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Oral Answers to Questions
(6 years, 2 months ago)
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Mohammad Yasin (Bedford) (Lab)
The Parliamentary Under-Secretary of State for Justice (Lucy Frazer)
We are looking at ways to improve our justice system and to modernise the delivery of justice in many ways, including with technology. In circumstances where 41% of tribunals were used at half their capacity in 2016-17, it is right that we consider whether spending money on the physical estate is the best use of money.
Mohammad Yasin
The Government like to say that they have reallocated court services rather than closed them, but Bedford has lost its magistrates court and employment tribunal court, so the public and lay members must travel more than 30 miles to access justice. Can the Minister reassure me that family court services, which are heard in the highly utilised Shire Hall, will remain in Bedford indefinitely?
Lucy Frazer
The hon. Gentleman is right in relation to the changes taking place in Bedford to a certain extent, but I emphasise that the closure of the tribunal court is nothing to do with any changes being made by the Ministry of Justice or Her Majesty’s Courts and Tribunals Service. The tribunal service is closing because the landlord did not extend the lease, and it was a decision of listing, which is a judicial capacity, to move the tribunal court’s hearings elsewhere. Civil cases will be heard in Bedford magistrates court, and until another location is found, it will not close.
Kevin Hollinrake (Thirsk and Malton) (Con)
Northallerton magistrates court in my constituency is scheduled for closure. Will the Minister consider using that court as a pilot for some of the future technology solutions, to ensure that those are workable in practice, before the closure is implemented?
Lucy Frazer
My hon. Friend makes a valid point, as has his neighbour, my hon. Friend the Member for Richmond (Yorks) (Rishi Sunak). I have met them both and the police and crime commissioner for the area. It is important to consider the appropriateness of pilots for mobile technology, and we will do so.
Richard Burgon (Leeds East) (Lab)
Thousands of key court staff were axed, but the Government are now spending tens of millions of pounds more on contracting agency staff. More than 100 courts were sold off, each raising not much more than the average house price. Now the Secretary of State has appointed someone with a slash-and-burn record as the new chair of the HMCTS board, telling the press that Tim Parker’s
“expertise will be vital as we deliver our reform and modernisation of the courts”.
To allay concerns that Mr Parker has been appointed for his toughness on cuts, can the Minister outline the specific expertise that Mr Parker has in working in our court system?
Lucy Frazer
The hon. Gentleman makes a number of points that I would like to refute, but I will mainly concentrate on two. It is important that where successful people in business put themselves forward for public service, we should welcome them and not put off experienced people from taking up important posts. Mr Parker has been successful in the businesses that he operated and has operated them appropriately, and we welcome him to his post. The hon. Gentleman also talks about cuts to our system. I would like to make it clear that the Ministry of Justice is proposing an extensive reform programme, which will put £1 billion into our courts service.
Mr Philip Hollobone (Kettering) (Con)
Benefit applicants in Kettering tell me that they are now having to wait a completely unacceptable 45 weeks for tribunal appeal hearings due to a lack of a suitable location. Will the Minister look into that as a matter of urgency and get that problem fixed?
Lucy Frazer
It is very important that when cases are started, they are heard expediently, so that people are not prejudiced and do not have to wait for justice. I am happy to meet my hon. Friend to talk about those issues.
Carol Monaghan (Glasgow North West) (SNP)
The Minister of State, Ministry of Justice (Rory Stewart)
This is something the Department studied in detail in 2015, and we have conclusive evidence that giving somebody a community sentence rather than a short custodial sentence reduces reoffending over a one-year period.
Carol Monaghan
We have evidence of that in Scotland as well. The Scottish Government’s move towards community payback orders has helped Scotland to achieve its current 18-year low in reoffending. Is the Minister looking to the Scottish Government’s example and considering how they have managed to achieve these figures?
Rory Stewart
Absolutely. We have a lot to learn from Scotland, specifically on community sentences, and indeed we will be looking at what more we can do to emphasise that a custodial sentence in the short term should be a final resort. In reoffending terms, it is often much better for somebody to be given a community sentence.
Derek Thomas (St Ives) (Con)
In Cornwall, I work closely with Konnect Cornwall, headed up by Ian Curnow, which does a lot of work on behalf of the Government and the Department for Work and Pensions to support ex-offenders and people who are on the way into trouble. What more resources can be made available so that no one is left behind?
Rory Stewart
A lot of this is about identifying those key local providers. The real challenge that we need to overcome, which is true not just for justice but for local councils, is that of making sure that when we work with the third sector we work, not with big national providers, but with small, grassroots local charities.
Kate Green (Stretford and Urmston) (Lab)
I draw the House’s attention to the fact that I am a life member of the Magistrates Association. In the all-party parliamentary group on women in the penal system, we recently heard from the Magistrates Association that magistrates are not familiar with the content of community penalties. That makes them reluctant to choose such penalties. The issue, in part, seems to be a lack of funding for training. Will the Minister comment?
Rory Stewart
This is a long-standing issue—it was true even in 2008-09—that consistently, the judiciary and magistrates have expressed concerns about community sentences. We need to do much more to build confidence, but the fact that this has been going on for nearly 10 years shows that it is a very challenging thing to do. Training will be an important part of that.
Craig Tracey (North Warwickshire) (Con)
Alan Mak (Havant) (Con)
The Lord Chancellor and Secretary of State for Justice (Mr David Gauke)
Retaining and recruiting engaged and motivated staff is critical to delivering the solutions to drive improvement across the service. Between the end of October 2016 and the end of March 2018, we have increased prison officer numbers by 3,111 full-time equivalent staff. This is already significantly over our target of 2,500 additional staff by the end of December 2018. Investing in the frontline is vital for safety, rehabilitation and security, which is why we are spending £100 million a year in additional prison officers.[Official Report, 1 May 2018, Vol. 640, c. 1MC.]
Craig Tracey
I thank my right hon. Friend for that answer and commend him for the work that he has done on recruitment. Can he confirm when we can expect to see the new officers on the landings?
Mr Gauke
My hon. Friend is absolutely right to raise that point. The key worker model is crucial. It will allow prison officers to spend more time, both on a one-to-one basis and with small groups of prisoners, improving staff-prisoner relationships. That can help us reduce both violence and reoffending. Some prisons, such as HMP Liverpool, are already running that scheme, and I look forward to more prisons fully implementing that over the months ahead.
Luke Pollard (Plymouth, Sutton and Devonport) (Lab/Co-op)
Many of Dartmoor prison’s prison officers live in Plymouth and have told me of their concern that prison officer cuts, inexperienced new staff and increasing retirement ages are causing stress and concern. Can the Minister reassure me that there is a proper plan to address staffing and morale in our Prison Service?
Mr Gauke
There is already a proper plan to address that point about staffing. That is why the numbers are going up, and that is the point I am setting out. The numbers are at a five-year high. We are ahead of what we promised in October 2016. I am pleased that we are doing that and we will continue to recruit new prison officers—net new prison officers—into the Prison Service.
Jim Shannon (Strangford) (DUP)
What additional training will these new officers be given to deal with the scourge of the availability of drugs in our prisons throughout the United Kingdom?
Mr Gauke
The hon. Gentleman makes an important point. We are refreshing the way that training works for prison officers. It is very important that we deal with the issue of drugs, which has been a real game-changer in its effect on prisons. As we change and refresh our training process, we need to ensure that new prison officers have the skills they need to deal with drugs.
Robert Neill (Bromley and Chislehurst) (Con)
The net increase in the number of prison officers is very welcome, and I particularly welcome the Secretary of State’s reference to a key workers scheme, but does he agree that the mix of the workforce is important? Successful key worker and personal officer schemes will depend on having experienced staff, because they are best able to develop relationships with prisoners and deal with violence, the risk of suicide and other issues. Will a strategy now be put in place for the retention of existing staff, perhaps with incentives to encourage good people to remain in the service?
Mr Gauke
My hon. Friend is right; it is important that we not only recruit new staff, but retain existing staff. We are working closely with those prisons that are failing to retain staff. It is worth pointing out that in 2017 the percentage of prison officers in bands 3 to 5 who left the service was 9.7%—higher than we would like it, but not particularly out of line with other employers. Prison officers do a very valuable job, and we need to recognise that, support them and encourage those who have a lot to offer to continue to serve.
Imran Hussain (Bradford East) (Lab)
I am astonished that the Secretary of State can come here and appear somewhat triumphant. Let us be absolutely clear: this Government cut 7,000 prisoner officers, so there are still 4,000 fewer than there were in 2010. When does he expect prison staff numbers to return to 2010 levels?
Mr Gauke
I suspect that you, Mr Speaker, would stop me if we started a debate on the state of the public finances in 2010 and the difficult decisions that had to be taken as a result of the situation we inherited. The reality is that since October 2016 we have been recruiting more prison officers, we are ahead of what we said we would do and we are continuing to recruit prison officers. That is really important to ensure that prisons operate as they should.
Mr Jim Cunningham (Coventry South) (Lab)
The Minister of State, Ministry of Justice (Rory Stewart)
Any death from suicide in prison is a tragedy. We have managed to reduce the number of suicides in prison—it nearly halved between 2016 and 2017—and most of that progress is due to a new protocol that identifies the individual needs of prisoners and their times of maximum vulnerability.
Mr Cunningham
How many additional staff who are trained to deal with medical illness have been brought in?
Rory Stewart
Nearly 15,600 of our staff have received additional training—that is the figure produced by my colleague. The ACCT—assessment, care in custody and teamwork—process, which is the new protocol for suicide reduction, focuses on the evidence for when prisoners are most vulnerable, for example their first night in custody, and how to ensure that we deal with them. But we still need to reduce the number of suicides further.
Stuart C. McDonald (Cumbernauld, Kilsyth and Kirkintilloch East) (SNP)
Ninety-three women have died in prisons in England and Wales since the 2007 Corston report. When the new female offender strategy is published, will it focus on community alternatives to prison, especially for the 70% of women who are sentenced to six months or less?
Rory Stewart
Absolutely. This is a common theme. We have clear evidence that reducing the use of custodial short sentences and instead diverting people into the community can be good for protecting the public, by reducing reoffending, but it is also very good for mental health and for reducing suicide.
Nick Smith (Blaenau Gwent) (Lab)
The Parliamentary Under-Secretary of State for Justice (Dr Phillip Lee)
Supporting victims of crime is a priority for the Government and we have made a commitment to publish a victims strategy by this summer. The strategy will set out our cross-Government approach to make fundamental improvements for victims. It will also consider how compliance with the entitlements in the victims code might be improved and better monitored, and how criminal justice agencies responsible for the delivery of entitlements might be better held to account.
Nick Smith
The Minister has promised us a strategy by the summer, but a victims law was offered in the 2015 Conservative manifesto and included in the following Queen’s Speech and reiterated in the 2017 general election. When will this long-promised law finally see the light of day?
Sir Edward Davey (Kingston and Surbiton) (LD)
With respect to victims of domestic abuse, will the Minister consider women who are not eligible for legal aid to help with their divorce after domestic abuse, including women who currently fail the means test due to their having a share in a valuable family home? Will he meet me to discuss the problems that such women face in paying for basic legal advice?
Gloria De Piero (Ashfield) (Lab)
Mr Speaker,
“Why should victims always have to be fighting their corner? That’s why we need a victims’ law.”
They are not my words, but the words of the Government’s Victims’ Commissioner. Can we be clear: will she and all the other people who are calling for it get a victims law?
John Lamont (Berwickshire, Roxburgh and Selkirk) (Con)
The Parliamentary Under-Secretary of State for Justice (Lucy Frazer)
First, I congratulate my hon. Friend on his impressive marathon run at the weekend.
We have agreed an implementation period that will give businesses and individuals legal certainty. We are now concentrating on ensuring that we negotiate the right future for our country, including a deal to ensure that there is mutual enforcement of recognition of judgments in the justice sector.
John Lamont
I thank the Minister for her response. I am very pleased not to have to bob this week, I can tell you, Mr Speaker.
Scotland is proud to have its own ancient and distinct legal system. Brexit will present the most significant challenge to that since the creation of the Scottish Parliament. It is therefore vital that we get it right. Will the Minister reassure me that, at her Department’s heart, it will ensure that Scots law continues to flourish post Brexit, respecting the distinct nature of Scots law and preventing legal confusion and chaos?
Lucy Frazer
My hon. Friend is right to identify that Scotland has a distinct legal system that should be respected. It is important that we engage fully with the devolved Administrations to ensure that we get the best and the right deal throughout the United Kingdom. The Secretary of State will be speaking this afternoon to the Scottish Justice Minister and my officials speak regularly with their counterparts in Scotland to ensure that we will get the best deal for the UK.
Laura Smith (Crewe and Nantwich) (Lab)
Given the uncertainty surrounding Brexit, it is important that the Government do not add to the worries of businesses, especially those that would otherwise be in a position to invest and grow. Will the Secretary of State end the uncertainty in the credit market and release the response to part 2 of the soft tissue injury claims process consultation immediately?
Lucy Frazer
The hon. Lady raises an interesting issue that I am happy to look into. More generally, legal certainty is incredibly important, which is why it is so good that we have agreed the implementation period, which gives us a period of certainty.
Mr Gregory Campbell (East Londonderry) (DUP)
Has the Minister made any assessment in the Department of the beneficial changes that can follow from our legislative framework here in the UK, once we are finally unencumbered by the EU?
Lucy Frazer
The hon. Gentleman is right that, after we have left the EU, we will be able to determine our laws, which will benefit our country in the way that we decide.
Joanna Cherry (Edinburgh South West) (SNP)
At the moment, there are two British judges on the European Court of Justice: one from the English legal tradition and one from the Scottish legal tradition. During the transition period, the domestic legal systems of the United Kingdom will continue to be subject to the full force of the jurisdiction of the European Court of Justice, whether in relation to litigation between private individuals or enforcement against the United Kingdom. Why, then, have the UK Government agreed to article 6 of the draft withdrawal agreement?
Lucy Frazer
The judges at the ECJ make a very valuable contribution to our jurisprudence and to the rights of individual citizens. It is worth pointing out that once someone is appointed as a judge of the ECJ, they are not a representative of their country; they are an individual determining cases that come before them, without any partisanship towards their country. Indeed, if we had a British case before the Court, there would be no saying whether it would come before an English judge or any other judge.
Joanna Cherry
One of the things that means the European Court of Justice is not a foreign court is the presence of British judges on it, but article 6 of the draft withdrawal agreement, which appears to have been agreed, provides that there will be no British judges on the Court of Justice during the transition period. Effectively, they are getting the sack at the end of next March, despite the Court’s continued jurisdiction over the United Kingdom. Does the Minister accept that, as a rule of law issue, it is concerning that there will be no Scottish judge and no English judge on the Court of Justice during the transition period, despite the fact that these countries will continue to be subject to the Court of Justice? Will she persuade the Prime Minister and the Secretary of State for Exiting the European Union to revisit this issue in the negotiations to come, so that there will be British judges on the Court of Justice during the transition period?
Lucy Frazer
As I mentioned, once the judges are appointed, they act independently of their country, so if we respect the judgments and the integrity of the other judges who are there already, we should be satisfied that we will get justice.
Stephen McPartland (Stevenage) (Con)
The Parliamentary Under-Secretary of State for Justice (Lucy Frazer)
My hon. Friend, along with my right hon. and learned Friend the Member for North East Hertfordshire (Sir Oliver Heald) and the right hon. Member for Delyn (David Hanson), are campaigning strongly and tirelessly on this issue; I was very pleased to meet them on 17 April. I am not aware of any specific conversations that the Secretary of State has had with his Cabinet colleagues, but the Government are sympathetic to the intention behind the Bill, although we believe that the offence is already caught by other legislation.
Stephen McPartland
Police dog Finn from my constituency was stabbed in his stomach with a 10-inch blade. When the offender tried to stab his handler, police dog Finn jumped up and took another stab wound to his head to save the handler. If the handler had not been given a little scratch to his hand, the offender could not have been sent to prison, because the current legislation does not work. The Service Animals (Offences) Bill, which is promoted by my right hon. and learned Friend the Member for North East Hertfordshire (Sir Oliver Heald), has its Second Reading this Friday. I am grateful to the Minister for the meeting that she had with me, but will she support the Bill on Friday because it can make progress only with Government support?
Lucy Frazer
I am aware of the case and I was very pleased to discuss it. Police dog Finn did a remarkable thing, and I know that he has been recognised for his work. The Government are looking at the issue.
David Hanson (Delyn) (Lab)
But will the Minister support the Bill on Friday?
Lucy Frazer
As the right hon. Gentleman knows, the Bill is in the hands of the Department for Environment, Food and Rural Affairs, and it will respond.
Sir Oliver Heald (North East Hertfordshire) (Con)
May I update my hon. and learned Friend? Some 34 out of the 41 police commissioners in this country support the Service Animals (Offences) Bill, and lawyers up and down the country, including Sarah Dixon, who runs the Finn’s law campaign, have identified a gap in the law. Is it not time that the Government backed my Bill?
Lucy Frazer
I am grateful for a third opportunity to address this issue and to speak again—this is the third time that I have heard my right hon. and learned Friend express his support for the Bill in the Chamber. As I have said, the Government are looking at this issue, and the matter is primarily for DEFRA.
Mr Speaker
In so far as the right hon. and learned Member for North East Hertfordshire (Sir Oliver Heald) seeks my advice, and he might not do so, my advice to him, to put it bluntly, is to follow Churchill’s adage: KBO—keep buggering on at all times. Just keep going, man!
Andrea Jenkyns (Morley and Outwood) (Con)
I congratulate hon. Members on their work in this area. As an animal rights campaigner, I think it is simply wrong that criminal damage is the highest charge that can be brought to punish someone who attacks a service animal. What are the Government doing to change the legal oversight, to protect our brave service animals, and to ensure that those who attack and injure service animals are subject to the full weight of the law?
Lucy Frazer
My hon. Friend raises a technical point about the offences that are available. In fact, there are two: criminal damage; and an offence under animal welfare legislation. Both attract a penalty of up to six months and, as she may be aware, DEFRA has identified that it is looking to increase the sentence to five years.
Mr William Wragg (Hazel Grove) (Con)
The Minister of State, Ministry of Justice (Rory Stewart)
To address education in prison, Dame Sally Coates’s report makes three key recommendations: first, to carry out an individual survey of a prisoner’s educational needs when they enter prison; secondly, to make sure that governors have more control over education provision to reflect the needs of the prison or local area; and, thirdly, to make sure that English and maths are a core part of that curriculum.
Mr Wragg
A 2017 report said that the quality of education in English and Welsh prisons was generally good, but it found that poor attendance and punctuality of prisoners often went unchallenged and that the process of moving prisoners to learning, skills and work activities from the wings was often ineffective and poorly managed. What is being done to address those problems?
Rory Stewart
It is absolutely right that there is no point having good educational provision if prisoners are not getting to the classrooms. Fundamentally we need to do two things: first, make sure that prisoners are moved reliably and predictably from their cells into the classrooms; and, secondly, make sure that the educational provision in the classrooms is sufficiently attractive for the prisoners to engage.
Mr Barry Sheerman (Huddersfield) (Lab/Co-op)
I apologise for being late, Mr Speaker, but I was at the unveiling of the first statue of a woman in Parliament Square.
May we have an evaluation of how far we have got? Some years ago, when I was Chair of the Education Committee, we looked at skills training in prisons, but I do not think that much has happened since then, particularly for people on the special educational needs spectrum, and especially those with autism.
Rory Stewart
There has been a significant improvement in the Ofsted reports, but the hon. Gentleman is absolutely right that people with special educational needs, in particular, and the more than 50% of prisoners who have previously been excluded from school or have literacy challenges remain a big issue for education in prisons.
Andrew Bridgen (North West Leicestershire) (Con)
Does the Minister agree that one of the keys to reducing reoffending rates is ensuring that skilled probation officers have manageable case loads so that they can give enough time and energy to each individual in their care?
Rory Stewart
Absolutely. It is particularly important that there can be flexibility so that there can be a higher ratio of probation officers to high-risk cases than for low-risk cases.
Helen Goodman (Bishop Auckland) (Lab)
It is right, of course, that prisoners must turn up, but when I visited Deerbolt prison in my constituency, the governor said that the contractor, Novus, was extremely unreliable. What is the Minister doing to respond to the report by ensuring that as contracts are rolled over, control of them is decentralised to the prison?
Rory Stewart
This is a central issue about which governors get very frustrated. Over the next 12 months, the hon. Lady will discover that we are putting governors in charge of that provision so that they can put pressure on the provider within the prison and ensure that it meets their needs.
Christine Jardine (Edinburgh West) (LD)
The Parliamentary Under-Secretary of State for Justice (Dr Phillip Lee)
We are committed to improving the provision of and access to mental health services for those in the justice system. We continue to roll out the keyworker role across the closed male estate so that all prisoners will have a named officer to provide them with dedicated support during their sentence. As the Minister of State, Ministry of Justice, my hon. Friend the Member for Penrith and The Border (Rory Stewart), said earlier, 14,600 prison staff have now completed at least one module of this training.
Christine Jardine
Figures show that, in March 2017, 75% of prisoners in England and Wales with serious mental health problems experienced significant delays in their transfer to hospital for treatment. Last month, an independent review of mental health assessment reported delays to transfer, with one of the reasons being the delay by the Ministry of Justice in sanctioning transfers. Given the pressure on those suffering poor mental health, surely this is important enough to require swifter action. What steps is the Minister taking to address the problem?
Dr Lee
I became responsible last September for the unit in the Ministry of Justice that authorises the transfer of patients from the criminal justice system into secure accommodation. We have had some internal difficulties, which I inherited, with the staffing of the unit, but things are improving. I get a weekly update on the number of people in the system who need to be transferred. I am under no illusions about the need to expedite those transfers, and I am in weekly contact with the Department of Health and Social Care about the need to assess the capacity at low, medium and high-security levels in the secure accommodation network.
Vicky Foxcroft (Lewisham, Deptford) (Lab)
Ruth Cadbury (Brentford and Isleworth) (Lab)
The Minister of State, Ministry of Justice (Rory Stewart)
While the frequency of reoffending—in other words, the number of offences committed by prolific offenders—has risen since 2009, the base rate, or the number of people reoffending, has dropped by two percentage points since the introduction of community rehabilitation contracts.
Vicky Foxcroft
In 2015, the Government commissioned two important reviews: the Dame Sally Coates review of education in prisons, which was mentioned earlier; and the Charlie Taylor review of the youth justice system. Both reviews highlighted basic failures in the current system and made important recommendations. Will the Minister tell me how many of those recommendations have been implemented?
Rory Stewart
My focus has been on the Dame Sally Coates review; youth justice is dealt with by the Under-Secretary of State for Justice, my hon. Friend the Member for Bracknell (Dr Lee). The Dame Sally Coates review is driving the entire education transformation over the next 12 months, particularly in respect of the three indicators that I mentioned earlier, including the assessment of prisoners and coming up with a plan. I shall have to reply in writing to the hon. Lady’s question about exactly how many recommendations have been implemented.
Ruth Cadbury
The joint report of the inspectorates of probation and of prisons stated that if the key functions of community rehabilitation companies
“were removed tomorrow…the impact…would be negligible.”
So what exactly are we paying for?
Rory Stewart
I must respectfully disagree with that. As I have said, the base rate of reoffending has dropped by two percentage points, which is actually quite significant, as the rate was flat for nearly 40 years before that. It would be very dangerous indeed to remove the community rehabilitation companies, which are looking after 40,000 people who were previously under very short periods of supervision, and nearly 100,000 extra people who would be dangerous to the community if not properly monitored.
Gill Furniss (Sheffield, Brightside and Hillsborough) (Lab)
Diana Johnson (Kingston upon Hull North) (Lab)
The Lord Chancellor and Secretary of State for Justice (Mr David Gauke)
I share the outrage at the distress that this intrusive behaviour can cause to victims, and I am determined to ensure that they can be confident that their complaints will be taken seriously. I am sympathetic to calls for a change in the law, and my officials are reviewing the current law to make sure that it is fit for purpose. As part of that work, we are considering the private Member’s Bill that is being promoted by the hon. Member for Bath (Wera Hobhouse).
Gill Furniss
It is appropriate on this day to refer yet again to the statue of Millicent Fawcett, and I shall channel my inner Millicent Fawcett by asking the Secretary of State this question. Nearly 100,000 members of the public have signed a petition calling for upskirting to be made a specific sexual offence, and MPs from all the major parties have signed an early-day motion that makes the same call, so why is the Secretary of State still refusing to act? We really need to ensure that our law reflects that of Scotland, where provisions on upskirting have been incorporated in the Sexual Offences (Scotland) Act 2009.
Mr Gauke
Let me also acknowledge the unveiling of the Millicent Fawcett statue.
As I have said, I am sympathetic to the idea of our taking action in this regard. There are instances in which people have been successfully prosecuted for upskirting in the context of outraging public decency, and voyeurism can also apply under the Sexual Offences Act 2003. However, those offences do not necessarily cover every instance of upskirting, which is why there is a strong case for looking at the law and considering whether we need to change it.
Diana Johnson
I, too, am using my inner Millicent Fawcett courage to raise this issue. In Scotland, the offences of upskirting and downblousing are covered by the 2009 Act. Surely the Secretary of State accepts that the same could be done in this country.
Mr Gauke
We are looking very closely at the Scottish legislation and experience. It is true that a very small number of prosecutions have been brought under that legislation. I want to reassure people that successful prosecutions have been brought in England under the existing law, but I think that there is a case for making sure that we have legislation that deals with this offence specifically.
David Linden (Glasgow East) (SNP)
I think that we all receive correspondence about this regularly. As other Members have done, may I encourage the Secretary of State to look at what has been done in Scotland, where we have shown leadership? The House is clear about the need for action—the will is there, so we must act.
Scott Mann (North Cornwall) (Con)
The Minister of State, Ministry of Justice (Rory Stewart)
In Devon and Cornwall, as in my own constituency in Cumbria, the number of offenders is fortunately quite small in absolute terms, which means that provision is at Exeter and Dartmoor.
Scott Mann
The Minister will know that Dartmoor Prison is earmarked for closure, after notice was served on its lease back in 2013. The prison is an asset to the south-west and employs a number of my constituents. My hon. and learned Friend the Member for Torridge and West Devon (Mr Cox) is also keen and eager for the prison to remain open. Will the Minister review the decision and look at what more can be done to keep that facility open?
Rory Stewart
The decision to close the prison was based on the fact that it was built in 1805 and there are significant maintenance issues, with a great deal of damp and leaking. However, we pay tribute to the governor and the prison officers for running a very good prison regime that is popular with the prisoners, which is one thing that we will have to balance when making the final decision on the prison.
Gareth Snell (Stoke-on-Trent Central) (Lab/Co-op)
The Parliamentary Under-Secretary of State for Justice (Lucy Frazer)
I regularly meet HMCTS to discuss the court estate. It regularly reviews the estate and has monitoring systems in place to ensure that there is appropriate physical access for disabled people and, when appropriate, to identify gaps and make improvements.
Gareth Snell
If there is monitoring, the Minister will be aware that the North Staffordshire combined justice centre, which is where my constituents from Stoke-on-Trent are sent for personal independence payment appeals, has small steps and insufficient parking, and on one occasion a gentleman was asked to remove a piece of life-saving equipment so that it could be scanned by security before he entered the building. Is the Minister willing to meet Pam Bryan and John Beech from the Stoke-on-Trent and Newcastle disability network so that we can look at how the site can be made fit for purpose?
Lucy Frazer
The hon. Gentleman is right: I am aware of that. The charity he mentions—the Stoke-on-Trent Area Network for Disability—made a complaint, and HMCTS had a meeting on 5 April to discuss the issue. It is looking at the feasibility of implementing the suggestions that were made, such as putting in place automatic doors, signage and improvements to the waiting area, but I would be very happy to meet the hon. Gentleman and his constituents to discuss them.
Daniel Zeichner (Cambridge) (Lab)
Access to courts for people with disabilities will not be improved by closing courts. It turns out from the response to a written question I recently tabled that this year no Minister has visited any of the courts that are due for closure. May I implore the Minister to come to Cambridge and talk to people with disabilities to see the impact that the Government’s plans will have?
Lucy Frazer
I am always happy to meet people who use the courts service around the country. We are improving access in a number of ways, including by ensuring not only that we have court buildings, but that disabled people can take advantage of the ability to give evidence by video link so that they do not have to go to a court at all.
Tim Loughton (East Worthing and Shoreham) (Con)
The Parliamentary Under-Secretary of State for Justice (Lucy Frazer)
I was pleased to meet my hon. Friend in March to discuss issues related to the family justice system, which he cares deeply about. It is important that every child has a stable home, and we need to look across the justice system to ensure that it delivers the right outcomes for vulnerable children and their families.
Tim Loughton
I was grateful for the meeting with the Minister. Does she agree with Baroness Shackleton that fault-based divorce produces uncertainty that creates an industry for lawyers and a jungle for the layman? Is it not high time for an overhaul of the whole family law system to address that and many other issues to do with couples’ rights before, after and without marriage?
Lucy Frazer
My hon. Friend makes a powerful point about no-fault divorces, as he has previously. When there is conflict within a family, it is important to reduce that conflict in the interests of not only the parents but the children. I can confirm that we are looking actively at the issue.
Yasmin Qureshi (Bolton South East) (Lab)
Our family courts are in crisis. The Ministry of Justice’s own figures show that since the removal of legal aid from the family courts, two thirds of litigants represent themselves and have no access to lawyers. They have to deal with the incredibly complex issues that arise in the family courts. Will the Minister confirm whether, as part of the review of the family justice system, the Lord Chancellor will re-establish early legal aid in such cases, which we have promised?
Lucy Frazer
The hon. Lady makes an important point. Family justice is important, because issues for children start by having a stable home and a strong family. She will know that, as part of the LASPO reviews, we will be looking at the issues she raises. I should also say that we have an online pilot at the moment relating to divorce, and it has been incredibly successful. It used to be the case that 40% of paper applications for a divorce were sent back owing to incorrect filings. That number is now down to 0.8%.
Robert Halfon (Harlow) (Con)
The Parliamentary Under-Secretary of State for Justice (Dr Phillip Lee)
Since 2010, the Government have made tackling domestic abuse an absolute priority. Last month, the Prime Minister launched the violence against women and girls strategy at No. 10, and following on from that I attended the first roadshow event, at Edgbaston cricket ground in Birmingham, to meet victims of domestic abuse and campaigners.[Official Report, 11 May 2018, Vol. 640, c. 12MC.]
Robert Halfon
Safer Places is a remarkable and extraordinary domestic violence charity in my constituency. It has highlighted the problem of the delay between domestic violence incidents being reported and finally getting to court. What are the Government doing to reduce the time between the incidents being reported and getting to court, so that the perpetrators of this evil abuse can be brought to trial more quickly?
Dr Lee
The police response to domestic abuse has improved in recent years, and action has been taken to address the inspector of constabulary’s recommendation that domestic abuse should be a force-wide priority. The police are referring over 19,000 more cases to the Crown Prosecution Service than they were in 2010. In the courts, the listing of cases is a judicial function, and they have a responsibility to ensure that all cases are heard by an appropriate judge with the minimum of delay.
Richard Burden (Birmingham, Northfield) (Lab)
The Parliamentary Under-Secretary of State for Justice (Lucy Frazer)
We have had a number of representations about this issue, many from the hon. Gentleman himself. I took part in the Westminster Hall debate on the subject, and I was pleased to have the opportunity to hear from him and many other Members. The Secretary of State also met the family of a victim recently. I understand that the recent decisions of the Legal Aid Agency are frustrating for the families, but the hon. Gentleman knows that I am unable to intervene in individual cases.
Richard Burden
As public funding has been made available to the coroner to appeal the judgment of the High Court on the naming of suspects in relation to the Birmingham pub bombings inquests, should not parity of representation be made available to the families of the victims of those bombings, to defend that same High Court judgment? If legal aid is not available to the families, why does the Minister not make funding directly available, following the example of the Hillsborough inquests?
Lucy Frazer
The hon. Gentleman makes a powerful point. This is a tragedy for all those concerned. He knows that the families have legal aid in relation to the inquest. Legislation on legal aid for judicial review and for inquests is different.
Stephen Kinnock (Aberavon) (Lab)
The Minister of State, Ministry of Justice (Rory Stewart)
I should like to pay tribute to the hon. Gentleman for his amazingly assiduous campaign. He asked exactly the same question, with exactly the same words, at the last Justice questions, since when I have met him another half dozen times. We have had a good meeting with his constituents, and I am now aware of their individual and general concerns. However, we need prison places in Wales.
Mr Speaker
The hon. Member for Aberavon (Stephen Kinnock) is further evidence of the KBO principle. The Minister said what he said non-pejoratively, but I simply make the innocent and prosaic, but valid, point that repetition is not a novel phenomenon in the House of Commons.
Stephen Kinnock
Repetition can be a form of flattery, Mr Speaker. I should like to thank the Minister for meeting me and the representatives of the NPT Prison Group for a constructive discussion, and for agreeing to put plans for the Baglan prison on hold. I am sure he will also have noted the decision of the Welsh Government to put all plans on hold pending a strategic review. Can he assure me that all plans for the Baglan prison are well and truly on hold, and that the UK Government will engage in a constructive and positive manner with the Welsh Government in the strategic review?
Rory Stewart
I hope the hon. Gentleman feels that we are engaged in a constructive and positive manner and that we have very much taken on board the concerns around that site, but it is important to bear in mind that more than 1,500 prisoners with Welsh addresses are currently being held in English prisons. We need to think about how to provide accommodation for them in Wales, because that is important for reducing reoffending, resettling them in their communities and keeping the links with their families.
Tonia Antoniazzi (Gower) (Lab)
Given the overwhelming evidence that smaller local prisons, where family links and the Welsh language can be maintained, are far more effective at reducing reoffending, why is the Secretary of State still proposing super prisons in south Wales when they are known not to work?
Rory Stewart
There are of course reasons why larger modern prisons are favoured, and that is partly about how we can manage things at scale. However, if there are communities in Wales that would like to come forward with proposals for smaller local prisons, I would absolutely agree that there is a strong argument for keeping prisoners closer to their homes.
Giles Watling (Clacton) (Con)
The Lord Chancellor and Secretary of State for Justice (Mr David Gauke)
We have invested in improving security through the use of body searches and metal-detecting technology in every prison. We are also trialling new X-ray body scanners to reveal more hidden items. We have invested £3 million to establish national and regional intelligence units in Her Majesty’s Prison and Probation Service which, with prisons, probation and law enforcement partners, are building intelligence about the highest-risk offenders.
Giles Watling
I thank the Secretary of State for his answer. My local newspaper, Clacton Gazette, recently ran a story about the use of drones to deliver drugs into prisons. Short of shooting the damn things down, what is the Department going to do about that?
Mr Gauke
I thank my hon. Friend for his question and his suggestion. We are taking decisive steps to tackle drones bringing contraband into prisons. Under Operation Trenton, Prison Service and police investigators intercept drones and track down the criminals behind them. There have been at least 32 convictions to date, with those sentenced serving in total more than 100 years in prison.
Rebecca Pow (Taunton Deane) (Con)
The Lord Chancellor and Secretary of State for Justice (Mr David Gauke)
I am delighted to announce that we have met and exceeded our October 2016 target of recruiting an additional 2,500 prison officers, with 3,111[Official Report, 1 May 2018, Vol. 640, c. 2MC.] full-time equivalent staff joining the prison workforce seven months ahead of schedule, 90% of whom will be on the landings by the summer. Prison officers are some of our finest public servants, and I am happy to see individuals seeking out a career in our Prison Service. Along with the rest of the workforce, those bright new recruits will ensure that prisons are safe and decent, tackle the unacceptable levels of drugs in prisons and cut the rate of reoffending.
Rebecca Pow
Will the Secretary of State outline what steps are being taken to secure employment opportunities for prisoners?
Mr Gauke
My hon. Friend is right to raise that. One of the best ways in which we can reduce reoffending is by increasing employment, which is why we have the New Futures Network coming in. I am keen to focus on ensuring that we provide employment opportunities to prisoners as much as possible.
Richard Burgon (Leeds East) (Lab)
The Windrush scandal is one of the cruellest examples of unaccountable state power targeting the vulnerable, defenceless and innocent that I can remember. Senior figures describe our immigration law as complex and unintelligible to everyone but working specialists, so I was disappointed to hear the Home Secretary say yesterday that people affected by the Windrush scandal will have “no need for lawyers”. I am sure that the Justice Secretary will understand why those words will not do, so will he guarantee today that all those who have been put into this kind of situation will have access to the necessary legal advice to help them when they need it most?
Mr Gauke
The Home Secretary set out a comprehensive plan yesterday for how we will make the process much easier for those who have been affected. For example, those who have retired to another country will be able to obtain British citizenship much more easily to allow them to come here without great difficulties involving visas and so on. The Home Secretary also set out how we are going to put in place arrangements to ensure that there is compensation for those who deserve it.
Richard Burgon
The Government’s reckless approach to our justice system means that criminal barristers have now been forced into co-ordinated action and are refusing to take up legal aid work due to changes to the advocates’ graduated fee scheme. Against all convention, the Government have denied parliamentary time to debate that properly. The Criminal Bar Association made a formal request that the Ministry of Justice delay, withdraw, amend or reconsider the implementation of the statutory instrument. If the Government will not listen to the views of parliamentarians, will they at least listen to barristers, put the new scheme on hold and set about fixing it?
Mr Gauke
On parliamentary time, my understanding is that we are waiting for information from the Labour party. On the substance of the issue, let us remember that reforms to the AGFS were worked out with the Bar Council and the Criminal Bar Association. The reforms are necessary to ensure that legal aid funds are distributed in an appropriate way, and that is why the reforms are being made.
Stephen McPartland (Stevenage) (Con)
Alex Norris (Nottingham North) (Lab/Co-op)
The Minister of State, Ministry of Justice (Rory Stewart)
As the hon. Gentleman will be aware, there has been an urgent notification process. We have put a plan in place. I have now visited HMP Nottingham, and I pay tribute to Tom Wheatley, the governor, for the work he is doing. He has a much better care process in place, and he has highly trained staff. We expect to see improvements soon at HMP Nottingham.
Peter Aldous (Waveney) (Con)
The Parliamentary Under-Secretary of State for Justice (Lucy Frazer)
My hon. Friend makes an important point about the important role that magistrates play within our legal justice system. The Secretary of State told the House of Lords Constitution Committee that the judicial age in general is being looked at in the round.
Stephen Kinnock (Aberavon) (Lab)
Rory Stewart
I will be meeting the Welsh Secretary specifically on this issue next week. We are setting up a meeting with the Head of the Welsh Government, who of course will be changing, and I would very much like the hon. Gentleman to join that meeting. I reiterate that, so long as offending rates in Wales remain as they are, although it is laudable that the Welsh Government wish to divert people away from prison, we currently need places for Welsh prisoners.
Charlie Elphicke (Dover) (Ind)
Rory Stewart
Fentanyl is unbelievably dangerous and has contributed to nearly 20,000 deaths a year in the United States. We have underscored through the Crown Prosecution Service guidance for prosecuting people. Fentanyl is a class A drug, but 50 times more powerful than other drugs. People need to understand that even a tiny quantity of this drug is a serious danger to the person producing it, to the person supplying it and, above all, to the public, and must be prosecuted.
Christine Jardine (Edinburgh West) (LD)
Lucy Frazer
I am aware of the recent document produced by the Law Society. Of course, it is important that we have professionals at every level, that we have a diverse profession and that we encourage young people to join what is an excellent profession.
Alex Chalk (Cheltenham) (Con)
Lucy Frazer
My hon. Friend is right to say that in putting together this scheme discussions went on for two years with members of the Bar and the MOJ. They were calling for us to implement this scheme, so that is the scheme we have implemented. We are always willing to talk to members of the CBA and the Bar Council. Since I have been appointed, in the past three months, I have met the chairman of the Bar Council twice and the chair of the CBA twice.
Ian Paisley (North Antrim) (DUP)
Northern Ireland has just undergone the longest rape trial in its history, resulting in the acquittal of four men. The Department is carrying out a major review of that trial because of subsequent problems flowing from it. Will the Government—the Department—make a submission to that review, particularly looking at whether the accused should not be named until after a verdict is published?
Mr Gauke
I thank the hon. Gentleman for his question. This is a long-standing and very sensitive issue, one my predecessors have looked at closely. We continue to look at it; there are arguments on both sides, and we need to examine the cases carefully before we rush to any judgment on this.
Mr John Whittingdale (Maldon) (Con)
Lucy Frazer
I know my right hon. Friend cares deeply about this important matter and he has raised it with me several times. Transparency is very important, and we are looking at the pilot. I am happy to update him, and I am looking forward to our meeting tomorrow with the Society of Editors.
Rachael Maskell (York Central) (Lab/Co-op)
When a person spends time in custody and the CPS then drops the case against them, as opposed to losing a case in court, they are not entitled to compensation, even when they have lost their home and everything. Does the Minister agree that that is a huge injustice? Will she say what she is doing about it?
Lucy Frazer
The hon. Lady raises an interesting issue and I would very much like to discuss it with her.
Zac Goldsmith (Richmond Park) (Con)
Nick Hardwick, the former head of the Parole Board, made the case yesterday that it should be required to publish comprehensive explanations for the decisions it takes and that it should make public the names of the people who are making those decisions. May I urge my right hon. Friend to follow that advice as he undertakes his own review?
Mr Gauke
My hon. Friend is right to point out that I am undertaking my own review of that. The first step is to address the decision of the High Court on the existence of rule 25, which prohibits, in essence, any information being provided on Parole Board decisions. We will do that, but we also need to look more widely at how the Parole Board rules work—that includes the issues of transparency and of how the Parole Board can reconsider cases in particular circumstances.
Alex Cunningham (Stockton North) (Lab)
The troubled Holme House prison in my constituency has had another damning report, this time from the Independent Monitoring Board, which talks of a shortage of staff, a lack of appropriate care for prisoners, a sustained drugs problem, and more violence against staff and between prisoners. Things do not seem to be getting any better. Will the Minister please take an interest in Holme House and ensure it gets the support it needs?
Rory Stewart
Absolutely. The central problem in Holme House is, of course, not the age of the building—it is relatively modern—but the drugs. So the first steps we are taking are to get more scanners, sniffer dogs and staff in place. It remains a very serious problem; the connection between the drugs, the violence and the suicide in Holme House is making it a particular area of focus for this Department.
Andrew Jones (Harrogate and Knaresborough) (Con)
What steps are the Government taking to improve the court experience for victims and for witnesses, because it can be a highly stressful and intimidating environment?
Lucy Frazer
The MOJ is taking a number of steps to improve the position for victims and witnesses: we have introduced the ability to give evidence through video link, so people can give their evidence even before the hearing, which takes the stress out of it; and physically disabled people can give evidence by video link in another location. So we are trying to improve the Courts Service experience for everybody.
Dan Carden (Liverpool, Walton) (Lab)
Most people know my constituency of Liverpool, Walton as the home of two premier league football clubs, but I think the Minister knows it better for the two prisons: HMP Liverpool, which was built in 1855, and Altcourse, which was built in 1997. Will he update the House on progress in the redevelopment of HMP Liverpool, and does he think that these Victorian prisons can ever be fit for purpose?
Rory Stewart
Unfortunately, as the hon. Member for Stockton North (Alex Cunningham) implied in his question, the age of a prison is not always the determining factor. We have significant challenges in relatively modern prisons. It is true in Liverpool that Altcourse has been performing better, and it is the newer prison. In Liverpool, we have provided a new multimillion pound fund for the repair of the windows across the estate, and we are looking at improving the conditions right across the estate. Stafford and Dartmoor show that it is possible to run good prisons in older, Victorian buildings.
Michael Tomlinson (Mid Dorset and North Poole) (Con)
I am grateful to the prisons Minister for meeting me recently to discuss the Farmer review, and I welcome his commitment to it. Will he update the House on the implementation of the Farmer review?
Rory Stewart
The Farmer review focused on the importance of families in rehabilitation. Prisoners’ links with families are central to reducing reoffending, and we have very strong evidence that when family links are kept, reoffending reduces. That means better family rooms and more family visits. In certain cases, prisons are having a lot of success piloting interactions between prisoners and, for example, the teachers of their children. All that is central, and the Farmer review is something for which we should be hugely grateful.
Judith Cummins (Bradford South) (Lab)
In October last year, the Government announced that they planned to increase the maximum penalty for death by dangerous driving. They also said that they would create a new offence of causing serious injury by careless driving. Six months on, we have still not seen any action. Will the Minister tell the House just when these vital changes will be implemented?
Robert Neill (Bromley and Chislehurst) (Con)
A year ago, virtually to the day, the legislative provisions of the Prisons and Courts Bill, which are necessary to implement Lord Briggs’s review of civil court structure, were lost in the Dissolution of Parliament. These important reforms are pressing and needed. Can the Secretary of State update us on when the Government intend to reintroduce legislation to enable the reforms to be progressed?
Alison McGovern (Wirral South) (Lab)
Next week will be the six-month anniversary of the publication of the report by Bishop James Jones into the experience of the Hillsborough families. The report contains many recommendations that relate to the work of the Ministry of Justice. Will the Secretary of State explain when we will see action from the Government on those recommendations?
Lucy Frazer
The position in relation to inquests and legal aid funding, as the hon. Lady may or may not know, is running alongside our legal aid review. I hope to be able to assure her that those matters are being looked at.
Kevin Hollinrake (Thirsk and Malton) (Con)
One of my constituents is fighting for justice, having suffered horrific physical and sexual abuse at Medomsley youth detention centre in the 1970s. Will my hon. Friend please update the House on the likely timescales for compensation and further convictions?
The Parliamentary Under-Secretary of State for Justice (Dr Phillip Lee)
I thank my hon. Friend for the question. The case that he refers to is a tragedy, and I am aware of it. We are in the middle of the independent inquiry into child sex abuse, and the interim report is out this week. Officials from my Department are fully engaged with that, and we are conscious that in some institutions that the Department is responsible for allegations have been made that child abuse has taken place in the past. Once we have a handle on that totally, we can start talking about the possibility of compensation.
Chris Law (Dundee West) (SNP)
A failure to agree on arrangements in international family law risks leaving a serious gap in the legal framework for proceedings involving children with family connections to the UK. Can the Secretary of State confirm what contingency planning is being undertaken to deal with that risk?
Lucy Frazer
It is really important that as we leave the EU we try to get arrangements similar to those that we have in relation to our cross-border workings through our court system. Family law is one of the important matters that we need to look at. I was very encouraged to see in the EU’s recent guidance that reciprocal arrangements in relation to family are one area that they are particularly interested in.
Yemen
(6 years, 2 months ago)
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Stephen Twigg (Liverpool, West Derby) (Lab/Co-op)
(Urgent Question): To ask the Minister of State for International Development to update the House on the humanitarian situation in Yemen.
The Minister of State, Department for International Development (Harriett Baldwin)
The UK is deeply concerned about the humanitarian crisis in Yemen, which is the largest humanitarian crisis in the world. More than 22 million people—over three quarters of the population—are in need of humanitarian assistance. The UN estimates that 17.8 million people in Yemen do not have reliable access to food and that 8.4 million face extreme food shortages. Last year, the country suffered the worst cholera outbreak ever recorded in any country in a single year.
At the Yemen pledging conference in Geneva earlier this month, the Minister of State for the Middle East announced £170 million of support to Yemen this year from the UK. That funding will meet the food needs of 2.5 million Yemenis. Last year, the UK was the second largest donor to the UN’s humanitarian appeal for Yemen. Our funding provided more than 5.8 million people with at least a month’s supply of food, nutrition support for 1.7 million and clean water and sanitation for approximately 1.2 million people, but money alone will not be enough. We must see sustained progress on the response to this year’s cholera outbreak; we must see payment of public salaries to millions of civil servants and their dependants; and we must see unhindered humanitarian access into Yemen. The UK has led the way here, too, lobbying and advising all parties to take the life-saving steps to prevent further deterioration of the crisis.
We are aware of reports over the weekend of significant civilian casualties resulting from coalition airstrikes. We take those reports extremely seriously. The Saudi-led coalition has confirmed that it will carry out an investigation. It is essential that that happens without delay, that the results are published and that the lessons learned are acted upon. Our hearts go out to the families of those killed. We call on all parties to comply with international humanitarian law. A political settlement is the only way to bring long-term stability to Yemen and to address the worsening humanitarian crisis. The Yemeni parties must engage constructively and in good faith to overcome obstacles and to find a political solution to end the conflict.
Stephen Twigg
I thank the Minister for her response.
Last week, the UN special envoy to Yemen, Martin Griffiths, briefed the Security Council on reports of a sizeable military offensive. He said:
“the prospect of intensive military operations in Al-Hodeidah, long heralded, may soon be forthcoming.”
He went on:
“Our concern is that any of these”—
military—
“developments may, in a stroke, take peace off the table.
There have been a number of missile attacks on Riyadh by the Houthis, many of which have been intercepted, but one last weekend resulted in a Saudi casualty. Saudi Arabia has the right to protect its territory and its people from these attacks. However, Hodeidah is one of the two major entry points for aid into Yemen. Any military offensive would cause an already catastrophic situation to deteriorate further. Will the Minister assure the House today that the UK is doing everything it can to prevent such an offensive by the Saudi-led coalition from taking place? Surely, if an attack on Hodeidah goes ahead, the UK would have to suspend arms sales to the Saudi-led coalition.
The UK has been supporting the coalition by providing targeting training for its air force. By the Ministry of Defence’s own figures, 42 potential violations of international humanitarian law by the Saudi-led coalition were recorded in just three months at the beginning of this year, compared with 66 incidents over the whole of the past year. Will the Minister set out what the value of our training is when the rate of civilian casualties is increasing, not decreasing?
Finally, as the Minister rightly says, what Yemen needs is peace and a political settlement. This conflict will not be solved by further violence. May I implore the Government to bring a resolution to the UN Security Council as a matter of urgency? Eight million people in Yemen are on the brink of starvation. Surely the United Kingdom has a responsibility to lead the international community to put peace on the table.
Harriett Baldwin
I congratulate the hon. Gentleman on securing today’s urgent question and finding time to discuss these important issues on the Floor of the House. He is absolutely right to pay tribute to the work of Martin Griffiths. As the hon. Gentleman will know, the UK holds the pen on this matter at the United Nations, and it is really important that Martin Griffiths has been appointed as a United Nations special envoy. As colleagues will know, he brought the debate to the floor at the United Nations last month. The UK strongly backs his work, and his outline of the process that will lead to a political solution and peace in Yemen. In fact, I am glad to have the opportunity to reiterate a point that he made: we urge all parties to the conflict to exercise restraint and continue to facilitate access for essential imports of food, fuel and medical supplies into the country, including through Hodeidah and Saleef ports. I agree that further military action is not the way forward. The way forward towards peace is around the negotiating table.
The hon. Gentleman made some points about the important role that the UK can play in the peace process, in addition to the role as penholder at the United Nations. Clearly our role is also to be a candid friend to those involved in the Saudi-led coalition; to encourage the process of the investigative joint incident assessment team and the publication of its reports, 55 of which have been published so far; to recognise that the UK is not involved in any way in the targeting chain; and to reiterate the importance of the UK having the most rigorous export controls, which involves the observation of international humanitarian law.
Sir Desmond Swayne (New Forest West) (Con)
Is the Minister absolutely convinced that President Hadi is not an impediment to a political settlement?
Harriett Baldwin
I will not fall into the temptation of commenting on any of the individual players concerned. Clearly, President Hadi needs to be involved in the discussions about the way forward. The United Nations special envoy, after publishing his outline and road map towards peace in Yemen, will need to engage a wide range of counterparties.
Kate Osamor (Edmonton) (Lab/Co-op)
I thank my hon. Friend the Member for Liverpool, West Derby (Stephen Twigg) for asking the urgent question, and the Minister for responding.
The situation in Yemen is as dire as ever, with millions at risk of famine, the worst cholera outbreak in human history and the alarming prospect that Hodeidah port may soon become a conflict zone. The Houthi political leader, Saleh al-Sammad, was reportedly killed in a bombing last week. What impact does the Minister think that this will have, and what steps is she now taking to reopen dialogue on a ceasefire with the new Houthi leadership and Saudi Arabia?
Last week in this Chamber, the Minister for the Middle East admitted that the level of humanitarian access was not as great as he would wish. Fuel and food imports are not enough and port access remains unpredictable for traders and aid agencies. Just yesterday, appalling images emerged of an airstrike hitting a wedding party. Twenty people were tragically killed and 45 more were wounded. The bride was killed and the groom taken to hospital.
Time and again, the Government imply that this suffering will happen with or without the UK. Well, surely now is the time to make it very clear that Britain will not be complicit. Will the Minister tell us whether the UK Government insisted on full, permanent, humanitarian access in Yemen and an end to the bombing of civilian areas before signing the £100 million aid partnership with Saudi Arabia last month? In the light of the weekend’s appalling airstrike on the wedding party, will the Government now finally suspend their arms sales to Saudi Arabia?
Harriett Baldwin
I thank the hon. Lady for her questions, which allow me to reiterate some of the points that I made to the hon. Member for Liverpool, West Derby. Yes, I do think the UK has an important role to play, particularly as the pen-holder at the United Nations. That is why we are strongly backing Martin Griffiths, the new special envoy for the peace process in Yemen. We believe that that is the most constructive route whereby the UK can engage all the participants in this conflict and send a common message to all of them that the way forward is not through bombs or missiles but through peace discussions, and very much in the way that he has outlined in his reports to the United Nations. The UK is proud to support his office and the tools that he needs to help with this.
As the hon. Lady will know, we are very involved with the United Nations’ role in inspecting ships going into Hodeidah port and reassuring participants that they are purely for humanitarian aid. The UK is also playing a role through the United Nations team that is trying to prevent access for the missiles that are being used to shoot from Yemeni territory into Saudi Arabia, risking the lives of civilians within Saudi Arabia as well. I do think that the UK is playing a constructive role in all these matters. That includes the Secretary of State travelling to Riyadh in December to take practical steps in terms of access to the port for humanitarian aid.
Bob Stewart (Beckenham) (Con)
Could the Minister describe the mechanism or system by which our aid gets taken from where it arrives in-country to the people who most need it, presumably by convoy? How do we ensure that this aid actually gets to the people towards whom we have targeted it?
Harriett Baldwin
This is an opportunity to pay tribute to all the humanitarian workers in all the conflict areas of the world who very often take such risks in delivering humanitarian assistance to some of the most conflict-affected parts of the world. My hon. Friend will be aware that in all areas where humanitarian aid is delivered, it can sometimes be caught up with different players in the conflict. Obviously we take every kind of precautionary measure through the United Nations to prevent this from happening, but it is still too often shockingly the case that some of this humanitarian assistance gets taken into situations where it is used as part of the conflict. That is one of the very many dangers that we highlight, and it is why we want to ensure that humanitarian workers around the world have safe access to provide their life-saving aid.
Chris Law (Dundee West) (SNP)
Many of us woke up this morning to see the horrific images of yet another airstrike by the Saudi-led coalition that has targeted innocent people, this time a wedding party in northern Yemen killing at least 20 people, including the bride. Of course, this is not new. Shockingly, of the 17,000 airstrikes since the war started, one third have hit non-military targets. The whole House should quite rightly condemn Saudi Arabia and its coalition for targeting innocent people.
Does the Minister agree that the UK Government’s selling 48 fighter jets to Saudi Arabia only last month, bringing total arms sales to £4.6 billion since the beginning of the war, makes the UK complicit in these atrocities and undermines the Government’s international development spend in Yemen? At the very least, will the UK Government commit today to fully and finally halt all arms sales to Saudi Arabia? Will she set out how the UK Government will influence Saudi Arabia to bring about a meaningful political solution to the war in Yemen?
Harriett Baldwin
Clearly, the UK is saying to all sides in this conflict that the way to secure peace is through political dialogue, including on the side of the Houthis, from Yemen into Saudi Arabia, but also through ensuring that international humanitarian law is respected in this conflict. The hon. Gentleman will be aware that this matter went to the UK High Court in 2017, and the High Court ruled in favour of the UK’s conclusion that Saudi Arabia does have processes in place to secure respectful compliance with international humanitarian law. He will also be aware of United Nations resolution 2216. We say to all the parties in this conflict that the way forward is not through bombing and missiles; it is through the political process that the United Nations special envoy has set out.
Mrs Pauline Latham (Mid Derbyshire) (Con)
My hon. Friend mentioned the largest cholera outbreak since records began, but the aid community is also struggling to cope with the largest diphtheria outbreak since 1989, with over 1,000 cases of this highly infectious disease. Young children are enduring the brunt of this outbreak: 90% of fatalities are under the age of 15. In an environment where more than half of all health facilities are closed or partially functioning, there has been a surge in child mortality driven by communicable diseases and chronic malnutrition. What more can this country and others do to make sure that medicines and nutrition get to the people who need them?
Harriett Baldwin
My hon. Friend raises a very important point. The UK welcomes the approval by the Yemeni authorities in Aden allowing the import of oral cholera vaccines, which should allow 400,000 doses to be administered in southern Yemen. Discussions on vaccinations in the rest of the country are continuing. The partnership with UNICEF in Yemen is allowing UK aid to be spent on vital immunisations against other outbreaks, including diphtheria, as well as helping to train staff on the ground on how to deal with new cases.
Tom Brake (Carshalton and Wallington) (LD)
First, I join calls from the Opposition Benches for arms sales to Saudi Arabia to be suspended, and echo the condolences to those killed in the wedding party.
The Ministry of Defence has previously confirmed that British forces are in the Saudi-led coalition operations room to provide training and advice
“on best practice targeting techniques to help ensure continued compliance with International Humanitarian Law.”
What went wrong? Was this latest strike in compliance with international humanitarian law, and what are its humanitarian consequences?
Harriett Baldwin
Of course, we welcome the fact that the Saudi-led coalition has acknowledged that a full investigation needs to take place to answer the questions that the right hon. Gentleman has asked. We urge that that investigation happen as quickly as possible. It does need to be published so that lessons can be learned.
Bob Blackman (Harrow East) (Con)
My hon. Friend rightly refers to the outbreaks of cholera and other diseases. The United Kingdom can be rightly proud of the aid that we are giving. What plans does she have to ensure that there is a supply of clean water to people who are suffering so that the diseases are not spread and people are not forced to drink dirty water?
Harriett Baldwin
My hon. Friend raises an incredibly important way in which UK aid is used—to provide clean water on the ground. We would reiterate the same access requests that we have made previously, because it is vital that the relevant water purification tablets find their way to people so that they can be reassured that the water they are drinking is not going to make them ill.
Ann Clwyd (Cynon Valley) (Lab)
The Minister keeps talking about political dialogue, but who are we having the political dialogue with? We have debated this many times in the Chamber over the last three years, and things have just got worse in Yemen. Today, 22 million people need humanitarian and protection assistance, including more than 11 million children—that is 4 million more people than was the case six months ago. A child is dying every 10 minutes in Yemen from preventable diseases, and yet the blocking of the ports and airports continues. What exactly is the Minister doing and who is she talking to?
Harriett Baldwin
It is vital that the discussions include all the people who can move this situation from one where we are observing a conflict to one where we have a peace process under way. My understanding is that the United Nations Security Council presidential statement adopted on 15 March was unanimously supported by all involved. It calls on all parties to the conflict to comply with their obligations and for the solution to be fully inclusive.
Henry Smith (Crawley) (Con)
The current situation in Yemen is not just a civil war or a sectarian conflict; it is also in many ways a proxy war between Saudi Arabia and Iran. In addition to diplomatic pressure being brought to bear on Saudi Arabia and the Gulf states, what pressure is being brought to bear on the allies of Tehran and that side of the conflict?
Harriett Baldwin
My hon. Friend is correct to point out that it is thought that the missiles being fired into Saudi Arabia from Yemeni territory are predominantly being supplied by Iran. I reiterate that the UK is trying to work with the United Nations to prevent that and to prevent use of the routes that might be being used to supply those weapons. It is important that all parties call on those supplying the arms to cease.
Anna Turley (Redcar) (Lab/Co-op)
The Minister referred to the fact that Saudi Arabia is going to conduct an inquiry into the tragic events of the weekend, but surely the British Government should now support a fully independent United Nations-led investigation into violations of human rights on both sides in Yemen?
Harriett Baldwin
We welcome the fact that the Saudi-led coalition has committed to an investigation, and it is important for that to be published in the very near future.
Edward Argar (Charnwood) (Con)
The hon. Member for Liverpool, West Derby (Stephen Twigg) was right to highlight that the immediate and most pressing priority is the alleviation of humanitarian suffering in Yemen, and the Department for International Development should be proud of its work in that area. He also highlighted that, alongside Saudi Arabia’s legitimate right to defend itself and support the legitimate Government of Yemen, it must, like all parties to the conflict, show restraint in its actions. Can the Minister reaffirm the UK Government’s strong position that what we need alongside humanitarian aid is a multilateral ceasefire to which all parties to the conflict simultaneously sign up?
Harriett Baldwin
I can confirm that that is why the UK is so strongly backing the United Nations special envoy who has recently been appointed and the work he is doing to outline a plan of action and to engage all participants in that process.
Caroline Lucas (Brighton, Pavilion) (Green)
The Minister acknowledges that Yemen is the largest humanitarian crisis in the world, so why are the UK Government via their arms sales choosing to make that awful situation even worse? How can we have any moral standing on the world stage while we continue to sell arms to the head-chopping, war-mongering Saudi Government? Of course we need to have diplomatic relationships, even with countries we do not agree with, but surely to continue selling arms to a Government who are essentially committing war crimes is beyond the pale, even for our own Government.
Harriett Baldwin
The hon. Lady will know that under United Nations resolution 2216, there is a legitimate reason for Saudi Arabia to be concerned about the fact that missiles are being fired on a regular basis into its territory. But she is right that the way forward is for all parties to engage in the political process, and that there is no military solution to the current conflict in Yemen.
Rebecca Pow (Taunton Deane) (Con)
I commend the commitment that the Government have already given to humanitarian aid in Yemen, but heavy rains will hit Yemen shortly, and the cholera crisis will get worse, together with the other awful diseases that are a consequence of having not enough water and unsafe water. Can the Minister expand on when extra aid will get there and exactly how it will get to the people who need it? Getting into the right places is extremely difficult.
Harriett Baldwin
My hon. Friend is right that this is not just about the money. This month’s pledging conference attracted a wide range of people who were prepared to contribute to funding the humanitarian effort, but it is also essential to ensure that the improvement in access does not slip back. We are concerned to maintain the role we have played both through the United Nations and bilaterally in ensuring that humanitarian access is as good as it can be.
Richard Burden (Birmingham, Northfield) (Lab)
The recent ghastly attack on the wedding party is not the first atrocity on civilians. Markets, schools and hospitals have been hit by coalition airstrikes in a civil war that has already claimed 10,000 civilian lives. As my right hon. Friend the Member for Cynon Valley (Ann Clwyd) said, that has created a humanitarian crisis in which a child is dying from a preventable disease every 10 minutes. Can the Minister answer the question put to her by my hon. Friend the Member for Liverpool, West Derby (Stephen Twigg): is it not time for the UK as penholder to call for a new United Nations Security Council resolution to ensure unimpeded access to Hodeidah and other ports?
Harriett Baldwin
The hon. Gentleman is right to reiterate the important role that the UK can play as penholder, which is why we so strongly support Martin Griffiths’ recent appointment as the UN special envoy on this situation. There was a United Nations Security Council meeting in March on this very subject. He is outlining the way forward in terms of engaging all parties to this conflict in discussions, and that has the wholehearted support of the UK at the United Nations.
Kevin Foster (Torbay) (Con)
I welcome the UK’s support for the UN verification and inspection mechanism, which is helping to speed up the inspection of ships delivering vital supplies to Yemen. However, does the Minister agree that that process needs to be speeded up even more if the people of Yemen are to get the supplies they so desperately need?
Harriett Baldwin
My hon. Friend raises a very important detail. The UK has great expertise in maritime matters, and we have deployed experts to Djibouti to help with that inspection process. In fact, UK support has helped to increase the proportion of ships that have been physically inspected by almost 10 times, from 8% to 77%.
Alison McGovern (Wirral South) (Lab)
May I press the Minister a little further? She gave a long answer a moment ago to my hon. Friend the Member for Birmingham, Northfield (Richard Burden) about a UN Security Council resolution. Exactly when can we expect to see one?
Harriett Baldwin
The UK led the drafting in March of the United Nations Security Council presidential statement, and as I understand it, that statement, which calls on all parties to comply with their obligations under international humanitarian law and to facilitate humanitarian access, and emphasises the need for an inclusive political solution, was widely supported.
Mr Philip Hollobone (Kettering) (Con)
The fundamental cause of the misery in Yemen is the Iranian-backed Houthi insurgency, which has blighted the lives of tens of millions of people. I have not yet made it to Yemen, but I made it to within a kilometre of the border in Saudi Arabia—a visit I declared in the Register—and there I learned that something like 70,000 rockets and over 50 Scud missiles have been fired from Yemen into Saudi Arabia, and 50,000 people have been evacuated. Saudi Arabia has the right to defend itself. We need to get this in perspective, because although at the moment there is no chance of any kind of political dialogue, I would rather that Hodeidah port was in the hands of the coalition, which would increase the chances of aid getting through to these benighted people, than that it remained in the hands of the Houthi insurgents.
Harriett Baldwin
My hon. Friend is right to highlight the perspective of those people who are on the receiving end of missiles fired from within Yemen, and he allows me to reiterate that United Nations resolution 2216 speaks of that. I disagree to some extent with my hon. Friend, in that I do not think that further military conflict is the way forward. We think the way forward is through the political process, backed by the United Nations special envoy.
Luciana Berger (Liverpool, Wavertree) (Lab/Co-op)
Liverpool is home to many of the Yemeni diaspora in the UK, and the plight of family members who are suffering in Yemen is a constant anxiety and pain to many of my constituents. I have listened closely to the Minister. In the light of the presidential statement from the UN Security Council, may I ask her specifically, as that was at least a month ago, whether she believes that a resolution is now urgently needed to permanently open all naval ports and airports to both humanitarian and commercial traffic, and if so, what is the UK going to do as penholder to achieve that?
Harriett Baldwin
The hon. Lady is right to say not only that these discussions are ongoing, but that they must be pursued with enormous urgency. I can assure her that the work that the special envoy is engaged upon has that urgency at its heart, and involves the UK wholeheartedly backing the way in which he is taking forward engagement with all the parties to pave the way for further steps.
Mr Alistair Carmichael (Orkney and Shetland) (LD)
I am sure I was not the only person who was struck by the Minister saying that we would be a candid friend to the Saudi-led coalition. With one third of the 16,847 air- strikes hitting non-military targets, surely we have now come to the time for a bit more candour and a bit less friendliness. Continuing to sell arms to Saudi Arabia is like giving more booze to an alcoholic; it is something that no proper, true or candid friend should be doing.
Harriett Baldwin
The hon. Gentleman is absolutely right to highlight the important role that the UK can play in being able to use the strong relationship that we have to raise these difficult decisions and difficult issues more effectively. For example, most recently, in March, during the visit of the Saudi Crown Prince Mohammed bin Salman, the Prime Minister was able to raise exactly these serious UK concerns about Yemen.
Nick Smith (Blaenau Gwent) (Lab)
Like my hon. Friends, I reiterate that every 10 minutes a child dies from preventable causes in Yemen. Will the Government give priority to the reopening of Sana’a airport, to help alleviate this desperate situation?
Harriett Baldwin
Among the work that the UK is doing, I particularly highlight the work that we have done through Djibouti, in terms of shipping access to Hodeidah, but it is something that we are monitoring very carefully. As the hon. Gentleman is aware, only about two thirds of the humanitarian assistance that Yemen needed got through in March, and so far in April it seems to be an even lower percentage, so it is something that we are paying very close attention to.
Graham P. Jones (Hyndburn) (Lab)
I am grateful to my hon. Friend the Member for Liverpool, West Derby (Stephen Twigg) for asking this urgent question. I think we all agree that what happened in Hajjah was absolutely shocking. It is not a first, and such killings continue in a war that has seen a lot of individuals killed. There needs to be a clear process of accountability; otherwise, the killing will simply continue. I welcome Martin Griffiths as the new special envoy. He has talked about a peace process, but let us not forget that recently Ismail Ahmed, the outgoing UN special envoy, said that the Houthis had walked away from a peace deal. My question to the Minister is how do we get a peace deal when the Houthis walked away from the Kuwait talks and the Geneva talks and Ismail Ahmed said they walked away from the talks at the back end of 2017? How do we get these people around the peace table?
Harriett Baldwin
As I said, negotiations and the special envoy’s work are ongoing, and I thank the hon. Gentleman for his support for his role and the work that he is doing, but no one should underestimate the difficulty of the task that he has been asked to undertake.
Joanna Cherry (Edinburgh South West) (SNP)
One of the terrible consequences of this conflict is that there are millions of internally displaced people in Yemen. The Minister is aware that Christian Aid is campaigning very volubly on that issue. How will the UK Government’s approach to the United Nations compacts on refugees and migrants address the particular needs of internally displaced people in Yemen?
Harriett Baldwin
I cannot give the hon. and learned Lady a specific response. She has drawn my attention to a particular detail, on which I will have to respond in writing.
Gill Furniss (Sheffield, Brightside and Hillsborough) (Lab)
According to Save the Children, there are now over 22 million people—that is two thirds of the population—in Yemen in need of humanitarian aid and protection. That includes more than 11 million children. That is 4 million more people than six months ago. The situation is only getting worse. Does the Minister agree that it is in part a result of the failure of this Government to pursue an end to this with the vigour required? Surely, now is the time to get together, as the penholder, another UN resolution, and to suspend arms sales to Saudi Arabia.
Harriett Baldwin
I draw the hon. Lady’s attention to the points that I have made earlier. It is important that the UK backs the work of the United Nations special envoy.
Wes Streeting (Ilford North) (Lab)
The UK’s ability to uphold the values of a rules-based international system will be undermined unless the UK is shown to call Saudi Arabia to account for its indiscriminate bombing of civilians in Yemen. So I ask the Minister, as so many other colleagues have today, to treat with urgency the need for a new UN Security Council resolution to make sure that all ports in Yemen are open to humanitarian aid to deal with the catastrophic situation already in place on the ground. Finally, if the Government of Saudi Arabia are not prepared to show appropriate restraint when exercising the country’s legitimate right to defend itself, I ask that the UK Government be prepared to––and will––suspend arms sales to Saudi Arabia.
Harriett Baldwin
Of course, in addition to backing the work of the United Nations special envoy, the UK will continue to maintain the very rigorous combined arms sales criteria, in terms of arms exports from the United Kingdom.
Jonathan Edwards (Carmarthen East and Dinefwr) (PC)
White phosphorus burns at 815 °C, and to the bone if it comes in contact with human flesh. Is its reported use as an incendiary weapon in Yemen considered by the British Government to be a chemical attack, and if not, why not?
Harriett Baldwin
The hon. Gentleman highlights, as did other hon. Members, the need for rigour in the process of investigating all these incidents and, in the case of those that come from the Saudi-led coalition, the importance of encouraging the joint investigative team to adopt a process that makes it possible to publish those reports very quickly.
John Woodcock (Barrow and Furness) (Lab/Co-op)
During our visit to Saudi Arabia over the Easter recess, we were able to put the UK’s concerns about the humanitarian catastrophe to the King, and in detail to his Ministers and officials. Will the Minister update the House on the block on the funds that have been deposited by Saudi Arabia in the Central Bank of Yemen, which are much needed? May I also gently say to her that it surely did not aid the cause of peace that she did not mention Iran and its pernicious role in the conflict until she was asked by her Back Benchers?
Harriett Baldwin
The hon. Gentleman raises an important issue. It allows me to welcome the fact that Saudi Arabia and the United Arab Emirates pledged between them some $930 million in humanitarian assistance at the Geneva conference earlier this month. However, as many colleagues have pointed out, it is important that it gets through.
Peter Grant (Glenrothes) (SNP)
Saudi Arabia has every right to defend itself, but what it is doing in Yemen goes way beyond self-defence. When one of the world’s wealthiest, most heavily armed and most highly trained military machines kills civilians in every one in three attempts, we have to accept that this is no accident; it is deliberate, unrestrained slaughter of civilians. I understand why the Minister cannot publicly criticise arms sales to Saudi Arabia. It is very noticeable that, despite being asked by nearly every Member on the Opposition side of the House, she has not yet personally defended those arms sales. Is that because, in conscience, she knows that they cannot be defended?
Harriett Baldwin
I have said numerous times that the UK maintains rigorous arms export control criteria, and one of those must be that at the time of export there are no concerns that the arms will be used in contravention of international humanitarian law. Again, this is an opportunity for me to emphasise how important it is that the Saudi-led coalition publishes the joint investigative assessment team’s reports, and to welcome the fact that 55 reports have been published so far.
Lloyd Russell-Moyle (Brighton, Kemptown) (Lab/Co-op)
The UK is not meant to sell weapons to countries when there is a clear risk that they will kill innocent civilians or break international humanitarian law. We sell 50% of all our weapons to Saudi Arabia, and 61% of all the killings have been the result of Saudi and coalition airstrikes. What is the Government’s red line on breaking international humanitarian law? When will we stop licensing the killing of innocent civilians?
Harriett Baldwin
The hon. Gentleman might even be a member of one of the Committees involved in this, so he will know exactly what the wording is for our arms exports criteria. We have heard from other colleagues about the missiles that are being fired into Saudi Arabia, and this allows me to reiterate—perhaps in conclusion, Mr Speaker—that a political solution is the only way forward to bring long-term stability to Yemen.
Mr Speaker
The Minister was approaching her peroration, but she has not yet completed it; she has one further opportunity to expatiate, because we have a further inquiry, from Mr David Linden.
David Linden
Thank you, Mr Speaker. The Minister talks about the UK being a penholder at the United Nations, but part of the problem is that we give the pen to Saudi Arabia so that it can write us cheques in exchange for arms. I want to ask her this question not as an MP speaking to a Minister, but at a human level. When she sees images of children clinging to their dead parents, does she not realise that it is time to end the arms sales to Saudi Arabia?
Harriett Baldwin
What I can say is that the hon. Gentleman rightly draws to the House’s attention how this conflict is harming the lives of so many, and why it is so important that the UK backs the work of the United Nations special envoy in taking forward the discussions that can lead to a political solution that will bring peace to Yemen.
Capita
(6 years, 2 months ago)
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Sir Vince Cable (Twickenham) (LD)
(Urgent Question): To ask the Minister for the Cabinet Office if he will make a statement on the financial position of Capita.
The Parliamentary Secretary, Cabinet Office (Oliver Dowden)
I genuinely welcome this opportunity to update the House on Capita’s announcement yesterday, which covered its 2017 full-year results, the launch of a £701 million rights issue and an update on its transformation programme. As I have told the House repeatedly, private companies can answer for themselves, but the Government’s priority is the continued delivery of public services. As we demonstrated with regard to Carillion, we have continued to deliver public services without interruption.
The House will recall that I came here in February when Capita initially announced the rights issue. Capita confirmed yesterday that it is proceeding in line with that previous announcement. The House might be interested to know that Capita’s statement yesterday announced that underlying profit before tax is £383 million for 2017, which is in line with market expectations; that, as a result of the rights issue, it has made a £21 million contribution to reducing its pensions deficit; and that, as a result of the announcement, the market reaction was a share price rise of over 10% on the day.
Capita’s board and auditors have confirmed that the company will continue to have adequate resources to deliver on its obligations, supported by its rights issue and other steps designed to strengthen its business. The rights issue is underwritten and the required shareholder vote will take place in early May. Management have confirmed that the key shareholders fully support their plan. In addition, the company has suspended dividends until it begins to generate positive cash flow; it expects to generate at least £200 million in 2020. The impact of all this has been to reduce dividends and shareholder returns in favour of other stakeholders. This, once again, is evidence of shareholders taking the burden, not taxpayers.
I understand that Members remain concerned about outsourcing companies, following Carillion’s liquidation. However, we must be clear that Capita has a very different business model and financial situation; it is not a construction business and it has minimal involvement in private finance initiatives. The measures that it has announced are designed to strengthen its balance sheet, reduce its pensions deficit and invest in core elements of its business. As I said in February, arguably these are the measures that might have prevented Carillion from getting into the difficulties that it did.
It remains the position, as I said in February, that neither Capita nor any other strategic supplier is in the same position as Carillion, but I would like to reassure the House that officials in my Department and I continue to engage regularly with all strategic suppliers. It is in taxpayers’ interests to have a well-financed and stable group of key suppliers, so we welcome the moves that the company announced yesterday.
Sir Vince Cable
The public will clearly be deeply concerned that yet another major Government contractor has been in financial distress, following Carillion and earlier service problems with Serco and G4S. Capita is not a construction company, but given that we are dealing with IT services that affect literally millions of people—for example, in relation to tax credits, disability testing and benefits, the congestion charge, the BBC licence fee and Army recruitment—what contingency plans has the Minister put in place since he was informed that the company’s losses are not sustainable? Is there a Crown representative in place? Have new contracts been stopped? Since the new chief executive announced cuts of £175 million a year, to make savings for the new company, how far have these been discussed with the Government, and how far have they a bearing on the provisions of those highly sensitive services? In the light of this development and earlier developments with Carillion, what steps have the Government taken to reform the system of Government procurement, so that we do not have companies low-balling to win contracts that then make losses, and to break up some of the contracts, so that we are not over-dependent on a handful of financially fragile companies?
Oliver Dowden
I thank the right hon. Gentleman for his questions. I will seek to address them all, but please forgive me if I miss any. I will come back to him in writing if I do.
On the company’s overall position, it is important to understand that what has happened is exactly in line with what was announced back in February, so there is not really a new development. The company’s underlying position, as it has said publicly, is that it has about £1 billion of cash that it can call upon.
The right hon. Gentleman asks about the Crown rep. I confirm that the Crown rep is Meryl Bushell. I met her this morning and continue to engage with her, as I do with all the other Crown reps.
The right hon. Gentleman asks whether new contracts had been awarded. Since the statement in February, no new contracts have been announced by central Government. However, I understand that the BBC and authorities in Northern Ireland have announced contracts.
The right hon. Gentleman asks what we are doing to break up the system of Government procurement. I always ask, with every contract that crosses my desk to be authorised, whether we have broken it up into as many small pieces as possible to make it accessible for small businesses. Over the Easter period, I made an announcement to help us meet the very challenging target we have set of 33% of all business going to small or medium-sized enterprises. We set a target of 25% in the last Parliament and met it. I announced a range of measures to help us towards the 33% target. I wrote to all the Government’s key suppliers saying that I wanted them to appoint an SME representative to try to drive business to SMEs. I have required all their subcontracting over the value of £25,000 to be published on the Government’s Contracts Finder. I am consulting on ways to improve prompt payment to make it a condition of business being awarded to strategic suppliers. That is very important to SMEs, and I am looking at ways to give them a right to go over the top of key suppliers to the Government to give them a right of recourse.
I say gently to the right hon. Gentleman that both he and I have a proud record from our time working for the coalition Government—he at a much more senior level, running the Department for Business, Innovation and Skills. In line with other Governments, we continue to award contracts to Capita. The House may be interested to know that of the major central Government contracts that have been awarded to Capita, about 20% were awarded under Labour, over half under the coalition Government and 27% under this Government. This issue does not to relate to one party over another.
The reason we do it is that we know outsourcing delivers efficiencies. According to one survey, we receive efficiencies of at least 11%. If we get efficiencies of 11%, that means more money to spend on health, more money to spend on education and more money to spend on core services. That is why the Labour Government did it, why the coalition Government in which the right hon. Gentleman served did it and why this Government continue to use outsourcing.
Mr Bernard Jenkin (Harwich and North Essex) (Con)
Does my hon. Friend agree that there is something of a correction going on throughout the sector, as it adjusts to the effects of the Carillion collapse and to the perhaps over-tight margins that some contracts have imposed on providers? I draw his attention to the fact that the Public Administration and Constitutional Affairs Committee is doing an inquiry into the lessons to be learned from the collapse of Carillion. Personally, I take confidence from the fact that the investors have decided to trust Capita with £700 million more of their capital to secure the long-term future of the company.
Oliver Dowden
I thank my hon. Friend for his question. He is absolutely right that what we discovered yesterday was that the rights issue is proceeding exactly as planned. In terms of the overall market, I have tried to be clear all along that suppliers should expect a decent rate of return—not an excessive rate of return, but one that allows them to run a profitable business, while ensuring that there are savings for the taxpayer. That is why we use private companies. It is not because of ideology; it is because they deliver savings to the taxpayer, which means more money to be spent on health, education and other public services.
Christian Matheson (City of Chester) (Lab)
May I thank you, Mr Speaker, for granting the urgent question and congratulate the right hon. Member for Twickenham (Sir Vince Cable) on securing it?
Capita is one of the strategic suppliers to the Government, providing services of particular strategic importance, yet, as we heard from its boss today, it had no strategy aside from mucking up the management of the dental register, leaving hundreds of dentists to stand idle; failing to maintain the primary care support service in England, which supervises GP and patient records; and failing on the Army recruitment contract, among many other failings. Members have been highlighting those and other failures to the Government over a period of years and will not be surprised at the latest news. I echo the call from the right hon. Member for Twickenham for the Minister to outline what contingency plans he has put in place to deal with a possible default on any one of those contracts.
The Government claim to be monitoring the situation and have a Crown representative in place, but do they even know what they are monitoring if they are not sure about the number of contracts Capita runs? I and other Members have asked for a list of Government contracts undertaken by Capita and have not been provided with one. Do the Government know how many contracts Capita undertakes across central Government and, indeed, across local government? Will they publish a list of all those contracts?
Will the Minister confirm what improvement plans have been agreed with Capita since its string of profit warnings or yesterday’s refinancing? What quality thresholds will be built into Government contracts to ensure that Capita and other privateers reach an acceptable standard of service delivery, particularly in view of their precarious financial situation?
This latest episode in the saga of outsourcing scandals again shows the public that the Government’s commitment to this practice is nothing more than ideological. Despite the danger to public services, along with the treats to Capita’s staff and subcontractors, the Government will not shift from their view that these giant multinational firms should make huge profits from the public purse, until the point when they fold, taking our public services with them. The Government act as though these firms should be allowed to privatise the profit of the public sector, while nationalising the risk to the British public. We need a change in direction now. Will the Minister use this latest episode involving Capita to finally introduce a presumption in favour of in-house provision of public services?
Oliver Dowden
I have a great deal of respect for the hon. Gentleman, and he could have done a little better than some of the overblown rhetoric in his contribution. Yesterday’s announcement was entirely in line with market expectations.
The hon. Gentleman asks what is being done in relation to strategy. The strategy has been set out clearly by the new chief executive. It includes a revised divisional structure and executive team to better manage and enhance services and client value, as well as a rights issue, which, as I said, has proceeded as planned and will materially improve the company’s financial stability, thereby reducing its debt, enabling it to invest in core services, allowing it to reduce the pensions deficit, which it has done by £21 million—I hope all Members will welcome that fact—and allowing it to reduce its cost base.
The hon. Gentleman asks what contingency planning the Government are doing. As I have said, we undertake appropriate contingency planning in respect of all our strategic suppliers. I take a close personal interest in that as a Minister, and I know that the Chancellor of the Duchy of Lancaster and Minister for the Cabinet Office takes a similarly close interest in it.
The hon. Gentleman asks about contracts that have been awarded to Capita, so let me give him the numbers. Of the current major central Government contracts that have been awarded to Capita, nine were awarded under Labour, which is 20%, 24 were awarded under the coalition, which is about 53%, and 12 were awarded under the current Conservative Government, which is about 27%. This is not a party issue; all three formations of government have decided to use outsourcing companies.
To conclude, I had thought that the hon. Gentleman would agree with the words of a previous Labour leader and somebody who many regarded as being, at least in some senses, a successful leader. Gordon Brown, hardly a rabid right-winger, said:
“It simply would not have been possible to build or refurbish such a number of schools and hospitals without using the PFI model.”—[Official Report, 14 November 2007; Vol. 467, c. 665.]
That was a sensible Labour Government who were committed to delivering public services. We do not see such sense from the current Labour party, I am afraid.
Mr Mark Francois (Rayleigh and Wickford) (Con)
While I agree with the thrust of the Minister’s response, I am afraid I have to tell him that a serious blot on Capita’s record is the Army recruiting contract. Capita does not have much experience in that area and has been underperforming very seriously on the contract for some five years. I told the House in Defence questions yesterday that it is now known universally in the Army as “Crapita”, because of its poor performance on the contract. Will the Minister accept it from me that, although nobody wants to see Capita go bust because of all the jobs that would be lost, equally we cannot have an Army without recruits? Therefore, this is one contract that Capita, honourably, should hand back.
Mr Speaker
I must tell the right hon. Gentleman that his second reference to the rather unfortunate nickname of the company concerned has just caused some merriment among school students in the Public Gallery. They clearly found it very funny, as did I, so the right hon. Gentleman may be a celebrity among those students—not to mention, of course, in his constituency and in many other parts of the country.
Oliver Dowden
My children are aged six and eight, and on the off chance that they happen to tune into this later, I will make sure that I do not repeat that word, because I would not want to hear it around our breakfast table.
I know about the commitment of my right hon. Friend the Member for Rayleigh and Wickford (Mr Francois) to this issue; he is absolutely right to raise it. We all know that there have been problems with Capita, but I can update him and the House by saying that the MOD and Capita have agreed an improvement plan under their contract. I understand that Capita is looking to deliver on that plan, so I am confident that it is making steps in the right direction, although I do not deny that there have been problems in the past.
Drew Hendry (Inverness, Nairn, Badenoch and Strathspey) (SNP)
A £701 million rights issue after a £530 million loss, with a scramble to recover reputation after damaging contract bungles, is indeed indicative of a business with no strategy. Given the wide range of public services involved, is the Minister at all worried by the situation? If so, what precautions has he put in place to protect people’s jobs? Does he agree that this highlights a role for the public sector in providing vital public services? Given that he is wedded to the PFI model, will he take the time to look closely at the Scottish Government’s Scottish Futures Trust model, which has saved the Scottish Government £1 billion?
Oliver Dowden
I thank the hon. Gentleman for his questions. As I have said, Opposition Members keep trying to characterise this as ideological, but the fact is that Governments of all colours have used outsourcing. Why? Because they know that that can deliver savings. It is just the same as when private companies use outsourcing so that they can focus on their core businesses.
The hon. Gentleman asks whether I take a close interest in this—yes, I take a close interest in all our strategic suppliers. On a weekly basis, I receive updates on the position and on the plans that we have, if necessary, in relation to all our strategic suppliers. However, I restate to the House that Capita’s position is not the same as Carillion’s—nor, indeed, are any of the other strategic suppliers in that position.
Dr Caroline Johnson (Sleaford and North Hykeham) (Con)
Does my hon. Friend agree that the Labour party is interested only in the ideological pursuit of renationalisation at any cost? What matters to the public is that they get the best services at the best value to the taxpayer.
Oliver Dowden
My hon. Friend’s raises a very important point that is another rebuttal to this idea of ideology. If we want to look at ideology, perhaps the number of PFI contracts signed by a Government would give an indication of that, so let us look at the numbers. How many contracts did Labour sign on average each year? Fifty-five at the peak. How many have this Government signed in the past year? One. If this is about an ideological commitment to the use of the private sector, Labour Members should search their souls in relation to their last Government.
Meg Hillier (Hackney South and Shoreditch) (Lab/Co-op)
The Minister makes great play of the 11% savings from contracting out, but it is no good making savings if core services are not being delivered well. Will he outline how many of the contracts he is concerned about—he has listed them a couple of times—and will he tell us how many contracts he is discussing with Capita with regard to whether their delivery should be reviewed? It is no good spending taxpayers’ money on a private company if it is not delivering the services that it is paid to deliver.
Oliver Dowden
The contracts that each Department agrees with the private sector for the delivery of services are very stringent. Each Department is responsible for ensuring their proper delivery, and if the company is not delivering properly, it will be in breach of the contract and remedies will be available. At the point of re-letting a contract, we look at the overall performance of the company concerned to ensure that it is in a fit state to be able to deliver on its promises. There is a dual responsibility between the individual Departments, which set out the terms, and the Cabinet Office, in which I sit, which has overall responsibility for the supplier market.
Dr Matthew Offord (Hendon) (Con)
Barnet Council has a significant contract with Capita. It also has a business continuity planning framework that monitors liquidity and indebtedness. It reviewed the situation twice last year, and again after the recent profit warning, and the company was shown to be far from reaching the relevant threshold for triggering any action, but in the local elections, the Liberal Democrats are using the issue to scaremonger. I urge the Minister not to take advice or direction from someone who undersold Royal Mail by £1 billion and then called the loss “froth”.
Oliver Dowden
I thank my hon. Friend for his question. Tempting though it is, I shall resist the urge to comment on the Royal Mail deal, but I refer him again to the— [Interruption.] When the Department was controlled by the Liberal Democrats, I do not think the right hon. Member for Twickenham (Sir Vince Cable) would have taken kindly to a Conservative special adviser getting too heavily involved.
I refer my hon. Friend the Member for Hendon (Dr Offord) to statistics that demonstrate that over half of the contracts that were given to Capita were awarded under the coalition Government, in which the Liberal Democrats played a sterling part. If they want to play politics, I refer them to those statistics.
Rachel Reeves (Leeds West) (Lab)
May I push the Minister on contingency planning because I fear that the Government are being a bit complacent about that issue? Since Carillion went bankrupt, hospitals in Sandwell and Liverpool have been mothballed. What confidence does he honestly have that if Capita were to go the same way as Carillion, its contracts would continue to run and these crucial public services would continue to be delivered? The experience of Carillion is that that is not happening.
Oliver Dowden
I gently disagree with the hon. Lady, who has a great deal of expertise in this area. Public services have continued to be delivered without interruption. There is a specific question about the PFI contracts in respect of those two hospitals, but I reassure her and other hon. Members, who I know take an interest in this, that we are taking a very close interest in the matter. We are engaging with NHS Improvement and the Department of Health and Social Care to try to resolve this as quickly as possible and ensure that we have a clear plan for the delivery of the hospitals.
Bob Stewart (Beckenham) (Con)
Obviously I support outsourcing in principle, but I am really concerned. If Capita is reviewing the way it operates—it has operated abysmally in various spheres, particularly Army recruiting, as my right hon. Friend the Member for Rayleigh and Wickford (Mr Francois) said—are the Government reviewing how they have oversight of these contracts so that we can get more effective feedback and problems can be corrected quicker?
Oliver Dowden
I thank my hon. Friend for his question. He is absolutely right to raise the issues that we have had with the Army recruitment contract, but what is happening demonstrates that the Government are engaging with these problems. The MOD and Capita have agreed an improvement plan, which seeks to address some of the significant problems that we have. When these problems arise, we are engaging with the companies concerned to try to deliver improvements.
Catherine West (Hornsey and Wood Green) (Lab)
What assessment have the Government made of the impact on apprentices who are employed in Capita’s many workplaces? How many individual apprentices may be affected? Which regions of the UK are particularly exposed? What contingency plans are in place to protect potential losses to the apprenticeship programme, and what will be done to stop these failing business practices? I am fed up with having to listen to poor apprentices in other companies who have lost their roles as a result of failing business practices.
Oliver Dowden
I reassure the hon. Lady that the Chancellor of the Duchy of Lancaster and Minister for the Cabinet Office is taking a very close interest in this and working in respect of all those apprenticeships. At the moment, those apprenticeships are ongoing, but clearly we need to look at how we can manage their future so that young people do not find themselves disadvantaged. I can assure the hon. Lady that this is a top priority for my right hon. Friend.
Stephen Kerr (Stirling) (Con)
The Minister says there have been problems with Capita, and while Capita and Carillion are different businesses in different situations, they have something in common: the businesses are both big and complex. What steps are the Government taking to involve more small and medium-sized businesses in the delivery of public services?
Oliver Dowden
My hon. Friend raises a very important point. It is right on two levels that we have a diverse supply market: first, because the more suppliers we have, the less we are at risk from the loss of any one supplier; and, secondly, because small and medium-sized enterprises are the backbone of our economy locally and nationally, creating 16 million jobs, and I am determined to ensure they get their fair share of such contracts. That was why I announced a range of measures over Easter, including providing subcontractors with a right of access to buying authorities in order to report poor practices. It was also why the Prime Minister wrote to every Secretary of State requesting that they appoint an SME champion. I want the message to go out to all SMEs—I spent a lot of time over Easter meeting small businesses and communicating this—that they can bid for and win Government contracts. Go on to Contracts Finder, find them, and bid for them!
Kelvin Hopkins (Luton North) (Ind)
In my two decades in the House, I have opposed PFI schemes root and branch from the beginning. It seems that the number of PFI agreements has dwindled to virtually zero, so it looks like the Government agree with me now. A number of public authorities are now insourcing and making financial gains as a result. Will the Government encourage that process, which would save public money? Will they also not hand out lucrative public contracts to Capita to help it out of its present circumstances?
Oliver Dowden
I shall resist the suggestions of Front-Bench colleagues; I do not think I will ever convince the hon. Gentleman to cross the Floor, despite his warm words.
We reviewed PFIs and introduced the new private finance 2 contracts, which removed many of the excesses we saw under the last Government. The hon. Gentleman asks about the rewarding of new contracts. Since the statement in January, as I said, no contracts have been awarded to Capita by central Government. Two have been awarded by the wider public sector—by the BBC and Northern Ireland authorities.
Bob Blackman (Harrow East) (Con)
My hon. Friend will recall that Capita developed from the public sector in the first place. Does he agree that the use of outsourcing not only controls costs and gives gains to the public, but provides certainty over the standards of service provided to the public? If an outsourced company fails to deliver to those standards, the contract can be recalled and given to an alternative provider.
Oliver Dowden
As ever, my hon. Friend and neighbour is absolutely correct. That happens regularly, and it is exactly why private companies all use outsourcing to provide services such as cleaning and site security—because they can use specialist providers and because that delivers savings. He talks about how the Capita model arose. I remind Labour Members who are getting overexcited that Capita was founded by Sir Rod Aldridge, who was a major donor to not the Conservative party, but the Labour party.
John Spellar (Warley) (Lab)
May I associate myself with the comments about Army recruitment made by the right hon. Member for Rayleigh and Wickford (Mr Francois) and the hon. Member for Beckenham (Bob Stewart)? Does not the Minister accept that Capita is only the latest outsourcing company to be in trouble? With some, including probation, hospital and rail companies, having to hand back contracts and the growing crisis in the over-leveraged, offshored care industry, does he not question whether there are not actually deep systemic problems with the Government’s dogma-driven privatisation model?
Oliver Dowden
I simply fail to understand how Labour Members can say that this is dogma-driven when the last Labour Government awarded 55 PFI contracts a year and one was awarded in the last year. Some 20% of the contracts awarded to Capita were awarded by the Labour party. This is not about ideology; it is about what works. Outsourcing delivers savings, which means that we have more to invest in the public sector—more in our schools; more in our hospitals.
Michael Tomlinson (Mid Dorset and North Poole) (Con)
May I give the Minister an opportunity to repeat and reinforce his message about small businesses and the importance of their getting more involved in the delivery of public services? Will he encourage businesses in my constituency and the wider Dorset region to bid for contracts?
Oliver Dowden
My hon. Friend is absolutely right. Small businesses should be going out there and bidding for Government contracts. I know that his constituency has much expertise in the aerospace sector, and I announced further measures over Easter to help such small businesses. I wrote to all our strategic suppliers asking that they adhere to the prompt payment code, and I am requiring suppliers on large contracts to provide their subcontracting data. They can be under no illusion that the Government are watching closely to ensure that in terms of contracts from government itself and subcontracting, SMEs get their fair share.
Wayne David (Caerphilly) (Lab)
I welcome the Government’s recognition that Capita is not delivering on its contract for Army recruitment, but rather than Capita simply introducing an improvement plan, would it not be better for the Government to consider bringing contracts back in-house so that Army recruitment is conducted by the Army? That is what the Army wants.
Oliver Dowden
As the hon. Gentleman has acknowledged, I have answered the question about the Army recruitment contract, and I shall not repeat my answer, but I would say that we are not driven by an ideological approach. If services can be delivered better in-house, of course they can be delivered in-house, but in the majority of cases, for contracts such as cleaning and security, both the private and public sectors have found that they get cheaper services that are just as good quality when they outsource. That is the right decision to make.
Mike Amesbury (Weaver Vale) (Lab)
Capita employs hundreds of people in my constituency at a place called Preston Brook. What discussions have the Government had with recognised unions, such as the Communication Workers Union, about the job and pension security of those workers?
Oliver Dowden
The hon. Gentleman raises a very important point. I can reassure his constituents, as I have done repeatedly at the Dispatch Box today, that yesterday’s announcement was in line with expectations. Capita is not in a similar position to Carillion. I can also reassure them that, as a result of the rights issue yesterday, a further £21 million has been paid down into the pension fund, meaning that their pensions are more secure as a result of the announcement on Monday.
Stephen Lloyd (Eastbourne) (LD)
The Minister has spoken several times in glowing terms about the importance of the SME sector. One of the issues that came out of Carillion’s collapse was the deplorable reality that it often did not pay its SMEs their subs for 120 days, and sometimes more. That is the way to destroy the SME sector. Given that this is taxpayers’ money, will he give me a guarantee that that is not happening at Capita and that people are getting paid within a fair and reasonable time?
Oliver Dowden
The hon. Gentleman is right to raise the issue of prompt payment, and I know that various Select Committees are looking into the Carillion case. My right hon. Friend the Secretary of State for Business, Energy and Industrial Strategy is sitting next to me, and the Chancellor announced in the spring statement a call for evidence on the prompt payment code, which governs such payments. The Government pay about 96% of our contractors within 30 days. As I said, I have written, post Carillion, to all our strategic suppliers to re-emphasise the importance of adhering to the code. We are consulting on how to exclude suppliers if they do not do so.
GKN
(6 years, 2 months ago)
Commons ChamberRead Full debate Read Hansard Text Read Debate Ministerial Extracts
The Secretary of State for Business, Energy and Industrial Strategy (Greg Clark)
With your permission, Mr Speaker, I shall make a statement about the takeover bid by Melrose Industries plc for GKN plc. On 29 March, Melrose announced that holders of 52% of GKN shares had accepted its offer, and as of last Friday, the figure had reached 88.5%.
As I informed the House on 27 March, the Enterprise Act 2002 sets out three circumstances in which a takeover can be referred to the Competition and Markets Authority on public interest grounds. They are financial stability, media plurality and national security. Any such reference must take place within four months of the completion of the transaction, and must result from a quasi-judicial decision, made impartially, on the basis of an open mind and solely on the evidence presented. No grounds were advanced for a reference on the grounds of media plurality or financial stability. To inform my decision on national security, I asked for a comprehensive assessment to be made by the Ministry of Defence and other bodies concerned with our national security.
The Secretary of State for Defence has written to advise me that the MOD has completed its detailed analysis and has agreed with Melrose a set of undertakings, specifically: to ensure that the Government are informed in advance of any plans to divest a business, a component of a business, or assets which engage in activities that the Ministry of Defence considers to have national security implications; to ensure that the Government have early visibility of any prospective purchasers, including structures of consortia and persons holding significant influence and control; to prevent the disposal of the relevant business, components of a business or assets without the consent of the Government; to ensure that the Government receive suitable protections from any subsequent purchaser in the event of any future sale of elements of the business; to ensure the continuation of contractual obligations to protect intellectual property and classified information; to ensure the continued maintenance of any capabilities with a national security dimension; and to provide the MOD with powers to inspect information and facilities to ensure the protection of classified information.
Those undertakings are combined with the undertakings that Melrose agreed to make in response to my letter of 26 March, including undertakings not to dispose of the aerospace business for at least five years without the Government’s consent; to maintain a UK stock exchange listing for at least five years; to ensure that the business remains headquartered in the UK, and that a majority of directors are resident in the UK; to ensure that both the aerospace and Driveline divisions retain the rights to the GKN name; and to guarantee that spending on research and development will take place on at least GKN’s previous level, amounting to a minimum of 2.2% of sales for the next five financial years. In important respects, those undertakings go beyond commitments given by the previous management team. Melrose has also agreed to meet my officials and me every six months to provide updates on its ownership of GKN.
On the basis of the commitments given relating to national security, the Ministry of Defence concluded that statutory intervention was not required. That is consistent with the other assessments that I have received. On the basis of the assessments that I have considered and the undertakings that have been entered into, my judgment is that there are not reasonable and proportionate grounds to make a statutory intervention on the grounds of national security.
GKN is a very important business, performing vital work in industries—aerospace and automotive in particular—with an expanding global market in which British innovation and excellence offer great opportunities. This takeover bid has entailed a vigorous debate about which of the two alternative British managements could most credibly reap those opportunities. The shareholders chose—initially by a small majority, and finally more substantially—new management. All UK public companies are subject to that challenge of how they can best be run: it is an essential part of the competitive business environment for which Britain is renowned.
The takeover bid has been important in wider ways. It is the first contested bid in which the new regime of legally binding commitments on future conduct has applied. The commitments that have been made reflect the strong interest of stakeholders—including employees, UK taxpayers, suppliers, and research and development partnerships—in knowing the future intentions of a bidder, provided in a way that is binding. These responsibilities, which broadly reflect those placed on directors of ongoing businesses by section 172 of the Companies Act 2006, are important to ensure that the longer-term and strategic interests of our economy are considered and addressed during takeover bids.
Now that such an ability to make post-offer undertakings has been established, I expect them to be implemented. The new management’s stewardship of these important businesses carries with it important responsibilities for our economy and our country. I look to the management to honour its commitments in both the spirit and the letter, and to create a strong future for GKN, its employees, its suppliers, and the industrial sectors in which it will play a major role.
I gave the House a commitment that I would carry out my legal responsibilities seriously, meticulously and fairly, and that I would keep the House up to date at every phase of these proceedings. I believe that I have done so, and I commend my statement to the House.
