Westminster Hall

Thursday 6th June 2019 Westminster Hall

Thursday 6 June 2019

[Mr Charles Walker in the Chair]

Consumer Access: Financial Services

Thursday 6th June 2019 Westminster Hall

[Relevant documents: Nineteenth Report of the Treasury Committee, Household finances: income, saving and debt, HC 565; and the Government Response, HC 1627; and oral evidence taken before the Treasury Committee on 12 March, on the Access to Cash Review, HC 2011.]

16:43

[Nicky Morgan (Loughborough) (Con)]

I beg to move,

That this House has considered the Twenty-ninth Report of the Treasury Committee, Consumers’ access to financial services, HC 1642.

It is a pleasure to serve under your chairmanship, Mr Walker. The Treasury Committee’s report “Consumers’ access to financial services” was published last month, its conclusions having been agreed by the Committee unanimously. The inquiry was launched in November 2018 to assess whether certain groups of consumers were excluded from getting a basic level of service from financial services providers, whether the regulatory landscape provided sufficient enforcement to ensure that customers could access financial services, and, if not, which remedies were needed.

Our report covered a lot of ground, so I will focus on four of its main conclusions. First, financial exclusion or vulnerability can affect us all at some point in our lives. Secondly, the Post Office alone is not a solution to banks closing their branches. Thirdly, a legal duty of care for financial services providers towards their customers is needed if the Financial Conduct Authority cannot make firms act in their customers’ interests at all times. Fourthly, at present the Equalities and Human Rights Commission does not have the resources to enforce financial services firms’ compliance with the Equality Act 2010, and therefore the Financial Conduct Authority should be given the power to do so.

Before I go into more detail on those four main conclusions, I will give a brief outline of the inquiry’s scope. We received almost 80 written evidence submissions, and we held five oral evidence sessions and two outreach events with members of the public and local charities—one in Waterloo, London, and one in Newcastle. I put on record the Committee’s thanks to everybody who sent us evidence and took part in those events. When I was elected by the House as Chair of the Treasury Committee, I was determined that our inquiries would not just talk about things that affect the City of London and our large financial institutions, but would concentrate on issues that make a real difference to consumers’, and our constituents’, lives. I hope that we have been able to do that in this inquiry.

The oral evidence sessions were held with advice groups and charities representing different groups in society, Members of the House of Lords who had previously carried out work on financial exclusion, representatives from banks and the Post Office, and the regulators with the power to make the changes needed—the Financial Conduct Authority, the Equalities and Human Rights Commission, and the Equality Advisory Support Service, which offers support to individuals with a disability dispute.

It is worth stopping to think about why financial inclusion matters. It is something that many of us will take for granted, perhaps until a time in our lives when we are excluded or suffering, or until we come across a constituency case of somebody struggling. Eleanor Southwood, the chair of the Royal National Institute of Blind People, said in her evidence:

“People experience enormous frustration. But it is also about financial literacy. It is about financial independence. It is about not being more vulnerable to any kind of financial abuse, because you are entirely on top of and aware of your own financial arrangements and situations.”

She went on to say that it

“comes back to the fundamental issues about confidence, the loss of confidence, the loss of confidence in yourself to understand the information.”

I remember the oral evidence that I heard from one of the charities at our roundtable in Waterloo, not very far from here. In this Chamber, we probably take financial inclusion for granted, but an inability to be in charge of one’s finances is sometimes a precursor to an inability to participate fully in society. That is something that we should all be concerned about.

There are many different elements to how consumers access financial services and, as the Committee heard, there are many ways in which people can be excluded. We started by trying to establish which customers we were most concerned about, but the reality is that access to financial services or financial exclusion is not limited to those we might naturally associate with being vulnerable, because vulnerability can happen to any of us at any stage of our lives. The FCA told us that its definition of vulnerability as

“someone who, due to their personal circumstances, is especially susceptible to detriment, particularly when a firm is not acting with appropriate levels of care”

could include up to half the population at any one time.

[Jim Shannon (Strangford) (DUP)]

I commend the right hon. Lady, who came into this House at the same time as I did; indeed, she made her maiden speech just before I made mine, so we have had that relationship in Parliament for a long time. She is aware of my constituents the Armstrongs. I have written to her, the Minister and the Department about them. They ended up in company insolvency and then personal bankruptcy, despite repeatedly advising their bank and lawyers that Mr Armstrong was very unwell over a sustained period.

The right hon. Lady referred to vulnerability, and paragraph 179 of the Treasury Committee’s report refers to it very clearly, stating:

“We therefore support the FCA’s intention to do so through a more balanced definition of ‘vulnerability’”.

Will that new recommendation ensure that we have the chance to protect people such as those I mentioned, whom she is aware of through her position as Chair of the Committee? Also, does she agree that not only the UK financial services industry but regulators at the FCA and the Financial Ombudsman Service must be part of any future work—

[Mr Charles Walker (in the Chair)]

Order. That is enough questions.

[Nicky Morgan]

I thank the hon. Gentleman. He is a legend for speaking in so many debates in this House, and I would feel rather excluded if he were not here today. I am grateful to him for raising those issues. He is a passionate advocate for his constituents, and has raised a number of cases with me as Chair of the Treasury Committee. He is right that a broad definition of vulnerability is important. People will be vulnerable at different times of their lives. He knows that in a separate inquiry we have been looking at the finances of small and medium-sized enterprises, many of which are almost no bigger than retail customers, and may be exposed to the same vulnerabilities.

My understanding on the definition is that the FCA has published its consultation and is asking about vulnerability. In the inquiry, we wanted to ensure that when we talk about vulnerability, we are not limited to a narrow definition, and that when those working in financial services think about vulnerability, they do so in the broadest possible sense, realising that people come in and out of being vulnerable.

In the case of the hon. Gentleman’s constituents, it is worth re-asking the question about how customers appear to those who advise them. We must also recognise that some people will not identify themselves as vulnerable. That is another thing that we heard during the roundtable. People do not want to tell their bank that they are vulnerable because they are concerned that it might lead to higher charges, or even losing an account or not being offered insurance.

[Jim Shannon]

With your permission, Mr Walker—

[Mr Charles Walker (in the Chair)]

You can make as many interventions as you like, Mr Shannon—make 10 —but brevity is the key. The Floor is yours.

[Jim Shannon]

This intervention will be brief, unlike the last one—apologies for that. Regulators at the FCA and the FOS need to do more to ensure that the most vulnerable in our society are afforded the appropriate response and interactions. Does the right hon. Lady agree that those regulators must do better?

[Nicky Morgan]

I do. I think the FCA is very aware of that, and wants to do better. That is why it has published the consultation on the definition of vulnerability. The hon. Gentleman and I have had previous conversations about the Financial Ombudsman Service, and I have had correspondence with other Members of this House. We all know that the FOS can sometimes struggle to offer the remedies and the speedy service that people are looking for. The FOS performs an important function, and its new leadership is very aware of the challenges. In particular, more and more of us are aware of the ability to go to the Financial Ombudsman Service, which puts pressure on it. However, the basic conclusion of our report is that everybody involved in financial services could do more.

Financial exclusion is a broad issue that can and does affect us all in many different ways. The key areas that the Committee chose to look at were why financial inclusion matters, which I hope I have already captured in my earlier remarks; the many issues that vulnerable consumers face, such as being able to understand their bank statements and communicate with their service providers in the way that they want to; and the closure of local bank branches and the use of post offices as a replacement.

[Colin Clark (Gordon) (Con)]

As a member of the Treasury Committee, I was glad to get into what is a vital issue in Scotland and rural parts of the country, which are being left with no banks because they are closing. One of our recommendations is that post offices should be properly funded and have proper facilities, so that people can use them as banking hubs, but the banks—not the taxpayer or the Post Office—should pay for that, because they are saving a fortune in closing branches and they must take responsibility for customers. Post Office banking hubs cannot be an afterthought at the back of a corner shop; they must be proper facilities that people have confidence in.

[Nicky Morgan]

My hon. Friend is a new but valuable addition to the Treasury Committee and we enjoy having him as a member. He is absolutely right. From the evidence we heard, we concluded that many banks are ushering customers towards the Post Office, which is providing basic banking services to customers of many high street banks at a loss. He is right to say that taxpayers should not subsidise the big six banks’ lack of branches. The Post Office must receive adequate funding from banks for the services it provides on their behalf. I will come on to say that post offices are not always the optimum place for customers, particularly those with vulnerabilities, to receive personal or confidential advice. I hope that that recommendation will be taken on board and that the Minister will respond accordingly.

Other issues that we talked about included insurance companies discriminating against consumers with pre-existing conditions that need not increase their premiums, and how poorly designed physical financial services infrastructure may not be noticed by all, but could have a profound impact on specific groups, such as touch screen ATMs and payment terminals that were rendered useless to the visually impaired. Again, we heard evidence from Eleanor Southwood, who talked about having to hand over her debit card to a taxi driver after a recent journey because she could not use the PIN terminal due to her visual impairment. As it turned out, the taxi driver was a thoroughly honest, decent person, as most taxi drivers are, who respected her need to pay just the bill, but that is another vulnerability that many of us who do not suffer it will not think about. It is not uncommon, however, and our big financial services providers should think about it in the design of their infrastructure.

The inquiry looked at various initiatives to address specific forms of financial exclusion, such as basic bank accounts and powers of attorney. On powers of attorney, as a constituency Member of Parliament, I see more and more older constituents who are appointing people with powers of attorney—other hon. Members may agree. The number of powers of attorney is growing enormously: in 2018-19, 749,000 lasting powers of attorney were registered with the Office of the Public Guardian, which is a 63% increase from 2016-17, and as of May, there were 3,998,000 lasting powers of attorney registered in total. That provides challenges for the carer who has power of attorney, in terms of accessing advice on behalf of the person they are looking after, and for the financial services institution, because it has to judge how much security it wants everyone to go through before it talks to them about account details, while at the same time not making its consumers’ or their carers’ lives more challenging than they already are.

We looked at whether changes to financial services regulation were necessary, such as the introduction of a duty of care to customers, similar to that which exists in legal services. We also investigated whether vulnerable customers were more likely to pay a so-called loyalty penalty for staying with their providers, and the ways in which consumers could be provided with greater access to low-cost credit.

Let me turn to our headline conclusions. I have already set out why financial inclusion is important and why it is a basic right when it comes to being part of our society. It is vital that all financial services providers do what they can to empower consumers to maintain their personal finances and mental health. The Committee heard that firms can do that by incorporating a universal design approach in all their interactions with every customer, which means that all customers, no matter what their individual needs, will be catered for. That can be done by having compassionate, well-trained staff, who ask their customers how they would like to be communicated with, and by making sure that every communication channel is available to them.

