House of Commons
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Oral Answers to Questions
(4 years ago)
Commons ChamberRead Full debate Read Hansard Text Read Debate Ministerial Extracts
Scott Benton (Blackpool South) (Con)
Damian Hinds (East Hampshire) (Con)
The Secretary of State for Health and Social Care (Matt Hancock)
We are processing coronavirus tests on an unprecedented scale and expanding capacity further, having already met our testing capacity target of 500,000 tests a day by the end of October. We now have five Lighthouse labs operating across the UK, with two more announced yesterday, and significant progress on next-generation testing technologies.
Scott Benton
I congratulate my right hon. Friend on the tremendous progress he has made over recent months on increasing our testing capacity, including the delivery of a new site in my constituency. The recent announcement regarding care homes is welcome. How quickly does he think the trial process can be concluded, so that we can roll out a nationwide scheme to ensure that those in care homes can finally see their loved ones again?
Matt Hancock
We have discussed many times in this House the importance of the use of testing because of the terrible dilemma of wanting to keep people safe in care homes, yet also wanting to allow visiting. Testing can help to resolve that. The pilots are ongoing in some parts of the country, and I very much hope that we can get to a position where we can offer testing to enable visiting across the country before Christmas
Damian Hinds
I welcome the testing pilots that are happening, including in Southampton. How will the Government be able to support local authorities and public health teams with the logistics of mass testing, particularly in large rural areas such as Hampshire?
Matt Hancock
Increasingly, the test itself is only one part of getting a high-quality testing system. The logistics around it are also vital. We are already funding local authorities across the country to support them to roll out mass testing, but we will learn from the pilots, including in Hampshire, to see what extra might be needed.
Jonathan Ashworth (Leicester South) (Lab/Co-op)
Testing, backed up by tracing and isolation, is key to avoiding further lockdowns. At the Secretary of State’s press conference yesterday, we heard that tier 1 has had “very little effect” and that the tiers must be strengthened. Can he confirm that it is the Government’s intention to impose a tougher set of restrictions on tier 1 areas post this lockdown?
Matt Hancock
It is too early to do the analysis that the hon. Gentleman requests, but of course, we remain vigilant.
Jonathan Ashworth
We will soon be asked to make a decision on the future of the lockdown, so the earlier we get that information, the better.
Testing for NHS staff is crucial for dealing with the backlog in NHS care. Last week, we learned that 139,000 people are waiting beyond 12 months for treatment. We now know that 252,000 people are waiting beyond 18 weeks for orthopaedic surgery, which is often hip and knee replacements, and 233,000 patients are waiting beyond 18 weeks for eye surgery—many could go blind. People are waiting longer for gynae surgery and heart valve surgery, and many are languishing on trolleys in dangerously overcrowded A&Es. As well as testing NHS staff, Ministers have promised to give the NHS whatever it takes. Can the Secretary of State guarantee that the spending review will deliver the resources, beds and capacity to bring waiting lists down?
Matt Hancock
The good news is that we are managing to continue to drive through the backlog that understandably built up in the first peak. Instead of attacking the NHS, the hon. Gentleman should be backing the NHS and thanking it for the incredible hard work that it is doing right now and will be doing this winter.
Mike Wood (Dudley South) (Con)
The Minister for Health (Edward Argar)
The Prime Minister has announced £3 billion to support NHS capacity this winter. Among other things, that money funds our Nightingale hospitals, so that surge capacity is available, and the NHS’s ongoing access to additional independent sector capacity. It also supports the safe discharge of patients, helping to reduce pressure on beds. In addition, £450 million of capital funding has been announced to upgrade and expand A&Es across the country, to help prepare the NHS for winter, and that money is already being spent.
Mike Wood [V]
The £3 million announced to increase winter capacity in Dudley is hugely welcome, but will my hon. Friend also look at Dudley’s bids for capital funding for a hybrid theatre and reconfiguration of critical care? Will he join me on a visit to Russells Hall, so that he can see the transformative effect that those projects would have on care for patients in Dudley South?
Edward Argar
I am delighted that my hon. Friend’s constituents will benefit from £3 million to increase capacity at Russells Hall Hospital in Dudley as part of the investment to upgrade A&Es ahead of winter. Future NHS capital spending will, of course, be determined at the upcoming spending review, but once our settlement has been confirmed with the Treasury, we will consider carefully how projects are prioritised within it. In the meantime, I encourage the Dudley Group NHS Foundation Trust to discuss its proposals with NHS England and NHS Improvement. I would be happy to meet my hon. Friend to discuss this, because I know how hard he campaigns on this issue, and I would be delighted to take him up on the offer of a visit when I am able to.
Justin Madders (Ellesmere Port and Neston) (Lab)
The NHS will only survive the winter if its workforce are valued and supported. The evidence from the British Medical Association to the Health and Social Care Committee this morning was stark. So does the Minister understand how demoralising it is for staff to hear reports that they may face yet another two-year pay freeze? I asked those on the Government Benches to rule this out last week. I got no answer, so I ask them again today: will they rule out a pay freeze for NHS staff?
Edward Argar
I am grateful to the hon. Gentleman. He is quite right to highlight the amazing work that our NHS and social care workforce have done throughout this pandemic, as they do every year, and I pay tribute to them for that. As he will know, the NHS agrees with its staff multi-year pay deals set by independent recommendations, and we continue with that process.
Sarah Olney (Richmond Park) (LD)
The Secretary of State for Health and Social Care (Matt Hancock)
In addition to giving local directors of public health access to tests, NHS Test and Trace will provide access to training, clinical, operational and service design guidance, and communication and engagement support. In addition, all local authorities have funding available up to £8 per head of population to support the roll-out.
Sarah Olney
I welcome the allocation of lateral flow tests to both Kingston and Richmond in my constituency to allow for mass testing. Can the Secretary of State confirm whether, in addition to the support he has just outlined for the testing, there will be additional resources to support local tracing efforts and to support those who are found to need to isolate?
Matt Hancock
Absolutely, the funding to support people who need to isolate is in addition to the funding I just outlined, which supports both the roll-out of mass testing and local contact tracing, and we always keep these things under review.
Richard Thomson (Gordon) (SNP)
Martyn Day (Linlithgow and East Falkirk) (SNP)
The Parliamentary Under-Secretary of State for Health and Social Care (Jo Churchill)
We have a four-month stockpile of all covid-critical PPE in place. Thanks must go to the tremendous contribution from UK manufacturers, including Honeywell in Motherwell in Scotland, which now meet 70% of our PPE needs. We have distributed 4.7 billion items, ensuring health and care providers and others have access to the critical protective equipment that they need to help keep everyone safe.
Richard Thomson
According to Treasury figures, the UK Government have spent £15 billion to date on PPE contracts, and the majority to date have been awarded without open tendering, often to those with connections to the governing party or to companies with no PPE experience at all. Does the Minister consider it is acceptable that, instead of that resource being used to protect frontline healthcare staff, so much of it has been squandered on millions of items that are absolutely unusable because they do not meet NHS standards, and how does she propose to restore this Government’s reputation for competence, probity and openness in the tendering process?
Jo Churchill
The global pandemic presented us with unprecedented challenges in securing the volumes of PPE required. We moved swiftly in order to make sure that we kept people safe. We procured goods and services, and worked with extreme urgency in accordance with procurement rules and Cabinet Office guidance. All offers were prioritised based on volume price, clinical acceptability and lead time. I am happy to reiterate: we have four months’ supply.
Martyn Day
The UK Government removed the zero VAT rating for PPE on 1 November, increasing costs by 20%. Social care and other frontline services are already having to pay higher prices and to buy larger quantities of materials, so why are this Government making it even more expensive to protect key workers during what is the second wave of covid?
Jo Churchill
I would like to thank the hon. Gentleman. In the main, many of our frontline operators are getting it free—social care, general practice, dentistry, optometry and so on. The relief was designed specifically to relieve the burden of VAT on sectors particularly affected by coronavirus while supply did not match demand. Now the Government are able to supply covid-related PPE across all sectors, the burden of VAT will still not fall on frontline providers for all covid-related PPE and demand will be met. Most businesses that make taxable supplies can recover the VAT that they incur on purchases of PPE as business expenses. They will therefore be able to reclaim all VAT after the 31st. But I reiterate: for the majority of frontline healthcare, it is free.
Dr Rosena Allin-Khan (Tooting) (Lab)
The price of an FFP2 mask bought by the Government increased by 1,400% in just six weeks to the end of May and gowns by 350%. I welcome all efforts by the Government to procure PPE, but I have concerns that we may not be getting a fair price. One company, PPE Medpro Ltd, was given Government contracts worth over £190 million. PPE Medpro Ltd had no previous experience and coincidentally was only set up on 12 May 2020. Reports have suggested that the company has substantial links to Conservative party donors, so can the Secretary of State or the Minister categorically assure the country that no Conservative party donors are profiteering from the pandemic?
Jo Churchill
Our plan on PPE has to be to stabilise the system and build resilience. That was outlined in the PPE strategy published on 28 September. [Interruption.] Children! Thank you.
Jo Churchill
I am sorry, Mr Speaker, but it is that old habit from being a mother of four.
We procure goods and services, as I have said, with extreme urgency in accordance with procurement rules and Cabinet Office guidance. We are confident of our supply, with four months’ worth of covid-critical PPE, over 70% of it now manufactured in the UK, providing UK businesses with jobs and ensuring that all health and care providers have access to critical protective equipment needed to keep patients and staff safe.
Philip Dunne (Ludlow) (Con)
Stephen Hammond (Wimbledon) (Con)
The Minister for Health (Edward Argar)
On 2 October, £3.7 billion-worth of funding was confirmed for 40 new hospitals, with a further eight schemes invited to bid for future funding, to deliver a total of 48 hospitals by 2030. Four in the programme are already in construction, and three others have commenced early, enabling works on site. The hospital building programme is, of course, in addition to significant upgrades to 20 hospitals, which will be complete by March 2024, and is part of a wider programme of investment.
Philip Dunne [V]
I am grateful to the Minister for those clarifications, and I obviously welcome this programme, but before he came into office, in March 2018, his Department allocated £312 million for a major capital programme at the Royal Shrewsbury Hospital and the Princess Royal Hospital in Telford. Now that an independent reconfiguration panel has confirmed that these decisions were properly made and should proceed, the trust is seeking approval from his Department for advance of funds for enabling work by architects, structural engineers and others. Can he confirm when this requested £6.3 million will be forthcoming?
Edward Argar
I am pleased to confirm to my right hon. Friend, a distinguished predecessor of mine in this office, at this Dispatch Box that £6 million-worth of funding has been approved in principle, allowing Shrewsbury and Telford Hospital NHS Trust to develop its plans and produce a business case for this scheme. The Department will continue to work closely with the trust to understand how the right support can be provided centrally to develop an affordable case for the overall scheme and to maximise the impact of this funding, and I will be writing to my right hon. Friend with more detail later today.
Stephen Hammond
The independent reconfiguration panel overwhelmingly backed the plans for the development at the Epsom and St Helier trust; does my hon. Friend agree that the Labour party should take away the threat of a judicial review and allow this investment to take place so that my constituents and the constituents of south-west London can benefit from greater access and better-quality healthcare?
Edward Argar
I am delighted that my right hon. Friend the Secretary of State recently gave these plans the green light following independent advice from the IRP, and I am pleased that this will mean my hon. Friend’s constituents and, indeed, many others will benefit from a new state-of-the-art NHS hospital in Sutton. Patients and the public will now be engaged in shaping the detail of the new services; I encourage all local people to participate positively in that process and the council and others to get behind that scheme and that record investment by this Government in his area.
Kevin Hollinrake (Thirsk and Malton) (Con)
The Secretary of State for Health and Social Care (Matt Hancock)
I have regular discussions with the Chancellor of the Exchequer and others. The best strategy for both health and the economy is to suppress the virus, supporting the NHS and the economy, until a vaccine can make us safe.
Kevin Hollinrake
The economic effect of the lockdown on the hospitality sector in particular is severe. In large constituencies such as Thirsk and Malton, the infection rate can vary significantly across different districts. When my right hon. Friend moves us back to a tiered system on 3 December, will he look at allocating tiers by district rather than by county to keep the economy as open as possible?
Matt Hancock
Throughout the process of the tiered system, we have always looked at a level of granular detail, whether at district council level or, indeed, ward level in some cases, to make sure that we have the appropriate measures in the appropriate places. While it is too early to say exactly how we will proceed from 3 December, that is a commitment that I can make to my hon. Friend.
Dr Philippa Whitford (Central Ayrshire) (SNP) [V]
As I have highlighted previously, covid is spread not just by droplets but by airborne particles, so good ventilation is key to reducing the risk of spread indoors, such as in hospitality. On 20 October, the Secretary of State agreed to speak to the Chancellor about removing VAT from ventilation and air-purification systems to make them more affordable. Can the Secretary of State tell us what discussions he has had with the Chancellor and what the outcome was?
Matt Hancock
There has been work on promoting ventilation in government. The hon. Lady is absolutely right that ventilation is important and that the scientific evidence on the aerosol transmission of coronavirus has strengthened over recent months.
Dr Whitford [V]
If that is the case, can the Secretary of State clarify whether we will hear an announcement from the Chancellor in the near future on supporting the installation of such systems? Even with the good news about potential vaccines, it will be a long time before most of the population are vaccinated, so what is the Secretary of State’s strategy to control covid over the coming year?
Matt Hancock
Our strategy is to suppress the virus and support the NHS and the economy until a vaccine can make us safe. Increased ventilation can help to reduce transmission, so it is an important consideration, among many others, for how we tackle this disease.
Rosie Cooper (West Lancashire) (Lab)
The Parliamentary Under-Secretary of State for Health and Social Care (Jo Churchill)
This Mouth Cancer Action Month is a timely reminder that everybody should seek advice if they are worried. Early in the first wave, dental services were suspended, but rapidly, over 600 urgent dental centres were set up to deliver care. Since June, dentists have continued to prioritise urgent treatment and vulnerable groups and to provide routine care across the dental network. They have worked hard to restore dental activities, while keeping patients and staff safe, owing to some aerosol-generating procedures that mean we have to take particular care in the dental sector.
Rosie Cooper [V]
I recognise the Minister’s comments that people are trying to get back to work in dentistry, but the reality is that there is massively reduced dental capacity; routine dental work is not going ahead as easily as people might imagine. Dentistry also plays a vital role in identifying mouth cancers. Following on from a previous question, I wonder what help the Minister can give dental surgeries to improve their capacity. Currently, they have to have an hour’s gap between patients. I understand that ventilation systems are available, which can help, but unfortunately they are very expensive. What help can Ministers give to enable dentists’ surgeries to purchase that equipment? Can grants be made available? This is a really urgent question.
Jo Churchill
I recognise the hon. Lady’s concern in this area. I assure her that I am working closely with NHS Improvement and the chief dental officer. I have held several meetings over the past week alone, and tomorrow I am meeting the chair of the British Dental Association. Some areas of challenge that she articulates, such as fallow time and so on, are things that we are actively working on at pace, as well as looking at specific testing solutions for dentistry. We are also looking at the issue of ventilation. I am happy to report when further work has been achieved.
Mrs Sheryll Murray (South East Cornwall) (Con)
Rob Roberts (Delyn) (Con)
The Secretary of State for Health and Social Care (Matt Hancock)
Yesterday, the House will know that we secured 5 million doses of the Moderna vaccine, so we have now secured access to 355 million vaccine doses through agreements with seven separate vaccine developers. We have secured them for the whole UK.
Mrs Murray [V]
I thank my right hon. Friend for that answer. What assessment has he done of the logistics necessary to deliver a vaccine to more rural areas, such as Cornwall?
Matt Hancock
We have done a huge amount of work. The deployment of the vaccine is, of course, being led by the NHS, which reaches into all parts of the UK. Our principled approach is that we will deploy the vaccine according to clinical need in every single part of the UK at the same time. That, of course, includes rural areas. A significant amount of work has gone into how best to deploy to rural areas, especially as some of the people who clinically will need to get the vaccine first are also those who might find it most difficult to travel. It is a very important question on which a huge amount of work is being done.
Rob Roberts [V]
I thank my right hon. Friend and fellow one nation Conservative for his hard work and that of his Department in impossible circumstances this year. Kate Bingham and the vaccine taskforce have done an amazing job in securing so many doses of vaccines, as and when they become available, which will be centrally procured by the UK Government and equally available across all parts of our United Kingdom. Does my right hon. Friend agree that that shows the power of all parts of the UK speaking with one voice and working together for the good of our entire Union?
Matt Hancock
I feel very strongly about this, and I agree very strongly with my hon. Friend. We should take forward this vaccine and ensure it is available fairly and equally across all parts of our United Kingdom. Of course, it will be deployed in each of the devolved nations through the devolved NHS. I have been working closely with my counterparts, and the four NHS organisations have been working together. Ultimately, let us hope that should a vaccine become available—we still do not yet have one authorised—it will be a moment at which the whole country can come together in support of making sure that those who are clinically most vulnerable will get support first wherever they live.
Damian Collins (Folkestone and Hythe) (Con)
The Secretary of State for Health and Social Care (Matt Hancock)
The Culture Secretary and I discuss regularly with social media platforms the action that is needed to tackle vaccination disinformation online. I am encouraged by the fact that social media companies who have attended meetings with us have agreed to commit to the principle that no user or company should directly profit from covid-19 vaccine disinformation and to ensure a timely response when we flag such content to them.
Damian Collins
It is obviously tremendous news that a vaccine will be available and that the people in the UK may be among some of the first in the world to receive it, but it is important that there is public confidence in the vaccine. The anti-vaccine movement is damaging: it is a threat to public health. Does my right hon. Friend agree that social media companies should not just be taking down anti-vaccine material when they are notified of it, but proactively looking for it on the internet and removing it themselves?
Matt Hancock
Yes, absolutely. A critical part of tackling disinformation is providing accurate, fair and objective positive information, and my hon. Friend is absolutely right about this point. The social media companies are working—and we are providing content for them—to ensure that proper, accurate information that the public can trust from the NHS about the effectiveness of vaccines can be promoted, as well as taking action to remove information that is not accurate and not correct.
Ellie Reeves (Lewisham West and Penge) (Lab)
The Minister for Care (Helen Whately)
Visits from loved ones are what makes life worth living for many care home residents, yet, sadly, these have been too few over the last few months. Unlike the first lockdown, during this period of national restrictions, we want visits to be able to continue. That is why we published new guidance on 5 November advising care homes of the steps that they can take to allow safe visiting while there are high rates of covid in the community. Yesterday, we launched our visitor testing trial and plan to offer visitor testing to care homes across the country by Christmas.
Ellie Reeves [V]
There are almost 2,000 people living with dementia in Lewisham and for those in residential care, a lack of social interaction through visits can cause their condition to deteriorate. Testing for family and friends is the way forward, but the Government’s pilot for this was launched only this week and just 20 care homes are included. With the festive period rapidly approaching, why was this not done months ago, and is it not just another example of the Government delivering too little, too late?
Helen Whately
We have been testing and have prioritised testing in care homes going back as far as May, and we have been carrying out whole care home testing. We are now testing over 500,000 staff and residents in care homes every week. Now, as testing capacity increases, we are launching the visitor testing trial with 20 care homes across Hampshire, Devon and Cornwall. We will use the lessons from that trial to roll out testing more widely across the country as fast as we possibly can.
Liz Kendall (Leicester West) (Lab)
I am afraid the Government’s pilot scheme simply fails to understand the scale or urgency of the task. The average time someone spends in a care home before they pass away is two years, so after eight months of not being able to visit, families do not have a moment to lose. If the Government believe that weekly tests make it safe for care home staff to go to work, why not just do the same for families? Will the Minister now agree that a proportion of the 157,000 tests that are currently spare capacity every day will be ring-fenced for family visits so that we can safely bring all families back together in time for Christmas?
Helen Whately
I absolutely want to enable relatives to go and visit their loved ones in care homes, but we have to remember that we are against a backdrop where covid is incredibly cruel to those living in care homes. We have seen outbreaks that have gone from one resident across to almost all residents within a few days, with staff also affected, so we have to get the balance right. We have to make sure that we do this in a way that is safe to residents and staff. That is why we are carrying out the trial to learn the lessons, so that we do it right and so we can then safely roll out testing and more visiting across the whole country.
Mrs Heather Wheeler (South Derbyshire) (Con)
The Secretary of State for Health and Social Care (Matt Hancock)
The Liverpool pilot will help to inform a blueprint of how mass testing can be achieved and how rapid testing can be delivered at scale. We are now making mass testing available right across the country.
Mrs Wheeler [V]
I thank my right hon. Friend for his reply. May I ask him to agree to extend the pilot for rapid testing to the whole of Derbyshire and Derby to give the pilot real work to compare our semi-rural area with the urban area of Liverpool?
Matt Hancock
We are now issuing test kits to 84 directors of public health across the country. I am very happy to work with Derbyshire and Derby to make sure that my hon. Friend’s request is taken up and we can make this happen.
Ms Angela Eagle (Wallasey) (Lab)
The Parliamentary Under-Secretary of State for Health and Social Care (Jo Churchill)
On top of the positive news this week of two vaccines, a covid vaccine will be deployed only once it has met robust standards on safety, effectiveness and quality through clinical trials and been approved for use by the Medicines and Healthcare Products Regulatory Agency or an appropriate regulatory body. The Government have asked the NHS to be ready to deploy any safe, effective vaccine as soon as it is available. Distribution arrangements must be flexible and include the make-up of the workforce needed to rapidly deliver a vaccination programme, training requirements, consumables and any supporting infrastructure. The key point, though, is that the Government have been clear they will do everything they need to do to roll out a successful vaccine.
Ms Eagle
Does the Minister agree that it is going to be a mammoth logistical effort, not only to do a vaccination-style thing as we do every year with flu, but to include everybody? Also, it looks as though, in order for the vaccine to be effective, people might have to have two injections rather than one, which doubles the number. Can she give any view at this stage, given the logistical efforts that are going in, of how long it will take us to safely vaccinate everybody in the country?
Jo Churchill
First, I would like to place on record my enormous thanks to Liverpool and its local leadership for how it has helped us with repatriating from Wuhan and with the mass testing. I am sure that Liverpool will once again step to the fore with any help we might need with deploying the vaccine. We will deploy it as fast as possible, but there is a process. We have to know that it is safe, through the regulatory framework. We then have to know that as it arrives from the manufacturers, we can distribute it at pace. We are aiming to do that, and every sinew is being strained to ensure that we can deliver as swiftly as possible. The entire population wants to get on with living a normal, or more normal, life.
Sir David Amess (Southend West) (Con)
The Minister for Care (Helen Whately)
Sadly, covid is cruel to care home residents, and outbreaks are hard to prevent and control, especially when covid rates are high in the surrounding community. As we set out in our winter plan for adult social care, we have a regime of regular testing for staff and residents, we are supplying personal protective equipment to care homes, we have been offering training in infection prevention and control, backed up by Care Quality Commission inspections, and we are providing £1.1 billion to social care specifically to go towards the cost of infection prevention and control.
Sir David Amess
I know that my hon. Friend has already touched on this subject, but she will be aware that since April, many people have not been able to visit relatives and loved ones in care homes, so will she please tell the House again what is being done to improve testing and to roll out the flu vaccine to ensure that these visits can resume safely after the latest lockdown?
Helen Whately
My hon. Friend is a great advocate for the care sector—for those who receive care and for the workforce—in Southend West. Yesterday we launched a trial of visitor testing, and we plan to offer this to care homes across the country during December. On his question about flu vaccinations, this year we are carrying out the biggest ever flu vaccination programme. So far, the majority of care home residents have been vaccinated, but there is further to go for care staff, and I urge any careworker who has yet to have their flu jab to ensure that they get it over the next few weeks.
Suzanne Webb (Stourbridge) (Con)
The Minister for Care (Helen Whately)
Our winter plan sets out what we are doing to support adult social care during the second wave of the pandemic, including supplying free PPE to meet social care’s covid needs across domiciliary care, day care services and personal assistance as well as in care homes, and includes a further £546 million of funding for the infection control fund, bringing the total we have provided to social care for infection control to £1.1 billion.
Suzanne Webb
The new megalabs will open in 2021, one of which will be just down the road in Leamington Spa. This is very welcome news for the care sector in Stourbridge, which needs fast access to testing to carry out its amazing work, and let us not forget that these megalabs will bring thousands of jobs to the midlands. The UK is already No. 1 in Europe for testing capacity. With these new labs on stream, that capacity will double. Will my hon. Friend commit to prioritising the social care sector in this new capacity?
Helen Whately
The answer to my hon. Friend’s question is yes. Adult social care has already been at the front of the queue for testing. Care homes in Stourbridge and across the country have had whole care home testing since May. We have now sent out more than 13 million test kits to care homes. Every week we are testing more than half a million staff and residents, with nearly 90% of results back within 72 hours. I will continue to make sure that social care is a priority, going beyond care homes to include domiciliary care and supported living as we increase testing capacity.
Andrea Leadsom (South Northamptonshire) (Con)
Alison Thewliss (Glasgow Central) (SNP)
The Minister for Patient Safety, Mental Health and Suicide Prevention (Ms Nadine Dorries)
The indirect impact of covid-19 has been significant for pregnant women and their young families. Support for families is a priority, and it means short-term and long-term harms can be prevented. Health visiting teams have continued to support and prioritise high-need families. We have also gone to great lengths to ensure that informal support networks that have been there in the past to support mothers and younger babies can remain and provide the support they were unable to give during the first wave.
Andrea Leadsom
I know that my hon. Friend is well aware of the desire of new families to return to face-to-face services as soon as is possible, but does she agree that the amazing work of so many in the early years sector to deliver online and digital services at this incredibly difficult time must not be lost? When we return to face-to-face services, we also therefore need to capture all the amazing learning on digital and make sure we can amplify support for new families in that way.
Ms Dorries
I absolutely agree with my right hon. Friend on that. First, may I pay tribute to her for the work she has undertaken throughout her career with families, parents and young babies, and on early years, particularly the first years of a child’s life? I am sure Members on both sides of the House are hugely anticipating and excited about receiving her review on early years and young families. She is right to say that using digital technologies has enhanced so many areas during the first lockdown and throughout our time with covid, not only in mental health, but with young families and children. In a way, it has been a catalyst whereby we have embraced technology in all areas across health service delivery. We are making sure that we continue to do that and we do not lose the moment.
Alison Thewliss
Many low-income families have struggled to make ends meet during lockdown. Families with babies under one are entitled to Healthy Start vouchers of only £6.20 a week, which is not enough to buy any infant formula that I can find on the market. By contrast, Scotland’s equivalent provides £8.50 a week for Best Start foods. The all-party group on infant feeding and inequalities, which I chair, produced a report on the cost of infant formula in 2018. It recommended the uprating of Healthy Start vouchers, because the cost involved in buying formula means that families are watering down formula or feeding their babies unsafe alternatives. Will the Minister urgently consider uprating Healthy Start vouchers, to ensure that low-income families can claim their entitlement, because many do not?
Ms Dorries
I will take away the hon. Lady’s comments and we will look at them.
Gareth Bacon (Orpington) (Con)
Jerome Mayhew (Broadland) (Con)
The Minister for Health (Edward Argar)
The Government are supporting the NHS’s ambition to continue to restore elective services for non-covid patients, while of course recognising the pressure on services from covid-19 infection control, with September statistics showing services already restored to about 80% of last year’s levels. Some £2.9 billion of additional funding has been made available from 1 October to manage ongoing covid-19 pressures, alongside recovering non-covid activity levels.
Gareth Bacon
I thank my hon. Friend for his response. Given the difficulties faced by the NHS because of covid-19, what considerations are being given to additional initiatives or the management of existing resources to address patient demand and break the backlog of non-covid-related treatments, such as diagnostic interventions for cancer?
Edward Argar
The NHS is working hard to maintain elective activity as far as possible during the second wave with extra funding, as has been set out. As shown in published September data, hospitals are carrying out more than 1 million routine appointments and operations per week, with around three times the levels of elective patients admitted to hospitals than in April, with many hospitals innovating to get through their lists. For example, Buckinghamshire, Oxfordshire and West Berkshire sustainability and transformation partnership has set up additional bespoke cataract units to deliver services. In addition, we have been making use of independent sector sites to assist the NHS with almost 1 million NHS patient appointments taking place within those facilities.
Jerome Mayhew
One adverse consequence of the first lockdown was that many people failed to seek treatment because they were afraid of the virus, but due to good planning and hard work, the staff of the Norfolk and Norwich University Hospital are able to treat covid patients while still undertaking the normal work of the hospital. Does my hon. Friend agree that the people of Broadland should continue to seek medical assistance when they need it, confident in the knowledge that it will be provided in a covid-safe and effective manner?
Edward Argar
I share my hon. Friend’s fulsome praise of the staff at Norfolk and Norwich University Hospital and the work that they are doing. They have a strong champion in him. Indeed, I pay tribute to all the health and social care staff who have worked so magnificently throughout the pandemic. I can wholeheartedly agree with everything he says. My right hon. Friend the Secretary of State has been clear throughout this pandemic that anyone who needs medical help should continue to seek it in the knowledge that they will be treated in a safe and effective manner appropriate to their needs. To put it bluntly, it is a case of help us to help you.
Alex Norris (Nottingham North) (Lab/Co-op)
For cancer care, we are still dealing with the backlog from the first wave, but we are now hearing of treatments being cancelled during the second wave. Extremely vulnerable immuno-compromised cancer patients need covid-free wards and staff need regular testing. Similar backlogs to the first wave could be the difference between life and death. I ask this at every Health questions but am yet to receive a persuasive answer. What will the Government do differently in order to restore cancer services?
Edward Argar
I am grateful to the shadow Minister, who always asks measured and sensible questions. He is right to ask that particular question, but I am very happy for him to raise with me any specific incidents of where urgent cancer care is being cancelled in the current situation. We have worked extremely hard, as has the NHS, to ensure that treatments such as that and emergency and urgent treatment can continue. He asked what we are doing differently. We have learned a huge amount, as has the whole country, over the past six to nine months. We have increased capacity in our hospitals, which is why, with the measures that we have taken, we can continue far more surgery and far more treatments, particularly cancer treatments, than we could in the first wave.
Mr Speaker
Unfortunately, we do finish at quarter past 12, so I will start topical questions, slightly late, with Steve McCabe.
Steve McCabe (Birmingham, Selly Oak) (Lab)
The Secretary of State for Health and Social Care (Matt Hancock)
We are seeing major scientific advances that will help to get things back to normal. We are expanding mass testing with the two mega labs that will add another 600,000 to our daily testing capacity and, on vaccines, we have secured an initial agreement for 5 million doses of the very promising Moderna vaccine and begun clinical trials of the Janssen vaccine.
Steve McCabe
It is now 41 days since I asked the Secretary of State whether he would stop the clock so that no one seeking access to fertility treatment loses out because of delays due to the pandemic. When does he hope that his Department will get around to answering?
Matt Hancock
The provision of fertility services is happening in the normal way in as many places as possible across England, but it is not happening everywhere because of the huge pressures on the NHS from the second wave of covid. As my hon. Friend the Minister of State was saying a moment ago, there are pressures on the NHS. There are now 15,000 people in hospital with covid across the UK, but the NHS is doing far more normal services that it was not able to do in the first wave.
Jeremy Hunt (South West Surrey) (Con)
This morning, the Select Committee has been hearing about workforce burnout. Witness after witness said that the one thing that would make a big difference to NHS staff is knowing that we are training enough doctors and nurses for the future even if we do not have enough now. Nearly two years on from the NHS 10-year plan, we still do not have the workforce projections published—I know that the Secretary of State is keen to get them published. Can he assure the House that, when they are published, they will be the independent projections and not what the Treasury has negotiated with his Department as part of the spending review?
Matt Hancock
I am grateful to my right hon. Friend for that question. I can give him a couple of projections and a couple of facts. Over the past year, we have 13,500 more nurses in the NHS than we did a year ago, and thousands more doctors. Let me give him this projection, which I am sure that he and everybody on the Government Benches will buy into: we are going to have 50,000 more nurses in the NHS by the end of this Parliament.
Bill Esterson (Sefton Central) (Lab)
Matt Hancock
Yes; the lateral flow tests that are being used in Liverpool are accurate. They measure whether somebody is infectious and have a very high specificity. We publish all these statistics, having had them assessed at Porton Down in one of the best medical science units across the whole world, so I assure the hon. Gentleman—and, through him, his constituents —that the lateral flow tests have a quick turnaround and a high degree of accuracy regarding whether someone is infectious. I have not seen the reports to which he refers, but I assure him that the best thing that people can do if they are offered a test is to get one.
Chris Loder (West Dorset) (Con) [V]
Matt Hancock
I am very happy to meet my hon. Friend and to discuss with him how we can strengthen the services that are available across Dorset, especially as the population is not as dense as in some other parts of the country. We need to ensure that we get services out into the community, rather than just in the big cities.
Paula Barker (Liverpool, Wavertree) (Lab)
Matt Hancock
As a proud supporter of the Conservative Government’s introduction of the national living wage, I am a big fan of the pay increases that we have seen for some of the lowest paid people in the country, such as some of those working in social care including the home care sector, about which the hon. Member speaks. National living wage legislation is not a “nice to have”; it is mandatory, and all employers must follow it.
Holly Mumby-Croft (Scunthorpe) (Con)
Matt Hancock
Yes; my hon. Friend has been a champion for Scunthorpe and for supporting Scunthorpe General Hospital. I am glad that we have been able to make an investment in that hospital, and I am happy to meet her to talk about what more we can do.
Dan Jarvis (Barnsley Central) (Lab) [V]
Matt Hancock
The hon. Gentleman and I share a passion for ensuring that organ donation is possible and is supported wherever it is needed. That is very close to my heart through personal experience—not mine, but that of a friend. The hon. Gentleman has raised this issue and driven a change in the law, and I am glad that the change in the law to an opt-out system has happened. However, during the first lockdown there was clearly a slowdown in the number of donations, and we do not want to see that. There are more services available in the second peak of this coronavirus crisis. I look forward to working with him and others to make sure that organ donation is as high as it possibly can be.
Jo Gideon (Stoke-on-Trent Central) (Con)
Matt Hancock
Yes, I do, and so does the Prime Minister. We feel very strongly about this. It is so important that we have the work across the country to tackle obesity; this has only been made more urgent because we know of the link between obesity and the risk of dying from covid. I look forward to working with my hon. Friend and others to make this happen.
Rachael Maskell (York Central) (Lab/Co-op)
Matt Hancock
I am happy to work with the hon. Lady and the director of public health in York, and obviously with NHS Test and Trace, to make sure that the link-up is as effective as possible.
Jonathan Gullis (Stoke-on-Trent North) (Con)
Matt Hancock
I am very happy to look into that idea, while making sure, of course, that we also have the availability of staff, which is critical. We have just had two questions from Stoke-on-Trent. Let me say how much I appreciate the work of everybody at the Royal Stoke, who I know are doing so much. There are difficult circumstances there because of the second wave, which is quite significant in Stoke. I thank everybody at the Royal Stoke for all the work they are doing.
Jamie Stone (Caithness, Sutherland and Easter Ross) (LD) [V]
Matt Hancock
Yes, I would be happy to do that. We are proposing roving teams who can get out into rural communities across England. I know that there are ongoing discussions between those in the NHS in England and in Scotland who are responsible for the deployment of the vaccine. However, it is a critical principle that it should be deployed according to clinical need, not according to where people live across the United Kingdom.
Mary Robinson (Cheadle) (Con) [V]
Matt Hancock
Yes, I think that is a brilliant idea. Let us work on it together.
Gary Sambrook (Birmingham, Northfield) (Con)
Matt Hancock
Yes, that is right. A vaccine will be approved only if it is both effective and safe, so when your ticket comes up, if you are asked to take the vaccine, then I and the whole serious clinical establishment—all of those who understand the vaccines and the value of them —will be urging people right across the country to get it, because it is good for you, it protects your loved ones and it protects your community. It is the primary route, alongside other things like testing, by which we will get out of this and get life back more closely to normal.
Chris Grayling (Epsom and Ewell) (Con)
Matt Hancock
I appreciate my right hon. Friend’s tenacity and doggedness in making the case for Epsom. I am a big supporter of the decision that has been made, and I am afraid, from his point of view, that the final decision on the location of the new hospital—in Sutton—has now been made. However, I am always open-minded to what further health services can be deployed in Epsom itself, and I suggest that my right hon. Friend and I work together on that.
Mike Wood (Dudley South) (Con) [V]
Matt Hancock
Yes. Vaccines could not be approved if there were not volunteers who were willing to take them and play their part. I want to end this session, if I may, with a tribute to my PPS, my hon. Friend the Member for St Austell and Newquay (Steve Double), who, along with some other Members of the House, is taking part in a vaccine trial, and therefore doing his bit to make vaccines available to help everybody across this country.
Dr Rupa Huq (Ealing Central and Acton) (Lab)
The Health Secretary will remember—his hon. Friend the Member for St Austell and Newquay (Steve Double) was there as well—that we had a really good meeting on 2 October about the link between covid and vitamin D. Since then the PM even said, two weeks ago, that good news is on the way. Will the Secretary of State update us on what is happening? The Government are meant to be getting rid of dither and delay. We could be like New Zealand; they have only had 16 deaths in care homes in the whole of this pandemic. What can he do?
Matt Hancock
Yes, we are making progress on that and working on the clinical protocols. I look forward to updating the hon. Lady with more information when a final decision has been made.
Mr Speaker
In order to aid the safe exit of hon. Members participating in this item of business and the safe arrival of those participating in the next, I suspend the House for three minutes.
Speaker’s Statement
Mr Speaker
Before the urgent question, I wish to make a short statement about Divisions. Last week, I announced that the number of proxies in operation meant that I could reduce the voting time before the doors are locked from 12 minutes to 10. I can now reduce the time further, to the normal time of eight minutes from the start of the Division. As at present, the occupant of the Chair may extend the time in a particular Division where there is evidence of delays or problems getting to the Division Lobbies.
Continuity Trade Agreements: Parliamentary Scrutiny
(4 years ago)
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Urgent Questions are proposed each morning by backbench MPs, and up to two may be selected each day by the Speaker. Chosen Urgent Questions are announced 30 minutes before Parliament sits each day.
Each Urgent Question requires a Government Minister to give a response on the debate topic.
This information is provided by Parallel Parliament and does not comprise part of the offical record
Emily Thornberry (Islington South and Finsbury) (Lab)
(Urgent Question): To ask the Secretary of State for International Trade to make a statement on the proposed parliamentary scrutiny of future Continuity Trade Agreements.
The Minister for Trade Policy (Greg Hands)
In under two years, the UK Government have signed or agreed in principle trade agreements with 52 countries that account for £142 billion of UK bilateral trade. That accounts for 74% of the value of trade with non-European Union countries that we set out to secure agreements with at the start of the trade continuity programme. Since the transition period began, we have expanded the ambition of our programme above and beyond that original scope. In November we signed an enhanced deal with Japan, accounting for £30 billion of UK trade in 2019, and we expect to make significant progress in securing further deals before the end of the transition period. We believe that this is the largest set of parallel trade negotiations ever conducted by any country.
Parliamentary scrutiny is central to our continuity negotiations. All signed agreements would be subject to the statutory scrutiny process as set out in the Constitutional Reform and Governance Act 2010, providing a guaranteed period for Parliament to scrutinise and debate these agreements. Indeed, Parliament has held debates on six of our signed continuity agreements, and not one of those debates has carried a negative resolution. Further, we have voluntarily published parliamentary reports alongside all continuity agreements, explaining any differences from the predecessor EU agreements. I am pleased to see that our approach to scrutiny was praised in a recent report by the House of Lords EU International Agreements Sub-Committee, “Treaty scrutiny: working practices”.
As we approach the end of the transition period, it is possible that the scrutiny window for remaining agreements will extend beyond 1 January into the new year. That means that we may need to use provisional application for a short period, in order to guarantee continuity of trade relationships and avoid any cliff edges. I thank the right hon. Lady for her two letters on the subject to the Secretary of State last week. Provisional application is a well-established and widely used mechanism to give effect to treaties while domestic ratification procedures continue in parallel. Many EU trade agreements were or are being provisionally applied, including the comprehensive economic and trade agreement with Canada and the agreements with Ukraine and with the Caribbean Forum. I remind the right hon. Lady that those EU agreements have already been comprehensively scrutinised at EU level and by this Parliament. In fact, the Government published a technical note in Parliament last year setting out our assessment of provisional application and the circumstances in which it might be used.
We will always take the time necessary to negotiate the right deals. Any agreement we sign must benefit British consumers and businesses, preserve our high food standards and protect the NHS, and they must share wealth across all our nations and regions as part of our levelling-up agenda. We look forward to submitting further continuity FTAs to Parliament for scrutiny once signed, and we welcome further debates on our independent trade policy.
Emily Thornberry
Thank you, Mr Speaker, for granting this urgent question on an issue that should never have become urgent. The Government have literally had years to protect our free trade with countries such as Canada, Singapore and Mexico, but with just six weeks to go until the end of the transition period, 15 of those continuity agreements have still not been secured, leaving £80 billion of UK trade at risk—two and a half times our trade with Japan. Those 15 agreements have been left so late that the Government will now have to ride roughshod over the rules of parliamentary scrutiny to implement them in time.
Why do we find ourselves in this sorry mess? Why were 20 agreements signed in 2019, but only four so far in 2020? Why have we heard Governments such as Montenegro and Cameroon saying that formal talks were held in September 2019, but then nothing for a full year afterwards? Why, in just the past week, have we heard the Prime Minister of Canada say that Britain has lacked the “bandwidth” to do a deal and the Government of Ghana express dismay that their UK counterparts would turn up late and badly briefed to meetings and then leave early with nothing resolved?
Those are all the hallmarks of Ministers who are simply not doing their job. How else do we explain why the agreement reached two weeks ago with Kenya has still not been laid before Parliament and cannot now receive the full 21 days of scrutiny? It is sheer bumbling incompetence, and instead of taking responsibility today, the Secretary of State has sent her Minister in her stead —a fitting symbol of a total failure to grasp this issue during her 16 months in office. It therefore falls to the Minister of State to answer my three final questions. First, what new steps is his Department taking to get these 15 agreements over the line before Christmas? Secondly, when will UK businesses be told if any of those agreements, including with Mexico, are definitely not going to be reached? Thirdly, how can Ministers continue to defend the adequacy of the rules for parliamentary scrutiny of trade deals after the absolute mockery that they have made of them today?
Greg Hands
It is genuinely a pleasure to answer this question. Let me try to take in turn the different points made by the right hon. Member for Islington South and Finsbury (Emily Thornberry). First, may I say in general that we are working very hard on the remaining agreements? We have around 700 dedicated officials in the trade policy group who are working on the agreements, and the Secretary of State, the Under-Secretary of State for International Trade, my hon. Friend the Member for North East Hampshire (Mr Jayawardena), and I are also working carefully on them.
Are we riding roughshod? No, we are not. CRaG would still be fully operating—[Interruption.] The right hon. Member for Islington South and Finsbury scoffs, Mr Speaker, but she voted the same way that I did for CRaG in 2010. She should have belief in what she voted for under the previous Labour Government.
As for provisional application, it is absolutely an accepted part of international procedure. It is under the—[Interruption.]
Mr Speaker
Order. I granted the urgent question in order for the question to be heard, but I cannot hear the Minister’s reply. I do not want a dialogue all the way through, please. I grant them on the basis that there is a need to listen to what is being said.
Greg Hands
The Vienna convention has been around for a long time, and I mentioned that many agreements were provisionally applied by the European Union. I specifically mentioned the CARIFORUM agreement with the Caribbean Community countries and the Dominican Republic, which is also of course a Caribbean country. The reason I mention it is that it has been provisionally applied for the past 12 years. It was signed by the last Labour Government. If the right hon. Lady was happy with something signed by the previous Labour Government that is still provisionally applied today, she is making a bit of a mountain out of the remaining days that we are adding to the process, given the fact that that has been provisionally applied for 12 years. Kenya is a new deal; it is not the continuity of the pre-existing deal.
What steps are we taking? We are stepping up our efforts and working extremely hard. When will UK businesses be told? We are telling businesses all the time about the deals that we have done and landed.
The right hon. Lady mentioned Ghana. There is a deal on the table; it replicates the EU agreement and is consistent with the EU-Ghana stepping stone deal applied in 2016. We are not asking Ghana to do anything that it is not already doing.
The right hon. Lady said in her letter to the Secretary of State on 10 November, which she referred to, that representatives of countries from Cameroon to Montenegro have been communicating with the shadow International Trade team. I do not know whether it is quite right for the shadow Secretary of State to be correspondingly directly with our negotiating partners during negotiations that we have been carrying out on behalf of the whole country. I would urge her in the interests of transparency to release all that correspondence with our negotiation opposite numbers, which she referred to in that letter.
It is ironic that the right hon. Lady invokes Ghana, given the amendments to the Trade Bill that she supported on other countries’ domestic production standards. The very exports that she is so worried about would have been prevented under those Labour amendments from entering the country in the first place.
The irony in Labour Members complaining that we have not yet rolled over all these EU agreements is this: they did not support these agreements in the first place. They voted against EU-Singapore, they abstained on EU-Japan, and they split three ways on EU-Canada, so they are complaining about agreements not being rolled over that they never supported in the first place.
As we know, Labour has moved on from the right hon. Member for Islington North (Jeremy Corbyn) to the right hon. and learned Member for Holborn and St Pancras (Keir Starmer). The right hon. Member for Islington South and Finsbury is caught between them both, first geographically and now on policy. She cannot escape from this: when it comes to trade and trade agreements, successive Labour leaders cannot decide whether they want these agreements or not. In short, they are in complete chaos, and their approach deserves to be dismissed.
Marco Longhi (Dudley North) (Con) [V]
I thank the Minister for his detailed and full responses. With more trade equating to more jobs in Dudley North and across the country, will my right hon. Friend update the House on the upcoming trade deal with Mercosur countries in the light of the recent Joint Economic and Trade Committee with Brazil?
Greg Hands
I thank my hon. Friend for that excellent question. I am aware of his background—I think he worked for five years in Brazil and knows the market extremely well. Mercosur is, of course, a very important partner for the United Kingdom, and there are significant opportunities for British business to do more trade, including with Brazil. Just last week, the Secretary of State and the Under-Secretary of State for International Trade, my hon. Friend the Member for North East Hampshire, were pleased to host their first Joint Economic and Trade Committee with Minister Fendt from Brazil. They spoke about success to date in financial services and food and drink sectors. As there is not an EU-Mercosur deal in effect, any future UK-Mercosur deal is not within the scope of this programme.
Stewart Hosie (Dundee East) (SNP)
The problem here is not simply the incomplete deals; it is the process we are following, which is not fit for purpose. MPs have no ability to vote to amend our negotiating mandate. As the Minister said, the Government report voluntarily, normally at the end of a negotiating stage to tell us that everything is great, but with no information about obstacles overcome or new obstacles emerging. Perhaps towards the end of a negotiation, the negotiators go into a tunnel from which no information emerges unless it is leaked to provide leverage, which is profoundly unhelpful. We are then offered a vote on a short take-it-or-leave-it debate—again, with no ability to amend or to reflect or represent constituents or sectoral interests. Finally, we find out, normally from the foreign press, as was the case with Switzerland and Norway, that the deal is not what the Government trumpeted it to be.
I ask the Minister, briefly, what action will he take to expedite the outstanding deals? What action will he take to mitigate the potential tariff and quota costs on some £80 billion of trade? More importantly, what action will the Government take because CRaG is not fit for purpose and we need a new system that allows MPs scrutiny and the ability to amend?
Greg Hands
I thank the hon. Gentleman for the rather more thoughtful questions than those of the official Opposition. Of course, to be fair to him, he voted against CRaG. In fact, he, I and the right hon. Member for Islington South and Finsbury (Emily Thornberry) were all elected in the same year, 2005. He voted against CRaG, which is fair enough, and the right hon. Member for Islington South and Finsbury and I voted for it. I can understand his consistency in being opposed to the process. However, we are confident that it represents a robust way of ratifying trade agreements and of Parliament having its say.
Not only that, but we have added to the CRaG process by publishing a scoping analysis and a likely economic impact assessment in advance of the deal, made written ministerial statements after each round, and then publishing an impact assessment when the deal is finally done which gets sent off to the International Trade Committee and the EU International Agreements Sub-Committee in the other place. We have gone far further than CRaG.
I will also say this about SNP Members. Once again, they are complaining about these deals not being rolled over, but they are all deals that they have either not supported or abstained on. They abstained on EU-Japan. They abstained on EU-Singapore. They are against EU-Canada. They are against EU-South Africa. They are against EU-Korea. In fact, I have gone back 15 years, and I cannot find a single trade deal that the SNP has ever supported or voted for, so it is a bit rich for the hon. Gentleman to come along today and say that the deals have not been rolled over—none of which he supported in the first place. The SNP is anti-trade, it is hellbent on breaking up our Union and it is against Scotland’s best economic interests.
Chris Grayling (Epsom and Ewell) (Con)
Listening to both the parties opposite, given how important free trade is for prosperity, I say thank goodness we are the ones in government. I commend my right hon. Friend and his colleagues for the work they have done in making as much progress as they have. I am confident that they will complete that progress in the time that remains.
As we head into 2021 and seek to negotiate another new round of free trade agreements, I ask my right hon. Friend to ensure that not only are we champions of free trade, but we set environmental sustainability at the heart of the negotiations. Those are global challenges that must be reflected in our commitment to free trade.
Greg Hands
I thank my right hon. Friend for his interest in this area. The UK’s new independent trade policy is designed to be very environmentally friendly. That occurred in the Secretary of State’s speech to the World Trade Organisation in the spring. The UK global tariff that we have published reduces import tariffs, or eliminates them entirely, on 104 environmental goods entering the UK, including things such as steam turbines. We have gone significantly further than the common external tariff of the European Union. When it comes to our negotiations with future trade partners, the US, New Zealand and Australia, we have committed to promoting trade in low-carbon goods and services, as well as supporting R&D, innovation and science in sectors such as offshore wind, smart energy, low-carbon advisory services and energy from waste.
Mr Speaker
We are heading to Scotland with the Chair of the Select Committee.
Angus Brendan MacNeil (Na h-Eileanan an Iar) (SNP) [V]
The International Trade Committee first reported on the roll-over of trade deals in 2018. Hon. Members probably remember that we were told then that all the agreements would be signed about a minute after midnight on 29 March 2019. It is a huge concern that we still have not done 15 of those deals—indeed, with 44 days to go, the biggest trade deal with the EU is still uncertain. Is it not the truth that jobs, businesses and communities need to be better served by the Government in their work associated with Brexit and these incomplete trade deals? It is time for the Government to get their act together, and quick.
Greg Hands
I thank the hon. Gentleman for that question. I remember appearing before his Select Committee during that inquiry in 2018, which I know he will remember well, too. The fact of the matter is that we have done roll-over deals with 52 countries. That is a very strong achievement and represents some 74% of the value of trade with non-EU countries that we set out to secure agreement with at the start of the trade continuity programme, which was when he did his inquiry. We are working flat out at the moment. He will know that just in recent weeks we have signed deals with Ukraine on 8 October, Côte d’Ivoire on 15 October and Japan on 23 October, and we signed an agreement in principle with Kenya on 3 November.
Alexander Stafford (Rother Valley) (Con)
I am glad that the right hon. Member for Islington South and Finsbury (Emily Thornberry) raised Ghana, because that is what I am concerned about. The Ghanaian contention that the deal on offer is not compatible with the Economic Community of West African States simply does not stack up in my opinion. Will my right hon. Friend confirm that Ghana’s deal with the EU is compatible with ECOWAS and our deal replicates the EU deal exactly?
Greg Hands
I thank my hon. Friend for his keen interest in Ghana, which is an interest I share. I went with the Westminster Foundation for Democracy in 2009 to help train up Ghanaian politicians. It is a country that I have kept a keen interest in for the past 11 years. There is a deal on the table. It replicates the EU agreement, gives full duty-free, quota-free access to our market and is consistent with the EU-Ghana stepping stone deal applied in 2016. There is no evidence that that existing EU deal has damaged Ghana’s relations with its ECOWAS neighbours.
Mr Barry Sheerman (Huddersfield) (Lab/Co-op) [V]
I am surprised that the Minister keeps evading the whole thrust of the urgent question he was asked. Why is he so terrified of parliamentary scrutiny? He can talk about chaos on the Labour side, but chaos and confusion reign in No. 10. There is chaos and confusion in our relationship trying to get an agreement with the European Union as we leave. What is wrong with this Government? I am a member of the Committee on the Future Relationship with the European Union, which is being abolished just when we need it for parliamentary scrutiny. Why are this Government so terrified of being responsible and accountable to this House?
Greg Hands
I just remind the hon. Gentleman, because he was definitely in the House in 2010, that the CRaG process, which was set up by the last Labour Government and which I strongly suspect he voted for, is exactly the system of parliamentary scrutiny that we are using as the basis for these continuity trade deals now. Not only that, but, as I have already outlined, we are building on the CRaG commitments with additional reports and additional involvement from the International Trade Committee and the House of Lords International Agreements Committee.
Matt Vickers (Stockton South) (Con) [V]
Does my right hon. Friend agree that our departure from the EU offers the UK a golden chance to lead the world in modern areas such as services, technology and advanced manufacturing, creating great opportunities for businesses and entrepreneurs in Stockton South?
Greg Hands
My hon. Friend is absolutely right. Services represents about 79% of our GDP and 80% of our employment. The UK, as we know, is a world leader in tech and digital and far ahead of our closest European competitors, France and Germany. We are one of the world’s leading international financial services centres, with best in class industry, infrastructure, talent and expertise. The recently announced deal with Japan goes further than the EU deal when it comes to services, particularly financial services.
Barry Gardiner (Brent North) (Lab)
The Minister knows, but did not say, that the current CRaG process was put in place when many other layers of democratic scrutiny were applied to international treaties through the EU, but those layers are now gone. Now that his Department has failed to conclude the roll-over agreements, does he accept that democratic scrutiny needs to reflect not just the convenience of Government, but the proper oversight and challenge of Parliament? Or will he only change his view when he finds himself in opposition?
Greg Hands
I think the hon. Gentleman is operating under the misconception that the Government do not want Parliament interested in trade and in trade deals. We are constantly at this Dispatch Box—I, the Secretary of State and the rest of the ministerial team—talking about trade and trade deals. We welcome all the additional parliamentary scrutiny. I remind him that the CRaG process he talks about was set up under the last Labour Government. We have gone further in terms of the reports that we publish and the involvement of Select Committees in both Houses of this Parliament.
Laura Farris (Newbury) (Con)
The Prime Minister of Canada went on the record last week to say that the two nations had reached a point where, in effect, a deal with Canada was there for the taking. Does my right hon. Friend agree with that analysis, and can he update the House on the progress of the continuity Canada deal?
Greg Hands
We are confident that we will be able to secure an agreement with our Canadian partners for entry into effect on 1 January. It is an incredibly important deal. I remind the right hon. Member for Islington South and Finsbury (Emily Thornberry) that her official position, under the hon. Member for Brent North (Barry Gardiner) at the time, was to oppose doing this deal in the first place. Canada is an important strategic partner for the UK and our 16th largest trading partner worldwide. The UK exports £11 billion-worth of goods and services each year, and we stand ready to secure and expand this trade.
Stuart C. McDonald (Cumbernauld, Kilsyth and Kirkintilloch East) (SNP) [V]
These deals cut across many devolved powers, so surely there should be a significant consultation and scrutiny role for devolved Parliaments and Governments, learning from experience in Belgium and Canada, for example—or does the Minister share the Prime Minister’s rather extraordinary view that the devolution of powers was a mistake in the first place?
Greg Hands
As we know, international trade is a reserved matter. However, it does have an influence on a large number of areas of devolved competence, so it is quite right that we involve the devolved Administrations in formulating our trade policy and our approach to different trade negotiations. In terms of the relations that I have with the Scottish Government, the ministerial forum for trade meets quarterly, involving not only the UK Trade Minister—myself—but the three devolved Administrations. Since May, in the time that I have had the remit for talking with the devolved Administrations, I have met with Scottish Minister Ivan McKee five times.
Dehenna Davison (Bishop Auckland) (Con)
Listening to what has been said so far, I am very glad that the Conservative party is in government, because we really recognise the value of free trade, not just in terms of GDP figures but the very real impact it has on our constituents—on the great people of Bishop Auckland and beyond. On that note, does my right hon. Friend agree with the interesting stance of the shadow Secretary of State that we should only make future trade deals with countries with which we have a trade deficit?
Greg Hands
The shadow Secretary of State has come out with some extraordinary comments in recent times. That particular one sounded like it was verging on Trumpian mercantilism. My hon. Friend is right that, at a time of growing protectionism, trade provides economic security at home and opportunities abroad. It is a key part of the Government’s levelling-up agenda. Trade is very much part of this country’s future, as are trade agreements.
Christine Jardine (Edinburgh West) (LD)
I am afraid I cannot share the relief of the hon. Member for Bishop Auckland (Dehenna Davison) that we have a Conservative Government, because as we move closer to the end of the transition period, my constituents, and constituents and businesspeople all over this country, are increasingly worried about their inability to secure the deals and the clarity needed. As a Scot, I am not a nationalist, so my views cannot be dismissed as wanting to undermine the interests of Scotland in the United Kingdom, so can the Minister give us some indication of where these deals are going to come from, how they will be settled and what scrutiny they will have in this place?
Greg Hands
I urge the hon. Member to judge us by our actions, not just our words. We have done continuity agreements with 52 countries, which account for £142 billion-worth of bilateral trade. On top of that, we have done a bespoke bilateral deal with Japan, which is the first stand-alone UK free trade agreement that this country has negotiated in 40 years. She should welcome the actions that we have taken to secure the future of these trade agreements and, in the case of Japan, improve on them.
Scott Benton (Blackpool South) (Con)
May I congratulate my right hon. Friend on the progress made so far in agreeing to roll over more than 20 of our existing trade deals? Is he able to reassure the House that the Government have sufficient capacity to continue to get trade deals over the line?
Greg Hands
That is a good question, and the answer is simply yes. The trade policy group, which I have been involved with in two different stints at the Department, is an incredibly dedicated, highly professional group of people. It has grown from around 45 at the time of the referendum in 2016 to more than 700. We have taken in private sector expertise—lawyers, experts in trade flows, experts in particular product lines and so on. I am confident that we have the capacity and the right people in place, and I pay tribute to them all for the hard work that they have been doing.
Dame Diana Johnson (Kingston upon Hull North) (Lab) [V]
As my right hon. Friend the Member for Islington South and Finsbury (Emily Thornberry) pointed out, the Canadian Prime Minister said last week that Canada was ready to reach a continuity agreement with the UK but that the British Government lacked the “bandwidth” to finalise the deal and, indeed, that his offer to provide support to the UK’s negotiators had not been taken up. Is not this just an embarrassing situation for the Government, who claim to be promoting global Britain?
Greg Hands
I thank the hon. Lady for that question. As I have already said, we are in a good position with Canada. I am confident that we will be getting a deal. I saw those comments by the Canadian Prime Minister, whom I greatly respect. The only other person I have seen make those comments is Winston Peters, the leader of the New Zealand First party. I see it sometimes from the negotiating teams opposite; we need to take what they say in a live negotiation with a pinch of salt.
Greg Smith (Buckingham) (Con)
I congratulate my right hon. Friend on the progress that has been made on the continuity agreements that are so vital for our country’s prosperity, not least in sectors such as agriculture, which is so important to my constituency. With that in mind, does he agree that, while the Opposition parties seek to play political acrobatics with trade, it is this Government who are listening and involving farmers in our future and continuity trade deals by putting the Trade and Agriculture Commission on a statutory footing?
Greg Hands
My hon. Friend is quite right. I think I am actually due to speak with farmers in his constituency in the coming 10 days or so, which I am looking forward to very much. He is quite right that putting the Trade and Agriculture Commission on a statutory footing means that all the National Farmers Unions from across the United Kingdom will play an active role in assessing trade agreements going forward.
Dave Doogan (Angus) (SNP) [V]
Even the Scottish Tory leader’s senior adviser, the former Tory MP for Angus, has said that this Government need a “wake-up call” as we see decisions taken by the UK Government without regard to Scotland. A failure to roll over these FTAs would lead to a tariff and quota disaster for Scotland’s £15 billion food and drink sector. Indeed, with food and drink exports four times more important to the Scottish economy than the English economy, we can see why Scottish producers are horrified at this abject ministerial failure. Why will the Minister not acknowledge this £38 billion crisis? What will he do to fix it for food and drink producers in Scotland?
Greg Hands
I think the hon. Member’s phrase was “abject ministerial failure”. We are working hard to roll over all these agreements. I just remind him that these are all agreements that were opposed by the SNP in the first place. It abstained on EU-Japan and EU-Singapore, and it was against EU-Canada, against EU-South Africa and against EU-Korea. He ought to be celebrating the fact that these agreements are not being rolled over, to be consistent with his previous position. We are working hard to make sure that they are rolled over.
Jack Brereton (Stoke-on-Trent South) (Con)
Does my right hon. Friend agree that we should continue to follow the significant headway we have been making on a number of these trade agreements, and that we should help great British businesses, such as those in Stoke-on-Trent, to grow jobs by making the most of these agreements?
Greg Hands
My hon. Friend is quite right. Both the Secretary of State and I have enjoyed meeting businesses in his constituency—particularly those in ceramics—and right the way across the city of Stoke. We have them on our minds in all our trade negotiations, to ensure that we get new opportunities for the ceramics industry in the Potteries and elsewhere.
Mr Toby Perkins (Chesterfield) (Lab)
The Minister seems keen to tell us how hard he and his team are working; meanwhile, crucial trade partners such as Canada seem to feel that the Government just have not got their act together and are not giving this the attention it deserves. Does he not realise that what is really important here is that British businesses, which need certainty about what their trading arrangements will be in January, are sat here in the middle of November still no clearer about whether we are going to be able to trade tariff-free with Canada?
Greg Hands
I remind the hon. Member that the deals that we have rolled over represent around three quarters of the programme. We have updated businesses, as we have updated this House, after each of those deals to make sure that they are kept apprised. When it comes to Canada, of course, this is a live negotiation. We have contact happening every day with Canada. It is worth remembering that Canada actually walked away from the negotiation in 2019, and did not return to the table until July this year. As soon as Canada returned, we put in place a negotiating team and we got on with it.
Jacob Young (Redcar) (Con) [V]
Trade, and the jobs, investment and prosperity it brings, is an incredibly powerful way to level up our country and transform left-behind places such as Redcar and Cleveland. Does my right hon. Friend agree that promoting trade and helping our businesses to export is the best way to rebuild and reshape our economy?
Greg Hands
I thank my hon. Friend and he is absolutely right. We have talked very much about the trade policy aspects of this Department. We are engaging very strongly with the US, for example, on steel tariffs. I know that is something his constituents will keep an ongoing interest in, making sure that those unnecessary and counterproductive tariffs are removed. But when it comes to the wider picture, the Department for International Trade more broadly works incredibly hard at promoting both the exports and inward investment that I know will be really important to his Redcar constituents.
Jonathan Edwards (Carmarthen East and Dinefwr) (Ind)
While recognising that negotiating international trade deals is a reserved matter, the Minister will be aware that many of the policy areas included in trade negotiations are devolved to Wales. Considering this, I find it quite incredible that trade deals can be signed without the formal agreement and approval of the Welsh Parliament. Earlier, he alluded that there had been engagement with the devolved Governments, but can he inform the House whether he has received any critique from the Welsh Government about the approach of the British Government to these continuity deals?
Greg Hands
I have an excellent relationship with the Welsh Government: first with Baroness Morgan and more recently with Jeremy Miles. The hon. Member is quite right that international trade is a reserved matter, but it does impact with devolved competence. I believe that the Welsh Parliament either has or will be recommending legislative consent to the Trade Bill, which I think is testimony to how well we are working together in the interests of all of the people of Wales.
Christian Wakeford (Bury South) (Con)
I appreciate my right hon. Friend’s comments on this topic. I also welcome progress on continuity trade agreements so far as a first step to more comprehensive trade deals in the future. Does he agree that we cannot force countries back to the negotiating table and we must not do any deals at any price?
Greg Hands
My hon. Friend is quite right: it takes two to tango, and that is as true for international trade agreements. If the partner does not want to negotiate, of course we will speak with them and use all the levers we have to try to get them to the table, but at the end of the day, if the partner does not want to negotiate, I am afraid that can happen.
Mrs Emma Lewell-Buck (South Shields) (Lab)
If the Government were in control of this situation and favoured transparency, they would have come to the House to make a statement, not be forced to via an urgent question. British businesses need to know how existing arrangements will be preserved. The Government’s negligence is leaving them susceptible to disruption to as much as £80 billion of global trade. I have listened carefully to the Minister and, as expected, it was lacking in any detail. When will the Government be able to share any real detail on how we are going to avoid this imminent risk to jobs and livelihoods?
Greg Hands
I would point the hon. Member to the agreements that we have signed in recent weeks with Ukraine, with Côte d’Ivoire and with Japan, with Kenya agreed in principle. We are looking forward to further agreements in the coming weeks that I hope she will welcome and support.
Jo Gideon (Stoke-on-Trent Central) (Con)
Could I congratulate my right hon. Friend again on the Japan free trade deal his Department has just concluded, which has created new opportunities, such as for Lucideon in my constituency of Stoke-on-Trent Central? Does he share my enthusiasm about the deal as an important pathway to the comprehensive and progressive agreement for trans-Pacific partnership?
Greg Hands
My hon. Friend—it is good to have so many Stoke MPs here, from our Benches, asking questions—is quite right. The CPTPP represents a fantastic future for this country, and I hope that we are able to apply for formal accession in early 2021.
Theresa Villiers (Chipping Barnet) (Con)
Our SPS—sanitary and phytosanitary—rules are based firmly on human health concerns, but they can have important animal welfare benefits by barring the import of food produced according to controversial intensive farming methods that would be unlawful here. With that in mind, will the Minister confirm that our trade deals will retain the ban in this country on ractopamine in pork and bovine somatotropin in dairy produce?
Greg Hands
I can confirm that on 1 January under the European Union (Withdrawal) Act 2018 all of those existing rules will be transferred over to the UK statute book, and those bans will be maintained, which fulfils the manifesto pledge made by my right hon. Friend and I both individually and collectively last December.
Stephen Farry (North Down) (Alliance) [V]
I recognise that Northern Ireland is part of UK trade policy. However, under the protocol, while our goods can freely circulate across the European Union, we are not covered by the EU’s free trade agreements. There are major concerns that companies that are part of the supply chain for EU products will now be excluded from those processes due to rules of origin complications. This is a major problem for our agrifood industry in particular, especially the dairy sector. Will the Minister undertake to give urgent consideration to these complicated issues?
Greg Hands
I greatly respect the work the hon. Gentleman has done in Northern Ireland over recent years, and he and I met in a separate capacity last year to discuss some of these problems. He is right: it is clear that under the withdrawal agreement and the protocol Northern Ireland is covered by UK free trade agreements, which is absolutely the right position to be in. Rules of origin complications with EU trade agreements are part of the active negotiation between London and Brussels at this very moment.
Fay Jones (Brecon and Radnorshire) (Con)
John Davies, who farms at Merthyr Cynog in my constituency, sits on the recently created Trade and Agriculture Commission in his role as president of NFU Cymru. He will be a loud voice for Welsh farmers, not holding back in his advice to Government. Does the Minister agree that having experts such as John scrutinising the detail of trade deals ensures they benefit Welsh farmers and proves this Government’s commitment to backing British farming?
Greg Hands
My hon. Friend is absolutely right, and farming in Wales is so important that we have put its representatives on the Trade and Agriculture Commission not once, but twice; both NFU Cymru and the Farmers’ Union of Wales are on it. We have excellent interactions and hear their feedback at the Trade and Agriculture Commission, and we look forward to that continuing when it is put on a statutory footing.
Hywel Williams (Arfon) (PC)
Wales has an exporting economy, with exports which in 2019 were worth £338 million with Turkey and £234 million with Canada. What assurance of stability can the Minister give Welsh exporters to these countries that they can continue their businesses next year?
Greg Hands
I thank the hon. Gentleman for that question, and he is right to highlight the importance of Welsh exports. They are very important to us at the UK Department for International Trade, and we are working very hard to get continuity of our trading arrangements with Canada—the CETA.
Sir Edward Leigh (Gainsborough) (Con)
There is one section of the community for which trade deals are literally a matter of life and death for their business, not just some minor tweaking of tariffs and regulations. In the 1930s people could walk all the way from Lincoln to Grimsby across derelict farmland because of the import of cheap American wheat, so in the rush to conclude free trade deals will my right hon. Friend assure me that there will be a gold standard process in this House, equivalent to our old European Scrutiny Committees, so that Members of Parliament who represent rural seats can hold the Government to account and protect our superb farming industry?
Greg Hands
My right hon. Friend represents his rural Lincolnshire constituency very effectively. There is no rush to complete future free trade agreements; he mentioned particularly the United States and there was no rush to do that. It is very important that we get the right agreement rather than a quick agreement, and I have already detailed how our commitments to parliamentary scrutiny go well beyond the previous Government’s CRaG procedures; we have added a lot to that.
Jim Shannon (Strangford) (DUP)
I thank the Minister for all he has done so far to secure the trade agreements, but may I ask him a question about the agrifood sector? Does the Minister agree that it is essential that we have the detailed proposals not simply to scrutinise, but also to get some indications to businesses who do not yet know how to plan for January, and whose position in limbo must come to a very speedy end? When does the Minister believe that that information will be available for those businesses?
Greg Hands
As soon as we conclude one of these continuity agreements and sign it, we will seek to publish it as soon as possible and start the CRaG process. The hon. Gentleman asks about the agrifood sector, which is incredibly important to Northern Ireland. I have met representatives of the sector on various occasions. I suggest that he looks, as I am sure he has done, at the UK-Japan deal and the potential protection for about 70 geographic indicators in that deal, as a sign of our commitment to the whole agrifood sector.
Jonathan Gullis (Stoke-on-Trent North) (Con)
The potteries were founded in Burslem by Josiah Wedgwood. They are known worldwide for their world-leading ceramic tableware, which, sadly, those on the Labour Benches forgot about. As the proud Member for Stoke-on-Trent North, Kidsgrove and Talke and the chair of the all-party group for ceramics, can I ask my right hon. Friend whether he agrees that deepening our trading ties with countries that share our values, ideals and high standards is essential for growth in the UK ceramics industry?
Greg Hands
My hon. Friend is quite right. We have gone through Stoke from south through to central and now to north. I reiterate our commitment to the ceramics industry, ensuring that we break down barriers, and reduce and remove tariffs to our ceramic exports in a way that is consistent with the UK values that I know both he and I share.
Damian Collins (Folkestone and Hythe) (Con)
The Minister will know that when new trade agreements or changes to trade agreements can affect other areas of policy, there are, understandably, questions, so I thank him for meeting me on numerous occasions to discuss digital and trade policy. Specifically looking at the EU-Japan trade agreement, will the Minister say whether that agreement will change the enforcement powers for people’s data protection rights? Has his Department already consulted, or does it intend to do so, directly with the Information Commissioner on that?
Greg Hands
I thank my hon. Friend for all his interaction. As the former Chairman of the Select Committee on Digital, Culture, Media and Sport, he has genuine expertise in this area and has continued his interest in it. He mentioned the EU-Japan trade agreement, but I think he is really asking about the UK-Japan trade agreement and the difference with the EU-Japan deal. If I commit to write to him in some detail on exactly where those differences are, he will be able to see them. I expect the report that is being submitted to Parliament will look at those differences in some detail.
Clive Efford (Eltham) (Lab)
Is it not true that the Government have just overstated the ease with which they would be able to do all this? We were going to have 40 trade deals on 29 March 2019, and we were going to have a trade area bigger than the EU, which was going to include China and the US. Prime Minister Trudeau said the talks hit the buffers because of the inability of the UK Government to negotiate trade deals—that is the truth of it. What are the Government going to do to ensure not only that we get these rollover trade deals dealt with, but that we have proper scrutiny of them?
Greg Hands
I am glad the hon. Gentleman made his question as long as he did, because it gave me the chance to check the voting record on the Canada deal he just mentioned. He actually voted against it when the vote came to the House of Commons, so it is a bit rich of him now to complain it is not being rolled over.
Stephen Metcalfe (South Basildon and East Thurrock) (Con) [V]
Will my right hon. Friend join me in congratulating the officials and Ministers in his Department on achieving 74% of the continuity agreements we wanted with non-EU countries? Will he further update the House on the progress he intends to make with the other 26%?
Greg Hands
Mr Speaker, I think I will use a cricketing analogy: we are 74 not out.
Rachael Maskell (York Central) (Lab/Co-op)
At a time when our economy is in peril and just 44 days before we leave the transition arrangements, we still have no agreement with the EU. Fifteen continuity agreements are yet to be agreed, breaching the Government’s own deadline which the Prime Minister clearly said was immoveable, yet the Trade Minister comes to the Dispatch Box and says that he will extend provision into January. Will he tell businesses what will happen to their trade with those 15 countries on 1 January, so they can now make their plans?
Greg Hands
It is relatively straightforward. If the agreement is made with the remaining countries and there is not the time to put it through the CRaG process before 31 December, it has the potential to be provisionally applied. The terms of that agreement will remain on 1 January in accordance with the existing EU deal going into that time, so there should be no interruption for businesses. Parliament will still have the opportunity, under the CRaG process, to give that agreement full scrutiny.
Simon Jupp (East Devon) (Con)
I commend the great work of the Minister and the Department so far in securing trade deals across the world. West country produce is already the pride of a nation and it is proudly found on shelves from Stornoway to Sidmouth. Does he agree that by continuing the great work to break down the barriers to trade, we can export the best of the south-west and promote the finest standard of produce across the world?
Greg Hands
I spent part of my childhood in the south-west, and I remember only too well the quality of its produce in the agrifood sector. We are negotiating better market access in markets such as Taiwan, China and the United States, where we have just had our first shipment of British beef this summer. We are also reducing tariffs in important areas such as the dairy sector, for example, on cheese, in some of these markets. This is part of a continuous engagement for UK agriculture.
Mr Speaker
We have a bad connection with Marion Fellows—we have tech problems—so we are going to go to Dr Neil Hudson.
Dr Neil Hudson (Penrith and The Border) (Con) [V]
I am pleased that the Government have strengthened the Trade and Agriculture Commission, announced more robust parliamentary scrutiny of trade deals and provided reassurance that products such as hormone-treated beef and chlorine-washed chicken will remain banned in the UK. Does my right hon. Friend agree that writing specific unacceptable products such as those, and others such as ractopamine-fed pork, the excessive use of microbials and the use of growth promoters, into specific chapters in trade deals would be a practical way of ensuring that high standards are encouraged globally? Does he agree that such an approach would make it clear to both parties in trade deals that those products are not going to be traded, allowing other, acceptable products to be encouraged and therefore driving up animal welfare standards globally?
Greg Hands
I thank my hon. Friend for that question. I think he is asking me to ban things that are already banned and put it in writing. Let me make it clear that we remain absolutely committed to our high food safety, environmental and animal welfare standards, on which he and I fought the last general election. We have ensured that the law offers protections for the existing standards, so that they will remain in place. Under the European Union (Withdrawal) Act 2018, the products he mentioned will remain illegal after 1 January.
Chi Onwurah (Newcastle upon Tyne Central) (Lab)
As chair of the all-party group on Africa, I wish to emphasise the importance of trade between the UK and Africa. By offering Ghana levels of market access that differ from those of its neighbours in the regional trading bloc ECOWAS—the Economic Community of West African States—the Government are forcing Ghana to choose between new trade barriers within ECOWAS or tariffs with the UK, which would plunge Ghana’s banana and cocoa producers, many of whom are already in poverty, into even more extreme poverty. So instead of bullying countries such as Ghana, will the Minister work with African countries to agree deals that promote trade and fair, sustainable economic development?
Greg Hands
I know, from previous meetings that the hon. Lady and I have had, her passion and commitment to the UK’s trade with Africa. On Ghana, I look at the situation closely, as does the Under-Secretary of State for International Trade, my hon. Friend the Member for North East Hampshire (Mr Jayawardena). We are clear that there is a deal on the table. It replicates the EU stepping stone agreement. There is no evidence to suggest that the EU stepping stone agreement in any way discriminates in respect of Ghana’s trade with the rest of its ECOWAS partners. We have also to be clear that the UK will follow World Trade Organisation rules on discrimination between economies of similar levels of development when it comes to trade agreements. That is very important, for example, for the generalised system of preferences. The best thing for us to do is for the UK and Ghana to sign that deal that is on the table.
Martin Vickers (Cleethorpes) (Con)
It is clear from the meeting that I held with the Minister’s colleague, the Under-Secretary of State for International Trade, my hon. Friend the Member for North East Hampshire, last week that any accusation of foot dragging in dealing with these continuity agreements is clearly not correct. I am working with businesses in my constituency to take advantage of the widening trade opportunities. Does this Minister agree that Members from across the House should be working with businesses to ensure that we maximise the benefits of the trade policies being pursued?
Greg Hands
My hon. Friend is right; we can have an esoteric discussion about trade policy, tariffs, quotas, automated tariff quotes and all this kind of stuff, but it must work for our consumers and our businesses. The whole point of doing trade policy is to make sure it boosts UK exports and inward investment in this country, and does good work for UK trade, consumers and businesses in constituencies such as his.
Wendy Chamberlain (North East Fife) (LD)
While the Department for International Trade attempts to strike trade deals, its counterparts in the Department for Business, Energy and Industrial Strategy are using the United Kingdom Internal Market Bill to expand the powers of the Competition and Markets Authority. There is a growing concern that the Office for the Internal Market could be used to challenge the devolved Administrations by, for instance, American investors with an interest in a trade deal. Can the Minister confirm whether he or the Secretary of State have had any discussions with their foreign counterparts over the role of the expanded CMA and the Office for the Internal Market?
Greg Hands
Of course the whole Government take a common approach to the United Kingdom Internal Market Bill. It is important for our trade partners to know that the UK has a well-functioning and efficient internal market. The measures that have been taken are necessary to protect the integrity of the UK’s internal market, which is extremely important for Scottish businesses, particularly if an agreement with the EU cannot be reached. I commend the United Kingdom Internal Market Bill to the hon. Lady for her further consideration in both Houses of this Parliament.
Rob Butler (Aylesbury) (Con)
Businesses in my constituency trade heavily with other nations, and obviously they want to get deals that will enable them to continue to do so as easily as possible, but they also know that deals have to be fair to both parties, whether that is two companies or two countries, so does my right hon. Friend agree that we should stand firm for British interests and not just accept any terms that are offered?
Greg Hands
My hon. Friend is absolutely right. Even in the negotiation of continuity agreements, it is important to ensure that we get the best possible deal for British consumers and British businesses, including those in his Aylesbury constituency.
Tony Lloyd (Rochdale) (Lab) [V]
The Minister glossed over a question raised by my hon. Friend the Member for Brent North (Barry Gardiner) earlier. My hon. Friend made the point that the CRaG procedures were established when the European Union was our main negotiating host and the scrutiny came through that process. Does the Minister accept that public distrust of bad trade agreements and public confidence in trade agreements will be established by parliamentary scrutiny, and will he now re-examine whether these procedures are adequate for a modern trading country such as the United Kingdom?
Greg Hands
As I pointed out earlier, we have we added quite a lot and gone beyond the CRaG process to ensure that Parliament is incredibly well informed. Over the course of this year, we have had many debates and published many documents, impact assessments, economic assessments and now reports on individual trade agreements. Parliament has been kept very well informed. When it comes to public distrust, the data shows that the UK public remain strongly in support of free trade.
Felicity Buchan (Kensington) (Con)
As my right hon. Friend and neighbour knows, I am Scottish born and bred. Will he confirm that we will look to put in place deals that benefit all four nations of the United Kingdom and all regions?
Greg Hands
I thank my hon. Friend and parliamentary neighbour for that question. We will always take the time necessary to negotiate the right deals that work for all nations of the United Kingdom and for all the regions of England, including our own region of London, as witnessed by the UK-Japan deal and the importance that that gives to UK financial services, which I know are very important to her constituents and mine.
Antony Higginbotham (Burnley) (Con)
I congratulate my right hon. Friend on the work that he and the team at the Department for International Trade have done in signing not only continuity trade agreements but trade agreements around the world that have the potential to benefit the whole economy and, importantly, local businesses in Burnley and Padiham. Can he reassure me that we will continue to work at pace to deliver even more agreements?
Greg Hands
I can, and can I just say what a brilliant voice for Burnley my hon. Friend has been in this House over the last 11 months? I can confirm that we are working very hard indeed on the remaining continuity agreements, but let us also recognise how far we have come in the agreements that we have already got.
Margaret Ferrier (Rutherglen and Hamilton West) (Ind) [V]
Scrambling at the last minute has been a feature throughout the Brexit process, and the UK Government’s approach to trade agreements is no exception. The Minister’s predecessor used to say that the EU trade deal would be the “easiest in human history”, yet that is now a race against time too. Will the Minister launch a full review of the timeline and negotiating strategy for future trade arrangements, so that they are not blighted by the serial incompetence that we have seen over the last four years?
Greg Hands
I think the hon. Lady asked about scrambling at the last minute, but we have done deals with 52 countries that account for £142 billion of bilateral trade. That is a huge amount: 74% of the value of those non-EU countries’ trade before the start of this process. We look forward to further continuity agreements in the coming weeks.
James Sunderland (Bracknell) (Con)
I welcome today’s update on continuity trade agreements. Does my right hon. Friend agree that the future looks very promising for global Britain, and that we are much better off together as the Union?
Greg Hands
I am delighted with the confidence that my hon. Friend has in the UK’s ability to carry out trade going forward. Under the Secretary of State’s leadership, and thanks to the whole team, all the people involved in the programme and an incredibly large amount of hard work, I am confident that we are in a good place today. I appreciate that that is also coming from my hon. Friend and his constituents.
Points of Order
Layla Moran (Oxford West and Abingdon) (LD)
On a point of order, Mr Speaker. I am grateful for the opportunity to make this point of order on the important matter of the country’s international development budget. It is unacceptable that we have heard in the media this morning that the Government are seriously giving consideration to reducing that budget from 0.7% to 0.5% of gross national income. The UK’s development spending has been the difference between life and death for countless vulnerable people across the world. I seek your guidance, because surely it is unacceptable that, yet again, we are hearing such things in the media as opposed to the Government coming to this House so that we can have a proper debate. If this is going to happen, what options are open to me and other Members to try to rectify the situation and quickly get clarity from the Government? Surely they would have to bring a Bill to the House to reverse this provision.
Mr Speaker
As I know the hon. Member will expect me to say, that is not a point of order, but of course it is important that she has raised the issue. I hope that the Secretary of State for Foreign, Commonwealth and Development Affairs and the Ministers who now have that responsibility, have been listening to what she said. If there is going to be a policy change, I would expect the House—not the media—to hear it first, as we keep emphasising. It is media speculation at this time. The hon. Member has some good avenues through which to pursue the matter; some named day questions would be a good start. However, I am sure that it is only media speculation. Surely a Government would not use this House as a secondary vehicle, when it should be the primary one.
Sir Christopher Chope (Christchurch) (Con)
On a point of order, Mr Speaker. Following on from your reference to named day questions, may I ask what can be done to ensure that we get timely responses to those questions? I have 12 outstanding named day questions to the Department of Health and Social Care, one of which is over six months late. Others are over a month late, including questions the answers to which I think might be of interest to the Prime Minister—for example, about policy relating to those who are immune through antibodies. I have also raised one matter not just as a named day question, but twice during debates on the Floor of the House, when I have asked the Department, and the Secretary of State in particular, for the evidence in support of the assertion made to the House on 1 October that
“hundreds of thousands of deaths…would follow”
if the Government
“just let the virus rip”.—[Official Report, 1 October 2020; Vol. 681, c. 503.]
Where is the answer to the very reasonable question that I submitted?
Mr Speaker
I know that the hon. Gentleman—as a person of long standing in this House, and great knowledge —knows that there are other avenues to pursue. Let me say once again that it is totally unacceptable for Members of Parliament not to get responses within the named time. The Procedure Committee will be listening to what we have already said, and I know that the Leader of the House is very concerned. The title is “named day questions”, and those questions should therefore be answered as such. It is completely unacceptable for questions not to be answered after six months. I am tempted to say that if there were an urgent question to be asked on the subject of named day questions, one could be tempted.
In order to allow the safe exit of hon. Members participating in this item of business and the safe arrival of those participating in the next, I am suspending the House for three minutes.
Doctors and Nurses (Developing Countries) Bill
Tuesday 17th November 2020
(4 years ago)
Commons ChamberRead Full debate Doctors and Nurses (Developing Countries) Bill 2019-21 View all Doctors and Nurses (Developing Countries) Bill 2019-21 Debates Read Hansard Text
A Ten Minute Rule Bill is a First Reading of a Private Members Bill, but with the sponsor permitted to make a ten minute speech outlining the reasons for the proposed legislation.
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Mr Andrew Mitchell (Sutton Coldfield) (Con)
I beg to move,
That leave be given to bring in a Bill to require the Secretary of State to report on the merits of a scheme for the United Kingdom to pay to train two doctors or nurses in developing countries for each doctor or nurse recruited to the National Health Service from those countries.
I am extremely grateful to you, Mr Deputy Speaker, for granting me this opportunity to make the case today for my Bill—my first ten-minute rule Bill since I was elected to the House 33 years ago. I am supported by a distinguished cross-section of Members from both sides of the House. I believe this Bill to be uncontroversial, but a genuine boost for the reputation of global Britain and the international values that this House supports, particularly ahead of the integrated review. It builds on the past reputation of our country as an international development superpower. We were the first of the major developed countries to honour our promise to the world’s poorest people to spend 0.7% of our gross national income as part of our mission to elevate the lives and social conditions of some of the most desperate people on the planet—people deprived not for any reason of their own, but because of where they were born.
One of the proudest moments of my political life was when the coalition Government, in spite of the austerity that our country faced back in 2010, declined to balance the books on the backs of the world’s poor and agreed to honour the 0.7% promise. I am still certain that that chimes with the values and instincts of the vast majority of our fellow citizens, even at such a dreadful time as this for so many.
Secondly, I want to emphasise how much we rely on those doctors and nurses and other healthcare workers who bring their talents and skills to this country to support our NHS from overseas. We respect them and we are hugely grateful to them. Indeed, if I may use a second world war analogy, much beloved by some of my hon. Friends, the heroes of this war against covid are not, as in the battle of Britain, the men and women of the Royal Air Force but, all too often, workers from overseas working in our hospitals, giving their all in our care homes, putting themselves in harm’s way, and often living on the minimum wage.
When we persuade a doctor from the developing world to come here, we do so in the knowledge that our gain will inevitably be their country’s loss. In this country, we have 215 doctors, nurses, health workers and midwives from Sierra Leone; from Nigeria, 4,099; from Pakistan, 3,394; from Ghana, 1,118; and from India, just short of 20,000. All these countries are developing nations with whom we have, or have had, a significant development partnership. What I am describing—the export to us of their doctors and clinicians—is reverse aid: not from Britain to help developing countries, but from those developing countries to help Britain; and it is clearly wrong. In Britain, we have one doctor for every 357 people—effectively, three doctors per 1,000 people—with some 15% of our nurses coming from overseas and about a quarter of our doctors.
What should we do about this dependence on doctors from overseas, and especially from the developing world, where we are effectively poaching their key public assets? First, we should grow more doctors and nurses here in the UK. The Government have recognised this and increased the number of doctors trained here from 6,000 a year to 7,100 from 2018. It was particularly good to see that universities like Aston in Birmingham now run a foundation course bringing more students from disadvantaged backgrounds into medicine.
We recognise also that it would be wrong for us to end the opportunity for those doctors in the developing world who wish to exercise freedom of movement. The House will be as shocked as I was to hear that not long ago there were more doctors trained in Sierra Leone practising medicine in Manchester than were practising medicine back in Sierra Leone—the country that had trained them. We should not restrain their career opportunities by cutting off their ability to come here if they wish and if we want them to do so.
So let us work with the grain of human nature, do the right thing, accept our moral obligation to people much less fortunate than ourselves, but also meet the needs of our citizens and ensure that they have the best possible healthcare. Therefore why not do the following? For every doctor or nurse we poach from a developing nation, we should ensure that that developing country—on losing their trained professional to our advantage—receives from the existing British development budget sufficient resources to train up and replace them, two for one? When we are lucky enough to secure such professionals from the developing world, we should replace them twice over, and expand their public health services accordingly.
Remember these figures: in Britain, one doctor for 357 people; in Nigeria, one doctor for 2,753 people; and in Sierra Leone, 1.4 doctors and nurses for every 10,000 people. Ghana—a country with which Britain has a close historic relationship—has in the upper east region, one of its poorest, one doctor for every 26,000 people. All the time, these countries, too, are fighting covid. Nigeria has 64,000 cases, Ghana has 49,000 cases, and Sierra Leone has 2,385 cases. India has an estimated shortage of no fewer than 600,000 doctors and 2 million nurses. India, where Britain actively recruits doctors, has one doctor per 10,189 citizens and has 30% of all the world’s acute child malnutrition.
The case we make to Parliament and the Government today is as follows: it is immoral and selfish for Britain, with its wealth and infrastructure, to poach doctors from the developing world. However, by taking the action I have suggested, we can turn that into a win-win for us and for developing countries. It would not be right to fetter freedom of movement for those medical and health personnel who wish to come here and who we as a country wish to admit—and to whom we are truly grateful for bringing their skills to these shores. By replacing twice over the health service professionals who come here from developing countries with which Britain has a close development partnership, Britain can help to meet its own healthcare needs while providing additional healthcare capacity within those countries.
On 1 January, the UK takes over the chair of the G7 group of nations. At a time when the new US President-elect is determined to reinvigorate the international rules-based system, when this major pandemic has destroyed lives and livelihoods around the world, and when we know that covid will not be beaten here until it is beaten everywhere, especially in countries with weak public health infrastructure, Britain’s international development leadership and commitment to the 0.7% promise to the poor—Britain’s example—have never been more needed. My Bill will contribute to that leadership and to the international progress we so badly need.
Question put and agreed to.
Ordered,
That Mr Andrew Mitchell, Nicola Richards, Bob Stewart, Dame Margaret Hodge, Sir Edward Leigh, Jess Phillips, Caroline Nokes, Hilary Benn, Sir Robert Neill, Harriett Baldwin, Crispin Blunt and Ms Harriet Harman present the Bill.
Mr Andrew Mitchell accordingly presented the Bill.
Bill read the First time; to be read a Second time on Friday 8 January 2021, and to be printed (Bill 213).
National Security and Investment Bill
Tuesday 17th November 2020
(4 years ago)
Commons ChamberRead Full debate National Security and Investment Bill 2019-21 View all National Security and Investment Bill 2019-21 Debates Read Hansard Text Read Debate Ministerial Extracts
The Secretary of State for Business, Energy and Industrial Strategy (Alok Sharma)
I beg to move, That the Bill be now read a Second time.
Our country has always been a beacon for inward investment and a champion of free trade. We recognise and celebrate the positive impact of these twin policies in delivering prosperity and opportunities across the United Kingdom. Over the past 10 years, the UK has attracted around three quarters of a trillion dollars of foreign direct investment, which in turn has helped to create 600,000 new jobs in our country.
In 2019-20 alone, more than 39,000 jobs were created in England thanks to foreign direct investment projects, with more than 26,000 of those jobs created outside London. Almost 3,000 jobs were created in Scotland, and more than 2,500 in Wales and 2,000 in Northern Ireland respectively. That is why we will continue to work relentlessly to ensure that the UK remains a great place to do business and invest. That approach is more important than ever as we look to business to create jobs in our recovery from covid-19.
The UK is very much open for business, but being open for business does not mean that we are open to exploitation. An open approach to international investment must also include appropriate safeguards to protect our national security. Those are not conflicting approaches; prosperity and security go hand in hand. Otherwise, we leave the United Kingdom open to the risk of being targeted and compromised by potential hostile actors who are looking to disrupt our economic and wider security.
Ms Nusrat Ghani (Wealden) (Con)
From the moment that this Bill was started to now, we have learnt a lot more about security and infrastructure. Does my right hon. Friend share my concerns that the Chinese national intelligence law requires Chinese firms to assist with state intelligence work? This was brought to light for me when TikTok gave evidence to the Business, Energy and Industrial Strategy Committee. I am incredibly anxious about the data that it could potentially be harvesting and sharing back with its parent company, ByteDance.
Alok Sharma
I know that my hon. Friend cares very deeply about this issue and, indeed, she and I have had discussions about it. I would say to her that the Bill is agnostic as to the domicile of an acquirer. I think that that is right and proper, but it is also right and proper that we look at every single transaction on a case-by-case basis. Let me assure her that if there are security concerns with any transaction, of course we will act.
Bob Seely (Isle of Wight) (Con)
There is a lot in the Bill that I am sure we all support, but does my right hon. Friend accept that without a public interest test, a character test, an anti-slavery test and a human rights test, the definition of national security being offered here is extraordinarily narrow and problematic to the broader age that we live in? Does he accept that there will be debate around that point—about what constitutes national security in this age?
Alok Sharma
My hon. Friend raises a point that I know he has raised with my fellow Ministers, and other colleagues will raise a similar point. He talks about modern slavery. He knows that the Government passed the Modern Slavery Act 2015. The Home Office is looking to update and strengthen that. I note the points that he has raised, but the whole point of the Bill is for it to be narrow on national security grounds, and that is the way that it was constituted when it was first discussed in the Green Paper in 2017 and in the White Paper in 2018. However, I will try to address some of the points that he raised as I go on.
Those who seek to do us harm have found novel ways to bypass our current regime by either structuring a deal in such a manner that it is difficult to identify the ultimate owner of the investment, or by funnelling investment through a UK or ally investment fund, or indeed, by buying or licensing certain intellectual property rather than acquiring the company. Be in no doubt that the UK and our allies are facing a resurgence of threats. That is why we are updating our powers to screen investments into the UK. Our current powers date back to the Enterprise Act 2002. Technological, economic and geopolitical changes across the globe over the past 20 years mean that the reforms to the Government’s powers to scrutinise transactions on national security grounds are now required.
Mr Kevan Jones (North Durham) (Lab)
I welcome a lot of the proposals in the Bill, including on the issue of land and the removal of the thresholds in terms of ownership. One way that people have been able not only to get influence in this country but to launder money has been through the purchase of large amounts of property in the UK, which were highlighted in the Intelligence and Security Committee’s report on Russia. Does the Secretary of State see the Bill addressing that issue?
Alok Sharma
I will go on to the detail of that particular issue, but as the right hon. Gentleman identified, the Bill looks at assets and intellectual property. On the point that he raised about the size of transactions, as he knows, under the 2002 Act, apart from some limited exceptions, businesses being acquired must have a UK turnover of over £70 million or, indeed, the merger must meet a minimum 25% market threshold. This means that acquisitions of smaller but technologically sensitive companies are not covered.
The Government have been clear for a number of years about our intention to introduce new powers. Many of our international allies, including our Five Eyes partners, have also acted to update their legal frameworks to address national security risks. We, in turn, are seeking to update our legislation in a proportionate manner to ensure that we have more security for British businesses and people from hostile actors targeting our country; more certainty for businesses and quicker, slicker screening processes as we remain open to trade and recover from covid-19; and a regime that is in line with our allies, meaning that investors will be familiar with this approach.
Let me turn to some of the specifics of the Bill. Part 1, chapter 1 introduces a call-in power that the Government may use in relation to a trigger event across the economy that they reasonably suspect has given rise to or may give rise to a risk to national security. Trigger events include acquisitions of certain shares or voting rights in a qualifying entity, and the acquisition of material influence over such an entity. As the right hon. Gentleman pointed out, it will be possible for the first time to call in the acquisition of a right or interest in a qualifying asset, including intellectual property, where such an acquisition would enable the acquirer to use the asset or control or direct how it is used. That is similar to the US and other countries’ regimes.
The call-in approach is consistent with the 2002 Act, but importantly there are no minimum thresholds for the size of the business or asset to be acquired. That means that sensitive businesses and assets that may previously have slipped under the minimum size threshold will no longer do so. That will close the back door into the United Kingdom that hostile actors could exploit.
However, it is important to reassure the investment community that the Government expect to use these powers sparingly. We estimate that less than 1% of transactions in any given year will be subject to call-in. For transactions that fall outside the mandatory requirement of the regime, the Government will be able to call in a transaction within a period of five years of a trigger event having taken place where they have not been notified. When the Government become aware of a trigger event having taken place, they will have six months to issue the call-in notice. That five-year period is, again, consistent with regimes in Germany and France. The Bill requires that the Government publish a statement of policy intent explaining how they expect to use the power to issue a call-in notice.
Should the Bill become an Act, the Government’s call-in powers will apply from the date of introduction and will cover transactions that complete during its passage. That will ensure that hostile actors do not rush through the completion of transactions between the introduction of the Bill and Royal Assent as a means to avoid scrutiny under this legislation. My Department has already set up an investment security unit to field enquiries from businesses and investors about transactions under the new regime.
Under the National Security and Investment Bill, there will be no requirement to publish call-ins. That is of course in contrast to the public interest intervention notices under the 2002 Act.
Aaron Bell (Newcastle-under-Lyme) (Con)
I welcome what the Secretary of State just said about the call-in power. Will he confirm that, as a result of the measures in the Bill, most transactions can take place within 30 days, which means that the UK will remain a venue, and be an even better one, for foreign direct investment as we seek to rebuild our economy following coronavirus?
Alok Sharma
My hon. Friend makes a very important point. We are giving certainty, and we expect that most call-in decisions will be decided upon within 30 days. I said that we expect that less than 1% of all transactions in any given year will be called in, and only about 10% of those will then face detailed scrutiny.
Mark Pritchard (The Wrekin) (Con)
Will the Secretary of the State provide clarity to the House about the jurisdiction of the Bill? For example, if a German technological company was listed in Germany but the IP and research and development was based in the UK, what powers would the Government have to act?
Alok Sharma
This Bill applies to any transaction that relates to an asset or entity in the United Kingdom. If that were the case, of course it would apply.
Sir Iain Duncan Smith (Chingford and Woodford Green) (Con)
I am interested in that point. If a malign actor made an investment in another country with a lower-standard test, which then invested in the UK, putting intellectual property rights at risk, where do the UK Government go on that? Do they give themselves the scope, which I do not see in the Bill, to act on the basis of the original investment?
Alok Sharma
I thank my right hon. Friend for his question. He has taken a great deal of interest in this legislation, and we have spoken about such matters. As I said earlier, the whole point of the Bill is that we will be able to scrutinise the precise details of a transaction and of who the ultimate beneficial owner of a particular acquiring entity may be. I would therefore hope that the Bill will indeed cover the particular set of circumstances he outlines.
Going back to the point about providing assurances, businesses and investors can be reassured that the Government will treat potential national security risks with the discretion they deserve.
Turning to the mandatory notification elements of the Bill, investors in 17 prescribed sectors of the economy will be mandated by law to notify the Government of acquisitions of entities above a certain threshold of shareholding or voting. That mandatory notification process is similar to the approach taken in the United States, Germany and France. The Government have, alongside the introduction of the Bill, published an eight-week consultation to refine the definitions of those 17 sectors. The discussions that I and other Ministers in the Department have had with the investment community suggest that that has been extremely welcome.
Many sectors, of course, are well defined, and the purpose of the consultation is to refine them further so that the definitions are clear and narrowly focused on specific parts of sectors in which risks are most likely to arise and will allow parties to self-assess whether they need to notify. The House will appreciate that we could not have published the consultation before we introduced the Bill, with its call-in powers, or we would have risked hostile actors completing transactions in the particularly sensitive sectors.
Richard Fuller (North East Bedfordshire) (Con)
My right hon. Friend is quite rightly focusing on precisely defining the sectors. Was he as concerned as I was to hear the Opposition spokesman say today that he would prefer a strategy that did not have that definition, relying instead on the whimsy of a particular Secretary of State at the time? That situation could, like it does in France, lead to a yoghurt company or water bottle business being defined as a national strategic asset.
Alok Sharma
My hon. Friend speaks with a great deal of interest and experience in investments. This Bill focuses on national security, and we have been clear that we will define the sectors where mandatory notification is required, which is right and proper. The whole point of the Bill is that we are taking a proportionate approach. We do not want some kind of chilling effect on investment coming into the UK. We have been a beacon for inward investment over many years with, as I said earlier, three quarters of a trillion dollars coming into our country over the past 10 years. We would not want that to change.
Transactions covered by mandatory notification that take place without clearance will be legally void. Again, that is in line with the French, German and Italian regimes. Parties to an acquisition may, of course, voluntarily inform the Secretary of State about their acquisitions to seek swift clearance to proceed. We have also streamlined the information required for notification from 36 pages, as required under the Enterprise Act 2002 for competition modifications, to a third of that.
The use of digital processes will make interaction with the Government much simpler, more transparent and slicker, and Government will aim to provide clearance for most transactions within 30 working days of notification, as my hon. Friend the Member for Newcastle-under-Lyme (Aaron Bell) raised earlier. Having spoken to the investment community over the past week, I know that that timely approach to the clearing of transactions is welcomed.
Moving on to the assessment of called-in transactions, part 2 of the Bill provides powers to assess transactions should the Government call one in. Where the specific legal test is met, the Government may impose conditions or, in extremis, block or unwind transactions. I stress once again that the Government will use those powers sparingly and proportionately.
The Government will take the necessary powers in the Bill to gather information about any transaction. However, such information will be strictly safeguarded against inappropriate disclosure. That includes, of course, information from parties, regulators and others to make informed decisions on transactions. If no remedies are imposed, a final notification will be provided at the end of a national security assessment. Alternatively, the Government may choose to prescribe remedies.
Any notification decision under the Bill will be subject to legal challenge from the potential acquirer entity by way of judicial review or appeal, and the Government will be able to apply to the court for a closed material procedure to protect commercially sensitive and national security matters in such proceedings. The investment security unit will ensure that the entire process is streamlined and supported by robust digital structures and governance to ensure swift decision-making on assessments.
It is worth noting that the new regime will be underpinned by both civil and criminal sanctions, creating effective deterrents for non-compliance with statutory obligations. Again, that is in line with sanctions in the French and German regimes.
Mark Pritchard
Is it not the case that a call-in itself could be commercially sensitive, particularly to a listed company? In that regard, a default of self-referral to the Government would probably be a better way for industry to ensure that share prices are not unfortunately affected by what might be a legitimate call-in.
Alok Sharma
My hon. Friend raises an incredibly important point. Of course, self-referral, as he refers to it, is possible. In fact, if any company has particular concerns as to transactions that they may be undertaking or part of, they will get a swift assessment from the Government.
I make the point, though, that we will not be effectively publicising call-ins when they take place. Clearly, at the end of a transaction, if there was a particular remedy, that would be made public. It is also worth pointing out that the Government will publish an annual report, not on individual transactions, but on the scope of the transactions and sectors that have been looked at. I hope that that will give future investors an opportunity to consider the type of transactions in which the Government have a particular interest.
The final measure that I want to detail relates to the overseas disclosure of information relating to a merger investigation. Under section 243 of the 2002 Act, there is a restriction on the ability of UK public authorities to disclose merger information to overseas authorities unless the consent of the entity has been given. Clause 59 of the Bill removes that restriction. That will strengthen the Competition and Markets Authority’s ability to protect UK markets and consumers as it takes a more active role internationally, allowing the UK to set up comprehensive competition agreements with our international partners.
In conclusion, I hope that right hon. and hon. Members on both sides of the House see that the Bill updates our national security powers in a proportionate, pro-trade and pro-business manner.
Alok Sharma
My hon. Friend raises an important point. As he will know, and I am sure appreciate, I am not going to be able to set out every single test that we will apply when it comes to a national security assessment. The application of the tests will, of course, be based on information that we garner from across Government. He can be certain that in using the powers, the Government will act in a quasi-judicial fashion, we will have regard to the statement of policy that has been published, and we will act, again, in accordance with public law principles of necessity and proportionality. I also made the point earlier that any decision can, of course, be challenged by an affected entity.
Stewart Hosie (Dundee East) (SNP)
Before the Secretary of State moves on, will he give way?
Alok Sharma
I will move on, if that is all right with the hon. Gentleman.
These powers are narrowly defined and will be exclusively used on national security grounds. The Government will not be able to use these powers to intervene in business transactions for broader economic or public interest reasons, and we will not seek to interfere in deals on political grounds. They will not and cannot be used for wider economic tests. The Government already have proportionate powers in statute for intervention on the grounds of competition, financial stability, media plurality and combating a public health emergency. Going further than that would risk chilling and destabilising investment in the United Kingdom and reducing growth opportunities and jobs.
The UK has the lowest corporation tax rate in the G20. We are rated one of the most innovative countries in the world, ranking fourth in the 2020 global innovation index. We are one of the top 10 countries in the world for ease of doing business. We have a world-leading research and development environment, and the stability of our institutions, tax system and legal framework are respected globally. It is because of our pro-market approach that the United Kingdom has become one of the premier places to invest in the world, and I certainly would not want to do anything to change that. The powers we seek in the Bill support and enhance our pro-business environment, supporting economic growth, prosperity and jobs across the United Kingdom, while enhancing security for our country. I commend the Bill to the House.
Edward Miliband (Doncaster North) (Lab)
I will start with the vital context to the Bill. At the heart of it is the first duty of any Government: to protect our national security, while meeting the shared desire across the House for our businesses to succeed and create wealth and jobs. The Bill must be seen against the changing geopolitical and economic landscape; the evolving nature of the threats to our national security in an age of rapid changes in technology; the lessons of covid about the critical nature of unexpected threats, including pandemics, which has thrown into sharp relief the critical need for advanced domestic capabilities in manufacturing and logistics and across supply chains; a shared sense across the House that we as a country have at times been too relaxed about some overseas interests investing in our country, with damaging national security implications; and an understanding that the existing legislation supported across parties two decades ago does not provide the basis for the kind of active industrial strategy that we need to build a safe and successful economic future. Those factors together demand legislation, and that is the context in which we view the Bill, so we support it and the fact that the Government are taking the necessary legislative steps to protect our vital national security interests. It is the right thing to do for our country.
Our main argument with the scope of the Bill is not so much about what it seeks to do on national security but what it omits on wider issues of industrial strategy. It is notable that the Bill brings us into line with other major economies on the security questions we face but fails to do so on broader issues of public interest and takeovers going beyond national security, despite the clear lessons that have been shown over the last decade. I will return to that point later in my speech, but first let me focus on the specific provisions in the Bill.
We should be candid that, in drafting the Bill, the Government face the very difficult challenge of keeping our economy open as much as possible to foreign direct investment, which is part of the lifeblood of business and jobs, and protecting our security. Navigating that challenge is hard, which is why getting the specific provisions of the Bill right is so important. This is obviously reinforced by the fact that the Bill goes significantly further in a number of respects than the 2018 White Paper envisaged—notably, the mandatory notification obligation that will apply in 17 sectors and the question of five-year retrospective application.
I want to raise a number of issues about the Bill in the interests of the constructive scrutiny that is the role of this House. These questions are about the scope of the Bill, the issue of retrospection, the capacity of the Government to make this regime work and the scrutiny of its effectiveness.
First, on the scope of the Bill, we do not take issue with the 17 key sectors identified by the Government. In quantum technologies, engineering, biology, space and a range of other emerging technologies, there are serious potential issues around national security. For example, the acquisition by a firm owned or funded by a foreign power of a company that designs graphic processes, networking routers or microchips could potentially risk national security, especially if the products are used by the UK Government. That is why the legislation is necessary.
However, as the Secretary of State acknowledged, the Bill goes well beyond those sectors. The call-in ability stretches to any entity or asset in the UK, irrespective of sector. While that was true in the old regime, this power will be viewed in the context of a much more activist, interventionist Government approach. We do not say that is wrong, or indeed out of line with some other countries, but there is a danger of a potential deterrent effect on investment.
To be fair to the Secretary of State, in his statement of policy intent accompanying the Bill he says that in those non-mandatory areas,
“transactions are only expected to be called in on an exceptional basis.”
The central question for businesses and investors in the non-mandatory sectors will be to decide whether or not to notify. The central challenge for the country is to make sure that investors are not put off from investing in the UK.
I would say to the Secretary of State that there is not yet clear, targeted guidance for market participants on how and when they should notify in those non-mandatory sectors; further detail on that will be crucial in due course. The Secretary of State will be aware of the example of the suspicious activity reports from financial institutions to the National Crime Agency where the system has, according to the Law Commission, been “swamped”. As with suspicious activity reports, there is a risk that the voluntary notification system sees businesses err on the side of over-reporting; the impact assessment already estimates that at least 1,000 notifications will be made each year. I hope that, during the passage of the Bill, Ministers can offer reassurance on that point.
Secondly, I want to raise is retrospection. The Government consulted on a six-month retrospective power to call in transactions for review, and certain respondents expressed the view that that was too long. The Government have chosen to go much further—for five-year retrospection. I appreciate that that is similar to France, Germany and Italy, and we have no inherent objection to it if the case can be made, but I have read carefully the Government’s response to the consultation, and I do say to the Secretary of State that Ministers need to do a better job of explaining the change in thinking to such a lengthy period.
In particular, I wonder whether Ministers would explain what the experience has been in those countries that have five-year retrospection—whether they have looked at its effects. As well as the possible deterrent effect on investors, there is obviously a massive challenge in unwinding a transaction that has taken place at five years’ remove. It would help if Ministers explained that, because there could be a subsequent series of transactions, so that unwinding from that would be very complex. There is also the issue that has been raised about the voiding, which is that a notifiable acquisition completed without the Secretary of State’s approval is void—not unwound by the Secretary of State, but automatically void without any decision required on his part. That is an unusual concept, and Ministers need to explain how it will work.
Thirdly—this is really important for practical purposes—I want to focus on how Government can guarantee an effective regime for the new powers. The Government have proposed a new investment security unit in BEIS. It is hard to overestimate the extent of the challenge for the new unit. It will have to respond to a large volume of mandatory, and potentially voluntary, notifications within a tight timeline set out in the Bill. The start of a new regime will always be turbulent.
The unit will have to track the development of fast-moving, highly complex technologies and monitor each of those markets, and the Secretary of State will have to take decisions on the advice of the unit, which can be challenged in court in the context of highly sensitive information and wide-ranging powers. And the unit will need to develop policy, practice and precedent to provide certainty to a wide swath of the economy. These are, as I am sure the Secretary of State knows, significant challenges, and it is no exaggeration to say that the success of the regime and the effective functioning of an important part of the economy rest on the new unit operating swiftly and effectively. If I may put it this way, the Secretary of State will be aware that his reputation and that of future Business Secretaries—not to be presumptuous —will depend on the resourcing and functioning of the unit.
I want to raise in particular the issue of small and medium-sized enterprises, which may well find the notification process most burdensome. Take the example of a small tech start-up founded by recent university graduates, who might incur much more debilitating costs in navigating the process than a large global corporation. It is essential that the Government find ways to mitigate this risk.
In any case, my hon. Friend the Member for Newcastle upon Tyne Central (Chi Onwurah) and I are seeking from Ministers assurances that the unit will be adequately resourced, with access to the right technical capabilities; and crucially, there must be a clear flow of information and shared priorities between the unit, protecting our national security, and the Department of International Trade’s new office for investment, whose job is to get inward investment into the UK.
Mr Kevan Jones
Does my right hon. Friend agree that what is also going to be needed is some very close relationships and working with the security services, because the information that it could rely on in these cases will mostly not be accessible straightaway by this new unit?
Edward Miliband
My right hon. Friend speaks with great knowledge on this issue, and he is completely correct. Indeed, I do not want to answer for the Secretary of State, but one of the issues that was raised was the definition of national security. These things are hard to define, for a whole range of reasons that we can understand, but for the reasons that my right hon. Friend set out, it is absolutely crucial that there is a close relationship with the security services.
Sir Iain Duncan Smith
Does the right hon. Member agree that the definition of national security provided in spheres such as the United States and Australia would actually help clarify for companies an idea of whether they are likely to fall within it? Without that, they are not quite sure what the judgment will be behind closed doors.
Edward Miliband
The right hon. Gentleman has taken a huge interest in these issues and, again, speaks with great expertise, and he may well be right that it is possible to do more on the definition. I am sure that is something the Secretary of State will consider. I can see there are definitely challenges, but I would agree with the right hon. Gentleman that the more guidance there can be for business about this, the better, because the more we will avoid a mountain of notifications that are not necessary and the more clarity there will be and the greater protection for our economy.
Fourthly, I want to talk about the role of this House in scrutinising the effects of this legislation. A large number of areas are left to delegated legislation in this Bill. Notably, the Bill enables Ministers to add new sectors to those subject to mandatory notification. I understand some of the reasons for this, but I do hope there can be proper scrutiny, if that is the case, in this House and, indeed, interaction with business. Given the sensitive nature of the issues involved in this Bill, I do think there needs to be a way—an annual report is envisaged, I believe, by the Secretary of State—for this House to monitor how this is working in practice.
I do not speak for it, but we have a special Committee of the House—the Intelligence and Security Committee—that can look at these issues. I would like to raise the question with the Secretary of State whether it could play a role in scrutinising the working of the regime and some of the decisions being made, because there are real restrictions on the kind of transparency there can be on these issues for the reasons raised by my right hon. Friend the Member for North Durham (Mr Jones). The ISC is in a sense purpose-built for some of these issues.
Again, this is one of a range of issues we will seek to raise during the passage of the Bill, because I think that it is really important. We see our role as a constructive Opposition to get this right. There is a shared understanding across this House that we need to update our legislation. There does need to be proper scrutiny, and I hope that there can be good scrutiny in Committee and an openness on the Government side to the points that are made across the House in relation to improving the legislation and a proper way to look at its operation, which is vital to our businesses.
Bob Seely
Is the shadow Secretary of State aware that some people on this side of the House, as part of this process and as part of the scrutiny, have been calling for an annual statement on strategic trade dependency to give ourselves an overview and an understanding of the strategic direction of some of our industries, including specific examples?
Edward Miliband
It sounds like a good idea to me, and I would welcome that. Actually, that is a convenient segue to the wider points that I want to make on this Bill.
Our view is that this is only one part of the change we need, because I believe that the existing legislation has been found wanting. That legislation was passed by a Labour Government—I checked—and I think it was more or less agreed across parties; certainly, the then Opposition did not vote against it. It has been found wanting not just on national security but on wider issues such as the public interest test for takeovers on economic grounds.
I just want to raise a very specific issue, because it illustrates the point. We are in the midst of a threatened takeover in the tech sector: the Nvidia-ARM deal. We know that ARM is the crown jewel of the British tech sector. We know that Nvidia competes with companies to which ARM supplies. There is a widespread view across the tech sector and across this House that this takeover could be a risk to the future prosperity and success of the sector in the UK, but looking at the Secretary of State’s statement of intent, I do not think that it falls in this list. The list of trigger risks are: disruptive or destructive actions; espionage; or inappropriate leverage. Those are not the issues with Nvidia. The issue is our wider economic interests, which speaks to the point that the hon. Member for Isle of Wight (Bob Seely) made.
In the two months since the takeover was announced, we have heard little from Ministers. It is true that there could be a referral on competition grounds—I am sure that the Secretary of State is a bit constrained in what he can say about this, but let us hear it if there is. But we are deeply worried about the future of ARM. We are worried about the strength of the legal assurances on its headquarters and other matters. It would be good if Ministers could tell us what they think about this issue. These are deeply serious issues about our industrial strategy and our economic base, and they go beyond national security and, on my understanding, the tests that are set out in the Bill.
Andrew Griffith (Arundel and South Downs) (Con)
The right hon. Gentleman speaks very lucidly about the deterrent effect, which he talked about earlier, as well as some of the challenges in establishing this new unit. Surely he must understand that the answer to this is to make sure that the scope of this Bill is absolutely as narrowly drawn as it can be. With respect, he has fallen into the trap of immediately hanging Christmas-tree-like baubles of employment policy and other areas of his industrial policy in what would otherwise be a very narrowly drawn and constructive Bill.
Edward Miliband
I really appreciate the hon. Gentleman’s point. These are not Christmas tree baubles that I have suddenly raised now. In 2010, there was the issue of the Kraft takeover of Cadbury. In 2014, there was the threatened takeover by Pfizer of AstraZeneca that had deep implications for our science base. I have felt for a decade that our legislation is not fit for purpose—and I acknowledge completely that this legislation was put in place by the Labour Government. These are deeply serious questions about the future of our industrial strategy and industrial base.
I do not pretend that these issues are easy to resolve. Of course there are dangers on both sides of the ledger, and we have to strike a balance between those two dangers, but we have enough experience with Kraft-Cadbury and with Pfizer and AstraZeneca— which did not happen, but not because of any powers of Government—to be anxious about Nvidia-ARM. If, as I believe, the whole basis of this legislation is to say that other countries are taking this action when it comes to national security and so should we, the logic applies here as well. It is not straightforward, it is not simple, and I completely acknowledge that to the hon. Gentleman, but I see the case for change.
Richard Fuller (North East Bedfordshire) (Con)
The right hon. Gentleman used the phrase “I feel” and then talked about confectionary, then about how he felt about pharmaceuticals and about semiconductor chips that are used in mobile telephony. That is the problem, is it not, Mr Deputy Speaker? His feelings are not an appropriate way to interfere in the development assets of private capital. What could he provide to those businesses to protect their development from the vagaries of his feelings from time to time?
Edward Miliband
It is interesting; I believe the hon. Gentleman supports this Bill—I may be wrong—but on national security, the Government will apply some tests and we could apply some tests when it comes to our industrial base. Let me make this point to him: it is not just France, but Germany, Australia, Japan and the United States. It is all of the other major industrial economies that say, “Well, no, we do have a strategic interest in certain industries.” Of course, if we decided to go down that route, we would have a debate in this House about the specific areas in which we wanted to be able to intervene. We would have to look at exactly the criteria, and it is not just about whim, but the question is: is the status quo adequate?
I say to the hon. Gentleman that the status quo is not adequate, and we do not just have 10 years or more of experience to suggest that the status quo is not adequate; we also have a real situation now with Nvidia and ARM. If anyone in the House wants to get up and say, “We think it is fine. We think this should just go ahead. We are not concerned about what that means for our tech sector”, then fine, but everybody I speak to in the tech sector who knows about this issue, including my hon. Friend the Member for Newcastle upon Tyne Central, says that there is a real worry. Why have we not developed enough of these world-leading companies in this country? Why do we want to see ARM taken over?
Andrew Griffith
The right hon. Gentleman is probably aware that on the journey to build the fabulous enterprise that is ARM, which is still employing thousands of British people and will continue to employ many more in the Cambridge artificial intelligence hub, that business made 22 acquisitions to equip itself to be where it is today. Had each and every one of those been subject to the jeopardy and the predations that he talks about, we may not have great British businesses like ARM in the future.
Edward Miliband
The hon. Gentleman is absolutely entitled to his view; we just have a difference of view on this. When it comes to our industrial base, I believe that the current legislation is inadequate, and there have been a series of events that illustrate that point. Indeed, I would make this point as well, which is that the Government say that the crisis of coronavirus makes parts of our corporate sector more vulnerable, and I think that only strengthens the case for action.
The overall point I would make is this: I welcome the Bill and think it is the right thing to do, but there is a broader picture here about what a modern industrial strategy looks like, and I do not think we can ignore these vital issues around our economic and industrial base.
Several hon. Members rose—
Edward Miliband
I have such an array of options. I think the hon. Member for Newcastle-under-Lyme (Aaron Bell) was first.
Aaron Bell
I thank the right hon. Gentleman for giving way. He is perhaps proposing an industrial strategy Bill, rather than a national security Bill, but on innovation and science and technology, does he not worry about the chilling effect of what he is proposing? Individuals who may be setting up a scientific or technology company might prefer now to do that in the United States, where they have every option of going to California and setting up the company in the first place, rather than setting up in the UK, because they might fear that he, as a potential future Secretary of State, as he indicated earlier, might prevent them from cashing in on what they have done?
Edward Miliband
The hon. Gentleman makes the point that the United States has exactly the regime that I am talking about and does indeed have those wide powers of intervention, so the notion that people are going to set up in the United States rather than Britain, when they have much stronger powers than us, does not hold water.
Tom Tugendhat (Tonbridge and Malling) (Con)
The right hon. Gentleman is of course right that there is a difference between the United States and the United Kingdom. One of the differences is that there are 350 million people in the United States. It is a continental power, a position that the UK sadly does not share. It does mean that our investment regime and our investment protocols have to recognise that we are having foreign direct investment of a very different nature.
I appreciate that this is a matter for debate, and I also appreciate that this is something where we will probably not agree. In fact, interestingly, the right hon. Gentleman seems to align much more closely with the former Prime Minister’s special adviser Mr Dominic Cummings than he does with me. Apart from that, it is actually a matter for a separate Bill. I may actually have some views where I sympathise more with him, but this Bill is quite clearly about national security. There are issues about how much further it should go, but what he says is not the scope of this Bill.
Edward Miliband
I can say to the hon. Gentleman that this is the first time I have been called a Cummings-ite. I have been called many things in my time, but a Cummings-ite after Cummings is really unusual.
The final point I will make before I conclude, because many hon. and right hon. Members want to speak in this debate, is that when I listen to Government Members, I feel that they accept the logic that we have to move away from the old view—the two decades ago view best embodied perhaps by the Enterprise Act 2002—when it comes to national security. They say, “We are worried about the investment effects, but national security matters.” Of course it does, and I agree with that. But then, when it comes to our industrial base, suddenly they have a completely different view, which is, “No, no, no. We can’t go back. We can’t change our view.” I think there is a degree, dare I say it, of inconsistency on that.
Mr Kevan Jones
Is there not a direct national security issue around telecoms? When BT was privatised, the old General Post Office was advanced in both mobile technology and fibre optics. It was because the Thatcher Government decided to throw it open to the open market that the advantage we had in this country was lost. That is why we now find ourselves at mercy of Huawei and other companies.
Edward Miliband
My right hon. Friend makes a very important point. Indeed, my hon. Friend the Member for Newcastle upon Tyne Central and I were discussing this very issue last night—that these issues can interact.
I will just say this and then I will conclude, Mr Deputy Speaker, I promise. I think the public are in a different place from some of the Government Members who have spoken. I think the public really recognise this issue. We have many great companies, but some of them have been subject to takeover, and the public do not really understand why and they do not really understand why the Government have not played more of a role. I can see some hon. Members nodding.
Updating legislation to protect national security is long overdue, and we welcome it. We will support the Government as they seek to protect national security and defend our country. We will push them to go further on industrial strategy and the takeover regime. We think this is the moment to be bold and develop the industrial strategy that 21st century Britain needs, but we want to see this Bill pass through the House. We will engage on it constructively, and I know from the Secretary of State and the way he operates that he will do the same.
Mr Deputy Speaker (Mr Nigel Evans)
As Members will notice, the call list is quite extensive and it is top heavy on the Government side, so please be mindful, particularly on the Government side, of the length of your contributions.
Sir Iain Duncan Smith (Chingford and Woodford Green) (Con)
It is always a pleasure to follow the right hon. Member for Doncaster North (Edward Miliband), not only because he followed me into leadership and discovered just exactly how pointless that really was. On that we can immediately agree, and he may well have stumbled into another point of agreement; he should know, now that he is a Cummings-ite, that I once employed him and then let him go, so maybe it is time for the right hon. Gentleman to do the same. Anyway, beyond that, I want to congratulate him, because there were things on which I did agree with him, as well as, obviously, things that would need further discussion.
I thank my right hon. Friend the Secretary of State for his deliberations on the Bill, which I will support tonight. It is long overdue. The debates around the Huawei stuff at the beginning of the year really exposed the fact that the UK had lost its way in this area in terms of threats and so on. We were behind the others—Australia, the United States; some of our big Five Eyes compatriots—but at least my right hon. Friend has grasped the nettle and brought this Bill forward, which is laudable. I also thank him for his courtesy in the course of this, in the sense that he spoke to me and, I know, to others. I particularly commend the courtesy of his Minister, the Under-Secretary of State for Business, Energy and Industrial Strategy, my hon. Friend the Member for Stratford-on-Avon (Nadhim Zahawi), who is a very good friend. He went out of his way to talk this through with colleagues on both sides of the House.
This debate is in that context. This is right. I particularly like clauses 32 to 39 and onwards, which deal with penalties, fines and incarcerations, the scope of which is up to five years. These are strong recommendations—slightly stronger than I expected, to be quite frank, but they are well worth it. There are many other good things about the Bill. I will not run through them all, because the Secretary of State did that, and I want to tease out a few points that I think are relevant and need inquiry.
The Bill gives the Secretary of State great powers for industrial strategy—powers to screen these investments that we have been discussing and to address the national security risk that they involve. It also gives him the power to call in investments. We have been through those already. However, I want to pick up on the things that I think are missing from the Bill and that I hope the Secretary of State will look at again in the course of its passage.
First, we have to accept that parked across this space are two very big threats: Russia and, of course, China. In fact, I think China is now the single biggest threat and problem posed to the United Kingdom and the free world. The way it is going—its problems, its difficulties, and the way it is focusing on internal suppression, external expansion and trashing both World Trade Organisation rules and laws—means that we will have to deal with that, and I suspect that this Bill will progressively be right in the middle of that. In dealing with that, I want to raise a couple of issues. In dealing with that, I want to raise a couple of issues.
Without this definition of national security, the Government are giving a stick to beat themselves with at the moment. Having such a definition is important for two reasons. First, it helps to improve clarity—a couple of my hon. Friends wanted clarity. I have looked at some of the definitions out there, including the American definition, which may not be perfect but it does cover some of the wider areas that I will talk about soon under transnational crimes and goes into things such as threats from drug trafficking. It is important for the Government to think carefully about this because it will help to define the Bill.
Bob Seely
On what the shadow Secretary of State said, there is obviously a genuine and good debate to be had on the elements of the Bill. This is not necessarily about industrial policy—I say with great respect to those on the Benches opposite—which is part and parcel of another debate. It is about the modern definition of national security and whether we see it as narrow or broad, and there is a strong argument today for having a broader definition of national security.
Sir Iain Duncan Smith
I agree with my hon. Friend and I agree that this is not the Bill to discuss industrial strategy. The right hon. Member for Doncaster North made wider points which I think are worthy of discussion, but I am not sure that that discussion should take place in relation to this Bill and I want to keep this narrow.
First, in China something very special is taking place: the idea of civil-military fusion, which is now infecting every single enterprise and company in China. The Chinese military, as we have already heard, uses this concept and strategy to acquire intellectual property, technologies and research for civilian use and for military use. An external investment screening body, therefore, should be set up under this legislation, to establish and investigate cases where this may now affect UK investments. This is very important, because the rules are very strictly applied in China: you co-operate with the intelligence services or you are out of business. You may be out of not just your livelihood but your freedoms.
Ms Ghani
Is it not even more dangerous in that, under the national security law in China, not only do people have to hand over data, but if asked by a foreign state they have to deny they are handing over data? If that is the case, should we not have a bigger debate about social media companies based in this country harvesting our data and our children’s data and where that data might end up down the line?
Sir Iain Duncan Smith
I of course completely agree with my hon. Friend and I was just going to come on to the data harvesting point, because it is caught in this. She is right that China’s national intelligence law requires all Chinese firms to assist with state intelligence work and to deny that if they are asked. Let us say the Secretary of State wants to investigate and says he has strong penalties for non-compliance. By law in China they are not allowed to comply with that process at all, so there is already a national conflict in this. TikTok is owned by ByteDance, which is a very dodgy company set up in China that has huge links with the Chinese Communist Government. So we need to be very careful about where we go with this because UK nationals might get caught up and get punished for what is essentially a refusal by the Chinese Government to allow others to do this.
I am also slightly concerned about some of the things that happened in the past not being caught by the Bill. The Henry Jackson Society has today announced that, having looked through the Bill, only 23 of the 117 Chinese acquisitions over the last decade would have actually been caught. The areas that are outside of this include pharmaceuticals. The Chinese takeover of Bio Products Laboratory, which has a very significant technology with regard to blood products, would not have been caught. In education, 10 universities have many thousands of obligations to Chinese investors, where they get a trade-off on technology, some linked to defence firms. That would not have been caught. Interestingly, Thames Water and Veolia Water have significant share ownership from Chinese firms, but that certainly would not have been called into question.
Richard Fuller
My right hon. Friend is referring a lot to China, and I am sure he will not be alone in that this afternoon. Is his perspective that we should be looking in the Bill to restrict all Chinese investments in the UK, or investment in particular sectors, and what is the differentiation if the origins of that is the Chinese state, in this fusion of the state with business?
Sir Iain Duncan Smith
My view is that the Bill should help us to identify exactly which of these are genuinely private and not located in China under Chinese law. That will be a big issue. I have to tell my hon. Friend that, on that question he is right, because I believe we are now facing a very significant threat from China. So we now need to use the Bill to figure out how we deal with that threat on a wider basis, not just on individual takeovers. The Government need to look at that. Huawei was a very good example of Government policy having to be reversed on that basis. It is a growing problem and he is right to raise it.
Richard Graham (Gloucester) (Con)
Does my right hon. Friend agree that it is incredibly important that we recognise that the Bill is not aimed at one particular country or any particular identified sovereign threat? It is a more general Bill about the importance and value of national security assets in this country. Does he also agree that referring to China as communist—although, of course, it is ruled by the Communist party—is a misnomer in the context of a successful model of authoritarian state capitalism with which we will have to deal and the world will have to deal? We will have to separate those companies that offer attractive investment opportunities from those that are genuine threats.
Sir Iain Duncan Smith
I thank my hon. Friend for that intervention. I know he has been a big champion of that relationship. We do not agree with each other on this matter because I think that China, with its dictatorial Government, poses a very significant threat. But I did speak about other countries—I did say that Russia also poses a threat—so I recognise his defence.
I want to move on to the national interest test. This year, the Australian Government invoked the national interest in looking at tests and they used it in similar legislation to block the acquisition of a minor stake—this might deal with the issue that my hon. Friend was talking about—in AVZ Minerals by a Chinese firm. They needed to intervene because the asset, given what has happened with covid and so on, had lowered in value unusually and unnecessarily, and that had opened it up to a takeover which they felt would have been very unhelpful. The other point I want to raise in passing is that we need to look at things like the Confucius Institute, which is here investing in universities with offers but is actually acting on behalf of the Chinese Government to follow lots of Chinese students around.
Other Members wish to speak, so I will finish my remarks. My main point is that without that national security test the Bill will lack clarity and definition, and fail to understand sometimes where it is actually looking. It could be open to pressures to turn this more into an industrial policy statement, rather than a national security issue.
The Bill also falls short of similar legislation by Five Eyes partners. My right hon. Friend the Secretary of State is absolutely right to say that they have looked across the scope of what others have done, but other Five Eyes partners have gone further on this. They are competitor countries to us, so it is not as though they have any kind of dictatorial regimes. The Committee on Foreign Investment in the United States and the Australian Foreign Investment Review Board are external bodies.
This is the point that I wanted to make to my right hon. Friend. I just wonder whether he might want to reflect on the nature of the pressure on somebody such as him, who, under the Bill, will have to sum up and make final decisions on the advice peculiarly to him. The other two organisations, in Australia and in the United States, have the ability to say that everybody on the panel makes a group decision on the evidence. I know he will argue that that process takes longer—yes, he may be right about that—but I feel that the pressure is on him.
I was in government for six years and I know what Downing Street does. It gives you a call and says, “I don’t think you have to go very far with this sort of stuff, do you? After all, this is worth a lot of money to us. Come on.” Others will say that and the Secretary of State will be sitting there thinking, “This is a balanced judgment. Where do I go on this?” I just wonder whether that pressure is fair on the Secretary of State. He would be questioned later on why certain decisions were made. If I was the Secretary of State, I would want to release myself from that situation. I would not want to be dragged to the courts to be accused of being biased in that decision and making a decision that was not agreeable. So I would look for more external bodies to be able to make that judgment.
I also say to the Government that human rights are vital nowadays. We cannot walk away from it; it is part of what makes us. The reality for us is that far too many companies have allowed themselves to quietly get sucked into the use of slave labour and other labour. We know about that, in Xinjiang province and in other areas too. My right hon. Friend does need to think about that very carefully. I do not want to make the Bill a Christmas tree, but elements of that are involved.
I congratulate the Government on bringing forward the Bill. It is the right legislation to bring forward. It is overdue, no question. However, the balance still needs to be widened somewhat. I hope that in the course of the Committee and Report stages the Secretary of State will accept that good amendments may come forward from brilliant people—not just me—who may well be able to help him in his adventures.
Stewart Hosie (Dundee East) (SNP)
I start with my ISC hat on because it was the ISC that first investigated UK Government powers and processes for scrutinising foreign investment in sensitive areas of UK industry, found them lacking and called for more powers. In its 2013 report, “Foreign involvement in the critical national infrastructure”, the Committee looked into the issue of
“foreign investment in the Critical National Infrastructure (CNI)”
and concluded:
“The difficulty of balancing economic competitiveness and national security seems to have resulted in stalemate.”
That is not a criticism and it is not meant to be contentious. This issue has arisen over the past few years and most, if not all, advanced economies are now grappling with it. I therefore welcome the Bill, in principle, or certainly a measure like it.
While on the subject of the ISC, I offer the apologies of its Chair, the right hon. Member for New Forest East (Dr Lewis), who is self-isolating having been contacted by the English version of Trace and Protect, and is sadly missing this debate.
The Bill is designed to bring additional scrutiny of foreign investment that may have an impact on national security. I say from the outset that not only is there nothing wrong with having a national security eye on investments in critical areas—it is in fact absolutely vital.
Currently, as we have heard, the ability of the Government to scrutinise investments on national security grounds contained within part 3 of the Enterprise Act—that is, the mergers provisions—is rather limited. In practice, it means that the UK Government are unable to scrutinise on the grounds of national security without the investment first meeting competition concerns or, in very limited circumstances, a public interest test. We know this concern and similar concerns are shared globally. A number of other countries have been tightening up their investment security regimes in response to changing national security-related threats, enabling technology, the loss of intellectual property and the increasing crossover between sectors, which I may touch on later. The Committee on Foreign Investment in the United States is largely seen as setting the standard. We have also seen tightening in Japan, Canada, Sweden, Germany and France at least, with the Japanese regime extraordinarily strict, in some cases limiting ownership to barely 1% of active management or, more accurately, to barely 1% of a company in certain circumstances.
In the UK Government’s proposals, if both the trigger and the threshold are met, the individual investment can be called in by the Secretary of State for approval. The powers can be retrospective; it can be called in after it has occurred. However, the time to conduct the national security assessment—30 days, with potentially an extra 45—might be deemed to be a little short, given how shrewd, or clever, certain institutions, organisations and individuals are at hiding genuine beneficial ownership. One thinks how long it took to find where beneficial ownership existed for some entities in the UK. Were it not for the Panama papers, we would probably still never know. I therefore question whether that maximum of 75 days is actually sufficient.
The Bill adds a mandatory notification scheme whereby investment interests in certain sectors and asset types—which I do not demur with—must be pre-emptively or retrospectively declared, but it removes notification of call-ins from the competition authority to a direct serve from the involved parties. In the interests of transparency, I seek clarity from the Government on the reasons why notification via the CMA is being removed.
The Bill also introduces new powers to increase screening in respect of health and preventing hostile acquisition through strategic buying of health supplies, for example. I welcome that, but the scope of activities that might be caught is very wide. There may be a good reason for that, but it is worth exploring. The statement of policy intent describes the core areas as including things such as advanced technology, which is perfectly reasonable, but it also contains a much wider definition of national infrastructure. The impact assessment for the Bill estimates that the new regime would result in between 1,000 and 1,830 transactions being notified per year. That is very specific and it is also an eye-watering number, given that only 12 transactions were reviewed on national security grounds since the current regime was introduced 17 years ago. The necessary resources, as the right hon. Member for Doncaster North (Edward Miliband) said, and access to intelligence agency assessments, as the right hon. Member for North Durham (Mr Jones) said, must be available in the proper manner in order to carry out the work.
Mr Kevan Jones
Does the hon. Gentleman share my concern that the Bill sets out a voluntary reporting and a notification system, but it is not clear how the security services enact any concerns they may come across into this system? I shall be making the point that I do not think this should sit within the Department for Business, Energy and Industrial Strategy. Does he have concerns on that issue?
Stewart Hosie
I absolutely agree that these services should not sit within another Department. I am not sure whether it would be appropriate for them to be able to request call-ins directly, not least because where the information came from would then become abundantly clear, but there must be a mechanism whereby information that an agency comes across can be fed in to the proper people in order for this call-in to happen.
It is also self-evident that Members considering this legislation need to have far more information to understand the reasons for the Bill and the changing nature of the threat it is designed to counter. We also need carefully to assess the impact the Bill will have on sectors and infrastructure, not just in the UK as a whole, but in the devolved Administrations and in the English regions, in the light of the future economic opportunities they see and the plans they are already putting in place. It is far too soon to seek assurances, but I hope the Minister will wish to take a little time just to convince himself that there are no unintended consequences, either for the UK or for the Scottish Government’s inward investment plans, when Government agencies of all sorts are out actively seeking investment in some of the areas that may be deemed to be critical national infrastructure. As an example, let me cite the whole of Scotland’s tech sector, but that of Dundee in particular. It now has a digital ecosystem that spreads out across academia and through gaming, software design and development, and data centres. Many of the component parts of that have cross-sectoral application, some of which, depending on who owns them and who wishes to use them, could certainly raise a national security concern, depending on how bits of tech are deployed. How do we ensure collectively that the Bill does not impede growth or investment in such areas?
I also briefly wish to raise, at this early stage, some issues about implementation. The Bill is set to radically overhaul the UK’s approach to foreign investment, at a time of significant economic uncertainty. On leaving the EU, the UK Government cannot afford to get their global Britain approach wrong and suffer what has been described as the “chilling effect” on investment if this appears heavy-handed. So let me turn briefly to some of the possible implications and costs of these measures.
First, the impact assessment suggests a net cost to business of £43 million. Can the Government confirm whether that is the direct cost, or whether the figure includes the cost of lost investment? I suspect that it is the former because the latter is incalculable, but if the Government get this wrong, the true figure in lost investment, and the concomitant loss of output and productivity, could be substantial.
Secondly, the impact assessment suggests that microbusinesses are in scope. As the Secretary of State will know, some of those businesses develop high-tech, cutting-edge intellectual property, and their business models include selling tranches of shares to raise cash throughout the development and life of the business. What assessment has been made of how these measures might stifle that investment and growth?
The third point is specifically on universities and academia. Throughout the whole UK, universities all have incubators, start-ups, spin-outs and commercialisable research. What assessment has been made of their ability to continue to thrive if the measures in the Bill inhibit investment by proposed sales being called in—because word will get out—or even investment being put off because of the potential additional risk of those sales being called in? We do not yet quite know what the impact on academia would be. There are some wider concerns about the possible impact on essential investment in energy, particularly renewable energy, and the possibility of retaliatory action against UK investors overseas, but I think they can be explored later in the Bill’s progress.
Let me return to one particular issue. I said earlier that the impact assessment suggested notifications of up to 1,800 transactions a year. In clause 7(4)(c), the Bill describes a qualifying asset as
“ideas, information or techniques which have industrial, commercial or other economic value.”
I know that this is not the Government’s intention, but wielding a hammer or welding a pipe are techniques that have economic value, and my concern is that companies erring on the side of caution will refer or notify themselves when they need not.
I have three brief questions that were sent to me by the Photonics Leadership Group. I intend to ask these questions now because they will be typical of what many industrial and new tech sectors are asking. First, there will be a huge number of research groups and businesses for which this Bill is relevant. Has the Department for Business, Energy and Industrial Strategy considered the number involved, and is it ready for the volume of submissions? Secondly, the information that has been sent out to relevant groups includes a flow chart, which suggests that businesses currently engaged in relevant business have from 12 November until this Bill is passed to register. This would suggest that the process is live already, but there appears not to be a template to allow businesses to contact BEIS and ask the question. Thirdly, since many in the sector cannot rely on foreign investment, how are the Government planning to replace this should there be the chill on investment that some fear?
I am pleased the Secretary of State said that the assessments would be based on information gathered from around and throughout Government, because I think we need to make our own geopolitical assessments. But the right hon. Member for Chingford and Woodford Green (Sir Iain Duncan Smith) quoted the Henry Jackson Society. It would be unfortunate if we found that our assessments of which investments may or may not be aligned were being driven, pushed or prodded by someone else’s geopolitical assessment. I say gently to the Secretary of State that we need to guard against that to ensure that national security is protected, but that we do not have the chill on investment that is possible if we get it wrong.
Greg Clark (Tunbridge Wells) (Con)
It is a pleasure to follow the thoughtful speech of the hon. Member for Dundee East (Stewart Hosie). May I join my right hon. Friend the Member for Chingford and Woodford Green (Sir Iain Duncan Smith) in paying tribute to the Front-Bench team for their courtesy in being open about the development of the Bill and for their communication with all parties in the House?
This is an important Bill at an important time. In recent years, we have seen a tendency on the part of some countries to move towards national measures that seek to protect their domestic economics from the open conditions of international trade, not only in goods and services but in ownership and intellectual property, and we of all nations should be a voice against that. Few nations have prospered through pursuing a policy of national self-sufficiency. Over time, they have become deprived of innovation, competition and investment, although the exposure and experience of international trade and investment can be disruptive and uncomfortable. In the end, workers become less productive than in other countries, consumers pay more and those countries use technology that is behind what other more open economies allow. In other words, they become less prosperous.
The importance of this Bill pivots on its title. Is it exclusively about national security, or is “and Investment” a doorway to a more restrictive view of overseas investment more generally? I am pleased that my right hon. Friend the Secretary of State made it absolutely clear that the Government have decided that it is the former, rather than the latter, although there are some dangers that I want to touch on.
Do we need a statutory framework to ensure our national security when it comes to commercial investments? Yes, of course we do. There are commercial activities conducted in this country that are essential to our national security—defence contractors are an obvious example. Public policy has always recognised that, whether through the use of export controls on their products or, in the case of ownership, through golden shares and the intervention powers of the Enterprise Act 2002 for national security, which have been referred to.
Does the framework need to be kept up to date? Yes, of course it does. As the Secretary of State made clear, technologies that are now pivotal to our national security had not been dreamed of 18 years ago when the Enterprise Act passed through this House. The nature of some of those technologies is such that their financial value may not be reflected in the ownership of the company concerned, so they may be pivotal but not trigger the turnover test. The turnover and the value of the transaction may not be a dependable guide to their importance to national security. The control of those technologies may not be confined any more to takeover bids for public companies; it may include ownership outside the stock market of intellectual property or other assets.
Most nations on earth have a framework for overseeing the national security consequences of investments. It is important that we have one and that ours is up to date. The Government are right not to expand the Bill beyond national security or to introduce, as the right hon. Member for Doncaster North (Edward Miliband) said, a wider public interest or industrial strategy test. I say that as the author of our current industrial strategy, of which an essential pillar is our business environment. That strategy says that we need to continue to be
“an open, liberal free-trading economy in which new businesses can be created easily”
and
“existing businesses can attract investment”.
It is obvious that if a British company has succeeded and has made an international impact, we want it to continue to succeed and prosper in this country, and to do so with its headquarters and operations here. That goes without saying. The most important thing is that the company is founded and prospers in the UK in the first place, as my hon. Friend the Member for Newcastle-under-Lyme (Aaron Bell) said. Especially in fields such as the tech sector, if we tell the founders of new businesses that, should they succeed, they will be excluded from the possibility that they can receive overseas investment, or at the very least that it will be heavily questioned if they should cede control of the business, and that the more their business succeeds, the more draconian the restrictions are likely to be—although Silicon Valley continues to be a major source of international capital investment—the consequence, no doubt unintended, may be that those firms will not be founded here in the first place but will go to places where there is no risk of there being stranded assets.
Bob Seely
My right hon. Friend is making an important point, and there is clearly friction on this side over what we see as the crux, but does he accept that the United States and Australia—two free-market nations—will have significantly tighter restrictions after this Bill than we will, and does that concern him?
Greg Clark
Of course we should look at the example of other countries; I am sure we will do so during the course of the Bill. However, I would say to my hon. Friend that those two countries are very different in their markets and the size of their economies. The pool of capital that is available to start-up companies in the US is vastly greater than it is in the UK at the moment, although I hope that will change, for reasons that I will go on to discuss. Australia, conversely, is a much smaller economy, which does not have the network of policy regulatory innovation that we have.
We have been a leader; that is our international reputation, and one reason that transactions are conducted in this country is the confidence in our rule of law. We should emphasise and champion that, rather than feeling compelled to follow what other countries are doing in their entirety. Our policy—our industrial strategy—must be to make Britain an even more attractive place for innovative companies to be founded and to stay—not because they are compelled to do so, but because the environment that we provide, in terms of scientific research, educated and trained people, the availability of capital at every stage in their development and the public policy environment make it an attractive place for them to want to be.
Neither must our regime establish, in my view, a list of countries that cannot invest at all in the UK. The test must genuinely be about national security. That is very appropriate. China has been mentioned already in these discussions, and of course it is right and proper that the national security concerns that the House has about China should be reflected through this regime, and these powers are important for that. However, when I was sitting in my right hon. Friend the Secretary of State’s place, I fought hard to save, for example, British Steel in Scunthorpe, Skinningrove and Teesside. The Chinese steelmaker that bought the company, Jingye Group, is essential to the employment of many tens of thousands of people across the north and the east of England, and more in the supply chain. From my recollection, there was no intellectual property vulnerability in terms of its operations. Indeed, the retention of that substantial steelmaking capacity has enhanced our economic resilience, whereas losing it would have seen us relying on imports. I might say the same for Geely, the owner of the London Electric Vehicle Company, which my hon. Friend the Member for Stratford-on-Avon (Nadhim Zahawi), being a west midlands MP, will be familiar with, and which gives valuable jobs to many people.
Richard Graham
My right hon. Friend is making a very good case for why it is important to look at each investment in its own right. Geely, which bought the London Taxi Company, produced electric vehicles and now exports them to the Netherlands and France while continuing to manufacture in Coventry, is a good example of why that is so important. Does he agree that it is simply not good enough for this country to say, “China is Communist and we will not accept Communist investment, and therefore we will not accept Chinese investment.”? We must be a great deal more sophisticated and open than that.
Greg Clark
I would say to my hon. Friend that the Bill’s focus on national security is absolutely right. We should have a beady eye on national security, with substantial powers, as my right hon. Friend the Member for Chingford and Woodford Green (Sir Iain Duncan Smith) said, to enforce that. I think the Bill has it right in its focus on national security.
The Committee that examines the Bill will need to consider in detail some of the provisions of the Bill as it is presented on Second Reading. It is essential to provide investors and UK firms with a sense of predictability and confidence, but that can be undermined if the law has administrative consequences that are unintended and not provided for. For example, there are strong reasons to think that there may be a deluge of notifications, as the hon. Member for Dundee East said, when the new unit in the Department is set up, and it must be geared up to handle that right from the outset.
The prospect of five years’ imprisonment for directors and fines of 5% of turnover, as my right hon. Friend the Secretary of State commends, for failure to notify under a mandatory regime within sectors defined as broadly as communications and transport is, in my view, likely to lead to many small transactions being notified under the voluntary regime for peace of mind regarding those very strong sanctions against an inadvertent breach. It is an enormous challenge for the Department to set up a new unit, especially since the current regime—or the previous one, since the powers are live—has dealt with a very small number of transactions each year.
As Secretary of State, I reduced the turnover threshold for review from £70 million to £1 million only two years ago. This Bill contains no de minimis threshold, and I will be interested to see during the passage of the Bill evidence of why a zero de minimis threshold is necessary, especially when the definition of technology assets extends to “ideas, information or techniques”, which is very broad. This could result in a very large number of very small transactions being notified defensively.
Even if businesses are confident that they will not be covered by the mandatory notification requirement, the advantages of voluntary notification and clearance, with its exemption from the five-year look-back, may prove to be very attractive and very important in baking in the approval of a transaction against reversal more than five years in the future. It is clearly the ambition of the right hon. Member for Doncaster North to add further public interest tests. As we approach the general election, it may well be attractive, as a defence against the action of future Governments, for companies to notify even when they do not have to. It is very important that the Department is geared up for that.
Much of the Science and Technology Committee’s work in recent months has been concerned with the nation’s response to the coronavirus. If we can learn one lesson from that—for example, from problems with the test and trace system—it is that, to have public confidence, we need to properly anticipate demand and to set up to meet it from the outset. If that demand is not supplied, public confidence, which is crucial for investment, will be undermined.
Sir John Hayes (South Holland and The Deepings) (Con)
Does not the coronavirus provide us with another lesson, which is that Government historically have not been terribly good at assessing risk and modelling the response to it? I say that as a former Minister, like my right hon. Friend. I was always surprised, in all the Departments I served in, at how little time is spent on modelling outcomes of the kind we are now enduring.
Greg Clark
My right hon. Friend is right. To look ahead, we need to develop the capabilities to do that, and for a unit in the Department that previously did not have that responsibility—it was with the CMA, advised by others—that is a steep learning curve.
The foundational feature of the UK’s commercial reputation in the world is a place where people and businesses all around the world can be confident in investing. That derives in no small part from a public policy regime that is rational, stable and rigorously and efficiently administered. We should continue to aspire to take a global position of leadership in this area, so I welcome the focus of the Bill and its ambition to bring our arrangements up to date. I look forward to helping ensure that we can be proud of the Bill and see it as a contribution to our continued reputation for having the highest standards of corporate government and investment security in the world.
Darren Jones (Bristol North West) (Lab)
Before I begin my remarks, I should declare my interests as chair of the all-party parliamentary group on technology and national security and the parliamentary internet, communications and technology forum APPG, whose members will no doubt have interest in the Bill; as the chair of a global network of legislators interested in artificial intelligence regulation called the Institute of Artificial Intelligence; and lastly, in my capacity as Chair of the Business, Energy and Industrial Strategy Committee, I have had discussions with the management of ARM, its founder Hermann Hauser and the CEO of Nvidia about the proposed takeover.
I support the Bill and thank the Secretary of State for briefing me on its contents last week. The ability to scrutinise foreign investment and to intervene when there are national security interests is not only a critical function of the state but an increasingly important one, given the impact of technology and data on every part of our economy and our infrastructure, and the use of that avenue to cause harm to Britain’s interests. It is on that basis that we should have a robust scrutiny function, but it should also be finely balanced with the transparent, clear and pro-investment framework brought forward under this Bill. I agree with other colleagues around the House that, by international standards, Britain has been a bit of a laggard in recent years in bringing forward a robust foreign investment regime, and that is why we support the Bill, but I have a few questions today, which I hope the Minister might try to answer in summing up.
First, on the definition of sectors, the 17 sectors identified include some dual-use functions such as quantum computing, which at this point in its development seems obvious and indeed is in line with the recommendations of the Science and Technology Committee inquiry into quantum computing in the last Parliament, when I was a member of that Committee. However, as has been noted, other sectors are identified merely as “artificial intelligence” or “energy”. Artificial intelligence, for example, is a general purpose technology that will increasingly apply to every aspect of our economy, so how we ensure robust and clear definitions will clearly be important.
It has been noted that there is a risk under the Bill of over-reporting as an insurance policy. I wonder whether lessons could be learned from other regulators—for example, by introducing regulatory sandboxes within the units in the Department where interested individuals might be able to come to set forward in advance the transaction and get some initial advice on whether it falls within the definitions. If it does not, I think there will be a risk of over-reporting, but also of court cases that dispute the definitions, which, in their own right, can be fairly limited in statutory instruments and will probably not apply to every circumstance. I reaffirm the comment from the Opposition Front Bench on engaging with Parliament on the sector definitions under the statutory instruments—and not just with Parliament as a whole but with the relevant Select Committees, including my own. I also note the interest of my hon. and right hon. Friends from the Science and Technology Committee, the Foreign Affairs Committee and the Defence Committee in this matter.
Secondly, on the definition of national security, there has been some debate in advance of the publication of the Bill on whether the Government were intending to go beyond national security and to look at broader economic or jobs-related issues. As my right hon. Friend the Member for Doncaster North (Edward Miliband), the shadow Business Secretary, said from the Dispatch Box, we think that there is some legitimacy to Ministers having a right to intervene when, for example, a major employer or a sector that is strategically crucial to the British economy is under threat from a legitimate overseas acquisition that could have an impact on British jobs or British industrial capacity. I welcome the comment that this is a broader industrial strategy conversation and note the Department’s intention to rewrite that, as previously advised before Christmas, although it will presumably now take longer. I look forward to that broader debate, but I agree with colleagues on a cross-party basis that at least some legal structure around the definition of national security would be helpful, for reasons I will come on to later.
Thirdly, this is not just about mergers and acquisitions; as the Government’s Project Defend assessment has shown, there are very long supply chains relating to critical national infrastructure, through which components are sourced from companies in jurisdictions about which Ministers might legitimately have national security concerns. I would be interested to hear whether Ministers plan to expand the scope of the Bill or bring forward other legislation in future to deal with supply chain intervention, in addition to or alongside merger and acquisition issues.
I also note that while clause 7 of the Bill covers all the corporate vehicles such as limited liability partnerships, trusts and limited companies, it excludes individuals. This is probably very limited, because individuals would not want to take on the liabilities of buying big companies, but I am sure there are potential cases where individuals will buy intellectual property or assets in their own individual right, whether it is a licence to intellectual property or actual property, as my right hon. Friend the Member for North Durham (Mr Jones) mentioned, and they would fall out of the scope of this Bill. I would be interested in the Minister’s view on that.
Fourthly, the application of the Bill applies from the date of presentation, not from the date the Bill becomes law. It would be useful, given that this is now the regime in the UK, for the Department to set out what current takeovers will be subject to it. Colleagues have mentioned the ARM-Nvidia takeover, which of course is important to the British economy. I understand from press reports that the Department has not felt able to confirm whether that will be subject to this legislation, but I think it would be in Ministers’ interests to be quite clear about that.
Equally, I would stress again the comments from the Opposition Dispatch Box about the length of retrospectivity. Five years seems a very long time, and I would be interested to understand why a period of five years has been adopted by the Government. One of the attractive natures of the British economy is our policy stability and the way in which the rule of law functions, and I share the concern that five years is a long time. There could be a change of Government, a change of Ministers, a change in leadership in the unit in the Department or a change in the view on national security that could start to unwind a transaction many years after it had gone through. Ministers need to consider that carefully.
Fifthly, we are still waiting for confirmation of the Government’s intentions for our post-Brexit competition and state aid policy regime. Ministers have been quick to table statutory instruments to say that the European regime will not apply from 1 January but have not yet set out what will. The Bill is implicated in that process. It is the start of a post-Brexit state aid and competition policy. If the Minister feels able to give us a bit of a glimmer in his closing remarks about when the details of our post-Brexit competition and state aid policy might be published, I would be grateful.
Lastly, I am not entirely clear what the assessment process is under the Bill. In previous examples, such as the hostile takeover of GKN by Melrose, in which I declare a constituency interest, the national security assessments were undertaken by the Secretary of State for Defence and, perhaps for fair reasons, were done without much oversight or transparency. Given that all those sectors will now be subject to national security assessments, will it be the Ministry of Defence, the Department for Business, Energy and Industrial Strategy, the intelligence services or another body that undertakes them? It would be useful to have some transparency about who is making the assessment and how the Secretary of State will ultimately balance very difficult decisions.
In sum, I will support the progress of the Bill. I share some concerns about the speed and why it has been brought forward so quickly, and I reiterate my point about the statutory instruments, therefore, being an important part of parliamentary scrutiny when they are introduced. I hope that Ministers will engage fully in the consultation process with stakeholders to ensure that the new framework is not only fit for purpose but gets the crucial balance right between national security concerns and maintaining Britain’s leadership as a pro-investment economy that fits with our broader regulatory position post Brexit.
Tom Tugendhat (Tonbridge and Malling) (Con)
I start, as many other hon. Members rightly have, by paying tribute to the ministerial team and the team of civil servants for their consultation on the Bill with not just Members of this House, but the wider business community. It is a hugely important Bill. When, no doubt, some of it becomes an Act, we will all be living with the consequences, which are difficult to imagine in a fast-changing world in which technology is evolving.
I welcome enormously not just the consultation that the Secretary of State has already contributed to, and which he has welcomed, but that which he has also invited, because that is a really important part of the next few weeks and months. It shows wisdom and extreme judgment to make sure that the Bill survives contact with the enemy.
I welcome the fact that the Bill has been crafted to recognise the competition that we are seeing increasingly between states. The Minister in his place, my hon. Friend the Member for Stratford-on-Avon (Nadhim Zahawi), as a former member of the Foreign Affairs Committee, knows only too well what we are seeing around the world and has regularly spoken with me about the various natures of competition that he, too, envisions. I welcome that he sees the Bill as being about the UK’s response and ensuring the prosperity and happiness of the British people around the world.
Power is not just about state power; it is also about the economics of strategic challenge through business. As the sadly likely recession following the covid pandemic rises, the reality is that state capitalism will pose a greater problem. As the wells of private sector investment dry up, companies able to draw on national reserves may do better.
Other countries have already seen that and reacted early. In March, in response to similar pressures that the Secretary of State responded to earlier, the Australian foreign investment review board reduced the threshold to zero for calling in acquisitions. In August, France reduced the shareholding required to trigger an inquiry from 25% to 10% for similar reasons. The United States has not followed suit on that basis, but the CFIUS regime, as we all know, is one of the most mature in the world. The Committee on Foreign Investment in the United States has, in some ways, led the way, so the need to adapt to changing circumstances is not so immediate.
For our Government to introduce the Bill now is a welcome demonstration that the UK sees the changing circumstances and recognises that state-owned enterprises pose a different threat from five, 10 or 20 years ago. The Bill also recognises, in the 17 sectors that other hon. Members have spoken about, the rapid pace of technological change that we are seeing and the urgency of making sure that we realise what we are looking at. As assets are being developed that are essential to our continued prosperity and security, they now emerge much more quickly than we ever imagined.
Indeed, I would argue that two of the biggest strategic losses for the United Kingdom in recent years were the 2014 sale of DeepMind to Google and the 2016 sale of ARM to SoftBank, but they have been completed. What those two firms have both enabled, however, is quite phenomenal. Deep Mind, which one can pretty safely say is the world’s premier AI company, is an extraordinary asset. When it started in 2010, it was seen as a sideline, but today in 2020 it is seen very much as the main event.
The UK is not directly comparable with some of the other countries that we have spoken about. Some people have mentioned France, Germany or Australia, but the UK has about double the foreign direct investment of France or Germany, and our international co-operation—our links abroad—are quite different.
Here I declare that my entry in the Register of Members’ Financial Interests shows that I, too, invest in businesses across the UK, and the reason why is that I think, as a Conservative, that if someone believes in business, they should put their money where their mouth is. I am proud to support some young people who have come up with some ideas, some of which may succeed and one of which may even make me as rich as the Under-Secretary of State for Business, Energy and Industrial Strategy, my hon. Friend the Member for Stratford-on-Avon—[Laughter.]
This Bill looks at the challenge that such businesses are starting up with, and here I pay tribute to my constituency neighbour and right hon. Friend the Member for Tunbridge Wells (Greg Clark) who spoke about the de minimis clause—the minimum amount that should be called in. Of course, it is absolutely right that companies can evolve. Technology can adapt very quickly, and ideas that one thought were insignificant can become very significant.
However, the reality is that that rarely happens overnight and, with the nature of British capitalism being as it is, the value of a company will be appreciated in the market a long time before the technology is appreciated by the Government. Therefore, although I understand why the minimum number is set at zero, there is an argument—I would welcome the Government’s thoughts on this—for setting it even as low as £1 million, which is actually a very small sum these days for many of the venture capital enterprises in our country.
I welcome the fact that this Bill makes the important distinction between national interest and national security. I see the hon. Member for Aberavon (Stephen Kinnock) in his place, and I know well that if this Bill were about national interest, he would be making one of the strong speeches about the steel industry that I have heard him make over the past five years, but this Bill is not about that. This Bill is fundamentally about the threats to the UK people and to our national security, not just our immediate interests.
It is important to make that distinction in the long term because, of course, to change that would be to fundamentally open a different question. It may be one that Opposition Members or, indeed, some Government Members, would wish to engage with, but it would be a big change to the investment environment of the United Kingdom. It would change our employment structures considerably and challenge many of the services that are built on the UK economy, from law and accountancy to finance and investment. It is a rather larger question, and I am glad that it is not included in the scope of this Bill.
The Government recognise that more consideration is needed, and they could do a little more, if I may say so, just to advertise the consideration that they are looking for in the 17 sectors. Having spoken to many lawyers in recent days—a confusion of lawyers, in fact—and to several businesses, it is quite clear that, although the consultation is welcomed, not all are as aware of what is required as would be beneficial.
If I may, I am going to start claiming some credit for some of this, because the Minister will know that the Foreign Affairs Committee has long pressed for tougher measures to protect our vital national security interests against growing threats. In our May 2018 report entitled “Moscow’s Gold”, we highlighted the corrupt investments associated with the Kremlin, but not unique to that Mafia-style regime, that have direct implications for the UK’s national security. The sanctions regime we rejected is a welcome addition to the state’s arsenal against those who seek to damage our national security. In 2019, we went further: in our report, “A cautious embrace: defending democracy in an age of autocracies”, we recommended that the Government establish a power to block listings on the UK markets on national security grounds as a matter of urgency. The Government have now announced their intention to do so to stop companies with questionable ownership from taking advantage of UK listings.
The fact that the Bill builds on both those reports is enormously welcome. They also led us to ask some pretty important questions about how the Government could achieve their aim, because there are various elements in which those questions exposed gaps or failures in the British structure that would allow the Government to be properly informed of where to get the information. That is why I will ask a few initial questions, before the Foreign Affairs Committee spends a few weeks hearing evidence and listening to commentators on the Bill and investors, practitioners and lawyers about its application. Indeed, we may even suggest amendments.
To turn to my first question, the Government have been clear that state-owned entities and sovereign wealth funds are not inherently more likely to pose a national security risk, especially if they have operational independence in economic investment strategies. This is of course important for many countries around the world, including Norway and many others, who operate very large sovereign wealth or national pension programmes. However, regimes such as that of the Chinese Communist party use opaque ownership structures to hide state interference. Will the Minister tell us what structures will be created and legal powers given to ensure that we can draw on the expertise and knowledge of those Departments and agencies across Government, including the Foreign, Commonwealth and Development Office, to shape decisions accurately? It is clear to all of us that UK missions around the world will need to be actively involved to ensure that the information required to take decisions is provided in a timely manner.
My second question is about the fact that this Bill provides gateways for disclosure of information to my right hon. Friend the Secretary of State and disclosure by him to a public or overseas authority. What we really need to know as well is not just how much he is able to exchange, but how much he is able to draw on other intelligence agencies and other partners and particularly, perhaps, on those in democratic and law-abiding countries, including the European Union, as we will no longer be part of the investment screening regulation and we have never been part of the different agencies or regulators in the United States, Australia and many other countries. Who are the likely partners with whom he is intending to share and how will we support each other?
Thirdly, the best estimate of the impact assessment suggests that the new notification regime will cost about £49 million a year and about £425 million over 10 years. Those numbers are, of course, uncertain. The new regime is expected to result in up to 1,800 notifications a year, which is a vast increase compared with the approximately 60 notifications a year that the Competition and Markets Authority currently deals with. The Bill introduces an investment security unit that will be staffed by 100 officials. May I seek assurance that this unit will have the capacity and necessary competencies to effectively screen this high volume of transactions and to expand if notifications are more than expected? The Minister will have heard from many people that there is the possibility that voluntary notification will result in a much higher level of disclosure than anyone is currently expecting, and therefore, the 100 officials could rapidly become overwhelmed and the timelines that he has very sensibly set out, of 30 and 45 days, could become impossible.
Mr Kevan Jones
Does the hon. Gentleman agree that this unit or some of the individuals in it will need a high classification of security clearance? Without that, they will not be able to make informed judgments on some of these applications.
Tom Tugendhat
I agree entirely with the right hon. Member that what we are looking at here is a multi-agency taskforce, not a BEIS departmental body. The reason, of course, why it has to be a multi-agency taskforce is that, as he says quite correctly, the need to have access to high-level intelligence is clear, but so is the need to be able to understand the changing nature of the technology and, indeed, the changing nature of some of the individuals and groups that may be affected. It is, after all, entirely possible that a company owned one day by one individual abroad is likely to be, or is in the direction of being, controlled by a rather less salubrious individual only a few days later, and the need for such multi-agency taskforce access is clear.
Insufficient resources would of course cost delays and have a serious impact on the UK economy. Indeed, it could lead to the various obstacles that I know the Minister has been incredibly careful about avoiding, which is why he has made the scope of the Bill so narrow. I am sure that he will be able to help me in assuring me that this group will have the resources it needs. Fourthly, given the sensitivity of the cases—my mistake: I was going to repeat exactly what the right hon. Member for North Durham (Mr Jones) said, so I shall skip it. I was going to ask for exactly the same.
As this Bill makes its way through the House, the Foreign Affairs Committee will be following it closely. As I have said, we will be conducting various hearings with various people along the way in the next few weeks, and we will, I hope, be making welcome suggestions that the Minister will be able to consider. Properly implemented and with due consultation and consideration, this new investment regime should provide certainty and transparency for UK businesses and investors in this country. It is an important and valuable change to our laws to ensure that our businesses are able to prosper in the safe knowledge that the information they develop and the innovations they provide allow the happiness and prosperity of these people, our friends and our allies.
Mark Logan (Bolton North East) (Con)
It is a great privilege to follow my hon. Friend the Member for Tonbridge and Malling (Tom Tugendhat). I especially agree with him that the Minister and his team have been exceptionally good at communicating this over the past weeks, so long may that continue.
With the right clarifications, I stand to support the Second Reading of the Bill. It is incumbent on all of us here to think in terms of the contribution we can make to our collective livelihoods—a contribution of security, a contribution of transparency and a contribution of prosperity. On prosperity, the Minister and other colleagues have been working hard to assuage some of my concerns. I gravitate towards this side of the House because I believe in opportunity—the opportunity that overseas investors see in the UK to grow market share, reach new customers and develop cutting-edge technology, thanks to access to the brightest brains on the planet, and a confidence that a penny put into Britain today can become a pound tomorrow. We do not want the Bill to herald in uber-protectionism by stealth; otherwise I would have great difficulty in subscribing to it.
Foreign direct investment is a powerful contributor to the UK. Indeed, conservative estimates show that FDI has created over two Boltons-worth of jobs. That is 600,000-plus jobs, as the Minister actually told me last night, so I hope that is correct. Over 57,000 new jobs were created as a result of FDI in 2018-19 alone. The “World Investment Report 2019” showed that the total value of the UK’s inward investment stock was $1.89 trillion—the third highest in the world, and worth more than the figures for Germany and France combined. Indeed, the northern powerhouse has been one of the top winners from FDI. Manchester has been recognised as Europe’s fifth best large city for business, ranking ahead of places such as Rotterdam. Bolton is a significant recipient of FDI through, for example, the £250 million redevelopment of the Crompton Place shopping centre, and this is central to our town’s rebirth. We need to be on the ball, as the value of the UK’s inward FDI has been falling. In 2016, the value of inward FDI was equal to 10% of GDP, which fell to 2% in 2018. I welcome the new Office for Investment, as we must not lose out to friendly competitors on our own doorstep. FDI contributes so much to our economy and society.
Moving on to security and transparency, the Bill seeks to contribute by putting the UK on a similar footing to other major economies, such as the US, France and Germany. Indeed, the CFIUS regime in the US reviews certain foreign investments in businesses to determine whether such transactions threaten to impair US national security. That is a sound premise and one that every nation state should embody: protecting one’s core sovereign interest. Indeed, the Bill aims to offer more security for British businesses and people and protection from actors or, indeed, actresses harbouring malign intent.
I appeal to the Minister to ensure that the Government will only use their brand- spanking-new powers exclusively on national security grounds and not for broader economic or political measures. Mission creeping may lead to capital seeping. I encourage the Minister to articulate how to safeguard against spurious applications of the new powers. Some analogous screening systems are viewed as not transparent, such as those that do not give parties the opportunity to debate the conclusions. I understand the intention of our own UK version is to allow a quicker, slicker investment process for investors.
I also understand that a new digital portal will be made available to investors, and the Government have committed to a 30-working-day service timeline. Along with mandatory notification of investments in key sectors, that provides much-needed transparency for firms, while providing proportionate defence against those targeting sensitive UK assets.
Finally, my humble contribution to today’s debate will imminently fly towards the Minister, like a not quite national security-protected Airbus paper plane. Alas, I have penned a mnemonic. According to Hansard, the word “mnemonic” has only been used once in this House, and without actually producing one. This could be an epic fail, so the House should brace itself. I will give way to the Minister if he would like to intervene straight away or, indeed, anyone else in the Chamber who can rhyme off the 17 industries that may feature in this final legislation. If not, forever hold your peace. Silence—great. It goes like this, and it does not roll off the tongue. It is CQC—which we are all very familiar with—CASCADED MS TEAM. C is for communications. Q is for quantum technologies. C is for computing hardware. I could go on, but I will simply repeat again: CQC CASCADED MS TEAM. That, hon. Ladies and Gentlemen, along with the Bill’s contribution to security, transparency and prosperity, is how I would like to personally contribute to today’s debate.
Mr Kevan Jones (North Durham) (Lab)
I was going to say it is a pleasure to follow the hon. Member for Bolton North East (Mark Logan), but I am not sure that it is. I welcome any measure that aims to protect or increase our national security. We live in an interconnected world now—a global world—in which capital is no respecter of national boundaries. We also live in a world in which nation states are using strategic investment as a way to pursue their own national interests, and there was mention earlier of the Chinese belt and road initiative.
We also live in a world in which nations or individuals use investments to launder money or to buy influence or protection, as was highlighted in the Intelligence and Security Committee’s Russia report. So the measures in the Bill are to be welcomed but, as the hon. Member for Dundee East (Stewart Hosie) said, the issues that it addresses were raised seven years ago in the ISC report on Huawei. None the less, I wish to mention a few areas where the Bill is still deficient.
The right hon. Member for Chingford and Woodford Green (Sir Iain Duncan Smith) mentioned the Secretary of State’s role. A call-in will be triggered on whether a transaction creates a risk to national security. Notification takes place in one of two ways—a transaction is notifiable either under four criteria or under a voluntary system. I believe the voluntary system is fraught with administrative difficulties and needs to change. However, I want to focus on how the assessment is then made and the role that the Secretary of State plays in deciding whether a case goes forward. I do so by reference to a recent case—that of the Cobham company.
The Bill would not have prevented the £4 billion sale of Cobham to a US company, even though the Ministry of Defence had huge issues around the sale, partly because it would allow unauthorised persons to understand either the details of the MOD capacity and activities, or give them a more strategic picture of the capabilities and activities that had been built up. The MOD said that the transaction posed a risk to the existing MOD programmes if the merger entity took decisions to exit from an investment or to move offshore the associated capabilities.
At the time, Lady Cobham’s concern was that Cobham would be split into various entities and sold off—and, lo and behold, that it is exactly what is happening. It has gone from four divisions to nine, and the risks to national security were clearly evident at the time. I see nothing in the Bill that would have stopped that, because it comes back to the decision of the Business Secretary.
I am not anti-business in any way, but I am not sure that BEIS takes a view in terms of security issues, which would be perhaps more evident in the Ministry of Defence and so on. So there is an issue about who takes the final decision on such bids’ going forward. I would prefer that to be a decision of the national security committee or a sub-committee of that, so that we may have in-depth intelligence reasoning—and I accept that such decisions should be taken on national security grounds only. If we look at the United States model, we see that some very dubious decisions are taken there on national security grounds, which, frankly, are more to do with protectionism rather than anything else.
Tom Tugendhat
Does the right hon. Gentleman agree that there is a real role for Committees of this House in such processes and that the ability to subpoena both witnesses and papers would add not only depth to the Government’s investigation but protection to the Business Secretary who was forced to take the decision?
Mr Jones
I agree. There is an issue, in some of these cases, around national security. A point was raised earlier in the debate about whether the ISC should look at such decisions. Certainly there is an argument for an annual report, which I would welcome.
I said earlier that I had a fundamental problem with one individual’s taking such decisions, and I am sorry, but I do not think that the new investment security unit is the vehicle. The hon. Gentleman has referred to it as a taskforce, but unless it has national security at its heart, the push for business to get things moved on will take over, rather than what we should be looking at—national security. So decisions should not be left with the Business Secretary.
The other issue I raise is with supply chains. We all know that supply chains are now very complicated, long and diverse, from small companies right down to SMEs. I asked who will map those supply chains. We might say that small companies will self-notify, but would we miss things? There is a key role here for our security services in terms of flagging up things about particular companies, and I do not see that in this process. A small company very low down the supply chain, which may have only a very small element of either a nuclear project or a defence project, might lead to a security risk. I do not think that the new investment security unit will be able to deal with this. That is a role for our security services, which should be at the heart of this, rather than just being a member of the taskforce.
The other area I wish to focus on is in relation to the core areas. Listing them in the way that they have been listed is not helpful. For example, the term “military dual use” brings in a whole host of issues. Is a vehicle that is used for military purposes “dual use” even if it has a civilian use? Trying to define things in a list is actually very unhelpful. I would sooner come at it from the point of view of security and intelligence-driven information, which would inform the decisions that are taken. I am also a bit reluctant for things to be added to that core list by secondary legislation.
Then we come to an area that has already been touched on, which is the role of universities. The Bill mentions
“moveable property, ideas, information or techniques which have industrial, commercial or other economic value.”
When does an idea become a commercial value? I personally think that we need to be looking carefully at this. There is some perfectly legitimate and important foreign investment in our universities, and I do not want to stifle it, but if we have, for example, a Chinese or Russian company investing in a university, particularly in a research programme, is that covered by this Bill? At the initial stage, the investment goes in, but there is no actual product as such. A separate look at that needs to be part of our overall assessment, and, again, that can only be done not from a broad brush stroke approach, but from letting our security services look at some of these areas.
The other point I want to make is to do with land, which is referred to in the Bill, but, again, what is strategic? Would it be allowable, for example, for a Chinese or Russian company, or any company, to start buying up real estate with Government offices on it? The other thing that the Bill does not really cover—the Minister might say that there are measures to cover this—is the issue relating to the well-trailed arguments about the way in which Russian and former eastern European countries have used the property market in the UK, not only to launder money but to build up huge assets in terms of power and influence.
I have just two final points. One is referred to in the appeal system as closed hearings. Members may be aware of what closed hearings are. This is where intelligence, which is an informed decision, goes before a court within a closed hearing. These hearings are mainly used in terrorism-related activities or other national security cases. I would be interested to hear from the Minister in his summing up exactly how he envisages that working in relation to this Bill and how he will manage closed cases, because they are very controversial. At the moment, for example, there are a lot of legal challenges to cases when intelligence goes before the court and then it is ruled that it cannot be heard in open hearings. I just wondered what the Minister has to say on that.
My final concern is around the time limit, which I do not quite understand. It is six months from the date that it comes available to the Secretary of State. I am very opposed to anything that is retrospective, because, as has already been argued, to try to unpick these things will be very difficult. I just want to understand from the Minister the reason behind the five-year retrospection.
Yes, I welcome this Bill, but what it should have at the heart of it is security and intelligence. At the moment, there is too much emphasis on business. I am not arguing for one minute that we should get security and intelligence looking at every single investment decision. I am pro-investment, but the balance here is possibly wrong if we are trying to stop what we all want to stop, which is malign activity in our economy.
John Redwood (Wokingham) (Con)
I have declared my business interests in the Register of Members’ Financial Interests.
I support the idea of Ministers having powers to prevent foreign acquisitions where security matters are of concern. I trust that Ministers will want to ensure that all the other transactions that do not pose those security issues will go through smoothly, easily and quickly for obvious economic reasons.
There is a wider concern. As Ministers have rightly said, this is not the debate to deal with all the other worries we might have about unsuitable foreign investors, but there is concern out there in the public that we do not want asset-strippers, we do not want large companies that come here in order to gradually close down the UK capacity to take out a competitor, and we do not want them to come in under cover of sustaining jobs in Britain only to take away the intellectual property and then later to discover that they are not so keen on the British business after all.
We do need those protections, but where Ministers are checking their defences on competition grounds as well as on security grounds, they need to ask themselves this fundamental question: why are so many of our assets sold to foreigners? There is, of course, one very simple reason: throughout this century, under all three types of Government we have had so far, we have run a massive balance of trade deficit with the EU on trade account, so we need to raise the foreign currency to pay the bills so we can afford to buy the tomatoes, the vegetables and the German cars and all the other things that we have been importing, not matched by an equal volume of exports to pay those foreign currency bills.
We see that it is having a bigger impact now on our long-term balance of payments situation. Before we ran this long series of huge deficits, we had net assets abroad, which meant that there was a big positive line in our balance of payments, which said that as a country we earned a lot more in interest and dividends from our investments overseas than foreigners earned on the investments they had in the UK. That has now been reversed, and every year now we have a very big deficit on the interest and dividends, because there are so many more foreign claims on us than we have claims on foreign assets.
This is a matter of concern. Ministers need to work on a series of economic revival policies that put much more emphasis on British people investing in Britain, so that we recreate more of that wealth in our own national hands and do not have the vulnerability, that need for foreign currency, which has been brought about by the current twin deficits—the trade deficit and now the deficit on investment income account.
I was very pleased to hear Ministers saying, rightly, that there are many great investment opportunities in the United Kingdom, so we need to deal with this paradox: why is it that foreigners can see them and are piling in with all their money to buy our best ideas, our best companies and our best properties, and why are more British people and British companies not able to do just that? The Government need to work with the British investors, British companies and British entrepreneurs to make it an even better climate for them to do the investing, as well as taking advantage of the foreign investors coming in and giving employment opportunities.
We need that entrepreneurial Britain, which grasps this opportunity and understands that we have a huge opportunity here to take out imports—to grow more of our own food, and to produce more of our own cars and more of our own products generally—so that we chip away at the very big balance of trade deficit, and in turn then generate cash that can be reinvested in the United Kingdom.
This Second Reading debate presents an opportunity to make the wider plea to Ministers that, as we recover from covid and the damage, we remember that £100 billion deficit that we were running in 2019 before covid-19 disrupted world trade and say that that is unacceptable: that means too big an increase in claims by foreigners on our country year after year. That is why we need policies to get the investment in, chipping away at the £20 billion deficit in food with the EU and at the fishing deficit and the car deficit, so that we are generating those jobs on British capital, and starting to reverse that net liability position that now disfigures our accounts.
Charlotte Nichols (Warrington North) (Lab)
It is a pleasure to follow the right hon. Member for Wokingham (John Redwood), who is my dad’s Member of Parliament. Considering the number of Conservative MPs who are self-isolating, I am glad to see Minister in his place. May I take this opportunity to wish good health to the hon. Member for Warrington South (Andy Carter), who is also self-isolating?
I welcome this Bill and I am glad that the Government are at last addressing the important issue of protecting important assets when foreign acquisitions threaten national security. However, I fear that they have dragged their feet on this matter and that that has led to paralysis rather than strategic planning in several sectors, most notably civil nuclear power.
In 2016, the then Prime Minister, the right hon. Member for Maidenhead (Mrs May), delayed approval of Hinkley Point C because of fears of the potential for a controlling influence by the Chinese state firm China General Nuclear Power Group. While approval was subsequently granted, that illustrates the governmental hesitation that has beset this vital industry—an industry that depends on long-term certainties—for years now.
It has taken more than four years for the Government to bring forward the proposals in the Bill to allay those fears. In that time, the nuclear sector, which offers both reliable low-carbon energy and high-skilled, well-paid, unionised jobs, has suffered paralysis. Our fleet of nuclear power stations is ageing and needs renewing. The Government promised an energy White Paper in summer 2019, which has been delayed and delayed ever since. In that time, we have seen Hitachi withdraw from its planned investment in a nuclear plant at Wylfa because of the Government’s hesitation in agreeing a funding agreement. The whole sector, and thousands of people in quality jobs, including almost 4,500 civil nuclear workers in my constituency, are still waiting to hear a clear plan and direction from the Government. We must not lose those jobs, and the planet cannot afford stalling over this green energy sector.
We know that part of the reason for the delay has been fear of foreign influence in our strategic assets. Dozens of Conservative MPs have even formed an internal lobbying faction called the China Research Group to focus on the threats that they perceive from China. That led to the banning of Huawei from our 5G network back in July. That makes it all the more extraordinary that it has taken so long for the Bill to be brought forward. Labour has called consistently for tougher powers on takeovers since 2012. I hope that now this legislation is finally here, the Government will have no more excuses not to act to give the assurances and firm grounding that nuclear firms reasonably request.
Alongside the Bill, I look forward to early publication of an energy White Paper that lays out the groundwork for nuclear energy that is environmentally and economically secure, and where the UK’s national interest and national security are protected.
Stephen Kinnock (Aberavon) (Lab)
My hon. Friend is making an excellent speech. Does she agree that the fact that 57 items of our critical national infrastructure—including, of course, nuclear, but also other energy and airports—are reliant on Chinese supply chains demonstrates the abject failure of this Government to bring forward a proper industrial strategy?
Charlotte Nichols
I agree that, given the national security risks posed by actions being taken by the Chinese state, including what our military refers to as sub-threshold activity, we should, as a nation, make sure that we have a Bill that ensures that our national security is protected from the Chinese state and anyone else, anywhere in the world, who seeks to damage our national security.
Developing a robust takeover regime is essential if we want firms in our key sectors to grow and provide good jobs here in the UK, and this Bill is a key part of that. I worry, though, that it misses the opportunity to go much further in strengthening powers that prevent damage to the UK’s national economic interest, as well as our national security, as in the case I have outlined. I therefore hope that the Government will consider amendments in Committee to widen the scope of what constitutes national security.
Sir John Hayes (South Holland and The Deepings) (Con)
This Bill is welcome, necessary, important and, it has to be said, overdue. In making a few remarks about it, I draw the Minister’s attention to the fact that the Chairman of the ISC, the right hon. Member for New Forest East (Dr Lewis), is not able to be with us and sends his apology. I will make a number of points from the Committee on his behalf and that of other Committee members.
The first is that this Bill is stimulated, at least in part, by the ISC report from 2013. That report, “Foreign involvement in the Critical National Infrastructure”, made the case that new legislation was required. The hon. Member for Dundee East (Stewart Hosie) has already made that point emphatically, but the Minister does need to explain what might have happened differently had this legislation been in place seven years earlier, because some of these powers are clearly retrospective but they do not stretch back into the mists of time.
The Bill is important, not least because the Government have acknowledged that the UK faces continued and broad-ranging hostile activity from foreign intelligence agencies, hostile state actors and others. Novel means of undermining UK national security include investments that can be structured to obscure the real actors behind them. This is not a straightforward matter of takeovers that are directly linked to defence or critical national infrastructure; it is subtler than that, as the Bill acknowledges and as the Government have said. I want to dig a little further into that during my extensive, but not tediously so, contribution.
The Bill’s importance is also reflected in the dynamism of the threat that we face, which is metamorphosing, as I implied a moment ago. Those who seek to undermine our national security are becoming increasingly clever at doing so and the Bill will need to exercise all the flexibility that its provisions permit. But it may be that, as well as that, we need to return to these matters time and again. In a recent debate, I emphasised that traditionally legislation coming before this House pertaining to security has been spasmodic—it has been periodic. Legislation has stood the test of time but, as the increasing dynamism of the threats we face obliges Government to think again about means of countering them, it may be that we see more legislation than we have hitherto in this area. I happily give way to my hon. Friend, a fellow member of the ISC
Bob Stewart (Beckenham) (Con)
I thank my very good friend for giving way. It seems to me that, if we define national security closely, we will not keep up with the speed at which it changes. So I am against the idea of having a definition of what national security is. Does my right hon. Friend agree?
Sir John Hayes
I do, but the challenge in a democratic polity is ensuring sufficient accountability while maintaining that degree of flexibility. It is all much easier in less democratic countries—I use that term as gingerly and modestly as I can—which are not obliged to legitimise or justify what their Governments do. We are—rightly—so the Government are properly scrutinised and held to account. It is right, as my hon. Friend says, that we maintain enough flexibility to respond to the dynamism that I described. But of course, we need mechanisms in place to ensure that that flexibility does not allow the Government too much scope. That is why—this point was made by my hon. Friend the Member for Tonbridge and Malling (Tom Tugendhat) and I emphasise it on behalf of the ISC—Committees in this place missioned to do just that need to play an important role. I know that the Government recognise that, and that my right hon. Friend the Member for Wokingham (John Redwood) recognises it.
John Redwood
Indeed. This issue—where does security end—is very difficult. If we look at the great wars of the last century, which we do not want to repeat, food supply was absolutely critical and was a great strategic vulnerability of our country.
Sir John Hayes
That is true. Vulnerability, of course, is also dynamic. That is why I emphasised, in intervening on my right hon. Friend the Member for Tunbridge Wells (Greg Clark), that the Government need to get better at assessing risk and modelling the response to it. This is what the Bill begins to do. It has been a long time in the making, but I emphasise that it is welcome because it begins to look at appropriate mechanisms for doing that. So it is certainly necessary.
Mr Kevan Jones
Does the right hon. Gentleman agree that security and intelligence need to be at the heart of the Bill and that they should drive how we take decisions? That is why being located in BEIS might be a mistake.
Sir John Hayes
The right hon. Gentleman made that point in his contribution earlier and it seems to me to be a profound one. In establishing the new processes and the new governance associated with this legislation, it is vital that the interaction with the intelligence services, and all the skills available to the Government to assess risk, is built in to their considerations but also to the process. I am not absolutely convinced that the Bill does that. It may be that there is sufficient flexibility, to take up a point raised in an earlier intervention, to allow the Government to do so, but I hope the Minister, when he sums up the debate, will provide reassurance that the connection between intelligence and risk assessment is as sure as it needs to be. I am grateful to the right hon. Member for North Durham (Mr Jones) for making that point.
Greg Clark
When the decision maker is a Minister in the Government, they benefit from the advice of the security services, including the National Security Adviser. That was certainly my experience as Secretary of State. All these decisions draw extensively on the advice of the national security apparatus. I do not think—my hon. Friend the Minister will clarify it when he winds up—there is any intended change to that.
Sir John Hayes
Yes, the Minister needs to explain how the Government’s arrangements for the new investment security remit interface and interact with the national security structures that already exist, such as the investment security group. There needs to be clarity about the process, as I described it a few moments ago.
Stewart Hosie
Of course, it is not just about the formal structures, because of the fast-changing nature of the threat and the way in which technology emerges and develops. Perhaps we should have an annual debate in here, where we can think out loud about emerging technologies that may become a threat and, on the other side, those technologies that have become so redundant they are no longer a threat, to avoid them being pre-emptively given to the Government and clogging up the system.
Sir John Hayes
That is an excellent suggestion from another member of the Intelligence and Security Committee. My goodness, we are here in force and working as a team, as you can see, Madam Deputy Speaker. It is important that the House considers these matters, as well as the Committees I mentioned which have a particular responsibility for dealing with these things and holding the Government to account.
The point was made earlier that the national interest and national security are not identical. But they are coincidental—they do overlap—as there is a point at which national resilience, or its absence, compromises national security. The Government acknowledge that in the scope of the Bill. They talk about critical national infrastructure, as well as technology sectors of various kinds. By the way, I first looked at this issue, Madam Deputy Speaker—this is not a widely known fact, but I am happy to share it in the privacy of this intimate gathering—as a Cabinet Office Minister, with the former Member for West Dorset, Sir Oliver Letwin. We looked particularly at the threats posed to core infrastructure, such as the energy sector. By the way, that threat is posed not only by hostile state actors, but other players who might choose to disrupt core activities, with extraordinarily damaging consequences for our citizens. The Government do look at those things, but historically I do not think they have done so systematically enough. I know my right hon. Friend the Member for Tunbridge Wells, who has a distinguished record in this area, will have had similar experiences to me when we, in turn, looked at energy as part of our ministerial responsibilities.
China has been mentioned. I do not want to speak about it at great length, but clearly the ISC is currently looking at China and will be considering these very subjects in relation to that inquiry. That will come as no surprise to the House or the Minister.
I said this Bill was necessary, but necessity requires a degree of precision and I have some specific questions that I hope the Minister will deal with, either in summing up or by writing to the ISC if he does not have time to address them today. In looking at a specific case, will the investment security unit be able to consider the cumulative effect of a particular business transaction? In other words, will it take into account whether past acquisitions in that sector, when combined with the case currently under consideration, will result in a cumulative threat to national security? Moreover, will the unit consider acquisitions that might result in an indirect threat, for example, through supply chains or managed service providers? This may well involve very small businesses; sometimes a single expert or a small group of experts will play a vital role, as component parts, in either a technology or an industry that is vital to our national security.
Bob Seely
My right hon. Friend is making an excellent point in an excellent speech. He is highlighting the need to understand national security not only as individual events and individual companies, big or small, but as a series of cumulative processes. Those gradual processes, over time, are as important to understand.
Madam Deputy Speaker (Dame Rosie Winterton)
Order. Just before the right hon. Gentleman replies, let me give a gentle reminder that we have a lot of speakers still to go and I know the Minister wants to give a full reply at the end.
Sir John Hayes
I am terribly grateful, Madam Deputy Speaker. I do not know whether it was the persuasiveness of the case I was making or its imperfection that has encouraged 1,001 people to intervene on me. Perhaps it was the latter, but I will give way no more and move to the concluding part of my oration.
There are questions to be asked about the proposals before us. I touch on one more before I reach my exciting summary. The Bill provides for the Government to apply to use closed material proceedings. My hon. Friend the Member for Isle of Wight (Bob Seely) and the right hon. Member for North Durham made the point about connections to other expertise, both within Government and beyond it, so how will that be impacted, given the closed material proceedings? How will closed hearings be managed effectively? I think the House will want to know the answer to that.
I said that the Bill is welcome, and it is certainly is, because it provides the means by which, for the first time, Government will consider matters of profound concern very much in line with the recommendations of the 2013 report. That report identified:
“The difficulty of balancing economic competitiveness and national security”
and suggested that it had reached a “stalemate”. With this Bill, we have moved on from that stalemate. Given the scrutiny the Bill will enjoy, in the spirit that this kind of legislation normally does, as the whole House will want to get this right, and given the Government’s willingness to listen and to take on board some of the points that have been made today and that will be made in further scrutiny, I have every confidence that we may end up with a very good piece of legislation that is fit for purpose. Edmund Burke said:
“Early and provident fear is the mother of safety.”
Sometimes it is important to be a little fearful in order to be provoked to take necessary action. In taking that action, the Minister will know that the Government have no greater responsibility than to secure the safety of the country they serve and its people.
Layla Moran (Oxford West and Abingdon) (LD)
It is a pleasure to follow the right hon. Member for South Holland and The Deepings (Sir John Hayes). I can assure the House that I will not be speaking for quite as long, although I aim to speak as eloquently. I thank the Minister for the time that he spent with the Inter-Parliamentary Alliance on China yesterday, going through some of the issues in the Bill. We operate on a cross-party basis, and I will be mentioning some of the concerns raised in that call so that they are made public.
The Liberal Democrats absolutely support the premise of the Bill. It is the right thing to be doing. My objection, however, lies in the Bill’s scope, which I genuinely believe should be wider. I appreciate that it has been constructed narrowly, presumably so that it can be put through Parliament quickly, but this is a great opportunity that should not be missed. The point that I made to the Minister yesterday was that if we are not going to amend this Bill to include some very important changes that are needed in our legislation, when are the Bills that will be necessary to fill in the cracks going to be brought to the House? I am hearing that that is what Members across the House want to know. If not now, when?
I will focus on two specific matters. The first, which has been mentioned by other Members, is the definition of national security. I found the speech of the right hon. Member for South Holland and The Deepings very interesting, because there are arguments for defining and not defining. I believe that we should be defining, so that this House can properly scrutinise whether the definition encompasses everything that we would consider a national security concern and whether those concerns will be captured in the Bill.
Anthony Mangnall (Totnes) (Con)
Rather than being about not not defining national security, I wonder whether this is about broadening the definition so that it can include the many other issues with which we are all concerned.
Layla Moran
Yes, indeed; I agree. We should be broadening it, in fact, to underline the values of our country that should be enshrined in the Bill. I hope that Members would agree that there is no way that anyone could describe human rights as baubles. Human rights are not baubles off of which we are hanging a Bill. Human rights are the trunk of the tree off of which we hang the legislation and everything that we do in this place. When I suggest that we widen the scope of the Bill to include more human rights amendments, it is in that spirit.
We should not be singling out China particularly—although I am about to—but it is right that this Bill is looking at the enterprise in itself; it is not China or any Chinese investment per se that concerns Members of the House. That distinction is very important. It is equally important, especially during the time of a pandemic, that we attract business, that this country is open for business and that businesses want to invest in it. That is all correct, but I have grave concerns, particularly about companies such as TikTok, which is an example of the kind of thing that we very much hope is captured in the Bill. It is a shame that we do not know—I certainly do not—whether TikTok will fall within the scope of the regime put forward by the Minister and the Secretary of State. That is a genuine question. If it will not, let me make the case for why it should.
As has been said, this is not just about national security and infrastructure as things that we can touch. As we well know, the way in which hostile states are now operating is more to do with data flows and what they do with them. We also know that China does not think within the scope of two, three or four years; it is thinking ahead to the 20, 30, 40 and 50 year marks. What is it doing with TikTok? It is harvesting data, and primarily the data of young people—not just here, but across the world. Some 41% of TikTok’s users are aged between 16 and 24. Our young people’s data is being harvested now. Why? Competitive advantage, perhaps, but also we know that the way that the modern Chinese state is operating is to slowly build dependency. It is incredibly important to recognise the point around dependency and national security now, because it is getting a slow underground hold on our country. If we are not careful and we just focus on the parts that we can see, like the mycelium of a fungus—is it edible or not?—we forget that the majority of what is happening is underground and longer-lasting than we might imagine. Will data flows be considered specifically? Will the movement of the global HQ of TikTok to this country come under the scope of the Bill? If not, I will seek support across the House for amendments at the next stage so that that can happen.
Now is the time to fully address human rights. That is why it is important to talk about China, because yes, on the one hand, there are data flows, but on the other, there is what it has done in Hong Kong. The issues with TikTok arise from 2017, but the more recent issues in June of this year, and what it has done in Hong Kong, suggest a direction of movement for the Chinese state that is deeply concerning. Linking that to what is happening in Xinjiang with the Uyghurs, we have, almost through not paying attention, tacitly said to that state, “We think what you are doing might be okay. We are not going to challenge it directly.” Magnitsky sanctions are mentioned as the current way that the Government are dealing with this. We welcome that and think they should go further. However, it is also time that we had amendments to a Bill that specifically deal with genocide, slave labour and supply chains. This is not just about sanctioning individuals. We know that the state has a hold on its enterprises, and that needs to be addressed too.
At this stage, I have no intention of throwing any Lib Dem strops and opposing Bills, or whatever. However, I hope that the Minister knows that at the next stage some movement needs to be made on these two very important issues.
Bob Stewart (Beckenham) (Con)
I want to concentrate on what is essentially the core of this Bill—our national security. Today our country continues to face a broad-ranging hostile attack from foreign intelligence agencies. A few of our critical industries and technologies may already have been purchased, at least in part, by foreign investors, some of whom may not have a particularly benign approach to British national security.
This Bill comes not before time, considering that the Intelligence and Security Committee ruled on the matter and suggested changes in 2013. Unless the UK curbs the right of foreign firms and investors to obtain technologies through the means of mergers and acquisitions, and similar, our advanced technologies could easily find their way into the weapons systems of foreign and potentially hostile states. This would definitely harm the UK either directly or indirectly. The Bill gives the Secretary of State the power to screen investments that might just pose a national security risk, and that is what we are talking about today.
Obviously the Bill very much reflects the views of the ISC, of which most Members, apart from the Chairman, are present. [Interruption.] I didn’t use the word “you”, did I, Madam Deputy Speaker? [Interruption.] Oh good—you were looking at me with horror.
Madam Deputy Speaker (Dame Rosie Winterton)
I only pointed out that I was once a member of the ISC as well.
Bob Stewart
I am always a culprit on the word “you”. I have now lost my place, thanks to your intervention, Madam Deputy Speaker!
The report produced by the ISC in 2013 contained a requirement for legislation, and we are now getting that legislation seven years later, which is rather a long delay. I am delighted that the Bill protects British industry and puts safeguards on it, but it puts particular safeguards on our national security. In future, investors will have no choice but to notify the Government if the ownership of certain businesses is to change hands—thank goodness for that. However, I note that the Secretary of State will also have the power to call in other businesses if he or she has concerns about national security. That is why I am slightly against a narrow definition of national security; I would prefer it to be a bit more fluid.
The decision to call in an investment will be based on three factors: the nature of the target of acquisition; the type and level of control being acquired and how that could be used in practice; and the extent to which the acquirer raises national security concerns. The list of sectors to be covered is under consultation. I will not use a mnemonic, which until today I thought was some sort of drill, but that list includes advanced robotics, artificial intelligence, cryptographic authentication, whatever that is, quantum technologies—I do know what that is—and satellite and space technologies, in which we are world leaders. It is very important that those sectors are guarded against being infiltrated, because that is what it is—infiltration to take away intellectual property.
At the moment, the UK is almost unique among major western economies in not having stand-alone foreign investment legislation, and this Bill will sort that out. It will give Ministers the power to look at transactions overall and to review them. The Government’s impact assessment estimates that it will result in well over 1,000 transactions a year—possibly up to 1,800, as some Members have suggested. That is a lot, and it means a lot of work for a specific department of BEIS. There will only be 100 people to do that work, which is slightly worrying.
I will finish, because I was told to be short—and I have been, in six minutes—and because I had your naughty finger pointed at me, Madam Deputy Speaker.
Bob Stewart
I am getting on with it! I am trying to finish. This is a good Bill. I hope the House will support it. I will not finish my last paragraph, because my hon. Friend the Member for East Worthing and Shoreham (Tim Loughton) has stolen my thunder. This is a good Bill, and we need it.
Stephen Kinnock (Aberavon) (Lab)
It is such a pleasure to follow the hon. Member for Beckenham (Bob Stewart), and I genuinely hope that your naughty finger will not be pointing towards me at any point in my remarks, Madam Deputy Speaker.
We on the Opposition Benches will not oppose the Bill, because it is a step in the right direction. It is good to see the Government finally recognising the need to put national security at the heart of how we deal with foreign investment. However, the Bill fails to address the broader issue of how takeovers and acquisitions should be regulated to promote our broader national and economic interests and, indeed, the interests of British workers and their families across the length and breadth of our country. In that sense, it draws a false distinction between national security and economic security, because it is absolutely clear that the two are intrinsically linked.
In order to properly reflect on the effectiveness of this legislation, we therefore need to go back to first principles and ask ourselves this single basic question: what is the economy actually for? It is only by reaching consensus on that fundamental point that we shall be in a position to assess the extent to which the Bill will make a positive contribution to the lives and livelihoods of our constituents.
The British economy is unbalanced, it is unstable and it is therefore profoundly lacking in resilience. It is too reliant on the financial services sector at the expense of manufacturing—our manufacturing sector has collapsed since the 1970s from 30% of GDP then to just 9% now. It is too London-centric, thus failing to harness the talents of so many people from other areas of our country; it is too inward-looking, with persistent trade deficits; it is too unequal, pushing the proceeds of growth to the wealthiest 1%, and it is too short-sighted, constantly aiming for the fast buck rather than long-term, sustainable prosperity driven by patient capital.
Every piece of legislation that is brought forward by the Department for Business, Energy and Industrial Strategy should be relentlessly focused on fixing those faulty foundations of our economy—those fundamental weaknesses—and every step that the Business Secretary takes should be a step towards an active industrial strategy that is designed to drive a modern manufacturing renaissance. He should be focused on home-grown industry, home-grown investment and home-grown technology. Those critical steps will help to build that sense of purpose and resilience into the UK economy that we are so desperately missing.
The culture of the UK’s corporations is also in urgent need of change. The prevailing business strategies are driven by short-termism, with the delivery of fast buck profits to shareholders taking precedence over all other considerations. Addressing that will require a new deal between shareholders, companies and their workforces, and between the public and private sectors. Far too many of the corporations listed in the FTSE 500 are characterised by a transactional, rootless form of ownership, which militates against the investment in R&D, innovation, skills development, new technology, plant and machinery that is desperately needed if we are to put our economy on to a more balanced and sustainable footing.
The Government’s laissez-faire approach makes a major contribution to this short-termist culture, because it opens the door to acquisitions by foreign companies, resulting in the UK’s having by far the highest number of successful hostile takeover bids of any advanced economy in the world. Time after time since 2010 we have seen our strategic national assets being flogged off to the highest bidder. Let us just look at the case of Arm, a jewel in the crown of the British tech industry, which is in the process of being sold to Nvidia, or Cadbury’s, an iconic British brand, sold to Kraft without any proper consideration of what that would mean for the long-term sustainability of the business.
Moreover, our sovereign capability is profoundly undermined by the fact that much of our critical infrastructure is not in our own hands. In fact, 57 of our critical national infrastructure supply chains depend on China, from our energy suppliers to our airports, our pharmaceuticals and our personal protective equipment. The repercussions of that overexposure have been felt during the pandemic. Our lack of capacity to produce PPE has cost the UK taxpayer an eye-watering amount of money; a breaking story today shows that a Spanish businessman has pocketed £21 million of British taxpayers’ money simply for acting as a broker between the Government and overseas suppliers—a potent symbol of systemic failure.
Let me be clear that many of these so-called private takeovers and infrastructure investments are carried out by companies and investment vehicles that are a front for authoritarian state actors who have wider political and national security agendas and whose values are at odds with our commitment to democracy, liberty and the rule of law.
The crucial point here is that our values should not be for sale.
The most obvious and pressing case, of course, is the Chinese Government, who are relentlessly expanding their influence economically, politically and militarily. We need only recall the case of Imagination Technologies, which was recently the target of a hostile takeover attempt by an investment vehicle with direct links to the Chinese state. Of course, there are also substantial Chinese stakes in Hinkley Point and other sizeable chunks of our critical national infrastructure.
Successive Conservative Governments since 2010 have been naive and complacent in their approach to China, exemplified by David Cameron and George Osborne’s disastrous “golden era” strategy. It is time for this Government, this House and, indeed, the entire country to wake up to the reality of these matters and to come to the realisation that, while we must always seek constructive engagement with China, we must take a clear-sighted, hard-headed approach to defending our national interest and our sovereign capability.
I also take this opportunity to raise another more specific way in which the Government’s lethargic tendencies have proved costly to British business and weakened the economy as a result. The Government have been naive about the deliberate attempts to weaken UK businesses through market distortion by the undermining of competition laws. The most obvious example of that is the deliberate over-production of steel way beyond global demand and the subsequent illegal dumping of that steel on European markets.
The result of those illegal uncompetitive practices combined with Conservative inertia has been the weakening of UK steel companies and the opportunity for foreign investors, many of whom come from countries that are the origin of the dumping in the first place, to buy up our strategically and nationally important asset. Some 80% of China’s steel industry is state owned, and the key point is that the illegal dumping of products from those state-owned industries into European markets is an example of the practices that are undermining the international rules-based order.
That in turn has a damaging and direct impact on our industrial base and on our communities and their families—the workforces that are directly impacted. It is a perfect example of how the global is truly local. We need a level playing field, and this legislation should be about—this is everything that the BEIS Department should be about—developing that level playing field so that our workforce is not competing with one hand tied behind its back against a system that is rigged against it from the word go.
This Bill is a big missed opportunity to strengthen the UK’s wider industrial strategy and for the Government to show that they are committed to building an economy of purpose and resilience. Moreover, it fails to reflect the impact of coronavirus on UK businesses and the increased vulnerability in the face of vulture capitalists and state-backed actors that are waiting to pounce. This legislation only really seeks to protect the UK’s national security and appears to do little to support the UK’s wider national interest, such as the need to protect jobs and support communities in this time of national emergency.
Focusing on the all-too-narrow scope of the Bill, I also have genuine concerns about the process for arriving at a decision on whether to block a takeover. Currently, the plan is that the process sits firmly within BEIS. That is an issue, first, because such a decision would have huge cross-departmental impact, so it would surely be better to create a multi-agency taskforce to rule on key decisions. Such a taskforce would include the Treasury, the Home Office, the Foreign, Commonwealth and Development Office, the intelligence and security services, and the Ministry of Defence. It could follow a similar model to the Committee on Foreign Investment in the United States. All the signs were that BEIS was a cheerleader for the Huawei deal, when it was clearly against our national interest to go ahead with that deal. That does not augur well for its ability to police the effective implementation of the Bill.
Secondly, handing all the decision-making power to the Business Secretary could lead to problems further down the line, should a future incumbent—I am in no way implying that such a fate would befall the current Business Secretary—be influenced by political or commercial interests in this country or overseas.
Sir John Hayes
I had not intended to intervene again in the debate, except that I want to emphasise, and perhaps amplify, the point that the hon. Gentleman has just made. The legislation brings us into line with other Five Eyes players—the intelligence community with which we work directly—but he is right to say that the mechanisms that they use are different, in some cases, from the ones employed in the Bill in exactly the way he describes. Will the Minister look at those mechanisms and see what more we can learn from them as the Bill is improved during its passage through the House?
Stephen Kinnock
The right hon. Member has pointed to the fact that it is such a broad, cross-departmental issue that it requires more than just one pair of eyes—if he will excuse the pun—to look at it.
Time and again, we have seen that the takeover regime is not fit for purpose. It is welcome that we are finally coming into line with other countries on national security, but we are still behind on takeovers that would harm the national interest more broadly. Protecting our national security is only one element of protecting, nurturing and developing the vital sectors of the future that we know are crucial for our economy.
Given the economic dislocation and potential corporate vulnerability caused by coronavirus, the case for action is stronger than ever. I will support the Bill, but we need to see improvements and further regulation to protect British business and the broader national interest.
Mark Pritchard (The Wrekin) (Con)
It is always a pleasure to follow the hon. Member for Aberavon (Stephen Kinnock). Although I did not agree with everything in his speech, I have fond memories of being in his constituency playing rugby as scrum half, fishing, and go-karting on rickety self-made go-karts that often fell apart. I also went to my first rock concert at Aberavon leisure centre—The Who; I think they were at Madison Square Garden some years earlier, I hasten to add.
I welcome the Bill. As has already been stated, it is perhaps a little long overdue, given that my predecessors on the Intelligence and Security Committee suggested in 2013 that such a Bill was required urgently. I also put on record my thanks to my hon. Friend the Member for Isle of Wight (Bob Seely), who has been calling for such a Bill for many years. I am sure he is, at least in part, happy to see the Bill before the House. I also commend the Secretary of State, the Minister and, indeed, the whole ministerial team for bringing the Bill forward so early in this Parliament.
It is, of course, right that the Secretary of State has new powers to scrutinise strategic and sensitive investments in sectors that might pose a national security risk to the United Kingdom. The Bill should also act as a legislative assurance, or reassurance, for would-be investors and businesses. They can now avoid, hopefully, being targeted and potentially exploited by the hostile states and entities hidden behind the respectable veil of supposedly legitimate mergers and acquisitions that take place in the City every day—strategic partnerships, joint ventures and major investments.
The Bill also rightly responds to the huge advances in technology, as we have heard from other hon. Members today, which in itself further widens the potential scope of the Government’s national security concerns—and, indeed, remit—particularly around intellectual property, patents and copyright. Although this might prove problematic for the Government, particularly around dual technology, it is absolutely right that it should be addressed. We heard from the hon. Member for Dundee East (Stewart Hosie) earlier on the use of dual technologies. However, the Bill should not mean compromising growth or prosperity, and I was glad to hear the Minister underscore that. Got right, there is no need for it to compromise or conflict with national security and national prosperity. It is more than manageable, certainly with this excellent ministerial team, for the Government to balance national security and economic competitiveness, and to give the Government greater powers to assess and scrutinise investments that could reasonably be viewed as posing a potential risk to the UK’s national security. The Bill rightly empowers the Secretary of State, where necessary, proportionately to impose remedies up to and including blocking the transaction, using full through to lower-level measures. If the risk to national security is extreme, clearly those fuller measures should be deployed.
Of course, the Bill protects businesses that are small. We have heard from hon. Members on that as well, and I think the Government need to be careful that investors are not put off by the potential for many months of bureaucracy and hurdles to entry to market, particularly at the start-up stage or the second or third capital raising stage for entrepreneurial SMEs. The Bill will, of course, look at small businesses, and many of these small businesses have a global reach although their turnover might not be particularly large. They might—by definition, as small businesses—have fewer than 30 employees, but that does not necessarily mean that their technology and intellectual property are not of interest to some of the UK’s adversaries.
In welcoming the Bill, I would like to take the opportunity to thank my hon. Friend the Member for Tonbridge and Malling (Tom Tugendhat) and his Committee for their work. He has raised this issue over many years, and I would like to put on record my thanks to him. My hon. Friend the Member for Beckenham (Bob Stewart) has rightly mentioned computing hardware, quantum technologies and satellite and space technologies. There is a list of 17, and I will not go into them now, but it is absolutely right that these very sensitive areas fall under the remit and the scrutiny of this new legislation. Madam Deputy Speaker, you will know as a previous distinguished member of the Intelligence and Security Committee, that the Committee is currently considering the threat of this whole area in its current inquiry into the national security threat that China may or may not pose. In my view, it poses a significant threat in a lot of areas. Will the Minister give an undertaking to the House that there will be a timely publication of those mandated reporting sectors?
If I may, I would like to ask a few questions, through you, Madam Deputy Speaker, of the Government. Can the Minister explain the Government’s arrangements for the new investment security unit? How will it interact with the national security apparatus and structures that already exist, including the investment security group? Will the investment security unit consider acquisitions that might result in an indirect threat—for example, through supply chains or managed service providers? What safeguards will there be in the Bill to prevent non-UK Governments from pressuring the UK Government to call in certain mergers and acquisitions that those Governments might find offensive or inappropriate even though the UK might take a different view? Also, on the issue of competitors, what safeguards will there be to prevent vexatious and spurious calls for the Government to intervene by competitors who feel they are going to lose out as a result?
This Bill is long overdue, but it is right to give credit where credit is due. I thank the Government for bringing it forward and I hope that they will work with the ISC and the whole House as it goes through to Report stage. I commend the Bill and thank the Minister for all he is doing.
Andrew Griffith (Arundel and South Downs) (Con)
It is a pleasure to follow my hon. Friend the Member for The Wrekin (Mark Pritchard), who was a very successful businessman before he entered the House. I am also looking forward to hearing from my hon. Friend the Minister when he sums up later.
Foreign investment in the UK is an unalloyed good thing, and we would all be much the poorer without it. Inward investment stimulates our economic growth across the entirety of the UK. In 2019 alone, as the Secretary of State told us, almost 40,000 jobs were created thanks to foreign direct investment, with most of those outside London, despite its global reach.
Foreign investors in the UK create more exports and spend more on research and development than our domestic businesses, giving the lie to some of the things that we have heard from Opposition Members this afternoon. Let us remember that every doctor, nurse and careworker who has looked after us during the pandemic is paid for directly from the product of the economic growth that results from being one of the most open economies in the world. That is one reason why I congratulate the Government on recently establishing the new Office for Investment, with my noble Friend Lord Grimstone and No. 10 working together to bring high-value opportunities to the UK, such as on net zero, as well as investment in infrastructure and advancing research and development.
I approach this Bill with a degree of trepidation, much as one may occasionally have to approach a golden goose and suggest moving it to a slightly different, newer nest next door. There are many positive aspects of the Bill that I welcome, such as the clear statement of intent about enthusiastically championing free trade—we heard that from the Secretary of State today. I think it is very important that the Minister restates that at each stage of the proceedings. In many respects, this will be a more modern and slicker framework, providing more certainty and clarity for those we seek to attract here to invest. Timelines for assessments will be set out in law, and, as somebody who was previously a practitioner of acquisitions, I know how capricious the current status quo is, so I welcome anything that can make that more predictable. I also agree that aspects such as the turnover test or share of supply are backward-looking in an era when a business can become successful or strategically important while barely out of the incubator.
I hope that the Minister will not mind if I mention some areas for those on the Government Benches to focus on, from the perspective of a colleague who wants the Bill to succeed in its stated objectives. It is really important that it remains narrowly drawn around the risk to national security, and it will be good to hear the Minister again restate that very clearly. To govern is to choose, and it is important to be as clear about what the Bill is not as we are about what it is.
Andrew Griffith
I will not, because I know that so many colleagues want to get in. The Bill is not about the impact of a particular locality or even the domicile of a particular acquirer, and it must not become another fit and proper test by the back door because we do not like the identity of an acquirer or their political views on that day of the week. Investment is all about taking risk and pricing that risk, but political risk is the very hardest to price. In a globally competitive world, where every word that we say in this House will be pored over for meaning, we all have a responsibility to ensure that we provide clarity to those who are poised to invest here.
Much is hung on the speed of this regime—I think, Minister, that 30 days must mean 30 days, and I can already see some ambiguity. The Bill talks about acceptance, not just receipt. A subjective view about what constitutes acceptance cannot be a back-door way of stopping the clock. That is a notorious practice in current European competition filings. There is also talk of the Secretary of State being able to have a further 45-day extension. I think there should be a clear presumption that if this is not done within 30 days, the transaction can proceed. In truth, if we apply that logic to a pavement licence during a pandemic, I do not see any reason why we should not apply it to keep our capital markets and our lifeblood of the economy functioning. Those timeframes should be symmetrical. The state should not load the dice in its own favour, because if we look at the Bill, we see that, when it comes to appealing the decision by the Secretary of State under judicial review, the claim must be brought within only 28 days.
I thought it was very helpful of the Secretary of State to provide the context that he expects less than 1% of all M and A asset transactions to result in notification, but with respect, I want the telephone number of his lawyer, because I do not know where we are going to find the risk-averse legal advisers in transactions that do not distort that by notifying just in case, particularly given the presence of criminal liability. I agree with other colleagues that I would like the Minister to commit, if possible, to publish annual statistics on the number of notifications and the outcomes.
Finally, as ever when we pass new legislation, it is wise to think of it as an opportunity to retire some elsewhere. Media plurality has ill served the media sector, much of which now lies in foreign hands. As we look to rebuild our industrial strategy in the future, post covid, and as we strike out post Brexit, a new lighter touch approach from the Competition and Markets Authority would give many of our British businesses the scale to compete internationally.
Bob Seely (Isle of Wight) (Con)
Naturally, Madam Deputy Speaker, I hope to speak for no more than six minutes. It is a pleasure—genuinely a pleasure—to follow my hon. Friend the Member for Arundel and South Downs (Andrew Griffith). In the spirit of constructive debate, I am going to disagree with some of his points, but it was undoubtedly the most eloquent argument in favour of a highly free-market approach, though I will ask some questions on it, if I may. I am going to talk a little about national security, and make some supportive suggestions for the Minister and some general points about the nature of national security in the modern world with China.
There is much to support in this Bill, and we can all agree that most of it is very necessary and very good. I would also like to thank the Minister, who is obviously held in very high regard by those on the Government Benches, for his engagement; it is always good to talk to him. I have actually rather enjoyed listening to the debate, because clearly a lot of constructive suggestions are being made, and I thank my hon. Friend the Member for The Wrekin (Mark Pritchard) for his kind remarks.
I am going to suggest some amendments and then explain why I think they are necessary. For me, there is an issue about national security and our definition of it. That has not been offered so far in the debate, but it sounds like the Government’s definition is too narrow in this age. That does not mean that we are talking about industrial policy. I was very interested to listen to many of the speeches by Opposition Members, including the hon. Member for Aberavon (Stephen Kinnock), who made some very good points. This is not the space for industrial policy, but it is a question of how we interpret national security.
The amendments I think we should be tabling are on a character test and a public interest test, if not specifically a human rights test. Nobody has ever accused me of being a bleeding heart liberal, but I think that, in this day and age, to have no human rights test, even one wrapped up in a public interest test or a character test, is genuinely confusing, especially because countries that are in many ways more free marketeer than us do have them. Australia has such a character test and a public interest test based on national security, competition, tax revenue, the impact on the country and what it describes as a common sense test. Forgive me if I am wrong, but I thought that we had rather invented common sense, but we do not necessarily have a common sense test or a character test.
While my hon. Friend the Member for Arundel and South Downs said that he is—I hope I am not misquoting him—ambivalent about the identity of people moving in, I am not. There is an issue about Huawei and there is an issue about ZTE because they are fronts for an authoritarian state. As well as a moral question over what authoritarian states do in their own countries—and, yes, we do tend to wag our fingers at people too much—there is a justified question to be asked, because how foreign authoritarian states treat their own people is very often, given half a chance, how they would treat us, so there is an issue for me here.
The next amendment relates to CFIUS, the Committee on Foreign Investment in the United States. That is a more transparent process and, if I understand it correctly, more people have to sign up to agree, so it is not just sitting within their version of the Department for Business, Energy and Industrial Strategy. Defence, the Secretary of State and other players get to sign off on funding for companies. In many ways, CFIUS has a higher threshold than we will have in this country. I do not think anyone is accusing the United States of being less free marketeer than we are, but in this area, they are more conservative. I am not saying they are right or wrong, but I think that it is an important point to note.
My right hon. Friend the Member for South Holland and The Deepings (Sir John Hayes) and the hon. Member for Dundee East (Stewart Hosie) spoke about the cumulative threat. It is not about a single company or a single issue, but the way an industry changes over time. Indeed, the hon. Member for Aberavon made that point about the slow collapse of the British steel industry. Also, the point has been made that a lot of foreign direct investment is good, but there is clearly a balance.
Finally on the amendments, I would be keen to see something more stated, more obvious or more explicit on critical national infrastructure. Where would we be with Chinese investment in our nuclear industry, for example, if this Bill was already law? That is a matter for genuine debate.
I will move on to one or two other specific points. We are forever telling people how we prioritise human rights and how we lead the world, yet there is nothing about human rights in the Bill. As I have said, I think that lacks consistency, and we need a public interest test.
Next, we are talking about national security without a definition. I was saying to my hon. Friend the Member for Bolton North East (Mark Logan) that we need a definition. He is very much a Sino expert: he lived in China and speaks Chinese, which is rather more than I do. He said that it is a very Confucian thing to say that, to have a debate, we need to understand the definition and know what we are debating. It is a genuine Confucian point: where is our definition of national security to have a debate with? We need that. In this day and age, we need a wider definition of national security. It is not just nuts and bolts on tanks—I am not saying that the Minister is saying that—but much wider than that.
The former leader of our party, my right hon. Friend the Member for Chingford and Woodford Green (Sir Iain Duncan Smith) talked about civil and military fusion in China. I am somebody who lived in the Soviet Union. I have travelled in China a bit, and I have worked in sort of authoritarian states. The purest free market position here is dated. I am not saying we need an industrial policy approach, but we need an understanding that sees strategic interests—national security and the national interest—in big data, artificial intelligence, facial and gait recognition and all these technologies that Moscow and Beijing want to use to control their own people. I am surprised that the technology being developed by universities potentially does not fall under the Bill, and I believe it needs to.
My hon. Friend the Member for Gloucester (Richard Graham) made the point, as he ever does, about the importance of Chinese foreign direct investment, and I agree. The point was also made by my right hon. Friend the Member for Tunbridge Wells (Greg Clark). Chinese FDI clearly has an important role. It enriches our country, but there is a cost as well.
Finally, we need an amendment on strategic trade dependency. I would like to see an annual statement from the Government on the nature of our strategic trade dependency. If I had stood up a year ago and said, “Personal protective equipment is a strategic issue for this country,” everyone would have laughed and Front Benchers would have been swapping amused WhatsApps at the foolishness of a Back Bencher. Who now denies that PPE is a strategic issue, given the amount of money it has cost us and the delays because we did not have our own industry? Over time, that industry had faded away, and now that has caught us out. There is a wider strategic debate.
There is also the nature of dynamic risk, as my hon. Friend the Member for South Holland and The Deepings said. Everything that we know about the last year, with the changing nature of authoritarian states, such as China and Russia, the fusion of the civil and military and the entirely different approach to power in those countries, makes me realise that the national security definition that needs to be offered in the Bill, but currently is not, should be, if not broad, then at least have a greater understanding of the modern world we live in than is currently the case in the Bill or this debate. I very much hope there will be movement on that from Ministers.
Tim Loughton (East Worthing and Shoreham) (Con)
It is a pleasure to follow my hon. Friend the Member for Isle of Wight (Bob Seely), who has great experience in these matters. As he said, this has been a very thoughtful debate. I welcome the Bill, which, as many hon. Members have said, is long overdue. Much of our law on industrial security and business transactions is governed by the Enterprise Act 2002 and our very narrow and often inadequate competition and markets laws.
A lot has happened in the past 20 years. Major global corporations have exercised huge powers in mining data, monitoring and tracking populations and controlling technology in every aspect of our everyday lives. In most cases, they have done so without the need for a close physical presence. Of course, the huge issue of cyber-security and cyber-crime has become the weaponry of the 21st century. It is therefore right that we bring our laws into the 21st technological century, which would also bring us into line with some of our major allies.
This is also an investment Bill. As a global free-trading nation, we need to get the balance right and ensure that UK plc is open for business in the eyes of the international investment community and international markets. My constituency neighbour and hon. Friend the Member for Arundel and South Downs (Andrew Griffith), mentioned the great inflow of investment and jobs that that has created. The Bill needs to be targeted and proportionate so that we continue to attract safe investment, while deterring unsafe and questionable investment.
I am pleased to welcome the new systems and procedures in the Bill, including the transparent call-in notices based on trigger events, a clear and swift timetable to make decisions on call-ins, clear timelines, a single point of decision in BEIS, the interaction with the Competition and Markets Authority and the sanctions and legal challenge process. It is good to bring that in line with our Five Eyes allies. As the Minister said, it is estimated that the Bill will affect less than 1% of all mergers and acquisitions and asset transactions in this country.
My concern, like that of other right hon. and hon. Members, is whether the Bill goes far enough. Does it cover enough sectors and appropriate interests? How should the Government define national security, which is absent from the Bill? Should there not be a greater independent and external screening mechanism? Is not too much power still concentrated in a Secretary of State who, as was indicated by my right hon. Friend the Member for Chingford and Woodford Green (Sir Iain Duncan Smith), can still be swayed by political considerations that sometimes—just sometimes—might trump national interests?
Where is the parliamentary scrutiny role in all this? Where is the appeal mechanism if no call-in is triggered? This is a point that not many other Members have mentioned, but does the Bill leave too many of our early-phase innovation companies exposed to being gobbled up by foreign super-giants that can take advantage of almost unlimited capital and currency swings in their favour? I remember the old days in the City when the Government had golden shares in companies such as Cable & Wireless, British Aerospace and Plessey. People had to make a foreign ownership declaration to own shares in Peninsular and Oriental, and they were only able to own deferred stock. The Government still have special shares in British Airways and Rolls-Royce, for example, but it is hard to think of the last time the UK Government blocked a takeover or major asset acquisition of a company in which they held a golden share. Are they actually that golden?
The Minister stated that he is nation agnostic and that there will be no white list of nations, but we all know—this debate has brought this out very clearly again—that China remains the biggest threat and the single most important reason why such legislation is required. I have been a lone voice on China’s human rights abuses in Tibet for many years, as chair of the all-party parliamentary group for Tibet, and it is good at last to be in company, partly sparked by the outrage that is going on against the Uyghurs, what has been going on in Hong Kong and the suppression of the indigenous Mongolian population. However, it is what we do not see that is so much more dangerous, and the row over Huawei and 5G earlier this year brought that to light.
The ownership of Huawei is quite clear: it is 99% owned by the Huawei Investment & Holding Company trade union committee. Under Chinese law, trade union committees are ultimately administered by and answerable to the All-China Federation of Trade Unions, which is according to its constitution under the control of the Chinese Communist party. It is a very clear ownership: Huawei is under state control.
Huawei is involved with at least 11 United Kingdom universities as well as six London colleges, and I have great concerns—I have raised them on many occasions in this House—about the influence of the Confucius institutes on our campuses around the country. The US has raised concerns as well. The US-China Economic and Security Review Commission last year said:
“China is using broad research relations with universities and other entities to try to fill in any technological gaps they have as well as in certain areas to try to advance Chinese standards so that Huawei and other Chinese-produced equipment will be the equipment of choice as networks get built out.”
That is a threat to national security, and we need to take account of it.
We have heard a warning just today about Scotland and Scottish universities: Scotland has the highest number of Confucius institutes per capita of any country in the world.
We all know that ultimately the CCP has a claim on any data held by Chinese companies, where it does not need to go to the inconvenience of hacking into a foreign company’s database, as happens all too often. That includes TikTok, as we have heard from many hon. Members—in particular, my hon. Friend the Member for Wealden (Ms Ghani), who has made a specialisation of this. The spread of social media is a hugely powerful tool in extending control over populations, particularly young populations. China’s national intelligence law requires all Chinese firms, not just Huawei, to assist in state intelligence work, and Huawei’s equipment is used in monitoring the population in Xinjiang province. And of course it has great form in stealing IP from countries around the world.
All the contributions in this debate so far have focused on technology and communications, but why is pharmaceuticals and biotechnology not on the list in the Bill? It has been included on the list of the equivalent legislation in France. We know from Wuhan the global reach that biotechnology can have when it goes wrong. What checks are there on Chinese laboratories operating on UK soil in dangerous materials that could compromise our security? China, as we have heard, has been taking over pharmaceutical firms, including human blood plasma firm Bio Products, originally part of the NHS and taken over in 2016 by the Creat Group. That company would not have been covered by the mandatory notification under the proposals in the Bill.
There are many other areas of Chinese ownership that cause concern, too. The China General Nuclear Power Group holds a third of Hinkley Point nuclear plant and 20% of Sizewell C, and Beijing-controlled companies control about 25% of nuclear and wind energy demand in the United Kingdom. As my right hon. Friend the Member for South Holland and The Deepings (Sir John Hayes) mentioned, it is the cumulative effect of their influence and their ownership that we need to be aware of. The largest operator in the North sea is the China National Offshore Oil Corporation, accounting for 25% of UK oil production and 10% of the country’s energy needs—helped by billions of pounds-worth of tax breaks from this Government and previous Governments, it should be noted. The chairman of the CNOOC, Wang Yilin, declared in 2012:
“Large-scale deep-water rigs are our mobile national territory and a strategic weapon.”
The China Huaneng Group is building Europe’s largest battery storage project in Wiltshire, and the Hong Kong company MTR owns a 30% stake in South Western Railway and has the Crossrail franchise. I could go on and on, and the Henry Jackson Society has estimated that only 23 out of 117 Chinese acquisitions of UK corporations in the past decade would have been subject to the mandatory notification in this proposed legislation.
These are all strategic areas—energy, infrastructure, transport interests—which could have a massive impact on our security and prosperity if controlled by a malign party, and on top of that there is the monopoly China is building up in the supply of lithium and cobalt, essential components of batteries and the battery technology that we need to develop globally for environmental reasons as well.
What would the impact of the Bill be on all of those operations? What are the reciprocal rights for UK companies taking a stake—a controlling one or otherwise —in equivalent companies in China? I bet they are not equivalent. Surely there needs to be some sort of equivalence test in this legislation to ensure that we have access to assets overseas that is equal to that we are allowing overseas corporations and Governments to have in this country.
I have not mentioned human rights, which has come up many times. I have not mentioned the malign influence of Russia and heavily disguised asset purchases from those close to the Putin regime. What does the Bill do for clearer declarations of ultimate beneficial ownership and the role of Companies House? We have done much in that area on tax avoidance, but what about for the purposes of the national interest? We need far greater transparency. Surely the Bill is a way of helping to achieve that. Surely there should be a wider national interest test.
We must also mention the role and influence of friendly foreign powers, particularly the concerns about US and Japanese multinational companies that have been gobbling up UK high-tech start-ups and defence companies in recent years. The hon. Member for Aberavon (Stephen Kinnock) mentioned ARM, which was taken over by the Japanese—SoftBank—in 2016 and then by the Americans this year. It makes silicon chips for virtually all our mobile phones. There are numerous examples of high-tech start-ups in silicon fen at Cambridge. Public money has gone into universities, resulting in commercial spin-offs, and then founding shareholders have been lured by pound or dollar signs to silicon valley, US high-tech giants and social media companies. That is why we have no equivalents of Facebook, Google or TikTok in this country. We have very few tech stocks; in the FTSE, the weighting of infotech is just 1.37%.
In conclusion, Madam Deputy Speaker—before some naughty extremity of your body casts itself in my direction —surely we should be using a national interest test to grow our own in the United Kingdom. Certainly there should be a reciprocity test if national interest protection laws overseas prevent UK companies from making equivalent acquisitions or taking strategic stakes. I support the Bill, but there are many questions still to be answered, and measures certainly need to be beefed up.
Anthony Mangnall (Totnes) (Con)
Thank you, Madam Deputy Speaker, for calling me in such an important debate. May I start by thanking the Secretary of State and the Minister for the time that they have given me, members of the Inter-Parliamentary Alliance on China and others to discuss the contents of the Bill and what it does?
As I understand it—I hope I get this explanation right—the Bill gives the Government the power to screen and call in acquisitions of assets deemed to pose a threat to national security. Those assets might include land, physical property or intellectual property. As a result, the Secretary of State will be given retrospective powers to consider investments made over the past five years.
I welcome the cross-party consensus on the Bill. It seems to me, as a new intake Member of Parliament, that this is one of those rare moments when there is consensus in the House to produce a truly remarkable piece of legislation. I hope that the Government will listen carefully to the comments that have been made already.
I welcome the sentiments of the Bill, and I hope that passing it into law will be our first step in attempting to match Australia’s Foreign Investment Reform (Protecting Australia’s National Security) Bill and America’s Foreign Investment Risk Review Modernisation Act of 2018. But—and there is a sizeable “but”—we have, as other Members have made clear, a long way to go before this legislation reflects the comprehensive laws that many of our Five Eyes nation colleagues have in place.
The UK seeks to be a competitive, free and fair economy. I believe that that is sacrosanct and that we must do everything we can to ensure that businesses and people around the world look at our country as an attractive destination for investment. A stable democracy, a highly skilled workforce, league table topping universities, the rule of law and world-class industries such as photonics and FinTech all make the UK an attractive place to invest that benefits investors and British citizens alike.
Our laws are balanced as a result, encouraging foreign investment and adherence to UK laws and national interests. That balance has become all the more challenging with rapid technological change, internationalist agendas and our own failure, if I may say so, to hold a strategic dependency review. In short, the threats to our national security are numerous, real and present, and they come in a multitude of forms.
The narrow scope of the Bill limits its impact. It fails to address the threats that the UK is currently facing, and it holds the potential to see us become complicit with businesses and organisations that violate human rights. The national security that the Secretary of State spoke of remains ill-defined, to the detriment of the objectives of the Bill. Added to that, under the screening mechanism outlined in the Bill, a number of sectors are not addressed, such as education—a core part of the UK’s economy and an attraction to thousands of foreign students across the globe, with institutions that undertake research and development programmes in myriad areas, including defence, development and foreign affairs. A recent study found that 10 UK university laboratories are now dependent on significant investment from Chinese defence firms, yet our universities have not been specified in the scope of the Government’s consultation on sectors to which mandatory notification applies. How can that not be considered a national security risk?
The pharmaceutical sector is a global success story, with many companies basing their operations here in the UK, but there is nothing in the Bill that would have stopped or reviewed the Chinese takeover of Bio Products Laboratory. At a time when we face greater and graver challenges around the health of mankind, the Government must rethink what needs to be included in the scope of their consultation.
I have touched on two sectors but said nothing about the UK’s nuclear sector or water industry. Both need to be given the cover to protect our national security. Our core infrastructure, which is intimately connected to our national security, is routinely being placed in the hands of foreign owners. That should be a cause of great concern to the whole House. My hon. Friend the Member for East Worthing and Shoreham (Tim Loughton) mentioned the 23 out of 117 Chinese acquisitions of UK firms—if less than 20% of Chinese acquisitions are being scrutinised under this legislation, we need to rethink parts of the Bill and strengthen it where possible.
Richard Fuller
I think it would be helpful for us to decide whether we are talking about foreign ownership of assets or Chinese ownership of assets. Obviously there is a gradation between them, but I am hearing from some of the contributions that we just do not like foreigner ownership of assets, which I am sure is not what my hon. Friend means at all.
Anthony Mangnall
It is important to recognise that China has a poor track record in this case, which has not been addressed, but of course we are not against foreign ownership. We want to ensure that the structure is in place to scrutinise these acquisitions in the correct way that protects opportunity in this country. I thank my hon. Friend for his intervention.
A few months ago, I broke cover early on to vote against the Government over the proposals to see our 5G network built by Huawei—and I have not lived it down yet! I did so because our core infrastructure should never be compromised by foreign investment, and that was a severe threat to our national security. I welcome the fact that the Government have moved so significantly and plan to phase out Huawei by 2027.
I also did so because of the reports of human rights violations by Huawei. The success of my right hon. Friend the Member for Maidenhead (Mrs May) in passing the Modern Slavery Act 2015 is a proud moment for the UK, but it is worthless unless we use this Bill to stop dealing with companies that are reported to be using slave labour and looking to invest in the United Kingdom. Nothing in the Bill prevents companies that are complicit in gross human rights violations from investing in the United Kingdom, and that is a huge oversight. It would be an injustice and morally wrong for the UK ever to look the other way as money created from slave labour was invested in this country.
We have been told that this is not the right Bill for such provisions, but with all due respect, that is the same excuse used by the Whips on every single occasion that I have raised concerns about a piece of legislation. If we are going to bring forward the correct pieces of legislation, let us bring them forward. If not, the Government should not be surprised if we try to tack on amendments to address the issues that so many Members across the House feel strongly about.
Bob Seely
My hon. Friend is making such a brilliant speech that I do not want to interrupt him, but I will do so briefly. Does he agree that all these concerns could be wrapped up in a public interest amendment—including, for example, a human rights element—which would give Ministers some leeway and scope to address them?
Anthony Mangnall
My hon. Friend is absolutely correct. I hope that the Minister is listening, that we might expect such an amendment to arrive before us in due course, and that, with the consent of the House, we might see it implemented.
As I was saying, the line between state and civil actor has been blurred. The civil/military fusion requires legislation, and the Bill is in need of development to counter it. I therefore ask the Government very quickly to consider the following few proposals.
First, I would suggest the introduction of a committee on foreign investment. Our colleagues in America have introduced such a system. That would alleviate the pressure for any decisions to be made from political expediency. I believe, as my hon. Friend the Member for East Worthing and Shoreham was saying, that that would promote parliamentary scrutiny and transparency and ensure that there was an understanding of the entire system.
Secondly, I would suggest that the definition of national security be expanded to include human rights. We do more often than not, in this country and in this place, develop policy around moral obligations. This should be one of those cases.
Thirdly, I suggest that we increase the Bill’s scope and use it to tackle organised crime. That has not been mentioned. The UK very successfully closed the domestic trade in ivory. There was a trade across the globe—a domestic trade in ivory that was linked to al-Shabab. There is a way to track organised crime down to terrorist organisations. There is scope within the Bill to do so.
Fourthly, a recent study found that at least 929 UK shell companies used in 89 corruption and money laundering cases accounted for £137 billion. Those companies are registered through Companies House. The Bill should be used to alleviate the burdens and ensure that there are fewer implications for the UK.
We can attract investment and tackle malign activities. I hope the Government will engage, in the same constructive manner in which they have introduced the Bill, and I will be supporting them tonight. I am sorry for going on for so long.
James Wild (North West Norfolk) (Con)
It is a pleasure to be called to follow my hon. Friend the Member for Totnes (Anthony Mangnall) and make a contribution reflecting my time as an adviser in the Ministry of Defence, as well as in the Cabinet Office, where I was involved in national security issues and the investment regime.
In three years advising the Defence Secretary, there were issues with an increasing number of transactions that, typically, related to small firms involved in sensitive parts of the defence supply chain or in emerging technologies. The regime at that time, because of the threshold limit, did not allow the Government to impose formal remedies, let alone block transactions. Instead, we had to rely on a quiet word with those seeking to sell firms, to discourage them from such action. In more than one case, a suspicion was that a hostile actor, a state actor, was seeking to use a transaction to acquire key intellectual property to support their offensive military capabilities.
Persuasion did ensure that none of those transactions came to fruition, but the risk was clearly there. It is not acceptable to leave that gap in our powers. In the Cabinet Office I worked on measures to improve the Government’s ability to take a more strategic view of risks, and to understand the cumulative impact that my right hon. Friend the Member for South Holland and The Deepings (Sir John Hayes) and others have talked about, as well as bringing in the regulations to lower the threshold for military dual-use goods and advanced technologies. That dealt with some of the problems, but the case for comprehensive reform to strengthen the current legal framework is compelling.
In legislating, our role here today is to judge how best to protect national security while encouraging investment and maintaining the UK’s hard-fought reputation as one of the best places to do business. In my view, that is best done by having a regime that is targeted, predictable, transparent and efficient, so I welcome the Bill, which improves on the proposals set out in the White Paper. It gives more clarity on the sectors where the greatest risks to national security exist, and for which a mandatory approach will therefore rightly apply, subject to consultation.
However, investors must be assured that the regime is about national security; it is not a power to block transactions that Ministers do not like, or a back door to protectionism. There also needs to be an efficient screening system. It is crucial that the structures and resources are put in place to ensure that the timetables for review and assessment in the Bill are actually met. I know that the proposed investment security unit will sit within BEIS. Others have mentioned that issue. I should be grateful if the Minister would explain how the unit will work—for example, with the National Security Secretariat within the Cabinet Office—and whether there will be joint staffing, given the need for people with sufficient experience and vetting to provide the advice, because the success of the regime depends on being able to deal with the number of notifications coming forward. Will there also be additional resourcing for the agencies and other parts of Government that will provide those assessments?
The Bill represents a proportionate approach to provide the powers to screen transactions on national security grounds and ensures that the UK remains open for business—but not at any cost.
Nickie Aiken (Cities of London and Westminster) (Con)
First, I note that I am the only woman on the Government Benches speaking in the debate today. That is not because many of my colleagues do not wish to. For example, my hon. Friends the Members for South Ribble (Katherine Fletcher) and for Rutland and Melton (Alicia Kearns) cannot speak today because they are self-isolating or shielding and our virtual Parliament does not allow them to take part in these debates. The sooner we allow Members who are having to self-isolate and shield to take part in debates, the better.
I welcome the Bill and the work it will do not only to protect British business and our national security, but to provide more safety and comfort to companies and individuals from abroad investing in the United Kingdom. There is a clear need for the Bill to secure new investment as we transition into a genuinely independent trading nation for the simple reason that legislation in this area was last written at the beginning of this century, and it has not kept up with business and advances in technology since then.
I regularly speak to financial and professional services based in my constituency of the Cities of London and Westminster, and the legislation technology lag is often a key concern. I am glad that the Government are taking action to prevent the lag from growing any greater. As we recover from covid-19, it is essential, for the economy to recover, that we remain a vibrant and attractive destination for global investment. The actions taken under the Bill to make interactions with the Government simpler, more transparent and swifter than the current regime have to be welcomed for the benefits to both domestic business seeking international capital and those investing from abroad alike.
The Bill, as I understand it, will also create an investment screening regime in line with those that already exist in other nations around the world—many have been mentioned today—meaning that investors will be familiar with the processes that they will likely have to undertake. I am pleased that my right hon. Friend the Secretary of State is keenly aware that we must strike a balance between preserving national security and enshrining the UK’s world-leading position as an investment location. Of course, we are aware that it is only a small minority of rogue players who might pose a risk to our national security, so we must welcome legitimate investment as openly as possible. I hope the Government will continue to work with businesses as the Bill progresses to ensure that that balance is maintained.
Having said that, I understand that the Government predict, in their impact assessments, that less than 1% of all mergers and acquisitions and asset transactions will result in voluntary notification to Government. Some of the magic circle law firms based in my constituency believe that the Government may have underestimated those figures and, indeed, even if they are correct, it will none the less result in a much greater number of transactions being reviewed than is currently the case. They are concerned that the increased administrative burden of more reviews might deter investors. I would welcome a response from the Minister on that point.
I am pleased that the Bill’s focus is on national security concerns and that it will not enable the Government to intervene for wider economic reasons. This appears to remove the potential for any political interference when reviewing mergers and acquisitions. I would welcome assurances from my hon. Friend the Minister that it is the Government’s intention to take the politics out of that as much as possible. Furthermore, I am reassured that the new investment security unit will be within the Department for Business, Energy and Industrial Strategy, rather than across Government—although I take the point made by my hon. Friend the Member for North West Norfolk (James Wild)—meaning greater consistency and potential speed in decision making. It is about that speed. As has been said already today, 30 days should really mean 30 days if we are to ensure that we do not block investment.
Finally, the Bill is to be welcomed in the broader context of other legislation before the House. I spoke last week in the Second Reading debate on the Financial Services Bill, brought forward by Her Majesty’s Treasury. Taken together, I believe the Bills represent a clear indicator that across Government, this Administration understand the priority and impact the financial and professional services, many based in the City of London, have on UK plc and the wider global economy. They will lead the recapitalisation of the economy post covid-19 and they will finance the Government’s levelling up agenda. It is right that we do what we can to ensure that they can operate safely and securely as technology advances in the financial marketplace.
I hope that my right hon. Friend the Secretary of State and ministerial colleagues will continue to consult business as the Bill progresses through the House. Should I be able to act as a conduit to the business community in my constituency, I would be delighted to help. I commend the Bill to the House.
Richard Fuller (North East Bedfordshire) (Con)
It is a pleasure to follow my hon. Friend the Member for Cities of London and Westminster (Nickie Aiken), who represents a constituency where many businesses will have to wrestle with some of the implications of the Bill as it passes through and becomes law. I congratulate my right hon. Friend the Secretary of State and the Minister on their preparation of this Bill. A lot of good time has been put in over the past couple of years and good evidence has been presented to prepare the Bill for debate today, and it will be my pleasure to support it.
It is both easier and right to look at this as a national security measure and not so much as an investment measure; we have to deal with the investment implications, but it is important that we get the national security measures right. There has been lots of conversation today about the requirements of the Bill, but I have to say that the evidence of historical examples has not been quite as strong as some of the measures in it. In many cases, this is a precautionary Bill, rather than one driven by the evidence historically. I do not think we want to be too critical of what we have been doing over the past 10 or 15 years. As many Members have said, this Bill is bringing something up to date so that we can deal with the things we think might be coming in the next 10 or 20 years.
I can now see why the Minister has had to thread a needle to try to land this precisely. Many voices, on all sides, have been asking him to extend the Bill. Indeed, the Bill has the potential to be an expansive octopus, given the pressures that might be put on the Government to extend it. I have heard about having a wider national interest test and including more sectors than the 17 we already have. We have talked about a definition of the national interest, which has been portrayed to the Minister as something that might restrict, but, as he well knows, the more precise a definition, the broader it can be in terms of how it is interpreted for others.
There have been many cautionary comments from others about the extension of the Bill into a national industry strategy for the country—that is not the purpose of the Bill. The right hon. Member for Doncaster North (Edward Miliband), the Opposition spokesman, who is no longer in his place, misjudged the Bill in saying that that is something we need to adorn it with. That would be completely inappropriate and it would take away from some of the scrutiny I hope Members will give the Bill as it goes through Committee.
I ask the Minister to be aware of and listen to people on the potential for unintended consequences. We have heard a lot about the decision in respect of Huawei, but he will be aware of the potential for retaliatory measures by us. Please look at the unintended consequences in respect of innovation in some of the sectors that may be affected. In that regard, I just point Members to my entry in the Register of Members’ Financial Interests as an adviser to a technology company.
May we also feed something in from the Government Benches about a pattern we are seeing? As we are bringing forward more regulatory measures and as we take back regulatory powers from the EU, parliamentarians are constantly raising the question of what parliamentary oversight of those regulatory powers there is. It would be useful if Ministers would look at that. I congratulate the Minister on presenting the Bill and I am grateful for the opportunity to make some comments today.
David Johnston (Wantage) (Con)
It is a pleasure to follow my hon. Friend the Member for North East Bedfordshire (Richard Fuller), who always brings a lot of expertise to debates about business matters in this House. I welcome the Bill, and I say that as a supporter of open trade and investment, not as a supporter of protectionism, not least because I want to see companies and products from the UK in every country in the world.
The Government’s No. 1 job is our national security, as is any Government’s. The regime for assessing that through an investment lens was designed in 2002. We can all pick something from 2002 that indicates just how long ago that was, but I have opted for the fact that it was in 2002 that President George W. Bush declared Iran, Iraq and North Korea as being the “axis of evil”. Whether or not we think he was right to do that and that those were the right countries, it illustrates just how much geopolitics has changed in that time and shows that we were not thinking about the threats we now face, at least in the same way, in 2002. It is therefore right that the Government now update the regime that we use to assess these matters. It is also right to have a system of mandatory notifications in the 17 areas that have been defined. In 2002, we did not even understand how artificial intelligence or advanced robotics might improve our lives, never mind the ways in which they might be used by hostile states to endanger our national security.
It is right that the Secretary of State will have a five-year period in which to call in trigger events after they have happened. That will enable him or her to perceive a threat that may not have been immediately obvious at the time of the trigger event. The Government rightly say that this Bill is not about one country or one threat—we should not be looking through the lens of 2002 for the current regime; we should make legislation now based on which countries we think are the threats in 2020. But I was one of the people concerned about the position we had got into with Huawei, which is, in many ways, a good example of why we need that retrospective power. Difficult though it may be to unwind some decisions, there are times when we have to do so. It is also right that there is no turnover threshold. If it relates to national security, it relates to national security. Turnover simply should not be a factor.
Unusually, I found that a lot of criticisms of the Bill that I looked at before this debate were actually in its favour, although a number of Members have actually made great contributions today about the ways in which we might further strengthen the legislation. The fact that we might, by the Government’s estimate, see between 1,000 and 1,830 notifications made says to me not that the new regime is too strong, but that our old regime has not been strong enough. Maybe it will end up at that number and maybe it will not, but having only had 12 assessments done in the period since 2002 suggests to me that we are not dealing with a strong enough set of tools to assess these situations. The fact that 100 instances might have to go through a full national security assessment and that we might seek to impose remedies on 50—again, by the Government’s assessment—just underlines why this legislation is important and why we need a much stronger regime.
It is right that national security is not defined in this legislation, as that will enable the Government—and, importantly, our security services—to interpret it as broadly as they can, and to perceive threats that they may not have perceived before. It is also right that the Secretary of State makes the decisions. I have seen some pooh-poohing of the role of politicians in this process, with the idea that they might use it for political gain or domestic considerations that are not really about national security, but we elect politicians to make judgments about national security. They are the ones who are truly accountable, rather than officials. It is right that that role should sit with the Secretary of State.
I welcome the way in which we have borrowed from international examples: mandatory notifications such as those in the US and Japan, and a retrospective period such as that in France and Germany. This suggests that we have looked at examples around the world, and borrowed from them all to try to get the best system for us. Of course, it also underlines the fact that we are behind a number of our partners—both the Five Eyes and our western European partners—and therefore the importance of passing this legislation quickly.
I will continue to welcome foreign investment and foreign trade, but I will never do so with any risk to national security. Given the actions that we see from hostile states through their investment decisions on a weekly basis, the passage of this Bill cannot come quickly enough.
Alexander Stafford (Rother Valley) (Con)
It is a pleasure to follow my hon. Friend the Member for Wantage (David Johnston) and also to recall the axis of evil. He mentions that things have moved on, but I challenge that and say that those countries that were part of that axis of evil are still threats today. Some of us were warning about the likes of China and Russia back in 2000, so I believe that the world is becoming a far more dangerous place. We have an increased number of threats rather than fewer, which is why this Bill is so fundamentally important. We need to have national security as our watchword. I know that this Government understand that perfectly well, so, as well as encouraging new investment into Britain, we need to increase the security and safety of British interests from hostile actors.
The Bill will give the Government new powers to block mergers and acquisitions when they are national security risks. It will also introduce an extension of screening powers to include assets and intellectual property as well as companies.
Why is this Bill so necessary? There is no doubt that foreign direct investment is vital to the UK economy. In the past 10 years, over 600,000 new jobs have been created from more than 16,000 FDI projects and $750 billion have flowed into the UK as a result of FDI. Foreign direct investment is overwhelmingly a good thing. As a Conservative, I am greatly anticipating throwing open our doors to global inward investment as we exit the Brexit transition period. I support unrestricted international trade and, for me, attracting investment into Britain is one of the most exciting things about leaving the European Union. Let me make this clear: leaving the European Union allows us to increase investment in this country, and it will be better economically for all of us.
However, we cannot be naive about the threat that certain regimes pose for the United Kingdom. They exert their influence by taking over companies in strategic areas and increasing our dependency on their products and services, limiting our independence and stifling our dissent in the process. We cannot overthrow the shackles of the European Union only for hostile powers to come over and take over the jewels in the British crown. That is not acceptable.
Members will know well that one of my political interests is the combating of the malign influence of the People’s Republic of China. The Government demonstrated strong leadership earlier this year by banning Huawei from Britain’s 5G infrastructure. I pay tribute to my hon. Friend the Member for Totnes (Anthony Mangnall), who is no longer in his place, who helped the Government to come to the realisation of these malign influences. However, despite Huawei’s weak protestations of independence from the Chinese Communist party, western politicians and companies know the price of conducting business in the PRC. A mainland Chinese telecom company, founded by a former People’s Liberation Army officer, has no chance of avoiding Beijing’s meddling, especially when the company in question is playing a central role in critical western infrastructure.
The same can be said of TikTok, a Chinese-owed app, which has enjoyed explosive growth in the west among teenagers. It is not all fun and games though, with the company being accused of having close links with the Chinese regime and of gathering data on our young people. Indeed, we heard from representatives of TikTok on the Business, Energy and Industrial Strategy Committee a couple of weeks ago, and we heard their protestations saying that they had no connection almost and that they were not passing over data. However, how can that be true when TikTok is owned by China—a state that is naturally hostile to human rights and many other aspects?
There are very real fears that the Chinese state is using its economic influence to weaken our Government, sow discord in our societies and extend its surveillance network in our lives. Let us be honest, it is not just in Britain that we see China act in such a way. We have seen it act across the middle east and into Africa as well. We are not the only country over which China is trying to extend its influence and it is great that this Bill will go some way to stop that influence and protect our national infrastructure. I am pleased that the Bill takes such a strong stance.
Huawei and TikTok should act as a cautionary tale to us for the future. The PRC’s unforgivable actions in Hong Kong, an autonomous territory, against the Uyghurs, a distinct and proud people, and against the Christians in China show us that Beijing cannot play by the rules and we cannot rely on them to look after our best interests.
However, the PRC is not the only regime about which we must worry. I do not need to remind Members of the threat posed by Russia and Iran and other despotic dictatorships. My priority is the protection of the British national interest and the safety of UK citizens. As the UK’s current powers to oversee foreign investment date from legislation in 2002, new primary legislation is needed to bring the UK Government’s powers up to date. As my hon. Friend the Member for Wantage said, much has changed over the past 20 years and therefore these new powers must take into account new threats and technological, economic and geopolitical changes. The Government must have powers to intervene effectively and efficiently to protect the UK. Furthermore, to be an effective and trustworthy ally to our friends and partners around the world, we must bring our powers into line with theirs. Australia, Japan and the United States have already taken action in this area, and we must not be left behind, because if we are, our businesses and our infrastructure will be ripe for the picking for these malign regimes.
This Bill means that we can continue to work on bringing investment to our shores, boosting GDP and creating jobs as we recover from the coronavirus while defending ourselves against those who threaten the safety of the British people and the UK’s sensitive assets. I expect Members in all parts of the House to support this crucial piece of legislation, which will ensure that we are prepared for the challenges and the threats of the future, because the world is not a safe place and there are many countries and regimes that want to do us down. We will always stand with the British people and with British business to protect our interests.
Aaron Bell (Newcastle-under-Lyme) (Con)
It is a pleasure to follow my hon. Friend the Member for Rother Valley (Alexander Stafford), and indeed colleagues around the House, as the last Back-Bench speaker in this debate.
This has been a very thoughtful debate with lots of interesting suggestions for the Minister from all sides. I thank the Secretary of State for his opening remarks and the Minister for his engagement with these issues. He met the Science and Technology Committee last week to talk through the Bill. It was obviously time well spent, because three of my colleagues from the Committee have already spoken, and now he has me as well—so well done to the Minister.
It is tempting, from a science and technology perspective, to seek to widen the scope of the Bill to attempt, for example, to protect start-ups in these fields, which are very innovative. Ultimately, however, I come down in the same place as the Chairman of the Committee, my right hon. Friend the Member for Tunbridge Wells (Greg Clark). Countries that try to legislate themselves into self-sufficiency instead end up self-satisfied, and that would then strangle the very innovation that we all seek and want to see in our businesses in the spheres of science and technology. I am therefore pleased that the Bill is drawn narrowly.
The Bill sits at the nexus of our domestic economy and our international relations. If we were to widen its scope beyond the fairly narrow way it has been drawn, that could have unintended consequences for both those things. We heard the excellent and witty speech from the former Leader of the Opposition, the right hon. Member for Doncaster North (Edward Miliband), who clearly has lots of ambitions in the area of industrial strategy. I look forward to him putting that into the next Labour manifesto, perhaps, and that is where we can discuss these things, but this Bill is not the place to try to detail all the elements, whether it is about confectionery companies, union control or any of those sorts of things. This needs to be a narrow Bill so that we do not move into too many unintended consequences.
On international relations, as my hon. Friend the Member for Wantage (David Johnston) said, we need to move with the times and in response to events. The exact nature of the threats we face evolves and changes over time. I trust my right hon. Friends the Foreign Secretary and the Prime Minister, and we need to give them the leeway to make judgments about national security in the face of what the international situation is at the time. This Bill is not just for the next five years. It is not just for the threat that we clearly face from the expansionist tendencies of Russia and China. It needs to stand the test of time, and by drawing it narrowly, we give it a better chance of doing that.
I support the Bill as it is, although many colleagues around the Chamber have made thoughtful suggestions for amendments, and I know the Minister will speak to those when he winds up. First, it gives us more security. Others in this place are far more expert on national security than I am, but it is clear that the developments we have seen over the past decade have meant that we have had to re-evaluate our relations with potentially hostile actors, such as China. My right hon. Friend the Member for Chingford and Woodford Green (Sir Iain Duncan Smith) spoke very firmly about that. This Bill gives us a proportionate defence against hostile actors who are targeting sensitive UK assets, and in ever more novel and complex ways that we could not have imagined in 2002 when the Enterprise Act on which our current defences rest was passed. It is time to update those powers, and I hope we can do so in a way that will stand the test of time. It is also right that we update those powers with a turnover requirement, because, again to echo my hon. Friend the Member for Wantage, national security is no respecter of the size of a company or where it is in terms of growth. Sometimes very nascent companies could have a significant impact on our national security in future.
The Bill provides more certainty for businesses and a regime that prioritises swift resolution of referrals and call-ins. That is absolutely, fundamentally important. My hon. Friend the Member for Arundel and South Downs (Andrew Griffith) was very much to the point on this. Businesses deserve certainty. If the answer is no on national security grounds, that is fair enough, but we cannot leave things in limbo. One might think that the five-year period does leave businesses in limbo to some extent. I acknowledge my hon. Friend’s point that most lawyers will probably suggest that they notify the Minister, and so, as he said, publishing statistics on notifications would be welcome. We need to maintain the UK as a premier foreign direct investment destination, because it is so important to our future, to our recovery from covid, to meeting our net zero targets—I congratulate my hon. Friend the Member for Arundel and South Downs on his appointment on that—and to levelling up. It is particularly relevant to me, in Newcastle-under-Lyme in north Staffordshire, that we continue to attract foreign direct investment so that we can continue to regrow our national economy and our local economies in areas that have not had much investment in the past couple of decades.
To sum up, this Bill will give us a regime in line with some of our strongest allies in the world. It will protect our national security and ensure that Britain remains fully open for business, and for all those reasons, I will be supporting it on Second Reading.
Chi Onwurah (Newcastle upon Tyne Central) (Lab)
As my right hon. Friend the Member for Doncaster North (Edward Miliband) set out very well in opening the debate, we support the Bill. Inward investment is crucial for businesses across the UK and our economy, but it is also crucial that the UK has the powers in place to scrutinise and intervene in business transactions that could have implications for our national security.
In fact, we would have welcomed this Bill a long time ago. It is clear that the Government have failed to keep pace with other countries, including the United States, France and Germany, that have already taken steps to update the legislation in line with evolving security threats. From serious questions about Huawei’s dominant role in the UK’s 5G network, as raised many times by the right hon. Member for Chingford and Woodford Green (Sir Iain Duncan Smith), to the takeover of Imagination Technologies by Canyon Bridge, it is inarguable that the Government have been slow off the mark on foreign acquisitions and the possible implications for national security.
Right hon. and hon. Members from all sides agreed on that, including, I think, the Chairs of the Business, Energy and Industrial Strategy Committee, the Science and Technology Committee and the Foreign Affairs Committee, and all five—I think it was five—members of the Intelligence and Security Committee who spoke. I thank colleagues from across the House for their contributions and apologise in advance if I cannot do justice to all of them.
This has been an excellent debate, one that I think showed the House at its best; we heard informed and considered speeches and, where there was disagreement, it was reasoned and open. There is strong agreement across the House that new legislation is necessary to combat changing security threats and to balance those considerations against the ambition to ensure that the UK remains an attractive country in which to invest.
Companies in fast-developing fields, from quantum computing to telecommunications to artificial intelligence to cryptography, are no longer just companies; they are strategic assets that are fundamental to our nation’s security. Until now, Ministers have failed to modernise the takeover regime to keep up with this changing landscape, the pace of technological development and what that means for security. Instead, they have continued to operate within a legal framework that, as we have heard, was created almost two decades ago, before Facebook or Twitter were even invented. My hon. Friend the Member for Warrington North (Charlotte Nichols) explained the impact of that uncertainty on the nuclear industry and investment in her constituency.
That is why we strongly welcome the Bill now and agree that it is necessary. It is essential that we get the specific provisions of the Bill right, in order not to deter foreign direct investment while also balancing the need to protect our national security. First, there is the definition of national security, which was raised by many, particularly the hon. Member for Isle of Wight (Bob Seely). The right hon. Member for South Holland and The Depths (Sir John Hayes)—[Interruption.] The Deepings, sorry.
Chi Onwurah
The right hon. Gentleman is always very deep in his responses. He suggested it was deliberately left undefined in the Bill. The sectors that will be subject to mandatory notification are also not defined in the Bill and, we are told, will be set out in secondary legislation. I thank the hon. Member for Bolton North East (Mark Logan) for his provisional mnemonic and wish him well in updating it.
Definitions, and the lack of them, are important because the proposed powers are not limited by size of turnover or share of supply threshold. They could apply to almost every business transaction within the sectors, and the definition of national security therefore must be set out to help provide clarity for businesses and investors, but it is unclear—perhaps the Minister could provide some of that clarity—whether the takeover of the UK artificial intelligence company DeepMind by Google would have been called in on national security grounds under the scope of this Bill.
In Committee, Labour will seek further details on how the retrospective powers to render acquisitions void would be applied and whether an assessment has been made of the economic and legal consequences for businesses and their employees of acquisitions being rendered void after the fact. The hon. Member for Dundee East (Stewart Hosie) highlighted the Government’s capacity, or lack of it, to process the sheer volume of estimated notifications that the Bill will provoke. We need also to look at how businesses, small businesses in particular, will be supported to cope with the new regulations, which may prove difficult to navigate. We will ask also whether an assessment has been made by Government of the impact the changes could have on investment in small businesses—a chilling effect—including university start-ups, particularly those in the 17 key sectors, which was a point made by the hon. Member for The Wrekin (Mark Pritchard).
Labour will also seek assurances about transparency and oversight and how the powers are applied—a worry of the hon. Member for Beckenham (Bob Stewart)—including calling on the Government to explore giving the Intelligence and Security Committee a role in scrutinising the use of powers under this legislation. My right hon. Friend the Member for North Durham (Mr Jones) was right to emphasise the importance of the involvement of and access for the intelligence services.
We hope to work with the Government to ensure that we establish a robust, transparent and fair regime that protects national security, while allowing the UK to continue to enjoy the opportunities that overseas investment affords businesses across our country and economy, but the Bill is also a missed opportunity. It is a missed opportunity to demonstrate what the Government mean by “industrial strategy” and to show that it is more than a slogan. It is a missed opportunity to help UK businesses in key sectors to flourish and grow here in the UK, sustaining and creating jobs—a point on which my hon. Friend the Member for Aberavon (Stephen Kinnock) was particularly eloquent.
Time and again, we see vibrant, growing UK companies sadly lost overseas. While we recognise that foreign acquisition can breathe new life into a company, supporting jobs and growth in the UK, far too often we see UK companies pawned off or stripped for parts. Far too often we see UK companies bought out and wound down to eliminate the competition, with the consequent loss of high-skilled jobs. Nowhere is that more evident than in the technology sector, which must be a key part of any 21st century industrial strategy.
We have lost far too many businesses to Silicon Valley, weakening our technological sovereignty. The takeover of leading UK technological company Arm by the US company Nvidia was announced recently, and while Ministers claim to have scrutinised the deal, they have not been forthcoming with the details. When Arm was previously taken over by SoftBank, legal assurances were extracted about the future of the company’s Cambridge headquarters and the UK workforce. Have Ministers extracted the same legal assurances at this time? Will the Minister come clean today?
The Business Secretary said himself that the UK should be open for business but not for exploitation. However, key companies have been cherry picked by companies in San Jose, with the UK consequently losing out. It is therefore not clear that the current takeover regime is fit for purpose.
The weaknesses in the current regime are about not just national security but industrial strategy. Under the current regime, the Secretary of State has the power to intervene in qualifying businesses on four public interest grounds: media plurality, national security, stability of the UK finance system, and the capability to combat and mitigate the effect on public health emergencies.
Sir John Hayes
The coincidence, as I described it, between national interests and national security is profound and is proven. When a company is taken over and technology transfer takes place, it is possible for a nation that is hostile to our interests to gain a sufficient understanding to develop systems that endanger this country, including, in some cases, weapons systems.
Chi Onwurah
The right hon. Member is talking to a chartered engineer who strongly believes that our capability in engineering and the kind of key technologies of which he talks is a basis for our national security, and that national security, without some degree of important technological sovereignty, is difficult to wholly achieve. I look forward to debating that in Committee.
It is worth pointing out that the Government’s powers have been used only sporadically in previous interventions, and they are seemingly not underpinned by any real strategy. The hon. Member for East Worthing and Shoreham (Tim Loughton) made a similar point.
Many Conservative Members are vehemently opposed to extending the remit of the Bill to cover industrial strategy, including, but not limited to, the hon. Members for Totnes (Anthony Mangnall), for North West Norfolk (James Wild), for Cities of London and Westminster (Nickie Aiken), for North East Bedfordshire (Richard Fuller), for Wantage (David Johnston), for Rother Valley (Alexander Stafford), for Newcastle-under-Lyme (Aaron Bell) and for South Dorset (Richard Drax). Labour believes, however, that the Government should be able to intervene in the takeover of a critical business on industrial strategy grounds. That power should be paired with defined criteria and transaction thresholds to give businesses and foreign investors clarity and confidence, and to truly make it clear that we are open for business and not exploitation—to coin a phrase.
Why did the Government not bring forward legislation to ensure that technology firms remain in the UK and to end the current ad hoc approach to industrial strategy being pursued by Ministers? That has seen binding commitments often negotiated at the last minute, companies lost, and no clarity as to the rhyme or reason why the Government choose to intervene or not. I urge the Secretary of State and the Minister to continue to approach the Bill in the spirit of collaboration, to address the undefined areas and issues that we have raised, and to shed some light on their long-term industrial strategy, including their plans to keep high-growth technological companies flourishing in the UK.
The Parliamentary Under-Secretary of State for Business, Energy and Industrial Strategy (Nadhim Zahawi)
It is a pleasure, as ever, to follow the hon. Member for Newcastle upon Tyne Central (Chi Onwurah). I thank all hon. Members who have spoken in this important debate. We have had upwards of 25 speeches, all of which were thoughtfully delivered. I also thank the shadow Secretary of State, the right hon. Member for Doncaster North (Edward Miliband), for his constructive approach to this important piece of legislation. I will aim to respond to as many points made by hon. Members as possible, but I will, of course, write in response to individual questions as well.
I begin by responding to the points of the right hon. Member for Doncaster North and the hon. Member for Newcastle upon Tyne Central, who both raised the grounds for intervention when it comes to the legislation. The legal texts in the Bill are explicit in their reference to national security rather than public interest or wider economic considerations. The hon. Member for Newcastle upon Tyne Central mentioned the particular deal with DeepMind and Google. If it is deemed that the asset is so important to national security—it does not matter who the acquirer is—the Bill would allow us to intervene and block that acquisition.
I have to be clear to the House today that any action the Secretary of State takes under the proposed regime would be to protect national security and not for wider economic or industrial reasons. I am sure that the right hon. Member for Doncaster North will look forward to the industrial strategy refresh that the Secretary of State is committed to publishing in the first quarter of 2021.
To address the point made by my hon. Friend the Member for East Worthing and Shoreham (Tim Loughton), we already have a proportionate public interest power on the statute book, and most recently we have legislated to allow intervention for mitigating the effects of public health emergencies. The right hon. Member for Doncaster North and the hon. Member for Newcastle upon Tyne Central also asked about the engagement with Government. The investment security unit will ensure that clear guidance is available to support all businesses engaging with investment screening from the outset. We have made it clear to the investment community that we are committed to effective engagement with businesses on the regime itself, and to ensuring that they are able to access a dedicated, simple online portal to notify us of any potential transaction. Of course, we note the importance of a full Government approach to investment screening. While the unit will be based in BEIS—this point was made by the right hon. Member for North Durham (Mr Jones) when he talked about the ISC—it will work closely with the security agencies and other Departments with real sector expertise. The chief executive of Make UK, Stephen Phipson has recognised this point, saying: “Technology development moves at fast pace and this Bill will modernise the UK’s approach in a proportionate way, given the Government’s commitment to a quick and streamlined process of evaluation.”
More widely, I am happy to meet any hon. and right hon. Member who has today expressed an interest in the workings of the investment security unit. The right hon. Member for Doncaster North also raised the role of the Intelligence and Security Committee, as many other colleagues have done today, and we will of course work constructively with its members and, indeed, with other Committees across the House. I wish the Chair of the Committee, the right hon. Member for New Forest East (Dr Lewis), well, and I would like to thank the other members of the Committee who spoke today. The contributions from the hon. Member for Dundee East (Stewart Hosie), the right hon. Member for North Durham, my hon. Friend the Member for The Wrekin (Mark Pritchard), my right hon. Friend the Member for South Holland and The Deepings (Sir John Hayes) and my hon. Friend the Member for Beckenham (Bob Stewart) were typically excellent and well-informed.
The right hon. Member for Doncaster, North, along with the hon. Member for Bristol North West (Darren Jones), also raised the issue of the five-year period for retrospection. We have come to that view because six months would simply be too short, and we have looked at what other countries have done. It would be relatively easy for hostile parties to keep a trigger event quiet for six months and time us out, but that will be substantially more difficult in a five-year period.
Sir John Hayes
I am extremely are grateful to the Minister for his comments about the members of the ISC who have contributed to the debate. Given the range of questions posed to him by ISC members, will he commit to write to the Committee formally to pick up those points, so that the Committee has a clear set of answers to the series of questions posed? It would not be fair to expect him to deal with all of them now.
Nadhim Zahawi
I can certainly give my right hon. Friend that commitment; I will do that.
My right hon. Friend the Member for Chingford and Woodford Green (Sir Iain Duncan Smith), my hon. Friend the Member for Isle of Wight (Bob Seely) and the hon. Member for Oxford West and Abingdon (Layla Moran), who is not in her place, probed on the definition of national security. A number of hon. Members have argued that the definition of national security is too narrow. I would gently point out that the Bill does not seek to define it at all, as some other Members have quite rightly argued, including, very wisely, my hon. Friend the Member for Beckenham. I think that is a real strength of the Bill, not a weakness. It means that the Government have the flexibility to act as risks change over time. The statement of policy that was published last week refers to espionage, disruption and destruction and inappropriate leverage. Those are examples of national security, not the exhaustive content of it. We need to maintain a degree of flexibility in our approach, as my hon. Friends the Members for Wantage (David Johnston) and for Beckenham recognised. I appreciate that these are quite important powers, and of course they are fully justiciable under the Bill. Hon. Members can feel secure knowing that their use, including the application of national security, can be fully tested in closed courts if necessary.
The Chair of the Science and Technology Committee, my right hon. Friend the Member for Tunbridge Wells (Greg Clark), and my hon. Friend the Member for The Wrekin expressed concerns that these reforms will somehow threaten investment in small tech firms. I again remind the House that we estimate that the vast majority of transactions across the economy will not be affected by this legislation, and we do not expect to take action in relation to most of the small number that are notifiable. We will make any interactions with the Government simpler, quicker and slicker by providing clearance to most transactions within 30 days, and often quicker. Notifiable investments will be submitted through a new digital portal. At the spring Budget, the Government committed to increase public spending on R&D to £22 billion, which I think is music to the ears of many innovators in our country.
My right hon. Friend the Member for Tunbridge Wells and my hon. Friend the Member for Tonbridge and Malling (Tom Tugendhat) made the important point that the Bill does not set out a minimum size of business affected by the regime. As the Secretary of State set out, the threats we face today do not correlate to the size of the parties concerned, as they perhaps once did. This is unfortunately the world we live in. I am glad that we live in a country in which small and medium-sized businesses thrive so mightily and are often at the vanguard of cutting-edge technologies, but it is only right that the Government have flexible powers to intervene when the acquisition of such businesses may pose a risk to our national security.
My hon. Friend the Member for Isle of Wight, the hon. Member for Bristol North West (Darren Jones) and the right hon. Member for North Durham (Mr Jones) raised the issue of supply chains. The covid pandemic has demonstrated the importance of resilience in supply chains to ensure the continued flow of essential items to keep global trade moving. We have focused on ensuring supply chains for goods such as PPE. When we entered the pandemic, only 1% was manufactured in the UK; it is now about 70%. That is why we are looking at what other steps we can take to ensure that we have diverse supply chains in place. We will consider all our global supply chains to avoid shortages in the event of future crises.
My hon. Friend the Member for Tonbridge and Malling, my right hon. Friend the Member for South Holland and The Deepings and the hon. Member for Dundee East also probed the assessment process. We will make any interaction with the Government much simpler, quicker and slicker, and I am very happy to share how we are doing that.
The Chair of the BEIS Committee, the hon. Member for Bristol North West, probed our approach to sectors. It is important for the regime to reflect technological change and keep up with the investment landscape. We welcome views from across the business community on our sector consultation, and officials from across Government are already engaging with the sectors’ experts to ensure that those definitions are tight.
In the time that I have left, I want to tackle the issue of human rights. My hon. Friends the Members for Isle of Wight and for Totnes (Anthony Mangnall), and the hon. Member for Oxford West and Abingdon raised the issue of human rights, particularly in relation to Xinjiang and the Uyghur people. We take our responsibility incredibly seriously and are concerned about gross violations of human rights being perpetrated against the Uyghur Muslims and other minorities in Xinjiang. We have played a leading international role in holding China to account on these abuses and we will continue to do so through the UN and other opportunities that we have. In respect of the risk of UK business complicity in human rights violations, including forced labour, we have urged all UK businesses to conduct due diligence on their supply chains and are taking steps to strengthen supply chain transparency.
In conclusion, we have had an excellent debate today and I again thank right hon. and hon. Members for their contributions. I look forward to further probing the Bill and getting it right together in Committee.
Question put and agreed to.
Bill accordingly read a Second time.
National Security and Investment Bill (Programme)
Motion made, and Question put forthwith (Standing Order No. 83A(7)),
That the following provisions shall apply to the National Security and Investment Bill:
Committal
(1) The Bill shall be committed to a Public Bill Committee.
Proceedings in Public Bill Committee
(2) Proceedings in the Public Bill Committee shall (so far as not previously concluded) be brought to a conclusion on Tuesday 15 December 2020.
(3) The Public Bill Committee shall have leave to sit twice on the first day on which it meets.
Proceedings on Consideration and up to and including Third Reading
(4) Proceedings on Consideration and any proceedings in legislative grand committee shall (so far as not previously concluded) be brought to a conclusion one hour before the moment of interruption on the day on which proceedings on Consideration are commenced.
(5) Proceedings on Third Reading shall (so far as not previously concluded) be brought to a conclusion at the moment of interruption on that day.
(6) Standing Order No.83B (Programming committees) shall not apply to proceedings on Consideration and up to and including Third Reading.
Other proceedings
(7) Any other proceedings on the Bill may be programmed.—(David Duguid.)
Question agreed to.
National Security and Investment Bill (Money)
Queen’s recommendation signified.
Motion made, and Question put forthwith (Standing Order No. 52(1)(a)),
That, for the purposes of any Act arising from the National Security and Investment Bill, it is expedient to authorise:
(1) the payment of sums out of money provided by Parliament of any expenditure incurred under or by virtue of the Act by the Secretary of State, and
(2) the payment of sums into the Consolidated Fund.—(David Duguid.)
Question agreed to.
Botulinum Toxin and Cosmetic Fillers (Children) Bill (Money)
Business without Debate
Delegated Legislation
Delegated Legislation
18:38 - The House divided: - Ayes: 361 / Noes: 245 - Question accordingly agreed to.
Petitions
Martyn Day (Linlithgow and East Falkirk) (SNP)
I rise to present a petition on behalf of my constituents in Linlithgow and East Falkirk relating to the retirement age of prison officers, an issue I have raised on their behalf on a number of occasions before. I would like to place on the record my gratitude to the hon. Members from both sides of the House who signed my early-day motion 654 earlier in the year.
The petition, which I fully agree with, states:
The petition of residents of Linlithgow and East Falkirk,
Declares that prison officers carry out some of the hardest public service work in dangerous and often violent conditions and yet they are expected to continue to carry out this work until they are 68 years old; further that police officers can retire at 60 years old even though they do not experience the same unrelenting threatening conditions; further that people living longer does not mean their physical and mental abilities can withstand the daily demands placed on prison officers; and further that the retirement age of prison officers should be aligned with that of police officers.
The petitioners therefore request that the House of Commons urges the Government to bring down the retirement age of prison officers to 60 as 68 years of age is too old to cope with the physical and mental challenges of being a prison officer on a daily basis; and to afford prison officers more generally the same consideration as police officers, who have periodic contact with the same type of offenders.
And the petitioners remain, etc.
[P002625]
Chi Onwurah (Newcastle upon Tyne Central) (Lab)
I rise to present a petition calling for the Government to rally international condemnation of police brutality in Nigeria. The petition was instigated by the Nigerian Association, Tyne and Wear.
The petition states:
The petition of residents of the constituency of Newcastle Upon Tyne Central,
Declares that the British Government and wider international community should condemn in the strongest possible terms the Nigerian military opening fire on protesters at Lagos Lekki Toll Gate on 20 October 2020 in which there are reports that 69 people were killed, of whom 51 are believed to be civilians, 11 police officers and seven were soldiers; further declares that these people were peacefully protesting against police brutality committed by, but not limited to, the Special Anti-Robbery Squad (SARS).
The petitioners therefore request that the House of Commons urge the Government to take action to rally the international community and ensure the Nigerian Government investigates this brutal violation of human rights in full, to encourage the relevant authorities to charge officers and soldiers guilty of killing unarmed protestors, to explore sanctions on the Nigerian Government if guilty of corruption, and to provide a strong voice against corruption and violence in Nigeria.
And the petitioners remain, etc.
[P002628]
Cleveland Bridge: Weight Limit
(4 years ago)
Commons ChamberRead Full debate Read Hansard Text Read Debate Ministerial Extracts
Wera Hobhouse (Bath) (LD)
Good evening, Madam Deputy Speaker. I am very grateful to have been granted this debate on the future of Cleveland bridge, which is of high importance for my constituents in Bath. I look forward to the Minister’s full response.
Cleveland bridge is a grade II* listed structure. It forms part of the character of Bath’s UNESCO world heritage status. It is worth reminding fellow hon. and right hon. Members that Bath shares its unique status only with Venice. Not just parts of our city but the whole city and its setting are a world heritage site. The protection of the city as a whole is of national importance, and it should not just be the citizens of Bath and the council that are called on to safeguard this treasure for future generations.
There is another aspect to this debate. Bath is a city identified as suffering from illegally high levels of air pollution, and it has been ordered by the Government to bring pollution levels down to the required legal minimum. The council has worked hard to develop a strategy in response. The route with one of the highest levels of air pollution is London Road leading towards Cleveland bridge.
Cleveland bridge links the north and the south of the city over the River Avon just a short walk from the city centre and is surrounded in all directions by listed architecture. Unfortunately, it is part of the primary road network and therefore has to be open to all traffic. The bridge consists of 19th-century ironwork with a 1920s concrete deck, but the weight of modern heavy goods vehicles is shaking the bridge to bits. Heavy traffic on the A36 and the alternative A350 has been an ongoing source of tension for many residents for many years. Not only are there issues at Cleveland bridge, but just a few miles away at the village of Limpley Stoke, the A36 suffers from regular landslips. It is also true that the A350 has issues and needs better infrastructure.
In 2009, Wiltshire Council attempted to put in the Westbury bypass to improve the A350 corridor. That was supported by Bath and North East Somerset Council, but the implementation of the plan was stopped by a public inquiry in 2009. In 2012, Bath and North East Somerset Council attempted to put a weight limit on Cleveland bridge. Objections were received from Wiltshire and Highways England, leading to a judicial review. Bath and North East Somerset Council was told it could not impose a reduced weight limit of 18 tonnes.
It is of note that the 2012 ruling states that
“we are conscious of Bath and North East Somerset’s important concerns about local air quality. The Department is not, in line with PRN guidance, commenting on the air quality aims of the proposed scheme.”
Eight years on, and especially since the challenge to Government by ClientEarth, the goalposts on air quality have completely changed. It is time that the Department for Transport commented on air quality in Bath when it comes to the A4/A36 route over Cleveland bridge.
It is clear that from the south coast to the M4, there is a shortage of suitable routes to take north-south traffic. For example, routes travelling east to west move at approximately 60 mph, but north-south routes travel at 30 mph. The impact is not just about lorries going through villages, but the loss of economic activity and efficiency.
Over the past few years, Wiltshire Council, Dorset Council and Bath and North East Somerset Council have formed an alliance. They recognised that, however much investment they made as local authorities, it would not be enough to fund the improvement of any one route. Additionally, if any authority favoured a particular route, it would become politically very challenging. I thank all colleagues across those three local authorities for the work they have put in so far, working together on a complex set of circumstances.
The alliance threw the question back to the Government and asked for an economic study to take place, and the relatively simple question was: which is the best route, and how do we improve it? This is now called the strategic study and is being undertaken by Highways England as part of its road improvement strategy. Highways England and the Government now have ownership of the issue. The A350 has been selected to be looked at in-depth.
I am grateful to the Minister, Baroness Vere from the other place, for responding to me in her letter on 22 October. She wrote that the improvement strategy will review the case for adopting the A350 corridor as the main strategic route in place of the A36/A46 and will consider the case for trunking or detrunking these key roads. The study alone will take until approximately 2023 to complete and then, if adopted, the third phase of the road improvement strategy will provide the framework to implement and pay for the necessary upgrades. In the meantime, Cleveland bridge will be closed for much of next year as urgent repairs to the structure are carried out. I am grateful to the Department for Transport for making funds available.
As I said before, Cleveland bridge is a grade II* listed structure. In their 1992 report, the engineers who carried out the last set of repairs stated that they did so on the understanding that the then local authority would exclude the heaviest vehicles. That never happened. In fact, it got worse.
The challenge of a listed heritage asset is that you have to work with the structure as it is listed. You cannot replace the Victorian ironwork—because it is listed. You cannot replace the 1920s concrete deck—because it is listed. You can only repair and strengthen them, but they will never be stronger than when they were new, and when they were new, they were never expected to carry the very heavy vehicles that are being used today. The innovation of the bridge’s design, in both the early 19th and 20th centuries, is recognised in its listing, but those designs never envisaged that the bridge would be on a modern primary road network, with all that that entails.
Wera Hobhouse
Next year will see the very latest technology deployed to save the 1920s concrete structure. The danger is that bringing back the heaviest lorries will hasten the collapse of the deck, destroying the listed asset forever. With continuing heavy lorries, it is estimated that the current repairs may last for only 15 years. Therefore, without a permanent weight restriction, my concern is that while progress will be slow on an upgrade to the A350, Cleveland bridge will again be in need of urgent, serious repairs very soon. We cannot let that happen. It is absolutely essential that we set a weight limit that the bridge can sustain for the long term.
The Department for Transport has expressed its view that the A350, as the major north-south link, is a viable option, and in Bath neither I nor the council would disagree. However, the Department for Transport has not done enough so far to create a consensus among councils and MPs in the Wiltshire constituencies to take this option forward to its final completion. It would be interesting to hear from the Minister whether the Government are actually looking into any other viable options.
In the meantime, people in Bath have waited for years for a solution. So, while we are waiting, the first thing that I would like to happen is for the Department for Transport to allow Bath and North East Somerset Council to have the power of decision making over its own infrastructure and keep the current 18-tonne limit. The council does not have that power on its own.
We are looking for the Government to consent to a permanent 18-tonne weight limit on Cleveland bridge. That is my ask to the Minister. The co-operation of the Government would benefit not only the people of Bath but the whole nation, and safeguard our heritage for future generations. The impact of a weight restriction would help to reduce air pollution across the city, in line with the Government’s important aim to improve people’s health. Last but not least, it would work in tandem with the Government’s ambition to improve their strategic A350 network and the overall economic benefits to the region. I look forward to the Minister’s response.
The Parliamentary Under-Secretary of State for Transport (Rachel Maclean)
I congratulate the hon. Member for Bath (Wera Hobhouse) on securing the debate. I know that Cleveland bridge, that iconic grade II* listed structure, which she has described in great detail and very eloquently, built in 1826, is of great significance to her constituents, and indeed the nation. As she highlighted, it is a UNESCO world heritage status site.
I know that many of the hon. Lady’s constituents have contacted her about this important local issue, and she has been extremely assiduous in discussing their thoughts and concerns in more detail. I of course agree with her that the protection of Bath is of national importance, and that is why it is good to have this debate tonight.
I want to put on the record a note of thanks to the hon, Lady’s local colleagues in Bath. She references the work on the clean air zones and the strategy. My Department has very close working with Bath, and we very much appreciate and thank those people for their work taking forward that important policy.
As I am sure the hon. Lady is aware, the Government are taking action to invest to improve England’s local highway infrastructure—the dense network of local roads of which Cleveland bridge is part. We know that, without that investment in local roads, delays and disruption occur for the travelling public and businesses. I am really glad that the hon. Lady referred to that. She noted and appreciated the funding that Bath and North East Somerset Council has received from the Department for repairs to that iconic great bridge. The Department’s grant for the project is £3.56 million of a total cost of £3.92 million, and the council is providing the remaining £360,000.
The highways maintenance challenge fund enables local highway authorities to undertake major maintenance projects that are otherwise difficult to fund from the regular highways maintenance block funding allocations. Improving and maintaining our local transport infrastructure is essential for economic growth and connectivity, and Cleveland bridge is certainly no exception. As part of our wider commitments to road maintenance, the Government are committed to improving local journeys and ensuring that our local road network is safe and reliable. We are therefore investing more than £7.1 billion in highways maintenance between 2015 and 2020-21 to help councils to keep roads and vital local infrastructure, such as bridges, in good condition.
Wera Hobhouse
I thank the Minister for elaborating on the funds that are available. As I mentioned in my speech, the problem is that if the bridge continues to have heavy goods vehicles on it even after the repair, it will very quickly need repairs again. Is it not a false economy not to put a permanent weight restriction on the bridge?
Rachel Maclean
I thank the hon. Member for her questions. I assure her that I will address those points—I hope, to her satisfaction. I have a copy of her letter to the Department with me.
We know that road condition, particularly the quality of road surfaces, is a concern for all road users, so we are making more money available for major repairs and trials of new technology to help local authorities future-proof our roads.
The local enterprise partnership, the West of England Combined Authority, considers the repair of Cleveland bridge and Saint Philip’s causeway viaduct as priorities. It sees Cleveland bridge and St Philips causeway as key structures in its regional network. As the hon. Member rightly said, issues on both structures have resulted in weight and speed restrictions, which the authority considers incur significant associated economic cost. Its view is that further restrictions will have an impact on safety, the economy and air quality, with higher carbon emissions. That is why the authority is very supportive of investment prioritisation for both these schemes.
Cleveland bridge has had funds allocated to it for its repairs, but I understand that the work has not started yet. Officers at the council propose that the work should begin in May or June next year, subject to the backing of council members, some of whom share the hon. Member’s concerns about the impact of HGVs on routes through Bath if the 18-tonne weight restriction is removed when the bridge is repaired. It would be a matter for the council to decide how to go forward, but I am sure that it is listening to the debate with great interest. I encourage her to continue working closely with the council to ensure that these important works can be undertaken.
I turn to the road investment strategy, which the hon. Member also touched on in her remarks. Bath’s Cleveland bridge provides a link between the A46 and A36 roads, which approach either side of Bath. It therefore forms part of an important through route between the Dorset coast and the M4. The majority of the route is part of the strategic road network—that is, roads managed by Highways England that link our most important population centres and international gateways, such as ports and airports.
Through the setting of periodic road investment strategies, the Government set out their strategic vision for the network and specify what Highways England must deliver in terms of road enhancements and day-to-day performance. To inform the content of the strategies, the Department and Highways England develop a substantial evidence base about the network, its current performance and likely future pressures. This is a product of several years of research, analysis, public engagement and consultation. These issues are of central importance in and around the city of Bath, and any long-term solution for reducing the impact of traffic at the Cleveland bridge will need to acknowledge and respond to this sensitive and deeply valued setting in relation to the natural, built and historic environment.
The hon. Member mentioned the strategic study. In situations where there is a recognised substantial problem or gap in current transport infrastructure, the Department commissions such a study to examine the issues and consider options that could address them. The unsatisfactory nature of the A36/A46 route passing Bath has long been acknowledged. The present dualled A4/A46 trunk road, the Batheaston bypass, was opened in 1996, but proposals to link the A4 to the A36 at Bathampton were rejected following a public inquiry. I am grateful to the hon. Lady for providing a lot more detail on the history associated with that to the House.
Subsequent proposals to revisit the options at that location, promoted by the local authority in connection with proposals for an eastern park and ride site, have not resolved the issue. There is a general recognition of the substantial factors that constrain choices for making meaningful improvements. In that light, the second road investment strategy committed Highways England to carrying out such a strategic study that will review north-south connections between the M4 and the Dorset coast. That will include a review of the case for adopting the A350 corridor as the main strategic route for the area in place of the A36/A46 via Bath and will consider the case for the trunking or de-trunking of key routes. So I hope I can reassure the hon. Lady that both Highways England and officials in the Department will engage with the Western Gateway as well as with a range of local stakeholders as the study develops. I should add that decisions about how Bath is best linked to the major destinations are for the relevant local highway authority to make.
Wera Hobhouse
I thank the Minister for the detailed description of what is taking place now, but, as I said in my remarks, this will take years, and in the meantime the people of Bath have an 18-tonne weight restriction on the bridge. Why can the Department not allow Bath and North East Somerset Council to retain that limit? It will be good for the bridge, the people of Bath and our national heritage.
Rachel Maclean
I thank the hon. Lady for her questions and her persistence. I have no doubt that the relevant stakeholders, including the local highway authorities, will be listening with great interest when they come to make their deliberations on these really important issues for the people of Bath.
In closing, I have mentioned the engagement taking place, but if the hon. Lady wishes to continue more engagement here in this place and with my noble Friend Baroness Vere in the other place, who is responsible directly for this particular matter of policy, I am sure she will find a lot of reassurance that she can offer her constituents. I thank her once again for this debate.
Question put and agreed to.
Members Eligible for a Proxy Vote
Member eligible for proxy vote | Nominated proxy |
|---|---|
Ms Diane Abbott (Hackney North and Stoke Newington) (Lab) | Bell Ribeiro-Addy |
Debbie Abrahams (Oldham East and Saddleworth) (Lab) | Chris Elmore |
Nigel Adams (Selby and Ainsty) (Con) | Stuart Andrew |
Imran Ahmad Khan (Wakefield) (Con) | Stuart Andrew |
Nickie Aiken (Cities of London and Westminster) (Con) | Stuart Andrew |
Peter Aldous (Waveney) (Con) | Stuart Andrew |
Rushanara Ali (Bethnal Green and Bow) (Lab) | Chris Elmore |
Tahir Ali (Birmingham, Hall Green) (Lab) | Chris Elmore |
Lucy Allan (Telford) (Con) | Mark Spencer |
Dr Rosena Allin-Khan (Tooting) (Lab) | Chris Elmore |
Mike Amesbury (Weaver Vale) (Lab) | Chris Elmore |
Sir David Amess (Southend West) (Con) | Stuart Andrew |
Fleur Anderson (Putney) (Lab) | Chris Elmore |
Lee Anderson (Ashfield) (Con) | Mark Spencer |
Stuart Anderson (Wolverhampton South West) (Con) | Stuart Andrew |
Caroline Ansell (Eastbourne) (Con) | Stuart Andrew |
Tonia Antoniazzi (Gower) (Lab) | Chris Elmore |
Edward Argar (Charnwood) (Con) | Stuart Andrew |
Sarah Atherton (Wrexham) (Con) | Stuart Andrew |
Victoria Atkins (Louth and Horncastle) (Con) | Stuart Andrew |
Mr Richard Bacon (South Norfolk) (Con) | Stuart Andrew |
Kemi Badenoch (Saffron Walden) (Con) | Stuart Andrew |
Siobhan Baillie (Stroud) (Con) | Stuart Andrew |
Steve Barclay (North East Cambridgeshire) (Con) | Stuart Andrew |
Hannah Bardell (Livingston) (SNP) | Patrick Grady |
Mr John Baron (Basildon and Billericay) (Con) | Stuart Andrew |
Simon Baynes (Clwyd South) (Con) | Stuart Andrew |
Margaret Beckett (Derby South) (Lab) | Chris Elmore |
Scott Benton (Blackpool South) (Con) | Stuart Andrew |
Sir Paul Beresford (Mole Valley) (Con) | Stuart Andrew |
Jake Berry (Rossendale and Darwen) (Con) | Stuart Andrew |
Clive Betts (Sheffield South East) (Lab) | Chris Elmore |
Saqib Bhatti (Meriden) (Con) | Stuart Andrew |
Mhairi Black (Paisley and Renfrewshire South) (SNP) | Patrick Grady |
Ian Blackford (Ross, Skye and Lochaber) (SNP) | Patrick Grady |
Bob Blackman (Harrow East) (Con) | Stuart Andrew |
Kirsty Blackman (Aberdeen North) (SNP) | Patrick Grady |
Olivia Blake (Sheffield, Hallam) (Lab) | Chris Elmore |
Paul Blomfield (Sheffield Central) (Lab) | Chris Elmore |
Crispin Blunt (Reigate) (Con) | Stuart Andrew |
Mr Peter Bone (Wellingborough) (Con) | Stuart Andrew |
Steven Bonnar (Coatbridge, Chryston and Bellshill) (SNP) | Patrick Grady |
Andrew Bowie (West Aberdeenshire and Kincardine) (Con) | Stuart Andrew |
Tracy Brabin (Batley and Spen) (Lab/Co-op) | Chris Elmore |
Ben Bradley (Mansfield) (Con) | Stuart Andrew |
Mr Ben Bradshaw (Exeter) (Lab) | Chris Elmore |
Suella Braverman (Fareham) (Con) | Stuart Andrew |
Kevin Brennan (Cardiff West ) (Lab) | Chris Elmore |
Andrew Bridgen (North West Leicestershire) (Con) | Stuart Andrew |
Steve Brine (Winchester) (Con) | William Wragg |
Sara Britcliffe (Hyndburn) (Con) | Stuart Andrew |
Deidre Brock (Edinburgh North and Leith) (SNP) | Patrick Grady |
James Brokenshire (Old Bexley and Sidcup) (Con) | Stuart Andrew |
Alan Brown (Kilmarnock and Loudon) (SNP) | Patrick Grady |
Ms Lyn Brown (West Ham) (Lab) | Chris Elmore |
Chris Bryant (Rhondda) (Lab) | Chris Elmore |
Ms Karen Buck (Westminster North) (Lab) | Chris Elmore |
Robert Buckland (South Swindon) (Con) | Stuart Andrew |
Alex Burghart (Brentwood and Ongar) (Con) | Stuart Andrew |
Richard Burgon (Leeds East) (Lab) | Bell Ribeiro-Addy |
Conor Burns (Bournemouth West) (Con) | Stuart Andrew |
Dawn Butler (Brent Central) (Lab) | Bell Ribeiro-Addy |
Ian Byrne (Liverpool, West Derby) (Lab) | Chris Elmore |
Liam Byrne (Birmingham, Hodge Hill) (Lab) | Chris Elmore |
Ruth Cadbury (Brentford and Isleworth) (Lab) | Chris Elmore |
Alun Cairns (Vale of Glamorgan) (Con) | Stuart Andrew |
Amy Callaghan (East Dunbartonshire) (SNP) | Patrick Grady |
Dr Lisa Cameron (East Kilbride, Strathaven and Lesmahagow) (SNP) | Patrick Grady |
Mr Gregory Campbell (East Londonderry) (DUP) | Gavin Robinson |
Andy Carter (Warrington South) (Con) | Stuart Andrew |
James Cartlidge (South Suffolk) (Con) | Stuart Andrew |
Sir William Cash (Stone) (Con) | Stuart Andrew |
Miriam Cates (Penistone and Stocksbridge) (Con) | Stuart Andrew |
Alex Chalk (Cheltenham) (Con) | Stuart Andrew |
Sarah Champion (Rotherham) (Lab) | Chris Elmore |
Douglas Chapman (Dunfermline and West Fife) (SNP) | Patrick Grady |
Joanna Cherry (Edinburgh South West) (SNP) | Patrick Grady |
Jo Churchill (Bury St Edmunds) (Con) | Stuart Andrew |
Feryal Clark (Enfield North) (Lab) | Chris Elmore |
Mr Simon Clarke (Middlesbrough South and East Cleveland) (Con) | Stuart Andrew |
Theo Clarke (Stafford) (Con) | Stuart Andrew |
Brendan Clarke-Smith (Bassetlaw) (Con) | Stuart Andrew |
Chris Clarkson (Heywood and Middleton) (Con) | Stuart Andrew |
James Cleverly (Braintree) (Con) | Stuart Andrew |
Dr Thérèse Coffey (Suffolk Coastal) (Con) | Stuart Andrew |
Damian Collins (Folkestone and Hythe) (Con) | Stuart Andrew |
Daisy Cooper (St Albans) (LD) | Wendy Chamberlain |
Rosie Cooper (West Lancashire) (Lab) | Chris Elmore |
Jeremy Corbyn (Islington North) (Ind) | Bell Ribeiro-Addy |
Alberto Costa (South Leicestershire) (Con) | Stuart Andrew |
Claire Coutinho (East Surrey) (Con) | Stuart Andrew |
Ronnie Cowan (Inverclyde) (SNP) | Patrick Grady |
Geoffrey Cox (Torridge and West Devon) (Con) | Stuart Andrew |
Angela Crawley (Lanark and Hamilton East) (SNP) | Patrick Grady |
Stella Creasy (Walthamstow) (Lab) | Chris Elmore |
Virginia Crosbie (Ynys Môn) (Con) | Stuart Andrew |
Tracey Crouch (Chatham and Aylesford) (Con) | Rebecca Harris |
Jon Cruddas (Dagenham and Rainham) (Lab) | Chris Elmore |
John Cryer (Leyton and Wanstead) (Lab) | Chris Elmore |
Judith Cummins (Bradford South) (Lab) | Chris Elmore |
Alex Cunningham (Stockton North) (Lab) | Chris Elmore |
Janet Daby (Lewisham East) (Lab) | Chris Elmore |
James Daly (Bury North) (Con) | Stuart Andrew |
Ed Davey (Kingston and Surbiton) (LD) | Wendy Chamberlain |
Gareth Davies (Grantham and Stamford) (Con) | Stuart Andrew |
Geraint Davies (Swansea West) (Lab/Co-op) | Chris Evans |
Mims Davies (Mid Sussex) (Con) | Stuart Andrew |
Alex Davies-Jones (Pontypridd) (Lab) | Chris Elmore |
Mr David Davis (Haltemprice and Howden) (Con) | Stuart Andrew |
Martyn Day (Linlithgow and East Falkirk) (SNP) | Patrick Grady |
Thangam Debbonaire (Bristol West) (Lab) | Chris Elmore |
Marsha De Cordova (Battersea) | Rachel Hopkins |
Mr Tanmanjeet Singh Dhesi (Slough) (Lab) | Chris Elmore |
Caroline Dinenage (Gosport) (Con) | Stuart Andrew |
Miss Sarah Dines (Derbyshire Dales) (Con) | Stuart Andrew |
Martin Docherty-Hughes (West Dunbartonshire) (SNP) | Patrick Grady |
Michelle Donelan (Chippenham) (Con) | Stuart Andrew |
Dave Doogan (Angus) (SNP) | Patrick Grady |
Allan Dorans (Ayr, Carrick and Cumnock) (SNP) | Patrick Grady |
Ms Nadine Dorries (Mid Bedfordshire) (Con) | Stuart Andrew |
Steve Double (St Austell and Newquay) (Con) | Stuart Andrew |
Peter Dowd (Bootle) (Lab) | Chris Elmore |
Oliver Dowden (Hertsmere) (Con) | Stuart Andrew |
Richard Drax (South Dorset) (Con) | Stuart Andrew |
Jack Dromey (Birmingham, Erdington) (Lab) | Chris Elmore |
Mrs Flick Drummond (Meon Valley) (Con) | Stuart Andrew |
James Duddridge (Rochford and Southend East) (Con) | Stuart Andrew |
Rosie Duffield (Canterbury) (Lab) | Chris Elmore |
Philip Dunne (Ludlow) (Con) | Stuart Andrew |
Ms Angela Eagle (Wallasey) (Lab) | Chris Elmore |
Maria Eagle (Garston and Halewood) (Lab) | Chris Elmore |
Mark Eastwood (Dewsbury) (Con) | Stuart Andrew |
Ruth Edwards (Rushcliffe) (Con) | Stuart Andrew |
Julie Elliott (Sunderland Central) (Lab) | Chris Elmore |
Michael Ellis (Northampton North) (Con) | Stuart Andrew |
Mrs Natalie Elphicke (Dover) (Con) | Stuart Andrew |
Florence Eshalomi (Vauxhall) (Lab/Co-op) | Chris Elmore |
Bill Esterson (Sefton Central) (Lab) | Chris Elmore |
George Eustice (Camborne and Redruth) (Con) | Stuart Andrew |
Dr Luke Evans (Bosworth) (Con) | Stuart Andrew |
Sir David Evennett (Bexleyheath and Crayford) (Con) | Stuart Andrew |
Michael Fabricant (Lichfield) (Con) | Stuart Andrew |
Laura Farris (Newbury) (Con) | Stuart Andrew |
Stephen Farry (North Down) (Alliance) | Wendy Chamberlain |
Marion Fellows (Motherwell and Wishaw) (SNP) | Patrick Grady |
Margaret Ferrier (Rutherglen and Hamilton West) (Ind) | Jonathan Edwards |
Katherine Fletcher (South Ribble) (Con) | Stuart Andrew |
Stephen Flynn (Aberdeen South) (SNP) | Patrick Grady |
Vicky Ford (Chelmsford) (Con) | Stuart Andrew |
Kevin Foster (Torbay) (Con) | Stuart Andrew |
Yvonne Fovargue (Makerfield) (Lab) | Chris Elmore |
Dr Liam Fox (North Somerset) (Con) | Stuart Andrew |
Vicky Foxcroft (Lewisham, Deptford) (Lab) | Chris Elmore |
Mary Kelly Foy (City of Durham) (Lab) | Bell Ribeiro-Addy |
Mr Mark Francois (Rayleigh and Wickford) (Con) | Stuart Andrew |
Lucy Frazer (South East Cambridgeshire) (Con) | Stuart Andrew |
George Freeman (Mid Norfolk) (Con) | Bim Afolami |
Marcus Fysh (Yeovil) (Con) | Stuart Andrew |
Sir Roger Gale (North Thanet) (Con) | Stuart Andrew |
Mark Garnier (Wyre Forest) (Con) | Stuart Andrew |
Ms Nusrat Ghani (Wealden) (Con) | Stuart Andrew |
Nick Gibb (Bognor Regis and Littlehampton) (Con) | Stuart Andrew |
Patricia Gibson (North Ayrshire and Arran) (SNP) | Patrick Grady |
Jo Gideon (Stoke-on-Trent Central) (Con) | Stuart Andrew |
Preet Kaur Gill (Birmingham, Edgbaston) (Lab/Co-op) | Chris Elmore |
Dame Cheryl Gillan (Chesham and Amersham) (Con) | Stuart Andrew |
John Glen (Salisbury) (Con) | Stuart Andrew |
Mary Glindon (North Tyneside) (Lab) | Chris Elmore |
Mr Robert Goodwill (Scarborough and Whitby) (Con) | Stuart Andrew |
Michael Gove (Surrey Heath) (Con) | Stuart Andrew |
Mrs Helen Grant (Maidstone and The Weald) (Con) | Stuart Andrew |
Peter Grant (Glenrothes) (SNP) | Patrick Grady |
Neil Gray (Airdrie and Shotts) (SNP) | Patrick Grady |
Chris Grayling (Epsom and Ewell) (Con) | Stuart Andrew |
Damian Green (Ashford) (Con) | Stuart Andrew |
Kate Green (Stretford and Urmston) (Lab) | Chris Elmore |
Lilian Greenwood (Nottingham South) (Lab) | Chris Elmore |
Margaret Greenwood (Wirral West) (Lab) | Chris Elmore |
Andrew Griffith (Arundel and South Downs) (Con) | Stuart Andrew |
Jonathan Gullis (Stoke-on-Trent North) (Con) | Stuart Andrew |
Andrew Gwynne (Denton and Reddish) (Lab) | Chris Elmore |
Robert Halfon (Harlow) (Con) | Rebecca Harris |
Luke Hall (Thornbury and Yate) (Con) | Stuart Andrew |
Fabian Hamilton (Leeds North East) (Lab) | Chris Elmore |
Stephen Hammond (Wimbledon) ( Con) | Stuart Andrew |
Matt Hancock (West Suffolk) (Con) | Stuart Andrew |
Greg Hands (Chelsea and Fulham) (Con) | Stuart Andrew |
Claire Hanna (Belfast South) (SDLP) | Ben Lake |
Neale Hanvey (Kirkcaldy and Cowdenbeath) (SNP) | Patrick Grady |
Emma Hardy (Kingston upon Hull West and Hessle) (Lab) | Chris Elmore |
Ms Harriet Harman (Camberwell and Peckham) (Lab) | Chris Elmore |
Simon Hart (Carmarthen West and South Pembrokeshire) (Con) | Stuart Andrew |
Sir John Hayes (South Holland and The Deepings) (Con) | Stuart Andrew |
Sir Oliver Heald (North East Hertfordshire) (Con) | Stuart Andrew |
James Heappey (Wells) (Con) | Stuart Andrew |
Chris Heaton-Harris (Daventry) (Con) | Stuart Andrew |
Gordon Henderson (Sittingbourne and Sheppey) (Con) | Stuart Andrew |
Sir Mark Hendrick (Preston) (Lab/Co-op) | Chris Elmore |
Drew Hendry (Inverness, Nairn, Badenoch and Strathspey) (SNP) | Patrick Grady |
Mike Hill (Hartlepool) (Lab) | Chris Elmore |
Damian Hinds (East Hampshire) (Con) | Stuart Andrew |
Simon Hoare (North Dorset) (Con) | Stuart Andrew |
Wera Hobhouse (Bath) (LD) | Wendy Chamberlain |
Dame Margaret Hodge (Barking) (Lab) | Chris Elmore |
Mrs Sharon Hodgson (Washington and Sunderland West) (Lab) | Chris Elmore |
Kate Hollern (Blackburn) (Lab) | Chris Elmore |
Adam Holloway (Gravesham) (Con) | Maria Caulfield |
Sir George Howarth (Knowsley) (Lab) | Chris Elmore |
John Howell (Henley) (Con) | Stuart Andrew |
Paul Howell (Sedgefield) (Con) | Stuart Andrew |
Nigel Huddleston (Mid Worcestershire) (Con) | Stuart Andrew |
Dr Neil Hudson (Penrith and The Border) (Con) | Stuart Andrew |
Jane Hunt (Loughborough) (Con) | Stuart Andrew |
Jeremy Hunt (South West Surrey) (Con) | Stuart Andrew |
Rupa Huq (Ealing Central and Acton) (Lab) | Chris Elmore |
Imran Hussain (Bradford East) (Lab) | Bell Ribeiro-Addy |
Mr Alister Jack (Dumfries and Galloway) (Con) | Stuart Andrew |
Christine Jardine (Edinburgh West) (LD) | Wendy Chamberlain |
Dan Jarvis (Barnsley Central) (Lab) | Chris Elmore |
Mr Ranil Jayawardena (North East Hampshire) (Con) | Stuart Andrew |
Mark Jenkinson (Workington) (Con) | Stuart Andrew |
Andrea Jenkyns (Morley and Outwood) (Con) | Stuart Andrew |
Robert Jenrick (Newark) (Con) | Stuart Andrew |
Dr Caroline Johnson (Sleaford and North Hykeham) (Con) | Stuart Andrew |
Dame Diana Johnson (Kingston upon Hull North) (Lab) | Chris Elmore |
Gareth Johnson (Dartford) (Con) | Stuart Andrew |
Darren Jones (Bristol North West) (Lab) | Chris Elmore |
Fay Jones (Brecon and Radnorshire( (Con) | Stuart Andrew |
Gerald Jones (Merthyr Tydfil and Rhymney) (Lab) | Chris Elmore |
Mr Marcus Jones (Nuneaton) (Con) | Stuart Andrew |
Ruth Jones (Newport West) (Lab) | Chris Elmore |
Sarah Jones (Croydon Central) (Lab) | Chris Elmore |
Mike Kane (Wythenshawe and Sale East) (Lab) | Chris Elmore |
Daniel Kawczynski (Shrewsbury and Atcham) (Con) | Stuart Andrew |
Alicia Kearns (Rutland and Melton) (Con) | Stuart Andrew |
Gillian Keegan (Chichester) (Con) | Stuart Andrew |
Barbara Keeley (Worsley and Eccles South) (Lab) | Chris Elmore |
Liz Kendall (Leicester West) (Lab) | Chris Elmore |
Afzal Khan (Manchester, Gorton) (Lab) | Chris Elmore |
Sir Greg Knight (East Yorkshire) (Con) | Stuart Andrew |
Julian Knight (Solihull) (Con) | Stuart Andrew |
Kwasi Kwarteng (Spelthorne) (Con) | Stuart Andrew |
Peter Kyle (Hove) (Lab) | Chris Elmore |
Mr David Lammy (Tottenham) (Lab) | Chris Elmore |
John Lamont (Berwickshire, Roxburgh and Selkirk) (Con) | Stuart Andrew |
Mrs Pauline Latham (Mid Derbyshire) (Con) | Mr William Wragg |
Ian Lavery (Wansbeck) (Lab) | Bell Ribeiro-Addy |
Chris Law (Dundee West) (SNP) | Patrick Grady |
Andrea Leadsom (South Northamptonshire) (Con) | Stuart Andrew |
Sir Edward Leigh (Gainsborough) (Con) | Stuart Andrew |
Ian Levy (Blyth Valley) (Con) | Stuart Andrew |
Andrew Lewer (Northampton South) (Con) | Stuart Andrew |
Brandon Lewis (Great Yarmouth) (Con) | Stuart Andrew |
Dr Julian Lewis (New Forest East) (Ind) | Stuart Andrew |
Clive Lewis (Norwich South) (Lab) | Chris Elmore |
Mr Ian Liddell-Grainger (Bridgwater and West Somerset) (Con) | Stuart Andrew |
Tony Lloyd (Rochdale) (Lab) | Chris Elmore |
Carla Lockhart (Upper Bann) (DUP) | Sir Jeffrey Donaldson |
Chris Loder (West Dorset) (Con) | Robbie Moore |
Mark Logan (Bolton North East) (Con) | Stuart Andrew |
Rebecca Long Bailey (Salford and Eccles) (Lab) | Bell Ribeiro-Addy |
Marco Longhi (Dudley North) (Con) | Stuart Andrew |
Julia Lopez (Hornchurch and Upminster) (Con) | Stuart Andrew |
Jack Lopresti (Filton and Bradley Stoke) (Con) | Stuart Andrew |
Mr Jonathan Lord (Woking) (Con) | Stuart Andrew |
Caroline Lucas (Brighton, Pavilion) (Green) | Bell Ribeiro-Addy |
Holly Lynch (Halifax) (Lab) | Chris Elmore |
Kenny MacAskill (East Lothian) (SNP) | Patrick Grady |
Kerry McCarthy (Bristol East) (Lab) | Chris Elmore |
Karl MᶜCartney (Lincoln) (Con) | Stuart Andrew |
Andy McDonald (Middlesbrough) (Lab) | Chris Elmore |
Stewart Malcolm McDonald (Glasgow South) (SNP) | Patrick Grady |
Stuart C. McDonald (Cumbernauld, Kilsyth and Kirkintilloch East) (SNP) | Patrick Grady |
John McDonnell (Hayes and Harlington) (Lab) | Bell Ribeiro-Addy |
Mr Pat McFadden (Wolverhampton South East) (Lab) | Chris Elmore |
Conor McGinn (St Helens North) (Lab) | Chris Elmore |
Alison McGovern (Wirral South) (Lab) | Chris Elmore |
Craig Mackinlay (South Thanet) (Con) | Stuart Andrew |
Catherine McKinnell (Newcastle upon Tyne North) (Lab) | Chris Elmore |
Cherilyn Mackrory (Truro and Falmouth) (Con) | Stuart Andrew |
Anne McLaughlin (Glasgow North East) (SNP) | Patrick Grady |
Rachel Maclean (Redditch) (Con) | Stuart Andrew |
Jim McMahon (Oldham West and Royton) (Lab) | Chris Elmore |
Anna McMorrin (Cardiff North) (Lab) | Chris Elmore |
John Mc Nally (Falkirk) (SNP) | Patrick Grady |
Angus Brendan MacNeil (Na h-Eileanan an Iar) (SNP) | Patrick Grady |
Stephen McPartland (Stevenage) (Con) | Stuart Andrew |
Khalid Mahmood (Birmingham, Perry Barr) (Lab) | Chris Elmore |
Shabana Mahmood (Birmingham, Ladywood) (Lab) | Chris Elmore |
Alan Mak (Havant) (Con) | Stuart Andrew |
Kit Malthouse (North West Hampshire) (Con) | Stuart Andrew |
Julie Marson (Hertford and Stortford) (Con) | Stuart Andrew |
Rachael Maskell (York Central) (Lab) | Chris Elmore |
Mrs Theresa May (Maidenhead) (Con) | Stuart Andrew |
Ian Mearns (Gateshead) (Lab) | Bell Ribeiro-Addy |
Mark Menzies (Fylde) (Con) | Stuart Andrew |
Johnny Mercer (Plymouth, Moor View) (Con) | Stuart Andrew |
Huw Merriman (Bexhill and Battle) (Con) | Stuart Andrew |
Stephen Metcalfe (South Basildon and East Thurrock) (Con) | Stuart Andrew |
Edward Miliband (Doncaster North) (Lab) | Chris Elmore |
Mrs Maria Miller (Basingstoke) (Con) | Stuart Andrew |
Amanda Milling (Cannock Chase) (Con) | Stuart Andrew |
Nigel Mills (Amber Valley) (Con) | Stuart Andrew |
Navendu Mishra (Stockport) (Lab) | Kim Johnson |
Mr Andrew Mitchell (Sutton Coldfield) (Con) | Stuart Andrew |
Carol Monaghan (Glasgow North West) | Patrick Grady |
Layla Moran (Oxford West and Abingdon) (LD) | Wendy Chamberlain |
Penny Mordaunt (Portsmouth North) (Con) | Mark Spencer |
Anne Marie Morris (Newton Abbot) (Con) | Stuart Andrew |
David Morris (Morecambe and Lunesdale) (Con) | Stuart Andrew |
Grahame Morris (Easington) (Lab) | Chris Elmore |
Joy Morrissey (Beaconsfield) (Con) | Stuart Andrew |
Wendy Morton (Aldridge-Brownhills) (Con) | Stuart Andrew |
Dr Kieran Mullan (Crewe and Nantwich) (Con) | Tom Hunt |
Holly Mumby-Croft (Scunthorpe) (Con) | Stuart Andrew |
David Mundell (Dumfriesshire, Clydesdale and Tweeddale) (Con) | Stuart Andrew |
Ian Murray (Edinburgh South) (Lab) | Chris Elmore |
James Murray (Ealing North) (Lab/Co-op) | Chris Elmore |
Mrs Sheryll Murray (South East Cornwall) (Con) | Stuart Andrew |
Andrew Murrison (South West Wiltshire) (Con) | Stuart Andrew |
Lisa Nandy (Wigan) (Lab) | Chris Elmore |
Sir Robert Neill (Bromley and Chislehurst) (Con) | Stuart Andrew |
Gavin Newlands (Paisley and Renfrewshire North) (SNP) | Patrick Grady |
Lia Nici (Great Grimsby) (Con) | Stuart Andrew |
John Nicolson (Ochil and South Perthshire) (SNP) | Patrick Grady |
Caroline Nokes (Romsey and Southampton North) (Con) | Stuart Andrew |
Jesse Norman (Hereford and South Herefordshire) (Con) | Stuart Andrew |
Neil O’Brien (Harborough) (Con) | Stuart Andrew |
Brendan O’Hara (Argyll and Bute) (SNP) | Patrick Grady |
Dr Matthew Offord (Hendon) (Con) | Rebecca Harris |
Guy Opperman (Hexham) (Con) | Stuart Andrew |
Abena Oppong-Asare (Erith and Thamesmead) (Lab) | Chris Elmore |
Kate Osamor (Edmonton) (Lab/Co-op) | Rachel Hopkins |
Kate Osborne (Jarrow) (Lab) | Bell Ribeiro-Addy |
Kirsten Oswald (East Renfrewshire) (SNP) | Patrick Grady |
Taiwo Owatemi (Coventry North West) (Lab) | Chris Elmore |
Sarah Owen (Luton North) (Lab) | Chris Elmore |
Ian Paisley (North Antrim) (DUP) | Paul Girvan |
Mr Owen Paterson (North Shropshire) (Con) | Stuart Andrew |
Sir Mike Penning (Hemel Hempstead) (Con) | Stuart Andrew |
John Penrose (Weston-super-Mare) (Con) | Stuart Andrew |
Andrew Percy (Brigg and Goole) (Con) | Stuart Andrew |
Jess Phillips (Birmingham, Yardley) (Lab) | Chris Elmore |
Chris Philp (Croydon South) (Con) | Stuart Andrew |
Dr Dan Poulter (Central Suffolk and North Ipswich) (Con) | Stuart Andrew |
Rebecca Pow (Taunton Deane) (Con) | Stuart Andrew |
Lucy Powell (Manchester Central) (Lab/Co-op) | Chris Elmore |
Victoria Prentis (Banbury) (Con) | Stuart Andrew |
Mark Pritchard (The Wrekin) (Con) | Stuart Andrew |
Jeremy Quin (Horsham) (Con) | Stuart Andrew |
Will Quince (Colchester) (Con) | Stuart Andrew |
Yasmin Qureshi (Bolton South East) (Lab) | Chris Elmore |
Dominic Raab (Esher and Walton) (Con) | Stuart Andrew |
Angela Rayner (Ashton-under-Lyne) (Lab) | Chris Elmore |
Steve Reed (Croydon North) (Lab/Co-op) | Chris Elmore |
Christina Rees (Neath) (Lab) | Chris Elmore |
Ellie Reeves (Lewisham West and Penge) (Lab) | Chris Elmore |
Rachel Reeves (Leeds West) (Lab) | Chris Elmore |
Nicola Richards (West Bromwich East) (Con) | Stuart Andrew |
Ms Marie Rimmer (St Helens South and Whiston) (Lab) | Chris Elmore |
Rob Roberts (Delyn) (Con) | Stuart Andrew |
Mr Laurence Robertson (Tewkesbury) (Con) | Stuart Andrew |
Mary Robinson (Cheadle) (Con) | Stuart Andrew |
Matt Rodda (Reading East) (Lab) | Chris Elmore |
Andrew Rosindell (Romford) (Con) | Rebecca Harris |
Douglas Ross (Moray) (Con) | Stuart Andrew |
Dean Russell (Watford) (Con) | Stuart Andrew |
Lloyd Russell-Moyle (Brighton, Kemptown) (Lab/Co-op) | Chris Elmore |
Gary Sambrook (Birmingham, Northfield) (Lab) | Stuart Andrew |
Selaine Saxby (North Devon) (Con) | Stuart Andrew |
Paul Scully (Sutton and Cheam) (Con) | Stuart Andrew |
Bob Seely (Isle of Wight) (Con) | Stuart Andrew |
Andrew Selous (South West Bedfordshire) (Con) | Rebecca Harris |
Naz Shah (Bradford West) (Lab) | Chris Elmore |
Grant Shapps (Welwyn Hatfield) (Con) | Stuart Andrew |
Alok Sharma (Reading West) (Con) | Stuart Andrew |
Mr Virendra Sharma (Ealing, Southall) (Lab) | Chris Elmore |
Mr Barry Sheerman (Huddersfield) (Lab/Co-op) | Chris Elmore |
Alec Shelbrooke (Elmet and Rothwell) (Con) | Stuart Andrew |
Tommy Sheppard (Edinburgh East) (SNP) | Patrick Grady |
Tulip Siddiq (Hampstead and Kilburn) (Lab) | Chris Elmore |
David Simmonds (Ruislip, Northwood and Pinner) (Con) | Stuart Andrew |
Chris Skidmore (Kingswood) (Con) | Stuart Andrew |
Andy Slaughter (Hammersmith) (Lab) | Chris Elmore |
Alyn Smith (Stirling) (SNP) | Patrick Grady |
Chloe Smith (Norwich North) (Con) | Stuart Andrew |
Henry Smith (Crawley) (Con) | Stuart Andrew |
Nick Smith (Blaenau Gwent) (Lab) | Chris Elmore |
Royston Smith (Southampton, Itchen) (Con) | Stuart Andrew |
Karin Smyth (Bristol South) (Lab) | Chris Elmore |
Amanda Solloway (Derby North) (Con) | Stuart Andrew |
Alexander Stafford (Rother Valley) (Con) | Stuart Andrew |
Chris Stephens (Glasgow South West) (SNP) | Patrick Grady |
Andrew Stephenson (Pendle) (Con) | Stuart Andrew |
Jo Stevens (Cardiff Central) (Lab) | Chris Elmore |
Jane Stevenson (Wolverhampton North East) (Con) | Stuart Andrew |
Bob Stewart (Beckenham) (Con) | Stuart Andrew |
Iain Stewart (Milton Keynes South) (Con) | Stuart Andrew |
Jamie Stone (Caithness, Sutherland and Easter Ross) (LD) | Wendy Chamberlain |
Sir Gary Streeter (South West Devon) (Con) | Stuart Andrew |
Wes Streeting (Ilford North) (Lab) | Chris Elmore |
Mel Stride (Central Devon) (Con) | Stuart Andrew |
Graham Stuart (Beverley and Holderness) (Con) | Stuart Andrew |
Julian Sturdy (York Outer) (Con) | Stuart Andrew |
Zarah Sultana (Coventry South) (Lab) | Bell Ribeiro-Addy |
Sam Tarry (Ilford South) (Lab) | Chris Elmore |
Alison Thewliss (Glasgow Central) (SNP) | Patrick Grady |
Derek Thomas (St Ives) (Con) | Stuart Andrew |
Gareth Thomas (Harrow West) (Lab/Co-op) | Chris Elmore |
Emily Thornberry (Islington South and Finsbury) (Lab) | Chris Elmore |
Edward Timpson (Eddisbury) (Con) | Stuart Andrew |
Kelly Tolhurst (Rochester and Strood) (Con) | Stuart Andrew |
Justin Tomlinson (North Swindon) (Con) | Stuart Andrew |
Craig Tracey (North Warwickshire) (Con) | Stuart Andrew |
Anne-Marie Trevelyan (Berwick-upon-Tweed) (Con) | Stuart Andrew |
Jon Trickett (Hemsworth) (Lab) | Bell Ribeiro-Addy |
Laura Trott (Sevenoaks) (Con) | Stuart Andrew |
Elizabeth Truss (South West Norfolk) (Con) | Stuart Andrew |
Karl Turner (Kingston upon Hull East) (Lab) | Chris Elmore |
Mr Shailesh Vara (North West Cambridgeshire) (Con) | Stuart Andrew |
Martin Vickers (Cleethorpes) (Con) | Stuart Andrew |
Matt Vickers (Stockton South) (Con) | Tom Hunt |
Mr Robin Walker (Worcester) (Con) | Stuart Andrew |
Mr Ben Wallace (Wyre and Preston North) | Stuart Andrew |
Dr Jamie Wallis (Bridgend) (Con) | Stuart Andrew |
David Warburton (Somerton and Frome) (Con) | Stuart Andrew |
Matt Warman (Boston and Skegness) (Con) | Stuart Andrew |
Suzanne Webb (Stourbridge) (Con) | Stuart Andrew |
Claudia Webbe (Leicester East) (Ind) | Bell Ribeiro-Addy |
Catherine West (Hornsey and Wood Green) (Lab) | Chris Elmore |
Helen Whately (Faversham and Mid Kent) (Con) | Stuart Andrew |
Mrs Heather Wheeler (South Derbyshire) (Con) | Stuart Andrew |
Dr Philippa Whitford (Central Ayrshire) (SNP) | Patrick Grady |
Craig Whittaker (Calder Valley) (Con) | Stuart Andrew |
John Whittingdale (Malden) (Con) | Stuart Andrew |
Nadia Whittome (Nottingham East) (Lab) | Chris Elmore |
Craig Williams (Montgomeryshire) (Con) | Stuart Andrew |
Hywel Williams (Arfon) (PC) | Ben Lake |
Gavin Williamson (Montgomeryshire) (Con) | Stuart Andrew |
Munira Wilson (Twickenham) (LD) | Wendy Chamberlain |
Beth Winter (Cynon Valley) (Lab) | Rachel Hopkins |
Pete Wishart (Perth and North Perthshire) (SNP) | Patrick Grady |
Mike Wood (Dudley South) (Con) | Stuart Andrew |
Mohammad Yasin (Bedford) (Lab) | Chris Elmore |
Jacob Young (Redcar) (Con) | Stuart Andrew |
Nadhim Zahawi (Stratford-on-Avon) (Con) | Stuart Andrew |
Draft Audiovisual Media Services (Amendment) (Eu Exit) Regulations 2020
(4 years ago)
General CommitteesRead Full debate Read Hansard Text Read Debate Ministerial Extracts
The Minister for Media and Data (Mr John Whittingdale)
I beg to move,
That the Committee has considered the draft Audiovisual Media Services (Amendment) (EU Exit) Regulations 2020.
It is a pleasure to serve under your chairmanship, Mr Stringer, and I welcome my colleagues.
The statutory instrument, which was laid in both Houses on 15 October, is being made under the European Union (Withdrawal) Act 2018. The regulations remedy certain failures of retained EU law arising from the withdrawal of the United Kingdom from the European Union. Through the SI, we are seeking to maintain but not to expand Ofcom’s remit to regulate video-sharing platform services. It is necessary to do so to ensure that the law remains operable beyond the end of the transition period.
The EU’s audiovisual media services directive, which is known as the AVMS directive, governs the co-ordination of national legislation on audiovisual media services. The directive was initially implemented into UK law in 2010, primarily by way of amendments to existing broadcasting legislation. The directive was subsequently revised by the EU in 2018. The regulations 2020, which transpose the revised AVMS directive, were made and laid in Parliament on 30 September. Those regulations came into force on 1 November, and introduced for the first time rules for video-sharing platform services. The Government have appointed Ofcom as the regulator for those services. The new rules ensure that platforms falling within UK jurisdiction have appropriate systems and processes to protect the public, including minors, from illegal and harmful material.
Three key requirements were placed on VSPs under the AVMSD regulations 2020, namely to take appropriate measure to protect minors from content harmful to those under 18; to take appropriate measures to protect the general public from harmful and certain illegal content; and to introduce standards on advertising. I should also like to draw the Committee’s attention to the report from the Secondary Legislation Scrutiny Committee, which considered the SI. I thank it for its work.
I should like to address some of the concerns about jurisdiction before explaining how the SI links to UK policy goals. Under the revised the AVMS directive, currently each EU member state and the UK are only responsible for regulating the VSPs that fall within their respective jurisdiction. The directive sets out technical rules governing when a platform falls within a country’s jurisdiction: there should be a physical presence of a platform, or a group undertaking of the platform in the country. Where there is a physical presence in more than one country, jurisdiction is decided on the basis of factors such as whether the platform is established and whether the platform’s main economic activity is centred in that country. There will be only one country which has jurisdiction for each platform at any one time.
Through the SI we are seeking to maintain the same position for Ofcom’s remit beyond the end of the transition period. The remit allows Ofcom to regulate VSPs established in the UK and additionally regulate platforms that have a physical presence in the UK but not in any other country covered by the AVMS directive. Although Ofcom’s remit will not be extended to include platforms established elsewhere in the EU, we believe that UK users will indirectly benefit from the EU’s regulation platforms under the AVMS directive. The regulation under the regime is systems regulation, and not content regulation. We therefore expect that as platforms based outside of the UK set up and invest in the systems, they comply with the AVMS regulations.
In the absence of the SI, Ofcom would no longer be able to regulate any VSPs, which would result in an unacceptable regulatory gap. Our approach also mitigates the small risk that a VSP offering services to countries covered by the AVMS directive but not in the UK would establish itself in the UK to circumvent EU law. Ofcom will continue to actively engage with its regulatory counter- parts in Europe after the end of the transition period regarding the determination of jurisdiction, co-operation and consistency.
The Government have always been clear that we intend to introduce legislation that will keep people safe online while protecting freedom of expression and recognising the invaluable role of a free press. The regulations align with UK policy goals and commitments to put in place protection for users, while paving the way for the upcoming online harms regulatory regime. Given that the online harms regulatory framework shares broadly the same objectives as the VSP regime, it is the Government’s intention that the regulation of VSPs in the UK will be superseded by the online harms legislation, once the latter comes into force. Further details on the plans for that legislation will be set out in the full Government response to the consultation on the White Paper, which is due to be published later this year, with draft legislation ready in early 2021. I commend the regulations to the Committee.
Chi Onwurah (Newcastle upon Tyne Central) (Lab)
It is a pleasure to serve under your chairship, Mr Stringer. I thank the Minister for his opening remarks. I declare an interest; as the Minister is aware, before I entered Parliament, I spent six years working for Ofcom as head of technology. Ofcom had responsibility for regulating broadcast audiovisual services and some responsibility for online audiovisual media services at a time when they were beginning to grow in importance, not always legally it must be said.
Online audiovisual media services were then nowhere near as widespread or as important as they have since become. They have been especially critical during these pandemic months. Of those, video-sharing platforms, or VSPs, which are the focus of the SI, have become a major presence in the lives of many in this country. VSPs are online services that enable users to upload and share videos with members of the public. Popular VSPs such as YouTube and Facebook allow users to engage with a large range of content. They have been of especially critical importance in recent months, although sometimes for worrying reasons. September saw the highest number of public reports of suspected child sexual abuse material ever received in a single month by the Internet Watch Foundation. The National Crime Agency estimates that there are at least 300,000 individuals in the UK who pose a sexual threat to children through contact abuse or online. On TikTok, the hashtag ‘#vaccinesaredangerous’ has had almost 800,000 views, with almost no mis- information warnings. Given that we hope to see a vaccine distributed very soon, the importance of appropriate action on misinformation is clear. Online advertising continues to be rampant on social media, and much of it is weakly regulated in terms of the protection offered to children in particular. The scale, speed and range of possible harms and misinformation facilitated through VSPs are vast. Yet, there is an acute sense of what those very platforms can offer for good—just ask the millions of school and university students who have continued to learn throughout the pandemic with the aid of online educational videos and video-based social engagement. I know many parents in particular who are very grateful to Joe Wicks stepping up to take on the role of the nation’s PE teacher during lockdown.
Done right, and regulated well, VSPs can be a boost to wellbeing, social engagement, education and business, and I am a big believer in technology’s positive impact on the world, especially well-regulated technology’s positive impact. As the Minister said, today’s SI is a seemingly narrow fix for deficiencies in the AVMS directive and the audiovisual media services regulations in the light of the UK’s withdrawal from the EU. It aims to define the scope of businesses that will be under UK jurisdiction for VSP regulation beyond the transition period—the end of the year, and sets the precise date of the end of the transition period for broadcasting regulation.
On jurisdiction, the SI maintains existing thinking on jurisdictional scope as being based on effectively country of origin principles. A VSP will come under UK jurisdiction if it has the required connection with the UK, the terms of which are narrow and limited to the two cases. First, a VSP will come under UK jurisdiction if it has a fixed establishment in the UK and the centre of its economic activity relating to the relevant service is based in the UK and not in another EU member state. Secondly, if the VSP is not established in the UK and no EU member state has jurisdiction over it, it will come under UK jurisdiction if the VSP has a group undertaking established in the UK. That seemingly narrow fix has wide implications and major deficiencies. It does not remedy failings in jurisdiction nor does it provide a level playing field for online and offline video services, and it does not protect our citizens from harmful content.
The scope of jurisdiction is the central issue relating to effective regulation. The SI continues to require a measure of establishment in the UK, and not in a EU member state, for a VSP to be under the UK’s regulatory scope. The SI has been introduced in accordance with the European Union (Withdrawal) Act 2018, which is intended, as I am sure the Minister would agree, to deliver British control of laws to Britain. Analysis commissioned by the Government themselves, however, suggests that under the existing ‘establishment’ test, continued under the SI, the largest VSPs—YouTube, Facebook, Instagram, dailymotion and Twitter—are outside of the UK’s regulatory scope. Many of those platforms will be under Irish and broader European jurisdiction. From my engagement with the media and technology industry, I know that that arrangement is deeply insufficient for the protection of our citizens and for the provision of a level playing field for British innovators. Fundamentally, it fails to retain, or regain, British regulatory sovereignty. Industry concerns mirror my concerns for child and public protection.
Given the millions of British children and members of public who use VSPs and seek protection from harm, what assurance can the Minister provide to suggest that his regulatory regime will protect them, especially when the Government are handing regulatory control to the EU? Looking beyond the immediate horizon, how does he intend to bring the largest VSPs under effective UK regulatory scope? Under his watch, he has taken back control on VSP regulation, only to give it right back again.
The SI is an incomplete plug to address a policy vacuum on VSP regulation. It is accompanied by temporary guidance from Ofcom on the VSP regulatory obligations, which will be supplemented by further detailed guidance introduced next year. As the Minister said, both sets of guidance will be replaced by an online harms Bill, which he told us to expect next year. That Bill has been expected imminently just about every week in this year, and further reassurances that it is on its way is hardly sufficient at this time.
Between now and the publication of next year’s final guidance, Ofcom has said that it will
‘prioritise only the most serious potential breaches’.
Why will the UK leave the transition period with no distinct regulation of grave harms that might be suffered by UK citizens? We urgently need an assurance from the Minister that the policy and enforcement vacuum will not endanger the wellbeing of citizens who use online VSP services. When will we have legislation to address that policy hole so that our citizens will be protected from online harms? When will the online harms Bill be brought before Parliament?
Video-sharing platforms continue to profit from content that is harmful and, in some cases, illegal. Online advertising, which the Minister mentioned, drives the VSP business model, and that of the content providers, for example, influencers. That advertising is almost entirely unregulated by statute and that obviously places television companies at a disadvantage, given that their advertising is regulated. It also has implications for our democracy as political advertising is also unregulated online. When will the Minister introduce the appropriate regulation of online advertising? Has any assessment been made of the uncertainty created for media businesses as a result of the Government’s constant policy catch-up? At the heart of this, when does he intend to fill the gaping gulf between regulation and the Government’s constant catch-up?
Although the SI poses pressing questions about risk and regulation, there are also persisting questions about long-term policy direction. At the fore of that, we will need a VSP regulatory regime that is effective at home and aligned with policy abroad, especially as we diverge from European legislation. That provides some scope for regulatory standards that offer robust protection to British citizens, but it also creates a need to ensure continuity, clarity and consistency for businesses. How does the Minister plan to ensure ongoing alignment with Europe on VSP regulation?
It is worth noting that the online harms Bill is a response to a two-year-old consultation, but the pace of technology, social change and the impact of covid-19 will make some of the consultation’s conclusions either obsolete or inadequate in the face of future threats. It would be nice to have a forward-looking regulatory regime as opposed to a backward one. Has the Minister consulted consumer groups and relevant VSPs to ensure the creation of a thought-through policy that is domestically effective and internationally aligned for the UK regulation of VSPs? I fear that the voice of consumer groups is unheard; the big tech companies have many lobbyists and excessive profits to pay for them. In this debate the voice of the consumer and the citizen is not as loud as that of the big tech companies.
The Government have been a static spectator as the debate on and the reality of VSPs’ online harms have passed them by. It is deeply concerning that Ministers are failing on such a matter. That failure places businesses in uncertainty, blocks innovation and gives away British regulatory sovereignty, but most of all, it threatens our children and members of the public from unchecked harms, misinformation and unregulated advertising. Despite that ongoing failure, the Government are still playing catch-up and are only now bringing in an SI on VSP regulation beyond the transition period, when there is barely less than a month before that period ends. And even then, they are introducing an SI that merely continues a highly imperfect scenario, in which British regulators cannot regulate to protect British consumers of VSP services. We deserve much better from our Government.
The Opposition will not oppose the SI because we do not think that the Government could now respond quickly enough to fill the gaps in regulation that the SI’s failings will leave. I note that the Minister is smiling, but he must take seriously the deficiencies in our regulatory framework that are left unaddressed by the SI. I hope that he can assure us that the Government will finally wake up and deliver effective regulation against harms, misinformation and unregulated advertising on VSP through immediate additional legislation.
Mr Whittingdale
I was smiling simply because after the catalogue of failure and disaster that the hon. Lady recounted in describing the SI, she then said that the Opposition will not oppose it, which obviously I welcome very much.
Chi Onwurah
I must say as respectfully as I can that there are many catalogues of disaster and inadequacy in the Government’s legislative framework, so we are not, unfortunately, able to address each of them given the time that remains before the end of the transition period.
Mr Whittingdale
Nevertheless, I welcome the Opposition’s decision not to vote against the SI.
I agree with a number of the points raised by the hon. Lady. She is right that particularly in the past few months, when, sadly, so many people have been forced to remain at home, the internet generally, but VSPs in particular have become a much greater feature of people’s lives. I have been known to watch and even go along with Mr Wicks, although that may be hard for some to believe, but I have done so, as have many in this country. Educational provision online, as well as entertainment, have been really important in getting us through this.
The hon. Lady is right that although VSPs and the internet generally offer a lot of benefit, there are harmful aspects, which the Government are keen to address. We share her concern about the rising reports of the number of incidents of child abuse online, and we are determined to tackle that. She will be aware that the Secretary of State recently had a meeting with the big platforms to discuss how to address the problem of anti-vaccine misinformation. I am pleased that the platforms have agreed to take action to ensure that nobody can profit from such material, and to remove it as quickly as possible.
Things are going on, but this particular set of regulations is, as the hon. Lady knows, required under the terms of the withdrawal Act, because the regulations were introduced during the transition period, and therefore we are required to put them into UK law. We believe that they are important in that they ensure that Ofcom has full responsibility for regulating VSPs. She is right that the regulations do not go far enough, and that there are certain deficiencies. She specifically highlighted the issue of jurisdiction. Because the regulations are derived from a new directive it is not surprising that the force of that directive is to impose EU regulations. Ofcom, as currently the regulator within scope of the regulations, regulates those platforms that are established in the UK, and those platforms that are established elsewhere in the EU are regulated by the relevant country regulator there.
The hon. Lady mentioned in particular TikTok. It is an interesting one because it is established in China, but it does have a presence in quite a number of EU countries. At the moment, it is not yet been determined which country should have responsibility for the EU regulation of TikTok, but undoubtedly one of the member states will have that role.
The hon. Lady spoke about how the regulations do not take back control and how we are still subject to EU regulation. At the end of the transition period, we will no longer be bound by the decisions of regulators elsewhere in Europe. At the moment we recognise that in each case the EU regulates the platforms or providers in a particular country, and we trust it to do that. That will not be the case after the transition period comes to an end, and we will be introducing further legislation, as the hon. Lady said. Under that legislation, Ofcom will have responsibility for the regulation of all those providing services into the UK. That will go further than the scope of the existing AVMS regulations. To that extent, the regulations we are debating are a stopgap. They are intended to ensure that the European standard of regulation continues to apply after the end of the transition period, but we intend to go further and to ensure that any platforms that are providing content to UK consumers come within the scope the UK regulatory regime.
That will be achieved through the online harms Bill. The hon. Lady has drawn attention to the fact that that legislation is some time in the coming, and she is right to that extent. I would simply say that it is absolutely essential that we get it right. She pointed out that this is an area where technology is developing very fast, and we need to ensure that legislation is forward-looking and can take account of future developments. It is vital that we put in place a regulatory regime that protects vulnerable people, young people particularly, from illegal and harmful content. At the same time, we want to be very conscious not to inhibit the growth of technology companies and innovation in the digital sector, which the Government are keen to encourage. Equally, we need to safeguard freedom of speech, freedom of expression and to provide proper safeguards to ensure that professional journalistic content is not caught up in the regulatory regime.
The Government are determined to meet those objectives. It is still the case that the Government will be publishing a response to the consultation paper very shortly, and that we will be introducing draft legislation next year. The hon. Lady referred to the need to consult, and I can promise her that we are already consulting widely, and will continue to do so. I have regular discussions with all the various stakeholders, as does my colleague the Minister for Digital and Culture. Consumer groups will certainly have the opportunity to make their voice known.
Although I recognise the hon. Lady’s unhappiness that this SI is a mere EU regulation that does not go as far as she would like and, indeed, as we would like, I can reassure that we will be bringing forward UK legislation to establish a pioneering UK regime very shortly. On that basis, I invite the Committee to approve the regulations.
Question put and agreed to.
Draft European Union (Withdrawal) Act 2018 (Relevant Court) (Retained EU Case Law) Regulations 2020
(4 years ago)
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The Committee divided: - Ayes: 8 / Noes: 2 - Question accordingly agreed to.
The Parliamentary Under-Secretary of State for Justice (Alex Chalk)
I beg to move,
That the Committee has considered the draft European Union (Withdrawal) Act 2018 (Relevant Court) (Retained EU Case Law) Regulations 2020.
It is a pleasure to serve under your chairmanship, Sir Christopher.
The instrument before the Committee relates to the question of which courts should be able to depart from retained EU case law. From January, our courts, rather than the Court of Justice of the European Union, will be the final arbiter of laws that govern lives in the United Kingdom. In order to promote legal clarity and certainty in our law following our departure from the EU, Parliament has provided that the EU law we have chosen to retain is to be interpreted in line with EU case law that we have also chosen to retain.
The way in which our law is interpreted by our courts and tribunals does not remain static over time. Our departure from the EU has naturally brought with it a change in the context in which the law is considered, and we would want our courts to be able to reflect that in their decisions where appropriate. Without the ability to depart from EU case law, there is a risk that EU law that has been retained in UK law remains tied to an old interpretation—an interpretation that is arguably no longer appropriate. In that way, the law can become fossilised or ossified. For that reason, the European Union (Withdrawal) Act 2018 vested in the United Kingdom Supreme Court, and Scotland’s High Court of Justiciary in specified cases, the power to depart from retained EU case law, applying their own test for deciding whether to depart from their own case law when doing so.
The instrument will extend the number of UK courts that have the power to depart from retained EU case law to include courts at the Court of Appeal level across the UK. It sets out that in making such decisions the test to be applied by those courts is to be the same as that applied by the United Kingdom Supreme Court in deciding whether to depart from its own case law, namely whether it is right to do so.
The instrument will achieve our aim of enabling retained EU case law to evolve in a more timely way than otherwise might have been achieved through the status quo. It will also help to mitigate the operational impacts on the UK Supreme Court and the High Court of Justiciary in Scotland that would have arisen had the power to depart from retained EU case law been reserved solely to those courts. It will further assist those courts by providing prior judicial dialogue on those complex cases from the Court of Appeal level.
In short, the provisions will balance achieving sufficient certainty with allowing appropriate flexibility. It may be worth my spending a moment just to explain what is meant by retained EU case law. That case law is defined in the 2018 Act as, broadly, any principles and decisions of the Court of Justice of the European Union, as they have effect in EU law prior to the end of the transition period. That includes those cases that were referred to the Court of Justice of the European Union by the UK, as well as those referred by other member states. That is a vast and complex body of case law, which spans across many different areas of law—environmental law, employment law, commercial law and many others.
As I have set out, the principle that British courts should be able to depart from retained EU case law has already been decided in Parliament, vesting the power to do so in the Supreme Court and the High Court of Justiciary in Scotland, where it is the final court of appeal. In amending the 2018 Act through the European Union (Withdrawal Agreement) Act 2020, however, Parliament also provided the power to make regulations to extend the list of courts that may depart from retained EU case law, to set the test to be applied by those courts and to specify any consideration that courts with the power to depart from retained EU case law should take into account in coming to such decisions.
This instrument extends the list of courts that can depart from retained EU case law to courts at the Court of Appeal level across the UK. The full list of courts is: first, the Court of Appeal of England and Wales; secondly, the Court Martial Appeal Court; thirdly, the Court of Appeal of Northern Ireland; fourthly, the High Court of Justiciary when sitting as a court of appeal in relation to a compatibility issue or a devolution issue; fifthly, the Inner House of the Court of Session of Scotland; sixthly, the Lands Valuation Appeal Court in Scotland; and seventhly, the Registration Appeal Court in Scotland.
The instrument also sets out that the test to be applied by those additional courts when deciding whether to depart from retained EU case law will be the same test used by the UK Supreme Court in deciding whether to depart from its own case law, namely, as I have already said, where it is right to do so. That test is well established and as a result is capable of being easily understood and applied without any further guidance. It is anticipated that applying the same test as that used by the Supreme Court will enable a consistent approach across the jurisdictions and in turn on appeal to the Supreme Court. There is a wealth of case law underpinning the Supreme Court’s test that has evolved over time to ensure that courts take into account changing circumstances and modern public policy.
Although the powers under which the instrument is made enable a list of factors to be specified for consideration by any court with the power to depart from retained EU case law, the Government have decided against that approach. In applying the Supreme Court’s own test in deciding whether to depart from retained EU case law, the courts will consider the principles set out in the House of Lords Practice Statement, which has been in operation since 1966, as well as the wealth of factors set out in judgments of the Supreme Court on the interpretation of its own test.
The instrument does not change the operation of the doctrine of precedent, which practically speaking, as hon. Members will know, means that when a court reaches a decision on whether to depart from retained EU case law, that judgment has the same precedent status as other judgments from that court. In other words, what matters is the rank of the court rather than the underlying material. As required in statute, the Government have consulted the President of the UK Supreme Court, the Lord Chief Justice of England and Wales, the Senior President of Tribunals, the Lord President of the Court of Session, the Lord Chief Justice of Northern Ireland, and others. That consultation, which was also extended to the devolved Administrations, as well as to representatives across the legal services sector, businesses and other organisations, and was open to the public, ran from 2 July to 13 August. The Government’s response to the consultation was published on 15 October.
That consultation sought views on whether to extend the power to depart from retained EU case law to the Court of Appeal and its equivalents across the UK, or to the High Court and its UK equivalents. Having considered the responses fully, the consultation response set out the Government’s decision to extend the power to depart from retained EU case law to seven additional Court of Appeal level courts listed in this instrument, as this option, as I have already said, strikes the appropriate balance between enabling retained EU case law to evolve more quickly where appropriate, and providing legal clarity and certainty.
It also assists in managing the operational impact by ensuring that cases are considered in a timely way. Giving additional courts the power to depart from retained EU case law avoids the two highest courts across the UK receiving high numbers of cases that would be likely to take considerably longer to resolve, which is not in the interests of the parties to those proceedings or indeed those with an interest in their outcome. Furthermore, by extending the power to this list of additional courts, we can mitigate the impact of potentially large volumes of divergent decisions both within and across the UK jurisdictions, as decisions of these courts are binding on themselves and courts below, as well as being persuasive across the UK’s three legal systems.
An impact assessment has been published alongside the consultation response. Any impact is heavily dependent on litigant behaviour in bringing proceedings seeking a departure from retained EU case law and of course the outcome of that litigation. However, based on the qualitative assessment, we assess that any impact from an increase of case volumes as a result of this instrument is manageable at the Court of Appeal level, and helps mitigate pressure on the Supreme Court.
The instrument enables our courts to be better able to consider whether to depart from retained EU case law than the status quo provided in the 2018 Act. Providing the seven specified courts with the ability to depart from retained EU case law will allow timely evolution of our case law, relieve pressure on the UK Supreme Court and avoid our case law becoming ossified. We are taking an approach that balances the importance of legal clarity and certainty with a need for the law to evolve with changing circumstances.
Alex Cunningham (Stockton North) (Lab)
It is a pleasure to serve under your chairmanship on a particularly dull afternoon, Sir Christopher. I hope that my speech will not be too dull.
The Opposition try to work with the Government to help us prepare for the end of the transition period. I am not the only one who has been content with brief speeches and decisions not to oppose the Government’s plans in many areas. Sadly, we are in a very different place with this statutory instrument.
As the Minister said, the European Union (Withdrawal) Act 2018 sets out the legal framework following our departure from the EU, after the end of the transition period on 31 December 2020 – a mere six weeks away. The aim of the 2018 Act is to provide much needed legal certainty in our domestic law, following Brexit. That is something that we welcome. As the Minister said, the 2018 Act sets out, among other things, which pieces of EU case law are to be retained in our domestic law, and how those laws are to be interpreted by our courts. As things stand, the 2018 Act gives the UK Supreme Court and the High Court of Justiciary in Scotland the power to depart from retained EU case law if those courts consider that it is right to do so. The provisions of the SI would extend the power to depart from retained EU case law to the Court of Appeal of England and Wales, as well as to other courts of appeal.
On 2 July 2020, the Government launched a consultation on whether that extension would be the right thing to do, and the Minister referred to it. In total, there were 75 responses to the consultation ranging from members of the judiciary to trade unions. Almost half of the responses received were from members of the legal services sector. The responses are quite startling. When respondents were asked whether the power to depart from retained EU case law should be extended, as the Government wish, beyond the UK Supreme Court, almost 60% of respondents were clear that it should not. When respondents were asked what positives would come from extending the power to the Court of Appeal, as proposed by the Government, only 9%— 9%, Sir Christopher—of respondents said that doing so would
‘strike the right balance between legal certainty and the evolution of law’.
Even fewer respondents—only 8%—agreed with the Government’s assertion that extending the power of the Court of Appeal would reduce pressure on the UK Supreme Court.
On the other hand, let us look at what respondents thought would be the negative impact of taking the decision. Some 37% of respondents said that extending the power of the Court of Appeal would introduce an element of uncertainty into UK law; 16% said that it would be an inappropriate constitutional change; and 24% said that it would lead to an overall increase in court workloads, when our court system is already on its knees as a result of the pandemic. That prompts the question, with such negative feedback, why are the Government so keen to pursue this action?
What is the point of holding a consultation just to ignore the very clear message of those who have responded? Both the Bar Council and the Law Society have also expressed a strong preference for the power to depart from retained EU case law to be reserved only to the Supreme Court and the High Court of Justiciary in Scotland. In its response to the proposed changes, the Law Society made its view very clear and said
‘the power to depart from retained caselaw should not be extended to UK courts…beyond the Supreme Court’.
It went on to say
‘any change from this position would constitute a major shift in the administration of justice’
which could
‘result in a lack of legal certainty through the emergence of novel judgements that are either not bringing on other courts or are inconsistent with precedent.’
Those serious concerns cannot be overlooked.
Granting the power to depart from retained EU case law to lower courts is likely to encourage litigation by parties who hope to overturn an earlier judgment that relied on EU case law, and subsequently will increase the volume of cases. That will inevitably put additional pressure on the courts, which are already facing a significant backlog at this time. The Minister mentioned the behaviour of litigants, and how the success of the instrument will rely on that. Well, I do not know whether he can really trust that people will not start to follow the route I have described.
It was not just the legal sector that opposed the move, the unions also expressed their opposition. The Government’s response to the consultation makes it clear that the unions are hugely concerned about the impact that a mass departure from retained EU case law would have on workers’ rights. The response notes that the unions were clear that the Government should not go ahead with the plan as it would undermine the doctrine of precedent and cause
‘significant uncertainty and disruption to both employers and employees.’
But this is not just about the professionals and the impact on workers’ rights. The proposals could have an impact on all areas of law—competition law, state aid, trade, agriculture, employment and intellectual property. And the Minister outlined other sectors of the law. Given all those areas of law, to attempt to overcome adopted established EU case law could result in our courts being overworked with all manner of weird and wonderful cases to deal with.
We accept that the courts should have the power to divert from EU case law vested in UK law, but that power should remain exclusively with the Supreme Court. I invite the Minister to address all the concerns expressed by the legal profession and the trade unions in particular. Will he outline why he believes the professionals are wrong in their concerns and how justice will be properly protected? Can he outline what the Government plan to do to ensure that the courts under the Supreme Court are able to operate effectively in the areas covered by the SI, and to ensure that the changes do not simply result in increased litigation and, ultimately, even more appeals to the Supreme Court?
We know that the Government have always been keen to stress how important workers’ rights are to Ministers and how workers have nothing to fear from a departure from EU law, which has in the past enhanced and better protected those rights. What reassurances can the Minister give to trade unions that their fears are unfounded, and that workers’ rights will not be compromised as result of the changes proposed today? We will wait and see, but I cannot see how the Minister can justify all the changes brought in by the SI. We have tried to work with the Government, and even help them to get the necessary secondary legislation in place in all manner of areas for use after the transition period. On this occasion, we are also trying to help, but as the proposed regulations stand, we will oppose them.
Alex Chalk
I am grateful to the hon. Member for Stockton North for his remarks; let me try to address some of his concerns.
The hon. Gentleman referred to the responses to the consultation but did not advert to the fact that a number of those who responded said that they did not want to have any opportunity at all to depart from EU retained case law. We think that would not only strike the wrong balance but would hide-bound British justice in a way that would not serve the interests of anyone in society. Plainly, there must be the opportunity for the courts to depart, the only question is which seniority of court should be able to do so. We quite accept that there is a balance to strike—a balance between ensuring that there is legal certainty and clarity which is important for litigants and those who want to advise them and ensuring that there is the necessary flexibility so that we can evolve, adjust and adapt.
The hon. Gentleman also failed to mention that of those who responded and engaged with the central question, namely, and I paraphrase, ‘Do you want this to extend to the Court of Appeal or beyond to the High Court?’, the overwhelming majority said the Court of Appeal, and that is precisely what we are doing.
The hon. Gentleman’s central point, and again I paraphase, is ‘Look, we should simply stick with the Supreme Court.’ But if he pauses to reflect on the implications of that, the very point he made about access to justice—I concede that that is a proper concern—is inhibited by retaining the power within the Supreme Court. How many individuals can credibly make their way to get a judgment from the Supreme Court? Not many. For the poor old Supreme Court to be left with the entirety of the work would be no service to it either. It would be much better for it to have had some of the legal points considered by the Court of Appeal, which brings to bear some of the finest legal expertise one will find anywhere in the world, and thereafter in appropriate cases for the Supreme Court to engage. If we leave it all to the Supreme Court, I respectfully suggest that is not necessarily particularly good for the overall quality of justice, and it makes justice inaccessible.
The third and final point is this: the hon. Gentleman’s proposal risks absurdity. If the European Court of Justice itself revisits its own case law, as it is able to do, perhaps in respect of employment law or environmental safeguards, and decides to have a different interpretation of regulations, directives and such, under his proposal of our in effect not making any changes ever, British courts would not be able to turn round and say, ‘Well, that looks like a jolly sensible new interpretation; we will apply it here in the UK.’ Our courts would be hamstrung in a way that, I respectfully suggest, would not be good for justice or access to justice.
The hon. Gentleman said that the trade unions have concerns and he referred to a ‘mass departure’ from retained EU law. Again, that misrepresents the position. If we had given the power to Cheltenham magistrates court to depart from retained EU case law, I would quite accept his point. But we are not giving that power to the magistrates court, the county court, the Crown court or even the High Court, but instead to the Court of Appeal. I hope that he recognises that that is a very senior court, and I should also make it clear that the equivalent courts to which I referred bind themselves with the doctrine of precedent.
The hon. Gentleman argued that the SI undermines the doctrine of precedent. On the contrary, it cements and reinforces that doctrine. That is the principle which underpins the provisions. It strikes the right balance between certainty and agility. I commend the draft instrument to the Committee.
Question put,
Electoral Commission
(4 years ago)
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The Leader of the House of Commons (Mr Jacob Rees-Mogg)
I beg to move,
That the Committee has considered the motion, That an humble Address be presented to Her Majesty, praying that Her Majesty will re-appoint Dame Susan Bruce DBE as an Electoral Commissioner with effect from 1 January 2021 for the period ending on 31 December 2023; and Dame Elan Closs Stephens DBE as an Electoral Commissioner with effect from 13 March 2021 for the period ending on 12 March 2025.
May I say what a pleasure it is to serve under your chairmanship, Ms Eagle? It is the first time I have ever had the privilege.
The Speaker’s Committee on the Electoral Commission has produced a report, its fourth of 2020, in relation to this motion. It may help if I set out the key points for the record. Electoral commissioners are appointed under the Political Parties, Elections and Referendums Act 2000, as amended by the Political Parties and Elections Act 2009. Under the 2000 Act, the Speaker’s committee has a responsibility to oversee the selection of candidates for appointment to the Electoral Commission, including the re-appointment of commissioners.
Dame Susan Bruce’s four-year term as the electoral commissioner with special responsibility for Scotland comes to an end on 31 December. Dame Elan Closs Stephens’ four-year term as commissioner with special responsibility for Wales comes to an end on 12 March 2021. Sir John Holmes, the chairman of the Electoral Commission, wrote to Mr Speaker in February asking the Speaker’s committee to consider whether to re-appoint Dame Susan Bruce for a further term of three years and Dame Elan Closs Stephens for a further term of four years.
Sir John provided the Speaker’s committee with appraisals of the commissioners’ performance. He described Dame Susan as
“an effective and valuable Commissioner, bringing a lot of experience of electoral processes through her previous roles in local government in Scotland, and a lot of knowledge of the political scene in Scotland”.
He also referred to Dame Susan’s role chairing the commission’s audit committee. Sir John said that Dame Elan had been
“a hard-working and committed Commissioner over the last three years, and has contributed a great deal at a time of great electoral change in Wales”.
He also noted Dame Elan’s service as a member of the commission’s audit committee. The Speaker’s committee consulted the Presiding Officer of the Scottish Parliament about Dame Susan’s re-appointment and the Presiding Officer of the Welsh Assembly about that of Dame Elan. Having considered this feedback and Sir John’s appraisal, it agreed to recommend the two commissioners for re-appointment.
Once the Speaker’s committee has reached a decision, statute requires that the proposed appointment or re-appointment be the subject of consultation with the registered leader of each registered party to which two or more Members of the House of Commons then belong. The statutory consultation provides an opportunity for the party leaders to comment, but they are not required to do so. No objections to these candidates were received in response to the consultation. If the re-appointments are made, Dame Susan will continue to serve as an electoral commissioner until the end of 2023 and Dame Elan until March 2025. I hope the re-appointments will have the support of the Committee and ultimately the House.
Jessica Morden (Newport East) (Lab)
May I, too, say what a pleasure it is to serve under your chairmanship, Ms Eagle?
I thank the Leader of the House for today’s motion on the re-appointment of the electoral commissioners for Scotland and Wales, Dame Susan Bruce and Dame Elan Closs Stephens. Mr Speaker has consulted with the Leader of the Opposition about these re-appointments and no objections were received, so we are happy to support them today. As the Leader of the House said, both candidates were recommended for re-appointment by the Speaker’s Committee on the Electoral Commission.
Dame Susan Bruce has a long record of service in local government. She is currently the electoral commissioner with responsibility for Scotland and her current term ends on 31 December. We, too, note that Sir John Holmes, chair of the Electoral Commission, told the committee that Dame Susan had been
“an effective and valuable Commissioner, bringing a lot of experience of electoral processes through her previous roles in local government in Scotland”,
and noted her
“knowledge of the political scene in Scotland”.
Turning to Dame Elan Closs Stephens, I declare an interest, as I was on the interview panel when we unanimously recommended her appointment as electoral commissioner for Wales back in 2017. As a representative of a Welsh constituency, I can say that she is very well known and respected, and has held a number of positions in Wales and has a speciality in cultural and broadcasting policy. She has been the electoral commissioner for Wales since March 2017, and her term ends on 12 March 2021. We, too, note that Sir John Holmes, chair of the Electoral Commission, wrote to Mr Speaker saying that she had been
“a hard-working and committed Commissioner over the last three years, and has contributed a great deal at a time of great electoral change in Wales”.
Her Majesty’s Opposition therefore have great pleasure in supporting Dame Susan Bruce as electoral commissioner for Scotland with effect from 1 January 2021 and Dame Elan Closs Stephens as electoral commissioner for Wales until 12 March 2025.
Question put and agreed to.
Ministerial Correction
Work and Pensions
(4 years ago)
Ministerial CorrectionsRead Full debate Read Hansard Text Read Debate Ministerial Extracts
Justin Tomlinson
The unit is the eyes and ears of disability issues across Government, making sure that disability issues are embedded in policy development. It is personally supported by the Prime Minister, which makes my job much, much easier. Disability issues are brought up at Cabinet and in interministerial groups, where I get to instruct other Ministers about their importance. We are an asset across Government, because we spend—I in particular spend—a huge amount of time on stakeholder engagement. In the past seven days, just as part of my ongoing work, I have met representatives of all the national charities that have been mentioned in the speeches today. I enjoy talking to people with real lived experience, and we then flag up that experience with the relevant Department if it is not DWP, and it makes a tangible difference.
[Official Report, 15 October 2020, Vol. 682, c. 235WH.]
Letter of correction from the Minister for Disabled People, Health and Work, the hon. Member for North Swindon (Justin Tomlinson):
An error has been identified in my response to the debate on a disability-inclusive response to covid-19.
The correct response should have been:
Justin Tomlinson
The unit is the eyes and ears of disability issues across Government, making sure that disability issues are embedded in policy development. It is personally supported by the Prime Minister, which makes my job much, much easier. Disability issues are brought up at Cabinet and in interministerial groups, where I get to instruct other Ministers about their importance. We are an asset across Government, because we spend—I in particular spend—a huge amount of time on stakeholder engagement. In the past few weeks, just as part of my ongoing work, I have met numerous national charities that have been mentioned in the speeches today. I enjoy talking to people with real lived experience, and we then flag up that experience with the relevant Department if it is not DWP, and it makes a tangible difference.
Environment Bill (Sixteenth sitting)
Tuesday 17th November 2020
(4 years ago)
Public Bill CommitteesRead Full debate Environment Act 2021 View all Environment Act 2021 Debates Read Hansard Text Read Debate Ministerial Extracts Amendment Paper: Public Bill Committee Amendments as at 17 November 2020 - (17 Nov 2020)
The Committee divided: - Ayes: 5 / Noes: 9 - Question accordingly negatived.
The Committee divided: - Ayes: 5 / Noes: 10 - Question accordingly negatived.
The Chair
I welcome hon. Members back to line-by-line consideration of the Environment Bill. I particularly welcome the hon. Member for Ynys Môn, who joins our Committee for the first time.
Clause 75
Water resources management plans, drought plans and joint proposals
Dr Alan Whitehead (Southampton, Test) (Lab)
I beg to move amendment 9, in clause 75, page 66, line 11, leave out “may” and insert “must”.
We start this morning with an amendment relating to clause 75. It will not be a surprise to any member of the Committee. The suggestion is to replace the word “may” in the line under the heading “Plans and joint proposals: regulations about procedure”. Proposed new section 39F of the Water Industry Act 1991 states:
“The Minister may by regulations make provision about the procedure for preparing and publishing—
(a) a water resources management plan,
(b) a drought plan, and
(c) a joint proposal”.
It seems to the Opposition that it is very important that these things—a management plan, drought plan and joint proposal—are actually published and that provision is made about the procedure for publishing them. That is a central part of this clause.
As we have said in this Committee previously, no aspersions are cast in any direction concerning the present intentions of Ministers, but I remind the Committee that we are making legislation for a very long time and that there might conceivably be circumstances in which Ministers less well inclined towards the process light upon this clause and decide that it is not really so important that regulations are made, hence we think that the word “must” should be inserted in the Bill.
We have pointed on a number of occasions to the lack of “musts” in the Bill. I think that this is one of the more important ones and I hope that the Minister, even if she is not prepared to consider a number of the other “musts”, will have laid by a little store of sympathy for this “must” proposal, because it relates, as I think she would agree, to a very important feature of this clause.
Fleur Anderson (Putney) (Lab)
I would like to add to the argument about the fact that this legislation will stand for a long time. Even the fact that clause 75 amends the Water Industry Act 1991 is a reminder to us of how long we expect this legislation to be in force and people to be acting on it accordingly. The Water Industry Act became law 29 years ago and we are still discussing it, and how we will amend it, now. Many years from now, we will still be discussing this legislation, and therefore it is so important to get it right. That is why a “must” instead of a “may” is very important, especially in this clause.
This amendment seeks especially to talk about regional plans. Currently, planning on a regional rather than a company-by-company basis is non-statutory, and so to put this on a statutory basis would be a gear change in terms of water resource management. I would welcome any moves to put regional plans on a statutory footing, but the Government have to be clearer on the circumstances in which the Secretary of State would use the powers and how adherence to the regional plans would be encouraged if it were not clearly set out here. The current drafting is too weak and does not give this clause the teeth that it needs.
By changing “may” to “must”, amendment 9 would tighten up the clause considerably and make it far more effective. It would require the Secretary of State to make provision setting out the procedure for preparing and publishing water resources management plans, drought plans and joint proposals. I would like the Minister, before rejecting the amendment and dismissing it as unnecessary, to answer the following questions. Under what circumstances would the Secretary of State expect to use the powers created by clause 75 to direct water companies to prepare and publish joint proposals—the regional plans? There is a concern that that will not become standard practice if it is not expected. If the powers are not used and regional water resources planning remains on a non-statutory footing—if it is just a “may”—how will the Secretary of State ensure that companies produce water resources management plans that are aligned with the regional plans?
In the absence of a commitment to using the powers created under clause 75 to direct regional planning, can the Minister assure us that the Secretary of State will direct the Department for Environment, Food and Rural Affairs to set out the need for company plans to align fully with regional plans in its strategic policy statement to Ofwat? Otherwise, many who are listening to and reading this debate will remain concerned that companies’ individual plans could deviate from regional plans, affecting our ability to provide sustainable water resources for society in the light of the worrying projections set out in the Environment Agency’s national framework for water resources.
Anthony Browne (South Cambridgeshire) (Con)
I want to make a general philosophical point about “mays” and “musts”. We have been talking about this matter a lot over the past couple of weeks. Obviously, our end objectives are the same: we all want a Bill that strengthens environmental protection, and a strong and independent Office for Environmental Protection.
I realise that this clause is slightly different from earlier clauses, but I will make the generic point that when we say that something should be a “must” rather than a “may”, we are often prescribing what the OEP can do. I realise that this amendment is about Ministers, but if we accepted all the amendments on this point, the OEP would end up with a whole list of things that it must do, as prescribed by the Committee, and it would spend all its time ticking those boxes. We would take agency away from the OEP.
As a parent, if I go around telling my children, “You must do this, and you must do that,” they do not feel very independent. If I tell them that they have to be grown up and make their own decisions, they feel more empowered. Throughout this whole process—we have another couple of weeks to consider amendments—it is worth thinking about what being so directive towards the OEP would do to its agency and independence.
The Parliamentary Under-Secretary of State for Environment, Food and Rural Affairs (Rebecca Pow)
It is good to be back this week. I welcome the shadow Minister again, and the new member of our Committee, my hon. Friend the Member for Ynys Môn. I thank the hon. Member for Southampton, Test for the amendment. I understand that the intention is to give certainty that Ministers will make secondary legislation about the procedure for preparing and publishing water resources management plans, drought plans and joint proposals, but he is again playing on my sympathies over “may” and “must”. He will not be surprised that I am not going to relent on this one.
I think the hon. Member will agree that the explanation is quite clear. The duties under sections 37A and 39B of the Water Industry Act 1991, which we have already heard about, to prepare and maintain water resources management plans and drought plans remain on statutory undertakers; they are “must” duties on the Minister. This was raised by the hon. Member for Putney. The plans are already on a statutory footing, and the Minister’s power to make regulations about procedural matters, to which the amendment refers, does not remove those duties. Ministers fully understand that water undertakers need to know the procedural requirements for fulfilling their duties in good time.
I thank my hon. Friend the Member for South Cambridgeshire for the good points that he made about independence and his children. It is entirely appropriate to provide Ministers with flexibility on when and how this provision is given effect.
Daniel Zeichner (Cambridge) (Lab)
I come from a very dry region, which adjoins the constituency of the hon. Member for South Cambridgeshire. Some water companies, such as Anglian Water, are already working with other parts of the country, and there are regional plans coming into place. Does the Minister agree that it would be much better to give legal certainty by specifying that as the amendment suggests?
Rebecca Pow
I thank the hon. Gentleman for that point, and lots of companies are already working towards that. We will talk later in more detail about how water companies will work holistically together to deal with the whole water landscape.
In the Bill, the Secretary of State has powers to direct future procedure under statutory legislation if he thinks, for example, that more attention needs to be given to what the hon. Gentleman suggests. There are existing powers in section 37B of the 1991 Act to make regulations for procedural requirements, and those are replaced by new section 39F. The existing powers have already been used by Ministers to make the Water Resources Management Plan Regulations 2007 and the Drought Plan Regulations 2005.
Water companies’ plans are revised every five years. The plans are prepared at different times within their own five-year cycles. When exercising these powers, Ministers in England therefore need to be flexible and mindful of when to introduce the new planning requirements, so as not to have unnecessary impacts on the preparation of water companies’ plans, many of which are under way. I therefore ask the hon. Gentleman to withdraw the amendment.
Dr Whitehead
I think the Minister knows what my answer is going to be. The hon. Member for South Cambridgeshire made a fair point about what would happen if we put in every “must” in every place in the Bill, and how that might constrain the agencies that are responsible for carrying out its business, but that is not what the Opposition has done with our repeated suggestions for the inclusion of “mays” and “musts”.
We agree with the hon. Gentleman that it is not appropriate for an agency to be constrained in that way if, for example, it may decide to carry out an action relating to an investigation or look at the extent to which it ought to do certain things. In that case, it is not appropriate to use “must”, and “may” is perfectly appropriate. There are, however, other circumstances where it is clear that an agency, or indeed the Minister, ought to do something.
In his analysis, the hon. Member for South Cambridgeshire made reference to parents and children, and I would say that this is on the parents’ side. It is a “must” in the same way as a parent must not leave their child on a bare hillside for the evening to see whether they survive. That is the sort of “must” this is, rather than a stipulation that a parent or a child must do certain things. I would put the Minister in the role of the parent, as far as this process is concerned. If the Minister is, in a sense, the parent of these activities, the Minister ought to act like a good parent. If there is a suggestion in the Bill that the Minister “may” not, that should be recognised.
In answer to the Minister’s question, I will not press this amendment to a Division. I know that this is becoming a little formulaic, but the Minister may want to reflect on whether drafting amendments need to be made at certain places in the Bill, either now or at a future date, bearing in mind that this is not a spray-paint job as far as “mays” and “musts” are concerned. I beg to ask leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Dr Alan Whitehead
I beg to move amendment 130, in clause 75, page 66, line 22, at end insert
“including persons or bodies representing the interests of those likely to be affected.”
I will give the game away straight away by saying that this is a probing amendment, as I am sure the Minister will be pleased to learn, and we seek her comments on it. As my hon. Friend the Member for Putney said, the 1991 Act has been with us for a while. Does the Minister think that bodies that represent those who are likely to be affected by a water resources proposal or a drought plan should be included in the process of preparing and publishing regulations? There is a distinction to be made between the Government deciding to make a plan, and those who would be particularly affected by that plan—for example, the hon. Members who would be affected by a drought plan in Cambridgeshire—having input into the process. There is a relationship between a high-level plan and the reality of any changes on the ground, and it is important to have both perspectives.
That is the reason for this amendment, and the Minister may wish to comment on whether she agrees with the principle behind it, even if the wording is not quite right. I would particularly like to hear whether she is signed up to the idea that I have set out and, if so, whether there are other ways of ensuring that the drawing up of these plans and proposals is a two-way process.
Fleur Anderson
I would like to unpack the amendment slightly more and highlight some areas that may be affected by the Government’s proposals. We would be very interested to hear from the Minister how this Bill will be enacted on the ground after it has progressed through both Houses.
Consultation is key during any planned preparation. The plans to clean up our water across the country are essential and, unless they are done correctly and with the full engagement of all the representative bodies, they will not work. If that happens, the current plateauing of environmental protection, which many people find very concerning, will continue.
The removal of section 37A(8) from the Water Industry Act 1991will remove a list of other bodies. The Act states:
“Before preparing its water resources management plan…the water undertaker shall consult”—
the use of the word “shall” is interesting. Following on from the comments of the hon. Member for South Cambridgeshire, I think that our job in this Bill is to say what is within the OEP’s remit, what must happen and what the OEP, with its flexibility, can decide should happen. We need to set that framework, and an essential part of that is engagement with all the right agencies. The proposed deletion will remove the Environment Agency; Natural Resources Wales; the Water Services Regulation Authority, or Ofwat; the Secretary of State; and any licensed water supplier, as listed in the 1991 Act. These bodies will not be included in this Bill unless we add the text of the amendment, which is, I think, very reasonable,
“including persons or bodies representing the interests of those likely to be affected”.
I do not think that that is overly restrictive, because it would give the OEP the ability to decide who those persons or bodies are. It does, though, say that they must be consulted. Has the Minister considered how to ensure that the new provisions on the preparation of plans by water undertakers will retain stakeholder engagement requirements? Does the Minister believe that the proposals are sufficient to ensure that the Environment Agency, in particular, is fully engaged in plan development? Its involvement is crucial to ensure a high level of environmental scrutiny of water resources options. That is essential for both the working of the Environment Agency and the effectiveness of any plans.
The Minister may suggest that this is dealt with through other requirements such as the customer challenge groups. However, those arrangements are typically extremely narrow and do not enable the wide engagement of the stakeholder that is necessary for the best plans—world-leading plans. Amendment 30 would ensure that consultation rights for stakeholders—
Fleur Anderson
Thank you, Mr Gray. Amendment 130 would ensure that consultation rights for stakeholders could be created under such regulations and allow these provisions to include a requirement for
“persons or bodies representing the interests of those likely to be affected”
by a plan to be consulted during the plan preparation. This requirement should be included in the Bill to make it as clear as possible and to ensure that full consultation with stakeholders takes place, so that we have the best possible water resources management plans and the best likelihood of increasing water quality across the country.
Rebecca Pow
I thank the shadow Minister for this amendment—a probing amendment, as he said. I understand the intention to ensure that those who are likely to be affected by water resource management plans, drought plans and joint proposals be consulted. The Government recognise that planning for water resources is strengthened by the involvement of a range of stakeholders, both individuals and representative organisations, in the development of the plans, as was outlined by the hon. Members who spoke.
The Government intend that stakeholders will be involved in the preparation and delivery of these plans in England. Clause 75 enables Ministers to set out in regulations which bodies are to be consulted on the preparation of plans. Under existing powers, Ministers have set out a long list of relevant consultees in the Water Resources Management Plan Regulations 2007 and the Drought Plan Regulations 2005. The Environment Agency’s national framework for water resources in England, which was published in March, already gives further clarity. It sets out how we expect water undertakers in England to engage with stakeholders to prepare their plans in future.
Reflecting on the comments from the hon. Member for Putney, I want to clarify that Ministers in England want to ensure that the process of developing these plans is open and transparent—more so than ever—through these changes and that stakeholders are involved at the right time, so that they can effectively collaborate on the plans. If we are to encourage this more holistic joint-working approach, that is really important.
While the current wording of “persons” is not defined in the Water Industry Act 1991, the Interpretation Act 1978, which applies here, defines “persons” as including
“a body of persons corporate or unincorporate”—
that is, a natural person or a legal person. It includes a partnership, which would include representative bodies. The meaning of “persons” is very broad and would include representative bodies, making the amendment unnecessary. I hope that provides clarity.
The changes introduced by clause 75 will help the plans to deliver cross-sector and mutually beneficial outcomes, which we all want for the wider water environment, as well to secure water supplies. I hope, therefore, that the hon. Member for Southampton, Test will see that his probing amendment is unnecessary. He was right to ask those questions, but I hope that I have answered them. I respectfully ask him to withdraw his amendment.
Dr Whitehead
I have, as a result of this debate, begun to feel that this is less of a probing amendment than I initially thought. My hon. Friend the Member for Putney made an important point, which I neglected to include in my contribution. The Water Industry Act 1991 included these things. At that time, there were specifications about agencies and bodies that should be consulted and involved in the plans. That has all been swept away.
While the Minister makes the possibly important point about the phrase “persons to be consulted” in proposed new section 37F(3), that appears to be a rather feeble replacement for what was firmly in the previous piece of legislation. At the very least, I would like some assurance. The Minister says that the phrase “persons to be consulted” could be interpreted as persons in the collective. By a transfer of reasoning, we might therefore get to the Environment Agency and various other people in the end. I would like the Minister to actually shorten that course and say, “Yes, it will,” so far as the Bill is concerned.
Rebecca Pow
The hon. Gentleman makes a good point, but just for clarity, we can make regulations to specify what persons or bodies must be consulted during the plan preparations, and we plan to use that power. I just wanted to get that on the record.
Dr Whitehead
I think we may be getting there. When the Minister says, “we can make regulations”, is she saying that the Government will make regulations that effectively restore that arrangement, in terms of persons, by a regulatory route, as I was trying to tease out? It would be helpful if the Minister said that it is very likely that regulations will come about that include a better definition of persons, so that those bodies can effectively be brought back into the process in a way that the Bill seems to have neglected to do.
Dr Whitehead
The hon. Gentleman would like to encourage the Minister to say something else on this.
Rebecca Pow
I will intervene one more time, just for clarity. As I said, we made the Water Resources Management Plan Regulations 2007 and the Drought Plan Regulations 2005, which demonstrates that we have already done something like what the hon. Gentleman asks for. I reiterate that we can make regulations to specify what persons or bodies must be consulted during plan preparations, and we plan to use that power.
Dr Whitehead
I thank the Minister for that. That is 65% of the way there. On balance, I am happy to withdraw the amendment. I beg to ask leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Amendments made: 47, in clause 75, page 67, line 20, leave out “the Assembly” and insert “Senedd Cymru”.
See Amendment 28.
Amendment 48, in clause 75, page 67, line 32, leave out “the Assembly” and insert “Senedd Cymru”.—(Rebecca Pow.)
See Amendment 28.
Clause 75, as amended, ordered to stand part of the Bill.
Clause 76
Drainage and sewerage management plans
Richard Graham (Gloucester) (Con)
I beg to move amendment 200, in clause 76, page 68, line 17, at end insert—
“(ca) the water quality and impact of the discharges of the undertaker’s drainage system and sewerage system,”.
This is a probing amendment, tabled in the name of my right hon. Friend the Member for Ludlow (Philip Dunne), myself and others. The last amendment I tabled proposed to change one word and add one letter to the Bill’s proposed environmental improvement plans. This probing amendment adds 16 words to a subsection on drainage and sewerage management plans. Both amendments have in common the shared interests of our environment and us as beneficiaries of that environment.
Amendment 200 focuses on drainage and sewerage management plans. It is an uncomfortable fact for us all that a huge amount of raw sewage is still discharged into our coasts and waterways—200,000 times in the last year, with 3,000 discharges in UK coastal waters between May and September—all of which threatens the quality of the water itself and water users. It is for that reason that 40,000 people signed a petition to end sewage pollution. My right hon. Friend the Member for Ludlow was motivated to initiate a private Member’s Bill, which will be heard in the House in due course, and to table this amendment to the Environment Bill.
Surely it is the aim of all of us to stop discharges into rivers, lakes and waterways, as well as into our sea, and to raise our current rating within Europe—although we are leaving the European Union, we are still a geographical part of Europe—from 25th out of 30 for coastal water quality. Only 16% of our waterways meet good ecological status.
Why does that matter for all of us, as users? Ultimately, there are health risks—gastroenteritis, ear, nose and throat illnesses, and apparently even, although I have not seen evidence, hepatitis and E. coli. Those of us who enjoy wild water swimming—in the River Wye, for example, on the Gloucestershire-Herefordshire border—will know that there are times when agricultural companies are pumping discharge into the water and damaging its quality and the experience, particularly for the young.
Cherilyn Mackrory (Truro and Falmouth) (Con)
My hon. Friend is making an important point. Does he agree that we need a change in when water companies give notifications of sewage outlets, particularly around the coastline, such as in my constituency and around the Cornish coast? Currently, they do it only in what they call “bathing months”. With better equipment and better wetsuits, we now swim all the year round off the Cornish coast. We have no way of knowing—unless we know that these things happen after heavy rainfall—whether the water is safe to bathe in.
Richard Graham
My hon. Friend makes a striking point. From a human perspective, Cornwall is probably the most used bit of coastline in our United Kingdom. The pressures are considerable and the point that she makes about more people swimming and surfing all year round is important. The restrictions should not just cover the traditional swimming months of May to September. I am sure the Minister will address that point.
Alongside a duty on water companies to ensure that untreated sewage is no longer pumped into the seas, the amendment would tackle a series of other actual and potential issues—for our water quality has implications across the whole ecological system, from plant life to fish stocks, as well as the health of the population. Our surface, coastal and ground waters suffer from significant pollution, as I have illustrated, and they also take that pollution into our seas and oceans. The Government have not made as much progress as we would have liked on meeting the targets established under the EU water framework directive, and the Bill is a step towards making significant improvements.
While diffuse pollution from agriculture, as I illustrated with the River Wye, accounts for 40% of river pollution, wastewater from sewage treatment accounts for almost as much, at 36% of river pollution.
Fay Jones (Brecon and Radnorshire) (Con)
As a Parliamentary Private Secretary, I am not always meant to speak, but my hon. Friend mentions the River Wye, which runs through my constituency. It would be remiss of me not to mention that there are many actors in this space. We cannot solely blame farmers in their entirety. The issue needs a whole supply chain response, because it is too important a problem to lay solely at the door of agriculture.
Richard Graham
My hon. Friend makes a very good point. There will not be too much specific finger-pointing with the amendment, nor in the Bill in general. We have already referred to water companies. Agriculture, in the broadest sense, is a challenge along the river that she loves in her constituency so much. There are, of course, others who discharge pollution into our waterways. Everyone has to do their bit; that is why the amendment is so important.
Let us be clear that the drainage and wastewater management plans proposed under clause 76 are an excellent step forward. They seek to improve water company focus, and they send a clear message about improving the safe and environmentally responsible treatment of human effluent. However, there is an omission in the objectives. The amendment would therefore place the obligation on water companies, in their five-year plans, to consider the impact on water quality of the wastewater facilities for which they are responsible.
Sewage is estimated to account for 55% of the rivers that are failing to reach the good ecological status to which I referred. This can lead to pollutants such as organic material, which depletes the dissolved oxygen in the water, and other pollutants such as phosphorus, nitrates, ammonia, pathogens and man-made toxic chemicals entering the water environment.
Dr Whitehead
The hon. Member for Gloucester has made a powerful speech in support of the amendment, covering many points that I would have raised had he not done so. The Opposition would have tabled an amendment on this subject had amendment 200 not appeared. We did not, because we saw that a substantial number of Members from both sides of the House had put their names to the amendment, which I think adds to its gravity. Frankly, we felt that if we had proposed a separate but similar amendment, it might have decreased the chances of this one being made, so we kept the position as it was. The one point I would disagree with the hon. Gentleman on is that the amendment should not be probing; it should be a serious attempt, with cross-party support, to get a provision into the Bill that will undoubtedly be to the benefit of the natural environment and its users as a result of changes in water companies’ activities.
I want to reinforce what the hon. Gentleman had to say about discharges of sewage and similar activities that have taken place over a number of years. He is right to state that there were more than 200,000 releases of raw sewage into rivers last year. That number slightly underestimates the actual effect of the releases, since some occurred over an extended period rather than being instant. We should think about why that happens.
These are not accidents; they are provisions within the operating arrangements for water companies which allow the occasional release of raw sewage into watercourses. All water companies have an emergency release provision in their operations. They have a system of stop valves that normally separate the sewage from the water, but if the system is so suffused with water at certain points—during a heavy storm, for example—that it cannot cope, those valves are effectively released; the two flows are then mingled. That is the point at which raw sewage may be released into watercourses.
Water companies say that, generally speaking, the dilution of the sewage is such that it does not make a great deal of difference, particularly in heavy storms and similar conditions. That is partly overthrown by the fact that discharges sometimes take place over a substantial period and are not simply brief discharges into rivers at the height of a crisis like a storm. I do not think that anybody would say that in periods of severe crisis for a water company, those sorts of provisions should be removed, but that provision far exceeds what we might expect.
The discharge of spills came to an incredible 1.53 million hours across the nine English water companies last year. As I mentioned, a lot of the spills are not brief. The water companies could introduce procedures that would ensure that they were brief by improving how they separate out water and sewage, and ensuring that those flows can be combined only in the most critical circumstances. It is evident from what we know about those discharges that that is not the case. This is being used as a safety valve by water companies in many instances, rather than as an emergency, last-stop procedure. It is certainly within the companies’ ability to ensure that those safety valves become last-gasp emergency procedures just by improving their procedures to ensure that arrangements for the separation of water are maintained to a higher standard.
As a shadow Minister, I would say that, wouldn’t I? However, it is perhaps not surprising, given that this concern is shared pretty much across the House, that other people have said much the same thing. For example, I believe the Minister met chief executives of the 15 water companies in September, at which point she called on them to take further action to protect the environment, reduce leakage and safeguard water supply. She said that
“we discussed a number of issues I feel strongly about, including storm overflows, and how we can work together to see much more ambitious improvements. This country’s green recovery from coronavirus can only happen if water companies step up and play their part.”
I could not have put it better, and the Minister indeed put it very well.
The hon. Member for Gloucester, who made an excellent contribution, reminded us that the amendment is supported, and was substantially crafted, by the Chair of the Environmental Audit Committee, the right hon. Member for Ludlow. Other hon. Members pointed out the concerns on this issue in their constituencies and why action needs to be taken. The entire Opposition think that this is a good idea and wish to pursue it, and of course the Minister has made admirable comments on how water companies need to step up their activity, particularly on storm overflows, to get things organised.
Basically, what is there not to like about the amendment, and why can it not just be instantly put into the Bill? It will not detract from anything; it will simply add a layer of urgency to something that we all think needs to be done, which surely is what Bills should be about. They should frame action in such a way that entreaties and suggestions are added to by a piece of legislation that says, “Go and do this over a period of time.”
We not think that this should be seen as a probing amendment. That is a very minor disagreement between the Opposition and the hon. Member for Gloucester, who I appreciate may have suggested that it should be deemed a probing amendment out of sensibility for his own side’s manoeuvrability, shall we say, on this issue. In his heart, I think, he would be absolutely behind the idea that it ought to go in the Bill straight away. I sense that very strongly from the vibrations that are coming across the room.
Rebecca Pow
I thank my hon. Friend the Member for Gloucester for the amendment and for painting such a charming picture of wild swimming in the River Wye, which I should think is quite chilly. I must also refer to my right hon. Friend the Member for Ludlow, who has done so much work on this. As my hon. Friend knows, I have met colleagues several times to discuss this very important issue. He quoted some, frankly, fairly ghastly statistics, as did the hon. Member for Southampton, Test. My hon. Friend is right that this matters and he knows, as does our right hon. Friend, that I take it extremely seriously. I think the hon. Gentleman knows that too.
The issue of river health and the impact of sewer overflows is a priority for me. One of my hats is Water Minister. I vowed that I must do something about that while I am in this role, and I am determined to take action. It has been overlooked for far too long. I have discussed that with my officials at great length. I will not say that they thanked me for it all the time, but it is a priority that I believe we have to get right.
I assure my hon. Friend the Member for Gloucester that controlled sewage discharge to watercourses from sewage treatment works are tightly regulated by the Environment Agency using powers under the environmental permitting regulations, so we obviously already have that in place. I want to be clear that when we were designing the current provisions in the Environment Bill on drainage and sewerage management plans, in clause 76, it was a prime objective to tackle the discharge of sewage into our waterways better.
Clause 76 specifically requires that each sewerage undertaker must prepare a drainage and sewerage management plan. [Interruption.] Yes, there is a “must”—that got a cheer! The clause also specifically requires that a drainage and sewerage management plan “must” address relevant environmental “risks”—those two words are very important—and how they are to be mitigated. That will include sewer overflows and their impact on water quality.
Although I understand the intention for specific references to address sewer discharges and water quality, it is entirely appropriate in this case to provide a broad definition in primary legislation of relevant environmental risks. The provision needs to stand the test of time and be fit for the environmental challenges of tomorrow, not just of today. I can say unequivocally and can confirm that I and any future DEFRA Ministers will also have a failsafe power to make directions to specify any other matters that a plan must address. In simple terms, that will ensure that if a plan or plans are not adequate, the Government can take swift action. I will not hesitate to use that power to direct companies if I am not satisfied with their performance to address sewer discharges and water quality. They should consider themselves on notice; in the meeting that was referred to by the hon. Member for Southampton, Test, I pretty much gave that message. I am not messing about.
Ruth Jones (Newport West) (Lab)
The Minister is making a powerful point. The Opposition have no problem at all with how diligent she is and how conscientiously she does her job. I am just wondering how she would feel if a successor—obviously in many years’ time—was not quite as diligent. We need to know that the safeguards are in the Bill. We want them enshrined in primary legislation. If the Minister is so keen on the power and so committed to it, what is the problem with putting it in the Bill?
Rebecca Pow
I thank the hon. Lady for reiterating my commitment. We believe the measures and steps that are here will ensure that that does happen—the sewerage and drainage management plans will come into use and the idea of that will become normal—but there will be an opportunity for a DEFRA Minister to have a failsafe power to make directions to specify any other matters. We also have the Environment Agency keeping abreast of all this. We even have the OEP, at the end of the day. We have so many checks and balances in the Bill that once we get the system going, it should be failsafe.
Richard Graham
The Minister has reiterated her own commitment, which none of us doubts. None the less, as the chair of the Environment Agency has said, despite all the various checks and balances, progress has not been as strong as any of us would have liked. Here is the opportunity to insert the words about
“the water quality and impact of the discharges of the undertaker’s drainage system and sewerage system”.
Even if the Minister believes that the Bill has enough “musts” and enough powers for the Minister to direct, the explanatory notes are not that clear, saying simply that
“The sewerage undertaker is required to set out in the plan what it intends to do to maintain an effective system of sewerage and drainage, and when those actions are likely to be taken”,
then adding, rather vaguely:
“Should other factors become relevant”.
Does the Minister not agree that there is a real opportunity to specify, at least in the explanatory notes, that the water quality and impact of sewerage overflow must be addressed?
Rebecca Pow
My hon. Friend is doing absolutely the right thing in checking up on the issues. I have been doing that myself, in fairness. He mentions the EA. As he said, Emma Howard Boyd, the chair, made it clear that much more is expected of water companies, which includes developing, publishing and implementing specific plans by the end of this year, to reduce pollution incidents. The Environment Agency is on the case. Following my meeting, the Secretary of State is meeting with water companies again very shortly. I repeat that “relevant environmental risks” will include sewer overflows and water quality; I said that just now and I hope my hon. Friend the Member for Gloucester was listening. Once that has been established as a risk, it would be very hard for anyone to argue in the future that it was not a risk. That addresses the point made by the hon. Member for Newport West, and I reiterate that point.
Dr Whitehead
The Minister talks about checks and balances, but I am sure she will know that, as far as the checks and balances relating to storm overflows are concerned, more than 60 discharges a year should trigger an investigation by the Environment Agency. Those storm overflows have been released hundreds of times per year by each water company. The Environment Agency relies on water companies to self-monitor their discharges, so the check and balance does not work as well as it should. Does the Minister think that arrangement is sufficient to keep those discharges under control?
Rebecca Pow
I thank the hon. Member for raising that important point; I just want to talk a little bit about the Environment Agency. They are actually part-way through a programme to improve the management of storm overflows. Event duration monitoring gadgets are being installed on the vast majority of combined inland and coastal sewer overflows, and will provide data for the duration and frequency of storm spills by 2025. Approximately 13,000 of the 15,000 overflows will receive this event duration monitoring, so it will make a difference—I am convinced of that. We do, however, accept that there is a great deal more to do.
Let me clarify how important I think the issue is; we do not want to sit around waiting, but to get on and do something about it. In addition to the Environment Bill and the ongoing discussions around making it as strong as possible, I have set up a new storm overflows taskforce to make rapid progress in addressing the volumes of sewage discharge into our rivers. This has been done at speed and very recently, when all of this “stuff”, as they call it, came to my attention. I would like to thank everyone involved for moving so fast on this. I will set a long-term goal on the storm overflows for sewerage undertakers, which I will talk about in more detail later, but the work on that needs to start now. The taskforce is developing actions that will increase water company investment to tackle storm overflows in order to accelerate our progress.
Daniel Zeichner
The water companies operate in a tightly constrained regulatory framework, always having to balance bills, investment and shareholder returns. What impact does the Minister think her welcome initiative will have on that, and will she be directing them as to either what they do not do instead, or where that investment should come from?
Rebecca Pow
I thank the hon. Member for Cambridge for that, and of course he makes a really important point. All those things will be in the mix for consideration. The storm overflow taskforce has been set up between the EA, DEFRA, Ofwat, the Consumer Council for Water, Blueprint for Water and Water UK. These are all things they are well aware of and will be discussing, and they will be the ones setting out clear proposals to address the volumes of sewage discharge into our rivers. They are working on that now, at speed, and I anticipate we will have a good idea of their list of actions by spring. The hon. Member might say that that is a long time away, but we are already in November; it is actually only a in few months’ time. I anticipate that this will be really beneficial and really helpful.
The whole thinking behind the taskforce’s action list is to increase the amount of sewage processed at treatment plants, for example through building additional sewage storage capacity, which I think my hon. Friend the Member for Gloucester might be pleased to hear, and separate surface water connections for the combined sewerage network.
I want to thank my hon. Friend the Member for Truro and Falmouth for her input; I have met her and others from Cornwall over the issue of surfers, as well as Surfers against Sewage, who do great work highlighting the issues. As I said, the taskforce is looking to all issues to do with water quality and sewerage overflows, which will include bathing water. We are looking into that.
I also want to thank my hon. Friend the Member for Brecon and Radnorshire, who makes a good point—always standing up for her farmers, in that great farming country she is in—and she is absolutely right. We cannot lay all of this at the door of the farmers. There are many causes and they all have to be looked at and tackled, but that is not to say that there is not work to be done with farmers—I believe they know that. Through our new environmental land management scheme, there will be opportunities to work with farmers to reduce pollution. That is coming down the tracks as well and will also help with the whole water pollution issue.
Richard Graham
I am very grateful that the Minister has announced this storm overflow taskforce, which is an interesting new group. Taskforces come and go and they have occasionally been used in the past—surely not by this Government—as a sort of alternative to action. One thing that would make us all have greater confidence in the Bill being able to deliver the change that the Minister and all of us wish to see, if she is unwilling, at this stage, to amend clause 76 with the words the amendment suggests, would be if she would consider amending the explanatory notes. At the moment, the relevant sentence reads:
“Any relevant risks to the environment and mitigation measures should be recorded in the plan.”
The Minister could, if she wished, insert “any relevant risk to the environment and mitigation measures, including water quality and the impact of sewerage overflow.”
Rebecca Pow
Thank you, Chair. I thought my hon. Friend would try and sneak in a final go. I do not blame him for that.
Rebecca Pow
Thank you, Mr Gray.
On that note, I hear what my hon. Friend the Member for Gloucester says about the explanatory notes but I want to reiterate what I said earlier: relevant environmental risks will include sewer overflows and water quality. Once that has been established as a risk, it will be very hard for anyone to argue that it is not a future risk. I shall leave it there.
I thank my hon. Friend the Member for Gloucester, my right hon. Friend the Member for Ludlow and other Members for all their work, particularly in raising awareness of this issue. I hope, on the strength of the assurance that I have given today, that my hon. Friend will kindly consider withdrawing his amendment.
Richard Graham
This has been a helpful discussion, with Members contributing from all sides. The hon. Member for Southampton, Test is even able to detect vibrations from across the room, which perhaps none of the rest of us has been able to do. As for the key issue in the proposed amendment, my right hon. Friend the Member for Ludlow put it very well in a note to me where he said, “This amendment would require water companies, their regulators and overseeing Ministers to have regard to continuous improvement through these admirable five-yearly plans to ensure our rivers can gradually recover from their polluted state to once again become clear and clean for our children and grandchildren to enjoy.” Members on both sides have highlighted how, in their constituencies, that is relevant.
The Minister has tried to reassure us that that is exactly her own objective. I have no reason to doubt that, as she has confirmed it several times. However, it seems to me that were I to withdraw the probing amendment, it would be on the basis of the words she used, which were that the relevant risks would include water quality and the impact of sewerage overflow. It is great that the Minister has made that statement, but we need to see that in the explanatory notes. If she can give an indication that she would consider that on Report, I would be happy on that basis to withdraw the amendment.
Rebecca Pow
I thank my hon. Friend for his passionate words. I am happy to consider making it clearer in the explanatory notes.
Richard Graham
I am very grateful to the Minister for making a significant step to recognising the strength of feeling on this, and I beg to ask leave to withdraw the amendment.
Dr Whitehead
I beg to move amendment 199, in clause 76, page 70, line 4, leave out “may” and insert “must”.
When a minister chooses to make a drainage and sewerage management plan, this amendment obliges them to consult on it.
Yes, this is another amendment. By the way, I thought that last bit was really exciting. I am sorry that hon. Members did not vote our way on amendment 200 this morning, but I appreciate the effort that everyone put it to make it almost get there.
Amendment 199 relates to the amendments to the Water Industry Act 1991. This is about how regulations “may” make provision about consultation, which is a particularly weak “may”. I would have thought that consultation is an essential element of the process. In particular, we are talking about consultation to be carried out by sewerage undertakers—that is, water companies—who are required by regulation to make provision about the person to be consulted, the frequency and timing of the consultation and the publication of statements.
There is a pretty tight requirement on water companies to be clear about what their provision is, except they do not have to do it. That seems to me to be a suggestion that holds the entire subsection. There is quite a fierce thing in this subsection about consultation. This is a good thing. It covers not just consultation, but who it should be carried out by—the sewerage undertakers—as well as instructions on who should be consulted and so on. It is all spoiled by the “may” at the beginning of the sentence. I think this is another important “must”, which ought to go into the Bill. Again, I will not push the amendment to a Division, but I hope the Minister will take careful note of our strong feelings on the issue and will put it in the box of reconsiderations for when she gets around to deciding whether there should be drafting amendments to the Bill in the future.
Fleur Anderson
I welcome the Minister’s earlier comments about taking action on sewage pollution, of which this is an additional part. I welcome the aims of the clause, and I believe it is vital that a strategic approach is taken to waste water management. However, I have a couple of issues with it that I would like to point out.
Sewage pollution is a very important issue for constituents across the country, including in my constituency of Putney, next to the beautiful River Thames, where we are extremely concerned about it. Some 39 million tonnes of sewage is dumped into the River Thames every year, with an estimated 50 epic dumps of pollution. The Tideway project is making great headway—it is making amazing progress, and I commend it. It will result in a real difference being made. However, there are still extreme concerns. One is about the use of the term “sewerage” in the clause, whereas the industry would prefer to use the term “wastewater”. Wastewater is a much larger section of domestic, industrial, commercial and agricultural production, of which sewerage is only a small subsection.
I slightly digress from the amendment—
Fleur Anderson
Which I should not do. I acknowledge that, but I would welcome the Minister’s comments on that.
Clause 76 amends the Water Industry Act 1991 by adding new section 94C. There are a whole rash of “mays”, and we have chosen modestly, and I think correctly, to identify one that should be a “must”. It is in new section 94C(3), which, again, talks about consultation on plans. We have talked about that previously, and it is absolutely vital for ensuring that those plans work and that they tackle the 39 million tonnes of sewage going into the River Thames and the similar incidences across the country. The Bill places obligations on water companies only for something they are already doing; it does not reflect the scale of the challenge from climate change or the fact that drainage is universally recognised to be a shared responsibility with other organisations that are also responsible for managing service water.
Water UK is concerned that, as written, clause 76 will exclude significant bodies that are involved in drainage and will eliminate much of the potential benefits that customers, society and the environment could otherwise gain. It is a fundamental feature of drainage and wastewater planning that water companies cannot do this in isolation, because drainage is shared with other risk management authorities, as defined in the Flood and Water Management Act 2010. For example, large numbers of drainage assets are not under the ownership of water companies, the management of which needs to be integrated into the drainage and wastewater management plans. That has been recognised by the National Infrastructure Commission in its recommendation that water companies and local authorities should work together to publish joint plans to manage surface water flood risk by 2020. Ensuring that such consultation is done as a “must” rather than a “may”, which is the aim behind the amendment, is absolutely essential.
As a minimum, all flood risk management authorities should have a duty to co-operate in the production of drainage and wastewater management plans. There should be the ability to require other flood risk management authorities to provide the information needed for the production of such plans. Clause 76 would ensure that that would happen as a directive to the OEP, which is needed to ensure that we have the best sewerage management plans and wastewater management plans that we can.
Rebecca Pow
I thank the hon. Member for Southampton, Test for the amendment. It is amazing that we have managed to get him excited—for me, that is a massive milestone in the Bill’s passage. I hope he does not mind my saying that.
I understand that the intention behind the amendment is to give certainty that Ministers will pass secondary legislation about the consultations to be carried out by sewerage undertakers on their drainage and sewerage management plans. Under proposed new section 94A of the Water Industry Act 1991, sewerage undertakers will have a duty to prepare drainage and sewerage management plans. Ministers understand that sewerage undertakers need to know the procedural requirements for fulfilling their duties in good time. Ministers require flexibility on when and how the provision is given effect so that procedural requirements for plans remain proportionate and current.
Dr Whitehead
I thank the Minister for what she has said. She has gone some way towards assuring us on this matter, and I beg to ask leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Dr Whitehead
I beg to move amendment 131, in clause 76, page 70, line 6, at end insert
“including persons or bodies representing the interests of those likely to be affected”.
This amendment is very similar to amendment 130. It adds the same wording to the end of this clause to ensure that persons or bodies representing the interests of those likely to be affected are included. We have effectively discussed this, so I am not very excited about this amendment. [Hon. Members: “Shame!”] By the way, I ought to assure the Minister that, although I am probably among the least excitable Members of this House, I do get excited about quite a few things; I draw a distinction between those two uses of language.
I think that the Minister will probably respond to this amendment in the same way that she did when we tabled a similar amendment to the end of a previous clause, so I do not think that we need detain ourselves very long, other than to say that we still think that such an amendment is a good idea.
Rebecca Pow
I thank the hon. Member for the amendment and his brevity. Clause 76 enables Ministers to set out in regulations which bodies are to be consulted on the preparation of drainage and sewerage management plans—a process that will be strengthened by the involvement of a range of stakeholders. We intend to make those regulations in England to include those persons or bodies representing the interests of those likely to be affected, including representative bodies such as the Consumer Council for Water.
I went into some detail about the meaning of the word “persons” previously, so I refer the hon. Member to that. As I also mentioned, this was done in a similar way when the existing water resources management regulatory making powers were used by Ministers in making the Water Resources Management Plan Regulations 2007. The regulations set out a long list of persons to be consulted by undertakers. I hope, therefore, that he will see that the amendment is unnecessary, and I respectfully ask him to kindly withdraw it.
Dr Whitehead
In the light of that answer, which I had anticipated, I beg to ask leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Amendments made: 51, in clause 76, page 70, line 38, leave out “the Assembly” and insert “Senedd Cymru”.
Amendment 52, in clause 76, page 71, line 6, leave out “the Assembly” and insert “Senedd Cymru”. —(Rebecca Pow.)
See Amendment 28.
Question proposed, That the clause, as amended, stand part of the Bill.
Dr Whitehead
I will not detain the Committee at great length on this particular clause stand part debate, because I just want to raise an issue that somewhat puzzles me about the wording of the clause.
The Minister alluded to the source of my puzzlement a moment ago in her response to the previous debate. As hon. Members can see, the title of the clause is
“Drainage and sewerage management plans”.
The clause refers repeatedly to such plans, but what we should be talking about are not Drainage and sewerage management plans but drainage and waste water management plans.
Some hon. Members may think there is not much of a distinction, but there is quite a substantial distinction, in that sewerage and waste water are not the same things. Waste water includes all the sources of waste water coming into a particular riverine or estuarial area, which may have a number of sources that are not sewerage-based. Therefore, the definition of these plans as drainage and sewerage management plans narrows what they might consist of—not only that, but the definition narrows who might be involved in these particular plans. It narrows it down to water companies, whereas a number of other companies are indeed involved in waste water management and properly ought to be within those plans, to make a comprehensive arrangement as far as waste water is concerned. What is a further source of puzzlement is that the Department and industry have actually worked on such plans for many years, and they are called drainage and waste water management plans.
The Minister may say, as she did a moment ago, that in the Water Industry Act 1991 the words “drainage and sewerage management” effectively mean a wider issue as far as waste water is concerned, but of course the wording in clause 76 is not what was in the 1991 Act but is actually an amendment to that Act. It would have been easily possible, as far as the construction of the Bill is concerned, to include the words “sewerage and waste water management” in the Bill, with no cost to anybody—no additional amendments; nothing—whereas the less than adequate wording in the 1991 Act has been retained for the purpose of these amendments.
I wondered why that was the case. Is it an omission or is it deliberate? Other than the rather obscure reference to the 1991 Act, why does not the Bill state what plans the Department has and what the plans should consist of if they are properly to take account of what “waste water” defines and accommodates?
Rebecca Pow
How quickly, in the space of 10 minutes, we have gone from excitement to puzzlement. I hope I can, however, assuage some of the puzzlement.
Clause 76 amends the Water Industry Act 1991 to place drainage and sewerage management plans on a statutory footing to match the status of water resource management plans. The provisions are modelled closely on the existing approach to water resource management plans.
I shall deal with the interesting point about the distinction between sewerage and waste water. The clause amends the 1991 Act, which defines the term “sewerage system” in a way that covers all relevant aspects of waste water, so we have used that wording. This includes facilities to empty public sewers and other facilities such as waste water treatment works and pumping stations.
The term “waste water” is not defined in the 1991 Act. The statutory name is not intended to dictate what the water industry chooses to call the plans as part of its daily operations; it might have some other casual term for it. Drainage and sewerage planning is the only key planning process without a formal statutory status in the water sector. Placing plans on a statutory basis will ensure a more robust planning and investment process to meet future needs, including housing.
Statutory plans will also allow waste water network capacity to be fully assessed and encourage sewerage companies to develop collaborative solutions with local authorities and others who have responsibility for parts of the drainage system. They should also sit with planning for population and economic growth and therefore help to deliver improved resilience in sewerage and drainage sources over the long term.
There is strong cross-sectoral support for the measure. When we consulted publicly on making plans statutory, over three quarters of respondents supported the proposal. The statutory production of the plans will clearly demonstrate how a sewerage undertaker intends to fulfil its duty under the Act to provide, improve and extend the public sewerage system to ensure that its area is effectively drained. A statutory plan will help to set out the actions needed to address the risks that some assess that might pose to the environment or customers.
Dr Whitehead
I think the Minister should accept that I am one of the least puzzled Members of the House, but I do admit to puzzlement sometimes. On this occasion, my puzzlement has not been assuaged. The Minister is talking about how good these plans could be, but that does not take us much further in terms of why the wording is as it is when it would have been so easy to put it right when the Bill was introduced. I take on board the Minister’s assurances that, in practice, the word “sewerage” can be used by reference back to the bits of the 1991 Act that have not been amended by this legislation to expand its remit, but it would have been easier to get it right first time round, but I shall not pursue this. It can go into the Minister’s box of things to think about should she wish to clarify this part of the Bill any further.
Question put and agreed to.
Clause 76, as amended, accordingly ordered to stand part of the Bill.
Dr Whitehead
I beg to move amendment 132, in clause 80, page 78, line 1, leave out “2028” and insert “2021”
The Chair
With this it will be convenient to discuss the following:
Amendment 133, in clause 80, page 78, line 34, leave out “2028” and insert “2021”.
Amendment 134, in clause 80, page 79, line 7, leave out “2028” and insert “2021”.
Dr Whitehead
These amendments all make the same point about there being no compensation for certain licence modifications in water abstraction. Should licences be modified as a result of environmental considerations, especially with the uprating of environmental legislation, water companies and other organisations will have to undertake additional actions to ensure that their licences are adhered to, but they will not receive compensation for those modifications. That is all well and good, except when those licences come to be revoked or varied, in pursuit of a direction under a section of the Water Act.
The no compensation clause comes in on 1 January 2028, so it could be argued that that gives the water undertakings a reasonable period to adjust to the changes, but it may have the reverse effect of what is intended. If companies were to make changes that might need to be undertaken before 2028, they would get compensation. I am not sure whether the clause requires a period of notice for changes caused by increased environmental protection—it is reasonable to give water companies time to adapt—or is it a device that allows water companies to get some money for environmental changes that they should be doing anyway, if they do them before 2028? It is a pretty long run-in for changes. I ask the Minister—and this goes for all these amendments, because they all seek to change the date from 2028 to 2021—whether she thinks that the 2028 date is satisfactory in terms of a run-in for the water companies to make their changes.
If they make the necessary changes before 2028, would they be protected from a legal requirement to enter into and discuss compensation? I would suggest that that is less than satisfactory. The Minister faces a choice this morning on which way she jumps; or perhaps, with great dexterity, she could jump in both directions.
Not only is there potential confusion about the precise intention of this clause, but the 2028 date itself seems to be excessively generous by any measure. If the Minister is not able to at least give us an indication that that date might be considered for foreshortening, we may wish to divide the Committee.
Fleur Anderson
I would like to speak in support of the concerns raised by my hon. Friend the shadow Minister about the long deadlines of this Bill, which would be rectified by amendments 132, 133 and 134.
Clause 80 amends the Water Resources Act 1991 to improve the way in which the abstraction is managed. This additional Environment Agency power, to act on licensing that causes environmental harm, is welcome. However, the timescale proposed in the Bill is too long, as the changes will apply to licenses revoked or varied on or after January 2028. With compensation remaining payable on any license changes opposed by the agency before that time, budgetary constraints will significantly limit its scope to act, which cannot be the aim of this Bill.
The current timescale does not appear to fully grasp the severity and immediacy of the problems facing UK waterways and the poor performance of water companies to date. Four out of nine companies assessed by the Environment Agency require improvement. We cannot wait until 2028 to start revoking licenses and take action, when there is clearly systemic underperformance in the water industry.
Moreover, water companies in England were responsible for their worst ever levels of environmental pollution in the five years up to 2019, leading to condemnation from Ministers and the Environment Agency. In the agency’s annual assessment of the nine privatised water and sewage companies, its chair, Emma Howard Boyd, said that their performance continued to be unacceptable.
Unsustainable abstraction can do serious environmental damage, particularly by changing the natural flow regime. This results in lower flows and reduced water levels which, in turn, may limit ecological health and result in changes and reductions of river flows and groundwater levels. This is about far more than just hosepipe bans.
The Government’s own analysis has shown that 5% of surface water bodies and 15% of groundwater bodies are at risk from increasing water use by current license holders, which could damage the environment. With the Environment Agency recently warning that in 25 years, England’s water supply may no longer meet demand, we will have to clamp down on over-abstraction now. Before becoming an MP, I worked for the aid agency WaterAid, where I saw the result of over-abstraction and how damaging that was for communities around the world. We do not want to face that here.
Abstracters are unlikely to give up these abstraction rights voluntarily and forfeit potential compensation payments. This means that over-abstracted rivers and groundwater-dependent habitats will continue to suffer for at least another eight years under the clauses of this Bill, putting threatened habitats and public water supplies at risk. Further clarification could then ensure that the new date would not impose unrealistic time pressures on water abstractors.
Variations to licences could then be made, setting out a reasonable compliance period for changes to be put in place before the abstractor would be in breach of the new conditions. That would give fair notice to abstractors, which I understand is a concern for the Minister and is the original purpose of the 2028 date, while also enabling swift action on the mounting environmental harm caused by damaging abstraction. It would put environmental risks in the driving seat, not the concerns of water companies, which is what the Bill does at the moment.
Does the Minister agree that without bringing forward the date from which environmentally damaging abstraction licences could be amended without compensation, we are unlikely to achieve the existing Government targets for the health of the water environment, which require us to bring our waters into good status by 2027 at the latest? Bringing the date forward to 2021 will allow action to be taken within the final cycle of the river basin management plans for 2021 to 2027, and allow us to reduce abstraction damage in line with Government targets set under the water environmental regulations of 2017. The dates need to add up.
In its report, “Water supply and demand management”, published in July, the Public Accounts Committee advised:
“The Environment Agency should write…within three months setting out clear objectives, and its planned mitigation actions and associated timescales for eliminating environmental damage from over-abstraction”.
The Committee wants immediate action and we should, too. Has the Environment Agency yet been able to outline how it will eliminate the environmental damage in line with statutory deadlines, given that this power will not come into effect until after those deadlines have passed?
I support these amendments, in order to put the Government’s own targets in line with each other and make sure that we take action against over-abstraction as urgently as necessary.
Rebecca Pow
The hon. Member for Putney has highlighted why we need to control water abstraction, which is why these clauses are so important. The Government would strongly prefer that solutions are found at a local level between abstractors and the Environment Agency, before these new powers are utilised. A lot of work is already going on to look at abstraction licences, to find different ways of working and to reduce quantities of water abstraction. Indeed, the Government’s 2017 abstraction plan sets out the Government’s commitment and actions to protect our water environment, and it is already beginning to have some effect. Since 2014, a total of 31 billion litres of water has been returned to the environment, and a further 456 billion litres has been recovered from unused or underused licences.
The implementation date of 2028 will afford the Environment Agency the time to engage directly with abstractors to resolve situations without the need to use these powers. That is one of the main pieces of work in progress, as I have outlined. It will also allow time for a catchment-based approach to water resources, to produce solutions. There is a lot of catchment-based work going on. Opportunities will come through the new environment and land management scheme and its systems of new environmental management, where farmers and catchments work together, which is crucial in a holistic approach to the water landscape.
Finally, the date allows time for the transfer of abstraction licensing into the new environmental permitting regime. The powers are more of a big stick, but we are hoping that these other things will swing into place before they have to be used.
Ruth Jones
Does the Minister agree that 2028 is a long time into the future? By then, small water bodies and wetland habitats, which are an essential but unnecessarily overlooked part of our water environment, may be lost. Something that has already gone cannot be brought back. The year 2028 is far too far into the future and we do not want things to be lost in the meantime.
Rebecca Pow
I thank the hon. Lady for her intervention, but I hope she realises, as I have just outlined, that we are taking action now. The Environment Agency is already working on reducing abstraction with these licence holders in many cases, and that work must carry on at pace.
I also want to be clear—the hon. Member for Putney touched on this—that these measures do not apply to water company abstraction licences. Following the Water Act 2014, water companies are not eligible for compensation for any revocation variation of their abstraction licences, so it is not the water companies we are actually talking about, but the other abstractors of water.
Dr Whitehead
I would have thought that if measures to sort out sustainable abstraction were already being taken, that would be a compelling argument for bringing the date forward from 2028. It is, after all, a longer period than the second world war. I am not convinced by the Minister’s arguments, and on the basis of that date we would like to pursue a Division.
Question put, That the amendment be made.
Dr Whitehead
I beg to move amendment 135, in clause 81, page 80, line 28, leave out subsection (9) and insert—
“(9) Regulations under this section are subject to the super- affirmative resolution procedure.
(10) In this subsection, ‘super-affirmative resolution procedure’ has the same meaning as it does in Section 18 of the Legislative and Regulatory Reform Act 2006.”
I will not detain the Committee for long. Our amendment suggests that instead of regulations under this section being subject to the negative procedure, they should be subject to the super-affirmative procedure. There is a real difference between the two because, as hon. Members will know, the negative procedure for secondary legislation requires merely that the legislation be laid before the House, and if no one objects to it within 21 days, it automatically becomes law. The affirmative procedure, on the other hand, means that under normal circumstances, the House is entitled to a debate on the legislation, in which the Minister is required to take part, at least to air the reasons behind the introduction of the regulations.
The affirmative procedure is potentially an important protection for Parliament to hear properly what is happening with secondary legislation. The super-affirmative procedure guarantees a 90-minute maximum debate on a piece of secondary legislation, and that is the procedure that we would prefer for this clause. We will not press the amendment to a vote, but we would be grateful if the Minister reflected briefly on why she thinks the negative procedure is the right way to go.
Fleur Anderson
Although there is some justification for a power to make technical updates to regulations, as my hon. Friend the shadow Minister has set out, the clause could provide a licence for the Secretary of State to weaken, via secondary legislation, the standards of our waters, and their chemical status in particular. Secondary legislation has caused a huge amount of division between the Opposition and the Government, as we have asked that much more of it be put into primary legislation. If there is more secondary legislation, and “may” does not become “must”, it is really important that it is debated under the super-affirmative procedure.
That is particularly worrying in the light of Sir James Bevan’s speech, which suggested possible reform of the way in which the status of our water is considered. What is behind that suggestion? The last thing we need now is a regression of water quality standards. According to data released by the Environment Agency last month, not a single lake or river in England that has been recently tested has achieved a good chemical status. We are experiencing a five-year high for environmental pollution by the water industry.
Stakeholder concerns about the unmitigated power in the clause would be unlikely to evaporate if there were a commitment to non-regression of environmental standards. Given the public support for environmental protection, which I am sure the Committee will acknowledge, why are the Government reluctant to provide assurances and to agree to the amendment? That goes to the heart of many of the issues at the centre of the Bill. Time and again, we have heard assurances of non-regression, but the Government have so far avoided every single opportunity to put those promises into statute. That persistent refusal makes us all highly suspicious.
At the heart of the water framework directive is the principle that the water environment is a system and that all its parts need to be in good working order for it to operate effectively. That principle remains true. The clarity of the one in, one out rule should not be abandoned, and any weakening of chemical standards would be a backward step in the light of growing public concern about water pollution and the new data showing the extent of water quality failures across England.
I urge the Committee to support the amendment, which goes some way towards addressing that significant risk, and would ensure that any changes to water quality regulations would be subject not to the negative procedure, as the Bill currently states, but to the super-affirmative procedure—as a new MP, I had to go and look it up and have learned a lot about it—as defined in section 18 of the Legislative and Regulatory Reform Act 2006. That would give stakeholders the right to input into any water quality regulation changes, including UKTAG, the UK technical advisory group that currently advises on standards—
Financial Services Bill (First sitting)
Tuesday 17th November 2020
(4 years ago)
Public Bill CommitteesRead Full debate Financial Services Bill 2019-21 View all Financial Services Bill 2019-21 Debates Read Hansard Text Read Debate Ministerial Extracts Amendment Paper: Public Bill Committee Amendments as at 17 November 2020 - (17 Nov 2020)
The Chair
Before we begin, I have a few preliminary announcements: please switch electronic devices to silent. Tea and coffee are not allowed during sittings. Can I emphasise the importance of social distancing? Spaces available to Members are clearly marked. As you can see, not all Members can fit around the horseshoe. Will Members sitting at the side of the Room or in the Public Gallery please use the standing microphone if they wish to ask a question? Date Time Witness Tuesday 17 November Until no later than 10.25 am Prudential Regulation Authority; Financial Conduct Authority Tuesday 17 November Until no later than 10.55 am UK Finance Tuesday 17 November Until no later than 11.25 am International Capital Market Association Tuesday 17 November Until no later than 2.45 pm The Investment Association Tuesday 17 November Until no later than 3.30 pm TheCityUK; City of London Corporation Tuesday 17 November Until no later than 4.00 pm The Association for Financial Markets in Europe Tuesday 17 November Until no later than 4.30 pm The British Private Equity and Venture Capital Association Tuesday 17 November Until no later than 5.00 pm StepChange Debt Charity Thursday 19 November Until no later than 12.15 pm Spotlight on Corruption Thursday 19 November Until no later than 2.45 pm The Association of British Insurers Thursday 19 November Until no later than 3.30 pm Transparency International Thursday 19 November Until no later than 4.15 pm The Finance Innovation Lab; Positive Money Thursday 19 November Until no later than 5.00 pm Hon Albert Isola MP, Minister for Digital, Financial Services and Public Utilities, Her Majesty’s Government of Gibraltar
Today we will first consider the programme motion on the amendment paper. We will then consider a motion to enable the reporting of written evidence for publication, and then a motion to allow us to deliberate in private on our questions before the oral session begins. In view of the time available, I hope we can take these matters without debate. I call the Minister to move the programme motion standing in his name, which was discussed yesterday by the Programming Sub-Committee for this Bill.
Ordered,
That—
(1) the Committee shall (in addition to its first meeting at 9.25 am on Tuesday 17 November) meet—
(a) at 2.00 pm on Tuesday 17 November;
(b) at 11.30 am and 2.00 pm on Thursday 19 November;
(c) at 9.25 am and 2.00 pm on Tuesday 24 November;
(d) at 11.30 am and 2.00 pm on Thursday 26 November;
(e) at 9.25 am and 2.00 pm on Tuesday 1 December;
(f) at 11.30 am and 2.00 pm on Thursday 3 December;
(2) the Committee shall hear oral evidence in accordance with the following table:
(3) proceedings on consideration of the Bill in Committee shall be taken in the following order: Clause 1; Schedule 1; Clause 2; Schedule 2; Clauses 3 to 5; Schedule 3; Clauses 6 and 7; Schedule 4; Clauses 8 to 21; Schedule 5; Clause 22; Schedules 6 to 8; Clauses 23 and 24; Schedule 9; Clauses 25 to 27; Schedule 10; Clause 28; Schedule 11; Clauses 29 to 44; 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 5.00 pm on Thursday 3 December.—(John Glen.)
Resolved,
That, subject to the discretion of the Chair, any written evidence received by the Committee shall be reported to the House for publication.—(John Glen.)
The Chair
Copies of written evidence that the Committee receives will be made available in the Committee Room. I call the Minister to move the motion about deliberating in private.
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.—(John Glen.)
The Chair
Q
Victoria Saporta: Good morning everyone, and good morning, Chair. I am Vicky Saporta, executive director for prudential policy in the PRA within the Bank of England.
Sheldon Mills: Good morning. I am Sheldon Mills, interim executive director of strategy and competition at the Financial Conduct Authority.
Edwin Schooling Latter: Good morning all. I am Edwin Schooling Latter, director of markets and wholesale policy at the Financial Conduct Authority.
The Economic Secretary to the Treasury (John Glen)
Q
Victoria Saporta: Thank you for the question, Mr Glen. Yes, we worked closely together, as you would expect for a Bill that proposes to revoke elements of the acquis and give the regulators specific powers. Ultimately, of course, it is for the Government to introduce the Bill and for Parliament to take it forward. However, the working relationship was very close, and because of that we are content with the content of the Bill and the proposed measures.
John Glen
Q
Sheldon Mills: We have had close interaction with you and your officials throughout the drafting of this Bill, and also the preparations for a new UK financial regulatory system, as we move to exit from the EU. We think it is important that there is an agile and confident UK financial services regulatory system, which will support the UK financial services industry and, importantly, also protect consumers and ensure market stability. We feel that the Bill is a good first step in that direction, to enable us to play our role in those goals and objectives for the UK financial services industry.
John Glen
Q
Edwin Schooling Latter: Yes, of course. Committee members will be aware that LIBOR is a benchmark that has had a troubled past. It is also a benchmark that probably does not suit the needs of its users as well as some alternatives; but it is very deeply embedded in the financial system, so while we think it is the right thing to move towards the end of LIBOR and its replacement with better alternatives, we need to be able to do that in an orderly way. The provisions in front of you contain some important measures to enhance the FCA’s powers to manage an orderly wind-down—for example, to identify the point at which the benchmark is no longer sustainable and to take measures to ensure that its publication ceases in the least disruptive way possible for the many hundreds of thousands of contract holders who have mortgages or more complex financial instruments that reference the benchmark in some way.
Mr Pat McFadden (Wolverhampton South East) (Lab)
Before I begin, can I get some sense from you, Mr Davies, about whether we can have a few questions?
Mr McFadden
Q
Victoria Saporta: Yes, I am happy to do so. The way the EU tends to function in terms of regulations—particularly banking regulations, which are part of the provisions of the Bill that relate to the PRA—tends to be quite unique relative to other non-EU regulators. Essentially the Commission proposes very technical regulations, which in banking are often agreed by technocrats in the Basel environment—in the Basel committee—and then these are debated in the European Parliament and the Council of Ministers, and become directly-applicable law. The reason for that way of doing it relates to the single market, so that every EU member state has exactly the same regulations. As I said, that is very unique. Every other member of the Basel committee, for example—all the G20 jurisdictions with the exception of Switzerland, which is another federal democracy—would have its regulators applying these technical rules that they have themselves negotiated internationally.
Pre the treaty of Lisbon and before the single market rulebook, this was the way that regulation was done in the UK through the Financial Services and Markets Act 2000. Primary legislation set out the objectives, framework and constraints through which regulators would operate and the regulators would then go about implementing the rules for the purpose, so that they could achieve the objectives that Parliament would have set for them.
Traditionally, UK regulators have done that in the prudential sphere, which is my current sphere. To preserve safety and soundness and contribute to financial stability, the PRA currently has a secondary objective of facilitating competition, but with the remit that the Government give them and always with an eye to preserving responsible openness and dynamism.
Mr McFadden
Q
Victoria Saporta: There is a considerable body of empirical research that suggests that regulatory independence is strongly correlated with stronger financial stability. Particularly in the banking system, there are lower losses under stress. One of the reasons for that is because regulators—at least in theory, but I happen to believe from my experience that that is the practice—potentially have longer horizons than Governments, and therefore regulatory independence tends to be more robust to such lobbying in the longer term, subject, of course, to accountability and objectives set by Parliament.
Mr McFadden
Q
Sheldon Mills: It is a good question. The starting point is our statutory objectives. We set our priorities for the year and also over three years on the basis of our statutory objectives, which are consumer protection, competition and market integrity. We then work out whether, serving those objectives, certain types of activities will help protect consumers, and help us ensure market integrity or further competition.
If you take the example of net zero, it is quite clear, regardless of where Government’s ambitions are in relation to net zero, that the move towards net zero forms a part of the issues that we face globally in terms of climate change. Those are risks in the economy and therefore impact the firms that we regulate and in turn may impact the consumers that we seek to protect. In a sense, we have little choice but to consider and be cognisant of Government’s aims in relation to net zero, because if we are not thinking about those climate risks and challenges, which our firms face, we would not be doing our job and serving our statutory objectives.
Quite often, you find that the aims of Government are merely looking at some of the risks that are impacting markets, impacting the firms, and therefore it is right and proper that we have work in relation to those areas, and we do have work in relation to net zero and climate change.
Mr McFadden
Q
Edwin Schooling Latter: In answering that question, I think that an important starting point is to recognise that the UK regulators, including the FCA, played a very large role in designing a lot of that EU regulatory framework. So the overall picture is definitely one where we support the nature of that framework and the provisions within it. There are a few areas where compromises to span 28 countries perhaps do not suit as well as they might the particular circumstances of UK markets. I think that there are some areas, for example in the MiFID regime, where we could look at an approach that was better calibrated to the UK’s capital market infrastructure, but areas where we would diverge are the exception rather than the rule.
Alison Thewliss (Glasgow Central) (SNP)
Q
Sheldon Mills: We have an obligation under FSMA such that all authorised firms will sit on our financial services register, and that allows a sense of public transparency as to who is authorised and what they are authorised to do. As the Committee may or may not know, we regulate tens of thousands of firms, upwards of 60,000 firms, so the register is quite large. The current rules allow firms that are authorised on the register to maintain their registration even though their activities are, in effect, dormant and they are not actually carrying out certain financial services. We need to give them rights to be heard in order to remove them from the register, and that takes time. Therefore, having a different regime, whereby we can give notice to firms that their removal might be pending unless they prove to us that they are active, is going to be a much more efficient and effective way of operating the register. This is important because harms are occasioned by the presence on the register of dorman firms. There is the activity of cloning, whereby firms use dormant names on the register to practise certain fraudulent and scam activity, which is a significant problem that we are seeking to tackle. We are committed, of course, to removing people from the register as swiftly as possible, but the provisions in the Bill will really help to accelerate that for us.
Alison Thewliss
Q
Sheldon Mills: It is not a resourcing issue as such. The process that one needs to go through in order to remove somebody from the register is time and resource-intensive and requires quite a lot of back and forth to execute, so this will be a more efficient process, which still respects the right of the person on the register to explain to us that they are using their licence or authorisation, but which will allow us to move forward a bit more quickly.
Alison Thewliss
Q
Sheldon Mills: I will need to come back to you on that.
Alison Thewliss
Q
Sheldon Mills: We can always do with more resources—that is a common refrain of regulators. Naturally, we will have to reorder our priorities in order to ensure that we are able to take on the onshored rules, to provide them with the right level of attention and make the right decisions. They will fall into two categories. Some we will be able to accept quite quickly and onshore reasonably easily, but others will have areas where we will rightly need to work through how they sit within the specifics of the UK market in a post-Brexit world, and they may take a little more time. All of them will require some form of consultation with the public, so that will take some time. I feel, however, that we have the expertise, experience and knowledge that certainly help us to have the head start on onshoring.
Alison Thewliss
Q
Sheldon Mills: I do not think so. What Ms Delfas was referring to is the need for firms to ensure that they are making efforts to be ready for transition. We have worked with firms and the Prudential Regulation Authority to ensure that firms are ready for transition. When we describe a “cliff edge”, what one is describing is the need to ensure that we are prepared for what we know is coming. We are working closely with firms and putting the right sort of pressure on them to be ready for that point.
Ms Angela Eagle (Wallasey) (Lab)
Q
Sheldon Mills: As I said, we have a significant amount of expertise in the United Kingdom. The reason we have that expertise is that—I have to be careful how I put this—much of the financial services legislation that has come about in the EU, the UK has fully participated in, often leading on the legislation. If we take the investment firms prudential regime, which is in the Bill, our colleagues at the FCA were leaders in that space, setting the pace and direction in the EU. So I think we have the expertise and the experience.
When I think about resources, there are areas where we will need to consider hiring more people, in particular the area of prudential expertise—that is a specific area within the FCA where we will need to hire. We will need to consider our resourcing carefully, as more parts of the acquis are onshored, but currently, where we stand, we think we are capable of moving around our resources in order to meet the demands.
The impact that it could have is of course the speed at which we are able to turn to the different pieces of legislation. If the ask was to do everything on day one, there would be an impact on resources; if we have a sensible framework and approach, I think we can manage.
Ms Eagle
Q
Are you sure that will not cause your resources to be stretched in a way that you had not anticipated? For example, if we have to approve new ways of doing things, onshore all these things and get new systems up and running, those who might wish to carry on can just shift to the internal market and carry on doing things, without having to wait for all the consultations that you and your colleagues will be doing to try to re-establish a UK-based regulatory system.
Sheldon Mills: The starting point is that the foundations of the system are clear to all financial services markets in the UK, so there will not be a gap that means organisations will not know the type of regulatory system that they expect when they are authorised a licence to operate in the UK. We will ensure that that is maintained and is clear throughout the transition and into the future.
On what I think you are referring to as the competitive regulatory system that we might enter into, I can assure you that we are engaged internationally through all international bodies. We play leadership roles in the ESB, the Financial Stability Board and all sorts of international bodies in financial services. Therefore, we are key actors in regulatory systems and the latest approaches to regulation across the world, and that will also support our being a sensible regulatory environment in which firms wish to operate. We are clearly engaged with negotiations and discussions with the European Securities and Markets Authority in relation to a range of regulatory activity, so I am confident that we will not have any significant gaps or issues that would cause issues for the UK financial services industry or for those who wish to come and play an active role in that industry.
Ms Eagle
Q
Sheldon Mills: The Bill is a matter for Government to take through Parliament. The important thing for us, as regulators, is that the Bill provides us with sufficient flexibility to meet the needs that we face as we move through the transition and into the future. In a sense, the Bill is silent on whether we are divergent or equivalent. Equivalence is a policy matter for Government, as opposed to a matter for us. All we need is sufficient flexibility to ensure that we have an appropriate regulatory system, depending on how Government policy emerges in relation to equivalence.
Ms Eagle
Q
Sheldon Mills: Neutral is too strong a word. My point of view is that we are interested in what I would call outcomes-based regulation. Equivalence can be done in one of two ways within the bounds of equivalence: it can be done line by line and letter by letter, or it can be done on the basis of seeking to meet equivalence objectives within an outcomes-based regulatory system. We are moving towards the position of the latter. Overall, equivalence is a matter for Government.
Ms Eagle
Q
Sheldon Mills: I do not think so at all. To give an example, it may look like it would take an army of 50 or 60 people to do the work of the investment firms prudential regime, but in reality it takes around 10 people to do that work. These are significant specialists in the technical architecture of designing prudential regulation. We would not ordinarily use those people in our consumer protection work, and they have different skills and are involved in different activities. I do not think that we will be any less vociferous in protecting consumers. During the crisis, those who watched us saw that we were at the forefront of ensuring that we tried to provide relief to consumers during the pandemic. We will continue in that vein. As the FCA’s conduct regulator, I am committed to ensuring that the consumer is at the heart of everything we do.
Abena Oppong-Asare (Erith and Thamesmead) (Lab)
Q
Sheldon Mills: I will go first and then pass over to Vicky. It is useful to start with our current accountability, because the Bill and future regulatory frameworks being consulted on by the Government deal with that issue. We wish to be accountable. As an independent regulator, an important part of our process is for us to have public accountability. We serve the public and ultimately are scrutinised by Parliament. Our main form of scrutiny is that of the Treasury Select Committee, but we attend many other Committees. Explaining our activity to Parliament is an important part of our work. Below that, within the Financial Services and Markets Act for the FCA specifically, are our statutory panels. They are there to scrutinise our work in a much closer engagement with the organisation. Then we have the consumer panel, the practitioner panel and the small business practitioner panel, as well as the advisory panel on markets and listings. They are able to make public their views, and—believe me—they do very often make public their views on our activity. In addition to that, we will consult on our policies when we do policy-making work ourselves, as do other public authorities. We will also provide access to non-confidential information and data so that all interested parties can make their views known to us.
We also evaluate our work to ensure that it meets its intended outcomes. We already have an existing accountability framework that would sit well with the additional rule-making powers we may get through the Bill and as we move forward with the proposed reform to the financial services regulatory regime. The future regulatory framework is out for consultation, so I will not say much in relation to it, but we of course acknowledge that there may need to be adjustments to the accountability framework to accord with the additional powers that we are getting. We look forward to seeing the responses to the Government’s consultation in relation to that.
Abena Oppong-Asare
Q
Sheldon Mills: As I said, we acknowledge that we will be getting additional powers and there may need to be changes to that accountability framework. Within the Bill, you see the foundational approaches in terms of how things may change. Within each of the specific policy areas, if we take the investment firms prudential regime review, there are certain “have regards” obligations that we will need to take account of in that regime. I think that is a sensible approach to take as you bring in onshored regulation. There are specific needs that Parliament considers it is appropriate for us to consider for that onshored regulation. Then, that “have regards” mechanism of pointing that out to us and us being accountable for meeting those “have regards” in accordance with our statutory objectives is a sensible approach and adds an additional layer of accountability and scrutiny for us.
There are other mechanisms within the future regulatory framework, which is out for consultation. Again, I do not have a strong view on them. I recognise that we are getting more rule-making powers and we may need to have more strengthening of the accountability framework.
Abena Oppong-Asare
Q
Victoria Saporta: To response to your question directly, yes, from the very beginning we had discussions with Treasury colleagues about how, within the narrow confines of this Financial Services Bill—I can talk about the related but quite distinct issue of the future regulatory framework—we could be more accountable, given that the Bill effectively gives the Government powers to revoke particular narrow areas of what will become, on 1 January, primary legislation, and then asks the regulators to fill in those particular gaps. The Government were keen that the process should be part of an enhanced accountability framework.
As Sheldon has said, within the confines of this Bill, the enhanced accountability framework applies to the updating of the rulebook to take into account the new Basel III provisions and the investment firms regulation, and three new “have regards” regulatory principles, which are set out in the relevant schedule and refer to us having to take regard of relevant standards recommended by the Basel Committee on Banking Supervision. That applies obviously to the PRA. We need to take the likely effect of the rules on the UK’s relative standing as a place for internationally active credit institutions and investment firms to carry on activities. Also, we need to take into account the likely effect of the rules on the ability of firms to continue to provide finance to households and businesses. This is an enhanced accountability framework, and the Bill also obliges us to publish how we have taken into account these “have regards”.
Those measures are within the proposals in the Bill to enhance our accountability publicly. There is the separate issue of the consultation that the Government are currently doing on how the future regulatory framework will look, what the enhanced accountability provisions within that are and how they should apply. I would not want to pre-empt that consultation but, clearly, the Government are interested and are trying to look at ways of keeping our feet to the fire, and that is absolutely appropriate.
Harriett Baldwin (West Worcestershire) (Con)
Q
Sheldon Mills: We have not undertaken a cost-benefit assessment of the Bill. That would be a matter for the Government. We have considered, as we discussed in response to earlier questions, the impact on resources within the FCA. Our current intention is to keep that within our current financial envelope, so we are not predicting at this stage an increase in fees or levies to take account of the Bill. That is all I can say at this stage.
In terms of the impact of the Bill and the onshored legislation, when we review the regulations on the investment firms prudential regime and so on, we will do a cost-benefit analysis of the rules and regulations that we are proposing at that stage. At this stage, we will not be doing that—that would be a matter for the Government, not for us.
In terms of the impact on consumers more generally, as I said, there are aspects of the Bill that are very consumer enhancing. I do not think they came up very much on Second Reading, but the provisions in relation to breathing space will be very helpful for consumers facing issues around statutory debts, which we are interested in as a financial regulator. The issues in relation to the register will be extremely helpful for us in terms of tackling fraud and scams. There are many elements of the Bill that are helpful. It is complicated, but the investment firms prudential regime is also consumer enhancing; currently, the capital requirements facing investment firms are those for the systemically important banks, and they are not fit for purpose. This regime will help us have a capital and prudential regime that is fit for investment firms. So there are a whole host of aspects of the Bill that are supportive of consumer interests and will not necessarily increase costs in a way that will be inimical to their interests.
Harriett Baldwin
Q
Sheldon Mills: All these measures are Government proposals, so the cost-benefit analysis that is required will be carried out by the Government and not by us. Once the Bill has been passed, in whatever form—we are bringing forward rules and regulations—we will undertake a cost-benefit analysis. I am giving an indicative view, as opposed to one based on a cost-benefit analysis that we are not required to carry out at this stage.
Stella Creasy (Walthamstow) (Lab/Co-op)
Q
Sheldon Mills: It is a broader question than the Bill, but I will answer by giving our approach to debt.
As a regulator, our approach is not to have a policy on whether people should be able to access credit, but we are concerned about the impact on people of firms providing credit. We want firms to be able to provide credit in a way that treats individuals fairly, takes account of their needs and circumstances and, in particular, supports vulnerable customers if they are in debt.
We work closely with debt charities. Some of the issues that we are seeing, which we all face and of which the FCA is cognisant, include the accumulation of debt among certain parts of the population, which is why it is important that rules and processes are in place to support people with debt management and why a breathing space policy forms an important part of that. I think that answers your question, but you might have more specific questions.
Stella Creasy
Q
Sheldon Mills: I think it is for Government to decide whether we should have that “have regard” regime, but there are current rules that firms should take account of the needs of customers. If customers are clearly displaying signals that they are taking on debt that is not affordable—and, in that sense, is not sustainable—firms should have in place mechanisms to ensure that they do not provide further credit or loans to them. There are rules in place on unaffordable lending.
It is for Government to decide whether we have “have regards”, but I do not think that we necessarily need them. I agree that there are issues with debt throughout society that we need to tackle, but I believe we have the right rules in place to ensure that firms make appropriate lending decisions.
Stella Creasy
Q
Sheldon Mills: You will have seen that we have done a significant amount of work in relation to high-cost credit and unaffordable lending. We have put caps in relation to forms of high-cost credit; we have tackled payday loan operators; we have a business priority that relates to consumer credit; we have introduced a review, which our former interim CEO, Chris Woolard, is undertaking in relation to aspects of unsecured consumer credit. We are extremely proactive in this area, and the overall system—in terms of the regulatory system—works well. The fact that consumers are able to go to the Financial Ombudsman Service, where they have had certain issues and the service is therefore enabled to give redress to those customers, is an important part of the system. However, I would not want you to think that that we are not proactively seeking to tackle the issues in this area.
Stella Creasy
Q
Sheldon Mills: I will let my colleagues go first, then I will come in.
Edwin Schooling Latter: Let me raise one area where work is under way. FinTech was mentioned, but the area of crypto-assets has been popular in some quarters. That is an example of an area where we have taken a very proactive approach to putting limitations on where those can be marketed to retail investors who may not fully understand the difficulties of valuing those, the risks attached to them, or the possibilities that they would lose all of their money the more speculative end of that product range.
Sheldon Mills: I would agree with Edwin. The main area which we will see in relation not just to financial services, but to any product, is the continued development of digital means both of accessing and of providing products and services. Our approach to that is twofold: one approach is to encourage innovation. These products and services can bring efficiency and lower cost, and they can bring different levels of access for consumers, including vulnerable consumers. However, while doing that, we ensure we are clear on the ethics and consumer protection aspects of these new forms of products and services. Those are some of the areas where we will see future opportunities and challenges within the financial services system.
Stella Creasy
Q
Sheldon Mills: With respect, I cannot regret not acting on something which I do not regulate. However, what we are doing is looking at that area through the form of this review. As you know, and as is implicit in your question, that does sit outside our specific regulation.
The Chair
Victoria, I think you were about to say something.
Victoria Saporta: Sorry, I am conscious of the time. I have basically one comment to make in our particular area. I agree very much with Sheldon on digitalisation and with Edwin on crypto. Another particular area that we are looking at—
The Chair
Order. I am afraid that brings us to the end of the time allocated for this session. I thank our witnesses on behalf of the Committee for their evidence.
Examination of Witnesses
Simon Hills and Daniel Cichocki gave evidence.
The Chair
We will now hear from Simon Hills and Daniel Cichocki from UK Finance, who are joining the sitting remotely. Can you introduce yourselves for the record?
Daniel Cichocki: Good morning, Chair. I am Daniel Cichocki. I am the London inter-bank offered rate transition director at UK Finance and, as such, am focused on the benchmark elements of the Bill.
Simon Hills: Good morning. I am Simon Hills. I lead the prudential policy work at UK Finance, so my particular area of expertise is the prudential regulation of banks.
The Chair
I remind colleagues that we have until 10.55 am for this session, so it is much shorter than the previous one. I hope that colleagues will be mindful of that.
John Glen
Q
Simon Hills: It is important to recognise that the Prudential Regulation Authority has been a strong supporter of Basel 3.1. It has been very influential in the way it was finalised, and I think that it is committed to implementing the Basel 3.1 framework in an internationally aligned way. That is important for our members, particularly if they are internationally active, because they want a coherent and harmonised regime across the world. If you are a UK bank operating in the UK, North America, Europe and Asia, you want one version of Basel 3.1 and you want it to be implemented in a coherent way. If not, and if there are different approaches to regulatory reporting, to how credit risk is assessed and to liquidity requirements, you have to implement a number of different versions of Basel 3.1, which will be more difficult.
In terms of UK Finance’s competence in, if you like, holding the PRA to account, we have a wide range of members for whom Basel 3.1 implementation is very important. I am pleased to say that I have good working relationships with Vicky and her colleagues at the PRA.
John Glen
Q
Daniel Cichocki: Certainly, the issues with the lack of sustainability of the LIBOR benchmark are very well documented, and it is important, as the Financial Stability Board has acknowledged at an international level, that we move away from LIBOR on a smooth and timely basis. It is also very important, certainly from an industry perspective, that as a result of moving away from LIBOR on to more robust reference rates, customers who have contracts referencing LIBOR are not inadvertently affected by that transition.
What this Bill seeks to do—and we are very supportive of its provisions—is to make sure there is a safety net in the form of powers being granted to the FCA, to ensure that those contracts that cannot be migrated on an active basis before LIBOR ceases have a solution so that the customer has a clear outcome for the contracts beyond LIBOR cessation.
These powers are important because before 2017, and the acknowledgement that LIBOR would cease, many contracts did not have clear, robust terminology setting out what would happen if LIBOR ceased. They may include terminology addressing if LIBOR should be unavailable for a day or two, and that might be the reference point those contracts would take. In that instance, without these powers, we may have seen customers falling back on to the last available LIBOR rate to the point of cessation, essentially becoming a fixed-term contract. We may have seen customers falling back on to cost of funds, which would create very diverse and disadvantageous outcomes for them. Equally, we would have seen fairly significant levels of contractual disputes beyond the end of 2021. These powers, in preventing all those negative outcomes for both customers and market integrity, are absolutely critical as part of the transition.
Mr McFadden
Q
Simon Hills: I am not sure that we would want the UK Government and authorities to diverge significantly, if at all, from other standards. We are not sure yet what Europe will do in respect of Basel 3.1. We do not expect draft legislation from the Commission until around Easter next year. That said, from the way in which the Commission has implemented previous iterations of Basel, I would expect it to stick quite closely to that Basel 3.1 framework, for the same reasons I have mentioned: international coherence and harmonisation, and easing the comparison of different banks and jurisdictions.
Mr McFadden
Q
Simon Hill: Yes, I think there is likely to be work to be done there. Of course, one of the accountabilities the Financial Services Bill gives the PRA is to take financial services equivalence and international competitiveness into account, and, importantly, the banks’ ability to continue to provide finance to UK businesses and consumers on a sustainable basis. I think we will all want to understand how different regulators around the world—not just in Europe—look at the PRA’s implementation when it gets down to those technical standards, which is why it is important for both Parliament and UK Finance to make sure there is no inappropriate deviation from international standards. I can assure you that if UK Finance members see that there is, we will speak up about it.
Mr McFadden
Q
Daniel Cichocki: It is absolutely right to acknowledge the issues with conduct around LIBOR in the past and the reforms that have taken place to make sure that those things are prevented. That includes the FCA oversight of the LIBOR benchmark, the introduction of the benchmark regulations at a European Union level, and transcribed into UK law, and broader reforms since the financial crisis, including the senior managers regime to ensure that the issues with LIBOR are not repeated. As the Committee will be aware, the fundamental reason why it is important to move away from LIBOR is that the underlying markets on which the rate is based have largely dried up. Therefore it is right to move us on to robust reference rates based on markets that are highly liquid and not reliant on expert judgment.
Simon Hills: It is important to remember that individuals in banks who are responsible for benchmark submission and administration are classified as so-called certified persons under the senior manager certification regime and they have to be certified as fit and proper every year by their firm. If they are not certified as fit and proper, they will lose their job and will find it very difficult to find a role in financial services again.
Mr McFadden
Q
Daniel Cichocki: LIBOR as it is formed today includes both elements of actual transactions and expert judgments of firms. These expert judgments, as a result of the issues in the past, are subject to those very high levels of governance control that I have talked about being introduced as a result of the benchmark regulation—absolutely appropriate as a result of the issues with LIBOR in the past. The underlying reason why we need to move away from it is that we want to be internationally on rates that do not require that expert judgment.
Alison Thewliss
Q
Simon Hills: Shall I go first and talk about the prudential regulation of banks? The Financial Services Bill achieves what it sets out to do: to implement a coherent version of Basel 3.1 in the UK. It is quite important to our members that we do Basel 3.1 the same in all the major financial centres in which firms operate. If a firm that is regulated by the UK operates in a different host country and the host country says, “That UK firm operating on our patch is supervised by the PRA and the PRA has introduced a watered-down version of Basel 3.1”, then they would add extra supervisory levels to bring it back up to the Basel 3.1 standard. That leads to a bifurcated approach with different regulatory standards in different countries, which makes life very difficult. A coherent approach, which is what the Bill seeks to achieve, is what we and our members want.
Alison Thewliss
Q
Simon Hills: We would not want to see wholesale deviation from Basel 3.1. Of course, Europe itself may choose to deviate from Basel 3.1, and that is a matter for its legislative process. I would not want to see the UK deviate from the agreed framework for Basel 3.1.
Alison Thewliss
Q
Simon Hills: I think there is a difference of approach in some G7 countries. Some perhaps apply a graduated or targeted approach to regulation. Canada, Japan and the US apply different iterations of the Basel standards to different sorts of firm. A large, internationally active bank would face the full gamut of Basel 3.1 in all its glorious granularity—in my view, that is right and proper—but a smaller, less systemic bank might face a different approach.
Of course, Basel 3.1 is applied by Europe—and that is what we are bound by at the moment—to all banks, not just those internationally active banks that are the target of Basel 3.1. The EU took the decision back, I think, in 1992—before even I got involved in this space—to apply the Basel III framework to all banks, from the smallest local Sparkasse in Germany to the largest, internationally-active bank.
I feel we must ask ourselves whether that is right; should there not be a risk-adjusted approach to safety and soundness? A sub-regional building society operating in the UK, for instance, has a vanishingly small probability of bringing the whole financial services system crashing down if it fails. Is it right to ask that firm to comply with all aspects of Basel 3.1? Maybe not.
Alison Thewliss
Q
Simon Hills: We don’t know yet how Europe will determine equivalence. I hope that our colleagues in the EU will look at our implementation of Basel 3.1, compare it with their own implementation and ask themselves the question, “Does this achieve what Basel 3.1 is seeking to achieve?” If they do, I hope there will be a form of equivalence—however we term it in the future—determination.
Ms Eagle
Q
Daniel Cichocki: As the Committee can imagine, from an industry perspective, we are absolutely focused on ensuring that the transition away from LIBOR—which is the right thing to do—is done in a way that treats customers fairly and consistently.
There is an awful lot of work being done at both an international and domestic level to agree standardised approaches to transition, where possible, but also to ensure that there are clear expectations from our regulators—here in the UK, it is the Financial Conduct Authority—about how that transition should be done.
Lots of work has been done and lots of work remains to be done, and, as you can imagine, we are speaking very frequently to the regulators here in the UK, and also working through the national working group to ensure that customers are transitioned on a fair and transparent basis.
Ms Eagle
Q
Daniel Cichocki: We are one voice from the perspective of the banking and finance industries, but it is important also to recognise that, within the overall national working group in the UK, there are voices that, rightly and properly, represent the end users of LIBOR, be they corporates themselves or the representatives of corporates. Although those voices are important in our national transition working group, it is equally important to address the concern that you articulate, which is absolutely right: the guidance that the FCA has provided to all firms that are transitioning their customers that the process should not be used to move customers on to inferior terms or rates that would be expected to be higher than LIBOR would have been. After speaking to our members in the industry, that message from the UK conduct authority has been heard loudly and clearly. All of us who are focused on moving away from LIBOR are acutely aware of the history of the benchmark and committed to ensuring that we move away from it in the right way and in a manner that treats customers fairly.
Ms Eagle
Q
Mr Hills, the industry has been lobbying the Government, Parliament and regulators to design regulations that will make UK firms more internationally competitive. Indeed, all of us in the room would share the aim of protecting our financial services industry. Do you think that the Bill achieves that?
Simon Hills: Yes, I think it does. The important thing is that the Bill achieves that by setting expectations of how the Basel 3.1 framework is implemented in an internationally coherent way. The PRA has to think about not only international competitiveness, but financial services equivalence, and the Bill achieves that.
Ms Eagle
Q
Simon Hills: I do not think that it is in the interests of the UK financial services industry and banks to introduce a divergent regime. We are talking about the importance of the City, and we want people to bring their money to the City for the right reasons, not the wrong ones. UK Finance members are certain that it is in no one’s interest to diverge from internationally agreed frameworks because that creates the risk that we bring in the wrong sort of people.
The Chair
If there are no further questions, I thank the witnesses for their evidence.
Examination of Witness
Paul Richards gave evidence.
The Chair
Q
Paul Richards: I am Paul Richards. I am a managing director at ICMA, which is the international bond market association. I am here to give evidence on the transition from LIBOR. I am involved in the transition from LIBOR to SONIA—the sterling overnight index average—because I chair the bond market sub-group, which consists of issuers, banks, investors and four major law firms. We work closely with the FCA and the Bank of England. If you will permit me, I shall make a short introductory statement.
I hope to be able to give you a bond market perspective on the Bill but, for the market as a whole, we are all trying to move away from LIBOR to risk-free rates while minimising the risk of market disruption and litigation. The Bill is welcome and very important for the bond market because it will give the FCA extra powers to deal with tough legacy LIBOR contracts and wind them down in an orderly manner.
There are three main points on which it would be very helpful if the Committee was willing to strengthen the Bill. First, the Bill needs to provide continuity of contract between the current definition of LIBOR and the new definition of LIBOR for legacy transactions once LIBOR is prohibited for new transactions. Legacy contracts referencing LIBOR under the current method of defining LIBOR need to be read as references to LIBOR under the new definition as determined by the FCA, so that there will be continuity there—this is sometimes called a deeming provision. This will reinforce the message that LIBOR will continue to appear on the same screen page, and it should also help to remove uncertainty and minimise the risk of a legal challenge on the basis that the current definition of LIBOR and the new definition are not the same and one party or another is worse off.
This is particularly a risk in the bond market in cases where LIBOR is specifically defined in legacy bond contracts in terms of its current definition. Continuity of contract or deeming provision like this was used when the euro was launched in 1999, and it worked well. Clearly, it would need to be drafted with the help of the Treasury and it would probably need to be drafted in terms of an article 23A benchmark in the way that the Bill is looked at. That is the first point.
The second and related point on which I hope the Committee will help is that the provision of the continuity of contract under the Bill needs to be accompanied by a safe harbour against the risk of litigation. This would provide that the parties to contracts would not be able to sue each other as a result of the change in the definition of LIBOR, and it would allow them to make conforming changes to bond market documentation.
The third point on which I hope the Committee will help is that the safe harbour and contract continuity provisions in the Bill need to be drawn as widely as possible, to protect any entity that uses the new definition of LIBOR for legacy transactions in place of the current definition of LIBOR. This would need to cover not just supervised entities in the Bill, but non-supervised entities, as the range of institutions involved in the international bond market is very wide.
Finally, I would like to draw your attention to two other points where there are significant legal risks under the Bill. One is that there needs to be equal treatment between legacy LIBOR bonds when the new definition of LIBOR takes over from the current definition, so that some legacy bonds are not preferred to others and there is no discrimination between them; otherwise, legal problems may arise. This would be a matter for the FCA under the Bill.
The other point is that there needs to be alignment internationally between the Bill and the similar legislation that is being introduced in the US and the EU, so that the rate used for legacy dollar bonds under English law and legacy dollar bonds under New York law is the same. Thank you, Mr Davies. I would be very happy to do my best to answer your questions.
John Glen
Q
Paul Richards: Thank you, Minister. First, as I mentioned, we welcome the Bill. The only question is: can it be improved to minimise disruption and litigation? The essential point is that, in the bond market, we have moved to SONIA as the risk-free rate, and new issues have been in SONIA for over two years now. That is the first step in the process.
The second step in the process is that we actively convert as many bonds as we can from legacy LIBOR to SONIA. We are making some progress there, but the third point is that we will still have tough legacy contracts that cannot be converted, either because they are too difficult to convert or because there are too many to convert by the end of 2021. In those circumstances, the provisions in the Bill are extremely helpful, because they provide for an orderly wind-down of tough legacy contracts. From that perspective, the Bill is very helpful. My questions relate to when the current definition of LIBOR is replaced by a new definition. Will there be contract continuity and a safe harbour to minimise the risk of disruption in the market and litigation?
Mr McFadden
Q
Paul Richards: LIBOR was set by a panel of banks. As the market no longer uses the underlying information that it used to use for banks, it has now changed, or will change, with the admission of SONIA, to a different definition. SONIA is essentially an overnight rate. It is a robust rate, because it is used widely in the market, whereas LIBOR is no longer used in the market as it was 30 or 40 years ago. That is one difference. A second difference is that LIBOR is a term rate—it is expressed over one month, three months or six months—whereas the liquidity in the SONIA rate is focused on the overnight market, which is therefore a much more representative selection and does not require expert judgment, unlike LIBOR.
A third point, perhaps, is that it is not just a UK proposal to replace LIBOR with risk-free rates in SONIA. A similar change is taking place globally. In the US, USD LIBOR is being replaced by the secured overnight financing rate, which has a similar sort of construction, and the situation is similar around the world. Those are the main reasons for the change.
Mr McFadden
Q
Paul Richards: As you say, LIBOR depended on expert judgment in many cases, because the market was no longer using LIBOR in the way it had been constructed. With SONIA, it is a much more liquid market and there is no need for expert judgment at all. That is one of the reasons why it is being preferred as the replacement for sterling LIBOR, and similarly around the world in other currencies.
Mr McFadden
Q
Paul Richards: A significant difference between LIBOR and SONIA is what is called the credit adjustment spread, which takes account of the difference between LIBOR and SONIA. In the consumer market, the proposals are, at a general level, to treat customers fairly. In the wholesale market, the aim is to have continuity of contracts between the old definition of LIBOR and the new definition that will be used for legacy transactions. This will be determined under the Bill by the FCA. It is not specified how it will determine it. There are market assumptions about that, but it is not decided yet how they will determine it. It is thought that it will consult the market before making a decision, but the end result will be that the rate that arises under the new definition of LIBOR will take over from the old definition of LIBOR, and there will be continuity of contracts between them. If that is emphasised in the Bill, that will give legal protection for all those involved, which is one of the main reasons for providing it. It needs to be accompanied by a safe harbour provision, which would protect all the different market participants involved. I would like to be able to tell you that this will eliminate the risk of litigation, but I cannot tell you that. What I can tell you is that it will minimise the risk of disruption and litigation that might otherwise occur because of the huge volume and value of transactions.
Mr McFadden
Q
Paul Richards: They are both needed, I think. The FCA’s judgment about treating customers fairly relates primarily to consumers. The protection that a safe harbour would provide, so that parties would not sue each other as a result of the change from the old definition to the new definition, is essentially designed for the international markets. So they are both needed. The FCA is already making statements about treating customers fairly, but the Bill should include both the continuity of contracts provision and a safe harbour protection to accompany that. The broader the safe harbour protection is drafted in the Bill—the Treasury, I am sure, could help on this—the better and more effective it will be in minimising disruption and the risk of litigation.
Mr McFadden
Q
Paul Richards: These are points that law firms that work in the City are acutely aware of from their previous experience. The law firms have been looking at what needs to be done to ensure that there is continuity of contract and a safe harbour protection. Of course, I hope that the Treasury will take account of that, as your Committee will take account of it before reaching a final conclusion. We should do everything we can to minimise the risk of market disruption and litigation, within the context of the overriding point, which is that we do need to move away from LIBOR to risk-free rates. That is, of course, what we have done, with new issues in the bond markets and with the conversion of legacy contracts from LIBOR to SONIA. We have a tough legacy problem for the future, which needs to be dealt with. The Bill helps to deal with that.
Alison Thewliss
Q
Paul Richards: Sorry, I did not quite catch the last point.
Alison Thewliss
You mentioned the uncertainty of how the FCA makes decisions around LIBOR contracts and benchmarking. Do you feel that needs to be set out more explicitly in the Bill so that you can know what to anticipate?
Paul Richards: I think it would be helpful for the Bill, specifically, to make provision for continuity of contracts—the deeming provision—and also for protection against litigation through a safe harbour, to be drafted as broadly as possible. That is not because the move away from LIBOR is not something that we should do—on the contrary, it is something we must do and we have made great progress in doing it already—but because, to deal with the tough legacy contracts in the Bill, we have to make sure that the new definition and the old definition are treated in the market as the same.
Alison Thewliss
Q
Paul Richards: I think that we are talking about 23A benchmarks in general in the Bill. What I have been talking about is specifically relevant to LIBOR. When the Treasury looks, as I hope it will, at whether anything is needed to advise you to strengthen the Bill, it might need to draft that in terms of benchmarks in general and not just LIBOR in particular.
Alison Thewliss
Q
Paul Richards: In the bond markets, we have to convert legacy contracts bond by bond, so it is the number of the bonds that is important, not just their value. In the sterling bond market, we think we have about 520 different legacy bond contracts, or 780 if you include the different tranches of securitisations. We have converted just over 20 of those so far in the market, but we know that we will not be able to convert all of them because some are too difficult to convert and there are too many to convert.
The FCA has an international role and English law applies in dollars as well as in sterling, so we need to take account of dollar legacy bond contracts under English law. In terms of number, we understand that there are more than 3,000 of those. In terms of value in bonds, we think we have around 110 billion in sterling outstanding.
The critical point for us in the bond market is that we need to convert them bond by bond. You will notice that that is different from the derivatives market, where there is a multilateral protocol that enables the market to do everything at once, which is currently in course. We cannot do that in the bond market.
Alison Thewliss
Q
Paul Richards: It is impossible to estimate the cost of litigation. The great thing is to avoid it wherever you can, and the Bill presents an opportunity to minimise the risk of it.
Alison Thewliss
Okay. It sounds like a good time to be a lawyer in this area. Thank you.
Ms Eagle
Q
Paul Richards: In the US, the alternative reference rates committee, which is the group equivalent to the sterling risk-free reference rates working group, has proposed legislation that is not identical to the UK’s but has the same effect, and so the concepts of continuity of contract and protection through safe harbours in the UK context will be recognised, we think, internationally as well.
Of course, we are not dealing here just with the proposals under New York law. We are having to look more generally. The EU has a proposal for legislation as well. It is important to recognise that the FCA has an international role, because the FCA is the regulator of the administrator of LIBOR, so what the FCA, through this Committee, decides in the UK will have an international impact.
Ms Eagle
Q
Paul Richards: No, I hope that the Government will consider this and say yes. I hope that that will happen, but it needs to be looked at in the context of the Bill as a great help to the market. It needs to be looked at in this context: can anything be done to strengthen the wholesale market?
Ms Eagle
Q
Paul Richards: The FCA has great powers under the Bill and I am sure that it will exercise them wisely, but we are dealing here with law internationally, and anything that can be done to strengthen that—and the Bill has the capacity to do that—will be helpful. I hope that it will also be helpful to the FCA.
The Chair
If there are no further questions from Members, I thank the witness for his evidence. That brings us to the end of our morning sitting. The Committee will meet again at 2 pm in the same room to take further evidence.
Ordered, That further consideration be now adjourned. —(David Rutley.)
Financial Services Bill (Second sitting)
Tuesday 17th November 2020
(4 years ago)
Public Bill CommitteesRead Full debate Financial Services Bill 2019-21 View all Financial Services Bill 2019-21 Debates Read Hansard Text Read Debate Ministerial Extracts Amendment Paper: Public Bill Committee Amendments as at 17 November 2020 - (17 Nov 2020)
The Chair
I remind members of the Committee sitting on this side of the room, or in the Public Gallery, to use the standing mikes when posing their questions. Our first witness this afternoon is Chris Cummings from the Investment Association. Mr Cummings, welcome.
Chris Cummings: It is a pleasure to be here. Thank you for your time.
The Chair
We have until 2.45 for this session. Mr Cummings, can you first of all introduce yourself for the record?
Chris Cummings: Good afternoon. My name is Chris Cummings. I am chief executive of the Investment Association, the representative body for UK-based fund managers, an industry now of some £8.5 trillion pounds, based here in the UK. Our products and services are used by three quarters of UK households, and we are deeply grateful for the opportunity to give evidence to your Bill session this afternoon.
The Economic Secretary to the Treasury (John Glen)
Q
Chris Cummings: Thank you for the opportunity to speak to one of the most central parts of the Bill. May I take a moment to congratulate you and your team on introducing the Bill? It provides much-needed reassurance to my industry, so thank you for that.
The industry is very pleased to see the overseas funds regime introduced as part of the Bill. Around 9,000 funds are currently available to UK investors as a result of the current regime. The reason we feel it is in the interests of UK savers and investors to have access to such a variety of funds is that it brings to the market not only choice but much-needed competition. It means that individual investors have greater choice and an ability to tailor their portfolio in a way that makes sense to them and reflects their risk profile. It is really the foundation of why the UK is the pre-eminent fund centre, not just in Europe, but globally. As the Minister knows, the UK has long enjoyed a reputation for being an attractive centre for fund management. That is built on the ability of UK investors to access an innovative and ever-adapting fund market.
We support this measure in the Bill wholeheartedly. At the moment, as the Minister knows, we manage around 37% of Europe’s assets, which is enabled through measures such as this. It is important for UK savers and investors; having such a variety of funds goes to the heart of having such a sophisticated savings environment in the UK.
It is important to note that if there was a cliff edge—if UK investors were not able to access these funds—that would constrict consumer choice. In trying to replicate something akin to what we have at the moment, we would bring a heavy burden of extra costs on to the industry and greater bureaucracy. It would reduce significantly the number of funds to which UK investors could have access. That is why we believe that the overseas fund regime is material.
It is worth contrasting that with what we see at the moment. In order to help navigate these turbulent waters through the Brexit period, I was delighted that the Government heard our calls to introduce a temporary permissions regime with the Financial Conduct Authority. I am pleased to note that the Bill extends the period from three to five years for that requirement, which is very good. It also allows us to tackle two particular issues wrapped up in the overseas funds regime.
First, there is a review of section 272, which is the current structure by which a fund sponsor or investment management company would seek to have their fund recognised by the FCA—our regulator here in the UK. Section 272 is okay, but it is rather cumbersome. It does not stand up well compared to international comparators. It is a rather lengthy form, which takes a while to complete and gives the FCA a six-month period to look at approving that particular fund.
The proposals in the Bill take us to a completely different level, where the FCA is able to look at fund structures across the piece rather than at each individual fund. We feel that is a big step forward. While section 272 could be reviewed and reformed, there is a different category of opportunity presented by the Bill and that is why our industry is so keen to see the Bill come forward and have the overseas fund regime baked into it as a measure that goes ahead. I will pause there in case there are comments before I move on to comment on equivalence, as you were kind enough to mention.
John Glen
Q
Chris Cummings: Currently, we enjoy unfettered marketing right across the whole of Europe and the EEA. Post Brexit, naturally, that will come to an end. The way that the regulatory authorities assess whether a particular fund is suitable is to judge the equivalence of the regime of the sponsoring organisation or where the organisation is based. Having that judgment of equivalence has been one of our industry’s clear calls throughout the Brexit process.
We were pleased that the Chancellor took a step forward in recognising and granting equivalence to a limited measure in the House of Commons in his statement last week. We think that was absolutely in the right direction. We have been unstinting in our calls for the European Commission and our European regulator, the European Securities and Markets Authority, to respond to those in kind and move forward so that the equivalence determination could have been made by now and be working. We were sorely disappointed that in June ESMA decided not only not to make a decision on equivalence, but to defer it for a period of time until after the IFR comes into effect.
We feel that that was a missed opportunity to settle the fact that the UK and the EU would be equivalent, which we currently are, having adopted, rather in full vigour, the European rules under which our industry labours. We are hopeful that continuing industry efforts to encourage ESMA and the European Commission to recognise the UK as equivalent will come through, but we are more than pleased with the steps that the Chancellor announced and the comments that are carried forward in the Bill. At the moment, we see that as a first step, but we look forward to greater work being done on this in the months and years ahead.
Mr Pat McFadden (Wolverhampton South East) (Lab)
Q
The Bill does lots of different things, but I would like to mention two. First, it onshores or incorporates a significant body of EU law through different directives into UK law and gives the governance of those to the UK regulators. Secondly, it sets up this overseas fund regime, by which it grants equivalence on a country-by-country basis. It says that the Treasury will make these equivalence decisions as well. The Chancellor announced the direction of travel last Monday.
How do you see the relationship between these two different parts of the Bill? In theory, in future, having onshored the body of EU law and the directives, we are now at liberty to depart from them if we so choose. Do you see a relationship between that debate around divergence and the degree of divergence that the UK decides to opt for and the equivalence decision that we now need from the rest of the EU?
Chris Cummings: It is worth reflecting on the good work that has been done so far in trying to bring the different regimes together and match equivalence. Looking to the future, there is a strong argument for the UK to continue to bolster its presence in the international standard-setting fora, whether that is the Financial Stability Board, the International Organisation of Securities Commissions, Basel, and so on. Our authorities can continue to play a very strong role in arguing for what our industry would prefer, which is global and international standards.
We continually push for international standards as a global industry because that allows us to operate with reduced bureaucracy and by taking costs out of the organisation so we can really focus on looking after client needs. The UK has an outstanding track record of having its policymakers and regulators taken seriously in those international fora, because of the scale of the market that we have in the UK and the sophistication of our capital market in particular. At that level, if we can push for international standards in an international environment, that reduces some of the potential friction between the EU and the UK or other jurisdictions about where divergence may or may not be happening. That is the first thing we would like to stress—the international nature.
Secondly, something that has become part of the discussion in terms of the future relationship of the UK and the EU, and which our industry thoroughly supports, is a much clearer focus on outcomes and outcome-based regulation. It is noticeable that across the EEA there are different approaches in different European jurisdictions, all of which have been judged equivalent so far. Recognising that different jurisdictions will walk up to the same issue from different directions, yet seeking to achieve the same thing, that is the material part.
The third area I would just point to, if I may, is the depth of relationship between the UK authorities and those across the EU, not just in ESMA, our European regulator, but in the national domestic regulatory authorities. It is still absolutely the case that the UK policy-making apparatus—the UK regulatory bodies—is seen to have considerable expertise to offer. So just because we start in different places, it does not mean that we should not see the UK taking a little leadership and the EU tacking towards us in terms of lessons learned because of the sophistication of the market that we can offer. That was one of the reasons why we in the IA, among many other organisations, through the Brexit process was keen to press for a regulator to regulate a dialogue, which could be technically oriented, focused on bringing market and regulatory understanding to bear and making sure that there was a no-surprises, keeping-markets-open focus through the process that we have been through.
So I do not see equivalence and divergence as axiomatically pulling in different directions. I think what we will undoubtedly see is a period where the definition of equivalence needs to be—we need to have a thoughtful discussion, actually, about the substance of equivalence, moving away from its ephemeral nature and the fact that it can be granted or dismissed within a 30-day notice period. We need to have a much more joined-up and mature discussion about how two major markets can keep on doing business together, particularly in investment management when, as I mentioned earlier, 37% of Europe’s assets are managed here in the UK and when, for certain member states, whether it is the Dutch pensions industry or something else, the quality of investment management conducted here in the UK is seen as a prized asset and something that they want to learn from and continue to enjoy the benefit of.
Mr McFadden
Q
Chris Cummings: We have been helping our members prepare for all shades of Brexit outcome over the last four years. Firms have taken the decisions that inevitably they would take, so they have set up extra offices, they have recruited further staff, they have gained the necessary permissions and licences from the national competence authorities. At the moment, even with, perhaps, no deal or a rather thin deal, we are as well prepared for that outcome as it is possible to be. We are giving much more thought to the companies that we invest in—everything from life sciences to technology, to transport and infrastructure, to make sure that those companies are well prepared for the Brexit outcomes, but from our industry’s point of view, recognising the equivalence decisions that have been made today, we are set as fair as any industry can be. I am trying not to over-promise, but suggesting to you that the industry has thought long and hard about potential outcomes, and we are as prepared as we can be for immediate issues.
Mr McFadden
Q
Chris Cummings: Thank you for the question. You have touched on such an important issue for our industry. Through the consultation on PRIIPs we highlighted to EU policy makers and regulators, to our own Financial Conduct Authority and others, the dangers that we saw in the PRIIPs key information document, the PRIIPs KID. Because of how the methodology for PRIIPs was created—taking a rather avant-garde view of the calculation basis—it meant that we could have negative transaction costs. Somebody could trade in the market and it would not only not cost them any money; they could actually lose money by making a trade. That led to some perverse outcomes that were pro-cyclical in the presentation of the information they gave.
Let me give you an example by reflecting back on a new fund that has had just two or three years’ experience. Imagine if, over the course of its life, that fund had had a very strong performance; it had done very well over a three or four year period. Because of the pro-cyclicality of how it had to report performance scenarios—looking to the future—it would have to present a potential investor with scenarios that were entirely positive and that generated levels of return that nobody in the industry would seriously put in front of a retail investor to suggest that this was what they could actually get. They were being forced to do it because of the methodology—the calculation basis—which reflected only that, if you had a few good years of performance, your fund would continue to have good years of performance. Similarly, if your fund had had a few bad years of performance, all you could project was that that bad performance would just continue and continue. That was because of the calculation basis and the way that the rules were written.
As an industry, we kept drawing this issue to the attention of the policy-making community in order to say that, if nothing else, when it comes to disclosure and investment, we have managed to convey the central message that past performance is no guarantee of future performance. Please let us keep on reminding people that past performance is no guarantee of future performance. Sadly, that requirement was taken away. The new calculation basis was introduced, which led to the industry ultimately being forced by its regulator to produce this pro-cyclical—and deeply misleading, in our view—information.
We continued to lobby against the wider introduction of the PRIIPs KID, arguing first that it should not be introduced. Secondly, having lost that argument and seen that that it was introduced only to closed-ended funds, we argued that it should be kept there until the wider implications were seen and not extended into the world of undertakings for the collective investment in transferable securities, because of the scale of UCITS and how many millions of people across the UK and Europe rely on them.
We were genuinely heartened when the Treasury announced that, post Brexit, it would be undertaking a review of the PRIIPs KID. What we hope to see, actually, is a wider-scale review of disclosure, whereby we can start from a different position. Given the technologically advanced world that we are living in today—the greater use of mobile phones, applications and computers, and just understanding that people engage with financial services in a very different way—could we have a rounder discussion about how we can do the thing that we want to do as an industry? We want to have a more engaged client base and to help them understand the different funds that are available and the different risk profiles of those funds, so that they can invest with more confidence, and certainly with more clarity about likely outcomes, rather than having to give false performance scenarios that simply nobody trusted in the industry.
Alison Thewliss (Glasgow Central) (SNP)
Q
Chris Cummings: I think this is a “two ends of the telescope” question, if you pardon the analogy. We tend to think a lot about the UK changing rules and changing approaches, and there are one or two examples of that in the Bill—we have just mentioned PRIIPs KID. There always seems to be a sense that it would be the UK moving away from the central European view of regulation. Of course, that need not be the case. There are a number of regulatory reviews that are timetabled to be considered by the European Commission. There is the alternative investment fund managers directive. There is the review of PRIIPs and so on. Looking two or three years out, there are quite a few opportunities where, actually, the UK may stay still because the rules work in practice and it could be the European Commission that is drifting away from the central scenario that we are in today. That is perhaps almost inevitable, looking 10 years out; there are bound to be changes to the regulatory architecture and the regulatory regime, because the UK will need to modernise its approach to regulation, and not only here and across Europe, but more globally, every economy is thinking about growth-oriented policies as a result of the covid crisis.
That is why, for us, we approach the discussion around equivalence very much from a point of view of saying, “Okay, even if the words on the page change, how can we make sure that the bandwidth is agreed by all sides, so that minor degrees of divergence from equivalence are not the straw that breaks the camel’s back?” That is why I come back to the point I was making just a moment ago about having a regulator to regulate a dialogue—a set, established forum where the FCA and the Prudential Regulation Authority can meet the European Securities and Markets Authority and the European Central Bank and so on, in order that information can be shared, regulatory approaches can be discussed and data can be shared as well, on a “no suprises” policy, so that we can make sure that in the UK and Europe there is a commonality of view, or a commonality of outcome certainly, that is being laboured towards.
I am confident that that would make sure that any discussions on equivalence are structurally much more sound and that we remove the political overlay. Across the industry, there is a concern that equivalence could be used as a political process rather than a regulatory one, which perhaps does not really lead to an outcome that is in the interests of savers and investors.
Every time a new rule is introduced that is different in the European Union from the UK, that adds costs to the industry, because we have to navigate our way through two sets of rules, which might not contradict, but simply do not join up. There are different reporting deadlines for data and so on. That is why we would really like to make sure we move to an outcome-based approach, rather than to a prescriptive, words on the page, exact phraseology, which will simply prove a headache for all.
Alison Thewliss
Q
Chris Cummings: Our friends in Switzerland have been navigating these waters for a period of time. The Investment Association continues to cultivate deeper relationships with our Swiss opposite number to see how it has mapped the terrain. We should make sure that we learn the lessons from how the US and the EU have negotiated when it has come to major directives. We have had a few instances where either the US was trying to apply its rules extraterritorially, into the EU, or where the EU sought to apply its standards and approaches outside the EU.
A really noticeable one was around costs of research. The EU, as part of the MiFID approach, suggested that all research had to be paid for. Investment managers had to pay for research produced by investment banks; in effect, we had to hand over cash. In the US, those payments were illegal. So the two regulatory regimes, both trying to protect consumer interests, found themselves at loggerheads.
Through industry intervention and working very closely with the regulatory authorities in the UK and in Europe and the SEC in the US, we were able to come up with a reasonably uncomfortable but workable compromise that has lasted over three years now, which gets reviewed on an ad hoc basis, but which allows both markets to function, even though the rules do not align. It is that kind of approach that makes you think, well, it works but it is sub-optimal. It feels ephemeral and, from an industry point of view, it is something else that is a distraction from the work of looking after our clients and investors. That is why we think that an openness and transparency around regulatory initiatives and regulatory thinking will help cement relationships into the future.
Alison Thewliss
Q
Chris Cummings: Actually, I think the Bill is a rather comprehensive document. I would defer to others who may have different opinions, but from the investment management industry, there is a good discussion about the overseas fund regime, which was essential for us; the future of passporting; a review of section 272, which we felt very strongly about; and of course equivalence. If anything, it goes towards what is most essential for our industry, which is protecting the delegation of portfolio management, because our industry in the UK is underpinned by an ability to manage the clients’ investments—yes, from the UK, but across Europe and much more internationally. Ensuring that ability to protect and preserve delegation is simply mission critical for the investment management industry, which is one of the few UK growth success stories that we have seen really expand over the past decade.
Alison Thewliss
Q
Chris Cummings: This is a matter that we have been working on very closely with our regulator, the FCA, and talking to Treasury about. It is part of the reason why, in firms’ preparations for—forgive the terminology—a no-deal or a hard-deal Brexit, the industry had to do the thing that we exist to do, which is look after our clients. So that has led to more substance, regulatorily speaking, being established in other jurisdictions, particularly in Luxembourg and Ireland, which have traditionally been the places where most investment management back-office work has been done, with the UK, of course, being the centre for fund management and the actual investment aspect of the industry.
Abena Oppong-Asare
Q
Chris Cummings: I am terribly sorry. I was having an IT glitch and I missed your question. I do apologise. Can I ask you please to repeat the question?
Abena Oppong-Asare
Q
Chris Cummings: Thank you for the question. We take the very strong view that we, as investors, rely entirely on public information. The quality of information produced by management is pivotal to the investment decisions that we make as investors. That has led to the point now where the investment management industry has a stake in more than a third of the FTSE. We think long and hard about investing in any particular company, listed or unlisted, and that is why we believe that it is the investor who is the client of the audit. A company pays for the audit, but it is the investment community that is the client of the audit. That is why we are so outspoken in pushing for better quality audits, and ensuring that the chairs of the audit committee take their responsibilities towards their investors seriously.
We absolutely worry about too close a relationship between an auditor and the company that they are auditing. That is why we feel that audits should be reviewed and we are constantly striving to have a more competitive ecosystem in the audit world, so you raise a very good point. If I may, I will offer to review that section of the Bill in more detail, and if we see anything that strikes us as being too weak or in need of strengthening, I will write to you with our proposals on that very quickly.
Abena Oppong-Asare
Q
Chris Cummings: Indeed. The audit profession has been through three major reviews recently. We entirely support the proposals to bring ARGA into existence. The work the FRC has been doing to prepare for the transition to ARGA has been commendable, but we need to go one step further and actually encourage policy makers to ensure that ARGA is brought into being as quickly as possible. Personally, I have been impressed by the new head of the FRC’s ability to convene and cajole the audit companies to exercise some soft power, to encourage them to improve the quality of audit. Still, it is not the same as having that statutorily recognised independent regulator, and we encourage this Committee—and other parliamentarians —to push for the establishment of ARGA as soon as possible.
The Chair
I call Gareth Davies. Gareth, I think you will have to move to the microphone over there.
Gareth Davies (Grantham and Stamford) (Con)
Q
Chris Cummings: You are right in saying around 75% are UCITS. UCITS have become a global brand. It is a high watermark, at least currently, in an investor-centric investment vehicle, and rightly recognised by jurisdictions across Europe and internationally. In thinking about how the UK develops its own UK fund regime, which is some work that the IA has put forward to the Treasury and the FCA, we have taken the UCITS regime as our benchmark to think about how it can be expanded upon; how can it be modernised given the experience with UCITS over the last few years.
One of the core issues that the industry takes very seriously is better governance of funds. That is one of the reasons why we supported our regulator, the Financial Conduct Authority, in stipulating that, at fund level—not at company level—there must be an independent, non-executive director who asks the big questions about governance of the fund, and ensures that there is a clear value for money assessment at least annually, to drive down costs for investors and to ensure that investors are getting a better deal out of those funds. In terms of modernisation, we think that a great deal is already happening in the industry, with more to come.
Although money market funds are used by some retail investors, they are seen more as a capital markets instrument. Given their brevity, they tend to attract a lot of overnight money. Their particular structures are perhaps for more sophisticated professional and institutional investors. They are a useful counter, but really for us UCITS are the gold standard at the moment. We are naturally keen to extend the UCITS regime, especially post Brexit.
That is why we brought forward our own proposals for a long-term asset fund, which we think will not only modernise the UK fund regime but draw together some of the more interesting parts from other fund regimes. It has the benefits of an open-ended fund, and some of the advantages of a closed-ended fund, with an extra layer of governance. It will allow UK savers and investors, institutional as well as retail, to invest more in infrastructure, taking a longer-term view, and in what traditionally have been higher-growth companies—technology companies, life sciences, biotech and so on—taking a much longer-term perspective. We think that the long-term asset fund will be a great complement to the existing UK and European fund family.
The Chair
Does anyone else on the Committee wish to catch my eye in the remaining four minutes? In that case, thank you very much, Mr Cummings, for your evidence.
Examination of Witnesses
Emma Reynolds and Catherine McGuinness gave evidence.
The Chair
We move on to our second panel of the afternoon, and the fifth in total. We have Emma Reynolds, formerly of this parish, now at TheCityUK, and Catherine McGuinness from the City of London Corporation. We have until 3.30 pm for this panel, and I will pull the plug if it goes over. Emma and Catherine, could you first introduce yourselves for the record, please?
Emma Reynolds: I am Emma Reynolds from TheCityUK. We represent the UK-based financial and related professional services industry, which employs 2.3 million people, two thirds of whom are based outside London. We are the largest taxpayer, biggest net exporting industry and contribute over 10% of the UK’s total economic output.
Catherine McGuinness: I am Catherine McGuinness, policy chair at the City of London Corporation. We are the local authority for the square mile. In addition, we work very closely with the UK’s financial and professional services sector, which carries our name even though, as Emma says, it is a UK-wide sector.
John Glen
Q
Emma Reynolds: Thank you, Mr Glen. We support the measures in the Bill, and both the overarching and the stated objectives. It is absolutely right that the UK Government are onshoring the regulations. There are obviously other measures within the Bill that are extraneous to that, which we support. The Bill is a welcome first step, but we look forward to working with the Government to develop an overall strategy for the financial services sector that could pull all the different strands together, building on what the Chancellor said last week, which was very welcome.
John Glen
Q
Emma Reynolds: It is a very welcome first step. All I would say is that we, as an industry, have a broader agenda about our industry’s long-term competitiveness going forward. I would not have expected to see that in this Bill. We had a very good relationship with Government, particularly with the Treasury, but some of the other issues that we are concerned about relate more to other Departments, whether it is access to skills and talent from abroad or green finance or other issues that are not in the Bill. It is a welcome first step.
John Glen
Q
Catherine McGuinness: Thank you for inviting me to give evidence. I cannot answer on the technical ability of the regulators in detail, other than to say that, in our experience, they are very capable of adapting and innovating. Indeed, we heard last week at Mansion House from both the Financial Conduct Authority and the Prudential Regulation Authority about their plans. Obviously, the regulators will be gaining significant powers under the Bill. It is important that we look at how those powers are scrutinised, including by Parliament.
On that front, the International Regulatory Strategy Group, which both TheCityUK and the City Corporation support, has suggested that parliamentary scrutiny be strengthened and reordered, and that the role of the Treasury Committee be complemented by setting up a joint Select Committee on financial regulation to look in detail at specific pieces of financial services regulation. That would be important to strengthen scrutiny, as we hand more responsibility to the regulators. It would also be useful––and the IRSG has recommended it––to increase the transparency of decision making by both the Treasury and the regulators, and to improve scrutiny. I am not sure if I have fully answered your question.
Mr McFadden
Q
The Bill does lots of different things but two big things are that it transposes, or onshores, lots of different parts of EU regulation from many different directives. It gives powers to the UK regulators to govern all that. In doing that, as we come to the end of the transition process, there is greater freedom for either the Treasury or the regulators to diverge from that body of EU law. The Bill does that, but it also has this overseas markets vision, which is granting equivalence on a country-by-country basis, to the 9,000 funds that are domiciled overseas but which operate in the UK. I want to talk a bit about these two different parts of the Bill. Starting with you, Emma, what do you think your members’ attitude is to onshoring this body of EU law? Do they broadly regard it as something that they would like to stick with or are there areas that they would quite quickly want to diverge from and, if so, what would be the most prominent areas?
Emma Reynolds: We were delighted that the Government took the unilateral decision last week to grant the EU equivalence in a number of different areas. We are still hopeful that the EU might follow suit. We have been calling for a technical outcome-based approach to equivalence for some time now. Within that, you could have different rules but the same outcomes. Even if there are pinch points around Solvency II—only some elements of Solvency II—you could have different rules in the UK that achieve the same objective.
From now until 1 January, we will remain technically equivalent. Inevitably, over time, there will be some changes in regulation, both on our side in the UK and in the EU. The EU is currently reviewing some of its own directives, MiFID being a case in point, but there are others too. We do not want to see divergence for divergence’s sake. We would like to encourage a strong dialogue between regulators in the UK and the EU. There already is that dialogue, but we would like to see a framework for that plan. If you are a member of ours who trades across borders, you want similar or the same rules.
Mr McFadden
Q
Emma Reynolds: We are still hopeful that the EU might take a similar decision to what we saw last week. We would not like to see divergence for divergence’s sake. There is no immediate appetite for great divergence from EU rules from our members. Does that answer your question?
Mr McFadden
Q
Catherine McGuinness: First of all, I do think the regulators can handle this, but I think it is important that we look at the right degree of scrutiny. Yes, when we speak to practitioners with the International Regulatory Strategy Group, it is their view that a joint Select Committee on financial regulation, which could look in detail at pieces of financial services regulation, would be a useful way of enhancing and embodying that scrutiny.
The Chair
For the Scottish National party, first of all, their spokesperson, Alison Thewliss.
Alison Thewliss
Q
Catherine McGuinness: Actually, what I was mentioning was the International Regulatory Strategy Group, which is a cross-sectoral group of practitioners, who come together to look at a number of issues and make recommendations. We can provide the Committee with their recommendations in this space. As I said, they are suggesting that we look at a joint Select Committee on financial regulation in Parliament. I am happy to share with the Committee more details about the International Regulatory Strategy Group and its current programme of work, if that would be useful, and to provide copies of the paper in this space.
Alison Thewliss
Q
Catherine McGuinness: Regulation is a complicated issue. I think that if we are handing powers to the regulators to make regulation, when over the past few years we have made regulation through the EU, where there is level after level of consultation and development, we need to look at how we replicate that and put in the appropriate level of scrutiny as we take things forward ourselves.
I have to say that we very much welcome this Bill as a step in the right direction in getting the framework in place but, as people have said, it is a first step. We think it is then important to move on and look at the next round in the Treasury’s consultation on the regulatory framework, as well as how to implement—to stray a little from your question—the Chancellor’s statements in his announcement last week.
Alison Thewliss
Q
Emma Reynolds: I would agree with Catherine and echo what she has said. Obviously, there are significant transfers of powers to the regulators, given that we are onshoring this regulation. In an EU context, we had the European Parliament’s Committee on Economic and Monetary Affairs, which is a sizeable Committee with huge resources and an enormous amount of time to write and draft amendments in this area.
It is not in the tradition of our Parliament to have such Committees. In a way it would mean this Bill Committee sitting permanently. In Parliament, working with industry and Government, we need to work out exactly how we will do it, bearing our traditions in mind. That is why the IRSG, which is a point of contact between us and the City of London Corporation, came up with some of the ideas in the paper, which Catherine mentioned. We are very willing to share that with the Committee.
Alison Thewliss
Q
Emma Reynolds: Yes, we sent that briefing out. Thank you for referring to it. Yes, we would like to see more guidance and clarity from the Government as to whether the UK’s version of the so-called CRR II—Capital Requirements Regulation II—is going to differ in any substantial way from the EU’s CRR II. Some of our members have put resources and time into planning for that. It is just a question of ensuring that we have the most efficient planning for what comes next.
Ms Angela Eagle (Wallasey) (Lab)
Q
Catherine McGuinness: The Bill must be viewed as part of a package with what we then heard from the Chancellor’s announcement. It is a first step, but it does not set out an ambitious overarching strategy for financial services for the future. This is a critical part of our economy and we would suggest that we need that strategy as we move forward. The Chancellor’s announcement last week and the emphasis on openness, innovation and green seem to us to be a significant next step, but we need to look at an overall direction for this important part of the economy.
Ms Eagle
Q
Emma Reynolds: We agree entirely with what Catherine has just said. I think the Chancellor has made a start prior to the consideration on Second Reading of the Bill. He obviously set out certain key reforms in certain areas, most notably in green finance. He also launched a number of calls for evidence and taskforces. Working in partnership with Government, industry would like to see the Government come forward with a strategy that pulls all of that together. That is not an easy thing to do, but we are a world-leading financial services sector in the UK, and we want to see that continue. This is a question of partnership with the Government. We are not saying we want it done to us without us being in the room, but we do think there is probably more to do to create a more coherent strategy for going forward.
Ms Eagle
Q
Emma Reynolds: If you are a global company that trades across borders, not just in the EU but in other jurisdictions, what you really want is the same or a similar set of rules. You certainly want global norms and standards on which those rules are based. There is no clamour for significant divergence from what we have. It is worth saying that although we are technically equivalent right now, and that will not change until 1 January, there will need to be responses from regulators, in terms of new regulation going forward.
We have the rise of FinTech, which brings its own challenges, but is a great asset to the UK. We have green finance, as well as some of the socioeconomic trends that have been accelerated by covid. All of these bring new challenges, and so our regulation cannot afford to sit still. We want to avoid unintended divergence when the EU and the UK are facing some of the same challenges. We may go about making our rules in a very different way, but if we could achieve broadly the same outcomes, that could mean we were equivalent, and that would provide advantages to those of our members who trade here and in the EU.
Ms Eagle
Q
Catherine McGuinness: I would say two things here. First, if we are not at the table helping to shape the regulation, there is, of course, the risk of divergence from either side as we exercise our own autonomy. I think that global standards are going to be critical for all of us, because we are talking about markets that operate across borders. It is in all our interests—the EU’s, ours and the institutions in the sector—to have a set of global standards around global issues. So, yes, there is a risk of divergence from either side. Keeping the conversation going as the regulation develops is going to be critical.
Taking the green question, for example, we have the EU, which is fairly advanced with its own taxonomy. We are now going to be looking at our own taxonomy, and I think that is a great thing that we should be doing. I also think that green finance is an area in which we can really lead the way, including in regulation. It will be important that we look at how those systems mesh together, and this is a conversation that the sector is encouraging our regulators to have with other countries, too—not simply the EU. I was nearly late because I came from a panel in the US speaking about the importance of a regulator-to-regulator discussion about some of these issues, and the role the sector might play in helping to develop thinking. It is possible that we may diverge, but it is in the interest of customers and businesses that there should be well regulated financial markets, with consistent rules and regulations over cross-border challenges.
Ms Eagle
Q
Emma Reynolds: I hope you do not mind if I take your last question first, because I think it sets the scene for the rest of your questions. There is very little in the deal for financial services, if there is a deal. However, our industry thinks it is incredibly important that there be a deal, because that would leave the door open for the EU granting equivalence in certain areas of financial services, and for other agreements that are essential to services more generally, such as provisions around data; frankly, if there is not a better agreement on that between the two sides, that could be very difficult, not only for our members, but for other service industries, too. I hope that answers your question on deal versus no deal.
There is nobody in our industry I could name who wants a race to the bottom. That is not the way to make yourself more competitive. We view the UK’s high standards as giving us an competitive edge. We have some of the highest standards in the world. We do not think that there will be a race to the bottom in that way.
On your question about protectionism, I think there is a live debate right now in the EU. One EU interlocuter put it to us very succinctly the other day as the trade-off between location and efficiency. European business has access at the moment to deep and liquid capital markets in the UK, which they find very useful, and which they cannot find in the EU currently. We would like to see that continue—that is in the interests of businesses not only here, but on the continent—but you are right that there is a live debate about what happens next, and whether location is more important to the EU. That debate is going on not only in the EU; covid has accelerated the trend towards protectionism, which is why it is so good to see that the UK Government are taking such an open approach in the Bill. We would encourage that to continue, because we think it is one of our strengths, and it gives us that competitive edge.
Ms Eagle
Q
Catherine McGuinness: Yes, but I think it is welcome that the FCA, under its new leadership, is also carrying out a review. That is appropriate. Clearly, we are asking a new role of it, and it is absolutely appropriate that it should review how it operates as it takes that on. I am very confident in our regulators, but I am also pleased to hear that the FCA is carrying out its review. Secondly, I would go right back to my point around the need for scrutiny and challenge in that space. That should involve not just the Joint Select Committee, but looking at the Treasury’s role.
May I revisit the question about how the UK can retain its voice in setting standards?
Ms Eagle
Q
Catherine McGuinness: I feel I missed a couple of points there. It is true that part of the way we will retain our global leadership in standard setting is by bilateral dialogue and co-operation, regulator to regulator, with other countries. There is also the question of how we work with the multilateral organisations. We need to take a good look at how we engage, on our new footing, with the Basel committee—how we engage with other global standard setters. We have a good story to tell. I think next year gives us a very good opportunity, as we take up the presidency of the G7 and with COP26 coming up. I have already mentioned our potential leadership on green standards. We should really look at next year as part of this new chapter for financial services, and look at how we can make clear our place in standard setting, and in that conversation around global standards.
Stella Creasy (Walthamstow) (Lab/Co-op)
Q
Emma Reynolds: There are measures in the Bill that do, as I understand it, reflect some of the measures that the EU has taken around prudential requirements. In the past, there has been a bit of a one-size-fits-all for different sizes of companies. For smaller companies that carry a smaller risk, you need to take a proportionate approach to regulation. That is by no means saying that we want lower standards, or a race to the bottom; it is about considering firms of different sizes and the risks that they bring.
Obviously, there are challenges every time there is a significant change such as this, and 1 January will look and feel very different, but there are some opportunities, too. For example, we will be in a position where the UK is making laws and regulations for one member state. I mentioned the fast-moving challenges coming up, involving socioeconomic changes to do with covid, FinTech and green finance; the UK will have more flexibility and agility, and so can perhaps act more quickly than before, or than the EU can, operating with 27 member states.
Catherine McGuinness: I think that is right. To add to what Emma has said, the Bill is very helpful in demonstrating the planned way forward. People will be looking for an ongoing commitment to high standards—and, yes, agility in how we make our rules, but also a rigor in that. We cannot stress often enough the importance of this country’s openness to welcoming trade and business, and to high standards, against our strong regulatory backdrop.
It is very welcome that the Treasury will be looking at the strong patchwork of the bases on which people can come into the UK and operate here—the overseas persons exemption and so on. The Treasury will look at how that whole framework can be knitted together in a more coherent manner, as I understand it. What people will be looking for is an ongoing commitment to high standards and the ability to do their business.
The Chair
Are there any further questions? In that case, I thank our two witnesses on this fifth panel. Emma and Catherine, thank you for your evidence.
Examination of Witnesses
Adam Farkas and Constance Underwood gave evidence.
The Chair
For this third afternoon evidence session—the sixth in total—we have Adam Farkas and Constance Underwood from the Association for Financial Markets in Europe. It is our first panel in person. We have until four o’clock for this session. Adam and Constance, do you want to start by introducing yourselves for the benefit of the Committee, and for the record?
Adam Farkas: Good afternoon. Thank you for inviting us both. We are delighted that we decided to come physically. We did not know what the other invitees would decide. I am Adam Farkas, CEO of the Association for Financial Markets in Europe. AFME is a pan-European trade group representing a broad array of European and global participants in the wholesale financial markets. Our members include banks headquartered in various jurisdictions, spanning from Japan to the United States, and inside and outside the EU. What they have in common is that they all do business in the UK and the EU. Our purpose is to serve as a link between capital markets, participants and policy makers across Europe.
My experience in the financial services sector spans over 30 years, covering both private and public sector bodies. Prior to joining AFME this February, I was executive director of the European Banking Authority for nine years, and before that, I acted as executive chairman of the Hungarian financial supervisory authority. In my capacity at the EBA, I also served on the Basel committee for eight and a half years. I should note that there are a few topics directly related to my prior position at the EBA that I am not permitted to address today because of my restrictions, but Constance will address those as appropriate.
Constance Usherwood: I am Constance Usherwood, director of prudential regulation at AFME. My experience also covers both public and private sectors. I also worked at the European Banking Authority some time ago, and have worked for a globally systemically important bank. I am very grateful for the invitation to be here with Adam today to give evidence. I hope that that is helpful to the panel.
John Glen
Q
Adam Farkas: I will try to answer the first part of the question, but then I will leave it to Constance. because this is one area where I was personally involved, and I am not allowed to comment.
On the first part of the question, it is beyond doubt, and everybody in the public and private sector recognises it, that the UK as part of the European Union was playing a leading role in shaping and forming financial services regulations in the Union. That is clearly evidenced by the leading role of London and the UK more broadly as the financial services centre or hub of the Union. That is beyond any doubt. It was respected as such, and had a very strong voice in shaping the different regulatory initiatives. For the future relationship, it is important to have engagement and openness, and that a co-operative attitude, or co-operative setting, is retained, with two autonomous decision-making jurisdictions, in which the two sides can co-ordinate, exchange views and possibly even influence each other’s new initiatives or the evolution of their respective regulatory frameworks, with the potential aim of maintaining as much consistency as possible and practicable. On the investment firms regime, I pass the floor to Constance, because I was part of the development of the standards at the EBA, so I must refrain from comment.
Constance Usherwood: With the investment firms prudential regime, the UK authorities have played a key role in the development of the prudential regime that is specifically targeted to the business models of investment firms and making sure that it is proportionate. In that respect, we fully support the approach that is being taken today. In terms of the application to the different prudential frameworks and of the regimes versus the CRR, the bulk of our membership will probably not be directly impacted by the regime due to their size and activities. That would also tally with the approach that the EU has taken.
John Glen
Q
Constance Usherwood: Yes, I would agree with that, absolutely.
John Glen
Q
Constance Usherwood: I am going to apologise, but I think that Adam is probably best placed to come in on this one.
Adam Farkas: We very strongly support the clear and oft-repeated message of the UK authorities that active transition by transaction parties to the new risk-free rate is the only way to achieve certainty of outcome in the transition. We have promoted this message regularly and we have developed market standard language to support it that can be used by investors to assist them in this process.
A very difficult part of the transition process relates to what happens to legacy contracts already in place that reference the old LIBOR rates that are being phased out. Within legacy contracts, there are the so-called tough legacy contracts, which are very difficult to repaper or change the reference in. They cause the most complex challenges for end users as well as for members of AFME or other financial services providers. We therefore very much welcome the provisions of the Financial Services Bill that give the FCA new powers to mitigate that risk by directing the administrator to change the methodology of LIBOR if doing so would protect the consumer and market integrity. That would enable the FCA to stabilise certain LIBOR rates during the wind-down period so that their limited use in legacy contracts can continue. The answer is yes, we are very supportive. None the less, we welcome the further clarity which, I think, will be forthcoming on 25 November from the FCA and the Treasury on what steps the authorities are planning to further this objective, because there are some outstanding questions that require clarification. I would be happy to go into them, but in the interests of time, I will stop there.
John Glen
Q
Adam Farkas: That is a difficult question to answer because we have not speculated on different outcomes, but certainly the path that the Bill is taking is something that we can very strongly support.
Mr McFadden
Q
Adam Farkas: Very briefly, equivalence determinations provide the major legal framework for different jurisdictions to provide access to service providers that are licensed and supervised in each other’s markets. To answer your question, if equivalence determinations by the EU are not forthcoming, or not brought forward at pace or with the width that is expected, that will put limitations on the access of service providers—financial services companies and firms—to the EU market. This is really an issue of market access.
Mr McFadden
Q
Adam Farkas: In very simple terms, if a company is licensed in the United Kingdom and does not have access, or loses access, to the EU—of course, that is completely free under passporting regimes—it will find limitations in serving clients or trading with counterparts in respect of the financial services that it provides in the other jurisdiction, which would be across the channel in this case. A lack of equivalence has been a risk throughout the process of the negotiations, so authorities have made significant efforts to prepare regulated entities—financial firms—and to force them to prepare for all eventualities. In other words, everyone is hoping for the best but preparing for the worst.
AFME members—of course, our membership is tilted towards the large players—have made extensive preparations over the years to get ready for the worst outcome, which would limit direct market access from the United Kingdom to the EU, by way of setting up entities, moving activities across the border and making all necessary arrangements to allow them to continue to serve their clients across the European market. Of course, if equivalence is granted and access is provided on that basis, it would improve the general situation of market access between the EU and the UK, so we welcome the Chancellor’s announcement and the UK Government’s determination last week to grant equivalence within a certain scope to third countries, including EU countries.
Mr McFadden
Q
Adam Farkas: With a lack of equivalence. If no market access is provided on another basis, the main mechanism is to establish entities that are licensed, capitalised and supervised in the other jurisdiction, meaning that that entity can have access to the market, but that involves costs and operational implications.
Mr McFadden
Q
Adam Farkas: It is a very difficult question. We all know the history of what happened. What is important is what happened afterwards and how the authorities decided to move away from the possibility of manipulating these rates. There is a global co-ordination effort and a long-standing global discussion on transitioning out of the old way of setting different financial benchmarks.
Regulations were put in place, changes to methodologies were put in place and public institutions took a stronger role to make sure that benchmarks are more robust and not prone to manipulation or potential distortions. I think, in that sense, this issue of reputation and the credibility of these benchmarks has been very strongly addressed by the authorities globally, and also in the UK by the authorities. I believe strongly that this will lead to a much sounder and more credible framework once the transition is completed.
Mr McFadden
Q
What is your view of what will happen on the EU side, absent a British influence, as financial services regulation inevitably evolves and develops? We no longer have one table, if you like. We have two tables—a British one and a European one. Does that mean, inevitably, that the two sets of regulations gradually spin off in different directions, or is that not the case?
Adam Farkas: Before I answer the bilateral question, I think that there are other forms of international co-ordination of financial services policy. One is multilateral in the form of the FSB, IOSCO—that is on market rules—and the Basel committee, which deals with prudential rules. Both the EU and the UK are significant players and participants in this global co-ordination. In the interest of having open, transparent, and well-functioning financial markets and maintaining international flow in capital movement, allowing both banks and corporates to manage their risks cross-border, these multilateral engagements are extremely important. They actually provide a very good platform to co-ordinate the major direction of financial regulation globally.
Now, the bilateral co-ordination will change, because it will take the form of the so-called bilateral regulatory dialogue—or whatever similar term the EU uses—with third countries, which provide a platform. Inevitably, if two jurisdictions take a separate course in legislation, there will be some divergence between the rules. What is very important is that if that happens, it is transparent to this multilateral setting as well as in the bilateral context; it is well-explained and co-ordinated as much as possible; and it is only done if there is a real justification for it.
Mr McFadden
Thank you. Constance, do you want to add anything?
Constance Usherwood: I would add that in the context of the Basel framework, that does allow for some adjustments or tailoring for jurisdictions when it comes to implementing that in law. That is certainly something that we would expect the PRA to look at, going forward—such things as mortgages and trade finance. There are little aspects of the Basel framework that already allow for some consideration of how that is best tailored to the market in which it is being implemented.
Alison Thewliss
Q
Adam Farkas: The Bill provides the possibility to achieve those recommendations. It provides the framework for future UK financial regulation. It provides the possibility, delegated to the respective regulatory authorities, to shape the UK’s financial regulation. However, if it is going to be a transparent process, as it is expected to be under the Bill, that opens up the possibility of retaining co-ordination with the EU in a new setting. The Bill sets the foundation to meet the policy recommendations that we put forward, but it does not guarantee it.
Alison Thewliss
Q
Adam Farkas: Yes.
Alison Thewliss
Q
Adam Farkas: I am probably not qualified to answer that. I am allowed, but I am probably not qualified. I think the FCA, as an authority, has been playing a leading role globally in the whole transition process and the whole global co-ordination process. The Bill’s intention to give a strong role for the FCA in defining the last steps of what happens with the legacy contracts and with LIBOR as a benchmark is pointing in the right direction, but I will not go further than that.
Alison Thewliss
Q
Adam Farkas: That is probably a legal question.
Alison Thewliss
Q
Constance Usherwood: The Basel 3.1 aspect, in particular, is about ensuring that banks hold capital commensurate with the risks that they take. As such, the Basel framework that it seeks to emulate in UK law does not consider climate risk as a risk. That is not to say that that work is not under way in international forums. The Network for Greening the Financial System is certainly looking at how to incorporate climate risk—or whether it can be incorporated—into prudential regulation. It is at a very nascent stage. I think the work that the PRA is doing in that forum is very positive, as well as such things as climate risk stress testing.
That is something that the PRA might want to open the door to later, once it is more considered and technically advanced. Certainly, the sustainable lending aspect is an important mandate that it has to look at. We remain interested in how it develops that mandate in its consideration of the rules.
Angela Richardson (Guildford) (Con)
Q
Adam Farkas: Answering the first question involves a bit of speculation into the future. Given the importance of the City of London as a global financial centre, and given the weight and experience of UK authorities in global standard-setting bodies, I would be inclined to confirm that yes, the United Kingdom is expected to remain a strong voice in multilateral standard-setting bodies and in multilateral discussions on financial stability, as well as in micro-financial regulation, markets, insurance and prudential banking regulation.
There is probably no conclusive answer to your second question, but the Bill certainly opens up the possibility of creating a framework within the United Kingdom that will delegate a lot of rule-making powers to the respective authorities—the PRA and the FCA. It will provide a well-defined, clear and transparent framework, and it will also define an accountability regime with that framework. In my view, that will establish the possibility—subject to the detailed rules that will then be adopted—that financial regulation as a whole will continue to ensure financial stability in a global financial centre.
Gareth Davies
Q
Adam Farkas: I do not know. What I can say is that the equivalence determination process consists of two stages. One is a technical assessment that involves a detailed assessment of the rule book for the set of regulations, with questions and interactions. In every jurisdiction there is a second stage, which is the determination itself after the technical assessment. That stage is a much more political decision, or is a decision of a more political nature; it considers other aspects in addition to the interests of the jurisdiction making the determination. The answer probably lies there, but I have no information on why equivalence decisions have not yet been made on the EU side. It is not true to say that no equivalence decisions have been made; some have been determined and published, even if on a temporary basis.
Gareth Davies
Q
Adam Farkas: I do not think I would like to express a view. One point of correction I would make is that there is no such thing as overall equivalence; unfortunately, the equivalence decisions are very technical and made bit by bit. There are equivalence provisions in different parts of the EU legislation, and there are equivalence decisions possible in parts of the UK legislation. Looking at the announcements from the Chancellor, it is very specific and is focused on certain activities or institutions that are deemed equivalent to the domestic regime. There is no overall equivalence, and there will probably not be.
On the Swiss equivalence case, I will refrain from commenting, if you will allow that.
The Chair
We have until 4 o’clock for the entire session, so you can ask a quick question.
Gareth Davies
Q
Adam Farkas: As an association, we are very strongly advocating the openness of markets, both in the United Kingdom and in the EU. We are very strongly advocating maintaining the co-ordination of dialogue and the consistent implementation of global standards. Of course, it is very difficult to speculate which way the EU will go. What I can say is that our members have a very clear view on this issue, and we are—
The Chair
Adam, can you please speak into the microphone? For the recording, you need to be in the right place.
Adam Farkas: Yes, of course.
Our position on this issue is very clear, and we have been open and transparent about our members’ position on arguing for market openness, maintaining consistency and, on the basis of constituency, maximum market access and flow of capital and services between the UK and the EU.
The Chair
Constance, do you have anything to add?
Constance Usherwood: Generally, we hope that the EU and the UK will establish a close, co-operative and stable long-term relationship for financial services, and it is very important to underline that that should be the long-term goal. I think the Bill leaves the door open for doing that.
Julie Marson (Hertford and Stortford) (Con)
Q
Constance Usherwood: It is very clear that the UK Government’s intention is that the UK should maintain high, consistent and global standards. From my knowledge of interaction with the PRA, it is committed to doing that. That was also made clear last week by Sam Woods in his Mansion House speech—it is not about a race to the bottom. In so far as a jurisdiction maintains a predictable, open and transparent rule-making process—we expect the PRA to do that with consultation processes—and operates a high, globally consistent standard, that is a really good competitive base from which global banks can operate out of.
Ms Eagle
Q
Adam Farkas: Given that it is providing a framework for the future regulatory architecture in financial services, I am not suggesting that these are missing, but I will list what is important for the industry: that the framework is predictable—that is key for the players—that the framework provides transparency, so that when the rule making is happening under the Bill, the process is transparent; that it is possible for the industry to engage, so when different rules or pieces of the rules are consulted on, there is sufficient accountability provided, but that is not for us to decide on; and that sufficient time is provided for implementation—that is always a critical issue for the industry.
I think that what is proposed in the Bill goes very far on all those points. In that sense, it is difficult to give a definite answer of what else would need to be in the Bill. Those are the points that we are looking at with great interest in relation to the final adoption of the Bill.
Ms Eagle
Q
Adam Farkas: I agree that this is an issue that will need to be addressed. There is a question as to whether it needs to be addressed in this particular Bill or in the context of the future rule making by the FCA, but the points raised are valid ones and we also agree with them.
Ms Eagle
Q
Constance Usherwood: Yes, I think we support it. One thing that I would note is that there are a lot of rules to implement; the Basel III framework that is going into this part of the Bill is over 160 pages long, so there is a lot of technical detail that will need to be considered. We hope that the full impact assessment is therefore done on that basis for the UK banking sector, and also that the consultation process allows the industry to have a meaningful input. I notice that there have been a couple of smaller consultations done recently by the PRA that have only required a month or two months for consultation, and certainly that is something we hope will be fully considered when they put the rules before industry.
Ms Eagle
Q
Constance Usherwood: Yes, I think that is probably the best way forward and I agree with the approach that has been taken. The other alternative is that it would all have to come before you and you would have to look at all these pages. I think that the regulatory authorities are best placed, and the most technically capable of really assessing it, and doing the impact assessment that will ensure that it is tailored to the UK banking sector.
Ms Eagle
Q
Constance Usherwood: Usually we would expect the impact assessment to be done before the rules are formalised, but it is a fluid process and I would not be certain what the PRA has in mind. We imagine it would take place at some stage prior to any finalisation of the rules.
Adam Farkas: Normally when detailed rules are produced there is some sort of obligation on the authority to provide an impact assessment with it, on the basis of the draft rules. Then, typically, there is a consultation, so opinions are sought from different stakeholders, and then the rules are finalised. The impact assessment is clearly a key feature of financial services rule making, at EU level and at national level. It is part of the broader accountability, which is very important.
The Chair
If there are no further questions, I thank our two witnesses for their evidence.
Examination of Witness
Gurpreet Manku gave evidence.
The Chair
Q
Gurpreet Manku: I am Gurpreet Manku, the deputy director general and director of policy at the British Private Equity and Venture Capital Association. The BVCA represents more than 300 private equity and venture capital firms in the UK, ranging from the smallest venture firms investing in start-ups, all the way through to growth-capital and mid-market firms investing domestically. We also have a number of larger pan-European and global fund managers.
The Chair
Thank you very much. We are going to follow the time-honoured tradition of going first to the Government, then to the Opposition, and then to other members of the Committee. We will start with the Minister, John Glen.
John Glen
Q
Gurpreet Manku: We welcome the Financial Services Bill as it implements a prudential regime for investment firms that is tailored to the specificities of the UK market while maintaining world-class regulatory standards. To give you some context, the UK has already regulated private equity and venture capital firms. Broadly, there are two categories. First, we regulate the managers of private equity and venture capital funds. Those entities are regulated under the alternative investment fund managers directive. We also regulate advisory entities under MiFID. Those firms will be most impacted by the investment firms prudential regime. These advisory firms advise on and arrange private equity transactions for other regulated fund managers, sometimes within the same group. Those other managers tend to be based overseas, including in the US, Asia and Europe.
That is important because the fact that the UK has a lot of those advisory entities signifies that the UK is a global hub for private equity and venture capital. Many international firms choose to make the UK a base for carrying out UK, European and, in some cases, international investment and fund-raising activity. Since the inception of the investment firms review, the BVCA has been in dialogue with both the FCA and the Treasury about its implementation.
We welcome the introduction of a tailored regime that appropriately covers the activities of these firms, as well as their size, and the relative risk they pose to the financial system when compared with other banks and financial institutions. The new regime will lead to additional requirements for some of those firms, particularly the advisory entities that I mentioned, including higher capital requirements. We submitted feedback to a recent FCA discussion paper on the need to calibrate these new requirements for the risk posed by those firms. Our key ask for the FCA and the Treasury is that an appropriate transition period is available to those advisories.
Interestingly, the FCA’s discussion paper acknowledges that while there are transition provisions in place for other categories of investment firms, there is a gap for the category that includes these private equity advisers. That FCA category in the UK is known as exempt CAD—capital adequacy directive—firms. That is not just an issue for private equity and venture capital firms. There are many other types of firms in this category. My understanding is that they tend to be smaller financial services firms, such as corporate finance advisory boutiques and other consultants. That reflects the UK market, which has a huge number of financial services firms at the smaller end.
We think that the omission of this transitional period in the EU text was not deliberate and was just a mistake. The category of advisers that we are referring to should also have a transition period. The benefit of the Financial Services Bill is that it will enable the FCA to correct this omission and ensure that all types of investment firms benefit from transition rules.
Finally, I welcome the confirmation that the target implementation date is January 2022, because I think that will give sufficient time for the FCA to consult on the detailed rules and we need that lengthy consultation period. It will also give firms the time that they need to implement them.
John Glen
Q
Gurpreet Manku: Interestingly, we have been speaking to the FCA about this since 2016. The need for a special investment firms prudential regime emanated out of discussions in the UK, because there was a recognition that regulatory requirements that apply to banks do not necessarily work in an investment firms context.
The FCA does understand the breadth and variety of firms that operate in the UK. The confirmation that there will be a bit more time to think through how the detailed rules will operate in practice is really welcome. If I had one ask, it would have been for more time to look at the details of what would follow.
Mr McFadden
Q
Gurpreet Manku: No, actually they will be holding more. The bulk of the members most affected are in that category known as exempt CAD. It is an odd category that exists in UK legislation. At the moment, that broad category of firms is required to hold a level of capital set at €50,000. Under the new regime, the calculation methodology will change to a quarter of their fixed annual overheads. For many firms, that will lead to an increase in capital requirements, which is why I referenced the need for a transitional period. A few years ago, we recognised that this was coming, and the transitionals were always going to be a feature of this regulation. In terms of what it means in practice, for some firms, there would have been a fixed requirement of €50,000, and that will move to several million pounds; for others, it might not be much of a jump. There is a wide variety of firms out there in the UK market. Those that might not be in my constituency could also be significantly affected.
Mr McFadden
Q
Gurpreet Manku: What I have seen in recent years is that other jurisdictions have tried to emulate what we have here. That is because the UK has always been an attractive jurisdiction, because of its highly regarded legal and regulatory framework, as well as the quality and depth of the financial and broader professional services ecosystem. In practice, that means that global institutional capital can be raised from here. So when it comes to the onshoring and the development of regulation in the future, we would be looking for continued high standards, but clear and effective regulation.
Mr McFadden
Q
Gurpreet Manku: Sorry, I had not thought about that for this session. Interestingly, one of the regulations that probably caused the most concern was referred to earlier—the PRIIPs regulation. Most of our members will market to professional institutional investors rather than to retail ones, but where that particular regulation is relevant, it has led to information that many have felt is misleading. Seeing that changed and the changes being introduced in the Bill is welcome.
The investment firms regime is probably one of the biggest changes to come—we are implementing that now. If we are looking ahead a few years, we want to look at how the alternative investment fund managers directive changes. The way it was implemented in the UK historically—through the work that our authorities and regulators have done—has meant that it was implemented in a proportionate and sensible way. We want that to continue.
Mr McFadden
Q
Gurpreet Manku: Throughout the past few years, we have continued to work with both the Treasury and the regulators. Given the body of legislation that has come to the UK’s shores and the work that we have done historically, it makes sense for the policy-making and rule-setting process to sit within the regulator, and there is an appropriate accountability framework around it.
Alison Thewliss
Q
Gurpreet Manku: I think that what will be important to see over the next year and in future is sufficient time for consultation, because that leads to further transparency. The documents that the FCA publishes are generally quite good and detailed, but I have seen some cases in recent years, and not just domestically, where there were very short windows to respond to quite technical consultations. Ensuring that there is sufficient time to review and digest any changes and to sit down and speak to the regulator about them will be helpful, and will also support the transparency objectives.
Alison Thewliss
Q
Gurpreet Manku: A typical consultation process is usually three months, which is usually enough time for us to gather the feedback from our members, whether they are large or small firms, and turn it into an industry-wide submission.
Alison Thewliss
Q
Gurpreet Manku: Yes, I believe it does, because robust regulatory standards and a clear and stable legal and tax framework attract global investors. While I recognise that there are concerns about Brexit, over recent years we have seen the continued ability of our members here to raise international capital and invest it.
Alison Thewliss
Q
Gurpreet Manku: Equivalence is important for us as well. I agree with all the feedback that has been provided to you throughout the day; I have been listening in on some of the sessions. Our members are prepared for all eventualities, which in practice means looking at setting up additional structures and obtaining additional licences in Europe to cover a period where equivalence decisions might not be available. Thinking about institutional fundraising more broadly, there are other ways to access EU investors, and some firms will have been looking at those routes in the absence of equivalence.
The Chair
If there are no further questions from Members, let me thank Gurpreet—who did a panel all on her own, remotely—for her evidence.
Examination of Witness
Peter Tutton gave evidence.
The Chair
We will now move on to our final panel of the afternoon. It is another one-man virtual panel, with Peter Tutton from StepChange joining us remotely. We have until 5 o’clock, when we must adjourn. Peter, could you introduce yourself for the record and for the members of the Committee?
Peter Tutton: Good afternoon, everyone, and thanks for inviting me. My name is Peter Tutton; I am head of policy at StepChange Debt Charity.
John Glen
Q
Peter Tutton: That is a good question. We are delighted that the two new debt schemes are going forward. We think that they will be a very important help for people who are struggling. What we think they will do is partly driven by our experience of being a deliverer of the debt advice scheme in Scotland. From when we have spoken to our clients, we know that the protections that both the breathing space scheme and the statutory debt repayment plan will offer––a sort of guarantee that if you keep up with your payments you will have protection from your debt spiralling, from collections activity, with people asking you to pay money that you cannot afford, and the threat of enforcement action––deal with the things that frighten people and make them stressed and anxious. They damage people’s health and lead them to do things like borrowing more to cope with unaffordable demands. The lack of a guarantee of forbearance can really impede people’s recovery from debt and financial difficulty.
We are very pleased: those protections have existed in England and Wales for insolvency solutions for some time but not for people who are able to repay their debts. Very often, clients will come to us after an income shock. As we sit here now, people are losing their jobs, having income reductions or falling ill. Their income will drop significantly for a time, but then it takes time for them to recover and get back on track. In those cases, these kind of schemes, first the breathing space scheme to help people to get advice and then the statutory debt repayment plan to help people pay their debts off within that safe space, will be really important in helping people. A lot of the fine detail about how they will work has still to be worked out. It will be important to ensure that they are accessible and that they fit together.
One thing we are interested in is when someone gets to the end of their breathing space scheme. If someone is still recovering, as we call it, from their financial difficulties, will they be able to go into the statutory debt repayment plan, where it may not be apparent that they can pay their debts within their long-stop period at that point, but where we have good reason to believe that their income will recover and that they have a good chance of getting back into work? It would be useful if the two schemes aligned so that people do not, first, get protection, then fall out of protection and only come back into it later. There could be a position where creditors could all pile in to take enforcement action or debts could begin to grow again. That is one of the things where we are keen to see the detail to ensure that the two schemes align and that we can move people from one to the other, with a long-stop on “How long is a reasonable period to repay their debts?” but one that is not worked out very strictly at the beginning while people’s circumstances are still fluid.
There is lots of fine detail to work out. We are going through the process at the moment with the Insolvency Service creditors and debt advice. Agencies are working out the detail of how the scheme will work in practice. What is important for both schemes is that we as debt advisers need to be able to administer them without significant extra cost. We might come to that later. With breathing space, there is no direct funding so the cost situation is very important. If it is very burdensome for us to deliver, it may be hard to do. We then need to do some work still with the creditors to make sure that everyone is getting the information that they need to get protection quickly to people who need it. There is a bit more work to be done there. Likewise, with regard to the way in which the statutory debt repayment will work, there are practical details such as how people will go into the scheme; how the “fair and reasonable” test will work—there is a need to make sure that it is not too cumbersome, and that it is effective and cannot delay protection unduly—and ensuring that creditors do not abuse the right to object, although they must have that right, in a way that can slow the whole scheme down. These are the sorts of things we will need to work out.
John Glen
Q
Peter Tutton: I think this is a necessary measure. We should cast our minds back to the child trust fund. In some ways that was similar, as it was a way of encouraging people to build up savings, although in that case the savings were for their children. As you may remember, one aspect of the child trust fund is that people got a voucher and then had to put it somewhere. A huge number of those vouchers ended up in default. We know that, especially among people who are less experienced in using financial services and in lower income households, it can be quite daunting when a choice has to be made between a number of different savings products that they do not really understand, and when they do not really know the difference.
That can create inertia. It makes a great deal of sense to give a safe way of moving people automatically into a successor product so that we do not have that problem of trying to contact them to get them to make a decision. The clause is worded so as still to allow people to make their own decision, which is quite right, and having safeguards seems sensible. We are big supporters of the Help-to-Save scheme, which is a cracking scheme. Our own research shows that having a pot of precautionary savings can significantly reduce people’s chances of falling into debt. If I had one criticism—
John Glen
I agree with that. We are trying to do what we can to improve awareness and get people to use small amounts; I think they can put by up to £1 or £2 minimum.
Peter Tutton: But it is a good scheme, and it is sensible to allow people who have saved into the scheme to put their savings somewhere else. They can make a choice if they want to, but we know that some of the people whom the scheme is designed to attract may struggle to choose between superficially similar financial service providers and get stuck in the middle. This makes sense.
Mr McFadden
Q
Peter Tutton: In an ideal world, we would like the breathing space period to be longer. We can understand why it has been set up as it has. It is very good that it includes, for instance, Government debt; it is a new thing that people will have protection from Government and local government debt; things like council tax are a very big problem for our clients. We can see that the Government may be nervous about a longer scheme. Perhaps if there was a way of looking again soon, once we are satisfied that it works okay, we could give that breathing space a bit more time. There are two things that the breathing space can do. There is what it does at the moment, which is largely about allowing people to get advice and get into a debt solution, but there is also time during which people need to recover.
As I said earlier, when people come to us they are often still in quite a degree of difficulty and their circumstances have not resolved themselves. We cannot always instantly put them into a stable long-term solution. One of the things that might help that would be a longer period of breathing space while they are recovering. In lots of cases, there is an obvious solution to put people into; if their circumstances are not going to improve and debt relief is the right solution, we will put them into that. We may be able to deal with that by articulating the statutory debt repayment plan and the breathing space such that there is a gap in the middle. Ideally, a longer period would be good. There may be a way of effecting that just by making sure those two things align, so that people whose circumstances are still recovering—they come to us and have a very small amount of money, but we believe that they will back into work, and for a lot of our clients that is what happens—can keep that protection going through until their circumstances improve and they can get back on the track of repaying their debts. That would be the one thing, instantly, that we would think about changing.
Another thing is that in the Treasury policy statement, including this legislation, there is a provision for funding the statutory debt repayment plan. The Treasury policy statement talks about that funding for debt advice providers being around 9% if you distribute funds as well. That is something that may need to be looked at again—not a lot, but a bit. That 9% is a bit less than the funding that we currently get from what is called fair share funding, which is [Inaudible] funding we get for helping clients with debt management plans. That funding actually allows us to do a lot of things.
One of the things that we are not yet sure about and are not able to model is what the additional costs of the statutory debt repayment plan will be. For instance, there is a provision in there for creditors to have a vote as a safeguard before a plan can be accepted. If we have to administer that vote in some way, for instance, it would mean an extra cost. There are some bits and pieces around that that may need looking at a bit more once the precise details of the debt repayment plan scheme are better understood.
Mr McFadden
Q
Peter Tutton: That is a really good question. I agree that that is what we are seeing—we put a report out last week. We see a growing number of households struggling because of covid—those who have lost their jobs. Furlough may be picking up 80% of their wages, but if you are on low pay, that is a big jump and a big cut can put people into difficulty.
You are absolutely right: this is growing. In an ideal world, it would be great if we had those breathing space protections tomorrow so that people had a safe place to go and we could start getting them back on the road towards control of their finances and stopping their debts growing. For practical reasons, I do not think that it will be possible to put that in place tomorrow. For the scheme to work and for us to be able to do it at the scale that we think it would need, it needs to work as an online remedy.
It also needs to work for advisers, to make sure that where we capture information or when someone inputs information into our online system debt help tools, for example, we do not then have to copy that again into the Insolvency Services portal, which is incredibly expensive. That is something that happens with DROs and can be very expensive. The software and APIs need to be developed so that there is a seamless process and the cost is minimised for the scale that we need to get people into this. I do not think it is possible to do that or for us, as debt advice providers, to be organised to do it on the scale that we would need to, much before the implementation date.
Bringing the scheme forward, for practical, implementation and software reasons—all that kind of stuff—is going to be hard, but I think there are things that the Government can do, in the areas that we are really worried about at the moment, to bring forward the protections, if not the breathing space scheme. One of the things that our polling estimates, and other people have said the same thing, is that a large number of people have fallen into rent arrears. Those people [Inaudible] in the private rented sector have relatively little protection against eviction for rent arrears. There are longer notice periods, but that will start unfolding quite soon—it probably already is—so are there protections? Similarly with council tax, there are people falling behind who may be subject to enforcement by bailiffs, which we know can be intimidating and expensive and can make people’s problems worse.
It seems to me that the Government and Parliament supported breathing space. There was cross-party support for the idea that people in financial difficulty need protection from unaffordable collections and enforcement that make their problems worse, so I think there is something the Government can do. That may not be through the breathing space scheme itself now, but it is in the spirit of those protections, particularly for key debts: things like rent arrears and council tax, and maybe other types of debt enforcement that will have lasting, harmful consequences if they are not addressed. That is something that the Government should be looking at now, to make sure that in the coming months people are not worrying more and more about what will happen to their house if their incomes do not recover, or worrying about a bailiff for council tax. Those are things that can be done by Government without the whole breathing space scheme, so I agree: with covid, there is a pressing need to look at the different things that Government may be able to do to help people through this period. Otherwise, we are likely to see some of those harsh enforcement actions starting to happen, and people experiencing harm because of covid. No one really wants to see that.
Alison Thewliss
Q
Peter Tutton: That is a very good question, and I am not sure I have a complete answer for you off the top of my head. First, the Government have some communications routes: those eligible for help to save are effectively those people who are in receipt of universal credit and tax credits, so these are people whom Government can identify and should be communicating with anyway.
To a certain extent, the thing about the transition is that because it is automatic, it is about ensuring that people know where their money is. I do not have an answer straight away when it comes to the best way of doing that. We know that it can be difficult to communicate and get people to engage. It is one of these things where we need a trial wording approach, communicating, and making sure that that communication is very clear that this is something that is happening to your benefit: “Here it is, and here is how you can get at it.” At the same time, there need to be more comms, perhaps to recipients of universal credit—the numbers of whom have grown quite a lot recently, as you will know—about the fact that this scheme is available to help them, and that if they put some money into it now they will get a bonus, which they may be able to use quite soon to deal with their difficulties. Those are the two things that spring to mind immediately.
Alison Thewliss
Q
Peter Tutton: I think that is a good idea. There is a maximum amount of savings, so if you can afford to save the full £50 a month, you will get the full bonus. If you are only able to save £20 a month, you will not, but if you allow the £20 savers to save for longer, they would get more of a bonus. There is definitely an argument there to say, “If we want people to build up a precautionary savings pot, we should give those who have started saving the best opportunity to build that savings pot where possible, albeit by leaving the accounts open a bit longer within the scheme.” That sounds sensible.
Alison Thewliss
Q
Peter Tutton: Yes, we are supporters of a duty of care as well: we have spoken with Macmillan about this, and we can see the point. It is an interesting one to attach to the Bill. The FCA said that it is due to reply to a consultation on a duty of care. That response probably will not come until Q1 next year, so it has been a bit delayed. That is a bit unfortunate, because if there is a need to legislate or it concludes that there is a need to legislate, the opportunity of doing so through this Bill will have passed.
We agree that there is a need for a duty of care. There has been a succession of problems over the years with financial services. The FCA does a good job: it does rules, and it is getting on top of some of the wide-ranging historical problems we have seen, from unauthorised overdraft charges to payday lending, other bits of high-cost credit, aggressive collections, and a whole range of things in my areas of interest. It is starting to get on top of these.
We think the measure could still be clearer. We think a duty of care, or at least being specifically required by a rule-making power to think about a duty of care and what that means, and empowering the FCA to make rules would be helpful. We have a particular take on duty of care. There are lots of definitions of it. One thing that we see is the idea of having regard to consumer protection. A duty of care could also help better define the consumer protection definition.
We still see too many cases where people who are vulnerable or face constraint choices because of lower incomes and are forced to use credit and things like that or because of behavioural biases built into products. People are in a situation where effectively there are firms exploiting those circumstances. This is the sort of thing that we think a duty of care could deal with. We need a more explicit statement in the legislation about the way firms need to understand the measure. In vulnerability guidance, we would make that more explicit and biting on the way firms have to think about their products and services, and making sure that they do not have the effect of exploiting vulnerable consumers.
We are not quite there yet with financial services, because these problems keep happening. It would sharpen that up and give a better line between what is regulatory policy and what is social policy. We would start to be able to have a better debate about when it is reasonable for someone on a low income to be on credit, the sorts of credit they may be offered that make their debt problems worse and why that is happening . That may help to stop that happening. For lots of reasons, we are supportive of the idea of a duty of care. It would sharpen the focus on vulnerability. It would sharpen the focus on the kind of detriment that people face when they are using financial circumstances as a sort of distressed purchase. For us, the measure is a good thing and something we would like the FCA to take forward.
Andrew Jones (Harrogate and Knaresborough) (Con)
Q
Peter Tutton: We spend quite a lot of time looking at the experience of our clients, and we survey our clients and poll them to see what has happened to them. When we were looking, back in the day, at breathing space we were trying to understand what brought our clients to advice and what helped them to recover. What we found was that our clients often had multiple creditors. On average, they would have about five or six. Typically, we find that some creditors, even most, will be very good, but it only takes one creditor to defect from good practice and to push for more money to destabilise people’s financial situation and restart the process of juggling bills and borrowing more to deal with a particularly aggressive, unaffordable payment demand.
There was a very strong message from clients that that impeded their ability to recover. At the same time, we spoke to our clients who were in the debt arrangement scheme in Scotland, and we got a very clear message from them that that kind of guarantee—the statutory framework that the debt arrangement scheme in Scotland gave them—reduced their anxiety and gave them a really good, strong and solid platform for recovery. They knew that if they paid what they could afford to pay and kept doing that, nothing else bad would happen to them in terms of unaffordable demands and escalating enforcement.
In that sense, we have known for a long time that people need protection from their creditors in certain circumstances. Both the experiences of clients who do not have that protection in England and Wales outside of insolvency and the experiences of clients who do have it in Scotland persuaded us that what has become breathing space in the statutory debt repayment plan was a necessary additional protection that we did not have at the time.
Andrew Jones
Q
Peter Tutton: Yes, I will dig some out.
Stella Creasy
Q
With the debt repayment schemes, I think all of us recognise that the breathing space is a very positive development. First and foremost, I want to ask for your view on the midway review element. Do you have any thoughts on what impact that might have as currently drafted?
Peter Tutton: It is a good question. We were very concerned initially about the midway point, simply because it could be very expensive and hard to administer the debt advice. The provision is now not quite as onerous, so we are not having to do full outbound calls and things like that. We are now reasonably comfortable with it as something that is a touching point, where clients touch in with us to ensure that they are still engaged with the process. That is something we do anyway. If someone has come for advice and there is a recommendation that the next step of a particular debt solution requires them to do further things for us to help them, we will follow up and keep in contact with them to ensure that they do not drop out of the process and that they have some help. The initial relief of having spoken to someone about it can lead people to think, “Well, I’ve got that out that way,” whereas it is important to keep going and get people into the debt solution.
There is some element of the midway review that is not dissimilar from the kinds of things that we would do anyway. The important thing is that the way it is done in practice should not become an onerous burden that does not really have any practical use to it. I think we are sort of there. We are talking to the Insolvency Service about the guidance and the way it will work. I think we will get to a place that we can live with. My operational colleagues who are implementing this are not saying it is unworkable at the moment, so we are reasonably comfortable with it, but time will tell. [Inaudible.] If, six months in, it turns out to have been really onerous with no practical effect, that is something we would ask the Treasury to come back and look at again.
Stella Creasy
Q
Peter Tutton: That is a good question. Our starting point here is that we would end the breathing space scheme as soon as it is no longer needed. At the moment, people come to us in a variety of different situations, and a number of different debt solutions are appropriate for them. If the most appropriate solution for them is a debt relief order, which is a type of insolvency for people with very low incomes or with disposable incomes and no assets, and they want to do it, we would put them into that as quickly as we can. If that can be done—sometimes it can, and sometimes it cannot—before the breathing space period ends, the breathing space will end.
There is actually a provision in the Bill that means that if you are in a debt solution before the review, it will end. It certainly is not a case of putting people in breathing space until it comes to the end of its 60 days, and then putting them in a solution. We will always try to get people into the right solution as quickly as they can. The other end of your question is that there might sometimes be cases whereby there is a debt solution but, for whatever reason, it takes a bit longer to get them into it. In exceptional circumstances, there might be a case to extend the breathing space, if for some reason it takes us longer to get someone into a DRO or something like that.
There is another question about this. One of the problems with debt relief solutions at the moment—debt relief orders and bankruptcy in particular—is that they have fees. These people are so poor and their debts are so big that they need to go into insolvency, but they have to find a fee, and the fee is hundreds of pounds for bankruptcy. Very few of our clients could afford that; they would have to save up for a year or two years to meet the fee.
There is a bit here that Government will need to think about, in relation to breathing space, if someone has come for advice and we have given them protection and worked out that the best thing for them is bankruptcy, but it will take them ages to find the fee to actually go bankrupt. They will fall out of that statutory protection, as it were, back into the mosh pit before they can get their protection in bankruptcy.
So you raise a really good question. There are two ends to it. One bit is that we would not keep people in longer than we needed to; that is a case of getting them into the debt solution they need. But there may be other people who will not be able to progress to the right debt solution for them, for a variety of reasons, before the breathing space runs out. That is something that Government may look at. Perhaps we need to build some evidence of that problem as we go along, but it would be good to do a quick review to see whether there are circumstances where the period needs to be extended or, indeed, whether elsewhere in Government we need to look at things like the barriers to accessing debt relief that mean it is not a good option, either because of the cost of getting into it or because it is still quite a stigmatising process and puts people off. There is another need, elsewhere in Government, to look at how the whole debt relief thing is working.
Stella Creasy
Q
Peter Tutton: The particular issue with the insolvency schemes for England and Wales—well, one of the issues—is the application fee. That is a point that is slightly different from the threshold; that is an issue about people having to find money to pay for those solutions.
Stella Creasy
Q
Peter Tutton: It makes some sense to look at this, because a debt relief order is so much cheaper than bankruptcy. Debt relief orders have a restriction on debt size and, as you say, a restriction on disposable income, both of which are to safeguard the creditors, because the Insolvency Service will not do a full investigation. The idea is that it is the people who have really got no money, no assets, and so if we let them into insolvency without an investigation, there is nothing squirreled away that otherwise would benefit creditors.
DROs have been running for many years now, and I think you are right: it is time to look at whether we could have an easier route into them rather than bankruptcy, which might mean lifting the disposable income threshold a bit or the debt threshold a bit, or both. There is now a bunch of people for whom we would be advising bankruptcy who are never going to get into bankruptcy because they cannot afford it, and often it is the debt size as well.
I think it is the right time for the Government to do this. Given what we might see after the fallout from covid of more households, more people, facing financial difficulty, it is a good time to review how these debt solutions work at the moment and to see what can be done to increase accessibility for those who need that help.
Stella Creasy
Q
The Chair
Order. Can we be a little briefer? We are slightly straying from the scope of the Bill. A very quick answer, please, Peter Tutton.
Peter Tutton: That is a good point. There are things we can do. There are a number of interventions, from lending rules to product features and price. Also, on the relationship between who is using high-cost credit, there is a social policy point here. Is there more to be done to give people affordable alternatives, so that they do not have to go to those products? It would be good to talk more about all of that, because it is absolutely key.
We estimate that survival borrowing under covid—people having to borrow to make ends meet—is up to about £6 billion. There is a big pile of debt building there, which people will not be able to afford to pay down. Some action now to give them an alternative and think about how to deal with that debt is timely and important. We should try to do something now before it gets much bigger.
The Chair
If there are no further questions, let me thank Peter Tutton. A few times we thought that your technology would fail us, but we got through, so thank you. I thank all our witnesses from our eight evidence sessions today. That brings us to the end of the oral evidence for today. The Committee will meet again in the same room at 11.30 am on Thursday.
Ordered, That further consideration be now adjourned. —(David Rutley.)
Environment Bill (Seventeenth sitting)
Tuesday 17th November 2020
(4 years ago)
Public Bill CommitteesRead Full debate Environment Act 2021 View all Environment Act 2021 Debates Read Hansard Text Read Debate Ministerial Extracts Amendment Paper: Public Bill Committee Amendments as at 17 November 2020 - (17 Nov 2020)
The Committee divided: - Ayes: 5 / Noes: 10 - Question accordingly negatived.
The Committee divided: - Ayes: 5 / Noes: 9 - Question accordingly negatived.
The Committee divided: - Ayes: 5 / Noes: 10 - Question accordingly negatived.
The Committee divided: - Ayes: 5 / Noes: 10 - Question accordingly negatived.
The Committee divided: - Ayes: 5 / Noes: 8 - Question accordingly negatived.
The Committee divided: - Ayes: 5 / Noes: 8 - Question accordingly negatived.
Fleur Anderson (Putney) (Lab)
Before our lunch break, we were discussing clause 81, on water quality and the powers of the Secretary of State. The clause gives the Secretary of State a wide-ranging power to amend the regulations that implement the EU water framework directive, particularly as they relate to the chemical pollutants that should be considered under the regulations and the standards applied to them.
I have some concluding comments to my earlier statement. The amendment would ensure that any changes to water quality regulations would be subject not to the negative procedure, as the Bill sets out, but to the super- affirmative procedure. This would give stakeholders—including UKTAG, the UK technical advisory group, which currently advises on standards and which should retain a lead role in this process—the right to input into any water quality regulations changes. It would also legally require the Secretary of State to have regard to that input, ensuring that standards and targets are altered only in line with scientific advice and following appropriate stakeholder consultation.
A robust, binding legal assurance of non-regression on environmental standards would give further assurance on that point. The Government still have the opportunity to give such assurance through the Bill, and that would be warmly welcomed by the environmental sector and many other stakeholders.
The Parliamentary Under-Secretary of State for Environment, Food and Rural Affairs (Rebecca Pow)
I thank the hon. Member for Putney for tabling the amendment. I understand entirely the desire to ensure an appropriate level of scrutiny when this delegated power is exercised. The clause creates a narrow power for the Secretary of State to maintain a list of the most harmful chemical substances that could enter watercourses and sets out measures to monitor and tackle them, keeping pace with the latest scientific knowledge. This is a key aspect of our wider regulations that protect and enhance our water environment. The exercise of the power in the clause is subject to consultation with experts in the Environment Agency who provide scientific opinion and have a statutory duty to monitor water.
I highlight the fact that the Secretary of State will take into account the latest scientific evidence when updating lists. In addition to the EA, a lot of that evidence comes through the UK technical advisory group, a working group of experts drawn from the environment and conservation agencies for England, Wales, Scotland and Northern Ireland who already derive threshold values for UK-specified pollutants, which are monitored for the purposes of contributing to the ecological status of our surface waters. A statutory consultation requirement could not be placed on the UK technical advisory group as it is not a statutory body, but it offers valued expert advice. The Secretary of State must also consult any person or bodies appearing to represent the interests of those likely to be affected by these provisions.
I understand that the amendment seeks to increase the level of parliamentary scrutiny of the exercise of the power by upgrading to the super-affirmative resolution procedure, as the hon. Member for Putney mentioned. As we have mentioned, this procedure is used extremely rarely for statutory instruments that are considered to need a particularly high level of scrutiny—for example, legislative reform orders under the Legislative and Regulatory Reform Act 2006, which could be used to abolish, confer or transfer statutory functions or create or abolish a statutory body or office—so we do not feel that that would be appropriate.
The hon. Member was concerned about a lowering of standards, which is absolutely not the case. I know that she has a particular interest in this, and I was so interested to hear earlier that she worked for WaterAid. Lots of Back Benchers engage with WaterAid—I did—when it holds events in Parliament. It does really good work. The wider regulations require the EA to have an extensive and robust monitoring regime for chemicals in the water environment and refer to the priority substances as those that must be used to assess chemical status in surface waters. The EA will monitor for new and emerging harmful substances through an early warning system and, in consultation with the EA, the updates to the list will be based on the latest science and monitoring data, which currently suggest a potential increase in the number of substances of concern, rather than a reduction. An eye will certainly be kept on that, because it is so important.
Although I fully acknowledge the importance of parliamentary scrutiny, a super-affirmative, or indeed a standard affirmative, resolution procedure is wholly disproportionate in this instance. This power can be used only to make relatively narrow changes to existing transposing legislation for the purpose of updating certain water quality standards. The power does not extend to changing the wider regime for assessing and monitoring water quality, which is enshrined in the Water Environment (Water Framework Directive) Regulations 2017. An update to the list of priority substances involves highly technical discussions, as I have mentioned, around emerging pollutants and their threshold values, measured in micrograms per litre, and sophisticated monitoring techniques, including biota testing.
I hope that clarifies the position, and I therefore ask the hon. Member for Southampton, Test to withdraw the amendment.
Dr Alan Whitehead (Southampton, Test) (Lab)
As the Minster indicated, the name super-affirmative suggests that this is not an everyday procedure. It has been suggested in the amendment because the clause would allow the Secretary of State, albeit on a reasonably narrow basis, to amend or modify legislation, and thereby to degrade or completely remove environmental protections that are already in the regulations. That would essentially be a power to deregulate current regulations, underpinned by the ability to do so by simply notifying the House. We do not think that is good enough.
As my hon. Friend the Member for Putney emphasised, the super-affirmative procedure would not just allow for greater parliamentary scrutiny but would allow for greater consultation in the process. We think it is an appropriate device to add, although it is a relatively new one. It has been in place, as the Minister alluded to, since 2016.
However, the Minister has given some assurances on the limit of the Secretary of State’s power to degrade or remove secondary legislation. She has also indicated that that would not be the intention of the Government, and that, on the contrary, it is their intention to try to uprate those regulations.
Rebecca Pow
Apologies; I was mistaken earlier. It was the shadow Minister who tabled the amendment. In addition to all these matters, the Secretary of State will conduct a two-yearly review of significant developments in international legislation on the environment. That is another prong that will help to keep up the standards of environmental protection. I thought the hon. Gentleman might be interested to hear some of the ways we might use—
Dr Whitehead
I thank the Minister for her intervention. Alas, we will never hear the detail of what those changes might be, but the fact that she was brandishing a sheet of paper that clearly had them written on it is perhaps further assurance. I did indeed move this amendment, but the multi-talented nature of Opposition Members could have led one to believe that someone else had done so, such is the power of our interventions this afternoon.
We do not intend to press the amendment to a Division, but I hope that this is another thing for the Minister’s “to think about” box. I do not think that it is generally a good idea for secondary legislation to be put through the negative procedure on this catch-all basis. Among other things, doing so puts considerable impediments in the face of Parliamentary scrutiny, because the negative procedure requires the legislation to be prayed against. That means that the right to a debate lies with the usual channels rather than being guaranteed, as it is with the affirmative procedure.
I hope the Minister will take the general point on board for future legislative purposes that we do not think that is a good idea. We would be grateful if the Minister could have that in mind when she is reviewing the legislation. On this occasion, we are reasonably happy with the Minister’s assurances on this clause and the additional—alas, secret—assurances that she has on her piece of paper. Therefore, I beg to ask leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Clause 81 ordered to stand part of the Bill.
Clause 82
Water quality: powers of Welsh Ministers
Amendments made: 53, in clause 82, page 81, line 19, leave out
“the National Assembly for Wales”
and insert “Senedd Cymru”.
See Amendment 28.
Amendment 54, in clause 82, page 81, line 21, leave out “Assembly” and insert “Senedd”—(Rebecca Pow.)
See Amendment 28.
Clause 82, as amended, ordered to stand part of the Bill.
Clauses 83 to 86 ordered to stand part of the Bill.
Clause 87
Valuation of other land in drainage district: Wales
Amendment made: 55, in clause 87, page 85, line 9, leave out
“the National Assembly for Wales”
and insert “Senedd Cymru”.—(Rebecca Pow.)
See Amendment 28.
Clause 87, as amended, ordered to stand part of the Bill.
Clause 88
Valuation of agricultural land in drainage district: England and Wales
Amendment made: 56, in clause 88, page 87, line 33, leave out
“the National Assembly for Wales”
and insert “Senedd Cymru”.—(Rebecca Pow.)
See Amendment 28.
Clause 88, as amended, ordered to stand part of the Bill.
Clause 89
Disclosure of Revenue and Customs information
Amendment made: 57, in clause 89, page 89, line 9, leave out
“the National Assembly for Wales”
and insert “Senedd Cymru”.—(Rebecca Pow.)
See Amendment 28.
Clause 89, as amended, ordered to stand part of the Bill.
Clause 90 ordered to stand part of the Bill.
Dr Whitehead
Apologies, Mr Gray, but we had previously notified the Committee that our amendments to the natural environment and environmental protection elements of the Bill would be moved by my hon. Friend the Member for Cambridge.
Daniel Zeichner (Cambridge) (Lab)
I beg to move amendment 169, in schedule 14, page 207, line 26, leave out paragraphs (3) and (4) and insert—
“(3) The relevant percentage is a minimum of 10%.
(4) The Secretary of State may by regulations amend this paragraph so as to increase the relevant percentage.
(5) The Secretary of State shall review the relevant percentage after 5 years or sooner.”
This amendment amends the power to vary the 10% level so that it can only be increased.
I apologise to anyone who was expecting to continue to hear the mellifluous tones of my esteemed colleague, my hon. Friend the Member for Southampton, Test. I am grateful to have a backing part; it is a huge honour.
After all the excitement this morning, I hope we can have a similarly exciting afternoon. We are coming to the bit that I have been looking forward to most since I first read the Bill: the exciting part around nature and biodiversity. Part 6 is fascinating. It is hard to imagine a more important and pressing subject when we all know that around the world, the targets we have collectively set ourselves continue, sadly, to be missed. At the same time, we look to find ways out of the economic crisis stemming from covid.
Part 6 is a very important part of the Bill. As I looked at the Bill last night in revising for today, I reread some of the 25-year environment plan. What an optimistic, forward-looking and exciting document it is, full of “wills”, “shalls” and “musts”. The trouble is that some of that enthusiasm seems to have been mislaid en route. One of the key things is that somewhere along the line, the planning White Paper came along, and there is an unresolved tension between the excellent ambition of the 25-year environment plan and those new suggestions.
As my hon. Friend the Member for Southampton, Test said at the beginning of our discussions, we think this is a good Bill, but we want to make it better. My task this afternoon is to try to help the Minister restore it to the Bill it might once have been. We could see this as a bit of a whodunnit. Who was it, and how did the changes creep in? Who did such harm to it, and how can we now help the Government make good? In some of the discussions on this schedule, the Government thought about going beyond net biodiversity gain towards net environmental gain, and we would really like that desire to be addressed.
Much of the schedule is about the planning system. I suspect many Members here have direct or indirect experience of our planning system and know how important it is. For the moment, the provisions for reducing environmental impact in the planning system are focused on preventing and mitigating harm. The net gain objective has been embraced in the national planning policy framework since 2012, when it replaced the previous policy objective of no net loss, which sought only a neutral outcome after losses and gains were accounted for. Thanks to the rules for site-based protection in the Conservation of Habitats and Species Regulations 2017, the net gain objective has been relatively effective in reducing loss of habitats and species without slowing down development, but it has been far from enough to turn the tide in nature’s decline. The principle of taking a more strategic approach to restoring nature and requiring a 10% net gain in biodiversity is one we fully support. That is what is addressed in this schedule.
We know how important that is because, sadly, the UK continues to suffer rapid biodiversity loss. The Government have failed on too many metrics: 46% of conservation priority species in England declined between 2013 and 2018. This is serious. We welcome the fact the Government have begun to address some of the issues, although we think we need to approach this serious issue in an open and clear way. We note the Prime Minister’s announcement a few weeks ago about 30% of land being protected, but we also gently point out that some 26% of that is achieved through a counting mechanism that includes areas of outstanding natural beauty and national parks. We want to address this problem. We have to be serious about it and not try to play with the figures, and our view is that at the moment the Bill is a lost opportunity to stop the decline. However, the new general condition has the potential to be an effective tool to boost biodiversity across the country, and there are many issues we want to address in the amendments to see how the Bill can be improved.
I will touch on several of our amendments, including on the length of time for which habitats should be maintained, which is 30 years; the exemptions, too many, in our view, from the biodiversity gain condition; the relationship between the new system and irreplaceable habitats; and the lack of a mechanism to guarantee what is prescribed in the biodiversity gain plan to ensure it is actually delivered on the ground. To turn to the detail of amendment 169, our fear is that we are in danger of being left with a rather unambitious percentage of biodiversity net gain that is all too easy for the Government to decrease if they choose to do so. At first sight, setting the condition for planning permission at 10% biodiversity net gain seems a reasonable thing to do, but it is important to note that the impact assessment published alongside the biodiversity net gain consultation in December 2018 said that 10% is merely the lowest level of net gain at which the Department
“could confidently expect to deliver…net gain, or at least no net loss”.
It does not appear that this is taking us very far forward. Indeed, 10% net gain is less ambitious than the current practice of some local authorities. I am told that Lichfield District Council already requires 20% net gain on new development, so although we welcome the Government’s statement and its response to the biodiversity net gain consultation, the 10% should not be viewed as a cap on the aspirations of developers who want to go further. I was pleased that the Minister reiterated this point on Second Reading. It would be very helpful if she could make a clear statement, to facilitate ambitious developers and to help them and local planning authorities, underlining that the aspiration is to go further.
A number of changes need to be made. Under schedule 14, the Secretary of State has a number of powers to make regulations, including a Henry VIII power to amend the 10% biodiversity net gain objective and to amend the types of developments the net gain will apply to. The Bill’s provisions read that “the relevant percentage” of biodiversity net gain for developers is 10%, and:
“The Secretary of State may by regulations amend this paragraph so as to change the relevant percentage.”
Our amendment is very clear: that must be amended to include a commitment to monitor and review practice, so that the level of gain can be increased in future if evidence demonstrates this is possible and needed. We also need a lock-in so that the percentage can only be increased by the Government, not simply decreased at a later date. There must be no mechanism in the Bill to lower the level of gain; that would seriously undermine the objectives of the system as a whole, and would likely result in little or no gain being achieved in practice.
Amendment 169 would ensure that the only way the 10% net gain figure could be changed is by being increased after review by the Secretary of State. It would also lock in a timeframe to ensure the percentage is reassessed after an appropriate amount of time, within a maximum period of five years.
I am sure the Minister will, as she has throughout, assure us that there is no need for concern. But to return to my whodunnit, I fear that there may be a villain in my story and Members might be able to guess who some of the contenders might be. Looking back at the Prime Minister’s “Build, build, build” speech in July, he did claim—spuriously in our view—that:
“Newt-counting delays are a massive drag on the prosperity of this country.”
We will discuss newts in more detail later, but when Government policy lurches from one approach to another, we need certainty that the commitment of the current Minister will not be trumped by future Ministers who might take a different view. Unless we get that certainty, we will certainly wish to press this amendment to a Division.
Rebecca Pow
I welcome the hon. Member for Cambridge as he takes the floor this afternoon. This is a tremendously exciting part of the Bill, through which we can all be a part in doing our hugely important bit for nature in this country. He is right about degradation—I am not even going to think about denying that—and about how important the Bill is. This is the tool for achieving the measures in the 25-year environment plan, which was the first environmental improvement plan. It is great that the plan is full of optimism because it sets out what we want to do and where we want to go, and these measures will be in this Bill.
Let me turn to the amendment. Responses to the net gain consultation revealed that some developers have already made voluntary commitments to no net loss or net gain and there were calls for both a higher and a lower percentage. It was quite interesting how that came out. On balance and having considered all responses, we believe that requiring at least a 10% gain strikes the right balance between ambition, creating certainty in achieving environmental outcomes, deliverability and costs for developers. It should not be viewed as a cap and the hon. Member for Cambridge has already mentioned a local authority that has set its sights higher. Many more are doing that and going voluntarily above 10%.
The hon. Gentleman mentioned the “Planning for the future” White Paper, which I think will probably be referred to a lot today. It specifically sets out support for biodiversity net gain and rightly identifies improving biodiversity as one of our most important national challenges. It is important to build the houses people want and all of the developments that we need, but that cannot be done to the detriment of the environment.
That is quite clear in the White Paper that biodiversity net gain and biodiversity more generally are one of our most important challenges. The Department for Environment, Food and Rural Affairs is working closely with the Ministry of Housing, Communities and Local Government on the implementation of biodiversity net gain to make sure it is fully integrated into the planning system. I have already said that the 25-year environment plan is the first environmental improvement plan, and all these things will work as part and parcel of one another.
The ambition of 10% net gain represents a significant step forward beyond current practice while striking a balance and meaning it does not have be reviewed as a cap. Restricting the ability to set a lower percentage requirement may force the Government to exempt any development types that cannot achieve a 10% net gain, rather than keeping them in scope and subjecting them to a lower percentage requirement. Broader exemptions would be a greater risk to the achievement of the wide policy aims than targeted application of a lower percentage gain.
Limiting the power might therefore compel future Governments to make other adjustments to the requirement, which could compromise environmental and development outcomes more fundamentally than a lower percentage of net gain.
Dr Whitehead
The Minister is making an interesting case for the clause. However, does she accept that it is a particularly egregious example of “first you have it, then you don’t” legislation appearing in consecutive paragraphs? That is to say—a bald statement, as she said—the relevant percentage is 10%, but then the Secretary of State can take that away. Does she have any suggestions as to how one might make that a little less alarming, if she is indeed suggesting that that sort of arrangement needs to be in place?
Rebecca Pow
I reiterate how closely we are working with other Departments and on the “Planning for the future” White Paper to make sure that biodiversity remains the significant objective that it needs to be, as has been indicated already.
Other measures in the Bill, such as the local nature recovery strategies that we will come on to talk about, will help with our moving towards biodiversity net gain. There are a lot of measures that will make it much clearer where the net gain is, what the advantages and benefits of it are, and where it should go.
One of the main aims of our planning reforms is to enhance the environment while having the development that we need. We want environmental assets to be protected. We want to provide more green spaces, more sustainable development and new homes that are energy-efficient. Many of these measures have already been announced and are being introduced, such as the measures on houses and on the reduction of carbon-intensive modes of transport. All these things will work together, and measures in the Bill will help that process. We will also work through the White Paper to deliver even further on the net gain.
Let me reiterate that limiting the power might compel future Governments to make other adjustments to the requirement that would compromise environmental and development outcomes more fundamentally than a lower percentage of net gain. What we are trying to do overall is to raise up the whole net gain.
Ruth Jones (Newport West) (Lab)
Does the Minister agree that these amendments are very moderate? We are not looking to limit things down, but to raise things up. The Bill already has the relevant percentage—10%—so to put that as a minimum is surely a very moderate thing. That word is a very important one. As she has already said, she is very ambitious, so adding that word would surely increase the ambition.
Rebecca Pow
I hear what the hon. Lady says, but I still stick to my point that restricting the ability to set a low percentage requirement might force Government to exempt any development types that cannot achieve the 10%. What we are trying to do is to make sure that everyone gets to the 10% mark, and others might go above that voluntarily.
On the final point about the amendment, about compelling the Secretary of State to review the percentage within five years, I offer my assurances that the Government intend to monitor closely the policy outcome of net gain after its implementation. Of course, Members should remember that we have our Office for Environmental Protection; we have a great big monitoring and reporting body. It will be very difficult for anyone not to stick to these measures. They are all in the Bill and they add to the overall enhancing of the environment. I respectfully ask the hon. Member for Cambridge to withdraw the amendment.
Daniel Zeichner
I am grateful to the Minister. I suspect that a theme is already emerging from this discussion, whereby the Minister tries very hard to explain away the differences that have emerged. That is her job and she has made a very good attempt at it. However, it seems counterintuitive to argue that, on the one hand, the Government are going to introduce this level and, on the other hand, they will have the ability to reduce it. As for the argument that that somehow protects the measure, I think that the cat was slightly let out of the bag by the suggestion that there might be exemptions that will allow another way round it. We will come on to that in a moment.
In some ways, this is a strange discussion, because the White Paper on planning emerged in the summer, after this Committee was in abeyance. It seemed to us—we made this point very strongly—that this process is a complicated set of interactions that would have benefited from the detailed interrogation of experts. We will get into some quite detailed planning law issues in the coming hours, I suspect, and many of us possibly do not have the expertise that some of our witnesses might have been able to bring to these discussions. It is a great pity that we are not able to explore that in more detail. But we are where we are and we will have to do our best.
The problem is that a lot of this goes back to the question of trust. Basically, the Minister is asking us to trust the Government. She says that they are introducing the OEP, but the OEP will work to the legislation that we are putting in place today. Inevitably, there is pressure —we know that there is huge pressure and we understand why—from local developers and a Government who want to build, build, build. That is why nature needs a voice: it needs the legislative protection that the Minister is so passionate about. There should not be any loopholes, because we know what will happen: if we leave loopholes, people will use them. That is why—and I will keep repeating this point—I want to understand what changed, who did it and why, because if we get an answer to those questions, we will understand what is likely to happen in future.
This Bill might look lovely and sound great, but when we begin to delve down into the detail and look at the “mays” rather than the “musts” and at the exemptions and loopholes it introduces, we may find that, like on so many other occasions in the past, it is a great disappointment. That is why we want to absolutely tie this down. On that basis, we wish to divide the Committee.
Question put, That the amendment be made.
Daniel Zeichner
I beg to move amendment 168, in schedule 14, page 209, line 37, leave out
“maintained for at least 30 years”
and insert
“secured in its target condition and maintained in perpetuity”.
This amendment requires habitat created under net gain to be secured in perpetuity.
The Chair
With this it will be convenient to discuss the following:
Amendment 75, in schedule 14, page 209, line 37, leave out
“for at least 30 years”
and insert “in perpetuity”.
This amendment would require post-development habitat enhancements for the purposes of biodiversity gains to be maintained in perpetuity rather than for 30 years.
Amendment 74, in clause 91, page 92, line 1, leave out
“for at least 30 years”
and insert “in perpetuity”.
This amendment would require habitat enhancements for the purposes of biodiversity gains to be maintained in perpetuity rather than for 30 years.
Amendment 230, in clause 91, page 92, line 1, leave out
“for at least 30 years”
and insert
“secured in its target condition and maintained in perpetuity”.
This amendment would require habitat enhancements created under net gain to be secured in perpetuity.
Daniel Zeichner
The theme continues with this set of amendments because, in exactly the same way as I have just explained, there is a risk of not achieving the desired outcome and ambition of the 25-year environment plan.
The amendment relates to the length of time that the biodiversity gain habitats should be maintained. Our amendment challenges the Government’s suggestion of 30 years. In our view, both schedule 14 and clause 91(2)(b) would allow protected sites potentially to be downgraded or destroyed after 30 years, thereby destroying the ecological gains and carbon storage benefits, and any prospect of those gains and benefits making a long-term impact.
That is essentially the issue: we are talking about the long term. I am sure the Minister will explain in a moment the logic for the Government’s 30-year proposal, but this takes us back to the basic point about how serious and ambitious we are about embedding these changes for the future. There will be little point to the provisions if they do not work in practice. For instance, if someone gets rid of a pond that has been in place for hundreds of years, with all the richness in biodiversity it has developed, and replaces it with another pond nearby, that replacement could be let go after 30 years. Our concern is that the provisions do not give the necessary strong support. The danger is that too short a period could simply see the biodiversity gains swiftly lost. Thirty years sounds like quite a long time, but when one bears in mind that we are already two years down the line from the 25-year environment plan and that politics does not always move at a frightfully great pace, it is not hard to imagine things moving quickly and those gains being quickly lost. If biodiversity gains are to properly contribute to the 25-year environment plan commitments to a nature recovery network and to provide carbon sequestration, which is so crucial to our net zero targets, these areas must be secured and maintained for the long term, because only through that kind of approach will we secure long-term nature recovery.
There really ought to be some binding mechanisms to ensure that the habitat condition target is reached in a timely way. One does not want to be cynical about some of these things, but one can well imagine that people wishing to build, build, build will try to find ways around them and will try, on occasion, to take advantage. The time taken for a habitat to reach its target condition—for example, for woodlands to reach maturity—could be specified in a biodiversity gain plan and included in planning conditions to ensure that it can be enforced. One can see so many possibilities here, and yet, even though the goal is within grasp, it seems that it is being clawed back. Again, I wonder by whom and for what purpose.
Amendment 168 to schedule 14 and amendment 74 to clause 91 would change the provisions by requiring post-development habitat enhancements for the purpose of maintaining biodiversity gains in perpetuity, rather than for 30 years. I have no doubt that the Minister secretly agrees with that; I suspect that she would like to see these things achieved. However, I suspect that she is constrained.
Our amendment 168 would ensure that those habitats are maintained at their target condition. It is interesting to note that that proposal comes not only from the Opposition Benches but is broadly supported. I was delighted to see a similar amendment in this group from the hon. Member for Chatham and Aylesford (Tracey Crouch), although I do not think that it goes quite as far as ours. However, there are clearly Government Members who see the significance and importance of achieving this for the long term. I have to say once again that, if we do not get the commitment we are looking for on amendment 168, we will divide the Committee.
Dr Whitehead
I want to add a few thoughts to the excellent introduction to the clause from my hon. Friend the Member for Cambridge. This issue has a considerable relationship to not only biodiversity gains generally but our targets under climate change legislation.
Part of the purpose of a number of the biodiversity gains that may arise as a result of putting percentages on biodiversity gain is not only to make a little gain but to actually sequester what is in that gain. That sequestration should and will count towards the carbon balance, so far as getting to net zero is concerned. We will discuss, when considering a new clause later in Committee, the whole question of what to do about planting trees over a period of time and how the planting of those trees leads, as those trees mature—my hon. Friend alluded to this—to substantial gains in net negative emissions, which are absolutely essential for reaching a net zero target in the future. The assumption would be that the carbon embedded in those trees is permanently placed on the carbon account as a negative input, because it has been effectively sequestered by the trees. That means not only that we can get to net zero, but that the whole question of net negative in the net zero equation is an essential starting point, and without that net negative input, there is no way we will get to net zero by 2050. As we in this House have all agreed, 2050 is the proper target, although we would like net zero to be achieved sooner in this country as far as emissions are concerned.
Rebecca Pow
I thank both hon. Members for their comments. The 25-year environment plan has been referred to, and I would say that Opposition Members are talking about weakening the commitments on biodiversity net gain in the 25-year plan. The Bill actually takes us further on biodiversity net gain. The plan only included a commitment to consult on a mandatory approach and strengthened policy. We are proposing a robust mandatory requirement with a broad scope of mechanisms for securing gains. I think that is important to register at the beginning.
The schedule states that “any habitat enhancement” within a development site that is considered significant by the planning authority must be
“maintained for at least 30 years after the development is completed.”
Respondents to the net gain consultation expressed strong support for a minimum period of maintenance, and Government responded by confirming that they would introduce a minimum period—hence the 30 years.
Ruth Jones
I am just seeking some clarification on the definition. The Minister said the amendment appears to weaken the Bill, but “in perpetuity” cannot be weaker than 25 years, because perpetuity is longer than 25 years.
Rebecca Pow
My point was that what we are introducing in the Bill is much stronger than what was in the 25-year environment plan. That was the point I was making. I will press on—
Rebecca Pow
But it was referred to earlier. It is a commitment we have made, and we are strengthening it. Credit should be given where credit is due. A great amount of work has advanced since the launch of that plan, which I went to in 2018 with the then Prime Minister, my right hon. Friend the Member for Maidenhead (Mrs May). We are forging on and doing even more than was promised in that plan.
I welcome the acknowledgment by hon. Members of the importance of long-term maintenance of biodiversity gain sites to ensure that we provide long-lasting benefits for wildlife and communities and for climate change, as was ably referred to by the hon. Member for Southampton, Test. There are, however, practical reasons why we should keep the minimum requirement to a 30-year duration. We need to create the right habitats in the right places for wildlife. Increasing the minimum required duration of maintenance might dissuade key landowners from volunteering their land for gains. Agreements made for perpetuity would also risk creating permanent conditions or obligations to maintain particular types of habitat, when future changes in climate or ecological conditions might make a different type of habitat more suitable. The Bill leaves space for flexibility.
I want to give some more detail about what we term conservation covenants. Any conservation covenant used for net gain would be drafted to secure the carrying out of habitat enhancement works and maintenance of the enhancement for at least 30 years. We would expect responsible bodies to respect that purpose when deciding whether or how to modify or discharge a conservation covenant. They might consider whether any flexibility for landowners would better serve that purpose than retaining the conservation covenant unchanged. I have talked to landowners about this, and it is a point they make, so that has to be respected. The Bill leaves the flexibility for that.
There are also a range of existing protections for habitats, which will not be going away. They could apply to biodiversity gain sites even after the 30 years have expired. These are principally of relevance to off-site habitat enhancements, but would still apply to habitats created within developments. We understand from stakeholders that there may, in some cases, be little difference in funding requirements between the minimum 30-year agreement and a longer agreement.
In cases where it is acceptable to a landowner and would deliver greater biodiversity benefits, we would, of course, encourage longer-term agreements. We would do that initially through guidance. Should further evaluation of the policy show that this is not achieving the right outcomes, the encouragement might be adjusted through policy, the biodiversity metric, which has been in existence for about five years and is currently being updated by Natural England, or further guidance. Any future decision relating to the mechanisms of the encouragement will be made by Government on the basis of evaluation of the biodiversity net gain practice rather than speculation, which, I suggest, is what is being done at the moment.
Dr Whitehead
First, I think it should be put on record that suggesting that a Government initiative is better than an amendment being proposed, when the comparison is made between two Government initiatives, one of which is better than the other, really should not stand. We did not write the 25-year environment plan; the Government did. If this improves on the 25-year environment plan, fair enough, but it is not to do with us.
Secondly, in law, 30 years means 30 years. It will be found out whether that was the right thing by encouragement only after 30 years. If someone rips everything up after 30 years, they will find the Government’s encouragement was not as good as it should have been. I am puzzled as to how the Minister will find out whether this is working short of the 30-year period. Would it not be better not to have that 30-year period, to ensure that we do not have to find out the hard way at the end of 30 years, when that change is made in law?
Rebecca Pow
I take the point that the hon. Gentleman made earlier. I put on record that I hear what he has said. We will not fall out.
Things will not stop after 30 years. For example, while the agreements made for biodiversity net gain might expire, the created habitats will remain subject to a wide range of protections at that point, as I just said. For example, if a woodland had been created, it would benefit from existing protections for woodland and would then fall into the scope of the felling licence and potential environmental impact assessment regulations for forestry. All those other protections would come into play.
I reiterate that people can voluntarily enter into contracts longer than 30 years if they so wish. I am sure that certain people will want to do that. In light of the reasons I have set out, I ask the hon. Member for Cambridge to withdraw his amendment.
Daniel Zeichner
I have been elevated, Mr Gray, to doctor. Thank you very much.
Daniel Zeichner
I am not sure what a doctor looks like, but thank you.
This has been a useful discussion, because it begins to show how complicated some of this is. It shows—we will come to this in subsequent discussions—that the interactions between the different pieces of protection legislation are complicated, as I have already hinted. This is possibly already a discussion for lawyers, and my fear is that it will become a discussion for lawyers in the future, because these things will be disputed. If we do not get the legislation clear now, it will lead, I suspect, to disappointment in the future.
Perhaps I was overly gushing in my praise for the 25-year environment plan at the beginning, but I was seeking to make a broader point, which is that in too many cases we have stepped back. This is a case in point. The Minister, in explaining the logic behind the 30 years, has raised more concerns in people’s minds than she might have allayed. I am grateful to my hon. Friend the Member for Southampton, Test for linking this issue to sequestration and our necessary attempts to achieve net zero by 2050. He seems to me to be absolutely right; we need these improvements.
It is striking that, in this schedule, this is the key tool that the Government are adopting. They are using the planning process. If that is the key path to protecting nature in future, we do not want to start introducing loopholes and qualifications in this way. I understand the debate around the 30 years—I was ploughing my way through the submissions to the net gain consultation and the Government’s responses—but I am sure that the Minister will concede that many people agree with our position, which is that this needs to be seen in perpetuity. An additional point is about how we monitor and check that progress in between. As we all know, it is all too easy for this place to pass legislation and think, “job done,” only to wonder why it has not had an effect in the real world. We will probably touch on some of those points as the debate continues.
Daniel Zeichner
I beg to move amendment 22, in schedule 14, page 212, line 15 leave out “may” and insert “must”.
Amendment 22 would make it a duty for the Secretary of State to provide a clear procedure to planning authorities. Here, again, we come back to the realms of local government. I should perhaps have said earlier that some years ago I was a district councillor in rural Norfolk. I very much enjoyed the experience, and spent many hours—as, I suspect, did many other members of the Committee—on local planning processes. I learned that planning law is lengthy, complicated and sometimes controversial, but very important when it comes to protecting and developing local communities.
This is another one of those “may” and “must” issues. The amendment would strengthen the Bill, which states only that
“The Secretary of State may make regulations as to the procedure which a planning authority is to follow in determining whether to approve a biodiversity gain plan”.
I fear, yet again, that the devil is in the detail. I remember being quite impressed as a district councillor some years ago that there was an interest in biodiversity. We had a biodiversity committee, which meant that we had some fascinating discussions, but I fear that nothing much happened. That is so often the problem: that there is concern but no means of translating intent into action.
Whether the Secretary of State “may” or “must” make regulations is therefore quite important. I fear that many planning authorities that do not have to engage with this will look at it sympathetically, because people want it, but it will be the usual thing: when they are constrained by so many competing requirements, it is tough to do something unless they have to, which is what we are in this place to ensure.
Regulations may specify the details of the
“time by which a determination must be made…factors which may or must be taken into account in making such a determination”,
and appeals against the planning’s authority’s decisions. I suspect that we are all familiar with the dilemmas that local councillors often face. We give them a huge range of things to take into consideration while trying to achieve balanced outcomes that can withstand scrutiny and appeal, and quite often—and rightly so—they have to take direction from their expert officers who have already made those calculations.
The question is where we balance this issue as a priority against the other things that councillors take into account. My sense is that unless we strengthen the Bill, it will become one more on the list of things that they really ought to take into account. At best, it may become a line on an agenda that gets ticked: “Yes, we have taken it into account, because somebody raised it,” but will it actually be considered among the trade-offs in the decision-making process? I am not convinced.
We also wish to raise the question of how the regulations will be decided here; again, we believe that they should be subject to the affirmative procedure to allow proper parliamentary scrutiny. They should also be subject to proper public consultation; because the issue is complicated, the input of biodiversity and planning professionals through public consultation would strengthen discussion and improve procedures. These are not simple matters—they have significant consequences and significant costs—but in due course such input would improve the overall planning outcomes. Improved procedures could ensure that all planning authorities’ biodiversity gain plans are sufficiently detailed, subject to public consultation, and made available in draft so as to inform planning applications. That is a part of the democratic process that we believe very valuable, although the planning White Paper seems to suggest that, for whole swathes of the country, that process may not be continued in future.
We want to get the Minister’s thinking on this, because it is not clear why she would not want to accept the amendment. We will not press it to a Division, but we would like an explanation.
Rebecca Pow
I thank the hon. Member for moving the amendment. Paragraph 16 of schedule 14 sets out that the Secretary of State may impose further procedural requirements relating to how a planning authority approves a biodiversity gain plan. Paragraph 15 makes it clear that the biodiversity gain objective must be met; it also specifies that other key factors, such as the accuracy of the plan’s ecological information, must be considered by the planning authority. The Government intend to use the paragraph 16 power to ensure that the requirements fit well with the planning system; the hon. Member alluded to that, and obviously it is really important, but we believe that the other considerations in paragraph 15 should provide confidence that approved plans will meet the legislation’s environmental policy objectives.
Primary legislation consistently takes this approach to the balance between powers and duties, as we have discussed many times. It is entirely appropriate to provide the Secretary of State with flexibility as to how the provision is given effect. Forcing the use of regulations when they might not be needed risks creating unnecessary complication, or even weakening the purpose of the measures. It may not be necessary for the regulations to cover all the areas in paragraph 16; they are set out to give the Secretary of State discretion to address them if it is considered necessary. While we cannot rule out needing to address appeals in the regulations, that may not be necessary. Forcing the Secretary of State to regulate such matters immediately when that may not be a clear necessity would risk adding complexity to a process that we aim to keep straightforward. The addition of undue complexity risks undermining the benefits of the approach for the planning authorities, the communities—which are obviously so important—and the developers using it.
The biodiversity gain plan is simply the document that allows the developer to demonstrate to the planning authority how it has satisfied the biodiversity net gain requirement. A typical biodiversity gain plan will consist of the completed biodiversity metric and some supplementary information. We expect that the consistency of the plans will make their assessment easier for the planning authorities, and reduce the risk of miscommunication. I therefore ask the hon. Gentleman to kindly withdraw his amendment.
Daniel Zeichner
I listened with interest to the Minister’s explanation. I am not entirely sure that I am convinced by it, because it is not clear to me why making regulations at a later date, rather than making things clear sooner, will make the position less complex. Having the discretion to make them or not does not seem helpful.
The Minister also raised an issue about the biodiversity net gain metric, which is worthier of comment. There is a worry that we are creating yet another algorithm that people will not understand—the phrase “mutant algorithm” has already been bandied about with regard to housing numbers and the planning White Paper. As someone who is interested in data, I am not convinced that it is the algorithm that is mutant, the issue is those who put the data in, or interpret or programme it in a certain way.
Clearly, there is concern that technocratic approaches to making such decisions will take away local input—that those with unique knowledge of the local community and local biodiversity could in some way be excluded. That is a concern. The amendment has the potential to explain to local planning authorities how things should work, so the Minister is missing an opportunity.
An important point was made to me by the Town and Country Planning Association: if there is just a simple metric, where sites have apparently lower biodiversity value, people’s attachment to that local open space and its social values could somehow be lost. There is a big debate to be had about how the metric works, and what parameters feed into it in.
Rebecca Pow
I am sure the hon. Gentleman is aware of this, but although he suggests that the metric is a new thing being imposed on people, it has been used for about five years, and is referred to by planning authorities and developers. As I think I just mentioned, Natural England is working on updating it, because it is complicated —it is not a simple thing, but it is a very useful thing. We want to know what is there, what the value is, and what the value could be—all that. We must also remember that all of this will link into the local nature recovery networks, which local communities will be really involved with.
Daniel Zeichner
Yes, and we will discuss those local nature recovery networks. The point that I am making is that the amendment was an opportunity for the Government to give direction to local planning authorities. Different planning authorities would do this differently—some would probably not do it at all, some would do it well, and some less well. It is sufficiently important for the Government to give direction. That is the point of our probing amendment.
To some extent, the Minister has clarified things, although I am not sure that has left us any more hopeful about the impacts, but at least we have had clarification. I beg to ask leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Daniel Zeichner
I beg to move amendment 170, in schedule 14, page 212, leave out line 26.
The Chair
With this it will be convenient to discuss amendment 171, in schedule 14, page 212, leave out lines 29 and 30.
Daniel Zeichner
Amendments 170 and 171 relate to a major concern about the proposals, which is that a number of exceptions have been made to the condition to provide a biodiversity net gain. As I said earlier, a noble ambition can be undone if there are too many exceptions and loopholes.
Under the Bill’s schedule 14 amendments to the Town and Country Planning Act 1990, biodiversity net gain provisions will not apply to development for which planning permission is granted by a development order, an urgent Crown development, or a
“development of such other description as the Secretary of State may by regulations specify”.
I hope Members are all still with me. The excitement of this morning cannot necessarily be replicated when discussing this provision, but it is clear that, in the wrong hands, it could lead to some pretty major exemptions.
In order to maximise the benefits of biodiversity gain, provide developers with certainty and create a level playing field, it is important that the application of the biodiversity gain system is broad, and that most development is part of the net gain system. As I said, the intention is noble, but if people want to find gaps and we give them the opportunity to find lots of them, I am afraid that that is what is likely to happen. We have probably seen that kind of thing happen in the past. If biodiversity gains are to be delivered on the scale that I genuinely think we all agree is needed, we need to ensure that the exemptions and loopholes are limited.
We think that the exemptions for development orders could have a very broad application in practice, particularly if they are extended to the full range of development orders, which include local or neighbourhood development orders, and development orders brought forward by development corporations. That could lead to major developments such as new towns, and wider proposals for free ports, being exempt from the biodiversity gain provisions. That is a significant loophole, and a major missed opportunity to deliver biodiversity gains at scale.
The problem that we face, which goes right back to where the discussion started, is that the challenge is pressing and huge. We know that. If we start introducing exemptions and loopholes, we know what happens. It is not an aspersion on developers; we know that lots of people are paid in the development sector to find ways around planning laws. In my part of the world, there are many of them, and they are very good. They are assiduous, and they probably know planning law better than I do—in fact, I think I can guarantee it. That is why we need to ensure that we do not give them extra opportunities to get around it. Clarification on the development orders exemption and its intended scope would be very welcome from the Minister, not least because I think her words might be useful in future, as local authorities try to defend themselves against clever people who are trying to find ways through this.
I am sorry to have to go back to the planning White Paper, but it is relevant because of its proposals. Incidentally —I do not think I made this point earlier—the Minister had to search pretty hard in the planning White Paper to find references to net gain and biodiversity; the mention of it is very tangential. Anyway, the White Paper includes proposals for the extended use of development orders for large-scale development, as well as wider permission in principle.
We fear that significant swathes of development could be taken out of the system of net gain. If I were being kind, I would say that that would be an unintended consequence of the planning White Paper, but I think that there are some who know full well what they are doing with this. It allows the Government on the one hand to say, “Look what we’re doing with our wonderful new Environment Bill. We’re delivering on our 25-year environment plan,” while on the other hand it is business as usual. That is really not what we need. Perhaps the Minister could use this moment to explain how she sees the relationship between the Bill and the planning White Paper. It is highly significant, and difficult, because the White Paper has come along since the Bill Committee was originally formed, but it is hardly irrelevant.
Paragraph 17(b) of the proposed new schedule introduced by schedule 14, which effectively enables the Secretary of State to exempt any type of development in future, could lead to wide exemptions from net gain. I note that in their response to the net gain consultation, the Government have outlined that a “targeted exemption” may be intended for brownfield sites. That is quite a significant statement. For many years, there has been considerable interest in pursuing brownfield sites. I think there is sometimes a misunderstanding that nature exists only in some parts of our landscape. It can, of course, exist everywhere. Brownfield sites are no exception to that. It may not always be as diverse and high grade, but it is still very important to our overall attempt to restore and recover nature.
I understand that some environmental organisations such as Greener UK have expressed concerns that the proposed targeted exemption for brownfield sites could undermine the delivery of biodiversity gain as a whole, if a substantial amount of brownfield land is brought forward for housing development. One can see how that could begin to happen. If it is predominantly brownfield land, frankly, for all our good intentions, we are not making sufficient progress. The sites can have significant biodiversity interest, even when there is no formal biodiversity designation. Under these proposals, we could see damage to brownfield land of high environmental value, which sometimes is not really appreciated until the planning process is well under way. That raises some issues around how the process will happen. At some point in the process, it has to be assessed. The point at which that assessment is done is quite significant. We will come on to that with other amendments.
Will the Minister clarify how brownfield land of high environmental value will be protected and enhanced? What steps will the Government take to ensure that any brownfield site exemption does not undermine our goal of biodiversity gain as a whole? Will she also clarify by what process any future exemptions will be considered by the Secretary of State before being pursued under the broad power in the Bill?
Will there be any public consultation on further significant exemptions from biodiversity net gain? That is a very important point. In my part of the country, which the hon. Member for South Cambridgeshire will be familiar with, we have a very engaged electorate, to put it mildly, which is a good thing, but it means that people are interested and would not want to be excluded from a discussion. It would be hard to exclude some of them, frankly, but they should have a proper, formal role in that discussion, and a sense that their involvement affects the outcome. Otherwise, it leads to further disenchantment in the way our politics works.
There is a range of weaknesses and loopholes, even before we get to what I have described as the real whopper. It is deeply concerning that nationally significant infrastructure projects and other large-scale infrastructure projects are currently exempted from mandatory biodiversity gains. That is a bigger discussion, but it is a factor in this discussion. We know that such projects can cause significant damage to nature and we believe that provision must be made to include such developments within the scope of mandatory biodiversity gain, in line with the Government’s 25-year environment plan to embed environmental net gain in infrastructure. We will return to this point later in Committee when we discuss new clause 32.
Amendments 170 and 171 would strengthen what the Government are trying to do, by removing the potentially very wide exemption from net gain for development orders, and remove the broad power given to the Secretary of State in the Bill to lay down regulations exempting further development from biodiversity gain as and when they wish. We are genuinely interested in the Minister’s response. I have posed a series of questions. We do not seek to divide the Committee on the amendment, but it is important that people in the wider world get a sense of what the Government are trying to do through this measure.
The Chair
I call the Minister. [Interruption.] I call Dr Alan Whitehead. I am terribly sorry. I would be most grateful if you would indicate more clearly if you wish to speak. The order of speaking goes from the proposer of the amendment to the Minister, but if you wish to add anything, please indicate that to me by standing up or by any other method that is clear.
Dr Whitehead
Thank you, Mr Gray. I escalated from a pen to a hand, but I can escalate to a full body motion, if that is acceptable.
I want to add to the admirable exposition of the two amendments by my hon. Friend the Member for Cambridge by drawing attention to amendment 171, which would leave out two lines from paragraph 17 of the proposed new schedule, which has the heading, “Exceptions”. I ask members of the Committee to see what has been done here, because I think it is shocking. At the start of part 2 of the proposed new schedule, conditions for planning permission relating to biodiversity are laid down:
“Every planning permission granted for the development of land in England shall be deemed to have been granted subject to the condition in sub-paragraph (2).”,
which is,
“The condition is that the development may not be begun unless”
there is a biodiversity gain plan. That looks terrific. The casual observer would think, “That’s it sorted out. The biodiversity gain plan has to be in place. That’s what the Bill’s about.”
On turning to paragraph 17, we see that there are some exceptions:
“development for which planning permission is granted…by a development order, or…under section 293A (urgent Crown development)”.
That is arguable, but then we have this sentence:
“development of such other description as the Secretary of State may by regulations specify.”
Put into English, that means that if the Secretary of State introduces a regulation, development is exempted. The whole thing is meaningless from the beginning. All it needs is a regulation, which I presume may well be under the negative procedure, for this to be completely undone.
I know that it is fashionable to blame drafting for these issues, but something as shocking as this has to have had an intention behind it. This cannot arise from someone taking a lax instruction, writing the provision in the bowels of a building, presenting it and no one noticing. How these things are written is instructed by Ministers, who under the Bill can simply remove stuff that the Government do not feel like doing. It refers to all development, not just to some developments—it says “development”. That really is not good enough for a Bill of this kind.
Rebecca Pow
I thank hon. Members for their comments. The hon. Member for Cambridge asked a lot of questions, so if I do not cover them all, we will put something in writing because I could not keep up with them all.
Paragraph 17 of the proposed new schedule introduced by schedule 14 sets out when the general biodiversity gain condition does not apply. Sub-paragraph (b) creates a power to exempt specific types of development through regulations. While I welcome the hon. Member’s acknowledgement of the importance of keeping exemptions narrow, there are good reasons to use this power, which amendment 171 seeks to remove, to introduce targeted exemptions for more constrained development types.
The Government will not introduce broad exemptions from delivering biodiversity net gains, which was something the hon. Member specifically asked about. The power will be used to make narrow practical exemptions in order to keep net gain requirements proportionate. Exemptions will ensure that the mandatory requirement is not applied to development on such a small scale that it could be negligible, and I will go on to talk a bit more about that and about no losses in terms of habitat value. Some development will result in negligible losses or degradation of habitat. Examples of such development might include changes or alterations to buildings and house extensions, for example. Applying the 10% targets to such development would not generate significant ecological gains, and the requirement might result in undue process costs for developers and planning authorities alike.
Ruth Jones
The Minister has talked about targeted, narrow exemptions, but that is not what it says in the Bill. I take on board the fact that she is enthusiastic about and fully committed to this, but somebody coming after her—heaven forbid—could use the wording in a completely different way and we would need to follow that is actually in the Bill, rather than what is in an explanatory note.
Rebecca Pow
I thank the hon. Lady for that and I reiterate my first sentence. The Government will not introduce broad exemptions from delivering biodiversity net gain, and we have made that quite clear.
Amendment 170 would undo the exemption for permitted development from the net gain requirement. Permitted development rights play a vital role in freeing up local planning authorities to deal with planning applications that really matter to local communities, and have a wider social, economic and environmental impact. The hon. Member for Cambridge will know that from his time on the planning committee at the district council. Many permitted development rights are for small-scale development or changes of use, such as modest alterations to buildings, small fences or temporary use of land for fairs, where there is little or no impact on biodiversity.
Development undertaken through local planning orders is not exempt from net gain, as we have touched on. Only development under the general permitted development order, such as adding a conservatory, is exempt. It is true that we have extended the scope of the permitted development rights in recent years in order to deliver more homes, but permitted development rights such as allowing office-to-residential conversions and allowing residential blocks to be built up are principally about the use of existing developments and development land, and so are generally outside the scope of biodiversity net gain.
Brownfield sites were mentioned. It is not the Government’s intention to exempt brownfield sites. We absolutely recognise the biodiversity value those sites can have and, indeed, their value to communities—many of them are right in the centre of towns and cities. Any brownfield exemptions will be narrow and will have to recognise biodiversity value. We will consult further on the details of exemptions. For example, brownfield sites will have a set of criteria that would relate to them when these matters were being considered.
Special development orders are rarely used, but it is important to retain the legislative flexibility to make them very quickly to respond to urgent priorities. For instance, in recent years they have been used to secure urgent planning permission for the temporary lorry parks as part of the Brexit preparations, and Members will be able to see the benefit of that and why it is important to do that quickly.
New towns were also touched on, and we are aware that there are extant powers in the New Towns Act 1981 to use special development orders to set out the planning framework for new towns. There are no plans to use those powers at present, and the Government recently consulted on modernising the planning powers of development corporations to ensure that they are fit for purpose. However, we are clear that any new town would need to contribute to biodiversity gain: indeed, one of the great things about new towns is that there is the opportunity and scope to make them wonderful, green, biodiverse spaces in which to live. We have learned so many lessons this year about how important those things are.
We think it is right that the legislation is clear that biodiversity gain should not be included in permitted development rights, and that a clear exemption for development orders is the best way forward. I hope I have given clarity on some of those other areas, and for the reasons I have set out, I ask the hon. Gentleman not to press amendments 170 and 171.
Daniel Zeichner
I thank the Minister, and I do think that some of what she said was helpful. However, I have to say that not only was my hon. Friend the Member for Southampton, Test excited this morning; he is now shocked. Being excited and shocked in the same day is a bit worrying, but the Minister will have heard the shocked tones from the Opposition Benches.
I think a close reading of the text gives cause for concern, and I hope that the Minister might, on reflection, look at what she described as “narrow”. One person’s flexibility is sometimes another person’s loophole. There are different definitions of narrow, and some of us can see a yawning chasm—a big gap that anyone who is astride a bulldozer could drive straight through—so we do think there is legitimate cause for concern. Clearly, the permitted development rights extensions have been extremely controversial and a cause for concern, so I am not entirely sure that the Minister’s defence would reassure everyone. Certainly in my part of the world, some huge problems have arisen from some of those changes, and I am not convinced that any concern was given to restoring nature when making those changes. I also have to say that whenever a Minister says there are no plans to do something at present, that is generally a good sign that it may happen sometime soon, so that is also a cause for worry.
I do think this issue needs to be further examined, and I suspect we will be coming back to it. I also suspect that the other place will look quite closely at this, so I do not think today’s discussion will be the end of the matter. However, it is useful to have had it, because if the Bill is not precise, the words that Ministers use become more helpful in defining and limiting.
I suspect that many people will look at the Bill and think that this is too big a loophole, and ask—exactly as my hon. Friend the Member for Southampton, Test did—what was the thinking behind doing this? That is the question I keep going back to: why has there been this change from the optimism of a couple of years ago? It may just be that this is what happens in government: officials look at it more closely and say, “You really do not want to do that, because”—and then the Government find that they are losing out on the noble ambition they had at the outset. We are pretty determined to make sure that that noble ambition stays on track.
I hope the Minister thinks we are in being in some way helpful to her; I am sure that is not how it feels at the moment, but she may come to see that in time. With the reset of Government policy, she may suddenly be flavour of the month. Maybe she can feature in a 10-point green plan—who knows? However, we do not need to pursue this issue further at the moment, so I beg to ask leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Daniel Zeichner
I beg to move amendment 172, in schedule 14, page 212, line 32, leave out “may” and insert “must”.
This amendment would commit the Secretary of State to make regulations excluding irreplaceable habitat from the net gain policy.
I am afraid that we are going to go further into the legalities of the planning system. I apologise: mid-afternoon is probably not the time to be doing this, but it needs to be gone into. This amendment is another may/must one. We are concerned about the provisions for net gain in the Bill, and the relationship between this new system and the irreplaceable habitats that, in many places, we treasure and love. These irreplaceable habitats are very precious places and include ancient woodlands, salt marshes, blanket bog and lowland fen, which, if destroyed, are technically extremely difficult to restore, and it takes a hugely long time to do so. By their very nature, these habitats cannot be properly recreated, so this is not a case of providing a replacement or, in any real sense, a gain.
The national planning policy framework sets out that
“development resulting in the loss or deterioration of irreplaceable habitats…should be refused, unless there are wholly exceptional reasons and a suitable compensation strategy exists”.
We need further clarity that provisions on biodiversity net gain will not undermine existing protections for irreplaceable habitats. The amendment seeks to explore the complicated relationship between these new provisions and the existing protections.
Schedule 14 gives the Secretary of State powers to define what is meant by “irreplaceable habitat” and to exclude such habitats from net gain or amend how the legislation applies to them. Amendment 172 would place a duty on the Secretary of State to make such regulations, such that they “must” rather than “may” make them. Any regulations and associated guidance on irreplaceable habitats should make it clear that current legal protections and requirements for irreplaceable habitats are fully retained and take precedence.
That is the problem with the interpretation of the different pieces of legislation. I suspect that the Minister has probably had these conversations. We want to add clarity to the process. If that is not done, we fear that it will be open to dispute in future. Not only that, but people would also be able to do things that they would not have been able to do before. The theme of some of the upcoming amendments is that there is a danger that something that looks good could end up doing harm as a result of unintended consequences. I am not in any way suggesting that that is the intention, but it is the risk, and that is why it is important that this is sorted out.
The Government should also reiterate that adverse impacts from development should be avoided, not just minimised. Our concern is that if the requirements for irreplaceable habitats are less arduous than those for other habitats, a perverse incentive could be created. We do not want the regulations to do that or to end up with the extraordinary situation of developers being incentivised to target irreplaceable habitats instead.
The Bill should be absolutely explicit that the mitigation hierarchy, existing designations, and statutory and planning protections for sites and species are not undermined by any of the new proposals. Net gain should be what happens right at the end of the process, if planners cannot find a way of stopping damage to habitats along the way. These protected sites should remain inviolate and rely on and benefit from the current protections and systems, which we want to ensure are in no way diminished.
Any regulations proposed by the Secretary of State should be taken under the affirmative procedure, and there should be public consultation because there is very real public interest in these issues. We believe that allowing third parties, including experts in the nature sector, to input into those regulations through public consultation would ensure that new net gain conditions would not inadvertently provide the kinds of loopholes that I have been describing. I do not think that the Minister will disagree with this, but in my experience local people invariably know their own locality best, and we should not be silencing them.
I say again that this amendment is an attempt to tease out from the Minister some safeguards and words of reassurance, and that we will not need to divide the Committee.
Rebecca Pow
I thank the hon. Gentleman for looking into this issue and for the amendment. Some habitats include ancient woodland, with which I have a great affinity, having been chair of the all-party parliamentary group on ancient woodland and veteran trees. We did a lot of cross-party work on this habitat. These habitats cannot be recreated and are typically considered irreplaceable. They are of enormous ecological and cultural importance and significance.
Daniel Zeichner
I welcome the Minister’s helpful comments. I do not think anyone doubts her commitment to those irreplaceable habitats. The key points are ensuring that that message is clear and understood and that the regulations are made, and the relationship between them explained, in the correct way. We are concerned about future arguments as a result of misunderstanding the gaps. We are all trying to get to the same place. On that basis, I beg to ask leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Schedule 14 agreed to.
Clause 91
Biodiversity gain site register
Daniel Zeichner
I beg to move amendment 10, in clause 91, page 91, line 37, leave out “may” and insert “must”.
I am sure you will be delighted, Mr Gray, that we have moved on to another clause, but the previous schedule was a big and important one. The biodiversity gain site register requires another discussion about “may” and “must”. The amendment seeks to tease out the intention behind the measure.
Clause 91 sets out that the Secretary of State may make provision for a biodiversity gain site register to be created. To some extent, this is the last stage of the mitigation hierarchy: it is not something that anyone would want to do, but we recognise that it might sometimes be necessary. It is very important that a register of compensatory habitat sites is publicly available and updated regularly, and that we are able to see how the process works.
All our amendment does is seek to tighten the Government’s responsibility to provide the register by turning it into a duty for them to do so. A register of sites is essential to secure and record meaningful and lasting net gain. I refer to some of my earlier comments: we worry that in some cases there will be not necessarily a lack of will but a lack of capacity to check and monitor. Not only does this have to work, but the message needs to go out that it works, such that, as my hon. Friend the Member for Southampton, Test said earlier, people will not think, “Well, no one is ever going to check. It’s not going to matter, and after 30 years who’s going to know and who’s going to care?” If that becomes the attitude, clearly this whole process and system will have failed in its intentions.
We do not want a simple tick-box exercise where it looks as if it has been done but no one knows what is happening in the real world. We think the amendment would help check on progress in delivering and maintaining enhanced habitat sites. We think it would help with the checking, monitoring, and enforcement function, even though we worry whether it will actually be done. This is a probing amendment, so we will not seek a Division. The question to the Minister is: why would one not do it? If the net gain system is to be established respective of mitigation hierarchy, it is hard to see why one would not do this as soon as possible.
Rebecca Pow
I thank the hon. Member for his amendment. It is definitely worth enquiring about this register, so I am pleased to have the opportunity to talk about it.
Clause 91 makes provisions for the creation of a register of these biodiversity gain sites. The register is necessary for the biodiversity gain condition to work effectively. Without a register, no habitat enforcement outside development sites would be undertaken in pursuit of biodiversity net gain. Furthermore, without the register, a development that is unable to achieve biodiversity net gain within its site boundary may not be able to commence development at all. That would block a significant proportion of new development, so the register is useful in a number of ways.
I welcome the hon. Member’s acknowledgement of the importance of the register and the provisions in this clause, and understand his wish that the powers within it should be exercised in good time. There is a clear need for the Government to design and implement this register before the biodiversity gain condition comes into effect, and I can confirm that, while the hon. Member seemed to suggest that one or may not create the register, it is the Government’s intention to do so.
I want to clarify that this clause provides this power for the Secretary of State to make regulations that will set out the rules and procedures for the operation and maintenance of the new register of biodiversity gain sites. That will include setting fees for applications to add land to the register, criteria for determining eligibility of land to be added to the register, and rules for the allocation of land in the register in relation to developments. The use and nature of the register is likely to evolve, and flexibility will be needed to update its requirements. Before making an order under this power, the Department wants to consult stakeholders. Detailed regulations will need to be in place to provide all parties with sufficient guidance on how the biodiversity gain register will operate. This will help create confidence that the system can achieve the intended environmental outcomes. I hope I am answering all the things that the hon. Member has on his mind.
Primary legislation consistently takes this approach to the balance between powers and duties, as I have said many times before. It is entirely appropriate to provide the Secretary of State with the flexibility as to how this provision is given effect. I hope that provides clarity. I think it is a probing amendment, and I ask the hon. Member to withdraw it.
Daniel Zeichner
I am grateful to the Minister. This is a probing amendment, so we will not divide the Committee, but it is extraordinary that it almost seems like a global change has resulted in “shall” or “will” appearing as “may” throughout the Bill. We could do a global change back again. It is clear that the system cannot work without the register, which gives rise to the question: why the delays? The Minister may be slightly nervous, in the sense that she said that we will need to design and implement the register. It comes from a 25-year environment plan from two or three years ago, so how long is this all going to take? She might want to intervene to say roughly how long she thinks it will take, but I suspect she will not want to do so.
Why is there not a greater sense of urgency? To go right back to where we started, it is urgent and crucial that we tackle this crisis, yet in designing the system it appears that there was a presumption that it would take a few months for the legislation to get through and that the register would then need to be designed.
Rebecca Pow
I will intervene. I am sure the hon. Gentleman will agree that local authorities in particular will want a system that works, not some flim-flam, half-developed thing that is going to go wrong. That is why it is so important to do it step by step. There is urgency, hence the Bill and all the measures in it. All this has to work with the local nature recovery strategies and the overall nature recovery strategy. The targets and all the rest of it will fit together, and it will come on stream with some urgency. Was that an intervention? Does he agree?
Daniel Zeichner
I have clearly touched a nerve. I am delighted to hear that. All I gently observe is that things move rather slowly sometimes. I am sure that the Minister wants it to happen quickly, just as we all want it to happen quickly and to work. I am not entirely sure that those two things have to be mutually exclusive, but I suppose experience suggests that things do not always instantly work smoothly. I appreciate the Minister’s contribution, and having heard what she has had to say, I beg to ask leave to withdraw the amendment.
Amendment, by leave, withdrawn.
The Chair
Amendment 74 was discussed previously. It was originally tabled by the hon. Member for Chatham and Aylesford (Tracey Crouch). I suspect that it will not be taken forward by another Member. Perhaps the Committee might like to send our warmest, best wishes to the hon. Lady. Perhaps the Minister might like to take that forward.
Amendment proposed: 230, in clause 91, page 92, line 1, leave out
“for at least 30 years”
and insert
“secured in its target condition and maintained in perpetuity”.—(Dr Whitehead.)
This amendment would require habitat enhancements created under net gain to be secured in perpetuity.
Question put, That the amendment be made.
Daniel Zeichner
I beg to move amendment 11, in clause 92, page 93, line 5, leave out “may” and insert “must”.
I am afraid that this is going to sound remarkably similar to the previous discussion. We welcome the measures in the Bill to ensure that developers who cannot achieve biodiversity net gain on a particular site will be required to fund improvements elsewhere, through purchasing biodiversity credits, to make up their required 10%—we would say at least 10%, but that is what the Bill requires—biodiversity net gain. We also welcome that the funds from these credits must be used for projects to enhance habitats and biodiversity. However, we have some concerns about clause 92, which we will interrogate with amendment 11 and amendment 136, which we will come to next. On amendment 11, clause 92(1) uses the wording:
“The Secretary of State may make arrangements under which a person who is entitled to carry out the development of any land may purchase a credit from the Secretary of State for the purpose of meeting the biodiversity gain objective”.
This is exactly the same point as in the previous discussion: the system cannot work unless that is done. The amendment would tighten the Government’s responsibility to operate those credits by requiring them to get on with it—to put it crudely.
Rebecca Pow
Clause 92 makes provision for the Secretary of State to set up a system of statutory biodiversity credits. Some developers might find that there are no suitable local habitat enhancement schemes to enable them to achieve net gain, and in such cases, a biodiversity gain requirement might become a barrier even to the most appropriate and sustainable of developments. To mitigate that risk, the Government will sell biodiversity credits, which may be counted towards a development’s net gain. That will allow us to achieve biodiversity net gains through strategic investment in habitat restoration, while reducing the risk of undue delay to development.
I welcome the hon. Gentleman’s clear acknowledgment that this and the environmental potential of the statutory biodiversity credits system are important. Obviously, there is a clear need for the Government to design and implement the credits system before the biodiversity net gain requirement comes into effect, and I can confirm that that is the Government’s intention. He is right about urgency and about wanting it to happen now, but it all has to happen step by step. The Government have every intention of doing that, because it will be an important part of the whole machine.
The Government will apply principles for setting the tariff rate—that was set out in the net gain consultation—in setting the standard costs of statutory biodiversity units. Although the Government still consider the consultation’s proposed range of between £9,000 and £15,000 for the cost of a biodiversity unit to be broadly appropriate, some respondents raised concerns that it was too low and would stifle habitat creation, while others thought it was too high. Several respondents asked for further evidence and work to refine the cost per unit.
The Government will undertake a review of the rate and seek further stakeholder engagement on this subject before announcing specific costs per unit of biodiversity. That is really important. I have spoken to a whole range of different people, from those who have land and who might want to offer it up for the offsetting, to the agents operating for them. Loads of people in this space clearly need to be consulted. I hope this explanation gives a bit more clarity.
Primary legislation consistently takes the approach, as we have set out in the clause, of balance between powers and duties. Forcing the creation of arrangements that might not be needed risks creating unnecessary complication in the process, or even a weakening of the purposes of the measures. In the long-term, for example, we might no longer need a credit system if sufficient habitat enhancement opportunities were offered by local landowners or conservation bodies. I hope that has given a bit more clarity and I ask the hon. Gentleman to withdraw his probing amendment.
Daniel Zeichner
The Minister’s comments are helpful. There is concern that if the system does not work appropriately, we could end up with credits stacking up without the work being done, which is clearly not the aim of the exercise. I think that we are all trying to get to the same place, so there is no need for me to re-rehearse the previous arguments. I beg to ask leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Daniel Zeichner
I beg to move amendment 136, in clause 92, page 94, line 5, at end insert—
“(11) In accordance with the biodiversity metric, the Secretary of State or another person, is obliged to carry out such works as necessary to enhance the biodiversity of habitat associated with the sale of biodiversity credits.
(12) The Secretary of State or another person is required to secure and maintain the enhancement in perpetuity after the habitat enhancement has reached its target condition.”
There is concern that biodiversity credits could undermine the biodiversity gains system as a whole. Our worry—to some extent this touches on my previous point—is that it is obviously uncharted territory. We do not entirely know how it will work, but the key thing, in our view, is that it is linked as much as possible to local priorities. The Minister hinted in her previous reply that it may be a touch optimistic to imagine that local alternatives will always be found, which is the reason for setting this up in the first place, but through the amendment we want to press her on how the Government can guard against the long-term pooling of revenue, instead of funds being used to achieve the net gain that we all want. That is our worry.
We also think—this goes back to an earlier discussion—that it would have been possible to make a requirement for habitats created through the purchase of biodiversity credits to be maintained in perpetuity. I suppose our worry throughout is that, for all the good intentions, it is possible that the system could end up not achieving what we want it to. It could be abused, and could, in effect, buy a way through for developers to access habitats that none of us would want to see developed. That is the danger and the risk, and we want to help the Government, through the amendments, to ensure that is not the case.
We also think that there ought to be a reporting function, and that the added value of biodiversity credits to local habitat creation projects and strategic ecological networks should be set out clearly in an annual report. To ensure transparency, habitats created through biodiversity credits should also be held on a register of biodiversity gain sites. That is partly about ensuring that the mechanisms work in an open and transparent way.
We have had strong representations from both the Town and Country Planning Association and the Local Government Association, which are genuinely worried about the possibility that biodiversity credits really will not be reinvested in their own locality. I think that is a reasonable concern. The danger, as those organisations see it, is that communities that accept developments might not see improved biodiversity, which could, in turn, make the process really quite hard to justify to local people. I can see how that could happen.
There is a question about whether credits should be retained by local authorities, so that funding stays in the area where development takes place, and local people can have a say in how the funding can be used to improve the natural environment. What level we should set that at is quite a big question. To some extent, we are trying to tease out from the Minister what she thinks it should be. We think that there is a genuine discussion to be had. I think she has already hinted that she shares my view that the overwhelming priority should be to get new development to achieve net gain onsite and locally, and that offsite contributions and credits should be a last resort. Further reassurance on that would be helpful.
We are placing, through the amendments, two key requirements on the Secretary of State, or any other body charged with using biodiversity credit funds, to ensure that natural sites created or enhanced by biodiversity credit funds are held to a high and lasting standard. I guess one of the running themes through our amendments is the sense of the provisions actually being for the long-term, rather than a mechanism for developers to find a way through to sites that they might not have had access to before.
The first requirement is that all habitat work carried out using biodiversity credits would have to achieve an actual enhancement in biodiversity, as measured by the biodiversity metric. The second requirement is that enhancement be maintained in perpetuity. I anticipate the Minister’s answers, because I think we have heard some of them before, but this amendment is sufficiently significant that, unless she comes back with a miraculous response, we will seek to divide on it.
Rebecca Pow
I thank the hon. Gentleman for his acknowledgement of the importance of the long-term maintenance of biodiversity gains in order to ensure that we provide that long-lasting benefit to wildlife and communities. The Government, too, recognise the importance of those long-term benefits. Indeed, the Government response to the net gain consultation confirmed that through the stated criteria for selecting habitat projects. The response stated that enhancement projects will be selected
“on the basis of their additionality, their long-term environmental benefits and their contribution to strategic ecological networks.”
Obviously, they have to have some real value.
The long-term benefits of habitats are vital, but binding future Secretaries of State to deliver only habitats that can be secured “in perpetuity” risks compromising another of the criteria: that of delivering habitats in strategically critical networks. We would not want to see new habitat creation fail to provide the coherent networks that our wildlife needs because we are bound only to use land that can be secured forever. Where enhancements in perpetuity are an appropriate option, the Secretary of State will have powers under the clause to use payments to purchase land interests in England for habitat restorations, or to secure the enhancements through other means.
With regard to the obligation on the Secretary of State to spend those credit sale funds, I draw the Committee’s attention to the reporting requirement under the clause, which will create a strong incentive for the Secretary of State to spend the funds both promptly and prudently. It was intimated by the hon. Gentleman, I think, that the Secretary of State might be hoarding the funds, but the idea is that this becomes its own trading platform—a bit like the nitrates trading platform, for example. DEFRA would only get involved were the market not working, or potentially just at the beginning when it is getting going. The intention is not that he or she is the banker—that is absolutely not how it should work.
Subsection (6) of the clause should also provide some reassurance. It clarifies that funds may only be used for activities related to habitat enhancement. I think the hon. Member for Cambridge was pressing to ensure that that is what would happen, but that is absolutely what they are for. Furthermore, subsection (10) will ensure that the long-term value of the money received from the sale of credits and the use of biodiversity enhancements can be monitored. That is important as well.
In the light of the reasons that I have set out, I ask the hon. Gentleman to withdraw his amendment.
Daniel Zeichner
I welcome much of what the Minister has said but, as I intimated, the perpetuity issue, and the concern about what might happen with the system not working and the potential for achieving outcomes other than those we are all trying to achieve, mean that we think our amendment would strongly improve the clause. On that basis, we seek to divide the Committee.
Question put, That the amendment be made.
Daniel Zeichner
I beg to move amendment 140, in clause 93, page 94, line 13, after “biodiversity in England” insert
“, including in particular the species and habitats listed in section 41,”.
The amendment clarifies the intent of the duty in relation to the conservation of priority species and habitats.
I am afraid that we are back to some of the interaction with different pieces of legislation. We welcome the change in the Bill to strengthen the Natural Environment and Rural Communities Act 2006—abbreviated to NERC—so that local authorities have a duty not just to conserve but to enhance biodiversity, as well as to follow the obligations of public authorities to plan for appropriate action in order to fulfil their duty and to report on their actions regarding that duty. That is the good news. That is the bit we support.
However, we have some concerns. Public authorities have a key role to play in turning around the state of nature, and the current duty on public bodies to have regard to conserving biodiversity has been rightly criticised for not being strong enough. A House of Lords Select Committee report on NERC in 2018 clearly outlined that
“the duty is ineffective as it stands, as a result of limited awareness and understanding among public bodies, weak wording and the lack of clear reporting requirements and enforcement measures.”
I cannot help but notice that those are exactly the kinds of concerns that I have been expressing all the way through this Bill as well. I guess what it shows is that there is nothing new about the difficulties that people have had trying to do good things but not necessarily doing them in ways that are clear and specific enough to translate into action.
The Lords Select Committee said:
“We recommend that the NERC Act should be amended in order to add a reporting requirement to the duty; the Government should also consider strengthening the wording.”
The measures taken in the Bill to do so are welcome, but we have concerns about the rewording of the duty of public authorities. We want to probe some of those points with some amendments. We will come to the more serious changes, but the first one is proposed in amendment 140. Currently, clause 93 stipulates that the “general biodiversity objective” be defined as
“the conservation and enhancement of biodiversity in England”.
Our amendment would broaden that to include the species and habitats listed in section 41 of the NERC Act. In effect, it is a clarifying amendment, as we feel that the provisions in the duty could be seen as being too open-ended to guide everyday action by public authorities.
We think it would be more helpful for there to be a direction that the biodiversity duty clearly requires authorities to act in order to further the conservation of the species and habitats listed under section 41. For those who are not familiar with section 41, it is a list of some of our most precious and vulnerable species, from water voles and otters to particular species of orchids and the short-haired bumble bee. We believe the amendment would provide a closer link between the public duty to enhance biodiversity and the species that need the most attention. Although I will listen with interest to the Minister’s comments, I do not think it is an amendment on which we will seek a Division.
Rebecca Pow
I appreciate that the intent behind the amendment is to ensure that action that might be taken under the biodiversity duty is effective and is targeted where it is most needed. At the same time, one of the strengths of the duty is that it is broad, and we want public authorities to consider all functions when determining the best action to take. That could be action on limiting their biodiversity footprint or addressing wider, indirect impacts on biodiversity, such as from transport policy, water use or energy consumption. We would not want to stop authorities considering such action, even inadvertently, by focusing their attention on what can be done for a targeted set of species and habitats. Also, there are some 943 species, some of which the hon. Member for Cambridge named, including the hairy bumble bee.
Rebecca Pow
There are some fantastic creatures and 56 habitats of importance on that list, as set out under section 41 of the Natural Environment and Rural Communities Act 2006. Interpreting this list and the actions required is likely to require specialist knowledge, which may not be available within every public authority.
In complying with the strengthened biodiversity duty, public authorities must have regard to any relevant local nature recovery strategy. If Government amendment 222 is agreed to, public authorities must also have regard to relevant species conservation strategies and protected site strategies, which will help public authorities to identify the actions with the most benefits for biodiversity, including for species and habitats listed in section 41 of the 2006 Act. I therefore suggest that the amendment is not needed; indeed, it might constrain public authorities’ actions to conserve and enhance biodiversity. While I think that it was a probing amendment, I urge the hon. Member to withdraw it.
Daniel Zeichner
We will not press the amendment to a Division. While the Minister and I might have a slight difference of opinion, the approaches are legitimately different. I was grateful for her reference to the short-haired bumblebee. Like many Members, I am a species champion. I stand up for the ruderal bumblebee, although I have never had the pleasure of meeting one—I live in hope. I beg to ask leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Daniel Zeichner (Cambridge) (Lab)
I beg to move amendment 138, in clause 93, page 94, line 18, at end insert—
“(1ZA) A public authority which has any functions exercisable in relation to England must exercise those functions consistently with the aim of furthering the general biodiversity objective.”
This amendment requires public authorities to apply the biodiversity duty in the exercising of all of their functions.
This is a slightly more serious amendment, in the sense that this is a more difficult issue, as we think that the clause has a couple of key weaknesses. Section 40 of the 2006 Act currently states that any public authority must,
“in exercising its functions, have regard, so far as is consistent with the proper exercise of those functions, to the purpose of conserving biodiversity.”
That implies a biodiversity duty in all day-to-day public authority decision making. As it stands, although the new duty widens public authorities’ responsibility to both conserve and enhance biodiversity, the wording narrows the application of the duty. Its current drafting applies only to actions taken in line with specific policies and objectives developed in relation to clause 93(3), which requires authorities to consider from time to time what action they can take to further the biodiversity objective and to take the actions appropriate to do so.
I apologise that this is slightly complicated, Mr Gray, but, yet again, we see the interaction between different forms of wording in various pieces of legislation. The risk is that the Government are changing the duty on public authorities to have regard to conserving biodiversity in all their functions to a duty on conserving and enhancing biodiversity with specific considerations that they must make from time to time. The reach into their everyday functions is not made clear.
This is, I guess, a discussion about how local authority members should make their decisions—what they should take into consideration and when. We fear that a key opportunity is being missed to improve the effectiveness of public authorities’ biodiversity work, namely by requiring them to factor in the need to conserve and enhance biodiversity in all decision making, including statutorily required planning and spending decisions. This is actually quite a big issue.
Biodiversity work is in continual danger of being marginalised. I referred to that when I spoke about my experience as a councillor, and I suspect that others will have had the same experience. This is not a criticism of councils or local government—they are under pressure, and many, many demands are put on them. However, if we have the challenge of restoring nature to a level that every member of the Committee would agree is what we are seeking, and if that is actually going to happen, the agenda needs to be taken up in local government. Embedding biodiversity into all public authority decision making is vital to ensure that we do not miss the opportunities that are available.
During my time as a councillor, I very much enjoyed our discussions but, as I have said, I do not think I could honestly say that I recall, when we came to make big decisions—we did make some quite big decisions, such as when the new Norfolk and Norwich hospital was discussed, which was referenced at today’s Health questions—any discussion around biodiversity, although we tried to take many things into account. It would make a real difference if biodiversity was central to decision making.
It is worth noting that the House of Lords Select Committee identified the “have regard” wording in the current obligation as the main reason, in its view, why the duty has been ineffective. That point has not been properly addressed. “Have regard” is a perfectly innocuous term, but it is just that—have regard in passing, not as a central part of decision making. We would welcome an explanation from the Minister on that point.
The amendment would fix the problem with the current wording of legislation and prevent biodiversity opportunities from being missed by requiring public authorities to exercise all their functions consistently with the aim of furthering the general biodiversity objective. That would prevent biodiversity being siloed. It would be rendered as a critical factor to be considered in all public authority decisions, including statutory planning and spending decisions, which can have significant impacts on nature and biodiversity.
Rebecca Pow
Our purpose in strengthening the current biodiversity duty is to ensure that public authorities take robust action to drive nature recovery. It is absolutely not the intention for biodiversity to become siloed, as the hon. Member has just said. He referred to the Norfolk hospital planning having no reference to biodiversity. I do not know what year that was—
Rebecca Pow
How times have changed. That will change—biodiversity will come into the general parlance. This is an ambitious duty. All public authorities will have to undertake a thorough consideration of what they can do to enhance biodiversity at least every five years, and then take action. As I said before, they will need to have regard to local nature recovery strategies and, if Government amendment 222 is accepted, relevant species conservation strategies and protected site strategies will provide information, data and tools to identify the most beneficial action to be taken in the region.
Clause 93 requires all public authorities to take a broad look across all their functions to identify the action they can take that would be most beneficial for nature. In our view, the strengthened duty in the Bill strikes the right balance by supporting action to conserve and enhance biodiversity while retaining the flexibility for public authorities to balance competing priorities. The amendment risks distorting those priorities by requiring public authorities always to exercise their functions to further the objective of conserving and enhancing biodiversity. Public authorities must retain the power to decide the best use of their resources. I am sure that the hon. Member for Cambridge, having been a councillor, appreciates that point.
We expect public authorities to look across all their functions and prioritise the actions that will have the most impact, in contrast to the existing biodiversity duty, which is a reactive duty. It is intended to be universal but, as we know, in many cases it has not driven action on the ground, as the hon. Member suggests. The amendment risks replicating the reactive nature of the existing duty by requiring a case-by-case assessment of each individual function and decision to ensure that it is furthering the biodiversity objectives. We would thereby lose the advantages of the more strategic view, which allows the most effective measures to be prioritised, so I urge the hon. Member to withdraw the amendment.
Daniel Zeichner
I hear what the Minister says, but the amendment is crucial to tilt the balance in local authorities. On that basis, I wish to divide the Committee.
Daniel Zeichner
I beg to move amendment 139, in clause 93, page 94, line 42, at end insert—
‘(1G) In this part, “public authority” has the meaning given by section 28(3) of the Environment Act 2020.”
The Chair
With this it will be convenient to discuss the following:
Amendment 147, in clause 99, page 99, line 16, leave out “95” and insert “93”.
Amendment 148, in clause 99, page 99, line 31, at end insert—
‘(4) “Public Authority” means—
(a) a Minister of the Crown, a government department and public body (including a local authority), and
(b) a person carrying out any function of a public nature that is not a devolved function, a parliamentary function or a function of any of the following persons—
(i) the OEP;
(ii) a court or tribunal;
(iii) either House of Parliament;
(iv) a devolved legislature;
(v) the Scottish Ministers, the Welsh Ministers, a Northern Ireland department or a Minister within the meaning of the Northern Ireland Act 1998.’
Daniel Zeichner
We tabled these technical but important amendments to interrogate the definition of “public authority” in the Bill as it applies to the biodiversity objective and the local nature recovery strategies—they are linked. Amendment 139 is consequential on amendment 147 and would clarify the meaning of “public authority” under section 40 of the Natural Environment and Rural Communities Act 2006 by using the definition set out in clause 28(3) of the Bill, as that particularly strong definition would apply well to biodiversity provisions. It would make it clear that the term “public authority” would apply to local authorities or organisations
“carrying out any function of a public nature”,
which would ensure that bodies with key public statutory undertakings, such as water companies or rail providers, would have a responsibility to comply with the enhanced biodiversity duty.
Such bodies might not be included in a narrower definition, and that is important because we know that they have many responsibilities, or a lot of land or many rivers to look after. Keeping them within the ambit of the biodiversity duty would therefore give them a much stronger incentive to do the right thing. Such bodies’ legal status or corporate structures might be different from those of local government authorities, but they still provide key public functions. Amendment 148, like amendment 139, would make it clear that the term “public authority” in relation to local nature recovery strategies applies to planning authorities and all planning functions.
Amendment 147 would amend clause 99, which currently provides definitions of a “local authority” and a “national conservation site”. However, that clause applies only to clauses 95 to 98, which set out provisions for local nature recovery strategies. Our amendment would extend the definition of local authorities and national conservation sites to the Bill’s broader provisions on biodiversity objectives and reporting—clause 93 on the general duty to conserve and enhance biodiversity; and clause 94 on biodiversity reports. Yet again, our proposals would strengthen the Bill, so my question to the Minister is: why would she not choose to support us on that?
Rebecca Pow
I thank the hon. Member for tabling the amendments—I shall rattle through them.
Amendment 139 would change the definition of “public authority” in relation to the strengthened biodiversity duty to that used in clause 28. Taken together, amendments 147 and 148 would have the same effect. Clause 93 does not alter the definition of public authority under section 40 of the Natural Environment and Rural Communities Act 2006, but clause 28 represents a different approach: it is drafted to be UK-wide, and then has carve-outs. Amending the definition to that in clause 28 would not make a significant difference to the bodies covered by the duty, although it would mean that the parliamentary estate would not be captured.
Amendment 147 would apply two additional definitions to the Bill’s biodiversity duty provisions, the first being “local authority”. The definition in clause 99 is very similar to the existing definition in section 40 of the 2006 Act. However, that definition includes parish councils, so the amendment would remove parish councils from the scope of the biodiversity duty—[Interruption.] “Shocking,” says the hon. Member’s colleague, the hon. Member for Southampton, Test.
I accept that many parish councils are very small and have limited resources, but they are likely to make a contribution to local biodiversity and we do not want to exclude them from the duty. I speak from experience: the hon. Member for Cambridge might have been a district councillor, but I was on my parish council for 10 years—I am very proud of it. We did a great amount of work on biodiversity, including by planting a chestnut avenue and creating a village garden out of a piece of tarmac. There is biodiversity if ever I saw it—we walk past it every day.
The second definition, “national conservation site”, is not a term used in the Bill’s biodiversity provisions, so applying it would have no practical effect. On its own, amendment 148 would have no effect. It would insert a new definition of “public authority” into clause 99. The definitions in clause 99 apply to the provisions relating to local nature recovery strategies, which are set out in clauses 95 to 98, but the term “public authority” is not used in a way that has an effect in those clauses.
I hope that that information was helpful, and I ask the hon. Member for Cambridge to withdraw the amendment.
Daniel Zeichner
I am grateful for the Minister’s clarification and I endorse her comments about parish councils. I, too, started on a parish council, and as a district councillor, I diligently attended my five parish councils regularly. They have a hugely important role to play. We were trying to widen the scope of the bodies that would be drawn into the process. That might be something that we need to revisit in order to embrace both points, which would be a good outcome.
The amendments were probing, so we will not need to divide the Committee. I beg to ask leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Daniel Zeichner
I beg to move amendment 137, in clause 93, page 95, line 1, leave out subsection (5) and insert—
“(5) After subsection (2) insert—
“(2A) the authority must act in accordance with any relevant local nature recovery strategy in the exercise of relevant public functions, including strategic and local land-use planning and decision making and in spending decisions, and in particular in complying with subsections (1) and (1A).””
This amendment would ensure that Local Nature Recovery Strategies are considered in day-to-day planning and spending decisions by public authorities.
Amendment 137 addresses a key issue in the Bill’s current drafting regarding local nature recovery strategies, which we welcome. If they are implemented properly, the strategies can enable a wide range of organisations to contribute to measures needed to address the biodiversity crisis and deliver the Government’s ambitions in the 25-year environment plan, in particular by supporting the creation of a nature recovery network.
By identifying local biodiversity priorities, including restoration opportunities, we think—I am sure that the Government agree—that policy integration and better value for money could be achieved at the same time as saving nature. I suspect that we all have good examples from our areas, but I am sure that the hon. Member for South Cambridgeshire will join me in praising Natural Cambridgeshire, chaired by Richard Astle, and the excellent work that it is already doing through its nature recovery toolkit. I believe that the hon. Member addressed Natural Cambridgeshire recently. I hope to do so again soon, and I will be keen to bring news of a strengthened Bill.
At the moment, despite local enthusiasm, the duty to use local nature recovery strategies is very weak. It is included in the duty to conserve and enhance biodiversity under clause 93(5), which requires local authorities to “have regard” to the strategies when making plans to conserve or enhance biodiversity, but that risks creating obligations for local authorities to develop local nature recovery strategies, thereby expending precious local resources, only to see that that effort might be wasted through a failure to give the strategies any influence on real decision making. That is a problem.
The duty should be a much stronger requirement to take the strategies into account in the exercise of public functions, including in the statutory planning system and in spending decisions. This mirrors arguments that I have previously made. Unless such a change is made, there is a real risk that local nature recovery strategies will overburden local authorities and once again risk sitting on the proverbial dusty policy shelf.
This is not a criticism of local authorities, but a reflection of the fact that many are already hard pressed and will not have the capacity to do what is asked of them. When I raised this previously, the Minister reassured me that all necessary funding will be made available under the Bill. I liked her reassurance, but she was not able to point me to where that was specified. I invite her to do so again, but I do not think she will be able to do so, because it is not specified—it is just an aspiration. This is not a party political point, but anyone who has been in local government well knows the problem that while central Government frequently make promises, the outcomes rarely transmit. They often end up in general funding, and we are told that it is in there somewhere, without clarity that it is enough. It is important to note that the success of the measures in general will be dependent on the Government making those funds available. I recognise that at this stage it seems difficult to predict the costs—there was some discussion in the impact assessment about how it was not entirely clear how much would be needed—but I ask the Minister how the Government intend to carry out an assessment of how the new duties operate and how they can ensure that resources are available to make the duties work.
The strategies are potentially a very useful tool. If they work well, they could effectively co-ordinate the actions of multiple stakeholders and direct local use of biodiversity gains from the planning system, environmental land management systems and other sources, helping to build and maintain ecologically coherent networks and nature recovery sites. That leads me back to the 25-year environment plan, particularly page 58, which is littered with “we will”, “we shall” and “it will happen”, including the statement that we
“will coordinate our action in England with that of external nature conservation…as well as farmers and land managers.”
That is great, but I have to ask when that will happen.
I had the pleasure of being an Opposition spokesman on the Agriculture Bill, and we were begging constantly, and tabling amendments, for an integrated approach between this Bill and the Agriculture Bill. I am afraid that we were constantly knocked back. Here we are, just a few weeks from the beginning of the phasing out of basic payments, and we do not have ELM schemes in place. The Secretary of State will have to deliver a fix in 10 days’ time. I am happy to be corrected by hon. Members on the other side if that is not correct, but that is what I hear. While the sustainable farming initiative sounds fine, it is a missed opportunity to link to the local nature recovery strategies that we are discussing today. Because of this weak duty to apply the strategies in decision making, I am afraid the potential that these have may well fall short.
Amendment 137 aims to strengthen the duty to use local nature recovery strategies by requiring all public authorities to “act in accordance with” any relevant local nature recovery strategy in exercising their duties, including the statutory requirements, planning and spending decisions. That would make a big difference and deliver real change, and that is why I worry that it is not in the legislation as it stands at the moment. It is essential to ensure that the local nature recovery strategies actively influence important day-to-day decisions that affect nature.
Fleur Anderson
I, too, would like to support amendment 137. I can picture the scene in the drafting committee. One group wanted to have “act in accordance with”, to make the duty very strong so “we would definitely put this into action”, and on the other side was the “must have regard to” group. I would like to speak on behalf of the “act in accordance with” group, and it was a mistake that the “have regard to” group won the day.
The provision for planning to work for nature is very welcome, but there is a risk that it will be stalled indefinitely if we do not have the amendment in the Bill. The duty to use local nature recovery strategies is very weak. The environmental coalition, Greener UK, has similar concerns. The amendment would embed biodiversity in public authority decision making, because here the rubber hits the road—or the hedgerow or the greener area of a siding. The amendment includes complying with spending decisions, and that is what will ultimately decide whether this is put into action.
There is great potential for these strategies to be a highly effective tool, and I welcome the five pilot schemes, as I know the Minister does. However, as it stands, the potential will not be realised because the duty is so weak. The amendment would ensure that local nature recovery strategies actually influence day-to-day decisions that affect nature. There are two examples of how that would work out in my constituency. We have many wonderful green spaces which have “friends of” groups, and they are knocking on the door and trying to get the attention of the local authority all the time. It is not a given that that will happen. Those groups really care about biodiversity, but the day-to-day work of the local authority is not reflecting that.
I have a very active save our hedgehogs group, and I am surprised that they have not been mentioned this afternoon up to now, so I want to put that straight. Those vulnerable mammals have been in decline by 30% in urban areas and 50% in rural areas since 2000. That is dreadful. If the local authority will have regard to the local nature recovery strategies, rather than acting in accordance with those strategies, there is a danger that the work to reverse the decline of hedgehogs will not happen. There is a mention of hedgehogs in the environment plan, but this amendment would cement action to save hedgehogs and all other biodiversity in our planning system.
Rebecca Pow
Some strong points have been made about local nature recovery strategies. I think we all agree that they are a good idea. When I was a trustee of the Somerset Wildlife Trust many years ago, it was working on a similar idea to that which is now coming into legislation. Subsequent Government amendment 222 changes the provision so, if accepted, public authorities will be required to have regard to species conservation strategies and protected site strategies. However, I will speak only to the original purpose of the amendment now.
We want public, private and voluntary groups to engage openly in the development of local nature recovery strategies and for this to follow through into their implementation. That is exactly what the hon. Member for Putney is asking for, so that those hedgehog highways and interlinking runways through fences in towns will stay there. I love a hedgehog as much as she does. I had some rescue ones from the rescue centre sent to my garden. We need to look after our hedgehogs.
Requiring public authorities to have regard to a specific document is an established and effective means of achieving that aim. I have discussed this with the officials. They have convinced me that this is the right terminology. We should also be mindful that public authorities have a wide range of existing duties such as housing, health and social care, which have to be considered. Some flexibility to take these wider considerations into account is important. Similarly, local planning authorities are required to balance a wide range of important considerations when establishing their planning policy for this area. I am keen that we continue to work with the planning system, rather than create complexity by making separate demands on planning authorities. The spatial information provided by the local nature recovery strategies will support the development of local plans.
I want to reassure the hon. Member for Cambridge that the Department for Environment, Food and Rural Affairs, will continue to work closely with the Ministry of Housing, Communities and Local Government to set out clearly the role for local nature recovery strategies as part of the ongoing planning reforms. The work has already started, and it has been clear that this must be an integral part of our future going forward. Those five pilots will inform the local nature recovery strategies. They have already been announced and money has been agreed for them. We will learn a lot from those about how these strategies will work.
We want the reformed system to play a proactive role in promoting environmental recovery and long-term sustainability. We have really high ambitions for the local nature recovery strategies in helping to do this. They are a crucial tool towards the whole endeavour of biodiversity from the ground upwards. I therefore urge the hon. Gentleman to withdraw his amendment.
Daniel Zeichner
I am grateful particularly to my hon. Friend the Member for Putney for enlivening our discussions late in the afternoon—well past teatime, in some people’s view, which I understand—and for introducing hedgehogs into the discussion. I had a side bet with one of my colleagues as to how long it would take for the Minister to raise a hedgehog highway. I am grateful to my hon. Friend the Member for Putney because that allows me to mention Nora the rescue hedgehog. The Cambridge Wildlife Trust allowed her to escape down a hedgehog highway in my sight. I am not sure where she went, but hedgehogs are very important.
The problem was confirmed by the Minister, who admitted that she had been convinced by her officials that this is the correct terminology. We do not think that it is the correct terminology; it is not strong enough. I invite the Minister perhaps to go and have that conversation again. That point takes us back to the beginning of our sitting, when my hon. Friend the Member for Southampton, Test and I questioned why some of these things are as they are. I am led to conclude, I am afraid, that despite the admirable enthusiasm, there are flaws in the process.
The Minister said that we do not want to put too many demands on planning authorities. Actually, we do want to put demands on planning authorities; that is exactly what this will be about if our goals are to be achieved. We get distracted by the hedgehogs and the bumblebees, but at heart there is a serious question of allocation of resources, effort and money through the planning process. That is often what it is about, and my fear is that, wonderful though much local effort is, sadly if it cannot be translated into action it will go on being just good effort, without the kind of gain that we want to see.
I suggested at the beginning of our sitting that there were some villains in the piece, and I think the Committee has a sense of who I think one villain is, but it is not just about the current Prime Minister. It is worth remembering that in 2011 the then Chancellor, George Osborne, described the EU habitats directive as placing
“ridiculous costs on British businesses”,
and spoke about companies being burdened with
“endless social and environmental goals”.—[Official Report, 29 November 2011; Vol. 536, c. 807-808.]
The point is that there is a view out there that this is all “green crap”, as another eminent former Prime Minister described it. That is why we are worried, why this matters, and why the Bill needs to be strengthened.
The Chair
The hon. Gentleman used the word “villain” with regard to the Prime Minister. He might wish to withdraw it as unparliamentary.
Daniel Zeichner
I withdraw the comment. [Interruption.] But I would like to press the amendment to a Division. I was distracted by the pantomime.
Question put, That the amendment be made.
Rebecca Pow
I beg to move amendment 222, in clause 93, page 95, line 3, at end insert
“and
(b) any relevant species conservation strategy or protected site strategy prepared by Natural England.”
This amendment requires a public authority to have regard to a species conservation strategy or protected site strategy in complying with its duties under section 40 of the Natural Environment and Rural Communities Act 2006.
The Chair
With this it will be convenient to discuss the following:
Government new clause 25—Species conservation strategies.
Government new clause 26—Protected site strategies.
Government new clause 27—Wildlife conservation: licences.
Rebecca Pow
The overall purpose of this group of amendments is to enable better species and habitat conservation in England as part of the Government’s commitment to growing back better, faster, greener. They will allow for the creation of two new types of strategies and will resolve inconsistencies regarding the licensing of development.
New clause 25 will allow Natural England to create species conservation strategies, which are innovative approaches to safeguard the long-term future of species that are at greater risk. The strategies will be developed using up-front surveying, planning and zoning across a wide area. Natural England will then develop measures to mitigate, or compensate for, the impact on species— from building projects, for example. This approach helps to avoid the need for reactive site-based assessments and mitigation.
The legislation is based on the successful district-level licensing approach to the conservation of great crested newts, which have already been mentioned today. An area is comprehensively surveyed in advance and a licensing strategy is developed. Up-front mitigation work is then carried out to cover the creation or restoration of ponds in areas that are known to provide the best habitats for newts to thrive in. Developers then make a conservation payment and can begin work without delays.
New clause 26 will allow Natural England to prepare and consult on protected site strategies. These will enable the design of bespoke solutions for sites that are affected by a combination of different impacts, such as pollution from agriculture and pressure from development. Protected site strategies are also based on existing, innovative schemes such as that in the South Humber Gateway, which has unlocked development on hundreds of hectares of land while creating 275 hectares of new wet grassland for birds, and is held up as something of a model.
For both species conservation and protected site strategies, local planning authorities will be placed under a duty to co-operate with Natural England. They will also be required to have regard to relevant strategies as they carry out their planning functions. These new strategies will deliver better environmental protections through simpler processes, and are therefore fully aligned with the proposals set out in the “Planning for the future” White Paper. The planning reforms will reinforce the implementation of these measures.
Amendment 222 adds an important provision to support the new strategies. Clause 93 strengthens the existing duty under the Natural Environment and Rural Communities Act 2006 to require public authorities to take action to further the conservation and enhancement of biodiversity. It also requires public authorities to have regard to local nature recovery strategies as they do so. This amendment extends that duty so that public authorities must also have regard to any relevant conservation strategy or protected site strategy as they consider what action to take, so the three kinds of strategies are designed to work together. The local nature recovery strategies will be a system of strategies covering the whole of England, and will identify where action can be taken to reverse the decline of nature as a whole. Species conservation and protected site strategies are more bespoke, targeted measures to help protect specific species and sites that are at risk, and are intended to ensure public authorities comply with legal protections in a way that achieves better outcomes for nature. It is therefore important to make this amendment, to ensure public authorities have regard to all three types of the new strategies.
Finally, new clause 27 makes three changes related to protecting species licences granted under section 16 of the Wildlife and Countryside Act 1981. Those changes are intended to unlock the full potential of strategic licensing for protected species. First, the new clause will introduce an additional “overriding public interest” purpose for granting a licence. Secondly, it will introduce two additional tests that must be met before a licence can be granted if
“there is no other satisfactory solution, and…the grant of the licence is not detrimental to the survival of any population of the species”.
Thirdly, the new clause will extend the maximum permitted licence period from two years to five years.
Taken together, the amendment and new clauses strengthen the nature chapter of the Bill and help to protect and restore species and habitats at risk, while also enabling much-needed development. I have rattled through them, Chair, and there is a lot of detail there, but I commend amendment 222 to the Committee.
Amendment 222 agreed to.
Daniel Zeichner
I think I may have missed a point. We discussed all those new clauses, did we?
The Chair
There was no sign from the Opposition that the hon. Gentleman wished to discuss Government amendment 222, so it was passed. Therefore, we will move on to Government amendment 223. If you are waiting for votes on Government new clauses 25, 26 and 27, they will come at the appropriate point in the consideration of the Bill—not now.
Dr Whitehead
May I seek your guidance, Mr Gray? Presumably, we will want to have a stand part debate on the clause.
The Chair
Hang on, this is not a general conversation. It is of course possible that if anyone in Committee wishes to have a stand part debate, they may do so at the appropriate moment. That is absolutely fine, but it is not to become a discussion.
Rebecca Pow
I beg to move amendment 223, in clause 93, page 95, line 21, after “England))” insert—
“(a) in subsection (1), after ‘conserving’ insert ‘or enhancing’;”.
This amendment adds a reference to enhancing biodiversity to section 41(1) of the Natural Environment and Rural Communities Act 2006.
This amendment makes a small change to section 41 of the NERC Act. The section requires the Secretary of State for Environment, Food and Rural Affairs to publish a list of species and habitats that are of principal importance to conserving biodiversity. The amendment will change the requirement to “conserving or enhancing” biodiversity.
The language mirrors that of the strengthened biodiversity duty under section 40 of the NERC Act, as amended by clause 93. The duty will require public authorities to take action to further the conservation and enhancement of biodiversity. The amendment will therefore create consistent language across two related sections of the NERC Act.
When the list is updated in future, the amendment will allow wider consideration of which species and habitats should be included. That is consistent with our intention, as expressed in the 25-year environment plan, to improve beyond merely trying to maintain the status quo—or conserving—and instead recovering and restoring nature. This small amendment further signals our ambitions to enhance biodiversity.
Daniel Zeichner
I regret to say that we have some extensive questions about clause 93 as amended, which may not come as a welcome moment for the Government. I get the sense, however, from looking at the Government Whip, that he may think tea has come.
Ordered, That the debate be now adjourned.—(Leo Docherty.)
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Covid-19: Employment Rights
(4 years ago)
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Gavin Newlands (Paisley and Renfrewshire North) (SNP)
I beg to move,
That this House has considered the covid-19 outbreak and employment rights.
It is fair to say that the pandemic has stress-tested a great many things across our civic, political and private lives. Day in, day out, jobs are being cut in many sectors across our economy. The jobs market is no exception, and neither, sadly, are employment rights. For far too many people an employment contract offers zero protection and has been rendered worthless, but despite some warm words the Government have not lifted a finger to help.
My interest in fire and rehire stems from my duty as a constituency MP for Glasgow airport, from my role as a transport spokesman and from my membership of the Transport Committee. Firing and rehiring emanates from the aviation sector, and in particular from British Airways. Among our first witnesses when the Committee looked at the impact of covid-19 on transport was Willie Walsh, the then chief executive of International Airlines Group, which owns British Airways. The company had just announced huge job losses—roughly 12,000 from a workforce of 42,000 were to be cut, while the reward, if that word can be used, for those who attempted to remain was a threat that they would be fired and rehired on reduced terms and conditions. For some, the reductions in net take-home pay were simply savage, with cuts of 40%, 50% or 60% not uncommon.
The workforce were understandably traumatised. I received hundreds upon hundreds of emails from British Airways staff. I spoke to cabin crew in tears at the treatment meted out by Mr Walsh and his willing deputy, Mr Cruz, and other BA management. It seems that Mr Walsh tried to make some of these changes a decade or so previously but failed; the pandemic has seemingly given him perfect cover to try again. I could not believe that that was legal. Perhaps naively, I thought that a contract and the law governing it would offer an employee and employer equal protection. Of course, we now see that there is no equality of arms whatsoever.
Following Mr Walsh’s appearance before the Committee, which it would be fair to say was not overflowing with modesty or contrition, further examples of firing and rehiring being deployed against thousands of workers came to light. That should not have come as a surprise to the Government. We and many other Members across the House had warned that without Government action other companies would follow in BA’s footsteps. Centrica British Gas has threatened over 20,000 employees with termination if they do not sign up to new, inferior contracts. Menzies Aviation, a ground handler at many UK airports, including Glasgow, assured me personally that it would not follow the British Airways lead but then copied and pasted its tactics for its own use. Heathrow, which other Members might touch on, is doing the same to its workforce. Unsurprisingly, many have voted for industrial action.
We should be crystal clear about what is happening and has happened. It is reprehensible to treat workers like this. It is counter-productive, self-destructive and flies in the face of what we in society should be willing to accept. In the words of a former Conservative Member, it is the “unacceptable face of capitalism.” Tory Ministers, including the Chief Secretary to the Treasury, have been queueing up to slate firing and rehiring, not least the Minister himself, who said last week:
“The very threat of fire and rehire is totally unacceptable”.—[Official Report, 10 November 2020; Vol. 683, c. 718.]
He slightly blotted his copybook just two minutes later, when he seemed to boast about the UK’s flexible labour markets and how easy it is to hire and indeed to fire workers. On that latter comment, I hope that he misspoke or that that was not what he intended, but that is how it came across to many people. The Minister and I met to discuss my fire and rehire Bill, which would outlaw the practice. He said that while the Government could not support the Bill he remained open to looking at further protections for workers in this area. Perhaps the change in management at No. 10 will allow a new and more collegiate approach on this issue. I know that it is a policy that many of the Minister’s colleagues are not pleased with. When he responds, will he say that he will work with me to strengthen workers’ protections in this area – perhaps in the Government’s Employment Bill? If he wishes to confirm it now, I would be happy to take an intervention, but if he will do so in his summing-up that would be good.
No one denies the unprecedented challenges facing business across the country. Aviation in particular has seen its business model receive its biggest shock since the war. There will be a debate on the issue tomorrow, so I will not go into detail, but as an example, Glasgow airport in my constituency has seen passenger numbers drop year on year by 83%, while some regional airports in England have seen drops of more than 90%. No serious person can argue that this is not a huge hit to an industry that has secured hundreds of thousands of jobs around these isles. The way to meet those challenges is by acting responsibly and being open with staff and trade unions about what the future might hold. In recent months, I have spoken to dozens of union reps, mostly from aviation but many from other industries too, and it is crystal clear that they recognise the position their employers are in. They know that change has to be on the table if their industry is to have a sustainable future. They are not reactionaries who want business and commerce preserved in aspic. They want their members and workers to be treated with respect, dignity and as partners as management come up with plans for the months and years ahead. A temporary problem, albeit for a more prolonged period than we would like, requires temporary solutions. Other airlines have managed to make such agreements with their work force. Threatening staff with the sack is not respectful, is undignified and is certainly not partnership.
I know that many Government Members—perhaps not the Minister—do not like to do so, but we should look at Europe. Partnership working is the norm, not the exception. The idea of management and workers coming together to plan a way forward, with the former working with rather than against the latter, is not some kind of socialist utopia. It is the stuff of advanced economies right across the continent—economies that are in most cases more advanced, wealthier and fairer than ours. That is not a coincidence. There is cross-party support for banning firing and rehiring. Members from every party in the House co-sponsored my Bill and I know that many Government Members are quietly supportive of the principles of the Bill.
Moving on from firing and rehiring, I welcomed furlough when the Chancellor announced it in March and I welcome its extension until next March, although the way in which that extension was announced and the way in which repeated calls for extension were flat-out ignored until the last minute—in fact, after the last minute—were sadly typical of the way the UK Government have handled employment and the economy over the past months. The U-turn has come far too late for thousands of workers made redundant after months of delays and uncertainty. Many good businesses have gone under and millions have been excluded completely. It is clearly still a system with many flaws, not least of which is the power it gives employers over workers, especially when those workers are worried for their jobs and livelihoods.
There is no appeal. An employee is entirely at the mercy and discretion of their employer as to whether to go on furlough or not. That is a lopsided arrangement. An employer can simply say that it is not worth the paperwork, terminate a worker’s contract and leave them to the pittance provided by the benefits system rather than furlough at 80%. The employee has zero rights under law to challenge, appeal or ask a third party to intervene.
Similarly, as we have seen in my constituency, where over 70 people have received no furlough payments due to flaws in the application process, there is no appeal to HMRC for any discretion. Over 70 households, instead of having access to furlough over the past eight months, have had to resort to food banks and the kindness of neighbours to get by, all because their employer was bought over and the change was not recorded by HMRC until one day after an entirely arbitrary furlough deadline was imposed retrospectively.
Returning to the aviation and travel sector and permanent part-year contracts that contain a provision to extend hours through the winter, I have been made aware that TUI is refusing to claim furlough payments for more than 500 permanent part-year employees on the basis that they are not extending the contracts this year due to lack of demand. However, the scheme has provision to claim for such employees, based on the amount earned in the same month last year or an average of monthly earnings for the tax year 2019-20. I hope that the Minister will join me in asking TUI and anyone else planning something similar to think again and to do the right thing. No one is asking for the furlough scheme to be a free for all, but it cannot be beyond the wit and imagination of the Treasury to come up with a system that gives some rights and power to the employee, rather than putting every single furlough egg in the employer’s basket and leaving workers with no recourse except to beg their bosses for some relief.
I welcome the Government’s introduction of bereavement leave for the parents of a deceased child. It is a decent and humane policy, and it deserves recognition. Now it is time to look at bereavement leave across the board and to give workers a right to paid time off at a time of grief and personal loss. That seems particularly pertinent when many have unfortunately lost a loved one to covid-19. It is a policy that would undoubtedly cost in the short term but could very well save money. Sue Ryder states that losing someone can have serious consequences not only for mental and physical health; it also costs the UK economy an estimated £23 billion a year due to presenteeism, absenteeism and reduced employment.
We have a situation whereby the UK’s sick pay system is, by a long way, the worst in western Europe. It is a system that has been shameful for years but is now being exposed as completely out of step with every single one of our neighbours and allies in Europe. Two years ago, the Council of Europe’s European Committee of Social Rights called the UK’s SSP system “manifestly inadequate”. In a sane world, that should have set off some kind of alarm in Whitehall, but here we are in the middle of a pandemic, asking people to self-isolate for the greater good yet providing a system of support that is manifestly inadequate.
Our nearest neighbours recognised the scale of the challenge right at the beginning of the pandemic. Ireland’s enhanced illness payment provides €350 a week to anyone who tests positive or has to self-isolate. Up to 10 weeks of payments can be made to people who have tested positive. It has ensured high compliance with self-isolation and helped provide some financial security for households who would receive a pittance if they lived in the UK.
There is no practical reason why the UK is so far behind our nearest neighbours; it is simply a matter of political choice and ideology. I know the Chancellor and his social media team are busy building the Rishi brand, and he would like to paint a picture of himself as the saviour of the economy, right down to delivering discounted katsu curries to diners’ tables. However, his signature strings are missing from a pledge to keep sick pay the lowest in Europe. His lack of photo ops to promote the UK’s position near the bottom of the league table perhaps says a lot about how well such boasts would go down with voters.
The Citizens Advice Bureau tells me that the current employment rights enforcement system is not up to task for dealing with the challenges exposed by the pandemic. Employees who have been unfairly treated have very few options for redress. For many people affected by the redundancy crisis, employment tribunals are the only place they can turn to in order to protect their rights and seek a fair outcome. There are currently six bodies that enforce employment rights in various ways: Her Majesty’s Revenue and Customs, the Gangmasters and Labour Abuse Authority, the Employment Agency Standards Inspectorate, the Health and Safety Executive, local authorities and the Equality and Human Rights Commission. The situation is messy and piecemeal. Along with Citizens Advice Scotland and others, I welcome the proposal to set up a single enforcement body for employment rights. Can the Minister tell us when it will finally be introduced? Will it be included in the Employment Bill, and can he give us a timescale for that Bill?
My final point is brief and to the point. Surely the most basic of employment rights ought to be receiving a fair day’s wages for a fair day’s work. The UK Government’s national minimum wage, or the so-called living wage, is not a real living wage; it does not meet the minimum income needed for an acceptable living standard. The different rates of the living wage for young people are wholly unjust and discriminatory, and they do not take account of young people’s needs, responsibilities and living costs. The Chancellor could and should do what is right by increasing the statutory minimum wage and ending the age discrimination within it.
Rebuilding the economy after covid will become the biggest challenge that our society faces once the virus is under control. Workers must be part of that rebuilding and not treated as serfs. They and their families should not be threatened with financial disaster if they do not accept attacks on their pay and conditions. Enhanced employment rights are not just the right thing to do morally; they are the right thing to do economically. They ensure that workers have greater security, and therefore encourage spending within the economy, providing vital income and custom for our retail and service sectors.
The impact of covid has highlighted the fragility of many people’s working conditions—the fact that their family’s future hangs by a thread, which can be cut at a moment’s notice whenever management decides. That has to stop, and a much more equitable balance between employer and employee must be found as soon as possible, for the good of everyone on these islands.
Mick Whitley (Birkenhead) (Lab)
It is a privilege to serve under your chairmanship, Sir Christopher. I thank the hon. Member for Paisley and Renfrewshire North (Gavin Newlands) for securing this debate. I should first declare an interest. Many Members will know by now that I am a lifelong trade unionist and former regional secretary of Unite the Union. My experience in the labour movement spurred me to stand for Parliament, so I warmly welcome the opportunity to contribute to this important debate.
The British public have been asked to make enormous sacrifices to win the war on covid-19. Livelihoods have been lost, businesses forced to close and families separated. At the same time, people have come together in a newly-found spirit of solidarity and community-mindedness. Across my constituency of Birkenhead, people have given up valuable time to produce and distribute personal protective equipment, deliver food parcels and look after the most vulnerable and isolated. They understand that we are all in this together but, for some, that message has fallen on deaf ears. Instead of playing their part, several large companies have cynically exploited the public health crisis to slash pay and attack working conditions. Despite receiving millions in taxpayers’ money, companies such as British Airways and Sainsbury’s continue to lay off vast swathes of their workforce. Such attacks have shone a spotlight on the many limitations placed on trade unions to hamper their ability to act in support of their members.
Employment rights in the UK are among the worst in western Europe. Our employment laws are the most draconian of any western democracy with the exception of the United States. Over the past 40 years, successive Conservative Governments have introduced restrictions on the right to strike, to picket, to belong to a trade union, to access industrial tribunals, and more besides. Each piece of legislation has eroded the ability of the unions to act effectively. As the Trades Union Congress has highlighted, the Trade Union Act 2016 represented the most serious attack on the rights of trade unions and their members in a generation, yet the crisis has shown how vital it is to have a strong labour movement. With unemployment spiralling out of control and covid-19 hitting frontline workers hardest, trade unions have leapt to the defence of their members.
Shop stewards have fought hard to keep their members safe in the workplace. Members have gone on strike to defend highly skilled, dignified work at sites such as Rolls-Royce, Barnoldswick. The trade union movement played a pivotal role in the introduction of the furlough scheme in March, as well as securing its extension last month, but too many employers regard the unions, to quote a former Prime Minister, as the “enemy within”. The scandalous practice of fire and rehire is a glaring example of why we need to overhaul the employment laws system. The Government must now acknowledge the central role that the trade unions have to play in forging Britain’s economic recovery. The Government have already withdrawn their knee-jerk reaction to banning socially distant picketing during strikes, but only as a result of a legal challenge by Unite the Union. Now they must follow that up. The Trade Union Act 2016 must go for a start, and a new charter must ensure that when bad employers use bad practices and mistreat their staff, the unions have the means and legal right to fight back.
Grahame Morris (Easington) (Lab)
Thank you for calling me to speak in this debate, Sir Christopher. I also thank the hon. Member for Paisley and Renfrewshire North (Gavin Newlands), my colleague on the Transport Committee, for securing this important debate. It would be remiss of me not to remark on the fact that this is a well-attended debate with representatives from all political parties, apart from the Government party and the Minister, who has to be here. I do not know whether that is a reflection of the importance that the governing party attach to employment rights, but it is a sad indictment.
I declare an interest. I have been a member of a trade union and the Labour party all my adult life, and I have the honour of chairing the Unite parliamentary group. I want to highlight cases of dreadful practices, but I also want to pay tribute to the thousands of employers who have gone out of their way to protect and reassure their employees at a time when they themselves often face unparalleled pressures, stress and uncertainty. However, it is regrettable that some rogue employers have sought to use the covid-19 crisis as an opportunity to force workers to sign up to wage cuts in inferior conditions under the threat of dismissal. While the practice of fire and rehire is not currently unlawful in and as itself, the way in which it seeks to capitalise on people’s vulnerability, particularly at this time during the pandemic, is, in my opinion and in the opinion of most reasonable people, morally despicable and indefensible and cannot go unchallenged. It is noteworthy that these actions are outlawed in most other European countries. My belief, shared by many others, is that that should be the case here, too. I will return at the end of my speech to the Minister’s remarks in our previous debate, as referred to by the sponsor of the motion, the hon. Member for Paisley and Renfrewshire North.
I pay tribute to the excellent work of my union Unite in successfully arguing and mitigating many cases of employers attempting to utilise this terrible practice of fire and rehire. However, it has not always been possible to reach agreement, as was the case with the British Airways cargo workers based at Heathrow airport, where more than 850 Unite members have balloted and are set to strike in December over pay cuts of between 20% and 25% and threats to outsource the workforce.
At the same time, Unite the union has announced December strike action at Heathrow airport in protest at the loss of employment rights and wage cuts for not just baggage handlers but firefighters, engineers, campus security, baggage operations and operational and air-side workers. Unless the employer acts in a reasonable fashion, it will effectively close our major airport over the Christmas period.
Fire and rehire is not restricted to the aviation sector, although there are some terrible abuses in that sector. ESS, part of the multimillion-pound Compass group, has been branded Britain’s most heartless employer by Unite, due to the manner in which it is treating staff working on Ministry of Defence bases. They are being forced to sign contracts making them hundreds of pounds a month worse off, with the threat of immediately losing their jobs.
Workers in our criminal justice system are being deprived of one of the most basic employment rights—the right to a safe workplace. Court staff are made to attend workplaces that the Public and Commercial Services Union insists are not covid-secure. The alarming number of outbreaks in the courts suggests that the union is correct. Perhaps this is a direct consequence of there being no assessment process agreed with the trade unions, or of the court service’s refusal to publish individual site assessments and only making them available on request.
I am told that in prisons, some governors have tweaked their exceptional delivery models to permit classroom-based education, despite national guidance that says this must not happen while covid threat levels remain high. The University and College Union is seeking urgent clarification about this, as are its members, who are being made to continue with face-to-face teaching and attendance in person in our prisons, despite the new restrictions. Whether in courts or in prisons, a business as usual attitude from managers is putting loyal staff at unnecessary risk, which is quite simply unacceptable.
In conclusion, a business, a government and, indeed, every organisation—even society itself—will be judged on how we get through this extremely difficult period. Only last week, the Minister said in the Chamber:
“The very threat of fire and rehire is totally unacceptable”.—[Official Report, 10 November 2020; Vol. 683, c. 718.]
Will he commit today to outlawing this totally unacceptable practice once and for all?
Liz Twist (Blaydon) (Lab)
It is an honour to serve under your chairmanship, Sir Christopher. I congratulate the hon. Member for Paisley and Renfrewshire North (Gavin Newlands) on securing this important debate.
We live in extraordinary times under coronavirus. It has had a huge impact on all of us, and on our businesses and communities. Although we are talking about employment rights, I recognise that it has had a huge impact on businesses, and I have been working with them, doing what I can to support them through this time. However, some have been less than scrupulous.
Too many working people have seen the very real impact that the pandemic and the measures taken to combat the spread of the virus have had on their work, in many different ways. Like so many other hon. Members, my caseload has increased hugely as workers and their family members contact me to seek advice and guidance on the Government’s measures, their employment situation and the effect on their family income.
The furlough scheme has helped, and I was glad to see the most recent announcements. However, for those on the lowest wages, the national minimum wage—who will get 80% of what we already consider to be the barest minimum that they should be paid and can live on—losing 20% of their income is no mean challenge. There is no reduction in their bills, housing costs and other expenses, so this is a real problem for them. Sometimes we underestimate the way in which so many people are living on the edge. They need all the money that they have to survive and do not have easy access to credit or to help from other sources.
I also want to mention those who do not even qualify for furlough or other payments—those who have fallen through the many cracks in the system, some of which we have already heard about. They may have changed jobs recently, may not have made it on to the HMRC records in time, or they may be self-employed. Speaking to these people in my constituency, I know of the devastation that they have felt—the excluded and the forgotten—as their income disappears and they discover the harsh reality of the universal credit system, although many do not even qualify for that.
Looking specifically at the issue of employment rights and the impact that the pandemic has had on working people, I will highlight some specific issues that I have come across in my constituency, as hon. Members will have in their own.
First, I want to talk about the fire and rehire situation, which many Members have already mentioned, and about joining Unite members at Newcastle business park to protest against British Airways’ plans to reduce staff and to dramatically reduce terms and conditions of employment. Those people felt the fear of redundancy, the fear of less well paid jobs—the fear for their future.
This is not a new issue. As a trade union officer in a previous life, I have certainly come across this before, but we have seen it done in a way which cynically uses Government support and then treats staff so very badly. I support those many BA staff who work in the call centre in Newcastle, just across the river from my constituency, and at Newcastle airport and as cabin crew. I was amazed at how many BA employees contacted me. They appreciate the support, and their employer’s approach makes them feel very hard done by.
BA is not the only employer that has treated its staff badly in this way. There is also the present issue with Centrica, or British Gas, where, hopefully, negotiations are now taking place. There must be better way than saying to staff, “If you don’t like it, leave—take it or leave it”. It is a crude form of industrial strategy—I was going to say industrial relations, but I do not think “relations” is a good word for that—and we need to ensure that we end its use, as it has a devastating impact on people facing that situation.
On redundancies, in my constituency there is heavy reliance on the retail sector, which has been massively hit. Early in the pandemic I met workers employed by Debenhams at the Metrocentre, who had lost their jobs. More than 200 people had lost their jobs, and I believe that Debenhams was in administration so there was not the normal consultation. The shop was shut, and that was it. Many of the people who lost their jobs were women. Other redundancies have gone on in the background as well. Sometimes I hear about them and sometimes I do not, but there has been a real impact.
I want to talk a bit about pregnant workers. A number of women have contacted me because they are concerned about their position—their safety and welfare, and that of their unborn child. The Government have issued guidance, which has been supplemented by the TUC and the trade unions—which is welcome—to safeguard individuals. Not surprisingly, my constituents do not want to be named in the debate. They want to keep a low profile, but they want to see that they are protected. Guidance says that at 28 weeks teachers, for example, should be found alternative work rather than being in the classroom, or otherwise should be home on full pay. It sounds great, but on the ground, for that person in a school where there are other pressures, it is much more difficult to see that that is enforced.
Then there are problems with parents whose children are isolated because they have been sent home from school. That means that in many cases one parent must take the decision to take unpaid leave, if they are unlucky. Many of those people are on minimum wage. I am thinking of a constituent who is on minimum wage and cannot really afford that drop in income, but is not entitled to any isolation payments or anything of that kind. Someone in that position must stop work. Some may be entitled to statutory sick pay, but the existing measures just do not cut it for those people. They do not have enough support for their income. It is a real problem, and there is also the concern, “What happens if my child has to be off again in a few weeks?” There are difficult issues for people, and we need to make sure we can help them through what may be repeated bouts of isolation, to meet their bills and, indeed, hold down their jobs.
Last weekend I made the mistake of looking at my emails on a Saturday, as I suppose many people do. I had a flurry of emails on exactly those employment rights issues. Some were about furlough and how the constituent would be affected, where employers might have a Government grant. One was from some care workers who had come into contact with covid-19 and had to isolate. They are minimum-wage workers. They are not entitled to the isolation payments—they have checked that out—and they fear that it may happen again. We need to find a way for those people to be looked after, not just for their sakes but for all our sakes, because it will help to stop the spread of covid-19 if people can safely take time off without feeling that they will go under.
I want to talk about health and safety. Many workers are in difficult situations at work, because of things they are asked to do. [Interruption.] Yes, I shall be winding up now. I will mention specifically the retail sector campaign by the Union of Shop, Distributive and Allied Workers, Respect for Shopworkers Week. Shop workers have had to carry on working and have borne the brunt. In responses to USDAW’s survey, 70% said abuse was worse than normal, 85% had faced verbal abuse, and 57% had been threatened by customers, with 9% even being assaulted. That is an impossible situation for people who are trying to keep things going for the rest of us. I hope that the Government will take steps to address all those issues.
Sir Christopher Chope (in the Chair)
Before I call the next speaker, can I say that we will have the winding-up speeches at half-past 10? If each speaker takes four minutes, there will not be time for the last one.
Claudia Webbe (Leicester East) (Ind)
Thank you, Sir Christopher, for that warning. It is a pleasure to serve under your chairmanship. I congratulate the hon. Member for Paisley and Renfrewshire North (Gavin Newlands) on securing this important debate.
The unprecedented economic impact of the coronavirus has laid bare the weaknesses of UK labour protections. During the crisis, workers’ rights and public health must be prioritised above all else. Yet the Government have allowed corporate giants, including those in receipt of taxpayer bailout funds, to use the pandemic as a cover for further exploiting their workforce.
Nowhere has this been more apparent than in Leicester. The severe exploitation in sections of our garment industry in Leicester have been laid bare and highlighted by a huge increase in casework received by me, a resurgence of reports, and the coronavirus. Her Majesty’s Revenue and Customs reported that, over a six-year period, one quarter of all UK textile factories caught failing to pay the minimum wage were based in Leicester. With some textile factories offering less than £3.50 an hour, workers are forced to endure horrific and unsafe conditions. That is particularly shocking, but Leicester’s garment industry is indicative of the abrupt decline in workers’ rights and living standards since the neoliberal deindustrialisation revolution of the 1980s. The result has been the biggest squeeze on wages since the early 1800s, with pay for the average worker still lower in real terms than a decade ago. In the fifth richest economy in the world, 14 million people are living in poverty, 9 million of whom live in households with at least one person in work. Our workers need a radically fairer offer, which means raising the minimum wage to at least £10 an hour, and investing in our communities and infrastructure to aid the necessary transition to a green economy.
Trade unions are the best line of defence against workplace exploitation. I pay tribute to all trade unions, including my own, Unite, and others, including PCS, GMB and Unison, to name but a few. Yet the collective ability of workers to organise has been systematically eroded by decades of anti-trade union legislation. The latest Global Rights Index from the International Trade Union Confederation placed the UK among the worst violators of trade union rights in Europe. Forty years ago, eight in 10 workers enjoyed terms and conditions negotiated by a trade union. Today, fewer than one in four workers have that benefit. The Trade Union Act 2016 must be repealed. Trade union autonomy and sectorial collective bargaining must be restored, and the right to take industrial action, in accordance with international law, must be re-established.
One of the most nefarious downward trends in labour protections has been employers’ exploitation of the legal status of workers. We must, therefore, crack down on toxic casualisation. Research by the Trade Union Congress found that 3.7 million people—one in nine UK workers—are in insecure work, including those on zero-hours or short-term contracts, agency workers and temporary casuals, as well as those in low-paid, often bogus, self-employment. Every job should be a good job, one that provides security, dignity and a fair wage. Zero-hours contracts must be eradicated, and hours should be regulated so that each worker gets guaranteed pay for a working week. Rights are meaningless if they are not properly enforced.
The Government must urgently reverse the funding cuts to regulatory bodies, including the Health and Safety Executive and Her Majesty’s Revenue and Customs, to ensure that workers are safe and fairly paid. The Government and sections of big business argue that the mistreatment of workers is inevitable and that rights, fair play and dignity in the workplace are unacceptable costs to the bottom line, yet this free-market race to the bottom has normalised poverty, hopelessness and exploitation in our communities.
I will end by saying that the coronavirus has demonstrated the need for us to build a society built around the principles of solidarity, and in which all of us, regardless of our job, can live in dignity.
Sir Christopher Chope (in the Chair)
Because I am keen that everybody on the list should be called, I will now impose a three-minute limit. I am afraid that the self-discipline I had hoped for has not materialised so far.
Wera Hobhouse (Bath) (LD)
Thank you, Sir Christopher. As Liberal Democrat spokesperson for equalities, I want to limit my remarks to disability employment and covid.
This debate is very timely. Last week marked the 25th anniversary of the Disability Discrimination Act 1995. That landmark piece of legislation established for the first time the civil rights of disabled people in the UK, including in employment. We have made some progress since then. The disability employment gap has decreased steadily over the years, falling from 33% in 2013 to 28% in 2020 but that, of course, is not good enough, and the pandemic puts us at risk of going backwards on that trend.
New research shows that disabled people are now facing profound harms to their financial security and job prospects: 71% of disabled people who were working in March have been furloughed or had their work hours reduced. There are clear signs that this pandemic has had had a disproportionate impact on the lives of disabled people. Many of them are clinically more vulnerable to the virus itself. Recent research from the charity Leonard Cheshire suggests that covid-19 has also exacerbated employers’ negative attitude towards disabled people. That is a worrying trend. Just 33% of employers recorded that they employed a disabled person on their staff in 2020, compared with 49% in 2018; 42% of employers reported that they were discouraged from hiring disabled people because they were concerned about needing to support them, especially during the pandemic. One fifth of employers admitted that they were less likely to employ someone with a disability.
Without Government action, there is a real risk that the pandemic will throw away the UK’s progress towards equality in the workplace. A national strategy for disabled people is needed, and I hope that that will be a top priority. It is vital that such a strategy provides a clear plan for addressing the inequalities that have widened as a result of the pandemic, not least in employment.
There are opportunities for the Government to promote inclusive workplace practices. Mandatory reporting on the gender pay gap has been a game changer. It brought much-needed transparency to the inequalities faced by women in the workplace. The same principle can apply to improving equality for those with disabilities. I know that HMRC is already doing that voluntarily.
I ask the Government to consider introducing mandatory reporting for large companies on the number of disabled people they employ, as well as their disability pay gap. Covid-19 has demonstrated that flexible working and working from home are doable. Many offices are already thinking about whether to ask employees to return to the office full-time after the pandemic is over. That is a positive step and it could set a precedent that makes work culture more inclusive for those with disabilities. Flexible working is the future for many offices and workplaces. Embracing it as the culture would create real opportunities for those with a disability and would make our country the inclusive nation we want it to be.
Rachael Maskell (York Central) (Lab/Co-op)
I put on record my interest as a member of Unite and GMB. Work is so gendered, which was brought into the spotlight in May when PwC highlighted that 78% of those who had already lost their jobs due to covid were women. Today, I want to focus my remarks on the impact of covid on women at work.
We know that inequality grows, particularly for working-class women. Think about the fact that only 9% of working-class women are able to work at home, compared with 44% of professional women. We know that women are also exposed to extraordinary risks in the light of their duties and their work. More women, particularly working-class women, have had their hours reduced. In June, that reached 52% of all women. Research showed that working-class women had double the reduction in hours of professional women.
Although the virus is gendered in so many ways, it is in particular weighted against women in the workplace. We know that improvements in employment rights would improve opportunity, in particular around absence payments. Statutory sick pay is a massive issue; the fact that we do not have proper statutory sick pay has a huge impact. We also know that women carry the vast majority of caring responsibilities for children and parents, and therefore need additional support. I am, therefore, supporting campaign group Pregnant Then Screwed’s call for a parent isolation grant. We know that working parents are having to take time off for childcare and, as a result, in many cases they do not get any income at all, taking unpaid leave. A grant would be a real game changer in ensuring that women are not further discriminated against and further disadvantaged in the workplace. It would work simply for the periods that parents are having to look after an isolating child, with them being remunerated for that.
I want to highlight the plight of pregnant women. Again, we know that their rights have been curtailed, particularly in the light of increased risk for women in the third trimester of their pregnancy. Yesterday in the Chamber, we heard the difficulties of that. I ask that the Health and Safety at Work etc. Act 1974 be fully extended and provision be put in place to ensure that women in their third trimester can get full payment at home and that that should not trigger their parental leave. Finally, I want to put on record the Pregnancy and Maternity (Redundancy Protection) Bill introduced by the right hon. Member for Basingstoke (Mrs Miller); it is vital to support women in the workplace during this time, in the light of the redundancies they have experienced.
Christine Jardine (Edinburgh West) (LD)
It is a pleasure to serve under your chairmanship, Sir Christopher, and also to follow the hon. Member for York Central (Rachael Maskell). I thank the hon. Member for Paisley and Renfrewshire North (Gavin Newlands) for securing this important debate. One of the commonest ideas expressed in this crisis is that the world, the economy and our day-to-day lives are going to be different when it is over. One of the things, it seems to me, that many of us here are increasingly concerned about is the impact it will have on employment rights, which people fought for bitterly for the best part of a century. Those rights were hard won and then fiercely defended, but now they are in danger of slipping from what seemed a firm grasp but is becoming looser.
No one can deny the unexpected shock felt by our economy and the impact that covid-19 has had on many sectors, specifically, as the hon. Member said, on the airlines and the air sector in general. As the Member for Edinburgh West, I have also experienced at first hand the trauma of the many employees of Edinburgh airport, connected businesses such as Menzies Aviation and specifically British Airways. Many of BA’s employees, who are constituents, have phoned me just looking for some explanation, help and support for the trauma that they are going through as a result of what some euphemistically call “adjusted contracts” and what elsewhere has been branded, quite justifiably, “fire and rehire”.
However, it is not just British Airways that has used this crisis and used redundancy to make a mockery of the terms and conditions of staff. I have had constituents who were working from home and were then forced to take annual leave because their employers’ IT was not working. I have had people whose jobs disappeared because the company was bought and there was no mention of being TUPE-ed. There is also one section of society that we are forgetting and that is the massive gig economy and the self-employed, who have been completely excluded for 10 months from any support. That is why, as the Liberal Democrat economy spokesperson, I want to see furlough extended not to March but to June next year, until we have, by all predictions, a vaccine and we may be able to resume some sort of normalcy and people’s jobs will be protected.
As we come out of this crisis, unemployment and the fall in vacancies could be disastrous for this country. We will need to keep a needle-sharp focus, not just on our economy but on employment and rights. We must we keep at the forefront of our minds and under the scrutiny of the Government the protection of employment rights. They are not bureaucracy, they are not red tape; they are protection for all of us and our ability to keep a roof over our heads and feed our families.
Justin Madders (Ellesmere Port and Neston) (Lab)
It is a pleasure to see you in the Chair, Sir Christopher. A lot of people are self-isolating at the moment; that number could be higher if test and trace worked properly, but we still have hundreds of thousands of people who cannot attend work for two weeks, as the law requires them to isolate. However, they are doing so without any protection from detrimental treatment by their employer, which could be refusal to pay sick pay to which they are entitled, or even dismissal.
I have also heard concerns from constituents that a period of self-isolation could be used to trigger a sickness absence review, or be used as part of a process that is already under way. It is quite possible that if other members of the same household get symptoms or test positive, people might have to self-isolate on multiple occasions. I am sure we can all understand the genuine anxieties people might feel if they have to tell their employer that they are having to self-isolate for a second or third time, so why are there no workplace protections to support them in doing the right thing? The Government could state very clearly, either through guidance or regulation, that a period of self-isolation should be classed as other leave that cannot be called unauthorised leave, sickness absence or annual leave, and cannot be used as part of any disciplinary or capability process. I think that is a very simple ask of the Government.
Fire and rehire is not a new development—it has been around for as long as people have had jobs—but just because it has happened for a long time does not make it acceptable. In fact, it shows that our employment protections are as antiquated as they are inadequate. The current crisis has shone a light on the absolute imbalance of power in the employment relationship, and the way in which so many people feel exposed to the whims of their employer. That powerlessness does not just manifest itself in people losing their jobs: look at everyone on zero-hours contracts, in the gig economy or in agency work. They are literally at the company’s beck and call, so insecurity is baked into the workplace. It is little wonder so many people have a sense of helplessness, but it does not have to be this way. Job security does not have to be an impossible dream, and the first step to understanding that is looking at why rights are so weak, and often illusionary.
That illusion manifests itself in full technicolour with fire and rehire, the very existence of which causes people great concern and bewilderment that they are in this situation. Yes, they are directly employed; yes, they have been there possibly for decades; yes, their terms and conditions have remained constant throughout, and may even have been collectively negotiated by their trade union. Their job has not changed, they have performed well, and the company still makes a profit, so why are they suddenly being asked to come in and do the same job for 20% less? The answer lies in the combination of weak employment laws, opportunistic employers, and an indifferent Government. Together, those factors allow for hard-won benefits to be stripped away through a consultation period that amounts to a box-ticking exercise, followed by the inevitable slide into weakened terms and conditions, which will often make it easier for the employer to do the same thing all over again in a year or two. It is a race to the bottom that has been accelerated by coronavirus, and it is about time that race was stopped.
Tim Farron (Westmorland and Lonsdale) (LD)
It is a pleasure to serve under your chairmanship, Sir Christopher, and I pay tribute to the hon. Member for Paisley and Renfrewshire North (Gavin Newlands) for having secured this debate. Let us leap straight in on the point that was just raised by the hon. Member for Ellesmere Port and Neston (Justin Madders): the issue of asking people to self-isolate, after being traced through track and trace, is vexed when it comes up against people’s right to an income.
As in other parts of the country, Cumbria’s NHS and public health services have been incredibly successful at tracking and tracing people. Their success rate has been 98%, compared with the Government’s failed equivalent programme, which has a success rate of something like 65%. However, if a person is contacted by the NHS in Cumbria, because of the Government’s failed system, they are not able to access the grant. That is an outrage, and for the past month, Cumbria’s Director of Public Health has been raising this as an issue; so far, the Government have failed to answer it. A right to an income is surely something that should be at the top of all of our agendas for our constituents.
I also want to refer to parental leave, particularly maternity leave. When the Government were coming up with the self-employed income support scheme back in March, they put together a scheme that looked at a self-employed person’s income over the past three years. If that person had taken parental leave—most likely maternity leave—during those three years, they ended up with a reduced income. That is a real blow to people, particularly women who have taken maternity leave in that time, and it shows the Government’s lack of concern for those people who have taken time out to raise a family. On top of that, as the hon. Member for York Central (Rachael Maskell) said, many people do not feel able to, or cannot, return to work after their maternity leave, simply because childcare is not available. Many of them are not able to be furloughed; many have lost their jobs, and they form part of the 3 million people in this country who have been excluded from any kind of Government support.
Many employers in the Lake district and the Yorkshire Dales have done a tremendous job trying to support their staff, and have kept them going for as long as they could. Despite the fact that 40% of the entire workforce was on furlough at one point and we have seen a sixfold increase in unemployment in the south lakes, they nevertheless kept their employees going for as long as they felt they could, but after that short summer season at the end of August, they let their staff go.
The Government have now announced an extension of furlough after months of most Members in this room urging them to make a commitment much sooner, but they left it so late that many employers in my constituency and elsewhere let their staff go in early September. Guess what? The Government will not backdate furlough to anybody who was let go before 23 September. There will be hundreds of thousands of people in this country whose employers did their best to keep hold of them, but realised they had the choice of losing their business and losing all their other staff or losing some of their staff. They made that difficult choice. Because the Government dilly-dallied for so long over extending furlough, there are thousands in that position. The Government should bring forward the date to which furlough can be backdated to the beginning of September.
Jim Shannon (Strangford) (DUP)
I thank the hon. Member for Paisley and Renfrewshire North (Gavin Newlands). We did look forward to this debate taking place earlier on. Unfortunately, it was postponed but with the chance to return to it today.
The figures of redundancy are extraordinary and frightening for my constituency. In Strangford, despite the furlough scheme and support scheme, which cannot be sustained in the long term, there were almost 2,700 actual claimants for unemployment—1,315 higher than March this year. That is double and it does not even account for those who were furloughed as well. For those aged 18-24, there were 650 claimants compared to 335 back in March, so it is younger people in particular as well.
We are facing what may well be the greatest recession in living memory. It must be remembered that the backbone of our economy is found in the SMEs, and it is for my constituency in particular. These are dire times. People in work are so happy to be in work that there is a danger of exploitation, and we must look at and regulate how staff are treated.
I want to quickly outline the issue for airline staff, who are having terms and conditions altered and have no choice but to accept that. How could they kick up when they knew the alternative was straight-out redundancy? While we received assurances that this was not the case, I was not surprised to be asked to sign a letter to the Minister from those opposed to these grave tactics—that is what they are— and I was pleased to be a signatory to that and also to participate in this debate.
I get a British Airways or Aer Lingus flight twice a week. The staff are courteous, kind and hardworking in the face of adversity. It angers me that they are being taken advantage of when their back is against the wall— when it is unlikely that they can refuse and walk away with dignity into another job. As I outlined at the start of my speech, every sector is in difficulty.
One of my constituents sent me a letter, which said:
“It is shameful that over the past few months major employers have used mechanisms for sacking tens of thousands of workers so that they can reduce terms and conditions”,
This letter refers to
“GMB members at British Gas/Centrica and British Airways”
as well. It goes on:
“The result is a negotiation that can never be conducted in a fair and balanced way. I think we need a change in the law to stop this from happening.”
I, along with every other right-thinking decent person, am asking for urgent intervention and not only for my numerous constituents who have contacted me, but also in the name of honour and decency. We cannot allow unscrupulous shady dealings to go unanswered and we must step up to do our part for the airlines, as we do for other staff as well. We all have moral obligations, for example when companies deliberately hire people for shorter hours and do not give holiday and sick pay in proportion. It is up to us in this place to provide the legislative framework to protect the workers. These are tough times and we must support our businesses that seek to retain staff, but we cannot turn a blind eye to those who are deliberately drawing up new contracts or job descriptions. We can only come through this if we do the right thing on behalf of our workers and those people who need us to protect them, or at least to legislate to provide that protection. We can only come through this if we do the honourable thing.
Owen Thompson (Midlothian) (SNP)
It is a pleasure to serve under your chairmanship, Sir Christopher. I join others in congratulating my hon. Friend the Member for Paisley and Renfrewshire North (Gavin Newlands) on initiating this important debate. I certainly note that, as the hon. Member for Easington (Grahame Morris) said, the number of Members taking part shows the real importance of this issue. I also welcome my hon. Friend’s Bill—the Employment (Dismissal and Re-employment) Bill—and commend that to Members, as well as the work that he is doing to end the practice of firing and rehiring.
The days of people worrying for their lives when they go to work should be long gone. Gone, too, should be the days when staff have to put up with salaries that do not pay the bills and with exploitative contracts that take advantage of job insecurities. Employers have a duty to look after their staff, and it is even more important in these difficult times that workers are properly rewarded with a real living wage and working conditions that allow them a comfortable life. It was a tough slog to get the employment rights that we enjoy in the UK, and we cannot let them be one of the casualties of this crisis.
One easy step that the Government could take would be to support the private Member’s Bill of my hon. Friend the Member for Paisley and Renfrewshire North to stop firing and rehiring on less favourable terms. They could also ensure that employees understand their existing rights and the working mechanisms to ensure that employers meet their obligations.
It has been clear historically that many Conservative Members are not fans of workers’ rights, as many ex-mining communities such as those in my constituency will testify. More recently, with the Trade Union Act 2016, Conservatives did all they could to undermine trade unions and workers’ collective bargaining rights. Perhaps they prefer working practices to be a little like the way No.10 appears to operate: a wild west where following the rules and showing respect for others goes out the window.
The hon. Member for York Central (Rachel Maskell) referred to the rights of women and working mothers, on which I should like to focus in my comments. There are fears that, without action, this pandemic could set women’s employment back a generation. Unlike previous recessions, many of the sectors most devastated—retail and hospitality—are major employers of women. We know that women are more likely to be in insecure contracts, to have greater caring responsibilities and to be in a precarious position over coming months as jobs are on the line.
A joint report from Maternity Action, “Covid19: new and expectant mothers in the front line”, cites a TUC survey from June, when one in four pregnant women and new mothers surveyed had experienced unfair treatment or discrimination at work, including being singled out for redundancy or furlough. In the same month, a survey by the Office for National Statistics found that parents, at 13.6%, were almost twice as likely to report that they had been furloughed as workers without children, at 7.2%. I am grateful for the fact that the furlough has eventually been extended, but fears remain that many hundreds of thousands of furloughed jobs will be lost, with a new wave of discrimination when the scheme winds down.
Another private Member’s Bill that the Government could throw their weight behind was introduced by the right hon. Member for Basingstoke (Mrs Miller) on pregnancy and maternity protections. I certainly urge them to do so. This would be similar to the legal framework in Germany, strengthening redundancy provisions for pregnant women and new mothers and ensuring that jobs are less likely to be put unfairly at risk during maternity leave. It could be done swiftly and would benefit thousands.
Why would the Government not embrace such a cost-effective solution? In theory, extending maternity and paternity leave regulations and ensuring that a suitable alternative vacancy is offered when one is available are not without cost, but doing so has so many benefits. Women’s rights and protections when pregnant are in existing health and safety guidance, but it is worth placing that on the record because there seems to be some confusion about it in the comments of some hon. Members.
Pregnancy is not an illness: it is important that we are absolutely clear about that. The guidance, however, is often little known or understood. If pregnant employees cannot work from home, employers should undertake a risk assessment to determine what steps must be taken to make the workplace safe for them. If an employer is unable to provide a workplace that meets those requirements, a pregnant woman must be suspended on full pay.
When the UK Government gravely warned pregnant women about the dangers of the covid-19 virus, they could and should have clarified those rules. Instead, many women report being forced to take annual leave or unpaid leave or to use maternity leave early when the pandemic meant they could not safely perform their roles. Surveys have found that around half of pregnant women have had a risk assessment carried out, and equally few feel confident that their employer will, in accordance with the legislation, accommodate the outcome of the risk assessment. Surely, looking after pregnant women should be a priority of any Government or any civilised society.
The UK Government’s response to pregnant women and mothers who have been unfairly treated has been to advise them to take matters to an employment tribunal. I am delighted by this Damascene conversion to the value of employment tribunals, given that the trade unions had to drag the Government through the courts to get rid of the fees that prevented access to tribunals for those who could not afford it. Tribunals are a vital tool, but early prevention in disputes is a far better cure. So why not get the guidance right in the first place? Why not make these issues legally enforceable and put deterrents in place for bad employers? Why put all the extra stress and pressure on the employees to fight their corner and put extra pressure on a tribunal system already feeling the strain?
So far, from written questions that I have asked on these matters, very few answers have come my way and they do not offer much comfort to tax-paying workers struggling to get by while facing discriminatory practices under the cover of the current pandemic. I urge the Government to improve the commitment to employment rights, tighten up laws where necessary—we have heard a few examples today—and make sure that they really do wrap their arms around everyone by protecting them from unfair employment practices.
Andy McDonald (Middlesbrough) (Lab)
It is a pleasure to see you in the Chair, Sir Christopher. I congratulate the hon. Member for Paisley and Renfrewshire North (Gavin Newlands) and the Backbench Business Committee on securing this important debate. I declare my interest as a proud member of Unite the union.
In March the Prime Minister told people across the country that the Government would put their arms around every single worker, but what has taken place in the past eight months has been nowhere close to what he promised. Instead we have had the silent erosion of employment rights and protections without a whisper from the Government. There is no doubt that this crisis has been brutal for working people, who have been laid off and made redundant in their droves and who have seen huge falls in the wages that they take home at the end of the day. It has been a brutal awakening that the rights and protections that they are supposed to enjoy, rather than acting as bulwarks against abuse by their employers, are in reality worth little more than the paper they are written on.
One of the most fundamental workers’ rights is the right to a safe workplace, as set out in numerous pieces of legislation, and the importance of that right could not be more pronounced during this pandemic, where otherwise benign workplaces such as retail have been turned into high-risk places, with high rates of contact with members of the public putting staff at risk from coronavirus. Despite that, huge numbers of workers were told to return to work over the summer, their employers spurred on by the dwindling support and increasing limitations of the furlough scheme, without proper precautions to ensure that a safe workplace was being put in place—effectively rolling back the right to a safe workplace.
The ability to demand this return to work, and the failure to put proper protections in place, putting staff in great danger—as we have seen in the health and social care sector—are a direct result of gutting local authority resources and in particular the Health and Safety Executive, which has been left powerless to enforce the rules that it was formed to uphold, with almost £150 million in real-terms cuts between 2010 and 2018 and about 500 inspectors let go. As we have seen at British Airways and Centrica, or British Gas, unscrupulous employers have been using this crisis—as my hon. Friend the Member for Easington (Grahame Morris) said—as cover to unilaterally push through dramatic changes to employment contracts and to water down staff pay, terms and conditions. These unfair, unethical and underhand fire and rehire tactics, used by some of the largest and most profitable businesses, are essentially a legal loophole for blackmail that leaves workers worse off, as employers know full well that, in an increasingly uncertain employment market and under the threat of redundancy, workers cannot say no.
Such tactics also allow bad employers, who are happy to chop away at rights and pay or to let staff take the fall for poor business decisions and mistakes while sitting on vast financial reserves and still paying bonuses and dividends to flourish, while good employers, who care about and invest in their staff, are punished as a consequence. These are the last things that people in our economy need in the middle of a recession. The Government should be helping businesses to boost wages, improve productivity and invest in their work force, not to shed staff and cut wages and employment rights. While they are at it, they could end the scourge of zero-hours contracts and insecure work.
Just look at Optare in North Yorkshire, where a last-minute concession was drawn from the Government to ensure that workers had the right to picket, as my hon. Friend the Member for Birkenhead (Mick Whitley) said. Look at Ark Academy school trust, whose cleaning contractor, Ridge Crest, told the reps from United Voices of the World to drop their union and they would get PPE and the London living wage. Look at the Leicester garment workers, knocking out fashion for Boohoo at record speed, having their pay withheld and otherwise being paid half the national minimum wage. Where is the enforcement from the Government?
Then there are workers whose rights have been breached and who have been put at risk by their employer over this period, but who actually know the rights and protections that the law affords them. They still have to overcome the hurdles that are put in place by an enormous backlog in the employment tribunal system. The figures have soared to over 450,000—an increase of almost 50%. Even if a worker has been forced to return to work in an unsafe environment, has had their wages and conditions cut or has been unfairly dismissed, they are not likely to get justice for the best part of two years, if not longer.
Justice for such basic matters that takes two years to be served is not justice. Rights that cannot be enforced are not rights at all; they are just gestures of good will that employers can readily ignore on a whim. Vital and fundamental employment rights that were built over years of what were extraordinary struggles, often in the face of huge adversity, have been demoted to little more than platitudes, rather than real, meaningful and enforceable rules and protections.
While this takes place, the Government look on. Although they have set out guidance for workplaces to be made covid-secure, they have failed to make it clear that the guidance does not circumvent or replace the statutory protections that are currently in place, thereby reminding employers of their legal obligations towards the health and wellbeing of their staff, even within the offices of the Department for Business, Energy and Industrial Strategy.
The Government have refused to back the Health and Safety Executive and to give it the teeth it needs to hold bad employers to account for their unsafe workplaces, putting staff in danger from covid by returning only a measly £14 million out of what has been a £150 million cut since the last Labour Government. It is simply illogical that the Government brought in new powers to restrain citizens from putting others at risk in the public sphere, while at the same time neglecting the enforcement of workplace protections, thereby allowing employers to flout the law in the workplaces they control and to put at risk the health and safety of workers and, in turn, the wider public.
In discharging his duty to keep safe all who work in this place, the conduct of the Leader of the House has been woeful and reckless in the extreme. On the outrageous tactic of firing and rehiring, the Government’s record is no better. They tell us that they expect all employers to treat their employees fairly and to follow the rules, and they have made it clear that they regret some of the decisions that have been taken. The Prime Minister had the audacity to tell BA staff in an email that employers should not be removing staff or changing terms and conditions, yet the Government have still allowed employers such as BA to take the taxpayer’s money and to lay off huge numbers of staff without consequences. They have refused to commit to stand up against such exploitation by bad businesses and to legislate to ban this tactic for good, as the Leader of the Opposition has rightly called for them to do.
Such outright indifference to the struggle of workers to keep their jobs, wages, rights and conditions takes place against a backdrop of the Government undermining the strength and bargaining power of trade unions that are fighting to protect jobs. However, we should not expect anything less from the same Government who sought to curtail the ability of working people to do that, though imposing employment fees.
President-elect Joe Biden said in his campaign:
“Today, however, there’s a war on organising, collective bargaining, unions, and workers. It’s been raging for decades, and it’s getting worse with Donald Trump in the White House.”
That is exactly the position in the UK after 10 years of Tory rule. After a decade of brutal austerity cuts by the Government, they have undermined protection for people at work and increased the risk to their health, safety and welfare. However, the pandemic has exposed just how much damage austerity has done, and how far these rights have been eroded.
The excuses offered by the Minister will be that such concerns are commercial issues—he has said it before—and that they are to be resolved by employers and workers. That is not good enough, and it shows just how far removed from reality the Government have become. It also demonstrates just how inadequate and unenforceable our current employment rights and protections are, and why, more than ever, we need a new employment rights settlement that can properly protect working people across the country.
I urge the Minister to confirm that the Government will never again put obstacles in the way of working people upholding their rights and seeking redress, and to guarantee that the protections afforded to working people will be strengthened in the employment Bill that has yet to appear before Parliament, a year after being promised. Their boast was that the employment Bill would
“Protect and enhance workers’ rights as the UK leaves the EU, making Britain the best place in the world to work.”
Well, let’s see it.
The Parliamentary Under-Secretary of State for Business, Energy and Industrial Strategy (Paul Scully)
It is a pleasure to serve under your chairmanship, Sir Christopher. Like everyone else, I congratulate the hon. Member for Paisley and Renfrewshire North (Gavin Newlands) on securing today’s important debate. This is a really important matter—a collective matter—and we have heard a number of excellent contributions from across the Chamber detailing individual issues within the overall, encompassing issue of workers’ rights.
Clearly, covid-19 has had a massive effect; it reaches deep into our economy and society. It has required us, as a country, to wrap our arms around the economy and around businesses and employees as well. The Government have acted decisively to provide an unprecedented package of support to protect people’s livelihoods.
Grahame Morris
I appreciate that the Minister is under siege, so I will just ask a simple question. If we are truly wrapping our arms around workers and employees, will he take steps to ensure that the awful practice of fire and rehire is outlawed, because it is unnecessary and is having an appalling effect?
Paul Scully
The reason why I am limiting interventions is that I want to leave the hon. Member for Paisley and Renfrewshire North time at the end of the debate to sum up. I will clearly cover fire and rehire in a second.
Before doing so, I want to look at just some of the ways in which we have wrapped our arms around the economy and around businesses and employees. We have done that through the furlough scheme, which has allowed 1.2 million employers across the UK to furlough 9.6 million jobs. As we have heard, that scheme has been extended to the spring. With regard to the self-employment income support scheme, there is an increase under the third instalment of the grant, covering November to January.
It is also important that we help to get people, and particularly young people, back into work; we have heard about that from other hon. Members today. That is why, as we have announced, more than 19,000 jobs have been created so far through the kickstarter scheme, helping young people from across the country into the workplace and into a variety of sectors. In addition, 1.3 million businesses have had a Government-guaranteed loan to support their cash flow through the British Business Bank. That is delivering £8 billion to more than 98,000 SMEs—something close to my heart.
The hon. Gentleman talked about fire and rehire tactics. A key aspect of building back better is to continue championing a flexible and dynamic labour market, which gives employers the confidence to retain and hire staff, while maintaining a framework that protects individuals. For those who, sadly, lose their jobs, clear laws about unfair dismissal will ensure that their rights are protected. We have tightened the protections throughout the covid-19 pandemic. For example, we have made sure that statutory redundancy pay, statutory notice pay and unfair dismissal compensation are based on a furloughed employee’s normal pay rather than furlough pay. People who, sadly, are made redundant will receive the same level of financial compensation as they would if they had not been furloughed.
To understand better the issues in relation to fire and rehire, the Government are working with ACAS, and we are bringing together a number of roundtables with businesses, employee representatives and other bodies to discuss these issues in more detail. The House should be left in no doubt that this Government will always continue to stand behind workers and to stamp out unscrupulous practices where they occur.
We have responded swiftly and effectively to the pandemic.
Paul Scully
I will come back to some of the hon. Gentleman’s points, but, yes, I will give way now.
Gavin Newlands
I am grateful, and I will keep my intervention brief. Can the Minister confirm, if he is having roundtable discussions about the practice of firing and rehiring, whether something might be brought forward in the employment Bill, when that Bill is eventually brought forward? If that is the case, will he work with me and others across the House to ensure that those provisions are good enough for the workers of this country?
Paul Scully
I will gladly work with the hon. Gentleman in continuing to discuss workers’ rights in this area and other areas. It is important that the employment Bill, when it does come, not only extends workers’ rights in the way that we talked about in our manifesto, but does so in a way that fully reflects the situation we are going through and the lessons learned from the pandemic.
Some hon. Members talked about pregnancy and maternity discrimination. That is not acceptable under any circumstances. We have continued to remind employers of their existing responsibilities under current legislation. Equalities legislation requires that employers must not discriminate in the workplace based on gender, pregnancy or maternity. Following the Government’s consultation in 2019, we are extending the redundancy protection period afforded to mothers on maternity leave to six months, once the new mother has returned to work, and to those taking adoption leave and shared parental leave.
We have taken steps to support new parents by passing emergency legislation that ensures that parents who are furloughed during the period, and are determined to be entitled to maternity, adoption and other family related statutory pay, do not lose out.
Rachael Maskell
Will the Minister give greater clarity about what rights women in the third trimester of pregnancy have to protect themselves and their children?
Paul Scully
I am happy to write to the hon. Lady fully to outline those details. The legislation entitles parents to a rate of pay based on their normal earnings, not their furlough pay.
Employment rights enforcement is as important as ever during this pandemic. We already spend £33 million a year on state enforcement of employment rights. Enforcement bodies continue to protect vulnerable workers and have worked with businesses to promote compliance throughout the pandemic. As has been mentioned, we have committed to go further and establish a single enforcement body for employment rights, to better protect vulnerable workers and create a level playing field for the majority of employers that comply with the law.
Paul Scully
I will not because I want to leave time for the hon. Member for Paisley and Renfrewshire North to respond.
The Government have acted decisively to protect the health and safety of workers who cannot work from home during the pandemic, including by providing tailored guidance on social distancing in the workplace to enable sectors to reopen and, where exemptions apply, to trade through the new English national restrictions. To date, the guides have been viewed over 3 million times. Where the Health and Safety Executive identifies employers that are not taking action to comply with the relevant public health legislation and guidance to control public health risks, it will consider taking a range of actions to improve the control of workplace risks.
The hon. Member for Paisley and Renfrewshire North made a powerful argument about fire and rehire. When I spoke in the Chamber recently, I was absolutely clear that it is not acceptable to use that as a bargaining or negotiating tactic. When I talked about flexibility for firing people, I was not talking about adding any extra power to Goliath over David. Indeed, it is clear that we must have a level playing field.
Small businesses need to be able to thrive, but when employees in big businesses are concerned about collective bargaining and the power of the large employers, that shows that we need to strengthen workers’ rights and not weaken them in any way. We will continue to work with hon. Members across the House. Any sensible employer should know that investing in and working with their people is the biggest strength that they have. I say that as someone who ran small businesses for 25 years.
We have talked about bereavement. I am glad that we introduced the right to bereavement pay for people who have lost a child. There is day-one right for unpaid leave to respond to other forms of bereavement.
The Low Pay Commission recommends the national minimum wage and the national living wage to Government. We will always respond to the collective view of that body, which encompasses union, independent and employer representation, rather than just taking a Government view, to come up with what is best for the economy, but not on the basis of the lowest paid in this country. We want to make sure we include our manifesto commitment to allow people to benefit as we level the playing field for people aged 23-plus as well.
The hon. Member for Blaydon (Liz Twist) talked about retailer abuse, on which USDAW, with whom I have had regular discussions, has had a good campaign. The retailers themselves have raised issues most recently about the closure of pubs and restaurants. In Nottinghamshire, for example, there has been an increase in reported abuse of retailers around the sale of alcohol, so we need to reflect and act on that quickly.
We have heard about zero-hours contracts from a few speakers. Some 3.2% of workers are on zero-hours contracts, and they work an average of 25 hours a week. The Taylor review recommended not scrapping zero-hours contracts. We have got rid of exclusivity clauses in zero-hours contracts, but he said that banning such contracts
“would negatively impact…more people than it helped.”
To conclude, I thank the hon. Member for Paisley and Renfrewshire North once again for securing this important debate. I want to reassure workers across the country that we will continue to stand shoulder to shoulder with them throughout the crisis as we build back better. As soon as parliamentary time allows, we will introduce an employment Bill to reflect everything that we have learnt, and we will deliver the Government’s manifesto commitments. The legislation will make workplaces fairer by providing better support for working families and new protections for those in low-paid work, and will encourage flexible working. It will balance the needs of both employers and workers, ensuring that everybody benefits from flexibility. It will also create a new enforcement body for labour market abuses and give greater protections to vulnerable workers.
The hon. Member for Leicester East (Claudia Webbe) talked about the situation in Leicester, which is so important for us all. The taskforce set up in Leicester has visited 140 premises. There are a significant number of live investigations, and we want to do more to make sure we get to the bottom of any reports of abuse in Leicester and beyond. The Government have a proud history of protecting and enhancing workers’ rights. We are committed to making the UK the best place in the world in which to work.
Gavin Newlands
I thank the Backbench Business Committee for allowing today’s debate. As a former member of that Committee, I could feel the virtual slap on the wrist from the hon. Member for Gateshead (Ian Mearns), who is hundreds of miles away. I am grateful to Members for their attendance. The debate has been very well attended. It is a shame that the only Government Back Bencher was not able to speak this morning. I am grateful to Members’ support for the many issues discussed this morning, including the support for action on firing and rehiring.
The Minister pointed out that he had spent many years running small businesses. I also ran businesses and spent time as a business analyst, so I understand and support the need for flexibility, but that should not be at the expense of workers’ rights. There has to be an appropriate balance, and we do not have that balance in this country at this point in time. Although I remain perhaps naively hopeful for the employment Bill, if the Government continue to refuse to act, will they please devolve employment law to Edinburgh, Cardiff and Belfast? The Prime Minister seems to have dug himself a rather large hole on devolution at the moment, which is grist to the mill for the cause of Scottish independence. I bring that up for the benefit of the hon. Member for Edinburgh West (Christine Jardine), because she is a big, big fan of independence. [Laughter.]
I implore the Minister, as I said in my intervention, to listen and work with Members across the House when shaping the employment Bill. That work should include the abolition of firing and rehiring, and making sure we have appropriate protections for all workers in the United Kingdom. I thank hon. Members again, and I thank you, Sir Christopher.
Question put and agreed to.
Resolved,
That this House has considered the covid-19 outbreak and employment rights.
Disabled Access: Leisure Facilities
(4 years ago)
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Siobhan Baillie (Stroud) (Con)
I beg to move,
That this House has considered disabled access at leisure facilities.
It is a pleasure to be here under your chairmanship, Sir Christopher. I am delighted to have the opportunity to make the case for fairer inclusion for disabled children at leisure facilities, and particularly theme parks. We are here to talk about Sebby, a very brave little boy, who suffered a horrible experience on what should have been a happy day. Yet rather than feel defeated, he and his family have chosen to fight to stop other children going through the same thing. Our petition for fairer inclusion for disabled children at theme parks has more than 26,000 signatures. In a year dominated by the global covid pandemic, which has certainly made this place much quieter, the high number of signatures, and media interest from around the country, shows the strength of feeling about this issue.
Sebastian, or Sebby, is six years old. I have spent time with Sebby and his sister. They are warm, happy and engaging children, who brought their own toys to calm down my screaming little baby when she was crying at our meeting. Yet Sebby has been through more in his short life than most of us in this Chamber put together. He is disabled with gross motor delay, with symptoms that are shared with cerebral palsy. He has had spinal surgery and double hip replacements, and he undergoes regular intensive therapy to improve his mobility. He uses an electric wheelchair and sometimes crutches. I urge colleagues to look up his Facebook page, “Sebby’s Adventure”. It is heartwarming, but they will also see his extensive work for often painful physiotherapy, and the amount of effort that he and his family are putting in, to improve his mobility. They impress me all the time.
It is with this brave child in mind that we think about looking forward to going to a theme park—a very simple thing. Indeed, that visit to a theme park was promised to get him through a number of tough surgeries in hospital.
Jim Shannon (Strangford) (DUP)
I thank the hon. Lady for bringing this debate to Westminster Hall. Perhaps I may quickly mention the case of one of my constituents, who is totally disabled—born disabled—and needs a wheelchair to get about. He asked the council to provide wheelchair football for him and a group of people. The council was hesitant initially but then responded very positively. That did two things: it improved his physical abilities and opportunities, but it also improved his mental wellbeing. Does the hon. Lady feel that the issue is not just physical but mental wellbeing?
Siobhan Baillie
That is absolutely key. This is not just about physical but about mental wellbeing. Such children and families are fighting and challenging all the time, and have to make their voices heard. Small acts of kindness or small changes to policy can make all the difference for mental and physical wellbeing.
In September 2019, Sebby, who was then five years old, entered Legoland looking forward to going on the Ninjago ride. Sebby’s parents had engaged with Legoland for months before to arrange the correct pass. They let the park know about Sebby’s disabilities and provided multiple items of the proof required to show that Sebby is disabled. The Ninjago ride that he wanted to go on is for trainee Ninjas—I am sure we all want to achieve trainee Ninja standards—because it was clear that it could be accessed by a wheelchair lift.
So far, so good, I can hear Members saying, but unfortunately not. As Sebby and his family got to the ride, a member of staff awkwardly intervened to say that he needed to show that he could walk before going on a ride. Other members of staff then joined in the discussion and they decided between them that he needed to show that he could take three steps, holding on to one parent with one hand.
This all took place in front of a busy queue of people. Anybody who has queued at theme parks knows that they are not the most harmonious of places, and Sebby was forced with considerable discomfort to take his three steps. He just about managed it and sat down on the ride. Despite this action, the ride manager then inexplicably required him to do the steps all over again. This drew more attention from people in the queue and Sebby was really unset. His mum described the whole episode as humiliating for him. Sebby—aged five, remember—was crestfallen and asked his mum and dad why anybody would ask someone disabled to walk. He said: “It was so hard and it upset me”.
Not wanting to ruin the day, his parents were positive, but they were both shocked and distressed. They then encountered the same problem on another ride, where Sebby was told he needed to walk again. Eventually, in order to avoid that problem, at other times Sebby left his wheelchair outside the ride and went in on his parents’ shoulders so staff could not tell he was in a wheelchair, and he was not challenged any more.
Sebby’s family were informed that he needed to walk the three steps as there was a short staircase that would be used in case of an evacuation. However, it is clear to Sebby’s mum that the evacuation could be adjusted with a ramp. The family has also seen the resort accessibility guide, which they believe shows that about 80% of rides are inaccessible. Under ride restrictions, the guide sets out the requirement to walk unaided for not just three steps but at least 10 metres,
“without the assistance of a mobility aid or a person to access the ride unit, which may include navigating stairs…In the event of an emergency, you will be required to walk down up to 80 stairs and walk sometimes over an uneven surface without assistance.”
Wheelchair users would, of course, therefore be challenged in respect of both access to rides and evacuation from them. Sebby’s family believe this is discriminatory.
What can be done? My hon. Friend the Minister may feel there is no need for Parliament to investigate this matter nor act, as legislation is already in place. He is right, but only to a point. Pursuant to section 6 of the Equality Act 2010, Sebby is disabled and his disability is a protected characteristic. Under section 29 of the Equality Act, theme parks, such as Legoland, are service providers. As a result, they are obliged to make reasonable adjustments to improve access so that disabled customers of all ages are not placed at a substantial disadvantage compared with non-disabled customers.
The reasonable adjustment duty is an anticipatory duty. This means that there is an expectation that businesses, including theme parks, should anticipate the reasonable adjustments that customers with disabilities may require. This serious and well-established legislation, passed more than 10 years ago, did not protect Sebby or improve his experience that day, nor is it working elsewhere.
Reading through the heart-breaking stories from other families around the country made Sebby’s mum completely determined to take action. They certainly made me very determined to make some changes in this area. This is not just about Legoland. It is clear that many other leisure parks need to make improvements. Before I read out some of the stories from other families, please note that I have not spoken to any of the parents mentioned. They have sent comments on social media and in response to the petition. I am willing to get in touch with them if necessary and welcome hearing from any of the companies mentioned. I think it is important to say that upfront.
I will read a few comments, so that we can see what is happening around the country. Ellen said, “My sister Abie has cerebral palsy and I have cried at Alton Towers before, when we had a problem getting on a ride. Don’t get me wrong, some places are great, but some just make everything a challenge.”
Jessica said, “I had a similar experience with a girl I care for, who is in a wheelchair, at Blackpool pleasure beach. They turned around in a crowded line and shouted, ‘Oh, you can’t walk well. The only rides that you can go on are in Nickelodeon land.’ This made me so angry. And yes, I did cause a scene, because nobody should be treated like that. They need to make these rides more accessible for wheelchair users so they do not always have to miss out.”
Chris said, “We had a similar at Thorpe Park in the disabled parking area. They would not believe my brother-in-law was disabled until he took off his false leg and waved it at them.”
Kate said, “My son was five. We only wanted to go on the small rides. A woman said that if he couldn’t walk, he couldn’t go in—bearing in mind, someone in front of us was holding a baby under one, who couldn’t walk either. They stood in front of us and told my son that he could not walk. He was paralysed by a drink-driver and he didn’t really understand what was wrong with him at that point. She had no damn right to say that, but we sucked it up for my son’s sake, only for this to happen at every ride. I sobbed so much that day that when I phoned to complain I couldn’t even get my words out.”
Anita said, “We had a similar experience at Chessington for our son, with him being made to get off a ride. He was so humiliated that he never wants to go to a theme park again.” She added lots of angry emojis.
Claire said, “Every ride has to step up, down or both—no lifts or options for anyone in a wheelchair to get even to a ride station on many occasions. If you spend £16 million on rollercoasters, then surely you can arrange for rides to be accessible for all.” I have pages and pages of this stuff. It is just awful.
Gemma said, “My little boy, aged 10, has cerebral palsy and autism. He is a real adrenaline junky. We visited Alton Towers a few weeks ago and had the same problem. We were supposed to be going to Disney, but due to covid we obviously couldn’t. I felt heartbroken seeing him look at all of the big rides and being unable to access them. In Florida, it isn’t a problem.”
Donna said, “My son is neurodiverse. I was told by a member of staff that he didn’t look disabled and, if he was, why would I come to a place like this?”
Katie said, “A very similar thing happened to us with my daughter at Legoland in London. They let her get on rides, then humiliated her in front of everyone by telling her to get off and she only has one leg. We were not told about any of this at customer services. She was nearly nine. She loves rides and always has. We were all so angry. She was living a perfectly normal life, then got cancer and had to have an amputation. It is so unfair. In this day and age, they should be able to make more things accessible for disability.” As I said, I can provide copies of those comments if necessary.
It is worth noting that a number of the families have mentioned that Disney parks in America and around the world are incredibly inclusive and have got this stuff right, so I do think it is achievable.
Legoland wrote to me last night, saying, “We recognise the importance of issues such as these being subject to public scrutiny. That is why we welcome the Westminster Hall debate that you have secured and hope that not only will it put these issues under the spotlight but also provide the Government with an opportunity to set out how it can work with the industry to support continual improvement to provision, support and access for disabled guests.” Legoland explained that since Sebby’s family reported these matters, it has created an illustrated guide to help guests understand step-by-step ride evacuation, and it can also create bespoke plans for families. Legoland has engaged in further staff training specifically to address ride restrictions and guest communication of ride evacuation processes. It has also made other changes in the last few years. I am happy to make this letter available to anyone who is interested. I have passed a copy to the Minister.
This was never about one company. As we have heard, there are theme parks around the country that should look to their policies and to the law. Theme parks are also an excellent source of fun. I enjoy them myself, as do many people, and they are an integral part of our tourism industry. However, brave children already battling disabilities should not be made to feel different or be excluded from leisure parks and rides. Parents of disabled children should not always have to fight, challenge and complain. The majority of those parents will not have access to legal advice and will not always understand their rights and what steps to take. I therefore ask my hon. Friend the Minister to use his experience to help us consider ways that we in this place can assist children like Sebby.
Leisure parks should not be able to set policies that effectively undermine a disabled child’s being able to use a ride that claims to be inclusive. Families should not have the surprise of a walking test on arrival, having previously been led to believe that the park is inclusive. It is unclear what training staff in the parks have had to understand policies and legislation and how they can help disabled people. The Ninjago ride is relatively new, having been built in 2017. I want to ensure that theme park providers are required to procure and commission new rides that are completely inclusive for disabled people. There should be no excuses.
I therefore respectfully request that the Minister arranges a stakeholder meeting, along with a Minister from the Department for Digital, Culture, Media and Sport and the disability Minister from the Department for Work and Pensions. I also request that he commits to reviewing any codes of practice. I am open to other ideas on how we can make improvements.
The Parliamentary Under-Secretary of State for Digital, Culture, Media and Sport (Nigel Huddleston)
It is a pleasure to serve under your chairmanship, Sir Christopher. I congratulate my hon. Friend the Member for Stroud (Siobhan Baillie) on securing the debate. She raises an important issue, following a disturbing experience of one of her constituents at a leading tourist attraction. It does not surprise me at all that she raises this issue with the compassion and professionalism that her constituents have come to expect from their excellent Member of Parliament. I will briefly respond to the issue raised before moving on to talk in more general terms about what the Government are doing in this area.
The specific case raised by my hon. Friend was a very unfortunate incident, and I sympathise with her constituents, the 26,000 people who signed the petition and the families who have written to her to articulate their concerning cases and experiences. I understand that Merlin, which owns Legoland and many other visitor attractions in the UK and around the world, has been in contact with the family. My hon. Friend will be aware that I am unable to discuss this particular incident or the specifics of the case in detail. However, my officials have also been in contact with Merlin, and I understand that it is looking into further operational changes, including staff training, which is so important to the visitor experience and the overall visitor experience for guests with disabilities. I am glad that it is also focusing on accessibility issues more broadly across its attractions, and I appreciate that it has also written to my hon. Friend directly.
My hon. Friend will be aware that, as the tourism Minister, I do not have direct responsibility for disability discrimination law. Ultimately, disability discrimination is governed by the Equality Act 2010 and is the responsibility of the Government Equalities Office, so I hope she accepts that I may not be able to give her complete chapter and verse on all the legal particulars of the case she raises, but I hope I can give a reasonably detailed response. The Equality Act requires service providers, including tourist attractions such as theme parks, to make “reasonable adjustments” to improve access for disabled customers of all ages. Fundamentally, disabled customers should not be placed at a substantial disadvantage to non-disabled customers. Ultimately, the question of whether there has been a failure to comply with the Act hinges on what does or does not constitute a “reasonable adjustment.”
The Equality Advisory and Support Service can be contacted—via its website, telephone or textphone—by anyone who believes that they or their children have been discriminated against during the provision of services, and it can contact a service provider on the customer’s behalf to discuss any particular concerns raised. It also liaises with the Equality and Human Rights Commission, which has powers to enforce the provisions of the Equality Act. I am happy to take this up in writing with the relevant Equalities Minister if my hon. Friend would like a more detailed response.
In the meantime, I will set out more broadly what the Government have done and are doing to make tourism and leisure more accessible. In 2019 we published the tourism sector deal, which set out an ambition to make the UK the most accessible destination in Europe by 2025. There were several reasons we wanted to pursue that goal. First, and most importantly, it is simply the right thing to do. Our amazing visitor economy—attractions, accommodation and transport—should be open to everyone. Secondly, it makes business and economic sense. According to Visit Britain, 43,000 British adults with a disability did not take a domestic holiday in 2017, when figures were last available. If they did take a domestic holiday, that would equate to a £117 million boost to the British economy. Thirdly, we have an ageing population. Projections indicate that in 50 years’ time there will be an additional 8.6 million people aged 65 and over in the UK. We must ensure that our tourism sector is fully developed to take account of the needs of those older tourists, many of whom will have access requirements, even if they do not consider themselves to be disabled.
The fact that we made that commitment does not mean that we are not already undertaking action to make the UK’s tourism offering more accessible. For example, VisitEngland has a dedicated web portal, providing tailored business advice to tourism businesses. Among other things, that includes detailed guidance on how businesses can welcome people with autism, dementia or hearing loss. I know that the tourist boards of the devolved Administrations are similarly engaging on those issues. VisitEngland has also ensured that its promotional and marketing activities are inclusive. For example, its “Escape the Everyday” campaign—it is currently on hold due to national restrictions, but we expect it to be revived shortly—has worked in partnership with Channel 4 to launch the “Mission Accessible” series, which follows comedian Rosie Jones as she participates in activities from the perspective of a disabled person with accessibility requirements.
In the Budget earlier this year, my right hon. Friend the Chancellor of the Exchequer announced a £30 million Changing Places fund to increase the provision of changing places and toilets in public buildings. Those are just a few examples. Furthermore, I know that many businesses in the private sector also provide excellent services to disabled customers. There are some standout examples, such as Eureka! The National Children’s Museum in Halifax and the Titanic exhibition in Belfast.
Jim Shannon
The hon. Member for Stroud (Siobhan Baillie) mentioned Disney World and Universal Studios in Florida as two examples where they enable profoundly disabled children in wheelchairs to travel. I have seen that when I have been there. Has the Minister had the opportunity at short notice to ascertain whether we can do that? If they can do it in America, we can do it here.
Nigel Huddleston
I thank the hon. Gentleman for his intervention. Prior to becoming a Member of Parliament, I worked in the tourism, hospitality and leisure sector, working with theme parks around the world, including the major theme park operators in the US and elsewhere.
There are leading global best practices and, to be fair, we have some in the UK. We should not belittle the progress that has been made, but we see with incidents, such as those mentioned by my hon. Friend the Member for Stroud, that we have further progress to make. We all need to learn from the best practices and there are outstanding examples throughout the world that we should learn from. Here on our own shores, with Halifax and the Belfast Titanic exhibition, we do already have some fantastic examples, but it is not consistent and it is not everywhere.
I know that many businesses wish to make further progress. There are also many charities, social enterprises and not-for-profit organisations doing great work in the area as well, such as Nimbus Disability and the Family Holiday Association. Despite all that activity, there is more to do and I am keen to look at the issue of accessible tourism in more detail. I will raise the issue directly with Merlin, the Association of Leading Visitor Attractions and other relevant tourism bodies, which I meet regularly as part of the Tourism Industry Council. I will be happy to facilitate further meetings with those bodies with my hon. Friend directly.
As we make further arrangements to make venues, attractions and other sites, such as sports stadiums, covid-secure, it is also important to ensure that they are accessible for all. I know that the sports sector is considering how to improve accessibility in sports stadiums, which was the topic of a recent report by the Digital, Culture, Media and Sport Committee when I sat on it.
The Government’s ambition is to ensure that we all work towards an even more accessible tourism and leisure industry. As I said, the sector itself and the companies involved also realise their responsibilities in this area. Their purpose is to bring joy to people and families. We need to ensure that everybody is included in that. Although great strides have been made, there is still much more to do. I look forward to playing my part in ensuring that happens.
Question put and agreed to.
International Fund for Israeli-Palestinian Peace
(4 years ago)
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Clive Efford (in the Chair)
I do not intend to read out all the instructions because there are not so many of us in the Room that we are over-spilling the horseshoe. Please clean your microphones and the area around them before and after use, and note the access and exit doors. We circulate around the Room. You can speak only from the horseshoe. I call Catherine McKinnell.
Catherine McKinnell (Newcastle upon Tyne North) (Lab)
I beg to move,
That this House has considered UK support for an international fund for Israeli-Palestinian peace.
It is an honour, Mr Efford, to serve under your chairmanship. I am pleased to have secured this debate as a recently appointed chair of Labour Friends of Israel and a member of Labour Friends of Palestine and the Middle East. During this very challenging period that we are living through, this debate today could not be more timely. The impending departure of the Trump Administration in January will provide an opportunity to reassert international consensus in favour of a two-state solution to the tragic conflict between Israel and the Palestinians. Britain should seize that opportunity by supporting the establishment of an international fund for Israeli-Palestinian peace.
The obstacles to a two-state solution are well known: settlement building by the Israeli Government, which threatens both the viability of the Palestinian state and, over the long term, the democratic character of the state of Israel itself; the actions of the Palestinian Authority, for example through its school curriculum, which threatened to instil hatred and violence in another generation of young people; and the refusal of terrorist groups such as Hamas, Islamic Jihad and Hezbollah to accept Israel’s right to exist. The prospect of a two-state solution is threatened, too, by the growing belief among both the Israeli and Palestinian public that, even if desirable, it is no longer possible. Most worryingly, support for a two-state solution is weakest among Israelis and Palestinians under the age of 30.
Over the past 25 years, the high hopes of Oslo have given way to fear, mistrust and pessimism, and that pessimism is understandable. It is more than six years since the last serious and substantive effort to restart the peace process. Ultimately, the international community can facilitate a two-state solution, but it cannot impose it. Only direct negotiations between Israel and the Palestinian Authority, which will inevitably involve painful compromises on both sides, can bring it about. We should not, however, see the current hiatus and barriers to a two-state solution as a cause for inactivity and passivity. Instead, we should think creatively and boldly about how we can best foster an environment in which peace negotiations and a two-state solution might resume and succeed. We should consider how any future settlement can best be sustained. Although the two conflicts are very different in both their causes and their character, the example of Northern Ireland provides important lessons.
In the mid-1980s, during the darkest days of the troubles, when the prospects for peace and an end to violence seemed so distant, the International Fund for Ireland was established. Over the past three decades it has invested more than £700 million in peace-building work, bringing together nationalist and Unionist communities in more than 5,800 co-existence projects. That investment provided the vital civic society foundations that underpinned the drive towards peace in the 1990s. It provided widespread popular support for the Good Friday agreement, and then helped to sustain it through the many challenges that it has faced in the subsequent years. Northern Ireland’s example teaches us that it is never too early to begin investing in and building constituencies for peace. In short, peace building is a vital prerequisite to peace making.
Since the advent of Oslo, a plethora of grassroots groups that bring Israelis and Palestinians together have sprung up in a wide variety of fields—sports clubs for children and young people, as well as cultural interface and tech and environmental projects. There is now a strong evidence base from both academic research and government evaluations to suggest that such projects work. A 2019 academic study carried out for USAID—the United States Agency for International Development—which evaluated four programmes in which the US had invested found that, three to five years after their involvement, the project participants continued to hold positive feelings about those from the “other” side of the divide, had an increased belief that peace was possible and reported that their perceptions had been altered by the programme. That study reinforced an earlier USAID evaluation that suggested that those participating in people-to-people work had higher levels of trust and co-operation, more conflict resolution values and fewer feelings of aggression and loneliness.
USAID studies are supported by the findings of a 2017 report by Ned Lazarus, a professor at George Washington university whose work drew on 20 years of evaluation data and extensive field work. It found that peacebuilding projects create peacebuilders and constituencies for peace, change attitudes and create empathy and trust between the two peoples. For example, nearly one fifth of participants in a programme by the NGO Seeds of Peace went on to dedicate their careers to peace-building work, and 90% of participants in a Near East Foundation project said that they trusted the other community more after being on the programme. A programme led by Parents Circle-Families Forum found that 80% of participants were more willing to work for peace and 71% felt more trust and empathy towards the other community.
Despite widespread and correct recognition, and the importance of laying the economic foundations for peace, such civic society work has too often gone unacknowledged by the international community and it has suffered from huge under-investment. Indeed, thanks in part to cuts by the Trump Administration, international investment in people-to-people work has fallen since 2017 from an already pitiful £37 million a year to £26 million a year now.
An international fund for Israeli-Palestinian peace would provide that much-needed focus and investment to enable co-existence projects to operate at scale and to amplify their impact. Designed by the Alliance for Middle East Peace, a coalition of more than 90 Palestinian and Israeli grassroots organisations, the fund would seek to leverage and increase public and private contributions funding joint economic development and civic society projects that promote peace, co-existence and reconciliation between the two peoples. It would be an independent organisation, supported by public and private donors, and it explicitly does not seek to replace any support that would otherwise be provided either directly to the Palestinian Authority or to Israel. Its goal is ambitious—to raise levels of investment nearly tenfold to $200 million a year. Those contributions would come from the US, Europe and the rest of the international community, including the Arab world, and the private sector.
I commend Labour Friends of Israel for their tireless campaigning, which stretches back nearly a decade, to increase UK funding on co-existence and their work over the past five years in support of an international fund. Indeed, nearly four years ago I was delighted to join a cross-party group of sponsors who backed a Bill presented by the former Member for Enfield North, Joan Ryan, which called on the Government to promote the international fund for Israeli-Palestinian peace. Televised campaigning persuaded the Government in 2017 to establish a new three-year programme—People for Peaceful Change—which invested £3 million in co-existence work. It also succeeded in securing a commitment from the Government in 2018 to support the international fund, making the UK the first country to endorse this concept.
Sadly, however, the Government have allowed the People for Peaceful Change programme to lapse and with it the UK’s investment in peacebuilding work in Israel and Palestine. The Government have also failed to follow up on their commitment to support an international fund, despite positive developments in the US, where the Middle East Partnership for Peace Act is expected to become law at the end of this year. This legislation, which passed the House of Representatives in July and is now progressing through the Senate, has strong bipartisan support and will establish a middle east partnership for peace fund. The fund will provide $110 million over the next five years for peacebuilding projects, with a new joint investment for peace initiative providing an additional $140 million in support to Palestinian-owned small and medium enterprises. The legislation not only provides two seats for international partners on the middle east partnership for peace fund advisory board but includes provisions that allow it to evolve into a new, truly multilateral institution. The arrival of the Biden Administration, together with the recent exciting moves we have witnessed in the middle east towards normalising relations with Israel, provides a huge opportunity which, if the UK is to live up to the Government’s global Britain ambitions, we should surely seize.
In closing, will the Minister provide three undertakings today? First, will he meet me and other colleagues to discuss reinstating the UK’s financial support for peace-building work and reinvigorating support for the international fund? Secondly, will he ask his officials to explore the possibility of the UK requesting one of two international partner seats in the new middle east partnership for peace advisory board? Thirdly, at the earliest opportunity after 20 January, will he discuss with the Biden Administration how the middle east partnership fund for peace might evolve into a truly international institution?
This week marks the 35th anniversary of the signing of the Anglo-Irish Agreement which set in motion the establishment of the International Fund for Ireland and set us on the path to the Good Friday agreement. We know the transformative impact of peace-building work and we know we have seen it in Ireland. I urge the Government to draw on this experience and commit to establishing this international fund for Israeli-Palestinian peace.
Theresa Villiers (Chipping Barnet) (Con)
May I say what a pleasure it is to serve under your chairmanship, Mr Efford, and to be back in Westminster Hall after it was closed for so long. I congratulate the hon. Member for Newcastle upon Tyne North (Catherine McKinnell) on securing a debate on this important issue.
Like the hon. Member, I welcome progress in the US Congress towards establishing a new international fund for projects to promote peace and reconciliation between Israel and the Palestinians. It makes sense in this context to reflect on some of the experiences in Northern Ireland, albeit that is a very different situation to the one that prevails in the middle east.
As Northern Ireland Secretary, I saw for myself the incredibly important role played by grassroots community projects aimed at bringing people together across historic and long-lasting divides. I saw how they helped to embed the peace settlement resulting from the Belfast Good Friday Agreement. Looking back in history, it is clear that they played a role in securing that agreement.
Over the years, we have seen groups such as the WAVE Trauma Centre, Healing Through Remembering, the Corrymeela Community and the Fitzroy-Clonard Fellowship. Such organisations cannot on their own resolve deep-seated conflicts—that requires political leadership from all sides. We have seen that from Israel, but sadly lacking from the Palestinian side. Grassroots groups of this nature, promoting peaceful co-existence, can be part of the momentum for peace and help to create the conditions in which political leaders feel confident to come together and find common ground and compromise.
Those Northern Ireland projects received support from many sources, including successive UK Governments, but also from the International Fund for Ireland, which has clearly provided inspiration for the ideas we are considering today. I certainly encourage the Foreign Office to deploy part of its aid budget to this new US-inspired international initiative on promoting projects aimed at securing peaceful co-existence between Israel and the Palestinians.
It is crucial that all funding, whether for this programme or others operating in the middle east, goes to worthwhile projects that are genuinely trying to bring people together. It is a concern for me and a number of my constituents that some UK charities and NGOs take a highly politicised and partisan approach to the middle east. For example, I have raised concerns about some of the activities in the past of War On Want with the Charities Commission. I hope those running any new fund will learn lessons from the problems that have beset existing aid programmes operating in the West Bank.
Just over 16 years ago, in my former role as an MEP, I first raised concerns about the abuse of aid money given to the Palestinian Authority. Those were the days of the flagrant misappropriation of cash by Yasser Arafat and his cronies—problems that, I am afraid, continue to some degree to this day.
I appreciate that successive Conservative Secretaries of State have tried to clean up the system. Those efforts were well intentioned and made a real difference. There are now far more effective controls to save taxpayers’ money than there were in the past. The issue remains, however, that the UK makes substantial contributions to UNRWA, which distributes aid on the basis of perceived entitlement rather than humanitarian need and whose definition of “refugee” as passing down generations perpetuates division rather than bringing people together.
I accept that UK aid money, thankfully, does not fund extremist or antisemitic curriculum content, but it does pay the salaries of teachers who use such materials. Thankfully, UK aid does not fund the appalling salaries paid to terrorists, but salaries were increased dependent on the number of Israelis killed. I am worried that while, thankfully, our taxpayers’ money does not go directly to fund these salaries, it indirectly enables such payments by the PLO by releasing money that otherwise would have to be deployed to cover the costs of the salaries of public sector workers that are currently met by the United Kingdom taxpayer.
Whether it is a new international fund for peace between Israel and the Palestinians or the UK’s existing programmes to support the Palestinian Authority, I urge the Minister to ensure that taxpayers’ money is always rigorously scrutinised and spent only on projects to bring people together rather than push them apart and on projects working for peace and not perpetuating conflict.
Conor McGinn (St Helens North) (Lab)
It is a pleasure to serve under your chairmanship, Mr Efford, and I congratulate my hon. Friend the Member for Newcastle upon Tyne North (Catherine McKinnell) on securing the debate. It is a particular pleasure to follow the right hon. Member for Chipping Barnet (Theresa Villiers). I knew her before coming to the House and I have worked closely with her on Northern Ireland matters since being in the House.
It is poignant that the debate is taking place so soon after the death of Saeb Erekat, Secretary General of the Palestine Liberation Organisation. He was firmly committed to his people’s rights, unwavering in his pursuit of a just peace, and committed to a two-state solution.
It is cause for optimism that the debate is taking place in the shadow of the election across the Atlantic. We cannot underestimate the significance of that, and if, like me, you believe in the ability of the United States to lead and be a force for progress in the world, you will share the hope that this will mark a new approach to its role in the middle east, particularly in using its influence to re-establish the basis for a lasting peace between Israel and Palestine.
If the last four years show anything, it is that you can be a friend to a country and its people without supporting its Government. I have felt like that about the United States and Israel. In fact, I have felt that, to be a good friend, you have had to oppose their respective Administrations, while continuing to advocate the development of strong links and co-operation between our countries and peoples.
The dire state of political relations and the breakdown of relations—the unilateralism and illegality of occupation, settlements and annexation and its effect on the Palestinian people, and the continued terror, threats and denial of Israel’s very right to exist—should not mean that we allow inertia, let the UK’s response and involvement be set by the recalcitrant, or abandon our role in the historic mission to find a just and lasting two-state solution.
A fund for Israeli-Palestinian peace is one such way in which the world can provide tangible support for advancing the cause of peace and improving the lives of Israelis and Palestinians. As the Alliance for Middle East Peace says,
“With the suspension of coordination between the Palestinian Authority and Israel, civil society is one of the only remaining channels for cross-border contact between Israelis and Palestinians. This places an undue burden on peacebuilding organisations”.
This work is vital and dangerous. Earlier this year Hamas arrested Rami Aman, a peace activist in Gaza, and seven other Palestinians for taking part in a Zoom call with Israelis. Hamas said that it amounted to a
“betrayal of our people and their sacrifices”,
and that any joint activities, co-operation or dialogue with Israelis is unacceptable—just because ordinary people wanted to talk to each other about their lives. I am pleased that Rami Aman was released from prison a few weeks ago, after spending six months there awaiting trial. It is another example of how Hamas, far from advancing the cause of Palestine, is through its violence and intransigence, hindering it.
The peace fund proposal is to increase public and private contributions worldwide, funding joint economic initiatives and civil society projects that improve social and economic conditions in Israel and Palestine. Following a successful campaign spearheaded by Labour Friends of Israel—I pay tribute to them for the work they do alongside colleagues in Labour Friends of Palestine and the Middle East—the UK Government provided £3 million of funding for a project that ran from May 2017 to March 2020, as outlined by my hon. Friend the Member for Newcastle upon Tyne North. It is a shame that the funding has ceased and that the Government have stopped that support for people-to-people work.
I hope the Minister will recognise that consistent investment to enable programmes to achieve long-term results is vital to the success of coexistence work. It cannot be a tap that is turned on and off; it must be sustainable, because without sufficient funding, from either Governments or private philanthropy, coexistence projects can currently have only a limited impact. Operating at scale and properly funded, however, they could help to build powerful constituencies for peace in Israel and Palestine, forcing leaders in both countries to return to meaningful negotiations and provide the vital civic society underpinnings for any future agreement.
The main inspiration for that is, of course, the International Fund for Ireland, which was put in place by the Irish and British Governments after the 1985 Anglo-Irish agreement, which, as has been said, celebrates its 35th anniversary this week. The objective of the IFI is to promote economic and social advance in Northern Ireland and the border counties and to encourage contact, dialogue and reconciliation between nationalists and Unionists throughout the island. The fund has done enormous work across Northern Ireland and in border areas for over 40 years, evolving its activities over time, but always focused on cross-community reconciliation, with over £750 million in funding being generated over the last 44 years.
The fund effectively resides with the Irish and British Governments, but crucially it has an independent board. People on all sides trust it. It has no political agenda; its only agenda is peace and reconciliation. It was originally funded by the United States, the European Union, Canada, Australia and New Zealand. That international support gave it further credibility, and all those countries still have observer positions on the fund’s board. The Irish and British Governments have also re-dedicated themselves to continuing the funding through the “New Decade, New Approach” agreement. Importantly, the board of the fund is scrupulously objective in how it decides which project to support. Its composition is evenly divided between the nationalist and Unionist communities and includes members from border counties in the south. These symbols of balance and even-handedness matter.
The lessons to be learned for any Israel-Palestine fund are almost all good; the even-handedness dimension is the most important. In that spirit, the International Fund for Ireland has for some years now made itself available to share experience and knowledge with organisations promoting reconciliation in other locations, including in Israel and Palestine. I know that Paddy Harte, the new IFI chair, is committed to this work, and I urge the Government to use his expertise and that of the board.
For me, peace must fundamentally be built on equality, opportunity and partnership. The international community cannot do all of those things, but it can help to create the conditions for them. I hope that we will be able to play our part.
Steve McCabe (Birmingham, Selly Oak) (Lab)
It is good to see you in the Chair once more, Mr Efford.
I thank my hon. Friend for Newcastle upon Tyne North (Catherine McKinnell) for securing the debate and for an excellent speech. Like others, I believe that an international fund for Israeli-Palestinian peace would aim to help any future peace process by promoting co-operation, dialogue, joint economic development and reconciliation between Israelis and Palestinians. As the chair of Labour Friends of Israel, I am delighted that we are able to have this debate today; this is something we have argued for for some time.
It is important that the concept of an international fund, as we have heard, has been designed by the Alliance for Middle East Peace, because it is an independent organisation with extensive experience in this area. Therefore, I think some of the concerns raised by the right hon. Member for Chipping Barnet (Theresa Villiers) about other group initiatives would not apply here, because ALLMEP has an almost impeccable record in this field.
Like my hon. Friend the Member for St Helens North (Conor McGinn), I am pleased that the UK became the first country to endorse the concept of an international fund when, in 2017, it introduced the People for Peaceful Change project after lobbying from LFI and others.
Theresa Villiers
There have been several mentions of LFI, and I welcome the work that has been done on promoting the idea of funding peaceful co-existence projects. However, does the hon. Gentleman not find it sad that the leading MP who championed this idea, Joan Ryan, then MP for Enfield North, felt so intimidated and bullied by people in the Labour party, especially on the antisemitism issue, that she actually had to leave the party? We cannot ignore that significant problem within the hon. Gentleman’s party when referring to the LFI.
Steve McCabe
I am grateful to the right hon. Lady for that, because it is probably as well to clear this issue up once and for all. LFI battled through the whole of the crisis of antisemitism in the Labour party, and I certainly do not want to in any sense pretend that it did not happen or that it was not a dark stain on our history. What I would say about my former colleague Joan Ryan is that I am immensely grateful to her for the work she did during that period. I hope that the changes that Labour is experiencing under a new leadership will herald the day when someone like Joan will feel perfectly comfortable sitting alongside me once more.
While I welcome that UK Government programme, it is important to acknowledge that, astonishingly enough, the UK Government had spent nothing on supporting co-existence projects prior to that programme. The US bipartisan and bicameral proposals, the middle east partnership for peace, is now making real progress. It aims not just to grow economic development, but to tackle the incitement and dehumanisation that has plagued both sides of this conflict. The legislation establishes a fund to improve economic co-operation and people-to-people exchanges. I think that is how we breathe life into the two-state solution. ALLMEP should be congratulated on its success in building an enormous, unprecedented coalition of support, making the fund one of the only bipartisan Israel-Palestine priorities in Congress.
In February 2018, the then Middle East Minister Alistair Burt announced the UK’s support for the concept of an international fund. However, since then the Government have failed to follow up on their warm words. The Biden Administration now present a huge opportunity for the UK to seize this moment and play a crucial part in this multilateral initiative. Our experience in development finance and in Northern Ireland means that we are ideally placed. We have heard about how we could claim one of the two international seats and use our experience to good effect.
This September, in response to a parliamentary question about plans to allocate funding to support the US fund, the Minister for the Middle East and North Africa said:
“We welcome efforts towards peace…We will continue to monitor the People-to-People Partnership for Peace Fund”—
as it was then known—
“as it progresses through the US legislative system.”
It is making great progress. Let us act now, to show that we are determined to get involved. Without funding from Governments and private philanthropy, co-existence projects can have only a limited impact but, operating at scale and properly funded, they can build powerful constituencies for peace, forcing politicians to return to meaningful negotiations.
As we heard from my hon. Friends the Members for Newcastle upon Tyne North and for St Helens North, Northern Ireland has shown that this work can provide vital underpinnings for any future agreement. That civil society dimension of peacebuilding is about practical politics, building and embedding public support for any future agreement and ensuring that it can weather the challenges ahead. Just as we found in Northern Ireland, broad-based popular support is a prerequisite for any successful peace process.
The International Fund for Ireland spent about 8% more per head daily than is currently available for grassroots co-existence work in Israel and Palestine. Over the two decades since the signing of the Oslo accords, a growing network of NGOs has worked at grassroots level to foster values of co-existence, peace and reconciliation. The international fund would bring together public and private donors, nations, corporations and private foundations and individuals. It would focus work on supporting joint initiatives and co-operation between Israelis and Palestinians and between Arabs and Jews. As my hon. Friend the Member for Newcastle upon Tyne North said, it would lead to empowerment, civic activism and a host of other activities. It is envisaged that that $200 million per year fund would receive contributions from the international community, including the Arab world, but importantly it would be independently managed and additional to any existing support already provided directly to either the Palestinian Authority or Israel.
This work is more critical than ever because, as elsewhere in the world, Israel is suffering the economic as well as health consequences of the pandemic. It is about to enter its first recession in more than two decades. The economic crisis in the west bank is even deeper, as it was already in recession. The Palestinian economy has shrunk by an estimated 7.6% during the pandemic, pushing an existing recession into a deep depression. This raises the prospect of increased tensions, which suits those who have no investment in building for peace.
The peacebuilding sector provides essential services to many communities, but it is dependent on global donors and support from foreign Governments. We must develop greater co-ordination among major funders so that donor states improve their efforts with regard to civil society. Increased co-ordination will lead to a more efficient and effective use of resources, as well as opportunities for cross-pollination and deeper partnerships. That is why this international fund is so important and why this country must play a leading role.
As we have heard, there is a growing body of evidence showing the benefits of co-existence projects, even though most of this work has been achieved in the face of considerable challenges, most notably the collapse of the peace process and the second intifada.
Four years ago, Labour Friends of Israel was proud to launch its campaign “For Israel, For Palestine, For Peace” in pursuit of the very international fund that is now within our grasp. I acknowledge the important intervention of the British Government with the people for peaceful change fund, but I urge the Minister to build on that today by confirming that we will play a leading role in supporting this international fund.
Nicola Richards (West Bromwich East) (Con)
It is a pleasure to serve under your chairmanship, Mr Efford, and I congratulate the hon. Member for Newcastle upon Tyne North (Catherine McKinnell) on securing this important and timely debate.
As the late, great former President of Israel and Nobel peace laureate Shimon Peres said,
“we should use our imagination more than our memory”.
His words ring truer today than ever before, as progress in Israeli-Palestinian peace negotiations has stalled, despite genuine efforts over the years to secure a two-state solution.
It was revealed last week that His Royal Highness the Prince of Wales placed a private donation to the Peres Centre for Peace and Innovation, an organisation founded by President Peres. This is excellent news, and it is not difficult to see why His Royal Highness was so impressed by the organisation’s indispensable work, including programmes that pave the way for mutual understanding between all of Israel’s citizens and for a lasting peace between Israel and its neighbours.
I join others today in calling on the UK Government to support the new people-to-people partnership for peace fund. I recall that the former Minister for the Middle East, Alistair Burt, endorsed the initiative a few years ago, and I sincerely hope that the Minister today will take this opportunity to reiterate the UK’s support.
The UK is rightly regarded as a world leader in the field of international development, and British taxpayers would, I am sure, take great pride in knowing that our aid is going directly to those on the ground in Israel and the Palestinian Territories who are working every day towards establishing stronger inter-community relations. Following the creation of the Foreign, Commonwealth and Development Office, I can think of no better way to display the UK’s newly stated commitment to use our international aid to advance our foreign policy goals. An outward-looking global Britain should be at the forefront of multilateral efforts to promote peace and co-existence, which lay the groundwork for a much sought after peace deal.
Beyond the region, our investment in the US Middle East Partnership for Peace Act, which is working its way through Congress with widespread bipartisan support, would send a clear signal to the incoming Biden Administration that the UK believes in its multilateral approaches to making the world a better place. It offers a welcome new channel for co-operation with our closest ally. This new vehicle for delivering aid directly to peaceful co-existence programmes, as well as supporting investments to small and medium-sized Palestinian-owned enterprises, promises to transform the region.
In recent years, the UK Government have begun to realign their aid to the Palestinian Authority away from donations to its general budget—which led to widespread misuse of aid, including the reprehensible payment of salaries to convicted Palestinian terrorists—and instead towards paying the salaries of specifically vetted healthcare and education civil servants. DFID’s announcement a few years ago of a further £3 million fund for co-existence projects marked a further step in the right direction, following growing concerns over aid abuses by the Palestinian Authority.
Constructive dialogue is possible. At the start of the covid-19 pandemic, we saw extensive co-operation and co-ordination between the Israelis and Palestinians, developing shared solutions to the problems jointly faced. I myself have visited the region and have seen the positive work in bringing both sides together. This international fund offers a viable pathway forward to ensure that aid goes directly to projects that bring Israelis and Palestinians together, all of which is overseen by a transparent system of scrutiny and review. It is a path that we must seize and support.
Jim Shannon (Strangford) (DUP)
I congratulate the hon. Lady for—I just need to find it—Newcastle upon Tyne North (Catherine McKinnell). Sorry for not knowing her constituency; I should know it very well, so apologies for that hesitancy. It is also a pleasure to follow the hon. Member for West Bromwich East (Nicola Richards) and to hear all the other contributions.
In her former role as Secretary of State for Northern Ireland, we had occasion to invite the right hon. Member for Chipping Barnet (Theresa Villiers) down to my constituency, and we can all marvel at how Northern Ireland has changed. I am a recipient of that, because my attitude has changed as well. I now look back on all those years. My hon. Friend the Member for St Helens North (Conor McGinn)—he is my hon. Friend—comes from a different part of the country and probably from a different tradition as well. None the less, we can both see how Northern Ireland has changed. And that happens only if people make the effort—only if people decide in their own mind that they want to change.
I was just sitting here when the hon. Member for Newcastle upon Tyne North referred to the Anglo-Irish agreement; the Belfast agreement has also been mentioned. I can remember exactly where I was in 1985. I was out on the streets—fact of life—protesting against an agreement that sold us short; I was making my point. Along with thousands of other people, I felt quite agitated—I am trying to pick my words very carefully—about the whole thing. There was a pathway of change that came to us.
I got married and had my children, and I can remember the first Orange parade that was stopped in Drumcree in Portadown. I remember very well what I said to my wife, Sandra, as I left that morning. I genuinely felt that I was on a train that had left the station and I could not get off it. That was how I explained it to my wife; I am not sure whether she really understood what I was trying to tell her. I was trying to tell her that we were on a road going in a certain direction and I did not think we could stop it. That was where we were at that time; it was a very difficult time.
As it turned out, Chief Constable Flanagan let the people walk down to Drumcree. I think that defused the situation and was for the best, because I genuinely did not think that we were ever going to come home from Drumcree—or we might come home in a very different position from the one we were in when we first left. As I said, that defused the situation.
I just want to say that I can really see the benefits of understanding. I supported Dr Paisley. Not all my party did, but I did, because of what I realised at that stage. When I came home from Drumcree, I said to my wife, “Sandra, you know something? I think we’ve got to look at things slightly differently. I think we’ve got to find another way. I understand that the nationalists have a very distinct constitutional position. I have a very different position as a Unionist, but we’ve got to find a way forward. We’ve got to find a way forward for my boys and for all the other wee boys and girls across the whole of Northern Ireland.” And I think we found that way to take things forward.
When Dr Paisley and Martin McGuinness got the Assembly up and running, I supported them wholeheartedly, and the rest of my colleagues then came round and started to see the benefits of what we were doing. That happened only because, ever mindful that constitutionally we were so far apart, we were prepared at least to enter into some discussions together.
I am going down through the years here, Mr Efford, and my apologies for doing that, but I remember I was on the Committee for Culture, Arts and Leisure—this is a true story—and the chair of that committee was of a different persuasion from me. When it was over, I went up to him, shook his hand, told him who I was and said to him, “You know something? Constitutionally, you will always want a united Ireland, but as a Unionist I will do my darnedest to make sure you don’t get it.” Barry McElduff was the chair of the committee, by the way. And I said to him, “But when we are here, your people and my people will want the same things, so how do we make that happen?” I said, “I’m going to recognise your position as chair and I hope you give me a chance to participate in the debates”—as if he could stop me, by the way. But he was very kind and we got on well, although we were from two totally different traditions. I am waffling a wee bit, so I apologise for that.
The process in Northern Ireland was supported financially and physically by the EU, the USA and across the world. By the way, I met Michel Barnier in Brussels—I think it was last year—and at that time he was able to tell me all the places in Northern Ireland where EU funding had got to. I had had a different opinion of Michel Barnier—I am speaking as a Brexiteer now—and I remember that when I came home and told my colleagues about meeting him, I said, “Guys, I don’t know how to put this to you, but he’s quite knowledgeable and he’s not a bad man, you know.” I think I could almost see the daggers coming from all my colleagues at that time, but I said, “I’m just telling you, observationally.” He made things happen.
I have been a friend of Israel for many years, in both the Northern Ireland Assembly and Westminster. My leader here, my right hon. Friend the Member for Lagan Valley (Sir Jeffrey M. Donaldson), has been chosen to be a speaker in many places. He has spoken in Palestine and Lebanon, in South Africa when the process was taking place there, and in Colombia and South America.
Peaceful co-existence projects between Israelis and Palestinians lay the foundations for a lasting two-state solution, which I fully support. Such projects include Save a Child’s Heart, which provides life-saving heart surgery for children from the developing world and the Palestinian territories. It recently conducted its 5,555th surgery—wow, isn’t that fantastic? It is incredible that that can happen.
Whether we like him or not, we cannot ignore the fact that President Trump was the instrument of the Abraham accords and he did move things on. We also have to recognise that Joe Biden has won the election and perhaps US influence will, hopefully, change as well.
Regrettably, some Palestine participants have been criticised—including when Prince Charles gave a private donation, as the hon. Member for West Bromwich East mentioned—for taking part in activities that normalise relations with Israel. If we do not normalise relations, we do not move forward. We have to do that.
In 2017, the Department for International Development announced unprecedented funding of £3 million towards peaceful co-existence. Again, I ask the Minister: is there any chance that money could be added again? A statement published by the Department said—I am coming to a conclusion, Mr Efford, and am conscious that two other Members want to speak—that the partnerships
“will bring together Israelis and Palestinians to cooperate on issues which can have a positive impact on social, political and economic life”.
That project ended in June 2020. It had a health pillar, a religious pillar and a youth pillar, which involved Israeli, Palestinian and Jordanian health officials doing an exercise simulating a collaborative response to a potential cross-border infectious disease outbreak. How good it was to have that.
The religious pillar brought together some 1,219 young Israelis and Palestinians who took part in holy site tours aimed at increasing understanding of religious tolerance. It did not make any person less a Jew or less a Palestinian. It did not change their religious opinions, but it brought them together to understand that people of a different religion can have that religion. As chair of the all-party parliamentary group for international freedom of religion or belief, I say that every day—Members here will know that, and it is where we should be coming from.
The youth leaders’ groups, women and political, business and community leaders participated in workshops and built the capacities—it is really important to have the capacity built in these communities—to identify opportunities to improve peace in local communities.
We all say we want peace in the middle east, but we need to put money into the right projects to achieve it. I look forward to hearing how we can move things forward in this House to bring real reconciliation, as I believe there can be, in Israel and Palestine.
Christian Wakeford (Bury South) (Con)
I apologise for being late to this debate; unfortunately, I was serving on a Delegated Legislation Committee at the same time. I thank the hon. Member for Newcastle upon Tyne North (Catherine McKinnell) for bringing forward this incredibly important debate. I refer right hon. and hon. Members to my declaration in the Register of Members’ Financial Interests, because earlier this year I went to Israel and the west bank on a fact-finding mission through Conservative Friends of Israel. It is a pleasure to follow the hon. Member for Strangford (Jim Shannon) for the first time. He made some very poignant points. I think he must have read my speech, because I will echo some of therm.
I join colleagues from both sides of this Chamber in supporting the international fund for Israeli-Palestinian peace, and I echo calls for the Government to take up one of the available seats on the board. For many years, we have heard concerns raised by UK taxpayers that their aid is perpetuating the conflict rather than helping to resolve it. This year we have given £51 million to the United Nations Relief and Works Agency, which delivers aid to recipients who meet problematic criteria based on entitlement rather than humanitarian need. UNRWA uniquely extends refugee status beyond the UN’s 1951 refugee convention, to all descendants of Palestinian refugee males.
Although UNRWA carries out important work, including the provision of healthcare and education, defining its recipients as refugees sends a troubling message to Palestinians living in the west bank and Gaza that they have a right to relocate to Israel. This undermines the viability of a two-state solution and runs counter to our policy on the middle east peace process.
We fund the salaries of teachers who use the official Palestinian Authority curriculum, which teaches Palestinian children that Israel’s existence is merely temporary, and which promotes violence against Israelis and Jews. Our aid frees up funds for the Palestinian Authority to pay salaries to convicted terrorists, with higher salaries paid to those who have killed more Israelis. I could go on, but the points have been made time and again, and have been made already in the debate. The PA has not made the changes we have called for, and that leaves the international community with no choice but to rethink its strategy. Peace is essential to prosperity for both Israel and Palestine.
The international fund that is being discussed today would be a step in the right direction. Peaceful co-existence projects lay the foundations for a lasting two-state solution, making peace more likely. Yet in the past some Palestinian participants have been criticised, even by leaders in the Palestinian Authority, for taking part in activities that normalise relations with Israel. Does the Minister agree that that is counterproductive, and that we must urge the PA to facilitate such projects, not oppose them?
I visited Israel and the west bank in February, as I said earlier, and was stunned by the incredible entrepreneurship and ambition in the region, despite the challenges of the conflict. Meeting young Palestinian businesspeople at an intelligence start-up in Ramallah was an eye-opening experience. It was clear that, like many young people, they have ambition and strive for success and growth. They seek peace, recognising that conflict restrains expansion, but they have achieved what they have in spite of the political leadership, not because of it. We also made an inspiring visit to MATI, the Jerusalem Business Development Centre, in East Jerusalem. The centre helps Arab women to set up and expand their businesses, as well as providing mentoring and training for job interviews. The deputy Mayor of Jerusalem, Fleur Hassan-Nahoum, is doing phenomenal work supporting job creation and organisation through the work of MATI.
We visited the Israeli charity Save a Child’s Heart, as the hon. Member for Strangford highlighted, and met many children from the west bank and Gaza, and the developing world, who have received life-saving heart surgery free of charge. Palestinian surgeons are trained to carry out life-saving heart surgery by Israeli doctors, so that they can save countless lives back home. Every Tuesday, Palestinian children from the west bank and Gaza travel to Israel for the weekly cardiology clinic with their parents. It is the first time that many of them have met an Israeli in a positive setting.
Not only is that experience of having surgery life-saving; it creates a bond between people that cannot be broken. “They fought for my son’s life. They gave us everything we needed. They are like family to me”. Those are the words of the mother of Mahmad, a two-year-old Palestinian boy from Gaza whose life was saved by the charity earlier this month in its 5,555th procedure. Does the Minister share my view that the UK should be supporting that incredible work? Will he join me in congratulating Save a Child’s Heart on reaching that epic milestone? Does he agree that such interactions truly lay the groundwork for future peace? Joining the international fund for Israeli-Palestinian peace as a board member will massively increase our capacity to support peacebuilding efforts such as Save a Child’s Heart, and I urge the Minister to consider doing so.
I conclude by pointing out that there have been many positives but also many negatives in relation to UNRWA, which have been discussed many times in this Chamber, including in today’s debate. We as a nation cannot fund antisemitism in a foreign nation while we try to stamp it out in our own society, so while we continue to fund UNRWA we need to make sure that it is reformed.
Owen Thompson (Midlothian) (SNP)
It is a pleasure to serve under your chairmanship, Mr Efford. I echo the congratulations that have been given to the hon. Member for Newcastle upon Tyne North (Catherine McKinnell) on securing the debate.
I welcome efforts to establish the multilateral international fund to help build a lasting Israeli-Palestinian peace. Anything that helps to bring countries together and focuses hearts and minds is a positive step, although we have to recognise that there are clearly other issues that need to be addressed on the ground to get things moving in that direction. I would certainly welcome diplomatic support from the FCDO to help establish the fund and ensure buy-in from the other nations, too. As we have heard from other Members, a very similar fund was established to help bring peace in Northern Ireland, but according to the Alliance for Middle East Peace, £1 billion was spent on those efforts over two decades. That is almost 10 times the amount that has been spent on similar efforts between Israelis and Palestinians to date.
Of course, the concerted efforts that brought results in Northern Ireland remain a beacon of hope for all of us. For those who grew up in that time, nobody could have imagined they would ever see Ian Paisley senior and Martin McGuinness not only sharing power, but being friendly and having a rapport together, earning themselves the nickname of the “chuckle brothers”. I sincerely hope that hard-won peace is not undermined by the reckless Brexit actions that the Government are currently undertaking, and that the UK belatedly recognises the importance of sticking to international law, for chaos falls when Governments unilaterally decide which international laws to follow and which to simply ignore, as we have seen in the middle east.
Like my Scottish National party colleagues, I speak as a friend of Israel, but a critical one. I absolutely understand and support Israel’s right to defend its territory against aggressors where there are undoubtedly threats from militant factions in Palestine, but I cannot support actions that undermine international laws by extending territories beyond internationally agreed boundaries, such as the 53-year-old Israeli occupation of the west bank. I cannot support actions that impose such brutal living conditions on a civilian population in Palestinian territories and cut off access to vital healthcare, albeit I am very impressed by the programme outlined by the hon. Member for Bury South (Christian Wakeford), which sounds like a step in the right direction.
I hope that now that a new President is on the way in the United States, there may be a chance for some reflection, and for the de-escalation of tensions that could permanently threaten the viability of a two-state solution by continuing to erode Palestinian rights. I welcome the fact that the Israeli annexations of the west bank have been put on hold through the signing of the Abraham accords. It is also positive to see some progress in normalising the diplomatic relations between Israel and the surrounding Arab states of Bahrain, Sudan and the United Arab Emirates, but at what cost? As with everything in the region, there is a more nuanced and complex story behind the smiles and warm words of these agreements, and much more to be concerned about than the top line of a story might suggest.
Although these accords were, in principle, supposed to halt further occupation and annexation of occupied territories, they contravene the terms of the 2002 Arab peace initiative, in which the establishment of an independent Palestinian state was given as a precondition for full, normal relations with Israel. This deal may have put further annexation on the back burner for now, but it has not removed the threat. It also disregards existing breaches of international law in occupied territories and Palestinian sovereignty rights, which could have major implications for reaching any lasting settlement between Israel and Palestine. Khaled Elgindy, a political analyst and author on the conflict, wrote,
“As many of us have argued from the start, Arab Gulf states’ normalization with Israel is not about normalizing bilateral ties as much as they’re about normalizing Israeli occupation & the settlements.”
That cannot be allowed.
We also know that settler violence and the forced displacement of Palestinian people in the occupied west bank has continued. On the night of 4 November, as the eyes of the world focused on the US election, 70 more Palestinian structures were demolished by Israeli forces in the Bedouin hamlet of Khirbet Humsah, making 74 Palestinians, including 41 children, homeless. Forcibly confiscating land and demolishing homes is not the way to make peace a realistic option. This has to be stopped.
The diplomatic role the UK has played in harbouring peace should not be undermined by continuing to sell arms that may be used in unlawful killings by any regime, whether friend or foe. The UK has massively increased the sale of arms to the Israel Defence Forces at a time when there has been rightful international condemnation of indiscriminate airstrikes and credible reports of unlawful killings, including of children and medics. The human rights record of Israel against Palestinians is woeful, and the UK should not turn a blind eye to its potential role in supplying these weapons. Arms sales should be suspended until all such reports of human rights violations are independently investigated.
I know that the term “ethical foreign policy” went out of fashion with the late Robin Cook, but it is certainly time that we brought it back, for without that, what do we stand for? I want Scotland and the UK to be a force for good in the world, not an enabler of human rights abuses. I am sure everyone in this House is united in wanting to see progress towards sustainable peace and stability for both the people of Israel and the people of Palestine, based on mutual recognition and the rule of law. I hope the proposed fund will help those efforts, but it is not in itself enough to move things beyond warm words.
The UK has an important diplomatic role and responsibility in the region, so I look forward to hearing from the Minister about any measures being brought forward. Recognising the issues on the ground for the people of Palestine and speaking out against human rights abuses, without fear or favour, is central to helping progress to a meaningful, sustainable peace that can meet the aspirations of all.
Wayne David (Caerphilly) (Lab)
It is a pleasure to serve under your chairmanship, Mr Efford. I begin by congratulating my hon. Friend the Member for Newcastle upon Tyne North (Catherine McKinnell) on securing the debate and on giving such a clear exposition of her case.
We have had a very good debate this afternoon. It is also important to stress that the debate has not only been good but it has been conducted in the right kind of spirit. That is so important when we talk about the emotive issue of Israel and Palestine. We need to have mutual respect among ourselves and understand that it is a complex issue that requires sensitivity and understanding.
One thing that unites most people in this House—certainly in this Chamber—is that we believe in the two-state solution. That is the only way to bring real peace to Israel and Palestine. We need to recognise that a safe Israel alongside a viable Palestinian state can be achieved only through negotiation, and for that negotiation to be successful, there inevitably has to be give and take. It also has to be recognised that it is important to pay attention to the climate in which those negotiations can take place and their overall context.
That is why this debate is so important. It is vital to have co-operation between the Israelis and Palestinians in a daily, practical sense. It is important that they understand where each other is coming from. It is important that they respect each other and that there is reconciliation between Israelis and Palestinians.
It is important to recognise, as a number of Members have said this afternoon, that we have a great deal to learn from the experience of Northern Ireland. That was mentioned by my hon. Friend the Member for St Helens North (Conor McGinn) and the right hon. Member for Chipping Barnet (Theresa Villiers). The contribution this afternoon from the hon. Member for Strangford (Jim Shannon) was particularly moving, because he accurately talked about two traditions in Northern Ireland: the nationalist tradition and the Unionist tradition, historically a long way apart from each other with different histories. What is significant about the 1980s and 1990s is that people began to talk and to understand where each was coming from. Eventually common ground was found, and, hopefully, a secure way has been mapped out to have lasting peace in Northern Ireland.
I remember well the mid-1980s and the 1990s and the troubles. I was a Member of the European Parliament at the time and I remember talking to my good friend John Hume. John passionately believed in the need for a well funded international fund for Ireland. Through negotiation with others, he was able to establish that fund, which made a huge contribution towards bringing people together and establishing through civic society the very firm foundations for a Good Friday agreement. That fund in Northern Ireland—the international fund for Ireland, as it was called—brought many people together, not just in Northern Ireland but from the southern part, too. It was the great unsung hero of the peace process.
From all of that, we have so much to learn. I believe that the fund we have been talking about this afternoon, in the context of Israel and Palestine, offers the way to take forward many of the principles underpinning that fund in Northern Ireland. We have heard about the international fund for Israeli-Palestinian peace, and hon. Members have accurately described the process in America, whereby the House of Representatives has approved legislation that is now progressing through the Senate. Significantly, the legislation has bipartisan support. It is not just Republicans or Democrats; people drawn from both parties in the United States are supporting the initiative. I, like other hon. Members, am hopeful that when the new Biden-Harris Administration takes office in January, it will take up the idea and make it a reality.
The fund is important because eventually it will become an institution—one that will have helped lay the bedrock for the peace process. However, it will not simply be an abstract institution. It will also be a fund that will encourage practical initiatives that bring people together. It will encourage entrepreneurship and—who knows?—it might even help the establishment of joint schools for the children of Israelis and Palestinians. It will provide spaces for people to talk about their common problems.
Theresa Villiers
The hon. Gentleman is very gracious in giving way. There is much that I agree with in his speech, but there is—sorry to use a cliché—an elephant in the room. He is a member of a party from which advocates for Israel such as Ian Austin and Ivan Lewis resigned their membership because saying anything in defence of Israel within the Labour party—a political party that they had supported for their entire adult life—was howled down and met with intimidation and antisemitism.
Wayne David
With all due respect, we are not talking about the internal politics of the Labour party here today. Frankly, we are talking about something far more important than that: we are talking about peace being established between the people of Israel and Palestinians. That is the important thing. That is not to underestimate what has been said about antisemitism inside the Labour party, but there is a time and place for everything. Today, we are talking about peace in the middle east and peace between the people of Israel and Palestine.
I believe that the fund, if it is established by the United States of America and others rally behind and support it, will be a huge step forward. However, I must say too that it is not an alternative to UNRWA funding but is something that must be introduced as well as that. It is not an excuse, as some people have suggested, for supporting settlements on the west bank. It is important to recognise that the fund is something quite different and it requires cross-party support from all good people who support peace in the middle east, coming together to find common ground.
I pay tribute, as a number of hon. Members have already done, to the Alliance for Middle East Peace. ALLMEP has being plugging away for a long time on this. At last, we are seeing real fruition coming about today and there is tremendous optimism. I must say that a lot of optimism is required from time to time in the middle east, but I believe the fund really offers that. All tribute to the alliance for championing that so consistently.
We are talking about the United States, but I emphasise that the fund must not be for the United States alone; we require multilateral international support. The Europeans have given support and the British can give support as well. It is vital that we do. There is a huge opportunity for the Prime Minister, when he talks about global Britain, to be proactive and to give the lead even to the Americans to encourage them to move forward quickly. I hope the British Government will be unambiguous and emphatic in supporting the fund as quickly as possible, but I want them to go further. I do not want only rhetoric from the Government; we are used to plenty of that. I want them to come forward and say that they want one of the two seats that will govern the fund when it is established. I also want them not only to say that will they support the Abraham accords that have been established between Israel, the United Arab Emirates and Bahrain, but to go further and say that the fund must be used for Arab support for such an initiative. That would be a huge step forward.
Finally, we all need to recognise that the fund will potentially make a huge contribution to peace. A lasting peace has to be seen as a process and not a single event.
The Parliamentary Under-Secretary of State for Foreign, Commonwealth and Development Affairs (James Duddridge)
It is a pleasure to serve under your chairmanship, Mr Efford, and a pleasure to be back here in Westminster Hall. Life can be a bit soulless when sitting in an office or a back bedroom making Zoom calls and so forth. This debate has demonstrated the value of physically being in the House. Perhaps you will thank the Speaker for facilitating that. I think all hon. Members would approve of extending that.
I am grateful to the hon. Member for Newcastle upon Tyne North (Catherine McKinnell) for securing this debate and to everyone who has participated, including the groups. I particularly welcome her as chair of Labour Friends of Israel and as a member of other organisations. I apologise; I am promoting her because of her talent, which is an easy mistake to make. I also apologise on behalf of the Minister for the Middle East and North Africa, who is not here today. He had a long-standing commitment to appear before a Select Committee, but it is a pleasure for me to represent Her Majesty’s Government here today.
The hon. Member for Caerphilly (Wayne David) talked about how respectful the debate has been, and I would like to carry on in that vein, but it would not be out of place for me to follow on from my right hon. Friend the Member for Chipping Barnet (Theresa Villiers) and draw attention to the excellent work that Joan Ryan, Ivan Lewis and Ian Austin did in this Chamber. They were all friends across party lines, although I campaigned in Ian Austin’s constituency to get him out of Parliament. I am happy with the robust nature of politics, but I know that really was not what happened. I know that there is a meeting going on as we speak to move things on slightly, but there clearly is a process for this type of debate, and engagement is a part of that process.
I echo the condolences expressed by the hon. Member for St Helens North (Conor McGinn) on the tragic passing of Saeb Erekat last week. He was a true champion of dialogue and of Palestinian rights, and his passing is a great loss to us all. Through you, Mr Efford, we pass on our thoughts and sympathies to his family and the people of Palestine.
The middle east peace process continues to be complex, as was demonstrated during this debate. There are sensitive issues that divide the House, although I am minded to report back to the Minister of the Middle East the similarities in the contributions. They were not identical, but there were things that we agree on, as well as things that might divide us. The Government will remain active in looking for progress on peace in the region. We welcome, as others have done, the normalisation of relations between Israel, the United Arab Emirates, Bahrain and Sudan. The agreements represent a profound shift within the region, but we must now proceed in parallel with steps to resolve the underlying conflict.
My hon. Friend the Member for West Bromwich East (Nicola Richards) demonstrated that there is an opportunity for the FCDO to work together. I know there is some concern about the merger, but this situation is perhaps typical of where the FCDO can add more value as one rather than as two, because development and politics are so tightly fused as to be almost indistinguishable. If the matter is not moving forward, it is not because of political or development reasons.
There is much to be done to rebuild trust. The suspension of the threat of annexation was a welcome first step, mentioned by a number of Members, but it must be made permanent. It is vital that the Palestinian Authority resume co-operation with Israel and that the Israeli-Palestinian leaderships come together to pursue the pathway to peace. Her Majesty’s Government believe that the two-state solution is the only viable long-term solution and the only way permanently to end the Arab-Israeli conflict, to preserve Israel’s Jewish and democratic identity and to realise Palestinian national aspirations.
The Government are aware of ongoing discussions, specifically around the international fund for Israeli-Palestinian peace, which I understand, despite the slight contradictions of other hon. Members, the US Senate will consider in 2021. We know that there is considerable flux in the US system, and as parliamentarians we know of the complexities of other systems, so it might be slightly further away than was thought before the debate. The Government support the objectives of the international fund, but Members will understand that Ministers tend not to make announcements about future funding from the Dispatch Box or in Westminster Hall. I can confirm that we have no plans to commit financial support at this stage, but we will continue to engage with the Alliance for Middle East Peace. It and its 100-members have a strong relationship with the FCDO and officials.
I hear a very clear message that one of the rationales for involvement is to secure a seat. I think that the hon. Member for Newcastle upon Tyne North pressed me to commit officials specifically to providing advice, and when the decision point comes I shall be happy to do that. She also pressed me to promise the time of the Minister for Middle East and North Africa. As she knows, even in covid times he is omnipresent here and on Twitter. I do not agree, having made a contribution and agreed to have a conversation with him, to commit his time at this stage, but I am sure he will make himself open to discussion at the right juncture.
Members spoke of the importance of projects that seek to promote peace. The UK remains committed to the middle east and to the occupied Palestinian territories, providing a vital role in helping to improve the lives of Palestinians and supporting the commitment to maintain the viability of the two-state solution. Our ongoing work includes humanitarian support to meet immediate needs in Gaza, support to key services such as health and education in the west bank, promoting economic development across the occupied Palestinian territories, and helping to meet the needs of Palestinian refugees across the wider region. To give a concrete example, the UK Government are providing £20 million this year to support the salaries of teachers, nurses and doctors. That will help the Palestinian Authority to support their health workers, especially in their frontline battle against covid and in delivering life-saving medical services. I am conscious of the celebration of 5,555 operations. It sounds like excellent work is being done. I am not sighted of the programme, but I am happy to receive more information.
Jim Shannon
The Minister mentions £20 million being set aside to fund the salaries of teachers and doctors. Would it be possible to encourage those teachers and doctors to perform some cross-community work? It might be a small method of bringing people together. It is just a thought.
James Duddridge
I will speak later about people-to-people programmes in general. I am not sure what the opportunities are, and there are real sensitivities in education and other matters that the House has discussed, but I will certainly take away that suggestion.
Christian Wakeford
I fully appreciate that £20 million is going to fund teachers and healthcare workers, but part of the problem is the curriculum that is being taught. If we are funding teachers to teach that curriculum, we perpetuate the problem. If we are funding it, can we do some meaningful work in reforming the curriculum so that we can truly bring about peace?
James Duddridge
I am conscious that this has been the subject of a number of debates. There is no funding of textbooks and there is careful selection of teachers. There is also a review, through our European partners, of some of these issues. I am happy to engage with the hon. Member in more detail outside this debate.
The UK is also a key supporter of the United Nations Relief and Works Agency in providing aid and development assistance to the Palestinian refugees.
Conor McGinn
It is very good to hear about the UK Government’s financial commitment to this work. Given that the role of global Britain is enhanced not just by the strength of its arguments and values but by the fact that it puts its money where its mouth is, does the Minister worry that continuing speculation about draconian cuts to the aid budget undermines the good work that is being done and gives rise to concerns about the sustainability of that work in the future?
James Duddridge
The UK is committed to spending its money on global Britain force for good development work across the board. I will not be led into a debate just before a fiscal event. We maintain a commitment and we want to be known as a force for good in the world. We want to punch great weight as global Britain, and the cash in the development budget is important to that.
Talking of cash, the £51 million provided through UNRWA has helped to educate about 500,000 girls and boys so far. It will pay to access healthcare for 3.5 million Palestinian refugees and create a social security net for more than 250,000 of the most vulnerable people across the region. In 2019, we also provided more than £16 million in humanitarian assistance to Gaza, supporting the health system, trauma care and emergency food supplies to more than 1.2 million people.
On the people-to-people programmes, hon. Members will intuitively know how civic activism and connections work. With other Members, I compliment the hon. Member for Strangford—you were very liberal with him, Mr Efford, for which we were all grateful—on the strong personal stories that he told about how one goes through pathways over time. I was amused to think that while the hon. Gentleman was on the streets, I was sitting my O-levels. It is good that he is passing on the baton of experience.
The people-to-people programme ended recently. It was a £3 million programme that brought together Israelis and Palestinians to co-operate to have a positive impact on communities and improve understanding between people on both sides of the conflict, and so build a basis for peaceful negotiation and resolution. The programme was also planned to have a research component that would inform any future work in the area. I will certainly speak to the Minister for Middle East and North Africa about contextualising that review with the requests from this debate and the opportunities through UNRWA.
We shall remain in close consultation with the United States and our international partners to encourage all parties to reverse negative developments on the ground, including by working regionally for peace and encouraging meaningful bilateral relationships. Ultimately, we shall succeed only when these are conducted by Israelis and Palestinians and supported by the international community.
Wayne David
Will the Minister give a commitment to at least explore the possibility of the United Kingdom putting itself forward to take up one of the two seats on the governing body of the new fund?
James Duddridge
I thought I had done that, but obviously not clearly enough. I will ask officials to look specifically at whether we should take one of those seats and at the timing of commitments. There is no point deciding late in the day that we do want to commit and that we would have liked a seat. There is a certain amount of timeliness. I sense that certain hon. Members are moving at the pace of the US, which I think will be slightly slower. However, I am more than happy to receive submissions on that and to pass them on to the Minister for the Middle East. I am happy to make that commitment, and I apologise that I was not clearer in terms of a commitment to see whether that would be advantageous and to do that at the right time.
To rebuild trust, we must see an end to detrimental actions on the ground. We consistently call for an immediate end to all actions that are likely to undermine the viability of a two-state solution. That includes terrorism, incitement, settlement expansion, the demolition of Palestinian property in the occupied Palestinian territories, including in East Jerusalem. The eviction of Palestinians from their homes causes unnecessary suffering and in all but the most exceptional cases is wholly contrary to international humanitarian law.
We are also concerned about further settlement advancements. Settlements are illegal under international law and damaging to peace efforts. The UK regularly urges the Government of Israel to end this counterproductive policy, most recently in an international statement alongside other international partners on 13 October.
However, we are also clear that Israel is a close friend, and it has many close friends in this Chamber, who reach out as part of friendship groups. The people of Israel deserve to live free from the scourge of terrorism and free from antisemitic incitement, all of which gravely undermines the prospects of a two-state solution, which is in everyone’s interest.
My right hon. Friend the Member for Chipping Barnet talked about prisoner payments, and we have raised that at the highest levels with the Palestinian Authority. With that, I will resume my seat.
Catherine McKinnell
I thank the Minister for that response. This debate is incredibly important and gives me great hope. The power of the possibility that this international fund holds is in the fact that it is not a party political issue. All parties have spoken in favour of working together for our shared ambition to build peace where currently that is a big challenge.
People-to-people work is not a fluffy afterthought. The civil society dimension of peacebuilding is about very practical politics. It is about how to garner public support for any future agreement and ensure that that agreement—the speech by the hon. Member for Strangford (Jim Shannon) was very powerful in this respect—can weather the challenges that it will inevitably face in the medium to long term.. Peacebuilding is essential for peacemaking. Nobody believes that co-existence by itself is going to create that lasting peace settlement, but it is absolutely necessary to ensure that it will last. It is up to politicians and Governments to have the will to make difficult compromises and reach an agreement. Ultimately, it is the people who will sustain that peace, who will benefit and who will reap the rewards of peace, security and co-existence.
I look forward to the Minister conveying the specific asks that have been made: that we put ourselves forward for a seat on the international fund that the US is leading, that we look at how we can contribute to it and be pioneers in leading this effort, and that we do so without delay.
Question put and agreed to.
Resolved,
That this House has considered UK support for an international fund for Israeli-Palestinian peace.
Integrated Rail Plan and High Speed 2
(4 years ago)
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Darren Henry (Broxtowe) (Con)
I beg to move,
That this House has considered the integrated rail plan and High Speed 2.
It is a pleasure to serve under your chairmanship, Mr Efford. I am grateful that this important issue has been selected for debate. Like many Members of this House, I am a passionate advocate for social mobility, a fervent supporter of the levelling up agenda and wholly committed to securing a carbon-neutral future. There is no doubt that I am seized by this matter, as MP for Broxtowe, hoping to foster benefits from a High Speed 2 east midlands hub at Toton.
I entirely agree with the Prime Minister that we must build back better and invest in an infrastructure revolution to recover from the unprecedented challenges and economic pressures caused by the covid-19 pandemic. HS2 is central to fulfilling all those aims, connecting our great towns and cities, accelerating our recovery from covid-19 and creating a prosperous, productive economy. Although it is most welcome that phase 1 of HS2 is under construction and that the Bill for phase 2a is making its way through the House, I want to focus on phase 2b of HS2, the scope and delivery of which is currently under review.
I understand that the National Infrastructure Commission’s rail needs assessment is being published this month and that the Government’s integrated rail plan will follow in the next few months. On this point, it is essential that the importance of the eastern leg of phase 2b is brought to the fore.
Catherine McKinnell (Newcastle upon Tyne North) (Lab)
I thank the hon. Gentleman for mentioning the eastern leg of the integrated rail plan. We have great representation in the room from the eastern leg. It stretches 500 miles from London to Aberdeen and Inverness, but in its current state it is sadly holding back the communities that it is intended to serve. That is why local authorities have come together to launch their Invest East Coast Rail campaign this Thursday. Will the hon. Gentleman join me in calling on the Minister to bring the Government’s support for that campaign to the fore and to ensure that the east coast main line is absolutely key in their thinking about investing in future rail for this country?
Darren Henry
I thank the hon. Member for her intervention. It is quite right that the Government invest in dependable rail lines that are quicker to their destination.
The connection from Birmingham to Toton, in the east midlands, and to Chesterfield, Sheffield and Leeds must be delivered in full. The council and business leaders in my area, and indeed in the north, have raised serious concerns with me that the eastern leg of phase 2b might be scaled back.
Matt Western (Warwick and Leamington) (Lab)
I congratulate the hon. Member on securing this important debate. Does he share my concern that, with the pressure of this pandemic and the subsequent costs, Government finances are such that there will be real pressure on the delivery of capital projects, and that it would be worth having a debate in the main Chamber on these schemes?
Darren Henry
I thank the hon. Member for his intervention. They are certainly worthy of a debate, but we need to make sure that we make the argument for future prosperity and for the potential of the people of this country, and not just for spending in the short term.
Should that scaling back come to pass, it would be counterintuitive, short-sighted and, frankly, unacceptable to communities in the midlands that have suffered from decades of chronic under-investment. Indeed, over the past five years, the east midlands region has had the lowest total public sector capital expenditure per person on transport on two occasions: in 2016-17 and then in 2017-18. In 2018-19, the east midlands received around 4% of the total capital expenditure across the UK—the second lowest after only Yorkshire and the Humber.
Despite those statistics, I wholeheartedly believe that the Government are committed to righting the wrongs of inequality and to levelling up and investing in the legacy of a green transport network. In the midlands, the new hub station at Toton will create thousands of highly skilled jobs, spark a huge improvement in local transport links and establish the east midlands region as a centre of innovation and renewable energy generation. It will provide green, carbon-neutral travel for the next century. It must go ahead, as the Prime Minister and numerous other Cabinet Ministers have repeatedly promised. Critically, the case for levelling up the eastern leg is more pronounced than for any other section of the railway.
Jason McCartney (Colne Valley) (Con)
I congratulate my hon. Friend on securing this important debate. He is passionate about the levelling up agenda, and not just for the east midlands. Does he agree that it will not just be the likes of Sheffield and Leeds that will benefit from the eastern leg and that towns in Yorkshire and the Humber, such as my local town of Huddersfield, will also benefit? Will he ask the Minister directly to commit the Government to deliver the east leg of HS2 on time, in full and at the same time as the western leg, to show their commitment to levelling up?
Darren Henry
I agree with my hon. Friend’s point, which is central to my argument. Towns and cities in Yorkshire, such as Huddersfield, Leeds, Sheffield and others, are all part of our levelling up, as are towns in the midlands, because levelling up cannot be done in part; it must be done in full.
It concerns me to read reports that communities surrounding the eastern leg have suffered from lower productivity and less investment, and are home to a number of social mobility coldspots, compared not just with the UK average but with communities on the western leg of phase 2b, from Crewe to Manchester. I draw the Minister’s attention to a recent study, “Mind the gap”, which highlights those inequalities. It shows that, despite housing 23% of England’s population, the east midlands is home to over 42% of England’s social mobility coldspots. It outlines that children born poor in these areas are more likely to stay poor. They are less likely to gain qualifications, and they are isolated from opportunity. Crucially, these areas are almost perfectly aligned with those experiencing high levels of transport poverty.
To be clear, it is not the east versus the west. We need the whole of phase 2b to be delivered, but the evidence is clear that communities on the eastern leg cannot and must not be left behind. As part of the levelling up agenda, the Government have said that they want to reduce regional disparities in the country. I welcome that, and I agree with the Prime Minister that we must build back better.
It is key to emphasise that when we speak of levelling up we are speaking of not merely one sector but a cross-departmental effort to build back better. Again, High Speed 2 is central to fulfilling that agenda, connecting our great towns and cities, accelerating our recovery from covid-19 and creating a prosperous, productive economy.
Tom Randall (Gedling) (Con)
I congratulate my hon. Friend on securing the debate. Does he agree that Birmingham is much closer to Nottingham than London, but the travel time from Nottingham to Birmingham is not that much shorter than it is to London? Although we often talk about improving north-south travel, improving east-west travel is also important, and schemes such as the eastern leg of HS2 will help to achieve that, and more.
Darren Henry
I completely agree with my hon. Friend. It is not just about speed, but about capacity to be able to achieve our aims.
There is no doubt that levelling up cannot be done in part. As I have said, it must be done in full. That includes levelling up communities, businesses and housing, and linking them with viable and efficient transport, thereby fostering true regeneration in regional communities such as the east midlands.
HS2 is so much more than a railway. It is important that we communicate its wider benefits. It is essential that the importance of the whole of the eastern leg of phase 2b is brought to the fore. Moreover, I want to press the case that Toton must remain as the HS2 east midlands hub in the Government’s integrated rail plan.
Lilian Greenwood (Nottingham South) (Lab)
I congratulate the hon. Gentleman on securing this important debate. He may not have been an MP at the time, but back in 2012 the options for phase 2 of the high-speed rail network ran to 347 pages and, after rigorous analysis, concluded that Toton was the right place for the station. That was not just because it had the potential to offer great interchange across our region, which local councils and other partners have now spent eight years developing, but because it provided the opportunity for regeneration—for housing and jobs. Does he agree that Toton beat other alternatives, including East Midlands Parkway, for those precise reasons?
Darren Henry
The hon. Lady is absolutely right. She is supportive of Toton, as are colleagues across the House, including my hon. Friend the Member for South Derbyshire (Mrs Wheeler) and others. Toton is really important to the story of regeneration. At Toton, there are plans for a high-tech innovation campus with 6,000 jobs, as well as garden villages and 4,500 homes. The site of Ratcliffe-on-Soar power station in a neighbouring constituency will be redeveloped into a national centre of excellence for green energy generation. The Government have supported the creation of a development corporation to oversee this huge regeneration project. It will change the lives of a generation of young people in and around my constituency.
Regarding potential alternatives for an east midlands hub, as HS2 Ltd’s March 2012 report describes,
“the intuitive interchange option for serving the East Midlands was potentially incorporating an HS2 station with the existing East Midlands Parkway station.”
Its viability was compared
“directly with the proposed East Midlands Hub station at Toton”—
the hon. Member for Nottingham South (Lilian Greenwood) will recall that from her time in Parliament, as she mentioned. Here, an initial appraisal conducted by HS2 Ltd noted engineering and sustainability issues with East Midlands Parkway, concluding that development around the HS2 station would not be supported.
[Ms Nusrat Ghani in the Chair]
In contrast, Toton is ideal and already functions as the centre point of a local transport strategy to connect over 20 villages, towns and cities across the region. On this point, I am excited to report that there are plans for tram extensions in Nottingham and Derby, new rail links—including reopening the Maid Marian line to Mansfield—more buses and better connections by road. This access to Toton strategy has the backing of the whole region, and would deliver the benefits of investment sooner. Therefore, it is critical that these plans and the wider Midlands Engine Rail programme are given the investment they deserve in the Government’s integrated rail plan, ensuring that we make the most of HS2 and connect as many people to it as possible.
To suggest that the station in the east midlands should move away from Toton would reflect a fundamental misunderstanding of what the Toton proposition has become. Toton will be a super-connected artery intended to pump new blood into a levelled up economy, a vision of the future and a blueprint for new ways of living and working.
Let us think for a moment. There are young people in communities such as the one I represent and in towns in the midlands and the north who are in school today. They are growing up with hand washing, wearing face masks, working in bubbles and learning online. For them, the investment that comes from HS2 is not about a railway. It is about hope, aspiration and a positive future: a future where their playing field has been levelled up, and where their potential can be untapped and harnessed. We all know covid has not affected everyone or every economy equally. The areas that were already left behind can now barely be seen in the rear-view mirror.
Economic recovery is not an option. Economy renewal is the key. HS2 runs through the centre of those left-behind towns and cities in the midlands and the north. There are compelling and comprehensive plans in place to harness the investment for the benefit of communities and businesses across the region. To give one example, two years ago, the Secretary of State for Housing, Communities and Local Government invited the Midlands Engine to bring forward this new form of development corporation to generate transformational economic, social and environmental change. That work, almost ready for submission, would result in 84,000 new jobs and £4.8 billion productivity for our economy.
The plans are not just for an extension of the old economy. The plans are for jobs for the next generation, and that is now. As the sun sets on industries such as coal-fired power stations, investment in infrastructure will bring forward sunrise industries: next-generation zero-carbon technologies developed by industry and universities, designed and built on the site of the former coal-fired power station at Ratcliffe-on-Soar; an innovation campus focusing on health, MedTech and biodiversity, alongside next-generation forms of living in a zero-carbon community, around the HS2 station at Toton; and next-generation forms of making and moving in the UK’s only inland air-based freeport around East Midlands Airport, which is already the UK’s largest dedicated freight airport. It is important to stress that these plans are not just compelling; they are credible. The Secretary of State for Housing, Communities and Local Government said so in the planning reform White Paper.
Set those benefits from HS2 in the east midlands alongside benefits across the whole stretch of the eastern leg up through Leeds to Newcastle. The impact will be breathtaking: over 150,000 new jobs and more than £60 billion added to the national economy. The benefits extend beyond jobs: 2.5 million lorries will be taken off the road, reducing carbon emissions by 76%, and 1.2 million cars every day will be replaced by rail, reducing carbon emissions further still.
Darren Henry
No, I will not. I need to make some progress.
There is no doubt that hard investment choices need to be made in this country, but we cannot lose sight of the long-term benefits by focusing too much on the short-term costs. It is not a question of whether we can afford this. That misses the cold, hard logic of investing in long-term strategic infrastructure. The Victorians knew what they were doing, and we are still generating economic benefit from their investment today. The question is whether we can afford not to do this. Over 13 million people are standing ready to benefit from this new infrastructure.
I am asking, first, for assurances that the eastern leg of phase 2b of HS2—from Birmingham to Toton in the east midlands, to Chesterfield, Sheffield and Leeds—will not be cancelled. Secondly, I would be grateful to meet the Minister to discuss progress on the eastern leg in my capacity as co-chair of the midlands engine all-party parliamentary group. Specifically, I hope to have productive discussions with the Minister to provide reassurance to my constituents that Toton station and, more generally, the eastern leg of phase 2b will happen.
In conclusion, recovery from covid-19 means investment is more important than ever. My concern is that communities along the eastern leg of HS2 have been left behind in the past. I urge the Minister to look at the evidence provided and ensure that the east midlands and, specifically, Toton station, will not be forgotten in the integrated rail plan. There is no doubt that levelling up cannot be done in part; it must be done in full.
The Minister of State, Department for Transport (Andrew Stephenson)
It is a pleasure to see a former Department for Transport Minister in the Chair. I thank my hon. Friend the Member for Broxtowe (Darren Henry) for securing this important debate. I also thank the hon. Members for Newcastle upon Tyne North (Catherine McKinnell), for Warwick and Leamington (Matt Western) and for Nottingham South (Lilian Greenwood), as well as my hon. Friends the Members for Colne Valley (Jason McCartney) and for Gedling (Tom Randall) for their contributions. An honourable mention goes to the Whip, my hon. Friend the Member for Erewash (Maggie Throup), who cannot speak, but I am sure that if she could, she would tell me off and be bending my ear about this exact subject.
Andrew Stephenson
Thank you, Ms Ghani.
I want to reiterate the Government’s commitment to HS2 and to enabling the east midlands, Yorkshire and the north-east to reap the benefits of high-speed rail services.
Hilary Benn (Leeds Central) (Lab)
I congratulate the hon. Member for Broxtowe (Darren Henry) on securing the debate. The Minister will be aware—he has heard the views expressed this afternoon—that splitting the Bills into two has given rise to concern about potential for delay or worse in respect of HS2 east. My constituents in Leeds, who really want this, for better transport links and for jobs, would be grateful for a specific commitment from the Government, namely, that they intend to proceed with HS2 east—I am backing up what the hon. Member for Broxtowe had to say—to Leeds, at the same time as the western leg to Manchester.
Andrew Stephenson
The right hon. Gentleman makes a good point. The reason why we have talked about doing this in more than one Bill is to speed up the process and deliver the benefits sooner. It was a recommendation that came from the Oakervee review. We acknowledge that the phase 1 Bill was introduced to Parliament in 2013 and did not get Royal Assent until 2017; similarly, the phase 2a Bill was introduced in 2017 and still does not have Royal Assent to this day. Hopefully, the idea of splitting it up is a good idea, put forward by Douglas Oakervee in his review, in order to speed up delivering the benefits of both the eastern and western leg.
Since the announcement of the integrated rail plan in February, I have met local leaders, Members of Parliament and business groups to hear their priorities for major rail investments in the midlands and the north. In all these meetings, regional representatives made it clear how important the potential economic benefits of HS2 are to their local communities. I will therefore address the concerns expressed today and reported in the media about the Government’s commitment to the eastern leg. I will try to respond to all the points raised in the four and a half minutes I have left.
In February, following the Oakervee review, the Prime Minister confirmed that HS2 will go ahead. He also committed us to delivering an integrated rail plan to determine how best to deliver phase 2b alongside our other major rail investments in the midlands and the north. As things stand, communities on the eastern leg will be waiting until 2040 to realise the benefits of HS2. That is clearly too long to wait, which is why our integrated rail plan is working on ways to scope, phase and deliver phase 2b alongside other transformational projects, such as the midlands rail hub and Northern Powerhouse Rail, with a view to not only bringing down costs but delivering the benefits of those major investments as quickly and efficiently as possible.
The integrated rail plan will be informed by a rail needs assessment for the midlands and the north by the independent National Infrastructure Commission. The NIC’s interim report was published in July, and we expect its final report to be published before the end of this year. I am aware that there are concerns about what the NIC is likely to suggest in that report, but as an independent body it is right that it looks at all available evidence when undertaking its assessment. Once the report is published, it will be for Ministers to consider the NIC’s conclusions and make final decisions on the integrated rail plan.
I will briefly mention the western leg of phase 2b, as I know that there have been rumours that the Government have scrapped the eastern leg in favour of focusing on the western leg. I confirm that that is simply not true. I made the point earlier to the right hon. Member for Leeds Central (Hilary Benn) that the reason behind this was simply in order to smooth the parliamentary passage of the legislation. We think that delivering phase 2b in more than one Bill, subject to what the integrated rail plan says, is a sensible way to move forward. The only reason why the western leg came forward before the eastern leg is that the western leg is shorter than phase 1 or 2a of the eastern leg. The design of Manchester Piccadilly is absolutely crucial for how we deliver Northern Powerhouse Rail, which is the only reason why we have started a design refinement consultation on the western leg rather than on both legs simultaneously.
Kevin Hollinrake (Thirsk and Malton) (Con)
Even across the north, the west is economically better off than the east of the country. Does that not make the case for investment to go to the east of the country first, or at least at the same time as the west?
Andrew Stephenson
As the Prime Minister said, it is not “2b or not 2b”. We have to get on with levelling up across the country. As my hon. Friend the Member for Broxtowe said, this is not about east versus west. Many Members here and many stakeholders want to see the full network delivered, as promised for many years. However, we will not know what that will look like until the integrated rail plan is published, which will hopefully be soon.
My hon. Friend the Member for Broxtowe makes a compelling case for his constituency, for levelling up and for wider regeneration that could happen around the Toton site. As the Prime Minister recently said, as we build back better from the pandemic, we will be doubling down on levelling up, and HS2 can play a major part in that. While covid-19 has not stopped us from pressing ahead with HS2, it has made levelling up even more important, to help ensure that no part of the country is left behind as we work to recover from the impact of the pandemic.
By improving capacity and connectivity, HS2 will give people better access to jobs and businesses access to larger markets and suppliers. Growing local economies and levelling up the north and the midlands is at the heart of what we are trying to achieve, and for that reason I am happy to confirm that Ministers from the Ministry for Housing, Communities and Local Government and the Treasury will be closely involved in drawing up the IRP. We know that it is not only about building a railway but about taking a holistic view of how to capitalise on our investments to help to boost regional economies.
Earlier this year, I had a very useful and informative visit to the proposed site at Toton with my hon. Friend. I also had good discussions with the leader of Nottinghamshire County Council, Kay Cutts, on this issue. I will continue that dialogue. I am more than happy to agree to my hon. Friend’s request for a meeting with him and the all-party parliamentary group. This railway is not just for the short term; it is a long-term investment that will bring our cities closer together. I hope to be able to provide certainty to my hon. Friend as early as possible.
Question put and agreed to.
SMEs and the Net Zero Target
(4 years ago)
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Kevin Hollinrake (Thirsk and Malton) (Con)
I beg to move,
That this House has considered support for SMEs and the net zero target.
It is an absolute pleasure to serve under your chairmanship, Ms Ghani. I draw hon. Members attention to my entry in the Register of Members’ Financial Interests on all things small business.
I am very supportive of the push to get to net zero as soon as possible. I absolutely believe that business will help to deliver that solution even faster than 2050. My principal concern in bringing forward this debate is that, in the headlong rush to get to that point, we must not treat businesses as collateral damage. We have done that in the past. When we had a change of emphasis in lending back in 2008, that happened to some good businesses, as well as to some businesses that had probably borrowed inappropriately.
I want to give an example of a business in my constituency. There is a very good business a few miles away from where I live called the York Handmade Brick company. It makes wonderful, handmade bricks, that look like old clamp bricks, for lots of houses around the country. It is a fairly small business employing about 20 people and is an award-winning company. Its processes use fossil fuels—natural gas—to fire the bricks. Now, I can see a situation where, in future, banks may look at this business and say, “That business does not sit with our ethical and sustainable goals portfolio. Therefore, it is perhaps not a business we want to support.” If that business needs to borrow some money to invest to move away from fossil fuels, for example, and move to other processes—biogas being an obvious one—what that company will need as it moves, down the line, to a different process, is money to invest. It is absolutely critical that our banking sector takes such businesses forward with us. Hon. Members might say that that is blooming obvious, but that is not always what we have seen in the past.
If we are going to get to net zero, it is absolutely vital that the private sector is taken with us. It will provide the cash and capital to invest in new processes and new techniques. We know for an absolute fact that the private sector is much better at allocating capital than the public sector—I might point to Croydon council in that regard, if Members have seen some of the recent news reports. The private sector is much better at allocating capital; in the past, the public sector has misallocated capital.
Of course, that investment will contribute towards innovation, and the solutions to climate change are about innovation. The more innovation and the more competitive free markets we have, the more our consumers get a better deal at a better price. We are seeing some interventions from shareholders in banks, who are saying, “We do not want you to invest in these kinds of industries anymore.” Shareholder action groups will get increasingly vociferous, which could be to the detriment of small and medium-sized enterprises, and even bigger companies. This is not just about SMEs: bigger companies will remember that last year, for example, there were some protests by actors from the Royal Shakespeare Company regarding BP’s sponsorship of that organisation, which led to a parting of the ways between the RSC and its sponsor. That is despite the fact that BP is working within our overall regulatory framework, and will be incredibly important in the future in making the investment we need to move from a dependence on fossil fuels to a greater dependence on renewable energy.
We have seen this with recent shareholder action in terms of things like the covid corporate financing facility, which is dispensed by the Bank of England. Again, there has been pressure from certain shareholder groups, saying that at this crucial time, when lots of businesses are in trouble because of covid, support for those businesses should have been linked to environmental objectives. How unfair would it have been, when hundreds of thousands of businesses employing millions of people are in crisis, to link those supportive measures to sustainability goals at such short notice?
My key message for this debate is that any intervention by the Government and our financiers, who are so critical to the UK economy, must be comprehensive, well considered, strategic and stable. Our interventions should be consistent over a long period of time to get to that long-term goal. Again, one example I might give is the recent news that we will bring forward the date on which we move away from fossil fuel cars—diesel and petrol cars. It was 2040; it has been brought forward to 2035, and has now been brought forward again to 2030. The motor manufacturers, of course, are gearing up for that, although it presents some real challenges for that sector during what is a difficult time anyway. What about the other businesses in that supply chain? Lots of other SMEs will have to make that change as well: those could be parts manufacturers, but they could also be forecourts. They are going to have to make massive changes over a very short period of time, so we must make these decisions in a strategic fashion.
Andrea Leadsom (South Northamptonshire) (Con)
My hon. Friend makes a really good point about giving sufficient notice. He also points out that businesses will always overachieve, and he might recall that back in 2015, the announcement was made that we would be taking coal off the system by 2025. It has indeed been the case that businesses have overachieved, because coal is almost off the system and it is only 2020.
Does my hon. Friend agree that there could be some merit in the UK Government doing what many G7 countries have done, which is to create a development bank that brings in some offer of Government funding to help with the transfer towards net zero that we all want to see, and from which all SMEs could benefit?
Kevin Hollinrake
I absolutely agree with my right hon. Friend, and commend her on the work she did when she was in the Department for Business, Energy and Industrial Strategy as energy Minister, providing a long-term framework that businesses can work within to phase out coal over that period of time: she was very far-sighted with her interventions. I am sure that my hon. Friend the Member for Grantham and Stamford (Gareth Davies) will talk about a development bank in his remarks in a few minutes.
One other area in which we need to look at a more strategic framework is that of the green homes grants. In our manifesto, we committed to about £9 billion for retrofitting, and I think we have committed about £2 billion so far through those grants, which is very welcome. One of the difficulties, as I have communicated to the Minister, is finding installers in our area. A lot of installers are thinking that £2 billion will go very quickly and, therefore, what is the point of applying?
The Federation of Master Builders has some data on that. There have been 180 inquiries to the Federation of Master Builders and only three have completed the paperwork because it was seen as too short a timescale. If we have a longer timescale, businesses will be more likely to invest in the training and the necessary other actions they need to take to qualify as a registered installer for that grant. A long-term, stable framework will encourage much-needed investment.
I will go back briefly to 2008. I am representing here, as I often do as co-chair, the all-party parliamentary group on fair business banking. Much of our work of the past 10 years—including the three years I have been involved—has been around trying to clean up the mess of 2008, when we withdrew support from lots of SMEs, unfairly and far too quickly, and did not give them the chance to transition into a different kind of business or even rebroker their finance.
We need to learn from that in terms of a timescale and a structure for that change and forbearance, in which the APPG has much experience. We need to learn from history. Warren Buffett once said,
“What we learn from history is that people don’t learn from history.”
It would be good to have a focus on that particular episode in our banking history.
With regard to banking, I mentioned before that banks are seeing some shareholder action in the businesses and sectors they will support in future. Access to capital being the most fundamental requirement of any business, this is a hugely important topic. As such, the APPG has come up with a project called Bankers for NetZero. It is engaging with the banking sector and others. It is supported by Volans, the sustainability think-tank, and Re:Pattern, who specialise in business transformation social impact. It is developing policy recommendations to lead to COP26, looking at the regulatory environment and the part banks play in financing; engaging with businesses on net zero challenges; and looking at opportunities and obstacles for banking, while trying to formulate some evidence-based, targeted policy, and to make recommendations on legislation and regulation, in accordance with the United Nations environment programme finance initiative, or UNEPFI, for short. The key objective is that no willing SME is left behind in this vital change to our economy.
One big issue over the next few years is the expected transition of lots of businesses from dependence on fossil fuels to a completely different model. That will be at a time, of course, when a lot of those SMEs are burdened with a significant amount of debt. TheCityUK recapitalisation group report said that SMEs are currently burdened with around £35 billion of unsustainable debt, which will put around 780,000 businesses at risk.
As a result of the covid crisis, it will be very difficult for the two thirds of businesses whose leadership is more focused on being greener and better to make that transition. We know how important SMEs are to our economy: 99% of all businesses are SMEs and they employ 61% of private sector employees, that is, 5.9 million businesses in total. That is a business environment that has been a huge success under this Government.
SMEs are disproportionately positively represented in our levelling-up areas. That also fits into the Government agenda. A very high proportion of SMEs are in construction; 99% of all construction businesses are local builders. They are going to be vital to retrofitting and other measures that we require to modernise our housing stock. They employ hundreds of thousands of local workers and 70% of all apprentices. Other sectors that have a high proportion of SMEs are transport and retail.
I know the Minister’s Department is looking carefully at the next few months. In terms of immediate business support, we need to think about things such as bounce back loans. Not all businesses can access bounce back loans, which is a huge issue. Lots of our businesses are with non-bank lenders, such as Tide, which do not have access to the Bank of England’s term funding scheme for SMEs and therefore do not have the capital to lend to them. Businesses already face that challenge.
Many businesses are struggling to get the new top-ups that the Department has brought forward, which is welcome. As for the businesses that can access that liquidity, many are swamped with applications or are closed to applications from new customers. We are locking some SMEs out of support right now, and we are going to need them to provide us with the solutions to our economic challenges moving forward. There are also issues with the new measures to allow businesses to pay this debt over a longer period of time—the “pay as you grow” guidance. That will be key, as it will allow businesses to pay back the loans over 10 rather than six years.
I welcome the Government’s focus on moving forward to a greener future. The Pension Schemes Bill that was before the House yesterday certainly moves us towards the net zero horizon. Last week, the Chancellor announced a taskforce for climate-related financial disclosure for large companies and financial institutions by 2025 to report on their progress in those areas. We also have the new green taxonomy and a plethora of policies in my right hon. Friend the Minister’s Department on the clean growth strategy.
In terms of where we need to go, first we need to ensure that we have diversity in finance provision. We need to solve the non-bank lender problem. However, I would also like us to invest in a new type of bank: a regional mutual not-for-profit bank that has a much more patient approach to providing finance to SMEs. During the financial crisis of 2008 and all the way through to 2013 in Germany, lending rose by 20% because of the regional banks. In the UK, lending to SMEs dropped by 20%, showing that patient capital works much better when it is provided by a diverse range of providers.
We need a sector-specific just transition road map that looks at every different sector. If some of the current provisions for hospitality, such as the VAT cut, were extended or made permanent, that would be welcome. The British Business Bank needs a role in supporting and advising SMEs. We need to standardise just-transition restructuring, so that if businesses are seen as being in a sector that banks do not want to support, there is a proven standardised process for taking those SMEs from where they are today into the greener future. The shared prosperity fund should be used to support SMEs to make the transition and we should have a fiscal policy that is conducive to allowing SMEs to make the transition, with tax breaks, for example, to decarbonise.
My final point to the Minister—and I know he gets this—is please, please, please let us have no cliff edges, but a strategic approach and a long-term stable framework towards that net zero future.
Alex Sobel (Leeds North West) (Lab/Co-op)
It is a pleasure to serve with you in the Chair, Ms Ghani.
I thank the hon. Member for Thirsk and Malton (Kevin Hollinrake) for securing the debate on this vital subject. In 2019, the business sector accounted for 18% of total carbon emissions. It is one of the biggest contributors of greenhouse gas, along with energy production and transportation. SMEs make up 99% of firms and 61% of the private sector workforce, and contribute £2.2 trillion in turnover, which makes them indispensable to the UK economy. They are extremely innovative, generate vast amounts of employment, and deliver economic prosperity and social cohesiveness. They are also disproportionately present in deindustrialised areas, and therefore present a unique opportunity to build back better.
Nowhere is that more evident than in Leeds, where we have a multitude of SMEs meeting social and environmental responsibilities. For example, Seagulls Paint was awarded a five-year contract by Leeds City Council for the collection, reprocessing and distribution of unwanted household paint, collecting and reusing more than 170 tonnes of paint a year. Other SMEs have been set up with the express intention of protecting the local and global environment, and they include Last Mile Leeds, Revive IT, the Phoenix Works and Revive Leeds.
It is not just a matter of businesses that have a sole environmental focus. Many are leading the way in taking steps to make their businesses more environmentally friendly. A recent opinion poll found that more than half—54%—of SMEs said that they had taken steps to green their business in the past 18 months. When asked whether the transition to a green economy would be financially positive or negative for their business, 61% were optimistic, and just 8% said that the overall impact would be likely to be negative, on balance. Participants pointed to net zero legislation, the ongoing war on plastics, climate activism movements and the green recovery movement as drivers of the transition, so SMEs are rising to the challenge. There are huge benefits and opportunities in the transition.
The hon. Member for Thirsk and Malton mentioned retrofit, and the opportunities suggest that we could create 100,000 new jobs in as short a time as 18 months if the actions in question were taken. In addition to the action that the Government have taken, there should be a reformation of the single-household approach of the energy company obligation, perhaps with the launch instead of area-based, street-by-street programmes supported and supervised by local authorities. There are areas in my constituency that still do not have external wall insulation, although it was planned more than 10 years ago. Another possibility is support for the development of community-led retrofit schemes and co-operatives, such as the Carbon Co-op in Manchester.
Those are all opportunities for SMEs, but many SMEs will come out of the pandemic burdened with debt, as the hon. Member for Thirsk and Malton said. To contribute to a net zero transition, they will require capital investment and business support. It is important that the Minister responds to my question about what support SMEs will be given to ensure that they have appropriate information, incentives and targets to be able to pull together to contribute to our collective ambition of net zero. What business support will they receive and, as the hon. Gentleman said, what financial support and investment can they receive?
As the chair of the all-party parliamentary group on net zero, I want to finish by talking about our action plan, which looks at building an expansive and ambitious covid-19 green recovery package that focuses on green job creation and workforce retooling, especially in disadvantaged areas. That includes looking at the growth of solar installers and the reintroduction of the feed-in tariff. Decarbonisation through heat pumps, electric heating or hydrogen would also present opportunities for SMEs as installers. All those things present a huge opportunity to create new SMEs and new jobs within them, but they need the business support, investment, incentives and targets, and an ecosystem that creates the opportunity for net zero for SMEs and business at large.
Gareth Davies (Grantham and Stamford) (Con)
It is a pleasure to speak in the debate, Ms Ghani, and I congratulate my hon. Friend the Member for Thirsk and Malton (Kevin Hollinrake) on securing it. I shall not repeat the statistics about how critical SMEs are to the national economy, but just point out that behind every business is someone who had an idea, stuck it out, saw it through and made it happen. As the son of a small businessman I know exactly how hard it is, so it is right to have a debate about how to support them to tackle one of the great challenges of our generation.
The debate is, of course, about support for SMEs and the net zero targets. I do not think that it is controversial to say that SMEs are both a cause of and a potential solution to climate change. The Federation of Small Businesses has said that about 16% to 18% of emissions are caused by SMEs, but also, given their might, they are a huge potential solution, with a view to our meeting the targets set down in legislation. We should be proud of that. Their role in our communities, as well as the knock-on effect on their customers and people who interact with them, can have a great impact.
Climate change is a risk and an opportunity for SMEs. As the hon. Member for Leeds North West (Alex Sobel) said, when surveyed SMEs say that they believe climate change is a significant risk, whether to the supply chain or because of extreme weather. However, it is also a huge opportunity for SMEs to show great innovation and to capture the opportunity of a changing climate. We should encourage and embrace that.
As my hon. Friend the Member for Thirsk and Malton said, much of this comes down to money. It is clear that in the UK we have a financing gap for SMEs. Only 30% of SMEs use external capital and financing. Many more would like to use it, but are unable to do so. Although the figure is a couple of years out of date, I understand that the National Audit Office has stated that there is a £22 billion financing gap for SMEs.
What should we do about the fact that SMEs need to get ready for climate change in order to mitigate the risk and capture the opportunities? How do we fix that financing gap? I have two potential solutions. First, I applaud the work of the British Business Bank. It is a great innovation as a financial institution and it works with 98,000 business in our country. It has £8 billion of financing and it has proved its worth through the coronavirus crisis. I believe that it should have more money.
The Government have shown, in their latest innovation for meeting our net zero targets, that they are willing to hypothecate the gilt markets with a green gilt. What a good idea that was. We could use the proceeds from that green gilt to help finance the British Business Bank to hypothecate its funding to help SMEs prepare for climate change and our net zero targets, and also to help them innovate and capture the opportunities.
Secondly and finally, as my right hon. Friend the Member for South Northamptonshire (Andrea Leadsom) so eloquently said, we must now look to a British development bank, rolling in the CDC as our international finance arm and rolling in the British Business Bank, to create a huge balance sheet from which we can issue bonds that will target not only regions but SMEs to help them meet the challenges of tomorrow and finance a future that is net zero.
Scott Mann (North Cornwall) (Con)
Thank you for your chairmanship today, Ms Ghani. I echo the thanks to the hon. Member for Thirsk and Malton (Kevin Hollinrake) for introducing this important debate.
Given that SMEs employ more than 60% of the private sector workforce, it is right that they play their role in this defining issue for our generation. I believe that our vibrant private sector businesses and entrepreneurs, with the right guidance from Government, are the key to meeting our climate change obligations. Green businesses are setting up across the UK, with the aim of reducing our climate emissions and getting them under control. Some of those products and services are playing their part in removing and stopping the release of far more CO2 emissions than they are creating, and as parliamentarians we must bang the drum for those businesses. I will therefore shamelessly plug businesses in my constituency in this debate.
Water Powered Technologies in Bude has created the Papa pump—a pump that is lighter and smaller than the alternative options available. It uses no electricity and, with no moving parts, is probably the world’s simplest and most cost-effective water pumping solution. Balaena Offshore Utilities is creating unique solutions to island and coastal communities’ water needs. It works out of the Gaia Energy Centre in Delabole, a facility that was built to celebrate the UK’s first wind turbine firm in Delabole—a revolution in 1991.
CleanEarth Energy in Wadebridge is helping people to refit their homes to provide energy-efficient solutions. Also playing its part is the Bude ReFILL shop—a brilliant shop that is designed to eliminate the need for plastic packaging by encouraging customers to bring their own containers to refill. Bude Cleaner Seas is working on a couple of brilliant solutions to cut plastic pollution. Reuse eliminates the need for plastic packaging, which can litter our planet indefinitely, and cuts the CO2 emissions that would have been released had the products needed to be produced.
There are other examples of great local businesses and community groups in North Cornwall that have set up to protect our climate, and I am sure that colleagues will have similar experiences in their constituencies.
The post-covid, post-Brexit period will provide an opportunity fundamentally to adjust the way in which our economy works, and I suspect that many consumers will look at products and services for the future. We can cut supply chains and ensure that local businesses are supported. A simpler supply chain will help us to cut our emissions but will require investment in new equipment and lending support for green finance investment. As my hon. Friend the Member for Grantham and Stamford (Gareth Davies) suggested, new lenders, banks, crowdfunders and other organisations can look at investment.
I should like to raise with the Minister an issue that has recently become a phenomenon in Cornwall: houses being knocked down and rebuilt. Materials have been shipped to other parts of the country, only to be shipped back down. Will the Minister look at that? If we recycle some of our aggregates in Cornwall, we will reduce our carbon footprint quite quickly and help small and medium-sized builders to reduce their emissions.
It has been a fantastic debate and a pleasure to take part.
Ms Nusrat Ghani (in the Chair)
That was an eloquent tour of all the SMEs in North Cornwall.
Richard Thomson (Gordon) (SNP)
It is a pleasure to serve under your chairmanship, Ms Ghani. I congratulate the hon. Member for Thirsk and Malton (Kevin Hollinrake) on securing the debate and commend him for the work that he does through the all-party parliamentary group.
The hon. Gentleman made a number of points about the importance of innovation in the role of banking. In the aftermath of the 2008 banking crash, a number of banks looked to rebalance their balance sheets off the back of their SME clients, and we must make absolutely sure that does not happen in the aftermath of this crisis.
The pressures on SMEs and the difficulties in ensuring they play a full part in the pursuit of the goal of net zero are well understood. The goal of many SMEs will understandably be to ensure their survival, often week to week and month to month, rather than to focus on the wider goal of net zero.
There are two roles for the Government, the first of which is to help to ensure that the businesses are still there and to help them to transform through the legislative environment, as well as facilitating change and innovation through grants and investment. On ensuring that businesses are still there, it is unfortunate that, even with the extension of the furlough, the owners of so many SMEs find themselves on the list of the excluded—those remunerated through dividends. That sends out a poor message that we are not helping them to do what they do best and grow their businesses and position them for recovery. The Minister needs to hear that, and although I am sure he has heard it many times, I make no apology for repeating it. I wish him strength in making that argument where it needs to be made.
The other role for the Government is in helping businesses to transform. It will help if there are no cliff-edges and no surprises. The Government have intervened through the bounce back loan scheme and the coronavirus business interruption loan scheme. The hon. Member for Thirsk and Malton spoke of the difficulties that businesses in his constituency faced, particularly if they operate through non-traditional lenders, in accessing CBILS and BBLS. A number of businesses in my constituency face the same difficulties and needless obstruction to what was intended by the schemes.
Croydon Council was mentioned, not necessarily in dispatches, but let me speak up for the role of local authorities. As a former council co-leader, one of the things of which I was proudest was being the first authority in the UK to introduce a carbon budget, which stood alongside the revenue budget and the capital budget so that decisions could be taken on an equal footing. What became very apparent very quickly was the difficulty, once the low-hanging fruit had gone, with some of the decisions that had to be taken to make progress and operate within the resource envelope. That was in the context of an annual revenue budget of £500 million and a capital budget of £100 million, so the difficulties for SMEs are well understood.
We have heard points made about the shared prosperity fund. I could have a debate all to myself about the bumpiness and uncertainty around devolved funding at the moment. I will not go down that particular rabbit hole at this point, except to say that it helps if there is clarity on investments and no cliff edges from the Government. That will enable the making of strategic, tailored decisions to get us to our goal.
To draw my remarks to a close, the Scottish Government have their own programme for Government, which has strategic, targeted aims to embed generational equality and regional prosperity. A part of that is about investing £100 million in a new green jobs fund over the next five years to support businesses to provide sustainable and/or low carbon products, and a £60 million youth guarantee to provide increased opportunities for green apprenticeships. That is on top of the investment that needs to go into broadband. The £600 million R100 programme will bring broadband to all parts of Scotland, which will be of particular benefit in helping SMEs in rural areas to survive and thrive, and there is also the investment of £62 million in the energy sector. Many companies, big and small, in the oil and gas sector have an enormous role to play in the big strategic transition that we need to meet, and that is important.
To wrap up, it is imperative that the Government prioritise the SME sector. We need sector-specific roadmaps with clear goals and deadlines. We need to extend the mandate for British business banks’ support for SMEs making the transition, and make specific provision for SMEs in the shared prosperity fund. We need a more expansionary fiscal policy to support SMEs, and we need to encourage the diversity of supplies to SMEs.
Matthew Pennycook (Greenwich and Woolwich) (Lab)
It is a pleasure to serve under your chairmanship, Ms Ghani. We always state this as a courtesy when opening our remarks in this place, but I am genuinely grateful that the hon. Member for Thirsk and Malton (Kevin Hollinrake) secured this debate, because the subject deserves far more attention in this House than it has received to date. When we talk about decarbonisation of the kind required by the net zero target, the focus is invariably on either big market trends or the action that the Government must take to drive emissions reductions across the largest emitting sectors of the economy. Although it is recognised that SMEs will be impacted by both, the assumption is always that they will simply adapt to any change made. To some extent, that will no doubt be the case, but, given that SMEs are the backbone of our economy, they need to be much more than an afterthought in our thinking about net zero, and much more thinking will need to be done about what targeted support they will need to ensure that the transition to net zero is as orderly as possible. The hon. Gentleman made very good points about the risks entailed when that does not take place and the need to learn lessons from history.
I intend to touch on three specific areas where there is clearly a need to do more to support SMEs in transitioning towards a local carbon economy. Before I do, I want to make two general points about the Government’s approach to climate action that have implications for them. The first is the need for a clear and credible net zero strategy. Setting a net zero target was an essential first step, but hitting that target requires a plan for its delivery. Despite having legislated for it more than a year ago, the Government have still not brought forward such a strategy. Indeed, core building blocks of it, from the national infrastructure strategy to the energy White Paper, have been repeatedly delayed. Although there will need to be a sector-specific component for SMEs in it, the most important thing is that the Government bring forward that comprehensive strategy as a matter of urgency to provide clarity and certainty for SMEs and other sized businesses, and a framework within which they can make investment decisions. The test of the announcement expected from the Prime Minister tomorrow will be whether it moves us forward towards that comprehensive strategy.
The second general point is that there is a real need for the Government to prioritise decarbonisation in any coronavirus stimulus package, and in particular a need to bring forward significant investment in low-carbon infrastructure. It is no good providing targeted net zero support for SMEs if the systems that they are embedded in and the infrastructure that they rely on are not transformed.
On the targeted support that SMEs require to make the transition in an orderly fashion, there are three areas, as I said earlier, that require more focus. First, SMEs clearly need more information and guidance on how to progress towards net zero. That not only means better access to tailored business, financial and legal advice; we need to do more to ensure that SMEs are persuaded of the commercial importance of planning for the transition to net zero early and the detrimental implications of not doing so.
The Government should look at what more they could do to support innovation in relation to SME business models and manufacturing processes. There are good examples of where this is happening in other countries across the world. The Dutch green new deal, for example, provides government-backed institutions to offer free technical advice to help businesses in Holland become more efficient. More could be done to augment and enhance the role of local government and local enterprise partnerships in engaging SMEs on the issue of net zero and helping them understand the business and supply chain opportunities that exist as part of it.
To date, while organisations such as the Carbon Trust and the Federation of Small Businesses have stepped in to provide SMEs with support along these lines, the Government themselves have done very little. Will the Minister outline in his response what plans, if any, the Government have to help inform and advise SMEs about how best to decarbonise their businesses? Secondly, as many hon. Members have said, SMEs undoubtedly need more help to access financing. Many have spoken about the pressure that SMEs are under as a result of the pandemic; the fact that they are struggling with high levels of debts and substantial losses of revenue. Many have also spoken about the financing gap that exists, not least the hon. Member for Grantham and Stamford (Gareth Davies) in his succinct and well-argued speech.
Other countries have created institutions to address this problem—the KfW in Germany, the Small Business Administration in the US, the Business Development Bank of Canada. I would argue that we do not have anything that does the same thing. There is a need to look again at what the British Business Bank could do, but also to establish a national investment bank with a clear green mandate—as we called for as part of our green economic recovery last week and challenged the Government to bring forward. Such a bank could provide low-cost, long-term financing to SMEs to help their transition in the way that the KfW has provided in energy efficiency loans to SMEs in Germany. Crucially, a national bank could be integrated into a network of regional outposts to ensure local delivery. We know that the Government have been discussing this for some time. Will the Minister confirm whether they have finally decided to establish such a bank? What sort of timeframe are we looking at for when it might be operational?
Lastly, SMEs need support with skills for their workforce. The Confederation of British Industry has estimated that nine out of 10 employees will need to reskill by 2030. That will require a national low-carbon skills strategy that embeds sustainability and net zero across the whole education system. We called for the Government to bring forward a national retraining strategy to deal with the immediate jobs crisis, while meeting the longer-term needs of a low-carbon economy. Much more could be done in this respect. Will the Minister explain what thinking the Government have done, if any, on a net zero skills strategy that will provide SMEs a workforce that is capable of successfully transitioning?
SMEs will be an essential component of the green transition, but to meet the challenge ahead, they need clarity, certainty, a wider package of investment and targeted support for information and technical advice, financing and skills. I look forward to hearing the Minister’s thoughts on all those areas.
The Minister for Business, Energy and Clean Growth (Kwasi Kwarteng)
I am very pleased to be conducting this debate under your eagle eye, Ms Ghani. I am also pleased to welcome my hon. Friend the Member for Thirsk and Malton (Kevin Hollinrake), who did a terrific job in outlining the issues. He has long been a champion of small businesses in this House and a very effective advocate for those interests and businesses which, as many hon. Members have pointed out, are absolutely essential to our economy. I will address a number of his points and then turn to points made by other hon. Members in this debate.
We have to make clear our absolute 100% commitment to net zero as a Government. The Prime Minister has shown many times that this is at the centre of our strategy. We also feel that, given where we are with covid, it is absolutely necessary to build back better. As my hon. Friend the Member for Thirsk and Malton said in the first part of his speech, the 2008 crisis was extremely difficult, but one of its bad features was that we did not as a global community look at climate change and think about building back greener and better in the aftermath. People in this Government, in the Opposition and in Governments across the world are much more focused on building back greener and building back better as a consequence of this covid crisis.
As my hon. Friend said, SMEs are the backbone of our economy and will have a key role in driving economic growth. He described a headlong rush to net zero; others might take a different view. However, we cannot assume that the push to net zero will be imposed on businesses. We have to take our people and our SMEs along with us. I fully accept that we should engage with SMEs. I do this fairly regularly, as I am sure he and others do as local MPs. If he has SMEs in his constituency that he wants to talk to about net zero with me, I urge him to engage with me on that. It is a two-way street, and I look forward very much to engaging with many of the excellent businesses in his constituency. My hon. Friend the Member for North Cornwall (Scott Mann) gave us a flavour of the many SMEs engaged with net zero in his constituency. He said that net zero and the covid-19 crisis would “fundamentally adjust” our economy, which was an excellent and well-made point.
On SME engagement, we have a net zero small business engagement strategy that seeks to strengthen our approach to working with SMEs, which is particularly relevant in the context of COP26 in Glasgow in November next year. I have made it a specific cause of mine to make sure that SMEs can play a part in COP26. We are also developing a small business energy efficiency scheme, which is obviously related, in some measure, to the green homes grant that we are pioneering at the moment.
My hon. Friend the Member for Thirsk and Malton will know that finance is a huge area of development. Thanks in small part to my hon. Friend the Member for Grantham and Stamford (Gareth Davies), the sovereign green bond is finally something that we will engage with. I was delighted that the Chancellor of the Exchequer announced that, and I know that my hon. Friend will be particularly happy, given his background and the campaign for that development that he promoted. Along with the sovereign bond, that clearly creates a space in which green finance is something that we are all engaged with. I speak to bankers, people in the City of London and investors, and there is huge appetite for these sort of green assets.
The fear that my hon. Friend the Member for Thirsk and Malton raises about SMEs being shut out of the market is legitimate. We can try to create a culture in which SMEs are looked on more favourably, but we cannot, I have to say, buck the trend of the market. I am afraid, for people who are not adapting, that investors are voting with their feet. It was only a few weeks ago that the market capitalisation of Ørsted, a Danish offshore wind company, was bigger than BP. That is a case of investors voting with their feet; it was not Government legislation that gave it that value in the market. My hon. Friend is a great champion of market forces, although perhaps in another context, but he will understand that if banks are keen to look at the green credentials of companies, that can make the climate more difficult for companies that are slower to adapt. However, that is definitely something that we should look at.
My hon. Friend was right to mention the British Business Bank in this context. I am keen—I have been driving this within the Department—to get a net zero remit for the British Business Bank. He will remember that the British Business Bank was set up years before the net zero legislation, so we have to do a degree of reverse engineering to ensure that the net zero challenge is at the centre of the bank’s remit.
The hon. Member for Greenwich and Woolwich (Matthew Pennycook) gave us a number of challenges. I would like to say a few words about them all, starting with his third point, relating to skills. I am very proud to have announced a green jobs taskforce. This is the first time that I, as the Energy Minister sitting within the Department for Business, Energy and Industrial Strategy, have got together with the Skills Minister, my hon. Friend the Member for Chichester (Gillian Keegan) to create something. We have come together and created a forum in which we are discussing green jobs. I am sure that the hon. Member for Greenwich and Woolwich will be pleased to learn that we have not only academics, business people and one or two small business representatives but we have trade unions coming together to discuss the immense opportunities that we have, as a country, in this space. There are something like 460,000 jobs already in the green economy in Britain, which is a figure that we want to see increase up to 2 million by 2030, so there is huge opportunity and ambition in the context of green jobs and green skills.
In the second part of his remarks, the hon. Gentleman talked very well about the need for finance and for some sort of national institution. He, as well as others in the Chamber, will know that there is plenty of discussion about that within Government. As we leave the EU, we are leaving the European Investment bank. Hon. Members have mentioned KfW Development Bank and we also have our own UK Green Investment Bank.
There is clearly an appetite in certain quarters, as well as a wide debate, for a national institution that may emerge as a consequence of our leaving the EU, focusing particularly on net zero. These are ongoing discussions, but my hon. Friend the Member for Thirsk and Malton cannot believe that I would be so naive, even if I knew the answer, to blurt out our plans in the context of a Westminster Hall debate. He can rest assured that this matter is being debated and discussed very seriously at the highest levels of Government.
The first point that my hon. Friend the Member for Thirsk and Malton made was very pertinent. If we are to try to bring people along with us on the journey towards net zero, we have to engage. Engagement means supplying information, exchanging ideas and providing guidance, as he suggested. We do that all the time and, of course, we could do more. Debates like this, dare I say it, are excellent ways in which we can broadcast and encourage our engagement with SMEs on the vital question of net zero.
There were many other remarks that I have not been able to fully address one by one. Broadly, I would say that this debate is absolutely key. Within the debate there were slightly different voices. If he will permit me to say it, my hon. Friend the Member for Thirsk and Malton is a brilliant champion of local business, but he did stress the fact that we must take people with us. There is no point in our hurtling to a net zero endpoint and leaving vast swathes of the economy and business behind. The hon. Member for Greenwich and Woolwich stressed that there is urgency, and I fully agree; there is a real need for further impetus. These are balancing arguments, and I can assure hon. Members present that the Government are taking all their remarks seriously.
We discuss the issue all the time and we are open to ideas. Ministers do not often say that, but we are open to ideas about how best we can engage with local businesses and small and medium-sized enterprises in our quest to reach net zero by 2050.
Kevin Hollinrake
I am really heartened by my right hon. Friend’s comments on this issue. It seems that the House is in accord. I am grateful for all the contributions. There is a lot of consensus.
I love the word “ecosystem”, which the hon. Member for Leeds North West (Alex Sobel) used in this context, to describe this whole situation. What we need is a 30-year ecosystem in order to take the business community with us. There were some great examples, such as the British development bank, through to Papa Pump and whatever else—two ends of the same scale. There are lots of banks that are supportive. There is the Bankers for NetZero project. We have Barclays, Tide, Handelsbanken and Triodos, which are all keen to have a conversation on this issue and try to take businesses with us. It is so easy to look at shiny new innovative businesses, rather than businesses that currently exist and that want to make a contribution. I am very heartened by my right hon. Friend’s comments that he wants to take business with us.
When someone is in the world of business and has their own SME, it is not just a job and a business—it is their life. It is so critical to everything they do and stand for. I urge again, and I am reassured by the Minister’s comments, that there should be no cliff edges. There should be a stable framework. If we leave no one behind here, the SMEs can lead from the front—if that is not too much of a mixed metaphor—towards a net zero future.
Question put and agreed to.
Resolved,
That this House has considered support for SMEs and the net zero target.
Written Statements
Defence Estate Optimisation Update
(4 years ago)
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The Minister for Defence Procurement (Jeremy Quin)
The Ministry of Defence (MOD) continues to deliver on its 25-year strategy to modernise its estate.
As part of this work we wish to confirm programme changes to individual sites: The disposal of DSG Colchester can be brought forward one year to 2021; the disposal of Middlewick Ranges also in Colchester will however be delayed by one year to 2022; the disposal of Fort Blockhouse 1 in Gosport will be delayed by at least three years to not before 2023; and the disposal of the remainder of the Southwick Park site in Fareham will be delayed to 2031. These delays are to meet military requirements.
We are also exchanging two parcels of land as part of the Forthside Stirling disposal to create a more sensible proposition for future development and will be enclaving Napier Lines at Woolwich Barracks as the long-term home for the King’s Troop Royal Horse Artillery. The disposal of the remainder of both sites will continued as planned.
There is the potential for adjustment to other site disposal dates as we continue to evaluate the movement of personnel and refine the portfolio timeline to meet military capability requirements. Any changes will be reflected in updates to the defence disposal database on the www.gov.uk website. This maintains a complete list of all MOD disposals including those that are part of defence estate optimisation. It is routinely updated throughout the year to provide the most accurate and current information as the Department continues to rationalise and enhance its estate.
The MOD remains committed to making the right decisions to support defence capabilities and offer best value for money for the taxpayer, balanced with our commitment to working with communities over the future use of sites released for disposal as part of the portfolio.
[HCWS582]
Social Housing Update
(4 years ago)
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The Secretary of State for Housing, Communities and Local Government (Robert Jenrick)
I am today announcing the publication of the social housing White Paper. This White Paper will bring transformational change for social housing residents and the new approach and regulatory changes we set out will make a measurable difference to their lived experiences.
A home should always be more than just four walls and a roof. This country has a long tradition of providing homes for those most in need, going back many centuries. Today, the social housing sector provides homes to 4 million households. Many landlords provide a good service to their residents. They provide a decent, safe home. They support thriving neighbourhoods and communities. They are open with their residents, listen to them and treat them with respect. But this is not true of all landlords.
The tragedy at Grenfell Tower in June 2017 raised critical questions for everyone involved in social housing. The chair of the public inquiry into the Grenfell Tower fire, Sir Martin Moore-Bick, identified broader questions on social housing policy raised through the consultation on the inquiry terms of reference. It was agreed that these broader questions should not be within the scope of the inquiry itself.
Through the 2018 social housing Green Paper we sought views on a wide range of potential changes by talking to residents across the country as well as launching a call for evidence about how social housing is regulated. Many residents reported positive experiences, but others did not. We heard concerns about safety, and about complaints being handled slowly or poorly: that residents were not listened to or not treated with basic courtesy and respect. This is why today I am delivering on our manifesto commitment and publishing the social housing White Paper: “The Charter for Social Housing Residents”.
Alongside the changes we are making to improve building safety, our package of measures will make a real change to residents. It will ensure that there will be action for those landlords whose services fall below expectations so that they can be brought up to the level of those that we know already deliver a good service.
Summary of proposals
The White Paper establishes a new charter for social housing residents, setting out what every social resident should be able to expect of their landlord:
1. To be safe in their home
We will reinforce the regulator of social housing’s consumer regulation objective to include safety explicitly. We will legislate to place an obligation on landlords to identify a nominated person responsible for ensuring compliance with health and safety requirements. We will consult on how we apply the stronger legal requirements on smoke and carbon monoxide alarms in the private rented sector to the social rented sector, followed by a consultation on how to ensure social tenants are protected from poor electrical safety. We will support residents to have a stronger voice on safety matters and promote best practice on safety engagement with landlords.
2. To know how their landlord is performing
We will establish tenant satisfaction measures for social landlords to report against on issues that matter to tenants. We will make sure landlords are reporting clearly on how they spend their income and introduce a new access to information scheme for housing association tenants. And, we will require landlords to identify a senior person in their organisation who is clearly identified as responsible for ensuring they comply with consumer standards.
3. To have their complaints dealt with promptly and fairly
We will build on the changes we have already implemented with the Housing Ombudsman Service to improve its performance and reduce its decision times, ensuring swift and effective resolution of complaints. We will raise awareness of how residents can make and escalate complaints. We will expect social landlords to take greater responsibility for upskilling their staff to serve residents better when they make a complaint or raise an issue.
4. To be treated with respect, backed by a strong consumer regulator for tenants
We will transform social housing regulation by creating a new, proactive consumer regulation regime for social housing, delivering robust oversight of all social landlords. This means establishing a new arm of the regulator of social housing to regulate proactively on consumer standards including quality of homes, repairs, engagement with tenants and complaints handling. The new approach will raise standards and include routine inspections of the largest landlords every four years, alongside risk-based reactive inspections to deliver scrutiny and investigation of landlords most at risk of failing residents. We will ensure residents can access information about their home and the services they receive, and can raise concerns about systemic failure to the regulator of social housing. We will maintain the robust economic regulation that is already working effectively to support a well-governed and financially viable sector, and make sure the whole system is cohesive and balanced.
5. To have their voice heard by their landlord.
We will empower residents by requiring landlords to improve tenant engagement. We will deliver a new opportunities and empowerment programme for social housing residents, to support them in engaging with landlords and holding them to account. We will review professional training and development to ensure residents are treated with courtesy and respect.
6. To have a good-quality home and neighbourhood to live in.
We will encourage investment in neighbourhood, place and decency. We will review the decent homes standard and boost the quality of, and access to, green spaces. We will tackle anti-social behaviour by enabling tenants to know who is responsible for action and who can support and assist them.
7. To be supported to take their first step to ownership.
We will enable delivery of good-quality, affordable homes including the investment of £11.5 billion in the new affordable homes programme to deliver up to 180,000 homes. The programme will unlock a further £38 billion in public and private investment in affordable housing. We are also introducing a new affordable homes guarantee scheme and implementing a new, fairer and more accessible model for shared ownership.
Alongside the social housing White Paper, I am publishing the analysis of the consultation responses to the social housing Green Paper 2018 and to the call for evidence on the Government’s review of regulation 2018. I am also publishing a consultation on mandating smoke and carbon monoxide alarms in social rented homes with the aim of ensuring the same legal protections for social housing tenants as for those in private rented homes.
This new charter with its focus on transforming social housing regulation, ensuring homes are decent and safe, offering residents swift and effective resolution of complaints and empowering residents will rebalance the relationship between landlords and tenants. This is a strong, coherent package that is going to make a real difference in people’s lives.
[HCWS581]
Third substantive report of the Independent Reporting Commission
(4 years ago)
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The Secretary of State for Northern Ireland (Brandon Lewis)
I have received the third substantive report from the Independent Reporting Commission (IRC).
The IRC emanated from the “Fresh Start” agreement of November 2015. The agreement set out the Northern Ireland Executive’s commitments around tackling paramilitary activity and associated criminality. This work continues to be taken forward through a Northern Ireland Executive action plan which contains 43 recommendations.
This third substantive report builds on the work already undertaken by the commissioners. The inclusion of a commitment to continue to tackle paramilitarism in the “New Decade, New Approach” agreement, in January 2020, highlights the ongoing importance of this issue, but the commission’s report again reminds us of the challenging work still to be done.
I would like to thank the commissioners for their work, particularly in delivering this year’s report in the midst of the covid-19 pandemic.
[HCWS584]
HS2 Land and Property Review
(4 years ago)
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The Minister of State, Department for Transport (Andrew Stephenson)
High Speed Two (HS2) is at the heart of our plans to build back better from the covid-19 pandemic, creating thousands of skilled jobs, boosting connectivity between our towns and cities and helping to rebalance opportunity across the country for years to come.
However, as part of that commitment to build back better, it is crucial that we deliver HS2 in a way that is as considerate as possible of those disrupted by the project, who may face losing their homes and relocating their businesses.
In confirming HS2 would go ahead in February 2020, the Prime Minister also committed to a step change in HS2 Ltd’s performance and to drive improvements in transparency, accountability and value to the taxpayer. This included a renewed focus on placing people—the communities and individuals who will be impacted by HS2—at the heart of everything the Government do.
So following my appointment as the Minister for HS2, I initiated a review of the HS2 land and property acquisition programme, to ensure that those most directly affected were placed at its heart.
The review examined HS2 Ltd’s operational acquisition processes and, where the evidence demonstrated it, associated wider-Government policies. It focused on four areas:
How to deliver a step change in community engagement on the land and property acquisition programme;
How to protect the interests of those impacted;
How to improve process efficiency and delivery by HS2 Ltd;
And how to drive a better tone, showing conspicuous respect, courtesy and understanding.
Today, I am pleased to publish the findings of this review. Copies of the report have been placed in the Libraries of the House.
The Government are grateful for the contributions made by Members of the House and their constituents, external stakeholders, the HS2 Residents’ Commissioner and the HS2 Construction Commissioner. The review also considered lessons from Phase One of HS2 and examined compensation regimes employed on other UK infrastructure projects and abroad.
The review generated a number of proposals that are designed to speed up property valuations and disturbance payments, settle cases and disputes more quickly and build on the improvements HS2 Ltd have been introducing to engage more effectively with people.
The focus now will be on how the Government and HS2 Ltd turn these proposals into long-lasting changes that improve not only the delivery of HS2, but also the experience and wellbeing of individuals, businesses and communities impacted by them.
The Government want to ensure that those living near the route receive the right support at all stages of the project. Importantly, they remain committed to ensuring that those affected are properly compensated and treated with compassion, dignity and respect.
Attachments can be viewed online at: http://www. parliament.uk/business/publications/written-questionsanswers-statements/written-statement/Commons/2020-11-17/HCWS583/.
[HCWS583]