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Oral Answers to Questions
(4 years ago)
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Richard Burgon (Leeds East) (Lab)
The Minister for Asia (Nigel Adams)
Deportations, removals and returns are a Home Office lead. The Home Office is responsible for ensuring that action is in compliance with the relevant legal frameworks. The Foreign Secretary and the Home Office meet regularly to discuss international business, and Foreign, Commonwealth and Development Office Ministers periodically discuss FCDO support for return flights to specific countries with Home Office colleagues, most recently the resumption of flights to Nigeria and Ghana following a pause due to the covid-19 pandemic. The UK’s international legal obligations, including under international human rights law, underpin all those exchanges.
Richard Burgon [V]
The Julian Assange case is just one of many recent cases that have led to greater public discussion of the issue of extradition between the US and the UK in recent years. There are concerns across the House about our country’s extradition treaty with the USA. One is that the US can request extradition in circumstances Britain cannot, something the Prime Minister labelled “unbalanced” earlier this year. Another is that provisions within the treaty are not properly upheld—for example, the treaty bans extradition for political offences. What is the Minister doing to ensure that the ban on extradition for political offences is always upheld?
Nigel Adams
As the hon. Member may already know, changes were made under the previous Government to make the system more balanced. I can tell him that the FCDO is committed to upholding the full range of rights set out in the universal declaration of human rights and in international human rights treaties to which we are a state party.
Margaret Ferrier (Rutherglen and Hamilton West) (Ind)
The Minister for Asia (Nigel Adams)
We strongly condemn the murder of Mr Mahboob Khan, another recent and apparently religiously motivated killing of an Ahmadi Muslim in Pakistan. On 8 November, my ministerial colleague Lord Ahmad of Wimbledon, the Minister for South Asia and the Commonwealth, publicly condemned the murder of Mr Khan. On 16 November, he raised concerns about killings of Ahmadi Muslims in Pakistan, including Mr Khan’s murder, with Pakistan’s human rights Minister.
Margaret Ferrier [V]
I thank the Minister for his response. Given that four Ahmadi Muslims have been murdered on the grounds of faith in the past four months, the latest being 31-year-old Dr Tahir Ahmad murdered at home in Punjab just last Friday, what further representations can his Department make to the Government of Pakistan on ending their state-sponsored persecution of Ahmadi Muslims in Pakistan, which is rooted in federal laws that explicitly target Ahmadi Muslims?
Nigel Adams
I thank the hon. Lady for her question. She may be aware that we had a very robust Adjournment debate highlighting this issue last night. We remain deeply concerned by reports of discrimination and violence against any religious communities in Pakistan, including the Ahmadiyya Muslim community. We raise regularly at senior level with Pakistan our concerns about the mistreatment of Ahmadiyyas and other religious communities. On 3 November, FCDO officials in Islamabad met representatives of the Ahmadiyya community in Rabwah to engage with their concerns, as well as raising the matter with Pakistani authorities.
Neil Gray (Airdrie and Shotts) (SNP)
The Secretary of State for Foreign, Commonwealth and Development Affairs and First Secretary of State (Dominic Raab)
We send our warmest congratulations to President-elect Joe Biden and Vice President-elect Kamala Harris on winning the election. Whether it is on trade, security or defence, we do more together than any other two countries and we see huge opportunities in the months ahead.
Neil Gray [V]
As President-elect Biden embarks on building his internationally focused team, including Antony Blinken as Secretary of State who said that Joe Biden would bring aid back to the centre of foreign policy, does the Foreign Secretary regret that the UK Government’s disgraceful plans to change the law to cut aid spending below 0.7% not only sends the wrong message to the rest of the world, but gets the relationship with the new Administration they did not want to see off to a bad start?
Dominic Raab
Actually, we consistently showed that we are a leading, if not one of the leading countries, on aid. That will continue. We also—this will matter to the United States—indicated the increase in defence spending, which shows what a dependable ally we are. All the soundings that we have had—that I have had—with the incoming leadership show that there are huge opportunities on climate change and covid to strengthen the relationship even further.
Lisa Nandy (Wigan) (Lab)
I echo the Secretary of State’s congratulations to President Biden and, in particular, to the Vice President-elect on this historic election. However, the spectacle of democracy under attack in the United States has sent shockwaves around the globe. Even after the transition announcement yesterday, the President has continued to say that he will
“never concede to fake ballots”.
Ron Klain says that the President has “set back” the democratic norms of the United States. Does the Foreign Secretary now regret emboldening those who attack democracy by refusing to assert that all votes should be counted and that processes need to play out, or will he stand with me and the incoming White House chief of staff in defence of free and fair elections?
Dominic Raab
First, I warmly join the hon. Lady in paying tribute to and welcoming the historic election of Vice President-elect Kamala Harris. Frankly, the stuff that the hon. Lady said about emboldening critics of the US elections could not be further from the truth. What we have said consistently—[Interruption.] She might want to listen to the answer to her question. What we have said consistently is that the US has the checks and balances in place to produce a definitive result. It has. We warmly welcome the new Administration. We look forward to working with them.
Lisa Nandy
Global alliances are based on shared values: democracy, the rule of law and human rights. Human rights will be a key pillar for the Biden Administration. They rightly recognise that Yemen is the world’s worst humanitarian catastrophe, sustained by US and UK support. The war has gone on for more than five years, with a dangerous rocket attack in Jeddah just yesterday. Does the Secretary of State agree with the incoming US Secretary of State, the National Security Adviser and the ambassador to the UN that it is time to end participation in, or any form of support for, the disastrous Saudi-led campaign? Will he now commit to playing the UK’s part by ending arms sales to Saudi Arabia?
Dominic Raab
I certainly agree with the hon. Lady that we have to pursue every effort to get peace in Yemen, both on the humanitarian side and on the political track. That is why we have been fully supportive of the UN special envoy, Martin Griffiths. I have been out to Saudi to encourage, promote and cajole the Saudis into doing the right thing. Of course, the Houthis need to move. Actually, the most important thing is a concerted regional push for a political end to this wretched conflict.
Geraint Davies (Swansea West) (Lab/Co-op)
The Secretary of State for Foreign, Commonwealth and Development Affairs and First Secretary of State (Dominic Raab)
Beijing’s imposition of new rules to disqualify elected legislators constitutes a clear breach of the UK-China joint declaration. This is only the third time we have judged a breach, and the second in six months. China has once again broken its promises and undermined Hong Kong’s high degree of autonomy.
Geraint Davies [V]
As the Foreign Secretary said, the Chinese Government have breached the Sino-British joint declaration twice in the past six months, so when will he implement the Magnitsky sanctions against the Chief Executive of Hong Kong, Carrie Lam? What steps is he taking to tighten capital flows into China via Hong Kong from the City of London?
Dominic Raab
I thank the hon. Gentleman for his interest. He will know that we have already made a new offer to British nationals overseas, suspended our extradition treaty with Hong Kong and extended our arms embargo on mainland China to Hong Kong. On the Magnitsky sanctions, this is not just something that we can decide at our fiat. We need the evidence to back it up. We are looking at and assessing that, working with our international partners. On 18 November, I led and issued a statement with our Five Eyes Foreign Ministers condemning the latest China move in relation to legislators. That was hot on the heels in October of 39 countries joining the UK in the UN Third Committee with a statement on Hong Kong as well as Xinjiang.
Simon Fell (Barrow and Furness) (Con)
The Minister for the Middle East and North Africa (James Cleverly)
As the host of COP26 and the president of the G7 next year, securing greater global ambition on climate change is a diplomatic priority for this Government. Ministerial colleagues in the FCDO and my right hon. Friend the Foreign Secretary regularly raise this subject, and he has done so, including with Japan and South Korea earlier this year. This strategy is working. China has pledged to become a carbon-neutral country by 2060 and Japan and South Korea have committed to become net zero by 2050. On 7 November, the Prime Minister appointed my right hon. Friend the Member for Berwick-upon-Tweed (Anne-Marie Trevelyan) as the international champion on adaptation and resilience for COP26.
Simon Fell
My constituents in Barrow and Furness have welcomed the Government’s focus on renewable energy, but it is clear that a global approach is required to deal with this crisis. As such, can my right hon. Friend reassure the House that the Department is working flat out on COP26 and the climate ambition summit to make it a success?
James Cleverly
My hon. Friend is absolutely right that the answer to this lies in global co-operation. The United Kingdom is leading from the front, and we are pressing foreign Governments for greater action and higher commitments at the climate ambition summit on 12 December. Our posts across the globe have engaged with host Governments, businesses and civil society on climate change issues ahead of COP26, and we will continue to do so in the run-up to the climate ambition summit this December.
Alyn Smith (Stirling) (SNP)
Climate change is going to drive the future crisis that humanity is facing. Parts of the world will get wetter and parts drier, with all the world more climatically unstable, population growth and resource scarcity. Climate change is going to be at the heart of every crisis that we are going to face.
The UK is undertaking the integrated review of foreign and defence policy right now. I will be grateful for an assurance from the Minister that climate change will be high on the agenda of that review, and that he will take good note of the Scottish National party’s suggestions, which we submitted to the review in good faith. We all need to work together on this, because climate change is a crisis facing humanity as a whole.
James Cleverly
The hon. Member is right to highlight the fact that climate change is going to be an important factor in the foreign policy of all countries around the world. We recognise that in terms of pressure on food production and resources, the potential implications and the conflicts that may come about because of that. That is why climate change and our response to it, development and diplomacy will all go hand in hand through the integrated review.
Alyn Smith
I am grateful to the Minister for that reassurance. I suggest that he has a read of the SNP submission to the integrated review. There are some very good ideas in there, not least to maintain development at the heart of climate mitigation and to fund it properly. If I were a Minister in a Government who stood on a manifesto in December to maintain 0.7%, I would be considering my position were that to be walked back upon. Is he considering his?
James Cleverly
I am very proud of the fact that the United Kingdom is and will remain one of the most generous aid donors in the world. We have focused relentlessly on ensuring that the work of the United Kingdom Government across all Departments focuses on addressing the poorest in the world, as well as the implications of climate change.
Antony Higginbotham (Burnley) (Con)
The Minister for Asia (Nigel Adams)
We are very much strengthening our relations with the 10 countries of the Association of Southeast Asian Nations. Last month, I had a meeting with the ASEAN Secretary-General. I have also met all ASEAN ambassadors to London. The Foreign Secretary visited Vietnam in September and met ASEAN Foreign Ministers. Last week, I was in the Philippines and met Secretary of Foreign Affairs Locsin, among others.
Antony Higginbotham
I welcome the Minister’s meeting in the Philippines. He knows that our relationship with the Philippines is not just on security and defence, but extends to the 30,000 healthcare workers in this country who came from the Philippines. May I press him on the conversations that he has had with the Government in Manila about those 30,000 workers and how we can strengthen the healthcare relationship?
Nigel Adams
My hon. Friend is absolutely right to raise that. While I was in Manila last week, I met a range of Cabinet Secretaries, including the Health Secretary and the Foreign Minister, as I said, and the British Red Cross. As my hon. Friend knows, there is currently a ban on Filipino nurses leaving the country. They are fantastic, committed health workers and we are very grateful to the 30,000 of them in the national health service. I am pleased to report that we managed to secure important progress in that regard. Following the discussions that I had with the Health Secretary, the Philippines President has confirmed that he will lift the ban, allowing our NHS to recruit these highly skilled and excellent health service workers.
Tom Tugendhat (Tonbridge and Malling) (Con)
I very much welcome my hon. Friend’s efforts with ASEAN and his emphasis on the Indo-Pacific. He will no doubt have seen the fantastic Policy Exchange report by my hon. Friend the Member for East Surrey (Claire Coutinho), who has been instrumental in emphasising some of these points. Does he agree that this tilt towards the Asia-Pacific is fundamental to defending democracies in the region, to ensuring that British interests are valued and to respecting the individual rights of countries that for too long have been pressed by China to come under a different orbit?
Nigel Adams
I thank the Chairman of the Select Committee for his question. He is absolutely right, and I also applaud the work of my hon. Friend the Member for East Surrey in this regard. Our tilt towards the Indo-Pacific region as part of the integrated review is testament to how much we value that part of the world. There are a number of issues that we will raise with China. We are concerned in particular about issues around the South China sea, and these are conversations that we have regularly with China. I made our legal position on that very clear here at the Dispatch Box a couple of months ago. Our support in that area has been widely supported by our ASEAN friends.
Christine Jardine (Edinburgh West) (LD)
The Parliamentary Under-Secretary of State for Foreign, Commonwealth and Development Affairs (Wendy Morton)
The UK is committed to the principle of non-discrimination on grounds of sexual orientation and/or gender identity. If it is passed, the legislation will reserve adoption for married couples, which in Hungary means heterosexual couples. While there would be an avenue for exceptions, adoption would be very difficult for same-sex couples in the future, as well as for single people. Our embassy in Budapest is closely monitoring the discussions of the proposal in the Hungarian Parliament, and will be discussing it with Hungarian officials and civil society actors.
Christine Jardine [V]
This unacceptable development in Hungary is a very worrying one, and is part of a wider movement to define families as a union between a male and female husband and wife and children. Does the Minister agree that we have to take every possible opportunity to impress upon the Hungarian Government how unacceptable this is to so many people in our communities here in the United Kingdom?
Wendy Morton
We are completely opposed to all forms of discrimination and we continue our work to uphold the rights and freedoms of lesbian, gay, bisexual and transgender people in all circumstances. We are really concerned that the amendment of Hungary’s Registry Act, which was passed by the Hungarian Parliament in May, will have an adverse impact on the rights of transgender people, and I raised our concerns about the amendment to the Act with the Hungarian Deputy Minister for Foreign Affairs and Trade in April. I can assure the hon. Lady that our embassy in Budapest takes all appropriate opportunities to discuss the rights of transgender people with senior government officials and civil society.
Mr Laurence Robertson (Tewkesbury) (Con)
Stuart C. McDonald (Cumbernauld, Kilsyth and Kirkintilloch East) (SNP)
The Secretary of State for Foreign, Commonwealth and Development Affairs and First Secretary of State (Dominic Raab)
We are very concerned about the conflict in the Tigray region of Ethiopia, in terms of both the humanitarian impact and the risk of spill-over and spread through the region.
Mr Robertson [V]
Having chaired the all-party parliamentary group for Ethiopia and Djibouti for a long while, I have seen the relative peace that Ethiopia has lived in since 1987, and the last thing it needs at the moment, following the locust problem and covid, is this situation. Does the Foreign Secretary therefore agree that the best way forward, and the only realistic way forward, is to find a peaceful solution to the problems? Will he also do everything he can to ensure that aid continues to get to the Tigray people who need it?
Dominic Raab
I thank my hon. Friend and pay tribute to the work that he has done in this regard. I share his concern. I spoke to Prime Minister Abiy on 10 November. We have made it clear that there needs to be a de-escalation of violence, humanitarian access and protection of civilians. Of course, there are also all sorts of regional implications, which is why I have also spoken to the Prime Minister of Sudan and the Foreign Ministers of Egypt and South Africa. This will require not only regional but international efforts to secure peace and protect the humanitarian plight there.
Stuart C. McDonald [V]
As the Foreign Secretary said, this conflict has implications for the whole region, including Somalia, with Ethiopian troops being pulled out of that country to be re-deployed to Tigray. Given reports that President Trump also intends to move troops out of Somalia, and given the threatening presence there of al-Shabaab and Islamic State, what discussions has the Foreign Secretary had with international partners about ensuring that Tigray does not end up helping to destabilise Somalia, too?
Dominic Raab
The hon. Gentleman is absolutely right. As my hon. Friend the Member for Tewkesbury (Mr Robertson) made clear, Ethiopia has been a relative success story lately, but there is a real danger for the people of Ethiopia and he has highlighted the risks of spillover to Sudan, Somalia and Eritrea, which will be very damaging not only for people in the region, but for wider equities. As I say, I have spoken to regional leaders. I will speak to the Deputy Prime Minister of Ethiopia soon. Of course, we will be engaging with the Americans. I was in Berlin talking with the E3 and our European colleagues. We have expressed our concern, and we are doing everything we can to bring peace and a de-escalation of the conflict.
Stephen Doughty (Cardiff South and Penarth) (Lab/Co-op)
The war and famine in Ethiopia in the 1980s are seared into the memories of the British people and the world, and yet again we are on the brink of another tragedy for the people of that wonderful country: hundreds of civilians hacked to death, tens of thousands of refugees, hundreds of thousands cut off from assistance, women and children caught in the violence between rebels and a Government now threatening to shell a city. So can the Foreign Secretary say why it has taken until today for the United Nations Security Council to meet on this? What more are we doing to secure humanitarian corridors and access for independent human rights monitors? Does he not agree that this is another reason why it would be the wrong time to cut our 0.7% commitment to humanitarian assistance?
Dominic Raab
I share the hon. Gentleman’s horror at some of the reports of the civilian casualties. We take this incredibly seriously, energetically and actively at the United Nations. Let me reassure him that UK funding is already helping those in urgent need of assistance. In Ethiopia specifically, the UK funds the World Food Programme, the United Nations High Commissioner for Refugees, UNICEF and the UN Office for the Co-ordination of Humanitarian Affairs.
Adam Holloway (Gravesham) (Con)
The Minister for the Middle East and North Africa (James Cleverly)
The humanitarian situation in Yemen is dire. As my right hon. Friend the Foreign Secretary warned in September, Yemen has never looked more likely to slide into famine than it does now. Almost 16 million people—53% of the population—are currently unable to afford food. In response, the UK is rapidly disbursing the £200 million-worth of aid commitment this year. We fully support UN special envoy Martin Griffiths, who is seeking the parties’ agreement to proposals for a nationwide ceasefire and formal talks.
Adam Holloway
Would my right hon. Friend give us some indication of the progress of the UN efforts?
James Cleverly
We strongly support the UN’s efforts and we regularly engage with all parties that have an interest in Yemen. On 18 October, I spoke to the spokesman Mohammed Abdul-Salam about the peace process and the Safer oil tanker; on 6 October, I spoke to the Yemen Foreign Minister about the progress; and on 17 September the Foreign Secretary co-hosted a P5+ ministerial meeting to encourage all parties to engage fully with the proposals that the UN has put forward.
Alex Cunningham (Stockton North) (Lab)
The Minister for the Middle East and North Africa (James Cleverly)
Our strong relationship with Saudi Arabia allows us to raise human rights concerns through a range of ministerial and diplomatic channels. Ahead of the G20 leaders’ summit, I raised human rights concerns with the Saudi ambassador, including the continued detention of at least five women human rights defenders. The UK also signed the UN Human Rights Council joint statement in September calling for the release of all political detainees. We will continue to raise human rights concerns with the Saudi authorities.
Alex Cunningham
Women in Saudi Arabia now have the right to drive, but some of those who fought for that basic equality remain behind bars. The UK is, as the Minister suggests, Saudi Arabia’s closest European ally, but does he understand why the detention of women human rights defenders by the Saudi Arabian authorities is an important test of our Government’s commitment to defending human rights? Will he call on them to release these women and all political prisoners immediately?
James Cleverly
We welcome the improved situation for women in Saudi and encourage the Saudis to continue steps in that direction. As I have already said, we engage on this specific issue at both ministerial and official level and will continue to urge the Saudis to go further.
Wayne David (Caerphilly) (Lab)
The Minister knows full well that the human rights situation in Saudi Arabia is terrible, and many people believe it is getting worse. Now that the G20 summit has been held, what precisely do the Government intend to do to put pressure on the Government of Saudi Arabia to release human rights activists, including women’s rights activists who are being held for fighting for freedoms that we in this country take for granted?
James Cleverly
I spoke to the Saudi ambassador about this very issue on 16 November. As I say, it is important that we recognise when progress has been made. Saudi is embarking on a reform programme and we are seeking to ensure that that goes further and faster, but as I said in response to the previous question, we do engage at ministerial level and at official level to encourage the release of women’s human rights defenders.
Ms Angela Eagle (Wallasey) (Lab)
Sara Britcliffe (Hyndburn) (Con)
The Parliamentary Under-Secretary of State for Foreign, Commonwealth and Development Affairs (Wendy Morton)
The UK is committed to rapid, equitable access to safe and effective vaccines through multilateral collaboration. We strongly support the COVAX advance market commitment, which is the international initiative to support global equitable access. The UK is the largest bilateral donor to the AMC, having committed up to £548 million to help provide vaccines for up to 92 developing countries. The UK also committed £71 million in non-official development assistance to participate in the COVAX facility for self-financing countries, in order to secure options to vaccines for UK domestic use.
Ms Eagle
In a pandemic we are only as strong as our weakest link. Is the Minister convinced that, even though we are one of the largest donors, we are doing enough to ensure that developing nations have the infrastructure they need to organise a mass roll-out of the vaccine?
Wendy Morton
A pandemic response is absolutely what we need to tackle this virus, and that requires global collaboration. The UK strongly supports multilateral approaches so that we can meet both domestic and global needs, and that work goes alongside UK deals with individual vaccine developers. I am sure that, like me, the hon. Lady will welcome AstraZeneca’s commitment to non-profitable access during the pandemic and the fact that AstraZeneca estimates that up to 3 billion doses will be available globally by 2021.
Sara Britcliffe
My question follows on from that asked by the hon. Member for Wallasey (Ms Eagle). What specific steps is my hon. Friend the Minister taking to ensure that the UK is at the forefront of providing vaccines to vulnerable countries around the world?
Wendy Morton
I know how interested so many Members are in the access to and distribution of these incredibly important vaccines as part of our covid-19 response. Our £250 million of funding for the Coalition for Epidemic Preparedness Innovations is helping to develop vaccine candidates that can be scaled up and accessible for developing countries. Our commitment of up to £548 million to the COVAX AMC will contribute to the target of supplying 1 billion doses for 92 developing countries in 2021 and vaccinations for up to 500 million people. We have also worked with the World Bank to secure up to $12 billion in financing to support developing countries’ access to covid-19 vaccines, treatments and tests.
Rushanara Ali (Bethnal Green and Bow) (Lab)
The Minister for Asia (Nigel Adams)
The UK Government have been clear about their political support for the ICJ process, and we continue to urge Myanmar to comply with the provisional measures ruling. We are aware of the intention of the Netherlands and Canada to intervene and understand that they will take a final decision once the case progresses. We are monitoring the case closely and continue to consider whether UK intervention would add value to its merits.
Rushanara Ali
I am grateful to the Minister for that answer. The failure to secure justice and hold the Burmese Government and the military in particular to account sends a dangerous message to other Governments that genocide and ethnic cleansing are acceptable policy tools. We are seeing that elsewhere in the world, too. I have asked this question of the Minister and the Foreign Secretary time and again, so, let me ask it once again: can the Minister say very clearly that the UK Government will join that case? If he cannot say so today, will he commit to saying so soon? Very eminent British lawyers, such as Philippe Sands, are involved and are asking the British Government to support it, because if they do not, people will quite rightly ask whether it is a case of the UK Government taking the stance that it is acceptable to commit acts of genocide on Muslim minorities.
Nigel Adams
I congratulate the hon. Lady on her work on this issue, alongside the former Foreign Secretary, my right hon. Friend the Member for South West Surrey (Jeremy Hunt). She is absolutely right that accountability is vital. The Myanmar military has committed atrocities against the Rohingya and other minorities, and there has been no tangible progress on accountability. We have been very clear about our support for the ICJ process. It is putting pressure on Myanmar to protect the Rohingya and to work towards genuine accountability. She mentioned genocide. We agree with the UN fact-finding mission that the events of 2017 constitute ethnic cleansing. We are clear that the question of whether genocide took place is a legal determination to be made by a competent court. The ICJ is a competent court and we welcome its consideration of the issue. I look forward to welcoming her and my right hon. Friend to discuss these issues in the FCDO shortly.
Beth Winter (Cynon Valley) (Lab)
The Minister for the Middle East and North Africa (James Cleverly)
The United Kingdom’s priority is to reinforce the non-proliferation treaty as a vital part of the international security architecture and to highlight the UK’s strong track record across all three pillars of the treaty. Building on the successful 2020 UK-led P5 process, we will work to promote transparency between nuclear and non-nuclear states and submit a national report to highlight our achievement in support of the NPT. The UK will also emphasise the important role of peaceful uses of nuclear energy in achieving the sustainable development goals.
Beth Winter [V]
Given that the UK is a signatory to this treaty, does the Minister agree that the logical next step would be for the UK now to become a signatory to the UN treaty on the prohibition of nuclear weapons, taking the lead from the First Minister of Wales, who has welcomed this treaty? In that way, we in the UK can take a lead internationally to create a future throughout the world without nuclear weapons.
James Cleverly
The UK has reduced by half its nuclear arsenal since the end of the cold war, but we will not sign or ratify the prohibition of nuclear weapons. We do not believe that this treaty brings us any closer to a world without nuclear weapons, and it will not improve the security environment.
Fabian Hamilton (Leeds North East) (Lab)
I hope the Minister will agree with me that the UK must seize the opportunity of the nuclear non-proliferation treaty review conference early next year to push multilateral nuclear disarmament back up the global agenda and take the steps necessary to bring about a world free from the threat of nuclear weapons. With major non-signatories, such as India and Pakistan, still remaining, will the Minister outline how the Government plan to encourage those countries and others to commit to signing the treaty?
James Cleverly
I think that everyone from all parts of this House will share the desire to see a world without nuclear weapons. However, we do need to ensure that at no point do we compromise the United Kingdom’s defence. We worked at the P5 conference of NPT nuclear weapon states that took place in February 2020 to demonstrate our engagement with the wider non-proliferation treaty community, and we will continue to work on our priorities: transparency, the UK national report, disarmament verification and peaceful uses of nuclear energy.
Simon Baynes (Clwyd South) (Con)
The Parliamentary Under-Secretary of State for Foreign, Commonwealth and Development Affairs (Wendy Morton)
Although it remains our intention and hope to reach agreement with the EU, as a responsible Government we continue to make extensive preparations for a wide range of scenarios. The FCDO is leading communication campaigns aimed at UK nationals living in the EU and UK travellers to the EU to help to ensure that they take the actions they need to be ready for the end of the transition period. We have also launched the UK nationals support fund, providing up to £3 million to support at-risk and hard-to-reach UK nationals who might need additional support to apply for residency in their host EU member states.
Simon Baynes
Will the Minister tell us how businesses and organisations in Clwyd South and the rest of the UK can access practical advice and support from the Government to ensure that they are ready for the end of the transition period?
Wendy Morton
My hon. Friend is right to ask such questions on behalf of his constituents. Let me point him in the direction of some areas of support. First, the Welsh Government provide an online EU transition portal at www.businesswales.gov.wales, where businesses and organisations can find up-to-date advice from the Welsh Government; there is an online query service and a helpline. For the UK as a whole, the best place to start is the gov.uk website, which provides comprehensive and up-to-date advice and includes step-by-step guides in key areas. From a business perspective, it might also be of interest to my hon. Friend to know that we continue to make excellent progress in our negotiations for a comprehensive free trade agreement to come into force in 2021, and we have agreed with the European economic area and European Free Trade Association states a continuity deal to ensure that trade flows continue at the end of the year while we finalise the more ambitious FTA that we are negotiating.
Damian Hinds (East Hampshire) (Con)
The Parliamentary Under-Secretary of State for Foreign, Commonwealth and Development Affairs (Wendy Morton)
Since 2015, the UK has supported 15.6 million children to gain a decent education. Sadly, due to covid-19, 1.6 billion learners were out of education at the peak of school closures, and an estimated 8 million girls are at risk of not returning. As one of our key priorities, we are working with countries directly and supporting the efforts of the Global Partnership for Education, Education Cannot Wait, UNICEF and the UNHCR to get girls back to school.
Damian Hinds
Britain’s contribution to ensuring girls’ education is one of the most important and proudest parts of our entire work in international development. How will the Minister ensure that the Global Partnership for Education conference is a success, and that countries around the world continue to step up to the plate on this most essential agenda?
Wendy Morton
My right hon. Friend makes a really important point. I know of his continued interest in education, particularly girls’ education. I assure him that we have established regular senior engagement with the Global Partnership for Education and our Kenyan co-hosts to ensure a successful replenishment that delivers major funding for girls’ education. We will secure significant pledges through bilateral engagement and in global forums from both traditional donors and new partners, and through domestic and global networks we will build attention to and expectation around this important replenishment.
Sarah Champion (Rotherham) (Lab) [V]
The Minister is aware that girls can only benefit from education if we tackle child marriage, female genital mutilation and all gender-based violence. NGOs report that funding for GBV programmes are not keeping up with the rise in cases due to covid-19. In October, the United Nations Population Fund stated that
“funding for GBV prevention and response remains unacceptably low.”
Is the UK going to further increase UK official development assistance for GBV programmes to combat the secondary impacts of covid-19 on women and girls? Is the money ring-fenced? And will the Minister be challenging the Chancellor’s attack on foreign aid, which will undermine all this work?
Wendy Morton
The hon. Lady may attempt to draw me into the debate on aid, but she knows that I am not going to speculate on that. She emphasises the importance of girls’ education. The UK is a world leader in our education expertise and our development spend. As I said, since 2015—[Interruption.] Opposition Front Benchers may mutter, but let us be absolutely clear: the UK has supported 15.6 million children to gain a decent education, and 8 million of those are girls. Our country direct programme for research and funding to organisations such as the Global Partnership for Education and Education Cannot Wait makes the UK a global leader in promoting girls’ education.
Andy Carter (Warrington South) (Con)
The Parliamentary Under-Secretary of State for Foreign, Commonwealth and Development Affairs (Wendy Morton)
The Government welcomed the news of the 10 November peace deal agreed between Armenia and Azerbaijan. I spoke to Azerbaijani Foreign Minister Bayramov on 13 November welcoming the news of the deal. It is now important that the co-chairs of the OSCE Minsk group—France, the US and Russia—continue to work together to ensure a sustainable peaceful solution that is based on the Minsk basic principles. In the meantime, the UK is also playing its part in dealing with the humanitarian impact of the fighting.
Andy Carter [V]
I thank my hon. Friend for her response and the work that she is doing on this issue, which is raised by a number of constituents in Warrington South concerned, in part, because this conflict is not covered in the UK media. Does she agree that the critical action to ensure that the conflict in Nagorno-Karabakh comes to an end is continuing UK support for the OSCE Minsk group and dialogue between Azerbaijanis and Armenians?
Wendy Morton
My hon. Friend makes a really important point about making sure that we seek and maintain a lasting peaceful settlement to this conflict. He is absolutely right that now that the proper fighting has ended, it is critical that the members of the Minsk group work together to deliver a lasting peaceful settlement. The UK has consistently supported the work of the co-chairs of the Minsk group to deliver that. Continued dialogue between Azerbaijan and Armenia is essential to prevent any further loss of life and to bring about a permanent negotiated end to this conflict.
Paul Howell (Sedgefield) (Con)
The Secretary of State for Foreign, Commonwealth and Development Affairs and First Secretary of State (Dominic Raab)
Since the last oral questions, I have opened the first ministerial meeting of the global Media Freedom Coalition of 37 countries, which the UK co-chairs alongside Canada; I have spoken to Prime Minister Abiy of Ethiopia to call for an urgent ceasefire in the Tigray region; and worked with my Five Eyes counterparts to issue a joint statement expressing serious concern regarding China’s imposition of new rules to disqualify legislators in Hong Kong.
Paul Howell
Will the Secretary of State identify opportunities to pressure the Chinese Government into ratifying the forced labour convention, the abolition of forced labour convention, and the 2014 protocol to the forced labour convention, allowing the UK to be sure that supply chains being used by UK businesses and government are in no way supporting the Chinese Government’s persecution of the Uyghurs? Does he agree that if UK business cannot get a full assurance, they should preferably onshore their supply chains back to UK plc?
Dominic Raab
I warmly welcome the spirit of my hon. Friend’s question, although I think we need to be realistic about what China is going to be willing to sign up to. Therefore, for our part, we work very closely with UK businesses. It is very important—a hallmark of global Britain—that our businesses conduct themselves with integrity. We were the first country to produce a national action plan on the UN guiding principles on business and human rights, and the first country, with the Modern Slavery Act 2015, to ask businesses to report on their supply chains and how they could be affected. We are very proud of our international leadership in this area.
Preet Kaur Gill (Birmingham, Edgbaston) (Lab/Co-op)
Our existing 0.7% aid commitment sends
“a strong signal that the UK is a reliable partner for long-term economic, social, environmental and educational advancement across the globe”,
and this is “cheaper than fighting wars”—not my words but those of the CBI and the former Chief of the Defence Staff, General Lord David Richards. Does the Secretary of State agree that rowing back on our promise to the world’s poorest people would jeopardise our soft power status ahead of the year when the UK will host the G7 and COP26, and will he recommit to his manifesto pledge, made exactly a year ago today, to spend 0.7% of GNI on aid?
Dominic Raab
ODA and our aid budget will remain at the absolute centre of the work we do as a force for good. I am afraid that we will have to wait for the spending review to hear what the Chancellor has to say on that.
Tom Randall (Gedling) (Con)
Dominic Raab
I totally share my hon. Friend’s objective. With the Magnitsky sanctions, the key thing is to target those directly responsible. That requires evidence, and we work very closely with all our international partners to share our experience and compare notes in relation to that. The recent comments follow on from the solidarity that we as Five Eyes, alongside the US, Canada, Australia and New Zealand, have shown in relation to human rights, in particular in Hong Kong. It also follows on from the wider caucus of 39 countries that backed the UK in the UN Third Committee on not only Hong Kong but the issue of Xinjiang.
Jack Brereton (Stoke-on-Trent South) (Con)
The Minister for Asia (Nigel Adams)
My hon. Friend is right to raise that. Protecting and promoting the freedom of religion or belief is an important part of our bilateral and multilateral relationships, and we do not shy away from acting on our concerns. We continue to deliver the recommendations of the report by the Bishop of Truro. Of the 22 recommendations, we have fully delivered 10 and made good progress on another seven, and we are on track to deliver all 22 by the time of the three-year review in mid-2022.
Douglas Chapman (Dunfermline and West Fife) (SNP) [V]
Dominic Raab
The hon. Gentleman is right to point to the important work that we do through ODA and on development. The Prime Minister hosted the Gavi summit, working with countries around the world to ensure that there is equitable access to a new vaccine. In relation to the 0.7% commitment and our future ODA spending, I am afraid he will have to wait for the spending review tomorrow.
Chris Grayling (Epsom and Ewell) (Con)
The Minister for the Middle East and North Africa (James Cleverly)
The full extent of the impact of covid-19 on the illegal wildlife trade is not known, but my right hon. Friend is right to raise this issue. We know that it is a serious crime undertaken by organised criminal networks. We have contributed £250 million to the Global Environment Facility, which runs the world’s biggest programme to tackle the illegal wildlife trade. He will understand that I am not able to give full details of future ODA spending commitments at this point.
Stella Creasy (Walthamstow) (Lab/Co-op) [V]
James Cleverly
The FCDO takes all reports of sexual assaults abroad extremely seriously. Miss McNamara had a deeply distressing experience in the UAE earlier this year. Consular officials from the embassy supported her when she reported the incident to them, and the FCDO consular staff are standing by to do everything they can to support Miss McNamara and her legal team.
Michael Fabricant (Lichfield) (Con) [V]
Dominic Raab
I thank my hon. Friend for raising this case. He is right to say that the High Court has found that the Foreign Office behaved lawfully, properly and in good faith throughout. However, I appreciate that, as he will know, that will be no solace to the family, who are still very much grieving for the loss of their precious son. We have made it very clear that we are on side of the Dunn family. We have consistently called for Anne Sacoolas to return. We will continue to do so, including, as my hon. Friend asked, in relation to the new Administration. I also negotiated the change of the arrangements as they affect the Croughton base so a case like this—an injustice like this—cannot happen in the future. In relation to the claim that the family are bringing in the US, I have made it clear that we are willing to support it in various ways.
Stephen Timms (East Ham) (Lab)
Dominic Raab
I thank the right hon. Gentleman, who I know always raises this case and these issues very assiduously and conscientiously. Of course, I will make sure that he can have a meeting with the Africa Minister to look at what further we in the FCDO can do.
David Simmonds (Ruislip, Northwood and Pinner) (Con)
Dominic Raab
I thank my hon. Friend, and he is absolutely right. The UK is a founding member of the Global Fund to Fight AIDS, Tuberculosis and Malaria. Malaria deaths have halved since 2002. That is an incredible achievement, and vital to bringing stability and hope to those countries affected.
Debbie Abrahams (Oldham East and Saddleworth) (Lab) [V]
Nigel Adams
I thank the hon. Lady for her question, and for her continued emphasis in this regard. These matters about the region of Kashmir have to be settled bilaterally between Pakistan and India. What I can say is that we do raise this issue at every opportunity with both authorities. I am more than happy to ask the Minister for South Asia to meet the hon. Lady, so that she can get a deeper insight into the actions that the Government are taking.
Simon Baynes (Clwyd South) (Con)
Dominic Raab
An important part of the work we do involves promoting all four corners of the United Kingdom. We do that in our post through a celebration of St David’s day, as well as other national festivals, and we do it all round the world. Through the GREAT UK Challenge Fund, the FCDO promotes Welsh businesses and Welsh culture. My hon. Friend might be interested to know that in the last financial year we supported 40 projects promoting the devolved nations, including 14 in Wales, and with the Department for International Trade we helped to attract 62 foreign direct investment projects, creating 2,736 new jobs. That demonstrates the value to the people of Wales of the United Kingdom Government, including in their foreign policy.
Robert Largan (High Peak) (Con)
Dominic Raab
I was in Berlin yesterday for an E3 meeting with my French and German counterparts on exactly that issue, and on how we are taking forward accountability within the scope of the joint comprehensive plan of action. More than 200 EU sanctions are listed in place against Iran, and with our E3 partners we are continuing the JCPOA to maintain and constrain Iran’s nuclear programme as best we can. We are looking to re-engage with the new US Administration, to see how we can strengthen that even further.
Alun Cairns (Vale of Glamorgan) (Con)
The Minister for Europe is aware that my 18-year-old constituent, Tom Channon, tragically died at the Eden Roc complex in Mallorca in July 2018. That followed a similar death of Tomas Hughes, just weeks earlier. I believe there is a strong criminal case to be pursued for prosecution for negligence, and on 10 July this year I wrote to the president of the provincial court. I have pursued the matter persistently, but I still have not received a reply. Covid will have played a part, but does the Minister agree that waiting five months after the deaths of two 18-year-olds, two years earlier, is wholly unacceptable?
Nigel Adams
My right hon. Friend is right to raise that case. Deaths abroad of our constituents are always tragic, and our consular staff at post have spoken with the president of the provisional court in Palma. We have asked him for a response to my right hon. Friend’s letter. He is right to point out that there are some enormous workloads as a result of the covid pandemic, but the president has assured us that he will respond to the letter in due course. We will continue to push on behalf of my right hon. Friend and his constituents.
Wes Streeting (Ilford North) (Lab)
Given that the Rajapaksa Government in Sri Lanka have effectively withdrawn from the commitments that the country made at the UN Human Rights Council, can we count on the Foreign Secretary to show the leadership we need to secure a new UN resolution, and ensure the prosecution of historical war crimes and accountability for previous human rights abuses, as well as an effective challenge to the present Government for ongoing human rights abuses?
Nigel Adams
The hon. Gentleman is right to raise that issue and I applaud his work with the all-party group for Tamils, alongside that of other colleagues. We will work closely with our international partners and the Human Rights Council on how best to take forward this important issue. The Minister responsible for Sri Lanka, Lord Ahmad of Wimbledon, raised a number of those concerns, including the harassment of civil society and the militarisation of civilian functions, when he spoke with the Sri Lankan Foreign Minister on 5 November. We have been clear in our support for the UNHRC framework, both in our discussions with the Government of Sri Lanka and with the UNHRC in February, June and September.
Sir Iain Duncan Smith (Chingford and Woodford Green) (Con)
My right hon. Friend the Secretary of State has witnessed the most appalling attacks and bullying by the dictatorial Chinese Government against Australia, including sanctions just because it asked for an independent inquiry into the covid issue. We stand together with our oldest friend and ally, so will the Secretary of State please now publicly condemn the actions of China, and support Australia at this very difficult time?
Dominic Raab
We stand absolutely shoulder to shoulder with Australia. I had exchanges with Marise Payne, the Australian Foreign Minister, at the weekend, and as we have shown, not just on the issue that my right hon. Friend has mentioned, but on Hong Kong, with the Five Eyes alliance, we will always stand shoulder to shoulder to make sure that we protect our key interests, protect our values, and show the solidarity that he expects and requires.
Mr Speaker
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.
Leaseholders and Cladding
(4 years ago)
Commons ChamberRead Full debate Read Hansard Text Read Debate Ministerial Extracts
Mr Clive Betts (Sheffield South East) (Lab) [V]
To ask the Secretary of State for Housing, Communities and Local Government if he will make a statement on whether leaseholders are expected to pay for the removal of dangerous cladding from their homes.
The Minister for Housing (Christopher Pincher)
I congratulate the hon. Member for Sheffield South East (Mr Betts), the Chair of the Select Committee on Housing, Communities and Local Government, on securing the urgent question, which is of huge interest and concern to many of our constituents up and down the country.
The question of who pays for remediation works is key for the Government and many of our constituents. We have been clear that leaseholders should not have to worry about the cost of fixing historical safety defects in their buildings that they did not cause. Test have shown clearly that aluminium composite material—the kind of cladding found on Grenfell Tower—is the most dangerous form of cladding material. We continue to engage with building owners, regulators and the wider industry to ensure that it is removed from high-rise residential buildings as quickly as possible.
ACM remediation costs are being funded through several sources, including warranties, building owners and developers. We have provided £600 million to fund the removal of ACM where funding has been a key barrier to remediation and the Chancellor of the Exchequer has allocated a further £1 billion to be spent on removing other types of unsafe cladding over the current financial year.
It is important to remember that this is a multi-year problem. Remediation work cannot be done overnight and it must be done properly so that it makes buildings and residents safe. That forms part of the ongoing discussion that my right hon. Friend the Secretary of State has with other Departments.
However, I am clear, and I hope that the House is clear, that public funding does not absolve the industry from taking responsibility. We expect developers, investors and building owners who have the means to pay to cover remediation costs themselves without passing on costs to leaseholders, but we recognise that there are cases where that might not be possible, and cases where there may be wider costs relating to historical defects. The Government are determined to identify suitable financial solutions and remove barriers to remediation.
The Government have asked Michael Wade to accelerate his work with leaseholders and the financial sector to develop proposals to protect leaseholders from the costs of remediating historical defects wherever possible. However, we must also ensure that the bill does not fall wholly on taxpayers. We will update leaseholders on that work before the Building Safety Bill, which has just completed its prelegislative scrutiny, is introduced in Parliament.
Mr Betts
Thank you, Mr Speaker, for giving me the opportunity to ask my urgent question. The Housing, Communities and Local Government Committee has just carried out prelegislative scrutiny of the draft Building Safety Bill. In general, the Bill is very welcome. It implements the recommendations of the Hackitt report, post Grenfell. However, clause 89 contains provisions for leaseholders to be charged a building safety charge. That could cover future costs, but it could also be used to recover the cost of historical defects, such as the removal of dangerous cladding. That is the concern.
I have a number of questions for the Minister. First, will he confirm very clearly and straightforwardly that leaseholders should not have to pay any of the costs of removing dangerous cladding from their homes, as has been the Government’s policy for some time? Those leaseholders bought their properties in good faith. They have not done anything wrong and they should not be financially distressed as a result.
If the Minister thinks that leaseholders should have to pay something—the Building Safety Minister said to the Select Committee that he thought an affordable amount was reasonable—how would he define an affordable amount? The Building Safety Minister said it was something that did not bankrupt an individual. However, if leaseholders are not going to pay—I hope the Minister will confirm that point—I accept that he should pursue developers, freeholders and others. In the meantime, if developers have gone out of business or are refusing to pay, does the Minister accept that, at least in the interim, the Government are going to have to step in and fund all the costs?
If the Minister accepts that point, does he also accept that the £1.6 billion so far made available to remove dangerous cladding will be totally inadequate? The Select Committee heard that to make all high-rise buildings totally safe and remove all defects, the total bill could be as high as £15 billion. Leaseholders should not have to pay that.
Finally, does the Minister accept that, without assurances on these points, many people are going to have a very miserable Christmas? They are trapped in properties they cannot sell, that they often cannot insure and where they are having to pay for waking watches, and wondering how on earth they are going to pay the bills that could arrive on their doormats at any time.
Christopher Pincher
I am grateful to the hon. Gentleman for his urgent question and for welcoming the proposals that we have tabled in the draft Building Safety Bill. He asks a number of important questions.
First, the hon. Gentleman asks whether the building safety charge will be retrospective. We envisage that the building safety charge will cover ongoing costs that leaseholders may have to pay for legal costs, building safety inspections and the like. In our proposals, we have said that the Secretary of State will be able to prescribe costs to ensure that unfair building safety charge costs do not fall unreasonably on the leaseholder.
We will of course look very carefully at the 80-page report from the Select Committee. I think there are somewhere north of 40 recommendations in the report. We want to look at it carefully and considerately, because we recognise it forms an important part of our answer to the challenge of building safety. I hope that we can develop a cross-party approach to our further scrutiny of the Bill when it comes before Parliament.
The hon. Gentleman asked me whether leaseholders will pay any costs at all. The point of introducing £1.6 billion of public money is to make sure that in the buildings that are most at risk and where there is no means to pay, the state steps in and supports those leaseholders, but, fundamentally, we expect developers and owners to step up and execute their responsibility to pay where buildings have been defective.
I cannot say that there will not be some costs at some point related to some defect in historical building safety that will not fall upon the leaseholder, but we want to make sure, through the public money that we are spending and through the work of Michael Wade, that we find innovative solutions to make sure that such costs are as minimal as possible. We cannot write an open cheque on behalf of the taxpayer. That would send the wrong signal to developers and those who are responsible for these buildings that they do not have to pay because the taxpayer will.
The hon. Gentleman asks about my noble Friend the Building Safety Minister in the other place. I can tell him that Lord Greenhalgh is working round the clock to find solutions to the challenges that face leaseholders up and down the country. He is determined, with the work that he is doing with insurers, developers and the financial services sector, to ensure that we come up with those solutions, and I look forward to working with him closely as the Bill, which he will introduce to Parliament, works its way through both Houses.
Sir Peter Bottomley (Worthing West) (Con)
It is on record that I am a leaseholder, but I am not affected by these proposals or problems.
The hon. Member for Ellesmere Port and Neston (Justin Madders) and I chair the all-party parliamentary group on leasehold and commonhold reform. We give our support to the work of the Select Committee, which, in this report, as in its previous one on lease renters, has laid out starkly one of the problems of some particular tenants. Social tenants do not have to pay, ordinary tenants do not have to pay; it is leaseholder tenants who have been lumbered with unimaginable anxiety and with costs beyond possible chance of payment. Until we get a full grip not just on the very high buildings and the aluminium cladding but on all the problems, including the developers who used wood for balconies in ways that were against the house building regulations, we are going to be left with a frozen part of the housing market in every single one of our constituencies.
We are grateful for the work that my right hon. Friend and his colleagues have done, but he should go on paying attention, as I think Lord Greenhalgh has, to the work of the Leasehold Knowledge Partnership, which was the first campaigning charity to get a grip of the scale of the problem. Also, will he say a word about waking watches, which are going on too long and at too high a cost?
Christopher Pincher
I am grateful to my hon. Friend for his contribution and for his ongoing interest in and commitment to this very important area of work. As I said earlier, we do not want leaseholders to carry the burden of these costs. That is why we are working with Michael Wade, who has a 40-odd-year history in the insurance market, to find innovative solutions to what is a very complicated problem. It is why we have also put aside a significant amount of public money in this financial year to remediate the buildings that are most at risk where the owners have no other means of paying.
My hon. Friend also asks about waking watch. We have published data on the costs of waking watch so that leaseholders are able to see the relative differences in charges by waking watch providers. It is entirely wrong that some providers charge so much, and I would point leaseholders to that data so that they can better understand where they may get better service. They may also know that alarm systems can pay for themselves within seven weeks and obviate the need for waking watch.
Mike Amesbury (Weaver Vale) (Lab)
The Housing, Communities and Local Government Committee’s scrutiny report on the draft Building Safety Bill, published today, makes for powerful yet sobering reading, not just for Members across the Chamber but, importantly, for the hundreds of thousands of leaseholders that are trapped in this living nightmare, left to foot the cost of a broken building safety system that they did not create. Before this, we had another powerful HCLG Committee report, a Public Accounts Committee report and a National Audit Office report, which repeatedly made it clear that, well over three years on from Grenfell, where 72 people lost their lives, the Government need to step up and step in to make buildings safe with a greater sense of urgency.
There are too many aspects of the building safety crisis to mention: the cost of remediation being passed to leaseholders and, yes, the interim costs such as waking watch; the snail’s pace of the work; other safety issues, such as firebreaks and wooden balconies not covered by the funding; the lack of prioritisation according to risk other than simply the height of buildings; and the ongoing saga of the external wall survey forms, despite this weekend’s botched announcement by the Secretary of State. How many reports are we going to need?
By my count, the Government have promised 11 times in this Chamber and beyond that leaseholders should be protected from the cost of remediation. Now we witness Minister after Minister shifting sand, referring to “affordable” costs put on the shoulders of leaseholders and enshrining in the draft Building Safety Bill the building safety charge—clause 89, there in black and white for people to see. Will the Minister tell me and the House what additional invoice paid in 28 days he defines as “affordable” or, as referred to at the Dispatch Box today, “reasonable”? Please answer that question.
Finally, will the Minister explain why those companies and developers that knowingly engineered false test results for insulation and cladding products, then riddled thousands of homes with flammable materials, are getting away scot-free?
Christopher Pincher
I am obliged to the hon. Gentleman for his questions. It is not true to say that leaseholders are being left to foot the bill. He and the House know full well that the taxpayer is spending £1.6 billion in this financial year to help remediate those buildings most at risk where the owners are unable to pay. Of course, those discussions across Government are ongoing. We keep the situation under review. However, I remind the House that it is not fair simply to place such a burden on the taxpayer. Developers and owners must step up and play their part.
The hon. Gentleman raised the question of the external wall system 1 form, which he knows is a form produced by the Royal Institution of Chartered Surveyors; it is not a Government form. I am pleased that, as a result of the negotiations undertaken by my right hon. Friend the Secretary of State and Lord Greenhalgh, the EWS1 form will no longer be necessary for those buildings that are not clad. The industry has made that clear. That will be to the benefit of something like 450,000 leaseholders. But there is more to do, and we will continue to do it.
The hon. Gentleman asked me what affordability is. It is a very subjective matter, because what is affordable to one person is not to another. We want to ensure that, as a result of the work that my noble Friend is doing with the financial services sector and the insurance sector, we come up with appropriate and innovative solutions to ensure that unfair costs do not fall on leaseholders for defects that may be identified down the line.
The hon. Gentleman also referred to commentary on lies told about fire safety tests. I entirely agree that that was wrong. It was outrageous. Where firms have been proven to lie, they must of course receive the full force of the law.
Mr Speaker
I note that we have 62 people to get through, so I am concerned. I recognise that everyone needs to get in, because they all have personal circumstances, so if we can help each other, that might just get us through.
Nickie Aiken (Cities of London and Westminster) (Con)
While I welcome the fact that a number of responsible property owners have taken the necessary steps, supported by Government funding, to remove dangerous cladding from their buildings, the leaseholders and residents of Paddington Walk in my constituency are still under pressure from their buildings’ owner, European Land, to pay for the works required to remove ACM cladding. As those residents said to me in an email sent this morning: “Manufacturers are responsible for defective kettles or cars. Why is it different for the most expensive purchase anyone will ever make in their lives?” Does my right hon. Friend agree that, given the billions of pounds being made available by the Government, it is now inexcusable that many building owners have still failed to remove dangerous cladding and are still trying to pass the cost and, indeed, the buck to leaseholders, who have suffered enough in this living nightmare?
Christopher Pincher
I quite agree with my hon. Friend. The buck ought to lie with the owners, their developers or the warrantee holder. She will know that we have spent a great deal of public money to remediate those buildings that are most in need of it, as I have described, but the responsibility of the developers—there are some very good developers out there—must be fully understood by us in this House and by them as an industry to remediate buildings that need it and to restore the reputation of their sector.
David Linden (Glasgow East) (SNP)
I congratulate the hon. Member for Sheffield South East (Mr Betts), the Chairman of the Select Committee, on securing the urgent question.
Despite the building safety programme applying only in England and Wales, its advice is still being used by insurance companies and mortgage providers in Scotland to guide decisions. This is leading to many people north of the border ending up in the same position as those south of the border: essentially mortgage prisoners and having their properties valued as worthless. The Minister knows that this is not just an issue of commonality for buildings over 18 metres; it includes those under 18 metres, too. So what measures will the Government be bringing forward, particularly with an eye to tomorrow’s spending review? What discussions has he had with lenders and insurance companies to make it clear that applying this process to Scotland is unfair? Will he agree to meet a delegation of Scottish MPs to look more closely at the issue impacting our constituents in this regard?
The problems for leaseholders arising from the 18-metre rule raise the question: why is the archaic and often unjust institution of leaseholding continuing in England at all? Might this, therefore, be an opportunity to follow Scotland’s example and abolish this outdated practice and the negative consequences that are so common with it?
Christopher Pincher
I am obliged to the hon. Gentleman for his questions. I will touch on two points that he raised. He is right that the financial services sector has commonalities throughout the United Kingdom: not simply in England but in Scotland, Wales and Northern Ireland. That is why the Secretary of State and Lord Greenhalgh have held a series of meetings with UK Finance and other components of the financial services sector. It is why an agreement has been reached that the EWS1 form should not apply to buildings without cladding, which, as I say, will help 450,000 or so leaseholders around the country. There is more work to do. I trust that the Scottish financial sector will take note of the advances we have made very recently in England and which we will continue to make. He raises the question of 18 metres. That is the guidance provided to us by Judith Hackitt and her committee and we are following that guidance. He also refers to leasehold reform. A leasehold reform White Paper will be forthcoming. Perhaps we may, at that time, be able to debate the advantages and disadvantages of the Scottish system and see where we are able to learn from them and possibly they are able to learn from us.[Official Report, 26 November 2020, Vol. 684, c. 9MC.]
Sir David Amess (Southend West) (Con)
A number of constituents in a low-rise block of flats in Southend West have been unable to get their properties insured because of cladding issues. It will cost £400,000 to remove the cladding and their service charges will escalate. Will my right hon. Friend please reiterate the principle that those costs should not be passed on to tenants or leaseholders?
Christopher Pincher
I am happy to reiterate that point to my hon. Friend. Lord Greenhalgh has had a series of meetings with the insurance industry to make sure it fully understands and takes on board that point. He will continue to do so, as my hon. Friend will continue to campaign doughtily on behalf of his constituents.
Mr David Lammy (Tottenham) (Lab)
I have to say to the Minister that I never dreamed that, three and a half years after my friend Khadija Saye died with her mother in Grenfell Tower, I would be here begging him to sort this problem out. I have over 1,000 residents in the Tottenham Hale Village in my constituency, a development built by Bellway Homes, which made £500 million profits in 2018, another £500 million profits in 2019, and has shown complete disregard for my constituents living in these buildings with combustible cladding. What is the Minister going to do about leaseholders in that situation when it is clear that his building safety fund is inadequate to meet the task? Will he meet me and my constituents, so we can sort this three and a half years after the Government promised it would be fixed?
Christopher Pincher
I am obliged to the right hon. Gentleman for his question. I sympathise with him for his personal loss and the loss of many of his friends and associates at Grenfell Tower. He asks what is being done to accelerate the pace of remediation in London, where there have been challenges that are unique to our capital. Lord Greenhalgh convened a summit of the London Mayor and the London Fire Brigade back in September to address an action plan to accelerate the work of London remediation. There was a further progress tracking meeting last month, and there are case conference meetings to address specific buildings in the capital and beyond. I remind the right hon. Gentleman that there were something like 2,700 applications for the £1 billion that we put aside for non-ACM cladding. We will work through those. We have now agreed that a significant number of them meet the criteria, and the first funding of those applications is about to begin. I am confident that the funding will be fully allocated by the end of the financial year in 2021, for which the money was made available.
Dr Liam Fox (North Somerset) (Con)
This is an issue of huge concern to many of my constituents in Portishead. It must be an absolute principle that leaseholders must be protected from the cost of remediation for safety issues that were not their fault. I welcome the Government’s support and approach. A £1.6 billion taxpayers’ commitment is huge, but the taxes of working families up and down the country should not be used to absolve developers, insurers and owners from their proper responsibilities. When will my hon. Friend come forward and set out how these responsibilities will be enforced?
Christopher Pincher
I am obliged to my right hon. Friend for his question. He is absolutely right. As I said in my earlier remarks, first and foremost the responsibility must fall squarely on the developers of these properties, their owners and warranty holders. There are some good developers that have worked hard to remediate ACM cladding; something like 50% of the buildings that have had ACM cladding remediated have been done, and are being done, by the private sector. Pemberstone, Mace, Peabody, Barratt Developments and others are all working to remediate their buildings. We have been clear that those that do not, such as those referred to by my hon. Friend the Member for Cities of London and Westminster (Nickie Aiken), must recognise that they will receive the full force of the law. I can tell the House that, from December, those responsible for buildings where remediation is not forecast to start by the end of 2020 will be publicly named, as a further incentive for them to get going.
Tim Farron (Westmorland and Lonsdale) (LD)
It would be an inexcusable outrage if the costs of making buildings safe in the light of the Grenfell tragedy fell in practice not on the developers or the governments, whose disregard of safety led to that tragedy, but instead fell on the innocent leaseholders; yet, in effect, that is the Government’s default position, as people are left with homes they cannot afford to make safe and homes that they cannot sell. Will the Government accept Lords amendment 13 to the Fire Safety Bill in the name of my honourable friends Baroness Pinnock and Lord Shipley in order to stop this injustice?
Christopher Pincher
The hon. Gentleman asks about an amendment that is being sent down to us from the other place. We will, of course, examine very closely the wording of that amendment, but my understanding is that it is a defective one, notwithstanding the issues that he raises and the concerns that he properly posits about leaseholders footing the bill. I hope that I have been clear to the House about my view on that. My understanding of the particular amendment is that it would be retrospective, which raises all sorts of legal challenges. It would also mean that building owners would be responsible for the normal wear and tear of buildings, which I am sure the whole House will accept would not be appropriate. We will look closely at the amendment, but I do not think that I can say at this stage that we can support it.
Tom Hunt (Ipswich) (Con)
I spoke about this issue soon after being elected. It affected one tower in my constituency. Since then, the problem has ballooned, and every week more of my constituents seem to be dragged into this. I agree that responsibility should ultimately lie with the freeholder, but the reality is that while the Government have that dispute with freeholders, it is the leaseholders in the middle who have this uncertainty hanging over them. Just last week, residents at Cardinal Lofts on Ipswich waterfront were all notified by quite a distant building manager that they had to pay £300 a month for a waking watch, at a time of uncertainty about employment for many of them because of the pandemic. That is completely wrong. I am glad that some support has been provided by the Government, but we need far more certainty far sooner. Will the Minister meet me and colleagues to talk in detail about the timeline for providing that certainty?
Christopher Pincher
My hon. Friend has raised this particular issue with me before, and I know that he has campaigned hard and long on it since his election just 11 months ago. I am happy to meet him to discuss that. The issue of waking watch has been raised by other Members. As I said, we want to ensure that leaseholders are aware of waking watch costs and the opportunities to mitigate them. It is the reason why we want developers to get on and remediate, and it is also why we have put £1.6 billion of taxpayers’ money aside to ensure that we can remediate those buildings where owners cannot, so that the waking watch issue becomes moot.
Clive Efford (Eltham) (Lab) [V]
It is a disgrace that three and a half years on, people still do not know whether the properties they live in are safe, and others cannot sell because they cannot get external wall system certificates. I am told by surveyors who would willingly carry out this work that they cannot do so because they cannot afford the huge premiums that are being charged by insurance companies. That is leading to a huge backlog in this area of work. It is essential to get that moving. What is the Minister going to do about that, and would he consider paying those premiums, so that we can remove the backlog and start to get some idea of the problem we are facing?
Christopher Pincher
The hon. Gentleman asks what we are doing to speed up the surveying process. We are making more professionals available to undertake EWS assessments. We are spending something like £700,000 to fund the training of those assessors, and we will produce about 2,000 of them over the next six months, which should help to speed up the process.
Chris Grayling (Epsom and Ewell) (Con)
In my constituency, the biggest concern for residents has been the inappropriate application of these rules and the EWS form to much lower-rise buildings than were ever envisaged and the resulting problems created for them in selling flats, moving flat and so forth. I welcome the announcements made by my right hon. Friend last weekend; I am grateful to him for that. Could I ask him to keep up the pressure on the different professionals and organisations involved, to ensure that this problem really does disappear? These homeowners should not be subject to pressures because of something that is not designed for their kind of property.
Andrew Gwynne (Denton and Reddish) (Lab) [V]
I often wonder how Ministers would react if they received a letter, often out of the blue, saying that the cost to make their home safe far exceeded their annual salary, sometimes by multiple amounts. We know that there have been more than 2,800 applications for the building safety fund. Can the Minister inform the House how many have been allowed to proceed to a formal application so far and how much has actually been paid out of the fund to date?
Christopher Pincher
I can tell the hon. Gentleman that 2,704 applications were received. A significant number of them, I regret to tell the House, were not sufficient to allow an immediate assessment, but more than 100 have been assessed successfully to move on to the next stage. The first tender for payment has been agreed, and I am confident that by the end of the financial year for which this money was set aside, it will have been fully allocated, and remediation work will have begun.
Sir Roger Gale (North Thanet) (Con) [V]
In his opening remarks, my right hon. Friend said that people should not be required to pay for faults that they did not cause, and he is absolutely right. Further to the point raised by the Father of the House, I have in my constituency one block that has social housing, private rented accommodation and full and shared leaseholders; will my right hon. Friend assure the House that the leaseholder element will not ever be faced with a disproportionate bill that will in effect pay for those who do not pay at all?
Christopher Pincher
I am obliged to my right hon. Friend for his question. As I said earlier, I cannot say that there will not be some cost that may occur at some point to leaseholders for historical defects work that may be undertaken, but we do want to make sure that, as a result of the work that Michael Wade is doing with the financial services and others, any such costs are fair and reasonable and can be carried. That is why we have put aside that £1.6 billion to make sure that the cost of cladding remediation for cladding such as ACM and high-pressure laminate can be funded by the taxpayer when the developers are not able to fund it, so that the cost does not fall on the leaseholder.
Ms Karen Buck (Westminster North) (Lab)
We have already heard about the difficulties that leaseholders have had with the EWS1 form backlog when they are seeking to sell. At the weekend, the Secretary of State claimed that his proposal to remove the requirement for this certification from properties without cladding had been cleared by and had the backing of mortgage lenders; in fact, UK Finance and the Building Societies Association both said that they did not back the scheme and had not been consulted, and that it did not solve anything and left 1.9 million homeowners in the lurch. Will the Minister tell us whether or not leaseholders who do not have cladding will be required to have the certification, and whether his proposal now has the backing of finance lenders?
Christopher Pincher
It is my understanding that buildings that do not have cladding will not need an EWS1 form. We clearly need to do more work with the financial services sector to advance the issues that have arisen with the EWS1 form but, as a result of the negotiations and the agreements made over the weekend, we anticipate that something like 450,000 holders will no longer need to use an EWS1 form.
Dr Matthew Offord (Hendon) (Con) [V]
I wish to press the Minister on that specific point. Will he confirm whether UK Finance has officially acknowledged that leaseholders of residential properties without external cladding do not need to provide an EWS1 form to finance, remortgage or sell their properties? Where can my constituents view that confirmation?
Christopher Pincher
As I said to the hon. Member for Westminster North (Ms Buck), my understanding is that the industry has confirmed that the EWS1 form will not be necessary for buildings that do not have cladding. As I am saying it from the Dispatch Box, I would imagine that is the view of the Government.
Dean Russell (Watford) (Con)
I welcome the EWS1 form measures as they will have a real impact and provide certainty for many in my constituency. However, a number of Watford residents, especially in places such as Outlook Place, are still finding it difficult to sell or remortgage their homes, so what reassurances can my right hon. Friend offer to those living in buildings with cladding that are under 18 metres?
Christopher Pincher
I am obliged to my hon. Friend, who I know has been campaigning long and hard on this issue in Watford. As I have said, as a result of some considerable and lengthy negotiations with the financial services sector, we have agreed that EWS1 forms will not be necessary for buildings that are for sale that are not clad in the same way as some buildings that are in grave difficulty. That will help 450,000 people around the country, a number of whom I suspect will be my hon. Friend’s constituents. There is more work to do on this matter and we will continue to undertake it.
Meg Hillier (Hackney South and Shoreditch) (Lab/Co-op)
I need to declare my interest in that I am a leaseholder in an affected block, but in my case, my developer is paying for the full remediation works. The Minister must acknowledge that this is one of the biggest consumer and safety failures in a generation. For all that I chair the Public Accounts Committee—we have published a report on this issue—and I watch taxpayers’ money very closely, surely the Government need to step up, just as they did when the former Secretary of State signed a ministerial direction sanctioning the expenditure of millions of pounds because he knew that it would take too long to go through the legal process of tracking down the actual owners of buildings for the most dangerous cladding. The Government need to step up. We need 10 times the amount that has been pledged. Surely the Minister must recognise this. Too many leaseholders are trapped and will never be able to move.
Christopher Pincher
I am grateful to the hon. Lady, and I know that she is a very considerate and assiduous Chair of the Public Accounts Committee. The Government, though, have stepped up. It is why we put £600 million on the table to remediate ACM-clad buildings, and about 79% of those have now either completed or begun their remediation. Ninety-seven per cent. of social housing buildings have had that remediation completed. It is why we stepped up again with £1 billion through the building safety fund to remediate buildings that have other non-ACM-style dangerous cladding, but we must not absolve the developers and the owners of their responsibility to make sure that remediation takes place in the buildings for which they are responsible. We work with them to make sure that happens while we keep the general situation under review.
Felicity Buchan (Kensington) (Con)
I welcome the additional money for training for assessors, because I understand from the industry that this is a very important issue, in terms of several of the delays. I am frustrated, however, that three and a half years on from the appalling Grenfell tragedy that happened in my constituency, we still have many outstanding issues. What assurance can my right hon. Friend give me that we will not be having the same conversation in six or 12 months’ time? Are there any interim measures that we can put in place to support leaseholders?
Christopher Pincher
I am obliged to my hon. Friend. I appreciate the very unique challenge that she has as the Member of Parliament for Kensington. As I said earlier, the £700,000 of public money that we are putting aside to support the training of assessors will deliver about 2,000 assessors—clearly qualified assessors—who will be able to undertake the assessment work over the next 12 months, so I trust that that will also be a means by which we will not be having this conversation again any time in the future. The public money that we have set aside beyond that—the £1.6 billion—is also designed to ensure that the worst, most dangerous buildings are dealt with quickly and effectively. I hope and trust that the conversations we have ongoing with developers and owners to make sure that they step up to the plate will mean that very soon, we will remediate all the buildings that are affected, and that we will be able to see value and trust restored to those buildings and the development sector.
Chi Onwurah (Newcastle upon Tyne Central) (Lab)
My constituent is a leaseholder in one of the 2,700 blocks —I think that is what the Minister said—that have applied to the building safety fund, which has approximately enough money to remedy about 600 blocks. She does not know whether her flat is safe. She cannot sell it and she does not know how much her liabilities may be. The Minister can talk about finding innovative solutions, but it is three and a half years since Grenfell and we still do not see builders, owners or developers paying for remediation. Will he guarantee to my constituent that she will not have to be liable—that she will not have to pay for these costs—and does he agree that this is just one more example that shows that the leasehold system is broken and needs to be reformed?
Christopher Pincher
The leasehold system and its reform will form part of a Government White Paper and separate debates in this Chamber, and I am sure that the hon. Lady will play her part in those.[Official Report, 26 November 2020, Vol. 684, c. 10MC.] It is not true to say that developers and others are not funding remediation. As I have described, firms such as Pemberstone, Mace, Peabody, Barratt and, I think, Legal and General are all stepping forward with funds to remediate buildings for which they are responsible, resulting in something like 50% of ACM-clad buildings being remediated by the private sector. I do not know the specific issues of the buildings in her constituency to which she refers, but I am happy to talk to her separately about them. I am confident that the £1 billion of public money that we will set aside through the Building Safety Bill will be allocated by the end of this financial year, as we said it would be, and that remediation of those non-ACM buildings will begin.
Kevin Hollinrake (Thirsk and Malton) (Con)
I draw the House’s attention to my entry in the Register of Members’ Financial Interests. In many cases there are insurmountable legal problems involved in trying to charge building owners and freeholders for these sums, and developers will often point the finger elsewhere. We know that responsibility lies with the developers and installers, with the manufacturers of insulation and cladding in many cases, and, let us be honest, with successive Governments for their approach to building regulations, which must be described as ambiguous. This cannot be left at the door of the leaseholders. Is it not right that the Government should now step in, increase the building safety fund, get the work done and claim back the moneys wherever possible and from whoever possible, and where they cannot, do so by means of a cross-sector levy?
Christopher Pincher
My hon. Friend is an expert in this field and I pay tribute to him for the work that he has undertaken. Mr Wade, our adviser, is working hard with us and with the sector to develop solutions that will provide help and support to leaseholders. In the meantime, as I say, the Government have stepped up and provided a significant amount of public money to remediate the buildings that are most in need of it where there is no other means of paying, but it must be right that we ask developers and those responsible for these buildings to pay. To signal that the state will simply step in and sub them will not encourage them to do the right thing, and it is for developers, owners and warranty suppliers in the first instance to ensure that the buildings for which they are responsible are remediated.
