of government policy. The burden of austerity has been borne by the public sector. Many speeches, including the speech of the noble Lord, Lord Haskel, have pointed out the extraordinary damage which austerity has caused, including the suffering by local authorities —in some cases spending has been cut by 50%. These cuts have materially reduced the quality of life in many sections of Britain, especially among the poorest. Yet the Government rule out any tax increases and persist in further devastating cuts in public spending. Already the taxes we pay as a percentage of GDP are 13% lower than in Germany, 17 % lower than in the Netherlands and 21 % lower than in France. All three have a higher standard of living than us and very much higher productivity. Lower taxes are not the path to more prosperity; they are more likely to be the way to a dysfunctional society. We spend a significantly lower percentage of GDP on health and social care than the Netherlands, France and Germany. Meanwhile, the NHS is heading for a crash, and will be further hit by EU nurses and doctors going home or no longer wanting to work in Britain, because of Brexit.
I am glad it is the policy of the Lib Dems to put 1p extra on income tax instead of further cuts in services. No one spoke a truer word—completely contrary to the philosophy of the Government—than the famous American lawyer Oliver Wendell Holmes, who said:
“Taxes are the price we pay for a civilised society.”
Lord Mawson (CB)
My Lords, I welcome the Chancellor of the Exchequer’s Spring Statement. It is certainly good news to hear that the UK economy has grown every year since 2010 and that the manufacturing sector is enjoying its longest unbroken run of growth for 50 years, adding 3 million jobs. This is all good news and rather a challenge to those who argue that this country does not have a future outside the European Union. The forecast by the OBR of more jobs, rising real wages, declining inflation, a falling deficit and a shrinking debt is all very good news and one wants to congratulate the Government on this achievement in this challenging time of change. The commitment of this Government to continue to deliver a balanced approach is right, and few of us who have run real businesses and organisations in the real world believe that throwing money at the problems of Britain in some of our poorest and most challenging communities will solve anything; it will make them poorer.
I welcome the Chancellor’s plan set out in August 2016 to back enterprise and unleash our creators and innovators, our inventors and discoverers—to embrace new technologies of the future and to tackle our long-standing productivity challenges. The Chancellor is surely right when he chooses to champion those who create the jobs and wealth on which our prosperity and our public services depend. The market is the only way to go if we want to provide jobs for millions of people and the tax revenues that underpin public services.
This is all fine, I agree, but in this digital age, the very nature of our economy is changing and, as an entrepreneur operating in local economies and real towns and cities in this country, I see every day that much of the machinery of government is not fit for purpose. Looking down into that machinery from No. 11 Downing Street, you see one thing. The OBR can quote whatever numbers it wants, but standing in the middle of that machinery, trying to make it work in practice and trying to run a SME in the middle of it, you see something altogether different. I suggest that the cellars of the Palace of Westminster, for those of us who have visited, are a helpful visual clue as to the machinery of the state I am talking about—machinery that SMEs are meant to make work. This machinery is in a terrible mess. It is full of short-term fixes carried out over many years and not fit for purpose in a modern digital economy.
In a modern digitised economy, in which small and dynamic SMEs will increasingly define our future economy, it is essential that the Civil Service and the organs of the state have a greater practical understanding of the day-to-day workings of small dynamic organisations and businesses, so that we do not undermine the life that is in them. We have a serious problem and we need to address it. The SME sector is a key part of our future economy and many SMEs are pulling their hair out at the bureaucratic demands that are landing every day on their desks.
There needs to be a far clearer grasp within government and the Civil Service of the cumulative effect on the practical day-to-day operations of SMEs of all this burgeoning bureaucracy we are generating. There was no mention of it in the Chancellor’s speech, I notice. Each piece of this bureaucracy on its own can seem very reasonable, but when you put it together the cumulative effect on a small organisation can feel debilitating and sap the life out of very good and committed people. Is anyone in government noticing and taking personal responsibility for these unintended practical consequences? Who is spending time in the cellar worrying about the machinery? Who is even interested because everything looks well above ground?
The Civil Service, in my experience, is made up of good, caring, clever and often impractical people whose culture is overly impressed by large organisations and reports; they often seem uninterested in practice. Large bureaucracies talk to bureaucracies. They speak the same language, but often seem to have little grasp of the realities of the day-to-day operations of small organisations. Having run a secondment programme for the Civil Service over a number of years, my colleagues and I have had an inside view of what this can look like. I thought it might be helpful to illustrate the issue in one very small SME that my family and I have a close involvement with. We thus see and feel the practical effects and impact of a wide range of government regulations arriving on the desk of a very small staff of people on a daily basis—people who are conscientious and want to follow the letter of the law, but increasingly find it challenging to do so. Stanton Guildhouse in Worcestershire is a small SME serving its local rural community through its offer of arts and educational classes. Here I must declare an interest. Its work has direct linkages with the work I founded at the Bromley by Bow Centre 35 years ago, where we now run 70 SMEs. This particular small rural SME also offers accommodation, meeting and conference facilities to families, charities, the public and business sectors from across the country in its Grade II-listed Manor House. It is a busy project with only one full-time member of staff and two part-time staff, and a small team of tutors. The turnover of the business last year was £139,000.
We count that today there are over 40 different regulations that directly demand attention from this small team of staff, many of them accompanied by complicated documents setting out terms and conditions and so on. To comply, we should ideally employ a lawyer, a health and safety consultant and an HR manager, which is completely unaffordable. Even things which hitherto were straightforward like opening a bank account, or working out whether a cleaner or art tutor working a few hours a week is self-employed or not, become major undertakings in themselves.
The part-time finance officer has alerted me to the impact of recycling rules and regulations on the day-to-day operation of the organisation, as well as the new regulations coming up the line, Making Tax Digital, which I understand is coming out in April 2019, after which all entities—initially those above the VAT limit—will have to file online. I am told the accounting community expects to do very well out of assisting clients with this change—clients who have never before had to register for online accounts other than via HMRC or the Charity Commission website. This is seen, I am led to understand, as a huge cloud hanging over SMEs and indeed the charitable sector.
A colleague of mine, a digital entrepreneur with a successful growing business working increasingly in new markets overseas, tells me that new data regulations will cost his business at least £15,000 per annum. He tells me that we might like to think the UK is the best environment to set up and grow a business and that we have less bureaucracy than our overseas competitors, but we are in real danger of this becoming an illusion—his words, not mine.
I make it clear that my colleagues and I are not against the regulation and modernisation of services. We have built very successful entrepreneurial businesses, and social and business innovation is our core business. However, we have a real concern about the cumulative effect and scale of all this regulatory activity emanating from the many different silos of government, and whether it is sustainable in the real world. The logic that seems to underpin all this activity concerns us. Government cannot control every aspect of human life, and experience suggests that the more it tries to do so, the less personal responsibility for all our actions there will be. There is a balance to be found here and we worry that the Chancellor and his colleagues are coming out on the wrong side of this equation. Grand words and large numbers are fine but ultimately it is about the detail, and for the SME sector this matters for hundreds of thousands of jobs and millions of pounds of productivity. All this regulatory activity in turn produces many extra practical tasks for a very small team on a daily basis, which both is impossible to service and in practice undermines the involvement and work of good people who want to run a successful business.
In an increasingly joined-up and integrated world, I wonder whether the Government need to invest more in innovation in this space. We need to explore how to reduce all the unnecessary duplication produced by what seem like increasingly out-of-date silos and explore more cross-cutting solutions. I know we all talk about this endlessly, but the time has now arrived, in this digital age, when we must increase the practical activity in this space. Withdrawing from the EU may provide us with an excellent opportunity to grasp this nettle. As I say, it is not so much the individual measures that are the issue but their cumulative effect on SMEs across the country. People are becoming fed up to the teeth of an impersonal machine over which no one seems to have any control.
I have a practical measure to propose and a question to put to the Minister. Why not send civil servants drafting legislation, and perhaps all members of the Better Regulation Task Force, to spend some time in small organisations and businesses, to get the view “up the telescope”. They could spend some time working out whether that art class is or is not VAT-exempt; whether the tutor is self-employed or not; if the insurance cover is correct; if all health and safety requirements have been met; if the class is accessible to all forms of disability, likewise the online advert; if the records on the computer are compliant with data regulations; whether we have everyone’s permission for the photos; whether the risk assessment is up to date, and so on, times 40—all for something potentially involving just 10 people and lasting two hours. This is ridiculous and no way to run an economy, micro or otherwise.
In recent months I have listened to numerous speeches from all sides of this Chamber, worrying away at this issue. As the country prepares to leave the EU, now is the time to grasp this nettle. I suggest that our economy will depend on it. If we want a new generation of entrepreneurs to rebuild our economy and give us and their children a future, I for one hope the next speech by the Chancellor will have something to say about this matter, about the unwieldy machinery of government in an internet age, a digital age that I thought was meant to make our lives much easier but is in danger of doing precisely the reverse as we continue to apply old out-of-date siloed mindsets to a digital environment that is all about the integration of services.
Lord Bishop of Lincoln (Maiden Speech)
My Lords, I thank those who have made me so welcome to your Lordships’ House, not least those who hail from Lincolnshire, including several proud doorkeepers who either live in the county or have served there in the armed services. We share a love for our historic county, the beauty of landscape and building, not least Lincoln Cathedral, about which noble Lords may have heard from the noble Lord, Lord Cormack; the pleasure of its food—I am a bigger man now than I was when I went there—and, most importantly, the rugged, independent-mindedness of its people. I also thank those who have said warm words of encouragement in this debate.
I have been Bishop of Lincoln for over six years. My predecessor, Dr John Saxbee, is an expert in the work of the Danish theologian and philosopher Kierkegaard, one of whose most famous sayings is, “Life can only be understood backwards but it must be lived forwards”. Trying to understand my life backwards now, I can see that providentially much of who I was and what I did before coming to Lincoln in 2011 prepared me for the role that I now inhabit, and will inform and guide the contributions that I hope to make in your Lordships’ House.
I come from working-class roots in the former steel town of Consett in north-west Durham, a town that was only there because of the steelworks, the place where all the men in my family worked. I found faith and a vocation to the priesthood at the age of 13. It was a surprise to me—a surprise that has not exactly left me yet—that God was calling someone like me to be a priest. This vocation took me to south London, Hampshire and Portsmouth, where the journey back to my roots began. Portsmouth, although 350 miles south of Consett and a little warmer, has been described as a northern city on the south coast—a reminder that the north/south divide is as much a conceptual division as a crude geographical line. There I was able to begin to engage with issues of poverty, inequality and low educational attainment that reappear now where I currently serve.
