Domestic Abuse Bill (Third sitting)
Tuesday 9th June 2020
(3 years, 10 months ago)
Public Bill CommitteesRead Full debate Domestic Abuse Bill 2019-21 View all Domestic Abuse Bill 2019-21 Debates Read Hansard Text Read Debate Ministerial Extracts Amendment Paper: Public Bill Committee Amendments as at 9 June 2020 - (9 Jun 2020)
The Chair
Good morning, everybody. I have a few preliminary points. Remember to switch your electronic devices to silent mode. Stimulants, with specific reference to tea and coffee, are not allowed.
Obviously, the important thing today in Committee is social distancing. The main body of the Committee Room has capacity for a maximum of 15 Members. If more than 15 Members are present, two will need to sit in the Public Gallery, but if they catch my eye during the sitting, they will obviously be able to participate. I will have to suspend the sitting if I think anyone is breaching the social distancing guidelines.
The Hansard Reporters would be very grateful if Members could email electronic copies of their speaking notes to hansardnotes@parliament.uk.
Members will be aware that Parliament will hold a minute’s silence at 11 am in memory of George Floyd. I will suspend the sitting for one minute just before 11 o’clock.
Today we begin line-by-line consideration of the Bill. A selection list for today’s sittings is available at the other end of the room, showing how the selected amendments have been grouped for debate. Amendments grouped together are generally on the same or a similar issue. Decisions on amendments take place not in the order in which they are debated, but in the order in which they appear on the amendment paper. The selection and grouping list shows the order of debates. Decisions on each amendment are taken when we come to the clause that the amendment affects. I will use my discretion to decide whether to allow a separate stand part debate on individual clauses and schedules, following the debates on relevant amendments. I hope that that explanation is helpful.
Clause 1
Definition of “domestic abuse”
Jess Phillips (Birmingham, Yardley) (Lab)
I beg to move amendment 50, in clause 1, page 2, line 7, at end insert—
“(5A) For the purposes of this Act, people affected by domestic abuse may include any child (such as a child in relation to whom A or B has a parental relationship) who sees, hears or is otherwise exposed to domestic abuse within the meaning of this section.”
An amendment so children are recognised within the statutory definition of domestic abuse.
Thank you, Madam Chairman—that always sounds ridiculous, so I will say Madam Chair. I will start as I mean to go on, with a feminist flourish. The aim of the amendment is to ensure that children who see, hear or are otherwise affected by domestic abuse—in other words, who themselves experience the domestic abuse—perpetrated by one person aged 16 or over against another, are recognised in the proposed statutory definition of domestic abuse.
We will come later to the debate about the statutory definition and the importance of having a statutory definition. It is almost unbelievable to somebody who has worked in the field for so long that one does not exist. I think people on the street would think that one did. I will not talk more broadly about the definition now, but merely about the amendment with regard to children.
What are the reasons for the amendment? Why is it important? Analysis from the Children’s Commissioner suggests that 831,000 children in England live in households that report domestic abuse. On average, 692 child-in-need assessments—I presume that that is the figure for before covid-19—are carried out every single day that highlight domestic abuse as a feature of a child’s or a young person’s life. Having worked in the field, I know that that is an enormous under-reporting, but, still, the figure is 692 children every single day.
The Women’s Aid annual survey reported that, in 2018-19, 13,787 children used refuge services, compared with 11,489 women, so there are more children accessing our refuge services. When I worked in Refuge, there was always a board that said, “Flat 1, flat 2, flat 3, flat 4, flat 5”, and it was always, “Woman plus three” or “Woman plus four”—that was the number of children she had with her in the refuge accommodation. There were always more children than women in Refuge.
According to the Women’s Aid study, 187,403 children used community-based services, compared with 156,169 women. I want to explain that a little bit, because the headline figure of 187,403 does not mean that, in a single year, those children necessarily received any direct support as a result of their domestic abuse. I worked for a Women’s Aid in community services. That is where the vast majority of victims of all kind are seen; it far outstrips refuge accommodation. The reality is that you would sit with a form in front of you and often with a woman in front of you who was telling you of the horror she was facing at home, where she was still living or interacting with the perpetrator, because of the family courts or for a variety of other reasons, and you would know, and would have recorded on your system, the number of children in her household, but you might never lay eyes on those children—you might never see them. They would never necessarily come into community services. My organisation dealt with 8,000 to 9,000 community cases a year. Had we had the associated children in, it would have been like running 10 inner-city schools in the west midlands. Although that number of children are recorded in community services, it does not necessarily mean that they are accessing support.
The consequences of these childhood experiences are well known, ranging from brain development being negatively affected and cognitive and sensory growth being impacted, through to people developing personality and behavioural problems, depression and suicidal tendencies. Children who experience domestic violence from the age of three onwards reported 30% higher than average antisocial behaviours at the age of 14.
There is not really any crime type that we debate in this building that we could not link back in some way to adverse childhood experiences, whether we are talking about the link between domestic violence perpetration and terrorism, about the adverse childhood experiences that lead to grooming and sexual exploitation, about knife crime or about county lines exploitation. In every single one of these crime types, if we were to look back at adverse childhood experiences, it would not be too long before we saw a pattern of domestic abuse. It is haunting how much domestic abuse affects many of the issues that the Home Office deals with.
The children who have suffered report 13% higher than average conduct problems, such as fighting with their peers. The Joint Committee on the Draft Domestic Abuse Bill highlighted concerns that if children’s status as victims of domestic abuse that occurs in their household—rather than that which occurs to them as individuals in their own relationships or directly at the hands of the perpetrator in their home—was not recognised, the Bill could have a negative impact on the level and quality of specialist support available to children.
The provision of services for child victims of domestic abuse is already disjointed. Studies have shown that support for children is often a bolt-on to existing domestic abuse services and that many children do not receive any specialist support following their experiences of domestic abuse and violence.
Without wanting to blow my own trumpet, I think it is important to say that my in-depth knowledge of the domestic abuse services in Birmingham is probably a little bit better than that of the average Member of Parliament. I have worked in most of those services; I know where the services are. When I need a refuge bed, I rarely go through a referral line—my next-door neighbour but one is the place where I would go—and I have the phone numbers of the people I need to talk to at any given moment. If a child came into my constituency office and was facing domestic abuse at home, or came in with their mother and their mother was begging for direct support for that child, I would not know where to send that child for certainty of service.
Peter Kyle (Hove) (Lab)
What my hon. Friend describes is a set of services that works within the rules. I believe she is saying that guidance and codes go so far, but we really need legislation. Does she agree that the very existence of this good Bill, which we need, proves that statutory definitions make a difference and that that, fundamentally, is why we need their extension to children?
Jess Phillips
I absolutely agree. Throughout the day, no doubt, we will be told, as we were on Second Reading, and as we will be on Report, that, even though I am a sometime opponent of some things in the Bill—actually, I am not an opponent of anything in the Bill; I am an opponent of what I fear is missing from it—the definition is important and ground-breaking. We will be told that it is finally the leap pad that we can all use to do some things we have all so deeply wanted to do, but we have to make sure that we do that for the nation’s children and that they are on the face of the Bill.
I was talking about what I saw in services and saying that I would not necessarily be able to find somewhere for a child. In a case in my constituency, a woman’s husband was convicted in the Crown court of domestic abuse towards her. Her child is now going through the family courts. That is a story we will hear again and again throughout the passage of the Bill. The child’s school identified a need for extra support and had access to some educational psychology resources that could be put in place at the school. The school had to get permission from both parents. The father refused to allow the child access to the support. Those involved at the school, which is not huge administratively—primary schools in Birmingham, Yardley do not have big teams of policy people and people making decisions—felt anxious, nervous and unprotected about what to do, so they allowed the father to make that decision. There are all sorts of reasons why we need legislative change to provide explicitly that public bodies have a duty in that area. That is just one example.
When I worked in Refuge accommodation, I saw a decline in the number of family support workers. When I arrived, we had two children’s rooms in the main refuge, which had 18 flats for families to live in. There were communal spaces and two family support units, and, more importantly, four family support workers. Their entire job was to work with children, and to work through their experiences with them, and also to work with mothers whose sense that they could tell their children what to do had often been removed by a perpetrator who had undermined them at every level, to the point where the children—certainly the older children in Refuge—became the parent. Those workers watch childhoods being lost, usually by older teenage girls. However, in some cases it is boys who become a parent to their younger siblings.
I have seen horrendous cases, including one where I had to help with and facilitate the removal of children from a family for their best interest, when a group of three siblings was separated so that the oldest was sent somewhere separate from the two younger ones. I have lots of siblings, and it felt as if separating that sibling group was the cruellest thing ever to have to do, but that older child would never have had a childhood had she been resettled with her younger siblings, because, at the age of eight, she had become their mother.
Even in the time I worked in Refuge accommodation, we closed the family rooms because there was no longer funding for specific family support work, which came through early intervention grants, either through Supporting People funding or the local authority. The rooms that had been filled with big murals of Disney characters and the play schemes that offered places in summer—I remember we used to do this brilliant den-building thing, because of the idea that kids would like to build a space they felt safe in—started to disappear from refuges across the land. The onus on, and ability of, organisations to work directly with children has been limited.
If we were truly representative and I asked Members to survey all their constituents who had suffered domestic abuse about what single thing every victim wanted to see, there would be a variety of answers. However, I guarantee that a huge percentage would say, “I just want some support for my kids. I just want someone to talk to my kids. My kids have nowhere to go.” That is what victims of domestic violence say again and again at coffee mornings, at refuge support groups and at every refuge’s weekly house meeting. People are saying, week in and week out, “I just want something for my kids.”
Do not just take my word for it. Research conducted by the University of Stirling has shown the following: in two thirds of local authorities questioned, children faced barriers to accessing support in cases of domestic abuse. Over 10% of those local authorities had no specialist support for children who were victims of domestic abuse. In one third of local authorities questioned, children’s access to services was restricted by postcode.
I see the hon. Member for Dudley South in the room; I used to work at Black Country Women’s Aid and offer services across the great borough of Dudley. We had a rape crisis service that offered services to adults and children who were victims in Sandwell, but we offered other services in Dudley—around domestic abuse, for example. Rape victims and children who had been sexually abused or sexually assaulted would ring our services, and if they lived in Dudley, we would have to say to them, “I’m sorry, that service is for Sandwell kids. We cannot come into a school in Dudley.” I hasten to add that that is not the case now, I am pleased to say.
I am covered by parliamentary privilege, so I can say that I sometimes used to fake an address in Sandwell. I used to think, “The crime data for this one house is going to go through the roof. This is going to be some horrible hothouse of abuse where every person in Dudley who has ever been abused lives.” There is nothing worse than working for a service and telling people that they cannot access it. The people who live in Sandwell and Dudley definitely know the difference between the two, and it would be a grave insult to accuse someone who is from one area of being from the other; that would be like saying I am from Manchester. Nevertheless, the idea that people in the west midlands understand lines drawn on a local government map in 1974 when their children need support is frankly laughable.
Funding for children’s services fell by £3 billion between 2010 and 2018, and children’s services in two thirds of local authorities questioned are reliant on time-limited funding. It is important to stress the issue of time-limited funding: if I had superpowers beyond those I will ever have, I would scrap 31 March from every calendar in the world. People who work in the voluntary sector are aware that when a child comes in to start 10 sessions of support over a financial year, they might not know until well into April whether they will still have the funding to carry on supporting that child. The voluntary sector currently lives hand to mouth; that is not a criticism of this Government, but a criticism of literally every Government. The way we manage funding for those dealing with people whose lives are completely and utterly chaotic is a travesty.
In addition, 60% of local authorities that responded to the recent Women’s Aid survey have had to reduce or cancel children’s services as a result of covid-19. Cross-national comparative research has shown that when children are recognised as direct victims, they are more likely to be spoken to and have their perspective taken into account.
Liz Saville Roberts (Dwyfor Meirionnydd) (PC)
I refer to my own experience when I was a councillor responsible for local education. I remember—this varies between local authorities—how effective it was that looked-after children were the responsibility of the local authority and the schools were held to account for their educational performance. Obviously, this must be handled sensitively, but we know that children and their educational outcomes suffer in these circumstances, so making this more consistent must be beneficial.
Jess Phillips
I absolutely agree; there needs to be a consistent thread. I suppose the Government would lean on the idea of Ofsted’s safeguarding principles with regard to all schools, regardless of whatever jurisdiction they sit under. However, if we looked at any of the inquiries into sexual violence or harassment in schools, which have been done by what feels like every Select Committee over the past five years, we would see there is a real disconnect between the safeguarding that Ofsted is able to identify and incidents where, for example, peer-on-peer sexual violence in a school is handled appallingly. I cannot help but think there needs to be a far more consistent approach.
What is more, for example with Operation Encompass, a proper monitoring review and action plan needs to come out of any review. A former chief constable of Dorset Police wrote to me. He now runs an organisation that goes into schools and works with Operation Encompass. He told me that during a recent webinar with 150 school safeguarding leads, he ran an online poll, to ask who was aware of Operation Encompass: 35% said yes, they were aware; 49% said no, they were not; 9% said that they were not sure; and 7% said yes, but that they were not receiving any calls about children in such circumstances. I can only hope that they have very lucky children in their school without any incidences at home, although I find that vanishingly hard to believe.
When we talk about the voice of the child, nowhere in the debate that we will have over the next 10 days will we hear what I can only describe as a primal cry about hearing the voice of the child, including when we discuss the family courts. If I wanted to filibuster all day, I could read from the special folder in my inbox, which contains hundreds if not thousands of emails from children and adult victims who have been through the family courts, talking about how the children were ignored. There is a deep and meaningful reason why the voice of the child has to be put on the face of the Bill. Later, when we discuss the family courts, what we hear will put us all beyond any doubt that rarely are children asked what is happening at home by anyone, even when services are instigated.
Including children in the definition of domestic abuse would also mean that public authorities and frontline practitioners, including CAFCASS—the Children and Family Court Advisory and Support Service—and the police, will be encouraged to recognise and respond to children experiencing domestic abuse. Local authorities and their partners would recognise the importance of ensuring that child victims have access to support for their needs. That is deeply important.
I do not underestimate how stretched local authorities are. In most circumstances, they are trying to do the very best that they can. I used to say that I wished that the victims of domestic abuse were as important as the bins—there is a statutory duty to collect the bins—but now they will be. We have made it to the heady level of domestic abuse victims being as important as bins! I now wish to see children in every local authority reach that heady status. I do not underestimate the importance of bins, though. I am from Birmingham, where we have bin strikes all the time, so I cannot tell you how important I think that the collection of bins is—I do not wish to present otherwise to the Committee.
The report of the Joint Committee on the Draft Domestic Abuse Bill echoed much of what I am saying, stating:
“We recommend the Bill be amended so the status of children as victims of domestic abuse that occurs in their household is recognised and welcome the assurance from the Home Office Minister that the Government seeks to include the harm caused to children in abusive households in the definition”—
we would welcome that.
The Minister sent a letter following Second Reading this time—the Joint Committee report is actually a piece of scrutiny work done on a previous Bill. The Bill we are considering is a different one but, in shorthand, let us all assume that we are talking about the same Bill for now. In the letter, the Minister stated:
“It is vital that we support children who are affected by domestic abuse, and the Bill expressly recognises that in the statutory functions of the domestic abuse commissioner. One of the key functions of the commissioner will be to encourage good practice in the identification of children affected by domestic abuse and the provision of protection and support.”
I want to know what “encourage” means—the domestic abuse commissioner will “encourage”.
The domestic abuse commissioner, in her evidence to us on Monday, very much encouraged the idea that more support is needed for the victims of domestic violence who are children. She told a clear story about how shocking one particular service that seemed to be doing it well was to her—that she had never seen such a service. What powers will the powers of encouragement have? Will the Minister explain in her remarks how the commissioner will encourage that? The Government have not been encouraged to include children. The commissioner—regardless of her title—has no budget to commission children’s services in the country, and she has no power to demand that a local authority does it.
Peter Kyle
My hon. Friend makes an important point in focusing on the attention that encouragement is given in the current system. Can she give some examples, from her own experience, of all the other areas where services are encouraged to do something, but that does not actually happen?
The Chair
In replying, I am sure the hon. Member will remain within the terms of the Bill Committee.
Jess Phillips
I will remain within the terms by saying that we, as members of the Committee, received evidence yesterday from the Children’s Commissioner. She is encouraging us to look at this amendment and to pass it. I do not think anyone in this room doubts that the Children’s Commissioner has been trying to encourage that to happen, and it has not happened. That encouragement is just one good example of how the role of a commissioner, which will we talk about later, is deeply important. It must mean something more than just encouraging. I do not know why the Government would not want to be encouraged to include children.
The Minister’s letter goes on to say:
“In addition, clause 66 of the Bill places a duty on the Home Secretary to issue guidance on the effect of domestic abuse on children. Alongside the Bill, we announced on the day of Second Reading that the Home Office had awarded £3.1 million to specialist services for children who have both been directly and indirectly affected by domestic abuse.”
The organisation I worked for was one of those that received some of that money, for work in the area represented by the hon. Member for Dudley South; no one would argue with that. However, as will be said many times in the Committee, saying that advice will be issued in the guidance is all well and good. We want to see incredibly robust guidance. I spent the weekend reading the guidance on human trafficking, which nobody would want to see on the face of the Bill because it is long, in-depth, ridiculously detailed and targets specific agencies with specific nuance. That is what good guidance should do.
I understand that kicking the issue of children to the Commissioner and the guidance might make it feel as if the issue is forgotten. I do not think that Members opposite—certainly the Minister—do not want to see the very best for every child in our country. I absolutely think that the Minister wants that—it would be horrific to think otherwise—but the suggestion is that it does not need to be on the face of the Bill but will play its role in the guidance, which we have not yet seen. This is not a new Bill. The Domestic Abuse Bill is like an old lady of the House. The joint Committee compelled the previous Bill—this Bill’s sister—to publish the guidance before we even reached Second Reading. Why, if we are so confident that the issue of children can be dealt with in the guidance, can we not see that guidance? Why cannot this body of Parliament scrutinise the guidance before we agree that children will be perfectly well catered for? That guidance might allay my fears. I would probably still want to see it on the face of the Bill because I am a person who likes to use the law to get what I want, but maybe the guidance would allay my fear. Perhaps the Committee could be allowed to see a draft of the guidance during its discussions? I will not press it to a Division as I am sure all Members would agree.
Of the £3.1 million that was announced, which was of course welcomed, not a single penny would enable me to place anyone in Birmingham into the service. The hon. Member for Dudley South and people in his area are in a lucky position. Maybe we now need a Dudley house for Birmingham children to go to—it is not far, I will drive them and we will go to the Black Country Living Museum on the way. Most people in this room, let alone most Members of Parliament, would not have got any of that £3.1 million for any child in their area. They would not be able to access that service. Once again, we are back to postcodes and houses with ridiculous crime reports.
I am not sure why there is a resistance to include children in the Bill. I have concerns about how all issues that are too difficult to deal with are pushed on to the commissioner in statutory guidance. The Bill has been going through the Commons for so long that it is not unreasonable to expect to have seen the guidance.
Peter Kyle
My hon. Friend and I both have a lot of experience working in the voluntary sector, admittedly in very different parts. We both know that, if we had three charities in a room and asked them a question, we would get three different answers, but on this issue, is she aware of any charitable or campaigning organisation that supports children and opposes including children in the definition in the Bill?
Jess Phillips
I am not. Often, the two issues that the children’s sector mainly campaigns for in this regard become conflated. One is the issue of teenage relationship abuse and the age limit of 16, at which the definition that we are discussing currently sits. There is some divergence of opinion about whether the way to include children in the Bill is to remove age limits. For very obvious reasons, there are concerns about that. As somebody who has represented and worked with child victims in the past, I would not wish to see them criminalised—that is one issue. On the issue of whether a child should receive in the definition the status of victim rather than witness of domestic abuse, I have heard no divergence—my hon. Friend is absolutely right.
As somebody who worked in the women’s sector, I have to say that if the Government want to take some real credit for what they have done for the domestic violence sector, the greatest thing that they have done— I do not mean this in a glib way— is to genuinely unite charities, which now work in a way that was certainly not always the case when I worked in the field. On this matter, they are all singing from the same hymn sheet.
As always, I want to give voice to some of those who have suffered in childhood. Charlie Webster, the Sky Sports presenter, who sits on the victims’ board at the Ministry of Justice to advise the Government, has expressed real frustration that there seems to be little to no movement on this issue. She has talked about her experience of living with domestic abuse as a child. She said:
“Home is supposed to be your safe, loving space. As soon as I walked in the door from school I wouldn’t know where to put my feet in case I made a noise. I would chew quietly and make sure my teeth wouldn’t touch my knife and fork, not making any noise, trying to keep the peace to protect my mum. Anything would make him angry, even the sound of me eating. Hearing that, he would smash the table with his fists near your face. I was constantly on edge.”
Charlie admits that growing up feeling worthless and unloved has affected her adult relationships. Lasting effects include an inability to accept praise. Charlie said:
“I was traumatised and had a lot of nightmares. If I got close to somebody, it would trigger a feeling of a lack of safety and stability.”
She said that her situation was a factor in her being sexually abused by her former running coach in her teens, and added that,
“People like that coach are predators who prey on vulnerable people for the power. It was easy to have power over me.”
I wish I could say that Charlie’s case was an unusual one in which domestic abuse in childhood had not laid in step the trap of both domestic abuse and sexual violence and exploitation in adulthood.
Nickie Aiken (Cities of London and Westminster) (Con)
I would like to say that Charlie Webster is a good friend of mine. I have lived through her testimony and it is harrowing, to say the very least. There are many reasons why she was let down by local authorities and by the police. To go back to what you were saying, Jess, as the children’s services lead for a London borough, I have seen at first hand that the trauma of domestic abuse runs through all families and all relationships.
I would like to ask what you think the Domestic Abuse Bill will achieve by adding that definition of children, compared with what the definition does in the Children Act, where children are protected. Also, from the point of view of CAFCASS, there is the importance of family courts and of listening to children. I have sat on the board of CAFCASS and know that they have a huge part to play.
The Chair
Order. I remind Members that interventions need to be short. Also, may I make a gentle reminder that the speaker is addressing the Chair, and therefore not referring to other Members by their first name?
Jess Phillips
On that point, this is the first time for lots of us, doing a lot of things. We are all learning: I will inevitably get some of the procedure wrong— I almost always do. I have learned to live with that fact, and wear it almost as a weapon. I totally agree with the hon. Member about the effect that domestic abuse has. However, if the Children Act currently does that job, why is it not happening? The Children Act is currently failing. When you intersect—as the language has it these days—the Children Act with domestic violence, from my own experience there is starting to be a breakdown in understanding. I would argue that that has been brought about by the austerity faced by local authorities, although I have no evidence to back that up.
Usually, the main point of intersection between the Children Act and domestic abuse services is section 17 of the Children Act 1989. Section 17 is my favourite piece of legislation that was ever written. It is as though I keep it in a drawer and can just pull it out. Section 17 of the Children Act means that if a woman is destitute with her children, the local authority has a duty and power to house that child. Although I represented an area in the Black Country that was incredibly parochial, domestic violence services are national schemes. In cases of domestic abuse, we very often get the response from a local authority area—we take people from all over the country, and we disperse people out into different areas of the country. In fact, as part of the safeguarding approach, people are not allowed to stay in a refuge if they live within five miles of its location.
We would therefore be ringing round local authorities trying to rehouse people out of a refuge—or, in fact, rehouse people in our refuge, being paid for by that local authority. Any number of times, we would get “Computer says no” for x, y or z reason; but if the woman had a child, we knew that by the end of the day we would have bed space for her, because of section 17 of the Children Act. I have seen that eroded of late, because I have seen section 17 being used as a tool against victims of domestic violence to say, “We will rehouse your child, but you are going to have to go and sleep in your car, because we have a duty to the child, not to you as a family”.
So, while I love the Children Act, it is currently not doing this. From some of the evidence we heard from the victims, if you are multiply presenting, for whatever reason—in the instance of the evidence we were given, it was disability and domestic abuse—it is often the case that those who are specialist in one area are not specialist in the other. In domestic violence services, that person was being seen just as a disabled victim, and in disability services she was not being seen as a victim of domestic abuse. I am afraid that, with reliance on the Children Act and the agencies that necessarily come out of a local authority through the Children Act—namely, children’s social care—the situation was at the point where you would be able to access services only if you were near death; access is vanishingly rare, unless your threshold is certainly in Birmingham. I do not know why that is so, just because of the laws that exist to protect children: other laws exist to protect all people, if they are represented in the Bill. There is another law for everybody: why would we not include them?
I will often, because of the nature of this crime, lean towards talking about women. I cannot help but do it—it comes from the background I come from and the working organisation that I come from. However, I want to highlight the pain suffered by boys and young men who grow up with domestic abuse. I want to send a very clear message to my friends Rachel Williams, Jacky Mulveen and Mandy Thomas—three women who have dedicated their lives to campaigning for and supporting victims of domestic abuse, and all of whom have suffered the unimaginable loss of a death of a son because of domestic abuse. All talk about the strain that living with domestic abuse had on their sons and other children.
Rachel has talked many times about how the violence against her affected her children. Rachel’s ex-partner abused her for years. On 19 August 2011, Darren Williams walked into Carol-Ann’s Hair Salon, Rachel’s place of work in Newport, and attacked his wife of 18 years after she asked him for a divorce. Williams used a gun butt to smash Rachel in the head and fired two shots into her legs, which left her unable to walk until surgeons replaced her shattered bones with titanium. Six weeks later, her 16-year-old son Jack took his life. Rachel said:
“Children are not seen as victims of domestic abuse but as witnesses and that’s not the case. It’s about putting a strong message out that we need to do more in our society to stop this from happening.”
Rachel said her son was a “strong-willed boy” and she was “shocked and distraught at his death.” She added:
“He was a popular boy in school and was a bit of a Jack-the-lad but he was a loving boy. He was the first to put his shoes on and help me with the shopping from the car.”
Jacky Mulveen is a woman so very close to my heart. She runs local services in Birmingham that are utterly life-saving for victims of domestic abuse. Over many years, Jacky and I have spent time sitting on my living-room floor, late into the night, surrounded by papers for funding bids to keep her work going. A constant problem we face is the need for crèche facilities to care for children while their mothers get support. Even that, which is the most basic hat tip to the existence and needs of children whose families might need support, is almost never available. I cannot tell the Committee the number of times that I have had to pull a support service because we could not get a crèche or we could not afford it in the funding or the funding provider would not provide for childcare services. It is always hard to get funding for children’s support or to enable mothers to get support to help their children.
I am sure that the idea that there is currently support available for children living with domestic abuse would be met with the world’s greatest meme-worthy eye-roll from Jacky. Jacky is a manager, a support worker, a group leader, a fundraiser, a campaigner. Like so many women running local services, she has to do everything. I remember once I spent hours and hours erecting beds in refuge; I was one of the senior managers and my job that day was to put up the beds.
Jacky suffered years of horrific abuse at the hands of her ex-husband. She bears many scars, but none worse than the scar of losing her son, Karl, at the age of 17, after he suffered years of growing up in a household of tyranny. Karl lived just around the corner from me. He was born the same year as me and today I should be bumping into him in our local high street. Perhaps our kids would have been in the same school, even in the same class.
Jacky, Karl’s mother, wanted me to say the following: “21 years ago, my 17-year-old son died from inhaling butane gas, a way of dealing with the stresses of his childhood and the impact of growing up in a household of domestic abuse. Karl’s death was the catalyst to me leaving, so not only did he save my life, he also saved the lives of his brothers, who were then able to grow up in a household free from abuse, and also the lives of hundreds of children whose mothers our project has supported over the years.
I don’t want Karl to be an unspoken tragedy. His legacy is the work I do every day. I may not have been able to save my son, but I can use my knowledge and experience to support other mothers so that they can support their children and help them to heal. I want people to understand the devastating impact on children’s lives. Our children are dying, but their death certificates do not tell the full story. I also want people to understand that when you abuse a mother, you abuse the child, and when you support a mother, you are supporting the child. When we start to heal, we can then provide a foundation for our children’s healing. Leaving is a process and healing is a process and this process must not be missed out when commissioning services.”
Christine Jardine (Edinburgh West) (LD)
I thank the hon. Lady for her contribution. Does she, like me, believe that if we do what is proposed, we will have a completely different concept of what domestic abuse is and we will begin to tackle it in a way that prevents it from happening in the first place, because—as she so eloquently said—we see children become abusers and abused and the key to tackling it properly, although we will never wipe it out, is including children not only in the definition but in the care and the approach that we take?
Jess Phillips
I absolutely agree. If we are going to write a ground-breaking Bill, let us make it break ground. If we do not genuinely think, as a Committee and as a House, that it is worth putting children in, “because what difference will that make?”, what is the point in any of it? That is the question I would ask. What is the point in having a definition at all if we do not see the reality of domestic abuse?
As I have said, in moving this amendment, I absolutely feel that I have the ear of the whole House, so I feel that, on Report, there will be huge support. Across this House, no matter the colour of our rosettes, people have spoken up for children in our debates. That sends an immense message that we might not realise; and we have a chance, with this amendment, to send the same message again.
Virginia Crosbie (Ynys Môn) (Con)
Regarding the amendment, I want to hear the debate develop and I trust that my hon. Friend the Minister is listening.
In many ways, children are long-term “silent victims” of domestic abuse. The Public Health Wales adverse childhood experiences research found that 16% of adults in Wales grew up in a house with domestic violence. The definition of domestic violence used in the past obviously does not extend to domestic abuse as defined in the scope of the Bill. Indeed, children’s social care assessments for children in need in England show that more than half—51%—of relevant assessments last year cited domestic abuse as a factor. Given those figures, it is likely that many in this room will have witnessed or suffered from some form of domestic abuse in their childhoods.
Liz Twist (Blaydon) (Lab)
It is a pleasure to speak in this debate on amendment 50, which would include children in the definition.
My hon. Friend the Member for Birmingham, Yardley set out very fully the framework and the background to the need for this amendment to be made to include children in the statutory definition of the abuse. Why? We speak calmly about children observing—a very calm word here—domestic violence. What that means is that children experience violence—violent behaviour, abusive behaviour, shouting, fear and dread. They are not just observers but victims, affected emotionally and physically by that abuse. They feel the violence and danger. None of us in this room, I think, would disagree with that.
Why should we amend the definition to include children? Because they need to be recognised formally as victims in order to be sure that they can access the support and services that they will really need at the time they need them. Their needs would therefore be addressed specifically when dealing with domestic abuse. That needs to be set out in law, so that they have that beyond any doubt.
On Thursday, in the evidence sessions, we heard about the substantial support for the inclusion children in the definition of domestic abuse. We heard from the domestic abuse commissioner and the Victims’ Commissioner, both of whom gave evidence and believe that it is hugely important to include children.
Last Friday, the Minister kindly met me virtually, along with the children’s charities Action for Children, the NSPCC and the Children’s Society. We specifically discussed including children in the definition. We talked about the age 16 limit, which appears in an earlier subsection. The charities told the Minister that they and the wider sector were agreed in their wish not to change the reference in the Bill to age 16, but rather to support this amendment to include a wider description of children.
Yesterday, I was pleased to see, circulated by the Clerk, evidence submitted by the sector on the age 16 issue—DAB 44—including the people we heard from last Thursday, such as the Women’s Aid Federation and other organisations. No one wants to see children criminalised as a result of relationships between each other, and it is really helpful that yesterday that statement was circulated making the sector’s unequivocal support for the amendment absolutely clear.
I have talked to constituents about this issue, and to some excellent local organisations in the north-east, such as Children North East, which provides support for children affected by domestic abuse. They tell me about the difficulty of ensuring that they have funding and commissioned services for children. They are doing a great job, but there is so much more that we need to do to ensure that children have support when they are victims of domestic abuse.
In the Westminster Hall debate that I was fortunate to secure earlier this year, I spoke about my constituent Christine, who had been a victim of domestic abuse. She has come through that and now wants to change things. She talked to me about the need for children to be properly supported.
Christine’s daughter, who is now an adult, is still dealing with the trauma of the domestic abuse suffered by Christine and living in the home where that took place. Her daughter contacted me after the Westminster Hall debate—she sent a very nice card—to say how much she appreciated the fact that finally people were taking notice of the needs of children and recognising them as victims in their own right. She was so pleased that there might be a glimmer of hope that things might improve for children.
Again, why should this be in the definition rather than the guidance? Inevitably, people looking at what service they need to provide, especially in times of financial constraint, will ask, “What does the law require us to do?”. That is why it is important to have the amendment in the Bill. It will mean that statutory authorities must address the needs of those children. Statutory guidance is not enough and in any case, as we know, it is not yet ready. I support the amendment and hope that the Government feel able to accept it.
Nickie Aiken
I am delighted to hear that the Minister is certainly in listening mode. Having heard from the hon. Member for Blaydon that the Minister met with children’s charities on Friday, it is clear that she is in listening mode.
I would like to make the point that there is a lack in the role that local authorities should be playing under the Children Act, which I mentioned earlier. I led a council and was the children’s services lead at a time— 2010 onwards—when it got quite difficult. We were innovative and put children first. That was responded to by Ofsted, which awarded Westminster City Council the outstanding grade in children’s services. Again, last year, that was repeated—the first time any local authority had received an improved Ofsted outstanding grade. That was a brilliant example of how social workers and children’s services experts put the child at the forefront of all that they do.
Domestic abuse runs through so much, as we have heard today. Having launched the first ever domestic abuse strategy for Westminster back in 2012, I know that we put children at the heart of that.
Peter Kyle
The hon. Lady cited the example of Ofsted, which I think is a good example, because schools have a legal duty to improve; if they do not, Ofsted has the power to intervene. She is not making the case that it is important for children to have a legal footing in the Bill. Does she see the similarities in the argument, and is she open to the idea that it might be worth exploring the concept of having a statutory definition of children in the Bill?
Nickie Aiken
I think it is down to the Minister to decide that, but, as I said, from the commissioner’s point of view, it is important to encourage and to be part of the whole system. There is a lack in the involvement of local authorities, which already exists.
Having sat on the CAFCASS board for several years, as I said earlier, I was appalled when we had a briefing from experts who had been sent to Birmingham City Council to do the quality assurance, because the council was letting down its children. What I took away from the briefing, and what I have taken away from the evidence we heard last week, is that local politicians have to play a part and ensure that they put their children at the heart of their children’s services strategy. There is still a lack of that approach. In Rotherham, for example, where were the local politicians holding their services to account?
Jess Phillips
I speak as a local politician in Birmingham. If we would like a tally of who can slag off Birmingham City Council more, I would definitely win. The hon. Lady is talking about the children who might interact with Birmingham City Council or Westminster City Council. The reality is that they represent a tiny fraction of child victims of domestic abuse. The vast majority the children we are talking about will never interact with any children’s social worker ever. It is the duty of the council to fund services beyond that. While I could definitely take pot shots at Birmingham City Council, it is fair to say that, in reality, it would not be able to afford most of what we might be suggesting here.
Nickie Aiken
Having been a local politician for over 15 years, I have always taken the view that it is not always about the money. It is usually about the attitude of local authorities and the innovation that they can bring. Westminster City Council achieved two outstanding Ofsted grades at a time when we saw about 50% of our funding cut.
Let me end with the words of Charlie Webster, a victim whom the hon. Member for Birmingham, Yardley quoted today. I spoke to Charlie this morning and, when I told her I was hoping to speak today, she said:
“Thank you so much for validating the many times I’ve had to convince myself my life is worth living both as a child and an adult. I’m praying that this will make a difference to actually start to tackle the root cause and allow children love and to reach their potential because they’re absolutely deprived of it in Domestic Abuse.”
That is where I would like to end. I am delighted that we are debating the Domestic Abuse Bill in Committee today.
Alex Davies-Jones (Pontypridd) (Lab)
I, too, am a new Member of Parliament and this is the first time I have sat on a Bill Committee.
Since I started as a Member of Parliament, I have been inundated with casework, as Members can imagine, given what has happened in my constituency. We have had terrible flooding, the coronavirus pandemic, and the comings and goings of a certain political adviser, but I have also had lots of casework relating to domestic abuse and domestic violence. It has mainly been from women, with some from men, and, more often than not, it includes children in the family units, all of whom are victims who need equal protection. As it stands, the Bill does not fully address the needs of children affected by domestic abuse.
As we have heard from other Members, this Bill has the opportunity to change things and to save lives. Lives are not saved through encouragement, guidance or attitude; they are saved through funding services and by putting children in the definition in the Bill. That is how lives will be saved. Given that the Bill will inform the Government approach to tackling domestic abuse, it is vital that we understand the impact on children. We have heard many harrowing tales; as my hon. Friend the Member for Birmingham, Yardley said, we have all heard such tales.
Children need our protection and our support, and that needs to be fully reflected in the Bill. As a new Member and somebody who has already had people come to me about the issue, I cannot see how we would not include children, in order to save lives. It seems unconscionable to me that we would not do that. Members might say that legislation in the Children Act may save children, but what my hon. Friend the Member for Birmingham, Yardley said really hit me. There is legislation for everything now. We have legislation that will stop people from abusing people, but just include children in the Bill to save their lives.
The Parliamentary Under-Secretary of State for the Home Department (Victoria Atkins)
It is a pleasure to serve under your chairmanship as always, Ms Buck. I thank everyone who has contributed to the debate and those colleagues who have not risen to their feet to speak. I know that there are a few who consider these matters very important and have given them great thought throughout the debate, and who will do so as we go forward.
I am very grateful to the hon. Member for Birmingham, Yardley, for setting out the case for the amendment. I wholeheartedly agree that it is vital that we recognise that children are direct victims of domestic abuse. Growing up in a household of fear and intimidation can affect children’s wellbeing and development with lasting effects into adulthood. Children who are exposed to domestic abuse are more likely to experience mental health difficulties, to be excluded from school, and to become victims of domestic abuse in later life.
Many colleagues talked about adverse childhood experiences, including my hon. Friend the Member for Ynys Môn, who cited one of the highest percentages of looked-after children in Wales and is obviously very concerned. That is something that I have to consider, not just in the context of domestic abuse, but in my work at the Home Office on gangs and violence against women and girls specifically. That factor has many repercussions beyond the immediate impact in the household where the abuse occurs. I am very alert and alive to that.
I thank the hon. Member for Blaydon for our virtual meeting on Friday and for clarifying that the issue that she mentioned is now no longer taken on age. I make that point because in a moment I will describe the journey on which the Government have been with the definition so that there is transparency and no mystery about why the definition is phrased as it is. In the Westminster Hall debate, the argument was made that there should be no minimum age threshold. I said frankly during that debate that although it was a balancing exercise, we had come down on the side of keeping the age of 16 as the threshold. I was very pleased that on Friday, having had our discussions—I hope I am not misquoting—there seemed to be consensus about keeping that age in the definition.
I will explain the Government’s approach so that there is no misunderstanding that we are not in any way taking into account the terrible impact that domestic abuse has on children. The approach that we have taken with the definition is to describe the relationship between the abuser and the abused—the immediate victim of the abuse—and to define categories of abusive behaviours. That will be relevant when we look at other clauses as, understandably, people want particular manifestations of behaviour to appear in the Bill. We draw people back to the fact that we are looking at categories of behaviour because, sadly, there are countless ways of emotionally abusing someone, for example, and—as Members of this House will know—if we listed everything in statute, it would take quite some doing to change or update it, whereas statutory guidance is more flexible and we can update it.
The basis of the definition in the Bill is to focus on the relationship between the abuser and the direct victim, and to define the categories of behaviour. The definition does not address the impact of abuse on adult victims. I would not dream of trying to define in statute how Claire Throssell, for example, experienced the harrowing and awful things that happened to her. Nor would I dream of trying to put into statute some of the experiences described by the hon. Member for Birmingham, Yardley. We cannot do justice to them in the Bill.
That is the approach that we have taken, and that is why we place so much emphasis on the statutory guidance. That will be the document that commissioners and police forces look at to work out how to interpret the Bill at local level. Just as we have not put the impact of abuse on adult victims in the Bill, we have not done so with the impact of abuse on child victims. Instead, we will rely on the statutory guidance. We have, however, referred in the definition to the fact that perpetrators can use children in their abuse towards their victims. Clause 1(5) states that the perpetrator’s
“behaviour may be behaviour ‘towards’ B”—
the victim—
“despite the fact that it consists of conduct directed at another person (for example, B’s child).”
We have, therefore, put in the Bill the fact that the perpetrator may not confine their abusive behaviour towards the immediate victim, but that it can be directed through a child or another person as well. We have also emphasised the statutory guidance set out in clause 79(2)(b) in which the Secretary of State must issue guidance about
“the effect of domestic abuse on children.”
Jess Phillips
I just wonder—this might be a massive ask—if the Committee could see that guidance, or have sight of at least that section about what we are going to discuss throughout the Bill.
Victoria Atkins
I very much appreciate the request, but, sadly, I cannot provide the Committee with a copy at this point. When it comes to the transparency of the journey to this point, the guidance has not been created by a silo of Home Office officials who did not talk to anyone else. We have involved, consulted and asked other people, and that has included asking the designate domestic abuse commissioner for her views. Indeed, she mentioned last week that she had seen it. Other charitable sectors have been very much involved and consulted in the drafting of the guidance. Sadly, covid-19 has had an impact on our ability to draft the guidance so we have not been able to publish it in time for the Committee, but we are aiming to publish it in draft form before Report. I hope that members of the Committee will be able to see it before the next procedural stage, and I apologise for it not being available now. We want people’s views on it. All sorts of colleagues have been asking me whether certain things are being included in the guidance, and I have been saying to them, “This will be open for people to give their views on it.” Of course, I welcome views on it.
Liz Saville Roberts
I wonder to what extent the Minister has considered the Rights of Children and Young Persons (Wales) Measure 2011, and the fact that when we are dealing with children we are at the jagged edge of devolution—between the laws affecting Wales and those in England—as well as considering how the interplay will work with these measures.
Victoria Atkins
The hon. Lady probably does not know this, but she may be committing a parliamentary first. The old hands that have previously sat on Bill Committees will know that part of a Minister’s job is to keep talking while her officials furiously scribble notes that are handed to her to enable her to accurately answer difficult questions. Sadly, I do not have that ability, but Members may see me looking at my mobile phone. I would be grateful if the hon. Lady would indulge me and allow me to return to that later, because she asks a specific question. In general, I am, of course, aware of the jagged edge, as she describes it.
Liz Saville Roberts
Part of me feels that I may be a little bit boring in this Committee, because I have a duty to say, “Look at what has been done in Wales and look at the responsibilities that lie in Wales.” I fear—this came up in the Joint Committee on the Draft Domestic Abuse Bill—that we have two pieces of legislation in operation and this piece of law will affect the legislation that I have mentioned. We will create wonderful events, or we may unexpectedly create tensions out of the divergence test. It is important that that is considered at this stage.
Victoria Atkins
Very much so. May I postpone my answer until we debate the amendment that the hon. Lady has tabled on Welsh devolution, so that I can address the point about clause 11? We are aware that good work is going on in Wales on domestic abuse through the devolved authorities. Where matters are devolved, we have the “jagged edge”, as she describes it: some areas in Wales are devolved and some are not. It is perhaps a little clearer cut in Scotland, but we are clear that we want to work with our Welsh colleagues, and I hope that the commissioner gave reassurance last week. I think I am right in saying that the Home Office has helped to fund the work on adverse childhood experiences has been conducted by the South Wales Police. We see that as a really important piece of work with the police and crime commissioner in South Wales, and we hope that it will help the rest of the country as the findings are evaluated.
Peter Kyle
Perhaps my intervention will give the Minister’s officials time to get a note to her on the previous question. I realise that this might turn into a sketch from “The Two Ronnies”, with her answering the previous question to mine, but we will deal with that when it arises.
Can the Minister explain why there is a conflict between establishing the rights of a child in the Bill and having it in guidance? From what I have heard so far, I do not understand why we cannot have both.
Victoria Atkins
At the risk of turning into a sketch from “The Two Ronnies”, I am told that we will be consulting Welsh Ministers on the precise point raised by the right hon. Member for Dwyfor Meirionnydd, so I am grateful for that.
In relation to the intervention from the hon. Member for Hove, it is not a question of conflict. I was trying to explain the journey of the Government’s drafting of the definition. I do not wish anyone to think that children have been forgotten or ignored in the course of drafting the Bill. I hope that the references to children that we have scattered through the Bill—clause 66 is a good example—show our thinking on that.
Victoria Atkins
I do. I am going to complete the journey, because I suspect that where I end up will, I hope, answer some of those concerns. I take on board carefully the views of children’s charities.
We have made sure that the domestic abuse commissioner is required to recognise the impact on children in her statutory functions, which can be seen in clause 6. Of course, we also have local authorities. My hon. Friend the Member for Cities of London and Westminster set out the responsibility and the ways in which local authorities can help to deliver services on the ground. Indeed, I was most interested to hear about the domestic abuse strategy introduced by her council under her leadership. That is a very sensible point to be making and it is why, in part 4 of the Bill, where we put the responsibility on tier 1 local authorities to provide support to victims of domestic abuse in safe accommodation, we have expressly referred to victims and their children in that duty.
The need for statutory agencies to recognise and respond to the impact of domestic abuse on children is already embedded in the Bill. Councillor Simon Blackburn gave helpful evidence last week—he has experience as a former social worker, but also as the current leader of Blackpool Council and through his work in the Local Government Association—about the safeguarding legislation in respect of children and how, in some cases, although I accept not all, the safeguarding legislation will kick in.
I also remind colleagues that in clause 54—this has not necessarily come to light yet in the evidence, but I hope it will do so in due course—as part of that duty, tier 1 local authorities are required to set up local partnership boards for domestic abuse. One of the members of that board must represent the interests of children who are victims of domestic abuse.
The theme of children, and the impact on children, already runs throughout the Bill, but I take very seriously the concerns that members of the Committee have voiced and, indeed, the concerns of children’s charities and the witnesses we had last week. I am going to reflect carefully on this debate, and I invite the hon. Member for Birmingham, Yardley to withdraw her amendment.
Jess Phillips
I thank the Minister. I think that, in the words of Belinda Carlisle, everybody on the Committee dreams the same dreams and wants the same things—[Interruption.] Belinda Carlisle was not from Carlisle. The fact of the matter is that we all want the same thing from this Bill. We all want to see children represented in the Bill and the guidance—in every part of it. The Minister can point to clauses where children have been considered. We will not press the amendment to a vote, partly because the whole House would like the opportunity to discuss these issues further, with potential Divisions on Third Reading.
I want to say, with as much grace as somebody like me can manage, that it is a pleasure to hear that the Minister wishes to listen to what has been said today and what is being said by the sector, and seeks to act on it. I thank her for giving us the option of seeing the guidance prior to the next stage of the Bill. I beg to ask leave to withdraw the amendment.
Amendment, by leave withdrawn.
Clause 1 ordered to stand part of the Bill.
Clause 2
Definition of “personally connected”
Jess Phillips
I beg to move amendment 48, in clause 2, page 2, line 21, at end insert—
“(ee) one person is a provider of care to the other;”.
The Chair
With this it will be convenient to discuss amendment 49, in clause 2, page 2, line 34, at end insert—
“‘provider of care’ means any person (‘A’) who provides ongoing emotional, psychological or physical support to another person (‘B’) with the aim of enabling B to live independently, whether or not A is paid for this support;”.
An amendment to ensure a carer of a person with disabilities is included in the definition of “personally connected”.
Jess Phillips
We are now moving on from the definition to talk about exactly who we mean by “connected parties”. The amendment is a response to calls from people with disabilities and organisations within the disability rights sector that have been in touch with us to express their concerns about whether they are seen in the Bill.
As we said in the debate about whether children should be in the Bill, we recognise that there is a need for much more detailed and in-depth guidance. In relation to domestic abuse, we are potentially missing some real opportunities that genuinely need to be responded to with law—the courts of our land—but are currently not covered by the area of “connected parties”. The issue is those whose connection to a person is that they are their carer. We are not necessarily talking about paid carers.
Carers UK announced yesterday that 4.5 million people have become unpaid carers during the coronavirus crisis, so it is not a minority issue or something that happens only in certain areas. People who very much rely on others for their care might not currently be covered by what is outlined in the Bill as a connected party. They might never have been married or had a civil partnership. They might never have been divorced, which got a bit easier yesterday, and they might not be related. I should tell my husband that it got easier to get divorced yesterday—
The Parliamentary Under-Secretary of State for Justice (Alex Chalk)
He has been in touch already. [Laughter.]
Jess Phillips
The reality is that for lots of people a connected party to their wellbeing, their life, or what people would call their family, is a bit like in working class communities, although I am sure it happens in others: a woman lives down the road and her husband borrows somebody’s dad’s ladder, so they call her auntie, even though she is absolutely no relation whatever. We have to understand that in lots of people’s lives, connected people might not be what we would naturally recognise.