Daisy Cooper (St Albans) (LD)
Leaseholders in St Albans are already facing estimated bills of between £50,000 and £120,000 each for fixing safety defects in their buildings that they did not cause. These are not bills that are in the far-off distant future; these are costs that are being passed on to leaseholders right now, including through increased service charges. In the last three years, leaseholders in St Albans have seen their service charges rise from under £1,000 a year to £6,000 a year. Some of my residents cannot afford to pay these bills any more, and that will affect their ability to continue working in some professions, so will the Government get a grip and take urgent action to ensure that leaseholders no longer have to pay, as they are already doing, and that they do not have to foot the bill for these costs?
Christopher Pincher
I am obliged to the hon. Lady. She is right. We recognise, as she will, that there are many cases in which leasehold agreements allow the building owners—the freeholders or their managing agents—to pass on remediation costs to the leaseholders of individual flats. That is why we have instituted the work of Michael Wade to ensure that leaseholders are protected from any charges for historical remediation that are unfair. The fundamental responsibility—the first responsibility—for the remediation of those buildings must lie with the developers, the building owners and the warranty holders, and not with the leaseholders.
Theresa Villiers (Chipping Barnet) (Con)
I thank the Government for the substantial investment in tackling this problem, including for the social sector. Will the Minister encourage housing associations that have been funded to do this work to get it done as quickly as possible? That is the best thing to do to keep people safe, but also it is really tough on tenants effectively living in a building site for months on end, as has been the case in Desmond House in East Barnet in my constituency.
Christopher Pincher
My right hon. Friend is a doughty campaigner for her constituents in Chipping Barnet, and I will do exactly as she advises.
Stella Creasy (Walthamstow) (Lab/Co-op) [V]
Hundreds of families in Walthamstow have finally managed to get their foot on the property ladder through shared ownership and now, as a result of this crisis, find themselves in properties that are almost worthless and facing huge bills. Will the Minister reconsider the decision to exclude those bills that were incurred before 11 March, because many of those people have already tried to do the right thing and have incurred huge cost to themselves through the remediation works. Surely we should not penalise those people who have tried to act promptly on this matter.
Christopher Pincher
I am obliged to the hon. Lady. The decision of the Government was to make sure that those buildings that were most in need of remediation and where the owners could not pay should be, as it were, first in the queue for Government help. We want to work with the sector, with the leaseholder community and with the adviser Michael Wade to find solutions that will ensure that unfair bills do not fall upon leaseholders who are not responsible for the troubles that they face.
Marco Longhi (Dudley North) (Con) [V]
I should draw your attention, Madam Deputy Speaker, to my entry in the Register of Members’ Financial Interests. As a landlord myself, I make it my utmost priority to ensure that my tenants are safe in their homes. What steps is my right hon. Friend taking to ensure that all landlords are taking their duties seriously and acting on their tenants’ concerns?
Christopher Pincher
I can tell my hon. Friend that we have written to all those responsible for buildings, including their owners, where remediation has not started to remind them of their responsibilities and our expectation that remediation will begin by the end of the year. My hon. Friend the noble Lord Greenhalgh has convened roundtable meetings with owners and with local authority leaders to address the challenges that they face locally. We have made it clear that, from December, those responsible for buildings where remediation has not started and is not forecast to start by the end of this year will be publicly named. Those are active steps that we are undertaking to remind landlords and owners of their responsibilities.
Ruth Cadbury (Brentford and Isleworth) (Lab)
In October, more than 1,000 of my constituents—leaseholders, shared owners, tenants and students—were asked to leave the Paragon Estate in Brentford within seven days because the current owners, Notting Hill Genesis, found significant fire safety and structural issues. They were unrelated to flammable cladding, because that had been removed two years ago. In September 2019, Richmond House in Worcester Park, a four-storey block of only 23 leasehold flats, was destroyed by fire in 11 minutes. Both estates were developed by the Barclay Group, and both had the same significant fire safety defects. The week before last, the Sunday Times said that
“the scandal over building safety spreads far beyond dangerously clad tower blocks”
and could affect 4 million people. What are the Government doing right now to protect all those at risk of dying at home because of failures in the building safety regime?
Christopher Pincher
The building safety fund was designed specifically to deal with the removal of unsafe non-ACM cladding where the buildings are over 18 metres and where materials, even before the combustible cladding ban was put in place in 2018 under statutory guidance, should not have been used on high-rise buildings. That fund is available, and, as I have described to the House, it is already being disbursed round the country and will be completed by the end of this financial year. We will continue to work with the financial sector, as I have described, using Michael Wade. We will continue to work with developers to make sure that their responsibility is executed, and support for leaseholders is provided. As for the specifics of the case that the hon. Lady raised, I am not aware of it, but I am happy to discuss it with her outwith the Chamber.
Bob Blackman (Harrow East) (Con) [V]
As a member of the Housing, Communities and Local Government Committee, I have had the opportunity to scrutinise the draft safety Bill. The report that we published today has unanimous cross-party support, and I urge my right hon. Friend and his colleagues to look at it in very great detail indeed. I do not expect—it would be unreasonable to do so—an immediate reaction today following publication. However, during the inquiry, a concern arose from Lord Greenhalgh’s evidence about costs being passed on to leaseholders. My right hon. Friend has said that proposed amendments to the Fire Safety Bill are defective in some way, but would he commit, on behalf of the Government, to make it clear that the Government will ensure that it will be illegal for the cost of remediating unsafe cladding on buildings to be passed on to leaseholders in any shape or form?
Christopher Pincher
I am obliged to my hon. Friend. I can guarantee that we will look very closely at the report. As I have said, there are something like 80 pages and 40-odd recommendations. I shall look very closely at pages 22 to 39, which may include reference to proposals from another place.
Patrick Grady (Glasgow North) (SNP)
As my hon. Friend the Member for Glasgow East (David Linden) said, this is not a problem that stops at the border. I have constituents in the Partick area and elsewhere who are trapped in houses that they cannot sell and cannot get fixed as a result of advice assigned for an English model of ownership and management that does not apply in Scotland. When did the Minister last engage with his Scottish Government counterparts on this, and when will he next engage with them? Will he respond to the request from my hon. Friend to meet a delegation of MPs from Scotland to discuss how this particularly affects our constituencies?
Christopher Pincher
We discuss a range of issues with our colleagues in the Scottish Government—and officials discuss with officials—in the usual way, all the time. I am very happy to discuss with the hon. Gentleman any particular arrangements that he may wish to raise, and I will make sure that any such issues are raised with my noble Friend Lord Greenhalgh.
Antony Higginbotham (Burnley) (Con)
While discussions take place with property developers and freeholders about who will fund the cost of this, we should never forget that there are leaseholders and tenants living in these buildings, so would the Minister set out what steps have been taken to keep those people safe, as they are living in fear?
Christopher Pincher
We have put a great deal of public money aside to make sure that buildings that need remediation—and where there is no other means of making them safe quickly—are made safe through the ACM fund and the building safety fund. We will continue to work closely with the industry to make sure that other buildings are remediated and made safe. I look forward to further contributions from my hon. Friend in that regard.
Andy Slaughter (Hammersmith) (Lab)
The Minister answered a series of questions on this subject yesterday, and his answers all contained the same formulation of words: “to protect leaseholders from unaffordable costs”. Does he realise that that leaves leaseholders in limbo? What he needs to do now is either define what “unaffordable” means better than “just below the bankruptcy threshold”, as in a previous attempt by one of his colleagues, or he needs to recommit to exempting leaseholders from those costs, as well as social landlords, as there are costs not only for leaseholders but for tenants?
Christopher Pincher
As I said earlier, I cannot commit that there will be no costs that a leaseholder will ever have to pay with respect to some historical defect. We want to make sure, through the building safety fund and the ACM fund, and through our work with developers and owners, that the costs of cladding issues that confront many people and which are the subject of great debate in the House are protected for leaseholders.
The hon. Gentleman asks me about affordability, which is a very subjective matter. I want to make sure, through the funds we have made available and the work Michael Wade is doing with the sector, that people are able to get on with their lives, restore value to their properties and live as normally as possible without the spectre of costs hanging over them.
Barry Gardiner (Brent North) (Lab)
The Ministry of Housing, Communities and Local Government blames the building control inspectors. The building control inspectors blame the construction company. The construction company blames the developer. The developer blames the lack of proper regulation. What is clear is that no one blames the thousands of leaseholders in my constituency who are now trapped in their homes, paying for everyone else’s mistakes. So will the Minister accept that the buck stops with him to get those who are responsible to pay up, if necessary with a windfall tax on the industry, to sort out the regulation and to keep my constituents safe and solvent?
Christopher Pincher
The buck stops with those responsible for the development of these buildings, the owners and the warranty holders, and that—getting them to pay—is what we are working to make sure they do.
Gareth Bacon (Orpington) (Con)
I have been contacted by a number of constituents who are leaseholders in buildings under 18 metres in height that have cladding on them. They are unable to remortgage or to move home because mortgage providers are refusing to lend without the EWS1 form and the freeholder has not provided it. Will my right hon. Friend confirm whether or not an EWS1 form is required for buildings with cladding that are under 18 metres in height? If it is not, will the Government commit to reinforcing that message to mortgage providers, so that my constituents can move on with their lives?
Christopher Pincher
I can certainly confirm that buildings that are without cladding should not have an EWS1 form apply to them. EWS1 forms can be applied in other egregious circumstances, and we are working with the sector to make sure that we obviate, as far as is possible, the responsibility of leaseholders to provide those forms. There is more work to be done to ensure that buildings can have their value restored to them and that people can move effectively without recourse to an EWS1 form.
Munira Wilson (Twickenham) (LD) [V]
In my local authority of Richmond upon Thames, remediation work has either been started or completed on fewer than 50% of buildings with dangerous cladding. Leaseholders living in these buildings, such as the residents of the Sandy Lane estate in my constituency, are living at constant personal and financial risk. So may I press the Minister again: will he, in the first instance, commit to covering the costs of both the assessment and the remedial work, to keep not just my constituents safe, but leaseholders across the capital and the country, and claim the money back from freeholders and developers later?
Christopher Pincher
As I said a moment ago, some 79% of all identified high-rise ACM buildings have either completed or started their remediation, and some 97% of social sector buildings have either completed or started their remediation. I know that there are specific challenges in London, which is why the Secretary of State and Lord Greenhalgh have undertaken roundtables with the Mayor, the fire brigade and the sector to ensure that the pace of acceleration is speeded up. We want to make sure that this work is done. We will continue to work with the developer community and with leaseholders to make sure that it is. Where necessary, as we have already demonstrated, public money will be spent, but in the first instance the responsibility should fall on those who built these buildings or who own them.
Huw Merriman (Bexhill and Battle) (Con)
The Minister is quite right that the buck should stop with those who are responsible, but for the 66 leaseholders in the Landmark in Bexhill, their builder and developer have both gone out of business, and indeed the insurer is not in business either. Ultimately, while the freeholder should of course be responsible, legally they may not be. What can be done to ensure that leaseholders are not responsible and do not face years of court action or bankruptcy? Surely we need to look at an industry levy to make sure that the industry that is ultimately responsible carries the can.
Christopher Pincher
The work of Michael Wade is designed to address some of the challenges that my hon. Friend raises. In the interim—I am sorry to labour this point—that is why we put aside a very significant amount of public money to alleviate the risk to the buildings that are most at risk of fire and that are most dangerous, and where there is no other means of the owner paying, so that, fundamentally, leaseholders in those circumstances are made safe. The work of Mr Wade will focus particularly on the matters that my hon. Friend raises.
Stephen Doughty (Cardiff South and Penarth) (Lab/Co-op)
The bottom line is that this is a national scandal. It is a UK-wide problem that is going to require UK-wide solutions, such as the Minister has described, regarding the EWS1 forms that have affected my constituents. I have been absolutely appalled by the utterly amoral behaviour of many of the developers and construction companies, raking in billions while trying to dump the costs on to leaseholders in my constituency and so many others around this country. Has the Minister actually hauled in the likes of Redrow, Laing O’Rourke and Taylor Wimpey? If he is saying that they are ultimately responsible, what is he actually going to do to make them pay? Will it be a levy or some other measure? When will we see these innovative insurance products, because the reality is that my constituents are paying thousands in increased premiums right now?
Christopher Pincher
I understand the concerns of the hon. Gentleman and the passion with which he expresses the concerns of his constituents. We have named and shamed the owners and developers who did not step up the plate and properly and quickly remediate ACM-clad buildings. We made it clear that where we anticipate that the remediation of other buildings will not have begun by the end of this year, we will name and shame those owners and developers too. That is the work that Mr Wade is undertaking to develop the solutions that will mitigate the effect of any costs on leaseholders so as to make sure that we draw this terrible situation to a reasonably quick and satisfactory conclusion. I think that will answer some of the concerns that the hon. Gentleman has raised. We want to get on with this, and get on with it quickly, and that is the work that Mr Wade is undertaking.
Stephen Metcalfe (South Basildon and East Thurrock) (Con) [V]
Although I welcome the funding that the Government have made available to remove unsafe cladding and praise the owners who have stepped up to get the process under way, there are, sadly, many owners who have not done that, leaving residents in Basildon trapped in homes they cannot sell. Further to the point made previously, what more can the Government do, other than naming and shaming, to force building owners to start the process of cladding removal and to fund it where they can?
Christopher Pincher
Local authorities have a suite of measures with respect to enforcement—fines and the like that can be brought to bear to address the concerns, or some of the concerns, that my hon. Friend raises. As I have said previously and shall say again, the work of Michael Wade, a very experienced player in the insurance sector with 40 years’ experience behind him, is to bring the sector together to find sensible and innovative solutions that will result in the costs that may fall to leaseholders being mitigated. That is the solution to this problem, not simply writing a blank cheque on behalf of taxpayers, which would send entirely the wrong message to the developers and the owners of these buildings, who are, in the first place, responsible for remediating the issues that they have caused.
Charlotte Nichols (Warrington North) (Lab)
I should make a declaration of interest that I am a leaseholder, although I am personally unaffected by the matter we are considering. However, I have heard from a number of constituents who are—or whose children are—affected. Does the Minister agree that the principle is simple? They have purchased flats in good faith that have subsequently been shown to have been built potentially dangerously. As my hon. Friend the Member for Brentford and Isleworth (Ruth Cadbury) said, that extends far beyond combustible cladding. If they had bought some other item with inherent faults, they would not be expected to pay for repairs, so those leaseholders should not be liable for remedial works to make their homes safe, should they?
Christopher Pincher
Our actions are designed to ensure that the hon. Lady’s constituents and others around the country are not liable for the costs of cladding. I cannot say to her that there will not be some costs that fall on leaseholders that have some connection with defects in their properties, but we are working hard with Mr Wade and others to ensure that we have solutions to mitigate that, and we must make sure that developers and owners step up to the plate and remedy the situations that they have created. Where they cannot, thus far the Government have demonstrated that we will step in and support remediation of buildings, but we cannot and should not offer a blank cheque on behalf of taxpayers. The primary responsibility must reside with developers who built those buildings.
Robert Halfon (Harlow) (Con) [V]
I welcome what my hon. Friend is doing, particularly on fairness for leaseholders, but what measures can he take to support Harlow locally to improve the quality of social housing, given the urgent need to ensure that our social housing stock is fit for purpose and we can build an even better Harlow for residents, for the 21st century and beyond?
Christopher Pincher
My right hon. Friend campaigns for Harlow possibly like no other colleague campaigns for any constituency in the country. He was integral to our work on space standards for upbuilding and ensuring that buildings have light in all habitable rooms. In answer to his question, I point him to our affordable homes programme, under which £12.2 billion will deliver 180,000 affordable new homes in the next five years, and to our reforms to the housing revenue account, which will allow local councils more easily to build social homes if they wish. Harlow may wish to pursue those two endeavours.
Lilian Greenwood (Nottingham South) (Lab)
I have been contacted by numerous leaseholders in my constituency who, through no fault of their own, are worried sick because they are being told that they need to pay thousands of pounds for essential fire safety works, including the removal of unsafe cladding. Some are vulnerable or on low incomes and all fear losing their home or being trapped in a financial nightmare. I think that the Minister agrees with the Housing, Communities and Local Government Committee that leaseholders should not be required to pay for the remediation of historical building safety defects, but what is his advice to my constituents, who are receiving enormous service charge bills that they cannot afford and should not be asked to pay?
Christopher Pincher
I entirely sympathise with the situation that the hon. Lady’s constituents and those of other right hon. and hon. colleagues face. We are entirely cognisant of the fact that individual legal contracts between owners and leaseholders allow owners to pass on costs to their leaseholders. That is one of the reasons we invited Michael Wade to do the work that he is doing. We will work as fast as we can to ensure that the solutions that we are working through are available to mitigate any costs that leaseholders may fear they have to pay. That is also why we will continue to make public funds available, as we have through the ACM fund and the building safety fund to remediate buildings that are most in need and for which there is no other means of quick and easy remediation.
Caroline Nokes (Romsey and Southampton North) (Con)
Leaseholders are not just living in limbo. As we have heard this afternoon, they are living in fear. They are paying over the odds in insurance to live in fear, and in some cases they are paying well over £1,000 a year for waking watch charges. I recognise that my hon. Friend has done an enormous amount of work on that, but may I please impress upon him the urgency? At this economic time, people simply cannot afford those charges on an ongoing basis.
Christopher Pincher
I entirely accept the points made by my right hon. Friend. We will continue to work with the insurance sector on the insurance challenges that leaseholders face, with the financial services sector on the challenges with mortgage costs that leaseholders face, and with developers to make sure that remediation takes place swiftly and effectively, so that this problem is resolved.
Stephen Timms (East Ham) (Lab)
Will the Minister set out much more clearly the criteria for the much-needed grant funding? Residents at Waterside Park in my constituency are worried that their management company wants to apply to the building safety fund, even though the development recently received a B1 rating so remediation is not required. Would such an application be appropriate?
Christopher Pincher
I point the right hon. Gentleman to the specific criteria in the building safety fund, which was published earlier this year. As I have said and will say again, we will work with Michael Wade to make sure that there are solutions to what is a very complicated issue. There may be more than one element to the package of solutions to resolve this challenge. I do not want to give a running commentary to the House on the progress of that work, but it is ongoing, and we hope that we can make some further and concrete announcement soon to give succour to the points made by the right hon. Gentleman and reassurance to others in the House.
Scott Benton (Blackpool South) (Con)
I welcome the £1 billion the Government have made available through the building safety fund for the removal of unsafe non-ACM cladding. Is my right hon. Friend able to update the House with regard to the number of applications to the fund and how quickly those can be reviewed and processed so that the work can finally be done?
Christopher Pincher
I am grateful to my hon. Friend. He campaigns hard and long for his constituents in Blackpool South. We have now advanced more than 100 applications and the first payments for work will be made imminently. I am confident that the full allocation of £1 billion that the Chancellor made available in the Budget earlier this year will be made by the end of this financial year, for which the money was made available.
Ms Lyn Brown (West Ham) (Lab) [V]
Hundreds of constituents are affected by safety problems, from social housing tenants in Canning Town to leaseholders in Stratford. Those in the Prime Minister’s flagship Olympic park have had the Olympic dream turned into a nightmare. This crisis is getting worse. Just two weeks ago, four more blocks were placed on waking watch. They have been told there is a risk of fire, which increases their fear. They are trapped in unsellable homes and there is a dread that, at the end of all this, there is going to be an unaffordable bill for them to pay. Why can the Government not understand that this continuing uncertainty and punishing of leaseholders is plain wrong and that the notion of affordability is massively contentious and concerning? Perhaps we can have a meeting.
Christopher Pincher
I entirely understand the concern of the hon. Lady and her constituents. The Government are working hard and at pace to remediate these buildings and resolve the issues that her constituents face. I am very happy to meet her to discuss the specific issues in her constituency, but she can be assured that I have every sympathy with the plight of her constituents. We are working very hard, very quickly to make sure those issues are resolved.
Neil O'Brien (Harborough) (Con) [V]
Will my right hon. Friend update the House on what progress is being made in removing both ACM and non-ACM cladding in the social housing sector?
Christopher Pincher
Something like 97% of buildings with ACM cladding in the social sector have been remediated or have remediation under way. Of course, we continue to work on the remediation of non-ACM cladding, and we will work with local authorities to make sure that that is done as swiftly as possible. Another Member previously asked me if I would encourage housing associations to work more swiftly to remediate their properties—I think it was my right hon. Friend the Member for Chipping Barnet (Theresa Villiers)—and I said to her that, yes, we will. I say to my hon. Friend: yes, we will work harder with social housing operators to make sure that their properties are remediated.
Stephen Hammond (Wimbledon) (Con)
Like so many colleagues across the House, I have had many constituents write to me about the problems they are suffering with cladding, remediation and getting some answers from both finance and insurers, so I will not repeat all of what has been said before. Could I just say to my right hon. Friend that I have an outstanding meeting request with his colleague Lord Greenhalgh, and I wonder whether he might facilitate that for me?
I heard the Minister’s answer a moment ago to the question about whether or not the Government would look at the amendment from the House of Lords, and I listened carefully to his answer. Can he tell me whether or not the Government are sympathetic to the amendment, and whether or not the Government might bring forward their own amendment that would be in order?
Christopher Pincher
My hon. Friend encourages me to facilitate a meeting with Lord Greenhalgh, and I am happy to try to assist him in that regard. Regardless of the rather byzantine practices in the other place, I trust that we can make that happen for him.
My hon. Friend asks whether we have sympathy with the amendment sent down to us from the House of Lords. I understand what the amendment is trying to achieve. I believe it is defective, but of course we will look at it from the point of view that another Chamber in this Parliament has sent us an important amendment, and we will give it appropriate consideration.
Florence Eshalomi (Vauxhall) (Lab/Co-op) [V]
I receive emails from constituents in Vauxhall on an almost daily basis about this cladding scandal. My constituent who lives at Beregaria Court on Kennington Park Road emailed me yesterday and said:
“I am a leaseholder and do not own any other part of the building, I had no say in how this was built, until recently I didn’t know what cladding was, have just been working and saving for years and putting it all into 1-bedroom apartment that now is worth nothing.”
Such constituents bought their homes in good faith, so I have one question to the Minister: do the Government agree with me that in principle it is wrong to make leaseholders pay for these bills?
Christopher Pincher
I pay tribute to the hon. Lady. I know she campaigns hard for her constituents, and we have had many exchanges across the Chamber about the concerns that her constituents have raised with her. We entirely agree that it is not right that leaseholders who have done the right thing—who have invested in a property or have chosen a place to call home—should find themselves burdened by costs for which they are not responsible. That is why we are working with the financial services sector—Michael Wade is working on this—to try to make sure that any costs respecting historical defects of buildings are obviated. She will understand when I say that the taxpayer should not be held responsible for an open-ended cheque. We have already spent over £1.5 billion of public money to ameliorate those buildings most in need of it. The fundamental responsibility must lie with developers, but I entirely understand the point of view that the hon. Lady has raised on behalf of her constituents. Leaseholders who have done the right thing should not fall liable to unfair costs.
David Johnston (Wantage) (Con)
On behalf of my constituents who are affected by and anxious about this situation, can I add my voice to the cause that leaseholders should not have to pay for these charges? They have done nothing wrong. Can my right hon. Friend assure me that he will push lenders not to require the EWS1 form if it is not really needed, and also push the Royal Institution of Chartered Surveyors, which is training 2,000 other assessors, to deploy those in the areas of the country that most need them? If they are too thinly spread across the country, it will not do enough to reduce the delays.
Christopher Pincher
I am grateful to my hon. Friend for his thoughtful contribution. Yes, we will continue to work with the lending sector to ensure that the EWS1 form is fully and properly understood and is not misused, or that its use does not bleed across in a way that is inappropriate. We will of course roll out the 2,000 assessors as quickly as we possibly can. I will take on board his point and consider how those assessors can be best and most effectively deployed.
Hilary Benn (Leeds Central) (Lab)
For the past hour and a half, the Minister has had to listen to testimony about the nightmare that all our constituents, including mine in Leeds city centre, are living with. He knows that leaseholders simply do not have the billions that are still required to fix the problem. He knows that without funding from elsewhere, they will continue to live in unsafe homes, as waking watch and insurance bills mount. He knows that some of them will eventually lose their homes, because they will be made bankrupt by those costs. He knows how much anguish this nightmare is causing them. He also knows that an answer must be found, but I think the question that leaseholders who have been listening to this urgent question would like to put to him is: when will the Government come forward with that answer?
Christopher Pincher
I am grateful to the right hon. Gentleman. The question he puts is a fair one, and the way in which he puts the issues he raised was entirely reasonable and fair. We will bring forward proposals as quickly as we can, to ensure that costs to leaseholders are mitigated. He will understand that this is a complicated issue that tracks back over political generations. To unpick that challenge, and to ensure that remediation is done effectively, that liability falls where it should, that the taxpayer is not subjected to unfunded commitment and that leaseholders have the right thing done by them is a challenge, but one that we are rising to and one for which we will bring forward proposals as quickly as we can.
Sir Robert Neill (Bromley and Chislehurst) (Con)
The Minister may well have seen on Sunday on the television my constituent Ritu Saha talking not for the first time about the agony that she and her neighbours in Northpoint in Bromley are going through, for all the reasons that have just been set out by the right hon. Member for Leeds Central (Hilary Benn) and many others.
Of course there are complications in sorting out liability and dealing with some of the technical issues of remediation. I entirely accept that, and the work being done, but will the Minister recognise that the moral point is not complicated? At the end of the day, leaseholders who have done nothing to create this situation and who relied in good faith on a regulation that ultimately Government—of whatever description—own should not be out of pocket for whatever reason. If that takes more money, will he at least give the commitment that where it is a failure of regulation and no fault of the leaseholder, they will not ultimately have to pick up the tab?
Christopher Pincher
I am grateful to my hon. Friend. I have heard the testimony of Ritu Saha and others in his constituency. I understand the point that he makes. I hope that in answering him quickly, he will not in any way think that I am diminishing that point, because it has also been made by colleagues across the House. We will work at pace to ensure that leaseholders who through no fault of their own find themselves in this terrible situation are not subjected to unfair costs. Costs ought to fall in the first instance to the developers and owners—and their warranty providers—who built the properties. The Government have set aside funds in this financial year to support those buildings that require immediate remediation and where there is no other means of so doing. We will continue to keep the situation under review, but we will work with the sector to ensure that remediation is done by those where responsibility lies.
Madam Deputy Speaker (Dame Rosie Winterton)
I thank the Minister for his very comprehensive answers.
Virtual participation in proceedings concluded (Order 4 June)
Point of Order
Sir Charles Walker (Broxbourne) (Con)
On a point of order, Madam Deputy Speaker. I have just witnessed an elderly lady who was peacefully protesting with a handful of other people be arrested and carried spread-eagle to a police van just outside the precincts of the House of Commons. This is a disgrace. It is un-British, and it is unconstitutional. This Government and our Prime Minister need to end these injustices now. Madam Deputy Speaker, will you bring the Prime Minister and/or the Home Secretary here today to sort this out? She was an old lady robbed of her dignity for having the courage to protest about having her fundamental rights and those of my constituents and others removed.
Madam Deputy Speaker (Dame Rosie Winterton)
I thank the hon. Gentleman for his point of order. I can see that this is an extremely distressing situation. I shall of course ensure that Mr Speaker is aware of his comments, but there are also Ministers here who I am sure will ensure that the hon. Gentleman’s very strong views on the incident are fed back.
I shall suspend the House for three minutes, to allow for the safe exit and entry of Members.
National Health Service Reserve Staff
Tuesday 24th November 2020
(4 years ago)
Commons ChamberRead Full debate National Health Service Reserve Staff Bill 2019-21 View all National Health Service Reserve Staff 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.
There is little chance of the Bill proceeding further unless there is unanimous consent for the Bill or the Government elects to support the Bill directly.
For more information see: Ten Minute Bills
This information is provided by Parallel Parliament and does not comprise part of the offical record
Alan Mak (Havant) (Con)
I beg to move,
That leave be given to bring in a Bill to establish a system of reserve National Health Service staff; and for connected purposes.
The coronavirus pandemic is the biggest challenge that our health service has faced since its creation 70 years ago. Our inspirational doctors, nurses, paramedics, and clinicians of all disciplines have risen to that challenge, alongside our NHS leaders and non-clinical staff across the country. Those include Mark Cubbon and his team at the Queen Alexandra Hospital in Portsmouth, and Dr Raj Laly, a GP from my constituency of Havant, who also both contributed to the research for this Bill.
Supplementing that immense effort is an army of volunteers, operating on a scale not seen in this country since perhaps the Women’s Land Army of the second world war. As the coronavirus outbreak grew, my right hon. Friend the Secretary of State for Health and Social Care issued his clarion call for volunteers to help the NHS, and the public responded with great energy and in huge numbers. More than 750,000 people, from all walks of life, signed up to become NHS volunteer responders. As of today, they have collectively completed more than 1 million tasks, from shopping and collecting prescriptions, to driving people to hospital and telephone befriending them. I am sure the whole House will join me in thanking everybody who came forward to support their friends, colleagues, neighbours, family and communities since the outbreak began.
Those selfless people build on a strong tradition of volunteering that has existed in the health service for many decades. There are thought to be around 80,000 volunteers across all acute trusts in England, contributing more than 13 million hours of volunteering every year. The true figures are likely to be much higher. Those dedicated individuals carry out hundreds of roles, including volunteering on wards, providing administrative support, fundraising, organising patient participation groups, helping patients to find their way around hospitals, supporting relatives of the sick and picking up medicines from pharmacies.
One lesson we must learn from the coronavirus outbreak, and an opportunity we must seize, is ensuring that we retain the skills, experience and commitments of both our existing base of volunteers, and those people who have come forward since the pandemic began. To achieve those goals, we should create the NHS reserves—a new, but recognisable and trusted NHS brand that will fit effectively into the existing NHS family. The NHS reserves will be a new uniformed standing reserve of clinical and non-clinical volunteers, who can be called up to support our hospitals, GP surgeries, pharmacies and other healthcare providers whenever more help is needed. That might be during public health emergencies, seasonal increases in demand, or critical incidents such as terrorist attacks or major accidents. The NHS reserves brand will also help to formalise and give greater status and recognition to the many existing health service volunteers, and provide a way to retain and use the skills of recently departed or retired staff.
The House will know that our country already has a proud history of exceptional reserve services. They are founded on dedicated and skilled people who, often at a moment’s notice, rush to the scene of an emergency, give up their spare time to serve their community, or bravely defend our country. Those reservists are the very best of us. For example, the armed forces reserves not only contributed large deployments to Afghanistan and Iraq, but they provided around 15% of all the military personnel who made the London 2012 Olympics such a resounding success. The Police Special Constabulary is made up of more than 10,000 fully trained volunteers who work alongside full-time officers with the same uniform and equivalent powers. The Fire and Rescue Service has its well-known system of retained firefighters who respond to emergencies around the clock. In fact, the NHS is the only one of our major emergency services not to have a formal national reservist structure. The new NHS reserves that I propose would change that for the better, embodying many of the characteristics that have made our other reserve services so successful.
Every NHS reservist would wear the same uniform and have the same equal status as their regular health service counterparts. That will strengthen their role in hospitals and clinical settings, and give confidence to patients and staff. Rightly, when it comes to healthcare, patients will expect the very best treatments and the highest standards from our NHS. Therefore, every NHS reservist would receive appropriate training, and anyone working in a clinical discipline would be vetted and have to maintain the same up-to-date qualifications as their full-time colleagues. Professional bodies such as the General Medical Council, and charities such as St John Ambulance, would play a key role in that, given their expertise.
In practical terms, reservists in clinical disciplines could support or perform a range of roles, such as vaccinators, therapists, triage nurses or telemedicine providers, or help with continuing healthcare. They could also provide general cover in non-specialist clinical roles if private sector staff supply agencies, locums or staff banks were not available to help at short notice. On the non-clinical side, reservist roles could include drivers, electricians, logistics specialists, IT experts and communications professionals, and could also include and formalise the many hundreds of other non-clinical tasks that hospital volunteers currently carry out daily across our country.
Every year, around 75,000 clinical staff leave the NHS. They are people with relevant skills who could help at times of national or local emergency. Therefore, the NHS reserves would also offer a route for experienced staff to continue helping the health service after stepping down from paid employment. That would build on the important and valuable work already done by the General Medical Council and the Nursing and Midwifery Council that has allowed around 25,000 doctors and nurses to temporarily rejoin their registers to help in the fight against coronavirus.
I anticipate that, just like our other successful reserve services, NHS reservists will supplement, not supplant, any roles currently undertaken by NHS employees, while offering many other benefits to the health service. To make the NHS reserve system function well, we will also need a new national reservists register, where the health service can capture details about volunteers and their skills, possibly using the NHS app as one channel. This central source of information will be accessible to NHS trusts, hospital chief executives and other healthcare bodies around the country, enabling the NHS to know who can be called up, including those with expertise who are not currently employed by the health service. This would be a useful resource in its own right, and it is not one that the health service currently has access to.
The pandemic has shown just how much people love our NHS and how ready they are to support the health service when times are tough. I am grateful that the Secretary of State for Health and Social Care is supporting my Bill and has agreed to launch a pilot in all seven NHS regions across England. I thank him, his advisers and his Department for their help over many months. Some Members have already signed up to become parliamentary champions for the NHS reservists, and I welcome others who would like to promote the NHS reserves in their constituencies.
I strongly believe that we have a once-in-a-generation opportunity to harness the passion, skills and commitment of those who have already volunteered for the NHS and those who would like to do so in the future. By launching the NHS reserves, we will be creating a positive long-term legacy after coronavirus that will benefit our health service in every community for many years to come. I commend this Bill to the House.
Question put and agreed to.
Ordered,
That Alan Mak, Sir Iain Duncan Smith, Sir Graham Brady, Jeremy Hunt, Damian Green, Greg Clark, Joy Morrissey, James Cartlidge, Kevin Hollinrake, Tom Tugendhat, Danny Kruger and Andrew Griffith present the Bill.
Alan Mak accordingly presented the Bill.
Bill read the First time; to be read a Second time on Friday 12 March 2021, and to be printed (Bill 217).
Private International Law (Implementation of Agreements) Bill [Lords] (Programme) (No. 2)
Motion made, and Question put forthwith (Standing Order No. 83A(7)),
That the following provisions shall apply to the Private International Law (Implementation of Agreements) Bill [Lords] for the purpose of supplementing the Order of 2 September 2020 (Private International Law (Implementation of Agreements) Bill [Lords] (Programme)):
Consideration of Lords Message
(1) Proceedings on the Lords Message shall (so far as not previously concluded) be brought to a conclusion one hour after their commencement.
Subsequent stages
(2) Any further Message from the Lords may be considered forthwith without any Question being put.
(3) The proceedings on any further Message from the Lords shall (so far as not previously concluded) be brought to a conclusion one hour after their commencement.—(David T. C. Davies.)
Question agreed to.
Private International Law (Implementation of Agreements) Bill [Lords]
Tuesday 24th November 2020
(4 years ago)
Commons ChamberRead Full debate Private International Law (Implementation of Agreements) Act 2020 View all Private International Law (Implementation of Agreements) Act 2020 Debates Read Hansard Text Read Debate Ministerial Extracts Amendment Paper: HL Bill 139-I Marshalled list of motions and amendments for Consideration of Commons amendments - (17 Nov 2020)
The Parliamentary Under-Secretary of State for Justice (Alex Chalk)
I beg to move, That this House agrees with Lords amendments 1A and 1B.
Madam Deputy Speaker (Dame Rosie Winterton)
With this it will be convenient to consider the Government motion to agree to Lords amendments 4A to 4E.
Alex Chalk
Private international law, sometimes known as conflict of laws, comprises rules applied by courts and parties involved in legal disputes for dealing with cases raising cross-border issues. The rules generally apply in the context of civil law, including specialist areas such as commercial, insolvency and family law. PIL typically includes rules to establish whether a court has jurisdiction to hear a claim that has cross-border elements, which country’s law applies to such a claim, and whether a judgment of a foreign court should be recognised and enforced. However, it can also encompass rules on co-operation between courts and other public authorities in different countries involved in dealing with cross-border issues, such as service of documents, taking of evidence abroad or even establishing efficient procedures to assist with the resolution of cross-border disputes.
These agreements are important. They are the sort of thing that a member of the public, or a business trading across borders may not know they need until a difficulty or a disagreement arises. Without these agreements, cross-border legal disputes can become expensive and difficult to resolve. With them, the path to resolution is clearer and smoother.
Sir Robert Neill (Bromley and Chislehurst) (Con)
I am very grateful to the Minister for giving way so early on in his speech. As he will know, I have to chair the Justice Committee in a few moments, but may I thank him for stressing the importance of this not just for the big financial institutions and businesses of this country, but for individuals? Will he confirm that, in accepting the amendments, we have managed to achieve an improvement to the Bill through the very constructive approach for which he in particular has been responsible? Will he also confirm that, as well as the Bill, it is the Government’s firm intention to seek to join the Lugano convention on the enforcement of judgments and other international co-operation at the earliest possible date, so that we do not have any gap post the end of the implementation period, and to move on to the other international conventions—Hague and others?
Alex Chalk
I thank the Chairman of the Justice Committee for his remarks and for the contribution he has made throughout the passage of the Bill. I am quite confident that we are in a better place because we have looked at it constructively. That is, in large part, because of the contributions he has made, together with others. Yes, this is about individuals as well as businesses, and yes, we want to use this as the vehicle to get into Lugano, which will be good for the rule of law, good for individuals, good for certainty and good for businesses.
I was making the point that these agreements mean the path to resolution is clearer and smoother. Just by way of a couple of examples, these agreements can help a family where relationships break down and one spouse moves abroad, and they can help to sort out arrangements for custody, access and maintenance in the best interests of the children. These agreements can provide a framework for a small business to seek redress when left out of pocket by a supplier based in another country.
Christian Matheson (City of Chester) (Lab)
The Minister is explaining the scope of the Bill and I am trying to understand it. We all represent constituents and I have a couple of constituents’ cases, for example one where there is a dispute over a property in Cyprus and another where a constituent was involved in an assault in Italy. They both relate to issues that are not cross-border, but relate specifically to incidents or disputes in those countries. Are those kinds of cases covered by the Bill, or does the Bill look at issues only where there are cross-border affairs that need to be resolved?
Alex Chalk
I am grateful to the hon. Gentleman for asking that question. The Bill is more likely to affect the former example, rather than the latter. On the specific issue of a criminal offence, that is likely to fall outwith the Bill. There is, of course, a regime for cross-border co-operation in that regard, but that normally sits outside private international law agreements, which tend to be about family issues—whether you have maintenance and enforcement, and which agreements are going to be upheld by which courts—and commercial agreements, for example, between a widget manufacturer in the hon. Gentleman’s constituency and a supplier in another part of the world. This relates to agreements that are already in existence which we want to roll over, but also creates the framework for us to agree and implement future agreements.
The Bill contains two substantive clauses. The first ensures the continued implementation of three Hague conventions on various aspects of private international law that are currently implemented—at least until the end of the transition period—under the European Union (Withdrawal Agreement) Act 2020. The second concerns the implementation of further PIL agreements—the point that I was just making—by secondary legislation. This clause was removed from the Bill in the Lords on Report, but was returned by this House in Committee back in October. Although clause 1 is not subject to the amendments in front of us today, the need to have these provisions in force by 31 December creates an imperative to resolve the outstanding issues without delay.
Mr Jonathan Djanogly (Huntingdon) (Con)
As things stand, is it the Minister’s intention that there will be only one five-year period—that in five years’ time the Government will drop it? Or is his current intention that it will be extended if other things come up?
Alex Chalk
The legislation is clear that it can be extended more than once, but the real point is that parliamentarians will want to be satisfied that that process is not entirely a rubber-stamping exercise and that, first, Governments of any stripe will be actively required to turn their attention to whether it is the proper thing to do—and they will be, because of the consultation requirements in the statute—and secondly, that Parliament will be sufficiently notified of the Government’s intention to do so that it is well placed to marshal whatever opposition it thinks is appropriate.
All of that feeds into the next points that I wish to make, but before I do so I should say that the Government have been clear about how they want to use the power over the next few years, and that includes in respect of implementing the Lugano convention—or, indeed, alternatives with Norway, Iceland and Switzerland, should our application be declined—as well as, subject to consultation, the Singapore convention on mediation and the 2019 Hague judgments project. I pause to mention that the Singapore convention has no more doughty champion in this place than my hon. Friend the Member for Henley (John Howell).
If the Government ask Parliament to extend the power in five years’ time, they will need to make their case again and have the relevant regulations approved in both Houses. In any view, the sunset amendment represents a significant concession by the Government. It takes account of the concerns that have been powerfully expressed, while still retaining a proper measure of the flexibility and agility that we seek—manifestly in the national interest, we contend—to support the UK’s long-term private international law strategy which, I pause to note, strengthens the international rules-based order.
Finally, on the third of the three points to which I referred, Lords amendment 4B adds a requirement for the Government to consult prior to making any regulations under the Bill, whether those regulations concern the implementation of a private international law agreement or propose to extend the sunset period—the point I just addressed with my hon. Friend the Member for Huntingdon (Mr Djanogly). The amendment puts on the face of the Bill the commitments that we have already made from the Dispatch Box on engagement with Parliament and other stakeholders. Although there will be times when a wide-ranging and broad consultation is appropriate—for instance, when the UK is seeking to join a new private international law agreement—there will be other times when the power is used to make minor technical and procedural updates to agreements, such as to update the name of a foreign court referred to in an existing agreement.
The requirement to consult applies across the piece but allows for a proportionate approach to different issues. Different instruments will require different approaches and, no doubt, different consultees, and the consultees who might be most appropriate to offer a view on an instrument about family law will not necessarily be the same as those who might add most value in respect of an instrument that deals with commercial disputes. As with any statutory obligation to consult, there is a requirement to take proper account of the representations received, and I can give an undertaking that the Government will meet that requirement. In the explanatory memorandum that must accompany any statutory instrument laid before this House, we will provide—I hope this will provide some comfort to my hon. Friend the Member for Huntingdon—a thorough and detailed explanation of the consultation that has taken place, setting out not only those whom we have consulted but a fair and balanced summary of the views expressed.
In conclusion, I restate the point about the importance of resolving this issue today. Clause 1 needs to be in force before the end of the transition period. It is plainly in the interests of this country to avoid an extended back and forth, and the Bill represents a pragmatic approach that respects the misgivings that have been expressed while ensuring that Governments retain the agility and flexibility that they need to enter into vital international agreements. I urge right hon. and hon. Members to accept this compromise as an appropriate and balanced approach.
Madam Deputy Speaker (Dame Rosie Winterton)
I call the shadow Minister, Alex Cunningham.
Alex Cunningham (Stockton North) (Lab)
Thank you very much, Madam Deputy Speaker—from one Alex to another.
When I stood at the Dispatch Box some weeks ago for the Bill’s Second Reading, I made Labour’s position very clear: we absolutely understand and appreciate the need for the Bill. The Minister was rightly wholehearted in his endorsement of the Bill and provided us with some excellent examples of how it will work and what it will mean. He even mentioned that it will apply to widgets. Perhaps when he does his summing up, he can tell me what a widget is.
In a post-Brexit world, it is essential that individuals, families and businesses have access to fair and clear legal mechanisms for dealing with international disputes. This has never been contentious and, from the very beginning, Labour made its support for clause 1 of the Bill clearly known. Labour welcomes the principle of the Bill because it maintains and perhaps enhances our legal co-operation across jurisdictions and provides certainty and fairness for those involved in cross-border litigation. In a post-Brexit world, this is essential to maintaining a prosperous economy, protecting our legal system and providing for families and individual claimants engaged in cross-border disputes. International agreements provide clear and reciprocal mechanisms for dealing with international disputes. In doing so, they are crucial in protecting our country’s proud reputation as the world’s centre for resolving complex disputes while offering us a competitive advantage in finance, business and trade.
This is also a Bill that will affect human beings and human stories. A wide range of family law issues can lead to cross-border disputes—for example, when one partner takes a child abroad and there is a disagreement about parenting arrangements, when making arrangements for divorce in similar circumstances, and on issues of abduction and adoption. Over the years, many of us have seen examples of that in our constituencies, when a child has been removed from this country against the will of another parent, and yet we have struggled, even with the existing laws, to resolve those sorts of disputes. Of course, this is also about keeping our citizens safe. We must ensure that we have robust international agreements so that justice can be done.
On Second Reading and in Committee, we were content to give our full support to clause 1, which gives effect to international treaties in domestic law through primary legislation, because we recognised that it is both necessary and welcome. It is hoped that these provisions, which affect the rules on jurisdiction and the recognition and enforcement of judgments overseas, will play a crucial role in building a strong economy and provide some certainty for families in often desperately trying circumstances.
Labour welcomes the principle of the Bill, but we remain of the opinion that there was no need for clause 2. Attempts by those in the other place to persuade the Government to ditch the unnecessary and, some would say, dangerous provisions covered by clause 2 were successful. Sadly, their decision was not appreciated by the Government and, despite the pleas and arguments put forward by their lordships, the Government felt compelled to reinstate the clause when it came back to the Commons. The House will be aware that despite the clear and sensible arguments of the Opposition and others, ultimately the Government are the Government and use their majority to prosecute their will, and, with no surprise, succeeded in reinstating clause 2.
Christian Matheson
My hon. Friend is right that the Government have the right to push through their agenda even in the face of well-meant advice either from the Opposition or the lordships’ House. I wonder whether there are any other independent expressions of concern, perhaps from the legal system, that also concur with the view that perhaps clause 2, as it was, was not the best way forward.
Alex Cunningham
Yes, there are many organisations, including the Bar Council, and I will develop that point later in my speech. It is important to recognise that this is not a case of the people sitting down the other end of the corridor making things up on the hoof. They were doing it on the basis of expertise and the opinions of others.
It was not the end of the matter after the Commons sent the Bill back to their lordships. Their lordships were intent on their ambition and refused to let the matter drop. Happily, that situation has been improved somewhat in recent days. I will return to the message from their lordships quite soon. Before I do that, I am happy to reiterate our support for the Bill’s provisions in clause 1, which give effect to key international conventions in our domestic law. That is very welcome on these Benches.
Christian Matheson
My hon. Friend is outlining one of the concerns that I raised earlier, which is about wider concerns raised by experienced legal sources. There may be—and I might ask the Minister to comment on this later—inconsistencies between agreements between the UK and one country and agreements with another country that are achieved through secondary legislation. If the agreement with that particular country is different, citizens will be treated differently depending on the terms of a particular statutory instrument.
Alex Cunningham
My hon. Friend is correct. That could lead to considerable confusion in the system. What happens if a family member is moved from country to country? They will be subject to different jurisdictions and different laws, and it would be all the more complicated and difficult for resolutions to be made.
There appeared to be intense opposition to what the Government were trying to do, and it was not just from the other place; it was coming from all over the place. The Bar Council, in its helpful briefing, was highly critical of this new constitutional grab. It was somewhat concerned that the power in clause 2 to proceed by delegated legislation was very broad, and that, for instance, it enabled the appropriate national authority to make regulations for the purpose of or in connection with implementing any international agreement. To give effect to international treaties in domestic law is not a rubber-stamping exercise. The effect, implementation and enforcement of such provisions require robust debate, and we must protect the parliamentary scrutiny of such important legal provisions at all costs.
The Government attempted to raise arguments as to why that new constitutional measure would be necessary, but all of them have failed to convince. The first argument was that the new provision would allow the Government to implement each new international agreement without unnecessary delay, but there is no evidence to suggest that fast-track legislation is required. The implementation of international agreements in the past has often taken years, and there is nothing to suggest that implementing them through primary legislation would cause any difficulties without having to subject legislation to normal parliamentary scrutiny.
The Government raised the 2007 Lugano convention, which deals with the jurisdiction and enforcement of judgments between members of the European Union. The Government’s arguments appear to be that there may be only a short period in which to legislate to give effect to the Lugano provision at the end of the transition period. That is not an argument for developing that new Executive power more generally. The Government have not provided for clause 2 in relation to Lugano but, as the Chairman of the Select Committee, the hon. Member for Bromley and Chislehurst (Sir Robert Neill), said, there appears to be some movement on that, and I look forward to clarification from the Minister.
The Government also claimed that the Constitutional Reform and Governance Act 2010 allowed for sufficient parliamentary scrutiny. Once again, that argument does not carry much weight. As a result of clause 2 as originally drafted, the Government would be able to give force to model law without being subject to the scrutiny mechanism under the 2010 Act, which does not allow for the amendment of treaties or consideration of measures to implement them. That is a red herring, and the argument unravelled when subjected to expert scrutiny.
Even some of the Government’s own Members were rightly worried. It is worth putting on the record again a statement by the Conservative peer, Lord Garnier:
“Unquestionably, the provisions in Clause 2, which give the Executive the extensive future law-making powers originally in the Bill, have been shown to be constitutionally awkward and unwelcome”.—[Official Report, House of Lords, 29 June 2020; Vol. 804, c. 483.]
I think that the Minister has begun to address those issues.
Sadly, the Lords asked the Government to drop clause 2. The Government used their majority. A Conservative peer asked that them not to do so, but that is what they chose to do, so clause 2 was reinstated. As I have said, their lordships were not about to roll over, and they were determined that the Government should not get away with a smash-and-grab raid on our constitution and the way in which we do business in this country. It is no good at all our trumpeting a return of control of our own affairs—control for our Parliament to make decisions on the issues that affect our country and citizens—only for Parliament to surrender that control to an overbearing Executive who appear to be seeking shortcuts to creating legislation and regulations. That is not what the British people handed the Government a majority to do. I do not think they would tolerate the sidelining of MPs they elected to serve them. More importantly, we want to ensure that laws in this land are not just fit for purpose, but have been subjected to the widest possible scrutiny. Opposition Members have always been opposed to the power in clause 2 to implement future international agreements by secondary legislation, but we recognise that change to that clause can be made.
As I mentioned, both the House of Lords Constitution Committee and the Delegated Powers and Regulatory Reform Committee considered whether the power in clause 2 was appropriate, and both made it clear that it was not. None the less, Labour welcomes amendments 1A and 1B, tabled in the other place, which act as a safeguard to clause 2, as reintroduced here. It was good to hear the Minister speak with some affection for those in the other place, and their expertise and skills. Although Labour Members remain disappointed that clause 2 has been reintroduced, the Government have heeded some of the Opposition’s concern by agreeing to the five-year sunset clause to clause 2.
Let me turn to amendments 4A and 4B. Labour also welcomes the amendment to remove the power from the Bill to create criminal offences that are punishable by imprisonment. For obvious reasons, this is a sensitive issue and it is only right that the Government act with caution in this area. Finally, Labour supports the amendment to place an obligation on the Secretary of State to consult before using the implementing power contained in clause 2 or before extending it for a further five-year period. Ideally, we would like to have seen further detail on who the Government are obliged to consult, but this is none the less better than nothing. That said, the Minister might like to address that issue in his summing up.
Before I conclude, I wish to pose a few questions to the Minister, where he could go some way to alleviating the remaining concerns many of us, in and out of this place, have about the amended clause 2. Will he give assurances to the House that any consultations on the implementation of a PIL agreement will be held in public rather than in private? Will he confirm that any consultations on the implementations of a PIL agreement will be announced in good time to allow experts to offer their views? Will he give assurances that the Government will produce a report on the outcome of such consultations and ensure that it is widely available to Members of this House? To sum up, although the Opposition would ideally have liked to see clause 2 taken out completely, or for greater restrictions to have been placed on its power, it is clear that the Government have listened to the concerns of the House and have taken some action to address them. We will therefore support these amendments this afternoon.
Kenny MacAskill (East Lothian) (SNP)
Obviously, I rise to support the general principles of the Bill. The Scottish National party, in giving support to this legislation, takes the view that it is not where we wish to be, but in the circumstances of where we find ourselves, it is the best that can be done. It has to be put in the context, both legal and political, of where we find ourselves. In the legal context, many others have mentioned, correctly, that private international law is not even noted a great deal within the wider sphere of law and is rather a specialist niche. I say that as someone who was a lawyer and practised for 20 years, who was a Justice Secretary for seven and a half years and who was the Convenor of the Subordinate Legislation Committee when the Scottish Parliament was first established. Private international law does occasionally result in people’s eyes glazing over, but it is fundamentally important. Significantly, subordinate legislation is equally of great importance and far too frequently missed. Both require to be addressed, because as the Minister and the hon. Member for Stockton North (Alex Cunningham) have mentioned, they are fundamental. This is fundamental to business contracts, as we seek to promote business in a globalised world. It is fundamental to ensuring that litigation can take place if accidents occur abroad, and in the world in which we travel more that is understandable. In family matters, it is fundamental because children are taken, and deeply distressing custody battles are waged over abducted children not only across the border between Scotland and England but around the world. It is also important for the enforcement of aspects such as aliment, as we call it in Scotland, or alimony, as it is referred to down here. All those things depend on the ability to settle on a jurisdiction—a jurisdiction of choice, or sometimes one that is required—in which rights can be enforced.
Christian Matheson
The hon. Gentleman is touching on a point that I have expressed concern about. If these legal agreements are done on a bilateral basis with different countries, we might find that we have agreements with some countries and not others, and therefore constituents of ours with a case in one country will get better access to justice than those with cases in countries where such agreements have not been concluded.
Kenny MacAskill
Absolutely. It is well known—and I have experienced it myself—that where children have been taken to, for example, some north African nations, it can be extremely problematic, if not impossible, for parents seeking their return. Although they had the right to that child, their ability to enforce it was often not recognised. If that is to be the situation we find ourselves in with countries with which we have had greater movement in recent years and greater involvement in terms of trade, the complexities will be extremely difficult indeed.
In the political context, this is the reality. It is not the delusion that we have been given about the sunny uplands of Brexit, or in the defence review about aircraft carriers steaming towards warmer climes, dispensing all sorts of social dividend. I always thought that the people who should be doing the soft diplomacy should be the British Council, as opposed to military forces. I recognise and welcome any work that they can do in that sphere, but it is not what they are trained to do, nor is it their trained function.
This is not the sunny uplands of Brexit. It is the harsh reality of what we face on rights that we have had for more than a generation, on the security of an understanding that lawyers have had about what they could do and where they could go, and the arrangements that have built up. I myself in legal practice had relationships with lawyers in London and Northern Ireland, or wherever else—it was passed around. If all that breaks down, the difficulty for individuals is damaging.
All the emphasis in the public eye has been, perhaps, on the dangers and difficulties we face with access to Europol—there are huge difficulties there—and the difficulties that we may face in terms of sharing information about criminals. We all know that more individuals in this country appear before a tribunal than before a court. We all know, in this Chamber, that more people will be affected by the civil aspects in private international law than will be affected by the far too many, but still far fewer, aspects of criminal offending by those who come here and would require those provisions.
This is the harsh reality of Brexit. We are signing up for something that is acceptable but not as good as what we had. It carries numerous risks. It leaves the danger of deficiencies—sometimes through error, perhaps, but sometimes through a failure to negotiate—that will leave each and every citizen of this country in a worse place. This is not what we were promised. We vote for these measures, but we do so with a heavy heart. It is the harsh reality of Brexit coming home. I hope that many families do not suffer as a consequence.
Mr Djanogly
The ongoing disputes over the Bill have not related to the content of private international law treaties, but rather to parliamentary scrutiny of orders made pursuant to PIL treaties and scrutiny of the PIL treaties themselves. As far as the order-making powers are concerned, we have ended up today with a welcome compromise, eked out in the other place following a significant defeat and general kickback from basically everyone for the initial proposals for a Henry VIII clause.
To that end, there were counterproposals to limit the scope for orders to specific treaties, for reports to be laid before auditors and to a stated timetable and for a super-affirmative procedure. Although none of those proposals has been accepted, others have been. I welcome the concessions offered today by the Minister, who I have to say has now listened, in terms of the exclusion of some level of criminal offences punishable by prison, the introduction of a five-year sunset clause, albeit a renewable one, and a prior duty to consult on orders, although only with such persons as the Secretary of State thinks appropriate. That is, frankly, as far as we are going to get on this and I shall support what is offered. However, I wish to make two related wider points.
First, while Government suggest that the PIL treaties are non-contentious, the sweeping scope and initially non-restricted life of order powers clearly represent a significant increase in the power of the Executive. It is also an attack on the constitutional principle that international agreements should only change domestic law if they are instituted by Act of Parliament. Here we need context, because if one looks at the range of current Government Bills, one sees time and again power being removed from this place to the Executive. That was recently described by one journalist as this Government’s Maoist tendency.
It may be that recent staff changes at Number 10 are going to reverse that tendency. The Government should keep in mind that the Executive will not always be a Conservative one, and messing with our finely tuned unwritten constitution may not be to the Conservatives’ advantage in the long run.
My final point concerns what has been persistently avoided in the Bill, which is the urgent need to reform the Constitutional Reform and Governance Act 2010 provisions for scrutinising proposed international treaties. Frankly, I have not been able to understand Ministers’ feet dragging on this issue. As things stand, it looks like CRaG reforms are more likely to come in piecemeal via the Trade Bill and the Agriculture Bill. In my view, that sectoral hotch-potch should be managed by the Justice team, to cover all international treaties. I suggest that Ministers apply their many talents to that task.
John Howell (Henley) (Con)
Let me first declare an interest as an associate of the Chartered Institute of Arbitrators.
I thought for a moment that I was going to welcome the agreement that there clearly is between my hon. Friend the Member for Huntingdon (Mr Djanogly) and me, but, given his last comments, I am not sure any more—I need to think about them. However, I think we are on the same sort of page at the moment.
I, too, welcome these Lords amendments and point out that they are a very good compromise between this House and the other place. I also welcome what the Minister has said in bringing them forward. In taking away the criminality, having a sunset clause and bringing in a consultation, they have done a tremendous amount to bridge the gap that there previously was during our discussions on this Bill. But in fundamental essence, the Bill remains the same in what it can do, and I am glad that it does.
I made the point on Report as to why that was important. I am not going to repeat the entire speech that I made then—I probably could not get away with that—but I stressed the need for agility and flexibility, and I put that in the context of the Singapore mediation convention. There is a great necessity to get the Singapore mediation convention into working order and on the statute book. The reason for that is twofold.
First, it fundamentally does no harm whatsoever—in fact, it does a tremendous amount of good for the small businesses that are choosing mediation as a means of settling their disputes. Secondly, it ends the farce we have at the moment with the system that is in place whereby if one has a mediation, one then has to agree an arbitration, however short that may be, in order to take advantage of the New York convention. That is a nonsense that we do not want to continue with. We must implement the Singapore mediation convention, which allows the results of a mediation to be recognised in the countries that have signed up to this.
The Minister was kind enough to say that I am a great champion of the Singapore mediation convention, and he is quite right, because I have seen that it does a tremendous amount of good for this country. It is also because, as the hon. Member for Stockton North (Alex Cunningham) said, a tremendous amount of alternative dispute resolution takes place in this country. We are world leaders in this, but we will not remain so for very long unless we sign up to the Singapore mediation convention and get stuck into what the rest of the world is getting involved in. All I can do is recommend to the Minister that he gets on with introducing the statutory instrument to get the Singapore mediation convention up and running in this country. To repeat what I said on Third Reading, I am very happy to serve on the SI Committee that introduces the Singapore mediation convention and to see a great dream come true.
Alex Chalk
Let me begin, a little sooner than I had planned, by saying that I am absolutely delighted that this Bill is now going to be supported across the House. It is worth reflecting on the journey that we have made, because, as the hon. Member for Stockton North (Alex Cunningham) rightly said, concerns were raised, first on Second Reading but also in the other place, but we have now got to the point where the Labour and Lib Dem amendments were withdrawn in the other place and this Bill will now receive cross-party support. In getting to this point, their lordships recognised, in the words of Lord Pannick, that “substantial and constructive” amendments had been made by the Government. We did so because we recognise that the issues we are addressing here, when it comes to the constitutional balance in our country, are ones that merit proper and careful consideration. But the imperative for this was in fact laid bare in the points made by the hon. Member for City of Chester (Christian Matheson), who is no longer in his place—[Interruption.] He is back, as if by magic. He asked whether there would be different treatment for British citizens in different parts of the world. That is precisely what the Bill is all about. It is to try to reduce those differences. If we had no private international law agreements, that is exactly the situation we would increasingly find ourselves in. Because we are now better able to implement them, we are better able to provide that certainty and clarity which are in the interests of our constituents and their businesses, whether they manufacture widgets or any other products.
Madam Deputy Speaker (Dame Rosie Winterton)
In order to allow for safe exit and entry before the next business, we will have a three-minute suspension.
Exiting the European Union
(4 years ago)
Commons ChamberRead Full debate Read Hansard Text Read Debate Ministerial Extracts
The Parliamentary Under-Secretary of State for Business, Energy and Industrial Strategy (Amanda Solloway)
I beg to move,
That the draft Prohibition on Quantitative Restrictions (EU Exit) Regulations 2020, which were laid before this House on 9 November, be approved.
As I am sure hon. Members recognise, it is important that we have full sovereignty over our regulatory regime for goods at the end of the transition period. The statutory instrument will help to ensure that we are not challenged if we choose to diverge from EU regulations. At the end of the transition period, EU treaty rights on the movement of goods stemming from articles 34 to 36 of the treaty on the functioning of the European Union will be retained in UK law unless they are removed by this SI.
Alan Brown (Kilmarnock and Loudoun) (SNP)
I thank the Minister for giving way. Obviously, the statutory instrument is about divergence, and the UK Government talk about taking back control. What is the position on consent to the regulations from the devolved nations? More importantly, what discussions have the Government had with the devolved nations to make sure that their wishes are not overridden and that divergences are not forced on the devolved Administrations?
Amanda Solloway
I thank the hon. Gentleman for his question. I will come on to that later in my opening comments.
The EU treaty rights prohibit quantitative restrictions or equivalent measures on imports and exports, meaning that divergence from EU regulatory requirements could result in a challenge from a business or importer if they deem it a barrier to placing their goods on the market in Great Britain. To be clear, the SI is not a pre-condition for divergence: as of 1 January, Parliament will of course have the ability to introduce new regulations. Instead, it is about removing potential grounds for legal challenge based on retained treaty articles that have no place on our statute book once we have fully regained our independence.
The SI will remove the aforementioned EU treaty rights so they no longer apply in England, Scotland or Wales. It will not result in any immediate changes for goods in the UK but will protect our right to diverge from EU goods regulations in future, where we so choose.
The SI will protect our ability to regulate goods as we see fit and ensure that challenges do not require us to keep in line with the EU regulations. I commend it to the House.
Alan Brown
On a point of order, Madam Deputy Speaker. I asked the Minister a specific question about consent and the devolved Administration and the Minister said that she would come on to that in her speech. Can you advise me on how I can get that answer from the Minister?
Madam Deputy Speaker (Dame Rosie Winterton)
Thank you for that point of order. The Minister may respond at this point or she may wish to respond at the end of the debate. If she wants to do it now, that is—
Madam Deputy Speaker
That is the Minister’s right, but she has given an undertaking that she will respond at the end to the points raised, so we will leave it at that.
Chris Bryant (Rhondda) (Lab)
On a point of order, Madam Deputy Speaker. I am not sure that I have ever heard such a cursory explanation of a statutory instrument in the Chamber. The whole point of Ministers coming to the House, rather than doing statutory instruments elsewhere, is that they give a full and proper explanation of the legislation that they are advancing. Is there any way in which we can make sure that the Minister provides a full and proper explanation of why this statutory instrument is necessary?
Madam Deputy Speaker
I think we need to move on. The Minister has undertaken to come back at the end. I am sure she will have heard the points made by Members in the Chamber. I am sure she will come back at the end and perhaps respond to some of the points that have been made. I really would like to move on at this point.
Lucy Powell (Manchester Central) (Lab/Co-op)
Can I also, at the beginning of this debate, express, I am afraid, my absolute shock and disgust, frankly? This statutory instrument was deemed so important that it was brought to the Floor of the House rather than a Committee. Frankly, I could have been there as well and given a cursory speech and been at home with my children. But, instead, I prepared a proper speech that is fitting of a debate on the Floor of this House on a statutory instrument that has wide-ranging—very wide-ranging—powers.
The Minister and I do not usually stand opposite one another. We did have that pleasure this morning. This morning, in the debate we had in Westminster Hall, I thought to myself that I respected the Minister. It was the first time I had seen her in action, and I really did think what a sound and reasonable Minister she was. But, frankly, she is taking instructions from her Whips. That is her judgment to do. But in time, that will not be very fitting of her ministerial role. I know she will feel deeply uncomfortable with what she is being asked to do and it is pretty embarrassing for her.
Christian Matheson (City of Chester) (Lab)
I am listening to this, and I have to say that the impression I am getting is that the shadow Minister, whom I thank for giving way, is being asked to do the job of the Minister—namely, explaining to the House the basis of the statutory instrument that is before the House. Surely that is not the role of the shadow Minister.
Lucy Powell
Absolutely not, and my hon. Friend is right to make that point. It is not just we in this House who need these explanations. Frankly, businesses in particular are being left completely blind at the moment about how on earth they are supposed to prepare for the end of the transition. We are no further down the road with a deal, and they have no idea of the terms under which they are going to be trading in a few weeks’ time. I am sure many of those businesses, notwithstanding the total chaos that they are subject to at the moment as well, are tuning in to the parliamentary channel today to try to shed some light on this issue, and they did not even get a hello or a by your leave from the Minister.
Hilary Benn (Leeds Central) (Lab)
On the point that my hon. Friend has just made, anyone who was watching the Public Accounts Committee session yesterday with three permanent secretaries—I had an opportunity as Chair of the Future Relationship with the European Union Committee to guest—would have found that in respect of Northern Ireland, just to take one example of uncertainty, it is impossible at the moment to answer any questions about how the arrangements are going to work. And we are—what?—39 days away from actually leaving the transition period.
Lucy Powell
My right hon. Friend is absolutely right. He makes a very important point. Really, if this Government want to have any standing whatsoever with business, which is very shaky at the moment, I have to say—their reputation with business is incredibly shaky—they must do better. Any business tuning in right now would be, frankly, appalled because this has given them no information whatsoever.
Christian Matheson
I am now beginning to share the indignation of my hon. Friend on the Front Bench, because we have gone through a process from “eff business” to an “oven-ready” deal that frankly was not oven-ready, and now we have businesses waiting, as my right hon. Friend the Member for Leeds Central (Hilary Benn) says, to find out what is looming upon us in 39 days, and there is still no absolute clarity. Does my hon. Friend agree that the real problem is that the progression is getting steadily worse, with steadily more disrespect for the business that pays the bills of this country?
Lucy Powell
I absolutely agree. I said at the Dispatch Box a few weeks ago that the Conservative party was no longer the party of business. The Government are doing themselves no favours whatsoever. I do not know what shenanigans are going on or why the Whips are telling the Minister to speak for only a minute or two. I thought that such shenanigans would depart when Dominic Cummings left No. 10, but it seems that they are going to continue. If this is about curtailing debate, well, I am very sorry but I have news for the Government, because we are not going to be curtailing this debate.
Chris Bryant
I was particularly irritated by the Government’s cursory presentation of the measure before us because, although clause 1(2) states that the regulations
“extend to England and Wales and Scotland only”,
there has not, as I understand it, been a full consultation with the Welsh Government or the Scottish Government, and I was looking forward to having an opportunity to explore precisely where we are going on this with the Government Minister—she is the only person who can really answer that—not least because one of my biggest anxieties is that in this whole process the Government’s relations with the devolved Governments have been so bad that they are tearing at the structure of the Union.
Lucy Powell
My hon. Friend is absolutely right. I have not even started my substantive speech yet, which I intend to make, but I will come on to make some of those points. Time and again this Government show disregard not only for business but for devolution and power sharing. I think we have made our point about our real—[Interruption.] The Minister is now taking further instructions from the Whips, and I have no doubt that her winding-up speech will be even shorter than her opening remarks. She might want to maintain a bit more social distancing while she is doing this, because that is nowhere near—[Interruption.] Oh, are you allowed to sit that close together?
Christian Matheson
There is another possibility, of course, which is that the Government Whip on the Treasury Bench is explaining the basis of this statutory instrument to the Minister because she was not aware of it.
Lucy Powell
I don’t know what is going on, but I want to put on record my huge disappointment on behalf not just of those of us who have spent time preparing for this debate but of all those watching these goings-on. If this statutory instrument is important enough to be brought to the Floor of the House, it is important enough to be debated. I can see that there are decent, honourable Conservative Members who have not withdrawn and who are here to make a substantive speech for themselves, and I hope that the right hon. Member for Wokingham (John Redwood) will take his time in doing so.
I will now get on to my speech, as I have perhaps taken up a lot of the time that the Minister might have used to explain the statutory instrument to us. We do not oppose this statutory instrument today, because we recognise that it is a natural consequence of leaving the EU and an end of the transition period.
Chris Bryant
The Opposition Front Benchers might not be opposing this measure, and there might be things in it that we quite like, but if the Minister does not reply properly and fully and explain the measure before the House, I cannot see how the House can possibly support her, in which case we would have to force a Division.
Lucy Powell
My hon. Friend makes a good point, and I agree with him. I am beginning to change my mind as we stand here discussing this. Well, I say “discussing” it—we are discussing these issues, but discussion in a vacuum is not really proper discussion at all, is it?
This statutory instrument leaves more questions than answers, as we still have no idea what, if anything, will replace aspects of the current EU framework for the movement of goods in a future trade deal. Any deal is almost certain to make arrangements for the continued market in goods across the UK-EU border. Even with no deal, there would still be a number of implications for trade within the UK, as has already been mentioned by the hon. Member for Kilmarnock and Loudoun (Alan Brown). We want the Government to get such a deal, and we want them to do so urgently. As each day passes, the uncertainty for UK businesses is prolonged at a time when many of them are coping with unprecedented uncertainty due to the covid pandemic and the ensuing economic crisis.
The Prime Minister promised us an “oven-ready” deal, but it seems that in reality it is anything but. He promised us a future relationship, which included
“no tariffs, fees, charges or quantitative restrictions across all sectors.”
I have not seen much sign of that today. He promised that he would safeguard workers’ rights and consumer and environmental protections, and keep people safe with a
“broad, comprehensive and balanced scrutiny partnership.”