My journey back to my roots—or, as we members of the north-eastern diaspora call it, “home”—continued with a national job in Church House, Westminster, overseeing the provision of ordained and lay ministry across the Church of England. That sensitised me to the challenges facing the communities and churches in areas on the edge such as the north-east itself, Cumbria, Cornwall, Herefordshire and of course Lincolnshire.
That brings me to where I am today and the role that I now play, and to the Chancellor’s Spring Statement. There are some things to welcome in what was announced —what has been called the light at the end of the tunnel: the modest improvement in economic forecasts and the prospect of an increase in spending on and investment in public services, which will be good news to the people of Lincolnshire, especially if what is devoted to Lincolnshire addresses the challenges that we actually face.
Lincolnshire is formed by its history and its geography. In the words of one recent book, we are “prisoners of geography”. The impact on Lincolnshire of 50% of its population living in sparse, rural settlements is huge. Size matters, and in Lincolnshire this is expressed in challenges faced by the health and education services, not to mention the threat that climate change poses to Lincolnshire, which the most reverend Primate the Archbishop of Canterbury sees in a recent book as having,
“significant bite not only for our generation but also for those as yet unborn”.
However, Lincolnshire is not all rural or flat fens. There are communities like Grimsby, Scunthorpe, Lincoln itself and Boston. In those areas that voted heavily in favour of Brexit, there are the usual challenges of urban life, and there are more to come when the full impact of welfare reform is experienced. Unless economic policy as articulated in the Statement is directed as much towards the interests of these communities as it is to the more prosperous corners of our country, we shall be failing in our duty to create a fairer and more integrated society. Already I see in those communities a sense of alienation from the metropolitan elite. In the typology of David Goodhart’s helpful book, the “somewheres” resent the “anywheres”, while the “anywheres” do not understand the values of the “'somewheres”.
This is not new. The Lincolnshire rising of 1537 and the Pilgrimage of Grace that followed, were obviously about first of all a commitment to the old religion, but perhaps also driven by the resentment that King Henry VIII and his commissioners were the rich elite from the south who had come to plunder their assets. The King made his views on Lincolnshire clear. The shire was, he said,
“the most brute and beastly of the whole realm”,
and he saw that the perpetrators of the rising were cruelly executed. In hoping to avoid a similar fate, it is none the less my sincere wish to be a small but proud voice for the successors of those good people of greater Lincolnshire in this place.
Lord Hodgson of Astley Abbotts (Con)
My Lords, the Members of the Bishops’ Bench in your Lordships’ House have a long record of making distinguished and distinctive contributions to our debates, and I think the speech we have just heard continues that tradition—not that I would have expected anything else from the right reverend Prelate, given his far-reaching personal, academic and pastoral background. This includes not just the wide-ranging work in the United Kingdom which he described; I am told on the highest authority that he is an exceptionally accurate sprinkler of holy water. He has a son and family living in Australia, which gives him a world dimension, and he himself studied in California, where he received a master’s degree in sacred theology. I hope I am not being irreverent, but I am surprised there are degrees in theology that are not sacred. Whatever the rights and wrongs of that, he has made a powerful contribution to our debate this afternoon, and I am sure that I speak for the whole House when I say that we look forward to hearing from him again soon.
As I turn to my own remarks, I need to draw the House’s attention to my entry in the register—my chairmanship of several companies. I also ought to remind the House that I am currently chairman of a Select Committee of your Lordships’ House looking into citizenship and civic engagement. It is not directly relevant to our debate today but some of the evidence we have received has informed the background to my remarks.
My noble friend on the Front Bench has taken a certain amount of incoming fire so I begin by offering congratulations to the Government on their overall economic performance. I do so, first, as regards the continuing reduction in the Government’s borrowing requirement, which at £37.7 billion in the 10 months to the end of January is the lowest since 2008. Secondly, they have created economic conditions where tax receipts continue to outperform expectations so that the next financial year looks as though we will run, excluding capital investment, an overall surplus.
However, we live in uncertain times for reasons that we have been debating long into the night and will continue to debate long into the night, so there is still work to be done with borrowings at over £40 billion and the net debt at £1.73 trillion—84.1% of our GDP. I support the Chancellor in his determination to continue a responsible fiscal policy. I have to say to the party opposite that I fear for our future if Mr Corbyn has a chance to plant his magic money tree, as I think that would undo all the hard work done in the past few years.
In my remaining remarks, I want to look to the future and for my noble friend to comment on progress in three particular areas. The first is what the Government call emerging tech, and particularly the area of artificial intelligence and robotics. Over the next 10 to 15 years AI and robotics will transform the way we live and the way we work. In 2015, 5.5 million consumer robots were sold and next year 40 million are expected. They will free us, as that tide comes along, from doing many tasks that are dull, dangerous and dirty. It will be a huge important worldwide wave of change and it is important that this country is in the vanguard of it. Perhaps my noble friend could update the House on the Treasury’s perspective on progress in that regard.
However, as is always the case, there is a downside. To date, robotics have tended to affect employment in manufacturing—the manufacture of things. The next wave will deal with services, and this country is very service-oriented. Financial services, insurance, auditors and paralegals will find that a large number of their jobs no longer exist in the new world. At a further lower level, humdrum jobs will disappear. Commentators say, “Yes, yes, yes”, but in agriculture, for example, where there is expected to be quite considerable employment, albeit lowly paid, we can see from YouTube that a machine in California is now starting to pick strawberries mechanically, and in Lincolnshire a machine can pick cabbages and lettuces. They are not commercial yet but they will become so. Therefore, the idea that there is a large level of unemployment in these areas in the future is mistaken.
The implications for our society are for many fewer jobs overall. This will be the first industrial revolution that destroys more jobs than it creates, and it will be a society that looks like an unbalanced hourglass in terms of work prospects: a small blob at the top for those who are successful, a long thin middle and another blob at the bottom for those able to do the humdrum jobs that cannot be mechanised. All this will cause stresses and strains on our social cohesion. It will be emphasised because, over the next 25 years, we will see an ineluctable drift in wealth from the West to the East. The rising economic powers of the next 25 years will be India, China, and south-east Asia. Whether we like it or not, we will be in a relatively slower part of the stream. That, too, will emphasise problems that we might have in this country. That is my first point.
My second point is how to do more to make sure that our existing resources—our people here—are better equipped to deal with these very challenging conditions. Of course, productivity has been our Achilles heel for as long as I can remember. There are things we can do to improve productivity. The first is training, and I welcome my noble friend’s emphasis in his opening remarks on the Government’s commitment to training—the apprenticeships programme and the T-training. It has always seemed to me that a well-trained technician is likely to have a more satisfactory, well-paid and fulfilling job than someone with a 2.2 in media studies.
There is a second challenge, which is about trying to get people to work, and it is a question of infrastructure. One of the companies I chair is in central Manchester. It is a small company, employing about 40 or 50 people. We take on about four or five every year. We can recruit people from Manchester but we find it extremely hard to recruit from Bolton, Blackburn and—dare I say it in the presence of the noble Lord, Lord Davies?—Oldham, because the travel-to-work times from those towns to Manchester are very high. People are not prepared to commit to a job that requires them to spend too much time travelling to work every day. For another company in Runcorn which I chair, the situation is even worse.
If my noble friend asks his officials to get out the social mobility report of November 2017 and turn to page 75, they will see that planned spending per head on transport in London is £1,943, but in the north-west it is £680—one-third—and it is even less in Yorkshire and Humberside. The Treasury needs to think about the generality and the particularity if we want to make serious inroads on the imbalance between London and the south-east and the rest of the country.
The third element of this is getting UK employers to understand the importance of recruiting members of the settled population. When I say “settled population”, I mean settled—it is not another word for white. I do not mind about racial background, religion or anything, just the settled population. Noble Lords will have read, as I have, hundreds of articles saying that we are crying out for engineers, but I meet young engineers—young men and women who have a 2.1 in engineering—who find it hard to get a job. When you ask why, they say it is because employers say that they have no experience. Of course, you cannot get experience without a job and you cannot get a job without experience, so they are hooked into this very difficult situation. It can be easier to hire someone from overseas—it is probably no more expensive; it is perhaps cheaper—who will have two or three years of practical experience thrown in. This issue of crowding out needs to be addressed. If overseas recruitment is the default option—for employers it is economic and rational to do that because they get better-quality employees for a lower price—it will have implications for our society.
This takes me to my last point. Against this challenging background, we need to consider the fact that our population continues to increase very fast. Some people have said, “With Brexit, that’s all over”. Well, it is down but it is still very high. Every single day in the year to 31 December 2017, on average, the population of this country went up by 1,196 people. That is a large village or a small town every week. Approximately 500 was natural increase—that is to say, the excess of births over deaths—with 500 from outside the EU and 250 from inside the EU, balanced by about 150 people from Britain going to live overseas. The ONS projection is that we will have another 7 million people here over the next 25 years. To house them, we will need three cities the size of Manchester—with all the ancillary services that go with that.
We have these three trends: a move to the East, resulting in our living standards growing, at best, more slowly; an AI robotics revolution, which will reduce—potentially dramatically—employment opportunities; and a rapidly increasing population. In my view, though I hope I am wrong, this all suggests challenges to our social cohesion and our community life. I say to my noble friend that only the Treasury is in the position to assess the impact of these trends. Every other department is bound by its silo mentality, its own bit of turf. When he comes to wind up, can he say whether these sorts of long-term strategic issues even register in the Treasury? What sort of intellectual horsepower is being deployed to them? If he is not able to say that this afternoon, perhaps he could write to all of us who have participated in the debate to explain how the Treasury sees these trends working out or, if it is the case, why it disagrees with them.
Lord Livermore (Lab)
My Lords, I add my congratulations to the right reverend Prelate the Bishop of Lincoln on his maiden speech. In his Spring Statement on Tuesday, the Chancellor devoted just 75 words to the UK’s departure from the European Union. Yet, concealed in his numbers, the consequences of Brexit now cast a dark cloud over the entire British economy. The Chancellor sought to present himself as the great optimist, dressing up the OBR’s latest growth forecasts in a positive light. Of course, the 0.1% increase for 2018 is indeed welcome, but what he did not mention was how much lower those growth forecasts now are because of Brexit. To quote the OBR:
“The vote to leave the European Union appears to have slowed the economy”.