On the definition of “personally connected”, I want the Bill to reflect the realities of all domestic abuse victims. I want all victims to be able to access services, justice and support when needed. I think we would all agree that no victim should be left behind. We are taking our time—my gosh, it is quite a lot of time—to get the Bill right and see it through. It will never be perfect, but we should make every effort to make it as perfect as it can be.
Clause 2 defines what it means to be personally connected. In other words, the clause sets out the relationship between a victim and a perpetrator that comes under the definition of domestic abuse. The list includes what we would typically expect: as I have already laid out, those in intimate personal relationships with each other. However, my concern is that the clause, as it stands, fails to recognise the lived experiences of disabled victims of domestic abuse, who are among the most vulnerable. Their abuse often goes unnoticed.
The crime survey for England and Wales found that individuals with long-term illness or disability were more likely to be victims of domestic abuse. A 2016 report on intimate personal violence by the Office for National Statistics found that 16% of women with long-term illness or disability had experienced domestic abuse. Disabled victims are also more likely to experience domestic abuse for a longer period of time: 3.3 years, on average, compared with 2.3 years for non-disabled victims. With that in mind, I want the Bill to make it easier for disabled victims of domestic abuse to be recognised. To do that, we have to accept the reality of disabled people’s lives, where significant relationships are perhaps different from those of a non-disabled person with an unpaid carer.
Ruth Bashall, the chief executive of Stay Safe East, said that disabled people
“have emotionally intimate relationships with the people who, in very large inverted commas, ‘care’ for us, and the experience of abuse by those people is exactly the same as domestic abuse: the coercive control, the violence, the financial abuse and so on.”
It is important that we recognise, based on the evidence presented to the Committee, that a large number of disabled people will have no relationship with anyone except for the people who “care” for them. This type of close relationship can easily take on a problematic power dynamic that closely mirrors familial or intimate partner violence. As I have said, we can see how that might occur. I have been doing shopping and taking money from people who needed me to go to the shops for them. It would, if I were that way inclined, not be particularly difficult to build a relationship, a rapport and a need from me in that person that I could then exploit over a number of years. I would not do that, obviously.
In response to the Joint Committee’s report, the Government said that they did not propose to review the personally connected clause at the current time. Paragraph 60 of the their response states:
“If they are personally connected to their carer, this will be covered by our definition of domestic abuse. Otherwise, abuse of disabled people by their carers is already covered by existing legislation.”
What we heard from Saliha in the evidence session last Thursday was that, as a disabled victim of domestic abuse, she often finds that she is not understood by one or the other. As I have said this morning, her experience as a victim of gender-based violence or domestic abuse is often not expected, dealt with or understood by disability agencies, and vice versa: as a disabled person, she finds getting access to mainstream domestic violence services difficult.
We have to be very careful, when writing this Bill, not to ignore those intersecting groups of people and just say, “Well, there’s already existing legislation that would cover it.” It would not cover it from the point of view of domestic abuse because, as we all know, that has been lacking from our laws, and that is what we are here to try to improve.
I urge the Government to rethink their position for a number of reasons. First, it is not appropriate to say that abuse of disabled people by their carers is already covered by different legislation. This is a Domestic Abuse Bill for all victims. Therefore, if the abuse of a disabled person meets the definition of domestic abuse—if it is financially controlling, or if it involves sexual, economic or psychological abuse—but it is not by somebody in one of the connected party groups, that disabled person would not be left with many places to turn to take the case of domestic abuse to court or wherever.
If a disabled person meets the definition, that ought to be recognised and covered by this legislation, not something else. We cannot just keep saying, “Well, if you’re in this group you’re covered by this, and if you’re in this group you’re covered by this.” I would have thought that we would want to make a Domestic Abuse Bill that covers everybody.
I would go even further, and suggest that the Government’s response is a bit dismissive and fails to recognise the gender-based nature of domestic abuse solely because the victim is disabled. We cannot have domestic abuse covered by other legislation just because the person is disabled.
Secondly, while I appreciate that section 42 of the Care Act 2014 places a duty on local authorities to carry out safeguarding inquiries if they suspect abuse, that is no reason why disabled victims should not be represented in this Bill. Furthermore, there is evidence to suggest that local authorities are failing even to identify victims, even those who are at highest risk. Between 2015 and 2016, none of the 925 referrals of disabled victims to domestic abuse services were from adult safeguarding—zero.
I would be so bold as to bet that every piece of single adult safeguarding guidance in every adult safeguarding group that exists in every single local authority has domestic abuse written within it somewhere, and says that the vulnerable adults can be victims of domestic abuse. In all my years, I have literally never once referred a victim of domestic abuse to adult social care, because that is not what adult social care is for.
If I were to ring up my local authority or, I would even wager, Westminster City Council and say, “I’ve got this woman and she’s a victim of domestic abuse, and I see that that’s written into your adult social care board, so can I get a social worker out to see her later? She’s suffered some violence over the years and a bit of emotional abuse recently, the kids are getting a bit—”, the idea that an adult social worker would go out and see that victim is for the birds. The fact that zero referrals —none—to domestic abuse services of disabled women came from adult social care speaks to the evidence.
That is why we are proposing to amend the Bill to include carers in the definition of “personally connected”. Including carers will raise awareness and, I hope, help the police and local authorities to adopt better practices—for example, on something as simple as questioning a victim separately from the carer, which I imagine happens quite rarely. It is vital that those sorts of policies are put in place. The amendment provides an opportunity for us to tackle the profound inequalities faced by disabled survivors.
Stay Safe East sent a number of case studies, such as this one:
“A disabled woman was targeted by a man who was homeless. He gradually gained her trust and over a period of months, she began to see him as her friend, then as ‘better family than my own’. He assisted her first with shopping (while taking her money), then with household tasks and eventually with personal care. His controlling and intimidating behaviour towards the woman’s carers led them to withdraw the support, leaving him in complete control of the disabled woman’s life.”
To anyone who has ever worked in domestic abuse services, that sounds exactly like what a domestic violence perpetrator does—isolate, control and ensure there is no one else there to turn to. The quote continues:
“There was physical, sexual, emotional and financial abuse. The man then brought his friends into the woman’s home; they further intimidated her. When she was eventually able to seek help, her health had deteriorated due to neglect. Whilst the actions of the man and his friends could be described as ‘cuckooing’ (a term used by the police to describe taking over a person’s home for criminal or other purposes), they also constitute domestic abuse: the woman had a ‘close personal connection’ with the abuser which left her dependent on him and open to abuse.”
I am sure the Minister would say that the woman would have been able to get support from this service or that service, but why should she not be able to access direct support from domestic abuse services? Why would we not want to compel councils, for example, to commission services specifically for victims of domestic abuse who are disabled? Should the police take that case, on different grounds, using different legislation from a different law —[Interruption.] The very polite Member for Cheltenham is leaving; take care. It is a lovely constituency.
It is not fair to say that the woman had not been a victim of domestic abuse. It is not fair that she would not then be entered into the system that would allow her to access the specialist support that comes with understanding control, power and her own sense of worth in the world.
Another case study notes:
“A neighbour befriended a woman with learning disabilities, became her carer and provided her with support. He then demanded sex and verbally abused her because she would not have sex with him.”
These women experienced abuse by people who had in effect become their family, and with whom they had a close personal connection. They experienced this abuse as domestic abuse. In lots of the cases that Stay Safe East sent, when these women sought help, they were often refused services as victims of domestic abuse—they did not fit the current definition, and they suffered for months before being able to access the right, more specialist support.
Disabled people face huge barriers in getting support from the services that are available today and that we all hope to see improved. They still find it very difficult to access domestic abuse services; by and large, only one or two beds available in an area will be accessible.
With regard to specialism in learning disability support, for example: with the greatest will in the world, people like me and the women who work in the refuge where I worked are not specialists in dealing with people with learning disabilities. We did not have specialist training. With 19 women and 28 kids in the building each night, and people coming and going because of housing emergencies, where is the level of specialism that might be needed in our refuge for somebody with severe autism? Everybody does their best, but the specialism that can be found for disabled victims is often provided only by disabled voluntary sector providers, who do not deal with the manifest issue of recovering from the trauma of domestic abuse. We have to find a way to make sure that if a disabled person is the victim of domestic abuse, they get the same service as they would if they were not disabled—I am not saying that it is perfect for everyone, by any means.
Again, I cannot help but go back to the evidence from the victim Sal. She told the Committee that that was exactly what had happened to her: her parents had abused her, stating that she would never be able to do anything or go anywhere, and she had to allow them to control her because as a disabled woman in society she would not be able to cope. We have to hear her voice and make sure that we make the Bill as inclusive as possible, so that it can help as many people as possible.
Victoria Atkins
I will try to finish in eight minutes. I thank the hon. Member for Birmingham, Yardley for setting out the case for her amendments.
Clause 2 defines “personally connected” for the purposes of the definition of domestic abuse in clause 1. We believe that the personal relationship between the perpetrator and the victim is central to the nature of domestic abuse, which is why our clause 2 definition of “personally connected” covers two individuals who are or have been in an intimate relationship or have a familial relationship, as defined. We believe that the connection between the two—the victim and the perpetrator—is central not just to our understanding in the Bill but, frankly, to the public’s understanding of what domestic abuse is.
The hon. Lady set out the horrors that disabled victims have faced. We absolutely agree that the abuse of a disabled person by their carer is as unacceptable as any other form of abuse, but we fear that the impact of the amendment would be to broaden the scope of the definition of “domestic abuse” by capturing a range of people who are not personally connected. That would widen the definition beyond how it is commonly understood.
The examples of exploitation that the hon. Lady gave could, as she says, be dealt with by other legislation. I myself have prosecuted carers for stealing the life savings of an elderly woman with dementia; we were able to catch that exploitation and the resulting loss with existing legislation, under the Theft Act. There are other examples of exploitation; it is not something that we like discussing in day-to-day life, but the fact is that there are forms of exploitation across many, many walks of life.
Another example within my portfolio is county lines gangs. Gang leaders ensnare vulnerable children as young as 11, 12 or 13, build relationships with them and build up the trust that the hon. Lady described in her examples. They offer them food or new pairs of trainers, and when the children have accepted those “gifts”, they are part of the gang—they are sent out to work: to rob, steal and deal drugs. That is exploitation.
Finance Bill (Third sitting)
Tuesday 9th June 2020
(3 years, 10 months ago)
Public Bill CommitteesRead Full debate Finance Act 2020 View all Finance Act 2020 Debates Read Hansard Text Read Debate Ministerial Extracts Amendment Paper: Public Bill Committee Amendments as at 9 June 2020 - (9 Jun 2020)
The Chair
Good morning. I remind Members that tea and coffee are not permitted in Committee meetings. Please would all Members ensure that mobile phones are turned off and switched to silent mode during Committee meetings?
The selection list for today’s sitting is available in this Committee Room and written evidence received since the last sitting of the Committee, on Thursday, has been circulated by email to all members of the Committee.
The Hansard reporters would be most grateful if Members emailed any electronic copies of their speaking notes to hansardnotes@parliament.uk. Members should be aware that at 11 o’clock I will invite the Committee to observe a minute’s silence in remembrance of George Floyd.
Clause 21
Annual allowance: tapered reduction
Question proposed, That the clause stand part of the Bill.
The Financial Secretary to the Treasury (Jesse Norman)
Thank you very much indeed, Mr Rosindell; it is a delight to see you in the Chair.
I start by saying that we are at the point in “The Pilgrim’s Progress” where we are about to enter the slough of despond, and I apologise to all colleagues that the slough is a rather extended period of technical amendments. I can promise them that in due course we will enter the place of deliverance, although possibly not for some time.
Clause 21 raises both pensions tapered annual allowance thresholds by £90,000 each and also lowers the minimum annual allowance to £4,000. The Government provide tax relief on pension contributions. To give some background, in 2017-18 income tax and employer national insurance contributions relief cost £54 billion, of which 60% went to higher and additional-rate taxpayers.
The Government therefore impose limits on pensions tax relief. One of these limits—the tapered annual allowance—has affected some senior clinicians in the national health service and also some individuals in other public service workforces. This measure is the outcome of the Government’s manifesto commitment to carry out a review of the impact of the tapered annual allowance on the NHS. That review built on another review of the effect on public service delivery more widely, which was announced last August. Roundtable discussions with public service stakeholders, including representatives of the health professions, were held as part of these reviews. These reviews concluded at the Budget on 11 March.
In the last tax year, in recognition of the impact that the tapered annual allowance was having on some doctors, NHS England announced a special arrangement, for 2019-20 only, in which doctors in England could use that arrangement to ensure that they would not be worse off as a result of taking on extra shifts. As health is a devolved matter, that special arrangement applied only to England, but we are aware that the Welsh and Scottish Governments also put similar arrangements in place during 2019-20 for NHS staff.
Raising the two thresholds at which the tapered annual allowance applies by £90,000 each is the quickest and most effective way to solve this issue for senior doctors and other clinicians. It delivers a tax solution, which has been the British Medical Association’s primary request, and it comes into effect from 6 April, which is the beginning of the current tax year.
The changes made by clause 21 mean that no one with income below £200,000 will now be caught by the tapered annual allowance. The annual allowance will only begin to taper down for individuals who also have total income, including pension accrual, above £240,000. We estimate that this will take up to 96% of GPs and up to 98% of NHS consultants outside the scope of the tapered tax allowance, based on NHS earnings alone.
As this is a tax change, these measures will apply both to clinical and non-clinical staff across the whole UK, and they will apply in the same way to all workforces. These measures will also apply equally across public and private sector registered pension schemes. However, to ensure that the very highest earners pay their fair share of pension tax, the minimum level to which the annual allowance can taper down is reducing from £10,000 to £4,000 from the beginning of this tax year. This will affect only those with a total income, including pension accrual, of over £300,000. These measures will cost over £2 billion over the next five years.
The changes demonstrate that the Government are committed to ensuring that hard-working NHS staff do not find themselves reducing their work commitments as a result of the interaction of their pay, their pension and the tapered annual allowance tax regime. This meets the Government’s commitment to allow doctors to spend as much time as possible treating patients, and supports vital public services while ensuring that the very highest earners pay their fair share of tax. I commend the clause to the Committee.
Bridget Phillipson (Houghton and Sunderland South) (Lab)
It is a pleasure to welcome you back to the Chair this morning, Mr Rosindell.
The Opposition welcome the Government’s efforts to resolve the issue. Hon. Members will know that the primary function of introducing the tapered reduction of the annual allowance in 2016 was to prevent tax avoidance in the private sector, but whatever the original intention of the tapered annual allowance threshold, its impact was not properly considered. The result has been damaging to our NHS: as the Financial Secretary says, it has led to a situation in which senior practitioners have refused to undertake extra shifts because of the tax impact, and in many cases have taken early retirement.
According to a British Medical Association survey, just under a third of doctors have reduced the number of hours they spend caring for patients because of actual or potential pension taxation changes, while 37% of those who have not yet reduced them plan to do so in the next year. That is perhaps unsurprising considering the nature of the tapered annual allowance: as the BMA sets out, it creates a tax cliff edge whereby doctors effectively pay to work. Although the Treasury and HMRC have repeatedly stated that tapering affects only people with earnings over £150,000, in defined benefit schemes it has created a tax cliff at the income threshold of £110,000, which means that those in defined benefit schemes may face additional tax charges of up to £13,500 if they exceed the tax threshold income by just £1, while some could face effective tax charges greater than 100%.
Of course, we should recognise that that is not the only factor contributing to the real problem of staff retention in the NHS. Aside from the impact of coronavirus, hospitals and A&Es have been overstretched for years, increasing numbers of people are waiting too long for operations, and key performance targets are being missed month after month. We also face a chronic lack of family doctors; as the Nuffield Trust has highlighted, we have seen the first sustained drop in GP numbers in 50 years, which adds to the pressures on remaining staff. The problem is particularly acute in certain parts of the country: in Sunderland and the wider north-east, we can see the same picture at a much bigger level, where we face a real challenge to recruit and retain family doctors.
The doctors I speak to are always striving to do the best they possibly can in challenging circumstances, but we must acknowledge that the stress they have been placed under, due to the underfunding and neglect of our NHS by this Government, has made the situation even worse. The pension situation that many have faced since 2016 has no doubt proved to be the final straw, as doctors have opted not to take shifts, or to retire early. As we have seen, that is complicating efforts to retain such important NHS staff.
The situation would be unsustainable even if we were not facing the impact of coronavirus, but the additional pressures on doctors, many of whom will have taken on extra shifts, make resolving the issue more pressing than ever. All of us owe a debt of gratitude to those NHS staff who have put themselves on the frontline, in harm’s way, to do all they can in the national interest at this very difficult time for our country.
It is important to note that the problem is not exclusive to staff within the NHS; the annual allowance is a problem in other defined benefit schemes, including for the armed forces. As the Forces Pension Society states,
“in 2018 almost 4,000 serving military personnel, including those in non-commissioned ranks, received notification that they might have exceeded their annual allowance limit and for many a significant tax charge followed—well ahead of receiving any of the future benefit on which the tax is levied.”
The society argues that
“unless action is taken, there is a real risk to retention and operational effectiveness”—
a concern also highlighted by the Ministry of Defence.
We all owe it to those in our public services and our armed forces, who do so much to care for us, protect us and keep our country safe, to make sure that they are treated fairly and can plan effectively for their pension and later life. It is clear that that has not happened as a result of the changes implemented by the Government in 2016. The proposed measure does at least promise to address the issue in part and in the short term and the BMA has stated that the vast majority of doctors are now removed from the effect of the taper. However, there are still concerns, and I hope the Minister will be able to respond to them.
The proposed tax change would take effect only from 6 April 2020; as the Minister will know, the additional pressures created by covid-19 began before that point. As the Chartered Institute of Taxation has identified, that means that doctors who took on extra shifts during this period face the risk of being hit by higher tax bills later. What consideration has been given to the issue of medical staff who have made extra efforts during this crisis, but before 6 April 2020? Has any analysis been undertaken of the scale of the problem and will any measures be necessary to address it?
Given that the purpose of the clause is to reduce and reverse the trends with doctors not taking shifts and retiring early, I would also welcome confirmation from the Minister that the Government intend to monitor the impact of the clause on an ongoing basis, to ensure that it is having its intended effect.
We have concerns more broadly because, as the Minister said, the proposed change would benefit all high earners, not just NHS staff and those in our armed forces that the clause ostensibly targets. Monitoring the effect on taxation revenue will also be critical, because the Opposition want to see fairness right across the system. Although the measure seems to address the issue in the short term, the Minister will be aware of the wider concerns about whether the tapered annual allowance is appropriate in general.
The Office of Tax Simplification has suggested removing the annual allowance from defined benefit pension schemes, and that move was supported by the BMA. As it said in its response to the 2020 Budget, although it welcomed the Government’s proposal in part, problems remained, given that many doctors with incomes far below the new threshold will face tax bills as a result of exceeding the standard annual allowance, which remains at £40,000. That can happen simply following a modest rise in pensionable pay—for example, when receiving a pay increment, taking on a leadership role or being recognised for clinical excellence. The BMA has added that there is no change to the lifetime allowance and many doctors will still need to consider taking early retirement.
The Minister will no doubt be aware that the former Pensions Minister, Baroness Altmann, has similarly warned that just raising the threshold of earnings at which the tapered annual allowance starts will certainly not solve the underlying problem. She has called for fundamental reform to provide those in defined benefit schemes with greater certainty into the future. The Opposition support that call for broader consideration of the issue.
All that brings us to wider considerations around pension tax relief and whether the system as it operates works as well as it could. The Chartered Institute of Taxation, among others, has said that a review of how tax relief applies to pension savings should be considered, given that the solution that the Government have presented here has only been achieved at significant cost to the Exchequer and to the benefit of many higher-earning people, beyond our medical and armed forces staff. Will the Government consider such a review and think more widely about creating a simpler, fairer and more sustainable pensions system?
Jesse Norman
I thank the hon. Lady for her remarks and for welcoming these measures. She expresses what I know will be the universal sentiment in this Committee: a sense of profound gratitude to the NHS for the astonishing way in which it and all the public services around them have responded to the crisis posed by coronavirus. I certainly echo that.
The hon. Lady talked about underfunding of the NHS. I really do not recognise that at all: the NHS has been very well funded, with continuous above-inflation funding settlements. In relation to coronavirus alone, public services have received over £16 billion, the NHS central among them. However, that only underlines the point that extraordinary work was being done by the NHS before, and it throws into greater relief how flexibly, energetically and effectively it has responded to the coronavirus pandemic. I think that shows the inner resilience of the organisation.
The hon. Lady asked about people somehow being deterred from taking extra shifts in the NHS. She will be aware that NHS England put in place its own measures for last year, and we understand that parallel measures were implemented in Scotland and Wales.
The effect of the change, which begins in April, is to give a sufficiently generous increase in the annual allowance thresholds so that up to 96% of GPs and up to 98% of senior medical staff will be out of scope of the tapered annual allowance as regards their NHS earnings. It is interesting to note that, as the hon. Lady rightly acknowledges, that has been widely recognised by the key institutions. The BMA said:
“The vast majority of doctors are now removed from the effect of the taper and will no longer be in a situation where they are ‘paying to go to work’”
as they see it. NHS Employers said:
“Employers across the NHS will welcome this significant step in reforming pensions taxation.”
That is all to the good.
The hon. Lady asked whether we will monitor the clause’s impact. The Treasury will of course monitor it as we do the effects of taxation across the piece. This reform will retain a certain political currency and therefore, I think, support and enthusiasm across the Committee. She also asked about fairness across public services. She will be aware that one of the benefits of a tax reform is that it offers fair treatment across those public services, irrespective of how people work.
The question of whether the allowance taper should be removed has been scouted by some. Of course, unless it was replaced by some other approach, it would have the effect of there being no corresponding reduction in the capacity to add pensions relief. The absence of a taper would therefore create precisely the cliff edge that the hon. Lady warned against.
The hon. Lady mentioned the idea of a review. She will be aware that the Treasury had a review only a short number of years ago, which was inconclusive. We continue to reflect on this complex and difficult area of taxation and will do so as we ponder the future fiscal effects. With that in mind, I hope the Committee will agree that the clause should stand part of the Bill.
Question put and agreed to
Clause 21 accordingly ordered to stand part of the Bill.
Clause 22
Entrepreneurs’ relief
Question proposed, That the clause stand part of the Bill.
The Chair
With this it will be convenient to discuss the following:
That schedule 2 be the Second schedule to the Bill.
New clause 8—Review of changes to entrepreneurs’ relief—
‘(1) The Chancellor of the Exchequer must review the impact on investment in parts of the United Kingdom and regions of England of the changes made to entrepreneur’s relief by section 22 and Schedule 2 of this Act and lay a report of that review before the House of Commons within six months of the passing of this Act.
(2) A review under this section must consider the effects of the provisions on—
(a) business investment,
(b) employment, and
(c) productivity.
(3) In this section—
“parts of the United Kingdom” means—
(a) England,
(b) Scotland,
(c) Wales, and
(d) Northern Ireland;
and “regions of England” has the same meaning as that used by the Office for National Statistics.’.
This new clause would require a review of the impact on investment of the changes made to entrepreneurs’ relief.
Jesse Norman
The clause and schedule 22 rename entrepreneurs’ relief as “business asset disposal relief” and reduce the lifetime limit for gains eligible for relief so that from 11 March 2020 the relief can be claimed on gains of up to £1 million. The purpose of renaming the relief is simply to reflect its function and purpose more accurately.
The relief offers a reduced rate of 10% capital gains tax on disposal of eligible business assets. Evidence shows that for some people—indeed, quite a few people—the relief has been a tax planning tool, helping some of the richest people in society to pay less tax rather than discharging its purpose of incentivising entrepreneurship and enterprising business activity. Last year, three quarters of the relief’s cost was for claims made by just 6,000 people disposing of assets with gains of over £1 million. The reform ensures that the Government can more sustainably support small businesspeople with up to £100,000 capital gains tax relief available over their lifetime.
The clause also makes special provisions for disposals entered into before 11 March 2020—that is to say, Budget day—that have not yet been completed. The provisions ensure that such people can still use the previous lifetime limit, but only where the disposal has not been artificially structured for the purpose of securing a tax advantage. It is therefore an anti-forestalling rule, with the rules ensuring that everyone pays their fair share of tax.
The previous lifetime limit of £10 million was an unsustainable degree of support for those less in need of it, and, as I have said, did not discharge the purpose of supporting entrepreneurship as it should have done. The new £1 million lifetime limit is far more sustainable and better targets the people who it was intended should benefit from the relief.
Bridget Phillipson
I begin by acknowledging that the action on the relief is welcome, even if we believe it is overdue and could go further. The Minister might be familiar with the Resolution Foundation’s description of the entrepreneurs’ relief as “the worst tax break” that is, “expensive, ineffective, and regressive”. According to HMRC, it cost an estimated £2.1 billion in 2019-20 alone. Before responsibility is laid at the door of the previous Labour Government for introducing the measure, I should argue that many of the undesirable effects have followed changes made post-2010. I thank the House of Commons Library for providing me with a timeline of the changes made to entrepreneurs’ relief since its introduction in 2008, which has allowed me to illustrate that point.
The relief was introduced by the then Chancellor, Alistair Darling, in 2008 with the goal of promoting entrepreneurship in the UK and making us a world leader in the field by encouraging business owners selling up to reinvest the money into new businesses. The 2008 Budget established that the relief would set an effective tax rate of 10% for up to the first £1 million of gains made over a lifetime, which was increased to £2 million from April 2010.
In the coalition Government’s first Budget on 22 June, the then Chancellor, George Osborne, announced that the lifetime limit for entrepreneurs’ relief would be set at £5 million, while the single flat rate of capital gains tax would be replaced with the higher 28% rate paid by higher rate taxpayers. As part of the Government’s second Budget in March 2011, it was announced that the lifetime limit for entrepreneurs’ relief would be increased to £10 million from 6 April 2011.
When the relief was introduced by the Labour Government, the estimated cost was £200 million a year: the generous uprating of the lifetime limit under the coalition Government has undoubtedly contributed to its ballooning cost. Perhaps the cost would be justifiable if it had been shown to have a positive impact in boosting investment in jobs across our country, but there is no evidence to suggest that that has been the case.
The Institute for Fiscal Studies has calculated that, in 2017-18, three quarters of the £2.3 billion cost of entrepreneurs’ relief benefited only 5,000 individuals, with an average tax saving among that group of £350,000. The Resolution Foundation highlights HMRC data that shows that 82% of those who benefited have been male and in their late 50s, and that the majority of capital gains tax revenue is concentrated in London and the south-east. The 2017 HMRC evaluation found that only 8% of people claiming entrepreneurs’ relief in the previous five years had said that it influenced their investment decision making. That demonstrates the extent to which the relief was not working as intended, and the necessity of Government action.
Putting aside whether the approach taken by the Government is the right one, there are some technical issues that I hope the Minister can clarify. The Chartered Institute of Taxation has expressed a degree of surprise at the lack of transitional provisions, given that the capital gains tax changes are retroactive, affecting gains that have already accrued but not yet been realised and investment decisions that have already been made. The institute has also expressed concerns about the strength of the anti-forestalling measures for what is a change of policy rather than anti-avoidance legislation, saying it regards one aspect of the measures as open to challenge as retrospective taxation because the Government are changing the tax effect of an action after the right to take that action has arisen. Having sought legal consultation, it fears that may even be a breach of human rights. It has suggested changing the clause to allow a shareholder whose shareholding no longer qualified for entrepreneurs’ relief immediately after an exchange of shares to elect to retain the £10 million limit. Will the Minister tell us what consideration the Treasury has given to the issue?
What consideration have the Government given to going further than the measures contained in this clause? As I have sought to set out to the Committee, entrepreneurs’ relief is costly and is failing to achieve its objective. The Minister is aware, no doubt, that any number of organisations are critical of maintaining it in any form, although the criticism is not unanimous. The Federation of Small Businesses has voiced its concerns and believes that removing entrepreneurs’ relief would disincentivise employee ownership by reducing the value of businesses as they are handed over. Can the Minister say anything by way of reassurance to the Federation of Small Businesses, and does he agree with its assessment?
Many others remain critical and that is where the majority of opinion rests. The Institute for Fiscal Studies has stated that the £1 million relief in the clause is still too generous. The Association of Accounting Technicians says it is disappointing that the Government have failed to scrap it altogether, highlighting an overwhelming body of evidence from focus groups, HMRC-commissioned research, the Office of Tax Simplification, the National Audit Office and others,
“which indicates that the relief does not achieve its policy objectives, that it’s extremely expensive, poorly targeted and ultimately ineffective.”
In the light of that, will the Minister set out for the Committee why the Government have not gone further in this area?
On the new clause, which was tabled by the Scottish National party, we understand the rationale for a review of the measure’s impact on business and on different parts of the UK, but as I have sought to set out to the Committee, there is a strong body of evidence of the entrepreneurs’ relief not working effectively. I would appreciate a better understanding of the impact the amendment seeks to achieve. We do not oppose the new clause; we just think it could go further.
Let me make it clear that a more progressive approach to entrepreneurs’ relief should not be confused with being anti-business. As my hon. Friend the Member for Ilford North set out last week in Committee, Labour Members support measures to promote investment and entrepreneurialism and to support the small businesses that are the backbone of our community and that are doing so much at a difficult time to try and keep people in work, to support our communities and to contribute to our country. The Government need to bring forward measures to ensure that tax reliefs work effectively. The evidence suggests that the entrepreneurs’ relief, as conceived and delivered over the past decade, does not work.
There is a wider issue here that I hope we can revisit in later stages of the debate regarding the Government’s efforts to monitor the effect of tax reliefs such as entrepreneurs’ relief. The National Audit Office’s excellent recent report on tax reliefs shows that the Government are not reporting costs on over two thirds of them and that HMRC did not know whether most tax reliefs offered value for money. I believe the Public Accounts Committee will be taking evidence on this very shortly and publishing its report on the work of the National Audit Office in considering this important issue. We on the Opposition Benches will be following that discussion carefully, because it seems incredible that the Government do not have a proper grip on that area, where there is a real problem around value for money and whether the information provided to Parliament is sufficient, so we can understand whether tax reliefs are having the outcome intended by Government and whether fairness is built into the system.
We will continue to argue for a broad review of tax reliefs and continue to encourage Ministers to adopt the policy to determine exactly who is benefiting from the hundreds of tax reliefs that exist, whether they are fair, whether they represent good value for money, whether we can be confident that they are securing the policy outcomes as originally intended, and that the Government should legislate to make the system fairer as a whole.
Stephen Flynn (Aberdeen South) (SNP)
This is my first experience of a Finance Bill Committee—indeed, I think it is the first time we have met, Mr Rosindell, and I look forward to serving under your chairmanship. Dare I say that our new clause is constructive? That is the manner I am starting in. I would like the Government to change their stance a bit and look at the wider picture.
Before the Budget, it was well known to all of us in the public sphere that the Government were considering entirely scrapping entrepreneurs’ relief. We read a number of comments in the press and the public domain about Conservative Back Benchers being unhappy with that move because they felt it would stifle investment. Ultimately, the Chancellor did not scrap entrepreneurs’ relief but simply took it back to the level it was at when the Labour party introduced it in 2008, reducing it from £10 million to £1 million. We need to know what the Government’s long-term direction of travel is. We cannot be driven by a rebellion on the Government Back Benches. If the Government do not feel that entrepreneurs’ relief is beneficial, they should make that clear.
The Minister said that the Government have conducted a review, and indeed they have, but it was an internal review; as far as I am aware, it is not in the public domain. They are more than welcome to put it into the public domain, or they could agree to our new clause. The hon. Member for Houghton and Sunderland South talked about what we are could achieve. It is important that we have that review so that we all know where entrepreneurs’ relief is going to be in the coming years.
As I say, this is a constructive suggestion. It is based not just on our interpretation of the situation, but on the evidence. The IFS believes that entrepreneurs’ relief is poorly targeted; the FSB, on the other hand, is broadly supportive; and the Chartered Institute of Taxation believes that a public consultation on objectives and efficacy is necessary. There is a broad range of views about this policy, so the time has come for the Government to undertake a review in the public domain so that we all understand the direction of travel and know where they seek to go. Hopefully, that will inform us all a bit more about the position. As I say, this is a constructive suggestion, and I hope the Government will change their stance.
Jesse Norman
I thank the hon. Members for Houghton and Sunderland South and for Aberdeen South very much for their comments. They raise a number of important points.
It is certainly true that this relief has attracted widespread criticism from different interested and expert bodies; the hon. Lady is absolutely right to point that out. It is important to note that the Government have tried to strike a balance. An outright abolition might have had the effect of penalising a lot of entrepreneurial activity, undertaken in good faith up to the level that has been determined. That would have been, in the Government’s view, an overreaction to the situation. Therefore, we have tried to strike a balance by trying to keep the vast majority of entrepreneurial activity that is protected in place while cutting back on aspects that are ineffective or regressive.
It is interesting, as has been noted by Opposition Members, that alongside widespread concern there has also been notable recognition of the importance of that aspect of the relief that I have highlighted from the Federation of Small Businesses. I note that the national chairman described this as a
“sensible compromise on Entrepreneurs’ Relief”,
in which
“everyday entrepreneurs will be pleased to hear the Chancellor say that he has listened to FSB”.
Jesse Norman
We continue to stride boldly through the slough of despond. Here we come to the reform of the capital gains tax private residence relief ancillary reliefs. The clause makes changes to capital gains tax private residence relief where individuals have more than one residence, reducing the final period exemption from 18 months to nine months and reforming lettings relief so that that relief only applies where the owner shares occupancy with a tenant.
The clause also makes several other minor changes to make the private residence relief rules fairer. The Government are committed to keeping family homes out of capital gains tax, and private residence relief will still be available for the entire time a property is lived in. However, ancillary reliefs mean that in some circumstances people can accrue relief on two or more properties simultaneously. The reforms make private residence relief fairer by better targeting relief at owner-occupiers.
The final period exemption currently relieves the last 18 months of ownership of a main residence or former main residence from capital gains tax. This provides relief as people go through the process of selling their home, but it allows people to accrue relief on two properties simultaneously. From April 2020, the exemption will be reduced to nine months. The 36-month exemption for those who are disabled or are in a care home will remain.
Lettings relief is available when a property that was someone’s previous main residence is wholly or partly let out. This can extend the benefit of relief by up to £40,000 for an individual and £80,000 for a couple, while they are also accruing relief on their current main residence. In order to better target the relief at owner-occupiers, from April 2020 lettings relief will only be available in cases of shared occupancy. The armed forces future accommodation model is also a source of concern. We want to be sure that the clause will extend the benefit of employer-provided accommodation relief to those service personnel who live in privately rented accommodation under that new model.
The Government are also legislating on two extra existing statutory concessions. The first applies when an individual has more than one residence, but only one has any real capital value. This concession extends the time period for nominating the individual’s main residence. The second allows 24 months of relief where, for specific reasons, a person is unable to occupy a new home for use as their main residence. There is also a change to ensure that, when spouses or civil partners agree to transfer shares in a residential property between themselves, the receiving spouse or civil partner will inherit the transferring spouse’s past use of the property, no matter the use of the property at the time of transfer. This prevents unfair outcomes arising in certain cases.
The Government are committed to keeping family homes out of capital gains tax, through private residence relief. However, the current availability of lettings relief, and the 18-month final period exemption, can mean that people accrue relief on two or more properties simultaneously. These reforms address those concerns and make private residence relief fairer, by better targeting it at owner-occupiers. I therefore commend the clause to the Committee.
Bridget Phillipson
The objectives behind the clause seem well intentioned, but the Minister will no doubt be aware of the severe impact of covid-19 on the housing market, as referenced by many stakeholders—a point which I should be grateful if he would address. According to the Chartered Institute of Taxation, the evidential basis for the reduction in the final period exemption was based on an average selling time—before the current pandemic—of approximately four and a half months, and it is concerned that this evidence base may be undermined by the effects of covid-19.
The Minister will be aware of his Government’s own advice, which lasted until 13 May, that physical viewings of homes were not permitted, and as such, that the home-buying process would take longer, with people advised to delay moving into a new house. While there is updated advice, there are still clearly restrictions that will slow down the process of buying a new home, and wider practical difficulties in this area when it comes to estate agents, banks processing payments and the wider conveyancing system.
The Chartered Institute of Taxation referred to research by Zoopla, conducted between 12 and 19 May, which found that 41% of would-be home movers across Britain had put their property plans on hold in light of market uncertainty, loss of income and lower confidence in their future finances, with property inquiries reported to be more than 50% down on pre-lockdown levels. Given that ongoing uncertainty, it is increasingly likely that it may take longer than nine months for some of those affected by this provision to sell their property, given the deterrent impact of covid-19 and the lockdown on potential buyers, as well as all the practical difficulties for buyers, which I am sure we appreciate. That could leave sellers with an unexpected tax liability when a property takes longer than nine months to sell. Many stakeholders consulted on this legislation believe that the fairest way to resolve the issue is to defer the introduction of the final period exemption, so as not to burden some sellers with an unprecedented tax liability.
In their consultation with stakeholders from July 2019, the Government responded to worries about the nine-month period exemption being too short by saying that
“a 9 month final period exemption strikes the right balance between being long enough to provide relief whilst they go through the process of selling their home, but not so long that they are able to accrue large amounts of relief on two properties simultaneously, or on homes that are no longer used as their main residence.”
I will not seek to blame the Government for not predicting at that point the impact of a global pandemic, but we are living through some very difficult times. Has any further consideration been given to the timing of the measures contained in the clause? Given the pressures on the housing market, does he still regard them as appropriate and realistic? Is the Treasury considering the impact more broadly?
Putting the coronavirus aside, concerns have been raised that the clause runs in contradiction to the parliamentary convention on retrospective taxation, whereby retrospection is permissible only when dealing with unacceptable avoidance schemes. The clause is about changing long-standing reliefs rather than countering avoidance, and the Institute of Chartered Accountants in England and Wales has highlighted that the clause is retrospective. It also argues that it would be simpler for taxpayers if the measures were delayed until the start of the next tax year. I am sure the Minister has given consideration to that point, and I am keen to hear his views on the topic.
Another point raised by the Chartered Institute of Taxation is that the new rules must be well communicated. Their introduction coincides with the new 30-day time limit running from the date of completion to the reporting and payment of capital gains tax, meaning that there is now much less time to establish capital gains tax liability. What are the Government doing to communicate such changes, so that they are well understood?
The changes as a whole are projected to raise £50 million for the Government in this tax year and £120 million next year. Given the current situation in the housing market, I shall be interested to hear the Minister’s views on whether any change has been made to any projections in this area. It is vital that the Government can raise funding for our vital public services, but in the grand scheme of things, those seem like relatively modest sums. Although I want to ensure that our public services have the funding they need to get through this crisis, I am sure the Government would not seek to disadvantage those who, through no fault of their own, find themselves in a very difficult situation owing to the pandemic.
Those are the only comments that I seek to offer on the clause. I shall be grateful for a response from the Minister.
Jesse Norman
I thank the hon. Lady for her comments. She raises the question of retrospectivity. We do not regard the changes as retrospective. Capital gains tax is due only when a disposal is made, and taxpayers have 18 months’ notice of the changes. They have therefore had plenty of time to rearrange their affairs—for example, by selling property under the old rules if they had wished to do so. It is important to remember that any private residence relief accrued from periods when the property was lived in as a main home is retained.
I am glad that the hon. Lady does not blame the Government for failing to predict the pandemic. That would be a very widespread source of blame; few people across the world could be exculpated from that. She also raised the question of the effect of covid-19. It is worth saying that, as she highlights, the nine-month exemption is based on evidence that the average selling time was four and a half months, and the suggestion is therefore that nine months is not long enough. I note her point and will take it away with me from this sitting; I thank her for that. It still leaves the average significantly short of nine months. It is worth pointing out that, if people are taken over that level, they will still likely pay very little, if any, capital gains tax, because the annual exempt amount, which has just been increased to £12,300, keeps small gains out of CGT. If someone was running over by a month, it would have to be an enormous gain in order to breach the annual limit.
As I said, there are no changes to the wider 36-month exemption that is available to disabled people and to those in care homes. The Government think the CGT allowance provides an additional safeguard in case there are circumstances in which people might inadvertently run over time.
Question put and agreed to.
Clause 23 accordingly ordered to stand part of the Bill.
Clause 24
Corporate capital losses
Question proposed, That the clause stand part of the Bill.
The Chair
With this it will be convenient to discuss the following:
That schedule 3 be the Third schedule to the Bill.
Clause 25 stand part.
New clause 9—Review of changes to capital allowances—
“(1) The Chancellor of the Exchequer must review the effect of the changes to chargeable gains with respect to corporate capital losses in section 24 and Schedule 3 of this Act in each part of the United Kingdom and each region of England and lay a report of that review before the House of Commons within two months of the passing of this Act.
(2) A review under this section must consider the effects of the changes on—
(a) business investment
(b) employment, and
(c) productivity.
(3) A review under this section must consider the effects in the current and each of the subsequent four financial years.
(4) The review must also estimate the effects on the changes in the event of each of the following—
(a) the UK leaves the EU withdrawal transition period without a negotiated comprehensive free trade agreement,
(b) the UK leaves the EU withdrawal transition period with a negotiated agreement, and remains in the single market and customs union, or
(c) the UK leaves the EU withdrawal transition period with a negotiated comprehensive free trade agreement, and does not remain in the single market and customs union.
(5) The review must also estimate the effects on the changes if the UK signs a free trade agreement with the United States.
(6) In this section—
‘parts of the United Kingdom’ means—
(a) England,
(b) Scotland,
(c) Wales, and
(d) Northern Ireland;
and ‘regions of England’ has the same meaning as that used by the Office for National Statistics.”
This new clause requires a review of the impact on investment, employment and productivity of the changes to capital allowance over time; in the event of a free trade agreement with the USA; and in the event of leaving the EU without a trade agreement, with an agreement to retain single market and customs union membership, or with a trade agreement that does not include single market and customs union membership.
Jesse Norman
We are 50 minutes in and making very good progress, so thank you for your leadership from the Chair, Mr Rosindell.
Clauses 24 and 25 and schedule 3 make changes to UK corporation tax loss relief rules to introduce the corporate capital loss restriction that was announced at Budget 2018. At that Budget, the Government announced changes to the treatment of capital losses for corporation tax purposes. Currently, if an asset is sold at a loss, that capital loss can be carried forward and offset against up to 100% of the capital gains in future periods. In order to ensure that large companies pay corporation tax when they make significant capital gains, the Government will restrict the use of companies’ historical capital losses to 50% of the amount of annual capital gains from 1 April 2020. This policy builds on previous reforms to corporation tax loss relief, and brings the treatment of capital losses into line with the treatment of income losses.
The changes made by clause 24 will apply a 50% reduction to the amount of carried-forward capital losses that a company can set against chargeable gains that arise in a later accounting period. Various other changes that are required to deliver or support that loss restriction are also included. They include provisions to ensure that the restriction is proportionate for companies entering into liquidation, and that it operates effectively for companies in sectors that are subject to unique tax regimes, such as oil and gas, life insurance and real estate investment trusts.
This loss restriction will raise approximately £765 million in additional revenue over the next five years. An annual allowance of £5 million will apply across both income and capital losses to ensure that small and medium-sized companies are not affected. We estimate that less than 1% of companies will have to pay additional tax as a result of these changes. The change made by clause 25 is to amend the quarterly instalment payment treatment for certain companies with no source of chargeable income, which have a short accounting period resulting from a chargeable gain accruing.
New clause 9, tabled by the SNP, requires a review of the effect of the change to chargeable gains introduced by clause 24 and schedule 3 within two months of the Bill’s receiving Royal Assent. The review would focus on the effects of changes on business investment, employment and productivity across different regions of the UK, as well as the effects of various scenarios following the end of the EU transition period, and under circumstances in which the UK signs a free trade agreement with the United States.
The Government’s view is that such a review is not necessary. We set out detailed information on the Exchequer macroeconomic and business impacts in 2018, when this policy was first announced, and provided a further update at Budget 2020. Those estimates, which have been certified by the independent Office for Budget Responsibility, confirm that the changes made by the clause are not expected to have any significant macroeconomic impacts. The changes will affect very few companies—about 200 every year, which are likely to be dispersed across the UK. That estimate is not expected to change in any of the EU transitional free trade agreement scenarios set out in the amendment. A further review of the clause would not provide any additional useful information.
This restriction is a proportionate way of ensuring that large companies pay some tax when making substantial capital gains. The review that the new clause would legislate is unnecessary. I therefore urge the Committee to reject new clause 9, and I commend the clauses and the schedule to the Committee.
Wes Streeting (Ilford North) (Lab)
It is a pleasure to be here again on such a fine day in the Committee Room, going through some of the more technical elements of the Finance Bill.
We have heard from the Financial Secretary why clause 24 and schedule 3 appear in the Bill. As Members can see for themselves, part 1 of schedule 3—paragraphs 1 to 38—deals with changes required to introduce the corporate capital loss restriction; part 2—paragraphs 39 to 41—introduces changes in the treatment of allowable losses for companies without a source of chargeable income and makes other required minor amendments; and part 3—paragraphs 42 to 46—contains commencement and anti-forestalling provisions for the CCLR.
All in all, schedule 3 comes to 18 pages. I am sure that the Treasury deems them essential, or they would not be in the Bill, but it does seem to run somewhat contrary to the Government’s stated aim of simplifying the tax system. In case anyone wanted to reach for the explanatory notes for some salvation and solace, even they extend to 10 pages. I do wonder whether it was really necessary, with such a lengthy schedule and explanatory notes, to go into such detail; I guess my question to the Financial Secretary is whether anything can be done to simplify it. As I said, the Government’s stated aim is to simplify taxes—they even created the Office of Tax Simplification —but the OTS’s job is made much more difficult if, while it is trying to simplify the existing tax code, we are adding reams and reams of clauses to it.
The measure set out in clause 24 and schedule 3 is expected to raise significant revenues in corporation tax from large corporations. That is not something that I will complain about too much—in fact, I am not complaining at all—but a common concern among respondents to the Government consultation was about the timing in relation to our exit from the European Union and in the context of concerns about the impact on UK competitiveness. Although we do not oppose what the Government seek to do, it is important that they address those concerns up front—not least so that when people reply to Government consultations, they know that someone is reading and listening, and that the Government will at least address their concerns even if they do not share them.
Turning to clause 25, I am sure the Financial Secretary will recall that the London Society of Chartered Accountants wrote to the Chancellor on 19 April, copying him in, to raise issues about several clauses of the Bill. Paragraph 13 of that letter states:
“We note that this proposes that a company that would otherwise be ‘very large’ would be ‘large’ in the context of the regulations requiring payment of corporation tax in instalments if it is chargeable only because of a chargeable gain on disposal of an asset, but only for APs beginning on or after 11 March 2020. It is obviously aimed at non-resident companies that only come within corporation tax as a result of their new exposure to corporation tax on disposals of UK land and interests in entities that are ‘UK land-rich’. A single such disposal would result in the due date being on that one day that the company disposed of the property, so this is a welcome change for any but the largest organisations. However, it is unfortunate that this is not to apply to events before 11 March 2020, where companies have had to rely on a concession by HMRC. In such circumstances, HMRC propose that tax should be paid within 3 months and 14 days after contracts are exchanged unconditionally.”
It would be good if the Financial Secretary addressed those concerns in his reply.
We have already heard the Financial Secretary’s account of why he thinks the review required by new clause 9—tabled by our colleagues in the SNP, led here by the hon. Member for Glasgow Central—is not necessary. The proposed review of changes to capital allowances
“must consider the effects of the changes on…business investment…employment, and…productivity…The review must also estimate the effects on the changes in the event of each of the following…the UK leaves the EU withdrawal transition period without a negotiated comprehensive free trade agreement…the UK leaves the EU withdrawal transition period with a negotiated agreement and remains in the single market or customs union”—
I will not hold my breath on that one—
“or…the UK leaves the EU withdrawal transition period with a negotiated comprehensive free trade agreement, and does not remain in the single market and customs union.”
I understand why the Financial Secretary may not consider such a review necessary in the context of changes to capital allowances, but I would say two things in response. First, clear, widely available and readily understood analysis of the wider context and the wider pressures on the economy, covering issues such as business investment, employment and productivity is absolutely essential. Secondly, the headlines are obviously dominated by the coronavirus and, more recently, by events in the United States, with the murder of George Floyd, and the Black Lives Matter movement protests we have seen on the streets of the UK. However, in the background, as we know, there is the ongoing issue of Brexit, which has almost been forgotten in the national conversation, but which remains one of the single biggest challenges facing our country. The Committee on the Future Relationship with the European Union is hearing from Michel Barnier this week.
Whether Brexit is viewed by Members of the House as an opportunity or a threat, or perhaps a combination of the two, I do not think anyone would dispute that unravelling ourselves from the most sophisticated political and economic alliance in the history of the world is simple or straightforward, or without consequences. We have reached a settled position—to be clear, the official Opposition recognise that settled position—with a referendum and two general elections that have given the Government a mandate to implement the referendum. The question of whether Brexit takes place has been settled by those three democratic events; the question now is how it happens. At the same time, we are in the middle of a global pandemic that, as well as being a public health crisis, threatens to be an economic crisis. We are already in a recession, and the choices the Government make in the coming days, weeks and months, along with the choices they have already made, will shape and determine whether the recession is as short and shallow as we would hope.