Hilary Benn
My hon. Friend mentions tariffs, and of course we are all hoping for an agreement that means no tariffs are charged. The Government have already made clear to the motor industry and to car manufacturers that they have failed to get a satisfactory agreement on rules of origin, and therefore for some exports of the British car industry. We send, I think, just under 2,000 cars a day to the European Union. If they do not meet the rules of origin requirements, given the Government’s failure in the negotiations, they will face tariffs.
Lucy Powell
Absolutely. My right hon. Friend makes an excellent point, and that is why this debate is so important. It coincides with worrying rumours—I hear that they are rumours, but rumours can cause a great deal of worry—about the future of the Nissan car plant in Sunderland.
Alex Cunningham (Stockton North) (Lab)
The shadow Minister took the words from my lips. Nissan is in the north-east, and although we are 30 miles away, businesses in my constituency and throughout Teesside rely on it to buy their products. Within the last few days we have heard Nissan say that if we do not get a good enough deal, it will be off. That must be a terrible blow to any region, but to the north-east, where unemployment is nearly double the national average, it simply does not wash.
Lucy Powell
My hon. Friend makes an excellent point, and those are the real risks that we currently face. There is real uncertainty around the deal. Many of the previous commitments made are now undermined, and that will have a devastating impact on particular sectors, such as the automotive industry and the aerospace industry—perhaps my hon. Friend the Member for City of Chester (Christian Matheson) wants to come in on that. Both those sectors are particularly powerful when it comes to the so-called levelling-up agenda, and I worry about that.
Christian Matheson
I was going to talk about the automotive sector, but since my hon. Friend tempts me, I will mention the aerospace sector, which is a major employer in my area and the region that we share. Aerospace jobs with prime contractors or first-tier members of the supply chain have a jobs multiplier effect of four, five or six jobs for every one job in that prime or first-tier supply chain. It is not simply about the aerospace companies; the manufacturing industry right across is holding on, dangling, and waiting for some kind of hope of a deal, but we are not getting it.
Lucy Powell
My hon. Friend makes a powerful point. Those big manufacturing businesses are waiting every hour that passes for some news on a deal, and today they will be tuning into the Parliament channel to find out what will happen with the movement of goods after we end the transition period. Those cornerstone companies are what communities are built on, and when they go, they are gone. That is why this debate is so important, and frankly the Government’s disregard for it is embarrassing.
Alan Brown
The hon. Lady and her colleagues are making important points. She mentioned the levelling-up agenda. Is it ironic that although the UK Government talk about levelling up across the regions and nations of the UK, the areas that will be hit hardest by no deal and by a lack of preparation are the very areas that the Government pretend they are trying to level up? They speak with a forked tongue every time. Should not the Minister be giving us more information from the Dispatch Box?
Lucy Powell
Absolutely. This agenda could not come at a more critical time, because these same sectors and industries have been left on their knees as a result of covid-19. They just cannot cope with all these things coming at once.
Alex Cunningham
My hon. Friend will realise that businesses from Nissan to the chemicals industry on Teesside rely on a just-in-time supply chain. They need things to be crossing borders almost daily in order to complete the process of manufacturing goods. If there is any further delay in that process, some of these companies will say, “Well, we may as well manufacture in Spain.”
Lucy Powell
My hon. Friend is absolutely right. That is one of the reasons we wanted to support this statutory instrument today. Businesses have no resilience left anymore. Any money or time that they set aside for end-of-transition preparations and so on has all disappeared because of the coronavirus pandemic and the ensuing economic crisis.
It is important to remind the House of the things that the Prime Minister promised as the negotiations with Brussels enter their endgame, because I really am not sure that the results are going to match the initial promise that we were given at the election last year. A deal that fails to deliver on the commitments made in the political declaration and to the British people at the general election risks making life considerably harder for jobs, businesses and communities already grappling with the economic challenges of covid-19, as so many Members have already raised.
Chris Bryant
I used to have a farm in the Rhondda. One of the issues that I know is facing Welsh farmers in particular at the moment is that tupping has already happened for the spring flock. A pregnancy in a sheep takes roughly 152 days, so lots of commercial decisions have already been made by lots of farmers. How are they to proceed when they do not have the faintest idea what tariffs may or may not apply to Welsh lamb, 50% of which is sold in the rest of the European Union, on 1 January?
Lucy Powell
My hon. Friend’s knowledge of sheep gestation periods is far superior to mine, but I very much take his point about planning and the need for certainty. Not only is there all the uncertainty around tariffs and the trade in goods and services that we are now facing; add to that the fact that I am sure some of those Rhondda farmers had been planning for a bumper Christmas with some of their lambing earlier in the year, but that will no longer be the case. That is the double whammy that most businesses are facing, whether they are agriculture or manufacturing businesses.
With time running out, the Government really do need to get on with it and get a good deal for the British people and British businesses. I know that the Minister and her colleagues are in touch with businesses as much as I am. Businesses have real concerns that they will not have the bandwidth for Brexit alongside the pressures of dealing with the pandemic, nor will they have the time to implement whatever is expected from a deal, should one be struck.
Presumably, the Government’s argument today—not that we have heard it, so I have no idea what it is—is that they need to bring forward this legislation now, without knowing what will replace it, because time is running out to pass all the necessary legislation ahead of the transition. Why do they not recognise—perhaps the Minister might respond to some of these things in the 30 seconds that her Whips have given her—that the same applies to businesses up and down the country? They need time to do these things ahead of the Christmas period too.
Businesses have real concerns that the Government will blame them for any disruption and make them the fall guys. I wondered whether the new No. 10 internal arrangements might have changed its attitude towards business, but after today’s performance I am not sure that businesses will have that reassurance. [Interruption.] The Minister’s Parliamentary Private Secretary, the hon. Member for Bolsover (Mark Fletcher), moans from a sedentary position. He is more than welcome to speak in the debate, but I see that all his colleagues have withdrawn.
Mark Tami (Alyn and Deeside) (Lab)
Is not it ironic that at the election we were all promised certainty? Where are we now? We have no certainty in this process at all.
Lucy Powell
We do not even have certainty about what we are going to do at Christmas, do we—let alone any of the certainty that we were hoping for beyond the new year? As I said earlier, the Conservative party really is losing face with business. It used to be the party of business, but right now I am really not sure that it is.
Hilary Benn
My hon. Friend the Member for Rhondda (Chris Bryant) mentioned a moment ago a farm in his constituency. I do not know whether my hon. Friend the Member for Manchester Central (Lucy Powell) saw the comments of the Secretary of State for Environment, Food and Rural Affairs on “Marr” the week before last. When he was asked about the impact that tariffs, in the event of no deal, would have on lamb farmers, he said, “Well, they’ll just have to diversify into beef.” Is she aware that the chief executive of the National Sheep Association, Mr Phil Stocker, said:
“Mr Eustice’s comments will have angered many of our nation’s sheep farmers”?
Does not that reinforce the point that she has just made—that the Government are, frankly, losing face in the business community?
Lucy Powell
My right hon. Friend makes a good point. It is not only the business community, but the farming community—communities that have historically both been the base of the Conservative party. I am not sure whether that was the same interview in which the Environment Secretary also made false claims about Lurpak butter which had to be rectified by the company afterwards.
Alan Brown
The hon. Member is absolutely right. It is quite clear that the Tories are no longer the party of business. As she correctly says, they are alienating the farmers with their attitude. Laughably, they call themselves the party of workers. Is it not the case that it is the workers who are going to be shafted most by Brexit? Many workers in the UK, including the 3 million, are currently excluded from any support from the UK Government whatever, so the Government are actually doing a good job of alienating the entire population.
Lucy Powell
The hon. Member is absolutely right. Company directors who have not had any support during this crisis are particularly aggrieved, and they are part of the 3 million excluded, who he rightly mentions. I know that he has been making these points consistently, so maybe the Minister will respond to that point; you never know.
Lucy Powell
I was just going to get on to the detail of the statutory instrument. I have not actually started the substance of my speech yet, but I will give way.
Chris Bryant
My hon. Friend mentioned Christmas and the former vicar in me sort of bubbled up, and I remembered all those terrible years when I had to sing “Hark the Herald Angels Sing” 77 times before we even got to Christmas eve; lots of vicars will not be upset if they do not have to sing it quite that often.
Let me turn to the serious point. As I understand it, the delay in getting any kind of deal with the European Union almost certainly means that the European Parliament may have to sit on 28 December. Is it not perfectly possible, given that we do not even know the Christmas recess dates for this House yet, that we too may have to sit on 28 or 29 December? There is nothing in this measure that makes it clear what would need to change, whether a deal is sorted or is not.
Madam Deputy Speaker (Dame Eleanor Laing)
Order, just before the shadow Minister responds to the intervention, she said herself that she will now be turning to the substance of the matter before us. As much as it is always interesting to consider the history and choir practice of the hon. Member for Rhondda (Chris Bryant)—
Madam Deputy Speaker
Oh, no. I did not say “all of it”—not by any manner of means.
Madam Deputy Speaker
I think that is just as well. That which refers to his singing specifically of “Hark the Herald Angels Sing” is interesting, but not relevant. I am quite sure that the shadow Minister will come to the relevant points before us.
Lucy Powell
Thank you very much, Madam Deputy Speaker. Of course, my hon. Friend the Member for Rhondda (Chris Bryant) is very good at writing books. He has one out—I think for Christmas, actually—at the moment, but the book that we are all waiting for is his diaries. I am not sure when they will be published, but maybe they will be a Christmas bumper when they do.
As the Minister said briefly in her opening remarks, this statutory instrument will end the application in the UK of the rights derived from articles 34 to 36 of the treaty on the functioning of the European Union. The removal of these provisions will ensure that there is no barrier to divergence from EU rules should the Government choose to diverge. As the memorandum that accompanies the statutory instrument sets out, the Government plan for the UK to have its own regulatory regime for goods after the end of the implementation period.
Alex Cunningham
One of the things that will be covered by that regime is the movement of food, which does not just go from this country to Europe but comes in the opposite direction as well. Many businesses in this country are extremely worried that food for which there might be a lead time of three weeks could end up sitting on the docks for hours on end if we do not get the agreement that we need.
Lucy Powell
My hon. Friend makes an important point. I hope the Minister has taken note of that and that we can hear about it when she responds, because it is especially important at this time of year—not to keep on with the Christmas puns, Madam Deputy Speaker.
If the Minister is allowed to, will she update us on what the EU-UK trade regime will look like and what rights and protections will be in place at the end of the implementation period? When will we get the details? More importantly, will businesses have plenty of time to prepare for the regime’s implementation? Ministers have repeatedly said that in many policy areas the rights and protections that we have enjoyed inside the EU will be maintained and improved on when we are outside the EU. Will the Minister set out where she thinks we might diverge from EU standards and requirements in future? How will she ensure that divergence benefits British businesses, instead of putting in place new barriers to trade that could cost them dear?
Stephen Doughty (Cardiff South and Penarth) (Lab/Co-op)
My hon. Friend is talking about the import of different foods, as my hon. Friend the Member for Stockton North (Alex Cunningham) just mentioned. Is she aware of the specific situation for the UK overseas territories and whether or not they are being properly considered in the transition arrangements? I am aware of serious concerns from the Falkland Islands in particular in respect of their squid industry, which provides much of the calamari in European markets. They are concerned about whether those concerns are being heard in the negotiations and about whether or not at the end of December they will face a cliff edge that could be devastating to their economy, which relies so heavily on fish products. Does my hon. Friend agree that the UK Government ought to be standing up for the Falkland Islands and their fishing industry and ensuring that they are able to continue the excellent trade that they have with other parts of the EU?
Lucy Powell
My hon. Friend makes an excellent point about squid in the Falkland Islands that I was not aware of. It is important to bear that in mind. We are talking about the Conservative party losing its reputation, whether on business or agriculture; those of us who are halfway through the new series of “The Crown” will also be reminded of the importance of the Falkland Islands to Conservative Members. One would have thought that that would be at the forefront of their minds.
Stephen Doughty
I hope that the Minister will be able to address this point when she responds, because my understanding is that the Falkland Islands have been raising their concerns. There are meetings this week with the Minister for the Overseas Territories, but the Falkland Islands have written to the Prime Minister about this issue several times and my understanding is that there has not yet been a formal reply to the substantive concerns that they have raised. That is very concerning, because it leaves them in a great deal of uncertainty about what will happen post the end of December.
Lucy Powell
My hon. Friend is absolutely right. This statutory instrument should and could be an opportunity to clarify those matters but, as I said at the beginning of my speech, it will take provisions away without any of us understanding what will replace them. That is causing a huge amount of uncertainty, not just here in the UK but, as my hon. Friend says, in the UK territories. I am sure that, given its closeness to the EU, Gibraltar will be worried as well.
Christian Matheson
My hon. Friend the Member for Cardiff South and Penarth (Stephen Doughty) is absolutely right. I was grateful to visit the Falkland Islands during the squid-fishing season as a guest of the Falkland Islands Government. Squid fishing is a major part of their economy. It is an utterly inevitable consequence of what has happened that our overseas territories—my hon. Friend the shadow Minister mentioned Gibraltar as well—will feel out on a limb. We need to be able to assure them, as soon as possible, that they are not out on a limb. That assurance is still not forthcoming with, as my right hon. Friend the Member for Leeds Central (Hilary Benn) has said, 39 days to go. These are territories that choose to be British and they are not getting the kind of reassurance that they desire.
Lucy Powell
My hon. Friend makes a powerful point. Perhaps next time he goes on a delegation there he can see whether I want to join them, as the shadow business Minister. It sounds like a good trip, and I am partial to a bit of calamari, so I would enjoy that.
This statutory instrument relates not just to UK-EU trade, but to the requirement for a new framework for UK-wide trade, as we have been debating through the United Kingdom Internal Market Bill—now in the other place—because current treaty provisions also govern trade in goods across the UK. Will the Minister update us on where these issues are now up to, as we need to know before stripping away all the trade regulations that currently apply across the UK? As has been raised, any divergence needs to be agreed with the devolved Administrations, and that is why we are hoping that common standards for trading agreements will be agreed via the common frameworks put on a statutory basis. Ministers herald this approach yet refuse to put them on a statutory footing. There have been many long discussions on this in the Chamber and in the other place. The Government recently lost votes on this aspect of the internal market Bill, so we are hoping that the Government will accept these amendments when they return. Can the Minister confirm that?
Alex Cunningham
My hon. Friend posed the question of where there is likely to be divergence. We know already that there has been divergence on food standards, paving the way for importing chlorinated chicken, hormone-fed beef and all manner of things. Those goods are going to end up in the stomachs of the poor people—the people on low incomes—in my constituency and in my hon. Friend’s. Does she not agree that we need to tighten this up and make sure that all our people are protected with proper standards and proper regulations?
Lucy Powell
My hon. Friend is absolutely right. That is why it is such an important issue, and we really are hoping and expecting that the Minister will confirm today that the Government will accept the amendments on this that were passed in the other place, because it is about how we as a country are coming to an agreement about standards. I am sure that these issues will be raised later in the debate.
The Government must respect the devolution settlement and work collaboratively, in good faith, with the devolved Administrations to build that strong and thriving internal market with common standards underpinning it. Not doing so would threaten our precious Union by putting rocket boosters under the campaign for independence in Scotland. I know that the Prime Minister is very keen to talk about Christmas at the moment, but he seems to be giving the Scottish First Minister all her Christmases at once by his constant undermining of devolution recently. He seems to have made another blunder on that recently, propelling her campaign for Scottish independence by, as I said, putting rocket boosters under it.
On that point, I wonder whether the Minister would also explain to us the status of this statutory instrument. It is my understanding that her colleague, the Under-Secretary of State for Business, Energy and Industrial Strategy, the hon. Member for Stratford-on-Avon (Nadhim Zahawi), wrote to his counterparts in the devolved Administrations to seek their consent for him to lay this statutory instrument, which she is taking on his behalf, as some goods potentially affected by this instrument fall under devolved competence. I understand that consent has been received from the Welsh Government, but not yet from the Scottish Government—I do not know whether the hon. SNP spokesman wants to come in on this. I am not sure whether we can lay and agree to this statutory instrument today on that basis. What happens if the Scottish Government do not consent to it but Parliament already has? I do not know whether anyone knows the answer to that or if the Minister wants to rise to clarify that.
Christian Matheson
We can do better than that, of course, because we had word from the Prime Minister last week, who described devolution as “a disaster”. Conservative Members are playing fast and loose with the Union. They are playing fast and loose with the United Kingdom. They are playing fast and loose with devolution, and their attitude to devolution was shown from the very top by the Prime Minister. That surely answers my hon. Friend’s question.
Madam Deputy Speaker (Dame Eleanor Laing)
Order. We will stick to the terms of this statutory instrument, which is fairly narrow.
Lucy Powell
Thank you, Madam Deputy Speaker. The point is important to the statutory instrument, because I am not sure of its status. As my hon. Friend says, is it just another example of a total disregard for devolution and power sharing, further undermining that at such an important juncture. It is important to know whether, in writing to the devolved Administrations before laying the statutory instrument, the Government decided just to plough on anyway and totally disregard that consent, or whether consent is required on a retrospective basis. I really am at a loss on that and it makes me wonder whether we are discussing this statutory instrument on the basis on which we all thought we were discussing it, so I think that is an important point for the Minister to address.
Hilary Benn
Paragraph 2.2 of the explanatory memorandum reminds us that the provisions, which, as I understand the regulations, the Government are proposing to disapply, are the part of the EU treaty that encourages the free movement of goods by avoiding quantitative restrictions. The whole purpose of the negotiation, according to the Prime Minister’s word, is to achieve a deal that does not involve quantitative restrictions, yet we are being asked to disapply them. Furthermore, in the next paragraph it states:
“For clarity, as the GB intends to have its own regulatory regime after the transition period, these rights are being disapplied as it is no longer appropriate for them to coexist”—
coexist with what?—
“and pose some risk of challenge if we decide to diverge from EU law.”
Would it not be helpful to the House if the Minister, in replying, were to give us some explanation of the potential risk of challenge to something that the Government say is their objective in the negotiations—the free movement of goods without quantitative restrictions?
Lucy Powell
As always, my right hon. Friend makes an incredibly powerful point. Although on the face of it the statutory instrument looks like it is fairly narrow, it is actually of huge significance and importance. It is inextricably linked to the current negotiations. That is why, as the shadow Minister, I thought—foolishly maybe—that the Government had decided to bring it to the Floor of the House. As I say, there are aspects that look narrow, but it is a hugely significant statutory instrument. That is why I was flabbergasted at the beginning of the debate that the Minister did not seem to have anything much to say about it.
As other colleagues have pointed out in other statutory instruments and through the passage of the United Kingdom Internal Market Bill, it is still unclear what checks, controls and processes will be put in place on qualifying Northern Ireland goods, which are also implicated in this statutory instrument, moving from Northern Ireland to Great Britain. Despite the Government’s protestations at the time about the very real dangers, as they saw them, of EU attempts to blockade NI-GB movement and goods, there was absolutely nothing to deal with that apparent clear and present danger in the Bill, as we discussed at the time. We support unfettered access for Northern Ireland businesses to the rest of the UK market. However, there are a number of issues that stand relating to the breadth of the definition of qualifying Northern Ireland goods. My right hon. Friend the Member for Leeds Central (Hilary Benn) is across that matter as well. The Government appear to acknowledge that it is problematic, but it remains unclear what they are going to do about it.
Today’s statutory instrument sheds no further light on that. In fact, it probably makes it even more complicated. We need further clarification, because the definition is not sufficiently tightly drawn to provide the protections intended. The wide drafting of the definition of “qualifying goods” is the problem, because it includes anything that is in circulation within Northern Ireland without being subject to customs control while there. However, it also includes goods processed in Northern Ireland from Great Britain-derived goods, which are themselves subject to customs control in Northern Ireland. I hope people are keeping up, as this is quite a complex subject, which is why I hope the Minister will properly respond. As my hon. Friend the Member for Sheffield Central (Paul Blomfield) has said, that could include whisky imported from Scotland to Northern Ireland, which might be in duty suspension in Northern Ireland but then is used to make mince pies in Belfast. That would leave those mince pies as qualifying Northern Ireland goods, despite the whisky used to make them being subject to customs controls. So we have argued that the definition of qualifying Northern Ireland goods is not sustainable in the longer term. It appears that Ministers agree, but will the Minister let us know today what plans the Government have in place to resolve this?
Stephen Doughty
My hon. Friend is making an important point. She will know that I raised these issues in the statement the other day on Northern Ireland-related issues and trade with Wales. Is she aware of the concerns raised today on BBC Wales by hauliers, who are describing how they fear mayhem at the port of Holyhead in Ynys Môn—Anglesey? The Irish Road Haulage Association fears that the processes are not ready and in place. For example, it is concerned that the IT systems to deal with these changes are not ready. Does she agree that the Government have not answered a whole series of questions, which will have impacts on ports and trade in Wales, and of course on goods transiting the Republic of Ireland to Northern Ireland and back and forth? This is far, far more complex and people are simply not convinced by the answers they have had from the Government so far.
Lucy Powell
My hon. Friend makes an extremely important point about the impact on ports, including Holyhead. That is why, as things stand, this statutory instrument is at best making the situation worse; all it is doing is pulling away some of the existing frameworks, without our understanding what they are going to be replaced with. That is probably the worst of all worlds for anyone following these issues and having to try to plan around them. Road hauliers are at the forefront of that. I was talking to businesses about this the other day. It beggars belief that in the current situation, with the pandemic and what is going to be happening over Christmas, we could even be countenancing lorries stacking up on motorways and other roads, and gridlock at our ports, with all the paperwork that has not yet been agreed and sorted out. I just do not know what Government, at any time, would actively seek that, but that is what this Government seem to be doing.
Bambos Charalambous (Enfield, Southgate) (Lab)
My hon. Friend mentions paperwork. One issue with organic materials is the SPS—sanitary and phytosanitary —checks, which require certificates. We currently have a shortage of vets to carry out these certifications. Is that not another problem that will lead to our ports being blocked and further delays?
Lucy Powell
I really am learning some things today, and, yes, I very much think that that would lead to that. My hon. Friend raises another important point. These are the wide-ranging implications of what we are seeing and the huge uncertainty. Can the Minister tell us today whether a more refined definition of qualifying Northern Ireland goods will be introduced? When will we have the clarity we all need on that?
We are also concerned about the impact on standards across the UK. Given that Northern Ireland is, in essence, within the EU single market for goods, any good allowed to be sold within the EU as complying with the EU single market must be allowed to be sold in Northern Ireland. So if, for example, Wales decided to extend the EU environmental standards applicable to vehicle emissions, the combinations of regulations would mean that Wales could not succeed, because a lower standard vehicle would be on sale lawfully in Northern Ireland and would be a qualifying Northern Ireland good. The mutual recognition principle in the United Kingdom Internal Market Bill would override that desire of the Welsh Government. Given that processed goods from Northern Ireland may include components originating outside the country, does the approach outlined in the statutory instrument for qualifying goods have wider implications for the UK’s approach to the rules of origin with the rest of the world? I do not know whether the Minister wants to take this opportunity to respond—she may have had a chance to brief herself a little more during my speech while considering her closing remarks. As she will have understood, the statutory instrument, far from being a cursory, quick bit of legislation, has massive implications for businesses and others who, I am afraid, have been left wanting, given what we have heard today.
As this debate has shown once again, there are—[Interruption.] You are nodding, Madam Deputy Speaker; I am on my peroration, you will be pleased to hear. As the debate has shown, there are huge uncertainties still facing businesses that trade in goods and services, even those whose markets are mainly internal. Given that that now comes on top of the biggest economic crash that we have seen probably for 300 years, and the huge uncertainty still surrounding businesses, not least our manufacturers, as we have heard, due to the covid-19 crisis, the Government really need to step up and get a Brexit deal done, allow time for businesses to prepare and absorb the consequences of that deal, and get on and sort out all of these outstanding issues relating to the UK internal market. The House has expressed huge disappointment and shock that the Government have not taken this very important opportunity of its own making to come to the House today to explore and update us all on these very important matters facing business. The Minister will have an opportunity shortly to respond, and I hope that she will answer the many, many questions that we have raised today.
John Redwood (Wokingham) (Con)
I have declared my business interests in the Register of Members’ Financial Interests. May I reassure the Opposition that I wanted to make a few comments in this debate, and I submitted a request to participate on my own initiative? I have not received any message from the Whips, either before or during these debates, that I should not make a few remarks. With the permission of the House, I will exercise that democratic right.
I understand that there is a parliamentary game going on and that the Opposition want to extend this debate because there are some other things that they do not want to discuss, but that is a matter for them. Oppositions are quite entitled to use what time is available for their own purposes.
Alan Brown
May I ask the right hon. Gentleman whether the game is not on the Government’s side, given that they have withdrawn all their speakers, except for his good self?
John Redwood
On the contrary. As I have just explained, there has been no pressure to withdraw my application. Some of my right hon. and hon. Friends who thought that they were going to speak in the debate have reread the proposal and realised that, given the incisive eloquence we would hear from the Minister, there was absolutely no need for them to come to the Chamber and duplicate and triplicate that. I have been foolish enough to think that I can add something to the Government’s case, because I support the measure. The fact that my right hon. and hon. Friends seem to have better things to do shows that they are 100% behind the measure, and just want it to be passed as quickly as possible as they attend to their other duties as busy MPs.
So why do I support these regulations, and why are the Government doing this? The first reason is to take back control. That is what millions of people voted for, and many of us are very frustrated that it still has not happened. As the Minister stated clearly, this is about ensuring that, from 1 January, we in this House, on behalf of the British people, can decide for ourselves within international law what the rules shall be on tariffs, quantitative barriers, restrictions and inducements to trade—and how right that is.
I always find it so disappointing that the Opposition, who now say that they understand the spirit of Brexit and have embraced it, do not believe that they can come up with any single improvement on the great body of European law that has been forced on us over many years. I am more optimistic. Working with the talent on the Government Benches, I can see lots of ways of improving on European law. It can be better, not worse, and more rather than less in the right areas. Surely our trade policy should be geared to the interests and concerns of businesses that back this country by investing and creating jobs in it.
Stephen Doughty
I raised a serious point in an intervention on my hon. Friend the Member for Manchester Central (Lucy Powell) about the Falkland Islands. Does the right hon. Member agree that the UK family is a large one, including our overseas territories, and we ought to be backing the fishing fleet in the Falkland Islands that are trying to export squid and calamari to the EU? Will he join me on a cross-party basis in urging the UK Government to address the concerns of the Falkland Islands?
John Redwood
Of course I hope we can do things to help the Falkland Islands, as we have over many years. They are clearly part of our family, and blood and treasure have been shed to ensure that they are part of our family, so I above all think that we should do all we can.
From 1 January, we in this House can do the things that are in the power of an independent country. We cannot instruct the EU when we are out of it any more than we could when we were in it. There have been a glittering array of failed issues that we put to the EU on which it did not sympathise with us. We had a series of Governments who were so broken backed that they only ever accepted things that the EU wanted to do and did not try to do anything that we wanted to do, which is why it got so frustrating as a member of that body.
It is about taking back control, and I urge everyone here to be more optimistic about the powers of this House. What is the point of someone being a Member of Parliament if they do not believe that they can improve on anything in the inherited corpus of EU law? Why do the Opposition, on the whole, say, “Everything EU perfect, everything generated in this country rubbish”? It is not plausible, and it is against the spirit of the Brexit majority in this country. They want us to get a grip and do better. If we do not do better, they will change us. That is the joy of Brexit—they, at last, will get back control over us. If the law went wrong in the European Union, it did not matter who was in the Government. Even if they threw the Government out, nothing changed, because the EU would not change the law, whereas if we get the laws wrong, the public will know what to do—they can throw Ministers out.
John Redwood
I am not giving way, because I have a couple of points to make, and I am conscious that many Members wish to make speeches.
John Redwood
There are clearly Members on the Opposition Benches wishing to catch Madam Deputy Speaker’s eye.
The second point I want to make is that this is about our balance of trade and our balance of payments. One of the tragedies of our membership of the European Union over nearly 50 years was how we transformed ourselves from an industrial country with a strong farming and fishing industry into one that had been badly damaged by the rules and tariffs that the EU imposed on us and our trade with the rest of the world. It was asymmetric and very cruel.
We lost a large chunk of our motor industry in the first decade of our membership—I think it halved—and we lost a lot of our steel industry. We moved from being a net exporter of fish to being a heavy net importer, with much of our fish taken by foreign vessels and foreign industry. We have lost a lot of our self-sufficiency in temperate food, because the common agricultural policy did not suit us. State aid, cheap energy and so forth on the continent helped places such as the Netherlands to outcompete us on salads and flowers, for example.
We have a big job to do to rebuild ourselves as an industrial, farming and fishing country that is capable of cutting the food miles, cutting the fish miles and delivering more to ourselves and to our own plates through import substitution. I hope that from 1 January, if not before, Ministers will use these new powers to review all the restrictions and rules about trade and tariffs and create a British model that is better and fairer to Britain, so that “made in Britain” means something, and more is made in Britain and willingly bought by British people. It is very difficult for the Opposition to oppose that, although they will doubtless try to, because they always want to sell Britain short and to build the EU up to greater heights. None the less, outside this Chamber there will be great relief to know that at least some people in Parliament wish to see a revival of British fishing, British farming and British industry and to understand that the rules of trade and the skewed subsidies and tariffs against the rest of the world have been extremely damaging to people who want to build businesses and farming activities in the UK and that it is time for a reversal. I wholeheartedly support this measure. I want to take back control and I urge more MPs to get into the spirit of it, and, instead of cavilling and criticising every move that this country wishes to make to be independent, contribute to the debate about how we can be better.
Alan Brown (Kilmarnock and Loudoun) (SNP)
I do not often say this, but it is a pleasure to follow the right hon. Member for Wokingham (John Redwood). I am glad that he actually came and contributed here today. At the end of his rousing speech, I admired his optimism. He has retained that optimism all this life. He spoke about what could be done better. Perhaps he should have a word with his Minister about that, because she did not give us very much in the way of what could be better, or of what is happening as a result of this legislation. Perhaps his words will be heard by those on the Front Bench.
As everyone in this Chamber is aware, we on the SNP Benches are trying to work our way out of this place. We do not always hold this place in the utmost respect, and today is another day that illustrates that, to be perfectly honest. The Minister took an intervention from me, said that she would answer my point and then sat down. She did not answer the intervention, did not respond to the point of order and did not give us very much in her speech at all. Then we have seen the Government Whips—my goodness, they have been busy today. We had seven withdrawals in the previous debate and something like 15 withdrawals in this debate. Madam Deputy Speaker, I take it that there is nothing you need to tell the House about why so many Conservative Members have had to withdraw from this debate.
Madam Deputy Speaker (Dame Eleanor Laing)
The hon. Gentleman is asking me, but I have absolutely no idea. Unfortunately, I have no responsibility whatsoever.
Alan Brown
I thank you for that, Madam Deputy Speaker. The way things are just now, I worry about why so many people are withdrawing. Hopefully, everything is all in order. We know that the Whips usually try to force people to speak in debates, especially debates that might be short or dry, so it is certainly unusual that the Whips have been pressuring their colleagues to withdraw from today’s debate.
I hope that you can show some forbearance, Madam Deputy Speaker, because as I thought there were so many speakers in the previous debate, I did not expect to be called so early in this one, so my notes are a wee bit haphazard; hopefully, you can bear with me on that.
I must commend the shadow Minister for her speech and for the amount of information that she covered. She highlighted the deficiencies that the Minister did not cover. She said that, in actual fact, when we talk about the movement of goods, one of the key issues is what it means for businesses and whether they are ready for this. We can talk about divergence in standards of the EU, but are businesses ready for what will happen on 1 January 2021? Have the Government given enough support to businesses? When we turn on the radio just now, it tells us all, “Get ready for Brexit”. That is all very well, but it does not actually tell us what we need to do. What is the point telling us to get ready, when there is no information that is clearly accessible to businesses about what they need to do? Are IT systems up and running? The companies need to know what they have to do to be able to export, and that is before we even get to divergence.
Just today, ironically, my office got a letter from the Secretary of State for Business, Energy and Industrial Strategy, which is supposed to be aimed at all businesses, but I can assure the Minister that although that letter might be a bit of propaganda, it does not clear up what businesses need to do going forwards.
Patrick Grady (Glasgow North) (SNP)
I hear that from businesses across my constituency as well. A lot of them do not know exactly what they are supposed to do or how they are supposed to prepare. The simple solution to this surely is to extend the transition period, as we called for in our Opposition day debate before the summer. There would be no shame in the Government taking a little bit more time to get the negotiations right and to give people time. If they do not want to call it the transition period any more, they can come up with a different name for it—call it the implementation period or the adaptation period, or something like that. There would be no shame in it; we are in the middle of a global pandemic—no one foresaw this coming. It would do nobody any harm, and then one day they would get the glorious Brexit they are looking for, rather than the cliff edge that we seem to be barrelling towards.
Alan Brown
I thank my hon. Friend for that intervention. I am pretty sure that many businesses across the UK would agree with what he said. It would be a simple, common-sense approach. It could be called the emergency covid implementation period—something that would give businesses a bit more certainty in the short term, while the Government sort out the mess.
The key question I had for the Minister earlier is about where we are on the consent of the devolved nations. Importantly, what discussions have been had with the devolved nations about what will happen if the UK Government wants standards to diverge from those of the EU? What would that mean in terms of how the devolved nations operate? What will it mean going forward? Are they going to ride roughshod over the wishes of the devolved Administrations, as with the UK Internal Market Bill and the shared prosperity fund, which was a mechanism to bypass the wishes of the devolved Administrations? Is that what we are looking at? It is symptomatic of the entire Brexit process and debacle.
I looked at the explanatory memorandum at the weekend—unusually for me, on Saturday night I was sad enough to read an explanatory memorandum. It said that the Welsh Government had granted consent, but the Scottish Government had not. The explanatory memorandum has now been changed and does not reference either the Welsh Government or the Scottish Government. It would be great if the Minister would clear up where things are on that. I would be happy to take an intervention—I am still happy to take an intervention. I see there are none coming.
I refer to a letter from Ivan McKee to Michelle Ballantyne MSP, convenor of the Economy, Energy and Fair Work Committee. He said:
“The UK Government is seeking to lay the SI as soon as possible in order to secure a debate in the UK Parliament before the end of the year. This timeframe means that the SI would need to be laid before Scottish Parliament consent is confirmed, however Mr Zahawi’s letter states that they will not debate the SI until consent is received, therefore the Scottish Parliament should have the usual 28 day period in which to scrutinise the notification.”
In the preceding paragraph, he also says:
“Scottish Ministers therefore consider that consenting to the regulation remains appropriate.”
The Scottish Government have indicated that they are willing to consent to the SI and are willing to work with the UK Government on it. The UK Government committed not to debate the SI until consent was given. As we are now debating the SI, I ask the Minister again whether consent has been formally given. Perhaps we can assume it has not been; it would be great if the Minister could clear that up later on.
This is about divergence. I understand the UK wants to protect itself from challenges. We can understand that—there is a need to have some legal protections—but the Minister did say it is not a precedent to diverging. Could she confirm that? Why would we want to diverge from the EU, especially at the moment, when we are still negotiating this trade deal that really determines the future of the UK, particularly in the short term, on 1 January? What is the status of the trade deal discussions? Surely the UK thinking about diverging has a massive impact on the trade deal because the trade deal will confirm what divergences are possible or not. It seems to me that the cart is before the horse. We can talk about taking back control, but unless the UK Government are capable of joining up the dots in the big picture, this SI matters not a jot.
Patrick Grady
I suppose we should commend the right hon. Member for Wokingham (John Redwood) for turning up and contributing to this debate. Taking back control was supposed to be what it was all about, and where are they? Where are the Tories—the European Research Group, the Maastricht rebels and all the rest of them?
We had the same last night with the statutory instrument that directly amended primary legislation passed by the Scottish Parliament. Fair enough, it was relatively technical in nature, as is this measure, but it goes to the point of respect for the devolution settlement, and it goes to the point of democratic accountability that Brexit was supposed to bring forward.
Was the Labour Front-Bench spokesperson not right when she said that when the Government force through relatively technical stuff such as this statutory instrument what they are doing is driving a coach and horses through the devolution settlement, and they are doing our work for us, because they are undermining the case for the Union?
Alan Brown
I wholeheartedly agree. The shadow Minister used the phrase “rocket boosters” under the argument for independence, and I hope we do have these rocket boosters in place and getting fired up right now.
Alex Cunningham
Despite the fact that we share nationality, we do not share that particular ambition for separation. Some things about that worry me a lot if Scotland does eventually go independent. One is, do I get a passport? But more important than that, will I still get my supply? Will the divergences be in place for me to get my square sausage, my Scottish black pudding, my sliced sausage and, of course, my supply of Talisker?
Alan Brown
I will need to catch up with the hon. Gentleman in better surroundings, and we can share a sausage and Talisker, but of course he makes a serious point. In actual fact, the devolved nations want a common framework for agreeing how goods move about. To be honest, if we get our wish of independence, we are going to operate that way as well. We want to work with the other nations, and that is really important. But the way this UK Government are going about it, they want to impose their will on the different devolved nations, and it is like it or lump it. Hopefully, we can toast a wee dram to independence and we will discover we will still be friends after that as well, even though we do not share the same aims at the moment.
Patrick Grady
I am sure the hon. Member for Stockton North (Alex Cunningham) will be entitled to a passport as well, but is not the point that Lorne sausage and Scotch whisky—the indicators of these vitally important products—are at risk because of the lack of the UK Government’s ability to conclude a deal with the EU? That is the kind of thing that ought to be being addressed through statutory instruments like this, Madam Deputy Speaker, and that is why it is relevant to this debate.
Madam Deputy Speaker (Dame Eleanor Laing)
For clarification, I was not suggesting that the hon. Gentleman was in any way out of order in the points he made. I am just really concerned about the square sausage.
Alan Brown
Yes, so we all share the same good taste in food then.
I agree with the point my hon. Friend made. Following up his earlier point about the contribution from the other Benches, I actually thought, “Oh my goodness, I’m going to have to listen to another 15 Conservative MPs tell me how great Brexit is going to be, how they are taking back control, how this is just another step in the way of taking back control and there’ll be wonderful trade deals.” So in one way there is a blessing: I do not have to listen to 15 speeches the same. But in another way, it is disappointing that they have not turned up here to actually do their job and actually say what they wanted to say. That is disappointing.
Alex Cunningham
The right hon. Member for Wokingham (John Redwood) actually talked about taking back control, but he talked about Parliament taking back control, yet we are seeing statutory instrument after statutory instrument giving more power to the Executive. Is that really Parliament taking back control?
Alan Brown
I agree absolutely 100%. Again, if Parliament was taking back control, we would expect parliamentarians in here doing their job debating it. But not only have the Executive taken more power, but we know there is more power invested in unelected bureaucrats who were advising the Prime Minister. I am sure nobody is shedding a tear that Dominic Cummings has actually left, but there is too much power in unelected bureaucrats behind the scene. It is double ironic when Brexiteers come here and talk about taking back control, and the Government were in hock to unelected officials.
We do have to wonder what divergences are planned by the UK Government, but also how these divergences are going to be managed. What is the process going to be? Will there be proper impact assessments undertaken, and will there be complete transparency on divergences that are proposed and what that means for businesses? How will we ensure that there are no unintended consequences by diverging in one area, which might affect more businesses adversely by stopping the export of their goods or preventing vital imports coming in? Those vital imports might prop up the supply chain of the key industries mentioned earlier, such as aerospace and automotive, because we rely on an EU-wide supply chain, with goods in the supply chain going backwards and forwards two or three times sometimes to create a finished product.
Mr Kevan Jones (North Durham) (Lab)
Does the hon. Gentleman agree that it is about not only the import of goods, but exports? One of our key exports is shellfish, which is very important to the Scottish economy. Does he agree that any barriers or disruptions of that could have a huge impact on the fishing industry in the UK?
Alan Brown
I agree wholeheartedly. That is the problem with the silo approach that the UK Government have taken sometimes. They talk about the fishing industry and fishing quotas and, sure, the fishing quotas are important, but for the Government they have become the symbol of Brexit, so fishing quotas seem to be getting looked at at the expense of everything else and that includes shellfish. We also rely on the free movement of people at the moment coming from the EU to do the processing of the fish and different things, so we might end up with bigger fishing quotas without the ability to process the fish and then export them. It is hugely ironic, and that is why the Government need to always have their eye on the big picture and to join up the dots, rather than making headline announcements, looking for the headline in The Daily Telegraph. They need to understand what this means for ordinary people up and down the UK.
David Linden (Glasgow East) (SNP)
I am sure my hon. Friend is just clearing his throat to get started, but on the issue of the free movement of people, is the issue of immigration not a red herring—if Members will pardon the pun—in the context of fishing? The UK Government said that this was all about reducing migration, but in order to do most of these trade deals, they will probably have to do a lot of visa-free travel for countries such as India?
Alan Brown
Absolutely. It is about looking at the big picture but, instead, the Government make big headline announcements to get some plaudits. It might help them to win an election in the short term, but what does that mean in the long term for the UK? That is something that the Tory party needs to consider.
I was speaking about divergences. I hope that the Minister will clear up how the divergence process will work and how it will be transparent, because we need to ensure that no divergences are given to some cronies who shout the loudest, because that again might have a wider impact on other businesses. So far, there have been allegations of cronyism in how covid has been dealt with, in terms of supplies of personal protective equipment. I would never accuse the Government of cronyism in giving contracts to people they know and who might favour the Tory party, but other people have done that, so I hope that the Minister will give us assurances that, going forward, any divergences from the EU will be done with the best interests of UK businesses at heart and, again, done with the wishes and agreement of the devolved Administrations.
David Linden
I would be so bold as to put on the record that this Government have been guilty of cronyism. But that is not just in the context of Brexit or the pandemic. For example, there is also the cronyism in terms of Richard Desmond and the Westferry scandal. So I would caution my hon. Friend. It is not just in terms of the pandemic that the Government have been guilty of cronyism; it goes much wider than that.
Madam Deputy Speaker (Dame Eleanor Laing)
Order. As the hon. Gentleman said, the point he has just made goes very wide, and very much wider than the particular statutory instrument before us. So I am sure that the hon. Member for Kilmarnock and Loudoun will stick very strictly to the terms of the SI, which he has done very well so far in his long speech.
Alan Brown
Hopefully, I will not be too much longer—these notes might be deceiving.
A key point, as I said, is divergences and this is all about the movement of goods. Where are we with regards to the movement of goods in terms of a no deal? Are we still reliant on the EU making concessions, just because the UK is not in a position to check in common goods? If we are going to look at diverging, we have to be able to manage what we have got just now, never mind changing things going forward.
This was raised yesterday. The Minister at the Dispatch Box was not able to answer it but, on checking goods and the movement of goods, how many custom agents will be required? How many have been trained? Yesterday, the hon. Member for Bristol East (Kerry McCarthy) highlighted that the Cabinet Secretary estimated that 50,000 customs agents are needed, but that it is also estimated that only 10,000 have been trained to date. The Minister could not clear that up. This Minister has been taking lots of notes, so although she has not intervened, I am expecting a lengthy response. I hope that she can tell us where we are with training and employing customs agents and whether there will be enough in place on 1 January 2021.
David Linden
My hon. Friend has been incredibly generous in giving way. On the point about customs agents, Brexit was sold on the premise of us taking back control. Does he share my concern that “taking back control” was just something on the side of a bus and that when we look at the greater detail, we find that the Government have done very little preparation, which is worrying?
Alan Brown
Yes, it is very worrying. There has been very little preparation—all last-minute stuff. That is also why the Government are unable to engage with the devolved Administrations and businesses. They have not planned or done enough to get us to where they want to be—not where I or my hon. Friend want to be—in time for 1 January 2021.
The reality of Brexit preparations, as described by my hon. Friend the Member for Glasgow East (David Linden), was illustrated yesterday by the passing of the Kent borders regulations, which allow the police to stop lorry drivers entering Kent because of the fear of the utter chaos at the border in January. That shows how the UK Government have not done enough and that more work needs to be done. Clearly, all those issues matter in the immediate short term and need addressing in the long term before we start looking at divergences of standards.
Is there any planned divergence for agricultural standards? That has been touched on and is important. The UK Government resisted protecting those standards for future trade deals in the Agriculture Act 2020. What does the SI mean regarding the UK’s ability to diverge from the EU? While the UK wants to avoid challenge, what does that mean for the devolved nations in terms of the UK Government protecting themselves? Will they impose their will on the devolved nations? I mentioned the point earlier, but on divergences, will the internal market Bill become the kicker through the back door by allowing divergences to be forced on the devolved nations against their will?
We do not accept that the UK Government have any legitimacy in imposing divergence from the EU acquis on Scotland’s behalf as a member of the UK. On democratic principles, we do not consent to allow any withdrawal of Scotland from the EU. That applies to the withdrawal agreement and any subsequent legislation used to enforce the unwanted and undemocratic divergence from the EU, which Scotland voted overwhelmingly to remain a member of.
We do not accept the economic impact of diverging from EU rules, and that also applies to leaving the transition period, particularly because, as we discussed, the economy faces unprecedented challenges as we try to recover from the covid pandemic. We do not support or accept the need for the UK internal market Bill, which potentially allows divergences to be forced on the devolved Administrations against their wishes. We really need better co-operative working from the UK Government.
It would be ironic, when there seemed to be consensus from the Opposition that they would not oppose the SI, if, unless we start to hear decent responses from the Minister, there was a vote on it after all.
Madam Deputy Speaker (Dame Eleanor Laing)
I have been informed that the Member who is No. 5 on the call list has withdrawn from the debate, as have the Members who are Nos. 6, 7, 8, 9, 10, 11, 12, 13, 14, 15, 16, 17, 18 and 19. We therefore come directly to the Minister.
Amanda Solloway
I thank the House for its consideration of this statutory instrument and for the valuable contributions made to the debate.
I stress that my opening speech was short because these regulations do not result in any immediate change and will not introduce any changes for business. The regulations mean that if we choose to diverge from the EU requirements, either actively or by changing our legislation, or by not keeping pace with the EU regulations, we cannot be challenged under the EU treaty. As I have made clear—
Several hon. Members rose—
Amanda Solloway
Apologies, but I will not be giving way.
As I have made clear, the SI is not a precondition for divergence, nor does the SI itself introduce any diversion from current laws. I have set out today, however, the importance of this SI for ensuring that we are not faced with legal challenges that seek to keep us in line with EU regulations. This will ensure that we have the freedom to regulate in Great Britain how we see fit, considering the impact on businesses and consumers, while ensuring that UK product safety remains one of the strongest in the world.
We have engaged with officials across all the devolved Administrations, sharing drafts of the SI and taking them through the changes as appropriate. Consent has been received from the Welsh and Scottish Governments as some of the changes are subject to devolved competence. The SI will not impact on Wales’s and Scotland’s ability to regulate those that fall under these areas of devolved competence. Articles 34 to 36 of the treaty on the functioning of the European Union will still apply in Northern Ireland by virtue of the Northern Ireland protocol. It is therefore not necessary for this SI to extend to Northern Ireland.
Amanda Solloway
Apologies, but I am not giving way.
Coming on to business participation, since the summer the Department has been rolling out an ambitious series of readiness events for businesses and has published a range of guidance, including on this requirement, on placing goods on the market from January 2021. Let me once again stress that this SI itself does not—
Mr Kevan Jones
On a point of order, Madam Deputy Speaker. Call me old-fashioned, but I thought that the usual convention for a winding-up speech is to respond to the debate. All the Minister appears to be doing is reading her civil service—
Madam Deputy Speaker (Dame Eleanor Laing)
Order. That is not a point of order—it is a point about the content of the Minister’s speech, which is entirely a matter for the Minister, and she does not have very long, so we must let her finish.
Amanda Solloway
Thank you, Madam Deputy Speaker.
Let me once again stress that this SI itself does not introduce any changes for businesses.
These regulations give business greater certainty that as UK rules change they will not be rolled back after any legal challenges based on them. At the end of the transition period, EU treaty rights on the movement of goods stemming from articles 34 to 36 of the treaty on the functioning of the European Union will be retained in UK law unless they are removed by this SI. The UK will have its own regulatory regime after the end of the transition period. However, if retained, these EU treaty rights could impact our ability to diverge from EU regulation in the future. The EU treaty rights prohibit quantitative restrictions of equivalent measures on imports and exports, meaning that divergence from the EU regulatory requirements could result in a challenge. This SI will remove the EU treaty rights flowing from articles 34 to 36 of the treaty on the functioning of the European Union.
My Department published guidance on gov.uk on 1 September and 10 November detailing requirements on placing goods on the Northern Ireland market, as well as arrangements for access to the rest of the UK. My Department also issues regular transition bulletins that provide the latest readiness information. When the SI comes into force on 1 January 2021, it will protect our right to diverge from the EU regulations without being challenged under the EU treaty rights. I commend these regulations to the House.
Question put and agreed to.
Resolved,
That the draft Prohibition on Quantitative Restrictions (EU Exit) Regulations 2020, which were laid before this House on 9 November, be approved.
Madam Deputy Speaker (Dame Eleanor Laing)
I am going to suspend the House for a few minutes in order that we can have a change of Members and Ministers.
Madam Deputy Speaker (Dame Eleanor Laing)
Order. I call Minister Lucy Frazer to move motion 5. It is not moved, so I call the Leader of the House to motion 6. It is not moved, so I call the Leader of the House to move motion 7. It is not moved, so we come to motion 8, relating to virtual participation in debate.
Patrick Grady (Glasgow North) (SNP)
On a point of order, Madam Deputy Speaker. Given that we have just clipped through three items of business and the Leader of the House has been handling the Dispatch Box, should the House not be suspended again so that the Dispatch Boxes can be sanitised and Members who want to participate in the next item of business can make sure that they are present?
Madam Deputy Speaker
I appreciate the point that the hon. Gentleman makes, but I have taken the decision that, as we have just suspended and we have been sitting again for only two or three minutes, a further suspension is not necessary, and that the Leader of the House’s touching of the Dispatch Box was momentary.
David Linden (Glasgow East) (SNP)
Further to that point of order, Madam Deputy Speaker. In the interests of physical hygiene, it may be the case that the Leader of the House will use the Government Dispatch Box next, but should he rise to move the next debate, there is a possibility, of course, that the Opposition Dispatch Box has been touched by another Member and should be cleaned in advance of the right hon. Member for Walsall South (Valerie Vaz) arriving.
Madam Deputy Speaker
I appreciate the hon. Gentleman’s help in advising me on this matter, but I am satisfied that the necessary precautions have been taken to make sure that the Chamber and the Dispatch Boxes have been suitably cleaned and sanitised, and that we are that we are covid-compliant and that we will now proceed.
Virtual Participation in Debate
(4 years ago)
Commons ChamberRead Full debate Read Hansard Text Read Debate Ministerial Extracts
Madam Deputy Speaker (Dame Eleanor Laing)
Mr Speaker has selected the amendment in the name of John Baron.
The Leader of the House of Commons (Mr Jacob Rees-Mogg)
As this matter has been much discussed in this House, I will move it formally.
Motion made, and Question proposed,
That:
The Order of 4 June 2020 (Virtual Participation in Proceedings During the Pandemic (Temporary Orders)), as amended on 22 October, be further amended by adding at the end the following paragraphs:
() The Speaker shall draw up and publish a scheme to permit Members who are certified by a medical practitioner as clinically extremely vulnerable (or equivalent) according to relevant official public health guidance issued in England, Wales, Scotland or Northern Ireland, to participate virtually in such debates as are designated for virtual participation by the Speaker.
() The scheme drawn up by the Speaker shall include:
(a) arrangements for demonstrating and registering eligibility for virtual participation in designated debates;
(b) any other provisions the Speaker considers necessary to secure the effective implementation of this Order.—(Mr Rees-Mogg.)
Valerie Vaz (Walsall South) (Lab)
Quite frankly, I am astonished that the Leader of the House has decided to move this motion formally. This issue has come before the House because we requested an urgent question, and we expected the Government to come up with some sort of mechanism whereby every Member of the House would be treated equally. I am surprised that the Leader of the House has nothing to say, as he will know that this is something that exercises all hon. Members.
David Linden (Glasgow East) (SNP)
Has the right hon. Lady reflected, as I have, on the fact that for so long the Government have spoken about the importance of Parliament and taking back control, yet today a number of Conservative MPs have withdrawn from debates, and the Leader of the House has not moved motions? Does she share my concern that this Government are rather running out of control, and that the actions we have seen this afternoon are those of a Government who are perhaps panicking?
Valerie Vaz
I agree with the hon. Member. He will know how important it is for people with other responsibilities that there is a different way of voting. The motion states:
“The Speaker shall draw up and publish a scheme to permit Members who are certified by a medical practitioner as clinically extremely vulnerable (or equivalent) according to relevant official public health guidance issued in England, Wales, Scotland or Northern Ireland, to participate virtually in such debates as are designed for virtual participation by the Speaker.”
Why is a certificate required? Hon. Members are not children. We are not going to school with a sick note. The Leader of the House has frequently said that he has needed that for PE, even though—we hope—one of his children might well play for England at cricket. It is concerning that hon. Members who are serious and want to take part in proceedings have to produce a certificate from a general practitioner.
Mr Kevan Jones (North Durham) (Lab)
Does my right hon. Friend agree that this is also incredibly sensitive? Many Members may have a mental condition that is possibly not known to constituents or even to family members. Why should they have to divulge that? I have no problem personally with this, but particularly with mental health conditions, people may want not to make that widely known. Why should they have to do that?
Valerie Vaz
My right hon. Friend is absolutely right, and I have frequently asked from this Dispatch Box, during the urgent questions and debates that we have had on this issue from the start, why on earth we should have to do that. We are all equal; we are all hon. Members. We were all elected on 12 December, equally. Why should we have to produce something to say that we wish to take part in basic proceedings and our basic democratic rights?
Chris Bryant (Rhondda) (Lab)
My right hon. Friend referred to Members not being children, and my view is that it is wholly inappropriate for the Government to treat Members of the House as children by suddenly pulling business. Is that not even worse given that the Leader of the House personally volunteered to the Committee on Standards this morning that we would be debating these matters this evening?
Valerie Vaz
I am extremely disturbed, because I had no notice, as shadow Leader of the House, that the Government were going to pull any business. There was nothing from the Leader of the House, I am afraid, to say that the business was going to be pulled, and I find that a huge discourtesy, because he is a very courteous person and we do get on in terms of getting the business done, although we may differ completely on the politics side of it. My hon. Friend is absolutely right to say that there were important matters to be debated and for hon. Members to know. I had a speech prepared so that hon. Members would know exactly who had been agreed to go through on the independent complaints and grievance procedure, and my hon. Friend says that he was informed that that debate would happen, so this is a huge discourtesy to the House. Will the Leader of the House please say why the business was pulled in such a way?
John Spellar (Warley) (Lab)
This is also a discourtesy because some Members of the House had considerable objections to the make-up of that particular body. They wanted to ask questions, for example, as to how much these people were going to be paid, along with their civil service salary. We also wanted to ask questions about the social composition of the grouping, but we have been deprived of that opportunity peremptorily—
Madam Deputy Speaker (Dame Eleanor Laing)
Order. The right hon. Gentleman is not addressing the matter before us. I am not having filibustering.
Valerie Vaz
Madam Deputy Speaker, that was a question that I am really happy to answer, because the matter arose as a result of the Chair of the Standards Committee explaining to the House why we have not dealt with the first two motions. I feel that those motions are really important for the House, and I know that this is not the first time that my right hon. Friend the Member for Warley (John Spellar) has mentioned the make-up of that Committee. It is important for the House to know, in relation to those two motions that have not been moved, that we are not in the business of secrecy. We are in the business of transparency and hon. and right hon. Members need to know what is going on. Hon. Members are extremely busy at this time, and my right hon. Friend is correct in asking that question, because the question was posed earlier as to why the previous motions were not put before the House.
Madam Deputy Speaker
I understand that the right hon. Lady is, as always, behaving honourably and that she is giving a background to the matter in hand, which she is addressing, but I am making it clear to the House that we are discussing the matter that is before us now, not the matters that might have been before us, had they been moved. There will be other opportunities to address those matters—
Madam Deputy Speaker
Order. No hon. Member will interrupt when I am speaking. It is perfectly reasonable for the right hon. Lady to give background to the remarks she is making, but I know that she will now address the matter that is before us, not the matters that are not.
Chris Bryant
On a point of order, Madam Deputy Speaker. Is it, however, in order for the Leader of the House to tell a Select Committee of this House in the morning that he has made sure that we will be able to debate two matters this evening, and then not even to provide a change of business motion before the House or even to have the courtesy to notify those who might be involved in later debates? Is that really the way this House now proceeds?
Madam Deputy Speaker
That is not a matter for the Chair, because it is in order for the Leader of the House to arrange matters today as he thinks fit. If it were not in order, I could not have allowed the things to happen that have been occurring this afternoon. It is all in order. The hon. Gentleman’s opinion on that is another matter, and I am sure that he will have the opportunity to express his opinion if I have the opportunity to call him. While I am making this clear, I note that there is no speaking list for this debate, so I will call people who were here at the beginning of the debate. For people who have come in after five o’clock I have allowed some leeway, because the debate started without a great deal of notice, and I appreciate that the right hon. Member for Walsall South (Valerie Vaz) had to hurry to get to the Dispatch Box on time. So those who were here in the Chamber before five o’clock will have an opportunity to be called to speak if there is time. Those who have come in after five o’clock, I deem not to have been here at the beginning of the debate.
Chris Bryant
Further to that point of order, Madam Deputy Speaker.
As I understand it, that means that you would not be calling me. I am the only person who is able to move the amendment—
Madam Deputy Speaker
I had—up until this moment—every intention of calling the hon. Gentleman. I saw when he came into the Chamber, and I had every intention of calling him. His name is on the amendment and it is important that he is able to speak to it.
Aaron Bell (Newcastle-under-Lyme) (Con)
On a point of order, Madam Deputy Speaker. I just want to be clear about what time I arrived here; as a member of the Procedure Committee, I would be grateful for the opportunity to catch your eye.
Madam Deputy Speaker
I will take no further points of that kind; thank you. I call Valerie Vaz.
Valerie Vaz
Thank you, Madam Deputy Speaker. I am disappointed, saddened and alarmed, because this House has effectively been gagged. We are unable to debate two very important motions that were on the Order Paper. With the greatest respect, hon. and right hon. Members should have the opportunity to raise issues in relation to those motions, and that is the purpose of interventions—interventions that the Leader of the House desperately wants because he says that they move the debate along.
Ruth Cadbury (Brentford and Isleworth) (Lab)
My right hon. Friend is making a really important point about this House being gagged. I sat through several debates and questions when the Leader of the House said, “Look around you; we are gagged”—I do not know whether he actually used the word “gagged”, but he effectively implied that covid regulations meant that we could not debate properly. Like all organisations, we have had to adapt. Does my right hon. Friend agree that this is a proper piece of business that must be debated, and have the opportunity to be discussed fully and with respect, and that the Leader of the House’s attitude today contradicts every point that he has made when we have discussed virtual debating up to now?
Valerie Vaz
I want to address that point. We had a debate last week where a perfectly reasonable person, who passed all the tests that we could possibly have asked of her and more, was prevented from taking up a job. That was an absurd position. I would have liked to have asked the Leader of the House, and I wanted the House to know, whether any of the people who were on the list were members of a political party. That is the transparency we needed—the transparency, not the secrecy. This House is not about secrecy; it is about ensuring that there is open debate.
Nick Smith (Blaenau Gwent) (Lab)
My right hon. Friend has just raised a very serious concern about someone being blocked for a job for which they were in good stead. Would she tell us more about that?
Madam Deputy Speaker
Order. Perhaps the hon. Gentleman was not in the Chamber when I made it very clear that the matter that we are debating now is the matter before us. We are not debating other matters that we might have debated at another time. I call Valerie Vaz.
Darren Jones (Bristol North West) (Lab)
I am grateful to the shadow Leader of the House for giving way so quickly and for allowing me to contribute to her aerobic skills at the Dispatch Box as she stands up and down so quickly. On the issue of gagging Members of Parliament, each of us has our role as representatives of our constituencies, but some of us, as Chairs of Committees, are elected by this House on a cross-party basis to inform proceedings in this House. Consequently, Chairs of Committees need to be given the opportunity fully to debate the issues and to inform Members about our work. If virtual participation is not extended, there are a number of Committee Chairs who—as is the case today—cannot perform their function. Is this not just an extension of the gagging of the will of Parliament?
Valerie Vaz
My hon. Friend is absolutely right. I know how assiduous he is in his work as the Chair of a Select Committee. That is a key point, is it not? Chairs of Select Committees cannot be here. I do not think it is our business to say who can be here and who cannot be here. All Members have to be treated equally. As the hon. Member for Basildon and Billericay (Mr Baron) said, there is a hierarchy of hon. Members and we have strived not to have that hierarchy in this House.
Let me go back to the motion and deal with the point relating to “clinically extremely vulnerable”. This is not a happy way to deal with right hon. and hon. Members. It places them in a difficult situation. It is not that they do not want to be here, but that they cannot be here. It is about what they say about their families. They do not want to bring their families into debates. They do not want to bring their families into the limelight or to this place. They want to keep them away from it. However, hon. Members are having to say— sometimes in public, Madam Deputy Speaker—why they cannot be here and they are having to bring their families into it. I say that, because the hon. Member for Basildon and Billericay cannot be here. He tabled the amendment, along with my hon. Friend the Member for Rhondda (Chris Bryant). He co-signed the amendment and he cannot be here for a very, very good reason.
Mr Kevan Jones
The motion from the Leader of the House refers to Members who are clinically extremely vulnerable, but I know of at least one case in my own region where a Member has not been here because her husband is undergoing cancer treatment. She cannot attend because he is very vulnerable. They live in a house that does not have an east wing to enable him to isolate from her. The motion would not cover extreme cases like hers, would it?
Valerie Vaz
My right hon. Friend is absolutely right. He hits the nail on the head and explains the difficulties for hon. Members who want to do their job but cannot. They have to make the difficult choice of whether to be here and balance family with their work.
Chris Elmore (Ogmore) (Lab)
Does my right hon. Friend not agree that it is the invasion of privacy that so many Members take umbrage at? Family members of Members are not elected and nor are they public servants. They have a right to privacy. A Member can do their job in any other circumstance, so why should family members be exposed by the idea that their health is somehow in the public interest? It simply is not. That is what so many Members across the House find so disingenuous about what the Leader of the House and the Government are doing. They are putting families in the public eye and they do not deserve that. In fact, they deserve a lot better than that.
Valerie Vaz
My hon. Friend is right. We have a very difficult job to do anyway. As I said to the right hon. Member for Staffordshire Moorlands (Karen Bradley) and her Committee, some people like to say what they had for breakfast on Instagram, but some people do not want to do that. Some people do not want to say anything about their lives. We are forced to do it sometimes. We are forced to tweet and do various other things that do not come naturally to many of us—I can’t do it, actually. But he is absolutely right that this is a privacy issue. Hon. Members have to decide what they say in the public sphere.
Madam Deputy Speaker, you know that when our right hon. and hon. Friends were pregnant and having wonderful babies—something so natural—they were trolled. They were trolled for doing what they needed to be doing, which was to be at home with their children when they had just given birth. I remember being in the House during the debates in which they had to explain that they were not the laziest MP in the world but were actually looking after their new-born. That was the most terrible thing and it was clarified only as a result of the debates in this House, which is why this is such an important venue.
This is the most important venue: people look to the Chamber to hear about what is going on. Unfortunately, sometimes we talk rubbish, and I am the biggest person to do that—[Hon. Members: “No!”] It is pantomime season! Sometimes we do, but the Official Reporters have to write down every word, and we sound wonderful when we read it back—when we dare to.
Karen Bradley (Staffordshire Moorlands) (Con)
I know that my hon. Friend the Member for Basildon and Billericay (Mr Baron) will not mind my mentioning him, because we have been in communication today about this debate potentially taking place. His greatest regret is that he cannot be part of this debate. He secured an urgent question that enabled him to take part in our scrutiny proceedings and raise his point, but he cannot be here to take part in this debate because he has made the health of his family and his wife—he has been very public about that—his priority. We all know that he is working his socks off at home. Does the right hon. Lady agree that he is a great constituency MP and is working incredibly hard for his constituents?
Valerie Vaz
I absolutely agree with the Chair of the Procedure Committee. The hon. Member for Basildon and Billericay had the courtesy to email me before the start of this debate. He told me about the difficulty; I shall not repeat it, but it is safe to say that he is not able to be here today.
That great intervention from the Chair of the Procedure Committee gives me an opportunity to raise the incredible work done by her and members of her Committee, who are scattered all around the House—[Interruption.] She is pointing to them and I am trying to find them.
John Spellar
Does my right hon. Friend, like me, wonder a little at the paradox that we have here today? The Leader of the House has often waxed lyrical about the need for Members of Parliament to be here to debate, yet he pulled a fast one to pull two of the debates that we wanted to have.
Valerie Vaz
My right hon. Friend is absolutely right. I still do not have an answer to that. I hope that I will get an answer, partly because the normal courtesies of the House were not applied and I was not even informed—I was waiting to come in to speak and the motions were just not moved. That is not the right way to do business.
Wes Streeting (Ilford North) (Lab)
I believe I made the Chair’s curfew on speeches, so I will not intervene a lot. To go back to the point about childcare, last week more than a million pupils throughout the country missed out on school, and most of them were forced to self-isolate. This pandemic is throwing into chaos lots of parents’ routines. Does my right hon. Friend agree not only that it often impacts women and mothers disproportionately, but that if we proceed on the basis suggested by the Leader of the House, lots of dads in this place are not going to be able to fulfil the responsibility to their children that they want to fulfil? That is why the motion is wholly inappropriate and the amendment is very welcome.
Valerie Vaz
My hon. Friend makes an important point and I absolutely agree with him. We are now moving to a different stage—this is why we were part of the change of the hours—because many young men came into the House and there were some fathers who also wanted to be hands-on parents.
Valerie Vaz
The hon. Gentleman is one of them and I shall give way in a moment. That is why this is so important: the amendment that has been tabled is an equalising amendment that will mean everybody is treated the same.
David Linden
Is the shadow Leader of the House, like me, struck by the perceived hypocrisy on the part of the Government and in particular on the part of the Lord President of the Council? In some respects he comes to the House and talks about the great conventions of the House of Commons—he talks about the 1300s and we all refer to each other as hon. and right hon. Is not the specific the point that for so long the convention in this House has been that we are hon. Members, so the Leader of the House is trying to question Members’ honourable nature? Does the shadow Leader of the House see, like me, that there might just be a degree of contradiction on the part of Her Majesty’s Government here?
Valerie Vaz
I do. At the moment, as Members of Parliament we are not treated equally and we are not dealt with equally.
The Leader of the House says that he likes interventions and wants us here in the Chamber, so I am quite happy to take as many interventions as possible, whether people want to speak later or not.
Jeff Smith (Manchester, Withington) (Lab)
I suspect that I did not quite make the curfew, so I may need to intervene again. Further to the point made by my colleague from the Scottish National party, the hon. Member for Glasgow East (David Linden), he is absolutely right about the behaviour of the Leader of the House today. The Leader of the House has appeared in the Chamber on many occasions championing Parliament and the rights of Members to participate in parliamentary debates and represent their constituents. Does my right hon. Friend share my sense of irony that in the motion the Leader of the House is doing his utmost to restrict Members’ ability to represent their constituents in Parliament? Does she wonder, like me, how he manages to look at himself in the mirror in the morning?
Valerie Vaz
It is appalling that, for some of our colleagues, their right to be here has been restricted in such an appalling way. As I said in a previous speech, and as we keep repeating over and over, we are approaching some of the most important legislation that this country has ever faced. We are coming up to the most important juncture in our history, when we leave the EU on 31 December. Before that, we have to do something with the agreement, whatever it is and whenever it is made. We look forward to statements on that. To give effect to that agreement, legislation will be required, and it has to be introduced before 31 December. As a result of this motion, unless the amendment is agreed to, our colleagues will be prevented from taking part in a debate on one of the most important pieces of legislation ever to come before the House.
Fleur Anderson (Putney) (Lab)
Does my right hon. Friend share my bafflement that, as soon as there was a health need, the Prime Minister was allowed to participate remotely, yet he was not immediately clinically vulnerable? Other Members, however, are not allowed to speak. Does she share my view that all constituents are equal in electing us and should be equally represented? [Interruption.]
Valerie Vaz
I do not know whether my hon. Friend wants to intervene on me again. Perhaps she would want her question to be heard properly—there was a fair bit of heckling—so does she want to ask it again?
Fleur Anderson
I hope that I can now be heard. Does my right hon. Friend share my bafflement that the Prime Minister could speak under arrangements for virtual proceedings, although he does not have a clinically vulnerable condition that we know of? It is quite right that we should not know any of the ins and outs—
Madam Deputy Speaker (Dame Eleanor Laing)
Order. That means that the hon. Lady should sit down. I am making a point of order. Let us make sure that we get the facts correct about what we are debating. The motion before us is about participation in debates. Participation in questions, urgent questions and statements is a different matter which has been dealt with. In questions, urgent questions and statements, every Member has the right to participate virtually. I just want to make sure that the facts are correct, because that is a matter for the Chair.
Valerie Vaz
Thank you, Madam Deputy Speaker, for clarifying that. I think my hon. Friend was trying to say—and I know that Mr Speaker has made a ruling on this—that both the Leader of the Opposition and the Prime Minister should be here on equal terms, just as Ministers are here on equal terms. Mr Speaker has made it very clear that he wants Ministers here, which is why we are all here—he wants shadow Ministers and Ministers. It is about equality between the two parties, and the two parties being treated the same. We saw what happened with the Prime Minister. We do not know what happens behind the scenes, and we do not know who is helping under the lectern and so on. The fact is that he is here to answer questions asked on behalf of the Leader of the Opposition—
Andrew Griffith (Arundel and South Downs) (Con)
On a point of order, Madam Deputy Speaker. Is it in order that the Opposition party is clearly trying to filibuster and talk out a motion that will see our clinically shielding colleagues given a voice in this House? [Interruption.]
