Finance Bill (Seventh sitting)
Tuesday 16th June 2020
(4 years, 6 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 16 June 2020 - (16 Jun 2020)
The Committee divided: - Ayes: 7 / Noes: 10 - Question accordingly negatived.
The Chair
Good morning, everyone. As you are aware, social distancing guidelines are in place, so I remind all Members to sit only in marked seats. Tea and coffee are not permitted in Committee Rooms. Will all Members please ensure that mobile phones are turned off and switched to silent mode during Committee meetings? The Hansard reporters will be grateful if Members email any electronic copies of their speaking notes to hansardnotes@parliament.uk.
We now continue line-by-line scrutiny of the Bill.
Clause 72
Excluded property etc
Question proposed, That the clause stand part of the Bill.
The Chair
With this it will be convenient to discuss clause 73 stand part. I call the Minister, Kemi Badenoch. [Interruption.] Sorry—Jesse Norman.
The Financial Secretary to the Treasury (Jesse Norman)
Thank you, Mr Rosindell. My hon. Friend and I are sharing the duties on the Front Bench today, and it is I who rises to speak to clauses 72 and 73. The clauses make changes to ensure that additions of assets made by UK domiciled or deemed-domiciled individuals to trusts made when they were non-domiciled cannot be treated as excluded property. As that explanation indicates, it is a somewhat technical measure, which means that such additions are within the scope of inheritance tax.
The clauses have been introduced following a decision by the Court of Appeal. To give some background, the inheritance tax treatment of trusts depends on the domicile status of the person setting up the trust when it was made, known as the settlor, and the location of the assets. If the settlor is UK domiciled, inheritance tax is chargeable on their worldwide assets. By contrast, non-domiciled individuals do not pay inheritance tax on assets in trusts situated outside the UK.
The long-established position of Her Majesty’s Revenue and Customs has been that a settlement is made when a trust is created, and that a settlement is also made when assets are added to that trust. That means that assets would be within the scope of inheritance tax if they were added to a trust by an individual who is currently UK domiciled, even if the trust was set up when the same individual was non-UK domiciled. The Court of Appeal decision created uncertainty by ruling that a settlement was made only when assets were first added to the trust. That ruling meant that the domicile of the settlor for later additions to the trust would not matter. In turn, all subsequent settlements of assets into the trust would not be liable for inheritance tax in the UK. The measure was announced in the autumn Budget 2018, and stakeholders have had nearly two years’ notice of the change.
In July 2019, the draft legislation was published, which provided an opportunity to give feedback to Her Majesty’s Revenue and Customs. HMRC received feedback from a range of bodies including the Chartered Institute of Taxation, the Society of Trust and Estate Practitioners, the Institute of Chartered Accountants in England and Wales, the Tax Faculty and PricewaterhouseCoopers by the deadline for responses. HMRC then made a number of amendments based on the feedback provided, and stakeholders have since provided further feedback regarding the legislation.
Together, the measures will confirm that additions of non-UK assets by UK domiciled or deemed-domiciled individuals to trusts are chargeable for inheritance tax, even when the trust was originally set up while that individual was non-domiciled. The measures will also ensure that transfers between trusts made by a UK-domiciled individual are chargeable for inheritance tax. That will affect UK-domiciled or deemed-domiciled individuals who created an offshore trust when they were previously non-UK domiciled and have subsequently made additions of assets to that trust.
Although the measure will apply only to a small number of individuals, the tax saving for them could have been significant, and there have been claims for tax repayments as a result of the case. The clauses will ensure that the legislation is applied as intended and all tax is collected as expected. The changes introduced by the clauses will add clarity and remove any doubt from the legislation by confirming HMRC’s published and widely accepted views. I commend the clauses to the Committee.
Bridget Phillipson (Houghton and Sunderland South) (Lab)
It is a pleasure to see you back in the Chair, Mr Rosindell. We regard the measure as a welcome imposition to provide for a fairer tax system. HMRC figures indicate that the number of individuals who live in the UK but pay no tax on their offshore income has fallen, with the number of UK-based individuals with non-domiciled tax status falling by 13% on the previous year. HMRC believes that that is explained by individuals switching to domiciled status and other individuals leaving the UK tax system. Thus the clauses reflect that particular change. However, there are some issues reported by stakeholders.
Responding to clauses 72 and 73, the Chartered Institute of Taxation states that among its members transfers between trusts are most commonly undertaken for family or related reasons, and without any intention to avoid inheritance tax or to circumvent the excluded property rules. It argues that the main thrust of the legislation should be to limit additions by the settlor after they become deemed or actually UK domiciled.
The institute expresses concern about some scenarios in which property could inadvertently be brought into the scope of inheritance tax because a change is made to a trust, not an addition of assets, that could be treated as a resettlement, or trustees make a transfer between two settlements, both set up when the settlor was non-domiciled. In neither case is inheritance tax avoidance being attempted. There are some situations where trustees, not the settlor, are involved in transferring between two settlements, both set up when the settler is foreign domiciled, or when the second is set up by the trustees of the first. We believe that there should be no loss of excluded property status because of the changing status of the settlor. I would be interested to hear the Minister’s assessment of those concerns.
Secondly, both the Institute of Chartered Accountants in England and Wales and the London Society of Chartered Accountants were critical of the potential for retrospection. The former argued that if clause 72 is
“to be treated as always having been in force, this will result in unexpected IHT charges arising as a result of past events.”
The institute says:
“Given that the clause is not countering avoidance but is changing long-standing rules that are familiar to trustees and are clearly stated in the existing law…new legislation on this point should not affect events that happened earlier than the measure is enacted, ie Royal Assent.”
Similarly, the London Society of Chartered Accountants believes that this
“clause changes the IHT status of trusts to which assets are added. This change will have effect from the time that the trust was set up, so is retrospective. However, as the clause is not an anti-avoidance measure but is just a change to the law, retrospection is not appropriate and the clause therefore does not follow Parliamentary convention.”
I understand that these comments presume that the individuals in question do not seek to avoid tax when transferring assets between trusts, but I would be grateful if the Minister responded to these concerns.
Last, I heard the Minister’s comments, but the Institute of Chartered Accountants in England and Wales has raised the lack of a consultation period or of any follow-up, despite being led to believe that that would happen after a meeting with HMRC in November 2018. It reported that
“trustees of offshore trusts are unlikely to have considered these changes in the necessary detail”
and had concerns that there would be
“insufficient time for trustees to take advice to help them understand the full implications and…whether they want to take any action to unwind structures.”
In working with the intention of the measures the Government have introduced, I would be grateful if the Minister responded to those concerns and addressed the lack of a consultation period.
Jesse Norman
I am grateful to the hon. Lady for her questions and for her support on this technical but important measure.
The hon. Lady asks about unanticipated negative effects. I am happy to put on the record that HMRC has given reassurance that it will adopt a cautious approach if there is a case in which a taxpayer may accidently taint a trust that contains a mixture of excluded and non-excluded property. Hopefully, that will address many of the concerns about unexpected consequences that she touched on.
The hon. Lady asks whether this measure is retrospective. As she will be aware, we do not believe that it is retrospective. The key point is that HMRC’s application of the legislation, and therefore the legal position, was widely accepted in practice before the Court of Appeal decision put that position in doubt. The effect of it is going to be that individuals have been liable to the tax owed in the spirit of the legislation. Formally, clause 72 is not retrospective because it does not create any new changes pre-Royal Assent, but we recognise the concern that is raised. It is true that in some cases there may be what I would describe retroactable, and not retrospective, effects. That is precisely because HMRC and the Government are seeking to restore what might be referred to as the position as it had always been understood previously. That is the intended effect of the legislation.
The hon. Lady asks whether there should have been more consultation. As I outlined in my speech, the Government have had this in the public domain for a considerable period and discussed it, with plenty of occasion for people to conform their tax affairs to what is, after all, only a reaffirmation of existing tax law through legislation. There is also the counterpart problem, which the hon. Lady will understand: if the clause is not introduced now, it may allow opportunities for individuals to avoid paying inheritance tax on assets they put into trust or on properties transferred between trusts. I am sure she would not wish to abet or support those opportunities and that she would wish, overall, to join us in protecting revenue and providing certainty to taxpayers.
Question put and agreed to.
Clause 72 accordingly ordered to stand part of the Bill.
Clause 73 ordered to stand part of the Bill.
Clause 74
Relief for payments to victims of persecution during Second World War era
Question proposed, That the clause stand part of the Bill.
Jesse Norman
This is a small measure, but a very important one. The clause exempts compensation payments received under the Kindertransport fund from an inheritance tax liability. In late 2018, the German Government agreed to provide compensation payments for child survivors of the Kindertransport. As you will know, Mr Rosindell, the Kindertransport was an organised rescue effort for Jewish children, who were transported unaccompanied from Germany to escape persecution from the Nazi regime. I must say, it is one of the most shining examples of effective humanitarian action in Germany’s history—and in our history—in a very difficult time.
The Kindertransport fund, launched in January 2019, awarding one-off payments of €2,500 to survivors is subject to specified criteria as set out by the German Government. The measure will ensure that Kindertransport payments are not subject to inheritance tax. Changes made by clause 74 will be backdated to take effect so that no inheritance tax is paid on payments from the scheme from its opening date on 1 January 2019.
The clause provides reassurance to the original survivors of the Kindertransport that any payment made in connection with or under this compensation scheme will not be subject to IHT. While no amount of money could ever remove the suffering those children and their families experienced, the Government remain committed to supporting survivors of Nazi persecution. I trust that all agree that it is fundamental that the clause stand part of the Bill.
Bridget Phillipson
The Opposition welcome the provision. As the Minister says, it is a very important measure. Exempting from inheritance tax compensation payments made to the survivors of the Kindertransport is a just measure for those who had to face the devastating experience of being torn from their families as children in order to escape persecution. The House of Commons Library states that around 100,000 children were brought to the UK under the Kindertransport scheme, but of course many of those survivors have since passed away. It is only right that in the spirit of the Kindertransport fund all survivors receive their compensation payment in its fullest form and that that remains the case if the compensation is inherited.
According to the claims conference, to be eligible for payment survivors have to have been under 21 when the Kindertransport took place, between November 1938 and September 1939. However, the UK set an age limit of 17 for those transported. The oldest would therefore be born around 1921 or 1922, suggesting that they would be nearly 100 if they were alive today. The average age of the children who were transported was nine, so many would be in their mid-nineties today. Given those figures, we know that many people claiming compensation from the compensation fund will be survivors’ inheritors, so it is welcome that the payment is not subject to inheritance tax. However, I gently urge the Government to consider the issues that child refugees face today, and I urge Ministers to show the same level of commitment and dedication today that our country demonstrated in the past.
The Kindertransport survivor and incredible campaigner Lord Dubs worked tirelessly to protect child refugees following our withdrawal from the European Union, but the Government’s amendment of clause 37 watered down the UK’s commitment to protect unaccompanied child refugees in Europe who seek to reunite with their families in the UK. I hope that the Government will review their approach to child refugees and take seriously their commitment to protect child refugees fleeing violence and persecution in our present, just as they have taken seriously compensating child refugees of the past. Meaningful dedication to supporting child refugees requires both.
Jesse Norman
I thank the hon. Lady for her comments. She spoke very well about the Kindertransport scheme. As the Committee knows, the Government stand by our position on child refugees, and this country has a proud record in that area.
Question put and agreed to.
Clause 74 accordingly ordered to stand part of the Bill.
Clause 75
Stamp duty: transfers of unlisted securities and connected persons
Question proposed, That the clause stand part of the Bill.
Jesse Norman
In the spirit of proper scrutiny of legislation, we should chew carefully on clauses 75 and 76. They are quite technical clauses, which address the use of contrived arrangements involving the transfer of unlisted securities to connected companies for an artificially low consideration in order to minimise stamp duty and stamp duty reserve tax liability on company reorganisations.
In the Finance Act 2019, the Government introduced a targeted market value rule to prevent the artificial reduction of the stamp tax due when listed shares are transferred to a connected company. That was introduced with immediate effect to prevent forestalling. The Government consulted on extending the rule to unlisted shares, to ensure that we fully understood the potential effect of the change on small businesses. That is why draft legislation is narrowly targeted only at companies that enter into contrived arrangements that are used to minimise stamp tax on reorganisations.
The Finance Bill 2020 therefore extends the market value rule to the transfer of unlisted shares to connected companies. This form of avoidance seeks to exploit the way stamp duty and stamp duty reserve tax are currently charged: on the payment given as consideration, rather than on the value of what is received. Some taxpayers have been using contrived arrangements that reduce the value of the consideration paid when they transfer unlisted shares to a company with which they are connected as part of a company reorganisation.
The changes made by clauses 75 and 76 will mean that when unlisted shares are transferred to a company and the person transferring the shares is connected with the company, the tax charge is based on the value of the consideration for the transfer or the market value of the shares transferred, whichever is higher. The new rule will apply only when there is an issue with shares by way of consideration, narrowly targeting the measures to the circumstances where contrived arrangements are used to minimise the share of the tax on the transfer of unlisted shares. The measures will have effect for stamp duty in relation to instruments executed on or after Royal Assent of this Bill, and for stamp duty reserve tax in relation to agreements to transfer made on or after Royal Assent.
Clauses 75 and 76 prevent the artificial reduction of the stamp tax due on share acquisitions when unlisted shares are transferred to connected companies. It is expected to raise £25 million over the scorecard, and I commend the clauses to the Committee.
Bridget Phillipson
The Opposition welcome the measures implemented by these clauses to minimise the scope of continuing avoidance of stamp duties by extending the stamp duty and stamp duty reserve tax market value rule to the transfer of unlisted securities to connected companies. However, I raise a point regarding the impact of the clauses.
HMRC’s impact assessment of the policy notes that there will be a negligible impact on 250 to 350 businesses in the first year, disproportionately affecting small and microbusinesses. It estimates that the arrangements are most likely to affect private companies with a small number of stakeholders, such as owner-manager businesses, with an average value of £2.5 million. These may include family businesses, many of which we understand to be struggling in the face of the current pandemic. What assessment has the Minister made of this, and who is really the intended target of these clauses?
The Chartered Institute of Taxation expressed concern that unintended consequences could arise from clause 76 due to significant additional costs that are disproportionate to the tax at stake in many cases. It goes on to say that this
“may in some situations prevent commercially advantageous transactions, with no avoidance motive, from going ahead. The…vague description of policy rationale and the contrived arrangements being targeted has prevented stakeholders from assisting in designing a targeted rule so as to reduce the unintended consequences.”
Similarly, legal firm Cleary Gottlieb notes that
“the new rule is not limited to cases of stamp duty or SDRT avoidance, and it should not be assumed that transactions driven entirely by commercial considerations will fall outside its scope.”
I will be grateful if the Minister explains how the Government will seek to minimise unintended consequences of this measure being the targeting of businesses that are not seeking to avoid stamp duties.
Respondents to the consultation suggested that it would be preferable to introduce a targeted anti-avoidance rule into the legislation, or to extend the general anti-abuse rule or the disclosure of tax avoidance scheme provisions. What consideration have the Government given to inserting a targeted anti-avoidance rule into the legislation?
Last, the Chartered Institute of Taxation points out that, in relation to clause 77, there are a number of circumstances in which a shareholding of 25%—required for this exception to section 77A of the Finance Act 1986 to apply—will be an excessive hurdle, reasoning that it is not uncommon for a company to be owned equally by five or six entrepreneurs or a family group. It suggests that a requirement that the relevant shareholding is at least 10% would be more appropriate to cover a wide range of commercial scenarios. I will grateful if the Minister will address those concerns.
Jesse Norman
I am very grateful to the hon. Lady for the questions she raises. Let me take them in order.
On whether these measures will affect most small businesses or organisations, as the hon. Lady highlights, a relatively small number of organisations will be affected. The measures were subject to consultation, and interestingly the respondents were satisfied that there would be little impact on commercial activity as the measures were suitably targeted, and expressed some pleasure that the concerns they raised during the policy consultation about the impact of a more wide-ranging measure had been heard. This is, of itself, a tightly focused measure. It falls—where it falls—on a relatively small number of organisations, as I said.
However, it is important to pick out the logic of what I think the hon. Lady is saying. We all recognise the importance of combating the pandemic. She will be aware that the Government have spent many tens of billions of pounds on supporting businesses, families and jobs during this process. This measure is about something else: avoid a form of tax avoidance, or rather heading off a form of tax avoidance; curbing and preventing it. I do not think people’s concerns about the pandemic should be allowed to obtrude on that.
The hon. Lady asked a question about unintended effects. Our analysis is that precisely because of the targeting that was noted during the consultation phase, unexpected effects, while they can never be ruled out, should be limited and minimal. It is also important to say that there will be a modest additional administrative burden that will decline over time as people become accustomed to the new rules.
The hon. Lady asked whether it would be better to address this with a more targeted anti-avoidance rule, but this is quite a targeted anti-avoidance rule. It picks out particular forms and is restricted to company reorganisations of a certain kind, and it builds on the existing approach for listed shares. I therefore think that it addresses her concerns.
Question put and agreed to.
Clause 75 accordingly ordered to stand part of the Bill.
Clause 76 ordered to stand part of the Bill.
Clause 77
Stamp duty: acquisition of target company’s share capital
Question proposed, That the clause stand part of the Bill.
Jesse Norman
Clause 77 prevents a double stamp duty charge from arising on some company reorganisations, and follows on from clauses 75 and 76. During the consultation on extending the market value rule to unlisted securities, it was put to the Government that a double charge could arise on a type of company reorganisation known as a capital reduction partition demerger. We are very heavily in the long grass of tax intricacy. Such a demerger is where shares in a company are cancelled and shareholders are compensated with shares in a new company, rather than with cash. A corporate group may pursue this strategy where, for commercial reasons, it wants to split a group and ensure that the companies in that group are held separately by the original shareholders.
Currently, taxpayers who follow the rules can incur two stamp duty charges on such demergers, while other taxpayers use contrived arrangements to avoid paying any stamp duty on the same reorganisation. This clause, together with clause 75, ensures that one charge arises on most capital reduction partition demergers by more tightly targeting existing anti-avoidance provisions related to company reorganisations.
Stamp duty is a transaction tax. When a company is split using a demerger arrangement, there are a number of steps, two of which are potentially subject to stamp duty unless a relief applies. Usually relief applies on one step only, so that there is just one charge on the overall transaction. In some demergers, known as capital reduction partition demergers, relief is unavailable on both steps due to anti-avoidance provisions. Clause 77 will prevent a stamp duty double charge from arising, so that only one charge will arise on most capital reduction partition demergers. It does this by better targeting the existing anti-avoidance provisions. The measure applies to stamp duty instruments that are executed on or after Royal Assent.
Clause 77 works together with clause 75 to ensure that one charge will apply on most capital reduction partition demergers. This increases fairness and consistency. I therefore commend the clause to the Committee.
Bridget Phillipson
I raised these points in an earlier debate, but I will do so again so that the Minister can respond.
On clause 77, the Chartered Institute of Taxation points out that there are a number of circumstances in which a shareholding of 25%, which is required for the exception to section 77A of the Financial Act 1986 to apply, will be an excessive hurdle. Its reasoning is that it is not uncommon for a company to be owned equally by five or six entrepreneurs or a family group. It suggests that a requirement that the relevant shareholding be at least 10% would be more appropriate to cover a wide range of commercial scenarios. I would be grateful to hear the Minister’s response on that issue.
Jesse Norman
The hon. Lady raises a very specific circumstance. It would be appropriate for me to write to her about the specifics of the decision about percentages, rather than try to go through the argument here.
The discussion has already been had between HMRC and stakeholders, and therefore it has to some extent already been addressed through the consultation process, but I am happy to revisit the issue.
Question put and agreed to.
Clause 77 accordingly ordered to stand part of the Bill.
Clause 78
Call-off stock arrangements
Question proposed, That the clause stand part of the Bill.
The Chair
With this it will be convenient to discuss new clause 13—Call-off stock arrangements: sectoral review of impact—
‘(1) The Chancellor of the Exchequer must make an assessment of the impact of section 78 on the sectors listed in (2) below and lay a report of that assessment before the House of Commons within six months of the passing of this Act.
(2) The sectors to be assessed under (1) are—
(a) leisure,
(b) retail,
(c) hospitality,
(d) tourism,
(e) financial services,
(f) business services,
(g) health/life/medical services,
(h) haulage/logistics,
(i) aviation,
(j) transport,
(k) professional sport,
(l) oil and gas,
(m) universities, and
(n) fairs.”
This new clause would require the Government to report on the effect of Clause 78 on a number of business sectors.—(Alison Thewliss.)
Jesse Norman
Clause 78 simplifies the rules for accounting for VAT on goods moving from the UK to member states of the EU or vice versa in advance of goods being “called off”, as it is known, for delivery. This is known as “call-off stock”. These changes represent a simplification for businesses that use call-off stock arrangements and provide common rules across the EU. They apply to goods removed from or to the UK from 1 January 2020, and will apply for the remainder of the UK’s transition period with the EU. We expect the changes to have a negligible effect on businesses that adopt them.
The clause transcribes EU call-off stock law—new article 17A to the principal VAT directive—into UK legislation. It sets out the conditions for the rules to apply and provides sellers with statutory obligations to adhere to strict record keeping and reporting requirements. These changes are an administrative easement; the primary benefit is to UK businesses that will no longer have to register and account for VAT in the customer’s country, and vice versa. However, the quid pro quo is additional reporting requirements as well as EU regulations, which have direct effect, that set out new record keeping requirements, as I have indicated.
There is no obligation on a business to restructure transactions so as to meet the conditions and fall within the new rules. We expect that they would use the simplification only because they might derive a benefit for their business. Businesses that do not meet the conditions and so do not fall within the new rules should continue with the current VAT accounting mechanisms for EU cross-border transactions.
The Government published the draft legislation and guidance on the operation of the rules in December. The legislation was laid before the House in the Finance Bill at Budget earlier this year. A resolution under the Provisional Collection of Taxes Act 1968 means that the legislation currently has effect.
Call-off stock are goods that are bulk-shipped by a supplier across a border to a warehouse from where they will be supplied, or called off, as the customer requires. Different EU member states previously had different VAT accounting rules for call-off stock. Some required the seller of the goods to register and account for VAT in the country where the goods were to be called off. The UK avoided the need for the overseas supplier to register for VAT here. We allowed the customer to account for the VAT when the goods first arrived and in advance of being called off. The measure implements the changes adopted by ECOFIN on 4 December 2018, which were designed to simplify the rules and make them more consistent within the single market.
In normal circumstances the new rules, like the existing UK rules, do not require the seller to register and account for VAT in the country where the goods are called off. The new rules delay accounting for VAT until the goods are called off. To avoid VAT fraud, suppliers are required to report the initial movement of the goods to their tax authority, and both the supplier and the customer are required to keep additional records of the stock. When the goods are called off, normal VAT accounting and reporting procedures will apply and the customer will account for the acquisition of VAT. The Government had some concerns over the potential burden on business of keeping the new records required under the new rules and pushed for the right of business to continue using the existing rules if they so wished. A business is not required to arrange its affairs such that the new rules must be used. A supplier and their customer can agree to continue to use the existing UK rules for goods called off in the UK.
HMRC has produced guidance reflecting the introduction of the changes, and the measure is expected to be revenue neutral. It constitutes a simplification for UK businesses. The measure updates UK law to take account of the approach in the EU. It simplifies the VAT rules for call-off stock transactions and avoids the requirement for the supplier to register in the destination state.
New clause 13 would require the Government to conduct a review on the impact of the new call-off stock rules on a variety of different sectors within six months of the Bill receiving Royal Assent. The new legislation provides a simplification for businesses that choose to meet the conditions for it to apply. With that in mind, we expect it would have a negligible impact on businesses. I can inform the Committee that recent figures show that fewer than 200 UK businesses have reported that they are using the new rules, and we are not aware of any being in the sectors mentioned in the amendment. I therefore ask the Committee to reject the amendment and commend the clause to the Committee.
Alison Thewliss (Glasgow Central) (SNP)
It is a pleasure to see you in the Chair, Mr Rosindell. I take what the Minister says about the measure affecting relatively few businesses at the moment, but as this develops, that might not remain the case. There is a certain irony in the EU providing mechanisms for simplifying and harmonising these rules and trading across the EU—people moving their goods around the place—when the UK stands to come out of the EU and lose some of those benefits for businesses in all our constituencies.
There is an irony as well that the Government have decided to adopt these new rules. I am sure the Brexiteers in the room are no less keen on being rule takers, but that seems to be what the Government are doing in this case. We want to see as much harmonisation and simplification for businesses, because that is to their benefit. That is why we think it is important to stay in the EU in the first place.
Figures from the Scottish Government suggest that Scottish GDP could be 1.1% lower after two years, on the current cumulative loss of economic activity from leaving the EU, and up to £3 billion over those two years, on top of the devastating effects of the coronavirus outbreak. There will be an impact without having a free trade deal or an extension, at least for Scotland’s agriculture, fisheries and manufacturing sectors.
We want to see a comprehensive assessment of how all the sectors listed in the amendment will be affected—leisure, retail, hospitality, tourism, financial services, business services, health, life and medical services, logistics, aviation, transport, professional sport, oil and gas, universities—because they could all be affected by this clause. It would be wise for the Government to look at the impact of what they are proposing. It is always wise for the Government to look at the impact of their proposals on anything, I suppose, and we encourage them to do that.
Because the measure is retrospective, will the Minister say what notifications have gone out to business that may be affected and what guidance has been given? He said that companies can opt to use these rules or not. How does that work, and how does the guidance ensure that people know what they have to carry out, whether they decide to use the rules or not? It sounds quite confusing from what the Minister said. Finally, because he did not make it clear, will he say what happens to these measures after the transition period?
Wes Streeting (Ilford North) (Lab)
Let me begin by picking up on a point made by the Member for Glasgow Central about the provenance of clause 78. As we heard from the Financial Secretary, the clause transposes into UK law an EU directive that provides for simplified VAT treatment of call-off stock.
To begin, it is tempting to make the same point, and I know that repetition is not a novelty. Let me put it this way: it is very welcome to hear from the Treasury that divergence from EU rules and regulations is not considered by the Government to be an end in and of itself. I was curious last night, as I walked past the Annunciator in the Tea Room, to see the right hon. Member for Wokingham (John Redwood) making a lengthy speech on a fairly straightforward statutory instrument on electricity. I reviewed his speech this morning in Hansard, because it piqued my curiosity, and I received in passing from my hon. Friend the Member for Hove (Peter Kyle) a precis of the thrust of the right hon. Gentleman’s argument. It seems that a number of Conservative Members consider divergence from EU rules and regulations to be an aim in and of itself. Regardless of the merits of the case and the merits of continued co-operation, it is clear that, for a section of the House, there is a virtue in divergence.
I am glad that the Treasury does not share that view, although of course the Treasury looks at the numbers. We may not have had an impassioned exposition from the Financial Secretary of the arguments in favour of this particular alignment with EU rules and regulations, but what we did hear was a very clear argument from Her Majesty’s Treasury that, even having left the European Union, there are still benefits to be found for UK businesses from continued alignment, co-operation, simplification, axing bureaucracy and making things simpler.
I hope that that common-sense approach to our future relationship with the European Union prevails. As much as those of us who campaigned in a different direction in the referendum accept the result and the outcome, and accept that this is a settled political question, it is in all our interests and in our national interest that we maintain a future relationship with the European Union that is based on co-operation, where that is in the interest of our own country.
I turn to the specifics of clause 78. The Financial Secretary’s speech seemed to me to address some of the concerns expressed by businesses and chartered tax advisers, but I will raise them for the sake of clarity. Writing in Taxation, Angela Lang-Horgan, a German and British chartered tax adviser and lawyer, said:
“If businesses have continued to operate under the old simplification rule after 31 December 2019, VAT returns must be corrected once the new legislation is in place. This will add additional confusion to the situation. So far, HMRC has not indicated whether it would apply a soft-landing period. There is no transition period either because under EU law the UK was obliged to introduce the changes from the beginning of this year.”
Could I get some clarity from the Financial Secretary on those points? Will HMRC provide a soft landing period for the implementation of the new rules, or is a soft landing period not even necessary? If I understood him correctly—I may have misunderstood, in which case he will clarify—it seems that there is a degree of flexibility and choice on the part of businesses over whether to adopt this approach. Some clarity in direct response to the concern expressed by Angela Lang-Horgan would be welcome.
What efforts have the UK Government made to communicate with affected businesses in anticipation of the rules, which are effectively already in place? It is worth saying, although it is a mild digression from clause 78, that concern has been expressed—particularly by colleagues in the shadow Business team—that the Government are not communicating with businesses in a timely way with respect to changes in Government policy and their impact on businesses. I think that for some time there has been a cultural problem in government of not giving businesses long enough to anticipate and adjust to new rules; I wonder whether in this case that communication has been a bit more proactive.
The explanatory notes state that
“businesses could structure transactions to remain outside the scope of the new rules if businesses found them onerous.”
What proportion of businesses are expected to exercise that discretionary power?
Jesse Norman
I am grateful to hon. Members for their comments. The hon. Member for Glasgow Central regards it as an irony that the Government are bringing forward this rule. I would not describe it as an irony; it is a simplification for those companies that wish to use it, and it is optional. Some companies will prefer the current arrangements as more settled and simpler, while others may not—I do not think that there is anything more to it than that. So far, 200 companies have already taken it up; of course, we cannot say in advance how many may have chosen to do so by the end of the transition period, but it is a relatively small number of companies, as I have indicated.
Alison Thewliss
Can the Financial Secretary tell us how many companies are using the previous rules?
Jesse Norman
I certainly do not know the number of companies operating under the previous rules, but I would be happy to drop the hon. Lady a letter with any number that HMRC may have that can be publicly disclosed. The point is that there is a relatively small number of companies; they have seen this coming and it is an optional advantage for them. In reply to the point raised by the hon. Member for Ilford North, it applies only during the transition period, which will end at the end of this year.
We will be leaving the transition period on 1 January, which is not only stated by Government but is commonly understood. That goes to the question of divergence, which was raised by the hon. Member for Ilford North. We are bound by EU law while we are in the transition period. The Government certainly do not have any interest in divergence for the sake of divergence; the Government have an interest in the ability to set our own law, including our own tax law, as we as a sovereign nation see fit. That might or might not involve divergence, but this measure will not apply after the transition period.
The hon. Member for Ilford North also raises an important question about whether there is enough time for business to accommodate rules. I cannot comment on behalf of other Departments, but it certainly is a concern that has been raised in relation to the creation of tax law. Wherever possible, the Government try to abide by rules that we introduced after 2010 in order to have a more effective tax process. As he knows, it involves several stages and periods of consultation. We are coming up to an L day for legislation to be considered for the 2020 Budget, for the autumn Budget—if there is one—and for a Finance Bill next year. There is an orderly process, but I take his point about the importance of ensuring that it is as orderly and well structured as possible.
Question put and agreed to.
Clause 78 accordingly ordered to stand part of the Bill.
Clause 79
Post-duty point dilution of wine or made-wine
Stephen Flynn (Aberdeen South) (SNP)
I beg to move amendment 10, in clause 79, page 67, line 25, at end insert—
‘(3) The Chancellor of the Exchequer must review the expected effects on public health of the changes made to the Alcoholic Liquor Duties Act 1979 by this Section and lay a report of that review before the House of Commons within one year of the passing of this Act.”
This amendment would require the Government to review the impact of the proposed changes to alcohol liquor duties on public health.
It is a pleasure to serve under your chairmanship, Mr Rosindell. The amendment is quite simple and would require the Government to review the impact of alcohol duties on public health. It should come as no surprise, given that the SNP has long called for duty to reflect content, but we do not have the powers in Scotland to do that. Instead, we have to rely once again on the Westminster system in that regard. That is a real pity, because where we have powers in Scotland in relation to public health and alcohol, we have made great strides. For instance, we have seen the banning of irresponsible promotions and the lowering of the drink-drive limit. We ended multi-buy discounts, something that was certainly contentious at the time. As a young student, I was not overjoyed about the fact that I could not buy three crates of Tennent’s for £20. None the less, it was an important measure that no doubt changed the behaviour of many people, including myself at that time.
Of course, we have seen the overwhelming success of minimum unit pricing in Scotland. That was, again, an extremely contentious measure at the time, whereby we placed a 50p-per-unit charge on units of alcohol. The cumulative effect of all those measures has seen something that we all wanted to see in Scotland, where we have a difficult relationship with alcohol—one that was challenging to confirm but that we needed to confirm. We saw off-duty sales fall by 3.6% in the first year since minimum unit pricing was introduced. In England and Wales during the same period, off-duty sales increased by 3.2%. That is a very telling figure.
When I first came to Parliament, one of the very first debates that I took part in was in Westminster Hall. I cannot remember which hon. Member secured the debate, but it was about alcohol duty. I think the purpose of the debate was to galvanise hon. Members to stop the Government increasing alcohol duty and, hopefully, to reduce it. There was extreme passion in that Chamber and there were a lot of hon. Members present—more than are often seen debating any given matter in the main Chamber. There was a lot of passion about pints, but we cannot be passionate about pints without also having passion for public health and the consequences of the decisions being made. The stark reality is that the two are inextricably linked, and the UK Government need to be mindful of that fact. Supporting the amendment would be a good, positive first step on that journey to a more sensible approach that takes into account public health.
Alison Thewliss
Does my hon. Friend agree that the minimum unit pricing introduced in Scotland had the effect of removing from our shelves some of the most harmful drinks, including the high-strength industrial ciders that cause so much harm to so many people in our communities?
Stephen Flynn
Absolutely. My hon. Friend makes an excellent point. We did not have to walk far to find a shop in Scotland that sold ciders. White Lightning is incredibly strong. Often, individuals would buy it early in the morning, and by the afternoon the remnants were across our city. We were able to stop that, and that was important because it was having an impact on every single person who lived and worked there. This amendment gives the Government the opportunity to make sensible strides in recognition of the fact that public health and alcohol are inextricably linked.
Wes Streeting
I shall begin by addressing the SNP’s amendment 10. It is important to look carefully at the relationship between alcohol taxation and public health. We have seen in other areas of taxation, notably the sugar tax, the huge impact that decisions taken by the Treasury can have on public health and public health outcomes. It is long past time for us to look seriously and sensibly at whether more can be done to reduce the impact of alcohol and alcoholism on people’s lives and communities.
Turning to clause 79, I have had the opportunity to do a much deeper dive into some of the issues, not least because of the determined efforts of my hon. Friend the Member for Chesterfield (Mr Perkins). Anyone who has ever been lobbied by him will know that when it comes to standing up for his constituents and for businesses in his constituency, there is no more determined, stubborn and irrefutable representation than that which he provides. He has raised serious concerns about the impact of the clause on businesses in his constituency. I shall outline some of those concerns, in the hope that Ministers will consider their bearing on Government policy.
We understand perfectly what the Government are trying to achieve with clause 79. The clause amends the Alcoholic Liquor Duties Act 1979, to introduce sanctions for post duty point dilution of wine or made-wine, which, if carried out before the duty point, would have resulted in a higher amount of duty being payable. That change has, in effect, already come into force and we are legislating for it this morning. The change is perfectly understandable. It is designed to bring more revenue into the Treasury that would otherwise be, and is being, lost. I understand the Government’s position that post duty point dilution carries significant legal and revenue risk for the Exchequer.
The Wine and Spirit Trade Association is against the legislation, claiming it would put hundreds of jobs at risk and place more pressure on the industry. Recently, thanks to the initiative of my hon. Friend the Member for Chesterfield, I had the opportunity to speak to Global Brands, a business based in his constituency that makes VK and Hooch, among other products. We know that covid-19 is having a huge impact on the licensed trade industry and on alcohol sales in particular, affecting not only pubs but the producers of wines, spirits and other beverages. Global Brands is concerned that, because of the financial burden placed on its business by the clause, combined with the impact of covid-19, it expects to make 50% of its workforce redundant, putting 200 jobs at risk as a result of this change. If I can characterise our discussions in this way, it would be accurate to say that Global Brands accepts that this change is inevitable, and that the Treasury has a settled view on it, but it hopes that the Treasury might consider a 12-month delay in implementation—from April 2020 to April 2021—arguing that this would give it time to recover from the covid-19 shock, leaving it better able to absorb the change.
Global Brands makes other arguments that the Treasury may want to take into account. In particular, Global Brands sells what were commonly known as alcopops, a low alcohol by volume product—typically around 4% ABV. It is concerned that the impact of the change will be that, ironically, its low alcohol product would be taxed higher per unit of alcohol than much higher strength products, which flies in the face of the Government’s stated policy of discouraging high-strength alcohol and its impact on public health.
It is also worth highlighting that the Government have already announced their intention to conduct a wider review of alcohol taxation. I wonder whether it makes sense, from the point of view of business resilience and of giving companies such as Global Brands more time to cope with the covid-19 shock before absorbing this change, for the Treasury to consider this delay alongside the range of other issues that it will consider as part of its wider review of alcohol taxation. We might have been minded to table an amendment to probe the 12-month delay, but we were advised that such an amendment would not be in scope because the foundation resolution is clear about the date on which this change takes effect.
That is another reason why—I gently make this point again to Ministers—we feel strongly about the way in which the Treasury has restricted the scope of amendments and the debate by not introducing an amendment of the law resolution, as has been the case historically. As well as denying Opposition Members the opportunity to table broad, sweeping, political amendments to the Finance Bill, that also has practical implications. I impress on Ministers and the usual channels the need to reconsider that for future Finance Bills.
Finally, when my hon. Friend the Member for Chesterfield and I spoke to Global Brands just the other week, I was particularly impressed not just by the jobs and economic activity it provides in Chesterfield, but at the fact that its wider supply chain is virtually entirely British. Its ingredients, packaging and labelling are all derived from a British supply chain. I do wonder whether the Treasury has really thought through the timing of the change, the impact that it will have on businesses such as Global Brands, and where it might position such businesses in relation to their international competitors that are not providing jobs in this country and do not have a supply chain rooted here.
Given the unemployment statistics out today, we know that structural unemployment will become one of the biggest political issues and economic challenges in our country. Structural unemployment in Britain will become a feature of our life in a way that, frankly, it was not 10 years ago, in the wake of the financial crisis, and has not been for decades. The Government must do everything they can to protect jobs, which is why we have called today for them to come forward not just with fiscal measures in July, but a full-on, jobs-first Budget—because we are worried about the impact of covid-19 on unemployment.
The representations on clause 79 from Global Brands and from my hon. Friend the Member for Chesterfield remind us of the risk of the unintended consequences of Government policy. Given the impact on jobs and the supply chain and the fact that the Treasury is in any case preparing to undertake a review of alcohol taxation, I wonder whether the call for the Government to delay the measure by 12 months is not eminently reasonable—and whether they might come forward with their own change to the Bill on Report.
The Exchequer Secretary to the Treasury (Kemi Badenoch)
Clause 79 makes changes to alcohol duty legislation to introduce prohibitive sanctions for anyone who dilutes wine or made-wine once that product has passed a duty point. It will ensure fairness by providing equity of treatment across the drinks industry and will tackle future revenue risks for the Exchequer.
Post duty point dilution is a practice that enables wine and made-wine producers to reduce the excise duty that they pay by diluting the product after duty has been paid. Because the dilution increases the volume of wine and made-wine for sale, with no additional duty being paid, less duty is paid than would otherwise be due. UK legislation does not expressly prevent post duty point dilution for wine and made-wine, although it is prohibited for all other alcohol products. The practice gives certain wine or made-wine producers a tax advantage over those who produce other categories of alcohol, of which dilution is not permitted, and over others in their own sector who cannot make use of the practice.
Clause 79 will introduce new prohibitive sanctions for anyone who dilutes wine or made-wine once that product has passed a duty point on or after 1 April 2020. Introducing new sanctions to prevent the practice will maintain the principle that excise duty is calculated only on a finished product when it is released from production premises or on import. It will ensure fairness by providing equity of treatment across the drinks industry and will tackle future revenue risks for the Exchequer.
A review of the practice was launched at autumn Budget 2017, during which HMRC engaged extensively with industry and gathered a large amount of evidence to inform a decision. At Budget 2018, the Government announced the findings of the review and their intention to stop the practice being used for wine and made-wine, as is already the case for other types of alcohol. However, the Government also announced that that would not take effect until April 2020. That has given those businesses affected almost three years to prepare for the change, allowing them time to reformulate or diversify into the production of new lines.
Amendment 10 would require the Chancellor to review the public health effects of the post duty point dilution sanctions. When making changes to the alcohol duty system, the Government take into account a wide range of factors, including economic inequalities and health impacts. The new sanctions follow an extensive review by HMRC in 2017. Draft legislation was published in July 2019, alongside which a tax information and impact note was published on the gov.uk website, detailing the various factors that the Government have considered. The amendment is therefore unnecessary, as the Government have already published our assessment of the effect on public health. For the convenience of the Committee, I will reiterate that assessment. The Government expect that
“wine or made-wine may become slightly more expensive…there may be a positive health impact with less wine being consumed. However, this benefit may be offset if any increase in price leads to consumers switching to higher strength products.”
Alison Thewliss
I am sure the Minister has seen the graph that sets pence per unit against alcohol by volume. To say that it looks as though it was drawn by a child with a crayon is being generous to children with crayons. Will she consider a wider review of the duty per unit of alcohol by product type, because at the moment it makes absolutely no sense?
Kemi Badenoch
I thank the hon. Lady for her intervention. I am not quite sure which chart she is referring to, and I do not accept her comments. We must remember that the purpose of the clause is primarily to close a tax loophole.
Wes Streeting
I understand what the Minister says about closing a loophole and about the time that businesses have been given to prepare for the change, but does she not think that the impact of covid-19 has a bearing here? Given the representations that are being made about the impact of the double whammy, would she at least go away and consider the merits of a 12-month delay, and write to me and my hon. Friend the Member for Chesterfield to set out her thinking once she has had a chance to do that?
Kemi Badenoch
I thank the hon. Gentleman for that question. That is something that I have considered. I have had representations from the hon. Member for Chesterfield, Global Brands and other Members of Parliament, and I will take into account the points made by the hon. Member for Ilford North made in his speech.
On job losses, the announcement was made with enough time for people to prepare. We may not have been aware of covid, but postponing implementation any further would mean that the companies that adapted to the announcement about prohibiting post duty point dilution would be disadvantaged compared with companies that have not prepared since the announcement. We do not believe that that is fair.
On the point about the low alcohol value and moving the measure to stronger products, that is something that we have factored in. We will have a wider alcohol duty review—the hon. Gentleman referenced that. The Treasury has considered all those things, and we still do not feel that they are appropriate.
Wes Streeting
I am grateful to the Minister for being generous in giving way again. She will be pleased to hear that I will not labour the previous point.
As part of the Treasury’s review, will the Minister take into account the case for minimum unit pricing for alcohol? We have already heard the positive case from Scotland, and there is an active campaign for it. It would be useful for all of us involved in policy making if the Treasury review looked at the merits and the arguments against so that Parliament can make informed decisions.
Kemi Badenoch
The Government are monitoring the emerging evidence from the introduction of minimum unit pricing in Scotland and, recently, Wales, and we have addressed public health concerns in the duty system. For example, in February 2019, duty rates on white ciders were increased to tackle consumption. We must remember that the UK operates a single excise regime, so it is not possible to devolve duty rates. It is worth noting that many of the problems that have been raised are actually caused by EU rules, according to officials. I can write to the hon. Gentleman and other Members who want further clarification on that point.
Felicity Buchan (Kensington) (Con)
Does my hon. Friend agree that, although this is a very interesting debate, we are here to talk about taxation, not public health policy on alcohol?
Kemi Badenoch
I completely agree. I hope I have given enough answers to address the point raised by the amendment. We have already carried out an assessment on public health grounds, but this is tax legislation. I therefore ask that amendment 10 be withdrawn.
Clause 79 introduces a new sanction to prevent a practice that is currently available only in the wine and made-wine sectors and is used by only a small number of producers. Prevention of the practice by the use of prohibitive sanctions will address inequity of treatment across the alcohol industry and will create a level playing field so that alcohol products can compete more fairly in the marketplace. I therefore commend the clause to the Committee.
Question put, That the amendment be made.
Stephen Flynn
I beg to move amendment 11, in clause 80, page 68, line 5, at end insert—
“(3) The Chancellor of the Exchequer must review the expected effects on public health of the changes made to the TPDA 1979 by this Section and lay a report of that review before the House of Commons within one year of the passing of this Act.”
This amendment would require the Government to review the expected impact of the revised rates of duty on tobacco products on public health.
This amendment is in part very similar to the previous amendment, but it addresses tobacco duty, not alcohol duty. We want to review the impact of tobacco rates on public health. I take exception to the suggestions made in the previous debate that taxation and public health are not inextricably linked. The hon. Member for Ilford North said that we need a joined-up approach in the Treasury and across all sectors so that we can see the impact of taxation on other aspects of life. That certainly applies to tobacco as much as it does to alcohol duty.
Much like alcohol duty, tobacco duty is reserved to the UK Government. Again, that is deeply frustrating to those of us in Scotland, because it is the desire of the Scottish Government and the SNP to have a tobacco-free generation in Scotland by 2034. Obviously, tobacco rates will play a role in that, but that is not necessarily stopping us entirely and we are still making positive efforts to get there. The raft of different measures put in place by the Scottish Government include the 2020 ban on smoking near hospitals. There is also the regulation of electronic cigarettes and MVP devices, which will be an interesting and hot topic of debate in the coming years. A new national brand, Quit Your Way, was launched in 2018 and is being promoted on behalf of the stop smoking service. A Scottish ministerial working group on tobacco control is helping develop policy to reduce the impact of tobacco on Scotland’s health and to manage the register of tobacco and nicotine vapour product retailers.
That is all in addition to the Scottish Government’s previous efforts, including making prisons smoke free in November 2018, banning tobacco advertising in 2002, and banning smoking in enclosed public spaces in 2006, which is something that we all remember only too well. There are certainly many establishments in Scotland—I am sure the same is true in England—where one can still get the waft of the cigarettes that used to be smoked on those premises. A great deal of good has been and will be done, but ultimately the key lever of power lies, again, with the UK Government. That being the case, it is vital that consideration is once again given to public health and to the impact on it of decisions taken by the UK Government. I therefore suggest that the Government agree to the amendment, because it will be in their interests and in the interests of people across the United Kingdom.
Wes Streeting
If the hon. Member for Kensington does not think that there should be a relationship between public health and taxation, I am afraid she is really going to hate what I have to say on clause 80 and the Scottish National party amendment. For the same reason as before, I think there is a real case for looking at these issues in a joined-up way, and ensuring that our public health objectives are reinforced by the Treasury.
In its January 2020 Budget submission, the UK Centre for Tobacco and Alcohol Studies, in partnership with Action on Smoking and Health, recommended that the minimum excise tax should be updated annually to ensure that the minimum tax for tobacco products is the rate due for products sold at the weighted average price. In the light of those representations, I wonder whether the Government will consider the advice of public health experts, and what consideration they have given to committing to updating the MET on an annual basis from the date of the passing of this legislation.
As the all-party parliamentary group on smoking and health has noted, the covid-19 crisis means that reducing tobacco-related health inequalities should be a priority, now and in the longer term, to improve population health and resilience to any future disease outbreaks. Differences in smoking prevalence and smoking-related diseases are an important factor in the differences in morbidity and mortality from covid-19. If we are not going to think seriously about some of these public health challenges in the middle of a public health crisis, when will we, frankly?
There has also been a rise during lockdown in people’s exposure to second-hand smoke in the home. Households with children are twice as likely to report second-hand smoke in the home. We have already heard about the Scottish Government’s determination in that respect, but the Government’s prevention Green Paper set the target of the UK being smoke-free by 2030, which is defined as a prevalence of 5% or less. If we are going to do that, we really have to commit to doing it and make changes across the board to support that important goal, which we across the House share.
The argument that public health and taxation are not intertwined does not hold water. It is not fashionable to be nice about George Osborne in today’s Conservative party—it is even less fashionable in the Labour party, but I already have a cross to bear in my own party—and his sugar tax was hugely controversial when it was introduced. I do not mind saying that as I sat watching the announcement in the Budget I was a big cynic, not least because I am generally in favour, as a point of principle, of progressive taxation. I worry about any new charges or levies that have flat implications for people and households with different levels of income.
Taxation by its nature ought to be progressive wherever possible, but the sugar tax has been shown, over the fullness of time, to have had a really positive impact on sugar consumption in this country. The evidence shows that a public health epidemic, which I think is what obesity is, particularly affects those from the poorest backgrounds. The same is probably true of smoking and its health consequences not just for smokers, but for the people—particularly children—who breathe the smoke around them.
The all-party parliamentary group on smoking and health, ASH, the British Heart Foundation, Cancer Research UK, the Royal College of Physicians and many others are calling on the Government to adopt their road map to a smoke-free 2030. That would include the creation of a smoke-free 2030 fund, into which tobacco manufacturers would be legally required to give funds to finance the action needed to achieve the smoke-free 2030 goal.
What consideration have the Government given to the road map to a smoke-free 2030 and, in particular, the proposal that there should be some kind of levy on tobacco manufacturers? In the same way as the sugar tax was hypothecated to tackle obesity, what consideration have the Government given to introducing a hypothecated levy to take action to eliminate smoking?
Kemi Badenoch
Clause 80 increases the duty charge on all tobacco products by RPI inflation plus 2% in line with the tobacco duty escalator. In addition, the duty on hand-rolling tobacco will rise by an additional 4% to 6% above RPI inflation this year.
Smoking rates in the UK are falling, but they are still too high. Around 14% of adults are smokers. We have ambitious plans to reduce that still further, as set out by the Department of Health and Social Care in its tobacco control plan. That includes a commitment to continue the policy of maintaining high duty rates for tobacco products to improve public health. The UK has comprehensive tobacco control legislation, which is the envy of the world. However, smoking is still the single largest cause of preventable illness and premature death in the UK. It accounts for around 100,000 deaths per year and kills about half of all long-term users. According to Action on Smoking and Health, smoking costs society almost £14 billion per year, including £2 billion in costs to the NHS of treating disease caused by smoking.
At the Budget, my right hon. Friend the Chancellor announced that the Government were committed to maintaining the tobacco duty escalator until the end of the Parliament. The clause therefore specifies that the duty charged on all tobacco products will rise by 2% above RPI inflation. In addition, duty on hand-rolling tobacco will rise by an additional 4% to 6% above RPI inflation this year. The clause also specifies that for the minimum excise tax—the minimum amount of duty to be paid on a pack of cigarettes—the specific duty component will rise in line with cigarette duty.
The new tobacco duty rates will be treated as taking effect from 6 pm on the day they were announced: 11 March 2020. Recognising the potential interactions between tobacco duty rates and the illicit market, the Government announced at the Budget that they would publish a consultation on proposals for strengthened penalties for tobacco tax evasion as part of the track and trace system, including a £10,000 fixed penalty and a sliding scale for repeat offenders. In addition, the Government will strengthen the resources of trading standards and HMRC to help to combat the illicit tobacco trade, including the creation of a UK-wide HMRC intelligence-sharing hub. I hope the hon. Member for Ilford North will support that. I believe I have addressed quite a number of the points that he has raised.
I turn to amendment 11, which is designed to place a statutory requirement on my right hon. Friend the Chancellor to review the public health effects of changes to tobacco duty. The Chancellor assesses the impact of all potential changes in his Budget considerations every year. The tax information and impact note published alongside the Budget announcement sets out the Government’s assessment of the expected impacts. The Government are committed to improving public health by reducing smoking prevalence, and we co-ordinate these efforts through the tobacco control delivery plan 2017 to 2022, which also provides the framework for robust and ongoing policy evaluation. Accordingly, we review our duty rates at each fiscal event to ensure that they continue to meet our two objectives of protecting public health and raising revenue for vital public services.
I hope that reassures the Committee, and I ask Members to reject the amendment. The clause will continue our tried and tested policy of using high duty rates on tobacco products to make tobacco less affordable and continue the reduction in smoking prevalence, thus reducing the burden that smoking places on our public services.
On the point about a tobacco levy, I believe the Government laid out their position on introducing a levy in 2015. We do not believe a levy is an effective way to raise revenue or protect public health.
Amendment 11 negatived.
Clause 80 ordered to stand part of the Bill.
Clause 81
Rates for light passenger or light goods vehicles, motorcycles etc
Question proposed, That the clause stand part of the Bill.
Kemi Badenoch
Clause 81 makes changes to uprate the RPI vehicle excise duty rates for cars, vans and motorcycles with effect from 1 April 2020. VED is paid on vehicle ownership, and rates depend on the vehicle type and first registration date. The Government have uprated vehicle excise duty for cars, vans and motorcycles with inflation every year since 2010, which means rates have remained unchanged in real terms during this time. As announced in the 2018 Budget, all vehicle excise duty revenues will be used specifically for the national roads fund from this year, to provide certainty for road investment.
The changes made by clause 81 will uprate vehicle excise duty for cars, vans and motorcycles by RPI for the 10th successive year. As a result, the rates are unchanged in real terms since 2010, and that comes on top of the Government’s decision to freeze fuel duty rates for the ninth successive year. By April 2021, this will have saved the average car driver £1,200 in comparison with the pre-2010 escalator.
From April 2017, a reformed VED system was introduced that strengthened the environmental incentive when cars are first purchased, with all cars paying a standard rate in subsequent years. The standard rate will increase by only £5, the flat rate for vans will increase by £5 and the rate for motorcyclists will increase by no more than £2. These changes will ensure that the Government continue to support motorists with the cost of living, and that the vehicle excise duty system continues to incentivise the purchase of lower emission vehicles.
Felicity Buchan
Does my hon. Friend agree that as the economy comes out of the dislocation of coronavirus, we need to build a greener and cleaner economy? Incentivising the use of low-carbon cars is part of that, and clearly we cannot do so just through the tax system; we also need a structure of electric charging points. I am glad to say that my borough is one of the top boroughs in the country in that regard. As we look to build a greener economy, I commend this clause and the related clauses.
Kemi Badenoch
I thank my hon. Friend for her intervention, and I agree with her.
Wes Streeting
Following a previous theme, we support this approach to incentivising the use of greener and more environmentally friendly vehicles. It shows how decisions taken at the Treasury can support the public policy aims of other Departments and promote positive consumer change. Clearly, we have to do a lot more to ensure that people are using environmentally friendly vehicles, which produce fewer emissions and have a less detrimental impact on air quality and the wider environment than other vehicles do. I, in common with many stakeholders, welcome the reduced rate applied to alternatively fuelled light passenger vehicles, including hybrids and those powered by bioethanol and liquid petroleum gas.
Kemi Badenoch
I think that is a point we can all agree on. The Government are doing a lot to encourage the uptake of low emission and zero emission vehicles. As I mentioned earlier, the reformed VED system was introduced in 2017 for new cars. To elaborate, on first registration the owners of zero emission models pay nothing, while those of the most polluting pay more than £2,000. In subsequent years, most cars move to a standard rate, which is currently set at £145. The exceptions are electric cars, which attract a zero rate, and hybrids, which receive a £10 discount.
In the Budget, the Government announced a number of further steps to reduce zero emission vehicle costs, including exempting zero emission cars from the vehicle excise duty expensive car supplement; extending low company car tax rates for 2024-25, as we discussed earlier; and extending the plug-in grant scheme for zero emission cars and ultra-low emission vans, taxis and motorcycles until 2022-22.
Question put and agreed to.
Clause 81 accordingly ordered to stand part of the Bill.
Clause 82
Applicable CO2 emissions figure determined using WLTP values
Question proposed, That the clause stand part of the Bill.
Kemi Badenoch
Clause 82 makes changes that ensure that CO2 emissions figures for vehicle excise duty will be based on the world harmonized light-duty vehicles test procedure—WLTP—for all new cars registered from 1 April 2020. Until 1 April 2020, the owners of new cars were liable to pay VED based on CO2 emissions figures provided under the new European driving cycle test procedure, which is otherwise known as the NEDC. That test underestimates real-world driving emissions by up to 40%. In the 2018 Budget, it was announced that from April 2020, VED would be based on WLTP, which closely reflects real-world driving emissions. Consequently, vehicle excise duty liabilities for new cars purchased from April 2020 may change.
In the 2018 Budget, the Government announced a review of the impacts of WLTP on vehicle taxes. In July 2019, the Government announced that as mitigation to help the industry manage the transition to WLTP, company car tax rates would be temporarily reduced, and that the Government would publish a call for evidence on vehicle excise duty. Draft legislation for the Finance Bill was published on L day 2019 to switch on WLTP from April 2020 and to implement the new CCT rates.
Clause 82 confirms that CO2 emissions figures for vehicle excise duty will be based on WLTP for all new cars registered from 1 April 2020, and that all cars registered before 1 April 2020 will continue to use existing NEDC CO2 values for VED purposes. As WLTP is more representative of real-world driving conditions, this measure ensures that VED is based on a more robust regime for measuring CO2 emissions. It will also allow motorists to make more informed purchasing decisions when considering the CO2 impact of their new car.
Wes Streeting
I do not think that we need to dwell too long on this, but it is worth exploring a few points that were made during the Government’s consultation and to test some stakeholders’ arguments. Assertions are sometimes made, but it is important to revisit the arguments and see whether they stand up to the scrutiny of evidence. It will be interesting to hear the Treasury’s view on that.
There was a concern that the WLTP charging rates could lead to distortion ahead of April 2020, because consumers might bring forward purchasing decisions to avoid potential tax increases on new cars. Given that April 2020 has passed, it would be interesting to know whether such distortion has actually occurred. What assessment has the Treasury made of that?
On the environmental impact, some respondents stressed that company cars were more environmentally friendly than private cars. The argument goes that it is important to keep people in that market by adjusting company car taxation to reflect the lower impact. What analysis has the Treasury done of that claim? Does the Treasury think that that is a valid argument, or simply an assertion?
Finally, some concern was raised that under WLTP values, there could be an above-average increase in the reported CO2 emissions of cars with smaller engines, whereas cars with higher CO2 emissions would not be affected by the change to the same extent. How much does that argument hold water with the Minister?
Kemi Badenoch
On the question of why we are treating cars registered before 6 April 2020 differently and whether that would create a distortion, the WLTP testing standards were introduced in 2017 and EU legislation required manufacturers to record the CO2 emissions for both regimes. We have not sought to change the tax treatment of existing cars; we aim to encourage people who purchase new cars to choose low-CO2-emitting models.
On the analysis that the hon. Gentleman asks for, it is probably too soon to tell. The impact is linear, and we published some findings in July 2019 when we set rates. I can have that information provided to him, and I can write to him on that point. I do not have the full answers for the analyses that he is asking for.
Question put and agreed to.
Clause 82 accordingly ordered to stand part of the Bill.
Clause 83
Electric vehicles: extension of exemption
Kemi Badenoch
Clause 83 makes changes to exempt all zero-emission cars from the vehicle excise duty supplement that applies to cars with a list price exceeding £40,000 from 1 April 2020. The background is that the Government use vehicle taxes, including vehicle excise duty, to encourage the take-up of cars with low carbon dioxide emissions to help to meet our legally binding climate change targets. Vehicle excise duty incentives help to reduce the cost of zero-emission cars, which is one of the most significant barriers to uptake. From April 2017, on first registration, zero-emission cars paid no vehicle excise duty, while the most polluting cars paid more than £2,000. In subsequent years, while most cars move to a standard rate—£150 in 2020-21—electric vehicles attract a zero rate. Previously, however, all vehicles with a list price exceeding £40,000, including electric vehicles, paid a vehicle excise duty supplement of £325 in 2020-21 from years two to six following registration.
Under the changes made by clause 83, from 1 April 2020, all zero-emission light passenger vehicles registered from 1 April 2017 until 31 March 2025 will be exempt from the vehicle excise duty expensive car supplement. That will reduce vehicle excise duty liability for almost a third of zero-emission cars by an estimated £1,625. This demonstrates that the Government will continue to incentivise the uptake of zero-emission cars through the 2020s. The measure will incentivise uptake by reducing tax liabilities and aid the Government in achieving net zero. I therefore commend the clause to the Committee.
Wes Streeting
Clause 83 is obviously a welcome measure; we have heard from industry representatives that removing the VED surcharge for electric vehicles will encourage uptake. The RAC’s head of policy, Nicholas Lyes, states:
“Our research suggests that cost is one of the biggest barriers for drivers who want to switch to an electric vehicle and the steps taken”
by the Government
“will provide clarity and certainty for both consumers and manufacturers.”
I wonder whether the Government are looking at what more they can do to reduce the cost burden for people switching to electric vehicles. People make choices all the time about the purchase of new vehicles, and price sensitivity is one of the biggest aspects of that. If someone uses their car every day for regular journeys—to commute to and from work, for example—and has access to charging points at home, at work or in the vicinity, switching to an electric vehicle will make a real difference. It can be cost-effective as well as an environmentally friendly choice, particularly in the light of the clause.
However, for lots of people who do not commute regularly but have a family car for use at weekends and perhaps over the summer holidays, the financial choice is not always as straightforward. Although the environmental factors may be compelling and people might want to switch to an electric vehicle, the financial barrier is still too high. I wonder what more the Government can do, through industry support or other means, to further incentivise the switch to electric vehicles, as it would make a real difference.
On infrastructure, it is important that more is done to ensure that electric vehicle charging points are readily available for use—that is really an issue for the Department for Transport and local authorities, but at some point they will come knocking at the Treasury’s door. The Minister is smiling; I am sure that she is very familiar with that experience. I wonder how favourably she is looking on those arguments, because although progress is being made to expand electric charging points—the Mayor of London cares strongly about the issue, and I discussed it recently with the Mayor of Greater Manchester, Andy Burnham—much more progress can still be made in all parts of the country, so Treasury support would be very welcome.
Kemi Badenoch
The hon. Gentleman makes a point that we hear again and again about the cost of low emission vehicles. These changes are part of a wider package of tax and spend incentives—I have mentioned company car tax rates and the plug-in car grant.
On the question of what more we can do, the best mechanism is the call for evidence that the Government published at the Budget, which includes how vehicle excise duty can further incentivise the uptake of zero-emission cars. That is probably the best way for the industry and Parliament to suggest what more we can do to make low emission vehicles more affordable.
The hon. Gentleman is right that we get asked a lot about infrastructure and what more we can do to provide charge points. We understand that access to high-quality, convenient charging infrastructure is critical if drivers are to make the switch to electric vehicles confidently. That was why, at the Budget, we announced £500 million over the next five years to support the roll-out of a fast charging network for electric vehicles, ensuring that drivers will never be more than 30 miles from a rapid charging station.
Question put and agreed to.
Clause 83 accordingly ordered to stand part of the Bill.
Clause 84
Motor caravans
Question proposed, That the clause stand part of the Bill.
Kemi Badenoch
Clause 84 reduces vehicle excise duty liability for new motorhomes to support British motorhome manufacturers and UK holidaymakers. From 12 March 2020, most new motorhomes pay a flat rate of VED at £270 annually. To ensure that, in the future, motorhome vehicle excise duty liabilities reflect environmental impact and to incentivise the development and uptake of lower emission motorhomes, from 1 April 2021, motorhome VED liabilities will be aligned with graduated van vehicle excise duty.
From September 2019, EU regulatory changes have required motorhomes to record carbon dioxide emissions on the vehicle type approval document. Previously, the majority of motorhomes attracted a flat rate of £265, but from September 2019, due to their high emissions, new motorhomes saw a significant increase in their first-year vehicle excise duty liabilities. Motorhome dealerships and the main industry body, the National Caravan Council, expressed concern about the changes. The sector argued that, as motorhomes are generally derived from vans, their VED liability should be aligned with vans, rather than passenger vehicles.
The changes made by clause 84 mean that, from 12 March 2020, new motorhomes are more closely aligned with vans for VED purposes. Manufacturers are no longer required to provide a CO2 emissions figure when they register the vehicle with the Driver and Vehicle Licensing Agency. As a result, all new motorhomes will move to a flat rate of vehicle excise duty. Most new motorhome vehicles will be included in the private light goods vehicle tax class, with the minority that weigh more than 3,500 kg included in the private heavy goods class. As a result, new motorhomes’ first-year VED liabilities will be reduced by up to £1,905. The change will affect owners of motorhomes first registered from 12 March 2020. There are typically about 15,000 motorhomes registered in the UK annually.
The change will reduce new motorhome vehicle excise duty liabilities, and better align them with vans, rather than passenger vehicles. It will support British motorhome manufacturers and holidaymakers using motorhomes throughout the UK. I therefore commend the clause to the Committee.
Wes Streeting
This debate is particularly timely, given last night’s Adjournment debate, which was led by my hon. Friend the Member for Kingston upon Hull West and Hessle (Emma Hardy), who told the House that Hull is the capital of caravan manufacturing. Along with my hon. Friends the Members for Kingston upon Hull North (Dame Diana Johnson) and for Kingston upon Hull East (Karl Turner), she has been a doughty champion of the industry. That industry has been particularly hard hit by covid-19 because it relies so much on the leisure and tourism industry, which is still effectively shut down. Industry bodies and users were looking for this change, so I am happy to indicate that we support the clause.
Miriam Cates (Penistone and Stocksbridge) (Con)
I welcome the measure. The Moto-Trek manufacturer in my constituency makes exclusive hand-built motorhomes, so I know that the clause is very much welcomed by the industry. It certainly makes sense to tax motorhomes as vans, since they are mostly built on van chassis and do not do many miles, although they do, of course, emit carbon dioxide. It is right that we incentivise the manufacture of low emission vehicles, but motorhome users are very much committed to UK holidays and do not fly as a result, which is very positive for the environment. As we come out of covid, it is really important that we do everything that we can for UK manufacturers, for UK motorhome vehicle sales and, of course, for tourism. I therefore very much welcome the clause.
Question put and agreed to.
Clause 84 accordingly ordered to stand part of the Bill.
Clause 85
Exemption in respect of medical courier vehicles
Alison Thewliss
I beg to move amendment 12, in clause 85, page 72, line 33, after “supplies” insert “, including human breastmilk”.
This amendment would ensure that vehicles carrying human breastmilk would benefit from the exemption from Vehicle Excise Duty.
I am delighted to continue my personal journey to ensure that breastfeeding is mentioned in every possible place in this House. I am chair of the all-party group on infant feeding and inequalities, so I declare that interest up front.
The measure I seek to add to the Bill would cost the Government very little, if anything at all, but would send a very strong signal that the Government support and recognise breast milk banks across the UK. Sub-paragraph 2(b) of proposed new paragraph 6A to schedule 2 to the Vehicle Excise and Registration Act 1994 refers to
“medicines and other medical supplies”.
I am not quite sure whether that would capture breast milk. I seek clarification from the Minister on that, because I do not think it is clear enough, which was why I tabled the amendment.
Human breast milk banks exist across the UK. Some do not exist quite to the size and scale that we would like, so the amendment would help to encourage them that there is Government support for what they are doing. I mention the Human Milk Foundation, the Northwest Human Milk Bank, Hearts Milk Bank and Milk Bank Scotland, which is based in Glasgow and the one that I know best. Having spoken to Debbie Barnett, its donor milk bank co-ordinator, I know that Milk Bank Scotland does not have its own vehicles at the moment, but relies on the Glasgow Children’s Hospital Charity volunteers, who transport the milk, after picking it up from donors, and take it out to those who need it. Having its own vehicles would be something for a future point, but the amendment would certainly support the milk bank, and others across the UK, in doing that.
Like blood, breast milk has to be properly processed, and there are procedures in place for doing so. Like blood, it needs special carriage to take it from donors to the milk banks for processing, and back out again. The National Institute for Health and Care Excellence guideline 93 on donor breast milk banks says that, when transporting milk to the milk bank, critical conditions for transport include
“temperature and time limit, to ensure that donor milk remains frozen during transport.”
The guideline also states that donor milk should be transported
“in secure, tamper-evident containers and packaging”
and that a range of procedures are in place for achieving that.
In chapter 33 of its guide to the quality and safety of tissues and cells for human application, on the distribution of and transport conditions for human milk, the European directorate for the quality of medicines states:
“During transport, milk should remain frozen and dry ice may be used for this purpose.
The use of validated, easily cleaned, insulated transport containers is recommended.
The transport procedure should be validated, and the temperature of the transport container monitored during transportation.”
All those measures are relatively similar to how blood and other blood products are transported around the UK, and would fit quite well with the medical courier vehicles exemption set out in the Bill. Many of these organisations are charities, and they would very much appreciate support in moving milk around the country.
I appeal to the Government to accept the amendment, which is uncontentious—and indisputable, really. Doing so would send a good signal that the UK Government support milk banks, the people across the UK who wish to use them, and the science behind them. They are particularly important in supporting premature babies in their earliest days. The World Health Organisation recently indicated the significance of breast milk during coronavirus, and that women should be supported whenever possible to feed their babies with human breast milk. Covid-19 is not present in breast milk, and the milk is therefore of huge benefit in supporting babies in their earliest days. I encourage Ministers to take on the amendment, if they can take on anything at all, and to show support for milk banks across the UK.
Kemi Badenoch
Amendment 12 would extend the exemption so that it applied to people carrying human breast milk. I do not think that any of us would disagree with that, but clause 85 already covers the transportation of human breast milk. The purpose-built vehicles used by medical courier charities, which are exempted from VED by the measure, transport not just blood, but a wide range of medical products, including X-rays, MRI scans, plasma and human breast milk.
The inclusion of the amendment in the Bill would make things more difficult. Its wording is quite vague, it does not clearly define the vehicles that it is trying to capture, and it would create the risk of abuse. We believe that the matter is already covered by clause 85. Although the Government fully support the sentiment of the amendment, as breast milk is already captured under the clause, I ask the Committee to reject the it.
Alison Thewliss
I would like to press the amendment to a vote, to add to the clarity of the clause.
Amendment 12 negatived.
Clause 85 ordered to stand part of the Bill.
Ordered, That further consideration be now adjourned. —(David Rutley.)
Domestic Abuse Bill (Ninth sitting)
Tuesday 16th June 2020
(4 years, 6 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 16 June 2020 - (16 Jun 2020)
The Chair
I will not go through all the information that I gave at the beginning of last week’s sittings, but I will just remind everyone to switch their mobiles to silent mode. Also, can you ensure that your speaking notes are sent to hansardnotes@parliament.uk, for the assistance of the Hansard writers? We begin this morning’s sitting with clause 66 and Government amendment 40.
Peter Kyle (Hove) (Lab)
On a point of order, Ms Buck. I know that it is unusual to do this, but I think it is quite important, so I am very grateful. Last week, the head of policy and advocacy for the Children’s Commissioner’s Office wrote to me to explain that she had been wrongly quoted during the previous debates. I do not seek at all to reopen any of the debates of the past, but I do think that this is an important message. If I may, I will read out the three relevant paragraphs. The message states:
“Dear Mr Kyle
I am writing to you and the clerks of the Domestic Abuse Bill Committee to correct the account of a comment I made to the Pre-Legislative Scrutiny Committee for the Domestic Abuse Bill.
When I gave evidence to the Committee I commented that the Children’s Commissioner does not have to send draft copies of our reports or annual reports to the Secretary of State for Education for review. I was making the argument that I felt the same independence should be given to the new Domestic Abuse Commissioner.
Unfortunately my comment was recorded as saying that the Children’s Commissioner did have…‘to send draft reports to the Secretary of State for Education before publication, and that the Secretary of State had to approve its annual strategic plan’, and I did not spot this mistake in the transcript at the time. I am writing to clarify this point although the argument you were making during the debate still stands—that this independence is something to be welcomed.
I don’t know if it is possible for the clerks to amend the report of the pre-legislative scrutiny committee to reflect this error but I wanted to alert you both…as soon as I was made aware of this.
Yours sincerely
Emily Frith
Head of Policy and Advocacy
Children’s Commissioner’s Office”.
I just wanted to set the record straight, not to reopen the previous debate.
The Chair
Thank you, Mr Kyle. That has now been placed on the record, and I hope that it will satisfy everyone.
Clause 66
Power of Secretary of State to issue guidance about domestic abuse, etc
The Parliamentary Under-Secretary of State for the Home Department (Victoria Atkins)
I beg to move amendment 40, in clause 66, page 49, line 36, after “64” insert
“, (Homelessness: victims of domestic abuse)”.
This amendment is consequential on amendment NC16.
The Chair
With this it will be convenient to discuss the following:
Government amendments 41 and 42.
Government new clause 16—Homelessness: victims of domestic abuse.
New clause 13—Homelessness and domestic abuse—
“(1) Part 7 of the Housing Act 1996 (Homelessness: England) is amended in accordance with subsections (2) to (5).
(2) In section 177(1) and (1A) (whether it is reasonable to continue to occupy accommodation) for each instance of “violence” substitute “abuse”.
(3) After section 177(1A) insert—
“(1B) In this Act, ”abuse” means—
(a) physical or sexual abuse;
(b) violent or threatening behaviour;
(c) controlling or coercive behaviour;
(d) economic abuse (within the meaning of section 1(4) of the Domestic Abuse Act 2020);
(e) psychological, emotional or other abuse.”
(4) At the end of section 189(1) (priority need for accommodation), insert—
“(e) a person who—
(i) is homeless as a result of being subject to domestic abuse, or
(ii) resides or might reasonably be expected to reside with a person who falls within sub-paragraph (i) and is not the abuser.“
(5) In section 198 (referral of case to another local housing authority):
(a) In sub-section (2)(c) for “violence” substitute “abuse”;
(b) In sub-section (2ZA)(b) for “violence” substitute “abuse”;
(c) In sub-section (2A) for “violence (other than domestic violence)” substitute “abuse (other than domestic abuse)”;
(d) In sub-section (3) for “violence” substitute “abuse”.
(6) Article 6 of the Homelessness (Priority Need for Accommodation) (England) Order 2002, SI 2002/2051, is amended in accordance with subsection (7).
(7) In Article 6,
(a) after “reason of violence” insert “(other than domestic abuse)”;
(b) after “threats of violence” insert “(other than domestic abuse)”.”
This new clause amends Part 7 Housing Act 1996, concerning local housing authorities’ duties to homeless applicants, for England. It updates the definition of “domestic violence” to that of “domestic abuse” and removes the requirement that a person who is homeless as a result of domestic abuse must also be vulnerable in order to have a priority need.
Victoria Atkins
It is a pleasure to serve under your chairmanship, Ms Buck. I am pleased today to be able to bring forward new clause 16, which will amend the Housing Act 1996 to give those who are homeless as a result of being a victim of domestic abuse priority need for accommodation secured by the local authority. The Government believe that it is vital that domestic abuse victims who are homeless or at risk of homelessness are supported to find an accommodation solution that meets their needs and reflects their individual circumstances.
In April 2018 the Homelessness Reduction Act 2017 came into force. That Act, for the first time, puts prevention at the heart of the local authority response to homelessness, irrespective of whether those seeking support are a family or an individual on his or her own, and notwithstanding what has put them at risk. That means that all households that are homeless or at risk of homelessness should be provided with an offer of support from their local authority to find appropriate accommodation.