The real picture is that, in each and every one of the next three years, economic growth will be significantly lower than the Government’s pre-referendum forecasts.
The Chancellor said that growth is now forecast to be 1.5% in 2018, 1.3% in 2019 and 1.3% in 2020. What he did not mention was that, before the referendum, the forecast for each of those years was 2.1%. In his Statement, the Chancellor described growth in the subsequent years, 2021 and 2022, as “picking up”. Yet, compared to his Autumn Statement, the growth forecasts for those two years have in fact been revised down to 1.4% and 1.5% respectively. The Chancellor also failed to mention that at no point since the Second World War have there ever been five consecutive years of GDP growth below 2%—until now. Neither did he mention that the UK economy is forecast to grow 24% slower than the economy of the euro area over the next five years. Nor did he say that, having been at the top of the G7 growth league before the referendum, Britain is now not just at the bottom of the G7 but bottom of the entire G20.
The director of the Resolution Foundation said:
“Because it feels like old news the danger is we come to ignore quite how awful these economic forecasts are”.
The director of the IFS observed that these growth forecasts are,
“dreadful compared with what we thought in March 2016, dreadful by historical standards and dreadful compared with … the rest of the world”.
The Chancellor might describe himself as “particularly Tigger-like”, but it is doubtful that the British people will be enjoying themselves quite so much.
There were some other notable omissions from the Chancellor’s speech—on investment, trade, productivity and earnings. Investment is down in comparison with pre-referendum forecasts. The OBR noted that, by the end of 2017, business investment was almost 6% lower than the March 2016 forecast. The Bank of England has estimated that Brexit uncertainty has already lowered investment by between 3% and 4% and the OBR now expects investment growth to,
“remain subdued in the face of Brexit-related uncertainty”.
On trade, the OBR now believes that the negotiation of a new trading relationship with the EU will slow the pace of import and export growth over a 10-year period and it expects export growth to flatline by 2022. Productivity growth has also been downgraded yet again in every year from 2019 and is now even lower than the extraordinarily bad projections made at the time of the Autumn Statement. Earnings will now not return to their pre-financial crisis peak until 2025, leaving Britain barely halfway through a 17-year pay downturn. Lower growth, a weaker economy, poorer people—all direct consequences of Brexit, yet none of them mentioned by the Chancellor.
One set of figures that the Chancellor did focus on were the OBR’s updated fiscal forecasts, where he sought to talk up the Government’s performance on both borrowing and debt. In his Statement, he made reference to debt being revised down, although debt will still continue to rise from £1.74 trillion this year to £1.83 trillion next year and £1.88 trillion by 2020. Of course, when the previous Labour Government left office, the debt-to-GDP ratio stood at 57.1%, whereas this year it will be 85.6%.
On borrowing, the £4 billion improvement in this year’s deficit since the autumn is of course welcome. However, the improved forecasts only reverse one-third of last November’s enormous Brexit-induced borrowing downgrade and the structural deficit in 2019-20 is almost completely unchanged. As a result, the Chancellor remains a decade off meeting his target of eliminating the overall deficit and any hopes of an end to austerity are sadly misplaced. While the former Prime Minister and Chancellor congratulated each other on Twitter on the elimination of the current deficit, they were seemingly unaware of the misery that their policies had caused, with homelessness doubling and child poverty rising by over 1 million to the highest level since records began. Now, under this Chancellor, cuts to day-to-day spending are set to continue well into the next decade. Funding to local government will fall by a further 20% over the next two years and, as my noble friend Lord Haskel said, nearly 80% of the benefit cuts announced in 2015 are still to take effect.
In his speech, the Chancellor claimed to be building,
“a country that works for everyone”.—[Official Report, Commons, 13/03/18; col. 722.]
Yet as a result of the tax and benefit changes that this Government have made, the entire bottom half of the income distribution will now see their incomes fall. The second-poorest decile will lose £1,500 a year—a 10% fall—while the second-richest decile will gain £600, a 2% rise. The poorest working-age families with children will see an extraordinary 20% fall in their incomes, losing over £3,500 a year. Again, none of this was mentioned by the Chancellor. Throughout his Spring Statement, he seemed intent on concealing the damage done to our economy and the working families of this country.
We saw the exact same desire to conceal when the Government sought to avoid publishing their impact studies into the longer-term economic consequences of Brexit. These impact studies, finally published last week, show an even more significant cost of Brexit than we have seen so far. They show a 5% reduction in GDP from leaving the single market. They show new trade deals making up only 0.2% to 0.7% of that reduction. They show a devastating economic hit to every nation and region of the UK, with an 11% reduction in GDP in the north-east and an 8% reduction in both the north-west and the West Midlands. They show that leaving the single market would further increase borrowing by some £55 billion.
In his speech, the Chancellor speculated that the Labour Party could put at risk the recovery, threaten British jobs and burden the next generation, yet that is precisely what his own figures prove conclusively that his policies will do. Having seen the cost of Brexit so far and having commissioned their own Brexit impact studies, where the consequences are laid out in black and white, the Government have still chosen to pursue a policy that will demonstrably damage Britain’s economy. This is surely the first time that a Government have ever deliberately put aside the national economic interest and embarked instead on an economic policy that they know will make the country poorer. Why? Because this Government are now taking decisions not for the economic needs of the nation but for the ideological needs of the Conservative Party. As the economic costs of Brexit become clear and as we see the further devastating impact that the Government’s policy will have for decades to come, we must surely now ask: is this really the right path for our economy? Is this really the future that we want for our country?
Lord O'Neill of Gatley (CB)
My Lords, I, too, congratulate the right reverend Prelate the Bishop of Lincoln on his excellent maiden speech. By complete coincidence, I attended a wedding last Friday at which at least half of those present came from that proud county, so I can vouch that they appear to be a rather robust bunch.
With respect to the Spring Statement, I will make six—hopefully brief—points, two of which are questions. First, I congratulate the Chancellor on sticking to his commitment to only one annual fiscal event, not least to avoid the never-ending temptation of saying or doing something purely for the sake of it. I join other noble Lords in congratulating the Government more broadly on the ongoing positive fiscal progress. Far too frequently, the importance of eventually returning to some kind of fiscal health is underestimated in this place.
Secondly, I point out—others have touched on this but, to my slight surprise, it has not been specifically mentioned—that the OBR was surprisingly gloomy, contrary to general expectations in advance because of recent evidence. Although I suspect that, as I have just implied, things might not be as grim as it suggested, its justification does not lack credibility. In this regard, it would not be the worst of all outcomes if, yet again, it—and some of the rest of us—is pleasantly surprised in the autumn.
Thirdly, the OBR might easily be wrong. As David Smith highlighted in yesterday’s Times, if going forward the GDP growth that it suggests is as weak for the rest of the period, it will turn out to be worst extended period for 70 years. Is this realistic? Perhaps it is. But, beyond Brexit, it seems that there are some creeping better signs, not least the recent evidence of a pick-up in productivity. There are some credible reasons, some of which I have outlined in this place before, why this recent two-quarter improvement in productivity is not to be dismissed, as the OBR has done, and might persist. I do not have the time to highlight what they are, but I will no doubt return to them at some future date. If the OBR is wrong, the boost to public finances as well as the scope for material debt reduction, and for government investment spending, could be significant.
However, my fourth point is that the OBR might be right. If it is, the Government will have no choice but to take a bolder path on investment spending, both directly and indirectly.
Fifthly, in this regard, can the Minister respond to a question on the following? Recently, I participated in a conference on investment in the UK. At that event, the Chief Secretary to the Treasury said—this was very recently—that the Government would soon publish a paper on a new methodology for approval of investments, implicitly suggesting the possibility of allowing for broader productivity-enhancing analysis rather than the all-too-familiar rigid value-for-money approach that has long since dominated the thinking of many departments. That could be hugely important. When will that report be published?
Sixthly and lastly, in this vein, why are the Government so quiet and why have they become so apparently timid about their northern powerhouse and Midlands engine strategies, especially when, oddly, there is some evidence—albeit modest—that parts of this past strategy are working? The last time I spoke here, I highlighted the apparent strength of the north-west, notwithstanding some points touched on earlier, and, since then, the most recent data suggests that this is continuing. I would have thought that the Government would be rather proud of that and would want to pursue it more. Succeeding with both the broader, wider northern region, as well as the so-called Midlands engine, and sustaining the strength of the north-west would, among other things, help to deliver on some of the implicit core things that the OBR is so gloomy about and, most importantly, would result in a better future for the whole of the United Kingdom.
As it relates to the northern powerhouse, there are clear implementable policies, especially on transport infrastructure and education and skills, which the Government should embrace. While the transport asks require significant new central government fiscal action, the skills and education initiatives do not challenge the fiscal framework that much. As demonstrated by the recent proposals from the Northern Powerhouse Partnership, of which I am the vice-chair, these would be highly important to the education and skills challenges of the whole of the north and, for that matter, the Midlands, but would have very little impact on the Government’s overall fiscal framework, irrespective of whether the OBR is right or wrong. The Government need to rediscover their lust for these policies, some of which may have contributed to the tentative signs of some highly necessary and important regional rebalancing of the economy.
Lord Higgins (Con)
My Lords, I have long since forgotten how many Budget debates I have spoken in, but I have certainly spoken in every one since 1964, which is quite a long while. I have therefore got used to the annual Budget ritual, with the box outside No. 10, and so on. While I fully understand and accept the reasons which the Chancellor has put forward for changing our annual Budget arrangements, none the less I feel a little sentimental about the proposed changes.
We cannot go on calling it a “single fiscal event”; we should go on calling it a Budget in the autumn. I gather, from reading rather more closely what the Chancellor said, that it will continue to be known as a Budget. I also regret the fact that he will no longer publish the Red Book, which I always found a singularly convenient form of presentation, and I hope that he will reconsider that by the time we come to the autumn.
The Chancellor’s speech the other day sets out the record since 2010, which is good: the manufacturing sector is,
“enjoying its longest unbroken run of growth for 50 years”,
with 3 million extra jobs; every single region has,
“higher employment and lower unemployment than in 2010”;
and the wages of the lowest-paid workers are,
“up by almost 7% above inflation”.—[Official Report, Commons, 13/3/18; col. 717.]