Madam Deputy Speaker (Dame Eleanor Laing)
Order. If there were any filibustering taking place in this Chamber, it would not be in order and I would stop it immediately. The right hon. Lady is perfectly in order. She has taken a great many interventions and she has every right to do so.
Alan Brown (Kilmarnock and Loudoun) (SNP)
Let me go back to the guidance that the Deputy Speaker gave earlier about this being all about participation in debate. Clearly, the Leader of the House is trying to control who participates in debate. We know he is absolutely obsessed with physical participation in debate, so is it not disgraceful that the Government forced 20 Back-Bench Tories to pull out of physically participating in a debate earlier on a statutory instrument? The Government then pulled the Prisons (Substance Testing) Bill money resolution, taking 24 people off the call list. They then did not move the motion on the independent expert panel, taking 10 people off the call list. They then did not move the motion on the Independent Complaints and Grievance Scheme investigations: Commons-Lords agreement, taking 10 people off the call list.
Madam Deputy Speaker
Order. I have already made it very clear, and I know the hon. Gentleman is one person who has certainly been in this Chamber all afternoon, that we are debating the matter before us, not what might have been debated previously.
Valerie Vaz
Thank you, Madam Deputy Speaker. The hon. Gentleman is right to say that that is a bit concerning. At one point I thought that the Conservative Members were all at No. 11 being primed by the Chancellor on tomorrow’s statement. I thought that everyone was at a party, with drinks, canapés and things like that.
Let me just go back to the point about the right hon. Member for Staffordshire Moorlands, the Procedure Committee and its work—I was going to come on to that, but I will do so now. I have here two reports, its first report of Session 2019-21, “Procedure under coronavirus restrictions: proposals for remote participation” and its sixth report, “Procedure under coronavirus restrictions: virtual participation in debate”. The Procedure Committee has been extraordinary in the work it has done. It has done that work quickly, and I, too, pay tribute to Martyn Atkins, the Clerk. I was lucky to be on the Health Committee when he was a Clerk there. We were lucky to have him on that Committee. He was very assiduous, as were all the Clerks there. I have read all the reports, including the latest one. We did not have enough time to debate it on Thursday—we all just got a question each—but it is so important. I do not know whether right hon. and hon. Members have read it in its entirely. I could read it out, but it makes very important recommendations, one of which is:
“We do not consider that there is a justifiable case for eligibility for virtual participation in debate to be determined by reference to clinical vulnerability. Nor do we consider it appropriate to determine eligibility on a basis different from that for virtual participation in scrutiny proceedings. We therefore recommend that the criteria for eligibility for virtual participation in all House proceedings be made uniform at the earliest opportunity.”
This is the earliest opportunity.
John Spellar
Is it not utterly disrespectful for the Leader of the House and the Cabinet to disregard the House’s Committees, whose members are elected by both parties and whose Chairs are elected by the whole House? Is that not utterly contemptuous of the House and its Members?
Valerie Vaz
My right hon. Friend is right. It is concerning that Chairs of Select Committees, who are elected by the whole House, cannot participate. This is a cross-party report—a report that Members can amend but have not amended—which says that everybody should be treated equally in virtual participation. It is possible; we did it right at the beginning.
Chris Elmore
On the point about virtual participation being available to everybody, it has been confirmed several times—and I raised this with the Leader of the House last week—by the Clerk of the House and Clerks responsible for Chamber management and the broadcasting service that there is now enough capacity for Members to take part virtually in all proceedings of the House. Despite what the Leader of the House has said, there were trials some months ago of virtual Public Bill Committees, in which Members on both sides of the House participated. Since then, that technology has improved and the capacity has increased.
The reality is that for all Members, no matter what their situation may be, this is now a simple process of the Government—or, as it should be, the House—saying to the Clerk, “This is the will of the House, and we would just like all Members to be equal.” The Leader of the House’s excuse that it stops and stifles debate and limits intervention is simply not correct. Does my right hon. Friend agree that most Members would accept not having interventions, on the basis that it is a small price to pay to allow all Members to take part in crucial debates on the Floor of the House?
Valerie Vaz
I absolutely agree. I will come on to the capacity in a minute, but I want to spend some time on these Procedure Committee reports, because—
David Linden
On a point of order, Madam Deputy Speaker. Over the last couple of minutes, I have observed that quite a number of Government Whips have entered the Chamber. Can you confirm that, in the event that Government Whips tried to move a closure motion, that would in effect be muzzling the House and that a closure motion should not be granted?
Madam Deputy Speaker (Dame Eleanor Laing)
I have noticed that there are Government Members on the Government Benches. Who they are and what office they hold is not a matter for me. The Chamber is open to all Members to be here whenever they wish, as long as there are no more than 21 on the Government Benches at a time. A closure motion would be a matter for the Chair. Should one be moved, I would consider carefully how many people have spoken, how long the debate has been, how many interventions there have been and how many important points have been made. I am therefore listening very carefully to the debate.
Karen Bradley
On a point of order, Madam Deputy Speaker. I apologise, but could you confirm that if a closure motion were moved, proxy votes would not count towards it?
Madam Deputy Speaker
There are various stages of a closure motion: the granting of the closure motion, the taking of the closure motion and the substantive question that may or may not then be put. Proxy votes do not count for the calculation of the quorum necessary, which, as the right hon. Lady knows well, is 100.
John Spellar
On a point of order, Madam Deputy Speaker. Could you clarify whether it is 100 Members voting or 100 Members voting in the Aye Lobby?
Valerie Vaz
As I was saying, I think Members were slightly alarmed by a group of people walking with a purpose. It is usually the Whips who do that, as John Major used to say.
I will get back to the debate at hand, the Procedure Committee report and what my hon. Friend the Member for Ogmore (Chris Elmore) said about the participation of all hon. Members. I still have not finished with this idea of clinical vulnerability to a disease. I think, and I said at the time, that it is an unnecessary, bureaucratic way of saying that hon. Members can or cannot be here. It is in some ways quite humiliating for hon. Members to have to go to their GP and say, “Please could I have a note to say that I am clinically vulnerable so that I can take part in a debate?”
Jessica Morden (Newport East) (Lab)
I thank my right hon. Friend for giving way because it gives me an opportunity to speak on behalf of my hon. Friend the Member for Lewisham, Deptford (Vicky Foxcroft), who is not able to be here with us today and is sitting watching, although she would like to participate. She never wanted to have to say that she was clinically extremely vulnerable or to tell people about her rheumatoid arthritis but has been forced to do so. Does my right hon. Friend agree that forcing people to do this is very unfair?
Valerie Vaz
I agree, and we have seen how effective our hon. Friend the Member for Lewisham, Deptford (Vicky Foxcroft) is when she speaks at business questions, and when she asks questions. She is so frustrated because she has done some absolutely fantastic work on knife crime and wants to be able to take part in debates, but she cannot. We need to find a way to enable her to do that, and the only way is if the amendment is passed.
Alan Brown
The right hon. Lady makes an important point about the fact that the motion would force hon. Members to go to their doctors, get certification and submit that. Is it not also the case that it is then in the public domain that a certain number of MPs are extremely clinically vulnerable, which will lead to members of the public saying, “I wonder what is wrong with my MP, or that MP.”? That is the real issue. It is effectively breaching confidentiality, whereas if the amendment is passed, it is just a public health reason that covers Members, their families and anything else.
Valerie Vaz
That is absolutely right. We all know as hon. Members that we are only as good as our last election, and we have to fight like mad to be elected.
Patrick Grady (Glasgow North) (SNP)
I thank the shadow Leader of the House and appreciate that she is rising to the opportunity of laying out the fundamental lack of logic in what the Leader of the House is doing. After weeks, if not months, of standing at the Dispatch Box saying that virtual participation in debates was simply not possible and simply not desirable, he has now conceded that in some circumstances it is possible and desirable. If it is possible and desirable for some people, why should it not be possible and desirable for everybody who needs it? There is no logic.
Valerie Vaz
I agree. This is just one small further step that we are asking the Leader of the House to make, which we know he is capable of doing. On the clinically vulnerable, it is very difficult for right hon. and hon. Members to have to go to a medical practitioner.
Owen Thompson (Midlothian) (SNP)
On the point about the clinically extremely vulnerable, does the right hon. Lady not agree that the fact that the definition of clinically extremely vulnerable is different in Scotland and in England raises further issues? Which criteria would we follow?
Valerie Vaz
If someone wanted to help to us to decide what the definition is, that would be very useful.
Shaun Bailey (West Bromwich West) (Con)
I have much respect for the right hon. Lady, my constituency neighbour, but when people at work are asking for reasonable adjustments, they have to go in to their GP and get certificates, so is it the case of one rule for us and one rule for everyone else? Perhaps she will tell our workers in the Black Country why that is acceptable for us here, but not for them.
Nick Smith
On a point of order, Madam Deputy Speaker. I am a bit perplexed about the voting rights of Members tonight. I would be ever so grateful if you could confirm whether the Chair needs 100 Members to go through the Aye Lobby for any closure motion to be agreed.
Madam Deputy Speaker (Dame Eleanor Laing)
Yes, that is correct. Where were we? Valerie Vaz.
Valerie Vaz
I am still here. We are Members of Parliament. We are elected to do a job—we are elected to pass legislation. We cannot do that. We are in the middle of a pandemic, and when we first started with this pandemic, we were able to have a virtual Parliament —we were the first Parliament in the world to do that, with the expertise that we have here. We were able to undertake every single aspect of our work, and each hon. and right hon. Member was able to do that on an equal basis.
That is not what we are saying here—this is something different. This is just saying that those who are clinically vulnerable can take part in a debate. Hon. Members have made the point of the hon. Member whose name is on the amendment, the hon. Member for Basildon and Billericay, and many other hon. Members, who are looking after and caring for those who are clinically vulnerable and therefore cannot be here, because if they come down here they expose themselves to the virus. We know it is on the estate. We know that there have been people here who have been tested. Many of us have been tested and some have tested positive, including the Prime Minister, who had to take part in a virtual Prime Minister’s questions.
Alison Thewliss (Glasgow Central) (SNP)
Does the shadow Leader of the House agree that it is not just the arriving in this place that makes people vulnerable? Members from Scotland have much further to travel and multiple public transport journeys, if they can get public transport that is appropriate. The Caledonian Sleeper would have allowed someone to travel and meet very few people while doing so, but the Caledonian Sleeper to Aberdeen and Glasgow is currently not running. Does she agree that Members are made vulnerable by travelling on public transport in the way that we have to?
Valerie Vaz
I agree. We do not know where we can catch it. What we are doing is exposing families, friends, everyone—people that we work with here. We are in the middle of a pandemic and people are dying. I know people in my constituency—people who have been long-standing friends—who are now dead as a result of this virus. This is extremely serious. All we are asking is for right hon. and hon. Members to take part in debates. Why should they be excluded from the European legislation that is going to come through now? Why should they be excluded from that?
Chris Bryant
In answer to the point made by the hon. Member for West Bromwich West (Shaun Bailey), I have heard the same argument from the Leader of the House as well: we should not be any different from the rest of the public. I wholly agree with that. However, I think they misunderstand Government rules. The Government rules, as laid out by the Prime Minister yesterday in Parliament, are very clear. He said yesterday that, even in tier 1, if someone can work from home, they should work from home. That is the rule. The other part of the rule is that businesses have to do everything to make it possible for people to work from home if they possibly can. Those are the rules for the rest of the country; they should be rules for us here too.
Valerie Vaz
That is absolutely right. The Prime Minister did say that—
“work from home wherever possible.”—[Official Report, 23 November 2020; Vol. 684, c. 601.]
We can work from home, we have worked from home as Members of Parliament, and other Members of Parliament want to continue to work from home, and that is being denied. We are exposing hon. Members’ families, and the hon. Members, who are travelling backwards and forwards.
I take umbrage slightly with the Leader of the House. He thinks that if we are doing something remotely, we are not working. I have talked to many hon. Members. Zoom is horrible—whatever anyone says, it is awful. You have to concentrate, you have to stare—it is just absolutely terrible. What makes people really nervous about the whole thing is worrying about being late—suppose you have not logged in on time? Who is walking around in the background? Have you got the right background? It is terrible. Are you dressed properly? We would rather be here, of course we would, but we cannot be.
Andrew Griffith
The shadow Leader of the House has been generous to both sides in taking interventions. Having been in the past party to some of the deliberations of the Procedure Committee, I understand that there are strongly held views on both sides. I just put it to her and her colleagues that, tonight, what you are doing is letting the perfect be the enemy of the good. There is a motion that will give our colleagues who are clinically vulnerable the opportunity to participate virtually and what you are doing tonight will deprive them of that opportunity—
Madam Deputy Speaker (Dame Eleanor Laing)
Order. What the right hon. Lady is doing, not what “you” are doing.
David Linden
On a point of order, Madam Deputy Speaker. I know that the hon. Member for Arundel and South Downs (Andrew Griffith) is new to the House, but can you just clarify to him, given that he is such an expert on the procedures of this House, that he should not refer to you, because that is, of course, you and not the right hon. Lady on the Front Bench?
Madam Deputy Speaker
Yes, I am very happy to clarify that. As ever, the hon. Gentleman has made his point very well.
Chris Bryant
On a point of order, Madam Deputy Speaker. Could you not confirm that, as the hon. Gentleman just said that there is the perfect and the good on offer, if he votes for the amendment he gets the perfect and he does not discard the good at all?
Valerie Vaz
That was a point of clarification. Perhaps we can include those in the procedure in future.
Let me deal with the point that the hon. Member for West Bromwich West (Shaun Bailey) made. The point is that hon. Members cannot take part in the most important part of what we do, which is debate. We are excluding a whole group of hon. Members from taking part in a debate, and to take part in a debate is what they want. The fact is we had this process and we had this procedure and it worked.
Lilian Greenwood (Nottingham South) (Lab)
I think it is important to recognise that we do not just have to go back to the situation that pertained in May. The Procedure Committee’s report makes it absolutely clear that, because of the substantial work undertaken by the parliamentary audio-visual service since the discontinuation of hybrid proceedings, we have
“a more resilient broadcast infrastructure, with the capacity to facilitate virtual contributions to debate”
in a much more proper way. Is not that quite a change that needs to be reflected in our decision making?
Valerie Vaz
My hon. Friend is right and that is the point that I was just about to come on to. As I started to say, we were the first Parliament to become a virtual Parliament and we were the envy of the world. Other Parliaments have tried to do what we are doing now and what we did previously and what we are sort of on the way to doing. But I think we are doing a great discourtesy to the people who have worked so hard to get us to this stage. Yes, the Leader of the House will say that we broke down; that the House of Lords broke down. They are able to participate in every aspect of their work virtually. They broke down only once in 62 votes. We had a failure at the card reader, too. I do not think that we broke down whenever we had debates and people took part.
The point is that the broadcasters have worked so hard to get us to this place. One of the broadcasters said to me, “Please say that we are now doing seven to eight hours of virtual proceedings in the House of Lords and they are able to have two Chambers—they are able to have two sets of proceedings going on at the same time.” We have a huge amount of talent, not just in the House, but in the country. We can use that talent to ensure that we here in this Parliament, every single person, no matter what happens, can take part. People will have seen the hon. Member for Chatham and Aylesford (Tracey Crouch), but there are others who perhaps do not want to ask questions and state what their medical conditions are, but who also want to take part. We all have a responsibility to our constituents because we were elected. This is a democracy and we want to take part in every single aspect of our work, and we can.
Jeff Smith
I am grateful, once again, to my right hon. Friend for giving way. She is being very generous. She is making an important point about the improvements in the technology. The House of Lords has very capably been able to facilitate its debates. We rarely have problems in this Chamber. I have heard the Leader of the House say many times that the technology does not work, that it has faults, and that we cannot introduce it for debates because of those occasional faults. In asserting that position, is he not, in the words of his colleague, the hon. Member for Arundel and South Downs (Andrew Griffith), making the perfect the enemy of the good?
Valerie Vaz
I agree. We did have the good and we did have the perfect, and for some reason we cannot have that any more—although we might because the amendment may get passed. The hon. Member for Arundel and South Downs (Andrew Griffith), who is not in his place at the minute, said that it is the Opposition, but it is not—this is cross-party. If he looks at the amendment, it is signed by the hon. Member for Basildon and Billericay (Mr Baron) and the Procedure Committee has agreed—all sides, all parties.
John Spellar
Is my right hon. Friend as surprised as I am that, given the huge success of our excellent technical operators, a Government Minister has not used the expression “world beating”? In this case it is justified, but it is often a slightly overblown expression; it is normally used by the Secretary of State for Health and the Prime Minister.
Valerie Vaz
It is world beating, but we do not use the term in the same way as they use it, because all their world-beating test and trace and everything else do not appear to be world beating.
Alan Brown (Kilmarnock and Loudoun) (SNP)
I thank the right hon. Lady for giving way; she is being generous. Given that we have this technology, which can be used for the benefit of all Members, and going back to an intervention about making MPs go to a GP because some constituents might have to go to a GP, is it not a fact that GP practices are run on a very restricted basis now? People cannot get routine appointments because of the measures in place, so why on earth would we try to make MPs go to GPs, taking up valuable space and time that our constituents might want?
Valerie Vaz
The hon. Gentleman makes a good point. Obviously, I have not put the policy through, so I cannot answer his point, but it is about asking a medical practitioner to say that someone is clinically vulnerable.
Let us go back to the broadcasting and how brilliant it is.
Nick Smith
I thank my right hon. Friend for her contribution. She is doing a brilliant job, taking on board colleagues’ points on both sides of the House. She is taking the issue forward really well. Does she agree that colleagues across Parliament are starting to use Teams and Zoom proficiently now?
Valerie Vaz
They do, but we do not necessarily like them—especially when they break down and we are not linking in the right place.
The point about broadcasting is important because we have got to the stage where, on Zoom, people can put their hands up, so that could be a form of intervention. People have been able to undertake debates—I think this was mentioned at business questions—and, in some European Parliaments, they have been able to take interventions. If that is the key thing that seems to be stopping the Leader of the House from going to the next stage—making that giant leap—interventions can be done. However, we know that hon and right hon. Members can take part in debate, because we did it before. The plea that we all make is that they want to do so on an equal basis, without having to tell anyone that they are incapacitated in some way, or that they are shielding other people in their family in some way.
Jonathan Gullis (Stoke-on-Trent North) (Con)
The right hon. Lady is being generous with her time. Does she share my concerns about when I have to go back to Stoke-on-Trent, Kidsgrove or Talke and look school teachers, police officers, fire officers, GPs, doctors and nurses in the face and ask them to sacrifice themselves and to be willing to make some sacrifice by going in to look after people? In the end, they are public servants, as are we. Does she not agree that this would send completely the wrong message—that we have some sort of special protected status, compared with those who also work in the public sector?
Valerie Vaz
I would say: do not look them too closely in the face. We have to be 2 metres apart because that is what the Government guidance is. But the hon. Member is back to the same old thing. We are doing our work. I do not know but I hope not a single hon. Member does a face-to-face surgery. I started my telephone surgeries in March because I knew this was coming up; we had heard about the pandemic from China in December. So I think it is important, if the Government are going to give out guidance—[Laughter.] I do not think it is very funny when we are talking about people dying of covid and, if you are too close to them, they could pick it up—[Interruption.] Let me carry on.
So it is back to the same old thing. We are working. We are just working in a different way. I do not know any hon. Member who is not working 24/7. Absolutely every single hon. Member or right hon. Member is opening mail, or checking their WhatsApp. They are working. We are all working. We have a completely different job, and it is right that we do that. On people contacting us in the workplace when they want reasonable adjustments, that is our job. People contact us because sometimes employers are unreasonable. Sometimes people and institutions are unreasonable. People contact us to write those letters for them to make sure that they can get their work done. I am talking about reasonable adjustments.
Wes Streeting
We have heard key public sector workers invoked: “How will we look them in the face?” They will understand the rules perfectly well; they are abiding by them. Does my right hon. Friend agree that, given the reported public sector pay freeze, I do not know how any Conservative MP would look any public sector worker in the eye?
Valerie Vaz
I think that is a really important intervention. Perhaps the hon. Members would go to their public sector workers, look them in the eye and say, “Sorry, we couldn’t find any money for you to have a pay rise, but we”—[Interruption.] Well, I think it was an important intervention.
Let us go back to the broadcasters.
Shaun Bailey
Can I interrupt the right hon. Member at this point? Sorry, I wanted to raise it on a point of order, but can I just bring her back? I do not find death funny. I am sure my hon. Friends here do not find death funny. I actually have vulnerable people in my family that I have not seen in six months, so when she makes comments like that, I find it very offensive. So I would invite her to withdraw that comment and that slur against my hon. Friends, particularly my hon. Friend the Member for Walsall North (Eddie Hughes), because it is not appropriate.
Valerie Vaz
I really do not know what the hon. Gentleman is talking about. All I heard was people sniggering in the back. I heard people—[Interruption.] Oh my goodness, Madam Deputy Speaker.
Madam Deputy Speaker (Dame Eleanor Laing)
Order. Whatever we are debating, we will have a good-tempered and polite debate.
Valerie Vaz
Thank you, Madam Deputy Speaker. Can I just say this? When I was talking about the difficulties that our hon. Friends and right hon. Friends have taking part in debate, I just heard some sniggering from the Back Benches. Normally, I would just ignore it, but this is such an important debate, and I did not know what it was about.
Valerie Vaz
Joke? I was talking about broadcasting. We were talking about the public sector workers who are not going to get a pay rise apparently, but maybe the Chancellor will change his mind when he has heard this debate.
But let us go back to exactly what is happening here with this motion. It is discriminatory. How can we possibly carry on in this way when we have these two tiers of hon. Members? It is not fair, it is not right and it is not the way that we do things here. We need to treat every single Member equally. There is absolutely no justification.
Patrick Grady
On the point of equal treatment, the right hon. Member is right, because one of the first things the Government did under the proceedings under the pandemic motion was suspend the English votes for English laws procedures. They recognised that they would be practically unworkable, and they actually removed that distinction and that discrimination that Members from Scotland have experienced under the House EVEL procedures. Again, the Leader of the House has been tied up by his own logic, because he is making some concessions to some people, but he is not making them available to everybody. His own logic is his undoing here.
Valerie Vaz
The hon. Member is absolutely right. When the Government want EVEL, they have it; when they do not want it, they do not have it, even though SNP Members have made the arguments frequently. We are now getting to the point where this is discriminatory.
Fleur Anderson
I am grateful for the opportunity to mention discrimination. Does my right hon. Friend agree that this is a double discrimination—that not only are some people barred from being here and speaking, but they also cannot speak on behalf of their constituents? All the people who Members have been sent here to represent are discriminated against, as well as the Members themselves, so it is doubly hard.
Valerie Vaz
It is doubly hard for everyone not being able to take part in what we do in this House, which is to debate legislation. To debate—that is what the Leader of the House has said we should do, but hon. Members cannot take part.
David Linden
I have very much enjoyed the first hour of the right hon. Lady’s remarks and look forward to the next. I was reflecting on something said from the Conservative Benches a little earlier about reasonable adjustments being made. I was reflecting that pre-pandemic one of the greatest strengths that we had as Members of Parliament was the ability to come here and put things on the record; indeed, the Leader of the House tells us regularly that people have been able to come here and put things on the record since 1300. But of course, one of the difficulties for some our colleagues who do not have the ability to speak here is that they cannot get things on the record quickly with a point of order—something that many of us did at the beginning of the pandemic to call out bad practices from employers. Given that points of order are a good way of getting things on the record, does the right hon. Lady agree that getting some form of virtual participation in that regard might help some of our colleagues to call out bad employment practices?
Valerie Vaz
Yes. Hon. Members will also know the emails that we all get about particular pieces of legislation when they pass through the House. Whether it is here, in Westminster Hall or on petitions, Members cannot say how they voted or why they voted in a certain way, or talk about what the policy is. I do not know what hon. Members who cannot take part in debates say to their constituents; maybe I need to ask an hon. Member who is not here and cannot take part.
Jonathan Gullis
I am extremely grateful to the right hon. Lady for giving way again. She referred to the idea that our role here is to debate. Well, that is exactly what the Leader of the House is proposing. Those who are clinically vulnerable will be able to debate—or have I misunderstood what has been said?
Valerie Vaz
Yes, with the greatest of respect, I think that the hon. Gentleman has misunderstood. He will know that unless a Member certifies that they are clinically vulnerable, they will not be able to take part in a debate under virtual proceedings. That is where the difficulty lies, because there will be two different sets of hon. Members: those who will have to certify and those who cannot certify. For example, take the hon. Gentleman’s colleague, the hon. Member for Basildon and Billericay, who has co-signed the amendment. It is not he who is clinically vulnerable; it is possibly another person who is, and he wants to protect them. Therefore, he cannot take part in the debate, and he should be able to. Why can he not take part in the debate without having to expose whichever person it is, who he would expose to the disease if he came here physically? That is the point, and that is why I say that this is a cross-party matter. It has nothing to do with politics or with anyone here. The only politics is that the Government seem hellbent on ensuring that people cannot take part in debates.
John Spellar
Has not my right hon. Friend exposed another flaw in this, which is the argument made by some Conservative Members that, “Well, you’ll have to go and get a sick note”? But if people have to do that, they hand the note in to their employer; it is not put on the front page of the local paper and out on social media, exposing to the rest of the world their—or in this case, even their family members’—condition. Whatever happened to medical privacy in all this?
Valerie Vaz
I think it has gone out of the window with this motion; my right hon. Friend is absolutely right. It is not just about privacy for hon. Members—apparently we can take it because we have thick skins, although I am not sure that we all do; some of us have thin skins. It is about protecting the families, who do not necessarily ask to be exposed in this way. They are not the ones who are tweeting or who are on Facebook. We are exposing them. I know of many such cases. A friend in the SNP is protecting members of her family, and she has said so publicly, but why should she be prevented from participating?
Peter Kyle (Hove) (Lab)
It has been suggested by Government Members that people in other workplaces have to get sick notes, but will my right hon. Friend clarify that they do not have to get those notes from a GP in order to use Zoom? We are asking to use Zoom to continue working, not to be signed off work.
Valerie Vaz
My hon. Friend is right, and that is why we have these debates. He is absolutely right—I am sure they will come to that in the end, but hopefully not. Let us return to the discriminatory nature of this motion.
Karen Bradley
The right hon. Lady is being incredibly generous with her time, and this is most certainly a full debate—I think we can all agree on that. Will she comment on remarks made by the Secretary of State for Health and Social Care at the Health and Social Care Committee earlier today? I was not able to catch it, but I have seen reported that he said we have to stop this British attitude of soldiering on, and that we should not be coming into work with sniffles and coughs because we will pass them on to other people. Does she agree that that is contradictory to some of the other things we are hearing?
Valerie Vaz
That is extremely contradictory. As a result of the Prime Minister being exposed to sniffles and coughs, he shielded and was given the ability to do his work in a different way. That is all that right hon. and hon. Members are asking for.
Let me give two examples of people who are very vociferous and active, including in the Chamber. My right hon. Friend the Member for Barking (Dame Margaret Hodge) is an amazing Member of Parliament, but she is finding that she has not got a voice any more. My hon. Friend the Member for Huddersfield (Mr Sheerman) constantly badgers the Leader of the House during business questions, but he is now not able to do that. The Chair of the Education Committee, the right hon. Member for Harlow (Robert Halfon) loves coming into the Chamber—I have seen him—but he is not able to.
Shaun Bailey
May I apologise to the right hon. Lady? I did not mean to barrack her before. It was very discourteous of me and I put on the record my apologies to her now.
We talked about the risk of notes being leaked, and my understanding—I ask the right hon. Lady to please correct me if I am wrong—is that we would hand any sort of certification to the House authorities. Is she suggesting that that would not be a safe process, and that there is some risk that something might be leaked by the House authorities? I am sure she is not suggesting that, but will she clarify how such information might be leaked, were it to be given to the House authorities?
Valerie Vaz
No, I was not suggesting that at all, but as hon. Members know, no matter what happens, things get out. I gave the example of pregnant women or mothers who were not on the voting record because they were not here. That has now all changed, and that is what it took, which is why this debate is so important. We have stopped saying that people must be in the Chamber and voting, hence proxy voting, but it took the Procedure Committee and many debates to get that. That is why we are saying that we must treat people equally so that people outside cannot see any difference and everybody can take part in every piece of work done by the House.
Several hon. Members rose—
Madam Deputy Speaker (Dame Eleanor Laing)
Order. While the right hon. Lady is on the subject of treating people equally, I appreciate that in her long speech she has taken an enormous number of interventions and covered almost every possible aspect of the debate. However, I am a little anxious that other Members should also have the chance to speak.
Valerie Vaz
Thank you, Madam Deputy Speaker. I was about to finish. I ask hon. Members to read the amendment carefully. It simply says,
“with a public health reason”,
which is a wide definition.
Peter Kyle
My right hon. Friend talks about public health. GPs are quite busy at the moment because we are in the middle of a pandemic. Does she think that GPs have more important things to do right now than certify that MPs are okay—
Madam Deputy Speaker (Dame Eleanor Laing)
Order. The hon. Gentleman has not been here for the whole debate. We are not having any more long interventions. A lot of people wish to speak and we are addressing a specific motion, not GPs in general.
Valerie Vaz
The amendment states clearly
“a public health reason”
and no other reason. All Members would be treated equally and everyone could take part in the important debates that we will have on legislation on Europe. We were all elected on 12 December as equal Members of Parliament. I hope hon. Members will support the amendment and ensure that everybody can take part in debates.
Karen Bradley (Staffordshire Moorlands) (Con)
It is lovely to see everybody bobbing up and down—we do not get to see that nowadays—and there is no call list. Goodness me, Madam Deputy Speaker, what days we hark back to! How much we want to get back to those halcyon days.
I am afraid that I was not able to hear what my right hon. Friend the Lord President of the Council and Leader of the House said, because I was unfortunately caught unawares and did not know that the debate was about to start. I am grateful to him for the debate. He knows that last week, I called strongly for a debate on this matter, but it is a shame that it was done in such an unexpected and surprising way. I was on a call with the Independent Anti-Slavery Commissioner and it felt discourteous to say to her, “I’m terribly sorry, but I need to rush to the Chamber because apparently I am about to take part in a debate.” I set that call up several weeks ago and I was therefore disappointed to have to say that I could not complete our discussions on important matters relating to human trafficking and slavery. I should say that I am co-chair of the all-party parliamentary group on human trafficking and modern slavery.
I am also Chair of the Procedure Committee, which has issued six reports in this Session, four of which are on procedures under coronavirus. I thank all Committee members. A few have left us in the last few months, but we have a very active Committee and many of its members are in the Chamber, demonstrating that Procedure Committee members really do care about procedure.
We have worked incredibly hard to assist the House in considering what are appropriate proceedings and how we should change them to reflect the situation under coronavirus. I want to be clear up front: any recommendations by the Procedure Committee have been made on the basis of how we make the best of the situation. Nobody wants to be in this position. I keep using the word sub-optimal—my right hon. Friend the Leader of the House has quoted me on it. The position is undoubtedly sub-optimal.
Other members of the Committee will recall that in our first meeting, we said that we would have to consider proceedings under coronavirus because things might change quickly. We first convened on 2 March. By 6 March, we had the Clerk of the House and the House authorities in to give us private evidence and a private briefing. My right hon. Friend the Leader of the House was incredibly courteous in allowing time for me, as Chair of the Committee, to meet him privately to hear what the Government’s thinking was.
I remember that first briefing when Members heard, for example, “We will have to stay 2 metres apart.” It was the first time I had heard the term “social distancing”. None of us could comprehend the thought that the Chamber would have crosses on the Green Benches where we could not sit and that whole Benches would be out of bounds. None of us had any idea how that would function.
Karen Bradley
I give way to the august right hon. Gentleman and member of the Committee.
Karen Bradley
The right hon. Gentleman is absolutely right. I was going to come on to say that, but he gives me the chance to say it now. The House authorities have worked so hard and have made this House the envy of the world. The number of requests that the Committee receives from similar committees around the world to understand the temporary changes that we have introduced is astonishing.
Chris Elmore
Will the right hon. Lady also acknowledge that during a public evidence session, we had academics come in to say that, of all the devolved institutions and Parliaments in the world, we were world leading? The Leader of the House, the traditionalist that he is, was sector beating in terms of the facilities that were offered to Members of this House. It is such a shame that he is not willing to show that forward thinking now in ensuring that all Members are treated equally.
Karen Bradley
I thank the hon. Gentleman; I call him my hon. Friend, because he serves as the Committee’s vice-Chair and stands in for me when I am unable to participate, as I was not when I self-isolated, suffering, I believe, with covid. He is absolutely right. We had those comments from around the world. My right hon. Friend the Leader of the House should take incredible credit for being world leading on this matter. He introduced revolutionary changes, changing our procedure in the most significant way for 700 years, I think it was.
Owen Thompson
I know that the right hon. Lady did a session with the Canadian Parliament, but when Committee members took part in a session with members of the Japanese Parliament, it was very frustrating that they were there asking us questions about how we were implementing this world-leading solution, only for us to have to tell them, “Yes, we were; unfortunately, the Government have now stopped that.”
Karen Bradley
The hon. Gentleman makes an important point. It was slightly embarrassing, I think, for members of the Committee to have to say that, after saying that we did develop, at pace, the most incredible changes to our procedures and to the capability and capacity of our digital services in order to enable us to continue working.
My right hon. Friend the Leader of the House often talks about the period of the hybrid Parliament between the Easter recess and the Whitsun recess as being somehow not effective. During that period, as I recall it, five or six Bills received their Second Reading—unopposed, in fact. When we did have votes, the Government won those votes handsomely. We were able to have debates on legislation, we were able to have general debates on the matter of covid; actually, this House did function.
My right hon. Friend often talks about Bill Committees. I hope that he will recall from our very first conversations about this matter that I shared his reservations about whether Bill Committees could meet in any other way than physical. However, as the hybrid Parliament included physical presence—I certainly participated physically during that period—I was always of the view that that could be managed and accommodated within the rules that we had. Of course, the difficulty with Bill Committees was finding rooms that were big enough to accommodate a Bill Committee socially distanced, and ensuring that those rooms were set out. I am sure that my right hon. Friend will have seen some of the revolutions in the other place, including Perspex screens being put into Committee Rooms so that more Members of the other place can get into Committees.
Several hon. Members rose—
Karen Bradley
I give way to another august member of the Committee, the hon. Member for Blaydon (Liz Twist), and then I will give way to SNP Members.
Liz Twist (Blaydon) (Lab)
Speaking of Bill Committees, does the right hon. Lady recall that some of us took part in a trial running of a Bill Committee, including interventions and a full debate, which worked perfectly well? That might have been another way of ensuring that Government business was able to move forward.
Karen Bradley
The hon. Lady makes an important point. We did not really test or try that hybridity in Bill Committees, which may well have been possible. Given what the House authorities have been able to achieve in other areas, I am sure that if anybody could have achieved it, the House authorities could.
Alan Brown
On Bill Committees, clearly it is a matter of the business managers working to find appropriate space in the House, but has not part of the solution been found by the Government themselves, considering that they now put so many statutory instruments through the main Chamber, including SIs that should never be coming to the Floor of the House? They are actually finding ways to free up space and make a hybrid solution work anyway.
Karen Bradley
The hon. Gentleman makes an important point. I would not want to speculate about what goes on between the usual channels—I suspect the usual channels were slightly surprised by some of the things that have taken place today—but I hope, as a former Whip myself, that the usual channels will continue to work, because this place works best when the usual channels are working.
Chris Elmore
I am grateful to my right hon. Friend, and will return the compliment, as she is an exemplary Chair of the Committee. May I place on record, as my hon. Friends the Members for Birmingham, Yardley (Jess Phillips) and for Hove (Peter Kyle) have said, the fact that during the Domestic Abuse Bill Committee they were willing to take part in physical proceedings? There is an idea that somehow the usual channels were not working and names were put forward, but this is on the record: they were willing to take part in those proceedings. The only concern, which is available, as the right hon. Lady is aware, was about witnesses, and there was an option for having a hybrid-facility fallback to protect victims of domestic abuse. It simply is not correct to say that Members were not willing to engage in Bill Committees, and I know that she agrees.
Sir Geoffrey Clifton-Brown (The Cotswolds) (Con)
I have been in touch with my right hon. Friend the Member for Chesham and Amersham (Dame Cheryl Gillan), who is in one of the extremely vulnerable categories. She is watching the debate remotely, getting more and more demoralised about it. She has asked me to plead with the House to pass the motion unamended, because she has not been able to take part in debates since March, and it is likely that she will be unable to take part in debates until next March, which is simply not fair. Let the most vulnerable people take part in debates, then fight the other battles another time.
Karen Bradley
I, too, want my right hon. Friend the Member for Chesham and Amersham (Dame Cheryl Gillan) and many other clinically extremely vulnerable colleagues to be able to take part in debates, but the amendment does not preclude their doing so. It allows them and others to take part in those debates. I want to see my hon. Friend the Member for Basildon and Billericay (Mr Baron), who secured an urgent question last week, taking part in debates as well. I want as many Members as possible to take part in debates. This has been going on for far too long. About a quarter of Members are currently availing themselves of the ability to participate virtually in scrutiny proceedings: questions, UQs and statements. Not all of them are clinically extremely vulnerable, but they need to be allowed to take part in debates. We will have been going for 12 months by the end of March, and not to have heard from my hon. Friend the Member for Basildon and Billericay in a debate in that time I consider inappropriate and not fair on him. He is working incredibly hard, and he needs to be able to participate.
I should also like to raise the case of our hon. Friend the Member for Lichfield (Michael Fabricant), who has been texting me during the debate and has asked me to mention him. If he were here he would be speaking, but he cannot be here. He would love to take part in this debate down the line. He would love to take part virtually, but he cannot do so—he is not allowed.
Aaron Bell (Newcastle-under-Lyme) (Con)
I thank the Chair of the Procedure Committee, on which I serve, for giving way. She has mentioned Members who cannot be here. May I put on record the case of my hon. Friend the Member for Rutland and Melton (Alicia Kearns), who is heavily pregnant and would like to know whether the relevant words, “or equivalent”, in the motion extend to ladies in the third stage of their pregnancy?
Karen Bradley
I thank my hon. Friend, who has just joined the Procedure Committee. I was going to make exactly the same point, because my hon. Friend the Member for Rutland and Melton (Alicia Kearns) has texted me as well. In the third trimester of pregnancy, women are asked to shield, but they are not clinically extremely vulnerable. I know that my right hon. Friend the Leader of the House is sympathetic to that, and is trying to do all that he can to assist, but if he accepts the amendment, we do not have to have a debate about whether someone in their third trimester is clinically extremely vulnerable—we will just feel able to let them take part.
The capacity of digital services is much improved. We have seen what has happened in the other place. I do not think that my right hon. Friend should worry about allowing our hon. and right hon. Friends to take part in debates down the line, because this is not going to stifle debate—it will enhance and add to it.
Several hon. Members rose—
Karen Bradley
I see that many Members wish to intervene. I shall give way to my hon. Friend the Member for Eastleigh (Paul Holmes) and then the hon. Member for Glasgow North (Patrick Grady).
Paul Holmes (Eastleigh) (Con)
Does my right hon. Friend not accept, to back the point made by my hon. Friend the Member for The Cotswolds (Sir Geoffrey Clifton-Brown), that if the motion fails tonight the people she is talking about and whom she wants to involve in the Chamber will not be involved, so it will be the worst of all worlds?
Karen Bradley
Once again, I say to my hon. Friend that the Government could accept the amendment. However, I do not see why the Government would have to accept an amendment on House business, as this is a matter for the House to decide. If the House wants Members who cannot be here for reasons other than that they are clinically extremely vulnerable to participate, why would we not let them? Of course I want to see the motion to go through, but I want to see the amended motion go through.
Patrick Grady
The point that the Chair of the Procedure Committee is making about the amendment and about this being a House matter is very important. It should be a free vote. I am carrying quite a significant number of proxy votes, but I have consulted in advance with the Members for whom I am acting as a proxy, and I know that they all support the amendment. Given how this debate happened so quickly, is she concerned about whether other Members who are carrying substantial numbers of proxy votes have had a chance to consult all those Members individually on their exercise of those in a free vote, because I am sure that the Government are not threatening their Members on a free vote.
Karen Bradley
My hon. Friend the Member for Pudsey (Stuart Andrew) is perhaps the first Deputy Chief Whip to have voted against his own Government and kept his job, so I know that he will put forward this vote in the right way, but my concern is whether hon. and right hon. Members are aware of this debate and know that the vote is coming. I just ask the Government to let our hon. and right hon. Friends be able to take part.
Chris Bryant
I just want to make it absolutely clear that I would love the right hon. Member for Chesham and Amersham (Dame Cheryl Gillan) to be able to take part in debates fully. I have spoken to her several times this year and I know how painful she has found this. None of us is seeking to prevent that happening. All of us who have tabled the amendment and support the amendment simply want a few more people to be able to participate in exactly the same way as she is. If the Leader of the House would stand up now and say that he will accept the amendment, we could all go home and get on with more important business.
Karen Bradley
I thank the hon. Gentleman. I urge my right hon. Friend the Leader of the House to listen to what is being said and to what was said in the urgent question last week and in the statement that the Backbench Committee graciously gave to my Committee last Thursday. He could be the hero if he were to accept this amendment. It would show compassion and generosity, and it would show his courtesy, because he is one of the most courteous Members of this Parliament, who, in all his time here, has always ensured that Parliament is sovereign—in fact, he has campaigned very hard to make sure that Parliament is sovereign—and that Members of this House are heard, from all Benches.
I thank the many hon. and right hon. Members who responded to the call for evidence from the Procedure Committee on this important matter and expressed a majority view on the exclusion from debates, not just in this place but in Westminster Hall. Let us be clear: the Government motion does not extend to Westminster Hall. The reason for this furore—the reason that we are here—is that my hon. Friend the Member for Chatham and Aylesford (Tracey Crouch) was unable to take part in the debate in Westminster Hall on the disease that she is suffering from. Unless the Government are willing to look at extending the virtual proceedings to Westminster Hall, that will still be a problem. The Procedure Committee stands ready to work with the Government to find ways to allow more debates, perhaps more Adjournment debates in this Chamber, so that Members can take part—Members like my hon. Friend. Again, I urge my right hon. Friend the Leader of the House please to think about how this will look to those of our hon. and right hon. Friends who are not here for other reasons.
The hon. Member for Hove (Peter Kyle) made a very important intervention when he said that there is a difference about the situation here. Nobody is asking to not be at work. We are all at work. The idea that Members of Parliament have not been working over the course of the past few months when they have not been able to be here, or we are not in the full Chamber, is ludicrous given the hours that are spent on Zoom calls and Teams meetings, and the many, many pieces of constituent correspondence that we are all dealing with. In those few weeks at the beginning of the lockdown when people had such confusion and there was no certainty, the Government did an enormous amount of good in terms of the financial support and the guidance that was issued, but right at the beginning, everything was unknown.This was, as everyone says, an unprecedented situation.
Members across the House were dealing with constituents who had the most difficult and heart-rending stories. We wanted to do our best for our constituents, and we were doing that from home because Parliament was in recess. We could not ask questions of Ministers in the way we normally would by being here in the Chamber. Again, I pay tribute to the Government for the amount of access that Ministers made available to Members, to allow us to ask questions on behalf of our constituents. We are all working incredibly hard, whether we are working here, working in our offices in the precincts of the Palace or working at home. Nobody is asking not to work; it is merely that Members who cannot be here for reasons other than being clinically extremely vulnerable, including self-isolating because they have been told to by the Government, should be able to take part in all our proceedings.
Meg Hillier (Hackney South and Shoreditch) (Lab/Co-op)
As the right hon. Lady highlights, people are working very hard, and I pay tribute to members of the Public Accounts Committee, including the right hon. Member for Chesham and Amersham (Dame Cheryl Gillan). Two of the Committee’s members are self-isolating, and even on a hard-working Committee such as the Public Accounts Committee, they are two of the hardest working Members. It is of great sadness to me that those Members are unable to contribute to debate and that this issue has been kicked around like a football when it could be so easily resolved. I urge the Leader of the House to allow this amendment and to spare the pain of Members who have been unable to represent their constituents by participating in debates. The issue could be dealt with tonight, and then those excellent Members could contribute fully in the House.
Karen Bradley
The hon. Lady is right. Select Committees, of which we are both Chairs, have conducted their business virtually, with some physical proceedings to take evidence. She and I have both chaired meetings from Committee Rooms, but we have managed, as have all Select Committees, to take evidence, to work and to produce numerous reports on the basis of virtual participation, which includes all Members. Nobody has not been allowed to take part because their situation means that they cannot get a doctor’s note. Every single member of every Committee has been able to play a full part in the Committee. I do not understand why, on a matter of House business, the Government are determined to prevent that from happening.
Members spend years getting elected to this place. People give up their careers, and they lose their families in far too many cases. They do incredible work to get to this place. As an MP, I want to be in this place—I want to be here. There are Members who cannot be here at the moment, but they want to work. They want to have the chance to carry on their work and to be heard.
As I said, this is about the view of the House. I know that my hon. Friend the Deputy Chief Whip would never do this, but if proxy votes were used inappropriately —if a Member’s proxy vote ends up being cast in a Lobby that they would not want it to be cast in because they did not know this debate was coming, or if a Member is not here because they saw the business and were happy to believe that there would not be any votes—it would be a great shame. It will cause resentment, I suspect, if the motion goes through without a proper vote by all Members.
Sir Geoffrey Clifton-Brown
I am going to try again. This is a really sensitive matter for those who are extremely vulnerable. Why do we not let this motion go through tonight—it will fall if it is not passed by 7 o’clock—at least to give those very few Members the chance to participate in our debates? We can have the argument another day about the wider remit, but let us get this motion through tonight. I will be supporting the Government.
Karen Bradley
I will be sitting down shortly. I wanted to ensure that I took interventions because I know that many Members who were not here for the start of the debate will not be able to catch the eye of the Deputy Speaker, or possibly even the Speaker, due to the rules that apply to this debate, which are different from those of other debates with call lists and so on. This was a surprise debate—none of us thought that it was happening —so I wanted to ensure that Members had the chance to speak. I say to my hon. Friend again that I really want to see the motion go through, but I want it to go through amended so that all our hon. and right hon. Friends can take part in the debates. I really do not see why there is a problem with ensuring that my right hon. Friend the Member for Chesham and Amersham can take part in debates, and I have fought like he would not believe to ensure that she can do so, but I also want my hon. Friend the Member for Basildon and Billericay to take part in debates, because I want to hear from them both on these matters.
Sir Geoffrey Clifton-Brown
I simply remind the House that this motion will fall at 7 o’clock. Let us at least have half a loaf if we cannot get the whole loaf, and enable those very vulnerable people to participate in our debates.
Karen Bradley
As I say, I will sit down shortly, because I want to make sure that the amendment can be moved and that we have time for the vote, but I urge my hon. Friend to consider voting for the amendment, because that will mean that my right hon. Friend the Member for Chesham and Amersham and my hon. Friend the Member for Basildon and Billericay will be able to vote and speak.
Mr Kevan Jones
There is a simple way to move this on: the Government could accept the amendment tonight. The fact that this debate has been curtailed into less than two hours is not the House’s fault or the Procedure Committee’s fault, because the Committee has asked for a full debate on this and it has been refused by the Leader of the House.
Karen Bradley
The right hon. Gentleman is correct. We asked for this debate during the urgent question last week, and we asked for it again on Thursday. This debate has been sprung on Members, and I feel strongly that we need to look at the House having its say. This is a House matter. The Government have kindly tabled the motion, but it is a matter for the House to decide.
I shall conclude, because I want to ensure that the hon. Member for Rhondda can move and speak to his amendment. I urge the Government to think about how this looks in the eyes of the public when their MP can take part in a question but not take part in a subsequent debate. Yes, they can vote by proxy—we can have a debate about whether the proxy voting system works and whether it is optimal—but all of this is suboptimal. None of this is as good as it should be. Why exclude Members who could take part in debates and make important contributions simply because of—well, I do not know. I do not know why the Government are refusing to accept this, but we must give the House a proper say, and the Procedure Committee will continue to pursue the issue.
Chris Bryant (Rhondda) (Lab)
I beg to move amendment (a) in line 5:
Leave out from “Members” to “to” in line 8 and insert “with a public health reason relating to the pandemic”.
Welcome to the Chair, Mr Speaker. It is good to see you in your rightful place. I suspect that I am not going to please everyone, because I have just had an email from a Philip Toler, who says: “Why do you constantly stand up in Parliament?” [Interruption.] Oh, hang on, I seem to have united the House with that. He goes on: “Why do you not express your appreciation of the hard-working Prime Minister and all his Ministers? They are only trying their best. The Government was voted in by 95% of the population and you should therefore show some respect.” [Interruption.] Sometimes the vote in the Rhondda is a bit like that, but I do not think it is quite the same. That sounds a bit like a Trump version of how elections are run.
It is a terrible shame that this has become such a scratchy debate. There is no need for that, in all honesty, because there is a very simple issue at hand: the Government think one thing and quite a lot of Members of the House think a different thing, and we should be able to resolve that without all shouting and screaming at one another. I regret the way that we have ended up with the debate today, because many of us have repeatedly said to the Government, to the Whips and to the Leader of the House that the simplest way of having a proper debate on this is for the Government to timetable a chunk of time for a debate with a vote at the end of it, so that the House can decide. Unfortunately, that is not what the Government decided to do. They decided to table the motion on nod or nothing, without consulting with the Opposition Whips beforehand. Nod or nothing is there for consensual motions. The whole point of nod or nothing is that if the whole of the House does not agree then it does not go through. It is not nodded through, so we get nothing. I must say that when the Leader of the House made his response to the urgent question more than a week ago now, I had the impression that the motion he was going to table was one that the whole of the House would have been able to live with. Unfortunately, that is not what happened. What happened was that we had the nod or nothing games on Wednesday night and then again on Thursday. We have had a version of them again today.
Today has been the oddest of the lot, because the Government Whips put a whole load of speakers into lots of debates earlier on in the day. The Leader of the House, as I said earlier, told my Select Committee, the Committee on Standards, this morning that he had allocated time for two very important debates we would have tonight on bullying in the House of Commons. He said that we were going to have those debates and then he did not move the motions for them. I think it is a shame that we are debating this motion, rather than dealing with bullying in the Palace of Westminster. It has taken far too long to try to solve some of those issues. Members were asking earlier, “What will voters think watching this debate?” They will think, “Why haven’t you sorted out the bullying issues in Parliament?” They will not be worrying so much about this debate.
It is a shame we have got to where we are now. I say again that the easiest thing in the world for the Government to do is table a motion on the Order Paper in the normal way and to allow a chunk of time for it to be debated, so that all hon. Members can be notified that the motion is be happening at such-and-such a time and they can take their own view.
Mr Alistair Carmichael (Orkney and Shetland) (LD)
It appears to me that the House is now in a wholly unsatisfactory position. We stand to have a Division soon in relation to House business, which, by convention, is not normally whipped, and many Members who are not here will have given their proxies to their own party Whips. It is difficult to see how any view expressed by the House at 7 o’clock will be genuinely representative of the views of all the House.
Chris Bryant
I will come on to that point later, but there is a prior point which is really important. It is vital to the way we do our business as a Parliament that we have some business which is not subject to the Whip. Obviously, there are conscience clauses. One could argue that every single vote we ever cast in Parliament is a conscience clause, but there are specific matters that have historically been treated in the House as conscience clauses, such as abortion, gay marriage and so on. Traditionally, there has been a very strong view that when it comes to how the House does its own business and orders things, it is not a matter for the Whips.
Now, some of my best friends are Whips. Some of my very best friends are Whips. [Interruption.] Yes, all right, some of my next-door neighbours are Whips. They play an absolutely vital role in enabling the business of the House to proceed. They are therefore, in the main, for the greater convenience of the House. However, there is some business that we should just decide, because in our own conscience, out of our own thinking, that is what we have decided. I think that this matter, in the middle of a pandemic, really should be a matter where our own personal decision is the only thing that counts. It seems odd to me that we have ended up in a situation where a Government Whip can have more than 240 proxy votes—the Opposition Whip, too—yet lots and lots of people cannot take part in the debate. If anything, it should be the other way around.
I want to come specifically to the Government motion and why I have a problem with it, as it is worded. First of all, it says we must be
“certified by a medical practitioner”.
Frankly, I think medical practitioners have better things to do at the moment than to be signing people off as “clinically extremely vulnerable”. Secondly, the idea that we should have to present some kind of certificate—I do not know in what form—presumably to you, Mr Speaker, to prove that somebody has been certified as clinical extremely vulnerable by a medical practitioner, puts you in an invidious position, because you have then to decide. Effectively, you become the doctor of the House, deciding whether people are or are not clinically extremely vulnerable. I do not have any problem with all those people who are clinically extremely vulnerable taking part in debates. I think they should have been allowed to do so for some time already. I am not upset about saying that I have had several letters from the Secretary of State for Health and Social Care telling me that I should be shielding—I am not sure whether this is his way of trying to prevent me from taking part in debates. He is not directly addressing this to me—as far as he knows, it has gone out to 300,000 people, or whatever —but the truth is that my doctor says that I am not clinically extremely vulnerable and there is no need for me to shield, not least because I completed my treatment for my cancer back in February. I just think that this is an inappropriate way of us dealing with Members.
The second point is that there are many people who have responsibilities for other people in their households for all sorts of different reasons, as many and as various as the stars in the sky, no doubt. I simply think that it is invidious, therefore, to draw the line in one particular place. I say to the hon. Member for The Cotswolds (Sir Geoffrey Clifton-Brown)—he knows I have enormous respect for him—that, on this occasion, I just think that it would be perfectly simple for him to vote for the amendment and then we would be able to get both the right hon. Member for Chesham and Amersham (Dame Cheryl Gillan) and the hon. Member for Basildon and Billericay (Mr Baron) able to participate in debates.
Sir Geoffrey Clifton-Brown
I am grateful to the hon. Member, who I also have a lot of respect for. I say to him gently again that if he withdrew his amendment tonight and let the motion go through as the Government have tabled it, at least the most clinically extremely vulnerable would be able to participate—they have not been able to participate since March—and then we could have his battle with the Government on another day. We have had two hours to debate this subject; it will fall at 7 o’clock.
Chris Bryant
I sympathise with the argument. Indeed, the right hon. Member for Chesham and Amersham has expressed that argument to me. The problem is that the only people who have responsibility for the way we do our business this evening are the Government. The only people who can grant us time to have a row on another day and allow other people are the Government. So far, what we have seen over the last two weeks is that they are passionately, adamantinely opposed to allowing a further extension of people, so the only moment at which we can possibly insist is this moment.
I have heard the argument, “Don’t let the perfect be the enemy of the good”—I have heard it so many times in my life and sometimes I have even made it myself. I made it myself, oddly, on the issue of gay marriage, because I said to Members in my party, “Let’s just go with having civil partnerships, because maybe the country won’t wear gay marriage.” Lots of people, quite rightly, metaphorically slapped me in the face and said, “You’re an idiot. You simply don’t know where history is going.” So I say to hon. Members tonight: the perfect is within your grasp. Vote for the amendment and the whole motion will go through as amended, and we will be happy. The Government could say now, having heard so many Conservative colleagues and others in the House say that they would like to take part in debates, that they are going to accept the amendment.
Chris Bryant
If my hon. Friend will allow me, I just want to deal with the specific issue of the Government’s argument.
Some Members rightly say, “MPs shouldn’t treat themselves any differently from the rest of the country.” I 100%, wholeheartedly agree. All too often, we adopt an exceptionalist position for Parliament, which I think our voters and our constituents do not understand or accept, but I think that on this particular issue, the Government have simply got it wrong and do not understand their own rules.
The Leader of the House said last week that the rule in the country was, if you can, go to work. That is not the Government’s advice. It was not last week and it is not this week. As the Prime Minister categorically said yesterday, the Government’s rule says specifically:
“To help contain the virus, everyone who can work effectively from home should do so.”
Everyone who can do so should do so. The Prime Minister reiterated yesterday that when the present lockdown in England is completed, even in tier 1, the rule will be work from home if you can. In addition, the Government rules specify—this is in relation to employers, so this is the responsibility of the whole House:
“COVID-19 is a public health emergency. Everyone needs to assess and manage the risks of COVID-19, and in particular businesses should consider the risks to their workers and visitors. As an employer, you also have a legal responsibility to protect workers and others from risk to their health and safety. This means you need to think about the risks they face and do everything reasonably practicable to minimise them”.
The House can do something “reasonably practicable”, and that is to allow a significant number of Members to take part in debates remotely, because they are clinically extremely vulnerable. An additional number, which I believe to be a smaller one, could take part remotely for a public health reason in their own family or community.
I will make another point to the Government. I have felt a sense of deep frustration all year. I sometimes worry that the Government think that they are a Government of England, not a Government of the United Kingdom. I will lose some people in the Opposition now, but I am a passionate Unionist. I want the Union to hold together. As a Welsh MP, it has constantly been difficult this year to explain differences between sets of arrangements in Wales, Scotland, England and all the rest of it. Broadcasters have been particularly bad at explaining them, but the truth is that on this specific issue of whether people should work from home, the rules vary at different points in Scotland, England, Wales and Northern Ireland.
Chris Bryant
I will give way—as long as the hon. Gentleman promises that he will be a Unionist.
Patrick Grady
The point is exactly as the hon. Gentleman makes it, because the Government continue to put a rocket up the case for independence by refusing to accommodate the requirements of all Members of Parliament for Scotland. We are specifically exempt from legislation that now prevents people from Scotland from travelling to England. We have to be happy to be specifically exempt from that because the Leader of the House is intransigent.
Chris Bryant
Obviously I do not go quite as far as that, but when we had the firebreak in Wales—the Labour Government in Wales have dealt with all of this much better, delivering a clearer message all the time, but that is by the by—some of my constituents said to me strongly that they did not want me to come to Parliament, because they thought it would be inappropriate for me to do so as they were not allowed to travel. I make no judgment—some MPs felt they had to come, some felt that they did not, and all the rest of it—but the truth of the matter is that there are different rules in different parts of the country, and there will be different rules in different parts of England in the forthcoming weeks. It would seem to make far more sense, on an equality basis, to allow everyone to participate on an equal basis.
The Leader of the House denies this—I am sorry to be so obsessed with the Leader of the House, but I was looking forward to a long speech and we have barely had a word from him today, which is a terrible disappointment to us all—but on occasion he has intimated that we cannot really do our job as an MP unless we are here. My experience is that, of all my 19 years as a Member, this has been the toughest year as an MP in terms of the understandable demand from constituents. Most arrives by email, not from people physically coming through the door—several Members have mentioned that they have not held surgeries in person, but have been doing them online. On social media, Facebook in particular, I have been dealing with many thousands of cases every week. Some questions are not right—such as, “Is Lidl open?”, or, “How much are nappies in Sainsbury’s?”, neither of which I knew the answer to, but in a way, it has been a good thing for Parliament that many MPs have had engagement with their constituents that they never had in the previous year.
It is tough, because there is no point going on holiday this year as an MP, because frankly, at all hours of the day, we have been dealing endlessly with requests from constituents. A lot of the job we can do perfectly well from our living room, back study, outhouse or stable, depending on how grand or ungrand the house is.
Mr Kevan Jones
An example of that was this weekend. The annual NATO Parliamentary Assembly took place, involving individual parliamentarians from NATO countries, including the United States and all across Europe. It was all done virtually, and I was even chairing meetings on Saturday afternoon.
Chris Bryant
The Parliamentary Assembly of the Council of Europe and all sorts of organisations have been doing this perfectly well, fully engaging all their members and enabling them to take part. Members might say that it is more difficult for people to travel, but sometimes some Members in the House forget that the travel is as risky as the business of actually physically being in Parliament. Mr Speaker, you and all the staff in the building have done a phenomenal job in making this place as covid-secure as possible.
Sir Geoffrey Clifton-Brown (The Cotswolds) (Con)
On a point of order, Mr Speaker. Can you advise the House that, if this debate goes up to 7 o’clock, the motion will fall? Would it therefore not be prudent of the House to cease this debate now so that at least we can have a vote and thus protect those Members who are extremely clinically vulnerable?
Mr Speaker
I think everybody in here knows exactly what the outcome is of what is going on. I do not think that we need to reiterate the obvious.
Chris Bryant
I am grateful for your guidance, Mr Speaker, but let me make the point clear. I am moving the amendment in the names of the hon. Member for Basildon and Billericay and myself.
It is worth bearing in mind what Members are not able to take part in. I have heard very moving and important speeches by Conservative Members, saying that this year has seen a phenomenal suspension of liberty in this country—extraordinary. The Coronavirus Act 2020 has taken power away from individuals to live their lives as they want more than any other piece of legislation in our history. We subscribed to that because we believed that it was necessary. The Government insisted that they should require only a single vote every six months on a 90-minute debate, but the Members whom we are talking about are not able to take part in those 90-minute debates—to be honest, not many other people are able to take part in those 90-minute debates either.
If we look at the secondary legislation, we will see that, during this year, there have been 297 coronavirus statutory instruments, using powers in 106 Acts of Parliament. Why should none of the Members whom we are talking about be able to take part in any of that secondary legislation when it is depriving people of their liberty? More importantly, it is not about the Member; it is about the community that they represent—their constituency. Why should they be barred, for instance, from expressing a view about the 10 o’clock curfew in pubs, or whether their constituency should be in tier 1, tier 2 or tier 3? They are not able to take part in ten-minute rule Bills. They are not able to make points of order, which must be a terribly depressing thing for all of them—how can you live without making points of order? Ironically enough, they are able to table amendments, but they are not able then to speak to them. That is the irony of where we are at tonight. The hon. Member for Basildon and Billericay can table an amendment, but he is not able to take part in this debate because of the way that things have been structured.
I say to all hon. Members, first of all, I do not buy this argument about the perfect being the enemy of the good. Earlier today, I understand that the Government Whips tried to strong-arm the Opposition, saying, “Well, you’ll never get what you want. We’ll pull the motion.” But the Leader of the House said that he would enable the House to resolve this. The proper way to resolve this is to have a proper motion on the Order Paper when all Members know that the debate is coming and we can consider the thing properly.
Secondly, I believe that all MPs are equal—the good, the bad, the ugly. All of them are equal. It is a really important principle.
Chris Bryant
Oh. Anyway, the point is that it is such a historic principle that every MP is treated equally that it is a terrible shame that we have abandoned it this year just because there is a pandemic. I do not believe that House business should ever be whipped. I think it is wholly inappropriate to do that, and I think that there has been a tendency in the past year for the Whips to interfere. Sorry, I have just seen my Chief Whip—everything that he has done has been absolutely perfect. On a serious note, I just think that more of our business should be done without the Whips’ engagement, because sometimes that would mean that it was less cantankerous.
I especially object to the idea that large numbers of proxies should be used in a vote, unless the person who is delivering those proxies has asked each and every individual Member—every single one—how they intended to vote. Let me just say to Members who would even consider the idea of voting against the amendment, which I guess is the argument that many of them are advancing—
The Leader of the House of Commons (Mr Jacob Rees-Mogg)
On a point of order, Mr Speaker. Tomorrow’s business will now include a motion to approve a money resolution relating to the Prisons (Substance Testing) Bill, followed by a motion relating to the appointment of members to the Independent Expert Panel, followed by a motion relating to the Committee on Standards’ 11th report of Session 2019-21. These were the motions that were not brought forward today to allow two hours for the very important debate that has sadly just expired.
Mr Speaker
I do not really want to get into what we have already discussed. I want to suspend the House so that we can move on. It would be better if we did not have another point of order because I am not going to open up or extend the debate, but if it is very relevant, I will hear it.
Mr Speaker
I think we have—[Interruption.] Order. Let us calm down.
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 going to suspend the House for three minutes.
Business without Debate
HMP Frankland: Covid-19
(4 years ago)
Commons ChamberRead Full debate Read Hansard Text Read Debate Ministerial Extracts
Mary Kelly Foy (City of Durham) (Lab)
I thank Mr Speaker for granting this important Adjournment debate and I am grateful to the Minister of State, Ministry of Justice, the hon. and learned Member for South East Cambridgeshire (Lucy Frazer), for her call this morning in advance of this debate.
When society was shut down in March, millions of workers were told to work from the safety of their home to protect them from the virus. However, for the prison officers and staff at HMP Frankland and the rest of our nation’s prisons, that was obviously not possible. Instead, they went into work because it was crucial that prisons remained operational in order to protect the welfare of prisoners and the broader public. In doing so, prison staff, like all frontline key workers, unquestionably put their health at risk, and their bravery in doing their job should be commended.
Liz Twist (Blaydon) (Lab)
Does my hon. Friend agree not only that prison officers are to be commended for their dedication but that it is incumbent on their employers to ensure that the risks of covid-19, especially for those in the vulnerable group, are properly assessed?
Mary Kelly Foy
That is of course extremely important; it is one of the issues that I shall outline in this debate.
The selflessness of prison staff and their commitment to their work brings me to the purpose of this debate. In recent weeks, HMP Frankland has experienced an alarming rise in the number of covid-19 infections. At the peak of the outbreak, around 66 prisoners out of a prison population of 850 were confirmed as covid-19 positive, meaning that around 8% of prisoners were infected. In addition, at the peak around 220 staff were off work, with 73 operational staff covid-19 positive.
Mr Kevan Jones (North Durham) (Lab)
I congratulate my hon. Friend and constituency neighbour on securing this debate. I have a lot of constituents who work in Durham, Low Newton and Frankland prisons, and I pay tribute to the hard work they have done. Does my hon. Friend agree that this is not just about the operational staff? I have had a few cases in which the Prison Service has taken quite a rigid attitude towards those who are caring for vulnerable people at home and not been flexible in its approach to some of those cases.
Mary Kelly Foy
My right hon. Friend is correct. My discussions with the prison governor have shown how dedicated the prison is not just to the operational staff but all the staff and prisoners and the wider prison community.
In total, given the covid cases and the numbers isolating, more than 20% of all staff employed by the prison were off work at the same time. It is clear that the number of infections at Frankland reached an alarming level, especially given what we know about the ease and speed with which the virus spreads. It is therefore not surprising that both Public Health England and the wider prison outbreak control team recommended that HMP Frankland moved from stage 4 restrictions to the most severe stage 5 restrictions, in what would have been, in effect, a complete lockdown of the prison.
The recommendation was supported by the Prison Officers Association, which is extremely concerned for the welfare of prison staff and prisoners, because of the real fear that the virus was out of control in the prison. However, even though there was strong support for stage 5 restrictions from Public Health England, the outbreak control team and the POA, the gold command at HMP Frankland rejected the recommendation and instead reduced the number of prisoners allowed to exercise at any one time and the frequency of exercise; mandated mask wearing; and increased testing. This compromise was then accepted by the outbreak control team.
I recognise the pressures that the prison leadership is under, as well as the need to balance staff and prisoner safety with prisoners’ human rights, but I am concerned that the gold command seemingly rejected the initial advice of public health professionals. Does the Minister agree that local committee concerns should not be overruled by gold commands without being discussed at a national level first, especially when supported by Public Health England?
At HMP Frankland, I am happy to say that there is an extremely open and productive relationship between the Prison Officers Association and the prison’s leadership, and that this includes daily meetings and the sharing of Public Health England advice to the outbreak control team with POA representatives. However, as I understand it, while Frankland follows best practice on this, prison governors are under no obligation to share advice and recommendations with the POA. As the union is the representative of staff within prisons, this is clearly not right. So does the Minister agree that gold commands should discuss and divulge all Public Health England advice to and with the Prison Officers Association as the representatives of prison staff?
The infection levels among staff at HMP Frankland posed two serious problems. The first is with regards to staffing levels as a result of covid-19-related absences. It is no exaggeration to say that the staffing cover was paper thin due to these absences. HMP Frankland is a high-security prison, home to some of the most dangerous prisoners in the country. In such an institution, under-staffing poses an unacceptable risk to staff at work, to the protections offered to prisoners and to the general running of the facility. While staffing shortages have not, at this stage, reached a dangerous level at Frankland, I think we can all agree that genuine threats to staffing levels at any prison must always be taken seriously.
The second issue is the threat the virus poses to the health of staff and prisoners. I am aware that Frankland is a secure environment in which there are already restrictions on prisoners’ activities and movement, which can help slow down the spread of the virus. I also appreciate that additional measures were introduced by gold command in an effort to avoid a move from stage 4 restrictions to stage 5. It is positive news that these measures appear to have had some success, with the number of staff off due to covid-19 dropping from 220 to 112, while the number of prisoners infected or isolating has dropped significantly. This is a welcome improvement, albeit one that will need to be monitored closely as restrictions are eased in wider society.
However, although the decisions to increase stage 4 restrictions in order to avoid stage 5 by HMP Frankland gold command may have lowered the numbers of staff and prisoners who have had to isolate, it is arguable that a short-term move to stage 5 would have been a lower risk and would have better protected those in the prison, especially as this was the initial advice of the outbreak control team. I know that even temporary stage 5 restrictions would have been exceptionally tough for prisoners, especially for their mental health. However, I want to be clear that the staff at Frankland are concerned about more than just their own welfare and that of their families; they are also concerned about prisoner safety. No prison officer wants a total lockdown unless it was completely necessary, as they know the impact that this would have upon prisoners. Yet, while the effects of a lockdown would have been harsh, it was arguably necessary to best keep prisoners safe from covid.
I also recognise the argument and understand the concerns that stage 5 restrictions could lead to prisoner dissent at a level that would pose a different sort of threat to staff. However, there are a number of reasons why I do not believe that this occasion on its own was an adequate reason to avoid a stage 5 lockdown due to covid-19. First, there is the fact that many prisoners are just as afraid of the risk of infection as staff are, and that they would understand the need for stage 5 restrictions if it was needed to protect them from a major covid-19 outbreak.
Secondly, there is the fact that, under stage 4 restrictions, any prisoner who must isolate as a result of possible covid-19 exposure is losing out on freedoms that other prisoners have, through no fault of their own. As a result of this, there is potentially an incentive for prisoners to not report covid-19 symptoms, so that they do not lose their access to exercise, showers and phone calls. If every prisoner is locked down under the same restrictions for a short period to combat a major infection spike, that potential is reduced.