Since the 2017 Act was implemented, more than 200,000 households have had their homelessness successfully prevented or relieved. However, for those who need more support, it is right that the local authority should have a duty to house them immediately and secure accommodation for them. Under homelessness legislation, a person who is pregnant, has dependent children or is vulnerable as a result of having to leave accommodation because of domestic abuse, already has priority need for accommodation.
However, the Government are now going further. Through new clause 16, the Government will automatically give domestic abuse victims priority need for accommodation. That change will mean that consideration of vulnerability will no longer be required for domestic abuse victims to be entitled to accommodation secured by the local authority. If the authority is already satisfied that an applicant is homeless as a result of being a victim of domestic abuse, that victim and their family should not need to go through an additional layer of scrutiny to identify whether they are entitled to be accommodated by the local authority. The amendments to the Housing Act will help ensure that victims do not remain with their abuser for fear of not having a roof over their head. Alongside the announcement made in the spring Budget to extend exemption from the shared accommodation rate to victims of domestic abuse, that should support victims to move into a place of their own where they can feel safe and secure.
New clause 13, tabled by the hon. Member for Bermondsey and Old Southwark, who is not here today, would have the same effect as the Government’s new clause 16. The one difference is that the hon. Gentleman’s new clause would also extend priority need status to other persons residing in the same household as a victim of domestic abuse. I want to assure the Committee that such provision is not needed. Where an applicant has priority need, the Housing Act already requires local authorities to provide accommodation that is “suitable” for the household. There is therefore no need for each member of the household to have priority need. Amendments 40 to 42 are consequential on new clause 16.
Alex Davies-Jones (Pontypridd) (Lab)
Diolch yn fawr, Ms Buck. It is my pleasure to speak to new clause 13, which outlines the need for more stringent housing support for those fleeing domestic abuse in their current households. Colleagues may recall—I certainly will not forget it, and will be dining out on it for a while—that last week the Minister kindly coronated me as the princess of Wales. I was most flattered by the proclamation and make no apologies for speaking up for people across Wales. I plan to use my new-found royal status to ensure that the voices of Welsh victims of domestic abuse are heard and protected in the Bill.
We all know that with great royal power comes great responsibility. I will be using my voice today to focus on themes that are relevant across the board in England. It is clear that domestic abuse has no boundaries; it does not care what nation you are from or what language you speak. It is imperative that we ensure that collaborative working between both nations covered by the Bill can continue if we are to strengthen the spirit of the Union.
I am delighted to speak to new clause 13. I pay tribute to the hard work of my colleague the hon. Member for Bermondsey and Old Southwark for prioritising the housing needs of survivors of domestic abuse. Sadly, he is unable to join us today, and I know that all Committee members wish him well.
The Government’s change of heart following the brilliant campaign by the all-party parliamentary group for ending homelessness is a welcome step, and these changes will undoubtedly save lives. The campaign was supported by MPs across the House, and a number of organisations in the domestic abuse sector were involved. I hope that colleagues will afford me the opportunity to list the organisations that played a vital role and that are standing together against domestic violence: Crisis, Women’s Aid, Refuge, the Domestic Abuse Housing Alliance, St Mungo’s, Surviving Economic Abuse, Shelter, Homeless Link, Depaul, Centrepoint, Hestia, Changing Lives, the Chartered Institute of Housing, The Connection at St Martin-in-the-Fields, and Latin American Women’s Aid.
It is clear that in England there is a gap in the support offered to those fleeing domestic abuse. These are very real people who are making the brave and bold decision to flee from an unsafe household. We must remember that, because it can be easy to lose sight of that as we sit in this place and discuss the technicalities of the Bill. They should be our priority, but the current system is failing them.
Research by the APPG last year showed that nearly 2,000 households fleeing domestic abuse each year in England are not provided with a safe home, because they are not considered to be in priority need for housing. Colleagues may be aware that during the APPG’s inquiry into domestic abuse and homelessness in 2017, there was clear evidence that local authorities in England were consistently failing to provide people fleeing domestic abuse with the help they need.
I was particularly concerned to read about the vulnerability test being used as a gatekeeper tool by local councils across England. I am pleased that we will now be able to reverse that trend and provide those who are fleeing domestic abuse with a real opportunity to rebuild their lives, yet the amendment still does not go far enough. Despite initial informal commitments from the Ministry of Housing, Communities and Local Government to adopt the APPG’s amendment word for word, there are now some key differences in the final amendment, which could undoubtedly lead to some domestic abuse victims in England who require housing support falling through the cracks.
The APPG’s amendment would ensure that anyone in a household who applies for homelessness assistance in England due to domestic abuse would qualify for automatic priority need and have a legal right to a safe, permanent home. It is extremely disappointing that the wording of the Government’s amendment means that survivors would be required to physically make the application for homelessness assistance themselves in order to receive automatic priority need. Both the domestic abuse and homelessness sectors have expressed concern that the Government’s amendment fails to guarantee adequate protection to survivors of domestic abuse.
Colleagues will be aware that a note from the APPG, containing more information, was circulated to Committee members recently. I am aware that the hon. Member for Harrow East (Bob Blackman), in his capacity as co-chair of the APPG, recently wrote to Ministers and received a reply indicating that the Government do not intend to change their position on this. The Government response states:
“Allowing a member of the household to make the application could allow a perpetrator to manipulate the situation and frame themselves as the ‘new partner’, using the victim to obtain accommodation for their own gain and allow the abuse to continue.”
However, the domestic abuse sector does not agree.
The APPG’s amendment makes it clear that priority need status for settled housing can be guaranteed regardless of whether the homelessness application is made directly by someone in the household who is experiencing domestic abuse. In comparison, the Government’s amendment would not allow for other members of the household to make the application. So many examples spring to mind of where domestic abuse victims could slip through the cracks under the terms of the Government’s amendment, such as children who have had to flee an abusive situation with their mother.
Specifically, this is relevant in a context where only the mother has been abused but the children are not able to reside with their mother, perhaps due to parental addiction or the children being adults. Similarly, if a mother and her children were facing abuse by an adult child against one or more siblings who are under 16, but not against the mother, they would not be entitled to seek urgent support. I hope colleagues will forgive my listing the technicalities of those situations, but they are very real and present in all the communities that each of us represents and serves.
Allowing a member of another household to make an application for homelessness assistance on behalf of an individual who is the victim of domestic abuse is a vital safeguarding mechanism for those fleeing abuse. The strength it takes to flee an abusive household is undeniable, but it will not always be safe or suitable for victims of abuse to make an application for assistance in person. In many cases it will be too dangerous for them to leave their home until they know that they have somewhere safe to seek refuge, or there could be logistical issues, such as where a victim is receiving hospital treatment. For other groups of people considered to be in automatic priority need for settled housing in England, it is already the case that someone else in the household is able to make the application—for example, if a woman is pregnant, their partner is able to make an application on their behalf. The same principle must be extended to people who are fleeing domestic abuse.
Having spent some time discussing the provisions needed in England, I will turn my attention back to my home nation of Wales, to highlight the impact that the truly groundbreaking Violence against Women, Domestic Abuse and Sexual Violence (Wales) Act 2015 has had. In Wales, the Labour Government have implemented legislation that puts a duty on the devolved public sector to prevent, protect and support. This has increased understanding and built referral routes to specialist support, allowing local authorities to work alongside and in conjunction with those specialists in order to ensure rapid support for those who need it. After a decade of funding cuts to local authorities across the UK, it is clear that those local authorities are under pressure, particularly when it comes to the housing crisis that we see up and down the country. I urge the Government to reconsider and allow more flexibility for domestic abuse victims who are seeking urgent housing support.
Finally, I hope that colleagues will indulge me as I use some key case studies to highlight the importance of a more accessible system for applying for homelessness assistance. At Women’s Aid, one service user said:
“After a year of fallout, I was still homeless and on my backside—it felt like I was worse off for going through ‘the system’.”
A key worker from Solace Women’s Aid—a fantastic charity based in the constituency of my hon. Friend the Member for Bermondsey and Old Southwark—said:
“A lot of women I work with have a secure tenancy. They really don’t want to leave the secure tenancy. But then often they might not have a lot of choice… some women will prefer to…take massive risks…than leave it.”
One case highlighted by Crisis was that of Danielle, who was made homeless when her relationship ended, after her neighbour called the police following a two-day beating. Despite visible bruising and a letter from her partner admitting the abuse, she was told by the council that she needed to provide further evidence of her vulnerability, and that she was not a priority. So she ended up homeless and sofa-surfing for more than two years.
An anonymous survivor said that he had escaped a three-year abusive relationship where, on occasion, his partner had locked him in a room for five days and beaten him so severely that he was confined to a wheelchair. When he approached the council, he was refused help with finding a safe home, which left him with no option but to sofa-surf for several months. Eventually, a charity that supports victims of domestic abuse helped him to deal with the council, and he is now socially housed.
It is clear from those testimonies that we have an opportunity to change the course of people’s lives and affect their ability to regain their independence following a period of domestic abuse. It is not unreasonable to allow for a more flexible system to ensure that victims can get access to the housing support they need. That additional power would improve people’s ability to flee, and could be hugely powerful as a lifeline for those in need. The new clause is well written, with substantive detail. I ask that the people I have talked about be made a priority.
Victoria Atkins
I thank the hon. Lady for her comments. In the spirit of the Bill, and of the Committee, let us welcome the fact that we are making changes in the area in question. It is fantastic that new clause 16 has been tabled.
There is a sliver of disagreement between the Government and the hon. Members for Pontypridd and for Bermondsey and Old Southwark, on the role of other people in the household. We have heard a great deal—just in the Committee Room, let alone in our experiences outside it—of the manipulative nature of some perpetrators and their ability to seize an opportunity against their victim, use it for their own ends and do incredible damage to the victim. Also, the children are often victims. Victims of domestic abuse may be vulnerable and at risk of such manipulation—of being controlled by the perpetrator, whether that is a partner in an intimate relationship, as described in clauses 1 and 2, or indeed a family member. It was against that backdrop that we drafted the clauses.
Our primary concern, on the sliver of disagreement between us, is that an abusive partner could apply for new housing under the approach suggested by the hon. Lady, to the detriment of the victim and the gain and advantage of the perpetrator. Clearly no one wants that.
I take the point about the need to ensure that the system is sensitive to the needs of victims. Indeed, I am pleased that my hon. Friend the Member for Harrow East, who has led the campaign with the hon. Member for Bermondsey and Old Southwark, wrote to my hon. Friend the Under-Secretary of State for Housing, Communities and Local Government, the Member for Thornbury and Yate (Luke Hall), who responded on 10 June. In the course of the correspondence and conversations, the hon. Lady’s concerns were clearly canvassed as well. My hon. Friend the Under-Secretary told my hon. Friend the Member for Harrow East that there is already the flexibility in the system to take care of cases where someone has difficulty making their own application, whether that is because they are in a hospital bed or because they are in a refuge that they cannot leave.
The homelessness code of guidance covers such circumstances. Paragraphs 11.13 to 11.16 make it clear that where a face-to-face appointment does not meet the applicant’s needs, assessments can be completed on the telephone or internet, or with the assistance of a partner agency. As for the case studies that the hon. Lady raised, I very much hope that, under new clause 16, Women’s Aid and the other fantastic organisations that we all support would be able to help the victims who could not make applications face to face because of their circumstances.
The hon. Lady raised the issue of secure tenancies. Again, that is addressed in the Bill, in clause 65. Our slight disagreement, as I have said, is on the point about a perpetrator’s ability to manipulate.
We want victims to have full control and ownership of their homelessness application and the accommodation offer from the local authority. That is what new clause 16 manages to achieve.
Jess Phillips (Birmingham, Yardley) (Lab)
The Minister used the term “all victims”. Does the new clause cover those victims who are working in this country but have no recourse to public funds?
Victoria Atkins
We will come to debate that set of circumstances tomorrow. In terms of homeless applicants, including victims of domestic abuse, we are dealing with this within the confines of the regulations as they apply at the moment.
Amendment 40 agreed to.
Jess Phillips
I beg to move amendment 55, in clause 66, page 49, line 42, after “children” insert “;
(c) the support employers should provide to victims of domestic abuse, including through the provisions of paid leave.”
This amendment would ensure that employers are provided with guidance about the support they should provide to victims of domestic abuse, including provision of paid leave.
I did not do this last week, but I just want to say a massive thank you to the people in the Public Bill Office. The amount of work that has gone into these amendments might be clear from the number of times that I stand on my feet. It is important to thank the people who sit in the background doing all that work, having an argy-bargy with all of us as we try to table amendments. They are a godsend, so I want to say a massive thank you to them.
This amendment goes back to the Committee’s conversations last week about workplaces. In part, the Government’s announcement of a review of domestic abuse in the workplace potentially covers what this amendment seeks to do. It did not exist when I tabled the amendment.
This amendment is about workplace guidance, which would ensure not only that a victim is supported, but that secondary benefits are offered to other employees, who would be indirectly affected by the abuse happening at their workplace. Without guidance, we expect employers just to know what to do. In many cases, which I spoke of last week, they have considered terminating employment in order to protect their business and their employees, removing the only lifeline that a victim might have. Often, when we try to change things in the workplace—certainly in relation to an equalities framework—the argument we get back is, “This will be too onerous on big and small business.” Over the past couple of years, however, I have seen that businesses are truly interested in trying to do something about this.
I was called to one of those fancy things where lots of businesses sit around a table in a fancy building. It was so fancy that I saw Anna Wintour from Vogue in the lift—she was exactly as Members might imagine. Businesses from all over the country came to listen to me talk about what they might be able to do to help domestic violence victims in their workplaces. Various companies, such as Lloyds and Vodafone, have offered two weeks’ full pay to victims of domestic abuse.
Studies by those organisations—EY, for example, has done a specific study, such is the nature of its business—show that although that right was appreciated and used when needed, no employee had taken the full two weeks off as part of their paid employment. Those organisations are trying to be proactive. We have to make sure that that is available for everybody.
During my work on sexual harassment at work, I was often on the phone to fancy people in Los Angeles who ran the Time’s Up campaign. I constantly used to say, “We mustn’t forget about Brenda in Asda. We mustn’t forget that the person we are talking about is actually a woman called Brenda in Asda.” The same applies to the amendment, which seeks an element of paid leave as well as guidance for employers who want to do more than simply step forward and be the goodies and go to fancy lobby lunches to talk about these issues. We have to truly seek to change that.
The Government have suggested that they are going to hold a consultation and review what exactly that will mean. I have absolutely no doubt about what the findings will be. They will be the same as those reached over a number of years by different groups, including the all-party parliamentary group on domestic violence and abuse, working alongside the Employers’ Initiative on Domestic Abuse and the TUC. An unusual group of people have been working on this for a while. There are rabble-rousing union stewards working alongside some of the poshest organisations I have ever worked with. Those meetings are always a delight. We have taken evidence from New Zealand, for example, where that right already applies.
I will not press the amendment to a vote. It was tabled before the Government announced any sort of action in this area. It is merely a probing amendment, given that businesses have told us that they would not find onerous.
Victoria Atkins
The amendment brings us to the role that employers can and should play in supporting employees who are victims of domestic abuse. The Government expect all employers to show compassion when faced with cases of domestic abuse. It is important that the Government help employers to support victims. We recognise the excellent work of organisations that provide guidance to help employers to do more. The Employers’ Initiative on Domestic Abuse, for example, does great work and has increased the services that it can provide employers during covid-19, because it recognised its ability to send messages through its network of support. We very much support and applaud that sort of work.
Public Health England, in partnership with Business in the Community, which is a business-led membership organisation, provides an online domestic abuse toolkit, including advice on developing a workplace policy and guidance on practical workplace support. Although not specifically designated for victims of domestic abuse, some existing employment rights can help to support victims who face particular circumstances. For example, statutory sick pay may be available where the employee is suffering from physical injury or psychological harm. The right to request flexible working may also help in circumstances where working patterns or locations need to change. We committed in our manifesto to taking that further and consulting on making flexible working the default. In addition to the statutory right, many employers offer compassionate leave or special leave to their employees to enable them to take time to deal with a wide range of circumstances. That leave is agreed between the employer and the employee, either as a contractual entitlement or on a discretionary basis.
We accept, however, that that framework of rights may not work for every circumstance faced by victims of domestic abuse. There may be more that the Government can do to help employers better support those who are experiencing abuse. That is why the Department for Business, Energy and Industrial Strategy last week launched a review of support in the workplace for victims of domestic abuse. I always like to give the end date of such consultations so that colleagues are nudged into responding if at all possible: the end date is 9 September 2020. I ask colleagues to please submit their views and those of their networks of contacts, charities and businesses.
The review invites contributions from stakeholders, covering the practical circumstances that arise in relation to domestic abuse and work, best practice by employers, and where there is scope for the Government to do more to help employers protect victims of domestic abuse. We will also host events to build the evidence base further, before publishing the findings and an action plan by the end of the year. Our view is that the Government review provides the right framework for identifying how the Government can best help employers to support victims of domestic abuse. It creates a firm basis on which to make progress.
I am pleased that the hon. Member for Birmingham, Yardley has indicated that this is a probing amendment, so I invite her to withdraw it.
Jess Phillips
I thank the Minister. If anyone in this room were faced with an employee—and I have been in this situation a number of times—going through a court case, I cannot imagine that anybody, no matter whether they were working here or elsewhere, would expect that person not to be paid or even to be paid statutory sick pay for that period. However, that is the reality for the vast majority of people. Victims of domestic abuse need access to a specific sort of leave. That would change the culture in an organisation, and including information about it in the big pack that people receive on their first day would be a real sign that they could speak to their boss about it.
Asking for sick leave or compassionate leave because you have been raped is completely different from doing so because your mother has died. It is much easier for someone to ask their boss for leave because a relative has died than to do so because they might have been raped the night before. If someone’s house was broken into, they would ring their boss in the morning and say, “My house has been broken into. I can’t come in today because the police are coming.” That is a different conversation from, “My husband beat me up last night. I’m sorry I can’t come in, but the police are coming over.” It is not the same. We need to change the culture from the top down, to make sure there is a marker that shows people that if they have to go to court—which can take weeks and weeks—and if they need to flee, something can be done.
The Minister mentioned different guidance. The TUC says that its guidance on domestic abuse is the most downloaded piece of guidance ever from its website. Let us hope that culture is changing and that the review mentioned by the Minister shows real courage on what needs to change in the workplace. On that basis, I beg to ask leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Christine Jardine (Edinburgh West) (LD)
I beg to move amendment 47, in clause 66, page 49, line 42, at end insert—
“(2A) The Secretary of State must issue separate statutory guidance on domestic abuse that also constitutes teenage relationship abuse and such guidance must address how to ensure there are—
(a) sufficient levels of local authority service provision for both victims and perpetrators of teenage relationship abuse,
(b) child safeguarding referral pathways for both victims and perpetrators of teenage relationship abuse.
(2B) The guidance in subsection (2A) must be published within three months of the Act receiving Royal Assent and must be reviewed bi-annually.
(2C) For the purposes of subsection (2A), teenage relationship abuse is defined as any incident or pattern of incidents of controlling, coercive, threatening behaviour, violence or abuse, which can encompass, but is not limited to psychological, physical, sexual, economic and emotional abuse, including through the use of technology, between those aged 18 or under who are, or have been in a romantic relationships regardless of gender or sexual orientation.”
This amendment would place a duty on the Secretary of State to publish separate statutory guidance on teenage relationship abuse. The statutory guidance would cover not just victims of teenage domestic abuse but extend to those who perpetrate abuse within their own teenage relationships.
This cross-party amendment addresses teenage relationship abuse. It would place a duty on the Secretary of State to issue separate statutory guidance on how to support teenagers who either experience or may display abusive behaviour in their relationships. To be clear, the amendment does not advocate lowering the age limit for domestic abuse or criminalising anyone. We have to acknowledge that domestic abuse is not like a driving licence or a coming of age, because we know that it does happen to people before they turn 16. The amendment acknowledges that teenage abuse is a reality, and calls for the production of separate statutory guidance and recognition that young people, whether victims or perpetrators, need special referral pathways and service provisions that are appropriate for them and for their age.
Liz Saville Roberts
I am sure that the hon. Lady will greet the fact that this amendment would align English and Welsh legislation with safeguarding procedure in Wales, which presently acknowledges peer-on-peer abuse. That consistency of approach would be advantageous in enabling better service support to follow on from it.
Christine Jardine
I thank the hon. Lady for that excellent and very well-made point. If the Bill is to be as successful as everybody wants it to be, this amendment provides an opportunity to take early action to support and encourage young people away from a path that could lead to an abusive or an abused life. It is also very much in the spirit of much of the evidence we heard during our first sitting and much of what we have said in this room about recognising the impact that domestic abuse has on young people and the need to protect them from it throughout their lives.
The Bill in its current form defines domestic abuse as taking place between two persons above the age of 16—as I have said, we can recognise that people do not miraculously change when they are 16—and yet the evidence shows that to define it in those terms is to miss out vulnerable, troubled and an abused section of our young people who are unseen, unheard and, as a result, unsupported.
Victoria Atkins
I thank the hon. Lady for her powerful speech and for setting out the case for the amendment.
We know that domestic abuse in teenage relationships has the potential to shape adult lives. We know that it can be severe and can have many consequences outside the two people in the relationship. We are clear that the impact of domestic abuse on young people, including those in abusive relationships, exists and that we need to ensure that agencies are aware of it and of how to identify and respond to it.
The Bill’s definition states that behaviour is domestic abuse if parties are aged 16 or over. I note that that was supported by the Joint Committee and, indeed, by the evidence we heard from Lucy Hadley of Women’s Aid and Andrea Simon of the End Violence against Women Coalition at the evidence session of this Bill Committee. We are of the view that having a minimum age of 16 years does not deny that younger children are not impacted or affected by domestic abuse, including in their own relationships.
I have no doubt that the amendment is well intentioned. However, having established that minimum age as the threshold in the definition of domestic abuse, it follows that any statutory guidance issued under clause 66 of the Bill, which relies on the definition in clause 1, cannot and should not as a matter of law, address abuse between people who are aged under 16.
That is not to say that the guidance issued under clause 66, which addresses abuse between older teenagers, cannot have wider application. There are other sources of guidance for younger age groups. We intend to publish a draft of the guidance ahead of Report and, in preparing that draft, we have worked with the children’s sector, among others, to include the impacts of abuse in older teenage relationships within the guidance. Clearly, we will continue to work with the children’s sector to ensure that the guidance is as effective, thorough and accessible as it can be before it is formally issued ahead of the provisions in clauses 1 and 2 coming into force.
Nickie Aiken (Cities of London and Westminster) (Con)
As the Minister knows, I have concerns about this—I spoke to her when in listening mode. At the evidence session two weeks ago, for me the powerful evidence was from the Local Government Association spokesperson, the leader of Blackpool Council, whom I questioned specifically. He said that he felt that under-16s were dealt with under the Children Act. Does my hon. Friend agree that there are other ways of dealing with the matter?
Victoria Atkins
I thank my hon. Friend for her contributions, her canvassing of views sympathetic to the situations faced by teenagers under 16, and her work on that. She is right to point out the evidence of Councillor Simon Blackburn. He is an experienced councillor and also, in a previous life, was an experienced social worker. He contributes on behalf of the Local Government Association in all sorts of forums on which he and I sit—not just on domestic abuse, but on other areas of vulnerability.
I appreciate that it sounds rather lawyerly to focus on the age range, but we are careful not to tamper inadvertently, albeit with good intentions, with the strong safeguarding mechanisms in the Children Act. That is why we are not able to accept the amendment to the guidance, given that the guidance is based on the definition in clauses 1 and 2. However, other forms of information are available and as of September relationships education will be introduced for all primary pupils, and relationships and sex education will be introduced for all secondary school pupils. That education, particularly for primary schools, will cover the characteristics of healthy relationships, and will help children to model the behaviours with knowledge and understanding, and cover what healthy relationships look like. Of course, as children grow up and mature, the education will grow and develop alongside them, to help them as they are setting out on those new relationships.
In addition, the important inter-agency safeguarding and welfare document produced by the Department for Education called “Working together to safeguard children” sets out what professionals and organisations need to do to safeguard children, including those who may be vulnerable to abuse or exploitation from outside their families. It sets out various scenarios, including whether wider environmental factors are present in a child’s life and are a threat to their safety and/or welfare.
Finally, of course, the courts and other agencies should also take into account relevant youth justice guidelines when responding to cases of teenage relationship abuse, avoiding the unnecessary criminalisation of young people, and helping to identify appropriate interventions to address behaviours that might constitute or lead to abuse. As I have said, I appreciate the intentions underlying the amendment, but I return to the point that the age limit was on careful reflection set at 16 in the definition, and so the statutory guidance must flow from that.
Christine Jardine
Having heard the Minister’s comments, I beg to ask leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Christine Jardine
I beg to move amendment 84, in clause 66, page 49, line 42, at end insert—
‘(2A) The Secretary of State must issue guidance under this section which takes account of evidence about the relationship between domestic abuse and offences involving hostility based on sex.
(2B) In preparing guidance under subsection (2A) the Secretary of State must require the chief officer of police of any police force to provide information relating to—
(a) the number of relevant crimes reported to the police force; and
(b) the number of relevant crimes reported to the police force which, in the opinion of the chief officer of police, have also involved domestic abuse.
(2C) In this section—
“chief officer of police” and “police force” have the same meaning as in section 64 of this Act;
“domestic abuse” has the same meaning as in section 1 of this Act;
“relevant crime” means a reported crime in which—
(a) the victim or any other person perceived the alleged offender, at the time of or immediately before or after the offence, to demonstrate hostility or prejudice based on sex,
(b) the victim or any other person perceived the crime to be motivated (wholly or partly) by hostility or prejudice towards persons who are of a particular sex, or
(c) the victim or any other person perceived the crime to follow a course of conduct pursued by the alleged offender towards the victim that was motivated by hostility based on sex;
“sex” has the same meaning as in section 11 of the Equality Act 2010.’
This is another cross-party amendment. Misogyny is the soil in which violence against women and girls grows. That was said by Sophie Maskell of the Nottingham women’s centre, but it is a sentiment that sums up much of what the Bill is about. The amendment is an attempt to attack the problem at its root. It would do two things. First, by requiring all police forces to record misogyny as a hate crime it would allow us to assess how it influences domestic abuse and begin to understand the nature of violence against women and girls. That way, we might begin to overcome it, not pick up the pieces. Protecting survivors, making sure support systems are in place and constantly looking for improvements are all important, but understanding the roots of the problem and attacking it there is crucial. If we understand the nature and motivations of violence against women and girls, we can begin to prevent it in the first place.
This approach is already proving successful in Nottinghamshire, and has the support of many women’s charities including Refuge, Women’s Aid, Plan International, Southall Black Sisters, Citizens UK, Tell MAMA, Hope not Hate, the Jo Cox Foundation and more. The Law Commission is about to launch a consultation on the issue, but that is no reason not to start to record data, monitor incidents and get a full picture of where and how violence against women happens, so we can influence its prosecution and understand the role misogyny plays in it.
Liz Saville Roberts
Given that this is a landmark piece of legislation, I am sure that many Members present share my concern about the fact that we are failing to ratify the Istanbul convention with it. Surely we should be taking the chance to do so through this amendment, as well as a measure we will be discussing tomorrow.
Christine Jardine
I thank the right hon. Lady, and absolutely agree. We have a number of opportunities in this Committee to ratify the convention through this Bill. It is an international women’s rights treaty that this country signed, yet it is one of a handful of countries that still has not taken the steps the convention demands. Recognising misogyny as a hate crime would go some way towards achieving the goals of the treaty.
I will step back for a minute to explain why we should record misogyny as a hate crime, and what exactly I mean by a hate crime. Hate crime is defined as criminal behaviour where the perpetrator is motivated by hostility, or demonstrates hostility, towards a protected characteristic of the victim. Intimidation, verbal abuse, intimidating threats, harassment, assault, bullying and damaging property are all covered. Hate crime law is rooted in a need to protect people who are targeted because of their identity, and is defined as
“Any criminal offence which is perceived by the victim or any other person, to be motivated by hostility or prejudice, based on”
a protected characteristic. Currently, those characteristics are defined as disability, transgender status, race, religion and sexual orientation under the relevant sections of the Crime and Disorder Act 1998 and the Criminal Justice Act 2003, and allow prosecutors to apply for an uplift in sentencing.
Where does misogyny fit into that and affect it? Women and girls from a black, Asian and minority ethnic background often experience hate crimes based on multiple characteristics, and if we do not take misogyny into account, we do not truly get an intersectional understanding of the crime. Sex was the motivation for more than half of the hate crimes women reported last year; age was the second most common, followed by race. Some women may be victims of a hate crime because of their ethnicity or religion, and also because they are women. Some 42% of BAME women aged 14 to 21 reported unwanted sexual attention at least once a month. Many women and girls with intellectual disabilities are also disproportionately subjected to street harassment and sexually based violence, for the dual reason that they are disabled and that they are women. Our laws have to protect them equally, and they cannot do so effectively while misogyny is a blind spot.
I have a personal theory. I suspect that all the women in this room are like me, and have always rejected the idea that they are not equal. That is how we come to be here: we do not accept the premise that we are not equal. I grew up in a household with three daughters, and had no reason to believe that we were not equal to anyone else. I have often had the opposite problem, actually. My confidence was taken for aggression that was not appropriate in a woman, because women are not aggressive, apparently. I remember once when the BBC was tackling sexual harassment problems among staff, it launched an assertiveness programme for women. I asked my boss if I could do this assertiveness programme. I could not understand why my colleagues all laughed when I came out. They asked, “How did it go?” I told them that when I asked, “Gordon, is it alright if I do this assertiveness programme?”, he said, “I wouldn’t dare say no.”
Many of us cannot understand how women come to be the victims of misogyny unless it actually happens to us. Although we might think that we are equal, we have all witnessed misogyny everywhere and been the victim of it. We might cope with it, but we have been the victim of it. Harassment and abusive behaviour are often linked to misogyny, which comes from deep-rooted contempt for women and the understanding that we should behave in a certain way, and the belief that if we do not do so, it is acceptable to slap us or abuse us.
I am sure we do not need a reminder, but if we did, Friday’s front page of a national tabloid newspaper reminded us all quite firmly: contempt for women, an in-built hatred, misogyny that says it is okay to slap us, bully us or harass us in the street because we are women.
Julie Marson (Hertford and Stortford) (Con)
Misogyny is obviously appalling. A lot of us have experienced it. Does she agree that a consultation is really important, because it is a really complex area? Some of my experience and some research into abusive men has shown that a lot of them have borderline anti-social personality traits. They certainly have hostility, but a lot of it comes from things like lack of problem-solving skills, childhood abuse and personality traits, which need to be factored in.
Christine Jardine
I agree that consultation is necessary, but I see that as making the point. Consultation is necessary and we need the data to be able to figure out how much of it is due to borderline personality problems and social background, and how much of it is misogyny. We can only do that by having the police gather the data.
Where misogyny has been identified as a hate crime by police forces, it has helped the way that they address the causes and consequences of violence against women and girls. The proposal in this amendment is not theoretical. Police forces around the country are already doing this, showing the positive impact it can have. In 2016, Nottinghamshire police were the first. Their proposals have gone some way to allowing the Nottinghamshire authorities to see exactly where there are problems and how to deal with them. For four years, women and girls there have been able to report crimes that they regard as hate crimes and misogynistic.
This amendment has, as I said, wide support from women’s groups. Let us not wait for the Law Commission before we start working on it. If misogyny is the soil in which domestic abuse flourishes, we have the opportunity with this Bill to root it out, not just to pick up the pieces. We have to support victims and survivors, and we have to encourage perpetrators away from the crime. But if we can identify the different causes of abuse, we can tackle the cause and begin to reduce and eliminate domestic abuse.
Victoria Atkins
The Government are clear that all hate crime is completely unacceptable and has no place in British society. That is why we have tasked the Law Commission to review current hate crime legislation. By way of background, I should say that the Law Commission was asked to review both the adequacy and parity of protection offered by the law relating to hate crime and to make recommendations for its reform.
The review began in March last year, since when the Law Commission has tried to meet as many people as possible who have an interest in this area of law; it has organised events across England and Wales to gather views. Specifically, the Law Commission has been tasked with considering the current range of offences and aggravating factors in sentencing, and with making recommendations on the most appropriate models to ensure that the criminal law provides consistent and effective protection from conduct motivated by hatred towards protected groups or characteristics. The review will also take account of the existing range of protected characteristics, identify any gaps in the scope of the protection currently offered under the law, and make recommendations to promote a consistent approach.
The Law Commission aims to publish its consultation, as the hon. Lady said, as soon as it can, and I again encourage all hon. Members to respond to it. Given that this work by the Law Commission is under way, we do not believe that the time is right for specific guidance to be issued on this matter. Our preference is to await the outcome of the Law Commission’s review before deciding what reforms or other measures, including guidance, are necessary. However, I point out that in clause 66(3) we do put the gendered nature of this crime in the Bill. It states:
“Any guidance issued under this section must, so far as relevant, take account of the fact that the majority of victims of domestic abuse in England and Wales are female.”
And of course the guidance itself will reflect that.
The hon. Lady raised the Istanbul convention. We are making good progress on our path towards ratification. We publish an annual report on progress, with the last one published in October 2019. Provisions in the Bill and other legislation before the Northern Ireland Assembly will ensure that UK law is compliant with the requirements of the convention in relation to extraterritorial jurisdiction and psychological violence, so we are on our way. I very much hope that on that basis the hon. Lady will feel able to withdraw her amendment.
Christine Jardine
Following the Minister’s comments, there is just one reservation remaining. If misogyny is a hate crime, we can gather the data. Does the Minister accept or appreciate that perhaps we could start doing that before the Law Commission has reported?
Victoria Atkins
The Law Commission, in all its reviews, is incredibly thorough and of course independent. How long it takes is, I have to say as a Minister, sometimes a little bit frustrating, but that is because it is so thorough, so I cannot criticise the commission for that. I would prefer the commission to do its work so that we have a consistent body of evidence that I hope will enable the Government to draw conclusions as to the adequacy of the existing arrangements, and take steps from there.
Liz Saville Roberts
I wonder by which instrument the hon. Member for Edinburgh West and I might seek to ask the Government whether they will be implementing any recommendations from the Law Commission.
Victoria Atkins
I confess that I had not given thought to that particular detail. Far be it from me to suggest to ingenious Back Benchers how they can hold the Government to account. As I have said, we have the Law Commission review under way, and when the commission has reported, we will, of course, in due course publish our response to that review.
Christine Jardine
Having heard the Minister’s comments, I am happy to beg to ask leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Clause 66, as amended, ordered to stand part of the Bill.
Clause 67
Power of Secretary of State to make consequential amendments
Amendment made: 41, in clause 67, page 50, line 27, after “64” insert “, (Homelessness: victims of domestic abuse)”.—(Victoria Atkins.)
This amendment is consequential on amendment NC16.
Clause 67, as amended, ordered to stand part of the Bill.
Victoria Atkins
Understandably, questions have been asked about the territorial extent of the Bill, so I think it right to explain it. This is a standard clause setting out the territorial extent of the provisions in the Bill, the majority of which apply to England and Wales, or to England only. Following discussions with the Scottish Government and the Northern Ireland Department of Justice, the Bill also includes some limited provisions that apply to Scotland and Northern Ireland.
Part 6 of the Bill extends the extraterritorial reach of the criminal courts in each of England and Wales, Scotland and Northern Ireland, to cover further violent and sexual offences. The provisions are a necessary precursor to enable the United Kingdom as a whole to ratify the Istanbul convention, as they will ensure that the law in each part of the UK meets the requirements of article 44.
Question put and agreed to.
Clause 71, as amended, accordingly ordered to stand part of the Bill.
Clause 72 ordered to stand part of the Bill.
Clause 73
Short title
Question proposed, That the clause stand part of the Bill.
Victoria Atkins
I would like to speak to this, as I have a sense of mischief today. The clause provides for the short title of the Bill.
Question put and agreed to.
Clause 73 accordingly ordered to stand part of the Bill.
New Clause 15
Consequential amendments of the Sentencing Code
‘(1) The Sentencing Code is amended as follows.
(2) In section 80 (order for conditional discharge), in subsection (3), at the end insert—
“(f) section36(6) (breach of domestic abuse protection order).”
(3) In Chapter 6 of Part 11 (other behaviour orders), before section 379 (but after the heading “Other orders”) insert—
“378A Domestic abuse protection orders
(none) See Part 3 of the Domestic Abuse Act 2020 (and in particular section 28(3) of that Act) for the power of a court to make a domestic abuse protection order when dealing with an offender for an offence.”” .—(Alex Chalk.)
This New Clause makes two consequential amendments to the Sentencing Code as a result of Part 3 of the Bill. The first adds a reference to clause 36(6) to the list of cases where an order for conditional discharge is not available. The second inserts a signpost to Part 3 of the Bill into Part 11 of the Sentencing Code, which deals with behaviour orders.
Brought up, read the First and Second time, and added to the Bill.
New Clause 16
Homelessness: victims of domestic abuse
‘(1) Part 7 of the Housing Act 1996 (homelessness: England) is amended as follows.
(2) In section 177 (whether it is reasonable to continue to occupy accommodation)—
(a) in subsection (1), for “domestic violence or other violence” substitute “violence or domestic abuse”;
(b) for subsection (1A) substitute—
“(1A) For this purpose—
(a) “domestic abuse” has the meaning given by section 1 of the Domestic Abuse Act 2020;
(b) “violence” means—
(i) violence from another person; or
(ii) threats of violence from another person which are likely to be carried out.”
(3) Omit section 178 (meaning of associated person).
(4) In section 179 (duty of local housing authority in England to provide advisory services), in subsection (5)—
(a) for the definition of “domestic abuse” substitute—
““domestic abuse” has the meaning given by section 1 of the Domestic Abuse Act 2020;”;
(b) omit the definition of “financial abuse”.
(5) In section 189 (priority need for accommodation)—
(a) in subsection (1), after paragraph (d) insert—
“(e) a person who is homeless as a result of that person being a victim of domestic abuse.”;
(b) after subsection (4) insert—
“(5) In this section “domestic abuse” has the meaning given by section 1 of the Domestic Abuse Act 2020.”
(6) In section 198 (referral of case to another local housing authority)—
(a) in subsection (2), in paragraph (c), for “domestic violence” substitute “domestic abuse”;
(b) in subsection (2ZA), in paragraph (b), for “domestic violence” substitute “domestic abuse”;
(c) in subsection (2A), in paragraph (a), for “domestic violence” substitute “violence that is domestic abuse”;
(d) for subsection (3) substitute—
“(3) For the purposes of subsections (2), (2ZA) and (2A)—
(a) “domestic abuse” has the meaning given by section 1 of the Domestic Abuse Act 2020;
(b) “violence” means—
(i) violence from another person; or
(ii) threats of violence from another person which are likely to be carried out.”
(7) In section 218 (index of defined expressions: Part 7), in the table, omit the entry relating to section 178.
(8) In article 6 of the Homelessness (Priority Need for Accommodation) (England) Order 2002 (S.I. 2002/2051) (vulnerability: fleeing violence or threats of violence)—
(a) the existing text becomes paragraph (1);
(b) after that paragraph insert—
“(2) For the purposes of this article—
(a) “violence” does not include violence that is domestic abuse;
(b) “domestic abuse” has the meaning given by section 1 of the Domestic Abuse Act 2020.”
(9) In consequence of the repeal made by subsection (3), omit the following provisions—
(a) in Schedule 8 to the Civil Partnership Act 2004, paragraph 61;
(b) in Schedule 3 to the Adoption and Children Act 2002, paragraphs 89 to 92.” .—(Victoria Atkins.)
This New Clause makes two key changes to Part 7 of the Housing Act 1996 in relation to homelessness in England. First, it amends section 189 to give homeless victims of domestic abuse priority need for accommodation. Second, it amends Part 7 to change references to “domestic violence” to references to “domestic abuse” within the meaning of clause 1 of the Bill.
Brought up, read the First and Second time, and added to the Bill.
New Clause 4
No defence for consent to death
‘(1) If a person (“A”) wounds, assaults or asphyxiates another person (“B”) to whom they are personally connected as defined in section 2 of this Act causing death, it is not a defence to a prosecution that B consented to the infliction of injury.
(2) Subsection (1) applies whether or not the death occurred in the course of a sadomasochistic encounter.”—(Jess Phillips.)
This new clause would prevent consent of the victim from being used as a defence to a prosecution in domestic homicides.
Brought up, and read the First time.
The Chair
With this it will be convenient to discuss the following:
New clause 5—No defence for consent to injury—
‘(1) If a person (“A”) wounds, assaults or asphyxiates another person (“B”) to whom they are personally connected as defined in section 2 of this Act causing actual bodily harm or more serious injury, it is not a defence to a prosecution that B consented to the infliction of injury or asphyxiation.
(2) Subsection (1) applies whether or not the actual bodily harm, non-fatal strangulation, or more serious injury occurred in the course of a sadomasochistic encounter.”
This new clause would prevent consent of the victim from being used as a defence to a prosecution in cases of domestic abuse which result in serious injury.
New clause 6—Consent of Director of Public Prosecutions—
In any homicide case in which all or any of the injuries involved in the death, whether or not they are the proximate cause of it, were inflicted in the course of domestic abuse, the Crown Prosecution Service may not without the consent of the Director of Public Prosecutions, in respect of the death—
(a) charge a person with manslaughter or any other offence less than the charge of murder, or
(b) accept a plea of guilty to manslaughter or any other lesser offence.”
This new clause would require the consent of the Director of Public Prosecutions if, in any homicide case in which any of the injuries were inflicted in the course of domestic abuse, the charge (or the plea to be accepted) is of anything less than murder.
New clause 7—Director of Public Prosecutions consultation with victim’s family in domestic homicides—
‘(1) Before deciding whether or not to give consent to charging a person with manslaughter or any other offence less than the charge of murder in an offence of homicide in which domestic abuse was involved, the Director of Public Prosecutions must consult the immediate family of the deceased.
(2) The Lord Chancellor must make arrangements, including the provision of a grant, to enable the immediate family to access legal advice prior to being consulted by the Director of Public Prosecutions under sub-section (1).”
This new clause would require the Director of Public Prosecutions to consult the immediate family of the victim before charging less than murder in a domestic homicide and provide the family with legal advice so they can understand the legal background.
New clause 10—Prohibition of reference to sexual history of the deceased in domestic homicide trials—
If at a trial a person is charged with an offence of homicide in which domestic abuse was involved, then—
(a) no evidence may be adduced, and
(b) no question may be asked in cross-examination, by or on behalf of any accused at the trial,
about any sexual behaviour of the deceased.”
This new clause will prevent the victim’s previous sexual history being used as evidence to prove consent to violence in a domestic homicide case. This draws on the legislative measures in the Youth Justice and Criminal Evidence Act 1999 to prevent rape defendants raking up or inventing complainants’ previous sexual history.
New clause 11—Anonymity for victims in domestic homicides—
‘(1) Where a person (“A”) has been accused of a domestic homicide offence and where the person (“B”) against whom the offence is alleged to have been committed has died in the course of sexual activity, no matter likely to lead members of the public to identify a person as B shall be included in any publication.
(2) The matters relating to a person in relation to which the restrictions imposed by subsection (1) applies (if their inclusion in any publication is likely to have the result mentioned in that subsection) include in particular—
(a) the person’s name,
(b) the person’s address,
(c) the identity of any school or other educational establishment attended by the person,
(d) the identity of any place of work,
(e) any still or moving picture of the person.
(3) If, at the commencement of the trial, any of the matters in subsection (2) have already appeared in any publication, the judge at the trial may direct that no further reference to any of these matters may be included in any publication.
(4) If any matter is included in a publication in contravention of this section, the following persons shall be guilty of an offence and liable on summary conviction to a fine not exceeding level 5 on the standard scale—
(a) where the publication is a newspaper or periodical, any proprietor, any editor and any publisher of the newspaper or periodical;
(b) where the publication is a relevant programme—
(i) anybody corporate engaged in providing the programme service in which the programme is included; and
(ii) any person having functions in relation to the programme corresponding to those of an editor of a newspaper;
(c) in the case of any other publication, any person publishing it.
(5) For the purposes of this section— “domestic homicide offence” means an offence of murder or manslaughter which has involved domestic abuse; a “publication” includes any speech, writing, relevant programme, social media posting or other communication in whatever form, which is addressed to the public at large or any section of the public (and for this purpose every relevant programme shall be taken to be so addressed), but does not include an indictment or other document prepared for use in particular legal proceedings.”
This new clause will provide the victim of a domestic homicide with public anonymity.
New clause 14—Anonymity of domestic abuse survivors in criminal proceedings—
‘(1) Where an allegation has been made that a relevant offence has been committed against a person, no matter relating to that person shall during that person’s lifetime be included in any publication if it is likely to lead members of the public to identify that person as the survivor.
(2) Where a person is accused of a relevant offence, no matter likely to lead members of the public to identify the person against whom the offence is alleged to have been committed as the survivor shall during the survivor’s lifetime be included in any publication.
(3) This section does not apply in relation to a person by virtue of subsection (1) at any time after a person has been accused of the offence.
(4) The matters relating to a survivor in relation to which the restrictions imposed by subsection (1) or (2) apply (if their inclusion in any publication is likely to have the result mentioned in that subsection) include—
(a) the survivor’s name;
(b) the survivor’s address;
(c) the identity of any school or other educational establishment the survivor attended;
(d) the identity of any place where the survivor worked;
(e) any still or moving pictures of the survivor; and
(f) any other matter that might lead to the identification of the survivor.
(5) At the commencement of a trial at which a person is charged with a relevant offence, the judge may issue a direction for lifting the restrictions only following an application by or on behalf of the survivor.
(6) Any matter that is included in a publication in contravention of this section must be deleted from that publication and no further reference to the matter may be made in any publication.
(7) If any matter is included in a publication in contravention of this section, the following persons shall be guilty of an offence and liable on summary conviction to a fine not exceeding level 5 on the standard scale—where the publication is a newspaper or periodical, any proprietor, any editor and any publisher of the newspaper or periodical;
(a) where the publication is a newspaper or periodical, any proprietor, any editor and any publisher of the newspaper or periodical;
(b) where the publication is a relevant programme—
(i) any body corporate or Scottish partnership engaged in providing the programme service in which the programme is included; and
(ii) any person having functions in relation to the programme corresponding to those of an editor of a newspaper;
(c) in the case of any other publication, any person publishing it.
(8) For the purposes of the section—
“publication” means any material published online or in physical form as any well as any speech, writing, website, online news outlet, social media posting, relevant programme or other communication in whatever form which is addressed to the public at large or any section of the public.
a “relevant offence” means any offence where it is alleged by the survivor that the behaviour of the accused amounted to domestic abuse.
“survivor” means the person against whom the offence is alleged to have been committed.”
This new clause provides lifetime press anonymity for survivors of domestic abuse, and reflects similar protections for survivors of sexual assault enshrined in the Sexual Offences (Amendment) Act 1992. It prevents identifiable details from be published online or in print, and creates a new offence for breaching this anonymity.
Jess Phillips
I rise to speak not with my own voice, but with those of my right hon. and learned Friend the Member for Camberwell and Peckham (Ms Harman) and the hon. Member for Wyre Forest (Mark Garnier). I am better at doing one of those voices than I am the other, but I shall try to do justice to both.
The short term for this subject—given that we are debating short titles—is the “rough sex defence”. Other such terms are “Strangled to death in kinky sex romp,” “Woman shot in the vagina in a sex game gone wrong,” and, “Accused killed barmaid during kinky sex session.” Over the last few years, any one of us might have seen this type of headline. They are salacious, tacky and often used as clickbait. We all know that sex sells, but these headlines trivialise what is actually occurring. Women are being murdered and the men who killed them are exploiting a loophole in the law. The “rough sex defence”, as it has become known, is when a woman is killed in what the perpetrator defends as consensual violence. That means that, if your partner left you with 40 separate injuries, dreadful blunt force injuries to your head, a fractured eye socket and vaginal arterial bleeding, but explained that you had consented to such acts and that your death was simply a sex game gone wrong, there is a good chance that your murderer will end up with a lesser charge or a lighter sentence, or your death may not even be investigated.
The horrific injuries I just described were inflicted on Natalie Connolly. Her killer, John Broadhurst, left her to die at the bottom of the stairs, in a pool of her blood. She died of internal bleeding from 40 injuries that he inflicted on her body. He claimed that she insisted on rough sex, so it was her fault, not his. His lurid descriptions of what she insisted he do to her were unchallengeable. Not only did Mr Broadhurst kill Natalie, but he was able to entirely shape the narrative around her death, as she was not there to speak for herself.
That is why I support new clauses 10, 11 and 14. Currently, if a man assaults a woman during sex but falls short of killing her, she is in a much stronger position. She can tell the court that she did not consent, and the law gives her anonymity as a victim of a sex offence. The law bans him from using her previous sexual history in evidence of his defence, although that does not always work. But if he goes the whole way and kills her, she cannot give evidence, she has no anonymity, and his version of her previous sexual history is splashed all over the papers and compounds the grief of her relatives. This is a double injustice: not only does the man kill her, but he drags her name through the mud.
I cannot imagine the hurt and trauma of families who have already lost a daughter, sister, aunt or mother to have to hear the man who killed her describing luridly what he alleges about her sexual proclivities. Of course, she is not there to speak for herself; he kills her and then he defines her. We cannot allow that to continue to happen. We have the opportunity here to make these amendments, so that no victim is posthumously defined by their murderer.
Natalie’s case rightly caused widespread outrage, as her killer escaped a murder charge and was convicted only of manslaughter. He was sentenced to just three and a half years. We cannot have violence against woman and girls continually undercharged. Three and a half years! It is unfathomable.
New clause 6 would require consent from the Director of Public Prosecutions to charge anything less than murder in a domestic homicide. The rough sex defence has proved to be a powerful argument in court and has led to prosecutors backing down from a murder charge in favour of manslaughter, believing that they will stand a better chance of securing a conviction. New clause 7 would require the Director of Public Prosecutions to consult the immediate family of the deceased before deciding whether to give such consent and to provide them with adequate legal advice so that they can understand the legal background. Natalie’s grieving family said that they were not adequately supported in understanding why the charge was being dropped from murder to manslaughter, and what that would mean for the sentence.
We Can’t Consent To This found 67 recent cases of people in the UK who were killed during so-called sex games gone wrong; 60 of them were female. Following the deaths of those 60 women and girls there were 37 murder convictions, but in three of those cases, the deaths were treated as non-suspicious results of sex games until other evidence emerged—respectively, a confession to a friend, dismemberment of two other women, and a further review by a pathologist. They were not investigated as murder or even violent acts until, in one of those instances, the perpetrator had dismembered two other women. Seventeen cases resulted in manslaughter charges, with sentences of three years and upwards; five were subject to no charge, or found not guilty; and one case has yet to come to trial. In nearly half the cases, a murder conviction was not secured.
In the past five years, 18 women and girls have been killed in claimed consensual violent sexual activity. In 10 cases, the man was convicted of their murder; in six cases, the conviction was for manslaughter, and in one, there was no conviction. In one further case, there was a murder conviction only when the victim’s husband confessed to the crime; police had treated her violent death as non-suspicious. One woman’s death has yet to come to court. No one can consent to his or her own death, and it is time this defence was made no longer available.
Fay Jones (Brecon and Radnorshire) (Con)
The hon. Lady is making an extremely powerful speech. There are far too many cases to name them all, but I wanted to pay tribute to my colleague and hon. Friend the Member for Newbury (Laura Farris), who spoke so movingly about this issue on Second Reading when she mentioned the cases of Laura Huteson and Anna Banks. I feel that both their names ought to be on the record.
Jess Phillips
I could not agree more, and thank the hon. Lady for her intervention. Any opportunity to get women’s names on the record, especially those who have died, is absolutely fine with me.
New clause 5 arises from similar considerations, stating that where serious harm has occurred during sex because of the behaviour of one person, consent does not exist. We Can’t Consent To This found 115 cases of women who had been injured in non-fatal assaults that those accused said they had consented to. Examples of the non-fatal injuries that were claimed to be due to consensual sex include: being slashed in the back with a knife; two black eyes; being strangled; being punched in the stomach; being held against a wall and slashed with a knife, causing permanent disfigurement; being electrocuted with mains electricity; and a woman being throttled with a shoelace by a man she had met for sex—in that case, the strangulation was so severe that some of her brain cells died when the blood flow was interrupted.
In one case brought to the attention of my right hon. and learned Friend the Member for Camberwell and Peckham this year by a solicitor, prosecutors declined to pursue charges against a man accused of sexual assault because of fears he would claim it was consensual sexual behaviour. In deciding not to proceed, the CPS prosecutor said in a letter to the complainant,
“A prosecution could follow in relation to this offence, but the courts have shown an interest in changing the law so that the suspect could say that you consented to these assaults. This would be difficult to disprove,”
for reasons set out earlier in the letter.
“If I prosecuted this offence it is likely to lead to lengthy legal proceedings in which the background to the case would have to be visited as far as the sexual practices that led to and accompanied the infliction of the injuries. In my opinion it is not in the public interest to pursue this charge”
in isolation.
We Can’t Consent To This, the campaign group, has found evidence of 67 cases in the past 10 years. That defence should never have been open to those defendants.
Christine Jardine
It is a world of difference, but talking about this sort of consent, I find my mind is thrown back 20 or 30 years to the original arguments about rape and consent. Does the hon. Lady share my disappointment that we have not moved on?
Jess Phillips
I absolutely share the hon. Lady’s frustrations. The truth of the matter is that we are talking about specific cases where this defence could easily be leaned on, and we are trying to shut those loopholes. There are only really three defences in a rape case. One is mistaken identity: it was not the accused, but someone completely different. Another is that it just did not happen, full stop—luckily, science has moved quicker than social science. The final one is that she or he consented. That is usually the one that is leaned on, because, unfortunately, it is much more difficult to prove than it is to rape.
Pre-existing case law, R v. Brown, makes it clear that a person cannot consent to injury or death during sex. However, in 45% of cases where a man kills a woman during sex and claims she consented to it, this defence works. We cannot let that continue.
If a man can convince police, prosecutors, coroners, a judge or even a jury that the woman was injured during a consensual act, he may see the following outcomes: he is believed; police do not investigate it as a crime or no charges are sought by prosecutors; prosecutors opt to pursue a manslaughter charge, ensuring a far shorter sentence than for a murder charge; mitigation in sentencing due to no intention to kill. Extreme sexual and sadistic violence is not treated as an aggravating factor in sentencing because it is accepted on his say so that she consented to it. All those outcomes are entirely acceptable today.
Peter Kyle
There are many aspects of the cases that my hon. Friend is outlining that are extraordinarily disturbing and painful to understand. There is another one: the impact on the victim’s family. For them to sit there, coping with the death of their loved one, and then to hear that their loved one consented to these kinds of brutalising factors must cause pain beyond comprehension. Should we not remember the victims in all of this?
Jess Phillips
Absolutely. Even just from a personal perspective, the idea of my parents having to listen to conversations about me having sex at all is a harrowing thought, but we are talking about people who have lost their loved one having to listen to such things. The point about anonymity is made in rape cases, but there is no similar level of anonymity in this instance for a bereaved mother, father, brothers and sisters having to hear about vicious abuse, while somebody takes to the stand to say that the victim wanted it and loved it.
I have seen cases that would make most people’s toes curl, but I have to say that I have been deeply affected by this case. I have become a bit of an old hand at some things, but the Connolly case is so harrowing that I cannot imagine how her family have coped with it.
The law should be clear to all: a person cannot consent to serious injury or death. But the case law is not up to the task. When a woman is dead, she cannot speak for herself. Any man charged with killing a woman, or a current or former partner, should simply say, “She wanted it.” This is why we must change the law and urge the Government to accept these amendments.
Peter Kyle
I rise to say a few words about new clause 14. It seeks to grant anonymity in the press to survivors of domestic abuse, should they request it. In recent days, the front page of one of our national newspapers covered an instance of domestic abuse in really quite grim terms. It failed to point out the consequences of it, and did not report any remorse whatsoever. That kind of most insensitive reporting still makes its way on to the front page of papers.
We know the counter-case, too. In the wake of the Leveson inquiry, we know that these issues are sensitive. We must be fully aware of the need for the press to do their job in as unencumbered a way as possible. The Independent Press Standards Organisation, the largest independent regulator of the newspaper and magazine industry in the UK, has no guidance whatever for journalists on how to report domestic abuse cases. There is only a short blog, which suggests that journalists heed to how domestic abuse charities would like cases reported locally. The industry has acknowledged the issues relating to the reporting of domestic abuse, but no action whatever has been taken.
It is clear that the Government and Parliament need to speak, and we need to guide the industry through legislation. The issue has become so pronounced because stories are published in which victims and survivors of domestic abuse are named, as well as family members and children. When these stories make their way on to websites, which is where the majority of people read news these days, victims have no anonymity. Underneath the story, there is a plethora of people discussing and naming people, saying, “I heard this”, or “I heard that she was that”; the irony is that they are all anonymous. They are benefiting from an anonymity that the victims do not have. These issues are cast in a new light in the modern era, whereas regulations are distinctly old-fashioned.
Journalists are struggling on how to deal with the issue. I recognise that, and have spoken to many of them. It is not wholly the responsibility of the press, because when it comes to other crimes and their survivors, it is set out in law how journalists are to respond. The keystone piece of legislation providing anonymity is the Sexual Offences (Amendment) Act 1992, which gives survivors of sexual assault the right to press anonymity, and lays out the circumstances in which that right can be waived.
The Government have already shown support for the spirit of the new clause in legislation for survivors of other crimes such as the Serious Crimes Act 2015, which grants anonymity to and protection for alleged victims of female genital mutilation. In section 2 of the Modern Slavery Act 2015, victims of any human trafficking offence are granted anonymity. The Government are willing to grant anonymity to certain types of people, and it is striking that a person has the right to anonymity if they are the victim of sexual violence, but not if that sexual violence occurs within a relationship and in a home. These proceedings cast that anonymity in a new light. The new clause would provide similar restrictions on how the press could report on survivors of domestic abuse, so that it would not be left to individual publications to make that decision. In today’s hyper-competitive media world, where there are shrinking readerships and a move to online news, the issue is more important than ever.
The domestic abuse charity RISE in my constituency has been vocal about the need for this change. It reports that if the survivors they care for are named in the press, they are less likely to report domestic abuse in the first place. One service user provided testimony about the impact on their life of being named in the press:
“My daughter had to be informed by the school after the article named me as all the parents at school were aware, as well as the children because it was all over social media. It made me feel that I was still being controlled, I felt vulnerable and exposed. I feel so much hurt for my little girl, she didn’t need to know, the impact on her is huge, she is hypervigilant and gets very scared on the bus if someone is on their phone as she believes they are filming her. I never want another child to go through what my child went through.”
Another said:
“None of my family knew, neither did my employer. I felt a lot of shame and then seeing my name in the article and the awful comments made below the article were dreadful, there was racial abuse online. I felt sad, ashamed, embarrassed and violated. Something that took a lot of courage for me to report and everyone got to know about it. Even now I find myself googling my name for fear of it popping up again. There is an added layer of shame when I already had enough to process with regard to being abused.”
The Government have shown, through the development and scrutiny of the Bill, that they want it to stand the test of time. I believe that, as we move forward, the press becomes more competitive; there are more online opportunities to name and discuss people, and to tread over the line—particularly when someone in the public eye is subject to domestic abuse and the opportunity for media to make money from using that name becomes overwhelming. Some journalists might feel some shame about it, but for some it might be a choice between making money or income, and protecting a victim. I do not think that individual journalists should be put in that position.
We have an opportunity now to equalise the law and extend the protection of the anonymity given in cases of violent sexual crimes that occur outside the home, so that it is also given when crimes occur inside the home.
Alex Davies-Jones
Diolch, Ms Buck. I will be brief. I do not want to repeat the powerful words of my hon. Friend the Member for Birmingham, Yardley, but it is important to make the point that previous sexual behaviour is not, and should never be, taken as evidence of consent to a particular encounter. Neither should experience of or interest in any particular act be used to suggest that it is possible for someone to consent to their own murder, as has been the case in the past.
My hon. Friend the Member for Hove said that the media are complicit in sexualising and sensationalising horrific acts of violence and causing huge further trauma to the families of victims. Those victims—mainly women—and their families need anonymity.
A BBC study in 2019 found that more than a third of UK women under the age of 40 had experienced unwanted slapping, choking or gagging during consensual sex. Of the women who experienced those acts, 20% said they had been left upset or frightened. It is vital that women’s voices should no longer be silenced.
The Parliamentary Under-Secretary of State for Justice (Alex Chalk)
It is once again a pleasure to serve under your chairmanship, Ms Buck. I thank colleagues for those helpful and powerful contributions. I want to begin my remarks by echoing a point that was made: we should not be shy in this place about making observations that are sometimes uncomfortable.
It seems to me a fact that there is a worrying and increasing normalisation of acts that are not just degrading but dangerous. Because we live in a liberal, open, tolerant society we of course do not want to step into the bedroom. We do not want to intrude into people’s private affairs, but when what they do leads to someone’s death we should not have any compunction about taking the steps necessary, first to ensure that people are safe, secondly to ensure that justice is done, and thirdly to send a message: if someone wants to behave in that way, when the consequences come to pass, on their head be it.
I am grateful to the Opposition Front-Bench spokespersons for making the case for the new clauses. Before addressing those in detail, I pay tribute, as others have, to my hon. Friend the Member for Wyre Forest, who is the constituency MP of Natalie Connolly and her family, and to the right hon. and learned Member for Camberwell and Peckham. They have run a formidable campaign and have engaged closely and constructively with the Government. I pay tribute to them for that.
Peter Kyle
The Minister is making a good point. As he knows, the opportunity to amend legislation does not come up often, and we often do not get the chance to amend the perfect piece of legislation. Using all his wit, experience and erudition, he is able to find the failings in the new clause, but a principle is at stake. If he is saying that this is not the ideal piece of legislation or method to achieve those aims, will he spend a bit of time telling us what is, whether he will back it and whether he will make it happen swiftly?
Alex Chalk
I invite the hon. Gentleman to listen carefully to what I say in due course, and I hope that he will not be unhappy—
Alex Chalk
Disappointed—thank you. Do you want to make the speech?
The concern with the new clauses, among other things, is that they do not necessarily replicate the dictum in Brown. To those who are not familiar with this, a case more than 20 years ago, Crown v. Brown, laid down some case law—a point adverted to by the hon. Member for Birmingham, Yardley—that we recognise needs to be clarified. The point that I will develop in due course, which I think will find favour with the hon. Member for Hove, is that that is precisely what we intend to do. The concern is that these new clauses, for the reasons I have indicated—I will not go into any detail on new clause 5, because it is a similar point that I would seek to make—limit the application of the principles in Brown to offences that occur in a domestic abuse situation. I heard the hon. Member for Birmingham, Yardley say sotto voce, “Isn’t a Tinder date an intimate personal relationship?”. The reality is—I speak as someone who has defended as well as prosecuted—that the job of a defence advocate is to find whatever wiggle room there is in the law. Our job here is to close that down.
As I have indicated, the prosecution would have to show also that this activity was either not consensual, or was consensual and also amounted to domestic abuse. Again, defence counsel will be seeking to ask, “Is this really domestic abuse in circumstances where it is consensual?”. You can immediately see the arguments that would be made in court. The key is for us to close that down and give practitioners—but, more importantly, people—absolute clarity about what is and what is not acceptable. As I said at the outset, we need to ensure that any change made is clear, and does not inadvertently create loopholes or uncertainties in the law.
I invite the hon. Member for Hove to accept that despite the difficulties, we have been anxiously and actively considering for some considerable time how we can best ensure greater clarity in the law. We aim to set out the Government’s approach in time for Report.
Peter Kyle
On behalf of the Opposition Front Bench, I thank the Minister for his comments and the considered way he made them. We particularly thank him for the timeframe he outlined. Making a statement before Report is incredibly important; we need to move swiftly. The Minister knows better than anyone that if the same thing happened to one other person in the coming weeks, it would be an absolute travesty, so we need to make sure that these loopholes are dealt with quickly.
Alex Chalk
I hear what the hon. Gentleman has said, and I leave it where it stands. I understand and I agree. I turn to new clauses 6 and 7. Those who have argued passionately in respect of the so-called rough sex defence will acknowledge that perhaps this point is contingent on that. There are also real practical difficulties with new clauses 6 and 7. Let me develop them briefly.
New clause 6 requires the personal consent of the personal Director of Public Prosecutions where a charge or plea less than murder, for example manslaughter, is applied or accepted in cases of domestic homicide. That sounds unobjectionable. It would be perfectly sensible if the DPP was readily able or had the capacity to give that kind of personal consent. However, there are practical problems with it. Let me set out the context. A statutory requirement of this nature is, and should be, extremely rare. It should only be imposed where a prosecution touches on sensitive issues of public policy, not simply sensitive issues, which are legion in the criminal justice system. The only recent example of this consent function applies to offences under the Bribery Act 2010, and last year, a Select Committee undertaking post-legislative review of the 2010 Act recommended that the requirement for personal DPP consent be reconsidered.
We have to acknowledge that the Crown Prosecution Service handles a high volume of serious and complex casework nationwide, and it is important that prosecutors have the confidence to take their own legal decisions. Introducing requirements for personal DPP consent could serve to undermine or frustrate this approach. It would also, I am bound to say, potentially sit uneasily alongside other very difficult decisions that prosecutors have to make. Suppose, for example, in the context of a terrorist prosecution, that because of the way the evidence emerged, or because of new lines of enquiry, a decision was made to take the defendant off the indictment in respect of a bomb plot, but the prosecution said, “We are going to continue to prosecute him in respect of possession of materials that might be of assistance to a person planning an act of terrorism.” These are immensely difficult and sensitive decisions. However, there is neither the capacity nor the wherewithal for the DPP to make those personal decisions all the time.
It is sad to note that there is a high volume of cases involving domestic homicide, as the hon. Member for Birmingham, Yardley well understands. It means that charging decisions need to be made urgently, and sometimes at a speed, where no personal DPP involvement is possible.
These considerations apply equally to cases in which a lesser plea may be accepted. If pleas are offered in court, prosecutors are required to make a decision in an incredibly short period of time after speaking with the victim’s family, and the DPP could not be involved in that level of decision making. I invite the Committee to consider the circumstances, supposing it is in court: because of the way that the evidence has come out, there is the consideration of whether a lesser plea should be accepted. The hon. Lady pointed out that this does not always happen, but if the family have been properly consulted, it is no kindness to that family to say, ‘Do you know what? We’re not going to make a decision on this, which would let you begin to heal and put this behind you. We’re going to put this off for two or three weeks while the DPP has to consider it.’ Court proceedings will be suspended awkwardly, and the poor family will be left hanging.
Forgive me for stating the obvious, but it bears emphasising that the real remedy is for good prosecutors––the overwhelming majority are good and do their duty with diligence, conspicuous ability and conscientiousness– –to liaise with the family in a compassionate and inclusive way. I understand the desire for additional scrutiny in such significant and sensitive cases, but I assure the Committee that the Crown Prosecution Service already has systems in place to check and challenge decision making in these circumstances. Internal CPS policies require that chief crown prosecutors are notified of any and all homicide cases. It is likely as well that domestic homicides would be subject to a case management panel with a lead lawyer and either the deputy chief crown prosecutor or the chief crown prosecutor, so there is senior oversight.
The point that I really want to underscore is that because cases of domestic homicide inevitably have a lasting and dreadful impact on victims’ families, people deserve support and compassion, particularly as criminal proceedings can be upsetting and difficult to follow. Procedures are in place to ensure that is given. Where there is an allegation of murder, the police very often appoint a family liaison officer as a matter of course to assist with the process. I speak as someone who has prosecuted several murder cases. The role that liaison officers play is absolutely fantastic. Otherwise, the poor family turn up in court with no idea what an indictment is, wondering “What on earth is this examination-in-chief stuff? What is this plea and trial preparation hearing?”. The liaison officer role is invaluable, and needs to be supported by prosecutors speaking to family members, as they increasingly do.
Jess Phillips
Like the hon. Gentleman, I have been involved in a number of murder cases, and he is right that family liaison officers are worth their weight in gold. Does he think that there needs to be a more formalised link between the prosecutor and the family liaison officer—a referral pathway, or standard of practice that had to be met in each case? It could help us work towards having a less patchy approach if we had a formalised target.
Alex Chalk
There are, in fact, formal arrangements in both spheres. Family liaison officers have to operate within certain guidance, and in my experience, by and large, they do so extremely well. At the risk of stating the obvious, it comes down to the calibre, kindness and empathy of the individual. In my experience, they are very good at their job and play an invaluable role.
As for the prosecution, as little as 20 years ago, there used to be almost a benign disdain for witnesses. Prosecutors simply did not engage with them. That does not happen now; they meet witnesses and family members before the trial begins. Very often, they will speak to them at the end of the day to explain what has happened. The relationship between prosecutors and family liaison officers tends to dovetail extremely effectively. I do not think that there is a need for further guidance. The key is to ensure that both parts of the criminal justice system—the police and the prosecution—do their job. In my experience, people are increasingly extremely conscientious in that regard. That is important, because people’s sense of whether they have got justice will often depend on the conversations they have at the end of the day, when the matter has been explained to them.
Peter Kyle
I have never heard a journalist wanting the rule that prevents reporting from naming victims of sexual violence overturned. Has the Minister?
Alex Chalk
What I can say, from my experience in court, is that it is not unusual for the press to seek to overturn reporting restrictions where they are imposed at the discretion of the court, so although the hon. Gentleman may be right that in fact there is not a particular drumbeat in respect of sexual offences, I hope that the Committee will not be gulled into thinking that the press do not very often seek to overturn reporting restrictions that are imposed. The arguments that are made are, “Why should we be having secret justice?”, and so on. Those arguments are very often dispatched by the court; they are considered not to be valid, and then they are sometimes taken on appeal and so on. The only point that I am seeking to make is that we must be careful in this area and strike a balance, so that we do not find ourselves bringing the law into disrepute.
Christine Jardine
As a journalist and as someone who has taught law for journalists, I point out that although we might challenge discretionary interdicts and super-interdicts—I cannot remember what they are called in England—the principle of defending the anonymity of victims of sexual assault, sexual crimes, is never challenged in court. The only challenge is to discretionary non-identification where a public interest case can be made for that being overthrown. I find it difficult to believe that the press would actually want victims of domestic abuse named in the papers, unless there was some outlandish public interest.
Alex Chalk
The hon. Lady is absolutely right that of course it is not open to a journalist to seek to displace the reporting restrictions that have been imposed by force of statute. I was seeking to make the point, which I do not think she disagrees with, that it is not uncommon for the press to suggest that a court, in imposing reporting restrictions in an individual case, has overreached itself, gone beyond the bounds, and misapplied the balance. Sometimes, by the way, those applications are upheld at first instance or on appeal.
There is a judgment to make, and we have to recognise that there is a particular public interest, when the allegation is of sexual violence, in taking the step of exceptional interference. That justification exists in relation to sexual offences. However, we have to take great care before extending it further, not least because—of course, domestic violence and domestic abuse are incredibly serious, for all the reasons that we have expressed—women, and it is usually women, can be victims of all sorts of other offences. Then it becomes a question of how far we go—where do we draw the line? That is something that requires careful thought.
I apologise to members of the Committee for taking so long to explain the Government’s position on the new clauses. As I have sought to explain, we fully understand the anguish and hurt felt by the family of Natalie Connolly and many others, and, as lawmakers, we will and should do what we can to minimise such anguish on the part of bereaved families in the future. For the reasons that I have set out, the Government cannot support a number of the new clauses, but as I have indicated before, we expect to set out the Government’s approach in respect of the rough sex issue in time for Report. In those circumstances, I respectfully invite the hon. Member for Birmingham, Yardley to withdraw the new clause.
Jess Phillips
I will withdraw the new clause. I am very pleased to hear that there is an intention to deal with the matter on Report, and I speak entirely for the hon. Member for Wyre Forest and my right hon. and learned Friend the Member for Camberwell and Peckham in that regard. I beg to ask leave to withdraw the motion.
Clause, by leave, withdrawn.
Immigration and Social Security Co-ordination (EU Withdrawal) Bill (Fifth sitting)
Tuesday 16th June 2020
(4 years, 6 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 16 June 2020 - (16 Jun 2020)
The Committee divided: - Ayes: 8 / Noes: 5 - Question accordingly agreed to.
The Committee divided: - Ayes: 2 / Noes: 14 - Question accordingly negatived.
The Committee divided: - Ayes: 7 / Noes: 9 - Question accordingly negatived.
The Chair
Obviously, we will maintain social distancing. Like last week, the Hansard reporters would be grateful if Members sent copies of their speeches to hansardnotes @parliament.uk. We will continue line-by-line consideration of the Bill—the selection list is available in the room.
Clause 5
Power to modify retained direct EU legislation relating to social security co-ordination
Question proposed, That the clause stand part of the Bill.
The Parliamentary Under-Secretary of State for the Home Department (Kevin Foster)
It is a pleasure to serve under your chairmanship, Sir Edward. Given the nature of the clause, I will spend a few minutes outlining its impact to the Committee. The clause and associated schedules 2 and 3 provide an essential legislative framework to ensure that the Government can make changes to our social security system when the transition period ends, alongside the launch of the future immigration system. The provisions will enable the Government to amend the retained European Union social security co-ordination rules and to deliver policy changes from the end of the transition period.
The clause provides a power to the Secretary of State, the Treasury or, where appropriate, a devolved authority to modify the social security co-ordination regulations. Those EU regulations provide for social security co-ordination across the European economic area, and will be incorporated into domestic law by the European Union (Withdrawal) Act 2018 at the end of the transition period. Clause 5(4) gives the Government the ability to make necessary consequential changes to other primary legislation and other retained EU law to ensure that the changes given effect by the main power are appropriately reflected. That power may be used, for example, to address technical matters, inoperabilities or inconsistencies. Schedule 2 sets out the power of the devolved authorities under clause 5.
This social security co-ordination clause confers powers on Scottish Ministers and the relevant Northern Ireland Department to amend the limited elements of the social security co-ordination regulations that fall within devolved competence. It is important that we provide the devolved Administrations with the powers that they need to amend the aspects of the regulations for which they are responsible, just as it is right for the UK Government to have the powers for the laws that affect the UK as a whole. The powers are equivalent to those conferred on UK Ministers and will allow the devolved Administrations to respond to the UK’s withdrawal from the EU in areas of devolved competence, either to keep parity with Westminster or to deviate in line with their own policies.
Without the powers in the Bill, the devolved Administrations would need to bring forward their own parallel legislation to give them equivalent powers to amend the retained EU social security co-ordination regulations in areas of devolved competence. Before the Bill was introduced, letters were sent to the devolved Administrations to seek legislative consent in principle, in line with the Sewel convention.
Schedule 3 provides further detail on the form that regulations will take under the clause, whether as statutory instruments, statutory rules or Scottish statutory instruments. The schedule provides that the use of the power is subject to the affirmative procedure. It also gives clarity on the procedures that the devolved Administrations will need to follow. Paragraph 5 permits other regulations, subject to the negative procedure, to be included in an instrument made under the clause.