I do have a concern when I listen to statements made by Ministers—not so much Treasury Ministers, but certainly Ministers in other parts of the Government, including the Prime Minister and the people around him—that the economic issues and priorities of the country are playing second order to political considerations. That is a terrible mistake. I hope that the Government will take a more stable and orderly approach—if I may borrow a phrase from our former Prime Minister—to some of these choices and issues, and that the Treasury flexes its muscles at all points in conversations with other Departments about the considerations that must be made about our future relationship with the European Union and, indeed, about free trade agreements with other countries, including the United States.
The Financial Secretary may not have a great deal of sympathy for the case made for a review in the context of changes to capital allowances, but I am glad we are having this conversation, because debate in this place is moving too often away from some of the really serious economic challenges that are presenting themselves. We cannot wish those challenges away; we need to make active, sensible and wise choices to ensure that our country emerges from this period of our history with a stronger economy and with greater and more widely shared prosperity than we have today. I hope that that cause is shared by Members right across the House.
Finally on new clause 9, the reason why we table such amendments and new clauses calling for reviews is that that is one of the few ways in which Opposition parties can debate issues on the Finance Bill. In recent years, it seems Ministers—to their shame, actually—have been too frightened and cowardly to allow Finance Bills to be subject to amendments in the way they were traditionally. We no longer have the same freedom and flexibility to propose practical, concrete changes that we might like to see, which strengthen democratic and political debate in Parliament, with Oppositions not just criticising Government, but laying down alternatives so that we can debate their merits versus the Government’s approach. So, instead, we call for reviews.
Stephen Flynn
Dare I say that I think I am potentially being constructive again in the new clause that the SNP have tabled? We are seeking to allow the Government to open their eyes to what is coming down the track and to look at the impact on business, investment, employment and productivity of a number of different scenarios, be they a comprehensive free trade agreement, remaining in the single market and customs union, not remaining in the single market and customs union, and/or a free trade agreement with the United States.
Ultimately, however, this is not just about helping the Government to see the error of their ways, should they follow the path they are on, but also about reinforcing to hon. Members the huge detrimental impact that leaving the European Union will have on Scotland. Lest we forget, the people of Scotland voted overwhelmingly to remain in the European Union. We are being forced to put forward amendments such as this because the democratic views of the people of Scotland have been disregarded once again by this Parliament.
I will touch briefly on the reality of the situation facing Scotland, because it is incredibly important to the debate we are now having. A new study from the Scottish Government says that, if an extension is not agreed, Scottish GDP could be up to 1.1% lower after two years. That is just in relation to an extension. The cumulative loss of economic activity from leaving the EU would be up to £3 billion over those two years. That is on top of the devastating impact of the current pandemic on the Scottish economy. We will potentially have billions wiped from our economy at a time when we are reeling from the impact of this public health tragedy. That is simply not good enough.
The very notion that a US trade deal will save the day is complete and utter rubbish. Analysis from the Scottish Government highlights that the loss of friction-free trade with the EU would lower GDP by 6.1% by 2030. Analysis by the UK Government shows that a free trade agreement with the US would increase UK GDP only by up to 0.16%. Those are remarkable figures, which we all need to consider in full. The reality is that the reckless approach of the UK Government in potentially losing full access to the European single market will have a devastating impact on Scotland’s economic growth and prosperity. It also puts in jeopardy many of our key priorities: the NHS, upholding food standards and tackling the climate emergency.
Lowering standards is perhaps a topical subject to touch on, because we have all read with interest comments in the press over recent weeks about the impact of lowering food standards on imports of food into the United Kingdom. We are proud of Scotland’s agricultural sector and the produce we create, which is world renowned for its class. We cannot under any circumstances have a situation where the quality of that produce is impacted by the decisions of the UK Government, particularly when those decisions will be made on the back of something we did not vote for. I cannot emphasise that enough to Members. Whether it is chlorinated chicken, selling off the NHS to Donald Trump or simply trying to bring down the tariffs on Scotch whisky, the UK Government have shown they are incapable of meeting the needs of the people of Scotland, and I have grave concerns about what is coming down the line.
As I say, the new clause we have tabled today is constructive, because it would allow the UK Government’s eyes to be opened to the reality of the situation facing Scotland. If they are true in their comments about believing that Scotland is a key part of the United Kingdom, and Scotland should lead and not be led, they will hopefully bear the new clause in mind.
I will finish by touching on the comments of the hon. Member for Ilford North, who rightly said that, for many, Brexit has been forgotten about. Well, for people in Scotland it has not been forgotten about, because we overwhelmingly do not support it. Rightly, the pandemic—overcoming it and ensuring that lives are saved—is the focus of all our priorities at this moment, but we know what is coming down the line and we are fearful. Up until now, none of the mood music coming from the UK Government has offered any reassurance whatever. Hopefully, the figures I have highlighted in relation to a United States trade deal will re-emphasise the reality of the situation to the Government.
I said I would finish, but that was perhaps a fib, because there is one further comment I wish to touch on. I apologise if I get a word or two wrong, but the Minister said that the new clause would not provide “any useful information”, and I am astounded at that. I thought that a UK Government Minister would want to know about the impact on productivity of the decisions that the UK Government may take. I thought a UK Government Minister would want to know about the impact on employment of the decisions taken on business productivity, but it appears not. It appears that wilful ignorance is the story of the day, which is not a good thing. The people of Scotland will pay close attention to the actions of the UK Government moving forward, as they have up until now.
Jesse Norman
I would not have dreamt of not responding to the concerns raised by Members of the Opposition, and I am grateful to you, Mr Rosindell, for allowing me to do so.
The hon. Member for Ilford North mentioned the simplification of the tax system and asked whether the measures before us could be regarded as a simplification. He is absolutely right that simplification of the tax system is a highly desirable thing. In this case, without getting too far removed from political business, it seems there is a parallel to some of the work done by Thomas Kuhn on how science proceeds, where he distinguishes between times in which normal science proceeds, as it were, in a normal fashion and times when there is a paradigm shift and everything changes. Often, the effect of a paradigm shift is to create a moment of radical simplification to a system that was becoming overly complex in its theoretical analysis before. That was the effect of Copernicus on the Ptolemaic system, and of Newton on pre-Newtonian physics. There may well come a case, as in the past, where this Government or their successor decide on a radical tax simplification, but while we are in the world of existing tax, that is not the world we are talking about.
The hon. Gentleman should be pleased to know that these measures have been regarded within the profession as the model of how to achieve effective tax legislation— that is not always the case with Government legislation. There is a nice quote in the Tax Journal for 5 December 2018:
“The corporate capital loss restriction is a good example of how to produce effective legislation. The consultation will enable draft legislation to be produced for publication in December 2019. This will be subject to technical consultation ahead of its inclusion in the Finance Bill 2020. This allows time for the profession to work with HMRC to iron out the inevitable teething troubles.”
That is right. As I have identified, there were essentially two periods of consultation: one on policy design and, in due course, more technical consultation on draft legislation. That work is what is reflected in this piece of legislation. I hope I have reassured the hon. Gentleman on that front.
The hon. Gentleman raised a question about competitiveness. He will know that the components of competitiveness are many and various. It is not immediately obvious why the treatment of capital for capital losses should have any huge or certainly immediate competitive effect. We are talking, lest it be forgotten, about a measure that is likely to have an effect on some 200 companies. Some of them may be large, but this is a very small proportion of the overall corporate world in which we live. It is also worth saying that, even after this change, the system that remains is significantly more generous in some crucial respects than the system in many other countries that are our notional international competitors.
The hon. Gentleman raised the question of whether the Government are disallowing adequate challenge to the Bill. I would say that one man’s meat is another man’s poison, one woman’s meat is another woman’s poison and so on. The effect of having this structure to the Bill is that, as we grind through these clauses—I apologise to colleagues if it is a grind—and give them the detailed consideration that this Parliament would expect with its history of scrutinising tax, that is now being done under a system in which non-charging measures are covered by individual resolutions. That is an increase in clarity and, I think, very much to be welcomed.
The hon. Member for Aberdeen South talked vigorously about what he sees as the democratic views of the people of Scotland. May I remind him of a few facts? Scotland had a referendum in 2014 in which, I am pleased to say, a substantial majority was in favour of remaining part of the Union. In so doing, Scots reflected the wisdom of arguably one of Scotland’s greatest thinkers, Adam Smith, when he said that the Union with England was a measure from which infinite good had derived to Scotland. How right Smith was. Of course, it would overturn the settled convention that referendums take place once in a generation, and, to that extent, it would be a denial of the democratic basis of referendums, to have another in a shorter time period.
May I also remind the hon. Gentleman that it was extraordinarily lucky in many ways that the Scots were, as I trust they will always be, wise enough to see their future within the Union, because when crisis struck, and the oil and gas industry were completely clobbered and the oil price fell, that would have cut an enormous hole in the GDP of an independent Scotland, which disastrous economic outcome was avoided by Scotland’s ability to work with and benefit from its position within the Union? The same will be true under coronavirus, given the different exposures that the Scottish economy has to sectors affected by the economic downturn.
Jesse Norman
This is a very small and technical measure that widens the scope of capital gains tax relief in respect of loans to traders, so that from 24 January 2019 it applies to loans made to traders located anywhere in the world and not just in the United Kingdom.
Relief for loans to traders is available where a loan is made to a UK company, sole trader or partnership, for the purposes of a continuing trade, profession or vocation, or for the setting up of trade, but then the loan subsequently becomes irrecoverable. The relief allows a person to write off the loss against chargeable gains.
The UK has now left the EU and has agreed to follow its rules for the duration of the transition period. On 24 January 2019, the European Commission issued a reasoned opinion, arguing that the existing legislation for relief of loans to traders contravened the free movement of capital principle. The Government accepted that the legislation, as drafted, was too narrow, and agreed to introduce legislation to expand the rules and to comply with that principle.
The change made by clause 26 widens the relief, so that it applies to qualifying loans made to businesses worldwide and not just in the UK. The proposed changes are not expected to have any significant impact on the Exchequer, due to the small number of people making these loans. Loans of the type covered by this relief are often risky, making them unattractive to many investors. Widening the geographical scope of the relief will not make such loans less risky, but it will give UK-based investors a remedy should an overseas investment be lost. Draft legislation setting out this change was published during the summer and no comments were received.
The Government consider that this legislation is appropriate for supporting overseas investment opportunities for UK-based investors and for meeting our residual obligations to the European Union. I therefore commend the clause to the Committee.
Wes Streeting
Earlier, the Financial Secretary described our proceedings as “a grind for some”. How could it possibly be a grind when we were treated to such a fascinating history lesson as the one he gave at the end of the debate on the last group? However, I am not sure that invoking the economic lessons of Adam Smith will be enough to persuade the hon. Member for Aberdeen South of the case for the Union. Indeed, I am not sure that it would persuade me of the case for the Union. I will return to reading the books by our esteemed former Prime Minister, Gordon Brown, and I will leave it to my hon. Friend the Member for Edinburgh South (Ian Murray) to lead the charge in making the case for the Union. That might be more persuasive to the people of Scotland than the history lesson given to us by the Financial Secretary.
We are all learning new things this morning. In fact, the hon. Member for Aberdeen South has learned that, in this place, the words “and finally” are generally a statement of intent rather than a binding commitment. I am sure that on many occasions I have used the words “and finally” more often than once.
The Financial Secretary described clause 26 as very small and technical, and I suppose that is true to an extent. As we have heard, relief for loans to traders is a capital gains tax relief; it gives relief where a loan is made to a UK company, sole trader or partnership for the purposes of an ongoing trade, profession or vocation or the setting up of trade, and the loan subsequently becomes irrecoverable. To qualify for the relief, the loan must be to a borrower who is resident in the UK and who uses the money wholly for the purposes of a trade, profession or vocation or to set up trade, as long as they start trading. Relief is due only if there is no reasonable prospect of the loan ever being repaid.
Who can argue with any of that? The clause is technical and straightforward, and the Financial Secretary has made the case for it. Only towards the end of his speech did we hear that the purpose of the clause—please shut your ears, Mr Rosindell—is to extend the relief to borrowers outside the UK, which will ensure that the relief complies with article 63 of the treaty on the functioning of the European Union, and with the rules on the free movement of capital.
I thought we might have a bit of fun dwelling on that for a moment, because we are locked in negotiations on our exit from the European Union. I am sure it was not meant to be sneaky—Ministers would never be sneaky—but at the end of the Financial Secretary’s speech on the clause, he briefly mentioned that it was about bringing ourselves into alignment with European Union law. It is curious that we are trying to negotiate our exit from the European Union at the same time that we are passing domestic law to bring ourselves into alignment. The Government have begun their fourth round of trade negotiations with the European Union; the process is far from complete. With the Government’s self-imposed December deadline looming, it appears there is nothing that the Government are not willing to sacrifice for their ambition to get Brexit done.
In the light of that, I am curious about whether the Government intend for the alignment to be permanent, or whether it will be a measure from which they wish to diverge in the future. I wonder what other rules we are planning to align with at the same time as we are planning divergence, and I wonder how the Government are weighing up the case for alignment and the case for divergence. The clause is designed to align the UK with EU trade regulations and EU laws, which reveals an uncomfortable reality at the heart of the Government’s strategy: no matter how much they might claim that Brexit means Brexit and that we can shirk our obligations, we know that the continuing harmonisation of laws and rules will continue within the European Union, and that, over the course of our future relationship with the European Union and with any future trade agreement with any third party, there will always be compromise, choices, trade-offs, harmonisation, agreement to abide by the same rules, and a mechanism for dispute regulation.
I certainly do not wish to re-fight the battles of the past. As I have already said, we accept that this question is settled. We have left the European Union. The only question now is about our future relationship. However, in the same way that the Government have recognised, through the clause, that we have obligations to meet, and that doing so is in the interests of businesses here in the UK—as a principle, it does not apply only to businesses, but in this case we are talking about the capital gains tax relief that will benefit different types of businesses—it is important that we acknowledge that, in our future relationship, there may well be instances in which it is in our national interest to align with the European Union, or to persuade the European Union to align with us.
Going back to my previous remarks, it seems to me that there has been far too much dogma in the debate, and far too much emphasis on demonstrating, in a robust and visible way, that we have left, almost as though divergence is a point of principle and a good in and of itself. There may be opportunities and occasions on which my Opposition colleagues and I might see divergence from a particular approach taken by the European Union as an opportunity presented by Brexit, and there may be occasions, particularly in the context of debating our domestic tax affairs and economic policies, in which opportunities might present themselves, and we might propose courses of action that otherwise might not have been possible as members of the European Union. However, there will be occasions when alignment with the European Union and its approach is in our national interest, and the Government should be brave enough to say so.
I think that most people in this country, whether they voted leave or remain, would accept that there are lots of occasions when a deep partnership with the European Union would be in our interest. Indeed, reflecting on the conversations that we had during the referendum and since, it seems to me that one of the least concerns that people had about the European Union was the notion that we had an economic partnership. My constituency split pretty much down the middle on Brexit, so I have the opportunity to speak to people who voted leave and remain all the time, which I find insightful, instructive and enriching. I find that, when people reflect back on our membership of the European Union, one of their least concerns was about the economic relationship and the notion that it was a free-trade bloc and a trading partnership. In fact, one complaint that I got from lots of leave voters who were voting leave because of concerns about sovereignty is that it had become too much of a political project and not so much an economic one.
I hope that, as the Government scope out their policies, and as the Treasury seeks to influence other Departments and to restore some sense of reality and grounding in some of the economic considerations of our future relationship, people right across Government bear that in mind, and that we do not end up cutting off our nose to spite our face. This country already had a number of underlying structural problems with our economy that we needed to address—slow growth over the last decade, weak productivity and the extent to which our country is divided, not only in the economic gap between the wealthiest and poorest but in the regional, place-based economic inequalities across our country.
There are lots of issues for us to deal with, but I fear that our job is being made even harder by the covid-19 crisis and its obvious impact, and I fear that the job of tackling those problems will be made harder still if we make unwise decisions about our future relationship based on political and ideological dogma, rather than on the economic considerations. I hope that message will be taken back to the Treasury.
Jesse Norman
I am keenly aware of the 11 o’clock minute’s silence, and I wish to respect that, so I will keep my remarks short. The hon. Gentleman will be aware that my consideration of the EU in my speech was probably 40% to 45%, rather than a concluding thought. I am glad he recognises that opportunities will emerge after we have left the EU, and I am sure he is right that there will be cases in which we should wish to align with it on a sovereign basis.
The Chair
Order. At 11 o’clock, I will suspend the sitting for a minute’s silence. The bell will ring at that point. I propose we do not proceed with any further discussions until after the minute’s silence. Please be upstanding.
Immigration and Social Security Co-ordination (EU Withdrawal) Bill (First sitting)
Tuesday 9th June 2020
(3 years, 10 months ago)
Public Bill CommitteesRead Full debate Immigration and Social Security Co-ordination (EU Withdrawal) Act 2020 View all Immigration and Social Security Co-ordination (EU Withdrawal) Act 2020 Debates Read Hansard Text Read Debate Ministerial Extracts Amendment Paper: Public Bill Committee Amendments as at 9 June 2020 - (9 Jun 2020)
The Chair
Before we begin, I have a few preliminary points. Members should switch off any electronic devices or switch them to silent. As in all Bill Committees, tea and coffee are not allowed during sittings. Obviously, I must stress the importance of social distancing in the Committee Room. I will suspend proceedings if at any point I am not satisfied that advice on public health is being observed.
The Hansard reporters would be most grateful if Members could email any electronic copies of their speaking notes to hochansardnotes@parliament.uk.
We will first consider the programme motion. We will then consider a motion to enable the reporting of written evidence for publication and a motion to allow us to deliberate in private about our questions before the evidence session. If there are any questions about our unusual procedure because of social distancing during that session, we can deal with them then. In view of the limited time available, I hope we can take these matters without too much debate. At 11 o’clock, there will be a minute’s silence in memory of the death of George Floyd.
I call the Minister to move the programme motion, which was agreed at the Programming Sub-Committee yesterday.
The Parliamentary Under-Secretary of State for the Home Department (Kevin Foster)
I beg to move, Date Time Witness Tuesday 9 June Until no later than 10.20am Federation of Small Businesses; London Chamber of Commerce and Industry Tuesday 9 June Until no later than 10.50am The Confederation of British Industry; Make UK Tuesday 9 June Until no later than 11.25am The Migration Advisory Committee Tuesday 9 June Until no later than 2.40pm British in Europe; Professor Bernard Ryan Tuesday 9 June Until no later than 3.20pm British Future; Policy Exchange Tuesday 9 June Until no later than 4.00pm Detention Action; Immigration Law Practitioners’ Association Tuesday 9 June Until no later than 4.30pm the3million; The Children’s Society Tuesday 9 June Until no later than 5.00pm Fragomen LLP; No.5 Barristers’ Chambers
That—
(1) the Committee shall (in addition to its first meeting at 9.25am on Tuesday 9 June meet—
(a) at 2.00pm on Tuesday 9 June;
(b) at 11.30am and 2.00pm on Thursday 11 June;
(c) at 9.25am and 2.00pm on Tuesday 16 June;
(d) at 11.30am and 2.00pm on Thursday 18 June;
(e) at 9.25am and 2.00pm on Tuesday 23 June;
(2) the Committee shall hear oral evidence in accordance with the following Table:
(3) proceedings on consideration of the Bill in Committee shall be taken in the following order: Clause 1, Schedule 1, Clauses 2 to 5, Schedules 2 and 3, Clauses 6 to 9, New Clauses, New Schedules, remaining proceedings on the Bill;
(4) the proceedings shall (so far as not previously concluded) be brought to a conclusion at 5.00pm on Thursday 25 June.
It is a pleasure to serve under your chairmanship, Mr Stringer. I welcome my shadows, the hon. Members for Halifax and for Cumbernauld, Kilsyth and Kirkintilloch East, to the Committee.
Question put and agreed to.
Resolved,
That, subject to the discretion of the Chair, any written evidence received by the Committee shall be reported to the House for publication.—(Kevin Foster.)
The Chair
Copies of written evidence that the Committee receives will be made available in the Committee Room.
Resolved,
That, at this and any subsequent meeting at which oral evidence is to be heard, the Committee shall sit in private until the witnesses are admitted.—(Kevin Foster.)
The Chair
We will now hear oral evidence from a representative of the Federation of Small Businesses, who is attending by audio link, and from a representative of the London Chamber of Commerce and Industry, who is with us in the room. I welcome our witnesses and thank them for appearing today. Before calling the first Member to ask the first question, I remind all Members that questions should be limited to matters within the scope of the Bill, and that we must stick to the timings in the programme motion that the Committee agreed earlier. We have until 10.20 am. Before we get to the questions, perhaps the witnesses could introduce themselves.
Kate Green (Stretford and Urmston) (Lab)
On a point of order, Mr Stringer. May I first draw the Committee’s attention to my entry in the Register of Members’ Financial Interests in relation to financial support that I receive in my office for work on immigration policy?
The Chair
Thank you. Richard Burge, please introduce yourself.
Richard Burge: Thank you very much. My name is Richard Burge. I am the chief executive—fairly recent—of the London Chamber of Commerce and Industry.
Martin McTague: I am Martin McTague. I am the chair of policy and advocacy for the FSB in the UK.
Kevin Foster
Q
Richard Burge: With difficulty. The obvious difficulty they have is that they are surrounded by chaos at the moment. Many small businesses have furloughed a large number of members of staff, or they are operating on their own. They have only so much bandwidth, so this will be hard work for them, particularly as they do not know what the rules will be. If they employ EU citizens, their concern is that they will now be introduced to the world of having to register themselves and get themselves licensed, which, like customs documentation, is a completely new world for them, and they have six months to do it.
Martin McTague: Sorry, I could not hear that question very well. Could you repeat it? You are very echoey and quite distant.
The Chair
Just before you do, Minister, it would be helpful if when asking questions, Members said who they were directing the question to.
Kevin Foster
Q
Martin McTague: I just about got that; I think it was a question about small businesses’ experience of immigration. The reality is that 95% of small businesses have absolutely no experience of dealing with any kind of visa system, and the system has been largely designed for larger businesses with reasonably sophisticated HR resources. We have found that the biggest concentration of issues is to do with mid-skilled occupations; in other words, the debate tends to be very binary. It either refers to high-skilled and very sophisticated employment requirements or completely low-skilled ones, but there are a lot of mid-skilled positions that fall within the £20,000 to £30,000 bracket, and those are the ones that cause the most problems for small businesses in the UK.
Kevin Foster
Q
Martin McTague: I assume that was to me, was it?
Kevin Foster
My question to Mr Burgh is about the fact that he talked about the process of sponsorship and becoming licensed. He may be aware that the Home Office is looking to streamline that system. Is there a particular change, or changes, he thinks we could make to the sponsorship licensing system that would help address some of the concerns he outlined?
Martin McTague: [Inaudible] it is welcome. It is a change that we were keen to see, and there has been a welcome change in the Government’s approach.
Richard Burge: To add to that, first of all, I have great admiration for the Home Office team working on this. I have worked for Matthew Rycroft before, in the Foreign Office, and he is one of the most talented managers in the public service. I think umbrella licensing is a good idea: it has good precedents, and it would create a huge relief for small businesses if they felt they could go to an organisation that had the ability to provide umbrella licensing. It would provide reassurance to the Home Office and a workable solution for small businesses, and we would be happy to be part of that process.
Holly Lynch (Halifax) (Lab)
Q
Richard Burge: In two ways. One is relief that the threshold was lowered; it is now a much more realistic threshold. I have to say, though, that it is going to be a lot more workable within London than it is for my colleagues who run chambers in other parts of the country. A threshold of £25,600 is quite high in different parts of the UK, given the wage levels there, so while I think it is workable in London—not ideal, but workable—I also think we concentrate on income too much as an indicator of value, rather than skills, and that in parts of the country, the threshold is still probably too high.
Holly Lynch
Q
Martin McTague: There has been a broad welcome for that change. I think there was a strong feeling that the previously suggested £30,000 threshold was going to be far too high, so £25,600 is a really good move in the right direction. We actually think it should be lower, because there are quite a few jobs, especially in the care sector, that pay less than £25,600. That is why we have called for a care sector visa, because we think the requirements of that sector will always be uniquely different from most of the rest of the economy. However, the move to £25,600 is definitely welcome.
Holly Lynch
Q
Richard Burge: It would be quite complex. It would be a move away from worrying about what people are paid to worrying about their skills. Skills are not necessarily measured by qualifications, so we welcome the reduction down to A-level standard. However, for instance, you could look at a small coffee shop, where you pay with your credit card. No accountant, bookkeeper or partner in an audit company is physically involved in your paying your money and it appearing in the annual accounts of that company, but you still need a barista to serve your coffee, so the question is: what matters now—is it skills and competence, or is it qualifications and what you happen to be paid? I would like to see that change.
Martin McTague: The biggest thing for us is the bureaucracy of this system. We estimate that a typical business with fewer than 50 employees will probably have to spend about £3,000 per employee to get through this tier 2 process. That is made up of a whole series of different costs. The biggest obstacles to recruiting somebody through this system are simply the cost and the time required to do it. Many businesses that traditionally recruit on the open market and have never gone anywhere near this kind of tier 2 system will find it very off-putting, and may just constrain their ambitions and avoid doing it completely.
Mr Robert Goodwill (Scarborough and Whitby) (Con)
Q
Martin McTague: I can see that there will be more incentive to look for indigenous employees, but the reality is that a lot of the shake-out, or the potential shake-out, that we are hearing is likely to happen will be among the least-skilled people. Companies are going to enormous lengths to try to hang on to the rare skills that they have. If they have managed to recruit somebody from, say, the European Union, they are going to enormous lengths to try to get them to apply for settled status and to reassure them about the covid situation. I do not think that a new influx of unemployed people, many of whom will have poor skills, will solve a lot of the problems for these companies.
Richard Burge: From a London point of view, I think the jury is out, literally. I do not think we really know what to expect as we come out of covid-19. The critical thing for London, and probably for all metropolitan areas, is the mobility of people, and the willingness of people to be physically mobile to go and find new work, possibly earning less than they were earning before. However, it is also about emotional mobility, too. Are people emotionally prepared to go and do new work, taking completely new tangents in their lives and probably earning less? That will be a real challenge. I think there will be greater opportunities, but not necessarily in a career path that people might have been expecting.
Stuart C. McDonald (Cumbernauld, Kilsyth and Kirkintilloch East) (SNP)
Q
Richard Burge: I think it is inevitable that it is going to be more difficult for people from the European Union; that is the consequence of leaving the European Union and not having an immigration policy for people from there. It is no longer an internal market; it is now a normal external market.
I think what we need to do is to make the red tape manageable. I think part of that is umbrella licensing. Part of that will be border clearance that is rapid and smooth, so it needs to be digitised and there needs to be e-clearance, and that also means that it cannot get cluttered up with tourism. We hope that everyone from the European Union will be able to come without a visa and not get caught in that process. Part of this process is the mechanism, and I think that one of the big challenges for the Home Office is to ensure that, while there may be more bureaucracy, it tries to make that process as smooth and as digitised as possible, and that is going to be a big ask before 1 January.
Martin McTague: I am really sorry; I can barely hear the conversation. Is there anybody closer to the microphone who could just repeat the essence of that question for me?
Stuart C. McDonald
Q
Martin McTague: I got the essence of your question. Most small businesses treated EU nationals just as part of the pool of labour; they would not even question where they originated, and it was just a very simple recruitment process. I think that the additional costs will act as a disincentive, but more importantly it is quite hard to persuade a lot of EU employees to stay in the country. They are leaving, and they are leaving with the kind of skills that are in really short supply.
Stuart C. McDonald
Q
Richard Burge: If I may start with that, certainly from a London Chamber point of view, and I think from the point of view of all my colleagues around the country, it was hugely disappointing to see that disappear completely from the Bill this time. It was a very sensible scheme. I think it demonstrated flexibility and a willingness to try to respond to helping people get through what will be a permanent change in the market. It is very sad to see it go. We would like to see the route for lower-paid workers—lower-skilled workers—being reintroduced in the same way as it was under the previous Prime Minister’s Government.
Martin McTague: I think I picked that up. We were disappointed to see the disappearance of the 12-month scheme; we thought that was addressing an important part of the labour market, and it is regrettable that it disappeared. Hopefully something can be done to implement something similar.
Mr Richard Holden (North West Durham) (Con)
Q
Richard Burge: It is helpful, because it is creating bigger diversity in terms of availability and access to labour. I think most small businesses, though, or any business will be keen to employ UK-based labour if they can. That is simpler and easier. In the end you do need to have access to global markets. We have to remember that we are a globally trading nation and, in the 21st century, trading tends to be in the skills of individuals and their brainpower and abilities. It is mostly about people rather than things, although we tend to focus on trade as being about things rather than people. The more we can do to keep our borders—within the Government’s requirements in terms of immigration for other purposes, social purposes—as open to people for work as they are for goods and services, the better.
Kate Green
Q
Richard Burge: They are hugely important, particularly when you are talking about people whose skills are valued less in the marketplace of wages than those of others, so any complexity to that will be a disincentive to employment. I would ask that whatever we do in terms of social security payments and pension provision, we try to make that as simple as possible. They are potentially a huge attractant.
Kate Green
Q
Richard Burge: The first community I would like to talk about is overseas graduates who graduate from British universities. What the current Government have done to release the block on people who graduate from British universities and come from overseas being able to work is a hugely positive step, enabling people who have been to university here to stay on and work for a year. That is hugely encouraging and hugely exciting, and I think most businesses will be enthusiastic about trying to pick up that market.
In terms of people coming from overseas universities and institutions, I think it is very important that we move ahead on equivalence of qualifications—the transferability of people’s qualifications—particularly in vocational skills. I think we have to streamline that. Obviously, we have to make sure, particularly when they are in life-governing professions like medicine, that those qualifications are rigorously examined, but the more we can move towards a universality of qualifications between like-minded countries, the better. That will help hugely as well, and I think we in the UK should be leading on it. We have the best universities in the world and therefore it is in our interests to make sure we have inter-transferability of those higher-level qualifications.
Kate Green
Q
Martin McTague: I think the key is trying to make sure that graduates or undergraduates are attracted to UK universities, because once they are in that pool of the immediately graduating, they become a much more attractive group for small businesses in particular. It seems that a lot of the barriers that have been put up and are going to restrict the entry of undergraduates are the biggest worry for a lot of small businesses, because they think that therefore they will not have that pool of very skilled labour to draw on.
Mr Goodwill
Q
Richard Burge: The answer is that I don’t really know. A lot of companies that are already established in places such as Japan will find it easier; for the ones that have operations elsewhere in Europe, this will be a new world. This also comes down to the Home Office being flexible and agile in terms of making sure that we assume positive intent on the part of companies—that they are not getting people into Britain secretly to do full-time work, but that they are in fact part of the transferable market within their company.
We need to address that. It will be complicated, but there are precedents in companies outside the EU, so I think we will use that as an example. It will be more difficult for smaller companies. Increasingly, we find that international companies in London are actually quite small; they are not huge operations. You can find yourself to be an international company in London by dint of the first order put on your website, whereas in the old days you would have spent 20 years developing a domestic market and then you would move internationally. Smaller companies might find themselves potentially hostage to this without realising it. So yes, complex.
The Chair
I remind hon. Members of the scope of the Bill, which is EEA nationals, EU nationals and Swiss nationals, not the rest of the globe.
Mr Goodwill
Q
Richard Burge: I don’t know. We will look at that and provide you with some written advice on it.
Dame Diana Johnson (Kingston upon Hull North) (Lab)
I wanted to ask a follow-up to the question of the shadow Minister, my hon. Friend the Member for Halifax, about the income threshold. In some answers, we have heard about the effect that that might have on particular sectors, such as the care sector. Will you both say more about the regional impact of the provisions of the Bill? Do you have particular concerns for the regions? I understand that Richard Burge is speaking for the London Chamber of Commerce, but I am interested in what other chambers of commerce around the country might be thinking.
Martin McTague: We have made it clear that we think—if I heard the question correctly—that the care sector is a special case and should have a separate visa arrangement, because it does not fit neatly into any of the categories that we might like to define under normal immigration rules. It is clear from the experience that we have had over the last few months that this sector is under massive pressure. Any major changes would be disastrous.
Richard Burge: I would agree to the extent that I think that the care sector is a special case, but we need to make sure that the definition of the care sector—in terms of immigration—runs alongside what I hope is emerging in the Department of Health, which is a much closer definition of what care is, bringing it in. Certainly, the Health Secretary has been trying to say that care is as important as the NHS, so I think that it needs much more careful definition.
In terms of the regional perspective, we are a country of many parts. For instance, on the lower wage threshold, I am deeply worried that, particularly in essential services—care being among them, but also things such as porterage in hospitals—in many parts of the country this is not a sufficiently low level of wage to enable us to get people in who technically have lower skills but are in high demand. There needs to be a more nuanced approach to this in order to respond to the different economic circumstances in different parts of the country. My colleagues in other chambers think that I am quite fortunate being in London, where this wage level will get us through most of our problems but will not get them through theirs.
Dame Diana Johnson
Q
Martin McTague: The short answer is that the time available is far too little for most small businesses to adjust to what is a completely alien system. It is relatively easy for the larger businesses with HR departments to make this adjustment. They may already be recruiting tier 2 employees, but for most small businesses it will be extremely difficult and costly. I think that all it will mean is that most of them will decide to scale back their operations and make sure that they adapt to a new world that has fewer skilled people.
Richard Burge: My view is that most small businesses will be able to get through this, if they know the rules soon enough, if there is a process by which they can use umbrella licensing, and providing that new systems are put in place by the Home Office. I think that is the critical thing. As I said, I have huge respect for the Home Office under the leadership of Matthew Rycroft and his team, but they are dealing with things such as covid-19 issues on immigration, refugees arriving over the channel, the situation in Hong Kong, and the immigration surcharge. They have a huge job list to do—and this is the only one in which they have a choice about the timing. I hope that the Home Secretary will be looking internally at the Home Office and its capability to deliver things that will then enable business to respond in a timely manner. I am concerned about the pressure being put on them.
Stuart C. McDonald
Q
Richard Burge: It is slow and unwieldy and should be faster. One way of improving that is to involve businesses much more directly in analysing what a shortage occupation should be. We can rely on businesses who are asked to join, say, an industry body, to work alongside the Migration Advisory Committee on that work. We can rely on them to be forthright but not to plead special interest. It needs to involve business much more directly and that, it is hoped, will enable it to be much more responsive to the marketplace. The marketplace is going to change very dramatically over the next 12, 18 or 24 months, and we do not really know how it is going to change, so we have to be light of foot.
Stuart C. McDonald
Q
The Chair
We seem to have a technical problem. While we are trying to sort that out, are there any questions to Mr Burge?
Stuart C. McDonald
Q
Richard Burge: It is up to you in this House to decide how you use legislation to maintain scrutiny of Government. We would ask that, whatever means are chosen—through primary legislation or regulation—it is done in a transparent way and involves us. Instead of us in business being told what is happening, we should be involved in those discussions and make them as transparent as possible. As far as I can see, employment and immigration are not a national security issue; it could be discussed much more openly and transparently. We can resolve differences through public dialogue rather than through private discussion.
The Chair
May I just check that Mr McTague is there? Apparently, he is not. We will try to get him back.
Douglas Ross (Moray) (Con)
Q
Richard Burge: Just quickly, there is a thing called the British Chamber of Commerce, which is a hub body.
Douglas Ross
Q
Richard Burge: No, but individual chambers—the 53 member chambers across the UK—are members.
Douglas Ross
Q
Richard Burge: That is right. There are 53 accredited chambers.
Douglas Ross
Q
Richard Burge: No.
The Chair
Do we have Mr McTague?
Martin McTague: Yes, I am here. Sorry, the line dropped.
Stuart C. McDonald
Q
Martin McTague: The principle of the shortage occupation list is a difficult one for us, because it is a fast-moving situation and the shortage occupations can change from week to week and from month to month. It is better for them to be in a general category, but it is rather bureaucratic and clunky. It is a situation that we are prepared to stomach rather than appreciate.
Stuart C. McDonald
Q
Martin McTague: Sorry, I could not quite hear that.
Stuart C. McDonald
What improvements would you want to make to the procedure?
Martin McTague: I would like to see a much more active engagement with business representative organisations so that, if there are changes, they can be quickly implemented and we are not waiting for a long, drawn-out bureaucratic process to work its way through the system. It is about keeping as much flexibility in the system as possible.
Stuart C. McDonald
Q
Martin McTague: I am really sorry, I can barely hear you. It is echoing and distant. Could someone closer to the mic help me?
Stuart C. McDonald
Q
Martin McTague: I think the fact that the Home Secretary is in a position to vary it and respond to changes in market conditions is better than if it was written on the face of the Bill and we had to go through some sort of legislative process to get changes made. In terms of flexibility, my vote is for the most flexible system we can adopt.
Stuart C. McDonald
Q
Martin McTague: Sorry, can you say that again.
Stuart C. McDonald
Flexibility does not mean that you cannot have parliamentary oversight, does it?
Martin McTague: No, it is not that. I think the Home Secretary will be answerable to Parliament about the decisions that she or he has made. That would be a way in which Parliament could ensure there was proper scrutiny. There needs to be a system that can respond in real time to some of the really big changes in market conditions. They will be even more marked in the coming months.
Stuart C. McDonald
Q
Martin McTague: I’m sorry, I am struggling to hear you.
The Chair
If there are no further questions, I thank Mr Burge and Mr McTague. These are not ideal conditions, but thank you for giving us valuable evidence this morning.
Martin McTague: Thank you for bearing with me.
The Chair
Good morning, Mr Fell. The Bill Committee will now hear your oral evidence. I am sorry about the technical hitches; you will be on your own, not with Make UK.
Thank you very much for agreeing to give evidence today. If you would like to briefly introduce yourself, we can move straight to questions. We have about 10 minutes.
Matthew Fell: I am Matthew Fell, chief policy director at the CBI.
Kevin Foster
Q
Matthew Fell: I think our members completely understand that free movement of people is ending. Business gets that, and it is ready to phase into a new immigration system. I think, with the proposed approach of a points-based system, it is entirely possible to design a system that works for business. There are many positives in it so far—the headline salary threshold changes that have been announced and the commitment to streamline and improve the system are all positives—but I would say that there are perhaps three areas of concern for our members at the moment.
One concern is the absence of any route at all below level 3, which will prove challenging for the care, hospitality and logistics sectors and so on. The second, from the Government’s perspective, is introducing this with a phased approach; I can perfectly see where they are coming from, but it means that business will be left with a reasonably cumbersome system from the off, with a promise of improvements to come. The third is that we are getting very close to the deadline for the system being introduced, and business is still looking for further clarity, time to prepare and assurances that the system will be ready in time. Those are the concerns, against a backdrop of an effort to really make this work and lean into it.
Holly Lynch (Halifax) (Lab)
Q
Matthew Fell: There are a few things that we would like to see in the proposed new immigration system. We believe that a temporary route for people to come and work in this country would be a helpful addition to the system as it is currently set up.
Secondly, I would say to accelerate efforts to streamline the proposed approach. The vast majority of businesses have never previously had to engage with the visa system; something like only 30,000 businesses in the country have grappled with it so far, because we have lived and worked with free movement of people for so long. It will be a big change, so I would say to accelerate the changes to streamline and improve the system, reduce red tape and so on.
The final piece, just to reiterate, is to accelerate efforts to get clarity and detail out there and known to businesses as soon as possible, so they can begin to familiarise themselves, prepare and get ready.
Stuart C. McDonald
Q
“restrictive, complex and burdensome system.”––[Official Report, Immigration and Social Security Co-Ordination (EU Withdrawal) Public Bill Committee, 12 February 2019; c. 67, Q178.]
Could you say a little more about what you mean by that?
Matthew Fell: There are a couple of areas. It comes down to some of the red tape issues, and there are a few examples. The initial sponsor licence, businesses tell us, is very document-heavy, in their words—for example, on the HR practices side, having to evidence, track and monitor things that small businesses feel are perfectly obvious. If they employ 10 or up to 20 people and one person is missing, that is self-evident; they know if a person is not there.
There is quite a lot in the reporting requirements that could be streamlined. Lots of people say to us, “We have to report it if a migrant’s pay has increased, and we don’t quite understand why. If they were already given the green light because they cleared the salary threshold, why would we need to report that that has increased?”
Thirdly, people feel that the volume of documentation required to be kept on file, including details such as notes from interviewing candidates, is quite onerous. Those are some of the examples of red tape burdens that we would welcome efforts to streamline.
Stuart C. McDonald
Q
Matthew Fell: There will be a significant uplift in cost, particularly for businesses that have never grappled with this before. There is an ongoing cost, but there is also a first-time familiarisation effort that will cost more, particularly for small businesses. Larger companies who deal with high volumes of people are likely to have in-house HR and legal expertise. That is much less likely to be the case for small and medium-sized businesses, who will need to pay for external advice to be able to navigate this new system.
Stuart C. McDonald
Q
Matthew Fell: That is an issue. It is an issue that companies will look at, for example, if they were a multinational business and they were choosing the location of business, so it is true from a business perspective. From the employee perspective, it might be down to the speed with which they can get certainty—“Can I go and live there and know that it is okay?” Clearly, there are others who would speak more for the employee perspective, but that would be my perspective on the employee view.
Kate Green
Q
Matthew Fell: I think it is an important factor. It is quite hard to say exactly where the detail of that lands, particularly in the context of the EU-UK negotiations that are ongoing; we will need to see where they land. Social security measures and the issues that you have just described are really important for reciprocity—not just migrants coming to work in the UK, but UK workers overseas—and that reciprocity is particularly important for mobility of labour as well as for migrants coming to work in the UK.
Kate Green
Q
Matthew Fell: I think that bringing the skill threshold in the Bill down from degree to A-level is a positive change. That is a highly positive move that the CBI supported and which clearly broadens out the range of roles that can be addressed through that route. The issues are less about whether they can clear a threshold in terms of the work; they are more about the system costs and streamlining the red tape that I was describing. That is what would be most helpful.
Of course, even with that skills threshold reduced down to level 3 or A-level equivalent, that still leaves out many important roles for which businesses will find the transition and the adjustments quite hard to address in the short term.
Dame Diana Johnson
Q
Matthew Fell: The regional implications will be down to where there is a particular proliferation of types of sectors within a regional make-up. Some of the ones that we think are quite hard hit are care workers, general labourers in construction and the hospitality sector, as well as logistics. Hospitality is very much a regional industry, and that could be one that bears most of the brunt.
The Chair
Mr Fell, thank you very much for giving evidence to us. We found that very valuable. I am sorry about the technical difficulties we had getting through to you. We now move to our next witness.
Examination of Witness
The Chair
Welcome to the Committee. I apologise for the difficulties we had before. You will be on your own. First, can you introduce yourself to the Committee for the record, and then I will ask the Minister to ask you a question?
Tim Thomas: My name is Tim Thomas. I work for Make UK, the manufacturers’ organisation. I am Make UK’s director of employment and skills policy, so I cover all work-related issues and a few political issues, including immigration policy.
Kevin Foster
Q
Tim Thomas: Sorry, could you just repeat that? It was a bit echoey. Apologies for the line.
Kevin Foster
I will say it slowly; it will sound weird. How do you see the manufacturing sector working with the new system?
Tim Thomas: In terms of how the manufacturing sector will work with the new system, it will be a considerable challenge to cope with the end of free movement. Around 95% of our members employ an EU worker and about 5% employ a non-EU worker, so the majority of Make UK members do not currently interface with the tier 2 non-EU migration system. There will be a considerable change for manufacturers’ recruitment practices with the implementation of the points system.
It is fair to say that the changes to the proposed points-based system for manufacturers will ease the route. The reduction in the qualification level from level 6 to level 3 and the reduction in the salary threshold will make things easier for manufacturers than they would be. However, manufacturing is a global business; about half of manufacturing exports go to the European Union, and they cannot export their British-manufactured goods to the EU without an exchange of people. People, and the cross-fertilisation of people between the UK and the EU, go hand in hand with trade in manufactured goods. There is a strong connection with the EU and global trade in the manufacturing sector, and the ability to recruit people from outside the UK is vital to that trade.
Holly Lynch
Q
Tim Thomas: At Make UK, we have responded over several years to calls for evidence from the Migration Advisory Committee, and we are preparing our response to the current call for evidence. If I may make one point before I come to your question, the call for evidence from the MAC has a very short window for Make UK and other organisations to respond. That is because the points-based system is being implemented on a very truncated timeline. In gathering the evidence for the MAC, Make UK and other organisations face a stiff challenge in ensuring that our response is evidence-based and provides a realistic forward look at the manufacturing sector and the jobs we will need in the future.
As for how realistic the MAC can be in its work and how realistic we can be, covid-19, the changes to the manufacturing sector and the difficulties it is in have presented a challenge in showing the MAC the true state of what occupations are in shortage in our sector at the moment. The manufacturing sector systemically suffers from long-term skills shortages—we are no different from any other western European economy in that regard—and that is not because manufacturers do not train. About 75% of manufacturers have apprenticeship programmes, and Make UK is an apprenticeship provider. We are investing in training the next generation of talent, but the fact is that there are certain skills, including digital skills, that are not available in the UK, and we need them to make sure the manufacturing sector is internationally competitive and productive. In terms of the work of the MAC, it needs to take a realistic view of what the UK labour market can provide, given those skills shortages and how long it will take it to adjust at the end of free movement, given that those skills can be brought in through the points-based system.
There are some key elements of the manufacturing sector for which workers tend to come from the European Union. One is new green technology. We all support the move away from an economy in which electricity generation is carbon-based, towards clean energy. Clean energy is something that our members are investing large amounts of resource in. A lot of those skills, simply because the technology has been deployed for longer in the European Union, exist in, for example, Germany and Denmark to a greater extent than they exist in the UK. Accessing those green skills—those environmentally friendly skills—and that new technology is something that most people would support. We just need to make sure the MAC captures the fact that those skills are in shortage in the UK at the moment.
The Chair
We have very limited time, and three Members are indicating that they wish to ask questions, so please make the questions and answers brief.
Angela Richardson (Guildford) (Con)
Q
Tim Thomas: With great apologies, I could not catch much of the question. Could you repeat it? Is it possible to come closer to the microphone?
Angela Richardson
In your first answer you said that 95% of workers in production are EU nationals. What percentage of that are UK workers?
Tim Thomas: Apologies—what I said was that 95% of our members employ an EU worker. Across the whole of the sector, we employ between 2.7 million and 2.9 million workers, of whom about 330,000 are EU workers.
Stuart C. McDonald
Q
Tim Thomas: I think that would simply lead to more uncertainty among manufacturers. We expect the UK Government to implement the new points-based system on the timeline that they guaranteed, and to provide businesses with the full suite of material—the statutory instruments and guidance—by the end of the summer at the latest so that we have a significant period to familiarise ourselves with it before January. If we delayed implementation, that would cause more uncertainty among businesses. Clearly, we need time to adjust and to see what the new system is. However, we naturally do not want a delay to the implementation date.
Mr Goodwill
Q
Tim Thomas: I understand the point that you are making, but our issue is with the type of skills that we need. I mentioned green skills, and we also need digital skills. We need a range of skills that are not available in the UK labour market. We are training domestic UK workers for them, but in the meantime there is a skills mismatch between what employers need and what is available in the UK labour market. There may be some mitigation, but I would say that we are still going to need non-UK workers for the foreseeable future, until we develop those skills in the domestic labour market.
The Chair
Mr Thomas, thank you very much for the full evidence that you have given. It is valuable and I am sorry about the technical difficulties that we had in getting through to you.
Tim Thomas: Not at all. Thank you for your time.
The Chair
We shall now hear oral evidence from the Migration Advisory Committee. May I take this opportunity, while the witness is coming in, to remind hon. Members about the scope of the Bill. It does not encompass a points system. I did not want to interrupt the previous witness, given the problems that we have had, but perhaps we can remember the scope of the Bill.
Examination of witness
Brian Bell gave evidence.
The Chair
Mr Bell, thank you very much for coming today. I remind members of the Committee that at 11 o’clock the bell will ring and there will be a minute’s silence for George Floyd. We will stand for that minute. Would you like to introduce yourself, Mr Bell, for the benefit of the record?
Brian Bell: I am Professor Brian Bell. I am the interim chair of the Migration Advisory Committee and professor of economics at King’s College London.
Kevin Foster
Q
Brian Bell: If you move to a system in which you take control of immigration and are no longer subject to free movement under the European Union, you essentially have to have a selective immigration policy, and the question is where you think that selectivity should be. All the evidence that the committee reviewed in its 2018 report pointed to the benefits to the United Kingdom being highest when we focused on high-skill immigration—often high-wage immigration—and the gains, to the economy as a whole and also the resident population, which is our key metric, as it were, being highest with those kinds of workers. If you are going to have any kind of selectivity, that is where you want to tilt the balance, as it were.