On bank closures, which I have already touched on, large sections of society still rely on bank branches and face-to-face conversations with trained staff who understand financial services to carry out their banking needs, which can range from making transactions to taking out mortgages, credit cards or insurance policies. As I am sure hon. Members present can testify, sadly, for many communities, a local bank branch and, increasingly, free-to-use ATMs are becoming a thing of the past.

As we have heard, in many cases banks are redirecting their customers to local post offices to carry out their day-to-day banking, but that has its limits. The Post Office cannot help customers to set up basic banking transactions such as direct debits, nor does it sell mortgages or credit cards in-branch. Even if it did, the layout of many post offices is simply not conducive to giving customers the privacy required to discuss their personal finances.

The Post Office is not a replacement for a rapidly declining branch network, as was apparent during the TSB IT meltdown last year, when customers were told that the best way to make contact with the bank was through their local branch. The TSB branch network actually helped the bank out of its difficulty, because branch staff were by and large very impressive and wanted to help their customers—I think the TSB head office appreciates that. If branch networks are closed, such a workaround will not be possible. The Committee heard that banks have begun to share floor space with other banks or other organisations on the high street to share costs. That is to be encouraged, although it has to be done deliberately and planned properly, and we look forward to more innovation.

The Committee considered the need for a duty of care. Financial services providers should always act in their customers’ best interests, but they are not required to. If the FCA is unable to enforce such behaviour from firms under its current rule book and principles, the Committee supports a legal duty of care, analogous to that in the legal industry, which would create a legal obligation for firms to act in their customers’ best interests. Although a legal duty of care might still mean that customers have to take their provider to court themselves to seek redress, the existence of such a duty would sharpen providers’ minds as to how they treat their customers at all times. The Committee received arguments that a duty of care was not necessary and that financial providers already have to treat their customers fairly under the FCA’s rules, but clearly firms have not always done so.

We also considered the enforcement of the Equality Act 2010, which enshrines in law the obligation for service providers to make reasonable adjustments to assist customers with disabilities. The Committee heard numerous examples, however, where providers were not providing such adjustments. We heard that firms were not always providing interpreters for customers in branches, British Sign Language interpreters for those with hearing loss, or instructions on written correspondence to explain to a customer how to obtain an accessible-format version. Those do not appear to be instances of providers treating customers fairly or complying with the Equality Act.

If consumers want to seek redress, however, they have to take their provider to court as an individual because there is no regulatory body to enforce compliance with the Equality Act on their behalf. The Committee concluded that it would be absurd to expect an individual, particularly a vulnerable individual, to do that themselves, as it would be prohibitively expensive and far too daunting a task. Under existing legislation, the Equality and Human Rights Commission is the statutory body for enforcing the Equality Act, but it confirmed to the Committee that it does not have the relevant resources or expertise to investigate each individual case where a financial services provider is potentially in breach of the Equality Act or is failing to provide reasonable adjustments.

At present, no other statutory body has that power. The FCA told the Committee that it has the expertise and resources, but not the power to act. Therefore, the Committee concluded that the Government should give the FCA the power to take on the enforcement of individual cases relating to financial firms’ compliance with the Equality Act, in addition to the Equality and Human Rights Commission.

There are many other interesting and important aspects of our report that I could talk about, but I will not detain hon. Members for much longer. I urge all hon. Members present to read the Committee’s recommendations in full. The Committee looks forward to hearing the Government’s and the regulator’s responses in due course. I welcome the opportunity to have the debate and for the Minister to respond.

Before I conclude, I want to give one final example that captures it all. You and I, Mr Walker, have worked on mental health issues in this House a lot. We led the first big general debate on mental health in 2012—a groundbreaking experience. Much of the stigma of mental health has been tackled, but there are still cases where people are reluctant to tell others, be they friends or family or financial services providers or anybody else, about their mental health.

We also know that one of the behaviours of certain mental health conditions can be rather exuberant behaviour, sometimes typified by spending. We have one of the most sophisticated financial centres in the world. We have pretty well every major bank represented in the City of London. It struck me, listening to the evidence from Katie Evans, the head of research and policy at the Money and Mental Health Policy Institute, that we can do better, because she said:

“At best, I have heard of people literally putting their credit cards in a Tupperware full of water and putting it in the freezer, which is fantastic: how clever for someone to come up with that system for themselves, to try to put in place the friction they need when they are unwell.”

We should not need people to freeze their credit cards to stop them spending if they have a vulnerability through a mental health condition, or a breakdown, or a crisis. We can do better. Our financial services providers can do better. We will hear today from the shadow Front-Bench spokespeople, and from the Minister, and I hope that we can all make sure that financial inclusion is something that we are championing from here on in.

[Mr Charles Walker (in the Chair)]

I think I am going to call Marion Fellows, the Front-Bench spokesperson for the SNP.

13:51

[Marion Fellows (Motherwell and Wishaw) (SNP)]

Thank you for calling me, Mr Walker, in spite of my tardiness. I apologise to everyone present—I ran as fast as I could.

[Mr Charles Walker (in the Chair)]

You were 15 seconds late. I think anybody can forgive that.

[Marion Fellows]

To be fair, I thought it was more.

It is a real pleasure to serve under your chairmanship, Mr Walker. I commend the right hon. Member for Loughborough (Nicky Morgan) and her Committee for this really valuable report, on which I think most of us are agreed. As always, I want to give the Scottish perspective—I think I have got it down to a fine art now.

According to Which?, Scotland has lost more than a third of its bank and building society branches in just eight years. Some 610 branches closed down between 2010 and 2018. Santander’s recent decision to close 15 branches in Scotland will have a devastating impact on staff, customers and local firms. Branches will be lost right across central Scotland, in Alloa, St Andrews, Troon, Forfar and other places. It is of deep regret that the decision was made without the bank undertaking a full consultation with staff and local communities, which will be devastated by the closure of local services, and it is unacceptable that they will be shut so rapidly; all the branches will close by the end of the year.

The Treasury Committee is right when it says:

“there are still large sections of society who rely on bank branches to carry out their banking needs.”

That includes elderly people—although not all of them; we cannot all be lumped together—and small businesses, especially in rural areas that rely on tourism, where people are using cash. Those businesses need to be able to bank that money locally; otherwise, they will lose even more business when they are not on their premises but 20 or 30 miles away, trying to get to the nearest bank branch.

A bank branch network, or at least a face-to-face banking solution, is still a vital component of the financial services sector. The right hon. Lady referred to how important that was in the case of TSB. A branch network must be preserved. The UK Government must step in and act; they can no longer argue that they cannot intervene. They made a similar argument on RBS closing branches, but we now know the Treasury thought it was all right to force RBS to pull finance from customers through the asset protection scheme. The effect on consumers of the closures must be factored into the Government’s decisions.

We support the Committee view that, if necessary,

“the Government should make changes to competition law to allow banks to share facilities in order to maintain a sustainable branch network”.

As the hon. Member for Gordon (Colin Clark) said, that cost should fall to the banks, not the customers. We also agree that

“intervention by Government or the FCA may be necessary to force banks to provide a physical network for consumers.”

We agree with the Committee that

“the Lending Standards Board—through its oversight of the Access to Banking Standard—should publish the examples of non-compliance by providers within its annual report on the Standard, to increase transparency and the potential for external scrutiny over branch closures.”

The SNP continues to lead the campaign at Westminster to protect our post office network. I have spoken in so many debates on post offices, and I sometimes feel I am in danger of repeating myself, but these things are worth saying over and over. We agree with the Committee that post offices

“should not be seen as a replacement for a branch network, but a complementary proposition where available.”

Following our campaigning, the SNP has welcomed news that from October 2019, Post Office Ltd will raise the rates of payment that sub-postmasters receive for taking personal and business banking deposits. That will represent a near threefold increase on current rates. In my time as an MP, I have been consistently lobbied by sub-postmasters, because they are subsidising banking services to their own detriment. The impact of the closure of a post office following the closure of a bank branch is devastating, and not just in rural areas. In urban areas, too, there are vulnerable people who cannot move distances and who are only happy carrying out financial transactions with people they know and trust. That is extremely important.

The announcement of the increase in payments comes just weeks after my colleague and hon. Friend the Member for Paisley and Renfrewshire North (Gavin Newlands) secured a House of Commons debate on the sustainability of community and sub-post offices, in which he reiterated SNP calls to give sub-postmasters a fairer settlement. In recent months, as the SNP spokesperson for small business, I have written to the UK Government calling for changes to strengthen the post office network. Sub-postmasters have continually raised concerns about not receiving adequate financial remuneration. The National Federation of SubPostmasters found in a recent survey of its members that one in five post offices risks closing in the next year as the result of poor remuneration from Post Office Ltd; many postmasters are paid less than minimum wage for running their shops. That cannot go on. We need sustainable post offices, not as a substitute for the banks, but as a complement.

The UK Government must go further and commit to a full and independent review of sub-postmaster pay. I know the Minister is from the Treasury, but it would be good if he could have a chat with the Minister for small business on our behalf. In addition, plans to close Crown branches at the centre of our communities must be reversed to ensure the full range of services people have enjoyed are still available.

We agree with the Committee that

“The Post Office should not be subsidising the big six banks’ lack of a branch network...If a renegotiation of the current arrangements is necessary to make the scheme profitable, the Post Office should do so, with the full support of the Government.”

We should not measure the success of Post Office Ltd on profit alone, which seems to be the prevalent measure at the moment.

We agree with the Committee that when post offices are left as the only way for customers to carry out basic banking practices,

“the banks should be required to make provision for ‘banking hubs’ within the local Post Office. The ‘hub’ should be properly funded, with an agreed private and business banking provision set by the Department for Business, Energy, and Industrial Strategy (BEIS) and the Treasury. Postmasters must be trained, equipped and compensated to make the hubs viable. BEIS should make an immediate assessment of what the banking provision should be, the indicative cost per hub, and propose how the banks should fund it.”

The UK Government must act before a fifth of Scotland’s free ATMs start charging over the next year. That is another huge problem, especially for vulnerable people and those in isolated communities. They are having to travel further and further to access their own money, and are being charged more and more to do so. It is almost impossible to spend money in London during the week, and I frequently arrive back in my constituency with no cash. We are used to that in this place, but it is not like that everywhere across the UK, or for everyone.

[Nicky Morgan]

The hon. Lady is making an excellent speech, and she makes an excellent point on access to cash. Does she agree that cash is very important for people who are on a very tight budget? We heard evidence that once it’s gone, it’s gone. Somebody who needs to watch every penny they spend will not have a contactless card that they just keep using; they need to be able to see how much cash they have left in their purse.

[Marion Fellows]

The right hon. Lady is absolutely correct. The fact that somebody’s very constrained budget can be further constrained by their having to pay to extract their own money from their bank is absolutely ridiculous in this day and age. People are living hand to mouth, and the loss of £2.50 or more every time they take their money out of their bank via an ATM is absolutely unforgivable.