Rebecca Long Bailey (Salford and Eccles) (Lab)
I thank the Secretary of State for giving me advance sight of his statement.
There are two issues that I must raise today: the fact that the reported assurances obtained by the Government, both in the letter of 27 March and subsequently, are not sufficient to guarantee the security of the long-term prospects of the company and, indeed, the workforce; and the inadequate capacity of the takeover regime to protect companies outside the very limited grounds of national defence, media plurality and financial stability.
First, as I made clear last month, the assurances obtained by the Government in Melrose’s letter of 27 March were sadly inadequate. Apart from the first five assurances which were post-offer undertakings, what was in the letter was completely unenforceable. For example, there were no post-offer undertakings on maintaining employment or tax residency, which could easily constitute such undertakings. Indeed, the maintenance of employment is vital to our national security, and the loss of these jobs will cause the diminishment of vital skills that are integral to our defence industry.
Putting aside issues of enforceability, what of the assurances that have been reported since 27 March? The reported veto power that the Secretary of State for Defence has to stop the sale of certain businesses will not, I am afraid, solve the national security problem. Melrose reportedly has a short-term outlook which undermines the long term that is required for defence projects. That is important, and a veto on the sale of certain parts of the business by the Defence Secretary will not help significantly. Sadly, the Government’s failure to address the short-term horizons of Melrose may damage the capability of a business to deliver projects that could last for 10, 15 or 20 years.
Secondly, our takeover regime is inadequate, and the Secretary of State is acutely aware of that. If a takeover falls outside the grounds of national defence, media plurality and national stability, the Secretary of State cannot act, even though the takeover may be harmful for the business, harmful for employees, harmful to research and development, and harmful to supply chains.
Let us take the case of Unilever. Last year it was threatened with a takeover, and there was nothing that the Government could do because the takeover fell outside the three public interest exemptions. Unilever has since commented on the inadequacy of the UK takeover regime, and its recent decision to place its headquarters in the Netherlands was, as reported by the Financial Times, arguably driven by a desire to escape the poor safeguards for takeovers in the UK. Labour Members have called on the Government to broaden the public interest test. The measures that the Government have proposed so far are not good enough. We know that, in GKN’s case, they already had the power to act and did not do so. However, our takeover rules would not have prevented Unilever from being taken over had Kraft been prepared to follow through, because that had nothing to do with any of the three exemptions.
I agree with the Secretary of State that our takeover regime must be open enough to encourage foreign investment, but it must also protect against short-termism and long-term damage to our economy and national security. Arguably, too often it is short-termism that prevails. Only this week we heard reports that the hedge funds that bought GKN shares to make Melrose’s takeover possible are now targeting Melrose, shorting the company on the stock exchange.
What we needed from the Secretary of State today was not just a waving through of the deal, but action, both in obtaining concrete assurances from Melrose on the future of GKN and its workforce, and in the form of clear plans to reform and widen our takeover regime to protect British businesses. I fear that the short-term predators already smell their next victim—and it is not just Melrose; it is Britain’s industrial future.
Greg Clark
Right from the outset, the hon. Lady has been unable to advise us of what specific undertakings she thought it was appropriate to obtain. She needs to understand that as this is a quasi-judicial decision, the statement that she made that she would block the bid would disqualify her from making that decision, as the right hon. Member for Twickenham (Sir Vince Cable) knows to his cost.
The evidence presented to me was that this was a British company taking over another British company, that no such takeover has ever been blocked on national security grounds, and that the Ministry of Defence and the other agencies said there was no reason for intervention on those grounds. I have to tell the hon. Lady that the previous directors of GKN themselves said that there was no reason for an intervention on national security grounds. She should reflect on the commitments that the Defence Secretary and I have secured to retain the aerospace division for at least five years, to ensure that the Government have the right to approve any future sale of any defence business or asset, and to invest in research and development to at least the current level. Not once in the past four months has she engaged in a similarly forensic way to set out what she thinks would be appropriate commitments.
The hon. Lady says that the commitments are inadequate, but they have been given as legal deeds and in some cases set out to the Takeover Panel as post-offer undertakings. The truth is that she has had the opportunity to engage with this matter, but having prejudiced her position by saying from the outset that the takeover should be blocked, she has given away the ability to have influence on what the regime should be.
The hon. Lady knows perfectly well what the Government’s powers on takeovers are, because the 2002 Act was passed under a Labour Government and sets out those limited powers, which are the same as in the rest of Europe. The difference between the Government and the Opposition is that when we came into government, we reformed those powers to allow post-offer undertakings to be given, so the situation when Kraft bid for Cadbury and undertakings were reneged upon cannot happen in the current circumstances. We have taken an active approach to ensuring that all stakeholders’ interests are secured, whereas the hon. Lady preferred to float above it all and simply say no before considering the evidence. We have proceeded responsibly, and she would do the employees of and stakeholders in GKN a service if she engaged more forensically in future.
Sir Desmond Swayne (New Forest West) (Con)
What are the sanctions if commitments are not honoured?
Greg Clark
Sanctions with regard to undertakings to the Takeover Panel are those for contempt of court, which include everything up to imprisonment.
Drew Hendry (Inverness, Nairn, Badenoch and Strathspey) (SNP)
I thank the Secretary of State for advance sight of his statement.
The Secretary of State mentioned holding Melrose to the spirit and letter of its commitments, but traders have been short selling £725 million, or 17%, of Melrose stock, effectively betting against it making a success of GKN. What action will he take if there is any breach of the spirit or letter of the commitments?
The Secretary of State did not cover jobs in his statement. I asked him following a previous statement to what extent he would require assurances to prevent assets from being stripped and jobs lost, and not just those in the MOD or national security. What assurances has he had on the financial restructuring involved in the takeover, which will mean more debt and less investment at the core of GKN? How will that situation progress the Government’s industrial strategy, and can he explain how allowing the takeover will protect the skilled jobs that we require and tackle productivity issues?
Greg Clark
I am grateful to the hon. Gentleman for his questions. He will know that one undertaking that has been given is a commitment to at least five years of research and development investment, including participation in the joint industry bodies, which have been a successful part of our arrangements in the aerospace and automotive sectors and are an important part of our industrial strategy. That is a valuable commitment that I would have thought the hon. Member for Salford and Eccles (Rebecca Long Bailey) and he would welcome.
The previous GKN management criticised the commitment to retain the aerospace business, saying that it should not have been entered into given that the sell-off of GKN’s automotive business had already been agreed to. It constitutes a longer-term commitment than was made during the latter period of the previous ownership.
The hon. Gentleman will understand that in obtaining commitments from a bidder, I have to bear in mind commitments that the incumbent management have or have not made. No commitments had been made on the total number of jobs, and indeed the sale programme involved a majority of the business. One of the features of today’s results announcement was that the debt of the previous business was higher than anticipated, and the plans that the new management have set out include paying it down.
Lucy Allan (Telford) (Con)
I thank the Secretary of State for his statement and welcome the undertakings that he has secured.
The future of GKN was determined by speculators who came on to the share register in the final weeks of the bidding process to make a quick profit. Does the Secretary of State agree that that is no way to determine the future of a great British manufacturing company, and will he now conduct a review of the takeover code to ensure that speculators cannot participate in that way in a vote to decide a company’s long-term future?
Greg Clark
I understand my hon. Friend’s concern, and a number of hon. Members have raised that point before. There are a couple of things to say about it. First, most people who have bought shares latterly during the takeover process bought them from longer-term shareholders, and one way in which a bid can be backed is for people to sell before the end point of that bid. That situation was looked at, appropriately, by Professor John Kay, who published a substantial review. His panel noted that one suggestion was that voting rights should accrue only if people had been on the share register for a specified period. The Kay review concluded:
“We were persuaded that the introduction of such provisions by legislation or regulation would involve practical difficulties and would be unlikely to achieve the intended effect.”
That was an expert review by a serious person, but of course in all circumstances such as this we keep our corporate governance arrangements under review, and I will certainly do that now.
Rachel Reeves (Leeds West) (Lab)
I would like to follow up on the point that the hon. Member for Telford (Lucy Allan) raised. Other countries have a rule that people must have been shareholders for a certain period before they can vote on a takeover deal. Some sort of financial transaction tax would also reduce short-term speculation in companies that leads to their being taken over in this fashion. I urge the Government to look again at the takeover code, particularly for businesses that are so integral to our industrial strategy and have received a lot of taxpayer funding, in this case for the R&D work that GKN has undertaken.
Greg Clark
I am glad that the hon. Lady mentions the R&D work, which is very important. The commitments that have been made on R&D, both to keeping up investment and to participating in R&D partnerships, are extremely important. She and her Business, Enterprise and Industrial Strategy Committee asked for undertakings to be given on that and a number of other issues, and were not satisfied with the undertakings that were offered. I persuaded the company to go further and obtained undertakings relating not only to national security but to R&D and the ownership of businesses, and I hope she will acknowledge that that is valuable.
On the hon. Lady’s point about differential voting rights for shareholders, I mentioned the John Kay report, which her predecessor Committee scrutinised—I think the right hon. Member for Twickenham (Sir Vince Cable) gave evidence backing the report’s judgment. I know that her Committee is correctly interested in keeping our arrangements up to date, and if she and her colleagues want to review these matters, what their predecessors said is a good example of how that can be done.
Jack Lopresti (Filton and Bradley Stoke) (Con)
I congratulate my right hon. Friend on his statement, and on the work he has done on this difficult issue, especially in relation to securing the five-year guarantee for the aerospace business, which is unprecedented for a business such as GKN. Indeed, as he has just said, the last management refused to countenance such an arrangement. I visited the plant in my constituency a week or two ago and, despite some cynical scaremongering by some in the party opposite, the management and workers there are optimistic about the future and looking forward.
Greg Clark
I am grateful to my hon. Friend for his comments. It seems to me that when we establish a regime of post-offer undertakings, it is necessary to be active and to apply ourselves to the undertakings that it is important to secure. It is true that there has never been any commitment to own an important business such as that for more than five years, and I think that this will be valuable and welcomed by the employees in his constituency. I recognise his assiduousness in visiting the plant and talking to his constituents who are employed there.
Sir Vince Cable (Twickenham) (LD)
Further to the excellent intervention from the hon. Member for Telford (Lucy Allan), the Select Committee Chair, does the Secretary of State accept that the role of the short-term investors has been highly destabilising? They acquired 20% of the stock, they forced the takeover through and they are now short selling. If he is not persuaded of the merits of differential voting, how does he propose to deal with this problem?
Greg Clark
The right hon. Gentleman was not persuaded either. He commissioned a report, he had a respected and eminent individual look into this, and he gave evidence to the Select Committee to say that he was not persuaded. I have described some of the circumstances involved. Those who bought shares in the latter stages bought them from people who had decided they did not want to back the existing management. He knows that I take a great interest in ensuring that our regime of corporate governance is the best in the world. The fact that people can invest here with confidence forms an important part of our reputation. We have been successful over many years, and of course if the Select Committee wants to review the experience since the report that he commissioned, it has the ability to do that and I would be very happy to participate.
Rachel Maclean (Redditch) (Con)
The Minister will be aware that the global headquarters of GKN are in Redditch, and that this has been my first priority ever since we heard the news of the takeover. Is he also aware that I spoke to Melrose on Friday, and that it assured me that it has no plans to shut the Redditch office? It believes that many of the jobs will be reabsorbed into the functions of GKN. Does he agree that that is really good news, and contrary to some of the things we have heard in the media? Will he also comment on observations in the media about the Airbus relationship? Again, we have heard that the takeover could have a negative impact in that regard, but that is not what I have heard from Melrose, which thinks that the relationship could continue. Can he comment on that further?
Greg Clark
I congratulate and applaud my hon. Friend on being active and engaging with the new management to talk about the important headquarters function in her constituency. She has indeed secured good news from the company in that respect. I understand that the divisional heads of the aerospace and automotive businesses have been reappointed by the new management. Let us bear in mind that the incumbent management’s proposal was, latterly, that the automotive business should be sold, and that it would now be in the process of being sold. Airbus is clearly an important company, and there were some comments ascribed to it, although I do not think that they have been repeated. It will be important for the new management to set out its plans, so that all suppliers can have confidence in those relationships.
Mr Geoffrey Robinson (Coventry North West) (Lab)
Is the Secretary of State aware that short selling has been the decisive factor in this, and that that is a matter of great concern throughout the House? Also, he has rightly been concerned about the reputation of Melrose Industries plc for taking short-term measures. It cuts, closes and sells on at a profit. That is its reputation and, as far as I am aware, that is what it has invariably done. He has therefore sought longer-term undertakings—and five years is a significant period—that will keep the plants going and ensure that the company redoubles its commitments. However, his statement contained no indication as to whom those commitments are to be made, except presumably the Takeover Panel. What powers does the panel have to impose binding sanctions or, if necessary, to take the company through a legal process that he claims in his statement will be legally binding? On these crucial issues, he seems to have made no progress at all.
Greg Clark
This is the first time that any such commitment has been given on the ownership of assets for a period of five years. I have been active in establishing this regime, and I think the hon. Gentleman knows that, in my engagement with manufacturing and other industries, I have considered carefully the strategic importance of continued investment and stability. In the final analysis, there was a greater commitment to stability of ownership from the bidder than there was from the incumbent management. On the question of enforceability, I will place in the Library of the House the deeds that have been entered into in favour of the UK Government by the company. Some of them are under the Takeover Panel regime. As I said to his colleague on the Labour Front Bench, the effect of this new regime is that there will be sanctions up to imprisonment for a breach of those undertakings.
Stephen Kerr (Stirling) (Con)
I welcome the encouragement that my right hon. Friend gave to the Chair of the Business, Energy and Industrial Strategy Committee to look at the issues surrounding this takeover, and I am sure that the Committee will do that. Importantly, he also pointed out that this was a contest between two British management teams. Does he agree that the British taxpayer should expect companies that receive public money, either through contracts or through research and development, to be prepared to give an undertaking to take a long view when it comes to investment decisions?
Greg Clark
That is right, and I would also welcome consideration of these matters. Right from the beginning, I have made a commitment to the House that I would take a considered, comprehensive view and use the powers that I have, and that where I did not have statutory powers, I would say what I expected. When it comes to research and development, to the ownership of assets and, for today’s purposes, to national security, a long-term commitment is required, and it has been important to obtain undertakings in all those areas. I hope that the Committee will take a look at this.
Frank Field (Birkenhead) (Lab)
In his statement, the Secretary of State said:
“GKN is a very important business, performing vital work in industries—aerospace and automotive in particular—with an expanding global market in which British innovation and excellence offer great opportunities.”
Does he understand from his regular meetings with Melrose that it is thinking of adapting its business model so that these vital interests can be kept for a longer term than they would otherwise have been? If not, would this British company consider selling first to another British company?
Greg Clark
I am grateful to the right hon. Gentleman for his question, because I wrote and said that deliberately. I regard this company, operating in the sector that it does, as having an important long-term role. One of the reasons that there was a vigorous contest for this business was the recognition that there are immense opportunities involved. It is my purpose as Business Secretary to ensure that we reap those opportunities. That is why I requested what was in effect a change to the previous commitments that this company or any other had made, and I was able to do that on the aerospace side. As I said in response to the hon. Member for Inverness, Nairn, Badenoch and Strathspey (Drew Hendry), it was clearly not possible to extract another commitment on the automotive business, given that the incumbent management had committed to selling it forthwith. In the spirit of what the right hon. Gentleman has said, I think that he will reflect on what has been obtained for the first time in the UK takeover—namely, a commitment to a much longer-term perspective than had been the case, including the right for the British Government to approve any subsequent purchaser of defence assets—and agree that that is a significant step forward.
Bim Afolami (Hitchin and Harpenden) (Con)
I draw the House’s attention to the fact that, in the dark days before I came to this House, I spent several years in the City advising on mergers and acquisitions, and Melrose was one of the companies that I advised several times. Bearing that in mind, while there is of course a narrow range of scenarios in which the Government can intervene on a quasi-judicial basis, as the Secretary of State has already set out, will he confirm whether the Government will always ensure that we have an open globalised economy based on competition, not one in which politicians will capriciously intervene, which would be the approach of the Labour party?
Greg Clark
That is the right approach. The UK’s reputation for being a dependable place to invest and do business is based on clear rules and principles, and we have benefited from that. We make significant investments in the UK economy, we make significant investments in overseas companies, and we hold big assets. That is important to us, and we should be a trading nation, which means that we should be open to investment as we invest in other countries. That is the heart of our approach. However, it is important to keep the regime under review, and where there are long-term interests, such as in research and development, it is right that we have introduced an ability during a takeover bid to extract indications of how a bidder would approach things. That is what we have done in this case.
Jack Dromey (Birmingham, Erdington) (Lab)
It is a bleak day for British industry and British workers when a 259-year-old icon of British engineering excellence falls prey to a hostile takeover thanks to hedge funds moving in to make a quick killing. We will hold Ministers and managers to account for the promises that they have now made. Crucially, does the Secretary of State agree that the time has come for a fundamental review of our corporate takeover regime, because the idea that the British national interest can be sold down by the river by hedge funds moving in to buy 20% of a company is fundamentally wrong?
Greg Clark
The hon. Gentleman talks about employees’ interests, and he has fulminated about the bid for a company that has an important plant in his constituency, but he has not made a single request or proposed a single safeguard to protect those interests. I do not know whether he has met the new management of GKN—I do not think he has—but my hon. Friends the Members for Filton and Bradley Stoke (Jack Lopresti) and for Redditch (Rachel Maclean) have made the effort and have discussed the important commitments that are being made, and the undertakings that I have secured will contribute to employment stability. The difference between my hon. Friends and the hon. Gentleman is that they have rolled up their sleeves and got involved, whereas he has contented himself with making slogans from the Back Benches.
Mr Mark Francois (Rayleigh and Wickford) (Con)
The aerospace division is the jewel in GKN’s crown and is a vital part of Britain’s defence industrial base, so as a former Ministry of Defence Minister, I particularly welcome the guarantees that have been provided about the future of that part of the company. Will the Secretary of State say a little more about how he has worked closely with the MOD on that? Will he also assure us that the MOD will be a part of the six-monthly reviews?
Greg Clark
I will indeed, and I am grateful to my right hon. Friend, who speaks with considerable authority not just as a former MOD Minister, but as an ex-serviceman. Defence considerations are important, and I work closely with the MOD, which has provided a comprehensive assessment. That is the proper basis on which those with expertise in such matters can say what is required to safeguard national security, and I promised this House that I would abide meticulously by the expert advice that I receive. I am glad that I have had access to that expertise and have made my decision based on it. Of course, when it comes to considering the future opportunities for this company, our engagement through the industrial strategy is as important in the defence sector as it in the automotive and civil aerospace sectors.
Richard Burden (Birmingham, Northfield) (Lab)
The Melrose takeover of GKN was approved by 52% to 48% after 20% of the company had been snapped up by hedge funds. The Secretary of State has heard calls from both sides of the House for those with short-term interests to be excluded from making decisions on takeovers and for the public interest test to be expanded to include questions about research and development. He has rejected those calls today, but he says that he keeps matters under review. What form will his review take, and when does he expect it to report?
Greg Clark
On the hon. Gentleman’s first point, I have said to many colleagues in the House that when it comes to shareholdings, every purchaser in the latter stages has bought from a longer-term shareholder, who has in effect expressed a judgment on the company. This Government, previous Governments and this House have looked carefully at the rights of different classes of owners and have concluded that the hon. Gentleman’s suggestion would not be the right reform. However, he knows me well and I will of course consider the assessment of the conduct of this bid, but it would be wrong to mislead him by saying that I have formed a different view. I will take an objective view of the conduct of the bid, as will others in the House. The grounds for intervention are specified in the Enterprise Act 2002, which reflects the requirements across the European Union that every member state must apply.
Bob Stewart (Beckenham) (Con)
The old management was British, the new management is British, and the Secretary of State appears to have secured guarantees from the new management that it will do certain things that the old management had not guaranteed. Does that not imply that those who are working for the new GKN should sleep slightly more soundly in their beds?
Greg Clark
My hon. Friend puts it well and succinctly. Any takeover bid will obviously involve some anxiety for employees with long service, but whether or not the bid had succeeded, this was always going to be a period of change for GKN employees. As a result of the commitments that have been given, they can have more certainty about a confident future than would otherwise have been the case.
Darren Jones (Bristol North West) (Lab)
In the Secretary of State’s previous statement on this issue I asked two questions: whether the Government would ask Melrose for a commitment to the aerospace division of longer than five years, based on advice both from key customers and other stakeholders; and whether the Government would have a conversation with Airbus about the consequences of a short-term commitment of five years? Will the Secretary of State confirm to the House whether he asked Melrose for a commitment of longer than five years and whether he had a conversation with Airbus? If not, why not?
Greg Clark
On the hon. Gentleman’s first point, the commitment to five years is the longest that has ever been given and was not something that Melrose was willing to offer the Business, Energy and Industrial Strategy Committee. In fact, the further undertakings that have been entered into on defence matters, which are of course in the aerospace division, go beyond that period.
I mentioned in reply to my hon. Friend the Member for Redditch (Rachel Maclean) that Airbus’s chief executive has not repeated the reports that were made previously. I have discussed the matter with Melrose and its intention is to develop a relationship that it hopes will prosper in the future.
Kevin Foster (Torbay) (Con)
Given that this is the first time that the process has been used, the Secretary of State has rightly focused on the legal undertakings that he has been able to extract from Melrose. Will he speak a bit more widely about the general discussions that he has had about the future role of GKN’s assets in his industrial strategy?
Greg Clark
I have been very clear in my discussions with both sides during the bid. It is important to have equal treatment when taking a quasi-judicial decision. GKN has an important role to play in our industrial strategy in two important sectors. GKN will be part of an aerospace sector round table later this week, and I expect it to live up both to its responsibilities and to the opportunities in this most exciting of sectors.
Mr Paul Sweeney (Glasgow North East) (Lab/Co-op)
Takeovers are a good thing where they are likely to enhance value, but it is clear that this highly leveraged takeover by Melrose is likely simply to load GKN with £8 billion of debt. We know what will happen, as we have learned the lessons of history: the company will be broken up and sold off piecemeal to recoup the debt raised by Melrose to create false value.
We have also seen a lukewarm commitment on R&D. GKN’s current R&D is at only half to two thirds that of its main competitors. Why did the Minister not seek a more ambitious undertaking that the takeover will enhance value and increase GKN’s R&D spending target to that of its main international competitors? I echo the sentiments of other Members on the need to amend our shareholder takeover rules to ensure that short-term interests of people with no industrial knowledge or understanding of companies are not permitted to distort the interest of stakeholders in the long-term value of this company.
Greg Clark
For the first time in British corporate history, we have secured a commitment to spend, as a minimum, what the incumbent is already spending on research and development—that should be welcomed. Obviously, the reports of accounts and the disclosures that will need to be made to the markets will shine a light on the debt, but it is striking that it has been suggested today that £150 million was accounted for by unpaid suppliers’ bills at the end of the last quarter—I gather that is in the filings that have been released today—so I imagine the hon. Gentleman will want to study very closely with a beady eye the reports of accounts as they are published in the months ahead.
Kelvin Hopkins (Luton North) (Ind)
I am reminded of the Cadbury experience when it was taken over by Kraft. Undertakings were given about the factory in Bristol, which was sold off almost before the ink was dry on the deal. GKN is a company of national strategic importance not just to defence but to the wider economy and, indeed, to the Government’s much-vaunted industrial strategy. GKN should play a big part in that future.
If GKN were a German company in Germany or a French company in France this kind of speculative takeover would be prevented one way or another. One way to prevent it would be to have substantial stateholdings in such companies, and France, in particular, has done that over many years to make sure French companies remain French. Will the Government not look to France and Germany for the best way forward?
Greg Clark
Kraft’s takeover of Cadbury is exactly why we changed the rules so we can now have binding undertakings that are legally enforceable, unlike the situation that prevailed when the hon. Gentleman was in government. When it comes to the German system, in fact there is a substantial record of German companies being taken over.
Greg Clark
Yes, Vodafone’s takeover of Mannesmann is a classic case. KUKA, a German robotics company, has been taken over recently, as has Kabel Deutschland. There is a substantial record of takeovers in Germany. We have to operate the same public interest tests. What we have now is an ability to inquire into the intentions for the medium and long term, and to obtain legally binding commitments on that. I hope the hon. Member for Luton North (Kelvin Hopkins) would welcome that, because many of his constituents will benefit from it.
Mr Speaker
I greatly enjoyed the Secretary of State’s answer to the hon. Member for Luton North (Kelvin Hopkins), and I hope he will not take offence if I say that the hon. Member for Luton North was not himself in government—he looked rather shocked, nay affronted, by any suggestion that at any time in his career he might have been. The hon. Member for Luton North is a career Back Bencher and is immensely proud of the fact.
Mr Gavin Shuker (Luton South) (Lab/Co-op)
Workers at GKN’s Luton plant in my constituency are world leaders in ice protection systems for flight-deck windows and fast-jet canopies, and I believe they will share my dismay that the assurances the Secretary of State has put in place amount to little more than the new management picking up the phone and informing him before it does things that damage our national security and national interest. Is not the reality of the quasi-judicial nature of the decision-making process that he and future Secretaries of State will always veer on the side of caution, rather than face the prospect of being challenged in court when a takeover goes through?
Greg Clark
I am sure it is an unaccountable oversight that the hon. Member for Luton North (Kelvin Hopkins) has never served in government.
For the constituents of the hon. Member for Luton South (Mr Shuker), during the takeover bid, the incumbent management criticised the commitment to hold the aerospace division for five years. Given that a majority of the company was to be sold as part of the incumbent management’s plans, it is fair to observe that it is not clear there would be any greater stability—I put it as mildly as that—if the incumbent management had continued, rather than the new management that shareholders chose to manage the company.
Points of Order
(6 years, 2 months ago)
Commons ChamberRead Full debate Read Hansard Text Read Debate Ministerial Extracts
Mr Speaker
I am saving up the hon. Member for Birmingham, Erdington (Jack Dromey). It would be a pity to squander him at too early a stage of our proceedings.
Rebecca Long Bailey
On a point of order, Mr Speaker. The Secretary of State for Business, Energy and Industrial Strategy suggested in response to my earlier comments that I have never said what further undertakings he should have sought from Melrose. I know he cherishes our exchanges—there are many of them, so I forgive him for forgetting one of them—but on 27 March, in response to an update from him, I questioned the absence of numerous undertakings and was very specific about what they were. I would simply like to correct the record, and I accept his apology in advance.
Mr Speaker
I am most grateful to the hon. Lady for her attempted point of order, which I would prefer to classify as a point of continued debate. I am sure it will be of intense interest across the House, and copies of this particular extract of today’s proceedings will probably be lodged in the Library. More particularly, I rather imagine that she will wish speedily to communicate what she has just said to many, many thousands of people across Salford and Eccles.
Mr Speaker
The Secretary of State has been prompted to come to the Dispatch Box. Who would dare deny him?
Greg Clark
Further to that point of order, Mr Speaker. I can only regret that I missed the extensive undertakings and the forensic examination by the hon. Member for Salford and Eccles (Rebecca Long Bailey). It is possibly down to the fact that she had prejudiced her consideration of this matter by saying that Labour would block the takeover, thereby making it completely impossible for her to have any role in it were she in my position as Secretary of State.
Mr Speaker
The shadow Secretary of State and the Secretary of State have now had their little bit of fun, in which, with my characteristic generosity, I have been willing at this early stage to indulge them. I do not think we need to pursue the matter any further for now. Doubtless, they will preserve these little titbits for their children, or possibly for subsequent generations.
Jack Dromey
On a point of order, Mr Speaker. Indulging in the use of uncharacteristic language, the Secretary of State for Business, Energy and Industrial Strategy suggested that no proposals had been put to him by me and others. Would he like to confirm that I and others met him and made representations to him in detail asking that the bid be called in under section 58 of the Enterprise Act 2002, with a particular focus on defence and strategic grounds? Would he therefore like to take the opportunity to correct the record?
Mr Speaker
It is an extraordinarily eccentric impersonation of a point of order not to seek any procedural ruling from me, although the hon. Gentleman is wise not to do so in respect of the contents of the Enterprise Act, but to deploy the ruse of a point of order to whizz past me at an aeronautical pace in pursuit of some debating reply from the Secretary of State. That is very disorderly behaviour, but as the mood of the House is, on the whole, quite an amicable one, let us hear the mellifluous tones of the Secretary of State, I hope for the last time today.
Greg Clark
I have high regard for the hon. Member for Birmingham, Erdington (Jack Dromey), and what he says is uncharacteristic of him. I am disappointed that the limit of his request is to block the bid, rather than to specify undertakings that could have been made and to engage in greater detail than simply saying, “No. Block it.” It would have been more fruitful on behalf of his constituents if he had delved a bit more into its substance, and I regret his not doing so.
Mr Speaker
I will sturdily resist any temptation to intervene further in that exchange. This private squabble may continue for a little while, albeit with good nature, I hope.
Mr Speaker
On the subject of good-natured points of order, I say more in hope than in expectation, I call Mr John Mann.
John Mann
On a point of order, Mr Speaker. After a debate on anti-Semitism a week ago today, I have received very many kind remarks from parliamentarians, their staff and, indeed, members of House staff, for which me and my family are very grateful. There is an exception to that: one member of the Press Lobby chose to put out on social media, without any communication whatsoever with me, the suggestion that I had misled Parliament in relation to a criminal act of violence against my wife. May I repeat, on the record, that I have not misled Parliament and that my wife, who was the victim of this crime, has written to the media outlet concerned today clarifying this in some detail? This outrageous commentary has led to a wave of additional abuse against me, against my wife and against my daughter, including a threat of violence from a Labour party member from Sefton that is being referred to the police. Can you confirm my understanding that members of the Press Lobby have a privileged status within here? They have computers, telephones and lists of MPs, and if they are struggling to get hold of anybody they have the ability to wait outside this Chamber after a debate to speak to us. This member of the Press Lobby chose to use none of those things, and I just wanted your confirmation that the Press Lobby has the full ability to contact any of us, should they wish to do so, before putting out such scurrilous material.
Mr Speaker
I can confirm that. Any journalist can contact any Member if said journalist is minded to do so. I think it is as simple as that; I have no responsibility for what has been said, and the hon. Gentleman is not suggesting that I do. To be candid, I have no knowledge of which individual or outlet he has in mind. In a way, that is an advantage; he is asking me a straightforward question and I can offer him a straightforward confirmation by way of reply.
Needless to say, I am very sorry to hear about the torrent of abuse that the hon. Gentleman, his wife and his daughter have experienced—that is very sad. Nothing is going to stop the hon. Gentleman, whom I have known for more than 30 years, from speaking his mind, and it is right that that should be so. But it is a pity when people feel it necessary not to play the ball but to play the man or the woman, indulging in ad hominem abuse of a frequently loathsome kind, and sometimes of a kind that would be of interest to the police. This is a very worrying development in our democracy, about which I have spoken before, but I thank the hon. Gentleman for what he has said and I hope my reply offers him some reassurance.
Unsolicited Calls (Prevention)
Tuesday 24th April 2018
(6 years, 2 months ago)
Commons ChamberRead Full debate Unsolicited Calls (Prevention) Bill 2017-19 View all Unsolicited Calls (Prevention) Bill 2017-19 Debates Read Hansard Text
A Ten Minute Rule Bill is a First Reading of a Private Members Bill, but with the sponsor permitted to make a ten minute speech outlining the reasons for the proposed legislation.
There is little chance of the Bill proceeding further unless there is unanimous consent for the Bill or the Government elects to support the Bill directly.
For more information see: Ten Minute Bills
This information is provided by Parallel Parliament and does not comprise part of the offical record
Stephen Kerr (Stirling) (Con)
I beg to move,
That leave be given to bring in a Bill to make provision to prevent unsolicited calls; and for connected purposes.
Lest anyone be in any doubt as to the seriousness and importance of this subject, I should inform the House that well over 100 Members kindly offered to co-sponsor such a Bill. This is the first time I have had the privilege of attempting to bring a Bill to the House and I am glad to be able to get this level of support from only a single email.
Receiving unsolicited telephone calls has become an infuriating but inevitable part of our daily lives. Such calls are intrusive, seldom of any use and, in many cases, made with the sole intention of ripping people off. The situation has become normalised and we should not be content with that. It is estimated that some 70 million nuisance calls are made every year; this is a growing problem. A Which? survey estimated that 39% of calls in September 2016 were a nuisance and that the volume of nuisance calls for some was astonishing, with 10% of people receiving more than 60 a month—that works out at two calls per day, on average. Later data shows that Scotland is the worst area in the UK for rogue calls. The most recent figures from Which? show that 71% of Scots believe that receiving cold calls has discouraged them from even picking up their home phone when it rings, with 41% saying they feel intimidated by cold calls. New BT figures claim that every household in the UK receives four nuisance calls a day; as this is across 23 million households in the UK, it would indicate the ridiculous figure of 5 billion nuisance calls a year. Needless to say, those numbers show the extent of a problem that is at least very large.
These calls are intrusive; as people are sitting down with their family enjoying a bit of downtime in front of the television, they get interrupted by a phone call that turns out to be an unwanted waste of time, inconvenient and annoying. In the residential setting, this kind of disruption is never welcome. For businesses, unsolicited calls play havoc with the rhythm of the daily business routine and with the productivity of offices. I heard of one business where if one nuisance call was received by one phone, it could almost be guaranteed that every phone in the office would receive the same call throughout the day. That is distracting for employees, taking up precious time for no productive purpose, and it blocks the line, preventing customers and suppliers from being able to get through on the phone.
I have also heard stories of helplines being clogged up with this kind of call, preventing people who genuinely need help from getting through. It is the equivalent of setting up a trader’s stall outside a hospital accident and emergency entrance that blocks ambulances from getting in. We would not allow this in the physical world, so why should we tolerate it in telephony? For many who are more vulnerable, the people at the end of the phone gather data and try to foist products and services on them, which are usually neither wanted, nor needed. This leads to people getting ripped off by often unethical operators. Laws are already in place against that, but the line is blurry. Although people who phone purporting to be from a company to get access to someone’s computer are breaking the law, the calls where someone phones up to ask questions to build a profile of how vulnerable a person is may not be illegal.
This is a certainly an issue that affects millions of people across the country, one that demands action from us as legislators. We have a duty to ensure that our legislation is effective and gives the authorities the power they need to effect solutions to a huge problem. I am not suggesting for one moment that the Government have been complacent on this issue. Since the publication of the nuisance phone call strategy in 2014, there has been a great deal of Government action on this issue. I know how much work my right hon. Friend the Secretary for State for Digital, Culture, Media and Sport has undertaken on it, both in his current role and in his previous role as Minister of State. The single most significant element was placing responsibility for all nuisance calls with the Information Commissioner’s Office, creating a single port of call for the regulation of this issue. But more needs to be done, and making directors liable for the actions of their companies when they undertake nuisance calls is an essential part of the next step we should take in this House to tackle this problem. I hope to outline this element of what the Bill will do.
I recognise that much good work is being undertaken on financial services legislation that will outlaw the practice of soliciting insurance claims over the phone, making annoying traffic accident and payment protection insurance calls a thing of the past. Members will know that I am often a critic of the Scottish Government, but they have done much good work in this area. They have spent money on ensuring that people, especially the most vulnerable in our society, are aware of scams, and they have taken proactive steps to ensure that these warning messages get to the people who need to hear them. The Scottish Government estimate that the UK-wide economic harm from scam calls comes to £3 billion; this was in a report published only last month looking at the effectiveness of actions to reduce harm from nuisance calls. The work the Scottish Government have done has shown some results, and it is worth looking at this across the UK.
The private sector has also been hard at work on this issue. The Telephone Preference Service is a great way for people to limit their exposure to nuisance calls. BT has been working very hard to limit these calls. In my constituency, trueCall works with our local trading standards to install call blockers for vulnerable households and has blocked more than 21,000 scam and nuisance calls.
I would like to outline what I envisage the Bill doing. It is effectively divided into three parts, the first of which, as I have said, will make the penalties more robust and widen the way in which they can be applied. One aspect of the problem is that the companies that make nuisance calls are often pop-up companies. They are designed to make money and then go bankrupt, so that if they are caught, they will avoid a fine. That is an abuse of company law, and the Bill would make the directors of such companies personally liable for fines for nuisance calls. That reflects the private Member’s Bill that was introduced by the former member for Edinburgh West and the work of the hon. Member for North Ayrshire and Arran (Patricia Gibson), to whom I pay tribute for her work on this issue. If directors are personally liable, people will think twice before authorising such activities.
The second part of this Bill will tighten up the definition of a nuisance call. We think we all know what a nuisance call is—it is when someone calls us up and tries to sell us something that we do not really want—but is that, in fact, the definition that we should adhere to? Sometimes we receive calls that we are not expecting from businesses, and they are good. Is it right to say that a nuisance call is simply a call that we do not want? That would effectively end the opinion poll business and all telephone canvassing, and I am not sure whether that would make the Bill more desirable to Members or less. It is clear that the current legal definition is not effective, and the Bill is designed to empower the Government and the regulator to have a more robust definition of nuisance calls.
Finally, I would like to place a general responsibility on unsolicited callers to ensure that the numbers they are dialling are not registered with the Telephone Preference Service. That would ensure that there was no problem when phone numbers were bought and sold. As with any valuable data commodities, it would be the responsibility of both the purchaser and the seller to establish whether a number was a TPS number. It would be possible to fine both parties if they had not performed due diligence on the nature of the numbers that had been traded.
This is an important issue, which has rightly gained a lot of attention from across the House. It has also elicited a lot of conversation with the private sector. I thank Brendan Dick and his team at BT Scotland for providing me with an excellent briefing, as well as Which? and Citizens Advice for the work that they have done in this area. If we can make the situation better for people, we will remove a nuisance and make everyone’s lives a bit easier. At the same time, we will improve business productivity. It is seldom that one finds such widespread agreement on any issue across the House, and therefore I commend the Bill to the House.
Question put and agreed to.
Ordered,
That Stephen Kerr, Kate Hoey, Hugh Gaffney, Rachel Reeves, Mr Alistair Carmichael, Ben Lake, Nigel Dodds, Lady Hermon, Dame Cheryl Gillan, Fiona Bruce and Patricia Gibson present the Bill.
Stephen Kerr accordingly presented the Bill.
Bill read the First time; to be read a Second time on Friday 6 July, and to be printed (Bill 197).
Financial Guidance and Claims Bill [Lords]
Tuesday 24th April 2018
(6 years, 2 months ago)
Commons ChamberRead Full debate Financial Guidance and Claims Act 2018 View all Financial Guidance and Claims Act 2018 Debates Read Hansard Text Read Debate Ministerial Extracts Amendment Paper: Consideration of Bill Amendments as at 24 April 2018 - (24 Apr 2018)
17:04 - The House divided: - Ayes: 255 / Noes: 293 - Question accordingly negatived.
17:20 - The House divided: - Ayes: 255 / Noes: 293 - Question accordingly negatived.
The Economic Secretary to the Treasury (John Glen)
I beg to move, That the clause be read a Second time.
Madam Deputy Speaker (Dame Rosie Winterton)
With this it will be convenient to discuss the following:
Government new clause 9—Unsolicited direct marketing: pensions (No. 2)—
‘(1) The Secretary of State may make regulations prohibiting unsolicited direct marketing relating to pensions.
(2) The regulations may—
(a) make provision about when a communication is to be, or is not to be, treated as unsolicited;
(b) make provision for exceptions to the prohibition;
(c) confer functions on the Information Commissioner and on OFCOM (including conferring a discretion);
(d) apply (with or without modifications) provisions of the data protection legislation or the Privacy and Electronic Communications (EC Directive) Regulations 2003 (S.I. 2003/2426) (including, in particular, provisions relating to enforcement).
(3) The regulations may—
(a) make different provision for different purposes;
(b) make different provision for different areas;
(c) make incidental, supplementary, consequential, transitional or saving provision.
(4) Regulations under this section are to be made by statutory instrument.
(5) A statutory instrument containing regulations under this section may not be made unless a draft of the instrument has been laid before, and approved by a resolution of, each House of Parliament.
(6) If before the end of June in any year the Secretary of State has not made regulations under this section (whether or not in that year), the Secretary of State must—
(a) publish a statement, by the end of July in that year, explaining why regulations have not been made and setting a timetable for making the regulations, and
(b) lay the statement before each House of Parliament.
(7) In this section, “OFCOM” means the Office of Communications established by section 1 of the Office of Communications Act 2002.”
This new clause inserts a new power for the Secretary of State to make regulations (subject to the affirmative procedure) banning unsolicited direct marketing relating to pensions. If the power is not exercised by June, the Secretary of State must explain to Parliament why not. This new clause would be inserted after Clause 24.
Amendment (a) to new clause 9, in subsection (1), leave out “may” and insert “must”.
Amendment (b) to new clause 9, in subsection (1), after “pensions” insert
“and prohibiting the use for commercial purposes of information obtained by means of such direct marketing”.
Amendment (c) to new clause 9, in subsection (2)(c), leave out “and on OFCOM” and insert
“, on Ofcom and on the Financial Conduct Authority”.
Amendment (d) to new clause 9, in subsection (2)(d), after “(S.I. 2003/2426)” insert
“or the Financial Services and Markets Act 2000”.
New clause 1—High-cost credit: advice to the Financial Conduct Authority—
“(1) In exercising its functions the single financial guidance body must have regard to the effect of high-cost credit card lending on consumer protection and must produce and publish an annual assessment of any consumer detriment.
(2) The assessment under subsection (1) shall in particular consider—
(a) what level of interest and fees constitute a high-cost credit card;
(b) information provided by high-cost credit card providers to customers, and whether such information allows customers to make informed financial decisions;
(c) the impact of high-cost credit lending on levels of personal debt,
as well as any other factors that the single financial guidance body considers relevant.
(3) If the single financial guidance body considers it to be necessary for consumer protection it must advise the Financial Conduct Authority to impose a limit on the cost of specified types of credit.”
This new clause would require the single financial guidance body to consider the effect of high-cost lending using credit cards on consumer protection and produce an annual assessment of any consumer detriment from such high-cost lending.
New clause 2—Specific requirements as to the pensions guidance function: mid life reviews—
“(1) As part of its pensions guidance and money guidance functions, the single financial guidance body must provide targeted information and guidance for members of the public from the age of 50 to help them make decisions on their financial affairs.
(2) In particular, the information and guidance in subsection (1) shall include information and guidance on—
(a) increasing pension contributions in preparation for retirement,
(b) saving money in preparation for retirement, and
(c) career development and the impact of career development on financial matters including preparation for retirement.”
This new clause provides for the single financial guidance body to provide guidance to members of the public over the age of 50, to prepare them for retirement. These “mid life reviews” would provide guidance on pensions, savings, and career development.
New clause 6—Regulatory principles to be applied in respect of claims management services—
“(1) The FCA may make recommendations to the Secretary of State on regulatory principles to be applied to claims management services.
(2) The matters on which the FCA may make recommendations include, in relation to claims management services—
(a) the duties of authorised persons to act honestly, fairly and professionally in accordance with the best interests of consumers;
(b) the duties of authorised persons to manage conflicts of interest fairly, both between themselves and their clients, and between clients;
(c) other duties of authorised persons related to a duty of care towards their clients.
(3) If the FCA recommends that regulatory principles be applied to claims management services, the Secretary of State may by regulations impose such principles.
(4) The power to make regulations under subsection (3) is exercisable by statutory instrument; and an instrument containing such regulations is subject to annulment in pursuance of a resolution of either House of Parliament.
(5) In this section, ‘authorised person’ has the same meaning as in the Financial Services and Markets Act 2000, and ‘authorised persons’ shall be construed accordingly.”
This new clause would allow the FCA to recommend that the Secretary of State introduces a duty of care which would require claims management services to act with the best interests of the customers in mind.
New clause 7—Assessment of public preparedness for income shocks—
“(1) As part of its strategic function, the single financial guidance body must from time to time publish an assessment of the ability of members of the public to plan for and address sudden reductions in income.
(2) An assessment under this section must consider the impact of the work of the single financial guidance body on the ability of members of the public to plan for and address sudden reductions in income.
(3) The Secretary of State must lay before the House of Commons any assessment conducted under this section as soon as practicable after its completion.”
New clause 8—Ban on unsolicited real-time direct approaches by, on behalf of, or for the benefit of companies carrying out claims management services and a ban on the use by claims management companies of data obtained by such methods—
“(1) The FCA must, as soon as they take responsibility for claim management companies, introduce bans on—
(a) unsolicited real-time direct approaches to members of the public carried out by whatever means, digital or otherwise, by, on behalf of, or for the benefit of companies carrying out claims management services or their agents or representatives, and
(a) the use for any purpose of any data by companies carrying out claims management services, their agents or representatives where they cannot demonstrate to the satisfaction of the FCA that this data does not arise from any unsolicited real-time direct approach to members of the public carried out by whatever means, digital or otherwise.
(2) The FCA must fix the appropriate penalties for breaches of subsection (1)(a) and (b) above.”
Amendment 31, in clause 2, page 2, line 17, at end insert—
“including information about the services offered by credit unions,”
This amendment adds to the objectives of the single financial guidance body the requirement to provide information about credit unions.
Amendment 39, page 2, line 23, leave out from “accordingly” to the end of line 24 and insert—
“(da) to ensure the needs of people in vulnerable circumstances, including but not exclusively—
(i) those who suffer long-term sickness or disability,
(ii) carers,
(iii) those on low incomes, and
(iv) recipients of benefits,
are met and that resources are allocated in such a way as to allow specially trained advisers and guidance to be made available to them,”
This amendment would require that specially trained advisers and guidance are made available to people in vulnerable circumstances and would provide an indicative list of what vulnerable circumstances should include.
Amendment 40, page 2, line 36, at end insert—
“(4) The single financial guidance body must ensure it communicates to consumers using its services the difference between—
(a) provision of information,
(b) provision of guidance,
(c) provision of advice.”
This amendment would require the new body to ensure that consumers are made aware of the differences between ‘information’, ‘guidance’ and ‘advice’ so that they can specify what type of services they require from the new body.
Amendment 4, page 3, line 5, in clause 3, at end insert—
“(c) advice to the Financial Conduct Authority on matters relating to high-cost credit”.
Amendment 41, page 3, line 16, at end insert—
“(6A) As part of its money guidance function, the single financial guidance body must make available financial guidance on the use of alternative sources of retirement income, including housing wealth, to enable members of the public to make fully informed decisions about pensions and retirement income.”
This amendment would place a duty on the single financial guidance body to make available guidance on alternative sources of retirement income, such as equity release. This will provide a pathway for members of the public to consider their wider assets, particularly their housing wealth, to make effective decisions about their retirement income.
Government amendment 10, page 3, line 17, leave out subsection (7) and insert—
‘(7) The consumer protection function is—
(a) to notify the FCA where, in the exercise of its other functions, the single financial guidance body becomes aware of practices carried out by FCA- regulated persons (within the meaning of section 139A of the Financial Services and Markets Act 2000) which it considers to be detrimental to consumers, and
(b) to consider the effect of unsolicited direct marketing on consumers of financial products and services, and, in particular—
(i) from time to time publish an assessment of whether unsolicited direct marketing is, or may be, having a detrimental effect on consumers, and
(ii) advise the Secretary of State whether to make regulations under section (Unsolicited direct marketing: other consumer financial products etc) (unsolicited direct marketing: other consumer financial products etc).”
This amendment makes changes to the consumer protection function to make it clearer exactly what it entails.
Amendment (a) to amendment 10, in paragraph (b)(i), leave out “from time to time” and insert
“at least once every two years”.
Amendment 34, page 3, line 34, at end insert—
“(aa) the capability of members of the public to plan for and address sudden reductions in income,”.
Amendment 1, page 3, line 39, at end insert—
“(11) In carrying out its strategic and other functions the single financial guidance body must make and publish an annual assessment of the level of different types of lending across the United Kingdom by district.
(12) The types of lending covered by the assessment in subsection (11) should include—
(a) high cost short term credit,
(b) hire purchase agreements,
(c) conditional sale agreements,
(d) open ended credit,
(e) other secured lending, and
(f) other unsecured lending.”
This amendment requires the single financial guidance body to carry out an annual assessment of the level of different types of lending in different geographical areas across the United Kingdom.
Government amendment 11.
Amendment 8, in clause 4, page 4, line 2, at end insert—
“(2A) The single financial guidance body must, within 12 months of the passing of this Act, advise the Secretary of State on how to most effectively implement bans on—
(a) cold-calling on behalf of, or for the benefit of companies carrying out claims management services or their agents or representatives, and
(b) the commercial use of any data by companies carrying out claims management services, their agents or representatives where they cannot demonstrate to the satisfaction of the Secretary of State that this data was not obtained by cold-calling.
(2B) In this section ‘claims management services’ has the same meaning as in section 419A of the Financial Services and Markets Act 2000.”
This amendment will require the Secretary of State to specifically ban cold-calling and the commercial use of data from cold-calling by claims management companies, in addition to any bans recommended by the single financial guidance body.
Amendment 9, page 4, line 4, leave out “may” and insert “must”.
This amendment will place a statutory duty on the Secretary of State to institute bans on cold-calling on receipt of advice to do so from the single financial guidance body.
Amendment 42, in clause 10, page 7, line 22, at end insert
“and to whether the standards are proportionate”.
Probing amendment. The SFGB’s standards setting powers also need to be matched with principles of good regulation, ensuring that conditions are proportionate to the benefits they are expected to bring. This would bring the Bill (impacting charities) into line standards setting and enforcement powers granted to other bodies (impacting firms) such as those granted to the FCA.
Government amendments 12, 43, 25, 44, 26 45 and 46.
Amendment 2, in schedule 3, page 45, line 8, at end insert—
17A (1) Section 165 (regulators’ power to require information: authorised persons etc) is amended as follows.
(2) In subsection (4) after paragraph (b) insert—
(c) in relation to the exercise by the FCA of the powers conferred by subsections (1) and (3), information and documents reasonably required by the single financial guidance body in connection with the exercise by the body of its functions as set out in section 3 of the Financial Guidance and Claims Act 2018.”
This amendment extends the FCA’s power to require information from authorised persons to include information required by the single financial guidance body for carrying out its functions.
Government amendments 47, 48, 28 and 29.
John Glen
It is a great pleasure finally—for the third time of asking, I believe—to have the opportunity to start the Bill’s Report stage. I want to make a positive start to proceedings by covering new clauses 4 and 9, which will allow us to protect consumers from harmful cold calls by enabling us to lay before the House regulations to ban pensions cold calling and introduce bans for other forms of cold calling, if we consider it appropriate to do so.
As I have said previously, I want to ban pensions cold calling as soon as possible, given the profoundly damaging impact that pension scams can have on people’s lives. I have listened to the recommendations of the Work and Pensions Committee, which published a report before the turn of the year on preventing pension scams, as well as to the passionate calls that have been made across the House and in the other place to ban pensions cold calling. I am pleased to present new clause 9, which builds on and improves the clause proposed by the Committee. The Government’s new clause has a wide scope, which means that we can ban all pensions-related calls. Crucially, we do not need to wait for advice from the guidance body before we implement a ban, so we can make good on our commitment to ban pensions cold calling quickly. I hope that the fact that I will have to lay a statement before both Houses if we have not laid regulations before Parliament by June will reassure hon. Members on that point.
I turn to new clause 4. It is clear to me that, too often, significant consumer detriment arises because of cold calling. If we find evidence that people are experiencing detriment as a result of cold calling regarding consumer financial products, we will not hesitate to use this power to protect consumers.
I am pleased to be able to confirm the final part of our approach to protect consumers from cold calling by means of amendment 10. The amendment expands and improves on the consumer protection function. It gives the body powers to publish regular assessments of consumer detriment resulting from cold calling, and to advise the Secretary of State on where further bans should be implemented. The change clarifies the consumer protection function and gives the body a clear mandate to support the Government in preventing harm that results from cold calling. In fact, the Bill has been agenda-setting in relation to cold calling. The amendments that we are discussing will give the Government new powers to ban cold calling in some of the areas that are the most pressing when it comes to protecting consumers.
Neil Gray (Airdrie and Shotts) (SNP)
I thank the Minister for giving way and commend him for the action that he has taken—I am very supportive of it. He has made a good case for banning cold calling in the pensions industry and some other financial industries. The clear case for doing so has been well made, but why will the Government not go further and ban cold calling outright?
John Glen
I have tried to make it clear that when we are setting up a new body, it is important that we take time to reflect on the evidence and that we take action in consultation with and alongside that body. I acknowledge the widespread concern that exists in other areas, and I think that the action we are taking gets the balance right when it comes to getting the evidence together and moving as quickly as possible when the case has been made.
The amendments that I have outlined are additional to the amendment that was made in Committee to introduce a ban on claims management cold calling, which will cover calls about claims on matters ranging from mis-sold payment protection insurance to holiday sickness and car accidents. That means that calls about PPI, whether we have been in a car accident or whether we were sick on holiday—we are all familiar with such calls—will be banned unless prior consent has been given to receiving them.
Having ensured that we can tackle cold calling effectively, we plan to remove the existing clause 4 by means of amendment 11. Amendments 12, 25, 26, 28, 29, 45 and 46 are minor and consequential to these changes. In particular, amendment 45 commences new clause 9 on Royal Assent to ensure that there is no unnecessary delay in making regulations, and amendments 44, 47 and 48 prepare the Bill for the new data protection legislation.
Jack Dromey (Birmingham, Erdington) (Lab)
I wish to address the issues of pensions cold calling in new clause 9, wider cold calling in amendments 8 and 9, and the duty of care in new clause 6.
Let me start by saying what this Bill is about. In Committee, we heard the story of the Port Talbot shift supervisor who broke down and wept uncontrollably when he met the Pensions Advisory Service. He described how he had been conned into going down the wrong path on his pension, losing tens of thousands of pounds as a consequence. The reason why he wept, he said, was that all 20 on his shift followed his lead, and therefore they, like him, now faced a much bleaker future than would otherwise have been the case.
Pension cold calling is a blight on people up and down the UK. As the Minister has said, we all know the feeling of answering the phone to a number that we do not recognise and hearing that familiar phrase, “We believe that you have been in a car accident.” Indeed, I was heading over to one of the Bill Committee sittings when I received such a call, not having had one for some years. Someone said that they understood that I had been in a car accident. I said that, yes, I had been in an accident 38 years ago, and it was because somebody had run into the back of me. Since then, I have had two subsequent annoying cold calls, yet mine is but a minor problem. The more significant one is the 11 million pensioners who are targeted annually by cold callers. Fraudsters are making 250 million calls a year, which is equivalent to eight every second.
As the Minister knows, we have approached the cold-calling element of this Bill on a four-pronged basis: first, banning pensions cold calling; secondly, pushing for a total ban now on cold calling for claims management companies, thereby tackling the scourge of unsolicited claims head on; thirdly, banning the use of information obtained through cold calling; and, fourthly, ensuring that the strongest possible sanctions are put on those who break the ban, which means that they are struck off.
The Government’s commitment to ban pensions cold calling from June is a necessary and wholly welcome step. May I make the point—such points are not often made in the House—that the Under-Secretary of State for Work and Pensions, the hon. Member for Hexham (Guy Opperman), and the Economic Secretary to the Treasury have engaged with us, the wider community and the pensions industry? Their approach has been constructive. Together, we have come a very long way, but I hope that they will go just that little bit further. Our amendments would tighten the provisions around the ban and ensure that it is fit for purpose. The dual additions of making it an offence to use the information obtained through cold calling and conferring functions on to the Financial Conduct Authority would mean that the ban could be much tighter and more effective.
Although the original clause means that the “introducers” who tend to commit a lot of cold calling in cases such as the British Steel scandal would not be restricted, as they are not covered by the FCA, our amendment would restrict them. The move to ban the use of the information means that those firms which provide financial services and are covered by the FCA will be banned from using the information that the “introducers” gather. This slight shifting of the ban is designed to strengthen it further, as the FCA has much stronger powers than the Information Commissioner’s Office and can strike off members who contravene the rules. We therefore hope that Ministers will reflect further on this.
I now move on to cold calling more widely. A crucial issue on which the Minister has touched is the speed with which we now act. It is not only pensions where cold calling has a negative impact. There are many other industries that have been blighted by cold calling that creates serious consequences for innocent consumers. It is common for claims management companies to try to harvest cases for road traffic accidents and holiday sickness. Unfortunately, and extraordinarily, the UK has become the world leader for holiday sickness claims. The Association of British Travel Agents said that there were about 35,000 claims of holiday sickness in 2016, which represents a 500% rise since 2013. One in five Britons—19%, or around 9.5million people—has been approached about making a compensation claim for holiday sickness. Statistics from just one tour operator, in July and August, show that there were 750,000 travelling British customers, 800,000 Germans and 375,000 Scandinavians. The Scandinavians lodged 39 claims for holiday sickness and the Germans filed 114. The Brits put in just under 4,000 claims.
Alex Sobel (Leeds North West) (Lab/Co-op)
My hon. Friend referred to Jet2, which is headquartered in my constituency and has raised this issue with me on many occasions. It says that these vexatious claims are increasing the cost of flights and holidays for the rest of us. Is it not true that closing this loophole will effectively mean that we can all enjoy a holiday at a much more reasonable price?
Jack Dromey
My hon. Friend is absolutely right. When a reputable company such as Jet2 makes the point that the consequence of this practice might be price increases and a reluctance among some hoteliers to enter into agreements, it is clear that innocent holidaymakers will pay the price.
It is not just travel companies that are suffering due to the large number of cold calls. Around 51 million personal injury-related calls and texts are sent by regulated claims management companies each year. The Association of Personal Injury Lawyers has long called for a ban on personal injury cold calls from CMCs, especially as solicitors themselves are already banned from cold calling. Ironically, only recently, the Justice Secretary said that there would be a “forthcoming ban on cold calling” when discussing personal injury claims. If the Justice Secretary believes that there is a forthcoming ban, why do we not act now and include it in this Bill? As Lord Sharkey said in the other place, the ban is necessary to deal with the “omnipresent” menace of cold calls. Baroness Altmann has said:
“People need protection from this nuisance now. They shouldn’t have to wait still more years for a ban....Direct approaches to people on their mobiles or home phones should have no place in the modern world of business.”
The Government, in the public interest, must accept the amendment to ban cold calls when this Bill passes.
Ruth George (High Peak) (Lab)
My hon. Friend makes an excellent argument for banning such cold calls. Does he agree that the banning of cold calling by claims management companies for personal injury claims would be a far more effective method of reducing costs for insurance and personal injury than the Government’s proposals, which are currently being considered in the other place, to limit the injury compensation due to innocent victims, as well as to those who are not innocent?
Jack Dromey
My hon. Friend is absolutely right. There are legal consequences for those who make unlawful claims, but there are also business consequences, which in this case knock on to the legal profession and its work. Looking at it from every angle, this is a menace that we need to bring to an end; the question is how soon we can do so.
We hope that the Government will accept our proposals, not least because the Conservative party said at the 2017 general election that it would
“consider a ban on companies cold calling people”.
This is the Government’s chance to keep at least that manifesto promise while protecting the public at the same time.
It is deeply welcome that the Government have taken the powers to ban cold calling for pensions. They have also indicated their support—indeed, the Minister did so earlier—for a wider ban, which our amendment calls for. We are not calling for a blanket ban, which the Minister believes could impinge on non-contentious issues such as doctor-patient calls. The situation is different when such an established relationship exists. We are talking about commercial companies that are pursuing a commercial advantage. All claims management companies should be banned from cold calling, so we urge the Government to set out in the Bill that they will stop the scourge of cold calls by claims management companies.
New clause 6—this is the only other provision to which I will speak—would introduce a duty of care by requiring claims management services to act in the best interests of customers, not least those who find themselves in a vulnerable situation. Due to the scope of the Bill, the new clause relates only to claims management services. However, although this change would be important, we believe that a duty of care is required across all financial service providers. Many consumers are forced to deal with financial providers when they are at their most vulnerable. Such people can include those who have been diagnosed with serious illnesses, including cancer. At present, the Financial Services and Markets Act 2000 requires that the FCA must have regard to
“the general principle that consumers should take responsibility for their decisions”.
Frankly, that is not good enough.
The Financial Services Consumer Panel told the Lords Financial Exclusion Committee that consumers could reasonably be expected to take responsibility for their decisions only if firms had exercised a duty of care towards them. It suggested that such a duty would oblige financial services providers to avoid conflicts of interest and act in the best interests of their customers. The panel proposed amending the law to require the FCA to make rules on a duty of care, arguing that the introduction of such a duty would lead to a much-needed cultural change in the banking sector and the financial sector more generally.
Let us look at just one example. The charity Macmillan Cancer Support has said that people affected by cancer tell it that they experience barriers to getting the support that they need from the banking sector. By 2020, one in two people will have cancer at some point in their lives. Four in five people with cancer are £570 a month worse off on average as a result of their diagnosis. For example, Christine was first diagnosed with cancer in 2009, but is still feeling the financial effects today. She said:
“The financial fall-out of cancer was huge—I went into my overdraft and had to take out a loan to pay it off. When I found out that my credit rating had suffered, it seemed unfair because I was trying my best to get back into work and to have money coming in…For people like me who want to go on living and working, it’s about having that short-term support and understanding. What would have been great was if I’d been able to have an honest conversation with my bank”.
A specific requirement therefore needs to be explicitly stated to ensure that all financial institutions do their best by the most vulnerable people in society. The strong evidence that has been presented by Macmillan clearly shows that a universal duty of care is required across financial services providers.
In the light of examples in which the principle of treating customers fairly is clearly failing customers, how has the FCA reassured Ministers that the current regulatory provisions are sufficient? Can the Minister provide further details on when the discussion paper to which he referred will be brought forward? I know that he is seized of the problem and wants progress to be made at the next stages. That is crucial and, once again, we want to get on with it, because we need to tackle the real problem that has been identified. What assurances can the Minister give that action will be taken to ensure the timely introduction of the duty of care following the outcome of the FCA’s consultation paper?
We strongly support amendments tabled by a number of hon. Members, led by my hon. Friend the Member for Harrow West (Gareth Thomas), that would ensure that banks and financial institutions take proper account of local and regional need, and do not let down local people, as is all too often the case now.
Crispin Blunt (Reigate) (Con)
I will speak to amendment 41, which is in my name. My amendment is intended to make a point to the Minister, and I am utterly certain that I will get the assurance that I need in order to do nothing more than discuss it now.
I welcome the introduction of a single financial guidance body, as it should result in a simpler, smarter and smoother experience for the user, helping them to make informed financial decisions. However, we ought to use the opportunity of this Bill not only to ensure that we get the guidance bodies all in one place; we also need to recognise the different types of finance or retirement income that need to be signposted. Financial decision making can be complex, often requiring advice and support, particularly during events such as buying a first home, on retirement or following a bereavement.
I tabled this amendment because people ought to consider their finances in the round. In other words, all liquid and illiquid assets—cash and property—should be considered together. My amendment follows the lead of the noble Lady Greengross in the other place, asking the Government to ensure that this new guidance body highlights the full range of options available, so that its users get the best possible advice to help them to make informed choices about their finances and their futures.
The report published last month by the Housing, Communities and Local Government Committee describes equity release as one of the key tools available to those predominantly in later life. It ensures that older householders are able to pay for care costs or home improvements to give them the option to stay in the homes in which they have built lives and brought up their families. Equity release means that our constituents aged 55 and over who might be asset rich but cash poor can have the option of staying in their own homes by accessing the wealth that they have accrued in that home.
The Equity Release Council published a research paper last April called “Equity Release Rebooted”, in which it estimated that the average value of a defined contribution pension in 2012 to 2014 was £30,200, while over-55s in England possess approximately £1.8 trillion in housing wealth and more than 80% of over-65s own a home. For many, if not most people coming towards the position of making a decision about their retirement, their property is much their greatest asset. It must therefore be sensible for equity release to be signposted and to form at least part of any discussion about funding retirement and later life.
Alex Cunningham (Stockton North) (Lab)
I agree with what the hon. Gentleman is saying. Does he not think, therefore, that there is considerable merit in new clause 2, which promotes the idea of specific guidance for people in mid-life so that they get proper and clear advice on some of the decisions that they may have to make?
Crispin Blunt
I am sure that there is enormous merit in new clause 2, and I hope that the hon. Gentleman has the opportunity to make the case further. There is obviously a common theme of making sure that people have the information about all their assets to enable them to make the best possible decision. We must make sure, in setting up the body in this Bill, that we do not have to come back to this later on because, in practice, we are not delivering the best advice to people about all the assets with which they have to plan.
The pensions advice allowance allows people to withdraw £500, tax-free, from their pension pots to pay for financial advice on their retirement, including on housing wealth, but some people will be unwilling or unable to use this facility. It is incumbent on the single financial guidance body to provide free, impartial guidance and to ensure that this encompasses housing wealth. It is likely that any signposting requirement would push consumers towards the Equity Release Council, the industry body for the equity release sector. Members of the Equity Release Council are committed to product standards and consumer safeguards.
Stephen Lloyd (Eastbourne) (LD)
The hon. Gentleman is making a salient point. Given that the range of interest rates for a number of companies that offer equity release is really quite considerable, does he agree that one of the advantages of the advice going through an independent body is that those who are offering better and lower interest rates for consumers are more likely to receive custom?
Crispin Blunt
I am grateful to the hon. Gentleman, and I agree. He will note the very distinguished role that his predecessor played in the whole business of promoting equity release. It ought to be a really major option given the construction of people’s resources and where they sit on the scale of property ownership in the UK. We need to be clear about how important an asset it is and how important it is to make sure that this industry has the opportunity to give the best possible service to people in their life plans.
Consumers must obtain qualified financial and independent legal advice before they confirm their decision to go ahead and purchase any equity release product. Guarantees include the right to remain in the property for life or until moving into long-term care. Another key safeguard provided by members of the Equity Release Council is the “no negative equity” guarantee, whereby the repayment of the loan is never greater than the value of the home.
A major reason why the single financial guidance body signpost should include housing wealth is the growth in the equity release sector. Homeowners released £3 billion worth of equity in 2017, with 37,000 new customers signing up for equity release products for the first time.
Mark Tami (Alyn and Deeside) (Lab)
The hon. Gentleman keeps saying that this is about releasing equity. What people are actually doing is borrowing against the perceived wealth of the property.
Crispin Blunt
They are not borrowing against the perceived wealth of the property—it is the actual wealth of the property. If someone is in a position of planning for their retirement and they do not have an adequate pension pot, and given the scale of the imbalance between people’s assets in property as opposed to the pension provision they have made, it is obvious that, in making the assessments for their retirement, they should consider accessing the wealth they have accrued that is in their home.
With 37,000 customers signing up for equity release products for the first time in 2017, the number of these products has also risen enormously over the last decade—by 225%—and 78 product options with the necessary range of flexibilities are now available. This can only improve and grow as the industry develops. Consumers utilise equity release for various reasons, such as paying off a mortgage, making adaptations to the home, boosting retirement income, or as a means of providing deposits to children and grandchildren to enable them to take their first step on the housing ladder. Equity release can help in meeting some of the challenges in social care and in housing.
We should be more ambitious, ensuring that the new body signposts solutions such as equity release to all those we represent who might really benefit from unlocking the main source of their wealth overall, which will be the equity in their home. I look forward to hearing from the Minister how we are going to make a reality of that in practice through the guidance.
Neil Gray
I rise to speak to amendments 39 and 40, which are in my name. I want to say at the outset that while Scottish National party Members have felt the need to bring back some elements from Committee, we do on the whole welcome and support the Bill. We just want to see some improvements, which we hope will help to protect consumers and those accessing financial products. It is a shame that on the third attempt to consider the Bill we may still not get time to consider the second group of amendments, and in particular those tabled by the right hon. Member for Birkenhead (Frank Field), which we are keen to consider. However, I will proceed as quickly as possible so that we might get to the second group in good time.
First, amendment 39 would require that specially trained advisers and guidance are made available to people in vulnerable circumstances and would provide an indicative list of what “vulnerable circumstances” should include. It is positive that the Government decided to amend the Bill in the House of Lords to include a reference to the needs of vulnerable people within the functions of the new single financial guidance body. However, we feel that the Government should go further.
The amended version of the clause remains a little weak with regard to the inclusion of vulnerable people. Our amendment would make things more explicit and strengthen that objective by providing more detail as to who may fall into this remit, using the term “people in vulnerable circumstances”, which we think is more appropriate. The circumstances illustrated in our amendment can have a significant impact on people’s finances and long-term savings plans.
People in difficult financial circumstances may be more likely to use new pension freedoms, at a cost to their long-term pensions saving. Attractive as the pension freedoms may sound, it is clear that the Government have not put in place adequate safeguards for older people who are opting to free up funds, to ensure they will not end up in a desperate financial situation later. Those with less money are more vulnerable to economic shocks in their personal circumstances, as well as being potentially more vulnerable to scammers who give misleading or false advice for a fee, as we heard from the shadow Minister, the hon. Member for Birmingham, Erdington (Jack Dromey).
Being a carer or disabled can incur extra lifestyle costs. We want to ensure that the new body is as accessible as possible for all people, regardless of their circumstances. Specially trained advisers and resources must make up part of the new body, so that people can have confidence in its ability to support people in vulnerable circumstances.
The Minister said in Committee that our amendment was too prescriptive, but that does not really stand up. There is plenty in the Bill that is prescriptive and detailed. The new financial guidance body will be looking to the content of the Bill to understand what its objective and remit are. We are simply ensuring that the new body is absolutely clear that catering for those who find themselves in vulnerable circumstances should be a significant part of its remit. The wording of clause 2 makes that sound like an afterthought. That is an important discussion to be had alongside the duty of care, which I will come to later.
Amendment 40 would require the new body to ensure that consumers are made aware of the differences between information, guidance and advice, so that they can specify what type of services they require from it. In Committee, my hon. Friend the Member for Paisley and Renfrewshire South (Mhairi Black) tabled an amendment that would require the new financial guidance body to define the meaning of those services. The Minister said that that would potentially duplicate available definitions set out in regulations, but he also seemed to think that we asked for a definition because it would be useful for the body itself. That was not our purpose. Our purpose was to ensure that consumers themselves understand what services they have access to. We are tabling this amendment with tweaked wording to make it clear that we are asking that the new financial guidance body communicates clearly what services it provides people with and what they can access.
Guidance, information and advice are very different things. People expecting advice on what route to take may be disappointed to receive various information only. Likewise, there may be issues around exactly what the body is allowed to advise and to what extent it is able to advise on options available. Through this amendment, we are simply highlighting how important it is to ensure that users understand what they are getting.
Government new clauses 4 and 9 give the Secretary of State power to ban cold calling related to pensions and other consumer financial products. The Government have also tabled amendments to bring forward commencement of those clauses. The SNP and the Scottish Government have campaigned hard on cold calling, so we are pleased to see those provisions in the Bill. It is a positive step that the Government have tabled amendments 45 and 46, which will speed up the process for putting in place the necessary regulations for banning cold calling. It is clear that consumers want action now.
On the Government’s amendments, there is a concern that the Government are treating claims management companies’ cold calling and pensions or financial products cold calling differently. In Committee, the Government introduced clause 34, banning cold calling for CMCs unless the consumer has given their consent. With the two amendments on pensions and financial advice cold calling, the Secretary of State is giving herself a get-out clause, to shirk responsibility for taking action. Cold calling is cold calling. Consumers simply do not want to be bothered by nuisance calls, as we have already heard from the hon. Member for Stirling (Stephen Kerr) and my hon. Friend the Member for North Ayrshire and Arran (Patricia Gibson). Creating a complex framework around which providers are allowed to make these calls, on what types of product, under what circumstances, is over-complicating a very simple issue. People just want it to stop.
Will the Secretary of State, or the Minister who responds to the debate, explain why they think the need to ban CMCs’ cold calling is greater than the need to ban pensions or financial products cold calling? Tough action needs to be taken on this; otherwise, we risk creating loopholes that will allow cold callers to continue to operate.
I want to mention the duty of care amendment: new clause 6, tabled by Members on the Labour Front Bench. My colleagues spoke about it in detail on Second Reading, particularly my hon. Friend the Member for Inverclyde (Ronnie Cowan), who sadly cannot be here today to speak on it again. Applying a duty of care to CMCs would be a positive step in ensuring that such companies remain accountable for their actions if they cause harm to consumers.
Ideally, all financial institutions should have the best interests of vulnerable consumers at the heart of their conduct, but we all know that that is not always the case, and the fact that the Financial Conduct Authority has agreed to bring forward a discussion paper on duty of care is really positive. Macmillan has campaigned tirelessly on this issue, and I thank its staff for the briefings that we received ahead of these debates. We hope that the Secretary of State and Ministers will give serious thought to this idea, as well as to our amendment on vulnerable persons, which ensures that the single financial guidance body expressly allocates resources for specialist support for people in vulnerable circumstances.
The SNP has long called for and campaigned for action on cold calling. Indeed, it was the subject of a ten-minute rule Bill proposed by my hon. Friend the Member for North Ayrshire and Arran. We welcome the fact that there is to be progress in this regard, but this area of the Bill is becoming a bit of a guddle. That is why we would obviously prefer to see powers over this area devolved to the Scottish Parliament, so that we could take more robust action, such as was suggested by the Scottish Government’s action plan on nuisance calls. Indeed, the Scottish Government Cabinet Secretary for the Economy, Jobs and Fair Work, Keith Brown, has written to the UK Government many times, asking for them to take a tougher line on nuisance calls.
Nuisance callers blight our society and cause significant distress, particularly to the elderly and vulnerable people. Such harassment is unacceptable and must be stopped. Hopefully, in the time we have available, we will take the opportunity to make some necessary improvements to the Bill.
Craig Mackinlay (South Thanet) (Con)
I shall restrict my observations to pensions cold calling and unsolicited marketing thereon.
Last year, I was pleased to play a part in the scrutiny of the Pension Schemes Act 2017. It was timely legislation to ensure that pension savers were adequately protected as they saved, during the working period of their life, by the regulation of master trusts, which had previously been rather worryingly lightly regulated—insufficiently so, when for many, their pension will be their primary asset in life.
I am pleased that this Bill will bring together the Pensions Advisory Service and Pension Wise into a single financial guidance body, under the control of the FCA. I am further pleased to support the Government’s amendments, especially new clauses 4 and 9. It is right that the new clauses in the name of the Government allow the making of regulations to prevent cold calling and the sending of unsolicited direct marketing materials relating to pension savers. That is further strengthened in Government amendment 10.
At the core of what we shall hear in the House this afternoon is whether “may” should become “must”. That is at the core of an amendment tabled by the hon. Member for Eastbourne (Stephen Lloyd) and Willingdon —amendment (a) to Government new clause 9. There is a case for healthy competition. That usually results in lower charges, and that can be—can be—good for consumers. It would be a draconian measure to ban advertising, to entirely ban direct marketing, because that could be banning choice. It is often good advice for pension savers who have accumulated a pension pot to move to a provider who may provide a better pension, perhaps at a lower cost, with lower charges. That decision now rests with pension providers. If they do not act sensibly, that “may” in Government new clause 9 will, in certain circumstances, become a “will.” That is an important power.
Alex Cunningham
The hon. Gentleman talks about a total pot in the trillions, but for the vast majority of people, particularly part-time workers, their pot, although better than nothing, will be relatively small. Does he agree that several groups are still excluded from auto-enrolment, and that the Government need to do something to bring them in?
Craig Mackinlay
I thank the hon. Gentleman for that contribution. There is a wide debate—I have taken part in it—about whether the self-employed are playing a full role in getting pension provision. I think that there are measures that could be taken, perhaps using the national insurance system, to provide them with greater certainty. The primary purpose of the Bill is to ensure greater financial understanding among the general population. They need to know where to turn at the right time. I have confidence that the single financial guidance body will achieve just that.
I close with a suggestion that is probably best directed to the Financial Secretary to the Treasury. It has some relevance to the honest proposals put forward by the hon. Member for Birmingham, Erdington (Jack Dromey) on mid-life reviews. Employees, as they work through their working lives, obviously have an employer. Employers are very well aware—possibly more than anybody else—of when an employee is approaching retirement. I am sure that most responsible employers will be keen to help. I recommend that the Secretary of State discuss amendments to the Income Tax (Earnings and Pensions) Act 2003 to allow employers to pay for advice, outside of any benefit-in-kind tax charge, so that advice can be provided to employees and paid for tax-free. That would extend a benefit-in-kind exemption similar to what we see when advice relating to settlement agreements, or payment for CV writing and recruitment advice upon redundancy, is duly paid for by an employer tax-free.
In my view, the Bill is fit for purpose and I very much support it.
Frank Field (Birkenhead) (Lab)
I wish to speak to amendments (b), (c) and (d) to new clause 9, which stand in my name. As the House might know, they arise from the work that the Work and Pensions Committee did on miners’ pensions. For most people, decisions about moving pension capital are made towards the end of their lives, but miners had to decide where they should safely put their pension savings as a result of the change in the ownership of their industry.
Given the warning from the hon. Member for Airdrie and Shotts (Neil Gray) that we may not get on to the second set of amendments, I should mention that I have some amendments in that group to raise with the pensions Minister. Perhaps I may address two points to the Economic Secretary, but first I thank both Ministers for the way they have engaged with the Work and Pensions Committee for our report and in our meetings. We are immensely grateful to them. On some issues, I have joined my Front-Bench spokesmen because we have been pushing the same measures and interests.
I wish to raise two points that I hope the Economic Secretary will say will be added to the Bill. First, not only should cold calling become unlawful, but any information that arises from it should not be used for commercial purposes—that is, in respect of pension savings. Secondly, would it not be sensible to use the opportunity presented by this Bill to add the Financial Conduct Authority to the list of bodies in the Government’s policing arm to counter activities that unlawfully undermine people’s pension savings by trying to persuade them to move their assets in one way or another?
In the interests of getting on to the second set of amendments, I conclude my comments.
Jack Brereton (Stoke-on-Trent South) (Con)
I am pleased to be called to speak in this debate, Madam Deputy Speaker, because the issues are of particular interest to me as a member of the Work and Pensions Committee. I want to reflect on some of the evidence the Committee has heard in its inquiry into pension freedoms and choice, as it relates to some of the changes proposed in the Bill.
While I am extremely supportive of the work the Government have done to increase the freedom of our constituents in respect of their pension savings, it has undoubtedly created new challenges that must be addressed. I am pleased that the Bill has been brought forward as an opportunity to address them. The first challenge is advice. It was apparent from our sessions on the British Steel pension fund that those who find themselves needing to switch often struggle to get the advice they need. There were mixed experiences, with some people receiving very good local advice and others receiving very bad advice or none at all.
Jack Brereton
That issue certainly came up in our evidence. Those who saw our evidence sessions will know that there was quite a significant grilling of the FCA.
Those experiences show that some irrational decisions—often described as “emotional” decisions—were made in the moment. Sadly, those short-term decisions were not the best investment decisions for the longer term. Unfortunately, this vulnerability—the vulnerability of immediacy or a form of panic, one might say—allowed predatory vulture companies to take advantage of an emotionally charged situation, with people reinvesting their pension pots without the full, impartial advice that is needed. Those vultures exploited scheme holders, framing what they were doing as giving impartial advice, when it was nothing of the sort. Many people felt that they were not fully informed of the consequences of the complex investment decisions they were having to make.
The accessibility of free independent advice in such situations has, in some cases, been woefully limited. More generally, the often perplexing nature of pensions leaves many people making decisions about their investments that are not necessarily in their best interests. Evidence presented to the Select Committee by the Association of British Insurers from the FCA’s “Financial Advice Market Review: Baseline report” suggests that not even one in 10 UK adults—just 6%—had received regulated financial advice. Worryingly, 25% of people who needed advice about their finances did not access it.
There are a number of reasons why our constituents are not accessing the advice they need, but what has been demonstrated is that not enough people are currently accessing the free independent advice that is available. The Association of British Insurers suggested that although 44% of people who are approaching retirement had access to some sort of advice, only 10% used the Pensions Advisory Service and only 7% used Pension Wise. The lack of clear advice combined with confusion about who to trust for independent advice has made it too challenging for those making investment decisions. Not enough people are getting the advice that they need to make properly informed judgments.
Secondly, we also found that very limited numbers of people are making the active decision to shop around and switch providers. Often, the tendency of those changing schemes is to stick to the same provider, so switching—active consumerism—is another challenge. There are, of course, a number of reasons why people might find it difficult to switch providers, not least the lack of good information and advice about the choices available, as I just related. It is also a major barrier to consumer activity, so I am pleased that part of the Bill proposes to create a single guidance body. That will make it much clearer for our constituents to see where they can turn for the right advice to make informed decisions and manage their finances for the future.
Alex Burghart (Brentwood and Ongar) (Con)
My hon. Friend is giving an important speech. Some of the evidence that we received on the Work and Pensions Committee was from Citizens Advice, which suggested that 97% of the pension scams that had taken place in one year originated from unsolicited calls. Does he think that the measures that the Government are bringing forward in the Bill will go some way to combating that?
Jack Brereton
I thank my hon. Friend for that point; I agree that it is critical that we take action to stop cold calls, and I am about to come on to some of those points.
This change will also ensure that the advice that is available is joined-up and better suited to our constituents’ needs, ensuring that decisions are not made in isolation, but with consideration to the wider implications of investment decisions on an individual’s overall finances. Measures in the Bill will also ensure that people receive the appropriate advice as a matter of course and that they should opt out if they do not wish to receive such advice. I also hope that the commitment made by the Government and the industry to develop a pensions dashboard will be delivered, making it easier for our constituents to have access to the information that they need about their pension savings to make suitable decisions.
Thirdly, the Committee heard about the increasing number of pension scams that are being reported, with more people being actively deceived into making investments that are not in their best interests. It was suggested that many rogue companies are using cold calling to target people and to get them to invest without full thought of whether it is the right and best decision for them. I am sure that many right hon. and hon. Members have, like me, been contacted by constituents who have been continually badgered by cold calling. It is a real issue in Stoke-on-Trent South and I am sure that it is a challenge in other areas, too. Many of the people targeted by cold calling are elderly or vulnerable and are taken advantage of by those seeking to cheat our constituents out of their hard-earned life savings.
Michelle Donelan (Chippenham) (Con)
Does my hon. Friend agree that although the pension freedoms that were introduced in 2015 were a fantastic opportunity for our constituents, they have led to an increase in rogue scammers and cold calling? That is why new clauses 9 and 4 are so important for the Bill.
Jack Brereton
I absolutely agree. That is why it is so important that this legislation is passed and that the Government have proposed these amendments. I am pleased that the Government have put measures in the Bill to ban the use of unsolicited marketing on pensions and financial products and services. It is a significant step towards preventing future abuses.
Of course, this legislation can never stop all scams being attempted—we cannot legislate away those who have nothing but contempt for legislation—but it does send a clear message not just to those conducting this behaviour, but to those who are at risk of being conned. By raising awareness of the challenge of scams, the Government can make more people wary of them. This will mean that those who are targeted can have the confidence that whenever they are cold-called by people trying to offer this sort of advice about their pensions or information about their investments, the calls are not legitimate but in fact illegal, and they should put the phone down. The Government are taking a balanced approach, acting if necessary to target where cold calling is most prolific and most damaging, such as in the area of pensions and financial products and services.
Stella Creasy (Walthamstow) (Lab/Co-op)
I am delighted that we have finally got our time to debate the Bill; some people in Parliament might not be, but I believe that consumer protection is one of the most important things we can do in this place, because it speaks to the incremental unfairness that people face in life that individuals cannot face on their own but which together as a society we can tackle. In that sense, I rise to support amendments very much in that vein, and one of their common themes is that they come from Co-operative as well as Labour MPs. The co-op movement was founded on the values of consumer activism so I want to put on the record my support for amendments 31, 1 and 2, which my hon. Friend the Member for Harrow West (Gareth Thomas) will be speaking to later. I also want to get onto the next group, which are in the name of my other Co-op colleague, my hon. Friend the Member for Liverpool, Wavertree (Luciana Berger), amendments 5, 6 and 7 on mental health and debt.
In particular, however, in speaking to my new clause 1 and amendment 4, on the FCA’s potential role in tackling the impact of high-cost credit on our society, I want to repeat my Cassandra impression on debt. The Bill is about the fair treatment of consumers. I urge the Minister and the Government, in my Cassandra-like way, to learn the lessons of the payday lending industry. I do not need to tell any Member that the nation is drowning in debt, as we all have seen in our constituency surgeries. We owe more as individuals than do the Government: total household debt in June 2016 was £1.23 trillion, which is more than the Government’s national debt.
Average UK unsecured debt is now £14,000 and will be £19,000 by the end of the Parliament. The number of people who have gone bankrupt in the last year has soared to its highest level since the financial crisis. The reasons are not rocket science: there is simply too much month at the end of their money. Research now shows that economic insecurity has become the new normal for at least 70% of the UK’s working population, who the RSA has described as “chronically broke” and that 32% of the UK’s workers—people who are earning a wage—have less than 500 quid in savings and 41% have less than a grand. It is little wonder that a third are desperately concerned about debt.
Unemployment rates might still be dropping, but we all know that the cost of living has not dropped, and personal debt has filled the vacuum. So, too, has that insecurity, with 1 million on zero-hours contracts and nearly 2 million people in temporary work—and that is even before we get on to those in self-employment. In my constituency, 15% of people are self-employed. These are people who cannot predict their incomes. It is little wonder that the high-cost credit industry has been preying on these people.
One in 10 UK adults say their incomes change significantly from month to month, and almost half say they have experienced at least one monthly drop in income, with the average monthly drop being £385. Who of us could afford to lose that much from our monthly budget without there being consequences? Nearly half those people were self-employed or in that insecure work, which makes budgeting, on which much of the Bill depends, so difficult, and more than half said that one reason they experienced problems was an unexpected expense—a quarter had had two unexpected expenses.
The costs that people face when the washing machine breaks down or the landlord puts the rent up cannot be planned for, but they are all too frequently an everyday part of life. It is little wonder that nearly 6 million households now spend more than 60% of their income on essential outgoings. They have little flexibility in their budgets to begin with, so when those unexpected costs come, of course they turn to borrowing.
We know that that is not the case for everyone. We know that there are very wealthy people whose incomes are about five times as much as those of the people in the bottom half of our income stratosphere. That is what the new clause and the amendment are about. There are people who can manage borrowing well within their budgets, but the reality of modern-day Britain is that there are many more people for whom borrowing in itself becomes the problem. We know that 25% of the UK’s lowest-income households are struggling with debt and experiencing that “chronically broke” feeling. It is little wonder that it causes so many mental health challenges.
It is not the traditional demons to which people who are struggling are now turning. We did make progress on payday lending—the so-called legal loan sharks—but that industry does not go away; it simply mutates. It simply finds new ways in which to prey on those people. The new clause and the amendment are about credit cards. I would wager that most Members have one credit card, if not two, in their pockets. Many of us may also have had that conversation with constituents who have come to us when they are about to be evicted because they cannot pay their rent and are behind with their costs. When we ask them, “Do you have any debt?” they say, “No.” When we ask, “Have you a credit card?” they say, “Of course.” Because credit cards are so ubiquitous in our society, we do not think of the danger that they can be.
That is why I tabled the new clause and the amendment. As the Minister knows, I am frustrated with the Financial Conduct Authority, which has been looking into credit cards but does not see the risk. This is where I become Cassandra, because the risk is all too obvious. Of course there are people for whom credit cards work well, but we know that a significant chunk of the British population are in persistent debt and that their credit cards are an integral part of that debt. They are paying about £2.50 in interest and charges for each £1 of their borrowing that they repay. That matters, because we stopped it happening in the payday lending industry by introducing a cap.
My simple question to the Minister is this. Why do we want to protect one group of consumers from that kind of persistent debt, but fail to learn the lessons when it comes to other types of product? The issue is not whether the credit involves a payday loan or a credit card; it is the credit itself, and the cost of the credit. I hope to convince the Minister of that.
When we look into consumer debt, we can already see just how damaging credit cards have been. At the end of 2016, consumer credit debt amounted to £236 billion, which is about 15% of total household debt, but it accounts for half the interest payments that are made each year. When the FCA conducted a survey of credit card debt, it found that 19% of consumers—one in five—paid just the interest rather than the repayment charges. What could be called “zombie debtors” had 5.1 million accounts. On average, it would take them more than 10 years to pay off their debt. They are stuck in debt because of their credit cards. Little wonder that 40% of adults say they sometimes struggle to make it to payday, and a third of them say that it is because they are making credit card repayments. Debt is breeding difficulty, and difficulty is breeding more debt for them and their communities.
Luciana Berger (Liverpool, Wavertree) (Lab/Co-op)
I thank my hon. Friend for making such an impassioned speech about such a serious issue. I am sure that there are Members in all parts of the House who meet constituents in their surgeries and hear about their credit card debts, involving not just one card but, in some cases, two, three, four, five, six, seven or eight. It is the people with the most debt who are preyed on by those who give them access to additional cards, which only add to their burden.
Stella Creasy
My hon. Friend is absolutely right. It is no surprise that she has done so much work on the link between debt and mental health issues.
We are already seeing in the credit card industry the same patterns that we saw in the payday lending industry. If we are honest, we must admit that it took us too long, as a House, to act in respect of that industry. So many of us saw people in our constituency surgeries who were losing their homes and people who were massively in debt because they had become stuck in payday loans that they were using to pay for basics such as rent and food. But when we did act, what a difference it made. Bringing in a cap on the cost of credit has led to an 86% reduction in the number of people going to citizens advice bureaux with problems caused by payday lending. So one question for us is what the consequences will be if we do not act on credit card lenders. The Minister may say to me that the credit card industry is completely different from the payday loan industry—that is what he said when we had an Adjournment debate about this—so let me try to convince him that the two are intertwined.
I see in my local community, as other Members may have seen, companies such as Vanquis, Aqua and Capital One—indeed, Vanquis is owned by Provident, which is a doorstep lending company—offering credit to people who have bad credit histories and driving them into the same level of debt as payday loans did. Indeed, the FCA’s data shows exactly that, which is why it is such a mystery to me that it does not choose to learn the lessons from the payday lending industry and act accordingly.
Someone who has an Aqua credit card with a monthly interest rate of 3.992%, has borrowed £1,000 and is only paying the minimum monthly payment will pay £480 in interest by the end of the first year. By the end of the second year, the figure will be nearly £1,000—as much as they borrowed, which is the cap that we have put on payday lending. By the end of the third year, bearing in mind that a big group of consumers get stuck in this way for 10 years, they will have paid back double what they owed. Such companies are targeting our communities in much the same way as the payday lending industry did. They are targeting people with insecure incomes, because they have seen a new market. As I said, this industry does not go away; it just mutates.
Citizens Advice’s recent research about insecure income shows us just how much of a problem there is. People with high levels of income volatility are also five times as likely as others to have accessed this form of high-cost credit to meet the essentials—to put food on their table, to put petrol in their car to get to work and to pay their rent. Those are not costs that they can cut back on but the costs of everyday living. People with volatile incomes are also more likely to be paying fees and charges on cards, as well as overdraft fees.
That is why it is frustrating that, from the get-go, the FCA ruled out capping the cost of credit on credit cards and so learning the lesson from payday lending. It thinks the answer is to ask people to pay back money earlier, as if they have the spare cash to do that. It is not a fair fight for individual consumers against credit card companies, just as it was not a fair fight against payday loan companies. That is why we should intervene to set a fair market and learn the lessons about capping.
My new clause 1 does something simple: it asks the new financial guidance and claims body to step in, because the FCA is not doing its job and looking after the interests of consumers. It is not recognising, as Cassandra does, the risk that is coming and acting to avoid it. It says that persistent debt is when somebody pays 100% in interest and charges on top of the amount to be repaid, but it is not applying its own rule to credit cards even though we have seen how effective it has been in the case of payday lending.
I ask the Economic Secretary to show the leadership that this issue needs and that I believe the House would support. If he says today that he will take a strong hand with the FCA and not let it wait years and years, watching our constituents get into consistent debt with credit cards, logbook loans or any other form of high-cost credit, he will have my backing. I have tabled my amendment and new clause to give him the opportunity to tell us that he gets it. The House does not want to wait another five or six years watching our constituents get into debt, as we did with payday lending. I am sure the Government would not want to be forced to cap the cost of credit, as we had to force them in that case, and I am sure that he is proud of the difference that capping the cost of credit for payday lending has made to millions of consumers in this country.
FCA data shows us that millions of credit card owners need our help and protection now, which is why I have tabled the new clause and amendment. I believe that there will be support for them, but I want to give the Economic Secretary the opportunity to do what I know he wants to do, which is to ensure that we do not leave it so long this time. I look forward to hearing what he says, and I hope that other Members will support my call, because frankly, there are too many people in our constituencies who need and deserve nothing less.
Craig Tracey (North Warwickshire) (Con)
First, I should like to declare an interest as the current chair of the all-party parliamentary group on insurance and financial services. I welcome the Bill, because it will tackle some of the important issues that my constituents talk about. It includes a commitment to ban cold calling relating to pensions and to the creation of a single financial guidance body—an SFGB. I know that this approach also has the broad support of the insurance and financial services industry, but it is important that the SFGB should work with all stakeholders to fulfil its objective and of course ensure good consumer outcomes. With the Bill, we have an excellent opportunity to improve financial resilience by promoting early intervention to help to prepare people for income shocks and life events. These preparations include planning ahead for care and understanding the benefits of protection products such as income protection insurance, critical illness insurance and life insurance.
There is a lot in the Bill that I could talk about, but given the time constraints, I want specifically to speak against new clause 8, which seeks to put a duty on the Financial Conduct Authority to ban unsolicited direct approaches by claims management services. I agree with the Government that the Information Commissioner’s Office is best placed to implement any ban and that existing legislation means that data gained illegally is already restricted. However, I agree that there is an urgent need for reform relating to claims management companies.
Previously, there have been calls for the FCA to assume responsibility for CMCs, so the fact that the Government have taken action on this is to be warmly welcomed. The Association of British Insurers has stated:
“Confirmation of tougher regulation of claims management companies cannot come soon enough for people who are plagued by unsolicited calls and texts. Disreputable firms are fuelling a compensation culture that contributes to higher insurance costs for many.”
Last year alone, there was a total of 752 authorised personal injury CMCs, more than in any other claims sector, including PPI. Measures in the Bill will go some way towards tackling bad practice in the personal injury claims market, which has been costly for insurance companies, put up premiums for consumers and frequently delivered outcomes in which claimants’ interests were not put first.
Added to some of the measures in the forthcoming Civil Liability Bill, such as tackling the high frequency of whiplash claims, this Bill will help to ensure the success of the Government’s wider efforts to tackle these problem areas. It is therefore encouraging that the insurance industry has expressed confidence in the FCA’s more robust regulatory regime and its ability to properly oversee these firms, citing two significant benefits, both of which will play a vital role in addressing the problems associated with this sector.
First, a strong regime based on understanding the business models of individual CMCs will prevent firms that do not offer good value to consumers from operating. Secondly, personal accountability for senior managers of CMCs will ensure that when a firm struck off, its directors cannot simply resurface as a new CMC, as is currently happening. It is anticipated that, as a result of this change, consumers will be given more information about the services that CMCs offer and more transparency about the fee structure. It is therefore important that the improved regulation of CMCs should be implemented alongside the personal injury reform proposed in the Civil Liability Bill. It can only be good news for consumers when their interests are put above all others.
As I have said, this is an excellent Bill, but I would like to propose a couple of areas in which I think it could be strengthened, and I ask the Minister to take them into consideration when summing up. First, it would be useful if he clarified the exact scope of the services that the SFGB will provide for consumers. There is a great opportunity to look at how the Department for Work and Pensions could work with the financial services industry to make guidance a recognised norm and to look at ways to support interventions that could improve the retirement process, such as the introduction of a mid-life MOT.
Secondly, will the Minister provide a timeline for the introduction of the FSGB and tell us when the FCA will assume responsibility for CMCs? Swift action is necessary, particularly in relation to CMCs, given the drastic spike in claims relating to gastric illnesses by people who have been on holiday. It is no coincidence that this surge has coincided with CMCs preparing for the deadline for bringing PPI claims and the introduction of measures to tackle whiplash claim frequency.
The Opposition amendments to this part of the Bill are unnecessary. The Government are committed to banning cold calling in relation to pensions and by CMCs. Moreover, they and the SFGB will keep cold calling under review. If the Minister will give consideration in his summing up to the points I have made, I will have no hesitation in supporting the Government through the Bill’s remaining stages.
Gareth Thomas (Harrow West) (Lab/Co-op)
I rise to speak to the three amendments in my name. According to a recent Bank of England survey, the average level of household debt, excluding mortgages, is £8,000. While everybody should be able to access basic debt advice, people on low incomes with much higher levels of debt, at higher rates of interest, clearly need significant support. Unlike in the United States, it is difficult to work out with any certainty where such people are living in the UK, beyond relying on an individual to approach their local citizens advice bureau or another advice service.
At present, the new financial guidance body will not have access to data to allow for a detailed mapping of debt at a local level. Indeed, it will not have access to a full picture of the activity of banks and other lenders in our communities. There is no requirement on banks, payday lenders and other financial services providers to be fully transparent about the services in each of our constituencies—specifically where they lend, what rate they lend at, and the types of loan that they offer. Were that data available to public bodies, it would allow for the accurate mapping of who is lending and what is being loaned. Banks and other lenders do hold such data down to postcode level, and such data are released in the United States. Many British lenders that are active in the US are used to releasing that information, which allows public bodies to map the activities of banks and other lenders.
My amendments 1 and 2 would allow the single financial guidance body to facilitate the release of that information by lenders in an anonymised form so that we could know where debt is concentrated and what types of credit are used in different areas. That would allow for better, more strategic responses to the household debt crisis with which the House is familiar. The data would help to inform where to target the debt advice funding that the SFGB will dispense, encourage more engagement between mainstream lenders, and allow the community finance sector to scale up the provision of affordable credit in areas where there are specific problems. Indeed, such data would reveal market gaps and the communities excluded from mainstream credit.
Fair access to financial goods and services is a basic requirement for full engagement in modern society, but Thamesmead, an estate of 55,000 people in south-east London, has not been home to a mainstream bank branch for a long while. Charities report anecdotally that high-cost credit lenders such as doorstep or payday lenders are very active. More and more bank branches are being closed by the big banks, which is leaving whole communities, some in the poorest areas of our country, without a single mainstream bank branch. Thamesmead is not an isolated example.
At the same time, rumours persist that the big banks want to pull the plug on free cash machines. Which? has reported that over 200 communities in Britain already have poor ATM provision or no cash machines at all. The combination of a lack of access to cash machines and to mainstream bank branches could create the space for a much bigger increase in the activities of high-cost credit companies, doorstep or payday lenders or, worst of all, illegal loan sharks, as a response to the needs of people in such communities for short-term loans. We need to know where the other Thamesmeads are across the country so that charities, community banks and credit unions can be supported by the financial guidance body and other statutory bodies to target financial exclusion in such areas by signposting people to responsible financial providers.
In 2015, when considering this specific problem, the Financial Inclusion Commission, which was set up by the Government, argued for a much wider level of data disclosure to develop a greater understanding of the problem. It said specifically:
“If lenders were required to disclose data by postcode on credit applications and rejections, policymakers would be better able to understand the scale and shape of the low income credit gap.”
Since the financial crisis, banks and other lenders have withdrawn from higher-risk lending and raised the threshold for accessing mainstream credit. In turn, this has restricted the credit available to those with low credit scores, leaving them at the mercy of higher-cost lenders to bridge their income gap. Surely part of the long-term solution to the household debt crisis is to make it easier for low-cost credit providers and other alternatives.
It is true, as Ministers have previously suggested in Committee and in a letter to me, that there are other sources of data on debt. The Office for National Statistics and the Bank of England publish data on lending, but only at UK level—the data is not broken down by constituency or by area. StepChange, too, publishes some data on lending, as does the Money Advice Service, but the Minister might not be aware that it publishes only estimates of the number of people who are over-indebted.
I would not dream of criticising the Money Advice Service, but its data on lending does not go anywhere like far enough to meet the recommendations of the Financial Inclusion Commission. The Money Advice Service does not routinely collect information about the extent of debt problems at the most local level. Its last significant report was back in March 2016, and it set out estimates of the number of over-indebted households down to local authority level, not postcode level, which is what we need. The Money Advice Service data are estimates based on survey work, not actual individuals who take out loans.
I should be clear that some lending data is already released. The coalition Government, to their credit, required the British Bankers Association, which is now UK Finance, and the Council of Mortgage Lenders voluntarily to publish some data by postcode, primarily to try to tackle the challenges that small businesses were facing when accessing credit.
There are problems with the data. For example, it does not include high-cost, short-term credit—payday lenders. Additionally, it does not disclose lending levels or rates at postcode level. Some details of loan applications and credit providers’ registers are not released either, so a full picture of the level of lending at a postcode level has not yet been able to emerge.
At the moment, the data is released voluntarily. Legal underpinning is needed so that more statutory bodies working in this field can more easily negotiate improvements in data. Specifically in this context, for example, the single financial guidance body should be able better to negotiate the release of the data that it needs.
I say this gently to the Economic Secretary, who will be very helpful to me tomorrow, but efforts to re-engage the Treasury in getting UK Finance to improve the usefulness of the data its members release have not had much success recently. At the very least, I hope he will be willing to join me in meeting national groups operating in this field to hear their concerns about the data, and perhaps he might be willing to use his leverage to get at least small improvements in that area.
In the United States, the Community Reinvestment Act means that banks and other lenders have to report what they are lending, where to and at what rate. The disclosure requirements are critical as they enable independent, informed assessments of what the banks are doing. Crucially, they keep the banks honest. Before the CRA, access to credit was scarce in deprived areas, and that lack of access contributed to and prolonged the decline and deprivation in such communities.