Without the clause and associated schedules 2 and 3, the Government and relevant devolved authorities will have only the power contained in the 2018 Act to fix deficiencies in the retained system of social security co-ordination, restricting our ability to make changes. I reassure the Committee that the power in the clause will not be exercised to remove or reduce commitments made either in relation to individuals within the scope of the withdrawal agreement, for as long as they remain in the scope of that agreement, or in relation to British and Irish nationals moving between the UK and Ireland.
We are currently in negotiations with the EU about possible new reciprocal arrangements on social security co-ordination, of the kind that the UK has with countries outside the EU. The clause will enable the UK to respond to a variety of outcomes in those negotiations, including when no agreement is achieved by the end of the transition period. The clause will be necessary to deliver policy changes to the retained regime that will cover individuals who fall outside the scope of the withdrawal agreement, to reflect the reality of our new relationship with the European Union.
The Government have been clear that there will be changes to future social security co-ordination arrangements, including, as announced at Budget 2020, stopping the export of child benefit. The social security co-ordination powers in the Bill will enable the Government to deliver on that commitment and to respond to the outcome of negotiations with the EU to deliver changes from the end of the transition period. I therefore beg to move that clause 5 stands part of the Bill and that schedules 2 and 3 are agreed to.
Kate Green (Stretford and Urmston) (Lab)
Good morning, Sir Edward. It is a pleasure once again to serve under your chairmanship. Social security arrangements set out in EU regulation 883 of 2004 and elsewhere are currently directly applicable in the UK. They cover the co-ordination of social security, healthcare and pension provision for people who are publicly insured who move from one EU state to another.
The regulations ensure that individuals who move to another EEA are covered by the social security legislation of only one country at a time and are, therefore, liable only to make contributions in one country; that a person has the rights and obligations of the member state where they are covered; that periods of insurance, employment or residence in other member states can be taken into account when determining a person’s eligibility for benefits; and that a person can receive benefits that they are entitled to from one member state, even if they are resident in another.
The co-ordination regulations cover only those social security benefits that provide cover against certain categories of social risk, such as sickness, maternity, paternity, unemployment and old age. Some non-contributory benefits fall within the regulations but cannot be exported, and benefits that are social and medical assistance are not covered at all. Universal credit, for example, is excluded.
As we heard from Jeremy Morgan of British in Europe in his oral evidence to the Committee last week, most UK nationals resident in the EU are of working age. It is important to note that the number of people claiming the working-age benefits that are covered by the regulations—jobseeker’s allowance or employment and support allowance—has declined sharply since the introduction of universal credit. We might therefore expect social security co-ordination arrangements to apply to a declining number of working-age adults. The regulations will, however, still be of importance for a sizeable number of individuals, and not least for pensioners.
The co-ordination regulations also confer a right on those with a European health insurance card to access medically necessary state-provided healthcare during a temporary state in another EEA state. The home member state is normally required to reimburse the host country for the cost of the treatment. Under the European Union (Withdrawal Agreement) Act 2020, protection of healthcare entitlements is linked to entitlement to cash benefits.
Clause 5(1) provides an appropriate authority with the power to modify the co-ordination regulations by secondary legislation. The power is very broad, placing no limits on the modifications that appropriate authorities are able to make to the co-ordination regulations. By virtue of subsection (3), the power explicitly
“includes power—
(a) to make different provision for different categories of person to whom they apply…
(b) otherwise to make different provision for different purposes;
(c) to make supplementary…consequential, transitional, transitory or saving provision;
(d) to provide for a person to exercise a discretion in dealing with any matter.”
The power is further enhanced by subsection (4), which provides for the ability to amend or repeal
“primary legislation passed before, or in the same Session as, this Act”
and other retained direct EU legislation.
Since the UK left the EU at the end of January this year, the relevant EU regulations pertaining to social security, pensions and healthcare have been retained in UK law by section 3 of the European Union (Withdrawal) Act 2018. I accept that the Government need to be able to amend co-ordination regulations to remedy deficiencies in them resulting from the UK’s exit from the EU, but the 2018 Act already contains a power in section 8 to modify direct retained EU law. Indeed, the Government have already exercised this power for four of the co-ordination regulations. Any changes that do not fall within the scope of the power in section 8 of the 2018 Act must necessarily, therefore, not relate to any ability for the law to operate efficiently or to remedy defects, but be intended to achieve wider policy objectives. I think the Minister acknowledged as much in his opening comments.
I was, however, surprised that the Minister said that only the European Union (Withdrawal) Act 2018 provided such powers. My reading of the legislation is that the Secretary of State has further powers as regards social security, healthcare and pension rights for those who are protected by the withdrawal agreement under the European Union (Withdrawal Agreement) Act 2020. Section 5 of that Act inserts new section 7A into the 2018 Act so as to secure withdrawal agreement rights in domestic law, and that protection is buttressed by section 13 of the 2020 Act, which confers a power to make regulations in respect of social security co-ordination rights protected by the withdrawal agreement. Given the powers that already exist under the European Union (Withdrawal) Act and the European Union (Withdrawal Agreement) Act, as well as the fact that those powers have already been used by the Government, why does the Minister feel they are inadequate?
Paragraph 30 of the delegated powers memorandum is instructive. It states that the Government want to use the power in clause 5 to
“respond flexibly to the outcome of negotiations on the future framework and make changes to the retained social security co-ordination rules.”
Mr Robert Goodwill (Scarborough and Whitby) (Con)
Does the hon. Lady agree that, given the proliferation of judicial reviews and the test cases that often come forward, it is better to adopt a belt-and-braces approach so that we underline the Government’s intention in both the Bill and the withdrawal Act?
Kate Green
The issue is the mission creep and scope creep involved in using secondary legislation to amend primary legislation and retained EU rights, particularly a mission creep that now encompasses the ability to make significant policy changes.
As we heard in oral evidence from our witnesses last week, it is important to recognise the considerable importance of policy and legislation in relation to social security co-ordination. It is vital to labour mobility, and to protect the rights of EEA nationals who come to live in the UK and UK nationals who go to live in EEA member states. Policy in this area has the potential to impact the lives of millions, affecting their right to receive benefits to which they are entitled through national insurance contributions over periods of residency, and which they have a legitimate expectation that they will receive. Changes to policy in these important areas should, I submit, be given effect in primary legislation.
In response to the evidence that the Committee took from British in Europe last week, the Minister said that the Secretary of State could not make regulations that would breach an international treaty, and he offered some reassurances this morning to those who fall within the scope of the withdrawal agreement. However, as British in Europe pointed out last week, the powers in clause 5 mean that Parliament will not be able to properly scrutinise regulations that might breach our international treaty obligations—if not deliberately, then inadvertently.
The Minister also referred to the need to be able to reflect the ongoing negotiations with the European Union, and we heard from Adrian Berry of the Immigration Law Practitioners Association last week about the UK’s draft social security treaty, which is an annex to the Government’s proposed future trade agreement. Mr Berry highlighted the Government’s intention to continue the protection of the European health insurance card scheme for short-term travel and the uprating of old-age pensions, but noted that disability pensions and healthcare attached to pension rights are missing from the draft treaty. He also highlighted the limitations of the new EHIC, which would require those with long-term health needs to get prior authorisation from the UK Government, and that there would be no S2 cover, which enables people to obtain healthcare in the EU that they cannot get on the NHS in the UK. Will the Minister put on the record whether such changes could be introduced using clause 5, and can he confirm which classes of person they can be applied to?
The Government have argued that the use of the powers in clause 5 will be subject to parliamentary scrutiny, through the use of the affirmative procedure. Will the Social Security Advisory Committee have a role in scrutinising regulations introduced under this measure? Does he not in fact accept that changes in this important area require full debate and scrutiny in Parliament, and that the principles of any future policy should be set out in primary legislation?
Finally, clause 5(5) states that EU-derived rights cease to apply if they are “inconsistent” with any regulation made under the section, but the Government are under no obligation to specify where and when such inconsistencies arise. This creates considerable uncertainty for individuals who are affected, for their advisers, and indeed for politicians and the wider public. As we discussed last week on clause 4, such an approach is inimical to good lawmaking. The Government should spell out which parts of retained EU law might be affected by these provisions, and I hope that the Minister will do so in his response.
Stuart C. McDonald (Cumbernauld, Kilsyth and Kirkintilloch East) (SNP)
It is a pleasure to serve under your chairmanship again, Sir Edward.
I am grateful to the Minister and to the hon. Member for Stretford and Urmston for setting out the nature of these regulations in quite some detail, and also for explaining why they are hugely significant for a large number of people.
We acknowledge that there is a need for the appropriate authorities to have some powers in this area, but those powers should be focused on making technical fixes rather than providing carte blanche. The powers in the clause are hugely broad. In fact, they are basically without any limit, either in terms of scope or time, and it is worth reflecting on what exactly clause 5(1) says:
“An appropriate authority may by regulations modify the retained direct EU legislation mentioned in subsection (2).”
There is no constraining test at all.
As Adrian Berry argued when he gave evidence last Tuesday, all these clauses should at least have the test of being “appropriate”, if not being “necessary”, as a qualification. Opposition MPs have been championing the “necessary” test, but the Government have always preferred the test of appropriateness. However, even that is absent from the clause. On paper, therefore, we are creating powers to make inappropriate regulations, which seems quite an unusual concept. More than ever, we need reassurance on what exactly the intended use of these regulations is, and we will look carefully at what the Minister said about that this morning.
I also want to raise an issue on schedule 2, which the Minister also referred to. Schedule 2 sets out who can make use of the powers in clause 5, and I want to flag up an issue in relation to devolution that needs to be addressed. It was flagged up by the Scottish Parliament’s Delegated Powers and Law Reform Committee last year in relation to the predecessor Bill. The Committee reported on that Bill precisely because there are implications for some devolved competences around social security.
There are three routes by which the clause’s powers could be used in relation to devolved social security competence. First, Scottish Ministers could exercise these powers, sometimes with the requirement to consult UK Ministers, if that were required where a different route was used to achieve the same means. The Committee found those powers acceptable.
There is also a route for joint exercise of the powers, which would be considered where a change is so significant that it would be appropriate for joint exercise and scrutiny. Again, while the Committee sought some clarity on precisely when that route would be used, it supported the idea in principle.
Thirdly, however, there is the route of UK Ministers acting alone, by laying regulations in the UK Parliament that could still relate to devolved competence. The Committee’s report says:
“The Committee emphasises that as a matter of principle the Scottish Parliament should have the opportunity to scrutinise the exercise of legislative powers”
by the Executive. However, it notes that the Scottish Parliament has no formal role in relation to the scrutiny of secondary legislation passed by UK Ministers acting alone.
The Committee went on to note that there was silence in relation to the circumstances in which it would be appropriate for UK Ministers to exercise powers in relation to devolved social security acting on their own. It noted that there was nothing on the face of the Bill requiring UK Ministers to seek the consent of Scottish Ministers prior to the exercise of the powers in that way by relevant UK Ministers or the Treasury. It repeated the view that it had provided in relation to the Bill that went on to become the European Union (Withdrawal) Act—that UK Ministers should be able to legislate in devolved areas only with the consent of the devolved Administration, also advocating for a role for the Scottish Parliament in that process.
Kevin Foster
I thank hon. Members for their contributions. On the powers under clause 5, the Government have been given clear advice that they are necessary, particularly when we look at the ongoing negotiations. There are two parties to the negotiations, and the purpose of having a wider scope is to reflect whatever the outcome of the negotiations is. Hopefully, we will quickly be able to implement an agreement, in the same way that we have an agreement with Ireland bilaterally in terms of the co-ordination of social security, given the unique position of Irish citizens in the UK and UK citizens in Ireland, who are considered settled from day one. That is where we are.
One of the examples Opposition Members gave was of those protected by the withdrawal agreement. It is worth noting that this measure looks towards those who arrive after the end of the transition period and starts to look towards changes there, rather than at those who specifically have their rights protected by the withdrawal agreement.
In terms of the scope and whether the powers would be used in a devolved area, the UK Government continue to respect the devolution settlement. We are in discussions —officials certainly are, and I and my colleague in the Department for Work and Pensions wrote to the relevant Scottish Minister last week to set out where we are. We hope to have a legislative consent motion from the Scottish Parliament, but we have also set out what the position is if we do not get an LCM—for the Committee’s benefit, the Government would amend the Bill on Report to remove the powers in relation to devolved matters in Scotland.
Fundamentally, the clause is intended to ensure that we can implement powers and make the changes necessary, as outlined, to deliver the specific policy changes that we made clear in our manifesto, particularly around the export of child benefit, and also to ensure that we do not end up in a bizarre position where the UK is trying unilaterally to implement what is meant to be a reciprocal system, should we not be able to get a further agreement or if we have an agreement but are not able quickly and promptly to implement it.
Again, I would point out that using the affirmative procedure means that both Houses of Parliament will scrutinise any regulations and will have the opportunity to block them if they felt they were inappropriate. To be clear, if a Minister made wholly inappropriate regulations, such matters in secondary legislation, unlike primary legislation, can be reviewed in the courts as well.
It is therefore right that we stick with the clause as it is, certainly to ensure that we can implement whatever the outcome of the agreement is, including if we need to look at putting in place a system that reflects the fact that there has not been a further agreement.
Stuart C. McDonald
I just want to clarify whether the Minister would at least consider putting in a requirement that, before UK Ministers exercise these powers in relation to devolved competencies, they would consult Scottish Ministers. A cross-party Scottish Parliament Committee made that recommendation this time last year. It is surely at least worthy of consideration before Report.
Kevin Foster
To be clear, we will continue with our position of respecting devolution in areas of social security, hence the respect we have shown to the Scottish Government by consulting them about the Bill. We have also set out the Government’s position, were there not a legislative consent motion from the Scottish Parliament, in the letter we sent last week to the relevant Scottish Ministers. Obviously, separate discussions are going on with the Executive in Northern Ireland.
This is the right process. Parliament still has the appropriate ability to scrutinise how the powers are used and, if it wishes, may block the use of those powers under the affirmative procedure. This is about ensuring clear certainty that we can deliver whatever we can agree with the European Union on, we hope, a continuation of a reciprocal arrangement, which we cannot do if we do not have the powers in the clause. In other areas, powers are more restricted.
These are wide powers, but that reflects the wide range of outcomes that are still possible in the next six months. It is right to have a functioning and effective social security system and co-ordination of it. That is why the Government have brought the power forward in this Bill, as in the previous one. We maintain that the clause and the attached schedules are appropriate to the Bill.
Kate Green
Does the Minister anticipate, in the event of an agreement and treaty before the end of this year, a further piece of primary legislation to give effect to that? If so, would it not be possible at least to encompass the principles agreed into that primary legislation?
Kevin Foster
A lot would depend on the nature of the agreement. If it is part of a wider treaty, we may well see further legislation. However, our understanding is that if we can achieve agreement on this area, we would look to implement it rapidly through regulation, which is why the power is in the Bill. Our priority would be to avoid a situation where something is agreed of benefit to both UK citizens going to live in the European Union and EEA citizens coming to live here, with which we and the European Union are happy, but we are unable to provide that benefit because we are still going through a parliamentary process to implement it. That is why we believe the clause to be appropriate. It allows us to react to circumstances as necessary.
Question put, That the clause stand part of the Bill.
Stuart C. McDonald
I beg to move amendment 17, in clause 7, page 5, line 13, at end insert—
“(1A) Section 1 and Schedule 1 of this Act do not extend to Scotland.”
The Chair
With this it will be convenient to discuss new clause 33—Differentiated immigration policies: review—
“(1) The Secretary of State must publish and lay before Parliament a report on the implementation of a system of differentiated immigration rules for people whose right of free movement is ended by section 1 and schedule 1 of this Act within six months of the passing of this Act.
(2) The review in subsection (1) must consider the following—
(a) whether Scottish Ministers, Welsh Ministers, and the Northern Ireland Executive should be able to nominate a specified number of EEA and Swiss nationals for leave to enter or remain each year;
(b) the requirements that could be attached to the exercise of any such power including that the person lives and, where appropriate, works in Scotland, Wales or Northern Ireland and such other conditions as the Secretary of State believes necessary;
(c) the means by which the Secretary of State could retain the power to refuse to grant leave to enter or remain on the grounds that such a grant would—
(i) not be in the public interest, or
(ii) not be in the interests of national security
(d) how the number of eligible individuals allowed to enter or remain each year under such a scheme could be agreed annually by Scottish Ministers, Welsh Ministers and the Northern Ireland Executive and the Secretary of State;
(e) whether Scottish Ministers, Welsh Ministers, and the Northern Ireland Executive should be able to issue Scottish, Welsh and Northern Irish Immigration Rules, as appropriate, setting out the criteria by which they will select eligible individuals for nomination, including salary thresholds and financial eligibility.
(3) As part of the review in subsection (1), the Secretary of State must consult—
(a) the Scottish Government;
(b) the Welsh Government;
(c) the Northern Ireland Executive; and
(d) individuals, businesses, and other organisations in the devolved nations.”
Stuart C. McDonald
Clause 7 sets out the extent of the Bill, so here we come to how it impacts Scotland and the other devolved nations. Amendment 17 would disapply provisions ending free movement to Scotland. The new clause simply calls for the Government to consult on, and to review, establishing a differentiated set of immigration rules focused on Scotland, Northern Ireland and Wales, and lists a set of issues that we want the UK Government to consult upon. The Government would then report and lay that report before Parliament. There is little here that is too onerous. It is a perfectly reasonable request of the UK Government.
We heard plenty of concern about the implications of the Bill during evidence last Tuesday. It is fair to say that that concern is felt acutely in Scotland and Northern Ireland, but also in Wales and some regions of England. Scotland needs in-migration, and free movement of people has been a significant benefit to that country. The Government’s own risk assessments indicate a huge impact on the number of EEA workers who would qualify under the proposed new salary and skills requirements of the new regime. That is before we take into account the visa fees and the red tape, which I regard as ludicrous, that businesses will be bound up in. That has profound implications for Scotland’s economy, demographics, public finances and devolved public services.
Scotland’s economy relies significantly on small and medium-sized enterprises, which, as we heard last Tuesday, will find the tier 2 system very difficult. Small tourism or food and drink businesses, for example, that have regularly relied on the EU labour market are finding it well-nigh impossible to fill posts domestically. Instead of being able to interview a Portuguese food-processing worker or a Polish hotel worker, there is a significant chance that they will not be able to employ them at all. If they are able to employ them somehow, processes will be very different indeed.
The worker will have to seek entry clearance from their home country, so recruitment practice will have to change. Business will have to shell out for a sponsor licence and possibly on legal advice on how to do all that. The worker will have to pay visa fees plus upfront NHS health surcharges, not just for the main applicant but for the whole family. A skills charge will also be levied. As we heard last week, that could take the costs to the applicant to many thousands of pounds.
Mr Goodwill
I understand the point the hon. Gentleman is trying to make, but would it not attract more people to stay and work in Scotland if it was not the highest-taxed part of the United Kingdom?
Stuart C. McDonald
That is factually not true, so that is the end to that point. If the right hon. Gentleman is referring to the changes to the rate of income tax that we have made in recent years, there is no evidence that they have made a blind bit of difference. In fact, there are more people in Scotland paying less income tax, and that is before taking into account council tax and various other matters, so that point does not arise at all.
It seems that a huge proportion of the burden of all these fees falls to be paid by the individual worker. Realistically, however, why would a Portuguese food-processing worker or a Polish hotel worker pay £10,000 for the privilege of working in Scotland when they face no charge to work anywhere else in the European Union? The lower income tax that we pay in Scotland would be attractive, but it does not outweigh the £10,000-plus they would have to pay just to turn up.
Scotland has become a country of regular net in-migration, largely thanks to the free movement of people. But for in-migration, our population would have again been in decline since 2015—something that is projected into the future, with more deaths than births. Ending free movement risks pushing Scotland back to a future of population decline. Like other countries, our population of older people is increasing. That is not unique to us, but unlike other countries, in the UK in particular, our working-age population will rise only fractionally in the years ahead, according to various projections.
That brings us to the issue of public finances and devolved public services. There has been a welcome devolution of tax-raising powers in recent years, to which the right hon. Member for Scarborough and Whitby referred. However, with those tax powers now in place, the problem is that we are suddenly seeing the tax base shrunk by immigration policies. That has a direct impact on income tax receipts and also on the economic growth and tax revenue that companies’ VAT.
Douglas Ross (Moray) (Con)
Another report that is publicly available is the SNP’s White Paper ahead of the 2014 independence referendum in Scotland. Will the hon. Gentleman outline the proposals for immigration in that policy?
Stuart C. McDonald
I have no problem in outlining the paper. This point was got up on Twitter, as if it was a gotcha for the SNP. In that White Paper we advocated a points-based immigration system for those coming from outside the EEA, but we also advocated for the free movement of people. [Interruption.] The Minister looks as if I have been caught in some sort of trap. I am perfectly happy to support a points-based system for Scotland for people coming from outside the EEA. That is not a problem at all. But there are points-based systems and there are points-based systems. [Interruption.] People are chuckling away as if I am talking nonsense, but the Canadian points-based system is significantly different from the points-based system in Australia. The system proposed by the UK Government is barely a points system, and if hon. Members speak to anyone who knows the first thing about immigration law policy, they will say that there is barely a resemblance. Despite all the rhetoric, there is a tiny resemblance between what the UK Government are proposing and what the Australian points-based system is proposing.
On the issue of flexibility and regionality, the Australian points system includes some variation to take account of the different needs of different provinces. If the Australian points-based system is so wonderful, why has it not been replicated in any meaningful sense by the UK Government, including in respect of regional flexibility? Yes, the 2014 White Paper did refer to a points-based system for people from outside the EU—one that would be tailored for Scotland’s circumstances, not one that is completely inappropriate for it.
Ian Robinson and Fragomen, leading international practitioners, looked at the example of Canada, Australia, Switzerland and New Zealand and put forward a whole host of possible options. As they said last week, one of those options would be simply to allow the free movement rules to continue to apply in Scotland. If a hotel in the highlands of Perthshire is recruiting, it can continue to recruit from the EEA just as it does now.
However, there is a huge range of possibilities, from more radical suggestions, such as retaining free movement, all the way down to tailoring the points-based system to suit Scotland’s needs. That brings me to a very modest suggestion that I am bound to bring up; it is a suggestion from my hon. Friend the Member for Na h-Eileanan an Iar (Angus Brendan MacNeil) that I think he may have raised directly with the Minister. It is simply to ensure that points are awarded in this system for Gaelic language skills as well as for English.
This is not just about Scotland, however. The challenges in Northern Ireland will also be unbelievably acute and perhaps even more so, given the land border that it shares with a country not only where businesses benefit from free movement of people, but that runs a completely independent immigration system, tailored to meet its own needs, while still being part of the common travel area. Business in Northern Ireland may face thousands of pounds in immigration fees just to try to attract the very same people who, a few miles down the road, could take up the position totally free of cost and bureaucracy. Merely saying that this system will work for all of the UK does nothing to address that problem.
Even if the Government do not want to properly engage in debate and discussion with SNP MPs or Ministers in the Scottish Government, I urge the Minister to listen to and engage with other voices who are speaking out on this issue. Businesses, business groups, think-tanks, civic society, universities and public sector organisations are all hugely concerned about it. The Minister just needs to do a Google search for commentary in Scotland and Northern Ireland in particular on their response to the Government’s most recent proposals.
Mr Goodwill
Is the hon. Gentleman aware that figures released only this morning show that the unemployment rate in Scotland is now the highest in the United Kingdom, at 4.6%, compared with a UK rate of 3%? That means that unemployment has risen by 30,000 to 127,000. Does he not think that those are the sort of people we should be getting into jobs in Scotland and that we should not be looking to the EEA to provide the people?
Stuart C. McDonald
The economic impact of coronavirus is of course a tragedy, and every lost job is an absolute tragedy as well. Yes, of course we will focus our efforts on ensuring that people are back in work as soon as we can do that, but we cannot design our immigration system for the next decades based on this calamity. If the only reason Conservative Members can come up with to support this system being implemented in Scotland is that we are going through a pandemic, that is pretty farcical, given that these proposals have been in existence for the last few months, so no, I do not accept that it is any reason for shying away from the points that I am making. The system will cause huge long-term damage to Scotland’s economy and Scotland’s public finances. It is not just me saying that; a whole host of organisations have real concerns.
Again, I am not expecting the Government to do a 180-degree U-turn today, but I do want at least some recognition that there are genuine issues that require more than just our being told that this system will somehow work for Scotland, Northern Ireland or any other devolved nation.
Brendan O’Hara (Argyll and Bute) (SNP)
It is a pleasure to serve under your chairmanship again, Sir Edward. Although the United Kingdom’s population is projected to rise by about 15%, it is reckoned that the population of our rural areas, including my own constituency of Argyll and Bute, will fall by as much as 8%. The situation is absolutely unsustainable because, despite Argyll and Bute being an exceptionally beautiful part of the world, we have an ageing and non-economically active population and our young people leave to spend their economically productive years outside Argyll and Bute.
To give credit to the council and to the Scottish Government, they are doing what they can to make Argyll and Bute a place that young people do not feel that they have to leave before coming back to retire—many of them do—but before that long-term goal reaches fruition, a cornerstone of Argyll and Bute Council’s plan for economic regeneration was predicated on continuing access to EU nationals and attracting them into the area. Regrettably, and through no fault of our own, that option has been taken from them; and the UK Government, having taken that option from them, now have a responsibility to provide a solution that will help those areas suffering from depopulation to recover. It is becoming increasingly clear that a major part of that would be the introduction of a regional immigration policy similar to that which works in Canada, Australia, Switzerland and other countries, and one that reflects the different needs of different parts of the country. There is no reason, other than political will, why that cannot happen here.
Douglas Ross
Does the hon. Gentleman therefore suggest that if we had an independent Scotland, with its own immigration system, there would be a regional variation between Argyll and Bute and Edinburgh?
Brendan O’Hara
Ultimately, that would be a decision for any incoming Scottish Government to make.
Brendan O'Hara
Personally, I think that the greater devolution of power, as widely as possible across any nation state, is an exceptionally good thing. Anything that can attract people to come, live, work, invest and raise families in our rural communities must be looked at and broadly welcomed. It was broadly welcomed in the recent Migration Advisory Committee report, which said:
“The current migration system is not very effective in dealing with the particular problems remote communities experience. If these problems are to be addressed something more bespoke for these areas is needed…The only way to address this question in the UK context would be to pilot a scheme that facilitated migration to these areas, then monitor what happens over several years and evaluate the outcomes.”
As my hon. Friend the Member for Cumbernauld, Kilsyth and Kirkintilloch East said, that idea was welcomed by the right hon. Member for Bromsgrove in a ministerial answer on 23 July 2019, where he accepted the need for the development of a pilot scheme. To date, there has been very little movement and we fear that there has been backtracking by the UK Government about what they plan to do next about setting it up.
The Minister knows that the Scottish Government stand ready to work with him to design and develop a solution that is tailored to meet Scotland’s needs. I can tell him that if the MAC is willing to provide the advice, and the Scottish Government is minded to follow that advice, then Argyll and Bute is prepared to put it itself forward as a pilot area for such a scheme. I spoke yesterday to the chief executive of Argyll and Bute Council, Pippa Milne, who confirmed that the council would be happy to work with the UK Government and the MAC to see how a bespoke regional immigration system would work in practice. Will the Minister act on the MAC recommendation, which was supported by the former Home Secretary, and help Scotland to fight the curse of depopulation?
Holly Lynch (Halifax) (Lab)
It is a pleasure to serve under your chairmanship once again, Sir Edward. I will briefly outline our position on amendment 17 and new clause 33. We are entirely sympathetic to amendment 17 for the reasons that have just been outlined, seeking to protect Scotland from the impact of this hard stop on free movement without a plan for mitigating the effects on key sectors. On more rural areas, our focus will continue to be on finding a solution for the whole of the UK rather than just Scotland. We understand that the Scottish National party has not given up on its aspiration of independence for Scotland, but I am afraid that that is where our parties diverge. To have an immigration system for Scotland that is different from that of the rest of the UK without that broader sense of a more regional approach affecting every area of the UK would open a raft of further questions around the management of that system and the means of enforcing it geographically. We say this in the spirit of loving Scotland and wanting it to stay and prosper as part of the United Kingdom. On that basis, we cannot support amendment 17.
We welcome the approach behind new clause 33 in principle, but again feel that it misses the opportunity to consult with the English regions as part of the process. Richard Burge of the London chamber of commerce said in last week’s evidence session that the MAC was slow and unwieldy. He said that it needs
“to involve business much more directly and that, it is hoped, will enable it to be much more responsive”.––[Official Report, Immigration and Social Security Co-ordination (EU Withdrawal) Public Bill Committee, 9 June 2020; c. 12, Q18.]
Frustration with the MAC and a genuine and well-founded scepticism that, without radical reform, we would not be able to respond in anything like realtime to emerging workforce issues and skill shortages was a recurring theme in the evidence session and has been throughout our engagement with stakeholders ahead of the Committee. With this in mind, we are inclined to agree that one way of making immigration rules and shortage occupation lists more responsive would be to grant the devolved Administrations a greater say.
As I have already said, however, the glaring omission in new clause 33 is that it does not propose to consider the needs of the English regions in quite the same way. As a Yorkshire Member, it would be remiss of me not to reflect on the fact that the population of Yorkshire is comparable to, or greater than, those of the devolved nations. We hope that a report of the kind outlined in new clause 33 might take into account our needs and those of other regions, alongside those of the devolved Administrations. As a party, we will be looking to review the MAC and the shortage occupation list process in their entirety, shaping our own proposals for transformation in due course. On that basis, we broadly support new clause 33, but we will be shaping our own proposals in the coming months.
Kevin Foster
I am grateful to the hon. Member for Cumbernauld, Kilsyth and Kirkintilloch East and his hon. Friends for tabling the amendment and new clause. Having said that, there was a certain predictability about them given the SNP’s aim of separating our United Kingdom and wish for borders to be created across this island.
I turn to some of the more specific points. I have had direct contact with the hon. Member for Na h-Eileanan an Iar. He is very passionate about the Gaelic language and the role it plays in contemporary life. I have also had representations from Ministers and Members in Wales about the strong role that the Welsh language plays in our culture today, enriching our Union as a whole. Certainly, we will see what we can do to incorporate Welsh, Irish and Gaelic into our migration system. It is probably worth noting that the vast majority of fluent speakers of those three languages are either citizens of the United Kingdom or the Republic of Ireland, and therefore effectively not subject to migration control; they have rights to live and work within the United Kingdom and settle in any part of it they choose.
It was interesting to hear the comments of the hon. Member for Halifax, my Labour shadow, about how separate systems would be enforced. Like me, she does not want to see an economic version of Hadrian’s Wall between England and Scotland, although I recognise that others on the Committee perhaps do.
We are looking at how to make the Migration Advisory Committee’s role responsive and how it can choose some of its own reports—we will come on to that when we discuss some of the new clauses. The issue is not purely about a commission. I am thinking particularly about how the MAC can send out a more regular drumbeat of reviews, and commentary on reviews, for the shortage occupation list. That should fit in with our wider labour market policies rather than being considered apart from our skills and training policies. I hope we can find some sensible consensus on that.
The MAC has launched its call for evidence for the shortage occupation list and the advice that it is going to give Ministers about the new points-based system. I hope people will engage with that; there is certainly good strong engagement from many businesses. It would be good to see the Scottish Government promote the idea that businesses in Scotland should be getting involved and positively engage in the process—not least given that the MAC has indicated its intention for there to be shortage occupation lists for each of the four nations of the United Kingdom. It will probably not be a great surprise if many of those are very similar, given the similar types of skill shortages across the United Kingdom.
I was interested to hear the comments from the hon. Member for Argyll and Bute, in particular the idea that we could start having immigration policy for individual council areas. That is interesting. It is worth saying that the MAC suggestion was about remote areas. We both went to see the first HM naval base on the Clyde, in his constituency; as he knows, he is not exactly remote from the vibrant heart of culture and economy that is Glasgow—that is rather different from the concept of, let us say, eastern and western Australia in terms of distance.
I will be very clear: a range of powers is available to the Scottish Government. If the same pull factors that created the challenges today still exist, this look into the migration system is not going to provide a solution. With other Members from Scotland, including my hon. Friend the Member for Moray, we have looked at the fact that there is a determined drive—luckily, the Scottish Government have the powers around economic development—to create those strong opportunities in communities. Ultimately, if we create a migration opportunity but the pull factors are still there and have not been addressed, the situation will become a revolving door. That is why we have to look at those core issues first —why people are moving out—and not just look to a migration system as a magic bullet for those problems.
Brendan O'Hara
At the risk of giving a geography lesson, I point out that when the Minister visited Argyll and Bute he visited the easternmost tip of the constituency, nearest to Glasgow. The constituency spreads over 7,500 sq km, has 26 remote island communities and is not part of the vibrant central belt hub. That is why it and many other areas of the highlands and islands of Scotland need a bespoke solution. The problems we face in Argyll and Bute are not those that many large conurbations in the United Kingdom face. There is a need to recognise that.
Kevin Foster
Perhaps the point has been made, then, that this is not about having an immigration system based on a council area, but about having one for an area smaller than that of a council. I think that that would lead to confusion, with multiple areas.
There are many issues across large stretches of the highlands, and also rural parts of the rest of the United Kingdom. The fact that there are challenges in ensuring that younger people in particular have opportunities, and options to stay, is a facet of the issue that is not unique to parts of Scotland. However, if we do not deal with the core issues, most of which fall under the remit of the devolved Administration in Edinburgh, those pull factors will still exist, and the migration system is not a magic cure for them.
Stuart C. McDonald
It is a question of having strategies in place to address the challenges, but I want to pin the Minister down on the question of the remote areas pilot. That is a recommendation from the MAC. Can the Minister say categorically that this morning he is ditching it, and that there will not now be a remote areas pilot scheme? That would be really bad news.
Kevin Foster
We made it clear in the policy statement that we put out in February that we were not planning a remote areas pilot. Again, the thing that we must focus on is that many of the pull factors exist. It is within the competence of the Scottish Government to deal with those issues, and to create something and tackle them.
I have seen how Members of Parliament in the north-east of Scotland, including my hon. Friend the Member for Moray and my hon. Friend the Under-Secretary of State for Scotland, the Member for Banff and Buchan (David Duguid), are pushing for the creation of those economic opportunities that they want in parts of rural Scotland. Perhaps the one hope that we have on this point is that there is a Scottish Parliament election coming next year. I hope that there will be a more business-focused, opportunity-based Administration in Edinburgh, which will be focused on developing Scotland, not separating it.
Douglas Ross
I agree wholeheartedly with the Minister’s point about the number of factors that are within the remit of the Scottish Parliament and on which the Scottish National party Government of Scotland have failed.
We have heard from SNP Members that they want their own immigration system. Indeed, the hon. Member for Argyll and Bute said that they would design and tailor one. Does the Minister share my concern that we heard similar reassurances from the SNP Scottish Government about social security—yet they had to tell the UK Government that they could not take those powers because they could not implement the changes quickly enough in Scotland?
Kevin Foster
My hon. Friend, as always, hits the nail straight on the head with his arguments. Yes, we had many demands for devolution of policy, but then the Scottish Government did not want to take them up. Suddenly there was a new group of Unionists wanting the United Kingdom Government to deal with something in Scotland.
Stuart C. McDonald
Will the Minister do us the favour of explaining how his immigration policies will make the challenges easier rather than harder for Scotland?
Kevin Foster
The first thing that our immigration policy will do is provide a points-based system on a global basis, based on RQF3 and on having a shortage occupation list. Businesses in Scotland can recruit globally on that basis. Also, we can look at the first reform, which we have already carried out—a route that I was pleased to launch in Glasgow. I have seen it at first hand—the best talent being brought into our universities, and particularly into the University of Glasgow. Under that system, on a global basis, teams can be recruited to tackle and research some of the most challenging questions that mankind faces. On the occasion in question the issue was tackling malaria, and the huge impact of that.
Those are the sorts of benefits we want: high value and high skill—the attractions are there. It is a vision for Scotland, whose natural beauty is second to none, based on skills and the attractiveness of a high-skill, high-value economy—not on saying that the main thing Scotland’s economy needs is the ability to put more people on the minimum wage on a global basis.
Stuart C. McDonald
The Minister mentions his visit to Glasgow all the time. While he was there, did he speak with Universities Scotland, which is among the organisations that has spoken out in favour of a differentiated system? This is not just coming from the SNP. The Minister has also spoken about the benefits of his new system, but his own risk assessment says that it will cause levels of immigration to Scotland to fall. How is that in Scotland’s interests?
Kevin Foster
We engage strongly with partners, particularly our high-compliance Scottish universities that are sponsors of tier 4 visas. We very much welcome the contributions they make, as well as those that they make as part of wider groups, such as the Russell Group, that operate on a UK-wide basis.
There are two visions, I suppose. There is one that my hon. Friend the Member for Moray and his colleagues from Scotland bring us: a high-productivity, high-value Scotland, an attractive place to live with a thriving economy, recruiting on a global basis. Then there is the Scotland that the Scottish National party brings us; the only reason someone would go there would be to pay low wages or recruit at, or near, the minimum wage on a global basis. That, to me, is not a particularly inspiring vision.
Many of the powers to deal with the pull factors that lead to depopulation in rural areas are already in the hands of the Edinburgh Administration. As with so many other things—this has been touched on in relation to social security—it is time to see the Scottish National party getting on with the job of governance, rather than the job of grieving or looking to separate the United Kingdom.
The hon. Member for Cumbernauld, Kilsyth and Kirkintilloch East will not be surprised to hear that the Government’s position has been made very clear on this issue, but I will briefly set it out again. Immigration and related matters, such as the free movement of persons from the EU, are reserved matters, and the immigration aspects of the Bill will therefore apply to the whole United Kingdom. The Government are delivering an immigration system that takes into account the needs of the whole of our United Kingdom and works for the whole of it, not for the political needs of those whose goal is its separation.
We do not believe that it would be sensible, desirable or workable to apply different immigration systems in different parts of the United Kingdom, and the independent Migration Advisory Committee has repeatedly advised that the labour markets of the different nations of the United Kingdom are not sufficiently different to warrant different policies. That was an independent report—the type that people seem to want, but then do not seem to want to listen to.
Kevin Foster
No, I have given way many times. As we heard in the evidence sessions, the simplistic argument saying that Scotland is different from England for political reasons ignores the variation within Scotland itself, given the strength of the economy in Edinburgh compared with the economies of more rural areas.
I do not propose to address new clause 33 in detail; as I say, we have seen the MAC’s conclusions on this issue. The Government’s objection is one of principle: immigration is, and will remain, a reserved matter. We will introduce an immigration system that works for the whole of our country and all the nations that make up our United Kingdom by respecting the democratically expressed view of the people in the December 2019 general election and the 2014 vote of the Scottish people, which rejected separation. Both Alex Salmond and Nicola Sturgeon used the phrase “once in a lifetime” or “once in a generation” about that vote; now, only six years later, we see how short a generation has become. Free movement will end on 31 December, and we will introduce a points-based immigration system that ensures we can attract the best talent from around the world to Scotland, based on the skills and attributes they have, not where their passport comes from.
It will come as no surprise that SNP Members and I will have to agree to differ, as we regularly do on issues that relate to the constitutional future of Scotland. I obviously hope that the hon. Members for Cumbernauld, Kilsyth and Kirkintilloch East and for Argyll and Bute and the hon. and learned Member for Edinburgh South West will withdraw their amendments—although I have a sneaky feeling that they may not—and I particularly hope that others on this Committee who have also voiced their opposition to separatist politics will join the Government in opposing these amendments if they are put to a vote.
Stuart C. McDonald
I sort of thank the Minister for at least making a contribution, but I have to say that, having shadowed about six or seven immigration Ministers for five years, I think that is probably the most regrettable speech I have heard from any of them at any time; the second most regrettable was the one the Minister made during the Opposition day debate a few months ago. It might play well with some MPs in this place, but I watched the faces of some Scottish Conservative MPs that night, and they were not impressed.
The Minister is speaking not just to the SNP, but to business groups and public service organisations—a whole host of concerned organisations in Scotland. He might get away with it in this Committee, but he cannot really get away with dismissing their concerns as “nationalist nonsense” or “separatist rubbish”. These are very serious people with very serious concerns about the implications of his Government’s migration system for Scotland. It seems to be not so much a case of, “We hope it will be all right on the night”, but one of, “We don’t care—stuff you!”
Stuart C. McDonald
I beg to move amendment 11, in clause 8, page 5, line 41, leave out subsection (5) and insert—
‘(5) This Part of the Act shall not come into effect until a Minister of the Crown has laid a report before each House of Parliament setting out the impact of this Act on faith communities in the UK.
(6) A report under subsection (5) must consider in particular the ability of members and representatives of faith communities from the EEA and Switzerland to enter the UK for purposes related to their faith.
(7) A Minister of the Crown must, not later than six months after the report has been laid before Parliament, make a motion in the House of Commons in relation to the report.
(8) In this section,
“faith communities” means a group of individuals united by a clear structure and system of religious or spiritual beliefs.”
This amendment requires the government to report to Parliament on the implications of this Bill for faith communities, including the ability of members of faith communities to come to the UK for reasons connected with their faith.
Some 18 months or so ago, the then Minister of State for Immigration issued a written statement announcing changes to immigration rules. Apparently, those changes were to ensure that ministers of religion could no longer apply for a tier 5 religious worker visa; instead, they would have to apply for a tier 2 minister of religion visa. As I understand it, that was done because of a fear at the Home Office that people were coming in under the tier 5 visa route and leading worship while not having the level of English that the Home Office decided would be necessary to perform such a function. The explanatory memorandum said:
“The Immigration Rules currently permit Tier 5 Religious Workers to fill roles which ‘may include preaching, pastoral work and non-pastoral work’. This allows a migrant to come to the UK and fill a role as a Minister of Religion without demonstrating an ability to speak English.”
For some reason, the Home Office also decided to introduce a cooling-off period. The explanatory memorandum said:
“The ‘cooling off’ period will ensure Tier 5 Religious workers and Charity Workers spend a minimum of 12 months outside the UK before returning in either category. This will prevent migrants from applying for consecutive visas, thereby using the routes to live in the UK for extended periods, so as to reflect the temporary purpose of the routes better.”
I have been in discussions with representatives of the Catholic Bishops’ Conference about migration to both Scotland and England. They tell me that most Catholic dioceses previously used tier 5 religious worker visas for priests to come here on supply placements while parish priests were away for short periods because of sickness, training or annual leave. Those supply placements were essential, as they allow Catholics to continue attending mass while keeping parish activities running smoothly. That allows the parish to continue to function while the parish priest is off through illness, going on a retreat or accompanying parish groups on outings, or even just taking a holiday.
A supply placement priest will lead the celebration of holy mass, including the celebration of the sacrament of marriage. He will lead funerals, including supporting bereaved family members, and visit the sick and elderly of the local community. In an age when social isolation and loneliness are increasing, the parish is a place where people can gather as a community to support one another and engage in friendship. It is not just about worship, but about the community hub that the church provides by offering spiritual and practical help and supporting the sick, the elderly, the needy and the vulnerable.
Mr Goodwill
In my own constituency there is a Coptic Christian community; it is a closed order, so they do not preach. The system already works very well for non-EEA residents. Is the hon. Gentleman suggesting that, if we do not extend the scheme to the EEA, there will be barriers for people coming to the UK in the way that he describes?
Stuart C. McDonald
I will come to that point in a minute. In short, the point made to me by the Catholic Church and other faith groups—we had a debate on this issue in Westminster Hall around the time of the changes—is that, actually, the system for non-EEA nationals used to work but does not work now, precisely because of the changes that the Home Office made 18 months or so ago.
The system is much more expensive now, and it is beyond most parishes’ ability to pay the fees for ministers to come in and lead worship. If they come in under tier 5, which is the much cheaper option, they are no longer allowed to lead worship or whatever else. They can perform a range of functions, but not the ones that are really needed, including leading worship.
The issue is already a problem now and it will be made infinitely worse, because at the moment parishes can still rely on priests or other leaders coming from the EEA. They do not have to pay for the expensive tier 2 visa; they can just come in under the free movement of people. When free movement comes to an end, the same regime will apply and parishes will have to pay all sorts of fees, even to have priests come in from France, Italy, Poland or wherever else. They are not looking forward to that prospect at all.
As I was saying, visiting clergy not only allow the local community to continue to function, but benefit and enrich the whole community, as the community gains from cultural exchange and from sharing the knowledge and experience of priests from other parts of the world. They educate new communities about life in their country, and they open up avenues for local parishes to support communities in need. What was most surprising about the changes was that, as far as the SNP was aware, there had been no problems with visas for the Catholic Church or any of the other faith organisations that made use of the tier 5 route. The new requirement introduced in 2019 for anyone preaching to use tier 2 minister of religion visas has instead more than doubled the costs incurred by parishes arranging supply cover. For some parishes that is unsustainable, compromising people’s opportunity to practise their faith.
Furthermore, they point out that seminaries conducting formation in English are not necessarily recognised by the Home Office as meeting the English requirement under the tier 2 route, meaning that many priests educated to postgraduate level in English are nevertheless required to take a language test, with the extra logistical and cost implications. The new arrangements more than double the costs, making supply cover essentially unaffordable. I have heard directly from religious leaders in my constituency that that is the impact of those arrangements. Unless reforms are made, the situation will be worsened by the end of free movement, as I said in response to the intervention from the right hon. Member for Scarborough and Whitby (Robert Goodwill). I simply ask the Government to engage with faith communities about the challenges that this is causing them to face, and to see if we might be able to come to a solution that makes these sorts of arrangements continue to function in the years ahead.
Brendan O'Hara
As my hon. Friend said, the tier 5 religious visas were operating perfectly smoothly for the many Churches and religious organisations that relied on them until these unexpected changes were made. Catholic parishes throughout the UK—including my own in the Archdiocese of Glasgow—regularly used these visas as routes for priests to come to the UK on supply placements.
The changes that came into force in January are already causing something of a headache for a whole host of religious organisations that require clergy to visit to cover for periods of illness, holiday, religious retreat, or when priests or other clergy are away on pilgrimage. This is a time of a crisis in vocation, clergy are becoming increasingly elderly, and more and more parishes and dioceses are turning to priests from outside the UK to cover such absences, sicknesses and holidays, so it beggars belief that the measure would have been introduced in this way.
It is important that the Minister realises that the tasks of a parish do not stop when the existing or resident priest falls ill, or goes on a well-earned holiday or retreat. As pointed out by my hon. Friend the Member for Cumbernauld, Kilsyth and Kirkintilloch East, the church is more than just a place of worship, it is also a community hub providing both spiritual and practical support to the sick, elderly and vulnerable, as demonstrated by the great work of a number of organisations including the Society of Saint Vincent de Paul. The Bishops’ Conference of Scotland has been clear in saying that much of the positive work done in and around Catholic parishes which engenders that sense of community is being seriously undermined and compromised by these changes. The Home Office has to understand and recognise the benefits of allowing priests from other parts of the world to come in on a tier 5 visa. They enrich the whole community. It is a cultural exchange, it is a share of knowledge, a share of experience by priests and clergy from other parts of the world.
It is not just the Catholic church. Indeed, the Church of Scotland is on record as saying that it opposes the measure. Many of us are confused as to why these changes were deemed necessary. What grave issue has arisen that needed to be addressed in such a draconian fashion? The Scottish bishops said that for years they had sponsored priests through the tier 5 process, and they are completely unaware of any abuse of the system whatever. For years, priests came here, they worked and preached in Scotland and across the UK, and then returned home. Indeed, 25 years ago this summer at St Helen’s church in Shawlands in Glasgow, Father Stephens from Malawi was the celebrant who married me and my wife, rather successfully I am happy to report. But the question remains: why did this have to happen? What was the motivation behind it? Can the Government not see the harm they are doing to our religious communities, and can they not act to stop it?
Finally, exactly a year ago in a debate on that in Westminster Hall, my hon. Friend the Member for Glasgow North (Patrick Grady) invited UK Ministers to meet the Bishops’ Conference of Scotland. Did Ministers take up that invitation? Did that meeting ever take place and, if it did, what was discussed and what outcomes were agreed? If it never took place, why not?
Kate Green
I support the sentiments expressed by the hon. Members for Argyle and Bute and for Cumbernauld, Kilsyth and Kirkintilloch East. There have been considerable benefits to our faith communities from their ability to take advantage of freedom of movement and welcome EEA nationals into their communities. Faith communities, especially Churches of all denominations, have congregations with many EEA nationals among their membership and they are also often individuals who act as pastors, counsellors, youth workers and musicians.
As we have heard, many faith organisations have needed EEA nationals to cover short-term or sometimes longer-term appointments into leadership positions. That is especially true in areas where it has been hard to recruit. Free movement has also allowed faith communities some flexibility in terms of shared mission work, with UK nationals working overseas, undertaking mission trips, musicians performing in Europe at faith-based events or running camps and youth conferences. Faith communities have been able to bring EEA speakers and volunteers to help communities and to run events without the associated costs and rules around visitor visas and the tier system.
There will be a number of consequences for those communities as a result of the loss of free movement. First, while many faith groups have been effective in pointing their members to the EU settlement scheme where that is relevant, uncertainty remains about the scheme, what it means for families, for continuity of residence and for faith communities who are trying to keep people in their communities.
Faith communities looking to employ or to bring in volunteers from the EEA will now have to navigate the tier system, as they would for non-EEA nationals. As we heard, that brings complexity. With the greatest of respect to the right hon. Member for Scarborough and Whitby, I do not think it is the case that all faith communities have found that an easy system to navigate or to get the relevant approvals. There are also significant additional costs for sponsorship licences and visas. Indeed, it will not be cheap, especially when we include the additional NHS surcharge. A religious worker will be able to stay for up to two years. The cost for a one-year visa before administration costs is around £244, plus the NHS surcharge of £624, added to that the sponsorship licence fee and associated costs. On top of that, the community will have to fund any dependant costs and may also be providing the cost of flights, accommodation and training for the religious workers, and sometimes a small stipend. For smaller faith communities, that starts to become a very significant expense.
Many faith communities that rely on overseas workers tend to be found in the poorer parts of the UK. Poorer communities and poorer congregations are part of a poorer overall landscape and so the faith organisation itself will be less well resourced. It cannot draw on a wealthy congregation. That has a particular impact on smaller denominations and diaspora Churches, which will find that the loss of free movement will mean that poorer communities, who could benefit most from additional pastoral support, will feel the impact the harshest.
Proof of savings is difficult for some orders, which have vows of poverty, making it difficult for individuals to prove they can sustain themselves even if the order will cover all their living arrangements. If a person is needed quickly to cover a gap—the hon. Members for Argyle and Bute and for Cumbernauld, Kilsyth and Kirkintilloch East talked about the potential absence of a priest for a range of personal reasons—the procedure will now mean that there will be delay in bringing in that cover. I am not talking here about roles that fall short of being a full minister of religion, but there are roles that will still involve some level of religious duty. For example, there continues to be uncertainty about those coming in to work with children, and about pastoral work and preaching, and an understanding of the definitions of what those roles encompass, which is a particular issue with some particular faiths of particular traditions.
There is also a concern, as I have said, among faith communities that bring in musicians who may be self-employed and who may work in multiple settings. As the hon. Member for Cumbernauld, Kilsyth and Kirkintilloch East pointed out, seminaries that conduct formation in English are not necessarily regarded as meeting the English language requirement.
I hope the whole Committee will agree about the benefits of facilitating religious workers to come in to support our faith communities. In that spirit, I will ask the Minister a number of questions. What assessment have the Government made of the level of upscaling needed in the Home Office to process additional sponsorship licences for the purposes of ministers of religion or religious workers, or charity workers and faith communities, due to the removal of free movement?
Echoing the hon. Member for Argyll and Bute, what conversations are the Home Office having with faith groups regarding preparation for the immigration system that will affect them post-December? What help will be provided with regard to navigating sponsorship licences and understanding the costs that faith communities will have to meet?
At times, non-EEA nationals who have wanted to come to the UK for a short-term conference or to speak at an event have been denied visas; I have seen that in my own constituency. What assurance can the Minister give to faith communities that EEA nationals entering the UK for a conference or event for short-term study will not be restricted from doing so, and that appropriate decision-making will take place?
Will the Minister commit to reviewing the definitions of “minister of religion” and “religious worker”, and actively consult a wide variety of denominations and faith communities? What will the Home Office do to improve faith literacy among decision makers? I have to say that the asylum system has not given me much confidence that religious literacy in decision-making is where it needs to be.
What assessment have the Government made of the impact on creatives, such as musicians used by faith communities? Will they still be able to come to the UK? Will those in a different visa route be able to transfer if they take on a role in a faith community? For example, could someone who has arrived in the UK as a student transfer routes if they become a religious worker? Will it be possible for individuals to come to the UK as volunteers in faith communities and, if so, what restrictions will be applied to their activities? What discussions have the Government had with faith communities about their responsibility to carry out right-to-work checks?
This is an important issue for an important element of all our communities. I do not think the Government intend the impact of the removal of free movement to harm the operation of our faith communities, but the changes will cause real difficulties across a range of faiths, and particularly in those communities that most need the support that visiting religious workers can provide. I hope the Minister will be able to reassure the Committee.
Kevin Foster
I genuinely thank the hon. Member for Cumbernauld, Kilsyth and Kirkintilloch East for tabling this amendment. He always speaks with real passion, even when we disagree, as we did in the last debate, and his comments on this amendment have been no exception. We can perhaps be slightly more consensual now, even if the Government do not agree with the amendment.
I will deal briefly with a couple of points that have just been raised. First, in relation to decisions that would be taken on visitor visas for EEA nationals visiting faith groups, we have already made it very clear that EEA nationals will be non-visa nationals. Therefore, those looking to make visits to the United Kingdom would not be required to apply for a visa. They would be able to come through the e-gates and their visiting experience would be very similar, for example, to that of a New Zealander, a Canadian or a Japanese citizen at the moment, who can come through the e-gates and be granted visit leave. In a moment, I will come on to speak in a little more detail about the range of activities that a visitor can perform.
As a constituency MP, I have similarly sometimes been involved in decisions about faith communities, particularly a couple of years ago, when there needed to be some representations about how the income of Paignton parish church was considered, and whether a medieval church was an established organisation. I was only too happy to vouch that a church built in the 13th century is an established organisation, and that it was not set up for an immigration purpose, for pretty obvious reasons. I am genuinely always happy to hear representations from particular communities about that, as I did in that instance as a constituency MP.
We published the impact assessment for the Bill. I am clear that a lot of the Churches’ right-to-work checks will be the same as now anyway, because they have to do that for EEA citizens and UK nationals. When there is a right-to-work check, every one of us should be asked to present evidence that shows our right to work, as with right-to-rent checks; I recently had to show my passport to comply with those requirements, and rightly so. We are clear that there should be no discrimination there; those checks should be applied irrespective.
On the other points made, similarly, many faith communities, and certainly the larger faith communities present in the United Kingdom, are already sponsors. Much of that will transfer into the new system, so in many ways the experience of non-EEA nationals—non-visa nationals, to be absolutely clear—will be transferred over with the various concessions and opportunities, such as pay, performance, engagement and other items.
On the specific point made by the hon. Member for Argyll and Bute, I do not have officials’ or my predecessors’ diaries to hand, in terms of meetings, but as I met other faith communities at the invitation of Members of Parliament, I am certainly more than happy to meet the Scottish Catholic bishops representatives and to engage and have a conversation with them. They are a key partner. I certainly recognise the valuable social role that many Catholic churches play in communities across the United Kingdom. I am always happy to have a conversation about some of the definitions, particularly around visitor, tier 5 and tier 2. Some things, as I will come on to in a minute, will actually be covered by our visitor provisions, as well as under tier 5. Again, I am happy to have a conversation with them on those points.
I am genuinely grateful to the SNP for initiating this debate, because it gives me the opportunity to put on the record how the Government value the role faith communities play in this country, and more importantly, the contribution that many people who have migrated here have made and are making to the functioning and wellbeing of our faith communities. Faith communities enhance our national life, and they are stronger because people from around the world come and contribute to every aspect of their work, not least in bringing their skills to leadership in communities across the UK, hence why, in our future points-based immigration system, there will continue to be routes for those connected with faith and religion to come to the UK. Within the current immigration system, there are two routes specially designed for them, and this will continue in the future, to assist with consistency.
As referred to already, the tier 2 route for ministers of religion—effectively a skilled worker route—is for religious leaders such as priests, imams and rabbis, as well as missionaries and members of religious orders, taking employment or a role in a faith-based community. They can come for up to three years initially, which they can extend to six years, and they may qualify for settlement—indefinite leave to remain—after five years. Again, those who receive indefinite leave to remain are then exempted from the immigration health surcharge and will also have a permanent unlimited status within the United Kingdom.
Additionally, we have the tier 5 religious workers’ route. It should be clear to the Committee that this was designed with a very different purpose in mind. It permits stays of up to two years and caters for those wishing to undertake supportive, largely non-pastoral roles. In common with all tier 5 categories, as it is temporary at core, there is no English language requirement.
That last point is crucial. As I indicated, we welcome faith leaders from around the world, and in many communities regular conversations and events bring faith communities together in opposition to those who wish to sow the seeds of division between them. It is therefore right that those who want to lead a faith community, which involves both preaching and helping the faith community to interact with the wider community in their leadership role, should have a proper command of English to enable this—especially the valuable inter-faith work that goes on in so many communities.
I think of what happens locally in Torbay, and of the type of exchanges facilitated in the midlands, particularly by Coventry cathedral, given its background in different faiths. Those exchanges really cannot be facilitated if there is not a good command of a working language within the local community.
Mr Goodwill
Will the Minister pay tribute to John Sentamu, the recently retired Archbishop of York, who came from Uganda during the time of Idi Amin and has made a fantastic contribution to religious and general life in our country?
Kevin Foster
I am only too happy to do so and to put the Government’s thanks to him on the record. He provided an inspiration and a ministry that will be remembered for a very long time, and he broke the mould of what people expect from someone in such a senior position in the Anglican communion. Such contributions are very welcome and we want them to continue. We want to see that sort of person, particularly from the worldwide Anglican communion, as well as from the See of Rome—we have seen some amazing people come and be part of that community here in the United Kingdom. It is well worth paying tribute to such an example of someone who has achieved amazing things and revealed what he saw as God’s purpose for him as Archbishop of York. I am sure that we all wish him a very long retirement—not from holy orders, of course, which are a calling for life, but from his duties as archbishop.
I have heard the concerns expressed today about those who come to the UK for a very short term to provide cover while the incumbent minister is on holiday. It is worth pointing out our visitor rules, which will extend to EEA nationals as they currently extend to non-visa nationals, as I indicated earlier. In the immigration rules, the list of permitted activities specifically states that visitors may
“preach or do pastoral work.”
That allows many faith communities to hear inspiring preachers or hear about their faith’s work in other countries, especially in support of overseas aid and development work. Visitors are permitted to lead services on an ad hoc basis, which may provide a solution for communities that wish to invite visiting clergy to cover short-term absences, although they may not be paid for it—in many religious communities, that would not necessarily be a bar to providing a period of short-term cover.
It is worth my reminding the Committee that we have confirmed that EU citizens, who are the focus of the Bill, and EEA citizens more widely can continue to come to the UK as visitors without a visa, without prior approval, and use e-gates, where available, on arrival in the United Kingdom.
I hope that the SNP will consider its position on amendment 11. I say gently that we all need to reflect on whether it is appropriate to have faith communities led by those without a command of English adequate for the task—not least at a time when we need to come together more, not be separated by barriers of language. I therefore believe that the review that the amendment would put in place is not necessary. I invite the hon. Member for Cumbernauld, Kilsyth and Kirkintilloch East to withdraw the amendment, but I am always more than happy to discuss further how we can ensure that our faith communities are supported and that there is clarity on the three routes that I have outlined for ministers and those involved in faith communities to come to the United Kingdom and play the role that many have done in an inspiring way over many years.
Stuart C. McDonald
I am grateful to my hon. Friend the Member for Argyll and Bute and the hon. Member for Stretford and Urmston for their detailed contributions to the debate, and to the Minister for his response. We are back in much more convivial and consensual territory, and I much prefer it; I feel much more comfortable there. I am particularly grateful for the Minister’s offer to meet the Bishops’ Conference, which I am sure will be very welcome. This debate has helped us clarify how close we are to making sure the system works for all interested parties.
I scribbled down the fact that the Minister highlighted two routes, but of course there are three. Tier 2 is much more about the longer term, and affects ministers who want to come and settle, and the tier 5 route is not for people who will lead worship. Then there is the visitor category, but, as the Minister said, it does not allow for payment to be made, and the organisations that I have spoken to say that if somebody is here for a couple of months, there are challenges if they cannot offer to pay.
We are close, but those three routes do not quite resolve the difficulties that we have highlighted. If the Minister is able to engage with the bishops’ conferences and other religious organisations, we may be able to tweak one of the three existing routes or come up with another one. It is probably better to fix the three than to come up with a fourth. I hope we will find a resolution, and I am glad that the Minister is engaging positively. For that reason, I see no reason to press for a vote, so I beg to ask leave to withdraw the amendment.
Amendment, by leave, withdrawn.
The Chair
I have to be entirely neutral, of course, but it would be nice if the Government allowed us to have our religious services again, as has happened in the rest of Europe.
Clause 8 ordered to stand part of the Bill.
Clause 9 ordered to stand part of the Bill.
New Clause 9
Report on the impact to EEA and Swiss nationals
“(1) This Act shall not come into effect until a Minister of the Crown has laid a report before each House of Parliament setting out the impact of the Act on EEA and Swiss nationals in the UK.
(2) A report under subsection (1) must consider—
(a) the impact on EEA and Swiss nationals of having no recourse to public funds under Immigration Rules;
(b) the impact of NHS charging for EEA and Swiss nationals;
(c) the impact of granting citizenship to all EEA and Swiss health and social care workers working in the UK during the Covid-19 pandemic;
(d) the impact of amending the Immigration and Nationality (Fees) Regulations 2018 to remove all fees for applications, processes and services for EEA and Swiss nationals; and
(e) the merits of the devolution of powers over immigration from the EEA area and Switzerland to (i) Senedd Cymru; (ii) the Scottish Parliament; and (iii) the Northern Ireland Assembly.
(3) A Minister of the Crown must, not later than six months after the report has been laid before Parliament, make a motion in the House of Commons in relation to the report.
(4) In this section, ‘health and social care workers’ includes doctors, nurses, midwives, paramedics, social workers, care workers, and other frontline health and social care staff required to maintain the UK’s health and social care sector.”—(Stuart C. McDonald.)
This new clause would ensure that before this Act coming into force, Parliament would have a chance to discuss how EEA and Swiss nationals will be affected by its provisions, including no recourse to public funds conditions, NHS charging, the possibility of granting British citizenship to non-British health and social care workers, removing citizenship application fees and the potential devolution of immigration policy of EEA and Swiss nationals to Wales, Scotland and Northern Ireland.
Brought up, and read the First time.
The Chair
With this it will be convenient to discuss the following:
New clause 10—Extension of registration for EU Settlement Scheme—
“(1) The EU Settlement Scheme deadline shall be extended by a period of six months unless a motion not to extend the deadline is debated and approved by both Houses of Parliament.
(2) Any motion not to extend, referred to in subsection (1), must be debated and approved no later than three months before the deadline.
(3) In this section, ‘the EU Settlement Scheme Deadline’ means the deadline for applying for settled or pre-settled status under the Immigration Rules.”
This new clause would ensure the EU settlement scheme was not closed to new applications until Parliament has approved its closure.
New clause 11—Application after the EU Settlement Scheme deadline—
“(1) An application to the EU Settlement Scheme after the EU settlement scheme deadline must still be decided in accordance with appendix EU of the Immigration Rules, unless reasons of public policy, public security, or public health apply in accordance with Regulation 27 of the Immigration (European Economic Area) Regulations 2016 (as they have effect at the date of application or as they had effect immediately before they were revoked).
(2) In this section—
‘an application to the EU Settlement Scheme’ means an application for pre-settled or settled status under appendix EU of the Immigration Rules;
‘the EU Settlement Scheme Deadline’ means the deadline for applying for settled or pre-settled status under appendix EU of the Immigration Rules.”
This new clause would ensure that late applications to the EU settlement scheme will still be considered, unless reasons of public policy, public security or public health apply.
New clause 25—Report on status of EEA and Swiss nationals after the transition—
“(1) This Act shall not come into effect until a Minister of the Crown has laid a report before each House of Parliament setting out the impact of the Act on EEA and Swiss nationals in the UK.
(2) A report under subsection (1) must clarify the position of EEA and Swiss nationals in the UK during the period between the end of the transition period and the deadline for applying to the EU Settlement Scheme.
(3) A report under subsection (1) must include, but not be limited to, what rights EEA and Swiss nationals resident in the UK on 31 December 2020 have to—
(a) work in the UK;
(b) use the NHS for free;
(c) enrol in education or continue studying;
(d) access public funds such as benefits and pensions; and
(e) travel in and out of the UK.”
This new clause would require Government to provide clarity on the rights of EU nationals in the EU in the grace period between the end of the transition period, and the closure of the EU Settlement Scheme.
Stuart C. McDonald
With new clause 9, which stands principally in the names of my hon. Friends in Plaid Cymru, we turn to the central matter of the Bill: what will happen to EEA and Swiss nationals who are already here? The new clause simply calls on the Government to report on what the implications for EEA and Swiss nationals will be. That includes reporting on the impact of no recourse to public funds, NHS charging, the granting of citizenship to all EEA and Swiss health and social care workers working in the UK during covid-19, and certain fees. It also includes—we will probably not discuss this in great detail—the merits of the devolution of powers over immigration from the EEA and Switzerland to different parts of the United Kingdom. Those are all perfectly reasonable requests.
I want to focus on new clauses 10 and 11, which bring us back to the settlement scheme. We touched on that on Thursday, when Opposition Members made the case for a declaratory system, meaning that people would have their rights automatically enshrined in law. It would still apply to the settlement scheme so that they could prove their status and navigate employment, social security and other rights. I regret that the Government and the Committee rejected that proposal, but I have taken that on the chin and moved on. However, that puts the Government under a greater obligation to spell out what should happen to eligible individuals who do not apply for the settlement scheme by 30 June 2021. I have tried on a huge number of occasions to get them to reveal what work they have done to estimate how many people might not apply, even in broad-brush terms, and how they would respond.
As we heard in evidence, it is blindingly obvious that, even with all the good work that is going on, the Government will struggle to get above 90% of the target population. Getting above 90% would be a great success, given the international comparison. If the Government fall just 5%, 6% or 7% short of the target, hundreds of thousands of people will suddenly be without status and will lose any right to be in this country on 1 July 2021. By all accounts, this is a huge issue and we need to push the Home Office further to set out how it will address it. So far, all we have been told is that it will take a reasonable approach. That is fine, but it is not enough. We need much more detail, and new clauses 10 and 11 are designed to push the Government on that.
Mr Goodwill
Does the hon. Gentleman share my concern that extending the deadline by six months would encourage those who have been putting it off to put it off for another six months?
Stuart C. McDonald
Not really. People still have every incentive to apply for the scheme. On 1 July next year the deadline will have passed. People might put it off for six months, but I would far rather that than subject tens and probably hundreds of thousands of people to not having any rights at all. It is much the lesser of two evils. As I say, there are different ways in which we can do this. New clause 11 would allow people to apply after the deadline. I will turn to that in a moment. I want to set out exactly what new clauses 10 and 11 are designed to do.
New clause 10 would ensure that the EU settlement scheme was not closed to new applications until Parliament had approved its closure. We want to see what the plans are and scrutinise how the situation will be handled. Until we are satisfied, we will keep extending the scheme in order to protect people from the loss of their rights and from the hostile environment and the threat of removal. Why on earth should MPs give the Home Office a blank cheque to deal with this as it pleases? We will have that debate and the right hon. Member for Scarborough and Whitby can make his point that it will lead to a delay in people making applications, but I am firmly of the view that that is much the lesser of two evils.
On the closure of the settlement scheme, people who have not applied for a status will have no legal basis to remain in the UK after the grace period, no matter how long they have lived in the UK. They will be liable to removal and will face the hostile environment. After the grace period, a huge group of people will still not have applied. No similar scheme has ever reached 100% of its target audience. New clause 11 would bring back control of the situation to Parliament and allow us to be fully informed as to where the settlement scheme has got and what the Government’s plans are for dealing with this huge issue before we sign off on closure of the scheme. It is a modest proposal, but hugely important.
New clause 11 would ensure that late applications to the EU settlement scheme would still be considered unless reasons of public policy, public security or public health apply. In tabling the new clause, we are asking the Minister who he thinks does not deserve a second chance after 30 June next year. Who does not deserve the reasonable response that he has spoken about in the past? Under the new clause, applications made after the deadline could be ignored for restricted reasons relating to public policy, public security or public health. However, we want to know who, on top of that, the Minister thinks should be deprived of their rights and the ability to remedy the situation in which they find themselves. People will be unable to live in this country and they will be liable to removal. We need to know much more about the grounds on which people will be able to make a late application. What are the reasonable grounds that the Home Office will accept? They have yet to be defined. As far as we can tell, they will comprise only a very narrow list of exemptions, including, for example, for those with a physical or mental incapacity, and for children whose parents have failed to apply on their behalf.
As I have said many times, the deadline will be missed by many people for good reasons beyond those that I have just outlined. People will simply not be aware of the need to apply, and people with pre-settled status might forget to reapply for full settled status. I have set out a million times why people will not understand that the settlement scheme applies to them. Rules on nationality and immigration status in this country are hugely complicated. There will undoubtedly be people from all walks of life who think that they are British citizens and who already have a right of residence in this country. They will not appreciate that, in fact, they need to apply to the scheme. The consequences of making such a mistake can be dreadful. If we simply leave the Bill as it is, people will lose the right to be in this country and will be removed and subject to the hostile environment. Alternatively, we could at least leave open to them the option of being able to apply to the scheme after the deadline has passed. They would still have every incentive to apply, because they would need to evidence the rights that they access through the settled status process.
I ask the Government to look positively on these new clauses, and at the very least to provide much more information and assurance about how they are going to approach this issue. Up to this point, there has been barely a flicker of recognition that this is something that needs to be addressed, but we are talking about tens, possibly hundreds, of thousands of people being left in an appalling situation.
Holly Lynch
I believe that it is appropriate to speak to new clause 25 as part of this grouping. The hon. Member for Cumbernauld, Kilsyth and Kirkintilloch East has already explained his commitment to and passion for new clauses 10 and 11. Our new clause 25 is not dissimilar to new clause 9. New clause 25 is tabled in the name of my hon. Friend the Member for Torfaen (Nick Thomas-Symonds), who is the shadow Home Secretary, and myself and my hon. Friends.
New clause 25 focuses on the need to put to bed some of the anxieties of those who will not have had their status confirmed by the time the transition period ends at the end of this year. When free movement ends, eligible EEA and Swiss nationals will still have until the end of the grace period to apply for status through the EU settlement scheme, which does not close until the end June 2021. With this in mind, all the conversations we have had with those European citizens who have either applied or are planning on applying to the settlement scheme have centred on what their status will be between the end of free movement and their status being granted, which could happen up until the end of June 2021 and, in some cases, beyond that.
The new clause asks the Government to put together a report on the status and rights of people during that window and to lay it before both Houses for consideration. We are calling on the Government to recognise the genuine sense of vulnerability felt by people who may fall into that category and to provide some assurance, in a report to Parliament, guaranteeing that those people, who are eligible, will have a lawful status and not be disadvantaged during those six months.
I asked Luke Piper, immigration lawyer and head of policy at the3million, about this issue in last week’s evidence session. It is a top priority for him and his group. He told the Committee:
“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.”––[Official Report, Immigration and Social Security Co-ordination (EU Withdrawal) Public Bill Committee, 9 June 2020; c. 61, Q125.]
EU citizens in the UK have already endured a lot of uncertainty about their futures and are now also facing insecurity on their lawful status. The suggestion that employers or landlords should not be checking to confirm their personal status during this grace period seems to be an approach fraught with potential problems. I am keen to hear what engagement Ministers have with employers and landlords on this issue, and how any suspension of the hostile environment will be managed. Last December, the3million commissioned a survey on EU citizens’ experience of the settlement scheme. It was the largest survey of its kind and indicated that they are already facing barriers, with 10.9% of respondents saying they have already been asked for proof of settled status, even though it is not yet a requirement.
Although this new clause focuses on the rights of those who apply after the transition ends and who get their status before the EUSS deadline, there will presumably then be a group of particularly vulnerable people who apply before the deadline ends but who do not get their status until after the end of June 2021. What happens, for example, if they apply on 20 June 2021, which is before the deadline, but do not get confirmation of their status until 20 July, which is after the end the transition period and the closure of the EUSS? What are the rights and status of that cohort of people?
Although the numbers coming through are good, we know that lots of people are still yet to apply. As we have heard, we will never know exactly how many people are in that category. We will never know whether there is going to be a surge towards the end of the scheme, which will make this a bigger problem than many of us would like. When asked about the numbers and types of people who will struggle to apply on time, Luke Piper said:
“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.”––[Official Report, Immigration and Social Security Co-ordination (EU Withdrawal) Public Bill Committee, 9 June 2020; c. 62, Q126.]
Coronavirus has resulted in dedicated Home Office phone lines being closed, an inability to receive hard copies of documentation and specialist support services being stopped, impacting on the progress being made. The BMA has said that some doctors working tirelessly on the frontline may be in that cohort of people who have to leave things until next year, simply because they will be working flat out for the foreseeable future. After the transition period comes to an end, thousands of people might not have confirmation of their status.
Recent research by the3million on young Europeans living in London made some concerning findings. The focus group was the first time that some participants had heard about the EU settlement scheme, and a majority had not applied to it, despite being viewed as an easy to reach group because of their education and digital literacy. The new clause’s proposed report on that group’s rights between the end of the transition period and the EU exit deadline would be of great assistance in clarifying the status and rights of those harder-to-reach groups. It would also assist in getting them to submit their applications towards the end of the scheme.
It is important to note that, after the deadline, the EU settlement scheme will not close in practice, because people with pre-settled status will need to apply for settled status, and it will also be used by people will be joining family members in the UK after the deadline. Moreover, we will still be processing those applications that arrive on time but that will have to wait until the other side of the deadline for a decision to be issued.
Inevitably, the problem is the hostile environment and the long, dark shadow of the Windrush scandal. The fear brought about by the absence of a clear framework of rights and migration status for EEA and Swiss nationals between September 2020 and June 2021 is all too real. We therefore ask the Government to provide clarity on the rights of EU nationals in the UK during the grace period. EU citizens who have contributed and given so much to our society and country deserve to have security and confidence in their status.