A cross-party group of MPs found that more than 3,000 ATMs have closed in the last 18 months. According to the Treasury Committee, unless the UK Government step in to protect free-to-access ATMs, the UK is at risk of

“inadvertently becoming a cashless society. For a large portion of society, including some of the most vulnerable, this would have stark consequences.”

The latest figures from LINK, the UK’s largest cash machine network, revealed that 1,300 ATMs were lost between the end of January and the beginning of July last year.

The consumer organisation Which? predicted that free cash machines would become a thing of the past, after it emerged that 1,700 ATMs in the UK switched to charging in the first three months of this year alone. Cash machines in Scotland have disappeared at a rate of 32 a month in the 11 months to April. According to Which?, Scotland lost 204 free-to-use cash machines, which is 4% of the network. That is unsustainable.

The ATM Industry Association has warned that a fifth of Scotland’s free ATMs will start charging customers in the next year. The association—its members include banks such as HSBC, independent ATM operators and payment systems such as Visa—says the problem revolves around a 10%, or 2p, cut in the fee that banks pay cash machine operators every time money is withdrawn. Banks are saving money by closing branches, then giving money to ATM providers. They warn that the move to charging cash machines will increase if LINK moves to cut the fee even further as part of a review that is due to be completed by the end of 2020.

Given the recent closures of bank branches and the lack of support provided to the post office network, the SNP is concerned that a lack of cash facilities will hurt families and small businesses across Scotland. For people in rural areas, and for the most vulnerable members of our communities who might have less access to transport and online support, often the only option is their local cash machine. It is totally inequitable that they effectively pay a tax on cash withdrawals.

The right hon. Lady talked about insurance companies and the difficulty in insuring when there are pre-existing conditions, something I recently had difficulty with. I totally empathise. Vulnerable people—especially people with mental health conditions, whom the right hon. Lady mentioned—need people on the other side of the table or desk who can help them overcome their fear, allay their suspicions, and help them to become fully working members of our society. Someone can be vulnerable one day and not vulnerable the next, and systems have to take account of that.

The right hon. Lady also talked about the difficulties with powers of attorney and the duty of care, which perhaps should be regulated. The SNP would not go against any of the recommendations on those subjects. It is absolutely inexcusable that Tory Ministers are refusing to lift a finger as communities face mass closures of local ATMs and bank branches; as we have heard, it is often the most vulnerable who use them. The consumer group Which? is calling on the UK Government to appoint a regulator to oversee cash infrastructure in the UK. It is vital that they consider the proposal and introduce practical solutions before the cash crisis loses Scotland a fifth of its ATMs.

The SNP echoes the Committee’s conclusion that the independent Access to Cash review’s recommendations should be accepted. They include recommendations to

“guarantee consumer access to cash—ensuring that consumers can get cash wherever they live or work…take steps to keep cash accepted, whether by a local coffee shop or a large utility provider…call for radical change to the wholesale cash infrastructure, moving from a commercial model to more of a ‘utility’ approach, which will keep cash sustainable for longer…government, regulators and the industry should make digital inclusion in payments a priority…a clear government policy on cash, supported by a joined-up regulatory approach which treats cash as a system.”

We cannot go on leaving our most vulnerable communities and people behind. It is all right for people like us to do without cash, but it is not all right for huge swathes of our communities. I hope the Minister can agree to some of the Treasury Committee’s recommendations and help move forward the debate about post offices, bank hubs and so on.

13:59

[Anneliese Dodds (Oxford East) (Lab/Co-op)]

It is a pleasure to take part in this debate with you in the Chair, Mr Walker. I thank the right hon. Member for Loughborough (Nicky Morgan) for securing the debate and for the important work she undertakes as Chair of the Treasury Committee. I am particularly pleased that the Committee emphasised the importance of access to financial services and financial inclusion. As we have shown in this relatively short debate, it is an issue that potentially touches us all, because we can all become vulnerable, and access and inclusion are crucial elements of a functioning economy.

The beginning of the report features a quote from Sian Williams, the director of the Financial Health Exchange at Toynbee Hall, that stood out when I was preparing for the debate:

“We are in an environment where you have to be able to transact to survive.”

The statistics provide a very worrying picture, because many people are struggling. The Financial Conduct Authority estimates that 3% of UK adults cannot transact in that way because they have no current account and no alternative e-money account. That is a significant minority, and it includes some of the most vulnerable people. That indicates that much stronger action is needed.

I will focus my remarks on vulnerability, poverty, the availability of credit—particularly low-cost credit—post office banking, bank branch closures and the policy process in this area, particularly as it applies to basic bank accounts. The report quite rightly considers the relationship between financial exclusion and different types of vulnerability. Obviously, a consultation is going on at the moment on whether current definitions of vulnerability are appropriate. There is a very welcome focus on mental illness in the report.

I was struck by the right hon. Lady’s remarks and the case study she mentioned. Actually, we were promised that we would have so-called jam-jarring available within financial services by now. It is not standard, and nor is it standard in relation to how people are paid their social security. Often people request that kind of approach so that they can manage their money properly. They are doing the right thing in acknowledging that they might have issues, but they are not being aided by the technology. As the hon. Member for Motherwell and Wishaw (Marion Fellows) said, it is often the most technologically literate who have the greatest resources and can make use of technological innovations. That needs to be accelerated, but we also need to acknowledge that although technology can empower, it can discriminate as well.

I have had discussions with people involved with the Money and Mental Health Policy Institute, who have pointed out that although it is possible to use people’s financial transactions to pinpoint and identify vulnerability, such information could be used to ration services and access, as well as to facilitate them. If it is used, for example, to take people to a pop-up chat with an adviser, who can say, “Are you sure this is what you want to be doing? Can I help you?”, that is fine, but if it makes it harder for people with mental illness to access services that we benefit from, that is inappropriate.

The report rightly focuses on access for vulnerable groups, such as elderly and disabled people, and on a number of risks that technology can embed, which result in people being unable to access the most basic financial services. In many cases, that is getting worse because of issues such as the use of touch-screen technology, which was mentioned earlier, and the speed at which high street banks are closing. I will come back to that point later.

The report contains useful recommendations about vulnerable people’s access to financial services. I support the recommendation that the Financial Conduct Authority should consult on how power of attorney works in relation to financial services. If that is done properly with appropriate safeguards, it could improve the situation for many carers and those they care for. The discussion in the report about that is very helpful.

The discussion in the report about the Equality Act 2010 is very useful. The Labour party is committed to strengthening the Act and other anti-discrimination law. There is clear evidence, which is repeated in the report, that it is not being complied with in a number of areas, and that is simply unacceptable. The exchange between the hon. Member for Strangford (Jim Shannon), who is no longer in his place, and the right hon. Member for Loughborough was very instructive in that regard. I am sure that every Member in this Chamber has a whole bag of cases involving people with various vulnerabilities who have not been treated in the way that we would expect. That has to end, because it is discrimination.

The report touches on issues relating to low-income households at various points. The discussion of the loyalty penalty was very interesting. Citizens Advice’s work shows that the average consumer pays up to £1,000 per year more because of the loyalty penalty. That is clearly totally unacceptable. The Competition and Markets Authority noted that people on low incomes are much more at risk of paying the loyalty penalty. For people in the bottom 10% of income, it could account for up to 8% of their spending.

The CMA’s recommendation about transparency is welcome. There should be more accountability. Regulators should publish the size of the loyalty penalty in key markets and for different firms annually, but as the report states, just informing the public about the loyalty penalty for each firm is not enough. It is clear that regulators currently have little ability to protect customer interests in that respect, so we need to focus on that much more strongly. The time is right to reform the regulatory system in that respect and for many other areas of financial services. The Labour party commissioned a review by Prem Sikka, the academic, to look into some ideas for reform, and it has now been published.

The points that the hon. Member for Motherwell and Wishaw made about access to cash were very relevant. Even with the current standards, we all know from our constituencies and elsewhere that there are pockets where access to cash is not available. It tends to be in areas where people have low spending power and are incredibly reliant on cash that there is not the provision that we expect.

The report did not examine the relationship between poverty and financial exclusion, as the 2017 report by the Financial Exclusion Committee in the other place did. I completely understand that the Treasury Committee had a slightly different focus. It would be useful to look at that issue in more detail, because in the Financial Exclusion Committee report, Gingerbread reported that single parents and low-income households often find that they are disproportionately excluded from financial services. Lower-income people often pay much more for financial services, compared with those with greater incomes. The Child Poverty Action Group said that that is the case, despite the fact that most low-income households manage their limited resources well. We are often told that the answer for people with few resources is to manage their money better. Well, many of them are extremely good at doing that already, and I was very pleased that the right hon. Member for Loughborough confirmed that. The Lords report also looked at the so-called poverty premium and how it exacerbates the effects of financial exclusion. It is important that we bear that in mind and continue to look at it.

Problems in accessing lower-cost credit primarily affect low-income households, and it is good that the report looked at that in detail. It praised the Government for their proposed pilot of a no-interest loan scheme in the 2018 Budget, but that arguably does not go far enough in tackling consumer debt. We still do not have a clear timetable for when that measure will be implemented. The Labour party and I believe that it is essential to go further. For example, we should cap the total amount that a person can pay in bank overdraft fees and interest payments on credit card debt. People who get caught by overdraft fees often use other forms of credit to pay it off because it is such an expensive debt and is extremely bad for them.

It is unfortunate that the Government have not really grasped the issues relating to debt enforcement. That is becoming more of an issue in many parts of the country, particularly given changes to the withdrawal of funds for council tax relief. Individuals are now being pursued for small amounts of money in many parts of the country. This report and the Justice Committee’s recent report show that we need much stronger action against poor practice in the debt enforcement industry. We should implement many of the measures recommended in the Treasury Committee report and, for example, introduce tougher regulations on debt enforcement firms, such as changes to terminology in payment letters. We must ensure that the language is understandable to people with varying literacy levels, and that information about how to seek help with debt is given equal prominence to demands for payment.

The report also examines the issue of those who are unable to access affordable credit because they lack a credit history. We believe that the Government’s approach so far has been inadequate. Obviously, there has been the pilot, and they have tried to get the private sector to take this forward. We need to have more of a discussion about how to ensure that people can build up a credit history. I hope the Treasury Committee will continue to do that, but the discussion in the report was useful.

Let me move on to the post bank and bank branch closures. The Labour party is looking at research that we commissioned on how the post bank approach can be revitalised and how we can ensure that it provides good quality services that are good for both the Post Office and local communities. We think it could be possible to do that on the basis of the research that we commissioned. There could be 3,600 additional post bank branches, compared with what we have currently. That would help communities that are currently struggling with access to banking facilities, and in many cases would also help high streets. We think that using and building on the existing infrastructure is probably the most sensible way forward. This is not about tweaking; it must be more fundamental. We cannot just load more activities on to already pressed postmasters. The comments of the hon. Member for Gordon (Colin Clark) were useful in that regard. This is not just about the post office network; we need other reforms elsewhere in the financial ecosystem, and we must also focus on the behaviour of the big banks. I concur with many of the comments of the hon. Member for Motherwell and Wishaw in that regard.