That does not necessarily mean that you do not have any access to workers at low wages and with lower training or educational requirements. There are other routes that are already available within the system for immigration. For example, the family route allows you to recruit people who come through the family route for immigration, and there is the asylum route—once applicants are granted asylum they can be employed in the United Kingdom without regard to their skill level. There are alternative routes, and in fact that is extremely common. There are an awful lot of non-EEA workers employed in British firms across sectors who would not meet the requirements of the new immigration system but still have a job because they can come through different routes.
At the end of the day, there is a crucial distinction that we draw. With jobs where the training requirement and the education, both academic and vocational, to begin that job are reasonably low, firms can actually compete against each other, and we sort of want firms to compete against each other for workers, because that is good for workers; whereas for more technical, highly skilled jobs with very high training requirements there is often a practical difficulty in getting a new supply if you need it. You cannot just turn on the tap, so migration is a more obvious response for that.
Kevin Foster
In terms of that general route for recruitment, the MAC made some specific comments on the care sector, again in the context of the Bill ending freedom of movement. It was very specific against a sectoral scheme. Could you explain some of the rationale for that?
Brian Bell: The first point to bear in mind when thinking about the social care sector is that it is often described as being dependent on migrant workers. Nothing could be further from the truth. Something like 80% of those working in the social care sector are British, so actually it relies on British workers. The European Union is a relatively small fraction of the social care employment sector relative to the economy as a whole, accounting for about 5% of it, depending on which statistics are used.
We do not think there should be a particular route for social care because we think that immigration has historically been used as an excuse to not deal with the problems of the social care sector. The problems of the social care sector are fundamentally nothing to do with immigration. They are to do with the fact that, frankly, Governments of all stripes have failed to grasp the funding issue of social care. If people say that the response to the social care issue should be, “Well, employers should be allowed to bring in as many migrants as they want at the minimum wage,” first, that does not sound like the low-wage problem of the social care sector is being dealt with, and secondly it suggests that one of the groups that will really suffer from that is the social care workers. You are saying that you are going to keep on allowing their wages to be held down by allowing employers to bring in workers at the minimum wage, whereas we want to see wages rising in that sector. That will not happen if there is a continuous supply of free labour from abroad willing to work at the minimum wage.
Kevin Foster
Q
Brian Bell: The Migration Advisory Committee has a key role in making sure that we keep a pretty constant view of what is happening across sectors, occupations and industries as the new system is rolled out, to see where problems are emerging. When you switch from a system that has been running for 40 years to a new one that incorporates all European Union countries as well, there will inevitably be teething problems. It would be surprising if that were not the case. We will be focussed on looking for the evidence: where is the system having problems? We will be highlighting those to the Government, and we can do that. We have an annual report that we will be publishing, and we will be highlighting to Ministers where the problems are, as well as potentially what solutions might be available.
Kevin Foster
Q
Brian Bell: We were asked explicitly to think about whether there should be regional variation in the salary thresholds that are a key part of the system. The easiest way to answer that is to think about the fact that the median wage in Edinburgh for a full-time worker is higher than it is in Newcastle, Manchester, Leeds, Birmingham, Cardiff and Belfast. Compared to Dumfries and Galloway, it is 25% higher. In other words, regional wage variation—if by that you mean either the nations of Britain or the regions of England—demonstrates that variation within those areas is much greater than variation across them. If you really wanted to go down that route, you would need an immigration system that set thresholds in every local community around Britain. I do not quite know how that would be enforced. You would be explicitly saying that low-wage areas should stay low-wage areas and that high-wage areas should stay high-wage areas. I am not sure that it is a very sensible policy.
Holly Lynch
Q
Brian Bell: I think I can answer that, hopefully. At the moment, the Migration Advisory Committee is being asked to report on the shortage occupation list for the new system. We will report in September and we are taking evidence at the moment. Senior care workers are eligible for the new system.
Holly Lynch
Q
Brian Bell: About 60% of the workforce are RQF3 and above. Again, in a sense it goes back to my first answer: if you are going to have a selective policy, you need to draw the line somewhere. To the extent that you say, “This sector should get an exemption,” you really need to say that what that means logically is that we are going to take away some of the other occupations and say they are not eligible any more, or we are going to make the system more liberal and expand the remit. In one sense that would be fine. Fundamentally, it is a political decision as to where you draw that line. You could have completely free movement for the entire world if you wanted it. No other country does that, but that is a choice. Our evidence was that if you are to draw that line favouring the higher paid and higher skilled, it is better for the UK economy and the public finances as well.
The one thing I can guarantee is that we will look carefully at what happens in social care going forward. To the extent that the system causes problems for them, we will report on that. There is not quite a knife edge. It is sometimes described as a knife edge, but it is not. Every single person who is a European Union citizen who is employed on 31 December will still be employed on 1 January. There is no requirement—the stock will stay the same. What will change will be the flow coming in. In the EU settlement scheme, some 3.5 million people have applied already.
Holly Lynch
Q
Brian Bell: Absolutely. If we identify an occupation that we think is in shortage, I consider that essentially a failure. You might not think it is a failure if there has been a big increase in demand for that sector, so the sector suddenly sees a large increase in the demand for its product. In the short run, there might be a shortage in terms of getting the appropriate labour for that—that is fine and makes sense—but often the shortage occupation list identifies a failure of the British education system to provide the people who are needed. A classic example of that is nurses. Nurses have been on the shortage occupation list since I can remember ever hearing of it. Every time they are put on the list, we hear statements along the lines of, “Yes, we know that they are in shortage, and we have a plan to increase the number of nurses who go through training so that we deal with the shortage in the long run.” They are still on the shortage occupation list. We should be using the shortage occupation list to signal both to Government and to employers that there are training needs that need to be fulfilled.
Mr Goodwill
Q
Brian Bell: The seasonal agricultural workers scheme is probably the only sectoral scheme that the MAC has recommended as a good idea. That is because it is truly unique. I think the statistic is that 99% of seasonal workers in agriculture are not from the UK, which makes sense. As it is directly seasonal, the job does not fit with people who live in the UK and who want a year-round job to make a living. Most countries have some type of seasonal workers scheme, and I would be surprised if there was any argument for why we would get rid of that. It is in a pilot at the moment; as I understand it, the pilot is going well.
Mr Goodwill
Q
Brian Bell: Actually, that is a good question. It would be a question for Government. If there is a seasonal workers scheme, and we have removed the special entitlement of European Union workers in terms of access, there is no reason why the seasonal workers scheme should not be open to people of any nationality, but that is a question for Government.
Mr Goodwill
Q
Brian Bell: One thing that we have done, which is particularly important for public finances, is think about different types of immigrants, such as a migrant who comes to the UK and then makes their home here. We often highlight how migrants in general are positive for public finances. When we see them before they get permanent leave to remain, they are often not bringing their family or they are only just forming a family unit, so they are not using public resources but they are paying in taxes. Once they have permanent leave to remain and either become British citizens or stay here permanently, they begin to cost the Exchequer because they tend to start using schools and the health service. From a purely public finance perspective, you would like migrants who just come, pay their taxes, do not use any of the resources and then leave. We have done that kind of analysis. We have done less analysis in thinking about the broader questions on what the benefits are to British society more generally of having migrants who come to the UK and stay for a long time.
Mr Goodwill
Q
Brian Bell: I certainly have not seen any evidence of that. It is a difficult one, because there has been a different rule up until this point in time. I have not seen any evidence that suggests European Union workers are more or less likely to stay on a long-term basis than non-EU workers. The data are not very good on that kind of thing, but it would be an interesting thing to look at.
Stuart C. McDonald
Q
Brian Bell: That is correct. Immigration is a reserved matter, so we were asked to report just on that.
Stuart C. McDonald
Q
Brian Bell: Yes, on the salary threshold.
Stuart C. McDonald
Q
Brian Bell: I agree it was certainly finely balanced, although there was an extensive discussion on the maths. It is fair to say that that was primarily driven by Northern Ireland. The differences in wages between Northern Ireland and the rest of the United Kingdom are more significant than in other devolved Administrations, and they had different issues because of the land border.
You are probably right that the majority of our respondents were in favour of it. That partly tells you that when you call for evidence, you get very interested parties on one side, and not many on the other. A classic example is that when we did our major report in 2018 on the impact of immigration from the European Union, we got some 450 responses, almost none of which were not in favour of freedom of movement. Almost all were kind of in favour, which did not properly reflect what the British people as a whole thought. That is the nature of a call for evidence.
Stuart C. McDonald
Q
Brian Bell: The reasoning was that we received reasonably strong evidence, not just from Scotland but from other areas, nations and regions of the United Kingdom, that there are rural communities that find it difficult to recruit in the way that employers can in more urban and suburban areas. Often those employers are key to that small community, so they are sometimes more important than your average employer in a big city. That was our thinking about that.
We suggested a small pilot—it is important to emphasise that we thought it should be a small pilot. Such a scheme has clear risks, two of which I suppose I should highlight. One is that you issue a visa to someone and say, “You have to stay in one small area, with one employer, and you cannot move, because it is a rural scheme.” We generally do not like the idea of saying to workers that they have to stay with one employer, because that gives the employer lots of power and does not give the worker much power. There is an uncomfortableness about that kind of scheme.
The second problem is our worry that it does not deal with why rural communities are losing population. As soon as you have this type of scheme, you might get an immigrant to go there, but as soon as they have freedom to move—for example, if they get permanent leave to remain and can go anywhere in the UK—if the reasons why people in those communities do not want to stay in the first place still exist, why would we not expect that migrant to move as well?
There are problems, but we recommend the scheme. As I understand it, the Government have not yet decided whether to have such a pilot or not. If I have to be honest, part of that is because an enormously complicated system is about to be introduced. You want to go in steps, so the Government are focused on the main work route at the moment.
Stuart C. McDonald
Q
Brian Bell: We did not go as far as that. We said that we thought the argument was most compelling in Northern Ireland, but in the end we did not think the differences were quite big enough to justify having the more complicated system.
Stuart C. McDonald
Q
Brian Bell: There is a clear difference because of the border. To be clear, the shortage occupation list that we are reporting on at the moment has the ability to have a Northern Ireland SOL that is separate from the UK-wide SOL. If there are representations made to us that there are particular recruitment problems in Northern Ireland in some occupations, that are not true for the UK as a whole, we have the ability to recommend to the Secretary of State that they be put on the Northern Ireland SOL but not on the UK-wide SOL, as is true of Scotland.
Kate Green
Q
Brian Bell: It is both a good question and a very difficult question to answer. If you look at social care as a good example of this, something like 15% of workers in social care are non-EEA born. They can’t have been employed by the social care sector through the work route, as the work route is not open to the social care sector until next year because it has been RQF6 and that has excluded almost all such workers. Fifteen per cent. of the workforce has come through some other route. That is quite a big pool. Whether it is fully used—to be honest, we have not looked at that. We can do, because we have data on that, in the sense that we can see, to a certain extent, what all the non-EEA people in Britain are doing. Using the labour force survey, we can ask the question, “If you were born outside the United Kingdom and you are non-EEA, what is your current status? Are you in employment, are you looking for work or are you inactive but potentially available for work?” That is an interesting question. The one thing we cannot do—it just so happens we do not collect the data—is look at the visa you came in on. It would be nice to see whether asylum seekers are different than family route. I encourage the Office for National Statistics to ask that question.
That is an interesting question to look at, and we would be happy to do that—to think about whether there is a ready supply, potentially, of workers who are not actively looking at the moment but who, historically, have moved. There are an awful lot of people who would say they are inactive in the labour force survey but who, a few months later, have a job. We could look at that.
Kate Green
Q
Brian Bell: We were. That was another difficult decision we had to make. The difficulty is the following: for the worker route, the system works where you are sponsored by a principal employer—a main sponsor for your job. The question, again, is, where you would draw the line if you said part-time work was acceptable? We were given representations by some firms that said, “Lots of our workers almost have a portfolio of jobs, and they might do a day here, a day there and a day here.” That fits very badly into the system, because you need one employer. Frankly, I don’t think Home Office enforcement would be enough to really follow through every single worker and say, “When you add up all your jobs together, are you earning a sufficient amount that you are not burdening the Exchequer?”, which is one of the criteria we are focused on.
The issue became, if we did something like, “If you are willing to work at least 16 hours,” would that be okay? In the end, we concluded that the fiscal costs were significantly higher for that type of worker than for a worker who would come on a full-time salary. In the end, if you are going to be selective, we did not think that was an area you would be selective of.
I should say that we were mindful of the fact that that disproportionately affects women rather than men. Part-time work is, of course, much higher among women than men. In the end, we did not find that strong enough because, although that is true, the gender patterns of migrants as a whole are not that dissimilar between the sexes.
One thing that we discussed, and left open for Ministers to think about, is that, at the moment, tier 2 is quite restrictive, in that, if someone takes maternity leave, they are sort of supposed to go back to the full-time job as soon as they finish that maternity leave. We said that consideration could be given to whether, once someone is on a visa, there could be some flexibility for people who have a child to go back part time, and for that to still count. I think that might be worth considering.
Dame Diana Johnson
Q
Brian Bell: I should say that, if they have green skills at RQF3 and above, they are eligible for the scheme, so they will be able to enter the UK on a visa, so long as the employer is sponsored and they are paid the minimum salary threshold. I am not sure why green skills should be any different from normal skills. If there is a qualification or experience required for that job, and the person meets those criteria, the scheme is open for them. The scheme is not open for people who are at RQF1 and 2, which are essentially the jobs that either require fairly low formal qualifications or for which the training requirement to get that job is not very long. If that is the case, my response would be that we can recruit from the UK domestic workforce to fill those jobs.
The Chair
I cut off Stuart McDonald earlier, and I think he had another question. We have a little more time, so he may finish.
Stuart C. McDonald
Q
Brian Bell: Obviously, there is a difference between there being a UK-wide shortage and a devolved Administration shortage. For the second, we only look within the country. Broadly, we are looking for a broad shortage across employers. That is the first thing. As you say, it would not be very compelling to us if one employer said, “We find it difficult to recruit,” because our first response might be, “Perhaps you are not a very good employer.” We want to see, broadly within that occupational sector, that there is a recruitment problem. We want to think that it is more than just an extremely short-term problem. To be honest, this work route will not be ideal if you just want to fill a very short-term vacancy, for the simple reason that you have to pay fees and go through the process of applying. It is more suitable for permanent, long-term positions. We want to see that the shortage is likely to last into the medium term.
The final criteria that we use, which in one sense is the most important, is that we want to be convinced that migration is the appropriate response. In answer to your earlier question, we were talking about how skills are an important aspect of all this. One thing that we say to employers is that, if they want to be put on the shortage occupation list, and if they want us to recommend that, they need to show us evidence that they are going out and trying to train up British workers. They need to show that they have a training programme themselves, or that they are working with further or higher education colleges to try to increase the supply of British workers.
Either that takes time, which we understand, and which is an argument for putting it on the shortage occupation list until that has successfully come to fruition, or quite frankly, if they can show that they have done that kind of thing and it just has not worked, we also think that that is quite strong evidence. That suggests that there are structural problems in that sector or industry, so we perhaps have to accept migration as a response to that, and that British workers either do not want to do those jobs or there are alternatives that they would prefer to do.
Stuart C. McDonald
What do you say to those who have criticised the system for being too slow and not responsive? What is changing?
Brian Bell: Historically, it has been, because, as I said, we only ever reviewed the SOL when we were asked to. It was, frankly, probably low down in the priorities, so, often, it was looked at every three or four years. We will recommend to the Government how we should review it going forward. I cannot tell you what that will be, because we have not decided, but I will say that most other countries that have an equivalent, such as Australia, Ireland and Canada, usually have a regular review process about once a year. I think there is a trade-off. If you do it too often, you do not actually get any new information; the employer just sends you the same thing they sent you last time—
Domestic Abuse Bill (Fourth sitting)
Tuesday 9th June 2020
(3 years, 10 months ago)
Public Bill CommitteesRead Full debate Domestic Abuse Bill 2019-21 View all Domestic Abuse Bill 2019-21 Debates Read Hansard Text Read Debate Ministerial Extracts Amendment Paper: Public Bill Committee Amendments as at 9 June 2020 - (9 Jun 2020)
The Committee divided: - Ayes: 6 / Noes: 9 - Question accordingly negatived.
The Chair
I remind the Committee that with this we are discussing amendment 49, in clause 2, page 2, line 34, at end insert—
“‘provider of care’ means any person (‘A’) who provides ongoing emotional, psychological or physical support to another person (‘B’) with the aim of enabling B to live independently, whether or not A is paid for this support;”.
An amendment to ensure a carer of a person with disabilities is included in the definition of “personally connected”.
The Parliamentary Under-Secretary of State for the Home Department (Victoria Atkins)
Just to recap, I was setting out to the Committee that there are many forms of exploitation that can take place in all walks of life. I was giving the example of county line gangs grooming and recruiting young children with, frankly, paltry offers given the price they pay for the items they receive, such as food or a new pair of trainers. The police have been imaginative in dealing with gang leaders, including through prosecution under modern slavery legislation, because they draw out before the court that element of grooming and long-term exploitation and manipulation. I give that just as an example.
I completely understand where the hon. Member for Birmingham, Yardley is coming from, but we have tried to guard against addressing all forms of exploitative behaviour in the Bill, because we do not want inadvertently to dilute that central golden thread that runs through all of our understanding of domestic abuse: namely, that it is focused around a significant personal relationship, whether as a family member or as a partner. That is the core of the definition. If an unpaid carer is a family member, they will be caught by the definition. If they are a partner—as she said, many people have taken on caring responsibilities in the last couple of months because of the covid-19 crisis—they are covered by the Bill. I would not want anyone to think that carers per se are excluded from the Bill, but we have focused the definition around the central point of the personally connected relationship.
Abuse of disabled people by their carers can be covered by existing legislation. Section 42 of the Care Act 2014 places a duty on local authorities to carry out safeguarding inquiries if they have reason to suspect that an adult in their area with care and support needs is at risk of abuse or neglect. There have been steady overall increases in the number of concerns raised and inquiries conducted under that section. In 2018-19, for concluded section 42 inquiries where a risk was identified, the reported outcome was to have either removed or reduced the risk to the individual in 89% of inquiries, which is an increase of 63% from 2017-18.
The statutory guidance supporting the Care Act also places a duty on local authorities to ensure that the services they commission are safe, effective and of high quality. The Care Quality Commission plays a key monitoring role to ensure that care providers have effective systems to help keep adults safe from abuse and neglect. The offence of ill treatment or wilful neglect provided for in section 20 of the Criminal Justice and Courts Act 2015 was introduced specifically to tackle the abuse of people who are dependent on care services. In addition, we have introduced tougher inspections of care services by the CQC and made sure that the police, councils and the NHS work together to help vulnerable adults.
The plight of disabled victims of domestic abuse will feature in the statutory guidance. Indeed, there is the national statement of expectations document for local commissioners—we have not discussed it much because it is not strictly on the Bill—through which specialist needs are and will be addressed.
I hope that we have reassured the Committee that we are alive to the risks to people who are disabled. Some carers who fall into the “personally connected” definition will fall foul of the Bill, but for those carers who do not, there is already existing legislation to tackle exploitative behaviour where it transpires. With that, I invite the hon. Lady to withdraw the amendment.
Jess Phillips (Birmingham, Yardley) (Lab)
I thank the Minister for her thoughtful response. I appreciate what she said about the Care Quality Commission and its coverage, but it would have had absolutely no jurisdiction in the cases I outlined. Disabled victims are telling us that they are experiencing domestic abuse and feel that they are not in the definition. I look forward to the statement of expectations very much; I am pleased to hear that there will be expectations on commissioning in this area, but we want to get these people in the Bill. We will push the amendment to a vote.
Question put, That the amendment be made.
Liz Saville Roberts (Dwyfor Meirionnydd) (PC)
I beg to move amendment 29, in clause 2, page 2, line 24, at end insert—
“(h) they live, or at the time of the abuse lived, in the same household.”
This amendment would ensure that victims living with an abuser in the same household, for example as a flat share, are considered to be “personally connected”.
This is obviously a broader amendment than that of the hon. Member for Birmingham, Yardley, and I am aware that the Minister has made some response, which I will try to address.
I have two main points. I was on the Joint Committee on the Draft Domestic Abuse Bill last year and this is one of its recommendations—I will refer to that in a moment. Secondly, “personally connected” is a term that is used in the legislation in Wales and I have found it very interesting—I hope it is interesting for others as well—to make the comparison between the legislation in Wales and that which we are creating here today, and to be aware of how those two pieces of legislation sit together.
The report from the Commission on Justice in Wales, led by Lord John Thomas, came out in October 2019. We have a legislature in Wales alongside the legislation that we make in similar areas in Westminster, and the growing effect of the divergence of legislation needs to be considered, particularly the impact on the ground —on victims and perpetrators. The report from the commission—chaired by Lord John Thomas, previously of the Supreme Court—was commissioned by the Welsh Government, but we should be alert to the effects on justice in Wales, particularly in legislation such as this Bill where we already have legislation in a similar area in Wales, although with a very different effect.
Amendment 29 would insert those who live, or who at the time of the abuse lived, in the same household into the definition of those who are considered to be personally connected. Although we have voted, I was supportive of amendments 48 and 49. As the Bill stands, people who live in the same household but who do not have an intimate relationship are not considered to be personally connected.
There is an interesting golden thread, to use a phrase that has already been picked up on: we are using the phrase domestic abuse, but at the same time we are dealing with relationship abuse and how those two issues sit together, because they evidently do not merge entirely together—nor do they in the concept that we are dealing with here. It is important that we tease out the differentiations and that we do not get caught into assuming that a certain term means one thing when perhaps it means something else. We should be very aware of whether there are individuals we intend to safeguard in the legislation who otherwise fall outside of it.
First, I must say clearly that the purpose of my amendment is not to add into the legislation a requirement for the victim to live in the same household as the perpetrator in order to be protected. Rather, the amendment seeks to ensure that victims of abuse inflicted by a housemate in the same domestic environment as them, which might be a friend, a sibling or a cousin, would be protected in addition to those who are protected here, to ensure that we cover that environment-specific case.
There were relevant recommendations from the Joint Committee; I will just refer to them again, because I think that will enable me to refer to some of the points that the Government have made in the meantime. The Joint Committee recommended that the Government
“reconsider including the ‘same household’ criterion in its definition of relationships within which domestic abuse can occur. This landmark Bill must ensure that no victim of domestic abuse will be denied protection simply because they lack the necessary relationship to a perpetrator with whom they live.”
The Joint Committee recognised that
“abuse of disabled people by their ‘carers’”,
which we discussed earlier,
“often mirrors that seen in the other relationships covered by the Bill. We conclude that abuse by any carer towards the particularly vulnerable group should be included in the statutory definition. We share the concerns of our witnesses, however, that, even with the ‘same household’ criterion included in the definition of ‘personally connected’, paid carers, and some unpaid ones, will be excluded from the definition of domestic abuse.”
The Joint Committee therefore recommended that the Government
“review the ‘personally connected’ clause with the intention of amending it to include a clause which will cover all disabled people and their carers, paid or unpaid, in recognition of the fact this type of abuse occurs in a domestic situation.”
I am aware that the Minister has already referred to some of these matters. She touched on the Care Act 2014; just as an aside, and at the risk of repeating this all the time, I am not sufficiently familiar with the Care Act to be able to disentangle those areas that apply to England and those areas that apply to England and Wales, but I ask her at least to consider whether there are any possible gaps or loopholes in which there could be confusion of expectation. There may well not be, but one of my roles here is to ensure that we have checked that, care being devolved in Wales.
The only other point that I will make in relation to what the Joint Committee raised is the need for consistency of approach. Again, when we refer to previous legislation, or legislation that already exists, one of the alarm bells set off in my mind with this domestic abuse legislation is that what we are attempting to do here is to provide clarity and consistency. We have seen exactly the same issue with the range of sexual abuse offences. The fact that something exists in law does not mean that it is applied consistently across forces or even perhaps across local authorities. We need to be alert to ensure that what is put into this legislation is applicable and is experienced by victims consistently, as is intended. It is important to ensure that.
I have a few further points. As I mentioned earlier, this issue is particularly important when it comes to the victims and potential victims living in Wales, as definitions within Welsh legislation vary from what is included in the Bill. The Violence against Women, Domestic Abuse and Sexual Violence (Wales) Act 2015, in its definition of associated people, includes people who live or who have lived in the same household, so a different definition is being applied in Wales.
That is particularly important, since this is something we may well have seen at this time of covid-19 and also with young people, because younger households are much more likely to live in house shares and to rent privately. When all the bedrooms within a single house are occupied—in a terraced house, for example—with everyone sharing a bathroom and kitchen, that is a domestic situation in which abuse may occur. The landlord may well live there. There is a question about whether the legislation is missing something there that we might wish to capture. The 2019 figures from the Office for National Statistics illustrate that people aged between 25 and 34 now account for 35% of households in that sector.
Peter Kyle (Hove) (Lab)
The right hon. Lady has touched on a contemporary issue that has been happening throughout this crisis. It gives the Committee the opportunity to express our sincere gratitude to the frontline police officers and other statutory bodies who are doing so much to re-tool themselves during the crisis to ensure that they identify potential victims and people who are in danger of suffering domestic abuse, to offer support in really creative ways. We offer them our thanks. Will she join me in imploring the Minister and the enforcement agencies to learn from the experience that has been gained from this crisis, and to look at ways of putting that learning into live enforcement services, so that when we recover, we do not go back to business as usual, but aspire to do better?
Liz Saville Roberts
I am grateful to the hon. Gentleman for that intervention. In the legislation, the considerations will be about how to apply that and how to do so consistently. The training that is available for police officers and other support bodies will be critical. At this time, I beg that we make the legislation as future-proof as possible, because we have experienced something that is different to how the Bill was drafted. We must consider that now; we do not want to be playing catch-up.
To come back to my point, although I entirely understand that there is a debate between what we mean by the location of the abuse—in the household—and relationship abuse, we have found ourselves in our households far more.
Jess Phillips
On people who live together, we must not assume that we are talking only about young, trendy people in Brighton who live together in a house share. In my constituency, there are very vulnerable people who live in houses in multiple occupation for years on end, with almost no support from the structure that is meant to support them. Landlords often receive the extra housing benefit without providing any of the support we would hope to see. We are talking about—I see it every day in my constituency—cases of very vulnerable people who may have suffered a pattern of abuse living alongside people who, also because of their vulnerabilities, are very likely to be abusing them.
Liz Saville Roberts
That broader awareness of what constitutes a household has been brought home to us in the past few months, as well as the nature of the tensions that can exist in such households. The thing that comes to my mind is younger households where house-sharing is common. One can imagine those are quite small households. But this applies more broadly than that.
If we were to assume that the nature of the coercive or abusive relationship is based on whether there is a sexual relationship between the two individuals in a formal sense, we would close our eyes to the wider experience and we should consider whether we should capture them in this legislation. That also applies where there are informal sexual relationships, which can be imposed on people to a degree in certain household environments.
I am aware that we have already voted on the specific aspect of this in relation to people and their carer. I would be grateful if the Minister would consider our experiences in the past few months and the inherent tension between whether we are looking at this on the basis of household—where someone is physically located—and those people who are intimately related, or whether this is an opportunity to capture a wider question.
Julie Marson (Hertford and Stortford) (Con)
This amendment and the previous amendment speak to a common motivation to protect against an abuse that takes place in our society among many abusers of different relations of the powerful against the weak. I know that we are all motivated by a desire to address that.
I was a magistrate in a general court for several years before specialist domestic abuse courts were even envisaged and came into being. I saw a whole range of different contexts of abuse, but I wanted to be a part of the domestic abuse courts because it spoke to something special: a specific context of abuse based on a very intimate relationship. I do not want to dilute that, because that direction of travel—to have fought so hard to get recognition for domestic abuse as the uniquely invidious and insidious crime that it is—is something I do not want to go against.
While I completely empathise with the desire to prevent abuse wherever we find it, I believe that the direction of travel that is encapsulated in this landmark Bill is where we want to go. That is why I would resist attempts to dilute that aim, context and direction of travel.
Victoria Atkins
I thank the right hon. Member for Dwyfor Meirionnydd—gosh, I took a deep breath before trying to say that. My hon. Friend the Member for Hertford and Stortford has summed it up beautifully, if I may say so. I absolutely understand the motivation for the right hon. Lady’s amendment.
As we were saying earlier, exploitation takes many forms. I know that the hon. Member for Hove has shone a bright light on the concept of sex for rent. I keep coming back to this golden thread of the relationship. I think everyone understand that that is what the concept of domestic abuse centres around, so that is the approach we have taken with the definition.
We considered the Joint Committee’s recommendations very carefully. Our concern was that including “household” in the definition may have the unintended consequence of diverting people’s attention from those relationships where people do not live together. I am sure we can all think of examples of incredibly abusive relationships in which the two people in that relationship do not happen to live together.
I will give an example: I visited a fantastic women’s centre a month ago, which has independent sexual violence advisers and independent domestic violence advisers working together. The IDVAs could identify certain serial perpetrators in their local area who were in relationships with not one woman, but with several women at the same time. By definition, that perpetrator could not live with all of the women simultaneously, but was visiting them and conducting his abuse against many women at the same time. I am anxious that we do not inadvertently, with absolutely the right intentions, divert people’s attention away from the central purpose of the Act. We have also tried to ensure in clause 2 that where a relationship has ended, that is still considered within the definition, because we are alive to the fact of abuse after a relationship has ended.
Finally, we would not want to broaden the definition to such an extent that it covers areas, such as landlords and tenants, that I do not believe people think of when they think about domestic abuse. As my hon. Friend the Member for Hertford and Stortford has said, it has taken us an awfully long time to get to where we are, and I hope we can work on ensuring that victims who are in abusive relationships have our attention and focus. These other forms of exploitation should also have focus—just not in this piece of legislation.
Liz Saville Roberts
I appreciate the Minister’s response. I am slightly concerned about the fact that she talked about one man with a number of relationships with different people, and then a relationship that is over. There is something slightly contradictory about that.
Because of the times in which we are living through, our awareness of the impact of domestic abuse and the misery caused by it, and the awareness of our police forces, will have changed since this Bill was originally drafted. I therefore leave the Minister with a sincere plea to be alert to the fact that we need to learn on our feet very quickly.
I beg to ask leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Clause 2 ordered to stand part of the Bill.
Clause 3
Appointment of Commissioner
Question proposed, That the clause stand part of the Bill.
Peter Kyle
It is a privilege and honour to serve under your chairship, Ms Buck. This is the first time I have served under you, and it is an experience I am looking forward to. I have heard you are a very tough taskmaster.
I also pay tribute to the two Ministers present, who I know both want to make this the best legislation it can possibly be. I have worked with both Ministers in other areas, particularly the safeguarding Minister, the hon. Member for Louth and Horncastle. She might not remember this, but the very first Bill Committee I sat on was one for which she was on the Back Benches: it was the Public Bill Committee on the Investigatory Powers Bill in 2015-16, so I am familiar with being in a room full of lawyers and people with legal backgrounds when considering these kinds of Bills. At that time, the hon. Lady and I were both on the Back Benches, and if I remember rightly she was the first of the 2015 intake to go to into Government. Here we are again on a Bill Committee together, both as Front Benchers, which is an honour for both of us.
Jess Phillips
I am not sure whether my hon. Friend was going to come on to this, but exactly the same thing happened when the chair of the Equality and Human Rights Commission was selected. Both the Joint Committee on Human Rights and the Women and Equalities Committee put in complaints that were nothing to do with his character or his abilities, but specifically to do with his running Government contracts. That was completely ignored by the Secretary of State, and I am afraid to say that that conflict of interest has been used by people who are potentially under question from the EHRC at the moment to suggest that the commission is in some way compromised. This has an effect on people’s ability to do the job.
Peter Kyle
I am grateful for that additional example. I am very aware of the case study that my hon. Friend refers to, even though I was not going to bring it into my few words. It illustrates an incredibly important point: having the support of Parliament is an empowering force behind any public appointment. Furthermore, it offers increased credibility. It starts with a commissioner having the respect of—and a functional relationship with—not just the Government who made the appointment, but Parliament.
In our system of democracy, we take very seriously the relationship between Government and Parliament. Parliament will play a part in scrutinising, so if it has a hand in appointing, there is buy-in from the start. It really is a win-win for Parliament to be involved via the Select Committees.
The appointment has already gone ahead, and I do not think that anybody would say that Nicole is either not qualified for the job or not a welcome appointment to it—but this is certainly something that we need to think about for the future. In my earlier example, it is very clear that even though the public appointment went ahead and had the backing of Government and Ministers, the role has never lived to up to the expectations that were set for it when it was first created. I implore Ministers not just to submit future commissioner appointments to an appointment hearing with the Home Affairs Committee, but to give the Committee the power of veto.
I realise that giving power away is not in the DNA of the Home Office. It is not the normal trajectory that we see from Home Office Ministers, but there are times when giving power away is a very empowering act that leads to a much more functional relationship between Government and Parliament, Parliament and the appointee, and the appointee and Government.
The Home Office has already appointed the commissioner, and it is worth putting it on the record at this point that the Joint Committee on the Draft Domestic Abuse Bill, which scrutinised the previous and similar legislation to that which we are examining today, was not happy that that happened. It said, in paragraph 287 of its report, that
“we were surprised to learn that the process of recruiting a designate Commissioner had almost been completed before Parliament had had any opportunity to consider—still less to recommend any changes to—the draft Bill setting out proposals for the Commissioner’s remit and powers… We consider this unsatisfactory.”
I agree, and I suspect many Members in this room agree. They are free to do so, because there will not be a vote at the end of our discussion on this clause.
We all appreciate the enthusiasm of Ministers and the Home Office to get this appointment out the door, but I have to say that, even though we agree with and celebrate the appointment of Nicole Jacobs, the Minister and Government got away with it this time. Had that appointment not had the backing of the sector and of Parliament, it would be very hard to establish the credibility that this role needs within the sector.
I hope that my words will have made an impression. We purposefully did not put down an amendment to this clause, because we did not want to press this point, but we do want to impress it on people in the strongest possible terms that the joint relationship between Parliament and Government in making the appointment in future is something that will tangibly strengthen the role.
Victoria Atkins
I thank the hon. Gentleman for his constructive and considered comments on this matter. I thank him also for reminding me of the Investigatory Powers Bill, proceedings on which, it is fair to say, were more fiery than those on this Bill.
I very much take on board what the hon. Gentleman says, in that we have always been very conscious that the commissioner must have access to Parliament and must be accountable to Parliament in the sense of laying annual reports. Indeed, we have made it—I suspect that we will come on to this in a little while—their responsibility as a commissioner to lay their annual report before Parliament. They, not the Secretary of State, will lay it, decide when it is laid and so on. We have been very careful to ensure that.
Going back, I appreciate the point that the hon. Gentleman raised about the Joint Committee. I will explain the reason why we appointed the designate domestic abuse commissioner. I personally interviewed a number of impressive candidates for that role, and there were a couple of reasons why we wanted to appoint the designate domestic abuse commissioner.
First, we knew that the legislation would take time to get through the House and we felt that the commissioner could start the groundwork without their statutory powers, because of course the statutory powers are in the Bill. There was groundwork that she could start with—for example, setting up her office, building relationships and beginning to work out where there were particular areas of work that she wanted to focus on. That could all start, and I have personally found the designate commissioner’s assistance, over the last couple of months in particular, absolutely vital, because she has been key in drawing together the charities that are working on the frontline in the covid-19 crisis. She has a Monday call—she referred to it in her evidence and was kind enough to invite me to attend one of the calls—where she speaks to the sector across the country. She then processes that information and data for the Government, so that we are able to formulate policies to help in the very time-sensitive manner that we have been able to. I really value her contribution.
The commissioner will, of course, be accountable to Parliament through Select Committees, as the hon. Gentleman said. I certainly expect the Home Affairs Committee to call her, and the Justice Committee may choose to call her too, so there will be accountability.
Peter Kyle
I am very grateful to the Minister for her tone and the content of her words. What will she do if one of those Select Committees refuses to endorse a candidate that she puts forward? That is the key question. What will she do if it does so, after having a considered set of deliberations, based on sincere and non-partisan evidence? How would she react to that?
Victoria Atkins
Let us take a step back, because I would not want the hon. Gentleman to think that we appointed the designate commissioner on a whim. There is a very careful and methodical appointments process. He can imagine the scrutiny carried out by the legal advisers in the Home Office, the Cabinet Office and elsewhere, who pay attention to how we conduct these appointment processes. It is the same for other commissioners. I also have responsibility for the Independent Anti-Slavery Commissioner, and I do not think anyone would claim that Dame Sara Thornton is not independent and is not an extremely powerful voice in tackling the world of modern slavery. We have careful and methodical appointment processes. I am confident in the two appointments that I have been involved in, and I hope that we have weeded out the sorts of concerns that he is flagging. Once the appointment is made and the Bill is passed, if substantial changes are not made to it, we expect to be able to follow that through.
Peter Kyle
The Minister is being very generous and warm-hearted. I am not sure how she will be in a few days, but for now I fully embrace her generosity. What is the point of a Select Committee scrutinising somebody’s record and background, with a view to a public appointment, if it does not have any power over whether the appointment can go ahead afterwards? Would its time not be best spent doing something else if its conclusions mean nothing when it comes to the final decision?
Victoria Atkins
I again come back to the responsibility of the Minister making the appointment. It is a real responsibility; it is certainly something that weighed heavily on my shoulders. I am conscious that if we miss what we are trying to achieve with the appointment, that will have an impact on not just the commissioner, but the Minister and the Department. Just as the commissioner is accountable to Select Committees, so too are Ministers. Given that we follow the public appointments process, I am satisfied that we will recruit the right person for that role and equivalent roles.
I take the hon. Gentleman’s point, but I draw his attention to the drafting of clause 3. Subsection (3) is there to ensure that the commissioner is not regarded as a servant or agent of the Crown. We say that that supports their independence. I suspect that that will be a feature of amendments to come. With the appointment, we have wanted to ensure that the commissioner is able to start using her statutory powers when the Bill receives Royal Assent. The Committee has already heard reference to the mapping exercise of community-based services that the commissioner will undertake once she has her powers under clause 8. That is something that we have sought her help on, and we very much look forward to her assistance on that.
We want the commissioner to be a powerful voice; we want her to stand up for the victims of domestic abuse and hold public authorities to account where necessary, as is set out in clause 14. I am pleased that the designate commissioner has been welcomed by those working on the frontline, and people who are perhaps not so involved in the day-to-day concerns about domestic abuse can see that she is an expert appointment. She has more than 20 years’ experience, and she is bringing her expertise and drive to this crucial role.
Peter Kyle
The Minister has mentioned the designate commissioner’s experience and suitability for the job a number of times. I would never want to give the impression that I do not agree with the designate commissioner’s suitability for the job, and it is very important for the sector, in the absence of an appointment based on legislation and on parliamentary scrutiny and hearings, to hear the cross-party support for the designate commissioner. I hope that the Minister will accept our support for her as well when she makes her remarks.
Victoria Atkins
I do not think that anyone read into the hon. Gentleman’s constructive comments about this appointment anything other than that he was doing his job of scrutinising the wording of the Bill, and I am pleased that the designate commissioner has managed to gain such support in such a short period of time.
I commend the clause to the Committee.
Question put and agreed to.
Clause 3 accordingly ordered to stand part of the Bill.
Clause 4
Funding
Question proposed, That the clause stand part of the Bill.
Jess Phillips
These clauses all relate to the powers of the domestic abuse commissioner; there is a huge area of the Bill about her powers and how this role is going to work. As my hon. Friend the Member for Hove and the Minister have said, we all welcome the commissioner.
I want to make some brief comments about the issue that clause 4 deals with, which is funding. It arises from a constructive concern that I had during the evidence sessions and on Second Reading, which is that it appears that if there is something that the Government have not yet got an answer for, possibly for a completely good reason, there is a tiny bit of a willingness for them to say, “We’re going to ask the commissioner to do this thing for us.”
For example, on Second Reading, there was a push from all sides of the House, as there was from the sector and from the commissioner herself, around the provision of community-based services. Off the top of my head, the statistic is that 70% of all domestic violence victims are supported in community-based services. The vast majority of people will never end up in refuge accommodation, and that is something that we should continue to facilitate; refuges are absolutely not for everyone.
What concerns me and what we heard from some in the sector—I think it came from the voice in the room that was Suzanne from SafeLives—is that what was announced on Second Reading related to a mapping exercise rather than a duty. In the Bill, we see—it seems like we will see it in many weeks’ time—a duty on refuge accommodation, which we certainly all welcome, but there is definitely a desire, which I share, to see a similar duty on community services.
It seems that rather than a duty, the Government are proposing a mapping exercise—they proposed it on Second Reading—by the commissioner, to understand what community-based support exists. As Suzanne told the Committee in her evidence—I have to say, I think I could probably do it here now. If I did not come to the Committee tomorrow, I could probably map out community services, because droves and droves of evidence have been gathered about what community-based support services exist. I feel for the Government, because people like me put in questions such as, “How many bed spaces are there?”, when I know full well what the answer is. I understand the concern and the need to map services, and to make sure that we are funding things.
What concerned me a little on Second Reading and in the evidence sessions was that there were a huge number of questions from Members asking the sector what they felt the commissioner should be doing: “What is the commissioner going to do for my group of women? What is the commissioner going to do about this and that?”. They were completely reasonable questions to ask, although largely they were asked not of the commissioner, but of the voluntary sector aides and the victims. With the greatest respect to Nicole and her position, I am not sure most victims of domestic violence are too concerned with who the commissioner is, but the sector is.
What concerns me is the commissioner’s funding model. I know that there was some argy-bargy and push and pull about the number of days, which letters presented to the Committee on the previous Bill said would be increased. What worries me on staffing, which is dealt with in the next clause, and funding is that the commissioner will end up with all these jobs because, rather than taking direct action, we do another review or more mapping. It starts to ramp up the amount of funding that somebody will need to take on all this extra responsibility.
I want to be absolutely certain and to understand from the Minister what the mechanism is if the commissioner says: “I cannot afford to do this exercise that you have said I should do because I no longer have the funding.” What I do not want to see is Parliament scrutinising the domestic abuse commissioner—she and whoever takes the role after her will undoubtedly many times in their career sit in front of the Home Affairs Select Committee—and her being forced to answer: “I couldn’t afford to do this exercise or this report into x because we just didn’t have the budget.”
There seems to be a tendency to push things on to the commissioner that would once upon a time have sat with civil servants in the Home Office. I want an understanding of how the review process and funding will be taken forward and what grounds it will take to make a case to increase the budget, including increases that might be needed for the local boards that are associated with this part of the Bill. I therefore seek reassurance from the Minister.
There is a game that gets played—although certainly not by the Ministers in this Committee—of the devolution of blame. We devolve power, whether it is to Wales or Scotland or to local authorities, whereby the Government hold the whip hand. I am certain that all Governments of all flavours have done this. The Government hold the whip hand in deciding the funding formula or within what constraints that money may be spent. When problems arise we say, “Well, that’s Birmingham City Council’s fault because they are rubbish.” Again, if I was given £1 for every time I heard the invocation of the Welsh NHS, I could fund all community services. What worries me and what I do not want to see is an underfunded commissioner, with the Government saying, “That is the commissioner’s responsibility,” given that ultimately all this policy—everything that flows from the Bill and everything that happens in every single one of our local authorities—
Christine Jardine (Edinburgh West) (LD)
We have heard several times today already that the Bill is landmark legislation and that we should be future-proofing it in certain ways. Do I understand from what the hon. Lady says that we have to future-proof it against undermining public confidence, through arguments about whether it has been sufficiently funded and who is to blame for that—and should we take the opportunity at this point to make sure that that argument cannot arise?
Jess Phillips
Absolutely. I am not asking for a bottomless pot of funding for the commissioner for ever and ever. I am sure that, even if the Minister were to ask really nicely, the Treasury would tell her no—although it would seem that that is not so much the case now, given that my husband is furloughed at home. The reality, though, is that I do not want to put the commissioner into that position. The Minister invoked the position of the independent anti-slavery commissioner. Of course, we have seen—perhaps not from this appointment, but from previous appointments, when Kevin Hyland was commissioner—that he very much felt there were problems in that particular area. Will the Minister reassure me, first, that we will not be expecting the commissioner to do the job that we do here, the legislators, people with a mandate and elected to office, and that we will not apportion blame where children’s services, for example in local areas, have not been suitably encouraged by the commissioner; and secondly, that where there is a real need for her to do something on which she will then have to answer to a Select Committee, for example, that she will be resourced properly?
Victoria Atkins
I appreciate that this debate has been probing clause 4 and the resources available to the commissioner. We have provided the commissioner with an overall annual budget of over £1 million, which, among other things, will provide for 10 to12 staff to support the commissioner in carrying out her functions. In addition to the money from the Home Office, under clause 8(3) we have given the commissioner the power to charge a person—and when we say “person”, we are not talking about an individual but an authority or an organisation—for providing them with advice or assistance under subsection (2). We appreciate that exercises such as mapping community-based services will take a great deal of staff time and resources: it will take relationships across the country.
On the subject of mapping, I remember that just after I was appointed, two and a half years ago, my officials had done a very quick and dirty analysis of community-based services in a particular county—I will not name the county. They had found that there were something like 80 charities in one county who were working to help victims of domestic abuse. They ranged from the largest, national-type charities to the sort of charities where it is my great privilege to meet and discuss their work with their founders, who perhaps have set up a charity to commemorate a loved one who has been killed by a partner, for example. In their individual ways these charities work sometimes at a very local level to provide services. I wish that trying to map that was as easy as one would like it to be, but it is a difficult task, which is why we are asking the commissioner to do that for us. That is not because she is going to be in charge of policy creation but because, with the powers she will have under the Bill, the commissioner will be able to request that information from the public authority, as set out in the Bill. Then she will be able to produce advice and a report.
That touches on the point that the hon. Member for Birmingham, Yardley raised earlier about the meaning of the word “encourage”, and I apologise for not responding to it sooner. We believe that clause 14 is very powerful when read in conjunction with clauses 13 and 15. Clause 14 sets out the powers to request information and assistance from public authorities. Clause 15 sets out the requirement that the public authority must respond within 56 days to the report or the analysis by the commissioner. They report not just to the commissioner, but to the Secretary of State. I do not want to cast aspersions on any particular type of public authority; the public authorities mentioned in clause 14 include nationally known organisations as well as local councils and authorities. If there is a report by the commissioner condemning the conduct of one of those public authorities, and the authority has to respond within 56 days, that is quite a powerful tool for the commissioner. As we have already discussed, the commissioner is also required to lay annual reports before Parliament. It may well be that, as part of her general functions under clause 6, she will want to express her views on the conduct of public authorities in her annual report. Again, I do not want to direct her—she is independent—but this is a way to keep the commissioner and public authorities accountable.
On funding, we know that being in Government is about making tough choices. We have funding for the Home Office to be allocated across a whole host of deserving causes, including policing, counter-terrorism and maintaining a fair and effective immigration system. The budget we have set aside for the domestic abuse commissioner is what we have allocated. In setting that budget, we have looked at the budgets of other commissioners to ensure that it compares favourably, which it does. We will keep the budget under review, and the commissioner will discuss with the Secretary of State her budgetary needs for the forthcoming year. We have provided the commissioner with the available resources, because we want her to be able to fulfil her functions as set out in clause 6. It is not about attributing blame, but about trying to ensure that this new, powerful appointment will help us tackle domestic abuse and that, at both national and local levels, we can utilise what she will bring with her laser-like focus on domestic abuse. Her power and authority flow from clause 6, and I hope we will see real differences—not just nationally but in our constituencies over time, as public authorities realise that they are accountable not just to the public, but to the commissioner.
Question put and agreed to.
Clause 4 accordingly ordered to stand part of the Bill.
Clause 5
Staff etc
Question proposed, That the clause stand part of the Bill.
Peter Kyle
I just want to say a few words about the clause. Again, the Opposition do not oppose it or seek to amend it, but we want to ensure that we get it right. I accept the Minister’s previous comments on clause 4, and I was really pleased that she mentioned the role of the voluntary sector and did so in a way that reflected the complex tapestry of the voluntary sector. The fact that there might be many dozens of organisations— perhaps 80-odd—working in one area is something that I am very familiar with, having worked in the voluntary sector previously.
Duplication is a challenge that I faced when I ran the Association of Chief Executives of Voluntary Organisations, the umbrella body that co-ordinated the work of the voluntary sector. We did a lot of work on duplication and on trying to get third-sector organisations to work together and to share expertise and resources. That is more essential now than it ever has been, but it is not a problem that affects just the voluntary sector. I also had the pleasure of being an adviser in the Cabinet Office for almost two years, in 2006 and 2007. When we did one of our what seemed like annual reviews on waste and duplication in the civil service, we found that two committees in the Department for Education were looking at duplication. Just when someone thinks they have seen it all in one sector, they move to another and look beneath another rock.