Mr Goodwill
I very much sympathise with what the hon. Member for Halifax has just said. There is real concern that EEA nationals who have been working here, contributing not least to our health service, may find themselves missing the deadline. However, I do not agree that the way to address that is through new clause 10, as I made clear to the hon. Member for Cumbernauld, Kilsyth and Kirkintilloch East. Some like myself would always wait until the deadline before submitting an essay or article. By extending the period by six months, we might well just encourage people to put off the chore—as they see it—of applying.
I ask the Minister to reassure us that, as we approach the deadline, the Government will engage in a communications exercise and advertising campaign, particularly in some of the main EU languages, so that people are aware of the deadline and can submit their applications in good time for them to be processed.
Kate Green
That is an important point, in particular in relation to those communities, such as the Roma community, that have been hard to reach with information about the scheme. The Government have made some funding available for community organisations to reach such communities, but it would be extremely welcome to follow the suggestion that a particular push be made to communicate with those more remote communities as the deadline approaches
Mr Goodwill
The hon. Lady is absolutely right. Indeed, while many EU migrants have made a real effort to integrate and to speak English in their homes, encouraging their children to speak English, others have not assimilated as well and are still speaking their native language, as is their right. It is important that we communicate in those languages.
Perhaps we should also look at how we communicate through schools, because the children of some families who have come from the EU speak very good English, although their parents struggle with it. The children’s secondary schools may be another good way to get through to such families. I hope that the Minister will pick up that point and reassure us that the Government will be making the effort to communicate with the general population, to ensure that we can help our work mates and so on.
Domestic Abuse Bill (Tenth sitting)
Tuesday 16th June 2020
(4 years, 6 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 16 June 2020 - (16 Jun 2020)
Jess Phillips (Birmingham, Yardley) (Lab)
I beg to move, That the clause be read a Second time.
The Chair
With this it will be convenient to discuss new clause 9—Offence of non-fatal strangulation in domestic abuse context—
A person (A) commits an offence if that person unlawfully strangles, suffocates or asphyxiates another person (B) to whom they are personally connected as defined in Section 2 of this Act, where the strangulation, suffocation or asphyxiation does not result in B’s death.”
This new clause will create a new offence of non-fatal strangulation in domestic abuse offences.
Jess Phillips
I apologise at the outset, because the new clause contains rather technical legalese and quite graphic language. The purpose of the new clauses is to correct the inadequate way in which the law is applied in practice on the ground. Currently, we do not criminalise behaviour that was not already criminal—obviously, it is already a crime to strangle somebody; I can confirm that in case anyone was worried that it is not. The new clauses address a systemic problem that is highly gendered, as I will demonstrate, and if the Bill presents a once-in-a-generation opportunity to make a law work for domestic abuse victims and survivors, this can make a real contribution.
It is worth mentioning that exactly the same debate has taken place in the United States, Australia and New Zealand, all of which—most recently New Zealand, in 2018—have introduced specific laws on non-fatal strangulation. I will discuss that in more detail later. Before speaking to the new clauses in greater detail, it is important to establish that what I am talking about is completely distinct from the rough sex defence dealt with in new clauses 4 and 5, which also include asphyxiation. I am talking about strangulation in the context of physical domestic violence rather than strangulation during sex. New clauses 4 and 5 deal with consent issues relating to injuries inflicted during sex. There is of course some overlap, which I will address briefly at the end of my speech.
Strangulation and asphyxiation are the second most common method of killing in female homicides after stabbing. Some 29% of female homicides in 2018— 43 women—were killed by that method, compared with only 3% of male homicides. However, the important thing to note about non-fatal strangulation is that it is generally not a failed homicide attempt, but a tool used to exert power and control and to instil fear within an abusive relationship. That has been explored in academic literature and in detailed interviews with survivors. Strangulation sends the message, “If you do not comply, this is how easily I can kill you.” Researchers have observed that many abusers strangle not to kil, but to show that they can kill, using strangulation as a tool of coercion, often accompanied by death threats. The result is compliance and passivity by the victim in the relationship in the longer term. It is worth noting that I have very rarely come across a victim of domestic violence who has not been strangled as part of their abuse.
It is widely recognised that non-fatal strangulation and asphyxiation, such as suffocation with a pillow, are a common feature of domestic abuse and a well known risk indicator. The standard risk assessment tool used by police and domestic abuse services, which is called the DASH—domestic abuse, stalking and harassment—checklist, includes a question about attempts to strangle, choke, suffocate or drown the victim. The questions in the DASH checklist were identified through extensive research on factors associated with serious domestic violence and homicide. Researchers found that a history of strangulation presents an eightfold increase in the risk of death.
Although there can often be a lack of visible injury, it is important to recognise the very serious medical consequences of strangulation, which are not immediately visible. Many of the medical effects would come as a surprise to most members of the public, including survivors of domestic abuse, who may not realise the true dangers. Strangulation or suffocation result in the blocking the flow of oxygen to the brain by preventing the person from breathing, and the flow of blood if the neck is physically constricted. Loss of consciousness can occur in 10 to 15 seconds and a lack of oxygen to the brain results in mild brain damage. Studies show that between 8.9% and 39% of those who are strangled lose consciousness.
Although there may be little or no visible injury, numerous long-term medical effects of strangulation are reported, many of them neurological problems. They include a fractured trachea or larynx, internal bleeding, dizziness, nausea, tinnitus, ear-bleeding, raspy voice, neurological injuries such as facial or eyelid droop, loss of memory, and even stroke several minutes later as a result of blood clots; there is also increased risk of miscarriage. In addition to the longer term physical impacts, reports describe strangulation as extremely painful, and the inability to breathe is obviously very frightening. It is described in one report as “primal fear”. Anybody who has not been able to breathe, for whatever reason, understands that fear and the control over you that it will have.
Not surprisingly, strangulation has been found to result in long-term mental health impacts. Post-traumatic stress disorder is closely linked to experiencing fear of imminent death. Four studies report the victim’s sense of existential threat—a firm conviction that they were going to die. Recent research included interviews with 204 woman attending an NHS sexual assault referral centre in Manchester who reported that they had been strangled. In response to open questions about how they felt, a high proportion stated that they thought they were going to die. Of those 204 women, 86, or 42%, had been assaulted by a partner or ex-partner. The others had been sexually assaulted by someone with whom they were not in a relationship, such as a first date, an acquaintance or a stranger. A survey of 13 studies of delayed psychological outcomes identifies depression, anxiety, suicidal ideation, nightmares, PTSD, dissociation and the exacerbation of existing mental health difficulties. Obviously, many of the women experiencing non-fatal strangulation were also experiencing other forms of domestic abuse, but the clear message is that strangulation certainly contributes to the psychological trauma.
Reports on prevalence of strangulation within intimate partner violence describes a hidden epidemic. A range of studies indicates that though the lifetime incidence of strangulation is between 3% and 9.7% in the adult population, that rises to 50% and 68% for victims of recurrent domestic abuse. Two studies of intimate partner violence and sexual assault where medical examinations took place found that strangulation was involved in 20% to 23% of cases respectively. Those figures vary, but one message is clear: non-fatal strangulation is widespread and a common feature of domestic abuse, not some kind of aberration.
Reports from frontline domestic abuse workers in England and Wales demonstrate a number of issues. There is a chronic undercharging and a failure by both police and prosecutors to appreciate the severity of non-fatal strangulation. That was also found in comparative studies in the United States and New Zealand. The seriousness of strangulation as a domestic abuse risk indicator is often missed. A separate category of offence would emphasise the importance of non-fatal strangulation when risk assessments are carried out by the police.
Strangulation is generally prosecuted as an assault. There may be a red mark or no physical signs at all, even after a serious assault, and the lack of observable injuries often means that offenders’ conduct is minimised, so that they are charged with common assault rather than with actual bodily harm. As Members will no doubt be aware, common assault is a summary offence, which can only be tried in the magistrates court, whereas ABH is a more serious either-way offence, which can be tried either in the magistrates or the in Crown court. All summary offences must be charged within six months—and that puts further pressure on a victim in this circumstance to deal with the issue in a certain time frame.
The Crown Prosecution Service guidance for prosecutors on offences against the person states that, when deciding whether to charge with common assault or ABH,
“Whilst the level of charge will usually be indicated by the injuries sustained, ABH may be appropriate”,
where the circumstances in which the assault took place are more serious, such as repeated threats or assaults on the same complainant, or significant violence—for example,
“by strangulation or repeated or prolonged ducking in a bath, particularly where it results in momentary unconsciousness”.
I added my own emphasis, by the way—that is not the emphasis in the CPS guidance. The guidance therefore indicates that non-fatal strangulation and suffocation offences would result in a charge of ABH rather than of common assault. However, that is not what happens in practice in a great many cases.
The Centre for Women’s Justice carries out training for local domestic abuse services around England and Wales. Over the past two years they have trained more than 32 organisations at 24 training days in London, the midlands, the north-east and north-west of England, the north and south of Wales, and the south-east. Their training includes the CPS guidance I have quoted. They state that in most if not all training sessions, domestic abuse support workers report that where cases involving strangulation are charged, this is generally as common assault. They say that they hear this consistently from support workers across the country, and therefore believe this to be a systemic issue rather than local, isolated failings.
They also interviewed the deputy district judge in the magistrates court who sits as a recorder in the Crown court and who reported that undercharging of strangulation incidents appears to be extremely common. She stated that a significant number of domestic abuse cases before the magistrates court that include some element of non-fatal strangulation are charged as a summary offence of common assault, instead of the more appropriate offence of ABH. This information is obviously anecdotal, but may not come as much of a surprise to those who work on domestic abuse cases within the criminal justice system. Undercharging has been identified as a problem in the US, Australia and New Zealand. It is an inherent problem, given that strangulation often results in no visible injuries or just a red mark, and police officers are usually focused on the severity of physical injuries when they deal with assault cases. It is a very unusual type of assault, in that serious violence does not result in the level of injury that can be seen and measured easily.
There is currently no distinct offence of non-fatal strangulation or asphyxiation. Section 21 of the Offences Against the Person Act 1861 contains an offence of attempting to choke, suffocate or strangle in order to commit an indictable offence. Therefore, this only applies when the strangulation is done in order to commit some other serious offence. For example, the Centre for Women’s Justice was told of a case in which a woman was raped and then strangled; she was told by the CPS that the section 21 offence could have been used if he had strangled her before he had raped her, as a pattern in order to rape her, but that this offence could not be used because the rape and strangulation took place in the wrong order. This is obviously ridiculous. The 2015 Law Commission report on the Offences Against the Person Act concluded that this offence was needlessly specific and should be abolished.
It is usually difficult to prove intent for an offence of attempted murder; as noted earlier, the intention is often to frighten and coerce rather than to kill, so a charge of attempted murder is not an option. Therefore, assault is generally the only option for the prosecution, either common assault or ABH.
In a very large number of cases of strangulation, suspects are not charged at all because the six-month deadline for summary offences such as common assault charges has passed. That time limit does not apply to either-way offences. When strangulation is treated as common assault rather than ABH, cases are closed by the police because the deadline has passed without referral to the CPS. If it were dealt with as an either-way offence, that would not be done, and those cases would be sent to the CPS. Police have the power to charge summary offences without a charging decision from the CPS under the director’s guidance on charging. We do not know whether in practice officers obtain input from the CPS in most of these cases.
Frontline support workers report that police officers tend to focus primarily on physical injuries when assessing domestic abuse situations. Strangulation and asphyxiation leave minimal injury, and are therefore easily dismissed as minor and relatively inoffensive. Even when cases are referred to the CPS, prosecutors are also responsible for undercharging and for undercharged cases proceeding to trial. A new offence of non-fatal strangulation must be an either-way offence rather than a summary offence, both to reflect the severity of the conduct involved and to remove time restrictions. That offence could be included in the Bill, along with a maximum sentence, if new clause 9 were added.
There are numerous side effects flowing from undercharging strangulation as common assault. Not only does the offence charged fail to reflect the gravity of the offending behaviour, but the sentencing options and potential for a custodial sentence are limited due to the initial charging decision. In addition, a summary offence deprives the victim and the defendant of the potential to benefit from the greater resources and attention devoted to the Crown court prosecution. Because the accused has an automatic right of appeal following a summary trial in the magistrates court, the victim may have to undergo the trauma of giving evidence a second time in the Crown court. That automatic right of appeal does not exist in the Crown court.
The Parliamentary Under-Secretary of State for Justice (Alex Chalk)
May I begin by thanking the hon. Member for Birmingham, Yardley for a characteristically forceful argument? At the start, I acknowledge this: non-fatal strangulation is a wicked crime and deeply unpleasant. It is unpleasant for the reasons the hon. Lady set out: it is calculated to degrade and to terrify, and in the course of doing so to ensure that the victim has that profound sense that this could be it—their time could be up. That is why it is such a cruel, offensive and unpleasant crime. I also say by way of preliminary remarks that I am aware of the Centre for Women’s Justice campaign for this new offence of non-fatal strangulation. I wish to put on record my gratitude for their written evidence to the Committee.
I understand the concerns that have prompted the new clauses and I will address them directly. Before doing so, I want to say a little about the existing provisions in the law. In fairness, the hon. Lady did refer to them but there are a couple of points that would assist the Committee if they were teased out a little further.
Several offences can already cover non-fatal strangulation and they range in seriousness from common assault, also known as battery—my hon. Friend the Member for Hertford and Stortford, a magistrate, will know that well—to attempted murder. Within that spectrum, there remain a number of other offences referred to by the hon. Member for Birmingham, Yardley. Strangulation could also be part of a pattern of behaviour amounting to an offence of controlling or coercive behaviour; I shall come back to that in a moment. There is also assault occasioning actual bodily harm, grievous bodily harm, or section 20 assault, and grievous bodily harm with intent, or section 18 assault.
I want to step back for a moment to consider a non-domestic context, just to make some of this clear. For the sake of argument, suppose there is a queue outside a nightclub and somebody wishes to queue barge. He steps in and decides to grab the victim by the throat, throttle them and push them up against the wall. As the hon. Member for Birmingham, Yardley indicated, if that left no marks but the complainant was prepared to make a complaint to the police in the normal way, it is likely that would be charged as a battery. She is right that the charge would have to be laid within six months. It would be heard before the magistrates court—again, she is absolutely right—and would carry a custodial penalty. Even if no mark is left, that assault—it could be a punch on the nose but it could also be strangulation—would be covered in that way.
It is worth emphasising that, if that throttling or that strangulation was carried out in a more extreme way such as to leave marks, it is likely that would cross the threshold of harm which is more than merely transient or trifling. That might sound like rather archaic language, but that is the threshold for ABH. Why is that important? Assault occasioning actual bodily harm is not limited to being tried in the magistrates court; it can be tried on indictment in front of judge and jury and there the sentencing power is a full five years’ custody.
The reason I mention that is because if there is one advantage that has come from these things, it means people are much better able now to gather evidence than they were in the past. It used to be the case that you had to go down to the police station, the force medical examiner had to photograph you and so on. Now, people can get those photographs at the time. The mere fact that two, three, four or five hours later those marks may have gone matters not a jot. If the individual can show that the assault occasioned actual bodily harm, that can lead to trial on indictment and a very serious penalty.
To continue with my example of what happens in the nightclub queue, if the throttling went further and it led to some of the dreadful injuries the hon. Lady referred to—a fractured larynx, tinnitus, neurological injury leading to droop or PTSD—although it is a matter for the independent prosecutor, it is likely that would be charged as grievous bodily harm. If it is grievous bodily harm with intent, because all the surrounding circumstances indicated that that was intended given the harm done, the maximum penalty for that is life imprisonment, and that is an indictable-only matter.
That is the law as it exists at present, and the same legal principles apply in a domestic context as apply in the non-intimate context of a fight in a pub queue. The hon. Member for Birmingham, Yardley made the point: “Well, that’s all terribly interesting, but what about elsewhere in the world?” It is important, while we are mindful of our peers, particularly those in the common law jurisdictions, that we got ahead of the game to a considerable extent with section 76 of the Serious Crime Act 2015. It is worth taking a moment to consider what that ground-breaking piece of legislation introduced—the coercive control stuff.
We are guilty in this place of sometimes saying, “Right, we’ve passed this. Move on. What’s the next exciting and shiny piece of legislation we can pass?” Section 76 is of enormous import in terms of providing prosecutors—I will come to the hon. Lady’s point in due course about whether prosecutors are doing the right thing—with the tools that they need to protect victims. Section 76 says that if the defendant
“repeatedly or continuously engages in behaviour towards another…that is controlling or coercive”,
at a time when the perpetrator and the victim are personally connected, and the behaviour has a serious effect on the victim and the defendant
“knows or ought to know that the behaviour will have a serious effect”
on the victim, that is a criminal offence, punishable by up to five years’ imprisonment.
I wish to dwell on that for a moment, because behaviour is said to have a serious effect within the meaning of that section. It can be proved in two ways. First, if it causes the victim to fear on at least two occasions that violence will be used, or it causes the victim serious alarm or distress, which has a substantial adverse effect on their day-to-day activities. I mention that point because if, as the hon. Lady says, and I am absolutely prepared to accept it, more often than not in an intimate context this is part of a pattern of behaviour—all too often an escalating pattern of behaviour—the tools exist, should the prosecuting authorities seek to use them, to seek the conviction, punishment and disgrace of the perpetrator.
The question then arises of whether police and prosecutors are using the levers available to them. That is a really important point, and it is the central message that I take from the hon. Lady’s speech, which was effectively saying: “I recognise that there are a whole load of statutory provisions here, but why don’t we create a new statutory provision to really focus minds and ensure that this appalling behaviour is prosecuted?” I understand that argument, but we have to ensure that we do not, in that sensible endeavour, risk confusion in the law.
I will say one final thing about the current state of play within the law. There is, as the hon. Lady indicated, a specific offence under section 21 of the Offences Against the Person Act 1861, which makes it an offence to
“attempt to choke, suffocate, or strangle any other person, or…to choke, suffocate, or strangle”
a person in an attempt to render that person
“insensible, unconscious, or incapable of resistance”
with intent to commit an indictable offence. Typically, that is strangling someone in order to rob them, to steal or whatever it may be. I am aware that there can be some evidential difficulties in prosecuting a section 21 offence, particularly if there is no evidence, or insufficient evidence, of injuries, such as reddening and minor bruising to the skin. However, that sits in a wider context of the legislation that exists. There are other options for prosecutors to fill the gap.
There is a risk too, I respectfully suggest, that creating a new offence could limit the circumstances covered, and create additional evidential burdens when compared with existing offences. In other words, we would potentially have a situation where we created a new offence, and prosecutors said, “Hang on—this look a bit like strangulation to me, so we need to look at this new offence. Do we have all the mental elements—the mens rea and the actus reus of the offence—and can we make them out? If not, we shouldn’t charge,” instead of saying, “Hang on—there are a whole load of offences that we could properly charge: common assault, assault occasioning actual bodily harm, and grievous bodily harm with intent. They might have existed for 150 years, but they do the job.”
The key issue, going back to the point that the hon. Lady raised, is whether police and prosecutors are recognising this as a serious matter, and I will come on to that briefly in a moment. Before I do, though, I wish to say something on the clause as drafted. It is always worth going back to the text. New clause 8 says:
“A person (A) commits an offence if that person unlawfully strangles, suffocates or asphyxiates another person (B), where the strangulation, suffocation or asphyxiation does not result in B’s death.”
Sometimes what is important is what is not said, as opposed to what is said. That on its own, if it suddenly came into law, would be deficient, because it says nothing about whether the offence is triable either way, is indictable only or is summary only. It does not say what the sentence would be. It would be sitting there in splendid isolation. That is not a criticism, but as it is presently drafted, that would be a problem. As I say, that is not a criticism, it is just an observation that we certainly could never pass it in its current form.
Jess Phillips
I once again stand here as the right hon. and learned Member for Camberwell and Peckham and the Member for Wyre Forest. I merely speak to the new clauses, although with considerable support from myself behind them. I believe they will wish to discuss them potentially more on Report and so I will withdraw from pushing them to a vote today. I have merely probed in preparation for that. All I would say is that what is happening currently is not working. Whose responsibility that is, is potentially of no mind to the general public. They think that we, in this building, should be sorting it out, but we are not currently assessing properly the marker of strangulation when it comes to homicide. The risk element of what is occurring in every one of our constituencies—how it can be used in a way to stop homicide rather than just being the obvious path towards it—is on all of us as policy makers who have to try to break that link. I am sure this probing will not go away any time soon. I beg to ask leave to withdraw the motion.
Clause, by leave, withdrawn.
New Clause 12
Register for domestic abuse
“(1) The Secretary of State must arrange for the creation of a register containing the name, home address and national insurance number of any person (P) convicted of an offence that constitutes domestic abuse as defined in section 1 of this Act.
(2) Each police force in England and Wales shall be responsible for ensuring that the register is kept to date with all relevant offences committed in the police force’s area.
(3) Each police force in England and Wales shall be responsible for ensuring that P notifies relevant police forces within 14 days if they commence a new sexual or romantic relationship.
(4) A failure to notify the police in the circumstances set out in subsection (3) shall be an offence liable on conviction to a term of imprisonment not exceeding 12 months.
(5) The relevant police force shall have the right to inform any person involved in a relationship with P of P’s convictions for an offence that amounts to domestic abuse as defined in section 1 of this Act.”—(Liz Saville Roberts.)
This new clause would require that any person convicted of any offence that amounts to domestic abuse as defined in clause 1 must have their details recorded on a domestic abuse register to ensure that all the perpetrator’s subsequent partners have full access to information regarding their domestic abuse offences.
Brought up, and read the First time.
Liz Saville Roberts (Dwyfor Meirionnydd) (PC)
I beg to move, That the clause be read a Second time.
The Chair
With this it will be convenient to discuss new clause 49—Monitoring of serial domestic abuse and stalking offenders under MAPPA—
“(1) The Criminal Justice Act 2003 is amended as follows.
(2) In section 325 (Arrangements for assessing etc risk posed by certain offenders)—
(a) In subsection (1), after ““relevant sexual or violent offender” has the meaning given by section 327” insert ““relevant serial domestic abuse or stalking offender” has the meaning given in section 327ZA;”
(b) In subsection (2)(a), after “offenders” insert “(aa) relevant serial domestic abuse or stalking offenders,”
(3) After section 327 (Section 325: interpretation) insert—
“327ZA Section 325: interpretation of relevant serial domestic abuse or stalking offender
(1) For the purposes of section 325—
(a) a person is a “relevant serial domestic abuse or stalking offender” if the offender has been convicted more than once for an offence which is—
(i) a domestic abuse offence, or
(ii) a stalking offence
(b) “domestic abuse offence” means an offence where it is alleged that the behaviour of the accused amounted to domestic abuse within the meaning defined in Section 1 of this Act
(c) “stalking offence” means an offence contrary to section 2A or section 4A of the Protection from Harassment Act 1997.”
This new clause amends the Criminal Justice Act 2003, which provides for the establishment of Multi-Agency Public Protection Arrangements (“MAPPA”), to make arrangements for serial domestic abuse or stalking offenders to be registered on VISOR and be subjected to supervision, monitoring and management through MAPPA.
Liz Saville Roberts
The new clause calls for the creation of a domestic abuse register to ensure that greater and more consistent protection is provided for potential victims of domestic abuse from individuals who have a track record of abusive behaviour in relationships and whose potential for repeat violent actions warrants the threat of intervention.
A domestic abuse register would provide the vehicle for a shift in focus away from reacting to domestic abuse towards a more preventive approach. We know that repeat offending by perpetrators with violent and controlling histories of abuse is common. A 2016 report published by a Cardiff University professor of criminology states:
“Research demonstrates that the majority of male domestic abuse perpetrators are repeat offenders, with English research producing a figure of 83% within a six-year period.”
Data provided by the Metropolitan police to the London Assembly for its domestic abuse report showed that in the year up to September 2019, there were over 13,600 repeat victims of domestic abuse, and 21% of cases discussed at multi-agency risk assessment conferences in London in 2018 were repeat cases. This sobering fact warrants being addressed clearly in the Bill.
The domestic violence disclosure scheme, or Clare’s law, mentioned in a previous sitting, has been in place since March 2014. It is named after Clare Wood, who was murdered by her ex-boyfriend 11 years ago. It enables preventive action to be taken to protect potential victims of domestic abuse, but its use has been widely questioned by many domestic abuse charities such as Refuge. There are two elements to Clare’s law: the right to ask, which allows individuals or their families to seek further information about a partner’s past; and the right to know, in which the police offer to make a disclosure to an individual who they believe might be at risk through their relationship.
The Government’s 2019 review of the domestic violence disclosure scheme showed that only 55% of 7,252 right-to-know applications, and 40% of 6,196 right-to-ask applications, resulted in disclosures. Those are low percentages, and they give rise to the question: why are so many victims unwilling or unable to engage with the police? The same report revealed that seven out of 43 police forces made no right-to-ask applications in that year. That is problematic. Many abusers evade justice because the onus is on the individual to be suspicious about their new partner’s history. There is an implicit risk that if an individual is told that their partner has no record of domestic abuse, they might be reassured about trusting their partner, but it might be that their crimes were simply not recorded—in other words, that nothing was disclosed on asking.
Individuals with a history of coercive and abusive behaviour towards partners will seek out partners with whom they can repeat such behaviour. To speak plainly, it is predictable that their new partners will often not be people who will consider Clare’s law relevant to their immediate situation. Earlier, we referred to the fact that in a new relationship, people will not be receptive to asking whether their partner will do them harm, or to their mother asking that question of the police. They may very well not be receptive to the police knocking on their door to tell them this information. Although evidently Clare’s law is excellent in and of itself, it warrants our questioning its effectiveness. I am very interested in hearing what the Minister has to say about new clause 12, and about how they are considering how Clare’s law will work in future.
I hope all of us would endeavour to promote shifting the onus away from the victim to the perpetrator. That is precisely why a domestic abuse register is needed. New clause 12 demands that domestic abusers sign a register. This would ensure the wellbeing of victims, and place the responsibility on the offender—as they are on the register, they are of course a proven offender—and on the agencies that are meant to prevent abuse and protect victims from it.
The creation of a domestic abuse register would mean that perpetrators were monitored in the same way as sex offenders, paedophiles and violent offenders, which would allow the police to provide greater protection for victims via a similar process to that used in respect of the violent or sex offender register and the multi-agency public protection arrangements. New clause 49, which I support, proposes monitoring serial domestic abuse and stalking offenders via a register managed by MAPPA. However, importantly, senior police sources who gave evidence to the London Assembly raised concerns about the emphasis that the current register places on sex offenders over violent offenders. Before we shift more on to that mechanism, its effectiveness needs to be reviewed, because we could be looking to use mechanisms that are not proving effective. The point is echoed by the London Assembly, which agrees that a register could vastly improve the way that police officers are able to proactively track and manage the risks presented by the most dangerous perpetrators.
While it is, of course, welcome that the Bill strengthens existing powers with the introduction of domestic abuse protection notices and domestic abuse protection orders, which will give greater protection to victims, the onus remains on the victims, rather than the perpetrator or the authorities. A domestic abuse register would address that. It is not only political institutions, domestic abuse charities and campaigners that are calling for a domestic abuse register, but the very people who are affected by domestic abuse.
In closing, I will give one example. The mother of 17-year-old Jayden Parkinson called for such a register to be kept, in order to track the activities of domestic abuse offenders after her daughter’s former boyfriend, Ben Blakeley, brutally murdered her a day after she told him that she was expecting his first child. It emerged after her death that Blakeley was a serial abuser and had exhibited violent and controlling behaviour towards most of his girlfriends in the past, even pushing one of his former girlfriends down the stairs when she was seven months pregnant.
The case of Jayden Parkinson made it clear that the effective management of domestic abuse calls for a shift to greater proactive risk management. A domestic abuse register would place the onus on the most dangerous domestic abuse offenders to register with the police and to maintain up-to-date details, such as address and relationship status. I know that one of the police’s concerns is capacity—the numbers involved here. Surely, however, with a register and with the facilities enabled by technology, we would be able to reduce much of the pressure on the police in that respect. That would allow police forces to assess the threat posed by offenders in their communities and put in place the required level of proactive policing, or a lower level of monitoring through existing partnership arrangements.
Finally, there is a critical point to make. I referred to the London Assembly and the work being done by the Met, but that has only been done within some of the boroughs covered by the Met. We want a consistency of approach across England, across Wales, and across police forces, and, at the least, I would appreciate a comment from the Minister about a review of how consistency and the shifting of the onus on to the perpetrator and away from the victim can be managed consistently, across all forces and across England and Wales.
Alex Davies-Jones (Pontypridd) (Lab)
Diolch, Ms Buck. I will speak to new clause 49, if that is appropriate now, because it is grouped with the amendment.
Domestic abuse and stalking are the only crimes where a serial abuser is not proactively identified and managed. I take this opportunity to pay tribute to the fantastic work of Laura Richards and others, for all their hard work, and their blood, sweat and tears, on new clause 49.
Hollie Gazzard was stalked and murdered by Asher Maslin. He had been involved in 24 previous violent offences: three against Hollie; 12 against an ex-partner; three against his mother; and four against others. Why was Hollie left at risk?
Kerri McAuley was stalked and murdered by Joe Storey. He broke every bone in her face. When she left him, he bombarded her with 177 calls. He had many convictions for abusing many women since the age of 14. Two women had also taken out restraining orders against him. Why were the risks not joined up?
Linzi Ashton was raped, strangled and murdered by Michael Cope. He had strangled two previous partners, but his repeated pattern of abuse towards women was not joined up. Why not?
Justene Reece took her own life. Nicholas Allen coercively controlled Justene and he stalked her relentlessly when she left him. Justene ran out of fight. Allen had been convicted for assault and harassment of other women. However, none of those offences were joined up. He was charged with coercive control, stalking and manslaughter after Justene died. Why?
We are currently in the middle of a global health pandemic, but we are also in the midst of another pandemic: the murder of women. These murders do not happen in a vacuum; these murders do not happen in slow motion. They drip, drip, drip over time on an escalating continuum. Since the lockdown began, 33 women and four children have been brutally murdered.
These offenders are not first-time offenders; no one starts with murder as their index offence. Currently, police rely on victims to report crimes and often it is the victims who are forced to modify and change their behaviour; they flee their homes and they disappear themselves in order to stay safe. This incident-led approach to patterned crimes such as domestic abuse and stalking must be stopped. Women are paying with their lives. It is clear that we need a cultural shift, through law, to ensure that the perpetrator is the focus, and that they must change their behaviour and take responsibility. Serial offenders should be the ones who are tracked, supervised and managed, not the victims.
The Parliamentary Under-Secretary of State for the Home Department (Victoria Atkins)
I thank the right hon. Member for Dwyfor Meirionnydd and the hon. Member for Pontypridd for speaking to the new clauses.
We agree with the underlying objective behind new clause 12. It is of course vital to have the right systems and processes in place to identify and manage serial perpetrators of domestic abuse, and it is unacceptable that a domestic abuse perpetrator—particularly a known convicted offender—should be able to go on to abuse further victims. We therefore recognise the need for robust management of those dangerous offenders. However, we consider that the outcome can be achieved more effectively and, importantly, more safely through other means. As for new clause 49, we consider that existing legislation already provides for the management of the serial domestic abuse and stalking offenders we are concerned about.
Deputy Chief Constable Louisa Rolfe, the National Police Chiefs’ Council lead on domestic abuse, was clear in her oral evidence to the previous Public Bill Committee in October that better use of established police systems is the best way to grip dangerous individuals. She referred to the Bichard inquiry following the tragic deaths in Soham of Holly Wells and Jessica Chapman, which recommended that information about dangerous perpetrators should not be dispersed over multiple different systems. Her testimony was persuasive, and highlighted the fact that a new, separate register would introduce
“unnecessary complexity cost and, most importantly, risk.”—[Official Report, Domestic Abuse Public Bill Committee, 29 October 2010; c. 27, Q48.]
Furthermore, several witnesses at an oral evidence sitting of this Committee also questioned whether the creation of a new bespoke register was the right way forward. Suzanne Jacob made reference to the recommendations of the Bichard enquiry and Ellie Butt pointed to the vital importance of multi-agency working to manage the risk posed by perpetrators. In addition, Dame Vera Baird advised:
“It is probably better to think in terms of an institution that is already present…than it is to invent another separate way of recording the fact that they are a perpetrator.”—[Official Report, Domestic Abuse Public Bill Committee, 4 June 2020; c. 65, Q157.]
As the Committee will be aware, and as witnesses at the oral evidence sitting highlighted, the police already have systems in place for recording and sharing information about domestic abuse perpetrators. Offenders who have been convicted of stalking or domestic abuse-related offences are captured on the police national computer and, where appropriate, they will also be recorded on the ViSOR dangerous persons database, which enables information to be shared across relevant criminal justice agencies.
Section 327 of the Criminal Justice Act 2003 already allows for those domestic abuse and stalking offenders who are assessed as posing a risk of serious harm to the public to be actively risk-managed under MAPPA. Individuals who commit offences listed in schedule 15 to the 2003 Act and who are sentenced to 12 months or more are automatically eligible for management under MAPPA category 2 when on licence. Those offences include domestic abuse-related offences such as threats to kill, actual and grievous bodily harm, and attempted strangulation, as well as stalking offences under the Protection from Harassment Act 1997. When their licence ends, offenders can be managed under MAPPA category 3 if they are assessed as posing a risk of serious harm to the public. There is also discretion for other convicted domestic abusers who are assessed as posing a risk of serious harm to be managed under MAPPA category 3. Indeed, operational guidance makes it clear that this should be actively considered in every case.
The Government do, however, recognise the need to strengthen the use of current systems. Work is already under way to review the functionality of the violent and sex offender register, and the College of Policing has issued a set of principles for police forces on the identification, assessment and management of serial or potentially dangerous domestic abuse and stalking perpetrators. Work in this area will be supported by the provision of £10 million in funding for perpetrator interventions, which was announced in the Budget, to promote a better response to perpetrators across all agencies that come into contact with them.
The Bill also provides the police with an additional tool to help improve management of the risk posed by domestic abuse perpetrators. The police will be able to apply for a new DAPO that requires perpetrators who are subject to an order to notify the police of their name and address, and of any changes to this information. That will help the police to monitor the perpetrator’s whereabouts and the risk they pose to the victim. The Bill also includes the power for a DAPO to impose further additional notification requirements, to be specified in regulations that the court may consider on a case-by-case basis. The DAPO provisions include an express power to enable courts to use electronic monitoring or tagging on perpetrators to monitor their compliance with the requirements of the DAPO.
The aim of new clause 12 is to provide police with a statutory power to disclose information about a perpetrator’s offending history to their partner. However, Clare’s law already facilitates that. The domestic violence disclosure scheme relies on the police’s existing common-law powers, which are fit for purpose. The right-to-know element of the scheme provides a system through which the police can reach out proactively and disclose information to a person’s partner or ex-partner about that person’s violent or abusive offending history in order to prevent harm. As we have already debated, clause 64 places guidance for the police on Clare’s law on a statutory footing, which will help to improve awareness and consistent operation of the scheme across all forces.
I am very keen to emphasise—this is a concern that the right hon. Member for Dwyfor Meirionnydd has set out—that the burden should not be solely on victims. It is right that a victim can apply for a DAPO or can apply under the right-to-ask scheme, but the police can—indeed, are expected to—take the initiative in appropriate cases to apply for a DAPO or proactively make a disclosure under the right-to-know element of the domestic violence disclosure scheme, as I have just outlined. Given the views of the witnesses from whom we heard in oral evidence to this Committee and its predecessor, and the ongoing work to improve the systems and the MAPPA arrangements that I have set out, I hope hon. Members are reassured, and that the right hon. Lady will feel able to withdraw the new clause.
Liz Saville Roberts
I thank the Minister for her detailed response. This is a probing amendment, which I am happy to withdraw. The only thing that I want to say comes from the London Assembly, and from cross-border issues arising within the boroughs of the Met. Dauntless Plus, which deals with 600 or so of the most dangerous repeat offenders in London, reaches 1% of repeat offenders. Present arrangements seem not to be achieving what I am sure we would all wish them to achieve. I hope the Minister will keep a close eye on their effectiveness in future. I beg to ask leave to withdraw the motion.
Clause, by leave, withdrawn.
New Clause 17
Local Welfare Provision schemes
“(1) Every local authority in England must deliver a Local Welfare Provision scheme which provides financial assistance to victims of domestic abuse
(2) The Secretary of State must issue guidance on the nature and scope of Local Welfare Provision schemes and review this biannually in consultation with the Domestic Abuse Commissioner and other such individuals and agencies he deems appropriate.
(3) The Chancellor of the Exchequer must provide local authorities with additional funding designated for Local Welfare Provision, to increase per year with inflation.
(4) For the purposes of this subsection “domestic abuse” is defined in section 1 of the Domestic Abuse Act 2020.”—(Christine Jardine.)
This new clause would allow victims of domestic abuse to access a local welfare assistance scheme in any locality across England.
Brought up, and read the First time.
Christine Jardine (Edinburgh West) (LD)
I beg to move, That the clause be read a Second time.
I would like to apologise to the Committee in advance: as luck would have it, for the first time in two years of printing things too small for me to read, I do not have my glasses with me. Bear with me and I will do my best.
Christine Jardine
No, that is not what they say. I would like to speak to this cross-party new clause tabled in my name, which would ensure that emergency financial support was available to victims and survivors of domestic abuse across England, in the form of effective local welfare provision. It is supported by the crisis and destitution sector, from the Children’s Society to the Trussell Trust, as well as financial experts, including the Lloyds Bank Foundation for England and Wales, Smallwood Trust and Surviving Economic Abuse.
The Bill, for the first time, acknowledges economic abuse, which creates economic instability and often prevents women in particular from being able to leave an abusive situation, as they lack the financial resources to do so. Defining economic abuse is just the first step. It must be possible to enable those who find themselves in that situation to militate against this form of abuse. The Committee must look at whether we can provide a welfare safety net for all survivors that empowers them.
Local welfare assistance schemes often offer financial assistance to applicants in emergencies. At their best, this type of crisis support works in partnership with other organisations and provides a kind of wrap-around holistic support that other types of welfare cannot, but they are underfunded and underused, and consequently get forgotten.
Without question, cuts to local authority services and changes in the social security system have disproportionately impacted women. That social security system should act as a financial safety net for survivors of domestic abuse, but it does not. Too many survivors are still having to take out payday loans and rely on food banks or, if they are lucky, grants from charities.
Research from Women’s Aid recently found that a third of survivors who left their abusive partner had to take out credit to do so. Smallwood Trust estimates that 70% of their applications for financial assistance are received from women who are fleeing, or have fled, domestic abuse. Given that the Trussell Trust’s most recent food bank figures found an 89% rise in need since the same time last year, with 107% more children needing support, there can be no question but that the welfare safety net for our most vulnerable has gaping holes in it.
Before the creation of local welfare provision, the discretionary social fund, run from the Department for Work and Pensions, was often seen as an essential form of financial support for victims of domestic abuse. Community care grants were often used to enable survivors to establish a new home after a period in refuge accommodation. Since responsibility for those grants has shifted to hard-pressed local authorities, which do not have any statutory obligations to provide this form of support, getting them has become a postcode lottery.
The Children’s Society found that one in seven local authority areas in England now has no local welfare support provided by the council, and that in too many other areas, local welfare provision is far too difficult to access. Some 60% of local authorities had put in place stipulations about routes that had to be taken first before applying for local welfare assistance, including borrowing from friends or family, taking up a commercial loan or using a food bank. That is not acceptable.
Even when a local authority does provide an assistance scheme, Smallwood Trust has suggested that access is often dependent on what time of year one applies for help, and whether the pot is already empty. Analysis of council spending on local welfare provision by the Children’s Society found that in 2018-19, local authorities spent only £41 million on local welfare assistance schemes, out of a possible funding allocation of £129 million for local welfare provision. At their best, those schemes can offer assistance where universal credit cannot. They can be a further source of support while survivors wait for their first universal credit payment, or they can support those not on universal credit who need emergency support, perhaps to buy a new fridge, or a bed for their child, in their new home away from abuse. During the pandemic, some local authorities are even using creative methods to offer emergency financial assistance to vulnerable applicants with no recourse to public funds.
Victoria Atkins
Local welfare and assistance is important to meet the needs of the most vulnerable people in our communities. That is why, in 2013, the national social fund crisis loans and community care grants were abolished and local authorities were empowered, with maximum flexibility, to deliver services as they saw fit, according to local needs. The hon. Member for Edinburgh West will agree, I hope, that local authorities are best placed to determine what support is required for the most vulnerable in their area, given their expertise in the local communities that they serve. That was set out by the then Work and Pensions Secretary in 2014, when he found that local authorities delivered support more effectively than was the case under the social fund, as help was targeted at those who needed it most and joined up with wider social care.
I assure the hon. Member that we fund local authorities to deliver such important duties. In 2016, just over £129 million was included for local welfare provision schemes as a notional allocation within the English local government financial settlement. That allocation was increased to £131.7 million in 2020-21. In response to the coronavirus, we have also announced £3.2 billion of un-ring-fenced funding for local government to meet additional pressures arising from the pandemic and continue to deliver frontline services.
The hon. Member rightly focused on the overall economic situation of the victim. We included economic abuse in clause 1 because we accept that it is not just about bank accounts or money in the purse; it can take many forms. Similarly, the economic situation of the victim includes not just payments that she may be receiving by way of benefits, wages or salary, but her overall situation. That is why the statutory duty for tier 1 local authorities in England to provide support to victims of domestic abuse and their children in safe accommodation is part of the picture. Local welfare assistance schemes enable support in such circumstances, such as support for victims of abuse in women’s refuges to become established in the community. The work that the domestic abuse commissioner will undertake to explore in depth the provision of community-based support is part of the economic picture as well.
A principle that I think we all share and are working towards is that we all want victims and survivors to be able to stay in their homes with their children—if anyone has to leave, it should be the perpetrator. That is what we are trying to get to, but of course I appreciate that there will be situations in which that is not possible, and we are attempting to address that through the Bill.
We are committed to working with the commissioner on community-based services and on the range of services and needs that she will address during her tenure. We believe that it would be a little premature to look at that before she has the chance to undertake that work.
I thank the hon. Member for raising the issue. I hope that the indications that I have given of the Government’s overall approach to helping victims will help to reassure her.
Christine Jardine
I thank the Minister for her reassurance. I know that the issue is of concern to a lot of people; all of us in this House deal with constituents every week for whom it is a barrier to safety that they simply cannot afford either to leave or to get the abuser to leave—it works against them either way. However, I accept the Minister’s assurances. I beg to ask leave to withdraw the motion.
Clause, by leave, withdrawn.
New Clause 18
Guidance: Child maintenance
“(1) The Secretary of State must issue guidance relating to the payment of child support maintenance where the person with care of the child is a victim of domestic abuse.
(2) Guidance issued under this section must take account of—
(a) the potential for the withholding or reducing of child support maintenance to constitute economic abuse under section 1(4) of this Act;
(b) the need for enforcement action to prevent non-payment; and
(c) the difficulties faced by victims of domestic abuse in obtaining evidence to support an application for a variation of a child support maintenance calculation.
(3) The Child Maintenance Service must have regard to any guidance issued under this section when exercising a function to which the guidance relates.
(4) Before issuing guidance under this section, the Secretary of State must consult
(a) the Domestic Abuse Commissioner, and
(b) such other persons as the Secretary of State considers appropriate.
(5) The Secretary of State must publish any guidance issued under this section.” —(Christine Jardine.)
This new clause would require the Secretary of State to issue guidance to the Child Maintenance Service to tackle the problem of abusers continuing economic abuse by withholding or reducing child maintenance payments.
Brought up, and read the First time.
Christine Jardine
I beg to move, That the clause be read a Second time.
I am sure that we have all had constituents who have come to us because their relationship or marriage has fallen apart and their child maintenance agreement is being used against them by their former partner as a form of manipulation and abuse. New clause 18 aims to address that situation.
Withholding or artificially reducing child maintenance payments can be a way for abusers to perpetuate economic abuse. It can be especially hard for survivors to get the evidence necessary to succeed in getting the Child Maintenance Service to increase the amount that the abuser has to pay. We tabled the new clause to require the Government to issue guidance on child maintenance payments to survivors of domestic abuse that would have to address their specific concerns. Often, for survivors of domestic abuse, using the statutory child maintenance system is not a matter of choice; it is a matter of safety.
The Government must surely understand that the reality of domestic abuse is not confined to one area of people’s lives. It needs to be addressed across all services and Departments, including child maintenance.
Child maintenance, which is sometimes referred to as child support, can be vital for separated families and the wellbeing of the children, particularly in single-parent families. It is impossible to overstate the importance of child support for some survivors. It helps with the cost of raising a child, from the day-to-day expenses of food, clothing and school expenses to the cost of running a child’s main home and giving a child a decent quality of life. It is vital, as we have said often in Committee, for children who are often damaged by witnessing domestic abuse in homes.
Child maintenance arrangements can, as we know, take different forms. They can be made privately between separated parents, through the Government-run Child Maintenance Service, or, more rarely, through a court order. The statutory child maintenance system has seen big reforms, but there are still concerns over its effectiveness. In 2017, the Government introduced a fee waiver for survivors of domestic abuse who applied to the Child Maintenance Service. Although the reform has been welcomed, the way in which it works leaves many trapped in a dangerous dilemma: get financial support at the risk of abuse, or avoid abuse and face financial hardship.
Research commissioned by the Department for Work and Pensions in 2017 supports Gingerbread’s concerns that new charges in the CMS prevent parents and children from accessing maintenance. The findings also suggested that survivors of domestic abuse, who are perhaps most in need of a Government service to help ensure maintenance is paid, are some of the worst served by the barriers created by the charges and the dilemma that I mentioned.
Domestic violence can be a barrier to setting up a maintenance arrangement at all. It is estimated that one in four receiving parents cited domestic violence as a reason for not setting up an arrangement after the Child Support Agency case had closed. People who are already survivors are being asked to try to survive something else.
In 2017, Women’s Aid told the Work and Pensions Committee that the Child Maintenance Service had a
“rigid focus on incentivising collaborative arrangements between parents”.
It had
“the potential to increase survivors’ risk of abuse, including financial coercion and control.”
We need to publicise the fee waiver. It places an emotional burden on parents to voluntarily disclose their experience of domestic abuse in order to receive their exemption. It is simply not fair. Those who do not do that miss out.
Similarly, the Government have reassured parents and campaigners that processes would be in place to avoid the risk of abuse as a result of having to request payment and share personal details to set up direct payment arrangements. However, parents often discover that even CMS staff and banks can be unaware of provisions such as non-geographic bank accounts, where the receiving parent’s location would not be identifiable from a bank account sort code. Researchers have found that although one in five receiving parents surveyed said domestic violence had made it difficult to set up a direct pay arrangement, just 2% reported using a generic or national bank account. They also found that many parents reluctant to share details did not know that the CMS could help with providing this information.
A Gingerbread helpline example was of a single parent with a history of domestic abuse. The last incident had involved hospitalisation. She was told that she had to have a direct pay arrangement, and was given the option of using a non-geographic bank account or using a pre-paid card. However, both those options would reveal her new name, which was adopted to make her harder to trace. She felt at risk and was now considering dropping her case.
Ensuring payment can also be difficult when receiving parents fear domestic abuse, and the murky interactions between direct pay and collect and pay services does not fill parents with confidence. The Government argue that when direct pay is not working, parents can report the paying parent and come into the collect and pay service. In reality, some parents are wary of flagging non-payment for fear of rocking the boat or inflaming tensions with ex-partners who face hefty collection charges if the CMS steps in. Economic abuse of survivors of domestic abuse is unacceptable. Too many of us see too many of these people in our offices every week. This new clause would address their situation.
Alex Chalk
I thank the hon. Member for Edinburgh West for the exposition of her new clause and the way she did it, which was of real assistance to the Committee and certainly to me. Again, I absolutely commend and underscore the spirit and intention behind the new clause. I hope to provide some context that she will find reassuring.
Domestic abuse touches the lives of many DWP customers, and the Child Maintenance Service takes the safety of its customers extremely seriously. The new clause seeks guidance; the hon. Lady wants the Secretary of State to issue guidance relating to the payment of child support maintenance where the person with care of the child is a victim of domestic abuse. We have issued guidance already, and we have gone further by actually implementing—guidance is one thing, but it is when it moves on to training that it makes a big difference.
That training feeds into precisely the point the hon. Lady raises in subsection (2):
“Guidance issued under this section must take account of (a) the potential for the withholding or reducing of child support maintenance to constitute economic abuse under section 1(4) of this Act”.
Absolutely. We get that point, and that is precisely what the training is designed to achieve. It has been created with input from Women’s Aid, and it trains caseworkers on domestic abuse to identify the types of abuse, including economic abuse. By the way, that is not optional training; it is mandatory training—that is point one. Point two is that the DWP has introduced a complex needs toolkit, which includes a domestic abuse plan specifically, to give clear steps for a caseworker to follow in order to support customers, and it also outlines the support available to caseworkers. That toolkit is regularly reviewed and strengthened based on customers’ insight.
It may be helpful to the Committee if I set out other ways in which the Child Maintenance Service currently responds to cases involving domestic abuse. This goes to the point raised by the hon. Lady about how victims go about accessing support. First, the CMS can waive the application fee for victims of domestic abuse. Secondly, it provides advice and support to help victims of domestic abuse use the direct pay service where no further charges apply to ensure there is no unwanted contact between parents. Thirdly—picking up a point made by the hon. Lady—the CMS can act as an intermediary for parents to facilitate the exchange of bank details and ensure that personal information is not shared. Fourthly, the CMS will provide information to parents on how to set up a bank account with a centralised sort code, which avoids parents being traced. Fifthly, where the parents have reported domestic abuse, agents are trained to signpost clients to additional sources of support. I do not suggest that it is a one-stop shop, but, none the less, they are trained in what support is out there.
The bottom line is that the CMS will not tolerate parents failing to meet their obligations to support their children. Where a parent fails to pay in full and on time, enforcement action will be taken. I mention enforcement because the second limb of subsection 2 says:
“Guidance issued under this section must take account of…(b) the need for enforcement action to prevent non-payment”.
Let me turn directly to enforcement. The Child Maintenance Service has a range of strong enforcement actions at its disposal. They include deducting directly from earnings; seizing funds directly from a paying parent’s bank account, either as a lump sum or as regular payments; and a good deal in addition.
Jess Phillips
I deeply respect that the Minister is reading out exactly what should happen, but has he ever tried to get money out of the CMS for one of his constituents?
Alex Chalk
I have. I am perfectly prepared to accept that no organisation always works precisely as one might like. That is inevitably the case, but I am not suggesting that that is my usual experience. By and large, we have been able to deliver for my constituents in Cheltenham, while recognising, as I do, that there is always room for improvement. Perhaps we shall leave it there.
The Government have gone further and extended the powers to cover joint and certain business accounts, removing the opportunity for paying parents to put their money beyond reach. Where appropriate, the Child Maintenance Service will use enforcement agents to seize goods, forcing the sale of the paying parent’s property. The Child Maintenance Service may also apply to a court to have the paying parent committed to prison or disqualified from driving. In addition, we have introduced the ability to disqualify non-compliant parents from holding or obtaining a British passport, which we believe will act as a strong deterrent.
The impact of all that is important, and this goes to the point made by the hon. Member for Birmingham, Yardley. Of course, we have our anecdotal experience—mine, by and large, has been pretty good, but I accept that other colleagues will have had different experiences—but it is important to look at the data. Compliance with the CMS Collect and Pay statutory scheme has increased from approximately 57% in the quarter ending December 2017 to 68% in the quarter ending December 2019, according to Child Maintenance Service statistics to December 2019. In addition, 723,500 children are covered by Child Maintenance Service arrangements, reflecting an increase of 158,300—almost 30%—since the quarter ending December 2017. That is from the same statistics source.
Given all those measures, the central point is that, while the new clause seeks guidance, what is already in place is guidance and training, and that training is informed by Women’s Aid, as I said. In the circumstances, our view is that no new clause is necessary at this stage, because the Child Maintenance Service already has sufficient enforcement powers and has further strengthened its procedures, training and processes to support customers who suffer domestic abuse.
We will, however, continue to monitor the impact of Child Maintenance Service enforcement powers, as well as the support provided to help domestic abuse victims to use the service safely. The hon. Member for Edinburgh West, who clearly takes a close and principled interest in this matter, will watch that closely but, with that assurance, I hope she feels able to withdraw her new clause.
Christine Jardine
I thank the Minister for his reassurance but, as the hon. Member for Birmingham, Yardley said, he describes the ideal—it is not how we find it works. If we could get closer—just closer—to the ideal, we might all be satisfied. However, given his reassurance, I beg to ask leave to withdraw the motion.
Clause, by leave, withdrawn.
New Clause 21
Duty of the Secretary of State to take account of matters relating to gender
“It shall be the duty of the Secretary of State in performing functions under this Act to take account of the point that domestic abuse is a subset of violence against women and girls, which affects women disproportionately.”—(Jess Phillips.)
This new clause establishes the gendered nature of domestic abuse in statute.
Brought up, and read the First time.
Jess Phillips
I beg to move, That the clause be read a Second time.
We all know that domestic abuse disproportionately impacts on women. I think pretty much everyone who has stood to speak in Committee has at one point said that—we always add the caveat that of course we know it mainly happens to women. One in four of us in England and Wales will experience it at some point in our lives, compared with one in eight men. Women experience domestic abuse in far greater numbers than men—that is just a simple fact.
When we take a deeper look into the statistics, however, gender is clearly intertwined with domestic abuse in a much greater way than bald prevalence stats first indicate. To start with, the stats on domestic abuse collected and published by the Office for National Statistics, while being the best we have, do not take into account coercive and controlling behaviour. Academics working in the field estimate that the disparity in experience of domestic abuse between men and women would increase significantly were coercive control taken into account.
Abusers will use any tool at their disposal to control and coerce their partners, which in far too many cases includes rape and sexual assault. More than 1.7 million women in this country have experienced domestic sexual assault and rape. That is more than 12 times the number of men who have experienced this trauma. Last year, five times more women than men were killed by their partner or their ex. Over the past few years, over 96% of women killed in domestic homicides—almost all of them—were killed by men. Of the men who were killed in domestic homicides, more than half were killed by other men.
None of this means that men do not experience domestic abuse; I have never suggested that, and nor would I ever, no matter what somebody might read about me online. What that means is that domestic abuse is a form of violence against women and girls, with women making up the vast majority of victims and survivors of domestic abuse, particularly when it comes to rape, sexual assault and murder at the hands of their partner or ex, and that men make up the overwhelming majority of perpetrators.
However, domestic abuse as a form of violence against women and girls is not just about the numbers, as stark as they are. Domestic abuse is, in the words of the Istanbul convention—you know, I was meant to be in Istanbul this week. Sad times. I would have walked around citing parts of the convention, which I am sure the people of Istanbul know very little about, other than that it is their namesake. Anyway, the Istanbul convention says that domestic abuse is
“a form of gender-based violence that is committed against women because they are women.”
It is about the patriarchy that instils in abusive men the belief that they are entitled to control, abuse, rape and murder women because we are lesser. Gender inequality is a cause and consequence of domestic abuse. It is used to keep us controlled and silenced, and it happens to us because we have a lesser position in society.
The nature of domestic abuse as a gendered phenomenon has to be understood, not just by feminist academics, thousands of individuals working on the frontline in domestic abuse services, or those of us working in Westminster, but by all those whose job it is to respond to domestic abuse survivors and perpetrators. Too often, the nature of domestic abuse is not appreciated by professionals who need to understand what it is. According to Refuge, the largest specialist provider of domestic abuse services in the country, it is becoming increasingly common for local authorities tendering for domestic abuse support services to rely on a complete misapprehension about the nature of domestic abuse and the needs of survivors. Time and time again, I have seen commissioning rounds go out that just say, “Domestic abuse services”, without any suggestion that some of those need to be women-only services, for example.
Refuge staff have also told me that when the police attend domestic abuse call-outs, their misunderstanding of the nature and dynamics of domestic abuse, including the role gender plays, leads to them arresting the survivor rather than the abuser; asking perpetrators to translate what survivors are saying; and referring survivors and perpetrators to completely inappropriate support services, for example.
Within the Westminster bubble, it is easy to labour under the false belief that a critical majority of people have enough of an understanding of domestic abuse as a form of violence against women and girls that those responses to survivors are anomalies. That is not the experience of organisations such as Refuge, and Members need only look at my Twitter feed after I have mentioned gender or domestic abuse to see that we cannot assume that the majority of people understand domestic abuse as a form of violence against women and girls. There was a discussion about misogyny earlier today, and I invite members of the Committee to look at what my online experience will be tonight after I have said this about women. I imagine that, for many, it will be shocking, and some of it will almost certainly be a hate crime, but one that would never be collected in the data.
It is critical that every effort is made to ensure that domestic abuse is understood as a form of violence against women and girls. It is my view, in addition to that of Refuge, Women’s Aid, the End Violence Against Women Coalition, Southall Black Sisters and virtually every other domestic abuse service provider, that the best way of raising awareness of domestic abuse as a form of violence against women and girls is to include that definition on the face of the Bill. The Government’s consistent response is to say that they agree that domestic abuse is a form of violence against women and girls, that both men and women experience it, and that they are committed to including this in the statutory guidance accompanying the Bill.
Alex Davies-Jones
In our Committee’s evidence session, we heard from Sara Kirkpatrick, the CEO of Welsh Women’s Aid, who said this, and I heartily agree:
“Some really exciting things have come out of the Welsh legislation, particularly the idea of taking that broader lens…of violence against women and girls”––[Official Report, Domestic Abuse Public Bill Committee, 4 June 2020; c. 66, Q158.]
I know that I am harping on about Wales again, and I make no apology for it. We know that domestic abuse impacts everyone—men, women and children—but we also know that it is women and girls who suffer the most frequent and severe abuse. It is important to acknowledge that in order to enable practice and support to be tailored to the specific needs of the person experiencing abuse, as opposed to a one-size-fits-all approach.
The Violence against Women, Domestic Abuse and Sexual Violence (Wales) Act 2015 includes all forms of violence and abuse against women and girls, including domestic abuse, rape and sexual violence, stalking, forced marriage, so-called honour-based violence, female genital mutilation, trafficking and sexual exploitation—including through the sex industry—and sexual harassment in work and public life. None of these forms of abuse are mutually exclusive, and policy and service provision should reflect that.
Victoria Atkins
I thank the hon. Member for Birmingham, Yardley for tabling the new clause. I hope that she knows that I always enjoy debating the issue of gender with her, because those debates draw us out of the nitty-gritty of the Bill’s text and make us think about wider and bigger topics. I very much accept that she will get all sorts of abuse tonight on Twitter, but may I gently remind her that Twitter is not the real world? I say that as someone who came off Twitter a few years ago and I have not missed it for a second.
My bigger concern when it comes to raising awareness of domestic abuse relates to a more common misunderstanding. It is not necessarily that women are disproportionately victims and survivors, because from my experience, I think that that is pretty well understood. What worries me is the idea that “She must leave him.” I hope that, through the Bill, and the work that we are all doing, we are beginning to change that conversation, but I absolutely understand why the hon. Lady has raised this issue.
The hon. Member for Pontypridd took the words out of my mouth: anyone can be a victim of domestic abuse, regardless of their age, gender or ethnicity. We have had to reflect that fact in the definition. We have followed the lead of the drafters of the Istanbul convention in adopting that gender-neutral stance. There is no reference to gender in their definition of the act of domestic violence. The explanatory report published alongside the convention expressly states that the definition is gender neutral and encompasses victims and perpetrators of both sexes.
However, we very much want to reflect the fact that the majority of victims are female, which is why we set out in clause 66, following careful consideration by the Joint Committee on the Draft Domestic Abuse Bill, the requirement on the Secretary of State regarding the guidance; the guidance reflects that fact. I appreciate that the definition is incredibly important, but the people commissioning services, training and looking at how their local services are working will be drawn to the guidance, in addition to the Bill, and will want practical help with it. That is how we adopted the definition.
We have made it clear that the definition has two fundamental elements: the first deals with the relationship between the abuser and the abused, and the second deals with what constitutes the categories of abusive behaviour. If the definition is to work for victims and survivors, it must work for all, regardless of gender or other characteristics. Interestingly, we have not been able to identify any other English-language jurisdiction that adopts a gender definition in relation to domestic abuse.
Victoria Atkins
Other than Wales—forgive me. Gosh, that was probably a career-ending slip. I take the hon. Lady’s point about Wales. Apart from England and Wales, we have not been able to find other examples, although it may be that the hon. Lady’s Twitter feed will be inundated with them tonight. We place the emphasis on the draft statutory guidance. Believe me, I am under no illusions: hon. Members in the Committee and outside will be paying close attention to the guidance. I very much hope that, at the end of the informal consultation process, the guidance will be in a shape that meets with the approval of members of this Committee.
Jess Phillips
I thank the Minister. I know that she fundamentally wants a system in which commissioning is gendered and recognises the fact that the vast majority of these crimes happen to women. I agree with that.
If I read all the things that were tweeted at me in any one day, I would lose the will to live. It is important, on today of all days, to remember that the aggression towards Members sometimes features in real life, and that anyone who is willing to stand up and say what they feel about something can pay a heavy price.
I recognise what the Minister has said, and I beg to ask leave to withdraw the motion.
Clause, by leave, withdrawn.
New Clause 22
Children affected by domestic abuse: NHS waiting lists
“The Secretary of State must by regulations ensure that children who move to a different area after witnessing or being otherwise affected by domestic abuse as defined by section 1 of this Act are not disadvantaged in respect of their position on any NHS waiting lists.”—(Jess Phillips.)
Brought up, and read the First time.
The Chair
With this it will be convenient to discuss new clause 23—Children witnessing domestic abuse: school admissions—
“The Secretary of State must by regulations require admissions authorities of all mainstream schools to give the highest priority in their oversubscription criteria to children who have moved as a consequence of witnessing or being otherwise affected by domestic abuse.”
Jess Phillips
These new clauses are about child and school admissions and NHS waiting list, and we heard compelling evidence about that from Hestia at the evidence session. They are about the importance of ensuring that children who are forced to relocate because of domestic abuse are prioritised. Last Tuesday, I spoke at length about the need to include children in the definition of domestic abuse—I am sure everybody will be relieved to hear that I will not repeat that now. I very much hope that that has been heard, and I await progress.
Hestia and Pro Bono Economics advised that the average wait for children who move to obtain a new school place is between four and six months in cases of domestic abuse. That is certainly my experience of working in refuges—there were often children out of school. Obviously, we must take account of the fact that we are in this weird time when most children are not at school.
This means they have four to six months away from their peers without the routine and safety of school, while living in an unfamiliar house or refuge. The alternative would be to attend a school that is an impossible distance away, in a location deemed too dangerous for that child to live in.
We see parents and their children day in, day out in my constituency office because those children are not in school, and they are desperate for assistance in finding a school place. Those parents and their children are often living in temporary accommodation—perhaps in a Travelodge, or in a refuge where children of varying ages and needs are sharing one room. Cooking facilities are rare, and they are often reliant on food banks.
Many do not have the required resources or technology to educate their children. Imagine being in a domestic abuse situation and also having to home-school your children—it is worth noting that previously I would have said, “Try to imagine what it’s like to have to home-school your children for that period.” I do not need to ask people to imagine that anymore. I am not in a domestic abuse situation, and I have a loving and kind husband, but I have found it almost impossible to home-school my children. Now layer on top of that a situation in which everyone is living in one hotel room and having to home-educate their children.
I am sure everybody will hear in their constituencies some of the most heartbreaking cases involving a teenage child trying to study in temporary accommodation, living in difficult circumstances and saying, “I just can’t study. I don’t want to tell my friends where I live, so I walk a different way home.” Those are the most heartbreaking stories. I have heard of cases of children with severe PTSD and anxiety being placed in accommodation with men who trigger their symptoms. There are cases of children with sleep disorders and suicidal ideation being placed in a Travelodge where noise is unavoidable and antisocial behaviour is rife.
The impact of covid-19 has demonstrated the importance of schools, not only in education but in the provision of food—a subject that was not quite as topical when I wrote this as it is about to be. It is estimated that 1.3 million children are now dependent on food parcels from their school, and according to my notes there is now a campaign for those food parcels to be available throughout the summer—I should just scrap this part and be grateful that food parcels will now be available over the summer. Children not enrolled in school cannot access the food parcels provided by schools, which forces them further into food poverty. Obviously, we have all had to overcome that during covid-19, but in normal times there is no food provision for children on free school meals living in a refuge who are out of school. It is a complicated situation.
Schools have also remained open for known vulnerable children, including those on a child in need plan, because schools also provide safeguarding and pastoral care. They can act as a referral mechanism for those with mental health problems or special educational needs. Schools can be a safety net and a place of sanctuary for children at risk—I do not just say “can”, because we all have brilliant schools in our constituencies, and it is impossible to imagine what kids’ lives would be like without them.
Schools have also remained open for children with special educational needs and those with an education, health and care plan. Schools are integral in referring those with special educational needs to the local authority so that they can receive an EHC plan—I would like to carry on calling it a “statement”, because that seemed easier. Those plans offer support to children and young people whose special educational needs require more help than would normally be provided. The plans identify educational health and social needs and set out additional support required to meet those needs, most often in the form of support provided by schools. Children who are not enrolled in school do not have access to that safety net and the nature of support that can be provided by a school. They are not afforded these protections and do not have access to support services. They are left at risk and vulnerable in circumstances in which they have experienced extreme trauma and upheaval.
It is also well known that the consequences of domestic abuse are significant and wide-ranging. Brain development can be affected, impacting cognitive and sensory growth. There are associated personality and behavioural problems, and a greater prevalence of suicidal tendencies and depression. Pro Bono Economics has advised that childhood exposure to severe domestic violence can increase the number of children in the UK with conduct disorders by around 25,000 to 75,000, and the number with hyperactivity disorders by around 10,000 to 25,000. Conduct disorders are the most common type of mental and behavioural problem in children and young people. They are characterised by a repeated and persistent pattern of antisocial, aggressive or defiant behaviour, much worse than would normally be expected in a child of that age. I hasten to add that that is quite a gendered view of those disorders. Often when girls present with attention deficit hyperactivity disorder or autism spectrum disorder, it presents in a different way, and those ways are often ignored.
Victoria Atkins
I thank the hon. Lady. I will deal first with the NHS and then move on to schools. I think there is agreement across the Committee that it is important to recognise the impact of domestic abuse on children and the trauma it can cause. The role of the NHS is to give the best care to address the immediate and continuing health needs of such children. It is a key principle that access to the NHS is based on clinical priority, so when patients move home and between hospitals, the NHS should take previous waiting times into account and ensure, wherever possible, that they are not disadvantaged as a result. A child’s need to access and receive health services will be assessed, and services will be provided according to clinical need, which will consider the individual needs of the child. We have to trust clinicians to take decisions about a patient’s treatment.
On schools, I agree with the hon. Member for Birmingham, Yardley that vulnerable children, including those who have been affected by domestic abuse, should be able to access a school place quickly, and that any gaps in their education must be kept to an absolute minimum. As I have said before, wherever possible, we want victims, survivors and their children to stay at home and the perpetrator to leave, but in some cases, sadly, that is not possible for their safety.
Before I explain the Government’s position on that, I will highlight an important distinction between seeking school places in the normal admissions round, such as the start of the school year, and doing so outside that process, which is called in-year admission. As we know, it is important that children who have experienced or witnessed domestic abuse are more likely to seek a school place outside the normal admissions round and to require the in-year process. During the review of children in need and the 2018 consultation on domestic abuse, we heard about the difficulties and delay that such children face in accessing new school places when moving into refuge after fleeing domestic abuse. Improving the in-year admission system is the most effective way to get vulnerable children back to school as quickly as possible.
The in-year application process varies between local authorities and can be particularly difficult to navigate for disadvantaged and vulnerable families, including those who have been victims of domestic abuse, because the school may already be full, and oversubscription criteria are unlikely to be helpful at that point. To ensure that this does not prevent children experiencing domestic abuse from accessing the school places they need, the Government have committed to make changes to the schools admissions code to improve the in-year admissions process. That will ensure that all vulnerable children can access a school place as quickly as possible.
That is not to say that the current system does not support the admission of our most disadvantaged children when they apply for a school place in year. Fair access protocols are in place to ensure that vulnerable children who need a school place outside the normal admissions round can secure one as quickly as possible, but we know from consultation that there is confusion about how fair access protocols should work, which means that sometimes they do not work as effectively as they should do. In some areas, fair access protocols are used as the default way to place every in-year applicant, rather than as a safety net for vulnerable and disadvantaged children.
I am pleased to state that we intend to consult on changes to the school admissions code to better support the in-year admission of vulnerable children, including those in refuge or safe accommodation. In practice, that means making changes to the provisions relating to the in-year admissions process and fair access protocols by introducing a dedicated section in the code that will set out a clear process for managing in-year admissions. We are also proposing to provide greater clarity in the code on fair access protocols, which will improve their effectiveness by making clear their purpose and what they should be used for, and by setting out a clear process by which they should operate.
We will also extend the categories of children who may be admitted via the fair access protocol, specifically to include children on a child in need or child protection plan and children in refuge and safe accommodation. That will ensure that those children are secured a school place quickly, keeping disruption to their education to an absolute minimum.
Liz Twist (Blaydon) (Lab)
The Minister has talked at some length about the schools provisions, which are important to ensure that children have quick access to a school near them. Will she say some more about the NHS provisions in new clause 22? She has talked about clinical priority but, as most of us know—not just from children, but from other situations—moving from one health area to another means that there is inevitably a setback. The new clause is intended to address that.
Victoria Atkins
I understand that, but the problem is that we are now rubbing up against the fundamental principle of the NHS, which is that it is based on clinical need and priority. Clearly, if a child is in the most urgent clinical need, we would absolutely expect them to be at the front of the queue to receive help, but there will be different gradations depending on the condition, the length of the condition and the way in which it manifests. We have had to keep to the fundamental principle that that must be clinician-led, because we could not, with the best will in the world, hope to categorise exhaustively in the Bill the many ways, quite apart from domestic abuse, in which children may suffer or be ill
Liz Twist
I think this is fundamental, really. Simply moving house can put someone back in a queue when clinical priorities are assessed in that new area. What we are all trying to do—as, I am sure, is the Minister—is ensure that the principle is one of clinical priority, rather than where someone is on a waiting list. This change is absolutely vital.
Victoria Atkins
Very much so; that is the key principle on which the NHS operates. The hon. Lady will appreciate that I am neither a doctor nor a Health Minister. I take her point about waiting times, but once the clinicians have assessed the clinical need, they must surely be the ones to determine what sort of treatment the child receives, as well as when and where.
Victoria Atkins
I can see that the hon. Lady is perhaps not with me on that, but it explains our position. We stick to the principle of the clinician and the clinical need leading on this matter. Of course, I accept the point about different areas.
Liz Twist
I am sorry to keep pushing this, but I know that it occurs for other groups of people who are disadvantaged. People receiving alcohol or drug treatments, for example, may move from one area to another and lose all their connections. We are talking about clinical priority within a different group, so although someone might have reached the top of the queue in one place, they might not somewhere else. The amendment seeks to ensure that those children get the best chance that they can.
Victoria Atkins
Again, that comes back to the principle that, wherever possible, we do not want victims and survivors to have to move and be put in that new place. The hon. Lady articulates very well one of the many ways in which it is incredibly traumatic for the survivor to have to leave the family home to flee to the other side of the country with the children. In some cases, the survivor has to do so because of the danger of the perpetrator, but where we can, let us try to keep her and her children at home, so that they do not have to put up with such concerns about things that are terribly important on a day-to-day basis, but sadly become another consequence of fleeing.
Jess Phillips
I thank the Minister for her comments and welcome what she has outlined with regard to school places. She is right that we are talking about in-year school placements in the vast majority of cases. Some people are lucky enough to have to move house just at the right moment for getting kids into school, but the vast majority are not. I therefore welcome what she has said about changes to that process.
With regard to waiting lists for children, she is not wrong to lean on the principle that it should be clinician-led. However, in these instances a clinician will never see the child, because the assessment takes two and a half years. It will not be based on any clinical decision; it will be based entirely on a paper exercise where you just go back into the system. If someone were to move from Berkshire County Council, where they had already waited the 799 days, and then they moved to Staffordshire on day 798, they would just go back into the system. No clinician would lay eyes on them for Staffordshire’s 695 days. The decisions are not being made by clinicians in this instance. As I said, it took two and a half years for me to be sat in front of a clinician with regard to the situation in my own family.
I will not push the new clauses to a vote at this stage, but I think this goes to what we were talking about with regard to public duties. That the local authority has a public duty in this regard is great, but the reality is that if we do not put a public duty on other organisations, such as CCGs and healthcare workers, those are the things that fall through the gaps. For a child who has moved and has already been on a waiting list somewhere—let’s say for 798 days in Berkshire—there should be some way to prioritise their needs. I do not think the Minister would disagree with that as the principle. I will not push it to a vote now, but the Opposition will be seeking answers for that area from the Department of Health and Social Care. I beg to ask leave to withdraw the motion.
Clause, by leave, withdrawn.
New Clause 24
Assess the impact of welfare reforms on survivors of domestic abuse
‘(1) It is the duty of the Department for Work and Pensions, in conjunction with the relevant government departments, in developing welfare reform policies, to assess the impact of such policies on individuals who are or are likely to become victims of domestic abuse within the meaning of section 1 of this Act, and to promote their wellbeing through those policies.
(2) “Wellbeing”, for the purposes of subsection (1) above, relates to any of the following—
(a) Physical and mental health and emotional wellbeing;
(b) Protection from abuse and neglect;
(c) Control over day-to-day life (including over care and support, or support, provided to the individual and the way in which it is provided);
(d) Participation in work, education, training or recreation;
(e) Social and economic wellbeing; and
(f) Suitability of living accommodation.
(3) In exercising this duty under subsection (1) above, the Government must have regard to the following matters in particular—
(a) the importance of individuals who are or are likely to become victims of domestic abuse within the meaning of section 1 of this Act being able to escape abusive relationships;
(b) the importance of individuals who are or are likely to become victims of domestic abuse within the meaning of s. 1 of this Act being able to become economically independent of the perpetrator(s) of abuse; and
(c) the importance of individuals who are or are likely to become victims of domestic abuse within the meaning of s. 1 of this Act being able to rebuild their lives.’—(Jess Phillips.)
This new clause seeks to create a duty to assess the impact of welfare reforms on survivors of domestic abuse, and to ensure welfare policies that promote their wellbeing.
Brought up, and read the First time.
The Chair
With this it will be convenient to discuss the following:
New clause 38—Social Security: Exemption from repaying benefit advances—
‘(1) The Social Security (Payments on Account of Benefit) Regulations 2013 are amended as follows.
(2) In regulation 7 (definition of financial need), after paragraph (3) insert—
“(4A) It shall be presumed for the purposes of this section that A is in financial need where A—
(a) is or has recently been a victim of domestic abuse; and
(b) provides evidence of the domestic abuse in one of more of the forms set out in regulation 33(2) of the Civil Legal Aid (Procedure) Regulations 2012.