Gareth Snell (Stoke-on-Trent Central) (Lab/Co-op)
My hon. Friend makes an excellent point, but does he agree that the disclosure of such data would highlight the hotspots in communities such as the ones that we represent, and would therefore allow the Department for Work and Pensions to put in the necessary resources so that jobcentres and other advice bureaux can act as a preventive measure so that we do not see more of our constituents with little chance of getting out of the vicious circle of high-cost borrowing?
Gareth Thomas
My hon. Friend makes a good point.
In the United States, federal banking regulators regularly assess how banks are meeting local credit needs. Their assessments affect the way in which the banks are allowed to expand, merge, do acquisitions and so on. Banks can get credits towards their assessments if they invest in community banks or credit unions. Not surprisingly, both the community banking movement and the credit union movement are in even better health in the US than they are here.
Santander, HSBC and Barclays all operate in the United States, where they release far more data on lending, down to postcode level, than they do here. So surely the questions for this House are: why are they not willing to do that here, too; and, as I believe, should they be forced to do so? Last October, Santander announced an $11 billion, five-year settlement on lending and community development in eastern parts of the United States, which is the market in which it operates. That represented a 50% increase in its Community Reinvestment Act-related activity. No such equivalent increase has been announced here in the UK. The Community Reinvestment Act has cross-party support in the US, being backed by Republicans and Democrats alike, including for its data disclosure requirements. If Ministers are not prepared to accept my amendments, I would wish, with your permission, Madam Deputy Speaker, to press amendment 1 to a Division. These amendments are not onerous. Banks and other lenders record this data, and although a little work would be needed so that the information could be released in a useful format, a similar system works particularly well in the United States. In turn, the disclosure of lending details could help the single financial guidance body to make more effective choices.
I shall deal briefly with amendment 31. One key challenge for the single financial guidance body will be, as we all know, to help those who need loans, for whatever reason, to access the cheapest products—those offered by credit unions fall into that category. Surely the SFGB should be mapping where credit unions exist and what further action can be taken to promote the take-up of their services by those who are most in need. Credit unions have very low administration costs. They simply do not have the megabucks of a major bank or a payday lender’s marketing department, so many of those who most need the support that credit unions can offer are often unaware of the services they provide. Surely another challenge for the House is to work out how we help credit unions to make more information available about the products on offer. I know that Ministers are sympathetic to efforts to expand the credit union sector, so I ask them to give specific attention to thinking about what further steps can be taken to help the credit union movement to expand and to support the SFGB in achieving that aim.
Julian Knight (Solihull) (Con)
I refer Members to my entry in the Register of Members’ Financial Interests. I completely agree with what the hon. Gentleman says about credit unions. Does he agree that one key aspect of trying to promote them is improving their professionalism, IT and this information, and using the potential for workplace credit unions? Should we not try to bring this through the workplace and payroll?
Gareth Thomas
I agree with that point, which is why it has been encouraging over the past 10 to 15 years to see Departments beginning to do their bit to encourage the workplace take-up of credit unions. I hope the Economic Secretary may be able to tell me that Her Majesty’s Revenue and Customs will follow this trend soon, but the point about trying to increase professionalism is well made. Again, it would be good to hear commitments from Ministers that some of the problems that credit unions face due to poor regulation by the Financial Conduct Authority will be dealt with.
Gareth Snell
I apologise for intervening again, Madam Deputy Speaker. I was a director of a credit union in Staffordshire, but unfortunately it went under because the regulation from the FCA simply meant that it became unviable, because the authority did not understand the operating model. I therefore very much agree that the FCA has a big role to play, along with the Government, in making sure that credit unions are sustainable, because they offer a hope for constituents who would otherwise use high-cost lending.
Gareth Thomas
My hon. Friend amplifies the point I was making. One last point to make is that there is a need for legislative change to allow credit unions, in particular, to offer loans for cars and—
Madam Deputy Speaker (Mrs Eleanor Laing)
Order. Before the hon. Gentleman comes to his last point, there seems to be a lack of understanding generally in the Chamber about what happens at this stage in a Bill. I cannot put a time limit on speeches; this is Report stage. We have two groups of amendments to go through, and we have until 6 o’clock. Many questions have been asked, and Members will expect the Minister to have some time to answer them.
If we go on as we have done for the last two hours, there will be no debate on the second group of amendments. It will not be up to me to explain to the hon. Member for Liverpool, Wavertree (Luciana Berger) why she does not get to make her speech on her amendment in the next group. Every minute that people take in this House takes away from another colleague. Of course, there are people who prefer to hear the sound of their own voice, who only want to hear their own arguments and who will not give time for others, but I am warning now that if speeches take more than three minutes, we will get to a stage whereby the second group of amendments will not be heard. I cannot stop the hon. Member for Harrow West (Gareth Thomas) finishing his speech—he can take as long as he likes, as far as the Chair is concerned—but I am sure that he will have a view to helping his colleagues.
Stephen Lloyd
You make a salient point, Madam Deputy Speaker. I have been sitting here for two hours, so I agreed with a lot of what you said.
I am glad that we are finally concluding our consideration of the Bill. I rise to speak to amendment (a) to new clause 9, as well to new clause 7, amendment (a) to amendment 10 and amendment 34. The Liberal Democrats welcome the amendments that the Government have tabled, but we believe that they do not go far enough.
The Bill as introduced in the other place had three major flaws. First, the single financial guidance body had no explicit function to protect consumers. Secondly, the Government missed an opportunity to ban cold calling by claims management companies, as they had promised to do in their manifesto. The ban should also have extended to other financial products. Thirdly, there were no safeguards to ensure that people received financial guidance before they accessed or transferred their pension benefits.
I pay tribute to my Liberal Democrat colleague in the other place, Lord Sharkey, whose amendments to the Bill paved the way for the concessions that we have today. I know that he and others from across the political divide have been lobbying Ministers intensely behind the scenes. It would have been nice if the concessions had come earlier in the proceedings, but there we go.
My support for the concessions is not absolute. In particular, under clause 34, claims management companies must act as though all UK phone numbers are registered with the Telephone Preference Service. As the House will be aware, however, the TPS has proven to be somewhat ineffectual. The Information Commissioner’s Office received more than 11,000 reports of cold calls from people on the TPS register last year. We believe that the Financial Conduct Authority has more teeth to enforce a ban on cold calling by claims management companies. For that reason, we support new clause 8, which would put Lord Sharkey’s amendments back into the Bill. The other amendments to new clause 9 would have a similar effect, allowing the FCA to police the ban on pensions cold calling.
Government new clause 9 allows Ministers to ban pensions cold calling and, if they do not, they must lay a statement before Parliament each year. Although I would love to name and shame Ministers every year until a ban comes into effect, I would rather that they just got on with it. Amendment (a) to the new clause would make it a legal requirement for the Government to ban cold calling, rather than just an optional extra.
New clause 4 allows the Government to ban cold calling in relation to any other financial services product after receiving advice from the SFGB. I welcome the amendment, but Lord Sharkey and I are worried that the SFGB’s duty to report on cold calling “from time to time” is too weak. I have tabled amendment (a) to amendment 10 to ask the SFGB to publish its report on cold calling at least every two years. This duty should not fall quietly by the wayside.
I also encourage the Government to accept amendment (b) to new clause 9, which was tabled by the right hon. Member for Birkenhead (Frank Field). As my colleague, Lord Sharkey, pointed out in the other place, a ban on cold calling must also include a ban on the commercial use of data obtained by cold calling. This gives the Information Commissioner two bites at the cherry to punish companies flouting the ban.
I now turn to the two amendments that I tabled on income shocks. They would require the SFGB to improve the capability of the public to plan for sudden reductions in income. The issue was brought to my attention by the former Pensions Minister, Professor Steve Webb, and the Chartered Insurance Institute, to which I am very grateful. Too many people are unprepared for a sudden fall in income. The 2015 financial capability survey found that 26% of working-age adults have no savings to fall back on and that a further 29% have less than £1,000 saved. There are many reasons why income shocks could occur. Money Advice Service research from 2016 found that nearly three in four households receive an unexpected bill every year. One third of households have had to make an unexpected car repair or replacement, at a cost of £1,300 on average.
The “Improving Lives” Green Paper revealed that 1.8 million employees have a long-term sickness absence of four weeks or more in a year, yet statutory sick pay is worth less than three hours’ work a day on the national living wage. This problem is made worse because, as the FCA has noted, people with serious illnesses often have poor access to financial services, particularly insurance.
Amendments considered in the other place also touched on this issue. In response, the Government said that public preparedness for income shocks would be an aspect of the money guidance function. Although I welcome that commitment, I would like the Minister to go further. The Bill contains no specific direction for the body to improve preparedness for income shocks or any mechanism to measure the progress of the body in this regard.
The SFGB’s focus will be pulled in every direction. How will the Government convey to the SFGB the strategic priorities for the coming year, and how will Parliament and the public be able to scrutinise and evaluate that work? The Government have finally listened to the arguments made on these Benches and in the other place. I thank them for doing so, but they must now go the distance. They must take robust action to end the scourge of cold calling and protect millions of vulnerable people from sudden income shocks.
Steve McCabe (Birmingham, Selly Oak) (Lab)
I apologise for missing the earlier part of the proceedings; I was chairing a debate in Westminster Hall.
I want briefly to voice my support for amendments 8 and 9, to which I have added my name, and also for new clause 8, in my name, which effectively repeats amendment 42 as proposed by Lord Sharkey in the other place. As Members will know, that amendment was withdrawn on the solid understanding of a promise by the Minister in the Lords who said that her officials were working through the detail of a ban on cold calling. She went on to say that the Government would bring forward amendments to this House to implement that ban. Plainly, they have not done so.
I am not quite sure why the Government have backtracked on what seemed to be such an obvious and solid promise. It might have seemed that focusing on the role of the Information Commissioner and Ofcom was the easy option, but, with all due respect to the hon. Member for North Warwickshire (Craig Tracey), the kind of cold calling that innocent people are being subjected to every day is actually a cold, calculated business strategy; it is not only an issue about the misuse of personal data, important though that may be.
This Bill is supposed to be designed to ensure that people are protected and that the financial decisions that they make are taken after careful consideration and access to independent guidance. Why on earth are the Government reneging on their promise to eliminate cold calling for commercial purposes, the aim of which is to bounce people into decision making and deny them the time for proper, careful consideration and access to good guidance? New clauses 3 and 4 simply will not do the trick. People may well see them as a deception—an attempt by the Government to fool people into thinking that they are taking action when they are not really doing so at all. Everyone knows that it is a complete nuisance and underhand practice designed to entrap consumers.
Alex Sobel
I am here to support the amendments in the names of my hon. Friends the Members for Walthamstow (Stella Creasy) and for Harrow West (Gareth Thomas), which are complementary. I have also put my name to amendments 1, 2 and 31 in the name of my hon. Friend the Member for Harrow West.
Why do the poorest in our society have to pay more for the same services as the wealthiest? Why do they have to pay more for the same gas and electricity? Why do they have to pay more interest for the same loans? Why is credit more difficult to access and at much higher interest for the poorest in society? The structure of our society is such that growing inequality is in-built, because those with capital can further accrue it through cheap finance and lower costs, while those without capital cannot pursue their dreams through the high costs and limited availability of debt finance. Today we have an opportunity to make a small step in reversing that trend, casting light on the practices of high-cost credit providers and enshrining the duty to ensure that information about credit unions is provided by the single financial guidance body. The very mission of credit unions is to provide low-cost finance to people who are deemed high risk by traditional institutions, and they are owned by their own members.
Martin Luther King said:
“it is obvious that if a man is to redeem his spiritual and moral ‘lag,’ he must go all out to bridge the social and economic gulf between the ‘haves’ and ‘have not’s’ of the world. Poverty is one of the most urgent items on the agenda of modern life.”
Today we have the opportunity to pass these most excellent amendments and make a step towards bridging that social and economic gulf, not just because it makes sense in terms of financial justice, but on a spiritual and moral level.
The United States acted 40 years ago on the spiritual and moral lag that Dr King talked about, by introducing the Community Reinvestment Act. The Act was established to ensure that banking needs were met and monitored in low-income neighbourhoods, which had seen a retreat of traditional banking services and rising interest—a situation that we have faced in this country for far too long. My hon. Friend the Member for Harrow West gave an excellent explanation of the Community Reinvestment Act, so I will not repeat it. The banks in America have responded to the Community Reinvestment Act by establishing plans to service those communities and ensure that their services are not restricted. Banks in the US with community investment plans not only commit capital at affordable rates for loans, but invest in community development.
The amendments are needed before we can implement a community reinvestment Act. Without the disclosure of financial data and a statutory duty to promote credit unions, we cannot achieve community reinvestment by the large banks. The amendments are a necessary but insufficient precursor to getting real financial justice for communities that struggle to access affordable credit, but today we can make the first step to ensuring financial justice and legislating for a full community reinvestment Act. I hope that the Treasury Bench takes on board these excellent amendments and responds to them in kind.
Alex Cunningham
I want to speak briefly to new clause 2. While I am sure, Madam Deputy Speaker, that you have many years to go before you reach your own mid-life point, I am sure you will understand that we could all use a bit of advice at times—even though those of us with six decades or so behind us think it our duty to pass on pearls of wisdom to the younger generation.
There is plenty of talk about young people and their finances—about how they can manage their cash and get on the property ladder, which is of course impossible for many these days. This Bill does something to help young people, and I am pleased about that, but what it fails to do is help those in the mid-life stage—people who may have saved a bit, joined a pension scheme, or bought an ISA or two. More importantly, it does nothing to help those who have done none of those things and simply do not know who or where to turn to when planning their later life.
Although some excellent initiatives have passed through this House, such as Labour’s policy of auto-enrolment into workplace pensions, there have been a number of failures, not least around the issue of ’50s-born women and their state pension age, which was extended by the Tory-Lib Dem coalition by several years, condemning many such people to poverty when they should have been enjoying retirement. We could have hoped that the experience of thousands of women left facing difficulty and uncertainty would act as a salutary lesson to everyone else that they cannot really depend on Governments to deliver the security they need in retirement, but need to find ways to make provision for themselves.
People are now looking at their expected pension provision, if they have any, and then panicking about how they are going to afford to live when they retire, or are faced with the reality that they will have to work beyond retirement age in order to make ends meet. We also have people who have lived their lives just getting by—who have never been able to buy their own home and now do not know how they will afford their rent once they retire. Uncertainty is very much the name of the game in the 21st century, so we have a responsibility in Parliament to make provision to ensure that everyone, whether they can afford it or not, is able to work out how they will live when they are no longer receiving a wage. This new clause to provide targeted information to people from the age of 50 delivers that.
We all know that people can now expect to have several jobs throughout their career, and redundancy, zero-hours contracts and insecure work are clouds hanging over millions of people every day. Some people in their 50s find that they need to retrain for another role, but many do not know where to begin or where to get to the facts. This body, backed by the right promotional campaigns, including multimedia, could be a lifeline for those who ignore their money problems. I am, however, concerned about the capacity of the new body. We need to guarantee that it can expand if we are to reach many more people with guidance. I am yet to be convinced that that capacity will be there. I hope that the Minister will say something about how it can expand. I also hope that he can extend its services to provide the mid-life advice that people need.
Yvonne Fovargue (Makerfield) (Lab)
I, too, want to support my hon. Friends the Members for Walthamstow (Stella Creasy) and for Harrow West (Gareth Thomas). I hope that the FCA will look speedily at the total cap on the rent-to-own sector, with its inflated prices for goods and roll-up charges.
I am pleased that the Bill aims to ensure that members of the public can access good-quality, free-to-client impartial financial guidance, pensions advice and debt advice. Clauses 10 and 11, which relate to my amendment 42, require the single financial guidance body to set and enforce standards across the debt advice partners it commissions. I think that everyone agrees that the body will have to have regard to standards of practice for the organisations it commissions, but the respective roles of the single financial guidance body and the FCA should not create uncertainty. There may have to be additional requirements for organisations that it commissions.
However, an independent report to the Debt Advice Steering Group run by the Money Advice Service says that the quality assurance process for the larger debt advice charities should be authorised by the FCA. The concern is that any such new and additional requirements from the single financial guidance body should not replicate the requirements faced by the debt advice organisations from their regulator, the FCA. Having had a contract from the Legal Aid Board where we had three auditors in at one time, I was tempted just to throw the files into the middle of the room and say “Fight over them.” The auditing ought to be in the same capacity, and it should be done under one audit that covers all if there are the same requirements.
The body’s standard-setting powers also need to be matched with principles of good regulation, and conditions ought to be proportionate to the benefits they will bring. Amendment 42 would make that plain. Ensuring that the new body’s standard-setting powers have regard to proportionality would smooth its functioning, guarantee assurance and stop the uncertainty as to whether the FCA or the single financial guidance body has primacy.
Ellie Reeves (Lewisham West and Penge) (Lab)
I want to speak to amendments 8 and 9, which, unlike new clause 4, would lead to an outright ban on cold calling by claims management companies.
Claims management companies make and send around 51 million personal injury-related calls and texts each year. Such calls are not only a nuisance; they exploit vulnerable people. It is worth reiterating that solicitors are already banned from cold calling in personal injury claims, but the fact that claims management companies are not risks bringing the sector into disrepute. Cold calling can generate the false perception that obtaining compensation is easy, even where there is no injury. It can put pressure on people to pursue unmeritorious or, at the worst, fraudulent claims, which they otherwise may not do. It may never have been someone’s intention to make a claim, but if they receive a text promising them thousands of pounds, it might seem very tempting.
There is an important context. The Government are proposing to reform compensation rules for whiplash claims and to increase the small claims limit in road traffic accidents from £1,000 to £5,000, and in public liability and employers’ liability claims from £1,000 to £2,000. The Government say that that is to cut down on fraudulent claims and to bring down insurance premiums. However, many, including myself, are concerned that that will have a significant impact on access to justice, with people not being able to access proper legal advice in such claims.
Ruth George
Does my hon. Friend agree that a total ban on cold calling, including from claims management companies, would be a much more proportionate response to insurance industry claims of fraud within claims management, and that that should be looked at before any action that will impact on innocent victims of road traffic accidents and employer injuries?
Ellie Reeves
I absolutely agree. Surely a better solution to this issue is to have an outright ban on cold calling in personal injury claims by claims management companies, which is exactly what amendments 8 and 9 would do.
New clause 4 gives the single financial guidance body the ability to advise the Government if it considers a ban on cold calling by CMCs to be necessary. If the Government receive such advice, the Bill gives the Secretary of State the power to impose such a ban. However, the Bill does not compel the single financial guidance body to give such advice in relation to cold calling; nor are the Government required to act if they receive advice.
Although the Government have promised decisive action from the outset, I am concerned that the Bill is filled with ifs, buts and maybes and still falls far short of a ban on cold calling. Amendment 8 would commit the single financial guidance body to advise on how best to implement a ban within 12 months of the Bill being passed, and amendment 9 would require the Government to act outright and impose the ban. A ban on cold calling commands support from over two thirds of the population. We must respond to that and strengthen the Bill by agreeing to amendments 8 and 9, to see through a complete and necessary ban on cold calling.
John Glen
I am acutely conscious of the need not only to get on to the second group of amendments but to respond to the amendments in the first group. I will do my best to address all of them, and I will give myself five minutes to do so.
I will start with new clause 7 and amendment 34, tabled by the hon. Member for Eastbourne (Stephen Lloyd). The body is already expected to develop a national strategy to improve people’s financial capability, including ensuring that consumers improve their financial resilience, so the Government believe that the amendments are not necessary.
Jack Dromey
In the spirit of being able to get on to the next group, we welcome the ban on pension cold calling. We have sought to extend that ban to all cold calling. If the Minister is prepared to have discussions at the next stages, and before the Bill concludes its passage through Parliament, we would be prepared not to oppose Government amendment 11 or to move our amendments 8 and 9.
Frank Field
If the Minister’s optimism is misplaced on not accepting the amendments that I spoke to on behalf of the Select Committee, will he consider moving to secondary legislation?
John Glen
I thank the right hon. Gentleman for his remarks. I always listen very carefully to what he says. We have made provision for additional bans to take place very quickly, and if my optimism is misplaced, I would expect the body to act. I will continue to have a deep dialogue with the right hon. Gentleman on these matters.
Question put and agreed to.
New clause 4 accordingly read a Second time, and added to the Bill.
New Clause 9
Unsolicited direct marketing: pensions (No. 2)
‘(1) The Secretary of State may make regulations prohibiting unsolicited direct marketing relating to pensions.
(2) The regulations may—
(a) make provision about when a communication is to be, or is not to be, treated as unsolicited;
(b) make provision for exceptions to the prohibition;
(c) confer functions on the Information Commissioner and on OFCOM (including conferring a discretion);
(d) apply (with or without modifications) provisions of the data protection legislation or the Privacy and Electronic Communications (EC Directive) Regulations 2003 (S.I. 2003/2426) (including, in particular, provisions relating to enforcement).
(3) The regulations may—
(a) make different provision for different purposes;
(b) make different provision for different areas;
(c) make incidental, supplementary, consequential, transitional or saving provision.
(4) Regulations under this section are to be made by statutory instrument.
(5) A statutory instrument containing regulations under this section may not be made unless a draft of the instrument has been laid before, and approved by a resolution of, each House of Parliament.
(6) If before the end of June in any year the Secretary of State has not made regulations under this section (whether or not in that year), the Secretary of State must—
(a) publish a statement, by the end of July in that year, explaining why regulations have not been made and setting a timetable for making the regulations, and
(b) lay the statement before each House of Parliament.
(7) In this section, “OFCOM” means the Office of Communications established by section 1 of the Office of Communications Act 2002.’—(Guy Opperman.)
This new clause inserts a new power for the Secretary of State to make regulations (subject to the affirmative procedure) banning unsolicited direct marketing relating to pensions. If the power is not exercised by June, the Secretary of State must explain to Parliament why not. This new clause would be inserted after Clause 24.
Brought up, read the First and Second time, and added to the Bill.
Clause 2
Objectives
Amendment proposed: 39, page 2, line 23, leave out from “accordingly” to the end of line 24 and insert—
“(da) to ensure the needs of people in vulnerable circumstances, including but not exclusively—
(i) those who suffer long-term sickness or disability,
(ii) carers,
(iii) those on low incomes, and
(iv) recipients of benefits,
are met and that resources are allocated in such a way as to allow specially trained advisers and guidance to be made available to them,”.—(Neil Gray.)
This amendment would require that specially trained advisers and guidance are made available to people in vulnerable circumstances and would provide an indicative list of what vulnerable circumstances should include.
Question put, That the amendment be made.
Luciana Berger
I beg to move amendment 5, page 5, line 37, at end insert—
“(ia) how it will specifically provide protections and help to individuals in receipt of mental health crisis services, including NHS mental health crisis services;
(ib) which other mental health treatment services should be considered mental health crisis services for the purposes of this Act.”
Madam Deputy Speaker (Dame Rosie Winterton)
With this it will be convenient to discuss the following:
Amendment 3, page 5, line 39, at end insert—
(iiia) the application of the scheme for duration of a person’s stay in hospital or under the care of a crisis team in their local community”
This amendment will ensure that people who are staying in hospital or under the care of a crisis team in their local community will be protected by the Debt Respite Scheme once it is established.
Amendment 30, in clause 8, page 6, line 15, at end insert
“and must do so before 1 January 2020.”
This amendment commits the Secretary of State to implement a debt respite scheme by the end of next year.
Amendment 6, page 6, line 16, at end insert—
“(3A) A debt respite scheme established by regulations under this section must, specifically, provide protection and help to individuals in receipt of mental health crisis services as well as any other types of individual provided for by regulations under this section.
(3B) The regulations must define which services should be considered “mental health crisis services” for the purpose of this Act in addition to the definition in section 25 of this Act.
(3C) A debt respite scheme established by regulations under this section shall be accessible to individuals in receipt of mental health crisis services irrespective of whether those individuals have accessed debt advice.”
Government amendment 13, in clause 19, page 14, line 40, leave out from beginning to end of line 8 on page 15 and insert—
“(1B) As part of the application process, the trustees or managers must ensure that—
(a) the member or survivor is referred to appropriate pensions guidance, and
(b) the member or survivor is provided with an explanation of the nature and purpose of such guidance.
(1C) Before proceeding with the application, the trustees or managers must ensure that the member or survivor has either received appropriate pensions guidance or has opted out of receiving such guidance.”
This amendment will enable FCA rules to require trustees of a personal pension scheme who receive an application from a member to access or transfer their pension to refer them to SFGB guidance and explain its nature and purpose (or ensure that another person, such as the SFGB, does so) and will prevent them from proceeding unless the member confirms that they have received guidance or do not want it.
Amendment (a) to amendment 13, after “is referred to appropriate” insert “independent and impartial”.
Amendment (b) to amendment 13, after “has either received appropriate” insert “independent and impartial”.
Amendment (c) to amendment 13, in subsection (1C), leave out from “appropriate pensions guidance or” to end and insert
“has indicated to the provider of appropriate independent and impartial pensions guidance the desire to opt out of receiving such guidance.”
Amendments (a), (b) and (c) to amendment 13 specify on the face of the Bill that the provider of the appropriate pensions guidance should be independent and impartial, and that any desire to opt-out of guidance must be indicated to this independent and impartial guidance provider.
Government amendment 14.
Government amendment 15, page 15, line 14, at end insert—
“( ) make further provision about how, and to whom, a member or survivor may indicate that they have received or opted out of receiving appropriate pensions guidance for the purposes of subsection (1C);”.
This amendment expressly envisages the rules making provision about how the opt-out (or confirmation of receipt of guidance) mentioned in the new subsection (1C) inserted by Amendment 13 must be expressed in order to be effective.
Amendment (a) to amendment 15, leave out from “received” to end and insert
“appropriate independent and impartial pensions guidance, or have indicated to the provider of this guidance that they wish to opt out, for the purposes of subsection (1C);”.
Government amendment 16.
Government amendment 17, in clause 20, page 16, line 10, leave out from beginning to end of line 23 and insert—
“(2) As part of the application process, the trustees or managers must ensure that—
(a) the beneficiary is referred to appropriate pensions guidance, and
(b) the beneficiary is provided with an explanation of the nature and purpose of such guidance.
(3) Before proceeding with the application, the trustees or managers must ensure that the beneficiary has either received appropriate pensions guidance or has opted out of receiving such guidance.”
This amendment makes equivalent changes to Clause 20(2), which relates to occupational pension schemes in Great Britain, to the changes made by Amendment 13 for personal pension schemes.
Amendment (a) to amendment 17, after “is referred to appropriate” insert “independent and impartial”.
Amendment (b) to amendment 17, after “has either received appropriate” insert “independent and impartial”.
Amendment (c) to amendment 17, in subsection (3), leave out from “appropriate pensions guidance or” to end and insert
“has indicated to the provider of appropriate independent and impartial pensions guidance the desire to opt out of receiving such guidance.”
Amendments (a), (b) and (c) to Amendment 17 specify on the face of the Bill that the provider of the appropriate pensions guidance should be independent and impartial, and that any desire to opt-out of guidance must be indicated to this independent and impartial guidance provider.
Government amendment 18.
Government amendment 19, page 16, line 29, at end insert—
“( ) make further provision about how, and to whom, a beneficiary may indicate that they have received or opted out of receiving appropriate pensions guidance for the purposes of subsection (3);”.
This amendment is the equivalent to Amendment 15 for occupational pension schemes in Great Britain.
Amendment (a) to amendment 19, leave out from “received” to end and insert
“appropriate independent and impartial pensions guidance, or have indicated to the provider of this guidance that they wish to opt out, for the purposes of subsection (3);”.
Government amendment 20.
Government amendment 21, page 17, line 27, leave out from beginning to end of line 40 and insert—
“(2) As part of the application process, the trustees or managers must ensure that—
(a) the beneficiary is referred to appropriate pensions guidance, and
(b) the beneficiary is provided with an explanation of the nature and purpose of such guidance.
(3) Before proceeding with the application, the trustees or managers must ensure that the beneficiary has either received appropriate pensions guidance or has opted out of receiving such guidance.”
This amendment makes equivalent changes to Amendments 13 and 17 for occupational pension schemes in Northern Ireland.
Amendment (a) to amendment 21, after “is referred to appropriate” insert “independent and impartial”.
Amendment (b) to amendment 21, after “has either received appropriate” insert “independent and impartial”.
Amendment (c) to amendment 21, in subsection (3), leave out from “appropriate pensions guidance or” to “or has opted out” and insert
“has indicated to the provider of appropriate independent and impartial pensions guidance the desire to opt out”.
Government amendment 22.
Government amendment 23, page 17, line 46, at end insert—
“( ) make further provision about how, and to whom, a beneficiary may indicate that they have received or opted out of receiving appropriate pensions guidance for the purposes of subsection (3);”.
This amendment is the equivalent to Amendments 15 and 19 for occupational pension schemes in Northern Ireland.
Amendment (a) to amendment 23, leave out from “received” to end and insert
“appropriate independent and impartial pensions guidance, or have indicated to the provider of this guidance that they wish to opt out, for the purposes of subsection (3);”.
Government amendment 24.
Government motion to transfer clause 22.
Amendment 7, in clause 25, page 21, line 9, at end insert—
“‘NHS Mental health crisis services’ means services provided by NHS England, NHS Wales, or Health and Social Care in Northern Ireland in order to treat acute crises in mental health, whether arising from either acute or chronic mental health conditions.”
Amendment 37, in schedule 1, page 38, line 4, at end insert—
“3A (1) The term of office of a person appointed as chair under paragraph 2(1)(a) must not begin before—
(a) the person has, in connection with the appointment, appeared before the Work and Pensions Committee of the House of Commons, or
(b) (if earlier) the end of the period of 3 months beginning with the day on which the appointment is made.
(2) Sub-paragraph (1) does not apply if the person is appointed as chair on an acting basis, pending a further appointment being made.
(3) The reference to the Work and Pensions Committee of the House of Commons—
(a) if the name of that Committee is changed, is a reference to that Committee by its new name, and
(b) if the functions of that Committee (or substantially corresponding functions) become functions of a different Committee of the House of Commons, is to be treated as a reference to the Committee by which the functions are exercisable.
(4) Any question arising under sub-paragraph (3) is to be determined by the Speaker of the House of Commons.”
This amendment would require the chair of the single financial guidance body to attend a pre-appointment hearing with the Work and Pensions Committee of the House of Commons before starting their appointment. If no such hearing is held within three months, the appointment can also begin.
Amendment 38, page 38, line 41, at end insert:
“6A (1) The term of office of a person appointed as chief executive under paragraph 6(1)(a) must not begin before—
(a) the person has, in connection with the appointment, appeared before the Work and Pensions Committee of the House of Commons, or
(b) (if earlier) the end of the period of 3 months beginning with the day on which the appointment is made.
(2) Sub-paragraph (1) does not apply if the person is appointed as chief executive on an acting basis, pending a further appointment being made.
(3) The reference to the Work and Pensions Committee of the House of Commons—
(a) if the name of that Committee is changed, is a reference to that Committee by its new name, and
(b) if the functions of that Committee (or substantially corresponding functions) become functions of a different Committee of the House of Commons, is to be treated as a reference to the Committee by which the functions are exercisable.
(4) Any question arising under sub-paragraph (3) is to be determined by the Speaker of the House of Commons.”
This amendment would require the chief executive of the single financial guidance body to attend a pre-appointment hearing with the Work and Pensions Committee of the House of Commons before starting their appointment. If no such hearing is held within three months, the appointment can also begin.
Luciana Berger
I shall speak to amendments 5, 6 and 7. I am incredibly grateful to colleagues on both sides of the House for the constructive negotiations and discussions that have taken place to enable this group of amendments be discussed on the Floor of the House this evening. Their purpose is to extend the debt respite scheme set out in clauses 7 and 8 to people in receipt of NHS mental health crisis services. I am incredibly grateful to the large number of MPs—81, in fact—on both sides of the House who are supporting the amendments. It has also been a real privilege to work with the Money and Mental Health Policy Institute, together with colleagues from all parties, to put the amendments together.
Last year’s Conservative party manifesto contained a commitment to introduce a breathing space. The Government have since brought forward this Bill and launched a consultation into how a breathing space initiative would work in practice. This included proposals for a possible trigger point for accessing support, with the initial suggestion that a breathing space should be available only to a person seeking regulated debt advice. I very much welcome the spirit of the Government’s breathing space initiative, but I am concerned that it does little to protect the thousands of people in mental health crisis who are too unwell to physically go and seek such debt advice or to pick up the phone to make that call.
According to research by the Money and Mental Health Policy Institute, up to 23,000 people in England alone struggled with problem debt while they were hospitalised as a result of their mental health last year. Those people are likely to be receiving calls, texts and letters from their banks, local authorities and other creditors at a time of acute distress, and they are at risk of falling into further financial difficulty as a result of increased fees and charges—[Interruption.]
Madam Deputy Speaker (Dame Rosie Winterton)
Order. Some hon. Members are leaving the Chamber, and there is quite a lot of chatter. It would be good to be able to listen to the hon. Member for Liverpool, Wavertree (Luciana Berger).
Luciana Berger
I am grateful to you, Madam Deputy Speaker.
I am concerned about the charges that those people will face, and about the drop in their income from the loss of wages and benefits that people could experience as a result of being in in-patient care or crisis care in the community. Thousands more in the devolved nations, and those who are receiving mental health crisis support in the community, will be in a similar position. The additional anxiety and stress that those people experience as a result of those financial pressures not only threaten to undermine their recovery but make it much less likely that they will be able to repay their debts. The requirement for people in that situation to seek advice before they can benefit from a breathing space creates a barrier, and that barrier must be removed if the new scheme is to fulfil its purpose of protecting the most vulnerable customers.
Amendment 5 represents the first step towards rectifying this issue. It ensures that when the Secretary of State seeks advice from the new single financial guidance body on the establishment of a debt respite scheme, it will include advice on specifically how the scheme will protect recipients of mental health crisis services, and information on which services should be considered to be mental health crisis services. We propose that this should include psychiatric in-patient facilities and community crisis teams. Amendment 6 takes this further by ensuring that the regulations to establish the debt respite scheme specifically provide protection and help to individuals in receipt of mental health crisis services, irrespective of whether those individuals have formally accessed debt advice. Amendment 7 would provide the baseline definition of an NHS mental health crisis service.
Targeting these interventions towards people with mental health problems will have far-reaching positive consequences. People experiencing mental health problems are significantly more likely to be in financial difficulty than the rest of the population, and half the people in problem debt are also experiencing mental ill health. The number of people receiving NHS crisis care services is also likely to be relatively small, and a high proportion—at least a quarter—are likely to be in financial difficulty. Furthermore, people experiencing a mental health crisis are likely to experience problems with their cognitive and psychological functioning as a direct consequence of their illness and are therefore highly unlikely to be able to seek debt advice and access breathing space through regulated debt advice.
How will the system work in practice? We suggest that a person entering the care of a psychiatric in-patient facility or crisis team in the community would be supported to access breathing space if appropriate. That could take the form of a certificate or a stamped-and-dated letter confirming that the service user is in receipt of mental health support during a crisis and should have breathing space applied. Many clinical mental health professionals are currently fighting fires before they can help their patients with their mental health. They are writing to creditors, calling bailiffs and completing reams of financial paperwork, and the changes that I am proposing would simplify things for those professionals, allowing them to focus on their day job. It would also reduce demand on mental health services, as research shows that people who are not in problem debt are much more likely to recovery more quickly and less likely to experience mental health problems in the future.
It is important to acknowledge that the proposed changes would not apply in Scotland, which already has a debt arrangement scheme that would require separate legislation to amend. However, we hope that the successful implementation of our proposals could provide the case for similar reforms in Scotland.
John Glen
In the interests of time and to allow others to speak, I just wanted to confirm that the Government recognise the motives and the wide degree of support behind the proposals and the particular issues for people experiencing a mental health crisis. We will commit to ensuring that people receiving NHS treatment for a mental health crisis, either at a psychiatric in-patient setting or in the community, will be provided with an alternative mechanism to access the breathing space scheme. We will see that that is developed concurrently with the main breathing space scheme.
Luciana Berger
I am incredibly grateful to the Minister. What he has just shared with the House has been missing until now and will make a tangible difference to at least 23,000 people a year. I am grateful for the commitment that he has made. I was going to say in conclusion that amendments 5, 6 and 7 would prevent tens of thousands of people experiencing a mental health crisis from missing out on the protections that breathing space has to offer, which I welcome, because they are too ill to seek debt advice, so I again welcome what the Minister said, because it is critical that that most vulnerable group is not ignored.
Yesterday, the hon. Member for Plymouth, Moor View (Johnny Mercer), Martin Lewis of Money Saving Expert and I joined two people with lived experience, Lee and Susan, to hand in a petition of over 10,000 people who support the campaign. This is a truly cross-party effort, and the right hon. Member for North Norfolk (Norman Lamb) and I have campaigned long and hard. Mental health does not discriminate, and one day one of us in this Chamber could need to access a scheme such as breathing space. It could make a difference for any one of us. I am grateful that the Government have acknowledged the need to ensure that the scheme reaches everyone who needs it, particularly the most vulnerable, and tackles and addresses the impacts of mental health and debt, and I again welcome what the Minister has committed to this afternoon.
John Glen
Being mindful of the need to allow others to speak, I rise to discuss Government amendments 13 to 24. Clauses 19 and 20, which were added by the Government in Committee, aim to build on the Work and Pensions Committee’s proposals by putting them into a workable legal framework, ensuring mirroring provisions for UK occupational pension schemes. Discussions with stakeholders and Members of both Houses have informed amendments 13 to 24. If amended, clauses 19 and 20 would place new duties on managers and trustees of all defined contribution pension schemes when an individual seeks to access or transfer their pension pot.
Frank Field
We may not get a chance to discuss the amendments supported by the Work and Pensions Committee, so will the Minister give the same undertaking that he will introduce secondary legislation if our worries prove valid?
John Glen
The spirit that has run through the House during the passage of the Bill necessitates continued dialogue, and I can certainly give the right hon. Gentleman that undertaking.
I make it clear that when an individual seeks to access or transfer their pension pot, the duties will ensure that they are referred to Pension Wise guidance and that they receive an explanation of the nature and purpose of that guidance. Before proceeding with an application, subject to any exceptions, schemes must ensure that individuals have either received Pension Wise guidance or have opted out. Rules and regulations can specify how and to whom an individual must confirm that they are opting out, which allows for the opt-out process to be separated from schemes. Rules and regulations will set out the detail of the opt-out process, based on evidence of what helps people take up Pension Wise guidance.
These Government amendments lay the foundation for an effective final nudge towards guidance and will allow us to test what works best before implementation and to update the approach in future. They strike the right balance with what is set out in primary legislation, with rules and regulations providing suitable flexibility.
In the interests of time, and to be fair to everyone else, I will now sit down.
Norman Lamb (North Norfolk) (LD)
It has been good to join the hon. Members for Liverpool, Wavertree (Luciana Berger) and for Plymouth, Moor View (Johnny Mercer), and many others, in tabling our amendments. I very much welcome the Minister’s response.
People often get into a vicious circle, with mental ill health leading them into debt because they neglect vital things and the pressure of those debts intensifying their mental ill health. Kenny Johnston, an inspiring man who set up the charity Clasp and who walked out of darkness to build solidarity for people experiencing mental ill health and suicidal ideation, went through eight years of battle with a bank on mortgage arrears that were started by mental ill health, resulting in two suicide attempts—there was constant pressure on him over that eight-year period. This measure will make a difference. It will help, and it is good the Government have been prepared to listen.
It is important to understand that this is not a panacea. I encourage the Minister also to recognise that there are very many people beyond the scope of clauses 19 and 20, such as people in in-patient care and people supported in the community, who are still experiencing mental ill health and who may end up at risk of suicide because of debt. It is important to get the message out and to establish proper processes in companies, particularly financial services companies, to treat people with mental ill health in an appropriate way in order to protect vulnerable citizens.
Legislation is already in place. The Equality Act 2010 contains a duty to consider reasonable adjustments for people who suffer from a disability, which can include mental ill health, and it is important that we spread best practice much further. I welcome the measure, but it is a start and we need to do much more to protect people’s lives.
George Freeman (Mid Norfolk) (Con)
Given the shortness of time, I will be brief. I thank the Minister and congratulate him on providing the House with what we were looking for this afternoon. I congratulate the hon. Member for Liverpool, Wavertree (Luciana Berger), my hon. Friend the Member for Plymouth, Moor View (Johnny Mercer), the right hon. Member for North Norfolk (Norman Lamb), the Breathing Space campaign and the 80-odd colleagues on both sides of the House who have supported the proposal.
I thank the Minister and the Government for signalling what many people in the House and across the country hugely welcome: an appetite for cross-party working in pursuit of looking after the most vulnerable in society, in the spirit of the Prime Minister’s mission when she arrived in No. 10 two years ago. This will send a signal that we are serious.
Secondly, I echo the comments made by my neighbour, the right hon. Member for North Norfolk (Norman Lamb), about the importance of understanding the vicious cycle of mental health and debt, and the way in which the two are so often implicated here. Recent figures from ComRes have shown that 56% of people in work say that payday struggles are their biggest anxiety. Often that anxiety can lead to further complications in terms of depression, which can lead to mental health problems, which in turn can undermine their ability to earn and work. That often leads into a cycle that makes both the indebtedness and the mental health suffering worse, as I know from my own experience. Sixty years ago, my father won the Grand National and 10 years later he suffered a life collapse from a combination of indebtedness, bankruptcy, mental health issues and head injuries, which in those days were not well treated. It is a sign of how far we have come as a society and as a politics that we now talk about these issues so much more openly and we offer so much more help.
I shall close with my third point, which relates to the importance of that taboo. So many people in our society still suffer in silence from debt, which knows no boundaries and is no respecter of class, political affiliation or geography. People who may appear at ease and prosperous—and often those who appear most that way—are struggling in misery behind the scenes and compounding that misery through their inability to feel confident enough to talk about it. That is why, along with the co-chair of the all-party group on inclusive growth, the right hon. Member for Birmingham, Hodge Hill (Liam Byrne), we are working on a small campaign this summer with StepChange, the Money Advice Service, the Financial Conduct Authority and Martin Lewis called “Share not Shame” to encourage people to talk more openly about their indebtedness issues and to seek the help that is available. Many people in this country are paying far too much for debt that could be provided at a minimum—at a fraction of the price—and their debts could be rescheduled in a way that takes the pressure and shame from them. I welcome warmly the undertaking the Minister has given today and congratulate those Members who have led the campaign on this, which will signal across the country that this Parliament is taking their interests very seriously.
Yvonne Fovargue
I rise to speak to my amendment 30, which would improve the timeframe for the breathing space, ensuring its introduction by the end of 2019. That would provide greater certainty, because the current timeframe centres on the establishment of the SFGB, which is potentially moveable. I have proposed a realistic target, allowing sufficient time for the necessary preparation work. I am assured of that by the debt advice providers themselves; they say it gives enough time to plan and develop the new systems to deliver the new protections to all.
Let us not forget that debt often pushes people into a mental health crisis and that debt and depression necessitate people visiting the doctors’ surgery. They are suffering depression, but it is not that; it is the debts that are depressing them. The breathing space and statutory debt repayment plans, properly set up, will give people time and space to get debt advice, stabilise their finances through periods of temporary difficulty and put in place a long-term sustainable solution to their debts. That is not just of benefit to the individual; it benefits the creditors as well, because they know they will be getting their money back, in a fair way, over a fair period of time.
I hope that the Minister will also confirm some details of how the breathing space scheme will work. As I have said on a number of occasions, it is essential that the length of time involved is sufficient to ensure that people are not put back into the harmful uncertainty of unmanageable debt before they have that long-term plan in place. Six weeks has been mentioned, and such a period may help some people, but I have said many times that three months is probably more realistic. I have mentioned how long it takes to get people to come in and deal with the debts, with the need to open carrier bags full of envelopes that people have not had the courage to open. If we are going to start with six weeks, provision must be made for extensions to be made to that; it cannot just finish at six weeks, as it often takes longer than that to get an appointment.
I would like to see this scheme cover all relevant debts, including benefit debts, council tax debts and debts owed to central or local government. If creditors are excluded, they will be able to put the unhelpful pressure on the debtors, which will reduce the scheme’s viability and effectiveness. This has to stop creditors across the board making unaffordable repayment demands. For example, claimants on universal credit can have 40% of their benefit withheld to pay off third-party creditors, with another 40% going on paying back benefit advances—that is 80% of the money. That leaves them with 20% of what is considered the minimum amount required to live on, and that is simply unaffordable.
There is widespread unfair pressure from Government creditors. As StepChange says, bailiffs are often the first port of call rather than a last resort. Clients rate the DWP, HMRC and councils far worse than other creditors—far worse than payday lenders—for treating them unfairly. The Government should adhere to best practice, and I hope that the Minister will agree that it is in all our interests to ensure that no vulnerable people are put into a position where they are unable to pay off their debts.
Johnny Mercer (Plymouth, Moor View) (Con)
I rise to speak in support of amendment 5, which is in my name and those of the hon. Members for Liverpool, Wavertree (Luciana Berger), and for North Norfolk (Norman Lamb), as well as many others across the House.
We in this place often talk a very good game when it comes to mental health, and serious progress has been made in taking the agenda forward over the last few years thanks to colleagues from across the House. When it comes to parity of physical and mental health, however, small details in policy matter. The amendment concerns one such detail, and I am delighted by what the Minister has said today about bringing that into reality for some of our most vulnerable constituents. It was a manifesto commitment of the Government to introduce a breathing space scheme, whereby people who suffer from problem debt are given a fixed period without fees, charges, interest or collection. The consultation is out at the moment, and I support the proposal very much, but there is a gap in provision for those who suffer from mental health crises—those who are too unwell either to manage their finances alone or seek debt advice, and so would not be able to access this scheme.
As we have heard, last year that situation affected up to 23,000 of our most vulnerable constituents, who were hospitalised for poor mental health while struggling with debt. That does not account for those who were in a similar position while receiving mental health crisis support in the community. The link between debt and poor mental health is indisputable; it is a marriage made in hell. I pay tribute to the work of Martin Lewis in bringing together the Money and Mental Health Policy Institute, which has shone a torch on the relationship between debt and mental health. That relationship is often hidden away in some of the darker recesses of our communities, but it makes some of our most vulnerable constituents’ lives hell.
Tens of thousands of people in this country are trapped in a spiral of escalating debts and worsening mental health. Some receive court summons while they are in hospital. I know somebody who faced demands on their doorstep the day they were released following their recovery from an illness. Some people have missed bill payments while hospitalised for mental health conditions, and escalating fees and charges have led some to attempt suicide directly after contact from bailiffs.
The ask of this amendment is very clear: for the Minister to look at extending the current breathing space scheme to apply to anyone who accesses psychiatric in-patient care. We must commit ourselves ever harder to parity of esteem, as I have said. For those who have a short period of acute mental illness—who suffer panic attacks and cannot open the post, call the bank or even think coherently—going to a debt counsellor to call a halt to things is just impossible. The commitment that we seek today, and that we have got from the Minister, is important because it means that people can look to those in NHS crisis teams for advice and space in the breathing space scheme.
I thank the Minister for his willingness to listen to our concerns. The campaign has been a good one. It has involved all Members of this House and shown what can happen when those from all parts of the House work together. I come back to what I said at the beginning. We often talk a very good game—I was delighted that parity of mental health and physical health was made a manifesto commitment in 2015—but sometimes big words have to be matched by calibrated and careful actions. This is one such area, and I am delighted that the Minister has decided that he is going to work on it. I look forward to working with him and the policy institute to make that a reality for tens of thousands of people up and down the country.
Luciana Berger
I beg to ask leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Clause 18
Disclosure of information
Amendments made: 12, page 14, line 17, after “where” insert “—
(i) the disclosure is for the purpose of enabling or facilitating the exercise of the consumer protection function, or
(ii) ”
This amendment is consequential upon Amendment 10, which makes changes to the consumer protection function, including requiring the SFGB to pass information to the FCA in certain circumstances. This amendment ensures that disclosure of information in these circumstances is protected by subsection (7) of Clause 18.
Amendment 43, page 14, line 26, leave out “Data Protection Act 1998” and insert “data protection legislation”—(John Glen.)
This amendment changes the reference to the Data Protection Act 1998 to a reference to the “data protection legislation” (as defined in Clause 25 as amended by Amendment 44) to reflect the changes to data protection legislation that are to be made by the Data Protection Bill.
Clause 19
Personal pension schemes: requirements to recommend guidance etc
Amendments made: 13, page 14, line 40, leave out from beginning to end of line 8 on page 15 and insert—
‘(1B) As part of the application process, the trustees or managers must ensure that—
(a) the member or survivor is referred to appropriate pensions guidance, and
(b) the member or survivor is provided with an explanation of the nature and purpose of such guidance.
(1C) Before proceeding with the application, the trustees or managers must ensure that the member or survivor has either received appropriate pensions guidance or has opted out of receiving such guidance.”
This amendment will enable FCA rules to require trustees of a personal pension scheme who receive an application from a member to access or transfer their pension to refer them to SFGB guidance and explain its nature and purpose (or ensure that another person, such as the SFGB, does so) and will prevent them from proceeding unless the member confirms that they have received guidance or do not want it.
Amendment 14, page 15, line 10, leave out from “guidance” to end of line 11.
This amendment (and Amendment 13) removes references to independent financial advice from Clause 19, so that it refers only to pensions guidance given by the SFGB in pursuance of Clause 5 of the Bill.
Amendment 15, page 15, line 14, at end insert—
“() make further provision about how, and to whom, a member or survivor may indicate that they have received or opted out of receiving appropriate pensions guidance for the purposes of subsection (1C);”
This amendment expressly envisages the rules making provision about how the opt-out (or confirmation of receipt of guidance) mentioned in the new subsection (1C) inserted by Amendment 13 must be expressed in order to be effective.
Amendment 16, page 15, leave out line 17 and insert—
“communication that is made for the purposes of complying with the duty in subsection (1C)”. —(John Glen.)
This amendment is consequential on the changes to the duties on trustees made by Amendment 13.
Clause 20
Occupational pension schemes: requirements to recommend guidance etc
Amendments made: 17, page 16, line 10, leave out from beginning to end of line 23 and insert—
‘(2) As part of the application process, the trustees or managers must ensure that—
(a) the beneficiary is referred to appropriate pensions guidance, and
(b) the beneficiary is provided with an explanation of the nature and purpose of such guidance.
(3) Before proceeding with the application, the trustees or managers must ensure that the beneficiary has either received appropriate pensions guidance or has opted out of receiving such guidance.”
This amendment makes equivalent changes to Clause 20(2), which relates to occupational pension schemes in Great Britain, to the changes made by Amendment 13 for personal pension schemes.
Amendment 18, page 16, line 25, leave out from “guidance” to end of line 26.
This amendment is the equivalent to Amendment 14 for occupational pension schemes in Great Britain.
Amendment 19, page 16, line 29, at end insert—
“() make further provision about how, and to whom, a beneficiary may indicate that they have received or opted out of receiving appropriate pensions guidance for the purposes of subsection (3);”
This amendment is the equivalent to Amendment 15 for occupational pension schemes in Great Britain.
Amendment 20, page 16, line 31, leave out from second “a” to end of line 32 and insert “communication that is made for the purposes of complying with the duty in subsection (3)”.
This amendment is the equivalent to Amendment 16 for occupational pension schemes in Great Britain.
Amendment 21, page 17, line 27, leave out from beginning to end of line 40 and insert—
‘(2) As part of the application process, the trustees or managers must ensure that—
(a) the beneficiary is referred to appropriate pensions guidance, and
(b) the beneficiary is provided with an explanation of the nature and purpose of such guidance.
(3) Before proceeding with the application, the trustees or managers must ensure that the beneficiary has either received appropriate pensions guidance or has opted out of receiving such guidance.”
This amendment makes equivalent changes to Amendments 13 and 17 for occupational pension schemes in Northern Ireland.
Amendment 22, page 17, line 42, leave out from “guidance” to end of line 43.
This amendment is the equivalent to Amendments 14 and 18 for occupational pension schemes in Northern Ireland.
Amendment 23, page 17, line 46, at end insert—
“() make further provision about how, and to whom, a beneficiary may indicate that they have received or opted out of receiving appropriate pensions guidance for the purposes of subsection (3);”
This amendment is the equivalent to Amendments 15 and 19 for occupational pension schemes in Northern Ireland.
Amendment 24, page 18, line 2, leave out from second “a” to end of line 3 and insert—
“communication that is made for the purposes of complying with the duty in subsection (3)”. —(John Glen.)
This amendment is the equivalent to Amendments 16 and 20 for occupational pension schemes in Northern Ireland.
Ordered,
That Clause 22 be transferred to the beginning of line 1 on page 21.—(John Glen.)
This is a drafting change to reorder some of the existing clauses in the Bill to provide a more logical order following the insertion of NC3 and NC4.
Clause 25
Interpretation of Part 1
Amendments made: 25, page 21, line 2, at end insert—
“the ‘consumer protection function’ has the meaning given in section 3(7);”
This amendment inserts a definition of “the consumer protection function” into the interpretation clause, which will be necessary following the amendment to Clause 18 made by Amendment 12, which refers to the consumer protection function.
Amendment 44, page 21, line 2, at end insert—
“the ‘data protection legislation’ has the same meaning as in the Data
Protection Act 2018 (see section 3 of that Act);”
This amendment inserts a definition of the “data protection legislation” which is a term now used in Clause 18 (see Amendment 43) and the new clause inserted by NC9, to reflect the changes to be made to the law in this area by the Data Protection Bill.
Amendment 26, page 21, line 7, at end insert—
“‘direct marketing’ means the communication (by whatever means) of advertising or marketing material which is directed to particular individuals;” .—(John Glen.)
This amendment inserts a definition of “direct marketing” into the interpretation clause (using the definition in data protection legislation), which is a term used in the consumer protection function (see Amendment 10) and in NC3 and NC4.
Clause 36
Commencement
Amendments made: 45, page 35, line 6, at end insert—
“() section (Unsolicited direct marketing: pensions);”
This amendment amends the commencement clause so that the new clause on unsolicited direct marketing relating to pensions (inserted by NC9) would come into force on Royal Assent.
Amendment 46, page 35, line 25, after “Sections” insert—
“(Unsolicited direct marketing: other consumer financial products etc) and”.—(John Glen.)
This amendment amends the commencement clause so that the new clause on unsolicited direct marketing relating to consumer financial products other than pensions would come into force automatically two months after Royal Assent.
Schedule 4
regulation of Claims Management Services: Transfer Schemes
Amendments made: 47, page 47, line 17, at end insert—
“‘the data protection legislation’ has the same meaning as in the Data
Protection Act 2018 (see section 3 of that Act);”
This amendment inserts a definition of “the data protection legislation”, which is a term now used in paragraph 19 of this Schedule (as amended by Amendment 48) to reflect the changes made by the Data Protection Bill.
Amendment 48, page 49, line 32, leave out “Data Protection Act 1998” and insert “data protection legislation”.—(John Glen.)
This amendment changes the reference to the Data Protection Act 1998 to a reference to the “data protection legislation” to reflect the changes to data protection legislation that are to be made by the Data Protection Bill.
Title
Amendments made: 28, line 2 leave out “cold-calling and”.
This amendment, together with Amendment 29, amends the long title in consequence of NC3 and NC4.
Amendment 29, line 3 at end insert—
“to provide a power to make regulations prohibiting unsolicited direct marketing in relation to pensions and other consumer financial products and services;”.—(John Glen.)
See explanatory statement for amendment 28.
Madam Deputy Speaker (Dame Rosie Winterton)
I will now suspend the House briefly in order to make a decision about certification. The Division bells will be rung two minutes before the House resumes.
Madam Deputy Speaker (Dame Rosie Winterton)
I can now inform the House that I have completed certification of the Bill, as required by the Standing Order. Clauses 29 and 31 of, and schedule 4 to, the Bill, as amended, relate exclusively to England and Wales and are within legislative competence. Copies of the final certificate will be made available in the Vote Office and on the parliamentary website.
Under Standing Order No. 83M, a consent motion is therefore required for the Bill to proceed. Copies of the motion are now available. Does the Minister intend to move the consent motion?
The Parliamentary Under-Secretary of State for Work and Pensions (Guy Opperman)
indicated assent.
The House forthwith resolved itself into the Legislative Grand Committee (England and Wales) (Standing Order No. 83M).
[Dame Rosie Winterton in the Chair]
The Second Deputy Chairman of Ways and Means (Dame Rosie Winterton)
I remind hon. Members that, if there is a Division, only Members representing constituencies in England and Wales may vote. As the knife has fallen, there can be no debate. I call the Minister to move the consent motion.
Motion made, and Question put forthwith (Programme Order, 22 January, and Standing Order No. 83M(5)),
That the Committee consents to the following certified clauses of, and schedules to, the Financial Guidance and Claims Bill [Lords]—
Clauses and schedules certified under Standing Order No. 83L(2) as relating exclusively to England and Wales and being within devolved legislative competence
Clauses 29 and 31 of the Bill as amended in Public Bill Committee (Bill 160), and Schedule 4 to the Bill as amended on Consideration—(Guy Opperman.)
Question agreed to.
The occupant of the Chair left the Chair to report the decision of the Committee (Standing Order No. 83M(6)).
The Deputy Speaker resumed the Chair; decision reported.
Third Reading
Pete Wishart (Perth and North Perthshire) (SNP)
On a point of order, Madam Deputy Speaker. I am grateful to you for all the onerous contributions that you had to make to provide certification, but what can be done to ensure that the huge numbers of English Members who wish to speak in the English Legislative Grand Committee get their opportunity to do so? This is Dave’s legacy, for goodness’ sake. English votes for English laws was supposed to be the most important issue possible. It seems that, once again, English Members have been totally denied their opportunity. Is not this just the greatest waste of time that this House has to endure?
Madam Deputy Speaker (Dame Rosie Winterton)
That is not a point of order. If the hon. Gentleman wishes to speak on Third Reading, he is able to do so.
The Secretary of State for Work and Pensions (Ms Esther McVey)
I beg to move, That the Bill be now read the Third time.
This Bill is an important piece of legislation. When it started its journey in the other place in June last year, my noble colleague Baroness Buscombe told peers that it would create a framework that would ensure that people have access to the information and guidance they need to make the important and effective financial decisions that we all have to make at some point in our lives. It will also enable the transfer of claims management regulation from the Ministry of Justice to the Financial Conduct Authority, to ensure that there is a tougher regulatory framework and that people have access to high-quality claims handling services.
Alberto Costa (South Leicestershire) (Con)
I thank my right hon. Friend for giving way so early in her speech. Does she agree that it is important that the Financial Conduct Authority and the Financial Ombudsman Service are properly equipped to take on the additional powers proposed?
Ms McVey
I do indeed. We need to have bodies that have teeth, that are able to do this and that we can have faith in. My hon. Friend makes a very good point.
The Bill has delivered on what we said it would, but it now does so much more. The inclusion of a ban on pensions cold-calling, the commitment to introduce a debt respite scheme and the ban on claims management companies cold-calling, as well as the amendment on pensions guidance, all strengthen the Bill. I welcome and appreciate the collaborative spirit that the Bill has engendered across both Houses and the hard work that officials have done. There has been a broad consensus. That is positive, and it has helped so many people in so many different ways.
In the other place, we listened carefully to the thoughtful views of those who engaged in the debates. We appreciate, in particular, the input of Lord Stevenson, Lord McKenzie, Lord Sharkey, Baroness Drake, Baroness Kramer and others who have helped us to craft the clauses on debt respite, cold-calling, pensions guidance and consumer protection. There were some very constructive and helpful debates on other issues that helped us to ensure that the FCA will have regard to the needs of consumers when setting the single financial guidance body’s standards, to strengthen offences on impersonating the new body, to extend the claims management provisions to Scotland and—thanks to the tireless work of Baroness Meacher—to introduce an interim fee cap in respect of PPI claims. To quote Lord McKenzie on Third Reading:
“These changes have come about because, broadly, we have had a shared analysis of what the Bill could achieve”.—[Official Report, House of Lords, 21 November 2017; Vol. 787, c. 106.]
There have been many positive contributions in this House as well. We heard some excellent speeches on Second Reading from Members on both sides of the House. I remember, for example, the powerful speech by my hon. Friend the Member for Chippenham (Michelle Donelan) about debt arguably being one of the biggest challenges to social mobility and, as Conservative Members particularly support social mobility, how important it is to be able to give this financial support. I still recall the very strong contributions from the hon. Member for Makerfield (Yvonne Fovargue) on the proposed debt respite scheme and from my hon. Friend the Member for Mid Derbyshire (Mrs Latham), who recounted the hardships faced by her constituents.
We have listened to what hon. Members said in respect of pensions cold-calling and default pensions guidance. I would like to put on record again our thanks to the Work and Pensions Committee for its report highlighting some of these issues. I thank the Select Committee, peers and hon. Members in this House for the way in which all sides have worked collaboratively and constructively on these issues. We have been able to accept a number of the Committee’s recommendations. I am sure that all hon. Members will agree that, with its help, we have made huge progress in these areas. I look forward to continuing co-operation when we bring forward regulations on these matters later this year.
We have also listened to what was said in respect of cold-calling from claims management companies. In Committee, we tabled amendments to ban cold-calling in relation to claims management services unless prior consent has been given. This honours a commitment that we made in the other place. We believe that these changes—along with our commitment to keep under review, and potentially ban, other areas of unsolicited direct marketing in relation to consumer financial products —demonstrate our commitment to tackling unsolicited marketing calls. The Information Commissioner’s Office, which enforces restrictions on unsolicited electronic direct mailing, has the power to fine offenders up to £500,000. In 2017, the ICO issued 29 civil monetary penalties totalling £2.83 million.
In Committee, we also tabled amendments to the claims management clauses. We are now placing a duty on the Law Society of England and Wales to cap fees in relation to financial services claims management activity, as well as introducing a power for the Law Society of Scotland to restrict fee charges for this activity, to ensure that consumers are protected no matter which type of claims management service provider they use, whether it is regulated by the legal service regulators or by the FCA.
This Bill deals with important and fundamental issues not just to this House but to the many hundreds of thousands of people who will benefit from the services of a new single financial guidance body—particularly those who are struggling with debt.
I am pleased to be able to confirm again today for the hon. Member for Liverpool, Wavertree (Luciana Berger), the right hon. Member for North Norfolk (Norman Lamb) and my hon. Friend the Member for Plymouth, Moor View (Johnny Mercer) that the Government recognise the importance of providing a suitable mechanism to access breathing space for people experiencing a mental health crisis. We understand that people in the midst of a mental health crisis are likely to be too unwell to access the breathing space scheme through a regulated debt advice provider. We commit to ensure that people receiving NHS treatment for a mental health crisis, in either a psychiatric in-patient setting or the community, are provided with a suitable alternative mechanism to access the breathing space scheme and benefit from the protections it will provide. That provision will be developed concurrently with the main breathing space scheme.
In respect of claims management companies, the Bill sends out a clear message that we are on the side of the public, providing a stronger framework to ensure that individuals are accountable for the actions of their businesses. While recognising that many claims management companies do good work to support people to claim compensation, we have sent a clear message that we will tackle malpractice where it exists, such as nuisance calls and the encouragement of fraudulent claims. I commend the Bill to the House.
Jack Dromey
Why does this Bill matter? It matters because of that Port Talbot shift supervisor who said he would never, ever forgive himself, having made a mistake and been conned into being sold short on his pension, with all 20 on his shift following his lead. It matters for the single mum in my constituency who had been a victim of domestic violence and had continuously to borrow to pay off her debt. As she said to me, “I borrowed to pay the debt because I borrowed to pay the debt because I borrowed to pay the debt.” It matters to Christine, who was first diagnosed with cancer in 2009 but is still feeling the financial effects today—in debt, pursued constantly for it and her bank oblivious to her condition.
The Bill will help to end scams. It will help to ensure that rogues who are exploiting in particular the vulnerable and undercutting the reputable have no place in the market in future. This is a good Bill. It was strengthened in the other place and then in Committee. It establishes the single financial guidance body, which is a strong step in the right direction.
The Bill has also seen progress today. Progress was previously made on issues of immense importance, in particular pensions cold-calling. It is deeply welcome that the Government have listened to the strong representations made across the House on breathing space and recognise the particular problems of those suffering from mental ill health. The new body will promote greater understanding and help people to plan their finances and retirement.
There is still further progress to be made. We will engage with the Government following our earlier exchanges, because of our very strong view that the time has come to stop all cold-calling for commercial purposes by claims management companies. There is very important progress yet to be made.
The Government have constructively engaged and sent some welcome signals. They have talked about the next stage of the process. The sooner we can get there, the better. I would like to thank a number of people. While there were rather robust exchanges over GKN earlier on in the Chamber, I have to praise both the Under-Secretary of State for Work and Pensions, the hon. Member for Hexham (Guy Opperman), and the Economic Secretary to the Treasury for their helpful, constructive and collaborative approach.
I would like to thank the Work and Pensions Committee for its characteristically first-class intervention and advice, and in particular its Chair, my right hon. Friend the Member for Birkenhead (Frank Field). The Committee can take particular credit for the progress made on the ban on pensions cold-calling.
I would like to thank all colleagues in this place who tabled amendments and contributed to the various debates that took place.
I thank the Members of the other place for the contributions that they made, again across party—particularly, but not exclusively, Lords Sharkey, Altmann, McKenzie of Luton and Drake. I thank also the Commons Clerks and other staff who worked so hard with us to shape the Bill and to take it through Parliament. All those parties and organisations have contributed to the passage of the Bill with their wisdom and many topics of interest.
I thank those organisations and individuals who passed on their research or sometimes heartbreaking stories, which brought home to us the Bill’s importance. I often say that I believe we need a story to tell the stories, and we have heard so many stories—sometimes tragic ones—throughout the Bill’s passage. It is for people like them that we are all here, and I hope that the Bill will help them in the next stages, and as we move forward, making further progress, ensuring that it benefits all, but especially the most vulnerable in our society.
In conclusion, I have something to say to that steel shift supervisor who wept uncontrollably about the consequences of what he had done and the effect on others who followed his lead. We say to him and all those whose stories were told throughout the Bill’s passage that sometimes nothing can be done to put right the wrong that they suffered in the past, but in their own way, by telling their stories, making their contribution, they have helped to bring into being a very important body—the single financial guidance body—that will ensure that never, ever again are others treated as they were.
Crispin Blunt
I echo the compliments that the hon. Member for Birmingham, Erdington (Jack Dromey), the shadow Minister paid to the Work and Pensions Committee and its Chair and to the two Ministers who have done most of the legwork on the Bill. The Under-Secretary of State for Work and Pensions, my hon. Friend the Member for Hexham (Guy Opperman), and my hon. Friend the Economic Secretary to the Treasury have been exemplary in their handling of the Bill, as appears to be universally recognised. I would say to the shadow Minister that this is an immensely important Bill. It is very important for all the people we represent, building on the huge change that we made in giving people freedom around their pensions, and therefore there is a need to ensure that it is underpinned by proper advice and guidance.
I represent a number of financial firms in my constituency. I used to represent Legal & General, which was the biggest employer in my constituency, but it has had the impertinence to move out of Kingswood and go elsewhere. It is one of its rivals whose interests I defend. The pension freedoms that we announced in the Budget some time ago were a major challenge to two companies in my constituency—Just Retirement and Partnership. As one of my friends who worked at one of those companies said, “We have just a slight problem now, as the Government are not mandating that everybody must buy our product as an annuity. They now have options over their future.”
Those two companies were insurgents in the financial services market. Just Retirement specialises in the issue of equity release, which I addressed in the debate on the first group of amendments, trying to ensure that there is proper access to advice on people’s property as part of their asset structure in planning for retirement. Partnership specialised in identifying groups of annuitants with a shorter life expectancy, who therefore would be able to get a greater rate of return out of their pension investment. As people who had been saving with the big boys, such as Legal & General, moved into taking their pensions, they needed proper advice and guidance about the products that were available in the market.
I listened very carefully to the exchange between the Chair of the Select Committee and the Minister around the issue of the independence and impartiality of the advice that people will have access to. This will be the test that I apply to the Bill: people who are saving with a big player such as Legal & General must not be captured, in a sense, by simply not being exercised enough to seek independent advice in order properly to understand what options are available to them, and suborned as it were into continuing with the existing provider without understanding the options available to them. That is why the independence and impartiality, and the encouragement that people will get to seek that advice, is the test that needs to be set for whether this legislation will do the job, making them savvier about their pensions and the options available to them in retirement.
These matters are incredibly important to almost everyone in the course of their lives, when they come to make the big decisions about financial provision in retirement. I will be looking at this legislation, and at the undertakings that have been given, so that if it does not deliver what we hope it will, we can revisit it and ensure that people can access advice.
The Bill builds on the huge opportunities that we have given people to spend their own money in pursuit of their own priorities, while of course ensuring that they make sensible provision for their retirement, on the basis of advice and as informed consumers. That will take them away from being comfortable simply to be prisoners of their own big provider, without understanding the options available to them. We have given people their freedom and I hope that the Bill will ensure that they can use it in an informed way. That is a huge change, and one that I warmly support.
Neil Gray
It is a pleasure to follow the hon. Member for Reigate (Crispin Blunt) and I wish to echo much of what he has said. Much of what the Bill does is try to protect consumers from some of the unintended consequences of pension freedoms. We welcome the Bill.
I want to use the few minutes available to me to echo some of the thanks that have been offered by the Minister and the shadow Minister to all those involved, including the Clerks and the House staff. I thank my hon. Friend the Member for Paisley and Renfrewshire South (Mhairi Black), who served on the Public Bill Committee, and Emily Cunningham, who diligently provided support as part of the Scottish National party’s research team. I thank the Under-Secretary of State for Work and Pensions, the hon. Member for Hexham (Guy Opperman), and the Economic Secretary to the Treasury, the hon. Member for Salisbury (John Glen), for their dialogue—we got there in the end. There were some issues along the way, not least the delays in getting to this point, but we are where we are. I thank the Work and Pensions Committee and its Chair, the right hon. Member for Birkenhead (Frank Field), for their diligence in bringing issues to the fore. I also thank the stakeholders who provided expert advice and briefings throughout our deliberations.
We on the SNP Benches remain concerned about some aspects of the Bill, and we have all articulated that—the hon. Member for Reigate has just done so. We remain concerned about the opt-out from pension guidance and about cold calling. We will watch closely for the developments that the Government have promised as the Bill is signed into law.
Ruth George
I will not detain the House for long. In a long afternoon of debate on financial guidance and cold calling since the ten-minute rule Bill introduced by the hon. Member for Stirling (Stephen Kerr), we have heard how important it is that so many people receive support and proper independent financial guidance. I welcome the work that has been done on both sides of the House, by Front Benchers and Back Benchers. As a member of the Work and Pensions Committee, I am glad that we have been able to contribute to the work that has gone into the Bill. I hope that Ministers will continue to listen to the arguments as they develop the Bill further when it returns to the other place.
We have heard in recent hours about people suffering from mental health problems. They are more vulnerable to people seeking to take their money, whether through cold calling and doorstep selling. As we have heard, mental health problems can be exacerbated by debt. I hope that the Government will consider widening the definitions of debt and of mental health crisis. I have constituents in High Peak who, unfortunately, even at a time of crisis and having attempted suicide, are unable to access mental health crisis support—in-bed support is not available, and there is even a waiting list for support in the community. I therefore hope that the Government will have as wide a definition as possible of people either receiving crisis care or on the waiting list to receive crisis care—I am sorry to say that there are waiting lists for crisis care. The definition should be extended to all debt.
Recently, I asked some parliamentary questions about the level of debt being recovered under universal credit and was sorry to hear that about 6% of current full-service claimants are paying 40% of their universal credit payments to cover third-party debts, leaving them with just 60% of a universal credit payment, which is already lower for many recipients than legacy benefits. Those people have already seen cuts and this is leaving them with even less to pay their debts.
As we heard from my hon. Friend the Member for Walthamstow (Stella Creasy), companies that provide consumer credit can be ruthless in hounding their customers and often contribute to mental health difficulties. In this era of rising household debt, we have nearly £200 million of consumer credit. Independent financial guidance and support are needed more than ever. I urge the Government to ensure that as many people as possible can access it.
Question put and agreed to.
Bill accordingly read the Third time and passed, with amendments.
Mental Health Units (Use of Force) Bill (Money)
(6 years, 2 months ago)
Commons ChamberRead Full debate Read Hansard Text Read Debate Ministerial Extracts
The Parliamentary Under-Secretary of State for Health (Jackie Doyle-Price)
I beg to move,
That, for the purposes of any Act resulting from the Mental Health Units (Use of Force) Bill it is expedient to authorise the payment out of money provided by Parliament of:
(1) any expenditure incurred under or by virtue of the Act by the Secretary of State, and
(2) any increase attributable to the Act in the sums payable under any other Act out of money so provided.
The Bill seeks to reduce the inappropriate use of force against people with mental disorders in mental health units. It also seeks to increase oversight and allow greater scrutiny of the system when it goes wrong.
Like many Members, including the hon. Member for Croydon North (Mr Reed) who brought forward the Bill, I was very moved by the events that led to the untimely death of Seni Lewis. I pay tribute to the Lewis family, who have campaigned tirelessly to ensure that such a tragedy does not happen to any other family. The Bill is testament to the commitment of the Lewis family and the hon. Gentleman to ensure that we properly hold the system to account.
Mr Steve Reed (Croydon North) (Lab/Co-op)
I congratulate the Government and the Minister on bringing forward the money resolution this evening. We have been anticipating it for a few weeks, so it is a great pleasure and slight relief to have it before the Chamber.
The resolution will allow the Committee to complete its work in the morning and take forward this important social reform, which we hope will make a big difference to the lives of some of the most vulnerable people in our country—people who are living with mental ill health and should not face extreme forms, or indeed other forms, of restraint, which can cause serious injury or even death, as we saw in the case of Seni Lewis. I thank the Minister for her commitment to seeing this through.
Question put and agreed to.
Business without Debate
Delegated Legislation
Mr Speaker
In a risky move, but with the concurrence of the House, I propose to take motions 9 and 10 together. I merely remind Members—I am sure that they are keenly conscious of the fact—that both appertain to energy.
Motion made, and Question put forthwith (Standing Order No. 118(6)),
Energy
That the draft Domestic Renewable Heat Incentive Scheme (Amendment) Regulations 2018, which were laid before this House on 7 February, be approved. That the draft Renewable Heat Incentive Scheme Regulations 2018, which were laid before this House on 19 March, be approved.—(Mike Freer.)
Question agreed to.
PETITIONS
Patricia Gibson (North Ayrshire and Arran) (SNP)
This petition from the residents of the North Ayrshire and Arran constituency attracted 560 signatures, which were gathered by me, dedicated Garnock valley Scottish National party activists and our SNP councillor.
The petition states:
The petition of residents of North Ayrshire & Arran,
Declares that proposed closure of the 3 branches of the publicly-owned Royal Bank of Scotland in the areas of Kilbirnie, Kilwinning & Saltcoats 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 into account the concerns of petitioners and take whatever steps they can to halt the planned closure of these branches.
And the petitioners remain, etc.
[P002135]
Mrs Maria Miller (Basingstoke) (Con)
I rise to present this petition, which, with over 3,000 signatures, clearly demonstrates the strength of opposition to proposals for two separate motorway service areas in Basingstoke, at junction 6 and at a site near Hatch Warren next to junction 7. If both were to go ahead, this would mean four service station areas within a 23-mile stretch of the M3. I would like to thank local councillors who have campaigned tirelessly in their communities to raise awareness of the issue—in particular, Councillor Terri Reid in Hatch Warren and Beggarwood and Councillor Onnalee Cubitt in Basing ward.
The proposed motorway service areas cause huge concern. Residents in Hatch Warren are worried about the potential encroachment on their residential area from a proposed new motorway flyover to access the services on the opposite side of the motorway, and Thames Water has warned of the risk of sewage flooding resulting from the proposals currently being considered for junction 6. This proposal would also cause real road safety concerns, unnecessarily creating tailbacks on the M3, which in the past have led to road traffic accidents and tragically, the loss of life.
The petition states:
The petition of residents of Basingstoke,
Declares that urgent action must be taken concerning proposals for new Motorway Service Areas at Basingstoke; further that there is no need for any additional motorway service areas given that the existing services at Fleet and Winchester are only 23 miles apart; further that the development of any new facilities will be detrimental to the environment and traffic congestion; further that they are clearly not in the best interests of Basingstoke residents; and further that the two proposals that have been made to date, one at Junction 6 and one near Junction 7 are not acceptable.
The petitioners therefore request that the House of Commons urges HM Government to ensure road safety and the avoidance of traffic congestion are given priority over any unnecessary new motorway service areas around Basingstoke; and further urges the Department for Transport to reinstate the requirement for there to be a minimum distance between motorway service areas.
And the petitioners remain, etc.
[P002139]
National Bereavement Care Pathway
(6 years, 2 months ago)
Commons ChamberRead Full debate Read Hansard Text Read Debate Ministerial Extracts
Will Quince (Colchester) (Con)
It is a pleasure to lead this debate this evening, and may I thank the Minister for being here to respond?
I never entered politics with the intention of becoming a baby loss awareness campaigner. As with so many in this field, the loss of a child—my son in 2014—brought about my interest and desire to bring about change. And being a Member of this House, gives every one of us the platform to make a difference. It can be a small change that affects just one of our constituents, or it can be something larger that affects everyone in the UK. I am proud that through my role in this House I have been able to play even just a small part in the development and roll-out of the national bereavement care pathway, which is something that will make a difference to tens of thousands of bereaved parents and families up and down the country.
Before I move on to the pathway itself, I want to pay tribute to you, Mr Speaker. You have been hugely supportive of our baby loss awareness campaigning efforts in this place, and I know I speak for all members of the all-party group on baby loss when I say a heart- felt thank you.
Launched last year at 11 sites across England, the pathway has been developed by a number of baby loss charities, royal colleges and professional organisations with the support of the Department of Health and Social Care and the APPG. It is designed to improve the quality of bereavement care experienced by parents and families at all stages of pregnancy and baby loss up to 12 months. The pathway provides a practical framework for all those healthcare and other professionals involved and has been informed and led by the views of bereaved parents at every stage of its development. Parents have stressed the importance of sensitive and consistent care, of making informed choices, of privacy, of not having to repeat their stories to different members of staff and of having opportunities to create memories and spend time with their babies. As one bereaved parent put it:
“Parents don’t need protecting; they just need the chance to be parents, provide their child with dignity and create memories.”
Each year in the UK, thousands of parents and wider families sadly go through the devastating experience of losing a child. While we cannot take away that devastation and grief, good care can make a devastating experience feel more manageable, while poor-quality or insensitively delivered care can compound and exacerbate pain.
Jim Shannon (Strangford) (DUP)
I congratulate the hon. Gentleman on his hard work in this area—we are all greatly moved—and he is right to thank you, Mr Speaker, for all you have done. The combination of both your efforts is highly regarded in the House. Does the hon. Gentleman agree that, with three babies a week being stillborn or dying in the first four weeks of life in a nation as small as Northern Ireland, those suffering this heartbreak must be supported, which is why the care pathway is essential?
Will Quince
My hon. Friend is absolutely right, and I thank him for the support he has given to the APPG since its formation. He is right that just one stillbirth or neonatal death is one too many, and while we should rightly campaign for reductions—we have ambitious targets in that regard—it is absolutely right to ensure that even if we hit those targets, as I will come to later, we make sure we have world-class bereavement care for those parents and families who sadly suffer the loss of a child. Through the pathway, we can work to ensure that they receive the best-quality bereavement care that the NHS can deliver.
Bereavement care has been a priority for the APPG for two reasons. First, there is sadly an inconsistency in the quality and standard of bereavement care across the country. Every parent and family who suffer the loss of a child should receive the same high-quality bereavement care no matter where they live, yet that is not the case at the moment. A report from Sands in 2016 found that only 46% of trusts with maternity units provided mandatory bereavement care training for maternity unit staff. Further, of those who did provide the training, 86% provided their staff with just one hour or less of training each year.
A separate report by Bliss in 2015 on neonatal units found that 41% of units had no access to trained mental health workers and that while some units had dedicated bereavement facilities, many relied on normal accommodation or quiet rooms. That is very important. In the case of 50% of bereaved mothers, care after their baby had died was considered poor enough to have affected their psychosocial wellbeing and any plans that they might have for a future baby. We should therefore be ensuring that parents who suffer the loss of a child receive the best possible care wherever they are in the country, and that is exactly what the bereavement care pathway does.
The second reason, however, is that 15 babies sadly die every single day before, during, or shortly after birth. This takes me to the point made by the hon. Member for Strangford (Jim Shannon). Even given the Government’s ambitious target of a 50% reduction in stillbirth and infant death by 2025, there will still be tens of thousands of stillbirths and neonatal deaths, and tens of thousands of parents, grandparents and wider family members will still go through the tragedy of baby loss. While it is right that we work to reduce baby loss rates by, for instance, tackling smoking among pregnant women, we also need to ensure that there is high quality-care throughout the NHS for the parents who do, sadly, lose a child.
Last month, I had the opportunity to visit one of the first pathway pilot sites, established by Chelsea and Westminster and West Middlesex University hospitals, to see it in action. It was great to chat with staff and discuss what challenges they faced in implementing the pathway, and what benefits they had found for parents. My experience during that visit has been backed up by the recent early evaluation of the first phase of the pathway. Feedback from the pilot sites found that it had helped to raise the profile of bereavement care in hospitals—a vital change, now that that will be assessed as part of inspections by the Care Quality Commission—and that it had also encouraged different teams in hospitals and departments to work more closely together.
That independent report showed not only the need for the programme, but its obvious impact. For example, where bereavement midwives are in post, they are making a significant and positive difference in their trusts. However, more work is clearly needed to ensure that good practice is shared across hospital trusts, so that all staff who come into contact with bereaved parents are equipped and helped to deliver the high-quality care that we all want to see. The findings show the huge potential for improving bereavement care in pregnancy and baby loss, something that I, and the all-party parliamentary group, will continue to proudly support. It has also been useful for healthcare professionals to suggest ways in which the pathway can be refined, and, in particular, how it can be ensured that the documents and guidance that are issued are more practical in terms of implementation.
Last Monday, our APPG hosted a reception to mark the launch of the second wave of pathway sites. A further 21 trusts are now piloting the pathway, providing sites where bereaved parents will be able to experience better care.
Patricia Gibson (North Ayrshire and Arran) (SNP)
I congratulate the hon. Gentleman on securing the debate and on all the work that he has done in this field, including his work in the all-party group. Earlier, he gave the chilling statistic that 15 babies die each day in the United Kingdom. Of course we all know that the loss of a baby—the death of a child—is the last taboo. The irony is that, although the rolling out of bereavement pathway sites throughout the UK is welcome and much needed, it is because baby loss is so hard to discuss that it has taken us so long to reach this point.
Will Quince
The hon. Lady—and I will call her my hon. Friend—has made a very valid point, and I thank her for all her contributions to the formation and the continuing work of the APPG. She is right: there is a taboo surrounding baby loss, and we must break it. I remember the first debate about it that we held here, in November 2015, and the floods of e-mails and messages that we received from parents out there who were saying, “Thank heavens, someone is now talking about baby loss.” They had felt so enclosed, and unable to talk about it, to the extent that people would cross the street to avoid having to have that awkward conversation.
That is exactly why the pathway is so important. Although NHS professionals up and down our country are caring and compassionate to their very core, not everyone has experienced this kind of grief. It is important that the pathway is parent-led, because that enables parents to share the experience of what they went through, how they were feeling, and how things could possibly improve in the future. I encourage the hon. Lady to continue her work in the APPG and continue to participate in debates like this, because that shows the country as a whole that we are willing, ready and able to talk about baby loss, and will not stop talking about it until as have addressed some of these big issues.
Jim Shannon
The hon. Gentleman is being gracious in giving way—I thank him for that. One of my staff members had two miscarriages, and the loss for her was immense. What sustained her through that time of grief, which he knows about himself, was the support of family, friends and all of us associated with her, but probably more than anything else her faith and her Christian beliefs. Does he agree that it is critical that that is part of the pathway?
Will Quince
I thank the hon. Gentleman for his further intervention. He raises a good point, because hospital chaplains provide amazing support for those who have gone through this horrific experience. Whether someone is of a religion or of none, there is an important role for the calm, comforting voice and listening ear of a chaplain, who can sit with them and give them the time that NHS professionals are not always able to give in a busy, hustling and bustling maternity or neonatal department.
Victoria Prentis (Banbury) (Con)
My hon. Friend is being generous in giving way. Does he agree that the baby loss services that we have organised, particularly last year, have helped many couples across the UK come to terms with their grief? We had a fantastic one at St Mary’s church in Banbury and a fabulous one downstairs in the Crypt here. Whether or not people are of faith, those services enable them to demonstrate their grief in a public place, which is very helpful.
Will Quince
I thank my hon. Friend for that intervention and for the considerable work that she has put into both the formation and the ongoing work of the all-party group. She makes a really good point. Those services are not always religious, although most of them tend to be in some way, shape or form, and they are hugely important and comforting to families. I know that she has organised several, and various charities organise them too. They are about not just the religious element but people being able to come together and pay their respects to the children they have lost. They bring about a community and show people that they are not alone and that there are others who have gone through the same or very similar experiences. Long-lasting friendships often flow from them. I remember a service that I attended with my wife—I think it was the year after we lost our son. There was a lady there in her 80s who still came to the service every year to remember the child she lost in her late teens. That shows that the experience stays with people forever, and that these services are really important.
With the evidence showing that the pathway is making a really big difference in improving the quality of bereavement care in the hospital trusts in which it is being piloted, the aim is to roll it out across the country in October. As I said at the beginning, 11 sites launched last October and a further 21 last week, and a nationwide launch in October is very much the ambition. Sands established the project on behalf of the core pathway group, entirely thanks to £50,000 of funding from the Department of Health and Social Care. I am extremely pleased to see my hon. Friend the Member for Ludlow (Mr Dunne), the former Care Quality Minister, in his place, because he did so much with the Secretary of State to help secure that funding.
Mr Philip Dunne (Ludlow) (Con)
I hesitate to rise after that generous tribute, but may I say that I am absolutely convinced that without the work of my hon. Friend and his colleagues in the all-party group, we in the Department would not have given this issue the prominence that it has achieved under their leadership? In particular, I wish to mention the role that Sands has played in driving this agenda forward. I pay tribute to that organisation and all the bereaved parents that it represents, and I congratulate my hon. Friend on securing yet another debate on this topic.
Will Quince
I thank my hon. Friend for his kind words. He makes a good point about the charities involved. One of the great strengths of the all-party group is that we have been able to bring together about 40 baby loss charities, and that number grows at every meeting. This is one reason why we have been so successful. Some of the charities are big, including Sands, Bliss and the Lullaby Trust, while others are very small, including those that make teddy bears or knit little items of clothing for their local neonatal units. We are bringing all those charities together with one common purpose: to reduce baby loss and ensure that we have world-class bereavement care. This is what has genuinely made the difference. When politicians work with the charitable sector, the Government, bereaved parents, clinicians and medical professionals, that is when we can really make a difference, and I genuinely believe that this is a prime example of that happening.
This is also a good juncture to pass on my sincere thanks to the Secretary of State for Health and Social Care. He could not have been more supportive of the formation of the all-party group or of our work, and I have always felt that, with him, we were pushing at an open door at every turn. I know that that feeling will be echoed by other members of the group. Every time we have tried to move the agenda forward, the Secretary of State has been willing to listen and to act, and I thank him for that.
We are also most grateful for the Department’s financial support, in the form of £50,000, to help to launch the national bereavement care pathway. However—this is the big “however”—that funding was exhausted last year. Since then, Sands has continued to support the project, covering the costs of staff, partnership, documentation production, website development and all the engagement activity that supports it. To ensure that the pathway is embedded across England by 2020, in line with commitments on improved patient safety, maternity services and bereavement care, the project has to be suitably resourced. Sands has approached the Department of Health and Social Care asking for support to cover the core costs of the pathway. It has formally requested further funding for the current financial year and the next.
There is overwhelming political, parental and professional support for the pathway. I do not want to put the Minister on the spot, but I ask the Government to commit to provide Sands with additional funding for the roll-out of the pathway, which is so important. This will mirror the commitment given by the Scottish Government, who are funding the roll-out in Scotland. More widely, the Department of Health and Social Care should look to put in place the resources needed to ensure that staff are given the training and facilities that they need to make this a success and to give bereaved parents the best possible care. The loss of a child is something that affects tens of thousands of parents every year. The Government can rightly be proud of the progress made, the ambitious targets set and the plans put in place to reduce baby loss. By committing to funding the pathway roll-out across England, the Government can ensure that families who suffer the loss of a baby receive consistent, sensitive, world-class bereavement care right across our NHS.
The Parliamentary Under-Secretary of State for Health (Jackie Doyle-Price)
I congratulate my hon. Friend the Member for Colchester (Will Quince) on securing this debate on the important work of the national bereavement care pathway. It is only three years since he was elected to this House, but in that time, he has done more than simply putting this important issue on the political agenda. He has drawn considerable attention to it and really moved it forward, and I thank him most sincerely for that.
I also thank the hon. Member for North Ayrshire and Arran (Patricia Gibson), who has been a willing ally and partner in that work. We thank her for sharing her experiences, which I know must have been very painful. I am also grateful for the efforts of my hon. Friend the Member for Banbury (Victoria Prentis), who has applied her very considerable energy to this project. It is with pride that I stand alongside all these Members today to address this important subject which, as I have said, has really moved on in the past three years. I must also pay tribute to my hon. Friend the Member for Ludlow (Mr Dunne), from whom I have inherited this part of my portfolio. He left it in very good shape, which makes it very much easier for me to address the House on it this evening.
I was fortunate enough to attend the launch of wave 2 of the pathway here in Parliament just last week, when I met the charities, led by Sands, that are working hard to expand the pathway, and representatives from the wave 1 and wave 2 permanent sites. That uplifting event celebrated the difference that the pathway is making to parents across the country, and I was pleased to hear about the positive evaluation of the wave 1 pilot sites since the pathway was launched last October. I was particularly moved to hear the story and experiences of Cheryl Gadsby. She really brought to life the huge difference that the right care can bring to bereaved parents. Against that background—
Jackie Doyle-Price
I am glad you did that then, Mr Speaker, because I was just getting to a good bit.
Although my hon. Friend the Member for Colchester said that he did not want to put me on the spot about further funding, he actually did—very effectively—so before I go any further this evening, I am pleased to announce that the Department of Health and Social Care will provide additional funding for Sands to further develop and roll out the national bereavement care pathway in the coming financial year. It is a shame that the House is not busier, because it is not often that Ministers get the chance to say such things from the Dispatch Box.
The Department has been in conversation with Sands and can confirm £106,000 of funding to support the roll-out of the pathway in 2018-19. That is more than double the Department’s original funding of £50,000 to support the first year of the programme. While I am sure that all Members present understand that funding for future years cannot be committed at present, I hope that the announcement of this funding demonstrates the Government’s commitment to supporting the pathway as it moves towards national roll-out. The funding comes following recognition of the great strides forward that the pathway project is making in ensuring that all bereaved are offered the right high-quality care at a time of enormous tragedy.
I should pause here, as I did at the parliamentary event last week, to highlight the Government’s wider ambitions for maternity care because, as we have heard this evening, the number of deaths at childbirth are too high. The Secretary of State’s ambition is to reduce rates of stillbirths, neonatal and maternal deaths and brain injuries by 50% by 2025. Our even closer goal is to achieve a 20% reduction by 2020, which illustrates our desire to make rapid progress.
To that end, the Secretary of State launched a refreshed maternity strategy last year—not long after the moving debate on baby loss in the House last October. The strategy highlights further action that the Government and NHS England have taken to improve safety and reduce the number of stillbirths and other adverse maternity outcomes. The initiatives include funding for the new healthcare safety investigation branch to develop investigation standards and conduct independent investigations into all cases that meet the criteria of the “Each Baby Counts” programme run by the Royal College of Obstetricians and Gynaecologists. That will amount to around 1,000 cases annually and will improve the rigour and quality of investigations into term stillbirths, neonatal and maternal deaths and serious brain injuries, and of learning from the investigations. The investigations began this month and will be rolled out to all areas of England by this time next year. Other initiatives include more support for safety training for all maternity and neonatal staff and an ambition to reduce the national rate of pre-term births from 8% to 6%, building on the world-class expertise already available across the 35 pre- term birth clinics in England.
The Department of Health, together with the Health Departments in Scotland and Wales, has funded the development of a national standardised perinatal mortality review tool to support systematic, multidisciplinary reviews of the circumstances and care leading up to every stillbirth and neonatal death. The tool is now available and enables teams to provide clear and accurate information to parents about why their baby died. It will also help staff to understand where lessons can be learned and allow for future care to be improved.
I am happy to report that we are making progress towards achieving our 2020 ambitions. The stillbirth rate in England has fallen from 5.1 per 1,000 births in 2010 to 4.3 in 2016. The neonatal mortality rate was 2.7 deaths per 1,000 births in 2016, down from 2.9 in 2010, but we must continue to do all we can to ensure the best maternity care in this country and the most appropriate support if parents do suffer bereavement at birth.
We are committed to providing high-quality bereavement care, as I hope I have proved and demonstrated with my announcement this evening. Since 2010, the Government have invested £35 million in the NHS to improve birthing environments, including better bereavement rooms and quiet spaces, at nearly 40 hospitals. On 2 February 2018, the Secretary of State announced the Government’s intention to conduct a review of whether the law should be changed to allow parents to register a pregnancy loss that occurs at less than 24 weeks’ gestation, as many hon. Members have called for. The review will also look more broadly at what can be done to improve care and support for parents going through such losses.
It is crucial that parents who experience pregnancy loss, regardless of the gestation stage at which the loss occurs, receive the best possible care and support, and that we use all opportunities to learn for the future when things go wrong. The review will speak to parents, clinicians, midwives and other experts to develop recommendations to ensure that pregnancy losses before 24 weeks’ gestation are handled with the same sensitivity and care as losses at a later gestation.
The Department is also conducting a review of whether the law should be changed to enable or require coroners to investigate stillbirths. Currently, coroners have the power to investigate only if there is doubt as to whether a baby was stillborn or lived independently, regardless of whether doctors declared it a stillbirth. Some parents feel that a coroner’s investigation would help to provide answers when a baby is stillborn and that such learning could help to avoid similar tragedies in future. As part of that review, the Department is working with the Ministry of Justice to consult parents and experts about whether and, if so, how current legislation on coronial powers in relation to stillbirths should be amended to ensure that all avenues for investigating and learning from tragic events are considered.
Once again, I thank all Members of the House who have done so much to raise awareness of what can be done to support bereaved families through such tragedies. I am delighted to have been able to announce further funding for the national care bereavement pathway today, and I will closely follow its development as wave 2 of the pilot sites gets under way.
Question put and agreed to.
Statute Law (Repeals) Measure
Pensions (Pre-Consolidation) Measure
Ecclesiastical Jurisdiction and Care of Churches Measure
Mission and Pastoral etc. (Amendment) Measure
Legislative Reform Measure
(6 years, 2 months ago)
General CommitteesRead Full debate Read Hansard Text
The Chair
It may be helpful if I briefly outline the procedure. In a moment, I will ask whether the Committee is content to debate the five Measures together. If there is no objection, the Committee will have a single debate of no longer than an hour and a half, covering all five Measures. If there is an objection, the Measures will be debated in turn for no longer than an hour and a half each. Is it the wish of the Committee that the instruments be debated together?
The Chair
I call the Second Church Estates Commissioner to move the first motion and speak to all the instruments. At the end of the debate, I will put the question on the first motion, then ask her to move the remaining motions formally.
The Second Church Estates Commissioner (Dame Caroline Spelman)
I beg to move,
That the Committee has considered the Statute Law (Repeals) Measure (HC 781).
The Chair
With this it will be convenient to consider the Pensions (Pre-Consolidation) Measure (HC 782), the Ecclesiastical Jurisdiction and Care of Churches Measure (HC 783), the Mission and Pastoral etc. (Amendment) Measure (HC 784) and the Legislative Reform Measure (HC 785).
Dame Caroline Spelman
Thank you, Ms McDonagh. It is a great pleasure to serve under your chairmanship. I thank all Members for rising early to attend the Committee.
This is the first set of Church Measures to be considered in this Parliament. I will speak to each of the five Measures in turn, but it might be helpful for members of the Committee to understand the journey that the legislation has been on—it is a little different from how the House approaches other types of legislation.
All the Measures were debated at length in the General Synod of the Church of England, which is a bit like the Parliament of the Church of England in that every diocese sends an elected representative. The Measures have been approved to be put before the Ecclesiastical Committee which, in the constitution of our Parliament, is composed of Members of both Houses. The Committee considered the Measures first in the form rather like a draft legislative Committee—informally—and then formally. It made important, small amendments to the Measures that have refined them, and professed itself content with them, which is why they are before us this morning. I hope that that background might be helpful.
The procedure for Church Measures is set out in the Church of England Assembly (Powers Act) 1919, which became part of general law. In effect, it devolves lawmaking for the Church of England to the General Synod, subject to parliamentary scrutiny. As I have said, the Ecclesiastical Committee has reported its view that each of the five Measures is deemed expedient, which is the term used—Measures are either expedient or non-expedient as far as the Ecclesiastical Committee is concerned.
The Legislative Reform Measure will make it possible to remove or reduce burdens resulting in ecclesiastical legislation without going through the legislative process that applies to Measures under the 1919 Act. The Church of England needs that facility to address significant practical difficulties in a timely fashion. Until very recently, far more detail was included on the face of primary legislation than would be the case today. As primary legislation, whether in the form of an Act or Measure, can generally be amended only by further primary legislation, changes to Church legislation have proved time-consuming, costly and onerous. It generally takes between two and three years for a Measure to complete all stages in the General Synod and Parliament. It can take up to a year longer if, for example, Parliament is dissolved, as happened in very recent history.
For some legislation—for example, legislation that has constitutional implications or implications for the rights of individuals—the full legislative process in the Synod in Parliament provides the opportunity stage by stage for careful consideration, but for legislation to remove or reduce burdens of a financial and administrative nature, a legislative process taking two or three years is far too slow. The Measure therefore confers a power on the Archbishops’ Council to make orders to remove or reduce burdens. The Archbishops’ Council comprises senior members of the General Synod.
Before making an order, the Archbishops’ Council must carry out full statutory consultation. The draft order must then be laid before the General Synod. If the Synod approves the draft order, the Archbishops’ Council may proceed to make it. It must then lay the order before both Houses of Parliament, subject to the negative procedure for statutory instruments. An order will therefore not take effect if it is annulled by either House of Parliament, and further provisions to safeguard the role of Parliament and the constitutional position of the Church of England have been built into the Measure.
This is not a general power to legislate by order. It has been modelled to a large degree on the power that Parliament conferred on itself under the Legislative and Regulatory Reform Act 2006. The order-making power can be used only to amend or repeal “ecclesiastical legislation”, as defined in the Measure, and a number of ecclesiastical statutes have been expressly excluded, such as those relating to the appointment of bishops, key Measures that make provision for the worship and doctrine of the Church of England, and provisions relating to the application of the Church Commissioners’ general fund and for provision of constitutional significance.
Members of the Ecclesiastical Committee were given the opportunity to comment informally on the draft Measure at an early stage, and they provided three further safeguards. First, the Archbishops’ Council will be required to lay the consultation documents before both Houses of Parliament. Secondly, the Committee further restricted the scope of the order-making power by adjusting the definition of ecclesiastical legislation in the Measure so that it clearly excludes provisions contained in Acts of Parliament that do not form part of the ecclesiastical law of the Church of England.
Thirdly, a sunset provision was inserted into the Measure so that the order-making power expires five years after the first draft order is laid before the General Synod and can continue in force after that period only under a special procedure that involves an affirmative resolution in both Houses of Parliament. The sunset provision will in due course provide Parliament with an opportunity to see how the new order-making power is working. The power will provide the Church with a procedure for making uncontentious legislative changes within what should be a maximum 12-month period—a significant improvement over the average two to three years it currently takes.
The second Measure concerns mission and pastoral amendments, and implements proposals that were initially formulated by a simplification taskforce established by the Archbishops’ Council. Pastoral reorganisation is one of the things included, because such things as the creation of new benefices and parishes and the closure and opening of new churches are an active part of what the Church has to do. The amendments will streamline those procedures and remove duplication, making the consultation process more effective. For example, if a deanery synod has a plan for parish reorganisation, the Measure removes the duplication of a separate consultation on such a reorganisation—consultation should need to be done only once. The provisions therefore contain the presumption that the formulated deanery plan for pastoral reorganisation will give effect to the proposals. Also, a new type of instrument called a Bishop’s pastoral order will be available to provide for a limited range of administrative matters, such as changing the name of a parish, after consultation with the parishioners, or the creation of a deanery.
Provisions are contained within the Measure for compensating clergy who lose office as a result of pastoral reorganisation. The existing provisions provide in effect for a member of clergy who is displaced and does not find another post to receive compensation for loss of stipend and housing until they reach pensionable age. The new provisions are more workable, replacing the existing arrangements with compensation based on 12-months’ stipend and pension contributions, which is still significantly more generous than statutory compensation for people in other professions. On top of that, the bishop will have a discretionary power to authorise additional payments. Should the priest be shortly before retirement, it would be possible to extend the compensation beyond the 12 months, running up to the statutory retirement provisions. Additionally, the Measure strips away a number of over-prescriptive provisions, and various other provisions have been tidied up.
The third Measure is the Pensions (Pre-Consolidation) Measure. At its forthcoming meeting in July, the General Synod will look more widely at the pension provision within the Church as part of the work of trying to bring pensions together in a more practical way and ensuring that people are properly provided for. It amends various Measures and regulations and consolidates a large number of Measures and regulations that deal with Church of England pensions.
One Measure is worth citing because it was examined in detail at the Ecclesiastical Committee. It makes provision to permit the Church of England pensions board to transfer the clergy widows and dependants pensions fund into the Church of England funded pensions scheme, which is the main scheme that covers current service by clergy. That will mean that any excess sums in the widows and dependants fund can be applied for by clergy and their dependants under the funded scheme. At the same time, it will provide increased security to the beneficiaries of the much smaller widows and dependants fund. I stress that it provides better protection for the widows and dependents of clergy.