I want to talk a bit about the policy process in this area—in particular, the perils of not having a strong focus on implementation, and the initial legislation. The basic bank account legislation initially arose out of the EU payment accounts directive. Research conducted by Citizens Advice shows that, in practice, basic accounts are often still not very visible to consumers who might want to use them. Banks’ processes for determining what kind of account to give people rely too much on credit checks, and applying for a basic account is still too difficult for many people. The Committee recommended that the FCA should mandate banks to relax the restrictions on basic bank accounts and make them available to all—that is very sensible—and that it should require financial services to report how many basic current account openings they have rejected. That would be very helpful.

One particular problem that I have come across is that many of the most vulnerable and most excluded customers are informed that they cannot have a basic bank account because there has previously been some indication of fraud related to their financial activity, but no evidence of that has to be provided. In many cases, that fraud could be due to manipulation by others—for example, if people have been subject to domestic violence—or it could be because people had been addicted to substances and previously led chaotic lifestyles that are now behind them. Christians Against Poverty is concerned about that; it needs to be looked into and I hope the Government will do so.

We need a much stronger focus on the issue of access to financial services. We have mainly talked about access to basic banking—the Committee has a lot on its plate, so I do not want to suggest that it should deal with even more—but the savings infrastructure is another area in which there have been some worrying developments. Some 57% of UK adults do not have savings beyond £5,000. Help to Save was an interesting idea but it has not yet had the traction that many of us would have hoped. We still urge the Government to try to incorporate the credit union sector more closely with that initiative, and I hope that in future, the Government will view credit unions much more as part of the solution to many of the problems than they have in the past.

[Nicky Morgan]

I thank the hon. Lady for the many points that she is making. Did she, too, pick up Scope’s briefing for the debate, which makes the point that disabled people have an average of £108,000 less in savings and assets than non-disabled people? That is quite a staggering amount of money.

The Committee looked at household savings and debt last year. We might have a little issue with our agenda at the moment, but I take her invitation to perhaps return to that at some point.

[Anneliese Dodds]

I am very grateful to the right hon. Lady for raising that point. That is a staggering statistic, which is due to a whole range of factors: the support that people receive, their ability to participate in the labour market, and the savings infrastructure. She raises an important point: people living with a disability are very often at much greater risk of needing to tap into savings at different points, particularly when, sadly, many sources of support for doing things such as home alterations have dried up. It is really important that we listen to Scope about that.

We must also acknowledge that the ride has been bumpy and we are not moving forward in every area as we would want to. Research from the Friends Provident Foundation and the University of Birmingham suggests that in 2006-07 there were just over 1 million people with no household bank account access, and although that number fell to 660,000 in 2012-13, the trend was reversed in 2013-14 when the number rose again to 730,000. We need to understand what is not right here, and we need much stronger action.

I commend the Treasury Committee for its focus on the issue, particularly on the impact on the lives of vulnerable and low-income people. The Opposition will continue to campaign for reform of the financial services sector to ensure greater access to financial services and, as a result, a stronger economy for everyone.

[Mr Charles Walker (in the Chair)]

Minister, if you are inclined to speak until 3 o’clock, please do not, and allow two minutes for the right hon. Member for Loughborough (Nicky Morgan) to respond.

14:23

[The Exchequer Secretary to the Treasury (Robert Jenrick)]

Thank you, Mr Walker; it is a pleasure to serve under your chairmanship. I do not intend to use up all the time, unless there are many interventions from colleagues. It is a pleasure to follow the hon. Members for Motherwell and Wishaw (Marion Fellows) and for Oxford East (Anneliese Dodds). A dangerous precedent was set in the Lords by my colleague, the noble Lord Bates, who resigned after arriving 10 seconds late to a debate, so I am always careful to be on time now, although I am sure being 15 seconds late is allowed.

I thank both the Treasury Committee and its chair, my right hon. Friend the Member for Loughborough (Nicky Morgan), for securing the debate and for this important piece of work. As she knows, this debate comes just a few weeks before the Treasury will formally respond to the Committee’s comments and recommendations on behalf of the Government. I hope that she will forgive me for not pre-empting that by providing the full formal response, but I will try to set out our approach, our record in recent years and some further steps that we intend to take, as well as impress on her how seriously the Government take the issue and how carefully we will read and respond to the important recommendations in her Committee’s report.

Financial inclusion is a priority for this Government and has been for some time, particularly, as I hope my right hon. Friend will recognise, over the last two or three years, when in each successive Budget the Government have taken a number of important steps to address some of the issues that the report raises and on which it urges us to go much further. Like my right hon. Friend and others who have spoken, I think that financial inclusion is extremely important to build a unified society and economy. In her introduction, she made the important point that we have to take a wide view of what “vulnerability” means, because each and every one of us can be vulnerable at different stages in our lives, not just those whom one might stereotypically assume to be vulnerable.

That is reflected in the broad definition of “vulnerability” that the FCA is working towards. It has identified four indicators of potential vulnerability: low financial capability, low financial resilience, life events, which of course can happen to all of us, and physical and mental health conditions, which one might most clearly recognise as vulnerability. The Government, like the regulator, view this issue with the broadest possible definition.

I will say a few words on what we have done most recently. In November 2017, following a report from the Lords Financial Exclusion Committee, which the hon. Member for Oxford East mentioned, the Government announced the creation of the financial inclusion policy forum. The forum has now met three times and has successfully brought together for the first time the key leaders from across the industry, charities—including some of those mentioned today—and consumer groups, as well as Ministers from throughout Government and the regulators, to provide the leadership and co-ordination in tackling financial exclusion that the issue demands. The Government published our first financial inclusion report on 25 March this year, which takes stock of progress in the area. We intend to continue doing so annually.

Affordable credit was one of the core areas of the report. The policy forum is widely recognised by the sector as an important initiative and it has already managed to deliver tangible progress, although I hope it will go further in the months and years to come. A sub-group of the forum that was set up last summer to examine the issues of access to affordable credit made a number of recommendations. To build on that work, at last year’s Budget we announced a package of affordable credit measures aimed at supporting the affordable credit sector and offering more choice and a better deal to consumers who struggle to access mainstream credit.

Some of those measures have already been referenced in this debate. They include a £2 million affordable credit challenge fund, harnessing the UK’s undoubtedly great capability in the FinTech sector to address the specific challenges faced by social and community lenders. The Government have appointed Nesta as the delivery partner to run the challenge fund, and we expect to launch it in the summer—so, in the coming weeks.

Other measures include a change in the regulatory boundary of credit broking, to allow registered social landlords to refer their tenants to social and community lenders; a pilot prize-linked savings scheme to encourage the growth of the credit union sector and to encourage consumers to build up their personal savings, which we readily acknowledge are lower than most of us would like to see; and a feasibility study to design a pilot for a UK no-interest loans scheme, which we have already heard about. That scheme will be aimed at helping those at the margins of the financial system, for whom borrowing from social and community lenders can still be unaffordable. The Government have appointed London Economics, which is undertaking the study and will report back this summer. Depending on the results, we will then move quickly into the pilot design phase and then to implementation.

The Government are also directing an initial £55 million of dormant assets funding towards financial inclusion, primarily to address affordable credit. That will be deployed by a new, independent organisation, Fair4All Finance, which was launched in February. We are pleased with the rapid progress that it is making, and excited to see it begin work with a range of partners to tackle financial exclusion, but clearly there is more to be done.

We heard some comments about basic bank accounts. We think, as right hon. and hon. Members here do, that they play an important role. I will take away the comments from the hon. Member for Oxford East about access to and knowledge of those bank accounts. A large number of people benefit from them. The last report that we received, published in December 2018, found that almost 7.5 million basic bank accounts were open at that time, deployed through the nine designated institutions. The banks that are required to provide basic bank accounts send reports to the Treasury, so we receive accurate information, but we could perhaps do more to monitor those banks’ activities and ensure that they are more visible to potential customers, particularly the most vulnerable. I will take away the hon. Lady’s comments in that regard.

The report made a number of recommendations on safeguarding access to cash. The Government recognise that the use of digital payment is growing very fast—among the fastest of any major economy: in Europe, only a few Nordic countries are moving to a more cashless society at a faster pace than our own. Although we acknowledge the many benefits for consumers and the economy, there is and will continue to be for many years to come—almost certainly throughout our lifetimes—a need for cash and traditional face-to-face methods of banking to continue alongside the new thriving digital economy. Running both the digital and the cash systems side by side in all parts of the country and for all consumers, including the most vulnerable, will be a considerable challenge to us as Government and policy makers in the years ahead, but one that we must meet.

We have set up the joint authority cash strategy group, which responds directly to one of the report’s recommendations. It brings together the Bank of England, the Payment Systems Regulator and the Financial Conduct Authority to provide comprehensive oversight of the UK’s cash infrastructure, from supply to customer access. That will complement the Bank of England’s work to reform the wholesale cash industry, to encourage innovation and guarantee resilience even in a much lower cash usage environment. The organisation has already started work, and I am happy to update the Committee and other interested Members in the month ahead as we develop this area of work.

Industry has played a central role, and will have one in future, to maintain access to cash, because with industry innovation we can do more at a lower cost. I was pleased to meet Natalie Ceeney recently to discuss the findings of her excellent Access to Cash review, which showed that creative industry initiatives are already being developed, including encouraging greater use of cashback. We think that the industry, perhaps with Government help, can do more to encourage a resurgence in cashback, which was prevalent but is somewhat less so today. It could be part of the answer where ATMs are in decline. There might be opportunities for smaller shops such as convenience stores to return to offering cashback if they have stopped doing so. We would like to take that forward in future.

We have heard about ATMs, where there is undoubtedly a challenge. There remains a large network of free ATMs in this country—among the largest of any developed country in the world. In 2017, the number of free ATMs in the country reached its peak at 54,500, many of which were clustered in the wrong places, particularly in urban areas with the highest footfall. Since then the number has declined. Even though there might be a logical case for reducing the number of ATMs in areas with high footfall, where they are in less demand as more of us use contactless and digital payments, we want to ensure that we protect the people who live in harder-to-serve areas.

The number of ATM transactions is falling by around 6% year on year. Demand is reducing but it varies quite significantly in different parts of the country, as the hon. Member for Motherwell and Wishaw suggested. The last figures show that there was a 10% reduction in the use of ATMs in London, but the figure was as low as 2% in areas such as the east midlands, which my right hon. Friend the Member for Loughborough and I represent, and in Northern Ireland. There are large variations by region, age and socio-economic group. We need to pay careful attention to that. The LINK organisation has made an important commitment to maintain a good and appropriate geographical representation of ATMs, and a particular commitment that we intend to hold it to: that if the last ATM in one kilometre closes and no alternative is provided by the local post office in that radius, it will continue to seek an alternative location for an ATM and will use the subsidies that it provides without limit until an alternative is found. That is an important commitment, and we all need to hold LINK to account. I assure the Committee and colleagues here that I will play my role in doing that, as will my colleague, the Economic Secretary to the Treasury.