(5) A has recently been a victim of domestic abuse if a period of 12 months has not expired since the domestic abuse was inflicted or threatened.
(6) For the purposes of this section—
(a) ‘domestic abuse’ has the meaning set out in section 1 of the Domestic Abuse Act 2020;
(b) ‘victim of domestic abuse’ means a person on or against whom domestic abuse is inflicted or threatened.”
(3) In regulation 10 (Bringing payments on account of benefit into account), after subparagraph (b) insert—
“(c) In the case of a payment on account of benefit made to a person who can provide evidence of being or having recently been a victim of domestic abuse, subsections (a) and (b) shall not apply.
(d) A person has recently been a victim of domestic abuse if a period of 12 months has not expired since the domestic abuse was inflicted or threatened.
(e) For the purposes of this section—
‘domestic abuse’ has the meaning set out in section 1 of the Domestic Abuse Act 2020;
‘victim of domestic abuse’ means a person on or against whom domestic abuse is inflicted or threatened.
(f) For the purposes of this section, evidence of being of having recently been a victim of domestic abuse must be provided in one of more of the forms set out in regulation 33(2) of the Civil Legal Aid (Procedure) Regulations 2012.”’
New clause 39—Universal Credit: Exemption from repaying hardship payments—
‘(1) The Social Security (Payments on Account of Benefit) Regulations 2013 are amended as follows.
(2) In regulation 116 (Conditions for hardship payments), subparagraph (1)(f), after (c) leave out “and
“(g) the Secretary of State is satisfied that the single claimant or each joint claimant is in hardship”
and insert—
“(g) the claimant is or has recently been a victim of domestic abuse; and
(h) the Secretary of State is satisfied that the single claimant or each joint claimant is in hardship.
(2) For the purposes of paragraph 1(g) a person has recently been a victim of domestic abuse if a period of 12 months has not expired since the domestic abuse was inflicted or threatened.”
(3) In regulation 116 (Conditions for hardship payments), after paragraph (3)(d) insert—
“(4) In this regulation—
‘domestic abuse’ has the meaning as set out in section 1 of the Domestic Abuse Act 2020;
‘victim of domestic abuse’ means a person on or against whom domestic abuse is inflicted or threatened.”’
New clause 40—Social Security: Exemption from repaying benefit advances—
‘(1) The Social Security (Payments on Account of Benefit) Regulations 2013 are amended as follows.
(2) In regulation 12 (Conditions for payment of budgeting advances), after paragraph (2) insert—
“(2A) Where B is or has recently been a victim of domestic abuse, sub-paragraphs (c), (d) and (e) shall not apply.
(2B) B has recently been a victim of domestic abuse if—
(a) a period of 12 months has not expired since the domestic abuse was inflicted or threatened, and
(b) B is able to provide evidence of the domestic abuse in one of more of the forms set out in regulation 33(2) of the Civil Legal Aid (Procedure) Regulations 2012.
(2C) For the purposes of this section—
(a) ‘domestic abuse’ has the meaning set out in section 1 of the Domestic Abuse Act 2020;
(b) ‘victim of domestic abuse’ means a person on or against whom domestic abuse is inflicted or threatened.”’
New clause 41—Housing benefit: exemption from benefit cap—
‘(1) The Housing Benefit Regulations 2006 are amended as follows.
(2) In Regulation 75A, omit “or 75F” and insert “, 75F or 75FA”.
(3) After Regulation 75F, insert—
“75FA Exception to the benefit cap: domestic abuse
(1) The benefit cap does not apply to a person (P) who is or is likely to become a victim of domestic abuse or where the victim of domestic abuse has fled domestic abuse within the previous two years.
(2) Subparagraph (1) applies where P provides evidence of having experienced domestic abuse or being at risk of domestic abuse in one of more of the forms set out in regulation 33(2) of the Civil Legal Aid (Procedure) Regulations 2012.
(3) The exception in subparagraph (1) above will last for a period of two years from the date on which the person became eligible for the exception.
(4) ‘Domestic abuse’ has the meaning set out in section 1 of the Domestic Abuse Act 2020.”’
Jess Phillips
All these new clauses deal with welfare provision and the multitude of ways that the benefits system currently prejudices victims of domestic abuse.
I will first speak to new clause 24, which would place a duty on the Government to undertake an impact assessment of welfare reform changes on survivors of domestic abuse. I recognise that the Ministers in front of me from the Home Office probably do not have the stomach to change actual welfare rules that are run by the Department for Work and Pensions. It would be churlish of me to suggest that they were going to start making Department for Work and Pensions policy right here on the hoof, although Marcus Rashford has not done a bad job. If they do not have the stomach to change the policy that some of these amendments seek to make, we may need to assess when welfare changes are made with regard to victims of domestic abuse.
The Bill rightly recognises that economic abuse is a key tactic used by perpetrators to coerce and control, but while the Bill recognises this as a key form of harm experienced by survivors, what does it do to provide a safety net for survivors who face years of economic sabotage, control and exploitation at the hand of a perpetrator? Economic abuse is sadly widespread and over half the survivors surveyed by Women’s Aid and the TUC could not afford to leave their abuser. That means they will stay and experience further abuse.
Research by the charity Refuge says that one in five people have experienced economic abuse and 88% experienced other forms of abuse at the same time. That means many survivors are in debt and have been prevented from accessing their household income. Access to welfare benefits is therefore vital to ensure that women can access the financial support they need to escape and rebuild their lives. I am not sure anybody would argue with that.
A robust safety net that enables survivors to escape and rebuild independence is not a luxury, it is a lifeline. The cumulative impacts of numerous changes to welfare reform policy in recent years are having some serious consequences for survivors, including universal credit, the benefit cap, the two-child limit, the under-35 shared accommodation rate—which I recognise there are now exemptions on—and the bedroom tax. Welfare reforms are restricting the resources women need to leave.
Specialist organisations like Women’s Aid are receiving direct reports from their member services about the stark choices between poverty and safety that women are being forced to make as a result of welfare changes. This has obviously sharply increased during covid-19. Women’s Aid member services have reported serious concerns about women’s access to food and basic essentials.
In my constituency I meet woman after woman who has been placed in temporary accommodation, often a local hotel or bed and breakfast, sharing a room with her children, and without any access to cooking facilities. The women are often in significant financial distress, without access to any form of support. They and women in refuges are largely reliant on food banks. Specialist domestic abuse services are telling us that delays to universal credit and the cumulative impacts of welfare reforms are resulting in women being unable to access their most basic rights to food and survival. That cannot be right.
While the Government have made the case for bringing in various welfare reform policies, they are also having to retrospectively revise those policies because of the unintended consequences. Every time Ministers have stood up, they have oft warned of the unintended consequences of changing our laws, so they are only too alive to that possibility.
Many of the welfare changes in the last few years have had unintended consequences for survivors of domestic abuse. There is the well-documented case of a survivor who was forced to pay the bedroom tax because of a panic room that had been installed in her flat. That panic room had been installed because the survivor and her son were at such high risk of domestic abuse from her ex-partner, and the impact of the bedroom tax was to plunge her into financial instability and force her to move to a far less secure property, without the protections that the panic room had afforded her. Ultimately it was ruled by the courts that the survivor did not need to pay the levy, setting a precedent for others with panic rooms. However, the process was inefficient, costly, time-consuming and placed an unimaginable emotional toll on the survivor. It should not be on survivors to make welfare policy right. It is not the job of domestic abuse survivors to strength-test the system for us.
It is clearly the Government’s intention to transform the response to domestic abuse through the Bill, including economic forms of abuse. However, that intention is at risk of being seriously undermined by welfare reforms. Although the consultation on the Bill stated the intention to identify
“practical issues that make it harder for a victim to escape”,
and to
“consider what can be done to help victims of economic abuse”,
there is no mention of welfare reform policy. The range and severity of concerns regarding the current welfare reform agenda demonstrate that a new approach is needed. It is vital that the impacts and unintended consequences on survivors of welfare reform policies are safely and robustly assessed before implementation in the future.
I have personally had to take cases to court, with victims, regarding legislation that has not protected them. I have to say that, in almost every case, the court finds in favour of the victim in cases of domestic abuse. All the new clause asks is that, when we make new changes to welfare policy, considerations are made for victims of domestic abuse. Those considerations do not have to be listened to, but should be considered.
For example, when universal credit was originally rolled out, if somebody changed their situation, they would trigger a universal credit update. They may have been on legacy benefits, but if their situation changed and they went into the jobcentre and said that their address has changed because they have been moved into the area, they would then be put on to universal credit, as part of the roll-out. Immediately, the income of single mothers and victims of domestic abuse would drop by £600 overnight, simply by virtue of that.
Anyone who works with domestic violence victims would be able to look at every single welfare thing and say, “Well, this won’t work for this reason, and this may need mitigation for this reason.” That is not to say that we cannot have any welfare reforms that would never harm victims of domestic violence, but some time to prepare for what they are going to be would not go amiss, especially because the court eventually agrees with me and overturns them in the long term anyway, costing the taxpayer a huge amount of money.
New clauses 38 and 40 concern the non-repayment of advances. As with new clause 24, we need to ensure that the benefits system works for survivors of domestic abuse and enables them to support themselves and their children away from the perpetrator. We must recognise that access to money is fundamental and understand the benefits system as one of our most powerful tools to support survivors and enable them to live safely. Our social security system—particularly universal credit—does not support survivors and provide that essential safety net to help them live independently from the perpetrator. In fact, it does the opposite. It often forces them into poverty, exactly at the point that they make the incredibly difficult, traumatic and dangerous decision to leave their abuser.
Take a woman going into a refuge as an example. At the moment, after a few days in the refuge, she will be supported to apply for universal credit. For most women, this will be their first interaction with universal credit, having either never received benefits before or having received legacy benefits. It will typically be much harder for survivors to make an application for universal credit than most. Some will not have their own bank account, because they have been prevented by their abuser from opening one. Others will have left without key documents and ID. Refuge staff will help women overcome those barriers, but it still might take a few weeks to sort it all out. Only after that will survivors be able to make an application. They must then wait a minimum of five weeks before they receive the first payment. That means seven to eight weeks without any income at all. Refuge managers tell me that a wait of around two to three months before receiving the first payment is very common for survivors of domestic abuse.
While they wait for the money, survivors are reliant on food banks, perhaps a small amount of money that the refuge provider can give through a hardship fund and whatever else refuge workers can access from other charities and community groups. We must remember that this is happening at the very same time that the woman has left her home, her job, her friends and her family, because she fears for her safety. Many of these women will have been raped; many will have been subject to torturous physical abuse or will have experienced a sustained campaign of coercion and control.
Julie Marson (Hertford and Stortford) (Con)
Does the hon. Lady agree that, in some of these circumstances and given the really complex issues that she describes, a comprehensive training package is needed, as the most powerful place to intervene and help is the frontline? So, the training that the caseworkers in jobcentres receive, the tools they have and the relationships they build are really powerful ways to help people in those situations.
Jess Phillips
There is absolutely no doubt about it, and a good jobcentre worker is worth their absolute weight in gold. I have a gold star system for the ones in my local jobcentre, who are excellent in lots of circumstances. The hon. Lady is absolutely right. However, when we are talking about domestic abuse and universal credit, we have put in a huge amount, and maybe that could have been avoided if we had looked at some of the impacts of how this policy was going to be rolled out. For example, on the issue of split payments in universal credit, we are now asking jobcentre staff potentially to intervene directly when two people are sitting in front of them, saying, “So, would you like split payments?” It is rocky terrain for a jobcentre worker to have to try and deal with that.
In fact, if we look at the take-up of split payments, we see that it remains persistently low, compared with the number of victims of domestic abuse who are claiming universal credit. That situation means that there is potentially a need for the complete redesign of jobcentres, so that there are permanent private spaces for every single person who might need one, and so that people can be talked to separately. There are all sorts of things that can be done to make the situation better, and training at the frontline is absolutely key in that.
However, that roll-out of universal credit was not done in my own area; I had to go and ask what was being done. I have sat in the Department for Work and Pensions with Ministers and asked them what they are going to do about these issues. The issue of split payments was very much an afterthought, and I suppose that all I am asking for in new clause 24 is that it is not an afterthought but is built into the system from the very beginning. However, the hon. Lady is right—frontline staff are worth their weight in gold.
The way that universal credit has been designed means that women are forced to choose between staying with a perpetrator or being unable, in lots of cases, to feed themselves and their children. That cannot be right and cannot be allowed to continue. Although the reasons why a woman might return to a perpetrator can be complex, it should not surprise anyone in this room that their not having enough money to provide for themselves and their children is the most common factor. In a survey for Refuge, one refuge worker said,
“the changeover to Universal Credit has caused a significant delay in accessing benefits when women arrive at the refuge. The five- week waiting time means women have to survive with their children with no income, and only a few food bank vouchers. This means that many struggle with whether they’ve made the right decision to leave, if they can’t even feed their children on their own.”
Of course, the Government response is that advance payments are available for those who experience hardship during the minimum five-week wait. That is true, but the crucial thing about advances is that they are loans, which must be paid back immediately from the very first payment, at the rate of up to 30% of the person’s payment. In offering such loans, we are offering women the choice of having no money now or not having enough money for many, many months afterwards.
We must remember that this is often the period when women are traumatised, and supporting their traumatised children, while trying to rebuild their lives in a new place without their support network. They might well be going through the criminal justice process, or the family courts, or both. The system requires them to do that either without a penny, or with some money but in the knowledge that they will spend at least the first year of their life away from their perpetrator struggling to make ends meet, as they have to pay that loan back.
Specialist services supporting survivors tell me that many women they support do not take advantage of the advance payment, even though they desperately need it. Those women are frightened about the consequences of taking on debt at the very beginning of their life away from the perpetrator. Those who have experienced years of economic abuse might have thousands of pounds in debts that they were coerced into taking, with their perpetrator fraudulently putting their names against a variety of debts. That is very common. They know that they will likely spend the next decade paying that debt off and they do not want to start their new lives by volunteering for even more debt.
Those fears are often well founded. Research from Citizens Advice shows that people who take out an advance loan from the Department for Work and Pensions are more likely to get into further debt as they struggle to pay the loans back. The answer to this is to get rid of the five-week wait—some well-trodden evidence regarding everybody, but there we go. In the case of domestic abuse victims, the answer is to pay benefit advances to survivors of domestic abuse as grants, rather than loans.
It is hard to overstate how much of a positive difference that would make to women and children up and down the country. It is the difference between a woman in a refuge hoping the food bank has not run out of baked beans and a woman in a refuge being able to treat her child to a yoghurt or some sweets after dinner on their first day in a new school. It is the difference between a woman feeling hopeful that she made the right decision and can look forward to a life without abuse or a woman feeling that she has no choice but to go back, because she simply cannot afford to live away.
When I explain to Ministers the impact of the five-week wait and repayment of advances for survivors, they often tell me that they cannot treat different groups differently under universal credit or that it is impossible because people would lie and pretend to be victims—usually they say both. In fact, last week the Ministers wrote to me saying that paying advances as grants to survivors includes significant fraud risk.
On treating people differently, there are many exceptions in our social security system. The Minister herself already referred to the shared accommodation exemption for victims of domestic abuse, which is a recent change. It is a strength that there are differences for different people. It makes our system work better and better protect people.
There are already exemptions for survivors of domestic abuse in the benefits system. For example, the domestic violence easement means that survivors do not have to comply with job-seeking conditions of benefits for a few months while they focus on their safety. The destitution domestic violence concession, which we will no doubt discuss at length tomorrow, is a crucial example from immigration rules, which provides a lifeline to survivors on spousal visas. Exempting survivors of domestic abuse from repaying benefit advances would be another important difference for survivors of domestic abuse that ensures the system works as a safety net for them and not as a barrier.
On the point of making it up, as someone who has worked in specialist domestic abuse services, I can tell you that it is a thousand times more likely that a woman will minimise the abuse that she has suffered, or think it is not abuse because they have started to believe what the perpetrator is telling them—that it is their fault and they are making it up. I understand, however, the Government’s desire to ensure that public money is not received fraudulently and therefore accept that some level of evidence is needed.
The best model for providing evidence is the legal aid gateway, which sets out the evidence requirements for survivors of domestic abuse to access legal aid. The same framework can be used here. This is an affordable policy that would make an extraordinary difference. I urge the Committee to support new clauses 38 to 40, which would ensure that benefit advances are treated as grants and do not need to be repaid.
I will now briefly turn to new clause 41, which would exempt survivors of domestic abuse from the benefit cap. The benefit cap limits the total level of benefits that a household can receive. It was introduced in 2013 and has impacted 250,000 households since the limit was lowered in 2016. While the cap was one of a number of policies intended to reduce our deficit, the Government’s own evaluation shows that only 5% of households moved into work because of the benefit cap; 95% did not.
Instead, the cap largely impacts lone parents and those with an illness or disability. Seven out of 10 capped households are single parent families, of which 69% had at least one child under the age of five and 24% had a child under two, according to figures from May 2019. Around 90% of single parents are female, so it is unsurprising that single female parents make up 85% of all households whose benefits have been capped, but the cap is having a particularly devastating impact on survivors of domestic abuse and increasing the barriers that women face in leaving an abuser. There is no free childcare before the age of two, meaning that lone parents with young children often do not work enough hours to avoid the impact of the cap. The issue is particularly acute where a women has fled domestic abuse and is far from her support network, so is unable to rely on friends or family for childcare and is perhaps unable to work due to the abuse she has experienced.
Although survivors are exempt from the cap while living in refuges—another exemption that has been put through—they are not exempt as soon as they leave. That is severely restricting survivors’ ability to find a safe new home and move on from refuge, as their benefits might not cover the cost of housing, either in social housing or in the private rented sector. It is leading, essentially, to bed-blocking, where women who are ready to leave a refuge are stuck in the service, blocking spaces that other survivors fleeing abuse desperately need.
The impact of the cap on survivors was made starkly clear in the case of R v. the Secretary of State for Work and Pensions, which considered the legality of the benefit cap. Two of the claimants in the case were survivors. One was living in statutory overcrowded housing and was unable to move herself and her family anywhere suitable and safe due to the cap. Another was stuck in a refuge because the cap meant that she could not afford any move-on housing, and she was therefore blocking a much-needed space for another survivor. They told Women’s Aid that they felt financially penalised for escaping domestic abuse.
I know that the Department for Work and Pensions states that discretionary housing payments, which are paid by local authorities, are available for survivors in such circumstances. However, DHP allocations remain inconsistent, short term and dependent on different councils’ policies and practices—it is yet another postcode lottery. They are not monitored by the Government centrally, so it is impossible to know whether they are providing an effective solution.
The Department for Work and Pensions has repeatedly claimed that the benefit cap is saving money. As I have highlighted, however, the cap creates significant hardships, and the Department therefore gives back a significant proportion of the money it takes from claimants by providing funding for discretionary housing payments to local councils in order to help them support capped claimants. The circular process of transferring public money from one budget to another fails to consider the impact that has on families, particularly survivors, who rely on less stable support and are certainly under somebody’s “discretion”.
The Department does not include in its figures the cost of DHPs included in administration costs, nor does it consider the increased cost to local authorities through temporary accommodation or the wider cost that the hardship created by the cap might have on other public services. Women’s Aid is concerned that the DHP allocation remains inconsistent, short term and dependent on different councils. The DWP confirmed that it has not carried out a full cost-benefit analysis of the cap. In 2018-19, however, the DWP allocated £60 million of DHP funding for local authorities in Great Britain to support capped households.
For those reasons, I urge colleagues to support new clause 41 in order to exempt survivors of domestic abuse from the benefit cap. To summarise, the Bill must do more for survivors of abuse, including those suffering economic abuse, than merely define what is happening to them. The new clauses would ensure that the Bill has a legacy of not only recognising that money is used to control and abuse, but making significant changes to reduce the number of women who are forced to stay with their abusers because they cannot afford to leave.
Victoria Atkins
With regard to new clause 24, the Department is already obliged to consider the impacts of its policies through existing equality assessments, in accordance with the public sector equality duty. Moreover, the Department reviews, and is consistently striving to improve, services, working with partners who are experts in the areas that they support. This has included the roll-out of a significant training programme and the implementation of domestic abuse points of contact in every jobcentre.
Jess Phillips
Can the Minister not see the problem with a woman going in and asking for a split payment, and then returning home that evening?
Victoria Atkins
That is why we do not have it as a default. We are sensitive to that precisely because it will not work for some women. It has to be done led by the victim—led by the survivor—and not imposed universally. I will come on to our concerns about the default position in a moment but, if I may, I will carry on building the argument towards that.
The Department will also signpost individuals affected by abuse to specialist support and will work with them to ensure that they are aware of the other support and easements available under UC. Those include special provisions for temporary accommodation, easements to work conditionality and same-day advances. That approach ensures that victims are supported, while simplicity is maintained for others.
In July last year, the universal credit digital claims system was changed to encourage claimants in joint claims to nominate the bank account of the main carer for payment. We continue our support of payment of universal credit to the main carer through that messaging. This strikes the right balance between encouraging positive behaviour and allowing claimants to choose how best to manage their finances.
The proposed change in approach would be inappropriate for some vulnerable people who struggle to manage their money—for example, if one partner has addiction issues or is a carer for the other. A number of practical issues would present further challenges to vulnerable people. For example, 1.3 million adults in the UK do not have a bank account—most of them are on low incomes or unemployed.
The current process does not require both claimants to have bank accounts. The Government are working to improve financial inclusion, but it remains the case that the introduction of split payments by default could result in unnecessary payment delays for joint claimants when one partner does not have a bank account. It is necessary, therefore, to retain a single payment option.
Moreover, a move to split payments by default does not eliminate risk. Sadly, we know that, irrespective of how someone receives their money, perpetrators use a broad spectrum of abusive tactics to dominate and control their partners. That is the point about split payments being rolled out as a default.
The DWP has rolled out a significant training programme and implemented domestic abuse single points of contact in every jobcentre. That means that jobcentre customer service managers and work coaches have the right knowledge, tools and local relationships to support customers who are experiencing or fleeing domestic abuse. The Department continues to support survivors of domestic abuse through a range of measures, including signposting to expert third-party support, special provisions for temporary accommodation and other measures that I have mentioned, including easements to work conditionality.
We are achieving positive cultural change in jobcentre sites and, while we accept there is always more to learn, our departmental awareness of and support for those who have suffered or are suffering domestic abuse is better than it has ever been. I appreciate that the hon. Member feels strongly about her proposed measures, but I hope that I have reassured other colleagues about the steps that the Department for Work and Pensions is taking to support those who receive benefits, whether legacy benefits or universal credit.
Jess Phillips
Often the words that get read out bear no relation to the experience that we feel on the ground, whether as a benefit claimant or and as somebody supporting benefit claimants. With that idea that single payments are somehow safer and better, it is noble of the Minister to try to argue that universal credit going to one person in the household is better for victims of domestic abuse, but it is genuinely—
Victoria Atkins
I chose my words very carefully. What I said was that this must be led by the victim herself. I fully accept the point that the hon. Member made when she intervened on me. For some victims, walking in at the end of the day and saying, “I’m getting my UC separately,” may be a trigger. That is why we have to be led by the victim/survivor, rather than having split payments by default.
Jess Phillips
I understand, but about a year ago, I asked how many people had asked for split payments, and obviously the answer was, “We don’t collect that data”—the Government literally were not collecting the data nationally. When I asked them to collect that data, please, we saw that very few people are currently asking for split payments. That is not because people do not want some of their own money coming into their own hands; it is because the current system is not safe for having split payments. Split payments by default is a way of protecting people.
On the other equality areas that the Minister talks about, I totally take the point that saying that victims of domestic abuse do not have to repay the loans opens things up to care leavers. I am okay with that. If care leavers think that they cannot cope when we think about the universal credit five-week-wait loan, I would live with that. I think we need to look at all vulnerable groups. We are here to talk about the Domestic Abuse Bill, so I am leading chiefly in regard, but I am okay with other vulnerable groups not having to repay the universal credit loan. If anything, covid-19 has proved to us that the five-week wait is too much.
We can sit here and say that there are more than ever, but the reality on the ground is that victims are telling us that they cannot move out of refuge—they cannot afford to become free. We have to listen to them. There have been times in the Department for Work and Pensions—I really hope that that era will break out again under the current Secretary of State—when their voices were heard. I truly hope that that will happen, so we will continue to push this.
I shall not bother pushing a Home Office Minister into a vote to change the policy of the Department for Work and Pensions. I recognise all our limitations in that regard. However, we will continue to focus on this. I beg to ask leave to withdraw the motion.
Clause, by leave, withdrawn.
Ordered, That further consideration be now adjourned. —(Rebecca Harris.)
Trade Bill (First sitting)
(4 years, 6 months ago)
Public Bill CommitteesRead Full debate Read Hansard Text Read Debate Ministerial Extracts
The Chair
Good morning. Before we begin, I remind everyone to please switch off their electronic devices, or to put them on silent. Tea and coffee are not allowed during sittings. The Hansard reporters would be very grateful if Members could email electronic copies of their speaking notes to hansardnotes@parliament.uk.
Does anyone have a relevant interest that they would like to declare? If not, I call the Minister to move the programme motion, which was agreed by the Programming Sub-Committee yesterday.
The Minister for Trade Policy (Greg Hands)
I beg to move, Date Time Witness Tuesday 16 June Until no later than 10.30am The Institute of Directors The Confederation of British Industry Tuesday 16 June Until no later than 11.00am Advertising Association Tuesday 16 June Until no later than 11.25am Perpetuum Ltd Tuesday 16 June Until no later than 2.40pm Ernst & Young UK Trade Policy Observatory Tuesday 16 June Until no later than 3.10pm The National Farmers’ Union Tuesday 16 June Until no later than 3.45 pm The Chemical Industries Association Make UK Tuesday 16 June Until no later than 4.10pm The Trades Union Congress Tuesday 16 June Until no later than 4.30 pm Monckton Chambers Tuesday 16 June Until no later than 4.50pm Trade Remedies Authority Thursday 18 June Until no later than 12.00pm Client Earth The Trade Justice Movement Thursday 18 June Until no later than 12.30pm Digital Trade Network Sam Lowe, Centre for European Reform Thursday 18 June Until no later than 1.00pm British Chamber of Commerce in Korea
That—
(1) the Committee shall (in addition to its first meeting at 9.25am on Tuesday 16 June) meet—
(a) at 2.00pm on Tuesday 16 June;
(b) at 11.30am and 2.00pm on Thursday 18 June;
(c) at 9.25am and 2.00pm on Tuesday 23 June;
(d) at 11.30am and 2.00pm on Thursday 25 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: Clauses 1 to 3; Schedules 1 to 3; Clauses 4 and 5; Schedules 4 and 5; Clauses 6 to 12; 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.—(Greg Hands.)
I should point out that we have accommodated the Opposition’s desire to have more scrutiny sessions. There is now an additional scrutiny session on Thursday morning. That was arranged with the agreement that we would none the less finish considering the Bill by close of play next Thursday.
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.—(Greg Hands.)
The Chair
Copies of written evidence that the Committee receives will be sent to Committee members by email.
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.—(Greg Hands.)
The Chair
Before calling on the first Member to ask a question, I would like to 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 the Committee has agreed. For this session, we have until 10.30 am, so it is an hour. For the record, I will introduce the witnesses, Allie Renison, head of EU and trade policy at the Institute of Directors, and Jonathan Brenton, head of trade policy at the CBI. Welcome, and thank you for coming.
Allie Renison: Thank you.
Jonathan Brenton: Good morning.
Katherine Fletcher (South Ribble) (Con)
I don’t think they will be able to hear you on mic.
Stewart Hosie (Dundee East) (SNP)
Do you want to invite the witnesses in turn to make their opening remarks, and then we can see how this will work?
The Chair
Q
Allie Renison: Absolutely. Forgive me, but people raised in America have no problem, unfortunately, projecting their voice. My name is Allie Renison. I am head of EU and trade policy for the Institute of Directors. That is at the intersection of working on EU negotiating priorities and wider trade priorities. We have a very high share of members who trade internationally—about 70% export. Largely, about two-thirds are in services, and one-third are in goods. So international trade is a big part of members’ focus.
All in all, from discussing the purpose of the Trade Bill with members of the IoD, there is broad-based support for it, in so far as the objectives remain limited to continuity agreements and what is necessary to put in place requirements for taking up our trade defence measures outside the EU. There are some question marks around the future of new trade agreements, but in so far as the Bill is understood to cover the continuity phase, there is broad-based support for trying to ensure that that is over the line.
The Chair
Q
Jonathan Brenton: I will keep this quick because I am conscious that you want to keep moving. Our members generally welcome much of the Bill. They realise that time is against us and that we need, as Allie said, to make provision for trade continuity and for trade defences.
However, there are two schools of thought. There are those who wish the Bill had been wider in scope, a bit more about trade strategy and linked to policy areas, but there is a smaller group who say that time is limited, and recognise that other pieces of work need to be done, such as the secondary legislation needed to put the Bill in place, and that we need to get the trade defence authority up and running. I will just quote what one member said, to give you a flavour of this:
“I think we’d argue for something bolder and more visionary, that could capture the high ground for the future of international trade, and position the UK as leader in key global issues like climate change. However time is short, and it may be we have no alternative to short term pragmatism.”
So we recognise where we are. We will not get a perfect holistic framework for policy if we have to work with the grain of the Bill we have, but there may be one or two improvements that some of our members would like, especially on the working of the TRA in consultation.
But we remember the wider context, and I have to say, ladies and gentlemen, that that wider context is also about the unprecedented challenge of covid. Our members have shown extraordinary resilience, and I pay tribute to that, but they are not superhuman. For many of our members, this Bill is not at the top of their priorities, given there is so much going on in the UK economy at the moment. Those are my opening remarks.
The Chair
Thank you. Can I ask the Committee to put its questions, starting with the shadow Minister?
Bill Esterson (Sefton Central) (Lab)
Q
The Chair
Either of the witnesses can go first. Allie?
Allie Renison: Further to my counterpart’s evidence, in terms of discussing the agreement with businesses, there was some interest in it when there were developments in and around it, when the UK was seeking to accede to it in its own right six or 12 months ago. There was lots of interest in understanding what it actually meant. But, all in all, in so far as the purpose of it is to maintain a level playing field—unfortunately, the notion of a level playing field, and the importance of it in many areas of business, has been soured somewhat by some of the discussions and the context in the EU negotiations—having a level playing field and allowing people to bid on that level playing field, when it comes to Government procurement, is very important. Also, when it comes to future trade agreements, it is an important starting point.
At a time when the global trading system is being called into question by some very fundamental players on key aspects of it, including in some press reports over the last six to 12 months since the Government procurement agreement, it is really important that the UK puts down a marker and says that it wants to be part of this rules-based trading system. It is very important from a continuity perspective and as a marker in the sand in the UK’s international trade obligation commitment.
Bill Esterson
Q
Jonathan Brenton: I agree with what Allie just said on the importance of a level playing field and the important signal that it sends about the UK in a global trading system that is clearly under strain. I can quote the figures given at the time that the UK signed this. The size of the global market is £1.3 trillion. We are talking about the 19 signatory states—major trading partners such as the US, Canada, the EU and Japan.
There are agreements—they exist, and it is absolutely vital to sign them. Making them work and obtaining market access is not always the same as securing or signing an agreement. The most obvious example would be the United States, where many states have not ratified GPA. There is a very big procurement market in the US at state level, which we have asked the UK to look at and push for in the context of a US trade deal. Allie will know better than I do that opening up state-level access in the US is not that easy. There are also major markets such as Mexico that have not signed up to the GPA. So it is absolutely right that we should do this, but it is one step on the route to a fully transparent market in Government procurements across major markets.
Bill Esterson
Q
Jonathan Brenton: That is quite a big question. However, as a general principle, trade is more than trade deals. There are markets where the UK is focused on getting new global trade deals—the US, Australia, Japan and so on, although Japan is doing a kind of roll-over deal, but certainly Australia, New Zealand and the US. There are also markets where a trade deal is more of a long-term aspiration, because of the—[Inaudible]—of the UK in signing deals, and also the readiness of those countries to do deals. India and China would be examples.
There, what I think our members are looking for is for the UK to continue and step up its existing work through, say, the economic and financial dialogue in the JETCO—the joint economic trade commission—with both countries, to put on the table those issues that are important for business, and to do that in a way that matches what the UK wants with what the host country also wants, because I think this has to be win-win. In tandem with trade deals, we also want a push on market access, with the information coming from business being a part of UK strategy. I am simplifying it a bit, because I suspect in the case of the US that it will be a mixture of the two, and that, as and when we sign a US trade deal, there will still be work on the state level. I think it will take a long time to get the access we probably want.
Allie Renison: Can I follow that up? Can I just add a note on the US market? When it comes to a level playing field, the UK probably has a much more level playing field for its own internal market. That is largely, I would say, in some respects, because of single market legislation, which allows that level playing field not only in the UK but across all of the constituent parts of the EU.
By contrast, the US, and particularly Canada, do not have that kind of consolidated internal market. As was alluded to, there are differences at the state level. There have been very limited attempts to try to rectify that for trade agreements, when it comes to the US. I think there have been some studies in the past showing that despite the lack of, for want of a better word, “noise” around the closed aspect of some of the US procurement markets—those at a federal, state and even municipal, or county or local government, level—it is a bit more overt in some respects. When it comes to the actual implementation, some of the disruption, or patchwork approach, to determine access in other EU countries, on paper it is the same, but in practice it is sometimes different. I think that US can sometimes get a bad reputation for this, because it is a bit more overt.
In the context of trade agreements, I would say that, in terms of most of the work that is done to deal with the existing legislation around Buy America, which is the obligation that the US, at multiple levels of government, requires certain thresholds for suppliers to meet from a US origin point of view, they can get wavers for that at the federal level for trade agreements; they are not very common at the state level. Very often, I think that trade agreements are seen as an opportunity to start the conversation rather than necessarily unlock state-level market access.
Bill Esterson
Q
Allie Renison: If you were to compare approaches, obviously there was some discussion about having a Buy European agenda, which was under the campaign platform of Emmanuel Macron when he was campaigning to be President. However, that really did not get much traction, effectively because of the EU’s own rules around competition and state aid, and it was also seen as not necessarily wanting to compete with the US, and the current Administration, in that respect.
I do not think it is a big priority, in that it would depend on what the structures underpinning it would be. In a coronavirus world, countries and industries will probably want to hold on and fight for every piece of market share, in particular, but I do not think that that should be seen as an opportunity to try and make it harder for other countries to access our internal market, simply because we have a lot of members who do that reciprocally in other countries. We find that with the exports of a lot of companies working in manufacturing and heavy industry, specifically from a goods and services perspective. You can think back to the classic example of Rolls-Royce, which initially began manufacturing engines and then decided, just with a couple of engines, to—[Inaudible]—services. That is how it really gained its edge in the marketplace.
If you think of it from that perspective, that is an important feature of what British manufacturing brings to other parts of the world. To have that reciprocity closed off—because our members are so internationally oriented, compared to the average, I would say that that is a bigger a priority. We have a very low share of members who are looking at Brexit as an opportunity to reshore or bring back manufacturing, so to speak. Even the data that we have seen so far shows that there is much more of an indication, from an industry perspective, of diversifying in other markets rather than trying to onshore operations. I would not think that that is a big priority for our members.
I would distinguish that, however, from the Government’s general approach to foreign takeovers and investments, meaning there is some difference there, but when it comes down to procurement access, most of our members do not see Brexit as an opportunity to try to have us buy British, so to speak.
The Chair
I will move on to Andrew Griffith and to Stewart Hosie. I remind witnesses to speak slowly, because the sound quality is not brilliant in the Committee Room. We are struggling to hear you. It would be very helpful if you could speak slowly and speak up.
Andrew Griffith (Arundel and South Downs) (Con)
Q
Jonathan Brenton: I think we can take it as a given that the continuity of trade is the biggest priority for our members. Let us break that down into two questions. If the UK were to lose access to its trade deals, I think there would be an enormous loss in credibility in our trade policy and a loss of trust among business.
In terms of the individual sectors, I will take the specific example of Turkey. Turkey is a special case, of course, because it is in a customs union, but we know that it is pushing for a trade deal, which the UK would welcome. It all depends on getting a good EU deal, or an EU deal. If there were no trade deal with Turkey, a multi-billion auto trade—I would have to dig out the figure for you—that has doubled in the last five or six years, would face a 10% tariff. That would be an enormous shock to the UK auto industry. That is the kind of practical—[Inaudible.]
The Chair
Thank you. Allie, can we have your view please? Have we lost the connection? Allie can you hear us? Jonathan are you still on the phone? I will suspend the proceedings for a moment while we sort this out.
The Chair
We will now carry on with our proceedings. I welcome back Allie to answer the last question. Allie, can you keep your answers concise because we are up against the clock? Thank you very much.
Allie Renison: Thank you. I believe I heard the question that my counterpart answered about the importance of the roll-over. About 15% to 20% of our members have indicated that they make use of the trade agreements. The most important part, in addition to the roll-over, is the practical implementation of that. Briefly, what I mean by that is simply that we can have a roll-over or as close to roll-over as possible on paper, but what happens when it comes to changes at the border in other countries is another matter. I think that that, tied together, is the most important thing to make sure that we get. Obviously, we need to have the roll-overs in place so that we minimise any additional hits or disruption associated with changes arising from the UK-EU relationship.
The Chair
Thank you.
Jonathan Brenton: May I just go back and give you one stat to answer Andrew’s question?
The Chair
Yes, certainly.
Jonathan Brenton: UK engine exports to Turkey were £100 million in 2015. They were £900 million in 2018. You have a thriving trade that would hit a tariff wall of 10% if we cannot get a roll-over trade agreement. That is the stat I was looking for.
Stewart Hosie
Q
Allie Renison: You are very right to raise that point. On the modification issue, I suppose we do not know to what extent that will become an issue, as it depends on where we get to with the roll-over process. I cannot speak for other countries’ priorities, but I think there is a distinct feeling that when the roll-over process was happening during the article 50 period, the time pressure certainly meant that it was a choice between either having an agreement and rolling it over or not having it in place. That may have helped get the agreement over the line. There may be some scope for increased modification.
That probably becomes a bigger negative issue for some of the agri-producers, depending on whether, for example, quotas are changed to get a deal over the line. It depends on the level of quota, it depends on the sector and it depends on the sensitivity of that sector. That is probably the only example, and it is not a particularly prominent one. We have far more members in the processing industries when it comes to agri-food retail and wholesale, rather than actual producers. Their priority is making sure that you are able to get the agreement over the line in the first place.
Just to wrap up my answer, when I say that there is some concern about future trade agreements, I should probably clarify that that means they wanted to understand what the purpose of the Bill was and whether it laid out enough scope for engagement with other devolved Administrations. That is an important point to put on the record: we do not want to get to a situation on the one hand where a future trade agreement can be easily held up, with the Walloon experience in Belgium in the rear-view mirror. However, it is very important that we see it. We do not think that the current CRAG provisions are sufficient for future trade agreements, simply because we want to see the devolved Administrations more involved from the outset, rather than coming in as a blocker at the end. That is why I should clarify the delineation between the concern over future trade agreements and the split in process.
Gareth Thomas (Harrow West) (Lab/Co-op)
Q
Allie Renison: I am happy to begin on that, and I will slow down, rather than speeding up to get more information in. Keep in mind that that deal is a future trade agreement, rather than what is covered under the Bill. On future trade agreements, although I think the Government can do both, if you were to look at it in terms of priorities, the EU negotiations are four times as important as new trade agreements for our members.
With that in mind, however, when it comes to the US market, it is difficult to compare this with members’ views on the US negotiations with the EU, because there were not triangulation issues to the same effect. We do not know to what extent liberalisation with the US will impact on our relationship with the EU, so we simply do not have that triangulation problem. The triangulation issue rears its head more often now. If you think about it purely from a tariff perspective, a number of people in Great Britain who are trading in Northern Ireland simply want to know how it is going to work with the Northern Ireland protocol and how the tariff will operate. I do not think many members at this point have an offensive/defensive point of view. They want to know how the tariff changes will intersect with the EU negotiations. That is probably where the majority of our members are.
From a defensive point of view, some businesses have an eye on what changes there will be from an inward procurement perspective. There are some concerns about how standards will feature, without knowing how they are being discussed. I would not say that standards—chlorinated chicken and hormone-treated beef, for example—are big-ticket concerns for our members, because we do not have a lot of them in our membership.
From an offensive point of view, several big things unite our whole membership. First, there are the changes to delivering services physically—not immigration policy, but temporary labour mobility and the ability to go and provide services in the US. That is a big-ticket item for many members, who do not know whether that will be part of the trade agreement discussion. Secondly, e-commerce and facilitating digital commerce will probably be an even bigger offensive interest for both sides in the light of the pandemic.
The Chair
Q
Jonathan Brenton: Quickly, I would separate Japan and the US. For Japan, the timescales are very short because the legislation will need to go through the Japanese Parliament. Our members’ first priority is to ensure that we have a deal that matches what we already have. Given the chance, they would like to go further. Data is an important area. They also have concerns around pharma and the implementation of the economic partnership agreement, and there are some defensive interests around accumulation and ensuring that what we have in EPA is maintained.
On the US, I second what Allie said about mobility and services, and I would add mutual recognition of qualifications. It is notable, for example, that some US companies use Australian architects because they cannot use British architects, so there are deals to recognise qualifications in that area. There are historical tariffs that could be cut back. I agree with Allie about e-commerce, and there is a whole piece on future regulation. The role of the US market for SMEs is very important; it is a great way to begin exporting. Finally—this is an aspiration, perhaps—public procurement needs to start being opened up on a regional basis.
Many of our members make the point that the US deal should not jeopardise what we already have. We have a thriving relationship, and it is important that we safeguard what we have and go further.
The Chair
It ended so suddenly that I thought the line had gone again, but thankfully not.
Bill Esterson
Q
Jonathan Brenton: It is very important that I put on record, first, that the CBI is a member of both the Strategic Trade Advisory Group and the expert trade advisory groups, in terms of our personnel, and our members are also active on the ETAGs. We strongly welcomed the STAG and the ETAGs. As an organisation, we called for such a system in a letter to the previous Secretary of State, Liam Fox, in 2017. I think the first reaction of our members to any review of the ETAGs would be: “Keep them.” We have appreciated the insights that we have had through the ETAGs, on which a colleague of mine sits, regarding the continuity of trade deals.
Where could the system be made better? We have said to the Department for International Trade that we could have more transparency around membership. When we talk to members about ETAGs, one of the most common asks that we get is: “How can we be on one? Who is on the ETAGs?” An ask that we have had, which we hope will be fulfilled, is that the membership of the ETAGs should be published and there should be a transparent membership application process—as there has been for the STAG, the membership of which is published.
There also needs to be a clearer relationship between the STAG and the ETAGs. How does the STAG interlink? There could also be greater clarity about the role when it comes to negotiations. I should say, in terms of how the process is working, that when a negotiation has been launched, as is the case with the US and with Japan, there have been efforts by the DIT to brief the members of the STAG and the ETAGs. There have been short written records of the negotiations. We also know that there has been informal contact between business and DIT negotiators with specific questions related to the negotiations.
We welcome the system. It needs to be better, and it is really important that we understand that it is win-win. We see our role in business as giving negotiators the information that helps them to get the best possible deal for Britain. It should be possible to tweak the system to put the UK in the best possible position against its partners. If the US and the EU have a system in place, we should aim to match that.
Allie Renison: I will add briefly that the Institute of Directors is not part of the official main STAG, but it sits on several ETAGs. I echo much of what my counterpart said. I add one caveat: in respect of the continuity process, there are certainly lessons that we have drawn for the future. This does not just go to all the ETAGs and STAG. The DIT has done a fairly good job of setting them up and trying to ensure that business groups feel that they are part of the engagement process. We would like to have seen that to the same extent for the EU negotiations, because that is where there is the biggest potential for change coming out of trade agreements, compared with the other ones.
On the continuity process, we would have benefited from greater clarity early on about what was and was not going to be possible. If the Government had made it clear at the time that it was going to be impossible to roll over the Turkish customs agreement and why—keeping in mind that much of the roll-over, in so far as we can roll over what we have with Turkey, is linked to our relationship with the EU—we would have benefited all round from a lot more clarity early on in the process. The Government could have said that, based on the kind of relationship that the UK was seeking with the EU, it had not been possible to roll this over. Everyone understood that to be the case at the end of the process, but it could have been a lot clearer to businesses at the beginning, particularly for some of the fundamental ones.
From a preparation perspective—this goes to the heart of how ETAGs can certainly improve on what they have today—you need to make sure that you do not have a system whereby communication is so tightly controlled that you cannot go back and engage with members on the content of what you are discussing on policy. That is a very important addition to make one aware of: there is a balance to be struck between the Government having commercial sensitivities affected and making sure that, in this dialogue with business and stakeholders, we are able to actually have those conversations with members and that we are not overly restricted in doing that.
Matt Western (Warwick and Leamington) (Lab)
Q
Jonathan Brenton: Business and industry called for the Trade Remedies Authority. We welcome it; it is obviously essential. It is not an area that gets as much attention as perhaps it should do in trade policy. We have been told that the non-executive TRA board members will act to provide us with decisions that will be made in a fair manner. We have been told that they will be experts in trade, but they will not have any ideological bias. It is no surprise to you that some of our members would like to see provision for industry practitioners—not just business, but also trade unions, particularly for the manufacturing sector—to be involved in the TRA. First, they would bring their experience, and, secondly, it would be a matter of building confidence. Consensus is a really important principle in trade. It is a big, historic change for the UK to have its own independent trade policy, and we would like to think that it was built on a wide area of consultation, so that people feel involved.
Thinking about some of the other things that might be done to the TRA, it might be useful if the TRA was required, in its annual report, to review how it is acting compared with its peers: the EU and the US. That is a good principle for the UK and trade policy. There is no reason why the UK has to follow the EU and the US in everything; there is no reason why we cannot do better. As we embark on our own independent trade policy, we should be benchmarking ourselves against what others are doing, to check that we are in the right place.
Allie Renison: This is one of the areas in which, even with the trade-offs, there are many other questions when it comes to our relationship with the EU. This is certainly more in the opportunity basket of having a system that is more tailored to the UK’s needs. It is important to remember the context for the Trade Remedies Authority. It does not exist just to act for its own sake; it exists to undertake investigations. We should be careful not simply to assume that because every business has a concern about unfair competition or dumping, that is actually taking place.
Transparency is a very important part of what the TRA will be set up to do. Our broad support for the Bill is particularly because it is so linked to the creation of that. When I say transparency, if we think back to how it worked in the EU, the way decisions are taken on trade defence measures, anti-dumping measures, countervailing duties—the whole lot, so to speak—is probably one of the least transparent aspects of EU trade policy decision making. We should learn from that and make sure that it is not the case, because some decisions that are taken—rightly so, in the end—have come of that.
When we talk about the calculations and ratios needed, I think we should make that as transparent as possible, simply because once such a decision is taken, even if it is found to be justified in response to a case of dumping, it can have reverberations across supply chains. There are a lot of unintended consequences when it comes to defensive trade measures, and we should be careful to make sure that we understand that. That is not to say that producers do not have an absolute right to have their concerns taken up and redressed, but when it comes to action, because of the way supply chains work, there are often lots of unintended consequences, particularly for measures that are left in place for a longer period of time.
I close with another example of that. A small cluster of German solar panel producers decided to lobby the European Commission to put such measures in place. Please keep in mind that the UK, at that point in time and generally speaking, was more of a net importer, for efficiency and climate change purposes. In such a situation, it became quite difficult to get the UK’s voice heard. I call on that example to make sure that we understand that transparency is as important to the work of the TRA as the outcome itself. I do not know if you heard all that; I had something in my ear for most of it.
The Chair
Thank you. This will have to be the last question, given the constraints on time.
Gareth Thomas
Q
Jonathan Brenton: Can you repeat the question closer to the microphone?
Gareth Thomas
Could you expand on your hint about some concerns with the way the Bill has been drafted, which you alluded to in your opening remarks? Secondly, can you tell us whether the CBI still holds to the view it had the last time the Trade Bill was debated—that there should be more scrutiny of trade agreements by Parliament?
Jonathan Brenton: Do you mean parliamentary scrutiny?
Gareth Thomas
Yes.
Jonathan Brenton: I think we probably recognise that the debate about parliamentary scrutiny is, first and foremost, not for us, as a business organisation, although I think some of our members say that they would like to see more. Very important to us is that we have a trade policy built on consensus, with wider support built up in Parliament and civil society. One thing I commend about the STAG and ETAGs is the place for trade unions, non-governmental organisations and so on, and the fact that there is debate.
Our position is that we recognise, on balance, that the Bill has to be done in the time and conditions we are under, and that we need to be ready for the Brexit deadline, which is looming fast. However, we have not given up on our aspiration and calls for a more strategic approach to trade. We have said that repeatedly, and I think you will hear us say it more. We would like to feel that we have an approach to trade policy that is aligned with trade promotion, and an approach to trade deals that plays to the UK’s strengths, such as services, and future strengths. We would like to think that there are tested systems in place for consultation with business. I think some of these things are happening—the STAG system and ETAGs systems are evolving, and you can see the work that the Department for International Trade is doing on expanding its digital networks—but it would be reassuring for business to have that set out more comprehensively, and aligned with other policy areas like climate, and with the covid agenda, so that we had a confident framework.
Let us remember the historical moment that we are in, the time pressures we are under and the huge changes that have been brought on by the popular vote for Brexit and subsequent elections. We need to move pragmatically, given the situation we are in.
The Chair
Q
Allie Renison: You may have heard my remarks earlier; to reiterate them, for a future trade agreement, we do not think that the Constitutional Reform and Governance Act is sufficient, simply because this is where we take a view on the long-term impact and role of trade policy. We have all learned from the way in which the agreement between the EU and Canada was held up because of that country’s constitutional requirement to ratify it. [Inaudible.]—to have concerns about that early in the process. While we would not want to see, for example, devolved Administrations or Parliament trying to block trade deals at the outset, we think it is important to have that scrutiny requested. Perhaps in the Bill that is through developing future negotiating mandates, or asking whether we follow the EU trade example on that.
There needs to be a lot more front-loaded effort to help with future trade agreements, whether from a buying perspective or a scrutiny perspective. We do not want trade policy to become a politicised issue, in the way that it is in other countries. We would like this to be an issue of consensus as far as is possible. That is why we perhaps take a stronger view about the future role for scrutiny. We see this as integral to trying to build a bigger consensus around trade, rather than having it become another issue for both sides to argue about. I would distinguish that from this Trade Bill, which is about the continuity agreement. There is that possibility for modifications, the extent of which may vary, but we would separate that from the comments that I have made, and would distinguish between the continuity agreements and future trade deals.
Theo Clarke (Stafford) (Con)
Q
The Chair
Before the witnesses answer, I should say that I am prepared to go beyond 10.30 am, given the quality of the line. Please keep answers concise.
Allie Renison: Perhaps the Government could answer better on the exact implications of the Bill, but this is very much in the forefront of people’s minds. The businesses that we have spoken to have linked the Bill to the ability to carry on with the trade remedy provisions that we have. The Bill is an integral step to making sure that that competence is smoothly transferred over. I suppose the upshot of that is that certainly, for businesses that are relying on anti-dumping measures—[Inaudible.]
Bill Esterson
If we can get to the two witnesses, could we ask them to put their key points in writing to us, just in case Hansard missed anything? I am sure we would all appreciate that. I could not hear everything.
The Chair
In the interest of making sure we have a complete record of proceedings, that is a good suggestion. Thanks to our witnesses, Allie and Jonathan, for their forbearance and their time.
The Chair
We will now hear oral evidence from Konrad Shek, deputy director for policy and regulation at the Advertising Association. We have until 11 o’clock. We are experiencing some technical difficulties, Konrad, so if you can speak slowly and project your voice, the Committee will appreciate it. Please introduce yourself for the record.
Konrad Shek: Thank you very much, Chairman. Good morning, ladies and gentlemen. My name is Konrad Shek, deputy director for policy and regulation at the Advertising Association, which is a tripartite trade body that represents brands, advertisers, agencies and media. We also represent direct marketing and market research. Shall I give some background to the association?
The Chair
Yes, please.
Konrad Shek: The association is a member of the Professional and Business Services Council, which is co-sponsored by the Department for Business, Energy and Industrial Strategy, and also a member of the Creative Industries Council, which is sponsored by the Department for Digital, Culture, Media and Sport. I sit on a number of the DIT expert trade advisory groups. Among professional business services, advertising and market research is one of the largest exporters. We exported £9.7 billion, according to the latest Office for National Statistics figures.
There is general support for the Trade Bill from our members from the trade continuity perspective. I would caveat that somewhat, given that many of our members are preoccupied with covid-19 and Brexit. The technical details of the Trade Bill are perhaps not a high priority among members at the moment.
Trade with the EU is a significant portion of exports. The largest destination for our exports is France and Germany, so there is a lot of interest in getting a deal with the EU. There is also a lot of interest in the public procurement side of things from ad agencies and market research companies. Advertising agencies typically get involved in trade investment promotion, events and education promotion. They work for state-owned enterprises, especially sovereign wealth funds. Market research companies obviously get involved in opinion polling. Because of the international nature of London, we are very fortunate to be a global hub for advertising and market research, and a lot of companies get invited to tender for such projects.
Gareth Thomas
Q
Konrad Shek: Looking at some of the research out there, and analysis of the Bill, there is probably capacity for more scrutiny of the Bill. There is probably a lack of detail on the Trade Remedies Authority, although that is not necessarily a huge priority for us. A lot of remedies tend to be focused on the producer side of things, whereas we tend to export a lot more services. From the association’s point of view, I do not think that we necessarily have strong views on where the Bill would be improved, other than what I have said.
David Johnston (Wantage) (Con)
Q
Konrad Shek: One of the difficulties about data collection for services generally is that it is quite hard to collect that information. When you see reports from the ONS on the export of services, there is a significant lag in the reporting of that information. It is not quite as easy and straightforward as reporting the export of goods. Obviously, if there were an improvement in collecting data regarding the export of services, that would be hugely beneficial.
Bill Esterson
Q
Konrad Shek: From what I have seen, the Bill would really lock in current arrangements, rather than bring new opportunities as such. My understanding of the Bill is that it is more about continuity. The UK is a member in its own right. That carries benefits, because we have the opportunity to contribute directly and influence the rule-making around Government procurement, but my understanding is that there is a roll-over of current commitments on offer, based on the EU schedule. My analysis of it is that it is really just maintaining the status quo.
Bill Esterson
Q
Konrad Shek: Anything that could be done to help small and medium-sized enterprises to get involved in the public procurement market would be hugely beneficial. There are a lot of SME-type firms in the advertising and market research industries, and there are natural psychological barriers to participating in such projects. There are also cultural barriers, particularly if you go into markets where they do not necessarily speak the language. One of the benefits of the GPA is that there is a standardised process, whereby tenders are put out in the standard languages of the World Trade Organisation, and there is a certain amount of transparency about the bidding process, which helps with the overall level playing field.
Bill Esterson
Q
Konrad Shek: A lot of our companies are flexible, particularly in terms of their structures and how they operate around the world. Obviously, the larger agencies have local subsidiaries or local partners, but smaller agencies will probably rely on DIT support; activities such as those to do with taking part in trade fairs or trade missions are hugely beneficial for the smaller companies. There is a real mix.
As I said in my opening comments, we are quite fortunate: with London being a global hub, we are finding that business also comes to us; we do not necessarily have to search for it overseas. But there are definitely opportunities, particularly in the middle east, which are perhaps slightly harder to navigate, and without those local connections, SMEs may find it harder to get the resources to understand things.
Bill Esterson
Q
Konrad Shek: Given what is happening with the global economy in the light of covid, it is quite important for DIT to continue lobbying host Governments to keep their markets open and to refrain from trade protectionism—to keep the trade flowing as much as possible. It could also potentially do more work to get intelligence on the ground, understand new projects that might be coming into the pipeline, and feed that quickly to companies.
Matt Western
Q
Konrad Shek: I do not have a particular view on the Trade Remedies Authority at the moment. As I say, a lot of these anti-dumping subsidies tends to fall on the exports of goods rather than services. It is very hard to understand what distortions might come into play. As services are delivered by people, they are generally affected more by migration and immigration policies than subsidies or specific duties. I cannot think of a particular example at the moment, but there is a possibility that a country may put a tax on digital trade.
Gareth Thomas
Q
Konrad Shek: There is obviously a lot of interest in future free trade agreements. There seems to be a lot of discussion about moving away from the current structures of free trade agreements and looking for these lighter, more flexible types of free trade agreements, which can be negotiated in a shorter time. That is something we welcome, but there is obviously a trade-off; the lighter and more flexible type of agreements mean there is a lot better detail.
We would welcome having these agreements—[Inaudible.] Also, it has an important information aspect. If the UK signs a free trade agreement with a country, that disseminates the information that it is okay, or encouraged, to do business with that country. It sends a very good signal in terms of promoting trade investment links.
There probably needs to be some thought as well about the consultation process and the understanding of what companies require in terms of the wider economy and understanding the trade-offs. By opening or liberalising one particular sector, do we lose out in other sectors? There needs to be a balance, and a lot of political decisions need to be taken there.
There is scope for more consultation and perhaps a feedback process, hopefully for constructive criticism. One issue I have found with the DIT consultation is that it was good that we were able to feed in information, but there was perhaps less information being fed back to help in understanding about how issues lay or were being prioritised in the whole agreement.
Theo Clarke
Q
Konrad Shek: I do not have that much information on them. I do not suspect that our advertising agencies have a huge amount of business with those types of country. I do not have a particular view on that. There may be some side projects, perhaps for market research, but I do not have any detail on that.
The Chair
If no more Members want to ask questions, I thank you very much for your time, Konrad. That was very useful for the Committee.
The Chair
We will now hear oral evidence from Roy Freeland from Perpetuum Ltd. This session can last until 11.25 am. Roy, could you please introduce yourself for the record?
Roy Freeland: Good morning everyone. I am sorry, I am having some difficulty hearing.
The Chair
If you could introduce yourself, Roy, that will be great. I will now ask members of the Committee to ask you questions. We can hear you fine, so do not worry.
Katherine Fletcher
Q
Roy Freeland: I am broadly very supportive of the Bill because, as other speakers have said, we need to be pragmatic about the situation we are in. However, there are some issues. I am speaking as a representative of a high-technology SME supplying the rail industry that has particular problems or requirements for GPA, simply because many of our customers are effectively part of a Government procurement in their countries, so it is uniquely important to transportation businesses. I also have some comments on SME issues.
The Chair
Please do expand.
Roy Freeland: The improvement that I have to suggest is the question of reciprocity, which has already been mentioned. Article 85 of the EU directive in 2014 talked about ensuring comparable and effective access for undertakings to the markets of those third countries. I would like to see the Trade Bill include a brief provision so that countries that are applying restrictions to UK exports can have similar restrictions applied when they are trying to export to the UK. This is a non-confrontational way to deal with the issue. It has major advantages, in that it would be fair, and would be seen to be fair, being based on reciprocity rather than unilateral protectionism. It would help to demonstrate the UK’s leadership on free trade and refusal to accept unfair restrictions. I think it would also provide a negotiating tool for us. Exporters to the UK would put pressure on their own Government—[Inaudible.] This whole process would provide a backstop and would provide flexibility to deal with Government procurement issues without—[Inaudible.]
The Chair
Mr Freeland, are you still there?
Roy Freeland—ammunition for future negotiations, and some form of remedy in the short term.
Andrew Griffith
Q
Roy Freeland: I am afraid I am not an expert in reading parliamentary legislation, but I did not get the impression that the Bill is quite as explicit as I would like it to be. Certainly, the Trade Remedies Authority would be the right route to deal with this, possibly with a little help from a statutory instrument under the Taxation (Cross-border Trade) Act 2018. However, it is a very important issue.
The EU described the Buy America provisions of the Surface Transportation Assistance Act as one of the most fundamental obstacles to accessing to US procurement. The Transatlantic Trade and Investment Partnership fell over, and this Buy America provision was one of the issues. I am not advocating that we should have a—how can I put it?—Don’t Buy America Act, as much as I would like to see that. That might be rather provocative. However, we should have provisions to take action, and if a few US steel makers, for example, found that they could not supply High Speed 2 with rail track because of such rules in the Act, I think some reverse pressure might be put on the Americans to reconsider their position.
Andrew Griffith
I have no further questions. However, I think you should be reassured, Mr Freeland, and we wish you all the best with the successful exports of your business going forward.
Roy Freeland: Thank you.
Bill Esterson
Q
Roy Freeland: I am not convinced, as a supporter of free trade, that a Buy British element is appropriate. All I suggest is that we ensure adequate reciprocity, so that if a country effectively has Buy Local Acts, such as the Buy America provisions, we can respond by saying, “You’ve got that; we’ve got similar provisions.” Indeed, tenders could request confirmation from tenderers that their own country would not prohibit comparable and effective access in reverse. A simple requirement like that is appropriate at this stage, rather than prejudging the whole US FTA.
I should point out that the World Trade Organisation and the EU have noticeably failed to deal with Buy America. Therefore, one needs to look at it in another way.
Bill Esterson
Q
Roy Freeland: No, I am not a member of the FSB. However, I was a member of the Rail Supply Group council running the SME workstream, and of the Rail Industry Association SME group, so I am very familiar with SMEs’ issues. Indeed, I consulted with the Federation of Small Businesses prior to giving this evidence.
The particular problems for the SMEs that will be affected by the Bill include the requirement for membership of the GPA. Large multinationals can get round the GPA by simply setting up factories in the respective countries. A lot of them in the rail industry have already done that. SMEs do not have that capacity. I am slightly concerned that SMEs do not have the resource to fight the sort of legal battles that are clearly going on in the current version of trade remedies, and they need some support there. Those are particular problems that SMEs can face, but they absolutely need the GPA.
The Chair
Any further questions? Mr Freeland, we are experiencing some technical difficulties at this end, so if there are no further questions from Members, I propose that we wind this session up slightly earlier. Thank you very much, Mr Freeland, for your evidence. It has been very helpful to the Committee.
Ordered, That further consideration be now adjourned. —(Maria Caulfield.)
Trade Bill (Second sitting)
Tuesday 16th June 2020
(4 years, 6 months ago)
Public Bill CommitteesRead Full debate Trade Bill 2019-21 View all Trade Bill 2019-21 Debates Read Hansard Text Amendment Paper: Public Bill Committee Amendments as at 16 June 2020 - (16 Jun 2020)
The Chair
Before I welcome the witnesses, I remind everybody to please switch their electronic devices to silent. Tea and coffee are not allowed during sittings, but Members can obviously drink water. I also remind Members that the Hansard reporters would be very grateful if they could email electronic copies of their speaking notes to hansardnotes@parliament.uk.
We will now take evidence from the first panel. I welcome George Riddell, the director of trade policy at Ernst & Young, who is here in person, and I hope I can welcome Alan Winters of the UK Trade Policy Observatory. I think Charlotte Nichols wants to make a declaration.
Charlotte Nichols (Warrington North) (Lab)
I want to declare an interest: my father is the president of the TUC this year.
The Chair
Professor Winters, I am Graham Brady, and I am chairing the Committee. I know that you cannot see me and we cannot see you, so I am going to make sure everybody lets you know who is speaking to you when they are asking questions and making points.
I thank Professor Winters and Mr Riddell for joining us and helping the deliberations of the Committee. As Chairman, I am entirely independent. I will not be involved in the questioning, but I will be calling others to put their questions to you. I first call Bill Esterson, who is the shadow Minister. Could you introduce yourself before you start?
Bill Esterson (Sefton Central) (Lab)
Q
Professor Winters: I can if I concentrate hard.
Bill Esterson
Q
Professor Winters: In general, the Bill is trying to do sensible things in a basically sensible way. The issues that arise are about whether or not it is drafted in a way that would allow it to be used for things beyond these intentions.
For instance, it says that the Government do not expect to make major changes with this Bill, yet the procedures that it will set up might allow a Government that wished to do so to make really quite dramatic changes through secondary legislation. As we know, and you know better than me, secondary legislation is not typically challenged. For instance, under the GPA—the agreement on government procurement—if I understand it correctly, the Government have the power to make changes in the coverage of the agreement. A lot of that is about new members, which seems sensible, but if I understand it correctly, it also seems to be about the coverage of sectors within the UK.
When we deal with non-tariff provisions in the trade continuity agreements, for instance, the mutual recognition agreements are very serious bits of trade policy, particularly for services sectors. I think a non-tariff provision would include things like sanitary and phytosanitary regulations and technical barriers to trade. These are mostly governed by EU law at the moment, and in implementing a trade agreement, the Government could change a number of them. Rather than having to bring them back to the legislature as primary legislation, they would actually be able to move through a secondary legislation process, so I think there needs to be a little more attention on the potential spread of the use of this. The Bill can also be extended indefinitely in five-year periods. That seems to me to be not in the spirit of the Bill, which is about cleaning up.
Let me make one last point. The Bill is obviously designed, in terms of trade agreements, to deal with the continuity trade agreements, but there are at least two cases that, so far as I can see, will fall under the Bill and will really go further than just tidying up the details so that trade can continue. The first is UK-Korea. Korea and the UK have signed a continuity trade agreement, but with a commitment to renegotiate a fuller and more ambitious free trade agreement within two years. So far as I can tell, any of that would essentially be covered under this Trade Bill. Similarly with Japan, we do not really know what the Government intend to discuss with the Japanese Government, but the analysis that we got last month was—what shall we say?—studiously unspecific. Essentially, it reads as if it is going to be basically a new agreement; in a sense, the table is blank, and stuff will be put on or taken off. However, so far as I can tell, because Japan had an agreement with the EU on 31 January, it will be covered by the Trade Bill. Korea and Japan are two major trading partners, and this might not get very much scrutiny, essentially because you can undertake quite major changes under the heading of the Bill, which I interpreted largely as a tidying-up Bill.
Bill Esterson
Q
Professor Winters: The WTO’s government procurement agreement is restricted to the set of countries that have signed it, so quite a lot of this Bill is about what we do when that set of countries changes: what concessions do we expect from them and offer them? That seems, in a sense, to be fairly uncontentious. The other element of coverage is that the Government lists in the annexes to the government procurement agreement the sectors, and the thresholds for procurement in those sectors, that will be open, subject to the GPA’s requirements. I think that the powers in the Bill permit the Government to change that as they will, rather than, given that who you allow to bid for different bits of procurement is a fairly major piece of public policy, having a process that is open to more scrutiny.
Bill Esterson
Q
Professor Winters: Yes. The traditional way that we have handled trade agreements and, as far as one can tell, the Government’s intention going forward, is to say that the Government negotiate these treaties under the royal prerogative but that, to the extent that they require changes in regulation in domestic law, these will come to Parliament. In cases where that would normally be primary legislation, those changes will have to be made by Parliament through the processes for primary legislation.
What this Bill does—and it is the same in the European Union (Withdrawal) Act 2018—is say that a number of things can be changed by secondary legislation, even though they were originally set out under EU procedures through routes for primary legislation. It potentially brings to Ministers a number of issues one would generally expect to have the full scrutiny of Parliament. It would be a process that allows a little bit of scrutiny, the affirmative process, which, de facto, does not seem to result in very much. Again, in a sense, the worry is not that one might need these powers to tidy up a clause here or there, but that, in fact, quite serious issues would suddenly fall to the discretion of the Minister.
One of my colleagues, Emily Lydgate, has investigated this on environmental regulations under the European Union (Withdrawal) Act, and it is fairly alarming. As far as I can see, one could fall into that situation through the Trade Bill in the sense that the Japanese or Korean trade agreement could agree something that would normally be subject to primary legislation within the UK but that can now be handled with secondary legislation under the cover of the Trade Bill.
Bill Esterson
Q
George Riddell: Thank you; it is a pleasure to be here. I would characterise the Bill as creating the baseline of the UK’s trade policy. It tries to continue the basic trading conditions for rest-of-world trade that UK business currently enjoys.
That includes the continuity agreements. A lot of people, when commenting on those agreements, go straight to the tariffs: “If you don’t have a continuity agreement, you’ll face tariffs; if you do, it will continue as it currently is.” For the services sector, which I represent, there are also important establishment provisions within the services trade chapters of those agreements and mobility provisions that allow business travellers to travel between the UK and those third countries to supply services. The discussion about the continuity agreements and ensuring that the UK is able to continue to trade past 31 December this year is therefore wider.
The same goes for the government procurement agreement. The UK has enjoyed the status of the government procurement agreement at the WTO since its creation in 1995, although its membership of that particular agreement came through the European Union.
I will pick up two points that Professor Winters talked about. First, yes, new members join the GPA on a fairly regular basis. There are a number of ongoing accessions to the agreement, some with shorter timeframes than others. It is right that there is provision for the agreement to expand, as it naturally does, at the WTO. The other point is about the coverage and the entities. The UK list of covered entities is rather out of date. Many current Government Departments are not listed as part of coverage under the GPA, so the list is very outdated. Therefore, even if the thresholds the UK has signed up to as part of the GPA are not changed, there is a need for a technical update of the UK’s commitment to reflect the current machinery of government.
We are also establishing the TRA and bringing back powers from the Commission in Brussels to establish a trade remedies regime here in the UK. On the statistics front, which is very important in making trade policy, I would flag the interest in improving the trade in services statistics for the UK. Trade in services statistics are notoriously unreliable, and powers in the Bill could be used to make the UK a leader in how we measure services trade in this country and globally.
Bill Esterson
Q
George Riddell: If I understood correctly, Professor Winters’ point was about the potential for including new entities on the list and going further than the UK’s current commitments with regard to the GPA, leaving the continuity agreements question to one side. There are two aspects here. From my understanding of discussions in Geneva, they have been very focused on understanding what the UK’s current machinery of government looks like and how that could be represented as part of its GPA commitments. Certainly, the Government have said, from my understanding, that they do not intend to change the scope of the commitments, even if technical updates are necessary. I would not want to go further than that.
Katherine Fletcher (South Ribble) (Con)
Q
George Riddell: Two initiatives have been undertaken recently. One is that the Office for National Statistics has launched its experimental trade in services datasets, which it is looking to continually improve. Anything that supported that initiative would certainly look good. For the past Trade Bill, in the previous Parliament, a number of organisations, such as TheCityUK, put forward written evidence with more concrete suggestions. I do not have that with me, unfortunately, but I am happy to share it.
Coming to the point on the data being notoriously unreliable, both the US and the UK claim that they have a trade surplus in services with each other. There have been a number of attempts by statisticians on both sides to try to bottom out why that might be the case. It goes to show that, often, trade in services statistics are indicative and a good rule of thumb, but putting too much faith in them is not necessarily a wise move.
Drew Hendry (Inverness, Nairn, Badenoch and Strathspey) (SNP)
Q
Professor Winters: I confess that I do not know how to draft it in legislation, but I would suggest that one has something in the Bill that gives concrete form to the statements that we have that the Government expect not to use it to make major changes, and that such changes would come with primary legislation. At a practical level, one would need some sort of early-stage scrutiny to identify issues that were mere technicalities or minor issues, and to flag up larger issues that might require primary legislation.
I am afraid I am not a draftsman. I do not know how to write that, but it seems to me that that is what we require. This is a very sensible, pragmatic tidying-up Bill, but it seems to have loose ends that might, under some circumstances, lead to places other than those that the Bill says it is intended to cover, and more than the House would wish.
David Johnston (Wantage) (Con)
Q
George Riddell: In terms of the service sector, I would say that the two biggest elements are definitely the continuity agreements and the government procurement agreement. The government procurement agreement, although it largely covers goods, has several services provisions in it that are particularly important for small and medium-sized enterprises that operate cross-border government procurement contracts.
On the continuity agreements, it is difficult to say exactly, because there is different coverage in each of the continuity agreements for different service sectors. Broadly speaking, you have the horizontal elements in the more advanced trade agreements, such as that with Korea, which covers investment and establishment for service providers, and additional mobility provisions for short-term business visitors and the suppliers of services.
There are also, in some of those agreements, additional commitments on the digital economy, and how the UK and the third country can co-operate in order to foster more digital trade, which is of growing importance, particularly in the light of the pandemic that we are experiencing. I know that many of the people here have dialled in or participated remotely in these sittings, so it is a very pertinent topic for the service sector.
Fleur Anderson (Putney) (Lab)
Q
Professor Winters: I do not see strong and direct implications for our relationship with developing countries. Most of the countries with which we are signing these continuity agreements are, in fact, developing countries. I think the issue again, essentially, is that the Minister has powers to make regulations concerning non-tariff provisions, and some of those regulations could indeed rebound to the disadvantage of the countries we are dealing with—those on the other side. For instance, if we have issues surrounding conditions of entry for particular goods, the Bill might be used to tighten those up.
Having said that, the agreements we have with the developing countries—the continuity agreements—have genuinely continued, so far as they can, trade relations with those countries. There are some complications that are not in our gift, such as rules of origin, but I understand that the agreements that have been signed already under the heading of continuity trade agreements have made no changes, so far as access to the UK economy is concerned.
There is nothing I have seen in the Bill that is specific to developing countries that raises an alarm, but on the other hand, it is not clear that trade with developing countries is exempt from my residual nervousness about what the Bill might be used for under less satisfactory circumstances.
George Riddell: One thing that I am keen to emphasise is how the UK’s trading relationship with developing countries is split across the continuity agreements contained in the Bill and the customs Act, which gives effect to the generalised system of preferences and duty-free, quota-free access for least-developed-country exporters. You have the continuity agreements under this Bill, but there are also very important trade provisions in the customs Act, and making sure that they are aligned and work together to support developing countries’ trade into the UK is very important.
As for your question about SPS measures specifically, in my experience of working in developing countries and looking at how they trade, one of the biggest things is meeting food standards, health standards and environmental standards. The UK does capacity building very well through DFID—pending recent announcements today—and through programmes such as aid for trade in developing countries, in order to allow businesses and exporters to take advantage of the provisions in the trade agreements and EPAs.
Gareth Thomas (Harrow West) (Lab/Co-op)
Q
Professor Winters: I am not a huge fan of the process that we have under the CRAG, which seems to me to allow the Executive a bit too much scope to do things unscrutinised—
The Chair
We will try to find out whether we still have Professor Winters. Mr Thomas is there something you would like to pursue?
Gareth Thomas
I would very much like to hear what he has to say. [Interruption.]
Professor Winters: I did not catch all of your question. With the process we would be using for, say, the agreement with the US, my honest preference is that we would set up a system for new trade agreements that involved more formal consultation and more reporting back to Parliament than is obligatory under the CRAG. In one sense, I see the Trade Bill offering an even easier route for Executive decisions than the standard CRAG procedure, and I do not think that will really give us enough scope for bringing Parliament and the people along.
I think the issue, essentially, is that if this was abused in order to try to introduce major changes, there would be even less defence. There is no commitment to discuss, consult and so on, and the Minister is being granted extensive secondary legislative powers. Under the CRAG, although the treaty has to be approved through an affirmative process, if changes in domestic law are required to implement it as a new trade agreement, it would potentially have to go through primary legislation. As far as I can tell, that is not required here for any of the continuity agreements.