However, these are important things to bring into our deliberations on clause 5. Clause 5 essentially gives the Secretary of State the power to appoint staff for the commissioner and to appoint the resources for it, and therefore gives the Secretary of State quite considerable oversight and input into the effectiveness of the personnel, or the commissioner, with regards to their ability to work and to be productive, directly impacting the scale of work that they can undertake.
Clause 5(1) states:
“The Secretary of State must provide the Commissioner with—
(a) such staff, and
(b) such accommodation, equipment and other facilities,
as the Secretary of State considers necessary for the carrying out of the Commissioner’s functions.”
The key thing here is what
“the Secretary of State considers”,
not what an independent observer or what the commissioner herself considers appropriate for the job. There are two aspects to this: how resources are deemed appropriate in the first place, and whether that is done in conjunction with the commissioner, which I assume it would be in a functional relationship; the Minister is nodding, which is reassuring. However, it is also to do with the appointments themselves, because the Home Office retains the power to oversee and involve itself in some aspect of the recruitment.
My hon. Friend the Member for Birmingham, Yardley mentioned the former independent anti-slavery commissioner. He gave stark evidence before the Joint Committee, which it is worth referring back to, because this is what we have to avoid going forward. It certainly shines a light on what is potentially within the scope of the Bill as drafted. On page 77, paragraph 298 of the Joint Committee’s report says:
“Kevin Hyland told us he was concerned that the Secretary of State would have too much control of the Commissioner’s budget—
referring to the commissioner for domestic abuse—
“the staff employed and the content of the Commissioner’s reports. He pointed particularly to the power wielded by the Secretary of State through control of the Commissioner’s budget, noting that immediately he took up his post, the Home Office had proposed a reduction in the funds that Parliament had been told he would be given.”
Immediately after that commissioner was appointed, the Home Secretary tried to reduce the funds that Parliament had informed him he would have. These powers for the Home Secretary all exist in the Bill as it stands before us.
The bottom half of that same paragraph says
“he described the process of appointment as ‘unbelievable’, adding: ‘Sometimes I would select staff, and seven months later they had not arrived, or when they did arrive they sometimes waited two or three months for pay. In my 30 years in the police, I never, ever saw that happen once.’ He also described his experience of producing reports which, because they had to be approved by the Secretary of State, had to go through a long process of negotiation with and modification by a number of officials, with the final report not fully representing his views.”
We will come back to the latter point in discussions on future clauses. He raises in his testimony something on which we really need assurance from the Minister. The wording of the Bill as it stands is
“as the Secretary of State considers necessary”.
Therefore, the power is with the Secretary of State, the timing is with the Secretary of State and the amount of resource is with the Secretary of State.
Victoria Atkins
I hope the hon. Gentleman will forgive me if I do not accept his premise in relation to the independent anti-slavery commissioner. I am happy to say that I have a good working relationship with the current commissioner—I think it is good, anyway—and I am not aware of concerns as described by Mr Hyland in relation to the current commissioner. I take that relationship very seriously.
On the control of the Home Secretary in the clause, as the hon. Gentleman put it, I point him to subsection (2) which says:
“Before providing any staff, the Secretary of State must…consult the Commissioner, and obtain the Commissioner’s approval as to the persons to be provided as staff.”
In other words, the appointments cannot happen without the commissioner’s approval. The Secretary of State must also consult the commissioner before providing any accommodation, equipment or other facilities.
Let us be clear: the commissioner is an independent office holder. Ministers cannot and will not dictate their work plan, nor determine their recommendations. We expect the commissioner to provide robust and challenging advice and recommendations to national Government as well as local commissioners. However, we need a degree of ministerial oversight, as with all public bodies.
Peter Kyle
The Minister says that the Home Office does not have the power to direct workflow, but the Home Office does set the framework, and that does dictate the scope and scale of work undertaken. Does she therefore agree that the Home Office has significant input into what work is undertaken?
Victoria Atkins
The draft framework document we published alongside the Bill for colleagues to look at was produced in conjunction with and agreed with the commissioner. Therefore, some of the details we have discussed thus far on this part of the Bill are in the framework document. It is a public document—we are trying to be transparent—and it is made with the agreement of the commissioner, which I think is really important. The reason there has to be a degree of ministerial oversight is so that, for example, we ensure that public money is spent according to Treasury principles. The relationship between the Department and the commissioner will be codified in the framework document as provided for by clause 10.
In terms of the employment of staff, although staff will be employed by the Home Office as civil servants, the Bill, as I say, expressly provides that individual appointments must be approved by the commissioner.
I am pleased to say that the commissioner already has one member of staff as a designate commissioner. Her statutory powers are not yet in force, because we await the passage of the Bill, and the recruitment process will continue as the powers are approved.
It is very much for the commissioner to run her own office. We want a good working relationship with the commissioner. It is in everyone’s interests. That is the basis on which I and, I know, the Under-Secretary of State for Justice, my hon. Friend the Member for Cheltenham, conduct our relationships with, for example, the Victims’ Commissioner, in the case of my hon. Friend, and the commissioners for domestic abuse and modern slavery, in my case.
Peter Kyle
Just to clarify, the arrangement is the same as was described by the previous modern slavery commissioner. The Home Office does not select the individual staff, but internal Home Office recruitment processes might well play a part if it is a matter of secondment, or if there are other processes that need to go through the channels of the Home Office. I am not one of those people who bash the public sector—I think we see excellence in recruitment, human resources and the management of personnel in the public sector—but sometimes things can be slow, and the purpose of an independent commissioner is to bring expertise and entrepreneurialism—the approach from outside—into the heart of Government. Will the Minister assure us that that pace and speed will be matched by Home Office work when it comes to requests by the commissioner?
The Chair
Order. Interventions need to be short. I do not want to be too heavy about it, but I will be if I have to.
Victoria Atkins
I assure the hon. Gentleman that appointments to the commissioner’s office—precisely because they are civil servants—will of comply with civil service terms and conditions and recruitment practice. I hope colleagues will view those as being of a very high standard—objective and meritocratic. As to urging the Home Office to move speedily, I take that challenge forward. We will use our best endeavours because we want the commissioner to be as powerful as she can be as quickly as possible.
Question put and agreed to.
Clause 5 accordingly ordered to stand part of the Bill.
Clause 6
General functions of Commissioner
Question proposed, That the clause stand part of the Bill.
Jess Phillips
I note that we are having a wide-ranging debate, and jumping from one clause to another, and I will take some advantage of the fact that the clause is about the general functions of the commissioner to give some general, broad input on this clause and some of those to follow.
As has already been said by pretty much everyone —probably even including myself, although it is hard to remember now—we very much welcome Nicole’s appointment, and we welcome the invention of a commissioner full stop. In fact, I remember not knowing this building at all well and being brought down here, when the now Victims’ Commissioner was a Member of Parliament. The Labour party was running a women’s manifesto-building session, in one of the rooms here for victims of domestic violence and those who worked with them. It was long before I even stood for the council, and I just came to this building and gave evidence. One of the things we pushed for then, probably in about 2011, was the creation of a commissioner, so it is incredibly welcome that we are now starting to see those powers come into play. I hope that they will be a catalyst for change in domestic abuse policy. They will certainly allow us to find gaps—or, as the Minister has outlined, over-supply—and, more importantly, solutions to fill those gaps.
In the Joint Committee report published on 14 June, a number of concerns were raised by witnesses and the Committee about the role of the commissioner. Those concerns were also raised at the aforementioned evidence session. Today, I still think that some of them have not been allayed. My hon. Friend the Member for Hove has gone over some of those issues, but there are a few things I wanted to pick up specifically around the commissioner’s general functions.
The domestic abuse commissioner has the potential to effect real change in the way domestic abuse services operate. However, for that potential to be realised, we must first ensure that the Bill is amended to resolve the substantial concerns that could stymie the commissioner’s remit in terms of independence, resource and power. We have laid some of the amendments to do that.
With regard to the remit, which is in clause 6, my first point is not a complaint but rather a comment as to the operation of the commissioner’s role and how best she can make a positive contribution to combat domestic abuse. Notwithstanding comments from witnesses to the Joint Committee and the subsequent recommendations, the Government have made it clear that the role of the commissioner and the Bill are limited to domestic abuse and do not cover other forms of violence against women and girls. One notes from our debates earlier around the definition of domestic abuse that the words “sexual abuse” are within that definition. That has not been ignored. Around 56% of all reported rapes happen within people’s marriages. One of the most amazing facts—I say this to schools when I go and visit—is that raping your wife was only made illegal in 1991. So, John Major, that and the cones hotline are things to be very proud of.
The level of sexual violence in domestic abuse cases is shocking, and there is some concern about the functions of the commissioner, whose role is—to be very purist—about domestic abuse. What is her interaction to be with rape and sexual violence organisations such as Rape Crisis England and Wales, for example? That is yet to be ironed out.
Liz Saville Roberts
I just want to draw attention to some of the subsections in clause 6 and the interaction between the domestic abuse commissioner and the Senedd. I can see complications in exactly that area, and it needs clarity.
Jess Phillips
Absolutely, because, in Wales, it is a violence against women and girls situation. The Minister will remember—it might not be as far back as the Investigatory Powers Bill, but it is from way back at the beginning of this particular Bill—that, for many, many moons, we went over the conversation about whether this should be a violence against women and girls Bill. People like me were very much on the side that it should be—that you cannot see domestic violence in a vacuum and that it exists within a framework of patriarchal norms in society. However, I do not make those amendments to this Bill now. We have come an awfully long way and worked very hard together over many years to this point.
In this area, however, there is potential for people to put pressure on the current commissioner. I happened to run a rape crisis service as part of a domestic abuse service. We had a standalone rape crisis service. I can see how I would have said, “Well, they’ve got a commissioner—I’m just going to go to her.” Nicole may very well end up feeling conflicted by that, because much is part of the process.
It is clear that the commissioner must take care to spread her powers as widely as possible, and must ensure that a multi-agency approach is taken and that the needs of the third sector in this regard, specifically, are considered. From the evidence we received in the evidence sessions from the Victims’ Commissioner—although we did not hear from the Children’s Commissioner, she sent in evidence for us to consider—I am aware that all of the commissioners are working closely together to, for want of a better word, divvy up some of the concerns. We need some clarity on that. The Victims’ Commissioner, a woman who has incredible experience in the violence against women and girls area, is also responsible for antisocial behaviour and for victimhood of all kinds, so it will be important to make sure that we have clarity of purpose on remit and functions of the commissioners.
Liz Twist (Blaydon) (Lab)
Does my hon. Friend agree that the issue at the heart of these clauses, and this clause in particular, is the commissioner’s independence and freedom to act? We heard evidence last week that that is a concern and that it would be helpful to have assurances from the Minister that the domestic abuse commissioner can in fact act independently and without fear of ministerial over-involvement, shall we say?
Jess Phillips
Absolutely. For us, for the commissioner, given her own evidence, and for the sector—for everybody —independence is the single most important thing we wish to see in this role. That is not unreasonable, as my hon. Friend pointed out. Where there is contention—I do not think there is any perception of any contention whatever in the current appointment—it can be used to undermine any report that that person had written. Let us imagine that one of these bodies had to look into a political party and that political party was found wanting. It would be easy for politics to then play the game where we say, “Well, they’re just your pals. You’re giving jobs to the boys.” That undermines the fundamentals of what these bodies are doing. Independence in every part of the commissioner’s function is vital. It is to protect their work so there is absolutely no conflict of interest with the Victims’ Commissioner, the Children’s Commissioner and the domestic abuse commissioner.
My hon. Friend the Member for Blaydon makes an important point, and perhaps the Minister can answer this: who gets to decide if the commissioner should be sacked and should no longer be the commissioner? What grounds would they have to appeal that on? We all sit here with a weird employment status, in that we have no employment status. The people who employ me are the good people of Birmingham, Yardley, but they do not ever turn up to my 360-degree appraisals. No one is giving me the appraisal.
Let us say, for example, that there has to be an investigation by the commissioner into a report of practices by the Home Office regarding victims of domestic abuse, whether through its own policy on the matter or through other, adjoining policies, such as counter-terrorism or immigration. How can we make sure that the commissioner does not get sacked? If the Home Secretary were a Labour Home Secretary—I think this is a tool. With the recent stories, the Home Office has not necessarily been covering itself—
The Chair
Order. I have been quite generous with time, but I have to ensure that Members do not stray from the terms of the Bill Committee.
Jess Phillips
Okay. I just want to ensure that there is an independent process so that if there are problems, they can be solved. I close my remarks on that point.
The commissioner is a welcome position. Almost all the functions laid out in all parts of the Bill regarding the commissioner are to be welcomed and need little amendment. I commend the Ministers and the civil servants involved. I wish to seek some assurances specifically around the independence of the commissioner.
Victoria Atkins
I do not propose to repeat what we have already said, because this theme runs through our discussions. We are conscious of the need for the commissioner not just to be independent, but to be seen to be independent. We have listened to the Joint Committee and its recommendations on this point.
Taking a step back, the Government cannot be accused of being shy of scrutiny on this Bill. The Bill, as published in its original iteration, was scrutinised by the Joint Committee. As those who have been in the House for a while know, that does not happen to every Bill; it is an unusual process. The reason we did that is precisely because we wanted to involve the House in the consideration of the draft Bill before it became the Bill that Parliament would consider formally.
Although politics has got in the way of the Bill’s progress, we have used those chapters in the Bill’s history to good effect, I hope. For example, since the second iteration of the Bill that came before the House, which managed to reach the first day of Bill Committee just before the General Election, we have been able to insert the duty on local authorities into the Bill. That would have had to be done by way of amendment.
We have changed parts of the Bill in relation to the role of the commissioner, because we listened to what the Joint Committee said. We also listened to what the previous Bill Committee said. The hon. Member for Birmingham, Yardley referred in passing to the fact that the working hours of the commissioner have been changed. In consultation with the designate commissioner, we have extended her role from three days to four days a week, because she told us she was doing four days of work a week. We have listened to that and we have moved.
We also moved in relation to the Joint Committee’s recommendations about the laying of reports and strategic plans. In the original iteration, that was conducted through the Home Secretary. As happens with many reports, the report would be given to the Home Secretary and the Home Secretary would lay it before Parliament. We changed that in relation to reports and strategic plans so that the commissioner will lay them directly before Parliament, and she will choose the timing for doing so within the confines of the requirements of clause 12 in relation to strategic plans. We did that because we want her to be able to stand apart from Government and to lay her reports before Parliament as part of her role.
We have further amended the Bill to remove the requirements for the commissioner to submit strategic plans to the Home Secretary for approval. We have changed that so that the Home Secretary is simply consulted on them, and that is significant. I hope it reassures Bill Committee colleagues that, within the framework that we must have for any public role paid for through public funds—we have to have control and ministerial oversight—we have set that out in a way that safeguards independence. I hope people agree.
Andrew Bowie (West Aberdeenshire and Kincardine) (Con)
Clause 6(2) states:
“The things that the Commissioner may do in pursuance of the general duty under subsection (1) include… (g) co-operating with, or working jointly with, public authorities, voluntary organisations and other persons, whether in England and Wales or outside the United Kingdom.”
Does that include the commissioner working with organisations that are also within the United Kingdom but not in places specified in the Bill—in Scotland or in Northern Ireland?
Victoria Atkins
That is a very good point, and I am sure that I will have an answer to it very soon. My hon. Friend has highlighted what we have also tried to achieve in the Bill, which is to respect the devolution settlements we have with Scotland, Wales and Northern Ireland. Colleagues will know that the second iteration of the Bill had substantial parts dedicated to ensuring that victims of domestic abuse in Northern Ireland had the same protections as we have in England and Wales, but now that the Northern Ireland Assembly has been reinstituted, it has taken back responsibility and can deal with these issues in Northern Ireland, which is great news. I wish them Godspeed.
I draw my hon. Friend’s attention to the incidental powers set out in clause 9, which states:
“The Commissioner may do anything which the Commissioner considers will facilitate, or is incidental or conducive to, the carrying out of the Commissioner’s functions.”
As an aside, the commissioner “may not borrow money”—that is very helpful. I feel that my hon. Friend’s point requires further reflection, and we will do that.
The hon. Member for Birmingham, Yardley is absolutely right to raise the point about sexual violence and rape. She is correct to say that this has been one of those knotty subjects where we have listened to a range of views. It was my great pleasure to almost respond on Second Reading to my hon. Friend the Member for Shipley (Philip Davies), who—I think it is probably fair to say—takes a different approach to the hon. Member for Birmingham, Yardley on this matter. We have endeavoured to ensure the definition is gender-neutral, so that we capture victims regardless of gender, but in the statutory guidance we make it clear that it is a gendered crime, because we think that is an important part of the overall consideration of the legislation.
In terms of working with rape and sexual violence charities, the Victims’ Commissioner has responsibility for that. She is a formidable commissioner and does not hold back from establishing and proving her independence on a regular basis, for which we are most grateful. Taking a step back, the Victims’ Commissioner and designate domestic abuse commissioner clearly have a very good working relationship. They are both highly professional women. With the quality of people we appoint to commissioner roles—although personalities can be really positive and important—I would expect them to behave professionally with each other, and I have very much seen evidence of that. There may well be times when the Victims’ Commissioner and the DA commissioner join forces in drawing the Government’s attention to issues—they have done so in the last couple of months with the covid-19 crisis—and we welcome that. I hope that reassures hon. Members.
In terms of the advisory board—I apologise for the fact that I am jumping around—the advisory board is for the commissioner to appoint. I will step back from giving a suggestion of what she may or may not wish to do with that, because to do so would, I suspect, undermine all my previous arguments. It is for the commissioner to appoint, and she, I am sure, will be watching this line-by-line scrutiny very carefully. I suspect that the other points that the hon. Member for Birmingham, Yardley raised fit more comfortably in our consideration of clause 7 and the amendments attached to it. If I may, I will hold my fire—that does not feel like a terribly consensual way of phrasing it; I will keep my powder dry instead—on that matter.
Question put and agreed to.
Clause 6 accordingly ordered to stand part of the Bill.
Clause 7
Reports
Peter Kyle
I beg to move amendment 43, in clause 7, page 5, line 7, leave out “direct” and insert “request”.
This amendment changes the Bill so that the Secretary of State may request, rather than direct, the Commissioner to omit material from a report.
The Chair
With this it will be convenient to discuss amendment 44, in clause 8, page 5, line 29, leave out “direct” and insert “request”.
This amendment changes the Bill so that the Secretary of State may request, rather than direct, the Commissioner to omit material from any advice.
Peter Kyle
As the Chair said, I will speak to amendments 43 and 44, which relate to clauses 7 and 8. Right hon. and hon. Members will notice that both amendments achieve the same effect: to leave out the word “direct” and insert the word “request”. I do not think the intention of these amendments will come as any surprise. This strikes at the heart of the relationship between the commissioner and Government, and it is about ensuring that the much-vaunted independence of the commissioner, which everybody here accepts is incredibly important, translates into the document before us and into the legislation.
The hon. Member for West Aberdeenshire and Kincardine is welcome to pass me notes at any point in my speech, should he have any comments on it, but I warn him that the Home Office knows where he lives, and we will be looking out for him in his place tomorrow. If he has any other insightful observations, he is very welcome to intervene at any point.
It is incredibly important that this role is functional; it has at its heart a functional relationship between the commissioner and Government, the commissioner and Parliament, and all three involved in overseeing, scrutinising and ensuring that, at the end of the day, policy for domestic abuse is got right. We need to ensure that we get the best out of all three constituent parts of this set of relationships, Parliament, Government and the commissioner.
The most important relationship here is clearly between Government and the commissioner. Time after time, we see words from Government that all of us in this room, and everybody involved on the frontline of supporting victims and survivors of domestic abuse would agree with: the commissioner must be independent. We need to ensure that that aspiration is reflected in the legislation, because ultimately it is the legislation that counts.
It is noticeable throughout clauses 7 and 8, and indeed throughout this part of the Bill, just how much power the Home Office grants itself over the commissioner. That is important, because we cannot have a situation where the commissioner is said to be independent but, when push comes to shove and people have to resort to the law, the law says something different.
Christine Jardine
Does the hon. Gentleman agree that as recently as this week, doubt about whether a review or report that comes before the public has been entirely independent has damaged its impact? I refer to the Public Health England review of coronavirus, public faith in which was undermined by the fact that sections of it had been left out. The word “direct”, rather than “request”, would inevitably lead people to suspect that reports were not entirely independent.
Peter Kyle
I agree with what the hon. Lady says about that incident, because it is the one that is most recent, striking and relevant to the times in which we live. In order to ease the pressure on Ministers in the room, however, I am willing to concede that successive Governments of different persuasions have been guilty of that at various times. We can all think of reports that have become politicised, thereby diminishing the truth they seek to illuminate, their impact, their credibility and the work of the many people who were involved in producing them. It is incredibly important that the public who read such reports have faith in the independence of those who produce them, and know that the reports are free of political interference.
I do not seek to blame anyone, or to say that this is the first Government to have sought to retain power over quasi-independent bodies and institutions. I understand the desire of the Home Office and all Departments to retain power. I simply make the point that, sometimes, relinquishing some power strengthens relationships and leads to better outcomes. That certainly delivers better results to the frontline. Those who are at the receiving end—those who have recourse to the law and to the commissioner—will have more faith in the system and view it as more credible, and will therefore be more likely to use those services.
The Home Office sets the budget, and the Home Office sets the framework. Earlier, the Minister referred to the framework document and pointed to its consultative nature, which I accept. I have in front of me the draft framework document, which states in section 4.11:
“Although not prescribed by the Act, if the Commissioner does not agree with the Home Secretary’s request to omit material, the process will be as follows”—
this comes to the point made by my hon. Friend the Member for Birmingham, Yardley when she talked about what happens if a dispute arises. I accept the Minister’s response, but the draft framework to which she refers states that the commissioner can make representations to the Director of Public Prosecutions—I beg your pardon; I mean public protection. Perhaps that comes further down the line. I will start again. The draft framework states:
“The Commissioner can make representations to the Director for Public Protection as the Senior Policy Sponsor. A response must be provided within 28 working days.”
That is what is available to the commissioner should there be a disagreement and if the Home Secretary makes a direction with which the commissioner disagrees. The draft framework states:
“If agreement is not reached with the Director for Public Protection, the Commissioner may make representations to the Home Secretary. A response must be provided within 28 working days.
If agreement is not reached with the Home Secretary, the Commissioner may include a note in their report (or advice under section 8(2)) stating that certain information was omitted at the direction of the Home Secretary, but which the Commissioner did not agree was necessary to protect an individual’s safety or to support the investigation or prosecution of an offence.”
What the framework document actually refers to is that bit of the Bill that enables the Home Office and the Home Secretary to direct the commissioner.
Jess Phillips
I can think of very few areas in which that will come up as a matter of dissent, so it appears that it can be only a fear of something that might make the Home Office look bad once we remove the option of protecting the identity of the victim and of what might be before the courts, understandably. It seems that it is only there to direct where the victim may have said something bad about the Home Office.
Peter Kyle
The Minister disagrees and her dissent to my hon. Friend’s comment is on the record. Whether one agrees or disagrees with my hon. Friend, her point is that it is open to interpretation. People in that situation who are observing from the outside could quite reasonably be left with that interpretation. The amendment actually seeks to protect the Home Office from precisely the circumstances to which she refers, because if the independent commissioner publishes advice that is hard for the Home Office to see, that will spark a public debate between the two that would benefit the sector and show that the independent sector has an independent commissioner, and that the Home Office takes a different view. The buck will always stop with the Home Office, and rightly so.
Clause 8(5) states:
“Before publishing any advice given under this section, the Commissioner must send a draft of what is proposed to be published to the Secretary of State.”
We all understand why that would be the case and why the Home Office would be very keen to engage in that, but if there is a functional relationship at the heart of this, we do not need the power of legislation to engage constructively with each other. From the testimony and the evidence that we heard just last week from the designate commissioner for domestic abuse, it is very clear that she is straining at the bit to be open and constructive, and to engage not just with the Home Office, but with Parliament and all other stakeholders. The Home Office does not need the power of legislation to instruct somebody to do the very thing that is at the heart of a functional relationship between two organisations of this nature.
I accept that the Home Office is cautious and that Home Office Ministers are right to be cautious. The Home Office deals with law enforcement and the denial of people’s liberty. That is why the Home Office always has to be very careful with such pieces of legislation, and I know that the two Ministers take incredibly seriously the responsibility and the burden of the decisions that are made in the name of the legislation that they pass and uphold in their work. The inclination to retain as much overall power as possible defeats some of the objectives that the Home Office seeks to achieve. Although it must be an overwhelming temptation—even for understandable reasons—I urge the Home Office to have faith in the people whom it appoints.
Because of the previous conversations and exchanges that we have had, I think that we have had some fascinating exchanges already in the proceedings on the Bill today, and I believe that the Minister has been very sincere in her determination as to the way the commissioner is appointed in future. But this is really important: if we are to take the Minister at her word, why does she need the power in legislation to have the final word all the time? If the person appointed has been through an inscrutable process within the Home Office and if their background is absolutely first rate, why does the Minister need the power always to instruct them, to direct them?
I believe that the person described in the appointment process is the sort of person who does not need to be kept on a tight leash and who would benefit from more freedom in the role. That is the sort of thing we could test in this legislation, and it would then have an impact on future appointments and the creation of other roles. I think that this role would be more fruitful, productive and effective if it were approached in a less paternalistic way.
When Nicole Jacobs’s appointment was announced last September, the Home Office statement heralded the role as one that
“will lead on driving improvements”.
Quite rightly, the designate commissioner’s qualifications to do just that were highlighted, and that speaks for itself. But time and again, the legislation that puts her role on a statutory footing limits the freedom that she has to do just that. Reading it, one would be forgiven for thinking that it is less a statutory footing and more a meddlers’ charter. The Home Secretary has the right to meddle in almost every aspect of the commissioner’s role, from the advice that is given publicly to the reports that are produced. For every aspect of the key work that is done by the “independent” commissioner, the Home Secretary, the Home Office and a plethora of officials at different levels have the right to involve themselves in the way the work is done. I do not think that is in line with what Ministers, in their hearts, really want to happen. I think they are saying that they want to have a certain relationship, but when it comes to defining it in law, they cannot quite bring themselves to put in writing what is in their heads and hearts.
Aspects of part 2 of the Bill give more power to the Home Secretary than to the commissioner herself, and part 2 is designed to create the commissioner. This is really serious: the moment a Home Secretary “directs” the commissioner, the commissioner ceases to be—in the words of the Home Secretary herself, in the statement released on the appointment—
“a voice for those who need it most.”
I say that because if the Home Secretary has changed the words that the independent commissioner uses, they are the words not of the independent commissioner but of the Home Secretary. That is the very moment at which the sector itself will start to lose faith. We will have a sector and victims and survivors losing faith in their voice, their advocate, the person who has the best access to Parliament, to Government and to every Department of Government, not just the Home Office—she has the right, under the Bill, to engage with Departments right across Government. Once faith in that role is gone, it will be very hard to get it back and the ability of the commissioner to advocate, to give voice and to bring about change will be diminished.
I do not believe that is what Ministers want, and I do not believe that is the intent of the legislation. I truly believe that what they want is a commissioner who has the right to act, in the words of the Home Secretary, as
“a voice for those who need it most.”
What we cannot do, as any parent knows—I am not a parent—is tell a child, “You have the right to a voice, but I’ll tell you what to say.” That just does not work. I know that my hon. Friend the Member for Birmingham, Yardley would not even attempt to do such a thing in her household—I have met her children and know that they would see straight through it.
Victoria Atkins
I am going to tackle head-on the criticism about reports, but first I want to make it plain why the reports are so important and to explain how they come about. It is for the commissioner to decide what her reports concern. It is for the commissioner to publish every report that is made under clause 7. It is the commissioner who decides what she will report on. In practice, the reports will flow from the strategic plan set out in clause 12, but it is the commissioner who has that power.
These thematic reports will be an absolutely central part of the commissioner’s work. They will be the key mechanism for discharging the commissioner’s functions under clause 6, and they will identify and publicise good practice but also highlight areas for improvement. I emphasise again that the reports must be published. There is no facility in the Bill for reports to the swept under the carpet or delayed. The commissioner publishes them, not the Home Secretary. A great deal of the commissioner’s power comes from clause 7.
The hon. Gentleman quite rightly raises subsection 4, which states:
“The Secretary of State may direct the Commissioner to omit material from any report under this section before publication if the Secretary of State thinks the publication of that material—
(a) might jeopardise the safety of any person, or
(b) might prejudice the investigation or prosecution of an offence.”
There is nothing in subsection 4 that says, “Oh well, if the report makes the Government look bad, the Home Secretary can omit that.” There is nothing that says, “It’s not terribly helpful, and the timing is bad.” There are two very narrow grounds: jeopardising the safety of any person; and prejudicing the investigation or prosecution of an offence. Because we are so careful about the commissioner’s independence, we have taken the trouble in the draft framework document—the draft document drawn up in consultation with and approved by the commissioner—to try to set out a framework. Therefore, in the—I accept—diminishingly small possibility that the subsection will be used, there is a clear process as to how such disagreements can be resolved.
The ultimate sanction is not, I think, the Home Secretary redacting a name, a location or whatever is needed to protect the person named in the report; it is the last paragraph of the framework document, which says:
“If agreement is not reached with the Home Secretary, the Commissioner may include a note in their report…stating that certain information was omitted at the direction of the Home Secretary, but which the Commissioner did not agree was necessary to protect an individual’s safety or to support the investigation or prosecution of an offence.”
I do not want to speculate about how such circumstances may arise, but I am clear that if a report had a note like that in it, I would expect to be answering an urgent question on it the very next day.
Peter Kyle
The Minister comes right to the heart of the matter, as she characteristically does. However, when she was having debates and discussions with officials and colleagues about how to approach this part of the Bill, why was it decided that the final say should stay with the Home Secretary, with the commissioner needing to publish a note saying that she disagrees, rather than the other way round, with the independent commissioner able to publish what she likes while the Home Secretary publishes a little paragraph pointing out the bit that she did not agree with?
Victoria Atkins
It comes down to accountability at the Dispatch Box. As I say, there is a diminishingly small likelihood of that happening, but that does not mean that we can ignore it. I speak as someone who used to prosecute serious organised crime and spent a great deal of my career as disclosure counsel redacting documents and asking for protection from courts for documents that may, or have the potential to, undermine and jeopardise the safety of people for a variety of reasons, so this is something close to my heart. The power to omit this very narrowly constructed category of information is there to protect a person or to protect the prosecution or investigation of an offence. Accountability for that must fall ultimately on the Home Secretary or the Minister at the Dispatch Box.
I will give an example. I have tried not to speculate, because we all know, particularly in this field, that the ability of human beings to commit harm and to hurt other human beings seems almost infinite at times. Apologies that I cannot give details; I am treading very carefully for reasons that will become clear. A little while ago I was alerted to a mother and her family who had had to flee a house where there was a violently abusive relationship—she was fleeing in fear of her life. The circumstances of her fleeing were, shall we say, notorious in the local community, because the wider family have a reputation and presence in the local community that reaches far beyond the Bill. A person in public life inadvertently, for completely innocent reasons, made a comment about the manner in which that family fled. The concern—it was a very real concern—was that that public official, who had not really understood the ramifications of their commentary, had inadvertently put that victim and her family at significant risk.
Forgive me; I cannot go into more detail because I do not want to alert, but I put that forward because there are occasions where we have to look at not just the immediate circumstances but the possible ever-flowing ramifications that may result from a seemingly innocent assertion. I have complete faith in the designate domestic abuse commissioner that we will not get to a place where we are having to put notes in reports. I have to maintain this very narrowly constructed caveat to this otherwise wide-ranging and free power to safeguard any people or to safeguard investigations or prosecutions for offences that may not be immediately apparent when looking at the very specific circumstances of a case.
To give reassurance as well, I have asked whether this provision is in other pieces of legislation. It is in the Modern Slavery Act 2015 and indeed, it is wider there because the Home Secretary can also omit material for the purposes of national security. If one thinks about modern slavery, that makes sense because of international criminal gangs. I reassure the Committee that this provision exists in other legislation, it is very narrowly defined there and it is not about making the Government look bad or look good. It is about safeguarding people’s safety.
Jess Phillips
The Minister is incredibly reassuring on the point. With regard to the case she is talking about, I do not wish to gather any details. I have handled cases about misdemeanours of people in this place or of their friends, as we all know, and I seek similar reassurances that this power will never be used in a case that might be used to protect a friend of somebody in power or somebody in this place.
Victoria Atkins
The hon. Lady does not just need my reassurance. We have this framework—I appreciate it is a slightly tortuous process—where a very senior civil servant makes the first decision. It then goes to the Home Secretary and we then have the commissioner with the ability to put that note in the report. We have the reassurance of a very senior civil servant, with all the responsibilities the civil service bear in relation to ensuring they act within the Nolan principles and so on. We have that safeguard. We then have the Home Secretary, who has their own responsibilities under the ministerial code and being at the Dispatch Box, and then we have the commissioner being able to put that in her report. I hope that reassures hon. Members about this aspect of the report and clause 8. I invite the hon. Member for Hove to withdraw his amendment.
Peter Kyle
I am grateful to the Minister for her explanation. I will withdraw the amendment.
The Minister will note from the theme of the comments I have been making during the two sittings today that my Front-Bench colleagues and I are concerned not only by the specific parts of the Bill that give power to interfere with the commissioner’s work. Added up, there is the opportunity to make the commissioner’s work overly bureaucratic, slow and sometimes focused too much towards pleasing the paymaster and not enough towards serving the victims and survivors, for whom the commissioner exists to give voice. This was a good possibility to ventilate those in a focused way, but I hope the Minister realises that we feel strongly about the independence of the commissioner. We will talk about this more later, on other amendments on aspects of the commissioner’s independence.
I hope the Minister recognises the strength of feeling towards a hands-off approach. There was a period in Parliament when there was a very rapid turnaround in Ministers on the Front Bench. Time after time we heard, “I don’t want this to happen; my intention isn’t this.” Then three weeks later another Minister with another direction would say, “No, I am really focused on this.” That is why getting the letter of the law right is necessary, and why we need the Bill absolutely nailed down.
Liz Saville Roberts
I beg to move amendment 28, in clause 11, page 7, line 7, at end insert
“in England;
(aa) at least one person appearing to the Commissioner to represent the interests of victims of domestic abuse in Wales;”.
This amendment would require representation for domestic abuse victims in Wales, ensuring that both the interests of domestic abuse victims in England and Wales are equally addressed.
Diolch yn fawr iawn, Ms Buck. Amendment 28 would protect the interests of domestic abuse victims in both England and Wales as it recognises that the experiences and challenges faced by victims in both countries are in some respects different. It endeavours to smooth the jagged edge of the victim’s experience of justice in the context of devolution, as was mentioned earlier. The amendment calls for at least one person from Wales to be given a position on the commissioner’s advisory board in order to adequately address the specific concerns of domestic abuse victims in Wales. I note that it is the commissioner’s role to appoint board members. None the less, the Bill already specifies six roles of members, of which there are four that specify England. I also note the Joint Committee’s recommendation on a duty to consult, and Wales deserves a mention, given that there are so many other roles—six roles—already specifically mentioned, four of which specify England.
Although the designate domestic abuse commissioner has already done excellent work in co-operating with organisations in Wales, my amendment would formalise the relationship. I spoke earlier to the domestic abuse commissioner on this matter, and I welcome her actions so far. She has been in regular contact, as many of us are, with Welsh Women’s Aid and many other organisations on covid-19. She is intent on appointing a member of staff who will be able to specialise in Wales matters, but the specific point of ensuring a voice from victims ideally in Wales, but certainly a voice from Wales on the board, is critical, given that this is a piece of England and Wales legislation and we do, as we have already heard, have legislation specifically on this matter in Wales. I beg the Minister sincerely to consider putting this in the Bill, regardless of what she said previously about the commissioner’s role to appoint the board. It is specified for the other roles and it is becoming apparent that the interplay between England and Wales is quite complicated, so I think that for this to be effective Wales deserves representation to be specified on the board.
We also heard about the importance of differentiating our response to domestic abuse in both England and Wales from the CEO of Welsh Women’s Aid, Sara Kirkpatrick, in last Thursday’s evidence session. She rightly pointed out that clarity is incredibly important in the context of devolution, especially when it comes to understanding what funding is devolved and what is not, and how services are then actually available. That can have an impact on survivors and victims in Wales.
Ms Kirkpatrick made the point that Wales is physically different from England, in that our population overall is more rural. We must therefore provide frontline services to victims of domestic abuse that are adapted to the specific nature and geography of rural communities. I say that representing a constituency such as Dwyfor Meirionnydd, in which we do not even have a court any longer. The nearest court can be 60 miles away from people; I know that will be true for other Members here. That is the true experience for people on the ground in Wales, particularly those who are distanced from the southern, urban areas. Welsh Women’s Aid published a brief in the last month on rurality and domestic abuse, which includes a significant analysis of specific issues faced by survivors in rural communities in Wales.
I am aware that time is going by, so I will touch on some points, in part to have them on the record but also to reflect the fact that Wales has specific issues. The first point is that services are not always available to Welsh speakers through the medium of their first language. Particularly in my constituency, many service users who come into contact with public services are used to receiving their services through the medium of Welsh. It is a matter of rights for the individual, but it is also what people expect day to day. That is a significant area and evidently unique to Wales.
I will touch briefly on the matters that came up in the Welsh Women’s Aid report, “Are you listening and am I being heard?”. On the ability of survivors to access and engage with services, there is a fear within rural areas that if people gain access to services where they may well know the people who are providing them, they do not know how confidential those are likely to be. That in itself creates a reluctance to come forward to people such as the local police officer, the GP, court officials and other community leaders. If people are reluctant to come forward, how do we overcome that in a way that is accessible to them?
I touched on the matter of courts. Public transport issues are also a real issue in areas of Wales. In this age of digital by default, broadband access in certain areas of rural Wales is also patchy.
Fay Jones (Brecon and Radnorshire) (Con)
I sympathise with many of the points the right hon. Lady is making, but some of the areas and obstacles that she has highlighted are issues that are relevant in England and Scotland. Why is the experience of a Welsh victim so singularly different, when those characteristics are the same in England, Scotland and other parts of the United Kingdom?
Liz Saville Roberts
Indeed. The experience of rurality will be common across other nations of the United Kingdom, but overlying that is the fact that we have a separate legislature in Wales that is producing separate legislation. We want to make sure that with the different range of provision, interested bodies and services providers, we are none the less cutting through to survivors, victims and perpetrators, in the way that is intended, and that the fact that we have a difference between England and Wales is not missed out. If we can specify four roles on the board for specifically English aspects, I cannot imagine the justification for Wales not to be represented there as well, with its separate legislation.
In the report. points are made about hospital services being provided at a distance, as well as legal practice and provision. The reality of the experience of survivors is that access to legal services is more challenging in Wales than in many areas of England, for no specific reason, as is access to services for survivors who have fled from abusive relationships and been placed in rural areas. This is often combined with the fact that survivors do not know the community around them, and that certain properties will be known to be places where survivors are placed. We have to be very careful how we handle that.
Jess Phillips
I am not sure whether this is just by virtue of Birmingham being relatively near Wales, but in refuge accommodation services the connection between women moving across borders between Wales and Birmingham services is very common, for example women from Cardiff or Swansea were crossing the border to be housed in Birmingham and vice versa for safety reasons. I am sure that is one of the right hon. Lady’s concerns: how we can ensure this all works well together.
Liz Saville Roberts
Without mentioning them, there are certain communities in my constituency where private landlords are very inclined to take people in from public service sources in England, and from those individuals’ experience, they are used to one set of services being available to them in one place, and they find themselves receiving an entirely different set of services, often with their children going into Welsh medium education, in another. Survivors have to undertake the experience of that difference.
I am grateful for the opportunity to explain some of the experiences and scenarios on the ground in my own constituency and other places in Wales, but the fundamental thing that is crying out to be remedied here is the fact that it is possible for this legislation to specify certain roles on the advisory board. Alongside the fact that the Joint Committee recommended that consultation be undertaken with Wales, I beg the Minister to consider that it would be deeply appropriate to include Wales in this, because, otherwise, we will set the domestic abuse commissioner up to be falsely accused of not taking into consideration aspects that we have considered in this place, and this would be an obvious remedy to do that. I look forward to the Minister’s response.
Alex Davies-Jones (Pontypridd) (Lab)
I thank the right hon. Member for Dwyfor Meirionnydd for her contribution, which I support. I am always one for standing up and giving a voice to Wales and I feel that Wales desperately needs a voice in the Bill, which straddles both nations and they should be equally represented.
One in four women in Wales experience domestic violence at the hands of a partner in their lifetime. They need a voice on this advisory board too. We have seen the ground-breaking legislation in Wales. Thanks to the Welsh Labour Government, we have the Violence against Women, Domestic Abuse and Sexual Violence (Wales) Act 2015. We have already discussed the importance of the legislation aligning with the devolved Government, so that we do not have any gaps and inconsistencies, which people can fall through.
It is vital that Wales has a voice and is represented. We know that the domestic abuse commissioner has an effective consultative remit with survivors and services in Wales, to ensure there is an understanding of the context as to how devolved and non-devolved competency areas interact, but this must be done effectively to ensure that the board has representation from Wales, so that non-devolved survivors and services are given that voice. Currently the Bill only allows representation for voluntary organisations in England and that must be changed. I fully support this amendment and I urge members across the House to do so. I know there are hon. Members from Wales who would want Wales to be represented at all levels in the Bill, so I urge them to support this amendment.
Jess Phillips
I wonder about specific issues that this Bill—perhaps not yet, but potentially—covers, such as welfare and immigration. We heard from the commissioner herself that an onus was put on what she would be expected to do around the issue, specifically, of migrant women. Obviously, that does not sit within the remit of the Senedd, so there is a vital need for Wales to have representation.
Alex Davies-Jones
Absolutely. There definitely needs to be a cohesive relationship between the Senedd, the UK Government and the commissioner to ensure that all gaps are filled and that nobody falls through the gaps, in terms of competency of what is devolved and what is not, so I absolutely would support that.
Victoria Atkins
I thank the right hon. Member for Dwyfor Meirionnydd for standing up for Wales. I do not want to get into a comparison of rural areas, but I do not have a court in my constituency either, nor do I have any train line, but that is a campaign for my constituency—other than the Lincolnshire Wolds steam railway, I should say.
I quite understand why the right hon. Lady has raised this, and I hope that she is reading particularly clause 11(4); she will see that we have been meticulous in respecting the devolution settlement in Wales and drafting the membership accordingly. The reason subsection (4)(b) refers to
“charities and other voluntary organisations that work with victims of domestic abuse in England”,
is that we respect that under the devolution settlement Wales is able to do, and indeed is doing, so much to look after its own victims. The same goes with healthcare services and social care services in England; they are specified precisely because of the devolution arrangements.
We have been very sensitive to the wish of the Welsh Government to continue their own programmes of work on this—indeed, the right hon. Lady has set out some of them—so we have been clear that the commissioner’s remit in Wales is restricted to reserved matters such as policing and criminal, civil and family justice. The membership of the advisory body, as set out in subsection (4), reflects the division of responsibilities.
However, in addition to seeking advice from the advisory board, the commissioner is not prevented from consulting Welsh bodies, whether devolved or not, to learn from their experience or to conduct joint work. I welcome that sort of co-operation and I expect the commissioner to work closely with the Welsh Government’s national advisers.
Fay Jones
It is important to bear in mind that the designate commissioner last week made clear her intention to work hand in hand with the Welsh Government. I think she told us last week that she speaks to them on a weekly basis. That is evidence that we must bear in mind of the way in which we can work so closely together.
Victoria Atkins
My hon. Friend is absolutely right. It is about respecting the devolution settlement and being alive to different approaches that each may take, while also supporting each other and co-ordinating work. I hope that explains why the compulsory membership of the board is set out as it is. Of course, the commissioner can appoint up to four members outside that list, and I trust her good judgment to get the balance right. I reflect on the fact that we have been having conversations about how independent the commissioner must be, and we have tried in to keep that balance right.
Liz Saville Roberts
Will the Minister consider the risk of being open to the accusation that victims in Wales therefore have no voice with the domestic abuse commissioner?
Victoria Atkins
I think that would be very unfair on the commissioner. Let us not forget that, alongside the advisory board, the commissioner will be required to establish a victims and survivors advisory group. That is in the terms and conditions of her employment, and it is left to the commissioner to draw the group together herself. Again, I am sure she is watching these scrutiny proceedings very closely, and she will have listened to that concern.
I will draw back from making any requests or directions of the commissioner in that regard, but she has been clear throughout this process that she is keen to respect devolution, but also to work closely with the Welsh Government and Welsh national advisers where it is appropriate and possible to do so. As I say, given that there is the flexibility, given that we have heard from the commissioner herself about her intentions and given that she is required to establish a victims and survivors advisory group, I hope that the concerns expressed by the right hon. Lady will be allayed.
Liz Saville Roberts
I will withdraw the amendment for now, but I will hope to raise this further with the Minister in future. I beg to ask leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Ordered, That further consideration be now adjourned. —(Rebecca Harris.)
Immigration and Social Security Co-ordination (EU Withdrawal) Bill (Second sitting)
Tuesday 9th June 2020
(3 years, 10 months ago)
Public Bill CommitteesRead Full debate Immigration and Social Security Co-ordination (EU Withdrawal) Act 2020 View all Immigration and Social Security Co-ordination (EU Withdrawal) Act 2020 Debates Read Hansard Text Read Debate Ministerial Extracts Amendment Paper: Public Bill Committee Amendments as at 9 June 2020 - (9 Jun 2020)
The Chair
Good afternoon. This is the second evidence session, and it will be a mixture of people who are with us physically and people who are here virtually, so we will have to cope as best we can. Our first witnesses are a representative of British in Europe, via audio link, and Professor Bernard Ryan. We have until about 2.40 to take that evidence. I will go first of all to the Minister, then to the Opposition spokesman. Is anybody else desperate to ask a question at the moment? You can put up your hand and intimate to the Clerk that you would like to speak.
Those of you who are sitting at the back of the hall—you are very welcome, by the way—are equally members of this Committee. Apparently if you want to speak, you have to go to a microphone over there. Are we all happy to start the session? We have to ring our witnesses now, so please be patient.
We are ready to start with our first panel of witnesses. Thank you for coming today. This session will have to end at 2.40pm.
The Parliamentary Under-Secretary of State for the Home Department (Kevin Foster)
Q
Jeremy Morgan: The sound is not very good but I will do my best. The question was about social security provisions, is that right?
Kevin Foster
It was about what implications you see for British citizens in Europe regarding social security co-ordination provisions in the Bill.
Jeremy Morgan: May I start by thanking the Committee for asking us to give evidence, even in this rather strange way? The social security provisions are crucial for UK citizens in the EU. They govern pensions, pension increases, healthcare, other benefits, and the aggregation of the equivalent of national insurance contributions made in different countries, without which some people would fail to meet the minimum contribution period for pensions or other benefits. Those provisions are preserved in UK law by the European Union (Withdrawal) Act 2018 so there should be no impact. However, as is made clear in the briefing note that we prepared and that has, I hope, been circulated, we are worried about clause 5 because that clause creates a regulation-making power wide enough to modify rights under the withdrawal agreement. We entirely accept that in the explanatory note the Government say that they do not intend to have an impact on our withdrawal agreement rights, but we are worried about that on two grounds, and the concerns are twofold.
First, as a constitutional issue it is wrong to create a power in a regulation that might breach an international treaty. If that is to be done, it should be done by primary legislation after a proper debate. Secondly, and more practically, those social security provisions that are listed in the Bill are right up there with UK immigration law for complexity. It is Byzantine complexity, and that is no exaggeration. It would not be difficult for an unintended breach to slip through. Therefore, to prevent a breach of a treaty by mistake, it is important that any such amendment be made through primary legislation after a proper debate.
Kevin Foster
Q
Jeremy Morgan: I am sorry, I am having great difficulty in hearing the question.
Kevin Foster
A Minister cannot breach international law in regulations. Would you have any concerns if the legislation, for example, did not empower a Minister to quickly implement an agreement in relation to social security co-ordination if one was reached with the European Union before 1 January?
Jeremy Morgan: You are talking about the future relationship beyond Brexit, effectively?
Kevin Foster
Yes. Effectively, there are negotiations ongoing, and the issue is what happens if the Government reached an agreement and wished to implement it before that time.
Jeremy Morgan: I should start by saying that we were fairly careful in the representations that we made. We are a group that represents British citizens in Europe who are affected by Brexit and were there before Brexit. We have tended not to get into policy post the end of the transition period, simply because it is not within our remit to do so. It is for others to express views on that. Clearly, if a further agreement is made for rights that extend to others beyond those who are already in the EU, it is important that the Government should be able to implement that, but whether that is by primary legislation or regulations made at the time for that purpose is a matter for this Committee to decide. I do not think British in Europe would have a strong view about it.
Holly Lynch (Halifax) (Lab)
Q
Professor Bernard Ryan: Certainly. First, I thank the Committee and the Chair for the invitation.