Post offices play a key role. They provide a good range of banking services—not a complete range, but most of the services that individuals and smaller businesses will require. Although the number of post offices continues to decline, it is more stable than it has been for a long time. There are 11,500 branches across the country, and we will continue to do all we can to support them. My hon. Friend the Member for Gordon (Colin Clark), who is no longer in the debate, raised the important question of fees for services that banks provide to those running post offices. There has been a negotiation that has led to a significant increase in the amount of money that banks pay of between two and three times the amount of money that post offices receive for offering those services. I am very alive to that issue and the need of those running post offices, often on low margins and taking very little money out of their business, to receive fair compensation for their work.

The wider question of digital inclusion, which the hon. Member for Motherwell and Wishaw raised, is very important. Although younger people and perhaps those in this debate enjoy using digital payments, people have to be able to use digital services and live in areas with 5G or broadband to access them. In rural areas, that is not always the case, although there have been great steps forward. We are alive to that issue and we are working on our digital strategy as a country to ensure that more people have access to basic digital training. Through education we are taking steps in that regard. We should recognise that some new products coming out of the FinTech sector will be very useful to those who have the digital skills to access them, whether that is income smoothing, budgeting skills or the ability to share payments and bills among flatmates. They will make life much easier, but that is dependent on having the digital skills to access those services.

Financial guidance is not limited to digital skills. Last year, we established a new single financial guidance body, the Money and Pensions Service—MAPS—by merging three existing bodies, Pension Wise, the Pensions Advisory Service and the Money Advice Service. The new body provides money guidance for members of the public at every stage of their financial journey. The Government’s commitment to improve people’s financial capability and the provision of financial education is reflected in MAPS’s strategic function to develop and co-ordinate a national strategy that will build on and further progress the Money Advice Service’s work on financial capability.

It is particularly important that children and young people receive good-quality financial education to help them to shape their financial habits later in life. That is why financial literacy was made statutory in the national curriculum in England in 2014, which my right hon. Friend the Member for Loughborough will know from her work as Secretary of State for Education, as part of the curriculum for citizenship education for 11 to 16-year-olds. As reports from the all-party parliamentary group on financial education for young people have recognised, there is more to do to ensure that that education is delivered well in all parts of the country. We recognise that there is more we can do in that regard.

Public funding for debt advice in England has risen to £55 million in 2019-20. That provides help with debt to more than 560,000 people, an increase of 85,000 compared with 2018-19. In addition, during autumn 2018, the Government held a consultation on a breathing space scheme in response to campaigning by a number of Members. That will give vulnerable consumers 60 days’ respite from creditor action, giving them time to access debt advice and put their finances on a sustainable footing. The Government will publish our response to the consultation very shortly, and we have committed to laying regulations before the end of this year to establish breathing space.

The Committee’s report also made recommendations about how financial services can work better for vulnerable consumers. The Government have given the FCA strong powers to protect consumers, and we expect it to continue its work in this area. The FCA and other regulators no doubt will read with interest the comments and recommendations in the report; in turn, I will certainly pay careful attention to their responses.

We welcome the FCA’s work to improve our understanding of vulnerability in the context of financial services, including its forthcoming publication of guidance to firms on how to identify and treat vulnerable consumers. The breadth of the definition of vulnerability in the Committee’s report no doubt will influence and inform the FCA’s work in that regard. Through the Consumer Forum, the Government and regulators from across sectors are working to better understand vulnerable consumers. That will inform the actions taken by the Government and regulators in this space.

My right hon. Friend the Member for Loughborough asked particular questions about the duty of care. We will give that careful thought and respond in a couple of weeks’ time, as we will to her comments about the Equality Act. Those were very important questions. We will give more thought to them and respond to her, I hope in the next few weeks.

We all agree that access to useful and affordable financial products and services is essential to individuals, regardless of their background or income. Part of this is about ensuring that financial services are inclusive to all customers and protecting those who are financially vulnerable by making the right products and advice available. The banks are taking steps in that regard. I met the staff at my local bank in Newark last Friday and saw the quality of training that that bank, Lloyds, provides to protect vulnerable people, such as those who suffer from dementia and those at risk of scams, including new ones emerging as a result of the new digital economy. However, there is a great deal more that the sector and the Government can do.

The Government’s response to the Treasury Committee’s report will be published in the coming weeks. We will seek to address in detail all the recommendations that my right hon. Friend and her Committee made and outline the steps that we will take to build on the progress made on access to financial services. I thank the hon. Members who took part in the debate, and I thank my right hon. Friend for another interesting and rigorous report with insightful recommendations, on which I hope we can work together.

14:42

[Nicky Morgan]

I thank all the Members who attended the debate, including those who only intervened, and I thank the Minister for his thoughtful response. When a Treasury Committee report is described by the relevant Department as “interesting”, I hope that means that we have struck a chord somewhere along the way.

Members generously shared examples of financial exclusion and the importance of financial inclusion. I say to the Minister that, at a time when the House sometimes appears to struggle to find enough business to fill its day, this may well be an area in which there can be good cross-party agreement and working. If there is a need for changes to regulations or legislation, or for the House to show regulators and others that this issue is of great concern to us, this may be a good time to take advantage of that.

I will not go through everything the Minister said. He is absolutely right that the Financial Conduct Authority is very important in this area. We recognise that. On access to cash, the other issue is the cash infrastructure—the way that cash moves around the country. Sweden in particular has found that once that infrastructure has gone, it is difficult and expensive to bring it back. The Minister also talked about ATMs and post offices. He is right that FinTech offers opportunities for innovation in things such as budgeting. That is fantastic, but we want those things to be used by our large banks, many of which have millions of customer accounts, not just our small, innovative challenger banks and FinTech companies.

We wait to hear the Government’s response about the duty of care and the enforcement of the Equality and Human Rights Commission’s powers in relation to the Equality Act, and I am sure we all look forward to seeing the breathing space regulations. The hon. Member for Oxford East (Anneliese Dodds) mentioned the wording of consumer credit letters where debts are being chased. That has already been raised in this Chamber, and it is another area where I think there is general agreement.

Of course, Ministers can always speak directly to financial services providers. Yes, there is the raised eyebrow of the Governor of the Bank of England, but there is nothing like the raised eyebrow of Ministers. I am delighted to hear that the Minister visited a bank in his constituency to hear about the training it offers to protect customers with dementia.

[Mr Charles Walker (in the Chair)]

Let me conclude by saying to the hon. Member for Motherwell and Wishaw (Marion Fellows) that she was actually in the room, if not in her seat, at the start of the debate, and she knows full well that in this place it is being in the room that counts.

Question put and agreed to.

Resolved,

That this House has considered the Twenty-ninth Report of the Treasury Committee, Consumers’ access to financial services, HC 1642.

14:46

Sitting suspended.

Bus Drivers’ Working Hours

Thursday 6th June 2019 Westminster Hall

[Sir Graham Brady in the Chair]

16:11

[Matt Western (Warwick and Leamington) (Lab)]

I beg to move,

That this House has considered local bus drivers’ working hours.

It is a pleasure to serve under your chairmanship, Sir Graham.

Back in February I brought forward my ten-minute rule Bill raising the issue of local bus drivers’ working hours. It asked for two things: a change to working hours and an increase in more robust, independent medical checks for bus drivers. I do not believe that our current laws around the working hours of bus drivers are keeping our public safe. The Bill that I put forward, to which this debate relates, simply seeks to limit bus drivers on local routes to driving for no more than 56 hours in any one week and 90 hours in any two consecutive weeks. Doing this would bring the hours worked into regulatory alignment with those for long-distance bus and coach drivers, and for heavy goods vehicle lorry drivers. Some would say that this is simple common sense. Let me put it like this: how can a packet of cornflakes have more chance of safe arrival at its destination than a child on a bus?

I proposed the Bill in response to the terrible tragedy in Coventry city centre in October 2015, and in particular in memory of the two individuals who died in that accident: seven-year-old Rowan Fitzgerald and 76-year-old Dora Hancox. I pay tribute to Rowan’s family, Natasha, Barbara and Liam, who have joined us today. I thank them once more for their courage and encouragement, and before them I recommit myself to ensuring there is an important legacy from their terrible loss. That is why we are pushing for Rowan’s law—so that the rules around local bus driver working hours are made consistent with those for long-distance bus and coach drivers, and HGV drivers.

Many others were injured that day, including Rowan’s cousin Paige, but it could have been even worse. Were it not for the brave actions of Teil Portlock, who managed to disperse the pedestrians outside the Sainsbury’s, many others would have been killed or seriously injured. For the benefit of the Minister, may I describe what happened that day in Coventry? It was a busy Saturday afternoon. The video shown at the inquest revealed how the tragedy could have claimed more lives. In it, the bus careers across the main road, striking another bus and then a lamppost, before hurtling down a pavement and ploughing into a bus stop and the supermarket. As I have said repeatedly, it was an absolute inevitability that such a tragedy would happen.

The driver that day was Mr Chander, a 77-year-old male, of Leamington Spa. In the year leading up to the fatal accident, Mr Chander had worked an average of 47 hours per week. That statistic disguises the number of hours worked during busy periods, namely school term time. At those times, he was frequently working in excess of 56 hours a week and could drive school specials. These hours are long by any measure, particularly for a driver in his mid-70s. In the four weeks leading up to the crash, he had driven 62 hours, 76 hours, 76 hours and 72 hours respectively, which was an average of 72 hours a week over that period. That was despite his shocking safety record and some 16 written complaints from passengers, who, over the preceding couple of years, had contacted the company to register his erratic behaviour and innumerable incidents. Those hours are entirely legal under current UK law, and that is what many of us are seeking to address.

This issue is not new, and the crash in 2015 could have been prevented. Back in March that year, before the tragedy, my right hon. Friends the Members for Islington North (Jeremy Corbyn), and for Hayes and Harlington (John McDonnell), proposed such changes through an early-day motion. That was four years ago. Currently, British laws limit bus drivers’ hours on local routes of less than 50 km to 10 hours of driving a day, with no weekly or fortnightly limit, except that in any two consecutive weeks there must be at least one period of 24 hours off duty. That means it is entirely legal for a local bus driver to drive 130 hours over two weeks. If you extrapolate that, a driver could work 260 hours in under four weeks, which would be extraordinary.

Under EU law, a long-distance bus or lorry driver cannot drive for more than 56 hours a week, or more than 90 hours over two consecutive weeks. I believe this tragedy could have been avoided if driving hours for local bus drivers had been capped at 56 hours a week, and no more than 90 hours over two consecutive weeks, as is already the case for long-distance bus and HGV drivers.