Gareth Thomas
Q
Professor Winters: In general, most other countries have processes that involve more formally required consultation and rather more engagement with the legislature as the process goes through. For instance, in the USA there is a whole series of trade advisory committees—I think that is what they are called—which the Government speak to on a confidential basis. There is formal approval of a mandate, particularly if they want to do something on fast-track.
Those are things we do not have in the UK. We do not yet have a completely definitive statement about how these things will be handled, but essentially the CRAG process is fairly light on scrutiny and consultation. Compared with Australia, the US and Canada—where there is, if not constitutionally, at least informally a good deal of consultation with the provinces—we have a system that allows the Government rather more discretion.
Matt Western (Warwick and Leamington) (Lab)
Q
Professor Winters: For the Trade Bill, which is presented as a piece of legislation to make it feasible to roll over the continuity agreements that we are trying only to roll over and not to change—we have already joined the GPA and are not trying to change our schedule—you do not necessarily need a huge apparatus. If we get into a situation where the Trade Bill is used to make quite dramatic differences to the arrangement with Korea or to make essentially a new agreement with Japan, it is unfortunate that there would be less of an obligation to consult the devolved Administrations, parts of the legislature and stakeholders. The solution is not so much to nail those processes on to the side of the Trade Bill, as to try to find a way to ensure that the Trade Bill is not used for purposes that involve a major change relative to the status quo.
George Riddell: I agree with many of the comments made by Professor Winters and would add two additional points. The first is on consultation and its importance. Not only does it help the UK to identify what its offensive and defensive interests are and how best to achieve them through negotiations; it also helps to build political support. The thing that businesses want when they are looking to use trade agreements is the certainty that, when they make an investment under the provisions, in five, 10 or 15 years they will continue to be able to trade under the terms of that trade agreement. By not having wide consultation and the necessary support, it calls into question that certainty. The question of scrutiny and everything else is for this House and this Committee, but from a business perspective, we want widespread support for the trade agreements so that they can continue into the future.
Matt Western
Q
George Riddell: My understanding from reading the Bill is that it covers the continuity agreements that existed between the EU and third countries.
Matt Western
Professor Winters?
Professor Winters: Is somebody trying to get my attention? I am afraid you all faded away.
Matt Western
Sorry, I was just asking whether you feel that the Bill covers the current UK-US negotiations.
Professor Winters: As I understand it, the Bill does not cover current negotiations with the US. It is restricted to those countries that had agreements with the European Union on 31 January this year.
The Chair
That brings us neatly to the end of the time allotted for questions to these witnesses. I thank both of the witnesses, Mr Riddell here in person and Professor Winters struggling with technology to join us. It is very kind of you both to assist. Thank you very much.
We will have a brief suspension while we engineer the next session.
The Chair
Welcome, Mr von Westenholz. We have until 3.10 pm to hear evidence in this session with the National Farmers Union. Will you give a brief introduction of yourself for the record?
Nick von Westenholz: Good afternoon, Chair, and thank you. The NFU has submitted evidence on the Trade Bill. We will come to more detailed questions, but we want to raise two issues in particular: one is on trade and standards of food production, which is not covered in the Bill at present but we think ought to be; and the other is the issue that has been discussed at some length, which is scrutiny of trade agreements, both roll-over and future agreements.
The Chair
Thank you very much. I should have introduced myself. I am Graham Brady, and I am chairing the session. I will call other Members to speak but will not ask questions myself. We will start with the shadow Minister.
Bill Esterson
Q
Nick von Westenholz: As I mentioned, one of the key issues that we have raised about the Bill and, indeed, the Government’s broader trade policy is to do with the way in which food imports are dealt with, in particular the standards of production of those food imports. I am sure that members of the Committee are well aware of many of the concerns that have been expressed for a number of months—even a number of years now—about the implications of future trade agreements for the standards of food imports.
The Trade Bill deals only with our existing agreements by merit of our former membership of the EU, and not with future trade agreements. It is really future trade agreements where many of the issues lie. Nevertheless, we think that this is an issue for this Bill because of something that has been communicated to us on a number of occasions in recent months. We had lobbied on the Agriculture Bill—[Interruption.]
The Chair
Mr von Westenholz, we have a bell ringing at the moment, for a three-minute suspension of the sitting in the Chamber. It will stop shortly, but will ring again when the sitting starts. It is probably worth pausing while the bell rings.
Apologies for the interruption—do continue.
Nick von Westenholz: Not at all. I was just referring to the passage of the Agriculture Bill, to which a number of amendments were tabled attempting to address this issue of trade and food standards. It was often stated in our conversations with MPs about that Bill that it was not the correct vehicle for dealing with the matter, because it was a matter for the Trade Bill. We listened to that advice and we are looking at the Trade Bill as a legitimate and suitable piece of legislation to address the issue.
It is a complicated issue; there is no doubt about that. It is not necessarily straightforward to legislate in a way that manages the broader issue of ensuring that food imports meet standards of production equivalent to those that UK farmers are required to meet, but there are ways of doing it; some of the amendments tabled to the Agriculture Bill were well drafted to meet that aim. We certainly think that it is a shortcoming of this Bill that there is no provision for that sort of legislative approach.
Bill Esterson
Q
Nick von Westenholz: The Bill as it stands does not go beyond continuity agreements. The provisions in clause 2, for example, seem clearly to deal with those continuity agreements that we are currently party to, or were party to as a member of the EU. Going further would require new clauses, certainly; the reason why, as you imply, we want to explore whether that is appropriate is that the point has been made on numerous occasions in recent weeks that the Trade Bill is the appropriate vehicle for that.
Gareth Thomas
Q
Nick von Westenholz: Sorry, the sound is not great, but I think that that question was about our potential concerns with the EU’s CETA deal and whether we have concerns about a UK-Canada deal.
Maybe the best answer is that all trade deals, whether they are continuity or future trade agreements, present opportunities for UK farmers. We are very keen to make that clear: we are certainly not opposed to the notion of free trade agreements, and we hope that they might present opportunities to increase our exports of our fantastic food.
At the same time, however, all trade agreements will also look to increase access to UK markets for overseas producers, which will increase competition for UK farmers. Again, that in itself is fine, but we want to ensure that that competition is fair—whether it is Canadian farmers, US farmers or anybody else. The reason why we talk about overseas farmers meeting equivalent standards to UK farmers’ is simply on the basis of fairness; we are certainly not opposed to trade liberalisation, as long as that liberalisation is fair.
Fleur Anderson
Q
Secondly, on trade information, clause 7 provides new powers for HMRC to collect information on the identity and number of UK exporters, but the Government have said that providing that information will be voluntary. What impact would that position have on your members?
Nick von Westenholz: I will answer the second question first because, I am afraid, my answer will be brief. We have members who are exporters as well, but most of our members are probably not directly exporting themselves—they will be at the start of the supply chain; it will probably be their customers who are exporting. We have not yet done any assessment on what the impact of those provisions would be, so I am afraid that I cannot comment directly on that, although I suspect that it would be minimal.
Coming to the first question, the point is that UK farmers—like most EU farmers—operate under high standards of production in terms of the requirements they observe, particularly on animal welfare, for example. That is not to say that there are not farmers around the world who operate high standards of welfare. But in many cases in the UK, those are legal requirements, for example those around stocking densities for poultry, access to light, limitations on veterinary medicines that they can use—antibiotics, for example—and many other things. All those will have a connected direct or indirect cost for farmers, and will increase the cost of production in comparison to farmers overseas, who do not have to meet the same requirements.
For farmers who then have to compete directly against produce that is produced more cheaply because the regulatory burden is lower, it is, for us, a simple issue of fairness. In a way, I am loth to put too much emphasis on the differences of approach, because, as I have said, many farmers overseas will produce to high welfare, but we know that many farmers overseas produce to lower requirements because, very simply, they are not required to by their legal and regulatory structures.
Fleur Anderson
Q
Nick von Westenholz: The EU—and, by extension, the UK at the moment—operates a plant protection approvals regime that is much more precautionary that in other parts of the world. That means that UK farmers have access to far fewer plant protection products—pesticides, say—than many of their counterparts in other parts of the world. Again, that really comes down to an issue of equity if they are then being asked to compete against those farmers who have access to many more technologies, which UK farmers do not.
We have to distinguish between the issue of fair competition and what those standards would actually be. As I have said, the EU approach is very precautionary and there is—and there should be—an ongoing debate about what sort of standards are required when it comes to plant health and plant protection.
It is not always as easy as saying, “Lower standards or higher standards?” about these things. There is, for example, a long-standing debate about the use of glyphosate, the most widely used weed killer in the world. Although people might prefer less glyphosate use, or even for it to be banned, doing so would probably result in more carbon emissions, because farmers would be required to cultivate more and use more tractors passes. They would use more fuel as they go over the land and release more carbon into the atmosphere as they plant as part of weed control.
These issues are not always straightforward, and there needs to be a proper debate about an appropriate level of protection that also provides farmers with the tools that they need. It is important to take the opportunity to distinguish between debating what our standards ought to be and ensuring fairness and equity in competing with farmers overseas once a decision has been reached about what those standards are.
David Johnston
Q
Nick von Westenholz: I guess I am thinking about some of the continuity agreements that are not quite continuity agreements—for example, the Japan agreement, which is being renegotiated. Certainly, we would hope that there is the opportunity for UK farmers to open up more markets in the far east.
Really what I was saying was that, as farmers, we want to be ambitious about increasing the markets, whether at home or overseas, for our produce. If we are going to increase them overseas, we have to recognise that that assumes a degree of free trade, international trade and imports. We certainly want to expand those overseas opportunities, and it may be that some of those continuity agreements, which are being looked at again, provide particular opportunities.
Matt Western
Q
Nick von Westenholz: I got the second question. Could you repeat the first question, sorry?
Matt Western
Q
Nick von Westenholz: In principle, the idea of mutual recognition agreements can work. There is nothing that we would object to in an MRA in principle. An important aspect of this is that, if we simply try to hold overseas producers to precisely the same standards as UK producers, that might create as many problems as it solves. We need to develop a mechanism for comparing standards as easily as possible to certify, accredit or whatever it might be a degree or level of production standards that we accept as equivalent to our own.
A lot of the things I have mentioned already demonstrate the complexity and difficulty with some of these issues. That is one of the reasons why we have suggested the establishment of a trade and food and farming standards commission to get under the skin of all these pretty tricky policy areas and set out a road map for Government of the sort of policies and legislation needed to tackle the issues properly. We would like that to be established in law, under the Trade Bill or any other legislation, so that it reports to Parliament and contributes to some of the shortfalls in parliamentary accountability and scrutiny that have already been flagged to the Committee. We think that that is a very good and sensible idea. That commission would absolutely look at such things as MRAs and broader issues of how you manage and measure equivalence.
On the Trade Remedies Authority, we have not flagged any specific concerns other than to acknowledge that the constitution of the committee is very broad, and quite a lot of leeway is provided to the Secretary of State in the formation of that committee. We would like to explore further the possibility of ensuring specific representation for specific sectors if necessary. Having said that, we would hope that the TRA, even in its current format as set out by the Bill, would consult fully and take into account all parts of the economy when advising on trade remedies.
Bill Esterson
Q
Nick von Westenholz: There is the prospect of including those sorts of provisions in any of the deals that the UK Government are either currently negotiating or imminently going to negotiate. I am not sure that that is an issue specific to the continuity agreements. Countries all around the world are increasingly considering how such issues can be better accommodated in trade deals. Traditionally, they have not been part of trade agreements, although we have seen in the draft text between the EU and Mercosur, for example, provisions for preferential access to Mercosur for eggs where the production standards have been equivalent to animal welfare requirements in the EU, which is interesting.
This is a really important point: the UK Government should be seizing this moment to be a global leader in negotiating trade agreements that accommodate some of these sorts of policy areas, such as animal welfare, environmental impacts and climate change, and being creative and imaginative in how future trade agreements ought to look—not looking backwards and seeing how trade agreements have been done in the past, and merely looking to replicate those.
The Chair
That brings us almost exactly to the end of our allotted time. Thank you, Mr von Westenholz, for your assistance to the Committee in giving evidence. We will again suspend briefly while we prepare for the next evidence session.
The Chair
Our third panel of witnesses giving oral evidence is from Make UK and the Chemical Industries Association. We have until quarter to 4. Could I ask both witnesses to introduce themselves for the record—first Richard Warren in the room, and then Mr Cranshaw?
Richard Warren: I am Richard Warren, head of policy and external affairs at UK Steel. Although UK Steel sits within the wider organisation of Make UK, I will be speaking specifically on behalf of UK Steel and the steel industry rather than the wider manufacturing sector.
The Chair
If you would like to make any opening remarks, you are welcome to.
Richard Warren: Certainly. The Trade Bill deals with a number of issues that are extremely important to the steel industry, not least the one I am most keen to discuss this afternoon: trade remedies. Of just over 40 measures that are being carried over from the EU, 15 or 16 relate to steel, so we are probably more affected than any other sector in UK industry. Obviously the vast majority of that regime and how it will operate is dealt with by the customs Bill, so I will not dwell on it too much, but the Trade Bill is critical in establishing the Trade Remedies Authority as an independent authority that can act independently from the Department for International Trade.
The second element, of equal importance to the steel industry, is the continuity of trade agreements. There are a number of trade agreements, particularly with Turkey, that I would highlight as critical for establishing continuity with. Turkey is our third biggest export market after the EU and the US, accounting for 300,000 tonnes, which is about 8% of UK exports. The ability of the Bill to ensure that we can have as much of a continuity arrangement as possible with Turkey and with other, smaller export markets is paramount to the steel sector.
The other issues dealt with in the Bill are of lesser importance but are still worth commenting on. The UK steel industry obviously supplies public contracts in other countries, so ensuring that we are still members of the GPA after the end of this year is critical for the steel sector. In terms of data management and data sharing, there is already an issue that has come up during the transition period and the process before that. Ensuring that HMRC is able to share data with the Department for International Trade is extremely important to us, and I will touch on that later.
The Chair
Q
Ian Cranshaw: Good afternoon, Chair, and thank you for the opportunity to address the Committee today. My name is Ian Cranshaw. I am head of international trade at the Chemical Industries Association. The CIA has been around for over 50 years, and it represents and advises chemical and pharmaceutical companies located across the UK. Our core membership is a mix of chemical and pharma companies. They are all obviously treated as UK companies, but many of them are multinational companies using the UK as a base for their European and UK operations. We have small and medium-sized enterprises and MNCs.
Chemicals is a significantly enabling industry for downstream manufacturing. I think that most members of the Committee will understand that chemicals are a key ingredient in 96% of manufactured goods, so pretty much everything you see, touch, drink or use will have chemicals in it.
That is our intro. I am sorry—I did not really hear what you wanted me to focus on straight after the introduction, Chair.
The Chair
We will move to questions now, Mr Cranshaw, but that is very helpful. Thank you. We will start with Bill Esterson, who is the shadow Minister.
Bill Esterson
Q
Richard Warren: Certainly. We have a very good relationship with the organisation, as it currently exists within the DIT. There is only one live case—a case on welded tubes that are produced in Corby by Tata Steel, which I believe has been live for three months now—and we have had very good engagement with the organisation.
One critical issue is our ability as a sector to participate in trade remedies investigations, and particularly to finance them. I do not think it will be any surprise to people in the room that those cases cost an awful lot of money, particularly at this stage, when, frankly, industry in the UK does not have the same level of expertise that our European counterparts do. Bringing in external legal support and external consultancy has been critical, and our ability to do that as a sector has been severely disrupted by coronavirus. To put it bluntly, discretionary spend within many manufacturing companies, including in the steel industry, has effectively been halted. I say that to point out that we have asked for an extension with the TRA, and it has been as flexible as possible in providing us with an additional three months. I provide that case as an example to show that we have a very good working relationship with it .
In terms of how well, practically, those investigations will operate on an ongoing basis, and whether we feel that we are getting a fair hearing, I cannot comment on that yet, in the sense that we really are at the very first stages of the first investigation. We have another two or three investigations to go through this year. If I was to comment again at the beginning of 2021, I would probably have a more informed opinion.
To touch on the second question, about the membership of the Trade Remedies Authority, that is an important point. I would say that it is probably the only outstanding issue specifically within the trade remedies element of the Bill that we would still be pushing for reform of. In terms of the non-executive membership selected by the Secretary of State and appointed by them and the chair, there is no stipulation about how, or where from within industry and wider society, those members will be chosen.
That is an important point, because nowhere does the Trade Bill, the customs Bill or the secondary legislation actually define the role of the non-executive membership of the Trade Remedies Authority. All reference to decisions by the Trade Remedies Authority— recommendations to the Secretary of State—are referred to as, “The Trade Remedies Authority will do x or y.” Precisely what the role of those non-executive members is is still somewhat vague.
I understand that the Government will have left it that way to provide maximum flexibility and to allow for the organisation to grow into its role and to find its feet. But, from our perspective as industry, while it remains vague, we can have anything, from the board or the non-executive membership merely providing an admin task—looking over the funding of the organisation, the remuneration of staff and so on—right through to it having influence on the recommendations that the organisation ultimately makes on anti-dumping and anti-subsidy measures.
Therefore, while we have that ambiguity, industry is keen to see representation from a cross-sector of business. Everything from unions through to manufacturing interests and people who may be classified as trade remedies experts, who may have a slightly different view on trade remedies to industry, should be represented on that organisation to show there is a spectrum of views.
Bill Esterson
Q
Richard Warren: To a certain extent, it depends, ultimately, on the role of the non-executive membership. If the non-executive membership functions as a board providing steering for how the organisation operates on an admin basis, you could say it was less important. If the membership has a high level of influence over the outcomes of those investigations and the recommendations that are made, we would say it is extremely important.
On the same token, if the board membership was made up exclusively of trade lawyers from firms that have exclusively represented exporting producers, one would say that the outcome of those investigations may be biased. On the opposite end of the spectrum, if you had the entire membership made up of people who had a more protectionist bent, again, that may result in a biased outcome. While we have ambiguity around the role of the non-executive membership, industry will err on the side of caution and say it should represent a range of views so that it can come to a balanced decision on whether those measures are in the interests of industry and the wider UK economy and its workers.
Bill Esterson
Q
Ian Cranshaw: We started this journey back in January 2017. Previously, I would have said that policy has moved quite quickly—that was before coronavirus, where, obviously, policy has been delivered in a matter of weeks or months. However, I think some credit goes to the Department for International Trade, which has gone from a standing start, with a handful of 30 or so trade policy experts on trade defence instruments within the EU. Now, we have a significant and very capable resource in the Department. At the same time, when the Trade Bill passes, they will establish the authority, which will have 100, growing to 130, staff whose level of expertise has grown significantly over the last three years. We have seen many of them, and we have had good exposure to many of the employees of the Trade Remedies Investigations Directorate.
But the point I would make, and what that highlights, is that when they were developing that knowledge, who did they turn to for expertise and the nuance of how to carry out an investigation, how to assess the injury margin and how to build a case to prove that there had been inappropriate trade behaviour by a competing company or nation? That was really about turning to the manufacturers. One of our member companies has welcomed a continuous stream of TRID or TRA officials into their facilities, explaining how to build the case, because that case has to satisfy WTO criteria. It is a significant piece of work. Mr Warren mentioned the cost of building the case, and companies do not go into this lightly.
The second part of your question was about the make-up of the TRA board and how to achieve the balance. The Minister, Mr Hands, said that you do not necessarily invite people with a specific ideological position to the board—we really want trade experts. All that I would say is that trade experts are not necessarily trade remedy experts, and often that representation from the manufacturers or trade unions—some labour point of view; labour with a small “l”—generates and delivers real balance for any non-departmental public body that has to look at the entire scenario, certainly in a period when we are looking to build back better.
I am not going to keep stealing other’s summaries of how we are trying to work, but the Government have already said that they want to rebalance the economy and put more investment in certain areas. The chemical sector is focused in the north-west of England and the north-east, along the Humber—areas that require significant investment, and they need to know that they are competing on a level playing field. All of that, with a balanced view and a balanced board, would really help to ensure that all views and positions were reflected appropriately in policy development.
Bill Esterson
Q
Ian Cranshaw: Sorry, I heard that the question was about chemical regulation. Was it about whether chemical regulation is covered in the Bill?
Bill Esterson
Do you think that it should be covered in the Bill? It is not, as it stands. Do you think that it should be, and why?
Ian Cranshaw: There is an awful lot of work going on in chemicals, and the Government are keen to deliver a chemical strategy. That is something that DEFRA has covered over the past couple of years, and it is right that we have one. We have no issue with the amount of regulation on the chemical industry. We are dealing with sensitive products, and they ought to be regulated in the way that they are. Again, we have had a good hearing from the Government, but it is about the criticality of making sure that any deal with the EU—this is key for us—can include access to data sharing, because we do not need to replicate the testing of individual chemicals to build up a UK database when a perfectly functional database exists at the European Chemicals Agency. There is plenty of provision elsewhere for chemicals and chemicals regulations, and I do not necessarily think that it needs to be in the Trade Bill.
Katherine Fletcher
Q
Ian Cranshaw: That is probably me for me, because Richard is focused on steel. It is really important. We want a Trade Remedies Authority to be established, fully functioning and delivering support for UK industry from 1 January next year. Chemicals go into every other manufactured good. There are chemicals in the automotive sector; there are chemicals in chlorination of water; there are chemicals in putting the aroma into the natural gas that we all use in our stoves every evening. Chemicals does have downstream industries that will all be impacted, so we need a strong chemicals sector.
If I am honest, looking at remedies and chemicals, there are not a huge number of current remedies in place in the EU, so when the Department transitioned those remedies that were relevant to the UK, did a call for evidence and assessed exactly which remedies should be brought into the UK, of the 23 remedies that existed in the chemicals sector, only two were transitioned into UK law. I am not suggesting that it is a huge area, but it is a very significant area, and those two remedies that are in place are very important to those companies, and to downstream industries in the UK. One of them is producing fertilizer, and it is the major supplier of that fertilizer in the UK, so you can appreciate that its availability to UK farmers is absolutely crucial to their operations. If they were exposed to unfair trade from external operators, that really would be a significant loss to UK capability, especially when we are looking at supply chains and ensuring that our really critical production is safely onshored at the moment.
Katherine Fletcher
Q
Richard Warren: There are a number of agreements that are obviously already in motion to be carried over. One to highlight is that north African nations like Morocco, and South Africa, are important markets for steel. It is a bigger concern that the agreement for one of the biggest markets for our UK exports, Turkey, probably will not be carried over, regardless of the Bill. Whilst the Bill would allow for it to be carried over—the steel element, without getting into too many dull details about the coal and steel free trade agreement between the UK and Turkey—it seems like it is an almost impossible ask now to get that carried over.
So that wider concern, that sits outside the Trade Bill, is a bigger one for us; it is a very important one. The Trade Bill would allow that to legally happen, but with politics and the complexities of negotiations, I fear, that agreement will not be in place by the end of the year, which would result in 15% tariffs, on average, on UK steel going to Turkey—8% of our exports. It is an extremely competitive market already; a 15% tariff would pretty much knock that on the head. At the same time, because the UK has no tariffs on steel, we would still have up to half a million tonnes of steel coming in from Turkey, but it would be a very uneven trading relationship at that point. That is probably our biggest concern at this point, in terms of continuity trade agreements.
Katherine Fletcher
Q
Richard Warren: Obviously, yes. If we do not pass the Bill, there is no way that the Turkish agreement can be passed, but there are other complexities on top of that.
Matt Western
Q
Richard Warren: Certainly. As I said, the vast majority of how the trade remedies regime will operate—the responsibilities of the organisation itself, how it reports to the Secretary of State and so on—are dealt with within the Taxation (Cross-border Trade) Bill and the secondary legislation. There were still outstanding issues that we had with that legislation. Obviously, it has passed now, and we are working with the regime as it has been established. If we had an opportunity as an industry—we are talking about a hypothetical now—to strengthen the trade remedies regime, change elements of how it was operated, perhaps be more explicit in legislation about how those investigations are conducted, and change certain elements of the methodology, like dumping and how we treat certain non-market economies, that would be fundamentally best be dealt with in the Taxation (Cross-border Trade) Bill and the secondary legislation that supports it.
This Bill is fairly cursory in what it establishes in the trade remedies regime. Our key request at this point remains the make-up of the non-executive membership, rather than dealing with precisely how that regime operates. It really is the customs Bill that we would look to if we were making changes.
The Chair
It was a slow burn, but I have to say that the witnesses have excited the Committee, and I am getting lots of people wanting to get in, so if everybody can try to be quite crisp in their questions and answers, it would be appreciated. Antony Higginbotham next.
Antony Higginbotham (Burnley) (Con)
Q
Richard Warren: As Ian Cranshaw noted earlier, we have been on this journey for quite some time. We first started having discussions on the possibility of a Trade Remedies Authority at the back end of 2016. At that stage, there obviously was uncertainty. I do not think the UK Government had thought about—no one in the UK had—the need to establish a Trade Remedies Authority. Obviously, after the Brexit vote in 2016, that became immediately apparent to the UK steel industry. So if there has been an assessment done, I suppose it was an unofficial assessment through the evidence that we provided and the discussions we had with Government, and it became evident that this was an absolute must and there was no question that the UK would need an authority. I am happy to provide further data or evidence to the Committee afterwards.
If you look at the impact that trade remedies have had on imports and on dumping into the UK, the evidence speaks for itself. It is clear. China was exporting perhaps 500,000 tonnes to the UK in 2015-16. That has been reduced to 100,000 tonnes because of the measures that have been in place on the key steel products that it was found to be dumping and that were subsidised by the Chinese state. If that had gone on—it was a major cause of the difficulties that the steel industry was undergoing in 2015-16, when we saw a major restructure of the steel industry and new ownership—and those measures had not come in, the situation would have been far more dire, and the modest recovery that the steel industry saw in 2017-18, which has obviously been knocked off course by recent events, certainly would have been far slower and far more fragile.
Drew Hendry
Q
Ian Cranshaw: In chemicals, the REACH regulation is the key documentation, and that is stored by ECHA. We would accept that if you had to design a system now, it probably would not look a lot like what it does, but here we are 13 years after the ECHA database and the REACH regulations were introduced. UK companies alone have spent upwards of £600 million in furnishing that information on to the database, so you can appreciate the nervousness that, if we do not negotiate a deal with the EU that gives us access to that data, we will be back to a point where UK companies will have to rebuild a new database under UK REACH. There is no suggestion from DEFRA that we would move away from REACH. Globally it is seen as the gold standard for chemical regulation, so it is critical that we secure access to the data.
It is worth pointing out that UK companies are the second largest contributor of data to the information held on the ECHA database. Not only have our companies paid for the ability to use those chemicals, but, through their own innovation, research and capability, they have contributed significantly to the value of that database. It is crucial that we secure access to the data.
David Johnston
Q
Richard Warren: From our perspective, in terms of continuity—obviously, putting the EU to one side—the most important market is Turkey, with 300,000 tonnes and 8% of exports. It has a value of around £350 million. I can provide further details afterwards, if that would be useful. Without a shadow of a doubt, in terms of carrying over, that is the most important agreement.
There are other important markets, perhaps less for the sector as a whole but for individual companies supplying them. Manufacturing sectors in certain countries are very important, such as South Africa, Mexico and some of the north African countries I mentioned earlier. In terms of opportunity, we are essentially establishing what we already have, so it is difficult to see that there is a brand new opportunity. I wouldn’t say that it isn’t hugely important—we want to continue to trade with these countries and to make sure that we do not have a resumption of tariffs, but fundamentally the position is not going to be any different to what we currently have.
It depends on how you view the question. If you view it as, “If we don’t have this, you will have tariffs,” then there is a huge opportunity, because we would be in a worse situation than we currently are. If you view it from how we currently are, we are looking at exactly the same situation.
The Chair
Mr Cranshaw, I think you wanted to answer as well. Mr Cranshaw? We may have lost the line. We only have about three minutes left. Would you like to ask the witness a question, Gareth Thomas?
Gareth Thomas
Q
Richard Warren: Indeed. While it is not dealt with directly in the Bill, the complexity and complication around agreeing a deal with Turkey is that, obviously—sorry if I am teaching Members to suck eggs—it is in a customs union with the European Union. Once we have a trade deal with the European Union, we will have tariff-free access to the Turkish markets for things covered by the customs union.
Unfortunately for the steel sector, there is a rather antiquated agreement that just deals with coal and steel products. That would need to be replicated in addition for them to get access. As far as I understand from discussions with officials, it is not really on the table for discussion until an agreement with the EU has been established. Until we manage to get to that perspective, we are not looking at a replication of current arrangements and therefore it will be a 15% tariff, on average, for steel products going into Turkey. As I said before, we will not be putting any tariffs on steel coming in from Turkey, because we already have a zero-tariff position on steel. In a nutshell, that is the situation we find ourselves in. If you would like further information, we can provide it. [Interruption.]
The Chair
Apologies for the bell, which is out of our control, as the sitting is suspended in the main Chamber. We are nearly at the end of the time allotted for this session. I thank both the witnesses and all the Members for being here. If Mr Cranshaw cannot hear us, we will make sure that he is subsequently thanked for joining us.
The Chair
Q
Rosa Crawford: I am Rosa Crawford, a policy officer covering international trade at the Trades Union Congress. We are the national union centre of the UK, representing just over 5.5 million workers. I did not hear the second part of what you wanted me to introduce—was it some headline concerns on the Bill?
The Chair
Yes, if you just give an overview of your views about the Bill, that would be really helpful.
Rosa Crawford: The TUC believes it is crucial that UK trade policy supports a recovery from the pandemic based on good jobs, respect for workers’ rights, quality public services, support for the UN sustainable development goals and a just transition. Within that, we believe that the trade priority of the UK must be getting a good deal with the EU to protect rights and jobs, and we believe it is reckless that the UK Government have dismissed the offer by the EU of a deal that would provide zero tariffs and no-barrier access to the EU single market, with a guarantee that workers’ rights and social standards will not be lowered.
We are concerned that what we see in the Trade Bill is not a framework that would support the trade policy that workers need. Our main concerns focus on the fact that it provides no role for trade unions or Parliament in the negotiation of trade deals. It fails to provide a role for trade unions at the Trade Remedies Authority—to be able to have a say on the measures to prevent unfair trade and dumping. It provides no assurance that workers’ rights will be respected in trade deals, and it fails to ensure that UK procurement rules will promote respect for workers’ rights. It provides no assurance that public services will be protected in trade deals. I am happy to go through those concerns in more detail if that is helpful to the Committee.
The Chair
We have until 10 past 4 for questions, so perhaps we will see whether they are drawn out by questioning.
Bill Esterson
Q
Rosa Crawford: The TUC is in contact, and works very closely, with trade unions around the world, in advocacy for trade deals that promote good jobs and strong protection for workers’ rights and public services. We find that in other parts of the world, there is much more meaningful engagement between Government and trade unions, as well as with employers in trade negotiations. In our partners in Europe—in countries such as Austria and Sweden—there is routine consultation with the Government on the negotiation offers in trade negotiations.
Outside the EU, in countries such as the US, there is systematic and ongoing consultation by Government of the unions on the text that they propose. In the UK-US negotiations that have just been launched, we know that our US counterparts have seen a number of proposals that the US negotiators are putting to the UK Government. On the UK side, we have not seen any part of that negotiation so far. There is a much more meaningful engagement and a process whereby unions can comment on the text of the negotiations and have that input taken on board, which is very important, so there is a process whereby texts can improve to reflect what workers need in them.
As an example, the US unions were able to comment on the USMCA labour chapter and add significant improvements that prevented, for example, restrictions on freedom of association in Mexico. We would want that process in the UK trade negotiations and so we would want the Trade Bill to outline and affirm that trade unions would be engaged in the process of trade negotiations and would be consulted on the text, and that that would be the process going forward, not just for the continuity agreements but for all agreements. We would obviously also want that for the UK-EU negotiations, which we have not had that engagement on.
I would flag that there has been some movement in terms of Government consultation with members of the expert trade advisory groups that the unions sit on roughly half of. It has been indicated that we may get to see confidential material associated with trade negotiations on the condition of signing a non-disclosure agreement, but it is important to flag that the non-disclosure agreement is currently drafted so broadly that unions are concerned that it would limit what we are able to say in terms of our public advocacy. A balance needs to be struck between the legal restrictions placed on organisations and their ability to comment on the text of negotiations.
We welcome the fact that it looks like the Government are taking some steps forward in consultation, but it is currently not in the shape that we think is adequate and we have concerns about the restrictions they might place on us. We seek engagement with the Government on that, as the TUC and unions going forward. In the Bill specifically, a reference and an affirmation that unions will be consulted on the process of trade negotiations—as well as Parliament, which is crucial for democratic scrutiny—is key for us.
Bill Esterson
Q
Rosa Crawford: Yes. The TUC and unions were concerned about the fact that we were not consulted on any of those 19 continuity agreements before they were ratified and the fact that they were negotiated with countries where there are significant concerns about workers’ rights expressed to us by the unions in those countries.
To give two examples, the UK has now signed continuity agreements with South Korea and Colombia. In South Korea, for many years we have been expressing concern, with trade unions in South Korea, that freedom of association has been routinely overridden, with trade unionists thrown in prison for peaceful protest for workers’ rights, including two union leaders imprisoned last year who were only freed after a concerted global campaign. Trade union offices are raided and exploitative conditions are prevalent in large Korean multinationals such as Samsung. The UK signed an agreement with them that has no enforceable commitment on workers’ rights within it. Although there is a mention of International Labour Organisation standards, there is no enforcement mechanism for that, and therefore there can be no reprisal through the agreement and no penalty for abuse of workers’ rights.
We also have significant concerns about Colombia, which is one of the parties to the UK-Andean agreement. Colombia is listed by the International Trade Union Confederation as the world’s most dangerous country to be a trade unionist, with routine murders of trade union leaders, widespread repression of freedom of association and a real rolling back of rights, in contrast with the commitments made in the peace process by the Government. The fact that the agreement was signed, again without an effective enforcement mechanism on workers’ rights, is very concerning to us and indicates that these agreements will not be used to increase respect for workers’ rights, but will actually make it easier for companies to go to places where it is easier to exploit workers because human and trade union rights are not respected.
Bill Esterson
Q
Rosa Crawford: Trade unions have expressed concern that there was no enforcement mechanism in the EU agreements with South Korea or Colombia either. However, the EU is now engaged in a process of reviewing the enforcement mechanisms in its trade agreements—[Inaudible.]
The Chair
Rosa, we are delighted to have you back. Bill Esterson has one further question.
Bill Esterson
Q
Rosa Crawford: The TUC has confirmed that the Bill does not give assurance that the UK’s public procurement rules will promote respect for workers’ rights or environmental standards in its accession to the World Trade Organisation’s government procurement agreement. The GPA as it stands has no requirement for members to promote social standards in their tendering process.
The UK’s Public Contract Regulations 2015, which you mentioned, transpose provisions in the EU procurement directive of 2014, which states that Governments must ensure that public contracts uphold international, environmental, social and labour standards. Importantly, those regulations also include provisions about a price-quality ratio, which is intended to ensure that public authorities select tenders on the basis of quality and positive social impact, rather than price alone. We are worried that once we leave any kind of relationship with the EU and we just have to rely on the UK’s public contract regulations, the UK Government may roll back on those commitments to promote social standards through the tendering process.
We know the Prime Minister and members of the Cabinet have talked many times in the past about wanting to repeal EU-derived rights around working time, agency workers directives and other important protections for workers’ rights. We are worried that that may be the direction of travel with procurement as well, which is why we seek an addition to the Trade Bill that states that the GPA schedule that the UK files will make sure that it at least replicates article 18(2) of the EU’s 2014 public procurement provisions, which makes it clear that social standards must be part of the criteria used for settling public contracts, and that contractors must uphold those international labour and environmental standards. We would want the UK to go further than that and actually make it a compulsory criterion that the highest standards are used by contractors who receive public money, because that is the way to ensure that we get the best quality public services and provisions through our procurement arrangements.
We are concerned at the moment that we do not have a rigorous enough process of selecting tenders that always have the highest social standards, and that has had a terrible impact on the quality of services that we get, so it has had real public health implications. With the pandemic that we are facing now, we have had cases such as the Government choosing to import 40,000 protective gowns from Turkey on the basis that they were presumably lower priced than gowns they could get from a country that has higher standards. As we all know, all those gowns had to be impounded, as they did not reach NHS standards for safety. It is worth remarking that, in Turkey, there is extreme repression of workers’ rights.
By choosing the contractor with the lower price and the lower protection for workers’ rights, it leads to a much worse result for the public, and obviously there is a cost as a result. If there were concerted Government support for domestic manufacturing and domestic producers, and a preference was provided through the provisions in the GPA and through domestic legislation for providers who upheld workers’ rights and promoted the higher standards of workers’ rights, we would see more contracts going to UK manufacturers where there are strong trade union agreements, good protection for workers, decent pay and generally better conditions that promote a much more sustainable approach to business. Ultimately, there will be a better product for the public, which meets a public health need.
We think it is very important to send a signal with the Trade Bill that the Government’s accession to the GPA will be linked with making sure that the highest social standards are embedded in our public procurement criteria, and that that will be used as a key component for selecting tenders—not just price, but quality and the overall investment in sustainable development, good jobs and strong protection for workers’ rights.
David Johnston
Q
Rosa Crawford: As I outlined at the start, the crucial trade relationship that we believe the Government need to secure is that with the EU, which is our closest and most integrated trading partner and where the majority of our exports go. We are crucially reliant on—[Inaudible.] The trade agreements that the UK Government have secured through the continuity agreements do not represent anywhere near the importance to our trade. Although there will be some gains for certain sectors, it is not anywhere near as important for the EU. For us, the crucial thing about the continuity agreements is the lack of engagement with unions on them. They have been agreed on terms that we do not believe are advantageous to workers—for example, they do not have enforceable commitments around workers’ rights in them, which facilitates capital and UK businesses to go to countries such as Colombia, where the respect for worker’s rights is much lower.
For us, the crucial trading focus of the UK Government must be on securing a good deal with the EU. We do not believe that continuity agreements can substitute for those or, indeed, for agreements with the US or Japan, or Australia and New Zealand, which have launched in the last few weeks. We agree that there is a place for agreements—
David Johnston
Q
Rosa Crawford: It would be hard to make that estimation, because drawing a direct line between how trade agreements facilitate access for our businesses and imports and exports and specific jobs is quite difficult. Unions would treat any figure with some scepticism. We could probably look into which sectors were linked with particular countries. As I say, however, what would come out again and again is the overriding importance of the EU in promoting and supporting jobs in the UK. The continuity agreements do not represent a significant proportion of the jobs that are supported in the UK, if you could draw out some analysis that was credible on that.
Fleur Anderson
Q
Rosa Crawford: To focus on public services first, we are concerned that the Bill does not provide a guarantee of an exemption for all public services through a positive list, which is what we want to see in the Trade Bill. That is the only way to affirm that public services will be protected in trade agreements to make sure that there is no investor-state dispute settlement.
We are concerned that the trading partners that the UK Government have lined up as priorities for trade agreements once we leave the customs union with the EU are those that have explicitly made it clear that they would seek access to the UK’s public service market as a particular objective in trade negotiations. The US in particular, in its negotiating objectives, made it clear that regulations on drug prices were a barrier to market access which it would seek to overturn in trade agreements.
We know that in all recent US trade deals, such as the USMCA with Mexico and Canada, they have taken the negative list approach, which is where all services are included in the agreement unless specifically exempted. That means that if we had a similar deal with the US, part-privatised public services in the UK would be included in the agreement. If a future Government tried to renationalise them or regulate privatised parts of the public service, such as the provision of pharmaceuticals and medicines, they could be sued by the US Government. If ISDS is in the agreement, they could be sued through an ISDS tribunal. We are concerned that without an explicit commitment in the Trade Bill, as well as in all future trade negotiations, that public services are written out and there is no ISDS, our public services could really be on the line. That is what we need to see, rather than empty assurances from the Government that the NHS is protected.
In terms of workers’ rights, we have particular concerns about the US and the fact that they have ratified only two of the five fundamental ILO conventions. Forms of child labour are still legal in the US and there is legislation against freedom of association in a number of states where right to work laws exist.
It is clear that the US would see many of the employment protections we have in the UK, which we have derived from EU law, such as around working time, discrimination and paid holidays, as barriers to trade. They would say to the UK, “We are signing a deal with you only if you remove those barriers to our businesses being able to make more money, because we want workers to be able to work longer hours, have less holiday pay or be dismissed without any notice, or for agency workers to be fired on the day they are hired if we want to.” That kind of flexibility, we know, is the US approach.
Trade unions in the US have expressed grave concerns about that. The TUC and trade unions in the US have signed a joint statement making it clear that trade deals must protect workers’ rights and expressing concern about the breaches of workers’ rights in the US. With the Trade Bill not providing any affirmation that trade deals with existing countries, through the EU and the continuity group, and new trade agreements will have enforceable protection of workers’ rights, unless we see that kind of language making an affirmation that workers’ rights will be protected and effectively enforced through trade agreements, we know the realpolitik is that the likes of not only the US, but others such as Australia, New Zealand and others in the comprehensive and progressive agreement for trans-Pacific partnership, the CPTPP, are likely to pressure for lower workers’ rights. That will be their objective in a trade agreement; otherwise, the UK is a less attractive option for them.
The Chair
Ms Crawford, thank you very much for your time and for assisting the Committee with your evidence. That brings us to the end of the time allotted for this session. We will suspend briefly while we get the next one set up.
The Chair
We will now hear oral evidence from George Peretz, QC, of Monckton Chambers. We have until half-past 4 for this session. Let me introduce myself, Mr Peretz. I am Graham Brady; I am chairing the Committee and will be calling Members to put their questions, but I will not be questioning you myself. If you would be so kind as to give a brief introduction of yourself and any opening observations about the Bill, we would be very grateful.
George Peretz: Thank you, Chairman. I am George Peretz and I am a QC at Monckton Chambers. I specialise in a number of areas of law, but, relevant for these purposes, customs law and EU law, including trade remedies.
The Chair
Thank you very much. Do you have any initial observations on the Bill, or would you like to move straight to questions?
George Peretz: It is a short Bill and the Members are familiar with it, so while there are a number of issues that I am sure people will want to discuss, I do not have any opening observations.
Bill Esterson
Q
George Peretz: Did you say the scrutiny provisions?
Bill Esterson
The scrutiny provisions.
George Peretz: I am sorry, I am having slight difficulty hearing you.
Bill Esterson
The scrutiny elements of the Bill.
George Peretz: Yes, I thought I had heard it correctly. The first point to make is that the scope of the Bill, as set out in clause 1, is clearly confined to agreements with countries that had either a free trade agreement or an international package agreement with a free trade agreement with the EU before exit day. In that sense, it is limited, but none the less it is not quite right to portray it as simply a roll-over Bill, because the Bill does not prevent the Government from entering into an agreement, with a country that had such agreements with the EU—such as Japan or Canada—that is significantly different from the agreement that that country had with the EU before the United Kingdom left the EU. The absence of scrutiny provisions in the Bill needs to be seen in that light: that the agreement that the Government negotiate with Canada or Japan, for example, might look somewhat different—in fact, there is every reason to think that they probably will look somewhat different—from that which both countries entered into with the EU, most obviously because for those countries, an agreement with the United Kingdom is not the same as an agreement with the EU—it is a different market. Both countries will have different objectives and concerns in relation to the United Kingdom from those they had when negotiating with the much larger EU.
When one looks at the provisions of the Bill, which essentially do not provide much scrutiny at all, it is important to have that background in mind. There is the debate, with which Members are probably familiar, about the extent to which it is appropriate for there to be parliamentary scrutiny of free trade agreements. I can give you some thoughts on that, if you like. It is important with this Bill, however, to make that preliminary point.
Bill Esterson
Q
George Peretz: In this country, or elsewhere?
Bill Esterson
Either would be good.
George Peretz: I am just trying to think of an example. I suppose a case that ran into trouble, at least in part because it was accepted that there was not adequate scrutiny at an early stage, was negotiations between the EU and the United States on the transatlantic partnership agreement. Essentially—you would have to ask someone else for the precise detail—the EU side ran at what the European Parliament and member states were prepared to accept. That is one potential difficulty.
The issue with free trade agreements now, compared with what they looked like in the 19th century, when Richard Cobden could trot off to Paris to negotiate a free trade agreement with Napoleon III in a week or so, which involved a few tariff reductions, is that they are a lot more complicated than that now. Particularly once you move away from tariffs into other areas, agreements now require a lot of potentially important decisions on questions such as how matters of food safety are regulated, or the terms on which professional and other types of services are regulated, like auditing. Those are very sensitive indeed; they can profoundly affect both the public generally and particular interests.
So there is always the risk that, if an agreement has not been scrutinised properly at an early stage, a Government will go too far and then not be able to get the necessary legislation through Parliament. That is less of a risk inherent in our system, particularly in the present Parliament, given that the Government have a healthy majority, so it is not politically that likely. Also, the Government can quite often control agreements by secondary legislation anyway. But that can be a bit of a problem, and the TTIP negotiations turned out to be one.
Another issue with lack of scrutiny is much more difficult to find examples of, because it is not something from the textbook of finding examples. None the less, it is a fact, which people involved in trade negotiations fairly freely acknowledge, that it can be quite helpful to a Government to be able to say, “We are under scrutiny from our Parliament. We simply cannot make concession X, because we have discussed this with our own Parliament and know very well that it’s going to be very controversial; it’s going to be very difficult for us. We simply can’t do it.” That can be quite a useful negotiating tactic. As a lawyer, one is quite familiar with a situation where one is in negotiations with the other side and it is actually quite helpful sometimes to be able to say, “I’m afraid my client is very unreasonable; I simply can’t accept that.” That is quite a useful way of resisting certain types of pressure, and I think the same is true in trade negotiations, so it is another advantage of scrutiny.
Bill Esterson
Q
George Peretz: On the first question, plainly an unsatisfactory situation would have happened, had the United Kingdom left the EU with no deal last year. It is plainly an unsatisfactory situation if you have a whole set of powers in one Act of Parliament that are conferred on an authority that does not actually legally exist, because the legislation that sets it up has not at that stage been passed. That is what happened with the Trade Bill in the last Parliament. It is a bizarre situation, which is bound to create legal problems of one sort or another. There would have been challenges, no doubt, to the validity of the decisions taken by the Secretary of State, given that the mechanism by which he took them had no satisfactory statutory basis. The Department for International Trade told the world that the mechanism that it had adopted to get round that problem would have been sufficient to deal with it. We will never know whether it was right about that, but I think it would have created a set of legal issues that probably everyone could have done without if trying to—[Inaudible]—effective trade remedies. It will certainly be better if, at the end of transition, when all this comes into play, there is a strong remedies authority in existence, doing the job that the 2018 Act gives it.
The structure of the 2018 Act did seem to me sensible. I wrote an article that laid out the—[Inaudible.] It is the largely technical task of looking at the potentially legal point—[Inaudible]—a factual question about whether the various tests of dumping, subsidy domestically and so on have been met, through an independent authority that would be able to assess those reasonably objectively. It is charged with those functions. And there is the essentially political job of assessing the public interest, which is carried out by the politicians, who are directly accountable to you in the House of Commons. That seemed to me to be a sensible divide, and that is what the Government have done. That division of competence seemed to me to be broadly right.
A final point about the composition of the Trade Remedies Authority, going back to what I just said, is that the TRA’s job is in large part a technical one. It has to make a series of quite difficult legal and economic judgments that are essentially technical ones, but it does have a job of assessing the economic interests of the United Kingdom, which involve somewhat wider criteria. There is a case for the non-executive directors having to fit a number of those criteria; it is always desirable for there to be a diverse group of people on bodies such as this, because diversity brings strengths of its own. To focus on the particular task of this body, it is almost certainly helpful to have people who have experience of industry, because they will understand a lot of the issues and concerns that the TRA will have to grapple with. It would be helpful for some of the board to have backgrounds in law and in economics, because those are essential aspects of the TRA’s work, and it helps to have people right at the top who are familiar with such things.
The Chair
Mr Peretz, thank you very much. I am keen to get one more question in in the time we have available, if possible.
Gareth Thomas
Q
George Peretz: I am only broadly familiar with the US position, but I know a bit more about EU scrutiny. It is certainly at the lower end. This question was gone into in some detail at the International Trade Committee’s evidence session on 10 June, which I had the chance to listen to. It was with Brigid Fowler, who some people know from the Hansard Society, and a couple of other people whose names I cannot remember off the top of my head—one person from the Institute for Government and one from Global Justice Now. They went into some detail about the comparative perspectives, and it is worth looking at that.
In broad terms, the UK system as currently set up is something of an outlier. I do not know anything about the Canadian system, but one of the experts who gave evidence to that Committee—I think it was the person from the Institute for Government—said that Canada’s system is comparable to the UK, in that it has a reduced level of scrutiny. However, it is hard to think of any other examples of leading western countries where the scrutiny level is as low as it is in the UK.
One always has to be conscious that this sort of system is very different from the United States’ system. The US has separation of powers between the legislature and the Government, so it is rarely very enlightening when applied to a UK context, because the setup is so different. The EU is of course a very different body, because it represents a whole set of different states and has a set of controls that is appropriate for that, but not so appropriate for a unitary state. However, if we are looking at more obvious comparators such as Australia or New Zealand, I do not claim expertise on either of them, but I think there is a considerably greater degree of parliamentary scrutiny in both countries. It is certainly true, if one draws a comparison to the EU, where the European Parliament has to approve the mandates given to the Commission and has to be informed of changes and developments in the negotiations throughout. It is—[Inaudible]—comparable to what we have in the UK.
The Chair
Mr Peretz, thank you very much. I am afraid that brings us to the end of the time available for this session. Many thanks for joining us, and for assisting the Committee with its deliberations. We will now suspend briefly while we prepare for the next session.
The Chair
Q
Simon Walker: I am Simon Walker. I have been the chair of the Trade Remedies Authority for three months—a fairly recent appointment. From my limited exposure, given that I only made two visits to the office before the lockdown, I can report that the authority to be, which is still part of the Department for International Trade, is in good shape and raring to go.
Bill Esterson
Q
Simon Walker: I am not sure that falls within the purview of the Trade Remedies Authority to be. It seems a broader question than that. The TRA’s decisions will be subject to parliamentary scrutiny, because the final decision maker on our recommendations is the Secretary of State. If she rejects our recommendation, she must table her reasoning before Parliament.
Bill Esterson
Q
Simon Walker: I do not think I do, to be honest.
Bill Esterson
Q
Simon Walker: There are two underway at the moment, which are both transition agreements. One is about welded steel and tubes, and the other is about rainbow trout. Those two transition arrangements are in process at the moment. I cannot pretend that it will always be cheap to lodge a claim with the TRA, because it will require quite a lot of legal and technical expertise, so I would not want to over-sell that. It is a very substantial meta-seeking recommendation from us on the base of anti-dumping and fair subsidies or the need for an economic safeguard. It is a major intervention in economic process that I think justifies significant resource going into it.
David Johnston
Q
Simon Walker: I suppose the big worry about anti-dumping in general is that an overseas producer will seek to eliminate domestic competition in a predatory way and then force up prices as soon it has put its UK competitors out of business. That is at the heart of the issue, but there are infinitely more subtle variations of that, particularly if the exports come from countries where there are hidden or perhaps unfair subsidies of different sorts or where there is a disguise. The absolutely crucial thing is that there have to be UK producers of that product. If a product which happens to be massively available in another country is dumped cheaply in the United Kingdom and there are no UK producers, there is no domestic interest in that. That kind of unfairness aspect is fundamental to everything that we are going to be doing.
David Johnston
Q
Simon Walker: I think the Canadian, Australian and European Union’s trade remedies authorities operate competently and efficiently. The United States authorities have rather wider powers and a broader, much more variable political remit than this country’s will have, where our role is going to be to implement very strictly what is in the legislation. However, we are going to have to evolve something that is suited to the interests of this country absolutely specifically. That will be a challenge, because it has not been a function that the UK has had for some decades now, but I am confident that we can build up the expertise that will be required in the three basic strands. One is legal, one is analytical and economic analysis, and the third is investigatory, where claims are brought to us that require a detailed investigation. My hope is that over time we will build up the expertise to be recognised as an independent authority operating very much in the interests of this country, but that is an ambition and it will take a while to get there.
Gareth Thomas
Q
Simon Walker: It is important to stress that it is the Secretary of State who will make that ultimate decision. There are appeals mechanisms in this country, should we come to that finally. The appeals would need to be exhausted properly, but the remedies would be enforced in the same way as tariffs are enforced on imports to this country. There is not the ability of companies in other countries just to refuse to pay. That would have the same consequence as if they refused to pay normal tariffs or import duties on any goods.
Gareth Thomas
Q
Simon Walker: Certainly there are arguments that happen at WTO level all the time. One of the realities is that proceedings at the WTO normally take a very long time—I think that is particularly the case at the moment for various internal reasons—in the course of which considerable damage could be done in that case, unless the remedy were applied. That is why it is important that this country has the ability to act in that situation.
Fleur Anderson
Q
Simon Walker: I am happy with nine as a target. Three of them are internal, but we are going to want the other five non-executive directors all to be appropriately qualified in some way. I think we will get there. Nine to me feels the right sort of level.
It is important to stress that this is a board and it is fundamentally about governance. I would not want to mislead you about its decision-making capacity. Its role will be to set strategy, to hold the Executive to account, to test the strength of the arguments internally and to maintain the independence of the TRA from any organisation, including the Government. Those are the fundamental roles of the board, and we are going to be needing people who have that governance orientation in particular.
I am not supportive of the principle of representatives of particular organisations as such—to have representatives of industry or trade unions or the devolved Administrations —for a number of reasons. One is that I feel it would compromise the objectivity of the members of the board. The second is that it might reduce the capacity to appoint on merit. Thirdly, I think it would reduce the accountability if someone’s primary reporting back was to a sectoral interest group. To me, that would be a weakness.
Will there be people with trade union or industry experience, with close links with farming or with the devolved Administrations? I absolutely hope so. I very much hope that there will be people in those categories who apply for the board and are appointed, but they will be appointed as individuals who will work together as a board to hold to account the Executive.
I suppose the special skills I would cite that I am quite keen to see in non-executive board members are someone with a strong legal background, so that they can hold the legal team to account; someone with a financial and accountancy background, with real strengths in those areas; and if there is someone who has an investigatory background, perhaps, who could probe into material that is not always going to be easy to extract, that could be a useful facet. I hope they will be people who understand and relate to the devolved Administrations. I hope they will be diverse, because that has always been a goal of the Department and will be of the TRA once it is independent, but they will there as individuals working together on a board that is fundamentally about holding the Executive to account rather than making decisions itself.
Fleur Anderson
Q
Simon Walker: I am not sure that is really in our domain. I am very sympathetic to your point, but I am not sure how much that is in the remit of the TRA as such. Our professional teams will be trying to establish whether there is dumping, for example, from a particular country, and the sale of a product below its cost in that other country. If that is contrary to the economic interests of the UK, the TRA will try to assess that as objectively as possible. It is conceivable—I do not think it likely, but it is conceivable—that that might be from a developing country. There are shields for developing countries against an awful lot of tariffs—that is an element of exports that I hope will help them—and I certainly do not see developing countries being a big part of our focus, but I do not think that our remit is to look specifically at that.
Matt Western
Q
Simon Walker: I have not looked at other nations in that sort of competitive way. I suppose that what I have looked at is, as an organisation of not quite 100 people that might grow to 140 or 150 people—that sort of size—what it will take to run an organisation like that in terms of personnel with professional qualifications. It is not that hard to arrive at a budget for that kind of organisation, because it is not as if we are going to be paying for the submissions that are made to us. We are obviously taxpayer funded and our proposed budget—we are not in existence until the legislation is passed—is laid down by the Department. I think it is pretty much what anyone would expect, within a relatively modest scale, for an arm’s length body. Does that answer your question?
Matt Western
Q
Simon Walker: I do not think, I am afraid, that we have powers in that situation. Our mandate is very strict: it is about dumping, unfair subsidies and—this is very rarely used—safeguards in the event of unforeseen exports from another country that swamp the market. As I say, that is very rarely used. I take your point completely; that is a serious problem for the UK if that situation happens. I do not think it is one that the TRA can address.
Matt Western
Q
Simon Walker: The Department for International Trade and the Government as a whole. It is a matter for the Department and the Government as a whole rather than for us as an independent arm’s length body that will then be completely separate.
The Chair
That brings us to the end of our allotted time. I thank our witness very much. We are very grateful for your assistance.
Ordered, That further consideration be now adjourned. —(Maria Caulfield.)
Immigration and Social Security Co-ordination (EU Withdrawal) Bill (Sixth sitting)
Tuesday 16th June 2020
(4 years, 6 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 16 June 2020 - (16 Jun 2020)
The Committee divided: - Ayes: 2 / Noes: 8 - Question accordingly negatived.
The Committee divided: - Ayes: 7 / Noes: 8 - Question accordingly negatived.
The Committee divided: - Ayes: 7 / Noes: 8 - Question accordingly negatived.
The Committee divided: - Ayes: 7 / Noes: 8 - Question accordingly negatived.
The Chair
Just before we begin, I should say that if members of the Committee wish to take their jackets off, they have my permission to do so. The hon. Member for Cumbernauld, Kilsyth and Kirkintilloch East and the Opposition Front-Bench spokesperson have spoken. If no Back Benchers indicate that they wish to speak, I will call the Minister. I remind the Committee that with this we are also discussing the following:
New clause 10—Extension of registration for EU Settlement Scheme—
‘(1) The EU Settlement Scheme deadline shall be extended by a period of six months unless a motion not to extend the deadline is debated and approved by both Houses of Parliament.
(2) Any motion not to extend, referred to in subsection (1), must be debated and approved no later than three months before the deadline.
(3) In this section, “the EU Settlement Scheme Deadline” means the deadline for applying for settled or pre-settled status under the Immigration Rules.’
This new clause would ensure the EU settlement scheme was not closed to new applications until Parliament has approved its closure.
New clause 11—Application after the EU Settlement Scheme deadline—
‘(1) An application to the EU Settlement Scheme after the EU settlement scheme deadline must still be decided in accordance with appendix EU of the Immigration Rules, unless reasons of public policy, public security, or public health apply in accordance with Regulation 27 of the Immigration (European Economic Area) Regulations 2016 (as they have effect at the date of application or as they had effect immediately before they were revoked).
(2) In this section—
“an application to the EU Settlement Scheme” means an application for pre-settled or settled status under appendix EU of the Immigration Rules;
“the EU Settlement Scheme Deadline” means the deadline for applying for settled or pre-settled status under appendix EU of the Immigration Rules.’
This new clause would ensure that late applications to the EU settlement scheme will still be considered, unless reasons of public policy, public security or public health apply.
New clause 25—Report on status of EEA and Swiss nationals after the transition—
‘(1) This Act shall not come into effect until a Minister of the Crown has laid a report before each House of Parliament setting out the impact of the Act on EEA and Swiss nationals in the UK.
(2) A report under subsection (1) must clarify the position of EEA and Swiss nationals in the UK during the period between the end of the transition period and the deadline for applying to the EU Settlement Scheme.
(3) A report under subsection (1) must include, but not be limited to, what rights EEA and Swiss nationals resident in the UK on 31 December 2020 have to—
(a) work in the UK;
(b) use the NHS for free;
(c) enrol in education or continue studying;
(d) access public funds such as benefits and pensions; and
(e) travel in and out of the UK.’
This new clause would require Government to provide clarity on the rights of EU nationals in the EU in the grace period between the end of the transition period, and the closure of the EU Settlement Scheme.
The Parliamentary Under-Secretary of State for the Home Department (Kevin Foster)
It is a pleasure to serve under your chairmanship this afternoon, Mr Stringer. These new clauses give us an important opportunity to consider the position of EEA citizens—those who are already here and are covered by the EU settlement scheme, and those who will come to the UK under our future points-based immigration system.
Before the break, I was asked a couple of questions. I can assure my right hon. Friend the Member for Scarborough and Whitby that we are looking at a range of communications materials, and have already done so, in a number of common European languages. We have engaged with diaspora media, and are looking particularly at how we can work with them over the coming year, as we approach the deadline next year, to ensure that as many people as possible hear the message—not just those who need to apply, but their friends and families, so that people feel familiar with the system and realise that it is actually a relatively simple process. The vast majority of people do it via an app on their phone.
I was grateful for the question from the hon. Member for Halifax. She asked what the position would be if someone applied on 20 June 2021 and their application was still outstanding on 1 July 2021. That is a perfectly reasonable issue to raise. As set out in the withdrawal agreement, the rights of someone who has made a valid in-time application to the EU settlement scheme will be protected while that application is pending. The regulations under the European Union (Withdrawal Agreement) Act 2020 will save relevant rights in relation to residency and access to benefits and services for those who make an application before 30 June 2021 until it is finally determined.
The Home Office will clearly not take immigration enforcement action against an individual whose application is pending. That reflects some of the other principles in the migration system. Committee members may be familiar with 3C leave—the concept that if someone has extant leave and applies, their leave is extended until their application is determined.
I assure Members that the statutory instrument making the regulations will be subject to debate and approval by Parliament, and will need to come into force at the end of the transition period. The Government are currently developing those regulations, which will be debated and made in good time prior to their entry into force at the end of the transition period.
On the linked question of what happens in relation to status checks and other things, let me be clear that an individual undergoing an eligibility check while their EUSS application is pending will have the same entitlement to accommodation, work, benefits or services that they had before the grace period ended. The Home Office will confirm whether an application is pending when an eligibility check is carried out—for example, if someone has to prove their status to their employer. Given that it is a digital-only system, it will be very similar to the process that people would use if they had been given pre-settled or settled status. I hope that is of use. Given the nature of the issue, I will set that out in writing for members of the Committee. They may wish to refer to it later.
New clause 9, moved on behalf of our friends in Plaid Cymru by the hon. Member for Cumbernauld, Kilsyth and Kirkintilloch East, seeks to delay the ending of free movement and the introduction of the new points-based immigration system for as long as possible. That is no surprise, given the views of the hon. Gentleman and Plaid Cymru.
My response on behalf of the Government is simple: we must accept the wishes of the people of our United Kingdom. Free movement is ending now that we have left the European Union. It is just six months since the general election, during which my party said that we would introduce a points-based immigration system that will enable us to bring in the best talent from around the world—based on the skills that a person has, not where their passport is from. The Government will therefore reject any attempt to perpetuate free movement or delay the implementation of the new points-based immigration system. The Government have a mandate, and we will fulfil our pledges to the people. We will introduce our new firmer and fairer points-based immigration system from 1 January 2021, when the transition period ends.
Having said that, I appreciate the importance of proper data and information. It is precisely for that reason that the Government have published a detailed impact assessment to accompany the Bill. It was published on 18 May and can be found on gov.uk and the Parliament website. Copies were also placed in the Library, and I know it has been referred to at times during the debates we have had so far.
The impact assessment is slightly unusual because it is not confined simply to the scope of the Bill, which, as Sir Edward and you, Mr Stringer, have reminded us on a number of occasions, is relatively narrow. Instead, it seeks to map out the consequences that will flow from the introduction of the points-based immigration system that was set out in the policy statement, which my right hon. Friend the Home Secretary published on 19 February.
The impact assessment sets out the likely implications for both EEA and non-EEA citizens of the changes that we will make, and it deals with many of the issues raised by the new clause. In particular, it makes it clear that we will develop plans to evaluate policies under the future skills-based immigration system. I remind the Committee that we have expanded the role of the independent Migration Advisory Committee. Not only will the MAC respond to specific commissions from the Government; it will also be able to consider any aspect of immigration policy that it chooses.
We have also asked the MAC to produce an annual report, which will give it the opportunity to comment on what it believes is working well and anything it thinks is working less well in our system. Although it is for the MAC—as I have said, it is independent of Government—to decide how to exercise its new responsibilities, I would be surprised if it did not want to comment on the operation of the new points-based system once it is fully up and running, so that there is further assurance for the public and for the movers of the new clause. For those reasons, the Government cannot accept the new clause.
I will now speak to new clauses 10, 11 and 25, which concern the EU settlement scheme and the grace period that will run from the end of the transition period to 30 June 2021. New clause 10 is designed to extend the deadline for applications to the EUSS by six months, which would happen unless and until Parliament debated and approved a motion not to extend the deadline.
I share the aim of the hon. Member for Cumbernauld, Kilsyth and Kirkintilloch East to ensure that eligible EEA citizens are able to obtain the UK immigration status they need to continue to live and work here. As we constantly say, they are our neighbours and friends—we want them to stay. However, I do not think that is best achieved by the new clause, which has the effect of shifting the deadline for applications to the scheme potentially indefinitely. That would cause confusion. Instead, a clear deadline of 30 June 2021 will encourage applications to the scheme and ensure the greatest number of resident EEA citizens secure their status in a timely manner.
Furthermore, new clause 10 is ambiguous. It is not clear whether it is intended to be a one-off extension of six months or a rolling extension of a six-month period until such a time as Parliament votes to close the scheme with just three months’ notice. Having a clear and well-publicised deadline by which eligible citizens need to apply ensures that the maximum number do so rather than putting it off due to the impact of new clause 10, which could mean that a deadline is set with three months’ notice. The new clause could also mean that applicants face difficulties and delays in demonstrating their rights and entitlements in the future, as they would not be able to distinguish themselves from EEA citizens who arrived after the end of the transition period.
The Government have made it clear that we will continue to support eligible citizens in applying to the EU settlement scheme. In addition, as we have shown with all aspects of the scheme, we will take a flexible and pragmatic approach and allow people with reasonable grounds for missing the deadline a further opportunity to apply. We will set out further guidance on this issue in due course, but with over a year to go until the deadline, our focus is on getting as many applications before it as possible.
On new clause 25, we will bring forward a statutory instrument under powers in the European Union (Withdrawal Agreement) Act 2020 to set the deadline and save the residency rights of people who are eligible to apply to the scheme and who do so before the deadline. I am not sure whether this is the intention of the hon. Member for Cumbernauld, Kilsyth and Kirkintilloch East, but the effect of new clause 10 would be to breach our obligations under the withdrawal agreements. The deadline of 30 June 2023 applies only to EEA citizens and their family members who reside in the UK by the end of the transition period. Their close family members outside the UK at the end of the transition period—where the relationship existed before then and continues to exist when they seek to come here—and their future children have a lifelong right of family reunion with the resident EEA citizen. A universal deadline makes no provision for this group, whether it is 31 December 2021 or any other date, and it would be inconsistent with the provision to enable them to apply within three months of their arrival, as set out in article 18(1)(b) of the withdrawal agreement.
New clause 11 is intended to require the consideration of all applications to the EU settlement scheme made after the application deadline, unless reasons of public policy, public security or public health apply. As the hon. Gentleman will be aware, the withdrawal agreement requires late applications to be considered
“if there are reasonable grounds for the failure to respect the deadline.”
As I said earlier, the Government will adopt a flexible and pragmatic approach to the consideration of late applications. Where an eligible EEA citizen or their family member has reasonable grounds for missing the application deadline of 30 June 2021, they will be given a further opportunity to apply. This approach gives people a clear deadline and incentive to apply while also protecting those who are unable to do so through no fault of their own.
Our collective focus must be on encouraging applications to the EU settlement scheme before the deadline.
Stuart C. McDonald (Cumbernauld, Kilsyth and Kirkintilloch East) (SNP)
In terms of intention, I think everybody in this room is at one. The Minister provides assurance in relation to people who miss the deadline through no fault of their own. Would that include people who, because of their complicated immigration nationality situations, had not appreciated that they needed to apply for the scheme?
Kevin Foster
I think it is safe to say that the list will not be an exhaustive one. There will need to be an element of discretion as we cannot list every single possible situation that might reasonably cause someone to be late in their application, but if, for example, they have had a difficult court case or something that meant they had not been able to apply, and a status had then been granted, it is likely that that would be seen as a reasonable excuse. It will be set out in guidance.
Our intention is to set out a list of situations that are not exhaustive but indicative. We can all think of circumstances that would be perfectly reasonable. For example, in the case of a child in the care of a local authority, we would expect the local authority to have made efforts to get them registered. We could make a very long list and still not get to an exhaustive level. The list will demonstrate grounds, but it will not be an exhaustive list of the only situations that we would accept as reasonable grounds for failing to apply on time.
As I say, we will take a flexible and pragmatic approach with those who miss the deadline. We have more than a year to go before the deadline. If people feel that they might need to make an application, the best thing to do is to find the information and make the application. That is our absolute focus at the moment. We are working closely with support groups to ensure that we can reach out to vulnerable communities who might need assistance. We have kept a range of support services running throughout the recent period and have now reinstated all routes for application, including paper applications that are made available to those with the most complex needs.
We want to encourage applications before the deadline. That will ensure that EEA citizens can continue to live their lives here, as they do now, without interruption. To make a commitment now that we would also consider all late applications would undermine that effort.
Where there are reasonable grounds for submitting a late application, we will consider the application in exactly the same way as we do now, in line with the immigration rules for the EU settlement scheme. That includes the consideration of conduct committed before the end of the transition period on the grounds of public policy, public security and public health, and of conduct committed thereafter under the UK conduct and criminality thresholds. As I have mentioned, we will publish guidance for caseworkers on what constitutes reasonable grounds, to ensure consistency of approach. Again, however, with more than a year until the deadline, it is premature to do so now, for the reasons I have given.
Stuart C. McDonald
It is a pleasure to serve under your chairmanship, Mr Stringer. I am grateful to all hon. Members for taking part in this debate and to the Minister for his response. There have been some useful comments, including on the transition period, in response to points made by the shadow Minister, the hon. Member for Halifax. We will take that back to discuss with concerned groups and may revisit the matter.
For those who fail to apply in time, we understand that there will be guidance in due course. Again, we are grateful for that little bit of further information on how that will function through a non-exhaustive list of types of case where caseworkers will look sympathetically on a late application. I am grateful for that. The Minister will understand that we will revisit that repeatedly between now and next June, due to our concern about what will happen to those people who have the right to be here but risk losing it.
As I said in my intervention, we have a similar purpose across the House; we just have different views on how to go about doing it. Having adopted this course of action, we will continue to press and push the Government at every possible opportunity, so that we get the maximum reach possible and as few people as possible lose their rights and end up being cast adrift in a hostile environment or lose their right to be in this country altogether.
The two new clauses were possible solutions to that. I will go away and think again about their detailed drafting. The Minister provided some interesting comments in that regard. At this juncture, I beg to ask leave to withdraw the motion.
Clause, by leave, withdrawn.
New Clause 12
Immigration health charge
‘No immigration health charge introduced under section 38 of the Immigration Act 2014 may be imposed on an individual who is an EEA or Swiss national.’—(Stuart C. McDonald.)
This new clause would prevent EEA or Swiss nationals paying the immigration health charge.
Brought up, and read the First time.
The Chair
With this it will be convenient to discuss new clause 42—Immigration Health Charge: Exemption for EEA and Swiss citizens who are healthcare and social workers—
‘(1) The Immigration Act 2014 is amended as follows.
(2) After section 38 (Immigration health charge) insert—
“38A Health care workers and social workers from the EEA or Switzerland
(1) Any person who but for the provisions of the Immigration and Social Security Co-ordination (EU Withdrawal) Act 2020 would have the right of free movement is exempt from the Immigration health charge if that person is—
(a) a healthcare worker; or
(b) a social care worker.
(2) The exemption will also apply to a person who is a family member or dependant of an EEA or Swiss national who meets the conditions in section (1)(a) and (b).
(3) For this section—
“healthcare worker” means a worker who works in a healthcare setting within and outside the NHS who may come into contact with patients, including clinical administration staff, and care home staff;
“social care worker” means a worker as defined by section 55(2) of the Care Standards Act 2000.’
Stuart C. McDonald
This brings us to the hot topic of the immigration health surcharge. It is worth remembering that the health surcharge is a fairly new concept, as it was introduced in 2014. It is set at £400 per year for most applicants, with a discounted rate for students and tier 5 youth mobility workers. The Government have decided to increase the fee to £624 per person per year in October.
Those are hugely significant sums of money, as the charge has to be paid per person per year for the full duration of the visa being applied for, before that visa application has even been considered. Somebody who comes in under a typical five-year tier 2 visa will have to pay more than £3,000 up front in health charges. If they have a husband or wife and a couple of kids, that is three extra NHS surcharges, so more than £12,000 up front without even thinking about the visa fee. On a discounted rate, a student coming for three years will need to pay more than £1,400 up front. Again, that is completely separate from the visa fee. Of course, the Bill extends the scope of the immigration health surcharge to many more applicants.
A particular injustice is done to people applying for leave to remain based on long residence. They are individuals and families who are forced on to a dreadful treadmill of applications and expense. Repeatedly, they have to apply for 30 months’ leave to remain. A single parent with two kids applying under those rules would need to pay almost £4,700 in health charges, and more than £3,000 in immigration fees, for just 30 months. They have to make that same application over and over again until they get to 10 years. When they get to 10 years and are met with a settlement fee of £2,400 per person, they will already have paid £10,300 per person. For a family, £10,000 per person is impossible. Shamefully, those people are often prohibited from having access to public funds.
Those people are applying because of long residence in the UK so, realistically, in many cases, there is no other country that they can go to. The children have spent most, if not all, of their lives here. It can put families in intolerable situations where they have to choose which family member they can afford to pay the fee for. A child may end up missing out because the most immediate and pressing priority is to pay the fee for a breadwinner.
In a way, the charge represents the worst of Home Office policy making, although the Treasury is as much to blame for stripping the Home Office right down to the core and instructing it to use migrants as cash cows to fund its activities. It also illustrates the Home Office at its worst, because the policy is more about grabbing the headlines than anything else. It is illogical, unjust and counterproductive.
The excuse given is that the policy ensures that migrants contribute towards the cost of the NHS system that they may use—but in that case, why is there an NHS charge but not an education charge, especially for families with kids? Why is there not a public transport or roads charge, or a local services charge? It is essentially a fig leaf for the fact that it is simply a general tax.
It is also unjust in that it is a form of double taxation and it is a poll tax. Migrants, of course, contribute to public services through general taxation like everybody else, through income tax, council tax and indirect taxes. The NHS surcharge is totally regressive. It falls unfairly on different migrants, as a wealthy bank worker with no dependants will pay about a quarter of the sum that an NHS careworker will pay if he or she comes in with kids. Most importantly, it falls unfairly on migrants as opposed to those who are citizens or settled. Migrants pay a general tax that the rest of us do not, while at the same time paying all the other taxes that we do.
Finally, from a different perspective, this is a policy that makes the UK an eye-wateringly expensive place for people to come to work. That will now expand to EU and Swiss nationals, and to the small and medium-sized businesses that employ them. Just as businesses are struggling to keep their noses above water, the Government intend to whack them with a plethora of fees, vis-à-vis skills charges and the NHS surcharge.