The Chair
By the way, I do not know how our other witness is going to hear you. The acoustics are not brilliant, and I suspect that they are quite a long way away. They are already having difficulty hearing anyway, so speak up loudly, slowly and clearly. Sorry to interrupt.
Professor Bernard Ryan: I will do my best.
I obviously welcome clause 2. I see it as addressing a longstanding gap in immigration law, which is a lack of clear provision for Irish citizens, notwithstanding the fact that there has not been a policy or practice of placing restrictions on them. As I see it, the clause addresses the legal status of Irish citizens who enter the United Kingdom from outside the common travel area, so I wholeheartedly welcome it.
There are some finer points where one might point to potential problems down the road. I identified several in my evidence. First, in regards to family migration, it is still left open a little whether Irish citizens who will have the freedom to enter and reside will be in the same position as British citizens with regard to sponsoring family members in every respect. I think that is something that could be addressed.
There is also a difficulty relating to deportation and exclusion. I certainly would not argue that Irish citizens should be exempt from those. They are citizens of another state, as it were, so it should be possible to deport and exclude, but what is the threshold is going to be? We know that the general threshold is conducive to the public good, but in practice that is not the threshold that is used for Irish citizens because of the common travel area. There is a much higher standard, so could that be written into legislation or could commitments be obtained during the passage of the Bill about how those powers will be used in relation to Irish citizens in the future?
My third suggestion would be to consider the situation of persons of Northern Ireland, to use the recent jargon. The Belfast Agreement, of course, permits people from Northern Ireland to identify as British, Irish or both, so for a focus on identifying as Irish, is there really sufficient provision in immigration law for people to do that? They are not guaranteed full equality as regards to family sponsorship, but they do not have immunity from deportation and exclusion either unless they assert British citizenship. In the grand scheme of things, it is a detailed point, but it is important in the Northern Irish context—[Interruption.]
The Chair
Could you hold on a moment, Professor Ryan? Can we check the line, please? Let us carry on.
Holly Lynch
Q
Professor Bernard Ryan: I am afraid I do not have an answer to that. I have been following it, as it were, in relation to the policy statements, not in relation to individual cases.
Stuart C. McDonald (Cumbernauld, Kilsyth and Kirkintilloch East) (SNP)
Q
Professor Bernard Ryan: That is correct. I believe it was in the Committee stage, in the light of the evidence, perhaps, that the Minister made that commitment. Those commitments are obviously welcome, from my perspective.
Stuart C. McDonald
Q
Professor Bernard Ryan: It is obviously stronger if it is put in the Bill. If it is not, policy can always be changed. Going back to the wider clause, one strength of what has been done is that it gives clarity to Irish citizens on their position in the United Kingdom. That, in a sense, is the issue with deportation. What are the arrangements going to be? What are the standards going to be? Having things in legislation, rather than in policy, is obviously stronger, from the perspective of Irish citizens.
Stuart C. McDonald
Q
Professor Bernard Ryan: My main concern regards Irish citizens who are not yet resident in the United Kingdom. It is the case that Irish citizens are treated as settled once they commence residence. From that point, as things stand, they will clearly be able to sponsor, but what about the Irish citizens planning to come with their non-British or non-Irish family? They will need entry clearance. How will it work for them?
Stuart C. McDonald
Is that because the fact that they are not in the UK obviously means that they cannot be treated as settled persons? Okay. I will ask Mr Morgan a question, if he is able to hear.
The Chair
Are you receiving us loud and clear?
Jeremy Morgan: Yes. I heard very little of the other evidence, but I heard that question.
Stuart C. McDonald
Q
Jeremy Morgan: I would like to highlight a particular hardship that UK citizens living in the EEA will face after March 2022. The background is that, in the negotiations over the withdrawal agreement, citizens’ rights were a first priority for both sides, and reciprocity was the watchword. In other words, whatever we got, they got, and vice versa. That was a clear, underlying consideration in the negotiations.
However, the right of citizens to return with their families to their country of origin was deemed outside the scope of the negotiations, and the result is a serious inequality between UK citizens in the EU and EU citizens in the UK, in which, perhaps rather perversely, the discrimination is by the UK against its own citizens. We put forward an amendment in our briefing paper, which has been picked up as amendment 14. This is not the place to analyse the issue in great detail, but I would like to look at the comparison that we draw there between two groups in the case study—a UK citizen living in the EU and an EU citizen living in the UK.
It is a familiar story: a young UK citizen gets on their bike and goes to find work in the EU. They meet someone there, they marry and have a family, and they settle there. At the time when the UK citizen leaves, they have parents in the UK who are in middle to late middle age and are perfectly healthy. The reassurance was there, both for the UK citizen and their parents, that should either parent or both parents become infirm and need to be cared for by their child, there would be no problem about the UK citizen returning with family to look after them.
Years later, say in 2030, one parent might be by herself and need that care. After March 2022, the UK national will be able to return with their EU partner only if their partner can enter under the new points-based system—we have yet to see it, but that is likely to be quite difficult—or if they can meet the minimum income requirement, which is £18,600, as I am sure you all know. It has already been estimated that about 40% of the people living in the UK would be unable to meet that requirement, but matters are complicated for those returning from abroad by the UK rules on what income counts for such purposes. The income of the partner—let us say, in this case, the EU partner—will not count unless they are already in the UK and have been earning that income for six months. So it is a Kafkaesque situation: you cannot get in unless you have the income, but your income counts only if you have already got in.
In practice, the UK national has to earn the minimum income requirement on their own, while at the same time caring for their parent. It will simply be impossible for many people—probably most. In practical terms, the other option is to move the UK parent, who is now elderly and frail, to an unfamiliar country where, for language reasons, they will be unable to speak to the doctors or anyone else. It is well established in the literature that any move, for someone of that age, is difficult. Think how much worse it would be in such conditions; for most people, it is not a serious option.
In practice, it means that UK citizens have to choose between their parents and the family they have made in the EU—a heart-rending choice that nobody should have to make. It is not a choice that a comparable EU citizen of the UK has to face, because they have an absolute right to return to their EU country with a partner they met in the UK, and it is not a requirement that the UK citizen now living in the EU had faced when they moved, because at that time they had a right to do so. It is a case of moving the goalposts long after the event. It is a real worry for many thousands of people in that situation. Be they young or old, most people who have left the UK will have parents back there. It is a worry in the sense that people worry about it; it may not become a practical reality, because who knows what will happen in the future? But it is a real concern, which could be got rid of by passing amendment 14 and removing both the injustice and the discrimination.
Kate Green (Stretford and Urmston) (Lab)
Q
Jeremy Morgan: I think it would reduce such migration considerably, because the aggregation of contribution rules are absolutely vital. Most countries, including the UK, have minimum periods of contribution: unless you have contributed for the minimum period or contributed the minimum amount, you do not get any pension at all, so you are making your contribution, possibly without any benefit. The great advantage of the social security co-ordination rules is that they enable you to aggregate periods spent in different countries in the EU, including the UK, and you therefore overcome any such barrier, provided you have worked, in all, long enough to meet the requirements. In Britain, I think, the minimum contribution period is 10 years; in Italy, where I live, it is 20 years. These are substantial barriers.
Kate Green
Q
Jeremy Morgan: Concerns in the UK?
Kate Green
Yes.
Jeremy Morgan: All I can say, speaking as one of the many people in Europe who have taken advantage of the ability to move, is that we feel it would be a significantly reduced opportunity for young people in the UK now. Seventy-nine per cent of UK citizens living in Europe at present are of working age or younger. It is not a case, as some stereotypes have it, that we are all pensioners. I happen to be one, but I am one of the minority. Seventy-nine per cent are of working age or younger, who have taken advantage of the opportunities that the movement that we have been able to have has given to us personally but also, in terms of cultural exchange and awareness of practice in different countries, to Britain as a whole. They have established a considerable presence in Europe and it would be a pity for that not to be continued.
Kate Green
Q
Jeremy Morgan: Yes, it would, quite clearly. There are also questions as to whether they will be able to own property at all. Again, speaking of Italy, unless some bilateral arrangement is made, it will not be possible for British nationals to buy properties after the end of the transition unless they are resident in Italy. I am sure there are similar provisions in other countries.
Kate Green
Q
Professor Bernard Ryan: Thank you very much for bringing that up. One of the issues at present is that not only is there a lack of clarity about immigration status, but also it feeds into the lack of clarity as regards acquisition of nationality in two scenarios. One is British-born children—children born to Irish parents, and also Irish citizens wishing to naturalise. Because it is very often not clear on what basis Irish citizens are here, to the extent that it is not clear the question arises, “Are they without time limits and have they ever been in breach of immigration laws?” It is necessary also, from the perspective of the smooth working of British citizenship law, to absolutely tie down and clarify that Irish citizens are here, and on what basis. And yes, it will remove any possible question as regards children of Irish parents being British citizens and as regards access to naturalisation by Irish citizens who want it.
Mr Robert Goodwill (Scarborough and Whitby) (Con)
Q
Professor Bernard Ryan: I think you are bringing us into the question of the common travel area as such and its operation. That would be my interpretation of your question. One of the things I would expect to see in the future would be, if the United Kingdom does not stay within the Dublin system with the EU, that there will be an arrangement with the Irish Republic as regards asylum seekers, because of the open border. It would be logical to do that. I personally would prefer it if the common travel area, conceived as immigration control and co-operation between the two states, were on a more transparent, and maybe more statutory, footing—but that is a much bigger question. That is to some extent a different one from the status of Irish citizens, which is what the clause deals with. So, yes, in the end I would like to see the common travel area framed more transparently than it is at present.
Mr Goodwill
Q
Jeremy Morgan: I did not understand the beginning of the question. I think the question was: would this equalise the rights between EU citizens living in the UK and UK citizens living in the EU? The answer is yes.
Stuart C. McDonald
Q
Professor Bernard Ryan: Yes. Actually, I am borrowing that idea to some extent from Alison Harvey, from whom I believe you are hearing evidence later on. She has written a paper for the two human rights commissions in Ireland on the birthright provisions in the Belfast agreement, and her eventual solution is that people of Northern Ireland should be granted the right of abode—the status given to British citizens—which takes away their need to identify as British in order to get the equivalent outcomes. Both the things I raised—family sponsorship and deportation/exclusion—would be addressed by that route. I come at it from thinking about Irish citizens or people identifying as Irish citizens and how they should be protected, so I would say that an alternative route is to focus on that and somehow put in additional protections for the people of Northern Ireland to address the Irish citizens within them.
The Chair
Thank you very much. That concludes our session with this panel of our witnesses, who I thank for coming here today or speaking via audio link.
Examination of Witnesses
Jill Rutter and David Goodhart gave evidence.
The Chair
Welcome to our second panel of witnesses. We are going to hear oral evidence from British Future and Policy Exchange; thank you very much to our witnesses for coming today. We have until 3.20 pm at the latest for this evidence session. Can the witnesses please introduce themselves for the record?
Jill Rutter: I am Jill Rutter from British Future.
David Goodhart: I am David Goodhart from Policy Exchange.
The Chair
You are very welcome. As we normally do, the Minister will start by asking you a couple of questions, and then the Opposition spokesman, and then other Members will come in. Perhaps other Members who wish to ask questions could intimate to the Clerk that they would like to ask a question.
Kevin Foster
Q
The first question is to Mr Goodhart. I noticed that the January 2018 report from Policy Exchange, “Immigration after Brexit”, welcomed the ending of free movement. As you will appreciate, the main provision of the Bill is to alter UK law to remove the provisions for free movement. I wondered how you saw that, and how you saw the system that will seek to replace it, which we confirmed in a policy statement in February.
My question to Ms Rutter is this: given, obviously, the area that she covers in her group’s interest, I wonder how she sees the working of the European settlement scheme, which has now had 3.5 million applications, in terms of securing the continuing rights of EU citizens in the UK, or EEA citizens in the UK to be exact, under the withdrawal agreement.
David Goodhart: A general comment on the Bill is that I think it is broadly welcome. Part of the motivation behind Brexit, and perhaps the 2019 election too, was a more moderate level of immigration. It is true that immigration has dropped down the list of things that people worry about, for obvious reasons, even before the covid crisis, but I think that was partly because people saw that the Government were actually doing something about it. And I think the Government have broadly got it right to focus very much on restricting lower-skill immigration.
I think the higher-skill immigration channels are probably somewhat more liberal even than the Migration Advisory Committee envisaged. I mean, there has been a big liberalisation both on the salary threshold and on the qualification threshold. Bringing the qualification threshold down from degree level to A-level is a big move, and it will be interesting to see whether those changes achieve the goal of an overall lower level of immigration. I think the perfectly reasonable and democratically willed goal is a lower equilibrium level of immigration without damaging the economy. That is the goal that the Government are hoping to achieve, and I think the measures they have introduced are likely to achieve that.
I think I would probably have gone for slightly tighter restrictions, perhaps keeping the degree-level qualification and then having more exemptions—the type of exemptions that we see in the agricultural sector and so on—because Governments have made promises about immigration many times in the last 15 years or so, and they have very clearly said that they want the overall levels to be lower. I think it is quite likely that in a couple of years’ time they will not really be significantly lower, and then that will set off a whole—but then we will have the levers, at least, to do something about that.
Jill Rutter: I would like to make some general points before coming to your question on the EU settlement scheme. I am going to draw from the National Conversation on Immigration, which is the biggest ever public engagement activity on this subject and included a nationally representative survey and discussions in 60 locations across the UK, including a good few of your constituencies.
Although public confidence in the ability of successive Governments to manage the immigration system has been and still remains low, most people are balancers who see the pressures and gains of migration. Generally, most people want immigration to be controlled, they want migrants who come here to make a contribution and they want everybody to be treated fairly. However, control means different things to different people. It can be about UK sovereignty, controlling numbers, a selective immigration system and enforcement.
There are two further points in terms of public confidence. Immigration is a national issue that people see through a local lens, so what happens locally is quite important, and people’s understanding of immigration policy is very top line. They do not know the details of our policy, such as the detail of the EU settlement scheme.
Treating people fairly is hard-wired into most people. Most people want to see fair play and humanity. They want immigration to be controlled, but that has to be fair, and you do not win support by sounding nasty. In terms of the EU settlement scheme, nobody wants people who are here to be sent home. Towards the end of the National Conversation, when Windrush was an issue, people also talked about the unfairness of the Windrush scheme.
In terms of the Bill, the devil is in the detail and policy will be set through immigration rules, but areas to look at perhaps include people who have been awarded pre-settled status being automatically granted settled status, rather than having to apply again, and also thinking about citizenship. The public find it very reassuring when people make the UK their home and then take up British citizenship. That can sound a bit counterintuitive, but there is a preference for people becoming citizens, rather than having guest-worker schemes. On immigration policy, you could look at how one can make the acquisition of citizenship smoother and easier—by reviewing the cost of citizenship, for example.
Holly Lynch
Q
David Goodhart: As I just mentioned, it has certainly dropped down in terms of priority and level of anxiety, but pretty consistently over the past 20-odd years about two thirds of the public have said that immigration is either too high or much too high. That may have come down a little bit recently. It has certainly come down in terms of priority, partly because other things have been happening, even prior to covid. It is also because of a feeling that, with Brexit finally happening and the end of free movement from the European Union, we would be in control of it again, so a source of anxiety was removed.
Jill Rutter: To echo what David said, immigration has certainly dropped down of the list of issues of public concern. It is much less salient. Ipsos MORI has also tracked the same group of people over a five-year period, and has seen a slight warming of attitudes. That is evident in other polling data, too.
I think the reason for that is, first of all, as David said, that people feel that now we are leaving the European Union, the UK has control over immigration from the EU. But also the referendum itself enabled a much more open, public debate about immigration in pubs and among groups of friends. Inevitably, in that discussion, there is a kind of moderation of our attitudes. That is a reason, too. Again, there is a displacement effect: covid-19 has pushed immigration off the news agenda.
Holly Lynch
Q
David Goodhart: One third of food manufacturing’s employees are from the EU. That went up from virtually nothing in 2004—it is extraordinary what has happened in food manufacturing. In hospitality the figure is about 20%. The NHS has some special exemptions, but overall its figure is about 5% or 6%—rather higher on doctors than on nurses in percentage terms. Hospitality will be in a peculiar state anyway because of covid-19, so perhaps that is not such a big issue.
Do not forget, these people are not disappearing; it is incremental as people leave over time. That will be interesting to see. It may be that covid-19 will prompt EU citizens to leave in larger numbers. I do not know, Jill, whether you know if there has been any research in the past few weeks on that. That could be a problem, I guess.
Assuming that that will not change things hugely, the whole point of ending free movement is that food manufacturers either invest more in automation or they have to make the jobs at the bottom end of the labour market more attractive to people who are already here, which does not seem to me to be a foolish goal. That means that they will have to pay the jobs better and make them more pleasant in some way. That is surely a good thing.
Holly Lynch
Q
David Goodhart: I don’t quite get that, sorry.
Holly Lynch
If the MAC, as an organisation, is assessing where we have workforce shortages, that only informs our immigration approach. It should also be informing our domestic skills strategy.
David Goodhart: Well, there are lots of organisations that are constantly looking at recruitment problems. There is a whole industry of it, as you know.
Holly Lynch
Q
David Goodhart: We do not really have a skills policy in this country. Where do we spend most of our money on education and training, post school? On sending almost 50% of school leavers to three-year or four-year residential university courses, which they choose themselves, with absolutely no bearing on the needs of the economy or their own future employment needs. There is huge investment in the university sector; universities are private bodies that compete with each other. We do not have a national skills policy. We introduced the apprenticeship levy, but still less than 10% of school leavers go into apprenticeships—this is a different subject.
One of the potential upsides of the end of free movement is that it is going to help to concentrate our minds on getting better alignment of what we spend on education and training and what people and the economy need. Obviously, the covid-19 crisis will feed into that. I have been involved in some work at Policy Exchange on reviving the idea of the individual learning account and having a more ambitious version of it for people over the age of 21 who want to train or retrain in some area.
There is a very good case for suspending the apprenticeship levy and just having a much simpler system in which you have 50% of the apprenticeship paid for by the employer and 50% by the state, and extending it to much smaller employers, too. This is a slightly separate issue, I know.
Holly Lynch
Q
Jill Rutter: I fully agree that skills policy and immigration policy need to be much more closely aligned. Whether the MAC is the best instrument to do it, given its current remit, I do not know. There are arguments for extending the MAC and bringing in other expertise. At the moment it is very labour market economist-focused—its remit has largely focused on labour market impacts. There are arguments for expanding the MAC.
I also think it is worth looking at the migration skills surcharge, which is a very blunt instrument. It applies to non-EU migrants; employers who bring in non-EU migrants have to pay a surcharge. The money just disappears into the Treasury, and I do not think it incentivises training at all, so that is something to look at as well.
Stuart C. McDonald
Q
Jill Rutter: A whole load of factors influence public opinion. Our national media and political debates obviously have a hugely important impact, but so does what happens locally and your own personal contact with migrants. If you have friends who are migrants and refugees, you have another reference point to add to what is going on and what is being played out on the internet or on social media.
Stuart C. McDonald
Q
Jill Rutter: Absolutely, and that was very evident in the polling that we did: those with no personal contact with migrants and refugees as friends or work colleagues had more negative opinions. I think that that accounts for the difference in attitudes between some of our more diverse cities and our less diverse towns, but political discourse and media stories have an impact as well.
Stuart C. McDonald
Q
David Goodhart: I see what you are getting at. I think that there is some truth in the argument that when it is on the front pages of the newspapers every day, it generates a sort of generalised anxiety that is perhaps not justified. But actually if you look at the historic trend from the late ’90s, when immigration started really taking off again, it is remarkable how anxiety about immigration and actual immigration levels really do track each other very closely, although that may have diverged a bit recently.
I also think it is not really fair how it is often said in passing how xenophobic our debate about immigration has been. I do not think that our debate about immigration has been remotely xenophobic.
Stuart C. McDonald
Q
David Goodhart: Yes, really. Almost every time somebody talks about immigration and restricting it, they also say in parentheses how marvellous immigration is.
Stuart C. McDonald
Q
David Goodhart: “Go home” vans lasted about five seconds—
Stuart C. McDonald
Q
David Goodhart—and that was against illegal immigration. You are not in favour of illegal immigration, are you? You are in favour of illegal immigrants going home.
Stuart C. McDonald
Q
David Goodhart: No, I don’t think that was xenophobic.
Stuart C. McDonald
Q
David Goodhart: It was encouraging illegal immigrants to contact the authorities to get a grant in order to go home.
Stuart C. McDonald
Q
David Goodhart: Oh, the Nigel Farage—okay, there is a sort of xenophobic tinge to some of it, but this was a very minority part even of the leave campaign. I think there is an interesting point about opinion in Scotland, which is somewhat different, partly because there has been a somewhat different rhetoric in Scotland.
Actually, I think there is a very good case for having a different visa regime in Scotland once this Bill becomes law. I know that the Government rather set their face against that at the moment, but I think it would remove a source of antagonism between the Scottish Government and the UK Government, and it ought to be perfectly easy to manage, so long as we have a proper internal status checking system—something that is sometimes called the hostile environment. It is not the hostile environment; it is a system of checking people’s status. A separate system for Scotland works only if you have a reliable status checking system—by employers particularly, but also by landlords and others. There is a really good case for it but, as I say, it only works if you have a proper status checking system.
Stuart C. McDonald
Q
Jill Rutter, may we come back to you? Is there not also an issue about the fact that, compared with other countries—Canada being a particular example—very little effort has ever been made by UK Governments on an integration strategy or on investing in smoothing over some of the challenges that arise because of migration in particular pockets of the country? We had a small fund—I cannot even remember the name—that Gordon Brown introduced, which was scrapped by Theresa May, only for her to introduce a small pocket fund called the controlling migration fund. At best, is that half-hearted compared with what other countries have attempted?
Jill Rutter: Absolutely. Our getting integration right is core to building public confidence in the immigration system. In England, we have an integrated communities Green Paper. Sajid Javid, as a former Ministry of Housing, Communities and Local Government Minister, Home Secretary and Chancellor, is a champion of that but, since his departure, unfortunately, we have not had high-level champions in Government. For a period, we had no integration Minister at all.
Much of integration, too, involves devolved powers—education and so on—and I think more needs to be done by the devolved Administrations in Belfast, Cardiff and Edinburgh. Scotland has a refugee integration strategy, but it is very much about refugees, whereas integration properly as a two-way relationship is an “everybody” issue. Certainly, more action is needed there, in all the Administrations.
As regards the Bill, making immigration and integration policy coherent is something that you should consider—making the acquisition of citizenship easier, allowing asylum seekers who have been here for a long time to integrate and work, and incentivising integration through the new points-based system. For example, more points could be awarded to people who speak English, whatever their job will be in the UK—so using the points-based system to incentivise integration.
Stuart C. McDonald
Q
David Goodhart: Yes. That is something I have been interested in for a very long time. We should almost have an immigration and integration Department. The problem is, integration is very easy to talk about but, in a liberal society, it is very difficult to tell people where to live or to send their children to school. There are parts of the country where integration is a real problem; there are other parts of the country where it is not at all. You mentioned Canada, but it is a slightly special case; compared with comparable European countries, we do not do too badly.
The thing that I worry about at the moment is schools. Integration in schools is going backwards in most parts of England. In other words, schools are becoming less well integrated. In any given town, you are more likely to have a school that is overwhelmingly one ethnic minority, or ethnic minorities in general, and then another, almost entirely white school. That problem is getting worse, not better. That is something that is in our power to do something about.
We have ways of counting this, of measuring it. We have where people live and where they go to school, and we can measure that by different ethnic group. We can tell which areas are getting better, and which worse. It would be a really helpful thing, not necessarily every year, but every two or three years, to publish some kind of list of what has been happening in different places—some kind of integration/segregation list of local authorities. That would be a huge incentive for all the most segregated local authorities not to be right at the bottom—not to be the most segregated local authority in the country. There are things you can do, and I think we should focus attention on schools, because it is possible to play with boundaries and nudge people into a better school mix.
Mr Goodwill
Q
Jill, I note that you are a co-author of a document published in September 2018, “The National Conversation on Immigration”. I wonder how much that document reflected some of the feeling in the north of England and parts of the country that maybe do not see immigration as allowing somebody to make your coffee in the morning, clean your house or work as your au pair; those that, as we heard this morning, see it more as a limitless supply of Romanians and Bulgarians who can fill your job if you want a pay rise. Do we have a north-south divide on attitudes to immigration, and do you think that was a factor in the fall of red wall seats at the last general election?
Jill Rutter: It is not so much a north-south divide as an inner city-town divide, or a city-town divide. There are some differences in attitudes between the more diverse cities and the less diverse towns, and that can be partly put down to social contact, but there are other factors. In some of those so-called red wall towns, people have relatively little social contact with migrants, and where they do, people have perhaps come to do specific jobs in specific industries. For example, the distribution sector is heavily reliant on a migrant workforce, and poor management of some of those local issues has perhaps impacted on public concerns.
In England, we have the controlling migration fund, which is quite a successful way of dealing with those local impacts: I think its money has been well spent. However, that funding will end, and no successor to that fund has yet been announced. It is vital that that fund is continued, and that its funding is increased if we can manage to do so.
David Goodhart: One of the problems with free movement was that it was so difficult to plan infrastructure: you had huge waves of immigration, and then it fell. We had that experience in 2011-12, when immigration came right down—I seem to remember that the Government almost hit their 100,000 target; net immigration was about 130,000 or 140,000—and then went whizzing up again when the impact of the eurozone crisis hit. That may not be a huge amount when spread across the whole country or lots of big urban centres, but it makes it very difficult to plan your doctors’ surgeries, your school intakes and so on at a micro level. That has been one of the really big problems with free movement, and I think it ought to be more manageable in the future. That has been one of the really big problems with free movement, and I think it ought to be more manageable in the future.
Mr Goodwill
Q
David Goodhart: It will make flows more predictable, because they will be under our control. If, as I was saying right at the beginning, it turns out that the system is, in a sense, too liberal, it can be made less liberal and the numbers can be brought down, because people coming in need to have a visa; they are not coming in willy-nilly.
This also has an impact on the integration story. If your immigration going forward is overwhelmingly skilled workers and students—there will still be areas like asylum where this does not count—you are talking about mainly highly skilled people who will, at the very least, speak English well, which is a pretty important thing when it comes to integration.
Taiwo Owatemi (Coventry North West) (Lab)
Q
Jill Rutter: This is very much a skeleton Bill, and most immigration policy is determined in immigration rules. It is an issue in itself in that there have been thousands and thousands of immigration rule changes since 2010. The rules are presented to Parliament, which can only accept or reject them. No MP—even those well versed in immigration policy—can keep up with all the changes in the rules. We need to think about root-and branch-immigration reform. I do not think the current commission on simplifying the immigration rules will come up with the answer.
Perhaps we should look at what social security does. Social security is another complex area where most policy is determined in secondary legislation. There is the Social Security Advisory Committee—independent experts who scrutinise the law and make recommendations in plain English to Parliament—but we need a proper system of scrutiny. I cannot really answer your question about the Bill itself, because most of what will happen will be determined in either the rules or the operation of immigration law in the Home Office.
The last thing to say is that you cannot have an efficient immigration system on the cheap. Britain does very well in the speed at which it processes visas and citizenship cases compared with many other countries, but it performs badly when it comes to asylum cases. We need a properly resourced Home Office and for staff to be trained and supported, too.
Taiwo Owatemi
Q
Jill Rutter: The Government have invested quite a lot in terms of informing people about the EU settlement scheme. However, that information campaign needs to be extended, particularly when we come close to the cut-off date, and it must be methodical. There should be an information campaign, but we should also use employers and councils, people who actually have contact with EU citizens, to disseminate information. Employers could do a lot with their work force.
David Goodhart: May I make a point on this? One thing the Government should be looking out for down the road is that it is almost certainly the case that a few thousand people, possibly even tens of thousands of people, will not be captured by the EU registration scheme for whatever reason. The truth is that we are going to have a de facto amnesty for those people. That sets a precedent, and I imagine there will be all sorts of challenges, in that people representing the interests of non-EU illegal immigrants are going to say, “Well, these people are in effect illegal now, and yet you’re giving them an amnesty. What about us?” There are estimated to be about 1 million illegal immigrants in this country, so there is a potentially a legal minefield ahead of us on that one.
The Chair
Right. I think that ends our session. Thank you very much to our witnesses for coming and giving your evidence. We are very grateful.
Examination of Witnesses
Bella Sankey and Adrian Berry gave evidence.
The Chair
Good afternoon and welcome to this Public Bill Committee. We will now hear oral evidence from Detention Action and the Immigration Law Practitioners Association. Thank you for coming today; we have until 4 pm. Would you like to introduce yourselves for the sake of the record, please?
Bella Sankey: My name is Bella Sankey and I am the director of Detention Action.
Adrian Berry: My name is Adrian Berry. I am a barrister and chair of the Immigration Law Practitioners Association.
The Chair
We will start with a question from the Minister, then the Opposition spokesman, and then other colleagues will come in as they wish.
Kevin Foster
Q
Adrian Berry: I do not think that simplifying the immigration rules has much impact on inbound migration per se. It is obviously a good thing from the point of view of good rule making and from a user perspective. The more pressing question is how you integrate the intention to create free trade agreements with the EU and with other countries, and the migration routes there, with the Home Office proposals from January 2020.
We have the Home Office paper on the future of immigration, and then we have a parallel universe where there are free trade agreements with other migration routes and mobility rates contained in them—not just with the EU, but the proposed ones with Australia, New Zealand and the United States, drawing on precedents from existing EU free trade agreements with Korea, Japan and Canada. There appears to be no joined-up thinking in Government about what impact those mobility routes have on the Home Office proposals of January 2020. It is very important and necessary and urgent to see how that joined-up economic migration regime is going to work, and I have yet to see a Government paper on that.
Kevin Foster
Q
Adrian Berry: On clause 5, you already have powers to amend ineffective retained EU law under section 8 of the European Union (Withdrawal) Act 2018, so you can make regulations under Henry VIII powers to deal with any deficiencies in retained EU law and social security. You have given yourself additional powers under section 13 of the European Union (Withdrawal Agreement) Act 2020 to make regulations for social security co-ordination, so you already have two sets of Henry VIII powers. You are currently negotiating a third social security treaty, annexed to the draft free trade agreement. If that is agreed with the EU, you will have another Act of Parliament that you will need to implement that. Why do you need a fourth set in clause 5? If there is anything left in social security law that you have not covered under the array of Henry VIII powers that you are arming yourselves with, primary legislation and the scrutiny of MPs in this room at the highest level is required.
Kevin Foster
Q
Adrian Berry: It is devolved because it is a devolved power under the Scotland Act 1998.
Kevin Foster
Q
Adrian Berry: Yes, of course, but there needs to be primary legislation in whatever format, in my view, and not statutory instruments using the affirmative procedure.
Holly Lynch
Q
Bella Sankey: Thanks very much, Ms Lynch. For some time now, Detention Action has been working with a coalition of civil society organisations, including the Bar Council, the Law Society, the Equality and Human Rights Commission, Stonewall and others, and with MPs across the divide—Conservative, Democratic Unionist Party, Labour, SNP and Liberal Democrat MPs—to build a consensus around the idea that there needs to be a strict statutory time limit on immigration detention.
Immigration detention is a peculiarity of our public policy, in that there is no time limit. Unlike the criminal justice system or the mental health system, you can currently be detained indefinitely for months or years, and redetained indefinitely for months or years, without any statutory time limit in place if you are subject to immigration control.
It is a sweeping power that was introduced in 1971, when a series of immigration Acts acted to limit immigration from Commonwealth countries with the explicit intention of trying to reduce black and brown migration to the UK. The system was set up then, and has not been properly amended or looked at by Parliament. From the 1970s right up until the 1990s, a handful of people were detained, but it is now the case that thousands and thousands of people are detained each year. At present, as we sit here, 12 people in immigration detention have been there for more than one year.
The system is arbitrary and cruel. There is a crisis of self-harm in the system. Every day, my caseworkers speak to people who have suicidal ideation as a result of the indefinite nature of their detention. That is what everyone who has experienced the system will tell you: it is the indefinite nature that creates psychological torture and uncertainty. That means that people begin to lose the will to go on and live. We are seeking to implement a time limit through this Bill.
The Chair
Order. Can I just say that this is a Public Bill Committee, not a Select Committee, so we have to be focused laser-like on the Bill? I remind witnesses and questioners of that very important point. We do not need any general discussion of the issues around it; we are just talking about the Bill.
Holly Lynch
Q
Bella Sankey: Absolutely, and even if there is a very small error rate and there is perfect communication in that system, which I think we can all accept given the scale of the challenge is going to be very unlikely, those people will be subject to indefinite detention under our system. The link with the Bill is that the Bill does not put in place any time limit at all for EEA nationals or anyone else.
Holly Lynch
Q
Adrian Berry, you have already outlined some of your concerns about the sweeping Henry VIII powers in the Bill. Would it be fair to say that not only does that restrict the ability of Parliament to scrutinise further developments in immigration policy and immigration law, but that it provides a great degree of uncertainty for immigration lawyers, who are working with people in the system about what those future policies and approaches might look like?
Adrian Berry: Yes, that would be fair. What has happened—to give you an example—is that EU law has been domesticated and retained under the European Union (Withdrawal) Act 2018, and then there are clauses in the Bill that say that the law continues to apply, except in so far as it is inconsistent with immigration functions or immigration Acts. So you end up with law, which is good law in this country, but it may not apply if someone judges it to be inconsistent.
We look to the law to know what it means. We look for legal certainty and for good administration. In clause 5(5), and in paragraph 4(1) and 4(2) of schedule 1, you find the same legislative drafting technique used—retained EU law applies except in so far it is inconsistent with—and then a general statement—immigration Acts or an immigration function or regulations made. How is the ordinary person, never mind the legislator, to know whether the law is good or not in a particular area if you draft like that? You need to make better laws. Make it certain, and put on the face of the Bill those things that you think are going to be disapplied because they are inconsistent with immigration provisions. There must be a laundry list in the Home Office of these provisions and it would be better if they are expressed in the schedule to the Bill.
Holly Lynch
Q
Adrian Berry: Yes, because service users—us, the citizens—need to know what the law means. We are entitled to understand that. People who are affected by it need to know what it is. It is not good rule making to do it like this.
Stuart C. McDonald
Q
Adrian Berry: They might be leading disordered lives. They might have things happening in their lives that concentrate their minds elsewhere—family difficulties, work difficulties. They might be affected by coronavirus. They might have mental health impairments. They might be long-term sick. They might be old. They might be demented. There is a whole host of reasons that are part of the ordinary warp and weft of life why somebody might miss a deadline. Not everybody has my focus on the interests of the European Union (Withdrawal) Act and its implementing provisions. Ordinary people do not. There needs to be a benevolent regime that allows them to make late applications.
Stuart C. McDonald
Q
Adrian Berry: Yes. You apply late; they grant it. It is that simple. Why would you not do that? Somebody wants to regularise their status and they have withdrawal agreement rights—why muck around?
Stuart C. McDonald
Q
Adrian Berry: The Government set their own Executive policy for making immigration rules anyway; the Bill does not change that. What the Bill does do is take away your powers to make primary legislation and give them to Ministers by way of regulations. If you want to reverse the way in which powers are distributed in the constitution, that is a matter for you, but personally speaking I think it is a bad idea.
Stuart C. McDonald
Q
Adrian Berry: The Bill does not change the situation that immigration rules are laid before Parliament under section 3 of the Immigration Act 1971. That continues anyway. What the Bill is doing is something discrete and different. It gives Ministers the power to amend primary legislation and retained EU law, which are two separate things. At the moment, the Home Secretary lays immigration rules before Parliament, and they deal with executive policy, not with laws. So, although they are called immigration rules, strictly speaking they are not legislation. The difference here is that this is a paragraph on legislation.
Stuart C. McDonald
Q
Adrian Berry: The Home Office position and the UK Government position is to draw on precedent-based treaties that the EU has with Canada, Japan and South Korea, and those treaties have mobility routes that reflect General Agreement on Trade in Services mode 4 commitments for persons who are coming here as short-term business visitors, key personnel, key senior staff and specialists, and also routes in free trade agreements for independent professionals, contractual suppliers and so on. All of those routes would be for 12 to 24 months; none of them would lead to settlement or permanent residence for short-term business visitors.
The UK’s ambition is that it will attract highly skilled people in that way, but only on a temporary basis, and if you are creating an economic migration regime in the Home Office paper, as was trailed in January, and you make no mention of that, it is some omission in the overall scheme, because you need to understand how it works.
The second thing that you really need to clearly understand is that the UK is like a little moon next to the planet Earth of the EU on this. There is a 450-million person territory next door to us that is setting its own economic migration rules and it is competing with us, and if you do not bear in mind what will happen in terms of economic migration in the EU—that you can come in for service provision or for work and have a route to settlement—and you are still creating this inbound regime into the UK, then you are not thinking about the impact of living next door to a much larger jurisdiction, and it is critical in the national interest that you do so.
Stuart C. McDonald
Q
Bella Sankey: Thanks very much for the question. The Bill will mean that, for the first time, EU citizens will have the deportation laws that currently apply to non-EU citizens applied to them. Those rules are blunt, they are harsh and they are dehumanising. In 2007, the last Labour Government brought in a power of mandatory deportation for anybody who receives a sentence of 12 months or longer. In 2014, when Theresa May was Home Secretary, the coalition Government introduced additional legislation that meant that if somebody was seeking to resist deportation on the grounds that they had a loving parental relationship with a child in the UK, or a child who was a British citizen, they would only be able to do so if the effect of their deportation would have an unduly harsh impact on that child.
The Home Office defines “unduly harsh” as “excessively cruel”, so at present it is insufficient, if you are a non-EEA national, to show that the impact on your child would be cruel; you need to show excessive cruelty. The effect of that provision means that child cruelty is legislated into our primary legislation. It means that the courts, when they are making these decisions, are forced to allow a deportation to go ahead even though they may find on the evidence that serious psychological harm will be done to a child. The courts are clearly very uncomfortable about that and have said explicitly, in terms, that immigration law can no longer be reconciled with family law principles, because family law principles require the best interests of a child to be taken into account in all public decision making.
That is the situation as it stands. The impact of these laws over the past decade or more has been to cause untold trauma and pain, particularly to Britain’s black community, who are disproportionately impacted because, as is well-known, they are a community that is over-represented in the criminal justice system and subject to social and economic deprivation.
The issue from earlier this year that you mention was, of course, a charter flight to Jamaica. The majority of the people booked on to that flight by the Home Office had drugs convictions—a lot of them when they were teenagers or a long time ago. The law as it stands did not allow any of that to be taken into account, because of the automatic and mandatory power to seek deportation of those individuals.
A number of our clients were victims of modern-day slavery, grooming and trafficking, but again, they found themselves in detention without an opportunity to raise the fact that they had been subjected to that, and of course the large majority of them had been in the UK since they were two or three years old and had been in primary school here and secondary school here. I see the Minister does not seem to be agreeing with this account.
Kevin Foster
No.
Bella Sankey: But it is all there on the public record. As I say, the law as it stands has applied in a blunt and discriminatory way against the black community, and this Bill now proposes to extend those harsh provisions to all EU citizens.
I spoke only recently to a woman who was actually removed to Poland on 30 April, leaving behind an 11-year-old child here. She felt that the system had already become unbearable. She was taken into detention following a conviction for theft, and when she was in Yarl’s Wood, without legal aid and without help and assistance, she decided that it would be easier for her and less traumatic for her 11-year-old son if she just went back to Poland. This Bill is going to bring about thousands more Sandras, thousands more family separations, in completely unjust circumstances.
Mr Goodwill
Q
If, at the moment, the law is being used to actually frustrate the legal process of removing people who have no right to be in the UK, do we need to improve the law to make that work better? I am sure you would agree that it is not unreasonable to expect people who have committed serious criminal offences and have no right to be in the UK to be removed under the law of the land.
Adrian Berry: I believe in the rule of law. I think it is a good thing if we have judicial scrutiny of executive decisions, including deportation, removal and detention decisions, in order to ensure that they are lawful and consistent with the values that we have embedded in our Human Rights Act provisions and in our civil liberties provisions and statutes.
To answer your question directly, a lot of judicial reviews are settled on issuing, because the Home Office realises that it has made a mistake and it compromises on them. The second stage at which they are settled is when permission to apply for judicial review is granted and the Home Office realises that it has made a mistake and it compromises; it settles and pays the costs, on a polluter-pays principle. Very few judicial reviews go the distance to a substantive hearing, so you have to be very, very careful in measuring the data between the number of claims lodged and the number of claims that are determined at a final hearing.
What we do know is that judges routinely grant injunctions against removals, on the basis that they see a point in holding the ring in order to determine the true and lawful position in the situation. Whatever someone has done, all their interests—including the public policy interest in their expulsion and, on occasion, the public policy interest in their retention—are to be weighed up before a lawful decision is made. Judicial review is one check on it, in the absence of a proper full range of appeals, that allows that to take place.
Mr Goodwill
Q
Bella Sankey: The thing that is striking about this Bill is that it is being brought forward following two previous Immigration Bills, in 2014 and 2016, that implemented the hostile environment. Since those Bills came on to the statute book, of course, the Windrush scandal has come to national attention, yet in spite of that, every single aspect of the hostile environment remains in place, and there is nothing in this Bill to address that. Worse still, the Bill now extends the hostile environment to EU citizens. The hostile environment has been found in terms, in the Court of Appeal earlier this year, to lead directly to racial discrimination. Yet, as I say, there is no effort in the Bill to deal with the fact that, as things stand, we have imported immigration control into the country—employers, bank managers and landlords are all expected to be immigration officers—and we have made this country a much less pleasant place to live if you do not look British, if you do not sound British, or if you do not have a British name.
It is quite shocking that, following the Windrush scandal, this new piece of immigration legislation has been brought to Parliament without any attempt to deal with the very clear problems in the existing immigration regime.
Mr Goodwill
Q
Bella Sankey: I welcome the sentiment to use this moment to level up protections for people in the UK regardless of their skin colour. Unfortunately, though, what the Bill does is level down protections. As things stand, EU citizens have protections against deportation that have not been transferred into the Bill, so will no longer apply to EU citizens and will not apply to non-EEA nationals—predominantly black and brown people.
Similarly in our immigration detention system, there is nothing in the Bill to provide the kind of safeguards that EU citizens currently have against detention. We know that the system discriminates. If you are Australian and you are detained, 90% of Australians will be released before 28 days. If you are Jamaican and you are detained, only 40% of Jamaicans will be released before 28 days. You are right: there is direct racial discrimination hardwired into our immigration system at present, but nothing in the Bill actually deals with that. It only downgrades the rights of non-British citizens in this country.
Dame Diana Johnson (Kingston upon Hull North) (Lab)
Q
Adrian Berry: On the right of appeal, you will be aware that in section 11 of the European Union (Withdrawal Agreement) Act 2020 there was a provision for making a right of appeal by way of statutory instrument, and that that was exercised in the Immigration (Citizens’ Rights Appeals) (EU Exit) Regulations 2020.
The Chair
Order. I know it is unnatural, but you have to face us, or the microphones will not pick you up.
Adrian Berry: Sorry. There is a power in the European Union (Withdrawal Agreement) Act 2020 to create a right of appeal for those who are refused under the settlement scheme. A statutory instrument was laid and came into force on 27 January in the form of the Immigration (Citizens’ Rights Appeals) (EU Exit) Regulations 2020, which covers most of the terrain but, to deal with your point, does not cover invalid applications that are made under the EU settlement scheme, because they are not considered to have been properly made. There is no appeal right for those people. That would be a welcome amendment.
Briefly on a declaratory scheme, given how many people have been registered under the EU settlement scheme, there is a need to encourage maximum compliance and to make sure that deadlines are extended, if necessary, beyond June 2020 next year. There may come a point when the full merits of a declaratory scheme, which I would have supported at the outset, become more manifest to deal with the remaining cases, but at the moment we need to ensure compliance and a full subscription take-up of the scheme.
Bella Sankey: It is deeply problematic that there is not a declaratory scheme for EU citizens. Again, the echoes of Windrush should be considered. Wendy Williams, in her report published last month, found that the Windrush scandal was entirely “foreseeable and avoidable”.
At the time that the Immigration Act 2014 was passed, I worked for Liberty, the National Council for Civil Liberties, and we warned the Home Office that the Windrush scandal, and other scandals, would happen because of the hostile environment that was being introduced. I say again in 2020 that there will be a similar scandal, this time for EU citizens, because the very same problems that the Windrush generation encountered will be real and evident for EU citizens who do not manage to apply for the EU settled status scheme in time. Of course, they will often be people who are more vulnerable and in harder-to-reach groups, and will be made more marginalised by the fact that they have become essentially undocumented.
One of the other big problems with the Bill when thinking about redress and natural justice is that, at present, legal aid is not available in immigration cases. That was one of the many reasons why, during the Windrush scandal, people found themselves being detained and wrongfully deported. There was no access to lawyers for that generation that came to the UK post war to help us to rebuild. Similarly, there will be no access to lawyers for EU citizens who are seeking to regularise their status after the applications close. That is why one of the other amendments that Detention Action is proposing to the Bill is to bring civil legal aid back within scope, at the very least for article 8 cases where people’s private and family lives and human rights are at stake.
Gary Sambrook (Birmingham, Northfield) (Con)
Q
Adrian Berry: The flexibility that you need to make individual rules about economic migration you get from the immigration rules, which are of course not the subject of this Bill. If you want to change part 6A, which contains the current points-based system for economic migration, the Secretary of State can lay new or amended immigration rules, with the assistance of the Immigration Minister.
Clause 4 here is designed to deal with primary legislation and retained EU law, not with the immigration rules, so if the FSB thinks the clause is changing the economic immigration rules system, it is wrong in that respect. It is changing primary legislation about the administration of immigration control, not the specific rules for economic migration, which are made under the immigration rules.
Kate Green
Q
Adrian Berry: The draft social security treaty is attached to the draft free trade agreement, which is available on the Government website now, from last month. It includes short-term healthcare coverage for people who are travelling for short-term purposes, such as tourism and temporary work contracts, to receive what we call the EHIC card scheme. It also includes a system for old age pensions to be paid overseas in other EU member states and uprated to be equivalent to home pension rates here.
What is missing, and what we are losing, is disability pensions being paid overseas, and healthcare, which was attached to old age pensions and to disability pensions under the EU co-ordination regime, will no longer be attached for pensioners who retire in Spain, Cyprus or wherever, from 2021 onwards. At the moment, it is a bonus ball. If you get a pension paid overseas, healthcare coverage is included under the EU co-ordination regime and the bill is paid by the UK Treasury. In the new proposed UK treaty, that is going; it is just your old age pension uprating.
The UK has split the interrelationship between healthcare and social security and pensions, which is contained in the EU co-ordination regime, into two silos: social security and pensions in one silo, in this Bill, and healthcare arrangements under the Healthcare (European Economic Area and Switzerland Arrangements) Act 2019. There is no draft healthcare treaty attached to the UK’s draft free trade agreement at the moment, and no healthcare provisions included in this draft social security treaty. Both of those are missing.
Additionally missing is the S2 scheme, which we have at the moment, for people to make arrangements, prior to travel, to receive hard-to-find treatment in EU member states, if they cannot get NHS treatment in the UK. There is no S2 scheme for British citizens to go and receive that form of healthcare—healthcare that is unavailable here—and to get it in EU states. The cross-border health directive, which allows people to have their prescriptions and pick them up in EU states, will effectively be repealed. There is no provision for that in the draft social security treaty.
Who loses out? The disabled. They will not be able to get private health insurance to travel on holiday. It will have a direct and differential impact on people with physical and mental impairments. It will also have an impact on anybody who thinks they are going to be retiring to Spain, Italy or France. They will not have healthcare insurance there, even if they get their pension uprated. It is a big loss.
Kate Green
Q
Adrian Berry: It is, but it would be in an international treaty arrangement. The problem is that it is certainly differential treatment. It impacts on them directly because something that they would have had, which has been protected under EU law and under the withdrawal agreement, will not be available to them. New movers—disabled people who move for the first time in 2021, at the end of the transition period—will not have that. Travel for them will become very problematic.
It is interesting that even for the new EHIC card scheme in the draft treaty, the really expensive stuff is now carved out. In the new EHIC card arrangement, which is in the draft treaty, if you want chemotherapy, dialysis or oxygen therapy, you have to get prior authorisation from the UK Government now, even if you are going on holiday. You do not have to do that at present. It is clearly a rationing device that will further impact on British citizens with long-term health needs who, frankly, deserve a holiday. They will find it very difficult to have that because they will not be able to have the necessary insurance and comfort that they need, in order to travel in safety.
Kate Green
Q
Adrian Berry: It is interesting. In part 1 of schedule 1 they repeal some retained EU law, which is to be expected in the provisions on the workers regulation. That is a political choice. What is more unclear is that other retained bits of EU law, which relate to victims of trafficking or victims’ rights where people are victims of crime, remain on our statute book, but may be disapplied by this provision, if they are judged to be inconsistent with the provisions that are to be made in respect of immigration. We do not know whether they are or they are not. We do not even know the exhaustive list of these parts of retained EU law that help vulnerable people, such as victims of trafficking, because they are not spelled out on the face of the Bill.