Finally, there is the argument that a total lockdown could inspire some prisoners to act disruptively, putting the physical safety of staff at risk in a different way. While I know that there will always be a balance between managing the risk of prisoner disruption with the threat from the virus, it is vital that prisoner behaviour does not dictate the decisions taken to protect prisoners’ welfare, as well as the health and safety of staff. Does the Minister agree that the health and safety of staff should not be ignored in favour of prisoner appeasement?
It also strikes me that many of the negative implications of stage 5 restrictions could be resolved if prisoner welfare in general was improved. An example of that at HMP Frankland is the lack of telephone access in cells in comparison with other prisons. Does the Minister agree that telephones in cells would mitigate some of the impact of covid-19 restrictions on prisoners? Will she update the House on when HMP Frankland can expect to have such facilities?
The final issue I would like to raise is the treatment of prisoners in relation to wider society. While I understand that the leadership at Frankland took the decision to prohibit the use of gym equipment, I have also heard that that is not the case in all prisons in England. At a time when gyms have been closed nationwide due to the Government’s position that they are not safe to be open, it seems bizarre that gym facilities at some prisons have remained open. Will the Minister confirm that she believes that coronavirus restrictions in prisons should mirror those in wider society?
I want to praise the dialogue and the relationship between the governors at HMP Frankland and the POA representatives at the prison. They might not agree on every issue, but the strength of their working relationship has been stressed to me. In my opinion, it offers a great example to other institutions and employers across the country.
While the situation at Frankland is, thankfully, improving, it is a reminder that no matter how well an institution responds to covid-19, there is always room for improvement and lessons to be learned. Above all, we must recognise that there is a human element to these situations and that we cannot just look at numbers alone, alarming as they were. Prison officers work in a job where social distancing is often impossible and where the people they work with are not always compliant. That places an incredible level of stress on staff.
The prison staff and many of the prisoners at Frankland are afraid of the virus, as they are at every prison. Just like everyone else, they fear getting ill and the staff are scared of bringing the virus home to their families and to their communities. No one should have to work or live in an environment that is not safe. While prisons must stay open, no matter the circumstances, the way in which they operate can be altered to keep people safe and to mitigate the risks to staff and prisoners.
I am grateful to the Minister for her time and to right hon. and hon. Members for their interventions. I hope that important lessons can be learned from this situation.
The Minister of State, Ministry of Justice (Lucy Frazer)
I thank the hon. Member for City of Durham (Mary Kelly Foy) for securing this important debate this evening. As she started her remarks, she said that staff have done so much on the frontline in our prisons across the country. I start by paying tribute to that work and recognising the important work that they have done in our prisons, together with PHE and the NHS. They are all working in extremely challenging circumstances.
I will start by explaining the general approach that we are taking in prisons to manage covid and then address the specific situation in Frankland against that background. I do that because it is important to understand the context before considering the particular measures taken in a particular prison.
From the outset of the pandemic, the safety of our staff and those in our care has been paramount. We have at all times been conscious of the potential for the virus to spread quickly in prisons, which are closed environments, which could lead to significant deaths. Indeed, in March, at the beginning of the outbreak, PHE advised us that we could expect 2,500 to 3,500 deaths in our prisons if we took no action.
When the first wave hit, we took decisive action early and changed how we delivered our services. We implemented significant restrictions in prisons to support social distancing, reduce physical contact between staff and prisoners and minimise movement between prisons. We stopped social visits and transfers.
To protect the most vulnerable, we quickly implemented our compartmentalisation strategy, which quarantines new arrivals, isolates the sick and shields the vulnerable. We brought in mitigations to cover staff absences and provided extra support to prisoners facing restricted regimes as well as those being released from custody during this challenging time.
We also recognised that the lockdown had an effect on the mental health of those in our care who were subject to the restricted regimes. We thought about ways in which we could continue to allow them to have contact with their family. We rapidly deployed video calling into 50 prisons within weeks. That helped maintain family contact for prisoners when face-to-face visits were not possible.
That robust response by Her Majesty’s Prison and Probation Service, working extremely closely with PHE, meant that we limited the number of deaths in custody. Sadly, 24 prisoners died of covid-related causes during the first wave. Although that is considerably less than the thousands of deaths that PHE initially modelled back in March, it does not detract from the loss experienced by the families of those individuals who passed away. I offer my sincere condolences to their loved ones.
In the 12 months to September 2020, 176 prisoners died of natural causes, including covid. That is only six more than in the previous 12 months. Each life lost is a tragedy and that is why we are doing everything to manage potential outbreaks of the virus across the prison estate in the second wave. However, we must also recognise that, given the length of time since the virus began, we now need to allow prisoners more flexibility in their regimes.
We recognise that the burden of covid-19 goes beyond the risk of infection. We are alive to the risk that anxieties about covid-19 and the regime restrictions required for infection control may exacerbate prisoners’ mental health needs. We take that extremely seriously.
We are now thankfully better prepared than we were in March to respond to the challenge and therefore some flexibility in regime is now possible. We are continuing with all the measures we put in place in March, but in addition, we have more effective measures from wave one. For example, we now have greater capacity to test prisoners and staff for the virus. We are implementing the weekly testing of staff and that of prisoners on reception and transfer. That is an essential tool to help identify outbreaks early, reduce transmission and bring outbreaks under control as swiftly as possible.
Our aim is to balance the risk of infection while managing prisoners’ wellbeing. To do that, we need to run the fullest regimes possible consistent with infection control. That is why we have given our governors the flexibility to react to the local situation, acting on PHE advice. We published our national framework in June. That sets out how we will take decisions about restrictions in prisons. It allows prisons to move between different stages of regime delivery according to their local circumstances.
We eased restrictions in prisons over the summer, but we knew that in some cases we would need to reimpose them temporarily as the risk changed or as part of our response to outbreaks. Although our interventions reduced the likelihood and impact of covid-19 spreading in custody, we realise that we cannot reduce that risk to zero. Prisons cannot and should not be cut off from the community. If the number of cases in the community rises, the likelihood of an outbreak in the local prison will also inevitably rise. We are therefore ready to intervene quickly in response to suspected or confirmed cases among staff and prisoners, and to provide further support. Our success in closing outbreaks in prisons in both the first wave and the second wave shows that our approach is effective.
Having outlined our national response, I would like to turn to the situation at HMP Frankland. I very much welcome the conversation I had with the hon. Member for City of Durham earlier today to understand the concerns that she raised. I have also had an opportunity to speak to the governor at Frankland. I thank him and his staff, and all those working in prisons, for all their efforts in this challenging period.
On 13 October, an outbreak was declared at the prison after members of staff developed symptoms and tested positive for covid-19. As the hon. Member mentioned, Her Majesty’s Prison and Probation Service, PHE and the NHS took immediate action and a multi-agency outbreak control team was stood up to manage the response. In response to that, affected areas of the prison were quarantined, contact within the prison was reduced to a minimum and social visits were suspended. Cleaning practices across the prison were enhanced and all staff and prisoners are now wearing face coverings.
A mobile testing unit was deployed to the site and contact tracing carried out to identify close contacts needing to isolate. That mobile testing has now been replaced by regular on-site testing within the prison itself. Staff are being deployed in groups to assigned wings of the prison to minimise the chance of cross-infection. Prisoners are grouped in bubbles for access to essential services such as showers, phones and medication.
As I set out earlier, we have planned for outbreaks such as the one in Frankland. Although prisons are, by their nature, complex and high-risk settings for covid, I have every confidence in the range of measures that we have in place to contain outbreaks. The governor of the prison has told me that the measures he is taking are having an impact, but of course we will continue to monitor the situation closely.
I would like to respond to some of the particular concerns that the hon. Member raised. She mentioned that the regime should go to level 5. Frankland is currently operating at the most restrictive measure within the framework that is reasonable in the circumstances. We cannot take away basic dignity—basic decency—for the men. It would be difficult to take away a shower and some time in the open air. Indeed, as the governor said to me earlier today, if we did so, we would not only put the mental health of the men at risk, but we would heighten tension in the prison and put our staff at risk.
The hon. Member suggested that the POA and PHE support a different regime. I understand that PHE and the governor have agreed on a regime that both minimises the risk of infection and is operationally deliverable, and that continues to protect staff and prisoners from mental ill effects in the manner that I previously described.
I, too, would like to thank the POA for its constructive approach. At national level, throughout this crisis, HMPPS has worked very closely with the POA, and I thank it for all its constructive work in this period. As the hon. Member mentioned, there has been a meeting locally at HMP Frankland every morning with the POA to discuss management of the prison, and relations with the POA locally are good. I understand from the governor that the local POA did not raise any concerns about the management of covid at the prison.
The hon. Member raised the issue of staffing. She is absolutely right to highlight that there are staff absences at the prison. I have been reassured that the staff complement is sufficient, given the restrictive regime. As a high security prison, the staffing is higher than at other prisons. Of course, with a restricted regime it is also possible to operate with a lower number of staff. We keep all those measures under consideration, and have contingency measures in place across the country to ensure that additional staff and support can be provided where we have low staff complement.
The right hon. Member for North Durham (Mr Jones) mentioned the Prison Service’s approach to those who are shielding or who might have other issues. If there are any particular instances, I would be happy to take them up; it is very important that we look after our staff across the estate. There was also a question about in-cell telephony. We have installed that over the last 18 months in 48,000 cells. Frankland is on the programme, with the aim to roll out for 2021-22, subject to funding.
We will continue to act based on public health advice to protect our staff, prisoners and the NHS over the winter.
Question put and agreed to.
Draft Business and Planning Act 2020 (London Spatial Development Strategy) (Coronavirus) (Amendment) Regulations 2020
(4 years ago)
General CommitteesRead Full debate Read Hansard Text Read Debate Ministerial Extracts
The Chair
Before we begin, I would like to remind Members about the social distancing regulations; spaces available are already clearly marked and unmarked spaces must not be occupied. The usual convention of a Government side and an Opposition side is waived on this occasion, so Members may sit anywhere. Hansard colleagues would be grateful for any speaking notes to be sent to Hansardnotes@parliament.uk.
The Minister for Housing (Christopher Pincher)
I beg to move,
That the Committee has considered the draft Business and Planning Act 2020 (London Spatial Development Strategy) (Coronavirus) (Amendment) Regulations 2020.
It is a pleasure to serve under your chairmanship, Mr Hollobone. Although, as you say, Members may sit anywhere, I hope that all colleagues, no matter where they sit, will choose to support the regulations.
The regulations were laid in draft before the House on 2 November. If approved, they will simply roll forward the existing temporary disapplication of the legal requirements for the Mayor of London to keep his current spatial development strategy available for public inspection, and to provide a hard copy on request. Of course the strategy must be made available for inspection free of charge online.
The regulations are part of a wider package of Government measures to ensure that the English town planning system can continue to operate safely and efficiently during the pandemic. I can confirm for certainty that the plain English translation of the Mayor of London’s spatial development strategy is ‘the London plan’.
Parallel measures to the regulations are currently also in place across the country for other local plans and spatial development strategies, and it is our intention also to roll forward those measures. Regulations to implement them will be laid in Parliament shortly, but unlike the London plan provisions, they will be subjected to the negative procedure.
The present rules that authorities must follow when preparing plans, including consultation and the documents that must be made available at each stage, are set out in law. Earlier this year, in response to the coronavirus pandemic, and with the support of stakeholders, the Government amended those rules. In the interests of public safety and to ensure that plans can advance through the system and support local recovery, we made some changes. We temporarily removed requirements for authorities to make plans and other related documents available for inspection at council offices and other places, given that those offices are either closed or restricted in terms of right of entry, and the requirement for hard copies of the documents to be provided on request. Documents are still required to be made available on the authorities’ websites.
We also published guidance on how authorities should consider how they can continue to promote effective community engagement by means that are reasonably practicable, in particular to reach those sections of the community that do not have internet access. Because of the current level of uncertainty about the future spread of the coronavirus, and the extent of the associated restrictions, we propose to roll forward those measures by 12 months from the point that they expire on 31 December 2020. For the London plan that requires an amendment to the Business and Planning Act 2020, which in turn amends the relevant provisions of the Greater London Authority Act 1999.
My officials have discussed the current measures with the Local Government Association’s planning advisory service and the Planning Officers Society, and neither organisation has heard of any issues or concerns. It is important to stress that we hope that all authorities will be able to discharge those duties sooner than 31 December 2021. The changes do not prevent authorities from displaying documents in public buildings or sending out hard copies. We are simply continuing the existing disapplication of the formal requirements while the effects of the pandemic remain prevalent.
I believe that the Committee will understand that the changes are proportionate and pragmatic, and have been widely welcomed by the public and private sectors alike. I commend the regulations to the Committee.
Mike Amesbury (Weaver Vale) (Lab)
It is a pleasure to serve, once again, under your chairmanship, Mr Hollobone. I thank the Minister for his introductory remarks on this administrative statutory instrument. I am confident that the debate will not go on as long as a recent one on the Floor of the House.
As the Minister said, the regulations extend the duration of temporary provisions that were laid before the House earlier this year. They allow the Mayor of London to make copies of the spatial development strategy available at principal offices of the Greater London Authority. The provision of hard copies has become digital-centric in response to the ongoing pandemic, and that is entirely necessary.
There has been extensive consultation with stakeholders, and I share their welcome of the current provisions. I also welcome the reassurance that those who struggle with access to digital provision and the internet will have access to any relevant documentation. It is good that that access will be maintained.
The Opposition support the regulations, and I thank the Minister for his informative remarks.
Christopher Pincher
I am grateful to the Committee and to the hon. Member for Weaver Vale in particular for showing unity of purpose, and for the usual amity with which he presented the Opposition’s view. In this case their view dovetails and is in concord with the Government’s view. Therefore I commend the regulations to the Committee for approval.
Question put and agreed to.
Draft Immigration (Leave to Enter and Remain) (Amendment) (EU Exit) Order 2020
(4 years ago)
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The Parliamentary Under-Secretary of State for the Home Department (Kevin Foster)
I beg to move,
That the Committee has considered the draft Immigration (Leave to Enter and Remain) (Amendment) (EU Exit) Order 2020.
Diolch, Ms Rees. It is a pleasure to serve under your chairmanship for the first time.
The order was laid before Parliament in October, and is required to enable a number of changes arising from the end of free movement. First, it allows nationals of the European Union, the European economic area and Switzerland—for the sake of simplicity, I will refer to them from here on in collectively as ‘EEA’ citizens—who are aged 12 or above; using a biometric national passport rather than an EEA identity card; and seeking to enter the United Kingdom as a visitor under the immigration rules to be granted such leave by passing through an e-Gate, without routinely having to be interviewed by a Border Force officer about their intentions.
The order also allows EEA citizens, as well as other nationalities already eligible to use e-Gates, who are arriving in the UK under the new S2 healthcare visitor route to obtain six months leave to enter as an S2 healthcare visitor, either granted orally by a Border Force officer, or automatically by passing through an e-Gate in a similar way to standard visitors. The order allows those holding a service provider from Switzerland entry clearance to enter the UK on an unlimited number of occasions during its validity, receiving 90 days leave to enter upon each entry. It also defines the type of leave obtained by a person passing through an e-Gate, thus enabling Border Force officers to examine such persons and to cancel their leave where appropriate, for example if customs offending was identified at a later point in the airport.
Given the relatively simple and, I hope, the uncontroversial nature of the statutory instrument, I commend it to the Committee.
Holly Lynch (Halifax) (Lab)
I say with all sincerity that it is an absolute pleasure to see you in the Chair, Ms Rees, as we consider this important delegated legislation.
I am grateful to the Minister for outlining with such clarity the purpose of the SI. As we have heard, in essence the order allows those who would lose free movement rights to be able to continue to use e-Gates at the UK border. I followed last week’s debate on this matter in the Lords closely. The Opposition see the merits in the order—it would assist in managing queues and limit the disruption at the border when free movement ends—but we want to explore some of the detail further with the Minister.
We must have faith that the systems in place at the border are welcoming where appropriate but robust enough to identify if a person requires further investigation. The Minister will be aware of the letter sent by the chair of the National Police Chiefs’ Council, Martin Hewitt, to the Home Affairs Select Committee, dated 11 November. He referred to UK law enforcement co-operation with EU partners from 1 January 2021, and the possibility of any impact arising from the loss of the EU law enforcement and national security measures, known as LENS tools, as part of the Brexit process and the end of the transition period. Martin Hewitt was very clear that in the event of a non-negotiated outcome
‘the UK will lose access to all LENS tools and capabilities and will rely on contingencies. As an overarching principle, the loss of some or all of the tools will mean that, even with contingencies in place, the fallback systems will be slower, provide less visibility of information/intelligence and make joined up working with European partners more cumbersome’.
That is a pretty desperate warning.
I hope that the Minister can tell me that there will be a negotiated outcome, but in the absence of clarity about to which security databases we will have access post transition, it is highly likely that we will not have access to the data that we once had feeding into our systems and checks at the borders. With that in mind, can the Minister reassure me that e-Gates will be sufficient in identifying any potential threats at the border?
If I am not mistaken, based on the Minister’s recent appearance before the Home Affairs Select Committee, and having followed last week’s delegated legislation debate on law enforcement and security, we do not know whether we will have access to a range of LENS tools come 1 January.
The Opposition will not divide the Committee on today’s order, but we would welcome any updates from the Minister on the negotiations and, ultimately, we reserve judgment on the role of e-Gates until we have clarity about the overall package of measures to which the Border Force will have access. My hon. Friend the Member for St. Helens North (Conor McGinn), the shadow Security Minister, has written to his counterpart to seek urgent clarification on the issue, and I would be grateful if the Minister worked with his colleagues to ensure that we receive a response to my hon. Friend’s letter as soon as possible.
I note from the explanatory memorandum that the order forms part of the Government’s long-term plans to develop a new global border and immigration system that is digital by default. Such a move towards more digital checks will only work if we have access to the data to deliver that, and access to European databases will be crucial to achieving that.
EU citizens who are lawfully resident in the UK before 31 December 2020 will be protected by the Citizens’ Rights (Application Deadline and Temporary Protection) (EU Exit) Regulations 2020. The3million wrote to the Minister on 28 October to express its concerns that persons entering the UK after 31 December 2020, who are protected by grace period regulations but who have yet to make their application to the EU settlement scheme, will be inadvertently granted leave via the e-Gates for six months with the relevant restrictions attached, such as no right to work and no access to public funds. I would be grateful if the Minister clarified how that will work, and what measures will be in place to protect those covered by the grace period regulations? Should those protected by those regulations still be encouraged to pass through e-Gates? Would a person who has every right to work but has not yet had their application concluded under the settlement scheme encounter problems because it is recorded on their passports that they used the e-Gate and have six months leave as a visitor, and so prevented from working should they seek to do so?
I hope that the Minister understands the point that I am trying to make, and that he can offer clarity to me and the3million by explaining how those arrangements will work in practice.
Kevin Foster
I thank my shadow for her overall constructive approach and response.
EEA nationals who are eligible to apply to the EUSS will still be able to use their passport and their ID card at the border to enter, as they do today. Let me clear that going through an e-Gate would not invalidate their position in terms of making an EUSS application, if they are entitled to do so, before the end of the grace period. We have discussed in other forums the provisions for late applications.
Given the grace period and the deadline for EUSS application not being until 30 June, for the purposes of a right to work check, an employer can accept an EEA passport or identity card as proof of entitlement to work up to 30 June 2021. We do not intend to require retrospective status checks, but beyond 1 July 2021 we will expect employers not only to take that passport as a form of identity but to check EUSS status is in place, or other status under the points-based system for those who arrive after 1 January. After that date, EEA nationals will enter who are not entitled to the protections under the withdrawal agreement.
Where an employer carries out a compliance check for the right to work between 1 January 2021 and 30 June 2021, it would be a reasonable excuse for that employer to say that they saw an EEA passport, even if it later transpired that that person was not covered by the withdrawal agreement, and was not entitled to be here. Obviously, that would have consequences for them, having effectively made a dishonest declaration to their employer that they were covered. The employer, however, would have the reasonable excuse that they had done what they were required to do to comply with the necessary checks and requirements. There are also provisions in place for those who, for the sake of argument, are temporarily away from the United Kingdom on the night of 31 December to 1 January. I am conscious that that issue has been raised, but being away from home at 11.01 on the evening of 31 December will not see someone lose their entitlements if they have yet to apply to the EUSS. However, and as the shadow Minister has heard me say before, if any one has any concerns about their position next year, or beyond 30 June, we have a simple message for them: get your application into the EUSS today. It is free, simple to do and all that people are required to do is prove their identity, show evidence that they live in the United Kingdom, and declare any criminal records. Those who have been here for more than five years’ residence are granted settled status. I hope that answers the hon. Lady’s queries about EEA nationals and makes it clear that the system will not prejudice them. I think we would all agree that it would be rather odd to send people to the primary control point to have such discussions about entry.
The hon. Lady made a fair point about concerns relating to border security. She will be aware that a range of non-EEA nationals from our most trusted partners can already use the e-Gates. Those nationals include those from border five countries, such as Canada, Australia, and the United States, plus those from Japan, Singapore and South Korea. We have strong information-sharing arrangements with those countries. In fact, e-Gates have the advantage in identifying a slightly higher rate of incorrect documents than those spotted by physical examination. She will appreciate that I do not want to go into all the details about how our systems at the border identify dodgy documents, but e-Gates offer some good security advantages.
We check against a range of databases, and I know that attention has been paid to the Schengen Information System – SIS II. We made an offer to the EU to continue to be a part of that, subject to appropriate negotiation, but my advice is that the European Commission has stated its view that it is not legally possible for a non-Schengen third country to co-operate through SIS II. Switzerland has been cited as one such third country, but, unlike the UK, it is a Schengen country. We have maintained that offer, and regret the view expressed by the Commission. Some of the figures quoted in relation to SIS II also include UK law enforcement officer checks on the police national computer—something not inherently linked to information on border checks through SIS II. Some of the records also relate to documents rather than to people.
We are working on fall backs very similar to Interpol and information sharing. Clearly we will talk to colleagues because we have a mutual interest as neighbouring friendly democracies, and as we talk to New Zealand, Canada and other partners. That dialogue ensures that those who may present a threat, those whom we should not look to welcome to the United Kingdom, or those who fellow law enforcement agencies may wish to catch up with are automatically checked.
The type of information that is available when someone is at a primary control point and they swipe their passport is similar to the information derived from checks at e-Gates. I hope that reassures people. If there is a reason for someone to be interviewed, they will be flagged to a Border Force official, who will intervene. The system has the necessary resource and people should be reassured that the information garnered is the same at both a primary control point and at an e-Gate. If there is a query or warning, a Border Force official will intervene or make the necessary decision. We continue to work on capacity via existing bilateral agreements and Interpol. We understand that a number of counterparts in EU states look to circulate SIS II information via Interpol channels, although as the shadow Minister and her colleague, the shadow Security Minister are aware, there are issues about some elements of Interpol’s operation.
I should make it clear that we use SIS II for law enforcement and not, I understand, for immigration purposes, but we will obviously check security information at the border. That partly reflects the fact that we are not in Schengen.
We are continuing to negotiate with the EU. We hope to reach a mutually beneficial deal, but just as the EU has not taken no deal off the table, nor has the UK if the red lines set by the UK Government are crossed. We are having constructive discussions, however, and I am sure that the Prime Minister looks forward to updating the House on their progress when he is able to do so.
This has been a useful opportunity to consider some of the issues related to the SI, and I commend it to the Committee.
Question put and agreed to.
Ministerial Corrections
Education
(4 years ago)
Ministerial CorrectionsRead Full debate Read Hansard Text Read Debate Ministerial Extracts
Stuart Anderson (Wolverhampton South West) (Con)
What steps his Department is taking to support parents with childcare provision.
Vicky Ford
We have made an unprecedented investment in childcare of £3.6 billion this year. Childcare settings have been prioritised for reopening, childcare bubbles have reduced pressure on working parents, and from next Easter, disadvantaged children will be able to take part in our holiday activities and food programmes all across the country.
[Official Report, 23 November 2020, Vol. 684, c. 581.]
Letter of correction from the Under-Secretary of State for Education, the hon. Member for Chelmsford (Vicky Ford).
An error has been identified in the response I gave to my hon. Friend the Member for South Cambridgeshire.
The correct response should have been:
Stuart Anderson (Wolverhampton South West) (Con)
What steps his Department is taking to support parents with childcare provision.
Vicky Ford
We have made an unprecedented investment in childcare entitlements of £3.6 billion this year. Childcare settings have been prioritised for reopening, childcare bubbles have reduced pressure on working parents, and from next Easter, disadvantaged children will be able to take part in our holiday activities and food programmes all across the country.
National Funding Formula
The following is an extract from Education questions on 23 November.
Sir Edward Leigh
The headmaster of Caistor Grammar School has contacted me. This school produces, for kids from all sorts of backgrounds, some of the best results in the east midlands, but its buildings are in a shocking state. He has been refused a condition improvement grant, despite the fact that he has temporary and mobile classrooms that are classed by the Secretary of State’s Department as grade A. Will the Secretary of State assure me that, in his national funding formula negotiations, there is no discrimination against grammar schools? I often find that, while the education is wonderful, the buildings are peeling.
Gavin Williamson
I can absolutely assure my right hon. Friend that there will be no discrimination shown against grammar schools. I encourage him to be in contact with the school as the next round of condition improvement funding is due in January next year. I very much encourage that school, as well as other schools in his constituency, to apply. That gives me the opportunity to highlight the fact that we are spending more on the condition and improvement of our schools, with an extra half a billion pounds allocated to support schools and their rebuilding.
[Official Report, 23 November 2020, Vol. 684, c. 582.]
Letter of correction from the Secretary of State for Education, the right hon. Member for South Staffordshire (Gavin Williamson).
An error has been identified in the response I gave to my right hon. Friend the Member for Gainsborough (Sir Edward Leigh).
The correct response should have been:
Sir Edward Leigh
The headmaster of Caistor Grammar School has contacted me. This school produces, for kids from all sorts of backgrounds, some of the best results in the east midlands, but its buildings are in a shocking state. He has been refused a condition improvement grant, despite the fact that he has temporary and mobile classrooms that are classed by the Secretary of State’s Department as grade A. Will the Secretary of State assure me that, in his national funding formula negotiations, there is no discrimination against grammar schools? I often find that, while the education is wonderful, the buildings are peeling.
Gavin Williamson
I can absolutely assure my right hon. Friend that there will be no discrimination shown against grammar schools. I encourage him to be in contact with the school as the next round of condition improvement funding is open now. I very much encourage that school, as well as other schools in his constituency, to apply. That gives me the opportunity to highlight the fact that we are spending more on the condition and improvement of our schools, with an extra half a billion pounds allocated to support schools and their rebuilding.
Topical Questions
The following is an extract from Education topical questions on 23 November 2020.
Harriett Baldwin (West Worcestershire) (Con)
Gavin Williamson
I have some good news: on 14 January —after Christmas—there is going to be an opportunity for such schools to apply for the next round of condition improvement funding. There is more money in this pot than ever before due to the fact that we are spending more money on the improvement of our schools. Of course, I would always be very happy to sit down with my hon. Friend and discuss her educational priorities, including for the schools in her constituency.
[Official Report, 23 November 2020, Vol. 684, c. 599.]
Letter of correction from the Secretary of State for Education, the right hon. Member for South Staffordshire (Gavin Williamson).
An error has been identified in the response I gave to my hon. Friend the Member for West Worcestershire (Harriett Baldwin).
The correct response should have been:
Harriett Baldwin (West Worcestershire) (Con)
Gavin Williamson
I have some good news: there is currently an open round, in which schools can apply for condition improvement funding. There is more money in this pot than ever before due to the fact that we are spending more money on the improvement of our schools. Of course, I would always be very happy to sit down with my hon. Friend and discuss her educational priorities, including for the schools in her constituency.
Health and Social Care
(4 years ago)
Ministerial CorrectionsRead Full debate Read Hansard Text Read Debate Ministerial Extracts
Ms Dorries
… My hon. Friend the Member for Christchurch (Sir Christopher Chope) mentioned Sweden, but an article in The BMJ—a research study—concluded that Sweden and the US are the only two countries that are failing to reduce their numbers of deaths. In fact, it is far more accurate to compare Sweden with its Nordic neighbours. Sweden has 586 deaths per 1 million people, while its neighbour Norway has 279, so I am not quite sure why Sweden would be cited as a country of success.
[Official Report, 22 October 2020, Vol. 682, c. 1337.]
Letter of correction from the Minister for Patient Safety, Mental Health and Suicide Prevention, the hon. Member for Mid Bedfordshire (Ms Dorries).
An error has been identified in the response I gave to my hon. Friend the Member for Christchurch (Sir Christopher Chope).
The correct response should have been:
Ms Dorries
… My hon. Friend the Member for Christchurch (Sir Christopher Chope) mentioned Sweden, but a JAMA research letter referred to in the BMJ concluded that Sweden and the US were among eight countries that were failing to reduce their excess mortality numbers. In fact, it is far more accurate to compare Sweden with its Nordic neighbours. Sweden has 582.3 covid-related deaths per 1 million people, while its neighbour Norway has 52.5 covid-related deaths per 1 million people, so I am not quite sure why Sweden would be cited as a country of success.
National Security and Investment Bill (First sitting)
Tuesday 24th November 2020
(4 years ago)
Public Bill CommitteesRead 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 Amendment Paper: Public Bill Committee Amendments as at 24 November 2020 - (24 Nov 2020)
The Chair
Before we begin, I have a few preliminary points to make. Please switch electronic devices to silent. Tea and coffee are not allowed during sittings. Members can sit in any seat marked with a “please sit here” sign. That includes the side tables and the Public Gallery, although Hansard colleagues have priority on the side tables. Members sitting in the Public Gallery should stand by the microphone to my right.
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 evidence sessions. In view of the limited time available, I hope we can take these matters without too much debate. I call the Minister to move the programme motion agreed to yesterday by the Programming Sub-Committee.
The Parliamentary Under-Secretary of State for Business, Energy and Industrial Strategy (Nadhim Zahawi)
I beg to move, Date Time Witness Tuesday 24 November Until no later than 10.30 am The Royal United Services Institute Tuesday 24 November Until no later than 11.25 am Sir Richard Dearlove KCMG OBE Tuesday 24 November Until no later than 2.45 pm The Centre for International Studies, London School of Economics Tuesday 24 November Until no later than 3.30 pm Skadden, Arps, Slate, Meagher & Flom LLP Tuesday 24 November Until no later than 4.15 pm The Institute of Chartered Accountants in England and Wales Tuesday 24 November Until no later than 5 pm The Investment Association Thursday 26 November Until no later than 12.15 pm Slaughter and May Thursday 26 November Until no later than 1 pm Professor Ciaran Martin, the Blavatnik School of Government, University of Oxford Thursday 26 November Until no later than 2.30 pm Herbert Smith Freehills Thursday 26 November Until no later than 3.15 pm Simons Muirhead and Burton Thursday 26 November Until no later than 4 pm Chatham House Thursday 26 November Until no later than 4.30 pm PricewaterhouseCoopers
That—
(1) the Committee shall (in addition to its first meeting at 9.25am on Tuesday 24 November) meet—
(a) at 2.00 pm on Tuesday 24 November;
(b) at 11.30 am and 2.00 pm on Thursday 26 November;
(c) at 9.25 am and 2.00 pm on Tuesday 1 December;
(d) at 11.30 am and 2.00 pm on Thursday 3 December;
(e) at 11.30 am and 2.00 pm on Thursday 8 December;
(f) at 11.30 am and 2.00 pm on Thursday 10 December;
(g) at 9.25 am on Tuesday 15 December;
(2) the Committee shall hear oral evidence in accordance with the following Table:
TABLE
(3) proceedings on consideration of the Bill in Committee shall be taken in the following order: Clauses 1 to 10; Schedule 1; Clauses 11 to 58; Schedule 2; Clauses 59 to 66; 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 11.25 am on Tuesday 15 December.
It is a pleasure to serve under your chairmanship, Mr Twigg, and to serve with colleagues on this important Bill Committee.
Question put and agreed to.
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.—(Nadhim Zahawi.)
Resolved,
That, subject to the discretion of the Chair, any written evidence received by the Committee shall be reported to the House for publication.—(Nadhim Zahawi.)
The Chair
Copies of the written evidence that the Committee receives will be made available in the Committee Room. We will now sit in private to discuss lines of questioning.
The Chair
We will now hear oral evidence from the Royal United Services Institute. Before calling the first Member to ask a question, I remind all Members that questions should be limited to matters within the scope of the Bill and that we must stick to the timings in the programme motion. The Committee has agreed that for this sitting we have until 10.30 am. Will the witness introduce themselves for the record? [Interruption.] I am going to suspend the sitting for a few moments to see whether we can sort out the technical problems that we are having. This is not the first time; even the Prime Minister had problems yesterday.
The Chair
Q
Charles Parton: Thank you for inviting me. I am Charles Parton. I was, for 38 years, a diplomat, mostly with the UK, but for five years with the European delegation until the end of 2017. My area of work has largely been on China and, in the last decade, on the politics of China and the Communist party. I was an adviser to the Foreign Affairs Committee of the House of Commons on two of its recent China reports. I continue, since leaving diplomacy, to study what the Communist party is doing and the relevance of that to our UK policy.
Chi Onwurah (Newcastle upon Tyne Central) (Lab)
Q
Charles Parton: I would not profess to be an expert on individual cases, but I would like to make some general response to your excellent question. The first point to make is that the Government have not really been attending to the problem with the attention that they should, given the nature of the threat, particularly from the Chinese, although others may be relevant too. I do not think that there is the structure for actually assessing the degree of the threats; I think that 12 cases since 2002 is very few indeed, when you look worldwide at the Chinese programme for technology acquisition, both under and over the table. That in itself shows that there has been insufficient attention paid to the issue.
The delay in the Bill is also regrettable, because the threat has been fairly clear for some time. I would urge the Government, first, to research the question, which is the one you asked, of to what degree in the past have the Chinese in particular bought up technology companies, the acquisition of which was greatly against our interests? That work could and should be done.
I am an associate fellow at the Royal United Services Institute, which has a team that has been looking through technology at a number of questions, but it could quite easily divert that team to look at this question, which needs China expertise and the ability to search through a lot of open data, which it has. I am not a member of the Government, but I am not aware that the Government have done that sort of research to establish the full degree of the problem.
From the point of view of the threat—if you will excuse me, as this is the first question, for putting a little bit of context to it in terms of the China thing—it is undoubted that there is nothing wrong with investment. In fact, that is extremely good. We want as much investment and good relations with China as with everyone else, but we need to recognise that there is a values war going on. I have written an article about that, which came out in the Conservatives’ China Research Group report a week or so ago.
This is not a cold war, because China is very important to us for trade, investment and many global goods, and it is a science and technology power, but we should not underestimate the degree to which Xi Jinping and the Communist party intend, as Xi said to the first politburo meeting, to get the upper hand against western democracies. He talks about us being hostile forces and about a big struggle all the time. When you add that to his policy of civil-military fusion—using civil in the military context—and the fact that he has set up a party organisation specifically to push that forward, and the change in investment policy away from things such as property, football clubs and other things, very much towards benefitting China and its technology, we have to be a lot more careful than we have been in the past.
The first step for that is to do the research. I am not aware of a really good assessment of just how much technology has been bought, the targets and so on. Maybe the Government have one—I don’t know—but I do not think that they do.
Chi Onwurah
Q
I was particularly interested in the civil-military fusion, if you like, of China’s technology ambitions. Could you say a little more about how the Chinese see nascent technologies that are indirectly critical to downstream industries that supply our national security? I am trying to understand how, if you like, we differentiate between industrial strategy and technology to ensure that we have leading defence and national security capabilities. Is there a distinction that we can make there? Do we need to do further research, as you suggest? Do the Chinese make that kind of distinction? Do we need to address some elements of our industrial capability when we consider national security?
Charles Parton: We should widen this not only to companies, but to academia, if I could come back to your question from this angle. We have the phenomenon at the moment of Chinese companies, one might say, hiring our academics, in one way or other, to do scientific research on their behalf. Some of that is probably something that our defence establishment and security establishment would be pretty upset about if they were aware of it.
It is quite difficult to distinguish some of these and to know about them all, but a few weeks ago The Daily Telegraph did a story on, I think, Oxford University and Huawei’s commissioning of research. I think there were 17 projects. I looked at those, and I am not a technologist by any means, but some of them rang certain alarm bells. If you are researching, on behalf of the Chinese, drone technology, cryptography, gaits— Gait is very important for gait recognition. We have facial recognition and voice recognition, but in circumstances where people are wearing masks or there is bad weather, gait is an absolute identifier. Again, are these bad technologies? Well, there are perfectly good civilian uses for them, no doubt, but there also military and surveillance uses. I think we need to be very clear on what our academics, as well as our companies, are doing.
To give you another example, if you go on the website of one of the top Oxford mathematician professors, he has now retired and set up a company with a base in Shenzhen. He is an absolutely top mathematician and does the most abstruse things in cryptography. Should one of our top mathematicians be helping the Chinese in cryptography? Well, there are perfectly good and innocent uses of cryptography, I presume, for things such as banking and e-commerce, and there are perfectly not good uses of it, in military and surveillance and other things. I have no idea whether that is something we should be concerned about. On the face of it, it strikes me that we should be.
I think we need to broaden the scope—forgive me if this is outside the Committee’s scope; you are only looking at the Bill—because the whole question of defence of technology needs to be looked at, in terms of whether we are strengthening a hostile foreign power, but also let us not forget the reputation of British companies and universities. If you look at what is going on in Xinjiang, for instance, with the concentration camps there—activities that quite definitely meet the definition of crimes against humanity under article 7 of the International Criminal Court’s Rome statute, or article 2 of the UN genocide convention—should our companies and universities be helping with technologies that can be used to strengthen that surveillance and that repressive regime? What is the difference between that and South African apartheid or some of the other things that we have seen in the past? Increasingly, the excuse of, “Well, we didn’t really know what was going on,” has gone, and companies and academia will have to be much more careful of their reputation. I have slightly moved away from the nub of your question. Perhaps you could just push the tiller a bit and put but me back to the centre of it again.
Chi Onwurah
Q
Charles Parton: That is sort of way outside my technical expertise, but I would certainly say that one major criticism I have of the Bill is that you have to set up the right structure to be able to do that. I am not sure that the Bill’s putting everything in the hands of the Department for Business, Energy and Industrial Strategy and its Secretary of State is the right answer.
Let us take Huawei and the debate we had over the last couple of years, as well as the various flip-flops that have gone on. One might add flaps, as well as flip-flops, actually. There has been a big a division between the so-called economic and security Ministries. It is right that both have a say in the decision. Economic interests are very much at stake, but so are security interests. If you put everything into the hands of BEIS, which probably does not have the expertise on China—certainly not in the defence, security and surveillance realms, although not unnaturally, since its job is to encourage investment—you will perhaps find that the security and repression elements are not given sufficient weight, and more to the point, the perception will be that they are not given sufficient weight. We might therefore go back to this sort of business with Huawei, where there is a fight back and another fight back and so on.
What we actually need is an organisation that is made up of people on all sides of the debate and that has some real experts who actually understand what the technology means. One specific example I came across a year or so ago was a very interesting computer game. Fine. What is wrong with that? Well, I understand that it was then bought up by the Chinese and used to train fighter pilots. You cannot defend against everything, but you at least need some unbiased experts—a sort of, if I can use the words, Scientific Advisory Group for Emergencies—who would be there to advise, and then decisions would actually be accepted by all sides, not questioned.
On occasion, I am sure that questions would be put up to the National Security Council and the Prime Minister for decision if they were really important. However, the issue is often about very small companies with some very interesting technologies that have not been established. The Chinese are extremely efficient at hoovering around, finding them and buying them up early. I am not convinced that the structure and decision making of the whole process are right.
Nadhim Zahawi
Q
Charles Parton: I think what covid has done is expose the nature of the Chinese Communist party, in answer to your question. I hope that it has brought home to people the nature of the beast. Looking at what happened, China did not do so well to start with, and its people were pretty upset with it. China then used its external propaganda machine to right its domestic problem, pushing forward the line, “Look how badly the foreigners have done, and look how well we are helping the foreigners out of the mess,” while hiding the fact that it had allowed the virus to propagate so fast in the first place. To many people in democracies, that brought home the fact that the Communist party of China is prepared to use that against us.
Where the Chinese Communist party was unhappy with how countries were acting, it started to put them under pressure and made threats about the delivery of personal protective equipment or whatever. Australia is really taking it in the neck at the moment because it had the temerity to ask—perfectly reasonably—for an investigation of the origins of the virus, which is essential for scientific and preventive purposes. Look at the political pressure on Australia. There is absolutely no doubt that where the Communist party sees an opportunity to use whatever is going on at the moment, it will do so.
The question that I have continuously asked is this: to what degree is investment threatened by a country such as the UK, Australia or Canada standing up for its own interest? We are not actually attacking China, but we are saying, “Sorry, but we have our own interests and our own security. You wouldn’t allow the equivalent in your country, possibly rightly, and we are not allowing it here because we are defending our security, in this case.” To what degree is the tool of depriving someone of investment a real threat? I have urged in a number of papers that the Government look at that in dispassionate terms. The China-Britain Business Council recently put out a paper, but I would not describe it as dispassionate. That is for the Government to do. My own feeling is that the likely conclusion is that, on the whole, the threats are pretty hollow. Chinese investment is not done for charitable reasons.
Since 2017—the high point was 2016—China has cut back on investment. Beijing was getting pretty annoyed at the way money was seeping out not in line with its policies, but investment is now more tightly controlled and aimed at the acquisition of science and technology. To what degree are we vulnerable? This is not charity. Money is very cheap at the moment; it can be got at negative interest rates. It is not as though China is the sole source of money. It invests because it wants technology. Surely we have to look at that carefully and ask where is the mutual benefit. If it is mutually beneficial, fantastic, let us go ahead. Let us not be too brow-beaten by this thing—that if you do not do x or y, or if you do not take Huawei, we will hit your investment. I think, in practice, if you look at that and then look at some of the other threats that China has made over the years, including to your exports, all those have grown for all countries, although they had been in the diplomatic doghouse historically—certainly in the past; we will see about the future—but I think it is greatly exaggerated.
Nadhim Zahawi
I am grateful to you, Mr Parton. I do not want to hog the floor, as I am sure many colleagues want to ask questions. Thank you very much.
Stephen Kinnock (Aberavon) (Lab)
Q
Going back to your point about resourcing the investment security unit, can you give a bit more detail about what would be an ideal outcome from your point of view? Would it be that we need specificity in the Bill that key representatives and experts of the intelligence services, of the Ministry of Defence, of the diplomatic corps and of other agencies be formally named in the legislation, so we would have that reassurance that the body doing the screening had all the necessary breadth across the spectrum of both the economy and national security?
Charles Parton: That is a good question; it is not necessarily for me and I do not necessarily have the experience to lay down precisely how it works. For me, I think, first, that all those organisations you have mentioned—although others also on the economic side, such as the Treasury and BEIS—perhaps should be there to set the parameters of what needs to be referred. I think that, as a sort of preliminary filter, one would hope that there was an ability for most companies, and most universities as well, very quickly to put forward the deals or the pieces of work that they felt might be coming up against the parameters set by such a Government body.
For a quick decision, is the topic one that is suitable, or does it need a little more investigation? Should we be working with this organisation, or in some cases this particular Chinese academic or company, which may have links to the military or to the repressive regime? The experts, as it were, which means the SAGE-type committee, surely should be very quickly—companies and academics need to move quite quickly—making a preliminary estimation of whether this needs to be referred upwards to a Government Committee that wants to look at it in more detail.
I do agree with you that the range of interests needs to be representative if the decision is to be perceived by all sides as acceptable when it is eventually made.
Stephen Kinnock
Q
In the Japanese and German cases, they refer to national security including concepts of public order. I refer in particular to your comments about organisations out there in the marketplace, whether they are universities or businesses, needing to have clarity to know what needs to be referred and what does not. They need to know where the amber or red light is flashing, and where it is clearly a green light and not an issue. Would that be aided and facilitated if the Bill contained a definition of national security?
Charles Parton: It is a bit like defining terrorism. It is really quite difficult to be all encompassing. Sometimes, I am in sympathy with the Chinese legislation that adds at the bottom “and other offences” or “and other things”. I think it is quite difficult, even if people are convinced that they can effectively define that. It is not only national security; there is a question whether you are aiding crimes against humanity or the genocide that is going on in Xinjiang. I am using loaded terms there, but I think they are justified. There must be some mechanism for ensuring that those, too, are brought to bear, but I am not expert enough in legislation to be able to say, “Yes, we need a watertight definition of ‘national security’.”
Certainly, the Bill must convey to companies and academics the need to clear a range of topics. That will not be specific, but, at best, they must be encouraged to consult almost as a default, so that they are not caught out. The other question is, what happens if they don’t? What sort of sanctions are they under if they do not consult, when it is clearly something they should consult on, for reasons either of security or of repression and crimes against humanity?
Andrew Griffith (Arundel and South Downs) (Con)
Q
As a Committee considering this Bill, we will hear from a constituency that could sometimes trip over into Sinophobia, being against any form of engagement or trade with China. Looking at the economic development of that market and the opportunities that it presents, could you talk a bit about the non-risk-based categories, such as inert goods and household manufactured goods, which the Committee should draw a clear line around, and those categories that you have talked about, which are covered in the Bill and speak to a real national threat?
Charles Parton: Let me make the general point that I am sometimes accused of being anti-Chinese. I greatly resent that. I am anti-party, as anybody should be if they saw what it does in places like Xinjiang or Hong Kong. I am not anti-Chinese. I think the Chinese Communist party itself deliberately muddies the waters on that one and says, “You are anti-China,” when, actually, you are opposing the policies of the Chinese Communist party. That said, I began the session saying that we want investment from China, trade with China and good relations with China. China is a major player. This must not be a cold war. If America or China decides to pursue that, we must try to avoid it.
I always talk about the holy trinity of national security, UK interests and UK values. We should establish those with the Chinese and say, “Sorry, those are non-negotiable. Just as you sometimes come and say, ‘These are our core interests and we are not negotiating them,’ we have the right to do that too.” But beyond that, we want open trading relations and open investment relations. What is wrong with China buying London Taxis International? Nothing. If it wants to invest and that is mutually beneficial, great.
We want an open China as much as possible. We certainly want a much more level playing field than there is at the moment. China runs a series of negative lists and there is much on them, particularly in the area of services, which we would want opened up. We must press for that in conjunction with the Americans, the EU, Australia and all the other democracies that wish to trade with China. In many ways, that is in China’s interest. It is certainly in the interests of its people. A closed market, with China just relying on its own consumption—it is a big market—is not going to be good for China any more than it is good for us. I fully go along with that. I do not think we should be anti-China in any circumstances. That is, in a sense, racist. We should be anti-Communist party, or certain against its policies, but with the Chinese people, and in trading, we should maintain a perfectly normal relationship.
Matt Western (Warwick and Leamington) (Lab)
Q
Charles Parton: On the first question about academics, I am not sure whether this is about investment. I think that academics are in some ways a separate question, unless universities are setting up, as they do, companies, and are moving that way.
Matt Western
Q
Charles Parton: Where academia sets up a company, and that involves itself with China, yes, that should be under the purview of the Bill. There is a separate question about when Chinese companies hire or fund—whichever you like to say—UK academics to carry out a specific piece of research for them. Universities are working on that, and that is a very urgent question. Again, I think that a much stricter regime should be put in place to stop the seeping out of technologies that could be used in the military field or the repressive one. I am not convinced that that is there at the moment; I am sure it is not. That might be a separate question. It may or may not be one that requires parliamentary legislation—people who are experts on that can make up their mind—but some form of consultation with the Government, or perhaps a sanctions regime, needs to be put in place so that that does not happen.
On the question of intellectual property rights, China has a very rigorous campaign to get hold of our IP. Some of it is stolen through cyber, and I am sure our intelligence services and others are doing their best to combat that. I am not sure about the degree to which this Bill can act as a defence against Chinese abuse. It can certainly try to encourage companies to raise their own defences, but the UK has an organisation—the Centre for the Protection of National Infrastructure—that aims to put out that advice and help. I do not know whether it is strong enough in its actions and shield; that is outside my area of expertise. It is certainly there, but perhaps it, too, needs strengthening.
Nickie Aiken (Cities of London and Westminster) (Con)
Q
Charles Parton: I suspect that there is a limit as to how far down the line one can go, but where activity is still going on in the UK—that is to say, where UK individuals are still running that company in the UK on behalf of a friendly foreign country, and the company is later bought up—that should be covered by this Bill. Otherwise, you are absolutely right: you may find a company in Liechtenstein buying it; then the company gets bought by the Chinese, and the technology gets siphoned out. There has to be a defence against that.
If a company is bought by a friendly country and the technology is exported, and nothing is happening in the UK, then I cannot see how extraterritoriality would be applicable.
Simon Baynes (Clwyd South) (Con)
Q
I want to explore the extent to which the world—if I can describe it as one world—of academic consultants and private sector companies, to which you have referred, would agree with what you are saying. You refer to having a SAGE-like committee; is there a danger that, if you did have such a committee, it would actually have very divergent views?
I fully respect where you are coming from, but you made some quite hard-hitting comments earlier about crimes against humanity in the concentration camps, and questioning whether companies and academia should be involving themselves in aspects of China. You also referred to a top mathematician, who was formerly at Oxford University, helping China with cryptography.
I want to get a feel for the extent to which you think that your views are shared by academics, consultants and the private sector, and then feed that back into whether, if you did put together a SAGE-like committee—and I can see the sense in doing that—you might find it quite difficult to come to a consensus.
Finally, it must be quite difficult to judge exactly whether what is being developed—whether it be from an academic idea or from a corporate idea—will be helpful to the Chinese in a way that is detrimental to Britain, or is actually a perfectly sensible piece of research and development that could be of benefit to both countries.
Charles Parton: Can I take those three questions almost backwards, or certainly not in the order in which you have presented them? In terms of expertise within a SAGE-type community, those experts would not be making the political decision. They would be making the technical decision: “To what degree can these technologies be used in a military, as well as a civilian, context?” That is the advice that would be going up. It would then be for the Ministers on a committee to say, “Well, we judge that risk to be acceptable,” or “We do not.”
Of course, nothing is black and white in technology because, as the distinction between civil and military is increasingly eroded, it is quite difficult to know; there are many shades of grey here. A judgement has to be made on any particular technology—either “Sorry, we will have to rule that one out,” or “On this one, yes, there are some risks, and maybe we will come to regret it, but on balance, we will let that one through.”
On whether consultants, academics and others agree with my views on China and the nature of the regime, I think that depends, if you will excuse my saying so, on the degree to which they have studied China and looked at the issues. It is noticeable that those who read what the Chinese communist party says about itself tend very much to agree with what I say, or with the sort of views that I put out. Those who have other interests do not. Of course, there are some who I would say are captured, quite frankly, by the degrees of interference and other aspects that the Chinese United Front Work Department pushes.
There is a variety of opinion there, but I think that those who understand China and read what the party says—the party says an awful lot, actually, if you bother to read what it says; it is not a black box—are inclined very much to my views. Those views are: be careful, because it is not coming from the same angle as us, and has some very distinct and not very nice aspects to it. At the same time, it is a major economic power, a major science and technology power, and a major influence on the goods in the world, whether for health, development, peacekeeping or whatever, and we must get on with the country to the best of our ability. I don’t know if that answers your question fully; do come back.
Peter Grant (Glenrothes) (SNP)
Q
Mr Parton, the Bill looks primarily at direct investment by potentially hostile operators. Does it give sufficient protection against indirect control? For example, a company may be reliant on its bankers, who may or may not be based in a hostile territory, and who may rely on technology through a company such as Huawei; or a company’s ultimate owners and controlling party could be registered in an offshore tax haven, and it could be that nobody has any idea who actually owns that company. Does the Bill give sufficient protection against those kinds of threats through indirect influence and control?
Charles Parton: I am not a legal expert, but the Committee stage of the Bill needs to look deeply at that question. If there is any doubt as to who the ultimate owners are, that should be taken into account by whatever organisation makes the recommendation on whether a particular investment is acceptable. If we cannot follow through relatively easily back to the ultimate beneficial owners and users, that is a factor that needs to be weighed very heavily in the decision on allowing a particular, possibly sensitive, investment to go ahead.
Peter Grant
Q
Charles Parton: I have to say that that is outside my expertise, but I do think it is an extremely good and important question that could be researched relatively easily. Forgive me if I am pushing RUSI here, but I suspect that RUSI has the capability in one of its teams to do some data mining on that, and come up with an answer. It is a very important question, but I am not aware of any research, though there may be some, that goes deeply into that question. It is certainly one that should be followed up.
Andrew Bowie (West Aberdeenshire and Kincardine) (Con)
Q
Charles Parton: Again, I am not a legal expert, but it seems to set out the legal framework. It all very much depends on the structures and mechanisms, and the resourcing of them, that are set up to ensure whether the judgments about a particular company or a piece of academic research and the technology from them should be blocked or allowed through. I put it back to the Committee: if its detailed research, and the measures that go into the Bill, show that whatever organisation is set up is sufficient unto the job, and that the channels are there to ensure that all these small and sometimes obscure technologies are at least passed by it, that is a really important piece of work.
Andrew Bowie
Q
Charles Parton: I have not done comparative research on that, or done a paper on it. That is something that needs to be done by the Government. Perhaps they have done that. The impression that I get from discussions of this sort of question in the various fora that I mix in suggests that the Americans and Australians have taken a much more hard-hitting approach than we have. Again, it depends on what structure is set up by the British Government, and how it functions in line with the Bill. Forgive me for not giving you a full answer, but that is the sort of research that needs to be commissioned by the Government in order to make decisions on how to deal with that question.
James Wild (North West Norfolk) (Con)
Q
Charles Parton: The question of elite capture is very important and very topical. First, I have called for this in various papers that I have written. The Cobra committee that makes decisions on employment after political or civil service careers definitely needs strengthening. I am not sure of the degree to which work on that is going on; in fact, I do not think much is. Certainly neither the provisions, nor the exercise of those provisions, have been sufficiently rigorous. It is very much a question of lengthening the amount of time between leaving a particular post and taking up a job where, in some cases, you are laundering the reputations of some of these companies. If that period is too small and the criteria are too weak, there is a great risk of people, while still in office or still in post, saying to themselves, “I’d better not be too harsh on this, because in a couple of years’ time, I might be approaching these people, or they might approach me for a job.” That is pretty crude, I know, but it is perhaps easier to see in the case of a defence company. If you were in the MOD, say, and you had to make a decision, one hopes you would make it entirely in the national interest, rather than with a view to possible employment by whichever company might be bidding for a contract, but that is one area that needs strengthening.
The other area in all influence problems, of course, is that sunlight and transparency is the one weapon we have, but if a Minister, an ex-Minister or a top civil servant is running a consultancy company, and let us say Huawei is employing that company—I choose this example by sheer chance—that should be known. That should be declared, because if such people—who are still influential with their old colleagues, whether parliamentary, ministerial or civil service—are urging a certain line, as I have heard some urge, it may not be disinterested; in fact, it certainly is not in some cases. That needs to be made clear. Sorry, could you just repeat the second part of your question?
James Wild
Q
Charles Parton: Yes, but I think you have to be very happy and convinced that the Minister in charge is one whose future does not incline him or her to make a decision that is somewhat biased. It is not without precedent in the world, anyway, that some ex-Ministers have been under the influence of the Chinese Communist party for one reason or another, so you have to be quite careful about that, and it is a really important decision. That is why I would be more inclined to make sure it is very clear that it is not just within the purview of BEIS, because BEIS’s job is to push investment. That is perfectly fair, but there may be occasions—not now, but in the future—where people’s backgrounds, inclinations or futures incline them to be less than even in their judgment.
Stephen Kinnock
Q
Charles Parton: That is a very good question.
Chi Onwurah
Could I just add to that? That is an excellent point, but could you also say a little bit on how China responds to proposed takeovers that might implicate its national security, if those takeovers are allowed? How does it respond to that investment into its companies?
Charles Parton: Those are both good points. First of all, divide it into the state-owned sector and the private sector. In terms of the state-owned sector, the top executives of the big state-owned companies are appointed by the central organisation department of the party. That is the organisation that is, as Mr Kinnock has said, in charge of the nomenklatura: the top 3,000 to 4,000 party officials. Of course, a lot of state-owned companies are also owned at the provincial and lower levels, and there, too, the top executives are party members and beholden to the party. Let us not forget that most foreign investment by the Chinese is state owned, so it is not just a fair bet but a fair certainty that any state-owned enterprise investing is fully politically controlled.
When it comes to the private sector, Huawei has spent a large amount of its time insisting that it is a private company—I really do not care. And I do not really care that the national security law says that any individual or organisation must help the party or security organs when called upon. The brute fact is that, in the way the system is run in China, if the party tells you to do something, the only response from private business to an order is to say, “Certainly, Sir. How high do you want me to jump?” so this debate is entirely irrelevant. The party is now pushing committees into all private enterprises—foreign and local—and it would be a very unwise head of a private company who said, “No, Mr Xi Jinping. I don’t think so.” If nothing else has been shown by what has happened with Jack Ma, China’s second-richest person, and the Ant Group finance company in the last few weeks—there are, of course, financial risk reasons they might want to control Jack Ma’s Ant Group—it is, “Sorry, you are beholden to the Communist party.” That was a very fierce reminder of it.
In terms of this debate, I do not think we should be under any illusion that if a party says to a company about its technology or whatever, “Well okay, it’s all very well that you’ve got that, but we want it fed into our People’s Liberation Army organisations and science and technology system,” no company is going to say, “Oh no, that’s not right. We won’t do that.” For instance, when Huawei says, “If we were asked to do something against our commitments, in terms of what we do abroad, that would threaten security, we would not do that,” it is rubbish. They know that.
The Chair
I am afraid that brings us to the end of this part of the session. Mr Parton, I thank you on behalf of the Committee for your evidence and the clear, concise answers you gave. We must now move on to the next session. If Members want to take a comfort break for a couple of minutes, I am happy to do that.
The Chair
Q
Sir Richard Dearlove: I am Sir Richard Dearlove. I was in MI6 for 38 years. I was chief of the service from 1999 to 2004. Before that I was head of operations, and before that I was head of all the admin and personnel. In fact, I completed the building of the new headquarters and the move of the whole service into that. I retired in 2004 and became the Master of Pembroke College, Cambridge, where I was for 11 years. I am now chair of the board of trustees of the University of London and hold a number of other directorships and advisory roles. I still remain pretty heavily involved as a talking head on geopolitics and intelligence issues, and I have founded a small think tank, which is actually an educational charity in Cambridge called the Cambridge Security Initiative. That gives you in essence my colourful past.
Chi Onwurah
Q
Sir Richard Dearlove: Wow. That is a massive question. Bear in mind that a large part of my career related to the cold war. In that period, our main concern was the Soviet Union and the members of the Warsaw Pact. It was characteristic of that period that there were heavy controls, mainly exercised through NATO structures, to prevent strategic material from leaching, as it were, into the economies of the Warsaw pact. I will not go into all the mechanisms. Historically, one does not need to worry about those now, but it was very much an issue that was at the forefront of people’s minds during that period of the cold war. Bear in mind also—I think this is important in looking at the broader context of what you are interested in—that the Soviet Union had hugely sophisticated what’s called S and T operations: science and technology. A whole line of Soviet intelligence of the KGB was devoted to obtaining strategic material that would help the Soviet economy, particularly in the military industrial complex.
This is now in the public domain: in the mid-1980s, there was a major intelligence success, which, interestingly, was conducted by the French, but in which the UK had an important role. We completely dismantled, or learned, exactly what the Soviet Union and its allies were up to on a global basis. We knew before, but we did not know the detail to that extent, and what we learned was pretty shocking. That case has not been greatly publicised, but it was probably one of the most important intelligence cases of the cold war.
With the break-up of the Soviet Union and the disintegration of the Soviet empire, particularly the economic structures that bound the Warsaw pact countries together, in the West our attitudes towards those issues changed very significantly. There was a much more laissez-faire situation and, as countries broke away from the Soviet empire, an enthusiasm to trade with them without the same degree of control.
During that period, you had the emergence of China, which was still very much a regional power but with aspirations to become a global power. To short cut, we have now transferred to China the concerns we had about the Soviet Union and its allies, but the problem with China in some respects is much more serious than the problem with the Soviet Union, although that was bad enough. Charlie Parton, who was talking to you before, is an expert on China specifically. I am not, and my view is maybe more strategic, although I had a lot to do with China when I was head of MI6.
If you look back at the emergence of China as a regional power, from the very start—when Mao was still alive and was then succeeded by Deng Xiaoping—its intelligence community focused on China’s economic growth. It was not particularly interested in what we would see as strategic or political intelligence. There is a famous passage in Kissinger’s book on China in which he is talking to Mao and Mao says to him, “We’re not interested in your politics because we have our own ideological view of the world, and I don’t really care what our intelligence service reports about what’s going on in the west.” What he did not say, but what was quite clear because it became evident subsequently, particularly under Deng Xiaoping, was that the primary purpose of the Chinese intelligence machine outside China was to contribute to the economic rebuilding of China.
We in the West have been, over a longish period of time, pretty naive and had forgotten the fundamental dangers of having a close relationship with China. I am not anti-Chinese or a cold warrior. I understand—and this is the complexity that lies at the heart of this legislation—that our economies in the West are tied to China’s. They are intertwined in a manner that did not exist during the cold war between the United Kingdom and the Soviet Union. Of course there were economic links with the Soviets but essentially the relationship was one of separation. But that is not the case any longer. We are intimately engaged with the Chinese economy. Our enthusiasm––I am using “our” in the broadest sense of the West’s enthusiasm––to trade with China and to have a close relationship and to build that relationship is thoroughly understandable, but in the process we have let down our guard and we have been extremely laissez-faire, as it were, in our attitude towards the commercial threat from China.
I remember very well on one of my visits to the far east, when I was coming out of China through Hong Kong, talking to a British lawyer who had been head of a legal office in Shanghai for a long time. He said, “Richard, you have got to understand one thing about the Chinese attitude to us: they don’t understand win-win. All they understand is ‘We win, you lose.’” However intimate and successful your relations with China may be economically, if you are too successful, you can absolutely guarantee that the Chinese will transfer that success to themselves in their own economic structures, having allowed you to run successfully for a period of time.
What we now know and understand is that the Chinese are highly organised and strategic in their attitude towards the West and towards us. For example, some of the thousands of Chinese students who are being educated in Western universities, particularly in the UK and the United States, are unquestionably organised and targeted in terms of subjects––I am thinking more about graduates, PhDs and post-docs––looking at areas of strategic interest to the Chinese economy, and they are organised by Chinese intelligence.
We need to conduct our relationship with China with much more wisdom and care. The Chinese understand us incredibly well. They have put their leadership through our universities for 20 or 30 years. We in comparison hardly know anything about China because we just do not have that depth of knowledge and experience. You have people such as Charlie Parton and many wonderful Chinese scholars who understand intimately, in particular, the workings of the Chinese state, but they are rare individuals who are now massively in demand in trying to educate people about the problem that we have on our hands.
I am not one who is saying that we have to hold China at arm’s length. It is impossible to do that because they are so intimately involved in our economy, but we have to understand where we restrict their access, where we control their access and where we do not allow them to build strategic positions at our expense and literally take us for a ride. If you go back a little way, we were incredibly naive about this, which accounts for the position we got into with Huawei. It was completely ridiculous that we should even have been considering Huawei to build our 5G. That is probably why you called me. I was heavily involved in lobbying MPs through these various structures. I am delighted that the Government have now taken a grip on this issue.
The Chair
Thank you. I have no leeway to go past 11.25 am, so please can we keep questions as succinct as possible.
Sir Richard Dearlove: Sorry. That was a long answer, but it is precisely the question one should be considering.
Chi Onwurah
Q
You have talked about the relationship between the military-industrial complex, in the case of Russia, and economic development, specifically in the case of China. We have essential industries that are critical to our economy and there has been concern that BEIS is going to be overseeing the security implications. Where we have industries and technologies that are critical for national security, they are also critical for our economic security, so our national and economic security end up being linked. You have talked about some of those links in the case of Russia and China. How can we reflect those links effectively in the Bill? Do we need structures within BEIS, or outside BEIS, to identify and reflect the overlap between economic and national security?
Sir Richard Dearlove: This is a really difficult question. I am expressing the problem, not the solutions. You have to bear in mind that I spent my life as a poacher, not a gamekeeper, so my view of these problems is mirror imaging. I was an offensive intelligence officer, not a defensive one. I spent my life trying to penetrate Chinese intelligence, if you see what I mean.
The problem is much bigger than just national security; that is one of the difficulties. It leaches into the whole future of our economic competition with China. I do not like to talk about it, but some people use the phrase “a new cold war”. I do not subscribe to that. We have to find some other way of talking about this. They are very serious competitors who are beginning to edge along the path of enmity in the way they treat us on some issues—witness Hong Kong at the moment—so you have to have some sort of flexible scrutiny arrangement.
The reason this is so difficult to comprehend is that areas like climate change and energy policy, which are national security issues but not right on the frontline, are so big that, I think, China has a pretty disturbing agenda for us. They will encourage us to follow policies that they think are disadvantageous to our economy.
If you take their statements on things like climate change, which is relevant to what we are talking about, China is going to go on increasing its carbon emissions up until 2030, if we look at the figures and understand its policies. China is going to completely miss out renewables. When it has generated enough wealth and success in its economy, it is going to jump from carbon energy straight to nuclear and hydrogen. It will have the wealth and the means to do that. Renewables for the Chinese are going to be rather peripheral, because they will not generate the energy intensity that the Chinese economy requires. China has a road map in its head that is really rather different from ours and there is no question but that, competitively, our green agenda is going to put us at an even greater disadvantage to China, if you take a 30-year view of that.
There are some very worrying aspects of this. That means that if we are gaily allowing the Chinese to walk off with all sorts of bits of our economy, we are going to pay possibly a pretty high price for that over a long period. We need to take a strategic view of this. China certainly has a strategy, and at the moment we do not really have a strategy. We are beginning to realise that we have to have one, and maybe this Bill is a healthy first step in that direction.
You will need sub-committees of some sort, with flexible thinking and experts to advise on where these problems lie. The difficulty is also that we do not want to ruin our economic relationship completely with China. We still need to partner with it in areas that are advantageous to us and our economy as well.
Nadhim Zahawi
Q
Sir Richard Dearlove: My view would be that the annual report has as much transparency as possible, but you are probably going to require a secret annexe from time to time. It is a bit like the reports of the Intelligence and Security Committee, which I dealt with frequently as chief. They and we were keen that they should publish their reports, but there comes a point where it is not in our national interest that some of this stuff is put in the public domain. I would be pretty clear cut on that.
The Chair
I call Peter Grant, who will be behind you, Sir Richard, because of the social distancing rules we have in Committees.
Peter Grant
Q
Sir Richard Dearlove: Obviously, the threat scenarios shift and change. I think I accept that. Clearly, at the moment, what is driving our considerations is mainly China, but you are right. It applies to others—Iran, North Korea—and there may be other states.
A good example in the past, not a current one, is Pakistan. The Pakistani bomb built by A. Q. Khan—the Khan Research Laboratories—was created by sending 600 Pakistani PhD students to do separate bits of research in different universities around the world. That is the origin of our thinking on counter-proliferation, and it is another very clear example of where you have to have control from the security services. Now, I believe, we register PhDs in relation to the nationalities studying in certain areas.
The Bill should be able to accommodate a changing set of scenarios, and you are right to say that non-governmental organisations can become problematic. The proliferation issue, whereby Khan was trying to sell his technology to other countries, happened around the time of my retirement and the disarmament of Libya. That was all based on Pakistani technology, but there was a commercial network run by a family of Swiss engineers called the Tinners. This is an example of how dangerous things can be. The Tinner network had several semi-clandestine factories dotted around the world that were all making different parts for nuclear centrifuges. Okay, that network was eventually dismantled by the UK and the Americans, but the problem of national security goes into some pretty odd areas, and you are right to identify those as not necessarily just being China or, in the past, Russia. There are still aspirations on the part of certain powers to break the non-prefoliation treaty and become nuclear weapons states.
Mark Garnier (Wyre Forest) (Con)
Q
I am interested in your view on how the department that is proposed to be set up within BEIS to scrutinise this cuts across the Export Control Joint Unit, which is obviously a combination involving four Government Departments. Is that complementing it or contradicting it? Can they cut across each other? How do you see those two departments working together? They ultimately have the same aim, although they come from slightly different objectives.
Sir Richard Dearlove: I cannot give you a detailed answer to that question. From my experience, I would say that on some of these issues the co-ordination of Government Departments is one of the really big challenges, particularly when they ultimately have different objectives. The sophistication of our co-ordination mechanisms in the UK has not been highly developed, so we have run into problems in the past. My suggestion would be that this be given forethought rather than afterthought—that there is some arrangement to avoid those clashes of departmental interest.
Mark Garnier
Q
Sir Richard Dearlove: Yes, because they could be pulling in different directions. You have to have some degree of co-ordination. It is always better if these things are anticipated and something is put in place in advance, rather than scrabbling around to sort it out afterwards. I have seen that happen a lot.
The Chair
We are back to facing the front now, Sir Richard. Most members of the Committee wish to speak and I want to get everyone in, but I will have to cut them off at 11.25. Keep questions as succinct as possible.
Matt Western
Q
I am thinking of the consideration of investments from China in our nuclear power stations and other infrastructure networks. Something as simple as road traffic signals or rail infrastructure might break down if someone decided they wanted that to happen. Do you think the Bill does enough to recognise the unexpected areas of investment that a malign state might want to attack?
Sir Richard Dearlove: Probably not is the answer. The Bill should take account of the complexity of modern technology and the difficulties that we could run into in the future if we allow foreign entities to have a strategic piece of our critical infrastructure. Relationships can change over time and you can cause huge difficulties by throwing a switch and engaging a piece of software that is deeply embedded in something somewhere and causing a huge problem.
I do not want to be too alarmist, but Chinese engagement and involvement in nuclear power is another area of terrific concern and worry. It is not something that we should take at face value. We need to think very carefully about some of these issues. I would much rather have a French company building a nuclear power station than a Chinese company.