As we heard last week, it is the big multinationals that are well practised in this system over time, and that have the know-how and resources. Small and medium-sized businesses will end up not only having to navigate the complex tier 2 system, but often meeting the cost of the immigration health surcharge. If a job pays around £26,000 or £27,000, nobody in their right mind is going to come if they have to pay almost half a year’s salary up front. The small hotel and the fish-processing factory will have to pay it on their behalf and, quite simply, they may well not be able to afford to do that. It will not just be one job that remains unfilled. The danger becomes that that hotel or factory simply cannot continue to function and it moves elsewhere. Workers will go where they are not being totally ripped off.
Can the Minister give me examples of other countries that operate such a system in relation to a health surcharge? If so, what is the comparable rate? All the comparisons that I have looked at show that the UK is charging people to come here at a rate that is several times that of most of our competitor countries. In short, this is unjust, it is counter-productive, it is a double poll tax and it should be axed altogether. We support the Labour amendment and new clause as far as they go, but our view is that the solution is total abolition, rather than trimming around the edges.
Holly Lynch (Halifax) (Lab)
It is a pleasure to serve under your chairmanship once again, Mr Stringer. I rise to speak to new clause 42. I agree with a great deal of what my friend the hon. Member for Cumbernauld, Kilsyth and Kirkintilloch East said about the immigration health surcharge.
The Labour party is undertaking a significant piece of work with colleagues in the health team about the subject, so we will not make any further comments at this stage about new clause 12. We tabled new clause 42 and we welcome the Government’s commitment to scrap the NHS surcharge for migrant health and care workers, which we feel is long overdue.
The pandemic has shown the enormous contribution of overseas workers to our health and care system. They have put their lives on the line every day to keep us safe. It has been an insult and injustice to then ask them to pay extra for the very services they help provide. The Government acknowledged it was wrong, and said they would be scrapping the fee, which was described as “appalling, immoral and monstrous” by Lord Patten, the former Conservative party chairman, on 21 May, but details have yet to be published about exactly how and when it will happen.
I am mindful that the commitment made by the Prime Minister, following the exchanges between our party leaders at the Dispatch Box, was broader than the new clause before us due to the scope of the Bill. The U-turn was made when a No. 10 Downing Street spokesman announced:
“The PM has asked the Home Office and the Department for Health and Social Care to remove NHS and care workers from the NHS surcharge as soon as possible. Work by officials is now underway on how to implement the change and full details will be announced in the coming days.”
We share the opinion of Donna Kinnair, general secretary of the Royal College of Nursing, who said it was
“a shame it took this pandemic for the government to see sense”.
We also share the opinion of the British Medical Association, the Royal College of Nursing, the Royal College of Physicians and Unison, which have written to the Prime Minister to demand clarity about his commitment. I hope that the Minister can update the Committee and, indeed, the general public on what progress the Government have made. Can he confirm that all health and care workers will be exempt from the charge on a permanent basis, including those employed in the NHS, independent settings and the social care sector; that the spouses and dependants of health and care workers will also be exempt from the charge; and that health and care staff, who have paid the charge in advance, which will be all those currently working in the NHS and social care, bearing the brunt of the pandemic, will be appropriately reimbursed?
New clause 42 intends to hold the Government to the commitments made following PMQs on 20 May. As you can imagine, Mr Stringer, international doctors and nurses, who have just had to endure the most difficult, traumatising period of their careers, were hugely relieved when the Government made the overdue decision to scrap this unfair charge for health and care workers, finally recognising the vital contribution that overseas staff make to the NHS. However, we are nearly a month on since the announcement was made and we are still awaiting the details that we were promised.
Mr Robert Goodwill (Scarborough and Whitby) (Con)
I thank the hon. Member for Halifax for making the point about the contribution that overseas workers make to our health service and the way the Government have responded to that by suspending the immigration health charge. However, I have some concerns about new clause 12 and its discriminatory nature.
For example, it would extend an exemption to Poland, which has a 0.1% black and minority ethnic population, but not to other countries, particularly Commonwealth countries, which have very close links to the UK. If one looks at the European Union as a whole, its record on inclusivity is not good. For example, all 28 commissioners are white. Following the departure of the UK from the European Union, the number of Members of the European Parliament dropped by 20% as our MEPs left Strasbourg and Brussels, and only 24 of the 705 MEPs are from black and minority ethnic groups.
Stuart C. McDonald
The simple problem that I face here—again—is the scope of the Bill. I would love to abolish the immigration health surcharge altogether. If that is the only problem that the right hon. Gentleman has, I urge him to get in behind the new clause and we can work to scrap it for everybody else as well.
The Chair
Before the right hon. Member for Scarborough and Whitby resumes, I refer him to what the new clause says. He is beginning to stray a little.
Mr Goodwill
Thank you, Mr Stringer. The point that I was working up to was that by having an exemption only for EU citizens, we are discriminating against a large number of people who would wish to come and work in the UK from around the world. The ethnic mix of those particular groups would indicate that allowing the new clause would give a land bloc where the majority of people are white an unfair advantage over the rest of the world. I understand the aspiration to abolish the charge completely globally, but if we were to agree the new clause, we would end up in a situation where black and minority ethnic people from around the world would be at a great disadvantage to predominantly white people coming in from the European Union, EEA countries and Switzerland.
Kevin Foster
I thank the hon. Member for Cumbernauld, Kilsyth and Kirkintilloch East for tabling new clause 12 and the hon. Member for Halifax for tabling new clause 42, both of which relate to the immigration health charge, and for the opportunity they provide to debate this issue.
The background, for members of the Committee, is that the immigration health charge ensures that temporary migrants who come to the UK for more than six months make a fair contribution to the NHS services available to them during their stay. Income from the charge contributes to the long-term sustainability of our fantastic health service across our Union, although certain groups are exempt from the requirement to pay the charge and others benefit from a discounted rate.
The health charge is designed to help support the NHS services that we rely on throughout our lives. It raised approximately £900 million in much-needed income for the NHS from its introduction in 2015 to the end of the 2018-19 financial year—income that, I will be clear, has been shared between the four devolved health administrations in line with the Barnett formula, helping to fund the NHS across our United Kingdom.
Turning to the future, all migrants will be treated the same under our new points-based immigration system. The expectation is therefore that all nationals applying, including EEA citizens, will pay the charge if staying for temporary periods of longer than six months, unless an exemption applies. Of course, EEA citizens who are resident in the UK before the end of the transition period on 31 December 2020 are not subject to the immigration health charge. That was agreed as part of negotiations on the withdrawal agreement with the EU, which also protects the rights of UK nationals in the EU.
To touch on the point made by my right hon. Friend the Member for Scarborough and Whitby, now we have left the European Union, it would be rather hard to defend having an exemption for EEA nationals alone, given that we no longer have freedom of movement in place and will no longer members of the EU, and then applying this to the rest of the world. I respect the SNP’s point—they have made it regularly and I am sure they will make it again at regular intervals—and their principled view on this issue overall, but it would not make sense to have an exemption for one group applying under the points-based system rather than another, based on nationality alone. I appreciate the point and it will be interesting to hear what conclusions the hon. Member for Halifax comes to as part of her review.
The Government believe that new clause 42 is unnecessary. As has already been said, hon. Members will be aware that my right hon. Friend the Prime Minister has asked the Home Office and the Department of Health and Social Care to exempt NHS and social care staff from the charge. The exemption will apply to the relevant applications regardless of nationality—as I say, we are moving to a global points-based system—once that system is in place.
Officials are currently working through the detail of the exemptions; sadly, I will have to disappoint the hon. Member for Halifax and say that I cannot go into the full details today of where it will be, but hon. Members will appreciate that that is because we want to get this right and are working with our colleagues in the DHSC to do that.
There was a point made about renewals for doctors currently in the NHS. It is worth pointing out that those who are currently working in the NHS as doctors, nurses or in a number of health professions, are subject to automatic extension for a year. If they get an automatic extension for a year, that also waives the immigration health charge. It is not just the visa fee that goes, but the immigration health charge. Someone currently working for the NHS whose visa is due for renewal is getting a free year, and certainly by this time next year we will have the detailed guidance out there for them. I hope that provides some reassurance about the position as we stand here today.
I recognise the concerns about the financial impact of the health charge on people migrating here, including those who contribute to the NHS through tax and national insurance payments. The health charge provides comprehensive access to NHS services regardless of the amount of care needed during a person’s time in the UK, and includes treatment for pre-existing conditions.
The IHS not only represents excellent value when compared with the alternatives, but ensures that individuals do not need to worry about insurance or how they will pay for unexpected treatment while they are here. It compares favourably with the type of health insurance or other health care costs that those migrating to other countries might well face in order to get the same level of services that our NHS provides to all at point of need, free of charge, here.
As I said earlier, the Government is exempting NHS and care workers from the charge in recognition of the enormous contribution they make to the NHS directly. It is, however, only fair to expect people arriving in the UK to work in non-health-related roles to contribute to the range of NHS services available to them, given that they will not have the history of making contributions towards it that most long-term UK residents will have. It is also worth remembering that those who receive indefinite leave to remain—that is, settlement—are exempted from the IHS, in recognition of the long-term commitment to our United Kingdom this represents.
Finally, the Government are in the process of negotiating reciprocal healthcare arrangements with the EU, and it is important that we do not undermine the integrity of those negotiations through this Bill. I therefore invite the Members from the Scottish National party to withdraw the motion.
Stuart C. McDonald
I am grateful to the Minister for his response. We are essentially debating a fundamental point of principle here: we have different views about the appropriateness of this charge.
To respond to the right hon. Member for Scarborough and Whitby’s intervention, I am of course constricted in what I can table as an amendment or new clause. I would scrap the charge for everybody, not just EEA nationals, but the scope of the Bill prohibits me from tabling a broader amendment. I think that if an assessment of the NHS surcharge’s impact on black and minority ethnic people were carried out, it would make for interesting reading, but that is a debate for another day. I stand by my party’s position that this is a double tax that is completely unjustifiable, and will therefore push new clause 12 to a Division.
Question put, That the clause be read a Second time.
The Chair
With this it will be convenient to discuss the following:
New clause 36—Immigration Fees—
“(1) No fees may be charged for processing applications included in subsection (3) for those persons who have lost rights of free movement under section 1 or schedule 1 beyond the cost of that processing, unless the Secretary of State has complied with the procedure in subsection (2).
(2) If the Secretary of State proposes to make changes to the rules under subsection (1), the Secretary of State must get the approval of both Houses of Parliament.
(3) The list of fees to which subsection (1) applies includes, but is not restricted to, the following—
(a) fees for applications to enter or remain in the UK;
(b) fees for sponsorship licenses;
(c) immigration health surcharges; and
(d) immigration skills charges.”
This new clause will ensure that immigration fee changes must be agreed by Parliament.
New clause 37—Citizenship Fees—
“(1) No fee may be charged for processing applications relating to the citizenship status of a person who has lost rights of free movement under section 1 or schedule 1 beyond the cost of that processing, unless the Secretary of State has complied with the procedure in subsection (2).
(2) If the Secretary of State proposes to make changes to the rules under subsection (1), the Secretary of State must get the approval of both Houses of Parliament.”
This new clause will ensure that citizenship fee changes must be agreed by Parliament.
Stuart C. McDonald
These new clauses continue with the broad topic of fees and expense. Although I understand why they have been grouped together, it is important that they are not treated as being about exactly the same thing; we must separate out two distinct issues.
New clauses 36 and 37 were designed to flag up the issue of how far above the cost of processing immigration and citizenship fees have been set, generally speaking, and to challenge the Minister and Committee members about why we have allowed that to happen and what the appropriate approach to setting fees should be. I accept that there will be a whole range of views on what the price of immigration applications or certain nationality applications, particularly naturalisations, should be. My own view, and that of my party, is that the prices have been set too high. This brings us back to the fact that the Home Office’s budget has been cut to smithereens in recent years by the Treasury, and it is left with no other option but to milk every penny from the immigration and citizenship system to subsidise its activities. I urge Members to wake up to the enormous burden that, at this time of crisis, the Government are about to dump on business—especially small and medium-sized enterprises—as well as individuals by expanding all these fees to companies that recruit from the EEA labour market.
It is important to distinguish new clauses 36 and 37 from new clause 13, which raises a wholly separate issue and is about righting a profound injustice. We can debate fees more generally, but there should be no scope for debate about new clause 13. I know that Members of all parties have been troubled by Government policy in this area, because, like Labour, Liberal Democrat, Democratic Ulster Unionist, Green and Plaid Cymru Members, Conservative Members also signed an early-day motion that I tabled on the topic in 2018. When I applied for a Backbench Business debate I had support from Conservative MPs as well, as I did during the debate.
Holly Lynch
We support new clauses 13, 36 and 37, which were tabled by the SNP and address immigration and citizenship fee charges that fall within the scope of the Bill. We believe that visa charges should not exceed the cost price, for all the reasons that have already been set out.
Subsection (1) of new clause 13 would prohibit EEA and Swiss citizens from being charged a fee for registering as a British citizen that is greater than the cost of the registration process. As we have already heard, there is enormous cross-party support for this approach.
The Home Office makes a profit of up to 800% on immigration applications from families. The fees are now £1,012 for children and £1,206 for adults, which are really quite significant sums. We have all had constituents come to us because such fees are causing a huge amount of anxiety and stress after a change in circumstances. We have all had casework in which applications have been turned down on technicalities, which we have been able to challenge through our parliamentary offices. Families are often forced to make further appeals and further applications, and to pay again.
EEA and Swiss nationals will soon join the rest of the world in having to pay visa fees or fees for starting the journey towards British citizenship. The British Nationality Act 1981 contains provisions to ensure that no child with entitlement to register for British citizenship should have to pay a fee. Subsections (2), (3) and (4) of new clause 13 are designed to safeguard that Act, in spite of the Bill. I particularly welcome subsection (2), which would provide a further safeguard for children who receive assistance from their local authorities, adding to our proposals in new clause 58. We will come on to clause 58, but those provisions seek to provide automatic settled status for all EEA and Swiss children in care, and for those entitled to care-leaving support.
With that in mind, we welcome the independent chief inspector’s report, “An inspection of the policies and practices of the Home Office’s Borders, Immigration and Citizenship Systems relating to charging and fees”, which was presented to the Home Secretary last September. It set out concerns about the legislative procedure for citizenship and immigration fees, and it recommended that the Home Office undertake to provide considerably more clarity on fee levels, stating that the Government should:
“Either make public any Policy Equality Statements produced for ministers or publish separate statements that show clearly what has been considered when proposing fees levels/increases in terms of equality and diversity, in particular the social and welfare impacts on children, families and vulnerable persons.”
New clauses 37 and 38 would require Parliament’s consent for changes to be made to citizenship fees and immigration fees respectively. As we have discussed, the Government are attempting to grant themselves sweeping Henry VIII powers throughout the Bill; we have rehearsed that debate several times. We believe it is vital that parliamentary oversight is at least afforded to these charges, which will dictate the lives and prosperity of EEA and Swiss migrants in the UK for years to come. Ideally, that should be done through parliamentary legislation rather than through the current framework, which relies on statutory instruments.
Kevin Foster
I am grateful to the hon. Members for Cumbernauld, Kilsyth and Kirkintilloch East and for Argyll and Bute for tabling new clauses 13, 36 and 37, which provide the Committee with the opportunity to consider fees charged in respect of applications made by those who will lose the right of free movement under the Bill for citizenship, leave to enter or remain in the United Kingdom, the immigration health surcharge, the immigration skills charge and sponsorship licences. I pay tribute to the hon. Gentlemen’s diligence in going through all the points that they wished to highlight.
It may be helpful to provide some background information for the Committee. Application fees for border, immigration and citizenship products and services have been charged for a number of years, and they play a vital role in our country’s ability to run a sustainable system. To put them into context, the current charging framework across the operation delivered £1.98 billion of income in the financial year 2018-19. That income helped to deliver the funding required to run the borders, immigration and citizenship system, and it substantially reduces the burden on UK taxpayers, as I am sure members of the public would rightly expect us to do.
The immigration health charge ensures that temporary migrants who come to the UK for more than six months make a fair contribution towards paying for the NHS services that are available to them during their stay. As was touched on earlier, income from the charge directly contributes to the long-term sustainability of our fantastic health service across our United Kingdom. Certain groups are already exempt from the requirement to pay the charge, and others benefit from a discounted rate.
The immigration skills charge is designed to incentivise employers to invest in training and upskilling the resident workforce to move away from reliance on the UK’s immigration system as an alternative to investment in staff retention, productivity, technology and automation. Income raised from the charge will be used to address skills gaps in the UK workforce, and that will be of benefit to businesses in the long term. Any fees to be charged are already approved by both Houses of Parliament.
New clause 13(1) is designed to limit the Secretary of State’s power to charge a fee for applying for British citizenship to the cost of processing. That would apply to anybody who has enjoyed free movement rights at any point. Imposing such a provision would cut across the existing statutory framework for fees and would risk undermining the funding and coherence of the whole current and future system.
Additionally, making fee provisions that are specific to certain nationalities as part of the Bill would be unfair to all users of the border, immigration and citizenship system, and it could lead the Home Office to discriminating on the basis of a person’s nationality. That clearly goes against our policy, although I accept that part of the rationale for that was to get the new clause into the scope of the Bill.
Stuart C. McDonald
Yes, that is absolutely the case. This does not apply even to every EU national exercising free movement; it applies to EU nationals who have the right to British citizenship through registration. It is a very specific subset, to which hugely different considerations apply; they are not in the same position as folk who have chosen to turn up and apply through naturalisation. They have a right, under an Act of Parliament, to British citizenship.
Kevin Foster
I re-emphasise that having this type of provision in the Bill would cut across and create a new precedent. We would be talking about someone whose right of free movement was removed by the Bill. That would create incoherence, particularly once we have left the European Union, with provisions based on rights from being in the EU—a situation that does not now exist. We have put in protections that are appropriate and proportionate.
New clause 13(2) is designed to prevent the Secretary of State from charging the child of a person who has exercised free moment rights a fee to register as a British citizen, if the child is in receipt of local authority assistance. “Local authority assistance” is too broad a term and could include those who access a range of financial and practical support measures offered by local authorities. For example, a child may receive assistance from a local authority if they attend day-care facilities while they are not yet at school. That is quite different from a child who is looked after and in the care of the local authority by way of a care order made by a court, or a voluntary agreement with the parent to accommodate the child.
It is important to remember that any child, irrespective of nationality, who is looked after by their local authority can apply for limited and indefinite leave to remain without being required to pay application fees, ensuring that no child in local authority care is unable to access leave to remain. Although many will choose to pursue British citizenship, having citizenship, as opposed to an award of indefinite leave to remain, is not essential for any individual to work, live, study or access services in the UK .
Stuart C. McDonald
I urge the Minister not to pursue that line, which was pursued by a previous Prime Minister and Home Secretary. No one would say to anyone in this room, “You don’t really need British citizenship. Why not just settle for indefinite leave to remain?” The Minister is missing the point—I am talking about people who have as much right to British citizenship as anyone in this room. It is not a substitute to say, “Just become a migrant in your own home country and apply for immigration status here.”
Kevin Foster
I was talking about the logic of our fee system and the fact that we have exemptions to do with the status of people who need to access public services. Traditionally, our position on citizenship is that it is not something that people need in order to access services. I re-emphasise the breadth of the provisions in the new clause—I notice that that was not disputed.
New clause 13(3) would remove fees for the children of people who have exercised free movement rights to register as a British citizen where the child or the child’s parent, guardian or carer is unable to afford any associated fees. It raises similar points to subsection (1) in respect of fairness, discrimination and suitable legislative structures already being in place. Subsection (4) would require the Secretary of State to take steps to make persons who have exercised free movement rights aware of their rights to obtain British citizenship under the British Nationality Act 1981.
When explaining the rights that are afforded by settled status obtained via the EU settlement scheme, we make it clear that they may include a right to apply for British citizenship, provided that eligibility requirements are met. Of course, there is no charge for applying to the EU settlement scheme. Information about becoming a British citizen is also available in published guidance on gov.uk, and we are committed to ensuring that information of this nature is fully accessible for all. I hope that reassures the Committee that we are taking steps to make people aware of their rights, and that a statutory obligation to that effect is therefore unnecessary.
Stuart C. McDonald
I am grateful to the Minister for his comprehensive explanation, at least in so far as it related to new clauses 36 and 37. I do not agree with everything he said about the degree of scrutiny that MPs can apply on these matters, but he makes a very detailed case.
On new clause 13, I think that the Minister, probably for the first time, has not got the point that was being made. I challenge him to go back and speak to his officials about what the issue is really about. It is quite a narrow issue, in some respects, but none the less it is profound. It relates to kids, in particular—although it can be adults—who have a right to British citizenship. That is a small subset of EEA and Swiss nationals.
It is slightly bizarre that it is a Scottish National party MP who is having to stand up and champion the cause of British citizenship in this Parliament—I urge some Conservative Members to make this their cause, grab some headlines and win the day. These kids deserve it. They are as entitled to British citizenship as anybody in this room, and it is totally inappropriate for them to be priced out of that. I ask Conservative Members to think again.
I ask the Minister to speak to his officials again. Under his predecessor, I had the privilege of being able to take some kids who had been impacted to discuss the matter, along with some organisations representing them, and I would love to have that opportunity again. I feel very strongly about new clause 13 and wish to press it to a vote.
Question put, That the clause be read a Second time.
Stuart C. McDonald
I beg to move, That the clause be read a Second time.
The Bill, in combination with others that have gone before, removes from some people the right to be in this country, and requires them to apply for rights under the EU settlement scheme. As hon. Members know, I object to that approach, but I acknowledge that, for the vast majority of people, it will thankfully be a fairly straightforward matter and there will be no need for legal advice. As we have seen, the scheme has reached a good number of people so far. We have also seen that these issues can be complicated. It can be complicated for someone to know whether they are required to apply or whether they have the right to be here as a UK citizen or through some form of migration status. For some, proving the right to be here in order to get settled status can be tricky, and advice will be needed on the type of evidence required or whether, for example, an old criminal conviction brings a risk in applying.
In Scotland, some will be able to get advice and assistance funding from the Scottish Legal Aid Board in order to seek some support on these issues, subject to a means test, but it is not the same in England and Wales. We have to learn the lessons of history: restrictions on access to legal aid were a contributing factor to the Windrush scandal. In itself, it would not cost much money to allow some basic legal advice to be handed out to those who need it. I very much hope the Government will consider this proposal seriously and put right the absence of legal aid.
Holly Lynch
We very much support the right to access to justice for all, and legal aid is an essential component of that, so we support new clause 14. Cuts to legal aid have been disastrous for access to justice. Time and time again, we have seen that it is the most vulnerable who suffer. Huge swathes of areas of law were deemed out of scope by the Legal Aid, Sentencing and Punishment of Offenders Act 2012. Most evidence now suggests that there have been few or no cost savings to the Ministry of Justice from taking those areas of law out of scope, especially in relation to early advice.
When those representing themselves try to navigate complex areas of law without representation, cases are often longer and precarious, and thus more costly to the taxpayer. Indeed, the Williams review found that the withdrawal of legal aid contributed significantly to the problems faced by the Windrush victims. We do not want anyone else to be in a similar position when free movement comes to an end. We therefore support new clause 14.
Kevin Foster
I thank hon. Members for their contributions. The legal aid scheme is designed to target legal aid funding at those who need it most. Legal aid is available for the most serious cases to ensure and maintain access to justice while delivering value for money for taxpayers. The Bill itself does not provide a right to enter or remain for EEA citizens, and the new clause would bring issues relating to the end of free movement, such as applications under the EU settlement scheme, into scope for legal aid.
The EU settlement scheme has deliberately been designed to be streamlined and user-friendly. The majority of applicants will be able to apply without the need for advice from a lawyer. However, we recognise that there will be some vulnerable individuals who may need support in using the scheme, and we have put in place safeguards to ensure that the scheme is accessible to all.
The Government have always been clear that publicly funded immigration legal advice is available to some particularly vulnerable individuals. Individuals who are claiming asylum, those identified as potential victims of modern slavery or human trafficking, separated migrant children and victims of domestic violence are eligible for legal aid funding for immigration legal advice, subject to statutory means and merits tests.
Stuart C. McDonald
I am grateful to the Minister for his explanation. By reassuring us how simple the scheme is, which it is for the vast majority of people, he also makes the case that this will not cost a great deal of money. Only a very small number of people will require legal advice, but there will be some significant issues that they will need to work through. This is fundamentally about the rule of law, which the Westminster Parliament has lost sight of in relation to how important legal aid is. For that reason, I will stick to my guns and press the new clause to a vote.
Question put, That the clause be read a Second time.
Stuart C. McDonald
I beg to move, That the clause be read a Second time.
Illegal work was made a crime in its own right in the Immigration Act 2016. Lots of groups and MPs raised concerns at the time about the negative implications that would have, compared with any benefit it might bring. I think it is important always to revisit changes that this Parliament makes and to push the Government to explain what impact they really had.
I look forward to hearing from the Minister about the impact of that legislation. How many prosecutions have there been? What were the results of those prosecutions? What sorts of sentences were handed down? When the Government or law enforcement took that approach—the other side of the coin—what action was taken against those employers who were found to be employing people illegally?
As the Minister will be aware, at the time that legislation was introduced, all sorts of concerns were raised about the fact that it would strengthen the hand of exploitative employers, who would be able to have greater control over undocumented workers, essentially by having the knowledge that these individuals were committing a crime by undertaking that work and making it much less likely that they would even consider, never mind actually report to the authorities, the abuse and exploitation that they were suffering.
The offence applies to any migrant found to be working while they do not have valid legal status granting them leave to be in the UK, or when visa conditions ban them from working, such as in the case of asylum seekers, or if they work hours beyond those permitted by their visa, as may be the case for students. The penalty includes a maximum custodial sentence of six months and a fine at the statutory maximum. It also allows any wages paid to an illegal worker to be seized as the proceeds of crime.
The concerns raised in 2016 were that undocumented migrants in the UK forbidden from working illegally are forced to rely on illegal work, on charity and on the support of friends or family members, which can lead to situations of abuse and dependency, as well as instances of survival sex, for example, and destitution, homelessness and starvation. Often, agents who find work for undocumented migrants also run overcrowded, slum-like accommodation for the workers, keeping them isolated and cheaply accommodated.
Undocumented migrants who find work despite the prohibition are forced to look for work among some of the most unscrupulous and exploitative of employers. They are often underpaid or unpaid, forced to work extremely long hours, denied all workplace health and safety protections and threatened with being reported if they complain. As much of the work can be carried out cash in hand, the state sees none of the tax benefit either.
There are huge concerns here about modern slavery. I am grateful to the Catholic Bishops’ Conference on migration for its briefing, which states:
“Those perpetrating the horrors of modern slavery will seek every chance to take advantage of new migration policies. The government has a responsibility to ensure that proper safeguards are in place… the fear of prosecution currently deters people from escaping abusive employment practices or presenting themselves to the police. One particularly important step towards protecting people from exploitation would therefore be to repeal the offence of illegal working, so that no victim is at risk of being punished.”
Will the Government explain how this measure has helped in any way with what they want to achieve, and what steps they have taken to assess all the negative implications that we have been warning about and to militate against them?
Holly Lynch
We have one or two unanswered questions on how the new clause would work in practice. We want to ensure that we have done all our due diligence before lending it our support. We may well come back to this on Report.
The new clause gives us the opportunity to say to the Minister that we are incredibly concerned that there are people who, when free movement ends—innocent, ordinary, decent, hard-working people—for the whole raft of reasons that we have already been through in the Committee, may find that they have missed the deadline. They have then not only got a precarious migration status, but could, if they continue to wait, find themselves in the criminal justice system and criminalised. We need to address the issue now.
One example that we have mentioned is that which the BMA raised with me. Its doctors, on the frontline of fighting coronavirus, will potentially leave applying to the EU settlement scheme to the last minute for that reason. If they continue to work as a doctor, would they be criminalised if they had not done their due diligence in making sure they have their applications in, but were continuing to work in our NHS? Will the Minister reassure us that nobody will be criminalised and in our criminal justice system who absolutely does not belong there when free movement comes to an end at the end of this year?
Kevin Foster
To respond to my shadow, the hon. Member for Halifax, as we touched on at some length earlier, there would be grounds for reasonable excuse as to why someone had filed a late application. We will set out the criteria; it will not be an exhaustive list, because it would be impossible to come up with an exhaustive list of things that would be reasonable in many individual circumstances.
It is worth noting that the scheme has now been open for more than a year. The first group who started to apply to it were NHS workers, and there has been some very welcome work by NHS trusts and employers to make sure their employees are aware of it. For those very skilled people working in our NHS, it is worth remembering that what we are talking about is using an app on their phone with chip checker technology—it is a relatively simple and appropriate process. Certainly, any enforcement will be proportionate throughout the system, as people would expect.
New clause 15 intends to exclude all EEA citizens from the criminal offence of working illegally created by the Immigration Act 2016, as stated by the hon. Member for Cumbernauld, Kilsyth and Kirkintilloch East. I am grateful to him for the opportunity to debate this important topic. Again, as he would expect me to say, the amendment is at odds with our commitment to introduce a single global migration system. I accept that he wants to pick the issue up in the scope of the Bill, but that is a core reason why the Government believe it is right for us to have a single system.
Under the new system, everyone will be required to obtain the correct immigration status, and we will clearly distinguish between those who are here lawfully and those who are not, regardless of where their passport is from. Working illegally is a key driver of illegal migration and we are determined to tackle it. Illegal working results in businesses that do not play by the rules undercutting legitimate businesses that do. It encourages people to break our immigration laws, leaving people vulnerable to exploitation, and means that they are paid under the legal minimum wage.
The offence of illegal working applies if an individual works in the UK when they are or have reasonable cause to believe that they are disqualified from working because of their immigration status. The new rules will be clear and will set out what is expected of people as well as their entitlement. Any person who wants to work in the UK will need to have the correct status before starting a job.
EEA citizens with EU settlement scheme status will continue to enjoy the right to work and access the same services as they do now. As I have already said, we will continue to encourage applications to the EU settlement scheme before the deadline, and will implement the new points-based system that treats EEA and non-EEA citizens equally.
The new clause would discriminate in favour of EEA citizens, which is not justifiable after we have left the European Union. I appreciate the hon. Gentleman’s principled position in the provisions. I have touched on the provisions that are implemented proportionately, where they are applied. There is enforcement, particularly against employers who seek to exploit people. I hope that, in the light of those points, he will withdraw the clause, because it is not one that the Government can support.
Stuart C. McDonald
I am grateful to hon. Members for discussing the subject, but I do not think we really got into the meat of it. I do not think that only EEA nationals should be exempt from the criminal offence of illegal working; there are good grounds for getting rid of it altogether. I wanted to find out whether the Government have done any analysis about how it has helped in any way and, in contrast, about the unintended consequences, such as making exploitation more serious and more significant. We will perhaps return to some of those issues when we debate other aspects of the hostile environment later. I might write to the Minister to try to press again for answers to some of the questions that I raised at the outset. In the meantime, I beg to ask leave to withdraw the motion.
Clause, by leave, withdrawn.
New Clause 16
Immigration Rules Advisory Committee for Immigration Rules for EEA and Swiss nationals
‘(1) The Secretary of State must establish an Immigration Rules Advisory Committee to consider relevant Immigration Rules.
(2) In this section “relevant Immigration Rules” mean Immigration Rules that apply to persons whose right of free movement is ended by section 1 and schedule 1 of this Act.
(3) The function of the Immigration Rules Advisory Committee shall be to give advice and assistance to the Secretary of State in connection with the discharge of his functions under this Act and in particular in relation to the making of relevant Immigration Rules.
(4) The constitution of the Immigration Rules Advisory Committee shall be set out in regulations.
(5) The Secretary of State shall furnish the Immigration Rules Advisory Committee with such information as the Committee may reasonably require for the proper discharge of its functions.
(6) No relevant Immigration Rules may be made by the Secretary of State, until the Immigration Rules Advisory Committee is established.’—(Stuart C. McDonald.)
This new clause would require an advisory committee to be established in order to provide advice on immigration rules for EEA and Swiss nationals.
Brought up, and read the First time.
The Chair
With this it will be convenient to discuss the following:
New clause 30—Procedures for amending Immigration Rules—
‘(1) The Immigration Act 1971 is amended in accordance with subsection 2.
(2) After section 3(2) insert—
“(2A) Any statement of the rules, or of any changes to the rules, which affect the rights and obligations of persons who will lose their right of freedom of movement under the provisions of the Immigration and Social Security Co-Ordination (EU Withdrawal) Act may not be made or have effect unless the Secretary of State has complied with subsections (2B) to (2F) below.
(2B) If the Secretary of State proposes to make changes to the rules under subsection (2A) above, the Secretary of State must lay before Parliament a document that—
(a) explains the proposal; and
(b) sets it out in the form of a draft order.
(2C) During the period of 60 days beginning with the day on which the document was laid under subsection (2B) (the “60-day period”), the Secretary of State may not lay before Parliament a draft order to give effect to the proposal (with or without modification).
(2D) In preparing a draft order under section (2A) above, the Secretary of State must have regard to any of the following that are made with regard to the draft order during the 60-day period—
(a) any representations; and
(b) any recommendations of a committee of either House of Parliament charged with reporting on the draft order.
(2E) When laying before Parliament a draft order to give effect to the proposal (with or without modifications), the Secretary of State must also lay a document that explains any changes made to the proposal contained in the document under subsection (2B).
(2F) In calculating the 60-day period, no account is to be taken of any time during which Parliament is dissolved or prorogued or during which either House is not adjourned for more than 4 days.”’
This new clause would amend the Immigration Act 1971 to ensure that any changes to the UK’s Immigration Rules which affect EEA or Swiss nationals must be made under the super affirmative procedure.
New clause 31—Powers to make immigration rules on specific topics—
‘(1) Powers to make Immigration Rules in relation to certain persons who have lost free movement rights under section 1 and schedule 1 must be exercised only by the relevant Secretary of State as set out in subsection (2).
(2) For the purposes of (1), the “relevant Secretary of State” is as follows—
(a) if the rules relate to students, or to family members, the Secretary of State for Education,
(b) if the rules relate to investors, workers, or the self-employed, the Secretary of State for Business, Energy and Industrial Strategy.’
Stuart C. McDonald
New clause 16 is about how we make immigration rules. I would like to know how many hon. Members present have ever looked at the immigration rules, at least directly for any considerable period of time, because they would drive anyone round the bend, frankly. I am not looking for raised hands but I make the point because they are vital, but we never really have an opportunity to debate their context in any holistic way or to suggest amendments to them.
Instead, hundreds of amendments to the rules are tabled each year and we barely get a look in. They contain fundamental questions about family, workers, education, business and how we run our economy, yet the Home Office keeps all of those—essentially legislation-making powers—to itself. If we look at immigration rules and immigration statutes, we find that they can be incredibly technical. Hence, we have recently seen the Law Society tasked with the job of trying to simplify them—work that will be incredibly challenging but is nevertheless essential. It is for these reasons that I have proposed new clauses 16 and 30, to change the way the rule making is done in this country, to help MPs to understand immigration law and the changes that have been made and to give them a say in what those rules are.
Last week we heard Jill Rutter from British Future refer to the work done by the Social Security Advisory Committee in providing analysis that aids MPs’ understanding of changes that have been made to social security law and flagging up things that perhaps require greater scrutiny and debate. She supported the idea of something similar operating in the field of immigration. That is why I have tabled new clause 16, as I think I did last year as well. In a similar way, a committee would analyse what the Government are doing and their proposals for changing immigration rules; it would flag up any concerns it might have and allow MPs to decide what further steps were required by way of scrutiny or challenging the Government on the proposals.
Kevin Foster
I am once again grateful to the hon. Member for Cumbernauld, Kilsyth and Kirkintilloch East, and to others, for providing a further opportunity to discuss parliamentary scrutiny of the immigration rules and the powers to make them. Parliamentary scrutiny is an important issue, and one that I am aware members of the Committee are rightly very interested in. I will therefore take each new clause in turn.
I will first address new clause 31—I think I can respond pretty swiftly to this one. The UK Government work on the basis of collective responsibility. All policies are collectively agreed and reflect the views of all parts of Government. I may be the Minister for Future Borders and Immigration, and I have the good fortune to speak for the Government on matters connected with our new immigration arrangements, but I can assure the Committee that the policies I put forward are the policies of the entire Government, which were endorsed in December’s general election by the British people. No other Minister standing in this spot would advocate any different policies.
The notion of collective agreement and collective responsibility has long been a feature of the way this country is governed, which is why legislation confers powers on “the Secretary of State” generically. Incidentally, this approach also has the benefit of future-proofing our legislation in the event of machinery of Government changes.
I have the utmost respect for my right hon. Friends the Secretaries of State for Education and for Business, Energy and Industrial Strategy; both are doing excellent work in their posts and we are lucky to have them. But let me be very clear: were they to make immigration rules, they would be no different from those that my right hon. Friend the Home Secretary will be making, because this is a single united Government with a clear policy on these matters.
Our policies were put before and endorsed by the electorate, more detail was set out in a policy statement endorsed by the entire Government, and they represent the settled view of the Government as a whole. New clause 31 would therefore add nothing to the Bill. Having heard the explanation of how the Government system works, I hope the hon. Member for Cumbernauld, Kilsyth and Kirkintilloch East will withdraw it.
New clause 16 would require the Home Secretary to establish an immigration rules advisory committee to provide advice and assistance on any immigration rules relating to EEA citizens once free movement to the UK has ended as a result of this Bill. I have said previously that our new points-based system will be set out in the immigration rules. Those rules will be subject to parliamentary scrutiny in the usual way. The new clause seeks to add an additional layer of scrutiny, and will prevent the Home Secretary from making any immigration rules before an advisory committee is established by regulation. There is no justification for establishing a statutory advisory body to advise specifically on the rights of EEA citizens, who will be treated as other EEA citizens under the future immigration system.
Mr Goodwill
Does my hon. Friend agree that the Migration Advisory Committee carries out much of the work already? New clause 32 is specifically covered by the MAC.
Kevin Foster
I thank my right hon. Friend for his intervention. I will come on to new clause 32, which is about an annual report on the labour market, in a moment. We are freeing up the MAC to consider matters of interest to it and to provide recommendations on policies, although I expect it will be more nuanced when we come to reports on the labour market overall. That is more to do with the Department for Work and Pensions. We want a coherent strategy where migration is a part of that. We did not want to set it out purely in relation to EEA nationals.
Kate Green (Stretford and Urmston) (Lab)
The difference between the MAC, which, as the Minister rightly says, is interested in labour market trends and developments, and the Social Security Advisory Committee, which the hon. Member for Cumbernauld, Kilsyth and Kirkintilloch East set up as an analogy for the Minister to consider, is that the SSAC looks specifically at the implementation of secondary legislation and advises on new regulations that the Government might introduce. Given the extent of immigration policy introduced in immigration rules, I would suggest that the MAC is not actually set up, and is not even likely to be set up in future, to provide advice to the House on those matters.
Kevin Foster
The hon. Lady makes a not unreasonable point. The MAC gives advice on general policies on immigration. For example, it came up with what occupations should be on the shortage occupation list. It does not necessarily draft the legislation. However, the core of what we are driving at is there. I will continue with my speech because there have been significant changes in relation to simplification since an identical Bill was considered in the previous Parliament. Fundamentally, creating a statutory advisory body would simply delay the Government from introducing new consolidated and simplified rules by 1 January 2021, which could cause considerable confusion and ambiguity about which rules apply to EEA citizens once free movement ends.
In any event, the new clause is unnecessary. The Law Commission, in its consultation paper on simplification of the immigration rules, published in January 2019, asked whether an informal consultation or review of the drafting of immigration rules would help to reduce complexity. In its final report, published in January 2020, the Law Commission recommended that the Home Office should convene at regular intervals a committee to review the drafting of the rules in line with the principles recommended by the Law Commission. That is the more nuanced point that the hon. Member for Stretford and Urmston referred to. On 25 March the Government published our response to the Law Commission report and recommendations, and we accepted that recommendation. We included in our response the terms of reference for and membership of the simplification of the rules review committee. To be clear, this covers the whole ambit of the rules, not just those as they relate to EEA nationals.
The committee is, as recommended by the Law Commission, made up of Home Office civil servants, immigration practitioners and organisations representative of non-expert users of the rules, including those representing vulnerable applicants such as children. The review committee meets monthly to advise on the Home Office’s proposals to draft simpler rules and accompanying guidance and how they can be made more accessible online.
I hope that, as we have already established a review committee and its terms of reference and membership are transparent, that will give the hon. Member for Cumbernauld, Kilsyth and Kirkintilloch East the confidence to withdraw new clause 16.
New clause 30 seeks to introduce the super-affirmative procedure for immigration rules. Typically, that procedure is used only for deregulatory orders that amend or repeal primary legislation, such as legislative reform orders or public bodies orders, or remedial orders under the Human Rights Act. In those circumstances, it is right that the highest level of scrutiny should be applied, but it is not appropriate to apply the same procedure in respect of changes to immigration rules, which obviously are not, and cannot amend, primary legislation.
Under the current, well-established procedure, the Government are able to update the immigration rules in a responsive way, to ensure that we have an immigration system that meets the UK’s needs, commands the confidence of the public and reflects the wider economic, social and political context in the UK at any time. Requiring a minimum 60-day standstill period—that would be a minimum, because if, for example, changes were laid in late June, the period would not expire until late October—would severely hamper our ability to make timely and effective changes to the rules to respond to emerging situations.
Mr Richard Holden (North West Durham) (Con)
In evidence at the start of Committee proceedings, we heard from Mr McTague from the Federation of Small Businesses, who picked up this point. He said:
“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…we had to go through some sort of legislative process”.––[Official Report, Immigration and Social Security Co-ordination (EU Withdrawal) Public Bill Committee, 9 June 2020; c. 14, Q28.]
That is exactly the point that we are trying to get at. Changes are much better if they are in the hands of the Home Secretary, who can then address Parliament on them, rather than having to go through statutory changes like this.
Kevin Foster
I thank my hon. Friend for reminding us of the evidence that was given. The core of the matter is that our immigration rules need to remain flexible to respond to emerging situations. For example, if the conditions around visas were in primary legislation, we would have to be putting through Acts of Parliament to alter and extend visas in relation to the current covid-19 situation, which none of us would feel was a sensible way of handling that type of thing. In addition, this process has been established for a very long time. Parliament, rightly, can oversee the immigration rules, but they can be flexible and adapt. To be clear, putting forward, effectively, an immigration rules change could not, for example, alter the provisions that we have on Irish citizens in this Bill and in the primary legislation.
Kate Green
I just want to make sure that I have understood correctly—I may not have—what the Minister is saying and the provisions of the Bill. I understood him to say that the super-affirmative procedure is appropriate only in circumstances that include amending primary legislation, but is it not the case that the provisions of this Bill give the Government, in some circumstances, the opportunity to do that?
Kevin Foster
They do, subject to the affirmative procedure, but that is—as we discussed under previous clauses and particularly in the clause 4 debate—for specified purposes. The measure does not just give us an unending power.
We could not, for example, change our international obligations and some other areas via this method, the use of which relates to the narrower areas of the Bill. It is not a carte blanche to change all primary law that affects immigration law, but applies where it is consequential to the purposes of the Bill.
Stuart C. McDonald
I am grateful to the Minister for his response. New clause 31 was simply an opportunity to flag up the idea that we perhaps need to ensure that we look at immigration policy with a slightly broader perspective than simple numbers. The Minister protests perhaps slightly too much about collective responsibility and the idea that other Departments would have come to the same decisions as the Home Office in relation to certain policies, but I will leave that there.
I anticipated in my remarks about new clause 30 that the Minister would speak about the need for flexibility and the ability to act quickly. I am not calling for immigration rules in Acts of Parliament or anything like that; I am just saying that anyone who follows this area of policy closely over time knows that, in essence, Parliament has no realistic role in it whatsoever, and that has to change. It will not be changed by the Bill, but it is something that we should think about in the longer term.
On new clause 16, I absolutely agree with the Minister and totally welcome the ongoing work to simplify the immigration rules; the proof will be in the pudding. That is not an easy task, and I do not envy the folk who are undertaking it, but I wish them the very best of luck. However, new clause 16 is not just about simplifying what is already there, but about understanding the changes that the Government propose as we go along and providing detailed advice to help us in our scrutiny role. As some witnesses said last week, it is every bit as appropriate to do that in this sphere of policy as it is with social security, between which pretty good parallels can be drawn. I insist on pressing new clause 16 to a vote.
Question put, That the clause be read a Second time.
Holly Lynch
I beg to move, That the clause be read a Second time.
The new clause stands in my name and those of the shadow Home Secretary and my Committee colleagues. The new clause offers a sensible method to help to safeguard the rights of all EEA and Swiss nationals who are registered through the European Union settlement scheme by providing them with physical proof of that registration. We have already discussed some of these issues under new clause 25.
In the largest survey of EU citizens’ experiences of the EUSS, which was carried out by the3million, 89% expressed unhappiness about the lack of physical proof of their status. Simple physical proof would provide citizens with the type of reassurance that is offered only by something that can be held in the hand. Although in principle we largely support the aspiration to move toward a much more digital immigration system, we have already pointed out to the Committee time and again that, as the hostile environment persists, in the shameful shadow of the Windrush scandal, confidence in the system is at an all-time low.
The Home Office works through banks and landlords, and across Departments, actively to query a citizen’s immigration status. To have physical paperwork to hand, in order to put to bed any doubts about a person’s status quickly and confidently, would be a welcome addition to an e-visa.
There are also inherent IT risks when relying on purely digital proof for immigration status. The truth is that the Government cannot completely rule out the possibility of an irretrievable data loss or, even worse, the hacking of a data system. It is less than two years since the so-called WannaCry cyber-attack caused havoc for the IT systems of the NHS, locking users out of personal computers and resulting in 19,000 cancelled appointments. It transpired that the systems that the NHS used included Windows XP, which at the time was already a 17 year-old operating system and so was vulnerable to such interference. It does not bear thinking about, but in a nightmare scenario where such hacking or corruption affected the Home Office, a potential loss of data, or even the inability to access the data for a period of time, could have devastating consequences for those at the mercy of the hostile environment.
As stated by Luke Piper on behalf of the3million in last week’s evidence session, to trial a new digital-only scheme on over 3 million people is quite a gamble, and currently no other group in the UK is managed in this way. We share the concerns of the House of Lords European Union Committee, which were mentioned by Luke Piper in his evidence to this Committee. He said:
“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.”––[Official Report, Immigration and Social Security Co-ordination Public Bill Committee, 9 June 2020; c. 61.]
There are day-to-day practical complications that will be inflicted upon those in the EUSS who do not have physical proof of their status. For example, the Residential Landlords Association has repeatedly called for some form of physical proof to assist its members in both adhering to the law and avoiding discriminatory practices.
The Joint Council for the Welfare of Immigrants carried out research on the right-to-rent scheme in 2017. Out of 150 emails from migrants requesting that landlords check their identity online, 85% received no response. Only 12% of inquiries received a response that might invite a follow-up, such as a phone call or a viewing. Only three responses explicitly stated that the landlord was willing to conduct an online check. A migrant with documentation received a response rate of roughly 50%. Although there are still indications that renting migrants face unacceptable barriers, that is at least a marked improvement on the previous situation.
The fear is that the lack of physical proof will also act as an impediment for EU citizens applying for jobs. Millions of people work in the gig economy, which is characterised by short-term contracts and freelance work. We have already referred to the work of the Institute for Public Policy Research, which recently used data from the labour force survey in a report that found migrants are more likely to be working in industries or sectors, such as accommodation and food services, that have around 9% of EU workers. Facing competition from British citizens, who can prove their right to work by showing a passport, should that be required, and from non-EEA citizens, who can prove their right to work by showing their physical residence card, EU citizens have to go through the complicated hassle of a nine-step online process and then ask their potential employer to go through a 10-step process. It is inevitable that many employers will not have the desire or the time to complete such an arduous process, and as a result the employment prospects of those registered in the EUSS could potentially suffer.
Those are just a few examples of how a lack of physical proof could affect those who have pre-settled or settled status through the EUSS but exclusively digital confirmation of that status. The inconveniences and delay that could result threaten to permeate through daily life for millions of people, yet that could so easily be remedied by the Government with a degree of physical proof.
I want to take the Minister back to something he said during last week’s evidence session, when he put a question to the Children’s Society on the issue of granting automatic status to children in care and care leavers, which we will come to later. He said to Lucy Leon, the immigration policy and practice adviser for the Children’s Society:
“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?”
As it took several attempts for the question to be heard, due to the terrible sound quality, the Minister, in his second attempt, repeated:
“If they had to evidence their status many years later, how would they do it? How would they be able to define their status…?”––[Official Report, Immigration and Social Security Co-ordination (EU Withdrawal) Public Bill Committee, 9 June 2020; cs. 64-65.]
The Minister put a very good question. In the scenario that he described, he said that if status was granted by the Home Office, how would it then be evidence? We must acknowledge that the granting of a status only solves half the problem. The ability to prove that status is the other half of the problem.
On this issue, I am inclined to agree entirely with the Minister. I politely remind him that he proposes a problem, but he is the architect of the solution to this issue. He can overcome our own reservations by granting the physical proof to his own satisfaction, however he sees fit to do so. The Government should ensure that their systems automatically issue physical proof on granting status to someone, and they should allow the millions of people on the EUSS the certainty and convenience of physical proof of status.
Kevin Foster
It is a pleasure to talk about the new clause and to hear that my shadow agrees with me on some issues, but we slightly disagree on how best to evidence things. I accept that the new clause is well intentioned, but it may help if I explain first that we email everyone granted status under the scheme a PDF document, which they can print and retain for their own records as confirmation of their status and for future reference, as they may wish.
Like many other countries, we are moving away from issuing physical documents to be used as evidence of a person’s immigration status and their entitlement to work and access benefits and services, and towards a system that enables direct checks through online sharing of status by the individual or via system-to-system checks. Our border and immigration system will become digital by default for all migrants, and we intend over time to replace physical and paper-based products with secure online access to immigration status information, which the migrant can share with prospective employers, landlords and service providers.
New clause 19 is unnecessary, as we are already legally required to issue everyone granted status under the EU settlement scheme with a formal written notification of their immigration status in the United Kingdom. The notification also includes information about how they can access and share their immigration status information online, and about where they can find help to do so if needed. However, it is important that we do not return to relying on insecure paper documents, which can be lost, damaged or stolen, to evidence immigration status and entitlements.
The use of digital technology is now a well-established mechanism that people use when banking and shopping. Employers, landlords and service providers are likely to be concerned by any decision to issue what is specified as an insecure physical document, such as a paper certificate. They would also see it as an undesirable retrograde step that places additional administrative burdens on them to ensure that their staff are aware of the characteristics of a certificate, which might be some years old, and what it means. It would also be very susceptible to forgery and being tampered with, which could actually make it more difficult for EEA citizens, employers and others to determine genuine entitlement. We cannot allow that to happen.
Mr Goodwill
Does the Minister agree that some of the identity documents issued in places such as Greece and Italy are very insecure because they do not contain biometric data? That is an example of why a paper document would not be secure.
Kevin Foster
My right hon. Friend hits the nail on the head, and that is particularly true in an era of modern computing, scanning and high-quality printers available at home. We used to rely on paper documents as standard across society—for example, driving licences. To be fair, the previous Labour Administration moved away from having a paper driving licence that nowadays could probably be easily printed on most printers at home, and towards a plastic version. As we now move on, most people do checks digitally—for example, how many of us have a physical MOT certificate? It is done via an online system, which allows people to check easily. It is even possible to check online whether a car has an MOT before buying it, rather than having to look for a paper certificate.
We all know about the issues there used to be with paper MOT certificates, with blank books being quite valuable. That is why we have started to move towards digital status, which is more secure. It is, of course, retained by the Home Office for many years and allows that access. Again, we touch on some of the lessons learned from the Windrush review. Part of this is about having up-to-date and easier ways to access information, rather than relying on people to recognise documents that could have been issued some decades before. It is better that we have secure digital status that can be easily shared as technology advances and people move forward. That is right, but we are still already obliged to send a PDF confirmation so that if someone wants to print something out and keep it for their records, they can.
Holly Lynch
I just stress the point that we are not talking about an either/or approach to digital confirmation and physical proof. I am open to the taking of physical proof, and whatever format the Minister is most comfortable with. However, we are not talking about a system where someone relies exclusively on physical proof. Something will be issued in addition to digital status. Does the Minister accept that that would address the anxieties felt by the 3 million and more?
Kevin Foster
Again, I appreciate the points that are being made, but a secure, easy-to-share digital status does what it says on the tin. More and more countries are heading towards that, and we have seen it in other areas of life. To be clear, the new clause specifies a paper certificate as the preferred means. I do not think that something like that adds to something that is easily shareable—and easy to update, in relation to changing passport, or in other areas. That is why we have taken this approach and why we are clear that it is what we want migration status to move towards more generally. I do not think that printing out paper certificates, and having that as an either/or, is the best place to be headed, in trying to prove status. It is better that there should be a clear process and that landlords and employers should know the process that they need to engage with when employing EEA citizens beyond the end of the transition period.
As a transition measure, employers, landlords and public service providers will continue to be able to accept the passports and national identity cards of EEA citizens until 30 June 2021—the same day as the deadline for applying to the EU settlement scheme. After that date, EEA citizens with status under the EU settlement scheme will need to share their immigration status online to prove their rights and entitlements in the UK. Alongside that, in future, when an individual accesses public services such as benefits or healthcare, the Home Office will be able to confirm their status to the service provider automatically through system-to-system checks, at the point at which the person seeks to access the service. Their non-EEA family members will also continue to be able to use their biometric residence card until we have completed the roll-out of digital services online.
Eventually, all migrants to the UK—not just from the EEA but from the rest of the world—will have an immigration status that can be accessed and shared online. Having to rely on a document to prove immigration status will be seen as old-fashioned and vulnerable to abuse. By contrast, new clause 19 would impede our ability to encourage migrants to access and share their immigration status securely online, creating confidence that it is the appropriate process, and giving confidence to those who engage with it. I hope that, with the assurances that I have given, the hon. Lady will feel able to withdraw the new clause.
Holly Lynch
I am grateful to the Minister for his explanation of why he rejects the new clause. I stress again the vulnerability that people feel in the shadow of Windrush, when they do not have something they can physically hold in their hand, to give an assurance of their immigration status. There is great support for the physical proof approach in the House of Lords and I suspect that we have not necessarily seen the end of the issue, but I do not want to divide the Committee at this time and I beg to ask leave to withdraw the motion.
Clause, by leave, withdrawn.
New Clause 21
Annual review: Impact on health care and social care sector
‘(1) The Secretary of State must commission an annual report from the Migration Advisory Committee on the impact of the provisions of this Act on the health care and social care sector in the UK.
(2) In undertaking the evaluation, the Secretary of State must consult—
(a) the relevant Scottish Ministers;
(b) the relevant Welsh Ministers; and
(c) the relevant Northern Ireland Ministers
(3) The report must be laid before each House of Parliament as soon as possible after it has been completed.
(4) A Minister of the Crown must, not later than three months after the report has been laid before Parliament, make a motion in the House of Commons in relation to the report.’—(Holly Lynch.)
Brought up, and read the First time.
The Chair
With this it will be convenient to discuss the following:
New clause 49—Impact assessment on the social care workforce—
‘(1) No Minister of the Crown may appoint a day for the commencement of any provision of this Act until the condition in subsection (2) is met.
(2) This condition is that a Minister of the Crown has published and laid before both Houses of Parliament an assessment of the impact of the Act on recruitment of EU citizens, EEA nationals, and Swiss citizens working to the social care sector.’
This new clause makes the coming into force of the Act conditional on the production of an impact assessment of the changes on the social care workforce.
New clause 61—Duty to commission an independent evaluation: health and social care sectors—
‘(1) The Secretary of State shall commission an independent evaluation of the matters under subsection (5) and shall lay the report of the evaluation before each House of Parliament.
(2) The Secretary of State must appoint an independent person to undertake the evaluation (“the independent evaluator”).
(3) In this section, “independent person” means a person who is independent of Her Majesty’s Government.
(4) No person may be appointed under subsection (2) unless their appointment has been consented to by—
(a) the relevant Scottish Ministers;
(b) the relevant Welsh Ministers; and
(c) the relevant Northern Ireland Ministers.
(5) The evaluation under subsection (1) shall consider an assessment of the effects of this Act on—
(a) the health and social care workforce;
(b) the efficiency and effectiveness of the health and social care sectors;
(c) the adequacy of public funding for the health and social care sectors; and
(d) such other relevant matters as the independent evaluator sees fit.
(6) In undertaking the evaluation, the independent evaluator must consult—
(a) the Secretary of State;
(b) the relevant Scottish Ministers;
(c) the relevant Welsh Ministers;
(d) the relevant Northern Ireland Ministers;
(e) providers of health and social care services;
(f) persons requiring health and social care services;
(g) representatives of persons requiring health and social care services; and
(h) such other relevant persons as the independent evaluator sees fit.
(7) The independent evaluator must prepare a report on the evaluation for the Secretary of State.
(8) The Secretary of State must lay that report before Parliament no later than one year after this Act is passed.
(9) A Minister of the Crown must, not later than six months after the report has been laid before Parliament, make arrangements for—
(a) a motion relating to the report to be debated and voted upon by the House of Commons; and
(b) a motion relating to the report to be debated and voted upon by the House of Lords.’
This new clause would require an independent evaluation of the impact of the Act upon the health and social care sectors across the UK to be produced and laid before Parliament. It would require that the devolved nations are consulted as well as other interested parties.
Holly Lynch
The new clause would require the Government to commission the Migration Advisory Committee to produce a report on the impact on the health and social care sector of ending free movement.
I very much welcome some of the new developments that the Minister outlined earlier, to do with the changes in the way that the Migration Advisory Committee will operate. The group includes a number of new clauses, and we very much recognise the merits of all of them. In essence, they all plead with the Government fully to think through the implications of putting this hard stop on free movement in place without the systemic reforms to health and social care that would be required to address the workforce issues in those co-dependent sectors.
At the evidence session last week, we heard some pretty damning evidence from witnesses, even though, interestingly, none of them were there explicitly to represent the health or care sectors. Martin McTague of the Federation of Small Businesses told the Committee that the FSB felt that the £25,600 minimum income threshold
“should be lower, because there are quite a few jobs, especially in the care sector, that pay less than £25,600.”
He went on:
“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.”––[Official Report, Immigration and Social Security Co-ordination (EU Withdrawal) Public Bill Committee, 9 June 2020; c. 6, Q5.]
In response to a follow-up question from my hon. Friend the Member for Kingston upon Hull North, Martin McTague said:
“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.”––[Official Report, Immigration and Social Security Co-ordination (EU Withdrawal) Public Bill Committee, 9 June 2020; c. 11, Q16.]
We can all agree that this Bill represents a major change in immigration.
Brian Bell of the Migration Advisory Committee made a number of scathing points, which we should all reflect on. He said that
“immigration has historically been used as an excuse to not deal with the problems of the social care sector.”––[Official Report, Immigration and Social Security Co-ordination (EU Withdrawal) Public Bill Committee, 9 June 2020; c. 21, Q44.]
He is right. The problem is, when we suddenly turn off freedom of movement at the end of December and the Government are not able to deliver the radical reforms required in that timeframe, what happens to social care?
I will answer that. Unless we have a significant breakthrough with a vaccine, care homes and the care sector will still be battling the coronavirus. If we do not do our due diligence on this, by adopting the new clause, the Bill will be set recklessly to undermine social care at a time when it can least afford it.
A MAC report is necessary, and would give the Government an opportunity to develop a coherent strategy by conducting the exercise annually for the health and care workforce. That could inform both the domestic skills agenda and our immigration policy, allowing us to create fast tracks within immigration based on our needs at the time. Without that, the NHS will struggle to function. According to the British Medical Association, 29% of doctors in the NHS are from overseas. Freedom of movement has greatly facilitated that, as for years EEA staff have benefited from the flexibility it grants, allowing them to work in the UK and EEA simultaneously.
We have discussed in earlier stages of the Committee the potential introduction of visas and the costs attached to the changes brought about by the Bill. That might act as a major disincentive against attracting the best talent to the NHS. As always, there should be a clear national commitment to training future healthcare workers. Nevertheless, it is hard to imagine that the domestic workforce alone will be able to deliver. For a long time, the workforce has been supplemented with EEA workers.
The NHS reported nearly 90,000 job vacancies between October and December 2019. That has already led to rota gaps across the medical profession, and to well-founded concerns about the ability to staff services adequately. It can take up to 10 years to train a doctor. It is unrealistic to believe that a domestic push will address that vacancy shortage or likely subsequent shortages due to the UK’s decision to leave the EU and free movement.
Domestic recruitment drives also have barriers to overcome. The Royal College of Nursing has reported that the Government’s much publicised increase of 50,000 nurses consists of 12,000 more international nurses, 15,000 student nurses and another 15,000 retained nurses who had previously left the profession. In reality, therefore, only about 27,000 nursing vacancies have been filled, and that fails to address adequately the 40,000 nursing vacancies reported in the NHS in November 2019.
In the evidence session, Brian Bell, interim chair of the MAC, stated that occupational shortages were
“a failure of the British education system”.––[Official Report, Immigration and Social Security Co-ordination (EU Withdrawal) Public Bill Committee, 9 June 2020; c. 24, Q49.]
If the Government seek to prioritise domestic healthcare recruitment over immigration, some pretty urgent steps must be taken to address that.
The threat of ending free movement for the NHS is incredibly concerning. The threat of ending free movement for our social care sector is existential. The proposal to extend the tier 2 visa system to EEA nationals would sever recruitment and compound gaping occupational shortages.
The Institute for Public Policy Research modelled the impact on EEA nationals currently living in the UK and working in social care, and found that 79% of EEA employees—about four in five—working full-time in social care would have been ineligible to work in the UK under the skills and salary thresholds proposed by the MAC. Unison reports that there are currently 110,000 vacancies in social care, and while I suspect the Minister will tell me that his aspiration is to fill those solely through domestic recruitment, I wonder what assurances he can give us that that is possible in the timeframes required.
It was encouraging to hear the MAC report that senior care workers would be eligible to be included in future shortage occupation lists, yet we fear that deterring the recruitment of care assistants and more junior care workers from overseas may lead to a further increase in job vacancies in the care sector. We have all heard the warnings from Brian Bell that migrant workers cannot continue to act as a sticking plaster, working their socks off on low pay to mask the systemic problems in social care, but it is clear that we will be exacerbating the workforce issues impacting on the quality and availability of care unless the Government undertake a full and regular review. I urge the Government to adopt new clause 21 in order to fully understand the ways in which the new immigration system will affect patient care across all health and social care settings.
Brendan O'Hara (Argyll and Bute) (SNP)
As always, it is a pleasure to serve under your chairmanship, Mr Stringer. I will speak to new clause 61, which seeks an independent evaluation of the specific impact of the Bill on the health and social care sectors across the United Kingdom. This independent evaluation would follow from consultation between the Secretary of State for Health and Social Care, the relevant Ministers in the Scottish and Welsh Governments, the relevant Northern Ireland Ministers, service providers, those requiring health and social care services, and others. The new clause would require the Secretary of State to lay a copy of that report before both Houses of Parliament
“no later than one year after this Act is passed”,
and would require a Minister to make arrangements
“no later than six months after the report has been laid before Parliament”
for it to be debated and voted on in Parliament.
The new clause has gathered support from service users, third-sector organisations, trade unions and charities from every part of the UK, among them the Scottish and Northern Irish councils for voluntary organisations, Disability Wales, Unison, Camphill, Scottish Care, and the Welsh and Northern Irish branches of the British Association of Social Workers. I think the reason why they and many others have supported this independent assessment is that, as people who work on the frontline of health and social care every day, they are extremely worried that the Bill, which will end freedom of movement and introduce a points-based immigration system, will adversely affect hundreds of thousands of their clients: disabled people, children and young people, older people, unpaid carers and those with long-term health conditions—those who rely most on the health and social care services to look after them every day.
There is no doubt that the current coronavirus pandemic has given us all the opportunity to see just how precious our national health service and social care sector are. The NHS has risen to the challenge magnificently, as has everyone who works in it, and we are all hugely indebted to them. It has also reinforced just how lucky we are to have our national health service—should that have needed reinforcing—and we must do everything we can to protect it, so that future generations can have what we currently enjoy. We cannot afford to take chances with the future of our NHS or our social care services, and I believe that anyone who took chances with them would never be forgiven.
That is why so many in the health and social care sector are deeply concerned about what is contained in the Bill: they recognise that there is already a crisis in social care across the United Kingdom. On top of the seemingly relentless pressure on funding, we have an ageing population with increasingly complex care needs. The health and social care sector is battling every day to find and keep the workforce it requires, yet this Government have cut off a source of labour, with no clear plan as to what will replace it.
At the end of September 2019, NHS England reported having more than 120,000 unfilled posts—an increase of 22,000 on the previous year. Both the Care Inspectorate and the Scottish Social Services Council have found that 40% of social care organisations have unfilled vacancies going back over a year.
Kevin Foster
I have great respect for the hon. Member for Argyll and Bute, but I think people outside the House listening to the debate will wonder whether he has looked at today’s worrying figures on the employment market and the economic impact of covid-19. He asks where people might be found, but a significant number of people will be looking for new employment.
I welcome the opportunity to put on the record again the fact that the Government recognise the vital nature of the health and social care sector to the United Kingdom. I recognise that, in their view, hon. Members tabled the new clauses to protect a key sector. I assure members of the Committee that health and social care will be at the heart of the UK’s new points-based immigration system. The new skilled worker route will be open to a broader range of roles than the current tier 2 general route, following expansion of the skills threshold.
Under the current immigration system, only those coming to do graduate-level jobs are able to come to the UK under tier 2. In the future, our points-based skilled worker route will encompass jobs requiring school leaver qualifications. That means that all migrants—not just those from within the EU or EEA—will be able to apply for jobs meeting the skills threshold, including, as has been mentioned, senior care workers, giving a global reach to recruitment in the sector.
The general salary threshold will be set at £25,600, or the appropriate rate for the job that the person is coming to the UK to undertake. For a number of roles in health and social care, the rate will reflect the current national pay scales. We are also removing the cap and resident labour market test to make it quicker and easier to recruit workers from overseas where necessary. That will benefit all migrant workers and their employers, including those in the health and social care sector.
As with all immigration routes, we will continue to keep the points-based system under review. These changes are the first phase, and we will continue to develop and refine the points-based system based on experience.
Brendan O'Hara
On a point of clarity, did the Minister say that there will be sufficient capacity in the labour market to move the people losing their jobs as a result of coronavirus into the health and social care sector? Was that his argument? Does he recognise that there are currently 122,000 vacancies in England alone, and that there are projected to be another 320,000 over the next 10 years due to retirement? Does he really think that that will be made up by people losing their jobs?
Kevin Foster
Many people will be surprised to hear the hon. Gentleman suggest that one of the issues that the UK is facing at the moment is a shortage of labour. Sadly, we are seeing the impact of covid, and we know that health and social care will play a key part in providing job opportunities for those who need new employment. I am seeing that in my constituency. Many people would be surprised if there were Members in this building who did not think we should prioritise getting people who have faced the impact of the economic change into new skills and employment. That should not be a controversial point. I suspect that many of his constituents would be rather surprised if that is the point that he wished to make.
Brendan O'Hara
I am trying to stick to the Bill, but is the Minister saying to the country and people who are losing their jobs that, contrary to what the Prime Minister and the Chancellor have been saying, those jobs are not coming back, and they had better go find something else? The message has been that this is a temporary blip, we will recover from it, and the jobs will be coming back.
Kevin Foster
Thankfully, we will see many jobs come back. The Chancellor himself said that it will be difficult to save every role, and we can see that some of the changes in our economy, particularly in the retail sector, have been sped up. I am sorry that the SNP is looking to put its political philosophy ahead of the practical situation. I do not think it is controversial to say that, in Scotland, where there are vacancies, we should be trying to make sure Scottish-based workers are going back to work. I think the SNP will find it very interesting when it meets the electorate next May and explains why that was not its priority.
Holly Lynch
Does the Minister not accept the example that we have just been through? The Government, having recognised the labour shortage in agriculture, made a co-ordinated attempt to redeploy people who are currently out of work into the agriculture sector, but it proved incredibly difficult and the numbers have not transpired in reality. If he is saying that we can do something similar for social care, we would be keen to see the plan. What is his plan if we cannot redirect those people into social care in the timeframe that we are talking about?
Kevin Foster
There is a slight difference between talking about temporary roles in seasonal agriculture and carers, which is not a seasonal job. I represent a constituency with plenty of seasonal roles. It would be odd to start describing care as a seasonal one; it is not, for obvious reasons. People’s care needs do not vary by the season in the way the agricultural sector’s needs do in terms of picking fruit and veg.
Certainly, there is a need to make sure that we have the appropriate structure. Again, I think that people outside this room would be stunned that Opposition Members do not think that, at the moment, we should prioritise getting UK workers back to work. That might explain why, in December, people did not feel that those were the parties they wished to trust with being in government.
Moving on, our new firmer, fairer and swifter immigration system will have benefits for all sectors of the economy, but we recognise the special role that the NHS and those connected with it have in our society, which the events of the last few months have demonstrated clearly. That is why, in line with our election manifesto, the Government are introducing a healthcare visa, which will provide eligible health and social care workers with fast-track entry, the support of a dedicated team in UK Visas and Immigration and reduced visa fees.
As I said earlier, we are looking to exempt all those working in health and social care from paying the immigration health surcharge. We are also investing in social care. For example, in response to the coronavirus crisis, we have announced £2.9 billion to help local authorities respond to pressures in key services, such as adult social care, and to enhance the NHS discharge service, which allows patients to return home safely. No one should doubt our support for that critical sector of our society.
The hon. Member for Halifax talked about damning evidence, so it is worth remembering the evidence that the chair of the Migration Advisory Committee, Professor Brian Bell, gave to the Committee on 9 June. He said:
“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”.––[Official Report, Immigration and Social Security Co-ordination (EU Withdrawal) Public Bill Committee, 9 June 2020; c. 22, Q44.]
On new clause 21, the MAC is an independent non-departmental public body that advises the Government on immigration matters. It has a UK-wide remit and works across Government to provide transparent, independent, evidence-based advice. It currently undertakes work based on commissions from the Government; the Government determine the matters that they believe require consideration and ask it to consider and advise. As we have touched on, the Government are committed to expanding that role. This will be the first year that the MAC has produced an annual report, which is an important development to increase transparency and provide more regular evidence on issues relating to immigration.
In future, in addition to specific commissions from the Government, the MAC will be able to undertake other work that it considers necessary, including regular reporting on migration matters. I therefore cannot support a clause that requires it to look annually at a specific sector. As hon. Members will be aware, its reviews are thorough, and it takes time to seek views and analyse a broad range of evidence from across the UK. That means that the reports often take many months to complete, and we must be mindful of its finite resource and time. Requiring it to undertake an annual review on health and social care may prevent it from undertaking reviews on other issues where there may be a more pressing need, or may duplicate work that it plans to do.
I am also unable to support new clause 49, which would require the Government to consider the impact of the Bill on EEA citizens, but which ignores the new points-based system that we will implement at the beginning of January 2021. The Government have already published an impact assessment of the points-based immigration system, which sets out the impacts on all those who will use the system, not just those from the EU or the EEA.
We understand fully that ending free movement and the proposals for the future immigration system will have an impact. However, with the dramatic changes that we have seen in the UK labour market over recent weeks, it is right that we focus on getting UK-based workers back into employment and ensuring that employers are investing in and retaining the existing workforce. Migration policies need to be considered alongside that work, not in isolation from it. The Migration Advisory Committee will have the opportunity to decide what it wishes to consider alongside its annual report.
Holly Lynch
I heard the Minister’s comments. I would stress, once again, that new clauses 21, 49 and 61 are genuine attempts to ask the Government to recognise our concern about health and social care when free movement comes to an end. We are not attempting to play politics; our concern is genuine. We would be very happy for the Government to go away and look at any one of those options. Without pushing this to a vote, we ask the Minister to consider these issues in all further deliberations on the future immigration system. I beg to ask leave to withdraw the motion.
Clause, by leave, withdrawn.
New Clause 22
Tier 2 Immigration skills charge
“No Tier 2 Immigration skills charge will be payable on an individual who is an EEA or Swiss national and is coming to the UK to work for the NHS.”—(Holly Lynch.)
This new clause would exempt NHS employers from having to pay the immigration skills charge.
Brought up, and read the First time.
The Chair
With this it will be convenient to discuss the following:
New clause 35—Immigration skills charge—
“No Immigration skills charge introduced under section 70A of the Immigration Act 2014, or by regulations thereunder, may be charged in respect of an individual who is an EEA or Swiss national coming to work in the UK.”
This new clause ensures no skills charge can be levied in respect of EEA or Swiss nationals coming to work in the UK.
Holly Lynch
I beg to move, That the clause be read a Second time.
I rise to speak in support of new clause 22, tabled in the name of the shadow Home Secretary, myself and my Committee colleagues. The new clause would exempt NHS employers from having to pay the immigration skills charge.
As I have already stressed in my attempts to win support for other new clauses, the NHS workforce has historically relied on the support of professionals from across the world coming to the UK. In recent decades, that has included a supply of EU nationals. Nearly 10% of doctors, 8% of social care staff and 6% of nurses working in the UK are from EEA countries.
As things stand, NHS trusts pay the skills charge for those coming to work in the NHS from countries outside the EU and will be expected to pay those costs for those coming from EU countries after free movement ends. The immigration skills charge is effectively a skills tax paid by employers who have recruited from overseas instead of from the domestic workforce, to act as a disincentive and to promote recruitment from a local talent pool. That is fair enough, but in the context of the NHS, levelling the tax on NHS trusts is nothing short of an outrage.
If trusts cannot find clinical specialists here in the UK, they have no choice but to find them from overseas. The UK has a number of clinical skills shortages in many specialist areas and, in the absence of any Government strategy to respond to that domestically, the NHS has to hire from overseas.
We have already heard a lot about Brian Bell’s contribution to the evidence session last week. He gave the example of the nurse shortage. He said:
“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.”––[Official Report, Immigration and Social Security Co-ordination (EU Withdrawal) Public Bill Committee, 9 June 2020; c. 24, Q49.]
An NHS trust cannot unilaterally decide to train more nurses from the domestic labour force if it is struggling to recruit; it needs Government intervention to deliver the uplift.
In the MAC’s 2019 full review of the shortage occupation list, where all doctors were added to the list, under section 4B on health occupations, the review was keen to stress that
“the rise in vacancies and concern over lack of staff has occurred under freedom of movement and during a period when many health occupations have been on the SOL. Ultimately it will take more effective workforce planning and efforts to increase the flows into health professions (and decrease flows out) to meet growing demands.”
That is a worrying thought.
We have clinical workforce shortages almost across the board in the NHS, and that has been while we have had free movement. Adopting new clause 22 would be just one small step towards protecting the NHS from the inevitable impact of free movement coming to an end with the Bill.