At the very least, there needs to be a schedule spelling out the parts of retained EU law that may be affected by paragraph 6. Better than that, if you are going to repeal these parts of retained EU law, because you think they are inconsistent with the Immigration Acts, say so and put it in primary legislation, if that is your choice. Make a better law.
The Chair
Thank you for coming this afternoon. We are very grateful.
Examination of Witness
Luke Piper gave evidence.
The Chair
Good afternoon, Mr Piper. I am Edward Leigh, Chair of this Public Bill Committee. The Minister and the Opposition spokesman will ask questions. We have only 15 minutes. Minister, would you like to begin?
Kevin Foster
Q
Luke Piper: First, thank you for allowing me to attend by telephone. In general, it is true that the EU settlement scheme is there to provide people with their status and their rights to live in the UK under the terms of the withdrawal agreement. It is a great achievement of the Government’s to set the scheme up. Our concern is about those that do not apply in time and fail to acquire the status by the deadline of June next year. The worry is that those that miss the deadline will face the problems that some of the previous witnesses have spoken about—the risks to jobs and homes, and access to healthcare, welfare and so forth. Although there have been over 3 million applications to the scheme, it is not a reflection of the numbers of people that have applied or have succeeded, or of the types of status that are under it. This is more about an issue of recognising that there is a potential problem here. Yes, freedom of movement will end and there is a new status that people can acquire, but it is about creating safety mechanisms and ensuring that there is a safe passage for people to move from their old status to their new one. That is what we would like to see amended in the Bill to ensure that that security is there.
Kevin Foster
Q
Luke Piper: I will defer to the points that Mr Berry made in his presentation previously on the issues of social security co-ordination. Our central concern is that at this stage much of the rights-based provisions of the withdrawal agreement, both under title II and title III, have been delegated away by the Bill and the previous European Union (Withdrawal Agreement) Act to various Ministers, and there is a lot of legislation and regulations that we have still to see to fully understand how those rights and obligations will be implemented.
Holly Lynch
Q
Luke Piper: Yes. There are clear points as to why we feel physical documents will help people in their day-to-day lives. First, it is the No. 1 ask of our members and people that we speak to who are EU citizens in this country. They would like physical proof of their status to live here. It is something that unfortunately has not been followed through.
Indeed, the House of Lords European Union Committee made the point that there are real worries that those without physical proof will face similar problems to those faced by the Windrush generation; there is a risk that they will face discrimination because they do not have physical proof of their status. We also had concerns about the availability of an online status; there may be instances when the status is not available for IT reasons. Also, online systems can be hacked. There are real security risks.
Finally, we also have concerns about the newness of the digital-only scheme. It is essentially being tested on over 3 million people. A digital-only identity system like this has never existed before in the UK, and it is being rolled out for a massive cohort of people. We had rather hoped that there would be an opportunity to trial the scheme substantively before people were pushed into a digital-only set-up. Those are the key reasons why we desire a physical document.
Holly Lynch
Q
Luke Piper: The Bill brings freedom of movement to an end at the end of this year, but it is not clear what legal status people will have between the end of the transition period, which is at the end of the year, and the end of June—the end of the grace period. There has been no clarity about, or understanding of, what legal rights people will have. We have simply been told that certain checks, such as on the right to work, will not be undertaken, but it is not clear to us or our members how people will be distinguished, both in practice and in law.
Stuart C. McDonald
Q
Luke Piper: I caught the majority of the question, but let me repeat what I think you are asking: do we have an understanding of the number and type of people who will not apply on time? Is that correct?
Stuart C. McDonald
Exactly.
Luke Piper: Much as with the number of people due to apply for the scheme, we do not know. We have no idea of the exact number of EU citizens who need to apply under the EU settlement scheme, so we will not have an understanding of the number of people who miss the deadline. An illustration is the way we look at Bulgarian citizens in the UK. Their population has been estimated at 109,000; however, as of the end of March, over 171,000 Bulgarian nationals had submitted applications. It looked as though Bulgarian residents had already applied, yet more applications keep coming. We do not have a clear indication of the exact number of people who will not apply on time.
As for the type of people, we know that those most at risk and who are marginalised and disenfranchised are very likely to not apply, purely for the reasons that Mr Berry set out—various issues to do with connection to society, disability and so forth. Our concern is that the most marginalised and vulnerable in our society will be at risk, and that has been corroborated by a lot of organisations. You will hear from a representative of The Children’s Society after me, who will set out the particular risks for children and young persons. Conversely, we have significant concerns about older people, particularly those with issues such as mental ill health and dementia.
Stuart C. McDonald
Q
Luke Piper: That is a very important point. The most successful UK scheme that involved people signing up to certain policies was the digital-only scheme—the switch by everyone to digital TV. That was successful, as 97% of people had signed up by the time analogue TV was switched off. If you place that projection over the estimated population of EU citizens, and say that a remaining 3% will not switch, you are looking at more than 100,000 people who will lose their legal right to live in this country and will face all the problems that we talked about of not having a home, losing their job, and potentially facing detention and removal from the UK.
Stuart C. McDonald
Q
Luke Piper: The declaratory model is what we have advocated for. If we follow through with a constitutive system, which is what is being proposed, simply improving awareness of the scheme will not be sufficient, as is demonstrated by even the most successful campaigns, which do not achieve 100%. There have to be legal mechanisms in place to ensure that people have the safety that they need to transition to their new rights.
In particular, we suggest that amendments be adopted, including amendments setting out clear definitions of who cannot apply after June 2021, as opposed to who can. We feel that it will assist both Parliament and the Home Office if we can clearly pin down exactly who we do not want applying after the deadline. Furthermore, we could introduce mechanisms through which we could extend the grace period if necessary. We should understand what extending the grace period may look like, and what factors will be taken into consideration. We need to recognise that those who apply after June 2021, who will have no legal basis to be here, will need some form of retrospective mechanism, so that when they do secure their status, their previous periods of unlawful residence are secured.
Stuart C. McDonald
Q
Luke Piper: I think that unfortunately misrepresents our proposal. The declaratory system is a safety net. We are not advocating for a system where people should not have a deadline by which they must register. Indeed, we believe that there should be incentives and encouragement for people to register. The problem is the consequences for those who do not register in time. Under the current model, if you do not apply, you essentially become illegal in the UK, and you face immense amounts of problems, whereas under a declaratory model, the consequence is that you face inconvenience.
Stuart C. McDonald
Q
Luke Piper: You were a little muffled there, but I think you were pointing to the issues surrounding having pre-settled status, as opposed to settled status. Is that right?
Stuart C. McDonald
Yes.
Luke Piper: On the ratio of those acquiring pre-settled status to those with settled status, the trend is not looking great. The estimates that we have been working to suggest that the number of people acquiring settled status is a lot lower than it should be, and indeed the number of people getting pre-settled status is too high. That will, in effect, mean that rather than there being one deadline—June 2021—there will be lots of deadlines for lots of different people, at the various periods when their pre-settled status expires.
Stuart C. McDonald
Q
Luke Piper: It does, yes. It has quite significant implications for a person’s rights. Those with settled status have complete access to welfare benefits and housing support, which is vital at a time when a lot of people are struggling to retain their employment and their home. Those with pre-settled status do not have an automatic right to access those services and that support; they have to go through further tests and bear further burdens to access that help. This is causing significant problems for people whom we represent; we have seen a significant increase in the number of people experiencing problems in getting help and support because they have pre-settled status as opposed to settled status.
Rob Roberts (Delyn) (Con)
Q
Luke Piper: We would like a deadline, but want the consequences of missing the deadline minimised, hence our preference for a declaratory system. Of course there needs to be some kind of deadline by which people need to have put in an application; the issue is more what the consequences are for people who miss it.
Let me paint a picture for you of the inevitable problems with missing deadlines. Some people are under the misapprehension that they are fine—that everything is sorted. In my practice, and in speaking to many organisations and colleagues, I regularly come across people who believe that they are “safe”—that there is nothing else that they need to do. After the deadline, when the hostile environment bites, it is they who will feel the problem the most. It is a mis-characterisation to say that we are talking about permanently extending the deadline; we are looking at this in a holistic way to identify clearly, through good evidence and with the Home Office, what the groups are, what the issues are, and what can be done to the law to make it as safe as possible for people to get their new status.
The Chair
I think that concludes our evidence. Thank you for joining us online.
Luke Piper: You are welcome. Thank you for your time.
Examination of Witness
Lucy Leon gave evidence.
The Chair
I take it that we have on the line Lucy Leon, immigration policy and practice adviser for The Children’s Society. Minister, you have a question.
Kevin Foster
Q
Lucy Leon: I am sorry; the line is really unclear. I heard that you were trying to ask me a question about automatic status. Would you be able to repeat the second part of the question, please?
Kevin Foster
You talked about automatic status—granting something under a piece of legislation to someone. Under your suggested system, how, in decades to come, would an adult evidence the status that they were granted as a child?
Lucy Leon: The line is not very clear, so apologies if I have misunderstood the question, but are you asking what it would be like in decades to come if we granted children automatic status?
Kevin Foster
Yes. If they had to evidence their status many years later, how would they do it? How would they be able to define their status, as against someone who arrived in March 2021, for the sake of argument, and was not entitled to that status?
Lucy Leon: We have put forward an amendment about automatic status for vulnerable children, particularly those who are in care or are care leavers. We are not just looking to give them automatic settled status; we want local authorities to be given a duty to identify those children, and a timeframe in which they need to be identified and offered settled status. This would enable a financial burden to be lifted and pressure to be taken off the overstretched local authorities that are struggling right now.
We are not suggesting that children do not go through the scheme. We are saying that they still need to go through the scheme, but should be given indefinite leave, as opposed to pre-settled status, because children are falling through the net and social workers are struggling to understand their roles and responsibilities under the scheme. They do not know the processes, and they are struggling to locate documents for young people.
Kevin Foster
Q
Lucy Leon: Sorry, it is really hard to hear you. The line is really not very clear.
Kevin Foster
Okay, we will leave it there. I think you have made the points that are needed.
Holly Lynch
Q
Lucy Leon: At the moment, this is a significant burden on social workers. We welcome the guidance that has been issued, the funding that has been put in place, the prioritisation of this issue, and the fact that the Minister has taken time to write to council leads to ensure the issue is seen as a priority. However, we know—because we see it in our frontline services—that the information is not trickling down, and many social workers are unclear about what they are meant to be doing and how to help young people.
In the current pandemic, with helplines and embassies being closed and people being unable to travel, it has become even harder for social workers to support young people in locating the right paperwork to help them through this process. Social workers are also not always aware of who needs to apply, and some of the cases are very complex. Some children and young people are entitled to British citizenship, and the struggle to access legal advice and helplines at this time has made that very problematic for social workers. We see the proposal as not only taking the pressure off local authorities, but taking the stress off young people.
We see young people who have been incorrectly given pre-settled status, when they are entitled to settled status. We want to enable automatic settled status at this pivotal moment in young people’s lives, when they are planning their future, thinking about their education and thinking about pathways to work, so that they know that they can have indefinite leave to remain and can stay in this country, which is their only home. We are talking about children in care who would have had a history of abuse and neglect. It is imperative that, as corporate parents to those children, we give them as much stability as possible in the long run.
Holly Lynch
Q
Lucy Leon: I didn’t at all. I’m sorry, Ms Lynch; you cut off.
Holly Lynch
No problem. The Minister had presented a conundrum, but we are saying that if those children—bearing in mind that they have had a very difficult start in life—were granted settled status in a declaratory system through the local authorities, and they had both digital confirmation of that and physical proof, it would resolve the problem that the Minister put to you.
Lucy Leon: Yes. We are very much in agreement. That is why we support the 3million recommendation on physical documents as well.
Stuart C. McDonald
Q
Lucy Leon: Yes, that is what we are suggesting.
Stuart C. McDonald
Q
Lucy Leon: Sorry, I did not get that full question.
Stuart C. McDonald
I was just trying to draw a parallel with the status of kids who are born British citizens. Their rights come from a statute, just like you are proposing with these kids getting their rights in a statute, but they still end up—at some point, if it is convenient for them—applying to have proof of that status. But the rights come from a statute.
Lucy Leon: I am sorry. I cannot hear the question; the line is not very clear at all.
Stuart C. McDonald
Q
The Bill may mean that we end up with EU citizens and children stuck with “no recourse to public funds” conditions on their visas in years to come. How difficult do “no recourse to public funds” provisions and conditions make life for children and their families?
Lucy Leon: Sorry. It seems that the microphones are now moving around. Were you asking how difficult the NRPF conditions are for children and their families?
Stuart C. McDonald
Yes.
Lucy Leon: We have worked with children and families with no recourse to public funds for well over 10 years. We have a lot of experience through our services, and recently published a policy report called “A Lifeline for All”, which highlights the impact of this condition on children and families. One of the key issues is that families with no recourse to public funds have no access to mainstream services, or to housing and local welfare assistance schemes. Many of those who are fleeing domestic violence cannot access most safe accommodation either.
The policy has been continued under successive Governments, but that really does not mean it is the right one. It is hugely detrimental to children’s welfare to have a childhood characterised by deep poverty throughout, with the family stuck in a cycle of poverty, vulnerability and abuse, and the child at real risk of exploitation because they have no other lifeline to turn to. We also see the hugely detrimental impact that it has on children’s and young people’s mental health and emotional wellbeing to grow up in such long-term poverty.
In terms of educational opportunities and chances, we also see a higher prevalence of special educational needs among those children in families with NRPF that we have worked with. It is more than just financial support that these families need and are missing out on; it is the access to wider services and support.
Stuart C. McDonald
Q
Lucy Leon: We have significant concerns about those families. They are families who are already paying into the system. Most of the families we work with are single parents, often in jobs that are now seen as key worker jobs—working in hospitals, in cleaning, in catering or as delivery drivers. They are working families already; it is just that their income does not meet their family’s needs. They are also paying immigration application fees and the immigration health surcharge, so on top of living with no access to any mainstream benefits or extra support, they continually have to try to save up for the next tranche of fees that they will have to pay every two and a half years. They are stuck in an ongoing cycle of debt.
We have seen families lose contact with their social networks because they have had to borrow money, because that is their only means of survival. We are calling for a reduction in immigration fees to at least cost price, and for citizenship fees for children to be waived, because we are doubly penalising children in those families by increasing the levy charged on them, on top of their restricted access to public funds.
The Chair
Thank you very much for your evidence. I am sorry that the sound quality was not very good, but thank you for making the time and effort to come.
Lucy Leon: That is fine. I apologise for missing some of the questions. We are more than happy to submit further documentary evidence on the questions that I have been unable to answer.
The Chair
I think you should do that. You will be able to see the record, and if you have missed any question, you can always put in supplementary evidence. Thank you for joining us on the line.
Lucy Leon: Thank you for the opportunity.
Examination of Witnesses
Ian Robinson and Alison Harvey gave evidence.
The Chair
Good afternoon and welcome to our session. We have until 5 o’clock. Would you like to introduce yourselves for the record?
Alison Harvey: My name is Alison Harvey. I am a barrister at No5 Chambers in London.
Ian Robinson: I am Ian Robinson. I am a partner in Fragomen, the immigration law firm.
Kevin Foster
Q
Alison Harvey: Essentially, it does not have anything to do with that. There has been a lot of talk about the Bill setting up the new points-based system. It does not; it gets rid of the free movement law, and that is all it does. Although I have not sat on it yet, the Bar Council has appointed me its representative to the simplification committee on the rules, and I gave evidence to the Lords Constitution Committee about this a while ago.
If you look at what the Law Commission and the Home Office have published on the rules, it is simpler but not simple. We will not get to a simple system or anything like one until we consolidate the primary legislation. Let us remember that our immigration legislation is built on the Immigration Act 1971, which came into force on 1 January ’73, when we joined the EU. Before that, we had only had four years in this country, in all its history, without free movement. If you go back to 1066 and beyond, you have everyone within the King’s allegiance and dominions moving freely within the allegiance and dominions, subject to the limitations in place in 1066, but they were not legal limits. The passport that you have from Hull is the same as the passport that you have from Bangalore.
We then had the Commonwealth Immigrants Act 1968, which cut off free movement, but we were bigger then. As well as our current overseas territories, we had the associated states in the Caribbean, from which people came. That period of March 1968 to 1 January 1973 is the only period in our history when we have been as small as we are going to be from June, so the change is massive.
We are managing with a rickety old Act that desperately needs changing. The problem with immigration law is that every time you change it, you have to deal with the people under the old regime and make transition provision, so change always results in complexity.
Ian Robinson: The simple answer is that we are going from two immigration systems to one. Right now, we have reasonably simple arrangements for free movement and complex arrangements for non-Europeans. We will have one complex arrangement for everybody. In some areas, it will become slicker, I suppose, but it will remain complex.
In an international context, my clients will quickly recognise that the UK has a simpler, more transparent immigration system than many countries. That is great if you are a multinational, but if you are a small or medium-sized enterprise dealing just with the UK immigration system, that does not really help you, and the complexities can still trip you up. Likewise if you are an individual.
Kevin Foster
Q
Ian Robinson: In terms of the skilled part of the system, we will have one of the better skilled immigration systems in the world, in terms of much of the policy and the speed as it relates to skilled people. Where that falls down is the cost. I suspect that there will be more questions about that later, and I can cover them. We are wildly more expensive than other countries. What businesses want is speed. Singapore and one or two central African countries aside, no one can issue visas as quickly routinely as the UK does. We are very good at that. There are on-entry arrangements in Canada, but we are very good at issuing visas.
If I were talking to an American or Canadian audience, they look for predictability. We can offer certainty. It is a fairly tick-box, prescriptive list for a work permit, which is good. In that respect, it is a good system. It becomes more difficult again when you look at cost. It becomes difficult when you look at lower-skilled workers and the fact that the tap will be turned off, unless we have a youth mobility scheme.
My clients are not quite sure where they stand on that at the moment. On the one hand, if you had asked me three months ago, they were very concerned. Covid changes things, but they are nervous about taking the gamble now that there will be enough people in the labour market after the pandemic is cleared.
The final point that I would make is that if you are an established user of the system, used to working with Indian, US and other non-European migrant workers, you are going to experience a much better immigration system when we have a lower skill level, marginally lower salary, and one or two other changes, particularly when the new technology comes in for sponsorship.
But if you have never used the immigration system in that way before, and if you do not already have a licence, there is a real risk that you will have no idea and no time at the moment to apply for a licence. You probably will not have before the end of the year, so you will realise you need to too late, at which point, unless a concerted effort is made not only by the Home Office, but by trade bodies to push employers to apply for licences, we will be back to six-month delays before a company can even begin to make a visa application, which is not great. Steps need to be taken to make sure that employers know what will be expected of them, and that they can, as easily as possible, get the tier 2 sponsor licence.
Kevin Foster
Q
Alison Harvey: You have heard this afternoon—I did not manage to hear his evidence—from Professor Ryan. He has a grasp of the issue that is second to none. Clause 3ZA is very useful and important. I do think that it lowers the protection from deportation for the Irish. The Irish do not deport Brits at all. I think we ought to address that.
My own work has been around giving effect to the Good Friday agreement in the work I have done for the Irish Human Rights and Equality Commission and the Northern Ireland Human Rights Commission about looking at the Good Friday agreement. I would like to see, as a bedrock that would deal with some of the concerns about deportation and the question of identifying solely as Irish, a right of abode given to all the people of Northern Ireland, whether they identify as British or Irish or both.
A right of abode protects you from deportation. It is as close as you get to citizenship. You get the whole packet of rights. From the point of view of the Administration, the Government, the country, and the people in benefits offices, if you know that if you were born in Northern Ireland, you have a right of abode in the UK, it becomes much less problematic whether you identify as British or Irish or both. You essentially know what your social security entitlements and your health entitlements will be. I think that is the bedrock on which we build the flexibility in identification.
Kevin Foster
Briefly, because I am conscious that others want to come in, there has been mention of the deportation of Irish citizens. Can you think of an example—not of an extradition, I have to say, because that is a different provision?
Alison Harvey: An example where someone was deported?
Kevin Foster
An example where an Irish citizen has been deported from the United Kingdom or Northern Ireland.
Alison Harvey: I was looking at this recently for an article and I think there were examples at the time. I think they fall parallel with the Prevention of Terrorism (Temporary Provisions) Act 1974, where we were confining people to Northern Ireland or to Britain or not letting them in, so you have rules on third-country nationals, but they also have the potential to affect citizens of the two countries. It was in that period, and there was an overlap between the security powers that were being used at the time with the roll-over of the Prevention of Terrorism Act and the control orders and deportation—
Kevin Foster
They are historical pieces of legislation.
Alison Harvey: Yes, they have totally gone now.
Holly Lynch
Q
Alison Harvey: Very much the concerns that Mr Berry expressed about certainty. If it is said that provisions of retained EU law are not compatible with the Immigration Act, please can we have a list? Tell us what they are. You must know, Home Office, otherwise you are not going to be able to operate the system. As he said, we had the European Union (Withdrawal) Act 2018 and the European Union (Withdrawal Agreement) Act 2020, both of which essentially give us powers to save EU law. They also give us powers to knock out retained EU law bit by bit, so what is the point of the Bill at all, in substance terms?
I think the point must be, because immigration is a sensitive area and because it involves people, to give you the opportunity to put in place safeguards. I suppose the Bill goes beyond the European Union (Withdrawal) Act and the European Union (Withdrawal Agreement) Act in that it would allow you to build a new system. There are wider powers of delegated legislation. I think most of the repeals could have been done under those Acts. If you want to test that, you go back to March, when the Immigration, Nationality and Asylum (EU Exit) Regulations 2019 were passed. Look at some of the things that they do: “Let’s give all Gibraltarians a right to apply for British citizenship.” There are big chunky powers in those regulations that are not in the Bill.
The Bill is an opportunity to put some brakes in. What is astonishing is that the Bill looks almost the same as it did last time it appeared; yet last time we did not have a withdrawal agreement. All the wait and see markers that justified not putting something in primary legislation have gone. Similarly, although the Home Office delegated powers memorandum has got longer it has produced, for example, absolutely no more substance on why the powers on fees are needed. The Delegated Powers and Regulatory Reform Committee said that this is so unsubstantial you cannot even say it is a skeleton.
There really is no justification to explain why there possibly need to be those powers. It creates tremendous uncertainty. It certainly creates lots of opportunities for litigation; to go in and argue that, no, something is not incompatible. That does not seem to me helpful at all.
Ian Robinson: Alison has said everything that I could and more.
Stuart C. McDonald
Q
Alison Harvey: We have two groups. Proposed new section 3ZA to the Immigration Act is about the Irish in Britain, wherever born—all the Irish; anyone who holds an Irish passport—and it gives them protection wherever they enter the UK, so that if they come from Belfast and go for a weekend in Paris they have not lost all their rights just by spending a weekend in Paris, which technically in law at the moment they have.
The other group are the people of Northern Ireland, who are the people born on the soil of Northern Ireland. Those people, under the Belfast agreement, have the right to identify as British, Irish or both. The question is how you give effect to that right, because at the moment it is argued that you give effect to it by going through a renunciation process, which costs money and makes it very difficult for somebody to identify solely as Irish.
We have provided in the EU settlement scheme for the people of Northern Ireland—those who are born there—to be treated in the same way for family immigration purposes as EEA nationals. That is a fairly short-term right—not a short short-term right, but obviously one that is on the way out because we are leaving the EU and that advantage will disappear over time; it will not apply to new arrivals and it will not apply to the people of Northern Ireland who form subsequent relationships.
So we have said that we will make it not matter whether you are British or Irish, or both, because you will not be at a practical disadvantage. But what people would like to be able to do is identify as Irish without having to give up a British citizenship they never felt they held. That was a point made by Emma DeSouza in her litigation. That litigation ended because it was a case brought by her partner about his EU law rights. So although their arguments were about her ability to identify as Irish, that was not the crux of their case; their case was an EU case, so it died with the changes.
I have put forward in my paper a series of proposals as to how we could fairly simply amend the law to give effect to that aspiration, without in any way damaging the aspiration of those in Northern Ireland who say, “I in no way want to be treated any differently from anyone else anywhere else in the UK”. I think we can square that circle.
Stuart C. McDonald
Q
Alison Harvey: With any change, you have to decide what you do; it takes five years to get to settlement. What perhaps worries me most when I look at the points-based paper and those proposals is that rather than saying, “This is where we want to end up—how do we get there?”, they are all about what we are going to do next. Therefore, the fear is that we will never get where we want to end up, because we are rushing things, in a way.
As I say, this is a massive change. When Vivienne Stern of Universities UK gave her evidence to the Committee, she said, “Universities will recover from this. The question for us is, what is going to happen in the short to medium term?” I think it is very similar for the immigration system. In the short to medium term, maybe the recessionary effects of covid will mean that there is less need for people, but the short to medium term is the bit that that paper does not even regard as a problem; it just says that this is what we want, and I think that is not realistic. The attention has been focused, for good reason, on the stock of EU nationals—the people who are here—but what will really hurt business is the flow, or the cutting off of that flow.
Mr Robinson has made the point that our system is quicker than that of many countries, but employers are used to it being a lot quicker, and the employers who have the least difficulty are the global multinationals, which have the persons already employed in one part and can move them across. The solely British business, which does not have an overseas branch, has the most disadvantages. It is a bit like the recovery after the pandemic, and the supermarkets have actually done really well during it and the corner shop has closed. It is that sort of thing—this change will advantage the very people who you would have thought, given the Brexit ideology, were the people who were supposed to face a bit more competition from the Brits.
Stuart C. McDonald
Q
Ian Robinson: Yes, that is spot on. If I were to have two conversations,
one with an established tier 2 sponsor and one with a new employer using the system for the first time, the first conversation would be to say, “Okay, the systems that you have will become simpler and quicker, because there will be no advertising, no cap and so on. You will be able to bring more people through sponsorship, because skill level is going down.” It will be more expensive and it will be slower than free movement, but overall, frankly, they can absorb it.
If I then pick up the phone to an employer who has never used the system, they will probably spend between two and four weeks collecting documentation in order to put together an application. The application right now is typically taking four to six weeks, against an eight-week service standard. If we have a rush of employers applying for licences, it seems quite possible that, towards the end of the year or the beginning of next year, that lead-in time will become much longer, during which time they could miss out on an opportunity or a worker.
Then you get to the kicker: if you are sponsoring Stuart, who is single and coming in for three years, for an SME that would cost about £4,000 and for a larger employer it would be about £5,500. If you were coming in with a partner and three children for three years, that would be £17,000 in Government fees, not including the other associated costs.
Stuart C. McDonald
Q
Ian Robinson: Yes, that is fair. If you are coming in as a single person and you are covering your own fees, it is broadly £600 for a three-year visa. You will be paying an extra £624 a year for the health surcharge. You get to indefinite leave to remain, which is about £2,200 or £2,300, and then citizenship is about another £1,200. If you add that up, as I am about to attempt to, it would be not far off £10,000 just to get through to citizenship. If we assume that you are on £26,000 a year and clearing however much of that, it is a hell of a cut. If you also have children, you have to pay another £10,000 each.
Stuart C. McDonald
Q
Ian Robinson: We made several suggestions on simplifications for employers and individuals in Scotland: lower salary requirements, faster routes to settlement and so forth. The headline finding was that if the political will were there, it would be quite possible to continue free movement in Scotland after free movement ended for the rest of the UK. I appreciate that that may seem counter-intuitive to some people in the room, but the rationale is that, if you were to continue to operate free movement in Scotland, people would be able to move there and live and work on the structure of their European passport. The obvious challenge is what happens if they subsequently want to move to the UK, as some may, because at that point they would need to have permission to live and work in the UK, just as any other migrant would.
One of the challenges we have had is whether that would turn Scotland into a back door for England, Wales and Northern Ireland. It is hard to make that argument when you consider that the front door is open, given that there will be no visit visa requirement for Europeans coming to the UK. If you were a German who wanted to work in the UK and were content to do so illegally, there would be no incentive to go through Scotland first. You would jump on an easyJet flight into Stansted, maybe not even see an immigration officer and start work if you were so minded.
Stuart C. McDonald
Q
Ian Robinson: Yes.
Stuart C. McDonald
Q
Ian Robinson: No. The Government is content that the compliance environment/hostile environment measures that we have in place are sufficient to stop illegal migration and working from tourists. It would be equally capable of stopping that sort of migration from Scotland.
Stuart C. McDonald
Q
Alison Harvey: It is partly that and partly that we are small, so you can travel a long way quickly. If you give someone a visa for one part of Australia, it works very differently. I remember asking the Australian Minister about that, and he said that it was salary that glued people to the Northern Territory.
In our current points-based system, a tier 2 skilled worker works for a particular employer, so it is not that much of a leap to say, “You must work for the employer in X, Y and Z offices.” Applying it generally may be more complicated, but applying it to workers who work for an employer—whether they are highly skilled or low skilled does not matter—is easier. If you are someone who is on a payroll, it is easier to envisage it working. It becomes more complicated to stop people moving around outside the paid employer—they must be employed by that person.
Ian Robinson: A very quick point: right now, you sponsor a particular person to work for a particular employer in a particular location. If that location changes, the Home Office must be notified. I could not say how much scrutiny they give to that—I do not think it is a great deal—but employers are already reporting on that sort of thing.
Stuart C. McDonald
Q
Alison Harvey: I think Wendy Williams has given you an excellent blueprint in the Windrush lessons learned review. Although those recommendations emerged from Windrush, what she is saying is that you get a Windrush when you have a lack of understanding of your own laws. Complexity makes that understanding so difficult to achieve, as happened with Windrush. She recommends the consolidation of legislation. It is obvious. We need to do that through a consolidation Bill.
We have to have a self-denying ordinance so that no one is trying to change it—not the Government, not the Opposition—and we just get in and consolidate what we have got. Then we go in and change it afterwards. It is difficult enough to consolidate it. It can then go through the consolidated Bill procedure in Parliament, which is the only way you would ever get a consolidated Bill through Parliament without abandoning all other business in the Session to deal with it.
If the Immigration Act 1971 was our “going into the EU” immigration Act, we now need to start again and build up from the top. We need to think much more teleologically about where we want to be and what we want to achieve, rather than start with the how. The problem with the current paper is that it starts with the how and ignores where we are. It cannot cope with pressure such as from the pandemic and its effects on the economy. It is a rigid system full of teeny little routes. We do not need that; we need an idea of what the end result looks like, and then we can look at how to get there. We need a lot more sensitivity to regions, so we need to devolve down a great deal to regions such as Scotland, where immigration is needed. In Somerset, where I come from, the agricultural crisis is going to be huge.
The Chair
Thank you very much. I am afraid that it is 5 o’clock, and the rules state that I have now to ask the Whip—it is his moment of glory—to move the adjournment motion.
Ordered, That further consideration be now adjourned. —(Tom Pursglove.)
Finance Bill (Fourth sitting)
Tuesday 9th June 2020
(3 years, 10 months ago)
Public Bill CommitteesRead Full debate Finance Act 2020 View all Finance Act 2020 Debates Read Hansard Text Read Debate Ministerial Extracts Amendment Paper: Public Bill Committee Amendments as at 9 June 2020 - (9 Jun 2020)
The Committee divided: - Ayes: 6 / Noes: 9 - Question accordingly negatived.
The Financial Secretary to the Treasury (Jesse Norman)
It is a delight to see you in the Chair this afternoon, Ms McDonagh.
Clause 27 increases the rate of relief for businesses investing in research in development and supports the Government’s ambition to drive up R&D investment across the economy to 2.4% of GDP. R&D tax credits are a key element of that support for innovation and growth. To assist businesses further, the Government will increase the rate of the R&D expenditure credit from 12% to 13%. In the interests of disclosure, I should mention that my wife, Kate Bingham, is the chair of the vaccines taskforce and is engaged in the R&D sector.
Investment in R&D is vital for increasing productivity and promoting growth. There are two schemes for claiming R&D task credits: the research and development expenditure credit—RDEC—and the small and medium-sized enterprise scheme. Businesses can benefit from R&D tax relief regardless of whether they make a profit in that year. As R&D is often risky or pays back years after the investment, this is a well-targeted and much-valued incentive. In 2016-17, the Government provided over £2.2 billion to businesses through RDEC, supporting almost £25 billion-worth of R&D activity.
The changes made by clause 27 will provide an additional £1 billion of support over the next five years. Increasing the RDEC rate will make the UK even more competitive for R&D investment and drive growth across all the UK’s regions. I believe that the changes made by the Bill will give innovative businesses additional support and encourage further investment in R&D. I commend the clause to the Committee.
Wes Streeting (Ilford North) (Lab)
Welcome back to the Chair, Ms McDonagh.
The Financial Secretary has outlined the impact that clause 27 will have on the generosity of RDEC by increasing it from 12% to 13%. The Opposition certainly have no qualms about that; it is estimated to benefit approximately 7,000 businesses, which is to be welcomed, and the incentives that he outlined are laudable. If I may, however, I will raise a couple of concerns.
The Financial Secretary mentioned the RDEC provision and the SME R&D scheme. As other stakeholders have said, it is disappointing that while the RDEC rate of credit is being increased from 12% to 13%, we are not seeing an increase in the generosity of the SME R&D scheme. Will the Minister address that in his reply? I think it is a big missed opportunity: SMEs are an important part of our economy, and their R&D potential should not be overlooked. That is why there is a provision specifically for them, after all, so it is disappointing that they seem to have been overlooked.
While we are debating clause 27, I will make a few points about research and innovation more generally. The UK is a global centre of excellence in R&I, but we should be even more ambitious, and the Treasury ought to be driving ambition in that respect. The latest figures from the Library put the UK’s research and development spending at 1.7% of GDP—behind the USA, France and Germany. While I absolutely acknowledge that the Government intend to be more ambitious and increase the percentage of GDP spend on R&D, I do not think that there is any room for complacency, so it is disappointing that they have overlooked the SME dimension.
We have to ensure that any uplift in innovation investment also ensures value for money, and that we are more ruthless about returns for the taxpayer and our economy. It is the research that costs money and the development that brings in the financial and, crucially, industrial payback.
As I said only on Monday to a group of university leaders, we have world-class universities in this country. I am very proud of the UK’s higher education sector and the contribution it makes. I hope that the plight of our universities is well understood by the Treasury and that, as the Chancellor is considering what more needs to be done to support different sectors of our economy through the crisis, he will look very carefully at what is happening in our higher education sector. It is the result not just of luck but of strong leadership from our universities that we have a world-class higher education sector in the UK, and we want it to go on being world-class. That applies not only to the teaching and the reputation of universities as a destination for students and academics, but to the world-class research output of our universities.
We still need to do much more as a country to bridge the so-called valley of death—to take academic ideas on to commercial success. It is a constant source of frustration to me, and I think more broadly, that our universities are places of outstanding research and innovation that is then capitalised on elsewhere. We end up paying double: we pay for the research up front and then we pay to buy back the benefits of that research, which has often been applied and commercialised by others.
Industrial researchers know that the cost of scale-up and commercialisation is an order of magnitude more than the cost of fundamental research, and they allocate their resources accordingly. The public sector in the UK has that ratio almost entirely reversed, spending 10 times more on research than on scale-up and development. While I absolutely celebrate and champion the research base of our universities and the importance of research and scientific discovery, and the arts and humanities as public goods in and of themselves, it is disappointing that the UK taxpayer often find themselves a benevolent funder of research for the world, hamstrung by a funding regime that has insufficient capacity to absorb and commercialise UK-funded research in the UK. I believe there is an opportunity for the Government to think about what more they can do to ensure that future growth in the science and innovation budget is targeted on development as well as research, ensuring that research carried out in the UK is commercialised in the UK, and that the economic benefits are captured in the UK.
We can also do much more around our research and technology organisations, which are an under-utilised and undervalued part of our science and innovation base. Funding development rather than research, using RTOs, would also support the Government’s objectives, which I believe are shared cross-party, of levelling up and investing in those parts of the UK that too often in the past have felt overlooked or left behind. By ensuring that funding is targeted at development as well as research, we can ensure that a greater proportion of funding goes towards some of our industrial heartlands, particularly in the north of England, where many RTOs are located, rather than continuing to concentrate funding in the so-called golden triangle of universities in the south of England.
I hope that the Financial Secretary will take those points on board, and that when he has the opportunity to do so, with the Treasury, he will focus R&D investment appropriately. It would be particularly helpful if, this afternoon, he enabled us to understand why the Government have overlooked the importance of SMEs when thinking about our research and development tax incentives.
Jesse Norman
I thank the hon. Gentleman for his thoughtful comments and questions. Let me discuss the SME scheme first. It is worth reminding the Committee that the SME scheme is extremely generous as it stands. It has a 230%—2.3 times—corporation tax deduction on R&D spend and a 14.5% payable credit where losses are made; some £2.2 billion of support was claimed through the SME scheme in 2016-17. It is also true that some SMEs claim RDEC, and will therefore benefit from the increase of the expenditure credit we are discussing. In 2016-17, just under 3,500 small and medium-sized enterprises claimed a little over £200 million in support through RDEC.
I understand why the hon. Gentleman says we need more ambition, but it is important to realise that the increase now under way represents the largest increase in support for R&D for 40 years across all Governments, Labour, Conservative and coalition. It is an enormous investment that increases public investment in science, innovation and technology to £22 billion by 2024-5, so there is no absence of ambition from the present plans. Of course, it is always important to balance that ambition against cost-effectiveness and value for money.
The hon. Gentleman mentioned the situation of universities in the context of covid-19. I understand that point: I used to teach at University College London and at Birkbeck, and have been associated with several universities in my life. It is also true that an enormous body of work remains to be done within universities, which may in turn be stimulated by the present situation to address the third point he made, which is the importance of the “D” in R&D—improving commercialisation and development. That is often the part of the picture that is missing, and it is hard for Government to create the development side on their own; we need active, vigorous, energetic partners. When one looks at other countries that have been highly effective at the development side of R&D, one finds in many cases that it has been not just corporate-led, but led and supported by universities as well. The hon. Gentleman’s points are therefore well made.
I remind the Committee that the ambition of this measure has been recognised by the Confederation of British Industry, which noted that these were
“powerful incentives to get businesses investing”.
It has also been specifically supported by the Association of the British Pharmaceutical Industry, which has recognised that despite the difficult circumstances in which the Budget was delivered, there is a commitment to this sector and this kind of investment. With that in mind, I recommend that the clause stand part of the Bill.
Question put and agreed to.
Clause 27 accordingly ordered to stand part of the Bill.
Clause 28
Structures and buildings allowances: rate of relief
Question proposed, That the clause stand part of the Bill.
The Chair
With this it will be convenient to discuss the following:
Clause 29 stand part.
That schedule 4 be the Fourth schedule to the Bill.
New clause 10—Structures and buildings allowances: review—
“(1) The Chancellor of the Exchequer must review the impact on investment in parts of the United Kingdom and regions of England of the changes made by section 29 and Schedule 4 of this Act and lay a report of that review before the House of Commons within six months of the passing of this Act.
(2) A review under this section must consider the effects of the provisions on—
(a) business investment,
(b) employment,
(c) productivity, and
(d) energy efficiency.
(3) In this section—
‘parts of the United Kingdom’ means—
(a) England,
(b) Scotland,
(c) Wales, and
(d) Northern Ireland;
‘regions of England’ has the same meaning as that used by the Office for National Statistics.”
This new clause would require a review of the impact on investment of the changes made to structures and buildings allowances in Schedule 4.
Jesse Norman
Clause 28 makes changes that increase the rate of relief provided by the structures and buildings allowance. It is interesting that this allowance was also singled out by the CBI when referring to the economic incentives for investment that the Government provided in the Budget. From 1 and 6 April, for those businesses chargeable to income tax and corporation tax respectively, the rate of SBA will increase from 2% to 3% per annum. Clause 29 and schedule 4 ensure that SBA operates as intended through six minor and miscellaneous amendments.
The Government remain committed to incentivising businesses to invest in capital assets that will drive and support future prosperity. By increasing the SBA rate from 2% to 3%, we are levelling up the international competitiveness of the UK’s capital allowance regime. With a corporation tax rate of 19%, this country already boasts the lowest headline rate in the G20. Increasing the SBA rate helps us to go further, thereby reinforcing the UK’s attractiveness as a place to invest and do business, and addressing concerns about competitiveness—indeed, more than addressing them—that have already been raised in this Committee.
Wes Streeting
In the case of clauses 28 and 29, I think we have to ask some questions about what the Government are trying to achieve, and some questions about the frequency with which they change the rules.
As the Chartered Institute of Taxation has said, taxpayers generally welcome any increase in a rate of relief, but as the institute has noted on many previous occasions, regular tinkering with rules and rates of capital allowances brings additional complexity and uncertainty; it also undermines investor understanding of and confidence in what is on offer at any one time. Most businesses cite certainty as one of the most important factors in their business planning, and as the institute has also said, it is perhaps more important than the precise amount of relief available.
When the SBA was introduced in 2018, it took an approach of introducing another type of asset classification required only for tax purposes—something that was previously identified by the Office of Tax Simplification in its review of capital allowances as a source of compliance costs. For most property investors, as there is a clawback on disposal of a structural building, the main benefit of the SBA is one of cash flow. As financial accounts will have to provide for a deferred tax liability, it is questionable how much this tax measure will act as a significant incentive to invest or will result in a significant impact on the UK’s competitive advantage. The Financial Secretary ought to address that criticism.
One of the other issues I wanted to raise is something that the Chartered Institute of Taxation has mentioned. Broadly, the changes—particularly in clause 29 and schedule 4—can be described as making the SBA work as it was intended to. It is a relatively new relief, having been introduced in October 2018, and the need for these corrections may reflect the fact that the relief was introduced as a done deal for immediate implementation, with no prior consultation. I am sure the Financial Secretary will say in defence—he can correct me if I am wrong—that the Treasury considers this important to deter businesses that were planning expenditure immediately after the 2018 Budget from deferring it until a later date of introduction, to avoid people taking full advantage too soon. It prompts the questions of why we have a system that apparently requires constant fine tuning, and of whether this is really working to the extent that Ministers intend and to the advantage of the businesses that are supposed to benefit from the relief, if they face additional compliance costs as a result.
I move on to new clause 10. I am in danger of repetition, which I appreciate is not a novelty in this place, but it is repetition that could easily have been avoided, were it not for the same issues that I raised this morning in relation to the “amendments to the law resolution” that successful Governments of different political stripes would have tabled to enable a more wide-ranging political debate in the interests of Parliament and, most importantly, of the wider public.
Ms McDonagh, as you were not chairing this morning’s proceedings, I think it is fair to say that the debate surrounding this Finance Bill, and the clauses that we are considering this afternoon and will consider into next week, is a little more dry and technical than perhaps any of us would have liked. There is a reason for that: it comes down to the fact that the Government are trying to restrict the ability of the Opposition, minor parties and dissenting Back Benchers to cause trouble. That would have been a little more understandable, if not noble, in previous Parliaments, when Governments operated under much tighter majorities or with no working majority at all. That is not to say that it was justified—the Opposition strongly argued against it in the past and would argue against Governments behaving in such a way in the future—but this Government have a significant majority. They do not need to worry about Back-Bench rebellions to the same extent as they once did, and none of us is well served by the Government failing to table the “amendments to the law resolution” alongside the Finance Bill, in order to allow the more wide-ranging political debate that our constituents would expect us to have.
Here we are with new clause 10, just as we were this morning, with an SNP amendment using the structures and buildings allowances review—I hope the hon. Member for Aberdeen South will not resent my characterising the new clause in this way—to shoehorn in some important wider considerations around what is happening to the UK economy on business investment, employment, productivity and energy efficiency, as outlined in the new clause, in a way that would not be necessary if Opposition parties or any hon. Members of the House were able to table amendments in the way we would have liked and our constituents would have expected. The Government would be richer for the scrutiny and would be forced to raise their game, and the Opposition parties would be encouraged to think more carefully about the changes that we propose to Government policy and would be under greater scrutiny to ensure that, where we oppose Government, we also suggest alternatives. Previously, we would have been able to demonstrate those alternatives more plainly by tabling amendments, but we are curtailed by the way the Government have gone about the process and procedure for amending this Bill. As a result, here we are, locked in Committee Room 14 on a moderately sunny afternoon, debating rather dry and technical details of the Bill, when our constituents, the Government and the process of government would have been better served by a more wide-ranging debate.
Stephen Flynn (Aberdeen South) (SNP)
I look forward to serving under your chairmanship, Ms McDonagh. Before I start, I want to touch quickly on the remarks that the hon. Member for Ilford North made about why the new clause was tabled. This is the only opportunity available to us to highlight the issues that we seek to promote. Of course, that is not a criticism, and I would certainly welcome seeing a few more new clauses from Labour Members. Indeed, there is opportunity for all of us to discuss what we seek to discuss, but the key thing is that we need to move something first.
On the matter at hand, amending the tax system in order to incentivise capital investment is a good thing—it is something that we should all want—but when we take such actions we also need to ensure that good governance is put in place. We must also look at the effectiveness of those actions, particularly when we are dealing with the potential impact on business investment, employment, productivity and energy efficiency.
I want to focus on energy efficiency, because it is so important in combatting the climate crisis that we all face. Words mean only so much, so we need action too. We all want to understand how Government measures incentivise energy efficiency, and we want to see further detail behind that, but we also want to see how the Government could go further. For instance, I wrote to the Government—I am not sure whether I got a response—about VAT on building repairs. I appreciate that in the south-east of England, the need for energy efficiency in properties is perhaps not as urgent as it is in the Baltic north-east of Scotland, where I hail from, but that is not to say that it is not a hugely significant issue.
Although we would like VAT to be reduced to encourage home owners, property developers and the like to improve the energy efficiency of older properties, that is not something that the Scottish Parliament can legislate on; the Scottish Government’s hands are tied by the UK Government in that regard. I hope the Minister will take the opportunity to clarify why there has been no move on that issue. We want properties to be more energy-efficient, and reducing VAT on the essential repairs that they require would be a logical, practical and easy step. It is deeply frustrating that such matters are not within the Scottish Parliament’s competence, and that we need to rely on a UK Government we did not vote for and do not support. So much good is happening in Scotland at the moment and the Scottish Government are doing incredible work, but their hands are tied. For instance, in December 2019, the Scottish Government’s Housing Minister, Kevin Stewart, highlighted that, by the end of 2021, we will have allocated more than £1 billion since 2009 to tackle fuel poverty and improve energy efficiency to make homes warmer and cheaper to heat.
In my former life as an elected councillor in Aberdeen, I saw at first hand the good work that housing associations and local authorities have done to improve insulation, use newer windows to stop energy leakage and put better heating systems into homes. Moves are afoot to increase our energy efficiency, and they are all positive.
In Scotland, we are blessed that we will have legally binding standards for home energy efficiency from 2024 onwards, which will make things even better. However, we should not have to rely on the UK Government’s approval to put in further measures. I again ask the Minister to clarify why the Government have been unable or unwilling to reduce VAT to date.
As I say, so much good is being done in Scotland to improve energy efficiency. It is only right that the UK Government agree to the new clause, in order to then assess their own actions and determine what more can be done to improve the situation, not only for those in Scotland but for those across the United Kingdom.
Jesse Norman
I thank the two hon. Gentlemen for their questions and comments on the clause. The hon. Member for Ilford North raises the question of what he calls tinkering, and I of course recognise the concern. I think it is fair to say that Governments of all kinds were given a masterclass in the dangers of tinkering by the Labour Government that was in power between 1997 and 2010. I will not bore the Chamber by rehearsing the highlights, but some would give anyone cause for concern. It is an inveterate potential risk, and the difficulty, in this case as in others, is in trying to balance the desire not to make change with the positive good that can be made by a particular change.
In the case of the SBA, on which there has been considerable discussion with stakeholders in different ways, the effect of increasing the generosity of the relief is that a business investing in a £10 million building will be able to deduct an extra £100,000 a year. That is not a trivial amount of money; any such business would surely welcome that amount. That illustrates the difficulty with a general worry about that tinkering. It is noticeable that, again, this has received a lot of support.
I mentioned the CBI. The National Farmers Union says that the increase will
“deliver more effective tax relief for farm buildings.”
Interestingly, it also goes to the point raised by the hon. Member for Aberdeen South, by saying that this change
“will go some way to supporting farms investing in modern, efficient infrastructure which could help to improve productivity and deliver our net zero ambition.”
That is a worthwhile and a good thing.
There are a variety of amendments in the clause. The difficulty is that these are minor but necessary technical changes to ensure that the SBA legislation is fair and equitable. As the hon. Member for Ilford North said, there is a general problem with forestalling on much new tax legislation. In the case of this measure, it is inevitable that, when there is change in a complex environment, different consequential changes will occasionally have to be made in order to improve the functioning of the legislation, to ensure that it works as anticipated. That is what these changes do.