James Wild
Q
Sir Richard Dearlove: No, I was not. The first Huawei contracts were signed by BT in 2003 and, because BT was the primary provider, the relationship between BT and the intelligence community was, let us say, important; I will not go any further than that. BT was a successor to the General Post Office and, essentially, that was how the relationship came about.
At the time, people like myself were deeply concerned and shocked that we were signing deals with a Chinese company that looked to us to have strategic implications. Basically, as chief, I was not consulted. Basically, when I raised some questions, I was largely told, “It is nothing to do with you. These are issues we can control.” The relationship with Huawei took off without real consideration at the time that it would have a bearing on national security. I think that was extremely misplaced. I have written or said somewhere before that those of us who raised objections in 2003 were just disregarded.
James Wild
Q
Sir Richard Dearlove: I knew about the contract and said I thought it was completely inappropriate.
James Wild
Q
Also, do you think that although we need to look at the Bill as to what it does, we should also recognise that it does not solve all the problems and threats from hostile states—that the intelligence activity and other things we do to raise the cost of theft of IP need to be seen holistically across the piece, and that the Bill cannot solve all the problems?
Sir Richard Dearlove: The Bill is a step in the right direction. What is important about the Bill is that it raises parliamentary and public awareness of the issue. Everybody takes a big step forward in being sensitised to the problems in the future.
To be honest, I do not have any suggestions right now to add to the list, but I might look at that and see whether there are certain areas. For me, the Bill is almost a symbolic move—one that is long overdue and signals a change in attitude at Westminster and on the part of this and future Governments. It is a very healthy, pleasing and important development.
Stephen Kinnock
Q
“certain ‘critical’ elements of infrastructure, the loss or compromise of which would have a major, detrimental impact on the availability or integrity of essential services, leading to severe economic or social consequences or to loss of life.”
Would the Bill benefit from having that definition of critical national infrastructure embedded in the middle? Linked to that definition, should special measures be taken to raise our guard even higher when it comes to any kind of investment in our critical national infrastructure?
Sir Richard Dearlove: I would certainly see that as advantageous, because it defines a clear area where you start and from which you can make judgments about the involvement of foreign firms being given space or activity in those areas. That is not a bad idea at all, actually.
Simon Baynes
Q
Sir Richard Dearlove: I think we were over-enthusiastic about becoming a favoured trading partner with China. I am not going to name names, although I think I have done in one or two instances where, let us say, certain Ministers were incredibly enthusiastic and uncritical about building a commercial relationship with China. Part of that was driven politically, in that if we are going to not be a member of the EU, we need alternative relationships. I am not sure I would see it quite like that.
There has been a big emphasis on building a privileged position with China, which has led to people such as myself shouting from the sidelines and being pretty unpopular. For example, the 48 Group Club that the Chinese set up in the UK is extraordinary. They recruited a whole group of leading British business and political figures into that group who were designated cheerleaders for a burgeoning relationship with China. Huawei was an important part of that. The composition—the British membership of the Huawei board—was a very impressive line-up of people who were there to persuade us to drop our guard.
Anyway, I am glad that that is now largely history. A lot of the people who were involved are very keen to jump ship and be disentangled from those involvements. I am sure that, in time, the economic rewards that they were offered to go on to those boards and things were pretty significant. So the Chinese knew how to play us and that is why we got ourselves into this very difficult position on 5G.
Sorry, what was the second part of your question?
Simon Baynes
Q
Sir Richard Dearlove: On artificial intelligence, given that the UK is a leader in its own field, there are all sorts of aspects of AI and we would not want to allow the Chinese to buy those companies or take over the technology. There is no question but that the China dream that Xi Jinping has expressed is based on—let me put it like this—authoritarian technological supremacy and having a capability that dominates the global market in those areas. Huawei was definitely a step in that direction.
The critical areas are largely about the speed of technological advance and AI-related companies. We are very sophisticated in those areas, and the Chinese do not have a good record themselves of developing that sector without pinching it from the west—not to put too fine a point on it. The embargo placed on chip manufacturing by the Americans is a serious problem for China, because at the moment they cannot replicate that. I am sure that they will solve the problem themselves in due course. Of course, we have a certain dependence on them for certain things such as rare earth elements, so the quicker we can develop alternative sources, the better.
I am Cornish—I was born and brought up in Cornwall—and I see that one area where you might, using new technology, get rare earth out of the ground is Cornwall. I am devoted to the development of the Cornish economy, and I would love to see us making a real effort to develop Cornwall, for example, as a source of those elements, which is technically possible. It would be more expensive than buying them from China, but would be of huge benefit to our domestic economy. That is a good example of a sensitive area.
Andrew Bowie
Q
I was going to ask you a question I put to Mr Parton, although it is probably more relevant to you. How does what the Bill proposes compare with what is being done in other, comparable countries, such as our Five Eyes partners? Does it go as far as the Australians and the Americans, or are we still some way short of where we should be?
Sir Richard Dearlove: No, I think we will catch up. A very good example for us is Australia. They are hyper-dependent economically on their relationship with China, but the current Australian Government had the resolve to take a tough line on strategic issues, and they have suffered as a consequence. But their relationship with China will come back into balance, so the idea that you cannot be hard with the Chinese on these issues because it will prejudice a good trading relationship is rubbish.
The Chinese will probably respect you more if they know you mean business, they want a clear-cut relationship, and they see you have the legal means to impose that domestically, so they cannot just buy a high-tech company and walk off with the intellectual property, thank you very much. In the past, we have been so laissez-faire, it is ridiculous.
Chinese involvement in the oil industry is an interesting example too—I mean, look what they are doing now. They are doing deals with Iran and with Saudi Arabia on carbon fuel, exactly in the way I explained earlier. They are not going to cut their fuel emissions until they are ready to go for a nuclear-hydrogen economy, which they will have the means to do. We are sitting by and watching it happen, in a manner of speaking, and not worrying about the consequences for us.
One of my friends, who is a Chinese scholar, drew my attention—you will enjoy this, I think—to the 36 stratagems from the era of the warring states, which is 481 to 221 BC. I will mention three of the stratagems, because I think they are appropriate to the thinking of this Committee. Kill with a borrowed sword—that is, get what you can. Loot a burning house—bear that in mind in terms of taking advantage of the current pandemic. The third one is hide a knife behind a smile.
Sam Tarry (Ilford South) (Lab)
Q
Sir Richard Dearlove: You are talking about allied countries?
Sam Tarry
Obviously, if you are involved in global universities, for example, there will be some countries that we want to keep a much better relationship with, and whose students our intelligence services will have to monitor less.
Sir Richard Dearlove: There is definitely a graded difference in, let us say, our burgeoning relationship with India, but India can also raise some strategic security concerns for us. It has not always been entirely friendly, and bear in mind that it has quite a sophisticated weapons programme of its own. However, it would be wrong to treat India in the same way as you treat China; I agree that there is a gradation of treatment.
The Chair
That brings us to the end of the time allotted for the Committee to ask questions. On behalf of the Committee, I thank our witness very much for his time.
Before we finish, I want to read a message out to Members. I would appreciate it if Members did their best to arrive in the room a few minutes before this afternoon’s sitting starts at 2 pm, to ensure we can be seated in a socially distanced manner so that everybody remains safe.
Financial Services Bill (Fifth sitting)
Tuesday 24th 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 24 November 2020 - (24 Nov 2020)
The Committee divided: - Ayes: 6 / Noes: 10 - Question accordingly negatived.
The Committee divided: - Ayes: 6 / Noes: 10 - Question accordingly negatived.
The Chair
Before we begin, I have a few preliminary points to make, some of which you will have heard before. Please switch electronic devices to silent; tea and coffee are not allowed during sittings and, again, I remind everyone about the importance of social distancing and thank you all for complying with that. The Hansard reporters would be grateful if Members could email any electronic copies of their speaking notes to hansardnotes@parliament.uk.
Today, we begin line-by-line consideration of the Bill. The selection list for today’s sitting is available in the room and shows how the selected amendments have been grouped together for debate. Amendments grouped together are generally taken on the same or a similar issue, and decisions on amendments do not take place in the order they are debated, but in the order they appear on the amendment paper. The selection and grouping list shows the order of debates; decisions on each amendment are taken when we come to the clause that the amendment affects.
If a Member wishes to press to a Division an amendment that is not the lead amendment in a group, it would be helpful to indicate that in advance. I will use my discretion to decide whether to allow a separate stand part debate on individual clauses and schedules, following the debates on the relevant amendments. We start with clause 1 and amendment 19.
Clause 1
Exclusion of certain investment firms from the Capital Requirements Regulation
Mr Pat McFadden (Wolverhampton South East) (Lab)
I beg to move amendment 19, in clause 1, page 2, line 21, at end insert—
“(7A) The Secretary of State must, within three years of this Act being passed, prepare, publish and lay before Parliament a report on the impact of the amendments to the Capital Requirements Regulation made by this section and Schedule 1 to this Act.
(7B) The report must assess the impact on—
(a) financial stability;
(b) competitiveness; and
(c) consumer risk.”
This amendment would ensure that, where departures from current capital requirements take place, the Government carries out a review of the impact on competitiveness and consumer risk.
Thank you for your chairmanship today, Mr Davies. With your indulgence, I would like to explain to the Minister broadly the approach we are going to take with these amendments. A number will be about reviewing, producing reports, parliamentary accountability and so on. Another number get into the accountability framework for the regulators and that “have regard to” list, and we will want to explore that quite deeply. Then there will be another set around the later parts of the Bill, relating to the savings provisions, the debt scheme and so on. That might help the Minister and the Committee to understand broadly where we are coming from when we move these amendments.
This first amendment, amendment 19 to clause 1, is in the first of those groups. Clause 1 exempts certain categories of investment firms from the requirements of the capital requirements regulation. This amendment explores what the effect of that might be and not only our right to know that effect, but our obligation to understand it. The reason we tabled this amendment is that capital, or the lack of it, was at the heart of the financial crisis. The banks that keeled over were over-leveraged and behaved as though a rainy day would never come. In fact, it is estimated that when the financial crisis hit, Royal Bank of Scotland, which was one of the biggest banks in the world at the time, was leveraged to a degree of about 50:1, so they had very little cushion of resilience for when more troubled times came.
The Basel II rules, which were in place at the time, failed to stop either the collapse or the public’s having to step in—through taxpayers and Governments around the world—to bail out the sector. Last week, when we were taking oral evidence on the Bill, I quoted Paul Volcker, the former Chairman of the Federal Reserve, who gave evidence in this House about a senior banker who had told him that his bank did not need any capital at all, that money could always be borrowed on the wholesale markets and that the banks could operate without capital. The crash proved that not to be true. The banks need capital. They need a cushion. That is not just their insurance policy, it is ours—it is the public’s insurance policy too.
Following the crash, the world’s regulators, whether in the United States, the UK or the European Union, set out to solve the problem of “too big to fail”, which has been characterised as privatising the profits and nationalising the risks, and developed a new set of capital requirements for banks and financial institutions. It was designed to make them more resistant to downturns. Those rules, on a global level, are set out in the Basel III process, now revised to the Basel 3.1 process, in the CRR and in the actions of national regulators. That is important, because the Basel rules should not be regarded as a maximum when it comes to the safety of our financial institutions. They should be regarded as a floor.
Most banks and regulators will say that today they hold significantly more capital against their loan books and that they are better equipped to handle a downturn or economic shock than they were 12 years ago. That is broadly true. Banks are better capitalised now than they were. However, they do not all like that situation, in truth. They will also say—I am sure that some banks tell the Minister and the regulators—that if only they did not have to hold so much capital they could lend more. They may well be saying that more loudly during the covid situation, when, as we see light at the end of the tunnel, we want to get the economy moving again. The smaller banks and new entrants will complain about being held to the same capital rules as larger and more established institutions. They will argue that that is a barrier to market entry and that it acts to reinforce the oligopoly in the UK where there are four or five major high street institutions, which it is difficult for new entrants to compete against. Other institutions will complain of being held to the same rules as deposit-taking institutions, which is part of the exemptions in clause 1, arguing that the character of their business is different.
Clause 1, as I have said, equips the regulator to respond to some of those points. We are not only onshoring, as it were, the capital requirements regulation, we are making provision, through the clause and other subsequent clauses, for the regulators to depart from it. Of course, departure from a common rulebook is a consequence of Brexit. Indeed, some might argue that it is the whole point. The clause allows it, and it is important that the Committee understands that the amendment would not prevent it. Neither does it seek to relitigate the referendum or to prevent the common rulebook to which we have subscribed for many years from ever being changed. That is not what the Opposition are saying. We are saying that, Brexit or not, and inside the EU or not, capital requirements still matter and they are there for a reason.
I would argue that for the UK the need for financial resilience is even greater than it is for most economies. We are a medium-sized economy with a huge financial sector. The consequences of that sector getting into deep trouble are potentially all the greater for our economy than for some others. Having a big financial sector is in many ways a great strength, of course. It brings employment, tax revenue and investment to the country, but it is a risk when it gets into trouble, as we found out in our recent history.
The other thing that we learned during the crash was how interconnected the system was. With so many institutions lending to and trading with one another, when one falls over the consequences for the whole system can be catastrophic. That old saying “The thigh bone’s connected to the knee bone” was certainly true during the financial crash, as it is of our interlocked and interdependent financial system. We therefore have a duty, at the very least, to be vigilant about capital requirements. They are, as I said, the public’s insurance policy against having to bear the costs of another crash or steep financial crisis. The changes that have been made since 2007 and 2008 through the CRR, the Basel rules and other steps are, as yet, untested. Yes, the regulators do conduct stress tests and scenarios about what would happen if employment rose to this level or GDP fell to that level, but these are inevitably not quite real-world exercises. They are as real as war games compared to the real thing.
All the amendment does is ask for a report from the Treasury after three years of the new regime. That report should cover the impact of any departure from the current capital requirements in three areas: financial stability, that is to say the overall health of the system, because we learned how interconnected it all was; competitiveness, which is built into the regulator’s aims in the Bill and is bound to be the argument for any changes to the capital requirement rules; and, importantly, consumer risk. If we are only thinking about the competitiveness of our financial institutions and not considering consumer risk, we have not learned from the financial crisis. That is the other side of the scales. We can make the system ultra-competitive by asking institutions to hold hardly any capital but that exposes the consumers and public to greater economic risk. That last point is crucial.
To recap, the amendment does not attempt to freeze the situation forever as it is now. It does not stop clause 1 doing what the Government want it to do. It does ask for a report on the consequences and broader issue of divergence from capital rules, should the regulator allow greater divergence in the future. We should not allow this regime to be set up and then opened up to all the banking and industry lobbying that is likely to take place without making sure we have a means of understanding the consequences of that. Given the importance of this sector for the UK economy, we should be careful of these consequences. By enshrining these in a report from the Treasury, we can ensure that Parliament and the public see the consequences of divergence. That is the purpose of amendment 19.
Alison Thewliss (Glasgow Central) (SNP)
It is a pleasure to see you in the Chair, Mr Davies. I rise to support the amendment. I think it is perfectly sensible that we make assessments and ensure that the changes the Government are putting in place are worth while and valid and that we keep a close eye on them, because of the very risks that the Labour Front-Bench spokesman set out. We cannot predict the future, but we can assess how things are going and make sure that neither consumers nor businesses are at risk. I support that very much and do not have much to add to his comprehensive speech.
Ms Angela Eagle (Wallasey) (Lab)
I repeat that is a pleasure to see you in the Chair today, Mr Davies—there will be a bit more of that as we make our way through the Bill. I support my right hon. Friend’s amendment, and want to tease out some of the Government’s intentions in this very technical Bill. We may not have known before 2008, but certainly know now, that highly technical things can be crashingly important if we do not keep a close eye on them. Given that we are now onshoring all these directives, and that the Government have decided, before the transition period is even over, in anticipation of changes to the capital requirements regimes, to diverge from what was put into UK law as part of the withdrawal agreement, I think the Minister owes us—I am sure he will be prepared to do this—a detailed explanation of what the Government perceive to be the advantages of diverging from rules that we had such a crucial part in writing when we were in the European Union.
It was certainly the case when I was a Minister, and I am sure it still is, that because of the relative size and importance of the financial services industry in the UK, our technocrats, if I can call them that, were always very involved in drawing up and agreeing the financial service directives that were in effect in the whole of the European Union. We used to have quite vigorous arguments with the European Union about the nature of some of that, given the slightly different culture that we have in the Anglo-Saxon world, if I can put it that way—the Minister knows what I mean—compared with some things that more routinely happen in the EU, and also because, frankly, our financial services sector is far larger than most financial services sectors within the EU and differs in its make-up. There were always these cultural issues.
However, in the aftermath of the financial crisis, there was widespread recognition and agreement—not only in the Basel III and 3.1 regulatory negotiations and how those agreements were put into EU law, which we are talking about now—about what had gone wrong; about needing to identify systemically important companies and make sure they were regulated appropriately, given the risk that under-capitalisation posed to the economies of countries in which those organisations were based; and about having rigorous and intrusive regulation to avoid some of the mistakes and traps that were fallen into in the run-up to 2008.
I am particularly interested in—I hope the Minister will explain it—how this will work, given that the Bill gives our regulators the power to change what has just been onshored to create a completely different system for investment firms, and then to take that forward in future regulation. We know that we have to be eternally vigilant to the way that companies evolve to respond to regulatory systems. If we end up fighting the previous battle, we will probably miss the next bubble. I would therefore appreciate it if the Minister—in commenting on the amendment, which is probing, in that sense—will explain how he believes that the regime that the Bill introduces will be able to respond to the challenges of the evolution of threats. Once the nature of what had been going on during the financial crisis was laid bare—a lot of it had been going on under the radar—one of the surprises was the connection between investment companies and banks, particularly the investment arms of banks. We discovered their trading of derivatives and the leverage they got out of those derivatives to make more money for themselves, more commission and more remuneration. Actually, a lot of what was in those derivatives was not sighted, and the regulation had essentially involved taking on trust the rating agencies’ assessments of what those derivatives were worth, without looking inside the packages.
The Economic Secretary to the Treasury (John Glen)
I would like to take this opportunity, at the beginning of the Committee scrutiny stage, to say what a pleasure it is to serve under your chairmanship, Mr Davies, and to consider this important legislation with all Committee members. I welcome the opening comments of the right hon. Member for Wolverhampton South East, who described how the Opposition will approach the eight sittings over the next two weeks. I also broadly acknowledge and agree with virtually all of the comments that he and the hon. Member for Wallasey made in respect of the history of financial services regulation, and I look forward to responding to the points made and to a wide-ranging and constructive discussion over the next two weeks.
As I set out on Second Reading, this Bill forms an important part of the Government’s wider strategy for financial services at this critical moment, as we approach the end of the transition period. I just want to say at the outset that financial services, as some of us know––I look particularly to the hon. Member for Glasgow Central who has been in multiple Committees with me over the last three years––is necessarily a complex topic with a sometimes impenetrable vocabulary of its own. I will do my utmost to ensure that, in speaking to the Bill and any Government amendments, my comments are as clear, accessible and accurate as possible. Please feel free to challenge me on this and if at any point Committee members feel that I have fallen short of that ambition, I look forward to trying to correct that.
Let me move to amendment 19. The Government are fully committed to ensuring that any delegation of responsibility to the regulators is accompanied by robust accountability and scrutiny mechanisms. Members referred to divergence and regard to consumer interests. The differentiation between different categories of firms depends on an assessment of eight systemically important firms that will continue to be the responsibility of the Prudential Regulation Authority. Amendment 19 seeks to add a requirement for the Secretary of State to publish a report within three years of this Act, including an assessment of the impact of amendments to the capital requirements regulation on financial stability, competitiveness and consumer risk.
The amendments to the capital requirements regulation tell only a small part of the story. The Bill amends the capital requirements regulation to remove Financial Conduct Authority investment firms from the scope of the banking regime. The more important story will be told by the FCA’s rules that implement the investment firms prudential regime. I want to be absolutely clear on the point about divergence. Obviously, as we get towards the end of the transition period, we will get to a point where we have left the EU and the provisions of alignment within the transition period. Therefore these measures reflect the reality of where we will be on 1 January. As the hon. Member for Wallasey said, the UK’s regulators, Ministers and officials played an instrumental role, given the size of the UK financial services industry, in shaping those regulations on an EU-wide basis. But it is surely only appropriate that, when we have left the alignment provisions of the transition period—and rightly so—we should look to actually govern and set the regulatory environment that suits the particular needs of our industry. The configuration of that industry, as was understood in the speeches that have been made, is different.
When the FCA does implement the IFPR, the Bill requires the FCA to demonstrate how it has regard to several considerations, which I shall set out now. First it must have regard to relevant international standards: Basel 3.1. That goes to the point about the relative standing of the UK. The right hon. Member for Wolverhampton South East made a point about the risk around individual firms lobbying for differentiated treatment. It is right that the regulators are responsive to the needs of the UK industry, but they are also accountable to those international standards––the relative standing of the UK––in addition to the current statutory objectives under the Financial Services and Markets Act 2000 to protect consumers and the integrity of the UK financial system.
This approach aligns with the March 2020 House of Lords EU Financial Affairs Sub-Committee recommendation to delegate more power to the regulators, underpinned by more and strengthened parliamentary scrutiny. We are delegating this to regulators because they have the technical expertise, not the Government. The Bill’s reporting provisions should provide the information that Parliament is seeking. This amendment would create a duplication of efforts by the regulator and the relevant Departments on undertaking such an assessment.
Ms Eagle
I want to come back on that and press the Minister on a couple of questions that, with all due respect, I do not think he answered in his response. Clearly, our amendment is a hook on which to hang a debate about transparency, so that we know what the regulators are doing, and about accountability, because, as I said earlier, if these organisations begin to respond to particular inducements, such as their own remuneration, they can cause risk to happen in a way that can be severely detrimental to consumers and entire economies, as we have seen in recent history. I think that, in the light of that, we are perhaps owed a little more of an explanation from the Minister—I am putting this gently—about what the approach of the regulators will be. The Minister can stand there and say, “The regulators are going to right-size regulation.” That sounds like a fantastic thing because of the very phrase that the Minister has used—“right-size”—but how are they deciding?
We clearly got the wrong size because of evolutionary behaviour to avoid regulation and increasingly risky behaviour in the global financial system in the run-up to the global financial crisis in 2008, which was caused by or began in the subprime mortgage market in America but which brought most of the—if I can put it this way—western-style banking systems close to ruin in the rest of the very interconnected economy because of what had been happening with derivatives. Therefore I wonder whether the Minister might be able to say a little more about the benefits of having the regime that he called right-sized regulation; why we might wish to move away from the current position so quickly after the transition period is over; and what he sees as the benefits of doing this. Refusing our amendment means that there will be no transparent analysis of the effect on the public domain, so we will not be able to discuss it.
I for one think it is important to get these very technical, dry regulations out into the open and to translate them, with the seriousness they deserve, into the potential implications that they present for all our constituents. Our amendment seeks to do that by at least having a transparent publication of these kinds of analyses. The Minister wants to keep it in the regulators’ ambit, in which there is not so much light, to be honest. It is highly technical, and it is hard for those on the outside to have a look inside to see what the implications are. I have hardly had any correspondence from outsiders on the Bill to help me through the long hours and sittings to come. That rather illustrates my point: that a light needs to be shone on this area, because of the risks if we get it wrong.
The Minister rightly wants to get it right, but surely it is relevant to hear from him and to have a bit of transparency, and to put something on the record now about how he sees the advantages playing out, as opposed to the risks. Will he have another go?
John Glen
I am very happy to have another go. The hon. Lady is at risk of suggesting that there is somehow a clumsy, rushed delegation to regulators and a risk that—in that delegation—the industry will influence regulators to right-size in a way that damages consumers. I draw her attention to the fact that the legislation gives the FCA responsibility to have regard to the impact on consumers, on the market and on firms—that is, the impact on themselves—of not having the appropriate capital requirements.
The right-sizing comment refers to the fact that the firms are currently bound by rules that align them to other institutions that are clearly functionally different. Nobody really believes that it would be right for there to be a prescriptive mandate from primary legislation on exactly how those technical rules and those capital requirements on a firm-by-firm basis should exist. The FCA has the right to reclassify firms and monitor that reclassification as firms evolve. The PRA will retain oversight of systemically important firms.
I contend that the Bill contains sufficient mechanisms to ensure public and parliamentary scrutiny of both the FCA and the Treasury through the draft affirmative procedure and the FCA reporting requirements. That combination of the FCA’s existing statutory duties and the “have regards” set out in the Bill cover the areas that amendment 19 seeks to address.
I make one further important point that goes to the heart of the wider regulatory framework. The future regulatory framework consultation that we launched on 19 October sets out over a 12-week period to look holistically at what should be the constitutional relationship between the FCA, the PRA, the Treasury and Parliament to embed an enduring accountability framework on a much broader basis. There will be another consultation subsequent to that. I anticipate that the response to the consultation might be, “Why haven’t you done this before?”. The bottom line is that the measures are required to meet international standards within an internationally determined timeframe of expectations. I declared on Second Reading that this is the first in a series of pieces of legislation, and I have always said so. This first piece of legislation sets the accountability framework for the initial measures.
Stella Creasy (Walthamstow) (Lab/Co-op)
I do not think any of us doubt the Minister’s intention to get this right and to recognise that these decisions have a consumer impact. The challenge, which I think we all see, is that it is one thing for the FCA to conduct a public consultation on high-cost credit firms, for example—he knows my specialist subject—but on something like LIBOR or the Basel regulations, which is less tangible but no less impactful, the argument he is making seems rather to strengthen the point the amendment makes about including consumer risk as one of the things to be reported on, because it does not immediately grasp people’s imagination until a catastrophe such as the last financial crisis happens. He says he envisages the FCA’s performing this role, so will he set out how he sees it performing that role if we do not say, “Actually, could we in a couple of years’ time get some information on how consumer risk has been identified and addressed in this process?”. That is harder to quantify, but no less important.
John Glen
I am very happy to respond to that point and I thank the hon. Lady for her comments. I recognise her expertise, particularly on high-cost credit, and I look forward to—I imagine—further amendments on that, perhaps next week.
The FCA will be required to publish an explanation of how having regard to the additional considerations that I have set out has affected the proposed rules that it comes up with. When the FCA makes those final rules, it will publish an explanation complying with them, as well as a summary of those new rules, aligned to the FSMA publication requirements.
The challenge here is a bit of a mismatch between the concerns that we have collectively in Parliament to maintain standards that will not allow a repeat of what the right hon. Member for Wolverhampton South East eloquently set out as the problem leading up to 2008 and to have regard to the enduring and ever-transforming consumer risks, which derive from rules and technical standards that we in this place are not well placed to deliver, given their design. What we must do subsequently with the future regulatory framework review—it is not some short, rushed exercise, but a deliberately open exercise of consultation to try to examine best practices—is to come up with something that gets that balance right between the direction that Parliament sets in primary legislation and the accountability to this place that will exist for our regulators, through the Treasury Committee and through potentially significantly enhanced accountability mechanisms.
However, setting out the enduring final framework of that relationship between the regulators and Parliament is the point of that consultation exercise. With respect to this measure, I believe that the accountability mechanisms set within it and the procedures set out will achieve the accountability that is necessary and appropriate at this stage.
The Chair
Before I call the shadow Minister, I say that one of his many qualities is that he is very softly spoken, which is not conducive to Committee Room 14 with social distancing in place, so I encourage him to speak up; I am sure that would be appreciated by all.
Mr McFadden
I am a softly spoken and moderate man; it has not always done me good, but I am on track here at the moment.
I want to respond to the Minister’s reasons for advising us not to press the amendment. I talked at the beginning about three pots of amendments, and it strikes me that there are really two or three pots of reasons why Ministers say no to amendments. The first is that the amendment is wrong or not competently written in some way. Pot two is that it has completely misunderstood the Bill and therefore is not just incompetently written, but actually wrong in its intent. Pot three is to say that it is covered anyway. Usually, if somebody is not going to say yes to an amendment, it falls into one of those categories. The Minister has gone for pot three today. He has not really argued that the amendment is wrong in its content or that there is anything wrong with the way it is written; he has argued that this kind of thing is covered anyway. There is a problem for us in accepting that.
Ms Eagle
Does my right hon. Friend agree that there is a fourth one, which is to say, “This should not be on the face of the Bill; we are going to do it, but we are going to put it in secondary legislation,” which of course is unamendable and usually rammed through this House in a way that makes scrutiny even harder?
Mr McFadden
My hon. Friend is absolutely right. Perhaps there is even a fifth one, which is, “Wait for the consultation on something else.” The problem with going for pot three and saying the amendment is covered anyway is that that concedes that it would be completely harmless and there would be nothing wrong if it were accepted. The Government are, in effect, agreeing with its intent and saying they will do it.
John Glen
As ever, the UK remains committed to the highest level of regulatory standards. The UK is also committed to better regulation—regulation that is fit for purpose and appropriate to the risks, size and activities inherent to UK firms. At present, investment firms are supervised by either the FCA or—for those that are systemically important—the PRA. However, both currently operate under the same prudential regulatory regime as banks, which is not appropriate for non-systemically important investment firms. Such investment firms do not typically grant loans or accept deposits, so the risks they face and pose are different from those of banks.
A new, bespoke regime is required for investment firms, and the first step in that process is to remove non-systemically important FCA investment firms from the relevant regulations for banks. That is precisely what clause 1 does: it sets out the necessary amendments to remove FCA investment firms from the scope of the capital requirements regulation. Only credit institutions and PRA-designated investment firms will remain under the CRR. That is appropriate, as systemic investment firms pose similar risks to financial stability as the largest banks.
Clause 1 also introduces a definition of “designated investment firm” that recognises that only investment firms that conduct bank-like investment activities may be designated by the PRA as systemic institutions. As such, commodity dealers, collective investment undertakings and insurance undertakings that are not bank-like are excluded from the definition. That reflects the EU’s approach. The remaining investment firms—all FCA investment firms—will be regulated under the new investment firms prudential regime, which I will turn to when we debate clause 2 and schedule 2.
Clause 1 also amends the Capital Requirements (Country-by-Country Reporting) Regulations 2013. The amendments are necessary to ensure that FCA investment firms adhere to tax reporting requirements that are consistent with the new investment firms prudential regime, and not with the current banking regime. For example, the smallest FCA investment firms will be exempt from the reporting requirements, which is in line with the IFPR’s more proportionate application of regulatory requirements on the smallest firms.
Clause 1 is merely a first step in the introduction of the investment firms prudential regime, but it is a crucial step. I therefore recommend that the clause stand part of the Bill.
Mr McFadden
I just have a couple of questions for the Minister. He described the rationale behind the clause, but can he tell us how many firms we are talking about? How many of the non-deposit-taking investment firms are likely to be exempt from the capital requirements regulations under the terms of the clause?
What is the Minister’s response to the point that my hon. Friend the Member for Wallasey and I have been trying to make about interconnectedness? He has advanced a reason as to why such investment firms should be treated differently, but how will the regulators cope with the interconnectedness of the system if companies are treated differently in that way?
Alison Thewliss
My concerns very much lie around the interconnectedness, because the system will be only as strong as the weakest part within it. If the weakest parts start to pull down everything else and make everything else unravel, we have a real problem on our hands.
My questions are about the monitoring of risk within the system that is being established. How can the Minister be certain that the risks are being closely monitored by the regulators, that the regulators understand the business that smaller firms are doing in their part of the market, and that the activities that those smaller firms are engaged in does not pose a risk to everything else? There is definitely cause for them to be monitored in order to have an eye kept on them, and to ensure that their activities do not cause wider risk. If attention is not being given to them, how can we ensure that their activities are above board and are not causing further risks anywhere else within the system?
How will the monitoring be scrutinised more widely by Parliament and others? The Treasury Committee gets the opportunity to question the regulators, but getting down to such a level of detail is not necessarily something that we would do. How does the Minister envisage Parliament having a role in that scrutiny in order to ensure that, should something happen or go wrong, we find out about it timeously rather than when it is too late to have any impact and when the whole thing has tumbled down?
Ms Eagle
Like the hon. Member for Glasgow Central, I am on the Treasury Committee. We have a very full programme. The hon. Member for Hertford and Stortford also shares the pleasures of being on the Treasury Committee. However, it would be very difficult for us to question the FCA with this level of granularity. Therefore, given the onshoring and the importance of this regime as it evolves, how does the Minister expect the transparency, oversight and accountability to be put in place going forward? Does he expect that to also include consumer authorities and the consumer interest, and will explain what he expects these companies to be able to do under this regime that they cannot do now?
John Glen
I am grateful for those questions, and I shall seek to bring some clarity. The right hon. Member for Wolverhampton South East asked me two questions about the numbers. I cannot give a specific number here, because it is fluid and would be something for the FCA to determine. I am sure the FCA would be very happy to give him an indication on that.
To the other point around interconnectedness, made by the hon. Member for Glasgow, Central as well, the classification will be based on the evolving nature of the activities, and this is something the FCA makes judgments on all the time. The PRA is responsible for eight systemically important institutions, covering Goldman Sachs and J. P. Morgan, among others, which are of a size and scale such that their interconnectedness means they are of systemic significance.
There are a lot of complex relationships between financial institutions. Therefore, as acknowledged by the hon. Member for Wallasey, as people who are technically capable of evaluating those interconnected elements, it is appropriate and in their interest to make those judgments, and that sort of decision making does go on currently.
The scrutiny process links back—I will not keep repeating it—to the point that the right hon. Gentleman made about the “Future Regulatory Framework Review”, which will look at the appropriateness in a situation where that scrutiny has previously happened at an EU level, through combined conversations, the Council of Ministers, work that is then is auto-uploaded to the regulators. What is the new mechanism to hold regulators accountable in a situation where they are given the task from this place? That would be the purpose of the extended regulatory review and future legislation. It may involve an enhanced role for the Treasury Committee, with additional resources to augment the expertise that already exists, but that is a matter for that consultation.
In answer to the question from the hon. Member for Wallasey about what I expect the companies will be able to do that they currently cannot, this comes back to some of the evidence we heard last week from the British Private Equity and Venture Capital Association, which says there is a wide family of firms with different activities. The question is: are the regulations as they apply at the moment—as fitted for 28 countries, where obviously some compromises were made—appropriate for the configuration of firms as they exist?
What I would expect to see is consideration given for capital requirements that match the actual profile of activities, notwithstanding the very legitimate points made around the interconnectedness and the risks associated with their broadest activities. I have stressed throughout the passage of this Bill so far, and I reiterate now, that the essential purpose of the Government’s approach is to ensure that we have the highest regulatory standards. Our reputation as a centre for financial services is based not on finding quick fixes that shortcut regulatory standards, but on finding something that fits the nature of our industry, aligned to international standards, that gives us the best opportunity to grow and prosper in a way that is safe and secure for consumers.
Question put and agreed to.
Clause 1 accordingly ordered to stand part of the Bill.
Schedule 1
Exclusion of certain investment firms from the Capital Requirements Regulation: consequential amendments
Question proposed, That the schedule be the First schedule to the Bill.
John Glen
Schedule 1 complements clause 1, in so far as it makes consequential amendments to the Capital Requirements Regulation 2013 and the Capital Requirements (Country-by-Country Reporting) Regulations 2013. For example, many of these consequential amendments remove references to the Financial Conduct Authority as the competent authority under the CRR in recognition of the fact that henceforth only the Prudential Regulation Authority will be responsible for regulating credit institutions and PRA-designated investment firms under the CRR. Taken together, these technical amendments achieve the aim of removing FCA investment firms from banking rules while keeping the most systemically important investment firms under the regulation and supervision of the PRA. I therefore recommend that the schedule be accepted.
Mr McFadden
I have just one question. The Minister mentioned country-by-country reporting, which we may come to at other points in the debate. Could he help the Committee by telling us what is covered in the country-by-country reporting? There is an ongoing and very live debate about what we expect multinationals to cover in country-by-country reporting in order to avoid tax arbitrage or transfers between countries that do not stand up to scrutiny. What are the things covered by country-by-country reporting in schedule 1?
Alison Thewliss
I just want to ask the Minister about the additional responsibilities in the schedule. When we took evidence last week, Sheldon Mills said:
“We can always do with more resources”.––[Official Report, Financial Services Public Bill Committee, 17 November 2020; c. 9, Q12.]
What further discussions has the Minister had about ensuring that the PRA and FCA are adequately resourced for these additional responsibilities? It is an awful lot of extra work. We are moving an awful lot of work over to them while they have covid and Brexit to look at too. I just wondered whether there had been any further detail about what additional resources might be available or required in the months and years ahead.
John Glen
I will come first, if I may, to the hon. Lady’s point about the resourcing of the FCA. It is resourced by a levy, which it determines. It is under review, but it is approved and set by the FCA. The hon. Lady has asked that question a number of times over the past 18 months. She is right to draw attention to the enormous pressure that the FCA is under, in terms of giving guidance about the forbearance measures for consumers and banks. That will be a matter for the FCA. I have six-weekly conversations with its chief executive officer. That is not a matter that he has raised with me, but it will be under review. I support it in what it needs to do to secure those resources.
The right hon. Member for Wolverhampton South East asked about the Capital Requirements (Country-by-Country Reporting) Regulations. They were designed to ensure that appropriate tax reporting regulations are imposed on firms regulated under the banking framework. They require firms to report relevant information on tax and revenue in each country that it has operations. An objective of the IFPR is to make regulations for FCA investment firms more proportionate to the risk, size and activities of those firms. That will be reflected in the country-by-country reporting. That will enable certain investment firms, such as the smallest FCA investment firms, to have reporting requirements consistent with their size and activities, and ensures that such firms are competitive. Furthermore, the smallest investment firms do not typically have overseas operations, making these requirement irrelevant for them. I cannot say any more about that at this point, but I am happy to follow up further if the right hon. Gentleman wishes to have information.
Question put and agreed to.
Schedule 1 accordingly agreed to.
Clause 2
Prudential regulation of certain investment firms by FCA rules
Question proposed, That the clause stand part of the Bill.
Mr McFadden
I do not really have substantial questions at this stage, because schedule 2 sets out the detail, and I think we will probably have an extensive debate on it.
Ms Eagle
The clause inserts a new part 9C into the Financial Services and Markets Act 2000, which forms the legal basis for the new regime that the Bill introduces for investment companies. We have been talking about the minimum amount of capital required. We have covered some of that, although we will get further into it when we come to the Basel 3.1 bits.
Will the Minister say a bit about remuneration policies? That is another issue that will be regulated. We know from what happened in the financial crash and the build-up to that bubble that remuneration policies formed a key part of the bad incentives that created the behaviour that caused the crash. How will the Government be dealing with the regulators about remuneration? What will the principles be? Getting the right incentives for remuneration is a key driver for behaviour, and behaviour is a key driver for activities in that area, as we know only too well. If we did not know that from 2008, we would know it from the Wall Street crash in 1929. It is part of a set pattern. How will the Government ask the regulators to deal with that issue?
John Glen
I am happy to respond to that. The risk that the hon. Lady sets out—that, broadly, this country will go down a route where we deviate significantly from the new established norms of the regulation of remuneration and the rules around rewards and bonuses and so on—is a matter for which the regulator has responsibility. It will be incumbent on the Government to look at evolving best practice and the appropriate way to bring continuity to such regulations in line with those highest standards.
It is not our wish to create deviation for the sake of it. We will continue to look at the market situation. The point has been made already that we have to be alert to evolving new practices. In the same way, I think the hon. Lady would acknowledge that, in the light of the last crisis, there was an evolution in business models with respect to high-cost credit. There is always a risk in the sort of environment that we are in now that there will be new developments. I cannot prescribe precisely how we will look forward, but we will look to adhere to global high standards, because the integrity of our reputation relies on it.
Ms Eagle
I thank the Minister for his indulgence. Clause 2 is also partly about enforcing regulations; there are references to fraud and criminal offences, which again we will come to in more detail later. Will he let us know whether fraud enforcement will be beefed up? We can have a great regulatory regime and redefine fraudulent behaviour, but if enforcement is not up to scratch, that will not really deter. This is area where, if enforcement is too weak, the rewards are very high and the risk of being caught and prosecuted or fined is very low. Can he give some reassurance on that point at this stage?
John Glen
I am happy to. The hon. Lady makes a fair and reasonable point. We have to maintain the highest standards of regulation. The FCA and the PRA are extremely well respected globally, but that does not lead me as the Minister to be complacent. We must continually be vigilant about whether those standards of compliance and intervention into non-compliance are sufficient and adequate. We will always seek to maintain that.
To return to the principle, these capital requirements for firms are extremely detailed and technical. The regulators have the right expertise to update them. They will have increased responsibility, but they will need to consider the principles set out in the Bill. We are following the advice of the House of Lords Financial Affairs Sub-Committee, which said that these delegations would be appropriate. The broader conversation about the direction of travel around what sort of framework we wish to have in the UK is not fully addressed at this moment, but there will be more to say in the context of the response to the future regulatory framework two-stage review and the legislation we bring forward subsequently.
Question put and agreed to.
Clause 2 accordingly ordered to stand part of the Bill.
Schedule 2
Prudential regulation of FCA investment firms
Mr McFadden
I beg to move amendment 20, in schedule 2, page 63, line, at end insert—
“(ba) the target for net UK emissions of greenhouse gases in 2050 as set out in the Climate Change Act 2008 as amended by the Climate Change Act (2050 Target Amendment) Order 2019, and”.
This amendment would require that, when making Part 9C rules, the FCA must have regard to the UK’s net zero 2050 goal and the legislation that has been passed in pursuit of this goal.
The Chair
With this it will be convenient to discuss the following:
Amendment 39, in schedule 2, page 63, line 5, at end insert—
“(ba) the likely effect of the rules on the UK meeting its international and domestic commitments on tackling climate change, and”.
This amendment would ensure the likely effect of the rules on the UK meeting its international and domestic commitments on tackling climate change are considered before Part 9C rules are taken.
Amendment 24, in schedule 3, page 79, line 29, at end insert—
“(ca) the target for UK emissions of greenhouse gases in 2050 as set out in the Climate Change Act 2008 as amended by the Climate Change Act (2050) Target Amendment Order 2019, and”.
This amendment would require that, when making CRR rules, the FCA must have regard to the UK’s 2050 net zero goals and the legislation underpinning those goals.
Amendment 42, in schedule 3, page 79, line 29, at end insert—
“(ca) the likely effect of the rules on the UK meeting its international and domestic commitments on tackling climate change, and”.
This amendment would ensure the likely effect of the rules on the UK meeting its international and domestic commitments on tackling climate change are considered before CRR rules are taken.
Mr McFadden
Amendment 20 focuses on the new accountability framework for the FCA set out in schedule 2. If anyone wants to follow the detail, I am referring to the list at the top of page 63 of the current edition of the Bill. Returning to my opening remarks this morning, we tabled a similar—possibly identical—amendment to the accountability framework set out for the PRA in schedule 3, but we will come to that in due course.
As the Bill stands, the accountability framework in schedule 2 asks the FCA to have regard to three things: international standards, which I do not think anyone would argue with; the relative standing of the UK as a place to do financial business, which can be interpreted in a number of ways, but could be summed up as a competitiveness criterion; and other matters, which may be specified by the Treasury. I ask the Minister, why were those three picked out of all the things that we wanted the FCA to have to regard to in this brave new world, where we are onshoring all this, and not others?
We take the view that this list is incomplete and could be usefully added to. The regulators have an expanded new task, between schedule 2 and schedule 3, of regulating this huge, globally significant financial services industry with a lot of new powers, so what should they have regard to when they do this? There could be a number of things added to this “have regard to” list. Perhaps the most obvious is the UK’s climate change goals, specifically the commitment to reach net zero emissions of all greenhouse gases by 2050.
Why do we want to add that in particular? There are several reasons. First, this is completely bipartisan. The Government are committed to it and the Opposition support it. It does not divide the parties in this House; it has multi-party support. Secondly, we are not asking for something that has not already been legislated for. It was legislated for on two important occasions in this House. We are not tacking on a new, previously undiscussed climate change commitment to the Bill. The legislative history of this, as hon. Members will know, is that the original goal of an 80% reduction in greenhouse gases by 2050 was legislated for in the Climate Change Act 2008 under the last Labour Government, which the Conservative Government changed to a commitment to net zero by 2050 through the 2019 order referred to in the amendment, so this has already been legislated for twice, once at 80% and now at net zero.
Stella Creasy
Is it not also important to recognise that some of the strongest drivers for reaching some of those emissions targets will come from the financial sector itself? For example, the move towards decarbonising pension funds has been hugely beneficial in promoting renewable energy. It makes sense to join the dots when it comes to our country’s financial objectives and our wider social and climate objectives.
Mr McFadden
My hon. Friend is absolutely right. Joining the dots is exactly what we should do. Of course, she is right that individual investment firms will make their own decisions on these things, perhaps sometimes pressed by pension fund members, consumer groups or trustees in some ways. We applaud firms that do that, but how much more powerful would it be if that was a goal of the regulators, set out in our own financial services legislation? It would be more powerful, because the UK has this huge financial sector, which has around it this cluster of expertise, which we refer to a lot—legal and accountancy firms and all the rest—and because our own domestic commitments can bend the power of that sector towards the net zero goals.
The amendment goes with the grain of what more and more firms and people in this sector are talking about. By including this change, we can take all the fine-sounding commitments on corporate websites and put them at the heart of our regulatory mission. It can mark out the UK financial services regulation as having a new post-Brexit mission. If asked what we want the UK financial services sector to do in this post-Brexit world—we debated divergence and capital rules and all the rest earlier—what would be a better answer than making sure that the power of this is bent towards us achieving net zero, and in so doing encouraging financial sectors elsewhere in the world to go down the same path?
Finance will play a huge role in whether or not we meet the target. I do not propose, Mr Davies, to go through what the Committee on Climate Change has said that we need to do to reach the target in great detail, because we would be here all day, but I want to give the Committee an idea of a few headings that will require enormous investment.
If we are going to achieve the target, we will need a quadrupling of the supply of low carbon electricity. We have done well on low carbon electricity in the UK, in the last 20 years or so. We have vastly expanded the provision of renewables that go into the grid, but even after doing well we need to quadruple that if we are going to meet the target.
We will need a complete automotive transition, from internal combustion engines to electric or other zero emission vehicles. Just a few days ago, the Prime Minister himself announced a new, more advanced target for the phasing out of internal combustion engines.
There will need to be a huge programme of investment in buildings and heating. Whether that is through heat pumps or hydrogen boilers, there will need to be a huge programme of retrofitting equipment to millions of houses throughout the UK.
There will need to be a large programme of afforestation, because remember this is net zero. It will not be that we never have emissions, but we will have net zero. One of the main vehicles, if you like, in absorbing the emissions that we are still responsible for is afforestation, so we will need a huge programme.
We will need changes in farming and food production. We have the return of our old friend, carbon capture and storage. That takes me back, because a decade ago, when I was sitting where the Minister is now, we were announcing carbon capture and storage. It was announced again last week. There might be Members here who are quite new to Parliament, such as my hon. Friend the Member for Erith and Thamesmead, the hon. Member for Hertford and Stortford and maybe others who were elected in 2019. I look forward to them coming back in 10 years’ time and debating a Bill where new carbon capture and storage has been announced. Maybe we will even have achieved it by then, who knows?
Alison Thewliss
Members may indeed remember carbon capture and storage well, because we were promised a huge project in Peterhead, ahead of the indy ref, which has not yet emerged.
Mr McFadden
The hon. Lady is quite young, so she might be here in 10 years’ time—
Mr McFadden
Perhaps it is not her ambition to be here in 10 years’ time. Carbon capture and storage is back. There are more things that we will have to do, but all of those headings will need finance, capital and investment. That will not all come from the state. It has got to be a combination of public and private investment, if the country is serious about this goal.
This is not an ordinary piece of legislation or A. N. Other Bill that we want to tack on to the regulatory framework. It is an overarching piece of legislation that will inform investment patterns and work production in a whole range of areas. It is one of the most significant pieces of legislation in this country since the end of the war. Perhaps we do not always realise that, but it really is, if one thinks about the list that I have gone through.
All of those things will take finance. It seems to me not odd to add this to the regulatory framework, but very odd that it has not been added already, particularly because the Government have made so much of the country being an international leader in the area, including asking the former Governor of the Bank of England, Mark Carney, to play a leading role. We absolutely welcome that.
Gareth Davies (Grantham and Stamford) (Con)
The right hon. Gentleman sets out very well the problem that our generation faces. I say that as someone who has worked in financial services and has a family member who also works in the sector. The right hon. Gentleman is totally right that the key to unlocking progress towards 2050 is through private capital, but will he not concede that the Government have already made significant announcements such as those on the green gilts, the long-term asset fund and the green homes grant? Many announcements that have been made will help to mobilise capital towards the goals that he seeks.
Mr McFadden
The hon. Gentleman is right and he goes for pot 3 in terms of my reasons. I repeat: the problem about pot 3 is that the reason not to accept an amendment is that it concedes that it is absolutely heartless to do so. He is absolutely right. The Government have said that they want the UK to be a leading player and they appointed Mark Carney, who is a champion of green gilts, I believe. I was pleased to hear the Chancellor’s announcement, because green gilts have been issued by other countries in the past year or two. They have often been oversubscribed, which shows an investor appetite for products geared to that end.
Let me put the point back to the hon. Gentleman. If there are new financial innovations, such as green gilts, that Governments can issue to finance the list of things I mentioned from the Climate Change Committee and if there is investor appetite, as there seems to be, for the limited number of green gilts that have already been issued, why on earth would we not put at the heart of the regulator’s mission that they should have regard to these goals and use them as a guiding principle, particularly as we are going into a post-Brexit world where we will be asked on many fronts what we are for now given that we have left an existing framework? It is particularly appropriate to add this proposal to the Bill. This will require investment and it cannot all be done by the state. It will require innovation in finance. We have mentioned green gilts but other kinds of saving products, investment products, bonds, loans and all sorts of instruments will all have to be geared to the necessary changes to meet the net zero target.
The final reason for the proposal is to stress the ambition of the target. Any one of the things that I read out would require a lot of ambition and a lot of investment. It is pretty hard to see how this can all be achieved if it is not an explicit goal of financial regulation.
To recap, the amendment seeks to make these changes in the least possible contentious way. We have not added a syllable or comma to anything that the Government have not already legislated for. All we are asking for is that the Government signal that they are taking their own legislation seriously by adding the net zero commitment, which the House has already legislated for, to the mission of the financial regulators. That seems to be a most uncontroversial and reasonable thing we can do in the post-Brexit financial regulatory framework.
Alison Thewliss
I support Labour amendments 22 and 24 and wish to speak to amendments 39 and 42 in my name and those of my hon. Friends.
I agree very much with the right hon. Member for Wolverhampton South East. Our amendments are trying to help the Government out. That is unusual but, in the spirit of cross-party consensus and doing things together to save the environment, that is perhaps how we should proceed. On 9 November, the Chancellor said that he wanted to lead the world in the use of technology and green finance. Unfortunately, the Bill somehow missed the boat. It is unfortunate that the Chancellor’s statement came just before the Minister made his Second Reading speech because the Bill would be the place to start with this ambition.
Abena Oppong-Asare (Erith and Thamesmead) (Lab)
I am delighted to speak in favour of amendment 24. In just 12 months, the UK will host and hold the presidency of the 26th UN climate change conference of the parties in Glasgow, where the world will be watching. The amendment shows that the UK means business on climate change and that the Government are putting in place their promise to join forces with civil society, companies and people on the frontline of climate action ahead of COP26. It has the support of all political parties, so this is in no way party political or controversial.
Last week the Committee heard evidence from the likes of the Finance Innovation Lab and Positive Money, which support the amendment. The witnesses mentioned that it would be helpful if the FCA could refer to the Climate Change Act when preparing secondary legislation. Will the Minister therefore consider putting in capital requirements for investment firms, introducing weighting on environmental, social and governance issues such as penalising assets that have climate risks? As we know, the Bill covers legislation on packaged retail and insurance-based investment products, which will bring the £10 billion market to the EU.
We also heard last week that the Bill could be improved further, with a key information document that investors receive when looking at PRIIPS to include disclosure on environmental and social governance issues, and to ask the FCA to ensure that happens. I am sure the Minister will agree that that would help the Prime Minister achieve his ambitious 10-point plan—it is certainly ambitious—for the green industrial revolution.
It is important to know that there is a drive towards greater ESG integration across the financial sector, which investors are pushing for as well. This is an opportunity for the Bill to be shaped more robustly, and it sends a really strong message that the UK takes climate change seriously.
As we sit here today, hundreds of young people are meeting virtually at the mock COP, ensuring that net zero goals are deliverable. I am therefore surprised that elements of the amendment are not already in the Bill, given the Prime Minister’s ambitious 10-point plan for a green industrial revolution, which will not be deliverable if we do not reinforce our commitment to environmental sustainability in the Bill.
The amendment, which I believe is rather reasonable, would lay the foundations for sustainable environmental infrastructure with substance. As mentioned by a number of colleagues, this is not controversial but something that we really need right now. Particularly as we are dealing with covid, we need to be thinking seriously about the environment. The only way we can ensure that this is delivered is by putting something in the Bill that requires firms and the regulator to step up on this issue.
We do not have time for delay. This is an opportunity for us to put our heart into the Bill and deliver what we have promised, and it falls in line with what all political parties have been asking for.
Stella Creasy
The shadow Minister is making a powerful speech. I take the point made by the Government side, but I always wonder: what about the counterfactual? What problem will there be if we do not put these things into legislation? What message would that send about what might be jettisoned if, God forbid, we had another crisis on a similar scale to this year’s? Action on climate change is something that we simply cannot afford to go slow on. The counterfactual on this is an important issue, because it gives us an opportunity to say that if we do not put it into legislation, we are sending a message that this might be an optional extra, rather than an integral part of our future as a country.
Abena Oppong-Asare
My hon. Friend makes a good point. The UK Government constantly say on their website that they plan to go further and faster to tackle climate change. As my hon Friend has mentioned, this is a perfect opportunity to ensure that this is implemented in the Bill. I am surprised, frankly, that it is not in there. All that we are asking for is a reasonable amendment that already falls in line with the Government’s objectives. It is not going to create any extra work. We need to think about the future, particularly if we do not take action to address climate change, because we are heading for difficult times and I am really worried about the future for younger generations.
John Glen
Let me say at the outset that the Government are fully committed to reaching our climate change aims both domestically and internationally. We have set our commitment to net zero in legislation. When I was listening to the right hon. Member for Wolverhampton South East discuss the range of interventions and announcements that the Government have made in recent weeks and pivot back to the good work done previously, this underscores the fact that looking at this through a bipartisan lens is probably the most effective way. The aims that we share should be supported by sectors across the economy, not least financial services, as the Chancellor set out in his recent statement to the House.
Amendment 20 would insert the net zero target into the FCA’s accountability framework for the implementation of the investment firms prudential regime. Amendment 39 is similar, as it would insert an additional consideration into the FCA’s accountability framework, requiring the FCA to have regard to the likely effect on the UK’s domestic and international commitments on climate change.
I fully support the intention behind these amendments, of course, but the aim of this measure is to enable the implementation of a specific prudential regime to apply to a specific type of firm. The current “have regards to” provisions in the Bill are those that the Treasury found to be immediately and specifically relevant and that reflect issues raised by industry. I think about our relative standing and the importance of considering and aligning with international standards. Those are the ones that also relate to the equivalence decision and are directly tied to the implementation of the IFPR.
As the Chancellor set out in his statement outlining the new chapter for the financial service in the UK, if we are to achieve the net zero target it will mean putting the full weight of private sector innovation, expertise and capital behind the critical global effort to tackle climate change and protect the environment. The Treasury and the regulators are already making ambitious strides to that effect, and Members have referred to the role of the former Governor, Mark Carney. I draw attention to the green finance strategy, which the Government published just 15 months ago, and to the work across a number of activities in the City on which I have been seeking to lead over the past three years. The green finance strategy is something that the regulators have actively supported.
Stella Creasy
Apologies; I did not realise the Minister was going to move on. He has made an incredibly powerful case for the importance of including such a commitment, and he has essentially said that the Treasury might look to include it. He said that it had looked only at the immediate and specific regulatory requirements. Of course, many of us believe that we are facing an immediate and specific crisis, so can he tell us why the Treasury has not already taken on the issue of climate change, given that he has made a case that it should be part of it? He has gone for pop No. 3 in the shadow Minister’s list. There might be a sixth option here, which is: “If we did not come up with it, we are not going to support it.” That would be rather short-termist, surely.
John Glen
I hope I would never be accused of taking such an approach. The reality is that I want the Bill to work most effectively. As I just said, the regulators are already taking into account climate change as a risk to the economy. The FCA/PRA climate financial risk forum and the Bank of England’s climate change stress test are alive and working, and I am confident that they will continue to consider climate change risk when making rules for the prudential regimes. In that context, we will look carefully at the need to add that specific additional reason. I have also stressed the work that is going on internationally. We should ensure that what we put in primary legislation is actually best practice and in line with the evolving consensus on how to deal with such matters.
I turn now to amendments 24 and 42, which make a similar set of changes to the Prudential Regulation Authority’s accountability framework for the implementation of the remaining Basel standards. As I have already said, the Government are already considering how best to ensure that the regulators and the financial sector can meet the commitments, and the Bill grants the Treasury a power to specify further matters in both accountability frameworks at a later data, which could potentially be used to add such a “have regard” in future, if appropriate. Therefore, after serious consideration, I respectfully ask the right hon. Member to withdraw the amendment.
Mr McFadden
The Minister is effectively saying that this is not the right time or place, but it is something that the Government will carefully consider. Given the things that have happened in politics in recent years, prediction is a dangerous game, but I expect that this is something that the Government will eventually decide to do, and I think they will make a virtue of doing it at that time. Indeed, I can see the Chancellor making the statement to the House of Commons right now, saying, “This new requirement for the Bank of England, for regulators, for the whole of Government, puts the UK at the heart of this shift to green finance and the achievement of tackling climate change.”
I agree with my hon. Friend the Member for Walthamstow that the more the Minister said he agrees with this, the more it begged the question of why he does not do it now; we have to start somewhere, and putting it in here would only encourage it being put in broader financial regulatory systems. We also have this consultation in the future regulatory framework; it might even be part of the conclusion to that. For that reason, I am minded to press the amendment today.
Question put, That the amendment be made.
National Security and Investment Bill (Second sitting)
Tuesday 24th November 2020
(4 years ago)
Public Bill CommitteesRead 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 Amendment Paper: Public Bill Committee Amendments as at 24 November 2020 - (24 Nov 2020)
The Chair
Q
We will now hear oral evidence from Dr Ashley Lenihan from the Centre for International Studies at the London School of Economics. Thank you for joining us today. Can you hear me now?
Dr Lenihan: I can hear you now.
The Chair
Q
Dr Lenihan: First, let me thank the Committee for including me in today’s evidence-gathering session. My name is Dr Ashley Lenihan and I am a fellow at the Centre for International Studies at the London School of Economics, as well as an associate at LSE IDEAS. My research for almost 20 years now has focused on foreign direct investment and national security.
Chi Onwurah (Newcastle upon Tyne Central) (Lab)
Q
Dr Lenihan: That is an excellent question. To answer it, I will first step back for a second and say that the Bill is a very important step in the UK’s alignment with its closest allies on this issue, and especially the Five Eyes, because there is clear evidence that states are trying to use the market and companies over which they have control and influence to gain economic, technological and even military power in foreign investment. During times of economic downturn and crisis when asset prices are low, the opportunities for that type of behaviour increase. Hence, we have seen these modifications to regimes not only in the West, but outside the West as well.
I think one of the most important elements of regimes as they have evolved—especially among the Five Eyes, but among our NATO allies and even in Russia and China—is the move to ensure that review mechanisms have the institutional capacity and resources that they really need behind them. Part of this institutional capacity usually involves a multi-agency review body of some type.
There is always a lead organisation, and in the West—especially in the US, Germany and France—these tend to be in Treasury or in business or trade Ministries, and that lead body, like the Department for Business, Energy and Industrial Strategy in the Bill, receives the information and handles the day-to-day activity. However, in the US with the Committee on Foreign Investment in the United States, the idea behind having a multi-agency review body with multiple agencies and Departments across vast areas of Government is that you have the ability for regularised monitoring and feed-in from these agencies across the spectrum of possible threats, and you have dedicated staff within those agencies who have the necessary security clearances, training and specialised knowledge over time to keep an eye on potentially risky transactions and bring them to the awareness of the lead agency.
One of the key elements of CFIUS that has been very positive is that, as it has evolved, it has brought in more agencies, not less, so you have multiple opinions on the same potential transaction being brought to light and discussed before any decision needs to be taken by a Secretary or Head of State, depending on the question. In CFIUS, that responsibility ultimately lies with the President, but the idea is that you have had a multiplicity of views and, under the Foreign Investment Risk Review Modernisation Act—the most recent update of US legislation—you have an ensured national security risk assessment made by the head of intelligence on detailed investigations of certain transactions.
The idea behind this is that—hopefully—any decision made will be viewed by the public as one that is truly based on national security concerns because of the debate that had to take place behind the scenes. That lowers the risk of politicisation and intervention, and again heightens the possibility of actually catching risky transactions in a way that otherwise can be difficult.
One of the great examples of transactions in the US caught not originally in the regularised monitoring process, but by a CFIUS employee in one of the agencies, was the unwinding in 2011 of Huawei’s purchase of 3Leaf, which was a US-based cloud computing technology company that had gone bankrupt. The assets, employees and patents had been purchased by Huawei—bankruptcy assets were not consistently monitored by the regime at that time. The purchase was caught by a Government staffer who happened to notice on his LinkedIn account that somebody whom he knew, who had partially run 3Leaf, was now listed as a consultant for Huawei. That transaction had to be reviewed and retroactively unwound. At that point, of course, one must assume that the bulk of the damage had been done, but it goes to show the importance of having not just one agency looking at these cases and being responsible; a multiplicity is needed across the piece. If I have any concerns with the Bill, my primary concern would be that the institutional capacity and resources behind the review regime are not made clear.
Chi Onwurah
Q
In terms of your work on investments, and the investment regime, is there not a risk that it ends up capturing a host of investment transactions? I am particularly thinking of the burden and impact on our innovative tech start-ups. The likely definitions of the sectors to be involved include artificial intelligence and data infrastructure. Based on your experience of other countries’ introduction of new investment screening rules, have you found patterns in how similar changes have affected foreign direct investment, and potential trade deals, which is a topical subject? Do you have any thoughts on ways to mitigate the burden and impact, particularly on start-ups?
Dr Lenihan: The Bill is arguably broader in scope on call-in powers than some other foreign direct investment regimes—I would argue that these perhaps even include the US regime—because it does leave wide latitude for call-in powers. The Bill also covers trigger events that are initiated by all investors, both domestic and foreign, and that is truly rare among Western FDI review regimes that are focused on national security. Usually, the concern is to focus the regime on investments from foreign-owned, controlled or influenced entities. Domestic entities and acquirers that have, for example, ultimate foreign ownership or influence in some ways should be able to be caught by any well-institutionalised and resourced regime. I am not sure why it is that we do not actually see the word “foreign” in the Bill, even though it is supposed to be based on foreign direct investment. Perhaps that is a concern about potential domestic threats down the road, but either way, it will lead to a much larger volume of mandatory notifications than most other national security FDI regimes—the US, Germany, Australia and other countries. Almost 17 have made changes in the past couple of years, and these have increased and been modified since the covid pandemic.
I understand that the legislation may be written as it is to include domestic investors, perhaps to avoid appearing to discriminate against foreign investors. I would suggest that that is probably too broad a formulation for focusing on and identifying real risk. The EU framework for FDI screening encourages its EU members to adopt mechanisms that do not discriminate between third-party countries, but that does not mean that it takes the word “foreign” out of its legislation to target foreign investments as opposed to domestic ones. Part of that is about the volume of transactions.
One thing I would highlight is that FIRRMA expanded the scope of covered transactions to include non-controlling investments of potential concern, as well as any other transaction or arrangement intended to circumvent CFIUS’s jurisdiction. But because it has had more cases to review on a detailed level in the past two or three years than in its history, since 1975, a major element of that Act is, again, around staffing and resources. There is a specific provision in FIRRMA, which is very clear that each of its agencies needs to hire under-secretaries in each agency just to be dedicated to this task.
There are two elements. An inter-agency review team is needed. You need enough staff to actually handle and catch all the risks. You the need the proper resources to do so—the right access to the databases, the right security clearances, the right training. On top of that, the volume of mandatory notifications will be increased by the fact that this is not just focused on foreign investment. I do not think there is much you can do about the foreign cases that you will get. There will be a high volume of those, and you need to be ready for them, but it is an important national security risk that needs to be dealt with.
The Parliamentary Under-Secretary of State for Business, Energy and Industrial Strategy (Nadhim Zahawi)
Q
Dr Lenihan: Personally, I think they are fine. I know that might not be a popular answer with some. Germany, France and even parts of the EU framework set up this five-year retroactive for cases. I think that that is at minimum important. Other countries, such as China, Russia and the US, do not place any limit on retroactivity. I would have to check up on Australia and Canada, but there have been cases that have gone beyond a year there. Under the original Government White Paper, the idea of having only a six-month period, whether or not you have been notified, is quite dangerous, because there have been cases that were well known where they have been caught after that point.
Some of my examples are from the US. The reason for that is that it is one of the longest-standing and most institutionalised regimes. It is also one of the most transparent, from which we know most about the cases that have gone through it. I have looked at over 200 cases of this type of investment over a seven-year period in the US, UK, Europe, China and Russia. One case that stands out in the US is the 3Leaf acquisition by Huawei, which was caught almost at the year mark. Another good example that went over the one-year mark would be the review in 2005 retroactively of Smartmatic, which was a Venezuelan software company, and its purchase of Sequoia Voting Systems, which was a US voting machines firm. Smartmatic was believed to have ties to Chavez. However, that acquisition completed without knowledge of CFIUS and it was not actually able to be unwound until 2007. At that point, you worry about what has happened, but at least you do not have the ongoing concern.
You do need flexibility. With the volume of notifications and the learning curve that the investment security unit will have to undergo, or whatever the final regime truly looks like, it will take time to get the team in place and get the knowledge and systems down, to accurately catch even the most obvious investments that are of concern. Dealing with the kind of evolving and emerging threats we see in terms of novel investments from countries such as China, Russia and Venezuela needs the flexibility to look at retroactively and potentially unwind transactions that the Secretary of State and the investment security unit were not even aware of.
One thing is that for mergers and acquisitions transactions, which are historically what have been covered under these regimes, across Europe, Australia, Canada, Russia, China and the US, all the systems that have been used—the M and A databases: Thomson ONE, Zephyr, Orbis—take training, but they only cover certain types of transaction. They do not cover asset transactions; they do not cover real estate transactions, which are of increasing concern, especially for espionage purposes.
It is going to take time, and I believe that flexibility really needs to be there. It can always be reviewed in the future, but I do not think that so far foreign investment has been deterred in any way in countries that have that retroactive capability. To limit the UK’s capacity to protect itself for some kind of strange feeling that we need to be perceived as being even more open than everybody else when under threat is not really wise at this time.
Matt Western (Warwick and Leamington) (Lab)
Q
Dr Lenihan: I do think the US system is the most institutionalised that we have, and the best at the moment. That being said, Germany’s system is very good; it has caught quite a bit. The German system has also been very good about regularly updating, changing and adapting its regulations as it sees new emerging threats to itself. They seem to have good feed-in across Government and they are exceptionally good at co-ordinating with other states in terms of information of concern.
In terms of national security review, Canadian and Australian systems are quite good. The problem with those systems is that they tend to do national interest reviews at the same time or in tandem with their national security reviews. Over the long term, including national interest in the regime has had an impact on how they are perceived in terms of their openness to foreign direct investment abroad. In the OECD’s FDI restrictedness index, Canada and Australia rank far lower than the US, the UK, Germany and France, and I think this is because of their inclusion of national interest concerns. Similarly, on the World Economic Forum’s global competitiveness index, they rank far lower. That does not provide investors with the type of clarity that they need. In general, we see that investors tend not to be dissuaded from investing just because there is a new foreign direct investment regime, as long as that regime is seen to have clear regulatory guidance, is transparent, and is applied consistently over time.
France sometimes gets quite a bad reputation for economic nationalism, but its review mechanism is also quite good at catching potential threats to national security. Japan is an interesting case. It has been so restrictive for so long that it is a little harder to compare with the other western countries. Its system has been tied in again to an overarching inward investment regime that has been restrictive towards foreign investment for other means beyond national security, so I find that country to be less of a comparator for these purposes. I hope that answers the question.
Simon Baynes (Clwyd South) (Con)
Q
I have found your comments particularly interesting, Dr Lenihan. My own background is in the financial world, where I was involved in cross-border M and A and quoted equity transactions. I fully accept the premise of the Bill, which I think is important and has to be put into effect, and I draw encouragement from what you are saying about other regimes, but I am still left wondering a little bit whether, in practice, it will be really quite difficult for us to put into effect. Your point about the necessity of expertise among staff is crucial. Having sat at the centre of the process, I recognise that the point you make about a huge amount of information flowing across, especially in respect of unquoted companies, is very important; often, there is not much established information in the public domain. That first point is very important. The second point is that there is a very complex mechanism of market sensitivity as well. I do not quite know how this system intervenes with that. Also, within the UK itself there is a culture of openness, which has been touched on before, and in some respects we are a very different country from the others, particularly given the strength of the City of London. We therefore have the ability to transact in a way that some other countries do not, and a different culture.
The other point I wanted to raise and to hear your comments on is that there is a danger of political interference. I know that that is not the intention, but it must be a hazard in this process. What happens if the Government get it wrong about a company? Could not that be interpreted as political interference rather than seeking to establish a security risk?
Dr Lenihan: I started my career in mergers and acquisitions in aerospace and defence M and A, in London. I think you make an important point: the UK has historically been the most open country to foreign direct investment on most indices and indicators. That perception is strong, and I do not think that that culture of open investment will or should change with the introduction of the regime. To the contrary, it actually gives you one of the best starting points that any country has to do this.