All that is good, and the Chancellor is right to have stressed it. Similarly, the OBR forecasts predict more jobs, rising real wages, declining inflation and a falling deficit—and, the Chancellor says, a shrinking debt. It is not actually true that there will be a shrinking debt. My understanding is that clearly the national debt will continue to go up; that must be a slip by the draftsman who produced the Chancellor’s speech. It is essential to stress that we must continue to cut the deficit, for all the reasons that are well known—the effect on future generations, the strength of the economy, the fact that we have to pay large amounts of interest on the debt, and so on. I hope that we can take that point into account.
The OBR forecast in general is optimistic, although we shall have a number of particular problems. We hear talk of austerity all the time, but what that really means is that we are living within our means, and having to take the necessary measures to stay within our means—unlike Mr Gordon Brown, who managed to make everyone happy for a number of years simply by running up debts at a higher and higher level. We certainly do not want to see Mr Corbyn doing the same thing again.
Lord Skidelsky (CB)
I am sorry to interrupt the noble Lord, but does he not remember that the debt-to-GDP ratio came down for all the years of Brown’s chancellorship until 2008?
Lord Higgins
Conveniently or not, I happen to have forgotten that. At all events, let me consider what the noble Lord has just said.
I am glad to see that the noble Lord, Lord Livermore, who had disappeared for a moment, is now back in his place, because what I really wanted to say is that although I did not agree with every single word he said, I very much agree with what he said in general. The Chancellor missed an opportunity to spell out how much more difficult his task had been made by implementing the results of the referendum.
In my view the referendum has produced a disastrous situation. Someone said at the time that people did not vote for a lower standard of living—but that is precisely what they voted for, and it is precisely what they are going to get. That is very deplorable indeed. I agree with the noble Lord who said that it would be helpful if the Chancellor had spelled out the fact that, because of the effect of that vote, we are facing even bigger problems than we otherwise would have done.
It is important that we should not go for a very hard Brexit. We had a debate yesterday about what was going to happen, and we had to reappraise the position. We were saying that we needed a meaningful vote on the result of the negotiations, and there was a long debate about that. Unfortunately, we did not have an opportunity to vote on the place we should start from. The trouble is that the Government started by saying that we are going to withdraw from the customs union and the single market. That will be dangerous and damaging. Parliament really must take a strong position and say that we cannot go along with the implications of Brexit if it means that the living standards of our people will be lower. I think that we have a duty to say that we will not go along with this.
Therefore, as it stands, it is a good Budget but it is a far less good Budget than it would have been if we had not been dealing with the initial implications of Brexit. The situation will certainly be better if we do not continue along that route but instead take a revised view on where the Government should stand on the single market and the customs union.
I add only one point, which was made yesterday, about the Irish border. If we do not leave the customs union, we do not have a problem, and if we do leave the customs union, we do not have a solution. That is the reality. However, overall I welcome the proposed changes to our financial proceedings and debates, and I believe that this is as good a Budget as one can produce in circumstances which are much worse than they would have been if we had not had the result that we did in the referendum.
Viscount Chandos (Lab)
My Lords, I too congratulate the right reverend Prelate on his excellent maiden speech. I also thank the Minister for moonlighting from his DfID duties to introduce the debate. I should draw the attention of your Lordships’ House to my entries in the register.
A year ago I spoke in the debate on the Budget—possibly the last Spring Budget—and there were 39 speakers. This afternoon there are 14 or 15. Although projections and forecasting are difficult, as illustrated by the OBR, my calculation is that there has been a saving of a maximum of £7,500 as a result of the reduced number of speakers.
We have been invited to take note of the economy in the light of the Chancellor’s Spring Statement. The question is, which portrayal of the economy—the Chancellor’s sunlit uplands or the Office for Budget Responsibility’s darker valleys? And how does the Chancellor’s upbeat assessment relate to the other evidence that all your Lordships are exposed to: crises in local government, the NHS and the provision of care for the elderly?
The United Kingdom has the greatest regional inequality of any country in the EU, yet, as I watched the Chancellor make the Spring Statement, he gave the impression that the only question was whether the outlook was better on St George’s Hill or in Virginia Water. Just as the American President calls any inconvenient facts “fake news”, anyone who does not embrace the optimistic view of the Government has been dubbed Eeyore-ish, and the Chancellor—himself regarded as an Eeyore by his Brexit-enthusiast colleagues—has now proclaimed himself to be a veritable Tigger.
Even if this gentle banter feels rather less threatening than the President’s terminology, it strikes me as fundamentally trivialising important and, for millions of people, harrowing issues—squabbling over which costume in the nursery dressing box is whose, while rough sleeping, the use of food banks, child poverty and the cancellation of hospital procedures inexorably rise.
Seventy-five per cent of the welfare cuts introduced by the previous Conservative Chancellor in 2015 and not reversed by the current one are still to take effect, and the projections for public expenditure and borrowing in the period to 2020-21 are based on the assumption that these cuts are fully implemented.
I will leave it to future economic historians with longer perspective and greater objectivity to pass judgment on the Conservative and Conservative-led Governments’ measures over the past eight years to reduce the deficit arising from the consequences of the global financial crisis, but I will be surprised if a consensus conclusion does not suggest that the national finances could have been better strengthened through a significantly more equitable sharing of the burden. We cannot, however, rewrite history or easily reverse past actions, so the priority has to be to ensure that future policy does not continue to place such an unfair and intolerable burden on the least well-off. Whether or not the IFS’s projection of the need for a £30 billion to £40 billion increase in annual tax revenues by the mid-2020s proves to be in the right range, there is little doubt that, with all the changes, among other things, to the workforce and employment structures, radical changes to how taxation is raised fairly and effectively are essential.
Although the Chancellor announced 30 different consultations in the Spring Statement, many of these are pretty technical and of limited potential in terms of revenue raising, and some, even if welcome, such as fair payment of commercial suppliers and prompt payment by government, have no direct relevance to the Government’s requirement for funding.
There appear to be no signs of any deeper thinking by the Government about key areas of taxation, however difficult they may be, as the noble Lord, Lord Macpherson, as a former Permanent Secretary to the Treasury, has previously argued in your Lordships’ House, such as the reform of residential property taxation. Even if our departure from the EU has as benign an outcome as possible, we will not have prosperity and fairness without grasping such nettles.
I would like to conclude, therefore, by reverting to an issue that I raised a year ago in the debate on last year’s Budget Statement: the need to reform inheritance tax. Inheritance tax is not currently a substantial contributor to public funding—around £5 billion per annum, compared to, say, 10 times that for corporation tax, even at its currently discounted level—and the most ambitious realistic reform is unlikely on its own to substantially close a £30 billion funding gap. But it could, I believe, make a useful contribution to such a target, and, as importantly, reform could create a system widely seen as much fairer. In the context of the case for inheritance tax reform, Janan Ganesh wrote in the Financial Times:
“A country’s tax code is not just a mesh of rules and rates—it is a secular bible of moral signals”.
Although not included in the list of consultations, the Government have recently commissioned the Office of Tax Simplification to produce a review of aspects of inheritance tax. The scoping document, dated 15 February 2018, refers to,
“a review of a range of aspects of IHT and how it functions today, including its economic incidence, to identify simplification opportunities … The overall aim of the review will be to identify opportunities and develop recommendations for simplifying IHT from both a tax technical and an administrative standpoint”.
These Benches have asked for a fundamental review of inheritance tax for many years. My noble friend Lord Eatwell argued powerfully six years ago for a review which considered the taxation base shifting to the recipient of gifts and legacies rather than the donor or the estate. Inheritance tax was introduced by the noble Lord, Lord Lawson, who is not in his place, in substitution for the capital transfer tax regime, which embraced lifetime gifts, introduced in the 1970s by the late Lord Healey.
I therefore find the limited remit of the review, perhaps admittedly reflecting the narrow focus of the Office of Tax Simplification, very disappointing. That disappointment turns to acute concern once I have looked at the position of the chair of the OTS, the former Conservative Minister, Angela Knight. For 10 years, and for 15 months while serving as chair of the OTS, Ms Knight was a non-executive director of Brewin Dolphin, the private wealth manager. Indeed, before she was chief executive of the British Bankers’ Association, she was chief executive of the Association of Private Client Investment Managers and Stockbrokers. As I did last year when I spoke on this subject, I spent a few minutes on the internet, this time to look at Brewin Dolphin’s site. Their guide, How to reduce an inheritance tax bill, includes topics such as how pensions can be used as an estate planning tool, and the benefits of using trusts. It states:
“Many people think it is deeply unfair that the estate they have worked so hard to build up can potentially be subject to a 40% tax charge. Fortunately, there are lots of exemptions that can help mitigate the tax paid”.
The House of Commons Treasury Select Committee, in scrutinising Ms Knight’s appointment in January 2016, expressed concern about her potential conflicts of interest and recommended that she recuse herself from the consideration of any matters in which she had a conflict of interest. I ask the Minister, first, whether Ms Knight has recused herself and will continue to recuse herself in relation to the review of aspects of inheritance tax. Secondly, can the Minister say whether, in parallel with this limited review, the Government will conduct a wider-ranging review, as these Benches have argued?
Whether your Lordships rely on the OBR’s projections, the more pessimistic OECD ones or the more optimistic Bank of England ones, it is clear that the challenge of re-establishing a sustainable economy is huge. This is no time for tinkering; radical thinking is needed.
Lord Skidelsky
My Lords, in his Spring Statement, the Chancellor saw,
“light at the end of the tunnel”.—[Official Report, Commons, 13/3/18; col. 718.]
The light is pretty dim, and the tunnel has been much too long. The two are connected, the dimness of the light being largely the result of the length of the tunnel, as I shall try to demonstrate.
First, I have a question about the light. Real GDP is expected to grow by an average of 1.4% a year for the next five years. This is just over half of the trend rate of growth before the crash. GDP per head is expected to grow by under 1% a year in that period. This is a picture of a stagnant, becalmed economy. In the 1950s and 1960s, Britain was often called the sick man of Europe because its annual growth rate was a miserable 2.8% a year. Now we are promised half of that as the new normal. Note that it is by no means the new normal for other countries. The United States is expected to grow by 2.2% over the next three years, the eurozone by 2% and the rest of the world by 3.7%. So our new normal is actually quite a lot worse than the expected new normal of most of our trading partners. The noble Lord, Lord O’Neill, asked whether this pessimistic estimate is credible; possibly not. I am not a great fan of five-year growth forecasts. But what I would say is that it has nothing to do with Brexit. As the OBR made very clear, these poor economic prospects that it sees are rooted in structural problems in the British economy, which have been there for quite a long time.