We have already discussed the amendment of the law and I pointed out that, in some respects, proceeding directly with an income tax resolution has the effect of increasing overall transparency. It does not constrain debate in any degree. If the Labour party or any other party wishes to come forward and say that it wishes, on balance, to have SBA at 2%, 4% or 10%, it is fully entitled to say that in Committee now. That can then be evaluated and used to interrogate the position of the Government, and when we come to vote on it, the Government and colleagues can consider what an alternative might look like when they consider how to vote. That debate is not constrained—formal processes of amendment are not the same thing as the possibility of debating.
The hon. Member for Ilford North mentions his desire to avoid the dry and technical subject matter found in a Finance Bill Committee. He has chosen the wrong Bill about which to have that worry, because this is a dry and technical subject, and it is of its nature that it is like that and will always be like that. The idea that, before these procedures were in place, Finance Bills had wildly exciting and disco-like sessions in which Members of Parliament were able to propose exotic new ideas and debate was thereby enlivened is, I think, quite far from the mark.
The hon. Member for Aberdeen South raised a question about energy efficiency. He is aware that a vast array of measures have been put in place that are designed to bolster and improve the way in which we use energy. In due course, the Government will come forward with our own plans for net zero, which will do more in that regard. I think he called—or if he did not, he came close to it—for VAT to be, as it were, nationalised within Scotland. However, as I pointed out to the hon. Member for Glasgow North, I wonder whether the hon. Gentleman really wishes to overturn the fiscal framework that has been so carefully agreed over such a significant period and so much consultation between the then Government and the Scottish Government. If he really wishes to overturn the fiscal framework by demanding new powers, let him do so, but of course that upsets a much larger potential apple cart. On that basis, I commend clause 28 and urge the Committee to reject new clause 10.
Question put and agreed to.
Clause 28 accordingly ordered to stand part of the Bill.
Clause 29 ordered to stand part of the Bill.
Schedule 4 agreed to.
Clause 30
Intangible fixed assets: pre-FA 2002 assets etc
Question proposed, That the clause stand part of the Bill.
Jesse Norman
Almost as if it had been perfectly choreographed to illustrate the underlying nature of a Public Bill Committee on a Finance Bill, clause 30 concerns corporation tax intangible fixed assets relief for pre-Finance Act 2002 assets, thereby supporting UK investment in intangible assets.
Intangible assets include intellectual property rights such as trademarks, patents and design rights. The intangible fixed assets regime provides tax relief to companies for the cost of acquiring intangible assets. Relief is given either as the cost is written off in a company’s accounts or at a fixed rate. Not all intangible fixed assets are in the regime; there is a restriction, known as the pre-FA 2002 rule, that excludes certain older assets so that relief for the cost of such pre-FA 2002 assets is usually deferred until they are sold and the capital gains rules apply. This deferral, along with the administrative cost to companies in identifying whether an asset is within the regime, reduces the UK’s attractiveness, compared with other jurisdictions, as a location in which to hold intangible assets.
The changes made by clause 30 will make it more attractive for businesses to develop, manage and exploit intellectual property in the UK. They will simplify the taxation of such assets by bringing all intangible assets into the single regime where they are acquired on or after 1 July 2020. The clause will amend the commencement rules in part 8 of the Corporation Tax Act 2009, which prior to 1 July 2020 would have prevented pre-FA 2002 assets acquired by a company from a related party from coming into the regime. Intangible assets held by a company that is not within the charge to corporation tax as at 1 July 2020 will all be brought within the intangibles regime without distinction, should that company subsequently come into charge. The tax treatment for pre-FA 2002 assets already within the charge to corporation tax prior to 1 July 2020 will be preserved to protect those companies that already benefit from the existing rules.
There are further rules to apply the restriction to transactions that stop short of an outright acquisition of a pre-FA 2002 asset, but that nevertheless transfer its substance and value to a related party, such as in the form of a licence or some other new asset. The costs that can initially be relieved on such an acquisition will be restricted by reference to the market value of the asset; the company will not obtain full relief for the cost until it disposes of the asset. There are further rules to prevent arrangements between related parties that are intended to sidestep this restriction by creating or transferring what are notionally new assets instead of pre-FA 2002 assets.
The most immediate impact of this measure is likely to be on international businesses importing valuable intangible assets to the UK from overseas. These businesses will no longer have to perform the complex task of identifying excluded pre-FA 2002 assets, and will instead receive tax relief on all the assets that they acquire. Domestic companies, however, will also stand to benefit over the longer term from the reduced administrative burdens brought about by this measure. An estimated 1,000 companies a year acquire pre-FA 2002 assets. There will now be less need to distinguish between these pre-FA 2002 intangible assets and new intangible assets when companies enter into transactions involving such assets.
The clause enhances the availability of UK tax relief for the costs of acquiring intangible assets. It brings those acquired assets into a single tax code. That reduces the effects of an arbitrary distinction between older and newer intangible assets, and in so doing increases the attractiveness of the UK to innovative, IP-intensive businesses. I commend the clause to the Committee.
Wes Streeting
The Financial Secretary said that Finance Bills cannot be exciting and fun, but I am riveted by this particular clause—I have been looking forward to it all afternoon. I rise not to take umbrage at what the Financial Secretary said but to give voice to the concerns expressed by the London Society of Chartered Accountants and to ask the Minister to address those concerns.
As the society has acknowledged, this change will benefit many taxpayers. However, there will also be taxpayers who have capital losses or non-trading deficits and would have anticipated using them against any gain on pre-2002 intangible assets. There will be taxpayers who, having been through the transition to the new rules in 2002, are now quite happily running the two regimes side by side. For them, a compulsory change to the system would be more disruptive than maintaining the status quo, and as a result they might be disadvantaged. I wondered whether the Minister, speaking directly to that point, could clarify how those taxpayers will be impacted.
By way of slight digression, Ms McDonagh, and in response to the point that the Financial Secretary made during our discussion of the previous clause, I should say that I do not remember the Labour Government doing a great deal of tinkering between 1997 and 2007.
Wes Streeting
The word that the Financial Secretary was looking for was “transformation”.
Jesse Norman
That was an unexpected intervention from the Chair, Ms McDonagh, but no less welcome for that. I thank the hon. Member for Ilford North for his question. He slightly galloped through the particular concern, and I am afraid I did not fully catch it.
Jesse Norman
That is absolutely fine. What I will do is ask the hon. Gentleman to give me the letter; I will write to him separately with a response that addresses the detail of the concern.
I can say to the hon. Gentleman that we do not believe that companies will be worse off because of these changes, which will not affect IP already held by any company. If a company does dispose of its IP, it will be taxed on the same basis as it would have been before the changes. The company will still be able to make use of reliefs that they may have been expecting to use. Any tax change can have an impact in some particular cases, of course, but overall we do not expect companies to be worse off. I am very happy to take up and respond to the specific question that the hon. Gentleman raised, but I will do that outside this Committee Room, if I may.
Question put and agreed to.
Clause 30 accordingly ordered to stand part of the Bill.
Clause 31
Non-UK resident companies carrying on UK property businesses etc
Question proposed, That the clause stand part of the Bill.
The Chair
With this it will be convenient to discuss that schedule 5 be the Fifth schedule to the Bill.
Jesse Norman
This is another kaleidoscopically exciting measure alongside some of those that have already got the hon. Member for Ilford North so excited. I am happy to be able to titillate him further by discussing further changes to the non-UK-resident companies that carry on UK property businesses. Clause 31 and schedule five make amendments to legislation that provides that non-UK-resident companies carrying on a UK property business will be charged corporation tax from 6 April 2020.
In the Finance Act 2019, the Government legislated to bring non-resident companies that carry on a UK property business or who received other income from UK land within the charge to corporation tax from 6 April 2020. Until then, they are within the charge to income tax.
These changes make four minor amendments to the legislation that took effect in April 2020. They maintain the treatment of non-trading interest income of non-resident companies. They provide relief for interest expenses paid prior to the commencement of the non-resident companies’ UK property business—a UK resident company can already obtain relief for this type of expense. The time limits for making certain elections in respect of derivative contracts will only start to run for a non-resident company from 6 April 2020. Finally, for all companies, there is an exception from the obligation to notify chargeability to corporation tax if the taxable incomes have an amount on account of tax withheld from it. The changes clarify that the amount withheld on account of tax must meet the tax due on that income before the exception can apply.
These changes will ensure that there is a smooth transition for non-UK-resident company landlords from the income tax regime into the corporation tax regime. I therefore commend the clause and schedule to the Committee.
Wes Streeting
As the Financial Secretary has outlined, the clause and schedule make minor amendments that have arisen as a consequence of the provision made by schedules 1 and 5 to the Finance Act 2019. There is not much for me to add, as it is very much a consequential and technical adjustment.
Question put and agreed to.
Clause 31 accordingly ordered to stand part of the Bill.
Schedule 5 agreed to.
Clause 32
Surcharge on banking companies: transferred-in losses
Question proposed, That the clause stand part of the Bill.
Jesse Norman
We now enter the lush hinterlands of the banking surcharge regime. Clause 32 makes changes to the regime that ensures that the surcharge operates as intended when it was introduced.
The Government believe that even as reliefs are provided to support the economy in response to the coronavirus, the tax rules should continue to operate fairly and consistently for all businesses within their scope. Previously, the Government have legislated so that banks make a fair tax contribution, which reflects the risks they pose to the UK economy. That is why the Government introduced the bank levy in 2011—a tax on banks and building societies’ balance sheet equity and liabilities. It is also why banks have been subject to additional taxes above and beyond general business taxation ever since then.
In 2015, the Government made changes to the bank tax regime to ensure the sustainability of the tax base. They introduced the new bank levy rate, but offset that with the introduction of a new 8% surcharge on banks’ profits over £25 million, on top of corporation tax. The surcharge applies to corporation tax profits of banking companies within a banking group.
For corporation tax purposes, companies are able to make a number of adjustments when arriving at their profits. That might include transferring losses from one group company to another or carrying forward losses to the next accounting period. However, to ensure that banks are paying tax on all their banking profits, some of these are disallowed when arriving at the profits subject to the surcharge.
One such disallowed adjustment is for capital losses that are transferred from a non-banking company to a banking company and set against the capital gains of that banking company. That transfer should be disregarded when calculating the surcharge profit for the banking company. Currently, where these capital losses are carried forward to a future accounting period, that transfer is disregarded.
However, under the legislation as it stands, such transferred-in capital losses are not disregarded when they are set against the capital gains of the banking company in the same accounting period. That could, counter to the original intention, mean banks using losses from non-banking companies in their group to reduce their surcharge profits. That cannot be right, and the changes that we are making in the Finance Bill will ensure that it cannot happen. The changes made by clause 32 will stop surcharge profits being reduced by all capital losses transferred in from non-banking companies, whenever they are utilised against capital gains.
The changes made by clause 32 will ensure that the surcharge operates in the way that was intended when it was introduced. They will ensure that banks cannot reduce their profits subject to surcharge by using losses from non-banking companies in their groups. Above all, they will ensure that banks pay the additional tax on all their banking profits.
Wes Streeting
We welcome clause 32 and the Financial Secretary’s explanation of why the measure is necessary. It is important to emphasise, particularly for those in the banks who pay close attention to proceedings in Parliament, a couple of points that they should bear in mind, even a decade on from the financial crisis.
Across the House, we recognise and welcome—certainly this is true of Her Majesty’s official Opposition—the fact that the UK is a global financial centre and that the financial services industry is an asset to our country. It generates jobs and employment, and provides the oil to grease the wheels of the economy. We can see now, in response to the present crisis, the importance of getting finance to where it is needed.
Whether we are talking about business or personal customers, business loans and lending, mortgages, pensions, savings or bank accounts, people in their day-to-day lives understand the importance of a strong financial services industry. Across the House we recognise the importance of the financial services industry to the economy as a whole. As we saw, painfully, back in the midst of the global financial crisis, when the financial services industry fails and suffers, the whole economy suffers, too. It is important to acknowledge the value that we place on it.
However, it is also important that the banks should continue to reflect on the fact that the financial crisis—which came about as the result of irresponsible and reckless actions, and greed—demanded a significant price that fell on the heads of taxpayers and citizens of this country and around the world, who had no part in the making of that crisis. For the past decade of cuts to public services and pain that has been felt by businesses and households across the country—although part of the blame rests with Government for policy decisions that were taken, which we have rehearsed many times in those 10 years—it is a fact that the decisions and choices faced by successive Governments were made all the more difficult because of the irresponsibility of the spivs and speculators in financial centres, who did not understand their responsibility to society as much as they understood their own reckless greed.
In that context it is right that over the past 10 years Governments have asked banks, through the bank levy and other provisions, to pay back the debt they owe to society, so it is disappointing when new ways are found to try to lessen their tax liabilities. It is important that when the Government identify gaps and loopholes in legislation that have unintended consequences, they act to close them.
I hope that my remarks will achieve two things, the first of which is to reassure the financial services industry that we value its contribution and see it as an important part of our economic success and national life. However, I also want to remind financial services of the responsibilities that they have to the society they serve. The clause goes some way to ensuring that the debt they owe to society is properly repaid.
Jesse Norman
I thank the hon. Gentleman for his remarks. I share his view: it is of enormous value to the UK to have a global financial sector between the City of London, Birmingham, Leeds and Edinburgh. The UK is a country with astonishing heft in global markets, which is a very good thing in many ways. As he said, however, it is also important that those institutions pay the full burden of taxation that is due. There is very little concern that they have not done so in this case, and the concern has now been addressed because a potential loophole has been removed.
If I have understood him correctly, the hon. Gentleman attributes the crash of 2007-08 to spivs and speculators in the financial markets. There was a lot of that, but it is important to recognise that it was also a function of incentives, law and culture. Those things were all, in some respects, out of control before 2007-08. We talked banteringly about the level to which the Government have attempted to tinker with the legislation. In that case, however, it is perfectly clear that there was a failure not of regulation, but of supervision. It was a failure that was extraordinarily costly to this country.
In the spirit of putting things on the record, it is important to remember that, as the Vickers report found, the level of aggregate bank leverage in the financial sector in this country remained roughly steady for 40 years between 1960 and 2000 at 20 times capital. Between 2000 and 2007, it increased to 50 times capital. The effect of that was that, when the financial crisis hit, the UK banking sector was vastly over-leveraged. I am thrilled that this Government, as I suspect other Governments would have done if they were in place, have taken steps to extract a proper level of taxation from the banking sector and thereby set incentives that restrain the tendencies to growth and periodic explosion in the banking sector, because such tendencies are often absolutely ruinous for the wider economy.
Wes Streeting
It is, of course, right to say, especially with the benefit of hindsight, that the supervisory arrangements governing financial services in this country and other countries were insufficient. That is why we have a much more robust supervisory regime in place, which has been implemented to a large degree with cross-party consensus over the course of the past 10 years. I would gently point out two things. The first is the global context, and the second is that, although the Financial Secretary may point to the apparent failure of the last Labour Government to put in place a greater degree of regulation, I would challenge him—he can write to me if he cannot answer immediately—to cite a single example of a Conservative shadow Chancellor or shadow Treasury Minister calling for greater financial regulation by the last Labour Government. In fact, I remember the charge against the Government being that we were too prone to regulation rather than too hands-off, but I stand to be corrected.
Jesse Norman
I do not think there is any doubt at all that MPs and politicians across the political spectrum were taken by surprise and were not as alert as they should have been to the expansion in bank leverage that took place. I was merely putting those facts on the record. Inevitably, the responsibility lies with the Government in power at the time, as it would do in other crises, and it is for posterity to decide how it wishes to judge. I just mean that this is a proper response to a crisis that is much worse than it should have been; if those in charge at the time had taken the measures and spotted the crisis in advance, it would not have happened, notwithstanding all the ameliorative points that the hon. Gentleman has made in opposition to that.
Having said that, let me move on to points of greater overlap and agreement, and recommend to the Committee that the clause stand part of the Bill.
Question put and agreed to.
Clause 32 accordingly ordered to stand part of the Bill.
Clause 33
CT payment plans for tax on certain transactions with EEA residents
Question proposed, That the clause stand part of the Bill.
The Chair
With this it will be convenient to discuss that schedule 6 be the Sixth schedule to the Bill.
Jesse Norman
Clause 33 and schedule 6 would make changes to UK corporation tax payment plan rules so as to provide a deferred payment option for tax on certain transactions with EEA residents. Again, this is a small and technical matter.
A recent decision of the tax tribunal found that the requirement for a taxpayer to pay tax immediately following certain transfers of assets from a UK company to an EEA company within the same group did not conform with EU law. UK rules provide for tax-neutral transfers of assets between two group companies within the charge to UK tax, meaning that there is no immediate tax charge. If assets are sold or transferred otherwise, tax is payable immediately based on a disposal of the assets at market value.
The risk to the Exchequer arises from the fact that the tax tribunal decided that these rules could only be justified if transfers to group companies in the EU did not give rise to an immediate tax charge. In the absence of any mechanism for deferral, the tribunal decided that tax-neutral treatment must be applied to such transfers. Effectively, that would mean that the UK would completely lose its right to tax any profits on such assets. The case is under appeal, but resolution could be some years away. In response to that decision, the Government are acting to provide taxpayers with the option to pay tax on such transfers in instalments, which the judgment says would ensure compatibility with EU law. The effect of this is to remove the uncertainty caused by the decision and provide protection to the Exchequer.
This new facility to defer payment of part of a company’s corporation tax bill for an accounting period is modelled on an existing scheme for so-called exit taxes. Schedule 6 provides that corporation tax due on transfers of assets from a company in the UK to an EU company in the same group can be paid in instalments over five years, subject to interest at the usual rate for late-paid tax. We are making this change not to comply with European law, but to provide certainty to UK businesses and ensure that there is no risk to the Exchequer while the case before the UK courts remains unresolved. Once the risks and the uncertainty are resolved, this deferred tax payment facility will no longer be required.
Certainty could come either through a successful conclusion to the litigation in favour of Her Majesty’s Revenue and Customs, or at such time as the EU treaty freedom of establishment rules no longer apply to the UK. To that end, schedule 6 includes a power for the Treasury to repeal this facility by regulation; the Government intend that this power should be used once there is no need for the facility. These changes will provide greater flexibility for UK businesses, remove uncertainty and protect Exchequer revenues. I therefore commend both the clause and the schedule to the Committee.
Wes Streeting
Clause 33 and schedule 6 represent a welcome and sensible response to the decision taken by the first-tier tribunal in the case of Gallaher v. HMRC. The only question I have for the Financial Secretary is about the fact that the Treasury can withdraw the facility to enter into CT payment plans by statutory instrument, as he alluded to at the end of his remarks. The explanatory notes to the Bill state that the power of repeal
“is intended to be used if the Government determines that CT payment plans are no longer required.”
Could the Financial Secretary give us some sense of the circumstances in which the Government may determine that CT payment plans are no longer required?
Jesse Norman
I am grateful for the question. If we get certainty in the legislation, the effect would be that the provision was no longer required. Certainty could come, as I said, at the successful conclusion to litigation in favour of Revenue and Customs, or when the EU treaty freedom of establishment rules no longer apply to the UK. Those are the circumstances under which we would expect the Treasury to repeal the facility. It is done by regulation simply because it is completely uncontroversial and would be much better handled that way, rather than through the primary legislative process.
Question put and agreed to.
Clause 33 accordingly ordered to stand part of the Bill.
Schedule 6 agreed to.
Clause 34
Changes to accounting standards affecting leases
Question proposed, That the clause stand part of the Bill.
Jesse Norman
Again, this is a minor and technical amendment that makes a change to the Finance Act 2019 to remove a potential ambiguity in the spreading rules for businesses adopting the latest lease accounting standards.
The Finance Act 2019 made changes to the income and corporation tax rules for businesses leasing assets in order to allow rules to work following the introduction of international financial reporting standards 16. That legislation was designed to ensure equitable treatment for businesses by spreading the tax effects of adopting IFRS 16 over the average remaining terms of asset leases. Consequently, the Exchequer impact of those changes would also be spread out.
It was subsequently brought to the Treasury’s attention that minor aspects of the legislation did not work as originally intended. To address that, this clause makes minor amendments to the legislation, clarifying how the rules ought to be implemented. The Government published the amendments in draft on 11 July 2019, and they were well received by stakeholders.
The changes made by clause 34 clarify that firms ought to spread the tax effect of changes in adopting IFRS 16 over the average remaining term of asset leases. The changes are to be treated as having always had effect from 1 January 2019. They will affect only businesses, and they will have no novel impacts. They provide for only modest amendments to deliver on the policy intent agreed by hon. Members in the Finance Act 2019.
Making these clarificatory amendments will ensure that the legislation introduced in the Finance Act 2019 operates as intended, and therefore that there is fairness, certainty and stability for all businesses when applying the relevant accounting rules. I therefore commend the clause to the Committee.
Bridget Phillipson (Houghton and Sunderland South) (Lab)
It is a pleasure to welcome you to the Chair, Ms McDonagh, and to take up the case for the Opposition on what my hon. Friend the Member for Ilford North described as the more technical aspects of the Bill. I am sure we will continue to enjoy debating these clauses none the less.
The Opposition do not object to the principle behind this clause, which appears straightforward and achieves its aim. Bringing leases on to the balance sheet is a welcome step in achieving greater transparency in our system. The Opposition believe that there is a very important need for the Government to continue to do more in this area. I simply ask the Minister why this was not done sooner.
I am keen to raise the broader issue of tax transparency and tax fairness in our system as a whole. Our small and family-run businesses are operating in a very difficult climate due to the ongoing pandemic, and they want to have confidence that everyone is playing by the rules and that there is fairness across the system. We know from various documents that we continue to have an ongoing problem with tax avoidance and the broader tax gap in our country.
I am always grateful to the House of Commons Library for providing additional material in this area. It is a wonderful source of useful information, research and analysis, especially for Opposition Members; our ability to undertake some of this research ourselves is a bit more limited, as we do not have access to the fine officials who the Minister has the privilege of working with on a daily basis. The Library has put to us that the wider tax gap for income tax, national insurance contributions and capital gains tax was estimated at £12.9 billion in 2017-18, based on HMRC documents; there are other assessments, of course.
I am sure that the Minister will want to make sure that we do everything in our power to ensure that there is fairness right across the system, particularly at this time. We believe that income must be more tightly tied to tax treatment, with tax liability going up with income, so that the Government can fund, and can ensure that we have revenue available to fund, our vital public services—not least now, at this very trying time for our country.
We hope that this change and the future legislation that the Government might seek to bring forward will be developed in the same spirit of creating greater transparency within our system. We also hope that the pressures that Ministers and officials are under at this time will not divert them from the necessary action that they must continue to take, to ensure that we have greater transparency and that everyone pays their fair share. We also want to make sure that HMRC has all the resources and staffing it needs to do this work to the best of its ability.
Jesse Norman
I am very grateful to the hon. Lady—what an effortless tag team she and the hon. Member for Ilford North make! It is good to see them in action.
The hon. Lady’s points are very well made, and I hope she recognises that the Government take these issues seriously—not just avoidance and evasion, and, in a separate category, fraud, but the wider question of fairness. It is absolutely right that we should do so. In an environment where the vast majority of taxpayers pay tax as due, in good time and do not become subject to any enforcement proceedings, it is all the more vital to maintain that consent and recognition of the public fairness of the system. She is absolutely right about that.
I hope that the hon. Lady will see that some of the issues that we have been facing in this Finance Bill and its predecessors, be they the loan charge or IR35, have reflected a persistent desire of the Government to see fairness through, despite some pretty strong headwinds. Also important is the ability to strike a fair balance within each of those schemes; we have discussed the loan charge and the Amyas Morse review, which is designed to ensure the right balance, even within that area.
However, I also draw attention to other important aspects. As the hon. Lady will be aware, we have announced a consultation on a strategy that takes a much more vigorous approach towards tackling the promoters and enablers of tax avoidance. I hope she will note that there continues to be a robust enforcement process within HMRC—one that has been carefully modulated and restrained in the context of coronavirus, but has not been in any sense left off thereby.
I will also say a couple of other things of which the hon. Lady may be less aware. One is that because of the concern about the balance of powers, which has been raised in part by the Lords Economic Affairs Committee and others, we now have a customer experience committee within HMRC. It has also brought in a series of experts who understand what might be called effective and successful customer and taxpayer treatment, bringing them in from other sources across the private sector to make sure that people do feel well treated and well handled, and that it is not a bruising process to have an interaction with HMRC. That sense of the importance of maintaining consent, and of Revenue and Customs not being oppressive while remaining highly effective in ensuring that people pay the right tax due, is a balance that both HMRC and the Government are constantly seeking to strike.
Question put and agreed to.
Clause 34 accordingly ordered to stand part of the Bill.
Clause 35
Enterprise investment scheme: approved investment fund as nominee
Stephen Flynn
I beg to move amendment 4, in clause 35, page 34, line 3, at end insert—
“(13) The Chancellor of the Exchequer must, no later than 5 April 2021, lay before the House of Commons a report—
(a) analysing the fiscal and economic effects of Government relief under the Enterprise Investment Scheme since the inception of the Scheme, and the changes in those effects which it estimates will occur as a result of the provisions of this Section, in respect of;
(i) each NUTS 1 statistical region of England and England as a whole,
(ii) Scotland,
(iii) Wales, and
(iv) Northern Ireland;
(b) assessing how the Enterprise Investment Scheme is furthering efforts to mitigate climate change, and any differences in the benefit of this funding in respect of—
(i) each NUTS 1 statistical region of England and England as a whole,
(ii) Scotland,
(iii) Wales, and
(iv) Northern Ireland; and
(c) evaluating the lessons that can be drawn from the effects of the Enterprise Investment Scheme with respect to the encouragement of both private and UK Government-backed venture capital funds in the devolved nations of the UK.”.
This clause would require the Chancellor of the Exchequer to analyse the impact of the existing EIS and the changes proposed in Clause 35 in terms of impact on the economy and geographical reach; to assess the EIS’s support for efforts to mitigate climate change; and to evaluate the Scheme’s lessons for the encouragement of UK Government-backed venture capital funds in the devolved nations.
The amendment is, hopefully, straightforward and one on which Members can agree. As things stand, as we all know, the enterprise investment scheme facilitates investment firms by offering a tax relief to individual investors of up to £5 million a year, and £12 million over a company’s lifetime. Scotland has an extremely strong financial services sector: a recent EY survey showed that we attract more foreign direct investment than any part of the UK outside London. Indeed, my own city of Aberdeen is well known for securing investment, and regularly battles ahead of cities of a far greater scale.
However, with little financial services power, we are unable to fulfil Scotland’s potential in respect of domestic venture capital. Venture capital in the UK is highly concentrated in the golden triangle—London, the south-east of England and the east of England—which received 73% of all venture capital between 2016 and 2018, according to the British Venture Capital Association. That disparity is also reflected in the EIS. Between 2015 and 2018, only 210 Welsh firms benefited from the EIS, receiving only 1.3% of the total investment. In contrast, the golden triangle received 67% of all investment, with the average UK angel investment per firm being 40% higher than in Wales.
We support Plaid Cymru’s attempts to get Westminster to own up to its failure to get investment into Wales. The amendment would force the UK Government to officially consider the unsustainable concentration of private investment in one region of the UK at the expense of all devolved nations. As the UK Government narrow the applicability of the EIS, they need to consider how that will affect the ability of firms in other areas of the UK economy; how EIS—a tax really funded by taxpayers—could benefit us all by addressing climate change; and how they can encourage the establishment of venture capital funds, and therefore private investment, in the devolved nations.
I will focus briefly on climate change once again. As I said, we cannot escape the climate crisis in front of us. If we have the opportunity to do more, and if we have the ability to leverage investment in a way that allows us to combat the climate crisis, that is surely something that we should all seek to achieve. With that, I bring my remarks to a close. I hope that Members will be minded to support the amendment.
Bridget Phillipson
We welcome the Government’s attempt to draw from their capital review with industry lenders on the enterprise investment scheme. I will come on to our response to amendment 4.
The Government have listened and are not offering further tax relief, instead providing additional flexibility for fund managers to make subscriptions in shares for investors over the years in which the relief is given. However, the difference between adding further tax relief and additional flexibility in this policy is not clear.
We are sympathetic to the position that the hon. Member for Aberdeen South has outlined. We know that there is a big imbalance across the nations and regions of the United Kingdom. The Government talk a lot about the need to level up; we hear about it all the time. It has not always been entirely clear to me what that means—not least because, over the past 10 years, what we have seen has involved precisely the opposite.
I look forward to the days when the Government will provide investment in parts of the country such as the north-east of England, which will enable us to contribute our fair share and play our full role in economic recovery more broadly. We are therefore sympathetic to the amendment proposed by the hon. Member for Aberdeen South.
The requirement to release a report on the effects of the enterprise investment scheme will enhance scrutiny of this policy and ensure that its results are fruitful and target the right causes. It is important to ensure that it starts benefiting regions that need it the most. I am sure the Minister will understand why I put in a particular plug for the north east of England, but we want to see this right across the country and the nations of the UK as well.
The amendment also raises the important issue of the climate emergency, which has not simply vanished because we are currently focused on the pandemic. The climate emergency is still with us and the longer we take to tackle it, the faster we will start to feel the effects of global warming. Research and investment must go towards tackling the climate emergency and we need to encourage the responsible and relevant use of Government funds for knowledge-intensive companies to benefit from them.
In the broader sense of the clause, it is not quite clear to the Opposition what the outcome of adjustments to the enterprise investment scheme detailed in the clause would be. The clause lacks some detail and clarity. We worry that it may be open and liable to exploitation, so I would like the Minister to say a little more when he responds. We have seen problems in recent years in this area and we do not want to see them repeated here.
Research conducted by Ipsos MORI for HMRC in 2016 showed that income tax relief was the main driver for investors to use the enterprise investment scheme: eight in 10 considered the income tax relief element of the scheme to be very important, and 32% essential, to their decision to invest; more than half also considered capital gains tax exemption to be either very important or essential. While many investors decide to invest in the enterprise investment scheme for philanthropic reasons, the financial incentive remains important none the less. The concern is reflected in the scepticism of some universities reported in the Government’s consultation back in March 2018. It is in all of our interests that academic institutions, entrepreneurs and fund managers are aligned, but it is clear there are some issues around greater cohesion between them as part of this scheme.
The hon. Member for Aberdeen South referred to the disparity. The Government’s own figures show that London and the south-east accounted for the largest proportion of investment, with companies registered in those regions receiving 65% of all enterprise investment scheme investment in 2018-19. London and the south-east of England does not have a monopoly on talent, innovation or research. If the Government’s levelling-up agenda is to mean anything in practice, we have to see much more support targeted to those regions so they are able to take part in the wealth of our nation and they can contribute more. We have wonderful universities, pioneering companies both large and small, and a wonderful and flourishing supply chain.
I put it to the Minister that the hon. Gentleman is quite right. We require greater scrutiny to be confident that we are pushing in the right direction and that the Government are making sure that where measures are introduced, they are targeted on the areas of the country where additional Government support could lead to much better outcomes for residents of those communities, who want the opportunity to contribute more broadly to the economic health of our nation. Especially as we start to emerge from this crisis, we will need targeted support that allows every nation and region to contribute to our economy, both in terms of skills and broader investment. For that reason, we are sympathetic to the amendment.
Jesse Norman
I am glad to be able to address clause 35 and the questions the hon. Members for Aberdeen South and for Houghton and Sunderland South have raised.
Clause 35 changes the approved enterprise investment scheme fund rules to focus investments made through such funds on knowledge-intensive companies. It provides additional flexibility for fund managers to make subscriptions in shares and for investors to claim relief. Fund managers will have more time to deploy capital raised, and investors will be able to claim relief one tax year earlier than previously when using an approved fund. The EIS encourages investment in smaller, higher risk trading companies by offering tax reliefs to individual investors who subscribe for new shares in qualifying companies.
A knowledge-intensive company is defined as a company that has spent a defined proportion of its operating costs on innovation and/or R&D and either creates intellectual property or has a defined proportion of its employees with advanced degrees. The intention to change the existing approved fund structures to focus on knowledge-intensive companies was announced at autumn Budget 2017 as part of the Government’s response to the patient capital review.
The Government consulted on new rules and outlined its response at Budget 2018, which set out planned additional flexibilities for fund managers and investors using this structure. The changes made by clause 35 set out the requirements that must be met for investments to be considered as made via an approved knowledge-intensive fund. They include investing at least 80% of capital raised into knowledge-intensive companies and deploying the majority of capital raised within two years.
Amendment 4 would require the Government to review the economic and geographical impacts of the existing EIS and the changes to approved fund structure, and how far they support wider efforts to mitigate climate change. I understand and appreciate the intention of hon. Members to use EIS more strategically to help with mitigating climate change and to ensure that the benefits of EIS are spread more widely across the country, but I put it to the Committee that the amendment is not necessary.
It is worth reminding ourselves of the principal purpose of EIS. It is designed to address a specific market failure, which is that younger, innovative companies across the UK struggle to get access to patient and long-term equity finance to grow their businesses and to develop the innovative products that consumers may want in future. It is not designed specifically to help certain types of companies—for example those that operate in certain parts of the country or certain sectors. The scheme operates on a neutral market basis, and there is no requirement for that companies use EIS funds in specific ways, such as to develop products linked to the fight against climate change.
I completely understand that Opposition Members would like us to collect more information about how attractive EIS is to companies in different parts of the country. HMRC already publishes statistics about where fundraising companies have their registered offices and where EIS investors have their main household. However, it is also worth reiterating the limits of what we know.
Her Majesty’s Revenue and Customs knows where a company’s registered office is, but companies that benefit from the scheme are free to place their registered offices and places of establishment for EI purposes wherever they please in the UK. A registered office in the south-east may not mean that that investment is going into the south-east, because a registered office does not need to be in the same place as where the bulk of the staff are employed.
The hon. Member for Houghton and Sunderland South is concerned that there might be a lack of clarity in the structure, so let me shed some light on that. The measure limits approved fund status to companies that invest 80% of their capital into knowledge-intensive companies and extends the period in which approved knowledge-intensive fund managers must subscribe for shares in those companies from 12 months to 24 months, provided that 50% of the qualifying individual investment is invested within the first 12 months and 90% within 24 months. It allows the investor to carry back the claim for income tax relief to the tax year preceding the tax year of the fund closure. I would suggest that, within the limits of a description within legislation, that is relatively clear.
The hon. Lady also raised a question about regional investment. Again, I fully share her concern, and the Government’s levelling-up agenda is designed to address that very issue. I must say that across my different ministerial jobs, I seem to spend most of my life investing in the north-east of England, one way or another—the massive pivot towards offshore wind has been nothing but good to that area, and I remember making a substantial investment in the Tyne and Wear Metro and the A19 when I was at the Department for Transport—so I hope that the hon. Lady does not feel that there is any lack of love for or investment in that part of the world from this quarter.
Stephen Flynn
There are a few points that I think are incredibly important to pick up on. The first relates to the Minister’s remark that the EIS is and needs to be a neutral fund. It does not need to be a neutral fund; that is a choice. If we seek to combat climate change and put our words into action, we can make those decisions and make them now—the gift to do that is in the Minister’s hands. It is incredibly important that we focus on that point: that it does not have to be how it is at the moment.
I respect the commitment to review before 2024, but that is a significant time away. I am not overly comfortable with the idea that we can allow that time to pass before we assess whether the scheme is working as we feel it should.
Jesse Norman
May I say what a joy it is to have the boot on the other foot and to be able to intervene on another member of the Committee? Of course the hon. Gentleman is right that legislation can be changed, subject to the will of Parliament, but this measure cannot be changed without distorting its essential character. Its purpose is to implement a reform that addresses, and hopefully cures, a market anomaly.
To address the real and important wider concern that the hon. Gentleman raises, the real question is therefore whether there are other measures outside the EIS that could achieve some of the aims he describes. The EIS cures the anomaly, which is about investment—as we know, we cannot deduce effectively where the investment goes from where the head offices are—but there may be other measures that the Government can take, and that the Scottish Government may want to take, to address more widely the concerns that he describes.
Stephen Flynn
I look forward to the UK Government coming forward with such proposals; that would certainly be of much interest to me and to colleagues across the UK.
I want to home in on the climate situation in Aberdeen. It would be remiss of me not to highlight the fact that Aberdeen is the oil and gas capital of these islands, and indeed of Europe, and has been so for a significant time. However, we are extremely conscious of the situation in Aberdeen due to the oil and gas sector downturn—we heard earlier about the support that the UK Government put in place during the downturn, although I was not quite sure which downturn was being referred to since we are currently in the midst of perhaps the sharpest downturn of the North sea basin—but we are very cognisant that we need to make a sustainable transition to a net zero future.
If we look to the possibilities of the north-east of Scotland—hydrogen technologies, carbon storage, alternative fuel gas turbines, subsea and offshore energy—there is a wealth of opportunity. We are blessed with unbelievable natural resources in Scotland. If we can have a fund that channels money into exploiting such research and talent, we should be willing to do so.
Ultimately, amendment 4 is very clear: it is about
“analysing the fiscal and economic effects of Government relief under the Enterprise Investment Scheme since the inception of the Scheme”.
We are talking about analysing the scheme and whether it is doing the job it should be doing. As I have said on a number of occasions, the Government should not be afraid of looking at whether their schemes are effective. We should all retain a firm commitment not just through our words but—I repeat—through our actions to combat the climate emergency and the amendment is one way in which we could do that.
Stephen Flynn
I will press the amendment.
Question put, That the amendment be made.
Jesse Norman
The clause introduces the gripping topic of top-slicing relief on life insurance policy gains. It makes changes to ensure that the calculation of top-slicing relief on life insurance policy gains operates fairly and prevents excessive relief from being claimed. This measure supports the Government’s objective, already discussed in the Committee today, of promoting fairness in the tax system by ensuring that the relief is calculated in a fair and consistent way.
Life insurance policy gains arise, for example, when an investment bond is surrendered or matures. In this case, the gain accrues over the lifetime of the policy but is taxed in one year, which can result in gains being taxed at the higher rate. Top-slicing relief, or TSR, was introduced in 1968 as a mechanism to mitigate the impact of that higher tax charge. The principle behind TSR is simple: a taxpayer should not pay a higher rate of tax on their life insurance gain just because all of that gain falls to be taxed in a single year. Instead, the rate of tax on the gain should reflect the fact that it was accrued over the lifetime of the policy, assuming it rose in even amounts over the years during which the policy was held.
The calculation for TSR was intended to be straight- forward. However, changes to the personal allowance from 2010 have led to unintended complexity. A recent first-tier tribunal case brought into question how TSR interacts with the restriction to the personal allowance for higher rate taxpayers, creating uncertainty for taxpayers and a significant administrative burden for HMRC. It is for those reasons that we are making a change and a clarification to TSR in the Bill. I turn to both of those things.
The change made by the clause will permit personal allowances that have been reduced because the gain arises in one year to be reinstated in the TSR calculation. The gain will now be treated as if it arose in even amounts over the years during which the policy was held when determining the availability of the personal allowance in the TSR calculation. The change comes at an estimated cost to the Exchequer of £15 million per annum, but it provides a fairer result for those taxpayers who would otherwise have been taxed on their gain only because that gain has fallen in one year and reduced their personal allowance.
The clause will also put beyond doubt the principle that taxpayers cannot set their gain against their personal allowance first, in preference to their other income, in the TSR calculation. That will ensure that higher-rate taxpayers cannot get the benefit of the relief by effectively taking the benefit of the personal allowance more than once when calculating TSR. That will prevent excessive relief from being claimed and, in turn, protect £240 million of revenue.
The measure is estimated to affect around 2,000 of the 45,000 taxpayers who are entitled to top-slicing relief every year. The clause ensures that the taxpayers receive all the relief that they are entitled to and makes clear that taxpayers who seek to claim excessive relief will no longer be able to do so. It will ensure that top-slicing relief continues to operate in line with its original policy intent, and will therefore provide a fair and consistent outcome for those taxpayers who are entitled to claim the relief. I commend the clause to the Committee.
Bridget Phillipson
Before I turn to the substance of clause 36, and without dwelling on it too much, I will take slight exception to the Minister’s comments around the so-called levelling up agenda and the last 10 years. First, though, I must commend him—he is one of the few Ministers I have come across who understands how to pronounce my constituency name properly. He has great north-east knowledge, which will stand us in wonderful stead for the years ahead, when we can make sure that Sunderland and the wider north-east get their fair share of Government investment.
On clause 36, we note the Government’s stated objective of creating fairness in the UK tax system, ensuring that top-slicing relief is calculated in a fair and consistent way, and of seeking to provide legislative clarity. However, there are some issues that still remain around the language of the clause, regarding the treatment of gains before 11 March 2020.
In response to the clause, the Chartered Institute of Taxation noted:
“The amendments made by clause 36 have effect…from the tax year 2019/20. It is not clear why the amendments, which are clarificatory in nature and in accordance with the original policy intent, should not be extended to years prior to 2019/20 to provide the same clarity for taxpayers in respect of earlier gains.”
It also comments that,
“as clause 36 is not retrospective, an individual who is liable to tax in respect of gains from chargeable events before 2019/20 and who wishes to reinstate the personal allowance within the calculation for TSR will instead need to rely on the basis agreed in Silver v HMRC. Decisions of the First-tier Tribunal do not create a legally binding precedent.”
It argues that it is
“not clear whether or not HMRC will accept claims for repayment from taxpayers with gains in years prior to 2019/20.”
The Minister touched on this point in introducing the clause, but I would be grateful if he could clarify whether he intends for HMRC to accept repayment from taxpayers with gains in years before 2019-20. If he does not, as the language stands, do the provisions of the clause still affect taxpayers fairly?
The Chartered Institute of Taxation also notes that the approach is different from the approach in clauses 100 and 101, which we will come to later, which put
“beyond doubt that the relevant rules work as designed and intended but apply both prospectively and retrospectively.”
What assessment does the Minister make of that point?
The institute also draws attention to the fact that clause 36 specifies how reliefs and allowances are set against life assurance policy gains:
“The personal savings allowance does not operate as a typical allowance. It is a nil rate band of tax that does not extend the basic or higher rate bands. The draft legislation should specify that the personal savings allowance is not an allowance for this or any other purpose.”
It regards the term “allowance” as “an unhelpful misnomer”. I would be grateful if the Minister would address that point.
HMRC also notes that the clause will only really affect those with above-average earnings. We have considered that point more broadly in other aspects of the Bill; it points to something of a pattern in the measures that the Government are bringing forward. Over a significant period—over the last decade—we have seen that the impact of changes, whether that is spending reductions or the broader impact of Government policy, has fallen more sharply on those with less ability to make a contribution. Earlier in proceedings, we discussed the distributional impact of Government measures after 2010. We have seen a disproportionate impact on those from lower and middle-earning backgrounds. That cannot be sustained, not least in the current situation.
Jesse Norman
I thank the hon. Lady for her questions. Let me respond. She will understand that top-slicing relief has been around for a long time. It is therefore something that we have come to for specific reasons. As she will be aware, a concern is arising that the judgment, coupled with challenges from taxpayers, suggests that more clarity is needed in the legislation and, therefore, that we need to review the relief.
The review highlighted that some payers were paying tax on their gain at the higher rate only because they lost the personal allowance due to a gain being included in their income. That is why the conclusion was for the reinstatement of the personal allowance, solely for purposes of the top-slicing relief calculation, to address that and to bring it back in line with the policy intent.
Of course, as the hon. Lady says, the changes work in both directions—there is a cost to the Exchequer, which comes from allowing the gain to be treated as though it arose in even amounts over the years, but, at the same time, there is also a return from the Treasury, which prevents excessive relief from being claimed. That points to the essential fairness of the approach, because it is designed to restore fairness in the spreading of gain, but also to ensure that there can be no funny business, if you like, in the way in which the gain is treated with regard to the personal allowance that might allow it to be manipulated to the detriment of the taxpayer or the system.
The hon. Lady also asked about timing. HMRC will calculate the relief for affected taxpayers and advise them of changes in the relief calculation. For self-assessment returns submitted for the 2019-20 tax year, that calculation will be performed manually. For subsequent tax years, the calculation will form part of the automatic self-assessment process. Detailed guidance has been put on gov.uk setting out the changes in full. I hope that will put the matter beyond doubt.
Question put and agreed to.
Clause 36 accordingly ordered to stand part of the Bill.
Clause 37
Losses on disposal of shares: abolition of requirement to be UK business
Question proposed, That the clause stand part of the Bill.
Jesse Norman
Again, this is a small and technical clause. It widens the scope of share loss relief for income tax and corporation tax so that it applies to shares in companies carrying on a business anywhere in the world and not just in the UK.
Share loss relief is available where an investor or investment company makes an investment in qualifying shares that are later disposed of at a loss. The relief enables the loss to be set against taxable income, rather than against capital gains under the normal rules. Qualifying shares are shares to which the enterprise investment scheme, EIS, or the seed enterprise investment scheme, SEIS, are attributable, or in a qualifying training company, as defined in statute, which can be summarised as a small or medium unlisted trading company that carries on its business wholly or mainly in the UK.
The measure will change the existing statute so that investors can claim relief no matter where the business is based, providing added protection for those investing in high-risk enterprises. It will be backdated to proposals made after 21 January 2019. A change will be made to the reporting requirements so that HMRC can identify the tax residency of the company that issued the shares.
The UK has now left the EU and has agreed to follow its rules for the duration of the transition period. On 24 January 2019—hence the date—the European Commission issued a reasoned opinion arguing that applying SLR to shares only in UK companies contravened the free movement of capital principle. The Government accepted that the legislation as drafted was too narrow and agreed to introduce legislation to expand the rules and, thereby, comply with the principle.
The change made by clause 37 widens the relief so that it applies to shares in qualifying businesses worldwide, not just in the UK. The proposed changes are expected to increase the cost of the relief to the Exchequer by £5 million in 2020-21, increasing to £15 million per year thereafter.
The Government consider that this legislation strikes the right balance between supporting overseas investment opportunities for UK-based investors and meeting our residual obligations to the European Union for the free movement of capital. I therefore commend the clause to the Committee.
Bridget Phillipson
The Opposition welcome the intention behind this clause, and the statement of the Minister seems straightforward in terms of what the Government are seeking to achieve in this area. For future trading to be as streamlined as possible, it is important that the Government introduce this measure to ensure compliance with article 63 of the treaty on the functioning of the European Union after the end of the transition period.
However, on the transition period—we touched on this this morning, and my hon. Friend the Member for Ilford North raised this issue—we have, sadly, not had the kind of regular updates we would like in the House around ongoing negotiations. We all want the Government to succeed, and we want to secure a great deal for our country, but we want to be confident that the Government are making progress and are on the right track.
Some of the reporting we have seen lately suggests that—for a number of reasons, some of which are entirely fair, given the unprecedented crisis in which we find ourselves—Ministers and officials have found things hard. I understand how difficult it must be to operate during this time, but the pandemic has highlighted how important it is that we ensure everything is properly aligned at the end of the transition period and that we secure an excellent deal, because so much depends on it—workers’ rights, businesses and our ability to export.
We want to avoid any further disruption to our economy. We have been through a very difficult time—we are still going through a very difficult time—for businesses large and small, and not least for our manufacturing sector and our world-class exporters. We want to avoid any further disruption to the economy, at the border or in people’s lives.
The Government have variously described the deal they will secure as
“a great new deal that is ready to go”,
“ambitious”, “broad”, “deep”, “flexible”, “a balanced economic partnership” and “oven ready”—that is one I recall particularly well from the recent general election campaign. Given all of that, I am sure that we will have no difficulty at all, notwithstanding the big challenges we face around the pandemic, and that we can ensure we do not have tariffs, fees or charges, so that our world-leading industries can continue to do well.
On clause 37, especially, businesses will, according to HMRC, need to familiarise themselves with tax changes, make the decision on whether to claim for the loss, determine the tax residency of the company that issued that shares and inform HMRC of this information. I would be grateful if the Minister could assure us that there is no prospect of exploitation in this area and that the Government will do all they can to ensure fairness across the system, so that we do not end up with companies potentially claiming this relief in a way that was perhaps not intended in the scope of the legislation and in the measures that Ministers are quite sensibly seeking to set out here.
Jesse Norman
I feel almost sad to be winding up on the final clause of this very good day. I thank the hon. Lady very much for her questions. Regarding the transition period, she has said she is sure the deal will be smooth and tariff-free. In that, she shares the Government’s high hopes and expectations for a deal with the EU. There is not much more I can add to that.
On the prospect of exploitation, I cannot give her, I am afraid, the guarantee she seeks, because if there is anything that my five years on the Treasury Committee and one year as Financial Secretary have taught me it is that there are no limits to human ingenuity in exploiting aspects of the tax code contrary to expectation, so there is some possibility of exploitation. The comfort I can give her is that, as this change is mandated as a result of compliance with an EU procedure, once we are free from the transition period, we will have the ability to make a sovereign change to our own legislation that remedies any concerns that are raised and any risks to the Exchequer that thereby arise.
Question put and agreed to.
Clause 37 accordingly ordered to stand part of the Bill.
Ordered, That further consideration be now adjourned. —(David Rutley.)