As I said, on the whole, in the Bill as written, and in the statement of policy intent behind it, it is very clear that the powers for review and intervention should be used only for an identified risk of national security, and not on the grounds of national interest. Regimes that are based only on national security, like that in the US but also Germany and France—even with a very different culture in many ways—have not seen a lowering of levels of foreign direct investment over time, because they have introduced, modified or kept these regimes up to date. It is because, on the one hand, the stable environment that they provide and that the UK will definitely provide for foreign investors, is far more attractive than any uptick in cost from having to get up to speed on a new regime; also, they are able to retain these global perceptions of openness to foreign investment and ease of doing business because of the way in which the rules are applied. As long as the rules are applied consistently, and with clear reasons behind their use, and applied consistently and transparently over time, it should be okay.
The Bill provides for a lot of regulatory guidance, which needs to come forward in a clear and very easily comprehensible and understandable manner. As long as that happens, it should be okay. Global Britain should still be the proponent of liberal economic values that it always will be, while also being able to demonstrate to itself and to its allies that it is able to protect itself from this type of investment.
Going forward, Britain’s relationship with many of its Five Eyes allies is going to depend on having a comprehensive regime of this nature that is used well. Under FIRRMA, under US law, for example, the UK is an exempt foreign investor in certain categories—one of three with Canada and Australia. It has been stated that for that to continue––it is going to be reviewed––it needs to have a regime to protect itself. We can talk about this later, but part of that is about the potential concern about not just the ability to share intelligence on these issues, but about acquisition laundering, export controls and all these issues that tumble on behind that can affect investment, trade and intelligence-sharing relationships over time. That is important.
The research evidence shows that foreign investment is not deterred unless there is a problem in how this is applied. There has been politicisation of cases; demonstrated proportionality of response is also extremely important. There are many cases in which a threat to national security can be mitigated by agreements and undertakings without needing to block a deal. When you look at the modern history of foreign direct investment intervention across Europe and the US––even if you look at Russia and China and how they behave––the preference is, where possible, to mitigate national security concerns through comprehensive agreements, and that can be done in a host of ways. It can be that you have a board of directors that is only UK nationals, or that you require divestment of a certain black box technology company to another UK company or a friendly allied country. Whatever it may be, historically, there has been a preference for that type of action to be taken. Vetoes of cases are actually quite rare since world war one, when we first really saw this type of issue pop up.
The concern is if we see the UK blocking deals where it could mitigate because a deal has become a political hockey puck. In today’s world, where this is something that is constantly discussed in the Financial Times and The New York Times, whereas it was not 15 years ago, any case has the potential to be discussed widely in the political debate. The question is how it is treated by Government and how other countries perceive that treatment. I know that I have used US examples quite a bit, but if you look at US-China investment, China still invests a lot in the US, even though it complains every time a deal is blocked or mitigated. The reason behind that is because this is a sovereign right under customary international law, and China does the same thing when it has the same concerns. It is only if a case becomes truly politicised that there is an issue.
To give you an example, in 2005 in the US, the case of Dubai Ports World and P&O, which was a takeover of a UK company, became overly politicised in the US system. It is one of the only real examples where it has happened, and that was because there were a few US lawmakers who had a completely different view of the risk and relationship of the US vis-à-vis the United Arab Emirates than the Department of State or the Department of Defence. That is quite rare but what ended up happening was US lawmakers seeking to block a deal when most reasoned professionals in the industry and in various Government Departments thought that any risk could be mitigated simply in a host of other ways.
In the case of overuse, overbalancing, misuse, politicisation, whatever you want to call this tool of economic statecraft, there was a momentary blip in relations between the US and the UAE. There was a momentary stalling of trade talks, change in the currency basket and some uncomfortable months, but the relationship was strong enough to survive and it usually is. This is not really an aspect of going to war. I think the key is proportionality in response, how it is applied, and it is about consistency and transparency. The Bill is well written in many ways, but how it is used can go any number of ways, so it is about how the UK uses it going forward.
The Chair
Thank you, Dr Lenihan. There are lots of Members wanting to speak and we have limited time, so I will try to get through some quickly. I will call Stephen Flynn, Mark Garnier, then Stephen Kinnock.
Stephen Flynn (Aberdeen South) (SNP)
Thank you for your comprehensive and helpful answers, Dr Lenihan. I would like to divert back to some of the comments that were made about the Bill on Second Reading, particularly relating to definitions, or a lack thereof, in relation to national security. I would welcome your thoughts as to whether the Bill should or should not have a definition.
My second question relates to the scope of the Bill, which you mentioned earlier. In terms of the consultation going on, 17 sectors have been identified. The glaring omission seems to be social media, but I would appreciate your view on whether artificial intelligence would cover off social media to a level that you would be comfortable with.
Dr Lenihan: Those are both really good questions that I hoped would be asked. If national security is that which seeks to maintain the survival of the state and preserve its autonomy of action within the international system, unfortunately that means that you cannot necessarily define national security in law without binding yourself in an inflexible way. What we have seen is that most foreign direct investment regimes of this nature all refer to national security. I do not know of a single one that actually defines it or limits itself to a particular definition. I could be recalling incorrectly but I have looked at over 18 of them and I have never seen a particular definition.
What you do see in regulations is guidance as to how national security risk might be assessed or examples of what could be considered a threat to national security. US guidance is helpful on this, in terms of how they put their regulations together. Some have argued that it is too comprehensive—it is a lot to read and provides the lawyers with a lot to do—but it is useful and has meant that the process of knowing when you might be triggering concerns is easy to navigate. I really do not think that the UK wants to define it in the Bill.
There was a US Government Accountability Office report in 2008 examining the foreign direct investment restrictions in 11 countries at that time. Each was determined to have its own concept of national security but none of them actually defined it. In 2016 the OECD did a similar report after a new resurgence of changes in laws, and it looked at 17 countries including Lithuania, Korea, Mexico and Japan, and they came to the same conclusion. The OECD has quite good guidance in general on this and they have not recommended that their countries define national security risk, but they have recommended regulations to help increase transparency around what could be considered a risk.
Regarding the sectors for mandatory notification, I think that is a very good question and one that it is difficult to grapple with in many ways, because the threat is emerging and changing at the very same time that technology is emerging, changing and interacting with our society in various ways. Various countries have been trying to deal with this. In the US, a final rule was just put out in relation to non-controlling investments and situations where you have certain mandatory notifications. A pilot programme was initiated in 2018 to try to define—as your consultation will, in many ways—the proper sectors using North American industry classification system codes, instead of standard industrial classification codes as the UK regulation does.
Whatever codes you use, though, the US found that they had an incredibly high volume of mandatory notifications and were not necessarily getting to the issue that they wanted to. They have changed that under the final rule, and now mandatory notifications in that classification are going to be defined [Inaudible.] and would come under certain US export control regimes. The idea behind that is that the US is doing a review of export control regimes, which will try to get to what foundational technologies might be of concern. I think that applies to your question about social media.
Social media is of concern because of the data, and data retention, involved in most social media. As I understand it, the sectors in the Bill will be kept under constant review and can be changed and updated as needed. That is important, and it might be worth doing a pilot programme.
The Chair
Dr Lenihan, I was trying to squeeze two more questions in, but I think it will probably be just one.
Mark Garnier (Wyre Forest) (Con)
Q
Secondly, it is worth bearing in mind that the Minister, Lord Grimstone, sits in both the DIT and BEIS. He is responsible for investment promotion. We are talking about more acquisitive types of investment, but do you see a potential conflict of interest between the ambitions of the Government to secure more investment into the UK and potentially having the wrong kind of investment?
The Chair
Sorry, Mark, but we have about 90 seconds for that to be answered. Please have a go, Dr Lenihan.
Dr Lenihan: I would suggest that the investment security unit and the unit that will handle the processing of this regime remain in BEIS. That is fine; however, it would be useful to set up in the Bill some sort of multi-departmental review body that contributes regularly, and that has staff in those Departments who monitor the risks in relation to this concern. As you say, the Department for International Trade will be able to monitor, find and catch risk that others—such as the Foreign, Commonwealth and Development Office, GCHQ and its new cyber unit—cannot.
It would seem very strange to not have a feed-in from intelligence agencies and the Ministry of Defence on a regular basis. If you set that up in an institution that is clear, at least to the outside world, about its composition and makeup, as opposed to having ad hoc feed-in over time, it would help with the perception of openness from the outside. It would also help to counter any claims of an individual or place being politicised or used for some other purpose by a particular Minister, because then they could give a balanced opinion for the Secretary of State in charge to make a final decision.
The Chair
Thank you very much, Dr Lenihan. That brings us to the end of the time allotted to the Committee for asking you questions. We are grateful to you for your time. Where members of the Committee wanted to ask questions and were not able to, I will try to give them a bit of priority on the next panel—or in another, if that is helpful.
Examination of Witness
Michael Leiter gave evidence.
The Chair
We come to our fourth panel of witnesses. We will hear oral evidence from Skadden, Arps, Slate, Meagher and Flom LLP and Affiliates. For this panel we have until 3.30 pm. Mr Leiter, I welcome you, and ask you to introduce yourself for the record.
Michael Leiter: Good afternoon. My name is Michael Leiter, and I head the national security and Committee on Foreign Investment in the United States practice at Skadden Arps. It is a pleasure to be with you this afternoon.
Chi Onwurah
Q
Michael Leiter: Thank you for the question; it is quite a good one. It is one that the United States has struggled with, as have other countries and their regimes. We suggest a couple of approaches. First, one piece that I think the Bill does quite well—although there is a countervailing concern that has to be addressed—is not having a de minimis threshold, in terms of dollars. The Bill is quite strong in that regard, because as you note in your question, just because someone acquires a start-up company for a relatively modest amount—a few million pounds—it does not mean that that company and that technology does not have, or will not have, very significant national security implications.
The flipside of that is, of course, that without the de minimis threshold, it becomes a far more difficult regime to manage. The volume can be much higher. It can potentially poison venture capital innovation. This is best balanced by not having a threshold for dollars, as you do with the no de minimis threshold, but then making sure that regulators have the ability to review these matters extremely quickly. The pace of investment in emerging technologies requires a very short timeframe. It is not like a large public company transaction, which has extended timelines. As long as one implements a very rapid review process and has the officials in Government to keep up with that potential backlog, I think those two interests can be effectively balanced.
Chi Onwurah
Q
Michael Leiter: This is very important. I was rather taken aback by two things about the Bill. The first is the projection of over 1,000 matters, going from the very, very few that the UK has traditionally had; this is an explosive increase in matters. I am concerned that no Government are ready for that rate of change. Even in CFIUS under FIRRMA, although there is not an increase in the overall number of long-form notices, in the short-form declaration process, there was an increase. That was relatively modest, an increase of about one third, so the US now reviews approximately 240 full cases, and about another 100 short-form.
When you talk about going from a few dozen to 1,000, you have to be very sure that you have both the resources and the expertise to process that. I would be concerned by that. Another case where your Bill goes much farther than anything I have seen, and certainly much farther than anything in the United States, is in encompassing not just acquisition and investment in businesses but acquisition and investment in supplies, goods, trade secrets, databases, source code and algorithms, so it is tangible and intangible objects, rather than businesses. That scale is very difficult to predict, and if one is more in the mood for incremental change, so as to see how a Government can handle change, including those elements poses some real risk for management.
Nadhim Zahawi
Q
Michael Leiter: I am honoured to have worked with the UK Government for 20-plus years on security issues, and over the past 10 years on economic issues. I certainly think you have the potential to strike that balance. In the US, traditionally, the CFIUS structure was a balance between the security agencies, which tended to want to restrict investment, and the economic and commerce agencies, which tended to want to encourage that investment. Certainly, in the case of China, we have seen massive decline in direct investment because of both Chinese controls and US controls: a tenfold decrease from 2016 to 2018. But as you said, the scale and strength of the US economy mean that global investors look to the United States no matter what.
I do not mean to make less of the UK in any way but, from a UK perspective, one has to be a bit more careful, because you simply do not have the scale that inevitably will attract investment. The US could be a rather poor place to invest, with lots of regulation, but people would still come because of the scale of the market. You don’t have quite that luxury. That is not to say that the UK has not for generations been an incredibly attractive magnet for investment, but whereas the US can err on the side of security, from my perspective, admittedly an American one, the UK might want to be a bit more careful about restrictive measures, because the size of the market is not in and of itself so inherently attractive that companies and investors must be in it. We have a bit of an advantage over you on this one.
Peter Grant (Glenrothes) (SNP)
Q
Michael Leiter: I was able to see part of Dr Lenihan’s excellent testimony, which was quite informative and good. First, to clarify, although the US does make distinctions for exempted countries—obviously those are the UK, Australia and Canada right now—that exemption is extremely narrow. It limits those countries only on mandatory filings, and only if investors from those countries fulfil a fairly rigorous set of requirements. So, although Canadian, UK and Australian investors were quite excited before CFIUS reform, when the regulations about excepted investors were promulgated, that has had a minimal effect on those countries. It is not a significant advantage. Those countries are still subject to CFIUS review in the vast majority of investments they make. Now, that gives only half the story, because clearly investments from those nations go through a much less rigorous review, and come out with much better results than those from countries where the US has a more strained security relationship.
On what I see in the Bill, I would say a couple of pieces about the excepted possibility. First, as I read the Bill right now, it covers investments from other UK investors—not even simply those outside the UK. If my reading is correct on that front, I have to say that is probably not wise. We have already talked about the significant increase you could have, based to some extent on mandatory transactions as well as some other factors, and I think trying to take a slightly smaller bite of the apple and not including current UK businesses in the scheme would be well advised.
To the extent one has open trade and security relationships with certain countries, lowering the bar for review to exempt them, or including things such as dollar limits and getting rid of the de minimis exemption, might well make sense. That is another way of making sure that the Secretary of State can focus on those areas you think are the most sensitive from a security perspective. Whether we like to do so or not, that can be aligned to some extent with the country of origin of the investor. It is not always perfect—one must often look below that, especially when dealing with limited partners and private equity—but it is a relatively easy way to reduce the load you may experience if all these measures were implemented.
Nickie Aiken (Cities of London and Westminster) (Con)
Q
Michael Leiter: Right now, it is a very robust list. In fact, I would probably err on the side of going in the other direction. I think this is a good list of 17, but what is critical is that these sectors gain further definition about what this actually means. Let me give you a quick example: artificial intelligence. I invite you to go online and try to find more than 10 companies in the world right now who are doing well and do not advertise their use of artificial intelligence in one way or another. It is one of the most commonly used marketing terms there is: artificial intelligence and machine learning, all to serve you in your area of work. If one interprets artificial intelligence as encompassing all those businesses, there will be a flood of reviews. Now, if one focuses on those companies not using artificial intelligence but actually developing artificial intelligence, I think the definition of the mandatory sector will make much more sense. That is an area where I think the US is still finding its way. As Dr Lenihan noted, the US began with a set of listed sectors where transactions were more likely to be mandatory. They eliminated that and now focus purely on export controls, but again, it is not that a company uses export control technology; it is that it produces export control technology.
That may be too narrow for your liking, but if one mapped out your 17 sectors as currently described to their widest description, I think there would be very little left in the UK economy, except for some very basic manufacturing and some other services that would not be encompassed. This is a very broad list and, again, I think it will take some time to tune those definitions so they are not overly encompassing. Again, if you look at data infrastructure, communications, transportation —at their extreme, that is quite a broad set of industry descriptions.
Sam Tarry (Ilford South) (Lab)
Q
Michael Leiter: Thank you for your question. I will do my best to provide some advice. I do so with some hesitation, because I readily accept from my experience working with the US and the UK that although we are related, we have two very different systems. The scale of our Governments and the scale of our private sectors are different, so one should always be very careful of trying to learn lessons from any other single country.
First, I would try to take this incrementally. This is a very big step and in trying to predict second-order and third-order effects of this—both the security effects, which may be positive, and the economic effects, which may not be as positive—I would tread carefully. I would start narrowly, then open up the aperture as necessary, rather than opening up quite wide and then narrowing it down.
Secondly, I think it will take some time, and not only to develop the administrative capabilities to handle this volume within the Government. I think you would have a significant amount of learning to do within your private Bar as to how this works, but also how to manage those voluntary filings. You are talking about including voluntary notifications across the economy, which I think is quite a sensible approach, but that requires a degree of collaboration between the UK security sector and the Secretary of State and the UK private legal Bar and commercial sector to understand where those national security threats and risks may lie. This is something that has developed in the United States over the past 20 years, but does not, in my view, yet exist fully in the UK.
Next, I would say that it is very important to consider how this should be applied for limited partners in private equity. Private equity plays a massive role both in UK and US investment and having clear rules about limited partners and the rights that may or may not implicate non-British ownership in those private equity funds is a very important step to take and one that should be clarified up front. It should not be approached without further clarification.
Lastly, I think it is important to build into the scheme the ability to evolve as technology evolves. I heard some of the questions about social media during the previous panel and it would have been very difficult to understand the sensitivities that are implicated by social media 10 years ago, or perhaps even five years ago. The ability for the review and notification to evolve with changing technology, access to data and new national security threats is critically important. The regime should be a living one that will evolve with those changed political or technological circumstances, not one that keeps still.
Sam Tarry
Q
Michael Leiter: Having worked with some of them, I think you have some outstanding individuals in some of the relevant Departments who can look at this matter. I believe that they will have to increase their interaction with the security elements of Her Majesty’s Government in a way that does not perhaps yet fully exist. The departments and agencies that I worked with while I was in the US Government were generally fairly separate from these sorts of investment review, and it will be necessary for training among those agencies to ensure that there is an understanding of the nature of acquisitions and investments in the private sectors in a way that security agencies do not yet fully understand it. Teaching the economic agencies about those security concerns will also be necessary. I think that the Government will need an initiative to make sure that there is a degree of integration across Her Majesty’s Government based on an understanding of those cross-fertilisations, which will take some period to take hold.
Andrew Griffith (Arundel and South Downs) (Con)
Q
Thank you for joining us, Mr Leiter. It is invaluable to have a practitioner’s perspective as we make legislation; that is something I would like us to do more often. I wanted to ask about your practitioner experience with respect to two things: first, the inclusion in the Bill of personal criminal sanctions and, secondly, its behavioural impact, from the point of view of attorneys and lawyers advising clients, on the likelihood of notification.
Michael Leiter: Let me answer that with two points. First, there is clearly an educational process when such a new regime comes into place for bankers, attorneys and business people. This regime will take some time for them to understand as well, but I think that the UK, like the US—I have already drawn some distinctions about the risk of reducing investment in both countries—remains overall one of the most attractive places to invest in the world. One of the reasons it is so attractive is that it has a strong rule of law and courts system, and clear legislation. In that regard, those who would come and invest in the UK very much understand the need to comply with these regulations, and criminal and civil penalties.
What we have seen in the United States is an appreciation, even if there was some initial shock at the scope of the review and what might be considered a national security concern, and a very robust understanding that we at the Bar and our clients have developed about the importance of these reviews and compliance with the legal regime that applies. I do not see any likelihood of, or reason for, the same not taking hold in the UK. I find that my clients are quite appreciative of the counsel we give them, whether it is related to the US or a UK foreign investment. Overall, I think that the concern tends be less about personal criminal liability, although such concern undoubtedly inspires some, and more about the ability to continue to have good, strong, open relations with regulators in the country in which business is being done. That is critical.
The second piece I would commend you on, which is much better than the US system, is that the Bill provides for a very full and complete review by your courts. That is quite positive, especially with the change that will have to be implemented by the Government. The fact that there is an ability to turn to the courts for review is central and important. As you may know, that is not nearly equivalent in the United States. The ability to pursue remedies in the courts in the context of CFIUS is actually quite narrow. On behalf of my clients, and for improvement of the system, I am quite jealous of your approach on this front.
Stephen Flynn
Q
Michael Leiter: I will take those in reverse order. You are absolutely right: the timing is often central to much of what goes on in the world of mergers and acquisitions. With respect to the effective five-year look-back with six months of notification, that is not dissimilar to what we have in the United States. It serves a very useful purpose in that it certainly incentivises parties to file voluntarily.
To the extent that one includes a voluntary notification regime, I think that it is very important to have some period of look-back. I do not have a strong view whether that should be four or five years, but I do think that look-back is important in a voluntary regime. Of course, in CFIUS, there is no statute of limitations at all, but in reality, we rarely see CFIUS going back more than one year, at most two or three. Again, I think that if everything were mandatory, this would not be required, because to the extent that one has a voluntary regime, it is perfectly reasonable to give the Government an opportunity to look back. Doing so also provides an important incentive for parties, because they will often calculate the likelihood of the Government coming and knocking on their door one or two years down the line. I think that a general approach makes sense.
With respect to the specific timeline for the reviews, your Bill mirrors not perfectly, but closely, the CFIUS approach. In most cases, that timeline works relatively well, but there are a few exceptions. First, in public company mergers and acquisitions, this is no problem. The period between signing and closing tends to be quite long, so the idea of 75 days is not problematic. Similarly, whenever you have a matter where there is a competition review, which of course encompasses many things—on our side, Antitrust and Hart-Scott-Rodino, and in the UK and EU there are separate regimes—that 75 day-period seems to fit relatively well, provides sufficient time for the Government do their review, and will not be problematic.
The place where I think this is more problematic—I apologise that I cannot recall the Member who asked the question—is in smaller-scale, early-stage venture investments. That is where deals can go signed to close within hours or days, and having that longer period could be quite disruptive. In that sense, to the extent that one is concerned with early-stage technology investment, these timelines can be problematic, and finding a window to get through that quickly is quite important.
Finally, with respect to the timing of implementation and the time that it will take to get up to speed, I think it is important to have this effectively phased. I know I have said this several times, but I think this is a rather seismic shift in the UK’s approach to review of investment. I am not saying it is a bad shift. I think it is a shift that is consistent with the United States and other allies in Europe, and Australia. I think it is going in the right direction, but it is very significant, so having some opportunity to make sure that both the private sector and the public sector are ready for that and understand the rules—that the sectors are defined in a clear way and that parties understand, especially in the realm of having criminal penalties—I think it is particularly important to do that.
I think there are probably ways, to the extent you are worried about a risk during that interim period that things are not being reviewed, of addressing that as well, with the look-back provision, or initially implementing things in a narrower or separate sense, but I would be a bit careful about not having some transition period, which allows, again, both the public and private sectors to adjust to this very significant change.
Stephen Flynn
Q
I am sorry to flip back again, but on smaller-scale early-stage ventures, we said this could be an issue, and again, I am sorry to pin you down: could it, or will it, be an issue? Where would you lean in that regard? Will we find that investors seek to go elsewhere with this a little bit more, where the timing is a little easier?
Michael Leiter: I think it will be an issue unless you are confident that small-scale, early-stage investors can have their transactions quickly reviewed within roughly 30 to 45 days. If it is longer than that, that will make the investment climate, I think, worse than other competing markets. I think that could have an impact.
On your first point, let’s face it, business always likes predictability, so you always want certainty, but deal makers have to understand risk and understand some uncertainty. That is inherent. I will say, it is not that the US has done this remotely perfectly. The US announced almost two years ago now that it was going to further define foundational and emerging technology that would then be subject to different levels of review under CFIUS. Here we are, almost two years later, and we still do not have that. The fact is that there has been uncertainty, and there will be uncertainty on your side as well. Having those definitions clarified as quickly as possible is good.
Do I think that a lack of clarity for three, four or five months about these sectors will suddenly stop investment in the UK? No. I don’t want to exaggerate it to that degree. You can try to pin me down, but the fact is this is all a matter of balancing, and there is no clear answer about when people will stop or start investing. More clarity is better. The faster there is clarity, the better, and to some extent, a lack of clarity will push people to look at other markets.
Stephen Kinnock (Aberavon) (Lab)
Q
Michael Leiter: Thank you for the question. The answer is that many regimes do draw such a distinction, which is generally a good thing, but there is an exception to that as well. This is important on two points, one of which I have already raised so I will not belabour. Understanding the ownership structure of private equity to understand how the Bill will or will not handle limited partners who are managed by a general partner at a fund is very important. That is a significant amount of investment, and clarity on that point is critical.
In the United States, for example, foreign limited partners in US private equity are fundamentally, overall, not considered for CFIUS. For foreign private equity investing in the United States, foreign limited partners are considered. Again, that is broad brush, but that is fundamentally how it works. With respect to sovereign wealth funds or state-controlled investments, there is a perfectly good argument that yes, the standard of review might be a bit more rigorous. In the United States, the way that works is that if a foreign Government-controlled entity invests in what is known as a TID business—one that that deals with critical technology, critical infrastructure or sensitive data—in the United States, and if they own more than 25% equity, that is a mandatory filing. So, it is increasing the likelihood of a mandatory filing if you are controlled by a partner.
Using such a standard makes sense. Right now, I do not believe the Bill provides many opportunities for that. You are already saying that, in the 17 sectors, all will be mandatory and there is no de minimis threshold. From that perspective, whether you are a sovereign wealth fund or not, it will be mandatory in a large scale of matters. You could of course say, with a dollar threshold such as you have now, that in the voluntary sector, if it was a state-sponsored entity, that would also be mandatory. I think there is some sense to that, but I would move slowly on that because, as I have noted several times, you are going to have a relatively high number of mandatory filings in the first place.
There is a second important piece to this, though, about whether you actually want to change it for Government-controlled entities. That is, especially in the case of China, but other countries as well, the distinction between state controlled and not state controlled is becoming less and less. Again, in some western democracies, it is quite clear whether it is a state-controlled entity, but to the extent a foreign Government can influence a private sector actor, that distinction starts to fade away, at least partially. Under your regime, it is not clear to me, other than expanding some voluntary into mandatory, how that will apply, and I think, to some extent, the distinction is losing some of its fineness.
Stephen Kinnock
Q
Michael Leiter: That raises two excellent points. First, yes, I think private equity is quite methodical about thinking of those restrictions. Whenever I deal with private equity in the Unites States, whether it is US private equity, foreign private equity or sovereign wealth funds, there is always a consideration of the way in which the business in which they are investing may be subject to a national security review and whether or not they will, even if approved, lose access to critical information, technology or other management control of the business in a way that would make it a less attractive option. From a US Government perspective, I think that is entirely appropriate; it is the entire purpose of the national security reviews.
It could affect the choices of private equity in the UK, but one still has to identify what the national security risk would be—and not just what the national security risk might be, but the extent to which, if the investment was allowed, the Government could still put in place restrictions that would eliminate or mitigate that national security risk. That leads me to make two very quick points.
First, there has been much commentary about defining what national security means. I would not welcome to go down that path; frankly, I think it is a bit of a fool’s errand. The Government will define national security as they may. Certainly, they should not overreach in extreme ways, but this is not one that I think legislative language is well tuned to trying to capture. That is not to say that it should not be limited in practice, but trying to capture it in legislative language is, I think, exceedingly hard. Again, it changes over time, depending on technology, access to data and other factors. One can imagine certain things that, before covid, we never would have considered to be issues of national security, but that are today. Capturing language for that is quite challenging.
The second piece is making sure that you have a good regime. We have been talking so much about screening, punishment and what falls into the bucket of review. There has been much less discussion here, and there is much less discussion in the law, about what mitigation and rules and enforcement there will be. If you permit a foreign investor to invest in one of these sectors and you put in place certain protections to protect British national security, how will you actually make sure that that occurs? It is wonderful to have these rules, but unless you actually have the regime and follow these things and ensure that there is enforcement and monitoring of them, you will have spent an enormous amount of time and money but actually not protected national security, so I think we should not give short shrift—[Inaudible]—deal is closed and approved but still being monitored by the Government for the very national security risk we are trying to protect against.
The Chair
We have to end this session at half-past 3, so I think that this will be the last question and it will come from Simon Baynes.
Matt Western
Q
Michael Leiter: I think your Bill does cover it. CFIUS would cover it in two ways. First, to the extent that a non-benign actor was behind the first transaction, CFIUS looks at the ultimate parent and whether it has been structured to evade review, so I think there is robust authority there. Secondly, the follow-on transaction itself would of course also be subject to CFIUS review, so I think you could catch it in the first instance or the second instance.
I think your Bill covers that. I will say also that I think the Bill is quite expansive and potentially problematically so. The US regime looks to see if there is a US business that is being acquired or invested in. That is a broad definition, but it still requires, generally, some physical presence, some people or the like. Your Bill does not seem to contemplate that, and specifically it says, “If the business simply provides supplies and goods to the UK or from the UK”. That is a very broad definition. It fundamentally means that if someone in London is buying something from a US business and it sends that to London—well, I read that as being covered by the Bill. That would actually be more expansive than CFIUS. It might, in that sense, give you greater national security protection, but I think it also may implicate a far more significant scale of transactions.
The Chair
Thank you very much, Mr Leiter. We are grateful to you for giving of your time so generously to assist the Committee.
Examination of Witness
David Petrie gave evidence.
The Chair
We now move to the next session. David Petrie is from the Institute of Chartered Accountants in England and Wales. Mr Petrie, would you be so kind as to enough introduce yourself for the record?
David Petrie: Good afternoon, Sir Graham, and thank you very much indeed for inviting me to give evidence to the Committee. My name is David Petrie, and I am head of corporate finance at the Institute of Chartered Accountants in England and Wales. My background is in corporate finance and mergers and acquisitions, for 10 years or so now in my current role at the ICAEW and prior to that with PwC. My experience includes advising on transactions, principally in the mid-markets, including private equity buy-outs, company sales and some infrastructure transactions. Prior to that I had a career in industry as well, so I have seen all sides of the fence on this, I suppose.
The Chair
Thank you very much. Before I move on to taking questions, I remind everybody that this session has to close by a quarter past four.
Chi Onwurah
Q
David Petrie: The Government have been very clear that the purpose of this legislation is to focus on protection of national security. The guidance notes they have issued, which accompany the Bill and are intended for market participants, are very clear on that aspect. I would suggest that probably all the factors you listed in your question extend beyond a simple matter of national security—if national security can be a simple matter; no doubt that this Committee has heard this afternoon about the difficulties associated with defining national security. Many of the factors that you set out there, important elements though they are to all stakeholders in a company, are not necessarily matters of national security.
I would also say that that for some of the companies that you mentioned there, while certain of their activities might well be included within the scope of this new Bill, it would be very difficult in certain instances to suggest that they had a direct impact on our national security. Of course, that would be up to the new investment security unit to determine, based on a full representation of the facts. If that unit was at all concerned, a procedure is set out in the Bill whereby it would be able to call for as much evidence as it felt was necessary in order to be able to reach a balanced determination on whether investment by an overseas entity did indeed constitute a real threat to our national security. I think that is the point here.
Chi Onwurah
Q
David Petrie: I have read the impact assessment, which included that example. It is a difficult situation, as described in the example. In accordance with the way that this new legislation is drafted and the number and extent of the sectors that are regarded as mandatory—the sectors in scope such that their operating activities would require a notification of the unit—the example set out in the impact statement would indeed require screening by the investment security unit. The Government would likely have the opportunity to review a potential acquisition in that software company.
I was struck by that example, in that it suggested that service had failed, or a malign actor had decided not to provide the necessary services to the airport. I think a broader question here is what might happen in reality. Those services would be procured through a commercial contract, which in turn would, presumably, be backed by insurance. If it were an absolutely critical service, I would expect that the airport would have a back-up system, whether power supplies or a parallel running system, as they do for air traffic control. There are commercial protections for the actual operating activities of critical infrastructure, which should work. It is difficult to protect against the actions of malign actors, but critical infrastructure already has systems and processes, and invests heavily in capital equipment, to ensure that there is not an interruption of supply. The question would be the extent to which ownership of that asset physically gave the owners of the shares the ability to get in and interrupt supply. That almost implies mechanical breakdown or some deliberate and malign disconnection. Again, companies have cyber-security systems in place to ensure that critical infrastructure does not fail.
The point you made was about whether suppliers of that sort of service to our critical infrastructure and their ownership should be subject to review. As the Bill is set out and as the sectors in scope are drafted—of course, the Government will consult over the next month or so on those definitions and whether they should be adjusted or whether they are as wide-reaching as they should be—a business like that would be captured. The investment security unit and, presumably, the security services would have an opportunity to review whether or not to allow that to go ahead.
Nadhim Zahawi
Q
David Petrie: I think a quasi-judicial review is really important and a part of the process, and then, if necessary, there is judicial review. I think the question cuts back to how many times that is likely to happen. We have to step back a little bit and recognise that that would be a situation where the parties to the transaction are challenging the Secretary of State’s decision as to whether or not this is in the interests of national security.
I would assume that if the sellers are British companies, they will probably have received what they feel are adequate assurances that it is okay to sell to an overseas acquirer, but the Secretary of State takes a different view, presumably based on evidence provided by our national security services. Ultimately, if there is a compelling body of evidence to suggest that a transaction should be modified or adjusted or, in extremis, blocked, it would be quite an unreasonable group of shareholders to disagree with that if the if the Secretary of State was applying the test as set out in the Bill, and indeed in the guidance note, that intervention is to be limited only to matters where the national security of this country is at threat.
That is quite different from the national interest. It is tempting—or possible, rather—in this debate to get sucked into questions about what we should and should not be doing in this country. That is not what this is about. The Government have been very clear to the investment community, and to British business more generally, about the purpose of this legislation. That is why, although markets and investors recognise that it will take a certain amount of time and effort to comply with a mandatory regime—the Government have been very clear about their purpose in introducing that—the market is generally favourably disposed towards it. We can see that it is unfortunately necessary in these modern times.
Stephen Flynn
Q
David Petrie: Perhaps I could deal with the second part of your question first, if I may, on the potential number of notifications that the new legislation is going to necessitate. The first point I make about that is that this new investment security unit will need to be very well resourced. A thousand notifications a year is four a day; I am just testing it for reasonableness, as accountants are inclined to do. That is quite a lot of inquiries. I note from the paperwork that the budget allocated to the new unit is between £3.7 million and £10.4 million. I do not know and cannot comment yet as to whether that is likely to be adequate. What I can say is that the impact statement also suggests that of those 1,000 or so transactions which are going to be subject to mandatory notification, only 70 to 95—the numbers set out in the impact statement—are likely to be called in for further review by the Secretary of State, where a very detailed analysis of those businesses and the potential target is going to be necessary.
As, I hope, has been echoed by other witnesses, it is going to be extremely important that this new unit can engage in meaningful pre-consultation with market participants—with British companies, finance directors, and investors and their advisers—so that they can get a pretty clear steer at an early stage as to whether or not this is likely to be subject to further review. If the unit operates in a way where it can give unequivocal guidance to market participants at an early stage and is open to dialogue—I understand from discussions with the Minister that this is the way the unit is being asked to operate—that would be extremely helpful.
I would say that that is about process, certainly, but I think it is also about culture. It has to be a balance, which is well achieved by the Takeover Panel, for example, in this country. You do not tend to approach the Takeover Panel unless you are well-informed and have done your homework—"Don’t bother us with stuff you ought to know” is the unwritten rule. But at the right time and place, I think it is important that there is an opportunity for market participants to be able to engage in a dialogue. The guideline where we put this “Don’t bother us with stuff you ought to know” question is going to shift. At the moment, we really do not know a lot about the way the Government are going to look at certain transactions. We do know which sectors and operating activities are in scope, but, again, we are not quite sure at what stage it will be right to consult and try and get clear guidance. This process will evolve.
I note that the Bill includes provision for the new unit to issue an annual report as to the number of transactions called in and the sectors they are in. That will be extremely helpful for market participants. An issue here, I think, is potentially asymmetry of information. In order to resolve potential asymmetry of information amongst the investment and advisory community, it would be very helpful that the unit is well resourced and able to engage in meaningful pre-consultation, but, by way of a third recommendation, it would also be extremely useful if it was able to issue meaningful market guidance notes, similar to the notes that accompany the takeover code. That would again be extremely helpful so that we can understand. It would help the market to be better informed. If, for example, the unit is receiving a lot of notifications that are not correctly filled in or with important details as to ownership missing, then it would helpful to have guidance notes as to what we can do to make sure this process works with more certainty, speed, clarity and transparency—these are the things financial markets need to see—to help us with that, beyond what has already been issued, which is very helpful, I have to say. As the market evolves, that would be extremely helpful.
Mark Garnier
Q
David Petrie: That is a very difficult question. We will find out—that is the answer to that. I think businesses working in sectors where there is a real threat to national security know that. They know that they are involved in weapons design or designing software that could have a dual use. In advising companies over the years, I have found that no one knows better than the company directors about the value of their assets and their business, both from a market perspective and to competitors or others seeking to gain access to their technology.
The Bill has been in discussion for some years now, and the advisory community is well aware of its existence and of the Government’s desire to put this legislation on the statute book, so I do not think there will be many corporate finance advisers for whom the Bill emerging last week was a surprise. I am very sympathetic to the points made about small companies falling under the provisions of the Bill, but I hope that it will be possible for them to complete what, in the first instance, is a five-page questionnaire—when completed, it could run to 20 pages or more—at a relatively low cost.
To my earlier point, I hope they are able to engage in formal and meaningful dialogue with the unit at the earliest possible opportunity by saying, “This is what we do, and this is what we are worried about.” They have to say, “We’re concerned about this. These are the people from whom we are hoping to attract investment to take the business to the next stage. How do you feel about our business, and how do you feel about the people we are talking to? How does the Government feel about xyz corporation?” I think that kind of steer would help remove a great deal of uncertainty from the circumstances that you have set out.
Simon Baynes
Q
David Petrie: On the question of tangible assets, it really depends on what we are talking about. Again, it was trailed in the White Paper and the Green Paper that assets would also be within scope, so it is not going to be a surprise. It depends very much on the nature of those assets. In a relatively small country, the ability to acquire land or other buildings—strategic assets—immediately next to a sensitive military installation is, presumably, now included within scope because people who know about these things think it ought to be. I think the investment community will have a degree of sympathy there.
With intangible assets, that is a much more difficult question. It depends on the extent to which ownership of those assets is necessary in order for a malign actor to have the control or the information that they might need. It is possible to gain access to intellectual property through means other than ownership, so the question here is, how might those intangible assets be applied in ways that might prejudice our national security in some way? Again, that is something that the unit is going to have to assess on a case-by-case basis.
It makes sense to include assets that could be sold separately, without the sale of shares in a business. Companies often do that. They may well sell a parcel of patents, or parcel up a division and sell it on because it is no longer core to their operating activities. That is understandable. The investment community will understand that. In short, it is not a surprise, and we are going to have to find our way through this on a case-by-case basis.
Simon Baynes
Q
David Petrie: That would be the most obvious example. There are things like industrial designs, blueprints or chemical processes that may not be subject to patents. It is typically those aspects of production and design that it is necessary to ensure would be in the scope of this kind of legislation.
Much of the discussion that has led to the publication of the Bill has been around the ownership of shares or of the business—as to whether that is actually the bit that malign actors might want to get hold of. That may not be what really interests them with the business. It may well be intellectual property or these other assets, which it is necessary to separately define. If they are able to get hold of those without buying the company, then it seems to follow that it makes sense to include that within the scope of this Bill.
Simon Baynes
Q
David Petrie: Yes. I don’t think anyone is suggesting that the job of this new investment security unit is going to be straightforward. In fact, we are absolutely not suggesting that. It is going to be absolutely essential for Government Departments to work together and, going back to my original point, for this unit to be extremely well resourced, to be able to respond quickly and appropriately to what is put before it.
Peter Grant
Q
David Petrie: This is an issue that is well recognised by the investment and advisory community. I think that, as you say so rightly in your question, the warning flags, flares or whatever they might be will already be going off if this is a particularly sensitive military asset that is being considered for acquisition. I think that the unit will be able to look first at the nature of the asset, and it will be apparent very quickly as to whether this is a very sensitive issue. If the acquirer is not a British public limited company, a British private company or one invested in by private equity, if the ultimate ownership is structured in a way that is not conventional—many companies are held through offshore companies for entirely conventional, obvious and transparent reasons for the investment community—and if there is something strange about that ownership structure that makes it extremely difficult to trace the ultimate ownership, it feels to me as though that would be one of the 70 to 90 cases that the Secretary of State would want to review in a lot more detail. Then, due and diligent inquiries would be made to try and understand the ultimate ownership of those holding companies. There would be lots of complicated diagrams drawn, no doubt, showing who owns which bit of what and who are the key individuals and shareholders. The answer would be that, I am afraid, this unit is going to have to keep digging until they get to the bottom of who are the ultimate shareholders.
The Bill is drafted in such a way that you do not need to own much in the way of shares—or there are provisions included within it such that if an entity or individuals, or individuals reporting elsewhere, have control or influence over those holding companies, that in itself would be something we would be concerned about. The Bill includes provision for that because we know, and I believe the security services are well aware, that the equivalent of layering is used for acquisition of these sorts of businesses, or people have certainly tried to do that. So, it is going to be a matter of hard work and digging to get to the bottom of who really owns and controls those entities.
Peter Grant
Q
David Petrie: I suspect that would be the corollary of that, yes. We are probably dealing with a relatively unusual set of circumstances here. It rather assumes that the shareholders of the British company are absolutely determined to sell or take investment from an entity where its ultimate ownership is quite difficult to identify. We are dealing with quite an unusual situation—not unprecedented, certainly, but relatively unusual. I do not know what resources the new unit will have at its disposal, but given that this is relatively rare and is a question of national security, I would expect that the Secretary of State would ask it to use whatever resources are necessary to gain the information it needs.
I hope—again, we will see—that the closed doors process for the judicial review, should it come to that, would enable national security to be protected, so that if there were some other breaches as a result of the investigation, or if explaining how we found out what we know caused a breach in national security elsewhere, that problem could be resolved. I am comfortable—I think that would be the right expression—that those difficulties can be dealt with in circumstances in which the absolute preferred option for the company is to take investment, but I have to say that I think those circumstances would be relatively rare.
Sam Tarry
Q
David Petrie: Yes, I have. The Government have been very clear about the need to bring this legislation on to the statute book, and they have done so through the Green and White Papers. When consulting on the White Paper, they sought opinion from a very broad spectrum, including business groups, businesses, the investment community and so on. They have set that out in the response to the consultation.
The next consultation is the one on the sectors within the scope of the mandatory regime, and the next month or so is going to be a very important stage in this process. Defining those sectors in a way that market participants understand and that does not trigger manifestly unnecessary notifications is going to be very important, and we look forward to engaging in that process, as does the legal and investment profession and British business.
Sam Tarry
Q
David Petrie: Yes, that is an important consideration. I hope that if small businesses have limited resources, that is recognised by the new unit, and that smaller businesses are able to have an open dialogue with it, and can say, “This is what we do, and this is what we need the money for. We are going to need it quite quickly because we are running out of money.” If the unit is able to give unequivocal guidance very quickly, that would be very helpful.
I would also say that the new unit should not treat the 30-day turnaround for a mandatory notification as the target. The target should be to respond as quickly and efficiently as it can, and in such a way that does not cause difficulty or distress for small and medium-sized companies. A five-page form for a small or medium-sized company seeking investment for a UK or a relatively straightforward overseas entity is not a terribly burdensome obligation. I hope that it will be possible for them to find their way through that at relatively low cost.
The Chair
I do not think there are any more questions, so once again I thank you, Mr Petrie, for generously giving your time to assist the Committee.
David Petrie: Thank you.
Examination of Witness
Chris Cummings gave evidence.
The Chair
We welcome Chris Cummings, the chief executive of the Investment Association. Mr Cummings, would you be so kind as to introduce yourself for the record?
Chris Cummings: Thank you for the opportunity to appear in front of you. My name is Chris Cummings, and I am the chief executive of the Investment Association. We represent UK-based fund managers, an industry of some £8.5 trillion used by three quarters of UK households today. We own roughly a third of the FTSE.
Chi Onwurah
Q
Chris Cummings: Thank you; that is such a pertinent question. Before I address the substance of it, I want to try to describe the work of many of my members, which is broadly portfolio investments. They seek not to acquire a company but to invest, taking a very small stake—a fraction of a percent—of those companies. That provides an opportunity for those companies to receive the investment they are looking for, and enables us as investors to invest in a company, an industry or a whole sector in order to generate a return for the investors whose money we are managing. They tend to be pension funds and insurance companies—institutional investors.
Of that £8.5 trillion I mentioned that we manage, about 80% to 85% comes from institutional investors; the other 15% or so comes from retail: people on the high street saving in individual savings accounts and so on. Our view on the Bill is about how we can continue to do our work to help finance companies in the UK and internationally with the investment collateral that we can bring to bear. We do that in the two major parts of the market: listed companies and unlisted companies.
Perhaps I can address the point you made about small and medium-sized enterprises. We make investments in unlisted companies—of course, small and medium-sized enterprises are not listed organisations—by developing an understanding of sectors and industries. We look for individual institutions that we regard as high-performing—that is, high-performing over a long period of time, because we are patient investors, tending to take a long-term view, unlike colleagues in other parts of the industry, who are more high-frequency, or looking at a two to three-year earn-out period. To help us do that, we need two things. The first is legal certainty around the investment climate here in the UK, so that we understand the rules of the game, so to speak. This particular Bill is helpful in establishing greater clarity about the rules of the game; we do have one or two caveats, but it is helpful. The other is publicly available information, such as analysts’ reports—the type of thing that we as investors would look to receive and interrogate, and on the back of which we would then make an investment decision.
We are really looking for whether the Bill helps make the UK more attractive; whether it helps us funnel savings into productive investment that can help companies grow, create jobs and so on; and whether it is adding to the legal certainty of our investments. You are right to ask about SMEs; our members who invest in higher-growth companies are really keen to make sure that the process is as friction-free as possible, and that there are no surprises. Being very clear about a pre-notification regime is especially important to us, as is something like the five-year review period that could come after a deal has ended. Certainty about those 17 sectors is particularly important as well. That is why we have wanted to maintain a really close dialogue with the officials—the team that has sponsored this Bill—to make sure that no inadvertent barriers have been erected to us deploying that investment in the right way.
One of the suggestions we would like to commend to this Committee is something we have seen work particularly well in Japan, which considered a similar raft of legislation: a blanket exclusion for investment—not for takeovers, obviously, but for portfolio investment, where the investment industry wants to support unlisted or listed companies, and it is clear that there is not a desire to take them over, involve ourselves in the management of those firms, seek a position on the board or secure the intellectual property, but where we are just performing the role of long-term investor. That has been judged as being outside the scope of the legislation, but we commend that to the Committee as a practical step that takes forward the principles of the Bill and secures the “investability” of the UK’s investment landscape.
Chi Onwurah
Q
Chris Cummings: Forgive me: I noticed that I missed the point about mergers and acquisitions. We regard the pre-approval facility that officials have mentioned—I believe the last witness mentioned it, as well—which is a way in which the team responsible could be approached ahead of a deal being put together, as a very sensible, practical step forward, as long as confidentiality was absolutely rigorously maintained.
In terms of definitions, we find the Japanese definition quite attractive, and again we commend it to the Committee. It clearly differentiates out investors such as the ones we represent, who are looking to provide capital for a company and share in its success for the benefit of the investors whose money we manage, but are not seeking to take an active role in the management of those companies. We are not looking to put somebody on the board; we are not looking to intervene directly in day-to-day management decisions. Our relationship is with the board chairman and so on, in order to engage in a constructive and strategic discussion, but we stop short of securing assets or taking an active role in management. That is a system that works well.
Turning to our caveats, I mentioned the five-year review period. We undoubtedly recognise the spirit in which this legislation is drafted, but Governments change, as does public opinion. The strength of this Bill is that it is focused around national security. Perhaps a definition of national security may go a little further in helping investors as well, because we could not really strike upon a catchy, well-turned phrase that defined national security, and have a reluctance to move away from national security; we would hate to see the Bill being widened into more public interest ability.
A final point to note would be the interplay between this legislation and the Takeover Panel, which has a different and distinct role to play. The notification percentages are slightly different: it is 25% in the Bill, and 30% in the Takeover Panel, so ensuring that there was no accidental misalignment would be most useful.
Nadhim Zahawi
Q
Chris Cummings: When it comes to a clarification point around national security, this is similar policy-intent-driven legislation to what we have seen in other emerged markets, such as the US, Germany, France and so on. We do not find that it is out of step with other developed markets. In other jurisdictions—I will take the US as an example—the legislation has started small and then grown as people have become familiar with it. The UK, perhaps because we feel we are playing catch-up—that is not for me to say—has started on a larger scale first. That is why there are queries around scope and around the durations. We look forward to engaging with the definition of the 17 sectors to ensure it is as specific as possible, and to ensure that we understand the operation. We would like to hear from officials and colleagues in ministerial positions on how they see it working in practice, so that the investment community is really clear that the rules of the game have not changed, and that the UK really is as attractive as we want it to be for incoming investment.
As I mentioned, we represent UK-based investment managers, but of course, those organisations are headquartered not only across Europe, but in other parts of the world, particularly the US. We are managing pension scheme money not only for UK savers and pensioners, but from other parts of Europe and places as far-flung as Brazil. If we as investors were looking to make an investment in UK plc, we would need to be clear about where head office was, and where the money was coming from. All those things could be either pre-approved or ruled in court as quickly as possible to ensure that there is not a missed beat in attracting the investment that we all want to see.
Nickie Aiken
Q
Chris Cummings: As for particular strengths, we feel that the aspects that deal evidently with national security are strengthening a regime that needed some modernisation.
On the protection of intellectual property, one of the key areas—it is absolutely essential for us as investors—is knowing that if we are investing in a particular company, we are doing so because, depending on the market and sector it is in, we feel that the intellectual property is clear, maintained and protected by clear legal contracts, and that if something goes awry, we, as investors, have recourse to legal sanctions.
There is much in the Bill to be commended. In terms of areas of weakness—forgive me; I feel I have touched on these—it is about ensuring that, as investors, our position is clear and understood. In investing in a company, when doing that not to try to take it over or seize the reins, it is to provide more of a long-term investment to support the company’s development. We do not feel that quite comes through in the way the Bill has been written at the moment. It has been written, rightly, for takeovers. We do not want to be hit by ricochet —by accident—in wanting to continue to support UK plc and find that new barriers have been erected that prevent us doing that, simply because this part of the investment landscape had not been completely thought through. That is a caveat, rather than a point for deep consideration.
Nickie Aiken
Q
Chris Cummings: That is something we are looking forward to engaging with. When you first hear it, 17 sectors sounds like quite a lot, but having worked through the 17 sectors and looked at some of the draft definitions, I think that each one is justifiable.
We would be keen to point out a few things to the Government. First, the greater the specificity around the definitions, the better. Secondly, we should not rush to change the sectors by adding to them too quickly. Investment needs a degree of stability, and legislative stability most of all.
Thirdly, in consulting with industry and thinking about the operations and practice, I would ask to have industry expertise around the table. We found time and again working with officials—they are hugely valuable, talented individuals, but do not come from a commercial background, almost by definition, although some do—that having the commercial insight, we can play a role in nudging in the right area, to ensure that nothing is hard-coded that would prevent a deal because the nuance has not been appreciated. Having that industry insight would be a big step forward, if it could be accommodated.
Peter Grant
Q
Chris Cummings: With any new piece of legislation, and certainly one of this character and this far-reaching, investors will always want to understand the motivations that led to it being introduced, how it will work in practice and whether we can give case studies as quickly as possible to prove that it does work in this way.
The important thing—I cannot stress this enough—is how it gets spoken about by Ministers. That enduring political support for investment carries such weight with investors. More than the words on the page, what matters is how it is presented—how Ministers then talk about the desire to continue to attract investment and how they make themselves available to investors.
All major economies, because of the covid-19 crisis, are seeking new levels of investment, whether for individual corporates or infrastructure investment, let alone Government debt. We feel very strongly that the UK has a tremendous story to tell. Introducing new legislation such as this at a time when, bluntly, we are looking for more investment to come into the UK, will require a degree more explanation. The way it has been phrased so far, as national security and almost as a catch-up activity with other developed jurisdictions, is fine. However, if Ministers make themselves very much available to investors to explain how this will work, and make a bonus of the pre-authorisation facility, so that if investors are troubled that an investment they are considering could attract attention, there is an ability within 30 days —that is a really important point: within 30 days—to have it pre-approved and then stood by, that will go a long way in the investment community.
As you can tell, we will have to paddle a little bit harder, but that has the potential to be a short-term explanation for a long-term gain. Potentially, that is fine, but I say again that we hope Ministers will seize the opportunity to explain this to investors, the course will be set and we will not see further iterations or scope creep from national security to other sectors, which then becomes a little more worrisome.
Peter Grant
Q
Chris Cummings: Forgive me, but it is obviously not my role to advise future Ministers on attitudes they may take. I can simply say, from an investor’s point of view, that we prize stability, predictability and accountability beyond all things. Making sure that the rule of law applies and that there is no handbrake turn in policy direction matters hugely. Investment is being sought by every economy around the world, and it would be a very rash Minister indeed who decided to unpick something that is a great strength of the UK and one of our global competitive advantages: a system based on the rule of law and an approach to policy making that is entirely transparent and accountable to Parliament, which gives the investment community great confidence that the UK retains its position as being one of the safest places in the world to invest in.
From our perspective, that accounts for one of the reasons why our investment management industry here in the UK is globally pre-eminent. The UK is not only the largest investment centre in Europe; we are bigger than the next two or three added together. Only the US is a bigger market, and that is because of its substantial domestic scale. When it comes to international investment, the UK is streets ahead of its competitors. We would very strongly urge any parliamentarian, and certainly any Minister, to think twice before taking actions that would have a lasting consequence for our international reputation.
Simon Baynes
Q
Thirdly, to what extent do hedge funds represent members within your organisation? Obviously, they have greater capacity, or greater natural affinity, for investing in smaller companies—not always, but in certain cases. They might actually fall within the remit of the triggers, so I do not quite see how we could implement the blanket exclusion, if from time to time there are exceptions to the exclusion.
Chris Cummings: Thank you for asking me to clarify; I apologise that I was not as clear as I should have been. The hedge fund community has a representative organisation. It is a splendid one that can do a tremendous job in speaking for them, and I would not put myself in that position; I would not try to speak for them. We have members that invest substantially through private markets into smaller and unlisted companies. Again, it comes down to intention. The intention is not to invest in such a way as to take over the company and to seize the reins; the intention is to make an investment that is in the strategic direction of the company, to support its growth.
I am trying not the use the term “passive investment”, because we are anything other than passive when it comes to investing, but it is an approach that is designed to support the company, rather than to change dramatically the company’s ownership or direction, or to land one of our members on its board—in effect, they would then be part of the management and governance of that company. I hope it is more than a subtle definition; it is a distinction with a real difference. That is part of why we think it is an important distinction to make.
Other jurisdictions have been through similar experiences. The Japanese example is so relevant, because it is only a year or so ago that the Japanese Government were considering very similar legislation. As a result of consultation, they came up with the approach that we are suggesting: to exclude the activities of investors, insurance companies and so on, because it is around the intentionality—not wanting to take an active role in the management or to change the company’s direction, but to support through investment rather than to seek control.
The US has a similar modus operandi. It is not quite as framed in the legislation as it is in Japan—again, just through history. The approaches that we have seen in Germany and France also nudge in the direction that I am describing, so there are parallels. The Japanese experience is the closest match that I can offer the Committee, but we will continue to do further investigations and to feed in ideas through the Bill’s stages and through the consultation on individual sectors.
Simon Baynes
Q
Chris Cummings: Certainly, we are keen to see those smaller and medium-sized companies get access to as much growth capital and investment as they need. Part of our enthusiasm for this piece of legislation, and indeed others, is that it is an opportunity to re-excite the UK public about the opportunities for equity—for shareholder participation in fast-growing companies. That is partly why we are so keen to work with your Committee and others to communicate the message.
Perhaps a clearer distinction could be found for the difference between listed and unlisted companies. That is perhaps where we could focus our attention more, on explaining—I am not sure that “blanket exception” is quite the right language for me to use because that seems to be a one-and-done exercise and perhaps there would be more to it than that—but focusing the attention on the listed sector, where it is much more obvious that we as investment managers are investing for the long term rather than seeking control over the company. I hope that would allay some of the concerns that you rightly mention.
Matt Western
Q
Chris Cummings: You rightly raise the question of scale and resources. It is one of the things we have been consulting our members on, and having discussions with others, to try and get a better view of what the notification process would be, who would notify, who would then respond, the scale of the team in the Department that would be exercising due diligence in the applications and whether the system could cope. Bluntly, what would concern us deeply is having a 30-day notice or turnaround period that the Department regularly missed, because that would then create a shadow over this particular piece of legislation. It would gum up the works and, frankly, none of us would wish to see that.
Looking at how the regime works at the moment, with very few notifications, there seems to be a scale difference between where we are today and what the legislation proposes. We would like to hear more from Ministers on how they are going to address that and what the processes would be. There have been discussions about a portal, a very brief form of five pages or so that would be easy to complete, but I think a degree more of reassurance on that point would not go amiss—as would the confidentiality. There is so much around any investment process and the acquisition process that has to remain entirely confidential, that investors would require and would be looking for reassurance that these conversations could be held in the strictest of confidence and that nothing would appear until the right time. In terms of scale and resources, it is a point that we share your interest in.
I was making a note of the point you raised on transactions, but could you repeat that part of the question? Apologies.
Matt Western
Q
Chris Cummings: Thank you, and apologies again for omitting that. This is something that we, as the investor community, have been observing for the last few years at least, looking at the different requirements that Governments have tried to put on acquiring companies—Kraft Cadbury and so on, through to SoftBank—and seeing what has happened there, and the role that the takeover panel has been asked to play to police or report on those activities.
The intent behind the Bill at the moment seems to be for national security to preserve intellectual property in that R&D capacity here in the UK. If that is going to be seen through, transparent and accountable mechanisms need to be clarified in the Bill, on how that will work in practice, what resources will be in place to measure, monitor and report it, to whom it would report, and any sanctions that would be applicable afterwards. Those are definitely areas that we feel deserve further scrutiny.
From our point of view, as investors, the last thing we want is to invest in companies where we feel the IP is protected and the R&D facility is well known to us, but where within one, two or three years there has been either a change of management or further changes that mean that IP has been moved or duplicated elsewhere. That is a very legitimate concern.
The Chair
If there are no further questions, I thank you very much on behalf of the Committee for giving your time and assistance, Mr Cummings.
Ordered, That further consideration be now adjourned. —(Michael Tomlinson.)
Environment Bill (Twentieth sitting)
Tuesday 24th 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 24 November 2020 - (24 Nov 2020)
The Committee divided: - Ayes: 5 / Noes: 9 - Question accordingly negatived.
The Committee divided: - Ayes: 6 / Noes: 9 - Question accordingly negatived.
The Committee divided: - Ayes: 5 / Noes: 9 - Question accordingly negatived.
The Committee divided: - Ayes: 5 / Noes: 9 - Question accordingly negatived.
The Chair
This may be entirely disorderly, but to give the shadow Minister time to collect his thoughts, I am delighted to be able to advise the Committee that my first grandson, Frederick Evelyn Gray Barker, was born this morning at 6 o’clock. [Hon. Members: “Hear, hear!”] That is something that can go into Hansard and it can be put on his nursery wall.
Clause 130
Extent
The Parliamentary Under-Secretary of State for Environment, Food and Rural Affairs (Rebecca Pow)
I beg to move amendment 231, in clause 130, page 116, line 31, at end insert
“except that section (Use of forest risk commodities in commercial activity) and Schedule (Use of forest risk commodities in commercial activity) (use of forest risk commodities in commercial activity) extend to England and Wales, Scotland and Northern Ireland.”
This amendment provides that NC31 and NS1 extend to England and Wales, Scotland and Northern Ireland.
The Chair
With this it will be convenient to discuss the following:
Government new clause 31—Use of forest risk commodities in commercial activity.
Government new schedule 1—Use of forest risk commodities in commercial activity.
Rebecca Pow
May I be the first to congratulate you on becoming a grandfather, Mr Gray, and to welcome Frederick to the world? He has arrived on a really auspicious day for our global footprint. I hope that he will be very proud when he is a bit more grown-up and reads in Hansard what his grandpa said—hopefully he might just read long enough to read this speech as well. I think that he will be rather proud also that his grandpa was part of this Committee.
Rebecca Pow
I am delighted to discuss amendment 231, new clause 31 and new schedule 1. Consumers in this country are increasingly concerned that they are contributing to environmental destruction overseas, and they are right to be concerned: almost 80% of deforestation is caused by agriculture, including produce that we use here in the UK. Globally, half of all recent tropical deforestation was the result of illegal clearance for commercial agriculture and timber plantations. Shockingly, the figure increases to 90% in some of the world’s most biodiverse forests, including parts of the Amazon.
We will be the first country in the world to legislate to tackle this illegal deforestation by setting a framework of requirements on business. Businesses will be prohibited from using forest risk commodities produced on land that was illegally occupied or used. They will be required to establish a due diligence system for regulated commodities to ensure that their supply chains do not support illegal deforestation, and will have to report annually on that exercise. If businesses do not comply, they should be subject to fines. The measures will extend across the whole of the UK, so that we can work across our nations to tackle illegal deforestation.
As the first country in the world to legislate on this issue, we want to continue to lead the way internationally. Therefore, the measures also require us to review the law’s effectiveness every two years. The review will set out any steps that we intend to take as a result, ensuring that we will take action if we do not see progress. The enabling powers in the framework allow us to adjust certain aspects as deforestation patterns change and technology advances.
The law before us today is not only a win for the environment. It is a win for UK consumers, who will have confidence that the food they eat and the products they use have been produced responsibly. It is a win for responsible businesses in the UK, which will no longer be undercut by those who do not follow the rules. And it is a win for our international partners in producer countries, because this approach will deliver for trade and economic development as well as for the environment. We have seen that in Indonesia, where the introduction of a timber licensing scheme meant that confidence in the provenance of its timber grew, leading to an increase in trade. The value of Indonesia’s worldwide exports of timber products doubled from $6 billion in 2013 to nearly $12 billion in 2019.
Richard Graham (Gloucester) (Con)
As the Prime Minister’s trade envoy for Indonesia, I had the great pleasure of working closely with colleagues from the Department for International Development and in our embassy in Jakarta on helping the Indonesians to find a solution to what was a significant problem for them. Does the Minister agree with me that this measure shows what the UK can do abroad on our environmental policies, as well as at home?
Rebecca Pow
I thank my hon. Friend so much for his intervention, because he is right to point that out. I must applaud him for the work he did with the UK Government. It was a tricky issue. Timber is an important export for Indonesia, but that must not come at the expense of cutting down its precious rainforests and other forests, with all the knock-on effects that brings for the wider environment. We have the solution for timber, with sustainable timber regulations sorted out, and we are now working on other products. My hon. Friend is right to point out how beneficial that can be all around, with the knock-on effects, and I thank him for that.
As a result of that work in Indonesia, the amount of money made went up, as I said, and deforestation rates were three times lower in areas producing timber covered by the scheme than in other areas, so it worked all around. That shows how driving demand for sustainable products helps not just the people there but nature and the climate—it is an all-round win.
I assure the Committee that the Government intend to move swiftly to bring legislation forward and will lay the necessary secondary legislation shortly after COP26, which we will hold in Glasgow next November. We will consult again to gather views as we develop secondary legislation, and Parliament will have the opportunity to scrutinise many of the regulations.
Dr Alan Whitehead (Southampton, Test) (Lab)
At the risk of incurring your wrath, Mr Gray, I will add my congratulations to those of the Minister on the birth of your grandson. I observe that your grandson shares a name with an esteemed public servant in my city of Southampton, and I trust he will live up to the achievements of that individual even if he does not indeed pursue a great career in environmental conservation and management, which perhaps would be appropriate to today’s proceedings. That is all I am going to say.
The Chair
Order. I am most grateful to everyone, but no more congratulations. Thank you. But he was born in Brighton, just down the road from Southampton, so pretty close by.
Dr Whitehead
There we are: the coincidences are raining on each other now.
The Government new clause and new schedule represent a tremendous step forward in action not only in the UK but, as the hon. Member for Gloucester said, abroad. That demonstrates how we can reach beyond our shores in environmental protection and action, as well as in due diligence for conservation, environmental management and climate change purposes. The Opposition wholly welcome these measures. However, why were they so late in coming?
I think we can claim we nudged the Government a little in that direction, because our due diligence new clause, which we will discuss later, is about the wider subject that the Minister mentioned in her remarks and points the way. We hope that the Government will go beyond forestry products and into other areas. We tabled our new clause, which substantially anticipated the Government’s action, before Parliament went into recess for the lockdown. Can the Minister reflect on why these measures were as late as they were? In her opinion, did the nudging of not only Labour but also a large number of national and international environmental groups, who banded together to develop the due diligence way of doing things, have a substantial hand in making sure—albeit a little late in the day—that these new clauses came into being? It was just in time because the Bill will now have these clauses in it, and I hope they will fully survive the rigours of the Bill’s passage through the House and come to be a substantial part of it. I think it will be a very welcome and progressive part of the Bill.
Rebecca Pow
I welcome the fact that the Opposition are in agreement and welcome this. Nobody in their right minds would think this is a bad idea. I welcome that and we do share a good relationship, so I thank them for that. Yes, the amendment was tabled and we all listened to it, and indeed we had plenty of people on our side pushing for it as well. This is a global issue. Let us tackle it together globally, which I think the hon. Gentleman will agree is what we are doing.
Ruth Jones (Newport West) (Lab)
While we are singing from the same hymn sheet and all in harmony, would the Minister agree with over 90% of respondents to the public consultation—there were 63,000 respondents, which is a fantastic result— who felt the legislation could go further and that local law should be strengthened?
Rebecca Pow
A great deal of consultation went into this and all of those views were looked at, and then it was considered what would be the best and most positive way forward. Tackling this issue is not straightforward and requires dealing with other governments around the world. One has to tread a careful path, and I believe we have come up with a really workable solution.
To answer the comment by the hon. Member for Southampton, Test about why we did not do this more quickly, the consultation took a long time and we had to take into account a great many views and discussions. We must remember that a lot of this originated from the work done by Sir Ian Cheshire and the Global Resource Initiative. We referenced that way back in March, when I was being asked why the Government were not doing this fast enough. We had the GRI’s summary and we were working up how we could continue to work from its recommendations. That is where we engaged with so many NGOs, particularly the Royal Society for the Protection of Birds and WWF, because they are valued partners with a great deal of experience. They have been helpful in inputting into what we have come up with. I hope that is helpful to the shadow Minister and I think we will have a bit more discussion about this later, but I will leave it there.
Amendment 231 agreed to.
Clause 130, as amended, ordered to stand part of the Bill.
Clause 131
Commencement
Dr Whitehead
I beg to move amendment 2, in clause 131, page 117, line 21, leave out “on such day as the Secretary of State may by regulations appoint” and insert
“at the end of the period of six months beginning with the day on which this Act is passed”.
This amendment seeks to prevent the Secretary of State from choosing not to enact parts of the Bill. Currently multiple provisions including the whole of Part 1 (environmental governance), Part 6 (nature and biodiversity) and Part 7 (Conservation Covenants) could never be enacted, even after the Bill has received Royal Assent.
The Chair
With this it will be convenient to discuss the following:
Amendment 151, in clause 131, page 118, line 2, leave out “on such day as the Welsh Ministers may by regulations appoint” and insert
“at the end of a period of six months beginning with the day on which this Act is passed”.
Amendment 152, in clause 131, page 118, line 23, leave out “on such day as the Scottish Ministers may by regulations appoint” and insert
“at the end of a period of six months beginning with the day on which this Act is passed”.
Amendment 153, in clause 131, page 118, line 29, leave out “on such day as the Department of Agriculture Environment and Rural affairs in Northern Ireland may appoint” and insert
“at the end of a period of six months beginning with the day on which this Act is passed”.
Dr Whitehead
The amendments all essentially say the same thing, but face towards different Secretaries of State. They refer to the back of the Bill, which we are now considering. I recommend to those Members who perhaps have not ventured to look at the backs of Bills to any great extent in their time in this House to have a good look at the back of this Bill and any Bill that comes before the House. If hon. Members are on Committees on future Bills, it is always worth having a look at the back of the Bill to see what is intended for all the legislation that has been drafted and discussed assiduously. What I mean by that is that the back of the Bill is where things actually happen or do not.
For this Bill, it is more than important that what we have discussed and made passionate speeches about actually happens, and the provisions come into force in good time, so that our intentions are carried out. The problem with intentions on many occasions is that they are not actually reflected on the back of the Bill. What happens is that the ability to implement a part of the legislation is reserved to the Minister by regulation. For people who want to take their search of the back of the Bill seriously, the statute books apparently include a large amount of legislation which just has not been enacted—a complete education Bill, for example, from a while ago. None of it has been enacted, because what is on the back of the Bill has simply not taken place.
I mentioned earlier the Office of Gas and Electricity Markets regulations and the Energy Act 2013. Why is that important? Well, part 5 of the 2013 Act, as hon. Members will recall, was about the designation of a statement on policy for Ofgem, concerning the environment and climate change. We tabled an amendment suggesting that the Government should press Ofgem to revise its mandate to ensure that it has the environment and climate change at its heart. What hon. Members might be surprised to know, and I do not recall if it was specifically mentioned when we moved that amendment, is that already in legislation is a complete section of a Bill—not just a clause—saying that the Government should introduce a strategy and policy statement requiring Ofgem to have an environmental and climate change brief.
That was agreed by a similar Committee to this one, thinking in 2013 that that was going to happen. It has not happened, simply because, on the back of the Bill is a provision that section 5 of the 2013 Act comes into force when the Secretary of State by regulation decides. Ofgem has never had such a brief in its armoury because Ministers have simply declined to implement that bit of the 2013 Act. They have sat on their hands and not carried out the work necessary to implement it. We are trying to ensure that those important parts of this Bill, which we have laboured mightily over, come into force and do what we think they will do in reasonably good order.
Rebecca Pow
I support the shadow Minister in urging me to look at the back of the Bill. What goes on at the back of a Bill is the powerhouse, and I have become terribly interested in that. One must look at the back of the Bill, as he says. I must say, however, that I think he is being terribly negative. First, these measures will be in legislation. Secondly, the strength of feeling about improving the environment is now so strong, not just among our super keen Committee members, who are stalwarts in this area, but among everybody out there—we only have to look at Twitter. I want these measures as much as he does.