When the family and I met the Minister, just a month ago, she shared with us Department for Transport data that showed that bus drivers drive an average of 42 hours a week. I believe that hides the reality and what is happening at the extreme margins. It is reported that 10,000 bus or coach drivers are working in excess of 56 and a half hours per week, and that 42,000 drivers—some 40% of total drivers—are working in excess of 90 hours per fortnight on average.

Part of the issue is that drivers are seeking recompense for depressed earnings; they have seen their wages reduce, relative to other drivers, such as train or tube train drivers. That divergence, where there was once parity, is a great cause of the additional hours that have been worked. It means that on average bus drivers work nearly six hours per week more than average workers.

The Bill proposes moving to EU regulations that cover total hours worked, but also includes proposals to bring changes to mandatory breaks that would ensure a break of no less than 45 minutes would be taken after no more than four and a half hours of driving. At present, the entitlement to a 30-minute break after five and a half hours behind the wheel often results in drivers taking smaller breaks or none at all due to congestion on the route or other factors beyond their control. Also, it is not realistic to think that a driver can obtain proper rest and refreshment in that timeframe, after five and a half hours of driving passengers on often complicated routes, with frequent stopping.

Importantly, the changes to hours in the Bill should be introduced by employers at no detriment to bus drivers’ pay. The culture of long hours amongst bus drivers is accompanied by low rates of pay, which places on drivers a dubious incentive to work overtime. Regulations must prevent this, but must also ensure that bus drivers are paid properly for the essential public service they provide. This is important at a time when operators are cutting unprofitable routes and local councils are cutting funding to bus services. This all sounds obvious, particularly when looking at the regulations that apply in other European countries, but it is why so many of us are calling for change. I applaud Rowan’s family for their petition doing just that. It already has 2,800 signatures, mostly local, but I am sure the number will build as this campaign makes further headway.

Since I spoke to my ten-minute rule Bill, the family and I met with the Minister responsible for buses, who disappointingly cannot be here today. It was an emotional meeting. The Minister said she would look into this; I appreciate her honesty and her commitment to doing that. I have met representatives of the relevant unions to garner their views. The TUC, GMB and National Union of Rail, Maritime and Transport Workers all back this change, as does the Mayor of Greater Manchester. I met those responsible at Transport for London to hear their concerns, and to try to better understand the reasons behind the 16 or 17 deaths per year, on average, involving buses on the capital’s streets.

[Mr Jim Cunningham (Coventry South) (Lab)]

The accident happened in my constituency; I thought it only right and proper to come along today to support my hon. Friend. The accident is a by-product of deregulation about 30 years ago. I am surprised that the Government have never adopted the EU regulations. I support my hon. Friend and I extend every sympathy to the families of those killed in the accident. I hope that the Government will, for a change, take action, rather than drag this out so that, at the end of the day, nothing changes. That would be no comfort to the families concerned. Earlier this year, I met my hon. Friend and members of the victims’ families right here in Westminster Hall. We support them all that we can. I congratulate my hon. Friend on securing this debate.

[Matt Western]

I thank my hon. Friend for his intervention. I agree with him entirely about the marketisation of the bus sector, and the pressures that that has put on bus drivers and the hours that they work, and the pay and working conditions that they suffer as a result. Of course, that does not apply to tube drivers, for whom that has not been allowed to happen. We have seen widening divergence in tube driver and bus driver pay in the capital; it is a good example of what has been allowed to happen through marketisation of local bus services. I thank my hon. Friend for coming today. I know that many others hoped to be here, and were it not for the by-election in Peterborough, I am sure a great many more would have been here. Unfortunately, that is just a scheduling problem.

When I met Brake, the road safety charity, it was extremely impressed by the campaign and put its full support behind it, as did London Bus Watch. Sir Graham, you will not be surprised to learn that many bus drivers have approached me to share their stories and the reality of what is happening under existing legislation. Across the country, their responses have been clear and consistent. For example, a bus driver in Cornwall drives on a route longer than 50 km, so it should come under strict EU rules for long-distance drivers, but the local company exploits a loophole and splits the route into three, so that the same driver can continue the route and they do not have to comply with EU working hours restrictions—a simple example of how companies work the system. In Liverpool, a driver who used to work for Stagecoach said that drivers were regularly forced to work 12-hour shifts day after day, which caused fatigue. There are many other examples, but time does not permit me to give them.

There is also concern about who enforces legislation. What are the roles, and how are the Driver and Vehicle Standards Agency and the traffic commissioners resourced? It is disturbing, and may come as a surprise, that very few councils and local authorities have any bus safety data at all. Following a Freedom of Information Act application by one of the campaign groups, 46 of the 74 councils and local authorities approached said they had absolutely no bus safety data; eight said they did, and 24 are yet to respond. There is clearly much to do.

It is evident that what happened on that day in Coventry city centre could have happened anywhere, and it is unlikely to be the last such accident. In fact, what motivates me, and, I am sure, Rowan’s family, is our determination to ensure that there is no repeat of the Coventry crash, and that no worse tragedy ever occurs. I fear it is simply a matter of time unless the Government act.

I sum up by repeating that it is simply common sense to align the working hours legislation for local bus drivers with that for long-distance bus, coach and lorry drivers to bring safety to our streets, and to avoid an even more serious tragedy, but that must not impact on drivers’ pay. That is sensible, pragmatic and certainly not radical. We need only look at the legislation and what happens in Germany and the Netherlands, where daily driving cannot exceed nine hours, with an exemption twice a week, when it can be increased to 10 hours. Total driving time is limited to 56 hours a week, with a total fortnightly limit of 90 hours, and drivers have 45-minute breaks after four and a half hours of driving time. That is what happens in other European countries.

We must also introduce independent, regular health checks. Coventry was an example of an individual being suspected of being in ill health, but for some reason, that was not exposed, though it should have been. Through the Bill, I urge the Minister to provide for more regular, independent health checks to ensure the safety of all our passengers and other road users. That could be introduced via a simple statutory instrument, if the Government so wished. I urge the Minister to review the matter with his colleague and the Secretary of State. In the meantime, the family and I will continue to press for the introduction of Rowan’s law. We have come a long way, but we will continue until Rowan’s legacy is fulfilled.

15:09

[Jim Fitzpatrick (Poplar and Limehouse) (Lab)]

It is a pleasure to see you presiding in the Chair this afternoon, Sir Graham. I congratulate my hon. Friend the Member for Warwick and Leamington (Matt Western) on securing this important debate. I commend him not only for his excellent contribution, but for his campaigning on this issue, including his ten-minute rule Bill, which he introduced on 13 February, as he mentioned in his remarks.

I had hoped to welcome the new Minister of State, Department for Transport, the hon. Member for Northampton North (Michael Ellis), who has responsibility for road safety, to his place. I am never unhappy to see the Under-Secretary of State for Transport, the hon. Member for Harrogate and Knaresborough (Andrew Jones), but it would have been nice to be able to firmly welcome the new road safety Minister. As chair of the all-party group for transport safety, I was hoping to get an assurance from him that he would engage with the all-party group as much as his predecessor did, so I hope the Minister will take that message back to the hon. Member for Northampton North.

Will the Minister also pass on a message about the updated road safety statement, which he knows has been long awaited? I hope the reshuffle will not delay it, given the concern about how the road safety casualty figures on those who have been killed or seriously injured have stagnated over the past few years. It would be an impetus to getting those figures on a downward trend again, which we all want to see.

My hon. Friend the Member for Warwick and Leamington highlighted the crystal clear anomaly between the permitted hours of driving for HGV drivers, long-distance bus drivers and local bus drivers—a point also made by the RMT trade union in its briefing. I thank the union, the Parliamentary Advisory Council for Transport Safety and the Library for their information and briefings for this debate.

The Rowan Fitzgerald case cited by my hon. Friend graphically and tragically portrays the problem, and I offer my sincere condolences to the family. Long driving hours were a key cause of the death of seven-year-old Rowan. It is well documented that fatigue causes crashes. According to the Parliamentary Advisory Council for Transport Safety’s most recent figures, 62 people died in collisions where fatigue was recorded as a contributory factor and a further 509 were seriously injured, so fatigue is a major problem. Public sector staff have a responsibility for public safety. It is for local government and the Government to monitor how best to protect the public in these situations.

When one is driving a vehicle the size of a local bus, whether single or double-decker, regulations should protect passengers, other road users, pedestrians and the driver himself or herself. My hon. Friend put two cases: first, local bus drivers’ hours should be capped at 56 hours per week or 90 in a fortnight; and secondly, we should match European Union employment regulations. The fact that drivers are expected to drive for up to five and a half hours without a break under the existing regulations is absurd in this day and age.

I will not detail the specifics of the Coventry crash that killed Rowan and Mrs Dora Hancox; they have been well documented and the court has pronounced its verdict. Cause, effect, responsibility and blame are all indisputable. The financial penalty is significant, but, given the loss of life and serious injury caused, I am sure the victims and the families were not happy with just that outcome. A more significant conclusion would be for the Government to recognise that fatigue for that class of driver can be addressed and reduced so that we can prevent more deaths and serious injuries. It is within the gift of the Government to introduce the type of regulations that my hon. Friend mentioned.

The statistics on bus crashes, especially in London, my city, are very worrying. Fatigue is not responsible for every crash, but it is responsible for some, and it can be addressed and such instances reduced. I look forward to the Front-Bench responses, but especially the Minister’s, and hopefully we will see some progress in better protecting those who are at risk.

To conclude, a spokesperson for London Bus Watch, Tom Kearney, having spoken to many bus drivers across the country, said:

“Fatigue is their single biggest worry.”

If the drivers are worried, so should we be.

15:19

[Martyn Day (Linlithgow and East Falkirk) (SNP)]

It is a pleasure to serve under your chairmanship, Sir Graham. I am delighted to take part in this interesting debate, introduced by the hon. Member for Warwick and Leamington (Matt Western). I pay tribute to his work on this issue, and I wish him every success with his private Member’s Bill.

I thank the hon. Gentleman for his account of the tragedy that took place in Coventry. The hours worked in that case were truly shocking. Perhaps even more shocking is that those hours are perfectly legal. I also thank him for raising the splitting of routes to avoid the 50 km long-distance requirements. That is unacceptable, and I am grateful to him for mentioning that today. The hon. Member for Poplar and Limehouse (Jim Fitzpatrick) highlighted how fatigue causes crashes, and I could not agree more. I am grateful to him for the statistics he used to illustrate that point.

The Scottish National party has been a powerful advocate for fair working hours and working practices, so it will come as absolutely no surprise that I fully support the change being sought. A limit of 56 hours in a week or 90 hours over two weeks seems perfectly reasonable. In fact, I would not want to be driving for that many hours. I certainly would not want to see someone driving the hours they are driving now on local routes. I fail to see why any difference between the working hours of local bus drivers, long-distance bus drivers and HGV drivers should exist, other than it being an accidental mismatch from historical pieces of legislation. The average driver’s hours are 42 a week, which suggests that there would not be insurmountable problems for bus companies in facilitating a more respectable number of hours. It certainly would not put people out of work.