The OBR characterises the British problem as one of lack of supply, stating that the main indicator of this is,
“stagnation in productivity … since the financial crisis”.
I do not disagree with that, but what is lacking from the analysis is how a demand-side shock produced by the financial crash morphed into a supply-side problem. That is an interesting point of analysis which is underresearched. The explanation lies in the Government’s reliance on a market-led recovery. We now have a labour market that works pretty much as the classical theory tells us it should; that is, very flexibly and with a trade-off between wage growth and employment growth. With this kind of labour market, the economy rapidly returns to full employment, but it is a low-productivity level of full employment that leads inexorably to a low-productivity trap.
Output per hour worked grew by 2.3% between 1998 and 2008. Since the crash, it has grown by 0.3%. The fall in productivity growth would have been even greater had not hours worked fallen somewhat. The OBR has therefore said, rightly, that,
“a revival in productivity growth is essential”,
to sustain even the 1.4% annual growth of GDP.
This requires a return to the pre-crash level of investment. Public investment as a share of GDP has fallen from 5% in the 1960s and 1970s to roughly 3.5% today. Instead of compensating for the fall in private investment after 2008, George Osborne cut the state’s investment programme as part of his austerity Budgets. Low productivity is a direct consequence of the austerity policy.
We have now entered the Chancellor’s long tunnel and need to ask why it has been so long. This is the Chancellor on “responsible budgeting”:
“First you work out what you can afford. Then you decide what your priorities are. And then you allocate between them”.
This is absolutely fine, except that what you can afford is not independent of what you can do. If you can do nothing, there is an absolute limit to what you can afford, but that is not true of government. Government can raise taxes and increase its borrowing. The Treasury view, echoed by the Chancellor, is that such measures cannot bring about a net increase in government revenue because they reduce private sector activity by an equivalent amount. That is the real meaning of that little moral tale that the Chancellor has advanced.
This is exactly the same as the old Treasury view of the 1920s. For example, Winston Churchill when he was Chancellor of the Exchequer said in 1929 that,
“very little additional employment and no permanent employment can in fact and as a general rule be created by State borrowing and State expenditure”.
We thought that Keynes had demolished that doctrine, but it has returned with a vengeance. Since 2010, the Treasury and the OBR have been united in the view that there has been little or no spare capacity in the economy and therefore no scope for fiscal expansion. Rather, the only contribution fiscal policy could make to recovery was to cut the deficit. This would restore confidence and bring about a rapid bounce-back in private spending and investment. That was the doctrine; as far as I know, it still is. In fact, as the Minister says, the deficit has been coming down, but at a much slower rate than expected or forecast. And because austerity has lengthened the tunnel, it has postponed the solution of the budgetary problem.
Every competent authority agrees that the austerity policy lengthened the tunnel by two to three years and made the average household at least £5,000 poorer than it would have been. In doing this, it reduced the capacity of the economy to produce output.
Is there nothing fiscal policy can now do to raise the growth rate? Is it true that there is no spare supply in the economy? I should like to make two observations on that. The OBR estimates that unemployment, which is expected to stay at just over 4% over the next five years, is at an equilibrium rate. That is, that any expansion of fiscal policy now will simply lead to inflation, not produce any extra employment.
Is that true? I doubt it. I do not believe that headline unemployment figures are a true measure of spare capacity in the economy. I would question the idea that 4.4% unemployment represents the equilibrium rate of unemployment in this country, for two reasons. First, 4.4% is an average. It disguises the fact that there is overheating in some parts of the economy and underheating in others. In the south-east, unemployment is down to 3%; in the north-east, it is nearly 6%.
Secondly, and more importantly in my view, the 4.4% disguises the extent of underemployment—people working less than they want to. In 2016, the International Labour Office estimated that 6% of those in employment wanted to work longer hours than they were allowed to. In the United Kingdom, there are 32 million in employment, and 6% of that is 2 million. If we add this number to the headline unemployment figures, we get 3.4 million. That is an underemployment rate of 10.4%, not 4.4%. That seems to me a more accurate measure of the extent of spare capacity.
To conclude, I think there is more spare capacity in the economy than the OBR believes to be the case. If I were in charge of the Treasury—many noble Lords might say, thank goodness you are not—I would loosen fiscal policy, expecting to create a demand draught, and I would want monetary policy tightened to any extent needed to repress inflation. We have the spare capacity. What we lack is spare imagination.
Lord Judd (Lab)
Before the noble Lord sits down—I am certainly not one of those who turns white at the thought of him as Chancellor of the Exchequer—does he agree that it is not just a matter of people being underemployed? It is much more complex than that because some are very highly employed but their working conditions in this country are atrocious.
Lord Skidelsky
I completely agree. If you want to get a comprehensive view of what underemployment consists of, that would be a very important factor. I was just citing the most convenient measure we have, which is the measure of the International Labour Office: people who want to work more hours than they are allowed
The Lord Bishop of Portsmouth
My Lords, my first duty today is one of great joy: to welcome on behalf of this Bench, and I am sure the whole House, the right reverend Prelate the Bishop of Lincoln, and to congratulate him on a fine maiden contribution. Its quality was no surprise to me. He is remembered with great respect in the Diocese of Portsmouth, which I now serve and where my colleague and friend was parish priest and archdeacon. I know that his erstwhile congregation in Petersfield was delighted that he was able to visit them last year.
I know, too, that serving in Lincoln is a particular delight for him, not just because the diocese is full of wonderful people, but because his grandfather played football for Lincoln City. As a Black Country boy and lifelong supporter of Wolverhampton Wanderers, I understand the ups, which I am presently enjoying, and the more frequent downs of being a football fan, but I strongly suspect that playing and indeed supporting Lincoln City demands a very special kind of fortitude, resilience and above all hope. That, I also know, is the state of mind with which 18,000 ever-hopeful souls travel to Fratton Park, Portsmouth, of a Saturday. I applaud that, because hope is of course central to Christianity, anchored as it is in our sure and present hope in Christ.
The Chancellor’s Spring Statement was certainly characterised by hopefulness. In his own words, he is “positively Tigger-like” about our prospects, yet I cannot help but recall that Tigger’s boundless optimism does not match the facts before him. Tigger might even be accused of wishful thinking. As we have heard repeatedly, the Chancellor spoke about seeing light at the end of the tunnel. That, I think, was in relation to managing the deficit. If we achieve that then he held out the possibility that more money might become available for hard-pressed public services. That is an “if” of some considerable magnitude, and it is before we consider what sort of impact relatively modest increases would actually have, let alone the impact of the vast unknown unknowns of Brexit. Moreover, it relies on assumptions about the short term; the medium-term figures for the economy are less hopeful by a country mile, with the OBR expecting UK growth between 2017 and 2022 to be a full quarter, 24%, slower than growth in the euro area.
Furthermore, it is hard to see where the light at the end of the tunnel is for many people already struggling to make ends meet. The Chancellor said that wages were going up for those on the lowest incomes, but forecasts for pay and living standards are terrible. The OBR now expects pay to grow next year, albeit by only 0.4%. It does not expect any real pay growth ever above 1% a year during the forecast period, nor does it anticipate it reaching pre-crisis levels until 2025. Household incomes are little better—forecast to grow below 1% a year right through to 2023, leaving average incomes in 2021 £1,400 lower than forecast just two years ago, in March 2016. That is against a backdrop of significant cuts to working-age benefits yet to be implemented.
This is grim stuff. The facts and figures are stark, but it is on the impact for people, their well-being and dignity that we should properly concentrate. Some 1 million food parcels are given out by food banks every week. In my see city of Portsmouth, a quarter of children live in poverty. On the Isle of Wight, the figure nudges towards 30%. In some areas of the nation the numbers are worse.
I fear I risk sounding like one of the doom-laden prophets of the Old Testament, but I am, in fact, ever hopeful. Some of the consultations announced on Tuesday promised much, if they can be delivered, in terms of securing our tax base, not least by making companies that for all intents and purposes earn here pay tax here; that is a matter of simple justice. So too with the call for evidence on how we can achieve very necessary increases in productivity: the fact that we are only now calling for evidence does not suggest that we should expect to see anything concrete any time soon on what is a very pressing matter.
I am, however, as hopeful as any Lincoln City supporter. I hope that the commendable decision to return to a single Budget each year will result in properly worked out policies to ensure that work does not just pay but pays well enough to ensure a decent standard of living, as it should. That is truly a hope we can all embrace. I hope that business will be enabled to create secure jobs, that public services will have the resources they need to provide the services we want and, perhaps especially, that those who are vulnerable will be treated with decency and compassion. I hope that there is indeed light at the end of the tunnel, but we continue to travel this very long tunnel towards a light spotted at some unspecified distance ahead. I hope the end is close, but, with regret, I question whether the possibility of small increases in public expenditure, alongside depressed growth and flat-lining pay, offers much hope to the millions already struggling to make ends meet.
Lord Freeman (Con)
My Lords, I add my congratulations to those expressed earlier to the right reverend Prelate the Bishop of Lincoln on his most excellent speech. I speak for the Back Benches and for many of my colleagues when I say that he is most welcome.
I want to devote my brief remarks to one issue that I feel very strongly about, and of which I know the Chancellor is well aware: the need to improve productivity in our economy. Improvements there will, in turn, improve the living standards of our population. That is why, for the first time in my memory, a Chancellor has devoted a significant part of an important speech to dealing with the issue of productivity.
The Chancellor rightly referred to our UK companies being in the vanguard of the technological revolution. That is the key to improving productivity. He also emphasised that our industrial and commercial productivity could be and should be improved. My noble friend Lord Hodgson referred to the importance of productivity improvements for generating more wealth for our community and, most importantly, for the efficiency of our businesses. The Chancellor outlined certain initiatives that have already been introduced and new additional initiatives which I believe will be most welcome. For example, there has been a big increase in research and development expenditure over the past four decades, under both parties. That has contributed to some improvement in productivity, particularly industrial productivity.
Expenditure alone, however, will not be sufficient. People must have the skills to capitalise on new technologies. How can we improve those skills across the board? Technical education is one of the key means by which we can improve productivity, and I am pleased that the Government have committed more than £500 million per year to improving technology levels for schoolchildren over the age of 16 and those going on to higher education. I am led to believe that, next month, £50 million will be available to help employers prepare for the rollout of T-levels—for those who do not realise what that means, it means technical-level—and to help them prepare those who are working for a placement for training. Also to be fully introduced, at a cost of some £25 million, is a construction skills fund for 30 construction skills training centres around the country. I look forward to their being named, and I am extremely pleased about the announcement.