The Statute Law (Repeals) Measure repeals a number of ecclesiastical enactments that are spent, obsolete, unnecessary or otherwise not of any practical utility. It consolidates some of the 36 enactments relating to ecclesiastical jurisdiction and the care of churches and other places of worship. The oldest enactment that is consolidated in the Measure goes back to 1708, so it is high time we did a little tidying up.
The result is that all statute law relating to ecclesiastical jurisdiction other than the disciplinary jurisdiction over the clergy, and all statute law relating to the faculty jurisdiction and associated matters, are contained in a single Measure. That will make it much easier for anyone who needs to use the legislation to find out what the law is and to apply it.
In summary, those are the five Measures we are considering. I would be grateful for the support of Committee in approving that the Measures be sent for Royal Assent, which is essentially what we are doing. I remain at the disposal of the Committee for any questions that may pertain.
Karin Smyth (Bristol South) (Lab)
It is a pleasure to serve under your chairship, Ms McDonagh. The Opposition welcome the Measures, but I will touch on a couple of points about them.
On the Legislative Reform Measure, anything that seeks to reduce the burdens as defined and bring things up to date is to be welcomed, particularly in terms of more transparency for those working in that area. We agree on the Mission and Pastoral etc. (Amendment) Measure and welcome it in the interest of transparency. The Pensions (Pre-Consolidation) Measure is important in terms of return for years of service by the clergy and their widows and dependents. It will provide assurance and transparency for members of the scheme. The Ecclesiastical Jurisdiction and Care of Churches Measure is also to be welcomed.
We have a few concerns, which I will highlight. With regard to the tenure and compensation in the Mission and Pastoral etc. (Amendment) Measure, there is a period of one year in which people can find a new home, as the right hon. Lady identified. I recognise that the bishop has discretion, but I remind her that when people reach a key time in their lives or family circumstances—for example, it could be children’s schooling—the cost and availability of housing in many areas can be problematic. We hope that, in the use of those powers, the bishop will be cognisant of the security that is needed when moving, particularly for families and children at an important time in their education. A year has been identified as a longer period of time than other public servants might have, but it is still a short time in the life of a family.
With regard to the Ecclesiastical Jurisdiction and Care of Churches Measure, the Commissioners need to be mindful of the special place that churches have in our communities for those of us of no faith as well as those in the Church of England and other faiths. They are an important part of our history and community landscape and therefore belong to all of us. We welcome the clarity on the list. Access is important for that reason.
This has been a period of continued change for those involved—many years and many committee meetings have got us to this point. We thank them for their work, which is to be welcomed. For those working for, volunteering at or worshipping in the Church, it is important that the Commissioners continue to make its operation more accountable, accessible and transparent through such Measures.
Dame Caroline Spelman
I am grateful to the hon. Lady for raising those points. She might be reassured by the bit of extra research that I did on the statutory redundancy provisions in wider society, and the provisions under this Measure and that exist for clergy should they be displaced from their roles. Statutory redundancy pay, which applies to those who have worked for an employer for at least two years, is based on one week’s pay for each full year worked between the ages of 22 and 41, and one and a half week’s pay for each full year worked over the age of 41. The length of service is capped at 20 years, and the maximum amount payable is £15,240.
The compensation package for clergy is significantly more attractive, because clergy will get a 12-month stipend of about £25,000 irrespective of their length of service. They will also receive the equivalent of 12 months’ pension contributions. There is no provision for compensation in lieu of pension contributions under statutory redundancy pay. Under the new scheme, clergy who lose office are also entitled to housing for 12 months if they were previously living in a vicarage or other official residence. Again, there is no equivalent in the secular sphere.
The clergy package is therefore worth about £45,000. In addition, I reassure the Committee that the bishop will still have a discretionary power to extend that in such circumstances as those to which the hon. Lady referred. Hopefully that reassures the Committee that those who have served the Church so well are well cared for in such an event.
Question put and agreed to.
Pensions (Pre-Consolidation) Measure
Resolved,
That the Committee has considered the Pensions (Pre-Consolidation) Measure (HC 782).—(Dame Caroline Spelman.)
Ecclesiastical Jurisdiction and Care of Churches Measure
Resolved,
That the Committee has considered the Ecclesiastical Jurisdiction and Care of Churches Measure (HC 783).—(Dame Caroline Spelman.)
Mission and Pastoral Etc. (Amendment) Measure
Resolved,
That the Committee has considered the Mission and Pastoral Etc. (Amendment) Measure (HC 784).—(Dame Caroline Spelman.)
Legislative Reform Measure
Resolved,
That the Committee has considered the Legislative Reform Measure (HC 785).—(Dame Caroline Spelman.)
Draft Transport Levying Bodies (Amendment) Regulations 2018
(6 years, 2 months ago)
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The Minister of State, Department for Transport (Joseph Johnson)
I beg to move,
That the Committee has considered the draft Transport Levying Bodies (Amendment) Regulations 2018.
The draft regulations that we are considering today, if approved, would enable Cambridgeshire and Peterborough Combined Authority to collect appropriate levies from its constituent councils to meet the costs of carrying out their transport functions. As only the upper-tier authorities—Cambridgeshire County Council and Peterborough City Council—have transport functions, the levy will fall solely on these authorities.
The seven constituent councils of the Cambridgeshire and Peterborough Combined Authority—the administrative areas of Cambridgeshire County Council, the City Councils for Cambridge and Peterborough and the District Councils for East Cambridgeshire, Fenland, Huntingdonshire and South Cambridgeshire—have led a local process to improve their governance arrangements, which culminated in this House and the other place agreeing orders that saw the establishment of the Cambridgeshire and Peterborough Combined Authority in March 2017.
This order gave effect to the desire of the local authorities in these areas to improve their joint working, including on transport matters. An order has since been made which provided for a Mayor to be elected in May 2017 to the Cambridgeshire and Peterborough Combined Authority. The elected Mayor is the chair of the Combined Authority. Combined authorities are designated as levying bodies under the Local Government Finance Act 1988. Under that Act, the Secretary of State is able to make regulations in relation to the expenses of combined authorities that are reasonably attributable to the exercise of its functions, including those relating to transport.
The upper-tier authorities—Cambridgeshire County Council and Peterborough City Council—will need to consider how they fund any levy issued by the combined authority as part of their budget process. They will need to take into account the impact of council tax levels in their area, including when determining whether any council tax increase is excessive.
These draft regulations have to establish how any transport levy would be apportioned between the upper-tier authorities if the combined authority could not reach agreement. In the event that they cannot agree, the combined authority will apportion the levy by taking into account previous levels of transport expenditure by the authorities. The regulations help to facilitate the provision of transport arrangements as part of the combined authority’s wider governance changes, and I commend them to the Committee.
Rachael Maskell (York Central) (Lab/Co-op)
The Cambridgeshire and Peterborough Combined Authority was constituted in 2017, and has responsibility for some transport functions. However, it is these regulations which need to determine how these functions will be paid for.
As two upper-tier authorities are involved—Cambridgeshire County Council and Peterborough Council—the regulations seek to levy revenue from these in the proportion of the previous year’s spend for the subsequent year. This sum will then be adjusted for the following financial year based on actual spend. The funding can be drawn from council tax or Government grants, while they exist.
There are a couple of issues that strike Labour concerning these arrangements. First, there should be a strategic transport plan which sets out a detailed plan for the Combined Authority. This should be budgeted and should articulate where year-on-year spend should occur. This could be significantly different from the approach being taken where there are assumptions of equivalence to previous activity. The proposed process risks reinforcing a previous year’s pattern of expenditure, and/or could result in an end-of-year readjustment where one council will owe, possibly a significant resource, to the other council. This does not appear to be a sensible or logical mechanism through which to determine expenditure, and will increase administration at the end of each year and possibly have a significant impact on other budgets.
Could the Minister say why the combined authorities do not just create a strategic plan, budget for such a plan and then determine the year-on-year levy from each local authority on the basis of that plan? While there may still be need for minor adjustments at the end of the financial year, it would result in less significant variances, and be more in tune with real-time, actual expenditure.
Secondly, it seems that the way transport devolution is being determined is leading to further fragmentation of the transport system, not least the absence of a guiding mind over the transport system. Areas of the country now have a complete spectrum of different powers, if any, and mechanisms for funding them. This is not only creating much confusion but is not lending to an improved transport system. When will the Minister bring forward a strategic plan for the transport system, which is long overdue?
Labour believes that transport demands long-term plans, good governance requires full budgeting processes, and the people of our country need to have greater certainty as to where their taxes are being spent. Labour will not be dividing the House over these regulations, but does want the Minister to respond to the concerns raised in this debate.
The Minister of State, Department for Transport (Joseph Johnson)
I shall try to answer the points made by the hon. Member for York Central about the need for a strategic plan. She asked how the levy would be spent and what sort of decision making would be required as the combined authority determined its transport priorities. The starting point is that the total levy that the combined authority requires will be determined annually by the authority, and will be subject to its agreed voting arrangements, which as the hon. Lady may know, require a two-thirds majority vote, subject to that majority including the votes of Cambridgeshire County Council and Peterborough City Council. So there would be democratic oversight of the funding requirement that the combined authority sought.
The hon. Lady asked about fragmentation of the system and what she saw as the lack of a guiding mind and therefore the potential emergence of confusion in the system. The Department and the Government as a whole take a bottom-up approach to devolution, recognising that local groups and communities are best placed to determine their specific needs and identify the kinds of benefits that they seek from the transport system. That approach means that, where places choose this approach, we will support them. The transport plan will inevitably be part of devolution deals with any combined authority such as the Cambridgeshire and Peterborough Combined Authority. We would expect to see a transport plan forming part of any devolution deal and settlement that is granted.
The levy will initially be set by agreement with the local authorities, and this power provides a fallback in the event of disagreement to ensure that the combined authority can continue to deliver transport functions into the future. The provision of these powers to the Cambridgeshire and Peterborough Combined Authority is, I hope the hon. Lady agrees, an example of this Government’s commitment to devolving to metropolitan Mayors, which will result in improved delivery of local transport.
The placing of this funding stream from two of its constituent authorities in statute will strengthen the ability of the combined authority and its elected Mayor to raise a levy and use this funding to take strategic decisions on transport investment across the region. I commend the regulations to the Committee.
Question put and agreed to.
Draft Crime and Courts Act 2013 (Deferred Prosecution Agreements) (Amendment of Specified Offences) Order 2018
(6 years, 2 months ago)
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The Chair
Before we begin, if any gentleman or anyone else, including ladies, would like to remove their jacket, please go ahead. It is very warm in here. I call the Minister to move the motion.
The Parliamentary Under-Secretary of State for Justice (Lucy Frazer)
I beg to move,
That the Committee has considered the draft Crime and Courts Act 2013 (Deferred Prosecution Agreements) (Amendment of Specified Offences) Order 2018.
It is a pleasure to serve under your chairmanship, Ms Dorries. The statutory instrument relates to deferred prosecution agreements, which allow prosecutors to reach agreement with corporate entities that could otherwise be prosecuted for certain types of economic crime. The measure has been introduced simply to add extra offences. I say “add”, but we are simply dealing with the fact that the current legislation does not reflect changes made by the Financial Services Act 2012. That Act repeals certain offences and replaces them with new ones in the schedule relating to DPAs. That was a technical oversight, so I hope Committee members are pleased to hear that we should not detain them for long.
It is important to set out the background and identify what DPAs are. A DPA enables a prosecutor to reach agreement with a corporate entity that has committed an economic crime to allow the prosecution to be suspended pending the fulfilment of certain conditions by the company. It will be approved by a court only if the court is satisfied that it will meet the interests of justice, and if the terms are fair, reasonable and proportionate. The indictment that the company faces is suspended for the duration of the agreement—usually two or three years—and it can be reinstated if the company breaches the agreement. The purpose is to provide punishment such as disgorgement of profits, a financial penalty or steps to improve corporate governance. The entity receives a punishment without the severe consequences of a prosecution, which might result in a company going into liquidation, thus having to lay off innocent workers who have done nothing wrong.
Quite simply, the schedule of crimes in part 2 of schedule 17 of the Crime and Courts Act 2013 includes a reference to section 397 of the Financial Services and Markets Act 2000, which deals with misleading statements, practices and impressions in financial transactions. The provisions were repealed and replaced by the Financial Services Act 2012, which introduced offences that we want to include: misleading statements regarding relevant benchmarks and misleading impressions about the value of investments and interest rates that apply to a transaction. Those offences replace the section 397 offences in the repealed legislation. The statutory instrument seeks to amend part 2 of schedule 17 to the Crime and Courts Act 2013, and I commend it to the Committee.
Yasmin Qureshi (Bolton South East) (Lab)
It is a pleasure to serve under your chairmanship, Ms Dorries.
First, I declare an interest as I am a door tenant at 3, Temple Gardens, and I occasionally practise criminal law. It is important to put that on the record. I am not seeking a Division on this matter as the Opposition agree that the measure makes perfect sense. It is important to deal with crime, especially financial crime.
Lucy Frazer
I should probably say that I was a practising barrister—I no longer practise—if that is relevant. I am grateful for the hon. Lady’s indications.
Question put and agreed to.
Ministerial Corrections
(6 years, 2 months ago)
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Transport
(6 years, 2 months ago)
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Bim Afolami
First, when was the decision made to make changes to East Midlands trains that would impact Harpenden? At what stage were changes to Harpenden’s services considered and decided upon?
Joseph Johnson
This has been one of the biggest timetabling changes the system has ever undertaken and, as I have said, it will not have satisfied everybody in its first iteration. However, December is coming along in not too lengthy a period of time, and hon. Members are always welcome to put suggestions to the Department and to their operators for consideration.
The impact of the midland main line works only became apparent to us in November 2017, as I mentioned. This short timeline meant that a specific consultation for Harpenden passengers was simply not a viable option.
[Official Report, 18 April 2018, Vol. 639, c. 437.]
Letter of correction from Joseph Johnson:
An error has been identified in the response I gave to the hon. Member for Hitchin and Harpenden (Bim Afolami) during his Adjournment debate on Thameslink Upgrades.
The correct response should have been:
Joseph Johnson
This has been one of the biggest timetabling changes the system has ever undertaken and, as I have said, it will not have satisfied everybody in its first iteration. However, December is coming along in not too lengthy a period of time, and hon. Members are always welcome to put suggestions to the Department and to their operators for consideration.
The impact of the midland main line constraints only became apparent to us in November 2017, as I mentioned. This short timeline meant that a specific consultation for Harpenden passengers was simply not a viable option.
Defence
(6 years, 2 months ago)
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Nia Griffith
I thank the Secretary of State for that answer. Taking that as a yes, how is it that more than half a million pounds of LIBOR funds has been spent by the MOD in support of armed forces welfare, when the Under-Secretary of State for Defence, the right hon. Member for Bournemouth East (Mr Ellwood)—the Minister for Defence people—has said categorically that
“LIBOR funding should not be used to fund Departmental core responsibilities”?
Is it not time for the Secretary of State to admit that it was a serious misjudgment to use LIBOR funds in such a scandalous way? When will his Department be paying back that money?
Gavin Williamson
I am sure the hon. Lady is very well aware that the Ministry of Defence does not actually administer LIBOR funding—that is the Treasury. So much of the LIBOR funding has made such a difference, not just to those who have ceased to serve in our armed forces but to those who continue to serve. We are very grateful for the positive impact of that funding on so many of our services.
[Official Report, 23 April 2018, Vol. 639, c. 601.]
Letter of correction from Gavin Williamson:
An error has been identified in the response I gave to the hon. Member for Llanelli (Nia Griffith).
The correct response should have been:
Gavin Williamson
I am sure the hon. Lady is very well aware that the Ministry of Defence does not actually commit LIBOR funding—that is the Treasury. So much of the LIBOR funding has made such a difference, not just to those who have ceased to serve in our armed forces but to those who continue to serve. We are very grateful for the positive impact of that funding on so many of our services.
The following is an extract from Questions to the Secretary of State for Defence on 23 April 2018.
Andrea Jenkyns (Morley and Outwood) (Con)
Following on from what has been said earlier about the cadet force, does the Minister agree that the cadets are a great introduction to military life, because as well as giving children positive role models, they help to promote social mobility? Will he update the House on what steps the Department is taking to encourage the participation of state schools in the cadet movement?
Gavin Williamson
What our cadets do is extraordinary, right across the country, and we have had a roll-out of 500 new cadet units this year. This is about the ability to promote social mobility and giving youngsters an opportunity to really succeed in life—that is what our armed forces do. The cadet units are a brilliant way of giving young people the opportunity to get a taste of military life and they provide those role models. The question we need to be asking is: can we be doing more to inspire young people in our schools? I think the answer to that is a most certain yes.
[Official Report, 23 April 2018, Vol. 639, c. 603.]
Letter of correction from Gavin Williamson:
An error has been identified in the response I gave to my hon. Friend the Member for Morley and Outwood (Andrea Jenkyns).
The correct response should have been:
Gavin Williamson
What our cadets do is extraordinary, right across the country, and we are planning to have a total of 500 cadet units in schools within the next two years. This is about the ability to promote social mobility and giving youngsters an opportunity to really succeed in life—that is what our armed forces do. The cadet units are a brilliant way of giving young people the opportunity to get a taste of military life and they provide those role models. The question we need to be asking is: can we be doing more to inspire young people in our schools? I think the answer to that is a most certain yes.
Treasury
(6 years, 2 months ago)
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Wes Streeting (Ilford North) (Lab)
It is astonishing that Brexit, the single biggest risk to the economy, merited only two sentences in the Chancellor’s otherwise uneventful spring statement. If the economy and economic outlook are so rosy, perhaps he can explain why almost every school in my constituency is facing budget cuts, why my local NHS trust is in special measures, and why, when my constituents are crying out in the face of one of the worst waves of burglaries we have ever seen, the police are not responding because the Metropolitan police is subject to real-terms budget cuts. Is that not the grim reality facing our country, and is it not set to get worse because of the hard Brexit course his Government are following?
Mr Philip Hammond
No. The Government are pursuing a Brexit that protects British jobs, British businesses and British prosperity, as the hon. Gentleman well knows. We have protected school funding so that it will rise in real terms per pupil over the next two years, and as we move to the fair funding formula for schools, every school will receive a cash increase. The police settlement on which the House recently voted provides £450 million of additional resource for police forces across the country. We have protected police budgets since 2015.
[Official Report, 13 March 2018, Vol. 637, c. 735.]
Letter of correction from Mr Philip Hammond:
An error has been identified in the response that I gave to the hon. Member for Ilford North (Wes Streeting).
The correct response should have been:
Mr Hammond
No. The Government are pursuing a Brexit that protects British jobs, British businesses and British prosperity, as the hon. Gentleman well knows. We have protected school funding so that it will rise in real terms per pupil next year, and as we move to the fair funding formula for schools, every authority will be funded to enable every school to receive a cash increase. The police settlement on which the House recently voted provides £450 million of additional resource for police forces across the country. We have protected police budgets since 2015.
The following is an extract from the Chancellor of the Exchequer’s spring statement on 13 March 2018.
Mr William Wragg (Hazel Grove) (Con)
My right hon. Friend has struck the right balance between the need for financial discipline and the justifiable need for investment in public services. With that in mind, will he ensure in the autumn Budget that additional funds are provided for schools to ensure the successful implementation of the national funding formula, which we welcomed in Stockport?
Mr Philip Hammond
When she was Education Secretary, my right hon. Friend the Member for Putney (Justine Greening) announced that the fair funding formula would be introduced in a way that would protect per capita spending per pupil, and we would guarantee that every school would receive a cash-terms increase. That guarantee stands today.
[Official Report, 13 March 2018, Vol. 637, c. 742.]
Letter of correction from Mr Philip Hammond:
An error has been identified in the response that I gave to my hon. Friend the Member for Hazel Grove (Mr Wragg).
The correct response should have been:
Mr Hammond
When she was Education Secretary, my right hon. Friend the Member for Putney (Justine Greening) announced that under the fair funding formula every authority will be funded to enable every school to receive a cash-terms increase.
Petitions
Cross border contracting of taxis
Speed Limit in Spatham Lane, Streat Lane and Underhill Lane
Westminster Hall
Westminster Hall is an alternative Chamber for MPs to hold debates, named after the adjoining Westminster Hall.
Each debate is chaired by an MP from the Panel of Chairs, rather than the Speaker or Deputy Speaker. A Government Minister will give the final speech, and no votes may be called on the debate topic.
This information is provided by Parallel Parliament and does not comprise part of the offical record
Street Homelessness
(6 years, 2 months ago)
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Westminster Hall is an alternative Chamber for MPs to hold debates, named after the adjoining Westminster Hall.
Each debate is chaired by an MP from the Panel of Chairs, rather than the Speaker or Deputy Speaker. A Government Minister will give the final speech, and no votes may be called on the debate topic.
This information is provided by Parallel Parliament and does not comprise part of the offical record
Adam Holloway (Gravesham) (Con)
I beg to move,
That this House has considered street homelessness.
It is a pleasure to serve under your chairmanship, Mr Gray. I thought I had had the most interesting February recess, but in fact you were sailing through the south Atlantic to South Georgia in rather hazardous circumstances, so I will defer to you.
In the February recess, I wandered into Covent Garden, armed with some cardboard that I had taken from outside a store, and I bedded down for a night under the awning of St Paul’s church. I was there with a very friendly Italian man and a Romanian couple, who were busy checking their phones before going to sleep. My idea was to spend as many days as I could updating myself on the situation of the street homeless in London. I first did that 27 years ago as a much thinner and fitter ex-Army officer, who had only just left the Army and who was trying to become a television reporter. In February, 27 years later, I was doing the same thing as a much fatter Member of Parliament.
I wanted to understand what the Government strategies are to end street homelessness. The Government and the Prime Minister herself have said that they want to eliminate it within 10 years. I wondered how we will do that and whether it will really be possible. I also wanted to look at what effect the Homelessness Reduction Act 2017 is likely to have.
I emphasise that, from my perspective, this debate is about street homelessness, which is the obvious problem. There is, however, also the much bigger problem of sofa surfing, which I am not covering at all, although I acknowledge that it is very much there.
Some things have changed, and some things are the same. Things that are the same are the kindness and compassion of members of the public and of the charities dealing with this problem.
Mr Gregory Campbell (East Londonderry) (DUP)
I congratulate the hon. Gentleman on securing this debate. One of the most profoundly moving things I have heard—possibly he heard it too—was after the recent passing of the Rangers and Chelsea footballer Ray Wilkins. On the radio, a moving tribute was paid live on air by a homeless man, who said that, when he was outside a tube station in London, the person who came to him, took him for a hot drink, gave him some money and changed his life was Ray Wilkins. That man said in his tribute that the world might remember Ray Wilkins the footballer, but he will remember the man who saved his life.
Adam Holloway
What a lovely story—I thank the hon. Gentleman.
The other thing that has changed is that the Mayor of London, Westminster City Council, councils across the country and indeed the Government—I do not speak for the Government; I wish I did, but I am just a passed-over Back Bencher—are taking this problem extremely seriously, and I genuinely believe that. The No Second Night Out programme is a good example.
Mr Jim Cunningham (Coventry South) (Lab)
I congratulate the hon. Gentleman on securing this debate. Earlier he mentioned voluntary organisations, and I am sure he agrees that we should pay tribute to those in Coventry, such as the Cyrenians. They are underfunded to a certain extent, which we could have a debate about, but the serious issue is what to do about the problem. We need go less than 100 yards from here, across the road, and every morning we can see someone sleeping rough just under cover where the bookshop is. It is a serious problem, so how do we tackle it? I understand that a private Member’s Bill became law last April—
Adam Holloway
I have not come across the Cyrenians, but I agree with the hon. Gentleman that across the road is an excellent sleep spot.
The No Second Night Out programme is a good example of an early intervention service. It was launched in 2011 by my right hon. Friend the Member for Uxbridge and South Ruislip (Boris Johnson), now the Secretary of State for Foreign and Commonwealth Affairs, and it aims to ensure that no one, once identified, spends a second night sleeping rough in central London. More recently, Sadiq Khan has gone further and set up the No Nights Sleeping Rough Taskforce, trying to come up with new solutions. The taskforce brings together boroughs, voluntary organisations and central Government.
Apart from the proactiveness of the agencies that are helping, I noticed some other differences. In February 2018 the majority of the people I came across living on the streets were foreign nationals. One evening, at a soup kitchen on the Strand, there were—I will not exaggerate this—certainly 200 people. Various church groups—from Maidenhead, I think—and some Ahmadiyya Muslims, a Sikh group and an evangelical group were helping out. I wandered about while shawls and brand-new trainers were handed out, and I honestly did not hear English being spoken by anyone. I heard east European languages, Arabic and Italian.
The statistics seem to bear out my anecdotal evidence. Information collected by the Combined Homelessness and Information Network—the joint agency of people working with rough sleepers that is run by the excellent charity St Mungo’s—records that, in 2016-17, of the rough sleepers in London for whom nationality information was available, 30% were from central and eastern Europe. The figure for non-UK nationals overall was 52.6%; that does not include those who do not wish to give a nationality, and other sources put the figure nearer 60%, which was certainly my experience.
Melanie Onn (Great Grimsby) (Lab)
I note that the hon. Gentleman mentioned that those figures relate to London. Does he accept that, UK-wide, only 4% of rough sleepers in England are non-European Union nationals and 16% are EU non-UK nationals? Will he join me in thanking those faith groups who go out to serve all communities, regardless of background, and to help people who are in the direst of straits if they are rough sleeping?
Adam Holloway
Well, of course—the hon. Lady need not even have bothered asking the latter question, because it is a no-brainer, isn’t it? As for the numbers for the rest of the country, I do not know—I have not looked at them—but they are very interesting. There are many different people with different sets of figures, and I am sure that hers are correct. With the example of the numbers of foreign nationals living homeless in London, we can take our pick, but the CHAIN figure is the most reliable—I do not think that the figure is much more than 60%, but nor do I think it is much less.
Adam Holloway
I will in a minute, but I have only got to page 3 of my speech, and I have quite a few more pages, some of which will go on to cover voluntary organisations, for example, which the hon. Gentleman mentioned earlier.
Mr Cunningham
I thank the hon. Gentleman for giving way. One of the things that the figures mask is that some people are asylum seekers with no status, going from home to home. In fact, on Monday, I met a group of people who are concerned about this. The figure of 4%, or whatever it might be, belies the real figure. Does he agree?
Adam Holloway
Yes. As I said at the beginning of my speech, this debate is about street homelessness, and I totally accept that there is a much bigger and much less visible problem of people sofa surfing. Indeed, tomorrow morning I will be seeing an asylum seeker without recourse to public funds who is in exactly the position that the hon. Gentleman is suggesting.
Going on to the reasons for rough sleeping in 1991 and now, the demographic of the people I met on the streets recently is clearly different, because of the foreign nationals, but the reasons for people being there are as sad and complicated as they always were. Once again, I met that seemingly intractable group—the mentally ill, the drug addicted and, in particular, people suffering from mental health issues. Of the what one might describe as “genuinely” street homeless, the overriding majority had some sort of mental health issue, which is compounded by living on the streets and by drug or alcohol addiction.
Alex Chalk (Cheltenham) (Con)
My hon. Friend is being very generous with his time. At the last count in Cheltenham, there were nine rough sleepers, often with complex needs relating to substance misuse or poor mental health, as he indicated. Does he agree that, in those circumstances, there can be no substitute for qualified expert and intensive support, such as that provided by P3 in Cheltenham, and that we should continue to fund that generously?
Adam Holloway
I do not know P3, but I am sure that it does great work. I agree with my hon. Friend, and I will come on to that point. How we deal with the mentally ill and the drug addicted, how quickly they have access to support, and how the money goes to the teams on the ground is a very important part.
Some of the street homeless I spoke to were ex-soldiers. One guy had separated from his German wife, whom he had met during our time in the Rhine. She had taken the children back there, and he had been living in a forest in Germany for four months. He had come back to London before trying to head back down to the west country.
There are also ex-offenders, some of whom leave prison with £46 in their pocket, although I did not meet any of them. I am sure that there are also those who lost their homes as a result of benefits sanctions, financial problems or the breakdown of relationships, although despite speaking to many dozens of homeless people, I did not come across any of them. But, of course, there are many of them, and there will be many more in the sofa-surfer sector, which we discussed.
The most common theme was mental illness of some kind. If hon. Members have walked along the road to Victoria station, they will have seen all the people zombified out of their heads on this horrible synthetic cannabis, Spice. I spent a night sleeping there, round the back of the “goods in” entrance to McDonalds. I was looking for a suitable place to sleep, and I found a guy sitting on his own. I wandered up to him and had a bit of chat. He was an alcoholic and was quite lonely, and he was quite nervous of all the Spice guys in the area. He said that I could bed down next to him, which I did. He was 30, from the north of England and quite anxious for company. As we lay there in our sleeping bags—him drinking beer—he told me that he had a flat outside London; in fact, he showed me the keys. But he said that when he is in the flat, he just sits there, getting wasted, and sees nobody. I found it terribly sad that he was so lonely that he preferred to be out on the street. That guy illustrates the complexity of rough sleeping and why the problem persists, even when money is being poured into the system and huge numbers of different services exist.
Mr Ivan Lewis (Bury South) (Ind)
I congratulate the hon. Gentleman on securing the debate and going on to the streets to find out the realities for himself. I have to respond to the point about pouring money into the system. That is absolutely not the case; money is being poured into the system to react to a crisis. The crisis is caused by the breakdown of our public realm—the decimation of frontline public services and the lack of mental health services and drugs and alcohol services. On the one hand, the Government are pouring in ring-fenced money to tackle the problem, but the breakdown of the social fabric of our society—like in the ’80s and ’90s—is the reason we have such a high level of rough sleeping.
Adam Holloway
As I said, I would like to be in the Government, but I am not. We will hear from the Minister, who I think will confirm that enormous amounts of money are being poured in. The hon. Gentleman may have a case in terms of sofa surfers, but for the hard-core rough sleepers, I cannot agree with him. I did not come across the sort of people that he characterised. I accept that, in terms of the other group, he may well be correct, but I think that the number of rough sleepers has much to do with the very high levels of eastern European immigration over the last few years. But he is absolutely right that we still have the intractable problem that, whether or not people think we are pouring in money, we are not getting to the people at the very bottom—I will come to them in a minute.
Paul Blomfield (Sheffield Central) (Lab)
I congratulate the hon. Gentleman on his initiative to put focus on this issue. Over the Easter recess, I did the 6 am shift with police community support officer Steve Hart, in Sheffield, where I met all the people sleeping in doorways and stairwells. None of them were foreign nationals—they were all British—and they all had the sort of complex problems that he describes. I talked to the agencies that worked with them; the reason why those numbers have gone up each year over the last few years is surely that, as my hon. Friend the Member for Bury South (Mr Lewis) highlighted, starving money from local authorities has minimised not only their ability to deal with the issue, but a key source of funds for the charities in the third sector, which cannot provide the intensive support that people with complex problems need.
Adam Holloway
Again, I do not want to be a cop-out, but I will throw that to the Minister. If someone is fit and of sound mind, there are all sorts of services, although not quite 24 hours a day, that make it possible to sleep out. I am 52 years old and I was in the Army; to be honest, sleeping rough in central London is a lot more comfortable than going on exercise when I was in the Army. For those who are mentally ill, drug addicted, old or personality disordered, it is a very different thing.
Adam Holloway
Can I go on a little bit, unless the hon. Lady is desperate on this point?
Adam Holloway
We have to accept that some people are able to sleep rough in our cities because there are the resources to do so.
Laura Smith
Sorry, I cannot hold on. I have been out with homeless people in Crewe and Nantwich, and I do not relate to what the hon. Gentleman is saying at all. Does he agree that an area that needs to be looked at more closely is the high rate of benefit sanctions among homeless service users and the impact of those sanctions?
Adam Holloway
As I said at the beginning, this is a debate about street homelessness. I accept that is probably true in that other sector, but I did not come across it, and I am here to talk about my experience, so I do not know.
The hon. Lady said that she does not recognise what I was saying. I am not saying that even a large minority of the homeless are there because there are resources for them. I am trying to say, and I will develop this later, that we will get nowhere in solving the problem and getting to the people who are most needy if we just continue to talk about the homeless and feel sorry for everybody. We have to focus on the people in real need. Come out with me some time, and I will show you.
Laura Smith
I go and help the homeless in my community; we have great volunteers who also help them all the time. Thank you, but we are interpreting the issue completely differently. It worries me that you are not recognising some of the real, ingrained problems. I do not think that anybody would choose to sleep rough—I do not buy that.
James Gray (in the Chair)
Order. Before the hon. Gentleman replies, I must make a couple of boring points. First, interventions are getting terribly long—Members must make short, one-sentence interventions. Secondly, any Member who says “you” means me. If Members refer to another Member, they must use the third person—“him” or “her”.
Adam Holloway
Thank you, Mr Gray. I can only go by my own experience. I am very keen that we should get to the people who are in real need and that we should start treating people as individuals rather than lumping them all together and suggesting that everyone has the same need. I am trying to be honest; I can only go with my experience of three months back in the ’90s.
Adam Holloway
I really should not allow another intervention, as I am on page four of 15 of my speech, but go on.
Fiona Onasanya
Sorry. As the hon. Gentleman just said, we should not lump all homeless people together; rather, we should look at them individually. Does he agree that, based on his own experience, he is taking a broad-brush approach to all homeless people, and that that is incorrect?
Adam Holloway
Well, I am not—actually, I have just turned the page, and I am now on page five of 14. I hope I do not give that impression, because I certainly do not think that. People are on the street for a reason. The problem is not homelessness—although of course that is a problem—but whatever reason someone is on the street. I do not think we disagree at all, but I will get to the hon. Lady’s point.
What was my experience with No Second Night Out? That initiative is based on the idea that once someone is identified, they will not spend a second night out. That happens in cities up and down the country. I reported myself to the StreetLink helpline, and I was woken up at about 2 o’clock in the morning by two outreach workers and asked whether I would like to get in an Addison Lee taxi to go to the No Second Night Out south hub in Hither Green. No Second Night Out has three hubs in London—one in the east, one in the north and one in the south. I had a 3 am interview with a charming, extremely competent and razor-sharp member of staff, and I was then taken into an L-shaped room about a third of the size of this Chamber where about 30 people were camped out on the floor with their own bedding. I squeezed into the one remaining space between a refrigerator and some French windows. I got up the next morning, had a Pret A Manger sandwich and some coffee, and later had an assessment interview. Not wanting to take a valuable place, I made my excuses and left.
To be honest, I was quite relieved when I left. The thought of spending days or weeks sleeping on the floor in a cramped room between the refrigerator and the French windows did not appeal to me much. I can completely see how, for someone able-bodied and of sound mind, it would be much more appealing to sleep under the awning of St Paul’s church in Covent Garden or at the “goods in” entrance round the back of McDonald’s in Victoria, because people have freedom in those places. Also, if I were a drug addict, I do not think I would want to abide by the rules that hostels must have to protect the other people there. But if I had been ill or elderly, I would of course have been grateful for that place on the floor and the plan that St Mungo’s, which operates the initiative, has for people eventually to go on and find housing.
Even if I were Alastair Campbell himself, I would find it hard to put in terms quite how extraordinary the staff of St Mungo’s are. Having made my excuses and left, I was walking down the street, and I had gone round the corner from the hostel when its manager ran down the road after me and said, “No, no, no—you don’t have to do this yourself. Come back and we will sort you out.” It was quite remarkable.
Eddie Hughes (Walsall North) (Con)
Prior to becoming an MP, I worked for YMCA Birmingham dealing with homeless young people. Will my hon. Friend join me in celebrating the £2.2 million it was recently granted by the Government to refurbish its 72-bed hostel in Northfield, creating facilities for organisations such as Mind to provide support to formerly homeless people?
Adam Holloway
Absolutely. Indeed, I experienced that. For another programme I made some years ago, I pretended to be a homeless mentally ill person in Birmingham. When I was discharged from Queen Elizabeth psychiatric hospital, I went to that very institution and the people there arranged to look after me. That was 30 years ago.
Laura Smith
I find it unbelievable that the hon. Gentleman would pretend to be a homeless mentally ill person. That just shows how detached he is from the situation. I find that insulting.
Adam Holloway
All I can do is suggest that the hon. Lady watches that “World in Action” series from 27 years ago and draws her own conclusions about whether that was a good thing. Let us have a chat about it when she has done that.
Let us carry on with some realities. It is very depressing, after 27 years, to look at streets with the same cohorts of mentally ill and drug-addicted people on them—the people who fall through the cracks in the system. Although the police are more able to intervene when a mentally ill person is on the streets and local authorities have particular duties to those who are vulnerable due to mental illness, the reality is that someone who has had serious psychiatric problems is extremely unlikely to maintain a tenancy or stay off the streets for some time. Indeed, I had not appreciated the churn of people—even when people are engaged, the system does not seem able to keep them for the time that it needs to.
Let us be honest about the correlation between immigration and the rising number of street homeless. It is no surprise to me that, in 2016-17, 1,950 rough sleepers were migrants from Romania, Poland and Lithuania. Obviously, homelessness is a much greater risk when people are far from home and from familial support structures. It became clear to me that some migrants sleep on the streets by choice, preferring to sleep rough than to pay for accommodation. It is a no-brainer that years of high immigration and of successive Governments not building enough houses will have a knock-on effect for people at the bottom of society. Of course that will make rents unaffordable.
Kirstene Hair (Angus) (Con)
Does my hon. Friend agree that the Scottish National party Scottish Government have presided over a decade-long slump in Scottish house building? We went from almost 26,000 new builds in 2007 to almost 17,000 in 2016. That is totally unacceptable, and it has fuelled homelessness in Scotland.
Adam Holloway
The shadow Minister, the hon. Member for Great Grimsby (Melanie Onn), will attest to the fact that I am not well enough versed on what is happening in the rest of the country, so I cannot answer that question, but if my hon. Friend says that, I imagine it must be true.
On people from eastern Europe, perhaps it is time to ask ourselves whether it is exploitative to build an economy on cheap labour provided by those who can barely afford to accommodate themselves in our country. We could of course argue that those people are not strictly homeless, because they might have a home back home, but that is their reality when they are here.
My hon. Friend the Member for Angus (Kirstene Hair) alluded to the housing crisis. We must face up to the inevitable impact of that crisis, and of the related issues of lack of supply and affordability, on homelessness. It is estimated that between 2010 and 2016, population growth, including net international migration, was around 1.58 million. The number of rough sleepers has increased by 169% since 2010. In 2016-17, the housing stock in the UK increased by around 217,000 residential dwellings—an increase of 15% from the previous year, but short of the estimated quarter of a million-odd new homes required to keep up with household formation.
It is not difficult to see that the sums just do not add up, including under this Government. Although the Homelessness Reduction Act 2017 strengthens the duties of local authorities to provide advisory services to people threatened with homelessness and encourages pre-emptive action where house building has not kept up with population increases, it is absurd to think that that will not impact the people at the bottom of society who are often the most unseen—not those on the streets but those on sofas.
We must address the fact that homelessness impacts men and women in different ways. Rough sleepers are overwhelmingly men. During my recent stint on the streets, I saw only a handful of women whom I unscientifically judged to be street homeless—the big giveaway is people carrying bags and suitcases. CHAIN data for 2016-17 shows that only 15% of rough sleepers in London were women. Part of the issue must be that those who care for young children—typically women—are rightly prioritised in the allocation of social housing. However, somewhere along the line we seem to have forgotten that men who live on the streets were once part of a family unit.
Adam Holloway
I would love to give way again; the hon. Lady is so informed.
Laura Smith
Again, I am astounded by the misogynistic comment that it should be women who look after the children. I know that is a different issue to the debate, but I cannot let it go by.
Adam Holloway
I will read what I said again: part of the issue must be that the allocation of housing priorities goes to those who care for young children, who are typically women, and rightly so.
Adam Holloway
Yes, absolutely. It is right for housing priority to go to people who look after children, and typically they are women. Again, I am just stating the reality. If it is different, the hon. Lady should tell us.
Let us move on. We must recognise the particular challenge of mental health issues that affect men, and the way that men who battle for many years with the perceived stigma of mental health problems can be particularly susceptible to a sudden crisis that can lead to homelessness. I also learned about the ways homelessness affects women. Some women in London ride the bus for 24 hours a day to stay off the streets, and some go from place to place in return for a bed to sleep in.
We must also address the issue of how people’s generosity can sometimes be as much part of the problem as the solution. The man I met near Victoria station spent the night drinking beer bought with £30 that kind members of the public had come up and given him that evening. St Mungo’s staff told me of a client who had abused drugs for many years and had a leg amputated as a result, but who finally managed to get clean. This man told them that if he had not been given money by the public for so long he would have sought help much sooner. Begging is part of the problem—an able-bodied person can make quite a lot of money from begging on the streets of London. Generosity by members of the public is a factor in this; generosity can be enabling and mask those in real need.
Fiona Onasanya
Will the hon. Gentleman please clarify whether he seeks to assert that people would rather be homeless and hope for public generosity than in a place where they can have their own income?
Adam Holloway
No, and rather like the hon. Member for Crewe and Nantwich (Laura Smith), the hon. Lady is not listening. I am not saying that; I am saying that if someone is a drug addict, the generosity of members of the public can enable their addiction. I just gave the example of a guy who was on the streets for years and had a leg amputated, and who now believes that if the public had not been so generous, he might have sought help much sooner.
Fiona Onasanya
I recall the hon. Gentleman said that people can make money from being on the street—I am paraphrasing, but will he please clarify that point?
Adam Holloway
I will change that sentence. A person can make money in order to buy drugs to feed their addiction—that point was pretty clear in what I said.
An added complexity is that there seems to be a perception among some of those involved in helping the homeless that in order to access services someone needs to sleep on the streets. Surely we should be helping people earlier. The endless churn of people entering the system—many of whom could and should have been helped earlier—makes the job of organisations who are trying to care for those vulnerable, and trapped, people even more difficult.
Mr Paul Sweeney (Glasgow North East) (Lab/Co-op)
The hon. Gentleman makes an interesting point about the trapped nature of many homeless people. I recently visited a homeless shelter in Glasgow and I discovered a vicious cycle for people who might get a job, but they cannot then secure it because they do not have a bank account, and they cannot get a bank account because they do not have a job or permanent address. That puts people into a spiral of despair, which may well lead to them having addiction problems—no wonder they have addiction problems given the cycle of despair they are in.
Adam Holloway
I agree with the hon. Gentleman’s overall point. I think the business of not having an address has been dealt with by quite a lot of charities, but it is clearly much harder to hold down a job for someone who also has the complexity of sorting themselves out every night and living on the streets. I definitely agree with that.
How should we tackle the problem? From my experience of sleeping rough in 2018, I would say that our priority must be to ensure that we do not make the mistake of lumping all rough sleepers together. That stops us recognising people’s problems, and often means that we not go far enough to tackle the underlying reasons for rough sleeping. We also need urgently to address how mental health problems experienced by rough sleepers are identified and treated. Since my recent experience on the streets, a link has been made between the scaling back of mental health services and a rise in homelessness. An outreach worker, and former rough sleeper, told me only yesterday how he literally begged a doctor to get him some sort of treatment when no mental health services were available to help him.
Outreach workers also speak about their frustration at the lack of emergency mental health assessments, and the desperate need for help at the right time and in the right place. A supervisor at the No Second Night Out hub in London said that sometimes when someone arrives who is obviously suffering from a mental illness, the charity has to hold that severely mentally ill person in the hostel for up to three weeks before they get a mental health assessment. During that time the support workers, who are not psychiatric nurses, have to try to contain the situation, which is hugely challenging. If the person is accepted into an NHS mental health unit—that does not always happen, particularly if the person is a drug addict—more often than not, as has been said, they are simply released on to the streets a few weeks later.
Clearly there is an urgent need for mental health teams to be embedded with outreach teams so that they can look at the needs of an individual and refer them without any delay for the treatment they require. Homelessness charities say that there is no point putting enormous amounts of money into general mental health budgets, where it just disappears. The money has to go to the tip of the spear and stay with those people as they go through the system, so that we do not get the churn I have spoken about.
Thankfully, the problem of homelessness seems to be higher up the political agenda than ever before, and the Government’s 2015 Budget increased central Government funding for homelessness programmes to £140-odd million over the following four years. However, it is important that that money is used correctly, at the tip of the spear, focusing on the immediate needs of those on the streets and getting them the help they require, rather than being wasted on intervention that comes too late or does not tackle the root cause of someone’s homelessness.
If we are serious about this issue—I think the Government’s target is potentially over-ambitious—we must see people as individuals not just as homeless people. We must differentiate between different groups and have the courage to look at whether the provision of service is enabling some people to live on the streets, but obscuring others from the help that they need. We must think carefully about whether public kindness is enabling some addiction, and whether by lumping everyone together we are masking those in real need. In this country where we spend gazillions of pounds on a welfare state, we must try to rescue the people at the very bottom of our society from roaming the streets of our cities.
Several hon. Members rose—
James Gray (in the Chair)
Order. I will call the Front-Bench speakers in 20 minutes, and seven Members wish to speak. My rough arithmetic makes that three minutes each. I do not intend to impose a formal limit, but as a matter of courtesy to each other please speak for three minutes if at all possible.
Mr Ivan Lewis (Bury South) (Ind)
It is always a pleasure to speak under your chairmanship, Mr Gray. I congratulate the hon. Member for Gravesham (Adam Holloway) on securing the debate and on his extraordinary account of what he learned.
I care passionately about this issue, as do other Opposition Members, because homelessness is the ultimate symbol of the gross inequality that scars our country and, in my case, the city region of Greater Manchester. We are proud of the renaissance of Manchester, but we cannot celebrate the cranes in the sky, which represent growth and development, while so many people are sleeping in shop doorways before our eyes. This issue also matters to me because in the 1960s, a middle-aged woman was found sleeping in a Manchester park with her young twins. The police officer who found her said, “You can sleep here, madam, but the children can’t,” and they were whisked into care. That middle-aged woman was my grandmother, who was a war widow battling mental health problems, and the twins were my uncle and aunt. The point that I want to make is it that can happen to anyone, and anyone’s family.
Why do we face such a shocking situation—one that in my view is a repeat of the “no such thing as society” ’80s and ’90s? The hon. Member for Gravesham listed the range of people who could be rough sleepers. It is important to underline the need to look at things on an individual-by-individual basis, as there are many causes. Two points I want to make are that, first, many foreign nationals are of course not eligible for public funding, which creates a range of problems for the system and, secondly, that I do not think that the hon. Gentleman meant to say that someone is better off sleeping on the streets than being in the military. That would, I think, be a great indictment.
Adam Holloway
I just said that sleeping in central London, if someone is able-bodied, is no worse than being on exercises in the military. It certainly would not be the case for someone who was mentally ill or drug-addicted.
Mr Lewis
I thank the hon. Gentleman for that clarification.
I want to talk about the consequences of the slash-and-burn approach that has decimated public services as a consequence of the Government’s policies. The rhetoric is about a shift to prevention and early intervention, but the reality is that slashing and burning local authorities’ budgets has reduced them to providing their minimum legal responsibilities. Prevention and early intervention go out of the window. As for voluntary organisations, we no longer hear the term “the big society”. The reason why that was killed—that it was dropped and never mentioned—was that at the same time as the Government were talking about the growth in the importance of voluntary organisations, they were slashing the funding that they depended on. It is nonsense to talk about the big society. The alleged commitment to localism has proved to be complete nonsense. If you were running a business, Mr Gray, and you had a 50% cut in your budget over four years, you would go bankrupt or would be likely to go out of business. That is what is happening to local authorities under all political direction throughout the country. We are paying a heavy price for that.
I welcome the ring-fenced money that the Government have made available to tackle the issues, especially in Greater Manchester, but the irony is that the money, which is not adequate, is necessary only because of the impact of their social policy failures and cuts. It is right, therefore, that in a debate of this kind we do not say, “Take the politics out of it.” There is a rough sleeping epidemic as a direct consequence of political decisions. However, it is incumbent on an Opposition to offer creative and positive solutions, and Greater Manchester deserves tremendous credit for the innovative approach it is taking under the leadership of its Mayor, Andy Burnham, working with the 10 local authorities, the voluntary sector, faith groups and the private sector. The Mayor’s ambitious and morally right commitment is to end rough sleeping by 2020—seven years ahead of the Government commitment. They are committed only to ensuring that no one has to sleep on the streets of this country by 2027. I argue that that is a massive lack of ambition, in view of the humanitarian crisis.
Eddie Hughes
Mayors across the country have a role to play. We have heard about Sadiq Khan, and the hon. Gentleman has talked about Andy Burnham. Andy Street, in the West Midlands Combined Authority, chose homelessness as the first thing to address in his time as Mayor.
Mr Lewis
I congratulate Andy Street on making it a priority, but if the hon. Gentleman were to meet all the Mayors they would say the problems are the consequence of the breakdown of frontline services that many of the people we are talking about have traditionally depended on. I agree that Mayors have an important role to play, and I am proud of the groundbreaking approach that Andy Burnham is taking, which everyone acknowledges.
The first key element of a successful approach is high-level political leadership. It is of absolute importance that the people at the top should care about rough sleeping and homelessness and make that a priority. Another is that solutions should be co-produced with people who have lived experience of rough sleeping, and frontline organisations. The issue should never be about top-down solutions. There should be a clear strategy and plan, focused on reduction, respite, recovery and reconnection. As the hon. Member for Gravesham said, there should be a personalised approach across organisational boundaries, with key workers, support plans and personal budgets. Also, we need innovative, imaginative public services. I am really proud of the innovative work being done by the NHS and the fire service in Greater Manchester. Expanded housing provision will sometimes need to involve specialist provision. The hon. Gentleman said that the issue is mainly about men, but what about specialist provision for women, who, often, are fleeing domestic abuse, and for young people? There is a dearth of that provision.
There is also a key role for business. The corporate sector in most communities wants to help, and it is important that the statutory authorities find a vehicle to enable businesses to make a positive contribution, through their expertise and skills, and their willingness to make financial resources available. In Greater Manchester the Mayor’s fund and Big Change have been successful in putting together resources from a variety of sectors on a ring-fenced basis.
I agree with the hon. Member for Gravesham about the importance, in addition to support services and a rebuilt infrastructure, of tackling Spice. That is another epidemic, and I do not think that society is yet clear about how to tackle it. I also agree with him that it is of course appropriate, when we have succeeded in minimising the number of people on the streets, to take on the issue of begging on the streets by people who are not actually homeless and who have addresses. However, that is not the place to start. Public support should start with minimising the number of people who are sleeping rough.
Our society reached a post-war consensus that every citizen in this country should have access to free healthcare and universal education, and it is about time that in the same way we offered every citizen the right to a decent, affordable home.
James Gray (in the Chair)
That was nearly nine minutes, squeezing out two colleagues.
Derek Thomas (St Ives) (Con)
I am grateful to my hon. Friend the Member for Gravesham (Adam Holloway) for securing the debate.
In Penzance we have a problem, and across Cornwall two years ago we had the third highest level of rough sleeping in the country. When I ask people why, they say because it is the end of the line. People get on the train and get off when it stops in Penzance. There are rumours that local authorities buy people tickets to Penzance, but they are yet to be proved. I also know from personal experience about family breakdown, including instances when a new member of the family moves in and younger members feel they can no longer stay. Eviction for debt and so on has recently been a factor.
The problem is not new. In a previous job, many years ago, I worked for a local charity, and we supported homeless people. Long before food banks existed we set up help for them, providing food given by local people and tents and sleeping bags, as well as trying to get them better accommodation and support. Many years ago, under the Labour Government, there was a significant problem in Penzance, while I was on the district council. It was right that the council tried to address it, but unfortunately it caused extreme problems. The approach caused a lot of anxiety for those concerned and for the local communities, and cost several million pounds. The local authority just did not handle it correctly. I was concerned at the time for those who were homeless. It was right to help them, but things were poorly and ineffectively handled. That is why I am so encouraged by the efforts being made now; but we must proceed with caution.
Before I was married I invited a homeless man called Stan to come and live with me. It was quite funny as other people who came to the house were curious as to why there were two toothbrushes in the bathroom, and it started all sorts of rumours. What I learned was that more is needed than a roof over someone’s head, which I think is the point that has been made. In Penzance we have great services. Various meals are available throughout the day and there is support. All sorts of charities and other groups provide support, assistance and therapies.
Members on both sides of the House recognise that homelessness is a complex issue and can be solved only by everyone working together—including the police, local authority, voluntary sector, health and social care providers and landlords. It is true that house building must take place. We have not seen a significant amount of house building, and I am not yet aware of any scheme that is deliberately looking at how we can provide suitable housing for people who, as I have said, need more than just a roof over their head.
I will give three recent examples that have come into my casework folder of people who, as we have heard from my hon. Friend the Member for Gravesham, could have been helped earlier. There was one family whose business went bust; their house was tied to their business and they lost their business and their home. The council knew well in advance, but the day they left their business they had nowhere to go. More recently, there was the eviction of a tenant where there had been lots of work previously to pursue and achieve the eviction, but very little support, and she had nowhere to go on the day. There was also a young man I met recently who wanted to be close to his family and his children, but the only option available to him was at the other end of the county.
Those are examples of people who become homeless, rough sleepers or sofa surfers, yet none of those cases was a surprise. There was plenty of warning for all those concerned to have helped them. Excuses and reasons given to me included that the property had a section 106 agreement and it was not available for their situation. Another public sector organisation said, “This is not our responsibility.” Another said, “We offered him temporary accommodation,” but, as I have described, it was miles from home. An email I received yesterday described a hostel in Cornwall—it is a hostel for ex-service personnel, with eight beds in the room, mixed sex and miles from home. The individual is “terrified and cannot sleep”. There is no doubt in my mind that more can and should be done.
I am encouraged by the fact that we recognise the issue and that significant money and effort are being put into it. Cornwall Council is receiving £648,000 this year and £846,000 next year to address the issue. My colleagues and I will be asking how it intends to ensure the money goes where it is needed. I welcome the opportunity to debate this big and complex issue, which will not easily be resolved.
Rachael Maskell (York Central) (Lab/Co-op)
I will be brief. It is clear that everyone has a backstory; it is certainly clear, from spending time with the homeless in York, that if decisions had been taken elsewhere in the system we would not be in the situation we are in. We have multi-agency failure due to the austerity measures and the harsh decisions of the council, which has resulted in homelessness exploding on the streets of York. In 2010, just two people were recorded as sleeping rough, but today the picture is completely changed.
The chief executive of Changing Lives, which provides one of the services in York, said that rough sleeping is now,
“highly visible and we believe the numbers that will be counted later on in the year will be alarming.”
Even though he runs a service himself, he was “visibly shocked” at the levels of street homelessness in York and, of course, homelessness across the board is in an even more desperate situation.
The reasons for that are complex, but it is clear that some decisions can be made to change the situation, not least looking at the housing situation in York itself. It is absolutely hopeless for the council to say, “Go to the private rented sector,” because people cannot afford to live there. The broad rental market area for York does not match the true cost of housing in the city, due to the broad area it covers. Therefore, the private rented sector is not an option, yet people are still sent there by our service. I would like the Minister to look at that.
I would also like the Minister to look at the term “intentionally homeless”. I do not believe anybody makes themselves intentionally homeless. It is the council that intentionally makes people homeless. While we know that people have complex needs, there need to be alternative strategies for missed rental payments or antisocial behaviour, rather than people ending up intentionally homeless.
I also ask the Minister to look at what is happening with York’s local plan. The council is resubmitting it, seriously under-marking a number of housing types, particularly social housing. We need to disaggregate the terms affordable housing and social housing, but we need to put housing first for homeless people, as Nicholas Pleace at the University of York has more than adequately described. We need to look at what happens, because there is currently a punitive system in place around much of housing. We need to get it right, because people are really struggling in my city—local people, I stress.
The words of Sheila McKechnie will always stay with me. As a teenager, she fiercely held politicians to account to ensure they did not bypass the issues of homelessness. We need to ensure that no politician sits comfortably, even if strategies have been put in place, because it is a matter of such urgency. Different solutions are needed in different areas, and I ask the Minister to work with all of us to make sure that we find them.
Ben Bradley (Mansfield) (Con)
I have scribbled out a lot of my speech, so I will try to crack on, with your best wishes, Mr Gray.
Homelessness is one of my key local campaigns, and something I have worked on consistently since being elected last year. I have visited most of the relevant services in Mansfield and brought both the previous Minister for homelessness, my hon. Friend the Member for Nuneaton (Mr Jones), and the Home Secretary to meet the public sector charitable organisations and businesses to look at various aspects of things we might do better locally.
It is fair to acknowledge that the Government has taken some important steps to tackle homelessness. The recently introduced Homelessness Reduction Act 2017 is an important move in the right direction and can potentially help to reduce the number of people becoming homeless in the first place. Through my investigations over this year, I know that that prevention aspect of support was previously lacking. The flexible homelessness support grant is also welcome, providing £250,000 to Mansfield over three years.
In Mansfield, we have some brilliant supported housing associations, not least Framework Housing Association, the Nottingham Community Housing Association and others, that help to get people back on their feet after times of crisis. They would love to be able to offer ongoing support to the people who rely on them, but they struggle to access the funding to do so. Those providers are experienced in the issues surrounding homelessness and are often best placed to offer local support and tailored services.
In my constituency it is not the housing itself that is the real challenge, but the complexity of need, including mental health difficulties or addiction. Providing support in managing those things, with financial management, can make all the difference. Too often the way is blocked by bureaucracy or protectionism over different organisations’ priorities and budgets. People cannot get support for a mental health problem if they are on drugs, but they cannot get support for their addiction if they have an obvious mental health problem. The problems are clearly interrelated, but the services are not.
Addressing mental health issues, providing tailored local support and a joined-up approach between housing, health and local social services is key to addressing the issue of homelessness. Most local stakeholders would agree that in Mansfield, our acute services are pretty good. If someone finds themselves homeless, they have a good chance of getting accommodation and support fairly quickly. The numbers of street homeless in Mansfield have fallen over recent years.
We have some amazing local groups and charities such as The Hall, the Beacon Project and the Soup Kitchen that provide excellent care and support, and most importantly link in with key services. What we do not have is a low-level ongoing support or prevention service, to help people to manage their money and maintain a tenancy as they move on, and to stop them ending up back on the streets. For an entrenched population of long-term homeless, that is key.
It is important to note that a significant number of people, as has been mentioned, might not feature in the rough sleeping statistics because they have hostel accommodation or another form of temporary accommodation. While as a first step hostels can provide useful accommodation for homeless people and help to provide shelter, they are not a long-term solution. The use of drugs and alcohol, threats of violence, theft, bullying and other issues can mean they are not the safe space that people deserve.
It is frequently acknowledged that bed-blocking is a significant problem in the NHS. There is also an increasingly problematic form of hostel bed-blocking, where former rough sleepers in hostels are ready to move on but there is no move-on accommodation or support to help them do so. A joined-up effort to look at the ways in which we can continue to make progress in reducing homelessness will need to involve all levels of Government, the NHS and social care, charities and voluntary groups. There is no one-size-fits-all approach; we must take a range of different approaches to deal with the problem.
I have argued over the last year that tackling homelessness must remain a priority and that the funding should reflect its importance. That funding should not just be based on numbers. London obviously gets a lot of cash because the numbers are incredibly high, but I will argue for Mansfield, where the numbers are comparatively small but we have a deeply entrenched population of long-term homeless, who simply will not be able to get back on their feet without some intense long-term support.
Finally, can the Minister tell us when we are likely to have an assessment of the impact of the Act and the success of the various trials of different services, such as Housing First in Manchester, that have been brought forward by Government? Are more proposals are likely to be brought forward to look at those prevention services that I mentioned, with a view to meeting the target of eradicating homelessness by 2027?
John Mc Nally (Falkirk) (SNP)
It is a pleasure to serve under your chairmanship, Mr Gray. Like others before me, I thank the hon. Member for Gravesham (Adam Holloway) for securing this vital debate.
Homelessness affects probably every Member, not only of this Parliament but of the devolved Administrations and their respective Parliaments, who work side by side with local authority councillors and officers to help to resolve this huge issue. In my constituency of Falkirk, I work with a variety of other local organisations that willingly give their utmost to resolve this terrible situation, which too many of our constituents find themselves in.
Many interesting points have already been made. I have to praise the hon. Member for Gravesham for again getting out of his comfort zone and going to live with the homeless, some 27 years later. I read his report in The Daily Telegraph and thought it was extremely interesting on how different things are—or not—after such a long time. He asked why the problem still persists. It is a great question, and I would like some answers. He made some interesting observations in his report on that point, many of which have been mentioned. The two I noted were the No Second Night Out initiative, which I thought was excellent, and how all people cannot just be lumped together. That is extremely important.
Dr David Drew (Stroud) (Lab/Co-op)
Does the hon. Gentleman accept that in rural areas such as the one I represent, the difficulty is that, while we have always had hidden homelessness—people have slept in the woods and so on or have sofa-surfed—it is now street homelessness. We have to look at the dilemma of whether we provide a shelter or whether we try to find other ways of coping with these people. I would obviously prefer the latter. That shows the difference.
John Mc Nally
Hear, hear. I absolutely agree with the hon. Gentleman.
I come back to a point made earlier by the hon. Member for Angus (Kirstene Hair), who is not in her place. She mentioned the Scottish National party Government. I will quote Shelter Scotland to her, which warned, in evidence submitted to the Scottish Parliament’s Local Government and Communities Committee, that the combination of universal credit and the UK Government’s benefit cap reduction and the cap on housing benefit, all
“directly threaten tenancies and risk pushing more people into homelessness.”
None of us should tolerate that situation.
The hon. Member for Bury South (Mr Lewis) impressed me with his points on the new Mayor’s ambitions. That is an extremely important development for these new powerhouses; taking decisions locally is vital for all areas. The hon. Member for York Central (Rachael Maskell) described the effect of austerity measures on increasing homelessness in her own area.
Jim Shannon (Strangford) (DUP)
There has been a 32% increase in homelessness in Northern Ireland. Does the hon. Gentleman agree that, contrary to popular belief, homelessness is not restricted to people who sleep rough? It encompasses a much wider range of individuals in a variety of circumstances—particularly those with mental health issues.
John Mc Nally
I absolutely agree. I will come on later to describe some things I have already managed to do this year. I will first make other Members aware of what the Scottish Government are doing in relation to our own homelessness problems, and I will end my speech by taking the opportunity to mention two initiatives I recently had the honour of being asked to visit, to witness the innovative work being undertaken there to reduce homelessness in a very practical manner.
In Scotland, the SNP Government are taking action to end rough sleeping for good. Scotland has some of the strongest rights for homeless people in the world. A major change was made in the Homelessness etc. (Scotland) Act 2003: from 31 January December 2012, the priority needs criteria were abolished. This was described by Shelter as providing
“the best homelessness law in Europe”.
That is praise indeed. It was also described as very ambitious, and required 10 years of preparation between receiving Royal Assent in 2003 and coming into force at the end of 2012.
Everyone found to be homeless in Scotland is entitled to housing. Most people are provided with settled, permanent accommodation. Last winter—I hope it is now finished—the Scottish Government increased the capacity and capability of homelessness services in three Scottish cities, to meet the challenge of the harsh winter. As part of that strategy, the SNP Scottish Government set up the homelessness and rough sleeping action group to bring forward recommendations on how to eradicate rough sleeping, and also announced £150,000 of funding to extend some projects that had already been assisted in the winter.
Another great example of the Scottish Government’s commitment is the creation of the ending homelessness together fund of £50 million over five years from this year. Importantly, this focus on prevention has already contributed toward a significant fall in homelessness applications—a 38% reduction when compared with the number of applications between April and September 2007 and April and September 2017.
New recommendations to ensure the eradication of rough sleeping have been set out by the Scottish Government’s homelessness and rough sleeping action group. Some of the measures include a national system of rehousing, involving integrated support from frontline outreach services and, importantly, our own local authorities. For example, that includes moving to a Housing First model for those with the most complex needs, whereby people move straight into a permanent, settled home, rather than temporary accommodation. The Scottish Government invested £320,000 to support additional capacity for night shelters and extra staff, to help more people into accommodation over the winter. More money—some £150,000—will be committed this summer to continue some services going forward.
Jon Sparkes, chair of the homelessness and rough sleeping action group and chief executive officer of Crisis, said he was very pleased that the Scottish Government have
“given in principle support to all of the recommendations on ending rough sleeping from the Homelessness & Rough Sleeping Action Group”.
That group has to be praised for the manner in which it has dedicated itself to bringing the right recommendations that will have the biggest impact on the way people sleeping rough can access and receive services. The new recommendations have also been welcomed by Annette Finnan and John Mills of the Association of Local Authority Chief Housing Officers, who said:
“ALACHO members will welcome these new recommendations, they reflect much of the good work that is already going on in local councils across Scotland.”
That is praise indeed, and it is a good example of how Government and partners can work together.
As has been mentioned by many MPs when discussing Tory policy, welfare cuts are causing major hardship and housing insecurity for far too many people.
Faisal Rashid (Warrington South) (Lab)
Between 2010 and 2015, funding to homeless services was cut by 45%. Does the hon. Gentleman agree that that could be one of the main reasons for street homelessness?
John Mc Nally
I absolutely and totally agree. That figure is in your face and unavoidable. The impact those cuts are having on our streets is unavoidable; how could anybody not see it?
The Westminster Government must scrap the punitive cuts that have pushed people into destitution. Other charities and organisations are left firefighting these decisions. I will mention some action that has been taken by way of education into employment—life-changing measures for the vulnerably housed and homeless.
As chair of the all-party parliamentary group on the hair industry, I was honoured and privileged to attend a wonderful example of a community working together, in Exeter in Devon. Hair@theAcademy provides professional barbering courses for the homeless and vulnerably housed. A truly remarkable project, the academy has successfully piloted a level 2 certificate in barbering qualifications for six homeless adults. Those adults, who have issues, are all moving into full-time or part-time employment or self-employment. Before starting, all participants must complete a two-week citizenship course with Learn Devon, to ensure that they are clean and ready to begin learning.
The barbering course has the built-in flexibility to run over six months, recognising that there will be difficulties and issues. I would call it a magna vitae. It shows great, creative thinking from Learn Devon and from Mary Pugsley from Hair@theAcademy, who put the project together. What a great vision she has to help others who are more needy. The course is delivered with one-to-one tutoring, and as the learners become more confident, they are encouraged to become more independent in their learning journey. The courage of the businesses that support the course needs to be recognised. They have allowed these people to enter into life and have changed their lives and their way of living and their own communities are all the better for it.
Melanie Onn (Great Grimsby) (Lab)
It is a pleasure to serve under your chairmanship, Mr Gray. I thank the hon. Member for Gravesham (Adam Holloway) for securing this very important debate. The turnout of colleagues goes some way to demonstrating how important this issue is to so many representatives throughout the country. I am only sorry that more colleagues have not had more time in which to share their views and discuss issues affecting their constituents.
Street homelessness is just one part of the ever increasing problem of homelessness, but it is one that shames the country, so we must welcome the Government strategies to tackle it. I am referring to piloting the Housing First schemes in mayoral areas and bringing in the Homelessness Reduction Act 2017. However, I must enter a small caveat. Housing First has worked incredibly well in Finland and areas of Canada, and St Mungo’s, which the hon. Gentleman has spoken to and worked with closely, has also been undertaking this work for quite some time outside the pilots, so we should take this opportunity to congratulate those organisations that have already been undertaking this good work for some time. I also need to raise my concerns about local authorities’ ability fully to implement the range of facilities in the Homelessness Reduction Act without the funding properly to support the requirements of that Act.
Afzal Khan (Manchester, Gorton) (Lab)
I, too, feel that those are exactly the problems, so does my hon. Friend agree that local authorities up and down the country face these difficulties? In my own city of Manchester in 2010, we had only seven people in this situation, but in 2017 the number was 94. Manchester City Council is giving £3 million to tackle homelessness, but it is also fighting the tide of crippling cuts to local authority budgets, an historical housing crisis and punitive welfare reform—
Melanie Onn
My hon. Friend the Member for Manchester, Gorton (Afzal Khan) is absolutely right, and I could not support him more. I congratulate Andy Burnham, Mayor of Greater Manchester, on the action that he has taken to ensure that homelessness is at the top of his agenda and to tackle this issue for his city, including by putting some of his own funds into the task group. The rise in homelessness in Manchester and other areas has not simply happened by chance; it is a result of Government choices.
Faisal Rashid
The figures show that almost 5,000 individuals are now sleeping rough on our streets. That is a 15% increase on 2017 and a 169% increase since 2010—a massive increase. Does my hon. Friend agree that we cannot help the homeless if we do not provide the homes that they require?
Melanie Onn
Absolutely, and I will come on to that issue shortly. This problem is not insurmountable. When Labour was in government, there was an unprecedented drop in homelessness, but since 2010 it has worsened by every measure. As the hon. Member for Bury South (Mr Lewis) made clear, the doubling of rough sleepers since 2010 is a problem of the Government’s own making. Home ownership is at a 30-year low. The average home costs eight times the average salary. Today in England there are 120,000 homeless children. The building of social rent homes has plummeted, with fewer than 1,000 last year—the lowest level on record.
The Minister, who has responsibility for homelessness, recently said that she did not know why homelessness had risen. I find it very hard to believe that anyone in this place cannot immediately see some of the main reasons for homelessness increasing. My hon. Friend the Member for York Central (Rachael Maskell) rightly recognised some of them: a lack of social and council homes; disproportionately high rental increases making homes unaffordable for those on lower incomes; reductions in council funding meaning less for drug and alcohol services; crippling welfare reforms that have cut too fast and too far for those who were genuinely just about managing; and difficulty in accessing mental health services as the thresholds for those services get ever higher.
I shall take the opportunity to highlight some of the innovative work that NAViGO mental health services is undertaking in my constituency. It has worked closely with the local housing association to purchase properties and then uses them as step-down accommodation to support the service users who come to it for help, to ensure that they have wraparound care. That is the principle of Housing First in action in measures being taken by innovative organisations around the country.
Mr Sweeney
My hon. Friend gives very good examples of people who are homeless being given assistance. I wonder whether she will share my dismay at a letter that I received from Eleanor Wilson, a medical student in Glasgow, last night. She said that she witnessed, in a branch of Starbucks in Glasgow, a homeless man who was just queuing for a cup of coffee being told to get out of the premises. That is one of a litany of issues with Starbucks in the city of Glasgow. Starbucks cannot pay its taxes—does not contribute to helping the public realm—and is also ostracising homeless people on our streets who need help. Does my hon. Friend agree that that is totally unacceptable for a corporate citizen of the UK?
Melanie Onn
Absolutely. I think that we all have a responsibility. The hon. Member for Gravesham talked about a society that is enabling homelessness, but I think that there is room for compassion when dealing with people who have myriad social, economic and personal issues driving them to be in this situation.
A sensible welfare state provides security to those in society who need it. That has been eroded over the last eight years, creating an underclass to the extent that the Bureau of Investigative Journalism has stepped into the Government’s shoes with its report published yesterday in the New Statesman and identified 78 homeless people who have died this winter. That is 78 human lives lost, 78 people without a place that they could call home, 78 lost people. Why do I call them “lost people”? Because the Government do not collect those figures centrally. Because in response to my written questions and those from colleagues about deaths associated with rough sleeping, the Minister has repeatedly brushed that question off. There was no acknowledgement that the central collection of data would prove to be of discernible use—that it would better inform the Government of the scale of the issue at hand and provide some evidence and a means by which Government initiatives could be measured.
The Minister’s Department seems similarly unaware of which local authorities have commissioned adult safeguarding reviews in the event of homelessness-related deaths in their area, so we cannot know which local authorities have good practices and which need improvement. Will she agree today to start collecting centrally data in relation to deaths from homelessness? For everyone’s information, at least 59 men and 16 women have died. Their ages ranged from 19 to 68, and 14 of those who died were under the age of 35.
I congratulate them on their assiduousness, but it should not take investigative journalists calling round councils, charities, coroners’ offices and police forces to establish a full picture of how many people are dying on the streets of our country. And it is not just those figures that matter. The Government should be doing better in collating general information about people who are rough sleeping, because the accuracy of those figures is wholly insufficient. In the official figures, the estimated figure for rough sleepers in my constituency sits at around 22, but the list that I get every single month from my local outreach services shows more than double that number.
Mr Ivan Lewis
My hon. Friend is making an excellent contribution to the debate. Does she agree that there is a case for reviewing the nonsensical, arbitrary headcount that takes place once a year, in November, and leads to completely misleading statistics? We actually need a personal profile of each individual so that we know what their needs are and how to address them. The headcount once a year is completely misleading and unhelpful.
Melanie Onn
The hon. Gentleman makes an incredibly valid point, and I hope that the Minister is listening. I see that the hon. Member for Gravesham, who initiated the debate, is nodding: he thinks that what has been referred to would be of great use.
It is shameful that in 2018 we have experienced such a rise in homelessness in all its guises, from families left in supposedly temporary accommodation for up to two years, to those without even a roof over their heads. There must be action. Now is not soon enough, let alone 2027, especially for those who have lost their lives without the security of their own home.
The Parliamentary Under-Secretary of State for Housing, Communities and Local Government (Mrs Heather Wheeler)
It is a pleasure to speak under your chairmanship, Mr Gray. I congratulate my hon. Friend the Member for Gravesham (Adam Holloway) on securing a debate on this extremely important issue. Tackling homelessness in all its forms is a priority not only me for me, but for this Government. I understand his interest in this subject. As he mentioned, he has seen what it is like to sleep rough.
I am also thankful for the other experiences and expertise shared here today, whether it comes from a constituency or wider perspective. I am grateful to hon. Members for their speeches and questions and will, I hope, answer them as I work through my speech.
It should never be the case that someone finds themselves without a roof over their head. That is why, as hon. Members will be aware, the Government have committed to halving rough sleeping by the end of this Parliament and to eliminating it altogether by 2027.
Mrs Wheeler
No, I will not. There is not enough time, because I have to give time to my hon. Friend the Member for Gravesham at the end.
I thank my hon. Friend the Member for Gravesham for his kind comments about the ambitions of this Government. Hon. Members will be aware that at the beginning of this month we implemented the most ambitious legislative reform in decades, the Homelessness Reduction Act, which transforms the culture of homelessness service delivery. For the first time, local authorities, public services and the third sector will work together to actively prevent homelessness for any people at risk, irrespective of whether they are a family or a single person, of what has put them at risk or of whether they have a local connection to the area. To deliver the new duties under the Act, we know how important it is to provide local authorities with the requisite support to build the homelessness workforce. To help this, we have funded the London Training Academy, which will provide current frontline staff and apprentices. I am exceptionally proud of the work that has gone into delivering these changes and the work the Department has done. As ever, I am grateful to my hon. Friend the Member for Harrow East (Bob Blackman) for all his endeavours in bringing this Act to pass.
On rough sleeping, hon. Members will be aware that we are publishing our strategy in July, setting out the measures that we will take in order to achieve our manifesto commitments. Overseeing the development and delivery of the strategy will be the ministerial taskforce, chaired by the First Secretary of State, my right hon. Friend the Member for Aylesbury (Mr Lidington), and comprises Ministers from key Departments with responsibilities in relation to homelessness and rough sleeping. It is supported by the rough sleeping advisory panel, which I chair, with Mayors Andy Burnham and Andy Street sitting on it. The panel brings together key figures from local government, central Government and homelessness charities. We have met three times so far. Sub-groups of the panel have also been established to look at a range of themes, such as prevention, intervention, recovery, data and long-term social change for the strategy. Good progress has been made on the development of the strategy and I look forward to sharing our plans with hon. Members this summer.
We are, however, determined to take action to tackle rough sleeping right now. I am sure hon. Members will have seen the recent announcement on what we have called the “rough sleeping initiative”, which lays the foundations for the strategy. The measures contained in the initiative are based on tried and tested measures, which have previously had significant and immediate impact on bringing down rough sleeping. The measures include setting up a rough sleeping team, made up of rough sleeping and homelessness experts, drawn from and funded by Government Departments and agencies, with specialist knowledge across a wide range of areas, including housing, mental health and addiction. There is a £30 million fund for 2018-19, with further funding agreed for 2019-20. This funding will be targeted at local authorities with high numbers of people sleeping rough. The rough sleeping team will work with local areas with higher pressure to support them and deliver bespoke local interventions to immediately reduce the number of people sleeping rough on the streets. A further £100,000 will be made available to support the frontline rough sleeping workers across the country, to ensure they have the right skills and knowledge to work with vulnerable rough sleepers.
In addition, the Department is working with the National Housing Federation to look at providing additional co-ordinated move-on accommodation for rough sleepers across the nation, to ensure that they can stand on their own two feet once they have received help. As well as the support provided by other Government Departments in developing the strategy, this new package of measures will be supported by a range of Departments across Whitehall. For example—this will answer many colleagues’ questions—the Department of Health and Social Care will make available experts in mental health and drug treatment services to help support the new outreach teams, including those in hostels, and the Ministry of Justice will focus on prison and probation work with local authorities and outreach teams, in particular to identify short sentence prisoners and offenders serving community sentences who are at risk of sleeping rough. These measures build on existing action we have already taken to tackle rough sleeping. For example, as announced in the 2017 Budget, we are piloting the Housing First approach to support some of the most entrenched rough sleepers in our society. I have personally seen the good that Housing First can do, especially for those struggling with addiction, as my hon. Friend the Member for Gravesham mentioned. I saw that when I visited the Housing First projects in Glasgow last month. The Government are keen to see the results of how it will work in England and robust evaluations will inform wider roll-out, which my hon. Friend the Member for Mansfield (Ben Bradley) asked about.
Charities and volunteers carry out vital work across the country. Their work is key to ensuring that rough sleepers get the help that they need and they help us in meeting our manifesto commitment, particularly charities such as St Mungo’s and Homeless Link.
I understand the point made by my hon. Friend the Member for Gravesham that people sleeping rough might be migrants. To be clear, we have always worked closely with councils and homelessness outreach services to ensure that the genuinely vulnerable receive the care they need. The Government also provide funding for local authorities for specific projects to tackle rough sleeping by non-UK nationals. This fund helps projects to secure regular employment and accommodation for non-UK nationals, or facilitate voluntary return to their country of origin.
The Government have allocated more than £1.2 billion to tackle homelessness and rough sleeping over the spending review period. This includes––this is by no means exhaustive––£617 million in flexible housing support grants, £316 million of local authority prevention funding and £100 million to deliver low-cost move-on accommodation places to enable people leaving hostels and refugees to make a sustainable recovery from the homelessness crisis. There is a further £215 million for a central Government programme, which funds a range of innovative projects across the country and a £20 million fund for schemes that will enable better access in the private rented sector for those who are, or are at risk of, becoming homeless, which the hon. Member for York Central (Rachael Maskell) asked about.
Mr Ivan Lewis
I thank the Minister for her contribution to the debate. I ask her to look at a report published today by the organisation Justlife, which shows that there are ten times more people in temporary accommodation than Government figures suggest and that there is a direct correlation between unsupported temporary accommodation, welfare reform and rough sleeping. These people are living in appalling conditions in bed-and-breakfast hotels and guest houses. Will she study that report and will she be prepared to visit one or two of the Justlife projects in Greater Manchester with me, to see for herself the realities on the frontline?
Mrs Wheeler
I heard about that report yesterday. It is devastating to see the quality of the property that certain people are being asked to stay in. That is not acceptable in this country. I had a meeting arranged in Manchester. Unfortunately, it was cancelled by the people in Manchester, but I am sure there will be another time when I will come up.
In conclusion, I thank all hon. Members for their contributions to this important debate, which has been truly worthwhile. I reiterate that this Government are truly committed to achieving our manifesto targets and we will have further updates in the near future on what we will do to ensure that we meet them. Rough sleeping and homelessness is a scourge on our society. We will do everything in our power to sort it out.
Adam Holloway
I thank the Minister and the shadow Minister for their speeches, and the hon. Member for Stroud (Dr Drew) for his excellent intervention. It was fascinating to hear about the grandmother of the hon. Member for Bury South (Mr Lewis). Thank God we have moved on some way from that. I would love to hear more about Stan at some point.
We need to think about the realities of homelessness and see it for what it is, rather than how we would like to characterise it. Homelessness is of course a problem, but it is only a symptom. We will get nowhere if we do not get to the underlying problems these people face. As we have seen from this debate, if we cannot discuss this honestly, without the degree of ignorance and prejudice that we saw from a couple of hon. Members, we will get nowhere. We have to treat homeless people as individuals. We have to segment people to some extent, so that we do not mask the problems of the people at the very bottom of our society, who—at the moment and for generations—we have not managed to reach.
Question put and agreed to.
Resolved,
That this House has considered street homelessness.
Independent Financial Advisers: Regulation
(6 years, 2 months ago)
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Kevin Hollinrake (Thirsk and Malton) (Con)
I beg to move,
That this House has considered regulation of independent financial advisers.
It is a pleasure to serve under your chairmanship, Mr Gray. I put on record my role as co-chair of the all-party parliamentary group on fair business banking and finance, which is primarily concerned with the business banking scandals that have devastated many viable businesses and ruined the lives of many business people and their families. The debate does not directly relate to those issues, but does have connections with the regulator, the Financial Conduct Authority, and its willingness and ability to hold those it regulates to account.
Whether as a consequence of malpractice, incompetence or deception, there will always be situations where innocent investors lose money through the failings of financial advisers. I will refer to the cases of two constituents. For the purposes of confidentiality, one would prefer to be known simply as Helen, and the other is Andy Mohun-Smith. The only connection between them is that they used the same financial adviser, Scott Robinson, who owned and operated a company called TBO Investments until 2016. He also owns a company called Mount Sterling Wealth.
Those cases and the supposed regulation of Mr Scott Robinson are truly astounding because nine years after an initial complaint was made to the FCA, seven years after the financial ombudsman ruled that he had provided unsuitable advice and ordered him to pay compensation, six years after an expert witness concluded that the investments advised by Mr Scott Robinson that were made on behalf of Andy Mohun-Smith were completely unsuitable, four years after it was established that he was providing advice without the required professional indemnity insurance, four years after Mr Mohun-Smith was awarded damages of £2.2 million, three years after Companies House issued a compulsory strike off order to TBO Investments, as it had failed to submit accounts since 2012, 18 months after Mr Scott Robinson put TBO Investments into liquidation and phoenixed those clients into his other company, Mount Sterling Wealth, and 12 months after I first asked the FCO to address those cases, the regulator continues to designate Mr Scott Robinson as an approved person and to authorise his company to provide regulated advice. Most incredibly, it does so principally on the basis that to do otherwise may deprive an individual of their livelihood.
I am sure that my constituents are two of many people who have suffered significant financial loss and distress at the hands of Mr Scott Robinson and his companies. Mr Scott Robinson is a clever salesman with a long and extremely chequered history of providing investment advice. According to the research of my constituent Helen, he has to our knowledge set up five limited companies. Three of them have been dissolved. One, TBO Investments, has been put into voluntary liquidation. Three have had striking-off proceedings taken against them. I would be happy to hear from other investors who have had similar experiences. I urge them to come forward and to make complaints directly to the FCA.
My constituents’ connections to Mr Scott Robinson began in May 2007, when Mr Mohun-Smith started to invest in supposedly safe, regulated investments with him. Over the next four years, he invested more than £2 million with the firm. By the end of 2012, he realised that the investment advice he was being given was deficient, defective and deceitful, so he took legal advice.
In January 2013, Mr Scott Robinson’s insurance brokers informed him that his professional indemnity insurance did not cover the investments he was making, but he did not reveal that to Mr Mohun-Smith until June 2014. In March 2013, Mr Mohun-Smith issued a legal claim against TBO Investments and Mr Scott Robinson. In June 2014, when the trial took place, the judge struck out the defence, because Mr Scott Robinson did not appear at the trial, and awarded damages of £2.21 million.
A court of appeal effectively decided that Mr Scott Robinson could have a rehearing, but before that could take place, in August 2016, he placed TBO Investments into voluntary liquidation. That thwarted any opportunity for my constituents to take legal action to cover their losses, and left his own lawyers out of pocket. He then transferred all his clients to his other company, Mount Sterling Wealth, which he still trades in, for a sum of £28,613, despite the fact that the company’s directors earn six-figure sums from their provision of investment advice to those clients.
I understand that the insolvency practitioner for TBO Investments is taking legal action against Mr Scott Robinson to return moneys to the firm, on the basis that he breached insolvency rules by way of those asset transfers. For Helen, the financial services compensation scheme may help, as her losses are below the £50,000 threshold. For Mr Mohun-Smith, that is of little help or consequence.
To this day, Mount Sterling Wealth continues to operate. Its website features Scott Robinson, and it states above his photograph:
“We will help you to create, build, and protect your wealth, and tax efficiently pass it through the generations.”
According to Companies House’s records, however, Mr Scott Robinson’s directorship was terminated by his resignation from that company four days ago, after nine years of directorships. Perhaps that is coincidental, perhaps not.
Crucially, what is the FCA’s role in all this? On the question of TBO Investment’s lack of professional indemnity insurance, it simply states that
“it remains the responsibility of the firm”.
That is despite going on to say that it requires firms to report on that every six months and despite the fact that the FCA eventually cancelled TBO Investment’s permission to undertake regulated activity due to non-compliance. Despite all that, Mount Sterling Wealth continues to be authorised and regulated by the FCA. It says it will consider outstanding complaints when future applications for authorisations of individuals are made, but it continues to designate Mr Scott Robinson as an approved person.
According to the FCA, an approved person needs to be able to demonstrate that they are a fit and proper person for the purposes of providing advice. Shockingly, once they are approved, there is no ongoing re-approval process or requirement. The FCA has the power to levy fines and to impose banning orders on individuals, but it has thus far decided not to.
I have met Mr Andrew Bailey, the chief executive of the FCA, and I have spoken to other senior executives there. Incredibly, the only justification I can get for Mr Scott Robinson’s continuing designation as an approved person is that they are concerned that they may be
“depriving an individual of their livelihood”,
That is this individual, with their chequered record. What about the deprivation of my constituents’ livelihoods? What about their income, their investment and their hard-earned money? Is that not what the FCA should be principally concerned about?
I turn to the solutions. The FCA must take action. It must take a more proactive oversight role of the financial advisers that it regulates; it must surely instigate a re-approval process for financial advisers; it must be willing to hold financial advisers to account where there is clear wrongdoing, and impose fines and banning orders; and it should work with the Financial Services Compensation Scheme, and with Ministers if required, to revise and raise the level of the compensation scheme from the current level of £50,000, which is totally inappropriate.
For my constituents, Andy and Helen, this has been a most traumatic experience. In Andy’s words:
“This has had a devastating effect on my life...the damage to my health has been considerable. The enormous stress my wife and I were subjected to as a result of Mr Robinson’s disastrous investment decisions was undoubtedly a major factor in the breakup of our marriage.”
Those words say more than I ever could.
The FCA, the regulator that we entrust to make sure that our consumers, investors and businesses are fairly treated, has many questions to answer. It needs to take a long hard look at itself, and it must prove to those it is accountable to—the Treasury and Parliament—that it is able to carry out the role that it is required to perform. I, for one, am very sceptical that it is capable of doing so.
The Exchequer Secretary to the Treasury (Robert Jenrick)
I begin by thanking my hon. Friend the Member for Thirsk and Malton (Kevin Hollinrake) for securing this important debate. I also thank you, Mr Gray, for chairing it.
I am aware that this debate has been prompted by the constituency cases that my hon. Friend has highlighted today—those of Helen and Mr Mohun-Smith. As my hon. Friend will no doubt appreciate, I cannot comment on the specifics of the cases, although it has been extremely useful to listen to and learn from them. I was very concerned to hear the evidence he brought before us today and laid out so clearly and painfully.
Successive Governments have sought to put in place a policy framework for the regulation of the financial advice market, and they have provided the independent Financial Conduct Authority with the powers that it needs to set out the rules for this market and to enforce them to ensure that consumers are treated fairly. It is troubling to hear the issues that my hon. Friend’s constituents have experienced, which suggest either that the framework itself has not been able to give them the protection they deserve or that the FCA has not acted to enforce the rules in the way we would have hoped it would.
Consumers depend on good advice from honest and reliable individuals to manage their life savings properly, to help them make life-changing decisions and to ensure their security in retirement, especially following the implementation of pension freedoms. We want people to access help to make those important decisions, from simple guidance and information to regulated financial advice.
To ensure that the market for financial advice functions effectively, we have to protect people from unscrupulous advisers, and we also have to protect the majority of reputable advisers from those who would do down their industry and their jobs. The independent FCA has set out the rules for the market, and it has been tasked by us to enforce those rules robustly to ensure that consumers are always treated fairly.
Firms and advisers have to be authorised by the FCA, they have to be qualified to provide advice and they have to ensure that such advice is suitable for an individual’s personal circumstances. As in any walk of life, there will always be individuals and firms out there who try to bend the rules or even to commit fraud and other forms of criminal activity. The FCA has the ability to take swift enforcement action to ban individuals firms from providing financial advice, although that does not appear to have happened in the cases that my hon. Friend has mentioned, and I will give thought to the point he made about ongoing re-approval. More action may be required in that regard.
In other cases, advisers might not provide suitable advice, leading to financial loss for consumers. In those cases, consumers can refer to the Financial Ombudsman Service for compensation, which is usually up to a maximum of £150,000 per individual. The advisory firm is then legally required to provide that compensation. Sadly, it is often the case that firms go into liquidation and cannot provide the compensation that individuals deserve. There is then a second tier of protection through the Financial Services Compensation Scheme, which is mainly funded by an annual levy on the financial services industry. Since it was founded, the FSCS has helped millions of people and paid billions of pounds in compensation.
As my hon. Friend mentioned, the current limit for compensation from the FSCS for people who have received bad advice is £50,000 per person. Hon. Members will be pleased to know that the FCA has recently consulted on raising that compensation limit to £85,000, with an intention to introduce the new limit from 1 April 2019. We would strongly support such an increase. A limit of £85,000 would mean that—based on historical data, at least—only 2.5% of claims relating to investments and only 3.8% of claims relating to pensions advice would not have been fully compensated. Clearly, there will be individuals who have invested and lost far greater sums, perhaps including my hon. Friend’s constituents, but the vast majority of consumers would be protected.
Of course, when setting a compensation limit for the FSCS, the FCA has to strike a balance, providing an appropriate level of compensation to enough claimants, without placing an undue burden on the reputable financial advisers and firms that pay the levies—of course, those costs would be passed on in the end to consumers.
That is why it is mandatory for firms to be covered by professional indemnity insurance, which brings us on to another point raised by my hon. Friend. Such insurance should cover many claims, reducing pressure on the FSCS. The FCA published its consultation paper on the FSCS in October 2017, and it is considering whether to go further, to prevent firms from buying professional indemnity insurance that does not allow claims when the policyholder or a related party is insolvent. The FCA will issue a paper on this matter shortly, and we will welcome the decision that it makes.
The FCA has to remain vigilant in cases where firms go into liquidation to avoid paying compensation to consumers before re-forming as “new” firms. Andrew Bailey, the chief executive of the FCA, whom my hon. Friend referred to, has recently said that this practice, which is often called phoenixing, is actively being examined by the FCA and that the FCA is also considering whether the existing rules are sufficient or the creation of new rules is required.
For example, the FCA placed asset sale restrictions on eight advice firms last year in an effort to clamp down on phoenixing. That was done to prevent the common practice of transferring assets that belong to the collapsed firm, including from the client bank, to its former directors, who of course go on to set up a new firm.
Kevin Hollinrake
I am grateful to my hon. Friend for addressing so accurately and so well the points that I made. Is he surprised, as I am, that what he referred to as professional indemnity insurance beyond an insolvency, which is commonly known as run-off cover, is required in many other sectors but not currently in this sector? Is he also surprised that the FCA countenances a situation whereby an adviser it licences as an approved person is able to carry on activities with professional indemnity insurance even though that insurance does not cover the activities they are advising people about?
Robert Jenrick
I am surprised by both the points that my hon. Friend has just raised. He and I both worked in professions before coming to this House—I worked as a lawyer, and he worked as an estate agent—and it is surprising that, in the profession of financial adviser, those practices are permitted. I hope that answering such questions will be part of the scope of the FCA’s inquiry and the work that it will subsequently do.
To return to phoenixing, we will work with the FCA to ensure that appropriate rules are in place. I intend to ensure that action is taken in this area. Phoenixing in these circumstances is wrong. It leaves consumers and taxpayers out of pocket and tarnishes the reputation of the industry. Just as with phoenixing in other businesses, these practices can be deeply corrosive to public confidence and to trust in the system, and the effects are, in time, passed on to the whole economy. We want an economy and a society that understand that entrepreneurs and businesspeople can fail—and often do so on the road to later success, wealth, job creation and flourishing new businesses—but those who fail deliberately or recklessly damage our economy and public faith in capitalism, and they must be stopped.
I would like to use this opportunity to raise some additional critical points. The Government have been implementing other policy areas to ensure that we have a better-functioning market for financial advice that benefits consumers. The first of these is the retail distribution review launched in 2006, which drastically altered the current charging market for independent financial advisers, encouraging them to charge set fees and prohibiting them from receiving commission from product providers. That was an important step forward, reducing incentives for advisers to recommend investments in which they had a financial interest, and improving the overall quality of financial advice. It has been welcomed by the sector and those who rely on it.
More recently, under this Government, the Treasury and the FCA launched the financial advice market review in 2015, with the goal of improving the accessibility and affordability of financial advice. Research we have done shows that those with high incomes generally—although not always—have access to quality advice, but those with moderate or low incomes, who arguably have the greatest need, have found decent advice far less accessible. The final report, which we published in March 2016, set out a package of 28 recommendations, which the Government and the FCA have now implemented. Although the recommendations of that review will take time to take effect, we have had encouraging feedback from market participants that the work we have done, which the FCA must now take forward, will make a real difference to consumers, and we are already seeing some tangible results in that respect.
I thank my hon. Friend for bringing this discussion on a very important topic here today. I will raise the points he made with Andrew Bailey at the Financial Conduct Authority again—I appreciate that my hon. Friend has already been to see him. I will highlight the cases he has brought to my attention and will ask for further explanations. He does not bring cases to this place lightly. He has a great deal of experience in business. He and the constituents he has talked about deserve answers and actions, and others in his constituency and across the country deserve to be protected.
The issue is not static; the Government and the FCA are committed to ensuring that it remains under constant review. I will urge the FCA to step up its efforts, particularly in respect of phoenixing, which is a wider problem and a challenge for all of us who believe in a free economy and who want to see its reputation protected. Like all Members of this House, I want to see consumers and members of the public protected, and the reputations of those who choose to pursue careers as financial advisers protected, not tarnished by the actions of the few.
Question put and agreed to.
Dieter Helm Energy Review
(6 years, 2 months ago)
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Graham Stringer (Blackley and Broughton) (Lab)
I beg to move,
That this House has considered the cost of the energy review by Dieter Helm.
It is a pleasure to serve under your chairmanship, Mr McCabe. The motion has a slight ambiguity as to whether we are considering the cost of producing the report or the contents of the report itself, and I want to make it clear that we are considering the report itself, and not the £500 a day paid to Professor Helm for producing it.
The report is a devastating critique of Government policy over the past 10 years or so. That is not just this Government, but the coalition Government and the previous Government. The report’s extraordinary headline is that we will have paid £100 billion—that is one hundred thousand million pounds—more than necessary by 2030 for current energy policies. Consumers are paying 20% more for energy than would otherwise have been necessary. Thinking about the debates, rows and discussions we have about major infrastructure in this place, High Speed 2 will cost £40 billion or £50 billion, which is half as much. Some of my hon. Friends are against that highly controversial project, and many Government Members are in favour of it. Cost is a crucial issue, but it looks as though, for no real infrastructure benefit whatever, by 2030 we will be paying twice as much—£50 billion more—for an energy system that is, in the words of Professor Helm, “not fit for purpose”. One could also argue about the marginal differences in cost that people see for remaining in or leaving the EU. The sheer size of this £100 billion figure leaves many such arguments in the shade.
Professor Helm’s report is long—240 pages long—but if people want a simple version of his views, I recommend reading the transcript from when he was before the Business, Energy and Industrial Strategy Committee on 16 January. He knocked down some of the criticisms of the report when he was quizzed by Members. The transcript is much easier to digest and more to the point than the 240 pages of dense, well-argued points.
One can agree or disagree with the report, but it is logically coherent. One surprise is that, given the sheer magnitude of the figures involved, the Government have not responded in detail to it. I am sure there are responses that could be made. There could be disagreements on much of the detail in it, but it is a real failure that the Government have not responded to such an important report, which they of course asked for.
One thing that the report emphasises is how the energy market is working and has been set up. The Government have tried to pick winners, but as often happens, they have not. We would all like to pick winners; we would all like to win on the Derby or the Grand National, but most of us are not very good at it, and Governments by and large are not much better at picking winners in industry and energy. The people who are good are inefficient businesses—losers, rather than winners, if you prefer, Mr McCabe. They are good at picking weak Governments and lobbying and arguing for subsidy for less-than-competitive industries. The report says that they have done that, and it is devastating in its analysis.
Not only have the Government—as I said, I am not making a particular charge against this Government; this charge is levelled at the last three Governments—been subject to lobbying and wasted money, but in the background of the process are many lobbyists and green groups whose acquaintance with the truth sometimes leaves a lot to be desired. We not only have industry with vested interests, but groups such as Greenpeace lobbying in the background, many times dishonestly, to support policies that fit their ideological preference.
Mr McCabe, you may remember walking into the House of Commons before Christmas and seeing big signs outside sponsored by Greenpeace that said the cost of wind had been cut by 50%. That was an outright lie. It was challenged at the Advertising Standards Authority, and Greenpeace was made to take those adverts down. When Greenpeace and others were asked to justify their position, they said that they were using projected costs for wind farms in the North sea that had not yet been commissioned, let alone built. That is the background to a controversial policy area that the Government should by now have responded to.
I said that Professor Helm was coherent, which he is, but—this will come as no surprise to the shadow Minister, my hon. Friend the Member for Southampton, Test (Dr Whitehead)—I do not agree with the objectives that Professor Helm has always agreed with. They are the Government’s objectives, too, and I will explain why I do not agree. He starts the energy review by talking about the Government’s target in the Climate Change Act 2008 to reduce carbon emissions in this country by 80% from 1990 levels by 2050. I do not agree with that, and I will explain why. However, it is the Government’s policy and the law, and that is the basis of the review. His second objective, which he took as concrete, was the security of energy supply. Along with those two objectives, he wanted to see whether costs could come down.
My disagreement is that I have always thought that there should be a hierarchy of targets in energy policy. Security of energy supply should always be the top target, because if the lights go out, not only would we be in trouble as Members of Parliament for creating a system that does not keep the lights on, but the country would be in trouble. I have always thought that security of energy supply, rather than arbitrary carbon targets, should be the top priority.
Secondly, I would find it difficult to explain to my constituents and industry in my constituency if price was not one of the top priorities. For it to be tertiary is a mistake. Lower prices should be a priority, but a consequence of the policy is that they have been neglected, and they have gone up by more than they would have otherwise. That is where I disagree.
Dr Dan Poulter (Central Suffolk and North Ipswich) (Con)
I congratulate the hon. Gentleman on securing the debate; he makes some good points. I agree entirely with what he has just said about price, and with what the report seems to indicate. There has been a complete failure of competition in the domestic energy market; Governments always talk about it, but they have failed to deliver. There is still a predominance of the big six energy companies, effectively rigging prices. Does the hon. Gentleman agree that that needs to be fundamentally addressed if we are to have a proper energy market that benefits customers?
Graham Stringer
That is my reading of the report. I think Professor Helm goes slightly further than that—beyond the big six energy companies—and talks about the problems that have been caused by investing in costly new technologies that might have been cheaper to purchase later, but I essentially agree with the hon. Gentleman.
The price of energy is important not just in the way that I have described; it is also probably the most important industrial policy that this country can have. Matt Ridley pointed out in The Times some 12 months ago that at the start of the industrial revolution—this is from memory, so I might have the numbers slightly wrong, but they will not be far out—the cost of energy in Newcastle was about one 20th or one 25th of the cost of energy in China. We know what happened: this country, Europe and the United States boomed ahead because what previously required 20 horses could now be done with a few lumps of coal.
Recklessly putting up the price of energy has been a huge mistake for the country. When I say that, I do not want anyone to think that I am somehow in the category of anti-science. My background is that of a scientist, and I understand the opacity or otherwise of carbon dioxide to different wavelengths of electromagnetic energy. I understand the greenhouse effect in some detail, and I do not deny its existence—I think that what its impact will be is sometimes exaggerated, but that is a debate for another day.
We have been putting the price of energy up and closing coal stations—probably the coal stations should have been closed earlier, as Professor Helm says. As an intermediate pathway to the Government’s goals, it might have been sensible to use gas-fired power stations, which have half the carbon emissions of coal-fired power stations. If we look at the whole-world picture, we see what little impact we have—I think we produce about 2% of the carbon dioxide in the world. Over the next 10 years or so, 1,600 coal plants are planned in 62 countries around the world. China will make 700 of them. Approximately 65% to 70% of India’s energy production is from coal, but last Monday India cancelled the vast majority of its planned nuclear power plants.
Whatever impact we have will be minimal to negligible, yet we are putting the price of energy up for some of the poorest people in the country, including my constituents. We are also undoubtedly damaging industry, because due to the high price of energy we are, in effect, exporting many jobs to countries such as China, India and Malaysia, where they are often less efficient, and there is the carbon cost of the transport by ship or plane when we buy their goods.
Professor Helm, taking the Government’s policies as firm, has a number of suggestions. First, he believes that there should be one uniform carbon price. He points out, in a chart towards the end of the report, that we have many carbon prices at present, where we add to the cost of fossil fuels through many of the interventions to VAT. He believes that they should be unified, which would make things transparent. He also believes that there should be auctions for energy suppliers. Devastatingly, he says in the report that he is surprised, and I think it was a surprise to everybody else, that when things were put out to auction, rather than using interventionist prices, the prices dropped dramatically.
Professor Helm gives us his reasons on the interventions. I do not want to read too much of the report directly, but he says that the different interventions have made the market extremely complicated and expensive. He points out:
“The legacy costs from the Renewables Obligation Certificates (ROCs), the feed-in tariffs (FiTs) and lowcarbon contracts for difference (CfDs) are a major contributor to rising final prices, and should be separated out, ring-fenced, and placed in a ‘legacy bank’. They should be charged separately”.
On the complexity, Professor Helm’s answer to the Business, Energy and Industrial Strategy Committee was devastating, because some of the vested interests had been into the Committee previously and had lobbied. Some of the renewable energy people and some of the people from the Committee on Climate Change—all of them professors, you understand, Mr McCabe—had said, “There’s no problem with complexity whatever.” I think there is a problem, and anybody who has been in the real world for very long knows that there is a problem. Professor Helm’s key finding and recommendation on that was:
“The scale of the multiple interventions in the electricity market is now so great that few if any could even list them all, and their interactions are poorly understood. Complexity is itself a major cause of rising costs, and tinkering with policies and regulations is unlikely to reduce costs. Indeed, each successive intervention layers on new costs and unintended consequences. It should be a central aim of government to radically simplify the interventions, and to get government back out of many of its current detailed roles. This review explains how to do this.”
In taking on the professors who think that complexity is not a problem, Professor Helm said:
“It is empirically impossible to work out the costs of current policy, because each policy intervention interacts with every other policy intervention. Any cost-benefit analysis of a particular intervention has to do the plethora of interactions with all the other bits as well. If you want an empirical piece of proof, you need to have all that analysis done and then analyse the empirics of the counterfactual, of what would have happened if you did not have all that complexity.”
I agree with him: it is impossible.
The report also says that, having created that complexity:
“As a consequence of Electricity Market Reform (EMR), the government now determines the level and mix of generation to a degree not witnessed since these were determined by the nationalised industries”.
I suspect that if I had been a Member of this House when Lord Lawson, as Energy Secretary, proposed privatising the energy industries, I would have voted against. Nationalised industries at least have a direct line of responsibility between the taxpayer, who may benefit from them and subsidise them, and the controlled industry. What we have here is a complete mess: Government intervention, interfered with by lobbyists and vested interests with no accountability, which ends up with the poor consumer paying more than they need to.
Professor Helm criticises the Government for focusing too much on electricity and not enough on agriculture, which is a tiny part of the economy and creates about 10% of carbon dioxide emissions. He strongly believes—this should please the Government—in a free market solution. He believes that the auctions will not pick winners, but that the winners will pick themselves by being efficient in the auction process.
I want to deal with one of the main questions put forward by my hon. Friends who represent constituencies where Vesta, for instance, produces wind turbines. That question is whether the alternative, renewable energy business would have got going without intervention. Nobody can really answer that. When all that extra cash has been put into the energy market, there are bound to be spin-off benefits, but it cannot be known at any time, unless the market is tested, whether someone could have got more bangs for their buck for investing differently.
One area where I completely agree with Professor Helm is that we need research—not just the research carried out by vested interests who want to produce energy, but pure research. There is a long way to go in battery technology, which may be part of the solution. Unless something has happened since I left the Energy and Climate Change Committee, we do not even have a proper pilot scheme for carbon capture devices. All those things could be explored in a pure way and then, in the way that often happens after pure research, industry could look at what could be used and the way we are investing at the moment.
The final point made by Professor Helm is that tens of billions have been invested in subsidising wind farms in the north sea. On what basis can we say that was the right decision, rather than putting the money into carbon capture and storage? I do not have the answer to that, and I know the Government do not have the answer. They have opened their arms to vested interests and have ended up with a system that disadvantages our constituents and is essentially not fit for purpose. The Government need to respond thoroughly and properly to this important report. It is possible to disagree with it or to agree with parts of it, but it certainly needs a response.
Bill Grant (Ayr, Carrick and Cumnock) (Con)
It is a pleasure to serve under your chairmanship, Mr McCabe, and I thank the hon. Member for Blackley and Broughton (Graham Stringer) for securing this important debate.
I thank Professor Helm and the advisory board for their work on the independent review. It has certainly contributed to the wider debate on how we should approach energy policy in a way that balances the challenges of climate change, energy security and justice for customers. The true cost, or benefit, of the review will be determined by what the Government do with the findings. I am confident that the review, or at least the debate it has provoked, will lead to positive and successful steps to reduce the price of energy in this country for both domestic and business users.
The concept of starting an important debate about the future of energy markets, with the aim of bringing down the cost of energy for customers, must surely be the right thing to do. The UK Government have already shown that they are serious about making energy prices more affordable for consumers. In July 2017, the UK Government and Ofgem set out a plan to create a smarter energy system. We are seeing some progress, although perhaps not as much as many would like, on smart meters. It is a big hill to climb and I only hope it will continue to accelerate in the next couple of years. I am looking forward to the return of the Domestic Gas and Electricity (Tariff Cap) Bill to the House for its remaining stages, which I believe will be next week. It is entirely reasonable that the UK Government have sought to build on those actions with a review of what else can be done to bring energy prices down and provide energy security in a low-carbon economy. All the elements of energy production and the low carbon aspect make this quite a difficult Rubik’s cube to square off.
Professor Helm has frequently raised concerns about the price of renewable energy as produced by current technology and has called for Governments to take a more balanced approach to sourcing and securing energy. In his review, he put forward many interesting proposals for the future of UK energy policy, from a carbon price to the replacement of overpriced standard variable tariffs with a new default tariff, to a wider simplification of the whole raft and range of state interventions, which are cumbersome and only understood by a few people, if by anybody.
We do not necessarily have to subscribe to the findings of the review in full to acknowledge that many of its proposals are interesting contributions to the debate and at least merit further examination. That is why it is right that the UK Government have responded to the review by taking evidence from a range of interested parties, including consumer groups, and are now analysing that evidence. The review has been worthwhile and I am confident that it will prove to have been a valuable contribution to the UK Government’s efforts to reduce the cost of energy and to reduce fuel poverty—an important aspect for many—and to assist industry to become far more competitive as we go forward.
Patricia Gibson (North Ayrshire and Arran) (SNP)
I express my thanks to the hon. Member for Blackley and Broughton (Graham Stringer) for securing this debate. I am pleased we are having this debate on the cost of the Dieter Helm independent review, launched by the Department for Business, Energy and Industrial Strategy and led, of course, by Professor Helm, an economist specialising in energy. Such a review is a rather important matter. Therefore, it was extremely disappointing that it was announced by BEIS on a Sunday in the peak of the August holiday season last year and was scheduled to last a mere 30 days.
The review was set in the context of rising customer concern about power prices, which were set to increase by 15%, following the decision by British Gas to increase electricity prices by 12.5% on average, despite falling wholesale prices. Although UK domestic power tariffs remain low relative to other countries in the EU, they are rising, and for industrial users, they are the third highest of 15 European countries, according to the UK Government’s figures. One reason is increases in climate-related policy costs, which make up a growing proportion of the average energy bill.
The review’s terms of reference are about ensuring energy is affordable for households and businesses. It sets out 11 short bullet points and reiterates the laudable ambition to have the lowest energy costs in Europe for homes and businesses. However, the expert panel of five working alongside Professor Helm lacked a consumer voice, although manufacturing was represented. I do not understand why that was the case, but perhaps the Minister can shed some light on it.
Although the review was independent, with the purpose of reviewing the cost of energy, it focused on electricity. The Government said:
“The specific aim of this review is to report and make recommendations on how”
carbon and energy security aims
“can be met in the power sector at minimum cost and without imposing further costs on the exchequer.”
Indeed, the Government recognised that, although the UK has some of the lowest gas prices in Europe, our electricity prices are less competitive, compared with those for households in Europe, and are among the most expensive for the industry. Bills are about volume, not just price. For example, average domestic electricity prices in the US are half those of the UK, but bills are higher because the more energy-efficient UK homes have less waste. The same can be said of gas.
As well as the fact that the review was restricted to electricity, utility firms’ pricing and profits were not included, which some might argue was a missed opportunity. The Government have rejected the idea that the review was too narrowly based on Professor Helm’s opinions and too brief to unearth any valuable new evidence. Does that remain their view? How on earth can anyone seriously consider the cost issues facing UK energy without looking at the £20 billion Hinkley Point reactor project? I know that many in the energy industry agree with that.
There has been much debate about various aspects of this report, and that is as it should be. The report’s two main findings are that the cost of energy is significantly higher than it needs to be, and that energy policy, regulation and market design are not fit for the purposes of the emerging low-carbon energy market, but I believe we have to focus on the cost of energy to the consumer. The report makes it clear that, since late 2014, the price of oil, gas and coal has fallen significantly, the price of renewables has fallen, and there is downward pressure on the cost of transmission, distribution and supply. New technologies should mean lower, not higher, costs, and much greater scope for energy efficiency. Margins should fall as competition increases, yet Professor Helm points out—if we accept this—that households have seen few benefits from the cost reductions. Prices have gone up, not down, for too many consumers.
I am sure I do not need to tell the Minister about the strain that the unnecessarily high costs for households put on household budgets across the UK. Indeed, Professor Helm warns that such costs risk undermining the broader democratic support for decarbonisation. The Climate Change Act 2008 estimates that the cost of decarbonising electricity is about 20% of typical electricity bills, and it is thought that such legacy costs will amount to well over £100 billion by 2030. Professor Helm concludes that much more decarbonisation could have been achieved for less, and that costs should be lower and falling further. I am interested to hear the Minister’s reflections on that.
As Professor Helm identifies, the problem is that those higher than necessary costs are locked in for at least a decade, despite the Government’s welcome temporary price cap, due to contracts that the Government entered into. We need a way to reduce the burden imposed on consumers and businesses and ensure that decarbonisation costs are more transparent, at the very least.
There is no doubt a difficult balance to strike between costs and the challenges that the electricity and energy system will face in the next decade and beyond. Carbon budgets need to be met as we invest in new technologies that come on stream. We are living through a technological transformation, and electricity is increasingly the dominant energy form.
Professor Helm is clear that the 2050 carbon target could be met at a lower cost. It could perhaps even be met early, which would be of real benefit to households and the entire industry. Does the Minister have any thoughts about that? It is important that we consider Professor Helm’s work more carefully than is possible in a 90-minute debate, because our wider economic needs, and our ability to meet our energy demands and deliver our carbon budgets may, as Professor Helm points out, depend on it. We must also be extremely mindful when we attempt to break out of the high costs of our energy system, which locks too many households into fuel poverty. There are opportunities in the energy market, and I am extremely interested to hear how the Minister intends to capitalise on them for the sake of consumers, businesses and the delivery of our carbon budgets.
We cannot take Professor Helm’s conclusions as gospel, and nor should we. Indeed, in the past his work has not been short of critics, but it always provokes debate. It seems that Governments have pretty much ignored much of what he has said in the past. I am interested to hear about how his work will inform the Government’s approach as we face the future in this field, and about how consumers can remain at the heart of this process.
James Heappey (Wells) (Con)
It is a pleasure to serve under your chairmanship, Mr McCabe. I congratulate the hon. Member for Blackley and Broughton (Graham Stringer) on securing the debate.
I agree with much of what has been said. The Helm report is imperfect, although my copy is greatly improved by the artwork on the back of it contributed by my children. Such a report was always going to be imperfect. For the past 18 months, since the report was first discussed and commissioned, the whole industry and the Government have been holding their breath in anticipation of the response. It was always unlikely that the clouds would part and Professor Helm—as brilliant as he is—would provide the absolute solution for all future energy policy.
Professor Helm is right that the auction system we have been operating over the past decade or so is imperfect. It is complicated, and parts of it have given us the wrong result. Until recently, in the grid services markets, in particular, we ended up with lots of diesel coming through to meet that need. Clearly, that is not what the Government or anybody in the lobby in favour of decarbonisation hoped for. Clearly, it was not perfect. I accept Professor Helm’s criticism of the Government’s picking winners. More accurately, losers are very good at picking Governments. There is no doubt that some things we committed to in the past would not bear scrutiny today.
I do not accept that it is all doom and gloom. I accept the criticism from the hon. Member for Blackley and Broughton of the advertising that suggested that the cost of offshore wind had come down by 50%, but let that not hide the fact that the speed at which the cost of offshore wind has come down is a stunning success. Whatever the reduction is—we can debate that—there is no doubt that, only a few years ago, it was well over £100 per megawatt-hour, and it is now well below that. That is a consequence of the Government seeing the opportunity both from an energy perspective and for industrial strategy in the north-east of England. I think that is a good thing.
Graham Stringer
I appreciate the hon. Gentleman’s point, but does he agree that there has not been a huge technological advance in windmill technology over the past few years? The drop in costs probably represents how inefficient the energy market was previously, rather than an increase in wind turbines’ efficiency.
James Heappey
I do not have the evidence at hand to disagree with the hon. Gentleman absolutely, but my understanding from the industry—I accept that he is sceptical about the industry’s lobbying prowess—is that there have been some fairly significant improvements in the cost of manufacture and in the scale of the wind turbines that can be deployed. It may be that the cogs, wires and mechanisms within are no more efficient than they were—I honestly do not know—but if they can now be deployed much more cheaply because of the scale at which they are being manufactured, and if they can generate so much more electricity because of the size of these things, I think that those are cost reductions even if the underlying technology has not moved on. I suspect it has a little, but I do not have the evidence at hand to debate that point today.
Renewables have, I think, become the cheapest form of generation. Solar has been going gangbusters in the speed at which it has brought down its costs and so, too, has onshore wind, notwithstanding the political pressures against it in this place. It is increasingly hard to argue that the burning of hydrocarbon for the purpose of generating electricity is the cheapest way of providing electricity. More and more often, we can buy out the intermittency of renewables to deliver very cheap clean green energy, and it is no longer a choice between decarbonisation and cheap energy. It is just that the greener energy happens to be the cheapest as well. Crucially, what renewables also allow us to do, which will realise a big saving, is to decentralise the energy system. That will certainly bring with it significant reductions in the costs of transmission, and potentially even distribution as well.
I have said that our auction mechanism is imperfect, but it is worth noting that many other countries have sought to emulate what we have done with Government policy on the deployment of renewables. It has sped up our decarbonisation—spectacularly so—and has reduced the wholesale price of energy. I accept that that has been clouded by a combination of the energy companies not necessarily passing on the savings to consumers as quickly as they could and of the green taxes that the Government put on top of the wholesale price. That has meant that consumers do not see it, as some people in this room would, as the right thing, because, as the hon. Member for Blackley and Broughton said, they have not seen on their bill the translation of that change into their energy costs.
Professor Helm also rightly mentioned that there are other areas for decarbonisation where the Government have not yet made as much progress as they might. Some very good things are being talked about within the Minister’s Department and I know that she is a big champion of the decarbonisation of heat and how we do that better. I am a Parliamentary Private Secretary in the Department for Transport and I know that a lot of work is going on there to look at how we decarbonise transport and the future of mobility.
My right hon. Friend the Secretary of State for Environment, Food and Rural Affairs is doing great things on waste. I accept the criticism of Professor Helm and others in this place that agriculture has been lagging behind. Representing a farming constituency, I know exactly why that is the case. It will be very challenging when we have to start telling people that they need to reduce their consumption of meat, milk, cheese and everything else in the interest of decarbonisation, but that conversation is surely coming.
The issue is how we translate all the advances in technology in the power sector into reduced bills. The Domestic Gas and Electricity (Tariff Cap) Bill, which I spoke to on Second Reading—I also served on the Public Bill Committee—should not be regarded as the process by which we do that. I am reassured by my previous discussion with my right hon. Friend the Minister, and I hope that the Bill will not be a temporary raid on the market.
The analogy that I like to use is that the current market, the caterpillar, is going into the chrysalis and on the other side we will have the butterfly that is the wonderful, digitised, decentralised energy system of the future. It would be disastrous if the caterpillar went into the chrysalis and after an inordinate period of time what emerged on the other side was still a caterpillar. We need to give Ofgem the latitude to use this as an opportunity not just to introduce a price cap, but to transform the energy system so that all of the savings that clean tech undoubtedly will afford start to translate into reduced bills for consumers.
In this place, we have a job to keep ahead of what will undoubtedly be a change in the mindset of consumers. Electric vehicles are not gaining in popularity among the electorate because we in Parliament have told people they are a good thing. They are gaining in popularity because they are unquestionably the future of motoring. They are technologically advanced, better than normal cars and cheaper to run, and people will be going for such things as a result of that, not because they are motivated by decarbonisation. We need an energy system that is ready to give them not only the ability to motor effortlessly because the charging network is all there, but from which, with their electric vehicles, they can take full advantage of the fact that they now have a battery parked outside their home and can participate in the energy system to further reduce their bills.
Increasingly, people will start to get the internet of things within their home and businesses. They might not realise that that transition is happening because all that it might mean at the moment is a smart speaker in the corner of the room from which they invite Alexa to tell them the weather. Increasingly, people will find that as their homes become smart, they will be able to participate in the energy system and access services that will allow them to deliver their domestic energy much more cheaply because something like Alexa, Siri, Google Home or whoever else will be able to run their homes more cheaply and will work out when they need to perform various functions to take advantage of cheaper market prices.
In turn, as policy makers we need to ensure that everything is in place for storage to be fully unlocked both in catalysing the research and development for grid scale storage and making sure that the market is ready for people who have storage in their business, home or community. We need to make sure that the market is ready for storage to participate.
Demand-side response has been spoken about for so long, but I am not sure we have the policy levers quite right yet to make sure that demand responds on a meaningful scale, particularly when aggregated across lots of domestic users and small businesses. We have the big users signed up to it, but delivering it when it is aggregated across a large number of consumers is very important. We need to accelerate that transmission because I suspect that consumer demand for those things will start to take off quite quickly in the next five to 10 years. There is a danger that we will get caught out having not put in place policy and regulatory frameworks for the new energy system that people will realise they want, and it will not be delivered if we do not get that right.
The other thing it is tempting to do when talking about Professor Helm’s report, which focuses on the big stuff, is to forget that energy efficiency is far and away the best way to deliver savings to consumers. I know the Government have made some eye-catching announcements on this recently, and it is absolutely right that we continue to see small gains in people’s homes and businesses as just as important as the things that we talk about in the North sea or the big power stations that we build here in this country. They will deliver the biggest savings by far for consumers in the short and medium term.
I will wrap up simply by saying that the report is not perfect—we know that—but it raises interesting points that have stimulated a conversation in Parliament and helped to focus the Government on what could change. We are in danger of losing the argument with the bill payer if we do not start to show how all the clean technologies can and will translate into lower bills for users. The longer-term challenge is how we make sure that we fully decentralise and digitise the energy system. With that comes an opportunity to balance upwards from behind the meter through the community and then the region, rather than having the current system that is run rather inefficiently by a centralised system operator.
Last week BP announced some eye-catching policies for their internal decarbonisation goals over the next 10 to 15 years, but what was interesting was to hear Bob Dudley. When asked about the role BP might play in helping its customers decarbonise, he was clear that getting carbon pricing right is the thing that will move the dial most obviously, particularly for the big industrial users of energy. As policy makers we need to start considering urgently how we strike that balance between prompting the right behaviour from industry and not being punitive when it comes to increasing the price of energy. The opportunity for a future hydrogen economy requires decades of planning as we seek to transition, so starting that conversation now is very important indeed.
The discussion that we are having today is excellent. There is a lot that the Government need to do, and that Professor Helm will have prompted them to do through his report. It is not perfect, but the fact is that renewables are driving down the costs of energy. We need to be able to translate that into cheaper bills for the consumer. I know that the hon. Member for Blackley and Broughton is sceptical on such matters, but I passionately believe that the evidence shows that what we are doing is the right thing, and that we should keep our course.
Alan Brown (Kilmarnock and Loudoun) (SNP)
It is a pleasure to serve under your chairmanship, Mr McCabe. I congratulate the hon. Member for Blackley and Broughton (Graham Stringer) on bringing forward the debate. I was glad that we cleared up, right at the start, the pedantic point about the title and that we were not going to be debating whether Professor Helm should have been paid £500 or £400 a day.
The hon. Gentleman set out his stall with respect to the potential value of the overpayment by consumers. Obviously, we need to realise, going forward, that the issue is about getting the best value for consumers. I was a wee bit alarmed when he said that he was a scientist. I am a civil engineer, and I am always aware of how scientists like even more evidence-based detail. Funnily enough, one of the criticisms of Professor Helm’s report by some parties was that there was perhaps not enough evidence to back up his assertions. However, as other hon. Members have touched on, it certainly provides a good debating point, and throws down a few markers for the Government to consider.
The hon. Member for Blackley and Broughton mentioned a potential 1,600 new coal plants coming in around the world, while we are decarbonising and, correctly, eliminating coal-fired plants, so the UK impact on overall world reductions is pretty minimal. I do not think that that is the correct attitude. We must continue to lead by example on decarbonisation and to lobby and negotiate for others to do so. The hon. Gentleman was correct in pointing out that complexity is an issue—a theme that Dieter Helm brought out in his report.
A recurring theme of the hon. Gentleman’s remarks was the correctness or otherwise of the information presented by lobbyists for what he sees as vested interests. There is no doubt that it is a challenge for the Government and for all politicians when someone sets out how good their technology might be and how it might change the world. As I get more involved with the energy sector, it is a challenge to get to grips with the terminology—the buzzwords and abbreviations.
Most of the hon. Members in the Chamber seem to agree that the review is a good thing, but there has been debate on aspects of it. The hon. Member for Blackley and Broughton seems to question the value of the reductions in respect of offshore wind and how much is through cost reductions or efficiencies. I suggest that, at the very least, there has definitely been an increase in the efficiency of the manufacturing supply chain from going bigger and better. There is obviously an initial up-front cost. Cost reductions can be seen all around Europe. Given those similarities, I think there are genuine reductions in connection with technology.
In a relatively brief speech, the hon. Member for Ayr, Carrick and Cumnock (Bill Grant) touched on smart meters and the progress of the Domestic Gas and Electricity (Tariff Cap) Bill. He mentioned the Rubik’s cube, which is another thing I never got to grips with, and overpriced standard variable tariffs. At least in terms of the tariff cap and overpriced SVTs, cross-party working and political pressure are bringing the energy companies to book at last. I welcome that.
The hon. Gentleman talked about reducing fuel poverty. That is certainly important. I suggest that it is not just energy policy that leads to fuel poverty; austerity clearly feeds into it—if people do not have enough money coming into their household, they will, by default, almost certainly experience fuel poverty. So other Government policies have an impact.
My hon. Friend the Member for North Ayrshire and Arran (Patricia Gibson) gave a characteristically laid-back and chilled speech. I am tempted to go down that route, but I certainly agree with all the points she made. She concluded that consumers need to be at the heart of considerations. She is a champion of consumers, and I echo that sentiment. She correctly highlighted the issue of Hinkley Point. I shall come back to that and the fact that the cost of decarbonised energy is equivalent to 20% of bills; perhaps there is a better way of paying for decarbonisation.
Finally, we heard from the hon. Member for Wells (James Heappey). I congratulate his children on the high standard of their art work. The hon. Gentleman echoed Dieter Helm’s assertion that the auction system may be imperfect, but, as he said, it has clearly led to decarbonisation and the introduction of low-carbon technologies. There may be faults, but it has moved things in the right direction.
When the hon. Gentleman spoke of lobbyists and of losers backing Governments, I thought he might mean losers in government—but perhaps that is just a cheap shot by me. Electric vehicles are perhaps an offshoot of the debate, and although he said that there is increased uptake because people see them as the technology of the future, I am not sure we are quite there yet. Electric vehicle uptake is still too low, and we need to do more to get people to use them.
Uncharacteristically, I want to commend the Government for commissioning the review of energy policy. It may have been an admission that household energy bills are too expensive. As we have heard, that point has been reinforced by the announcement of the intended energy price cap—the Bill has its Third Reading on Monday. In October 2017 the Secretary of State said:
“Over the past 15 years energy prices have risen by over 90% in real terms.”
He added that there were bill increases
“on prices the CMA had already concluded were too high.”—[Official Report, 12 October 2017; Vol. 629, c. 473.]
The cap is intended to be temporary—until 2023—which does not give the market too long to become truly cost-effective and competitive. That means that we need longer term, consistent, logical energy strategies in place by then. Hopefully we shall see the butterfly come out of the chrysalis, as the hon. Member for Wells said.
It is therefore not surprising that Dieter Helm obviously agrees that the cost of energy is too high
“to meet the government’s objectives and, in particular, to be consistent with the Climate Change Act”.
Another key finding was that
“energy policy, regulation and market design are not fit for the purposes of the emerging low-carbon energy market, as it undergoes profound technical change.”
Those aspects of the matter, as the hon. Member for Blackley and Broughton said, are the result of a combination of successive Government failures to remedy matters.
The review highlights the fact that the investment strategy of picking winners is not necessarily efficient, and suggests that interventions should be radically simplified. No doubt the latter point will appeal to a Tory Government, but it is also the case that simplification should not happen to the detriment of emerging technologies. I have sympathy for a Government trying to support particular technologies. However, it should not be done on too much of an ad hoc basis. The way the Government have tackled the matter has not always been logical. My hon. Friend the Member for North Ayrshire and Arran mentioned Hinkley Point C, with a price of £92.50 per megawatt-hour, compared with £57.50 per megawatt-hour in the latest auction for offshore wind. That is only half the story. As Dieter Helm correctly reminds us, Hinkley is sucking those costs out for a 35-year contractual period. Meanwhile offshore wind gets only a 15-year contractual period. As he says:
“The nuclear plant will always run, reducing the market available to newer technologies until mid-century or possibly longer. This could act as a brake on technical change”.
Will the Government heed that warning and pull back from other nuclear projects such as Sizewell?
On my recurring theme of onshore wind, we need to find it another route back to market. It has been excluded from contracts for difference auctions, cannot bid for the flexibility market under current arrangements, and is not allowed to bid for the capacity auctions. We need to find a way to get onshore wind and photovoltaics or solar back to market so that we can capitalise on the reduced prices.
Dieter Helm also recommends that the legacy costs for renewables obligations certificates, feed-in tariffs and contracts for difference should be separated, ring-fenced and placed in a legacy bank. It will be interesting to hear the Minister’s recommendations on phasing those out.
Dieter Helm highlights the fact that the “revenue = incentives + innovation + outputs” framework for Ofgem, which covers the transmission and network operating regime, needs to be changed, and is resulting in higher than necessary prices. We have long argued that the current transmission system is outdated and disincentivises the construction of appropriate generation in the correct locations. Of course, it also disadvantages Scotland—particularly the north of Scotland.
Dieter Helm suggests that the Government should establish an independent national system operator and regional system operator in the public sector, with relevant duties to supply and take on some of the obligations of the relevant licences from regulated transmission and distribution companies—again, it would be good to hear a ministerial response on that. Such a provision might be slightly different, but to me it vindicates the SNP Government’s proposals to develop a not-for-profit energy retail company, and further changes that Dieter Helm suggested would complement that venture. It would also reduce Ofgem’s role in network regulation, which would be good.
Dieter Helm highlights that capping the supply margin would be the best way to meet the objectives of new legislation, and that the Government should issue an annual statement to Parliament, setting out required capacity margins and guidance for system operators. That would give parliamentarians greater scrutiny and input, which I would welcome.
Energy costs are a function of two things—the cost of energy and the amount of energy households use, which is linked to a property’s energy efficiency. Other hon. Members have touched on that issue, and I think the Government need to make more direct investment in energy efficiency policies. The SNP Government are doing that, and there is no doubt that the cost of energy then becomes less of a burden on those who might be fuel poor or struggling with their energy bills. If the money comes from direct taxation—especially in Scotland, where we have a more progressive tax system—that is clearly a much better way of paying for such initiatives and creating a fairer society.
As other hon. Members have said, this is a great starting point for debate. In the long term, we look forward to a proper Government response after their call for evidence, and I would certainly welcome a response from the Minister on the matters raised today.
Dr Alan Whitehead (Southampton, Test) (Lab)
I congratulate my hon. Friend the Member for Blackley and Broughton (Graham Stringer) on securing this debate. He is well ahead of the Government in having the first response to the Helm review—as he rightly said, a response from the Government who commissioned the report in the first place is currently conspicuous by its absence. Given how these things proceed, it is a little odd that the Government’s initial response to the Helm review into the costs of energy was essentially to call for evidence on the cost of energy. I am not quite sure where we are with the Government response to the report they commissioned, although I am sure we will hear about that from the Minister. Because we have no indication of what the Government intend to do with the Helm review, we are slightly at sea in terms of how best to respond to it at this stage. Should we consider the commissioning of the report, its terms of reference, the recommendations within it, or, indeed, what the Government will do with it?
Stephen Kerr (Stirling) (Con)
A good place to start would be Dieter Helm’s conclusion that there is apparently nobody in government or any other sphere who can explain all the interventions being made in the energy market, such is the clutter of interventions in that market.
Dr Whitehead
The hon. Gentleman makes a strong point. That point is also made strongly in the Helm report, which has a list of the various interventions in play. Indeed, I think we can add a few more to those in the report, some of which have appeared more recently, such as energy intensive industry, underwriting and so on. What the Helm report says is right: we have vastly over-complicated many of the areas that we consider necessary as policy levers. Indeed the temptation, not just for the current Government but for successive Governments, has been than when they see a shed that is slightly leaning, they build another outhouse on the side to stop the shed leaning. They subsequently have to do something with the outhouse, and then we get the current extraordinary complexity of the whole process.
To get a feel for exactly how complex the market is, I refer hon. Members to a recent chart produced by the University of Exeter about the various interactions that the energy market now undertakes. Helm makes that point strongly. The question is this: if we are simplifying the market and how it works, how do we do that? How do we dismantle the complexity as we simplify the market, and what will be the consequences of that simplification?
All other things apart, this review was a hospital pass for Dieter Helm, and, as the hon. Member for North Ayrshire and Arran (Patricia Gibson) emphasised, it was, frankly, an unbelievably rushed job. It was commissioned on 6 August last year, and concluded on 25 October last year. Not only was it commissioned on 6 August, but it had terms of reference that ran to one and a half pages. If hon. Members read them, they will see that not only do they greatly curtail what the review could have covered, but they are internally contradictory regarding what they ask the review to do. For example, the review states that the Government have
“the ambition for the UK to have the lowest energy costs in Europe”,
but, as the hon. Member for Kilmarnock and Loudoun (Alan Brown) emphasised, the review merely talks about power. Although we are supposed to have the lowest energy costs, the review is only supposed to consider power, and not heat or energy efficiency; that point was made by the hon. Member for Wells (James Heappey). The review has apparently wide ambition, but in practice it covers a constrained area of examination. It is essentially a review of the cost of electricity, and that is what it concentrates on.
Given where energy is now, if we talked properly about its overall cost we would have to mention that, as the Helm review lays out in some circumstances, the cost of energy is higher in a number of other European countries but the cost to consumers is much lower. That is because of the difference in energy efficiency in those countries, and the interaction between different forms of energy—what happens to heat, for example—and the power sector. If we take the lowest energy costs in Europe as our theme, it is not immediately clear what we are talking about. What will those lowest energy costs be compared with? If we restrict ourselves to the power sector, how can we complete that examination in terms of overall energy costs? That is a bit of a theme of the report, hospital pass that it is, although given the short time span and the terms of reference given to Professor Helm he has done a tremendous job.
Nevertheless, we should be clear that the report in essence represents an extended opinion piece: the opinions of Professor Dieter Helm on how the energy market and the electricity market in particular will work in future. He has been expressing those opinions—I am familiar with a number of them—forcefully for a considerable period. I strongly agree with some of his opinions and I do not agree as much with some, but they are mostly there in the report, one way or another.
The question we have to ask about the recommendations that Professor Helm makes in the report is, how are they backed up with evidence? Having read the recommendations or even the executive summary, we might confidently assume that in the report we would find not only evidence to back up the recommendations, but talk of their consequences. However, we do not find that. What we find is material to back up why Dieter Helm’s opinions are right. As a satisfactory answer to the question asked, the report falls rather short of what one wishes might have been achieved. That is a problem in responding to it fully.
I strongly agree with some of Professor Helm’s conclusions, but some I do not agree with at all. However, I would have liked to see in the report what informs his conclusions, what the consequences of those conclusions are, and how they will be worked through. Professor Helm, for example, talks about the legacy costs of energy and of interventions by Government. As the hon. Member for Stirling (Stephen Kerr) intimated in his intervention, the extent of those potential legacy costs is laid out for us in the Helm report.
The solution provided is that those legacy costs should be discontinued as something that goes on people’s bills, as they do at the moment, but that they should be all bundled up and put somewhere else. Where are they put? There is nothing in the report to tell us that, except that they will be socialised across consumers and not across to industry. One way or another, the bundle of legacy will reach back on consumers’ bills, in just the way that the social and environmental costs that appear on bills now are also borne by customers. Not only that, that cost will land on customers’ bills in a more concentrated way because, according to Professor Helm’s recommendation, industry will be exempted from the impact of the legacy costs. That means that customers’ bills will go up considerably and not down considerably over the period, as I assume is the intention of that particular proposal.
Similarly, one suggestion is that generators that produce power intermittently might be required to back that up by commissioning their own power resources to ensure that the intermittency is not spilled across the rest of the market. That sounds like a good idea except that if we do that, with each of those power generators independently commissioning their own power back-ups, that is a recipe for extreme inefficiency in the market over time. The market would have a series of near-redundant back-up power stations, not socialised across the piece but responsible only to those people who commission them and, therefore, in the market as a whole probably substantially increasing rather than decreasing the cost of energy.
There are a number of things in the report—the question of who runs the distributed energy service, how that is best run in the public interest, the simplification of the system over the period, and how the carbon price can be used in future to manage the transition to a low-carbon economy—but I am not convinced that it is much other than a good talking point as far as future energy policy is concerned. The report is a good, elegant and well-constructed talking point, but nevertheless it is a starting point and not a conclusion by any means.
I hope that that is how we see the report in future, because there is a long way to go before we get to the conclusions necessary to back up what the hon. Member for Wells described as the difference between the caterpillar turning into the pupa but still ending up as a caterpillar, or the caterpillar turning into a butterfly. As I think I have already mentioned to the hon. Gentleman, I personally prefer the example of the axolotl, which is a Mexican salamander. As I am sure hon. Members know, unlike other salamanders, it does not undergo the metamorphosis necessary to become a land-living amphibian; it stays for the whole of its life unmetamorphosed, with gills, under water. We do not want the energy market to end up like the axolotl. We are in a process of rapid transition—
Steve McCabe (in the Chair)
Order. I am very conscious of time, Dr Whitehead. Perhaps we could get back to the wind-up.
Dr Whitehead
Yes, Mr McCabe. I am just about done with the axolotls.
To conclude that remark and indeed all my remarks, in our energy markets we are above all—indeed, the terms of reference to an extent underline this—in a period of rapid transition towards forms of energy generation, transmission, distribution and supply that will look very different from most things that we are used to today. We know that is the case, because that transition is proceeding apace. I am not sure that the report does justice to that transition, and I hope that the Government response to it and their actions on its recommendations—that transition and the need to achieve a safe landing with that transition in the interest of customers and carbon emissions—are properly undertaken for the future. I look forward to the Minister’s response.
The Minister for Energy and Clean Growth (Claire Perry)
It is a pleasure, as always, to serve under your chairmanship, Mr McCabe.
I understand about axolotls and chrysalises, but I did not know what a hospital pass was. I assumed that it was something people put in their windscreen when at Great Western Hospital. It made me very grateful that we unveiled the statue of Millicent Fawcett today— 11 blokes and now one woman in Parliament Square. Perhaps we can have some terms everyone understands in the future.
I thank the hon. Member for Blackley and Broughton (Graham Stringer) for securing the debate. We could discuss the issues of science and climate change, but that is not why we are here. The points he made were very good ones. The challenge of how to make policy in a way that keeps the lights on and the costs down, does not burden future generations with unnecessary costs and achieves carbon emissions reduction targets, involves important questions for debate, so I am grateful.
Before I get on to some Helm comments, I will set out a couple of ground-preparation points. We are at a tipping point. When we used to talk about low carbon, it was axiomatic to think about high cost. As we heard very eloquently from my hon. Friend the Member for Wells (James Heappey), those trade-offs increasingly are going away. I accept that renewable energy without the necessary level of battery, solid state or liquid storage will not keep the lights on and give us the hot showers we want, which is why I am such a proponent of gas, particularly clean gas, in the system in future.
Tackling our climate change issue and delivering on our carbon commitments, which are world leading in their scope, does not mean that we are looking forward to a high-cost, low-economic productivity future—quite the opposite. As we have set out in the clean growth strategy and continue to debate, we are employing more than 400,000 people in the low-carbon economy, which is bigger than aerospace in the UK. That economy is growing very rapidly, creating great export opportunities, and is doing so in the knowledge that we have decarbonised more and grown our economy more than any other G7 country. That is something of which successive Governments should be very proud.
I want to reassure the hon. Member for Blackley and Broughton that when we think about technological investments in the future, we are trying to apply a triple test. First, what happens to the carbon emissions? Can we see emissions actually coming out—can we count them? Secondly, can we see a cost-effective pathway to deployment? Can we deliver technology that will reduce costs rapidly? Thirdly, does this give us a competitive advantage based on what we are doing well in the UK, which we can export? It is not just us on this low-carbon journey; the world is pivoting to a low-carbon economy. Trillions of dollars are being spent on low-energy production and transport.
The hon. Gentleman talked rightly about coal; as a founding member of the Powering Past Coal Alliance, I wish we could persuade all countries that it is the fuel of the past. Equally, it is not right for us to dictate to some of the emerging economies their energy mix. We have to encourage and support them. India has said that it wants its entire car fleet to be electric by 2030. That will have a material impact on the price of that technology around the world. All that creates a reinforcing, positive spiral. If we can demonstrate leadership in technologies and other countries do, too, the price will drop, as has been seen with solar panels. That means that more countries can adapt and we get ourselves to a better place.
The focus on low carbon is not a win-lose situation; it is a win-win situation. The emphasis on innovation cannot be made strongly enough, which is why we have committed £2.5 billion over this Parliament just for this area of low-carbon innovation, which is part of the biggest increase ever in public spending on UK science research and innovation.
We can debate strategies, and we will, but we need to focus on costs now. Reducing costs both for consumers and for businesses is the heart of what we want to do. We have seen and heard what has happened to the input cost going into the system; I accept the point about onshore wind—the hon. Member for Kilmarnock and Loudoun (Alan Brown) and I have debated that. We have a manifesto commitment that we do not believe large onshore wind is right for England, but I am aware of other parts of the country and we are working to see what we can do.
We have seen a dramatic fall in the cost of low-carbon energy. Indeed, we have just celebrated our second period of coal-free power generation—a record of 57 hours not using coal to power our electricity in the UK. There are some other more subtle points, too. Network costs, which make up a quarter of dual fuel bills, have fallen 17% since privatisation, and the pressure is downwards on those. We have seen a dramatic increase in the level of competition in the retail energy market—there are now more than 65 suppliers. Switching levels are hitting record highs.
As hon. Members will know, I will bring back to the Floor of the House the Report stage of the Domestic Gas and Electricity (Tariff Cap) Bill next week. It sounds as if we will have strong support from all Members present. We believe that we need to do more to help that market move towards a more price-competitive place, and we want that cap to be in place for this winter.
On household energy bills, it has not just been about consumers and taxpayers investing in the future of energy generation and low carbon. Much of that investment has been offset by improvements in fuel efficiency in homes, which I believe the hon. Member for North Ayrshire and Arran (Patricia Gibson) alluded to, often directly through measures such as the energy company obligation. In fact, although prices have gone up as a result of the investment in future forms of technology, the average bill in homes has dropped by £14 since 2012, because we have become much more efficient.
Stephen Kerr
The Minister has not mentioned smart meters in her list. When does she feel she might be in a position to tell us where we are going with the SMETS2 meters and the connection with the Data Communications Company?
Claire Perry
My hon. Friend has anticipated my speech; I was also going to mention the very dramatic, large roll-out of smart meters. We know we need to move to SMETS2 and make sure that that is done as seamlessly as possible for consumers who already have a SMETS1 meter—I am happy to take that offline.
Alan Brown
On the point I made, does the Minister agree that there is also scope for direct Government investment in energy efficiency, rather than relying on the likes of ECO, which still makes the consumers pay for it in their bills?
Claire Perry
I do; things such as the warm home discount are part of the long-term commitment that we have made to ensuring that there is better energy efficiency. We are working hard to take out costs wherever possible.
The hon. Member for Blackley and Broughton represents a manufacturing and industrial constituency; we have reduced the policy impact of energy bills on our most energy-intensive industrial consumers by up to 80%. He mentioned the relative costs of energy in Europe, where we tend to do very well in terms of gas costs and not so well in terms of energy. That is often because of political choices that countries make about where they will allocate their network costs. That is exactly why we commissioned the Helm report, to understand what it is we need to do better to ensure that our cost of energy for both households and businesses is as low as it can be.
I heard a lot of conversations about not wanting Government meddling in the design of the energy system, but somehow the terms of reference were too broad and Government should have been involved in setting them, and that the report was too short. Professor Helm is one of the world-leading experts on energy markets and design. It is fantastic that he has come out with some incredibly far-reaching recommendations; it is a no-holds-barred look at how we deliver more affordable energy, keep the lights on, decarbonise, create innovation and build relationships between the market and the public sector. I will not even answer the criticisms about his remuneration; he did a great report and it was good value for money.
We have had a very vibrant debate about the report; we will not rush to respond to it. This is an opportunity when we are at a tipping point on how we generate and deliver our energy. We need to take a very sensible, sober look at what we want to do. Much of that was covered in the report—questions about the importance of energy to our economic success, the disruptors that are going along, the move from passive to active demand, zero marginal low-cost clean generation, and the need to access lower cost, effective storage technologies. The market is changing, regardless of what the Government do. All the analyses of the report benefit strongly from hindsight, which is a wonderful thing, but the hon. Gentleman’s point about complexity, and Government layering intervention on intervention, are really well made. We need a response that is sober and sensible, that sets out an energy policy or strategy for the future that can survive successive political cycles and can respond quickly to what I have no doubt will be enormous technological changes.
The job of Government is to set ambition. We are among the most ambitious Governments in the world—we are the first developed country to ask for advice on what a zero-emissions economy would look like in 2050. It is great to see other countries joining us. We are also responsible for setting a balanced budget, so that all our decisions can be made secure in the knowledge that we will have a stable financial framework. Our job is not to respond to customers who lobby loudest, but to look to work with companies that create value for consumers, so we have frameworks and stability that will stand the test of time. If we get that right, this trilemma that we always talk about of cost, carbon and security, would be solved, at least for electricity.
I thank all the Members who have spoken; it is always a pleasure to talk about this very important subject. I look forward to repeating the debate when we bring forward the response to the Helm review, but I am extremely grateful to Professor Helm for his report and for challenging us to think about these vital issues for the future.
Graham Stringer
It has been a good debate. I thank the Minister; I understand why she says she is reluctant to formally reply to the report in the short term. That is disappointing—an interim reply on the Government’s position would be useful. I am pro-renewables: I just think that we are at the stage where they have to answer the question of whether they can exist without subsidy. If they cannot, auctions look to be the way forward, as Professor Helm says.
Motion lapsed (Standing Order No. 10(6)).
Protection of Welsh Speakers from Defamation
(6 years, 2 months ago)
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Mr Philip Hollobone (in the Chair)
Will those who are not staying for the next debate please be kind enough to leave quickly and quietly? We now come to the important issue of the protection of Welsh speakers from defamation. I call Liz Saville Roberts to move the motion.
Liz Saville Roberts (Dwyfor Meirionnydd) (PC)
I beg to move,
That this House has considered protection of Welsh speakers from defamation.
Diolch yn fawr, Mr Hollobone. It is an honour to serve under your chairmanship. It will probably come as no surprise to anyone present that the subject of the debate was inspired by the recent contributions of a topical columnist to a national Sunday newspaper and current affairs magazine. The text is in the public domain, so I will refrain from using the little time available to repeat it. Suffice it to say that those comments are the latest manifestation of a long tradition of decrying, belittling and mocking the Welsh language and, by association, Welsh speakers.
The royal commission on Welsh education stated in 1847, in Y Llyfrau Gleision, or the Blue Books:
“The Welsh Language is a vast drawback to Wales and a manifold barrier to the moral progress and commercial prosperity of its people. It is not easy to over-estimate its evil effects.”
Fast-forward to 2011, and the Daily Mail saw fit to allow a book reviewer to describe Welsh as an
“appalling and moribund monkey language”.
There has been much in between—you get the picture.
I want at the outset to establish a sense of proportionality. I do not seek to equate the bigotry against the Welsh language in the 21st century with the extremes of Islamophobia or anti-Semitism, but neither should the fact that majority prejudice is directed against a range of minorities devalue the need to address this issue.
Nick Thomas-Symonds (Torfaen) (Lab)
I congratulate the hon. Lady on securing this debate. She talked about how this issue sweeps back to 1847. Putting aside the specifics of what has happened in the modern era, does she agree that no one should be discriminated against by virtue of the language they speak, whether it is Welsh or any other language?
Liz Saville Roberts
I agree entirely. We need to consider the effects on groups in how we deal with press regulation and in our regulation of hate crime and hate words.
Ian C. Lucas (Wrexham) (Lab)
I congratulate the hon. Lady on securing the debate. Does she agree that the refusal by the Independent Press Standards Organisation to apply clause 12 of the editors’ code of practice to groups such as speakers of the Welsh language shows how inadequate the regulatory system run by IPSO?
Liz Saville Roberts
I am grateful to the hon. Gentleman for raising something that I will raise anon. The two of us agree with the National Union of Journalists, which has raised that very point. Sadly, we live in a time when bigotry is increasingly acceptable. Hate words open the way to hate crimes.
Kevin Brennan (Cardiff West) (Lab)
The hon. Lady is being hugely generous in giving way. Does she agree that one way we could address this issue is by extending the use of the Welsh language in this place? It is currently restricted to the Welsh Grand Committee, but I wrote to the Leader of the House today to ask her to meet me to discuss permitting the use of Welsh in our debates in this Chamber and in the main Chamber. Does the hon. Lady think that that might be one way to raise the profile of the Welsh language and stop the bile of the bigots?
Liz Saville Roberts
Of course. We recently used Welsh for the first time in the Welsh Grand Committee, but allowing its use in the Chamber and here in Westminster Hall would be a clear statement about the status of the language.
IPSO acknowledges that hate crimes and hate words are connected by exhorting the media to avoid prejudicial or pejorative reference to an individual’s race, colour, religion, sex, gender identity or sexual orientation, or to any physical or mental illness or disability, but complaints to IPSO are turned down on the ground that the editors’ code does not apply to groups of people. As I mentioned, the NUJ has long campaigned for the press regulator to accept complaints about how specific groups are represented in the media, rather than confining its remit to comments relating to specific individuals.
The drip feed of mockery undermines the extraordinary success story of one minority language at a time when 97% of the world speaks around 4% of the world’s languages—mostly English, Spanish, Portuguese, Mandarin Chinese, Russian, Indonesian, Arabic, Swahili and Hindi—and only 3% speak the roughly 96% remaining languages. Wales’s Government have set a target of doubling the number of Welsh speakers to 1 million by 2050. The number of pupils in Welsh medium schools reached an all-time high last year of almost 106,000, and more than 1 million people learn Welsh on the language learning app Duolingo.
Tonia Antoniazzi (Gower) (Lab)
I thank the hon. Lady for giving way. She must be proud of having secured this excellent debate. Does she agree that we should not belittle the advancements the Welsh Government have made with Welsh language learning? Although I am not a Welsh speaker, I am a proud person who represents Wales and I speak other languages. The advancements that Wales has made are a good example for other languages, particularly in Northern Ireland.
Liz Saville Roberts
Indeed. Much about Welsh is a success story. None the less, the constant undermining—the drip feed—affects the way parents approach sending their children to Welsh medium schools and the way individuals approach using Welsh in services. I will return to that.
There is an idea that Welsh is somehow antiquated rather than new. We need to challenge that. Many of us are frustrated by references to Welsh as a quaint folk antiquity. A language is as venerable as its oldest literature and as vital as its youngest speaker. Yet language is not just a mechanical tool of communication. There is an expression—in Welsh, of course—“Cenedl heb iaith, cenedl heb galon,” which means, “A nation with no language is a nation missing its heart.”
For many people, Welsh is their first language. For many, the Welsh language is their mother tongue. It is the language of the home, the language of the community and the language of the workplace. Why would anyone seek to force those people to justify the language in which they think, dream, work and live? It is as natural and as normal to them as the English language is to its first-language speakers. I was lucky enough to have the opportunity to learn the language as an adult, but my daughter’s first language is Welsh, as it is for my husband and for the majority of people in my constituency. For them, speaking Welsh is not an optional extra; it is who they are. The Welsh language just is.
Ask almost any Welsh speaker and they will talk about the accumulative effect of centuries of establishment scorn. They will talk about parents choosing not to pass their own first language on to their children, about Welsh speakers being reluctant to use the language beyond a narrow social group, about the social norm of turning to English, about children who lack the confidence to use Welsh outside school, and about adults who are reluctant to access services in Welsh, internalising the negative stereotype. Let us speak plainly. We know that that prejudice is an example of the majority asserting its power over minorities to devalue them. Tolerance and diversity walk hand in hand. This is on the spectrum of oppression.
Albert Owen (Ynys Môn) (Lab)
I am extremely grateful to the hon. Lady for giving way and thank her for securing this debate. I have the advantage of not reading the Sunday papers, but I understand that the debate originated with Rod Liddle. I am not a defamation lawyer, but does the hon. Lady agree that, rather than changing the law in the long term, we need a respect agenda for the United Kingdom’s four nations and their languages so that we can all express ourselves comfortably in the language of our choice?
Liz Saville Roberts
I agree entirely that we need a range of approaches. We do not want to be heavy-handed in our legislative approach, but when there is legislation that could be put into effect, as there is in other countries—I will come to that—it would be remiss of us not to consider all the options open to us.
Let me give an extremely brief synopsis of the status of Welsh in law, which is concerned mostly with the rights of Welsh speakers to use and access services in the language. The office of Welsh Language Commissioner was established by the Welsh Language (Wales) Measure 2011, which gave Welsh the status of an official language in Wales with legal effect. Most of the commissioner’s work concerns the creation and implementation of language standards, but she also has a remit to ensure that Welsh speakers are treated fairly. In the light of what we are discussing, the commissioner recently stated:
“While it is important that we respect freedom of expression…the increase in the offensive comments about Wales, the Welsh language and its speakers is a cause for concern.”
She called for action to stop such comments and said that
“legislation is needed to protect rights and to prevent language hate.”
I remind Members that Welsh and Scottish Gaelic enjoy European status as semi-official or co-official languages, meaning that they can be used in the European Council and the requesting member state. The UK ratified the European charter for regional and minority languages 17 years ago, and article 7 of the charter includes provision to,
“promote…mutual understanding between all the linguistic groups of the country and in particular the inclusion of respect, understanding and tolerance in relation to regional or minority languages among the objectives of education and training provided within their countries and encouragement of the mass media to pursue the same objective.”
I also draw attention to the evident relationship between the characteristics afforded protection under the Equality Act 2010 and how a number of those are reflected in the way police forces and the Crown Prosecution Service record hate crimes on the grounds of hostility or prejudice towards a person’s disability, race, religion or belief, sexual orientation or transgender identity.
It is interesting that some forces have chosen to identify additional protected characteristics, with Greater Manchester police recording hate motivation against alternative subcultures such as goths. North Wales police treat the Welsh language and culture as legally protected characteristics. Such hate crimes and incidents are identified under race and further categorised as Welsh or English, with 42 such crimes and incidents recorded in the last two years in the force’s region. Indeed, it appears that legislation may already cover hate crime on the grounds of people speaking a different language, given that the Crime and Disorder Act 1998 and the Criminal Justice Act 2003 included national origins within the definition of a victim’s membership or presumed membership of a racial group when considering whether an offence was racially aggravated.
Looking further afield, it is interesting to note that a number of legislatures make specific reference to language as a factor in crime. Those include Canada, Belgium, Croatia, Kosovo, South Africa and Australia. Australia’s federal Racial Discrimination Act 1975 makes it
“unlawful for a person to do an act”,
if
“the act is reasonably likely, in all the circumstances, to offend, insult, humiliate or intimidate another person or a group of people;”
and
“the act is done because of the race, colour or national or ethnic origin of the other person or of some or all of the people in the group.”
I draw attention to the reference here to both individual and group rights, which is significant to our debate.
As the Welsh Language Commissioner has stated, this matter requires a number of approaches, but I question why Welsh speakers, as individuals within a group, have no legal protection at present. Put simply, that is felt by speakers in the present post-Brexit climate to encourage comments against them that they as individuals feel to be defamatory.
I ask the Minister to commit to respond to the Welsh Language Commissioner’s call for a meeting with interested individuals and groups to explore how to move this agenda forward. I also ask him, in his response, to consider the implications of article 7 of the European charter for regional and minority languages, which we have of course ratified, and the UK’s commitment to encouraging the mass media to play its part in promoting respect, understanding and tolerance across linguistic groups.
Although I understand full well that defamation as a legal concept refers to the individual rather than the group, I beg the Minister to consider that linguistic groups are made up of individuals, as are groups protected from discrimination and hate crime by the Equality Act’s protected characteristics, which in turn are reflected in IPSO’s list of what qualifies as discriminatory.
I ask the Minister to approach his Government colleagues and discuss how to deal appropriately with the prejudiced caste of Welsh language speakers by acknowledging the existence of language hate and thus laying the foundations necessary to identify language as a recognised protected characteristic in equality legislation. That might be on the grounds of the Welsh language’s status as an official language, along the lines of a list of identified languages, or by an alternative method. It might be via greater clarification of the resources already available in criminal law. As this is potentially a protected characteristic, could he comment on the means by which IPSO might then be called on to review its present dismissal of Welsh speakers’ complaints, and on the wider question of IPSO’s handwashing of responsibility for the effects of media incitement of hatred against protected characteristic groups?
Finally, I ask the Minister to join me in welcoming North Wales police’s inclusion of the use of both Welsh and English as protected characteristics in relation to hate crime, and request that we work together to facilitate the complete devolution of policing and the enabling of Wales’s four police forces to establish a hate crime unit best able to address our country’s needs. Would he also note that once again this might well be an example of how a separate legal jurisdiction would better serve the needs of Wales than the England-and-Wales anachronism? Diolch yn fawr.
The Parliamentary Under-Secretary of State for Wales (Stuart Andrew)
Diolch yn fawr, Mr Cadeirydd. I first congratulate the hon. Member for Dwyfor Meirionnydd (Liz Saville Roberts) on securing this debate. I welcome the opportunity to discuss the important matter of the protection of Welsh speakers.
The hon. Lady’s speech, and the interventions, were certainly interesting. I have noted the strong views expressed on all sides and I am grateful to hon. Members for their contribution. I will try to respond to as many of the points as possible in the short time I have, but I will say at the outset that I would be more than happy to meet the hon. Lady so that we can perhaps discuss this in more detail. I think we need more than half an hour to discuss this important matter. I also think it would be useful to ensure that we include an invitation to the Welsh Cabinet Secretary, given the important role they play in the Welsh Assembly and the Welsh Government, to come to that meeting. I hope she will be happy with that offer.
The right of the people to speak in Welsh is simple, but powerful. Our language is part of what defines Wales as a nation, but it should not set us apart. I am very proud to be a Welsh speaker. I grew up in an English-speaking household, but my parents sent me to a bilingual primary school because they wanted me to have the best options available to me. When I moved away, as I have mentioned before, I stopped speaking Welsh daily. Now, returning to more frequent use of the language, I have noticed that it is not easy to get back into the swing of things and confidence can sometimes be something we struggle with.
As a Minister, though, I not only want to use Welsh more frequently, but believe I have a responsibility to do so. We all work in privileged positions and we have an opportunity to show Welsh speakers that our language is a normal part of the business of running the country. That is why, although I felt quite a bit of nervousness about it, I was keen to get on with doing media interviews in Welsh and trying as much as I can to conduct some of my meetings in Welsh, and indeed a phone call with the hon. Lady just yesterday. I do that because I believe it sets a good example, because people have a right to expect to be able to interact with their Government in the language of their choice.
Tonia Antoniazzi
Does the Minister acknowledge the inappropriate comments made by the hon. Member for Monmouth, when he condoned Rod Liddle’s comments as,
“kind of pub banter shock-jock stuff”?
Stuart Andrew
I will come on to Rod Liddle’s comments later, but I will not make a comment about my hon. Friend the Member for Monmouth (David T. C. Davies) at this stage. I am sure the hon. Lady will not mind.
I was also immensely proud to be able to speak Welsh in the first bilingual Welsh Grand Committee that was held in this House in February. Again, I confess I was apprehensive, and I was worried that people would pick up on my mistakes rather than focusing on the content of what I was trying to say. I know that many speakers have that worry, but we all have to get over it, frankly, and we all have to support each other. I think I mentioned during the St David’s day debate that I was struck by the comments of the hon. Member for Dwyfor Meirionnydd:
“Only through the use of the language will the language live.”—[Official Report, Welsh Grand Committee, 7 February 2018; c. 81.]
Governments at both ends of the M4 can set policies and targets, and commit to certain service levels, and those are undoubtedly important, but what is critical is to support Welsh speakers to feel able to speak the language. We have a responsibility to continue to protect and support its use not only when dealing with officialdom, but as everyday conversation. I say we all have a responsibility. Yes, the Government have a role, but those who are fluent in Welsh also have to help those who are learning to feel confident to be able to speak it. If they make a mistake, it does not really matter; it is about giving oxygen to the language.
I know that the Welsh people as a nation have a sense of humour. Much of the debate has centred on the individual who tried to deride our language, and even though we have a Welsh sense of humour, and even though the author of the article says it was a joke, I have news for him: he is not much of a comedian. His articles were, frankly, downright rude.
The Government are committed to a free and independent press, and as such only intervene in cases where publishers have broken the law. I am sure that we all agree that that is vital to a strong and fully functioning democracy, in which the powerful can be held to account without fear. The hon. Member for Dwyfor Meirionnydd and others have mentioned IPSO, which regulates 95% of national newspapers, by circulation. The rights of individuals are protected under IPSO’s editor’s code, but not the rights of groups. I am sure that the hon. Lady and I will discuss that in the meeting we will arrange.
Ian C. Lucas
The crucial point is the Government’s position, so far as IPSO is concerned. The Secretary of State for Digital, Culture, Media and Sport recently asserted that he supports IPSO in its regulatory role. However, IPSO refuses to look at cases such as the one we are discussing. Does the Minister support the Secretary of State, or does he support people who want an appropriate regulator?
Stuart Andrew
The Government are committed to a free and independent press. That is an important part of what we do. We intervene only when the law has been broken. I have been asked if I will raise these issues with my colleagues, and I commit to do just that. Once I have had those meetings, I will be happy to reply to the hon. Member for Dwyfor Meirionnydd and, if he wants, to the hon. Gentleman too.
The issue of equalities has come up. The hon. Lady mentioned the various groups and individuals that are protected because of their age, disability, sex, sexual orientation and so on. However, there is already appropriate legislation to capture potential cases of defamation—the Defamation Act 2013. Unlike colour, nationality and ethnic or national origins, language is not, as she knows, an explicit aspect of race for the purposes of the Equality Act 2010.
Nevertheless, where an organisation, such as an employer or service provider, imposes language requirements that may in some way be linked to person’s nationality or national origins, it would be a matter for the courts to determine whether that might constitute unlawful indirect discrimination under the race provisions of the Equality Act.
Liz Saville Roberts
Along those lines, it is important that I mention Gwynedd County Council v. Jones in 1986. It was declared legal for Gwynedd County Council to have a language requirement across a number of its jobs because there was not, in terms of employment, a connection between race and language, because language is an acquirable skill.
Stuart Andrew
Again, this is why we need careful consideration of many of the issues that have been raised. Looking at the Equality Act, for example, it is not clear what the effect of adding language to the list of protected characteristics might be. For example, if it was unlawful to discriminate on the basis of language, would it be possible to advertise a job that required a person to speak Welsh, or would that be discriminatory against speakers of other languages? I hope the hon. Lady understands why I want to make sure that we discuss this in great detail and that we do not actually create unintended consequences.
Liz Saville Roberts
I agree entirely with the need to not rush legislation and to avoid unintended consequences. I draw a line between employment law, and the skills necessary for jobs, and defamation.
Stuart Andrew
I take note of what the hon. Lady says. I will move on, because I notice that time is running out, as often happens in these debates.
I know that the author of that article wanted to be provocative. It is what he is about. It is how he tries to gain publicity, in the hope that more people will read his articles. He will probably give some publicity to this response. However, I do not personally intend to give him any more airtime.
Albert Owen
The Minister and I are both from a bilingual community. Although he does not want to give any more oxygen to that author, is he as concerned as many Opposition Members, including the mover of the debate, about IPSO? Will he take this matter up with the editor of the newspaper that the article was published in, to show the concern there has been in Wales? I am sure that the Wales Office is also upset by the article. Will he make the editor of that newspaper aware of what has been said in the debate?
Stuart Andrew
I will happily write to the editor.
As I say, I do not want to give any more oxygen to that article—although I commit to writing that letter. Instead, I will focus on our language and the important contribution it makes to our culture. At about 4,000 years old, Welsh is one of the oldest languages in Europe. We should be proud of how we teach people to speak Welsh; of how we are keeping the language alive; of our institutions, such as S4C, which, through the reforms we are implementing following the independent review, will broaden the appeal of the language to a digital audience; and of events such as the National Eisteddfod, which has roots back to the 12th century and attracts more than 150,000 visitors each year. Our attention must be focused on the important matter of ensuring a strong language for the future; on giving people across Wales the opportunity and confidence to use Welsh in social and official capacities; on ensuring that more and more Government services are available in Welsh; and on taking every opportunity to promote the strengths and attractions of our nation.
I pay tribute to the hon. Member for Dwyfor Meirionnydd. She made an important contribution, as have other hon. Members. I know that there is a great strength of feeling on this in Wales, but I also know that Wales is a very confident nation. It is staggering to compare the number of Welsh speakers in my community of Llanfaes and around Beaumaris when I was growing up on Anglesey with how many there are now. I was there just a week or two ago and it was pleasantly surprising to hear more and more people speaking in Welsh in shops, in restaurants and, of course, in the pub. I hope we will see more of that.
I have agreed to the hon. Lady’s meeting request, and I will of course approach other colleagues. However, the Government have a firm view on police devolution. The practice of English and Welsh police forces working together is a strong one that we will stick to. On the other issues, I look forward to our meeting in due course, so that we can debate these issues even further and hopefully get the resolution and the confidence that we all want to see.
Question put and agreed to.
Global Road Deaths
(6 years, 2 months ago)
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Mr Barry Sheerman (Huddersfield) (Lab/Co-op)
I beg to move,
That this House has considered global road deaths.
Not many people realise this, but 3,500 homes will today have a knock on the door, and a policewoman or policeman will say to the person who opens the door that their son, daughter, mum, dad, uncle or aunt is dead. Some 3,500 people die on the roads globally every day. That is, at a conservative estimate, 1.3 million people dying on the road on this planet of ours each year. That is a disgraceful number.
I have been in this place longer than you, Mr Hollobone, but you will recall that I have form when it comes to being passionate about tackling road deaths. I shall be very careful today, and I hope that colleagues will stop me if I mention something that ends in “safety”, because I do not believe in that description. I think that we should talk about road deaths and serious road casualties, because that brings home to us the reality that 3,500 people die on the roads every day and 1.3 million die every year.
According to the World Health Organisation, road accidents are the 10th leading cause of death globally—the number of people killed in road accidents is just under that for deaths from tuberculosis, which is in ninth place—and they are forecast to be the seventh biggest cause of death by 2030. But unlike natural disasters or disease, this is a human-made problem and every one of the deaths is avoidable—every one of them.
Stephen Kerr (Stirling) (Con)
We should discontinue the term “road traffic accidents”, because, in fact, that is not the case at all—these are road traffic collisions.
Mr Sheerman
I did promise that I would not call them accidents or talk about safety.
As I said, I have form on this issue. Very early in my career, I saw two young people thrown from a car and dying by the side of the road, and I never lost that image in my mind. They had been thrown out of the car because they were not wearing seatbelts. When I came to this place, I tried to do something about the issue. My only successful private Member’s Bill—the only time I have come in the top 10 in the ballot—was my Safety of Children in Cars Bill, which stopped children being carried unrestrained in cars. After that, with a little help from the right hon. and learned Member for Rushcliffe (Mr Clarke), who is now the Father of the House, I managed to wangle past him a coalition that delivered adult seatbelts. We managed to get a 72 majority in the vote the night before a royal wedding, and I am very proud that that was the case. We then took the coalition that succeeded in that and called it PACTS—the Parliamentary Advisory Council for Transport Safety. I still have the privilege and honour of chairing that organisation. After 10 years, we formed the European Transport Safety Council, as regulation was moving to Europe. Some years after that, I became chairman of the Global Road Safety Partnership established by the World Bank.
Jim Fitzpatrick (Poplar and Limehouse) (Lab)
I think that I have to challenge my hon. Friend. He said that if he mentioned the word “safety”, colleagues in the Chamber should stop him, so I am stopping him—because he has a very proud record on transport safety, in terms of seatbelts, his private Member’s Bill, the role that he played in setting up the Parliamentary Advisory Council for Transport Safety and his recent role, which I am sure he will come on to, leading the inter-country legislators committee at the United Nations. Safety is in his DNA, and he should not be embarrassed by that.
Mr Sheerman
I am very grateful to my hon. Friend, who has campaigned with me for many years on this topic. One thing that I am trying to highlight today is that too many of us in this field have been doing this work for a long time. We need fresh blood; we need new people coming in who will be as passionate as we have been. Certainly part of my role as chair of the Global Network for Road Safety Legislators will be trying to enthuse people in legislatures around the world to get involved—to understand that 1.3 million deaths a year is unacceptable to any civilised society.
When I was working in this area some years ago, a Swedish professor—a doctor—said to me, “We have to get the United Nations to take this seriously and then we can lift the profile of what is happening on our roads.” As Lord Robertson said in a presentation only recently, people forget that if road deaths carry on at the present level, more people will die in the 21st century on the roads than died in all the wars of the 20th century. I hope you agree, Mr Hollobone, that that is a chilling statistic.
I want to say a little about Britain. In 2016, 181,384 casualties on Britain’s roads were recorded. There were 1,792 fatalities—that is 1,792 knocks on the door. Please let us use that all the time—the knock on the door, the chilling moment when someone is told that a member of their family has died. The long-term trend in the numbers of people killed and injured in road accidents has been declining, but the decline has stalled since 2011, and in 2016 we actually had an increase. To those figures we should add the road deaths and injuries in Northern Ireland; otherwise the Minister, who understands these stats very well, would pick me up on that.
It is important that the United Nations now has road safety as one of its sustainable development goals. Why is that? It is because the United Nations knows that that is vital to taking on poverty worldwide. We know that the death of a member of a family in the developing world usually means that family unit lurching into poverty, or, if it is a long-term disability, it drags the family down because it affects their ability to live a decent life. These tragedies are not just about statistics; they affect real families.
In relation to the countries that we have knowledge of, we know that we probably have an underestimate of the numbers of people dying. I was in Beijing not many months ago, and an interesting fact is that, mysteriously, as soon as the United Nations introduced a 5% reduction target, a 5% reduction started appearing every year in the Chinese statistics. I am saying that the stats may be worse even than we are arguing today.
I have just come back from New York, where we had a General Assembly debate on road deaths. It was a very good debate indeed, and a motion was passed on an action programme that I think will be very useful if we take it seriously.
I am arguing today that the United Kingdom has great knowledge about transport safety and great expertise. We have quite a good record. It is not the best in the world—sometimes Sweden is better than us—but the fact is that we have a good record. As I said, we have enormous knowledge; we have research centres and research evidence. We know very well how to reduce the number of accidents on the road, and we do not do that by a lovely gesture.
I have been in this field long enough to know that someone has only to knock on the door of an insurance company and it will say, “I will give you this flashy little thing that you can put on your bicycle when it’s dark and it will illuminate you and prevent accidents.” Another company will say, “I’ll give you lots of money to have a brand-new version of the Tufty Club, where you train all children about road safety.” Neither of those things, according to the research evidence, has been very successful at all. They may be quite fun to do, but they are not the way in which we tackle these things.
I have worked very closely with the Safer Roads Foundation. It knows very well the efficacy—all the research shows this—of low-cost engineering schemes. We know where people are having accidents. We modify the landscape; we do something about a particular junction that is dangerous, and that low-cost engineering scheme provides the best return possible on our investment.
We have knowledge of the research across the world. I also chair the international committee for road safety research. That is an attempt to link all the researchers on this planet of ours to one another so that we know what each of us is doing. We have worked very closely with India, for example. It is a case of finding out which research can help and sharing the information. One nation will have done the research and can pass it on quickly to the others.
We did not have a millennium development goal for road safety, but the sustainable development goals adopted by the United Nations changed the whole framework. We are now being taken seriously and we need to work very hard indeed to ensure that we achieve something substantial.
In September 2015, at a UN Heads of Government summit, the UK accepted sustainable development goal target 3.6, to halve road deaths by 2020. That was welcomed, but it was rather paradoxical, as our Government have failed to adopt a target for the UK since 2010. The Minister and I get on very well. He knows that, in a debate like this, I will nudge him again on two things: first, to have targets in the UK and, secondly, to have a national centre for investigation of all road accidents, particularly road accidents involving a road death.
We know that we are holding back casualty reduction at home. Targets are not a solution, but they do indicate ambition and commitment, and they influence where we put the resources. When the Government have targets for issues such as reducing suicides, hospital waiting times and net migration, it is hard to see the logic for not having an accident death reduction goal as well.
Jim Fitzpatrick
My hon. Friend is making a powerful point and one that many of us have challenged the Government on since 2010. Does he agree that it is completely anomalous that the Government are signed up to the sustainable development goals for the reduction of road casualties, deaths and serious injuries internationally, and that they are signed up to the European Union’s targets for the reduction of road deaths and serious injuries, but that they will not sign up to targets for the reduction of deaths and serious injuries in the United Kingdom?
Mr Sheerman
I take that point. My hon. Friend is a great campaigning friend of mine. I did not know whether to apply for this debate under this Department or the Department for International Development. I hope that I am stimulating a relationship between the Department for Transport, which is very good—I will give it its due—and has a Minister who cares about this, and the International Development team, so that they make proposals.
Using our experience, research and knowledge to help people around the world is one of the best investments we can make in helping a developing country at the moment. Road crashes are the No.1 killer of young Africans aged between 15 and 29. Certain countries leap off the page, such as Tanzania and South Africa, because they are well above where they should be, given the size of their population, the nature of their roads, and the number of people driving cars and two-wheeled vehicles. Much of this has a heartbreaking real cost. Road crashes frequently kill or injure household breadwinners, causing loss of income, increased costs—such as those of caring for a disabled victim—and tipping people into deepest poverty.
The Overseas Development Institute report “Securing safe roads” contained in-depth analysis in three cities—Nairobi, Mumbai and Bogota. That analysis was led by the ODI and the World Resources Institute, which found that it is the poorest sections of society that bear the brunt of traffic-related injuries and deaths, and that politicians and the public tend to blame individual road users for collisions, rather than policy makers or planners.
Can I put this next point at the heart of my remarks? The fact is that, in many ways, cars have become much safer—like a cocoon. My wife recently changed her car because she wanted a hybrid car. It has automatic collision avoidance and 16 airbags. Cars are safer and getting safer still thanks to some of the great work that is being done on the new car assessment programme worldwide. The people in danger are the vulnerable road users—the pedestrians, cyclists and people on two-wheeled vehicles—across the world. Those are the people we really have to worry about.
In terms of other places, America is in fact slipping back on its success. There should be good laws and sensible research-based activity by Government, such as seatbelt legislation, as well as law enforcement, so that people are not let off, or able to pay bribes, because they do not want to be caught for speeding or drunk driving. In the United States, because the states have different rules and regulations, many of their cars do not have rear seatbelts or regulation on that. They are slipping behind. We need that mixture of wise laws, good science-based answers and ensuring that these laws are obeyed. How confident are the Government that their contribution to accident prevention overseas will be well spent?
There is a new United Nations trust, which we established last week. It has every possibility of being a good and substantial fund. The Fédération Internationale de l’Automobile put in the first £10 million, and some companies will put in. However, given my experience with the World Bank and the Global Road Safety Partnership, there is a danger that we put too much emphasis on the private sector. Individual Governments must come in. I hope the British Government will put money into the United Nations trust, but they must ensure that there are strings attached, so that we know that the money flows to evidence-based, good ends.
We need to support the development of a road accident strategy across the world. We need to highlight what the Overseas Development Institute report says. We need to reframe road safety in public debates, making connections with issues that people care about, such as the economy, equality and education, and to build alliances at all levels of government, including local, regional and national. We must also produce, in every country, a dedicated road safety plan with short, medium and long-term objectives.
I have had the privilege to work with some very good people on this. Etienne Krug at the World Health Organisation in Geneva has been inspirational in the work that I have done. David Ward and the team from his organisation produced the wonderful report “Manifesto #4roadsafety”for the Global Network for Road Safety Legislators—that comes out of the Towards Zero Foundation. There are some very good people in this area, but at the end of the day, we must ensure that we have, as the World Health Organisation says, a policy called “save lives” based on an integrated safe-systems approach. The WHO report recommends 22 priority interventions in six key areas: speed management, leadership, infrastructure, vehicle safety, enforcement and post-crash survival.
To conclude, we know the answers. We can stop these 1.3 million deaths. We can reduce them dramatically if we work together on the basis of good laws that are enforced fairly and squarely across every country that we work with. We have an enormous opportunity to save lives, communities and families. Let’s go for it!
Mr Philip Hollobone (in the Chair)
I am obliged to call the Front-Bench spokespeople no later than 5.8 pm. The guideline limits are five minutes for the Scottish National party, five minutes for Her Majesty’s Opposition and 10 minutes for the Minister. Then Mr Sheerman has a minute or so to sum up the debate at the end. There are five hon. Members seeking to catch my eye, including at least two former firemen. I am afraid there will have to be a time limit of four minutes to ensure that everyone gets in.
Bill Grant (Ayr, Carrick and Cumnock) (Con)
It is a pleasure to serve under your chairmanship, Mr Hollobone. As you suggested, I have served more than 31 years in the fire and rescue service and sadly, I am no stranger to road traffic crashes. It is unbelievable—indeed shameful—that road crashes are the leading cause of death worldwide for people aged between 15 and 29. It is a sobering thought to consider the number of lives and the human talent, especially in less well-off countries, that have been lost due to road crashes that were in many cases, if not all, entirely preventable. Things can and do change. In my time in the service, from the early ’70s to 2005, I witnessed many advances. I thank the hon. Member for Huddersfield (Mr Sheerman) for his contribution to some of them. They include local authorities’ road improvements at dangerous corners, chevrons, warning signs and improved lighting.
The law has been brought to bear through drink-driving limits, speed limits, speed cameras, seatbelt-wearing, crash helmets for motorcyclists and improved driving tests. Safety campaigns such as “Reckless driving wrecks lives” are another advance that many authorities introduce to school children at secondary 5. Manufacturers are to be complimented again for introducing air bags, side impact bars, advanced braking systems, child safety seats and restraints. The fire service has also improved training and equipment and introduced collaborative working with the police and our wonderful ambulance service in the UK.
Road deaths around the world are tragic and costly, and it is time that we stopped treating them as simply things that happen. With others, I delivered fire service training in Romania in the ’90s post the Ceauseşcu regime. That was an eye opener. It was a wonderful country with wonderful people, but they had no particularly good infrastructure. They had poor equipment and poor training and, at the time, the fire service was linked to the military. I am sure the situation will have improved in recent times.
A report earlier this year by the World Bank and the World Resources Institute spoke about treating road deaths as a public health issue, which I would be very much minded to support. There is much more that can and must be done, particularly in developing countries, to improve road safety and reduce the number of accidents and the number of lives needlessly lost due to traffic accidents every year.
As the hon. Member for Huddersfield said, it is very often the police officer who has to go and knock at the door to advise mum or dad that their son or daughter is not coming home, or sometimes to advise the son or daughter that their mum or dad is not coming home. That is a horrendous consequence of a road traffic crash.
I am proud that the UK still has one of the lowest traffic-related fatality rates in the world, with 2.9 deaths per 100,000 people per year. Despite the improvements mentioned earlier, that is still too many, and we should continue to work to reduce that figure further, but it can be compared with the African average of 26.6 deaths per 100,000 people per annum, which is surely unacceptable. I hope that the Department for International Development and the Department for Transport recognise that global road safety is a public health issue of immense importance. The unacceptable fact is that traffic accidents—or traffic crashes—cause almost as many deaths each year worldwide as malaria, HIV and AIDS combined.
I trust that DFID and Transport will consider what more can be done to engage with Governments and stakeholders to promote road safety around the world and in developing nations. The UN rightly included among its global goals for sustainable development a target of halving road deaths by 2030. I hope that those who can implement change are listening, especially to the passion and enthusiasm of the hon. Member for Huddersfield.
Jim Fitzpatrick (Poplar and Limehouse) (Lab)
It is a pleasure to see you in the chair, Mr Hollobone. I am pleased to follow my friend, the hon. Member for Ayr, Carrick and Cumnock (Bill Grant), and I commend my hon. Friend the Member for Huddersfield (Mr Sheerman) on securing the debate and on his excellent speech that laid out the issues.
My hon. Friend outlined the statistics of more than 1.25 million people dead and 20 million seriously injured across the world, and the international response, including the World Health Organisation’s and the United Nations’ sustainable development goals, of which two specifically target road crashes. I am delighted to see the Minister present, who is highly regarded, which is the upside. The downside is that because he is highly regarded, much is expected of him. We look forward to his contribution.
The UK is one of the world leaders in road safety. My hon. Friend the Member for Huddersfield attended the UN General Assembly, as he described, and I commend his activities in sponsoring the inter-parliamentary legislators group to share best practice. We can help other countries. We are doing so already through individuals and organisations such as His Royal Highness Prince Michael of Kent, the international patron of road safety; the FIA Foundation; the Towards Zero Foundation; the Parliamentary Advisory Council for Transport Safety; the Department for Transport; the THINK! campaign; Max Mosley; and Stop the Crash, chaired by David Ward and Lord Robertson and mentioned by my hon. Friend, to mention just a few.
In this Chamber, we recently debated the International Development Committee’s report on education for all. I made the point that it is all very well promoting education in developing countries, but we should also be teaching road safety in schools, because 500 kids leave for school every morning and do not return home. They die on the world’s roads. We need to get those kids to and from school safely.
I chair Fire Aid, which is the umbrella organisation for the UK fire service and fire industry that delivers post-crash response and training equipment to more than 30 countries. One of our founding partner organisations, the Eastern Alliance for Safe and Sustainable Transport, quotes the 2015 World Health Organisation report on road safety, which details that half a million lives could be saved each year through good post-crash care. That includes stunningly simple things, such as a single universal telephone number for an emergency service response—18 countries have no 999 number and 41 countries have multiple numbers. Our partnership organisations deliver equipment and training, and are saving lives.
The UK has a good road safety story. The THINK! brand of the Department for Transport is held in international regard. We have expertise across the piece that we can share with other countries, whether on legislation, regulations, equipment or training. That soft diplomacy could enhance UK plc’s reputation. We can save lives. We can prevent broken bodies. We can have the most positive economic impact in the countries that would benefit most.
We need a signal from Government that recognises not only the opportunities that the sustainable development goals provide but that we are in the best position to help so many countries, whom I hope would acknowledge our assistance. We should not do it just for geopolitical advantage, although that should not be lost on the Foreign and Commonwealth Office, but because it is the right thing to do. It is already being done by all those I mentioned earlier and others.
I am keen to hear how much the Government are doing, how much they recognise what is being delivered by those UK organisations and how much more they think we can do—not just through the Department for Transport, but through the Department for International Development too. I look forward to the Front-Bench responses from the SNP, from my hon. Friend the Member for Reading East (Matt Rodda) for the Opposition and from the Minister. This issue should demonstrate that there is no difference between any of the UK parties.
Stephen Kerr (Stirling) (Con)
It is a pleasure to serve under your chairmanship, Mr Hollobone. I congratulate the hon. Member for Huddersfield (Mr Sheerman) on securing the debate and on his excellent speech, which many hon. Members found very stirring. His passion in the subject reawakened in me the memory of a phone call to our home in the middle of the night when my cousin, Eric, sadly died in a road traffic collision. I shall never forget the sight of my father, a typical Scot who did not wear his heart on his sleeve, standing in the kitchen of our home in Forfar and crying.
I want to speak briefly about the privilege I recently had of attending a presentation on stage at the Macrobert theatre at the University of Stirling entitled “Safe Drive, Stay Alive”, which shows young drivers how dangerous the roads can be. All the year 4 and year 5 pupils from the surrounding secondary schools in central Scotland attend the presentation. Frankly, the dramatic production uses shock tactics to hammer home the message about the importance of being aware on the roads and concentration when driving, and about how dangerous the roads are. I pay tribute to the team who I saw on stage: PCs Vinny Lynch and Andrew Starkie alongside Alan Faulds, Patrick Boyle, David Galloway and Bill Taylor. David Galloway particularly deserves a special plaudit. He talks about road safety with the authority of someone whose life has been drastically changed by a road collision. The performance is intensely emotional and moving, so it is hard not to shed a tear throughout the evening. From start to finish, it works effectively to truly convey the impact of a car crash—those two seconds that change lives forever, both physically and mentally.
I will never forget what someone from one of the blue light services said on stage:
“When I go home from my shift at night, and I lay my head on my pillow and I close my eyes, I see you lying in the wreckage of the car.”
No matter how hard the rescuer tried to expunge that memory from her mind’s eye, that is what she saw. It is my view that although it is a shock production, it is so important that the relatives of those who have died, the voices and testimonies of the emergency service first responders, and the victims themselves speak to young people, as it can truly be a turnaround moment in their appreciation and awareness of the danger of roads. If every young driver could see this production and see through the eyes of a road casualty, I am sure that we would go a long way to ending the scourge of car fatalities among young people. I believe that it would teach lessons that would remain for a lifetime.
Jim Shannon (Strangford) (DUP)
Thank you for calling me to speak, Mr Hollobone.
I congratulate the hon. Member for Huddersfield (Mr Sheerman) on securing this debate, on the compassion and passion that he always shows for his subject matter, and on the vociferous way that he speaks on each and every occasion that he brings an issue forward. The hon. Gentleman is a Huddersfield Town supporter, but we forgive him for that. As a Leicester City supporter, I am very pleased to remind him of that; I think that his team beat us once this season, but we beat them the other time. However, that is by the way.
It is very good to come along and speak about an issue that is very important to the hon. Gentleman and indeed to every one of us who is here in Westminster Hall to participate in this debate. One preventable death is one too many. The fact is that road deaths are largely preventable and we must do our part to try to ensure that such deaths are prevented.
As I always do in these debates, I will give a Northern Ireland perspective. I look forward to the Minister’s response. There is a great responsibility on his shoulders to come forward with the answers that we are looking for, but I have no doubt that he will respond in a very strong and supportive way to what we are saying.
The Police Service of Northern Ireland data shows that 95% of all deaths and serious injuries on roads are caused by human error, whether that is drink-driving, speeding, carelessness, inattention, or not wearing a seatbelt. We all know what we have to do on the road and sometimes, inadvertently and for whatever reason, we may not do those things.
The latest figures released by the Department for Infrastructure in Northern Ireland show an increase in the number of serious injuries from road collisions to 828, which is the highest figure since 2010. While the number of road deaths has been dropping in the last couple of years, the number of road injuries has not, and we also have to consider that.
The 63 road deaths in Northern Ireland in 2017 continued the downward trend that began in 2014, when 79 people in Northern Ireland lost their lives on the roads. Although the 2017 total is significantly higher than 2012’s low of 48 deaths, about half as many people die on Northern Ireland’s roads now compared with a decade ago. Yet, as I said at the start, one preventable death is one too many. Sixty-three families are grieving today; 63 homes have been torn apart; and the communities of those 63 people are living without a vital part of their make-up. We need to see an improvement in road safety and in this place we need to play our part in achieving that.
A recent survey by the Brake charity and Churchill Car Insurance of 2,000 UK drivers was quite illuminating; we always cite statistics, but I believe they give an indication of what people are thinking. Some 52% of those surveyed admitted to driving at 25 mph or faster in areas with a 20 mph speed limit; 25 to 34-year-olds were the age group most likely to drive at 25 mph or faster in a 20 mph area, while 55 to 64-year-olds were the least likely to do so; more than seven in 10 drivers underestimated the number of children who are killed on roads globally every year; and eight in 10 drivers thought that vehicles travelled too fast in their area. In addition, research has found that children cannot judge the speed of approaching vehicles that are travelling faster than 20 mph, so children may believe that it is safe to cross a road when it is not.
In his introduction to the debate, the hon. Member for Huddersfield referred to the Green Cross Code, the Tufty Club and so on; I am of the generation that can remember those things. When we were children, those things were very much part of the safety regime that existed.
Five hundred children are killed on roads globally every day, which comes to nearly 183,000 deaths across the world each year. It is for that reason that we must take on board the manifesto of the Global Network for Road Safety Legislators—Manifesto #4RoadSafety—which highlights the measures that it believes parliamentarians worldwide should adopt to reduce the number of road deaths.
As I have said, we have a role to play to improve road safety globally. I congratulate the hon. Gentleman on bringing this matter forward, raising awareness of it and highlighting it for the attention of the Minister. I would also like to highlight the fact that any strategy must be carried out in co-operation with the devolved Assemblies, and I look forward to understanding what the cohesive UK-wide strategy will entail. I ask the Minister to consider—indeed, very much consider—having a United Kingdom of Great Britain and Northern Ireland-wide strategy. If he introduced such a strategy, all the regional devolved Administrations could be part of it, which would also be a good idea.
Luke Pollard (Plymouth, Sutton and Devonport) (Lab/Co-op)
I thank my hon. Friend the Member for Huddersfield (Mr Sheerman) for calling this debate on a really important topic. Around the world, we must design better safety into our roads, and as a member of the Transport Committee I will confine my remarks to how we can design better safety into roads, not only here in Britain but around the world.
There is one feature in particular that I will speak about, which is road signs, because right around the world, whether the road signs are pointing to Plymouth—
Luke Pollard
Before the interruption, I was talking about road signs. Whether they point to Plymouth, Perth, Paris, Panama or Phnom Penh, they are important around the world. The issue was brought to my attention by one of my constituents, Trevor Gorman. His son, also called Trevor, was killed in a road accident last June on the A38, which runs through Plymouth. Trevor was driving with two friends when their van collided with a road traffic post, killing all three men. The post they collided with was made of steel, and was not designed to collapse or crumple to absorb the impact. Experts at the inquest said that the pole met requirements when it was erected in the 1990s, but had not been replaced since then.
The accident that took the lives of these three young men could have been prevented. Thanks to Highways England, the steel signpost has now been changed to a lattice-type pole that crumples in the event of an impact. I wrote to the Minister on 15 March trying to raise awareness of the importance of crumple-able lattice poles in preference to hard steel poles that do not crumple when hit by traffic that comes off the road. I wrote to and met Jim O’Sullivan, the chief executive of Highways England. He confirmed that the sign would be replaced with a crumple-able post, not the same steel post that has been used in the past. That is really important, because as there is more and more traffic, more and more hard, galvanised steel posts are being erected on motorways and lesser roads across the world. In Britain, many of those hard posts are being replaced by lattice-type posts. I invite hon. Members, next time they are driving on busy motorways, to have a look at the signposts. The lattice-type posts—those that can be seen through—crumple if they are hit by a car, absorbing the impact. The pole will not come loose and hit people in cars, which is how Trevor Gorman and his friends died.
We have an obligation not only to learn from best practice of replacing hard, galvanised steel poles in the UK with crumple-able, collapsible poles, but to ensure that best practice is shared around the world. I am sure that hon. Members will be familiar with the 1968 UN convention on road signs and signals, which sought to standardise the amount of signs. What it did not do is standardise the poles to which those signs are attached. I invite the Minister to engage in international collaboration and co-operation on road safety. Could the best practice that is being adopted on our roads in the UK—replacing hard poles with collapsible poles—be shared with our international neighbours?
Mr Gorman, who has been running a fantastic campaign to raise awareness of this issue, wants to ensure that no other families suffer the knock on the door spoken about by my hon. Friend the Member for Huddersfield. If we can do that not only in England and for traffic authorities across the UK, but around the world, those three young men who died on the A38 because their van hit a pole that could not collapse might not have died in vain.
Mr Philip Hollobone (in the Chair)
We now come to the first of the Front-Bench speeches. To help our Opposition spokesmen, I will ask the Clerk to set the clock to show how long a five-minute speech should last. I call Alan Brown for the Scottish National party.
Alan Brown (Kilmarnock and Loudoun) (SNP)
Thank you, Mr Hollobone. It is a pleasure to serve under your chairmanship; the debate has been impeccably run, as usual.
I congratulate the hon. Member for Huddersfield (Mr Sheerman) on introducing the debate. He has spent a long time campaigning on road safety in general, and I pay tribute to his previous work on seatbelts and his parliamentary manoeuvres to ensure that that important legislation got through. He clearly set out the magnitude, scale and impact of global road deaths, how important the issue is, and the fact that this is the 10th biggest killer in the world at the moment—set to rise to seventh, around the level of tuberculosis and all the rest of it. As parliamentarians we all sign up to campaigns to eradicate diseases and other killers, but clearly more needs to be done to tackle the scourge of global road deaths.
I pay tribute to all the other speeches made by hon. Members—I cannot go through them all due to time constraints. Clearly, it has been a consensual debate because it is on such an important subject, but I may make a couple of comments about the Government that are not quite so consensual. I pay tribute to the hon. Members for Poplar and Limehouse (Jim Fitzpatrick) and for Ayr, Carrick and Cumnock (Bill Grant) for their speeches and the work they have done in the fire services. I have friends in the fire services. Such personnel are at the front end, seeing this close up. The devastation is not just for the families; we have people at the front end, and the psychological stress has an impact on other people besides the families.
We have touched on the fact that according to the World Health Organisation, road accidents are the 10th leading cause of death, so obviously the issue needs to be tackled. To tackle it properly, we need to understand the causes. Over the years, better vehicles and roads have contributed, particularly in the UK, to a reduction in the number of deaths on the road, but the fact that 90% of deaths occur in low and middle-income countries—Africa has the highest death rate—suggests that there are other factors such as healthcare and remoteness when people are involved in accidents. We need a detailed analysis to tackle the issue on a proper, global scale.
From the Library briefing paper, Great Britain seems to do well; it is ranked 46 out of 49. I noticed that, interestingly, Mexico has the same death rate per million as the UK—27.7 deaths per million population. Mexico is not a high-earning country, so other factors are obviously at play. As the hon. Member for Huddersfield mentioned, the US does not have as good a record—it is the 9th worst in the chart. What are the reasons for that? In the US, they have a car culture, so I would have thought that they would be more safety conscious. They certainly have a much more lax attitude to drink-driving. There is no compulsory requirement for crash helmets for motorcyclists, who are vulnerable road users. The hon. Member for Huddersfield touched on rear seatbelts. It shows again the theme of having correct laws, enforcing the laws and making sure people adhere to them.
In the UK, there were fewer road deaths this year than in 1926 when records started, which shows the progress made. There was a post-war increase in the number of deaths, up to 1966, in line with the number of road users. In 1966, drink-driving legislation was introduced and that started a downward trend in the number of deaths, which has continued since.
A few years ago, the Scottish Government went one step further. They have lowered the drink-driving limits further, from 80 mg per 100 ml of blood to 50 mg per 100 ml. The measure was met with scepticism by Opposition politicians at the time. The Tories were telling us that all these poor wee grannies were going to be targeted by the police and meanwhile real criminals would be going scot-free. In actual fact, there has been a 7.6% reduction in the first year of the new legislation. It has helped to bring about a change in culture, which will clearly lead to a reduced number of fatalities and accidents. I urge the Minister to think carefully about this and to fall in line with Scotland, rather than having the joint highest drink-driving limit in Europe.
In terms of other road safety measures, average speed cameras have been a success. On the A9, average speed cameras have reduced the number of fatalities by 40%. Investment in the strategic road network helps. I would also suggest that the UK needs to sign up to the UN target to halve the number of road deaths. The Scottish Government have a target of a 40% reduction in road deaths between 2010 and 2020. I believe the UK Government abandoned their target for a reduced number of fatalities—I would urge the Minister to think carefully about that.
Matt Rodda (Reading East) (Lab)
It is a pleasure to see you in the chair, Mr Hollobone. I start by congratulating my hon. Friend the Member for Huddersfield (Mr Sheerman) on securing this important debate and on his knowledgeable speech. He has been an impressive road safety campaigner for many years, and the debate is worthy of him. I also pay tribute to other hon. Members who have spoken today.
This is a very timely debate. Globally, about 1.3 million deaths as well as more than 50 million injuries are caused by road accidents each year, according to the latest estimates from the World Health Organisation. In the UK, we have a proud record and some of the safest roads in the world. There are an estimated 3.7 road traffic deaths per 100,000 people in the UK, meaning we have the safest roads in the world other than in Sweden. However, we must strive to be even better.
I am pleased that the last Labour Government supported global road safety. In 2009, Labour pledged to donate £1.5 million each year from the Department for International Development to a global road safety facility. However, under this Government, progress has somewhat stalled. The 2010 to 2015 coalition originally scrapped our 2009 pledge, before being forced into a U-turn by the International Development Committee in 2011. In our 2017 manifesto, we said that a future Labour Government will reset the UK’s road safety vision and ambitiously strive for a transport network with zero deaths, reintroducing road safety targets and setting out bold measures that will continuously improve road safety standards.
I ask the Minister why the Government scrapped the road safety targets that were introduced by Labour. The Government talk about road safety being a top priority, but Ministers have failed to reduce the number of those seriously injured or killed on our roads.
Jim Fitzpatrick
I know my hon. Friend has limited time, so I will just ask a quick question. We had a 30-year consensus on the reduction of deaths and serious injuries on roads, starting with the Conservative Administration in the ’80s under Mrs Thatcher—I think the hon. Member for Worthing West (Sir Peter Bottomley) was Road Safety Minister at the time. Does my hon. Friend agree that it is very disappointing that the coalition Government moved away from targets? Does he hope, like I do, that the present Conservative Government would restore the targets that they started 40 years ago?
Matt Rodda
My hon. Friend puts it very well. I seek consensus on this issue and I hope the Minister will consider the points that my hon. Friend has made so eloquently. He did not mention the reductions in the police, but I should add that there is a link to that as well. I hope the Government will also reconsider their cuts to the police service.
It is worth bearing in mind that the road injury statistics are rising. A Department for Transport statistical table for the year to September 2017 showed that serious road injuries had increased by 7%. We should focus on that point and seek consensus. As I mentioned earlier, the Minister should seriously look at the UK taking a leading role in promoting road safety globally. What discussions has the Minister had with colleagues in the Department for International Development about global road safety? I also believe, in addition to domestic consensus, that there should be consensus between Departments. We should seek to work with our international partners.
In conclusion, although we have one of the safest road networks around, we should not be complacent. The Government should be doing much more to make our roads even safer. I look forward to hearing the Minister’s comments on some of the important points raised in today’s debate.
Mr Philip Hollobone (in the Chair)
If the Minister is kind enough to finish his remarks no later than 5.52, that will allow Mr Sheerman two minutes to sum up the debate.
The Parliamentary Under-Secretary of State for Transport (Jesse Norman)
I am very grateful for those remarks, Mr Hollobone. It is a pleasure to serve under your chairmanship. I am grateful to colleagues from all parts of the House for the thoughtful interventions they have made on this important topic and for how they have managed to compress a lot of thought and passion into a small number of minutes. That is impressive and good to see.
I congratulate the hon. Member for Huddersfield (Mr Sheerman) on securing this debate. As he said, this is a serious global issue. It is a sobering thought indeed to reflect that around the world, 3,500 lives are lost in road crashes every day according to the World Health Organisation. I absolutely recognise his efforts over many years, internationally and at home, to create a positive force for change. I am also pleased to acknowledge that sat behind him is a Mount Rushmore of dignitaries from the global road safety world, including David Ward of the Global New Car Assessment Programme and David Davies of the Parliamentary Advisory Council for Transport Safety. I thank them very much on behalf of the House and the Government for the work they do.
I had the pleasure of presenting to an international field of parliamentarians and others at the Global Network for Road Safety Legislators in December last year. That was a welcome opportunity to share the UK experience with other legislators, to learn from them and to see best practice in the field. As has been said today, by international standards the UK has an excellent road safety record and a long history of success in encouraging safe behaviour and safe road use from all those who travel on them. It is a record that this country should be proud of. It goes back many years under different Administrations. It is interesting to reflect that the number of people killed or seriously injured on Britain’s roads has dropped by 61% since 1990.
The hon. Member for Strangford (Jim Shannon) rightly mentioned that many of these accidents occur from human error. It may be that in a world of connected autonomous vehicles and pods travelling around the world, human error will be minimised, road safety will be improved and accidents will fall, but there are many things that Government, local authorities and business can do and have done to reduce the number of people killed and seriously injured on our roads and roads in other parts of the world.
I am keenly aware of the impact such fatalities can have and the need to protect our most vulnerable road users. I cannot pause without reflecting on the comments made by my hon. Friends the Members for Ayr, Carrick and Cumnock (Bill Grant) and for Stirling (Stephen Kerr) and the hon. Member for Poplar and Limehouse (Jim Fitzpatrick). They drew attention to the important issue of the impact on young people. In my constituency we have a marvellous charity called the ELY Memorial Fund, which is dedicated to supporting those bereaved by road traffic accidents. It was set up after the death of Emma Louise Young by her wonderful parents, Angie and Steven Tyler. They have pioneered a “Dying2Drive” initiative that will match anything that my hon. Friend the Member for Stirling could mention. I have visited it myself. As the sixth formers come out, seeing a smoking ruin of a car with bodies slumped over it and blood everywhere, the colour drains from their faces and they become completely aware in the most graphic way possible of what it could be to have an experience like that. As my hon. Friend rightly said, it is absolutely harrowing.
Just looking at our young adults, the number of those aged between 17 and 24 killed on Britain’s roads has fallen by 25% since 2010 and 77% since 1990. There is therefore much to be proud of but much still to do. The UK has been a key driver in the development of the sustainable development goals. We are in a strong position to make an effective contribution to the UN’s target on road safety, sustainable development goal 3.6, which is to halve the number of global deaths and injuries from road traffic accidents by 2020. We are also pleased to play our part in the development of a common global vision and narrative on sustainable transport through a target to provide by 2030 access to safe, affordable, accessible and sustainable transport systems and special attention to the needs of those in vulnerable situations. The hon. Member for Huddersfield rightly focused on the impact that a death can have in destroying the fabric and the social and economic integrity of a family. That is one reason why that is a development issue as much as it is merely a road safety issue.
I suggest to the House that the Government’s commitment in the area is clear. The road safety statement, “Working Together to Build a Safer Road System”, published on 21 December 2015, set out our priorities for action. We have delivered heavily on those actions. In particular, in March 2017 we doubled the penalty points and increased the fine—to £200—for using a hand-held phone when driving, as part of our continuing efforts to tackle that dangerous and reckless action.
For more than 50 years, we have used a combined approach of tough penalties and rigorous enforcement along with the THINK! advertising campaigns, recognised by Members across the House for their quality and the international respect that they command, to reinforce the social unacceptability of drink-driving, reminding people of the serious ramifications that drinking and driving can have on themselves and others. That has had results: alcohol-related fatalities have reduced from 25% of all road deaths in 1979 to 13% of a much smaller number of reported road deaths two years ago.
On drug-driving, we introduced a specific drug-driving offence in 2015, with specified limits for 17 drugs, including illegal and prescription drugs. In addition, in 2015 we provided £1 million in funding to police forces specifically for better equipment, enforcement and training of officers in drug-recognition and impairment-testing skills. Last year we published research on the effectiveness of the drug-driving legislation introduced in 2015. It found that the legislation had led to additional police activity against drug-drivers, and higher prosecution and conviction rates.
It is important to say that we also recognise the importance of equipping drivers with the right skills, encouraging the uptake of more pre-test practice in driving and a broader range of real-world driving experiences for novice drivers. Following a public consultation last year, therefore, we have announced amended regulations to allow approved driving instructors to provide lessons on motorways to learner drivers in a dual controlled car. Those new rules will come into effect in June this year. Meanwhile, from 4 December 2017 the practical driving test changed to include following directions from a sat-nav and testing different manoeuvres, making it more applicable for modern driving.
A theme of this debate has been that young people are particularly at risk. That is absolutely right. We know that they are disproportionately represented in our casualty figures, and we are undertaking a substantial £2 million research programme to identify the best possible interventions for young and novice drivers. Those measures to be considered include voluntary limits during the first months of driving solo, more pre-test learning and hazard perception learning, the use of telematics to help novice drivers, and a range of educational interventions.
It is also important to recognise that vulnerable road users other than drivers need attention. Motorcyclists account for 19% of all road deaths, despite accounting for only 1% of traffic. They have not been mentioned in this debate, which I know is by accident and because of the short time we have had, but they are a very important source of the killed and seriously injured statistics. We consulted on improvements to motorcycle training and provided our response last year, setting out our long-term intention to provide for change.
In September last year I announced a cycle safety review. In March this year I launched the consultation on the cycling and walking investment strategy safety review, which invited those with an interest in improving safety of cyclists and pedestrians—including vulnerable road users—to provide evidence, whether drawing on experience from this country or other countries, so that we may use that evidence to shape future policy decisions.
Our road safety statement sets out the Government’s vision, values and priorities to improve the safety of our roads, and how we are working towards a reduction in the number of deaths and injuries domestically. However, I recognise that our road safety statement—it is a theme that that has come out today—does not include a national road safety target.
Jim Shannon
No mention has been made of the insurance companies, which have been strategically and purposefully trying to reduce accidents by offering insurance incentives. Perhaps the Minister will comment on that, because some of those insurance companies have brought in systems that really help.
Jesse Norman
As the hon. Gentleman acknowledges, insurance can cut in different directions based on the pooling effects and the way it is segmented, but potentially insurance can be a valuable part of setting a set of incentives, particularly for young drivers, that could improve road safety over time.
I will return to the key topic that has been raised: the lack of a national road safety target. It is true that we do not have one and we do not have road safety targets for local authorities or the police. Our judgment has been that there is a tremendous need, as has been recognised here, for local road safety practitioners, the police and local authorities, to supply and apply their knowledge and skills to local circumstances, but we are wary of a centralised approach to setting targets. That occurs in a political context in which the 2010 Government took over a vast panoply of targets across the whole of Government and sought to create greater empowerment and local accountability by removing many of those targets. It is important to say that local authorities, the police and other bodies remain free to set their own targets, if they find that useful. It is also worth saying that the over-emphasis on targets can itself be counterproductive, because it can cause people to chase the target, rather than the problem.
We understand and remain committed to the international road safety goals, to which we have already committed ourselves, to sharing our experience and expertise with other Governments, and to taking part in many global forums, which have responsibility for making roads safer, including the UN World Forum for Harmonisation of Vehicle Regulations and the Global Forum for Road Traffic Safety, both hosted by the UN Economic Commission for Europe in Geneva. In addition, my colleagues in the Department for International Development are contributing nearly £10 million—not £1 million or £1.5 million—to the Global Road Safety Facility, a multi-donor trust fund operating through the World Bank. That is a scheme to which the Government as a whole are signed up. The programme has been running since 2013 and is due to continue until 2021.
The Global Road Safety Facility generates research and evidence on road safety. Working on these areas directly relates to the focus area of disability through potential reductions in future disabilities incurred through road crashes, as well as all the other economic and social effects that have been highlighted today. That facility has made progress on road safety particularly within the World Bank, and in 2015 all World Bank-funded road programmes included the road safety component as a result of its work. Also, in 2016, road safety was accepted as a theme in the World Bank environmental and social safeguarding framework, so that all programmes approved near a road will need to include an appropriate road safety component.
This research will help to reduce the high numbers of fatalities for road traffic accidents in low and middle income countries. We will be collecting road transport data through a grant between the Department of Health and Social Care and the work of the official development assistance research funding, in order to assess solutions to road safety problems globally. That will help shape policies and regulations to reduce accidents in four partner countries: Vietnam, Bangladesh, Kenya and China. In summary, the Government take an active role in reducing global road deaths and will continue to support and engage in making not just our roads, but all roads around the world, safer.
Mr Sheerman
We have a thoughtful Minister, and we are building a good relationship with him. This is not a party political matter—
Written Statements
(6 years, 2 months ago)
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Bilateral Loan: Ireland
(6 years, 2 months ago)
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The Economic Secretary to the Treasury (John Glen)
Her Majesty’s Treasury has today provided a further report to Parliament in relation to the bilateral loan to Ireland as required under the Loans to Ireland Act 2010. The report relates to the period from 1 October 2017 to 31 March 2018.
A written ministerial statement on the previous statutory report regarding the loan to Ireland was issued to Parliament on 7 November 2017, Official Report, column 45WS.
[HCWS641]
Sodium Valproate Regulation
(6 years, 2 months ago)
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The Parliamentary Under-Secretary of State for Health (Jackie Doyle-Price)
My hon. Friend the Parliamentary Under-Secretary of State for Health (Lord O’Shaughnessy) has made the following statement:
The EU review into the safety of sodium valproate has now been completed and has recommended that a contraindication for valproate should be introduced in pregnancy and in girls and women of child bearing potential unless they are enrolled in a pregnancy prevention programme.
Valproate is a very effective treatment for epilepsy and bipolar disorder. For some women with epilepsy it may be the only effective treatment. Use of valproate (Epilim, Depakote and other generic brands) in pregnancy is associated with a 40% risk of persistent neurodevelopmental disorders and a 10% risk of physical birth defects. Clear information on the risks of valproate in pregnancy is failing to reach patients, and the warnings issued over the last four years have not had a significant enough impact on valproate prescribing in women of childbearing age. Despite repeated communications on this risk, it is estimated that 400 women in the UK took valproate during pregnancy in 2016.
Following the completion of the EU review, the UK healthcare system will now be making changes to ensure that girls and women of childbearing potential are only taking valproate if there is no other suitable treatment, and that the woman is enrolled in a pregnancy prevention programme. This programme will ensure that every girl or woman knows about the risks of valproate in pregnancy, that where appropriate she is on effective contraception, and that she has a review by her specialist prescriber at a minimum once a year, when a risk acknowledgement form will be discussed and signed by both prescriber and woman herself.
There are approximately 27,000 women of childbearing age receiving prescriptions for valproate in primary care. Within the coming months, GPs should identify all relevant women and girls on valproate in their practice, check that they are on effective contraception as appropriate, and refer them for specialist review unless they have already had a review in the last year.
Specialist prescribers should assess whether treatment with valproate is necessary for women of childbearing potential referred to them, namely that there is no suitable alternative treatment. If continued treatment is necessary, the woman must be enrolled in the pregnancy prevention programme, be on effective contraception, and understand the need to avoid pregnancy.
Pharmacists will ensure the medicine is dispensed in packs which will include the new pictogram and the warning statement. Pharmacy professionals will also make sure that the GP has discussed the risks in pregnancy with female patients and where this has not happened advise them to make an appointment with their GP to have this discussion at the earliest opportunity.
The Medicines and Healthcare products Regulatory Agency has been working in partnership with professional bodies and the healthcare system to bring together a package of measures to support healthcare professionals in implementing these important changes. Educational materials for healthcare professionals and patients are being sent to GPs and specialist prescribers. NICE has updated its guidelines which mention valproate to reflect the new regulatory measures. GP electronic system providers have provided a search and audit function to facilitate the identification of women of childbearing age on valproate and are updating the alerts for valproate.
The MHRA will be closely monitoring the effectiveness of the new measures for avoiding prescribing of valproate to women of childbearing age and in preventing pregnancies from being exposed to valproate. Relevant data will be published and there will be ongoing follow up to ensure progress is being made.
I would particularly like to thank the families involved the Valproate Stakeholder Network who have shared their experiences and expertise. Their dedication, support and altruism will help to keep future generations of children safe.
[HCWS640]
Port Connectivity: England
(6 years, 2 months ago)
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The Parliamentary Under-Secretary of State for Transport (Ms Nusrat Ghani)
I am today publishing the Government’s report on port connectivity, entitled “Transport infrastructure for our global future: A Study of England’s Port Connectivity”.
This country’s ports are a modern success story. At present around 95% of all goods entering and leaving Britain are moved by sea and the port sector directly contributes £1.7 billion to the UK economy. Once factors such as supply chains are considered, the port sector’s economic contribution to the UK is estimated to be £5.4 billion per annum.
The role ports play in facilitating trade and driving economic growth is only likely to increase. As an island our ports are fundamental to our global success as an outward-facing trading nation.
Ports are investing many billions of pounds in their own infrastructure to ensure larger ships and volumes can be accommodated, and so that England continues to be a key destination for global trade. It is therefore vital there is appropriate capacity on our inland transport network, to and from our international gateway ports, to meet demand.
As part of a wider commitment, Government are making investment totalling over £60 billion in this Parliament alone to improve our transport networks as a whole, including freight connectivity.
This connectivity supports the movement of everything to and from our ports which are vital to our everyday lives from providing fuel to our power stations to generate electricity for our homes, to transporting the produce to our supermarkets so we have food to eat.
“Transport infrastructure for our global future: A Study of England’s Port Connectivity” sets out our vision for how we can continue to grow a thriving English port sector1 and how collaboration and innovation by Government and industry can enhance the trade, economic and productivity benefits delivered by ports.
The report has been developed with input from Network Rail, Highways England, the port and wider freight industry, and its customers. In doing so the study has looked at the current challenges and opportunities for port and freight connectivity, and makes specific recommendations which the Government and industry can work together to achieve.
A copy of the study has been placed in the Library of both Houses and is also available on gov.uk, together with the supporting regional case studies report on connectivity.
1 Ports policy is fully devolved to the Scottish and Northern Ireland Governments. In Wales, responsibility for fishing ports only was devolved to the Welsh Government but from 1 April 2018, powers in the Wales Act 2017 will saw further devolution to include all ports wholly in Wales, other than reserved trust ports (Milford Haven is the only one of these) for which the UK Government retain responsibility. An overview of Milford Haven’s connectivity is included in the supplementary case study document for information, but the recommendations are not intended for implementation in Wales.
[HCWS639]
Financial Guidance and Claims Bill
(6 years, 2 months ago)
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The Parliamentary Under-Secretary of State for Work and Pensions (Guy Opperman)
Later today I will place in the Library of the House the Department's analysis on the application of Standing Order No.83L in respect of the further Government amendments tabled for Commons Report stage for the Financial Guidance and Claims Bill.
[HCWS637]
Employment, Social Policy, Health and Consumer Affairs Council
(6 years, 2 months ago)
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The Minister for Employment (Alok Sharma)
The Employment, Social Policy, Health and Consumer Affairs Council met on 17-18 April 2018 in Sofia, Bulgaria. DWP officials represented the United Kingdom at this informal Council.
The agenda consisted of presentations from experts and panel discussions among experts, member states, the presidency and the Commission.
The first day focused on how member states and social partners can deliver upon principle one of the European Pillar of Social Rights: education, training and life-long learning. Following an opening plenary, a number of speakers presented on themes including early childhood development, and the implementation of the Council recommendation on upskilling pathways. Panellists then reflected on how to best provide upskilling opportunities for adults.
The second day centred on delivering on principle four of the European Pillar of Social Rights: active support to employment. The Commission first took stock of progress against the Council recommendation on the integration of the long-term unemployed into the labour market and the youth guarantee. A presentation was then provided by Eurofound on the remaining challenges with regard to integrating young people and the long-term unemployed into the labour market. Panellists then discussed domestic measures being taken to address the challenges.
The informal Council concluded with remarks from the EU Commissioner for Employment, Social Affairs, Skills, and Labour Mobility, and Dr Biser Petkov, Minister of Labour and Social Policy of the Republic of Bulgaria.
[HCWS638]
Grand Committee
Smart Meters Bill
Tuesday 24th April 2018
(6 years, 2 months ago)
Grand CommitteeRead Full debate Smart Meters Act 2018 View all Smart Meters Act 2018 Debates Read Hansard Text Read Debate Ministerial Extracts Amendment Paper: HL Bill 83-I Marshalled list for Grand Committee (PDF, 88KB) - (20 Apr 2018)
The Deputy Chairman of Committees (Baroness Fookes) (Con)
My Lords, I must make the usual announcement. If there is a Division in the Chamber, we must adjourn and resume after 10 minutes.
Clause 1: Smart meters: extension of time for exercise of powers
Amendment 1
Lord Grantchester
Lord Grantchester (Lab)
My Lords, I will speak also to Amendments 2 and 4 in this group. Amendment 1 gives the Secretary of State a further three years beyond the date the Government are asking for in the Bill. The Government seek to extend the existing powers provided to the Secretary of State to develop, amend and oversee regulations relating to the licensing of smart meters from 2018 to 2023. Unusual as it may seem, we would like the Government to have more time. We want them to get the smart meter implementation programme right.
We are all in favour of smart meters and the benefits that they will bring to energy efficiency and customer satisfaction. I could cheekily say that we do not want to have to grapple with whatever state of distress the smart metering programme has reached when we take over at the next general election. We want the plan to work for consumers, and at the moment we see a smart meter rollout that is unclear, incoherent and unco-ordinated in its approach. The Second Reading debate revealed the delays, complexities and escalating costs at this juncture. We want the Government to take more time. We think that they will need more time. Ostensibly, they are seeking the five-year extension—three years beyond the 2020 deadline—in order to conclude a review of the data access and privacy framework by the end of 2018, and to fulfil any actions needed from the review.
In addition, I understand that the National Audit Office review of the cost-benefit analysis, due in July, will also be delayed because of a lack of resources. The review was also going to consider the technological choices made to ensure that the programme was not going to be installing obsolete equipment. I would appreciate it if the Minister would include the latest position on the NAO report in his remarks. This indicates that there is going to be a pause in any case. We believe that this time should be used constructively. Experience has already shown that the timetable has slipped. We say to the Government, “Take more time. We think you might need it. And in return, let’s get it right. Let’s be more ambitious. Let’s capture the latest technology to bring real benefits to consumers”.
Also contained in the amendment is the consideration that the statutory obligation to complete the rollout by 2020 needs to be reassessed. First, there is a mixed message or misunderstanding about what is to be completed by 2020. I am grateful to the Minister for his letter of 22 March, after Second Reading. In his second paragraph, he writes:
“The obligation on energy suppliers … is to take all these steps to install smart meters … by the end of 2020”.
However, in the first paragraph of page 2 of the letter he writes:
“The Government is committed to ensuring all homes and small businesses are offered smart meters by the end of 2020”.
There is a lack of clarity between installation and being offered a smart meter by 2020.
The Government needs to reassess the whole programme, revisit the milestones and reset the parameters in a collaborative way with the various interested parties charged with making smart metering happen. Just as the Government need sufficient time to undertake and execute actions from the post-rollout review of the programme, as the Minister’s letter states, so the industry needs the confidence to implement worthwhile solutions for its consumers.
I move to Amendment 2, which was moved in the other place, and we repeat it here merely to retest under what circumstances the Secretary of State may wish to remove certain licensable activities to which his department has drawn attention in its memorandum, submitted to your Lordships’ Delegated Powers and Regulatory Reform Committee. Although it is stated that there is no intention to use this power, one licensable activity that could be removed is a revision of the smart meter communications service, the DCC. In line with the ambitions under Amendment 4, perhaps the Minister might clarify why his department may wish to use the power included here.
On Amendment 4, although the Minister and the Government may wish to portray that smart metering is now back on track and proceeding constructively towards its objectives, very few independent assessments concur with that view. There continues to be confusion regarding which types of SMETS 1 meters can be upgraded without replacement to be interoperable and from what date. There is confusion around differing standards and the use of differing technologies around the UK; confusion over whether pursuing the 2020 deadline has the potential to increase costs and risks and jeopardise the programme’s increasingly suspect credibility to consumers; and concern that a lack of fully tested SMETS 2 meter devices will further undermine meeting supposed timescales.
In considering the number of reports across the various parameters important to stakeholders, the necessary consumer activity required and the technological challenges inherent in these meters, we concluded that it would be far more constructive if all those intimately challenged by the rollout were to come together to share perspectives and work constructively together to find common solutions and co-ordinate the rollout. We consider that Ofgem as the industry’s regulator would be best placed to lead and develop this national plan. We consider that consumers should be put at the heart of the programme, costs monitored to secure benefits for them and the programme able to take advantage of all developing consumer technologies.
Proposed new subsection (3) clarifies those that Ofgem must consult, and subsection (4) specifies all the ambitions to which the national plan must have due regard. The plan must set out credible milestones with appropriate timescales for achievement, including the installation or termination date. The plan needs careful monitoring and adjustment, with frequent reports from Ofgem. For example, I draw attention under proposed new subsection (4)(g) that all other national rollouts of smart meters have been conducted through DNOs—distribution network operators—not suppliers. Here the rollout has been conducted by energy suppliers. I do not wish to challenge the whole implementation model, but it could be that different answers are required as implementation proceeds, and Ofgem needs to be able to take account of this and promote effective delivery mechanisms.
A reset needs to be made so that the consumer can begin to have confidence again that smart meters will be deliverable and beneficial. Smart metering needs to be the first crucial initial infrastructure in place to deliver the benefits of smart technologies to the home. It needs to be effective—it needs to be got right. I ask the Minister to respond positively to this amendment. It may not be correct in every detail: for example, it does not include a review of the cost-benefit analysis, as it had been understood that the NAO was already going to be doing this. The Minister needs to advise the Committee on the status of that review. It can be included on Report, should the NAO not conduct the review after all. However, I ask the Minister to agree that a national plan along these lines is required and to bring something back himself on Report. Perhaps this can be discussed next week, but a favourable response would be very constructive. I beg to move.
Baroness Featherstone (LD)
I support Amendment 4. Compared with other noble Lords present, I came late to the smart meters table. They have participated in a number of debates leading up to where we are now and during that process they have obviously met a number of bodies associated with the smart meters programme. I have to say that I have been somewhat shocked at how what should be an energy revolution, welcomed on all sides of this House and beyond, has turned into a shambolic mess. As was mentioned, the cost—much higher than was ever envisaged—will no doubt end up with the consumer. This could and should never have happened.
I was a member of the London Assembly when it was formed in 2000 and I was chair of the transport committee. When we introduced in London the biggest civil engineering project since the end of the Second World War—the congestion charge—a great deal of planning and work went into making sure that on the day it went live, it was so well thought through that nothing went wrong, despite the Daily Mail circling the perimeter of the charge to, it hoped, see it go wrong. I do not really understand why the commissioning of such a major infrastructure project has not been treated in that fashion. This is an absolutely huge change and an infrastructure priority, heralding a better future for all when energy is very important to this country. It seems to have involved a kind of piecemeal bun fight over which companies will deliver which meters to which people under what circumstances and for how long, with no co-ordination, no collaboration and nothing bringing it together.
Everyone has made it quite clear that the deadline will be missed. I am afraid that I have not met anyone, other than the Minister, who thinks that this deadline will be reached. That being the case, rather than move the programme to 2023 or whatever, it would be far better to grab hold of it now: otherwise, consumer confidence, which is vital to this project, will be completely undermined. I hope that the Government will grasp hold of this and take up the recommendation of the noble Lord, Lord Grantchester, coming back with a similar suggestion for halting the project and promoting a national plan. Not only does what needs to be done to whom, by whom and at what cost need to be thought through but there is a great need for a new communications programme to market the project. There is possibly also a need to incentivise consumers and to find a way not to put them off but to bring them back into the fold after they have become somewhat disillusioned.
The opportunity to make the project work is there, but at the moment we are in danger of the absolute opposite happening, with diminishing returns and diminishing confidence, shooting ourselves in the foot over what should be a fantastic programme for the future. The project has been piecemeal, inadequate and not thought through. If the Minister will excuse me, I believe that he should bring it together, do the necessary and bring back an amendment on Report.
Lord Teverson (LD)
My Lords, I congratulate the noble Lord, Lord Grantchester, on this major amendment in terms of a plan. I have been searching to find a way in which this project can be put right. The difficulty is in making it deliverable and coherent without going back to where we were 12 years ago. This programme started in 2006 and it has taken since then—the time taken for the First World War, the Second World War, the Korean War, plus a bit more—to get to 300 SMETS 2 meters. That is what we have achieved over that period of time. That suggests to me that it has not been good. Obviously, a number of Governments have been involved during that time. We all understand how important this is. This programme is not just about people not having to read the meter any more, as one of my colleagues said over lunch, but about how we manage energy in the whole economy and our nation for decades ahead. We should be leading a cultural, technical and economic change.
Lord Skelmersdale (Con)
My Lords, is there not actually a rather bigger problem than the one the noble Lord has just explained? At the moment smart meters are offered to consumers. They do not actually have to have them. This whole scenario falls absolutely flat unless there is an imposition on the energy companies, whether gas or electricity, to install smart meters in their customers’ premises.
Lord Stevenson of Balmacara (Lab)
My Lords, I support my noble friend Lord Grantchester in his Amendment 4 and reiterate his important suggestion. He accepts that his amendment is not necessarily the definitive way forward and is inviting the Government to engage with him and others to try to find a form of words, process and activity that would enable a national plan to come forward that we could all get behind. I hope that when the Minister responds he might signal that this is something he will consider.
Like the noble Baroness, Lady Featherstone, I have come to this relatively late. Those who have not been living the ups and downs of this over the past few years are completely and utterly shocked that it could have got to this stage without some very serious consequences. At a superficial level—I know it is more complicated than this—the initial programme has had to be restarted and reset but is now about to stop, and people are being laid off and made redundant because there is no guarantee that the SMETS 1 meters will be continued after October 2018. A completely new, untested and uncertain scheme involving SMETS 2 will be brought in on top of that and will therefore go back over ground already covered in a way that is as yet unforeseen.
At the same time, the whole costs of this are hidden and difficult to ascertain. The process under which levers can be exercised on people is not clear and the role of Ofgem, the regulator, is very passive in relation to the capacity it has now. It all smacks of being a complete and utter train crash of enormous proportions, and the only solution appears to be to keep ploughing on. British pluck is all very well but it has not always been the most successful way forward, particularly in matters involving technology.
I urge the Minister, when he comes to respond, to think very carefully about the way in which the Opposition are proposing this and about the support we have received from others. If we do not come out of this with a clear and approachable process—whether it is this national plan or not—the real danger is that consumers will literally be switched off in the sense that they will not wish to be involved in this. As a result, the huge upside of this, the benefits of bringing in a new technology, opening up innovation and bringing in new thinking about how we manage our energy supply—which was the point made by the noble Lord, Lord Teverson—will be lost if consumers are not prepared to walk along. This is not about individual customers having a better time; it is about how we as a country can cope with the energy demands that we will face, and minimising them while strengthening our approach as we go through. This is a terrific chance to get this right in a proper and positive way.
The Parliamentary Under-Secretary of State, Department for Business, Energy and Industrial Strategy (Lord Henley) (Con)
My Lords, the noble Lord, Lord Teverson, used the examples of the length of a number of wars. I will not follow him down that track because I think one could come up with some longer wars as examples. He mentioned that this had started under a Labour Government, continued under a coalition Government and was now being dealt with by a Conservative Government. I have been a member of two of those—obviously I was not a member of the Labour Government. It has been going some time but we want to get it right.
When things have been going some time I am always faintly surprised when Oppositions put forward amendments to suggest that we should take even longer. I suppose that is why the noble Lord, Lord Grantchester, prefaced his remarks with, “Unusual as it may seem”. I take note of that. I will not rise to his bait to make any comments about the likely outcome of the next election. Quite rightly, he wants whoever is in government at the time, whomsoever that may be, to be helpful, possibly referring to the remarks on the word “helpful” made by the noble and learned Lord, Lord Goldsmith, in yesterday evening’s debates. We will try to avoid “helpful” in the future.
To continue on the helpful theme, I would obviously like to be helpful. The noble Lord asked whether we could have further meetings. I will make myself available when the noble Lord, the noble Lord’s colleagues and the noble Baroness, Lady Featherstone, and others want to have meetings between now and Report if we feel that we can discuss things further and take things forward.
In the meantime, I will respond in a little detail to the specific amendments—Amendments 1, 2 and 4 in the first group. As I said, the first amendment proposes to extend certain powers that the Secretary of State has to develop, amend and oversee regulations relating to smart meters until November 2026, although in this Bill we have sought only the powers that we think are justified, which extend to 2023. Extending the powers to 2023 would allow the Government to continue to oversee the programme, while suppliers meet the obligation on them to take all reasonable steps to install smart meters in homes and businesses by the end of 2020.
The noble Lord referred to my letter where I talked about them offering rather than installing—we are trying to make sure that they have at least offered something to everyone. Obviously no Government can guarantee that one can be installed in every home because it is quite possible that a number of individuals will refuse to have a meter for whatever reason. It also allows the Government to undertake a post-rollout review once the programme has been operating in a steady state and then implement any of the recommendations that emerge. We hope this will help to ensure that the smart metering programme is fit for purpose—whether SMETS 1 or SMETS 2—for decades to come.
Lord Stevenson of Balmacara
I am sorry to interrupt, but on the narrow point, what specification are the Government adhering to? Is it the obligation on energy suppliers to take all reasonable steps to install smart meters or not?
Lord Henley
We hope that they will offer—and if they do, obviously they must then install. There is no point offering to install one unless they do so. So we hope that all of them will have offered and installed by that date.
Lord Stevenson of Balmacara
It is important that we get this right, because there is a world of difference between making an offer to install and having an installation completed. My noble friend Lord Grantchester, in making his proposal, would give an additional three years because the understanding we had from the first paragraph of the Minister’s letter was that it was about the completion of that process. If the noble Lord is saying that the licence obligation placed as a condition of licence on energy suppliers is only to offer, does he not accept that that completely changes the process?
Lord Henley
No. I wanted to make clear that there is no obligation to have got to a 100% rate of installation because we know we can never get to that target. What we are looking for is that they must make the offer and then make the installation—that is the undertaking—by the appropriate date. We do not think that extending the time is necessary. Does the noble Lord follow me?
Lord Stevenson of Balmacara
I will try one more time and then I will stop. The obligation placed statutorily on companies operating as energy suppliers is, as I understand it, to have made an offer to take all reasonable steps to install smart meters in homes covered by the mandate by the end of 2020. That will be considered to have been completed if they have written to and received information back from all those who would be eligible to receive these things, and, where there has been an acceptance, have completed the installation. Obviously, as the Minister said, you cannot install a meter if somebody says that they do not want one, so those people are taken out of it—but must everyone else, if they say that they want a meter, have had one installed by 2020? That seems extraordinary.
Lord Henley
It is not simply a matter of writing a letter to the individuals concerned. One letter would not be enough. The energy suppliers must show that they have made reasonable efforts with all their customers while allowing a degree of flexibility in certain circumstances. The rollout obligation puts that onus on them. Ofgem has made it publicly clear in an open letter that it will need to adapt its approaches to consumer engagement, using other approaches where necessary. It is not merely a letter, but it must make a genuine attempt—merely making a solitary offer is not sufficient—to get hold of those people to make an installation.
Lord Grantchester
I shall interject very quickly to follow up on my noble friend’s comments. There has been a lot of confusion about what sort of meter will be installed. The Government have backed away from SMETS 1, but I am also hearing industry commentators suggesting that if SMETS 1 meters can be interoperable, the process should continue beyond October as they will then be interoperable as though they were SMETS 2 meters. So if, as we are hearing from other commentators, people are standing down staff from being able to put meters into premises where they have said yes because of the unavailability of SMETS 2 meters, that in itself will mean there will be a considerable delay to implementation. In the circumstances, it is rather unclear to the consumer what exactly their expectations will be and what will be delivered by what date—hence my argument. The Minister needs to appreciate that there is probably still a lot of confusion out there regarding what meters will be done by what date, when they might be installed and when any benefits will be appreciated.
Lord Henley
As the noble Lord is aware, SMETS 2 meters are now being installed. I cannot remember the figures given at Second Reading, but so far there have been very few. However, we expect to see a fast increase over the coming months.
We have also made clear—the noble Lord alluded to this—is that SMETS 1 will no longer count by October, the date to which he referred, and thereafter SMETS 2 will be installed. If a SMETS 1 is installed after that date and is upgraded to a SMETS 2, obviously that will count as a SMETS 2. I will take advice and write to the noble Lord if I am wrong on that. However, as the noble Lord knows, from October SMETS 2 will count in meeting that commitment.
With that, with the changes and with the gradual rise in the number of SMETS 2 installed, no suppliers will have problems in finding work for their staff, and so will not have to lay people off and bring them back on during this process.
Baroness Featherstone
My understanding is that there are so few SMETS 2 meters out there—mainly in supplier homes—that their testing with the DCC cannot be relied upon at this stage. Surely it cannot be done with fewer than 50,000. I am not a technician—I do not know what the number is—but 300 or fewer is not enough to ramp up the rollout of SMETS 2 in the way the Minister is suggesting.
Lord Henley
Again, I will take advice on that. We will come back to it on a later amendment. The noble Lord, Lord Teverson, has spoken about not moving further until we have a large number rolled out. However, my understanding is that this process is beginning to happen and that numbers are going up. The noble Baroness is looking at me in disbelief, as she so often does. We often disagree.
Baroness Maddock (LD)
In defence of my noble friend, we have had briefings which tell us what she has just said to the Minister. I do not know where he gets his briefings, but the industry has briefed us and it is clear that SMETS 2 is not at the stage that he thinks it is.
Lord Henley
My Lords, I am not sure whether, strictly speaking, the noble Baroness is correct. My understanding is that the number of SMETS 2 installations will go up over the coming months, in which case it will be possible to test them, and therefore that by October we will be at a stage where we can go ahead. We have time on our hands on this matter and, as I said, I would like to have further meetings with the noble Baroness and others between now and Report. We could then go through some of these particular points.
At the moment perhaps I may get on with these amendments and come back to my point. As I said in response to the noble Lord, Lord Grantchester, there will be this change in October. SMETS 1 meters will no longer count, but suppliers will still be able to make use of their workforce in the installation process.
On the extension that the noble Lord is generously seeking on behalf of the Government, we do not think it can be justified. It would not send out the right signals and could even have—dare I say it?—an unhelpful impact. It could suggest that the Government would play an active role in leading the programme well beyond the point at which the self-sustaining industry model overseen by Ofgem is due to take over. It also risks undermining industry momentum in progressing the rollout just as suppliers are accelerating deployment with the new generation of meters being brought in. Delay to investment decisions and deployment would also bring delay to the benefits that accrue to consumers from receiving smart meters. In turn, that could impact on the pace of moving to a smart meter system with dynamic time-of-use tariffs made possible by smart meter installation. That is why we are firmly committed to the programme’s timetable as reflected in Clause 1.
The noble Lord referred to the NAO report. We welcomed it and the follow-up study on smart meters, and will work closely with the NAO to help review the progress of the programme, but I do not believe that the report necessarily means that we need a pause in the rollout. As the noble Lord knows, it is routine for the NAO periodically to examine every major government programme, as it did on smart metering in 2011 and 2014. We will take note of the report and discuss it with the NAO, but I do not think that the programme needs a pause.
Amendment 2 relates to the power to remove licensable activities. This amendment seeks to limit the extension of the Secretary of State’s power, so that beyond 1 November 2018 he would not be able to exercise the power to remove any licensable activities in respect of smart meter communications. The Government have so far used the power only to establish the provision of a smart meter communication service as a licensable activity. That ensures that we have a communications and data system that supports secure, reliable and interoperable services for smart meters. The DCC is playing a fundamental role in driving smart metering benefits, and we do not currently consider that we will exercise this power to remove the provision of a smart meter communication service as a licensable activity.
However, we cannot rule out that evidence could emerge to suggest that the removal of at least some elements of this licensable activity to the market could be justified. Retaining the power to remove licensable activities in respect of smart meter communications is therefore necessary as a backstop and is consistent with the Secretary of State’s principal objective of protecting the interests of energy consumers. The Secretary of State may also determine that it is appropriate and in energy consumers’ best interests to introduce further licensable activities in support of smart metering by 2023.
As detailed in our delegated powers memorandum, the smart metering programme continues to develop policy in a number of discrete areas, including overseeing the development of technical solutions delivering smart benefits to the small number of premises which are currently not expected to be served by the smart meter communications network as to do so would be disproportionately expensive. This is typically due to location and surroundings. For example, this can affect premises in highly built-up areas with many tall buildings as well as remote or mountainous areas.
One of the tools we may wish to use to deliver the policy is requiring activity to be licensed. For example, it might be considered appropriate to create a licensable activity that relates to arranging the establishment of communications to these properties. Should we introduce a new licensable activity here that is subsequently found no longer to be justified or needed, we would need to have retained until 1 November 2023 the ability swiftly to remove that licensable activity.
As the noble Lord will be aware, we have used the affirmative resolution procedure. We have also referred it to the Delegated Powers and Regulatory Reform Committee. It did not raise any issues with it. Further—I shall read this out because it is not often that one gets praise of this sort—the memorandum from the committee, in the part that I have highlighted, states:
“There is nothing in this Bill we would wish to draw to the attention of the House. We do, however, wish to commend the helpful and well-drafted memorandum about the delegated powers in the Bill, provided by the Department for Business, Energy and Industrial Strategy”.
We do not often get praise, so I think that it is worth repeating it on this occasion to make sure that it is properly on the record. Obviously, it was already on the record, as it was in the committee’s 17th report—but I am grateful for the opportunity to repeat it.
Amendment 4 is the big amendment tabled by the noble Lord, Lord Grantchester, and principally supported by the noble Baroness, Lady Featherstone, and the noble Lord, Lord Teverson. I am grateful to the noble Lord, Lord Grantchester, for what he said about it. He talked about there being confusion on a number of points, which I hope I can help deal with. He also spoke about moving from rollout by suppliers to rollout by DNOs, as happens in another country. I suggest to him that making such a change might bring more confusion and chaos than absolutely necessary. Let us first deal with the amendment and no doubt we can talk about that later.
The amendment would task Ofgem with consulting stakeholders and publishing a national plan for smart meters by 31 December 2018. It would then require the Secretary of State to specify the final version of such a plan in regulations. The large-scale rollout of smart meters across Great Britain by 2020 is a substantial technical, logistical and organisational challenge. As we have made clear, meeting that challenge depends on collective and co-ordinated delivery. I think that that programme should be led by the Government, who set the policy and regulatory framework for the realisation of the benefits. The rollout is delivered by energy suppliers, networks and others. Ofgem’s role is to make sure that consumers remain protected during the rollout, to monitor energy suppliers’ compliance with their obligations and potentially to enforce against any non-compliance. The Government have provided strong leadership and established governance frameworks, with clear roles and responsibilities, across all these parties. Under this leadership, the smart metering programme has already made substantial progress.
Given the scale of the challenge, I understand and welcome the noble Lord’s appetite for information and reassurance on progress. I remind him of the commitments that the Government made earlier in the passage of the Bill—namely, that we will publish an annual report on the progress of the smart metering implementation programme as well as an updated cost-benefit analysis in 2019, to reflect the state of play after the transition from SMETS 1 to SMETS 2 meters has taken effect.
In that context, it is not clear what the additional value of a national plan of the type proposed by the noble Lord would be. The purpose seems to be to task Ofgem with the oversight of smart metering implementation and to reduce the Government’s role. Such a change in approach would simply divert attention and resources from the rollout delivery and associated consumer benefits. The Government are rightly accountable for safeguarding the benefits of smart metering. The new clause would duplicate existing efforts to deliver an efficient rollout and would put an undue burden on Ofgem. Furthermore, requiring the Secretary of State to specify the final version of the national plan in regulations would limit his ability to use the Section 88 power, of which the noble Lord will be aware, to modify the smart metering framework in future. The purpose of the Bill is to enable the Government to respond to the operational realities of the rollout and to adjust the monitoring framework as may be required. The new clause would undermine that intent.
In summary, a high-level plan for the rollout of smart meters was set by the Government in their 2011 prospectus document, which establishes the framework for the rollout.
Lord Campbell-Savours (Lab)
I was engaged in debates on these matters with the noble Lord, Lord Teverson, 10 years ago, when the original legislation was put through. I am unable to understand what pressure is on the Government to get on with this before the National Audit Office produces its report. I would have thought that that report was critical in all this, as it may well make recommendations that do not fit within the proposals of this legislation. What is the pressure? Could we not have waited for another six months? What would have happened if we had?
Lord Henley
I have been criticised for the Government going rather slowly on something that was introduced in 2006 by the Government of whom the noble Lord was a supporter. As the noble Lord, Lord Teverson, said, this has continued through the length of two world wars and a bit more; I asked him not to specify any further wars. The NAO has already reported three times. As I said, we will respond to the NAO’s report, but I do not see why we should not continue with what we are doing at the moment. As far as I know, we are all in full agreement on the general benefits of a smart metering programme and of getting as many people as possible on to it, so that they will be wiser about their use of energy and more able to consider which energy supplier to choose—I am just giving all the benefits of smart meters. I do not think that there is any need to pause for the NAO report. As I said, we will consider it and respond as appropriate.
Lord Campbell-Savours
Has the NAO expressed a view on whether the legislation should have been delayed? It will have a view. Is it happy for us to proceed with legislation without its report?
Lord Henley
I am not aware that the NAO has asked for any delay, but the noble Lord can look at its three reports, including the most recent one, which I have referred to. I will leave that to him.
As I said, we published our prospectus document in 2011, which established a framework for the rollout and was the basis for the regulatory framework through which the rollout is now being delivered. It is right that we have progressed from planning to implementation. Both the Government and Ofgem are focused on monitoring the rollout to ensure that it delivers in a timely way—albeit, as the noble Lord, Lord Teverson, put it, slightly less timely than he would have liked. Where our monitoring activity identifies areas where the course of the rollout needs to be adjusted, we will of course take action.
In due course, we want smart metering to be business as usual in a competitive retail market. The Government will then be able to step back when it is right so to do. However, in the short to medium term, the Government do not intend to step back from their leadership role. Through the powers in the Bill, we will sustain our active engagement with the industry to ensure that any risks to meeting the 2020 deadline are identified and addressed as quickly as possible. I repeat what I said about hoping to have ongoing discussions with the noble Lord and others, but I hope that in the meantime he will feel able to withdraw his amendment.
Lord Grantchester
Before the noble Lord sits down, could I just come back to the NAO report, just to be clear in my mind about exactly what is happening? Am I to understand that the NAO is still planning to report by July 2018 on the cost-benefit analysis of introducing smart meters? The noble Lord has correctly said that the NAO has already done two reports—in 2011 and 2014. It is now four years since the report of 2014 and I understood that the general consensus was that it was about time to do another cost-benefit analysis, in order to prove to consumers that what is happening is for their benefit, even though the costs are going up. However, if the review is being shelved, it is important to know that. We understand that it was not part of any legislative programme but that it was going to improve consumers’ perspectives on accepting an offer that would be beneficial to them. Can the Minister be precise: is the NAO report going ahead in July 2018 or not?
Lord Henley
I do not know about the precise timing of that report. Obviously, that has to be a matter for the NAO. We will respond at that moment, but I do not think it is necessary for the Government to delay what we are proposing to do. As the noble Lord, Lord Teverson, said, there has already been too much delay. We will await with interest the report from the NAO.
Lord Grantchester
I do not think that the NAO wants to cause any delay. I understood that it did not have the resources to undertake this work and therefore that it would not happen, although it is crucial for the continuing rollout that consumers can easily see the benefit over and above the cost of the programme. It is not easy to understand it within their own bills, but if the NAO produced a report showing that overall it was beneficial to consumers that this was going ahead, it could be very constructive in allaying some people’s fears that this is not for them because of the cost. I want only to understand whether the NAO still has a commitment to produce the report this year.
Lord Henley
Again, I do not know about this year. I understand that the NAO still plans to undertake a review. It has not confirmed its timetable. Obviously, that is a matter for the NAO. When there is a new cost-benefit analysis, obviously we will look at it—but I cannot go into the NAO’s timetable.
Lord Teverson
Perhaps it might be useful if we could meet the NAO and go through this and make sure that the audit is broad enough in scope without it taking longer. I realise that this question is not completely to do with these amendments, but I did ask the Minister about the transferability of SMETS 1 meters, which is different from interoperability—SMETS 1 meters are surprisingly interoperable generally—and the problem of taking one out and replacing it with one that is almost identical but is from a different supplier. Is the Minister aware of that? Do his officials see that as a significant problem? Is there a solution so that we can stop this almost immediately, if it is happening?
Lord Henley
I think I had better take advice on that and possibly write to the noble Lord, or deal with it in any meeting that we have. I understand that some SMETS 1 meters can be upgraded. But I do not want to put on the record anything that I might have to make a personal statement about and correct the following day. Perhaps we could leave that to a letter or a discussion with the noble Lord.
Lord Teverson
I am very happy with that. I stress that it is an asset and financing issue, rather than an interoperability issue.
Lord Grantchester
I thank the Minister for his response, and I am grateful for all the comments made around the Committee today. It has been very helpful. I am not trying merely to tease the Government in offering them more time, I thought that the Minister might come forward with evidence to show that all this is going to be achieved well within the 2023 timeframe, and the different steps that are going ahead, such that we could be shown to be completely erroneous in our impression that the Government may need more time. I put it to him that we are trying to be constructive and trying to get the right solutions done in an effective way for smart metering to be well accepted, so that when consumers are offered a smart meter they are only too keen to go ahead because of the state of the technology, the benefits that can be shown to them, and so on, and we can all look forward to an early resolution of all these problems for a successful outcome. So if the Minister is happy to take it in that timeframe and does not see a critical issue in the 2023 deadline, I am very happy to beg leave to withdraw the amendment.
Lord Grantchester
“Cyber security
The Secretary of State must place a duty on the Government Communications Headquarters to conduct an annual risk assessment to ensure that the smart metering system is adequately protected from cyber attacks.”
Lord Grantchester
My Lords, I shall speak to Amendments 6 and 11 in due course. Amendment 3 places a duty on GCHQ to conduct an annual risk assessment regarding the security of the smart metering system. One of the delays experienced in the rollout of smart meters concerns whether or not the system is secure from cyberattacks. Considering that the technology used to communicate the information from the smart meters is a basic 2G technology which can hardly be said to be secure, it is remarkable that GCHQ is able to pass the system as fit and secure.
In the Minister’s letter dated 20 March, which I referred to earlier, he clarified that critical communications with smart meters will happen only when authenticated by strong encryption and independently countersigned by the DCC. I would be grateful if the Minister could clarify what that means, whether GCHQ is demanding technological improvements and whether security issues are part of the Government’s review of the data access and privacy framework to be completed this year. What processes do the Government have in place to ensure the robustness of the system? Cybersecurity is a constant challenge, and we believe that an annual risk assessment will be required to keep the UK’s infrastructure secure from potential attack. I beg to move.
Baroness Featherstone
My Lords, I tabled Amendment 11 to probe issues around the use of data obtained by the powers in the Bill. It takes the form of a review into the use and potential misuse of the data obtained via the smart meters scheme. The review would look at the risks of data theft and of data being passed to a third party without the consent of the consumer, and if the risk of theft or passing on without consent was substantial the report would bring forward measures to be implemented to combat such events. Lastly, the amendment would require the Secretary of State to lay a report of that review before both Houses within six months of the Act coming into force.
I think the intent of the amendment is quite clear. We have recently seen the extreme value of data to a number of organisations. It is clearly valuable in a world where we create and feed markets through information, and the more personal that information, the more targeted sales or persuasion can be. The amendment seeks to put measures in place to mitigate those risks.
Baroness Maddock
My Lords, Amendment 6, in my name, refers to issues that I raised at Second Reading. It calls for a review of the code of practice for energy suppliers. It is a probing amendment. I am anxious to get a bit more information from the Government about how they understand consumer engagement because I feel that whenever we are trying to deal with these issues human behaviour is the last thing about which we have serious concern. If we look back at the Green Deal, some of the disasters there were due to human behaviour, so it is important that we understand how people react. Indeed, the success of the rollout depends on consumers and consumer confidence, yet, as we have already heard, they are not obliged to have a smart meter. Therefore, how they react to the proposals is very important.
Lord Campbell-Savours
My Lords, I do not profess to have huge knowledge of this subject. It is not an issue which I have researched recently.
When the original legislation went through—I refer to the role played by the noble Lord, Lord Teverson, in about, I think, 2006 or 2008—I spoke at great length during the course of the proceedings because I knew the subject. However, my questions on this occasion are simple and elementary.
When my service charge for my flat in London is issued every three months by the management company, it always shows the amount of water consumed by each flat in a list that is circulated to all members of the residents’ association—there are about 160 flats and a similar number of members—and therefore the occupants of flat 1 in my block will see how much water I use. I have always thought that was rather dangerous—depending into whose hands it fell—because from water consumption you can tell the scale of occupancy of the residents.
When I was having a chat with some colleagues and I saw Amendment 11, tabled by the noble Baroness, Lady Featherstone, in which paragraphs (a) and (b) of subsection (2) of the proposed new clause refer to,
“the risk of data obtained from consumers being stolen”,
and,
“the risk of data obtained being passed on to third parties without the consent of the consumer”,
I was left wondering what would happen with this 2G technology and how easy it would be to hack in and find out how much electricity is being used by the occupant of a particular flat or house. That is exactly the information that burglars, of all people, would want. I wonder to what extent these matters have been taken into account when deciding on the technology supplied. People have meters at the moment, but I do not know if there has been any research on whether this information is already being tapped into and given to people who would misuse it by breaking into people’s homes. Has any work been done to establish to what extent that might be a problem?
The Minister cannot have all the answers—I understand that—but if we are not aware today of the incidence of this information being abused, perhaps he could write to the members of the Committee about it because it is important. We are going into a new era with all this technology and I wonder whether it could be abused by people having that important information when they are seeking to burgle or interfere with other people’s properties.
Lord Grantchester
I support Amendments 6 and 11 which are also in this group. In Amendment 6, the noble Baroness, Lady Maddock, seeks a review of the code of practice energy suppliers must follow in the installation of smart meters. We agree with that as a necessary and constant reassessment of best practice should become part of any post-rollout review.
Similarly, Amendment 11, also in the names of the noble Baronesses, Lady Maddock and Lady Featherstone, calls for a review of the use of data from the operation of smart meters. I am grateful to them and my noble friend for highlighting some of the problems that could arise if we are not careful in this operation. We agree that it should be kept under constant review by the department to make sure that the risk of errors and non-compliance is kept to a minimum.
Lord Henley
Like the noble Lord, Lord Grantchester, I take it that we are dealing with Amendments 3, 6 and 11. The noble Baroness, Lady Maddock, caused me some confusion when she said Amendment 7. However, I am sure she meant Amendment 6 if she did say Amendment 7. I take it she was speaking to Amendment 7, and I will come to it in due course. I will deal with the amendments in the order in which the three leads took them and so I will deal first with Amendment 3, then Amendment 11 and then Amendment 7. If I get confused in my note I hope the noble Lord, Lord Grantchester—who is always quick on these things—will stop me.
I will also take note of the points raised by the noble Lord, Lord Campbell-Savours, and his general remarks about service charges in flats and the consumption of water by himself and others. Obviously that is wide of the Bill. I am sure the noble Lord uses appropriate amounts of water and comes to the House as clean as he always should be. We will read nothing into the amount of water that appears on his service charge. However, he makes a perfectly good and valid point about what people can understand from information about the use of a particular flat or residence by the consumption of gas, electricity or whatever. I hope that can be partly dealt with in what I have to say about security but it might also be helpful if I write to the noble Lord and others about it in due course.
Amendment 3 asks GCHQ to undertake an annual risk assessment of smart metering’s vulnerability to cyberattacks. Considerable effort has been invested by the energy industry as a whole and by government—including the National Cyber Security Centre, which is part of GCHQ—in designing security protection into the end-to-end, trust-based security architecture. Robust security requirements have been developed for smart metering equipment, the DCC and participating organisations, as well as assurance on the implementation of these requirements. These are a fundamental part of the smart metering regulatory framework.
In April 2016, the NCSC technical director published a blog on the security of smart meters in which he stated,
“we’re confident that the Smart Metering System strikes the best balance between security and business needs, whilst meeting broader policy and national security objectives”.
The NCSC continues to be fully engaged on smart metering, providing an annual threat report and practical guidance.
Underpinning the security requirements, assurance and governance arrangements currently in place is a security risk assessment. This has been through a number of iterations on the back of public consultation to ensure emerging and future security threats are appropriately addressed. This is in turn informed by the annual threat assessment that the NCSC provides. Additionally, each organisation must carry out an assessment of its processes for the identification and management of risk at least annually.
The end-to-end security model is also subject to ongoing monitoring and review. Smart metering regulations require that a review of the end-to-end security model is undertaken at least annually. This is undertaken by industry in the form of the Smart Energy Code security sub-committee, which is independent of government and composed of security experts from industry. Industry is also subject to an independent security assessment prior to using systems and annually thereafter. This assessment is set against a security controls framework, which is detailed in regulations. This is the basis for a consistent level of review across all organisations and provides a guide to the types of evidence that should be provided to demonstrate compliance.
Based on the detail I have just outlined, an additional security assessment annually by GCHQ, most likely by the NCSC, is unnecessary given the existing and ongoing risk management and security assessment arrangements and the close engagement GCHQ and the NCSC have had and continue to have in relation to smart metering. I hope that the noble Lord will feel that his amendment is largely dealt with.
I move to Amendment 11, tabled by the noble Baroness, Lady Featherstone, which deals with data privacy. It refers to data obtained by energy suppliers, both as a result of half-hourly settlement and due to smart metering in general. This data has the potential to deliver benefits for consumers, suppliers and the energy system, but we recognise again that appropriate safeguards are required on who has access to data, in which circumstances and for which purposes.
Lord Campbell-Savours
I ask a consumer question: if someone wanted to know now whether it was possible for their meter to be hacked, who would they ask? Who could tell them?
Lord Henley
The first people to ask would be the suppliers of that meter, to ask them what evidence they have and to take it from there. The same is true for any IT equipment that the noble Lord buys for any purpose. None of us can give any absolutely cast-iron guarantees as to what can and cannot be done by nefarious people.
Lord Campbell-Savours
This is one of the reasons why the amendment asking for this sort of national plan would have been interesting. Those are the kinds of questions that the consumer would expect to find in a report of that nature. I would not ask my supplier; I would ask the manufacturer whether its equipment could be hacked. If it said that it could be, I would want assurances as to how that would be dealt with. I am not altogether convinced that manufacturers have been asked, or whether GCHQ has been asked that question for it to appraise separately. It is on the list; I presume it too has been asked about the system that is being introduced.
Lord Henley
The point I am making to the noble Lord is that it would be wrong for anyone to give an absolute cast-iron guarantee of any sort with equipment of this sort. I can think of a whole range of other questions on other subjects. I remember that it used to be said that if you went to a school and asked about its policy on bullying and were told there was no bullying, you should immediately reject that school because quite obviously it had no idea of what was going on. Similarly, if someone offered a cast-iron guarantee that their equipment was unhackable, I would have some doubts about it. They could say that they had done everything possible to make sure it was unhackable, but we have the right processes in place with suppliers and others to make sure that checks can be done—which is what I have set out—to make metering as secure as possible. In response to the noble Baroness, Lady Featherstone, who dealt with privacy, that is why we have also had consultations with the privacy commissioner. I think that we have all the appropriate checks in place—but if I offered the noble Lord the guarantee he is asking for, he would know that I was a charlatan.
Lord Campbell-Savours
There is another question that would have been answered in this report. It is the question that the public ask all the time. If I have a supplier and I have a piece of equipment installed, will I be able to change supplier? Most people in this Room probably know the answer about retaining that equipment, but the great public outside do not know the answer, and that is what they worry about. So it is essential to the Government’s case to make it clear when and in what circumstances that problem will no longer arise.
Lord Henley
I fully understand what the noble Lord is saying and the need to provide the public with as much reassurance as possible, and clearly to explain the range of steps that the Government have taken with security experts, including GCHQ, which I mentioned earlier, to provide robust security for the smart metering system. We worked in partnership with GCHQ on the blog on smart metering infrastructure. We will continue to support Smart Energy GB, among others, to provide a clear and reassuring message to the public on smart metering security. We will do all we can. Everyone else will do all they can. All I am saying is that one can never get beyond that 99.9% security up to 100%.
Lord Campbell-Savours
The noble Lord, Lord Teverson, drew a distinction between transferability and interoperability. The question I am asking is what the public are asking. When will they be given assurances that it will be possible to change supplier and retain their smart meter? It is a very simple question, and I do not think you will find the answer anywhere at the moment as far as the public are concerned.
Lord Henley
The noble Lord asked what assurance we can give to the public about security, and I think I have given as much assurance as I can. I acknowledge that it is important for the Government to continue to give as much assurance as possible. That is why we talked to GCHQ and others. With regard to changing supplier—is it changing the meter or changing supplier? They are two different matters.
Lord Campbell-Savours
One is the consequence of the other, as I understand it. That is the problem. When you change your supplier, I understand that on occasion you have to change the meter. Am I not correct?
Lord Teverson
Unfortunately, probably after the First World War, the Second World War and the Korean War, the phoney war bit during the coalition Government was around the whole process more or less coming to a halt because this whole security issue came up, which was a major delaying factor at the time. I do not want to talk on behalf of the Government of that time, but security was given huge focus. From a personal point of view, I feel that that area has been dealt with enough at the moment. It clearly needs an ongoing security look, but it was one reason why the whole programme pretty much ground to a halt during part of the period of the coalition Government—if that is at all helpful.
Lord Henley
We will get on to “helpful” again later on. I do not know whether I can take the noble Lord much further. We have talked about security, and I have made it clear that we must give the public as much assurance as possible. I think that the noble Lord is happy about that and the involvement of GCHQ and others.
The noble Lord raised the question about consumers in effect losing functionality when switching supplier. When installing a smart meter, it is necessary for energy suppliers to take reasonable steps to inform the consumer that they may lose some of the functionality when switching supplier—but only some. There is also the question of whether those with SMETS 1 meters can switch supplier. The noble Lord’s question started on one level and moved to quite different levels at different moments, but I think that that was what he was talking about. Consumers with the first generation of SMETS 1 can still switch energy supplier, and they are often in a better position to do so. That is a matter for them, and they can continue to do that.
I shall now move on to the second in this block of amendments—the amendment tabled by the noble Baroness, Lady Maddock, Amendment 6, which suggests that there should be a review of the code of practice by the Secretary of State. Receiving a positive installation experience that leaves consumers satisfied and well informed is vital to ensuring that they can engage with their smart meter and take control of their energy use. Energy suppliers were required by their licence to develop and adhere to an installation code of practice when installing in domestic and microbusiness premises. In developing this code, energy suppliers were required to ensure that it both supported the delivery of overarching objectives and, in a number of key areas, met detailed requirements. Those requirements include providing energy efficiency guidance, not charging consumers up front for the installation, and meeting the needs of vulnerable domestic consumers. Energy suppliers were also required to take into account the views of consumer groups and other interested parties when developing the code.
The code was consulted on in draft in 2013 and subsequently approved by Ofgem in its capacity as the authority in this area. It is overseen by a code governance board composed of representatives from large, small and microbusiness energy suppliers. It also includes representatives from Citizens Advice. Any of those representatives has the ability to propose amendments to the code, which are then presented to Ofgem for consideration. This governance framework ensures that consumer interests are represented on an ongoing basis across all elements of the code’s operation.
Energy supply licence conditions supporting the code of practice also require energy suppliers to put in place monitoring arrangements and procedures for reviewing and updating the code. As part of this activity, energy suppliers are required to obtain views from consumers on the installation process and conduct of their installers. To achieve this, the code requires all energy suppliers installing more than 5,000 smart meters a year to undertake a survey of their customers. These surveys are conducted regularly, the results are anonymised, and reports are provided to the code governance board on a quarterly basis, enabling any areas of concern to be identified and rectified, including through amendment to the code.
As a further backstop, in the event that significant concerns are raised regarding the suitability of the code, Ofgem also has the power to require energy suppliers to review specific features of the code and can direct modifications if necessary. The amendment here would require a one-off review of the code to be undertaken, but I hope that in outlining the governance and monitoring requirements already in place I have demonstrated that the code is already subject to ongoing review and continues to evolve to meet consumer needs.
Baroness Maddock
I made two points about gas. When it is turned off, I certainly do not expect them to allow things that are unsafe. My point was that there is no provision for somebody in poor circumstances—say they are elderly and they have a smart meter put in and it is the middle of winter and they cannot use their boiler—to get a new boiler. I think the Government need to look at this. It is a very small point but there will be several people affected by it.
The Minister has explained how the process works at the moment and how the code of conduct works and how it can be amended. Can he tell us how it has been amended as the process has gone along?
Lord Henley
I would prefer to write to the noble Baroness regarding any amendments that have taken place. I, like others involved in this, but not all, am relatively new to the subject—but it has been going for some time, so I imagine that amendments have been taking place.
I think the noble Baroness suggested earlier—just in terms of the travails on the telephone—a degree of aggression.
Baroness Maddock
It was the lack of understanding of the person who was trying to persuade to have a meter of how it worked and what the options were and whether they were interoperable.
Lord Henley
If the operator could not cope with the noble Baroness, obviously they probably need further training. I think that is probably a matter for that particular supplier. There is guidance for them and they should take every opportunity to treat all domestic customers fairly and to be as transparent and accurate as possible in their communications. I hope that they will continue to do so. I note what the noble Baroness said.
I hope I have dealt with the three amendments in sufficient detail and I hope that the noble Lord will feel able to withdraw Amendment 3.
Lord Grantchester
I thank the Minister for his comprehensive reply. Initially I was slightly alarmed when he talked about the national infrastructure having to be a balance between security and business needs. I would have thought that our national infrastructure is critical and must be entirely secure at all times. However, he went on in his reply to further elaborate that energy threats are assessed each year and I was very satisfied that the situation is under constant review, so I am very happy to withdraw my amendment.
Lord Grantchester
“National Plan for Smart Metering
(1) Within one month of the passing of this Act, the Secretary of State may direct OFGEM to develop a draft National Plan for Smart Metering which will deliver all the objectives of the smart metering implementation programme, together with an appropriate termination date.(2) The Secretary of State must consult OFGEM before giving a direction under this section. (3) When preparing the draft National Plan, OFGEM must consult—(a) District Network Operators (DNOs);(b) Data Communications Company;(c) energy suppliers;(d) consumer interests bodies;(e) Smart Energy GB;(f) the National Audit Office; and(g) such other relevant bodies as may seem to be appropriate.(4) The draft National Plan for Smart Metering must set out the obligations to be undertaken by the licensed energy suppliers and their associated organisations in delivering all the objectives of the smart metering programme and must include, but is not limited to, the following—(a) detailed targets for each quarter of each year for each energy supplier in pursuit of the objective of complete roll out of smart meters by an agreed termination date;(b) a detailed specification for the functionality and performance required in each meter, so as to ensure reliable service life, ease of installation and maintenance, appropriate inter-operability, future upgrading capacity, and removal and safe disposal of obsolescent equipment;(c) an assessment of the future developments thought feasible and desirable for the smart meter programme, including monitoring of customer activity so as to deliver least cost tariff benefits combined with the maximum ability to engage with future appliance applications, inter-operability, compatibility with smart phones and tablets, and the encouragement of self-generated capacity in the home;(d) an assessment of the potential of smart meters to be the gateway to additional domestic energy efficiency measures;(e) an analysis of technical developments to provide alternative solutions for Home Area Network (HAN) connections where premises are not able to access the HAN using existing connection arrangements;(f) an assessment of the most effective way of dealing with the inclusion in the programme of hard-to-reach premises and multiple-occupancy dwellings;(g) an assessment of alternative delivery arrangements as between energy suppliers and DNOs which might increase the effectiveness of roll out solutions over time.(5) OFGEM must publish the draft National Plan for Smart Metering by 31 December 2018.(6) After due consideration and consultation, the Secretary of State must in regulations made by statutory instrument specify the final version of the National Plan for Smart Metering.(7) A statutory instrument containing regulations under this section may not be made unless a draft of that instrument has been laid before, and approved by a resolution of, each House of Parliament.(8) OFGEM must report annually on the extent to which the National Plan for Smart Metering is being delivered, in line with the termination date.(9) If at any point it appears to OFGEM that the targets specified in the National Plan for Smart Metering are not likely to be achieved, it must prepare a report for the Secretary of State, who must lay such a report before Parliament, together with recommendations for what consequential action is required to enable the programmes to be completed by the termination date.”
Lord Grantchester
Given the noble Lord’s answer on Amendment 4, I merely wish to point out that in putting forward this amendment we are not suggesting a change in approach as he seemed to think. We are suggesting that Ofgem be used as the Government’s regulator in order to critically analyse, on behalf of the Government, the plan that is unfolding in their own eyes and mind. The Minister made the point that there was a high-level plan somewhere in existence. It needs to be dusted down, expressed and promoted because it does not appear to be inspiring confidence around the industry at the moment. Indeed, if this high-level plan was more readily available, we could perhaps look at it and critique it because, in assessing the Bill as it goes through the House, we need to be robustly reassured that everything is in place and likely to be successful, hence the need for the amendment we were proposing.
I will critically analyse the Minister’s response and engage with him further in the coming week. In the meantime, I will not press Amendment 4.
Baroness Maddock
“Review: use of powers to impact energy use in the United Kingdom
(1) The Secretary of State must commission a review to consider how the extended use of powers provided for in section 1 will impact energy use in the United Kingdom, with particular reference to—(a) the impact on fuel poverty; and(b) the impact on energy efficiency.(2) The Secretary of State must lay the report of the review under subsection (1) before each House of Parliament within 12 months of this section coming into force.”
Baroness Maddock
My Lords, I rise to move Amendment 5—I hope I have got the right number this time and I apologise if I confused people before.
This is a probing amendment. I have raised issues with the Government before about the interoperability and the joining-up of the different policies that we have. Fuel poverty is an area in which I take an interest and the Bill impacts on fuel poverty strategy and affects those in fuel poverty. It also impacts on energy efficiency, which, as the Government have made clear, is one of the reasons for the programme. However, I am never quite sure how good the Government are at joining everything up. The amendment therefore asks the Government to review how this programme is affecting the fuel poverty and energy efficiency programmes and how it can benefit them.
On fuel poverty, the ability for people on low incomes to get an accurate bill and save energy is important. We know that shock bills can create a sense of fear in people and quite often that is why they end up going into debt. Inaccurate bills can sometimes have the same effect and we recognise that part of this development is to prevent people receiving inaccurate bills. Any delays in the programme will have a greater adverse effect on those who are in fuel poverty or are vulnerable in some way or another.
The pre-payment meter price cap, to which we will come later, is still closely linked with the smart meter rollout. One area of the rollout concerns me. Smart meters have been of great benefit to people on pre-paid meters but I understand there might be problems later when the SMETS 2 come in. Could the Minister reassure us that the Government have this in hand, because some people are concerned about how it might work out?
I learned today something that neither I nor my colleagues had heard of before. Photovoltaics on roofs is one of the energy efficiency programmes that we have introduced in the past, but when one of my colleagues in the House who has such a system asked for a smart meter she was told that she could not have one. However, she might be able to when SMETS 2 comes in. So there are two questions about the SMETS 2 meters: are people who pre-pay going to suffer and what are we doing about people with solar panels? Do the Government know how many houses have solar panels? That is a whole chunk out at the moment. If that is the case, they should be the first people to get SMETS 2. Somebody should try to target it in that way.
The other issue is one that I have discovered, I think from the briefings we got from Smart Energy GB, which is the fact that not everybody has an in-house display when they have their meter fitted. I was quite shocked by this because I thought that was the whole point. As it said in the briefings I received from it, some people have meters in very strange places—in cupboards under the stairs and all sorts of places. I cannot understand why the programme was not insisting that, when you have a smart meter, you have an in-house display, otherwise many of the benefits that we hope smart meters will bring are somewhat negated if you cannot read it very easily.
I am not going to prolong the Committee much longer, but it is important, whenever the Government review what is going on with the smart meter rollout, that they think carefully about the other areas of policy. As I said, and as I raised before, I am particularly concerned about those in fuel poverty. I know that the smart meter rollout companies are working quite carefully with other people to help those in fuel poverty. I declared an interest at Second Reading because I am a vice-president of a fuel poverty charity, National Energy Action. I would be interested to hear whether the Minister can answer a couple of the questions I have given him. I urge that, whatever reviews we have, we must sometimes refer to how it is impacting on other government policies. I beg to move.
Lord Teverson
My Lords, I shall speak to my Amendments 12 and 13. One of the things that has exercised me most about this programme is how, in the transition from SMETS 1 to SMETS 2, we assess that we are sufficiently there to fire the gun to roll out what is an £11 billion programme. That is not an insignificant amount of money. My noble friend Lady Featherstone pointed to the congestion charge. I do not know what it cost to roll out; it was expensive, but I suspect it was not anywhere near £11 billion. That is why it is important, before the rest of this happens, that we make sure we are in the right place.
I understand that we currently have some 300 SMETS meters out there being tested. I also understand that there is still a further software upgrade to happen in September—I would be interested to know whether that is the case—yet we have a deadline of October, which is only some six months away. That is why I am saying in the amendment—it is rather a blunt instrument and probably would not be absolutely correct for the final Bill—that there should be some 500,000 SMETS 2 meters out there to make sure that this market works. That seems like a huge number, but I remind noble Lords that it is 1% of the total number of meters that have to be smart by the end of this programme—some 47 million to 50 million. That is why, in terms of the size of the programme and the length of time we have already taken in getting it right and getting consumer confidence, I am trying to understand from the Government and the Minister what tests they have and what threshold they are expecting to see before they say that the programme is fully fit for purpose, they have confidence and they are going to roll the rest of it out as SMETS 2—SMETS 1 no longer, although we have 10 million of those meters already. What is the threshold that says that they have the confidence to roll out one of the most expensive projects? I am not sure that it is as expensive as Hinkley C, but it probably will be by the end of the Hinkley C programme. It is a huge amount of money and a huge national investment that is really important for the future, so what is the threshold test before we roll it out with confidence?
Baroness Featherstone
I shall speak to Amendment 7, which is in my name and that of my noble friend Lady Maddock. Much was and is made about the upside of the benefits, or the hoped-for benefits, to the consumer of the rollout of smart meters. In the other place, the Secretary of State Greg Clarke said:
“About a third of the savings come from the possible reductions in the use of energy. Just over 40% comes from the supplier’s cost savings, which is a result of not having to read meters … We expect those savings to be passed onto consumers as savings in their bill”.—[Official Report, Commons, 24/10/17; col. 238.]
We want a new clause that makes that expectation of the Secretary of State into a reality by putting it into the Bill, and we do that by amending the Energy Act 2008 to put in a provision,
“requiring the holder of a supply licence to pass on any savings made by the holder as a result of the Smart Metering Implementation Programme to the consumer”.
I do not really feel that I need to labour the point—I think that it is clear. A promise has been made, and this is the methodology for making sure that that promise is delivered.
Lord Stevenson of Balmacara
My Lords, this is a wide-ranging group of amendments and it is a bit hard to find the right balancing point to address it, so I am going to give up at the beginning and just go through them one by one—in a slightly different order, just to confuse everyone.
Amendment 5 is right on the money in trying to make us focus again on why we are doing this and what it is about. It will not be worth doing unless there is an impact on energy efficiency. As we were reminded in the first group by the noble Lord, Lord Teverson, the problem we face and the one that the Government have to open themselves to be honest about is whether this will be worth having in the sense that it will actually change people’s behaviour and therefore save us some of the costs that we have from our expensive use of energy. If that is not part of what we are thinking, we need to make it part of the process and, indeed, the plan, if we go that way.
I was listening hard to what the Minister was saying, but I was expecting him to say a lot about the industrial strategy, since it is seated in his department and it seems to me that this is part of the industrial strategy. Our energy efficiency should have a material effect on our ability as a nation to continue to operate as a net importer of energy and as we gradually try to be more effective and efficient in what energy we can produce and how we use it. Those things seem crucially the bedrock on which any industrial strategy, and therefore any chance of this country surviving in the long term, is placed. I would have thought that it would be important to the Government to put this at the heart of what they were saying about the future stages of this process, because that will be helpful in convincing consumers, both those in fuel poverty and others who are just interested in the overall economics and efficiency of the country. So the requirement to lay a report that focuses on that might help us to win the battle of hearts and minds to get people more to accept it, and we support the amendment.
Amendment 7 is a bit more on the money in real terms, because it says that, if there are economic and other efficiencies in the process, the consumer should benefit from them. Again, we would support that. You do not have to be a conspiracy theorist—well, probably you do, but you do not have to be a genuine conspiracy theorist—to sense that there is something a bit odd going here. In a curious sort of way, the noble Lord, Lord Teverson, said it. Here we have an £11 billion programme. It is not being financed out of general taxation; there is a money tree, and that money tree is consumers who are being asked to pay for this without actually knowing what they are paying for. This is being loaded on to their bills and recouped by the companies. It is not being passed on to those who are benefiting from efficiencies. Nor is it being used for useful purposes for trying to help those who are suffering fuel poverty. Have I got this wrong? If I am right in this, we ought to confess that this is what we are doing and think much more carefully about the £11 billion price tag. The noble Lord, Lord Teverson, put his finger on it in saying that we ought to be certain about the benefits that will flow from this before we push the button, and his amendment, which we are coming on to, focuses on that.
The noble Baroness, Lady Featherstone, talked about real benefits to individuals. If we were interested in the consumer approach and in consumers buying this programme, getting behind it and saying that everybody should have one of these things because not only do they give you pretty pictures about what energy you are using but you get money out of it because it shows you how to reduce your costs and that benefit comes back to you, that would be an advantage to the Government, who might otherwise be struggling to get people behind this.
Amendments 12 and 13—effectively, Amendment 13 —take us back to our discussions on the first group of amendments and Amendment 4, which is tabled in my name and that of my noble friend Lord Grantchester. Amendment 13 sets as a condition of minimum confidence 500,000 SMETS 2 meters—still a very small number—which are so far really untested in operation. Going back to what I said earlier about the need to operate in the wider context of opening up for innovation and bringing in new ideas, new ways of saving money and new ways that consumers could try to do things differently in their home in their use of equipment and the internet of things, we know all these other things are there and should be part of this process and package, but they cannot be until this project goes well. This amendment might look like a simple delaying tactic, but it sets an important pausing point at which everybody who is concerned in this, whether there is a proper plan or not, can say that they have confidence to go ahead with this project because they know it works and that at least at the level of the first 500,000 of these SMETS 2 meters it is a going concern, it is terrific, we can talk it up and we can all get behind it. There is a lot to commend this amendment to the Minister and I look forward to hearing him respond to it.
The Government have a rather uncomfortable choice. It would be very sensible for them to accept either this amendment or Amendment 4 because without some sort of overall bringing together of the consumer interest, the supplier interest, the regulator interest, Parliament, which needs to have a role in this, and the Government we will not get this working properly. That will be suboptimal for the country and for everyone in the long term.
Lord Teverson
My Lords, may I correct something I said about Hinkley Point C? EDF’s latest estimate is actually £19 billion to £20 billion. Preventing that sort of capital expenditure on energy generation is what this programme should be about. I apologise to the Committee that it is a rather larger sum than even I thought.
Lord Henley
My Lords, £1 billion here, £1 billion there and pretty soon we are talking real money. I will deal with the amendments in the order they came: that is, Amendments 5, 7, 12 and 13. Amendments 12 and 13 go together. Actually, all three go together, but there was some confusion.
Starting with Amendment 5, which was tabled by the noble Baroness, Lady Maddock, on energy efficiency and fuel poverty, I ought to say in passing that I very much support the spirit behind these amendments but I am concerned that they could undermine the efficient delivery of the rollout and could lead to unintended consequences and costs for consumers. But I will deal with the amendments one by one, starting with Amendment 5.
One of the main objectives of the smart meter rollout in Great Britain—it does not apply to Northern Ireland—is to put consumers in control of their energy use so that they become more informed and efficient, and save themselves money. Smart metering will reduce the costs for prepayment customers and enable remote topping-up, meaning that some of Britain’s hardest-pressed energy consumers will have access to more competitive deals and more convenience in paying for their energy. I was grateful for what the noble Baroness said about people with prepayment meters and the price cap. We will get on to the price cap for others more generally, but it is already in existence for people with prepayment meters and I think that it has been working with some success.
If I heard her aright, the noble Baroness said that she had heard that SMETS 2 meters posed a problem for some prepayment customers. We believe that SMETS 1 meters provide significant smart functionality to consumers, but SMETS 2 will provide them with additional benefits and will allow consumers always to retain smart functionality when they switch suppliers. SMETS 2 meters will also allow consumers, if they choose, to share data with third parties, and those third parties may be able to offer, for example, tailored energy-efficiency advice, which could be of use to certain customers.
Amendment 5 would introduce a new clause requiring the Secretary of State to commission a review to consider how the extended use of powers would impact energy use in the United Kingdom, with a particular focus on the impact on fuel poverty and energy efficiency.
With in-home displays offered to households as part of the installation, low-credit alerts are more visible, giving consumers an early warning. The ability for consumers to set a budget and to see exactly how much they are using, in pounds and pence, is giving prepayment consumers control over their energy use and contributing to greater levels of satisfaction among prepayment consumers. Certainly, the research that we have done shows that 84% of smart prepayment customers are satisfied with their smart meters and 88% are likely to recommend them. Government research shows that eight out of 10 would recommend them to family or friends, and 82% of people with a smart meter have taken at least one step to reduce their energy use. British Gas is reporting that its dual fuel customers with smart meters are making sustained 4% annual energy savings.
To some extent, that brings me on to the question about accessibility of meters raised by the noble Baroness. As she is well aware, the accessibility of existing meters can be pretty difficult, as I discovered in London the other day as I lay down on the floor trying to read a meter. I realised that I did not have my reading glasses with me but then realised that reading glasses would not help as I was wearing my contact lenses. It is a minor problem for someone in a reasonably fit state, but we accept that reading meters can be difficult for certain people, depending on where the meters are put.
The technical specifications for IHDs require them to be designed to enable the information on them to be easily accessed and presented in a form that is clear and easy to understand, including by consumers with impaired sight, memory, learning ability or dexterity. Energy suppliers, led by Energy UK, have been working together to develop a fully accessible IHD, and we expect that device to be available shortly. If it can be made available to those who have problems, the noble Baroness and I will also find it a great deal easier.
Baroness Maddock
The thing that surprises me—and I have not really had an answer to it—is why, when the Government planned the programme, it was not part of the plan that everybody with a smart meter should have an in-home display. It would be an obvious enhancement and would not be difficult. I do not know why it was not thought that this should be insisted on from the beginning.
Lord Henley
This is going back in history. The past is another country. I do not think I want to go there just for the moment. I do not know the answer to that. If I can find out more, I will certainly let the noble Baroness know.
The noble Baroness also raised the question of smart meters working with solar panels and spoke about the information she had received from one of her noble friends. As I understand it, all SMETS-compliant electricity meters must be capable of both measuring the amount of energy the household consumes or imports from the grid and recording the electricity generated by solar panels or other microgeneration technologies that is fed back or exported to the grid. We are not aware of any technical reasons why smart meters cannot be installed in premises with microgeneration technologies. However, some suppliers may start installing for these customers later in the rollout. If the noble Baroness would like to go back to her unnamed noble friend—perhaps it was not a noble friend, perhaps it was someone misleading the noble Baroness—and get back to me, I will take this up and find out what the real answer is. The initial response is that we feel that this should not be the case, but I will respond when the noble Baroness gives me more information.
Amendment 7 was spoken to by the noble Lord, Lord Teverson, and the noble Baroness, Lady Featherstone. The rollout of smart meters offers an opportunity for consumers to take control of their energy use and realise significant savings as soon as the meter is installed. Like any infrastructure project, the smart metering programme involves some investment, but it will enable a net reduction in consumers’ energy bills over time. Amendment 7 would give the Secretary of State power to modify licence conditions and industry codes so as to require energy suppliers to pass the savings they make from the rollout on to consumers.
We expect that competitive pressures will encourage energy suppliers to pass on the cost savings they make from the rollout of smart meters. If energy suppliers do not pass on the savings to their customers, their customers, as we all know, can switch to a better deal among an increasing number of competitors. As noble Lords will be aware, there is an increasing number of competitors and it is quite simple to switch. We recognise that the market is not working for all customers. That is why we have introduced to Parliament the Domestic Gas and Electricity (Tariff Cap) Bill—it is in another place at the moment—which will require Ofgem to set a cap that protects existing and future domestic customers who pay standard variable and default rates. The cap will last until 2020, and it may be extended annually, up until 2023, if it is assessed that the conditions for effective competition are not yet in place. In setting the cap, we expect Ofgem to take into account the benefits that energy suppliers will achieve from the rollout.
Smart meters are themselves an enabler to greater competition in the energy retail market. Smart meters provide near real-time information to consumers on their energy consumption and how much it is costing them, giving consumers greater awareness, which in turn is expected to further increase consumer switching. The signs on this are encouraging. According to a report on consumer engagement in the energy market, published by Ofgem in 2017, 23% of consumers who say they have a smart meter have switched supplier in the past 12 months, compared with 17% of those who say they do not have a smart meter. It is worth pointing out that we would expect the level of engagement from consumers to help inform Ofgem’s review into whether the conditions for effective competition are in place.
I turn now to the final two amendments in the name of the noble Lord, Lord Teverson—Amendments 12 and 13. The Government want consumers to benefit as soon as possible from the advantages of smart meters. That is why we continually review the rollout and take action to remove any barriers to effective delivery. The amendments would require, as a condition of extending powers that the Secretary of State has to amend or introduce new regulation for the purposes of smart metering, one of two conditions are met first before those powers can commence. The noble Lord suggested either 500,000 second generation—SMETS 2—meters must have been installed or a review of the programme, focused on consumer satisfaction and value for money, must be complete. We do not believe that either of those conditions for commencing the extended regulatory powers are warranted or necessary. We are also concerned that the effect of those amendments would be to leave the Government without powers to intervene to unlock delivery barriers and ensure consumer benefits are being realised.
I will take each condition in turn. I shall deal, first, with the noble Lord’s SMETS 2 target of 500,000. Like the noble Lord, we want to see the SMETS 2 meter installation accelerated. It is very small at the moment, but in the near term this should happen only if it is in the best interests of consumers. Setting a target would remove suppliers’ flexibility to plan and manage the rollout efficiently in order to serve their customers effectively in a competitive market and could lead to unintended consequences. We are assured that larger energy suppliers have commercial and financial incentives to drive them to install SMETS 2 meters as soon as is practicable. SMETS 2 meters unlock more of the customer base, supporting more cost-effective marketing approaches. They also include capability for load control and additional support for consumer access devices, thereby supporting service offers in line with energy suppliers’ potential future business strategies. These incentives align with regulatory imperatives to make progress, not least that our current expectations are that from later this year the installation of SMETS 1 meters will no longer count towards an energy supplier’s rollout obligations. We intend to include in future quarterly statistical publications—subject to sufficient supplier anonymisation—information about the number of SMETS 2 meters that have been installed, allowing for progress to be tracked and transparent.
We agree with the noble Lord that the programme should understand its impact during operations, in terms of consumer satisfaction and value for money. As regards consumer satisfaction, the department commissions and receives, including via Smart Energy GB, regular survey updates on smart meter consumer satisfaction. I have referred to some of them, and the satisfaction levels that have been achieved. In terms of value for money, my right honourable friend the Minister for Business and Energy, Claire Perry, has committed, as part of the Bill’s passage in another place, to undertaking and publishing an updated cost-benefit analysis in 2019, which will reflect, among other things, the real benefit for consumers. On this basis, the noble Lord’s condition would be duplicative and risks undermining the powers that the Government need to ensure the rollout is progressed smoothly and in consumers’ best interests.
Lord Campbell-Savours
Can I just ask again a rather simple question? I understand that we are not the only country in Europe with a smart meter installation programme. The French claim that they have done it for half the price of the programme in the United Kingdom. They claim it is going to cost them €5.5 billion, whereas we are potentially spending £11 billion. Is there any truth in that? Is our equipment the same as what the French are introducing? Is there some explanation for this suggestion that we are paying rather a lot for our equipment?
Lord Henley
I do not necessarily take all claims from France as seriously as the noble Lord does. I will certainly have a look at that claim being made by the French, but I believe we are doing reasonably well. Obviously, I will have a look at what they are doing and, if there are things that we can learn from that, we should do so. Just as we will continue to monitor delivery in this country, we will study and look at what is happening abroad. I have received advice about what is happening and whether we are sharing our experience with other countries and whether other countries have shared their experience with us. We have looked not just at what is happening throughout Europe—we have met representatives from Ireland, Sweden, Spain, Malta and, I understand, France—but we have looked further afield to India, Australia and the United States. Lessons we have learned include the importance of consumer engagement. That is why I emphasised earlier what we have done on consumer engagement.
On the actual costs, the advice I have received is that the EU average comes in at £181, compared with our figure of around £155 for a single-fuel electricity installation. So that is somewhat lower. On that front we are doing better. If there is anything further I can add about gas distribution grids in Malta or Italy that might be of use or even of interest to the noble Lord, I will pass it on. Another matter that came up was a concern about privacy, which is something that the noble Lord is concerned about and we discussed earlier.
In conclusion, we will continue to monitor the delivery of the programme and will continue to provide updates in annual reports and an updated cost-benefit analysis. I do not think the amendments add much. They risk duplicating those processes and could result, as I said, in unintended consequences that might delay getting the benefits to the consumer. I hope, therefore, that the noble Baroness, Lady Maddock, will feel able to withdraw her amendment.
Lord Teverson
The purpose of my amendment—I accept a lot of what the Minister said about its effects—was to get to understand what the test will be. What criteria will the department use to say, “SMETS 2 meters will work, they will integrate with the systems they have to integrate with, so we will give them the green light”? How will the assessment be made that SMETS 2 works—not just the individual meters but as a system—before we invest the other £8 billion?
Lord Henley
My Lords, we have started. The noble Lord gave his figure for how many SMETS 1 meters have been installed—I think it was about 10 million, which I do not dispute. I do not have the precise figure in front of me. We feel it is likely that we will be ready to cease to count the SMETS 1 meters towards the target in about October and therefore the suppliers will move on to SMETS 2, which brings further benefits. Over this year, we will see a growth in the number. I am not going to give a precise figure now for how that will grow, but we are likely to see the benefits from that. There is no point sticking with SMETS 1 when we can move on to SMETS 2.
Lord Teverson
I agree entirely with that, but it is not the point I am trying to make. SMETS 2 operates through DCC in a different system. It has different software and capabilities; otherwise, there is no point in doing this. SMETS 1 machines work on different systems. They work through the suppliers in bespoke ways. I understand the difference between the two. We need to stop operating SMETS 1 as soon as possible and we want to roll out SMETS 2. What is the test so that we can be happy that SMETS 2 functions correctly and confident that it is all systems go? I do not understand the test.
Lord Stevenson of Balmacara
I suggest that the test has already been passed and we are doing SMETS 2 come what may.
Lord Henley
We are going ahead to SMETS 2. The noble Lord is right there. We will see benefits from that, just as we have seen benefits from SMETS 1. That process will continue. I am suggesting to noble Lords and the rest of the Committee that we will provide appropriate reports back as to how that goes in due course, but I cannot provide any figures on exactly how fast that is likely to go, particularly in the initial stage this year.
Lord Campbell-Savours
I shall put it another way: what would happen if, having fitted 500,000, we found that there was a problem?
Lord Henley
My Lords, I do not believe in crossing bridges until we get to them. When we get to that stage, if there is a problem, I will come back to the noble Lord.
Lord Stevenson of Balmacara
Let us put the noble Lord, Lord Teverson, to bed happily. There is no further testing. The Government have accepted this, on the basis of what we understand to be the evidence of 300 SMETS meters placed into the homes of employees of the companies commissioning them. The network is said to be working, and may or may not be, at two different levels in the north—I am not quite sure where—and the south because there are two different arrangements, with an imperfect but satisfactory, to all intents and purposes, gas approach based on the idea that the SMETS 2 meters that go on to the gas equipment have to be shut down for most of the time that they are there because otherwise they will use up the batteries, which they are restricted to using because you cannot use electricity near gas since it might blow up. Therefore, they are battery-driven and the batteries cannot last forever. It would be ridiculous to have a situation where you had to have teams of people coming in right across the country replacing the batteries all the time because that is what we are trying to stop them doing when they have to read all the meters. The Government are going ahead with this—this is the point I still do not quite get—on the basis of very imperfect testing on a scale of £8 billion to be spent over the next few years, which is effectively a voluntary tax paid by people who did not know that they were being asked to pay it. It is bonkers.
Lord Henley
I am afraid I do not recognise what the noble Lord has offered. I suggest that we continue discussions on this. What the noble Lord is putting to me is not what has been put in front of me in other places. As I said, we will continue to monitor matters and to provide information. That will be sufficient to deal with the amendments. If the noble Lord would like to continue to make these strange allegations about what is happening, we can continue to do that in the discussions that I offered when dealing with the first amendment.
Baroness Maddock
My Lords, I am grateful to the Minister for his full response to me on Amendment 5. I am still not totally convinced that the Government always look very carefully at how their different policies interact. I am grateful that he has asked for extra information about the photovoltaics. It was new to me and I will come back to him with a bit more detail. Let us hope that it is just a one-off—that the supplier was just not very interested in doing this particular person’s house and that there is nothing more to it than that. I was quite shocked: lots of people have photovoltaics and if that really was the case we really need to do something about it. As I said, it was a probing amendment to try to open up discussion on these issues that I am concerned about. At this stage, I beg leave to withdraw Amendment 5.
Baroness Featherstone
“(aa) that the cost incurred when the smcl administration order is in place is not passed on to the consumer; and”
Baroness Featherstone
Clause 3 seeks to protect the consumer from any costs that might ensue following a failure of the DCC. How could the DCC fail? It is a new service and there is a change in the top management at this critical point. No aspersion is intended but it is a change right at the top, and of course there are questions about the financial security of the DCC, should the parent company, Capita, run into problems. That is a timely point to make, given that my right honourable friend Vince Cable has secured an Urgent Question which is being debated right now. This afternoon Capita has revealed losses of £500 million last year, it has launched a £700 million fundraising effort to reduce its vast debt pile and its share price has plunged by 47.5%. At Second Reading it was mentioned by noble Lords across the House that Capita had issued a profit warning. They were right to do so.
We are all nervous since the collapse of Carillion. Is Capita too big to fail? What will we do if it does? Clause 3 is about insuring against the unknown, because the costs of any failure should not be a liability for the consumer. I beg to move.
Lord Stevenson of Balmacara
My Lords, in this group we have Amendment 10, which I think takes the debate a little further forward. The noble Baroness, Lady Featherstone, made the case very well about the immediacy of the problem that now faces the Government and how they make progress with a company which has given a profits warning and has had to raise funding. Although it says that it might have access to many billions of pounds in borrowings and other things, it obviously raises questions of an order similar to those in the Carillion episode of a few months ago. I look forward to the Minister’s response on that, which I hope will cover the question of whether the Crown’s official involved in checking out companies that have major contracts with the Government has considered its longer-term prospects, making sure that any contracts placed with that company are satisfactorily secured in terms of delivery.
Our amendment fits in very neatly with this, at least in the sense that the reality of an administration is that it is a failure not only of the operations but of the possible costs. Like the noble Baroness, Lady Featherstone, and the noble Lord, Lord Teverson, we do not wish to see those costs passed on to the consumer. However, it also raises wider questions about what is going on here. In a sense, this is relatively familiar territory in that the Government are achieving a social objective using private sector activities. As was said in the other place only this afternoon, this is not new to Governments; Governments of all shapes have for the last 20 years or so increasingly used the private sector. Indeed, it is a long and distinguished history: Governments do not do very much on the ground in terms of buildings or roads. They may well carry responsibility for them and pay for them but the physical work is done by others. Outsourcing can deliver benefits. However, at a time when margins are being decreased and there is a bit more concern about whether these companies will be able to survive, we have to be very careful in what we do.
The thinking behind Amendment 10 concerns not just the mechanics of what happens in a default but whether the Government can think a bit more widely about how the company operates. Obviously, the new company, the DCC, is crucial to the delivery of the SMETS 2 programme. It is wholly owned by Capita; it has a ring-fenced arrangement with Capita but is nevertheless entirely under the control of that company. Although there are independents on the board, and everything else, do the Government really feel that that is sufficient at a time when so much is riding on it? We are talking about £8 billion worth of investment and work going forward, and everything that we have said this afternoon in relation to the future of our energy policies and initiatives and to consumer interests is certainly part of the whole operation.
When we were considering the green bank—I am waiting for the head of the noble Lord, Lord Teverson, to snap up at this point—we came across a similar problem, which was trying to make sure that the body that was being set up in the private sector, which we knew at that time was to be sold, had imposed within its structures a set of conditions under which the Government retained a golden share, to make sure that its original purposes, and green purposes in particular, were not polluted or changed by subsequent changes in the operational management of the company when it was set up or in its eventual sale. It turned out to be a very complicated issue, and I pay due credit to the noble Lord, Lord Teverson, for pursuing it to the point where we found a solution, which was not one that the Government ever thought we would come up with. But it was possible to come up with something that met the requirements that the Treasury set, unrealistic though they were, that the arrangements should not leave the Government in a direct power relationship to the company, because that would require any costs and everything else to go on to the balance sheet, but still retained the ability of the company to operate so that the green objectives were retained and operated. I am simplifying to make the point.
Does not this arise also with DCC? Is there not a worry here that we are talking about an organisation, a structure, a delivery function and an operation which suggests that we really ought to be thinking harder about the overall structure here? If the narrow question about what happens in an insolvency is insufficient to probe it, should not the wider concerns about all the companies that are going through difficulties with their delivery of public service obligations? The newspapers will be full of questions about what is happening to recruitment to the Army, because Capita is not performing very well on that, and what happens to other areas of activity. We may find that, £3 billion into the programme, the main structural body responsible for organising the network for our safety and data and all the operations that will lead to customer buy-in to this is unable to fulfil its objectives because of other financial constraints, and we do not have the right regulatory structures in place to ensure that it carries on the way it does. This amendment gives the Government at least some incentive to look at that, and I hope that they will respond positively to it.
Lord Teverson
My Lords, I support the amendment moved by my noble friend Lady Featherstone. Indeed, I agreed with many of the points that the noble Lord, Lord Stevenson, mentioned. The structure of the company in terms of green shares or golden shares is an interesting point that may be well worth pursuing.
Perhaps I should know this, as it is a factual question, but how long is the contract with Capita for DCC? What are the arrangements at the end of that contract? However long the smart metering programme goes on for—and one hopes that smart meters will be there for many decades before the next technology comes along—what are the arrangements for selecting the next incumbent? Does the DCC remain, or does it transfer to the new contractor, or is there a new corporate structure at that time? I am just trying to understand the length of commitment that we have with DCC at the moment. I am sure that, if I had done that research, I would already know, but perhaps the Minister could enlighten me.
Lord Henley
My Lords, as the noble Lord, Lord Teverson, says, there is always a lot to be said for asking questions to which one already knows the answer. In fact, I was told that that was one of the firm rules—that one should only ask questions to which one knows the answer.
My noble friend Lord Young will respond to the UQ on Capita debated today in another place—in time, I hope, for noble Lords to go through and listen to it. We do not believe that any of our strategic partners, including Capita, are in anything like a comparable position to Carillion. The current licensee is wholly owned by Capita but is required to operate at arm’s length from it. There are provisions in its licence to prevent Capita from taking working capital out of the licensee. Together those provisions mean that DCC would continue to operate while Ofgem, as regulator, sought to appoint a new licensee or for a new owner to be secured. I shall not say anything further on that subject at the moment but I hope I have dealt with the points raised by the noble Lord, Lord Teverson, and his noble friend Lady Featherstone. If necessary, I shall write to them in greater detail.
Baroness Featherstone
I thank the Minister. I am comforted to some extent to know that he believes that the service will carry on, regardless of financial issues. I look forward to seeing the potential scale of the costs, but I disagree with him about those costs. From what has been said and from what I can glean from this whole business, I do not think at the moment that the savings to the consumer will come anywhere near the costs to the consumer. However, for the time being, I am content to withdraw my amendment.
House of Lords
Gaza
Lord Hylton
To ask Her Majesty’s Government what proposals they have for processes by which Israel might be held accountable for its treatment of the inhabitants of Gaza.
Baroness Stedman-Scott (Con)
The United Kingdom is deeply concerned about the recent violence in Gaza. Israel has the right to protect its borders, and Palestinians have the right to protest. There is a need to establish the facts, including why such a volume of live fire has been used and what role Hamas has played. All sides must now commit to restraint and peaceful protest. The UK remains committed to a two-state solution which ends the conflict.
Lord Hylton (CB)
My Lords, I thank the noble Baroness for her reply, which deals more with the present situation. I am concerned with the background. Do the Government agree with United States Senator Bernie Sanders, who is Jewish, and who said last week:
“Hamas’s … violence … cannot excuse trapping … two million people inside Gaza”?
He added that the United States,
“must play a … role in ending the Gaza blockade”.
If Israel will not change its policy, how can it be held accountable for breaches of international law—for example, collective punishments? Will the Government consult the United Nations General Assembly about a possible tribunal?
Baroness Stedman-Scott
As I said, the Government remain gravely concerned about the humanitarian situation in Gaza and continue to monitor it closely, including the effect that electricity shortages are having on the health sector. We are supportive of the Palestinian Authority resuming government functions in Gaza, helping to improve the dire humanitarian and economic situation. We continue to call on the Israeli Government to ease restrictions, and for Israel, the Palestinian Authority and Egypt to work together to ensure a durable solution for Gaza. We share the commitment of the United States to improving the situation in Gaza and bringing forward a viable peace plan. We remain committed to a two-state solution which ends the conflict and alleviates the suffering of the Gazan people.
Lord Collins of Highbury (Lab)
My Lords, I do not know whether the Minister has had the opportunity to read the leader in yesterday’s Guardian, which summed up the situation extremely well. For the two-state solution to be viable, we have to articulate very strongly why it is important. If people in Israel think that by destroying and harming the Arab cause in the way that they are doing now will help with peace and the long-term security of Israel, they are mistaken. We need to make the case for a two-state solution strongly, and we need to argue it very strongly with the current Government in Israel. If they continue with their current policy, they will undermine the cause of peace but also ensure that the Arabs will stand up and fight back strongly.
Baroness Stedman-Scott
The noble Lord paints a true picture of the situation and of the angst and frustration at the fact that we seem unable to bring about a two-state solution; the angst of that is palpable. I have not read the leader in the Guardian, but I will make sure the officials get me a copy and I will make sure that I read it. People are continually trying to make the case that the actual motivation and desire to achieve peace in a two-state solution must come from the individuals involved, in Israel and Palestine, and we will do everything we can to help that happen.
Baroness Northover (LD)
Does the noble Baroness think it acceptable that Israel is not allowing out for treatment those who have been wounded in the recent protests to which she referred? Have the Government made any assessment of whether the sniper rifles and components given export licences and sold to Israel by UK firms have been used on protesters?
Baroness Stedman-Scott
Of course, such behaviour is unacceptable. The information I have is that we take our responsibilities for the export of defence arms extremely seriously. We approve only equipment that is for Israel’s legitimate self-defence, and all applications for export licences are assessed on a case-by-case basis against strict criteria. We will not issue a licence if there is a clear risk that the equipment might be used for internal repression.
Lord Hannay of Chiswick (CB)
My Lords, in her answer, the Minister referred to the Government welcoming the United States’ support for the people of Gaza. Can she tell us what that consisted of? I seem to have missed it. Perhaps she can say what support the United States is now giving to the people of Gaza. Once again, can she explain why the Government rejected the view of the International Relations Committee of this House that the best way we could show our support for a two-state solution is by recognising the state of Palestine?
Baroness Stedman-Scott
On the support that the United States is giving to Gaza, I will need to write to the noble Lord about the detail of that. On the two-state solution, given the lack of experience on my part in Foreign Office matters, all I will say is that everything I have learnt about this confirms that it is indeed a two-state solution that we look to. It is complicated and difficult, but I remind noble Lords of the debate we had on Syria where the noble Lord, Lord Roberts of Llandudno, spoke. Of course, one likes to think that the situation in Syria can be resolved, but it looks hopeless. Quoting Nelson Mandela, the noble Lord said—I paraphrase—that everything looks impossible until it happens. We must hope that we can get the peace that we need in these two states.
The Lord Bishop of Norwich
My Lords, can the Minister say whether the Government support the UN Secretary-General’s call for an independent investigation into the recent bloodshed in Gaza?
Baroness Stedman-Scott
I can confirm that there is an urgent need to establish the facts. The UK is supportive of accountability and transparency, and we welcome Israel’s commitment to investigate the conduct of operations. We urge for those findings to be made public and, where wrongdoing is found, for those responsible to be held to account.
NHS: Artificial Intelligence
(6 years, 2 months ago)
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Lord Holmes of Richmond
To ask Her Majesty’s Government what steps they are taking to encourage the adoption of artificial intelligence in the National Health Service.
The Parliamentary Under-Secretary of State, Department of Health and Social Care (Lord O’Shaughnessy) (Con)
My Lords, the Government believe that artificial intelligence, or AI, has the potential to transform health and care services. Our work to support this includes £4.2 billion of spending to update hospital IT infrastructure as well as the digital health technology catalyst, which provides funding to help small and medium-sized enterprises turn innovative ideas into reality. In addition, the Industrial Strategy Challenge Fund is supporting AI programmes in digital pathology and radiology, with winners of the wave 3 competition announced next month. We will continue to ensure that our regulatory frameworks protect patients while enabling the benefits of AI to transform care.
Lord Holmes of Richmond (Con)
My Lords, does my noble friend agree that the potential benefits to the National Health Service from AI go far further than just the clinical setting? For example, DNAs currently cost the service in excess of £1 billion. What more can be done to generate proofs of concept and work, not just in London but across the country, to ensure that AI machine learning, with all its benefits, can be put into making the NHS the greatest health service, not only in patient care but in taking up all the advantages of the fourth industrial revolution?
Lord O’Shaughnessy
My Lords, I thank my noble friend for his question and congratulate him and the rest of the committee on the excellent report, AI in the UK: Ready, Willing and Able?, which has a substantial chapter on AI’s application in healthcare. The potential to transform every element of health and care is susceptible to artificial intelligence. A couple of areas outside the clinical setting that I would highlight are workforce planning and triaging patients between different forms of care. As for support, in addition to the items in my first Answer, I highlight the work of the Topol review, which is designed to make sure that staff are fully equipped and trained to take advantage of these technologies as they come through the system, rather than letting them sit with a few early adopters and not becoming more widespread in the NHS.
Baroness Thornton (Lab)
My Lords, it is quite clear that the use of big data and AI will have transformative outcomes for patients. There are at least two challenges. The first is investment, which the Minister has already mentioned. What framework of accountability and transparency is in place to deal with that level of investment? How will we know whether it is being sensibly invested? The second is safeguarding and protecting data, and I use my local hospital as an example. A partnership between Google DeepMind and the Royal Free Hospital trust resulted in a breach of the Data Protection Act and the personal data of more than 1.6 million patients was transferred to the Google subsidiary as part of the creation of Streams, an app to diagnose and detect acute kidney injury—which we would, of course, all support. This suggests inexperienced procurement and negotiation skills in the NHS and the potential for the Googles of this world to run rings round them, to all our detriment. What are the Government doing to safeguard patients and their data?
Lord O’Shaughnessy
The case the noble Baroness highlighted brings to the fore both the potential benefits and risks. There are tremendous benefits in having personalised healthcare, and we all want to see that delivered. At the same time, if data is not used safely and securely we lose the public’s trust. If we do not have that trust, we will not be able to get the changes that we want. The Government respect the decisions made by the Information Commissioner and National Data Guardian in their judgments about poor practice at the Royal Free. I am pleased to say that the hospital has responded well to these. We are doing a couple of things to make more systematic changes. First is implementing the proper data standards of the GDPR in one month’s time. We will also make sure that National Data Guardian’s 10 data standards are written into every NHS contract so that, when it comes to procurement, there is understanding about the kind of things they should and should not be doing to safeguard data.
Baroness Grender (LD)
My Lords, does the Minister agree with the recommendations of the AI Select Committee, regarding NHS data, that a framework for the sharing of data is now urgent or needs to be delivered by the end of 2018? Does he support the need to digitalise, in consistent formats, by 2022? Evidence received by the committee suggests that failure to do so risks our missing out on profound opportunities from AI, because the current approach to data storage—especially among different NHS trusts—is outdated and piecemeal.
Lord O’Shaughnessy
The noble Baroness has highlighted two of the recommendations from the report. I support the proposal for a regulatory framework; it is a piece of work that I have kicked off in the department. I cannot put a timing on that, but I understand the need to provide a safe operating environment so that people who want to get into this field, whether from NHS trusts or businesses, can do so knowing that they are operating on a legal basis. That is something that we are working on.
On digitalisation, she is quite right: the £4 billion programme known as Personalised Health and Care 2020 is trying to deliver before 2020—as the name suggests—the kind of digitalisation that will enable AI to bring those benefits across every corner of the health and care systems.
Viscount Ridley (Con)
My Lords, is the Minister aware that many parts of the world envy Britain’s strengths and opportunities in AI, particularly in the health area, and that government procurement could turn this early lead into a golden opportunity for the UK?
Lord O’Shaughnessy
Yes, I absolutely agree with that. As the report highlights, we have a unique opportunity because of the nature of the way that the NHS was set up and its potential for realising a comprehensive data set of 65 million people. It is not just about those procurement rules; we have talked about having the right framework. It is about providing reassurance within the system—at a time when the public are beginning to understand just what data can do for good and for bad—that the NHS will use their data safely, securely and legally so that they can trust that it is being used for proper purposes from which they will benefit.
Lord Kakkar (CB)
My Lords, I declare my interest as chairman of University College London Partners. Does the Minister believe that there is a sufficiently robust mechanism for the diffusion of the innovation associated with digitalisation and artificial intelligence across the NHS? In particular, what role does the Minister think the academic health science networks should play in that process?
Lord O’Shaughnessy
Of all the innovations, diffusion is probably one of the greatest challenges that the NHS faces, as the noble Lord knows very well. We are doing a couple of things. First, we are supporting the global digital exemplars, which are providing that digitalisation at trust level, to make sure that they have the infrastructure there. Secondly, he talks about academic health and science networks. They have just been relicensed and are now to have a national remit to promote innovation. AI is absolutely part of the work that we are expecting them to do.
Schools: Integrated Communities Strategy
(6 years, 2 months ago)
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Viscount Ridley
To ask Her Majesty’s Government what contribution schools can make to the policies outlined in their Integrated Communities Strategy green paper.
The Parliamentary Under-Secretary of State, Department for Education (Lord Agnew of Oulton) (Con)
My Lords, schools play a critical role in promoting integration and widening opportunities for all communities. Many schools already do this successfully, creating inclusive environments where our children are able to learn the values that underpin our society. We want to ensure that this is the case for all schools and other types of education setting. This is why, as part of the Green Paper issued in March, we announced a strengthened package of support for schools and measures to deliver quality education across all settings.
Viscount Ridley (Con)
I thank my noble friend for that encouraging reply. Given that the Integrated Communities Strategy commits to supporting schools,
“to increase diversity to ensure they are more representative of their wider area”,
and in light of the evidence that religious selection by schools divides children along not just religious lines but ethnic and socioeconomic lines, with potentially worrying consequences for society, what are the Government doing to ensure the promotion in schools of the universal humanist values of the secular enlightenment and to break down barriers between children of different religious and cultural backgrounds?
Lord Agnew of Oulton
My Lords, in addition to promoting the fundamental British values of democracy, the rule of law and individual liberty, all schools are required to promote mutual respect and tolerance of those of different faiths and beliefs. As part of teaching a broad and balanced curriculum, all state-funded schools are required to provide religious education. Turning to integration, the Integrated Communities Strategy sets out a package of measures to help increase integration among children. It includes working with admissions authorities, where we are piloting five areas to increase diversity of pupil intakes, funding the schools linking programme, which is twinning schools of different faiths, and strengthening expectations for all new free schools on how they improve integration further.
Lord Blunkett (Lab)
My Lords, as the Minister is aware, the Select Committee on Citizenship and Civic Engagement, ably chaired by the noble Lord, Lord Hodgson, published its report last Wednesday. We were able to comment on the Green Paper at the end of our deliberations, including the staggering revelation that the Government had failed to mention citizenship education at all in the strategy document. This is a rhetorical question: how can the Minister persuade his colleagues in the Department for Education that schools cannot meaningfully contribute to shared British values, to the integration that we seek and to the aspirations he has laid out this afternoon if they are so uncommitted to citizenship education in our system?
Lord Agnew of Oulton
My Lords, I commend the work of my noble friend Lord Hodgson and his fellow members of the committee that has just reported. I extend an invitation to any of those members to meet me to discuss their recommendations and any criticisms that they have of our handling of this area. One of the most vital parts of the future of this country is to ensure that schools become the integration engine for our society. We are doing a lot to achieve that. Citizenship is part of the key stages 3 and 4 curriculum and, as the noble Lord will know, recently in our integrated strategy document we encouraged a number of additional methods to push this further forward.
Lord Singh of Wimbledon (CB)
My Lords, does the Minister agree that the underlying cause of religious extremism is the aggressive assertion that one system of belief is better than another? Will he further agree that, while we are all free to believe what we like, schools should emphasise respect for different faiths and the exploration of the many commonalities between them?
Lord Agnew of Oulton
My Lords, most dogma is based on ignorance, therefore a good education system is important because it tackles ignorance. All state-funded schools, including faith schools, have a legal obligation to promote community cohesion and to teach a broad and balanced curriculum. They are required to promote the fundamental values of democracy, the rule of law and individual liberty, as I mentioned in answer to an earlier question. We are looking at the moment at how faith free schools can pay more attention to how they attract pupils from different faiths and backgrounds.
Lord Watson of Invergowrie (Lab)
My Lords, the Green Paper highlights the fact that 60% of minority ethnic pupils are in schools where they are in the majority. It goes on to say:
“This reduces opportunities for young people to form lasting relationships with those from other backgrounds and can restrict pupils’ outlook and education”.
Yet last year’s Conservative manifesto contained a pledge to remove the 50% cap on faith schools admissions. Surely all our state schools must be open, inclusive, diverse and integrated, and never exclusive, monocultural or segregated. The duty of the education system should not be to emphasise and entrench such differences in the eyes and minds of young people but rather to emphasise the common values, to which the Minister himself referred and which we all share. Will the Minister give an assurance now that the backward step of removing the faith schools cap is no longer government policy?
Lord Agnew of Oulton
My Lords, the matter of the faith cap is still under consideration, so I am afraid that I am not able to give the noble Lord the assurance he seeks at this moment. However, referring to the recent Integrated Communities Strategy document; on education specifically we are addressing eight separate issues which all link to integration: admissions, the free school point I made a moment ago, school linking, fundamental British values, independent schools and registered schools, out-of-school settings and home education. All of them are addressed in this document, and we seek to ensure that integration remains at the heart of our policy.
The Minister of State, Ministry of Defence (Earl Howe) (Con)
My Lords, I note that the noble Lord, Lord Pearson, has been trying to get in for some time and has graciously given way each time.
Lord Pearson of Rannoch (UKIP)
I am most grateful. Do the Government know what is being taught in our some 2,000 madrassas, which are not inspected by Ofsted, and which teach Muslim children about Islam and to recite the Koran for perhaps 20 hours a week? If the Government do not know what is going on there—and Written Answers to me confirm that they do not—should they not find out?
Lord Agnew of Oulton
My Lords, we gave additional powers and budgets to Ofsted in January 2016 to carry out inspections of what we might consider to be unregistered schools. In that time, they have inspected 208 out-of-school settings. They identified 51 as being unregistered schools in the formal sense, and have closed 44 of them. There are seven still under active investigation. We have just renewed the contract with Ofsted to carry on the work. I accept that it is a problem, but we are alert to it and we are investigating it.
Probation: Voluntary Sector
(6 years, 2 months ago)
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Lord Ramsbotham
To ask Her Majesty’s Government whether they plan to increase the contribution made by the voluntary sector to the delivery of probation services, following publication on 17 April of the report by HM Chief Inspector of Probation, Probation Supply Chains.
The Advocate-General for Scotland (Lord Keen of Elie) (Con)
My Lords, the report of 17 April from Dame Glenys Stacey is one for which we are grateful. The voluntary and charitable sector has a viable role to play in helping to reform offenders. We recognise that community rehabilitation companies have faced financial challenges, which means that many of them have not been able to develop their engagement with the voluntary sector to the extent envisaged. We will carefully consider the inspectorate’s recommendations as we work to improve probation services.
Lord Ramsbotham (CB)
My Lords, I thank the Minister for that Answer. The Chief Inspector of Probation has repeatedly drawn attention to the failure of the transforming rehabilitation reforms—rushed, rather than thought through, by Chris Grayling—to protect the public or satisfy the needs of offenders under probation supervision. In her latest report, she draws attention to the reduction of the contribution contracted from the voluntary sector, an essential partner under the old system, and the failure of community rehabilitation companies to analyse the needs of those under their supervision, a given for all former probation trusts. Can the Minister please tell the House what the Government are doing to rectify this, and whether the chief inspector’s particular recommendations to the Ministry of Justice and Her Majesty’s Prison and Probation Service will be actioned?
Lord Keen of Elie
My Lords, if I may, I will quote from the chief inspector’s report of 17 April:
“We found that the quality of services was variable, but reasonable overall”.
We intend that the service should be more than reasonable, and we are considering her recommendations.
Lord Marks of Henley-on-Thames (LD)
My Lords, the report demonstrates that probation services have been going badly wrong, with a failure to involve the voluntary sector on anything like the scale envisaged. Allowing the community rehabilitation companies to design and implement their own delivery models was a mistake and has led to uneven and inadequate delivery. Do the Government now plan to tie CRCs to more rigorous contracts by variation, or on renewal? Might this not also enable CRCs to provide much more in the way of needed services to the National Probation Service?
Lord Keen of Elie
My Lords, the community rehabilitation companies faced unexpected difficulties when it was found that the financial float of those companies was less than had been planned for. We have already discussed the terms of the contracts with the CRCs and they are the subject of further consideration. We are certainly determined that there should be a diverse provision so far as probation is concerned, and one that does involve third sector organisations.
Lord Beecham (Lab)
The chief inspector has stated that the present system is fundamentally flawed and that she doubts whether the service can ever be restored to the standard we should accept. Will the Government now join with her, the relevant trade unions and the judiciary to examine how the performance and reputation of a critical part of our system can be restored?
Lord Keen of Elie
My Lords, with regard to the present provision it should be noted that the community rehabilitation companies have reduced the number of people reoffending. Indeed, our reforms mean that they are monitoring 40,000 offenders who had previously been released with no supervision.
Baroness Corston (Lab)
My Lords, will the Minister accept that one of the reasons why it is very difficult to know what is going on in the community rehabilitation companies is that, under the Grayling legislation, as it was previously referred to, they are specifically excluded from the Freedom of Information Act?
Lord Keen of Elie
My Lords, I do not consider that a material consideration, given that they are subject to the very report that we are discussing presently, Dame Stacey’s report of 17 April.
Lord Beith (LD)
My Lords, the Minister should not speak about unexpected difficulties, given that the likelihood that the amount of work going to the CRCs would be lower than the Government predicted was something of which the Justice Committee warned, along with many other things.
Lord Keen of Elie
My Lords, the flow of work between the NPS and the CRCs was indeed lower than the Government had anticipated when they implemented these measures.
Lord Beecham
My Lords, could the Minister perhaps answer the question that I put to him? Will the Government sit down with the trade unions and the judiciary to deal with the crisis in the system?
Lord Keen of Elie
My Lords, with respect to this reference to crisis, I remind the noble Lord of what the chief inspector said in her report:
“We found that the quality of services was variable, but reasonable overall”.
We aim to improve that. We do not intend to sit down at present with particular parties, but we are addressing the recommendations in the chief inspector’s report, which is the proper way forward.
Lord Bassam of Brighton (Lab)
My Lords, perhaps the Minister can tell us what the current recidivism rate is.
Lord Keen of Elie
I am not in a position to answer such a general proposition but I will undertake to check the relevant statistics in that area and to write to the noble Lord in due course. I will of course place a copy of the letter in the Library.
Lord Harris of Haringey (Lab)
My Lords, the Minister said that, for some reason, the CRCs did not need to be subject to the Freedom of Information Act because there was a chief inspector. Could he explain exactly why the chief inspector is a substitute for citizens posing questions to and seeking information from the CRCs?
Lord Keen of Elie
It may not be a substitute for citizens seeking information, but it is a means of ensuring that the conduct of the CRCs and the results of their work are put into the public domain by those who have a clear understanding of how the work should be performed, and are the subject of published reports.
Iran: Nuclear Deal
Lord Campbell of Pittenweem
To ask Her Majesty’s Government what representations they have made to the United States government concerning their continued support for the Iran Nuclear Deal, in light of the meeting between the President of France and the President of the United States to discuss the issue.
Lord Campbell of Pittenweem (LD)
My Lords, I beg leave to ask a Question of which I have given private notice.
The Earl of Courtown (Con)
My Lords, the UK’s position on the JCPOA is clear: we regard it as a crucial agreement that makes the world a safer place by neutralising the threat of a nuclear-armed Iran. The deal is working. There is no better alternative plan. We are engaging all partners following President Trump’s 12 January speech and working hard at all levels towards a strong agreement for the continued success of the JCPOA. We are clear that the deal is not rewritable.
Lord Campbell of Pittenweem
I am grateful to the noble Earl for that Answer, but I hope he will excuse me when I say that it does not convey the necessary urgency. If this agreement is renounced by President Trump, it will strike yet another grievous blow to the issue of nuclear arms control. President Trump opposes a renewal of the strategic arms control treaty with Russia, and Russia is already in breach of the intermediate nuclear weapons treaty fashioned by Gorbachev and Reagan in Iceland. The truth is that we are witnessing the fabric of nuclear arms control collapsing before our very eyes. Why are the Government not more vocal on these issues?
The Earl of Courtown
My Lords, I agree with much of what the noble Lord, Lord Campbell, said, and he makes a number of important points. I should also add that we are in regular discussion with our partners on this issue. The E3 is working with the US to address President Trump’s concerns by agreeing a joint framework and we are holding regular high-level and expert meetings with French, German and US partners to agree a joint approach for the deal. The Question refers to the visit of President Macron to the United States this week, and later this week Chancellor Merkel will be there as well. All will be putting pressure on President Trump and the United States Administration to get this deal sorted out.
Lord Collins of Highbury (Lab)
My Lords, at the heart of this is the 12 May deadline. We have seen the markets this afternoon, certainly the oil markets, reacting as if they know that Trump is going to stick to this deadline. What are we doing as a Government to support our allies? The Minister referred to the visit of President Macron and of Chancellor Merkel. We have just had a meeting of G7 Foreign Ministers. What is our Foreign Secretary doing to ensure that we have a clear common voice to ensure that this agreement, agreed across the board, is maintained and not unilaterally torn up on 12 May?
The Earl of Courtown
My Lords, there is common agreement on the E3+3 group as far as the United States is concerned. We expect developments in the coming days and plan to update Parliament when we know the facts, but this is unlikely to be before President Trump has made an announcement. The noble Lord also mentioned the G7 Foreign Ministers meeting. I have not had a readout of that meeting as yet, but I understand that this was discussed.
Lord Howell of Guildford (Con)
My Lords, in agreeing with the point of the noble Lord, Lord Campbell, about urgency, does my noble friend accept that this is a question not just for the western alliance but the whole comity of nations concerned with the proliferation of nuclear weapons? It boils down to the simple question: do we or do we not want Iran to develop as a nuclear power, with nuclear weapons, and destabilise the Middle East even further? We recognise that it is doing all sorts of undesirable things in the Middle East, but this is the specific question of nuclear proliferation. Can we be sure that our Ministers and those of our allies will continue to press President Trump to revalidate the agreement, rather than open up a new area of danger in the Middle East?
The Earl of Courtown
My Lords, I can assure my noble friend that we are making every effort to put pressure on the United States Administration to validate this agreement. My noble friend is also right on the proliferation of nuclear weapons—we cannot afford any proliferation of nuclear weapons. I should also add that, so far, this deal is working. Iran has given up two-thirds of its centrifuges and 95% of its uranium stockpile. Our priority is working with the deal and making it deliver for our shared security interests.
Lord Hannay of Chiswick (CB)
My Lords, will the Minister confirm that, whatever decision is reached by President Trump on 12 May, the British Government will stand by the JCPOA and will not allow that action by the US—unilaterally taken and in the face of the IAEA inspections showing that Iran is in conformity with the agreement—to carry the day?
The Earl of Courtown
My Lords, I agree with the noble Lord, Lord Hannay, that we must stay behind this JCPOA. We must also work and put enough pressure on the United States Administration to get their agreement.
Lord Robathan (Con)
My Lords, while the deal is probably the best we will get and it took a huge amount of work to get it, I counsel the Government not to be starry-eyed about Iran. It is currently involved in Yemen, Syria and Lebanon, causing trouble and mischief-making. We should always hold its feet to the fire, and not trust it until we have seen proof that it is to be trusted.
The Earl of Courtown
My Lords, my noble friend is correct in much of what he says. In parallel with our efforts to keep the nuclear deal, the UK is firm in the need to tackle Iran’s destabilising behaviour in the region, including its ballistic missile programme, but we are clear that the matter needs to remain separate from the JCPOA.
Lord West of Spithead (Lab)
My Lords, I am sure that the noble Earl is aware that before the JCPOA was signed, we were on a track that could well have ended up in a war in the Middle East because of the Israeli reaction against Iran as it became more aware of what was going on. Can the Minister confirm that we are also talking with people from Mossad and others about this issue because the loss of the JCPOA would be very dangerous and could lead to a war in the Middle East?
The Earl of Courtown
I could not agree more with the noble Lord about the importance of the JCPOA. As he is only too aware, discussions with other security agencies are never detailed at this point, but all Ministers are bringing up this issue in order to try to get some agreement.
Lord Lamont of Lerwick (Con)
My Lords, I draw the attention of the House to my entry in the Register of Lords’ Interests both as chairman of the British Iranian Chamber of Commerce and as the Government’s trade envoy to Iran. Does the Minister not agree that in answer to the powerful and important point made by my noble friend Lord Robathan, none the less, the way to get Iranian co-operation in other areas of the Middle East is not to start by tearing up an agreement that the Iranians have themselves signed in good faith? When President Trump says that Iran is not in compliance with the agreement, that is incorrect, as the International Atomic Energy Authority has repeatedly certified.
The Earl of Courtown
Yes, my Lords, I agree with my noble friend. However, he will also know that trading with Iran presents a difficult scenario, although there are a number of success stories where trade from the United Kingdom is progressing well.
Baroness Deech (CB)
My Lords, do the Government consider that the country has scored an own goal by refusing to deal with President Trump in the way that President Macron has? Difficult though it may be, it would have been better had we extended more of a hand of friendship and welcome to President Trump, given the need to influence him regardless of personal feelings.
The Earl of Courtown
My Lords, the noble Baroness mentions our relationship with the United States Administration, with whom we are in continual contact. Our contacts with the US Administration are very important. The noble Baroness has talked about our relationship with President Trump, one of our closest allies. The fact is that we continually engage with the Administration and no doubt that will continue.
Lord Browne of Ladyton (Lab)
My Lords, a US pull-out and the reimposition of tough sanctions on Iran will lead to those very firms that we have encouraged to trade with Iran, as well as our banks making contact with Iranian banks, to potentially suffer devastating losses of financial support by commercial banks. Last Thursday, when EU foreign Ministers met, at least some of them were contemplating an emergency line of credit of support for EU businesses trading with Iran. Do our Government intend to support that initiative if it is necessary to do so? If not, how do they intend to support our businesses?
The Earl of Courtown
I thank the noble Lord for raising a very important point. As I have said, the business environment in Iran is incredibly difficult and the opportunity for due diligence is equally so. The noble Lord mentioned a number of details which I am not aware of, and therefore I will have to write to him.
Automated and Electric Vehicles Bill
(6 years, 2 months ago)
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Baroness Sugg
That the order of commitment of 20 February 2018 committing the bill to a Grand Committee be discharged and that the bill be committed to a Committee of the Whole House.
Haulage Permits and Trailer Registration Bill [HL]
Tuesday 24th April 2018
(6 years, 2 months ago)
Lords ChamberRead Full debate Haulage Permits and Trailer Registration Act 2018 View all Haulage Permits and Trailer Registration Act 2018 Debates Read Hansard Text Read Debate Ministerial Extracts Amendment Paper: HL Bill 84-R-I Marshalled list for Report (PDF, 80KB) - (13 Apr 2018)
The Parliamentary Under-Secretary of State, Department for Transport (Baroness Sugg) (Con)
My Lords, in moving that the Bill do now pass, I am grateful to all noble Lords who contributed during its passage. Following our debates and the report of the DPRRC, I am pleased that we have been able to introduce government amendments to improve parliamentary scrutiny, consulting and reporting. We will consider further in the other place the amendment tabled by the noble Lord, Lord Tunnicliffe, on trailer safety. The Government agree that trailer safety is an important issue, and as I have set out, my department will produce a report on it. I should like to thank the Bill team, which worked for many months on the detail of this legislation and will continue to do so as it progresses through the other place and regulations are drafted. This Bill will enable the Government to make important and responsible contingency plans for the haulage industry following our exit from the European Union. I beg to move.
Lord Tunnicliffe (Lab)
My Lords, I will briefly comment on the Bill. This is the third transport Bill that the Minister and I have worked on together. They have been conducted very efficiently by virtue of the efforts of the Minister and the Bill team. Virtually all issues have been settled by debate and consensus. I also thank my Bill team, which is half of one person, Katherine Johnson, especially for the brilliance of the amendment she crafted, which was supported in this House because of the care of the wording. I am sorry that we have that amendment between us, but I am very pleased with the way things have gone. I wish us both luck with the next transport Bill, which we are about to start.
Baroness Randerson (LD)
My Lords, I will not detain the House with a great long speech, but I endorse the words of the noble Lord, Lord Tunnicliffe. I thank the Minister for her courtesy and the care with which she has dealt with the Bill.
Baroness Sugg
I thank the noble Lord, Lord Tunnicliffe, and the noble Baroness, Lady Randerson, for their comments and constructive engagement throughout the passage of the Bill.
Civil Liability Bill [HL]
Tuesday 24th April 2018
(6 years, 2 months ago)
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Lord Keen of Elie
That the Bill be now read a second time.
Relevant document: 22nd Report from the Delegated Powers Committee
The Advocate-General for Scotland (Lord Keen of Elie) (Con)
My Lords, the Bill makes important changes to our personal injury compensation system. It is about making that system fairer, more certain and more sustainable in the future for claimants, defendants, the taxpayer and motorists. This builds on our wider reforms to cut the cost of civil justice claims and strengthen the regulation of claims management companies.
The first part of the Bill will deliver a key manifesto pledge: to support hard-working families by bringing down the cost of living through a crackdown on exaggerated and fraudulent whiplash claims, which lead to higher insurance costs. The second part of the Bill will provide a fairer method for setting the personal injury discount rate. It will, for the first time, use a new, regular, more transparent mechanism in which the Lord Chancellor consults independent experts before setting the rate. We aim to provide full compensation for seriously injured claimants while being fair to those, particularly the National Health Service, who bear the cost of paying. We believe that the Bill will provide a compensation system that meets the rightful needs of claimants while saving the public money, both as consumers and taxpayers. About three-quarters of the United Kingdom motor and liability insurance market has already committed publicly, through a letter published on 20 March, to ensure that any savings resulting from enactment of the Bill will be passed on to the public.
I begin with the issue of whiplash. DWP data shows that around 650,000 RTA-related personal injury claims were made in 2017-18. That is nearly 200,000 more than in 2005-06—a rise of 40%. If we take the 10 years following 2005-06, the rise is around 70%. We estimate that around 85% of these are for whiplash-related injuries—higher than in any other European jurisdiction —yet Department for Transport figures show that in the decade up to 2016-17, reported road traffic accidents went from around 190,000 to around 135,000—a fall of 30%. Many claims will, of course, be genuine and the Government would never seek to deny justice to those who suffer injury; it is absolutely right that individuals are compensated for genuine injuries. However, by 2016-17, there were around 670,000 whiplash claims in the United Kingdom. That number is too high and the costs to motorists and consumers too great. It comes despite major improvements in motoring safety, such as the increased use of integrated seat and head restraints. We must ask ourselves what is going wrong.
The reality is that some of these claims are not genuine. Last year the insurance industry identified 69,000 motor insurance claims that it considered fraudulent. By their very nature, these claims are difficult to detect, so I ask the House to consider that the problem goes much further than this already significant number. That the number is so high is indicative of an ever-pervading compensation culture in this country. The knock-on effect of this has been to drive up insurance premiums. I would go as far as to say that, for some, it has become socially acceptable to make a whiplash claim for little or no injury. Noble Lords may have seen examples in the media of exaggerated or fraudulent whiplash claims, such as the man making a claim after his car was slowly reversed into in a supermarket car park. It transpired that he was not in the car at the time.
As the House will no doubt agree, the purpose is to compensate those for whom genuine injury has occurred. Our reforms seek to reduce and control the costs of whiplash claims and to disincentivise people making fraudulent or unmeritorious claims. The level of compensation paid out for such claims is, in the Government’s view, out of all proportion to any genuine injury suffered, especially when balanced against its effect on the price of premiums paid by ordinary motorists. Insurance industry figures show that in 2017 car insurance premiums rose at the fastest rate ever. Though there are other contributing factors, without reform to whiplash claims those increases are estimated by the ABI to continue at an alarming rate—potentially 10% per year. For many people—particularly those in rural communities—owning a car is not a choice: it is a necessity. Higher insurance premiums hit young and elderly motorists particularly hard. That is why we pledged in our manifesto to bring down the cost of motoring. The Bill can and will do that.
The measures in the Bill relating to whiplash will therefore address a number of issues. They will introduce a ban on settling whiplash claims without medical evidence. This will discourage fraudulent claims and encourage insurers to investigate claims properly, providing fairness and certainty for claimants, so they do not feel pressurised into accepting an offer before knowing the true extent of their injuries. They will provide for a new system of fixed tariffs for payments for pain, suffering and “loss of amenity” in whiplash claims. This will give claimants proportionate compensation while controlling the costs of claims. The final tariff figures will be set in regulations to be debated via the affirmative procedure by Parliament following Royal Assent. The judiciary will have discretion to increase the compensation payable in exceptional circumstances, with the cap set in supporting regulations. The whiplash reform programme also includes measures not in the scope of this Bill, to increase the small claims track limit for road traffic accident personal injury claims to £5,000 and for all other personal injury claims to £2,000.
The measures in the whole reform programme are fair and proportionate. They will prevent fraudulent and unmeritorious whiplash claims from driving up insurances costs, allowing insurers to pass on savings of about £1.1.billion a year to consumers. This would mean an average reduction in car insurance premiums for consumers of around £35 a year. As a Government we fully intend to hold the market to account in making sure that happens.
I now turn to the second part of the Bill, the personal injury discount rate. Fairness and sustainability are at the heart of our reforms. With any change to the system for compensating the seriously injured, we must keep in mind the person behind every claim. The Government continue to support the aim that seriously injured people should receive 100% compensation to meet expected future financial losses, including medical and care costs. The way compensation is calculated must be fair to both claimants and defendants, including the National Health Service.
This Bill will reform the personal injury discount rate, which adjusts a compensation lump sum to allow for the return a claimant is expected to receive by investing it over the period of the award. Currently at minus 0.75%, we have one of lowest rates in the world. In Germany, it is 4%; in France it is 1.2%, and in Ireland it is 1%. The current rate consistently compensates for injury at more than the 100% required by law. Awards currently average 120% to 125% even after management costs and tax. This is putting huge pressure on the National Health Service in claims for clinical negligence. Last year, the NHS spent £1.7 billion on such cases, a cost that has almost doubled since 2010-11, with an unsustainable average increase of 11.5% every year.
The current legal framework requires the Lord Chancellor to assume claimants to be very risk-averse investors, and the discount rate has been set since 1998 with reference to returns on very low-risk investments—index-linked UK gilts. This is unrealistic. In reality, claimants do not behave as very low-risk investors; they invest their compensation in diversified low-risk portfolios and on average receive higher returns than is assumed under the present law. This results in inflated payments for claims which overly penalise defendants.
Every pound spent on overcompensation could instead be spent on front-line public services: in our hospitals, our schools and our Armed Forces. We will therefore do a number of things in the Bill. We will provide for the discount rate to be set in future by reference to how evidence indicates claimants actually invest, giving a more realistic rate that will mean that injured parties with low-risk investment appetites still receive full and fair compensation and ensure that defendants, including the NHS, are not left shouldering the burden of overcompensation.
We shall provide for the first time that the Lord Chancellor should set the rate regularly—at least every three years—and must do so after expert advice from an independent panel which protects the interests of claimants, as well as defendants, by ensuring that the rate is grounded in investment practices and market conditions.
Transparency and fairness in setting the rate were two of the main concerns voiced by the Justice Select Committee, and we have responded to that in setting out our position in the Bill. Changes to the discount rate will affect only lump-sum payments for future financial loss. They will not affect periodical payment orders, which account for a significant proportion of the compensation paid for future loss in the cases involving the most serious and long-term injuries.
Periodical payment orders are annual, risk-free payments providing a steady stream of income which is not affected by the discount rate, allowing claimants to plan for their long-term needs. PPOs are available from the National Health Service in all negligence cases, including those involving brain damage during birth, and in almost all cases where the defendant is insured by a UK-regulated insurer. A court is able to provide protection by ordering a PPO where it believes that it is in the claimant’s interest. In any event, for serious long-term injuries, claimants will continue to be able to rely on the National Health Service as any other person would.
These reforms will reduce spending pressure on the NHS. The NHS Confederation and other influential medical bodies have described how the change last year in the discount rate exacerbated the financial impacts of clinical negligence claims. These higher litigation costs against the NHS are now unsustainable.
This fairer approach to setting the discount rate could, assuming a rate between 0% and 1%, save the taxpayer between £250 million and £550 million per year and, in turn, mean savings to insurers of between £0.5 billion and £1.5 billion per year, to be passed on to consumers in the form of lower insurance premiums.
Alongside our wider work to reform the civil justice system and, through the Financial Guidance and Claims Bill, strengthen the regulatory regime for claims management companies and ban cold calling, the reforms contained in the Civil Liability Bill are needed to put personal injury payments on a fair, more certain and sustainable footing for the future. In turn, they will save the NHS and consumer money. Legislating to ensure that genuine whiplash claims are backed by medical evidence, and that claimants receive proportionate compensation, will reduce the number and cost of whiplash claims. This will allow insurers to pass on savings to consumers, and, as I have said, three-quarters of the UK motor and liability insurance market has already publicly committed to doing so.
In changing the system by which the discount rate is set we want to continue to ensure fairness, so that those who suffer catastrophic personal injury get 100% compensation, within a more informed and transparent system in which the rate is set by the Lord Chancellor at regular intervals, with the benefit of independent expert advice, in the interest of claimants. I commend the Bill to the House and I beg to move.
Lord Beecham (Lab)
My Lords, I begin by referring to my interest as an unpaid consultant with my former solicitors’ firm, and to a paternal interest, inasmuch as my daughter is a barrister and a part-time deputy district judge.
This Bill, as the noble and learned Lord has reminded us, covers two discrete areas of personal injury law: claims for damages for whiplash injuries, and the way compensation for financial loss in serious injury claims, by way of lump sums, is to be calculated. The former is, in effect, a response to exaggerated claims. Exaggeration is, however, not confined—as the media, the insurance industry and the Government would have us believe—to claimants and their advisers. A small number of insurance companies, operating under a variety of labels in the market, constantly claim that the number and cost of damages claims for whiplash injuries is rising, with a consequential impact on premiums, which would otherwise be lower.
We are all familiar with the benevolent intentions of the industry and its heartfelt aspiration to reduce premiums. A degree of scepticism about the industry’s case, is, however, justified. In his seminal report, Common Sense, Common Safety, the noble Lord, Lord Young of Graffham, who it was a pleasure to see in the House yesterday, declared:
“The problem of the compensation culture prevalent in society today is, however, one of perception rather than reality”.
Road traffic accident claims have fallen by 14% since 2013 and by 10% in the past year, while last year the number of claims relative to the number of vehicles on the road was the lowest since 2008. Interestingly, the latest data published—just today—by the Compensation Recovery Unit records a fall in the number of motor cases registered to the unit from 780,000 in 2016-17 to 650,000 in 2017-18. The numbers between 2010-11 and 2017-18 ranged from 828,000 to 761,000. Settlements recorded by the CRU were, at 683,000, the lowest since 2011. Moreover, the cost of such claims in the UK is in the lower half of the European league table of such costs.
There is a legitimate concern, to which the noble and learned Lord has referred, about the activities of claims management companies—and indeed of “McKenzie friends”, a growing feature in the courts these days in this and other areas—about which little or no action has so far been taken, either by the Government, or, in relation to connections between solicitors’ firms and such companies by the Law Society, which I find somewhat deplorable.
In any event, in practice the proposals will impose a tariff system for compensation for pain and discomfort ranging from £235 for up to three months to £3,910 for 18 to 24 months—respectively 76% and 49% less than the guidelines prescribed by the Judicial College. Crucially, the system is entirely based on the timescale, and not the severity, of the pain and suffering endured. These replace, for road traffic cases, payments which the MoJ—without adducing any evidence—regards as “out of all proportion” to the level of injury suffered. Having said that, I welcome the provision that no case should be settled without a medical report.
Someone suffering a comparable injury sustained otherwise than from a road traffic accident—for example, a workplace accident—with effects lasting two years, could recover £3,000 more in damages and the costs of the claim, which, in RTA cases, would in future have to be paid out of the damages and not by the defendant.
Some noble Lords may be aware that a few weeks ago I sustained an injury, which left me with a colourful presentation around my eye, when I was thrown to the floor in a Tube train that made a violent, sudden halt. It was not a soft-tissue injury but if it had been—I suppose it could have been in those circumstances—any claim would not have been affected by the provisions of the Bill, whereas it would if I had been a passenger in a road vehicle. Some friends of mine recently experienced precisely that kind of accident. The question arises: why should comparable injuries not attract comparable awards, and comparable recovery of the cost of a claim, whether they are incurred in a road traffic accident or any other accident for which a defendant is deemed liable?
There are, moreover, serious questions to be asked not just about the scale of damages deemed recoverable but about how the level of damages is to be determined and by whom. The 22nd report of the Delegated Powers Committee asks some salient questions and makes some powerful comments on the way the Government are proceeding. It poses what it describes as two central questions:
“What is meant by ‘whiplash injury’?”,
and:
“By how much are awards of damages to be reduced?”.
The answer it divines is:
“‘Whiplash injury’ means whatever the Lord Chancellor says it will mean, in regulations to be made by him or her at some future date”,
with “a full definition” emerging once the Bill is enacted and not before. It also observes:
“Given the complex physical and psychological components of whiplash injury, it is not satisfactory that these matters should be left to regulations rather than being subject to a rigorous debate in Parliament”—
a refrain all too frequently heard in this House in relation to secondary legislation. As to the second question, about the quantum of damages, the committee points out that the reduction,
“will be whatever the Lord Chancellor says it will be, in regulations to be made … at some future date”.
The Government pray in aid the need for what they say is,
“flexibility ... to reflect possible changes in society’s perception of the value of”,
pain, suffering and loss awards over time and a possible need,
“to change the parameters of the categories of the tariff to adjust or refine the approach to different severities of injury should this become necessary in future and in the light of experience over time”.
Those are two possible candidates, I suggest, for the Nobel Prize for vacuity. Unsurprisingly, the committee was less than impressed by these responses and in five sub-paragraphs it demolished the Government’s position, pointing out that the need for possible updating figures or mechanisms does not justify a failure to include them initially in primary legislation.
Rather than relying yet again on unamendable statutory instruments, Acts of Parliament are to be preferred for this, and for quantifying damages, and are equally preferable where,
“society’s perception of the value of”,
pain, suffering and loss claims changes over time. Equally, it said:
“The need to refine the tariff in relation to different severities of injury”,
can be accommodated by a new Act.
Crucially, the committee avers that the judiciary, with its long experience of personal injury claims, should determine the provision for damages or, failing that, responsibility should be undertaken by independent medical experts. Its emphatic conclusion is that,
“it would be an inappropriate delegation of power for damages for whiplash injury to be set in a tariff made by Ministerial regulations rather than on the face of the Bill”,
and that the initial tariff,
“should be set out on the face of the Bill, albeit amendable by affirmative statutory instrument”,
in the future, following further recommendations by the judiciary or an expert panel. This of course echoes repeated expressions of concern about the use, and indeed abuse, of delegated legislation, with the limited opportunities afforded to persuade Governments to think again and respond to concerns expressed in either House. Will Ministers delegate the decision on this critical issue, as suggested by the committee, albeit subjecting any recommendations for approval under the affirmative procedure? My suggestion would be that the decision should be made by an advisory panel or the judiciary. Then, if we are proceeding by the secondary legislation procedure, the Lord Chancellor should embody that recommendation in an affirmative order.
Much is being made of promises made by the insurance companies that savings will be passed on to their customers. Indeed, the Minister has repeated that today. Can he say what estimate of such savings has been made over time and what is their current level? How will we ensure that the industry delivers on the promise, and in what form? The Minister has said that it will, but how will that be ensured? Can he also tell us how much the Government have raised in the form of insurance premium tax since the standard rate rose from 5% in January 2011 to 12% in 2017, and for the higher rate from 17% to 20% in the same period? I recall once suggesting a small percentage increase in insurance premium tax some years ago to fund a reduction in the savage cuts to legal aid made by the coalition Government, but that, unsurprisingly, never materialised. The Minister may not have those figures to hand, but it would be interesting to see them in due course.
There is real concern about the pending increase in the small claims level, which, apart from the £5,000 limit chosen for whiplash claims—however loosely defined— will now be set at £2,000 by the Lord Chancellor. Below that figure, noble Lords will be aware that costs are not awarded. This is significantly higher than would be the case if the existing level was increased to reflect inflation. I have seen two suggested figures for that: £1,400 and £1,600, but these are still significantly lower than the £2,000 now prescribed. If we are to retain the system, should it not be on the basis of RPI or CPI, reviewed every three years as a matter of course? Interestingly, I understand that Scotland has chosen not to apply its version of the small claims regime, known as the simple procedure, to personal injury claims up to £5,000 such that, successful parties in these cases, described as “summary causes”, can recover their costs. Given the Minister’s role as Lord Advocate and his deserved reputation as one of the most eminent Scottish lawyers, would he encourage the Lord Chancellor to look again at the small claims limits?
In light of the current impossibility of successful claimants claiming costs or obtaining legal aid, has the Ministry of Justice made or received any assessment of the impact on the court system of more unrepresented claimants in this area of the law? There is existing concern, which has been voiced several times in your Lordships’ House and elsewhere.
Finally, in relation to this part of the Bill, I revert to the issue of claims management companies: a parasitic growth in our justice system, seemingly able to pursue potential clients via cold calling and seek disproportionately large fees out of the modest damages recovered. I understand that the Government are looking at this matter, but can the Minister indicate how this unacceptable approach might be curbed?
Part 2 of the Bill deals with the discount rate, which is, as the Minister explained, the rate used to calculate the level of damages to be awarded in the most serious cases, having regard to investment returns and inflation. We are looking here at cases of very serious injuries with life-changing consequences that might last a very long time. The Government are proposing a change from very low-risk investments to low-risk as the basis for calculating compensation. It is, however, inherently difficult to predict what future loss or cost of care or treatment would be occasioned in such cases. Greater reliance on periodical payment orders, to which the Minister referred, would help. Can he update us on government thinking on this aspect and how they might be promoted? His evidence to the Justice Committee implied support for this approach, and that is welcome.
The NHS is in a curious position on the issue of damages. Treatment in such cases can be expensive and the NHS must be compensated for costs incurred where the damage is inflicted by a third party, but sometimes the NHS is the defendant, as in clinical negligence cases, but also potentially in other cases, where the negligence is not related to clinical error. Accidents can take place on NHS premises, for which the NHS is liable.
It is in all our interests that the NHS should not see its resources reduced by the requirement to pay large sums to unfortunate patients who have suffered from clinical negligence. However, surely such compensation payments should be funded out of general taxation rather than being avoided by requiring the victims of clinical negligence to take greater risks in investing the proceeds of damages. We surely all agree that the NHS should be protected but the question is: by what method? My submission is that the method that the Government are proposing will ultimately perhaps be at the expense of the people who have been injured rather than of the community collectively, and I invite the Government to think again about that aspect.
The House will wish to give careful consideration to the changes proposed in the Bill. I trust that in doing so we will put the interests of the victims of negligence at the top of our deliberations, but also that we will ensure that crucial decisions are made not by ministerial fiat but with the full involvement of the judiciary and are subject to proper parliamentary scrutiny.
Lord Sharkey (LD)
My Lords, I will deal first with the proposal to reform the compensation for whiplash arising from road traffic accidents. Let me say at once that I agree with the remarks made by the Delegated Powers Committee in its report of last Friday. It concluded, as the noble Lord, Lord Beecham, has said, that there should be a definition of whiplash in the Bill, as should the tariff for damages. The committee says bluntly that it would be,
“an inappropriate delegation of power”,
for either of these matters to be handled by secondary legislation. The definition of whiplash is so central to any discussion of the Bill and any assessment of its consequences that I am very surprised that the Bill should have been brought before us with that definition absent. It is clear that the issue of how to define whiplash has been under consideration by the Government for some time. Surely it should be possible either to produce the definition for the Bill or to delay the Bill until the definition is available.
That is certainly a matter that we want to raise in Committee, as is the issue of the tariff and who should set it. Should it be, for example, the Judicial College? The impact assessment sets out the proposed tariff, but why is the proposed tariff not in the Bill? The structure and levels of the tariff will certainly influence our debates, and Parliament should be able to decide on the initial tariff, amendable later by secondary legislation.
In the case for reforms set out in the assessment there are many appeals to evidence, a lot of which is vigorously contested. That throws some doubt on the case for reform, but it would be very helpful if the Minister was willing to discuss these contested areas before we reach Committee. For example, there is the assertion that the number of whiplash claims is somehow too high or too fraudulent. The Access to Justice Foundation has published calculations showing that claims in total are already falling. In fact, as the noble Lord, Lord Beecham, has pointed out, CRU data for 2016-17 shows a 10% decline in whiplash or whiplash-related claims since 2012-13. The Motor Accident Solicitors Society has strongly questioned the view that a high proportion of claims are fraudulent. It has said that, when proven and suspected fraud figures are disaggregated, proven fraud drops to 0.25% of all motor claims, while fraudulent whiplash claims will be a small percentage of that already small percentage.
The principal justification in the impact assessment for reforms is economic—specifically, that there are three market failures that must be addressed. The first failure is one of asymmetric information. Only a victim can really know the extent and duration of pain or suffering caused by a whiplash injury. The Government see this as an incentive to make false or exaggerated claims but, as I have mentioned, the incidence of such claims is highly contested.
The second market failure alleged by the Government is the creation of perverse incentives. Legal costs are recoverable by successful claimants from the defendants. The Government say that if legal fees were not, or less, recoverable, claimants would bear more of the cost of bringing such claims, which would help to bring down their volume to a level that was,
“optimal for society as a whole”.
Leaving aside the question of what “optimal” might mean or how it might be calculated in this context, there is the problem of access to justice, as noted by the Law Society in its comments on the Bill. The Access to Justice Foundation has estimated that the proposed new tariff would deny 600,000 people injured on our roads each year the right to legal advice when seeking compensation. The figure comes from a July 2017 study by Capital Economics. Then there is the question of whether, or more likely to what extent, making medical report costs unrecoverable impedes access to justice.
The third identified market failure is what the impact assessment calls, “negative externality”—a phrase that is clearly weapons-grade management speak. This refers to the practice of insurance companies settling claims without medical proof of injury. Here, I entirely agree that this drives market failure, and I support the provisions in the Bill that will ban this practice.
In addition to the reduction in access to justice likely to be brought about by these reform proposals, there is the obvious issue of fairness. If someone is involved, as the noble Lord, Lord Beecham, has said, in a road accident, under the Government’s reform proposals they would be entitled to £3,500 for a neck injury lasting 24 months. They would also be unable to recover the cost of a lawyer to assert their rights. If someone suffered an identical injury at work, they would be entitled to £6,500 and would be able to recover costs. How is this fair, reasonable or coherent? I should be very grateful if the Minister could address this issue when he replies.
In all the very comprehensive information supplied to us by the Minister and his officials, I have been unable to find any mention of vulnerable road users. They are cyclists, motorcyclists, horse-riders and pedestrians. These people seldom suffer whiplash, and I have seen no evidence of fraud, yet they will all be caught by the proposed new system. I hope that the Minister will agree to remove them from the scope of this Bill.
Then there is the question of who benefits from these proposed reforms. The impact assessment estimates a total net benefit of £130 million. Within this, motorists gain £l.l billion by way of reduced premiums; insurers gain £190 million; HMT—the Treasury—loses around £140 million; and claimants lose £980 million. The impact assessment also sets out the risks assumed in calculating these figures. It explicitly acknowledges the risk that CMCs will produce more unmeritorious claims to offset the reduction in claims pursued as a result of the reforms. We all know how very vigorous and fast moving the claims industry can be, and as we speak, the Government are busy in the other place dismantling the reforms that we voted through to try to suppress cold calling.
However, the major risk surely lies in the percentage of savings to insurance companies that is passed on to motorists in reduced premiums. The impact assessment gives a figure on this and says it will be 85%, but it does not explain why. Is it, for example, that 85% of all savings will be passed on by 100% of insurers or that 100% of savings will be passed on by 85% by value of insurers? Perhaps the Minister could tell us which it is. In either case, what grounds are there for confidence that the insurers will pass on any particular percentage?
I note that the insurance companies which wrote to the Lord Chancellor in March ended their letter by saying that they,
“publicly commit to passing on to customers cost benefits arising from Government action to tackle the extent of exaggerated low value personal injury claims”.
Leaving aside the issue of whether cost benefits are the same as savings—I have no idea whether they are—is the promise to pass on all or only some of the cost benefits? Who decides what is a cost benefit for the purpose of passing it on, and how transparent will this decision be? What mechanism will there be for checking the sums actually passed on, and what remedy will be available if they turn out to be lower than expected?
I now turn to Part 2 of the Bill, dealing with the personal injury discount rate, and I should say at the outset that I agree there is an urgent need to change the basis on which the rate is calculated. But I have several concerns. The first is to do with timing. It is clear that the current discount rate needs amending, but the process proposed in the Bill means that there would be no change until 2020. This is three years after the implementation of the minus 0.75% rate, which is obviously wrong and is causing very significant financial damage to both private and public sector organisations. For example, the Minister will know that the National Audit Office has highlighted that the estimate from NHS Resolution, at the current discount rate, will add £500 million to the cost of claims in the year 2017-18 and £3.5 billion in overall provisions accrued. Clearly, it would be better to spend this money on front-line NHS services. Why wait? Surely there is enough information held by the Government and their advisers to enable a faster change.
My second concern is with the review period of three years that is proposed in the Bill. This may be too short. It may mean that a review is undertaken unnecessarily, incurring cost and creating market uncertainty. A three-year period may also create real incentives for gaming the litigation process by whichever side believes its objectives are most likely to be met by an impending rate change. A five-year review period, I suggest, would mitigate the risks associated with this. We will probably want to discuss this further in Committee.
My third concern is with having the Lord Chancellor make the decision on the rate, as at present. Under the new system, he or she will have the recommendation of the expert panel to take into account, but this will not be binding. How is this materially different from the current situation? Of course, the basis for setting the rate will have changed, but it will still be the Lord Chancellor who decides. In fact, there is a strong case for removing the decision from the political arena altogether and handing it over to an expert panel. The impact assessment reports that, of the respondents to the consultation on the matter, 35 favoured an expert panel, 17 favoured a co-decision between an expert panel and another person, and 48 favoured a Minister, based on advice from an expert panel. To put this another way, the majority of respondents to the consultation were in favour of not having the Minister make the decision. This kind of system works well for the economy as a whole, with the MPC setting the base rate quite independently of politicians. Perhaps the Minister can say whether he has considered this option and, if he has, why he has rejected it.
Finally, I would like to make a suggestion to the Minister. He will know that many Members of this House believe that we should repeal Section 2(4) of the Law Reform (Personal Injuries) Act 1948, which has the effect of greatly increasing the sums that the NHS must pay out in settlement of clinical negligence claims. The Public Bill Office has confirmed that any proposal to repeal this section via this Bill would be out of scope. Nevertheless, repeal is an urgent necessity, and suitable legislative vehicles are likely to be extremely rare. This Bill could be used for repeal if the Government were to agree to an out-of-scope amendment granting the right to repeal Section 2(4). In closing, I ask the Minister to consider this, and whether he would be prepared to meet to discuss this further with me and other interested Members.
Lord Hope of Craighead (CB)
My Lords, I do not wish to say very much about the general principle that lies behind Part 1, which deals with damages for whiplash injuries, except to make three points. First, we have been subjected to quite a bit of lobbying by those who object to the measures that it contains. Some, I have noted, say that they are punitive and arbitrary—words which I myself would not attribute to Part 1 as I read it. Indeed, the noble and learned Lord has said enough to persuade me that it is necessary to do something to try to minimise the abuse that has given rise to such a large and disproportionate number of whiplash claims. The abuse has been going on for some considerable time, and it is time that something was done to address it.
My second point is that I particularly welcome the provisions in Clause 3 for an uplift beyond the tariff amount in exceptional circumstances and the provision in Clause 2(8) which deals with the situation where a whiplash injury is combined with other injuries which also require to be compensated. Those are sensible precautions against the risk of unfairness in particular cases. Thirdly, I associate myself—at least for the time being—with the remarks of the noble Lords, Lord Beecham and Lord Sharkey, on the need for thought to be given to putting the definition of the phrase “whiplash injury” in the Bill, rather than leaving it to delegated legislation, because it is so central to the whole system set out in this part. There is something to be said for at least the starting point of the tariff to be in the Bill too, although, of course, amendable in as simple a way as possible by statutory instrument.
My reason for speaking in this debate is that I would like to say a bit more about the personal injury discount rate provided for in Part 2. My reason for doing so is that I was one of the members of the Appellate Committee which heard the case of Wells v Wells 20 years ago in May 1998. Power was first given to the Lord Chancellor to set a discount rate by Section 1 of the Damages Act 1996, when the noble and learned Lord, Lord Mackay of Clashfern, was Lord Chancellor. I very much look forward to hearing what he has to say when he contributes to the debate later. I hope to be in the Chamber when he speaks, although I have other things to do. For reasons that he may be able to explain, he did not set a discount rate before the Government changed shortly after the Act came into force.
The baton passed to his successor, the noble and learned Lord, Lord Irvine of Lairg, who was here earlier but is no longer in his place to listen to the rest of the debate. He did not indicate that he was willing to exercise that power. One might sympathise with him, because of the difficulties in finding a solution to it. In that situation, it was left to us in Wells to deal with the issue and to devise what we thought would be a firm and workable principle which the courts could apply. The solution which we derived in that case set out the basic principle which was applied by the Lord Chancellor when, in due course, the power was exercised in June 2001 and again in March last year, resulting in the figure to which the noble Lord, Lord Beecham, referred. As is stated in the Explanatory Notes, Wells provided the basis for the calculation of the discount rate which has been followed ever since.
I certainly do not wish to quarrel with the proposition that a fresh look needs to be taken at this problem. It is, of course, an inescapable fact that the lower the discount rate, the higher the award will be. So there is a tension between those who wish to raise the rate so as to reduce the burden on those who have to bear the cost of the award and those who do not wish to see a reduction in the general level of damages where the award has to provide compensation for future loss. The Explanatory Notes say that the basis of calculation which was held in Wells to be appropriate is that the claimant is a very risk-averse investor. I do not think that any of us on the Appellate Committee used those very words, but the thrust of our judgment was similar to what the Explanatory Notes say, for reasons that I will explain.
The Bill seeks to change this assumption by substituting that which is set out in paragraph 3(3)(d) of the proposed new Schedule Al to the Damages Act 1996. This is that the damages will be invested adopting an approach which involves more risk than a very low level of risk, but less risk than would ordinarily be accepted by a prudent and properly advised investor. How one reacts to that proposal may well depend on how essential it will be for the claimant to be able to rely on the award to provide for his or her needs for the rest of their life. Claims that require recourse to the discount rate vary widely, from those in which the main element is to make good a relatively small element of future wage loss to those where the award has to provide for the future care and support of those who are very seriously injured.
As it happens, the claimants whose cases we were dealing with in Wells had all sustained very serious injuries of the kind which are normally classified as injuries of the maximum severity. In one case, the claimant had suffered serious brain injuries, as a result of which she was no longer capable of working or looking after herself or her family. In another, the claimant had been injured before birth, was suffering from cerebral palsy and was very severely handicapped.
It was against that background that, in my speech in Wells, I said that the assumptions that had to be made were, first, that the lump sum would be invested in such a way as to enable the claimant to meet the whole amount of the losses or costs as they arise as the years go by during the entire period for the assumed lifetime while protecting the award against inflation, and, secondly, that the losses or costs will have to be met entirely out of the relevant proportion of the lump sum. Those assumptions indicate the challenge that lies behind the exercise that we are contemplating. I went on to say that this meant that the rate should be one that is to be expected where the investment is without risk and which takes full account of the effects of inflation.
As Lord Lloyd of Berwick, who was with us on the committee, said, if the claimant has to realise capital from investments in a depressed market—and, as we know, the markets go up and down—the depleted fund may never recover. We were aware that a lower rate of discount would lead to increased insurance premiums. We were not addressed in detail on this subject, so we were not in a position to form a view about the wider consequences of our judgment. However, it is worth noting that the noble and learned Lord, Lord Steyn—who was also on the committee—pointed out that if the right decision was that the discount rate should be modified to ensure that victims were compensated as nearly as possible for the consequences of their injury, by and large the public would have to pay for the increase in awards. He said that because he was applying the principle which lies at the heart of the assessment of damages at common law, which is to provide injured parties with a sum which will be adequate to cover their loss over the whole of period during which the loss is likely to continue: no more, but certainly no less.
The noble and learned Lord talked about transparency and fairness, but there is no doubt that Part 2 seeks to alter the balance in favour of the public and thus, to an extent, undermine the principle that lies behind the common law. Reasons have been given as to why that might have to be done. For my part, I would have been very much more concerned as to where this reform was leading us if there had not been the provision in new Clause A1 of the 1996 Act which is set out in Clause 8(1) of the Bill. This is a clause which would allow a court to take a different rate of return into account, including a lower return, if any party shows that it would be more appropriate in the case in question.
I have in mind—and I have never forgotten it—a case I once had to deal with where a highly talented young woman had been rendered tetraplegic as a result of a road accident which was certainly not her fault. The injury was so severe that she was almost totally paralysed. She could not move any part of her body below the neck. She could breathe but she could not speak. She could communicate only by sucking and blowing through a tube to spell out words on a screen in front of her. For her, the award was assessed on the assumption that it would be necessary to provide and pay for 24-hour care and attention every day, and for the accommodation and equipment she needed to sustain any kind of reasonable comfort, for the rest of her lifetime.
It would seem quite wrong for someone in her condition to be required to expose the award to risks to any degree just because, without that, her award may bear more heavily on the defendants and their insurers—and perhaps through that, on the general public. So I not only welcome the new clause as a safeguard against the risk of unfairness in these extreme cases; without it, the Bill would risk, in the more extreme cases, giving rise to an injustice which ought never to be contemplated.
Lord Hunt of Wirral (Con)
My Lords, I declare my interests as detailed in the register, in particular as a partner in the international, commercial law firm DAC Beachcroft and as chairman of the British Insurance Brokers’ Association. It is also my great privilege to follow the noble and learned Lord, Lord Hope of Craighead. Fascinated as I was to hear his explanation of what lay behind that decision in Wells v Wells—of course I shall respond in much greater detail in due course in Committee—certainly the world has moved on a long way since that original decision.
I hope that the reforms in the Bill are in no sense controversial. They skilfully and fairly balance competing interests. That is never an easy task for government but it is an essential one, and I commend the Minister on his courage and resolution.
Reference has already been made to the many representations we are receiving, and we shall inevitably hear a great deal of noise from all those vested interests on both sides. But we are not here in this House to serve vested interests. It is the public interest we must serve, and it feels as if Ministers have got the balance broadly right. This has not happened by accident, especially on the law relating to the discount rate.
The reform proposals in Part 2 address an increasingly urgent need. As noble Lords have already understood from previous speeches, the lower the discount rate, the higher the cost. England and Wales are now the sole territories in the developed world with a negative discount rate for all future loss claims. For many younger and elderly drivers alike, the consequences have already proved to be extremely costly. That has thrown out any balance of fairness. We must also, as several speakers have mentioned, be aware of the heavy burden the negative discount rate has been imposing on the National Health Service.
Competition law prevents insurers offering any collective undertaking that premiums will fall if and when the discount rate is restored to a sensible level. However, there has still been an unprecedented commitment from individual chief executives across the market that savings would indeed be passed on. I cannot think of another occasion on which industry leaders have come together to make such a public pledge. They are of course responding to a strong lead from the Government, as the Minister made clear.
The Government published Command Paper 9500, The Personal Injury Discount Rate: How It Should Be Set in Future, on 7 September of last year. The Secretary of State then wisely asked the Justice Select Committee in another place to undertake pre-legislative scrutiny of the draft clause included in the report, which would change the basis on which the discount rate is calculated. That committee, on which no party has a majority, came to a consensus, in favour of reform, with certain caveats. In particular, the committee supported the establishment of an independent expert panel—not a representative panel—to advise the Lord Chancellor on the discount rate, and any discussion on the discount rate necessarily involves making reasonable assumptions about the likely appetite for risk on the part of anyone looking to invest a sum—particularly a substantial sum—of money.
As the committee and the Government have both acknowledged, setting the discount rate can never be a precise science, but I strongly support the notion that it should have a real-world basis, which is currently rather lacking. The Government are rightly committed to retaining the principle of full compensation, which, as we have just heard from the noble and learned Lord, Lord Hope of Craighead, is so important, particularly in very serious cases.
We must not forget that this means compensation must be neither too little nor too much. In Paragraph 77 of their response to the Select Committee, I was heartened to see the Government state that they,
“will work to ensure that the panel is ready to start work at the earliest opportunity”.
That is a clear undertaking. Given the very considerable measure of consensus around this legislation, I ask my noble and learned friend the Minister to confirm that arrangements for the establishment of this expert panel can and will begin well before the legislation eventually receives Royal Assent.
I would like to mention Part 1 of the Bill. The discount rate provisions are of vital importance, but the plans for whiplash reform too should be commended as being sensible and uncontroversial. For far too long, we have as a country sustained a system in which there is an unseemly squabble over the value of soft tissue injury claims. That has been far more to the benefit of those paid to do the squabbling than it has been for their clients, the victims. What matters most to their clients is prompt and fair redress, not a mathematically precise assessment of their loss. The idea of creating a fixed tariff for such claims, while novel in common law terms, is the right way forward. It takes the mystery out of how such claims are valued and avoids the use of precious court time in arguing over valuations. It can and must create a smoother process for the claimant, who will rightly be placed at the centre of such a process.
I have been a practising lawyer for exactly 50 years next month—I started life as a claimant lawyer, acting in cases for thalidomide victims. I have to say that claimant lawyers and others with a stake in maintaining the status quo are heavily pressurising me to argue that this is unfair and ill thought through. I believe that the Government have taken account of any legitimate concerns. They have wisely dropped the notion that some claims should receive nothing at all. The sums proposed for the tariff, while low, are more in line with what society can realistically afford to pay for these claims. Let us not forget, it is the wider public who have to fund these claims through higher insurance premiums and the inflated cost of goods delivery.
There are consumers and citizens at both ends of this equation. It is the task of Government to balance the interests of everyone involved. In another place, as we have heard, debate continues today on the Financial Guidance and Claims Bill, particularly on how we will contain the excesses of the claims management industry. How many times have we said that in this place? But at last it seems that something is being done. There is a simple answer to the question: it is to contain the amount of money from which they and their hangers-on can take a cut. By their very nature, civil claims set group against group, citizen against citizen.
A decade or more ago, I had the privilege of talking to a very senior senator in Washington, who told me that a complicated and unpredictable system of redress ultimately undermines civility in society. I believe that it does, and I hope that these reforms will go some considerable way towards simplifying redress and restoring the balance of fairness in society. However, I also hope that, in what I think is increasingly an uncivil age, they will serve to restore civility and a healthy respectful relationship between the people in England and Wales.
Lord McNally (LD)
My Lords, it is always a pleasure to follow the noble Lord, Lord Hunt. As I have reminded the House before, we once sat on the same committee, which was modestly called young Atlantic political leaders—where are they now?
It is very difficult to know where to insert oneself in a debate such as this with so many expert contributors, so let me begin at the beginning. During my childhood, I had two quite serious but non-permanent injuries that could probably be pinned on the school and the building I was in when they happened. Looking back, I know that it would never have occurred to my parents to sue somebody because of these misfortunes. Yet, in preparing for this debate, I decided to Google “injuries at school” to see what would happen. Up came a whole smorgasbord of offers: “Has your child been injured in the nursery?” and “Has your child been injured in the playground?” It seems to me that the tenor of the debate so far almost accepts as a given a change for the worse in our society. I do not know whether the spokesman for the Opposition is about to sue Transport for London for his injury—he is shaking his head, which is good; he is going in the right direction—but people see compensation as being worth the risk.
When I came to this House in the late 1990s, one of my first interventions was made in shock after I had been off and spent the afternoon watching daytime television. I saw advert after advert—not unlike the adverts inviting you to play the National Lottery—saying that if you had had the good fortune to have an injury, there might be some money in it for you. I have heard the statistics that my noble friend Lord Sharkey cited; nevertheless, what has happened has cheapened our concept of justice. Access to justice is right; certainly, when we hear the example given by the noble and learned Lord, Lord Hope, of the lady who was severely injured in a motor accident, we understand that of course there must be protection. But we have to have the courage to say that access to justice is not limitless and should not lead to clogging up the courts or to cases that increase costs throughout the system.
One thing that has come up when we have debated this before is personal experience. I suppose I should therefore give one other example. A couple of years ago, my wife had a little bump at a T-junction. When she got home, she told me that she had exchanged numbers with the other driver. I said, “Oh well, if you bumped into him, you bumped into him—I’ll ring him up”. The guy was a taxi driver. I spoke to him; we had a civilised conversation. I said, “Look, get the car checked over. Send me the bill and I will settle it”. We did not hear anything for some weeks, and then we were told that the driver had sustained a whiplash injury. I live in St Albans and it was now being handled by a solicitor in an east Lancashire town and they had provided evidence from a doctor in south Manchester. I immediately said, “This is a scam”.
I wrote to the chairman of our insurance company saying it was a scam and that my wife was willing to give evidence if they wished to challenge this obvious attempt to defraud the company. A few weeks later, we got a letter saying that the company had settled the claim because it was under £5,000 and it was not worth fighting. I wonder how many claims of £5,000 and under are settled in that way. Is it a victimless crime—or one that is passed on to the consumer?
I do not accept that this is so small a problem that it should not be dealt with, and I welcome the Government’s attempt to do so. In 2010 when I came into this place, I went to the Ministry of Justice. Between 2010 and 2013 we tried to bring forward some reforms in this area. In the previous Labour Government, Jack Straw campaigned on this issue and has continued to do so. This is an issue that needs addressing. As my colleague and noble friend Lord Sharkey said, we will tease out some of the things that are being put forward to Committee, because that is what we are here for.
The noble and learned Lord, Lord Hope, set the scene for the second part of the Bill. It was one of the most difficult pieces of work that one faced as a Minister. I was greatly helped at the time by the noble Lord, Lord Faulks, who succeeded me at the MoJ, and by the noble Lord, Lord Ribeiro. It is horrible to hear a case like the one we were given and then have to bring it down to some mathematical solution to give that person justice, but that has to be done. We have to ask in the Bill whether some of those powers should be given to the Lord Chancellor alone, or if there are other ways. We hear what the Delegated Powers Committee has said about certain of those responsibilities, and it has said that a whiplash injury should be defined. We will probably bring that forward in Committee. The tariff for injury should also be in the Bill.
There will be questions about whether the definition of a minor injury being up to two years is excessive. Is the small claims limit set too high at £5,000? As has been said, how will the Government ensure that the consumer and not the insurance companies benefit from these reforms? Nevertheless, this is timely legislation.
In the past, we have managed to get a degree of cross-party agreement that reform in this area is needed, and I hope that in the great tradition of the Lords, the expertise here will be used to help the Minister carry forward a Bill that is really worth while. What he certainly has, and which I had, is the presence of the noble and learned Lord, Lord Mackay, in his regular place behind him. Throughout any difficult and torrid debates in Committee on the Bill, he will come to the help of Ministers who flounder at the Dispatch Box. It is a very reassuring thing to see and, like the noble and learned Lord, Lord Hope, I look forward to hearing the contribution of the noble and learned Lord, Lord Mackay, to this debate.
Lord Hodgson of Astley Abbotts (Con)
My Lords, like the noble Lord, Lord McNally, perhaps I may begin at the beginning. Notwithstanding some rather disobliging remarks from the Delegated Powers and Regulatory Reform Committee referred to at some length by the noble Lords, Lord Beecham and Lord Sharkey, which no doubt we shall discuss in Committee, I welcome the Bill because it has at its heart the objective of achieving the greatest possible fairness. There will be fairness on the one hand to ensure that those who suffer life-changing injuries, often through no fault of their own, are properly compensated in so far as money can ever compensate for life-changing events of that sort. There will also be fairness to the other participants in the insured class who will inevitably have to face commensurately increased insurance costs. They are entitled to reassurance that overcompensation will not take place.
Sadly, as other noble Lords have referred to, there is a darker side to all this as part of a litigious society in the form of making claims on the basis of no or fabricated evidence. The proposals in Part 1 to bring whiplash claims under control therefore seem very worthy of support. In his opening remarks, my noble and learned friend referred to some of these fabricated cases, and perhaps I may pass on to him and to the House the following example. Last Friday, I was in the north of England to attend a board meeting of a company of which I am the chairman. I took a taxi and, as is my wont, I inquired of the temperature of the taxi driver, political and otherwise. We got on to the issue of whiplash injuries. He told me that it was prevalent in this and other towns in the north of England for young men to buy a clapped-out banger of a car or van for around £200 and engineer a crash with a taxi. I asked why they would choose a taxi. The driver said that there were two reasons. First, they know that a taxi will be well insured. If it was not, it would not be licensed by the local authority. Secondly, taxi drivers depend on the good will of the local authority for the renewal of their licences and so are less likely to put up a fight, argue the case and press for compensation. That is my contribution of anecdotal evidence gathered last week in the north of England, and it is why I think the Bill is an important first step towards reining in the compensation culture.
I say that it is a first step because there are other areas which need attention. No doubt noble Lords will have received briefings from the Association of British Travel Agents about burgeoning claims for compensation for illness occurring on holiday. Moreover, one of the most depressing aspects of the reviews I have carried out of the charity sector is the way in which individuals attending a charitable event, such as a proposal to raise funds for some much-needed community project, seem quite ruthless in bringing claims against a charity. Falling over a guy rope for a tent is a very common claim, as if tents do not have guy ropes and you have no responsibility for looking where you are walking. Charities are often run by volunteers who have only limited access to legal advice. Faced with what they consider an unreasonable claim, they can only use the small claims court for personal injury claims up to £1,000. I understand that this is to be raised to £2,000. However, the £1,000 for road traffic accidents is to be raised to £5,000. I hope that my noble and learned friend the Minister will explain at some point why we are moving from £1,000 to £2,000 and £1,000 to £5,000. That would be extremely helpful, particularly for smaller charities that have to deal with these unfortunate incidents.
Turning to Part 2 of the Bill, I have taken an interest for some time in what is familiarly called the Ogden rate, including initiating a debate on the matter last July, to which my noble and learned friend on the Front Bench replied. I support the overall shape of the proposal. I note the experienced comments of the noble and learned Lord, Lord Hope of Craighead, about risk. We may be able to have some existential discussions about the nature of this in Committee.
I want to raise two issues that I hope we can explore. First, reverting to the underlying strategic aim of achieving fairness, it seems that with long-tail insurance cases, the use of lump sum damages can result in only one near certainty: that the award will be unfair to one party or another. Surely we need to do more in such cases to make better use of periodical payment orders. One of the answers to the question raised by the noble and learned Lord, Lord Hope of Craighead, on making sure that people were fairly compensated would be to make greater use of PPOs.
I am concerned that injured parties—who may or may not be financially sophisticated—may be seduced by an apparent amazingly large lump sum against which the PPO may seem fairly modest and, in reaching that conclusion, may think that they should accept a lump sum. There is a risk that the injured party may be egged on by investment managers who see a long stream of advisory fees stretching into the future, and by insurance companies who see a chance to put a pink ribbon round the file and close the claim for ever.
My second concern is the proposal for the timing of reviews, a process that—as pointed out by the noble Lord, Lord Sharkey, in his opening remarks—needs to be designed to minimise the possibility of the system being gamed. I share the view that three years is too short a period. Indeed, any fixed-term review period is a very blunt instrument. I would argue that the trigger for a review should not be time-based but result from changes in the available rate of return on our investment. Establishing such a benchmark could be problematic, though changes in the base rate would be a pretty good indicator given that these investments will be low-risk, even under the new regime. Perhaps thought might be given to extending the duties of the expert panel proposed in the Bill to include a power for it to recommend to the Lord Chancellor that the rate ought to be reviewed. I look forward to discussing this matter and others in Committee.
Finally, there is an often expressed concern—indeed, it has been expressed this afternoon—that these proposals to control the costs of claims will result not in reduced premiums for the insured but merely in increased profits for insurance companies. Those of us who have spoken up for a fairer system expect the industry to demonstrate that savings as a result of these measures are being appropriately passed on. To be candid, it will not be good enough for the industry to say something along the lines of, “It’s a very competitive industry so savings are bound to be passed on”. The public are in a cynical mood, as reflected in an article in last Saturday’s Times entitled “Insurers fail to drive down premiums”. The article quotes Mr Matt Oliver from GoCompare as saying:
“Where insurance is concerned, loyalty doesn’t pay. Companies typically use their best deals to attract new customers, so often the only option for existing customers is to go elsewhere”.
If that situation persists, it would be a sad outcome to the Bill, the purpose of which I strongly support.
The Earl of Kinnoull (CB)
My Lords, it is a pleasure to follow the noble Lord, Lord Hodgson of Astley Abbotts, who, as ever, was authoritative and full of charm. I declare my interests as set out in the register of the House and particularly those in respect of the insurance industry.
I also welcome this Bill, seeking, as it does, to tackle two distinct policy areas that are in need of reform. That reform, I believe, will benefit all in the country. I am looking forward to the passage of the Bill, which I hope will deliver these reforms in an optimal way, achieving the vital balance between the interests of all those concerned. To summarise two very interesting early speeches in the debate, from the noble Lords, Lord Beecham and Lord Sharkey, there is a great benefit to be gained from having certainty here. I do not believe that we in this House could feel that we had done our job unless we knew there was certainty on a number of the things mentioned in both those speeches. I certainly believe certainty will help.
The Explanatory Notes for the Bill point out that the UK generated 780,000 whiplash claims last year, which is one in 83 of our population. That is now down to one in 100. However, even the one in 100 statistic is worrying. In preparing for today, I came across a Daily Telegraph article entitled “UK ‘whiplash capital of Europe’”. The first paragraph says there are,
“one out of every 140 people claiming for a whiplash injury each year”.
That article was published in May 2011, so one in 140 has gone, via one in 83, down to one in 100. I am obviously delighted that it has come down, but one has to feel, as a bit of a cynic about the claims management industry, that at least part of that is probably due to its spending so much of its energy on some of the new and wonderful things, such as the holiday sickness scam. However, the figures are too new, and I would like to probe them. I have no doubt we will come back to those in Committee. The point is that it is a vast number of people.
We should also take a look here at other countries. I have run personal lines underwriting businesses in continental Europe, so I have some experience on the ground of what in other countries the number of whiplash claims should be. It is a heck of a lot less. Sometimes—for instance, in France—that is due to impediments, which I think are unfair, that are put in the way of allowing people to claim for whiplash injuries, but in markets such as Germany the number is remarkably less. I certainly remember going to meetings and spending the day with Munich Re, a major reinsurance company, in Munich, and people pulling my leg about what they call “the British disease”. It is one reason Munich Re was pulling back from reinsuring British motor insurance.
The noble and learned Lord the Minister, in his speech at the Association of Personal Injury Lawyers conference on 17 April said:
“The number of road traffic accident related personal injury claims remains around 70% higher than in 2005/06 and around 85% of these claims are for whiplash related injuries. This is despite extensive improvements in both vehicle safety and a decline in the number of reported accidents in recent years”.
That decline, in the past 10 years, was 31%, according to the Department for Transport statistics. So 31% fewer accidents, in safer vehicles, are producing 70% more whiplash claims.
All this whiplash-claims activity produces loss cost to the insurance industry. We in the industry of course reprice our products annually, so that cost is therefore charged on as a problem to you and to me. The removal of non-bona fide whiplash claims is estimated in the impact assessment to be worth £1.1 billion a year. The ABI has probed how much of that goes into the pockets of those who have had the whiplash, or allegedly so, and how much goes into the pockets of claims management companies and specialist solicitors firms. The answer is that about 50% goes into the pockets of those assisting the whiplashed people.
Our task, then, is complicated. We are aiming for a £35 a year reduction in annual premiums. We will need to come back to this in Committee, as I do not understand what the promise really is from the insurance industry in respect of the £35 that could be there for the saving. I am sorry to disagree with the noble Lord, Lord Hodgson of Astley Abbotts, but the industry is incredibly competitive, so I cannot believe that at least some of that will not naturally come back through competitive pressures. It is also true that people have been making these promises to their regulator, the FCA, which—I speak again with experience—is one of the toughest regulators in the world. It would certainly be pretty displeased with someone who had breached a promise to the general public and was not treating customers fairly. The fines for not treating customers fairly are very large. There is a certain amount of carrot and stick there.
On the personal injury discount rate, we have much to thank the House of Lords judges for in the case of Wells v Wells. They laid out the law with great clarity, a clarity that the noble and learned Lord, Lord Hope of Craighead, exhibited earlier in his seminal contribution. As ever, I learnt a lot; the noble and learned Lord never gets up without me learning. In March last year, the discount rate was lowered from 2.5% to minus 0.75%.
Oddly, this is the second time this year that we have spoken in this Chamber about discount rates, the other occasion being the debate on reconstruction and renewal, where we talked about discount rates in respect of the financial modelling, which gave very surprising numbers as to how expensive it would be to repair the Palace in some of the options being considered. That discount rate came from the Treasury Green Book and was 3%. I noted in that debate how sensitive things were and have looked for a precise example.
In the educational section of the Chartered Insurance Institute website, there is a worked example which is very instructive. It notes that when the discount rate was 2.5% the lump-sum settlement for a 20 year-old man who requires £100,000 of care per year for his lifetime was £3.2 million. When the discount rate changed to minus 0.75%, that £3.2 million rose to £8.9 million, almost three times the amount. That demonstrates just how sensitive it is.
That is why, in its latest annual report, NHS Resolution moved its reserves for past losses up by £4.7 billion and stated that it expected £1.2 billion to be added annually to the budgeted cost going forward for clinical negligence. All that is money coming out of the front line of the health service. This year’s budget for clinical negligence excluding the PIDR change is £1.95 billion, so the extra due to the change represents an increase of more than 60% in the cost for clinical negligence to the NHS.
The insurance industry, naturally, has had to increase its reserves. Noble Lords will have read all about the one-off pain of that, but the industry has the opportunity to reprice, so for classes of insurance such as employer liability and public liability the industry is now repriced and whole again.
Had Wells v Wells been heard in 2018, instead of 1998, a lot of argument would have been presented concerning the lessons learnt in the aftermath of the financial crash and, in particular, the effect that quantitative easing has had on the gilts markets. According to the Bank of England website, the Bank has bought £435 billion-worth of gilts and £10 billion-worth of corporate bonds. To put that number in context numerically, that is about 25% of today’s gilt outstandings. Quantitative easing was unheard of in 1998, and it has certainly had an effect on the very part of the investment market that Wells v Wells is tied to; indeed, that effect has been to depress the PIDR to its current level of minus 0.75%.
I accept that, mechanically, this number is what Wells demands but, like many noble Lords, I feel that it is completely wrong. I could say a lot about that at a high level, but it implies that investors will pay the Government to house their money over the decades ahead. I do not believe that that is credible or the lesson of history. The equivalent of the PIDR in France is 1.2%, in Ireland 1.5%, in Spain 3.5% and in Germany 4%. Britain is an outlier, as other noble Lords have pointed out. Rethinking the PIDR, therefore, is an idea whose time has come.
The Bill makes a good stab at things, but could the Minister give us a bit of colour on what,
“more risk than a very low level of risk”,
means? Indeed, I worry, as others do, that the whole of paragraph 3(3)(d) of new Schedule A1 on page 9 of the Bill is none too legally certain. Also, what timeframe does the Minister have in mind for when the expert panel will have reviewed the PIDR and the level either affirmed or changed? I am thinking, in particular, of the £1.2 billion clock that is ticking for the NHS.
I make one short final point concerning Scotland and Northern Ireland. Section 6 of the Bill refers to the role of the FCA, yet it applies only to England and Wales. I am concerned that this could create problems for the UK market and present a potential for the ever-creative claims management companies to arbitrage regulation between the different parts of the UK. The interests of the UK in this regard would be best served by having a single market and regulator. Is the Minister in touch with the devolved Administrations to ask whether they would be willing to make use of this primary legislation to improve the situation generally? I close by welcoming this Bill.
Lord Mackay of Clashfern (Con)
My Lords, this is an extremely interesting Bill for me, for reasons that I will explain in a moment.
I will not say much about the first part of the Bill and the types of injury it deals with. That is because long ago, when I was in practice in Scotland, the system was still that juries awarded damages in personal injuries cases. I acted for the defendant in a case of whiplash injury. The lady came to the jury to explain how bad her injuries were. We had put in an advance offer—as was usual—for what we understood, from the medical evidence, was a reasonable estimate of the worth of the injuries. At the jury trial the lady was very good at explaining how bad the whole thing was, and she got an award considerably above our offer. My reputation as an estimator was, therefore, adversely affected by that experience.
I had the great advantage, however, that the late Lord Fraser of Tullybelton—as he became—was the presiding judge. In those days the judge was not supposed to give much indication: it was a matter for the jury and he was not supposed to intervene to say it should be this or that. Lord Fraser—as those who knew him will remember—was an excellent judge who observed that requirement meticulously. He came to me afterwards and said that he thought I had been very badly treated by the jury, which shows how difficult it is to estimate genuinely on this type of injury. I have no doubt that there may be some question about precisely what the rate should be when the whole thing is lumped together as if it were a reasonably common experience, with reasonably common results.
However, I want to speak primarily about Part 2 of the Bill, because I am in the remarkable position of seeing that this part would amend a Bill that I introduced, and which became an Act, in 1996. My recollection of that—it is over 20 years ago, as your Lordships will quickly be able to observe—was that the judges were having a lot of difficulty in assessing damages, particularly for the whole of life, as some cases required. They were of course experiencing the benefit of actuaries and other people who ran investments, and so on. This involved a very large amount of work in the individual cases and the judiciary were anxious—I am subject to correction by members of the judiciary who may remember this situation—to avoid the necessity for this repeated excursion into financial administration. The other thing is that at that time, in 1996, the markets were probably a bit less volatile than they are now.
Eventually we passed that Bill, which required the Lord Chancellor to fix the discount rate. Fortunately, I had managed to retire before I had to do it so it fell to the noble and learned Lord, Lord Irvine of Lairg, to fix it, which I am sure he did to the best of his ability. He had to take the advice of the Government Actuary but he was not confined to that. He fixed the rate and that rate has lasted until 2017. The great thing about that matter is that if it changes after such a lapse of time, it is going to be quite a change and the effect on the estimates within various bodies, particularly public bodies such as the National Health Service, is terrific. I entirely agree that something more regular is required and that it is a difficult task, because the effects of the kind of injuries that may come before the court can vary tremendously, from those which will last for a lifetime to those which are much shorter.
I want to look at the assumptions that the Lord Chancellor is required to make under the Bill and I venture to suggest that they form a bit of a challenge. The Bill says in Part 2:
“The Lord Chancellor must make the rate determination on the basis that the rate of return should be the rate that, in the opinion of the Lord Chancellor, a recipient of relevant damages could reasonably be expected to achieve if the recipient invested the relevant damages for the purpose of securing that—
(a) the relevant damages would meet the losses and costs for which they are awarded”.
That is fairly easy to say on a day-to-day basis. But Part 2 then says that,
“the relevant damages would meet those losses and costs at the time or times when they fall to be met by the relevant damages”.
These will be years ahead in some cases, so it is quite an assumption that the Lord Chancellor has to make. The last provision is really crucial. It says that,
“the relevant damages would be exhausted at the end of the period for which they are awarded”.
When I chaired the Select Committee that looked into the Assisted Dying Bill, one thing we learned was that doctors had great difficulty in assessing the length of life. One of the great difficulties is to assess when the damages should be finished, because in the life cases, which are now a very substantial part of the damages that have to be paid by the National Health Service, life expectancy is very difficult to estimate. Even as you get near the end of life, life expectancy seems to be very difficult to estimate. When a baby is born and the results affect that baby for the rest of its life, you can imagine the difficulty of trying to determine that.
The Lord Chancellor has to go on, having made these assumptions, to assume,
“that the relevant damages are payable in a lump sum”.
He is not allowed to take account of the fact that you can now pay in instalments. The second assumption is,
“that the recipient of the relevant damages is properly advised on the investment of the relevant damages”.
That seems a fairly easy assumption to make. It is not so easy to know what the right advice would be. The third assumption is,
“that the recipient of the relevant damages invests the relevant damages in a diversified portfolio of investments”.
You would think that might be covered in proposed new subsection 3(b), but for clarity it has been separated out. Proposed new subsection 3(d) is the one I want particularly to draw attention to because we may want to look at it in some detail in Committee. It says:
“The assumption that the relevant damages are invested using an approach that involves … more risk than a very low level of risk, but … less risk than would ordinarily be accepted by a prudent and properly advised individual investor who has different financial aims”.
I assume these are different aims from the people who are investing the damages award for the injured party.
The assumptions that have to be made by the Lord Chancellor on this basis all seem very reasonable, but I think it would require the Lord Chancellor to have a certain element of the prophet about him or her to enable these assumptions to be taken with any degree of accuracy—we really need to look at this. I imagine that the promoters of this Bill have looked at this very carefully and if it is going to be accurate from the point of view of awarding damages, these conditions have to be fulfilled. The difficulty about it is how you satisfy yourself that that will be true. That is what I would like to hear a little about.
The expert panel included an actuary, but my understanding of actuarial science—it is a limited understanding—is that it is very much based on the statistical evidence on length of life. The trouble is that each case is separate; it is not the average, it is an individual case. How do actuaries go about doing this? I am interested to know. The Government Actuary has to do all that kind of thing and does it extremely well, but it is not by any means easy. Getting an expert panel to agree—it includes an actuary and investment people—will be very difficult.
The Bill deals with making fair the system of awards in civil liability. Two distinct aspects are covered in the Bill—the particular kind of injuries are dealt with in the first part and the discount rate in the second part, but the system is bigger than that. One of the important elements in the present system is an Act of 1948 in which Section 4(2)—I am sorry, Section 2(4); I had better get them in the right order—indicates that the damages are to be calculated on the basis that the medical attention is given on a private basis. I can see that in 1948, when the health service was very young, that might be appropriate, but I think modern times have crept up on that and it is rather doubtful whether that is a good basis.
There is another point in relation to that. One of the biggest areas of claim for the National Health Service is in obstetrics. The trouble with an obstetric injury is that it is likely to have effect for the rest of the person’s life and, as I say, you have to forecast what that is. My understanding is that the amount of private practice in obstetrics has almost disappeared for the reason that the premium for an operator in obstetrics is so large as not to be worth while; he is better to be in the National Health Service. I am not sure about that but it is what I understand to be the case. If so, it strengthens very much the need for a revision of a rule that requires you to assume what is not there as a basis for damages. Assessing damages is difficult enough without trying to assume what now is no longer practised.
Lord Monks (Lab)
My Lords, I start by declaring an interest as a member of the board of Thompsons Solicitors, the largest trade-union-oriented firm of solicitors and a big firm in the personal injury world. I serve on the board with my noble friend Lady Primarolo, who is sat behind me.
We are concerned with the victims but also with abuse of the system. No one on our side supports abuse, and we have heard some examples of that. No one doubts that there is quite a lot of it, but nor should anyone doubt where the primary blame for some of this lies. The key to the answer to that question is in the example given by the noble Lord, Lord McNally: the insurance companies have been extremely weak. If you can concoct a claim, you get £5,000 or maybe something near it. That did not just go around one northern town; it spread like wildfire. I believe that the insurance industry bears a lot of the responsibility for the situation we are in today. Add to that the claims management industry, which has been fostered by the opportunities that have been provided, and it seems to me that as lawmakers we should be looking very much at their activities as well as remedying any abuses that are around. My worry about the Bill, particularly with the increases in the cost limits and so on, is that the blame is being put on the victims and they are the people who will lose out. I will develop that thought in a moment.
The Bill is intended to reduce motor insurance claims first and foremost and, more generally, to reduce the number of claims for personal injury at work. The increase in the small claims limit is being introduced as a package with the Bill, and of course it can be done by statutory instrument. As has been mentioned, the current small claims limit for all personal injury claims is £1,000. It is proposed to double that amount, which is well above the levels recommended by Lord Jackson as recently as 2013. Others here who know more about this subject than I do will recall that Lord Jackson was proposing that when his package was introduced in 2013, the small claims limit should be increased only when inflation had taken it up to £1,500, and thereafter in blocks of £500. He did not contemplate a doubling for personal injury cases.
A justification for the hike is that the £1,000 figure requires revision because it has not been increased since the 1990s and an inflationary rise is therefore necessary. However, an increase of sorts was made in 1999, when the limit was restricted to general damages. That was the year Lord Jackson took as the base year for his recommendations. One of the unions that has submitted information to the House, the retail union USDAW, has calculated that if the CPI had been applied from 1999 to the present day, the limit should be increased to £1,440 and on current CPI rates would reach £2,000 only some time at the start of the 2030s.
The effect of this increase on non-road traffic personal injury cases—an area where the abuse is a lot less than in road traffic claims—will be profound. At present, very few are dealt with in the small claims court, but under the proposed new regime many more would fall into that court, where legal costs are not recoverable. As a result, a lot of claimants would be unrepresented or would have to find their own resources. For union members that is probably fine, as the union would cope with that; for a sound case, that is what we do; it is a core job that we have. But the many others not in a union will be made much more vulnerable. The result is deprivation of legal representation in recovering damages for injuries and losses. The number of workplace PI cases is reducing annually, and USDAW, from its own experience, calculates that the number of cases captured by the proposed lift in the small claims limit would increase fivefold. As I say, if people are in a union, that is not such a problem, but for others, it is a big problem.
As we have heard, extra costs will accrue to the Government as well. The impact assessment acknowledges that the changes will cost the NHS £6 million, and public funds generally £140 million each year. The impact assessment goes on to confirm a benefit of an extra £1.3 billion to the insurance industry. The Government are hoping that 85% of this windfall will be passed on to the consumer in reduced premiums. I note the guarantee that the chief executives have given, so let us hope that that bears out and they live up to their promises. But they will have to forgive me for being a bit sceptical. The Association of British Insurers has admitted that the insurance industry saved more than £8 billion over five years a result of earlier government changes, yet there is no sign that insurance premiums have declined at all. Indeed, they have continued to rise. Other factors tend to crowd in on these kind of promises, and they must be held to account in keeping this guarantee. I hope the Government will confirm that they will do that.
A further worry is that the decreasing presence of lawyers will leave a vacuum into which could sweep unregulated case management companies. They are always on the lookout to increase their business, and some of them are prepared to use highly questionable methods to persuade vulnerable people that a “lottery win” is within their reach if they just listen and leave it to them.
A word on the road traffic cases. The Government’s justification for raising the small claims limit to £5,000 is that there is an epidemic of fraudulent claims. Yet that evidence should not just be taken at face value or anecdotally borne out by stories that we all tend to tell. The Association of Personal Injury Lawyers has made it clear that it believes that the figures the Government are relying on are exaggerated. The figures for actual proven fraud are rather low. All this shows that there is perhaps a need to spend a little more time checking each other’s figures because, on the current proposals, perhaps as many as 96% of all road traffic claims will be captured by the increase to £5,000.
It is therefore undeniable that hundreds of thousands of genuinely injured people could risk losing the basis for their claims being proceeded with effectively with legal representation. It should always be remembered when the House considers such things that legal claims are the primary driver for retaining and improving health and safety standards in the workplace, and that the massive reduction in the number of claims that is likely to be occasioned by these changes will have an adverse effect on health and safety standards. Deregulation in this area increases the risk of injury at work, and the Bill simultaneously would restrict the ability to seek redress. I hope we will have some substantive debate and see substantial changes to this Bill in Committee, and I look forward to getting into the detail to see whether we can make it better.
Baroness Berridge (Con)
My Lords, it is a pleasure to go down memory lane to the nine years I spent as a personal injury and licensing barrister at Kings Chambers in Manchester. During my time as a junior barrister, dealing with road traffic accidents seemed to be compulsory basic training, rather akin to the traffic list in a magistrates’ court for the criminal Bar of this era. I should state that I was a member of the PIBA, and I am grateful for its briefing, as well as the advice of the now head of the personal injury department at my old chambers, who happens to be my former pupil mistress, Fiona Ashworth.
As is the nature of the independent Bar, I represented both claimants and defendants, the latter being legally represented through insurance companies as a result of the statutory obligation for drivers to have third party, fire and theft insurance. It is important to note at the outset that it is claimants who are legally unrepresented, unless they have fully comprehensive insurance or free-standing legal expenses insurance. Of course, a claimant may be a passenger, who is obviously under no duty to be insured. This statutory obligation of third party, fire and theft created a huge market of customers for insurance companies, and the quid pro quo of creating this market at that time was the Motor Insurers’ Bureau, which the insurance companies paid for to deal with claims when the defendant driver was uninsured. Underlying all of this is the foundational principle that if you drive your car deliberately or negligently so that you damage someone else, in terms of their property or personal injury, you must compensate them. How sad it is that the term “compensation culture” has come to be seen only as derogatory. It is an important plank of any mature justice system. I must state at the outset that I agree with the tenor of the comments of the noble Lord, Lord Monks, and I ask my noble and learned friend the Minister to comment. In my experience, the overwhelming majority of claimants are genuine.
The mischief that the Bill seeks to address seems twofold regarding whiplash claims, and it is to Part 1 that I will limit my comments. Her Majesty’s Government have two laudable desires: to reduce insurance premiums and to reduce exaggerated and fraudulent claims. While I believe, along with other noble Lords, that the obligation to obtain a medical report will serve the useful purpose of ensuring that claims are dealt with thoroughly and will help to reduce the possibility of fraudulent claims, I currently have reservations about the introduction of the Lord Chancellor as the creator of a new tariff, the separation out in the personal injury system of compensation of one discrete form of claim, and the proposed levels of the new tariff. I also mention the oddity of the codification of the duty to mitigate.
First, I will address the separation out of one type of claim. I spent more hours than I care to remember poring over what was then the Judicial Studies Board guidelines to assess the value of someone’s personal injury claim. After a while, it was described to me that you get a feel for cases, but it is important to remember that the guidelines do not seek to compare apples and pears. There is no mystery to the assessment. These guidelines are based on reasons and analysis as to why certain injuries merit more compensation. Importantly, they enable claimants—perhaps chatting about their injuries in, say, the office or the pub—to have confidence that they can compare, for instance, why a visible scar is worth more than one that is not visible; or why, in general, a fracture will merit more compensation than a soft-tissue injury.
The guidelines hold together as a body of reasoned assessment, and it these guidelines that the Bill seeks to substantially change. It is important to remember, as the noble and learned Lord, Lord Judge—who is not in his place—stated in Simmons v Castle, that the Court of Appeal has the power and a duty to review the guidelines. I would be grateful for confirmation from the Minister of whether the insurance companies maintain that these tariffs are too high for this type of injury, have raised these arguments in the courts and have been unable to persuade them.
I note that my noble friend used the word “proportionate”, which is a legal term that could be subject to test in our courts, to challenge these guidelines. Is it that the courts have said that the guidelines are a matter for Parliament to legislate on—to take one section of injuries out of the guidelines as they decided they were unable to do so? Is that also why we have the Bill? Also, am I correct in my reading of the Bill that a whiplash injury to a cyclist, motorcyclist or pedestrian falls outside the tariff? Does a whiplash injury fall outside the Bill if you fall over in the street or are a passenger on a train that stops suddenly? Even a motor vehicle accident on a private road might be treated differently. These would then be assessed on the Judicial College guidelines, not the Lord Chancellor’s fixed tariff. This matters enormously as the amounts of compensation that Her Majesty’s Government are proposing in the tariff, in the consultation and the impact assessment, are so much lower than the Judicial College guidelines. How can this be just to a claimant?
I had the privilege, mainly due to court listing procedures on the northern circuit, to sit in waiting rooms for hours talking to genuine claimants. So often, the few thousand pounds of compensation for pain, suffering and loss of amenity was going to have a substantial effect on their finances, enabling them to buy a car, pay off a debt or pay for education, as well as make windfall purchases such as holidays. Why does a car passenger not deserve the same whiplash compensation as a cyclist for the same injury? I could perhaps understand this part of the Bill more if the savings to the insurance companies of reducing motor car whiplash claims had to be passed on through insurance premiums. A mere pledge is just not good enough. Why do Her Majesty’s Government think that genuine claimants should not get this compensation and that the insurance company should have the money instead? As the Personal Injury Bar Association briefing states:
“Further, if a claimant is going to be fraudulent or exaggerate a claim, there will be a large incentive to describe symptoms lasting for longer than the tariff provides so as to bring their claim out of the tariff and more than double the amount of compensation they receive. The greater the disconnect between the tariff amounts and the judicial college guidelines and court awards, the greater the incentive to exaggerate the duration of symptoms. Such an approach would undermine the stated goal of the Bill”.
Of course, if the tariff is to be the same as the Judicial College guidelines, the statute is superfluous.
Surely such irrational differences between the tariff and the Judicial College guidelines will somehow be justiciable. Maybe someone will now say that the European charter, on which I so happily voted with the Government yesterday, might be the solution. I am not in principle against a tariff system: we currently have one called the Judicial College guidelines and we also have one for the criminal injuries compensation scheme, but the tariff has to apply to all cases so that people can readily understand the fairness of their compensation. Also, why does the government tariff say that a 10-month injury and a 12-month injury merit exactly the same amount of compensation? There is not even a bracket of figures in the examples of the tariff I have seen. How can this be just?
There are other, more complicated, cases that we also need to consider. While the overwhelming majority of soft-tissue injuries caused to the neck, shoulder and back by the forces of deceleration on impact recover within six to 12 months, a small minority of claims—perhaps around 5%— leave permanent damage. Long-term effects can range from ongoing twinges, to accelerating the onset of arthritis, to the more complicated but well-recognised fibromyalgia and chronic pain syndromes. The latter will command substantial levels of compensation. Although these will, of course, fall outside the new tariff outlined in the Bill, it is important to realise that pressure may be put on unrepresented claimants to settle their claim too early, relying on only a basic GP’s medical report. Such a report does not even require a GP to have seen previous medical records. People will often need advice to wait and see. I sent back so many claims, saying, “Don’t settle now. Wait.”. However, we all know of the type of pressurising phone calls that can be made. Are Her Majesty’s Government going to make the quid pro quo of these savings to insurance companies that those companies must provide legal advice to an unrepresented claimant? How else will there be equality of arms?
In relation to the Lord Chancellor as the creator of the tariff, I would be grateful if the Minister could clarify whether the Lord Chancellor will have to consult the Lord Chief Justice on Clause 2(2), or even have to consider the Judicial College guidelines when deciding on this tariff. It is hard to imagine that the tariff, if at the levels outlined in government consultation, will not impact on other forms of compensation. Is it the Government’s intention to bring down compensation on a whole range of injuries by the use of this statute? Will not insurance companies be able to raise non-tariff injuries and use this legislation to say the Judicial College guidelines are too high overall, trying for a revision of the whole system?
I turn briefly to the duty to mitigate, outlined in Clause 2(1)(b)(ii). It refers to,
“the claimant's failure to take reasonable steps to mitigate its effect”,
thereby bringing their case in the two-year period. It seems this might encourage defendants routinely to argue that earlier treatment would have led to lesser injuries so they would be in the tariff, and that is a difficult argument for litigants in person to meet and argue against. I would be grateful to know why the Government are putting the common law duty to mitigate on a statutory footing only in this area and inserting a section that will lead to an increase in the complication of litigation, which I was pleased to see in its briefing that the PIBA did not want to encourage.
In conclusion, the Minister said that three-quarters of the insurance companies have signed up to a pledge. I am surprised that it is not more. Why are we relying on only three-quarters? Will there be a strategy to ensure that the entire industry signs up to pass on these savings? In relation to the abuse correctly outlined by the noble and learned Lord, Lord Hope—I practise in this area—yes, there is an abuse, but the intended, not unintended, consequence of the Bill is to have a significant effect on genuine claimants. Is that a fair balance to strike? There will be an effect on genuine claimants: they will not benefit from the Bill. I fear we are hearing too loudly from the lawyers and the insurers, and I have yet to see any representation purely on behalf of genuine claimants from an organisation with no other vested interests. I hope the Minister will be open to listening and meeting to deal with the concerns that I have outlined.
Lord Thomas of Cwmgiedd (CB)
My Lords, I will address only Part 1 of the Bill, following on from the very eloquent remarks of the noble Baroness.
It seems to me that there are four problems that will have to be addressed, and I will briefly mention them and suggest some solutions. The first is the need for advice and who is to pay for it. This is a problem that runs right across the whole of the legal sector at the moment, and gets more difficult by the day. We need to deal with small claims— small areas where advice is needed—in a proportionate manner, but one that does not incentivise people to bring litigation for the sake of litigation.
Secondly, it cannot be right to categorise a claim as for the fast track or a small claim, simply to enable fees to be recovered. Those are different points: the point of a track is the difficulty of the case.
Thirdly, I welcome the principle of a tariff; this is a novel departure. We ought to look at this and I very much take the point made by the noble Baroness about why we are doing it in this one sphere, which could be met with the remark, “Well, you should pilot it”. There is much to be said for setting a simple tariff, for two reasons: one, it gives certainty and two, it enables claims to be settled more easily. I shall return in a moment to the way in which that should be set.
Fourthly, there is the problem of fraud. In my own experience, the insurance industry—not merely in large claims but in small ones—crusades or works very hard to suppress fraud. In the instance mentioned by the noble Lord, Lord Hodgson, what are commonly known as “cash for crash” cases, the insurance industry has instigated significant prosecutions and has made use of the contempt of court rules to seek the imprisonment of those who have brought false claims. It would be helpful to know what the issues and difficulties are, and the proportion of cases where the insurance industry feels there is a fraudulent claim but cannot prove it. It is important when setting the tariff to have some clear idea of why and how you are setting it. Are you setting it to stop fraud, or on the basis that people should be more stoic and should not be paid so much for a bit of pain? What is the basis?
I will return to each of those four points. First, on the provision of advice, it seems that we need to look at this issue more broadly and not separate out those who suffer this type of personal injury. It is wrong that the energies of claims managers and the legal profession should go into this kind of claim and not the much more important types of small claim. If resources are to be used, they should be used for the vindication of serious rights. It is, I think, the experience of everyone that many people have rights they cannot vindicate because they cannot get legal advice. I hope that the Government give serious consideration to funding the Courts & Tribunals Service or some other body to provide proper online advice in this area, in which a great deal can now be done. Last year, City university and others sponsored a hackathon where people tried to create this kind of legal advice online. I hope that efforts will be made to pursue that.
Secondly, on the allocation of tracks, whether a small claim or fast-track claim, it is essential that the courts have the right IT. If they are to have litigants in person, the IT must be designed to deal with those.
Thirdly, on setting the tariff, I listened with great interest to the noble and learned Lord, Lord Mackay of Clashfern, explain the task the Lord Chancellor would have in setting the discount rate. The task of setting the tariff rate, although dealing with much smaller sums, poses some difficulties. He is given no committee—although a committee is provided for in the other part of the Bill—and no guidance as to what he is to take into account. It would be helpful to look in Committee at assistance that could be given to the Lord Chancellor. Certainly, as has been suggested, maybe the judges could give advice, or the Lord Chief Justice could appoint people who can give advice. It is wholly wrong in principle that this should be set by a government Minister without proper legal advice and medical advice, because no doubt over the next few years, medical science will improve so that we have a much clearer idea of how you prove or show that such injuries have been sustained.
Finally, we must address a fundamental problem: what is this compensation level to be set at? Is it to be set to deter fraud, or is it a matter of compensation? If it is the latter, and assuming that an ordinary individual needs advice, who is to pay for the advice? Is that part of the compensation or not? That point must be addressed. You cannot say we are offering fair compensation unless you are clear about the various objectives. I warmly support this Part of the Bill—as I do the other Parts, on which I could not better the comments already made. It has the right principles, but a great deal needs to be done to improve it.
Lord Faulks (Con)
My Lords, I begin by declaring some interests. I am a practising barrister, and Part 2 of the Bill, relating to the personal injury discount rate, is relevant to the size of the awards in cases in which I am instructed by both defendants and claimants. In particular, I declare an interest as acting for the National Health Service and for various medical defence unions in claims of the utmost severity. I should also declare an interest as having being a Minister in the Ministry of Justice between 2013 and 2016, immediately following the noble Lord, Lord McNally, from whom we have heard. During that time, whiplash reform was frequently discussed. However, during my time in the Ministry of Justice, neither Lord Chancellor changed the discount rate.
The Bill, or something like it, has been a long time coming. Noble Lords may remember that in the Queen’s Speech a Bill was foreshadowed which would,
“ensure there is a fair, transparent and proportionate system of compensation in place for damages paid to genuinely injured personal injury claimants”.
The scope of this Bill, which is,
“to make provision about whiplash claims and the personal injury discount rate”,
is much narrower, although I anticipate that the aim of the legislation very much reflects what was said in the Queen’s speech. I hope that, at the very least, we will be able to debate the future of Section 2(4) of the Law Reform (Personal Injuries) Act 1948, as referred to by my noble and learned friend Lord Mackay and the noble Lord, Lord Sharkey.
I imagine that most noble Lords will agree that many whiplash claims have contained a strong element of a racket. There may well be a dispute as to how much of a racket, but very few of us will have escaped invitations to commit a fraud, usually on the telephone, inviting us to say that we have been involved in an accident. There is also the sort of fraud suggested to the noble Lord, Lord McNally. There is such an accumulation of anecdote that it becomes beyond anecdotal evidence. I regularly used to receive telephone calls when I was a Minister, inviting me to participate in these frauds. When I identified myself and invited further information to be provided to me, the phone suddenly went silent.
The difficulty, or perhaps the advantage, to some people with whiplash is that it is neither provable nor disprovable by any scans or investigations, and so provides an opportunity for those who wish to participate in a fraud, or simply wish to exaggerate the impact of a particular accident on their neck or back. I agree with the noble Lord, Lord Monks, that insurers have played their part in what has been this racket. The inclusion of pre-medical offers precluding settlement is definitely a step in the right direction and it is important that it should remain in the Bill.
Part 1 reflects a strategy to restrict the level of damages and to discourage these ambitious, or fraudulent claims. It has been criticised, and I quote the briefing from the Law Society as “arbitrary, disproportionate and wrong”. It said that the Bill ignores genuine claimants, and even that the evidence of fraud is very slender. It is true that the existence of a tariff will mean smaller claims for pain, suffering and loss of amenity, although when a scheme of this sort was originally announced, not by the Ministry of Justice, but by the Treasury, it was suggested that no damages at all would be paid for pain, suffering and loss of amenity. However, in this scheme, what are known by lawyers as special damages will be recoverable—that is, loss of earnings or medical expenses attributable to the injury. There is a power, subject to the regulations, for an uplift on the tariff for damages in exceptional circumstances. It is said that this will give rise to litigation—that the changes and the proposed increase in the small claims limit will result in a proliferation of litigants in person. I am sure these and other criticisms, which we have already heard canvassed in the course of these debates, will be debated in Committee. My view is that this part of the Bill is aimed in the right direction and is a necessary correction to the whiplash claims racket.