In saying that, I should point out that the SNP supports the full devolution of employment law to the Scottish Parliament. We do not have control over that, so the debate is particularly relevant for me, as it allows me to make these points. In Scotland, we have control over transport policy, and we have tried to prioritise the provision of quality bus services. In general, we believe that the current model for providing bus services, where public authorities have the power to intervene, including through subsidies, is generally the right one. However, we need to do more. That is why we are trying to strengthen the powers through our Transport (Scotland) Bill to allow transport authorities to run their own services in some cases, or to take over whole networks or parts of areas. In that melting pot, it would make great sense for Scotland to have control over the hours drivers may work. That would assist us in boosting public confidence in the safety of the service, which is a point I am happy to make here, as this Parliament has that power just now.

Another area of concern is that many of the protections and rights secured for our workers have flowed directly from our membership of the European Union. It is imperative that those are not put at risk by any Brexit race to the bottom. It is worth pointing out that the UK rules on drivers’ hours are slightly different from the EU’s. Under UK rules, after 5.5 hours of driving, a break of 30 minutes must be taken. Under the equivalent EU rules, a driving period of no more than 4.5 hours gives drivers a break of 45 minutes. I am not a professional driver or a professional transport person, but on the few occasions when I have had the misfortune of having to drive from my constituency to London—a journey that took me longer than 5.5 hours—I needed a considerably longer break. I say that as someone who is not regularly driving every day. While I may not be a professional driver, starting from a more relaxed position and coming out severely fatigued would worry me from my personal experience.

[Jim Fitzpatrick]

I just want to make the point that we would not go five and a half hours in this place without having a break, a cup of tea and a chat, and we are not driving vehicles the size of a bus.

[Martyn Day]

Absolutely. I thank the hon. Gentleman for making that excellent point. I could not agree more.

In conclusion, I hope the Minister will look favourably at addressing drivers’ hours and breaks. The hon. Member for Warwick and Leamington has highlighted a good issue. I support him and wish him every success. Can the Minister tell me what the rationale is for continuing to have different working hours for local and long-distance drivers? It certainly is not safety, and I fail to see any logic for it.

15:23

[Matt Rodda (Reading East) (Lab)]

I am grateful to serve under your chairmanship, Sir Graham, and to have the opportunity to speak in this important debate. Today’s debate about bus safety is happening in response to the most terrible tragedy, when, as we have heard, Rowan died in a horrific accident at just seven years old. Dora Hancox also died, and many others were injured. I want to pass on my condolences to Rowan’s family: to his mother, Natasha; his grandmother, Barbara; and their relatives. They have been through the most unimaginable suffering and the loss of a much-loved young son.

No family should have to endure what these families have been through. It is essential that we now listen to the families and understand what they have suffered to help ensure that a tragedy like this never, ever happens again. That requires determined action and investment by the Government, working with the bus industry, trade unions and passengers to look again at the problem of excessive working hours.

Before I discuss how safety can be improved, I thank my hon. Friend the Member for Warwick and Leamington (Matt Western) for his campaigning work on behalf of Dora and Rowan’s families and for securing this debate as part of the campaign to improve bus safety. I thank other hon. Members for speaking today, and I look forward to the Minister addressing the points I will raise.

Labour believes that safety should always come first, and we want to see a culture of improved safety across our entire transport system. That clearly means setting higher safety standards and investing more in road safety, in the safety of our bus services and in other modes of transport.

I want to address the importance of setting higher standards of safety first, before discussing the wider issue of investment. It is clear that there is a considerable difference between the regulation of coach drivers’ hours and the more limited regulation of local bus drivers’ hours. The regulations regarding bus drivers’ hours need to be reviewed in light of the tragedy, as was mentioned by my hon. Friend the Member for Warwick and Leamington. I call on the Government to work with operators, unions and passengers, and to support his Bill.

There needs to be a thorough review, considering the issue from first principles, rather than merely tinkering with the problem. As part of that, it is important to consider the wide range of factors that could affect drivers and lead to a loss of concentration, including fatigue, their underlying health, their age, driver training and the use of any safety devices in cabs. It is important that those issues are considered thoroughly in response to this tragedy.

Turning to the wider issue of the need for investment in the bus industry to improve safety, there has been a 45% cut in Government funding for buses since 2010 and a fall in bus usage across the country. I am concerned that the decline in services and the pressure on drivers and operators contributed to the terrible accident in which Rowan tragically lost his life. Investment will save lives by reducing accidents in the short term and by cutting long-term damage from things such as air pollution, which can threaten health.

As a party, we see improvements to safety as integral to the wider package of investment. That is a proven approach, and there is a long history of investment in transport infrastructure, better pay, better training and improved regulation of services all leading to improvements in safety. As part of that, Labour would reinstate the services cut by the present Government. We would also allow all councils to regulate services and, indeed, to set up new municipal bus companies, which have a record of providing much better quality services than those run by private companies. Those measures for buses would be part of a much wider range of investments to improve our whole transport system.

Our party’s programme is in stark contrast to the current state of bus services, where there is declining bus use, endemic low pay among drivers and a shortage of drivers. If the Government want to improve safety, they need to reconsider their approach and acknowledge the deep and serious effects of the cuts that have led to this accident and other problems in the service.

I am conscious of time, and I will sum up my remarks by making the following points. Rowan and Dora’s families have suffered the most terrible tragedy, and I hope we can all agree that no family should have to suffer as they have. Urgent action is now quite clearly needed. A Government review of drivers’ hours, supporting my hon. Friend’s Bill and working with operators, unions and passengers are important ways of addressing the problem. There needs to be investment, not cuts, in bus services. All those measures together are vital for improvements in safety.

15:28

[The Parliamentary Under-Secretary of State for Transport (Andrew Jones)]

It is always a pleasure to serve under your chairmanship, Sir Graham, and I congratulate the hon. Member for Warwick and Leamington (Matt Western) on having secured this debate about local bus drivers’ working hours. I should probably also start with an apology: I am not the bus Minister. My hon. Friend the Member for Wealden (Ms Ghani) is away on an overseas ministerial visit, which is why I am covering for her in today’s debate. However, I understand that she has been very engaged with this issue and met the hon. Member for Warwick and Leamington, together with the family of Rowan, to discuss it on, I believe, 7 May. She has promised to look into the concerns raised; she is doing so, and she will write back to the family through the hon. Gentleman very shortly.

Before turning to some of the issues, let me join colleagues in paying tribute to Rowan’s family for their work. I must say that it is astonishingly brave, when something must be acutely painful, to draw something so positive from it by campaigning to see that other families do not have to suffer as they have suffered. That is noble and brave work, and we as a House should recognise it.

The Government are committed to ensuring that the bus industry complies with the current law, including its duty of care to passengers. As promised, my hon. Friend the Member for Wealden will press that with the industry at every opportunity. We all agree that the tragic accident that occurred in 2015 in Coventry should never have happened and must never be allowed to happen again.

However, the Government are not convinced that amending the local drivers’ hours legislation is the answer. A number of pieces of legislation already exist to regulate the bus industry, which together should have stopped this tragic accident happening. It might be helpful if I detail some of those.

There is a general duty of care under the Public Service Vehicles (Conduct of Drivers, Inspectors, Conductors and Passengers) Regulations 1990, which set standards for bus companies and their drivers, to ensure safety for their passengers. The GB domestic drivers, hours rules in the Transport Act 1968 limit bus drivers to 10 hours daily, with 30 minutes’ break after five and a half hours and a daily rest of 10 consecutive hours.

There are the general Working Time Regulations 1998, which limit the working week to an average of 48 hours—although I am aware that of course individuals can opt out of that requirement if they choose to—and provide an entitlement to adequate rest. There is also health and safety at work legislation, which places a duty on employers to ensure the health and safety of their employees and others who may be put at risk by their work activities. That includes a duty on employers to manage the risks from fatigue, irrespective of any individual’s willingness to work extra hours.

Colleagues have made some comments about the legislation in other countries, so I should perhaps just clarify that. A point was made about not adopting EU regulations, but the EU regulations do not apply to local bus drivers. No EU regulation of local bus driver hours exists. Is fatigue covered? Yes, most certainly it is; it is right at the heart of health and safety legislation, which includes a duty on operators to manage fatigue. The safeguards we have in place should have prevented the tragedy of that terrible crash in Coventry, had they been properly followed. The point, of course, is that they were not.

[Matt Western]

On that point, it is my understanding that this is a derogation and every country can derogate from the EU directive on local bus driving hours. However, in the two examples I gave, Germany and the Netherlands, they abide by the 56 hours and the 90 hours for a fortnightly period. My simple premise is, why can we not have consistency between the hours worked by a long-distance bus driver or HGV driver and those worked by a local bus driver? As I said, is it not bizarre that a box of cornflakes is more likely to arrive at its destination safely than a seven-year-old child?

[Andrew Jones]

I remind the hon. Gentleman that, as I understand it, there are no EU regulations that apply directly, so the read-across is not absolute, and we have other legislation in place. However, as with all the comments from colleagues here, I will, of course, make sure that I go back and discuss that with my hon. Friend the Member for Wealden, who is the bus Minister and is taking this case forward, to ensure that they are all absolutely understood. The key point, I think, is that a difference has been seen in the style of driving and the recognition of driving, with different stoppage patterns, but the point about fatigue is correct and that is why it is built into health and safety legislation.

I will press on to talk about the incident. We have a legislative framework in place and it should have been followed. It was not followed. While the driver in question was within the working hours limits—a point made by the hon. Member for Warwick and Leamington—there had been multiple warnings that he should not have been behind the wheel that day, including numerous passenger complaints, which were not acted upon.

Although I am sure this is of no comfort at all to Rowan and Dora’s families, the bus driver was found guilty in his absence of causing death by dangerous driving, and the bus company was found guilty under the Health and Safety at Work etc. Act 1974 of putting members of the public and its own staff at risk and was fined £2.3 million. Following the bus operator’s conviction, the traffic commissioner held a public inquiry on 30 January this year to consider the operator’s good repute.

As part of the inquiry, the operator listed the actions taken since the October 2015 accident with a view to preventing such an accident from happening again. Those include medical reviews of drivers over 70, which now take place every six months rather than the statutory requirement of every 12 months. Any driving instructor’s report highlighting a need to restrict a driver’s hours must now be brought to the attention of the company’s operations director and managing director. Instructions and advice about such restrictions must now be issued in writing. The company has limited casual drivers to 40 hours, work per week since the incident and, since 5 January this year, has ceased using casual drivers altogether.