As constituency MPs, we all have casework relating to patients with rare medical conditions who have been on waiting lists for years to see a specialist, because there may be only one or two doctors specialising in that condition in the country. There may be only a handful in the world, so trusts are regularly looking to recruit from overseas because they seem to have no choice. The immigration skills charge punishes trusts for doing so, with the Government taking back much-needed cash from budgets in order to pay the fees. It seems grossly unfair and counterproductive, and it takes money out of frontline hospital services.
The Labour party has submitted freedom of information requests to 224 NHS hospital trusts in England, asking how much of the charges they are paying back to the Government. So far, only 45 have responded—around 21% of the trusts. To give an indication of what some hospitals are paying out, I should say that Lewisham and Greenwich NHS Trust had to pay the Government £961,000 in immigration skills charges over the past three financial years. Portsmouth Hospitals NHS Trust tells us that it paid out more than that in the 2019-20 financial year alone, with a bill for £972,000 in just 12 months; it has paid over £2 million in immigration skills charges since 2017. The Royal Free London NHS Foundation Trust has paid over £1 million in the same timeframe, and the University Hospital Southampton NHS Foundation Trust has paid £1,224,509 since 2017.
From the 21% of trusts that have responded to our FOI request, we know that nearly £13 million has been taken out of the NHS and handed back to the Government since 2017—nearly £13 million from just 21% of hospital trusts in England. That some hospitals can pay out nearly £1 million in immigration skills charges in a single year surely has to be a sign that the system is not working as intended. To repeat the point made by the MAC, this is all while people have been able to come under free movement, where fees would not have been applicable. That is about to come to an end. I urge the Minister to adopt new clause 22 to mitigate any further detrimental impact on the NHS workforce and to ensure that NHS funding stays in the NHS.
Stuart C. McDonald
In a sense, this debate echoes the one we had on the immigration health surcharge. I support everything that the shadow Minister has said, but I would push the Labour party to go a bit further and scrap the whole scheme.
I have nothing against the principle that employers should pay a contribution towards the cost of training and developing the skills on which businesses rely, but why should it apply only to those who recruit from abroad? That is not in any way a proxy for determining which businesses, companies and employers are not doing enough training in their own right. In fact, very often the opposite is the case: many of the businesses, companies and employers who recruit from overseas are also the ones who invest considerable sums of money in training and upskilling their workers.
However, skill shortages often arise at very short notice. For all the workforce planning that they do, and for all the training that they invest in, employers regularly have a need to recruit from abroad. As I say, it is a very poor proxy for trying to target companies that are not properly investing in training. The whole thing needs rethinking.
Kevin Foster
I thank the hon. Members for Halifax and for Cumbernauld, Kilsyth and Kirkintilloch East for tabling the new clauses. The objective of the immigration skills charge is to incentive UK-based employers to take a long-term view of investment and training, and it is designed to address the UK’s historical underinvestment in training and upskilling. The income raised is allocated to the Department for Education and the devolved nations to address skills and training gaps in the resident workforce.
We can all agree that immigration must be considered alongside investment in, and development of, the UK’s resident workforce, and it is only right that we provide those workers with opportunities to develop skills in order to further their careers and to contribute to the future economy. That is with particular reference to the situation we see at the moment in our country, where many people might need to find new employment opportunities due to the economic impact of covid-19.
The Committee may also wish to note that the introduction of the charge was supported by the independent Migration Advisory Committee as part of its December 2015 review of the tier 2 route.
The Migration Advisory Committee also recommended that the charge be extended and retained to cover employers of EEA citizens in the future immigration framework. In its September 2018 final report on the impact of EEA migration in the UK, the MAC said:
“We believe that extending the ISC to cover EEA citizens under any post-Brexit work-permit scheme would, on balance, be appropriate.”
It would also make no sense, now that we have left the European Union, to apply exemptions based purely on being an EEA national, as this suggests.
On new clause 22, the Government recognise the vital nature of the health and social care sector to the United Kingdom. Health and social care will be at the very heart of the UK’s new points-based immigration system, and we are doing all we can to ensure that the new system is fair, attractive and welcoming to the best and brightest overseas migrants. The new skilled worker route will be open to a broader range of roles in the sector—following the expansion of the current skills threshold—than the tier 2 general route.
As I mentioned earlier, the income for the immigration skills charge is used to address skills and training gaps in the resident workforce, including the healthcare sector. It is right, therefore, that we focus on providing UK resident workers with the opportunity to develop skills that will enable them to become the healthcare heroes of tomorrow—the revenue from the immigration skills charge does that. For those reasons, the Government are not prepared to accept the two new clauses.
Holly Lynch
We absolutely cannot wrap our heads around that, given how much money is being taken out of the NHS frontline, which seems to be an indication that the whole approach is not functioning as intended. However, with that in mind, I will not seek to divide the Committee. But the Labour party may return to this point at a later date. I beg to ask leave to withdraw the motion.
Clause, by leave, withdrawn.
Ordered, That further consideration be now adjourned. —(Tom Pursglove.)
Finance Bill (Eighth sitting)
Tuesday 16th June 2020
(4 years, 6 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 16 June 2020 - (16 Jun 2020)
The Committee divided: - Ayes: 6 / Noes: 10 - Question accordingly negatived.
The Committee divided: - Ayes: 6 / Noes: 10 - Question accordingly negatived.
The Chair
With this it will be convenient to discuss the following:
That schedule 10 be the Tenth schedule to the Bill.
The Financial Secretary to the Treasury (Jesse Norman)
It is lovely to see you in the Chair, Ms McDonagh. I apologise to hon. Members who have had the pain of seeing me do the urgent question in between our two Public Bill Committee sittings; I can only admire their strength and resilience.
Clause 86 introduces schedule 10, which enables changes to be made to the Hydrocarbon Oil Duties Act 1979 to require white diesel to be used for filling private pleasure craft such as yachts and canal barges, to meet our international obligations under the EU withdrawal agreement. It is an enabling power, and it follows consultation with private pleasure craft users and fuel suppliers in 2019.
There is no current timetable for commencement of these changes. Details of implementation via future secondary legislation will be set out in due course, after the consultation that the Government are planning this summer on wider changes to red diesel that were announced at Budget 2020. Once commenced, the changes will affect only the type of fuel that private pleasure craft can use and not the amount of fuel duty users pay. They already pay the standard white diesel rate for propelling their craft, and they are entitled to use rebated red diesel for other, non-propulsion purposes, such as heating and cooking. The changes will not affect that. Where craft have a shared tank for propulsion and non-propulsion purposes, such as heating, the Government will explore options that prevent users from paying more duty for their non-propulsion use than they would otherwise have to pay.
In 2018, the Court of Justice of the European Union ruled that the use of red diesel to propel private pleasure craft breached the fuel marker directive, which is designed to ensure, given the variation in duty treatment in member states, that any misuse of diesel crossing EU internal borders can be detected. Over the summer of 2019, the Government consulted on how they intended to implement the Court judgment by requiring private pleasure craft to use white diesel for propulsion. More than 1,600 replies were received. At the present time, private pleasure craft use the lower-duty red diesel for both propulsion and non-propulsion, but pay a top-up to the white diesel rate on the proportion of fuel that they use to propel their craft.
Last year’s consultation saw evidence on the impact that requiring private pleasure craft to use white diesel propulsion would have on users of diesel-propelled craft operating in UK inland waterways and along the coast, and on the companies that supply diesel to them. The responses are informing implementation issues for suppliers, known as registered dealers in controlled oils, or RDCOs, and users of diesel fuel.
The changes made by schedule 10, once commenced by secondary legislation, will amend sections 12 and 14E of the Hydrocarbon Oil Duties Act 1979, to disallow the rebates that apply to diesel, biodiesel and bioblend not used for road vehicles on the fuel used for propelling private pleasure craft. In practice, such craft have not been benefiting from the rebated rate on fuel use for propulsion, as they have been paying the additional duty to ensure that they pay the full rate as required while we are in the transition period.
Schedule 10 creates new penalties for using marked fuel for propelling a private pleasure craft, similar to those that exist when marked fuel is used in road vehicles, and also gives Her Majesty’s Revenue and Customs powers to take samples. It also provides for secondary legislation to mitigate the impact of the measure on houseboats and permanently moored residential craft; as they do not use fuel to propel their houseboat, they should be entitled to continue to use red diesel.
Finally, the schedule amends schedule 7A to the Value Added Tax Act 1994, to provide for the removal, if necessary, of the reference to marked fuel used in private pleasure craft in respect of which a declaration has been received. It provides that the changes will be brought into force on the days and in the areas appointed in secondary legislation at a future date.
This clause and schedule will ensure that we respect our international commitments, by enabling us to make changes to legislation covering fuel use by a private pleasure craft to the extent required to meet those commitments. I therefore commend the clause and the schedule to the Committee.
Wes Streeting (Ilford North) (Lab)
I should have said this morning that, although those on the Government Front Bench are doing a joint effort today to give each other a break, this is my penance for the shadow Chief Secretary, my hon. Friend the Member for Houghton and Sunderland South, handling the digital service tax single-handedly last week, so I am afraid that Members will be getting even more tired of my voice than the Financial Secretary’s voice.
I want to raise a few points on clause 86. First, as the Minister said, this clause and schedule are intended to enact the judgment of the European Court of Justice and to make sure we abide by our obligations under the withdrawal agreement. The challenge for various industry bodies is that this proposal effectively means that we are going to have to go through a number of changes, unless the Government intend this to be a permanent change in approach.
It is a significant disruption for the industry. British Marine, the main leisure boating industry body, said the change would present
“severe problems for boat users and the industry”,
and that was the position of all representative bodies. Given the issues raised by industry bodies and the strength of objections, why has the Minister sought to implement the judgment of the Court of Justice of the European Union when we will have left the European Union and, at some point in the not too distant future, these sorts of judgments will not have to be abided by?
Suppliers and industry bodies have deemed the switch as not viable due to its being uneconomical and impractical to change waterside fuelling locations from red to white diesel. What will the Minister do to support suppliers in this transition and to ensure that commercial users, such as fishing boats, are not negatively impacted by the switch?
Jesse Norman
I thank the hon. Gentleman for his questions. We fully appreciate the degree of concern that has been shown by the industry. As he will be aware, we are under an obligation to abide by EU judgments while we remain under the withdrawal agreement. The proposal underlines how seriously we take legal obligations that have been incurred in the EU withdrawal agreement, and that includes implementing the result of the European Court of Justice judgment.
It should be made clear that, during the transition period, if the Commission were not convinced that necessary steps had been taken to implement the judgement, it could, in principle, refer the case back to the European Court and ask it to levy fines for non-compliance. Those fines can be pretty substantial—up to €792,000 a day plus a potential one-off fine of at least €10 million—so we are very focused on communicating the seriousness of our intent in passing this enabling legislation. We do not believe that paying fines to the EU, especially as we have now left the EU, would be an effective or good use of taxpayers’ money, not least when we are making broader changes to reduce the entitlement to use red diesel more widely.
It is worth pointing out one other thing: we have not set an implementation date. The reason is that we recognise that it is important for Government to continue to work with users of private pleasure craft and with fuel suppliers to understand how they can implement the changes, precisely to make sure that those changes are as little onerous and as easy to enact as they can be. It is only once we have seen that consultation, gone through that process, reflected further on it and had a chance to consider how the legislation could be framed that we will be able to return to this issue.
Question put and agreed to.
Clause 86 accordingly ordered to stand part of the Bill.
Schedule 10 agreed to.
Clause 87
Rates of air passenger duty from 1 April 2021
Question proposed, That the clause stand part of the Bill.
The Exchequer Secretary to the Treasury (Kemi Badenoch)
Clause 87 makes changes to ensure that the long-haul rates of air passenger duty for the tax year 2021-22 increase in line with the retail price index. The change will make sure that the aviation sector continues to play its part in contributing towards funding our vital public services.
Aviation plays a crucial role in keeping Britain open for business, and the UK Government are keen to support its long-term success. Indeed, the UK has one of the highest direct connectivity scores in Europe, according to the latest Airports Council International Europe report. The Government appreciate the difficulties that the airline industry currently faces as a result of coronavirus. That is why the Chancellor provided a comprehensive package for all businesses affected by the virus on 20 March. However, as air passenger duty is paid on a per passenger basis, the recent decline in passenger demand will have resulted in a reduction in air passenger duty liabilities for airlines. As the industry returns to health, it is right that the revenue raised from air passenger duty should continue to remain in line.
The clause increases the long-haul reduced rate for economy class nominally by only £2 and the standard rate for all classes above economy by £4—a real-terms freeze. The rounding of air passenger duty raised to the nearest £1 means that short-haul rates will remain frozen in nominal terms for the eighth year in a row, which benefits about 80% of all airline passengers. More broadly, the Government will consult on aviation tax reform. As part of the consultation, we will consider the case for changing the air passenger duty treatment of domestic flights, such as reintroducing the return leg exemption, and for increasing the number of international distance bands.
The changes made by the clause will increase the long-haul APD rates for the tax year 2021-22 by the RPI. Air passenger duty is a fair and efficient tax, where the amount paid corresponds to the distance and class of travel of the passenger and is due only when airlines are flying passengers. The changes ensure that the aviation sector will continue to play its part in contributing towards funding our vital public services. I therefore commend the clause to the Committee.
Wes Streeting
The industry has stated that the proposed changes do not support it and its net zero plans. The news that the airline industry does not like air passenger duty will come as a surprise to no one. As we are debating air passenger duty under clause 87, and as Treasury Ministers declined to come to the House in response to an urgent question from the Chair of the Transport Committee, this is an opportunity for me to raise concerns directly with Treasury Ministers about support for the airline industry in the light of the challenges it faces because of covid-19.
The Minister said that the airline industry has benefited from Government support. In so far as any industry and employer has benefited from the general schemes made available—the job retention scheme, the self-employment income support scheme, the various business grants and loans that are available—that is true. However, back in March, the Chancellor referred to specific support for the aviation industry. It is now June and that support has not yet materialised. In fact, we do not even have any outline of what that support could entail or whether it will materialise at all.
Let us bear in mind that the industry contributes £22 billion a year to the British economy. It supports 230,000 jobs in aviation and throughout the manufacturing supply chain. If we take into account the broader sweep of jobs based around the supply chain, airports and travel, we are probably looking at something closer to 500,000 jobs.
Ministers, whether in the Treasury or the Department for Transport, ought to be embarrassed by the fact that, only a matter of weeks ago, a leading figure in the airline industry told the Transport Committee that the Government have been “asleep at the wheel”. That is not the way that the Treasury should approach a major industry. Of course, the airline industry has a lot to change in order to meet our country’s net zero ambitions, but I am sure we would all agree that we would prefer it if the aviation industry got to that point through research, innovation, sensible application of technology, change of consumer behaviour and a just transition to support the workforce as the industry changes, rather than because airlines go bust and people lose their jobs.
Anthony Browne (South Cambridgeshire) (Con)
This is my first ever Bill Committee, but I was under the impression that we were meant to talk about the actual elements of the Bill, rather than wider economic policy or industrial strategies for business. The hon. Member for Ilford North has kindly emphasised all the support the British Government are giving the airline industry, but it is completely irrelevant for discussion now.
The Chair
I would just say to the hon. Gentleman that the decision on what is spoken about and what is not is mine. My general attitude is to encourage participation and comment. I will show the same latitude to both Government and Opposition Members. I call the Minister.
Kemi Badenoch
On the issue of a specific support package for the industry, the hon. Member for Ilford North has mentioned the range of measures that we have put in place, and we know that the DFT, the Transport Secretary and the aviation Minister are in close contact with the aviation sector. What the hon. Gentleman does not know is that Treasury Ministers, including myself, have also received lots of representations from the industry—it is not an issue that we are ignoring—but we need to be careful about how we make interventions.
The aviation sector is important to the UK economy. When those companies, as with any other companies that make a material contribution to the economy, find themselves in trouble as a result of coronavirus and have exhausted the measures already available to them, the Transport Secretary and Chancellor are listening to understand the issues, but any intervention needs to represent value for money for the taxpayer.
As we saw in the urgent question earlier today, there are so many people we need to help. We need to be careful about how we spend taxpayers’ money and where it should be directed. At this time, the Chancellor has not made that decision, but we will continue to work closely with the sector, and we are willing to consider the situation of individual firms, rather than working a sector-wide basis, once all the other Government schemes and commercial options have been explored and exhausted. That includes—I am sure this is something Opposition Members agree with—raising capital from existing investors and approaching other investors first.
Question put and agreed to.
Clause 87 accordingly ordered to stand part of the Bill.
Clause 88
Amounts of gross gaming yield charged to gaming duty
Question proposed, That the clause stand part of the Bill.
Kemi Badenoch
Clause 88 increases the thresholds for the gross gaming yield bands for gaming duty in line with inflation. This is a very small change, which is assumed by public finances.
Gaming duty is a banded tax paid by casinos in the UK, with marginal tax rates varying between 15% and 50%. Public finances assume that the bands are uprated with inflation each year to prevent fiscal drag. Without an annual uprating, over time, casinos would pay gaming duty at higher rates, so the change made by clause 88 uprates the bands of gaming duty in line with inflation. That is expected by the industry and assumed in public finances. Rates of gaming duty will remain unchanged. The change will take effect for accounting periods starting on or after 1 April 2020. I therefore commend the clause to the Committee.
Wes Streeting
We have heard representations from the chief executive of the Betting and Gaming Council, Michael Dugher, who will be known to many hon. Members across the House. The council is calling for reform of business rates and casino taxation. In the light of its representation, which, unsurprisingly, makes the industry case, and reflecting on some of our earlier conversations about alcohol duties, tobacco and smoking, what plans does the Treasury have, if any, to look at reform of gambling taxation generally and at the specific reforms Mr Dugher is calling for of business rates and casino taxation?
We have also heard strong representations from hon. Members across the House, such as my hon. Friend the Member for Swansea East (Carolyn Harris) and the right hon. Member for Chingford and Woodford Green (Sir Iain Duncan Smith), about their work to highlight the impact that gambling has on people’s lives. Irresponsible gambling blights people’s lives. In the light of our conversation this morning about the positive role that Treasury decisions can play in promoting good public health outcomes, is the Treasury minded to look at those issues in the round as part of a wider review of the gaming duty and gambling taxation more generally?
Kemi Badenoch
The answer is to look at what the duty is designed to do. It is a change to gambling taxation; it is not related to the regulation of gambling activity, which, as we know, is the remit of the Department for Digital, Culture, Media and Sport.
The Government continue to monitor the effectiveness of existing gambling controls. As the December 2019 election manifesto set out, we intend to review the Gambling Act 2005. We will always consider the potential impact of tax changes at the same time.
We should remember that freezing the duty bands would have a small impact on public finances, while pushing smaller, generally regional, casinos into higher duty bands. The casino industry paid about £220 million in duty in the last financial year. The Government believe that the sector already makes a fair contribution to the public finances. I do not believe it is the small regional casinos that we would be looking to affect in terms of problem gambling.
Question put and agreed to.
Clause 88 accordingly ordered to stand part of the Bill.
Clause 89
Rates of climate change levy until 1 April 2021
Question proposed, That the clause stand part of the Bill.
Kemi Badenoch
Clauses 89 and 90 ensure that the climate change levy main and reduced rates are updated for the years 2020-21 and 2021-22 to reflect the rates announced at Budget 2018. The climate change levy came into effect in April 2001. It is a UK-wide tax on the non-domestic use of energy from gas, electricity, liquefied petroleum gas and solid fuels. It promotes the efficient use of energy to help to meet the UK’s international and domestic targets for cutting emissions of greenhouse gases. Energy-intensive businesses that participate in the climate change agreements scheme run by the Department for Business, Energy and Industrial Strategy qualify for reduced rates in return for meeting energy efficiency or carbon reduction targets.
Budget 2016 announced that electricity and gas rates would be equalised by 2025, because electricity is becoming a much cleaner source of energy than gas as we reduce our reliance on coal and use more renewable resources instead. These changes give effect to rate changes announced in 2018 and reaffirm the commitment to equalise the main rates for gas and electricity. The reduced rates will be subject to increases in line with inflation, as in previous years. In order to ensure better consistency in the tax treatment of portable fuels and the off-gas grid market, it was announced in the 2017 Budget that the climate change levy rate for liquefied petroleum gas would be frozen at the 2019-20 level in the years 2020-21 and 2021-22. For that reason, the reduced rate for liquefied petroleum gas that applies to CCA participants will remain set at 23% for the years 2020-21 and 2021-22.
Clauses 89 and 90 will update the climate change levy’s main and reduced rates for 2020-21 and 2021-22, as announced in the 2018 Budget, to reflect that electricity is now a cleaner energy source than gas. The electricity main rate will be lowered, whereas the gas main rate will increase so that it reaches 60% of the electricity rate in 2021-22. The rates were announced over two years ago, to give businesses plenty of notice to prepare for the rate changes. To limit the impact on the CCA scheme, participants will see their climate change levy liability increase by retail price index inflation only. That protects the competitiveness of over 9,000 facilities in energy-intensive industries across 50 sectors. I therefore commend the clause to the Committee.
Wes Streeting
The Chancellor suggested that pollution taxes would increase as a result of his Budget, but Jayne Harrold, PwC’s UK environmental tax leader, said that under the 2020 Budget:
“There was not really an increase in pollution taxes as the Chancellor suggested with the climate change levy (CCL) changes announced. In fact, freezing CCL rates on electricity to level up the gas rate faster based on carbon emissions will reduce the amount of pollution tax applied. Extending climate change agreements for two years is equally minor good news for energy intensive businesses who get significant CCL reliefs.”
Can the Minister give us a sense of what more the Treasury will do to ensure that taxes from polluting behaviour increase?
I also want to probe on the green gas levy. The 2020 Budget promised the introduction of a green gas levy to help fund the use of greener fuels, to work in conjunction with the rise in the climate change levy. When and how do the Government plan to introduce the levy?
Kemi Badenoch
I missed the hon. Member’s last question, but I can write to him on this issue, if he is happy with that. I go back to the question whether we are doing enough to achieve net zero. The answer is that we are going as far as we can, but we must also ensure that we protect the competitiveness of businesses throughout the UK. As announced in 2016, the changes to the climate change levy rates will see electricity and gas main rates equalised. That is being done incrementally—not because we do not want to go far enough, but in order to protect the tax liability of businesses. The Treasury review on the cost of transitioning to net zero will consider the role of tax in the transition. Does that answer the question?
Wes Streeting
My question was specifically about the changes that the Government plan to make in relation to the green gas levy, which had been announced in the Budget. When and how do the Government plan to introduce the green gas levy?
Kemi Badenoch
I cannot give the hon. Member an answer to that, but I will definitely write to him. I think officials will be able to brief him on the green gas levy. I cannot talk about it in the context of the climate change levy, which is what we are discussing, but I take his point. It is a good question. It is a Department for Business, Energy and Industrial Strategy competency, which is why I do not have an answer from a Treasury perspective, but I can speak to my counterparts in that Department and get back to him.
Wes Streeting
Thank you.
Question put and agreed to.
Clause 89 accordingly ordered to stand part of the Bill.
Clause 90 ordered to stand part of the Bill.
Clause 91
Rates of landfill tax
Question proposed, That the clause stand part of the Bill.
Kemi Badenoch
The clause increases both the standard and lower rates of landfill tax in line with inflation from 1 April 2020, as announced at Budget 2018.
Landfill tax has been immensely successful in reducing the amount of waste sent to landfill. Landfill tax provides a disincentive to use landfill and has made it the most expensive waste treatment method in terms of average gate fees. The success of the tax has contributed to a 70% decrease in waste sent to landfill since 2000. Household recycling has increased to 45%, from 18%, over the same period. The benefits of this reduction are twofold: first, there are economic benefits as valuable resources are used better, rather than being simply tipped into a hole in the ground, and secondly, there are environmental benefits, not only from the increased efficiency in the use of our precious resources, but through a reduction in greenhouse gas emissions from decomposing waste.
When waste is diverted from landfill we promote more sustainable waste treatment practice, such as recycling. The Government want to move towards a more circular economy and we are working together with business, industry, civil society and the public to achieve that aim. Landfill tax is one of the Government’s primary levers in achieving this.
When disposed at a landfill site, each tonne of standard-rated material is currently taxed at £91.35 and lower-rate material draws a tax of £2.90 per tonne. These changes will see rates per tonne increase to £94.15 and £3 respectively from 1 April 2020. By increasing rates in line with RPI we maintain the crucial incentive for the industry to use alternative waste treatment methods and continue the move towards a more circular economy. The increase in landfill tax will affect businesses and local authorities that send waste to landfill, but by continuing the positive trend of managing waste more sustainably businesses and local authorities will be able to reduce their landfill tax liabilities.
In conclusion, clause 91 increases the two rates of landfill tax in line with inflation from 1 April 2020, as announced in the autumn Budget in 2018. The clause maintains the incentives in the landfill tax for businesses and local authorities to divert waste treatment away from landfill and to continue to invest in sustainable methods of waste disposal, helping the Government meet their environmental objectives. I therefore commend the clause to the Committee.
Wes Streeting
Aside from paying tribute to my own local authority, the London Borough of Redbridge, and other local authorities for the efforts they have made to reduce the amount of waste going into landfill, there is only so much that can be said about an inflationary increase in landfill tax. I am happy for us to support the clause.
Question put and agreed to.
Clause 91 accordingly ordered to stand part of the Bill.
Clause 92
Carbon emissions tax
Question proposed, That the clause stand part of the Bill.
The Chair
With this it will be convenient to discuss, That schedule 11 be the Eleventh schedule to the Bill.
Kemi Badenoch
At Budget 2020 the Government announced that they would make the necessary legislative changes to the carbon emissions tax in Finance Bill 2020 to ensure that this policy remained a viable option to maintain carbon pricing in the UK after the transition period, in the event that a trading system proves undesirable. If the Government decide to use the tax as their carbon pricing policy after the transition period, the tax would be commenced, by secondary legislation laid in late 2020, from 1 January 2021.
The clause and schedule strengthen the effectiveness of the carbon emissions tax by ensuring that penalties can be issued for non-compliance and late payment and the legislation is updated to reflect developments since the tax was established in the Finance Act 2019. In line with the withdrawal agreement, the UK will remain in the EU emissions trading system, known as the EU ETS, until the end of the transition period on 31 December 2020. The UK will continue to have legally binding carbon reduction targets after leaving the EU.
As set out in the UK’s approach to the negotiation, the UK would be open to considering a link between any future UK emissions trading system and the EU ETS, if it suited both the UK’s and the EU’s interests. If a linked trading system between the UK and the EU is not agreed, the UK would introduce an alternative carbon pricing policy. The Government are therefore preparing both a UK standalone emissions trading system and a carbon emissions tax.
Budget 2020 announced that legislation would be included in this Finance Bill to provide a charging power to establish a UK ETS linked to the EU ETS or a standalone UK ETS, and update the existing legislation relating to carbon emissions tax. This schedule amends the Finance Act 2019 to ensure that the tax will be ready to be operational from the end of the transition period, if needed. The clause and schedule deal with the latter.
Clause 92 introduces schedule 11, which makes amendments to part 3 of the Finance Act 2019, which established the carbon emissions tax. Schedule 11 will amend the Finance Act 2019 so that the carbon emissions tax is ready to commence from 1 January 2021 if needed.
I will briefly highlight the most significant changes in what is a fairly technical schedule. Paragraphs 9 and 10 add provisions to the tax for a penalty for failure to make payments of tax to HMRC on time. That would be achieved by adopting the existing provisions on late payment penalties in schedule 56 to the Finance Act 2009. The penalty would be commenced by appointed day regulations if the tax were introduced.
Similarly, paragraph 4 allows for provisions to be made for the imposition of civil penalties for failure to comply with a requirement of the regulations; the review of, and a right of appeal against, a specified decision relating to the tax; and the modification of domestic and EU regulations relating to the monitoring and regulation of emissions.
Paragraph 8 amends the commencement and transitional provisions to ensure that the regulations needed to operate the tax may be made before the tax has commenced. It also removes provisions that were needed when we were planning to commence the tax partway through an emissions reporting period. Those are no longer needed, as we would now start the tax on 1 January, the first day of an emissions reporting period.
Paragraph 3 allows the Treasury, by regulations, to exclude regulated installations of a specified description from the charge to tax. That enables the Government, for example, to exclude Northern Ireland power generators from the tax, were they to continue to participate in the EU ETS as provided for in the Northern Ireland protocol. Paragraph 6 ensures that regulators will be able to recover costs incurred in doing work connected with carbon emissions tax, even if that work is done before regulations are made.
In conclusion, the clause and schedule ensure that the carbon emissions tax is ready to commence from 1 January 2021 if needed. It would provide a stable carbon price and help the UK to meet its carbon reduction commitments. I therefore commend the clause and schedule to the Committee.
Wes Streeting
The clause and schedule that we are discussing make perfect sense in light of the impact of our exiting the European Union. I just have a few questions for the Minister.
This clause gives the Government the power to introduce a UK emissions trading scheme or carbon tax via a statutory instrument. As we have already heard from the Minister, and as we have heard from public statements on both sides of the channel this week, we will leave the EU emissions trading scheme on December 31 2020, when we leave the transition period.
I think the Minister alluded to the fact that so many of the questions that stakeholders have remain unanswered. I accept that this is just an enabling clause in anticipation of the further detail, and I appreciate that some of these questions may relate to responsibilities in the Department for Business, Energy and Industrial Strategy, so I will accept it if she sends me in that direction, but does she know when the Government plan to respond to chapters 1 to 3 of the consultation on the future of UK carbon pricing? Can she give assurances that there will be time to scrutinise Government proposals and implement a new scheme by the end of the year, bearing in mind that the proposals will have an impact on a wide range of organisations?
Touching on a theme I raised this morning about support for businesses as they undertake a transition to new frameworks, how do the Government intend to support UK companies during the transition, bearing in mind that, just as we are feeling the impact on Government business of disruption caused by the pandemic, many businesses are feeling exactly the same disruption? Is it realistic or desirable for companies across the country to be adapting to a new scheme that is not yet known and that may need to take force by the end of this year?
Kemi Badenoch
We published a consultation response on 1 June, and the carbon emissions tax consultation is due to be published shortly. I will say to the hon. Gentleman, “Watch this space.”
In terms of the impact on businesses, the carbon emissions tax would have an impact on around 1,000 installations that currently participate in the EU emissions trading system, most of which are operated by large businesses. Businesses whose emissions exceeded their allowance would need to familiarise themselves with the tax and pay a bill once a year, in lieu of surrendering trading allowances under the EU emissions trading system. It must be said, however, that the administrative burdens of complying with this tax are not expected to be more than what they would have been under the EU emissions trading system.
Question put and agreed to.
Clause 92 accordingly ordered to stand part of the Bill.
Schedule 11 agreed to.
Clause 93
Charge for allocating allowances under emissions reduction trading scheme
Question proposed, That the clause stand part of the Bill.
Kemi Badenoch
The clause provides the power to auction carbon emissions allowances, to establish a UK emissions trading system, which could be linked to the EU’s or operate independently. Alongside clause 92, to update the carbon emissions tax, this clause ensures that a strong carbon price remains in all scenarios, while supporting the ongoing negotiations.
The UK’s membership of the EU emissions trading system will end following the transition period. As mentioned in the previous clause, the EU ETS covers around a third of UK emissions, including the power sector, heavy industry and aviation. It has been an important tool, alongside other taxes and regulations, in helping to reduce emissions.
Following the UK’s exit from the EU, we have choices about how best to put a price on carbon, tailoring our approach to the UK economy. Carbon pricing will continue to play an important role to help meet the UK’s legally binding carbon budgets and net zero. The Government are preparing an independent UK emissions trading scheme, which could be linked to the EU ETS. As set out in the UK’s approach to negotiations, we are open to considering a link if it suited both sides’ interests.
Clause 93 is essential to the establishment of a UK ETS, as it provides the power for Government to auction emissions allowances and intervene in the market to deal with any price volatility. As I mentioned earlier, the Government are also preparing a carbon emissions tax and a possible alternative in clause 92. Introducing legislation to support potential negotiated options, as well as legislating for alternative approaches to carbon pricing after the transition period, will provide certainty that we maintain an effective carbon price in all scenarios, continuing to drive reductions in emissions on our journey to net zero.
The changes made by clause 93 introduce a charging power. This means that through regulations, emissions allowances can be auctioned by the Government in any future UK ETS, ensuring that participants pay a price for their pollution. The clause will also enable regulations to be made for additional market stability mechanisms, to operate in an independent UK emissions trading scheme. That will ensure a smooth transition for businesses. First, a price rule, known as the auction reserve price, will maintain a carbon signal when allowance prices are low. Secondly, a cost containment mechanism will respond to in-year price fights, protecting the competitiveness of UK business when allowance prices are high. Further detail on these measures has been set out in the Government’s recent response to our consultation on the future of UK carbon pricing.
This clause is a prudent and sensible one to legislate for. It will pave the way for an emissions trading scheme, which could be linked to the EU ETS, if that is in our interests. It also ensures that a stand-alone emissions trading scheme could be implemented as an alternative policy, should a link not be agreed. Alongside that, legislation will be updated related to the carbon emissions tax, so we are keeping all options on the table for maintaining a carbon price signal from 1 January 2021.
Wes Streeting
The Minister asked us to watch this space. We will certainly do that and wait to see how discussions progress. We look forward to seeing the details of future arrangements in the not-too-distant future.
Question put and agreed to.
Clause 93 accordingly ordered to stand part of the Bill.
Clause 94
International trade disputes
Alison Thewliss (Glasgow Central) (SNP)
I beg to move amendment 14, in clause 94, page 76, line 33, at end insert—
“(2) The Government must lay before the House of Commons by 9 September 2020 a statement of the conditions under which it would consider it appropriate to vary rates of import duty under this Section.”
This amendment would require the Government to state the conditions under which it would consider it appropriate to vary rates of import duty in an international trade dispute.
The Chair
With this it will be convenient to discuss the following:
Amendment 15, in clause 94, page 76, line 33, at end insert—
“(2) No regulations under this section may be made unless a draft has been laid before and approved by a resolution of the House of Commons.”
This amendment would require the Government to seek the approval of the House before making regulations varying rates of import duty in an international trade dispute.
Amendment 16, in clause 94, page 76, line 33, at end insert—
“(2) The Chancellor of the Exchequer must, no later than a month before any exercise of the power in subsection (1), lay before the House of Commons a report containing the following—
(a) an assessment of the fiscal and economic effects of the exercise of the powers in subsection (1);
(b) a comparison of those fiscal and economic effects with the effects of the UK being within the EU Customs Union;
(c) an assessment any differences in the exercise of those powers in respect of—
(i) England,
(ii) Scotland,
(iii) Wales, and
(iv) Northern Ireland; and
(d) an assessment of any differential effects in relation to the matters specified in paragraphs (a) and (b) between—
(i) England,
(ii) Scotland,
(iii) Wales, and
(iv) Northern Ireland.”
This would require a review of the economic and fiscal impact of the use of the powers in section 94 including comparing those effects with EU Customs Union membership.
Clause stand part.
Alison Thewliss
This is a small clause in the Bill, but hidden within it is the Government’s intention to set the conditions under which they would consider it appropriate to vary the rates of import duty in an international trade dispute. With amendments 14 to 16, we seek to amend clause 94 because we are concerned that it gives the Government a huge amount of additional power, with which they will avoid scrutiny. The explanatory notes state that the clause
“replaces the requirement for ‘authorisation’ with a requirement to have regard to international obligations.”
The Government need to explain why they feel they need the additional power, what the safeguards to it will be and why they think it is appropriate at this time.
Trade wars are damaging and should be very much a last resort. If the Government intend to take such actions, they deserve the scrutiny of the House. It should not just be about what the Secretary of State deems to be appropriate. I remind Members of the dispute affecting the Scotch whisky industry in Scotland, which is facing a 25% tariff because of US actions regarding Airbus and Boeing. Disputes have spillover effects that affect other parts of the economy, so we need a good understanding of why the Government are seeking these powers.
Amendment 14 would force the Government, by 9 September 2020, to set out the conditions under which they would breach international law to engage in a trade war. If none exist, they can surely remove the clause from the Bill. If there are conditions under which they would jeopardise our economic prosperity, the House deserves to know. Amendment 15 would require Commons approval before Ministers could follow such an irresponsible course of action. Brexit campaigners said they wanted to restore parliamentary sovereignty. If that is the case, the Government should accept that Parliament must have a say in such important matters.
Amendment 16 would force UK Ministers, no later than a month before any exercise of power, to make an economic assessment of the implications of the power and compare it with the economic health that the UK would be enjoying within the EU customs union. Ensuring that the public are informed of the impact of such an act of economic vandalism should not be controversial. We were promised a veritable land of milk and honey during the EU referendum campaign, so we certainly deserve to see the truth about these kinds of actions. The Government must explain why they think it is important to remove that authorisation and allow the Secretary of State to do what they want without the check and balance of this House.
Bridget Phillipson (Houghton and Sunderland South) (Lab)
The Opposition have considerable sympathy with the hon. Lady’s arguments and the amendments tabled by the SNP. We have many concerns about clause 94, which seems buried, given that it is of such considerable importance for the years ahead.
The change to the language in section 15 of the Taxation (Cross-border Trade) Act 2018 has worrying implications for the Government’s adherence to the World Trade Organisation’s dispute settlement system. Replacing the requirement for authorisation under international law with the more nebulous consideration of appropriateness is extremely concerning, and implies that the Government may seek to sidestep international law regarding trade disputes. The matters set out in section 28 of the 2018 Act already give the Government considerable flexibility over what they consider to be appropriate action in the light of international law. It is effectively up to the Secretary of State to decide which international agreements are relevant to the exercise of the function. Loosening up the language even further in this clause is thus highly questionable.
The proposed changes seemingly downgrade the Secretary of State’s responsibilities when it comes to their international obligations. Having regard is nowhere near as onerous as having authorisation. That would allow the Secretary of State to operate at a much lower standard of requirement, and move away from recognised EU standards. We therefore seek to understand the reasoning behind the change. What is wrong with the current provisions regarding the variation of import duties in trade disputes?
There are further questions to which we seek answers from the Government. What will they use the clause for? It does not detail what kind of dispute is in question. How might the Trade Remedies Authority be involved in the decision-making process? Could this be an upshot of the digital services tax? The US has already found similar measures by France to be trade-restrictive, leaving the office of the United States trade representative to authorise retaliatory tariffs, as we discussed last week in Committee with reference to the digital services tax. While both parties are in the process of reaching a deal over the matter, it is possible that the Government wish to introduce this clause in preparation for a similar confrontation with the US. I hope the Minister can assure us that that is not the case, but why do the Government wish to reduce their responsibilities in adhering to international law?
The amendments tabled by the hon. Member for Glasgow Central and her colleagues go some way towards responding to that. The production of a report by the Chancellor no later than a month before any exercise of the power regarding the economic impact of such an action might enable Parliament to better scrutinise the actions taken through the clause. As it stands, other than through the scrutiny of primary legislation, Parliament has little say over international trade. I welcome the amendment to seek approval of any regulations deriving from the clause by resolution of the House of Commons, in the spirit of parliamentary scrutiny. However, the Government hold a considerable majority, and therefore I question how far the amendment would go in practice towards ensuring that the Government act in accordance with international law.
I welcome the amendment regarding the requirement for the Government to detail the conditions under which they would consider it appropriate to vary the rates of import duty under the clause. However, I believe that the implications of the wider clause are of significance and that the Government ought to provide these details during debate, rather than by September, although we are sympathetic to the intention behind the amendment. I stress that I would like the Minister, when he responds to the hon. Lady’s concerns, to explain the reasoning behind this change, what kinds of disputes the clause would cover, and whether the Trade Remedies Authority will be involved.
If the changes in the clause are in anticipation of a dispute with the US over the digital services tax, does this not involve giving the Government permission to ignore international trade rules when disputes arise, undermining the authority of the WTO in the process? I hope that the Minister will provide assurances on the issue of appropriateness and respond to the concerns that the hon. Lady and I have, because this is a significant change. We have reservations about the measure that the Government are putting forward, and we would like to understand much more about their intentions.
Jesse Norman
I thank hon. Members for their comments, and pay tribute to my colleague the Exchequer Secretary for rattling through the clauses we debated earlier with such effectiveness. The hon. Member for Glasgow Central has raised important questions, which I want to address properly, so I will give this issue quite a considerable amount of discussion because it is an important aspect of the Bill.
Clause 94 makes a change to the criteria in section 15 of the Taxation (Cross-border Trade) Act 2018 to ensure that the UK can vary the amount of import duty in the context of an international trade dispute. Provisions in various international trade agreements allow for the UK to vary the amount of import duty applied to goods in the context of an international trade dispute. There is existing provision in section 15 of the 2018 Act that gives the Secretary of State the power to
“make regulations varying the amount of import duty”
where
“a dispute or other issue has arisen between Her Majesty’s government…and the government of a country or territory”.
Currently, section 15 of the 2018 Act is worded in a way that could be interpreted to mean that a binding ruling of the World Trade Organisation is needed before the UK can impose a duty, which would be restrictive. In certain circumstances, countries are within their WTO rights to impose additional tariffs quickly in relation to the actions of other WTO members and, where necessary, outside of WTO dispute proceedings.
In addition, since section 15 of the 2018 Act was enacted, there have been developments in the wider sphere of trade policy, including increasing trade protectionism and problems with the WTO dispute settlement system. The WTO appellate body has stopped functioning, and it has now become possible for final and binding resolution of a WTO dispute to be blocked by a party to the dispute by appealing a panel report. That means it may not be possible to apply retaliatory duties, even where a panel report has found in the complaining body’s favour and the respondent has failed to bring itself into compliance.
Against this background, it is essential to ensure that the UK has the appropriate tools to respond to any unilateral measure or action taken by a WTO member that is not compatible with its obligations to the UK and that harms UK interests. Clause 94 therefore amends the original provision to ensure that, after having regard to relevant international arrangements, the Government may deal with such an issue by varying the amount of import duty. The EU is seeking similar powers, it should be noted, through amendments to its enforcement regulation, because it too recognises the importance of being able to respond quickly in the event of illegal measures being taken against it. What we are talking about is therefore in parallel to a process seeking similar powers within the EU.
At present, section 15 of the 2018 Act permits variation of import duty only where the UK is authorised under international law to deal with the issue. Clause 94 will amend section 15 to allow the Government to vary import duty where they consider it appropriate, having regard to relevant matters, including the UK’s international obligations, as set out in section 28 of the 2018 Act. That amendment will allow the UK to respond more effectively to developments in the international trading system, in line with international laws and our rights as an independent WTO member.
To come to the question asked by the hon. Member for Glasgow Central, there are a number of situations in which it would be appropriate to vary rates of import duty. The most likely situation is that in which the UK has successfully challenged another WTO member’s measures in the WTO dispute settlement system, and the other member has failed to bring itself into compliance. The UK could then impose retaliatory measures, including higher import duty against the other member. That is not contrary to and does not undermine the international rule of law; it insists on the international rule of law, in the face of measures that could disable it.
Import duty variations might also be imposed following a dispute brought under a free trade agreement or in the context of a WTO member applying a safeguard measure but failing to agree an adequate level of trade compensation for the adverse effects caused by the measure. It is also possible that the UK could lose a dispute under a free trade agreement and could agree compensation with another country. The compensation could take the form of lower import duty on certain goods.
In each of those circumstances, the Government are still required by the 2018 Act to have regard to our international arrangements that are relevant to the exercise of this power. It need hardly be said that the UK strongly supports the rules-based international trading system and appropriate enforcement of WTO agreements. It is because appropriate enforcement would be otherwise lacking that this clause is being brought into effect.
Amendment 14 would require the Government to state the conditions in which they would consider it appropriate to vary rates of import duty. As you will know, Ms McDonagh, international trade disputes are broad and varied, depending on the nature of the international agreement under which they are conducted and on the subject matter of the dispute. It would limit the Government’s ability to respond effectively in a particular dispute if they were required to list in advance conditions for varying import duty in a dispute. I have already set out several situations in which it would be appropriate to vary rates of import duty. Examples have also been provided in the explanatory notes to both the Taxation (Cross-border Trade) Act 2018 and the Finance Bill.
Amendment 15 would require the Government to seek the approval of the House of Commons before making regulations varying rates of import duty in an international trade dispute. It is important to say that clause 94 is not an unchecked power. Any specific tariff measure introduced under section 15 of the 2018 Act would require secondary legislation, as is prescribed in that Act. The requirements set out in amendment 15 are therefore not necessary. Secondary legislation will involve the public passage of a piece of legislation. The Government need flexibility to respond effectively to state-to-state disputes, but with the understanding that they must have regard to the international arrangements to which the UK is party.
Amendment 16 would require the Chancellor of the Exchequer to lay before the House of Commons a report containing an assessment of the economic and fiscal effects of the exercise of the powers in clause 94, including a comparison of those fiscal and economic impacts with the effect of the UK being within the EU customs union, and an assessment of any differences in the exercise or effects of those powers in respect of England, Wales, Scotland and Northern Ireland.
Information on the expected impacts of import duty variations will be provided in the documentation accompanying any and each statutory instrument. However, it would not be appropriate to publish extensive detail, because doing so could undermine the effectiveness of the UK’s response. It would also not be appropriate to compare the economic and fiscal impact of the use of the powers in clause 94 with EU customs union membership. First, the EU may not itself have a dispute with the WTO member against which the UK has brought an action. Secondly, even if the EU were applying retaliatory measures against that WTO member, the EU’s retaliatory tariffs would be based on the impact on the EU27 and would not take into account impacts on UK industries and sectors. The amendment would therefore invite the Governments and others to compare apples with oranges.
Alison Thewliss
Although the Minister spoke for a long time, he did not get to the nub of why the clause is necessary, what safeguards are in place, and why the requirement for authorisation is replaced with a requirement to have regard to international obligations. I will press my amendment to a vote.
Question put, That the amendment be made.
Alison Thewliss
I beg to move amendment 17, in clause 95, page 77, line 5, after “tax” insert
“which is due at the relevant date from the debtor and which became due in the 12 months immediately preceding that date, and/”.
This amendment seeks to limit the extent of HMRC’s status as a preferential creditor in insolvencies by preventing the policy from being applied retrospectively and by limiting that preference to only those taxes which became due in the 12 months before the relevant date as given in the Bill (1st December 2020).
The Chair
With this it will be convenient to discuss the following:
Amendment 18, in clause 95, page 77, line 6, after “deduction”, insert
“from a payment made by the debtor in the period of 12 months immediately preceding the relevant date.”
This amendment seeks to limit the extent of HMRC’s status as a preferential creditor in insolvencies by preventing the policy from being applied retrospectively and by limiting that preference to only those taxes which became due in the 12 months before the relevant date as given in the Bill (1st December 2020).
Amendment 19, in clause 95, page 77, line 29, after “tax”, insert
“which is due at the relevant date from the debtor and which became due in the 12 months immediately preceding that date, and/”.
This amendment seeks to limit the extent of HMRC’s status as a preferential creditor in insolvencies by preventing the policy from being applied retrospectively and by limiting that preference to only those taxes which became due in the 12 months before the relevant date as given in the Bill (1st December 2020).
Amendment 20, in clause 95, page 77, line 30, after “deduction”, insert
“from a payment made by the debtor in the period of 12 months immediately preceding the relevant date.”
This amendment seeks to limit the extent of HMRC’s status as a preferential creditor in insolvencies by preventing the policy from being applied retrospectively and by limiting that preference to only those taxes which became due in the 12 months before the relevant date as given in the Bill (1st December 2020).
Amendment 21, in clause 95, page 78, line 9, after “tax”, insert
“which is due at the relevant date from the debtor and which became due in the 12 months immediately preceding that date, and/”.
This amendment seeks to limit the extent of HMRC’s status as a preferential creditor in insolvencies by preventing the policy from being applied retrospectively and by limiting that preference to only those taxes which became due in the 12 months before the relevant date as given in the Bill (1st December 2020).
Amendment 22, in clause 95, page 78, line 10, after “deduction”, insert
“from a payment made by the debtor in the period of 12 months immediately preceding the relevant date.”
This amendment seeks to limit the extent of HMRC’s status as a preferential creditor in insolvencies by preventing the policy from being applied retrospectively and by limiting that preference to only those taxes which became due in the 12 months before the relevant date as given in the Bill (1st December 2020).
Amendment 23, in clause 95, page 78, line 26, at end insert—
“(8) The amendments made by this section do not apply to any debt secured by a floating charge in respect of monies were advanced to the debtor before 1 December 2020.”
These amendments seek to limit the extent of HMRC’s status as a preferential creditor in insolvencies by preventing the policy from being applied retrospectively and by limiting that preference to only those taxes which became due in the 12 months before the relevant date as given in the Bill (1st December 2020).
Clause stand part.
Clause 96 stand part.
Alison Thewliss
The amendments seek to limit the extent of HMRC’s status as a preferential creditor in insolvencies by preventing the policy being applied retrospectively, and by limiting that preference only to taxes that became due in the 12 months before the relevant date as given in the Bill, which is 1 December 2020. In the current context, that is particularly important. With firms increasingly running the risk of insolvency, it really is unfair to give HMRC a queue jump to recoup lost funds, when other businesses and individuals in the real economy may be well out of pocket.
The plan is to grant HMRC preferential status in insolvency proceedings from December 2020, and measures will make directors personally liable for a company’s tax liabilities where HMRC considers that avoidance or evasion is taking place or where there is evidence of phoenixes in the tax abuse using company insolvencies. I understand that the insolvency and restructuring trade body R3 is very concerned about the prospect of the policy. It feels very strongly that introducing such a policy would damage business lending and impede business rescue. UK Finance has suggested that the measure could hit lending to small firms by over £1 billion.
When I made representations in the Chamber on Second Reading, I explained that the policy is incredibly problematic. On the issue of phoenixism, R3 has suggested that the policy could lead to blameless shareholders, lenders, businesses and rescue professionals being made liable for the tax avoidance activities of rogue directors. What do Ministers intend to do to protect those who are innocent in the system from becoming liable under the proposals?
As well as having a detrimental impact on business and economic growth, restricted lending will make it harder to rescue businesses, increasing the knock-on effect of one business’s insolvency on other businesses and individuals further down the line. Business investment, returns to creditors and confidence in the UK’s corporate framework all stand to be damaged as a result. Ministers really need to give us a bit more detail about why they feel the policy is necessary.
Although the measure on tax abuse using company insolvencies can be mitigated through accurate legislative drafting and detailed guidance from HMRC, the SNP feels strongly that the policy to grant HMRC preferential creditor status should be withdrawn in its entirety. It is an introduction that could well prove a hammer blow to business rescue money across the UK, at exactly the same time as the Government are seeking to level up the economy and support businesses as they try to make their way through these difficult days. We all know of businesses in our constituencies that are really struggling and might not make it further than a couple of months ahead. Knowing that the policy is being introduced could have a detrimental effect on those who are supporting such businesses and on lenders.
In addition to scrapping the clause, the SNP believes that the UK Government must urgently introduce a comprehensive financial package to ensure a strong economic recovery, protect jobs and prevent new businesses from going under. With dire warnings emerging that up to half the loans issued under the bounce-back loan scheme are at risk of not being paid back, and with businesses defaulting on payments due to financial difficulties, it is vital that the Government introduce strengthened and tailored financial support urgently. The Treasury must heed the calls and turn its bounce-back loan scheme into grants for those who require them. It should write off debts for businesses that are facing increased hardship to ensure that they can survive in the long term and that jobs are protected wherever possible.
Many businesses are struggling to stay afloat during these challenging times, and despite the extensive financial support that has been provided by the Government, which we do not dispute, loans will not be the answer for every business. For many businesses, it is not income deferred, but income lost completely. For example, hospitality and tourism businesses will not be able to recoup that money, and loans will just put them further into debt.
It is important that the Government look at this matter very carefully and take on board the very substantial concerns that R3 has raised about the proposed policy, hence why we have tabled so many amendments. I would be grateful if the ministerial team could tell us exactly why this change is required and why it has been brought about.
Wes Streeting
I must confess that I come to this clause with a slightly different set of questions for Ministers to respond to. There is no doubt that in the current climate, the risk of insolvency to businesses is much greater, and it is right that the Government do all they can to stop preventable collapses, to safeguard jobs and to ensure that the UK is well positioned for the economic recovery that we hope will follow in short order, with the aim of making this recession as short and shallow as possible.
That is why my right hon. Friend the shadow Secretary of State for Business, Energy and Industrial Strategy and the shadow Minister for business and consumers, my hon. Friend the Member for Manchester Central (Lucy Powell), were prepared to work closely with their opposite numbers in the Department for Business, Energy and Industrial Strategy to expedite through the House of Commons the recent Corporate Insolvency and Governance Bill.
Turning to clause 95, the question I wish to pose to Ministers is why HMRC is only a secondary preferential creditor. HMRC will remain an unsecured creditor for the taxes that the bankrupt businesses owed, and we have had strong representations for HMRC to be a preferred creditor across the board, to ensure certainty and to recognise the fact that HMRC contributes, through tax collection and maintenance of general rules, to the general operating environment from which all businesses benefit.
Although we have heard that the risk exists that businesses may lose out as a result of HMRC having greater preferential status in the process of recovering money, it does not necessarily follow that the businesses that would lose out are those that most of us would have in mind as being of greatest concern, such as small to medium-sized enterprises. When a business becomes insolvent, bank loans need to be paid off first; unpaid bills to SMEs would have a much lower priority and be less likely to be paid off anyway.
I recognise the concerns expressed by UK Finance. They are concerns I heard in my previous life on the Treasury Committee, and I am always open to talking to colleagues at UK Finance and across the across the banking industry. However, they have to go somewhat further to make a more convincing case than they have outlined. It would be interesting to hear from the Minister why HMRC is only a secondary preferential creditor and why, on this occasion, the Treasury has not gone further.
To respond to the lobbying from the financial services industry, I would say that it was ever thus—when measures like are brought forward, it says that the sky will fall in and business lending will stop. There are challenges with business lending in this country, but it is stretching the imagination somewhat to say that such challenges will be presented by this modest clause.
Anthony Browne
As somebody who used to run the British Bankers Association, which turned into UK Finance, I was very involved in some of those earlier lobbying efforts. I must say that in this case, I simply do not believe it. I do not think this measure would have any impact on business lending; it is quite clear that the tax has already been paid by employers or customers, and it would have a very limited impact—virtually no impact—on the actual risk of a loan or the risk of default. I fully support the Government on this.
Jesse Norman
I am grateful to colleagues for their comments. I will talk about the clauses in a moment, but I will first enjoy this moment in Committee: a senior Opposition Member of Parliament says that he is resistant to financial sector lobbying, which I am thrilled about; and on the other side, someone who headed up the lobbying organisation says that, from an inside standpoint, we are talking about irrelevant minutiae. Let us enjoy for a second that rare moment of harmony and joy in Committee.
Alison Thewliss
From what the Opposition Front-Bench team said, I do not think that I have support for the amendment, so I am content to withdraw it, but I may return to the subject later. I beg to ask leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Clause 95 ordered to stand part of the Bill.
Clause 96 ordered to stand part of the Bill.
Clause 97
Joint and several liability of company directors etc
Question proposed, That the clause stand part of the Bill.
The Chair
With this it will be convenient to discuss, That schedule 12 be the Twelfth schedule to the Bill.
Jesse Norman
Clause 97 and schedule 12 introduce a new power to allow HMRC to tackle the behaviour of tax avoiders and evaders who seek to reduce their tax bill unfairly through the misuse of company insolvency. This measure tackles the small minority of people who use insolvency intentionally to sidestep tax liabilities. It does so by allowing HMRC to issue notices that make directors and other persons connected to the company jointly and severally liable for the company’s avoidance, evasion or phoenixism debts, as they are described, if insolvency is threatened. It is not linked to clauses 95 and 96, which make HMRC a secondary preferential creditor for certain tax debts.
The Government announced our intention to consult on tax abuse and insolvency at Budget 2017. The consultation ran from April to June in 2018, and the Government published a response document in November 2018. The Government also published draft finance Bill legislation for technical consultation in July 2019.
As I made clear when I discussed earlier clauses, it is the Government’s aim to support companies and help them to avoid insolvency, particularly at this very difficult and challenging time, and the measures recently announced to restructure the UK’s insolvency framework support this aim. This legislation will not impede those restructuring plans, and the measure focuses firmly on those who misuse insolvency in connection with tax avoidance or evasion, or who run up repeated liabilities that they then step away from.
In ordinary times, insolvency is a highly unfortunate but necessary part of commercial life. However, a small minority of people misuse insolvency for their own ends. They hide behind a company to engage in tax avoidance or evasion, or repeatedly build up tax debts, and then strip out the assets, liquidate the company and leave nothing to meet outstanding tax liabilities. Not only does this deprive the Exchequer of funds for important public services, but it undermines the insolvency process and adversely affects creditors and other businesses, and it casts the whole reputation of insolvency into disrepute. It is only right that we should act to discourage such misuse, and that is what this measure is designed to do.
Clause 97 introduces schedule 12, which contains details of the new regime and sets out conditions that must be met before the legislation will apply. First, paragraph 2 sets out the conditions that must apply before HMRC can issue a notice to an individual connected to a company that has engaged in tax avoidance or evasion. The conditions are: that the company has begun an insolvency procedure, or there is a serious risk that it will; and that the person was responsible for, facilitated or knowingly benefited from the avoidance or evasion.
Paragraph 3 sets out the conditions that must apply before HMRC can issue a notice to an individual who is connected to companies that repeatedly go insolvent with significant outstanding debts. Such companies are often referred to as phoenix companies, and it is widely agreed across the House that they are a blight on commercial life. The conditions are: that the person must have had a connection in the previous five years to at least two companies that began insolvency; that the person has a connection to a new company that carries out the same trade as the old ones; and that the amounts due to HMRC from the old companies total at least £10,000 and at least 50% of the amount due to unsecured creditors overall. That is an important safeguard to ensure that the measure focuses on catching those who play fast and loose with their tax. Paragraph 4 allows the amounts to be varied by a statutory instrument.
Wes Streeting
It is always the case that when a new measure is introduced, criticism can be made of it simply because it had not existed previously. In this case, it really is a reflection of the Treasury’s failure to clamp down effectively on the abuse of the system and the people trying to avoid and evade their taxes. Despite the Government’s previous efforts to impose greater accountability for tax avoidance and evasion, there are still too many holes in the system, but I welcome the fact that clause 97 and the schedule will go some way to addressing that.
What is the threshold of responsibility for the conduct? When will HMRC consider the serious possibility that the tax liability might not be paid? At what stage will HMRC conclude that there is likely to be a tax liability arising from the avoidance? Might the Treasury go further, for example, by asking HMRC to report on how much money is lost by companies participating in or promoting tax avoidance schemes and then becoming insolvent before HMRC can counter the schemes and collect the money owed? Following on from that, how much money would be collected if those companies’ directors, participators and associated persons were made jointly and severally liable?
Alison Thewliss
I want to comment briefly on the huge gap that exists within Companies House as part of this process. If we go after companies and directors that are involved in phoenixing, why can that not be stopped at source when those companies are registered at Companies House? Why is there no link to the Government’s Verify scheme for those who wish to register companies there? Companies House is obliged only to register the information, not to check whether any of the information is accurate, correct or related to any other kind of activity. It is not involved in anti-money laundering obligations, but it really should be. Will the Minister look carefully at the question of Companies House? That could be a key part of preventing phoenixing in the first place. For example, I have a friend who employed a builder to do work on his house for his disabled son. The builder went bust and phoenixed, as he has done on several occasions. My friend is out of pocket, and that company continues to trade. It is employing sub-contractors who lost out last time because there is nobody else to hire them in that small community. There needs to be a stop on those types of people and behaviours, and I urge the Minister to consider ensuring that Companies House is a big part of that.
Jesse Norman
I thank both hon. Members for their comments. I draw from them strong support for the clause, although it was caveated in the way they described. Let me address the issues that they raised.
The hon. Member for Ilford North asked, “Why not do this earlier?” There is a long-standing principle in company law that the corporate veil should not be pierced, and limited liability should exist in place. As he will recall, there was a moment not so long ago when HMRC had Crown preference and was always the first, or close to the first, creditor to get paid out. It then got moved to the back of the queue.
As we think about the current insolvency and abuse regime, there has been a process of further reflection on all the different aspects of it, and that inevitably includes the phenomenon that we have seen. My impression—I do not know whether it is true—is that phoenixism is a better recognised phenomenon and a more widely understood problem than it has been. This is part of a much wider effort that has been made—particularly since I have been Financial Secretary to the Treasury, but before that, too—to really push on the issue of avoidance and evasion, and that is what we are doing.
The hon. Gentleman also asked about process. It is a perfectly good, important question, and I have been through it myself with HMRC officials. I will not read out the conditions in each case, but there are central cases for the issuance of avoidance and evasion notices, avoidance and evasion facilitation notices, and repeated insolvency notices. Each has some quite specific criteria sitting underneath it. For avoidance and evasion facilitation notices, a company must have begun an insolvency procedure or given assurance that it will; it must have incurred a penalty for facilitating tax avoidance or evasion; there must be a serious risk that some or all of that liability will not be paid; and the person must have a relevant connection to the company at the time that the behaviour leading to the penalty occurs. There are important threshold tests that must be met, and there are appeals processes against notices that have been filed, which are designed to provide safeguards, for all the reasons that one might imagine.
I have a degree of sympathy for the point that the hon. Member for Glasgow Central makes about Companies House. In the promoter strategy, which we published at the time of the Budget, we looked to create a more integrated approach to trying to crack down on abusive avoidance and evasion, and the promotion of avoidance and evasion. It has been in part about pulling together different entities, one of which might be Companies House and another of which might be the Advertising Standards Authority, if the two had been outside the purview of a more traditional approach. I take the hon. Lady’s point, and I thank both hon. Members for their support for this important clause and schedule.
Question put and agreed to.
Clause 97 accordingly ordered to stand part of the Bill
Schedule 12 agreed to.
The Lord Commissioner of Her Majesty’s Treasury (David Rutley)
One more!
Clause 98
Amendments relating to the operation of the GAAR
Question proposed, That the clause stand part of the Bill.
The Chair
With this it will be convenient to discuss the following:
New clause 12—General anti-abuse rule: review of effect on tax revenues—
‘(1) The Chancellor of the Exchequer must review the effects on tax revenues of section 98 and Schedule 13 and lay a report of that review before the House of Commons within six months of the passing of this Act.
(2) The review under sub-paragraph (1) must consider—
(a) the expected change in corporation and income tax paid attributable to the provisions in this Schedule; and
(b) an estimate of any change, attributable to the provisions in this Schedule, in the difference between the amount of tax required to be paid to the Commissioners and the amount paid.
(3) The review under subparagraph (2)(b) must consider taxes payable by the owners and employees of Scottish Limited Partnerships.
This new clause would require the Chancellor of the Exchequer to review the effect on public finances, and on reducing the tax gap, of Clause 98 and Schedule 13, and in particular on the taxes payable by owners and employees of Scottish Limited Partnerships.
That schedule 13 be the Thirteenth schedule to the Bill.
Jesse Norman
One more clause unto the breach, dear friends; or close the wall up with our English dead, and possibly our Scottish dead as well—our British dead. We will rephrase the bard.
Clause 98 makes minor procedural and technical changes to the general anti-abuse rule referred to as the GAAR to strengthen its procedural efficiency and ensure that it operates as originally intended. The clause tackles a small minority of taxpayers who deliberately avoid, in this case, providing information and thereby frustrate HMRC’s ability to pursue inquiries into abusive tax arrangements under the GAAR.
The clause also introduces some minor amendments to remove ambiguity and to ensure that, where HMRC decides not to pursue a case using the GAAR, inquiries can continue using other arguments. This measure was announced at Budget 2018 and the Government published draft legislation for technical consultation in July 2019. The changes will help to protect over £200 million in tax revenue by ensuring that the GAAR works effectively.
As I have often said, the Government take a firm line against those who seek to avoid tax and try to circumvent the rules. The GAAR was introduced in July 2013 and it has become an important part of the Government’s strategy to clamp down on tax avoidance; to deter individuals from engaging in it in the first place; and to prevent promoters from marketing and selling such arrangements.
The GAAR focuses on tackling abusive tax avoidance. By abusive, I mean the sort of arrangements that push the boundaries of the law and are clearly not within the spirit of what Parliament intended. The GAAR legislation asks whether a specific tax arrangement is abusive and applies what is known as the “double-reasonableness” test. Tax arrangements are considered abusive if they cannot reasonably be regarded as a reasonable course of action. An independent advisory panel provides an opinion to HMRC on whether a tax arrangement constitutes a reasonable course of action.
The clause will strengthen procedural changes made to the GAAR previously in 2016 which tackle mass-marketed tax avoidance schemes. The changes in 2016 introduced provisional counter-action notices, which allowed HMRC a 12-month window to gather information and consider whether to continue a GAAR challenge or pursue a different approach.
Some taxpayers and advisers, I am sorry to say, have deliberately refused to co-operate with HMRC during that window, deliberately withholding information to prevent HMRC from making an informed decision. In effect, those people are seeking to run down the clock and it is right the Government take action to prevent this. At the moment, HMRC has no recourse against such people. Once that window closes, no further GAAR action is possible and HMRC is unable to pursue any alternative non-GAAR approaches.
The clause replaces the provisional counter-action notices introduced in 2016 with a simpler protective GAAR notice. This will enable HMRC to carry on its investigations beyond 12 months and it mirrors the way normal tax inquiry notices work. The amendments will also confirm that where HMRC decides not to pursue the GAAR, cases can still be pursued using a technical non-GAAR argument. That has always been the intention of the legislation.
The changes remove the incentive not to co-operate with requests for information and ensure that appropriate safeguards, such as appeal rights and the oversight exercised by the independent GAAR advisory panel remain in place. Given that the GAAR targets the abusive end of the avoidance spectrum, the changes proposed here will only affect a small minority—those who persistently go to extreme lengths to sidestep the rules. These changes are needed now to ensure that HMRC can take action against those who are constantly looking for new ways to avoid paying their fair share of tax.
New clause 12 in the name of the SNP requires the Chancellor of the Exchequer to review the impact of clause 98 and schedule 13 within six months of the Bill receiving Royal Assent. Specifically, it would require the Chancellor to review the effect on public finances and on reducing the tax gap, particularly on taxes payable by earners and employees of Scottish limited partnerships.
In response, I highlight to hon. Members that amendments to the GAAR are minor procedural changes designed to ensure the policy operates as originally intended. The effects of these changes to the regime will not be visible within six months’ time. As with all tax measures, however, we will continue to review and monitor the effect of this change, as is standard.
HMRC already publishes the “Measuring the tax gap” report annually which shows how the tax gap has changed year on year for different forms of behaviour and different taxpayer groups. HMRC also publishes an annual report and accounts that provide specific information on the impacts of the GAAR, including the number of GAAR opinion notices issued. For that reason, I ask the Committee to reject new clause 12.
To sum up, these amendments ensure that the GAAR remains an effective tool in HMRC’s armoury for tackling abuse of tax avoidance. I therefore commend the clause and the schedule to the Committee.
Wes Streeting
As the Financial Secretary outlined, this clause is designed to tweak the system. Therein lies my criticism and my concern. The challenges we face when it comes to tax avoidance and abuse have been well documented during this Committee in relation to the loan charge. Even where Government have sought to clamp down on avoidance and HMRC has put in place controversial but rigorous arrangements, there continue to be, to this day, companies and promoters that tout schemes that are patently against the spirit and letter of the law. HMRC has made it clear that such schemes do not work, but those companies and promoters are still at it.
The most recent examples I have seen are of umbrella companies targeting public sector workers in the NHS. Rather than just tweaking, Ministers should be trying to give the general anti-abuse rule more bite. For example, they could extend the general anti-abuse penalty rules to apply a 100% penalty for any tax avoidance scheme that fails the GAAR or, more likely, fails for some other reason, but would have failed the GAAR as well. They could prevent operators of avoidance schemes simply running away from their liabilities and victims, making directors, shareholders and other associated persons jointly liable for the new GAAR penalty, as I alluded to in the previous discussion.
Umbrella companies create a unique opportunity to flog tax avoidance schemes to low-paid workers. We see that exploitation taking place. We could counter that by making umbrella company directors and associated persons jointly liable for unpaid PAYE, national insurance and VAT. We should make the promoters, scheme designers and independent financial advisers jointly liable for unpaid tax and penalties from a failed scheme, with a safe harbour designed to protect people acting in good faith. For example that could be where a promoter followed specific tax advice from a regulated adviser, where factual assumptions in advice were reasonable or where advice was shared with scheme participants; the list goes on. There are reasonable exemptions, or reasonable assessments could be made, where people are acting in good faith, but we still see far too many examples of people designing or promoting schemes in the full knowledge that they will make a quick buck but will not pay the consequences.
As we have seen, the Government and HMRC are trying to clamp down. When they catch up with people who have followed advice, often in ignorance of tax rules and in the belief that they were following good, independent financial advice, the bite really hurts. Why are we not going after the scheme promoters much more aggressively? Despite all the controversy—the headlines generated off the back of the loan charge, the debates in Parliament, inquiries and grillings before the Treasury Committee—we still have not got to the heart of the issue.
In my opinion, and that of many people following our proceedings, the people who design, contrive and promote such schemes are still not paying the price for giving bad advice to their customers, who believe they are following good advice and the law. We are not going to quibble about clause 98 and the tidy up it is doing, but I am disappointed by the lack of aambition. The Treasury has to be much more aggressive with the promoters than it is currently.
Alison Thewliss
In new clause 12, we mention the issue of Scottish limited partnerships. I make no apology for doing so, as they are still a problem. We only need to look at the ongoing campaign journalism by Richard Smith and David Leask on this issue to know that Scottish limited partnerships are being used in nefarious ways to move money and goods around the world. They have been involved in war crimes and all kinds of things. The loopholes existing in Scottish limited partnerships and Companies House must be closed by the Government. They are harming not only individuals who suffer the effects of these crimes, but Scotland’s reputation. They are called Scottish limited partnerships, but Scotland really has no part in it; they are an historic arrangement, but they are governed here.
There are still people not doing the simplest things such as registering persons of significant control. The answer to my recent parliamentary question suggested that 948 companies have still not registered a person of significant control. That is dramatically down from where it was, but it tells me that people are using other means to hide their money, rather than going through Scottish limited partnerships, and that no Government fines have been levied on the 948 companies that have not registered a person of significant control. That is money that the Government could have in their pocket. They are deciding that they do not want to pursue that for their own reasons. It really does stick in my craw that this is a continual issue: I have to raise it on the Finance Bill and the Scottish National party has to raise it in this House.
We are also concerned about the tax gap. The tweaks being made here are not really going to change that significant gap. In June 2019, HMRC published revised estimates, which put the tax gap at £35 billion for 2017-18, representing 5.6% of total tax liabilities. The Minister, no doubt, will say that the tax gap has fallen—it has—but that does not disguise the fact that it still exists, and that tax is money that could be coming into the revenues. It could be supporting businesses and individuals across the country and we could be abolishing policies such as the two-child limit, because the money would be there in the Government’s bank account. The Government could use that money rather than not collecting it. I could go into great detail, which I have here, about all the anti-avoidance mechanisms that have happened. I am sure other hon. Members are as warm as I am and would like to get some fresh air, so I will skip that in the interest of the patience of all colleagues.
We do need workable general anti-avoidance rules. They must tackle tax avoidance in all its forms. They must not exempt existing established abuse from action being taken. They must include international tax abuse within their scope. They must give the right to the tax authority to take action against tax avoidance, defined in an objective fashion capable of being numerically assessed, without the consent of the unelected authority. They must increase the burden of proof on this issue on to the taxpayer.
In 2014, the coalition Government announced the introduction of a system of follower notices and accelerated payment notices. In cases where someone is in dispute over their assessment, HMRC may issue a follower notice if this arises from the use of an avoidance scheme that is the same or similar to arrangements that HMRC has successfully challenged in court. In July 2017, HMRC reported that it issued over 75,000 such notices worth in excess of £7 billion and managed to collect nearly £4 billion. That is still a significant gap of £3 billion. HMRC must be able to collect the taxes it is due in real time instead of waiting for those judicial decisions.
With Scottish limited partnerships, the extent of the abuse of the current system is laid bare in the Global Witness report “Getting the UK’s house in order”, which highlights the deficiencies at Companies House that have been going on for many years. This needs to be dealt with soon. Reviews have been carried out, things have been talked about, but there has not really been any action. It makes no sense to me that we have such a system but do not allow it to catch the people it should be catching.
I sat on the pre-legislative Joint Committee for the Registration of Overseas Entities Bill in the last Parliament. That Bill seems to have disappeared completely. It would help to tackle some of the money laundering that goes on with property registered in the UK. People across the country, particularly in many London boroughs, see blocks of flats with nobody living in them. People could live in those flats. They are being used for money laundering and moving money about. We need to bring that Bill back and ensure those people are held to account. We should close these loopholes in the system and ensure that the tax that is due is collected for the benefit of all of us.
Jesse Norman
I am grateful to colleagues for their contributions. I want to take up some of the points made by the hon. Member for Ilford North. The delicacy and agility in his ability to pivot from detailed scrutiny to a swingeing extension of tax powers, and new taxes galore, is interesting to watch, but the fertility of his invention is great, and I will read his suggestions with some care, in the record. I am grateful to him for that.
The ugly truth of the matter is that tax avoidance and, in particular, the promotion of it, is an amoebic activity that tends to flow into empty spaces and to be parasitic, if amoebas can be parasitic—I am not sure whether they can—on good activity. So, right next to where we see good or lawful and legal activity, we can see some unpleasant, nasty and abusive tax avoidance.
The hon. Gentleman is right to focus on how we see new forms emerging. It means that the battle against tax avoidance and evasion is never fully won. I hope that he will take some comfort from all the work we are doing on the promoter strategy. It is designed not merely for potential new powers, but for a different way of thinking about disrupting the economics of the supply chain. To pick up on a point that he raised about effectiveness, the GAAR can lead to a fine of 60% of the counteracted advantage. It can be pretty substantial, and it has genuine teeth.
I hope what I say in responding to the point made by the hon. Member for Glasgow Central on Scottish limited partnerships falls within the framework of the Bill. The issue is well understood, and there is public concern about it, which is shared across the House. She will be aware that BEIS introduced some new reporting requirements for Scottish limited partnerships in June 2017. Since then, new registrations have declined sharply. Of course, there is a sump of existing partnerships and, as she will be aware, BEIS is consulting on wider reforms to prevent the criminal misuse of those partnerships but retain their core and, in many ways, effective and important other purpose. It announced reforms in that area as of December 2018, and the Government have made clear that they will legislate when parliamentary time admits. So although the matter does not, in its preponderance, fall directly within the clause, she is right to raise it and the Government are fully sighted in that regard, and fully seized of it.
Question put and agreed to.
Clause 98 accordingly ordered to stand part of the Bill.
Schedule 13 agreed to.
Ordered, That further consideration be now adjourned. —(David Rutley.)