I thank the hon. Member for the raft of amendments on the same point, which would have the effect, six months after the Bill receives Royal Assent, of commencing all the remaining provisions of the Bill that can be commenced by the Secretary of State, Scottish Ministers, Welsh Ministers and the Department of Agriculture, Environment and Rural Affairs in Northern Ireland.
That one-size-fits-all approach would cause very serious problems when the Bill is implemented following Royal Assent. For example, if the amendment were to be accepted, it would very likely delay the establishment of the Office for Environmental Protection by nine months. We have already launched and concluded a recruitment campaign for the chair of the OEP. Far from not doing anything, we have already started, and I hope the hon. Member will commend that.
Many parts of the Bill will be at least partially commenced much earlier than six months after Royal Assent, and other provisions will need at least in part to be commenced somewhat later, requiring further evidence gathering and public consultation, for example. That is not to mention the impact on local authorities. We will have to work very carefully and closely with them, because they are absolutely key to implementing quite a number of measures, not least in terms of biodiversity, as well as the waste measures.
I assure the hon. Member that the Government have not brought this vital piece of legislation to this House only for it to languish uncommenced in a cupboard. He gave an example of another piece of legislation. The Bill will not be like that, particularly not after all the time that has been invested in it. It has gone on for the whole year of my life as the Environment Minister. It has come and gone, and it has returned, and it is the stronger for it. It is certainly not going to languish.
We are setting ourselves legally binding targets under part 1 of the Bill, and we will need all the tools later in the Bill to support the delivery of those targets. The targets are legally binding—that is what the Bill says. Work is already going on with many organisations and the Department to work out how we will devise the targets, what the best targets to start with would be, and what later targets would be. An awful lot of work needs to go on—consultations, further detailed guidance and then new regulations—as I am sure the hon. Member will appreciate.
As we have said, we will bring forward at least one target in each of the four priority areas as well as a target for fine particulate matter, PM2.5, by the Bill’s 31 October 2022 deadline. All that work has to take place before that. Every time I speak on air quality—the hon. Member will understand this point—we are being held to account. We need to do this and we will do it. He asked whether we would trigger any of the work and the measures. We published the targets policy paper on 19 August, detailing the roadmap for delivering the targets.
I hope the hon. Gentleman will agree that we are demonstrating that this will not be a Bill that sits in a cupboard getting dusty. Ministers in devolved Administrations need a measure of flexibility in commencing the provisions in many parts of the Bill as well. Other parts of the Bill can safely be commenced on Royal Assent or two months later. Hon. Members will know that that is the customary approach for Bills. Therefore, the commencement of provisions in the Bill already strikes the right balance between automatic commencement and providing the necessary flexibility to Ministers. I hope that clarifies the position, and I ask the hon. Member to withdraw the amendment.
Dr Whitehead
We do not want to divide the Committee on the amendments. I welcome the Minister’s enthusiastic intimation that she has no intention that this Bill should sit on a covered shelf. I am sure she is right on that, given her commitment so far to making this Bill work, and the effort that she has put into ensuring that we move forward. Indeed, I welcome her indication that action has already started on ensuring that these provisions work. However, that does not undermine the fundamental point about the legislation, namely that it is possible for Ministers who are less dedicated than she is simply to sit on their hands. That is the central concern behind our amendments. I strongly take on board her point that she is not a Minister who is going to sit on her hands.
I wonder whether she has considered the green Cabinet Sub-Committee as part of her approach. I am not sure whether she sits on it, but if she or a colleague of hers does, she might take the opportunity gently to remind the Ministers in the Department for Business, Energy and Industrial Strategy that they also have a responsibility to implement legislation, and that the fact that they have not done so has a substantial effect on some of the things that we want to do in this Bill. She might take the opportunity to say, “Get on with it—seven years down the road, you ought to have implemented this.”
Rebecca Pow
The hon. Gentleman makes a very good point. I was not specifically going to comment on that, but I am sure he will agree that as a result of the Bill, other Departments will have to look at what they do on the environment. Many already do, but there will now be much more of a requirement that they do so. Does he agree that one reason why we must bring forward a lot of these measures, particularly on diversity, is that they will dovetail with the new agricultural land management system? It is important that the two schemes work together.
Dr Whitehead
I very much take on board the fact that the Bill is primarily about DEFRA, but it cannot work properly unless all other Departments play their part in ensuring that that happens. That point is very well made, and it underlines my request for the Minister to have a quiet word with another Department to suggest that it does as she intends, as far as this Bill as this concerned, with its areas of responsibility in relation to environmental and climate change outcomes. I beg to ask leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Clause 131 ordered to stand part of the Bill.
Clause 132
Transitional or saving provision
Amendments made: 63, in clause 132, page 119, line 38, leave out “the National Assembly for Wales” and insert “Senedd Cymru”.
See Amendment 28.
Amendment 64, in clause 132, page 119, line 39, leave out “Assembly” and insert “Senedd”.—(Rebecca Pow.)
See Amendment 28.
Clause 132, as amended, ordered to stand part of the Bill.
Clause 133 ordered to stand part of the Bill.
New Clause 4
Memorandum of understanding
“(1) The OEP and the Committee on Climate Change must prepare a memorandum of understanding.
(2) The memorandum must set out how the OEP and the Committee intend to co-operate with one another and avoid overlap between the exercise by the OEP of its functions and the exercise by the Committee of its functions.”—(Rebecca Pow.)
This new clause requires the OEP and the Committee on Climate Change to prepare a memorandum of understanding, setting out how they will co-operate with one another and avoid overlap in the exercise of their functions.
Brought up, read the First and Second time, and added to the Bill.
New Clause 24
Guidance on OEP’s enforcement policy and functions
‘(1) The Secretary of State may issue guidance to the OEP on the matters listed in section 22(6) (OEP’s enforcement policy).
(2) The OEP must have regard to the guidance in—
(a) preparing its enforcement policy, and
(b) exercising its enforcement functions.
(3) The Secretary of State may revise the guidance at any time.
(4) The Secretary of State must lay before Parliament, and publish, the guidance (and any revised guidance).
(5) The OEP’s “enforcement functions” are its functions under sections 29 to 38.’—(Rebecca Pow.)
This new clause provides that the Secretary of State may issue guidance to the OEP on the matters listed in clause 22(6) (OEP’s enforcement policy). The OEP must have regard to the guidance in preparing its enforcement policy and exercising its enforcement functions.
Brought up, read the First and Second time, and added to the Bill.
New Clause 25
Species conservation strategies
‘(1) Natural England may prepare and publish a strategy for improving the conservation status of any species of fauna or flora.
(2) A strategy under subsection (1) is called a “species conservation strategy”.
(3) A species conservation strategy must relate to an area (the “strategy area”) consisting of—
(a) England, or
(b) any part of England.
(4) A species conservation strategy for a species may in particular—
(a) identify areas or features in the strategy area which are of importance to the conservation of the species,
(b) identify priorities in relation to the creation or enhancement of habitat for the purpose of improving the conservation status of the species in the strategy area,
(c) set out how Natural England proposes to exercise its functions in relation to the species across the whole of the strategy area or in any part of it for the purpose of improving the conservation status of the species in the strategy area,
(d) include Natural England’s opinion on the giving by any other public authority of consents or approvals which might affect the conservation status of the species in the strategy area, and
(e) include Natural England’s opinion on measures that it would be appropriate to take to avoid, mitigate or compensate for any adverse impact on the conservation status of the species in the strategy area that may arise from a plan, project or other activity.
(5) Natural England may, from time to time, amend a species conservation strategy.
(6) A local planning authority in England and any prescribed authority must co-operate with Natural England in the preparation and implementation of a species conservation strategy so far as relevant to the authority’s functions.
(7) The Secretary of State may give guidance to local planning authorities in England and to prescribed authorities as to how to discharge the duty in subsection (6).
(8) A local planning authority in England and any prescribed authority must in the exercise of its functions have regard to a species conservation strategy so far as relevant to its functions.
(9) In this section—
“England” includes the territorial sea adjacent to England, which for this purpose does not include—
(a) any part of the territorial sea adjacent to Wales for the general or residual purposes of the Government of Wales Act 2006 (see section 158 of that Act), or
(b) any part of the territorial sea adjacent to Scotland for the general or residual purposes of the Scotland Act 1998 (see section 126 of that Act);
“local planning authority” means a person who is a local planning authority for the purposes of any provision of Part 3 of the Town and Country Planning Act 1990;
“prescribed authority” means an authority exercising functions of a public nature in England which is specified for the purposes of this section by regulations made by the Secretary of State.
(10) Regulations under subsection (9) are subject to the negative procedure.’—(Rebecca Pow.)
This new clause gives Natural England the function of producing species conservation strategies and makes related provision.
Brought up, read the First and Second time, and added to the Bill.
New Clause 26
Protected site strategies
‘(1) Natural England may prepare and publish a strategy for—
(a) improving the conservation and management of a protected site, and
(b) managing the impact of plans, projects or other activities (wherever undertaken) on the conservation and management of the protected site.
(2) A strategy under subsection (1) is called a “protected site strategy”.
(3) A “protected site” means—
(a) a European site,
(b) a site of special scientific interest, or
(c) a marine conservation zone,
to the extent the site or zone is within England.
(4) A protected site strategy for a protected site may in particular—
(a) include an assessment of the impact that any plan, project or other activity may have on the conservation or management of the protected site (whether assessed individually or cumulatively with other activities),
(b) include Natural England’s opinion on measures that it would be appropriate to take to avoid, mitigate or compensate for any adverse impact on the conservation or management of the protected site that may arise from a plan, project or other activity,
(c) identify any plan, project or other activity that Natural England considers is necessary for the purposes of the conservation or management of the protected site, and
(d) cover any other matter which Natural England considers is relevant to the conservation or management of the protected site.
(5) In preparing a protected site strategy for a protected site, Natural England must consult—
(a) any local planning authority in England which exercises functions in respect of an area—
(i) within which any part of the protected site is located, or
(ii) within which a plan, project or other activity that Natural England considers may have an adverse impact on the conservation or management of the protected site is being, or is proposed to be, undertaken,
(b) any public authority in England—
(i) that is undertaking, or proposing to undertake, a plan, project or other activity that Natural England considers may have an adverse impact on the conservation or management of the protected site,
(ii) the consent or approval of which is required in respect of a plan, project or other activity that Natural England considers may have an adverse impact on the conservation or management of the protected site, or
(iii) that Natural England considers may otherwise be affected by the strategy,
(c) any IFC authority in England which exercises functions in respect of an area—
(i) the conservation or management of which Natural England considers may be affected by the strategy, or
(ii) the sea fisheries resources of which Natural England considers may be affected by the strategy,
(d) the Marine Management Organisation, where—
(i) any part of the protected site is within the MMO’s area, or
(ii) Natural England considers any part of the MMO’s area may otherwise be affected by the strategy,
(e) the Environment Agency,
(f) the Secretary of State, and
(g) any other person that Natural England considers should be consulted in respect of the strategy, including the general public or any section of it.
(6) In subsections (4) and (5), a reference to an adverse impact on the conservation or management of a protected site includes—
(a) in relation to a European site, anything which adversely affects the integrity of the site,
(b) in relation to a site of special scientific interest, anything which is likely to adversely affect the flora, fauna or geological or physiographical features by reason of which the site is of special interest,
(c) in relation to a marine conservation zone, anything which hinders the conservation objectives stated for the zone pursuant to section 117(2) of the Marine and Coastal Access Act 2009, and
(d) any other thing which causes deterioration of natural habitats and the habitats of species as well as disturbance of the species in the protected site, in so far as such disturbance could be significant in relation to the conservation or management of the protected site.
(7) A person whom Natural England consults under subsection (5)(a) to (e) must co-operate with Natural England in the preparation of a protected site strategy so far as relevant to the person’s functions.
(8) The Secretary of State may give guidance as to how to discharge the duty in subsection (7).
(9) A person must have regard to a protected site strategy so far as relevant to any duty which the person has under—
(a) the Conservation of Habitats and Species Regulations 2017 (S.I. 2017/1012),
(b) sections 28G to 28I of the Wildlife and Countryside Act 1981, or
(c) sections 125 to 128 of the Marine and Coastal Access Act 2009.
(10) Natural England may, from time to time, amend a protected site strategy.
(11) The duty to consult a person under subsection (5) also applies when Natural England amends a protected site strategy under subsection (10) so far as the amendment is relevant to the person’s functions.
(12) In this section—
“England” has the meaning given in section (Species conservation strategies);
“European site” has the meaning given in regulation 8 of the Conservation of Habitats and Species Regulations 2017;
“IFA authority” means an inshore fisheries and conservation authority created under section 150 of the Marine and Coastal Access Act 2009;
“local planning authority” has the meaning given in section (Species conservation strategies);
“marine conservation zone” means an area designated as a marine conservation zone under section 116(1) of the Marine and Coastal Access Act 2009;
“MMO’s area” has the meaning given in section 2(12) of the Marine and Coastal Access Act 2009;
“public authority” has the meaning given in section 40(4) of the Natural Environment and Rural Communities Act 2006;
“sea fisheries resources” has the meaning given in section 153(10) of the Marine and Coastal Access Act 2009;
“site of special scientific interest” means an area notified under section 28(1) of the Wildlife and Countryside Act 1981.” —(Rebecca Pow.)
This new clause gives Natural England the function of producing protected site strategies and makes related provision.
Brought up, read the First and Second time, and added to the Bill.
New Clause 27
Wildlife conservation: licences
‘(1) In section 10 of the Wildlife and Countryside Act 1981 (exceptions to section 9 of that Act), in subsection (1)—
(a) in paragraph (a), omit the final “or”;
(b) at the end insert “or
(c) anything done in relation to an animal of any species pursuant to a licence granted by Natural England under regulation 55 of the Conservation of Habitats and Species Regulations 2017 (S.I. 2017/1012) in respect of an animal or animals of that species”.
(2) In section 16 of that Act (power to grant licences), in subsection (3)—
(a) in paragraph (h), omit the final “or”;
(b) at the end insert “or
(j) in England, for reasons of overriding public interest”.
(3) In that section, after subsection (3A) insert—
“(3B) In England, the appropriate authority shall not grant a licence under subsection (3) unless it is satisfied—
(a) that there is no other satisfactory solution, and
(b) that the grant of the licence is not detrimental to the survival of any population of the species of animal or plant to which the licence relates.”
(4) In that section, in subsections (5A)(c) and (6)(b), after “two years,” insert “or in the case of a licence granted by Natural England five years,”.
(5) In that section, in subsection (9)(c), after “to (e)” insert “or (j)”.
(6) In the Conservation of Habitats and Species Regulations 2017 (S.I. 2017/1012), in regulation 55(10), for “two years” substitute—
“(a) five years, in the case of a licence granted by Natural England, or
(b) two years, in any other case.”’ —(Rebecca Pow.)
This new clause makes provision relating to licences granted under regulation 55 of the Conservation of Habitat and Species Regulations 2017 and section 16 of the Wildlife and Countryside Act 1981.
Brought up, read the First and Second time, and added to the Bill.
New Clause 31
Use of forest risk commodities in commercial activity
‘(1) In Schedule (Use of forest risk commodities in commercial activity)—
(a) Part 1 makes provision about the use of forest risk commodities in commercial activity,
(b) Part 2 makes provision about enforcement, and
(c) Part 3 contains general provisions.
(2) Regulations under the following provisions of Schedule (Use of forest risk commodities in commercial activity) are subject to the affirmative procedure—
(a) paragraph 1;
(b) paragraph 2(4)(c);
(c) paragraph 5 (except for paragraph 5(2)(b) and (5));
(d) paragraph 7;
(e) Part 2.
(3) Regulations under the following provisions of Schedule (Use of forest risk commodities in commercial activity) are subject to the negative procedure—
(a) paragraph 3;
(b) paragraph 4;
(c) paragraph 5(2)(b) and (5).”—(Rebecca Pow.)
This new clause inserts NS1 and specifies the Parliamentary procedure for making regulations under that Schedule.
Brought up, read the First and Second time, and added to the Bill.
New Clause 1
The environmental objective
‘(1) The environmental objective is to achieve and maintain a healthy natural environment.
(2) Any rights, powers, liabilities, obligations, restrictions, remedies and procedures arising from this Act must be enforced, allowed and followed for the purpose of contributing to achievement of the environmental objective.’—(Dr Whitehead.)
This new clause is intended to aid coherence in the Bill by tying together separate parts under a unifying aim. It strengthens links between the target setting framework and the delivery mechanisms to focus delivery on targets.
Brought up, and read the First time.
Question put, That the clause be read a Second time.
Daniel Zeichner (Cambridge) (Lab)
I beg to move, That the clause be read a Second time.
Fleur Anderson (Putney) (Lab)
The clock is ticking: we are only five weeks away from the end of the famous implementation period. This amendment seeks to freeze that in time and say that in five weeks’ time there will be no regression or diminution in any protection afforded by any environmental standard effective in UK domestic law. Surely that is the most important part of the Bill. At least we could say that the Environment Bill is being brought forward to replace, renew and look beyond all the environmental protections that we will not have when we are not an EU member: that we will do better than that—or at least, not regress. If the amendment is not agreed to, we are worried that we will not have that safeguard.
The Government have frequently stated their desire to improve the quality of our environment and protect our existing environmental standards. Why, then, do they stop short of enacting an unambiguous and binding requirement not to regress on existing rules, as would be enacted through the amendment? This is not about staying tied to EU rules. As the shadow Minister says, we are not re-enacting Brexit at all; rather, we are ensuring that the UK rules get better and better over time and are protected from deregulatory pressure.
Non-regression is an exciting and emerging norm of environmental law, and we need to harness its potential. That requires a positive trajectory for environmental standards, with the ultimate goal of progressively improving the health of people and the planet. There is a precedent, as was mentioned, in other international laws and instruments. Non-regression can be found explicitly in international instruments, such as the 2015 International Union for Conservation of Nature draft international covenant on environment and development, the 2017 draft global pact for the environment and the 2018 Escazú agreement, which mirrors the Aarhus convention for the Americas. It is important to mention those because there is precedent. We cannot say that such a provision is unnecessary and does not need to be done. It should be added to the Bill.
To underscore why we, as the Opposition, feel so strongly about the issue, one need only look at how much the UK’s environment has benefited from the EU framework that the Bill is replacing. In the 1970s, we pumped untreated sewage straight into the sea, but EU laws and the threat of fines, as well as good enforcement, forced us to clean up our act. Now, more than 90% of our beaches are considered clean enough to bathe off. I have yet to hear a meaningful reason why the Government would not at least commit to the new clause. To say that it is not necessary is just bluster and evades the issue, and it is just not good enough.
If we are to put our money with our mouth is, the new clause should be added to the Bill, especially because it would match our ambition as we host COP26 next year. It would be a meaningful legal commitment to non-regression, and in turn a powerful endorsement of the Government’s stated ambitions to be world leaders on environmental matters. It would create an authoritative platform from which the UK could seek to improve global green governance. There is nothing to lose by adopting the new clause and everything to gain.
Rebecca Pow
I thank the hon. Members for Cambridge and for Putney for their input. The hon. Member for Cambridge seemed to suggest that my optimism and enthusiasm are negative assets, but I would never even have started my journey to this place if I had not had such optimism and enthusiasm; I am sure the same could be said of every Member here.
I vowed all that time ago that I would engage with environmental issues should I ever make it to Parliament. Lo and behold, here we are discussing the Environment Bill. I know that the hon. Gentleman is very passionate about the environment, and I like to think that he is just teasing me, because he knows that while I and my colleagues are in office, we will stand up for everything in the Bill. We hope that future Governments will do the same, because that is the purpose of the legislation.
The new clause, which aims to tie the UK to EU law at the end of the transition period, is unnecessary. To put it simply, we have left the EU and we should not bind ourselves to the legislative systems of the past. The Government made it very clear that the UK will continue to be a global leader, championing the most effective policies and legislation to achieve our environmental ambitions. I believe that we have demonstrated that even today with the due diligence clause. We will continue to improve on our environmental standards, building on existing legislation as we do so.
Ruth Jones
The Minister is making some interesting points, but does she agree that this is not about staying tied to the EU’s apron strings but about UK rules getting better and better? The new clause provides us with a baseline to improve on.
Rebecca Pow
The hon. Lady leads me neatly on to say that the UK does not need the EU to improve the environment; our high regulatory standards on environmental protection are not dependent on EU membership. Rightly, one could say that over the years we have taken on board standards, such as those governing sewage in water, but we have actually influenced a lot of European policy. Now we are going further. We often led the way, as members of the EU will acknowledge.
To continue with the same approach as the EU is not good enough. I know that many members of the Committee are well aware of the damaging effects of some EU policies, in particular the common agricultural policy. The thought behind it was good, but the environmental consequences are not necessarily to be lauded. That is why we now have this great opportunity to change it, as we must. We will do better.
Lest everyone always thinks that the EU offers some gold-plated system, let me give some examples of where we have already gone ahead of it. For a start, we were the first major economy to legislate for net-zero emissions by 2050. Another good example is the UK’s landfill tax, which is one of the highest in Europe and has been effective in reducing waste disposal and increasing recycling. The UK has also introduced one of the world’s strictest ivory bans to protect elephants from poaching, whereas the EU has yet to legislate on that. Similarly, our clean air strategy has been applauded by the World Health Organisation as an example for the rest of the world to follow.
I must also mention the UK’s microbeads ban, which shows the power of the Back Benchers who worked on it; just the other day, my involvement and that of many others was cited in the Chamber. That ban came into effect in 2018, but the EU did not move to introduce an equivalent ban until a year later. Those are just a few examples, not to mention our recent ban on single-use plastics—plastic straws, drink stirrers and cotton buds—coming into force in October 2022. We are ahead in many cases.
There are concerns about non-regression, but surely, after we have sat here for weeks going through the Bill with a fine-toothed comb, it is obvious that we have a real, detailed framework of targets, monitoring and reporting. We are then to be held to account on whether the improvement is actually occurring: Parliament will be able to scrutinise. There will be a closer watch on these things than ever before, which is a good thing. The Secretary of State is required to report to Parliament every two years on what is happening on the environmental front internationally—to look at the new environmental laws being introduced, sift through them and work out which ones would benefit us.
Dr Whitehead
Would the Minister at least agree that nothing in the new clause suggests that we should be pegged to EU law, as we were in the past? It simply says that a snapshot should be taken at the point of departure, so that there is something to stand on when it comes to things that we wish to carry out in the future. Far from pegging us back, it actually supports the sort of thing the Minister is suggesting.
Rebecca Pow
We have reached that point already. We have been in the EU, so have had all the same laws. We are not going to sweep them all away, but we will build on them. When that review of international law is done, the EU laws will also be looked at.
I think we have covered what the hon. Member for Cambridge is asking for. On the SI points—I am very interested that the hon. Gentleman has looked at that report about the SIs—I should say that, three to five years after Royal Assent, the responsible Department must submit a memorandum to the relevant Commons departmental Select Committee, published as a Command Paper. The memorandum will include a preliminary assessment of how the Act has worked in practice, relative to objectives and benchmarks identified during the passage of the Bill and in supporting documentation.
The Select Committee, or potentially another Committee, will then decide whether it wishes to conduct a further post-legislative inquiry into the Act. Perhaps we should send that to the authors of that report, because perhaps they were not aware of it. I think it is really helpful, and I hope that it helps.
I have not yet mentioned the OEP, which will help to uphold our standards as well. It will be absolutely essential, ensuring Governments are held to account for the environmental performance I mentioned before. All that goes further than the EU’s environmental governance framework, with stronger binding remedies available to the courts and a wider scope to hold all public authorities to account on the environment. It is much wider.
Our sovereign Parliament must be able to fully realise the benefits of regulatory autonomy in order to take action on improving environmental protections in the future. To support parliamentary scrutiny of our ambitions, the Bill contains provisions in clause 19 that allow Parliament to hold the Government to account on delivering their commitments to improving environmental protections, and where a new Bill contains environmental provisions, the Ministers in charge of that Bill—who will potentially be Ministers in other Departments—will be required to make a statement confirming whether it maintains the level of environmental protection in place at the time of the Bill’s introduction. I hope that has been helpful, and I ask the Opposition if they now might withdraw the new clause.
Daniel Zeichner
I do not think the Minister will be surprised to hear that I am not convinced and will not be withdrawing the amendment. The reason we are not convinced is that there is nothing wrong with optimism, but it has to be tempered by realism, and frankly, as we have seen at the very top of this Government over the past few months, optimism does not always produce results. Looking at the state of our economy, I suspect that we are facing a hard winter and the pressures that will be put on environmental protections will be intense. It is not unreasonable for us on the Opposition Benches to once again remind Government Members about comments made by the current Prime Minister and previous Conservative leaders. The green crap is still the green crap, as far as some are concerned—[Interruption.] That was said by a Conservative Prime Minister.
Rebecca Pow
I ask the hon. Gentleman to withdraw that remark and stop referring to that. We have moved echelons from there, and it is really unfair that this keeps being dredged up by the Opposition, who themselves do not have a great record on the environment. Does he agree?
Daniel Zeichner
The Minister might well wish it had not been said, and I wish it had not been said, but it was.
Richard Graham
On a point of order, Sir George. Is it appropriate in this Environment Bill Committee, where we are discussing serious issues, for a Member, however well intentioned, to raise a supposed quote by a former Prime Minister from several years ago, which he certainly never heard—none of us heard it—in language that is arguably not particularly parliamentary?
Daniel Zeichner
The point I am making is that all Governments will face a dilemma and a pressure when it comes to economic imperatives and environmental protection. We have seen as much in the response to questions I raised about the impact of the planning White Paper, which have not been addressed by the Government. I understand why they have not been addressed—because they are not addressable. There is a tension, and the question we are asking is: when those pressures come—as they will—is this legislation strong enough to protect our environment? The Minister says it is; I say it is not, and that is the difference. I am sure the hon. Member for Gloucester appreciates the point I am making, because it can hardly be denied that there is a tension. If he thinks there is not a tension, that is great, but that is a different world from the one I am living in.
The non-regression issues go beyond the EU question. The point we are making is that a worldwide set of negotiations will continue, hopefully in a more positive way with the new American Administration, and non-regression will be part of those wider discussions. Exactly as my hon. Friend the Member for Southampton, Test has said, this new clause does no more than establish a baseline from which we believe we should be moving, and we see no reason to not put it in the Bill.
I hear what the Minister says about the review and revision clauses that were in the transposed legislation, but I gently say that when that comes up, it will be a very big piece of work, given the number of statutory instruments we have been discussing. In fact, as I think most of us appreciate, once we start digging into them, it often opens up a cornucopia of riches in terms of issues to look at, and we see that what looked like a very simple transposition is actually extremely complicated. We think non-regression is really important, and that is why we intend to press this new clause to a Division.
Question put, That the clause be read a Second time.
Dr Whitehead
I beg to move, That the clause be read a Second time.
This new clause concerns well consents for hydraulic fracking: cessation of issue and termination. Hon. Members may ask themselves, “What has fracking got to do with this Bill? Why is there a new clause about fracking when we are talking about other issues entirely?” I would contend that fracking, or potential fracking, is central to many of the issues that we have discussed. The current fracking regime and whether or not wells are being fracked cut across, potentially considerably so, the Bill’s protections and provisions relating to the natural environment, biodiversity and various other issues. There are a number of worrying issues relating to how fracking is carried out, how its consequences are dealt with, and how its by-products come about and are or are not disposed of.
I am sure that hon. Members will have access to a fair amount of information about the fracking process and that they will be aware that, as far as this country is concerned, it has not got very far. The Cuadrilla well in Preston was paused on the grounds that it caused earthquakes when the fracking process began. Although the then BEIS Secretary, the right hon. Member for South Northamptonshire (Andrea Leadsom), used a provision to direct that that particular drilling company should not proceeded, that provision also allowed for corners to be cut on standards, so that it could get going with the fracking process. The standard relating to seismic disturbance was only a small part of the substantial environmental consequences to which the widespread introduction of fracking would give rise.
Mercifully, fracking is not used substantially in this country, but it is in other countries. When I visited Texas some time ago, I went to Austin, which is right in the middle of the fracking industry, in the large, relatively easy-to-access basin that covers a lot of Texas and in which a lot of fracking wells have been drilled. As we came into the airport, we could see ahead of us what looked like a moonscape. There was a large number of circular pads with extraction equipment covering the landscape as far as the eye could see. It also glinted in the sun, inasmuch as attached to those fracking pads were a number of what looked like ponds or small lakes. It looked like a landscape of lakes, but it was not. It was a landscape of tailing ponds associated with the fracking pads, and in which were placed the results of the fracking process—the fracking fluid that had been used to blast the rocks apart, which contained substantial chemicals to assist in that process. If they were to be produced in this country in the quantities suggested—at least 10,000 or so cubic metres of fluid per fracking pad—they would be classed as hazardous waste and would need to be disposed of very carefully. There are actually very few hazardous waste sites in this country that can take that kind of waste. The solution in the United States was that, on some occasions, they injected the waste back down into deep basins, which is not ideal. Alternatively, they just kept it on the surface in tailing ponds on the landscape. That could be the future for us, if we were to develop fracking to any great extent.
As I say, we have had only two goes at fracking in this country so far. They happened to be in two areas of the UK that contain the seams from which gas can be extracted through the fracking process. One is the Bowland shale in the north-west of the country, which happens to encompass the Lake District national park. The other is across the Weald and into South Downs national park, an area of outstanding natural beauty that goes across Sussex and into Hampshire. If we had a substantial fracking industry in the UK, wells would be drilled in those two concentrated areas. There would be a concentration of wells in that precious landscape, possibly like the concentration that I saw in Austin, Texas.
The Infrastructure Act 2015 placed restrictions on where fracking can take place, but it did not have a great deal of traction in this country. Modern fracking can proceed by diagonal drilling; it does not have to involve drilling down. An interesting discussion emerged about the extent to which parts of the country could be declared to be surfaces on which fracking should not take place. The Government of the day identified some areas of outstanding beauty and national parks as areas where fracking should not take place, but all people need to do is set up a fracking plant right on the boundaries of a national park and drill diagonally.
Fleur Anderson
Does my hon. Friend agree that if the new clause is not agreed to and fracking is not stopped, that will undermine a lot of the biodiversity and ecosystem protection elsewhere in the Bill? It is bad for the climate, the environment and pollution, and local people do not want it either.
Dr Whitehead
I thoroughly agree with my hon. Friend about a regime of substantial fracking. All that has happened at the moment is that fracking has been paused. All the infrastructure requirements and legislation allowing fracking on a reasonably unrestrained basis are still in place, so it is more than possible that a future Government, or indeed this Government, might decide that they no longer wish to pause fracking. Everything is ready to go. As she said, this raises the question not only of what happens to the fracking fluid but of the escape of fugitive emissions between the well being produced and the gas being conveyed. Indeed, it is the practice, when fracking has been completed, to have a so-called flare-off to clean the well’s tubes, as it were. Enormous amounts of gas mixed with elements of the fracking fluid are released into the atmosphere and simply flared.
We understand that fracking sites will have multiple wells drilled with a very large amount of transport involved, with traffic coming to remote countryside areas, the levelling of an area several football pitches wide to make the pad, and a host of other things that result in environmental despoliation in pursuit of fracking. There are also the long-term consequences when the well is depleted: will it be re-fracked? If it is depleted, will it be properly capped off? One of the problems in Texas now is that the fracking wells have not proved to be as bountiful as had been thought––what a surprise––and several have simply been abandoned with little done to cap them off. There can be a regime for doing that properly, but in the countryside where the fracking has taken place, there is continuing danger and concern in respect of surface water and water in seams underground.
Ruth Jones
My hon. Friend is making a powerful point. Does he agree that it is the unforeseen consequences that are so dangerous with fracking? We do not know what we do not yet know. In the mining industry near my constituency, we have mountain-top villages that are at risk of subsidence because of the extensive mine workings underneath. We need to be very careful about what we wish on future generations.
Dr Whitehead
That is an important point. These things do not appear and simply go away. An example of something that does appear and then go away is onshore wind. When the turbine’s life is up, it can simply be taken away. That is an advantage of that form of power, but this form of power leaves in its wake enormous environmental scars and a substantial legacy of worry for the communities in which it has taken place, even after it has finished its life. If the well is to be properly exploited, there is the potential legacy of re-fracking on several occasions when all that stuff starts again to keep the well producing. It is a grubby, dirty, environmentally unfriendly, legacy-rich business that we surely should not be inflicting upon ourselves in pursuit of something that we should leave in the ground anyway.
In an era when we say that our dependence on fossil fuel will greatly decrease—indeed, companies such as British Petroleum have said that they will cut down substantially the amount of oil that they get out of the ground, and that they will move into different areas—it does seem strange for us to be encouraging an activity that involves trying to locate the most securely fastened bits of climate-damaging hydrocarbons from the soil, blast them out of solid rock and bring them to the surface to use for fossil fuel activities. As far as this is concerned, I think the watchword is, “Just leave it in the ground.”
That is why we have given the Bill an opportunity to include protection against that happening—and, indeed, protection against the conflict that I believe exists between the Infrastructure Act 2015 and this Bill, in terms of which permissions override which protections, particularly as far as fracking is concerned. We have an opportunity to set out in the Bill that no well consents will be given, and that fracking will not take place in this country. The new clause essentially says that the Oil and Gas Authority will not issue well consents, with all the consequences that I have set out; and that permits that have been given should lapse over a period of time and the work should not be undertaken.
This is a serious issue for the future of our environment and for environmental protection, and we have the ability, literally at the stroke of a pen, to put it right in this Bill. We can put it beyond doubt that—no matter whether there is a pause, whether there are concerns about earthquakes, or whether there are concerns about the environmental consequences of wells drilled in particular places—we will grasp the issue firmly by the scruff of the neck and say, “No more. We are not doing this. It is not good for our environment, and we won’t have it anymore.”
I hope that hon. Members across the Committee will join us in making sure that that is part of the clean, safe and enjoyable environmental future that we all want to strive for, by agreeing to add the new clause to the Bill.
Rebecca Pow
In the last 25 minutes, we have been all the way to Texas and back, we have been up north and we have been all over the place. I thank the hon. Member for Southampton, Test for his proposed amendment. The Government continue to recognise the importance of natural gas as a source of secure and affordable energy as we aim to reach net zero emissions by 2050. Natural gas still makes up around a third of our current energy usage, and we will need it for many years to come, even as we decarbonise. I know that the shadow Minister has a great deal of knowledge and interest in the energy sector, but I am sure he understands that.
The Government have always been clear that the development of domestic energy sources, including shale gas, must be safe for local communities and for the environment. With regard to fracking and shale gas development, the Government have taken a science-led approach to exploring the potential of the industry, underpinned by world-leading environmental and safety regulations. In addition to a traffic light system to monitor real-time seismic activity during operations—with a clear framework of stopping operations in the event of specified levels of seismic activity—the Government also introduced tighter controls over the shale gas industry through the Infrastructure Act 2015.
A well consent is essentially permission to drill an oil or gas well, and it is required from the Oil and Gas Authority before an operator can explore for oil and gas onshore in the UK. All well consents issued by the OGA on or after 6 April 2016 contain a further requirement for operators to obtain hydraulic fracturing consent from the Secretary of State for Business, Energy and Industrial Strategy before carrying out any associated hydraulic fracturing. That consent ensures that all necessary environmental and health and safety permits have been obtained before activities can commence.
The current definition of “associated hydraulic fracturing” is based on the approach taken by the European Commission, which I am sure the shadow Minister welcomes. Using that definition sets the right balance between capturing hydraulic fracturing operations and not capturing techniques used by conventional oil and gas operations, or more widely in the water industry, where processes such as acidisation are commonly used to clean wells after drilling.
The Environment Agency reviews any proposal involving the use of acid on a site-specific basis before deciding whether the activity is acceptable. The agency’s regulatory controls are in place to protect people and the environment, quite clearly. If the proposed activity poses an unacceptable risk, a permit will not be granted.
We have had such an eloquent description of what goes on in the US. The hon. Member for Southampton, Test paints a very clear picture of that lovely trip—although, it was probably not all that lovely, seeing that moonscape. Comparisons are not necessarily helpful because, of course, in the UK we have an entirely different regulatory system. Construction standards in the UK are robust and regulators have the tools to ensure that the risk of pollutants entering groundwater is minimised.
The EA also assesses the hazards presented by fracking fluid additives on a case-by-case basis and will not allow hazardous substances to be used where they may enter the groundwater and cause pollution. The EA has the power to restrict or prohibit the use of any substances where they pose an environmental risk. The shadow Minister touched on hazardous waste and flow-back fluids, which include fracking fluids. They are deemed to be mining waste and require an environmental permit for management onsite. Disposal of flow-back fluids must be at a regulated waste treatment works, which are also regulated by the EA. Shale gas operators must demonstrate that where any chemicals are left in the waste frack fluid, it will not lead to pollution in groundwater. I think it is quite clear that we have a very tight system already in place, which will address many of the issues raised by the shadow Minister.
Let us move on to what has happened recently, when I was involved as a Back Bencher, as were many colleagues. The Government announced in November 2019 that, although any application would be considered on its merits, in the absence of compelling new evidence, they will take a presumption against issuing any further consents for hydraulic fracturing for shale gas extraction, creating a moratorium.
The Government set out their position in full via a written statement to the House on 4 November 2019, and we are satisfied that the current regulations ensure that appropriate safeguards are in place. We therefore have no plans to repeal sections 4A and 4B of the Petroleum Act 1998, as inserted by section 50 of the Infrastructure Act 2015, and nor will we direct the OGA to withhold well consents that include provisions for associated hydraulic fracturing.
There are no plans to turn the moratorium on shale gas extraction into a ban. The moratorium will be maintained unless—this is absolutely crucial—compelling new evidence is provided to address the concerns about the prediction and management of induced seismicity. Such evidence is, it must be said, yet to be presented. I therefore respectfully ask the hon. Gentleman to withdraw his amendment.
Dr Whitehead
The Minister has kindly and gently made quite a good case on our behalf. She has confirmed what we have said: in the UK, we are not talking about an end to or a ban on fracking, or indeed a resiling from the circumstances under which fracking was set up as an activity in the UK. The word “moratorium” means a pause; it does not mean the end of anything. It can be a more or less lengthy pause, as the Minister suggested, but it is still a pause, so the way is open for fracking to come back to this country if, as the Minister said, the circumstances permit that.
I agree with the Minister that the regimes in this country and in the US are not the same. The moonscape near Austin that I mentioned is a worse-case scenario—that is true—but even in the early applications for fracking in this country, there was pressure on the Government to cut corners. There were applications for tailing ponds, however briefly they would have been in place. A number of the environmental issues around fracking that I have mentioned would come to this country—not to the same extent as in the US, but they certainly would be part of the fracking process were it to recommence.
There are other differences between the US and the UK in terms of who owns the surface of the land. In this country, the Queen effectively has a hand in the ownership of the surface of the land, while in America, people can buy the rights to what is underneath someone’s land, drive a truck on to it and start drilling, because they have the right of access through the land to what is underneath it. That is not the case in this country. Indeed, as the Minister set out, the Infrastructure Act 2015 introduced a number of constraints on what can and cannot be done, and what cannot be done is along the lines of exactly what is done in America. The Government have nevertheless put forward, in a number of papers that they have published, a prospectus on how much fracking there would be in this country and where it would be undertaken. That would have a substantial impact on the environment in a country that is nothing like Texas.
Texas is enormous and, as everyone knows, this country is not. Not only is this country not enormous, but the shale to frack is specified as being concentrated in particular parts of it. Those areas, as I have emphasised, cover some of the most precious and beautiful parts of our country, and we should really go out of our way to preserve them and ensure that they continue, as much as possible, in their present state.
Daniel Zeichner
I beg to move, That the clause be read a Second time.
To some extent, this is part 2 of a discussion that we had a little earlier. The new clause was tabled by my hon. Friends the Members for Bristol East (Kerry McCarthy) and for Leeds North West (Alex Sobel), former Committee members who have now gone on to other, greater things—perhaps not greater, but different. I am delighted to move it on their behalf. Opposition Members give it our full support.
My hon. Friends were very far-sighted, in the sense that they tabled the new clause before the Government came up with their own proposals. However, the new clause goes further, which is why we believe it is worth pursuing. I will go back to why this matters. Greener UK tells us that about 28% of the UK’s overseas land footprint—nearly 6 million hectares—is in countries at high or very high risk of deforestation and which often have weak governance and poor labour standards. At the same time, about 1.6 billion people depend directly on forests to secure their livelihoods. The food and everyday products that we buy could be destroying habitats for endangered wildlife and impacting livelihoods overseas. This is a big issue, which I think we all agree on, on the basis not only of the discussion this morning but of those facts.
The new clause would create a duty on the Government to publish draft due diligence legislation within six months of this Bill receiving Royal Assent, consistent with our earlier discussion, covering all environmental and human rights risks and addressing the impacts associated with the activities of specified bodies, including within business, finance and public authorities. It is the human rights risks and finance issues that we particularly add to the earlier discussion. The new clause would require any goods placed on the UK market to have fully traceable and transparent supply chains and to not cause adverse environmental and human rights impacts, including deforestation, forest degradation and ecosystem conversion and degradation.
Since the new clause was first tabled, as the Minister mentioned earlier and as my hon. Friends have also referenced, there has been a consultation on whether the UK Government should introduce a new law designed to prevent forests and other important natural areas from being converted illegally to agricultural land. As the Minister reported, there is strong support for action, with 99% of respondents agreeing that there should be legislation to make forest risk commodities more sustainable. The Government were good to their word and have introduced new schedule 1 and the associated clauses, which we discussed and agreed to earlier. However, we think this new clause would go further. Its scope is wider, which means it would have a greater impact and would do more to tackle what we sadly see as our complicity in deforestation.
The evidence base is there. The Global Resource Initiative taskforce recommended back in March that:
“The government urgently introduces a mandatory due diligence obligation on companies that place commodities and derived products that contribute to deforestation”—
whether that is legal or just illegal under local laws, which is an important distinction—
“on the UK market and to take action to ensure similar principles are applied to the finance industry.”
The financial industry can be supportive in those markets. That, again, goes further than new schedule 1.
We think that a mandatory due diligence framework would formalise and obligate responsible practices throughout the UK market-related supply chains and could ensure comprehensive accountability and help prevent deforestation and other global environmental damage. The Government are right to set their sights high. We had discussions earlier about how ambitious—or not—the legislation is. We think we should be world leaders; the problem is that we are not entirely convinced that this does enough.
Greener UK says of what we have already agreed in the Bill:
“This does not accord with the urgency needed to tackle deforestation and falls short of the government’s ambition for a world leading approach.”
That is the view of the major environmental organisations. They also think—and we reflect this point—that there should be more dialogue, both with themselves and others who understand how the processes emerge. They are also concerned that, because this was a late addition to the Bill that came in through a Government amendment, it would have been helpful to have produced more detailed explanatory notes as to how it should work. They have a range of detailed questions, which I will not trouble the Committee with this morning. However, it suggests to me that there is more work to be done and that our new clause would help with much of that.
We hope the Government will go further in future, but it is striking that, Greener UK draws a comparison between the due diligence system and the approach taken to the EU timber regulation, which we have brought across through secondary legislation. It thinks that our approach is weaker by comparison.
That feeds into my overall sense of what is happening with the Bill: sadly, the rhetoric is good but the delivery and actuality is weaker. We wish to make the Bill stronger. Again, this is an important point for us so we want to divide on it, but I want to hear why the Minister thinks we should not be strengthening in that kind of way.
Rebecca Pow
I assure the hon. Gentleman that we are already one step ahead and, in fact, voted to include the world-leading legislation in the Environment Bill this very morning. We are making more progress than any other country. I understand his sentiments but, yet again, he is being negative about the enormous step we are taking.
Our amendments will help us protect the world’s most precious forests. They will allow us to set mandatory requirements on businesses that use agricultural commodities associated with deforestation. As we have said before, there are other regulations that deal with timber; our amendments will deal with other products where trees are cut down to grow crops such as palm oil, soya, rubber, beef and the associated leather, and cocoa. The hon. Gentleman will agree that those are crucial crops to be looking at as we proceed, and that that will make a genuinely big difference. We have heard the great example of what happened in Indonesia when timber was tackled. The same thing could happen with other crops in reducing the cutting down of forests. I have seen some of those on my travels.
Our framework is designed to work with Governments around the world, who are the custodians of the world’s precious forests, by requiring businesses to ensure that commodities they use have been produced on land that is legally occupied and used. I have pointed out previously how so many countries are not even adhering to their own legislation, so that is the crux of where we are placing our intentions. Our amendments will become part of the Bill now, allowing us to act quickly on this important issue, as opposed to within six months of Royal Assent, as in the new clause.
The hon. Member for Cambridge mentioned the consultation, which had a fantastic response. It highlighted that we need to act urgently, which is why we are taking action. That is in line with the recommendation of the Global Resource Initiative to introduce due diligence legislation. That is what we are doing urgently, as was called for. We are listening to feedback and I reassure the Committee that we intend to move swiftly to take forward this legislation, laying the necessary secondary legislation shortly after COP26. We hope that our setting this path will be a big talking point at COP26, potentially encouraging others to follow.
The hon. Gentleman made a sound point on human rights. We agree that, in some circumstances, there is a relationship between commodity production and human rights. It does not necessarily follow that the best solution is to tackle those two issues at the same time. Tackling human rights abuses requires an approach that is tailored for that purpose, rather than through the narrow lens of the subset of commodities, examples of which I have just listed, chosen for their impact on forests.
The Government support the United Nations guiding principles on business and human rights—an internationally agreed framework for addressing human rights risks in all kinds of business activities. Those principles encourage businesses to adopt due diligence approaches and to address any negative impacts, where appropriate. The UK was the first state to produce a national action plan for the guiding principles, and we have already announced measures to strengthen the approach of the UK’s Modern Slavery Act 2015, as part of that plan. I am sure the hon. Gentleman is fully aware of that really important step.
The hon. Member for Cambridge touched briefly on finances. I want to clarify that the due diligence legislation is designed for a specific purpose, which is to ensure that companies in the UK are not using products that have come from illegally used or occupied land. We anticipate that information included in the reports published by the regulator will provide data, which others, including the finance sector, can use, thus helping inform investors of the extent to which the companies they invest in are involved in illegal deforestation. That is the way in to what the hon. Gentleman was addressing. I hope that is helpful. I will wind up and ask the hon. Gentleman, in the light of my assurances, to withdraw his proposed new clause.
Daniel Zeichner
Frankly, I do not think that the Government are one step ahead, given that our proposal was tabled long in advance and is far more extensive and far reaching. I heard what the Minister said, and I know she is very proud of what is being done. We just need to go further.
I gently point out that I am not the one saying that what is being done is not achieving what was hoped for. It is many environmental organisations, some of which the Minister cited earlier. I suspect she will find that the debate will continue. No one is saying the matter is easy; it is complicated and difficult, and this has to be done in some cases through international negotiation. We understand and appreciate that, but we believe it is better to be more optimistic and ambitious.
Again, I heard what the Minister said on the linkage to human rights, but the evidence is pretty clear that environmental degradation and disrespect for human rights go hand in hand. That is why we believe the new clause would give a sensible way forward. On that basis, Mr Gray, we will divide the Committee.
Question put, That the clause be read a Second time.
Ruth Jones
I beg to move, That the clause be read a Second time.
As we approach the end of Committee stage of this important Bill, I rise to speak to new clause 7, which appears in my name and those of my hon. Friends here in the Committee Room, but also, more importantly, those of colleagues from right across the House. This is a cross-party new clause and an important addition to the Bill; I hope Ministers will recognise that it will simply enhance the scope and reach of the Bill and take it closer to being fit for purpose.
The new clause calls on the Secretary of State for action and leadership, introducing a requirement for them to maintain,
“a register of the end use of all recycled waste created, collected or disposed of in England.”
As things stand, only voluntary policies exist for monitoring the end use of recycled material, and that approach fails to provide sufficient data to understand recycling rates and end markets.
Like many Opposition colleagues, I commend the Environment, Food and Rural Affairs Committee on its recent inquiry into food and drink packaging. It was a thorough and comprehensive review and I hope it will influence what we do and how we do it. As part of that review, the EFRA Committee highlighted the lack of data, stating:
“In order to make evidence-based policies and assess their impact, the Government needs access to reliable data. It is shocking that it does not know how much plastic packaging is placed on market in the UK, nor how much is really recycled. ”
A new end use register for recycled waste would improve existing data. That is important, because it would mean that the Government—whichever Government, of whichever party—were able to deliver evidence-based policies and to better understand the end use of recycled material. The information gathered from and by the register that this new clause provides for could help to improve transparency, reduce waste and, in turn, increase public confidence in the recycling system.
That confidence is a key point, and I want the Minister and her colleagues to think about it. We will not get the buy-in we need from residents across England if we do not ensure that we can point to crude, hard facts. As Greener UK pointed out in a typically helpful and comprehensive briefing, that public confidence has been
“damaged by growing awareness of waste exports”—
I have spoken about those previously, for instance in the Sri Lankan debacle—
“and confusion caused by inconsistent recycling schemes across England.”
In other words, the new clause would help any Minister with responsibility for recycling to get the job done, and it would help to ensure that our country takes all the steps necessary to tackle the climate emergency and preserve our planet.
Rebecca Pow
I thank the hon. Lady for the new clause and join her in thanking the EFRA Committee; the Committee does a lot of really helpful inquiries, and the waste and packaging one helps to add to the weight of knowledge and information. As hon. Members will know, I was on that Committee for a long time, and one does feel that the recommendations that come out of those inquiries are often useful and can help in that whole mix of listening, consulting and reporting.
The Government are absolutely committed to monitoring waste throughout its journey by improving the data captured on the generation, treatment and end use of waste. As I have said numerous times, I am keen to see improved transparency in where waste is ending up and to make that information more accessible to and usable for businesses, regulators and Government as well as the public. As the hon. Member said, people do want information and to understand, and that is why our labelling requirements—another measure introduced through the Bill—will be so helpful.
Waste tracking is reliant on largely paper-based record keeping, making it difficult to track waste effectively and providing organised criminals with the opportunity to hide evidence of the systematic mishandling of waste. That is why clauses 55 and 56 provide the regulation-making powers needed to introduce mandatory electronic waste tracking across the UK. The powers, which I know the green NGOs will welcome, will enable us to monitor waste through its entire journey from production to end use. The hon. Member was slightly critical about some of the NGOs’ comments, but actually those measures met with a great deal of positivity. The clauses will enable us to track all controlled waste and waste from mines and quarries, and that will include information on waste that is being recycled as well as on products and materials produced from waste.
I am pleased to confirm that we will consult on the design of a waste tracking system next year and that the consultation will address both access to and use of waste tracking data as suggested by the new clause. I therefore do not consider it necessary to introduce a separate clause placing a duty on the Government to launch a specific register for the end use of recycled waste, as that would duplicate effort for both public authorities and businesses.
The new clause would place a further duty on the Secretary of State to introduce the measures in England only, but clauses 55 and 56 give us the necessary powers to establish a system that covers the whole of the UK. We are working closely with the devolved Administrations—that includes the Scottish Government —to develop that. While I support the intention behind the new clause, I consider it unnecessary and ask the hon. Member kindly not to press it.
Ruth Jones
I am glad that the Minister agrees with the comments of the EFRA Committee about the lack of hard data. That is why we need a register, and that is why we tabled the new clause. I am also glad that she acknowledged the importance of ensuring we bring the public with us. Public confidence is so important; otherwise, they will not buy into any new recycling schemes.
The Minister mentioned mandatory electronic waste tracking, which is to be welcomed. However, the new clause is not about having an either/or system; it would enhance the system. The register would be a useful addition to that electronic waste tracking system.
Rebecca Pow
Is the hon. Member aware—I touched on it in my speech—that local authorities already collect and report data on their waste and many publish information about recycling performance? Information reported to local authorities is published, including on the destination of recyclable material where available. Does she agree that one does not want to put extra burdens on local authorities when they are already dealing with a lot of what she is arguing for?
Ruth Jones
I thank the Minister for her comments. The problem is that we have a voluntary code with some taking part and others not. That is the issue. No one wants duplication of anything, but we do want to reinforce and enhance the current system so that we have a coherent and comprehensive system across England and—she mentioned the devolved nations—for all areas.
The Minister mentioned the public consultation, and I take that on board. My only worry is that such consultations have been known to be a cause for people to drag their feet. We urge her to ensure that the consultation is speedy, with suitable results at the end of it. I will not press the new clause, so I beg to ask leave to withdraw the motion.
Clause, by leave, withdrawn.
The Chair
I suspect that no one wishes to move new clause 8, unless I hear to the contrary.
Rebecca Pow
On a point of order, Mr Gray. New clause 8 is the weeds one, tabled by my hon. Friend the Member for Chatham and Aylesford (Tracey Crouch). I know she has a great interest in these things, and we acknowledge that. As a gardener, I am a great weeds person—a weed is just a plant in the wrong place—and I thank her for her continued work on pollinators.
The Chair
The Committee has already sent the hon. Member for Chatham and Aylesford our warmest and best wishes in the current circumstances, and we can add the Minister’s words to that.
Financial Services Bill (Sixth sitting)
Tuesday 24th 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 24 November 2020 - (24 Nov 2020)
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: 10 - Question accordingly negatived.
The Chair
We now continue the line-by-line consideration of the Bill. I think everyone is okay with all the normal announcements about social distancing, Hansard and tea and coffee. The Clerks have told me that you have to ask my permission to remove your jackets, so I can unilaterally grant everyone permission to strip off—to remove their jackets if they so wish. As you know, we may debate amendments together when that is logical, but the votes on them will not necessarily be in the same sequence.
Schedule 2
Prudential regulation of FCA investment firms
Mr Pat McFadden (Wolverhampton South East) (Lab)
I beg to move amendment 21, page 63, line 5, in schedule 2, at end insert—
“( ) high standards in social practice and corporate governance including pay, adherence to equalities legislation, transparency and corporate responsibility, and”
This amendment would require that, when making Part 9C rules, the FCA must have regard to high standards in social practice and corporate governance including pay, adherence to equalities legislation, transparency and corporate responsibility.
The Chair
With this it will be convenient to discuss amendment 25, page 79, line 29, in schedule 3, at end insert—
“( ) high standards in social practice and corporate governance including pay, adherence to equalities legislation, transparency and corporate responsibility.”
This amendment would require that, when making CRR rules, the FCA must have regard to high standards in social practice and corporate governance including pay, adherence to equalities legislation, transparency and corporate responsibility.
Mr McFadden
Thank you for your chairmanship, Dr Huq. Your initial instructions threaten to make the proceedings a lot more interesting than this morning’s. We will not take them too literally when it comes to how much clothing we remove.
Like amendment 20, on which we concluded debate this morning, amendment 21 relates to schedule 2 on page 63 of the printed Bill. It is designed to ensure that the regulators have regard not only to environmental regulations, which we tried to press this morning, but to social and governance considerations.
Committee members who have anything to do with the sector or industry will know that the letters ESG—environmental, social and governance—come up a lot. I am sure that, like me, the Minister does lots of roundtables, meetings and so on, and he will be struck by the enthusiasm with which City voices are speaking about ESG. We dealt with “E” this morning when discussing amendment 20; amendment 21 is about the “S” and the “G”.
The agenda of prioritising those things goes with the grain of what investors and fund managers say, at least, they are doing of their own accord. However, we believe that adding it to the Bill and the regulatory framework would put regulatory force behind these trends, which already exist with varying degrees of enthusiasm in the investor world.
The Chair
Order. I think you were told this morning that if you crank the volume up a bit, it is better for the recording.
Mr McFadden
I apologise, Dr Huq; I shall try to speak up.
There are many fine-sounding statements about ESG principles on corporate websites. Some of the toughest money management companies in the world are now telling us that it is no longer just about quarterly or annual returns, but about long-term sustainability. We are told that investors do not want to be making money on the back of poor governance or shoddy or illegal working practices; they want their investments to be in companies and projects that are sustainable for the long term and are run in the right way.
With your indulgence, Dr Huq, I will illustrate that with an example that has been in the news recently. I want to consider what these corporate statements were worth in the case of the clothing firm boohoo. When The Sunday Times exposed the shocking conditions in boohoo’s supply chain back in July, including paying workers in the supply chain well below the minimum wage and serious fire risks in the factories in which the clothes were made, the company commissioned an independent review of the supply chain. That was chaired by Alison Levitt QC; she reported in September. She found that the allegations about the supply chain were
“not merely well-founded but substantially true”.
On the corporate governance side of things, her findings were damning. Her report says:
“No member of the Board I interviewed mentioned that the responsibility for what is happening in the supply chain derived from the duty of the company’s officers to act in the best interests of all the shareholders.”
In other words, the board did not understand that it was not in the interest of their own shareholders to allow a supply chain in which these illegal practices were taking place. Ms Levitt was effectively concluding that the board did not know it was their duty—or that if they did know, they did nothing about it.
Ms Angela Eagle (Wallasey) (Lab)
Does my right hon. Friend agree that the lack of effective enforcement is also an important factor in boards’ thinking that the risk may be worth taking? Lack of effective enforcement has been a feature of the last 10 years, as enforcement authorities have been starved of funding and retreated further and further from the frontline, where these practices are going on.
Mr McFadden
My hon. Friend is absolutely right. The point I am making in moving the amendment is that, although there are arguments to be made about enforcement and minimum wage inspectorates and so on, there is another side to the issue: the considerations for investors in these companies and the role of regulators. That is what the amendment is about.
Following Ms Levitt’s report, my hon. Friend the Member for Leicester West (Liz Kendall) wrote to all of boohoo’s main shareholders—the list reads like a “Who’s Who” of blue-chip City firms: it includes Jupiter, Fidelity, Invesco, BlackRock and Standard Life Aberdeen. None of those firms—with one notable exception, which I will come to—has taken meaningful action. They talk about engaging and following the situation closely, but only one has actually followed through. All the firms have on their websites very fine-sounding statements about ESG, corporate governance, social considerations, sustainability and so on—indeed, some have set themselves up as champions of those causes.
Let me come to the exception to the rule on that list: Standard Life Aberdeen. It has sold all its shares in boohoo and is clear about why. In a letter to my hon. Friend the Member for Leicester West, the Standard Life Aberdeen chairman Sir Douglas Flint says that the firm had been concerned about the supply chain for some time and that
“Our patience with the company’s responses on the issue had been diminishing during the last year. That patience evaporated this summer with the company’s response to the media allegations and that is why we took the decision to sell our remaining shareholding.”
Standard Life Aberdeen is run by serious people. It is a very reputable, important financial management firm and it has decided to act in accordance with its ESG principles and wants to uphold them. What the story shows is that too many companies do not and that often it is just words.
Our amendment seeks to put some regulatory force behind the upholding of these principles. Firms say that they want to uphold them, but, as the story shows, too often that is not the case—action is wished away with talk of engagement and monitoring the situation and all the rest of it. The amendment would make the regulator have to have regard to the exploitation of workers and make upholding high social and governance standards a hallmark of the UK financial services industry. In that way, we would not just depend on good people such as Sir Douglas Flint and on companies that are the exception to the rule; we would send a clear signal to the whole investment industry about the kind of response that we want to see. Otherwise, the fear must be that, although there will be plenty more warm words and mission statements, they will be of little comfort to someone working in an overheated factory and earning £3 or £4 an hour—about half the minimum wage—and that, when the story is exposed and the exploitation is no longer hidden, the investors in the company that is ultimately responsible will not do anything about it.
I ask the Minister to imagine the signal that such a regulatory duty could send. Not only would there be a minimum wage law, as there is now, but the UK’s supercharged, empowered regulators would have social and governance considerations at the heart of what they do.
We have had many debates about standards and what would happen in the UK after Brexit on this issue. Time and again, the Prime Minister has said that he does not want a race to the bottom: he wants the UK to uphold high international standards and there is absolutely no reason to think that our departure from the EU should be any threat to rights of work or any considerations like that. This amendment is a chance to prove that and put it at the heart of financial regulation.
The truth is that companies are much more likely to take such considerations seriously if their investors are tapping them on the shoulder and saying, “Why aren’t you doing that?” It is clear that Standard Life Aberdeen tried to do the right thing for a time with boohoo and eventually got so exasperated that it divested itself of its shares in the company. That is what we want to see more of from major investors and shareholders. It is not happening enough at the moment. The fine words on corporate websites are not matched enough by that kind of action.
Adding what is in the amendment to the regulators’ “have regard to” list and the accountability framework in the Bill would send a powerful signal about the character of post-Brexit financial services. That is why we have tabled it today.
Alison Thewliss (Glasgow Central) (SNP)
It is a pleasure to see you in the Chair, Dr Huq. I rise to support the amendments tabled by the Labour Front Bench. It is really important to hold financial services firms to account; the example of boohoo given by the right hon. Member for Wolverhampton South East is a perfect example. Standard Life Aberdeen really should not be the exception rather than the rule. All financial firms should take their duty seriously, look all the way through their supply chains and act responsibly. It is clear that if the carrot of “doing the right thing” is not working, we need further means to hold companies to account.
The amendment is one of those that make me ask myself, “Why wouldn’t the Government want to do this? Why wouldn’t the Government want to support these things? Whose interests do they serve if they do not want to put this in the Bill?” The Scottish National party feels strongly that, although ESG is not the end of the movement towards a fairer, more sustainable future, it is certainly a vital part. We support the growing trend in the private sector towards greater corporate responsibility. By taking a greater stake in the communities where they operate, firms can become partners for social progress.
I was struck by the evidence given by Fran Boait in the session last week. She said:
“The Bill sets the direction, and it needs to integrate the needs of the wider economy, social responsibility, the environment and thinking about how we set a direction that is different from the one that led to the global financial crash”.––[Official Report, Financial Services Public Bill Committee, 19 November 2020; c. 112.]
The amendments set a good example of that change in direction and responsibility, and of the strong message that the Government need to send out.
To an extent, we have been able to do that in Scotland. We have promoted social responsibility in corporate culture, not least through actions such as the Scottish business pledge. We welcome a wider framework, which would encompass the financial sector and encourage them to do their bit. The partnership between the Scottish Government and business is based on boosting productivity and competitiveness through fairness, equality, environmental action and sustainable employment. It is a commitment to fairness, with businesses signing up to mandatory elements of the Scottish business pledge such as paying the real living wage—not the pretend-y living wage that the Government like to promote: the real living wage, as set by the Living Wage Foundation—and closing the gender pay gap, which has slipped during covid and may well fall back.
Stella Creasy (Walthamstow) (Lab/Co-op)
We should put on the record that the gender pay gap has not slipped but has been abandoned as a commitment by the Government. I hope the Government will rethink that quickly, given the importance of the case that the hon. Lady makes. It has not slipped—it has gone.
Alison Thewliss
I meant more that the actions of businesses had slipped, but the hon. Lady is correct to point out that the Government have abandoned that commitment as well. I was going to go there with that point. If companies are not held to account, that slippage will become irreversible. Companies have worked so hard to try to bridge that gap, and going backwards really is unacceptable.
By bringing those elements together, companies across Scotland have shown that they can improve productivity and competitiveness and build sustainable growth in a way that achieves fairness, equality, opportunity and innovation. We have the UK’s highest proportion of living wage employers in Scotland because the Scottish Government made that commitment. That is what we can do with the limited powers that we have. If we were to put into legislation here far more responsibility and accountability, it would certainly move that agenda forward.
In addition, we believe that moves such as increasing worker representation on company boards, which is commonplace among our more productive, investment-rich European competitors, would promote much greater social responsibility among companies that had that representation, as would increasing the representation of women and minority communities on public and private sector boards.
Scotland is on track to ensure that all public sector boards have a 50/50 gender balance due to the statutory targets that we put in place. We would support similar UK legislation for the private sector, because if these things are not in place, it will take a very long time before we see any meaningful change. The evidence shows that it is good for companies and organisations to do that, because they do better when they better represent society.
It is important that we make sure that companies are held to account in this way. The amendments tabled by the official Opposition are good and sound. I am interested to hear why the Minister thinks that they are not good ideas worthy of pursuit.
The Economic Secretary to the Treasury (John Glen)
It is great to be under your chairmanship again, Dr Huq. I thank the right hon. Member for Wolverhampton South East and the hon. Member for Glasgow Central for their comments.
The right hon. Gentleman opened with a depiction of the appalling situation with Boohoo, the Levitt review and the challenge of securing widespread adherence to higher standards of corporate governance. He mentioned the actions of Sir Douglas Flint from Standard Life Aberdeen, with whom I have worked closely during the last three years.
Many of the particular aspects of that case are beyond the scope of the Bill, but the right hon. Gentleman uses it to illustrate the reasons why he tabled the amendments, which would introduce a new “have regard” in the accountability regime to which the Prudential Regulation Authority and Financial Conduct Authority would be subject when implementing the Basel standards and the investment firms prudential regime respectively. The amendments would require the PRA and FCA to consider higher standards in social practice and corporate governance when making new rules under the Bill.
It is unclear from the wording of the amendments whether regulators would need to look at their own best practices or those of the firms they regulate. Regardless, I fully support the intention behind the amendments. Indeed, I have chaired the asset management taskforce over the past three years: we have had 10 meetings with industry representatives, including Catherine Howarth, whose responsible investment charity ShareAction has done some significant work on stewardship and how we can get better transparency across the whole of the ESG agenda. Indeed, I believe that our report on that will be produced imminently.
There is no doubt that the regulators are committed to the highest levels of equality, transparency and corporate responsibility. For example, the UK has some of the toughest requirements on bonus clawback and deference in the whole world. The Government, working with the regulators, were also world-leading in the design of an accountability regime for senior managers in the industry; sequentially, over the past three years, that has extended to more and more parts of the financial services industry.
FCA solo-regulated firms are expected to have undertaken a first assessment of the fitness and propriety of their certified persons by 31 March 2021. The senior manager and conduct regime, implemented for all banks, building societies, credit unions and Prudential Regulation Authority-designated investment firms in 2016, was extended to cover insurance firms in December 2018 and most other FCA-regulated firms by December last year.
However, the track record of our regulators should not make us shy away from making them legally accountable for upholding the highest standards going forward. The fact is that the regulators, as public authorities, are already subject to the requirements under the Equalities Act 2010, as are businesses across the UK, including firms within the scope of the PRA and FCA remits. They already have existing powers and duties under the Financial Services and Markets Act 2000, which is being amended by this Bill, in respect of pay, transparency and principles of good governance. In fact, they are already responsible for making rules on remuneration under these two prudential regimes.
I recognise that when I think about the City, there are significant elements that need more work. For the past while, I have been responsible for the women in finance charter. I am currently conducting a series of challenges to the CEOs of banks, looking at what they are doing to address, beyond the targets, a pipeline of talent, so that there are better opportunities for more women to reach the executive level. I will speak more about that later this year.
Sound governance is necessary to support the regulator’s primary objectives of safety and soundness, market integrity and prevention of harm; a new legal obligation in this space would only be duplicative and redundant. It would likely conflict with existing obligations on the regulators in exercising their duties to ensure the sound governance of regulated bodies, creating confusion over whether these vaguer concepts conflict with the regulator’s general objectives.
I do not believe that this Bill is the right place for such changes, but there might be other routes to reassert how important we think these matters are. The Government are currently considering the policy framework in which the regulators operate through the future regulatory framework review, which I mentioned this morning and on Second Reading. I would welcome right hon. and hon. Members’ engagement on this important question—I really would. The matters that the regulators need to have regard to as part of this Bill reflect considerations immediately pertinent to these specific prudential regimes and, I believe, provide the right balance.
Abena Oppong-Asare (Erith and Thamesmead) (Lab)
I am really happy to put forward amendment 25, because it will require that, when making capital requirements regulation rules, the FCA must have a high regard to standards in social practice and corporate governance, including pay, adherence to equalities legislation, transparency and corporate responsibility.
We know that best practice corporate governance results in social and economic gains, and that is something the Government are particularly passionate about. Companies that persist in treating climate change solely as a corporate responsibility issue, rather than a business problem, are running a risky business and stand to lose out.
We have seen businesses turn the need to tackle climate change into successful business opportunities. For example, BrewDog, the world’s largest craft brewer, will remove twice as much carbon from the air as it emits every year, becoming the first carbon-neutral brewery. If companies can already shoulder this social responsibility and incorporate it into a successful business model, there is no reason not to hold all businesses to the high standards our country needs to tackle imminent social and political issues.
Climate change affects every facet of everyone’s lives. The effects of climate on companies’ operations are now so tangible and certain that the issue demands a strategy and leadership from the Government. Government intervention has worked before, and it will work again, particularly through amendment 25. Take the Equal Pay Act 1970, for example, which was mentioned previously. Business and civil society converged, and companies with over 250 employees were made to publish data on pay gender discrepancies, resulting in a win-win scenario. Excellent work is now being done to tackle this further and understand racial, gender and environmental concerns, which are intricately linked. We have to follow civil society’s work on equal pay and extend the reporting to data collections on the grounds of racial equality and environmental equity, because our actions will be futile if our evidence is not fertile.
There is no one-size-fits-all approach to climate change: each company’s approach will depend on the particular business and strategy. What we are calling for in this amendment is for the Government to support and enable employers to publish an action plan to tackle climate change and social inequalities, including initiatives to mitigate climate-related costs and risks in client value chains. Jesse Griffiths, the CEO of the Finance Lab, had some important advice for the Committee last week. He said:
“I think that the absolutely fundamental issue with regards to the Bill is that it is an opportunity to put social and environmental purpose at the heart of both the regulation and the duties of the regulators.”—[Official Report, Financial Services Public Bill Committee, 19 November 2020; c. 113.]
Environmental engagement is economic effectiveness, and this amendment will improve the economic health of our businesses and the environmental health of our country.
The amendment would also ensure that regulators can act in accordance with social needs, and ensure that businesses maintain corporate responsibility while still thriving in a competitive marketplace. When the Government asked Ruby McGregor-Smith to review the diversity pay gap, I welcomed that initiative. Campaigners have moved mountains in terms of identifying the profitability, both social and economic, of deepening our commitment to diversity and opportunity of wealth and health creation for all. In McGregor-Smith’s review, “The Time for Talking is Over, