House of Commons
(5 years, 10 months ago)
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Prayers
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Speaker’s Statement
(5 years, 10 months ago)
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Mr Speaker
Order. I have received a letter today from the operations manager of the central criminal court informing me that Fiona Onasanya, the hon. Member for Peterborough, has been sentenced to a period of imprisonment of three months. I have also received a letter from the registrar of criminal appeals informing me that Fiona Onasanya has submitted an appeal against her conviction, which is listed for hearing on 5 March. I shall cause the text of the letters to be published in the Votes and Proceedings and in the Official Report.
[The letters will appear at the end of today’s proceedings.]
On an altogether more upbeat note, I hope that the whole House will want to join me in offering the warmest possible congratulations to the hon. Member for Bolsover (Mr Skinner) on the occasion of his birthday—87 years young today. I hope that the hon. Gentleman is with us in this Chamber for many years to come.
Oral Answers to Questions
(5 years, 10 months ago)
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Mrs Sharon Hodgson (Washington and Sunderland West) (Lab)
The Secretary of State for Work and Pensions (Amber Rudd)
May I join you, Mr Speaker, in wishing a happy birthday to the hon. Member for Bolsover (Mr Skinner)? I hope he finds it a cheery occasion, as the rest of us do.
We are committed to having a strong safety net where people need it. It is clear that there were challenges with the initial roll-out of universal credit, and the main issue that led to an increase in food bank usage could have been the fact that people had difficulty accessing their money early enough. We have made changes to accessing universal credit, so that people can have advances and so that there is a legacy run-on after two weeks of housing benefit, and we believe that that will help with food insecurity.
Mrs Hodgson
The Secretary of State may be aware of the cross-party children’s future food inquiry that I am co-chairing. Over the past year, I have heard from charities, families and, most importantly, young people themselves about their experiences with food insecurity. The matter is complex, but they tell me that universal credit is making their situation worse. Will the Secretary of State join me in April for the launch of the report, and will she tackle children’s food insecurity as a matter of urgency?
Amber Rudd
I can reassure the hon. Lady, who chairs the all-party parliamentary group on school food, which I briefly co-chaired some while ago, that I am as committed as she is to addressing food insecurity, particularly for children. I believe and hope that the changes we have made in terms of access to early funds will have reduced food insecurity, but I will of course take an early interest in the report that she is producing. I look forward to seeing it.
Andrew Bridgen (North West Leicestershire) (Con)
Will my right hon. Friend confirm that someone on benefits moving into work under the legacy welfare system that we inherited from the Labour Government could have lost up to £9 of every £10 they earned? There was no incentive to work whatsoever.
Amber Rudd
My hon. Friend draws attention to a real failing of the previous system. There was such a high rate of tax—sometimes up to £9 out of every £10—that there was no incentive for people to get into work. I thank him for reminding us that universal credit adjusts to such situations and ensures that work will always pay.
Stephen Timms (East Ham) (Lab)
The Secretary of State is, no doubt, right that delays in payment were part of the problem, but does she recognise that the fact that people are not entitled to any money for the first five weeks makes a big contribution to the problems that we are seeing?
Amber Rudd
I have acknowledged that people having difficulty in accessing money on time was one of the causes of the growth in food bank usage, but we have tried to address that. One of the principal ways of doing so is to ensure that every applicant can receive advance payments on the day that they apply. In fact, I visited a jobcentre just before Christmas and was told about a number of claimants who came in for the first time on the Friday before Christmas and got those advance payments.
Chris Bryant (Rhondda) (Lab)
One recent change has actually made things worse. A bunch of my constituents, who were merely changing address with the same social landlord and who were covered by the alternative payment arrangements, suddenly found that they were 10 weeks in arrears on the housing benefit element when the bulk payments element was brought in, putting them in even worse debt. All the things that the Secretary of State is talking about today have made things worse in recent weeks, so I hope she will look at the matter.
Amber Rudd
Of course I will take a look at any particular cases that the hon. Gentleman brings to me. I have addressed the issue of direct payments of rent to landlords being made more frequently by saying that alternative payment arrangements should generally be more available. The fact is that universal credit is a more effective, more transparent system than what it replaces. One of the best ways to ensure that that is actually delivered on the ground is for MPs to engage with their jobcentres to make sure all that information is available.
Neil Gray (Airdrie and Shotts) (SNP)
We know from a series of academic and stakeholder reports that the rise in food insecurity can, at least in part, be put down not just to the implementation but to the value of social security benefits. The Secretary of State has acknowledged that, I think for the first time, this afternoon. We also know from Library figures that higher than expected inflation means that the benefits freeze will save an extra £1.2 billion in the coming year. Does the Secretary of State agree that those low-income families who are being driven into food poverty deserve a break and that the benefits freeze should stop this year?
Amber Rudd
May I just point out to the hon. Gentleman that, by 2020, payments made under universal credit are expected to reach £62 billion, compared with £60 billion under the previous system? [Interruption.] The hon. Gentleman raised the issue of the amounts, and I am merely pointing out to him that, with the changes in place, the amounts are larger under universal credit than they would have been under the previous system.[Official Report, 14 February 2019, Vol. 654, c. 10MC.]
Martyn Day (Linlithgow and East Falkirk) (SNP)
The Minister for Employment (Alok Sharma)
We have now successfully rolled out universal credit full service across the country, with 1.6 million people now claiming universal credit. For the next phase, referred to as “managed migration,” we will test and refine our approach in a pilot, with up to 10,000 people moving from legacy benefits to universal credit. That pilot will start in July 2019.
Martyn Day
It has now been a calendar month since the High Court found the DWP unlawful in its universal credit work assessment periods, yet hard-pressed families are still being penalised for receiving payments on a four-weekly basis. Will the Secretary of State give a commitment to make a statement to this House on how to rectify that appalling anomaly?
Alok Sharma
I understand the hon. Gentleman’s point but, as he is aware, the Department is considering the High Court judgment carefully—I have said this before in the House—and it therefore would not be appropriate to comment further at this stage.
Stephen Kerr (Stirling) (Con)
Can the Minister confirm that, because of the Budget, there will be £4.5 billion available in additional measures over the next couple of years?
Alok Sharma
Yes, we set out in the last Budget that there will be £4.5 billion available, with a large amount of that obviously coming through the increase in work allowances.
Emma Hardy (Kingston upon Hull West and Hessle) (Lab)
As the Minister knows, universal credit has now been rolled out in Hull. A constituent, who has had an incredibly troubled life, came to see me on Friday. During his time he has suffered from addiction, he has been sleeping on the street and he has had convictions. The good news is that, not long ago, he walked through the doors of the Jubilee Church in Hull, and people there have been giving him support. He is now on an 18-month rehabilitation course. However, he has been told that, at the same time, he has to actively look for work. Surely the Minister would agree that while this young man is on a rehabilitation course—an opportunity for him to turn his life around—he should not also have to prove that he is actively searching for work.
Alok Sharma
Easements are, of course, available. I am happy to sit down and discuss the specifics of this case with the hon. Lady to see what may be possible.
Margaret Greenwood (Wirral West) (Lab)
On the evening of 14 January, the Government announced that, from this May, mixed-aged couples on a low income will no longer be able to claim pension credit when the older partner reaches state pension age and will have to claim universal credit instead. Couples affected could lose out by up to £7,000 a year, and the Conservative party manifesto pledged to safeguard pensioner benefits. Why have the Government broken that pledge?
Alok Sharma
If the hon. Lady would kindly listen, what I am saying is that the long-agreed change for mixed-age couples was voted on and agreed by Parliament in 2012. We should also be clear that mixed-age couples already claiming pension-age, income-related benefits at the point of change will not be affected, so long as they remain entitled.
Mohammad Yasin (Bedford) (Lab)
The Minister for Employment (Alok Sharma)
Monthly reporting allows universal credit to be adjusted on a monthly basis, which ensures that if a claimant’s income falls, they will not have to wait several months for a rise in their UC award.
Mohammad Yasin
My constituent who works for the NHS is paid a day outside her assessment period, meaning that she has to borrow money to pay the bills when she loses the benefits she is entitled to. Why, despite the High Court’s ruling, are this Government still making the lives of single working parents as difficult as possible?
Alok Sharma
As I have said, we will respond to the judicial review in due course. The hon. Gentleman will also be aware that, where the employer pays a claimant on a fixed date every month but that changes because of a weekend or a bank holiday, we tell the employer that they should still report the actual pay date to the real-time information system, so that the UC claim is unaffected. Guidance is available from Her Majesty’s Revenue and Customs on that.
Mark Pawsey (Rugby) (Con)
I think the Minister has just referred to the situation that affects my constituent, who is paid on the last Friday of every month, so as the calendar date varies, there are occasions when there is a nil award for UC. Will he confirm that that issue is being looked at and considered?
Alok Sharma
Yes. As I have said, this is a matter where employers need to take action, and guidance is available from HMRC. As I understand it, employers were once again reminded before Christmas that they need to get the right payment date in place.
Helen Goodman (Bishop Auckland) (Lab)
My constituents in this situation are still being harassed by the Department. Is the Minister going to make the change in line with the High Court judgment from 11 January or for all claims that fall into this category from the very beginning?
Alok Sharma
I completely understand why colleagues are asking these questions and why they want answers, but I have to repeat myself at this stage and say that the Department is considering the High Court’s judgment. I hope therefore that the hon. Lady will appreciate that it would not be appropriate for me to comment further.
Mr Speaker
Very good of the right hon. Member for Carshalton and Wallington (Tom Brake) to join us. He will be pleased to know that he is just in time.
Carol Monaghan (Glasgow North West) (SNP)
My constituent received an unexpected late payment for temporary work during his UC assessment period, which resulted in a nil award. Surely the time has come to ensure that the assessment period recognises when the money was earned and not when it was received.
Alok Sharma
We had a discussion about what happens where there is a fixed payment date, but I point out that where two awards had been made in one assessment period it would mean that the claimant would be entitled to a maximum UC award in the following assessment period.
Tom Brake (Carshalton and Wallington) (LD)
The Minister for Disabled People, Health and Work (Sarah Newton)
I will allow the right hon. Gentleman to catch his breath, by saying that all people who carry out work capability assessments are fully qualified healthcare professionals, including nurses, paramedics, occupational therapists, physiotherapists and doctors. Most have two years’ post-registration experience, most have worked in the NHS and some combine working part-time in the NHS with being employed to undertake WCAs. As I said to the Select Committee during its recent inquiry on the WCA, future contracts will be open to all sectors.
Tom Brake
I thank the Minister for her reply and for giving me time to recover my breath. As a constituency MP, I am sure that she, like me and many others, will know many constituents who feel that they have been ignored, bullied or interrogated during WCAs. Given that in the past the Ministry of Justice has had to spend some £100 million in arguing court cases and appeals, will she at least undertake to examine whether the public sector is not in fact better placed to carry out these assessments than private contractors, who have a very poor reputation?
Sarah Newton
Let me make it absolutely clear that I want to make sure that every person claiming a benefit from the Department for Work and Pensions has a really positive experience. We look at independent research on our claimant experience, and the vast majority of people are treated with respect and dignity, and the right decision is made the first time. However, one person’s poor experience is one too many, and we are constantly working with disabled people and stakeholders to improve our processes.
Greg Hands (Chelsea and Fulham) (Con)
It is so important to discuss how we can help those who cannot work, but we should also recognise that 900,000 more disabled people are in work since 2014. Will the Minister outline what more she can do to get even more disabled people into work?
Sarah Newton
My right hon. Friend makes a really important point. We have a strong safety net for people who cannot work, but it is also wonderful that so many more people are able to work. I am delighted to announce that from 1 April we will uprate the Access to Work grant to just under £60,000 per person per year, which will provide tailor-made support to enable people to work.
Anna Turley (Redcar) (Lab/Co-op)
The Secretary of State for Work and Pensions (Amber Rudd)
Our new guidance, which was introduced last August, now ensures that claimants with chronic conditions that are unlikely to change over time will receive an ongoing award, with only a light-touch review every 10 years. This is an important step in preventing those long-term claimants with the highest needs from having to undergo unnecessary reviews of their condition.
Anna Turley
I appreciate the Secretary of State’s response, but will her Department review the cases of those who have already had decisions overturned? For example, I had a constituent with three brain tumours. She was awarded the highest rate of daily living and mobility allowance in 2016, but then reassessed in 2018 and not awarded anything. We had to appeal that decision, the appeal was of course successful, and she received a backdated payment of £5,000. I am sure the Secretary of State would agree that that was cruel and inhumane for someone at my constituent’s point of life. Is the Department going to look back at how many people slipped through the net over the past few years, before the Secretary of State made changes?
Amber Rudd
It is difficult to make policy based on individual cases discussed across the Chamber, but if the hon. Lady wants to show me that individual case, I will certainly look to see whether it should impact on the changes we have already made and will look at going forward.
Debbie Abrahams (Oldham East and Saddleworth) (Lab)
Since 2013, nearly 8,000 disabled people have died within six months of being found ineligible for personal independence payments—yet more evidence that the assessment process is not fit for purpose. If the Secretary of State is not prepared to scrap this inhumane process, will she at least support the Bill promoted by my hon. Friend the Member for Bridgend (Mrs Moon), which would remove the arbitrary and cruel six-month time limit for people with a terminal illness?
Amber Rudd
The hon. Lady will be aware that under disability living allowance there were also assessments and difficulties with getting people paid on time, so let us not pretend that this is a wholly new change in terms of the consequences. I have started to look at the proposal from the hon. Member for Bridgend (Mrs Moon), to make sure that people with a terminal illness are treated correctly and get the support that they need as soon as possible.
Chris Green (Bolton West) (Con)
The personal independence payment reassessment process is taking far too long for my constituents, with an average delay of more than 40 weeks. That causes a problem for people with significant health concerns. What action is my right hon. Friend taking to substantially reduce the waiting times in the Bolton and Wigan area?
Amber Rudd
I thank my hon. Friend for fighting so hard for his constituents and making sure that the most vulnerable in his constituency are well represented and looked after by their Member of Parliament. I believe he was referring to the tribunal reviews that take place when there are PIP appeals. We are working with Her Majesty’s Courts and Tribunals Service to make sure that we speed up the process to ensure that the waits are not so long.
Peter Grant (Glenrothes) (SNP)
It is all very well for the Secretary of State to say nice words about light-touch reassessment, but she will be aware of the case I raised last week in which a constituent whose condition worsened was assessed and lost her benefit as a result, and she will be aware of the case I have previously raised of the constituent whose leg was amputated and who was then assessed, on the basis of a phone call, as being able to walk four times further than he could the previous year on the basis of a work assessment. When are we going to see the reality of these assessments match up to the nice cuddly words we get from the Secretary of State, instead of their being used as a brutal and inhuman way to take people off benefit?
Amber Rudd
I would caution the hon. Gentleman about being so negative about an assessment that, yes, works for the vast majority of people. Only a certain number of the appeals get through and only 5% of the total number of assessments are overturned. I do not want people generally who are listening to and watching this exchange to think that the assessments are something to be fearful of. The people who conduct these assessments are sympathetic, thoughtful people who try to give the right answers. [Interruption.] Yes, they are. I urge the hon. Gentleman to let me know if he has a particular case or cases, because I or the relevant Minister will always talk to him and make sure that the outcome is settled.
Sir Oliver Heald (North East Hertfordshire) (Con)
The Minister for Disabled People, Health and Work (Sarah Newton)
It is really important to recognise and celebrate the achievements and contributions, in all aspects of life, of people with learning disabilities and autism. Disability Confident highlights achievements of disabled people, including those with learning disabilities. Most recently, the high-profile November and December campaign reached more than 16 million people on Twitter alone. We are investing in new support and employment opportunities too, and we also work with charities such as Autism Exchange and the Speaking Out Forum.
Sir Oliver Heald
My constituent, Sam Prowse, has been chosen as a winner on the inaugural Learning Disability and Autism Leaders’ List announced recently. He was chosen for his work with Hertfordshire County Council as an adviser supporting the library service on autism and on making information easy to read. Does the Minister agree that this list is a good way of celebrating the achievements of people such as Sam who give a great deal to the local community?
Sarah Newton
I thank my right hon. and learned Friend for raising this matter. I very much support the inaugural Learning Disability and Autism Leaders’ List. I thank Sam for his contribution to his community and congratulate him on his achievement. There are so many unsung heroes in all our communities and it is always a pleasure to have an opportunity such as this. The Prime Minister’s award, Points of Light, provides another excellent way of highlighting the contribution of disabled people to our society.
Several hon. Members rose—
Mr Speaker
I must congratulate the hon. Member for Huddersfield (Mr Sheerman) on his magnificent tie. I had thought that perhaps it depicted fireworks, but I am advised by a scholarly source that it would be more accurate to say that it depicts tropical foliage.
Mr Barry Sheerman (Huddersfield) (Lab/Co-op)
For the information of the House, I am wearing a Beatles “Magical Mystery Tour” vintage tie. I feel that, at the present moment in this country, I am on a magical mystery tour.
May I use this question to beg the Front-Bench team not to be condescending and patronising about people with different abilities? So many of the people on the autism spectrum with whom I work are extremely talented. They are unusual; they think differently. Many companies today are looking for people with that sort of quirky talent in the tech industries and much else. Let us not condescend; let us put more money, influence and resources into finding that talent and supporting it.
Sarah Newton
I absolutely share the hon. Gentleman’s passion and enthusiasm for speaking up and out for people with autism, who do have many special skills and talents. It is a pleasure to work with so many people on the autistic spectrum—people who are neuro-diverse—and to hear of their experiences in setting up businesses and in making real contributions to their places of work. I absolutely join him in speaking up for the huge benefit they bring to all of us in society.
Kirstene Hair (Angus) (Con)
Recently in my constituency, I held a Disability Confident event where I signed up many new employers in Angus and heard success stories of constituents of mine who have benefited from the scheme. Does my hon. Friend agree that we should be encouraging Members across this House to have a similar event so that we can see the successes of the Disability Confident campaign?
Sarah Newton
I congratulate my hon. Friend on taking that initiative. She is an absolute champion of enabling people to reach their full potential in society through work. I pay tribute to the many hon. Members across the political divide who have joined Disability Confident and who are getting out and having events in their constituency. We should all be proud that, for the first time in our country, there are more disabled people in work than out of work, so the nation can draw on that rich talent pool.
Jenny Chapman (Darlington) (Lab)
I support the comments of my hon. Friend the Member for Huddersfield (Mr Sheerman). Is it not true that, because of their recruitment processes, many employers are missing out on the talent and the enrichment that employing someone with autism would bring? People do not even get that first opportunity. What more can the Minister do to support employers to think again about the way they go about recruiting people and to give the opportunity to a wider range of people to get that first chance?
Sarah Newton
The hon. Lady makes a really important point. We do not want employers to miss out on this fantastic talent pool of people. Through Disability Confident, we are able to provide free and extremely valuable resources to employers to show them how they can make reasonable adjustments regarding the recruitment, retention and management of people on the spectrum in the workplace. That is really important. I am sure that her question will raise awareness of the free, fantastic resources that are available to all employers through Disability Confident.
Danielle Rowley (Midlothian) (Lab)
The Minister for Employment (Alok Sharma)
Universal credit is primarily a digital service, but it can also be accessed via telephone and in a jobcentre, where in-person support is available. We also provide assisted digital support as part of our current universal support offer.
Danielle Rowley
The Secretary of State told Sky News that she will ensure that no deflection script strategy is used by the universal credit helpline in the future. Is she therefore admitting that a deflection script has been in use, and that there has been a culture of rushing people off the phone and diverting them online? If so, will she now apologise for the Department having denied this tactic?
Alok Sharma
The hon. Lady has already been sent a copy of the universal credit digital channel document, which Department for Work and Pensions staff use as a guide when taking calls from claimants. She will be aware that this document says clearly that staff must use a common-sense and sensitive approach in resolving queries ahead of any digital discussion. Let me be absolutely clear that there is no intention to deflect and there are no targets for getting claimants to use a digital channel.
Hywel Williams (Arfon) (PC)
On 15 January, the First Minister of Wales agreed with Plaid Cymru and Labour MPs that the devolution of certain aspects of welfare benefits should be explored. Will the Minister meet me to discuss how universal credit can be better tailored to the needs of the people of Wales, particularly with regards to claiming online and the needs of Welsh speakers?
Alok Sharma
As the hon. Gentleman knows, we have now put in place mechanisms so that Welsh speakers do benefit. I am happy to meet him and any other colleagues to discuss any issues that they may wish to raise.
Mark Menzies (Fylde) (Con)
The Secretary of State for Work and Pensions (Amber Rudd)
I am pleased to say that, because of the changes made by this Government, we have record levels of employment—up 3.4 million since 2010—and the female unemployment rate is currently at a record low.
Mark Menzies
Recent figures show that unemployment in my constituency continues to fall. What plans does the Secretary of State have to reduce it further by working with businesses and further education colleges to ensure that young people have the skills needed for today’s workplace?
Amber Rudd
I thank my hon. Friend for the good work that he does in his constituency to ensure that unemployment continues to fall. We are committed to providing targeted support to young people, so that everyone—no matter what their start in life—is given the very best chance of getting into work. The Jobcentre Plus support for schools programme helps to improve the employability of young people and has resulted in thousands of children being better equipped for today’s labour market.
David Hanson (Delyn) (Lab)
Unemployment in my constituency has actually risen by 30% over the past 12 months. Given today’s economic figures, which show very low economic growth over the last seven years, and given the impending doom of no deal, what contingency plans is the Secretary of State making so that unemployment does not rise still further?
Amber Rudd
I urge the right hon. Gentleman not to be so despondent about the growth figures today. We are seeing growth. Overall employment continues to rise. If he would like to speak to one of us regarding any scheme he has to boost employment in his constituency, I would be pleased to see him.
Mike Amesbury (Weaver Vale) (Lab)
The hon. Member for Fylde (Mark Menzies) asked about employment trends, but one trend that he did not mention is that zero-hours contracts have quadrupled since 2010. This week is HeartUnions Week, so will the Secretary of State join me, the TUC and the Labour party in pledging to ban these disgraceful contracts?
Amber Rudd
I am afraid that the hon. Gentleman may have his facts wrong. Zero-hours contracts are down; 780,000 people are currently on zero-hours contracts, down from 883,000 in the same period in 2017. Overall, we estimate that 2.4% of the employment market are on zero-hours contracts.
Alison Thewliss (Glasgow Central) (SNP)
The Parliamentary Under-Secretary of State for Work and Pensions (Guy Opperman)
The Government have recently reviewed the maximum rate of deductions, which will be reduced from 40% to 30% from October 2019. We are also taking action through the introduction of a Breathing Space scheme and the setting up of the Single Financial Guidance Body, which will consider the needs of people in vulnerable circumstances.
Alison Thewliss
The Minister will be aware that I recently met the Minister for Employment regarding my constituent Georgina Woods, whose historical repayments soared from £11.12 a month to £79.46 a month when she moved from tax credits to universal credit—a situation that she cannot get resolved because she tried to save the Government money by not applying for tax credits. It is really difficult to resolve this case due to a lack of communication between the Treasury and the DWP, and that issue will only get worse as universal credit rolls out and it is more difficult for constituents to get this resolved. Why is the Minister’s Department treating people more harshly than the Treasury is?
Guy Opperman
I know that the hon. Lady has met my hon. Friend the Minister for Employment on the issue of her constituent and that the Department awaits more details to investigate it in more detail. The wider point is that the Minister for Employment is looking into this issue with Her Majesty’s Treasury and will, I am sure, update her.
Kevin Foster (Torbay) (Con)
I welcome the reduction in the maximum deduction rate, but what analysis has the Minister done of what that may mean for the poorest households and how will he communicate the impact of the change?
Guy Opperman
We believe that it is a positive step in the light of the review that took place. I draw my hon. Friend’s attention to the Breathing Space scheme that is being introduced by Her Majesty’s Treasury to assist people on an ongoing basis. That scheme came in in the legislation that we introduced last year.
Mr Jim Cunningham (Coventry South) (Lab)
Why does the Minister not stop universal credit until such time as the Government get the result of the pilot scheme? Anywhere else, if people have a pilot scheme, they wait to implement it and learn the results from it before rolling the system out. You would do that in the private sector. Why not do it here?
Guy Opperman
With respect, the answer is twofold. First, there has been a gradual introduction of universal credit and, secondly, the pilot scheme is in respect of managed migration.
James Cleverly (Braintree) (Con)
Will Quince (Colchester) (Con)
The Parliamentary Under-Secretary of State for Work and Pensions (Justin Tomlinson)
Building on recent announcements, I have just held two roundtables with care leavers and care leaver charities. The next step is to meet employers to explore how we can further improve job opportunities for care leavers.
James Cleverly
I thank my hon. Friend for that answer. Prior to universal credit, under the legacy system, care leavers and other vulnerable jobseekers were just left to sign on but now, with tailored support and work coaches, that has changed. Now that youth unemployment is at record low levels, what is the Minister’s Department doing to make sure that work coaches are helping care leavers to find not just a job but the right job for them?
Justin Tomlinson
I pay tribute to my hon. Friend, who has championed this area for a number of years, particularly during his time under the former Mayor of London as his youth ambassador. We recognise that the key is to build a personalised and positive relationship between the work coach and the care leaver. We have been working very closely with the Children’s Society and Barnardo’s to improve both the guidance and the training for all our frontline work coaches.
Will Quince
Care leavers are one of the groups at highest risk of homelessness. What support does the Department offer to help care leavers and vulnerable claimants to secure housing?
Justin Tomlinson
Last Thursday, my hon. Friend held a powerful debate in Westminster Hall covering some of this area. The Government take the issue very seriously. We are providing additional funding for 47 local authorities that have the highest numbers of care leavers at risk of rough sleeping. That funding will allow them to appoint specialist personnel advisers to provide additional support to small caseloads of those at risk. I am also keen to look at opportunities to open up the jobcentres to care leavers six months before their 18th birthday in order to look at all the different opportunities and support available to them.
Ruth Cadbury (Brentford and Isleworth) (Lab)
Given that care leavers are, by definition, vulnerable and have a host of challenges, including in housing, getting into work, and skills and training, what discussions is the DWP having with local authorities so that rather than drip-dripping a few special projects the Government actually address the chronic underfunding of local government that has let care leavers down, among many others?
Justin Tomlinson
Our whole strategy of supporting care leavers, which was set out as part of the care leaver covenant, is about closer partnership working with not only the Department for Education but local authorities, to ensure that there is consistent support across the board. As I said in my previous answer, I want to start that earlier, giving young care leavers the maximum time to prepare for the transition as they reach 18.
Steve McCabe (Birmingham, Selly Oak) (Lab)
The Government deserve some credit for the care leaver covenant. What specific joint work is being undertaken with the Children and Families Minister the hon. Member for Stratford-on-Avon (Nadhim Zahawi), to ensure that every young person leaving local authority care leaves with a specific offer of a job, apprenticeship or further training? Have the Government considered making that a legal obligation?
Justin Tomlinson
I thank the hon. Gentleman; I know that he has raised similar issues before. It is right for this work to be joined up and consistent. At the moment, in the DWP, we look at this 28 days before care leavers are due to start UC. As I said, I think that that should be brought forward to six months, with advice and training on the different opportunities that are available. It is vital that all groups work in partnership. They have supported all the roundtables that I have held and I will continue to work closely with them.
Louise Haigh (Sheffield, Heeley) (Lab)
Dr Rupa Huq (Ealing Central and Acton) (Lab)
The Parliamentary Under-Secretary of State for Work and Pensions (Justin Tomlinson)
There is clear evidence that work offers people the best opportunity to get out of poverty. A working-age adult living in a household where every adult is working is about six times less likely to be in relative poverty than one living in a household where nobody works.
Louise Haigh
Research by the Joseph Rowntree Foundation shows that the real-terms cut in social security is the single biggest driver of in-work poverty, leaving those struggling to make ends meet on poverty pay losing hundreds of pounds a year. If the Secretary of State is looking forward to the benefits cut not being extended, as she told Sky News, why do the Government not end it now, rather than wait to review it in 2020?
Justin Tomlinson
This Government are not only delivering record employment in all regions of the UK—it is accepted that work is the best route out of poverty—but targeting support at the most vulnerable in society, with increases in the national living wage, which will see the fastest pay rise in the last 20 years, changes to the income tax threshold and a doubling of free childcare.[Official Report, 14 February 2019, Vol. 654, c. 9MC.]
Dr Huq
Crash-era debt was owed to commercial lenders and stemmed from lifestyle desires, but Turn2us reports that the bulk of its 9,000 users in Ealing are in-work adults who are struggling to meet the bare basics—their debts are to council housing departments, energy providers and water companies. If the Government will not unfreeze the benefits cap now and end the scandal of zero-hours contracts, what are they doing about that worrying trend, noted by the London School of Economics, the National Audit Office and Citizens Advice?
Justin Tomlinson
As we know, there are 1 million fewer people and 300,000 fewer children in absolute poverty. The hon. Lady raised that theme at the last DWP oral questions, when she set out the distressing case of a claimant who she claimed was left with just £10 over Christmas because her payment was due on Christmas day. We looked into that case and I took a personal interest in it. The claimant actually received their full entitlement before Christmas, as well as interim support for childcare because they had been able to secure work. I know that the hon. Lady would want everybody in the House to be aware of that.
Mr Speaker
That is a testament to the effectiveness of repetition. As I have often had cause to observe—I say this as much for the benefit of those observing our proceedings as for Members—repetition is not a novel phenomenon in the House of Commons.
Jack Dromey (Birmingham, Erdington) (Lab)
That more are in work is welcome. That one in eight are the working poor, with working parents struggling to clothe and feed their children, is shameful. Does the Secretary of State recognise that working poverty consigns millions to a hand-to-mouth existence and, because people fall beneath the threshold for auto-enrolment, working poverty is all too often followed by a retirement in poverty? That cannot be right.
Justin Tomlinson
Auto-enrolment is a success, with 10 million new savers, and we intend to lower the starting age from 22 to 18 and remove the lower earnings limit.
Matt Western (Warwick and Leamington) (Lab)
The Minister for Disabled People, Health and Work (Sarah Newton)
Universal credit has been designed with accessibility in mind, and we are committed to providing a tailored service that recognises those with complex needs. We are improving accessibility features and we are adding to the system all the time, allowing people to claim online, by telephone or through home visits. We really want to work with many community partners or those who are supporting people with complex needs to make sure they do get that support.
Matt Western
A year ago I wrote, with 100 MPs from across the House, to the then Secretary of State to highlight what was really faced by so many disabled people, which is a hostile environment in trying to access payments. It now transpires that seven reviews are being undertaken by the DWP into the serious administrative mistakes that have been made, including why 4,600 disabled people have wrongly had their personal independence payments stopped. Will the Minister update us about what progress has been made on those seven reviews and, indeed, about what learnings are going to be taken forward?
Sarah Newton
We work very hard in the DWP to make sure that decisions are made accurately the first time. However, where there have been mistakes, we work really quickly to remedy them as soon as possible. The hon. Gentleman is quite right that we are going through some wide-scale administrative exercises on both employment and support allowance and PIP, and I regularly provide written ministerial statements to the House—the most recent ones were in December—setting out exactly what we are doing.
Tom Pursglove (Corby) (Con)
Sarah Newton
It is absolutely right that we should be focused on making the right decision first time. We have had independent reviews of both the work capability assessment and the PIP assessments, and we are working rigorously to implement each of the steps that have been identified.
Marsha De Cordova (Battersea) (Lab)
Under schedule 2 to the Universal Credit (Managed Migration) Regulations 2018, the compensation for severely disabled people who have moved on to universal credit for the loss of premiums is a flat rate of £80 per month if they have been placed in the limited capability for work group. This is considerably less than the actual loss of income, which is approximately £180 per month. Will the Minister give a full breakdown of how that figure was reached, and will she listen to Labour’s demands and commit to ensuring that the compensation reflects the real loss of those premiums?
Sarah Newton
I fear that you, Mr Speaker, will not allow me the time I need to answer such a detailed question, so I am very happy to write to the hon. Lady. I do want to say, because I think the whole House will be pleased, that we have now enabled people who have single-tier pensions to be held back on the legacy benefits until the managed migration regulations come into effect.
Marsha De Cordova
Under universal credit, for working disabled people to qualify for in-work support, such as the work allowance, one must be found unfit for work under the work capability assessment. This is unlike the legacy social security system, under which a disabled person will qualify for in-work support, such as the disability element of working tax credit, by being in receipt of disability living allowance or PIP. Does the Minister agree with me that it is absurd that a disabled worker must be found unfit for work to qualify for in-work support, and will she commit today to reviewing this?
Sarah Newton
Universal credit provides tailor-made support for all people, including those with disabilities. Once somebody meets their work coach, they will have a personalised journey to support them into work and to make progress into work, and that can happen even before the work capability assessment is taken.
Alex Cunningham (Stockton North) (Lab)
The Parliamentary Under-Secretary of State for Work and Pensions (Guy Opperman)
I helped to introduce Breathing Space as part of the Financial Guidance and Claims Act 2018. The Department for Work and Pensions is fully supportive of the Breathing Space policy. We also recognise the importance of ensuring that people can access advice in identifying solutions to their debt problems, and we have set up the Single Financial Guidance Body.
Alex Cunningham
That is very good to hear, but both the Treasury Committee and the Work and Pensions Committee have said that Departments take a disproportionate and often aggressive approach to the recovery of debt. A single person over 25 claiming universal credit could have £127 deducted from their benefits each month to pay existing debts. If the Government are determined, as the Minister says, to help people manage their debts, why is his own Department making deductions that push claimants further into poverty?
Guy Opperman
The hon. Gentleman will be aware that, in relation to Breathing Space, the Government are considering the responses to our recent consultation and will respond in due course, and that the standard deduction rate for the repayment of a non-fraud overpayment of universal credit is 15%.
Mrs Kemi Badenoch (Saffron Walden) (Con)
The Minister for Employment (Alok Sharma)
The DWP has a network of over 630 jobcentres across the UK. We consider a number of factors when making decisions about the future DWP estate, including the potential demand for services, the accessibility of our buildings and value for money.
Mrs Badenoch
I have a vulnerable constituent who lives in Stansted Mountfitchet but has to travel an hour and a half by public transport to Braintree in order to access a jobcentre. Will the Minister please review jobcentre provision in my constituency, specifically in Uttlesford district?
Alok Sharma
I thank my hon. Friend for the work she does on behalf of her constituents. I can confirm that we will continue to work with community-based partner organisations, including Saffron Walden Town Council, to ensure support and the delivery of outreach. Also, for vulnerable claimants and those in remote areas, alternative attendance arrangements can be introduced.
Mr Speaker
Just before I call the hon. Member for Dulwich and West Norwood (Helen Hayes), I can tell her that this morning I conducted my usual weekly Skype session with school students, and today it was with students at the outstanding Elm Wood Primary School in her constituency. I engaged with those quite superb, articulate and personable students, and with their class teacher, Stephanie Kamara, and the headteacher, Ms Myrtle Charles, who made a guest appearance. What a credit those students are to their teachers and parents.
Helen Hayes (Dulwich and West Norwood) (Lab)
The Secretary of State for Work and Pensions (Amber Rudd)
I take a particular interest in ensuring that the Department for Work and Pensions liaises closely with the Home Office to make sure that the Windrush generation are properly supported. So far we have helped over 400 customers to swiftly confirm their status and access benefits.
Helen Hayes
Thank you, Mr Speaker. I am always proud of the students at Elm Wood Primary School, which is indeed an excellent school with brilliant students.
I have been writing to the Secretary of State for many months on behalf of my constituent, who was the first Windrush citizen to return to the UK in May last year. She has since been denied access to attendance allowance because she was not in the country during the assessment period. The only reason she was not in the country at the time was the illegal action of the British Government. I have been told by the DWP that she must wait until the Windrush compensation scheme is published and include within her claim compensation for benefits she is due now. That is absurd and unacceptable. Why is the Secretary of State, who presided over the Windrush scandal as Home Secretary, continuing to compound and extend the injustice that Windrush citizens are suffering by failing to put in place the support they need to access all the benefits to which they are entitled?
Amber Rudd
I would like to reassure the hon. Lady that I have looked into this case, and I do take seriously, as she and the House would expect, the issue of ensuring that the Windrush generation are supported correctly by the DWP. We have reinstated the claimant’s pension credit and have awarded arrears to date. With regard to the attendance allowance, I will be writing to the hon. Lady, and officials are working to resolve the matter. I will provide the letter as a matter of urgency.
Eleanor Smith (Wolverhampton South West) (Lab)
The Secretary of State for Work and Pensions (Amber Rudd)
Today I am delighted to confirm that 10 million workers have now been automatically enrolled into a workplace pension. Since 2012 this policy has been transforming savings culture. The increase in pension uptake has been particularly marked in younger workers, women and those on low earnings. For many, a private workplace pension was once a pipe dream. Thanks to the action we have taken, it is now a reality. Today I am also bringing forward plans to strengthen the Pensions Regulator to protect final salary pensions, including a new prison sentence of up to seven years in certain circumstances. These measures show that the Government are on the side of workers saving for retirement and that we will protect their incomes from the reckless behaviour of a small number of unscrupulous bosses.
Eleanor Smith
I have many female constituents who are self-employed or on zero-hours contracts. They do not have a set regular monthly wage, yet the DWP insists on a four-week assessment period to assess their earnings and determine their benefits. Those women are being forced into hardship by sudden cuts to their benefit payment and a lengthy appeals process, which can take up to three to four months. Why can the DWP not recognise the situation that those on fluctuating incomes are put in and revise its guidelines accordingly?
Amber Rudd
I hope the women the hon. Lady refers to are engaging with their work coaches, who try to provide a tailored service to enable individuals to realise how much better supported they are under this system. I would also point out that female employment is at a record high—jobs and support are out there. With the help of work coaches, we want to ensure that the women she refers to do not just get the average jobs they may start on, but have a real opportunity to develop careers.
Greg Hands (Chelsea and Fulham) (Con)
Amber Rudd
I thank my right hon. Friend for his support. In his constituency, 21,000 people and 4,290 employers are now auto-enrolled. It is working well in his constituency. In April, we will increase the amount of contribution from employers.
Margaret Greenwood (Wirral West) (Lab)
Social security sanctions can be detrimental to the health and wellbeing of claimants, and, in extreme cases, push people into destitution. The Government’s response to the Work and Pensions Committee report was shocking. Apparently, they are only prepared to consider increasing the length of sanctions, not reducing them. What has happened to the concept of compassion? Will the Secretary of State end the Government’s cruel and counterproductive sanctions regime?
Amber Rudd
I do not recognise the hon. Lady’s description. I have been around jobcentres. I always make a point of speaking to work coaches, asking them about the way they impose sanctions and when. They always say to me that it is a last resort only done after a series of engagements. This is a personal choice that work coaches make. They have a lot of discretion and in my experience they are using it correctly.
Luke Hall (Thornbury and Yate) (Con)
Amber Rudd
I am happy to say that that is exactly the aim of universal credit: to ensure that it helps people while they are in work, gives them the additional funds they may need, and ensures that the taper rate, the amount of tax they pay as they move into more employment or a higher level of pay, does not adversely affect their ambitions and their ability to earn more.
Neil Gray (Airdrie and Shotts) (SNP)
The Government are about to enact an element of policy passed seven years, two Parliaments and two Governments ago without a debate or a vote. Mixed-age pensioner couples are set to lose £7,000 from their household income if the changes to pension credit go ahead. Surely, with the Joseph Rowntree Foundation saying that 300,000 more pensioners are in poverty now compared to 2012, the Secretary of State must seek a new mandate from this House for these cuts and have a debate and a vote?
The Parliamentary Under-Secretary of State for Work and Pensions (Guy Opperman)
The reality is that the absolute poverty rate for pensioners has fallen to a record low, with over 200,000 fewer pensioners in absolute poverty before housing costs. The state pension has also increased by over £1,000 in cash terms since 2010 by reason of the triple lock, as well as many other reasons.
Damien Moore (Southport) (Con)
Guy Opperman
My hon. Friend’s constituents in Southport will be reassured that the Government are cracking down on the mismanagement of existing defined benefit pensions, so that his constituents can ensure they get the pensions they deserve and have saved for.
Wera Hobhouse (Bath) (LD)
The Minister for Employment (Alok Sharma)
Yes, of course I will meet the hon. Lady. As she knows, there are set criteria in place before people are able to claim benefits or universal credit, but I am of course very happy to meet her.
Chris Green (Bolton West) (Con)
The Parliamentary Under-Secretary of State for Work and Pensions (Justin Tomlinson)
I am sure that it was a fantastic interview, which we will all be looking to hear in the archives online. As set out in the earlier questions, we are doing a huge amount to support care leavers. I am very grateful for the support of charities such as the Children’s Society and Barnardo’s, who are helping to shape that. Only last week, I met a group of care leavers from the Big House charity in London, who were able to give me their personal wish list of things that we can do. We will continue to work with care leavers, charities and support organisations so that they can have the maximum opportunities, which many take for granted.
Mr Speaker
It is always pleasing to see a happy Member. The hon. Member for Bishop Auckland (Helen Goodman) is convulsed with mirth. She is in a state of almost uncontrollable hysteria. Well, I hope she is very happy. I do not know what it is that has amused her, but it is good to know that she is a happy spirit in the Chamber.
Layla Moran (Oxford West and Abingdon) (LD)
Amber Rudd
This was a policy that was introduced and voted on in the House in 2012. It is right that some people who are paid very low wages and are paying taxes should not have to pay for other people to make different life choices that they feel they cannot afford. The hon. Lady is probably aware—I hope she is—that we changed the retrospective nature of that policy to ensure that families who were already in existence before 2012 were not adversely affected by it. I think that is the right balance.
Andrew Rosindell (Romford) (Con)
The House will know that the Government are doing more than ever to support people with disabilities in the workplace. Will the Minister tell us what is currently being done to safeguard the dignity of long-term sufferers on employment and support allowance and universal credit?
The Minister for Disabled People, Health and Work (Sarah Newton)
I thank my hon. Friend for his question. Safeguarding the dignity and wellbeing of people with the most severe lifelong conditions is of paramount importance. A number of Members have raised cases with me where people were receiving the highest levels of support, including in personal independence payment, and they were then reassessed as not needing any support. I was very concerned to hear about that, so I am now ensuring that DWP decision makers review all such cases to make sure that we get the right support to the right people at the right time.
Stuart C. McDonald (Cumbernauld, Kilsyth and Kirkintilloch East) (SNP)
Amber Rudd
I understand the hon. Gentleman’s approach to this, but I must remind him of the terrible financial inheritance that we took on, which required belt-tightening, from which we are now getting some of the benefit. I also point out to him that now wages are rising faster than inflation, this is a significant change for people in receipt of it.
Mary Robinson (Cheadle) (Con)
A constituent of mine, who suffers from paranoid schizophrenia, works part time in a catering assistant role, which she began as a volunteer. However, last April, she was informed that the entire year of ESA would be reclaimed due to a mistake in the reporting of her hours and salary. Does my right hon. Friend agree that claimants can often be vulnerable to errors, and would she agree to meet me to discuss this very difficult case?
Amber Rudd
Of course, I will meet my hon. Friend to ensure that the right decisions have been made, but I would point out that she has drawn attention to one of the benefits of universal credit: a monthly assessment allows a much more accurate payment to be made to individual applicants.
Mr Stephen Hepburn (Jarrow) (Lab)
Amber Rudd
As I was able to say earlier, only under 2.5% are on zero-hours contracts. The facts do not support the hon. Gentleman’s approach. He can have his own views; he cannot have his own facts.
David Duguid (Banff and Buchan) (Con)
Additional cold weather payments are paid over the winter months when average ambient temperatures fall below zero degrees for a period of seven days. It is a welcome measure, particularly in Scotland, but may I ask my hon. Friend, on behalf of my constituents around the Banff and Buchan coast, if wind chill factor could be taken into consideration in any future review?
Justin Tomlinson
My hon. Friend has been campaigning hard on this issue, which is important to his constituents, and, following the fantastic private Member’s Bill introduced by the hon. Member for Arfon (Hywel Williams), we have committed to carrying out a full review, working with the Met Office, so that we can get more detailed assessments of where cold weather payments are needed, using technology such as satellites, technology on ships, buoys, and so on.
Mohammad Yasin (Bedford) (Lab)
Amber Rudd
I certainly hope that that does not come forward, but I think this is the responsibility of the Department for Digital, Culture, Media and Sport, so I am sure that the hon. Gentleman will want to put that question to its Secretary of State.
Andrew Bridgen (North West Leicestershire) (Con)
Some people are paid four-weekly, not monthly, so one month of the year, they will get two payments. Will the Minister ensure that universal credit can cope adequately with this situation?
Alok Sharma
As my hon. Friend knows, we discussed this in an earlier question. Of course, the key thing is to get support to people, and where they have two payments in one assessment period and none in the following period, they should expect to receive their full universal credit payment.
Frank Field (Birkenhead) (Ind)
Does the Secretary of State think that, if the regulator had the power to commit to prison for seven years individuals who wilfully or recklessly mishandle a pension scheme, Sir Philip Green would now be in prison?
Amber Rudd
I thank the right hon. Gentleman for the extraordinary work he did that has led in part to our announcement that there will now be prison sentences for people who commit the sort of criminal activity we have seen. I cannot be drawn on that individual case, unfortunately, but I believe we will see a different regime going forward.
Stephen Kerr (Stirling) (Con)
We have now had 10 consecutive months of real growth in wages. Can the Secretary of State confirm that this is the strongest real-terms wage growth in this country for 10 years?
Amber Rudd
I thank my hon. Friend for bringing attention to that fact. It is good news for people who are earning and people living on lower incomes, and I certainly hope that it continues.
Luciana Berger (Liverpool, Wavertree) (Lab/Co-op)
Many people across the House will have been shocked by the pictures of my constituent Stephen Smith, who has a progressive lung disease and was hospitalised at 6 stone. He had repeated failed appeals and tribunals, and the Liverpool CASA, his advocate, said:
“We were unable to solicit any reply from the DWP”.
He was readmitted to hospital because he was so unwell, and it was only after I intervened that the DWP overturned its decision, but it should never have got to that. What will the Secretary of State do to ensure that no one in our country faces such an injustice in seeking the support they are entitled to and deserve?
Amber Rudd
I share the hon. Lady’s indignation. We have apologised to Mr Smith and his ESA payment has been repaid and reinstated in full. I will take a personal interest in ensuring that, where errors were made, they are corrected.
Will Quince (Colchester) (Con)
Under our benefits system, serious or terminally ill students have to abandon their courses to claim benefits. It is wrong for us to be telling students to give up on the hope of getting better and to abandon their courses just to claim benefits. We have to put this right.
Amber Rudd
I thank my hon. Friend for his campaign. I share his view that we need to take action. We are developing policy and I will make sure that he is the first to know what action we do take.
Chris Stephens (Glasgow South West) (SNP)
Turning back to the question from my hon. Friend the Member for Airdrie and Shotts (Neil Gray), does the Secretary of State not share the outrage of many people that her Department is pushing through cuts to pension credit with no legislative procedure? Will the Government bring the statutory instrument to the House for debate so that Parliament can discuss this enormous cut to low-income pensioners and the double whammy to many women born in the 1950s?
Guy Opperman
This year, we continue to spend more than £120 billion on benefits for pensioners, including £97 billion on the state pension, which goes up. Mixed-aged couples already claiming pension credit or housing benefit for pensioners will continue to receive those benefits and will not be affected while they remain entitled to either.
Justin Madders (Ellesmere Port and Neston) (Lab)
On 2 November, my constituent won his ESA appeal—the DWP did not even bother to attend—but three months on, it is still arguing about whether he should get the full back pay. At what point did the Department become above the law?
Sarah Newton
Something has clearly gone amiss, and I should be happy to meet the hon. Gentleman and see what we can do to sort it out as soon as possible.
Paula Sherriff (Dewsbury) (Lab)
I recently met a group of people who, despite having severe and unstable epilepsy, had been denied benefits. The questions asked by the assessors appeared to be completely irrelevant to their condition. For instance, one assessor’s report referred to a person’s complexion. How does the Department intend to ensure that assessors are appropriately trained to deal with different conditions?
Sarah Newton
I would be happy to meet the hon. Lady to go through the report. I assure the House that healthcare professionals are thoroughly trained and often work with leading national charities that represent people, including those with epilepsy, but of course there is always more we can do, and I should be delighted to meet the hon. Lady to discuss that.
Colleen Fletcher (Coventry North East) (Lab)
I am told that many PIP claimants in Coventry with severe mental illnesses are being forced to attend medical assessments miles away in Birmingham. The assessors are rarely mental health professionals, and many of them fail to understand the complexities and fluctuating nature of the claimants’ conditions. Will the Minister commit herself to ensuring that Coventry claimants are assessed in Coventry and that all assessors are appropriately qualified?
Sarah Newton
Let me reassure the hon. Lady. People with severe conditions, including severe mental health conditions, can have home assessments; and many more people are benefiting from PIP than benefited from the legacy benefit, disability living allowance.
Several hon. Members rose—
Mr Speaker
Order. I am sorry to disappoint remaining colleagues, but demand exceeds supply, and we must now move on.
Seaborne Freight
(5 years, 10 months ago)
Commons ChamberRead Full debate Read Hansard Text Read Debate Ministerial Extracts
Andy McDonald (Middlesbrough) (Lab)(Urgent Question)
To ask the Secretary of State for Transport if he will make a statement on the cancellation of a contract with Seaborne Freight as part of the Government’s contingency planning for a no-deal Brexit.
The Secretary of State for Transport (Chris Grayling)
In December, following a collective Government decision and a procurement process involving my Department and the Treasury, we contracted with three shipping companies to provide additional ferry capacity as part of contingency planning for a potential no-deal EU exit.
Let me make it absolutely clear that in the event of a no-deal Brexit, the Government’s priority will be to ensure the smooth operation of both the port of Dover and the channel tunnel, and we are introducing measures at the UK end to contribute to that. However, any sensible Government plan for all eventualities. That is why we agreed contracts worth around £100 million, with the bulk of the award—£89 million—going to DFDS and Brittany Ferries to provide services across seven separate routes. Built into those agreements are options to add capacity on two other routes from those companies, should they be required. That capacity could be needed to guarantee the smooth flow of some key goods into the UK, particularly for the NHS. It is worth my reminding the House that, in the event of no deal and constriction on the short strait, the capacity would be sold on to hauliers carrying priority goods.
In addition to the £89 million-worth of contracts with DFDS and Brittany Ferries, the Department entered into a £13.8 million contract with Seaborne Freight to provide ferry services from the port of Ramsgate to Ostend. At the time of the award, we were fully aware of Seaborne’s status as a start-up business and the need for it to secure vessels and port user agreements to deliver a service. However, the shorter distance between the two ports meant that the route could provide us with shorter journey times and lower cost, making it a potentially attractive part of the package.
Seaborne’s proposition to the Department was backed by Arklow Shipping, Ireland’s biggest and one of Europe’s largest shipping companies. For commercial reasons, I have not been able to name Arklow Shipping or mention its involvement to date, but its support for the proposition from the outset and the assurances received by the Department provided confidence in the viability of the deal. Arklow confirmed to me that it intended to finance the purchase of ships and would be a major shareholder in Seaborne. It also confirmed to me its view that the Seaborne plans were “both viable and deliverable”. Those assurances included clear evidence about the availability of suitable vessels from the continent and about the formal steps that Seaborne, via Arklow, had taken to secure the vessels. However, releasing that information into the public domain could have driven up the cost of the vessels significantly and might even have resulted in their being removed from the market, where supply is extremely scarce. I have therefore had to refrain from saying anything publicly about this to date.
My Department monitored closely Seaborne’s progress towards meeting its contractual commitments. By last week, the company had secured firm options on ships to operate on the route, had reached provisional agreement with Ostend and was close to doing so with Ramsgate. However, late last week, despite previous assurances, Arklow Shipping suddenly and unexpectedly withdrew its backing from Seaborne. In the light of this, and after very careful assessment, I took the decision to terminate this contract. My Department concluded that there were now too many major commercial issues to be resolved to enable Seaborne to establish alternative arrangements and finance in the time needed to bring ferries and ports into operation.
As I have repeatedly made clear, not a penny of taxpayers’ money has gone, or will go, to Seaborne. The contracts we agreed with the three ferry companies are essentially a commitment to block-book tickets on additional sailings after the UK leaves the European Union. So actually we have taken a responsible decision to make sure that taxpayers’ money is properly protected.
I can confirm that the contracts with DFDS and Brittany Ferries remain on track and will provide us with valuable additional freight capacity into the UK in the event of disruption following EU exit. We also have contractual options to replace the Seaborne capacity with additional capacity on routes in the North sea, and this is an option we will be discussing across the Government in the coming days.
While the focus of this Government is to secure a deal with the European Union, as a responsible Government we will continue to make proportionate contingency plans for a range of scenarios. That is the right thing to do.
Andy McDonald (Middlesbrough) (Lab)
What began as a debacle has now descended into a Whitehall farce. This Minister is rewriting the textbook for ministerial incompetence in office. I repeatedly warned the Secretary of State that this was the wrong decision at the time, as did industry, yet he chose to ignore those warnings. He told the House last month that this procurement was done properly. It has since emerged that the Department for Transport took shortcuts on the Seaborne Freight procurement. The deal was signed off by a sub-group of a sub-group and the main form of oversight, the procurement assurance board, never looked at it.
The Secretary of State points the finger at Arklow for the contract cancellation. Is it really a good time to further insult the Irish, and is the Arklow angle not a distraction from his decision? He has produced a letter from the company more than a month after the contract was signed; it does not prove anything regarding due diligence. He told this House that the Seaborne contract award was
“responsible stewardship of public money.”—[Official Report, 8 January 2019; Vol. 652, c. 191.]
Sadly, the exact opposite is true, yet again.
The Secretary of State’s decision to award the contract to Seaborne led Ramsgate port owner Thanet Council’s budget deficit to grow by nearly £2 million in the last year. His personal intervention to halt the budget vote last Thursday has compounded those losses. Two days later, he pulls the plug on Seaborne, leaving the council high and dry with mounting losses. What is more, taxpayers face a legal bill of nearly £1 million to fight Eurotunnel following his decision. So can he say how much cancelling the contract will cost the taxpayer and specifically the costs incurred in his own Department? He simply cannot keep blaming others for his own mistakes. This disastrous decision sits squarely with him and his office. Is this Transport Secretary’s approach to transport and wider Brexit contingency planning not off the Richter scale of incompetence? And for the good of the nation and the sake of some semblance of faith being restored to this shambolic Government, should he not now, at long last, do the decent thing and go?
Chris Grayling
I have to say that the hon. Gentleman brings new meaning to the term “utter hogwash”. First, he clearly was not listening when I said that we have spent no money on this contract. My Department is doing a lot of work on no-deal Brexit preparations, as are other parts of Whitehall—that is the prudent thing to do—but we have not spent any money on this contract. The contract was in fact assured jointly by my officials and officials in the Treasury.
The hon. Gentleman says the letter is worth nothing, but let me just quote from the letter, from the managing director of Arklow Shipping, one of Europe’s biggest shipping companies with operations in Rotterdam and Ireland, which covers chartering, technical and crewing, and finance. He said:
“Arklow Shipping has been working with Seaborne for twelve months in connection with Seaborne’s proposals to develop new freight services between the UK and continental Europe. Arklow Shipping is therefore familiar with Seaborne’s agreement with Her Majesty’s Government to provide additional freight capacity in the event of the UK’s departure from the European Union on a no deal basis.
3. In support of the current proposals to develop the shipping route between Ramsgate and Ostend, Arklow Shipping intends to provide equity finance for the purchase of both vessels and an equity stake within Seaborne which will be the operating entity of this project.
4. Seaborne is a firm that brings together experienced and capable shipping professionals. I consider that Seaborne’s plans to deliver a new service to facilitate trade following from the UK’s departure from the EU are both viable and deliverable. I will be working closely with the team at Seaborne to ensure that they have appropriate support from Arklow Shipping to deliver on their commitments to Her Majesty’s Government.”
Enough said.
Craig Mackinlay (South Thanet) (Con)
Does my right hon. Friend share my disappointment that Arklow Shipping, a major Irish shipping company and the main backer of Seaborne, has pulled away from this contract? Can he give assurances to Thanet District Council and local taxpayers that the cost of keeping Ramsgate in a state of readiness as part of the Brexit contingency planning, which we are all happy to do, will not fall on local taxpayers?
Chris Grayling
I share my hon. Friend’s disappointment. We are spending a lot of money on contingency planning and resilience in Kent, and I personally regard the port of Ramsgate as an important part of that. He knows that I am committed to continuing to work with Thanet District Council, and I would like to see ferries come back to Ramsgate. Whatever happens, we must make sure that we keep open opportunities for the future, in my view.
Alan Brown (Kilmarnock and Loudoun) (SNP)
Last month, the Secretary of State said that he had full confidence in Seaborne, and just last week he lobbied Thanet Council on its budget plans for Ramsgate. Does this not tell us everything we need to know about his judgment? His argument that Seaborne accounted for only 10% of the proposed additional services and that it did not matter if it did not deliver was nonsensical. Flouting EU procurement rules on unforeseen events by arguing that this was an emergency situation was also fundamentally flawed, given that he awarded a contract to a company with no ships. He says that he has been in negotiations with Seaborne for 12 months. How is that an emergency situation? He has now created his own emergency procurement process.
How many representations has the Secretary of State’s Department received on the procurement process, and are those representations still live, given the two contracts worth £89 million that he has awarded? Are we ever going to see the legal advice and the due diligence that was supposed to have been undertaken? Also, he has not answered the question on why this contract was not referred to a procurement assurance board. What will this missing 10% of capacity mean for Dover? What impact will it have on the port there? To keep HGV freight moving, what is his Department doing about the backlog of 9,000 ECMT permits? Given that he has now reached a stunning new level of incompetence, which must have been really hard to achieve, when will he go?
Chris Grayling
I am not sure that the hon. Gentleman was listening to a word I said. He asked a question about no ships. I can confirm that, as of last week, two ships had been identified and that options were in place to operate the route. This makes it even more disappointing that Arklow was not able to continue its support. He asked a question about negotiating for 12 months. That was Arklow, not my Department. He asked a question about the legal position. The legal position was signed off by officials in my Department and by the Treasury and by my accounting officer. The hon. Gentleman also asked about extra routes. As I mentioned in my remarks, we already have options for additional capacity in the North sea. Those routes are clearly longer and more expensive, but they are available to us. He asked about the ECMT permits. The current position is that the European Union has been very clear that we will continue with the current arrangements. I know of no reason why that should not happen, but we have bilateral arrangements that we can fall back on if it does not.
Sir Roger Gale (North Thanet) (Con)
Setting aside the utterly synthetic outrage dribbling from Opposition Front Benchers, and further to the answer given to my hon. Friend the Member for South Thanet (Craig Mackinlay), I should like to tell the Secretary of State that Councillor Bob Bayford, the leader of Thanet Council, has made it plain that Thanet wishes to act in the national interest and will continue to seek to do so, but it cannot act alone. There is a contract that Thanet has not yet signed, and will not now sign, with Seaborne Freight. That contract is ready for signature. Is there any reason, given the precedent set with Manston airport, why the Department should not sign that contract and take over the port itself for the duration?
Chris Grayling
As my hon. Friend knows, I have had discussions with the leader of Thanet District Council over the past few days, and I have been clear that there is a strong case to include Ramsgate port in the resilience work being done in Kent to prepare for a potential no-deal Brexit. We must also be mindful of the council’s financial position and ensure that it is not exposed to financial risk as a result of the broader resilience work happening across Kent.
Lilian Greenwood (Nottingham South) (Lab)
Questions remain about the legality of all three contracts for additional ferry capacity. The Government used an accelerated procurement process to award the contract to Seaborne Freight, which can be done only in urgent and unforeseeable circumstances. The Department said that the circumstances were the
“unexpected and unforeseeable limitations on the extent to which the market had… been able to”
put “in place contingency plans” for a no-deal Brexit. Given that the Government have consistently provided reassurances that that there will not be a no-deal Brexit, how was it “unexpected and unforeseeable” that the market was unable or unwilling to put in place contingency plans for this scenario?
Chris Grayling
The particular prompt for this procurement exercise was a change in the assumptions last autumn about the level of potential disruption around the channel ports. That prompted us to look again at what the capacity requirements might be to maintain supply of essential services into the United Kingdom, particularly for the NHS. It would be prudent for any Government in such a position to plan for all eventualities. I want the UK to leave the European Union with an agreement, and we are working hard to achieve that, but we would not be doing our job properly if we were not preparing for all eventualities.
Mr Mark Francois (Rayleigh and Wickford) (Con)
I offer strong support to the Secretary of State because, unlike the Labour party, he is actually undertaking contingency plans for all eventualities. On that point, will he update the House on the other two ferry contracts, their status and when they will come into operation?
Chris Grayling
My right hon. Friend makes an important point. I have heard nothing from Labour bar attempts to disrupt the Brexit process. There has been no support for contingency planning or for a deal. All Labour Members seem to want to do is to act against the national interest, which is typical of the Labour party today. Its Members are more interested in themselves than in the country.
As for the other two contracts, they are proceeding according to plan. The routes will be ready, but I hope that they will not be needed, because I hope that we will leave the European Union with a deal. However, we must be ready, and we will be ready.
Grahame Morris (Easington) (Lab)
The Secretary of State spent a great deal of time maligning the RMT union, which had simply been asking that Ministers ensure that the Brexit ferry contract ships are crewed by British seafarers on decent pay and terms and conditions negotiated through the recognised trade unions. Can the Secretary of State answer a straight question? In answer to the previous urgent question, he talked about the advantages of developing a facility at Ramsgate, so will he confirm whether Ramsgate will be now be used at all in the event of a no-deal Brexit?
Chris Grayling
I believe in competition, so I would like Ramsgate to operate a ferry service whether there is a no-deal Brexit or not, and I know that the leader of Thanet District Council would like to see the same. It is a good port that has played an important role in the past. However, we will continue to work with the council not only to secure the short-term needs of the port of Ramsgate, but to help it promote the port as a viable option for the future.
Mr Robert Goodwill (Scarborough and Whitby) (Con)
We have heard a lot of nonsense about the company not owning any ships, but is it not the case that the majority of rail operators in this country do not own any trains and that many airlines wet lease aircraft, meaning that not only do they not own the planes, but they do not directly employ the crew?
Chris Grayling
My right hon. Friend makes an important point. I have said that the Labour party does not like business any more, but it does not understand business any more. Many Labour Members will go on holiday this summer using airlines that own no planes, because that is how business works, but they lost any understanding of how business works long ago, and I see no sign of that changing.
Ms Angela Eagle (Wallasey) (Lab)
Last month, the Secretary of State came to the House waxing lyrical about his support for start-up businesses, meaning Seaborne Freight. Is he not even remotely embarrassed that the project has fallen to pieces despite Government support? Will he not at least say sorry to the House for the mess that he has made?
Chris Grayling
This is a start-up business that did not succeed because its principal backer changed its mind. That is to be regretted and it is a great shame but, as a Minister, I will never make an apology for the Government trying to work with new small businesses. Again, the Labour party does not like small business and does not want us to work with small business. When we do, it shouts and screams. Well, I think the Government should do more for small business, and I am going to carry on doing so.
Mr Jacob Rees-Mogg (North East Somerset) (Con)
My right hon. Friend cannot possibly be criticised for entering into a contract, which cost the taxpayer no money, with a new business backed by one of the biggest shipping owners in Europe. Is it not eccentric of Arklow to behave in the way it has and to abandon a contract it supported a fortnight ago? Is there any question of the Irish Government’s involvement either to help or to hinder one of their biggest businesses?
Chris Grayling
It is not for me to ascribe any motivations to Arklow for the decision it has taken. I regret it having taken that decision, and I think it is a shame, particularly as it gave clear commitments to Seaborne at Christmas time and to my officials and me in January before changing its mind suddenly. I do not know what prompted that decision. I just think it is a very great shame.
Tom Brake (Carshalton and Wallington) (LD)
What will it take for this Secretary of State to get the sack? Let me see if the following would cause the Prime Minister to issue him his P45: breaking EU procurement rules. Does the Secretary of State really believe he can claim no deal is an emergency that came to light only in October? If it did, it is his fault for underestimating the disruption caused at the ports. Is he confident that this argument is going to stand up in court?
Chris Grayling
I have been absolutely clear that this procurement was dealt with very carefully by officials in my Department and in the Treasury who fully understood the legal implications of it, and it was approved by my accounting officer. I will not comment on any other legal matters.
Charlie Elphicke (Dover) (Con)
The whole House knows that the Secretary of State has been one of the most assiduous Cabinet members in working on contingency plans to make sure that we execute the national interest in leaving the European Union. Has he looked at the possibility of not simply Dover to Calais and Dunkirk but Dover to Zeebrugge? That is a short sea route going to Belgium, not France.
Chris Grayling
Absolutely. I am also aware that the port of Zeebrugge has made a lot of preparations for the post-Brexit world. One of the things that can help to ease pressure on Dover would be an additional route from Dover to Zeebrugge. I am very keen to see the port of Dover carry on through the Brexit process without significant disruption, and I will do everything I can to help it achieve that goal, but it is sensible to have some easing of pressure on both Dover and the tunnel to give guarantees on services such as the NHS. I will be doing everything I can to make sure things remain as normal as possible for Dover.
Mr Chris Leslie (Nottingham East) (Lab/Co-op)
Given that this is just one example of hapless contingency planning that we are aware of, and that there may be all sorts of other haphazard things going on, should not the Secretary of State commit to more transparency about contingency planning more broadly? He knows that the Operation Yellowhammer papers on trade and transport went before the Cabinet last week, and there was a discussion at full Cabinet about whether those papers should be published. Which side of the argument was he on? Was he for publication?
Chris Grayling
Let us be clear, first of all, that Cabinet minutes are not published. I have been pretty transparent over the months in explaining what we are doing on the aviation front and the haulage front. We have been having regular contact with industry, and we are working very closely with the aviation sector and the haulage sector. I do not think we can be accused of hiding what we are doing. The reality is that I am standing here today precisely because we did not hide what we are doing, as we published the detail of these contracts.
Mrs Sheryll Murray (South East Cornwall) (Con)
May I send a message to the Secretary of State? The south-west and Plymouth are open for business, and I am sure that my constituents who work in that city would really welcome any further opportunities that a contract would present.
Chris Grayling
I am grateful to my hon. Friend; it has been good to see Members from around Plymouth welcoming the extra traffic that would flow through Plymouth as a result of these contracts. I should also take the opportunity to provide a message of reassurance to Hampshire, where we have done extensive work around the port of Portsmouth in respect of just a couple of extra sailings a day. Let me put it clearly on the record that there is no expectation of major road disruption affecting the surrounding areas of either Plymouth or Portsmouth.
Joanna Cherry (Edinburgh South West) (SNP)
The UK Government have been aware of the possibility of a no-deal Brexit since article 50 was triggered in March 2017, so can the Secretary of State tell us why this contract, which was awarded only at the end of December 2018, proceeded under regulation 32 of the Public Contracts Regulations 2015 without competitive tendering? Will he state clearly for the record, as I have asked this question of him and other Ministers five times now: what were the reasons of extreme urgency and the unforesee- able events that justified his Department proceeding without competitive tendering under regulation 32?
Chris Grayling
The hon. and learned Lady was not listening a moment ago when I answered that very same question from the Chair of the Select Committee. I said that the thing that prompted the move was a change to the assumptions on the levels and length of disruption that might arise in a no-deal Brexit scenario.
James Cleverly (Braintree) (Con)
Part of the criticism that my right hon. Friend’s Department has received has arisen because Seaborne Freight was seen as a company that had no track record in shipping. We now know that Arklow was the company behind Seaborne Freight, and it had a huge amount of experience in shipping. What more can be done, in terms of no-deal preparations and more broadly, to ensure that when new start-up companies that are backed by well-established companies present themselves to Government the House can understand the relationship between those start-ups and the companies backing them?
Chris Grayling
We always have to take steps to be careful about commercial confidentiality, particularly when a company is in a complex negotiation, as was the case in this situation in respect of new ships. I was clear to the House when I spoke a few weeks ago that Seaborne Freight had substantial backers. It is really important that when Ministers stand up and say, “Look, we know they have substantial backers”, the House does not disbelieve that, because actually it has proved to be true.
Luke Pollard (Plymouth, Sutton and Devonport) (Lab/Co-op)
The Secretary of State has said that no money has been spent on this process, so could he tell us how many of his officials were working for free during this process? He says no money has been spent, but what about the embedded cost? The time each official and each Minister has spent on this project is cost, so will he publish the costs of how much time has been spent on this debacle? If he will not resign, will he at least apologise for this mess?
Chris Grayling
Dear oh dear, they keep trying, don’t they? We have hundreds of civil servants across Whitehall working on no-deal preparations to make sure that we are ready in case it happens. I am clear that we do not want no-deal, but we are taking the necessary precautions. The problem is that the Labour party does not believe that should be happening.
Mr Philip Hollobone (Kettering) (Con)
With regard to no-deal preparations, will the Secretary of State confirm to the House, once again, that we have signed the common transit convention, which means that import duties and customs declarations do not have to be sorted out until goods arrive at their final destination? In his reply, will he also mention that the mayor of Calais has said that Calais will be open for business even in the event of no deal?
Chris Grayling
Both of the points made by my hon. Friend are absolutely correct. My view is that the common transit convention solves many of the problems. We cannot be 100% certain, because we have not had confirmation from the French yet about how they would manage border posts in Calais, notwithstanding the common travel convention, but he is absolutely right that it should enable trade to flow through smoothly. I have been clear in saying regularly that I expect those ports and the tunnel to operate pretty much normally, but we have contingency in place just in case that is necessary.
Thelma Walker (Colne Valley) (Lab)
A fake lorry traffic jam in Kent, rail timetable chaos, which is still affecting commuters and local businesses in my constituency, and now a cancelled contract with a ferry company that owns no ferries—is the Secretary of State proud of his record?
Chris Grayling
There was no fake traffic jam; it was an exercise to test the movements of vehicles into and out of Manston in Kent. The timetable troubles were caused by a project where Government were investing in rail infrastructure in the north-west—something that never happened under Labour—which ran late. As I said a moment ago, this shipping company identified and got firm options on two ships but was unfortunately not able to carry on because its backers pulled out.
Michael Tomlinson (Mid Dorset and North Poole) (Con)
Despite the hogwash and doom-mongering from the Opposition Benches, the Secretary of State is absolutely right to ensure that there is contingency planning for every eventuality. For the avoidance of doubt, will he confirm that the taxpayer’s interests have not been damaged and that he will continue to take all necessary steps to ensure that we are ready, deal or no deal?
Chris Grayling
Absolutely. This is essential Government spending across Government. We have to be ready for all eventualities. I make no apology for the fact that the Government are spending money on preparing for no deal, but my view is that the best kind of contract for the Government is one for which we pay no money until the service is delivered and, of course, that is what we had in this case.
Jonathan Edwards (Carmarthen East and Dinefwr) (PC)
Over the past year, a new start-up based in my constituency, Carmarthen Bay Ferry, has successfully operated an excellent service for the people of Carmarthenshire and tourists, linking Glanyfferi in my constituency and Llansteffan on the other side of the Towy estuary. In the light of the collapse of their arrangement with Seaborne Freight, will the British Government have a look at the Carmarthen ferry model to see how to run a successful ferry operation?
Chris Grayling
I am not sure that operating a freight haulage operation across the English channel is quite the same as operating what I am sure is a fine business in the hon. Gentleman’s constituency, but I wish it well for the future anyway.
Andrew Bridgen (North West Leicestershire) (Con)
“When the facts change, I change my mind” is a quote widely attributed to John Maynard Keynes, someone normally highly supported on the Opposition Benches. Will my right hon. Friend the Secretary of State confirm that the facts have changed and it is only prudent that Government policy changes to reflect the new reality?
Chris Grayling
Absolutely. We set out a plan, and I was clear that we did not expose the taxpayer to risk. The events of last week happened, so we changed our mind. My hon. Friend is absolutely right. The best thing for the Government to do is to pursue the right policy at the right time.
Mary Creagh (Wakefield) (Lab)
It is touching to see this arch-Brexiteer Secretary of State relying on the good will of an Irish shipping company and the Dutch dredging firm that dredged the port of Ramsgate. Will he tell us whether that dredging was carried out under the appropriate licences and who will pay for it? He talked about due diligence; Arklow told “Channel 4 News” that it did not agree to the contract with Seaborne and blamed the UK Government for moving too fast. If Arklow could do the due diligence on Seaborne, why could not the Secretary of State?
Chris Grayling
I can only refer the hon. Lady to what I quoted earlier:
“I will be working closely with the team at Seaborne to ensure that they have appropriate support from Arklow Shipping to deliver on their commitments to Her Majesty’s Government.”
It is there, plain, in black and white.
Dr Matthew Offord (Hendon) (Con)
There has been much ridicule of Seaborne Freight because it did not own any ferries but, to build on the theme of the question from my right hon. Friend the Member for Scarborough and Whitby (Mr Goodwill), is the Secretary of State aware that Uber does not own any taxis and, indeed, Airbnb does not have any hotels, either? Does he agree that it would be more ridiculous if the Government had not planned for a no-deal scenario and had refused to award any finances to it, as the shadow Chancellor advocated?
Chris Grayling
This is the point: the Labour party wants to disrupt Brexit. It wants us to leave the European Union but will not approve the deal and does not want us to prepare for no deal, so it has no policy at all. Frankly, as I have said on more than one occasion, Labour is not fit to be an Opposition, let alone a Government.
Karen Lee (Lincoln) (Lab)
Did the Secretary of State’s decision to cancel the contract with Seaborne predate the letter from Arklow—yes or no?
Tom Pursglove (Corby) (Con)
In the light of the decision to end Seaborne’s contract, what discussions has the Secretary of State had with other providers about their providing extra capacity?
Chris Grayling
We made provision in the contracts that we signed with Brittany Ferries and DFDS for additional capacity on other routes, that were not in our original mix. Those are options that we are free to take up and we will have cross-Government discussions in the next few days to assess current needs and forecasts and see whether that is required.
David Hanson (Delyn) (Lab)
The Secretary of State says that there are no costs to Government, so for the avoidance of any doubt, will he place in the Library the costs of any legal fees and the numbers and types of civil servants working on both the pre-work and the cancellation? Will he tell us the total cost of all that to the taxpayer?
Chris Grayling
My Department is accruing a bill of many, many millions of pounds, preparing for a no-deal Brexit in a whole variety of different areas—we are working on maritime, aviation and haulage—and I regularly answer questions about those amounts through written questions. I am also always happy to place information on those amounts in the Library of the House.
Kevin Foster (Torbay) (Con)
I am sure that, like me, the Secretary of State finds it interesting to come into this Chamber one day and hear complaints about the potential impact of no deal, and to come in here the next day and hear complaints about the efforts to mitigate those impacts. Will he confirm what work has been done to ensure that the main routes across the English channel—the Eurotunnel and the main crossings between Dover and Calais—will continue working even in a no-deal scenario?
Chris Grayling
My Department and I are working on detailed plans to ensure that the pressures on both the tunnel and the port of Dover are as small as possible. I am very confident, as I have said on more than one occasion, that things will move pretty smoothly through there. The purpose of this additional capacity is to ease some of those pressures and to prepare for contingencies if they are required.
Layla Moran (Oxford West and Abingdon) (LD)
The Secretary of State has mentioned several times now his reliance on his Department, but in the end the buck stops with him. When evaluating these bids, it is worth noting that Deloitte did not make a formal assessment of Seaborne’s financial stability because it was not incorporated until April 2017. Mott MacDonald provided a technical assessment of that and the review flagged up significant execution risks relating to the Seaborne bid. We may not all be experts in everything we talk about, but surely the public expect a level of common sense when it comes to things as big as this. Where was the common sense of the Secretary of State when it came to this contract?
Chris Grayling
The common sense came in two forms: first, when Arklow Shipping confirmed to my Department in writing in December that it was supporting this; and, secondly, because we had a contract where no payment was made until the service was delivered.
Chris Green (Bolton West) (Con)
Spectators of this debate may think that the greatest of catastrophes has happened, but all this debate really reveals is the Conservatives’ support for innovation, for small business and for delivering on Brexit, and the Opposition’s opposition to that.
Chris Grayling
I keep saying that I find it baffling that the Opposition should be opposed to giving a chance to a small business when the taxpayer was exposed to no financial risk at all, particularly when that small business had a major international backer. It is inexplicable.
Richard Burden (Birmingham, Northfield) (Lab)
On successive occasions, the Secretary of State has assured the House that he carried out full due diligence tests of this contract before he awarded it, but I for one am none the wiser about what those due diligence checks consisted of. Today, will he answer the question that he failed to answer when he last appeared before the House on this matter? In April last year, Seaborne Freight issued an investor briefing that claimed:
“Detailed port agreements with Ramsgate and Ostend negotiated and agreed.”
We now know that no such agreements existed. Did his due diligence checks not reveal that and, if not, what kind of due diligence was it? Or did they reveal that and, if so, what weight did he attach to the fact that Seaborne had issued an inaccurate investor briefing?
Chris Grayling
The comfort that we had was that the three professional advisers advised us that credible plans were in place. That was reinforced by written confirmation from Arklow Shipping that it was supporting the proposal and by the fact that we protected the taxpayer’s interests by ensuring that no funds would be paid over unless this was delivered. The fact that, last week, we had a firm that had options on ships and agreements reached in principle with both ports, suggested to me that it was on the right track. It was just a shame that the backers did not feel able to continue.
Helen Goodman (Bishop Auckland) (Lab)
In another triumph of the Department’s no-deal Brexit planning, the Secretary of State’s junior Minister wrote to all Members of Parliament about the hauliers who, presumably, will use these sea routes, saying that 3,816 international permits had been awarded, but there are 526,000 HGV hauliers in this country, so fewer than 1% will be able to get a licence. Is this really going to work in the event of no deal?
Chris Grayling
As you will be aware, Mr Speaker, the European Commission has already said that it wants haulage to continue. It does not expect a permit-based system to be required. But in the event of a no-deal Brexit, we have bilateral agreements with a number of other EU member states that come into effect. We have put in place a system to distribute the ECMT permits precisely because we want to make sure that all bases are covered. However, we wrote to hauliers last week saying that they were being issued as a formality. Nothing that has happened so far would lead us to believe that those restrictions will be there.
Jim Shannon (Strangford) (DUP)
I thank the Secretary of State for his answers so far. Has he had the opportunity to review the unexplainable action of Irish firm Arklow Shipping in relation to its agreement with Seaborne Freight? Was there a signed contract or is it the case, as some stories today indicate, that the Republic of Ireland and the EU are doing all they can to frustrate Brexit?
Chris Grayling
I do not want to attribute any possible reasons for Arklow Shipping pulling out. It was a shame that, just at the point when everybody had draft contracts in place ready for signing, the company backed away. It is a regret that that is the case. I would have liked to have seen this new service come into effect, if only to ensure that the port of Ramsgate had alternative business for the future, but I am afraid that it is not for me to comment on the motivations of the company involved.
Mr Paul Sweeney (Glasgow North East) (Lab/Co-op)
Perhaps when the Secretary of State is finally fired for his incompetence over this issue, he might get the consolation prize of being invited on to Comic Relief’s special edition of “The Apprentice”, where we can see him on “Team Seaborne”, trying desperately to fill in the capacity that he has failed to provide as Secretary of State. I think we could all do with a laugh on that front. The reality is that the financial risk is neither here nor there. There are barely 50 days to go and the Secretary of State has still failed to provide that vital freight capacity, so where is it coming from? Is he going to ask the Ministry of Defence to provide this emergency capacity?
Chris Grayling
Dear, oh dear; you do get them from the Opposition, Mr Speaker. The hon. Gentleman has clearly not been listening to a word I said. I said that we have options available on two other routes in the North sea. Those routes take longer and are more expensive, but we have had them in reserve all along. I judged and we judged—my Department felt—that it would be better if we could have access to a shorter route from Ramsgate to Ostend. That has not worked out and we now have the option to return to the original choices.
Brendan O’Hara (Argyll and Bute) (SNP)
Putting aside the further reputational damage caused, is the Secretary of State fully satisfied that he has handled this affair to the very best of his ability? If this embarrassing shambles was indeed him at his very best, what on earth has to happen on his watch to make him resign?
Chris Grayling
Dear, oh dear. I will simply say that I am always going to do what I believe to be in the national interest, and that is what I and my team in the Department have been doing.
Louise Haigh (Sheffield, Heeley) (Lab)
One of the many things that this shambles reveals is the Government’s utter lack of preparedness for a no-deal Brexit. To avoid any more embarrassments for the Secretary of State, is not it high time that his Government ruled out a no deal?
Chris Grayling
If the hon. Lady wants a non-no-deal Brexit, she should line up behind the deal that the Government have reached with the European Union, but if she is not prepared to vote for it, she should not complain when Ministers are preparing for all eventualities.
Kevin Brennan (Cardiff West) (Lab)
The hon. Member for Argyll and Bute (Brendan O’Hara) has been very unfair; I am sure the Secretary of State is handling this to the best of his ability.
The Secretary of State was very careful not to answer the first part of the question from the hon. Member for Strangford (Jim Shannon), who directly asked whether there was a contract between Arklow and Seaborne. Is not it the case that the Secretary of State knows full well, as reported in The Irish Times today, that there were numerous discussions between Seaborne and Arklow, but there was no contract or even formal agreement in place—and yet he went ahead?
Chris Grayling
I do not think that Opposition Members are listening at all to what I have said. The agreements were all in place and ready to be signed, but the reality is that, at this moment, Arklow took a step back and did not want to continue. We had commitment now, a month ago and at Christmas time that Arklow was backing this proposal, but to be on the safe side—to be sure—we set up a contractual structure that meant that the taxpayer had no exposure unless the service was delivered. That was the right thing to do.
Wayne David (Caerphilly) (Lab)
Last month, the Secretary of State said to this House:
“We contracted with Seaborne Freight because the service it proposes represents a sensible contingency”—[Official Report, 8 January 2019; Vol. 652, c. 190.]
Given what we now know and with the benefit of hindsight, will the Secretary of State have the humility to come to the Dispatch Box and say sorry?
Chris Grayling
It was a sensible contingency. If we require that capacity now, we will have to use longer routes through the North sea, when it would be better to go from Ramsgate to Ostend. We have the resources, facilities and capacity available to deal with what we have identified as the needs of organisations such as the NHS.
Nic Dakin (Scunthorpe) (Lab)
My hon. Friend the Member for Birmingham, Northfield (Richard Burden) asked the Secretary of State whether, at the point of signing off the contract, he knew that Seaborne Freight had not got in place the agreements with the port authorities in Ramsgate and Ostend that it was saying that it had got. This is about due diligence—was it done?
Chris Grayling
I can only think that Opposition Members have not been listening to a word I have said. I said at the start that we knew that they had not got the arrangements in place. That is why we put in place a tight contractual structure that involved no financial commitment from the taxpayer until they had got those things sorted out.
Martin Whitfield (East Lothian) (Lab)
We have heard today that there was no legal contractual agreement between Arklow Shipping and Seaborne. The Secretary of State has confirmed that the reason for pulling out of this contract was the announcement on Friday. If that is the case—if he only knew about it on Friday—then how can the DFT spokesperson be correct that he is in advanced discussions with other shipping companies?
Chris Grayling
Precisely because, as I said, we already had secured options that would enable us to provide alternatives.
Drew Hendry (Inverness, Nairn, Badenoch and Strathspey) (SNP)
Throughout this ridiculous Brexit shambles, Brexiteers have liked to lean on historical events to justify the metaphors for some of their Brexit fantasies. Was this calamity actually engineered by the Secretary of State, so that he could paint himself as some kind of latter-day Horatio Nelson—“I see no ships”? Well, we see no competence. Will he resign?
Chris Grayling
Actually, I did see ships—they were lined up ready to go on this route. It is a shame the backers pulled out.
Universities: Financial Sustainability
(5 years, 10 months ago)
Commons ChamberRead Full debate Read Hansard Text Read Debate Ministerial Extracts
Angela Rayner (Ashton-under-Lyne) (Lab) (Urgent Question)
To ask the Secretary of State for Education if he will make a statement on the financial sustainability of universities in England.
The Minister for Universities, Science, Research and Innovation (Chris Skidmore)
I thank the hon. Lady for the opportunity to discuss the higher education sector today in what is my first urgent question.
This Government recognise the importance of the higher education sector and the massive contribution that it makes to this country. We recognise the multiple challenges that the sector is facing and that these will require institutions to adapt to a more competitive and uncertain environment. It is true that the current context presents significant challenges to institutional management, efficiency and financial planning in the HE sector, but it is wrong to characterise the HE provider sector as teetering on the brink of financial collapse. In its final annual report on the financial health of the sector published in March last year, the Higher Education Funding Council for England—the Office for Students’ predecessor—concluded that the HE sector continues to be in a sound position financially.
The new regulatory framework under the Office for Students brings a risk-based approach to monitoring financial viability and sustainability in order to protect students’ interests. Financial sustainability is a condition of registration. This means that the OfS, as regulator, will pay greater attention—and, importantly, require more specific action—where there is greater institutional vulnerability. Where the OfS identifies particular risks to a provider’s financial sustainability, it will indeed take action. This may include enhancing its monitoring or imposing a specific condition of registration on a provider to improve its financial performance. It may also require a provider to strengthen its student protection plan. This will enable action to be taken before a provider faces major financial difficulties.
The Department for Education is also working closely with the OfS to understand the sector’s wider financial risk in worst-case scenarios. We are working with the OfS, other Departments and other relevant national partners to develop full contingency plans to deal with unforeseen and/or major HE provider failure. This will set out roles, responsibilities, triggers and actions to be associated with instances where HE provider market exit falls outside the normal business-as-usual approach of the OfS in implementing its regulatory framework and requires Government action. But ultimately, as autonomous bodies, the financial viability of universities is a matter for the leadership of the HE providers themselves.
The terms of reference of the post-18 review that has been led by Sir Philip Augar include a focus on ensuring choice and competition across a joined-up post-18 education and training sector. The review will look at how it can support a more dynamic market in provision while maintaining the financial sustainability of a world-class higher education and research sector. We have been clear that the review recognises the need to preserve and protect the existing strengths in the system, and the stability of providers is key to a strong system.
The HE sector does face challenges, but we are confident that universities will rise to these challenges and continue to be providers of world-class higher education.
Angela Rayner
Thank you for granting this urgent question, Mr Speaker. I want to take this opportunity to wish my comrade, my hon. Friend the Member for Bolsover (Mr Skinner), a happy birthday.
Serious concerns were revealed this weekend about the financial situation of Reading University and there are reports of at least three more universities facing a significant risk of insolvency. I hope that the Minister will tell us in a little more detail what steps he is taking to address the situation at Reading, as well as across the sector, because the consequences of such a failure would be disastrous for students, staff and entire local communities and economies. Can the Minister reassure us that it is the Government’s policy to prevent such a disaster? I do not feel reassured from his response that he has a grip of this.
The Minister said that he is working with the Office for Students towards establishing student protection plans. Can he clarify how many universities do not have plans in place? When will he ensure that they all do? What will it mean in practice? Will students be left with a refund but no qualification after years of study? HEFCE had a list of universities of financial concern. Can the Minister tell us whether the new regulator has such a list and how many providers are currently of concern? Last year, it granted at least one £1 million emergency loan. Can he tell the House how many others have been issued? The new regulator has now said:
“The OfS will not bail out providers in financial difficulty.”
Is that Government policy and from when does it apply?
Can the Minister confirm that his Government have also handed universities a £200 million pensions bill but no new funding to meet those costs? Is he lobbying the Treasury to change that? The Office for National Statistics has demanded that the Government end the “fiscal illusion” of pretending that all loans for fees are repaid. When will the Government follow that ruling? Given the uncertainty that universities now face, can he tell the House whether the Augar review will be published this year? Will he guarantee that any proposals on tuition fees will not lead to cutting universities’ funding?
This crisis is a direct result of the Government’s failing free market experiment. Is it not time they faced the fundamental fact that education is best provided as a public service for the public good? If this Government will not change, it is time for a new Government.
Chris Skidmore
I will respond to several of those points, but I do not think it is appropriate for the Government or the OfS to comment on the position of individual providers.
In terms of the role of the Office for Students in HE financial sustainability, as I have stated, the new regulatory framework that has been created brings a risk-based approach to monitoring financial viability and sustainability, in order above all to protect student interests. The reforms have provided for that framework, and it means that the OfS, as regulator, can pay greater attention and require more specific action if there is institutional vulnerability.
Ultimately, these are autonomous bodies and leaders of HE providers are responsible for ensuring their institutions’ financial viability. They are not part of the public sector; they are autonomous institutions. During the passage of the Higher Education and Research Act 2017, a key point voted on by Labour Members was that universities would remain independent and autonomous. The OfS will therefore work closely with providers in financial difficulty, but neither the OfS nor the Department for Education will prop up failing providers. The OfS may enhance its monitoring or impose a specific condition of registration, requiring a provider to improve its financial performance, but we need providers at risk of any financial difficulties to come forward, so that we and the OfS can work with them on improving those registration conditions, which may require a provider to strengthen its student protection plan.
I turn to the issue of HE provider failure. The aim of the new HE regulatory approach is that the Office for Students will be able to act in anticipation of developments such as course closure or market exit, rather than in reaction to them. As I have said, under the new regulatory framework, providers must meet a set of registration conditions aimed at ensuring that they are financially viable, sustainable and well-managed organisations. The new HE regulatory framework has been designed to promote diversity, innovation and choice in HE, in the interests of students, and achieving that does not equate to propping up any particular failing HE provider.
In a competitive market, providers that fail to meet quality standards for students’ expectations may see their financial position come under even greater pressure. There is an expectation that providers may, in a small number of cases, exit the market altogether as a result of strong competition. However, the OfS’s primary interest is ensuring that any such closures do not adversely affect students and their ability to conclude their studies and obtain a degree. Students are making a considerable investment when they commit to a programme of study—investing their time, energy and money—and it is important that they should be able to complete those studies.
On protecting students and student protection plans, the OfS has the powers to ensure that all registered HE providers have these plans in place to safeguard students’ interests against the risk of financial failure. It is a registration condition that they have such a student protection plan in place. Student protection plans will set out what students can expect to happen in the event of a course, campus or department closure or if an institution exits the market. The plans must address the specific risks faced by the provider, and may include measures such as the transfer of students to another provider or financial compensation. In addition, the new regulatory framework sets out that all providers must have a refund policy.
On the pensions issue that the hon. Lady mentioned, the Government’s consultation on the teachers’ pension scheme changes closes this Wednesday—13 February. I encourage all providers to participate in that consultation, which is an important one. It is right that this live consultation should seek views on the impact of the proposal on higher education institutions, and we will finalise funding decisions once the consultation has concluded.
The hon. Lady mentioned the post-18 review being led by Philip Augar, which is still ongoing. More information on the review will be available in due course, and it will be published in due course. I will not speculate on what recommendations the independent panel will make on HE tuition fees, or on what the final conclusions will be. However, the post-18 review terms of reference include a focus on ensuring choice and competition across the joined-up post-18 education and training sector. The review will look at how to support a more dynamic market in provision while maintaining the financial sustainability of a world-class higher education and research sector. I look forward to the review being published in due course.
When it comes to the hon. Lady’s own position on the financial sustainability of the HE sector, I have to say that of all the universities I have visited and all the vice-chancellors I have spoken to, not one supports Labour’s position of removing tuition fees and completely crippling the HE sector’s financial position. The removal of fees completely would ensure that instability returned and student number caps returned. When it comes to access and participation plans, the money spent on them has risen from £430 million to £860 million in recent years, and that money would end up being capped. Labour does not have any answer on what it would do to ensure that the finance of our universities is protected for the longer term.
Joseph Johnson (Orpington) (Con)
May I congratulate my hon. Friend on the excellent start he is making on what is the best job in government? Universities’ financial sustainability and our soft power as a country depend on our ability to compete successfully for international students around the world. Does my hon. Friend agree with me that we should put in place a competitive offer for international students by restoring the two-year post-study work visa that we mistakenly abolished in 2012?
Chris Skidmore
I thank my hon. Friend for the work he put in as one of my predecessors as Universities Minister. The establishment of the Office for Students was very much down to his hard work. I remember the Higher Education and Research Act as the most amended piece of legislation in the history of this place, and he did a sterling job in making sure that we have the regulatory framework in place to ensure that we protect against financial failure in the market.
When it comes to international students, the Government are absolutely determined to press forward and look internationally at what we can do. Our universities are world-class and world-leading organisations. We have had roughly 460,000 applications from the EU and internationally this year—the highest level of applications ever seen. We will be publishing an international education strategy in the spring. We are clear that we have removed the cap on international student numbers, and we want to do more to ensure that we can increase our ability to compete not just nationally but internationally with other countries that also recognise the value of higher education at the international level.
Marion Fellows (Motherwell and Wishaw) (SNP)
The University of Reading is an example of the recent trend of universities running into financial difficulties. It has got a short-term loan, but it is very unclear what this Government intend to do, as the Office for Students said last year that it would not bail out universities any more. Is it or is it not the Government’s position to offer financial aid to universities with cash-flow issues?
Universities UK is extremely concerned about all the issues that universities are facing, such as pensions and the Brexit strategy being pursued by the present Government. Will the UK Government look at universities—the place they hold in society across the UK and the amount of cash they generate for the UK economy—and help them to get through this real and immediate crisis?
Chris Skidmore
I made it clear in my opening remarks that the Government do not intend to bail out any independent, autonomous institutions, which is what HE providers are. What we have done is provide the regulatory framework by which the OfS can step in to help universities by signposting and working with them in advance to ensure that market failure does not occur. I have to say that our ability to provide record levels of investment in universities has been the result of increased tuition fees, which we have not seen in Scotland. As a result, some of the poorest students are able to access universities in a way that does not happen north of the border.
Vicky Ford (Chelmsford) (Con)
Just before I ask my question, will the Minister join me in congratulating Trinity College, Cambridge on appointing its first ever woman master, Dame Sally Davies?
Students are right now thinking about which courses to accept for next year and what university to go to. Can the Minister confirm that the regulator, the Office for Students, has given all registered institutions the bill of health that means they are financially secure for at least the next three years?
Chris Skidmore
The Office for Students is currently undergoing a registration process for all HE institutions, including FE providers. I understand that around 250 institutions have now been registered and, having spoken to the OfS, I am confident that it will finish the process over the course of this year. I of course congratulate Dame Sally Davies on her appointment. We need more women in leadership positions in higher education—the more, the merrier—so I offer many congratulations.
Matt Rodda (Reading East) (Lab)
Reading University is an outstanding, research-intensive university with high-quality teaching, as I am sure the Minister is aware, as it scores excellent marks in the Government’s own teaching excellence framework. It also provides thousands of high-quality jobs in Reading and the wider Thames valley region. Will he reassure students, the university and the many local people who rely on it that he is willing to help, and will he meet me and the university’s vice chancellor to discuss the issues involved?
Chris Skidmore
I am happy to meet the hon. Gentleman, as a constituency Member of Parliament, at his request. However, the Government’s position is not to comment on the financial sustainability of individual institutions. I will arrange the meeting, but I urge him and Reading University to contact the OfS to begin discussions on any concerns they might have. The OfS is there to provide early signposting and pick up on issues, rather than to react to late decisions or financial circumstances.
Kevin Foster (Torbay) (Con)
The Minister will have seen the growth in the universities sector over the past few years, particularly as the student caps have been removed, and he will be aware that Torbay hopes at some point to have an institution of university status. Will he reassure me that we will not return to the era of caps, which would make that impossible?
Chris Skidmore
I entirely agree. I am proud to be a member of the Government who reduced the student number cap between 2012 and 2015, and eventually abolished it in 2016, allowing a record number of students to access higher education. We know that, going into the 2020s, we will need a knowledge-based economy, so it is right that we allow more people the opportunity to succeed in their ambition to achieve a degree. Abolishing student finance by looking at fee levels would simply give away a fee freeze to the children of millionaires while capping the number of students who could attend university.
Gareth Thomas (Harrow West) (Lab/Co-op)
The Minister has said that the Government will not bail out universities in financial difficulties, yet virtually his first act as Universities Minister was to take through Parliament a 20% increase in tuition fees, albeit just for accelerated degrees at this stage. Can he reassure the House that he has no plans to allow other degrees to see a 20% hike in tuition fees as a result of the financial problems currently facing universities?
Chris Skidmore
I welcome the measures we are putting in place to increase course innovation and flexibility within the HE sector. I passionately believe that that is the future and where we need to go. People may need to train and retrain across the course of their lives, so we will need course provision that allows people to access the HE market at every stage of their lives, right the way through their 20s and 30s. Two-year degrees are not a silver bullet—in fact, they were put forward in a Labour party amendment to the Higher Education and Research Act—but we have tried to ensure that they open up the market and we have encouraged more HE providers to take up two-year degrees. At the moment, they have been capped by the financial ability or the lack of financial ability to do so. Ultimately, it is £22,000 for a degree as opposed to £27,000. It is not necessarily an increase in fees; it provides people with an opportunity to study at a time of their choosing.
Sir Desmond Swayne (New Forest West) (Con)
What would make universities less financially sustainable than making them entirely dependent on Government finance, particularly if it is a Labour Government?
Chris Skidmore
Absolutely. If we began to return to a stage where universities are financed entirely by taxation it would not only put an increased burden of £12 billion on the taxpayer—an increase of about 2p to 3p on income tax rates—but mean that HE would have to compete with Government funding priorities on the NHS and welfare. Ultimately, we would return to student number caps and the situation we see in publicly funded universities in other countries where people struggle to find seats in lecture theatres. It is right that we have a sustainable financial system that protects students’ futures.
Gareth Snell (Stoke-on-Trent Central) (Lab/Co-op)
The Government still put billions of pounds into the higher education sector through research grants. If the Minister is not going to bail out institutions that are struggling financially, will he indicate to the House what action he is taking to safeguard the taxpayer pound being spent by institutions on research?
Chris Skidmore
I entirely agree with the hon. Gentleman on the value of research and development in the HE sector. The Government are committed to spending 2.4% of GDP on R&D. Some university grants relate to Horizon 2020 and the Government have made an underwrite guarantee extension to protect all currently allocated grants. We want to work with the sector to look at how we can increase money for R&D. The return on investment is fantastic. In the space sector, for every pound spent on R&D £10 is returned, so I could not agree more that we do need to do more as a Government. We have not done more in the past to bring ourselves up to the OECD average. Universities will be at the front and centre of that.
Andrew Bridgen (North West Leicestershire) (Con)
Does the Minister recall that in 2010 the system we inherited for funding higher education was completely unsustainable? Does he agree that that was demonstrated by the fact that it was the previous Labour Government who commissioned the Browne review?
Chris Skidmore
My hon. Friend is absolutely right. Our inheritance from the previous Government meant that we had a cap on student numbers, low numbers of people from disadvantaged backgrounds going to university, and low numbers of women entering science and mathematics degrees. All those trends have been reversed by investing in access and participation plans, investment to ensure that universities can expand geographically and—[Interruption.] The hon. Member for Blackpool South (Gordon Marsden) is chuntering from a sedentary position. [Interruption.] I do apologise. The hon. Member for Ashton-under-Lyne (Angela Rayner) is chuntering from a sedentary position. I say again that turning back the clock to taxpayer-funded degrees would simply be a fee cut for the children of millionaires and I simply do not agree with that.
Paul Blomfield (Sheffield Central) (Lab)
The Minister will know that, whatever HEFCE said a year ago about the financial stability of the sector, a perfect storm is gathering with the potential drop in EU student numbers, EU research income and the Augar review. Does he agree that one way of mitigating the risks would be to take advantage of available sources of income? Does he accept that it would be a positive thing for him to embrace the recommendation of the all-party group on international students for an ambitious target for international student recruitment?
Chris Skidmore
I recently had a meeting with the Higher Education Commission, led by an all-party group in Parliament. I was keen to receive that report, and as I said, our international education strategy will be published in the spring. I look forward to that and to receiving all views while we consider what our policy proposals will be.
Mr Philip Hollobone (Kettering) (Con)
At a time when Her Majesty’s Opposition are expressing concern about the stability and viability of university finances, does the Minister share my outrage at the sky-high salaries and rocketing salary increases of some of these vice-chancellors and other senior university officials, which are far beyond anything that they are worth and are particularly insensitive to students, who always have to manage on a tight budget?
Chris Skidmore
Universities receive significant amounts of public funding, so it is right that their senior staff pay arrangements both command public confidence and deliver value for money both to students and taxpayers. We want to see senior staff pay in universities that is fair and justifiable, and the process for setting pay must be transparent. We have asked the OfS to pay close attention to the elements of the regulatory framework that will deliver value for money, as well as conditions of registration relating to senior staff pay, which will improve transparency in this area. I note that tomorrow, the OfS is publishing the first of its new annual reports on provider senior staff pay.
Mr Jim Cunningham (Coventry South) (Lab)
I have two universities in my constituency. Looking back—given some of the remarks that have been made by Government Members—I can remember that when the Major Government were in trouble, the proportion of students was only about 20%. Under a Labour Government, it was 47%, so we always find that under a Tory Government, universities have problems. However, my more serious question of the Minister is this: has he looked at the impact that Brexit will have on the number of students and exchanges, and the skills that are required from abroad to help research and development?
Chris Skidmore
It is important to say, going back historically, that the hon. Gentleman is talking about the 1992 era. I was 11 at the time, and we need to move forward to the 21st century and have a unity of purpose that means we should ultimately want to do what is in the best interests of students. We should celebrate the fact that the a record level of students are now going to university—around 39%—but we also have to make sure that we get post-18 education right, so that we do not allow students to drop out if that course is not appropriate for them. I am delighted that the Minister with responsibility for further education—the Minister for Apprenticeships and Skills, my right hon. Friend the Member for Guildford (Anne Milton) —is sitting here today. We work closely together to make sure that we have a unified position that will benefit all students. When it comes to Brexit and the issue of student numbers, recent figures show that the number of EU students applying to universities has not fallen. It has risen—figures were published last week—and I welcome the fact that we need to highlight the opportunities that will be available in our world-leading universities.
Luke Hall (Thornbury and Yate) (Con)
Does the Minister agree that Labour’s policy to scrap tuition fees, even for the wealthiest people in our society, would put the whole sector in mortal peril and risk tens of thousands of students not being able to go to university at all?
Chris Skidmore
My hon. Friend is absolutely right. What I have seen, going around to universities, is institutions that have been able to develop scholarship opportunities and help some of the poorest students in society to access higher education in a way that they would only have dreamed of a decade ago, at the same time as investing in capital, buildings, research and making sure, above all, that they improve the student experience by ensuring that the buildings, facilities and accommodation are really top-quality. The investment that has gone in, as a direct result of making sure that we have the finance and capital available for universities, has been spent well by them, in contrast to returning to a dark-ages position of our simply having no ability for students to pay fees. This would mean that we would return to the bad old days of student-number caps.
Layla Moran (Oxford West and Abingdon) (LD)
I was delighted to hear that the number of EU students has gone up, but one has to wonder whether it would have gone up even more had they had clarity about fees earlier. I used to help to run university admissions when I was a teacher. I can tell the Minister that the conversations we were having were in the year before the year of final exams, and July is too late. When are we going to get the clarity needed for the 2020 intake?
Chris Skidmore
We have set out clearly in the Government guarantee, when it comes to EU students studying at UK institutions, that we want to put financial provision in place for those students up to 2020. There is obviously a separate issue, which I am working on, about exchanges when it comes to the Erasmus scheme. Ultimately, I say to Members that a lot of the exchanges that take place and a lot of the ability to create educational partnerships rely on a deal with the European Union. The Prime Minister’s deal set out clearly the opportunity to protect those education partnerships. If anyone has any concerns about making sure that those can continue, I urge them to vote for the deal.
Alex Sobel (Leeds North West) (Lab/Co-op)
Staff at the universities in Leeds talk to me constantly about the twin threats they face: first, financial sustainability; and secondly, Brexit, including the issues of Erasmus, Horizon 2020 and the £30,000 threshold the Government want to apply to EU migrants. What assessment has the Minister made of universities’ ability to recruit and retain staff?
Chris Skidmore
The hon. Gentleman is absolutely right. This is not just about the financial numbers; it is about ensuring we have the human capital and that we are a welcoming place for higher education leaders and academics to come and continue their research. On the immigration White Paper, there is a consultation period, so we are consulting on the £30,000 cap, and I am keen to ensure that all HE institutions can feed into that consultation, both through the Home Office and by writing to me. I have also commissioned the Government Office for Science to model the potential impact on the scientific and research communities. So I am attuned to his concerns. We need to ensure that in leaving the EU we do not leave behind our European partnerships in academia, but we must also reach out much more widely and adopt a more international outlook.
Legislation against Female Genital Mutilation
(5 years, 10 months ago)
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Urgent Questions are proposed each morning by backbench MPs, and up to two may be selected each day by the Speaker. Chosen Urgent Questions are announced 30 minutes before Parliament sits each day.
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Wera Hobhouse (Bath) (LD)
(Urgent Question): To ask the Minister for Women and Equalities if the Government will introduce further legislation to protect vulnerable young girls against female genital mutilation.
The Parliamentary Under-Secretary of State for Justice (Lucy Frazer)
I am grateful for the opportunity to address the House on this important matter. Female genital mutilation has no place in our society. It is an extremely painful and harmful practice that blights the lives of many girls and women. The Government have taken the lead in tackling this barbaric crime. We strengthened the law in 2015 to introduce FGM protection orders and help prevent this appalling crime, and nearly 300 of these orders have now been made. Lord Berkeley’s Bill, supported by my hon. Friend the Member for Richmond Park (Zac Goldsmith), would improve the powers of the courts to protect children, and it is disappointing it was objected to on Friday. I am pleased to say, however, that we are working to bring it back in Government time.
Wera Hobhouse
I thank the Minister for her response and I welcome the Government’s commitment on this issue.
We need greater protection for girls at risk of female genital mutilation. The statistics clearly prove that female genital mutilation is on the rise, yet successful instances of protection orders being obtained are as rare as ever, and only four cases have ever been prosecuted. Can the Minister update us on the implementation of the legislation?
The successful prosecution 10 days ago of a mother who had inflicted this practice on her young daughter illustrates the flaw with current legislation: prosecutions only take place after the crime has been committed, and even then rarely. Further protections are needed to ensure that young girls do not have to go through the brutal, life-changing and sometimes life-threatening trauma of female genital mutilation. Can the Minister assure the House that the Government are willing to explore all legislative options, including amending the Children Act 1989, to ensure that young girls do not stay in a home where they are at risk of female genital mutilation?
We have an issue with serial objectors to private Members’ Bills. Mr. Speaker, you will be aware that my private Member’s Bill on upskirting met the same fate last year. Since the failure of Lord Berkeley’s private Member’s Bill on female genital mutilation, seven Ministers and the Conservative Chief Whip have come out in support of the proposed legislation. Can the Minster explain how the Government plan to deal with those of their own Back Benchers who serially object to private Members’ Bills that the Government seem to support?
In 2016, the Procedure Committee made recommendations for improving the process of private Members’ Bills that would prevent this type of situation from arising. Given the outcry caused by last Friday’s objection, will the Government commit to reviewing these recommendations?
Lucy Frazer
The hon. Lady, who I was pleased to work with on her private Member’s Bill on upskirting, raises some very important issues. She is right that we need to protect these vulnerable women, and I am pleased to say that, as she said, we have recently had a successful prosecution in this area.
Since 2015, the Government have introduced a number of measures to protect women and girls from female genital mutilation. We have created several offences, including failing to protect a girl from FGM. We have introduced civil protection orders, and there is a mandatory duty to report known cases involving under-18s. As I mentioned at the beginning, the Government will present a Bill in Government time.
As for the broader question of private Members’ Bills, the hon. Lady will know that many have passed through the House successfully, including important measures involving my own Department relating to emergency workers, to mobile phone technology, and—last Friday—to Finn’s law.
Helen Whately (Faversham and Mid Kent) (Con)
I welcome my hon. and learned Friend’s commitment to ensuring that the Bill will be given Government time, but will she give me an indication of when she expects this amendment to the Children Act to be presented to the House?
Lucy Frazer
I cannot give my hon. Friend a precise indication, as that is not within my power, but the Government intend to act very swiftly.
Carolyn Harris (Swansea East) (Lab)
I congratulate the hon. Member for Bath (Wera Hobhouse) on raising this pressing issue.
Female genital mutilation is an abhorrent practice, which can have dreadful consequences for the women and young girls who fall victim to it. Since legislation in 1985, there has been only one—very recent—conviction, although the NHS reports that nearly 15,500 cases presented at hospitals with symptoms of FGM in the past two years. The absence of successful prosecutions in our country indicates the failure of the current procedures. It is essential that we recognise the secrecy and fear surrounding the practice and address the fact that it makes people unlikely to report suspicions or instances of FGM.
The Serious Crime Act 2015 provides for protection orders, which offer a legal means of protecting and safeguarding potential victims. Since 2015, more than 240 orders have been granted to help victims and those at risk, which demonstrates that such protections are effective and can be used as a means of proactive assistance.
The clear need for increased protections makes the actions of the Member for Christchurch (Sir Christopher Chope) even more shocking. His reputation for objecting to important Bills precedes him. Today, I am not using the term “honourable” when referring to our colleague, because “honourable” implies “principled”, and the Member for Christchurch displayed no such principle in the Chamber last Friday. His objection to the FGM Bill sank to new depths. However, the issue should never have been left to be dealt with through a private Member’s Bill.
The Bill will protect countless women and girls, and any delay in its passage puts them at unnecessary risk. The Government should have introduced legislation long before now. Relying on a private Members’ Bill was a risky strategy, given that, as we know, worthy Bills have been talked out or objected to on many such occasions. We cannot now leave this Bill on the sidelines. If the Member for Christchurch has done nothing else, his antiquated and appalling behaviour last Friday has exposed the Bill’s importance. I seek an assurance that it will be back before Members during Government time, and very shortly, so that we can pass an essential piece of legislation.
Lucy Frazer
The hon. Lady cares deeply about protecting vulnerable people, and I am pleased to have met her to discuss a number of matters in the family justice sphere. She makes a number of important points.
It is essential to protect women and girls, and since 2015, the Government have introduced a number of measures to ensure that they are protected. As I have said, the Bill will be dealt with in Government time, but let me clarify what it does. It is not the case that without it, women and girls do not have protection; we introduced protections in 2015. What the Bill will do is enable a judge to make a care order during the same proceedings.
The hon. Lady makes another important point about the number of protection orders. She said that more than 200 had been issued since September. In fact, the number has gone up to 296; so just under 300 protection orders have been granted since their introduction at the end of September 2018.
I want to make a final point because a number of Members rightly identified that not enough prosecutions are successful, and this is a very important point that we must tackle. We are tackling it in a number of ways, through funding for education and through the bringing of legislation, but these are very difficult cases to prosecute for a number of reasons: cultural taboos, lack of information from affected communities and the fact that the age of the vulnerable girls might prevent them from coming forward. The issue we have in this country is not isolated; there is a very low prosecution rate for these kinds of offences across Europe, but this Government are committed to doing whatever we can to protect these girls further from this terrible crime.
Vicky Ford (Chelmsford) (Con)
FGM is barbaric and also illegal, and I thank this Government for bringing in FGM protection orders. Can the Minister confirm that closing this specific loophole to make sure the protection orders can come within the definition of family proceedings will be dealt with not only in Government time but as a matter of urgency within Government time?
Lucy Frazer
As my hon. Friend identifies, this is an important matter. It will come before the House in Government time; as the Chief Whip has indicated, this is a matter that he would like to proceed with, as would the Government.
Alison Thewliss (Glasgow Central) (SNP)
FGM is a violation of human rights. Data released over the weekend showed that in the past two years medics in Scotland’s cities have treated victims of FGM on more than 230 occasions, which is horrific and quite chilling to think of, but we still know very little about the extent to which it is practised despite women being treated who have already suffered FGM.
In Scotland, we have laws in place to tackle this illegal practice and are looking at introducing protection orders also for women and girls at risk, which would give judges the power to prevent a woman or girl believed to be at risk of FGM from being taken out of the country. I know from some of my own constituency cases that that is a very real concern, and some of my constituents have raised it with me. We also have a national action plan to prevent and eradicate FGM.
The more crucial point about this today, however, is that it is disgraceful that this Bill has been blocked. It is becoming increasingly frustrating in this House to have the will of the House circumvented by one male Member, whom such issues will not affect, standing in the way of progress when we want to get on and do good things that would prevent women and girls from being harmed. So what will the Minister do, and will she speak to her colleague the Leader of the House and others to ask for measures to be put in place to prevent this abuse of the House from happening again? The private Member’s Bill system has already been said by the Procedure Committee, on which I serve, to be broken and discredited, and we cannot have faith that Bills will progress if somebody can object to them as easily as we saw last week.
Lastly, the Minister has not given a date for when this Bill will return to the House. I understand that the Leader of the House will make a statement tomorrow in the House after the Prime Minister’s statement; will there be any update on when this will happen then?
Lucy Frazer
I am very pleased to hear of the measures being taken in Scotland, because of course this is not a domestic problem that affects any region in particular but is an international problem. The Home Office is working with all regions to deal with this issue, and I am very pleased that when we brought in the legislation in 2015, we extended the reach of extraterritorial offences to ensure we could help prosecute in relation to cases affecting the UK that were carried out elsewhere.
Rebecca Pow (Taunton Deane) (Con)
I am pleased to hear the Minister stating that this Government regard dealing with the harms of this awful issue of FGM to be of the utmost importance. We must give a clear message on this, and does the Minister agree that the best way to do that would be by giving time to bring this amendment in this Bill forward as quickly as possible?
Lucy Frazer
I am happy to confirm to my hon. Friend that the Government think that this is a very important matter. Across the Departments, we think that it is an important matter, and the Chief Whip has indicated that he does, too. We will be bringing forward this Bill in Government time.
Jess Phillips (Birmingham, Yardley) (Lab)
Like everybody else in this building—and, frankly, in the country—I am disgusted by the hon. Member for Christchurch (Sir Christopher Chope). If I were ever to be in charge of a political party, I certainly would not allow him to keep his Whip, should he ever do anything like this in this place again. He is a total disgrace. New laws are very nice but they are often just words on goatskin to the women who are affected by these and other crimes, so what will be in this Bill to make sure that the services that used to exist in Birmingham for victims of FGM and their families will be put back?
Lucy Frazer
I know that the hon. Lady takes a great deal of interest in women’s issues, and I have been pleased to work with her on a number of issues that cross my Department. I know that many of them stretch beyond my Department as well. She talks about funding and the importance of working in the community, and she is right to identify the fact that this is not simply a matter of making laws. It is about action, education and understanding. Of course, laws must set the boundaries and tell people what is right and wrong, and this crime is absolutely horrific and must be stopped, but that is not the extent of the Government’s actions on FGM. The Home Office’s FGM unit is driving a step change in our nationwide outreach, and it has done more than 100 events across the country to raise awareness. The Department of Health and Social Care has provided £4 million for the national FGM prevention programme in partnership with NHS England. The Department for Education has provided nearly £2 million for a national programme to improve the social care response to FGM, and it has announced a further £1.7 million to continue that work. That is what is happening in this country; the Department for International Development does an extensive amount of work overseas in addition to that, to ensure that women worldwide do not suffer from this horrific practice.
Sir Desmond Swayne (New Forest West) (Con)
I am glad that the Minister is granting Government time for this Bill. When I sat on the Opposition Benches and was a regular attender on a Friday, the Labour Government Whip would, as a matter of course at the end of each sitting, object to every Bill that was listed but undebated, whatever the merits of those Bills. That was also my duty on Fridays when I became a Government Whip. Why has the Government Whips Office abandoned that duty to my hon. Friend the Member for Christchurch? If we want more debating time for legislation, as I certainly do, we know where we can find it, don’t we?
Paula Sherriff (Dewsbury) (Lab)
Women who have been subjected as children to the abhorrent practice of female genital mutilation are much more susceptible to contracting cervical cancer, and it can also make smear tests much more painful, both emotionally and physically. I am proud to be an ambassador for Jo’s Trust, the UK’s cervical cancer charity, and I wonder whether the Minister would commit to meeting me to discuss how we can further support the survivors of FGM.
Lucy Frazer
I would be very happy to meet the hon. Lady. She has pointed out some of the terrible consequences of this horrific act, and I should like to take a little bit of time to refer to some of the others. In a leading judgment in the Supreme Court in a case concerning FGM, Lady Hale said that
“these procedures are irreversible and their effects last a life time. They are usually performed by traditional practitioners using crude instruments and without anaesthetic. Immediate complications include severe pain, shock, haemorrhage, tetanus or sepsis, urine retention, ulceration…Long term consequences include…urinary incontinence…and sexual dysfunction…It is likely that the risks of maternal death and stillbirth are greatly increased”.
This is a horrific activity, and we must do everything we can to prevent it.
Richard Benyon (Newbury) (Con)
My hon. Friend the Member for Richmond Park (Zac Goldsmith) is delayed elsewhere, on the Committee corridor, but I know that if he were here, he would start by paying tribute to what the Government have done so far and by echoing the dismay being expressed by all Members today at the behaviour of one of our colleagues on Friday. He would also say that it is a pity that our hon. Friend is not here to give an account of himself, because there might be a perfectly good reason for this. Will my hon. Friend the Minister please convey to those who manage procedure and Government business that many of us are just fed up with this kind of behaviour? We want a different system in which this sort of thing does not happen.
Lucy Frazer
I am grateful to my right hon. Friend for his comments and to my hon. Friend the Member for Richmond Park (Zac Goldsmith) for his sponsoring of the Bill, which the Government supported and continue to support. I am sure that those in charge of parliamentary procedure are listening and have heard those comments.
Liz McInnes (Heywood and Middleton) (Lab)
From talking to colleagues across the House, I know that we are all upset by the actions of the hon. Member for Christchurch (Sir Christopher Chope), so I am pleased that the Minister intends to bring legislation before the House. I understand that business will be quite light next week, so I wonder whether she might take the opportunity to bring a Bill to the House then.
Lucy Frazer
My portfolio is quite large, but I am not in charge of parliamentary business. However, I am sure that those who are in charge of it are listening to this debate. The Government are keen to bring legislation forward in Government time and will do that shortly.
Andrew Bridgen (North West Leicestershire) (Con)
Female genital mutilation is abhorrent and barbaric and should never be inflicted on any girl or woman in this country or, indeed, any country. In the spirit of equality, will the Minister update the House on the Government’s policy on male genital mutilation?
Lucy Frazer
My hon. Friend has a number of concerns relating to family justice that I am happy to have talked to him about over recent months. This Bill was about female genital mutilation, and the Government will be bringing forward legislation to address that matter.
Liz Saville Roberts (Dwyfor Meirionnydd) (PC)
Some people, although possibly very few indeed, will accuse the MPs condemning the behaviour of a Government Back Bencher of virtue signalling. Expressing abhorrence at the deliberate mutilation of young girls and changing the law to protect them is our duty, but if the Government are also to avoid the charge of virtue signalling, will the Minister indicate when the Bill will be brought forward?
Lucy Frazer
I am happy to repeat that the Government take this matter seriously. The Chief Whip has identified this subject as a matter of importance, and it will be given Government time shortly.
Mr Philip Hollobone (Kettering) (Con)
Female genital mutilation is an abhorrent crime and must be dealt with severely. The Minister keeps saying that this is an important issue and that it is horrific, but let us look at the reality. This crime was made illegal in 1985—34 years ago—but there has been just one prosecution. The Government need to make a little change to the Children’s Act 1989 to include the FGM amendments, but they have relied on a private Member’s Bill, introduced in the other place two years ago, to get the changes through. Until just the other week, the Government had not committed to allocating days for the consideration of private Members’ Bills, so it is completely inappropriate for Her Majesty’s Government to rely on a private Member’s Bill to make these important changes. The Government now say that they will allocate Government time to get the legislation through, and it is about time, too. They should have done that in the first place.
Lucy Frazer
I am grateful for the opportunity to respond to those points. Under this Prime Minister, the Government have taken a number of actions over several years to ensure that the offence of FGM is properly identified and prosecuted, that funding is allocated to addressing it and that girls are protected. The Government have introduced both a new offence of failing to protect a girl from FGM and civil protection orders, which have been well used since their introduction last September, and have made it a mandatory duty to report known cases involving under-18s. While the matter is important and the Government will bring forward new legislation, I reiterate that these changes would enable a judge to make a care order in the same proceedings. The protections that have existed since 2015 remain in place and will continue to protect individuals.
Mr Pat McFadden (Wolverhampton South East) (Lab)
Further to the question of my hon. Friend the Member for Heywood and Middleton (Liz McInnes), the legislative programme for next week is not exactly heavy. The public will simply not understand how such important legislation can be stopped by the shout of one man when it has cross-party support. I repeat the call for the Minister to speak to the Chief Whip about bringing forward a Bill next week. Such a Bill would have bipartisan support and would go through the House very quickly.
Lucy Frazer
I hear what the right hon. Gentleman says, and I understand that the measure has cross-party support. When the Government introduce a Bill, I look forward to its swift passage through the House.
Michael Tomlinson (Mid Dorset and North Poole) (Con)
Like one or two other Members here today, I was present on Friday. The Minister will know of the cross-party support not only today but on Friday, too, so I welcome her announcement that a Bill will be introduced in Government time. Will she take back my concern that a Bill be introduced as soon as possible? I echo Opposition Members: if there is time next week, so be it. Let us bring it forward.
Lucy Frazer
I am grateful to my hon. Friend for his comments and for being in the Chamber for the private Member’s Bill on Friday. His comments have been heard.
Gareth Thomas (Harrow West) (Lab/Co-op)
I share the deep concern of the Labour Front Bench and other Opposition colleagues about the actions of the hon. Member for Christchurch (Sir Christopher Chope).
How many young girls does the Minister think Britain would be leaving more at risk of female genital mutilation if the proposal by some Conservative Members for a multibillion-pound cut to the work of the Department for International Development were implemented?
Lucy Frazer
What we do know is that there are victims of female genital mutilation in the UK, where FGM is being carried out. In November 2018, the Department for International Development announced £50 million to target and prevent female genital mutilation in African countries, and that is part of a wider investment by DFID. So far, through its support, DFID has protected 3 million girls worldwide from FGM.
Several hon. Members rose—
Mr Speaker
That is a difficult choice. I believe the hon. Member for Hendon is a doctor. Let us hear from the fella.
Dr Matthew Offord (Hendon) (Con)
Unfortunately, Mr Speaker, not a medical doctor.
Dr Offord
That is correct.
I thank my hon. and learned Friend the Minister for making a statement today. I also welcome that she does not see a moral equivalence between brit milah and female genital mutilation. There is no moral equivalence between the two. I urge her to bring forward legislation as soon as possible, because I would like to hear the reasons why my hon. Friend the Member for Christchurch (Sir Christopher Chope) opposed the Bill. I do not believe it is sustainable to say, “I objected to the Bill because of procedure rather than its content.” Let us bring forward a Bill as quickly as possible so that not only can we hear that defence but, more importantly, we can hear the will of the House by taking a vote on the issue.
Lucy Frazer
I can confirm that we will shortly bring forward a Bill in Government time, and I look forward to the cross-party support that I am very pleased to see today and that I experienced during the recent passage of the upskirting Bill, which I co-sponsored, to ensure we do as much as we can to continue protecting vulnerable children and women.
Jim Shannon (Strangford) (DUP)
I also thank the Minister for her positive response and for her commitment to act and legislate quickly. Like her and everyone else in the House, I believe we must do all we can to stop this horrific and barbaric mutilation of girls. Will she outline the steps that will be taken to educate communities at an early age, especially given that the first guilty verdict for FGM was against a mother? There is a need to change the thinking in some communities.
Lucy Frazer
The hon. Gentleman makes an important point. Often we change the law, but what is really important is that we change the culture. That is why the Government are spending sums across Departments to ensure that we educate people. As I mentioned, the Department for Education has provided nearly £2 million for a national programme to improve the social care response to FGM, and it has announced a further £1.7 million to continue its work. That Department is also providing grant funding for two projects to help safeguard girls from FGM. The Home Office’s FGM unit has participated in over 100 engagement events across the country.
Kevin Foster (Torbay) (Con)
I was one of the few Members here on Friday afternoon. I have also used the “object” procedure, mostly to object to Bills that my hon. Friend the Member for Christchurch (Sir Christopher Chope) is moving to progress without debate. I therefore find some of his reasoning somewhat questionable. It is vital not only that we change the law to bring in this provision, but that it is then used. What work is the Minister engaged in with those who deal with child protection to ensure that once the law is changed, the orders are used?
Lucy Frazer
That is also an important point, because laws need to be implemented and be a matter for a number of other agencies, including the Crown Prosecution Service, to look at in taking forward prosecutions.
Counter-Daesh Update
(5 years, 10 months ago)
Commons ChamberRead Full debate Read Hansard Text Read Debate Ministerial Extracts
The Secretary of State for Foreign and Commonwealth Affairs (Mr Jeremy Hunt)
Mr Speaker, with permission, I will update the House on the campaign against Daesh, one of the most brutal and depraved terrorist organisations the world has ever seen. Since Daesh’s reign of terror started, investigators from the United Nations have discovered more than 200 mass graves in areas of Iraq once held by the terrorists, containing between 6,000 and 12,000 corpses. The UN has concluded that Daesh’s onslaught against the Yazidi minority in northern Iraq amounted to the crime of genocide, as testimony from remarkably brave individuals, such as the Nobel peace prize winner Nadia Murad, makes clear.
Daesh once imposed its rule of terror on an area roughly the size of the United Kingdom, but has now been driven back to an isolated enclave in eastern Syria. However, the House should not mistake territorial defeat for final defeat. Military action by many nations, including the UK, has broken Daesh’s grip on thousands of square miles of Syria and Iraq—and we can draw encouragement from that success, at the same time as we salute the extraordinary courage of the coalition of armed forces that made it possible—yet as we drive Daesh out of territorial strongholds we are seeing its operatives turning to guerrilla tactics and forming more conventional terrorist networks. So we must press on with the military campaign, even as we employ every diplomatic and humanitarian lever to address the conditions that led to the birth of Daesh in the first place.
Today, I will outline the measures that Britain is taking to guard against the re-emergence of Daesh in the middle east and to protect our people at home. I turn first to the current situation. The Syrian Democratic Forces have cleared Daesh from large areas of the Euphrates valley, expelling its fighters from significant population centres and confining them to a small area near the frontier with Iraq. Their action, alongside the armed forces of all the countries from the global coalition, has liberated millions from tyranny. Of course we take particular pride in the courage and professionalism of the men and women of the British armed services, and the whole House will want to congratulate Flight Lieutenant Thomas Hansford, a Typhoon pilot from 1 Squadron, who was decorated with the Distinguished Flying Cross in November after destroying four Daesh truck bombs during a single mission over Syria.
On 19 December, President Trump announced the impending withdrawal of American troops from eastern Syria, where about 2,000 US personnel have been deployed. Contrary to what many anticipated at the time, there has been no hasty or precipitate departure. As the US Secretary of State, Mike Pompeo, confirmed to me when I met him in Washington last month, the US Administration recognise the importance of conducting the withdrawal in a way that allows the immense progress achieved against Daesh in Syria to be maintained. We must also do everything within our power to address the conditions that allowed the rise of Daesh, to which I now turn.
The central requirement is for political progress in Iraq and Syria. The new Iraqi Government, under President Salih and Prime Minister Abdul Mahdi, are seized of the importance of winning the peace through democratic politics and economic reform, and the UK will do everything possible to help them. My right hon. Friend the Prime Minister visited Iraq in November 2017 and proposed an enduring security partnership. My right hon. Friends the Secretary of State for Defence and the Minister for the Armed Forces have since visited Iraq to take forward that pledge, and in January my right hon. Friend the Minister for the Middle East visited Baghdad, where he met the President and the Prime Minister and announced a new £30 million funding package. The UK has helped to train nearly 90,000 members of the Iraqi security forces. We will press ahead with this essential work, including at the re-established military academy.
In Syria, the civil war that gave Daesh its great opportunity has been raging for almost eight years. The House knows the history of this terrible conflict. From the beginning, we have done our best to promote a political settlement, but our efforts have collided with Assad’s determination to subjugate his country at whatever cost and by the most brutal methods. We will continue to work to advance a peaceful settlement. In the meantime, we have mounted our largest ever response to a single humanitarian crisis. The Government have committed more than £2.7 billion of humanitarian aid to the Syrian crisis, providing more than 27 million food rations and 10 million vaccines since 2012. Now that Daesh has been cleared from large areas of Syria, there is an urgent need for humanitarian assistance in those regions. On behalf of my right hon. Friend the Secretary of State for International Development, I can announce that UK Aid has provided another £20 million of help for areas of Syria recaptured from Daesh, including Raqqa, bringing the total to more than £40 million in this financial year.
The Government continue to believe that Daesh poses the single greatest terrorist threat to this country, so finally I turn to the measures that we are taking to keep our people safe here in the UK. We are using a range of tools to reduce the threat posed by fighters returning from Iraq and Syria. Those who do come back to the UK should expect to face investigation and, where appropriate, prosecution. Those fighters detained by partner forces in the region must also expect to be brought to justice for any offences, in accordance with due legal process, regardless of nationality.
In the internet age, Daesh has no need to control territory in order to spread poisonous propaganda. Supporters around the world increasingly produce their own propaganda, as well as sharing content from the terrorist group’s outlets. The Foreign Office hosts the global coalition’s strategic communications cell, which works with international partners to counter Daesh’s propaganda. The Government have also mounted extensive cyber operations to destroy Daesh’s online capabilities.
When Britain joined the campaign against Daesh, we knew that we were embarking on a protracted struggle against a movement dedicated to medieval, obscurantist barbarism. Although we can take heart from the crushing territorial defeats meted out to Daesh, the struggle to combat its ideology will take much longer and is far from over. Until then, we must be vigilant, and the Government will continue to fulfil their first duty by doing whatever is necessary to protect the British people. I commend this statement to the House.
Emily Thornberry (Islington South and Finsbury) (Lab)
May I say that our first thoughts are with the members of our armed forces who are involved in the campaign against Daesh and who every day put their lives on the line in the service of their country? We also recognise the heroism of Flight Lieutenant Thomas Hansford. We owe them all a very great debt.
I thank the Foreign Secretary for advance sight of his statement for this, the first supposed quarterly update on Daesh since 3 July, almost seven months ago. That is all the proof we need—if we need it—that this truly is a Government who do not know their quarters from their halves or their halves from their elbows. There is a serious point, though, because the commitment to provide Parliament with quarterly updates on the campaign against Daesh was included in the motion on which this House voted when it authorised intervention in Syria. It is not acceptable that we have had to wait for more than half a year for this statement, and I hope the Foreign Secretary will apologise for that failure to comply with the terms of the 2015 motion.
In the time I have, I wish to ask the Foreign Secretary to address a much more serious and profound issue regarding the status of the 2015 motion. As the whole House will recall, that motion stated explicitly that it was designed to
“eradicate the safe haven”—
that ISIL had—
“established over significant parts of Iraq and Syria”.—[Official Report, 2 December 2015; Vol. 603, c. 323.]
During the debate in December 2015, the former Prime Minister repeatedly made it clear that the motion had been worded in that way explicitly to address the concerns of Members that this military action should not lead to a wider open-ended intervention in Syria. That was the rationale on which many Members supported the motion, and now we are in a position where we have been told that that rationale no longer exists by the President of the United States himself, who claims that Daesh has been all but destroyed and that, as a result, US troops will be withdrawn within a matter of weeks.
Before we get to the implications of that announcement for our own engagement in Syria, may I ask the Foreign Secretary to address the implications for Kurdish cities and towns in northern Syria? Does he agree that, after all the sacrifices made by Kurdish forces in the war against Daesh, and still being made by them today, it would be a disgrace for America and the world if they were now abandoned and left to the mercy of Turkey and its militias? Will he make it clear that that will be avoided at all costs?
Next, what estimate has the Foreign Secretary made of the remaining strength of the Daesh forces still in Syria in terms of numbers and firepower and does he agree with the White House that it is just a matter of weeks until they are destroyed? Furthermore, does he agree with the President’s conclusion that, once those Daesh remnants have been destroyed, the coalition’s military engagement in Syria can be brought to an end?
We are all aware that many people, including President Trump’s own advisers, strongly oppose that conclusion and argue that an ongoing military presence is required to prevent the re-emergence of Daesh until such a time as Syria is peaceful and stable, with a new, strong and unifying Government in place who are able to tackle the threat on their own. Indeed, many of the President’s advisers argue that continued military presence is necessary for other reasons, including the need to contain Iran. However, if the Foreign Secretary subscribes to the views of the President’s advisers, rather than the President himself, can he spell out for us where, in the 2015 motion, it was made clear to the House that our intervention was not just designed to eradicate the safe haven established by Daesh, but would include maintaining an open-ended military commitment in Syria in case Daesh should ever return? Given that that was never the policy that this House was asked to support, will the Foreign Secretary accept that the 2015 mandate for military action will need to be renewed if our engagement in Syria is going to continue even after those Daesh remnants have been destroyed?
I am afraid that I must close by asking the Foreign Secretary about the civilian death toll from coalition airstrikes in Syria. As he will know, there is a large disparity between the official military estimate of just over 1,000 civilian deaths, and the estimates produced by organisations such as the Syrian Observatory for Human Rights, which puts the toll at 3,300, including 1,400 women and children. May I ask the Foreign Secretary what estimates the Government have made of the true level of civilian casualties from coalition airstrikes and, based on the investigations into those airstrikes, how many does he estimate have sadly been caused by British planes and British drones?
Mr Hunt
First, I thank the shadow Foreign Secretary for the tone of her questions. I will do my best to answer them as clearly as I can. I apologise for the fact that we did not keep the House updated as frequently as we promised and that this statement is long overdue, so she has my apology without reservation for that. We did lay a written statement just before Christmas, but that is not good enough; the commitment was to verbal statements.
The right hon. Lady is correct in what she said about the 2015 motion. There is a very important matter that we need to address in my response to her comments. The motion did talk about eradicating safe havens, but it is very important to say that the territorial defeat of Daesh does not mean the defeat of Daesh. The President of the United States has talked about a territorial defeat. Daesh now holds just a few square kilometres of the Middle Euphrates valley, so its territory has come down massively from an area nearly the size of the United Kingdom, and it is possible that it will lose that even this week, according to some of the comments that the President has made. But that does not mean that it will be defeated. However, it also does not mean that we are saying to the House that our commitment to a military campaign is indeterminate. The right hon. Lady used the phrase “open-ended military commitment” and that it is not. We are committed to the defeat of Daesh in Syria. That is what the mandate is and we will stick to that mandate.
The right hon. Lady talked about the Kurdish SDF fighters. I want to put on record to this House the incredible courage of those fighters. I stand in the House today to report what I think most Members would consider to be an extraordinary and—dare I say it—rare success in foreign policy, whereby it is possible to see an evil organisation a shadow of its former self. That would not have been possible without the incredible courage of the SDF fighters. It would absolutely not be acceptable to this House, the Government or the country were there to be adverse consequences to those fighters from other regional powers. I had that discussion with the United States when I visited there on 24 January, and it shares that view. Indeed, Turkey also knows our opinion on that issue. The SDF plays an important role for us right now, because it holds a number of foreign fighters captive and is responsible for looking after them, so its role will continue to be extremely important for some time.
In this battle, it is important not to claim victory too quickly. If we do so, we risk Daesh re-establishing a territorial foothold. Indeed, concerns are already being expressed that that is beginning to happen in parts of Iraq now. We do not want to declare victory too quickly only to find shortly afterwards that the very thing that we thought we had defeated is back. That is why we need to continue until we are confident that Daesh will not be able to establish a territorial foothold, but that is not an open-ended commitment. This is a military commitment to make sure that the military job is properly completed.
On the deaths from coalition strikes, I am not aware that the Government have an internal estimate that is different from the estimates that the right hon. Lady told the House, but I will find out and write to her, if I may.
I fully recognise that the whole matter of military intervention overseas is a very difficult issue for many Members of this House. It is something that this House takes its responsibilities on extremely seriously, and that we rightly debate very carefully. I think that we can all think of military interventions that have not been successful in the way that was promised, but this is not in that category. This is a military intervention—not by Britain alone, but with a global coalition of allies—that has been extremely successful in reducing the threat to British citizens. It has also been one in which Britain played a particularly important role, because we led the part of the campaign that was countering Daesh disinformation and online propaganda, which was one of the main recruiting sergeants. We can, as the right hon. Lady rightly did, pay enormous credit to the members of our armed services who have done such a remarkable job.
Sir Michael Fallon (Sevenoaks) (Con)
Does my right hon. Friend agree that, although there can be no guarantee of a peaceful future for Iraq, interventions such as that by the coalition can indeed be successful if the fighting is done by local rather than foreign troops, if airstrikes are conducted according to the strictest rules of engagement, and if the military campaign is properly underpinned by a political process of reconciliation and reform that tackles some of the root causes of the insurgency?
Mr Hunt
My right hon. Friend of course speaks with great wisdom on this because he was responsible for a lot of the training of overseas armies that makes precisely that strategy possible. We have now trained 70,000 Iraqi forces as a result of the programme that I think he may even have set up when he was Secretary of State for Defence.[Official Report, 14 February 2019, Vol. 654, c. 10MC.] He is absolutely right that coupling that with a programme of political reconciliation is the key. I would go further and say that that is really the key lesson from what happened in the original Iraq conflict, which ended up so much more problematically than anyone in this House was hoping for at the time. Local boots on the ground and proper political reconciliation is the way to make progress.
Martin Docherty-Hughes (West Dunbartonshire) (SNP)
I, too, thank the Secretary of State for early sight of the statement. I join him in recognising the risks faced by and the capabilities of members of the armed forces. As someone who comes from a forces family who served in Iraq, and also Afghanistan, I know of the risk that they put themselves in in fulfilling their duties.
The Iraq Government have stated that they need £88 billion to rebuild the country following the prolonged conflict. While, as the Secretary of State said, Daesh’s state-building may be close to defeat, the organisation still holds a powerful sway in many parts of the world, including the Philippines and Somalia. He talked about reconciliation. At the heart of reconstruction, there is a lack of truth and reconciliation for a new Iraq, and that could possibly allow for a resurgence of Daesh. Does he recognise that with less than half of the sums required for reconstruction being available, if we fail to invest adequately in Iraq, that runs the risk of allowing Daesh to regain a foothold?
Will the Secretary of State expand slightly more on what we have learned in this process to enable us to combat fanaticism in this region and beyond?
Finally, does the Secretary of State recognise that more work is required to be done through truth and reconciliation, especially if Iraq is to be fully reintegrated, and that that includes the innocent women and children whose Daesh husbands and fathers cast them aside for the sake of fanaticism—an issue that was most recently given steam in The New Yorker by journalist Ben Taub?
Mr Hunt
I thank the hon. Gentleman for his comments. He speaks of some very important issues.
The hon. Gentleman is absolutely right that reconciliation has to be central. Sometimes that costs money. In this country, we can be proud of the fact that we have put £2.7 billion into that process, which has had a huge humanitarian impact.[Official Report, 14 February 2019, Vol. 654, c. 10MC.] But part of reconciliation in this case, which is a specific case different from the original Iraq war, is the need for justice against the perpetrators of the genocide that Daesh was responsible for. On 17 January, I had the privilege of meeting Nadia Murad, the Nobel prize-winning Yazidi campaigner against sexual violence in conflict. In her book, she talks about the perpetrators of sexual violence against her who have still not faced justice and are still in the region somewhere. She says that for someone like her, there will be no closure until those people face justice. Part of that process of closure is justice, but part of it is also for people like her to be able to go back to the villages near Mount Sinjar that they were driven out of, at a time when many of their family members had been murdered. That is beginning to happen. All these things matter.
I think we have learned a number of things, but probably the most significant has been the need to engage in cyberspace as well as with boots on the ground, because it was the dissemination of propaganda that probably allowed Daesh to grow much further than we anticipated in the early days.
Crispin Blunt (Reigate) (Con)
I welcome the Foreign Secretary’s proper tribute to the fight of the Syrian Democratic Forces in our interests, noting that they have sacrificed 8,000 soldiers, including men and women, with 5,000 permanently disabled. The Foreign Secretary says that, having liberated all that territory from ISIS and then taken into custody thousands of foreigners, they are responsible for the investigation of those people. Surely the states from which those people come must bear the burden of investigating and prosecuting their own citizens who are being looked after. When will the Foreign Secretary instruct his officials to negotiate with the forces of the Democratic Federation of Northern Syria the repatriation to the United Kingdom and the proper investigation and prosecution of British citizens who will range from the wholly innocent to the rather eccentric to the downright murderously dangerous, who need to be put in British custody as soon as reasonably practical?
Mr Hunt
I thank my hon. Friend for his comments. First, in terms of the courage of people who have been fighting in Syria, there is one group that we have not mentioned so far, and that is the White Helmets, who did an extraordinary job in Syria—not so much in the particular conflict against Daesh, but we can be proud that this country has resettled 29 families of White Helmets and was instrumental in getting about 400 White Helmets out of Syria towards the end of last year.[Official Report, 14 February 2019, Vol. 654, c. 11MC.]
The issue that my hon. Friend raises—I will not pretend to him; he speaks with huge knowledge of the region—is immensely complicated. The complicating factor is not that we do not want to take responsibility for these individuals, although frankly we would be happy if they never came back, because they have gone to fight for enemy forces who have been committing the most appalling atrocities. The issue we have is ensuring that they face justice, and sometimes that is not as easy as simply bringing them back here. That is why we are working through this as quickly as we can to try to find the right solution, to ensure that we can look the victims who have suffered in the face and say that we have brought the perpetrators of these atrocities to justice.
Hilary Benn (Leeds Central) (Lab)
Given what the people of Iraq and Syria faced when ISIS/Daesh suddenly acquired control of large parts of territory, what has been achieved in the years since is really quite remarkable. I am sure the whole House will want to join the Foreign Secretary and the shadow Foreign Secretary in welcoming the near-final defeat on the battlefield, if not in ideology, of this bunch of fascists.
The Foreign Secretary referred to the mass graves that have been uncovered. Since the UN report in November, further graves have been found in places such as Tabqa and Palmyra. Who is taking responsibility for collecting forensic evidence, so that those who have committed these crimes can be brought to justice? Given the difficulties that he just referred to in working out who will take that responsibility, does he think there is any potential for the United Nations to agree to an international tribunal where these cases may ultimately be brought, so that the individuals who murdered people in cold blood and raped and tortured them can finally face the justice that they deserve?
Mr Hunt
I thank the right hon. Gentleman for asking that question. He is right that unless we are able to demonstrate justice for these atrocities, we will not persuade people that as a world, we have sat up and taken notice of what has happened. The Minister for the Middle East and North Africa, my right hon. Friend the Member for North East Bedfordshire (Alistair Burt), recently met Karim Khan of UNITAD, which is the United Nations investigation body, and we are strongly supporting its work. The UK strongly supported the international, impartial and independent mechanism, to ensure that we have a proper mechanism for investigating these people, and we brought forward Security Council resolution 2379, which sets up an independent investigatory body. It is none the less not easy. Finding evidence that can be traced back to an individual perpetrator in whichever part of the world is extremely challenging, but that does not mean that we should leave any stone unturned in this process.
Bob Stewart (Beckenham) (Con)
Having given evidence in war crimes trials, it is my understanding that people charged with genocide or crimes against humanity should be brought to book in the country in which they have carried out their crimes. Will those who have carried out genocide against the Yazidis be tried in Iraq, or will the International Criminal Court have some responsibility for dealing with that matter?
Mr Hunt
My hon. Friend is right; our first intention is that they should be tried in Iraq if it is possible to get justice for them in Iraq, and there is no reason why it should not be, with the new Government in Iraq. Of course, there are cases in which it is not possible for people to get justice in the country where the atrocity happened. That is when the ICC has a role, and that is why we support the ICC. It has a very important role to play internationally, despite a number of challenges that it currently faces.
Mrs Madeleine Moon (Bridgend) (Lab)
The Secretary of State is right; the defeat on the battlefield is to be welcomed, but the ideology continues to grow. The fact that they have been defeated on the battlefield does not mean that they are not planning and are not capable of carrying out further attacks. Can he say a bit about what we are doing to track the money that is laundered to fund such attacks? The crucial thing that we need to do is cut off access to the money.
Mr Hunt
Absolutely. We have taken a number of measures to try to find out what is happening with that money and cut off access to it, including the Sanctions and Anti-Money Laundering Act 2018, the Criminal Finances Act 2017 and the Proceeds of Crime Act, which I think became law in 2010; I cannot remember which party was responsible for it. We can always go further, and for that we need to work with not only UK-based banks but Crown dependencies.
Jack Lopresti (Filton and Bradley Stoke) (Con)
My right hon. Friend knows well that the Kurdistan region of Iraq and the valiant Peshmerga were essential allies in defeating Daesh on the battlefield. We all appreciate that the ideology of Daesh has not yet been defeated. Given the Kurdistan Regional Government’s vital and positive role in challenging continuing extremist ideologies and upholding security in the region, will he increase his efforts to strengthen the KRG in Iraq and help them achieve a full and fair political settlement with Baghdad?
Mr Hunt
My hon. Friend makes an important point. We are helping to train the Peshmerga at the moment. My right hon. Friend the Minister for the Middle East and North Africa was in Baghdad and Erbil just two weeks ago, and he met President Salih and Prime Minister Mahdi to talk about that important reconciliation and inclusion of the Kurds in the reconciliation process.
Janet Daby (Lewisham East) (Lab)
Due to this conflict, approximately 5.5 million Syrian people have become refugees and undergone experiences that are very difficult for us to imagine. Half of those people are children. In the borough of Lewisham, we have made a commitment to be a sanctuary borough for Syrian refugees. How many refugees have we received in the UK, and what is our target?
Mr Hunt
I believe that over 14,000 Syrian refugees have come to the UK. We should also pay tribute to neighbouring countries such as Iraq, which has 250,000 Syrian refugees. That is an important reason why we as a country must have a humane policy when it comes to asylum seekers.
Mark Pritchard (The Wrekin) (Con)
The Foreign Secretary will know that the self-governing regime and the Arab-Christian coalition in the north-east of Syria are under huge pressure from the Assad regime. What is the Government’s latest thinking on the safe haven plan of President Erdoğan of Turkey?
Mr Hunt
We are looking at that plan very closely, and we are talking to our allies in the United States about it. We understand the strategic reason why President Trump wants to withdraw American troops, but our concern is to make sure there no unintended consequences. That is why we think it encouraging that, although the original announcement suggested this withdrawal would happen very quickly, the United States has behaved with considerable pragmatism in practice.
Jamie Stone (Caithness, Sutherland and Easter Ross) (LD)
I, too, pay tribute to our armed forces. What they have done in recent times gives us good cause to hold our heads up high.
United Nations Security Council resolution 2254 says that free and fair elections must take place under UN supervision and that the political transition should be Syrian-led. Given that the resolution was by definition unanimously approved by the Security Council, which includes Russia, and that Russia’s subsequent position and activities in effect block its implementation, what, if any, recourse does the UK have to go back to the United Nations and make some attempt to remove this completely illogical blockage and ensure the implementation of a resolution that is fundamental to the future of the country?
Mr Hunt
I completely share the frustration that the hon. Gentleman has expressed about the role of Russia. We were on track, with the potential for a political settlement that could have removed Assad and meant the people of Syria did not have to suffer from someone who was prepared to use chemical weapons against his own people to impose his bloody rule. However, the Russians then intervened in the process, and it now looks as though Assad is here to stay, to put it very bluntly, so I think the Russians have to take responsibility for the way in which they have changed the situation. Like us, they have a veto at the Security Council, and we cannot stop them exercising that veto. What we can do is to support the work of UN special envoy Geir Pedersen, who has just started and will I think do a very good job. We hope that he can find a way forward, but we do not underestimate the challenges.
James Morris (Halesowen and Rowley Regis) (Con)
I welcome the Foreign Secretary’s statement, and I particularly welcome the progress that has been made on degrading Daesh. Does he agree with me that the continued influence of Russia and Iran in Syria and across the middle east actually presents the biggest threat to the rules-based international order that we have seen for a long time and that Britain needs to redouble our efforts to try to rebuild that rules-based international order over the long term?
Mr Hunt
I absolutely do agree with that. I think we have to be aware of the limits of our power and of the mistakes that we have made in our own foreign policy over the years in the middle east. As a new Foreign Secretary, I am very conscious that this is not an area of the world that someone can come to understand quickly, so we need some humility as we approach policy in this area. He is right, however, that one of the challenges we have is the involvement of Russia, which has become a more influential player in the region, and we should also say that about the activities of Iran. Taken together, these do present real risks to stability in the region of which we need to be aware.
Mr Paul Sweeney (Glasgow North East) (Lab/Co-op)
I welcome the Secretary of State’s statement and the ongoing efforts to defeat Daesh in the field, but he will be aware of the wider strategic need to promote reconciliation. I would reflect on the post-invasion picture in Iraq, particularly the strategic blunder of de-Ba’athification, as it was then seen, and the huge vacuum and stoking of sectarian tensions it created. Is the Secretary of State aware of the growing concern about the continuing judicial processes in Iraq that may be stoking sectarian tensions, and what efforts is he making to impress on the Government in Iraq that that ought to be avoided at all costs?
Mr Hunt
This was exactly the topic that my right hon. Friend the Minister for the Middle East talked about when he met President Salih and Prime Minister Mahdi on his recent visit to Iraq. I do not want to pretend that we have magically moved to a totally robust and stable democracy in Iraq. None the less, I think it is encouraging that the country is getting used to the process of elections and that the new Government are committed to reconciliation in the way that the previous Government were. However, it is a very fragile new democracy, so if we are going to do what Prime Minister Mahdi wants, we have to give him all the help we can.
Rachel Maclean (Redditch) (Con)
May I join colleagues in adding my thanks to members of our armed forces? As a member of the armed forces parliamentary scheme, it has been my privilege to visit serving soldiers in various locations, which makes me very humbled and very proud.
May I ask the Secretary of State for an update on the number of people joining Daesh to fight for it as foreign fighters, and what is he doing to reduce further the number of British citizens joining that force?
Mr Hunt
My understanding is that the number of people from the UK trying to join Daesh to fight has fallen significantly, but I will write to my hon. Friend with the most up-to-date information. In terms of the total numbers, about 900 UK citizens have gone to fight with Daesh, about 40% of whom have come back and about 20% of whom have been killed. We are obviously working out as quickly as we can what is going to happen to the remaining 40%.
Gavin Robinson (Belfast East) (DUP)
I thank the Secretary of State for the statement he has made. He is right to highlight the importance of our efforts in the cyber-sphere, and to mention that we host the global coalition’s strategic centre communications cell. When we considered this work in the Defence Committee, we heard that our efforts are too slow, too reactive and too cautious, and when we asked who excels in this sphere, we were told it was the Israel defence forces. Will the Secretary of State engage with Israeli representatives and learn the lessons about how we could be more proactive and more effective?
Mr Hunt
I will happily take that away. My understanding is that we have excellent co-operation with the IDF, and there are always things we can learn from working with other organisations involved in similar battles. Of course, we do work under the very tight legal constraints rightly imposed by this House in terms of what our agencies are and are not allowed to do and the authorisations necessary. That is something we would not want to change: that is as it should be. However, I will happily take away the challenge of seeing what we can learn from the IDF, which have a formidable reputation.
Mr Philip Hollobone (Kettering) (Con)
As the British Foreign Secretary, my right hon. Friend is an international statesman. One hundred years ago, his predecessor was drawing the borders of all the countries we are talking about in this discussion this afternoon. In the treaty of Versailles 100 years ago, the Kurdish people were in effect ignored by the western powers. One hundred years on, after their valiant efforts against Daesh, will my right hon. Friend assure the House that we will not abandon the Kurds again and that we will help them to achieve if not independence, at least autonomy in Syria, Iraq, Turkey and Iran?
Mr Speaker
Notwithstanding the validity of what the hon. Gentleman has said about the status of the Foreign Secretary as an international statesman, my hunch is that the right hon. Gentleman is altogether a wilier soul and too discerning a dad to try that one on with the kids.
Mr Hunt
I am slightly perplexed, Mr Speaker, but someone will enlighten me about your pearls of wisdom.
I think what my hon. Friend says is worthy of serious reflection. The truth is that we have seen what important allies the Kurds have been in this battle against Daesh. Were we to let them down now, it would send a terrible signal about our commitment to our allies for any future conflict in which we might be engaged. With respect to reflecting on what my predecessors did 100 years ago, it tells any Foreign Secretary that they do need to approach the job with a degree of humility.
Jonathan Edwards (Carmarthen East and Dinefwr) (PC)
As many contributors to this discussion have mentioned, the Kurds have been doing the dirty work for us on the ground in northern Syria against Daesh, yet, in the words of one defence analyst, they face potential slaughter at the hands of the Turkish military. What are the British Government doing to avoid this gross betrayal, to protect the Kurds from Turkish aggression and to allow the Kurds to finish the job in the last stronghold of Daesh in Deir ez-Zor province in north-east Syria?
Mr Hunt
We do understand that Turkey, too, has a right to territorial integrity, but we are very concerned about what might happen with regard to the issue the hon. Gentleman raises if the US withdrawal is too precipitate, and if it was not clear what outcomes would be unacceptable both to the US and to us. That is why there has been a huge amount of discussion between Turkey, the United States, the United Kingdom and our other allies, precisely to avoid the outcome he is talking about.
Kevin Foster (Torbay) (Con)
It is reassuring to hear what the Secretary of State has said today and to have an indication, for those of us who supported military action against Daesh, of what needed to be done to ensure that these fascists, as they are rightly called, would be defeated and not allowed to fester. Will he reassure me that we will continue a long-term engagement in Iraq and Syria, because defeating Daesh in the long run is also about rebuilding those devastated communities, supporting Christians to return home and ensuring that funds are available, through aid, to redevelop those countries?
Mr Hunt
I am happy to reassure my hon. Friend that our commitment to that part of the world is for the long term. Our military commitment is finite—it is restricted to the mandate given by the House of Commons—but we are committed in every possible way, because we recognise that if the region is unstable, we will pay the price back here, through terrorism, disruption to our economy and any number of ways. He is absolutely right that our commitment must remain.
Andrew Bridgen (North West Leicestershire) (Con)
The Leader of the Opposition is a former national chairman of the Stop the War Coalition. Under his chairmanship, the coalition issued a statement praising Daesh for its “internationalism” and “solidarity”. Does my right hon. Friend agree that although we might have many words to describe Daesh, those are certainly not two of them?
Dr Matthew Offord (Hendon) (Con)
As chair or the all-party parliamentary group on explosive weapons, I thank my right hon. Friend for the £5 million of additional funding he has supplied for the United Nations Mine Action Service’s de-mining activities in Iraq. May I ask him to go further and speak to his colleagues in the Ministry of Defence and the Department for International Development to ensure that mine deactivation and removal is a priority? In places such as Fallujah, which was the first city to be freed from Daesh control, people’s daily lives are disproportionately affected by these terrible weapons. Even though Daesh has been routed, it has left behind a terrible legacy.
Mr Hunt
As the Under-Secretary of State for Defence, my right hon. Friend the Member for Bournemouth East (Mr Ellwood), has just told me, the reality is that if the mines remain long after the war, the war lasts longer. The truth is that people cannot get back to their normal lives and the tragedy continues, so we very much support the work that my hon. Friend describes. I am sure that there is more we can do, so we will look at that.
Point of Order
(5 years, 10 months ago)
Commons ChamberRead Full debate Read Hansard Text
Stephen Pound (Ealing North) (Lab)
On a point of order, Mr Speaker. Last Friday afternoon, I was conducting an interview with a constituent whose son had been killed. It was impossible for me to continue or conclude the conversation due to the motorised protest taking place outside in Whitehall, which culminated in a cacophonous crescendo of car horns and klaxons. That noise was unbearable, and it was appallingly disrespectful to my constituent. What discussions have you had with the authorities to prevent this happening again, bearing in mind that it affected not only those of us who operate out of No. 1 Parliament Street, but Scottish National party Members just along the street, and considering that, should we move to Richmond House, the situation will be even worse?
Mr Speaker
I readily accept, before I say anything further to the hon. Gentleman, that a cacophonous crescendo of car horns and klaxons—a wonderful display of alliteration—the spectre of which he has just invoked, is undesirable. I have no reason to doubt that when he was conducting an extremely serious meeting with his constituent about the gravest of matters, it must have been at the very least disconcerting and at worst, frankly, destructive, so I am not insensitive to what he has said. Off the top of my head, I cannot claim to have an immediate resolution of the matter. The Serjeant at Arms, who is in his Chair and whose presence is a constant source of reassurance to us, will also have heard what the hon. Gentleman has said.
I think that the matter bears reflection, because of course the conduct of a demonstration—I know that the hon. Gentleman will be on the same page as me on the matter, because he is a very well-read and cerebral fellow—is necessarily an other-regarding act, not a self-regarding act, in the sense that it has implications for other people. It might be referred to, in more commonplace parlance, as a neighbourhood effect; in this case, the hon. Gentleman was in the neighbourhood and the effect was upon him and his constituent. I think that we do need to consider this. I hope that the Serjeant, the parliamentary security director and the police can give some thought to the matter.
The right to demonstrate, including making some noise in the process, is an important right, but so too is the right of another person to go about his or her lawful business, and the right of Members of Parliament to go about their business on behalf of, and frequently in conversation with, constituents is very important, too. Let the matter be further reflected upon, and I hope that the hon. Gentleman will receive some feedback in due course. That might not be an ideal reply, but I hope that it will pass muster for now.
Financial Services (Implementation of Legislation) Bill [Lords]
Monday 11th February 2019
(5 years, 10 months ago)
Commons ChamberRead Full debate Financial Services (Implementation of Legislation) Bill [HL] 2017-19 View all Financial Services (Implementation of Legislation) Bill [HL] 2017-19 Debates Read Hansard Text Read Debate Ministerial Extracts Amendment Paper: HL Bill 143-R-I Marshalled list for Report (PDF) - (25 Jan 2019)
19:19 - The House divided: - Ayes: 293 / Noes: 248 - Question accordingly agreed to.
The Financial Secretary to the Treasury (Mel Stride)
I beg to move, That the Bill be now read a Second time.
I should begin by paying tribute to my noble Friend Lord Bates for piloting the Bill through the other place so successfully. I am sure that the House will recognise the importance of supporting our financial services industry no matter what the outcome of negotiations on leaving the European Union. The UK’s position as a world-leading financial centre is critical to our prosperity. In 2017, the financial sector contributed £131 billion to the UK economy. It employs over 1 million people across the country, two thirds of whom are outside London, including in the thriving financial centres of Edinburgh, Belfast, Manchester and Cardiff. UK exports of financial services were worth over £77 billion in 2017, which highlights the importance of the sector on the global stage.
Mary Creagh (Wakefield) (Lab)
I am sure it was an oversight, but in his list of UK financial services centres the Financial Secretary neglected to mention the Yorkshire centres of Leeds and Halifax—of course where the Halifax bank was born—and the many building societies that remain in our area.
Mel Stride
I thank the hon. Lady for that very appropriate intervention. She is quite right to mention the local presence of financial services across the United Kingdom.
My right hon. Friend the Chancellor of the Exchequer has already set out the Government’s long-term vision for the future success of the UK’s financial sector, based on world-leading positions in the markets of the future, whether in green finance or in FinTech, and we are pursuing an ambitious global financial partnership strategy to cement our trading relationships with key partners.
However, we also need to ensure that we have appropriate regulations in place, with the right balance between protecting stability and fostering competitiveness. We aim to be the safest and most transparent place to do business, leading the race to the top and always championing high regulatory standards in financial services markets. The Bill will ensure that, in a no-deal scenario, the UK’s regulatory landscape will not fall behind its international counterparts.
The Government have been clear that we do not want a no-deal scenario, but it remains the role of a responsible Government to continue to prepare for all possible outcomes. That includes the event that we reach 29 March without a deal. In those circumstances, we will have brought on to our statute book the vast body of EU legislation that needs to be operative at the point of exit. However, the powers under the European Union (Withdrawal) Act 2018 relate only to legislation operative immediately before exit day. A number of pieces of EU legislation will not be covered by the powers conferred under the withdrawal Act. They include proposals that are either already agreed but which have not yet been implemented, or those that are soon to be agreed beyond our exit from the European Union.
Mary Creagh
The Minister talks about the in-flight legislation and the proposals as they appeared in the other place. When they first appeared in the other place, they were missing a couple of bits relating to the taxonomy of environmentally sustainable activities that would allow companies to green-check their revenue streams, and to new disclosure requirements for asset owners such as pensions schemes, which is of great concern to the Environmental Audit Committee. Can he explain why those two proposals were left off the list? The Bill has now been amended in the other place, but why were they originally missing?
Mel Stride
I think this is an example of Parliament carrying out its process and legislation being improved as a consequence. The most important point is where we have ended up. Having listened to the arguments put forward in the other place, the Government chose to embrace the amendments that brought those two particular files into the scope of the Bill.
The Bill provides a mechanism through which the UK will be able to implement in-flight financial services legislation. They fall into two categories. The first category of files relates to those that have been agreed while we have been a member of the European Union, but will not apply or be in force prior to the UK’s exit from the EU on 29 March. In a no deal and in the absence of the Bill, there would be no effective way to implement those files in a timely manner, as each would require primary legislation. The Bill allows the Government to domesticate each of these files in whole or in part via an affirmative statutory instrument. It further provides a power to fix deficiencies within them.
Robert Neill (Bromley and Chislehurst) (Con)
Will my right hon. Friend give way?
Mel Stride
I will give way first to my hon. Friend the Member for Bromley and Chislehurst (Robert Neill), but wait with great anticipation for the intervention of my right hon. Friend the Member for Loughborough (Nicky Morgan).
Robert Neill
I am very grateful to my right hon. Friend for giving way. I entirely support the thrust of what is sought to be done here, as does the financial services sector. None of us wish that it should ever be necessary, but given that we are seeking to set out these safeguards, can he help in relation to one matter of in-flight legislation? In clause 3(1)(e), there is specific mention of the inclusion of
“delegated acts under the Prospectus Regulation”.
The financial services sector very much welcomes that being included, because it is important. On the other hand, for another important piece of in-flight legislation, the Securities Financing Transactions Regulation referred to in clause 1(3)(f), there is no use of the words “delegated acts”. It is anticipated that under both examples level 2 legislation, as it is called, might be desirable, so can the Minister help by explaining why the distinction has been drawn in that way?
Mel Stride
I thank my hon. Friend for his question. He is quite right, although the reference to the Securities Financing Transactions Regulation is, I think from memory, in clause 1(12), line 35 or thereabouts—the fourth file although the fifth measure in the list, the earlier two being combined. As to the main point on which he seeks clarification, the Bill will bring into effect those measures, as amended or otherwise, by affirmative statutory instrument at the time they are brought in. It will then be a case of the way in which those measures are dealt with in terms of the delegated powers to which he refers.
Nicky Morgan
I thank the Minister for giving way. In his letter to colleagues last week, the Economic Secretary stated that the Bill will allow for the Government to choose to implement only those EU files or part of those files which they deem beneficial for the United Kingdom. The Minister talks about whole or parts of legislation. Is he able to set out which of the files or parts of legislation the UK does not intend to implement, and how they will make the decision about what is or is not beneficial to the United Kingdom?
Mel Stride
I would make two points. First, where we will end up with the various files that are the subject of the Bill will, to some degree, be determined by where we end up shortly after or after any no-deal exit. I would imagine that at that point the EU would also wish to be negotiating with us on those measures. Secondly, the files themselves, under the schedule as opposed to clause 1, are being negotiated at the moment. We therefore do not have clarity on the exact form they will take.
The second category of files, as I explained, are those that are still in negotiation. These are files that the UK has, in many cases, played a leading role in shaping, and that could bring significant benefits to UK consumers and businesses. The Bill also allows the Government to domesticate these files, in whole or in part, via affirmative statutory instrument. Given that the UK will not be at the negotiating table when the files are finalised, we will be unable to advocate for the interests of the UK’s financial services sector during those negotiations. The Bill therefore provides the Government with the ability to make adjustments to the files that go beyond the deficiency fixing powers for the agreed files. These powers are clearly defined and proportionate.
Jonathan Edwards (Carmarthen East and Dinefwr) (PC)
I am extremely grateful to the Minister for giving way. As he has outlined, these are powers that would only be used in the event of a no deal. As a Treasury Minister, I would imagine he is probably losing more sleep than most Government Ministers at the prospect of a catastrophic no-deal situation. Will he outline what reporting mechanisms will be introduced by the Treasury for how these powers are used, either by the Treasury or by Treasury-affiliated bodies such as the Bank of England, the Prudential Regulation Authority and the Financial Conduct Authority?
Mel Stride
I am pleased to report that the Bill, as amended in the other place, allows for reporting in respect of the statutory instruments on a six-monthly basis—that commitment is in the Bill—and that there will be four periods in total. The first period of six months will commence from the moment the Bill receives Royal Assent. The report will both look backwards at the powers that have been exercised up until that point and forwards to those powers that may be exercised in the coming period. As to other organisations, such as the Bank of England, there will be a requirement for annual reporting on the basis of the measures undertaken by those regulatory organisations.
Robert Neill
The Financial Secretary is being extremely generous, but it may actually speed things along. Can he help me on one matter relating to the second class of legislation, the level 1 files? He set out a list of files that are included in the second category. Is it intended that that is entirely exclusive? The Bill deals largely with the procedure for dealing with these files. I have in mind, for example, the proposals that are being developed by the Commission on non-performing loans and on business crowdfunding services—again, areas where the UK has had a good deal of input into initial discussions but that are not actually listed in the Bill. Is it intended to deal with those? If so, in what way?
Mel Stride
I can confirm to my hon. Friend that the list is exhaustive in the terms he was discussing. In the case of non-performing loans, these matters were considered but it was decided that the number of these in relation to the number within the EU was relatively low and that existing tools that are available were adequate to deal with those particular matters. Hence, that particular issue does not feature within the scope of the Bill.
Changes cannot be made in such a way that the implemented files depart in a major way from the effect of the original legislation. However, the Government will have some flexibility to make adjustments in order to take account of the UK’s new position outside the European Union. As a result of amendments to the Bill during its passage through the other place, the Treasury will be required to publish a draft statutory instrument at least a month before laying it, alongside a report detailing: any omissions from the original EU legislation; any adjustments from the original EU legislation; and the justification for those adjustments.
The Treasury will be further required to publish six-monthly reports on how the power has been exercised and how it will be exercised in the following six-month period. Following contributions in the other place, the Government have also introduced a requirement for the financial regulators, the Bank of England and the Financial Conduct Authority, to report annually on their use of any powers sub-delegated to them as a consequence of the Bill.
Having gone through the Bill’s various provisions and outlined its importance both to our future financial stability and to making sure that we are in the right place in the unlikely and undesirable event that we face a no deal, I commend the Bill to the House.
Jonathan Reynolds (Stalybridge and Hyde) (Lab/Co-op)
I am someone who believes in Parliament—I believe in it not just as a way to pass the laws under which we are governed and to hold Ministers to account but, crucially, as a way of reconciling the different and competing interests that a complex and sophisticated country such as ours inevitably encompasses. Like many colleagues, I find our politics at the moment increasingly bitter and angry and lacking in respect and empathy for opposing points of view. For me, the House of Commons and, to an extent, the House of Lords have historically given this country the means to have the conversation that it needs to have with itself to begin to resolve differences of this kind.
I say that in opening to explain that it is a genuine source of sadness to me that, so far, Brexit has represented not the return of greater powers to Parliament, but the greatest accumulation of power to the Executive that we have ever seen in peacetime. That reality is before us again today. The Minister has clearly laid out the basis of today’s legislation. We are now so close to our EU exit day without a deal—just 34 working days, to be precise—that ensuring that we have a functioning regulatory system after Brexit is an urgent priority.
Leaving without a deal would be so problematic for this country that it is hard to believe that it has ever been much more than a thinly veiled threat to try to force Parliament into supporting the Government’s rejected Brexit withdrawal agreement. However, we have had to take appropriate steps to ensure that we have a functioning system in the event that that does happen. The Bill transfers significant powers to Government to deal with EU financial legislation that is in flight at our time of departure, meaning that we have been involved to some extent in shaping it but that it does not yet form part of the law applicable to the UK.
It is a welcome change to have the opportunity to substantively debate a major piece of legislation such as this. Until now, the Government have chosen to transpose the existing EU financial regulatory framework through secondary legislation. Ministers, my colleagues and I have now debated dozens of statutory instruments with just a handful of colleagues in the corridors of this place, passing legislation on huge items of EU regulation, containing many thousands of pages. I will spare our colleagues the excitement of referring to each of them in detail, but they provide all sorts of vital consumer protections and market safeguards.
Financial regulations are like the intricate parts of an engine: we do not need to understand them all or even to know about some of them, but we benefit from them being there and we will soon know when they go wrong. The regulations that we have dealt with include those that mandate the provision of clear, succinct information to people before they invest in particular products. They include the protections that ensure that people are not charged exorbitant fees for paying by credit card when they book a flight for a holiday, and those that allow insurers to operate across the UK and the continent, providing products that people depend on to give themselves security and protection. At a macro level, we have dealt with regulations that form part of the package that was designed to fix the enormous flaws in our global financial system that caused the 2008 crisis, including those that specify the bank capital requirements and which put in place the new market infrastructure designed to make derivatives trading more robust and more stable and lower the risk of contagion in a market downturn.
So far, all these have been debated by up to 17 Members each time in Committee Rooms in the House. The Opposition have requested debates on the Floor of the House on a number of them, all of which have been refused until very recently. Tens of thousands of pages of regulation have simply been ported across in a way that I do not think any Member, on either side of the House, has found fully satisfactory.
The Government have assured Parliament that no policy decisions are being taken as part of this process. However, it is vital that all colleagues are aware that porting across EU regulations into British law does not mean that we have been legislating for the status quo. Sometimes, the very act of taking out a reference to “the European economic area” and replacing it with a British one results in a material change. For instance, a no-deal Brexit would immediately mean that we assess the capital reserves of financial institutions differently, because we would no longer be giving preferential treatment to the sovereign debt of EU member states. Similarly, there would be no limit on the fees applied if a UK citizen used their credit card to buy something from an EU member state after a no-deal Brexit, because the reciprocity that we have now cannot be provided for. This point—that the withdrawal process cannot guarantee the continuity of the status quo—is one that I feel very few people understand, and I cannot stress it enough.
In addition, this process inevitably involves matters of judgment and raises questions about capacity and resourcing. For example, simply substituting “the European Securities and Markets Authority” for “the Financial Conduct Authority” and “the European Commission” for “the Treasury” creates a new relationship between those institutions that has not existed previously. It creates questions about the checks and balances between them, especially when new powers are being bestowed, and about which decisions will instead go to other bodies such as the Bank of England and the Prudential Regulation Authority. These decisions should not be taken unilaterally and simply presented for rubber-stamping in a Delegated Legislation Committee. That is relevant because the Bill effectively sets up the same process, but for the next two years of new financial services legislation.
We are extremely grateful to the Minister and the civil service for taking the time to fully brief us about their approach, but the Opposition plan to vote against the Bill today, and I want to explain the three reasons why. First, as I have touched on, we believe that the Government’s approach is fundamentally undemocratic. Simply diverting the process for the scrutiny of future EU legislation to secondary legislation Committees risks a major democratic deficit.
As we have seen with the no-deal statutory instruments, it is entirely within the Government’s gift whether time is granted on the Floor of the House to debate these instruments further. We will effectively be bestowing power on the Treasury to decide our future compliance with EU financial regulation. Given the concerns that the financial sector has about being a rule taker, that is an enormous step to take. When Britain voted to leave the EU, I believe that it was to empower Parliament to debate and make those decisions, not to concentrate them in the hands of a few civil servants and Ministers. Of course, the big change from a sovereign point of view is that, for some of these, we would no longer have had any input at the EU level.
Secondly, the approach of splitting in-flight files and existing regulations into a patchwork of statutory instruments lacks coherence. We are debating the Bill today. Numerous other, related statutory instruments will proceed in Committee this week, one of which we are sitting on tomorrow. We have already discussed some of the legislation referred to in this Bill in Committee, yet the updates on it and the next stages of these directives and regulations are now included in the Bill as being in flight. We need a single overview to identify what the post-Brexit framework will look like. Approaching it piecemeal risks having items fall through the gaps as well as creating clashes and inconsistencies. Significant powers are being transferred to the Bank of England and our regulators, yet there is no single item of legislation that demonstrates the extent and scope of the powers.
To be frank, given that the legislation is itself only a stop-gap, none of us really knows what the Government have planned for financial regulation after Brexit. This opaque and confusing process is inaccessible not just to legislators, but to those outside Parliament. I have received correspondence from two different asset managers in the past fortnight, for example, seeking insight into what is happening in this place regarding the collective investment regime because they have found the SI process so confusing to follow and are worried about the future.
Thirdly, we must acknowledge the systemic importance of what is included in the Bill. Nobody wishes to see a repeat of the events of the global financial crisis in 2008. That is why an extensive package of regulation emerged in the aftermath of the crisis, designed to protect against a repeat of those mistakes. Many of those pieces of regulation had their origins in the 2008 and 2009 G20 summits. There was a co-ordinated global effort, of which we were part, intended to make our financial markets safer and better able to withstand stress, hopefully protecting the public purse in future.
I genuinely hear no appetite for a bonfire of EU regulation when I speak to people in the UK finance sector but, in truth, we simply do not know what the future holds or where pressure may come from to relax or tighten regulations. However, the Bill risks enabling the Treasury to make wholesale changes to our regulatory regime with little recourse available to Parliament to have a say on that, other than through the secondary legislation process, which, as we have all seen, can severely limit the chances for scrutiny. I believe that the current Treasury would approach that process in good faith, but Ministers and Prime Ministers change and we do not know who ultimately will be entrusted with these powers.
Some of the fundamental pillars of the post-crisis financial regime, such as the capital requirements directive V and the bank recovery and resolution directive II, as well as other items of regulation designed to strengthen the financial market infrastructure, are included in the Bill. The capital requirements directive, for example, sets out the asset buffers that systemically important financial institutions must hold and in what ratios. Given the costs involved to banks, these regulations often involve significant negotiation and lobbying. We saw in the US last year that a concerted lobbying effort secured major concessions from the Basel committee on capital requirements. It is simply a fact that such legislation involves the management of large and competing interests, and it does not seem right to the Opposition that the Treasury could be lobbied on such a matter and subsequently implement a statutory instrument that is subject to limited scrutiny compared with primary legislation.
It is for these reasons that our reservations outweigh our understanding of the need to pass the Bill. We very much want a strong and successful financial sector after Brexit, but we reiterate that the best way of ensuring that we have that is to negotiate a deal that the House is willing to vote for. We acknowledge that in the event of no deal a whole raft of emergency legislation would need to be passed, but at present we cannot sign up to handing over these powers to the Government without any guarantee about how they will be used. It is our intention, therefore, to oppose Second Reading and divide the House.
Alison Thewliss (Glasgow Central) (SNP)
It is a pleasure to be in the big room today, rather than up in a small Committee Room, debating these important issues of financial regulation.
I would like to correct the Financial Secretary slightly. He mentioned lots of cities but not my home city of Glasgow and its contribution to financial services. It was a shocking omission, not least because I am sitting across from him and because of its importance to Glasgow and to Scotland. Scotland’s financial sector outstripped London’s last year when it came to jobs growth. It grew by 6.6%, to 161,000 employees in Scotland. Many of my constituents, as well as others across Scotland, rely on the sector for their jobs and businesses, as do many secondary businesses.
The financial sector is also important because of the increased tax base it brings to Scotland. All citizens in Scotland benefit from the funding for public services to which the financial services sector contributes. It makes up 8.9% of the Scottish economy and provides a crucial source of funding for schools, hospitals and local government. It is vital that the sector is allowed to continue to flourish and that the appropriate regulatory safeguards are upheld to ensure we do not see a repeat of the 2008 financial collapse.
It is important to understand the context in which the Bill is operating. The in-flight legislation is part of regulatory reform that resulted from the 2008 crisis and its purpose is to prevent history from repeating itself. We in the SNP cannot allow any watering down of regulation as a result of Brexit, and I am concerned that the Bill may be too broad and sweeping and could leave gaps that could be exploited by those who wish to do so.
I appreciate that we are, in effect, doomsday planning here this afternoon in the event of a no-deal Brexit but, as we see with the continuing chaos in the UK Government, that doomsday clock is getting a good deal closer to midnight every day. Applying rushed legislation to a bad scenario will not help matters. We need to get this right and, if there is not time to get it right, the Government must face the reality of the situation we face. It is within their power to avoid a no-deal Brexit by extending article 50 and ruling out a no-deal Brexit until adequate protection is in place.
There is a good deal of vagueness in the Bill—this point was made in the Lords and has been made again today—because it grants UK Government Ministers worryingly wide scope to legislate. Clause 1(1)(a) grants the Treasury the power to make provisions “corresponding, or similar, to” provisions in EU financial services legislation. Which is it—is it corresponding or similar to? The phrasing leaves space for policy changes beyond the scope of what secondary legislation should be able to do.
Clause 1(1)(b) gives the Treasury powers to make adjustments to the specified legislation it considers appropriate. What criteria are being used to scrutinise and judge the appropriateness of a policy? The wording also leaves the door open for unscrutinised discretion on the part of Ministers and organisations that they may delegate these powers to. The standard is not good enough, given the importance and impact of the Bill and what it is trying to achieve.
The Bill gives Ministers wide latitude to make policy changes using delegated legislation. That conflicts with the position laid out in the EU withdrawal Act, which prohibits such changes because they greatly reduce the opportunity for Parliament to scrutinise policy. The Government have acknowledged that passing legislation without a substantive debate in Parliament is undesirable. We cannot allow this to slip past.
There is a legitimate concern that the Bill leaves scope for regulators to diverge from European technical standards, which could ultimately contribute to the undermining of the EU principle of equivalence. Many businesses rely on meeting these requirements to access EU markets. The Financial Markets Law Committee has raised that issue directly with the Treasury, along with wider concerns about the potential market uncertainty caused by the unreliable nature of British technical standards as a result of this legislation. The Treasury has attempted to address some of those concerns in its policy note, which outlined the safeguarding mechanisms for the Bill, but sadly those still fall woefully short of what is expected.
Subjecting SIs to the affirmative resolution procedure is no substitute for bringing primary legislation before Parliament because there is no scope to amend them. The Treasury has also committed to engaging with key stakeholders, but, as the Opposition spokesperson mentioned, if previous efforts are anything to go by, this is not reassuring. We have all sat in Delegated Legislation Committees where it feels like the only stakeholder engagement is asking the opinion of a select few. We cannot ignore the needs of businesses and the wider public at such a precarious time.
More care should be taken to gather the experiences of the business community and the wider population before making decisions that could impact on them. It has been difficult throughout this process to gather evidence because statutory instrument Committees cannot take evidence, and we will not be taking evidence on the Bill either, meaning that we will lack the ability to scrutinise this in many different respects.
It has been said many times inside and outside the House that leaving the EU is the will of the people. That is definitely not the case in my constituency or the rest of Scotland, which voted 62% to remain, but even if it were, I would find it difficult to accept that people who voted for Brexit want this—there are gey few Brexiteers here today trying to defend this policy. Tory Ministers are being given unfettered power to legislate with no parliamentary scrutiny, which is way outside any mandate the Government feign to have.
The Bill makes a mockery of the leave campaign promises of taking back control, because this Parliament and each of us as MPs will have less control than we had before. It allows for the creation of new laws via statutory instruments, but these will be adjusting or augmenting primary legislation passed not by this House but by the institutions of the EU. The Chair of the Treasury Committee made an excellent point in her letter about the measures in the Bill that will allow the Government to choose to implement only those EU files, or parts of those files, that they deem beneficial to the UK and to make adjustments to legislation to fix deficiencies and take account of the UK’s new position outside the EU. That sounds like a policy choice—choosing to implement only those files, or parts of files, deemed beneficial to the UK. It would involve the Government deciding which files are beneficial to the UK and so allow them to do what they said they would not do.
After Brexit, the UK Government will have no seat at the European table, as these in-flight directives proceed, on issues that will impact on businesses across these islands. Weirdly, we are delegating scrutiny of these policies to the EU when we are not going to be members any longer. We have heard in Delegated Legislation Committees about how the UK is a great leader in financial services with great expertise, and we have heard how influential and involved our officials have been in making regulations for financial services—the Economic Secretary referred to this in his letter—but this influence is being chucked away for glib slogans on the side of a bus.
We will be losing influence on matters that will disproportionately affect financial services in this country, adopting legislation from another jurisdiction that we have chosen actively not to be a part of and then leaving it up to the Treasury to decide what we take and what we leave, and perhaps not even the Treasury—perhaps the Financial Conduct Authority or some other organisation whose work we are even less able to scrutinise. It is completely unacceptable, and I see no Brexiteers here willing to defend it—not one bit of it. Where are they now?
The UK Parliament, and our own elected representatives in this place, will not have a say in the detail. We are passing into the hands of Treasury officials the ability to determine the position at some point in the next two years. If we want to continue to operate in the EU market, we will have to comply with those rules. Nothing, absolutely nothing, that we introduce—deal or no deal—will be as good, as seamless and as hassle-free as the passporting deal that financial services have now, while the UK is a full member state of the EU. The Treasury cannot deny that fact.
Scotland has worked hard to get to where we are now. In Edinburgh, in Glasgow and in places throughout Scotland, financial services firms are working hard, investing and doing so much to promote their talents. There is no doubt in my mind, and in the minds of the hundreds of constituents who have emailed me, of their concerns about Brexit. They believe that things would be better all round if the Government acted in the best interests of the country, and revoked article 50.
I strongly agree with the hon. Member for Stalybridge and Hyde (Jonathan Reynolds). The principled position is to oppose the Bill. The Government are taking plenty of powers unto themselves, which is outrageous in the context of “taking back control” and all the other glib utterances that we heard at the time of the EU referendum. They say, “Just trust us, and it will be fine.” I am sure I can trust them, and perhaps it will be fine, but we cannot be assured of that. We should not give up our own role as Members of Parliament, which is to scrutinise all these matters.
Mary Creagh (Wakefield) (Lab)
It is a pleasure to follow the hon. Member for Glasgow Central (Alison Thewliss), who made an excellent speech.
Today’s debate has focused on Brexit and financial services. I want to focus on why the Bill is so vital to our budding green finance industry, what the EU is doing to promote green finance and what our own country is doing in that regard, and what the Government can do to end uncertainty for an important and growing part of our economy. I shall refer to the sixth and seventh reports of the Environmental Audit Committee, “Greening Finance: embedding sustainability in financial decision making” and “Green finance: mobilising investment in clean energy and sustainable development”.
In 2015, the United Kingdom signed up to the Paris agreement on climate change and the UN’s global goals for sustainable development, which set out ambitious targets to transform our world. In the three years since then, we have learnt much more about climate science. As was made clear in a report published by the Intergovernmental Panel on Climate Change in October 2018, if we are to avoid the catastrophic effects of uncontrolled climate change we shall need radical and unprecedented changes in all parts of the economy, which will require trillions of pounds—or dollars—to be invested in clean energy and cleaner transport infrastructure.
I pay tribute to the Government for some of their work in that regard. The Bank of England’s Task Force on Climate-related Financial Disclosures looked into strategy, risk and targets. The Government then set up the Green Finance Taskforce, whose report made a series of recommendations, one of which was that the Government should establish a sovereign green bond to kick-start investment. The Government have yet to respond to that report, but I hope they will do so soon. We have seen the green growth strategy, and, in the City of London, $22 billion of investment has been raised in seven currencies for more than 72 green bonds. I fear that the Bill could potentially disrupt some of the progress that we are making, and interfere with London’s place as a centre for green finance.
We have done well in our own country. We have moved quickly to decarbonise the power structure. However, we have done very little to deal with our agricultural and transport-related emissions, and almost nothing to decarbonise our heating emissions. When people tell me that things will be easier, I always ask, “How are you going to transform 31 million gas boilers over the next 10 years?” According to the IPPC’s report, we have just 12 years in which to tackle damaging carbon emissions. We need to think big, and think globally, if we are to rise to that challenge.
My Committee’s inquiry found that the privatisation of the Green Investment Bank and the reduction in European Investment Bank lending following the referendum may have played a part in the 56% reduction in investment in green energy projects in the UK. We could not work out whether that was a blip or a trend, but I look forward to seeing this year’s figures and finding out which it was. Our “Greening Finance” report states that climate change poses material threats to our economy, our investments and, of course, our pensions, which provide the funding for these companies.
There are three climate-related financial risks. There is the physical risk posed by more heatwaves such as the one that we experienced last year, more droughts, which will threaten the water industry, wildfires, which we have seen in the Arctic and in California, extreme rainfall, rising sea levels, and flooding. That risk will affect investment in food, farming, infrastructure, house building and insurance. In a 4° world, my Committee was told, the insurance market would cease to exist. London’s position as a global insurance centre would be destroyed, and the jobs along with it. There is also the risk posed by the transition to the green economy. Companies that do not make a timely low-carbon transition could face costly legal or regulatory action, and some will be left behind by innovative firms with cleaner, greener, more efficient technologies.
Issuers—banks, insurance companies, asset managers and owners, and a range of other financial institutions—must assess and report climate-related financial risks. That is particularly important in relation to pension funds. I welcome the National Employment Savings Trust, but by the time a young person auto-enrolled in the scheme retires, we could be living in a world radically transformed by climate change and society’s response to it. According to the latest Met Office prediction, in a high-emissions scenario our summers will be 5° warmer than they are now. That has implications for the water that we drink and the homes in which we live.
It is vital that our pensions, investments and savings are able to weather those changes, which is why my Committee called on the Government to introduce mandatory reporting of climate-related financial risk. We also wrote to the chairs of the 25 largest pension funds asking them what they were doing to mitigate that risk. We think that improved reporting would help to divert more capital to more sustainable ends, because what gets measured gets done. That would increase investment in the new green infrastructure that we need, and would mean that our savings did well while also doing good. We are pleased that the Government have clarified the fiduciary duty of pension trustees in trust-based schemes, which will come into force on 1 October 2019, and we are waiting to hear from the Financial Conduct Authority what it intends to do.
Let me now turn to why the Bill matters in relation to sustainable finance. I asked the Minister—and I was grateful to him for giving way—about “in-flight” legislation. The EU has proposals for financial services legislation that would promote sustainable finance. It is debating proposals for a framework for low-carbon benchmarks which would allow investors to harmonise their portfolios with the Paris agreement on climate change. The benchmarking is important, because only by seeing what is happening in other companies can investors work out whether they are doing well or badly, and make the strategic changes that may be necessary. It is also discussing the possibility of a taxonomy of environmentally sustainable activities which would allow companies to “green-check” their revenue streams, and new disclosure requirements for asset owners such as pension schemes, as well as asset managers, banks and insurers. My Committee had called for that.
When the Bill was introduced in the other place, I was disappointed to note that the EU proposals for benchmarks and disclosure requirements were not included in the list of “in-flight” legislation in the schedule. The Minister said that this was Parliament doing its job and amending legislation, but it is not clear to me whether those proposals were left out accidentally or deliberately. Do we think that we are already doing those things so brilliantly that we need not bother to pursue the proposals? The Minister has not made that clear.
I welcome the amendments made in the other place to include all the EU’s sustainable finance proposals. However—this is important—the Government have no obligation, but only the option to adopt those valuable measures. Will the Minister reassure the House that the Government will adopt them, and that the UK will not fall behind when it comes to EU action on sustainable finance? If we diverge from the EU’s regulations on sustainable finance it would harm large financial institutions with investment in green financial products in Europe. It could harm our budding sustainable investment industry. We are at the moment a world leader in finance; we know the difficulties Brexit will cause to be faced across our economy, but we have the opportunity to be a world leader in sustainable green finance and we must not let that opportunity pass us by.
Anneliese Dodds (Oxford East) (Lab/Co-op)
My hon. Friend the Member for Stalybridge and Hyde (Jonathan Reynolds) set out very clearly and comprehensively the problems with this Bill in his opening remarks. I do not want to repeat them all, but I will summarise the core reasons why the official Opposition cannot support the Bill.
The Conservative Government often mix their metaphors when presenting their Brexit process. This Bill, for example, part of what the Government have described as an onshoring process, is presented as dealing with those so-called in-flight measures that have not yet landed. In my brief remarks, I want to explain why many of us are confused about the identity of the pilot of this plane, quite how far and fast the plane will go, and indeed whether it should be on the runway in the first place. I suppose that it is at least a relief that the Transport Secretary is not in charge, given last weekend’s revelations.
First, who will decide which parts of in-flight EU legislation will be implemented? This is straightforward for those Bills that have already been passed at EU level but not yet implemented—those taxiing on the runway. In that case, the Bill commits itself to implementation in the UK, not least given that UK Ministers and MEPs would have been fully involved, one would hope, in all aspects of that legislation, with Government only able to fix deficiencies in that legislation.
The picture is, however, far less clear for legislation still under discussion at EU level, and thus to a certain extent still up in the air. In that regard, we are informed that this Bill will enable
“the Government to choose to implement only those EU files, or parts of those files, which it deems beneficial to the UK”.
They will be able to
“adjust the legislation as it is brought into domestic law to fix any deficiencies or, in the case of files still in negotiation, to ensure that it reflects the UK’s position outside of the EU.”
How exactly they might do so, and what that reflection might encompass is left unclear. The right hon. Member for Loughborough (Nicky Morgan), Chair of the Treasury Committee, rightly raised this earlier in an intervention on the Minister, and I am disappointed that she did not receive a sufficiently clear response to that question; I will return to that point later. Indeed, there is no indication here that that deviation from EU practice will even be flagged up to this place, let alone go through a different decision-making process as a result. Instead, it is expected that, as usual with this Government, sadly, statutory instruments will be used. Clause 1(1)(b) even states that the Government can make
“any adjustments the Treasury consider appropriate”,
a power that was initially open-ended but that, quite rightly, was amended in the other place.
The point remains that it will be difficult for Parliament to be aware of any deviations from EU practice. The Conservatives may well respond by stating that industry would be quick to point them out. Frankly, I am grateful for industry’s engagement with this process, to the extent that it has been able to input, and it is essential that, as mentioned by my hon. Friend the Member for Stalybridge and Hyde, we preserve our strong and successful financial services sector, and our regulations must reflect that. However, I reiterate a point I have made before: there is no organisation in the UK with an explicit mandate to promote financial stability and the consumer interest in financial services, a role which is filled within the EU by the Finance Watch. It is unsurprising therefore that Finance Watch has put on the record its concerns that the current approach to Brexit could be used as a means to undermine financial regulation, pointing to, for example, the Chequers agreement’s phraseology of the UK pushing for greater liberalisation of financial services, investment and procurement markets post Brexit.
The second reason to reject the Bill concerns its peculiar status among the rest of the so-called onshoring process. The flight path here is bedevilled with interactions with numerous other legislative processes, from those embedded in the 40 statutory instruments that have already been laid before Parliament to the additional 20 yet to go, and with only 34 working days between now and 29 March, as rightly underlined by my hon. Friend the Member for Stalybridge and Hyde.
By contrast, with the extraordinarily rushed process being adopted here, the Government’s powers under this Bill can be exercised for up to two years—yes, two whole years after Brexit. That is in a context where the Government have no clear plan for financial services regulation post 29 March. Rather than this confusion of legislation—short-term, long-term and of indefinite duration; primary, secondary affirmative and secondary negative—we surely need to have some consolidated legislation covering this area. This confusion is of course part of a pattern, sadly, over recent years from Conservative Ministers, with Acts in 2012, 2013, 2014 and 2015 having to correct or amend existing provisions. Indeed, we have been informed that there may well be correcting amendments to be considered even after the 60 statutory instruments and this Bill are passed.
Of course we had a good example of the deficiencies even within this Bill, as rightly pointed out by my hon. Friend the Member for Wakefield (Mary Creagh), in relation to the legislation governing environmental indicators and reporting, which was initially missed off the schedule. I pay tribute to her for raising this essential issue of green finance and greening finance and how it was initially missed out of these proposals.
I found the Minister’s response to the hon. Member for Bromley and Chislehurst (Robert Neill) rather peculiar; I note that the hon. Gentleman is no longer in his place, but I felt he made an important point. He asked whether the UK would keep in step with emerging provisions from the EU, such as in the area of non-performing loans. The Minister suggested in response that alignment in this Bill was rejected due to the content of those proposals, when his Bill, however, was presented as inclusive of all financial services legislation that was in-flight aside from those elements that we had specifically opted out of, such as those relating to banking union, which we do not participate in of course and which is presumably the real reason why non-performing loans legislation is not included here.
My hon. Friend the Member for Wakefield highlighted in her remarks the non-scientific nature of the assessment by this Government of which measures will be deemed in-flight or otherwise. We have had no indication of the criteria to be used for that from Government. The discussion we have had, albeit in this brief debate, has pointed up that all we have as a Parliament currently as an indication of this Government’s approach to regulating financial services in the future is this Bill and the no-deal SIs—no overall plan, no indication of how the different pieces fit together, and above all no clarity around how we will be able to keep in step with the EU27 in relation to emerging issues like green finance and cryptocurrencies.
Sir Greg Knight (East Yorkshire) (Con)
On the issue of no clarity, can the hon. Lady tell the House why her party did not oppose the Bill in the other place or suggest any changes to it there?
Anneliese Dodds
It is my understanding that there was significant challenge from my party in the other place, and in fact changes were made, including for example a clearer indication of the circumstances under which those adjustments could be made by the Government. Initially that was very open-ended, but we supported and pushed for much more clarity on that. We would have liked to have seen change in other areas, and perhaps clarification in additional areas. We have not had that, however, which is why it is necessary to oppose the Bill at this stage.
Finally, this legislation is of course only required because of the Conservative Government’s recklessness in persisting with a commitment to keep no deal on the table, as rightly underlined by the hon. Member for Glasgow Central (Alison Thewliss). We have seen very clearly today from the preliminary estimates of GDP growth for the final quarter of last year how this determination to prioritise ideology over national interest is harming our country. The contribution to GDP from business investment was negative for the fourth quarter in a row; that is a clear sign that uncertainty surrounding the Government’s Brexit strategy is acting as a real drag on the economy. The construction sector actually contracted this quarter, and after two consecutive quarters of negative growth, the UK manufacturing sector sadly is now officially in recession. So 2018 had the worst annual GDP out-turn since the then Chancellor’s disastrous 2012, and economists are forecasting that even worse could well come.
The flight into the buffers that would be represented by a no-deal Brexit is still being countenanced. Any responsible Government would take that plane off the runway once and for all.
The Economic Secretary to the Treasury (John Glen)
I thank all Members for their contributions to the debate. As my right hon. Friend the Financial Secretary to the Treasury set out earlier, the Government do not want a no-deal scenario, but our job as a responsible Government is to prepare for all possible outcomes, including reaching 29 March without a deal. The Bill forms an important part of those preparations. In a no-deal scenario, it would ensure that we could maintain the UK’s reputation as a global leader and that the competitiveness of our financial services industry would be maintained. The UK has in many cases played a leading role in shaping these proposals over a number of years, and they will bring benefits to UK consumers and businesses once they have been implemented. I want to talk about the four or five themes that have been raised in the debate, after which I will address the points made by the hon. Member for Wakefield (Mary Creagh).
Mr John Baron (Basildon and Billericay) (Con)
I refer the House to my entry in the Register of Members’ Financial Interests. The Economic Secretary to the Treasury will be aware of our exchanges in Committee regarding EU regulations as they relate to key information documents and how KIDs are adversely affecting the assessment of investment trusts. The trade bodies oppose them, including the Association of Investment Companies, which has suggested that the investors’ response to them should be to “Burn before reading”. Can the Minister report back on his deliberations with the Financial Conduct Authority, which has been rather slow out of the blocks? Ultimately, it is the Government’s responsibility to get this right.
John Glen
I am happy to respond to my hon. Friend’s intervention. I acknowledge his expertise in this area and his excellent article in the Investors Chronicle this week. I would point out that, just last summer, the FCA issued a call for input and sought industry views on the next steps for packaged retail investment and insurance products—PRIIPs. That consultation closed on 28 September and the FCA is reviewing the responses carefully. It will publish a statement in the first quarter of this year. When I next see the chief executive of the FCA, I will challenge him on that publication date.
Let me turn to the substantive thrust of the concerns raised in the debate. The first relates to the desirability of no deal. As I have said, we do not want a no-deal scenario, but we need to be responsible and to plan for all eventualities. Our priority remains getting approval for the deal that we have negotiated with our European partners, which will deliver on the democratic choice of the British people.
Turning to the other preparations, we have now laid 50 statutory instruments before Parliament. The allegation from the hon. Members for Oxford East (Anneliese Dodds) and for Stalybridge and Hyde (Jonathan Reynolds) was that there had been no coherence to the Government’s work, but as the hon. Lady will know, we will have had 53 statutory instruments. We have more debates tomorrow and on Wednesday, and I think several more next week. We are addressing the deficiencies in all the major EU files and the relevant domestic legislation. This will ensure that we have a functioning financial services regime at the point where we leave the EU in a no-deal scenario. Our aim throughout this work has been consistently to minimise disruption for firms and their customers and to provide a smooth transition when we leave the EU.
The hon. Member for Glasgow Central (Alison Thewliss) made a point about the breadth of the power in this legislation. We have worked hard to ensure that this is a clearly defined power and that changes cannot be made such that the implemented files depart in a major way from the original legislation. However, the Government will retain some flexibility to make adjustments to take account of the UK’s new position outside the European Union. The amendments proposed by the Government require the Treasury to publish draft SIs at least one month in advance of laying, as well as a report detailing where there have been omissions and changes and giving the justification for those changes. We believe that the report will allow parliamentarians to scrutinise the changes before the SIs are laid. If the UK were forced to take on EU legislation either in whole or not at all, it is likely that we would be able to domesticate very few of these files in good time, so even the positive aspects of the reforms would be delayed. This is a pragmatic measure to deal with the reality of a very undesirable situation, and our approach has been endorsed by the industry, with which we have engaged in the preparation of the Bill.
Alison Thewliss
The Minister talks in his letter about how things are deemed to be beneficial for the UK, but he and I will have very different opinions on what would be beneficial for the UK, or indeed on whether Scotland should be part of the UK, so how can he say that that is not a policy decision?
John Glen
We are talking about a no-deal scenario, which we cannot fully anticipate or set out in legislation. However, there would be a full discussion and additional legislation in those circumstances.
For the benefit of the House, I want to clarify the industry engagement that has been undertaken on this Bill. The Treasury engaged with industry ahead of the introduction of the Bill, and the financial services industry has been expecting many of the files for some time. For example, the industry will be generally supportive of the changes that will be implemented with the European market infrastructure regulation regulatory fitness and performance programme—EMIR REFIT—file, which introduces changes to regulations for clearing and reporting requirements, to make them more proportionate and to provide further clarifications. We have been engaging to deliver what the industry expects.
With respect to accepting EU laws after exit, the Bill is not about accepting such laws wholesale. We will be able to implement only those pieces of legislation that are beneficial to the UK, because we will be able to choose the files, or specific provisions within those files, that we are going to implement. For those files that we have already agreed at EU level but not yet implemented, we will be able to fix deficiencies similar to what was done in relation to the European Union (Withdrawal) Act 2018. For those files on which negotiations will be ongoing at the point of exit, we will be able to make some adjustments to them to take account of the fact that we will not be around the negotiating table when they will be finalised.
Moving on to the model for financial services regulation more generally, the Government of course recognise that this legislation should apply only for an interim period while we consider a sustainable, longer-term approach that balances the need to ensure appropriate parliamentary oversight of financial services legislation after leaving the EU with the need to maintain the flexibility and competitiveness of our regulatory regime. That is why the model in the Bill would apply only for a temporary, non-extendable two-year period post exit, specifically in a no-deal scenario, and to specified EU files only. The Government will take forward our approach for a sustainable long-term model in due course.
Turning to the points made by the hon. Member for Wakefield, the UK has publicly led on the development of sustainable finance, as she set out, and the Government are committed to the sustainable finance agenda and are a leader in green finance. That is why we have included these files in the Bill. We recognise that the files form part of the EU’s response to the Paris climate change agreement and the UN sustainable development goals. The Government support the aims of the files and do not consider them harmful to industry at their current stage of development. As such, we were pleased to add them to the schedule to the Bill, and we thank the noble Lords who recommended their inclusion.
I stress again that this legislation involves a temporary measure, with the delegated power limited by a two-year sunset clause and subject to the affirmative procedure in each and every instance of its use. Following constructive engagement in the other place, the Bill is clearer about the power contained within it and has much stronger reporting requirements than at its introduction.
I thank all right hon. and hon. Members for their contributions to this debate. I am sure that we can agree on the importance of continuing to support the UK’s world-leading financial services industry in any future scenario. I look forward to discussing the Bill further in Committee, and I commend it to the House.
Question put, That the Bill be now read a Second time.
Business without Debate
(5 years, 10 months ago)
Commons ChamberRead Full debate Read Hansard Text
Election Law Reform
(5 years, 10 months ago)
Commons ChamberRead Full debate Read Hansard Text Read Debate Ministerial Extracts
Craig Mackinlay (South Thanet) (Con)
I am pleased to be afforded the Floor of the House for this Adjournment debate on the reform of election law. Many might ask, “What does it matter?” Naysayers might say that this is a debate in defence of ourselves. Well, perhaps, but this is serious. Our election law is a mess, leaving candidates and agents exposed as never before to the real risk of criminal prosecution, so this cannot wait—it needs solving now.
Election law is important, as it defines the type of democratic institutions that we have. The playing field must be fair and equal, and seen to be so, and the results of elections need to be respected as just and fair. That must be encapsulated in our election law.
Jim Shannon (Strangford) (DUP)
I thank the hon. Gentleman for giving way before he gets into the thrust of his contribution. I asked his permission to intervene beforehand.
In Northern Ireland we have made many, many changes to electoral law, particularly for stricter controls on registration and identification. That is not the subject of this debate, but does the hon. Gentleman agree on the need for voter ID in the mainland? We have done it in Northern Ireland, and it has done away with a lot of discrepancies in voting. That may be a separate issue but, none the less, does he agree it is important?
Craig Mackinlay
I thank the hon. Gentleman. He raises a wider debate about voter registration, and I would not object to its application on the mainland. I see nothing wrong with every single voter having a unique identifying code so that people cannot vote in two places, for instance. I would welcome moves towards that.
Through no design of mine, and for obvious reasons, I have come over the past two years to know, rather too closely, the intricacies of election law. I do not intend my contribution to descend into a personal rant against the Electoral Commission, the Crown Prosecution Service and Kent police, which led me to a three-month trial and subsequent acquittal, but I hope some good can come from my experiences by being a catalyst for the reform of election law, which was recently described by a retired professor of election law, Bob Watt, as a “compost heap”.
We have two key statutes: the Political Parties, Elections and Referendums Act 2000, often referred to as the PPERA; and the Representation of the People Act 1983, often called the RPA. The PPERA was enacted to reflect the reality of modern politics, and it created the Electoral Commission, a statutory body with powers over election processes and guidance setting for candidates, agents, political parties and, importantly, local authority electoral staff.
The Electoral Commission has a budget of £17 million and employs 134 staff. It oversees and controls national party spending, donations and reporting and the regulation of third-party campaigners, among other things. Members may not be aware that it is from the PPERA that ballot papers have thereafter had the candidate’s name and the logo of the national political party for whom they are standing. That was a recognition of the reality that the electorate vote for political parties. Few of us in this House would be so bold as to claim that the electorate vote for us solely as individuals—if only that were true; they vote in larger part for the party messages, for the perceptions they have of party leaders and for the national party manifestos. This legislation set spending limits of close to £20 million for registered political parties to spend across the UK in the regulated period of a year prior to a planned and forecast election as envisaged by the Fixed-term Parliaments Act 2011.
We then have the law that is more relevant to us. It is relevant to candidates and agents across elections, no matter what their type, be they parliamentary, Assembly Member, council, mayoral or police and crime commissioner elections. I refer to the Representation of the People Act 1983, which is the legislation I would like to focus upon this evening. I wish to focus on two small sections—sections 90C and 90ZA. It was on the construction and interpretation of these two sections that the entire case against me was founded, and it is from these things that we need to learn and change. In broad terms, the 1983 Act governs candidates’ returns, spending limits, timings, agents’ and candidates’ responsibilities, and, importantly, various offences, notably against those not authorised to spend money on a campaign. There is a clear prohibition in section 75 of the Act, with punitive criminal sanctions against those who spend without the authority of the election agent.
Those small sections are detailed and they are often not understood, so I will advance to the House what they mean. Section 90ZA explains the common meaning of “election expenses”. Subsection (4) outlines the concept of “incurred and authorisation”, and this accords to the long-held view that election expenses can be so only if incurred or authorised by a candidate or agent. This interpretation, relied on by all political parties, has roots going back to 1868 legislation in another form. If not authorised, an offence can be committed by the person incurring expenses under section 75 of the Act. This seemingly clear interpretation was to prevent those who might want to interfere with an election from doing so—or else face criminal proceedings. It also provided candidates and agents with the power to control what is spent on the campaign they are legally responsible for.
Section 90C explains what to do if goods, services or facilities are provided free or at a discount, for instance, where a friendly printer provides printed material, perhaps as a party supporter. It is clear and people fully understood what it was there for; the concept was simple. The section dictates that the item, service or facility given free or at an undervalue should form part of the election expense return at a proper market value rate, subject to some simple de minimis rules.
My case passed through a long trail of court interpretations before criminal trial. At an early application to dismiss, which was rejected, we argued that the normal interpretation of section 90C—the discount or free provision—could apply towards a candidate’s election expenses only if such a good, service or facility had been properly authorised in the first place by the candidate or agent under the normal authorising provisions of section 90ZA. It has long been the understanding of colleagues in this House and experienced election law Queen’s counsel, some of whom write the textbook on election law, that the rules always intended that agents were responsible for the finances of election campaigns. Candidates will be focused on meeting electors and winning votes during the campaign period—we will all be familiar with that. The law intended agents to be involved in all the spending decisions in a campaign, either by spending themselves or permitting someone else to spend on their behalf. They, or the candidate, are meant to authorise any spending on the campaign, so that all expenditure goes through them. As a result, the agent is then liable to produce a full, “true” return of all this spending and be responsible for keeping within the legal spending limits.
The Act also takes steps to try to ensure that others are dissuaded from spending on an election campaign without this authorisation from the agent or candidate. Section 73(6) and section 75 provide for offences for people who make payments for the campaign or who spend on campaigning without the agent’s express permission. Anyone spending or making such payments without authorisation—written authorisation should be the norm—risks committing an offence. If others are willing to take the risk of committing an offence by spending or paying expenses without authorisation from the agent, that would be a criminal matter for them. This does not mean there is a free pass for people to flout spending limits by simply refusing to give authorisation for spending which others decide to incur anyway. So it is clear that the baton of the risk of illegal activity passes from the agent or candidate to the individual deciding to incur the unauthorised expense. We all have some strong and great supporters in our constituencies who are keen to help, but I expect that none would flout the wishes of the candidate and agent and decide to place themselves in jeopardy. Then there is a deterrent to third parties incurring expenses without authorisation.
The judge in an early part of my ordeal did not agree with this long-held interpretation and interpreted that the legislation should mean that anything used to the benefit of a candidate or to denigrate their opponent, used either by the candidate or, more worryingly, simply “on their behalf”, should be included in a candidate spending return, regardless of whether it was authorised or not. This was appealed to the Court of Appeal, in front of the Lord Chief Justice. That appeal was successful and the normal ground was seemingly restored.
The Crown Prosecution Service, with the Electoral Commission attaching itself as an interested party, appealed the Appeal Court decision to the Supreme Court. That appeal was heard on 23 May 2018, with judgment given on 25 July last year. In summary, that decision overturned the Appeal Court decision and has to stand as the ultimate authority on the interpretation of sections 90C and 90ZA of the 1983 Act.
Andrew Bridgen (North West Leicestershire) (Con)
I wish to recap. Worryingly, a candidate in an election could be liable under the law for spending on his behalf that he neither authorised, nor was even aware of.
Craig Mackinlay
I am grateful to my hon. Friend, as he has encapsulated the issue in a few brief sentences. I will be expanding on that in the remainder of the debate.
The Supreme Court decision ruled that under section 90C free goods, services or facilities for the “use” or “benefit” of the candidate, arranged either by them or on their behalf, must be included in an election return. In addition, and this goes to the point made by my hon. Friend, authorisation or even, it would seem, full knowledge of the candidate or agent is not required, and only active refusal might—I stress might—be the only possible defence. It is difficult to see how that could be done if the candidate or agent is unaware of the matter concerned or the costs involved.
The Electoral Commission does not come off unscathed by that Supreme Court judgment. Paragraph 28 of it states that
“the Electoral Commission's helpful guidance documents issued over several years, whilst they certainly both address the question of apportionment of expenditure between party and candidate, and deal with the concept of free or discounted services, nowhere appear to alert readers to the possible link between them, nor to the application of the notional expenditure rules to what must sometimes be a difficult exercise of separating local from national expenditure.”
Let us overlay that statement about the Electoral Commission with some of its own written output on the launch of a consultation on a new draft code of practice on 10 September 2018:
“We hope these Codes will make it easier for you to submit your own or your party’s returns, simplifying the process and removing any blurred lines that there might have been”.
It goes on:
“In responding to this consultation you’ll help us to further demystify the process and remove any confusion that you or your party may have over the process of campaign reporting.”
So, we have an acknowledgement by the Electoral Commission of problems in election law and it was admonished, to a degree, by the Supreme Court.
The only reference in the draft code published in September last year to the Supreme Court judgment is a single paragraph on page 4 of a 23-page document, which is as yet without statutory force. That single paragraph says:
“This notional spending falls to be declared as election expenses in the candidate’s return even if the items provided have not been authorised by the candidate, the candidate’s agent or someone authorised by either or both of them, R v Mackinlay and others (Respondents), UKSC 42, 25 July 2018.”
That is it: this fundamental change in interpretation encapsulated in a few lines in a draft code of practice, with no guidance as to what it might mean in practice. If the hope was, to use the Electoral Commission’s words, to demystify and remove blurred lines, the Electoral Commission has comprehensively failed.
Mr Mark Harper (Forest of Dean) (Con)
I think my hon. Friend has answered this question, but to pick up the point made by my hon. Friend the Member for North West Leicestershire (Andrew Bridgen), did the Electoral Commission suggest in the draft code of conduct how a candidate was supposed to know, or to be able to account for, that information in any practical way? Or did it leave that open?
Craig Mackinlay
My right hon. Friend highlights exactly what he might have expected, but I am afraid he will be disappointed, because that is it. There is not one additional word of guidance as to how this change of interpretation might be administered on the proper battleground of elections.
Ian C. Lucas (Wrexham) (Lab)
The hon. Gentleman is making an important and helpful speech. Was the issue of whether the money was national spend or local spend within a political party relevant to the finding he is describing? For example, some Conservative national spend for an individual constituency might not have been authorised by the agent. Was that the reason the decision was made in the way that it was?
Craig Mackinlay
The hon. Gentleman highlights the issue at stake, which is at the core of the Supreme Court judgment, but we are still left with this ambiguity as what others might do that the candidate might not know about. Matters of which the candidate has little to no knowledge, and activity that they certainly had not authorised, would have to be part of an election return.
Ian C. Lucas
I have great sympathy for the ordeal, as he described it, that the hon. Gentleman has gone through. We all have experience of elections and agents. The central point that he has indicated is really important: individual authorisation should be obtained from the individuals concerned. That requirement should be adhered to and, if that has not happened, that is deeply regrettable.
Craig Mackinlay
The hon. Gentleman makes reference to the full understanding of election law dating back to 1868 and in its various guises since. It is only now that the Supreme Court has overturned what we had all accepted as the normal happenings and procedures of election law for all these years. It has confounded many election specialists.
Let me pick up where I left off. As yet, the draft code has no statutory force. In just 51 days, we will be appointing candidates for local elections and in 80 days the local elections will be taking place throughout the country, possibly in just about every constituency. The Electoral Commission currently proposes to put thousands of local election candidates into battle with no clue as to what they should do to stay properly within the newly interpreted law.
Alex Chalk (Cheltenham) (Con)
Does my hon. Friend share my concern that these issues, with which the Electoral Commission is grappling very late in the day, have been known to us for many years? Regrettably, the Electoral Commission has dragged its feet in addressing these issues. It should do so in a way that provides clarity and certainty for people who could otherwise be liable to prosecution.
Craig Mackinlay
I thank my hon. Friend for his intervention. There is one person in this House who has been liable to prosecution: I have had the full force of that.
As I shall ask a number of times in my speech, is the Electoral Commission fit for purpose? Was the commission’s preferred interpretation of the relevant sections of the 1983 Act, which it used in support of my prosecution and, it seems, for no other obvious purpose, included in the 2015 guidance for candidates and agents? No, it does not appear anywhere. Did it find its way into the revised guidance for the 2017 general election, under which everybody in this House fought for election? No, it does not appear anywhere. Armed with the result of the Supreme Court judgment, to which the Electoral Commission was attached as an interested party, did the commission finally incorporate it into its most recent guidance for the local elections in England in May 2019? Did it incorporate within that guidance the definitive Supreme Court interpretation of sections 90C and 90ZA of the 1983 Act? I think you know the answer, Madam Deputy Speaker, and it is no. Why did the Electoral Commission intervene, at public expense, if it had no intention of advising candidates and agents, on pain of criminal prosecution, as to the proper interpretation of law following the judgment in its favour? Is the Electoral Commission incapable of speaking with itself? I ask once more: is it fit for purpose at all?
A huge grey area has now opened up. What if someone decides, without recourse to the candidate or agent for authorisation, to print and deliver thousands of leaflets saying “Vote for X”? This could cost the individual thousands of pounds, which they decide to pay themselves. Once it is printed and delivered, they inform the candidate and agent about the unwanted help that they have provided and paid for. Unknown to them is the fact that the candidate has no headroom left in their election budget for this kind of spending, which would breach the legal spending limit. The leaflets are clearly for the benefit of the candidate and they have obviously been used. They are notional, as they are free, because the third party has paid for them. The Supreme Court’s new interpretation of section 90C requires that that cost must be recorded, and in the circumstances that would breach the spending limit for the candidate and agent, with all that that might entail.
Candidates and agents need to know the risks they face. Clear warnings should be given in Electoral Commission guidance. Remember that it is candidates and agents who face criminal sanctions if spending limits are breached. Under the Supreme Court’s judgment, they lose control of spending should anyone else decide to offer their support for free, whether it is wanted or not. How can anyone hope to budget for an election campaign under such a system? We all need clarity from the Electoral Commission. It pushed for this interpretation of the law and won at the Supreme Court, so how do we deal with it in practice? At the next election, might people provide free goods and services on behalf of, say, the right hon. Member for Islington North (Jeremy Corbyn), or my right hon. Friend the Member for Maidenhead (Mrs May), to the extent that they breach their spending limits? Will we then find them massively embroiled in police investigations and court cases? There are those who may decide to take such action and spend money simply to cause chaos. The Electoral Commission has yet to step up to the plate and explain how the interpretation that it pushed for and won on in the Supreme Court will play out in practice.
I shall dwell only briefly on some of the errors that have put people to threat of financial and criminal sanction, at the doors of the commission and its guidance. The commission offers, in its own words, “bespoke advice” to campaigners and parties. Let me highlight but one recent publicised example. Vote Leave sought that bespoke advice, on offer for free, in respect of activities during the referendum campaign. It seems that Vote Leave acted on that advice and has now been accused of breaking the law—by acting on Electoral Commission advice, which is now considered to be the wrong advice. You could barely make it up.
Battle buses have probably been part of election campaigning since buses were invented. An investigation into the Conservative party concluded with a report published on 16 March 2017 and led to fines. No similar investigation was made into the use of battle buses by any other party or by any third-party campaigners. There appears to be a lack of even-handedness in the activities of the commission across much of what it does and whom it pursues. Its status and reputation are not helped when its current director of regulation has posted anti-Conservative social media messages in the past and has provided witness statements for court use against Conservatives, including me, but against no other political party.
All political parties and candidates use correx boards—we are all familiar with them in this House. They have become the usual stock in trade at all elections. These boards are rugged—we are familiar with their construction—and would last for many years, save for the inevitable criminal damage, I am sorry to say, that characterises many modern election campaigns. Across all of these documents—of 2015, 2017, and 2019—is there one word of advice on how correx boards should be treated and how criminal damage should be reconciled and accounted for? Everyone will be familiar with my answer by now—it is no. There is not one word of advice.
The Electoral Commission offered substantial evidence during my criminal trial. Its view was that correx boards should be written off and recorded in full at the first election that they are used. I can only say, “Really?” Then say so in published guidance. Let us examine what its current perceived position really means. Let us say that successful candidate X wins in a safe seat that is likely to be held for many years. That is common for many in this House. If the boards were to be expensed through the election return at the first outing, at the second outing, there would be nothing to declare because they cannot be counted twice. The new Opposition candidate at the second election would be at an immediate disadvantage on needing to buy expensive correx boards just to keep up, while the sitting MP would have a zero cost to declare, allowing a spending advantage, as budget could be used for additional leaflets or other election promotions. I ask again: is the Electoral Commission fit for purpose? Does it actually understand what it is there to regulate?
Let me give a few examples of the perversity of the law and the situation we now find ourselves in following the Supreme Court judgment. This would certainly apply should we face—heaven forbid—a premature general election. What would be the status of a supporter—or, probably more accurately, a spoiler—deciding to hire an aircraft with a trailing banner of support which is not wanted or assented to by the candidate or agent? The benefit test and the on behalf test under the Supreme Court ruling would have been met, the candidate would probably have seen it and, as such, they would need to account for it as an election cost, potentially exceeding their election budget and placing themselves under threat of prosecution under the criminal code. That would mean a loss of seat, fraud charges, a criminal record, costs and loss of any professional qualifications—potential ruination.
How would senior members of a party possibly tour the country at an election, as is the usual and expected standard practice? This would be deemed, under the benefit test under the Supreme Court, to be in support of the candidate in the particular constituency visited. The Nicola Sturgeon helicopter alone would break the budget of the candidate visited, as would the security and travel costs for the PM or the Leader of the Opposition.
I have saved the most perverse example, which is relevant to this age of digital campaigning, until last. What if a foreign national or hostile foreign Government were to spend on Facebook advertising in support of—or denigration of—a candidate but it is entirely unwanted by that candidate? The benefit and use tests under the Supreme Court ruling would have been met. If the candidate were able to obtain the cost of the advertising from Facebook and find who placed it—in itself a tall order—how many impressions would be relevant? Were the impressions seen by non-voting businesses or by minors, they would not be an election cost, but impressions viewed by those of voting age would. However, the law and Election Commission guidance state that an honest assessment needs to be made. Under the newly interpreted understanding of section 90C of the 1983 Act, an honest assessment would need to be made. Might this pitch the election expenditure over the limit, with all that follows? The double entry of election expenses requires, at all times, the identification of donors. So, madly and perversely, the candidate could find themselves in a double illegality because a second illegal activity would be deemed to have taken place by the recognition and deemed acceptance of an illegal foreign donation.
It is very easy to speak in an Adjournment debate just to have a moan, but tonight I wish to conclude with some solutions—I have a number of them. Might higher local candidate spending limits and lower national party spending limits be the answer, so that any interpretative complications at the margins would at least allow sufficient latitude for the candidate to be on the correct side of the law and spending limits? Legislative change needs to be forthcoming—it is urgent; it is needed almost within days. I have proposed a most simple and elegant solution. It is available to Ministers under a simple statutory instrument, which I recommend be passed with all haste.
Schedule 4A to the 1983 Act lists what are election expenses under part 1 and what are not election expenses under part 2—for instance, if a candidate drives themselves around in their own car. The Secretary of State has wide powers under section 15 of the Act to make orders to add or subtract from parts 1 and 2. A simple addition, in these words, to part 1 would clarify the law and revert matters to what I believe Parliament always obviously intended under the Act. It reads:
“Notwithstanding that a matter might fall to be included within Part 1”—
that is the “what is”—
“of this schedule because of section 90C of this Act”—
the deeming provision that the Supreme Court has now come to—
“it would only be deemed an election expense if section 90ZA(4) also applies.”
It is section 90ZA(4) that requires authorisation by an agent. In easy terms, this would restore, within threeand a half lines, the position that election expenses can only be so if properly authorised by a candidate, agent or somebody properly authorised by them. With this in place, we can start to unload what has been described as the compost heap of election law in due course and replace it in the longer term with legislation that is fit for purpose. But candidates and agents deserve protection right now.
Mr Jonathan Lord (Woking) (Con)
I am fortunate to have an excellent agent, Simon Ashall, who is fully trained, but—my hon. Friend has brought this issue out in his excellent and important speech—even he is in a muddle about some aspects of our current electoral law. There were 3,304 candidates at the last general election, and only a few hundred, at most, will have had a professional agent. A really good and experienced agent does not feel that he can be on top of things. My hon. Friend is absolutely right. We need robust and effective electoral law and regulation, but it also needs to be simplified, fair-handed and clear. I thank him for bringing this debate to the House.
Craig Mackinlay
I thank my hon. Friend for those robust and powerful words. As he describes, when experienced election agents treat these laws with fear, this is not a position by which any political party will be able to recruit election agents in the future. The barriers should be clear. One should know where the RPA or the PPERA kicks in. But, as my hon. Friend says, how can anybody know what cannot be known? Those are the realms that we are now in.
Candidates and agents deserve protection. There are elections in 80 days’ time and nominations for candidates close in just 51 days. I ask the Minister to act urgently, with that simple proposed statutory instrument of threeand a half lines, to bring clarity to the law and protection for all candidates and agents.
Alex Chalk (Cheltenham) (Con)
I thank my hon. Friend the Member for South Thanet (Craig Mackinlay) not only for giving an excellent speech, but for making such an important contribution to this critical field. People watching this from the Public Gallery, or perhaps reading the debate later, may be surprised to learn that these issues are of such seriousness that if candidates or their agents get them wrong, there is a decent possibility that the matter will be resolved with an individual standing up in court, potentially at risk of losing his liberty, his reputation and, indeed, his livelihood. If that is the consequence, it is critical that the legal landscape is clear, and I am afraid that I respectfully agree that it is not clear.
Let me give the House just one small example of how we find ourselves in a situation where people’s campaigning activity might owe more to their appetite for risk than to the correct campaigning message. In 2017 in Cheltenham, one of the issues was whether I should be putting out a leaflet that mentioned Cheltenham repeatedly throughout. Under one view, if it was simply a national message that would apply to Cheltenham, it could be national expenditure. But under another view, it could be allocated as local expenditure. People watching this should understand that if someone gets that judgment wrong, they could end up being prosecuted for breaking their limit.
I thought that there was a risk involved in allocating that as a national spend so I declined to do so, but others took an entirely different view, mentioned Cheltenham a lot and simply allocated the spending as a national spend. It turns out, however, that the Electoral Commission has decided after the event—through these provisional codes of conduct—that circumstances where the constituency is mentioned should be classed as a local expense. Well, if that is right, the implications are absolutely enormous.
My hon. Friend has already delivered a devastating critique of the Electoral Commission, but one of my criticisms is that it is so slow to act. It knew about this situation in 2015, and yet two years later, when it came to the 2017 election, had it sorted the situation out? No. Had it provided any guidance? No. Candidates like me were simply left to fend for ourselves and make a judgment based on our appetite for risk. I had zero appetite for risk, so I took a cautious approach; others did not, and the net effect was that there was not a level playing field. If the Electoral Commission is not there to ensure a level playing field, what on earth is it there to do?
Ian C. Lucas
The hon. Gentleman is making a very important point. I am a member of the Select Committee on Digital, Culture, Media and Sport, and I am particularly interested in this debate because of the inquiry that we have been carrying out into fake news. One issue that is crucial in all this, but that we have not really discussed today, is the advent of social media campaigning. If we are talking about not being up to speed, I have been on a huge learning journey on the Committee since I was re-elected in 2017. Frankly, I am sure that most of the Members of the House will not be aware of the scale of change that has happened in this area in recent years. The issue regarding local and national spend that the hon. Gentleman mentioned is just one of those changes. We need urgently to reform the law to take account of what actually happens in campaigns today.
Alex Chalk
The hon. Gentleman makes a good and fair point, but I would say that the law will inevitably struggle to keep up with every last twist and turn. That is one of the reasons that we need to have an Electoral Commission that is agile and nimble, and can provide assistance to candidates. My first criticism of the Electoral Commission is that it has singularly failed to show that agility and nimbleness. That is not simply an academic criticism; it is echoed in how elections are run, and it means that we do not have a level playing field.
Mr Harper
I think that the situation is actually slightly worse than my hon. Friend says. When listening to the speech of our hon. Friend the Member for South Thanet (Craig Mackinlay), it struck me that the Electoral Commission had been quite nimble and agile in some ways, in the sense that it decided to back a legal action that made the current position more complicated and less straightforward. What it actually should have been doing was being less nimble and sticking to the existing understood provisions in the law, rather than trying to change them. There is enough change in the system, as the hon. Member for Wrexham (Ian C. Lucas) says, without muddying up things that everyone in this House thought were very clear.
Alex Chalk
The Electoral Commission needs to do two things. First, it needs to be nimble and agile in responding to developments in campaigning practice. Secondly, it needs to show judgment when matters come before its desk. That judgment means using common sense, but it also means being scrupulously impartial and scrupulously independent. That is not just a statement of the obvious. It is something that is set out in the code of conduct for electoral commissioners, which says:
“Commissioners, and the Commission as a body, are accountable to Parliament. Within the Commission, Commissioners are accountable to the Chair. Commissioners are expected to act at all times to further the Commission’s aims and objectives, and uphold its impartiality.”
Impartiality is key. Section 2 on conflicts of interest goes on to say:
“The failure to declare an interest and then act appropriately can affect the validity of a decision. The test in all matters is—would a fair-minded and informed observer conclude that there is a real possibility of bias? The issue is not just whether there is bias, but instead could there be a reasonable suspicion of bias? Decisions must be made in an impartial way without any opinions being formed beforehand”.
And yet we have an extraordinary situation whereby the director of regulation of the Electoral Commission—the person who comments on the fines imposed on political parties, and who, perhaps more than anyone else, should be impartial and be perceived to be impartial—wrote on Facebook when David Cameron became Prime Minister:
“Just can’t understand what people were thinking—do they not remember the Tories before?”
She went on to say that she
“doesn’t want to live under a Tory government.”
She also wrote that she could “not believe” that she lives
“under a Tory PM again! What is wrong with people? Grrr! Words have failed me.”
This is the person who is making decisions on whether to proceed with prosecutions or investigations against my hon. Friend. How on earth does that satisfy the test? I remind the House that the test asks
“would a fair-minded and informed observer conclude that there is a real possibility of bias? The issue is not just whether there is bias, but instead could there be a reasonable suspicion of bias?”
Well, if that test is not crossed in this case, what on earth is the point of the Electoral Commission?
The Parliamentary Secretary, Cabinet Office (Chloe Smith)
It is a pleasure to be here with you tonight, Mr Deputy Speaker. I thank my hon. Friend the Member for South Thanet (Craig Mackinlay) for raising this issue. I am glad that we have been able to have a lengthy debate in which to fully understand these matters. He has raised a number of important points, and I am glad of the opportunity to respond. I also thank my hon. Friend the Member for Cheltenham (Alex Chalk) for adding his remarks, and all those who have done so through interventions.
First, I do recognise the very difficult time that my hon. Friend the Member for South Thanet has recently gone through. I hope that he takes solace not only from his acquittal but from the further remarks that the judge went on to make about the good faith in which my hon. Friend was operating. It must be said, however, that while he was acquitted, one person in the case was found guilty of breaching electoral spending rules. The rules that govern the spending of political parties and candidates at elections are important. They provide for a level playing field, as has been discussed, both for parties and candidates. The extent of their importance and the seriousness of any breach can be seen in the judge’s remarks during sentencing on the other part of the case. I will not say anything further tonight on the details of that case, but I do want to address the points on electoral law raised by my hon. Friend. The first of those concerns the Supreme Court judgment on notional expenditure, and the second touches on the divide between candidate and party expenditure. A few other points have been raised, but I will focus on those raised by my hon. Friend.
I should say at the outset that the laws that govern our elections are an integral part of the UK’s democratic framework and therefore something that we should be proud of, respect, protect, and aim to promote. They ensure that there is a level playing field for all candidates, parties and campaigners participating in UK elections, provide a level of protection in regulating the registration of campaigners and parties, ensure that election-related expenses are accounted for, and provide checks and balances. In addition, the Electoral Commission, as the regulator, plays an important role in the electoral framework to ensure that candidates, parties and campaigners are complying with the law.
Let me turn first to my hon. Friend’s point about his disagreement with the Supreme Court’s ruling that there should be no additional requirement for a candidate or an agent to authorise the provisions of free or discounted goods or services. He speaks of amending the primary legislation that governs this point and proposes that it could be amended by way of a statutory instrument so that authorisation becomes required in both types of case. The Government are considering this judgment very carefully and will continue to do so, as will I, in the light of the arguments that have been put tonight. There are serious implications for the law on notional expenditure for electoral candidates. We will continue to talk to the political parties to understand the implications for future campaigns and to consider potential solutions. Indeed, I will be discussing this only tomorrow with a cross-party delegation from the other House.
However, one point I would make tonight is on whether this could or should be done through primary or through secondary legislation. That deserves some consideration. It may not be appropriate, entirely, to seek to amend the primary legislation, as proposed, through the use of the order-making power that is found, as my hon. Friend set out, in paragraph 15 of schedule 4A to the RPA 1983. That schedule sets out the general categories of election expenses. His proposed changes would be a fundamental change to the meaning and effect of notional expenditure provisions in that legislation. It is therefore a fair consideration that any such amendment should be done by primary legislation rather than by an order-making power. I offer that to the House in terms of considering the complexity of the change that we might be looking at.
Mr Harper
I approach this matter with care, as I have been in my hon. Friend’s position in the past and know how complex this legislation is. May I just probe her on the answer she is giving to my hon. Friend the Member for South Thanet (Craig Mackinlay)? I thought that his solution was not actually making a fundamental change but putting the legislation back to what we all thought it was, and what I think Members had thought they were doing when they legislated in the first place.
Mr Harper
I see that my hon. Friend is nodding. I do not think that he is suggesting using order-making powers to make a big change but saying that we should use those order-making powers to put the legislation back to what we all thought it was before the justices in the Supreme Court made their decision last July.
Chloe Smith
I thank my right hon. Friend. As he says, he has stood at the Dispatch Box in this role, and he, too, will have grappled with the intricacies of the RPA, the PPERA, and more besides. I understand his point, which I would answer by way of an example. Only tonight, I have just come from leading a statutory instrument debate on a further election expenses order. I am a very lucky Minister. I have had the opportunity to be part of three of four election-related debates in only one day. That measure was perhaps a more straightforward example of candidates’ electoral spending limits. We therefore have, at this very moment, some very practical examples before the House of what I would suggest is the right use of that order-making power. That was a different order of thing, I would suggest to my right hon. Friend, than even the way that he characterises this proposed change. We do need to consider whether such a thing should be done by ordermaking or in primary legislation. Whatever the genesis of the problem—whether it came from the Supreme Court or from a different source—it is right that we give it that consideration.
Mr Harper
Can I just check the Government’s position on this? I know what the view of my hon. Friend the Member for South Thanet is—that the position was clear before last year and the Supreme Court’s decision in July changed the understanding of the position. Is it the Government’s understanding that before the Supreme Court’s decision, the law was clear, as my hon. Friend set it out, and then the Supreme Court changed everyone’s interpretation of it? In other words, do the Government think that there is something that we need to fix, or do they think that the Supreme Court just set out what everyone thought the law was and therefore we do not need to do anything to fix it?
Chloe Smith
I think it is fair to say that the Government certainly recognise that the position has been brought into a lack of clarity. The net position right now is that candidates and agents may well be seeking a clearer understanding, and so the question is how to help to provide that. I will come on to ways of doing so.
I want to turn briefly to the arguments put by my hon. Friend the Member for South Thanet about how party and candidate spending rules interact. He is arguing, quite understandably, that the law in this area requires reform as well—again, due to a lack of clarity. The Supreme Court itself acknowledges that separating local from national expenditure can sometimes be a difficult exercise. Certainly, the Government’s view, absolutely, is that ensuring that the electoral framework is well understood and operates effectively is important for all of us. One piece of work that is going on is that since 2017 the Electoral Commission has produced a series of updated non-statutory guidance documents on electoral spending for political parties, candidates and third-party campaigners for parliamentary general elections, local government elections, and other elections. That includes specific guidance on managing spending returns and others.
In addition, the Electoral Commission has been working on new statutory codes of practice for registered political parties and candidates. Those are intended to add clarity and give examples of how the law applies to different kinds of electoral spending. I will make a few points on the codes, which I hope will be helpful, and then on what the Government will do.
The code for candidates clarifies the qualifying expenses for candidates that must be declared in a candidate’s spending return and candidate expenses that are exempted. It provides guidance on the cases or circumstances in which expenses are regarded as incurred for the purposes of a candidate’s election. The code also seeks to provide clarity on notional expenditure, which has been discussed at length tonight.
The code for parties similarly clarifies the qualifying expenses that must be declared in a party’s spending return and includes general principles on all campaign expenditure incurred and on expenses that are excluded. As well as guidance and codes, legislative change is always an option to reform electoral law, and we should look at that carefully.
Mr Harper
I am grateful to the Minister for being so generous in taking interventions. Can she set out for the House how the position outlined by my hon. Friend the Member for South Thanet is treated? In other words, if a third party decides to be helpful and spends a candidate’s money on their behalf without their authorisation, how does the code of conduct say that that should be accounted for, in her understanding of the law? The way that my hon. Friend set it out was quite worrying.
Chloe Smith
I am not in a position to set that out on the Electoral Commission’s behalf, because it ought to speak for itself. I do not intend that to be a weaselly get-out, but these codes are the work of the Electoral Commission, and it is for the Electoral Commission to hear these concerns, respond to them accordingly and, in due course, lay the codes before the Commons, and I will come back to that.
Andrew Bridgen
We are not accusing the Minister of any weaselly get-out, but she and the Electoral Commission have to understand that there will be no weaselly get-out for any of us if we find ourselves in this situation without clarity on election law. This is a very worrying situation.
Chloe Smith
I quite agree, and I hope that that has been clear from the words I have used and repeated tonight. It is in all our interests—I say that in the widest possible sense of the democracy of which we all have the privilege and honour of being part—that these rules are clear. I simply meant that I am not in a position to answer in detail the question asked by my right hon. Friend the Member for Forest of Dean (Mr Harper) about paragraph x, y or z of the code, because that information is available to the House from a different source, and the House should scrutinise that for itself.
Craig Mackinlay
As I said in my speech, we have three bits of guidance: the 2015 guidance for general election candidates; the 2017 guidance, refreshed for the general election; and now the 2019 guidance for local election candidates. The Supreme Court judgment came before the publication of the 2019 rules. My right hon. Friend the Member for Forest of Dean asked a clear question: what was the intent? Was the intent of Parliament where we once were and what we all understood, or was it what the Supreme Court has finally come up with? If the Electoral Commission is so keen on what the Supreme Court came up with, why has it not put that in its latest 2019 guidance for local candidates? That is the reason I am trying to put the pitch back to what we have all understood for many years—from 1868 onwards—by a simple three-and-a-half-line statutory instrument. I recommend that this be given the most urgent consideration.
Chloe Smith
My hon. Friend reiterates a number of important points. He is right that this requires urgent consideration, and I have confirmed that the Government are looking at the position and want to help ensure that there is clarity. In this House, we are legislators; we are responsible for looking at the law and whether it is clear. As to the regulator’s responsibility to provide usable guidance promptly, I observe again that the Electoral Commission is separately accountable to the House. There have been questions tonight from my hon. Friend and others that the House will wish to satisfy itself of for its oversight of the Electoral Commission, which, as you know, Mr Deputy Speaker, is through the Speaker’s Committee. I encourage Members to direct some of their questions to that source. That is the right thing to do.
What I can talk about is the Government’s next steps, so let me add something in relation to the codes of practice that I have mentioned. First, the commission concluded its public consultation on them in December 2018, and Ministers will review those draft codes before they are put to Parliament. Again, I emphasise that because that is the right and proper opportunity for the Government to contribute their part, but also for this Parliament to do so. The commission aims to have them approved by Parliament in time for elections in 2021. The Government will continue to work with the Electoral Commission on the statutory codes of practice, because we recognise the importance of having clear and accessible codes to provide further clarity on electoral spending.
Alex Chalk
There can be no doubt but that the Minister is attending to these matters with her customary diligence. Does she agree with me, however, that we can have endless codes of conduct, but that will not address the potential mischief? The situation is that somebody who is being mischievous could in effect sabotage a candidate’s campaign by flying an aeroplane towing a banner at great expense, and that may render the individual liable to conviction, punishment and disgrace. No code of conduct is going to solve that, is it?
Chloe Smith
Yes, in short, I do recognise the example given, and I am very grateful to my hon. Friend for expounding it. I am also grateful to my hon. Friend the Member for South Thanet, who added other compelling examples, whether about leaflets or in relation to other hostile actors seeking to do such harm. I understand those concerns, and I am glad they have been laid out clearly in examples tonight.
Mr Harper
The Minister is being generous in giving way. I want to pick up a point she made about the code of conduct. She talked about clarity, but from listening carefully to my hon. Friend the Member for South Thanet, I think that while part of the problem is about clarity, post the Supreme Court’s decision, the issue is not really clarity. The law is clear, because of the Supreme Court’s judgment, but the problem is that the law, as the Supreme Court set out, is not a good outcome because it allows others to cause mischief. This is not about making the law clear; it is about changing the law back to what we all thought it was in the first place, and only we in this Parliament can do that.
Chloe Smith
Yes, and this brings me neatly to the concluding part of my remarks. This is precisely the piece that we in the House and the Government would seek to consider, which is whether we should change the law to provide such clarity. The argument has been put very well tonight that there is a lack of clarity. That has been exemplified and expanded on, and the question remains about the consideration of that judgment and its implications for the law on notional expenditure for electoral candidates.
It is right that we continue to talk to the political parties to understand the implications for future campaigns and to consider potential solutions. Indeed, the Government proactively put this forward as a topic of discussion at the parliamentary parties panel, which we use to consult on these issues, last December. As I mentioned earlier, I will be meeting representatives from across the parties as soon as tomorrow to discuss their views.
Mr Lord
I thank the Minister, on behalf of colleagues, for those assurances. Given the importance of this matter, could she give us some sort of timeline? There are different ways to get this new understanding sorted out and on to the statute book, but whichever way her Department chooses, may we at least have a timeline so that this important matter is sorted out once and for all?
Chloe Smith
I would like to be able to do so, but I am not in a position to do so. My hon. Friends in the Whips Office will have heard that request, and they may in turn be able to advise me about what may be manageable in the forthcoming parliamentary business. However, I intend to continue considering the matter carefully, as I hope that I have outlined, because we need a better understanding of a few related complexities. For example, were we to make the change, how would we avoid the possibility of further abuses being committed between categories? Proper consideration needs to be given to such a change and to which power could be used to do that, as I said earlier. I give the House a commitment that I will continue to consider those important aspects with Cabinet Office officials.
Jim Shannon
On that point, I think that the thrust of what hon. Members have put forward tonight is the need for clarification. They also referred to the upcoming council elections in May. Many of us are seeking that clarification before May, so can the Minister give some indication of what will happen?
Chloe Smith
I thank the hon. Gentleman for that intervention and, indeed, for his earlier expression of support for improving the integrity of all elections through the use of voter ID at polling stations. I have set out tonight a number of the tools being used to try to give that clarity: the guidance from the Electoral Commission, the work on the codes and the question of legislative reform. As he will have just heard, I am unable to commit to a clear date for legislative reform tonight, because our considerations need to continue, but I hope that some elements of the existing guidance may still be helpful to all candidates and agents, not just those of us in this Chamber, in the upcoming local elections.
Let me come to a conclusion. It is also important that we have cross-party consensus on any legislative options, because these matters, which apply to our entire democratic framework, ought to be above mere party politics. We would require that consensus before we could proceed with a legislative option. I thank my hon. Friend the Member for South Thanet again for raising this important matter. As he and I have set out, these rules exist for a good reason: they create a level playing field by ensuring that all associated candidate and party costs are accounted for within electoral spending limits, and they prevent the misuse of electoral spending. The Government will continue to work with the regulator to ensure that there is clear guidance on electoral spending, including through the codes of practice to which I referred. We will continue to consider the implications of the Supreme Court judgment, with a view to protecting those important principles that underpin our democratic framework, which include fairness to candidates and agents and of course the concept of a level playing field, which has been well articulated tonight.
Question put and agreed to.
Recall of MPs Act 2015: Member for Peterborough
(5 years, 10 months ago)
Commons ChamberRead Full debate Read Hansard Text
Draft Northern Ireland (Ministerial Appointment Functions) Regulations 2019
(5 years, 10 months ago)
General CommitteesRead Full debate Read Hansard Text Read Debate Ministerial Extracts
The Minister of State, Northern Ireland Office (John Penrose)
I beg to move,
That the Committee has considered the draft Northern Ireland (Ministerial Appointment Functions) Regulations 2019.
It is a pleasure to have your hand on the tiller for our proceedings, Mr Walker. I do not propose to take a great deal of time setting out the statutory instrument initially, because it is simply one of those that are forced on us by the absence of a Northern Ireland Executive at Stormont. This is not something that anyone here particularly wants to have to pass as an SI through the Westminster Parliament, but we have to do that simply because there are a small number of ministerial appointments for the smooth running and good governance of Northern Ireland that have become both urgent and important and without which good governance in Northern Ireland would be increasingly difficult.
The positions, ranging from the Attorney General for Northern Ireland through to member or chair of the Northern Ireland Local Government Officers’ Super- annuation Committee, are listed in regulation 2(2) and (3). It is notable and welcome that the SI is short, covering just two sides of a piece of paper. I am very happy to go through any one of those offices for anyone who has particular questions about why it is included and when the current incumbents’ terms of office are due to finish, if the Committee is interested, but the initial indications informally, before we tabled the regulations, were that this is relatively uncontroversial and straight- forward legislation. Therefore, I do not propose to go into lots of detail unless required, but of course other members of the Committee may feel differently—I feel an intervention coming on.
Mr Pat McFadden (Wolverhampton South East) (Lab)
I am grateful to the Minister for letting me intervene. I understand why the Government have to introduce an SI such as this to cater for such appointments. As he rightly says, it reflects the absence of devolved government over quite a long period. May I ask him this? Apart from the piecemeal approach set out in such SIs, has there been a broader discussion in Government about the restoration of direct rule?
John Penrose
I can confirm that those meetings and discussions—sometimes very privately bilaterally, sometimes more broadly—are ongoing. The right hon. Gentleman will be aware that we have primary legislation that we passed just over four months ago that is due to be extended, if Parliament feels that that is right, in order to allow time—two five-month consecutive periods—for the restoration of devolved government in Northern Ireland.
Until those two five-month periods have been completed, we are trying to create a space in which talks about talks and discussions about how to restore the Executive can be undertaken. If at the end of the first five months, we do not decide to renew for the second five months, or if at the end of the second five months we are still without a devolved Administration in Northern Ireland, at that stage that primary legislation lapses and at that point the Secretary of State’s existing legal duties to hold a local election in Northern Ireland come back into force—that is the purpose of the legislation—and therefore everybody, on all sides, has an interest in trying to ensure that the devolved Administration in Northern Ireland are restored as soon as that can be done.
I can see that the right hon. Gentleman wants to intervene again, but I will just make one more point before he does. These six examples of appointments are just the ones that are both urgent and important. There is a lengthening list of policy changes and other issues, which is growing every day, that would be far better served, for the people of Northern Ireland, if a devolved Executive were in place to take those decisions and to get government in Northern Ireland moving again. This is not something where pressure is going down; pressure is rising steadily. I am sure that I speak for everyone here—I hope I do—when I say that I am sure everyone wants to see the restoration of devolved government. That was central to the Belfast agreement. Everyone will understand that it is far better to have a functioning local democratic Administration in Northern Ireland, if at all possible, and with that I will give way once more.
Mr McFadden
I am extremely grateful to the Minister for his patience. I agree, as we all do, I am sure, with what he says about the desirability of restoring devolved government. Most of his comments in response to me have been about how much effort the Government have been putting into that, which is absolutely great, but my question was: has there been any discussion about what happens if that does not work? Will the Government end up having to make a decision they do not want to make and restore direct rule?
John Penrose
The legal position is that after the five months, which come to an end in March, Parliament must decide whether to grant a second five months, all the time working and hoping for and, we hope, supporting the notion of restoring devolved government in Northern Ireland. If at the end of the second five months, or if there is no renewal for those second five months, the Secretary of State has an existing legal duty that is currently in suspension to consider whether a further election in Northern Ireland would be required. That is the legal requirement, rather than a requirement to return to direct rule. I know that everyone would want to avoid going to direct rule and would, therefore, want us to consider direct methods of getting a local election going in Northern Ireland, if necessary. Clearly, the best option is to restore existing Members of the Legislative Assembly to their place in Stormont.
With that, I propose to do something unusual for a politician and that is to stop talking, sit down and see whether anyone wishes me to answer any questions.
Stephen Pound (Ealing North) (Lab)
Normally, there is no greater or more dangerous hostage to fortune than to say that something is an uncontroversial, minor piece of legislation, because after three or four hours have passed we generally realise that perhaps it is not so minor or uncontroversial. However, in this case, I believe the Minister might be right.
May I take the opportunity not just to say what a pleasure it is to serve under your benevolent dictatorship—oversight—Mr Walker, but also to welcome the Minister? I have opposed him across the Dispatch Box but we have not had an opportunity to formally welcome him. He is one of a small but highly distinguished group of politicians who cut their political teeth in the borough of Ealing and went on, in most cases, to far greater things. I refer to him, the right hon. Member for Putney (Justine Greening), you, Mr Walker, and the hon. Member for Shrewsbury and Atcham (Daniel Kawczynski). In the case of the Minister, I remember well that in 1997 he took on the then incumbent and managed to reduce the Labour majority to a knife edge—21,423. We still remember that with great affection.
This is something that Labour has consistently called for and we entirely accept and understand the Minister’s overarching point, that we would not be here out of choice and would much rather that the appointments, re-appointments and reconfirmations were handled where they should be, by an Assembly and an Executive in Northern Ireland. However, following up on the comments made by my right hon. Friend the Member for Wolverhampton South East, we need even more energy and activity on the part of the Minister and the Secretary of State in seeking to act on the appointments and to progress towards re-establishing the Executive.
The original focus on this side of the House was on the Northern Ireland Policing Board, which has oversight of policing and comprises political and independent members and the prisoner ombudsman. I am glad to say that that board has been appointed, and on 2 February Rev. Lesley Carroll was appointed as the new prisoner ombudsman. May I take this opportunity to put on record my best wishes for her? I have met the reverend on a number of occasions and she will be a first-class ombudsman. This is an excellent appointment and one that has the approval and approbation of the House and certainly that of the community in Northern Ireland.
We welcome the appointments being made under the SI, but we ask the Minister to outline what consultation the Government will have with Northern Irish political leaders and the leadership of Opposition parties in Westminster in the event of an incumbent not seeking reappointment. Although we all want to see devolution restored, the Opposition are not over-brimming with confidence in the Government’s ability to do that. As such, is the Minister considering any further appointments, given that we are two years on from the collapse of the institutions? We cannot allow a vacuum or any sort of hiatus in those appointments, because frankly there are people who flourish in the darkness. There will always be people there to take advantage of that vacuum. We would like to see those appointments progressed, but in the meantime we endorse the Minister’s comments. We wish him a fair following wind. We understand why he has had to table these regulations, and we support him in the spirit of bipartisanship.
John Penrose
I thank the Opposition for their kind support. I appreciate that I tempted fate by saying this is an uncontroversial piece of legislation, so I am grateful for their support to avoid my being proven too badly wrong. Incidentally, I remember fondly my excursion to Ealing, Southall, where I ate a great deal of curry, although I cannot say I troubled the scorers much more than that. It was a great time to learn the basics of campaigning. I think that the hon. Gentleman was first elected at the same time as I was not elected, but he was campaigning with a great deal more aplomb and certainly a great deal more success than I was at the time.
Stephen Pound
On a point of order, Mr Walker, the Minister and I both attempted to unseat the incumbent. In my case, it was Harry Greenway in Ealing North, and in his case, it was the late Piara Khabra in Ealing, Southall. One of us succeeded.
The Chair
I think that was a debating point, not a point of order. It was a very fine debating point.
John Penrose
Moving swiftly on, the hon. Gentleman asked about the process of appointments and what would happen in a couple of different scenarios, such as if incumbents were not going to stand or if people might not be reappointed. The simplest answer is that the process for all the appointments will be governed through the independent regulation process. That is either the Commissioner for Public Appointments for the UK or the Commissioner for Public Appointments for Northern Ireland. We are required to follow some very important and straightforward rules, and we will of course be following them in every case. I am not sure whether they necessarily require full consultation with Opposition parties, but they are designed to ensure a proper, independent and, as far as possible, entirely transparent and meritocratic process is followed. We will of course follow that wherever we can.
Stephen Pound
May I put down a marker and say that in the case of judicial appointments, we would very much appreciate at least being involved? I am not asking for a veto; I am saying that due to the serious and sometimes controversial nature of judicial appointments, we on the Opposition Benches would like at least to be in the picture.
John Penrose
The hon. Gentleman brings me neatly on to the second point he raised, which was about appointments other than those listed in the regulations. May I at this stage keep our collective powder dry and say that were we to need to add to the list in the regulations by bringing forward other SIs to extend it—everybody hopes we will not have to—that would inevitably be subject to the normal parliamentary process of scrutiny? I am sure that he will have an opportunity to raise that point and/or any others, depending on what other positions are listed in those potential SIs, as those other positions come forward.
I hope that has answered all the hon. Gentleman’s questions and that I have not tempted fate or tested anyone’s patience too much in our consideration of this uncontroversial piece of legislation.
Question put and agreed to.
Draft Social Security (Contributions) (Rates, Limits and Thresholds Amendments and National Insurance Funds Payments) Regulations 2019
Draft Tax Credits and Guardian's Allowance Up-rating Regulations 2019
(5 years, 10 months ago)
General CommitteesRead Full debate Read Hansard Text Read Debate Ministerial Extracts
Chris Stephens (Glasgow South West) (SNP)
On a point of order, Sir Graham. My question, of which I have given you advance notice, relates to the explanatory memorandum to the draft Tax Credits and Guardian’s Allowance Up-rating Regulations 2019. Section 3 appears to suggest that the English votes for English laws procedure will apply and that the
“instrument applies to England, Wales and Northern Ireland only”,
but section 4 seems to suggest that the instrument applies to the whole United Kingdom, so there is some confusion. My view, certainly, is that tax credits are not devolved under the Scotland Act 2016. May I ask for some clarity on the issue before we proceed?
The Chair
I am grateful for notice of that point of order. I have taken advice on the matter, and I gather that because it arises from the explanatory memorandum, it is not a matter of substance for today’s business. However, the Minister is at liberty to give it further explanation should he so wish.
The Exchequer Secretary to the Treasury (Robert Jenrick)
I beg to move,
That the Committee has considered the draft Social Security (Contributions) (Rates, Limits and Thresholds Amendments and National Insurance Funds Payments) Regulations 2019.
The Chair
With this it will be convenient to consider the draft Tax Credits and Guardian’s Allowance Up-rating Regulations 2019.
Robert Jenrick
It is a pleasure to serve under your chairmanship, Sir Graham. I will now introduce the two sets of draft regulations and explain the changes that they will enforce. They both represent routine annual exercises necessary to ensure the collection of national insurance contributions and the resulting contribution to our public services. They will also increase certain benefits in line with inflation.
May I pause for a moment to address the point of order raised by the hon. Member for Glasgow South West? As he set out, there is a minor typo in paragraph 3.2 of the draft explanatory memorandum:
“The entire instrument applies to England, Wales and Northern Ireland only”.
It should, of course, have mentioned Scotland. Paragraph 4.1 states:
“The extent of this instrument is the United Kingdom”,
which, of course, includes Scotland. This version of the explanatory memorandum is only a draft; we will publish a corrected version. I am grateful for the opportunity to make that clarification.
Turning to the Tax Credits and Guardian’s Allowance Up-rating Regulations, as hon. Members know, the Government are committed to a welfare system that works, ensures that work always pays, and is fair to the taxpayer while maintaining protection for the most vulnerable in our society. In the Welfare Reform and Work Act 2016, we legislated to freeze the majority of working-age benefits—including child tax credit and working tax credit—for the four years up to 2020, which helped to put our welfare system on a sustainable long-term path. However, the disability elements of the child tax credit and the working tax credit were specifically exempted from the freeze. The guardian’s allowance was not affected either.
In introducing the draft regulations, we are legislating, as in previous years, to ensure that the guardian’s allowance and the disability elements of the child tax credit and working tax credit increase in line with the consumer prices index, which put inflation at 2.4% in the year to September 2018. The draft regulations will mean in practice that we will maintain the level of support for families with disabled children in receipt of child tax credit and disabled workers in receipt of working tax credit. The regulations will also sustain the level of support that we offer for children for whom one parent or more is absent or deceased. Increases to those rates are part of the Government’s wider commitment to supporting the most vulnerable people in our society.
The Social Security (Contributions) (Rates, Limits and Thresholds Amendments and National Insurance Funds Payments) Regulations will make changes to the rates, limits and thresholds for national insurance contributions and make provision for a Treasury grant to be paid into the national insurance fund, if required. The changes, if approved, will take effect from 6 April 2019.
I will outline the changes to employee and employer NICs, which are commonly referred to as class 1 NICs. On class 1 primary NICs for employees, the lower earnings limit will rise in line with inflation, from £116 a week to £118 a week, and the primary threshold will increase with inflation, from £162 a week to £166 a week. The upper earnings limit is aligned with the UK’s income tax higher rate threshold, which will rise from £892 a week to £962 a week in 2019-20. On class 1 secondary NICs for employers, the secondary threshold will rise with inflation from £162 a week to £166 a week. The level at which employers of people under 21 and apprentices under 25 start paying employer NICs will rise from £892 a week to £962 a week.
For the self-employed, who pay class 2 and class 4 NICs, the rate of class 2 NICs will rise in line with inflation from £2.95 a week to £3 a week. The small profits threshold will rise with inflation from £6,205 a year to £6,365 a year. On class 4 NICs, the lower profits limits will rise with inflation from £8,424 a year to £8,632 a year. The upper profits limit, which is aligned with the higher-rate threshold, will rise from £46,350 a year to £50,000 a year.
Class 3 contributions will allow people voluntarily to top up their national insurance record. The rate for class 3 will increase in line with inflation, from £14.65 a week to £15 a week. The regulations also make provision in the usual way for a Treasury grant of up to 5% of forecasted annual benefit expenditure, to be paid into the national insurance fund if needed during the period of 2019-20. There are similar provisions with respect to the national insurance fund for Northern Ireland.
I trust that that is a useful overview of the changes that we are making to bring rates of support and contributions to the Exchequer in line with inflation. As I said at the beginning of my speech, the draft regulations are a routine annual exercise and do not depart from recent practice. I therefore commend them to the Committee.
Peter Dowd (Bootle) (Lab)
It is a pleasure to see you in the Chair, Sir Graham. Last week, while preparing for the Committee and to set the context for the debate, I had a look at various documents, including the draft Social Security (Contributions) (Rates, Limits and Thresholds Amendments and National Insurance Funds Payments) Regulations 2019 and the draft Tax Credits and Guardian’s Allowance Up-rating Regulations 2019. The House of Commons Library has published an excellent briefing on these statutory instruments. To help set the context, I went even further back to Monday 6 March 2017, which might actually have been the last appearance of the former Chief Secretary to the Treasury before the election. Looking at those documents for context is worth while and I am sure that all hon. Members have done so.
As the Minister clearly outlined, the draft Social Security (Contributions) (Rates, Limits and Thresholds Amendments and National Insurance Funds Payments) Regulations 2019 enact the annual re-rating of the various national insurance contribution rates, limits and thresholds, and allow for a Treasury grant not exceeding 5% of the estimated benefit expenditure for the coming tax year to be paid into the national insurance fund. In light of the impact of inflation on incomes in conjunction with the poor wages that we have seen over the past 10 years, we will not oppose the regulations, and we accept that they will uprate national insurance thresholds in line with the consumer prices index.
As the Minister outlined, the draft Tax Credits and Guardian’s Allowance Up-rating Regulations 2019 make it possible to increase certain tax credits and other child benefits rates, as well as the guardian’s allowance, from April 2019. Although the Government are uprating some benefits, they are excluding others entirely. For the fourth year in a row, most working-age benefits are being kept at the 2015-16 cash value. That costs a couple with children in the bottom half of the income distribution £200 on average. According to analysis by the Institute for Fiscal Studies of the 2018 Budget, around £4 billion-worth of cuts to social security remain in the pipeline. The benefit and tax credit rates in 2019-20 are worth 6.1% less than if the freeze had not been introduced.
Although we will not divide the Committee, we place on record our objections to the Government’s social security strategy, which is wholly inadequate to tackle the growing inequality in our country. As Members know, over the past five years we have seen a 31% increase in the use of food banks. That is a direct result of cuts that the Government have inflicted on the country, and that were not reversed in the most recent Budget. The Government have to take responsibility for that growth fairly, squarely and unambiguously.
Although the Chancellor might insist that austerity is over, the Resolution Foundation concluded in its analysis of his most recent Budget that that will be achieved only by reversing many of the remaining social security cuts. Rather than making slight adjustments to social security through statutory instruments, the Government need to look at redesigning our social security system so that it provides the basic protection that people need. Of the benefit cuts announced in 2015, 75% remain Government policy.
The Institute for Fiscal Studies previously noted that the Government’s social security policies, including the freeze, have left many families ill-prepared for another economic slowdown. The announcement in the last day or two that growth in the coming year might be 1.2% indicates that such a slowdown is not unlikely. Putting that in the context of Brexit draws a multi-coloured tapestry, as such forecasts are particularly pertinent given the uncertain economic period that the country could be about to face. The regulations should therefore be condemned, not for what they are but for what they leave out. They offer inadequate support for struggling families across the United Kingdom.
Chris Stephens
I welcome the Minister’s clarification of the explanatory notes. I do not necessarily believe that a whole nation being taken out of a statutory instrument can be described as a small typo, but I accept his answer that the instrument does apply to the whole of the United Kingdom.
I will touch on many of the themes that were explored by the shadow Minister. As he outlined, although some benefits are being uprated, most working-age benefits are being frozen under the current benefit freeze. That is having a very real impact. Indeed, with the impact of inflation, the cuts in the final year of the benefit freeze take £4.7 billion out of the social security system. To put that in context, that is more than the great work allowance boost that the Government recently announced. It looks as if the Government are giving with one hand and taking away with the other.
The Government have the ability to lift the benefit freeze if they want to, but they have decided not to. I therefore ask the Minister, given that the Chancellor has claimed that austerity is coming to an end, what the strategy is going forward in relation to uprating all social security benefits, and ensuring that those most in need are those who receive the money.
Robert Jenrick
I am grateful to the hon. Member for Bootle for indicating that he will not oppose the regulations. That is important for two reasons. First, they enable us to ensure that the disability element of tax credits and the rate of guardian’s allowance rise with inflation, providing the support that those individuals and families require. Secondly, they will enable us to continue to collect national insurance contributions for public services across the country.
In answer to the question on what the uprating mechanism will be when the current freeze comes to an end at the end of this financial year, the Welfare Reform and Work Act 2016 provided for a four-year freeze. That will then lapse and, subject to any further decision being approved by the House, the assumption, as we have made clear, is that we will revert to the pre-existing statutory obligations, which in most cases was a CPI uprating each year.
The hon. Gentleman raised a wider point about why we chose to adopt the policy at the beginning of the coalition Government. The reforms that we have pursued since 2010, including those legislated for in the 2016 Act, were necessary to put the public finances back on track and to protect the taxpayer following decades of unsustainable increases in welfare spending. Welfare spending rose by 65% in real terms—an increase of £84 billion—under the last Labour Government.
The benefit freeze, although undoubtedly difficult for many in our society, was an important part of a package of welfare reforms designed to incentivise work, which we know is the best route out of poverty. Since 2010, there have been record levels of individuals finding employment and near-record low levels of people who are unemployed. Those reforms have worked, and we will look to the next financial year, and the spending review that will precede it, to make decisions on how we will choose to proceed thereafter. I commend the regulations to the Committee, and I hope that all Members will support them.
Question put and agreed to.
Draft Tax Credits and Guardian’s Allowance Up-rating Regulations 2019
Resolved,
That the Committee has considered the draft Tax Credits and Guardian’s Allowance Up-rating Regulations 2019.—(Robert Jenrick.)
Draft Representation of the People (Election Expenses Exclusion) (Amendment) Order 2019
Draft Combined Authorities (Mayoral Elections) (Amendment) Order 2019
Draft Local Authorities (Mayoral Elections) (England and Wales) (Amendment) (England) Regulations 2019
(5 years, 10 months ago)
General CommitteesRead Full debate Read Hansard Text Read Debate Ministerial Extracts
The Parliamentary Secretary, Cabinet Office (Chloe Smith)
I beg to move,
That the Committee has considered the draft Representation of the People (Election Expenses Exclusion) (Amendment) Order 2019.
The Chair
With this it will be convenient to consider the draft Combined Authorities (Mayoral Elections) (Amendment) Order 2019 and the draft Local Authorities (Mayoral Elections) (England And Wales) (Amendment) (England) Regulations 2019.
Chloe Smith
It is a pleasure to serve under your chairmanship, Mr Bailey. The statutory instruments seek to make significant improvements to the electoral framework. Where I can, I will address and explain each of them in order.
The draft Representation of the People (Election Expenses Exclusion) (Amendment) Order 2019 proposes that expenses that are reasonably attributable to a candidate’s disability and that are reasonably incurred are excluded from a candidate’s electoral spending limits. For example, such expenses include, but would not be limited to, British Sign Language interpretation for hearing-impaired candidates or the transcription of campaign material into braille for a visually-impaired candidate. The order will also exclude from electoral spending limits expenses funded from grants provided through the Government’s interim EnAble fund for elected office. That interim fund of £250,000 will support disabled candidates and help to cover disability-related expenses that people might face when seeking elected office.
The Government are absolutely committed to ensuring that the diversity of the UK is sufficiently represented in public office. Although around one in five of the UK population has a disability, disabled people remain insufficiently represented in our Parliaments, Assemblies and councils. The proposed changes will help to create a level playing field between candidates with and those without disabilities, which will enhance equality of opportunity.
The draft Combined Authorities (Mayoral Elections) (Amendment) Order 2019 and the draft Local Authorities (Mayoral Elections) (England And Wales) (Amendment) (England) Regulations 2019 make changes to the rule governing the conduct of elections of combined authority mayors and of local mayors. The instruments remove the existing requirement that each candidate’s home address must be published during the election process and included on the ballot paper at elections of combined authority mayors and local mayors.
These changes are designed to enhance the security of candidates standing at those polls and to deliver commitments made by the Government in response to recommendations made by the Committee on Standards in Public Life. These are two of four instruments on that issue. In December 2018, we introduced two statutory instruments that implemented another recommendation from the Committee on Standards in Public Life in relation to candidates in local government and parish council elections. Since 2010, candidates in UK parliamentary elections have been able to choose for their home address not to be made public at such polls. The changes that we are making across all four instruments—for local and parish council elections and, with these SIs, for combined authority and local mayoral elections—will bring the procedure at those polls into line with what already applies to parliamentary elections.
The instruments before the Committee have quite a wide remit, so let me cover application. The election expenses exclusion order will apply UK-wide to all UK parliamentary elections, including by-elections. In England, the order will also apply to local government elections, Mayor of London elections and London Assembly elections, and to mayoral elections and combined authority mayoral elections. In Northern Ireland, it will apply to Northern Ireland Assembly elections. I plan to lay a second statutory instrument before the House this year to widen the application of that provision to police and crime commissioner elections across England and Wales. The two draft instruments concerning mayoral elections make provision for combined authority and local mayoral elections in England.
For hon. Members who have not already had enough, let me turn to the detail of the proposed changes. The election expenses exclusion order excludes expenses that are reasonably attributable to a candidate’s disability and are reasonably incurred, by substituting a new paragraph 7A in part 2 of schedule 4A to the Representation of the People Act 1983. Part 2 of schedule 4A to the 1983 Act sets out a list of matters that are excluded from being election expenses and that are therefore not taken into account when calculating a candidate’s electoral spending limits. The change ensures parity with electoral spending limits for non-party campaigners. Schedule 8A to the Political Parties, Elections and Referendums Act 2000 excludes reasonably incurred expenses that are reasonably attributable to an individual’s disability from the electoral spending limits of non-party campaigners.
Let me allay any concerns, should the Committee have them, about whether the change will require candidates to disclose any disabilities. It will not, and there will be no legal obligation for candidates to report their disability-related expenses, although they can if they wish.
I also seek to allay concerns that the exclusion could be misused by individuals who want to manipulate their electoral spending limits. The provisions are quite clear that the exclusion can be used only for expenses that are reasonably incurred and reasonably attributable, as I have set out, and there is a robust process around candidates’ spending returns to make sure of that. Any breach of those spending rules can be referred to the police and prosecutors for investigation. In sum, the order will not give candidates with disabilities an advantage, but create a level playing field so that candidates with disabilities are not disadvantaged from standing for election.
On the mayoral elections statutory instruments, currently, candidates standing at those two types of elections are required to give their home address, which appears on certain election documents and the ballot paper. The only current exception to those requirements is someone standing at combined authority mayoral elections, where the mayor would also have police and crime commissioner functions, because such candidates may require their home address not to be made public. Under the proposed changes, candidates at either type of election will not be required to provide their home address on their nomination form or consent to nomination form. Instead, they will be asked to include it on a home address form, which will not be made public.
We recognise that we need to strike a balance between the transparency of the electoral process and the safety of candidates running for public office. It is important for electors to know whether a candidate lives locally and whether they have a link to the area in which they are standing for election. For that reason, if a candidate chooses not to make their home address public, they must state the name of the local authority area in which they live. That will then appear on the ballot paper, the statement of persons nominated and the notice of poll for the election, instead of the candidate’s home address. We are providing that home address forms be available for inspection by certain authorised people, including other candidates standing in the poll.
Let me briefly inform the Committee of the consultations on the orders. On the election expenses order, we consulted with the Electoral Commission, the Welsh Government, the Scottish Government and the Northern Ireland Office. There was also plenty of cross-Government collaboration between the Cabinet Office and the Government Equalities Office. All have been supportive.
On the two mayoral instruments, we have consulted with the Electoral Commission, the Association of Electoral Administrators and the Society of Local Authority Chief Executives. Again, I confirm that there is broad support for the proposed changes. We have also kept political parties informed of the changes through the parliamentary parties panel.
I highlight that it is important that the changes are in place as soon as possible, so that they can apply at the local government elections in May. The instruments come into force on the day after the day on which they are made. I commend them to the Committee.
Cat Smith (Lancaster and Fleetwood) (Lab)
I am sure the Committee welcomes the fact that the last general election returned the most diverse House of Commons ever, with more women MPs, more ethnic minority MPs and more MPs who are LGBT. The Minister is right to point out, however, that we still have a long way to go to achieve parity in the number of disabled candidates standing for election and being elected to this place and to councils up and down the country.
The Opposition welcome the instruments before us. We recognise that disabled candidates incur costs because of their disability and that they should not be penalised at election time. The Minister and I have spoken about addresses on ballot papers many times, so that is also a positive change. We recognise that it could help more women and candidates from ethnic minority backgrounds to come forward, because there is a climate of intimidation and threat in our politics.
The Opposition therefore welcome these instruments. I want to speak briefly about both sets of instruments, because it is important that we acknowledge that intimidation, including death threats, criminal damage, sexism, racism, homophobia and antisemitism, has no place in our democracy. I think we are all too aware that candidates are often targeted because of their gender, sexuality or ethnicity. That represents a wider context of discrimination that targets individuals on the basis of their different identities. We should be particularly concerned about the scale of abuse experienced by women MPs, the resurgence of far-right and racist parties across Europe, as well as the worrying emergence of an organised far-right presence on the streets of British cities and towns.
The current legislative requirement for local candidates to disclose their home address on ballot papers has made local candidates and their families vulnerable to abusive activity and in some cases has deterred talented individuals from standing for elected office. The proposed changes should help to reduce that risk and bring the rules for local elections in England in line with those already in place for UK parliamentary elections, as the Minister mentioned. I and the Labour party have called for that on many occasions, so we very much welcome the statutory instruments before us today.
In addition to these measures, we also believe that there should be greater flexibility for electoral agents, to ensure that they do not have to disclose their home address either. The law currently requires election agents to have an office that appears on election imprints. That is often a local political party office or an office set up specifically for an election. However, agents who do not have such facilities are often forced to disclose their home address. It would therefore be welcome if the Minister outlined any steps that she or the Department are taking with regard to electoral agents.
With regard to the access to elected office fund, there are huge financial barriers in place that penalise disabled candidates, which we should acknowledge. The Government’s decision to close the fund will be a lasting stain on their legacy, because their own evaluation, published last year, highlighted the fund’s positive impact on disabled candidates, enabling them to stand for election. That evaluation noted that, in February 2015, the Geneva-based Zero Project, initiated by the Essl Foundation, selected the access to elected office fund as one of the top global innovative policies to support and encourage political participation by people with a disability. Over the past three years, the Government have rightly been under continued pressure to reintroduce that fund.
In September 2015, in a submission to an inquiry by the UN special rapporteur on disabilities, the Equalities and Human Rights Commission said:
“The UK Government should reopen the Access to Elected Office Fund in England, and work with the Scottish and Welsh Governments to explore options for making the scheme, or similar funds, available across Great Britain.”
Civil society groups, such as Disability Rights UK and More United, have also played a vital role by campaigning on this issue. I therefore ask the Minister again: will she restore the access to elected office fund as a matter of urgency?
The exclusion created by the order before us will capture disability-related expenses funded from grants provided by the EnAble fund for electoral office for disabled candidates. This interim fund of £250,000 will provide grants to support disabled candidates and will primarily cover English local government elections in May. Although we welcome the additional funds, the Minister would probably agree that the EnAble fund is not in itself a long-term solution to the substantial under-representation of disabled people in public life. The EnAble fund for elected office runs until May 2020 and is primarily intended to support disabled people seeking election in the May 2019 local elections and the May 2020 police and crime commissioner elections. Therefore, it is not intended to cover those seeking to stand for parliamentary elections. However, paragraph 4.2 of the explanatory memorandum states:
“The territorial application of this instrument is UK-wide. The instrument will apply to candidates standing for Parliamentary elections across the UK”.
Some might argue that there is an increased likelihood of an election before the one scheduled in 2022, so will the Minister provide clarification on those issues?
Concerns have also been raised with me regarding the administration of the EnAble fund and the timing of these draft instruments. The Electoral Commission itself recommends that any changes to election rules should be clear six months before anyone is required to deliver or comply with those rules, so that those in question can be informed and respond accordingly. In these cases, that would have been the September just gone, so will the Minister explain why it has taken so long for these draft instruments to be prepared?
Government delay meant that the fund was launched on 3 December, just five months ahead of the local elections this May. I hope that I will be proved wrong, but my fear is that the current timeframe is too short to support disabled candidates who are not already elected and looking to stand again. We know from the experience in Scotland that the longer the lead-in time, the more successful the scheme will be. The Scottish Government spent a year on promotion and a broader access to politics scheme ahead of the 2017 Scottish local government elections. What steps are the Government taking to promote the new fund and to ensure that aspiring candidates are aware of their rights?
The Local Government Association issued a seriously flawed bidding document that included a requirement that any contractor must support the Government’s vision of shifting the prime responsibility for supporting disabled candidates to political parties. I have been told that that attracted zero bids, which forced the LGA to rewrite the document and start again, deleting that particular requirement. Will the Minister confirm whether that was the case? The revised contract has now been awarded to Disability Rights UK, and the EnAble fund is open for applications. We welcome the fact that the fund is now managed by a deaf and disabled people’s organisation that has an understanding of the barriers that disabled people face.
However, the issue of responsibility is extremely important. Political parties should play a role in supporting disabled candidates. Not only do they have a legal obligation to make reasonable adjustments for disabled members and candidates under the Equality Act 2010, it is also, frankly, the right thing to do. That is why the Labour party established a bursary scheme to support disabled members standing for Parliament following the Government’s decision to freeze the access to elected office fund.
Opposition Front-Bench Members are extremely concerned by the Minister’s shifting the prime responsibility for supporting disabled candidates from central Government to political parties. While all political parties can do more to reduce barriers faced by disabled candidates, the extra campaign costs that disabled candidates incur because of their disability should be met by the Government. The Government’s own evaluation of the access to elected office fund stated that there was a potential risk
“that the parties may do less regarding ‘reasonable adjustments’…with reduced Government funding actually leading to fewer disabled candidates being adopted”.
That will particularly be the case for smaller parties, which will have less money to spend on election expenses, and the same can be said for independent candidates, who will not have access to political party bursary schemes.
It is clear that the draft instruments are needed to make our democracy more representative and to tackle rising security concerns. The Opposition welcome the additional funds that the Minister’s Department is providing through the EnAble fund, but we disagree with the political direction that the Government are taking. I urge the Minister to restore the access to elected office fund immediately, in order to find a long-term solution to this incredibly important issue.
Chloe Smith
I will try my best briefly to answer the questions that have been put to me. I welcome the Opposition’s support for the draft statutory instruments. I did not clearly hear the hon. Lady’s third question, and I wonder if she might repeat it for me, so that I can be sure to answer all her questions. I think I got the other six.
Chloe Smith
Perhaps if I answer the first and second questions, the hon. Lady will be able to think of the third. I shall return to the others.
The hon. Lady asked how we might protect the home addresses of agents as well as candidates. I have considered that, but I should make the Committee aware that doing so would require primary legislation, rather than secondary legislation, because of where in law agents are legislated for. I assure the Committee that that is being considered, although it is not possible to do inside tonight’s SI.
I will move on to the questions on the draft expenses exclusion order. Secondly, the hon. Lady believes that the predecessor fund—the access to elected office fund—should be reinstated. The Government are committed to the relevant issues, and they are using the interim EnAble fund for elected office to enable them to look at long-term solutions, as it is right to do. I refer to the fund as an interim fund because we want to use it to help people in the 2019 elections, while also allowing for a programme of work with disability organisations, to help political parties to work on improving their ability to support disabled candidates. From that we hope to have political parties offering and advertising support, as well as solutions to help independent candidates. I think that the last of the hon. Lady’s questions was about independent candidates.
The hon. Lady argued that supporting disabled candidates should not be a matter for parties, and that it was for the Government to do the job instead. I suggest that as a point of principle we expect employers and service providers to make reasonable adjustments—a phrase that she rightly used in her question. Given that we expect such action of employers in all other walks of life, I think it is reasonable that we expect political parties to step up and take it for candidates. I stand on a point of principle there, rather than accepting that there is a deficiency in the statutory instrument.
Cat Smith
Just to clarify, political parties absolutely have a role to play, and they should step up, where they are able to. My concern was primarily about smaller political parties, whose election funds are obviously much more constrained than those of the large parties that the Minister and I represent, which have more resources available.
As to the question that was not very clear, it was about the EnAble fund for elected office running until May 2020. Paragraph 4.2 of the explanatory memorandum states that the order is meant to be a UK-wide instrument applying to candidates for parliamentary elections; however, a parliamentary election is not scheduled until after May 2020. I was seeking clarification as to whether the Minister expected the fund to be used at the next general election. Perhaps it was a slightly cheeky question.
Chloe Smith
Forgive me, Mr Bailey. I was concentrating so diligently on the hon. Lady’s previous question that I did not catch the detail she was asking for. I think perhaps it is simplest if I write to her on that point, to make sure that the Committee receives a reasonable answer. It comes back to the answer I just gave, which is that we are trying, through the EnAble fund, to create an interim way to support disabled candidates while putting long-term solutions in place. I think that is the right way to go about it.
I hope that what I have told the Committee will provide reassurance about our desire for action to happen during a range of elections. I hope that that will mean we have a good testing ground, so that we can look at solutions across different types of elections. Finally, although it has been noted that the arrangement is to run until 2020, actually it is to run until 2020 or until its total of £250,000 is exhausted. That may assist the Committee’s consideration.
The hon. Lady raised the question of a Local Government Association document, on which I am afraid I cannot give the Committee an answer tonight. I am not aware of it, but I will ask my colleagues in the Government Equalities Office to answer questions on the fund more broadly. The fund itself is not my responsibility, although the election expenses order is, so the hon. Lady may want to direct her question to ministerial colleagues in that Department.
Finally, the hon. Lady asked whether the order had been introduced on the right timeframe, ahead of the May 2019 elections. Although it is always desirable to have matters in hand six months before elections—that is certainly the aspiration that I work to and that the Electoral Commission has highlighted—I think that the order is in place in sufficient time. I hope that the answers I have given to the Committee about how we are using the fund and the order to encourage the development of longer-term solutions give confidence that we are looking at how to promote the fund, advertise the fund and ensure people are aware of how to use the fund. Ultimately, I think that the measures are in place at the right time for the elections, and I hope that the measures will be successful. I commend all three statutory instruments to the Committee, and I hope that what I have said has been helpful.
Question put and agreed to.
Resolved,
That the Committee has considered the draft Representation of the People (Election Expenses Exclusion) (Amendment) Order 2019.
Draft combined authorities (Mayoral elections) (Amendment) Order 2019
Resolved,
That the Committee has considered the draft Combined Authorities (Mayoral Elections) (Amendment) Order 2019.—(Chloe Smith.)
draft local authorities (mayoral elections) (england and wales) (amendment) (england) regulations 2019
Resolved,
That the Committee has considered the draft Local Authorities (Mayoral Elections) (England and Wales) (Amendment) (England) Regulations 2019.—(Chloe Smith.)
Draft Ecodesign for Energy-Related Products and Energy Information (Amendment) (EU Exit) Regulations 2019
(5 years, 10 months ago)
General CommitteesRead Full debate Read Hansard Text Read Debate Ministerial Extracts
The Minister for Energy and Clean Growth (Claire Perry)
I beg to move,
That the Committee has considered the draft Ecodesign for Energy-Related Products and Energy Information (Amendment) (EU Exit) Regulations 2019.
It is a pleasure to serve under your chairmanship, Mr Paisley. The draft regulations were laid before the House on 19 December last year. I will set out the framework for why we are here, and then plunge into the detail of what we want to introduce.
Obviously, there is a strong belief across the House that a deal with the EU is in our mutual interest, but it has always been the case that a responsible Government must plan for all eventualities, including a very unwelcome no-deal outcome. The draft regulations will ensure that in such a scenario our eco-design and energy labelling legislation will continue to function effectively.
Committee members will be aware that in recent years the EU has introduced, through the eco-design directive and energy labelling regulation frameworks, a suite of product-specific regulations that have been of enormous benefit to consumers and businesses alike. They have worked to minimise the costs and environmental impacts of products used both in the home and in businesses by setting minimum performance requirements. They also help consumers, as anyone who has gone to buy a new appliance will know, to make informed purchasing decisions through universal energy labelling.
The suite of regulations is one of the reasons that bills have gone down since 2012, and will save household consumers about £100 on their annual energy bills by 2020. It will also lead us to save about 8 million tonnes of carbon dioxide in 2020. The policy has therefore been one of the most cost-effective ways of meeting our carbon budgets.
The policy has also served a very strong purpose for industry. It has allowed companies to set minimum performance requirements that have helped them to drive innovation and increase competitiveness, and to export to the world’s largest and most successful single market. It is therefore imperative that we can continue to deliver those benefits in the unwelcome event of a no-deal Brexit.
Using the power in the European Union (Withdrawal) Act 2018, the draft regulations will amend EU-retained law and ensure that eco-design and energy labelling requirements will be the same as they are now in any outcome. That will give businesses and consumers the certainty that they need.
There is a suite of amendments. The first is on a technical labelling term, and replaces “Union market” with “UK market”. Without that tiny amendment, less efficient and more polluting products could be put on the UK market, meaning that consumers who thought they were buying something energy efficient were not. That would be an unwelcome outcome.
The second amendment transfers powers held by the Commission to the Secretary of State—repatriating sovereignty—to introduce eco-design and energy labelling product-specific regulations for the UK market after exit. The Secretary of State would use that power in the event of no deal to lay before Parliament new energy labelling and eco-design product-specific regulations that the UK voted for and helped to shape as a member state. Because they will enter into force and apply after exit day, those regulations have not been saved in the UK statute book by the withdrawal Act. That is part of the reason for introducing today’s legislation.
One of the questions I have received is whether Brexit—whether orderly or disorderly—will mean the UK rowing back in any way on its climate change commitments, including commitments to transparent labelling and design. The answer is absolutely not. Not only will our existing eco-design and labelling requirements stay the same in the eventuality of our having to use the provisions in the draft regulations, but we have been very clear that we wish to be more ambitious than the EU in our climate change commitments, as we have been, and as we will continue to be regardless of the shape of our relationship after exit day.
The third aspect of the draft regulations is the EU product database. Suppliers placing products on the UK market have to enter product information into the EU product database—an online portal, which went live in January of this year, where all the market surveillance authorities can view product information uploaded by suppliers. If we have a no-deal Brexit, it will be replaced by a UK market surveillance authority that will request technical product information directly from the suppliers, as the authorities have historically done.
The next three amendments relate to changes that the Government are making to the trading of goods subject to EU-wide product-specific rules. They are not specific to this SI. The fourth amendment is the UK regime for third-party assessment. One of the changes pertains to the conformity assessment of goods to ensure they meet relevant requirements. After a no-deal exit we would have a UK-only system for conformity assessment. Products needing to be assessed by a third party in order to show compliance with UK legal requirements would be assessed by UK testing bodies called “approved bodies”. However, to minimise disruption and any burdensome red tape, businesses would be able to continue to use EU testing bodies when selling their goods to the EU after exit. That is intended to apply only for a time-limited period.
The fifth amendment is a new UK conformity-marking procedure. After exit, if we had no deal, a new UK marking would need to be affixed to products to indicate conformity with UK requirements. This would replace the CE marking that members of the Committee might be familiar with, which indicates conformity with EU requirements. Again, to ensure continuity and that manufacturers do not face a huge and unwelcome burden of regulation should we have no deal, in opposition to what they were promised, most manufacturers will be able to use the CE marking for the UK market, again for a time-limited period. The sixth amendment is a new UK regime of product testing standards. This SI carries across the current list of EU harmonised standards used for the verification of compliance of products with EU legal requirements, but renames them UK designated standards.
Finally—I am sure this will come as a welcome relief to the Committee—the regulations make tiny, minor changes to update our domestic energy labelling regulations to ensure market surveillance can carry out its enforcement activities on the labelling of household lamps and electric ovens. They are routine changes not related to Brexit. We felt it was a good use of the Committee’s time to debate that change along with the others.
These regulations are an appropriate and necessary use of the powers in the withdrawal Act and will maximise continuity in eco-design and energy labelling regulations should we have the unwelcome outcome of a no-deal Brexit. I commend them to the House.
Dr Alan Whitehead (Southampton, Test) (Lab)
It is a pleasure to serve under your chairmanship, Mr Paisley. I note that you can get from one end of the Committee corridor to the other far more quickly than I can. That is something to bear in mind for future meetings.
I find this evening’s discussion quite complex, and not only because of the complexity of what is before us. By the way, I think I will be saying this fairly regularly in Delegated Legislation Committees: this matter should not be before us in the shape of an SI. We are increasingly getting to the position where we cannot properly scrutinise these matters. This is one example of that. I find the subject quite complex not because of the complexity of the stuff before us, important though that is—I thank the Minister for providing a rapid guide to it in its complexity—but because of what might happen in terms of eco-design, energy labelling, and, as the Minister mentioned, the CE label mark in the event of a no-deal Brexit. What will happen in terms of the operation of those different marks and their acceptability? The Minister mentioned that the CE labelling would be acceptable in the UK for a limited period, but we have had no clarification of what the regime for energy labelling, for example, is likely to be.
The legal position immediately after a no-deal Brexit is that, even though the standards will be the same, those EU labels will not be acceptable in the UK, and vice versa. Third parties, certainly after a short period, will have to undertake two separate regimes of labelling, even though the standards may be identical. As far as I understand it, there has been no discussion of how those labelling arrangements might be acceptable on an interchangeable basis, provided that the regime is the same.
I welcome the fact that the Minister assured the Committee that, as we adopt these new requirements in the event of a no-deal Brexit, the various regulations that comprise the eco-design and eco-labelling specifications will not be in any way amended as a result of the draft regulations—that is to say, the arrangements will be identical in substance, as far as having the same regime is concerned. If we are to have anything that is usable immediately post a no-deal Brexit, it will be very important that it is absolutely clear that EU and UK arrangements are identical. If the Minister can shed a little light on that, I would be very grateful.
Let us assume that the arrangements will be identical. In that case, we have the following position: there is a body of regulations and arrangements that makes the design of energy-related products fit for sale and use within the EU. Obviously, under such circumstances as we are discussing, the eco-design arrangements regarding items fit for sale and use would hopefully be grafted wholly on to the UK position.
Then we have the eco-labelling information, which arises from the eco-design. It is the sticker that we see on fridges, freezers and other items that gives us the energy rating and other things. As the Minister said, that will be subject to a redesign by the EU shortly after we will have left in the event of a no-deal Brexit. When that happens, that will presumably also have to be incorporated into UK regulations in order to keep that UK-EU equivalence going.
The third pillar of this, although it is not exactly what the draft regulations are about, is the CE labelling, which sits over all the other things. The eco-design is what makes the product saleable. The eco-labelling is the information that should be provided to the public as a result of the design. The CE label is what makes anything, including energy-related products, saleable and useable throughout the EU. Anything that will be sold in the EU has to have that CE label on it.
In the explanatory memorandum there is a passing reference to the fact that all that will be subject to the CE marking framework. It indicates that the UK marking that will replace the CE marking will be introduced by the draft Product Safety and Metrology etc. (Amendment etc.) (EU Exit) Regulations 2019. My understanding is that until that statutory instrument is introduced and replaces the CE marking with a UK marking, the rest of this falls down because they are all subject to that arrangement. Although that SI has been published, I understand that it has not been laid or discussed in Committee.
It is rather important that we receive some kind of assurance that that statutory instrument will go through before the possible occurrence of a disorderly Brexit. If it does not, the set will be incomplete. What we are discussing will have no substance because there will not be a regime to enable the CE marking that oversees the whole process to be replaced with a UK marking. The Minister says the UK has indicated that there will be a time-limited period—I do not know whether that is unilateral or negotiated and whether it will be months, years or weeks. It would be helpful for the Minister to give an indication of how that might work.
There is likely to be a pretty chaotic arrangement to determine who will have what standards affixed to their products for sale in the UK from Europe. A European piece of electrical goods sold in the UK will have to have a European energy standard attached to it and, presumably, on the other side, an identical UK thing stuck on. I hope the eco-design will be the same, although there are indications in this SI that the Secretary of State will have powers to alter those arrangements if necessary. I would have thought that the Secretary of State would do such a thing at his or her peril, inasmuch as that would throw out the possibility of any alignment of standards for future reference out the window.
That emphasises the need to keep the arrangements aligned, because I anticipate that there will have to be discussions and arrangements for how those things work in the long term. These regulations provide no solution to that. All they do is provide a regime that allows standards to be maintained in the UK; they give no indication of how the trading arrangements will work from the EU to the UK, the UK to the EU and third parties to both the UK and the EU in future. That is a particularly dangerous area for us to go into.
Although I understand that these regulations are necessary to align with what exists in the EU, they lack clarity about how the regime will work in the longer term. Does the Minister have any intention to make further clarifications, or will further statutory instruments come our way to give us further definitions? One has to be in the pipeline very shortly in order to sort out the CE regulations, but there may be others to sort out those trading regulations. I am interested to hear from the Minister whether it is the Government’s intention to clarify any of those positions about what is acceptable for trading purposes in different parts of the UK.
My reading is that it is not about whether arrangements themselves are parallel and equal in their effect but about whether, if a label is placed on a sale item in the UK or the EU and that label is not valid, even if the background is, the product can be sold. Unless there are good arrangements at least for the time-limited period the Minister mentions, or better oversight arrangements for that trading, even with the regulations in place we are potentially in for a period of complete chaos. Potentially, goods will be prevented from going into a country or an area as a result of people not having the right bit of labelling on them, even if the regulations are, as the Minister indicates, good and sound regarding the environmental and energy consequences of the sale items.
Although the Opposition do not intend to oppose the regulations, we think that a lot remains to be done to clarify how the arrangements will work. I look forward to hearing from the Minister whether that work will be done in time for the Brexit we all hope will not occur on 29 March—a disorderly Brexit that causes these problems to arise in the first place.
The Chair
I do not see anyone else energetically bobbing to catch my eye, so I call the Minister.
Claire Perry
I wonder why, Mr Paisley. I thank the hon. Gentleman for his usual thoughtful and in-depth analysis and scrutiny. I will try to answer some of his questions and then explain why I cannot answer them all.
He asked a question that comes up reasonably frequently in these Committees: why are the Government using this form of legislation and not primary legislation? The response in this case, as in many of the others, is that the European Union (Withdrawal) Act is a wide-ranging Act that effectively allows us to transpose EU legislation, with tweaks, into UK statute. In this case, we are making technical fixes to retained law to ensure that the functioning statute book would work if we were to have a no-deal exit.
The hon. Gentleman raises valid points about the intent of policy and its design. There is no change in policy intent. If we were to go down that route and create a conforming or, in some cases, diverging, group of regulations, that would be subject to further primary legislation. However, I want to reassure the Committee that the instrument has been subjected to the usual detailed scrutiny provided by the Joint Committee on Statutory Instruments and the Secondary Legislation Scrutiny Committee. Members of both those Committees deserve our thanks for what can be a thankless task. They are scrutinising well and passing things with, if you like, a bill of health. We are where we are with introducing legislation.
The hon. Gentleman asked an important question about time-limiting periods and about what happens immediately. We have always said that in the event of a no deal we will have a continuity principle, with no divergence on exit day between UK and EU requirements. That is in the best interests of business, and we are anxious to avoid any increase in red tape or any consumer confusion arising from the decision. There would be a continuity principle on day one and, as we set out in our technical notice on 13 September 2018, we would then allow a grace period in which products assessed by EU testing bodies, those bearing the CE mark and those meeting EU requirements could continue to circulate in the UK. If we were then to change that or to set a time-limited closure for those allowances, we would go through the usual process of consulting businesses heavily.
As I think the hon. Gentleman alluded to in his closing remarks, this matter has material consequences for other members of the EU, as well as for the UK. A disorderly, no-deal Brexit is not in the interests of any member of the EU, because the millions and millions of consumer goods items that are manufactured and imported into the UK would be subject to confusion and a loss of consumer confidence. That is why, when we talk about no deal, we must get the message out very clearly that it is a real problem for anyone hoping to export to one of the continent’s largest markets.
The hon. Gentleman rightly alluded to a related SI, the draft Product Safety and Metrology etc. (Amendment etc.) (EU Exit) Regulations 2019, which are part of this suite of regulations. I can assure him that that SI was laid last week on 7 February, and I am sure he looks forward to debating it very shortly—I cannot wait. Essentially, if we were going down this route of being able to diverge, we would potentially have the opportunity to review our own testing and marking limits.
I believe in theory there is nothing to stop us adopting the CE mark through negotiation, if it was a trusted mark, assuming that we had agreement on what that meant in terms of testing standards, but those will be decisions that we will take in the interests of the UK, based on what works for our businesses and our public consumers. We would work to minimise disruption to ensure that those changes could be usefully made.
I thank the hon. Gentleman for allowing us to proceed with the regulations, which are an important part of our no-deal preparation. Of course, that brings home once again just what myriad tasks are involved in unpicking 40 years of close conformity; it is my strong belief that this would be a most undesirable outcome for the continent and for the UK, but any responsible Government must prepare for all eventualities. On that basis, I commend the regulations to the Committee.
Question put and agreed to.
Draft Intellectual Property (Copyright and Related Rights) (Amendment) (EU Exit) Regulations 2018
(5 years, 10 months ago)
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The Committee divided: - Ayes: 9 / Noes: 8 - Question accordingly agreed to.
The Parliamentary Under-Secretary of State for Business, Energy and Industrial Strategy (Richard Harrington)
I beg to move,
That the Committee has considered the draft Intellectual Property (Copyright and Related Rights) (Amendment) (EU Exit) Regulations 2018.
It is normally said as a formality, but in this case I reiterate what a pleasure it is to serve under your chairmanship, Sir Edward. Having served on Committees under your chairmanship before, I know that we can expect fairness and a sense of justice from you in the Chair. I am sure the shadow Minister agrees.
The draft regulations form an essential part of the Government’s contingency planning to ensure that copyright legislation continues to function appropriately if there is no negotiated agreement on the terms of the UK’s exit from the EU. Copyright law is largely harmonised internationally by a series of multilateral treaties to which the UK and most other countries are party. Those agreements ensure that music, books, art and other copyright works that originate in any treaty country are protected in all others. Fortunately, our membership of those treaties does not depend on our relationship with the EU. As such, regardless of whether a deal is agreed, UK copyright works will continue to receive protection around the world.
However, a body of EU law on copyright goes beyond the provisions of those international agreements. It has further harmonised copyright protection across the EU and has introduced EU-only rights and mechanisms for facilitating the use of copyright content in cross-border services, which includes the sui generis database—in my rather crude legal studies 40 years ago that meant “without categorisation”; I do not suppose the Latin has changed, but I am sure the shadow Minister will correct me if it has. That provides EU-wide protection for EU database creators and the copyright country of origin principle, under which satellite broadcasters that transmit films and other copyright-protected works across the EU need permission from the copyright owner only for the state in which a broadcast originates, rather than every state in which it is received.
A significant proportion of our copyright legislation derives from the EU copyright acquis and therefore includes reference to the EU, the European economic area and member states. Without amendment, many such references would become inappropriate in the event of a no deal, either because they presuppose the UK’s membership of the EU, which will not make sense when we are no longer a member state, or because they implement EU cross-border copyright mechanisms that will become inoperable in a no-deal scenario.
Mr Barry Sheerman (Huddersfield) (Lab/Co-op)
I apologise for being late; some of us were trapped in the Chamber for a statement. Was the point that the Minister is pursuing not at the heart of the controversy and fuss around this statutory instrument in the House of Lords? I wonder if he could let me know.
Richard Harrington
I cannot let the hon. Gentleman know, because I do not think that is the case, but I am sure I will be corrected if it is. Certainly, I have not been informed that the statutory instrument caused a problem in the House of Lords, and I am sure that someone would have told me if it had. Their lordships, particularly certain friends of mine, such as Lord Adonis, do go into great detail on such statutory instruments, so it may well have been one of them. I am afraid I cannot answer the question now, but I will try to answer it by the end of the sitting.
Mr Sheerman
Because I am so popular with the Whips, they have been putting me on a lot of these Committees, so I am gaining some knowledge by experience. It seems that we pitch up to clear these instruments and say that we have given them the seal of parliamentary accountability, but so much of the information about these really complex areas is not here and, often, Ministers do not seem to know what the real impact of the measures will be. As far as I understand it, the implications for intellectual property of coming out of Europe are huge, but I am not getting that picture from the few words I have heard from the Minister.
Richard Harrington
I hope that the hon. Gentleman will hear me out, because I do not think it is as huge as he does. We sometimes disagree on things, but I think it is fair to say that his heart is in the same place as mine. However, if he will hear me out—
Richard Harrington
I could correct that bit about the hon. Member for Huddersfield’s heart if it would pre-empt the hon. Gentleman’s question.
Ian C. Lucas
I would like some clarification about the country of origin principle. Is the Minister saying that if this instrument were to pass, the country of origin principle would apply to the UK as it does now?
Richard Harrington
If the hon. Gentleman will give me a few minutes, I will finish. If he is not satisfied with what I have to say, I will be happy to take his questions.
On the point made by the hon. Member for Huddersfield about this being a controversial SI in the House of Lords, as I thought, it is yet to be debated in the House of Lords. That does not, of course, mean that he will not be right in future, but it has certainly not been debated up until now, so I clarify that for the record.
The SI will preserve, where possible and appropriate, existing arrangements in UK copyright legislation by making minor correcting amendments. The only exception to the principle of continuity arises from our implementation of some of the EU cross-border copyright mechanisms. It is unavoidable that the reciprocal elements of those mechanisms between the EU and the UK will become inoperable in a no-deal scenario, because they depend on reciprocal provisions that only apply between member states. We have therefore considered how best to address our implementation of those mechanisms.
In some cases, it is appropriate to continue to extend the cross-border provisions to the EU on a unilateral basis, because providing continuity in that way would be beneficial to UK consumers or businesses. That is the case for the copyright country of origin principle in satellite broadcasting. In that case, the regulations will support UK consumers and give them continued access to foreign television programmes by not introducing new barriers to broadcasts in the UK. For other mechanisms, doing so would be detrimental to those in the UK. For example, continuing to provide database rights for EU creators without reciprocal action by the EU would put UK businesses at a competitive disadvantage. This instrument restricts those mechanisms to operate on a purely domestic basis or brings them to an end, as appropriate.
Mr Sheerman
On a point of order, Sir Edward. I have been on several Delegated Legislation Committees, and this is the most complex SI I have dealt with. I did not have access to this material before I walked into this room. As a Member of Parliament, I find myself floundering, because it is so highly complex—I speak as someone who has a lot of sons-in-law, one of whom is an intellectual property lawyer, and as someone who has been given a little bit of information about how important this issue is to businesses. Could this meeting be deferred so that we can actually read this stuff? I feel that I am not doing my duty, and you, Sir Edward, are more punctilious than anyone else in the Palace in how you regard parliamentary accountability. I have walked in here on a busy day, after three statements, and I am faced with all this material that I have not had advance notice of and have not had a chance to read. How can I do my job as a Member of Parliament?
The Chair
Mr Sheerman, you are a very experienced Member of Parliament. You have, I think, been here since 1979. It is incumbent on Members of Parliament, if they really are interested—and I am sure that everybody here is interested—to read all the material beforehand. However, we are only halfway through the Minister’s speech. He has several more pages of wonderful prose still to go, so we may be more enlightened if we are patient.
Mr Sheerman
Further to that point of order, Sir Edward. I am a pretty hard-working Member of Parliament, as are you, and I take my job very seriously. I only complain when I have cause to complain—when, for instance, I come into a meeting such as this in which I feel that I cannot do justice to the proceedings and I feel on the back foot. This is the tip of the iceberg. I have just come from the statement about Seaborne Freight and preparations at ports. We are well into the 21st century. I have not had the chance to talk to some of the leading people in the industry, as I would normally do, to say, “Guys, what do you think about this?”.
I was on a Delegated Legislation Committee two or three weeks ago on the important issue of air safety, which I know a lot about because I chair the Parliamentary Advisory Council for Transport Safety. I found that the Minister did not know about it; he had not done his homework. He just gabbled his statement and left me alone.
The Chair
I think the hon. Gentleman has made his point. We have nearly an hour and a half to go. Let us listen to the Minister. If the hon. Gentleman and other Members want to speak later, we can stay here for a long time and really delve deeply into this. So far, we have heard from the Minister that this is minor amending legislation, but let us listen to him.
Catherine McKinnell (Newcastle upon Tyne North) (Lab)
Further to that point of order, Sir Edward. I obviously do not have the experience of my hon. Friend the Member for Huddersfield, but I made an effort to read all the papers about these very important regulations that we are being asked to pass or oppose. One thing that alarmed me about them was that they referred to the regulations having an impact on UK businesses, but said that there will be no significant impact on charities, voluntary bodies or the public sector. Clearly, the regulations will have an impact, but I could find no evidence of an impact assessment. Is one available? If so, could it be provided to us during the debate so that we can properly scrutinise this issue?
The Chair
That is an interesting point of order, but it is not actually a point of order to do with procedure. It is a point of information for the Minister, who can deal with it now if he wishes, because he has the knowledge.
Richard Harrington
I shall do my best. Impact assessments are worked out on what is called the de minimis threshold. That means that if the impact is expected to be less than, from memory, £5 million, there is no need to do an impact assessment. In the judgment of the people who work these things out, it is below that level. That is why there is no separate impact assessment.
Richard Harrington
Yes.
I will continue and then, if this is acceptable, Sir Edward, I can pick up other points after I have finished, if hon. Members feel that I have not covered them. The shadow Minister usually feels that I have not done so.
In support of the instrument, we have published three impact assessments, each of which has been green-rated by the independent Regulatory Policy Committee. They correspond to three of the most significant cross-border mechanisms: sui generis database rights, the copyright country of origin principle, and cross-border portability of online content services, which allow EU consumers to access their online streaming or rental services as if they were at home when they visit another member state.
The Secondary Legislation Scrutiny Committee and the European Statutory Instruments Committee commented that the assessments did not provide sufficient detail on the impact of no deal on UK stakeholders. The reasons for that are the same in each case: the impacts on UK consumers, broadcasters and other stakeholders will result from the UK’s being treated as a third country in a no-deal scenario, not from these regulations, which amend the UK’s portion of the cross-border provisions and will primarily affect EU right holders, consumers and broadcasters.
In line with the “Better regulation framework”, the impact assessments consider the effects of the instrument under consideration and not—this is significant—the impacts that arise from other countries’ legislation, which we cannot avoid in a no-deal situation. However, we recognise that those impacts exist and that UK stakeholders will need to be aware of them. That is why in November 2018 the Government published a long-term economic analysis of the impacts of leaving the EU. We have also published technical notices and detailed guidance on what a no-deal Brexit would mean for copyright and related rights. This gives consumers, right holders, businesses and other organisations the information they need in plain English to make informed preparations for all outcomes.
Richard Harrington
If the hon. Lady does not mind, I will not. I will be finished in literally two minutes.
These regulations will provide certainty, clarity and, as far as possible, continuity for UK businesses, right holders and consumers as we leave the EU. I commend the draft regulations to the House.
Catherine McKinnell
On that point, will the Minister give way before he finishes?
Catherine McKinnell
The Minister rightly says that the information should be available to businesses so that they can prepare for Brexit, whatever the scenario might be. I did not get the exact wording that he used. Are the Government not concerned that, at this stage in proceedings, that luxury will not be available to businesses before the event? How many businesses have the Government consulted on a formal basis in order to arrive at their conclusions on the impact that these changes would have on those businesses?
Richard Harrington
I will do my best to answer those questions. I may have misled the hon. Lady on the impact assessment. I thought she was referring just to the charities. We published three full impact assessments in December 2018, but there was no significant impact on charities, which was the point I think she was making.
Catherine McKinnell
The point I was making is that the explanatory memorandum says that some changes could have an impact on UK businesses, but I went on to note that it says there will be
“no significant impact on charities”.
I am concerned that it has been acknowledged that there will be an impact on businesses. My point relates to our ability to scrutinise that impact, the accessibility of information and the amount of consultation that has taken place in order to be able properly to assess and scrutinise what the impact will be.
Richard Harrington
I now fully understand what the hon. Lady was saying. The Government did not carry out a formal consultation. Given that it was during the negotiations with the European Union on the future trading relationship, it was felt at the time that making everything public would have impaired our ability to do that. However, I can confirm that the Department conducted industry roundtable discussions with individuals from a range of organisations across all sectors. In this sector, that included the Commercial Broadcasters Association, Directors UK, the PRS for Music—the performing rights society—techUK, which represents over 900 technology firms, the Libraries and Archives Copyright Alliance, the British Library, the Publishers Association, the Society of Authors, the Association of Photographers and the Authors Licensing and Collecting Society, among others. In roundtable discussions, the Department talked to and listened to the concerns of stakeholders from right across the affected industries.
Mr Sheerman
Can I have a further intervention? Were any senior figures in the industry involved, such as Richard Branson or the heads of the big conglomerates? There are a number of key players in this area of intellectual property, and it is vital for the vibrancy of our film, television and creative sectors. The Minister and I get on very well and I like him—I do not like all Ministers, but I like this one.
Mr Sheerman
No. The fact of the matter is that I am learning the lessons, Sir Edward. It has been a heavy day and I have been trying to catch up on this as the Minister was speaking.
Mr Sheerman
No, I am not wandering. I have been in so many Delegated Legislation Committees in which I have asked the Minister, “What is the downside of this?” Ministers keep saying to me, “It’s all going to be all right. These few regulations will make it all right,” and then I go out and talk to the industry, which says, “It’s not all right. There’s going to be severe dislocation.” Is the Minister suggesting that participants in those roundtable discussions said, “It’s all right, Minister, wonderful; steady as you go,” or did they have serious reservations about leaving the EU and about the impact on their sector?
Richard Harrington
I can answer that question in the following way. The hon. Gentleman knows that I have a lot of respect for him and that we share many views. I do not know what the views of the stakeholders on leaving the EU were—I imagine they would have thought it detrimental to their businesses, but I was not party to that. Today, we are talking about a specific piece of secondary legislation for the event of crashing out of the EU—a hard Brexit.
I do not know the rank of the people involved, and I cannot say whether Richard Branson was involved. He is offshore and is allowed only 90 days here, so perhaps he was not allowed to come. I cannot comment on that. However, I assure the hon. Gentleman that there were proper senior people representing proper companies and proper entities. I do not think that the Department had a plan for only low-level people to attend. I cannot say who was there. I am not withholding information; I am afraid I do not know. Having had more than two years’ experience of the Department, I can say it is fairly thorough in its consultations with stakeholders.
Nick Smith (Blaenau Gwent) (Lab)
The Minister said that there were no formal consultations as part of the exercise, but there were roundtables with key people from the relevant sectors and businesses. Where is the feedback from the roundtable discussions that took place? I am quickly flicking through the information on the analysis and evidence, and I cannot find it. Will the Minister tell us more about what businesses said during the roundtables so that we can understand what occurred?
Richard Harrington
I must apologise for not sitting down, Sir Edward. I have never had so many interventions in an SI.
Richard Harrington
Yes, it is. The hon. Member for Huddersfield has been to far more than I have.
I hope the shadow Whip will accept that I am not generally one for waffle on this kind of thing. I do not know the answer to his question, but I know that formal minutes were not published because there was a discussion rather than a formal consultation. He does not have a copy of the minutes in his pack because there are not any.
Henry Smith (Crawley) (Con)
How were the companies invited to the roundtables? How were they selected?
Richard Harrington
They were selected because the officials concerned understood them to be the main stakeholders in the field. They are experienced at their jobs. As I have said before, I have found the Department for Business, Energy and Industrial Strategy to have a very good system of consultation.
Catherine McKinnell
I thank the Minister for giving way. He is being very generous. I am here to scrutinise the legislation. Members of the public, businesses and consumers who will be affected will take a great interest in this process, and they will be concerned that the Government are comfortable to proceed with these legislative changes without any formal consultation. It creates the impression that there is an avoidance of democratic scrutiny, which is typical of much of the Brexit legislation passing through Parliament at the moment and is causing concern.
Richard Harrington
I thank the hon. Lady for that contribution. I disagree with her because there has been a fairly thorough informal consultation, although I fully accept that is not the same as a formal consultation. I noticed a look of disdain on the shadow Minister’s face, which his face does not normally give away, but it did in this particular case.
Mr Sheerman
This is a nice intervention in the sense that we are here to learn. That is our job. Sir Edward is the expert on this and people respect his experience. We are trying to do a thorough job. I apologise for pushing the Minister on this, but what he has just described is almost a secret meeting that took no minutes. There was a meeting. We do not know who was there. There is no record of who was there and no record of what was discussed and whether people said, “Steady as you go, mate. Get on with it,” or whether they had severe reservations. The consultation seems a bit strange.
Richard Harrington
There were roundtable discussions, not a formal consultation that was put online. It was a group of stakeholders that the Department thought were the relevant ones. The Department wanted to hear their views and listen to what they had to say, and that is reflected in this no-deal statutory instrument. The point that the hon. Gentleman makes—he usually makes it—is about the view of industry and business on leaving the European Union. In this case, we are talking about a limited amount of what we might call crash-out, emergency, hard-Brexit statutory instruments. No minute was kept because it was not a formal consultation, but roundtables are like that—people raise their views and officials take note of them.
Henry Smith
I am grateful for the Minister’s generosity in giving way. He has used the term “crashing out” twice now. I appreciate that there are a range of opinions across the Committee about the merits or otherwise of Brexit—I see some well-known suspects in the Committee Room, and I think I know the Minister’s view, too. When industry stakeholders were brought in, was their selection conducted with a bias towards “remain” opinions, or was it more random?
Richard Harrington
I do not want to mislead my hon. Friend. I do not know about this specific case, but I could give him other examples in which the Department has consulted with stakeholders. I assure him categorically that their views on Brexit would be the last consideration. The Department is a professional organisation run by very professional civil servants. From a ministerial point of view, I have come across no case in which any Minister would say, “We are having that company in, but not that one.” That would be very improper. I reassure him categorically on that point.
Mr Sheerman
The Minister was the first person to start using extravagant language about crashing out of Europe. Most of us still want to see a harmonious process with a smooth transition out of Europe. His term “crash-out” is extremely worrying for people in the creative industries in this country, many of whom would be deeply disadvantaged by our crashing out of Europe with no protection for their intellectual property or their many years of creative work. The Minister used the words “crash-out”. Were there any people at the roundtable like Sir Bob Geldof, who is a leader in the industry and runs a large number of companies? He would have known what to say. Let’s get him in—let’s talk to Sir Bob! [Interruption.] The Minister thinks I am star-struck because I have mentioned two well known figures, but they are well known figures in the industry. Why were they not consulted?
The Chair
Order. I think we are in danger of getting overexcited about terms such as “crashing out”. We need to tone down the whole debate and use very careful words. The scope of the debate covers the amendments that the draft regulations will make to UK copyright legislation; it is quite a technical and detailed debate. Let us avoid getting overexcited about crashes, shall we?
Mr Sheerman
On a point of order, Sir Edward. I pointed out that we were having a very civilised conversation, using all these technical terms, until the Minister started talking about “crashing out”. I am an expert on road and transport safety, so I am worried about crashing out of anything.
The Chair
We are going to calm down now. The Minister will bring his remarks to a conclusion, and then we will hear from the Opposition.
Richard Harrington
May I clarify that I should probably not have used that expression? I really meant a hard Brexit or leaving without a deal, but I used a euphemism. I find that Opposition Members—and indeed Government Members—need a little raciness and excitement when debating statutory instruments, so I felt that the expression might have been appropriate. However, it clearly was not, so I apologise to the Chair and the Committee. It was like saying “a rollercoaster” or something like that. Now that I think I have clarified that point, may I finish the point about consultation?
Toby Perkins (Chesterfield) (Lab)
I am not so interested in the Minister’s terminology, but I am very interested in the consultation. In asking us to support the draft regulations, he is asking us to take quite a lot on faith. We all remember being told that the Government’s documentation was excruciatingly detailed, but it was subsequently exposed that there was very little detail at all. Opposition Members therefore want a little reassurance about the consultation with the industry, which we recognise is a very important one. On reflection, does the Minister think it would be useful to give us a bit more information about the feedback from the Government’s roundtable discussions, given the huge upheavals in their EU negotiations?
Richard Harrington
I think we have covered the consultation. The hon. Gentleman’s point is that we should have published the response as if it were a formal consultation, but I have accepted that it was not.
I reiterate that the Department hosted a whole series of industry roundtables to discuss no-deal planning generally with publishers, collection management organisations, broadcasters, technology firms, museum archives and educational institutions. During the drafting of the regulations, we listened to the concerns of stake- holders that published their views on the issues and opportunities for IP arising from Brexit, such as the Alliance for Intellectual Property and the British Copyright Council, which are representative bodies that cover a broad range of copyright interests. We also published the technical notices with detailed guidance on what no deal might mean for copyright and regulated rights.
Mr Sheerman
Can I be helpful, as someone who was a Select Committee Chair for 10 years? When we did an inquiry, we put out a call for evidence, which was printed in the papers and shared on social media and so on, so anyone who wanted to give evidence to the Public Accounts Committee or the Education Committee could write in. Was this wider consultation publicised and broadly known about? Were people told about it and could they submit their evidence or signify their interest in the topic? Did the Minister get many responses?
Richard Harrington
I can clarify that it was not like a Select Committee inquiry, which is online and public. This was a series of meetings of stakeholders to talk about the issues, so it is not a fair comparison. I fully accept, however, that in the hon. Gentleman’s opinion, the Department should have held a full public consultation, but for the reasons that I explained before, it did not. We are satisfied with the results, however, and we are happy to stand by the draft regulations.
Bill Esterson (Sefton Central) (Lab)
It is a pleasure to serve under your chairmanship, Sir Edward. This is already close to being the longest statutory instrument Committee that I have served on in my nine years in this place and I have only just stood up to respond as Opposition spokesman.
Bill Esterson
I find the answers we have had to the numerous interventions absolutely remarkable—and not in a good way. The Minister’s inability to answer some pretty simple questions from my hon. Friends the Members for Huddersfield, for Chesterfield and for Newcastle upon Tyne North is staggering. I do not blame him in particular, because it is not his brief, but the fact that the answers are not available for him to give is baffling.
If the Minister cannot tell us what was said in the consultation, what was the point of it? What concerns were raised? He cannot tell us that either. How do we know whether the consultees at those roundtables truly reflected the breadth of views in the sector? If we cannot answer those questions, how on earth can the Committee judge the responses—he cannot tell us what they are anyway—and whether they justify us supporting the regulations? I am afraid that we are in a bit of a pickle.
The regulations are about whether holidaymakers can watch Netflix, Sky, Amazon Prime or any other content provider on the continent or in the Irish Republic; uncertainty about satellite TV broadcasts between countries staying in the EEA and our own; and businesses not knowing whether they can share databases. There is also an element in the regulations about the Marrakesh treaty and disabled people who copy material so they can use it in a different country from their country of origin, which I do not remember the Minister mentioning in his opening remarks.
We have yet another statutory instrument, which describes detailed changes to regulations relating to the UK’s exit from the EU, including in the event of, as the Minister puts it, crashing out—on the Opposition Benches we are happy with that term, but others might call it no deal. Yet again, the analysis leaves significant gaps in the ability of hon. Members to scrutinise and adequately decide whether the regulations do what they are supposed to, or whether what they propose addresses the objective of preparing for life after Brexit, including in the event of no deal.
On numerous previous occasions, my Labour Front- Bench colleagues and I have spelled out our objections to this Government’s approach to secondary legislation. The volume and flow of EU exit secondary legislation is deeply concerning for accountability and proper scrutiny, especially when the evidence does not back it up, because the evidence is not able to be provided to us, as we have just heard. The Government have assured the Opposition that no policy decisions are being taken. However, establishing a regulatory framework, for example, inevitably involves matters of judgment and raises questions about resourcing and capacity. Secondary legislation ought to be used for technical, non-partisan, non-controversial changes, because of the limited accountability that it allows. Instead, this Government continue to push through contentious legislation with high policy content via this vehicle.
As legislators we have to get it right. These regulations could represent real and substantive changes to the statute book and, as such, they need proper and in-depth scrutiny. In this light, we in the Opposition would like to put on record our deepest concerns that the process regarding these regulations is not as accessible and transparent as it should be.
Let us look at the explanatory memorandum, to see in a bit more detail what is being addressed. Paragraph 7.2 refers to the EU satellite and cable directive, which allows broadcasters to gain copyright clearance for broadcasts across the EEA, while only having to obtain permission in the country of broadcast. The explanatory memorandum says that the regulation will apply only within the UK, with consequences unresolved as to the impact for broadcasting across the EEA. This appears to have significant consequences for broadcasters, the impact of which is not addressed by the impact assessment.
Speaking of the impact assessments, when I walked into the room, I did not see copies of the three impact assessments that the Minister referred to available for hon. Members to scrutinise. On previous occasions, when the Government have bothered to publish impact assessments, they have been available to members of Delegated Legislation Committees. I do not understand why that is not the case on this occasion. My hon. Friends, who have raised their concerns about their ability to do their job this afternoon, are absolutely right to make that point, because how can they possibly comment without that information, when they are not given such detail? I have a copy of it, because I got a copy before the meeting. However, unless those copies are available here, hon. Members will not be aware of everything that might be available to them.
The Chair
Order. On that point, are the Government ensuring that this information is available now to all Members?
Richard Harrington
My understanding is that it was published in December and therefore is available on the website and through every other form of public means. I do accept that they were not in this room and if they should be, I will ensure in future that they are.
The Chair
I think it is quite important that the Government should ensure that these are available in the room on all occasions. I think it is a fair point.
Richard Harrington
I will clarify the position. I agree with your position, Sir Edward, and I will ensure that in future, if I am involved in statutory instruments, and if the documents are available—as they would be, if they were published in December—they will be available here. I think that is a valid point and I would like to apologise for that.
The Chair
The Government must take this seriously, because in the past the Opposition have moved dilatory motions on this sort of issue. Therefore, the Government must take this sort of thing very seriously indeed.
Catherine McKinnell
I am grateful to the Chair for raising that point. Does my hon. Friend share my concern, and the concern of those businesses and consumers potentially affected by these changes, that in not providing the impact assessments for hon. Members to scrutinise as part of this process, the Government are giving the impression that they have something to hide, thereby increasing the level of anxiety about the potential impact of these changes?
Bill Esterson
I think my hon. Friend has made an extremely good point, and the Minister and his colleagues have heard what she has said. And I thank you, Sir Edward, for your intervention there as well.
This situation simply is not good enough. I came to this Committee today expecting that all Members would have the information that I have, or that it would be available to them in the room, but it is not here. Of the papers that are emailed around when the Committee of Selection selects the Members for a Committee, the impact assessment is not one of the documents that is usually sent; it is usually waiting here in the room for us. It would usually only be the Front-Bench spokespersons who would get a copy in advance.
Catherine McKinnell
As I said directly to the Minister before, I noted the comments about the impact assessments and actually looked for the impact assessments that are relevant to this legislation, but I could not find sufficient impact assessments to clarify for me what the impact of the legislation would be. So it is not even a failure of the Government to make them available today; actually, this process is all very unclear, in terms of what the impact is and how it has been assessed. So, even if the information that is available was provided, I do not think that it would be clear enough.
Bill Esterson
I completely agree with that, and there are a number of points here. In previous Committees, we have had a discussion about the fact that impact assessments have not been produced at all on numerous occasions when significant changes have been made, and there has been an issue with the nature of the impact assessments that the Government have chosen to produce.
I will discuss a little later the content of the three impact assessments that have been produced. My hon. Friend the Member for Newcastle upon Tyne North is quite right that they do not actually give Members the ability to scrutinise thoroughly what we are being asked to scrutinise.
Mr Sheerman
My hon. Friend knows, as I do, that if someone had not asked an urgent question last Thursday on roaming charges after Britain comes out of the European Union, that very complex issue would have been dealt with in one of these Committees up here, with as little information as we have now. As it was, the Minister had to come to the Dispatch Box and there was a thorough airing of a very important piece of delegated legislation. Many of us, Sir Edward, will be coming up to Committees time and again—there are hundreds of these pieces of delegated legislation. So, early on—it is quite early on—we have to get this process right, so that we have the information that we need to do our job.
So I want the Minister to reflect on what happened last Thursday. The Opposition had to call for an urgent question to find out what was going on in an important area of policy regarding roaming charges after we leave the European Union, which is not dissimilar to the policy area that we are considering now.
Bill Esterson
My hon. Friend is absolutely right. There is a similarity with the portability of content and the ability for consumers to watch Netflix or Amazon Prime, on the one hand, or for satellite broadcasters to reach their customers in a country different from the one where their broadcast comes from. It is very similar to the point about mobile phone roaming charges. Who knows? Maybe somebody will table an urgent question on those points in the days ahead. So I completely agree with my hon. Friend’s point; it had occurred to me, as well.
I mentioned the apparently very significant consequences for broadcasters, which have not been addressed by the impact assessment. Just to emphasise the consequences of these regulations, a European Commission notice to stakeholders states that in the absence of an agreement between the UK and the EU, broadcasters in the UK will no longer benefit from this mechanism when providing cross-border broadcasting services to EU customers, and they will have to clear rights in all the member states that their signal reaches. I do not think we are talking about a situation where it is just one side of the Irish border or the other, although there are some interesting questions there about where someone lives and which signal they receive. I do not see how the regulations address the Commission’s point. That must be of major concern to UK broadcasters. I wonder whether that was one of the technical points raised in the roundtable to which the Minister referred—he was not able to tell us before, but perhaps he will be when he responds.
Paragraph 7.4 of the explanatory memorandum refers to the implementation of the EU term directive and to copyright duration for copyright works originating from EEA states. It also says that copyright works originating in the UK will be treated with consistency in the EEA. I can see how we could guarantee consistency of treatment of works originating in the EEA, but how can the regulations guarantee the same in return? Has a mutual recognition agreement been finalised in that respect?
In paragraphs 7.5, 7.8 and 7.15 of the explanatory memorandum, it is claimed that there will be consistency of treatment for EEA citizens in the UK and for UK citizens in the EEA. Again, when was a mutual recognition agreement signed? Or, in the event that it was not, why is that claim being made? As far as I can see from what has been published, we have no way of verifying whether the regulations will hold up in court. That lack of published consultation—or informal roundtable consultation, or however the Minister wishes to describe it—would suggest that I am right to have such concerns.
In contrast to the paragraphs that indicate a continuation of mutual recognition or an establishment of new agreements on mutual recognition in some areas, paragraph 7.10 of the explanatory memorandum refers to the ending of mutual recognition and to the end of information sharing with respect to UK cultural heritage institutions. It is impossible to predict the consequences of the end of those arrangements for the arts and for heritage objects.
Paragraphs 7.12 and 7.21 refer to the Marrakesh treaty and rights for disabled people to copy copyrighted materials and to exchange such copies. Paragraph 7.12 refers to the loss of rights for disabled people to have copies of copyrighted works without infringing copyright. I do not pretend to understand the consequences of the EU’s membership of the Marrakesh treaty—unlike some of the lawyers sat behind me, I do not have the training or qualification for that—but can the Minister tell us when we will ratify the Marrakesh treaty in our own right as the UK, as indicated in paragraph 7.21?
According to the Government’s September guidance on no-deal planning, the answer is “after we have left the EU.” Can the Minister confirm whether we will be able to do what is suggested in the explanatory memorandum between exit day and ratification of the treaty? Can he confirm when we will become signatories to the treaty in our own right, or whether something already happened in that respect that is not mentioned in this paperwork?
Paragraph 7.20 concerns the portability regulation—this affects Netflix and Amazon Prime—which allows us to watch content when we visit the EEA by moving rights and permissions with the consumer. The draft regulations appear to end that arrangement. That change will have a significant impact on consumers and on the providers of content. Who will pay for holidaymakers to watch Netflix or Amazon Prime when in the EU after 29 March? I wonder whether we will be able to watch the “House of Cards” series—it springs to mind in this place—using a UK subscription, or if we will need to buy a new EU subscription to do so. Can the Minister clarify that?
The sifting Committees of both Houses of Parliament recommended that the statutory instrument should be upgraded from the negative to the affirmative procedure. The House of Commons sifting Committee gave the following reasons:
“The amendments to primary legislation are considerable, and the combined number of changes to other legislation is significant, all relating to intellectual property, a cornerstone of the internal market in services.”
The Committee set out its concerns about the country of origin principle for satellite broadcasting and the portability or otherwise of online content. It stated its reservations about the inadequacy of the impact assessments, just as my hon. Friends have this afternoon:
“The Committee is concerned about the impact on business and the loss of consumer rights and is disappointed that the Government has chosen not to provide further information on these issues to assist the Committee in its decision making.”
That is sounding very familiar. The House of Lords reached a similar conclusion. The sifting Committee conclusion is confirmed in paragraph 3.2 of the explanatory memorandum to the regulations.
Without more detailed impact assessments, how is it possible for the Government to claim that the statutory instrument does what is needed to protect businesses, workers and consumers? The EU approach to impact assessments for regulatory changes is so much stronger than the narrow version chosen by the Government. It addresses the wider economic and societal impact. It is absurd that the Government refuse to use such an analysis for complex, far-reaching changes. The lack of full analysis and consultation leaves open the question of whether regulations such as these are fit for purpose and whether they might be open to challenge in the courts. This side of the House has made that point repeatedly in Delegated Legislation Committees that have considered multiple and complex regulations related to exit from the European Union.
The Government guidance published on 24 September 2018 sets out the consequences of a no-deal scenario in this area. It raises concerns about universal database rights, portability of online content services, country of origin for copyright clearance of satellite broadcasting, the potential for UK heritage institutions to infringe copyright, the non-ratification of the Marrakesh treaty before exit day, and the potential implications. All those concerns are apparent from a detailed analysis of the regulations and the explanatory memorandum, yet the information before us does not explain how or why they should be, and have been, addressed. It does not address the concerns raised by the Government’s own guidance.
According to the impact assessments—I return to the intervention by my hon. Friend the Member for Newcastle upon Tyne North—inadequate as they are, the Government’s aim is to maintain the status quo for UK database creators and to avoid any costs to rights holders. The logic of what is proposed is that there will be a cost to EEA creators of databases that will likely be passed on to UK consumers. It is hard to believe that consumers will not have significant concerns about the idea of having to pay more for their services. The consumer affairs experts we spoke to in preparing for this Committee had not been consulted about that. I wonder what was said at those roundtables by consumer representatives about those concerns. So much for the championing of the cause of the consumer, which we often hear from members of the Government, in particular the Secretary of State for International Trade.
Meanwhile, again in the impact assessments, we see that EEA broadcasters will not need separate rights clearance in the UK. But without a reciprocal agreement post Brexit, EEA nations could choose to suspend country of origin broadcast rules between member states. While the statutory instrument preserves the status quo, EEA broadcasters into the UK may be affected by familiarisation costs. Some 33,000 UK businesses would be affected—that is a Government estimate—as their work is broadcast by EEA rights holders into the UK. Again, there is potential for costs to be passed on to the consumers. Was that point raised in the roundtable, and what was said? We do not know.
UK online content services with EU equivalents will not be able to give customers access to their material when present in the UK unless access is reciprocated—that is in the impact assessment. That will not be in place from day one after Brexit, and there is no indication of how long such arrangements might take to put in place. What was the basis for the statement in the impact assessment that tourism in the UK would not be affected? Were broadcasters consulted? What was their view? What was the view of the UK hospitality industry of the impact on tourism in this country? Were they at those roundtables?
The explanatory memorandum states that the regulations achieve certain objectives. I wondered how it was possible for someone who is not an expert in the relevant law to confirm those claims, so I sought advice from a number of legal experts, since the Government did not publish any analysis from lawyers. One lawyer told me:
“I don’t have the bandwidth to think the implications through”.
That goes to the first intervention by my hon. Friend the Member for Huddersfield. Another lawyer told me:
“The draft regulations simply need as much Parliamentary scrutiny as time permits, and the goal is more technical than policy driven - to make the regulations as good as they can be under the circumstances, so that the courts don't have to spend the next decade unpicking them. It would be a very considerable undertaking to quality assure these very complex amendments to existing UK law.”
That came from a lawyer with 40 years’ experience of UK intellectual property law. The specialist IP lawyers who looked at this do not have the bandwidth to consider these matters. They tell us that making good regulations matters, so the courts do not have to spend the next decade unpicking them, but lawyers are unable to say whether the Government guidance on no-deal consequences have been addressed. If the lawyers cannot say whether the regulations can be relied on, what chance do we have, as Members of the House of Commons with limited access to information?
The Minister confirmed there was no formal consultation. Had there been, perhaps the lawyers could have advised the Government and avoided any potential that the regulations would be inadequate. Perhaps the lawyers would have had time to tell us whether the Government’s proposed regulations were fit for purpose. We have not even had that from the people at the roundtable.
I return to the expert advice. That lawyer with 40 years’ experience in IP told me,
“The one thing that can be said with certainty is that it is a shocking departure from minimum standards of Parliamentary scrutiny to allow such wholesale changes to our existing intellectual property laws to be made without proper stakeholder or expert scrutiny.”
That lawyer confirms what we have been saying about a number of the SIs we have been asked to consider. The Minister’s response will need to be remarkable to address the yawning gap in his analysis.
Ian C. Lucas
It is a pleasure to be here, Sir Edward. I want to make a couple of brief points to add my concern about the general tenor of these proceedings.
First, the only reason we are discussing the statutory instrument is that the European Statutory Instruments Committee, on which I sit, recommended that it should go through the affirmative resolution procedure rather than the negative. The Government’s original intention was that we would not even discuss this very important piece of secondary legislation, which is indicative of their understanding—or lack of understanding—of a proposal that clearly has substantial impacts and effects.
My second point is about the impact of the statutory instrument. Paragraph 2.5 of the explanatory memorandum says:
“This instrument will ensure retained EU law contains appropriate references to the ‘European Union’, ‘Member State’… Additionally, the instrument aims to give continued effect to cross-border mechanisms and their underlying policies wherever possible.”
Therefore, the intention of the statutory instrument is to continue with arrangements that are agreed by the EU, or by the EU states, after we leave the EU.
The explanatory memorandum goes on to say:
“Where this is not possible…the mechanism is given unilateral effect within the United Kingdom.”
The statutory instrument therefore gives EU member states the power to determine the arrangements that are going to apply within the UK. Government Members who think that the process of taking back control means giving other nations control over the legislation and laws that apply to this country, without us having an input, have the ideal statutory instrument to support. We are, it seems, passing to other countries authority over not only past legislation, but future legislation. On the basis of this statutory instrument, we seem to be binding ourselves to having our laws set by other jurisdictions and members of the EU after we have left. That seems quite an extraordinary proposition, which goes way beyond the ambit of a Delegated Legislation Committee such as this one.
In summary, what we have here is a catastrophic mess. I have great respect and affection for the Minister, but frankly, this whole thing is a massive embarrassment. There has not been proper consultation. We have a piece of secondary legislation that appears to give other countries the authority to legislate within the UK without us having an input. The Government need to go away, rethink, have a proper consultation, and come back with an appropriate statutory instrument for this Committee to consider.
Richard Harrington
I shall do my best to go through the many points that have been raised. I hope that I can persuade Opposition Members to rethink their objection to the statutory instrument—I very much doubt I can, Sir Edward, but if you will be patient with me, I will do my best. I nearly said “if the court will be patient”, because this is like a courtroom drama, but I know that you are a patient man, Sir Edward. If the Committee will bear with me, I shall do my best.
The shadow Minister raised many points. There was a general one about his concerns. [Interruption.] Perhaps he could listen to what I have to say.
Richard Harrington
It is perfectly okay, but I would like the hon. Gentleman to concentrate on my points, as I did my best to concentrate on his. I hope he will feel that I have answered them properly.
To deal first with the hon. Gentleman’s fundamental concern about the process as a whole, I reiterate our view that the regulations are not intended to make significant changes to existing policy. In line with the powers of the European Union (Withdrawal) Act 2018, they aim for continuity as far as possible, and so provide the minimum necessary changes to ensure that our internationally renowned UK copyright legislation continues to function in a no-deal scenario. We have really tried to provide continuity and certainty.
Bill Esterson
I am grateful to the Minister for giving way. I have a great deal of respect for him, and I do listen to him. The Opposition understand that this series of statutory instruments is about preparing for no deal and trying to avoid disruption. The problem is that the information available to us and the answers we have had from the Minister raise serious questions about whether that is exactly what is happening. That is the heart of the matter.
Richard Harrington
I accept fully that that is the Opposition’s intention, but I felt that I should make it as clear as I can that the regulations are not intended to make any significant change to our existing policy.
The hon. Member for Sefton Central asked whether any rights will be lost in the event of no deal. I can categorically say that they will not. As I said previously, certain reciprocal arrangements that facilitate cross-border use of copyrighted material will end, but that is distinct from the underlying intellectual property rights. I hope that his lawyer of 40 years’ experience will confirm that. Our continued membership of the international treaties on copyright will ensure that UK works will continue to receive protection abroad, while foreign works will continue to be protected in the UK. These changes also ensure that copyright duration will not change for UK rights holders on exit.
The hon. Gentleman also asked what we are doing to support UK broadcasters who are facing the loss of the copyright country of origin principle. It is still our intention to secure an agreement with the EU on our future relationship—I think that is very well known—and as we set out in our White Paper last July, we want any deal to involve the best possible arrangements for the broadcasting sector. If we leave without a deal, broadcasters may face disruption due to the fact that the EU copyright country of origin principle would cease to apply to the UK. We have tried to give broadcasters and other businesses as much information as possible about the implications of no deal by putting this in the technical notices and detailed guidance about what it means for copyright. The UK cannot address that issue unilaterally in a no-deal scenario.
The shadow Minister mentioned the Marrakesh treaty. The UK has implemented the provisions of the treaty in UK law, and they will be retained after exit. Currently, the treaty has effect in the UK due to the EU’s ratification of it in October 2018, and we are on track to ratify it in our own right, but that cannot happen until we leave the EU, because it is an EU competence at the moment. Until we ratify the law, other treaty countries could prevent the cross-border exchange of copies of works in accessible formats in the UK. Our domestic copyright exceptions stemming from the treaty, which provide disabled persons with improved access to copyright-protected works, will not be affected by our departure from the EU.
The shadow Minister asked when we will ratify the Marrakesh treaty. We are on track to do that. It will be literally as soon as possible after exit. Our ratification must then be accepted by the World Intellectual Property Organisation, before we are once again individually treated as a member of the treaty. There will be a delay between exit and the acceptance of our ratification in a no-deal scenario. We are doing our absolute best to ensure that it will be as short as possible.
On the impact assessments, the hon. Member for Sefton Central asked why we did not consider wider impacts. The impact assessments that accompany the instrument describe in detail the effect of introducing the regulations relative to the pre-exit status quo. That is in line with the “Better regulation framework” and HM Treasury’s Green Book guidance. They are not intended to analyse the impact of no deal more broadly, such as the effect of the EU cross-border copyright mechanism ceasing to apply to the UK. Those impacts arise from the fact that the EU will treat the UK as a third country in a no-deal scenario and will happen regardless of whether this instrument is made. We considered the wider impacts of our exit from the EU in a long-term economic analysis published last November.
The shadow Minister asked why the Government are using secondary legislation for EU exit. This matter has been discussed widely in relation to many statutory instruments, but fundamentally, using primary legislation is inappropriate for the large number of mechanistic changes that are needed. It is normal to use secondary legislation in these circumstances. Furthermore, the changes are dependent on the outcome of the negotiations. This method was heavily debated and agreed to by both Houses during the passage of the European Union (Withdrawal) Act last year. It would not be practical to make all the required legislative changes through primary legislation. However, I reiterate that these changes do not include major policy changes or decisions on policy.
We are very pleased to have—and we do accept—recommendations from the sifting Committee, on which the hon. Member for Wrexham serves, to ensure that sufficient scrutiny is in place for the secondary legislation made under the principal powers in the Act. I accept what the shadow Minister said about not regarding this as enough scrutiny, but we did accept straightaway the recommendations of that Committee.
The shadow Minister asked what the effect will be on UK consumers. The EU portability regulation works by reciprocal application of cross-border rules. It will not cover UK-EU travel in the event of no deal, and we cannot replicate the effects of existing arrangements on a unilateral basis. It is true that UK consumers may see changes to their content services when they visit the EU, but the law will merely revert to its pre-April 2018 status quo.
The shadow Minister asked why the UK is unilaterally applying the country of origin principle for EU satellite broadcasters. The proposed plan is consistent with how UK legislation already treats satellite broadcasters from outside the EU. Continuing to apply the country of origin principle in this way will support UK consumers’ continued access to foreign television programming, because it is not introducing new and unnecessary burdens on broadcasts to the UK. I am sure that the businesses to which the shadow Minister refers will be very pleased about that.
The hon. Member for Wrexham continued that theme and asked why we give unilateral effect to certain mechanisms. It is unavoidable that some cross-border arrangements will apply. In some cases, we will apply these arrangements to the EU on a unilateral basis. That does not mean that we will unilaterally implement EU law; we will just provide continuity where we feel that it is appropriate.
I have done my absolute best to answer the questions raised. As I said in my opening speech, this statutory instrument is essential in preparing our copyright legislation for a no-deal scenario. I therefore commend the regulations to the Committee.
Question put.
Draft Defence and Security Public Contracts (Amendment) (EU Exit) Regulations 2019
(5 years, 10 months ago)
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The Parliamentary Under-Secretary of State for Defence (Stuart Andrew)
I beg to move,
That the Committee has considered the draft Defence and Security Public Contracts (Amendment) (EU Exit) Regulations 2019.
It is a pleasure to serve under your chairmanship, Mr Evans. A responsible Government plan for all eventualities. As part of the preparations to leave the European Union, it is essential that we ensure that our legislation governing defence and security procurement functions properly beyond exit day in a no-deal scenario. It is the first duty of a Government to keep their citizens safe and the country secure. As part of that, the Government need to be able to procure the critical equipment and capabilities they need smoothly and with confidence.
In the event of no deal, these amending regulations will provide procurers and suppliers with legal continuity and certainty, giving them the stability they need to conduct business after 29 March. Clearly, the amendments reflect the UK’s new status outside the EU in a no-deal scenario, but the framework and principles underlying the defence and security procurement regime remain otherwise unchanged. That is in accordance with the powers given to amend retained EU law in the EU (Withdrawal) Act 2018. The Act does not allow major policy changes or the introduction of new legal frameworks beyond those changes to fix deficiencies to ensure that the law continues to function properly and changes to remove any reciprocal obligations that are no longer appropriate from exit day.
Brexit will offer us real opportunities, including reform of our defence and security procurement regulations. In the near term, however, the regulations ensure that the UK’s defence and security procurements continue to function smoothly in a no-deal scenario, but with that all-important autonomy from the European Union.
To protect the UK’s essential security interests, the regulations will maintain the effect of article 346 of the treaty on the functioning of the European Union by writing its substance into the existing regulations. The regulations already make clear that they can be trumped by article 346. Article 346 enables us to disapply the defence and security procurement rules where necessary to protect essential national security interests.
Through the amendments, control over our procurement is returned to the United Kingdom. For example, the Secretary of State for Defence will take the power previously held by the European Commission to modernise, although not broaden, the 1958 list of warlike stores that falls under article 346(1)(b). All notices for defence and security procurement opportunities will in the future be published on a new UK e-notification system. Business continuity meanwhile is assured through the transitional provisions. There will be no defence procurement cliff edge.
Competition remains the cornerstone of defence procurement policy, ensuring that we equip our armed forces with the right capability at the right price. Currently, we allow bids from suppliers outside the EU, although the existing regulations provide the legal right of market access required by EU law only for suppliers based in the EU. Any restrictions on, for example, bidding on national security grounds are made clear from the outset of any procurement. The regulations provide a legal right of market access for suppliers based in the UK and Gibraltar that currently enjoy rights under the EU defence and security directive. After exit day, suppliers in the EU will lose their legal right of market access, but we will still allow them to bid on the same basis as suppliers outside the EU. That reflects the UK’s new status as a third country outside the EU.
Mr Robert Goodwill (Scarborough and Whitby) (Con)
Much EU environmental legislation, such as for vehicle emissions, has an exemption for military use. After we Brexit, will that situation change under any of the provisions in the regulations?
Stuart Andrew
Nothing in this order, which purely transfers our procurement regulations, does that. We can look at a whole raft of matters once we have properly left. We will obviously consider the point that my right hon. Friend raises, but that would be under further consultation, and legislation would then have to come through the House.
Nigel Mills (Amber Valley) (Con)
To take the Minister back to what he was saying about allowing companies based in the EU to have access to our defence procurement, is that a reciprocal requirement? If any part of the EU refused to allow our defence companies access to their markets, could we refuse companies in their countries access to ours?
Stuart Andrew
As it stands at the moment, these regulations would come into force should we leave without a deal. British companies would not have a legal right of access to those European competitions. Having said that, a minimal number of contracts have been won by UK companies through that legal right, compared with the number of exports that our industry secures. I have a lot of faith in the British defence industry and believe that it will be successful in terms of all the other international competitions that will take place.
Although the amending regulations mainly relate to exiting the EU in a no-deal scenario, they also make some updates and corrections to the Defence and Security Public Contracts Regulations 2011. These will come into force before exit day, regardless of whether there is no deal. Through the amending regulations, the Government will ensure that UK defence and security procurement continues to function properly and appropriately, with solid legal foundations underpinning it. This instrument would give procurers and suppliers the confidence and continuity in procurement that they would need in the case of a no-deal scenario, and I commend the regulations to the Committee.
Wayne David (Caerphilly) (Lab)
It is a pleasure to serve under your chairmanship, Mr Evans. This is a very worrying amendment to the regulations, because it deals with the doomsday scenario of a no-deal Brexit. We have 46 days left before we leave the European Union, and the Government are coming forward at this late stage with quite a significant piece of legislation that requires far more detailed scrutiny and far greater preparation. If the Government were serious about considering this, why on earth did they not do so months and months earlier? I am concerned about the regulations, which are indicative of the Government’s irresponsible approach to Brexit as we near the end of the process.
The explanatory memorandum explains that the central purpose of these regulations is to ensure that there is
“little or no distinction between the treatment of economic operators from the EU and other places outside the UK.”
In other words, this mechanism—as far as defence procurement regulations are concerned—provides the brick wall between Britain and the EU and the rest of the world. However, it is important to bear in mind that this issue works both ways. It would not apply simply to companies from abroad—whether outside or inside the EU—that wish to engage in commercial activities here, but would have an impact on British companies’ work in other European countries, which is an important point. The Government correctly argue that the export capacity of British industry in the military sector is significant—not just to the rest of the world, but to our partners in Europe. I am concerned that companies with long-term strategies increasingly oriented towards an export capacity will find trade more difficult if this measure is introduced.
Mr Goodwill
The hon. Gentleman is absolutely right that this uncertainty is damaging, but should he not take the advice of 57.6% of people in Caerphilly who voted to leave the European Union, and back the deal?
Wayne David
It is important at this stage in the process that we do not engage in such cheap debating points. We need to look at the nature of our economy and the impact that a no-deal Brexit would have. This is too important for simple political digs or empty rhetoric. We need cool heads and a sharp analysis of what is before us. That is what I am seeking to do, and I hope, in the national interest, that the Government will do so too. We are getting perilously close to the point of no return. We have 46 days. We must take a deep breath, stand back and put the interests of our country and our constituents first.
Why have the Government adopted this approach? The impact assessment says that there are no policy changes, and therefore they do not require a detailed business impact assessment. However, I suggest that it is a policy change because it cuts across what we have been doing and saying for many years in this country. There should therefore be a fully-fledged business assessment so that we can understand the economic consequences of what we are doing. Incredibly, that is lacking. I come back to the point that I made at the start. If we had any sense, and if we were seriously considering a no-deal Brexit, this issue should have been considered in detail months ago—indeed, two years ago. Europe is a vital export market for us, and this will have a big impact.
The Government talk a great deal about competition, but it is worth bearing in mind that 40% of the Ministry of Defence budget is single-sourced. There is no competition; the MOD simply gives the money to a particular company or amalgam of companies. It is therefore important that we question the Government’s commitment to competition.
Mark Tami (Alyn and Deeside) (Lab)
I was thinking of the airborne warning and control system, for which there did not appear to be any procurement policy. We just opted for the American option, rather than something that would have benefited employment in this country.
Wayne David
That is a very good and important example. There was at least one other strong alternative to the Boeing bid for AWACS, but the Government decided not to consider it at all. There was no publicity, openness or transparency; they just came to a cosy little arrangement with an American company, and effectively bought the equipment off the shelf from the United States, with minimal investment in the British economy.
Mr Goodwill
Would the hon. Gentleman agree that sometimes there can be great benefits to the UK from that? For example, General Dynamics is building a new light tank for the British Army in Merthyr Tydfil, employing 950 people.
Wayne David
Yes, indeed. I commend the work that General Dynamics is doing, but let us not forget that that company lost out because of the lack of competition for the mechanised infantry vehicle. Again, the Government put competition to one side and came to a cosy little deal with a German-led consortium for the Boxer vehicle, and General Dynamics lost out. It quite rightly said, as Saab and others said about the Wedgetail, that it does not mind losing a bid, but it at least should have the chance to bid openly for it. The Government should be giving contracts to the best companies at the best price to have the best impact on this country’s economy. Sadly, that is not what they are doing.
The draft regulations will transpose into British legislation article 346 of the treaty on the functioning of the European Union—an important article that allows exceptions to competition rules where national security issues arise. However, fleet solid support ships remain an issue: despite representations from Labour, from other Opposition parties and from trade unions, the Government have decided not to issue the contract to a British company. Instead, they are putting it out to international tender, saying, “It’s these terrible European rules that are making us do this—we’re tied into the straitjacket of European competition rules.” But which EU rule are they referring to? Article 346! If their rhetoric is true, why are the Government taking that article en bloc and transposing it into British legislation? For the life of me, I cannot understand it, if they are sincere in their comments about the invidiousness of article 346.
I would very much like to hear the Minister explain how he can square that circle and face both ways at the same time. If the Government were serious about a no-deal Brexit, surely it would have been sensible to take the opportunity to ditch article 346 and have decisions taken in this country, in the interests of British industry and British jobs, rather than putting contracts out to competition. However, I fear that the Minister’s response will confirm that the Government are not concerned about that. They want to ensure as smooth a rhetorical transition as possible, but they have not gone into the depths of detail that are required.
I come back to the point that this Committee and all such Committees are going through a façade, because the Government are not really contemplating a no-deal Brexit; this is all part of blackmailing Parliament to ensure that the Government get their own way. I have raised a couple of points that I would like the Minister to respond to, but I particularly ask him to do his best to refute my last point about the Government’s strategy.
The Chair
I call the Minister. [Interruption.] If hon. Members wish to catch my eye, will they at least look at me?
Peter Grant (Glenrothes) (SNP)
I apologise, Mr Evans; I might have thought that somebody on the Conservative Benches would want to say something about the draft regulations, but there we go. It is a pleasure to serve under your chairmanship.
I echo the concerns raised by the hon. Member for Caerphilly about how we got into this position. We are now counting down in days rather than weeks and months to Brexit day, yet we still do not have a legislative framework in place to make it work, and we still do not know whether there will be a deal. As the hon. Gentleman said, a lot of this is clearly Government scaremongering to get Members through the right Lobby, at a date yet to be decided, because the prospect of no deal is just so terrifying.
The same comments could apply to a lot of the legislation that is being considered by Delegated Legislation Committees just now. Next week’s recess has had to be cancelled, not because major legislation needs to be debated on the Floor of the House, but because the Government have run down the clock without allowing enough time to lay secondary legislation before Parliament —an indication that their competence in government is disastrously lacking.
It was interesting to hear the Minister speaking about control over procurement reverting to the United Kingdom. Brexit was not supposed to be about bringing control back to the United Kingdom; it was supposed to be about bringing it back to the United Kingdom Parliament. I see no role at all for the UK Parliament among the significant powers that will now be vested in the Secretary of State. Those powers are currently vested in the European Commission, which is held to account in a way in which individual Secretaries of State in this place are not. Perhaps the Government are trying to make it look as if the European Commission’s powers will instead, in a like-for-like swap, be exercised by a Secretary of State. However, an individual Secretary of State is subject to less transparency and parliamentary democratic oversight than the European Commission.
That is particularly the case with defence contracts. The two big excuses that are always given to keep the contents of a contract completely hushed up—at the time and sometimes for years or decades afterwards—are commercial confidentiality and national security. When we get contracts of millions or even billions of pounds where commercial confidentiality and national security can both be played, it is very easy to shut down transparency. It should be no surprise, therefore, that defence contracts form a large proportion of those that should never have gone down the road we took. I hope that the measure is not laying of foundations for yet more scandals, whereby a contractor is not competent and a very expensive buy-out is required in order to get somebody who is fit for purpose and able to do the job.
I welcome the Minister’s admission—if I copied his words down correctly—that the Government currently allow bids from suppliers from outside the European Union. That will come as news to people in Scotland, because five years ago they were telling us that they would not even accept bids from Scotland if we were not part of the United Kingdom. I am pleased that that has been laid to rest, at last.
That is how it should be, because we are purchasing essential equipment for our armed forces and they deserve the best that we can provide. It should not necessarily be about who can provide it at the cheapest price; it should be about who can provide, within the required time, the best equipment and that it will be reliable in intense, testing conditions. Soldiers have died in Iraq because their equipment was not up to standard. We cannot allow that to happen again.
To the extent that the draft regulations fill a gap that the Government have chosen to create in our domestic legislation, I certainly do not oppose them. I am concerned, however, that they simply concentrate further powers among individual Secretaries of State, who historically this Parliament has found extremely difficult to hold to account. I wonder whether in 10 or 15 years’ time we will be looking at a lot more, and even worse, examples than recent ones. Defence procurement decisions have clearly not been made purely in the interest of the defence of these islands and our citizens, but for some other reason that had to be kept under lock and key for the next 20 years.
As I have said, I do not oppose the draft regulations, but the fact that it is necessary to bring them to Committee so close to Brexit day is an admission of incompetence—and nothing less—by the Government.
Mr Goodwill
I will not detain the Committee long. Following on from the point made by the hon. Member for Glenrothes, this is not about getting the cheapest equipment, but about getting the best equipment. Although much of the equipment built in the UK is state of the art, the global market may supply particular specialists, such as drones. In the Nimrod contract more than 20 years ago, a political decision to revamp the old Nimrod airframes ended in disaster. Lockheed Martin had a perfectly good alternative that would have meant jobs in the UK for companies like Hunting Aviation at East Midlands airport.
It was mentioned that the Boxer vehicle had been given to a German company. To be fair, it should be made clear that 60% of the value of that project will go to British companies, including BAE Systems, Thales UK and Pearson Engineering. When we place an order abroad, there is often collaboration. Indeed, the frames for the tank being built in Merthyr Tydfil are being built in Spain. Part of our negotiating strategy is to ensure UK involvement in such projects. I hope that the Committee will understand that the Boxer is not a purely German-built vehicle, but a vehicle with a high degree of UK content. Indeed, if further contracts are awarded around the world for Boxer, we could hope and expect to get a share of that.
Wayne David
The right hon. Gentleman makes an important point, but it is also significant that recently Rheinmetall has taken over a part of BAE Systems. That is an issue of concern.
Mr Goodwill
Exactly. The hon. Gentleman is absolutely right, although, in the spirit of collaboration, the new turret for the Warrior, which I think has gone to Lockheed Martin, will involve a gun from Rheinmetall. Germany has a long record of building very good guns, as we have found out to our cost at times, but it is important that we look at that collaborative approach. Indeed, many UK companies, such as BAE Systems, have interests in other factories around the European Union. That should not change following Brexit.
Stuart Andrew
I am grateful to all hon. Members who have spoken. As they will be acutely aware, delivering the deal we have negotiated with the EU remains the Government’s top priority. However, these amending regulations will provide for continuity and legal certainty in this important area in the event of no deal. It is prudent to plan to ensure that we have some certainty. The hon. Members for Caerphilly and for Glenrothes said this was bad planning. The whole point of the draft regulations is to ensure that we are prepared for every eventuality. I question whether they are massively significant, given that we have tried to replicate as much of the current regulations as possible so the industry knows where it stands and can have confidence that not too much has been changed.
The hon. Member for Caerphilly mentioned concern about the effect of UK businesses not having a legal right to bid when other EU member states procure. I am sure the Committee will be interested to know that between 2011 and 2015, UK defence exports totalled £40.2 billion and contracts from the EU to British companies under the current EU directive were €168 million. That is a significant difference, but regardless of the changes made by the draft regulations, British businesses will still be able to bid. Given the world-class industry and technology we have in this country, I am sure that many of those businesses will be successful.
The hon. Gentleman also mentioned single-source procurement. That is often done either because we need the equipment quickly or because we need the proven capability that is on offer. AWACS was mentioned. I have said on a number of occasions that the capability that is being offered works and is proven. The Australians are using it. Some of our armed forces personnel are out there at the moment learning about the equipment. The hon. Gentleman mentioned the Airbus and Saab alternative, but they have not even put it on the plane yet. We know from experience that when it comes to this sort of equipment, we can spend years and years trying to prove a capability that does not work and ends up costing us billions.
Stuart Andrew
Those planes are ready at the moment. Some of them are ready for us at the moment. They are on the production line. That will not be an issue at all. As I said, we are still going through a lot of the assessments, but the point is that the Airbus alternative has not even been proven. This is a capability that we need. I agree completely with the hon. Member for Glenrothes that we need to give our armed forces equipment that they can rely on and depend on. This is a classic example of why we have do that.
Wayne David
I hear what the Minister is saying, and he may have a case, but would it not have been far better simply to have an open procurement competition under which every competitor could set out what it had to offer and everybody could see which was best?
Stuart Andrew
It would have taken them some time to prove the capability. The point is that we do not have the time. The E-3 system is not really up to standard, and we need to replace it. That is why, as I say, we look at these situations very carefully.
I am glad that my right hon. Friend the Member for Scarborough and Whitby talked about the Boxer. It is a proven capability, and he is absolutely right that we negotiated for 60% of the supply chain to come from this country. The hon. Member for Caerphilly said that BAE Systems had been taken over by Rheinmetall. This is a joint venture; it is something we should be really pleased about.
Stuart Andrew
We are seeing investment in this country, and I am surprised that the hon. Gentleman is not welcoming the fact that jobs will be sustained in Telford, and more jobs will be created, because of this joint venture. It is disappointing that Labour Front Benchers are not welcoming this investment in the British defence industry and the jobs it will secure.
Regarding article 346, the whole point is that we have transferred the wording, because in this instance we want that continuity to take place. It also allows us to exempt the need to go into international competition, should there be a national reason why we have to keep that capability within this country. The hon. Gentleman said that we have not gone into the changes in depth, but, as I said in my opening comments, those are for future discussion. Once we have left, we want to have a look at the opportunities available to reform our defence procurement systems.
Finally, the hon. Member for Glenrothes said that the 1958 list will be transferred to the Secretary of State. It is not fair to say that the Secretary of State will not be held to account. There will be many opportunities to hold him to account, including questions in the House and Select Committee hearings, but the most important point is that any changes that the Secretary of State might suggest to the 1958 list would have to go through this House as an SI, and would therefore need the approval of both Houses. It is not fair to say that he can make such changes on a whim. I hope I have answered all of the specific questions, and clarified the implications of the amended legislation.
Question put and agreed to.
Resolved,
That the Committee has considered the draft Defence and Security Public Contracts (Amendment) (EU Exit) Regulations 2019.
Westminster Hall
(5 years, 10 months ago)
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Secondary School Opening Hours
(5 years, 10 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
Daniel Zeichner (Cambridge) (Lab)
I beg to move,
That this House has considered e-petition 229178 relating to secondary school opening hours.
It is a pleasure to serve under your chairmanship, Mrs Main. I will start by reading the petition:
“School should start at 10am as teenagers are too tired. Teenagers are so tired due to having to wake up very early to get to school. The Government should require secondary schools to start later, which will lead to increased productivity at school”.
One of the things I love about the Petitions Committee is that the petitions we receive are often direct and to the point. There is no political beating about the bush—no “on one hand” and “on the other hand”. This one goes straight to the point: teenagers are tired, so schools should start later. It has achieved huge cut-through; there has been huge public interest, which is why it is such a pleasure to open this debate.
Over the next few minutes, I plan to lay out some of the scientific evidence that backs up the petition. I will say a little about the huge number of responses, many from teenagers, parents and schools. I will report a little on the responses in my city of Cambridge, and I will say a little about the practical challenges, the wider implications and some of the possible travel benefits.
When I started writing this speech, I was tempted to conclude, in time-honoured fashion, with a politician’s reply of “yes—maybe”, because, sadly, these things are always more complicated than one might imagine, but the more I read, the more I found myself agreeing with the petitioner. Allow me to praise the initiator of the petition. It was started by Hannah Kidner, a teenager doing her A-levels at Blundell’s School in Devon. She is in the Public Gallery. This petition is a great example of people-powered democracy. It was started just three months ago and has already garnered more than 180,000 signatures, proving that there are issues other than our future relationship with the European Union that stir passions.
I will set out the legal position. I thank the Library staff for their excellent briefing, which has informed much of my speech. Academies and free schools set their own school days and term dates with their board and headteacher. Local authority maintained schools decide the length of the school day, session times and breaks, but school must open for 190 days in a school year, and the school year must start after July. That means there is scope for local decision making, rather than the Government issuing an edict. I am not fond of the academy structure, and I favour so-called free schools even less, but they all receive public money, so my guess is that a future Government could act, because they would hold the purse strings. On the other hand, it is always convenient for Governments to delegate decisions that they consider tricky. More of that later.
The question of starting times has been considered at various points in recent years. There are strong feelings on both sides of the debate. I am not an education or neurological development expert, but I am told that many studies across the world over the years, particularly in the US, have suggested that a later start time may have a positive impact on pupils. However, some reviews have found more mixed results, and some have raised concerns about the quality of evidence. In Singapore, a school found that a delayed start time had a positive impact after nine months. A study in Canada found that
“Students from schools that started later slept longer, were more likely to meet sleep recommendations and were less likely to report feeling tired in the morning.”
The authors claimed:
“The study adds weight to the mounting evidence that delaying school start time benefits adolescent sleep.”
Canadian researchers claim that letting teens start school just 10 minutes later might help them to get more than 20 minutes extra sleep on a typical night. Although that might not sound like much, for some sleep-deprived adolescents it might be enough of a difference to enable them to get the recommended minimum eight hours of sleep a night. A lead author of a study into this issue, Karen Patte of Brock University in Ontario, said:
“Our body’s circadian clock naturally shifts later at puberty, so teens get tired later at night (due to later melatonin release) and therefore, need to sleep in longer in the morning in order to get sufficient rest. Delayed (school) start times have been recommended for adolescents to align with their delayed sleep schedules.”
Generally, though, it is thought that a further exploration of the evidence is required. One study, “Delayed School Start Times and Adolescent Sleep: A Systematic Review of the Experimental Evidence,” stated that
“School start times were delayed 25 to 60 minutes, and correspondingly, total sleep time increased from 25 to 77 minutes per weeknight. Some studies revealed reduced daytime sleepiness, depression, caffeine use, tardiness to class, and trouble staying awake. Overall, the evidence supports recent non-experimental study findings and calls for policy that advocates for delayed school start time to improve sleep. This presents a potential long-term solution to chronic sleep restriction during adolescence.”
However, the study goes on to state that
“there is a need for rigorous randomized study designs and reporting of consistent outcomes, including objective sleep measures and consistent measures of health and academic performance.”
I am grateful to Harriet Sherwood, who wrote an excellent piece for The Guardian a few weeks ago highlighting some of the issues underlying this debate. She wrote:
“Sleep experts are warning of an epidemic of sleep deprivation among school-aged children, with some urging educational authorities to alter school hours to allow adolescents to stay in bed longer. Adequate sleep is the strongest factor in the wellbeing and mental health of teenagers, and a shortage is linked to poor educational results, anxiety and obesity”.
She reported that the French Education Minister recently approved a proposal to push the start of the school day back by an hour—albeit to 9 am—for students aged 15 to 18 in Paris. The article continues:
“Scientists say that humans’ circadian rhythms – the body clock that manages the cycle of sleep and wakefulness – change in adolescence. The cycle shifts two hours in teenagers which means that they are wired to go to sleep and wake up later. ‘It’s like they’re in a different time zone,’ said Dr Michael Farquhar, a consultant in paediatric sleep medicine at the Evelina children’s hospital in London.
‘We’re asking them to get up before their body clock is ready, because that’s the way the adult world works. So most teenagers end up sleep-deprived.’
Sleep is the ‘strongest predictor of wellbeing among teenagers’, said Russell Viner, professor of adolescent health at University College London and president of the Royal College of Paediatrics and Child Health.”
There are strong scientific reasons for considering change, but beyond the simple correlation between teenage brain development and sleep patterns, and the impact that may have on school results, it is important to recognise that schools are more than just exam factories. I am afraid successive Governments have needed to be reminded about that. I suspect most of us would agree that schools are key parts of communities and play a key role in family life, and that that would have to be considered as part of a proposed change to the school day.
Daniel Zeichner
I am happy to take interventions from both hon. Members, but I give way first to the hon. Gentleman.
Daniel Zeichner
Well, I am not sure I am going to go for that, but I give way to my hon. Friend the Member for Lewisham, Deptford (Vicky Foxcroft) .
Vicky Foxcroft
My hon. Friend is making a fantastic speech. Does he agree with me and the BMJ that delaying the time children finish school is a very important part of this issue? On his point about our children being safe and part of the local community, ensuring that they stay in school between 3 pm and 6 pm has been shown massively to reduce the potential for knife crime during those hours.
Daniel Zeichner
I am grateful to my hon. Friend. One of the difficulties with the proposed change is that starting later may well mean finishing later. There are pros and cons to that, which I will come to in a moment, but she makes an important point about safety.
John Howell
Has not research shown that we need to limit the amount of time people spend using screens, whether on their phones or their iPads, and that doing so can have a big effect on people’s attentiveness during class?
Daniel Zeichner
I am grateful to the hon. Gentleman for making that point. There has been good research recently suggesting that is the case, particularly with regard to the hours immediately before sleep. There is a range of issues about how we boost young people’s quality of life, and I fully admit that this is only one of them.
I am not an expert, but there are quite a few experts in Cambridge, which I represent, so I know people who are. Sensibly, I would suggest, I sought their advice. I am particularly grateful to the headteachers of Hills Road and Long Road sixth-form colleges, of Coleridge, Netherhall and Parkside secondary schools, of Cambridge Academy for Science and Technology, and more. I was struck by the alacrity and thoughtfulness of the responses that I received from all those institutions; they were really well considered and well thought through, and of course they pointed out both the advantages and the potential pitfalls of this proposal. I suspect that any Member who asked their local colleges and schools about the subject would get similarly well considered responses.
Cambridge headteachers and principals mentioned plenty of positives. The proposed change could provide opportunities for childcare relief for staff, allowing teachers more time with their children in the mornings, which in turn may improve recruitment and retention—a key issue in my area. A lot of people pointed out that starting school later could significantly reduce traffic problems, which are particularly acute in university cities such as Cambridge, and delaying the start of the school day for teenagers could make a substantial change to public transport peaks. Many of us notice the difference getting in and out of Cambridge outside term time.
However, one local headteacher told me that he thought the proposal would work only if it was
“co-ordinated across the system. That is the big issue, as with the current term structure. Because of the need to co-ordinate with primary schools on childcare, working patterns of parents by and large running 9-5, it is hard for individual institutions to step outside the norm.”
His point is well made. I agree with him about co-ordination, although I have to say that I am less convinced that everyone works nine-to-five these days. I note that better employers are introducing more family-friendly flexible working. That should be encouraged, and it could be part of the answer when it comes to staggered school start times.
Let us look at some of the downsides. Although across-the-board change may be positive from an organisational perspective, the context of the school in question is key. Another Cambridge head, who I think has experience from a previous posting, said that although starting later has worked well at Portsmouth College,
“it is very context dependent as a stand-alone solution”.
Clearly, different communities have different requirements and preferences, and any change must take that into account.
There are also questions to do with the impact on the wider community and families—many parents who do the school run on their way to work may find a later start disruptive—and at what age such a change would best suit students. Parents who allow their children to walk home alone may feel uncomfortable with the school day starting at 10 am, as it may mean children returning later in the afternoon or early evening. Clearly, some parents might not feel comfortable with their 11-year-old travelling home in the dark in winter.
Dr David Drew (Stroud) (Lab/Co-op)
My hon. Friend is making an excellent speech. We cannot exonerate the parents. For good or bad, I have two grammar schools in my constituency. Children come to Stroud’s grammar schools from the other side of Swindon. That means there are 11-year-olds who have to get up at 5 o’clock in the morning. We can talk about putting the start of the school day back to 10 am, but at the moment, the days of some 11-year-olds start at 5 am and do not end until at least 9 pm, by the time they have finished their homework. That cannot be good for children. We need to look at what makes a school accessible, rather than letting the free market go mad and letting parents make the choice.
Daniel Zeichner
Many of us continue to argue for a good local school in every area. Parental choice sometimes leads to difficult journeys for children, as my hon. Friend explained. That may be the choice people make, but the impact on children may not be as positive as one might wish.
The proposed change would affect not just children and parents but teachers, many of whom already work very long hours. They may prefer school to finish earlier, because they have more to do when the school day finishes. Of course, the change may cause complications for families with children at both primary and secondary school. It may also impact after-school extracurricular activities, particularly in winter, when inter-school sports games may be affected by darkness. Of course, other voluntary sessions happen after school, including exam revision, music classes and community outreach. There is a range of potential pitfalls.
As I mentioned, others in the world do things differently. There have been changes to school start times in other countries. In fact, some of our European neighbours start their days even earlier; some schools run from 7 am until 1 pm. Of course, that depends to some extent on the local climate, but that all shows that this is a very complicated range of issues.
That complexity is not always understood by everyone. Some people have characterised this debate as somehow being about lazy teenagers. Today I was on BBC Radio Cambridgeshire’s excellent morning programme with Thordis Fridriksson. I am told that many people who contacted the show had little sympathy for what they described as “sleepy teenagers”, and thought that getting up on time was good practice for the world of work. That is pretty unsympathetic. People of my generation and older should try to remember what it was like for us when we were teenagers. I am afraid that similar grouchiness can be found in some of our national media, which may be dominated by grumpy old men from a certain background—but maybe I am stereotyping, too.
Having said that, some teachers have questioned whether we would risk undermining the work ethic by accommodating difference. One teacher told me she was concerned, and questioned whether, if young people started later at school, we would not be training them to be up and ready for a job, which would often start earlier. I am not that sympathetic to that view; better employers are generally more open to flexible working. However, I recognise that there are jobs that have to be done at particular times, and many of us have been frustrated by colleagues who struggle to get to work on time, Mrs Main—and not always teenagers. There are always extenuating circumstances.
Moving on to the more detailed practicalities, evidence shows that the term “teenagers” does not do justice to the complexity of the issue. What works for older teenagers may not be so beneficial to younger people. A local headteacher pointed out to me that although there is some
“evidence that for 14-18-year-olds a later start to school is beneficial…the same is not true for 11-13-year-olds. This introduces a bit of a dilemma as meeting the needs of all would mean extending school hours and so adding costs. Given that we are currently unable to meet our costs due to inadequate funding”—
a point I think she particularly wanted me to relay to the Minister—
“any move in this direction would be impossible to deliver with our existing resources.”
This is a key point, particularly for state schools. I suspect that the proper funding of education is the main issue for almost every state school, so questions about the timing of the school day come lower on their list of priorities. Although this debate is not party political, I highlight the difference that sufficient funding would make to schools. It would give them the ability to experiment and to find what suits them, which would arguably lead to the best outcome for this debate.
I conclude by saying a little about the public response; as I said, there has been huge interest. The Petitions Committee Clerks have engaged with the public on this matter, and they have done an excellent job. Last week, they surveyed nearly 5,000 people, some 92% of whom identified themselves as secondary school students, and who were much more enthusiastic about change. The key themes that emerged touched on the academic research that I have mentioned, the effects on family life and transport, the potential mental health benefits, the potential challenges for teachers, and the effect on those with illnesses and disabilities. The Clerks of the Committee told me that the story about this petition was the most engaged-with post ever on Parliament’s Instagram account. When the survey closed, it had had over 5,000 responses in under 48 hours. Clearly, this is an idea that has captured both hearts and minds.
I will read one of the contributions from a parent, which puts the point very well:
“I have five teenage children and it is an absolute nightmare getting them all ready for a 9am start every day. In order to start school at 9am they have to leave the house at 8am and therefore get up at 6.30am.”
That echoes the point made by my hon. Friend the Member for Stroud (Dr Drew). She carries on:
“I would defy anyone to try and get 5 teenagers out of bed every day at 6.30am and not feel, as I do, that this is far too early!...Having to wake 5 teens at 6.30am each day is like trying to raise the dead. I can see that it’s not that they don’t want to get up—they enjoy and look forward to school—but they genuinely can’t get up. Being forced to wake up before they are ready has a massive impact on their health and well-being, which suffers hugely, and moreover so does mine! The school morning is without question the most stressful time of the day for children and parents.”
I have some sympathy for that account, and I am sure others will recognise the situation.
As for the quantitative response to the questions in the survey, the figures are pretty stunning. One of the questions was:
“How often do you feel drowsy or sleepy during the day?”
That is not a question for MPs, Mrs Main, but a question for teenagers. More than 85% of teenagers said that they often or always felt drowsy or sleepy during the day. That is a message that we should take seriously. The next question was:
“How often have you been bothered by trouble falling or staying asleep, or sleeping too much?”
Some 60% were often or always troubled by sleepiness. There is something going on out there that we clearly need to pay attention to.
I hope that I have been able to lay out just some of the arguments made for and against teenagers starting the school day later, and to show that although some might swiftly dismiss such a suggestion, when you look into matters more deeply, they are never as simple as they seem. My conclusion would be that schools and colleges must make their own decisions, but within a co-ordinated and organised local framework, and with sufficient funding to make it possible. We are a long way from having either of those, but we are a rich country, and it does not have to be this way; it is a matter of political choice.
The time may soon come when these issues should be addressed by a radical and reforming Government. We are living through a world of dramatic technological change; knowledge is more universally available than ever before, through every smart phone. Within a couple of decades, the context has changed beyond recognition, yet our organisational structures for learning remain very much as they were half a century ago. As we learn more about ourselves—how we learn, and how we are different at different stages of our lives—why not reform our structures to meet our needs? Why always say that is too difficult? When hundreds of thousands of young people are telling us that they want change, perhaps it is time to create a system that works for them, instead of telling them why it cannot be done.
John Howell (Henley) (Con)
It is a pleasure to serve under your chairmanship, Mrs Main, and it is a great pleasure to follow the hon. Member for Cambridge (Daniel Zeichner). I will say straightaway that there is a kernel of truth in what he has said, but more research needs to be done on the subject. That is the bottom line of what I am going to say, so I could stop there, but I want to talk about a couple of things. Before he left this place, I remember George Osborne saying what a fine profession we are in when 9.30 is considered to be early. I think that illustrates the point that the issue should be examined in more detail.
When I saw the debate title, I was initially sceptical. I, too, thought it would be about giving teenagers more time to stay in bed for longer and, therefore, to stay up later. However, the scientific evidence, as mentioned by the hon. Gentleman, provides a different perspective. As I said in my intervention, we need to look closely at the amount of screen time used by teenagers during the day, but also, in particular, just before he or she goes to bed at night. Parents have a large part to play in dealing with that important element.
The results of my inquiries suggest that we should take a broader look at the issues. I started by looking at research undertaken in the United States, which is a different country, with different traditions, and where classes have traditionally started much earlier than ours. It is not unusual for them to start before 8 o’clock in the morning—so there is a lot that can be done. One study in the US replaced the self-reported information with information obtained from wrist-worn monitors. The importance of that is that, as the hon. Gentleman has said, many people, when asked how often they feel tired, will say “I feel tired quite a lot,” but I think that wearing wrist monitors, which monitor the amount of sleep they get and when they begin to drop off, is a better approach to the problem.
A school in Seattle delayed its start time from 7.50 to 8.45, which is quite a big change. However, the difficulty is that it resulted in 34 minutes of additional sleep time for the teenagers—that is all. I have to ask: is that significant? One of the other results was that students were late on two fewer school days and had two fewer absences, which is not, I would argue, a large or significant result from the study. Nevertheless, it indicates a possible solution, which is to do more research. Another factor is that the approach in question appears to reduce the number of car accidents and, given that teenagers are at higher risk of having car accidents, that is significant. There are important societal issues at stake, besides just how much time teenagers can sleep.
The hon. Gentleman suggested a potential course of action, particularly for academies and free schools, which are free to do as they wish on the issue. There should be local action, if people think that is the right way to go, but I suspect that that is not what the hon. Gentleman or I want, because there is a difficulty. One school might move its start time to 9.30 and another might keep it the same. There would then be big knock-on effects on such things as childminding, as he explained. More attention needs to be paid to those considerations. The county councils, of course, have responsibility for decisions for maintained schools, and I suspect that they will not be as willing as academies and free schools to study the research.
As an aside, when I was a sixth former, there were completely different regimes for the sixth form and the rest of the school. Sixth formers came in for their particular classes, rather than spending all day at school. That flexibility in the system was a good thing to encourage. If I may say so, given that I am here participating in this debate, it certainly did me no harm. More research along those lines would be useful and I would welcome it.
Martyn Day (Linlithgow and East Falkirk) (SNP)
It is a pleasure to serve under your chairmanship, Mrs Main. I suspect the irony of our debating this issue, when we start the working week in Parliament at 2.30 on a Monday, has probably not been lost on anyone, and it may have been emphasised by our slightly later-than-scheduled start time—but I am sure that that will just add humour to the debate.
When I first saw the title of the petition I wondered whether it was serious, and the hon. Member for Henley (John Howell) also mentioned such scepticism. I was fascinated when I read the research publications and saw that there are serious, positive ideas on the subject. I am grateful to the hon. Member for Cambridge (Daniel Zeichner), whose opening speech went through much of that research in an even, balanced manner. The remark that he quoted about the possibility of teenagers being in a different time zone will have struck a chord with all of us. When my stepson comes to visit, it often feels like that. Perhaps now I shall have a greater understanding of the body clock mechanisms of the young.
The petition received 431 signatures from my constituency, which makes it the second most popular in my area. It is second only to the petition on fireworks. To recap quickly the position in Scotland, the Schools General (Scotland) Regulations 1975, as amended, require schools under education authority management in Scotland to be open for 190 days a year. However, they do not define the length of the school week for pupils, which is a matter for the discretion of education authorities, within their responsibility for the day-to-day organisation of the schools. There is a widely accepted norm of 25 hours and 27.5 hours for primary and secondary schools respectively, and school holiday dates are also, of course, set by the local authorities.
The primary focus in any discussion of schools must be on the quality of the education provided, which is why the Scottish Government continue to invest so heavily in education. Schools spending has risen under the Scottish National party since 2006. The average spend per pupil has increased by almost 13%. Scottish spending per pupil was £4,968 in primary schools, and £7,046 in secondary schools in 2016-17. That is an increase in cash terms of at least 12.8% for the primary sector and 13.1% for the secondary sector. Education budgets are rising—
Mrs Anne Main (in the Chair)
Order. I have indulged the hon. Gentleman somewhat in his listing of the amounts of money being spent on Scottish education, but the debate is about secondary school opening hours, so I hope he will get on to that now.
Martyn Day
No problem. I make the point that it is part of the wider education package, and the timing issue is obviously important.
Having briefly discussed the budgets, I will move on to ask: what about the proposals in the petition? There is, of course, nothing to stop schools in Scotland adopting the hours they want, although there might be a requirement for staff contracts, school transport contracts and various other things to be changed if those changes to hours were introduced. However, that is not a reason not to introduce them.
There is interesting research behind the petition. Open University research found that teenagers aged 13 to 16 who started their day at 10 am had improved health, with 50% less absence. That is a key factor that might suggest it is worth looking at other contracts and times. On the other hand, research by the University of Surrey and Harvard Medical School suggests that turning down the lights in the evening would be more effective. Using a mathematical model, the research shows that when clocks changed in the autumn most teenagers’ body clocks would drift even later in response to later start times and, in a matter of weeks, they would find it just as hard to get out of bed. Clearly, reputable research exists pointing in different directions. I would probably reach much the same conclusion as the hon. Member for Henley—that we need a bit more research. We certainly need to keep looking at the issue.
That brings me to what is perhaps the crux of the argument—whether the real debate is about more sleep versus better sleep. Some studies suggest that longer sleep is associated with academic performance. Better sleep is connected to overall cognitive processing. Clearly, a balance needs to be achieved, and we would all benefit from seeing more research.
The point I was making earlier in discussing budgets and other aspects of education was that the quality of the education provided is fundamental, and must be the key to the issue. It is a question of what satisfies that criterion. If school hours have an effect, we should be willing to look at them. I am keen to see more research. If I had seen only the title of the petition I might have laughed it off, but actually there is a lot of substantive work behind it, and we all need to look at that and see what we can learn from it.
Mike Kane (Wythenshawe and Sale East) (Lab)
It is a pleasure to serve under your chairmanship, Mrs Main. I congratulate my hon. Friend the Member for Cambridge (Daniel Zeichner) on moving the petition so eloquently on behalf of the Petitions Committee, and Hannah Kidner on coming up with the idea for a petition that has attracted so much support in such a short space of time. She can be very proud indeed that she has made Parliament act on her idea; I will go into why I think it was so popular.
On first reading the title of the petition, that school should start at 10 am as teenagers are too tired, many people will have dismissed the idea—hon. Members have made that case—but there is a growing body of opinion that starting the school day later would be better for teenagers, both in terms of their physical and mental health, which I will come on to, and in relation to their academic performance.
When I researched this debate, I found a 2017 study by Dr Paul Kelley of the Open University. It was conducted at an English secondary school that showed that delaying school start times for teenagers can have major benefits, including better academic performance and improved mental and physical health. The study found that rates of illness decreased by more than half over a two-year period and students in their mid-teens got significantly better grades when they started school at 10 am instead of the usual 8.30 am.
As has been pointed out by several hon. Members, however, children across the world are sleeping less. Here in the UK, the national health service is seeing more serious problems than before, with hospital attendances for children under 14 with sleep disorders tripling in the past 10 years. British schoolchildren are the sixth most sleep-deprived in the world, with American children topping the rankings. There are likely to be a number of sources for that problem, as the hon. Member for Henley (John Howell) pointed out, with mobile phone and tablet use featuring high on the list. More than 80% of children in the UK now have their own phone by the age of 12, while 58% have their own tablet by the age of 10, and two thirds of teenagers say they use those devices in the hour before they go to bed. As it happens, it is one of my personal rules not to do that.
Let us face it: we have all become slaves to these devices, and parents must be role models and set an example in that area. Indeed, the Minister has made the issue the focus of his attention in recent weeks, suggesting that our schools should ban mobile phones altogether. I think that suggestion got rather more attention than he ever thought it might when he made it.
I think the reason why so many young people signed this petition is that they see mental health going up their agenda. The hon. Member for Linlithgow and East Falkirk (Martyn Day) mentioned that we in Parliament start our day at 2.30 pm on a Monday, but my day started at 9 o’clock with a visit to a company in my constituency called Endress+Hauser, a major manufacturer of pressurised equipment across the continent. Its representatives told me about their workplace practices, changing times to improve people’s mental health and having full staff sessions on anxiety and their mental health and wellbeing. It is a rising agenda.
We know that the number of young people attending accident and emergency departments for a psychiatric condition more than doubled between 2010 and 2015; I think that is particularly what young people are worried about. Just 8% of the mental health budget is spent on children, despite their representing 20% of the population. Any MP with a constituency case load will have more and more parents coming to see them about special educational needs and trying to get that provision through local authorities, their multi-academy trusts and child and adolescent mental health services provision. Referrals to CAMHS increased by 64% between 2012-13 and 2014-15, but more than one quarter of children and young people referred were not allocated a service.
What is hampering schools in making a change? Today in Tes, the Government were criticised for school budget cuts that lead to less innovation in our schools, particularly relating to education technology. The Minister and I are no strangers to that. In the current climate, it is difficult for schools to make such changes, even innovative changes to the school day, when £1.7 billion in real terms has been taken out of the school system since 2015. As my hon. Friend the Member for Cambridge said, every state school is facing a crisis.
Our schools need the Government to take an honest approach to the issue. We must act now and give our children and teenagers the knowledge and confidence to take charge of their own mental health and wellbeing. The current system gives schools the autonomy to organise the school day in a way that best suits their pupils, in conjunction with the wider community. If schools want to change their times, and do so effectively, they must work through a framework and a form of subsidiarity in their local authority area or more widely. If certain countries that make up the United Kingdom—or conurbations such as Greater Manchester or Merseyside, which have their own mayoral systems—consider doing so, I do not think that any of us would be averse to that. They should come back with ideas.
The subject of the petition merits proper consideration by the Department for Education, particularly the underlying challenges faced by teenagers and the ability of our schools and teachers to support them while facing sustained budget cuts and increasing workloads. I congratulate my hon. Friend again on his considered introduction of the petition, and Hannah Kidner on bringing it to Parliament and gaining so many signatures in such a short space of time.
The Minister for School Standards (Nick Gibb)
It is a pleasure to serve under your chairmanship, Mrs Main. I congratulate the hon. Member for Cambridge (Daniel Zeichner) on the way he introduced the debate. We can all agree that every child’s experience at school should be a happy one. The Government want them to do well at school and be alert and receptive to what is taught. Clearly, ensuring that teenagers are refreshed and ready to work when they arrive at school is hugely important.
The e-petition states, bluntly, as the hon. Gentleman said:
“School should start at 10am as teenagers are too tired”.
I share the views of my hon. Friend the Member for Henley (John Howell) and the hon. Member for Linlithgow and East Falkirk (Martyn Day) that there is insufficient evidence at present to suggest that allowing teenagers to start school at 10 am across the board would necessarily be beneficial. A timely start to the school day in secondary school helps prepare pupils to enter the world of work after they leave school. Workplaces expect their employees to start and finish work at a set time and to demonstrate the value of hard work and application.
As the hon. Member for Cambridge acknowledged, delaying the start of the school day for teenagers might also cause difficulties for working parents, for example those with younger children at primary school, if start times were different from those for siblings at secondary school and finishing times were correspondingly different. That would present problems for working families, particularly those where both spouses are working.
The Government have high ambitions for all pupils, and we want to encourage and support greater social mobility. We want to ensure that pupils have excellent opportunities to thrive and to excel. There is broad, though not universal, agreement that teenagers generally need more sleep than they currently get, and while some results have shown a benefit from a later start to school, particularly in the United States, where schools typically start significantly earlier than in the United Kingdom, the effects of delaying school start times are as yet unproven here.
The hon. Member for Linlithgow and East Falkirk cited research conducted by the University of Surrey and Harvard Medical School in 2017, which found that delaying school start times is unlikely to reduce sleep deprivation in teenagers. The research predicts that turning down the lights in the evening would be much more effective at tackling sleep deprivation. The research went on to say:
“The mathematical model showed that delaying school start times in the UK would not help reduce sleep deprivation. Just as when clocks go back in the autumn, most teenagers’ body clocks would drift even later in response to the later start time, and in a matter of weeks they would find it just as hard to get out of bed. The results did, however, lend some support to delaying school start in the US, where many schools start as early as 7am.”
It continued:
“The mathematical model shows that the problem for adolescents is that their light consumption behaviour interferes with the natural interaction with the environmental clock—getting up late in the morning results in adolescents keeping the lights on until later at night. Having the lights on late delays the biological clock, making it even harder to get up in the morning. The mathematics also suggests that the biological clocks of adolescents are particularly sensitive to the effects of light consumption.”
Finally, it said:
“The model suggests that an alternative remedy to moving school start times in the UK is exposure to bright light during the day, turning the lights down in the evening and off at night.”
A further study, the Teensleep Project, looks at adolescent sleeping patterns and the impact of sleep education on teenage students. Professor Foster from the project says:
“Our pilot study showed that about 25% of teenagers had clinically poor sleep—can we justify late starts when it might only benefit 25% of students? Instead, we must introduce sleep education with parents, teachers and students. We are not ruling out a later school start, but we need a good set of data to show this is having a huge impact on adolescents. Unless later starts are combined with sleep education, it may actually worsen the issue”.
That conclusion tallies very much with what my hon. Friend the Member for Henley and the hon. Member for Linlithgow and East Falkirk said.
The Government welcome the chief medical officer’s report into screen time, which was published on 7 February and includes advice on managing screen time and social media use in a sensible and effective way. The report is clear that scientific research is currently insufficiently conclusive to support the chief medical officer’s evidence-based guidelines on optimal amounts of screen use or online activities, such as social media use. However, the report provides advice for parents and carers based on child development research. It includes leaving phones outside the bedroom at night time or taking screen-free meal times, which I am sure that the shadow Minister also does.
We recently consulted on the draft regulations and guidance for relationships education, relationships and sex education and health education. The guidance sets out the content for the subjects, including health and prevention. It says that pupils should know the importance of sufficient, good-quality sleep in promoting good health, and that a lack of sleep can affect their weight, mood and ability to learn. It also sets out that teachers should make sure that pupils are aware of the benefits of physical activity and time spent outdoors, which should be linked to information on the benefits of sufficient sleep and good nutrition.
Good mental health is a priority for the Department and for the Government. It can have a profound impact on the whole of a child’s life, not just their attainment. Schools and colleges have an important role to play in supporting the mental health and wellbeing of children and young people by putting in place whole-school approaches tailored to the particular needs of their pupils and students.
The decision on when to start the school day lies with individual schools, as was pointed out by the hon. Member for Cambridge. All schools have the flexibility to decide when their school day should start and finish. Most schools start their days at 9 am or earlier. That is not to say that a later start time can never work, and some schools have decided to begin their school day later. Monkseaton High School in North Tyneside trialled a 10 am start, but has since reverted to 8.55 am.
In 2011, we revoked the regulations prescribing the procedure for changing school opening times. Since then, maintained schools and academies have had the autonomy to change their own school opening times. The Education (School Day and School Year) (England) Regulations 1999 require all maintained schools to be open to educate their pupils for at least 380 sessions—190 days—in each school year, with every school day consisting of two sessions separated by a break in the middle of the day. Academies and free schools are not bound by these regulations, but their funding agreements state that the duration of the school day is the responsibility of the trust.
There are no specific legal requirements for how long the school day should be. Governing bodies of maintained schools are responsible for deciding when sessions should begin and end on each school day, the length of each lesson and the timings for the morning sessions, the midday break and afternoon sessions. The governing body has the power to revise the length of the school day as it sees fit. Schools are also responsible for setting the timetable for their school day, and so could, for example, schedule more intellectually challenging subjects later in the day if they decide that that is when their students are more receptive to being taught.
Schools also have the autonomy to extend the length of the school day or offer provision after the end of the school day if they believe that it would be beneficial to their students. Extending the school day, or offering extra education activities around the school day, can help children—particularly from the most disadvantaged backgrounds—to improve attainment and social skills, raise aspiration and help parents with childcare.
We expect schools changing the length of their school day to act reasonably when making those decisions, including by consulting parents, giving parents notice and considering the impact on pupils and teachers, and on parents’ work commitments and childcare options. They should also consider the impact of reducing students’ time in school. Our evidence shows that every extra day of school missed can affect a pupil’s chances of achieving good GCSEs, which has a lasting effect.
I am grateful to the hon. Member for Cambridge for highlighting this issue. The Government cannot, and should not, insist that schools delay the start time of the day. Schools already have the power to do so themselves, if they feel that it would be in the best interests of their pupils. That is a key point: schools know what is in the best interests of their pupils. They are best placed to make a decision on whether to change the content, structure and duration of their school day to get the best outcomes for their pupils, and they know the individual circumstances of their pupils and of the local area.
We would not want to take away the freedom of any school by requiring them to start the school day at a set time, especially when evidence on delaying school start times in the United Kingdom is, at best, inconclusive.
Vicky Foxcroft
I have listened intently to the Minister’s speech, and he is absolutely right about the lack of evidence on delaying start and finish times. However, I mentioned the BMJ research on young people and their likelihood of being stabbed or facing violence, and the lack of evidence around that. Will the Minister commit to getting more research on delaying start and finishing times, to make sure that our kids are kept safe?
Nick Gibb
I am interested in the staggered end times of schools, as mentioned in the BMJ research that the hon. Lady cited. That feeds into schools’ autonomy to decide when to start and finish. We trust headteachers to make those decisions, which will be based very much on local circumstances, including when other schools in the area finish for the day and so on. We are always open to more research being conducted on these issues. We certainly want to make sure that children are safe when they leave school and walk home in the evenings.
The focus should be on ensuring that children and young people understand the importance of sleep and how best to get sufficient sleep at night, to enable them to achieve their best.
Daniel Zeichner
I am grateful to all Members for their contributions, a consistent feature of which was the call for more evidence. I sometimes think that people call for more evidence when they do not necessarily like what they hear from the evidence already there. It seems to me that the strength of feeling of young people in this country, demonstrated through the petition that was so admirably put forward, bears some thinking about. I actually think that there is plenty of evidence—particularly the Open University study—that shows a real potential educational gain here, and some schools and colleges might want to seize that opportunity.
I am always mindful of the level at which these decisions are taken. I remember in the early days of the Labour Government after the 1997 general election, when there were discussions on banning smoking in public places. Tony Blair came to a Labour event and said that it might be left to local councils to decide, because he was a bit nervous about taking that decision. We said, “This needs leadership,” and in the end he did it and no one thinks it controversial now. I would say that the evidence shows that it is very hard for local schools and colleges to take the decision that we debating today on their own. It needs some leadership, and I am hopeful that at some future point we will have a Government who have the courage to listen to our teenagers, act on what they are telling us and find the evidence to back it up.
Question put and agreed to.
Resolved,
That this House has considered e-petition 229178 relating to secondary school opening hours.
Written Statements
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Competitiveness Pre-Council Statement
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The Minister for Universities, Science, Research and Innovation (Chris Skidmore)
My noble Friend the Parliamentary Under-Secretary for State for the Department of Business, Energy and Industrial Strategy (Lord Henley) has made the following statement:
The Internal Market and Industry Day of the Competitiveness Council will take place on 18 February 2019 where the right hon. Lord Henley, Parliamentary Under-Secretary of State, will represent the UK; and the Research and Space Day on 19 February 2019 where Chris Skidmore MP, Minister of State for Universities, Science, Research and Innovation, will represent the UK.
Day one—internal market and industry
The internal market and industry day will consider a number of non-legislative items including, a competitiveness check-up focusing on the impact of EU value chain integration on competitiveness. Ministers will be asked to exchange views on the impact of artificial intelligence on EU industry and to adopt conclusions on the EU’s co-ordinated plan on artificial intelligence.
They will take part in a policy debate on ‘Clean Planet for all’, the EU’s strategic long-term vison for a climate-neutral economy. The non-legislative part of the agenda will finish with a European semester policy debate on how to deliver key reforms to make the European economy more competitive and resilient in the face of global uncertainty.
Under any other business, there will be updates on the following current legislative proposals: the company law package including a directive on digital tools and processes and a directive on the cross-border conversions, mergers and divisions; the regulation on enforcement of union harmonisation legislation on products; and the regulation on promoting fairness and transparency for business users of online intermediation services.
Day two—research and space
The research and space day will begin with a session on the Horizon Europe package during which the Council will review the progress report and exchange views on the specific programme implementing Horizon Europe—framework programme for research and innovation for 2021- 2027.
Under any other business, the presidency will provide information on the state of play of the Horizon Europe package, covering the framework programme and its rules for participation and dissemination. The presidency will then conclude the Council by providing information on the ITER and Euratom programmes.
[HCWS1320]
Informal Foreign Affairs Council
(5 years, 10 months ago)
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The Minister for Europe and the Americas (Sir Alan Duncan)
My right hon. Friend the Secretary of State for Foreign and Commonwealth Affairs attended the Informal Foreign Affairs Council (Gymnich) on 31 January and 1 February. It was chaired by the High Representative and Vice President of the European Union (EU) for Foreign Affairs and Security Policy (HRVP), Federica Mogherini. The meeting was held in Bucharest, Romania.
Eastern Partnership
The discussion of the Eastern Partnership confirmed the importance of the partnership and how much it had achieved in the last 10 years with a need to keep focusing on anti-corruption, rule of law, freedom of movement and values; with cyber, stratcomms, energy security, P2P, CSDP and connectivity all cited as newer areas for future attention.
Venezuela
Foreign Ministers expressed concern about the situation in Venezuela, and agreed the importance of holding elections. Foreign Ministers recalled their Council conclusions in May 2018, which stated that the elections were neither free nor fair, and reiterated the need for free and transparent elections respecting the constitutional rules of Venezuela. The HRVP announced the formation of an International Contact Group for Venezuela, with the first meeting due to take place on 7 February in Montevideo.
China
Foreign Ministers had a broad discussion about China’s growing role in the world including EU—China co-operation on the JCPoA and climate change. There was agreement that the EU’s 2016 China strategy remained relevant and calls for greater EU unity on shared areas of interest. Foreign Ministers also held a discussion on China with candidate countries (Albania, Macedonia, Montenegro, Serbia, Turkey).
[HCWS1318]
Mental Capacity (Amendment) Bill: EVEL
(5 years, 10 months ago)
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The Minister for Care (Caroline Dinenage)
I am today placing in the Library of the House the Department’s analysis on the application of Standing Order 83L in respect of the Government amendments tabled for Commons Report stage for the Mental Capacity (Amendment) Bill.
[HCWS1317]
Integrated Communities
(5 years, 10 months ago)
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The Secretary of State for Housing, Communities and Local Government (James Brokenshire)
Britain is a great place to live and is made stronger by its diversity. However, the benefits and opportunities of our society are not felt equally by everyone. No community should feel excluded, and everyone should understand and embrace the benefits and opportunities of living in modem Britain.
In March 2018, the Government launched a consultation on the Integrated Communities Strategy Green Paper to obtain the views of the public and organisations on its ambitious goal to build integrated communities where people—whatever their background—can live, work, learn and socialise together based on shared rights, responsibilities and opportunities. The consultation ran for 12 weeks in total and closed on 5 June 2018.
I am today publishing the Government’s response to this consultation. The consultation process considered the Government’s proposed actions as laid out in the Integrated Communities Strategy Green Paper and presented a number of questions about the Government’s strategy for consultation. There were over 3,400 responses to the consultation, reflecting the high level of interest in building integrated communities. A breakdown of the responses to each of these questions can be found in the Government’s response.
The Government have taken the views expressed in the consultation into account when developing our next steps. These are set out in the integrated communities action plan I am also publishing today. This outlines more than 70 actions across Government to help create strong and integrated communities. This action plan will build the capacity of our leaders, strengthen our communities, boost English language proficiency, and give people the infrastructure they need to thrive. The views of communities will continue to be an important factor when implementing these actions.
The action plan sets out a framework of national priority actions to promote integration and adopts a localised approach. As the Secretary of State for Communities, one of my priorities is to help build thriving, liveable and resilient places where people get along—from our high streets to our community spaces.
I am placing a copy of both documents in the Library of the House.
[HCWS1321]
Private Pensions Update
(5 years, 10 months ago)
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The Secretary of State for Work and Pensions (Amber Rudd)
I am pleased to announce today, two important steps to ensure millions of people have greater security in retirement.
A stronger pensions regulator
Today, the Government have published their response to the consultation “Protecting Defined Benefit Pension Schemes—A Stronger Pensions Regulator”. This outlined their approach, as set out in the 2018 White Paper, to strengthen, clarify and streamline the defined benefit pension system.
The Government will introduce two new criminal offences to prevent and penalise mismanagement of pension schemes.
The first will target individuals who wilfully or recklessly mishandle pension schemes, endangering workers’ pensions, by such things as chronic mismanagement of a business; or allowing huge unsustainable deficits to build up; or taking huge investment risks; or a combination thereof. We will introduce a new custodial sentence of up to seven years’ imprisonment or an unlimited fine for this offence. This brings the punishment in line with similar offences in financial services.
The second, which will attract an unlimited fine, will target individuals who fail to comply with a contribution notice, which is issued by the Pensions Regulator requiring a specified amount of money to be paid into the pension scheme by that individual. We will also introduce a new civil penalty of up to £1 million for this offence.
We have also provided an update on measures to strengthen the Regulator’s information-gathering powers, such as enhancing their interview and inspection powers previously announced in the White Paper.
The changes will build on the robust system that is already in place to protect defined benefit pension schemes, further protecting individuals’ pensions and ensure greater clarity for employers.
The Government’s full response to the consultation is available here:
https://www.gov.uk/government/consultations/protecting-defined-benefit-pension-schemes-a-stronger-pensions-regulator
Ten million workers automatically enrolled into pensions
Today we announce the milestone of 10 million workers having been automatically enrolled into a workplace pension.
Automatic enrolment is transforming the savings culture of this country by normalising workplace pension saving. It is enabling millions of workers to look forward to a more secure future and a better retirement.
Between 2012 and 2017, the proportion of eligible employees saving in a workplace pension rose from 55% to 84%. The private sector has seen the largest increases over this period, with participation rates almost equalising among eligible men and women in 2017. The increase has also been particularly marked among younger workers and those with low earnings. Among eligible employees aged 22 to 29 years, participation increased from 35% to 79%; and 76% of people earning £10,000 to £20,000 thousand are now saving, a rise of 42 percentage points since 2012.
Employers’ support is key to the success of automatic enrolment. In the last two years, thousands of small and micro employers have enrolled eligible workers into a pension for the first time. Automatic enrolment is now business as usual.
In addition, we brought in the first of the planned increases in minimum contribution rates, in April 2018, raising the overall minimum contribution level to 5%. From April 2019, the second planned increase, to a minimum 8%, will enable many workers to save even more.
The Government are committed to building on the 10 million milestone to support more workers, no matter what job, to save for a better retirement.
[HCWS1319]
House of Lords
China: Uighur Muslims
(5 years, 10 months ago)
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Lord Ahmed
To ask Her Majesty’s Government what assessment they have made of the allegations of human rights abuses committed against the Uighur Muslim community in the Western Province of China.
The Minister of State, Foreign and Commonwealth Office (Lord Ahmad of Wimbledon) (Con)
My Lords, we remain seriously concerned about the human rights situation in Xinjiang, including the use of political re-education camps and widespread surveillance and restrictions targeted at Uighur Muslims and indeed other minority groups. Our diplomats recently visited Xinjiang. We believe strongly that everyone everywhere should enjoy equal rights and protections under the law. That is why we are promoting and defending human rights, including the right to freedom of religion or belief, which is a fundamental part of the UK’s foreign policy.
Lord Ahmed (Non-Afl)
I thank the Minister for his reply. As he has already confirmed, according to media and social media reports, concentration camps, mass surveillance, forced disappearances, torture and the banning of religious practices are all happening there. Will the Minister join me in condemning these gross violations of human rights by the Chinese authorities, and will he demand the closure of these concentration camps and access for UN representatives to confirm that the detainees have been released and the camps have been closed down?
Lord Ahmad of Wimbledon
The noble Lord rightly raises important issues and concerns. Reports have also indicated that even basic expressions of religious symbolism, such as the growing of a beard or the wearing of a headscarf, are used as indicators to target particular communities. I assure the noble Lord that we are working on this, including with the UN, which he mentioned. We have clearly asked the Chinese authorities to implement the full recommendations of the UN Committee on the Elimination of Racial Discrimination, and we have reminded them both bilaterally—as the Foreign Secretary did last year in his meeting with the Chinese Foreign Minister—and in the Human Rights Council that our concerns about the camps and the reports from our diplomats in Beijing require action. On human rights more generally, I assure the noble Lord that I am specifically looking at the next meeting of the Human Rights Council in March to see how we can not just lobby on this issue but build stronger alliances.
Lord Dholakia (LD)
My Lords, the noble Lord is right to raise his concerns about the abuse of human rights of the Uighur community in Xinjiang province. Today, Turkey has made a formal protest to the United Nations, asking it to investigate what is going on in that part of the world. Have we made formal representations to the United Nations, and have we warned the International Criminal Court to keep an eye on what is happening in some of these camps?
Lord Ahmad of Wimbledon
My Lords, as I said, the United Kingdom has taken a very serious stance on this issue. I mentioned the Human Rights Council. At the latest UPR last November, we raised not the general issue of human rights but specifically the plight of the Uighurs and the detention camps. I assure the noble Lord that we will consider all avenues at our disposal to raise these issues bilaterally with China and through building international alliances. It is because of the strength of our relationship with China, which is an important one, that we can raise these issues in a candid manner.
Baroness Berridge (Con)
My Lords, there have been consistent reports from within these re-education camps that Uighur Muslims were forced to give DNA tissue and blood, and consistent allegations that Falun Gong followers have been subject to forced organ harvesting. Have we spoken to the Chinese about our worries about those tests and their purpose, and whether they are in any way connected to the recent worrying reports of rogue gene editing in China?
Lord Ahmad of Wimbledon
My noble friend makes some important points. On organ harvesting, I am fully cognisant of the issue of Falun Gong, which I know the noble Lord, Lord Alton, has raised several times. As my noble friend may be aware, Sir Geoffrey Nice conducted a report on this matter, the preliminary findings of which have been made available; the final report is still due. Foreign Office officials attended the launch of the preliminary report and will attend the follow-up meeting. On the other issues she raises, let me assure her that in all our interactions with the Chinese Administration, we have made it very clear that their actions are disproportionate, discriminatory against particular communities and, indeed, counter- productive in the longer term for China as it seeks to establish its position on the world stage. I assure my noble friend that we will continue to raise these issues through all avenues.
Lord Alton of Liverpool (CB)
My Lords, in the aftermath of the death in detention of the Uighur poet and musician, Abdurehim Heyit, how does the Minister respond to the Turkish Foreign Ministry—referred to by the noble Lord, Lord Dholakia—calling on China to close the camps, alleging, in its words, “torture and brainwashing” and calling them “a shame on humanity”? Can we expect to see the United Kingdom Government not only press again the human rights point with the Security Council but raise with China the danger to its whole belt and road initiative, which is in jeopardy if many countries with large Muslim populations decide to follow Turkey’s lead and start imposing sanctions, preventing the development of those capital projects?
Lord Ahmad of Wimbledon
Like the noble Lord, Lord Dholakia, the noble Lord raises the issue of Turkey and other countries. I assure them that we are working with all international partners on this important priority. I agree with the noble Lord about the camps. First, China claimed that they did not exist. Now the claim is that they are there for re-education. About 10% of the whole Uighur community is being held in these camps. It is clear that the camps are extrajudicial and are held so that people can change their faith. We are aware of the various reports and we will act to ensure that they are verifiable. That does not mean that we are sitting back and doing nothing; we are working with all like-minded partners. As I said in response to the noble Lord, Lord Ahmed, I shall seek to take this up during Human Rights Council meetings as well.
Baroness Kingsmill (Lab)
My Lords, will the Government consider making representations to the Trump Administration in respect of the human rights of the hundreds, possibly thousands, of children currently caged, it would appear, many of whom have been lost in the system? There is a real breach there. They are our allies. It would be helpful if representations were being made.
Lord Ahmad of Wimbledon
My Lords, the noble Baroness raises a number of issues, including the allegations of children being caged. All these matters are very much on our radar. Specifically on the American question, I am in regular contact with Sam Brownback, the US ambassador for freedom of religious belief. I hope to meet him very soon and I assure the noble Baroness that we will discuss this issue.
Lord Collins of Highbury (Lab)
My Lords, there are pictures of these camps on the BBC website. They are huge and the idea that they are somehow for educational purposes is just crazy. Can the noble Lord tell us more about building alliances, because the international response to this crisis has been muted? What is he doing, specifically with other Muslim countries, to try to build up a much stronger response so that China does listen?
Lord Ahmad of Wimbledon
I too have seen those images and anyone who has cannot help but be appalled by them. The noble Lord raises the issue of building alliances. I have talked about the Human Rights Council and my meeting with the US ambassador for freedom of religious belief. However, this is not just about Muslim countries. As I often say, I defend the rights of Christians and people of no belief, not despite being a Muslim but because I am a Muslim—as anyone of any faith would protect the rights of others. That is the British Government’s approach, which I know is shared by the noble Lord and, indeed, across the House. That is how we will approach this issue.
Parking on Pavements
(5 years, 10 months ago)
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Lord Lennie
To ask Her Majesty’s Government what plans they have to prevent motor vehicles parking on pavements.
The Parliamentary Under-Secretary of State, Department for Transport (Baroness Sugg) (Con)
My Lords, in Greater London there is already a general ban on pavement parking. Across the rest of England, local authorities can implement local bans using traffic regulation orders. In recent months the Department for Transport has carried out a review of pavement parking, gathering evidence on the effectiveness of current legislation and the case for reform. That review is now complete and we are considering its findings.
Lord Lennie (Lab)
I thank the Minister for that Answer. Do the Government accept the views of Guide Dogs, the RNIB, the Living Streets charity campaign, all wheelchair users and all parents pushing a pushchair along the pavements, as well as all the local authorities that have to repair them after they have been damaged, that legislation should move to a default position, as is the case in London, of no parking on pavements unless designated otherwise, rather than just discourage- ment, which is currently the case?
Baroness Sugg
My Lords, a recent survey by the RNIB of more than 500 blind and partially sighted people found that 95% of them had collided with a street obstacle in the past three months. A vehicle parked on a pavement was the single most reported obstacle, so I do agree with the noble Lord that pavement parking is a problem. There are calls for the Government to introduce a law that bans all pavement parking across England, and the roads Minister is keen to make the process as simple as possible. However, before seeking new primary legislation we are evaluating the effectiveness of the current legislation. We want to understand the issues that have prevented councils taking action already.
Lord Holmes of Richmond (Con)
My Lords, does my noble friend agree that this is a curious Alice in Wonderland situation, where pedestrians have to go into the road because of cars that are already on the pavement? Some 69% of the public and 78% of local councillors support a new law. Are they right?
Baroness Sugg
My Lords, we have heard a lot of concern from interested groups, the general public, those with disabilities, the elderly and, of course, mothers with pushchairs about the incidence of pavement parking outside London. We have gathered evidence to try to understand the effectiveness of the current legislation. We are considering those findings carefully and we will make an announcement in due course.
Lord Low of Dalston (CB)
My Lords, I recently heard about someone who was knocked down on a pavement by a powered mobility scooter. She fell and broke her wrist. Does the noble Baroness agree that there is a need for tighter regulation of vehicles on pavements?
Baroness Sugg
My Lords, this is something that we are looking at. With the advent of new technology we are seeing new vehicles on the pavement. That will be one of our considerations when we look at the law on this.
Lord Bradshaw (LD)
My Lords, the Traffic Management Act 2004 imposed a duty on local authorities to manage their own road networks. The same Act also provided for traffic officers to be appointed to enforce these powers. However, Part 6 of the Act, which makes provision for penalties, has never been enacted. That leaves local authorities in a position where they have duties which they cannot carry out because they have no revenue streams from penalty notices to pay for enforcement. Will the noble Baroness look carefully at the Act, which, as I say, has never been properly brought into effect, but which does contain the powers that she is talking about? It would enable much more efficient management of both highways and pavements.
Baroness Sugg
My Lords, since the Traffic Management Act 2004 came into force, more than 93% of local authorities in England have taken up the powers. On the specific point about enforcement, I will have to follow it up with the department and write to the noble Lord.
Lord Berkeley (Lab)
My Lords, I am sure that the Minister will be aware that her colleague Jo Johnson wrote a circular letter in the autumn to local authorities, praying in aid—about penalties for persons committing nuisances while riding on footpaths—that people shall not,
“tether any horse, ass, mule, swine, or cattle, on any highway, so as to suffer or permit the tethered animal to be thereon”.
This came from the Highway Act 1835. Is it not about time this legislation was updated?
Baroness Sugg
My Lords, I was interested to find that cycling on a footway is also an offence under Section 72 of the Highway Act 1835. Obviously, it has been updated with various pieces of secondary legislation. As I say, we are looking carefully at the issues around vehicles on pavements and will respond in due course.
Lord McColl of Dulwich (Con)
My Lords, is the Minister aware that this practice can be lethal because of the glass and steel grids on pavements that allow light to underground structures? If a lorry goes over them, the whole thing can collapse and crash down and would kill anyone underneath.
Baroness Sugg
My Lords, I know that street furniture, including lamp-posts, also inhibits people in confidently navigating their way around the streets. Pavement parking can cause damage to paving stones and perhaps glass objects—so we are looking carefully at the evidence we have gathered.
Child Refugees
(5 years, 10 months ago)
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The Minister of State, Home Office (Baroness Williams of Trafford) (Con)
My Lords, as of September 2018 a total of 1,075 refugees have been resettled through the Vulnerable Children’s Resettlement Scheme. Over half of those resettled were children. Most refugees settled have been from Lebanon, Turkey, Jordan, Iraq and Egypt, although—following UNHCR’s urgent appeal— we have accepted approximately 50 unaccompanied children from Libya via Niger.
Lord Dubs (Lab)
My Lords, I am grateful to the Minister for her Answer. Will she agree that while the conditions in the camps in Jordan, say, are physically better than in the camps on the Greek islands or in northern France, there are still many people there who are stuck and have no hope of any future unless countries such as Britain show a bit of humanity and bring more of them here. Could we not speed up the process?
Baroness Williams of Trafford
My Lords, this country is not just bringing people here. We are also helping people out in the region, as the noble Lord will know. He will also know that the then Prime Minister significantly increased our contribution to help those people out in the region, many of whom could not actually make the journey over here. I think that is to be commended. It is also much more efficient to help people out in the region when hopefully peace will come at some point soon.
Baroness Stroud (Con)
Can my noble friend the Minister tell the House how many of the children who have come to the United Kingdom have gone missing in the care system and what steps will be taken to find them, bring them back into care and ensure they are not further exploited?
Baroness Williams of Trafford
I thank my noble friend for asking a very important question. Those children are particularly vulnerable when they come here, and people who would wish to exploit children have an ideal opportunity to do so when those children arrive. I can assure my noble friend that local authorities—which are, of course, the corporate parents of these children—are doing all they can to ensure that they do not go missing and, when they do, to ensure their safe return. I cannot give her numbers, but I will try to write to her if I have those numbers.
Lord Anderson of Swansea (Lab)
My Lords, Christian refugees from the region, including children, face a double handicap: first, as refugees, and, secondly, because they are not welcome as Christians in the camp. In spite of the warm words of the Foreign Secretary just before Christmas, we received no Christian refugees from the region in the first six months of last year. Has the situation improved?
Baroness Williams of Trafford
In assessing whether refugees need our help, we do not do so by what religion they are but by where their vulnerability lies. I do not know whether the situation has improved—it is probably over to my noble friend to follow that up. However, I hope the situation has improved. As I said, we do not differentiate by religion.
The Lord Bishop of Salisbury
The youngsters who have made the journey across Europe are among the most courageous young people in the world. You do not leave home unless you live in the mouth of a shark. What are the Government doing with those who arrive and, as the Minister said, are vulnerable? The Children’s Society recently published evidence of a high level of self-harm and suicide among these people. What is happening with the introduction of independent guardians, as is the case in Scotland and Northern Ireland? What other provisions can be made? What can be done for these young people to have permanent leave to remain when they reach adult age?
Baroness Williams of Trafford
The right reverend Prelate is absolutely right: any child who makes that journey is in an incredibly vulnerable position from the moment they leave their country of origin to the moment they arrive here, whether it is to people traffickers who bring them across dangerous seas, the dangerous seas themselves or the exploitation they might face during the journey or when they arrive here. Local authorities will provide wraparound care through the various agencies that might be involved with these children. The right reverend Prelate is right to say that psychological trauma is one of the main things that these children suffer. The message is that children should not be sent across these dangerous regions and across the sea to get here. They should be helped in the region or become refugees, at which point this country will give them the security that they need.
Baroness Hamwee (LD)
My Lords, 1,075 is a drop in the ocean given the appalling situation in the region. Last week, the Minister assured the House that the Home Office takes very seriously the importance of quality assurance, and that must include efficiency. To give just one example, in October, the Court of Appeal described as patently inadequate the Home Office’s dealing with unaccompanied asylum-seeking children. Is the Minister satisfied that quality assurance really is embedded in the Home Office?
Baroness Williams of Trafford
My Lords, 1,075 is not the definitive number: it is 1,075 who have been settled through the Vulnerable Children’s Resettlement Scheme. In addition, there is the vulnerable persons settlement scheme, under which we have resettled almost 14,000 people, half of whom were children. I am confident that quality assurance is in place, and I expect it to be in place given that we are dealing with probably the most vulnerable children who settle in this country.
Lord McConnell of Glenscorrodale (Lab)
My Lords, on trafficking and those who the Government quite rightly say should be deterred from travelling to the Mediterranean if at all possible, the reality is that thousands of people are still being trafficked and sent—not necessarily voluntarily. They then go on to boats on the Mediterranean and make that most dangerous of crossings. There are now no rescue boats whatever available on the Mediterranean because of the actions of the Italian Government, supported by the European Union and others. When people do find themselves in the sea, they are drowning. What actions are the Government taking to put pressure on the Italian authorities and the European Union, in these last few weeks of our membership, to rectify the situation?
Baroness Williams of Trafford
Whether we are a member of the European Union or not, we will take seriously our responsibilities to help those people in need. The noble Lord will appreciate that there is a fine balance to be struck between encouraging people to make dangerous journeys and wanting to help them take refuge from some of the terrible situations they have come from.
Equal Pay
(5 years, 10 months ago)
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Baroness Prosser
To ask Her Majesty’s Government what plans they have to amend the Equality Act 2010 in relation to equal pay.
The Minister of State, Home Office (Baroness Williams of Trafford) (Con)
My Lords, the Government remain fully committed to the equal pay protections in the Equality Act 2010 and to the fundamental principle of equal pay for equal work.
Baroness Prosser (Lab)
I thank the Minister for that reply. It is disappointing, but not surprising. We were all pleased with the measures taken by the Government last year to require employers of more than 250 people to make public their gender pay gaps. We welcomed that information because it gave us a picture of where the problems lay, but will we simply receive it as though there is nothing more that can be done?
Change will not come about by osmosis. Action will have to be taken. For a start, the law could require companies to break down the data to give us a better picture by age, ethnicity and so forth. Plus, the Government could legislate to require employers to develop positive action programmes—maybe establishing women-only training schemes, for example—or to provide more decent-quality part-time jobs. Will the Minister consider such initiatives as those, which would help to close the gender pay gap and bring the Equal Pay Act into the 21st century?
Baroness Williams of Trafford
My Lords, it is a good idea to say at this point that the gender pay gap and equal pay are two different things, although both may exist in the same organisation. The noble Baroness is absolutely right that work needs to go on to encourage organisations to improve their gender pay gaps where they are wide. The EHRC and the Government are working with organisations that want to improve their situation. This is not something that has just been left on the shelf. The gender pay gap is at its lowest, but we still have further to go.
Baroness Burt of Solihull (LD)
My Lords, the Resolution Foundation has estimated that Britain’s 1.6 million black, Asian and minority ethnic employees are losing out to the tune of £3.2 billion a year in wages compared with white colleagues doing the same work. We welcome the consultation that the Prime Minister launched in October to seek views on whether there should be mandatory reporting of ethnic pay gaps at work. We know that the diversity of the workforce is good for business, so does the Minister agree that the time has now come to introduce ethnic and minority pay gap reporting?
Baroness Williams of Trafford
Organisations can indeed do that if they wish, but the noble Baroness raises an important point. Actually, gender pay gap reporting was the first step in what will be a long process. It had never been done before and we wondered before organisations reported what the compliance rate would be. As the noble Baroness will know, it was 100%. It is not that organisations do not want to go further—they do—but she is right that a gender and ethnically diverse workforce makes for a better workforce.
Baroness Boycott (CB)
My Lords, if we really want to have women working in this country and therefore being equal, as a country we need to take childcare seriously. I have been campaigning for this since I was 21—I am obviously way past the need for it now—but we still do not have it. Have the Government ever considered the scheme that Quebec introduced in 1997 whereby universal childcare was subsidised? You paid about 10 quid a day. It was found that very soon the increased revenues from women’s earnings paid for the measure through the taxation system. If we want women to work and to be equal, surely the state must take a role in doing some of women’s work, which is rearing and looking after children.
Baroness Williams of Trafford
I am very interested to hear about Quebec’s scheme, and I thank the noble Baroness for that. This Government introduced 39 hours of free childcare for working parents and have encouraged shared parental leave, which is possibly not as good as it should be. We can certainly learn from other countries, such as Sweden, in that regard.
Baroness Afshar (CB)
My Lords, would the Government consider home-based working as working so that people working at home are recognised and valorised as workers? That would allow a lot of home- based textile workers who are employed by their kin to be entitled to the privileges to which other workers are entitled.
Baroness Williams of Trafford
Home-based working is a very good idea. Certainly organisations see it as beneficial to have some flexibility in the way that their employees work. It is to be encouraged.
Lord Dubs (Lab)
There is a simpler answer to all these inequalities, particularly discrimination against women. I ask the Minister not to dismiss it out of hand, which she has done before. If we put all income tax returns into the public domain, as has been done in some countries in Scandinavia, we would see what incomes are and what tax dodging takes place, and we would then see the real nature of inequality.
Baroness Williams of Trafford
The noble Lord has mentioned this to me before and I have rejected it. The equal pay legislation and the gender pay gap audits that we have asked organisations to undertake are starting to lift the lid on where inequality lies in our workforces.
Baroness Gale (Lab)
My Lords, in April companies will be required for the second time to publish their pay gap data, and I hope we will see some improvement in closing that gap. Does the Minister agree that, for that to be effective, companies should be required to publish action plans and that civil penalties should be issued to companies that do not comply with the law? If the Equality and Human Rights Commission could be given powers and resources to carry out enforcement activity, that would have more immediate impact because at present no action seems to be taken when companies fail to deliver.
Baroness Williams of Trafford
My Lords, it is good practice for companies to publish action plans. One of the requirements for companies not publishing their gender pay gap figures is that they carry out a gender pay gap audit. That did not come to pass because all companies complied. It certainly is good practice and some companies are doing it.
Animal Welfare (Service Animals) Bill
Monday 11th February 2019
(5 years, 10 months ago)
Lords ChamberRead Full debate Animal Welfare (Service Animals) Act 2019 View all Animal Welfare (Service Animals) Act 2019 Debates Read Hansard Text
Crime (Overseas Production Orders) Bill [HL]
Monday 11th February 2019
(5 years, 10 months ago)
Lords ChamberRead Full debate Crime (Overseas Production Orders) Act 2019 View all Crime (Overseas Production Orders) Act 2019 Debates Read Hansard Text Read Debate Ministerial Extracts Amendment Paper: HL Bill 157-I Amendment for consideration of Commons amendments (PDF) - (8 Feb 2019)
15:45 - Division on Amendment 13A (to Amendment 13) - Ayes: 188 / Noes: 207 - Amendment 13A (to Amendment 13) disagreed.
Baroness Williams of Trafford
That this House do agree with the Commons in their Amendment 1.
The Minister of State, Home Office (Baroness Williams of Trafford) (Con)
My Lords, as noble Lords will know, the purpose of the Bill is to sidestep the bureaucratic barriers that we currently face in investigating and prosecuting serious crime. The Bill allows law enforcement agencies to access content data directly from communication providers based overseas using an overseas production order.
Briefly, before turning to the amendments to the Bill made in the Commons, I know from conversations with the noble Lords, Lord Rosser and Lord Kennedy, that there were some concerns surrounding extradition. I put on the record and reassure noble Lords that this Bill has nothing to do with extradition. Overseas production orders are about seeking stored communications content data from overseas providers for the investigation and prosecution of UK criminal matters; it does not provide any new avenues for extradition, which is entirely out of scope of this Bill.
I turn to the amendments made in the other place. Orders under the Bill can work only when a relevant international agreement is in place between the UK and another country. As the majority of the CSPs are based in North America, we expect the first such agreement to be with the United States. Amendments 1, 13 and 15 relate to death penalty assurances in any such international agreement.
Amendment 13A, proposed by the noble Lord, Lord Paddick, would amend the Bill to oblige the Secretary of State to seek and secure a death penalty assurance in any future international treaty. I make it absolutely clear: if noble Lords vote in favour of this amendment, they will be tying this and all future Governments’ hands in negotiations that are never entirely under our control, whether they be with the US or any other country with which we wish to enter into an agreement. Live international negotiations do not work in this way. If we are unable to secure a relevant international treaty, this Bill and its powers will be rendered entirely pointless.
As I have stated throughout the passage of the Bill, it is our duty to give our law enforcement agencies the tools that they need to fight and prevent serious crime, and our prosecution authorities the tools that they need to bring offenders to justice. Current delays in accessing content data held and stored by companies based outside the UK make their job much harder. Delays prevent criminals being brought to justice. If we do not successfully conclude this Bill and the US agreement, child abusers will be able to continue their heinous crimes while the police wait for up to two years for the relevant evidence to be transferred from abroad, or worse still, drop investigations because they simply cannot afford to sit through long delays.
The reality is that the majority of communication service providers are in the US. It is a fact that we need access to data held in the US a lot more than the US needs access to data held in the UK. The UK holds only 1% of the data that we need to prevent and catch sexual abusers of children, meaning that 99% of it is stored abroad. The level of child sexual abuse reported by US service providers has increased, and continues to increase, in horrific quantities—by 700% since 2012. There is a clear inequality of arms from the outset, and to restrict Ministers’ discretion in negotiations could jeopardise the US agreement and result in serious criminals being able to continue their abuse.
Of course the US treaty will have some form of death penalty assurance associated with it, but the exact details and practicalities of this assurance have not yet been negotiated. That is why Parliament will, rightly, have its say on any treaty put before the Houses during designation and prior to ratification. Members can then decide whether the contents of the treaty and its death penalty assurances are acceptable to the House.
In recognition of the concerns raised by noble Lords, the Government have amended the Bill so as to mandate the Secretary of State to seek death penalty assurances in connection with all relevant international agreements. For the first time, this puts into primary legislation policy that reflects the overseas security and justice assistance brought in under the coalition Government in 2010. The outcome of such negotiations will be implicit in the international treaty necessary to give effect to this Bill. The Government will commit to make a Statement, in both Houses, when the relevant treaty is put before Parliament in the usual way. Indeed, this Government and previous Governments are familiar with the need to obtain death penalty assurances when providing evidence to other countries. We do this in line with OSJA, a fundamental piece of long-standing policy that recognises that negotiating with another country is complex and does not attempt to dictate the outcome of any particular negotiation. Governments of all colours have agreed with and used the approach set out in OSJA.
The Government’s amendment, in line with OSJA, is therefore a sensible compromise that does not jeopardise law enforcement agencies’ capabilities. I ask noble Lords to support Amendments 1, 13 and 15, to let the Government continue our negotiations with our international partners as we have done for so many years, and to exercise powers of scrutiny—both prior to ratification of the agreement under CRaG and when secondary legislation comes to be laid—to assess whether the terms of any death penalty assurances are acceptable.
Lord Paddick (LD)
My Lords, Amendment 13A in this group is in my name. I make it clear from the outset that we support this Bill, which is why at Third Reading in the other place we did not vote against it. What we did—and what Labour did in the other place—was to vote against the Government’s Amendment 13 proposing a new clause after Clause 15, because it does not go far enough. It does not ensure that death penalty assurances are secured from foreign states to make sure that data provided by the UK, whether by law enforcement agencies or private companies, does not lead to someone being executed. The Government claim to have come a long way in their amendment, but it requires only that a Secretary of State seek death penalty assurances, not that any agreement is dependent on death penalty assurances being received.
The UK is a signatory to the European Convention on Human Rights, which is incorporated into UK law by the Human Rights Act 1988. It is also a signatory to Protocol 13 to the convention. Article 2 of the convention states:
“Everyone’s right to life shall be protected by law. No one shall be deprived of his life intentionally save in the execution of a sentence of a court following his conviction of a crime for which the penalty is provided by law”.
Article 15 states:
“In time of war or other public emergency threatening the life of the nation any High Contracting Party may take measures derogating from its obligations under this Convention to the extent strictly required by the exigencies of the situation, provided that such measures are not inconsistent with its other obligations under international law”.
Article 57 states:
“Any State may, when signing this Convention or when depositing its instrument of ratification, make a reservation in respect of any particular provision of the Convention to the extent that any law then in force in its territory is not in conformity with the provision”.
However, the UK is also a signatory to Protocol 13 to the convention, Article 1 of which states:
“The death penalty shall be abolished. No one shall be condemned to such penalty or executed”.
Article 2 of the protocol states:
“No derogation from the provisions of this Protocol shall be made under Article 15 of the Convention”.
Article 3 states:
“No reservation may be made under Article 57 of the Convention in respect of the provisions of this Protocol”.
In other words, there should be no death penalty in any circumstances whatever. That is our international legal obligation.
The UK has been clear—until this Conservative Government took office—that it will campaign to remove the death penalty wherever it exists in the world and will never facilitate the execution of anyone in any foreign state. The difficulty with the type of agreement covered by this Bill is that data provided by the UK to an American law enforcement agency, for example, could result in someone in the US being sentenced to death, contrary until recently to both the UK’s international obligations and its declared intention to do all it can to eradicate the death penalty wherever it exists in the world.
I say “until recently” because, in a High Court case in October last year, it was revealed in correspondence from the Home Secretary to the then Foreign Secretary that, in the case of two ISIS terrorists, evidence was going to be supplied to the US without a death penalty assurance. His letter said that,
“significant attempts having been made to seek full assurance, it is now right to accede to the MLA”—
mutual legal assistance—
“request without an assurance”.
The then Foreign Secretary replied that in this,
“unique and unprecedented case … it is in the UK national security interests to accede to an MLA request for a criminal prosecution without death penalty assurances”—
a unique and unprecedented case to provide evidence to the US that may lead to executions. The Bill as drafted allows the Government to enter into a data exchange agreement where potentially there would be no death penalty assurance in any case. The Government’s new clause requires the Secretary of State only to seek such assurances; it does not bar the Secretary of State from entering into the agreement without death penalty assurances.
The Government will say that not entering into an agreement with the US could potentially allow terrorists and paedophiles to be a threat for longer. We say that we will not stand in the way of such an agreement provided that it does not result in UK data resulting in people being sent to the electric chair. The first thing to say about what the Minister said in her opening remarks is that these agreements are about securing legal authority to enable data to be provided that can be used in evidence in criminal proceedings. It is about giving legal cover for the handing over of data. It should not prevent the arrest and detention of dangerous suspects while that formal legal authority is obtained, and it can still be obtained through existing MLA arrangements, as in the case of the ISIS suspects. It may delay the trial, but it should not prevent the arrest and detention. Even if there were circumstances that I cannot personally envisage where the arrest and detention of a dangerous criminal were delayed, if the US says it will not sign an agreement containing death penalty assurances then it is the US that is prepared to allow the threats from terrorists and paedophiles to go on for longer by having to rely on the current MLA system.
I shall summarise our position using someone else’s words:
“Our amendment would prevent authorities in this country sharing data with overseas agencies where there is a risk of the imposition of the death penalty. More than 50 years ago parliament as a whole passed a law which ‘opposes the death penalty in all circumstances’. That is the law of the land. It means we do not co-operate with any government if the consequence could be capital punishment. Parliament has for a long time believed that the death penalty is so abhorrent, and the risks of a miscarriage of justice so awful, that we outlaw it. Our ban applies to all countries where the death penalty is still on the statute books. But government Ministers are desperate to cosy up to Donald Trump’s administration in the US, where the death penalty is still imposed. Our amendment simply blocks data sharing co-operation with all countries if the death penalty is a risk”.
I have just quoted, word for word, the shadow Home Secretary Diane Abbott from her column in the Daily Mirror on 28 January this year about the Labour amendment that was replaced in the Commons by Amendment 13. However, Amendment 13A is designed to have the same effect as the Labour amendment passed by this House.
The opposition parties have worked together on this issue from the beginning, but this should not be a party-political issue; it is a question of fundamental human rights. Again, the Minister will correct me if I am wrong, but essentially this Government are willing to sacrifice people to the electric chair in America if that is what it takes to secure the kind of agreement that the Bill covers. Asking us not to tie the hands of those negotiating the deal really means, “Do not ask them to insist on death penalty assurances”.
The question is: do we stand by Article 2 and Protocol 13 of the European Convention on Human Rights, and do we oppose the death penalty in other countries, or do we not? If we are prepared to see people being executed on the back of evidence provided by the UK, then noble Lords should support the government amendment rather than Amendment 13A. This is a question of principle, a question of conscience and a question of human rights, and we should support it on all sides of this House.
Lord Hope of Craighead (CB)
My Lords, I have been struggling to understand what the Government’s position might be. I think I picked up the Minister saying that the amendment concerns prosecutions in the United Kingdom only. With great respect, if that is right, I do not understand how that fits in with the language of the statute and the amendment itself. I will explain where I am coming from.
Section 52 of the Investigatory Powers Act 2016—the section being amended—is headed “Interception in accordance with overseas requests”. We are contemplating a situation where a request comes from another country, presumably for prosecution in that country, on the basis of information that we have obtained via intercepts. The whole point of Section 52, without the amendments, is to authorise the making of interceptions in accordance with that request.
My understanding is that subsections (6) and (7) of Clause 1 deal with a precaution against the kind of point that the noble Lord, Lord Paddick, was talking about—our international obligations. I agree almost precisely with the background which the noble Lord traced for us, set against Article 1 of Protocol 13 of the European Convention of Human Rights, which provides that sentencing to death is a violation of the right to life under Article 2 of the convention. If one applies Article 1 of Protocol 13, it would seem to be a breach of our convention obligations to provide information to a foreign country that would lead to somebody being sentenced to death. I do not know whether that has ever been tested in a court, because I do not think the issue has been brought before a court—I am not aware of that happening. However, there seems to be a strong prima facie case that if the Secretary of State was proposing to do that, he could be stopped on the grounds that it would be in breach of this country’s international obligations.
I am puzzled about whether the Minister is right that the purpose of this section is to enable us to prosecute in our own country, where we have no death penalty. The idea of an international agreement is, I think, that it should be reciprocal; it would be a bilateral agreement with a particular country—let us assume it is the United States—and there would be obligations on both sides. We would seek the benefit of the agreement to obtain information for us to prosecute cases of child abuse, which the Minister referred to; one would very much want to secure an agreement which would enable that information to come to us. However, in the context of Section 52, the thrust seems to be the authorisation of intercept information by us to provide for prosecution abroad. I am having difficulty seeing how that fits in with what the Minister said earlier.
Let us assume that the noble Lord, Lord Paddick, is right that this is really dealing with provision of information to go abroad. Then one comes right up against Article 1 of Protocol 13. What mechanism does one install to prevent a breach of the article? I think I am right that the mechanism of an assurance is well established in international law. In fact, in 2006 the United Nations produced a very helpful note, Diplomatic Assurances and International Refugee Protection, which traced the mechanisms that had been established to protect people who were being sent abroad by a country in answer to a request. The message in the United Nations paper is that one can protect oneself or one’s country against a breach of the international obligation by obtaining an assurance. However, the emphasis is on obtaining the assurance, because an assurance is given by the requesting country to the country from which the information to go abroad is being requested.
There was sometimes some doubt about whether that mechanism was reliable in a case where the threat abroad was of torture, because some countries are really not capable of preventing torture being perpetrated by all manner of officials, so an undertaking in that sort of situation is not really reliable. The paper goes on to say that if one is dealing with the kind of problem that we are contemplating—the risk of a death penalty being imposed—that is easily verifiable and an assurance could be relied upon as a secure protection against a breach of the international obligation.
Lord Pannick (CB)
My Lords, I am far less clear than the noble and learned Lord, Lord Hope, that it would be a breach of our obligations under the European Convention for us to supply information abroad in circumstances where it may be used in a prosecution that may lead to a death penalty. As he well knows, all the cases concern extradition. They concern circumstances in which this country is removing a person to face possible trial abroad where that person may be executed. The European Court of Human Rights has repeatedly made it clear that that is a breach of our obligations. I am far less clear on whether the same would apply where all we do is provide information, which is under the control of the authorities in this jurisdiction, to assist a prosecution abroad.
A particular reason why I am far less clear is that the noble Lord, Lord Paddick, mentioned the one example where there was a challenge to the decision of the Secretary of State to do precisely this: to provide information abroad to the United States in circumstances where it was said, accurately, “These people may face prosecution which may lead to the death penalty”. My recollection, which I would be grateful if the noble Lord or the Minister could confirm, is that the Home Secretary’s decision was the subject of a legal challenge and—again, please confirm whether I am right or wrong—the High Court rejected that challenge. It held that it was lawful for the Home Secretary to act in that way.
Lord Pannick
I am very grateful. I do not have immediate access to that judgment, but perhaps the Minister can provide the House with some assistance in relation to it. Can the Minister also confirm what I understood her to say: no information will be provided abroad under the Bill, unless and until there is an agreement with the relevant state—here the United States? My understanding—again, I think the noble Baroness said this, but I should like her to confirm—is that before any such agreement has practical effect, it must be put before this House and the other place for approval. Ratification cannot take place unless and until, under CRaG 2010, Parliament has had that opportunity. It seems that is the time at which both Houses of Parliament can consider whether they wish to approve such an agreement, if it does not contain the sort of assurance that the noble Lord, Lord Paddick, is seeking.
Lord Hope of Craighead
I can respond to two of the noble Lord’s points. First, I am happy to agree with him about the stages in which we are moving, which was my earlier point: we are at the preliminary stage of negotiation, rather than the CRaG stage. As for whether the provision of information over which we have control is a breach, that is still open to question. That is why I said that I realised it had not been tested. I was certainly thinking about the very point that the noble Lord makes. It is quite different if you have an individual—that is absolutely plain—but if you are gathering information nevertheless, it runs up to the big question of whether that is a breach. It is an uncertain point, so we have to be very careful.
Lord Pannick
I am entirely in agreement with the noble and learned Lord. All I was saying was that I would not wish to assert to the House that it would be a breach of our international obligations under the European Convention on Human Rights to provide information to another state in circumstances where we are not extraditing a person to that state. The courts and the European court may take a different view. I have no doubt that in the legal proceedings arising from the case referred to by the noble Lord, Lord Paddick, one of the grounds of challenge would have been that this is a breach of the human rights of the individual concerned, who, as a consequence of our providing the information, may face a death penalty. That is why I should like the Minister to give any further assistance to the House on what the court said.
Lord Kennedy of Southwark (Lab Co-op)
My Lords, I make clear at the start that we support the Bill, as noble Lords throughout the House have. My party and I oppose the death penalty. I fully accept that the Government and the noble Baroness have moved forward, and in that sense the new clause before us today is welcome. The noble Lord, Lord Paddick, has set out the treaties, conventions and obligations that we have signed, which underpin the intention and support of the British Government to oppose the death penalty.
This House has many important functions, and asking the Government to think again is one of them. It is right to do so again here: we need to look at this issue once more. I have expressed concern many times from this Dispatch Box about this risk; particularly around Brexit, whatever else we do, we must never allow a situation where we are helping criminals or terrorists. I ask the House to think again. It is not about helping criminals or terrorists; it is about ensuring that we support the things that we, as a country, believe are right. It was the Labour MP Sydney Silverman whose Private Member’s Bill in 1965 abolished the death penalty for murder. For treason and other offences, it was not until 1998 that it was finally abolished completely.
The noble and learned Lord, Lord Hope of Craighead, set out some serious legal matters about where we are going with this. In the context of those, and the points made by the noble Lord, Lord Pannick, it is right for this House to ask the Government to think again. I entirely accept that when the Bill is passed nothing will happen until the treaty is signed, but it is not wrong, at this stage, to ask the Commons to look at it once more. I also understand that the amendment is about information going to other countries.
In conclusion, this is an important amendment. If the noble Lord divides the House, we will support him.
Baroness Williams of Trafford
My Lords, the central point here is whether or not we are in breach of the European Convention on Human Rights. My view is that we are not. Article 1 of the 13th protocol does not prevent member states providing assistance to a third country, where that assistance contributes to the use of the death penalty by that country. Even if the amendment related to the use of the designation power, under Section 52 of the 2016 Act—which would be the gateway for the flow of information from the UK—it would still not prevent designation in the absence of assurances about the use of our material. That is not to say that we will be sharing information for the pursuit of the death penalty. Noble Lords have heard, on many occasions, that I am not going to pre-empt our negotiations with the US, but this shows that not only is the amendment unnecessary but it may not do what its sponsors hope.
The case of the foreign fighter, which the noble Lord, Lord Paddick, talked about, shows that we are compatible with the ECHR, for the reasons outlined by the noble Lord, Lord Pannick. The noble and learned Lord, Lord Hope, and the noble Lord, Lord Pannick, said that any agreement would have to be put before Parliament. That is absolutely the case. The noble and learned Lord, Lord Hope, talked about this being the negotiation stage. I would put it further back than that: it is the pre-negotiation stage. It is a framework Bill, on the basis of which treaties would be negotiated and made.
Lord Paddick
My Lords, will the Minister confirm that, when a treaty is put to Parliament, if the House of Commons approves it, then it does not matter what the opinion of this House is; the treaty is ratified even if this House votes against it? I obviously agree with the noble and learned Lord, Lord Hope of Craighead, that whether this is a breach of the European Convention on Human Rights has yet to be tested in court—certainly not at the European level. Will the Minister explain why the then Foreign Secretary had to say that seeking death-penalty assurances in the ISIS case was unique and exceptional, if the Government were not concerned about people executed on the back of evidence provided by the United Kingdom?
Baroness Williams of Trafford
My Lords, the noble Lord is absolutely right. The treaty would be put to the Commons; the Lords could certainly have a view but that might not be taken into account by the Commons. That is nothing unusual. The Commons quite often exerts its supremacy.
Baroness Williams of Trafford
That this House do agree with the Commons in their Amendments 2 to 12.
“(5A) The judge must be satisfied that there are reasonable grounds for believing that all or part of the electronic data specified or described in the application for the order is likely to be relevant evidence in respect of the offence mentioned in subsection (3)(a).
This requirement does not apply where the order is sought for the purposes of a terrorist investigation.”
“(9A) For the purpose of subsection (5A), “relevant evidence”, in relation to an offence, means anything that would be admissible in evidence in proceedings in respect of the offence.”
“(ba) does not require the person to do anything that (taking into account the existence of the overseas production order) would result in the person contravening the data protection legislation, and”
“(1A) Subsection (1) does not authorise the doing of anything that contravenes the data protection legislation.”
“(1) This section applies to an application for an overseas production order if there are reasonable grounds for believing that the electronic data specified or described in the application consists of or includes journalistic data.”
“(2A) Where this section applies, notice of the application must be served on— (a) the person against whom the overseas production order is sought, and
(b) if different, the person by whom, or on whose behalf, the journalistic data is stored.
(2B) But a judge may direct that notice of an application need not be served on a person falling within subsection (2A)(b) if the judge is satisfied that—
(a) serving notice on the person would prejudice the investigation of an indictable offence or a terrorist investigation, or
(b) it is not reasonably practicable to establish the person’s identity or to make contact with the person so as to enable service to be effected.”
“(6) In determining for the purposes of subsection (5) whether or not a purpose is a criminal purpose, crime is to be taken to mean conduct which—
(a) constitutes one or more criminal offences under the law of a part of the United Kingdom, or
(b) is, or corresponds to, conduct which, if it all took place in a particular part of the United Kingdom, would constitute one or more criminal offences under the law of that part of the United Kingdom.”
“(7) Subsections (8) and (9) of section 4 apply for the purposes of subsection (2B) of this section as they apply for the purposes of subsection (3)(a) of that section.
(8) In this section, “terrorist investigation” has the same meaning as in the Terrorism Act 2000 (see section 32 of that Act).”
Baroness Williams of Trafford
That this House do agree with the Commons in their Amendment 13.
“Designation of international agreements for purposes of section 52 of Investigatory Powers Act 2016
(1) Section 52 of the Investigatory Powers Act 2016 (interception of communications in accordance with overseas requests) is amended as follows.
(2) In subsection (3), at the end insert “(see further subsections (6) and (7))”. (3) After subsection (5) insert—
“(6) Subsection (7) applies where an international agreement provides for requests for the interception of a communication to be made by the competent authorities of a country or territory, or of more than one country or territory, in which a person found guilty of a criminal offence may be sentenced to death for the offence under the general criminal law of the country or territory concerned. Such an offence is referred to in subsection (7) as a “death penalty offence”.
(7) Where this subsection applies, the Secretary of State may not designate the agreement as a relevant international agreement unless the Secretary of State has sought, in respect of each country or territory referred to in subsection (6), a written assurance, or written assurances, relating to the non-use of information obtained by virtue of the agreement in connection with proceedings for a death penalty offence in the country or territory.””
Lord Paddick
Baroness Williams of Trafford
That this House do agree with the Commons in their Amendments 14 and 15.
““the data protection legislation” has the same meaning as in the Data Protection Act 2018 (see section 3 of that Act);”
Companies, Limited Liability Partnerships and Partnerships (Amendment etc.) (EU Exit) Regulations 2019
(5 years, 10 months ago)
Lords ChamberRead Full debate Read Hansard Text Read Debate Ministerial Extracts
Lord Henley
That the draft Regulations laid before the House on 10 January be approved.
The Parliamentary Under-Secretary of State, Department for Business, Energy and Industrial Strategy (Lord Henley) (Con)
My Lords, the changes being made by this instrument relate to the Companies Act 2006 and supporting secondary legislation. In some cases, the changes will have no impact on business; they simply tidy up provisions in the legislation to reflect Brexit. Other provisions will have an impact on business. These provisions are mainly to ensure that certain EEA-based entities will be treated in the same way as other third country entities after exit day. This is an approach that has been taken in many statutory instruments that this House and the other place have considered over the last few months. These changes are made only when necessary to ensure that the UK does not breach the World Trade Organization’s most favoured nation rule upon exit.
I will set out these changes and the impact on companies, but first I would like to briefly highlight two provisions that remove access to EU-based processes and systems. The first is that this instrument revokes the Companies (Cross-Border Mergers) Regulations 2007. This allows the merger of two or more companies or partnerships based in at least two EEA member states. There have been approximately 400 cross-border mergers involving UK companies and a company in another EEA jurisdiction since 2010, around 50 a year. After exit, companies seeking a merger with another company outside of the UK will need to transfer assets and liabilities using contractual arrangements. This already happens now between UK and non-EEA companies, so many businesses will already be familiar with it.
The second provision is that after exit the UK will no longer be part of the Business Registers Interconnection System. This tool connects business registries across Europe. Much of the information that Companies House makes accessible on BRIS is openly available on the UK company register via GOV.UK. Many other member states do the same on their registers for business transparency reasons.
I turn now to how the provisions in this instrument deal with certain EEA entities and EEA—regulated markets. The main practical impacts are around filing changes. EEA companies that have registered with Companies House under the overseas companies regulations will need to provide additional information. This will align the information required from them with that required from non-EEA companies. The additional information is minor, such as the address of the registered office and the law under which a company is incorporated. The same group of companies will also be required to provide more detail in customer-facing material. This includes the location of the company’s head office, its legal form, liability status and whether it is subject to insolvency proceedings.
While these are minor administrative details, they are important for corporate transparency and very useful for the clients and customers of foreign companies with UK operations. These changes apply only to EEA companies that are already registered as overseas companies in the UK. We have provided companies with a three-month notice period to provide the additional information and Companies House will inform them of the requirements. The forms to update their details will be available on GOV.UK on exit day. Further changes affect UK companies which have an EEA corporate appointment—that is, a director or company secretary that itself is an EEA company. Any UK company with this type of appointment will need to provide Companies House with two pieces of additional information within three months of exit. This aligns the filing requirements for EEA and non-EEA corporate appointments.
Another change ensures that EEA credit reference agencies and credit and financial institutions are treated in the same way as those from third countries. After exit the registrar of Companies House will no longer be able to send protected information that they hold on directors to these companies.
I would also like to explain the definitions of the phrases “UK regulated market” and “EU regulated market” within these regulations. These definitions were inserted in the Companies Act 2006 by the Accounts and Reports (Amendment) (EU Exit) Regulations 2019 and are consistent with the definition in the Markets in Financial Instruments (Amendment) (EU Exit) Regulations 2018, which we debated in December last year. The definition confers preferential treatment on certain entities listed on EEA-regulated markets such as the London Stock Exchange and the Frankfurt stock exchange. In most instances we have inserted,
“UK regulated market or an EU regulated market”,
to maintain the status quo. However, in two places we have restricted the provisions to companies listed on a “UK regulated market” to avoid breaching WTO rules. The first is the exemption to the prohibition on subsidiary companies owning shares in a parent holding company. This exemption will be available only to companies that have access to UK-regulated markets. The second provides that only companies listed on a UK-regulated market will be able to benefit from some relaxations on controls on their distribution of profits. We are providing a one-year transitional period for those affected.
Overall, these amendments do no more than is necessary, are broadly technical in nature and will ensure that a clear and coherent company law framework is in place after exit. I commend these regulations to the House.
Lord Fox (LD)
My Lords, I thank the Minister for bringing this SI to the House. It is another episode in the unravelling process. I have four comments, along with one pro forma comment on consultation.
The Minister mentioned the Business Registers Interconnection System. My understanding is that that is already part of Companies House. Can the Minister assure your Lordships’ House that there is no change in the information available—in other words that the information that was available on BRIS remains available on the new Companies House system?
That takes me to my second point. There are a number of mentions of a role for the company registrar in this instrument, and a lot of them are time-limited over the three months post exit day. What level of capacity will be needed to handle what will be a surge of registration, inquiry and people wanting to know what to do? What level of information will go out to inform companies that they are required to do these things? Who will hold the buck for putting that information out there? It is not clear how companies will find out about this or whether there will be the capacity within Companies House to handle the three-month surge. I would like to know what kind of risk analysis has been done by the Government and what level of communication they are planning.
Thirdly, as the Minister set out there are a number of technical changes around cross holdings of shares between EEA and UK companies. It is not clear to me how many companies this would affect. What intelligence do the Government have on how many companies will be affected in this shareholding? Obviously, there is time for these companies to change that. Does that significantly change the shareholder profile of many companies in this country? If so, how? Does it have any effect overall on market liquidity? What kind of analysis of what this means has gone on?
The final substantive point is on cross-border mergers. The Minister mentioned those in his introduction. He did not explain what the implications are if there are cross-border mergers already under way now or at the time of exit. What regime are these cross-border mergers governed by?
All of this is regrettable, because we have a functioning system that works very well. I am co-operating in so far as I think it is important that we have some sense of where this is going in the regrettable event of exit day. My final point is this: can the Minister outline what level of consultation has gone on? Again, it looks like none. What is the justification for no consultation?
Lord Adonis (Lab)
My Lords, I want to pick up on consultation, the final point of the noble Lord, Lord Fox. A theme running through our consideration of all these statutory instruments is either non-existent or totally inadequate consultation, which in any other context would not be regarded as acceptable. Since these are changes in the law that affect significant parts of our economy and significant organisations, it is totally unacceptable that there was no proper consultation.
The blather in the Explanatory Memoranda, which varies by statutory instrument, amounts to the same thing: all this planning was done in secret. It is only at the last minute that this cascade of orders has been presented to the House. Because, I presume, the Government did not want to indicate to the EU that we were engaged in such intensive no-deal planning, there is a straightforward admission that practically no consultation has taken place at all.
The noble Lord, Lord Fox, asked what the level of consultation was. We are told in paragraph 10.1 of the Explanatory Memorandum:
“We have not been able to publicly consult in order to minimise sensitivities in advance of negotiations with the EU”.
But these negotiations had been going on for two and a half years when this order was laid before Parliament. Can the Minister tell us what the sensitivities were in advance of negotiations with the EU, which meant us being told that an entirely technical set of changes concerning access to Companies House databases could not be consulted upon with the relevant business communities? It seems to me that the only thing that is sensitive is not the content of these regulations but the very fact that the Government were engaging in no-deal planning. But it was hardly a secret that the Government were engaging in no-deal planning—it was widely known. After all, the Prime Minister told us that no deal would be better than a bad deal. The arguments are entirely implausible and unacceptable.
What really happened, as we are seeing time and again in these orders, is that the Government had no idea of the scale of the changes that would be required. This was all done in a massive rush in the run-up to Christmas, when the no-deal planning was accelerated. It was not that there were sensitivities—there were no sensitivities at all in respect of these orders. Having read the debates on the orders in the other place, I cannot see a single sensitivity. Indeed, the Government’s own argument that these changes are technical answers the point about there being sensitivities.
The reason there was no consultation is that there was no time to consult. And the reason there was no time to consult is because this whole thing has been done in a massive rush. That is why—having had a quick glance at the Order Paper—we have this week some 30 statutory instruments being considered one after another and we are not being given a recess.
While these changes themselves appear entirely technical, the continuing declaration by the Government, order by order, that there has been no meaningful consultation whatever is unacceptable. It is only right that the House should put that on record. As we get to the end game of this terrible period, that will weigh on the House as we consider whether it is right to extend the Article 50 negotiating period so that we are not faced with what will otherwise happen—a massive rush of ill-considered orders with almost no time to consider them at the end.
I have one specific question for the Minister. Paragraph 10.1 states that informal consultation took place with the Law Society, but it does not mention any business-related organisations. It does not say whether the CBI or the Federation of Small Businesses were consulted, even informally. Those are the organisations that represent the business community, so will the Minister tell us why, in this informal consultation, only the Law Society was consulted? What is the special status of the Law Society in relation to this statutory instrument, which in fact affects companies and the operation of Companies House? Why were the CBI and the FSB not consulted?
Since this instrument has been published, of course, business organisations have had a chance to come forward. Will the Minister tell us whether the CBI, the Federation of Small Businesses or any other business-related organisation made any informal or formal responses to the Government, and what those responses were?
Lord Stevenson of Balmacara (Lab)
My Lords, the points made by the noble Lord, Lord Fox, and my noble friend Lord Adonis are very important and I hope that the Minister will be able to respond to them. I have a couple more questions to add that the Minister might wish to respond to when he sums up. To add to the comments made by my noble friend Lord Adonis about the consultation, will the Minister also confirm that, if the Law Society was the only body consulted, why were the CBI and the FSB and others not consulted and can he give adequate reasons for that?
Paragraph 7.22 of the Explanatory Memorandum refers to,
“permitted disclosures to credit reference agencies, credit institutions, financial institutions”,
and the current legislation giving “preferential treatment” to EEA agencies. I take the point made in the Explanatory Memorandum that there seems to be no particular reason for that, but will the Minister comment on whether that raises an issue about data protection adequacy? The Government are on record as saying that they want to ensure that movement of personal data between the UK and the EEA is uninterrupted. If a distinction is to be made in terms of access, does that not bear on adequacy? If so, will the Minister comment?
Secondly, paragraph 7.24 refers to political parties and expenditure. My understanding—I may be wrong and I look forward to the Minister’s comments—is that shareholder authorisation is required for donations to political parties, organisations and candidates by any companies established in the UK to ensure that their intentions in relation to those activities are transparent. I take the point that, if we are crashing out of the EU and becoming an independent body, there is a question about the relevance of payments made to political bodies operating in the EU, but that does not take the trick in relation to transparency. Surely, shareholders of UK companies should know whether their companies are making payments to political parties whether or not they are in the UK, particularly if they are operating in the EU. I would have thought that was of interest to shareholders.
I am not in any sense saying that there is anything wrong with what the Government are doing, but it would be helpful if the Minister could explain their rationale. If it is a transparency measure, it is not relevant to exclude payments made to political parties and organisations for referendums and other things, wherever they take place, simply because we are no longer in the EU. That information would be of value to shareholders. I look forward to the Minister’s response.
Lord Henley
My Lords, I thank all three noble Lords for their contributions. I was not surprised that there was comment about the consultation. I repeat that, as we made clear in the Explanatory Memorandum, we were unable formally to consult on the provisions in the statutory instrument. But as my honourable friend Kelly Tolhurst said in the other place:
“On consultation, as I outlined, we have consulted, worked with and used the expertise of Companies House to ensure that we are making the best provisions to enable UK companies to implement the regulations that we require for them to be legal if we leave the European Union without a deal”.—[Official Report, Commons, Delegated Legislation Committee, 4/2/19; col. 8.]
We extensively engaged with Companies House—I think it is the right place, initially—on the changes that will impact EEA and UK businesses. In addition, impacted businesses—I will get on to numbers in due course—were notified of many of the changes in this instrument through the publication of the Structuring Your Business If There’s No Brexit Deal technical notice published in October, including filing changes, the route of access to BRIS and the revocation of the cross-border merger regime.
The noble Lord, Lord Adonis, seems to think that we did not consult the CBI, the FSB and other similar bodies. I shall give him an assurance that applies not just to this order but to a range of other orders and orders that will cover other departments. The CBI, the FSB and others—I could go through a whole list of them—are in the department on a weekly basis seeing the Secretary of State. The noble Lord will find that they are also in the department on a regular basis seeing officials and making officials aware of their concerns. I can give a cast-iron guarantee that any concerns they have will have been noted and we will have been made aware of them. As I said, this applies not just to this order but to a range of orders. We are the Business Department. My right honourable friend the Secretary of State has made it clear that his door is always open to representative organisations, just as I made clear last week when dealing with the intellectual property regulations how recently I saw, for example, the ABPI and the BIA. Irrespective of Brexit or whatever, it is important to us to have regulations. The noble Lord, Lord Adonis, is an old hand and has been a Minister. He will have done that in the various departments in which he served, and he knows that those engagements go on with great regularity.
I shall now start working through the various points and questions that the noble Lord, Lord Fox, put. I shall start with his concerns about BRIS. It will continue to be open to scrutiny by all non-UK interests after exit. In addition, most EEA registries are open and can be accessed through the relevant websites in the EEA states, but that will have to be a matter for where the company is based. GOV.UK lists those websites for the EEA and the rest of the world. There are no changes in the information available.
The noble Lord then asked how many would be affected and whether Companies House has the capacity to deal with these matters. I can assure him that we are in constant touch with Companies House and it assures us that all is well. The impact will be small. For example, there are only five companies in scope of the change around intermediaries being a member of their holding companies and we found no companies in scope of the change to investment in companies’ distribution of profits. Going a bit further, in relation to the filing changes, we reckon there are about 1,900 companies in scope of the changes which will have three months to update their information. Again, I am assured that there are no problems in that area.
The third point made by the noble Lord was about technical changes in relation to cross holding. He asked what analysis we have done. We have made only two changes, which relate to intermediaries dealing in securities being a member of their parent holding company and how investment companies can distribute profits. The regulations will ensure that, after exit, only intermediaries that are members of or have access to a UK-regulated market will benefit from this exemption, and certain investment companies will no longer benefit from some relaxations on controls of their distribution of profits unless they are listed on the UK market.
The noble Lord’s final point was on cross-border mergers. I have a note on that which has been temporarily misplaced. I apologise to the noble Lord; I might have to write to him on that.
I turn to the concerns relating to political parties raised by the noble Lord, Lord Stevenson. The regulations amend Part 14 of the Companies Act, which sets out the shareholder authorisation required for a company’s donations to political parties, organisations or candidates for electoral office. Under the current legislation, that reflects that the UK is part of an integrated European political system. In practice, that means that the same authorisations are required whether the political expenditure relates to the UK or other member states. After exit, these authorisations will apply only to donations and expenditure relating to UK-based political parties, organisations and candidates for electoral office. We are making these changes because, after exit, it will no longer be appropriate for the UK to set shareholder authorisations on donations outside the UK, as the UK will no longer form part of the wider EU political system.
Lord Stevenson of Balmacara
It was very helpful of the Minister to read out what is already in the Explanatory Memorandum. However, that was not my point; I was asking why the Government are making the change. If the regulations are there in the first place for reasons of transparency of political contributions, it does not really matter where they are.
Lord Henley
As I said, we have to get the statute book in the right place in the event of no deal, and therefore that small change had to be made. I do not think that I need go any further than that, unless I have misunderstood the noble Lord. I will look carefully at what he has said and will possibly write to him.
The final point that I wanted to deal with related to cross-border mergers. The noble Lord, Lord Fox, asked what happens to mergers that are in progress now. Mergers between UK and EEA companies may not be recognised by the destination member state after exit. We informed stakeholders of the change via the Structuring Your Business If There’s No Brexit Deal technical notice, which was published in October and to which I referred earlier. In that, we told them what they ought to do and what advice the impacted companies ought to take.
I believe that I have answered all the points. I will write to the noble Lord, Lord Stevenson, if I have misunderstood him.
Recognition of Professional Qualifications (Amendment etc.) (EU Exit) Regulations 2018
(5 years, 10 months ago)
Lords ChamberRead Full debate Read Hansard Text Read Debate Ministerial Extracts
Lord Henley
To move that the draft Regulations laid before the House on 19 December 2018 be approved.
The Parliamentary Under-Secretary of State, Department for Business, Energy and Industrial Strategy (Lord Henley) (Con)
My Lords, the purpose of this statutory instrument is to ensure that, in the event of the UK exiting the EU without a withdrawal agreement, the system for the recognition of EEA and Swiss professional qualifications in the UK for the purpose of access to regulated professions continues to function effectively, and that existing recognition decisions for EEA and Swiss professionals remain valid. The effect of the statutory instrument is to create a system which retains the best aspects of the current system while providing regulators with more freedom to rigorously check the standard of qualifications prior to granting access to a profession. The instrument will provide certainty to individuals with recognised EU professional qualifications already working in the UK, and the businesses and public sector organisations employing them. Furthermore, it will ensure that the future supply of professionals into the UK in certain key sectors can be maintained. The instrument makes changes to existing regulations using the powers conferred by Section 8 of the European Union (Withdrawal) Act 2018.
Before I turn to the detail of the statutory instrument, I will provide noble Lords with some relevant background on European Union directive 2005/36/EC, which I will now refer to as the directive. The directive sets out a reciprocal framework of rules for the recognition of professional qualifications across borders. It applies to the EU member states, as well as to EEA EFTA states and Switzerland. The directive provides several routes for recognition of qualifications, including automatic and general systems for the purposes of establishment and a mechanism for those who want to work on a temporary or occasional basis. The directive covers a very large number and wide range of regulated professions.
The directive is implemented in UK law by a number of pieces of legislation, including the European Union (Recognition of Professional Qualifications) Regulations 2015, the earlier European Communities (Recognition of Professional Qualifications) Regulations 2007 in respect of Switzerland, and a number of pieces of sector-specific legislation for certain professions. Following the UK’s withdrawal from the EU, the directive will no longer apply to the UK and the domestic legislation implementing it will not operate effectively because it will place obligations on UK regulators that they will not be able to fulfil outside the EU. It is necessary to lay this statutory instrument to ensure that the domestic legislation underpinning the recognition system operates properly.
I will now set out the effect of the statutory instrument in more detail. First, it will protect recognition decisions already made before EU exit and allow applications for recognition which have been made before exit to be concluded under the pre-exit rules, as far as possible, after exit. Secondly, it will also enable professionals who have started offering services on a temporary or occasional basis before EU exit to complete this service provision. Thirdly, it will enable qualifications to be recognised in the future. The changes we are making will retain a version of the general system for recognition, where UK regulators will be required to recognise EEA and Swiss qualifications which are of an equivalent standard to UK qualifications in scope, content and level.
However, it should be noted that some things will change under this statutory instrument. First, we are amending the scope of the existing regulations so that the basis of recognition will be determined by where the qualification was obtained as opposed to the nationality of the applicant. Secondly, UK regulators will no longer be obliged to offer compensation measures and partial access to professions in circumstances where EEA and Swiss qualifications are not deemed equivalent to UK qualifications. Thirdly, we are also removing the obligation on UK regulators to offer EEA and Swiss professionals a mechanism for providing services on a temporary and occasional basis. Finally, farriers and certain health and care professionals, such as physiotherapists, will no longer be in the scope of the amended 2015 regulations. These professions will now be addressed in related sector-specific legislation, to which I now turn.
It is important to note that this statutory instrument and the amended 2015 regulations do not apply to nurses, midwives, doctors, dentists, pharmacists, architects and veterinary surgeons, who are entitled to automatic recognition on the basis that their qualifications meet the EU’s minimum training conditions. The systems for qualification recognition for these professions are currently implemented by legislation that is, fortunately, the responsibility of Ministers in other government departments.
In conclusion, the statutory instrument is vital to maintain the operability of the framework for the recognition of professional qualifications and provide certainty to businesses and professionals. The impact of this SI on businesses and the public sector will be minimal. I look forward to listening to noble Lords’ comments. I beg to move.
Baroness McIntosh of Pickering (Con)
My Lords, I welcome the regulations but I will ask a number of questions. The first is, obviously, what are the reciprocal arrangements for the rights of British professionals affected by the terms of these regulations in other EEA countries and Switzerland? Is that matter currently ongoing in the Minister’s department and the other relevant departments for those professions to which he has referred?
There is a reference on page 4 of the Explanatory Memorandum to the situation of lawyers. I must declare an interest because I practised in two separate firms in Brussels as an EU lawyer, as I would call it, with the qualification that I had then as a member of the Scottish Bar—I am now a non-practising lawyer. Could the Minister confirm that the Explanatory Memorandum refers on, I think, page 4 to the statutory instrument relating to lawyers that has already been adopted? What is the exact relationship between the SI that we have already adopted and the regulations before us? What is the position overall of European lawyers from EEA countries and Switzerland wishing to practise here and of British lawyers wishing to practise post Brexit in other EEA countries and Switzerland?
The position of teachers has long posed a particular problem in countries such as Germany. In the consultation that I am sure my noble friend and his department will have done, were any issues raised about reciprocal rights for teachers, and have any issues been raised by existing EEA-national or Swiss-national teachers currently practising their profession in this country? I think my noble friend has answered this question, but the Explanatory Memorandum says that such issues will be the duty of others—for example, paragraph 17.9 says that the Department of Health will look at EEA and Swiss doctors, nurses, midwives and dental practitioners who wish to come and work here. If I have understood that correctly, what will the position be regarding the recognition of EEA and Swiss professionals in Northern Ireland, with there currently being no devolved government there? Is that something his department will look at? For example, the Explanatory Memorandum says specifically that farriers in Northern Ireland will not be covered. I would be very grateful if he would help me to understand particularly how farriers will be dealt with in that regard.
Lord Hunt of Kings Heath (Lab)
My Lords, I remind the House of my membership of the board of the General Medical Council. I want to follow the noble Baroness by focusing on doctors in discussing this SI. As far as the GMC is concerned, the SI provides welcome legal clarification and certainty on the supporting framework governing how EEA-qualified doctors will enter the UK medical register if the UK leaves the EU on these terms—in other words, under a no-deal Brexit. We hope it will help to manage any potential disruption to the NHS medical workforce in those circumstances.
However, can the Minister confirm—I think he did so by implication in his opening remarks—that the regulations will be of only limited application to the medical profession? They will apply only in so far as they make transitional provisions for applications made or actions taken before exit day and which have not been fully determined by then.
The Minister will be aware that there is continuing anxiety in the health service about the uncertainties caused by the current state of negotiations. Given the reaction of many EU nationals working in the NHS to the climate of opinion in this country, I think we have to be really concerned about future staffing and the workforce pressures that will come around the corner very quickly.
Lord Fox (LD)
My Lords, before going into detail, I acknowledge that the General Medical Council, the Law Society, the Institute of Chartered Accountants in England and Wales and the Engineering Council have welcomed these proposals. I suspect this is more in sorrow than anything else, since this is better than the uncertainty that would exist without them.
My understanding of secondary legislation and its role—I fear I am treading into Adonis country here—is that it should be about technical, non-controversial issues. When you consider that the 2005 directive paves the way for free movement, you realise that this is actually quite a controversial instrument. In essence, it is here to make up for the fact that, outside the EU, we can no longer treat the European Union as a most favoured nation under WTO rules and will have to strike out the movement opportunities of EU 27 citizens. I understand that; that is why I tabled Amendment 66 to the Trade Bill. I know the Minister was not the beneficiary of that debate or speech but, for the sake of completeness, I am sure he would like to consult Hansard from about this time last week. He will see that free movement has important benefits and this SI tries to mitigate their removal. For that reason, I would say that this is not non-controversial and it is not, strictly speaking, just a technical piece of legislation. Therefore, we should probably not be using this instrument to discuss it, but here we are again.
I am sure the Minister has had a chance to look through Hansard for the other place; his colleague Richard Harrington, the Under-Secretary of State, piloted the debate through that House. A number of issues came up, which have already been touched on. One of these was about the Internal Market Information System, or IMI, of which we will no longer be members after exit. This is an important registry of skills and the way they relate to each other. It is not clear what we will replace it with—an Excel spreadsheet, perhaps—or who will hold it and be accountable for its veracity. I suspect it will be the Minister’s department, but this is not clear.
Reciprocity was raised by the noble Baroness, Lady McIntosh. The debate in the other place seems to indicate that there is no guarantee of reciprocity or process by which it is being sought or managed. If that is the case—it seemed to be the view of the Under-Secretary of State—why not? What are the Government doing to protect the interests of British citizens?
Baroness McIntosh of Pickering
I am most grateful to the noble Lord. We managed to get it on the record from my noble and learned friend Lord Keen that there is no reciprocity. Reciprocity remains a matter for negotiation. Perhaps the Minister could confirm this, but my understanding is that all those professionals who happen to be British and wish to practise, or continue to practise, in EEA countries and Switzerland will not be subject to reciprocity. This will have to be negotiated at some future date.
Lord Fox
I thank the noble Baroness for her intervention, as that seemed to be the tone of the debate in the other place.
More importantly, at that time the Minister was asked how many British citizens are affected and what was being done to inform them. He then gave a series of off-the-cuff answers. There has been time now for the department to get to some substance, given that that debate occurred some time ago. Perhaps the Minister can tell us how many there are or how one can go about finding out how many are involved. What level of the information process is going on? As we know, the European Union has said that individuals currently practising abroad on this basis will have to register with the relevant bodies within the European Union. This is worrying, and worrying for British citizens. The Minister should take this seriously and explain what is going on.
The issue regarding the medical profession will be very important indeed. It is about making sure that we do not just continue to recognise the qualifications of current employees in the health service, but have a smooth and seamless way in which future employees can be qualified to operate in it.
On the subject of farriers, it is not clear to me why farriers are included, but in another off-the-cuff comment the Minister in the other place made a joke. He said that one Member of the other place who was a qualified accountant was lucky because he was not a farrier. That seemed to imply that farriers were providing a second-class service to that of chartered accountants. Perhaps the Minister can dispel that myth.
Lord Adonis (Lab)
My Lords, the noble Baroness and the noble Lord, Lord Fox, have raised a number of significant issues. The first point to make about the issues involved, which are to do with the recognition of professional qualifications or the potential non-recognition of them in what will be only six weeks’ time, is that it seems impossible to say that these issues are purely technical. There is nothing technical about whether people’s professional qualifications are or are not going to apply, and whether they will or will not be able to work in a matter of months. The noble Baroness said, rightly, that the response of the Government is that further negotiations should take place on this. We are six weeks away—six weeks—and I doubt that the Minister is going to pretend, since his honourable friend in another place did not, that these matters can be resolved in the next six weeks.
Baroness McIntosh of Pickering
The noble Lord follows these issues even more closely than I do. Does he share my anxiety that from what we learned this afternoon of what the regulations set out, there will have to be separate statutory instruments for all the professions that fall under different departments, such as doctors, vets, architects and so on?
Lord Adonis
That is a very good question. My understanding—but I am not the Minister and he will have to tell us, since it is hard enough for us to understand without my trying to answer for him—is that the provisions of this statutory instrument give all the relevant regulatory bodies dealing with professional qualifications the power to determine whether those bodies will admit EEA and EU nationals and their qualifications. If the noble Baroness is right, it is much more complicated than I thought. I had thought that this one statutory instrument simply conferred all those powers, in so far as they are granted by the state, but if in fact further statutory instruments will be required that will be of huge concern to many professionals.
We are told that all these statutory instruments are technical. I emphasise that there is nothing technical about these issues at all. Indeed, the scale of the issues became apparent to me only on reading the debate in another place, which was referred to by the noble Lord, Lord Fox. If I may, I will read quite a chilling exchange between my honourable friend Chi Onwurah and Richard Harrington, the Business Minister, on this very important question of what will happen to UK nationals who have jobs on the continent which, at the moment, depend upon the automatic and mutual recognition of qualifications. We are saying, quite properly, that we are going to immediately roll over the recognition of qualifications of EU nationals here and we have the power to do so—of course, we have no power to do so and enforce this in respect of UK nationals who practise on the continent. The House can imagine the concerns that they have.
I will read the exchanges from the other place. My honourable friend asks the Minister,
“given that British citizens living in the European Union will be required to regularise their professional qualifications, does the Minister envisage that there could be circumstances in which they would not be able to continue working without doing so?”,
to which the Minister replied:
“I envisage that there could be those circumstances … the only way that that could not happen is for there to be no crashing out … the hon. Lady has made valid point; I would not say it was a ridiculous point”.—[Official Report, Commons, Sixth Delegated Legislation Committee, 4/2/19; col. 11.]
This is a matter of huge concern. This Parliament is not in a position to be able to guarantee that—we do not even know the number.
Lord Fox
The noble Lord is completely correct, but the Minister was incorrect in saying that by voting for the current deal this would not be an issue. The political declaration says that free movement of people will end. Therefore, this issue remains on the table whether or not there is a deal, whether we crash out or have a deal.
Lord Adonis
The noble Lord is absolutely right. What makes it even more extraordinary is that we are debating this as some kind of technical change, when in fact it is potentially fundamentally affecting the livelihoods of UK citizens abroad, which Her Majesty’s Government have a duty to protect. That is one of the fundamental duties of the state: to protect the interests of citizens going about their lawful business. The Government do not even know the numbers. The Minister for Business in another place said:
“I do not know how we would know which UK nationals were working abroad”.—[Official Report, Commons, Sixth Delegated Legislation Committee, 4/2/19; cols. 11-12.]
If this was being properly prepared for, it is within the resources of Her Majesty’s Government to be able to make estimates to consult with the relevant professional bodies and invite those affected to make representations. However, all the preparation of these instruments has happened in secret, so there has been no opportunity to do so.
With the situation we are facing in respect of this instrument it is fundamentally irresponsible for us to be proceeding down this course. I doubt whether the Minister will be able to keep a straight face and say that this is purely technical—it clearly is not a technical matter that Her Majesty’s Government are not in a position to guarantee the right of UK citizens to continue in their employment on the continent after 29 March. I anticipate that he will say that he has no choice because if we crash out there is no alternative. But there is an alternative: for us not to crash out on 29 March. The Government should do what they have been resisting for months; in the event of us not having a deal by the end of March—and the Government are running down the clock now, deeply irresponsibly—they should, in good order, apply for an extension of Article 50 so that we do not crash out.
This statutory instrument brings into very sharp relief the reasons why it is so much the duty of the Government and the state to do so. We are not in a position otherwise to guarantee the fundamental and legitimate rights of UK citizens, unless we have a continuation of the current regime of European law. We have no basis to do so; Ministers have accepted that. Because we have good relations with our European neighbours, we are hoping that they will not start imposing new requirements or that their relevant professional bodies will not start nit-picking or introducing new requirements.
Not only do we not have a guarantee—the noble Lord, Lord Fox, used the word “guarantee”—we do not even have any assurance. I can understand that it might not be possible to guarantee it, but because there has been no time to have any of these discussions, we have no assurances whatever that the existing qualifications of UK citizens on the continent will be recognised. Nor do we have any assurance that there might not be sudden changes. Let us make some fair assessment of what will happen. I will be astonished if existing employers try to turf out UK citizens from their jobs on 29 March. However, it is perfectly possible.
Some of us are acquainted with professional bodies on the continent. They are sticklers for their processes. Sometimes they can be a tad nationalistic in their approach to these issues, which is part of the reason for our being in the EU. They can decide to start protecting their own, and they will have an absolute right to do so once we do not have these rules in place. Profession by profession, in all kinds of technical and perhaps even surreptitious ways, I can easily see them start changing the rules, which will quite rapidly close down options for UK citizens to be able to take jobs on the continent. These are not technical issues; these are fundamental issues.
Lord Fox
Does the noble Lord agree that if we allow our regulators sector by sector to supervise the application process and grant access or stop access on the basis of their rules, that is exactly what will happen in all the countries of the EU 27? The danger of restrictive practice such as he suggests is very real.
Lord Adonis
The noble Lord makes a very good point, because, yet again, there has been no proper process of consultation. I am becoming a bit of a connoisseur of how consultation has been conducted under these statutory instruments and I can tell your Lordships that this one is unique in that it does not even have a paragraph that says what the consultation was. Paragraph 10 of the Explanatory Memorandum is simply headed: “Consultation outcome”. It continues:
“Consultation between Devolved Administration officials and Government officials, supported by Government Legal Advisers, took the form of regular meetings and engagement specific to the amendments made by this instrument”.
It does not say what that consultation was, with whom it was conducted, what the results were, or anything. However, I note that quoted by my assiduous honourable friend Chi Onwurah in the debate in the other place was the briefing given to her by the Institute of Chartered Accountants in England and Wales, which said—I suspect there have been many such representations:
“’Elements of the SI are open to interpretation. A UK regulator could refuse an EEA applicant by saying the EEA qualification is not equivalent in some way. There is a chance that EU members states will notice this and potentially do the same in their provisions for considering UK nationals/UK qualification holders’”.—[Official Report, Commons, Sixth Delegated Legislation Committee, 4/2/19; col. 7.]
That goes to the fundamental point made by the noble Lord, Lord Fox, which is that Her Majesty’s Government have no means of requiring our professional bodies to continue recognising the qualifications of EU nationals. Indeed, the Institute of Chartered Accountants, which represents one of the most numerous and significant professions in the country, says—it is not us scaremongering —that under these regulations regulators could choose to vary their requirements in respect of mutual recognition and that, if they do so, the legitimate expectation is that regulators on the continent do tit-for-tat responses in respect of their countries.
Let us be clear—we are debating this statutory instrument some six weeks before it comes into effect: we are talking about hundreds of professions, thousands of professional qualifications and 27 other countries, all of which will have discretion to act as they see fit in the matter of these regulations after 29 March. This is profoundly irresponsible. It is just one facet of the whole business of crashing out with no deal, but I could not conceivably be a party to agreeing it today. If the noble Lord, Lord Fox, chooses to divide the House on it, I shall certainly not support the regulations.
Lord Dykes (CB)
My Lords, I feel strongly about these matters along the lines sketched out vividly by the noble Baroness, Lady McIntosh, and the noble Lords, Lord Fox and Lord Adonis—as I think will a number of other Members across the House—because of the chaos behind these SIs and the way in which the Government are presenting them: inadequately and sometimes improperly drafted, and without proper explanation of the provisional import of their content and detail. There are many other examples.
Lord Stevenson of Balmacara (Lab)
My Lords, we have covered a lot of ground in the last half hour or so. One important point which has not been made follows on from those made by the noble Lord, Lord Adonis, and other noble Lords. It is puzzling that the Government have chosen to ignore the question of how our important services trade will survive, both in the event of a no-deal Brexit and, more generally, if and when we leave the EU. This SI in some senses plays to that concern.
In the Trade Bill, which is currently paused in your Lordships’ House and may reach Report shortly, there is virtually no mention of trade relating to services at all, yet that is 80% of our GDP and consumes a huge amount of our resource and activity. At the heart of services activity is the General Agreement on Trade in Services, which we are members of through our WTO membership and which will apply to us once we leave the EU. However, without any statement at all in the Trade Bill and no confirmation that the Government understand and support the very important services work that relies so heavily on professionals and their ability to move and support their work, knowing exactly where the Government are coming from is a bit puzzling.
My noble friend Lord Adonis is right to raise the connection here between the right to free movement of persons and the freedom of establishment, which are key pillars of the GATS deal. He is also right to ask why the opportunity was not taken in this SI—as, indeed, it has not been taken in the Trade Bill—to support those who must deliver services in this country, in the EU and wherever they trade to generate the return and income we will need if we are to continue to enjoy our current standard of living. In that sense, the idea that somehow, through this statutory instrument, we will encourage non-tariff discrimination and barriers seems perverse. I hope that the Minister will have some answers to that question when he responds.
Paragraph 7.16 of the Explanatory Memorandum sets out the issue but then ducks out of it, for all the reasons given by others in this debate. It is not just about farriers, although it is a curious feature of life that they are not regulated in one part of our United Kingdom but they are in the other three. Discriminating against the rights of free movement, persons and services and the freedom of establishment to provide those services is one thing. However, we currently enjoy a system—whether through the EPC or through the EU’s general regulatory arrangements—whereby established regulated professionals in professions with established training standards automatically qualify to trade wherever they are able to do so. We are trading that for the system we are introducing, which will be devolved to professional bodies. Admittedly, some of these are of great stature and longevity and will, I am sure, act in the first instance. However, because it is not a national system and will not be subject to national standards, it is bound to be variable and to raise the concerns mentioned by my noble friend and raised in the other place of a possible tit-for-tat arrangement under which regulations made in this country—regarding accountants or lawyers, for example—are seen as unsatisfactory by others in the EU, who may introduce tit-for-tat regulatory change to prevent our nationals qualifying. That seems an extraordinary situation to open up and I would be grateful if the Minister would respond to that point.
The underlying issue is the approach we will take if we leave the EU—with no deal or with a deal—to protect the way our citizens are treated. My noble friend Lord Adonis is right: it would be a strange Government who set out deliberately to devalue the possibility of their citizens earning a living and a valuable income for this country in the way this instrument appears to suggest. This is probably not the place to raise all the wider issues mentioned by the noble Lord, Lord Dykes, but he certainly has a point when he asks why we are going through the pain to achieve something that does not seem in any sense optimal for those involved in it. Clearly, minimal consultations were carried out and were mainly focused on whether these regulations will apply in Scotland, Wales and Northern Ireland without difficulty.
I would be grateful if the Minister would respond to this statement towards the end of the Explanatory Memorandum:
“Devolved Administrations have confirmed their agreement for UK Parliament to lay this legislation UK wide”.
That is what this statutory instrument does. It goes on to say:
“This has been sought under the terms of the Intergovernmental Agreement”.
I am not sure which intergovernmental agreement that refers to, but if the Minister could write to me with the details, I would be grateful.
Lord Henley
My Lords, as the noble Lord, Lord Stevenson, put it, this is not about farriers—I will not deal with that question, unfortunately; my noble friend Lord Gardiner will possibly have to deal with it on some other occasion—or about why they are not regulated in Northern Ireland but are regulated in England, Wales and Scotland. I do not think anyone knows the answer to that question, and I will not try to answer it, just as I do not know why, for example, hairdressers are regulated in Italy but not here. In France, they are doubly regulated; you find that if you want to be a hairdresser who makes home visits you must have one form of qualification, and if you want to operate from a shop, you must have another. Again, we do not consider that necessary, but obviously we have to make provisions for UK citizens who want to work abroad to do so when that is possible.
However, before anyone thinks it is all sunshine out there under the current system—the noble Lords, Lord Fox and Lord Adonis, in their little exchange seemed to imply that as a result of these regulations we would get further restrictive practices—I remind noble Lords of the restrictive practices that happen already. One has only to look at the position of UK ski instructors—to take one example from the 600 or so professions that can be affected—and the problems they have had trying to operate in France, where, for some reason, throughout these wonderful years restrictive practices have always come into effect to try to exclude UK ski instructors from operating.
Lord Henley
No, it will not, but we are making it quite clear that we believe that we will offer that unilateral ability to operate over here—not that there are that many ski instructors here, although I believe there are north of the border. The noble Lord should welcome the unilateral nature of these regulations.
We will talk about no deal; as I said, we hope that with a deal we will be able to cover all the other 600 or so professions or quasi-professions that are covered. However, I make it clear that I will not deal with other professions, which are, quite rightly, a matter for other departments. Therefore I will not answer the point made by the noble Lord, Lord Hunt, about doctors, because that will be a matter for regulations from the Department of Health and Social Care that either might have already gone through or will go through, and the same is true of my noble friend Lady McIntosh’s concerns about legal services. The legal services SI and the BEIS SI are separate legislation, laid by the Ministry of Justice, and are an effect of the legal services directive and the establishment directive. These alternative routes for recognition of lawyers exist now and, as I said, that is a matter for them.
I shall start off with numbers—the noble Lord, Lord Adonis, and other neighbourhoods, expressed concern about numbers. As the noble Lord will be aware, the European Commission maintains a database of the number of qualification recognition decisions awarded to most professions across the EU, the EEA and Switzerland. It does not tell us exactly how many professionals are working in the European Union at any given time, but it gives an indication in the form of the number who have sought recognition of their qualifications. That database tells us that in the 10 years from 2008 to the end of 2017, approximately 20,000 UK professionals have successfully had their qualification recognised in the EU, the EEA or Switzerland, and of those 20,000 decisions, about 12,000 related to qualifications in the scope of this statutory instrument. Further, I can tell the noble Lord that the top five professions having their UK qualifications recognised are: secondary school teachers, with approximately 3,400; lawyers, with approximately 1,600; doctors, with approximately 1,500; primary school teachers, with about 1,500; and, going back to Italy and France, 1,400 hairdressers.
Lord Adonis
I am very grateful to the Minister for giving way. He is talking about the consultation that took place with UK regulators and professional bodies. What consultation has there been with UK nationals who work on the continent, who could well be affected by the lack of reciprocal recognition of qualifications? It is their interests that are entirely unprovided for in the statutory instrument.
Lord Henley
I do not think it will be possible to consult them in the way that the noble Lord suggests. I accept that they are affected. We are making the order—a one-sided order—so that those coming to the UK can benefit from it. Obviously, UK citizens abroad are in a different position, but I hope they will take appropriate advice.
Lord Reid of Cardowan (Lab)
I am very grateful to the Minister. He mentioned that 12,000 UK citizens were awaiting professional recognition abroad and that 20,000 had thus far had their accreditation accepted in the European Union, as if to imply that that was an inevitable and inexorable acceptance which would continue. Does he accept that for all the 32,000 UK citizens working abroad, according to his estimates, should a reciprocal decision to that taken here be taken by European Union countries—to allow their professional organisations to make the decision—all those 32,000 UK citizens could be subjected to changes in the accreditation system in future, thus threatening the jobs, positions and livelihoods that they hold at present?
Lord Henley
I think the noble Lord has misunderstood what I said. Over the past 10 years, according to the EU’s database, 20,000 qualified professionals have had their qualifications recognised in the EU or the EEA. Of those 20,000—it is not a question of adding the two figures together and getting 32,000—12,000 related to qualifications within the scope of this statutory instrument, the implication being that the other 8,000, whether they were farriers from Northern Ireland, doctors or whatever, were not within the scope of this SI; they were within the scope of another. We are talking about 12,000 UK citizens who at some point over the past 10 years have gone to work in the EU. I am advised that the largest proportion of them are teachers, and the same is true of those coming back here. I have given figures for secondary school teachers and primary school teachers. Lawyers and doctors are not within the scope of this SI. I mention also hairdressers, where we can never have reciprocity because, as the noble Lord will be aware when he goes to his barber, we do not regulate hairdressers and barbers, whereas that is the case in Italy, France and no doubt in Luxembourg and other countries. I do not have the precise details of which of the other 27 countries regulate such things.
Lord Reid of Cardowan
I do not know whether my barber is regulated or unregulated but, looking at the outcome of his work, I suspect he is unregulated. I thank the Minister for clarifying his figures, but will he now address the substantial point that the 12,000 who have previously been accredited and are employed in jobs, presumably across the European Union, could in the future, if the EU does the same as the Government are doing, which is to pass the power of accreditation down to the professional organisations on the continent, find themselves without accreditation for their livelihood because the professional associations in Europe may well be tempted into what would be the equivalent of a trade war by protecting the interests of their own members vis-à-vis those who come from the United Kingdom? That is precisely the point that people in this Chamber are worried about.
Lord Henley
I am not going to comment on the noble Lord’s barber. However, the position of all 12,000—should they still be there and working, because that was over a period of 10 years—will be perfectly all right and they need not worry.
Lord Henley
There is no point in my giving way every time the noble Lord speaks because I must try to answer the points.
Lord Henley
I apologise to the noble Lord.
There has been guidance from the European Commission on this matter. Decisions on the recognition of our qualifications made by another EU member state before exit will not be affected by our withdrawal from the EU. That is what the Commission has said. Therefore those 12,000, should they still be there, will be perfectly all right. Obviously, for any new person it will depend on what arrangements come into effect. We are dealing with our own arrangements for people coming into the UK. I hope that finally answers the noble Lord’s point.
Lord Henley
Can my noble friend wait just a minute? In the event of no deal, people seeking recognition of their qualifications after 29 March will be assessed under the host member nation state rules. I shall now give way to my noble friend.
Baroness McIntosh of Pickering
I am grateful to my noble friend. I hope he will come on to respond to the precise point about reciprocity. I think that what the noble Lord was trying to say was the question I put to my noble friend earlier. We are proceeding ahead of our European partners. We are ahead of our EEA and Swiss partners for the purposes of this statutory instrument. I think my noble friend will confirm that those new applicants will not have reciprocity because it is a matter for negotiation. Is that the case?
Lord Henley
My noble friend has it. We are saying to the large number of French ski instructors who want to come here that they can. It will be up to the French skiing authority. I mention ski instructors because this is just one area where what the noble Lord seemed to think was working perfectly quite obviously was not. I use that, possibly flippantly, just to make that point. French ski instructors will be able to come to Aviemore and qualify. That is what these regulations are about.
Lord Winston (Lab)
I remind the Minister that in 1938 that is exactly what we did in Britain. I had a number of colleagues who became great scientists and medics and who were refused their qualifications when they came to this country as refugees. For example, my boss worked as a housemaid for three years before she was able to start looking down a microscope. This is a real issue, not just for ski instructors but for people who are highly qualified as well.