The Department for Education has lead responsibility for the skills revolution, especially technical education, and T-level training in digital and construction skills has already been introduced. However, I hope that this initiative—perhaps the Minister will have an opportunity to comment briefly on this—will be expanded much more widely and as soon as possible. It has been supported by companies, including Rolls-Royce and Fujitsu in particular. These skills will be taught from 2020 across the country.
This week the Chancellor stated that the Government will launch a call for evidence to understand how best they can help the UK’s least productive businesses learn from and catch up with the most productive. He also said that £31 billion was going to fund infrastructure, R&D and housing through the national productivity investment fund. That is warmly to be welcomed.
I strongly support these initiatives and congratulate the Chancellor—which I hope my noble friend on the Front Bench will communicate to him—on his strong support and guidance. When these programmes are implemented, productivity certainly should, and will, improve.
Lord Young of Norwood Green
My Lords, I apologise to the Minister if I did not understand the nuance and nature of this debate, especially as he seemed to quote 90% of the Statement. Nevertheless, I recognise its nature now and I am grateful for his willingness to respond on the issue of apprenticeships.
I too congratulate the right reverend Prelate the Bishop of Lincoln on giving us one of the lesser inscrutable quotations from Kierkegaard about whether you are living your life forward or backward; I understood that one. On looking at the Bill team, it reminded me that the challenge for young people today is to feel confident about their future, and the challenge for the older generation is to make it clear that we understand their concerns, whether they are about jobs, housing or even—if they are thinking that far ahead—their pensions.
I congratulate the noble Lord, Lord Higgins—who has contributed to every such debate since 1964—on his enthusiasm. However, he said that people precisely voted for a reduction in their standard of living but, with respect, I do not think that they did. There was a confused range of views about what people voted for, but when they saw an advertisement on a bus saying that there would be an extra £350 million going into the health service every week, perhaps they can be forgiven for being confused about what they were voting for.
As to the Chancellor’s Tigger-like enthusiasm at the moment and his remark that there is light at the end of the tunnel: we all know what people say about light at the end of the tunnel—it often signals that there is a train coming. Whatever our thoughts on Brexit, we know that train is coming and that it will have an impact.
I congratulate the right reverend Prelate the Bishop of Portsmouth on reminding the House about taxation, productivity, food parcels and so on. What stuck with me when he reached the end of his speech was that we wanted an economy where people felt that work paid and that their jobs were secure. That is another huge challenge.
To be positive—I like to try to be positive—I recognise and welcome the Government’s understanding of the importance of skills. Of course, the noble Lord, Lord Freeman, reminded us of the £500 million for T-levels. My concern about T-levels is that when I talk to employers and educationalists, they are concerned about the way they are being introduced and about the future of existing qualifications, whether they are City & Guilds, BTEC, HND or HNC. Getting it right, not just in introducing it, will be crucial but I welcome the focus on vocational skills.
I think it was the noble Lord, Lord Hodgson, who told us that even if you got a 2.1 degree in engineering you still might find it difficult to get a job. That ought to make us reflect on the huge amount of money we are spending on higher education. Given that they have three or even four years, surely there should be an obligation on universities to ensure that work experience and the ability to find a job at the end of a degree course is a key component. People are paying £9,000 plus a year for that experience. We have got it wrong in weighting everything towards higher education. I think the pendulum should swing back towards technical and vocational education, because as we know, that is where so many of the skills are required. It is not an either/or choice, as I have said on many occasions.
I welcome the commitment to 3 million apprenticeships by 2020, but as many of us in this Chamber have said, it is about not just the number but getting the quality of apprenticeships right. The recent announcement that a major training provider, learndirect, went belly-up is not good. We have some challenges. Of course, I welcome what is being done for SMEs but my experience of talking to a range of SMEs is that they still feel that the apprenticeship levy is too complicated. If we do not get past that concern we will not achieve what we all want to achieve: to create good-quality apprenticeships that are perceived by potential apprentices and their parents and teachers as a worthwhile career route. I also welcome the fact that we are going to have a more sophisticated measure of human capital; that is absolutely required.
There was a dire prediction by the noble Lord, Lord Hodgson, regarding the effect of artificial intelligence. I have enough trouble with my own intelligence in knowing whether he is right or wrong; I suspect that the answer lies somewhere in the middle. The plea I make relates to my declared interest as the chairman of the board of governors of my local primary school. We spent quite a few hours recently looking at our three-year budget. The task for us is to try to manage a deficit. We are getting to the point now where, although we are trying to protect teaching, we have cut everything else to the bone. That is a really serious problem not just for my school but for a range of schools. I see it as a special problem for primary schools, because the cost of remedying the situation for them if we do not get it right is much greater, as we know. The school of which I am chairman of the board of governors is a very diverse school in what is not the wealthiest of neighbourhoods; nevertheless, we are still achieving good results. My concern is that if the Chancellor does not recognise in his forthcoming Budget the need to do something about the education budget, the outlook for our next generation of young people will be very serious
I hope that the Minister can reassure me regarding the concerns I have expressed about T-levels, SMEs and apprenticeships.
Baroness Kramer (LD)
My Lords, I join in the welcome to the right reverend Prelate the Bishop of Lincoln. He is obviously supported by the noble Lord, Lord Cormack, and my noble friend Lord Taverne, but when he mentioned that the doorkeepers largely hail from Lincoln, that is when I knew we had a real power to be reckoned with in this House. We know where genuine authority lies. We very much appreciate his speech. He focused very much on a divided society, and that issue was picked up by others in this debate—the noble Lord, Lord O’Neill, was talking about the north/south divide, although the right reverend Prelate the Bishop of Lincoln reminded us that it is not just geographic, as those who struggle can very well be located in the south as well. This is timely in the context of this particular Statement.
I join with others—the noble Lord, Lord O’Neill, seemed to have had the same reaction to the trailers that came ahead of the Spring Statement—in saying that I had thought we were going to get some really super growth figures. Frankly, that should not have been so unexpected, because if we look at the markets that we export to, they were on steroids in 2017: the euro area grew at 2.5% and the US at 2.3%. I was genuinely quite shocked when the Chancellor announced that growth in 2017 had slowed from 1.9% in 2016 down to 1.7%—not quite as bad as expected in the autumn, but in light of this great global growth pretty difficult to explain. A falling performance when the going is good is really pretty extraordinary, quite frankly. But the forecasts for the future are worse. The noble Lord, Lord Skidelsky, described a stagnant and becalmed economy. The OBR is forecasting growth for the UK in 2018 at 1.5% and it drops after that, while in contrast the OECD, which released its numbers on the same day as the Spring Statement, forecast growth in 2018 as 2.9% for the US and 2.3% for the euro area.
I recognise that we have a productivity problem and an investment problem, but I disagree with the noble Lord, Lord Skidelsky, in one area. He basically suggested that the fundamental problems we have are not in any way related to Brexit. But I join with others—we heard from the noble Lords, Lord Livermore and Lord Higgins—in saying that, if it were not for Brexit, the capacity to draw investment into the UK would enable us certainly to improve growth and productivity. Brexit has now become that kind of barrier. We have seen it in the numbers—particularly foreign investment numbers in the course of this year. To me that is very significant. If I may pick up the point that the noble Lords, Lord Hodgson and Lord Freeman, and others made, we are at a point where we are entering a fourth industrial revolution, where everything will change, thanks to AI and robotics. That makes it the most crucial time to draw in that kind of investment. If you do not ride the change, you are left behind. The last thing we should be doing for our young people—in the Box or otherwise—is to let ourselves get left behind at this absolutely critical point in time. So I am exceedingly concerned.
If we turn more broadly and look at our population at large—you would not have known it from the Chancellor’s words—people are feeling pain. The day before the Spring Statement, we got the February numbers for UK consumer spending. Consumer spending fell in February by 1.1% year on year, declining for the ninth time in 10 months. Wages are stagnant—we are all aware of that—and inflation is running at over 3%, and it is making life for ordinary people exceedingly difficult. Frankly, a lot of that sits at the door of Brexit. Yes, it is part of a longer-term pattern of modest economic growth, but the inflation rates that we have seen really are Brexit in origin. The impact on people’s lives is very significant.
The right reverend Prelate the Bishop of Portsmouth, the noble Viscount, Lord Chandos, and others talked about the general suffering of the population at large, but the Chancellor did not really address public spending pressures very much in his Statement. There was a bit of a sense of light at the end of the tunnel and maybe we would be able to lift our foot off the austerity pedal a little at some point in future, but it seems to me that is completely out of kilter with the reality that we are facing. I argue that the pressures to increase funding in the public sector have simply become unavoidable. Just last week, the NAO, in its report Financial Sustainability of Local Authorities 2018, warned that 66.2% of local councils with social care responsibilities have now eaten heavily into their reserves. Social care is struggling in many parts of the country. The NHS is not coping; indeed, routine operations were cancelled for a whole month this winter. Schools are asking parents for money; the noble Lord, Lord Young, talked about the struggles that his local primary has, and they are repeated nationwide. My noble friend Lord Taverne, the noble Viscount, Lord Chandos, and others talked about the welfare cuts that are still to bite. We simply cannot continue in this vein.
Even though the Chancellor now anticipates that day-to-day spending will come into balance in 2019, which is of course good news, it is very far from salvation. As the IFS said following the Chancellor’s speech, borrowing is only down to pre-crisis levels, at 2% of national income, but debt is twice its 2008 levels. Realistically, this is the time when we absolutely have to look at raising taxes. At the very least, we need to reverse the cuts since 2015 in corporation tax—which surely could have been left at 20%; I do not believe a penny below that has encouraged any company to put more money into any investment—and reverse the cuts in capital gains and inheritance tax, which would give us a bit of breathing space.
However, I argue that the NHS and social care are now such a funding challenge that they require a more radical solution. I very much regret that none of the many studies that the Chancellor announced this week included an assessment of a dedicated NHS and social care tax, which, frankly, looks like the only way to put these key services on a sound footing long term. Since a new structure takes time, my party is calling, as my noble friend Lord Taverne said, for a penny-in-the-pound increase on income tax to provide £6 billion this year to prevent another near-term crisis in the NHS and social care.