By contrast, I do not think that there should be much real debate about the need to change the discount rate, which was dramatically reduced as a result of a decision of the then Lord Chancellor, Ms Truss, from 2.5% to -0.75%. Even cautious wealth advisers have described this rate as “incredibly generous”, and this is borne out by relevant international comparisons. As we have heard, the Government’s proposal is to change the assumption. The result should still be a generous discount rate from the point of view of claimants and should result in fair compensation to them. The Government could in fact have gone further in relation to the assumptions, but have been rather conservative—with a small “c”.
I do, however, have a number of issues with this part of the Bill. The first is that it could be some time before it takes effect. The cost to the taxpayer of a change in the discount rate is very high indeed. The Department of Health is a particular loser. The suggestion is that the recent changes may result in a loss of as much as £1.2 billion a year. Furthermore, the cost of clinical negligence claims generally, as revealed in the recent National Audit Office report, has got completely out of hand. Every day that -0.75% remains the discount rate will be a further blow to government, both national and local, as well as to those affected by increased premiums.
There is a 180-day turnaround period between the Lord Chancellor deciding to commence a review and the expert panel reporting back. But the obligation to commence a review begins only after commencement of the Act, and we do not know when that will be. As I understand the Bill, he or she has 90 days after commencement before the 180-day turnaround period even begins, and perhaps my noble and learned friend will confirm my understanding of this. The commencement date—see Clause 11 in Part 3—is on such a day as the Secretary of State may appoint, and so the period does not begin automatically once the Bill is passed. The Lord Chancellor must be ready for these changes. Why can the initial 90-day period in which the Lord Chancellor has to commence a review not be curtailed to, say, 30 days? Surely preparation should be under way for at least some preliminary work on the composition of the panel. I hope my noble and learned friend will be able to reassure the House that the Government intend to get on with this as soon as possible.
My other main concern is the frequency of the review. My experience as a practitioner is that, pending a probable change in the discount rate, parties on both sides, particularly in substantial cases, will inevitably and legitimately seek to game the system. Indeed, I can tell the House that that is going on at this very moment, depending on when trials might take place in relation to anticipating forward changes in the discount rate. If the review is every three years, there will be a constant exercise in guessing whether the discount rate will go up or down. By complete coincidence, the period of five years that was suggested by the noble Lord, Lord Sharkey, and my noble friend Lord Hodgson, is one to which I adhere. I respectfully suggest that it should be five years. What is important is that there should be regular reviews, as opposed to no reviews at all or very infrequent reviews, which, as we have heard, has been the position since the Damages Act came into force.
I am also concerned about the recoverability of investment advice as a separate head of damages. My construction of Clause 3(3) of Schedule A1 inserted by Clause 8 leads me to think that this should not be a separate head of damages as is now the case following the decision of Eagle v Chambers—here I have to declare an interest, as I was involved in that case. Given that the discount rate reflects a degree of advice—or at least proper advice given to a claimant—then surely he or she cannot recover the cost of additional expert advice as once was customary in large cases.
Finally, I want to say something about periodical payments. I entirely endorse what a number of noble Lords, including my noble friend Lord Hodgson, have said about periodical payments. I read the Government’s response to the House of Commons Select Committee in which they said that they would investigate, either directly or with the help of a third party, whether there are any ways in which the present law and practice regarding PPOs could be improved to ensure that any avoidable obstacles to their use are removed. It seems to me that periodical payments are often much more satisfactory than lump sums and are a clear indication that a claimant is not interested in gambling on the uncertainties of the market or indeed his or her life expectancy, but simply wants to make sure that damages are available, as and when needed, for the rest of their lives.
In this context, I will comment briefly on the speech of the noble and learned Lord, Lord Hope, who was one of the judges in the case of Wells v Wells. He spoke of the power that always existed for having varying rates, according to different heads. I agree with my noble friend Lord Hodgson that some of his anxieties would be and are satisfied by the regular awards of periodical payments, particularly cases of cerebral palsy for example, where life expectancy, even in the time of my practice, varied considerably. It is now very much longer than it was, because of improvements in medical science.
I have thought carefully about whether it ultimately should be for the Lord Chancellor to decide these matters or if there should be a panel, taking it out of the political sphere entirely. Indeed, the political pressures on a Lord Chancellor not to do anything are plainly there in the existing legislative framework. Ultimately, it is appropriate that a Lord Chancellor should decide, albeit with the obligation regularly to review on advice, because ultimately it is a political matter. This was one of the difficulties that the Supreme Court faced because, as the noble and learned Lord, Lord Hope, said, it did not have all the evidence that one might have to come to its conclusion. The Supreme Court does not have what the Supreme Court in America has, so-called Brandeis briefs, with all the information enabling you to make an almost economic or socioeconomic decision. Politicians make what legal academics call polycentric decisions about the appropriate discount rate or any other factor. That is not something that courts in this country are able to do.
In my view, subject to hearing further argument, the structure of the Bill in this respect is right. We want a fair system of compensation for both sides in litigation, and one that commands public support. The Bill, though capable of improvement, should do this.
Lord Hayward (Con)
My Lords, it is always a daunting task to follow my noble friend, who is such an expert in this field. I intend to raise three non-legal points on the Bill, in the view that it pursues the right course, but there are certain questions that are worth raising.
First, I fall into the category of the noble Lord, Lord McNally, as the insurance industry settles too often, too quickly and in too many cases. I disagree with the observations of the noble and learned Lord, Lord Thomas, but that does not necessarily mean that I disagree with either the noble Lord, Lord Monks, or the noble Baroness, Lady Berridge, in their comments, because those that are settled too early do not necessarily go to lawyers to be dealt with.
I will cite two personal circumstances, as others have done. First, when I was chief executive of a business, we were confronted by a malicious claim in relation to racial discrimination. I referred it to my chairman, who said that he wanted us to fight it because it impugned the honour of a number of members of staff, including me, and we were in a financial position to do so. We fought the case and it was settled the day before it went to court by the individual making the claim withdrawing. We paid not one penny, but there was a cost.
There is a clear message for the insurance industry: it is about time it fought a few more cases. I say that because the first time I ever asked a Question in this House was in relation to the case of Mr John Elvin. Rather like the noble Lord, Lord McNally, he was involved in a false claim. He identified it to the insurers on the Monday, because it had happened on a Saturday. He said, “I am convinced this is a false claim”. The insurers, esure, chose to do nothing. It settled it.
The community at large suffers, not only the individual, because we all have to pay for that. The insurers should challenge a few more cases. As I say, in this case the individual had absolute chapter and verse in relation to what had happened and warned the insurance company before it was even contacted by the other party that this was going to be a false claim. It could and should have pursued it. Having cited it in this House, did the insurers come back and say, “You have cited an incorrect case and you haven’t got the facts right”? No, they were absolutely silent. The insurance industry has a lot to improve on, because this should not be a “protect the insurance industry” Bill, it should be a “protect the consumers” Bill, which overall I believe it is.
The noble Lord, Lord Sharkey, and others have identified concerns about what can be taken at face value from the insurance industry. Those are quite reasonable questions to ask. I for one have experience of discussing this issue with representatives from insurance companies, not only as regards individual cases but in terms of their general approach. Around a year and a half ago I listened to the evidence given by the ABI to a Select Committee in the House of Commons. The association blamed everyone else, even to the extent of when explaining the difference in practice in other European countries saying, “Oh, there is a different driving style there”. Well, people drive on the other side of the road, but I am not sure that there are that many other differences in driving style that would result in us being identified as the crash claims capital of Europe. The insurance industry has something to answer for in this area.
One other area that has not been touched on during the debate in terms of its implications, although it has been identified, is the ramifications for the health service. If we are to ask people to get signed documentation in one form or another, by implication that will result in an increased burden on the health service. I am not sure how well it will cope with the extra demand and I am also concerned about the prospect of people pressurising GPs and hospital specialists by saying, “Please sign me off for six months. No, I would like nine months. No, I would like 12 months”. People will push it up in one form or another. It is right to go for some form of medical certification, but we should recognise the implications of the burden it will place on the NHS.
Thirdly, I look forward to the future possibility of other similar legislation. If we do not resolve the problems in relation to the insurance industry, claims companies and others pursuing this matter, as the noble Lord, Lord McNally, implied, we will be back in this Chamber considering a “civil liability (schools injury)” Bill, a “civil liability (visiting public buildings injury)” Bill and a “civil liability (travel industry)(sickness on holiday in Benidorm)” Bill. We have to recognise that if this issue is not tackled properly at its source—I believe that the different participants are all responsible—we will need many more pieces of legislation to resolve the problems that we are currently trying to resolve in one field.
Lord Cromwell (CB)
My Lords, it is a tradition in this House to say what a privilege it is to follow the previous speaker. As the 15th speaker in this debate, I have to say that I have enjoyed and learned from all 14 speeches so far. It has been a real privilege to listen to this debate because it reflects the House of Lords at its best: terrifyingly well qualified; taking a roughly hewn Bill and making it even better, and I am sure that the Minister is extremely grateful for all the questions and advice that he is receiving. Well, all good things must come to an end.
I intend to speak on the personal injury discount rate, and in particular the panel that is being established to advise on it, about which I have some questions for the Minister. I wish first to make a general point. It is essential that in a Bill that combines whiplash claims, an area that is infamous for mischief, and the discount rate for personal injuries as a whole, we are not tempted into viewing all claims, or even most claims, as excessive or fraudulent, a point made powerfully by the noble Baroness, Lady Berridge. There are, of course, opportunistic claims and, in some cases, a collusive sub-industry seeks to profit from them, but there are also many injury claims that reflect tragic and agonising circumstances for individuals and their families. It may be that it is too easy for false claims to be effective, but that is wholly separate from determining the value of compensation claims that are found to be genuine and on which the discount rate has a profound effect.
In swinging the pendulum away from apparently excessive claims, we must not allow it to travel so far that it treats genuine claims unfairly or distorts their real value. As the Justice Select Committee reported,
“it may be simply increasing levels of under-compensation for claimants who were already under-compensated”.
The noble and learned Lord, Lord Hope, also touched on the difficulty for a claimant who, in a depressed market, has to eat into capital and is thereby unable to recover their position later. We need to be mindful of such unintended consequences. As the Minister reminded us, there is a person behind every claim.
Turning to more specific matters in the Bill, relating to the changed approach to the discount, who are the winners and losers? The winners are those who save substantial sums through reduced payouts: the Government, the NHS and insurers. Some might say that this not a bad thing, particularly if the results in reduced premia are passed on—something that a number of speakers have touched on and expressed a certain amount of cynicism about. However, the losers are people whose lives may have been damaged or curtailed, who may be in lifelong pain and who have to make the payout last them to the end of their days. The winners win at the exact expense of the losers.
I invite the House to consider the question of the inequality of arms between the winners and the losers. The winners are large, well-organised, well-connected and articulate bodies with financial interests in the outcome; they are able to draw on a depth of expertise in the rather arcane world of predicting investment returns far into the future. Contrast that with the losers of the new arrangement. These are typically individuals who have suffered an injury. We cannot assume that they are well resourced, that they are acting collectively, that they are familiar with theories on investment returns or that they are erudite in subjects such as yield curves or risk profiles. I note that the Justice Select Committee report contained these words:
“We advise caution in considering evidence of claimants’ investment behaviour to set the discount rate. Investment by claimants in higher risk portfolios could indicate they are under-compensated and forced into higher-risk investments to generate sufficient return for their future living expenses”.
In the same report, the committee highlighted the inadequate evidence of real behaviour of people seeking to invest safely for their future—a future of uncertain duration, as pointed out by the noble and learned Lord, Lord Mackay of Clashfern, uncertain health and uncertain investment returns. The government response to that report accepted that the evidence is indeed limited.
In short, these people need protecting. I do not think that there is any disagreement about that. They are wholly dependent on the Lord Chancellor and the panel set up to determine the discount rate. I am concerned that both the panel and the Lord Chancellor have an incentive, perhaps even a temptation, to keep the discount rate just a shade higher than it should be—what the noble and learned Lord, Lord Hope, referred to as a “tension” in the arrangement. I note that in the Ministry of Justice impact assessment, 45% of the 92 respondents favoured retaining a very low-risk approach, so I do not think that we are looking at unanimous support for the new approach to a higher discount rate.
In its equalities statement, the Ministry of Justice concludes:
“The proposals will therefore be likely to reduce the amount of compensation that claimants receive unless they can demonstrate that a different rate should apply”.
Does the Minister really think that a claimant will be able to persuade a court or the Lord Chancellor that a rate should be changed? Currently, I believe, courts can vary the rate but never do so. I look forward to him correcting me or confirming that.
My second question is: can the Minister tell the House how the powers of the Lord Chancellor are to be contained such that he or she is prevented from perhaps guiding or even overriding the panel, especially as the panel is chaired by the Government’s own actuary, and that person will have two votes out of a total of six?
Turning to the panel itself, it has five members, quorate when only four: the Government Actuary, another actuary, an economist, an investment manager and a person familiar with,
“consumer matters as relating to investments”.
Those are four very clearly technical roles, although getting an economist and an investment manager to give an unambivalent view or one consistent across their professions is always something of a challenge. Each of these four panel members will be aware of the background to their appointment—that rates have been too low and need to be increased. Any dissent from raising rates may be considered too soft-hearted or too pessimistic about future economic growth, which itself is often a matter of political perspective. In short, there may be subtle pressure to pitch the rate a bit higher. Only a small adjustment in the rate will save the winners many millions but could spell a lifetime of struggle and hardship for the losers.
That leaves one role, which, by contrast, sounds to me pretty vague. I note that they are the last person listed as a panel member, and it feels slightly as if they have been bolted on as an afterthought, but perhaps I should not read too much into that. It would appear that this person is almost expected to sign off on behalf of consumers—in other words, on behalf of those receiving these payments. That is going to have to be a person who is not only extremely robust in negotiation but also multi-skilled in the technical areas represented by those who outnumber them, in vote terms, five to one. Otherwise, they are likely to find themselves outgunned or simply overwhelmed by the views of the other committee members, to say nothing of having only a single vote. My third question to the Minister is: can he tell the House whether, and on what basis, he feels that the last panel member is sufficient to counteract an inherent tendency for the panel to adopt a perhaps marginally overoptimistic view of the economic future? I say again that even the smallest tweak upwards in the discount rate will have a very significant negative consequence for the claim.
My final question to the Minister is: can he look again at the composition of the panel and the roles of the panel members so that he can assure the House that there is a fair balance of representation, both numerically and in terms of firepower? So often it is possible, in seeking to right one wrong, unintentionally to create another. This Bill in large measure seeks to prevent false claims of overpayment, but we must not in the process end up with a system that could deprive of adequate compensation those who need and deserve it.
Lord Ribeiro (Con)
My Lords, I find myself not only at the end of the list of speakers but surrounded by lawyers and other more knowledgeable people than I on this subject. The Bill affects patients—those who have been injured and those who seek compensation. As a clinician, I have witnessed some of these injuries, which range from merely a stiff neck to a quadriplegic patient, as was mentioned by the noble and learned Lord, Lord Hope of Craighead.
I have also despaired of the length of time it takes before cases are settled and compensation made. Sadly, in some instances the patients involved receive substantially less than their lawyers and claims companies. Unlike car or house insurance, in which the insurer knows the accident falls within the terms of their policy, clinical negligence poses a unique problem. The doctor often does not know that there has been an incident that might result in a claim for negligence. Clinical negligence cases have a long tail. The doctor is often notified three to five years after the incident.
The Medical Defence Union, to which I am grateful for providing some of the data I will be using today, noted 1,000 claims since 1995 with more than ten years between the incident and the notification. The limitation period on claims is three years from the date of the incident or three years from when the patient was aware that the alleged negligence had occurred. The long tail means that indemnifiers need sufficient funds to pay claims years into the future.
As we have heard from many speakers, the drastic change in the discount rate from 2.5% to 0.75% from 20 March last year has had the practical effect of inflating substantially awards to patients and litigants. I shall give one example from a surgical context. Before the discount rate, the MDU’s highest payment on behalf of a consultant member was £9.2 million to a patient with a spinal injury, who would be expected to live for many years. After March 2017, a similar claim would cost £17.45 million. With children, it is even worse, because they have a much longer future ahead of them. In one case involving a GP, a child aged 14 with a 50-year life expectancy would have expected to receive £8.4 million at the 2.5% discount rate. That same patient would now receive £17.5 million at the 0.75% rate.
The financial crisis related to this policy is huge. When inflation is added to a claim—let us say at 10%; I know that the rate is lower at the moment—claims double every seven years. The National Audit Office produced a good report on this matter in September 2017, Managing the Costs of Clinical Negligence in Trusts, where it recognised the problem and noted that the drivers of the cost of clinical negligence claims are related to the legal and economic environment and are not linked to patient safety—I shall return to patient safety later and how the health service safety investigations body legislated for last year can help reduce litigation through a learning culture.
The spiralling cost of claims is beyond the control of doctors and other healthcare professionals. Paragraph 16 of the NAO’s report states:
“There is no evidence yet that the rise in clinical negligence claims is related to poorer patient safety, but declining performance against waiting time standards is one factor which increases the risk of future claims from delayed diagnosis or treatment”.
The NHS Resolution annual report for the financial year ending 31 March 2017 focused on the impact of the discount rate and the financial crisis that it had caused for the NHS. It stated:
“The liabilities arising from incidents up to 31 March 2017 for all types of claims have increased significantly, with the provision reported in our accounts increasing from £56.4 billion in 2015/16 to £65.1 billion in 2017/18. In addition to the changes in discount rate factors, these increases are due to continued inflation for damages awards and legal costs, and the growing number of cases where we provide for the cost of care for life”.
In a letter to the Lord Chancellor in January 2018, the NHS Confederation raised the issue of rising costs and the impact of the discount rate. It noted that the Chancellor of the Exchequer’s Budget speech of March 2017 had indicated that the Government had put aside £5.9 billion for three years to 2020 to protect the NHS from the effects of the change in the personal injury discount rate. My question for my noble and learned friend the Minister is: what happens after 2020? If the problem is not resolved by then, costs will surely rise. Perhaps the Minister can say where we are with the consultation on the discount rate being carried out by the Ministry of Justice and when we can expect to learn the results. What progress are the Ministry of Justice and the Department of Health and Social Care making on the recommendation of the National Audit Office that a co-ordinated strategy is required to manage the growth in clinical negligence costs by September 2018?
One major block to reducing clinical negligence costs to the NHS, as was mentioned earlier by the noble and learned Lord, Lord Mackay, the noble Lord, Lord Faulks, and other noble Lords, is Section 2(4) of the Law Reform (Personal Injuries) Act 1948. I look forward to hearing more about this, and I hope that the Minister will be in a position to provide an amendment in Committee so that we can explore it a bit further.
There is no doubt that Section 2(4) was enacted in good faith at the birth of the National Health Service—70 years ago in 1948. It completely ignored care that could be provided in the NHS. One wonders whether this might have been—it is just my thought—because few lawyers in those days would have considered seeking treatment in the new health service, preferring to stay with what they knew best. Currently, however, bodies such as the Medical Defence Union, the Medical Protection Society and NHS Resolution are prevented by Section 2(4) from compensating patients on the basis of care provided by the NHS—even if that care is of a high standard and has been provided before the award. Thus, billions of pounds of taxpayers’ money earmarked for the NHS finds its way instead into the independent care sector.
Currently, a claimant awarded damages on the presumption that he or she will pay for care and treatment privately is not precluded from using NHS care. Some claimants, having been awarded compensation, have admitted that they have gone on to use the NHS. That seems like a double whammy if ever there was one.
Surely it is time to stop robbing Peter to pay Paul. It is time that Section 2(4) of the 1948 Act was repealed. Unless we do that, I have great concerns about the long-term sustainability of the NHS and social care, a subject that we shall debate on Thursday. I have grave concerns that we will not be able to fund the NHS if it continues to incur the liabilities so graphically described by many speakers today. The NAO report shows that in 2016-17 10,600 new clinical negligence claims were registered with NHS Resolution under the Clinical Negligence Scheme for Trusts—CNST. Furthermore, NHS Resolution spent £1.6 billion on claims in 2016-17 and there is a £60 billion provision to pay for the future cost of claims arising in 2016-17.
This is unsustainable. As in the film “We Need to Talk About Kevin”, we need to talk about repealing Section 2(4). Although the scope of this Bill is tight, I am sure that there are enough noble and noble and learned Lords here to make it possible to include this.
Finally, the proposed health service safety investigation body will provide an opportunity to address the rising cost of litigation and a safe space for healthcare professionals to meet and discuss healthcare issues—and near misses—that could lead to litigation. The NAO proposes a safety and learning team to engage with trusts on patient safety issues, but I believe that in the HSSB we will have a force for good that could do much to reduce the cost of litigation and at the same time improve patient safety.
More medical input has been suggested, and I agree with my noble friend the Minister of State that no settlement should be possible without a medical report. I agree, too, with the views of the noble and learned Lord, Lord Thomas, and the noble Lord, Lord Faulks, that a committee—advisory or otherwise—supporting the Lord Chancellor should include a medical expert, for the reasons the noble and learned Lord, Lord Thomas, gave. Medical knowledge and diagnostic assessments and skills are improving continuously and we may reach a point when we can set a timeframe for how long an injury may last.
Lord Marks of Henley-on-Thames (LD)
My Lords, we have had an extremely strong debate with important contributions from all noble Lords who have spoken, which has delivered much to consider in Committee.
I will begin with whiplash claims. There has plainly been an explosion of such claims over recent years, many of them exaggerated, unnecessary or fraudulent, even if the last few years have not continued that upward trend. My noble friend Lord McNally and the noble Lord, Lord Hayward, made the point that not only false whiplash claims but other claims have mushroomed. There can be no doubt that the ban on solicitors paying referral fees has helped to restrict the trend but there is considerable evidence of the ban being circumvented, particularly with the help of claims management companies.
Cold calling generates a great many claims—the noble Lord, Lord Faulks, is not the only Member of this House with repeated experience of this—but the very fact that this practice is so widespread suggests that not everyone responds with a rejection. I understand that it is difficult to control cold calling by claims management companies operating from abroad but there is no excuse for our not doing everything we can to stop this direct incitement to fraud. We agree with the Government that we must try to stamp out unmeritorious, exaggerated and fraudulent claims.
If I may be permitted to add to the accumulation of anecdotal evidence, my wife had a similar experience to that of Lady McNally when she hit the back of a car that was in front of her, ever so gently—so she tells me, anyway. Out stepped five strong young men, on their way to a paintballing and laser-gaming session. They were polite, charming and concerned as to whether my wife was all right, and they all assured her that they were fine. So off they went to their paintballing and laser gaming; a week later, my wife received a claim for some £13,000 in respect of their five alleged whiplash injuries. She told our insurers that she did not believe any of them were genuinely injured and that they had all told her they were unhurt. We have not found out whether the insurers paid out but, since we have heard nothing further, I suspect that they did. This illustrates a major problem, which is that it is often easier for insurers to give in and pay small claims than to investigate and fight them—a point made by the noble Lord, Lord Monks, and others. It is a point that will not be assisted by reducing the amount payable in such claims.
However, while we must do everything we can to stamp out false claims, in so doing we must take care not to prevent those with genuine claims recovering fair compensation. I reiterate the point made by a number of noble Lords: it is unfortunate that this legislation is being dealt with separately from the Government’s proposals to increase the small claims limit, with which this legislation is closely connected and which will have a number of significantly unjust outcomes.
First, increasing the small claims limit for personal injury claims to £5,000 would prevent cost recovery for claims below that sum. It would thus deny very large numbers of genuine claimants legal advice and representation because the only way they can afford lawyers in these cases is by relying on conditional fee agreements and the recovery of costs from insurers—a point well made by the noble Lord, Lord Monks, and the noble Baroness, Lady Berridge. This will affect not just road traffic accidents. My noble friend Lord Sharkey mentioned the plight of other vulnerable road users, including cyclists and pedestrians, who will find it difficult to bring claims without legal help. Many other claims will be affected as well.
The increase in the small claims limit will increase the number of litigants in person and reduce access to justice in general, hitting, as always, the most vulnerable citizens the hardest. Furthermore, the increase will take the vast majority of whiplash claims outside the pre-action protocol for low-value personal injury claims in road traffic accidents and the portal associated with it, which, for all its faults, has provided a route to settling many of these claims quickly and economically. If the small claims limit is to be increased, then I suggest the scope of the portal and the protocol should be broadened, or at least we should have a new parallel protocol to assist claimants in person in these cases. I draw some support from the speech of the noble and learned Lord, Lord Thomas, in that regard, but I regard £5,000 as simply too high for the small claims limit and would endorse the £3,000 figure proposed by the Bar Council and the Personal Injuries Bar Association.
Turning to the detail of the Bill, I share with my noble friend Lord Sharkey and the noble and learned Lord, Lord Hope, the view of the Delegated Powers and Regulatory Reform Committee, expressed in trenchant terms, that it is inappropriate that whiplash is undefined on the face of the Bill and that the initial tariff for damages is left to be determined by regulations. We hope that the Government will follow the usual line and conventional course of accepting the committee’s recommendations before the start of Committee on 10 May and put down amendments defining whiplash injury and spelling out the initial tariff in the Bill. As to the figures suggested for the tariff in the impact assessment on the whiplash proposals, included in the information pack helpfully provided by the Government, table 6 on page 26 says it all. The Government have in mind to reduce the damages for pain, suffering and loss of amenity for injuries of less than three months’ duration from £1,800 to £235, and for injuries of three to six months’ duration from £2,250 to £470 and so on. These are drastic reductions indeed. It is pretty clear that the intention is to make such claims not worth bringing. We are all for getting rid of fraudulent and unmeritorious claims; we are not for denying honest claimants reasonable compensation for genuine injuries.
We can see the reasoning behind the proposal that claims should not be settled without medical reports, and I should add to my registered interest as a practising barrister—I am not sure this is a declarable interest—in that I have recently represented an insurer in a case involving such settlements. We can see why making medical reports compulsory is likely to deter false and inflated claims. I do, however, stress the need for reporting doctors to question claimants’ accounts of whiplash injuries closely in order to weed out inflated or false claims. One of the difficulties with whiplash injuries is that generally, all the doctor has to go on is the account of the patient. Another, is that the estimation of duration is usually carried out in advance and is notoriously both difficult and variable.
However, to avoid unfairness to genuine claims, the cost of medical reports—which I understand from MedCo to be some £180 plus VAT—must be recoverable. I have asked the noble and learned Lord to find out about that, but have since noted that in paragraph 5.121 on page 33 of the impact statement, an expectation is noted that:
“Insurers will have savings for 120,000 medical reports they would no longer be responsible for of around £22 million per annum, and associated medical report VAT of about £4 million per annum”.
Doing the maths, 120,000 multiplied by £180 is £21.6 million. So it is pretty clear that whoever compiled the impact assessment expected claimants with injuries likely to have a duration of less than three months to pay £216 including VAT for a medical report in the hope of recovering £235, leaving the princely sum of £19 to represent compensation for the injury. The tariff proposed in the impact assessment is far too low, and in this I am afraid I disagree with the noble Lord, Lord Hunt of Wirral.
Furthermore, I can see no reason why the tariff should be set by the Lord Chancellor. If there is to be a tariff—though I agree with the noble Baroness, Lady Berridge, that flexible guidelines may be better, and I agree with the observations of the noble and learned Lord, Lord Thomas—is not the sensible proposal that any tariff should be established by the Judicial College? Why should damages for whiplash injuries not be comparable to damages for other injuries? The Government have made no convincing case on that.
My last point on whiplash is that all the savings from these reforms should be passed on to policyholders. I am not convinced by the Government’s touching faith in the insurance industry, nor even by the regulatory stick mentioned by the noble Earl, Lord Kinnoull. I would like to see a healthier scepticism on the part of the Government and, if need be, a clear statement that if savings are not passed on to policyholders then the industry may be subjected to a tax penalty on a windfall saving.
I turn, more briefly, to Part 2, on the discount rate. We support the move from a very low-risk to a low-risk investment assumption, principally for the reason given by the Minister that in practice the investment of damages is not generally undertaken on a very low-risk basis. In particular, we fully accept the need, on which the noble Lord, Lord Ribeiro, expounded, to reduce the cost to the NHS of catastrophic injury clinical negligence claims. I urge the Government to accept the suggestion made by my noble friend Lord Sharkey and the noble Lord, Lord Faulks, that we try to move faster in implementing the first change of rate, as the present negative rate is so plainly wrong, as the noble Earl has persuasively argued. Defining the level of risk is difficult, though, and I join the noble and learned Lord, Lord Mackay of Clashfern, in seeking more guidance from the Government on their approach; there is too little at present.
We are also unclear as to why it has to be the Lord Chancellor who determines the discount rate. The Government have said this is a political decision, but are they really right about that? Why should the expert panel not report to a judge or judges or to the Judicial College, taking on an expanded role? The speech of the noble and learned Lord, Lord Mackay, illustrated the difficulties facing a Lord Chancellor in this task.
I am also unpersuaded that a fixed period of three years for the time between reviews is appropriate, but I do not accept the point made by the noble Lord, Lord Faulks, and others that a fixed five-year period should be a substitute. Interest rates change fast in some periods and very slowly in others. Would it not be better for the expert panel to meet annually or every two years to consider whether the discount rate needed changing in the light of circumstances? If the panel’s view were that no change were needed, the rate would be left unchanged. If the panel thought the rate did or might need to change, it could conduct a full review and produce a report, which, as I say, I suggest could be to the Judicial College.
On the composition of the panel, I accept that an independent panel of experts is intended rather than one representative of either claimants or insurers. However, I suggest that to meet the point made by the noble Lord, Lord Cromwell, the legislation should include a requirement that the panel consider the interests of claimants and insurers even-handedly. I also accept that it should include a medical expert.
Lastly, I turn to periodical payments in cases where there are long-term elements to awards, often for the long-term care of the catastrophically injured, of whose claims the noble and learned Lord, Lord Hope, spoke so movingly. Unfortunately, the take-up of periodical payments orders has been low. This may be partly because the discount rate has been very low so that lump sums have been unduly high. I suggest, or suspect, that many claimants and their families are also attracted by lump sums even where periodical payments would be more suitable. The problem with lump sum awards is that expectation of life is actuarially determined and, as the noble Lord, Lord Hodgson of Astley Abbots, pointed out, it can therefore never be exactly right. Some claimants die earlier than expected, leaving a windfall inheritance for their heirs. More seriously, others live longer than expected so that their damages run out well before they die and they are left without the lifelong support the court intended them to have.
Will the Government make proposals to encourage greater use of periodical payments orders? I note the support for them expressed by the noble Lords, Lord Hodgson, Lord Beecham, and others. They provide some answers to the point made by the noble Lord, Lord Cromwell, on the need to protect claimants from the effect of a raised discount rate. I am entirely unimpressed by the argument that defendants’ insurers, the Medical Defence Union or others prefer to pay out lump sum. These parties after all represent the tortfeasors and if they are required in this sophisticated economy of ours to reinsure so as to pay out what are in effect annuities in place of lump sums, I see no reason why they should not do so.
I also join the noble Lords, Lord Sharkey, Lord Ribeiro, Lord Faulks and the noble and learned Lord, Lord Mackay, in inviting the Government to revisit the basis on which medical treatment is costed under the 1948 Act. If a way could be found to do so, it would be a beneficial use of this House’s time.
I close by expressing my gratitude to the Minister and the noble Baroness, Lady Vere, for arranging a very helpful meeting of all Peers to discuss these reforms and to consider amendments. I look forward to working with the Government and others to improve this Bill.
Baroness Chakrabarti (Lab)
My Lords, one noble Lord’s declared interest is perhaps another’s experience and expertise, or perhaps even better put, interests and experience can sit simultaneously with a noble Lord. Perhaps uniquely, in what has been an incredibly thought-provoking debate, I seem to be without interest or expertise. However, I have listened with enormous care to the wonderful tutorial that noble Lords have given me. I have read, as have so many other noble Lords, many submissions to which we have had access in this House. Just as I respect the interests and experience of those debating inside this Chamber, I do not think it is completely fair to suggest that everything from outside is, as one noble Lord suggested, noise.
The noble Lord, Lord Faulks, said that there are some real polycentric issues at stake and important, occasionally competing, concerns. I do not accept that all insurers are unscrupulous, nor do I accept that all claims are fraudulent or indeed, that all professional legal practitioners who are trying to do their best for their clients in this area are ambulance chasers. Further, I too have had the benefit of meeting the Minister, so nor do I believe that Her Majesty’s Government are somehow completely captured by the insurance industry in what they are trying to do in this Bill. However, to improve it requires listening to some of the concerns that have been expressed both inside and outside the Chamber.
The Bill addresses its purported targets by—how can I put it?—circuitous routes. It is concerned with, at worst, fraud and, at best, inflation of, for example, whiplash claims. I agree with, I believe, the majority of noble Lords, that compulsory medical reports before settlement must be a good idea. It would be good to see clear provision in the Bill for the cost of such reports to be met by insurers where settlements are made. That seems completely fair, and might be something we could look to. But, essentially, the Bill does not directly deal with fraud.
Another stated target is unscrupulous claims managers and McKenzie friends. Again, there is nothing in the Bill about that public policy problem and social evil. These problems have been pointed out by a number of noble Lords, including the noble Lords, Lord McNally and Lord Hodgson, the noble Earl, Lord Kinnoull, my noble friend Lord Monks and the noble Lord, Lord Faulks. We know that there is some level of problem here; I do not think anyone doubts that.
Another target is the unfairness of overly high insurance premiums. Again, the Bill does not directly regulate insurance premiums. We are told that industry leaders have made a public pledge to pass on the benefits of limiting claims to insured persons, but there is nothing in the Bill at the moment to give teeth to that promise. It would be helpful to so many people to hear from the Minister about the teeth in that promise.
Finally, a target of the Bill is said to be devastating pressures on the NHS, and perhaps on social care, too. Again, this is a very indirect approach towards the devastating pressures on the NHS and on social care in this country at this time. I echo the sentiments of my noble friend Lord Beecham—perhaps other discussions need to be had about the 1948 Act and so on—that that devastating pressure has ultimately to be met with a more honest conversation about taxation with a country that loves its NHS.
Those are the targets. But, instead of the direct approach, the Bill approaches these problems somewhat indirectly. First, in relation to whiplash injuries in Part 1, it does this by limiting damages in a particular class of claims. I have to say that, on a day when there have been very special celebrations in Parliament Square, I was a little sad to notice that I was to be just one of two noble Baronesses speaking in this Second Reading debate. But that disappointment began to fall away when I heard the extraordinary, eloquent and principled speech from the noble Baroness, Lady Berridge. She spoke of the need to hear the voice not of lawyers, insurers or any other professionals and experts but of victims. I can only tell her that we heard that channelled through her voice today, and I am sure that people outside will be very grateful for that. She pointed out with particular clarity the problem of principle in singling out one class of victims—not even a whole class of victims but a class within a class of victims—and saying that they must have their damages limited by the Bill and by regulations under it, as opposed to other victims, who may also be inflating or misstating their claims.
That is a matter of principle and will be a concern for people on the outside who are looking to understand what is behind this legislation. It is important to address that principle if we are to retain the public’s trust in the legislative process and in public policy making. I moved closer and closer to the noble Baroness’s devastating logic when she spoke about the role of the Judicial College and her concerns about why these particular damages should be set by the Lord Chancellor, not by the judges, as with all other tortious damages in our law. The Minister will, no doubt, address her concerns.
The second circuitous route, and a matter of enormous concern expressed on all sides of the House, is the incredibly broad delegation granted to the Lord Chancellor in defining whiplash and then setting the level of damages. The Delegated Powers Committee’s findings on this cannot be easily ignored. We listened to the concerns and I hope we can take them on board in amendments as the Bill progresses. The noble and learned Lords, Lord Hope and Lord Thomas, the noble Lord, Lord Sharkey, and many other noble Lords pointed out that to give the Lord Chancellor the defining power over the problem and then the further power to set the damages is a step to far. It is a precedent that we do not want to set in any Bill. It is a wider constitutional point that applies to this Bill and we do not want to be doing it in future. It is a problem in relation both to the rule of law—and clarity and certainty in law—and to parliamentary sovereignty as opposed to ministerial fiat. I hope that the Minister will take that on board and that there can be further clarity and definition on the face of the Bill.
The third concern that has been expressed is about inequality of arms and, in particular, the effect of combining measures in this Bill with the increase in the small claims jurisdiction. As the noble Baroness, Lady Berridge, pointed out, in practice even amounts of money which are small to the ears of those of us in this Chamber are incredibly important to a lot of people who will hear about, and perhaps read about, this debate. Small amounts of money can be life changing for people. To leave a greater number of people who have been the victims of even relatively minor injuries unrepresented, with no means of recovering costs and, therefore, no means of getting proper representation, is an affront to access to justice. In the civil sphere in particular, that has already been diluted, if not positively undermined, in recent years.
The Bill attempts to nudge victims, even those with quite serious injuries, into becoming slightly higher-risk investors. Some on the outside have suggested that they are to become stockbrokers and have the confidence and expertise to become more adept at investing and managing single lump-sum payments. Noble Lords will have read the argument against that. Equally, the noble Lords, Lord Hodgson and Lord Faulks, and others have pointed to the inescapable logic of the preference for periodical payment orders. Yet there is nothing explicit in the Bill to incentivise those orders, as opposed to encouraging slightly higher-risk investments or discouraging playing it safe. In the case of an ordinary lay person who is not used to managing investments, particularly if they have had a serious personal injury, one can understand the instinct for playing it safe. Again, that was pointed out by several noble Lords. The point about lack of representation was mentioned particularly by my noble friend Lord Monks and the noble Lord, Lord Marks. I agreed with so much of what he said.
It is always worth listening very carefully to the noble and learned Lord, Lord Mackay of Clashfern, on matters of this kind. As I heard references to the discount, the complex nature of this decision, what is being asked of the Lord Chancellor in Part 2 and the prophet-like powers that the noble and learned Lord described, echoed by the noble Lord, Lord Marks, and others, I really thought that we might give further thought to how we could achieve greater clarity, transparency and accountability in the Bill for this incredibly complex decision over which so much might turn for victims and claimants on the one hand, but also, as the noble Lord, Lord Ribeiro, and others pointed out, for the NHS. I hope that on that matter, as well as on so many others in this Bill, there will be real room for the kind of thoughtful debate and constructive collaboration to improve what I believe to be a genuine attempt to balance a number of important societal interests.
Lord Keen of Elie
My Lords, I thank the whole House for all the contributions on the Bill today. I might not answer every query posed during this stage of consideration, but—and I hope this reflects the steps that we have taken already—I would be perfectly open to, and would welcome, meeting any of your Lordships who wish to engage with me and officials prior to Committee to discuss particular issues. That is an invitation I hope at least some noble Lords will consider taking up if they have any queries.
Clearly, there are different views about the state of the Bill at this stage, but I could not accept the observation made by the noble Lord, Lord Cromwell, that it is rough-hewn. Respectfully, it appears to me that a great deal of work has been done to prepare for the issues that we shall have to address. I will look at those issues in two parts, as does the Bill, and begin with whiplash.
The noble Lord, Lord Beecham, took issue with some of the statistics and suggested that perhaps matters had turned, but let us be candid. I shall not use some of the terminology used by noble Lords about a racket or anything else. What we have is a very obvious and clear trend in the development of claims for road-traffic-based whiplash injury. It has been going on for more than 10 years. The consequences are very clear and obvious; it may well be that we should have considered acting sooner to address this issue, but act we must and that is what we intend to do.
The New England Journal of Medicine recently carried out an analysis of the incidence of whiplash injury and the availability of compensation. It discovered a very obvious correlation between the availability of compensation and the incidence of whiplash claims reported in road traffic cases. The noble Earl, Lord Kinnoull, observed that when he attended meetings with the reinsurers Munich Re in Germany it had alluded to the situation in the United Kingdom, which is quite exceptional. Unless Scandinavians have much thicker necks than us in this part of the world, there is little to conclude except that a claims culture has developed, because the incidence of these claims in that part of the world is very different from our own.
We therefore have to address how these claims will be contained in the wider public interest and, ultimately, in the consumer interest. However, I do not suggest that any one part of the community is wholly or solely to blame for the situation we now find ourselves in. For example, I do not demur from the suggestion that insurers have been complicit in the development of this claims culture over the past 10 years or more in their willingness to avoid undue expense and simply to settle claims without the necessity for any form of real evidence. Many noble Lords have experience of that themselves.
However, there is some rationale to the way in which we are attempting to approach this matter, and it includes the reference to proposed changes in the small claims limit as well. The idea of a tariff is not entirely novel; such an approach has already been taken in Italy and in Spain, where they faced a similar claims culture. We are, first, bringing together a tariff and, secondly, making it a requirement that no claim can be settled without a medical report, or MedCo report. I discern that there is almost universal approval for that step. Thirdly, we have agreed that the claims portal for small claims will be reviewed, which the noble Lord, Lord Marks, suggested would be required, to make it accessible to claimants themselves when they come to make claims. It will of course be simpler for them to make that claim in circumstances where they know that there is, beyond the issue of liability, a tariff that determines the damages for pain and suffering. I emphasise those damages because this does nothing in respect of the claims for wage loss and other outgoings incurred by claimants in the circumstances.
I will also take up a point mentioned by the noble Lord, Lord Marks, with regard to the cost as compared with the tariff of damages at the very lower end. I understand that where liability is accepted, the cost of the MedCo report will be a relevant recoverable cost, no matter whether this is in the small claims court or otherwise. Another question that has been raised is how the original cost of the MedCo report is funded, and we are looking at that and discussing it with interested parties at present. However, there will be no material issue over the recovery of the MedCo report cost itself, which the noble Lord identified as in the region of £180 plus VAT.
That, then, is the background. There are other potential targets. The noble Lord, Lord Beecham, referred to the conduct of claims management companies, and I will say a little about that. As noble Lords will be aware, we are already taking steps through the Financial Guidance and Claims Bill, which is making its way through the other place, to address some of the difficulties that arise with regard to claims management companies. First, their regulation will go to the FCA. As the noble Earl, Lord Kinnoull, observed, that is a regulator with teeth, and we consider it properly positioned to deal with claims management companies. There will also be the means to limit the percentage that claims management companies can take from a claimant when they deal with a claim, to try to control their activities in that regard.
We have of course been concerned with the issue of cold calling, which I suspect has bedevilled virtually all of us at one point or another. The Information Commissioner is concerned with that as well. One of the difficulties, and this was touched upon in the course of debate, is how to regulate the unregulated. One of the real difficulties is that in the context of cold calling, we have seen the claims management companies, or those who carry out this cold calling, move out of the United Kingdom and carry out this conduct from abroad. It is a very simple thing for them to do, and it is a very difficult thing for us to stop. That is why you have to look at alternative routes to addressing the wider issue that we have to deal with. We are certainly concerned that we need to control the activities of the claims management companies, although they alone are not responsible for the way in which this whole industry of whiplash claims has developed.
I notice that the noble Lord, Lord Monks, who I appreciate is not entirely sympathetic to the Government’s position on this, did make a passing remark in the context of other claims, such as workplace claims. He said the abuse was a lot less than in road traffic accident cases, but implicitly he accepts the existence of abuse in the context of RTA cases, and I believe that is almost universally acknowledged. We seek to address that in Part 1 of the Bill. We consider that we are taking a proportionate approach. Yes, it distinguishes whiplash-type injuries that occur in a road traffic context from other forms of accident or injury, but that is because we have to address a particular mischief. That is what we are doing with Part 1 of the Bill. It appears to us that this is the sensible and considered way forward in order to control this situation.
I note that the Delegated Powers Committee has made a number of recommendations with regard to Part 1 of the Bill. We do not entirely agree with its recommendations, but I have noted the concern expressed by noble Lords about the question of defining whiplash injury. The intention was to have a degree of flexibility, so that if the claims industry developed in a particular direction in response to legislation, we were equipped to deal quite rapidly with that. It may be that noble Lords would like to see rather more in the way of definition so far as whiplash is concerned, and I take on board the observations that have been made.
There is also the question of the tariff, and of course an illustrative tariff was provided in the papers that were produced along with the original Bill and to which reference has been made. We consider that being able to regulate the tariff by the affirmative procedure is a more flexible way of being able to respond to changes. But, again, I hear what noble Lords say and we will have to consider that going forward.
I would like to respond to a number of points made by the noble Lord, Lord Sharkey. First of all, I hope I have made clear that medical report costs are recoverable. There was a suggestion that they were not. He referred to the position of other parties such as cyclists being caught, but they are not brought within the tariff on the basis of Part 1 of the Bill. To answer that particular point, they are specifically excluded at Clause 1.
I would like to move on to Part 2, the question of the discount rate, and address a number of points. First of all, it appears to be generally understood that we do need to put in place a means by which the discount rate can be determined and reviewed on a regular basis in order that we do not encounter the sort of situation we had in 2017, when we saw it go from 2.5% to minus 0.75%. I wholly agree with the observations of the noble Earl, Lord Kinnoull, that the present discount does not realistically reflect the way in which a party—any party—is going to invest funds going forward. Therefore, we have to bring this back into a realistic scenario.
The objective—here I address a number of points made by the noble Lord, Lord Cromwell—is not to have representatives of various interested parties partaking in an exercise of trying to agree a rate. The whole point of the structure in Part 2 is that there should be an expert panel, not a representative panel. The noble Lord asked about there being a fair balance of representation on the panel, but that is not the intention or the objective. The idea is that we should have an expert panel to advise the Lord Chancellor.
The intention is that that should be an open exercise so that, for example, the way in which the expert panel reports to the Lord Chancellor will be open. Indeed, in our response to the Justice Select Committee, the Lord Chancellor observed that he would be publishing the recommendations of the panel’s report in circumstances where he received it and was to act upon it. In due course, he will also be required to explain the way in which he fixes the discount rate. Indeed, he will be amenable to judicial review in carrying out that function, so that there will be ultimately an oversight of the way in which he discharges that duty. We consider it appropriate that that should be done openly and effectively in that way.
Clearly, it will be important that the discount rate should be reviewed at regular intervals. We have alighted upon the period of three years for review after considering various representations, but I have heard the references to five years as a review period and the interesting alternative mentioned by the noble Lord, Lord Marks, of essentially having an expert panel meeting at regular intervals to consider whether there are circumstances that might require a proper review of the discount rate. We would be open to discussing these alternatives to see how we can effectively ensure that the discount rate continues to reflect the reality of investment.
On the point of investment, I believe there is general consensus that we should move from the very-low risk level to the idea of a low level of risk for investment. That is not to suggest that claimants are going to become stockbrokers—I really do not feel that that is a proper reflection of the situation at all. The intention in Part 2 of the Bill is to bookmark the place in which the expert committee will address the question of how the discount rate should be fixed. It is to give the panel a degree of flexibility in that context between, at one end, very low risk and, at the other end, low risk by an investor who is not concerned about having to provide for their future care.
On the question of future care, which arises most particularly in the context of clinical negligence cases and the subsequent cases of severe injury that very often arise from that, there is always the difficulty of determining not only what the appropriate discount should be but, as noble Lords have observed, what life expectancy may be. That is always an estimate. You could almost say that you invariably get it wrong; you can never be sure that you have got it right. That is why we consider that PPOs are a very important option available to claimants. Looking at the data that has been gathered in arranging guidance for the Bill, we have noted that their use is essentially limited to cases where claims exceed £1 million, and more generally £5 million. They are not always taken up, and one of the problems with the present discount rate is that it would tend to discourage claimants and their advisers from taking up PPOs. But clearly, if you want certainty with regard to future care, one way to secure it is to agree to a PPO, and we would wish to encourage them.
We have to underline, however, that PPOs are not universally available. For example, I understand that the Medical Defence Union, which is a mutual, is not in a position to guarantee future payment of a PPO and therefore not in position to provide them. However, that may alter as we look at the question of indemnity arrangements—for example, in respect of general practitioners—which we are doing at the present time. We certainly wish to encourage the use of PPOs and are looking at providing guidance to claimants and their advisers, in order to ensure that they are taken up in appropriate circumstances.
One further issue that has been raised by a number of your Lordships is Section 2(4) of the 1948 Act. We recognise the question that is being raised about this and the appropriateness of maintaining that. Presently, Section 2(4) of the 1948 Act would not fall within the scope of the Bill. I appreciate that, if we were to amend the long title of the Bill, we might be able to bring the matter within scope, but there is a concern that the repeal of Section 2(4) potentially raises issues that will have to be the subject of consultation with interested parties. We are concerned that we need to act promptly, particularly with regard to the discount rate, and it would be unfortunate if that process was materially slowed because of an attempt to bring Section 2(4) and its repeal into the present Bill. I hear what noble Lords have said and am not unsympathetic to the suggestion that the time has come to revisit that provision and understand why we need to maintain it. My concern is that attempting to bring it into the Bill at this stage could have unfortunate consequences for the way in which we are trying to deal with the discount rate.
On that last point, I appreciate the concern about the delay in respect of the discount rate. We are proposing to carry out the first review as swiftly as possible. I understand that we are aiming for April 2019, not 2020 as has been suggested. There is a 90-day period and then a 180-day period. There is a need to have an expert panel in place, but considerable steps may be taken in anticipation of the Bill passing to ensure that we have the machinery in place for the swift appointment of an expert panel, so that the review can be carried out as soon as possible. I will take further advice from officials on the question of how far we can go with that sort of preparation prior to Royal Assent of the Bill, in order to move swiftly on that matter.
I appreciate that I have not addressed all of the queries that have been raised this afternoon. In the time available, I regret that I will not be able to do that but, as I said at the outset, I am open to meetings with noble Lords who wish to raise questions on the Bill prior to Committee, and I would welcome the opportunity to engage with them. I beg to move.
Capita
(6 years, 2 months ago)
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Lord Young of Cookham (Con)
My Lords, with the leave of the House, I shall repeat in the form of a Statement the Answer given earlier today by the Parliamentary Secretary to the Cabinet Office to an Urgent Question in the other place.
“Mr Speaker, I welcome the opportunity to come to the House to update it on Capita’s announcement yesterday. This covered its 2017 full-year results, the launch of a £701 million rights issue and an update on its transformation programme. As I have said repeatedly, private companies can answer for themselves but the Government’s priority is the continued delivery of public services. As we demonstrated with respect to Carillion, we have continued to deliver public services without interruption.
The House will recall I came here in February when Capita initially announced the rights issue; Capita confirmed yesterday that it is proceeding in line with that previous announcement. The House may be interested to know that Capita announced in its statement yesterday that its underlying profit before tax was £383 million for 2017, in line with market expectation. It made a contribution of £21 million to reducing its pensions deficit and as a result of this announcement the share price rose by more than 10% on the day.
Capita’s board and auditors have confirmed that the company will continue to have adequate financial resources to deliver on its obligations, supported by its rights issue and other steps designed to strengthen its business. The rights issue is underwritten and the required shareholder vote will take place in early May. The management has confirmed that the key shareholders fully support its plan. In addition, the company has suspended dividends until it begins to generate positive cash flow. It expects to generate at least £200 million in free cash flow in 2020. The impact of this has been to reduce dividends and shareholder returns in favour of other stakeholders. This is evidence of shareholders, not the taxpayer, taking the burden.
I understand that noble Lords remain concerned about outsourcing companies following Carillion’s liquidation. However, Capita has a different business model and a different financial situation from Carillion. It is not a construction business and has minimal involvement in PFIs. The measures that Capita has announced are designed to strengthen its balance sheet, reduce its pensions deficit and invest in core elements of its business. Arguably, these measures may have prevented Carillion getting into the difficulties that it did. It remains the case, as I said when I came to the House in February, that neither Capita nor any other strategic supplier is in the same position as Carillion, but I would like to reassure the House that officials in my department continue to engage regularly with all strategic suppliers. It is in the taxpayer’s interest to have a well-financed and stable group of key suppliers, so we welcome the moves that the company is making”.
Lord Hunt of Kings Heath (Lab)
My Lords, I am grateful to the Minister for repeating that Answer. I think that this is the third occasion on which he has come to the House to discuss these issues, twice in relation to Carillion and now in relation to Capita. It is striking that from the Government’s point of view, Capita is one of the limited number of companies which are privileged to have large government contracts, yet it is interesting to note that the boss of Capita admitted today that the company has no long-term strategy at all. That, to say the least, is a little worrying.
I would also say to the noble Lord that Capita’s record is, at best, patchy. When I mention the messed-up management of the dental register which left hundreds of dentists standing idle, its failure to maintain the Primary Care Support England service which supervises GP and patient records, and failing on the Army recruitment contract, one questions why this Government in particular are so wedded to giving yet more contracts to this company and similar ones. I hear what he has said about Capita being a different model and having a different structure from Carillion, and he said that shareholders will be taking the burden, but I still think I am right to ask him what contingency plans Ministers have put in place to deal with possible defaults on these contracts. Also, can he confirm that improvement plans have been agreed with Capita since its string of profit warnings and yesterday’s financial statement?
The noble Lord said that it is of strategic importance for the Government to have, I think by implication, contracts with a limited number of providers. However, the other side of the coin is that if we have a domino effect—first Carillion, then Capita—a huge swathe of government contracts will be put at risk. Is it right that so much government work should be put in the hands of a very limited number of companies? I would also like to ask whether he agrees that this excludes SMEs from many prime contracts. They have to subcontract with these principal contractors, but we know what happened with Carillion. Carillion was a very late payer and as a result, many SMEs went bust due to its collapse. What is the Government’s approach to SMEs and can we ensure that they get a fair crack of the whip?
Lord Young of Cookham
I am grateful to the noble Lord, Lord Hunt, for his questions. I will try to answer all of them. On the question of a strategic approach, he will know that a new chairman, Ian Powell, was appointed last year and a new chief executive, Jon Lewis, in December. Jon Lewis has made it clear that he is in the process of putting together what he calls a “transformation programme”. Yesterday’s announcement was part of that process. The market’s response shows that it now has confidence in the new leadership team at Capita.
The noble Lord then asked why the Government are wedded to Capita. I have looked at the major central government contracts that have been awarded to Capita: 20% were awarded by the last Labour Government, just over 50% by the coalition Government and the balance by the current Government. So, it is not the case that we are more wedded than previous Administrations to the concept of using private providers and outsourcing contracts to get the best value for money. Appropriate contingency plans are in place for each contract. They depend on the nature of the contract—that is, whether others could immediately take over if there was a problem. Major contracts have terms that give contracting authorities the freedom to act in the event of supplier failure, including financial distress. I assure the noble Lord that appropriate contingency plans are in place for these contracts.
Turning to the noble Lord’s question about small providers and SMEs, the Government are anxious to break up these large contracts wherever possible to enable more SMEs to bid for them. During the Easter Recess, the Minister announced a whole raft of measures designed to boost opportunities for small businesses to gain government work. He is right to point out how important SMEs are. They provide 16 million jobs in this country and we are committed to ensuring that they are treated fairly by large suppliers. The Government have a target of HMG spend on SMEs. It was 25% but is now 33%, so I think we are at one on that issue.
On paying subcontractors promptly, Capita is currently paying 80% of invoice value to SMEs within 30 days and has plans to raise that to a higher percentage. I hope that deals with the thrust of the noble Lord’s questions.
Lord Wallace of Saltaire (LD)
My Lords, are the Government considering an overall review of the privatisation and outsourcing process? This is not just about Carillion and Capita. I have been reading about the problems that Serco has been going through and the recovery programme that it is now undertaking. I have been reading a little about the problems that G4S has had over the past few years in delivering some of the services it promised. There seems to be an underlying problem of large and diverse outsourcing companies, which are extremely good at drawing up contracts, managing to crowd out SMEs.
When I was a Minister, I remember being told that SMEs lose out because they are not as good at preparing contracts and spending the money in presenting them—so they end up as the subcontractors—and that we are therefore facing an oligopoly of diverse, major companies that successive Governments have allowed to grow, as the Minister said. What can be done to encourage more SMEs to become prime contractors? If I may say so, allowing more local authorities to take responsibility would help a great deal because more local suppliers would then be able to do so. The centralisation of these diverse outsourcing companies means that decisions are taken in London and small outsourcing companies in Leeds, Manchester and elsewhere end up as subcontractors. That is very bad for local enterprise. Are the Government now considering an overview of the sector and considering that competition policy needs to be rather more active here?
I have one final comment. I am very conscious that there is a problem of oligopoly in a number of sectors, with accountancy being a major example. Do we not need now to break up some of these oligopolies?
Lord Young of Cookham
There is nothing ideological about this. Governments of all persuasions have found that outsourcing certain activities enables them to focus on the key functions of government. A recent survey by the CBI showed that overall there was a saving of roughly 11% by going through the process of outsourcing activities, engaging competitive markets and awarding the contract to the contractor best able to meet the objectives.
I entirely agree with what the noble Lord said about SMEs. I think there is a contract with HMRC which, when it came to an end, we broke down into component parts. As I said in response to the noble Lord, an additional measure that we have taken is that, when a main contractor is slow in paying the subcontractors, that main contractor will be deleted from the opportunity to bid for future contracts. That is a good example of the steps that we are taking.
Subcontractors will have greater access to buying authorities to report payment performances, and suppliers will have to advertise subcontracting opportunities on the Contracts Finder website. Without repeating what I said a moment ago, we have a target of driving up from 25% to 33% the percentage of government spend with SMEs on these major contracts.
Lord Carlile of Berriew (CB)
My Lords, can the Minister confirm that, as Capita refreshes itself and restructures, the Government will be totally intolerant of any attempt to reduce the standard of services for which Capita has contracted? If Capita attempts so to do, will the Government prioritise finding new contractors to undertake those services, including SMEs?
Lord Young of Cookham
The Government will hold Capita, and indeed other suppliers, to the terms of their contract and take appropriate steps if those terms are ever broken.
Lord Faulkner of Worcester (Lab)
My Lords, would it be helpful if the House were reminded of what the Companion says about procedure on Urgent Questions? They are treated as Private Notice Questions, which in turn are treated as similar to normal Oral Questions. In particular, the answers and supplementary questions on a Private Notice Question must be brief to allow as many people as possible to come in.
Lord Young of Cookham
If that was a rebuke to me, I am glad. I plead guilty, and I am sure that will have been noted. I will be as quick as I can with the responses to the following Urgent Question.
Local Elections: Voter ID
(6 years, 2 months ago)
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Lord Young of Cookham (Con)
My Lords, with the leave of the House I should like to repeat an Answer to an Urgent Question given in the other place yesterday by the Parliamentary Secretary at the Cabinet Office. I apologise in advance if it is somewhat longer than it would normally have been. The Answer is as follows:
“The British public deserve to have confidence in our democracy. There is clearly the potential for electoral fraud in our system, and that undermines confidence and promotes perceptions of vulnerability. When fraud is committed in elections, it is not a victimless crime. People’s votes are stolen, or someone is elected who should not have been elected.
Earlier this year the Government announced that they would be conducting pilots for voter identification at the local elections in May this year in line with our manifesto commitment to legislate to ensure that a form of ID must be presented before voting.
Voter ID is part of the Government’s commitment to improve the security and the resilience of the electoral system that underpins our democracy and will promote greater confidence in our democratic processes. In making these changes, we will bring our electoral system in line with others, such as that in Northern Ireland or Canada, which operate successful programs and recognise that there is an increasing expectation that someone’s vote should be protected and carefully guarded.
We already ask that people prove who they are in order to claim benefits, to rent a car or even to collect a parcel from the post office, so this is a proportionate and reasonable approach. Democracy is precious, and it is right to take that more robust approach to protect the integrity of the electoral process.
Since 2014, the independent Electoral Commission has pushed for the introduction of ID to strengthen the system, and it has welcomed the voter ID pilots as a positive first step towards implementing its own recommendation that an accessible, proportionate voter identification scheme be introduced in Great Britain. In a recent report for Democratic Audit UK, academic Stuart Wilks-Heeg stated that after the scheme was introduced in Northern Ireland there was no evidence to suggest a fall in turnout but that there was plenty of evidence that fraud declined sharply.
Indeed, it was the previous Labour Government who introduced photo ID at polling stations across Northern Ireland in 2003. As I have said, it has not affected turnout there and it has helped to prevent election fraud. The Labour Minister at the time said:
‘The measures will tackle electoral abuse effectively without disadvantaging honest voters’,
ensuring that,
‘no one is disfranchised’.—[Official Report, Commons, 10/7/01; col. 739.]
The opportunity to pilot voter ID in May 2018 was offered to all local authorities in Great Britain, and five—Woking, Gosport, Bromley, Watford and Swindon —have committed to do so. Proxy voters in Peterborough will also be required to show ID before they can vote on 3 May 2018. The Minister for the Constitution has taken the opportunity to speak to each local authority about the design of their pilots and the methods that they have applied to ensure that their electors are aware of voter identification and that each elector’s needs are understood. Local authorities will notify every eligible voter by including information of the ID requirement on their poll card.
No one will need to buy ID documents to be able to vote, and the ID requirements will not be limited to a passport or driving licence. In the pilots, voters can use a wide variety of ID, from marriage certificates and passports to bus passes and bank cards, depending on where they live. If voters do not have the required ID, local authorities are providing alternative or replacement methods to ensure that no one is disenfranchised. Everybody eligible to vote will have the chance to do so.
The pilots will help to identify the best way of implementing voter ID, and we look forward to each authority’s findings. The Minister for the Constitution has responded to the recent letter from the chair of the Equality and Human Rights Commission, and a copy has been made available in the Library of both Houses. All the local authorities involved have completed equality impact assessments, and the Electoral Commission will independently evaluate the pilots, with results published this summer.
We want to ensure that our elections are as accessible as possible and that there are no barriers to democratic participation. We have recognised that, for example, people with a disability face different issues when registering and voting. We have run a call for evidence to hear directly about their experiences to enhance the Government’s understanding so that we can help those people to register and cast their vote. We have also recently made it easier for survivors of domestic abuse to register to vote anonymously for fear of revealing their address to an ex-partner, as there were fears that that was preventing survivors registering to vote.
The aim of the pilots is to protect voting rights, and it comes in the context of protecting and improving our democracy. Pilots are important in order to find out what works best. Electoral fraud is unacceptable on any level, and its impact on voters can be significant. It takes away an elector’s right to vote as they want, whether through intimidation, bribery or impersonating someone in order to cast their vote. The Cabinet Office, in partnership with the Electoral Commission and Crimestoppers, launched the Your Vote is Yours Alone campaign only last month to encourage people to report electoral fraud if they see it.
The impact of electoral fraud is real and it is criminal. It steals something precious from a person and undermines the entire system for everyone. I do not want to see our democracy dumbed down; it is rather a shame that the Labour Party appears to”.
Lord Kennedy of Southwark (Lab Co-op)
Ensuring our elections are safe and secure is an important duty, and one which I fully support. Will the noble Lord, Lord Young of Cookham, say a bit more about the evaluation process? I hope that he can confirm that a speedy decision will be taken by the Government after the pilots have been evaluated, as we need simple but effective measures to ensure the integrity of the electoral process and to ensure that we do not get in the way of enabling people to cast their vote, which is the other side of the same coin and an important part of their playing their role as citizens of the UK.
Lord Young of Cookham
I am grateful to the noble Lord. There will be an independent statutory evaluation of the pilots conducted by the Electoral Commission. That will be published by the end of July, and it will inform the ensuing debate.
Lord Tyler (LD)
My Lords, we recognise the validity of the concerns of the EHRC, but we should know by the summer whether the Government were correct in their assessment or whether those concerns were legitimate. Meanwhile, what exactly are the new safeguards to prevent electoral fraud in postal and proxy voting that are being tested in the three pilot areas referred to by the Minister in the Commons yesterday? The Minister also assured my Liberal Democrat colleague there that the number of registered electors who are not permitted to vote in person, for lack of appropriate ID, will be recorded and reported. What will happen if that number exceeds the margin of victory in a particular ward?
Lord Young of Cookham
The noble Lord is quite right: three local authorities are piloting new procedures for voter ID on postal votes—Tower Hamlets, Peterborough and Slough. I said a little about that in my opening remarks. Some local authorities are not only making people more aware of the incidence of electoral fraud and encouraging them to report it where necessary to Crimestoppers, but are following up after the election—contacting certain electors who have used the postal vote—to make sure that nothing improper has taken place.
With regard to turning up at a polling station and not being able to vote, in one local authority—I think it is Swindon—if you do not have the necessary documentation on polling day you can take along someone called an “attester”, who has the necessary documentation and is registered in the same ward, and if the attester vouchsafes your identity you can then vote.
Lord Campbell-Savours (Lab)
Is the Minister aware that during the proceedings on the Electoral Administration Bill on 21 March 2006, in col. GC 94, some of us proposed an alternative to electoral registration in a scheme similar to the pilots currently proposed by the Government? There was, however, a crucial difference: individual local authorities could apply for permission to run voter ID control schemes only if they believed that they had a particular problem with electoral fraud. With the Government now proposing pilots with a view to a national rollout, in addition to existing electoral registration schemes, which are already costing us millions—a fortune and, in my view, a waste of money—will not more money be wasted on a problem that affects only a very small number of local authorities?
Lord Young of Cookham
I was not in your Lordships’ House in March 2006—I was elsewhere—so I do not recall that intervention. However, the noble Lord made a similar intervention when we debated a statutory instrument on the combined authorities order 2017. We are not minded to adopt the proposals that he has referred to. Any incidence of electoral fraud is unacceptable. The independent Electoral Commission have been pressing for voter ID since 2014; the Eric Pickles report that looked at the wider incidence of voter fraud recommended it as part of the way forward; and I think that this is the right way. I notice that when we debated the measure in Grand Committee there was broad support for the Government’s approach, with a notable dissenting intervention by the noble Lord.
Lord Hayward (Con)
Would my noble friend consider, when he reviews the effectiveness of ID in voting systems, consulting the Labour Party? In selection meetings the Labour Party requires two forms of ID: one photo ID and one proof of address. It goes on to say, “It is rare that members have no form of ID”. That is a direct quote from the Tottenham Labour Party, but it applies—does it not?—to many other Labour constituency parties: they have experience and expertise that the Government could well draw on.
Lord Young of Cookham
I am very grateful to my noble friend. The chances of my presenting myself at a selection meeting for the Labour Party, when it chooses a new candidate, are small. However, my noble friend makes a valid point: people are now accustomed to being asked for various forms of ID during the normal course of their daily lives, so there should not be a problem as we introduce these pilots for voter ID in a few local authorities.
Baroness Corston (Lab)
My Lords, when I was in the other place representing Bristol East, I was one of the few Members who conducted a constituency-wide consultation on identity cards when they were proposed by the then Labour Government. There was a mix of replies and we then held a consultation with the Minister, Beverley Hughes—now my noble friend Lady Hughes. The people who were most in favour of identity cards were women from our ethnic minority communities, who said to us in terms that they had no access to their passports and no bank accounts; some of them were not even allowed to have a library card. This also applied to replies from another women’s organisation, representing women who were subject to coercive control. They all said, “I do not have any means of identity, and no man in my family will allow me any”. Perhaps the Minister will tell me how women like that will be able to vote because they will not turn up if they think that they will be turned away.
Lord Young of Cookham
The noble Baroness makes a valid point. Local authorities are implementing equality impact assessments and working with partners to ensure that voter ID does not risk preventing any eligible voter from voting. The noble Baroness has raised an important issue, and when the Electoral Commission evaluates the impact of the pilots, I will make sure that it takes on board the specific issue she raises.
Lord Rennard (LD)
My Lords, the Minister will be aware that when you go along to a polling station to cast your vote but find that somebody has stolen it and impersonated you, you would be issued with a tendered ballot paper. Those are then kept separately in discrete envelopes and used if necessary—because the result of the count is so close—when somebody has to adjudicate whether or not that is a valid ballot paper. This process indicates what level of impersonation takes place at polling stations, so can the Minister tell us how many tendered ballot papers have been issued in any of the recent national elections? Does he also accept that perhaps the best deterrent against impersonation at polling stations is the presence of a uniformed police officer, as used generally to be the case?
Lord Young of Cookham
I am not sure that the presence of a uniformed police officer would guarantee the absence of impersonation in every case. The steps that we are taking in line with the recommendation of the Electoral Commission are the right way to go. The noble Lord asked a specific question; the answer to it is not in the folder in front of me, but I will endeavour to get it and write to him.
Lord Bassam of Brighton (Lab)
My Lords, can the Minister perhaps give us some advice on the terms of reference and the way in which the Electoral Commission will produce its report? One of the particular concerns being expressed on our Benches is that voter ID schemes will be used to depress turnout. Will an evaluation of the impact on turnout come through from this study and, in particular, will the Electoral Commission look at that issue and compare, say, Peterborough with adjacent areas that do not have the obligation to produce voter ID when people go to vote?
Lord Young of Cookham
Not only will the Electoral Commission be able to do that—I am sure that it will—but anybody could look at the turnout. As I said in my opening Statement, there is no evidence in Northern Ireland or in many other countries that have moved over to voter ID that this has depressed turnout.
Yemen
(6 years, 2 months ago)
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The Minister of State, Department for International Development (Lord Bates) (Con)
My Lords, with the leave of the House I will repeat in the form of a Statement an Answer to an Urgent Question on Yemen given by my honourable friend Harriett Baldwin in another place earlier this afternoon. The Statement is as follows:
“The UK is deeply concerned by the humanitarian crisis in Yemen, the largest in the world. Over 22 million people—more than three-quarters of the population—are in need of humanitarian assistance. The UN estimates that 17.8 million people in Yemen do not have reliable access to food and that 8.4 million face extreme food shortages. Last year, the country suffered the worst cholera outbreak ever recorded in any country in a single year.
At the Yemen pledging conference in Geneva earlier this month, the Minister of State for the Middle East announced £170 million of support to Yemen this year. This funding will meet the food needs of 2.5 million Yemenis. Last year, the UK was the second-largest donor to the UN’s humanitarian appeal for Yemen. Our funding provided over 5.8 million people with at least a month’s supply of food, nutrition support for 1.7 million people, and clean water and sanitation for approximately 1.2 million people, but money alone will not be enough. We must see sustained progress on the response to this year’s cholera outbreak. We must see payment of public salaries to millions of civil servants and their dependants, and we must see unhindered humanitarian access into Yemen. The UK has led the way here too, lobbying and advising all parties to make the life-saving steps to prevent further deterioration of this crisis.
We are aware of reports over the weekend of significant civilian casualties resulting from coalition airstrikes. We take these reports extremely seriously. The Saudi-led coalition has confirmed that it will carry out an investigation. It is essential that this happens without delay, the results are published, and that lessons are learned and acted upon. Our hearts go out to the families of those killed. We call upon all parties to comply with international humanitarian law.
A political settlement is the only way to bring long-term stability to Yemen and to address the worsening humanitarian crisis. The Yemeni parties must engage constructively and in good faith to overcome obstacles and find a political solution to end the conflict”.
Lord Collins of Highbury (Lab)
My Lords, I thank the Minister for repeating that response to the Urgent Question asked in the other place. Clearly, Saudi Arabia has the right to protect its territory and its people from the missile attacks witnessed in recent weeks, but this does not excuse the targeting of innocent civilians. Despite UK training to the Saudis on international humanitarian law compliance, we have seen the rate of civilian casualties increase.
UN special envoy to Yemen, Martin Griffiths, said at the Security Council that if intensive operations were launched in Al Hudaydah, one of the main entry points for aid, it would, as he put it,
“in a single stroke, take peace off the table”.
If an attack on Al Hudaydah were to go ahead, causing an already horrific humanitarian situation to get worse, what measures, apart from condemnation, would the Government take to bring pressure on the Saudis? Surely, these are the circumstances when the suspension of arms sales must be considered.
Lord Bates
The noble Lord is absolutely right to say that there is never any excuse for this. There is a joint incident assessment team in the Saudi-led coalition which investigates these incidents and produces reports, 55 of which have already been published. But we have been very clear at the UN in our most recent wording and language. The UK is the penholder at the UN Security Council on the Yemeni issue and we are urging restraint on the part of Saudi Arabia, particularly in the context that the noble Lord is referring to. For that to happen, it is also very important that the Houthi rebels, in this context, do not perpetuate or worsen the situation by continuing their missile strikes into Saudi Arabia. So, it is a very complex and fast-moving situation. We do not want it to deteriorate further and we are actively engaged at a humanitarian level, and very much at a diplomatic level.
Lord Wallace of Saltaire (LD)
My Lords, I am conscious that an already poor humanitarian situation has been exacerbated by the conflict, and by the blockade. Can the Minister tell us a little bit about the blockade of the ports which US and Saudi ships have been involved in, and how far that now has been lifted?
Can he also tell us about the consultations we are having with the Emiratis who, after all, alongside the Saudis, are major players in every single way in Yemen? I received a note from the UAE embassy in London about the humanitarian assistance to Yemen the other day. Clearly, they have major local responsibility, so can he assure us that we are working as closely with them and criticising when we think it is necessary?
Lord Bates
I shall respond by giving a bit more information. Yemen imports 90% of its food and almost all its fuel. The level of imports remains insufficient. The UK has been responding to this by sending DfID experts and funding experts, particularly to Djibouti, to help to speed up the process of verification of shipping. As a result, over the past year the level of shipping that has been cleared to enter Yemeni ports has increased from 8% to around 70%—around tenfold—and we welcome that. We are funding to the extent of £1.3 million the UN verification inspection mechanism. These are all very important steps to ensure that urgent humanitarian support gets in.
Windrush Generation
(6 years, 2 months ago)
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The Minister of State, Home Office (Baroness Williams of Trafford) (Con)
My Lords, with the leave of the House I will repeat a Statement made in the other place by my right honourable friend the Home Secretary.
“From the late 1940s to the early 1970s, many people came to this country from around the Commonwealth to make their lives here and help to rebuild Britain after the war. All Members will have seen the recent heart-breaking stories of individuals who have been in this country for decades struggling to navigate an immigration system in a way that they should never, ever have had to. These people worked here for decades. In many cases, they helped to establish the NHS. They paid their taxes and enriched our culture. They feel British in all but legal status, and this should never have been allowed to happen. Both the Prime Minister and I have apologised to those affected, and I am personally committed to resolving this situation with urgency and purpose.
Of course, an apology is just the first step we need to take to put right the wrong that these people have suffered but, before I get on to the steps that we will be taking, I want to explain how this situation has arisen. The Immigration Act 1971 provided that those here before it came into force should be treated as having been given indefinite leave to enter or remain in the UK as well as retaining a right of abode for certain Commonwealth citizens. Although HMS “Windrush” docked in the port of Tilbury in 1948, it is therefore everyone who arrived in the UK before 1973 who was given settlement rights and not required to get any specific documentation to prove those rights. Since 1973 many of the Windrush generation would have obtained documentation confirming their status or would have applied for citizenship and then a British passport.
From the 1980s, successive Governments have introduced measures to combat illegal immigration. The first NHS treatment charges for overseas visitors and illegal migrants were introduced in 1982. Checks by employers on someone’s right to work were first introduced in 1997, measures on access to benefits in 1999 and civil penalties for employing illegal migrants in 2008. The most recent measures in the immigration Acts of 2014 and 2016 introduced checks by landlords before property is rented and checks by banks on account holders.
The public expect us to enforce the Immigration Rules approved by Parliament as a matter of fairness for those who abide by the rules, and I am personally committed to tackling illegal migration because I have seen in this job its terrible impact on some of the most vulnerable in our society. However, these steps intended to combat illegal migration have had an unintended and sometimes devastating impact on people from the Windrush generation, who are here legally but have struggled to get the documentation to prove their status. This is a failure by successive Governments to ensure that these individuals have the documentation that they need, and that is why we must urgently put it right. It is abundantly clear that everyone considers people who came in the Windrush generation to be British, but under the current rules this is not the case. Some people will have indefinite leave to remain, which means they cannot leave the UK for more than two years and are not eligible for a British passport. That is the main reason why we have seen the distressing stories of people leaving the UK more than a decade ago and not being able to re-enter.
I want to enable the Windrush generation to acquire the status that it deserves—British citizenship—quickly, at no cost and with proactive assistance through the process. First, I will waive the citizenship fee for anyone in the Windrush generation who wishes to apply for citizenship. This applies to those who have no current documentation and to those who have it. Secondly, I will waive the requirement to carry out a knowledge of language and life in the UK test.
Thirdly, the children of the Windrush generation who are in the UK will, in most cases, be British citizens. However, where that is not the case and they need to apply for naturalisation, I shall waive the fee. Fourthly, I will ensure that those who made their lives here but have now retired to their country of origin are able to come back to the UK. Again, I will waive the cost of any fees associated with this process and will work with our embassies and high commissions to make sure people can easily access this offer. In effect, that means that anyone from the Windrush generation who now wants to become a British citizen will be able to do so, and that builds on the steps that I have already taken.
On 16 April, I established a task force in my department to make immediate arrangements to help those who needed it. This included setting up a helpline to get in touch with the Home Office. Let me be quite clear: this helpline and the information shared will not be used to remove people from the country. Its purpose is to help and support. We have successfully resolved nine cases so far and made 84 appointments to issue documents. My officials are helping those concerned to prove their residence and they are taking a proactive and generous approach so that they can easily establish their rights. We do not need to see definitive documentary proof of date of entry or of continuous residence. That is why the debate about registration slips and landing cards is misleading. Instead, the caseworker will make a judgment based on all the circumstances of the case and on the balance of probabilities.
Previously, the burden of proof on some of the Windrush generation to evidence their legal rights was too much on the individual. Now we are working with this group in a much more proactive and personal way to help them. We were too slow to realise that this was a group of people who needed to be treated differently, and the system was too bureaucratic when these people were in touch.
The Home Office is a great department of state. It works tirelessly to keep us safe and to protect us. It takes millions of decisions each year that profoundly affect peoples’ lives, and for the most part it gets these right. But recent events have shown that we need to give a human face to how we work and exercise greater discretion where and when it is justified. That is why, going forward, I will be establishing a new customer contact centre, so that anyone who is struggling to navigate the many different immigration routes can speak to a person and get the appropriate advice. This will be staffed by experienced caseworkers who will offer expert advice and identify a systemic problem much more quickly in the future. I will also be putting in place 50 senior caseworkers across the country to ensure that, where more junior members of staff are unsure about a decision, they can speak to someone with experience to ensure that discretion is properly exercised.
There has also been much concern about whether the Home Office has wrongly deported anyone from the Windrush generation. The Immigration Act 1971 provides protection for members of this group if they have lived here for more than five years and if they arrived in the country before 1973. I am now checking all Home Office records going back to 2002 to verify that no one has been deported in breach of this policy. This is a complex piece of work that involves manually checking thousands of records. So far, 4,200 records have been reviewed out of nearly 8,000 which date back to 2002, and no cases have been identified that breach the protection granted under the 1971 Act. This is an ongoing piece of work and I want to be absolutely certain of the facts before I draw any conclusions. I will ensure that the House is informed of any updates, and I intend to have this data independently audited once my department has completed its work, to ensure transparency.
It was never the intention that the Windrush generation should be disadvantaged by measures put in place to tackle illegal migration. I am putting additional safeguards in place to ensure that this will no longer happen, regardless of whether they have documentation or not. As well as ensuring that the Home Office does not target action against someone who is part of the Windrush generation, I will also put in place greater protection for landlords, employers and others conducting checks to ensure that we are not denying work, housing, benefits and services to this group. These measures will be kept carefully under review, and I do not rule out further changes if they are needed.
I turn to the issue of compensation. As I said earlier, an apology is just the first step we need to take to put right these wrongs. The next and most important task is to get those affected the documents they need. But we also need to address the issue of compensation. Each individual case is painful to hear, but it is so much more painful, and often harrowing, for the people involved. These are not numbers but people—with families, responsibilities and homes, and I appreciate that. The state has let these people down, with travel documents denied, exclusions from returning to the UK, benefits cut and even threats of removal—this to a group of people who came here to help to build this country; people who should be thanked. This has happened for some time. I will put this right and, where people have suffered loss, they will be compensated. The Home Office will be setting up a new scheme to deliver this, which will be run by an independent person. I will set out further details around its scope and how people will be able to access it in the corning weeks.
I am also aware that some of the individual cases that have come to light recently relate not to the Windrush generation but to people who came to the UK after 1 January 1973. These people should have documentation to confirm their right to be here, but I recognise that some have spent many years here and will face similar issues in documenting their rights after so many years in this country. Given that people who have been here for more than 20 years will usually go on a 10-year route to settlement, I am ensuring that people who arrived after 1973, but before 1988, can also access the Windrush task force so that they can access the support and assistance needed to establish their claim to be here legally. I will consider further, in the light of the cases that come forward, whether any policy changes are needed to deal fairly with these cases.
I have set out urgent measures to help the Windrush generation document their rights, how this Government intend to offer them greater rights than they currently enjoy, how we will compensate people for the hardship they have endured, and the steps that I will be taking to ensure that this never happens again. None of this can undo the pain already endured, but I hope that it demonstrates this Government’s commitment to put these wrongs right going forward”.
My Lords, that concludes the Statement.
Lord Kennedy of Southwark (Lab Co-op)
I thank the noble Baroness, Lady Williams of Trafford, for repeating the Statement made yesterday in the other place by her right honourable friend the Home Secretary. As the noble Baroness said, from the late 1940s to the early 1970s, many people came to this country from around the Commonwealth to make lives here and help rebuild Britain after the war. Before that, many of them fought in the British Armed Forces to defeat both Nazi Germany and Japan—people such as my friend Sam King, who served in the RAF during the Second World War. Sam came back to Britain in 1948 on the “Empire Windrush”, served his local community as a postman, was the first black mayor of the London Borough of Southwark and was awarded the MBE for his services to the community. Sam loved this country very much. He sadly passed away at the age of 90 in 2016. It is people such as Sam King who have been treated in such a shameful way.
Despite the apology from the Government and their admission that a terrible wrong has been done to the Windrush generation, no Minister is taking any responsibility whatever for these gross abuses of the Windrush generation’s rights—their rights denied, their rights taken away and people who are in the UK legally being treated appallingly by the country they call home. So my first question to the Minister is: when is a Minister of the Crown going to accept responsibility for this scandal and resign? The noble Lord, Lord Bates, offered his resignation because he turned up late for Questions earlier this year—quite rightly, it was not accepted by the Prime Minister. This is a monumental scandal and what is offered here does not go far enough. A Minister or Ministers have to accept responsibility.
The Government’s hostile environment for illegal immigrants was badly designed and put together, with no thought given to how to ensure that people who are here legally would be protected and not caught up in that environment. People here legally should not be at risk of losing their jobs, driving licences or homes or be threatened with deportation. Does the Minister accept that some of the people who are here legally will actually be scared to come forward to the Home Office, having heard the terrible reports of abuses and denial of rights? What is she going to do to gain the confidence of these individuals, who need help and support but will be worried about coming forward?
At the bottom of my copy of page 2 of the Statement, the last sentence reads:
“Instead, the caseworker will make a judgment based on all the circumstances of the case and on the balance of probabilities”.
Can the Minister be crystal clear about exactly what she means here? That statement does not appear to be an unequivocal guarantee that people who came here as part of the Windrush generation will not have their rights taken away or be denied justice. They are still at risk of deportation from the country that has been their home for decades. Who is bearing the civil standard of proof? Is it the person or is it the Home Office? At the top of my copy of page 3 of the Statement, it says that, for some of the Windrush generation, the burden of proof,
“to evidence their legal rights was too much on the individual”.
Other than saying that,
“we are working with this group in a much more proactive and personal way”,—[Official Report, Commons, 23/4/18; col. 620.]
which I hope we would expect to be the norm, what has actually changed here? How are other people being treated when they enter the system? This is not shining a very good light on how Ministers run the Home Office.
In paragraph 6 on page 3, it says that a new customer contact centre will be “staffed by experienced caseworkers”. In paragraph 7 on the same page we are told that 50 senior caseworkers will be put in place to help junior members of staff who are unsure about a decision. Surely we should ensure that these matters are dealt with by experienced staff in the first place. Will the Minister comment on that and tell the House how the experienced staff at the contact centre relate to the junior members of staff mentioned in paragraph 7, who are making the decisions, and how the 50 senior caseworkers fit above that? That part of the Statement seems very confused.
I agree that it was never the intention that the Windrush generation should be disadvantaged by measures put in place to tackle illegal immigration; but they were, because of poor implementation and development of policy at the Home Office by Ministers. Because of that, people who deserved better have been treated badly by the state. They have been treated appallingly, and someone in the Government should take responsibility for that.
Compensation is referred to on the last page of the Statement. Other than saying that people will be compensated and a scheme will be set up, run by an independent person, there is absolutely nothing about compensation. Will the Minister give the House some more detail on what this will look like? We do not want to read in the media about people who, having been denied their rights, are being made to jump through hoops to get the compensation they deserve for the abuse they have suffered.
This is a shameful episode and it is about time someone in the Government took responsibility for it.
Baroness Hamwee (LD)
My Lords, I too thank the Minister for repeating the Statement. My noble friend Lord Paddick very much wanted to be here but is precluded by circumstances beyond his control. Not only he and I, and these Benches, but many others feel frankly ashamed to have discovered what has been going on. The Minister, whom I believe to be a compassionate, caring person, must be very uncomfortable too. She will understand that this is not a matter of what people “deserve”—the term used in the Statement—but of their rights.
We are told that the Home Secretary is committed to resolving the situation with “urgency and purpose”. They are, indeed, needed, and more widely than on this issue. The position of the Windrush people—citizens who seem retrospectively to have become migrants—is a symptom, not a cause, of the problem. The cause, as we see it, is the culture within the Home Office, an attitude that one cannot avoid saying must come from the top: hostility or compliance—which seems to be the substitute term now—and certainly carelessness, by which I mean “care-less”, as in lacking in care.
That seems to be why every immigration lawyer to whom I have spoken says that the first thing they do is ask the Home Office what information it has on their client, because so often they find that it is wrong. That is why the Home Office has such a poor record before the tribunal. The Minister will not be surprised by this: it is why I sought to remove the Home Office exemption from the Data Protection Bill, which can be applied in the interests of effective immigration control—a matter others are now pursuing. The Home Office might say that it can choose not to apply that exemption or that it will be applied only when it is relevant, but it is the Home Office that has to assess these aspects.
My first question to the Minister is therefore a question and a plea. Before the UK finds itself in an even more embarrassing position—which I assure her I do not want—will the Government reconsider whether the exemption is just, wise or even common sense?
My second question is about staffing, to which the noble Lord, Lord Kennedy, has referred. Are the officials concerned being redeployed within the Home Office, or is the establishment being increased? If so, may we have details of this? It has appeared for some time that Home Office officials are really overloaded. As regards the customer contact centre, or indeed any part of the work, is this being outsourced to the private sector? Again, may we have details?
Thirdly, what information will the Home Office publish so that we can see the whole picture systematically, rather than as a series of individual stories, and not just about deportations?
This affects many, many people. Another cohort, of course, is the 3 million EU citizens in the UK. They raise it in their current 128 questions on settled status. It must affect UK citizens abroad as well. Manifestations of the Home Office policy are very wide, but I will mention just two. One is the right to rent, on which the chief inspector has recently reported less than fully positively. One of his recommendations mentioned quality assurance checks. Another manifestation is immigration detention, to which people unable to prove their status have been consigned.
Immigrants might be legal, they might be illegal or perhaps they cannot prove their status, so the Home Office makes an assumption, if not a presumption, that they have no rights. This issue is more extensive than—I do not want to say “just”—the Windrush generation.
Baroness Williams of Trafford
The noble Lord is so keen to get up that I was going to give him the opportunity, but he will get the opportunity. I thank both noble Lords for their comments, and echo the words of the noble Lord, Lord Kennedy, on the endeavours of the Windrush generation, who rebuilt this country after the war. Some of them actually fought in the war, and I pay tribute to the noble Lord’s friend Sam King: what a truly rich and fulfilling life he clearly led in his time in this country.
The noble Lord makes the point about no Minister taking responsibility. I have to say that when my right honourable friend the Home Secretary stood up yesterday, apologised and made very clear that she was going to put right this wrong, she took responsibility. It takes a big person to stand up and say, “Sorry, we’ll make this right”. So she firmly took responsibility yesterday, as well as in the weeks preceding.
On compensation, my right honourable friend the Home Secretary said yesterday that she will set out further details on its scope, but she made it clear that it would be run independently of government. Details will be set out in due course. The noble Lord also made the point about a hostile environment, which was made yesterday as well in the Question I answered. This country should be a hostile environment to illegal immigrants but it should not be a hostile environment to people who are here as of right, which is the whole point of what the Home Secretary is putting right here. These people are welcome in this country and we are not hostile to them. If anybody feels scared about coming forward—I hope none of the scaremongering is being generated within these walls—they should come forward. The Home Secretary made very clear yesterday that there will be a sympathetic and human approach to the help these people will get.
The noble Lord also commented on the balance of probabilities. I hope he appreciates that the Home Secretary yesterday made it clear that people can produce a wide range of evidence, including school and parish records. The evidence people will need to produce will be treated in a sensitive and light-touch manner. As regards the contact centre, experienced staff will deal with these cases. The point about the junior staff is that in every set-up there will be junior and senior staff, and where there is any difficulty in determining a case it will be passed to a senior member of staff. All the staff in the contact centre, as well as in the task force, will be trained, and nobody need feel any fear about approaching members of the task force or the contact centre, nor need fear the hearing they will get.
The noble Baroness, Lady Hamwee, said that this was not about what these people deserved but about their rights, which were established when they came here as part of the Windrush generation and of course more recently. My right honourable friend the Home Secretary made it clear that perhaps the Home Office is sometimes too focused on cases as opposed to humans; she made it very clear that this is a human consideration.
As regards the immigration exemption, I hope we will not conflate immigration rights with the cases of the Windrush generation, who, as the noble Baroness says, are here as of right, and we just need to regularise that status. Therefore I will not go into the immigration exemption in the Data Protection Bill. However, I will go on to discuss EU citizens, because that clearly points to how it is absolutely right to be proactive about having a system to establish settled status and to plan it well, which the Home Office has done. Those rights will be established early on rather than waiting 47 years beyond the point when people’s rights were naturally given but not documented in all cases. The noble Baroness asked about Home Office staff in the contact centre. There will be Home Office staff, and they are trained to a sufficient degree to deal with the cases that come forward.
I reiterate the words of my right honourable friend yesterday. These cases are being dealt with very sympathetically, and I hope that anyone who should come forward or knows of anyone who should come forward will be encouraged to do so.
Lord Kerslake
My Lords, third time lucky—my apologies. I should first like to declare an interest. I am chair of Peabody, and if noble Lords have read the newspapers recently, they will have read of one case, reported in the Guardian, involving a well-regarded caretaker, Hubert Howard, who was forced to be dismissed from his job with Peabody in 2014 under these rules. He came to this country at the age of three. His only crime, if you can call it that, was to seek to return home because one of his parents was ill. This is a practical example of how organisations have contributed to the misfortune of these individuals.
The Minister has rightly said that the state has let these people down. In my career I cannot think of many examples where we have seen such a shameful and terrible miscarriage of justice. It makes me personally feel ashamed that this has happened in my country. I think we must acknowledge that, without the work of Amelia Gentleman in the Guardian, and indeed the work of David Lammy, we would not be having this debate today. Those cases would have carried on as injustices.
After what has been a painfully long period—even two or three weeks ago, the Government were still saying that this was a process where people have to go through the normal applications—the Government have recognised the wrong that has been done and have taken steps to address this. I think this is very welcome and we should acknowledge the scale of change in the Government’s position, but I fear there is a risk of further injustices happening. If we are to deal rightly with the Windrush generation, and with similar situations from other communities—this is the thing we must not lose sight of—there are some important questions to answer.
First, there is much talk of a change in culture and practice, but very little talk about a change in policy. Unless that happens, the practice will always be trumped by the policy. We know that the restrictions on illegal immigrants grew over time, but the dial was turned up very considerably with the 2014 and 2016 Acts. The environment was changed very considerably, too. My first question is: do we really stick with a very hostile environment in circumstances where we cannot be confident, as the noble Baroness, Lady Hamwee, has said, that we have got the answer right on individuals? They suffer the injustice of us getting the proof wrong, or their proof not being clarified, and then we apply draconian policies. I ask the Minister: in the light of what we have learned here, should we not be seriously be revisiting the existing policies?
My second question is: how will Parliament know it has made progress on the Windrush generation? Where will we get that information from? Are the Government willing to consider an independent third party verifying the progress in tackling those cases? Given the scale of the injustice, that is something the Government should sign up to.
Thirdly, are the Government going to take a proactive approach to tackling those families identified in the Guardian and other newspapers, rather than just waiting for them to come to the call centre? I would personally like the opportunity to speak to Mr Howard to see whether we can offer him his job back.
Baroness Williams of Trafford
I join the noble Lord in saying that this is a bad period—for successive Governments, actually—but that is not a reason to try to shirk our responsibilities as a Government. In terms of Mr Howard, the task force is aware of his case and we have contacted him previously, and we will be doing so again as part of this exercise. We are taking a proactive stance on cases we know exist.
The noble Lord also asked whether we should be revisiting some of our policy, for example in connection with the hostile environment. This is not a new thing. Successive Labour and Conservative Home Secretaries over the past 30 years have sought to make the UK a hostile environment for people who should not be here. Let us not forget the consequences of people who should not be here. They actually cause some of the worst detriment to people, for example through modern slavery and serious and organised crime. We do not want those people in this country. We do want this country to be a friendly environment for people who are here legally, so we will not back down—as successive Governments have not done—on tackling the pernicious practice of illegal migration to this country.
On independent oversight of what we are doing, the Home Secretary has announced that an independent person will be put in charge of the compensation scheme. I am sure that there will be plenty of time and room for debate in this House, as has already taken place, to scrutinise the effects of some of the measures that the Home Secretary outlined yesterday.
Lord Cormack (Con)
My Lords, I am sorry that I am the only one on this side of the House, but I echo the expressions of shame that have already been made on both sides of the Chamber. This is a very sad day, but my noble friend the Minister was right to say that the blame is in fact cumulative and that all of us who have voted on any immigration measures have inadvertently perhaps played a part. I would like to suggest this to my noble friend: I do not like the expression “those people”; we are dealing with fellow British subjects and citizens who have the same rights as anyone in this Chamber, and that must be underlined. I would like my noble friend to discuss with the Home Secretary that a High Court judge be asked to look at all the various Acts and measures to which she referred in the Statement to see where misinterpretation could have arisen and what we can do about it. It may well be sensible for a new Bill to be presented to your Lordships’ House and another place, clarifying and rectifying the measures which have led—however inadvertently—to our treating our people so despicably.
Baroness Williams of Trafford
I thank my noble friend for being the one person behind me, and I of course echo his points: this is a shameful episode in our history. The rights of these people are the rights of British citizens. However, I do not think it was the misinterpretation of legislation but rather its unintended consequence that did not—I do not want to say “confer”—confirm the rights of these people. They are not illegal migrants and that is why my right honourable friend the Home Secretary is going to right this wrong as soon as we can. He talks about other people perhaps being victims of a similar thing. That is why the measures we have in place for EU citizens are so important, so that this type of unintended consequence does not happen in the future.
Baroness Benjamin (LD)
My Lords, this is the third time in the last week that I have spoken on this appalling issue, and it breaks my heart to do so. The image of broken-hearted elderly men and women of the Windrush generation weeping on television over the truly unbelievable treatment they have received will remain with us for a long time. They are etched on the nation’s mind and consciousness. It could so easily have been my life being torn apart, but it is good to see the Government showing remorse and determination to put right things that should never have happened.
Will the Government, rather than just relying on victims coming forward, as the Minister has said several times, be proactive in reaching out to local communities and black-led churches to engage with those who have lost trust and confidence and are too traumatised to come forward? They truly are. For some, financial compensation will never be enough, but can the Minister tell the House if the compensation package will include backdated benefits and pensions for those who lost entitlement to those benefits, including those who were wrongly deported and now live abroad?
I want something good to come out of all this, something positive. The country wants it. The Windrush generation needs it; they deserve it. As a mark of true sincerity and respect for those people, for all the Windrush generation and the country, will the Government consider having a Windrush day to celebrate what the Windrush generation has done for this country? They feel so much part of the fabric of our rich country, so let us show them that they are appreciated on 22 June every single year. Windrush day is what we need, so the Government can really show that they care.
Baroness Williams of Trafford
The noble Baroness’s idea of a Windrush day is wonderful and I will certainly take that back. She is right that, rather than relying on victims coming forward, we should be proactively going out and ensuring that those who should be coming forward and require our assistance will do so. She is right on that proactive approach.
On compensation, I had a brief word with my colleague from DWP yesterday. The whole structure of the compensation scheme will be revealed in due course, but that is certainly an area where compensation might be appropriate, particularly if someone could not access their benefit because they were deemed not to be a citizen of this country.
Lord Morris of Handsworth (Lab)
My Lords, in circumstances such as those we have listened to, read about and discussed with colleagues and friends, there is always a great temptation to treat them all the same when we come to talk about restitution, reparation or whatever is appropriate. I ask that the civil servants who were involved in carrying through the policy be properly briefed, so that they understand the individuality of each case and apply to those people what is appropriate and just.
Baroness Williams of Trafford
I could not agree more with the noble Lord. These are people. They are not numbers; they are not cases. They are people; they are human beings. Quite often they are human beings who have suffered terrible loss in the difficulties they have faced. I will certainly take that back to the department. I echo his sentiments that we are dealing with human beings here.
Lord Scriven (LD)
My Lords, this is a situation where faceless bureaucracy and policy has forgotten that we are dealing with individuals. My issue is not to apportion blame, but to try to solve the problem as quickly as it can be deemed for the individuals involved. That will require joined-up government not just in policy but in its implementation. We are talking about driving licences, benefits, jobs and housing. Rather than just have a Home Office helpline, would it not be useful to have co-ordinated centres providing face-to-face meetings with local government across the country? In that way, the moment a decision is made, it will tip off other government agencies about that person’s right to remain and to have all the benefits due to them as a citizen. The unintended consequence may be that a decision is made by the Home Office but months have to go by before it filters through to the rest of government.
Baroness Williams of Trafford
The noble Lord is absolutely right that of course, this does not just involve the Home Office. As he mentioned, a number of departments are concerned, including the DWP, the DVLA and all sorts of other government departments. I have every confidence that the centre and the 50 case- workers across the country will provide a joined-up approach and that people will not have to go to several different places in order to solve their case. It should be resolved in one place by co-ordinating with other government departments. I thank the noble Lord for making the point because it is a very important one.
Lord Faulkner of Worcester (Lab)
My Lords, I want to underline what the noble Lord, Lord Kerslake, said about the role of David Lammy MP and the Guardian newspaper, in particular the work of Amelia Gentleman in bringing this whole matter to light over the past few weeks. I feel bound to say that someone in the Home Office should have taken the trouble to read the debate on Windrush that we had in Grand Committee on 18 January, when I first raised the question of Paulette Wilson and Anthony Bryan, both of whom had been threatened with deportation. In the case of Mr Bryan, he was given an air ticket to go back to a country he had not lived in since he was a child, while Paulette Wilson was taken to Yarl’s Wood detention centre and obviously treated like a criminal. Had some notice been taken then—following the campaign led by the Guardian and David Lammy—we would have come to where we are today very much sooner.
Having said that, I am delighted that we are where we are. I should like the Minister to confirm that the culture inside the Home Office and the immigration department will change as a result of the Home Secretary’s statement yesterday. There are terrible reports of immigration officers playing a game in which they catch people in what is known as a “Gotcha culture”. When they think they have found an illegal immigrant, they mark it up as a victory. That sort of talk and action can no longer be tolerated. Can she give an assurance that that will stop? Also, can we now begin to have a proper debate on and give full recognition to the importance we attach to the immigrants among us? We are all immigrants in one way or another, so we should move away from the blame culture and xenophobic attitude which is colouring so much of our public debate.
Baroness Williams of Trafford
I agree with the noble Lord that the culture is everything in an organisation and I hope that the Home Secretary’s words yesterday will have acted as a jolt to the culture not only in the Home Office but in other government departments because, in the end, everything is about human beings as individuals and citizens of this country. He mentioned our debate in Grand Committee and I will mention again what I have said: is not hindsight such a wonderful thing? If only this had come to light far sooner. It is 47 years after some of these people arrived, and indeed a lot longer for others. I understand that Paulette Wilson now has her documents and that Mr Bryan has had his status confirmed. That is an example of how, I hope, the Home Office is being proactive in its approach.
On David Lammy, I did mean to say when the noble Lord, Lord Kerslake, made his point that my right honourable friend the Home Secretary also paid tribute to his work yesterday. I echo those comments.
Baroness Lawrence of Clarendon (Lab)
My Lords, I have been listening to the debate for a while. I had no intention of speaking but I have been sitting here and thinking about when the Windrush residents first came here and how they suffered with accommodation, jobs and all the signs in the windows saying, “no Irish, no blacks, no dogs”. Now here we are again, almost 70 years later, talking about the same people who travelled here and are facing deportation and everything else. These people are suffering a double whammy. They should never have been put in this position, because they came here as British citizens. They were invited here, yet here we are now, talking about hundreds of people being deported and what we should do. This should never have happened. This country was never told in the first place that these people were invited here to build the country up; they did not just come here. The residents of this country never understood why the Windrush people came here in the first place.
Baroness Williams of Trafford
The noble Baroness is absolutely right: it is a double whammy. I have often referred to the comments in the windows of bed-and-breakfasts here in the 1960s, saying “no Irish, no blacks, no dogs”. What a terrible insult they are to the noble Baroness, myself and anyone who is black, Irish et cetera. We are a country of immigrants. These people are here by right and she is absolutely right that they are here because we invited them.