Lord Henley
The noble Lord hits the point absolutely on the head. That is what the regulations are doing. That is why we are saying we will recognise their qualifications. Obviously I cannot say that France will recognise the qualifications of a UK ski instructor, or something more important. That has to be a matter for the French authorities, and we hope they will follow what we are doing.
Can I move on to deal with just one or two of the other points? I see that the House is filling up and, I think, wants to move on to other business.
Lord Henley
Perhaps it does not. I will continue.
I have already mentioned the guidance from the Commission. The noble Lord, Lord Adonis, was concerned that existing qualifications would be recognised, and I mentioned what the Commission said in published guidance about the recognition of other qualifications. We have every faith in that. The noble Lord, Lord Fox, complained that this should be technical and non-controversial—
Lord Adonis
My Lords, I am very grateful to the Minister for giving way. These are extremely serious matters. These figures are huge: 20,000 professionals currently have their qualifications recognised, which means that many thousands more will want the same in due course. The Minister referred to what the Commission said. Richard Harrington, the Minister in another place, said:
“In a no-deal scenario, the recognition of qualifications”—
UK nationals’ qualifications on the continent—
“will be assessed under host member state rules. In that scenario, after exit day, our nationals will not be able to provide temporary and occasional professional services as they previously could under the directive, but that will be subject to their host member state’s laws and regulatory frameworks”.—[Official Report, Commons, Sixth Delegated Legislation Committee, 4/2/19; col. 11.]
Those words could not be clearer. We have no basis whatever for being able to offer assurances, let alone guarantees, to UK nationals that their qualifications will continue to be recognised for the purposes of new employment after 29 March. I need hardly point out to the House that what the Minister, Richard Harrington, said will come to pass in six weeks’ time. Any responsible Government would not be putting regulations of this kind to the House unless they had made proper provision in that respect.
Lord Henley
My Lords, we are bringing these forward in the event of no deal. We are saying, “We will take in all your qualifications”. The Commission, as the noble Lord acknowledges, has said that it will recognise existing qualifications from UK nationals out there.
Lord Henley
The noble Lord will have to wait until I have finished answering this point. He can then interrupt me if I decide to give way, but I think I ought to be allowed to answer a point fully before I take another one.
I will now quote from a letter that my honourable friend wrote to his opposite number following the debate on these regulations in another place:
“Therefore, UK citizens living in EU countries who are working in regulated professions or under protected titles, and who are doing so under a recognition decision under the MRPQ directive, will not have their recognition decisions affected by our withdrawal from the EU and they will not seek further recognition in order to be able to continue working or using their title”.
I will now give way to the noble Lord.
Lord Fox
I thank the Minister for giving way and apologise for being so enthusiastic. Richard Harrington said in the other place that,
“the Commission has advised holders of UK qualifications living in the EU to obtain recognition in an EU27 member state before exit”.—[Official Report, Commons, Sixth Delegated Legislation Committee, 4/2/19; col. 11.]
Is the Minister saying that that is wrong or is he saying that his colleague in the other place is right?
Lord Henley
My honourable friend is always right. On this occasion, he wanted to clarify his thoughts a little, and that is why I am quoting from the letter he wrote. I hope that response answers the noble Lord’s question.
Baroness McIntosh of Pickering
My noble friend is being incredibly generous and I am most grateful to him. I asked what his department is doing on a reciprocal basis, given that this is a matter of negotiation. The example given earlier was of a biomedical scientist, which falls within the scope of this directive, but it could equally be a clinical dental technician or a dental nurse. What is the department doing to ensure that there is two-way traffic and that we quite rightly ensure that EEA and Swiss nationals can carry on or make new applications here? Will he put our minds at rest that that is precisely what the Government and his department are doing for our nationals in the EEA, Switzerland and the EU?
Lord Henley
I assure my noble friend that my department and the other relevant departments—this does not just affect BEIS—will seek reciprocity. We cannot offer reciprocity in a no-deal situation. What we are trying to offer in that situation—which is all these regulations are about—is protection for those who want to come into the UK. It is a one-way offer and one would hope others will take it up.
Lastly, I want to deal with the point of the noble Lord, Lord Stevenson, as to whether there is a GATS risk. The current system is based on the nationality of the professional rather than the nationality of the qualification. To keep in line with WTO rules, we have to change that at exit day to avoid being in breach of them. WTO members can recognise professional qualifications gained in other countries provided certain conditions are met. This recognition can be gained unilaterally but it must not operate in a discriminatory way, so we cannot retain a system that provides preferential treatment simply on the basis of a professional’s nationality—it has to be on the qualification.
I believe that I have answered most of the questions put to me. These regulations are important and it is necessary to get them on the statute book.
Seaborne Freight
(5 years, 10 months ago)
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The Parliamentary Under-Secretary of State, Department for Transport (Baroness Sugg) (Con)
My Lords, with the leave of the House, I will repeat in the form of a Statement the Answer given by my right honourable friend the Secretary of State for Transport to an Urgent Question in the other place. The Statement is as follows:
“In December, following a collective government decision and a procurement process involving my department and the Treasury, we contracted three shipping companies to provide additional ferry capacity as part of contingency planning for a potential no-deal EU exit. Let me start by being absolutely clear that, in the event of a no-deal Brexit, the Government’s priority is to ensure the smooth operation of both the Port of Dover and the Channel Tunnel, and we are putting in place measures at the UK end to contribute to this.
However, any sensible Government plan for all eventualities. That is why we agreed contracts worth around £100 million, with the bulk of the award, £89 million, going to DFDS and Brittany Ferries to provide services across seven separate routes. Built into those agreements are options to add capacity on two other routes from those companies should they be required. This capacity could be required to guarantee the smooth flow of some key goods into the UK, particularly for the NHS. It is worth reminding the House that, in the event of no deal and constriction on the short straits, this capacity would be sold on to hauliers carrying priority goods.
In addition to the £89 million-worth of contracts with DFDS and Brittany Ferries, the Department for Transport entered into a £13.8 million contract with Seaborne Freight to provide ferry services from the Port of Ramsgate to Ostend. At the time of the award, we were fully aware of Seaborne’s status as a start-up business and the need for Seaborne to secure vessels and port user agreements to deliver a service. However, the shorter distance between the two ports meant that the route could provide us with shorter journey times and lower cost, making it a potentially attractive part of the package.
Seaborne’s proposition to the department was backed by Arklow Shipping, Ireland’s biggest and one of Europe’s largest shipping companies. For commercial reasons I have not been able to name Arklow Shipping or mention its involvement to date. But its support for the proposition from the outset, and the assurances the department received, provided confidence in the viability of this deal. Arklow confirmed to me that it intended to finance the purchase of ships and would be major shareholders in Seaborne. It also confirmed to me its view that the Seaborne plans were, ‘both viable and deliverable’. These assurances included clear evidence about the availability of suitable vessels from the continent and about the formal steps which Seaborne, via Arklow, had taken to secure these vessels.
However, releasing this information into the public domain could have significantly driven up the cost of the vessels and might even have resulted in them being removed from the market, where supply is extremely scarce. I have therefore had to refrain from saying anything publicly to date about this.
My department monitored closely the progress of Seaborne towards meeting its contractual commitments. By last week, the company had secured firm options on ships to operate on the route, and had reached provisional agreement with Ostend and was close to doing so with Ramsgate. However, late last week, despite previous assurances, Arklow Shipping suddenly and unexpectedly withdrew its backing from Seaborne. In the light of this, and after very careful assessment, I took the decision to terminate this contract. My department concluded that there were now too many major commercial issues to be resolved to enable Seaborne to establish alternative arrangements and finance in the time needed to bring ferries and ports into operation.
As I have repeatedly made clear, not a penny of taxpayers’ money has gone or will go to Seaborne. The contracts we agreed with the three ferry companies are essentially a commitment to block book tickets on additional sailings after the UK leaves the European Union, so actually we have taken a responsible decision to make sure that taxpayers’ money is properly protected.
I can confirm that the contracts with DFDS and Brittany Ferries remain on track and will provide us with valuable additional freight capacity into the UK in the event of disruption following EU exit. We also have contractual options to replace the Seaborne capacity with additional capacity on routes in the North Sea, and this is an option we will be discussing across government in the coming days.
While the focus of this Government is to secure a deal with the European Union, as a responsible Government we will continue to make proportionate contingency plans for a range of scenarios. That is the right thing to do”.
Lord Rosser (Lab)
I thank the Minister for repeating the Statement. On 8 January, my noble friend Lord Tunnicliffe was told by the Government:
“With Seaborne, the proposal was subject to technical, financial and commercial assurance”.—[Official Report, 8/1/19; col. 2127.]
What were the financial assurances received and from whom? Were the financial assurances given specific, firm, unqualified and in writing, or were they only in the form of an intention or a consideration of giving financial support, as the Statement suggests?
Why was no reference made in the Statement of 8 January to the extensive involvement on the financial side of the Irish company Arklow Shipping? The Government said it was for commercial reasons. What commercial reasons were so important that they overruled the public interest and transparency on a Brexit issue? Perhaps instead it was because the Secretary of State was so determined to have the involvement at all costs of a British shipping company, to avoid the embarrassment of having to rely exclusively on European companies to help us out of a no-deal mess, that he reached this questionable agreement with Seaborne Freight without competitive tendering and then knowingly did not disclose in the Statement that even British Seaborne Freight was dependent on financial backing materialising from an EU-based Irish company? If that is not the case, why was the agreement not reached directly with Arklow Shipping, one of Europe’s largest shipping companies and clearly the intended real power behind Seaborne Freight?
Baroness Sugg
My Lords, we have listed the checks carried out as due diligence on the operational suitability of all the bids submitted as part of the department’s procurement of additional freight capacity. They were director searches and basic counterparty financial solvency checks, with technical support provided by Mott MacDonald. Two high-level technical reviews were completed. The first related to the ferry tender and submission compliance within the DfT evaluation process and the second to the technical feasibility of the tendered ferry intervention. Financial analysis was carried out by Deloitte to assess the financial robustness of operators, and price benchmarking by Deloitte to examine the prices offered to DfT in comparison with market rates to enable the assessment of value for money as part of the procurement process.
I explained earlier in the Statement the reasoning behind not mentioning Arklow before. It was for commercial reasons. It would have adversely affected the cost of ships in order to procure the contract. We contracted directly with Seaborne because it was the company that had been working for over a year to provide the service between Ramsgate and Ostend.
Baroness Randerson (LD)
My Lords, we now know that the Government’s own estimate is of an 87% reduction in cross-channel trade for three to six months if there is no deal. Given that the whole point of Brexit no-deal preparations is to minimise risk, why did the Department for Transport approve the contract with Seaborne when it was known that there was a high risk that the company would not be able to fulfil the contract? When we spoke about this on 8 January, the Minister gave me solemn assurances that the financial backing for Seaborne was good. How did that situation change so dramatically overnight?
What the Minister did not tell me on 8 January was who will pay for the dredging of Ramsgate harbour. The Minister told us today that no public money will be put forward to Seaborne, but who will pay for the dredging of the harbour, given that we now know that no company could provide ships in time for a no-deal Brexit to use that harbour?
Baroness Sugg
My Lords, we went ahead with the contract with Seaborne on the understanding that it was a start-up company and did not currently provide the service. As I explained, this was a shorter and therefore cheaper route, which was why we were keen to make use of it. But we have enough capacity in the remaining contracts for prioritised goods.
The DfT is not party to the dredging work at Ramsgate, but of course we will continue conversations with a number of stakeholders, including Thanet Council, over any plans to re-establish ferry services at the Port of Ramsgate.
Lord Campbell-Savours (Lab)
My Lords, the dredging started five weeks ago on 3 January, so accounts must have been submitted or Thanet Council will be aware of what the bill is. Have the Government been told how much that bill is? Will the Government pay that bill at the end of the day? How much is the bill to Slaughter and May, Deloitte and Mott MacDonald, to which the Minister referred, for the assessment of Seaborne’s business plans? Finally, in the Statement on 8 January, the Minister told us:
“We are concerned that in the event of no deal, there will be disruption at the Port of Dover … which is why we are making these contingency plans”.—[Official Report, 8/1/19; col. 2128.]
What replacement contingency plans are now being considered to deal with the disruption at Dover, which the Minister herself predicted?
Baroness Sugg
My Lords, as I said, the DfT is not party to the dredging work. I am not able to comment on the value of contracts held by entities other than my department. Dredging of the port is the responsibility of the relevant port authority and continues to form part of the ongoing discussions. As I said, the DfT will continue conversations with a number of stakeholders, including Thanet Council, over plans to re-establish the ferry service.
On the money paid around the Seaborne contract, the contract awarded to Seaborne was part of a broader procurement exercise to secure additional freight capacity after Brexit, and as part of that the three contracts were awarded. Extensive third-party due diligence was carried out on these so a cost would have been attached to the process even if we had never entered into an agreement with Seaborne.
Lord Birt (CB)
My Lords, the Minister has told us that substantial commercial due diligence was done on this deal, yet the Secretary of State’s Statement says clearly says that Seaborne,
“was backed by Arklow shipping”.
It goes on to say that Arklow offered support for the proposition, and finally that Arklow,
“provided confidence in the viability of this deal”.
Will the Minister explain more clearly than she has so far what the backing was, what the support was and what the assurances were?
Baroness Sugg
My Lords, I take this opportunity to remind the House that no taxpayer money has been transferred to the company and the Government stand by their robust due diligence carried out on Seaborne Freight. Perhaps it would be helpful if I read out some specific reassurances that Arklow provided to us. It said:
“Arklow Shipping has been working with Seaborne for twelve months in connection with Seaborne’s proposals to develop new freight services between the UK and continental Europe. Arklow Shipping is therefore familiar with Seaborne’s agreement with Her Majesty’s Government to provide additional freight capacity … In support of the current proposals to develop the shipping route … Arklow Shipping intends to provide equity finance for the purchase of both vessels and an equity stake within Seaborne which will be the operating entity of this project … Seaborne is a firm that brings together experienced and capable shipping professionals … I consider that Seaborne’s plans to deliver a new service to facilitate trade following from the UK’s departure from the EU are both viable and deliverable”.
That is from Arklow Shipping, which, as I said, is Ireland’s largest shipping provider and one of Europe’s biggest. That letter has now been published on the GOV.UK website.
Lord Howell of Guildford (Con)
My Lords, I should like to say a word on behalf of the trade union of ex-Secretaries of State for Transport, of whom there are several in your Lordships’ House. This case really confirms that the portfolio is a no-win situation because everybody is a critic and nobody is your friend. But in this particular case, are we to understand therefore that when the contract was first made, although it could not be revealed for commercial reasons, it was in fact being made to a combine that had dozens of ferries and enormous ferry experience? I know it had to be cancelled later when Arklow pulled out, but I am waiting to hear a flicker of recognition from those shoot-from-the-hip critics who rushed forward to criticise at the original time when they did not know the full facts. Would it not have been wiser to become a little more informed before the usual crowd gathered to criticise the Secretary of State?
Baroness Sugg
I thank my noble friend for those comments. The contract with Seaborne was specifically designed in recognition of the risk posed by contracting with a new operator and it protected the taxpayer, as it was always designed to do. As I said, no taxpayers’ money has been paid to Seaborne. My noble friend is quite right to point out the assurances that we received from Arklow Shipping. Noble Lords would expect a responsible Government to ensure that we are able to deliver capacity for critical goods in the event of no deal and that is what we are doing.
Lord Berkeley
The Minister seeks to blame Arklow for this withdrawal, but the Irish Times says something rather different. It states that Arklow was never “a backer”, did not have “any formal agreement” with Seaborne and was not “a contract partner”. Who is telling the truth?
Baroness Sugg
My Lords, the contract was with Seaborne Freight. I have read out extensively the reassurances provided by Arklow, which are set out in the letter published on GOV.UK. The contract, however, was with Seaborne and we entered into that given the reassurances that we had.
Universities: Financial Sustainability
Viscount Younger of Leckie (Con)
My Lords, with the leave of the House, I will now repeat an Answer to an Urgent Question given by my honourable friend the Minister of State for Universities, Science, Research and Innovation in the other place today:
“I thank the honourable Member for the opportunity to discuss the higher education sector today in my first Urgent Question. This Government recognise the importance of the higher education sector and the massive contribution it makes to this country.
We recognise the multiple challenges the sector is facing and that these will require institutions to adapt to a more competitive and uncertain environment. It is true that the current context presents significant challenges to institutional management, efficiency and financial planning in the HE sector, but it is wrong to characterise the HE provider sector as teetering on the brink of financial collapse. In its final annual report on the financial health of the sector, published in March last year, the Higher Education Funding Council for England, the Office for Students’ predecessor, concluded that the HE sector overall continues to be in a sound position financially.
The new regulatory framework under the Office for Students brings a risk-based approach to monitoring financial viability and sustainability in order to protect students’ interests. Financial sustainability is a condition of registration. This means that the OfS, as regulator, will pay greater attention and, importantly, require more specific action where there is greater institutional vulnerability. Where the OfS identifies particular risks to a provider’s financial sustainability, it will indeed take action. This may include enhancing its monitoring or imposing a specific condition of registration on a provider to improve its financial performance. It may also require a provider to strengthen its student protection plan. This will enable action to be taken before a provider faces major financial difficulties.
The Department for Education would also work closely with the OfS to understand the sector’s wider financial risk in worst-case scenarios. We are also working with the OfS, other departments and other relevant national partners to develop a full contingency plan to deal with unforeseen or major higher education provider failure. This will set out roles, responsibilities, triggers and actions to be associated with instances where an HE provider market exit falls outside the normal “business as usual” approach of the OfS implementing its regulatory framework and requires government action. Ultimately, the financial viability of universities, as autonomous bodies, is a matter for the leadership of the HE providers.
The post-18 review terms of reference led by Sir Philip Augar include a focus on ensuring choice and competition across a joined-up post-18 education and training sector. The review will look at how it can support a more dynamic market in provision, while maintaining the financial sustainability of a world-class higher education and research sector. We have been clear that the review recognises the need to preserve and protect the existing strengths in the system, and the stability of providers is key to a strong system.
In conclusion, the HE sector faces challenges, but we are confident that universities will rise to these challenges and will continue to be providers of world-class higher education”.
Lord Watson of Invergowrie (Lab)
My Lords, I thank the Minister for repeating the Answer to the UQ in the form of a Statement. Two impending great unknowns have combined to leave many universities feeling vulnerable. The first is, of course, that the Augar review, whose publication date remains shrouded in mystery, seems likely to recommend a significant cut in tuition fees. Can the Minister give a commitment that should that be the case, it will not lead to a reduction in university funding? The more serious problem facing universities is the uncertainty after we leave the EU, particularly if that should happen without a deal, which the Prime Minister has consistently refused to rule out.
Now we learn from media reports that at least four universities have serious financial problems. I hope the Minister will tell noble Lords how many institutions his department understands to be at risk of insolvency. Reading we know of, but it seems the Government do not have a handle on the situation there because when the Urgent Question was heard in another place this afternoon, the Universities Minister suggested that Reading should contact the Office for Students, even though the university has said that it did so last week.
The Minister caused some astonishment in the Urgent Question exchanges when he stated:
“There is an expectation that providers may, in a small number of cases, exit the market altogether as a result of strong competition”.
It was almost a throwaway remark. The Government seem not to have considered that not the least important factor when a university finds itself in financial difficulty is the potential knock-on effects in the local community, because it is a matter of concern not only for students and staff at the institution but for the local area in which it is based.
There also remains some doubt about the fundamental role of the Office for Students in this situation. Is it merely the regulator or is it a player? Last year, its chair, Sir Michael Barber, stated unequivocally that the OfS would not bail out any institutions that found themselves in financial trouble, yet soon after we learned that an unnamed institution had been provided with an emergency loan when it ran out of cash at the start of this academic year. Will the OfS remain a lender of last resort? That question, I fear, may be put to the test in the not-too-distant future. Will the Minister clarify government policy on this?
Finally, last week the Universities Minister said that the DfE was working with the OfS towards establishing student protection plans. Earlier today in another place, the Minister said he hoped to complete reregistration by the end of the year. If that is the case, it is not very reassuring to people who need reassuring at this time. Will the Minister say how many universities and students are currently covered by student protection plans and how many are not? These questions have assumed even greater importance over the past few days.
Viscount Younger of Leckie
I thank the noble Lord for multiple questions. I shall first address the Sir Philip Augar review. As the noble Lord would expect, I cannot comment on what might come out of the review, but I say again that it is ongoing and more information on its outcomes will be available in due course. When that happens, the Government will be in a position to respond.
The noble Lord also asked about reports in the papers of some universities with serious financial problems. We are certainly aware of them, but I am not in a position to speak about any universities that have these issues and do not want to do so. The OfS continues to say that it will not bail out providers. That is not its role. The noble Lord asked about student protection plans. I will need to write to him on the number of universities with protection plans in place. The noble Lord raises a very important point. One of the most important aspects of the reforms that we brought forward in the Act was to ensure that students have proper protection plans in the unlikely case that providers do not make any.
Lord Storey (LD)
The problem of funding is compounded by the financial issues arising from pension liabilities that universities face. The Government are offering additional funding to schools and colleges to cover the shortfall created by the revaluation of the teachers pension scheme. Will the Minister tell us why not universities too?
The thread of Brexit runs through the problem of funding. Vice-chancellors warned as far back as 2017 that British universities were already losing out on millions of pounds of funding from, for example, the Horizon 2020 programme, as a result of the outcome of the Brexit referendum. Will the Minister tell us how far the UK’s share of funding from that programme has fallen since the referendum? What additional moneys will the Government put into scientific research this year, given the assurances made about underwriting scientific research funding?
Viscount Younger of Leckie
I shall first answer the question about the pension scheme. The noble Lord may know that Her Majesty’s Government have a consultation on the teacher pension scheme changes which closes on Wednesday—in two days’ time. The Department for Education has limited financial resources and can afford to fund only part of the increase in employer contribution costs relating to the TPS. Schools, further education colleges and other publicly funded training organisations are in great need of additional support for those costs. The live consultation seeks views on the proposal’s impact on higher education institutions. We will finalise funding decisions once that consultation has concluded.
On the Horizon programme, the noble Lord may know that negotiations are ongoing. As he said, it is important that we continue to engage in that programme, and we very much hope that will be the case.
Lord Howell of Guildford (Con)
My Lords, does my noble friend agree that some university funding might be made easier if the whole process of receiving bona fide students from overseas were made somewhat less complicated? Does he agree that that in turn would be much easier if we took the student immigration figures out of the overall immigration figures and dealt with them carefully and sensibly in a separate way, and that this would be particularly beneficial for links with the Commonwealth, and especially with India?
Viscount Younger of Leckie
My noble friend would expect me not to agree with that point, but I think the whole House would agree it is very important that we continue to attract students from overseas—from EU and non-EU countries. It is very encouraging that the number of applicants from the EU has increased by 1% to 43,890. There is still a lot of work to do in that respect but, in terms of students being included in the migration figures, we have had much discussion in the Chamber about that, and I do not want to go into it today.
Lord Blunkett (Lab)
My Lords, I declare an interest as listed in the register. Perhaps the noble Viscount would contemplate how we can provide much greater certainty as a global player in higher education. It is not just a question of the Augar financing review, Brexit, the pension fund or even the very temporary drop in the demographic in relation to early entry to university; it is also a question of our place in the world. Will he speak to the Secretary of State and, for that matter, to the Chancellor about the critical importance of retaining our reputation and removing uncertainty, which would undermine the willingness of students to come from abroad and undermine the reputation of our universities worldwide?
Viscount Younger of Leckie
There are a lot of uncertainties around, and the noble Lord makes an extremely good point. One of the most important points coming through, perhaps as a result of the reforms that we are making, is the opportunity for current and new providers to market themselves effectively. There are a lot of issues connected to this, including the teaching excellence framework. As we know, we are beginning to look more at how subjects can be assessed, so that students from abroad can see with much greater transparency and clarity what courses are available and what their ratings are like, and hopefully choose Britain rather than other countries to come to and study.
Lord Adonis
My Lords, two very specific questions were asked by my noble friend on the Front Bench which the noble Viscount did not reply to. When precisely will the Augar report be published, and can the noble Viscount give an undertaking to the House that its recommendations will not diminish funding for our universities?
Viscount Younger of Leckie
I answered the question by saying that I cannot give a precise date for when the Augar review will report, but I have said consistently that it will do so very shortly, and here we are early in 2019. I am not going to be drawn into speculating on what the Augar review will say; we will have to wait. When the report is published, the Government will want to make a full response.
Lord Tugendhat (Con)
My Lords, does the noble Viscount agree that when he uses the word “marketing”, in this context it is a rather dangerous word? One reason why some universities are in trouble is that they have been marketing a great deal too hard and getting into debt as a result. Does he accept that it will now be necessary for the regulatory agency—the OfS—and others to keep a very close eye on the finances of universities, and to ensure that rumours that spring up about one do not spread to others? There is a danger here of a contamination effect.
Viscount Younger of Leckie
My noble friend is right. When I mention marketing, I stick to my view that universities, just like employers, need to market themselves and explain what they do and who they are. Equally, he is right that the Office for Students, with the greater teeth that it has been given, must look ahead with the strong level of provider registrations that it is operating at the moment. Part of that is being sure it can keep an eye on the viability of each and every registered provider, anticipating rather than reacting to any issues that might crop up.
Social Security (Contributions) (Rates, Limits and Thresholds Amendments and National Insurance Funds Payments) Regulations 2019
(5 years, 10 months ago)
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Lord Bates
To move that the draft Regulations laid before the House on 16 January be approved.
The Minister of State, Department for International Development (Lord Bates) (Con)
My Lords, I shall speak also to the Tax Credits and Guardian’s Allowance Up-rating Regulations 2019, and I will explain the changes that the two sets of draft regulations would bring.
These social security regulations make changes to the rates, limits and thresholds for national insurance contributions and make provision for a Treasury grant to be paid into the National Insurance Fund if required. These changes will take effect from 6 April 2019.
First, I will outline the changes to employee and employer national insurance contributions, referred to commonly as class 1 NICs. On class 1 primary NICs for employees, the lower earnings limit will rise in line with inflation from £116 to £118 a week, and the primary threshold will rise with inflation from £162 to £166 a week. The upper earnings limit is aligned with the UK’s income tax higher rate threshold, which will rise from £892 to £962 a week in 2019-20. On class 1 secondary NICs for employers, the secondary threshold will rise with inflation from £162 to £166 a week. The level at which employers of people under 21 and of apprentices under 25 start to pay employer NICs will rise from £892 to £962 a week.
I now move on to the self-employed, who pay class 2 and class 4 NICs. The rate of class 2 NICs will rise in line with inflation from £2.95 to £3 a week. The small profits threshold will rise from £6,205 to £6,365 a year. On class 4 NICs, the lower profits limits will rise with inflation from £8,424 to £8,632 a year. The upper profits limit, which is also aligned with the higher rate threshold, will rise from £46,350 to £50,000 a year.
Finally, class 3 contributions allow people to voluntarily top up their national insurance record. The rate for class 3 will increase in line with inflation from £14.65 to £15 a week.
The regulations also make provision for a Treasury grant of up to 5% of forecasted annual benefit expenditure to be paid into the National Insurance Fund, if needed, during 2019-20. A similar provision will be made in respect of the Northern Ireland National Insurance Fund. I trust that this is a useful overview of the changes we are making to bring rates of support and contributions to the Exchequer in line with inflation.
I now turn to the Tax Credits and Guardian’s Allowance Up-rating Regulations. As noble Lords may know, the Government are committed to a welfare system that is fair to the taxpayer while maintaining our protection for the most vulnerable in society. To put the regulations in context, the Welfare Reform and Work Act legislated to freeze the majority of working-age benefits, including child tax credit and working tax credit, for four years—that is, up to 2020. This helped to put our welfare system on a sustainable long-term path. Specifically exempt from the freeze were the disability elements of the child tax credit and working tax credit. The guardian’s allowance was also not affected.
As per previous years, we are now legislating to ensure that the guardian’s allowance and the disability elements of child tax credit and working tax credit increase in line with the consumer prices index, which had inflation at 2.4% in the year to September 2018. Therefore, alongside our commitment to fiscal discipline through such measures in the Act, the Government are equally committed to protecting those who are most in need of it.
In practice, the regulations mean that we maintain the level of support for families with disabled children in receipt of child tax credit and disabled workers in receipt of working tax credit. They also sustain the level of support for children whose parents are absent or deceased. Increases to these rates are part of the Government’s wider commitment to supporting the most vulnerable people in our society.
This proposed legislation makes changes to the rates, limits and thresholds for national insurance contributions, makes provision for a Treasury grant, and ensures that guardian’s allowance and the disability elements of working tax credit and child tax credit keep their value in relation to prices. I hope noble Lords will join me in supporting these regulations, which I commend to the House.
Baroness Janke (LD)
I thank the Minister for his introduction to the orders. The freezing of working age benefits means that tax credits increase benefits only for workers and children who are disabled. This excludes a whole range of benefits which are crucial to many of the poorest people and families. The Resolution Foundation states that the four-year freeze on working age benefits has been,
“one of the most vivid examples of austerity in recent years as it represents a … real-terms cash loss for millions of low-income families”.
Among the poorest families, the average single parent will be £710 worse off, which amounts to between 3% and 7% of their income. The freeze looks set to cost working-age families £4.4 billion in 2019-20.
I noticed from the Explanatory Memorandum that no consultation was thought to be needed. Last year when these orders went through, the Minister was asked about an impact assessment on child poverty but he said that there was no need as this was done when the freeze was announced. However, we are now entering the fourth year of the benefits freeze. Is it not time an impact assessment was made in relation to the most vulnerable and poorest groups? This is particularly important, first, because the circumstances of these groups need to be taken into account when the migration to universal credit takes place and, secondly, in the light of the evidence of so many reports—for example, by the Resolution Foundation, the Joseph Rowntree Charitable Trust, the Trussell Trust and many others—which draw attention to the poverty and suffering being caused to people and working families at the lower end of incomes.
Does the Minister consider that disabled workers who benefit under the second statutory instrument will be at risk when the Government migrate them to universal credit? Will the Government look at the risk of that process to this vulnerable group? Will they use the forthcoming test-and-learn pilot of managed migration to trial a system where benefit claimants are moved automatically to universal credit so that their income is protected?
Baroness Sherlock (Lab)
My Lords, I too thank the Minister for that introduction. As we have heard, the purpose of the first set of regulations is to make changes to the rates, limits and thresholds for national insurance contributions and provide for a Treasury grant to be paid if necessary. Given the impact of inflation on household incomes, coupled with the poor wage growth over the last decade, we are of course supportive of measures that will ensure that NICs thresholds increase in line with inflation.
But I want to spend a bit longer on the second of these measures, whose purpose, as we have heard, is to uprate the guardian’s allowance and the few elements of tax credits fortunate enough to have escaped the brutal benefit freeze which has been applied across the board—that is, the disability elements for families with disabled children who get child tax credit and disabled workers in receipt of working tax credit. These are to be uprated by CPI, the 12-month measure which was 2.4% to last September. Obviously, that increase is welcome but, as we have heard, it does not cover all the major elements of child tax credit or working tax credit. It does not cover the single parent, couple or 30-hour elements of working tax credit or the child or family element of child tax credit, which is the bulk of the money—all these are frozen. Many of the people who get the tax credits that are being uprated are also in receipt of other benefits such as child benefit, JSA, ESA or housing support, which are frozen as well. This is really quite damaging.
We should not allow an occasion like this to pass without establishing for the record that this is not the way that Parliament traditionally goes about doing this business. The reason that social security benefits and tax credits are indexed to inflation is so that they keep their value. Before 2011, they were linked to the RPI or Rossi, a variant on RPI. When the Government decided to shift that and link them to CPI, it saved the Treasury a lot of money; of course, it cost the same amount to those who were on the benefits. That shift was strongly contested, but at least it retained the aim of ensuring that the value of the benefits stayed at the level determined by Parliament. When the Government made the switch, they claimed it was because CPI was a better measure. But the report published last month by the Economic Affairs Committee of this House pointed out that the Government are not above inflation-measure shopping. For example, when the Treasury is paying out benefits and tax credits, it uses CPI; when consumers are paying student loan repayments or facing increased rail fares, it uses RPI. The coalition Government ditched even CPI, limiting most working age tax credits and benefits to a 1% annual increase from 2013-14. The current Government went further still and froze those tax credits and benefits at their 2015-16 levels until 2020.
Lord Bates
My Lords, I thank the noble Baronesses, Lady Janke and Lady Sherlock, for their questions on these important orders. I do not dissent at all from the assessment by the noble Baroness, Lady Janke, that we are talking here about some of the most vulnerable people in society, and therefore that our approach should be extremely focused.
Nor, though, would I want the accusation to stand that we have been somewhat impassive to the needs of people in the circumstances in which they find themselves, because one of the greatest routes out of poverty, as we all know, is that of employment. This may not be very helpful, but the noble Baroness referred to my noble friend Lord Young taking these orders through last year. At the time he mentioned the increase in employment, which is now at record levels—I am sure that she, being fair-minded, would recognise that as being something that is helping the poorest in our society immensely; the reform of benefits to ensure that work always pays; and some of the important measures that have been taken, not least the national living wage, the increase in which by 4.9% to £8.21, significantly above CPI, will mean an increase in full- time wage workers’ annual earnings of over £690. Unemployment has fallen by over 1.1 million since 2010.
At the time when my noble friend took the orders through, we made a serious point and there was a rationale for the arguments being made for welfare reform. From 1997-98, welfare spending rose by £84 billion in real terms—
Baroness Lister of Burtersett (Lab)
I am sorry to interrupt, and I am sorry that I missed the beginning of the Minister’s statement. Before we move on to the more general question about spending, I do not think he has addressed my noble friend’s point. Given that paid work is supposed to be the best route out of poverty, why are the Government freezing the tax credits paid to people in paid work?
Lord Bates
That decision was taken through the 2016 Act that I mentioned in my introduction. It was taken then as part of the need to get our public finances into the right order. That was the rationale for it. I say to the noble Baroness, who is someone else who cares immensely and focuses on these areas, that that was the rationale that we used at the time.
On the specific questions, I turn to the point about CPI that was raised by the noble Baroness, Lady Sherlock. She said the previous Government had announced in the Summer Budget of 2010 that CPI would be used for the indexation of benefits and that they would review the use of CPI for the indexation of taxation and duties. Consistent with that, the default indexation assumption is CPI. RPI is no longer recognised as a national statistic.
The noble Baroness, Lady Janke, asked about the impact of the benefit freeze. The Government are committed to taking action to help the most disadvantaged, with the focus on tackling the root causes of poverty. Our welfare reforms are incentivising work and supporting working families. Since April 2016, the universal credit childcare element has covered up to 85% of eligible childcare costs. We will be investing over £6 billion a year in childcare by 2020. Since 2010, 300,000 fewer children are living in absolute poverty and 630,000 fewer children are living in workless households—a record low. We are committed to helping lone parents to find work that fits around their caring responsibilities. We have extended free childcare for three to four year-olds for working families to 30 hours a week, with over 340,000 children benefiting in the first year.
The noble Baroness, Lady Sherlock, asked some specific questions, which she very kindly said that she would give me the opportunity to answer in writing. If that is acceptable, I will write to her and copy in the noble Baronesses, Lady Janke and Lady Lister, who have also spoken in the debate.
Tax Credits and Guardian’s Allowance Up-rating Regulations 2019
(5 years, 10 months ago)
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Lord Bates
To move that the draft Regulations laid before the House on 16 January be approved.
Solvency 2 and Insurance (Amendment, etc.) (EU Exit) Regulations 2019
(5 years, 10 months ago)
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Lord Bates
To move that the draft Regulations laid before the House on 8 January 2019 be approved.
The Minister of State, Department for International Development (Lord Bates) (Con)
My Lords, as this instrument has been grouped, with the leave of the House I will speak also to the draft Financial Conglomerates and Other Financial Groups (Amendment) (EU Exit) Regulations 2019 and the draft Insurance Distribution (Amendment) (EU Exit) Regulations 2019.
The Treasury has been undertaking a programme of legislation to ensure that, if the UK leaves the EU without a deal or an implementation period, there continues to be a functioning legislative and regulatory regime for financial services in the UK. The Treasury is laying SIs under the European Union (Withdrawal) Act to deliver this, and a number of debates on these SIs have already been undertaken in this place and in the House of Commons. The SIs being debated today are part of that programme and have been debated and approved by the Commons.
These SIs will fix deficiencies in UK law on the prudential regulation of insurance firms, the distribution of insurance products, and financial conglomerates, in order to ensure that they continue to operate effectively post exit. The approach taken in this legislation aligns with that of other SIs being laid under the EU withdrawal Act, providing continuity by maintaining existing legislation at the point of exit but amending where necessary to ensure that it works effectively in a no-deal context.
Three SIs are being debated today: the financial conglomerates and other financial groups regulations, the insurance distribution regulations and the draft amendments to the Solvency II regulations. The financial conglomerates and other financial groups regulations set prudential requirements for financial conglomerates or for groups with activities in more than one other financial sector. The insurance distribution regulations set standards for insurance distributors regarding insurance product oversight and governance, and set information and conduct-of-business rules for the distribution of insurance-based investment products.
Solvency II sets out the prudential framework for insurance and reinsurance firms in the EU. Prudential regulation is aimed at ensuring that financial services firms are well managed and able to withstand financial shocks so that the services they provide to businesses and consumers are safe and reliable. Solvency II is designed to provide a high level of policyholder protection by requiring insurance and reinsurance firms to provide a market-consistent valuation of their assets and liabilities, understand the risks that they are exposed to and hold capital that is sufficient to absorb shocks. Solvency II is a risk-sensitive regime, in that the capital that a firm must hold is dependent on the nature and level of risk that a firm is exposed to. In a no-deal scenario, the UK would be outside the EEA and outside the EU’s legal, supervisory and financial regulatory framework. The Solvency II and insurance regulations, the financial conglomerates and other financial groups regulations and the insurance distribution regulations therefore need to be updated to reflect that, and ensure that the provisions work properly in a no-deal scenario.
I shall start by addressing the changes to the financial conglomerates and other financial groups regulations. Under the EU financial conglomerates directive, a financial conglomerate is defined as a group with at least one entity in the insurance sector and at least one in the banking or investment services sector. One of these must be located within the EEA, while the others can be located anywhere in the world. This statutory instrument will amend the geographical scope of the definition so that one entity must be located within the UK rather than the EEA in order to be subject to the UK regime. This statutory instrument also amends the definition of a competent authority, so that it no longer includes regulators based in the EEA.
In line with the approach taken for other statutory instruments, this instrument transfers several functions from the EU authorities to the UK regulators. For example, the EU financial conglomerates directive requires EU authorities to publish and maintain a list of financial conglomerates. This function will now be carried out by the Financial Conduct Authority and the Prudential Regulation Authority. In addition, the responsibility for developing binding technical standards will pass from the European supervisory authorities to the appropriate UK regulator.
The Earl of Kinnoull (CB)
My Lords, I declare my interests as set out in the register, especially those in respect of the insurance and reinsurance industries. I will speak briefly to two of the three statutory instruments: the Solvency II and insurance regulations and the insurance distribution regulations.
Turning to the Solvency II and insurance regulations, and thinking about the near term, I congratulate the drafters of the statutory instrument; I know the ABI has been sitting with Treasury and PRA officials. First, it gives great comfort to the board of an insurer or reinsurer in the near term—I was thinking about how I would analyse it. It gives certainty on capital required, rollover for capital models and the ability to use reinsurance as temporary capital, and the asset values in an insurer’s balance sheet are unaffected. Secondly, I think the mutual equivalence regime is clever. It would have been possible to put equivalence for EU countries in the statutory instrument, but instead it is left to the Treasury to decide what to do. I think that is important because otherwise it would be possible for us to grant equivalence and then find that our Lloyd’s market had no equivalence granted back to it in the EU, which would be quite wrong. Mutuality of interest is preserved by that. Finally, I think the selection of measures designed to reduce that horror for all insurers, multiple regulation of the same action, is as good as can be done in the circumstances, so I congratulate the drafters on that.
However, thinking about the longer term, I put a question to the Minister. Solvency II—which came into force on 1 January 2016, for those who did not know, and is a regulation dating from 2009—is very much a one-size-fits-all solution to the problem of having the right amount of capital in your insurance market. Accordingly, it was not designed for the British situation. If you look at equivalent regimes in other jurisdictions—I am particularly familiar with the Bermuda jurisdiction, which is equivalent to the EU, but there are others such as Japan, Australia, Canada and the US, which is of course 50 jurisdictions in insurance terms—it seems that some changes could be made.
Your Lordships might well ask for some examples and I can think of two. There is a lot of gold plate around; that can go away. But one dynamic that has always surprised me is that over the last 15 years or so a large number of insurers and reinsurers have been set up, notably in Bermuda, while I do not think any have been set up here in the UK, the home of insurance. A review could properly investigate that dynamic. There are many reasons for it but I hope a review could address them because, to be competitive, I hope that new insurers and reinsurers will be born here, and soon. I would like to hear the Minister’s views on whether a review is warranted and can be expected.
I turn to the insurance distribution regulations. The directive on insurance distribution came in during 2016 and was the update to the 2002 insurance mediation directive. Insurance brokers were then hit by a regulation in 2017, which expanded on the directive, and in 2018 were hit by GDPR. A substantial series of changes have thus been made to how they need to operate, and a period of stability for them would be quite important. I come from the insurance underwriting world but I know the absolute necessity of having a healthy insurance intermediary world to feed our insurance underwriters.
One statistic that is a little worrying is that when the FSA, as it then was, took over the regulation of brokers there were 8,000 insurance brokers in Britain. Britain now has a bigger economy and we are down to under 5,000 of them, which does not feel right to me. I know that it is extremely difficult to found new insurance businesses. Does the Minister feel that, in the longer term, a review would be warranted here? It could seek out gold plate—insurance brokers are sure, and I am convinced, that the cost of regulation in this country is far greater than in other EU countries—but also look at why we have a shrinking number of brokers and why it is so difficult to start up a new broking business. A good review there would certainly give us a fitter and healthier insurance industry.
Baroness Bowles of Berkhamsted (LD)
My Lords, I too thank the Minister for his introduction. When I was involved in legislation in Europe, Solvency II was perhaps the first time that I discovered that I could be right while the Treasury was wrong. When I chaired the committee that gave me the confidence to trust my own judgment and to have few, if any, disagreements with the Treasury.
As it was originally done, Solvency II did not manage to cater for everything that the UK needed. In particular, we forgot about annuities; so did the ABI and the Treasury. I have to tell your Lordships that Parliament did not forget about annuities, but we were not strong enough to work out what to do about that because there was a big row going on, particularly between the UK and France, on equities and volatility. When I came back and discovered that I was to chair the committee, one of the first things on my agenda was Omnibus II, which aimed to sort things these out. We had the volatility adjustment for France; we had extrapolation for bonds in the eurozone, which were desperately needed by Germany; we also had the so-called matching adjustment, which we needed because otherwise the fact that insurance companies naturally tried to match the term of the assets that they collected to their liabilities would have been forbidden. They were supposed to account for their assets separately from assessing their liabilities, which in the business of annuities is a pretty stupid thing to do. Because we were having to box and cox with three other things, that meant that the solutions were probably less than perfect in the end, so in the fullness of time it might perhaps be made a little more perfect.
Lord Deben (Con)
My Lords, I point out my declaration of interest, particularly as chairman of PIMFA, the wealth management and independent financial advisers organisation. My noble friend will know that these SIs are not very acceptable to me because they are based on a number of hypotheses that are quite difficult to deal with. I will not repeat what I have said before on that, but I just want to remind my noble friend of those facts. However, there are some particular ones that I am concerned about.
The first is that anyone who deals with these issues is concerned about costs. Once again, we have a new system that means there is more work for the financial regulators. Every time we talk about that, no one tells us how much it will cost and quite how it will be paid for. Each time my noble friend explains with charm and elegance that there is not an awful lot of cost just here and that the FCA and Prudential Regulation Authority are both happy that they will be able to deal with this within their present resources.
The trouble is that I have heard that so often now that I am not sure this really works. There does not seem to be a position in which we have added these costs up. I have a suspicion that if we are not careful we shall end up with a lot more costs. One of the issues about people saying how much we pay into the European Union and how much we get out of it is that we forget an awful lot of things which, if you do them together, are much less expensive than if you do them apart. When I was Minister of Health and Safety I remember how useful it was that there was only one authority that tested ladders. We did not all have to test them ourselves. I am afraid we are in that situation here. I would like my noble friend to tell me whether these bills have been added up and how they will be paid. What sort of assurances can he give us that we will not find ourselves with significantly greater regulatory costs as a result of this?
The second point I want to raise is, in a sense, to pick up something raised by the noble Earl, Lord Kinnoull, about gold-plating. I think he and I are on the same side here. I do not think we disagree, but it is terribly important to say that most of the gold-plating I have ever found has been put there by the British. Gold-plating is a mechanism that happens in our system particularly. Having been a Minister in these circumstances, I know how it happens. A civil servant arrives and says, “Minister, we thought that if you do it this way round then somebody could find this answer, and it would be better therefore if we make sure that we close off all possible ways of avoiding whatever it is we’re talking about. Better not leave it until we discover—better do it first”.
Therefore, almost all our regulations, way outside the financial services area, are much more expensive regarding time, regulation and the rest of it than many other European countries. So the noble Earl was right to say that quite a lot could be done here about the reduction of gold-plating, but we could do that anyway because this is our gold-plating. There is no advantage in leaving the European Union to do this. The sad thing is that we have not done it before, and how we have managed to organise it.
There may be some things that we can do that we could not otherwise, but that leads me to my third point, which worries me considerably. In dealing with each of these SIs the Minister used the fascinating phrase—I would love to know who produced it—that were we to leave the European Union without a deal we would no longer have to inform the other authorities in the European Union of what is happening here. However, it will be discretionary to whatever the British regulator is to share this information, if that would be sensible, regarding our own regulation.
I am worried about this word “discretion”. Who decides that the discretion will be used? Is it something that the Government will press on these regulators? What do we mean by using “discretion” if this were, in the particular circumstances, valuable to regulation? Do we mean merely to our own regulation, or that we will be in a friendly situation because the regulation of others nearby will have a great effect on us? Is this really a cover word for saying what we do now together, because we are in the same organisation, we will sort of do in the future but pretend we are not doing and call it “discretion”? It seems that is precisely what is really happening here. This is a mechanism of recognising the need to do things together, but not actually putting ourselves into a position in which we have to do things together. Therefore it will be much less good, we will have to do a good deal of it and it will be much less possible to run regulation properly.
The last of my four points is simply that we are now creating a whole new language in which quite a lot of words are used without any clear meaning. The one I want to press my noble friend on is “equivalence”. It is a very useful word but I suspect it does not mean anything very precise. When we want to say that we will not be difficult with our neighbours, that we will recognise that markets, particularly financial markets, are very much interlinked, then we talk about the search for equivalence—no doubt we shall use discretion to search for that equivalence. I would very much like to know exactly the definition of “equivalence” as used with reference to these three SIs, because it matters quite a lot. If my noble friend could answer my four relatively simple questions, I would be most pleased.
Baroness Drake (Lab)
My Lords, I rise to comment on the Solvency 2 and Insurance (Amendment, etc.) (EU Exit) Regulations, applying in the event of a no-deal departure from the EU. My concern is from the perspective of the policyholder. Unlike the noble Lord, Lord Deben, I am keen to keep hold of some of the gold-plating that may exist in the current regulatory framework.
The driving intent of the Solvency II directive was policyholder protection, achieved by insurers complying with risk and capital requirements. The benefits are so important to both businesses and individuals that it is not surprising that the Government believe that provisions need to continue after Brexit.
The statutory instrument transfers responsibility for important technical functions from the EU authorities to the UK. The PRA will assume hugely important decision-making powers. Significantly, the risk-free rate—the rate that insurance and reinsurance firms must use to value their liabilities—will be transferred from the European Insurance and Occupational Pensions Authority to the Prudential Regulation Authority.
The PRA will take on responsibility for making binding technical standards. There must be robust checks and balances on how it exercises those functions. Similarly, the Treasury will be given power to make regulations dealing with the system of governance and risk management and methods and assumptions used in valuations and risk modules.
The UK insurance market attracts business from across the world. An efficient UK insurance sector is essential to businesses and individuals, allowing them to manage their risks. The sector is of systemic importance to the functioning of the real economy and individuals’ ability to manage their lives, but in a no-deal scenario there is a risk of the sector moving into uncertain territory.
Given the systemic importance of the insurance industry, continued confidence that capital requirements are sufficient to protect insurers and policyholders against insolvency is essential. There is a risk, and a growing fear, that in a no-deal scenario the Government will allow regulatory standards to drop in this area. My question is simple: can the Minister give an assurance that there will be no weakening of the standards of regulation, governance and capital requirements on exit from the EU?
Lord Tunnicliffe (Lab)
My Lords, I thank the Minister for introducing these three SIs. However, once again, it gives me no pleasure to be here; these various SIs have ruined yet another weekend and are in pursuit of an outcome which all sane people believe is stupid and potentially catastrophic. It need not have been this way. Even with the excuse of taking responsible action in case of a no-deal scenario, had we started the whole process earlier we could have been considering these SIs at a more modest rate and perhaps giving them more scrutiny than they are inevitably able to receive—certainly, from me.
Before turning to my own concerns, I want to comment on what other noble Lords have referred to. The noble Baroness, Lady Drake, and the noble Lord, Lord Deben, spoke of responsibilities presently held by EU bodies being transferred to UK bodies. There are two problems here. One is that the sheer complexity necessarily involved in doing that leaves the possibility of unintended mistakes having been made in the transfer. Secondly, the noble Lord mentioned costs. I am not too worried about costs; I am much more worried about resources. Do the FCA and the PRA have the resources to take on this burden? It has been explained to me that they will get their money from the industry and so on, but will the people involved be good enough, given the complexity of the situation that we are addressing?
The noble Baroness, Lady Bowles, talked about the generality of Solvency II. From my standing-start understanding of this area, which began on Friday night, I accept that there is some debate about Solvency II. On the solution suggested by the noble Earl, Lord Kinnoull, that the changes be introduced through this instrument, the Minister knows that I would be the first person to jump down his throat if he tried to do that.
The Earl of Kinnoull
I am sorry for having confused the noble Lord, but I certainly did not suggest that changes be introduced in the instrument. I suggested that Solvency II was a one-size-fits-all regulation with a number of things in it. The noble Baroness, Lady Bowles, must have known how difficult were the negotiations, taking place over such a long period and spanning a large part of the world, because of the interaction between the global insurance markets. I suggested merely that it might be wise to have a review and asked the Minister for his view on that. I apologise for any confusion.
Lord Tunnicliffe
I thank the noble Earl for that explanation and apologise for misunderstanding him.
The task we have is under Section 8 of the European Union (Withdrawal) Act, which is a very narrow task. My concerns are perhaps quite small and detailed, but I think that there is a fundamental concern about the process. There is a generality in political activity whereby what politicians do should be understood by a reasonably intelligent amateur—I am at least an amateur—and there is disquiet about the complexity of these three SIs. They are remarkably difficult to understand if one is not part of the industry. It is impossible to read the raw instruments. Much of them relates to FSMA 2000, which has been amended so many times that the original document is indistinguishable. Trying to understand the measure from the Explanatory Memorandum, in which I must trust because I have no other way of examining it, was difficult.
The Opposition will not oppose these instruments. As I read through them, they seem in general to do similar things, so I have no points to raise. However, paragraph 7.12 of the Explanatory Memorandum states:
“The European Commission’s responsibility for developing legislation will be transferred to HM Treasury which will be given power to make regulations for certain matters previously dealt with under Solvency II, e.g. the system of governance and risk management, methods and assumptions used in valuations and risk modules”.
That seems to be a pretty sweeping power which has been transferred. Does the Minister believe that is compatible with the withdrawal Act, particularly Section 8? What scrutiny, if any, will Parliament have of the exercise of these powers by HM Treasury? As set out here, they seem to be unrestricted.
Paragraph 7.13 says:
“EU assets and exposures held by UK insurers will no longer be subject to preferential risk charges when setting capital requirements for insurers that use the Standard Formula”.
At first sight, that sounds as though we are taking something away from the EU, that we are being beastly to them. It was only when I did further research that I realised that it has the opposite effect. As I understand it—I hope the Minister will be able to confirm this—the effect will be to increase the capital requirements for UK insurers, which will certainly reduce their profitability. As we know from previous debates, the objective of the withdrawal Act was to not introduce new policy. In his introduction, the Minister said that these instruments aligned with previous SIs. I do not think they do because, in order to stop cliff-edge changes in value, previous SIs have always had some sort of transition regime. If the effect is higher capital requirements, does that mean that UK insurers have been operating unsafely, with insufficient capital? If not, we will be introducing an increased burden on them. If my interpretation is right, why is there not a transition regime in order to make sure there is no cliff-edge change to that requirement?
Further on, in the section on impact, paragraph 12.3 states:
“UK insurers which use the Standard Formula for calculating capital requirements will be impacted by the removal of preferential treatment for EEA risk-weighted assets and exposures. Such insurers could face higher capital requirements unless they divest themselves of such assets and exposures. However, the government intends to legislate to provide regulators with powers to introduce transitional measures to phase in on-shoring changes to reduce the immediate impact on exit.
That hints that the Government are going to introduce a transitional regime through the regulators. Is that a proper interpretation of the paragraph? If so, when will the legislation alluded to, giving these powers to the regulators, come before the House? Why has this not been part of the SI?
Paragraph 7.15 of the insurance distribution instrument says:
“Regulations 6 and 12 of this instrument also transfer relevant legislative functions of the European Commission contained within Articles 25(2), 28(4), 29(4) and 30(6) of the IDD to HM Treasury. This includes the powers to make regulations about conflicts of interest, regulations about inducements, and regulations on assessments of suitability, appropriateness and reporting to customers, and specifying principles for product oversight”.
That seems to be a big bunch of powers. Will they be subject to any parliamentary scrutiny?
Finally, I was somewhat exhausted by the time I came to look at the conglomerates SI—we amateurs do have to work hard—but reassured by paragraph 7.12 of the Explanatory Memorandum which says:
“In practice this change will not have a material effect on financial conglomerates already operating in the UK”.
With that assurance, I have no questions on that SI.
Lord Bates
I thank noble Lords for their questions and of their scrutiny of these important SIs. I am sorry to have ruined the noble Lord’s weekend. I hope he got a chance to see the rugby.
Lord Bates
I hope that cheered him up a bit.
These are very detailed SIs but in your Lordships’ House there was a wealth of ability to understand them and raise some pertinent questions. The noble Earl, Lord Kinnoull, began by paying tribute to the parliamentary draftsmen and officials at the Treasury and the way they have worked with the ABI. I have witnessed that close working relationship and am grateful to the noble Earl for recognising it in his remarks. I do not have a note relating to his question about the insurance industry on the number of insurance brokers relative to the growth in the economy, and whether there is something about the competitiveness of the UK insurance market that we need to learn from. Those are interesting points and I will take his suggestion back to John Glen, the Economic Secretary to the Treasury and brilliant Cities Minister, who is looking at issues of competitiveness. I will then write to the noble Earl.
Most of the questions related to Solvency II, so I will group those and deal with the other ones as I go through. The noble Lord, Lord Tunnicliffe, asked about insurance distribution and why the Government need the additional powers in the SI. The instrument also transfers relative legislative functions of the European Commission contained within the insurance distribution directive to the Treasury. Any changes made to regulations by the Treasury would have to be approved by Parliament. I hope that that offers some reassurance.
The noble Baroness, Lady Bowles, asked whether the financial conglomerates regulations had resolved the problem of double gearing in the insurance model. FICOD has created new supervisory powers which increase standards of governance and oversight for the largest financial groups. This has helped address gaps that arise from the sectoral supervision of individual firms in a group, in particular the risk of double gearing, which can arise in the absence of robust, group-level policies on capital governance. As I was reading that, I wondered if it answered the question of whether the problem has been resolved. I think the answer may be yes, but I will say that we are working on it and I will write to the noble Baroness. I thank her for raising that point.
The noble Lord, Lord Tunnicliffe, asked about the transitional power referred to in the Explanatory Memorandum to the Solvency II regulations. This power can only be used to phase in the EU exposures changes that the noble Lord is concerned about; it cannot be used to avoid a cliff-edge impact. The power will complement transitional arrangements already approved by Parliament, including the temporary permissions regime. The noble Earl, Lord Kinnoull, asked whether we should have a review of Solvency II. The UK is putting in place all necessary legislation to ensure that, in the event of a no-deal exit in March 2019, there is a functioning legal regime. The Act does not give the Government the power to make policy changes beyond those needed to address deficiencies. That means, as far as possible, that the same rules apply. Let me extemporise a bit: the noble Baroness, Lady Bowles, made the point that the record of UK regulators in leading on Solvency II was widely acknowledged. I think that that is to be encouraged. In all likelihood, if our world-class regulators spot deficiencies in the new regime, they will keep that under review.
The noble Baroness, Lady Drake, asked whether we will be weakening standards. In many ways, as I have alluded to already, our intent—the Chancellor and many others have put this on the record—is to recognise that the UK’s reputation in financial services is earned because we have high standards, not because we have low standards. In a sense, there is a tension between the claim that we are going to be lowering standards and my noble friend Lord Deben asking whether we are going to be gold-plating standards, a question I will come to in a second. My noble friend asked about the definition of equivalence. The definitions that operate for each EU equivalence regime will not change and we will use the same criteria for making equivalence decisions in the future as the EU uses now.
My noble friend asked whether the regulators will have adequate resourcing for a no-deal scenario, a question picked up by the noble Lord, Lord Tunnicliffe. Figures on resources and any new costs are for the regulators to publish in their annual reports, which are laid before Parliament. I remain confident that the regulators are making adequate preparations and effectively allocating resources ahead of March 2019. They have actively participated in a wide range of groups in developing technical policy and regulatory rules and have chaired a number of committees and task forces, bringing their considerable experience in implementing EU legislation to bear.
The noble Baroness, Lady Bowles, asked whether there is a figure for EU holding of gilts compared to the rest of the world. To the best of our knowledge, there is no reliable data on EU firms’ holding of gilts; however, analysis by the regulators suggests that the capital impact of this change should not be significant.
My noble friend Lord Deben asked about gold-plating by the UK. Solvency II is a maximum harmonisation directive—I do not know whether that is another phrase my noble friend will pick me up on. There must be a level playing field across the EU and we are preserving these rules as much as possible. He also asked whether the instruments reduce the need for the PRA to co-operate and share information. The UK fully expects a high level of co-operation to continue after exit, as is currently the case with countries such as the United States.
The noble Lord, Lord Tunnicliffe, asked whether too much power has been transferred to the PRA. In the longer term we will need to review the regulatory framework in the UK, including the role of regulators and how far they should be accountable. He asked why we are increasing capital requirements under Solvency II —whether the current requirements are not adequate—and worried about what the past situation was. The prudential standards in Solvency II are not being altered. The capital standards that apply now are entirely appropriate and will be largely unaffected by exit. There are only two situations in which a firm may be required to hold more capital once outside the EU’s joint supervisory framework for group supervision. Some EU groups operating in the UK may be subject to an additional layer of supervision by UK regulators. He asked why we are giving new legislative powers on Solvency II to the Treasury. The EU withdrawal Act explicitly provides for EU functions to be transferred to UK bodies, which is what we are doing.
I will, as with previous secondary legislation, review the record of the debate with officials. Should I find that any points have not been covered adequately, I will write to noble Lords and copy in other Members. In the meantime, I commend the regulations to the House.
Insurance Distribution (Amendment) (EU Exit) Regulations 2019
(5 years, 10 months ago)
Lords ChamberRead Full debate Read Hansard Text Read Debate Ministerial Extracts
Lord Bates
To move that the draft Regulations laid before the House on 19 December 2018 and 17 January 2019 be approved.
Financial Services Contracts (Transitional and Saving Provision) (EU Exit) Regulations 2019
(5 years, 10 months ago)
Lords ChamberRead Full debate Read Hansard Text Read Debate Ministerial Extracts
Lord Bates
To move that the draft Regulations laid before the House on 15 January be approved.
The Minister of State, Department for International Development (Lord Bates) (Con)
My Lords, as with other instruments we have debated today, these have been laid under the EU withdrawal Act. This instrument is part of the Treasury’s legislative programme to ensure that, if the UK leaves the EU without a deal or an implementation period, there continues to be a functioning UK legislative and regulatory regime for financial services.
In December 2017, the Treasury announced that legislation would be brought forward to establish a temporary permissions regime enabling EEA firms operating in the UK to continue their activities here for a limited period after withdrawal. At the same time, it was also announced that legislation would be brought forward to ensure that contractual obligations not covered by that regime could continue to be met, helping protect the interests of UK customers of EEA financial services firms. The legislation setting out the temporary permissions regime for firms that passport under the Financial Services and Markets Act 2000 was debated and passed by this House last autumn, in the form of the EEA Passport Rights (Amendment, etc., and Transitional Provisions) (EU Exit) Regulations 2018.
Separately, legislation for temporary regimes for non-UK central counterparties, EEA payments and e-money institutions, and trade repositories has also been debated and passed by your Lordships’ House. This instrument therefore delivers on the second commitment: to ensure that those financial services contracts not captured by the temporary permissions regime can continue to be serviced. It similarly ensures continuity for customers of financial services providers that do not enter other temporary permissions regimes, or that exit these temporary regimes without full UK authorisation or recognition. Specifically, this instrument makes provision for passporting EEA firms, non-UK central counterparties, EEA payments and e-money institutions and trade repositories to wind down their operations in an orderly manner. It will apply to those firms that no longer wish to operate in the UK, and to those that exit the temporary regimes without permission from UK authorities to carry on new business here. The approach taken in this instrument aligns with that of other statutory instruments being laid under the EU withdrawal Act. It delivers on the Treasury’s commitments and is vital to the financial services sector and its UK customers.
Turning to the substance of the instrument, many noble Lords will be familiar with the EU law that allows EEA firms, non-UK central counterparties and trade repositories to provide regulated services in the UK on the basis of being authorised in their home member state, or recognised or registered by the relevant EU authority. In a no-deal scenario, the UK would be outside the EEA and outside the EU’s legal, supervisory and financial regulatory framework. Once the EEA frameworks providing for passporting rights, recognition of central counterparties and registration of trade repositories fall away, we will need to avoid widespread disruption to the provision of financial services, which would ultimately affect UK businesses and consumers. This instrument inserts provisions into the existing temporary regimes to allow for orderly winding down of existing contractual obligations or services, providing continuity and certainty for UK customers of those firms that do not enter the temporary regimes, or that exit them without full UK authorisation, recognition or registration.
Specifically, these draft regulations establish four distinct run-off regimes related to four different temporary regimes, covering EEA firms passporting under the Financial Services and Markets Act 2000, non-UK central counterparties, EEA payments and e-money institutions, and trade repositories. This instrument is necessary to minimise disruption to users and providers in the UK financial services sector in a no-deal scenario. The temporary regimes which have been established go a long way towards mitigating the risks of disruption and uncertainty. Without the additional wind-down provisions, however, some UK businesses and consumers could nevertheless see disruption to their existing contracts or services.
Baroness Bowles of Berkhamsted (LD)
My Lords, I thank the noble Lord, Lord Bates, for his introduction. Just in case, I will declare my interest as a director of the London Stock Exchange Group plc; obviously, this would not affect the exchange, but I guess that it could be relevant to some of our competitors. Perhaps it would have been useful if we could have had one of those flow diagrams like the ones you make when you are trying to create your algorithm, to see the way through this. I will try to do that in my own little way, but it will have to be with words.
It seems that any passporting firm that provides services at the moment can continue by going into the temporary permissions regime, and then it can either become authorised or can bounce out of that regime because it will not go for a permanent authorisation; that has been contained mainly in things that we have dealt with previously. When we come to this provision, which is quite useful, those that are not intended to continue to be authorised indefinitely can either go into the supervised run-off, which does what it says on the tin in that they continue to be supervised here, or they can go into the contractual run-off, which relies on their home member state because they do not have an entity here. So you go into the supervised one when there is a branch here and you go into the contractual one if you do not have a branch here. That is clear.
However, I wonder what is going on when you might start to yo-yo between one and the other. It says that you can go from the SRO into the CRO; I suppose I could understand that if the branch closed down, so that it was going to be doing it remotely—is that how it is envisaged? What would cause the regulator to move it from the SRO into the CRO? Obviously, if there is a branch and you are in a run-off, there may come a point at which you say, “Hey, I want to close this branch and disappear”—so that seems to be one reason why you might need it. I was not quite clear why you might want to go the other way, from the CRO into the SRO, if there is no entity here to regulate—I cannot see that a branch would be invented. I could not quite understand why one would go in that direction.
Then there seemed to be a carve-out of some of the more important organisations, such as fund managers, trustees and depositories, and I can understand that they have to go into the temporary permissions regime—I agree with that. We are then probably dealing here on the markets side with smaller organisations. However, I was not quite sure how long they could be hanging around for. It says that it could be five years after entry into the regime; then it says that that is whether they enter on exit day or enter after having been in the TPR. So if they have been in the TPR, which is a year but which can keep on being extended, is there an end stop? Could some of these be hanging around for about 10 years, if the TPR was extended a few times and then they went into the SRO and the CRO for another five years? That seems a long time; I would have thought that five years for the combination might have been enough.
I was thinking that when of course I got to the parts such as those on the trade repositories and CCPs, where the PRA is in charge. There it is a much stricter regime, and quite rightly so, because you are looking here at market infrastructure and potentially bigger effects. However, there it will be a non-extendable period of one year or, in the second scenario, if they have been in the temporary permissions previously, the recognition may be adjusted—but, again, it will be no longer than one year. So it looks like they have been thinking around the problem I have related with regard to the market side of things. So that was in sharp contrast. My only concern was for how long as a maximum an organisation could be in the TPR and then in one of the run-off situations, because it does not make that clear.
Apart from that, I have no particular comment, and obviously it seems to be a very sensible provision to have made for the benefit of the stability of business that is going on in the UK. It would be very welcome if we knew that there was reciprocity in the rest of the EU for this, and it would be even better if we did not have to do it at all—but I suppose it is making the best of things in the circumstances.
Baroness Kramer (LD)
My Lords, I have just one quick question to follow on from the comments of my colleague, who is so much better versed in this than me. It struck me that we seem to have one timetable proposed by the FCA and a different one proposed by the PRA, without an awful lot of logic as to why one takes one approach and the other takes another. Are these two regulators working completely independently and sending over their various paragraphs that then get incorporated into the statutory instrument, or is there some coherent framework? If the regulators are not working together, what can we do to make sure that they will? It will be complicated enough for business without trying to work out which regulator is thinking which way. I would assume—I do not know—that some entities find that they face both regulators. Why the difference under the new rules that each regulator is bringing forward?
Lord Tunnicliffe (Lab)
My Lords, it may have been exhaustion, but when I got to this SI, I concluded that it was all really quite straightforward. Having listened to the previous speeches, I am not so sure.
The SI seems to be summed up in paragraph 2.8, and it seems to me to be about run-offs in various areas. As far as I could see, the promises in paragraph 2.8 were carried through in the references to the various areas.
I, too, have some second-order questions about why the time limits were different, but I must admit that I comforted myself with the sure and certain knowledge that if any of them became in the least bit difficult, the Government would introduce an SI to change them anyway, so I did not overburden myself with that.
Paragraph 12.6 states that an impact assessment will be published alongside the Explanatory Memorandum. It has escaped me if it has, so I should be grateful if the Minister would tell me whether one has been published. If it has, I suppose it is my responsibility to find it; if it has not, a further apology on this matter will be gratefully received.
Lord Bates
I thank noble Lords for their questions. It might be for the ease of the House to know that I have the advantage—I think—of having a flow diagram in front of me. It must be one that I can release; I am sure it is. It has something printed on the top which probably tells me that it should not be released, but I am happy to make this diagram available. I do not want to reopen the debate about whether the Official Report should be able to capture diagrams and schemes; that would be a heresy that would cause a debate way above my head and pay grade, so I shall stay way out of it. I will circulate that diagram to noble Lords and place a copy in the Library. I will also, if I may, write in detail on the points raised by the noble Baronesses, Lady Bowles and Lady Kramer. Perhaps the same letter could be used to do that.
On the points raised by the noble Lord, Lord Tunnicliffe, about the impact assessment, I can confirm that one was published on 8 February. On the point made by the noble Baroness, Lady Bowles, about the maximum time for extension of terms, the regime can be extended by no more than five years at a time.
Lord Bates
But the noble Lord was just telling us how he was working over the weekend. He does Fridays, Saturdays and Sundays. The Opposition Chief Whip is here, so he should not undersell himself. He is one of the most diligent Members of this House. We will certainly look at that point.
On why the CCP regime is non-extendable, the Bank will remain in close contact with CCPs to inform them of expectations during the run-off period. This task is expected to be manageable, given the relatively small number of CCPs that can be expected to be in a run-off.
The noble Baroness, Lady Bowles, also asked under what circumstances a firm may be moved from a supervised to a contractual run-off. The FCSR makes provisions allowing a firm to be moved from the contractual run-off to the supervised run-off and vice versa. For this to happen, a regulator would have to consider the matter specified by the FSCR, including whether the move is necessary for the protection of consumers. Only the regulators can move a firm between the SRO and the CRO; firms cannot choose whether to move.
I appreciate that there will be other points relating to this but, as I have given a commitment to write to noble Lords, I will conclude my remarks there for the time being, and commend the regulations to the House.