The traffic commissioner published his decision in March this year. On top of the £2.3 million fine imposed by the courts, the traffic commissioner took the regulatory action of varying the company’s licence to reduce the number of vehicles it could operate for a 28-day period. That regulatory action was a strong warning to the company, and through the company to the entire industry, that it had failed to come up to expectations in ensuring the safety of its staff and other road users, and that if such a failure was ever repeated, the complete loss of its right to operate would be the likely consequence.

It is important that we look at every opportunity to raise awareness of the lessons learned from this tragic accident and the importance of continuing to improve safety. The hon. Member for Reading East (Matt Rodda) spoke about how safety should be at the heart of our transport networks. That point was also made by the hon. Member for Poplar and Limehouse (Jim Fitzpatrick). We have discussed it on countless occasions, and he knows that we are in exactly the same place in placing great priority on road safety.

[Matt Western]

Does the Minister sense that there is possibly under-resourcing or under-capacity in the enforcement of what should be going on with these bus companies and through their depots? How much random independent checking is going on to ensure that they are conforming to existing legislation?

[Andrew Jones]

That is an important point. The traffic commissioner is the regulator and responsible for the licensing and regulation of public service vehicles, which includes enforcement and prosecution where appropriate. We also have the DVSA—the Driver and Vehicle Standards Agency—which carries out monitoring and compliance checks. Those can include not only routine checks, but reactive or proactive checks where there is evidence that an operator is non-compliant or an issue has been reported.

There are methods in place, with checks and balances, to be reactive in response to information or proactive if necessary. Those checks can include looking at the logs of drivers’ rosters and considering the health and wellbeing of drivers. Those are the two methods through which the regulations can be enforced.

[Jim Fitzpatrick]

I am grateful to the Minister for that further explanation of the checks and balances in the system. Given the numbers of complaints that he catalogued that were recorded against this driver in the days, weeks and months preceding the tragic crash, is he reassured by the traffic commissioner and the other authorities that cases of drivers such as the one responsible, who got away with so much for so long, will not be able to be repeated because of the example of this case, where clearly the system did not work?

[Andrew Jones]

That is at the heart of what is happening. The system has not worked here, and the points about how we take that forward and improve the enforcement and vigour of the regulation are central to where we need to go. That is a point that I will be taking from this debate and taking to my hon. Friend the bus Minister in our meetings next week, when she is back from overseas.

It might be helpful if I updated the House on some of the data involving buses. We all need to see a continuation of the long-term trend of improving road safety in the UK. Colleagues in the House have made a significant contribution to that over a sustained period, and we all owe them a duty of thanks. It has led to the UK—along with, I think, Sweden—having the safest roads in the world. There are still significant areas where we need to make more progress, but we should look at that sustained cross-party initiative with some pride, although we recognise that there is no room for any complacency anywhere at all.

On that point, the hon. Member for Poplar and Limehouse asked about the new Minister with responsibility for road safety. My hon. Friend the Minister of State, Department for Transport, is not here and I should be a little cautious about putting things in his diary, but I am absolutely confident that he will wish to engage strongly with the all-party group. I will also pass on to him the comments made about the updated road safety statement.

Fatal road accidents involving buses have been falling over time. The number of buses involved in fatal road accidents, per billion vehicle miles, has fallen by 36% in the last 10 years, so there is a positive downward trend and we want it to continue. It needs to be kept in mind that the GB domestic drivers’ hours rules set maximum limits, to give some flexibility to the bus industry, and do not reflect drivers’ normal working patterns. Figures from the Office for National Statistics show that, on average, in 2017 bus drivers worked 42 hours a week, which is within the 48 hours average limit allowed in the general working time rules. The bus Minister has promised to look into the robustness of these figures, and it is of course some of the outlying figures, rather than the average, that we need to focus on here. The average is perhaps not showing the entire picture, which is why that further work needs to be done.

[Matt Rodda]

I thank the Minister for his detailed exploration of the figures. Perhaps he would agree to ask his ministerial colleague to write to me and to my hon. Friend the Member for Warwick and Leamington, detailing, as he said, some of the outlying figures and giving a much fuller picture of the statistics on this aspect of bus safety, and perhaps also indicating the level of resources for the traffic commissioners’ office at present.

[Andrew Jones]

I will certainly pass that request on. I know that my hon. Friend is already planning to write to the hon. Member for Warwick and Leamington, but I will pass that request on very happily.

Following its inquiry, the Select Committee on Transport published its report entitled “Bus services in England outside London” on 22 May. One recommendation in the report is that the Government consult on whether legislation governing GB drivers’ hours is still fit for purpose or should be amended. The Government are currently considering the recommendations in the report and will of course publish a response in due course.

The Department for Transport did conduct an extensive review of the effectiveness of the GB domestic drivers’ hours rules in 2009-10. That looked at whether these vehicles should fall under any of the provisions in the EU drivers’ hours rules. At that time, the Government decided not to make any changes, concluding that the existing rules are both important and appropriate in ensuring the safety of drivers and others on the road and that any further restrictions could risk placing further burdens on the sector, but it is clearly appropriate to keep monitoring this. As new data becomes available, it should obviously inform our decision making.

I understand from the Confederation of Passenger Transport UK, the main trade association representing the bus industry, that the accident that we have been discussing and the resulting court case have already had an impact on the sector. The public inquiry illustrated that a complex chain of organisational and management factors or unsafe acts contributed to this terrible incident.

As the hon. Member for Reading East highlighted, buses are a vital industry. It is important that we support the bus industry to thrive, while ensuring that safety is at its heart. I absolutely agree with that. It is why we have the Bus Services Act 2017. We of course need to have a transport sector that has safety at its heart.

The hon. Gentleman talked about the decline in passenger numbers since 2010. I should perhaps point out that we have actually had a decline in passenger numbers for several decades. It did not start in 2010—frankly, it probably started long before I was born.

The hon. Gentleman also talked about investment in the sector. We have obviously seen pressures on local government finance in particular, but the national support for buses, through the bus service operators grant, has been protected at a quarter of a billion pounds, and that has been in place for many years.

The Bus Services Act is all about giving greater powers to local authorities. At the heart of those is partnership, but there could be franchising as well. We want to see a thriving bus industry, with safety at its heart and passengers at its heart, providing for the sustainable, secure movement of people around our country. That new set of powers, which are still being worked through by local authorities up and down the country, is at the heart of how we are seeking to take that forward.

In addition to the Bus Services Act, the industry is currently considering a bus safety strategy. As a Department, we welcome the bus safety strategy. Industry groups such as the Urban Transport Group have been considering what a strategy might include and delivering research into other sectors, such as rail and aviation, that have effective near-miss reporting systems in order to understand how near misses are reported and acted on. If there are lessons to be learned from other sectors, we should seek to learn them. The aviation sector has a very good track record, and interestingly that has been used as a template for how we can do reporting and for changing the culture in areas of public life such as our health service.

The public inquiry illustrated that in this case there were multiple reports of unsafe acts or near misses, and the failure to act contributed to this terrible incident. Department for Transport officials are working with the Urban Transport Group as it develops the strategy, and I know that the lessons learned from this incident will be fed into the development of the strategy. It is important to know that. I hope that it will be of some comfort to the families of Rowan and Dora that the lessons from this incident are being fed into the development of safety strategies.

Both the industry and the Government are determined to minimise the chances of this crash ever being repeated. There is strong consensus across the industry that there is no substitute for a closely managed culture in which safety is paramount. As a Government, we take this issue very seriously and will continue to press the bus industry at every opportunity to continue to improve its policies and procedures and ensure that it complies with all its legal duties, so that no driver gets behind the wheel of a bus who is not safe to drive that bus.

As I have said, I will be meeting the bus Minister next week so that she knows the content of our debate. I will ensure that all the points made by colleagues here are taken forward and she is fully sighted on them, and that we maintain the progress that is being made on road safety in general and bus safety in particular.

I would like to finish by paying tribute once more to Rowan’s family for their bravery and dignity in handling what must be so difficult an issue and seeking to draw something so positive from it.

15:48

[Matt Western]

I thank the Minister and, indeed, everyone who has participated in the debate. I also thank the Minister for standing in for his ministerial colleague, because clearly this is not his direct brief.

Where I differ from the Minister is on his point that the bus industry’s focus is on sustainability and safety. I am not convinced by that; I think that the focus of any private sector company is really profitability and sustainability. Safety seems to be a little further down the list of priorities.

As my hon. Friend the Member for Poplar and Limehouse (Jim Fitzpatrick) so eloquently put it, the fundamental issue here is driver fatigue, and the need for us to legislate to ensure that passengers, and the driver, have every chance of arriving at a destination safely, and to ensure that the driver is not put in the difficult position of having to work excessive hours simply to survive and bring enough money home, which is what has happened as a result of the depression of drivers’ wages over recent decades.

The point about health checks is important, and I welcome the moves being made in that regard. Health checks have to be independent and regular. I do not believe that 70 is the right threshold—I think it should be an earlier age—but that is for independent authorities to review and consider.

It is important to look at European legislation. The Government claim that our legislation is generally stronger or better than that of Europe, but that is clearly not the case in this instance. The legislation in Germany and the Netherlands is much stronger, and would, I believe, result in much safer road conditions for passengers and other road users here.

I thank my hon. Friend the Member for Reading East (Matt Rodda) for his remarks. He is quite right about safety devices: they should be fitted to all vehicles. I do not believe they were operating at the time of this incident. Certainly, on many of that particular bus company’s vehicles, many of the devices were found not to be operable. These are the sorts of things that require greater enforcement, and the relevant agencies should check for compliance. I ask the Minister to refer this to his colleague, and to commit to publishing the data on what checks are done and how frequently. I am not convinced that we have that reassurance from the various authorities that are supposed to do that on behalf of the public.

To return to the point I made at the outset, the simple truth is that there is more chance of a box of cornflakes arriving safely at its destination than of a child or any other passenger on a local bus route doing so. That cannot be right. That is why so many of us here are calling for these changes, and have done so in other forums. I am disappointed that more people were not here today, but it is understandable, given how important the by-election in Peterborough is.

I am calling for the introduction of a maximum of 56 driving hours per week, and of 90 hours per fortnight, with a 45 minute break over a work period of four and a half hours. We have to avoid a race to the bottom. Many of us in this House fear that post Brexit, whatever happens, there will be a race to the bottom, and legislation will become ever weaker and more diluted. That point was well made by the hon. Member for Linlithgow and East Falkirk (Martyn Day). I welcome the inclusion of this issue in the Transport Committee’s report. It is important that it be given more prominence and urgency, and I hope that we can bring the changes to realisation soon.

Finally, I thank Rowan’s family for coming along today, for their courage, and for their encouragement. I assure them that I will continue to fight on their behalf to bring about this change.

Question put and agreed to.

Resolved,

That this House has considered local bus drivers’ working hours.

15:53

Sitting adjourned.