I also very much regret that the Government failed to consider giving local authorities the powers to become major builders of affordable and social homes. The Government are making some movement on housing but not at the scale required, certainly to deliver social and affordable housing, and again those pressures are becoming completely unsustainable. I believe it was the noble Viscount, Lord Chandos, who talked about the homeless problem that we have; we have all seen it develop. However, that is only a minor symptom of a much broader and deeper problem that has to be tackled. We know that, given those kinds of powers and the ability to go out and borrow, local authorities can deliver the kind of housing that we need because they have done so in the past. This is the time to take off the ideological cap, recognise that the housing market is fundamentally broken and empower local authorities to deliver the kinds of houses that we definitely need.
I join others in being glad that the Chancellor is looking once again at the apprenticeship levy. That is a really messed-up piece of policy, and I hope very much that we can read in the Chancellor’s words that he is going to sort out the nonsense. For small companies, and I talk to many of them, it has simply turned into a tax, not a mechanism to deliver either training or apprenticeships. In the same way, I join others in being glad that we are getting another look at late payments, but this time could we have a solution rather than another report?
I support the Government’s decision to find a more effective way to tax digital companies, perhaps on their revenues rather than their profits. It is an outrage to see large, successful companies essentially paying very little tax. However, I think the Chancellor’s proposal is too narrow. It really should be almost just a first step. Big brand companies such as Starbucks can outwit the tax system just as well as Google. A fundamental part of the problem is that we do not know how to deal with the value of things like brands and intellectual property, but that is the shape of so many companies of the future. We have to crack that problem now, or we will find ourselves without any effective tax base. I hope that the accounting profession will get wrapped into this, frankly. In the scandal of the collapse of Carillion, a big part was the completely inadequate pricing of the value of contracts and good will by the accounting firms, so that the company looked artificially healthy when it was crumbling. Others should investigate who should have known what and when, but it is all part of the same issue.
I also regret that the Chancellor did not take this, as he was doing so many studies, as an opportunity to look at intergenerational fairness. We really have a very unbalanced tax system. Each working person is now supporting 1.7 people and the number is rapidly headed to 1.9 people. That is unsustainable. The noble Lord, Lord Hodgson, talked as if we have too many people, but the problem is the shape of our demographics. We are desperately short of working-age people. That is one of the reasons why cutting back on immigration is particularly ironic at this time.
Lord Hodgson of Astley Abbotts
The issue is also that we are not prepared to employ older people. Once you are past 55, you are on the scrap-heap. A great deal more could be done. We have done a lot of work in other areas of prejudice, but ageism is a prejudice we have yet to tackle.
Baroness Kramer
My Lords, around this House we can see many people who might mistakenly be classed as older but who can demonstrate that they have a great deal to contribute. We may want to do it in a different way, with part-time work and different opportunities. I agree that employers are unimaginative. But it does not get us away from the problem; if we hit a dependency ratio of 1.9, we are not functional as an economy. I cannot see any way, without rational immigration, of doing it.
We have a sluggish economy with fundamental problems of productivity and investment. We have public services that are often on the brink of break-down. We lack key pieces of infrastructure, especially affordable and social housing. Our national debt remains high. Ordinary people are feeling the pinch of stagnant wages and high inflation, and our young people are carrying an unwarranted burden. Frankly, there could not be a worse time for Brexit, with all the additional costs that it places on businesses and a future in which the economy and our businesses have less access to both markets and talent.
I join those around the House who take the view that, until we make up our minds that we need to be in the single market and the customs union, we frankly do not have much of a hope of seeing a substantial reversal in the kind of economic patterns that were embedded in the OBR report. I was as astonished as others that the Chancellor felt that he must be “Tiggerish”. It made me think that life in Cabinet must be pretty dreadful if, when you present a report like this on an OBR statement, you find yourself happy.
Lord Davies of Oldham (Lab)
My Lords, this has been an interesting debate, distinguished by the contribution of the right reverend Prelate the Bishop of Lincoln, in his maiden speech, and we look forward to him continuing to contribute to our deliberations often in the future. My only link with Lincoln was when I was concerned 20-odd years ago with my party’s higher education policy. I must say that you cannot go to Lincoln without seeing the majestic cathedral and think that it is the only structure worth concentrating on. What was being proposed in Lincoln then was the university, in what seemed to be a green and muddy flatland down by the river. Lincoln University developed with extraordinary rapidity. It is an enormous tribute to the people of Lincoln that they developed their university to real status in a very short time. I, for one, visit the cathedral when I am there, but I always go to have a look at the university as well.
The Minister introduced the debate in his usual equable and optimistic manner. He treated the House in his opening speech to a description of the economy, but I am afraid that it reinforced the theme of several speeches in this debate: the Government seem to be guilty of the most extraordinary complacency. He suggested that the recovery is in fact at hand. Let me say that, if it is, it will still be the longest recovery from recession since the 1920s—so not a great deal to boast about there. Also, as several noble Lords who contributed to the debate indicated, we are by no means sure that the problem is over. After all, we all remember that the previous Chancellor expected to create a surplus by 2020. We do not get too much talk now from the Government about surpluses, as far as the financial position is concerned. Further, as has been emphasised by so many speakers, growth last year still kept us firmly in the relegation zone, at the bottom of the G7. Last year was the lowest since 2012, and the OBR has of course forecast that, in 2020 and 2022, the situation will deteriorate. So that is some recovery for the economy.
The Government have missed every target that they have set themselves in the last decade for the rate of reduction of the deficit and we are all aware of the consequences of that. Behind it all, of course, this gave the justification for austerity. The consequences of austerity have been disastrous for our people and also for our economy. The austerity programme, forged over these last seven or eight years, has only begun the question of clearing the deficit, but it has created so many problems in our public services. In a real sense, our society has seen the transfer of the problems of indebtedness from the Exchequer to our public services. The difference between the two is that the impact of public services upon ordinary people is so much greater.
The National Health Service will end this year £16 billion in deficit. There are 100,000 jobs in the National Health Service that are not being filled because there are not the resources to do so. The crime rate increases, yet the number of police officers is cut by 21,500. The number of firefighters has been cut by 850. Our Prison and Probation Service is on the brink of crisis. I should think that there is not a single Member of this House who does not shudder when we learn of what is going wrong in our prisons. The mark of a civilised society is surely that it ensures that prisons are a place for the rehabilitation of people, rather than a deterioration in their perspective on society.
In education, we have had the first cut of the per capita payment to schools ever. That is a very drastic thing. It makes the position almost unmanageable for the heads and other figures in schools. In addition to that, of course, we understand that, under social welfare, there are now proposals to end free dinners for tens of thousands of children from poor families. Surely at times the Government must wonder whether they look vindictive towards poor families who are dependent on society. These poor families are often wage earners who, in the jobs they do, do not earn enough—or earn regularly enough—to sustain the family budget.
Of course, local government is in crisis. Most of us know our own local authorities quite well, but I have to say, my ears were pinned back when the television announced that the local authority causing the greatest upset to the Government is Northamptonshire, followed not long afterwards by Surrey—authorities we automatically assume have a massive Conservative influence and a great commitment to loyalty to the Government. Yet Northamptonshire is saying, “We cannot continue with the resources made available to us by the Government”.
It is quite clear that this crisis is due to spread. We have not had the full range of social security cuts yet. Universal credit has already cut social security provision significantly but we all know that there is a great deal more to come in terms of the impoverishment of certain sections of our community. As far as adult social care is concerned, can anybody be unaware of the problems facing the elderly as they near the time when they cannot look after themselves? People have no obvious recourse to any support that will ensure that their last days are passed in some degree of comfort.
I want to say something about housing. I know the Minister has said, “We don’t have to look at the Spring Statement on housing because the Government will move smoothly into action shortly afterwards”. My heavens, the Government have a lot of movement to make. We have rising homelessness in our society. We are one of the richest countries in Europe. One of the richest cities in Europe—London—has seen significant increases in people sleeping rough. Of course, what has been brought out in this debate so strongly is that living standards have fallen over this period. Real wages have fallen by 0.5% since the end of 2017 and are lower now than in 2010.
Can anyone conceive of a Government being buoyant about their position when the broad mass of the wage-earning public are seeing their standards of living fall? Surely the Government have to respond to these very acute problems. I appreciated the speech of the noble Lord, Lord Mawson, when he talked about the digital economy and the problems facing small entrepreneurs. There is no doubt that we need to see small entrepreneurs flourish. They are an extremely important part of the economy. However, if the challenges being presented to them are not just those of developing their business but challenges posed by the Exchequer and Her Majesty’s Revenue and Customs, we have worries ahead of us.
I am grateful to my noble friend Lord Young for his comments on training and apprentices. He did not bring in the broader issue that an important part of training—and of the relationship between the education system and the training provided by employers—is the role of further education. But this Government have slashed the provision of further education in this country and are now apparently reliant on employers to provide the necessary breadth and skills to the apprenticeships they develop.
I have no doubt that the Minister will meet many of the challenges presented by this debate and that he will do his very best to give a response to all the issues raised. I have left out Brexit; I am not at all sure that we can at this stage address to the Government the challenge on the position of Brexit in circumstances where so much is so totally uncertain. We all know the hesitations of the OBR in producing forecasts on Brexit. However, the Minister has to face the facts: no one in this debate today who expressed a position on Brexit has said, “Let’s go and make this situation more difficult”.
The Minister of State, Department for International Development (Lord Bates) (Con)
My Lords, I sense that the opening part of the speech of the noble Lord, Lord Davies, might be the one area in which we find common agreement, on the majestic qualities and aesthetic beauty of Lincoln Cathedral, which is a great place to start. Again, in responding to this extraordinarily high-quality debate, I congratulate the right reverend Prelate the Bishop of Lincoln on his excellent contribution to it. As someone who hails from the same part of the world as he does, having been born in County Durham, I used to think that Durham Cathedral was the greatest cathedral on the planet, but even I was turned when I saw Lincoln Cathedral in all its splendour, particularly the facade. It was wonderful to hear his remarks, and I look forward to hearing many more.
This debate covered a number of areas, and I will try to summarise the key themes. There was a focus on the debt and the progress made in reducing the deficit; we are beginning to see a reduction in the debt. My noble friend Lord Higgins, whom I congratulate on his 54th contribution to a Budget debate, pointed to the fact that in absolute terms debt continues to rise. We referenced the percentage of GDP, which the OBR forecast shows is beginning to fall. My noble friends Lord Hodgson, Lord Higgins and Lord Freeman, and the noble Lords, Lord Mawson and Lord O’Neill, all made reference to the important element of continuing that effort to control spending, and said that rather than pitching it in terms of austerity, we should do so in terms of living within our means. The noble Baroness, Lady Kramer, also mentioned intergenerational fairness, which means ensuring that we hand on a legacy to our children which does not saddle them with the debt of the previous generation.
Public services featured significantly in the debate, and rightly so. The noble Lord, Lord Haskel, began by highlighting the importance of public services, as did the noble Lords, Lord Taverne and Lord Davies, the noble Viscount, Lord Chandos, and the noble Baroness, Lady Kramer. There was a strong focus on productivity, investment and technology, which the noble Lord, Lord Mawson, focused on, as did my noble friends Lord Hodgson and Lord Freeman. There was particular reference to skills, which was commented on by the noble Lord, Lord Young, and my noble friends Lord Freeman and Lord Hodgson; I will come back to that in a moment.
A variety of views were expressed on the OBR forecasts themselves. It was a bit of a teaching masterclass with the noble Lords, Lord Skidelsky and Lord O’Neill, as we listened to their explanations, and the noble Lord, Lord Livermore, gave his own interpretation of those statistics. However, everybody focused on them. The Chancellor said in his Statement that GDP growth statistics are not a target to be met. They were forecast to be beaten. We are very much in that mindset—just as when the forecast for last year, given as recently as November at 1.5%, was beaten, at 1.7%. We would like to believe that a lot of the changes announced will produce a better outcome.
Brexit featured large in the contributions of the noble Lords, Lord Taverne and Lord Higgins, and the noble Baroness, Lady Kramer. In a spirit of fairness, as Brexit has had so much airplay in your Lordships’ House, particularly this week, I am tempted to say that I may not dwell on it to the extent that they may wish—but I will certainly refer to it. There were some significant contributions both by the right reverend Prelates the Bishop of Lincoln and the Bishop of Portsmouth, and by the noble Viscount, Lord Chandos, about what I would term societal fairness, particularly with regard to young people and people living on welfare. I shall seek to cover some of those points.
Some of the points that I will not be able to address at this moment—I give notice that I shall write on these subjects—concern the review by the Office of Tax Simplification, which was raised by the noble Viscount, and the change in methodology and a paper announced by the Chief Secretary to the Treasury that might be forthcoming, which were mentioned by the noble Lord, Lord O’Neill. I will look into that matter and write to him, if I may.
Now I shall address some of the specific points raised. The noble Lords, Lord Young of Norwood Green and Lord Davies, spoke about the importance of schools. Even while repairing the public finances, the Government continue to protect the schools budget. The core schools budget is at a record high of around £41 billion, and in July the Government announced £1.3 billion in additional schools funding over the next two years.
The noble Baroness, Lady Kramer, spoke about the issues and challenges facing social care. The Government have given councils access to £9.4 billion more of dedicated funding for social care over the next three years, as a result of measures since 2015. The OBR says that the current forecast would leave local authorities in England with £20.2 billion of reserves at the end of 2020-21, which is £3.8 billion—25.3%—more than they had at the end of 2010-11.
The noble Viscount, Lord Chandos, spoke about inheritance tax. Moving to a recipient-based system for inheritance would not only, in our view, increase the complexity of tax but add to the administrative and compliance burdens. The OTS will review the tax to ensure that it is fit for purpose; the review will consider a range of simplification options.
Several noble Lords, including the noble Lord, Lord Davies, and the noble Baroness, Lady Kramer, referred to housing. The Autumn Budget of 2017 said that more than £15 billion of new financial support would be available for housing over the next five years, taking total financial support over the period to £44 billion. In February we announced £866 million-worth of successful housing infrastructure bids, which will deliver up to 200,000 homes in high-demand areas. We have doubled the size of the Housing Growth Partnership to £220 million, providing much-needed investment in small to medium-sized housebuilders, and the Government launched a consultation, under a revised National Planning Policy Framework, to ensure that more homes are built.
My noble friends Lord Freeman and Lord Hodgson, and the noble Lord, Lord Young, spoke about the importance of developing human capital in the context of the advance of technology and the fourth industrial revolution, in AI, that is coming down the track. These are very real challenges that we face. In the new economy we expect increased levels of automation, with some jobs changing. For example, tomorrow’s employers might start to pay more of a premium for general or technical competence rather than for traditional forms of educational attainment. We therefore need to ensure that we make the right investment in our people now so that everyone has the best start at school and continues to receive support and training throughout their working lives. With the support of the ONS, our analytical work will examine the nature of the skills that are valued by the labour market and look at labour market outcomes resulting from education so that we can take a more sophisticated approach going forward.
The right reverend Prelate the Bishop of Portsmouth made a profound point about the poorest in society. He will have heard me comment in my opening remarks about how the combination of the changes to the national living wage and tax thresholds is leading to some welcome and real wage increases for some of the lowest paid in our society. The Government are committed to taking action to help the most disadvantaged, with a focus on tackling the root causes of poverty, including workless households. The fact that there are 3 million more people in work and 950,000 fewer workless households and that 608,000 fewer children are living in workless households has to be, as the right reverend Prelate put it, a reason for hope for the future.
The noble Lord, Lord Skidelsky, focused on productivity and analysed it in some detail. Following the good practice of a student, I will read the Official Report and review what he said. We are very much of the view that productivity is, and has been for many years, one of the greatest challenges that our economy faces. There have been many debates and arguments about why that is so. Some have pointed to its reliance on services rather than manufacturing. As automation has increased, we have not seen the same growth in productivity as, say, the German economy. However, we are not in any sense complacent about this. That is why we set up the National Productivity Investment Fund. Some £31 billion has been made available for research and development—an area which my noble friend Lord Hodgson spoke about and which my noble friend Lord Freeman also mentioned. In digital, we have announced over £95 million for 13 locations as part of the £190 million Local Full Fibre Network Challenge Fund. Transport is another element that feeds into productivity.
I think we need to look at employment and take on board the performance of many other countries in the European Union in relation to GDP. For example, the unemployment rate in France is currently 9.5% and its youth unemployment rate is 22.4%. According to the OECD, in the third quarter of 2017 in the UK it was 4.2%.
The noble Lord, Lord O’Neill, who did so much during his time as a Treasury Minister to advance the northern powerhouse, was right to challenge us not to be timid about the advances that have been made there—due, in not insignificant part, to his efforts in and leadership of that initiative. In the past year we have seen an extra £8 billion added to the north’s economy, with growth and productivity rising at a faster rate there than in London and faster than the UK average. The north’s economy is now worth £316 billion —bigger than that of Norway, Sweden, Austria or Belgium. Last year, as an average, we saw employment in the northern powerhouse area rise at a faster rate than in England. There are now over 400,000 more people in work in the north than in 2010, and the number of claimants of unemployment benefit in the north has decreased by 40% over the same period. Most crucially, as regards transport, where he urged us to do more—several noble Lords referred to this—by 2020 we will have invested over £13 billion to improve transport in the northern powerhouse area. That is more than any other Government in history. I hope that will go some way to address some of the concerns referred to by my noble friend Lord Hodgson.
The noble Lord, Lord Mawson, gave an inspirational address, viewing the economy from the perspective of the entrepreneur. I pay tribute to the work that he has done in Bromley-by-Bow, and certainly in the Lee Valley. He has turned that area of London into one of the most exciting areas, particularly as regards technology around Shoreditch, which holds huge potential for the future of this country. It is instructive that business investment remains strong. It increased by 2.2% in 2016 and forecasts show that it will grow by 1.7% in 2018. I believe that technology investment, certainly in London, is at its highest level ever, which is to be welcomed, with companies such as Apple, Facebook and Bloomberg locating their offices here.
My noble friend Lord Hodgson asked about artificial intelligence and technology. New technologies have the potential to drive economic growth in the UK. We believe they are not something we should be fearful of but that we should ensure that we have the skills and the investment to take advantage of them when they arrive.
The noble Lord, Lord Haskel, asked for an update on the industrial strategy. There will be regular updates on our progress towards the grand challenges set out in the industrial strategy, though this was, of course, not the primary purpose of the Spring Statement. The noble Lord also questioned the quality of jobs. Over three-quarters of the growth in employment since 2010 and nearly all the net increase in employment in the last year has been full-time work, and the proportion of full-time jobs that are low paid is at its lowest level in at least 20 years.
The noble Lord, Lord Young, and the noble Baroness, Lady Kramer, spoke about the apprenticeship levy. There have been over 1.2 million apprenticeship starts since May 2015. We remain committed to delivering 3 million apprenticeship starts in England by 2020. We recognise, however, that this is a significant period of change for employers. As they have two years to spend their levy funds, businesses are taking their time to plan ahead and grow in a controlled way. On the overview, next month, working families will see another increase in their personal allowance, above inflation increases in the national minimum wage and the national living wage and a freeze on fuel duty, which we believe will feed through into some of the poorest areas of the country. The right reverend Prelate the Bishop of Lincoln referenced the north-east of England. Since 2010, there have been 78,000 more people in work in the north-east and 18,800 more businesses, and the north-east has seen the second-fastest growth in median gross weekly earnings since 2010, which is plus 13.8%.
As the Chancellor told us in the Spring Statement this week, this Government are delivering on their plan, which is firmly grounded in a balanced approach. It is not all about controlling finances and not all about investment but is a combination of both. We are seeing large investments, particularly in critical economic infrastructure. That has to be the right thing to do, while combining fiscal discipline with strategic investment in our economy and public services. The OBR forecasts more jobs, rising wages, declining inflation and a falling deficit. That has to be welcomed.
When we look for reasons for hope—I refer back to the speech by the noble Lord, Lord Mawson, who talked about giving people hope for life after Brexit— one area of hope could come in the shape of Forbes magazine, which undertook its annual survey of the best places in the world to do business. Out of 153 economies in the world, of the best places to do business in 2018—not historically, but in 2018—the UK was ranked number one. That is what real business is thinking. That is what Boeing is thinking when it sets up operations in Sheffield, that is what Toyota is thinking when it invests in its plants, and that is what other investors are thinking when they come to this country. We share their confidence in the prospects for this economy. While this review and these forecasts present a challenge, we believe that there is real cause for hope and that we can see a better future for the people of this country as we make a success of Brexit going forward.
Motion agreed.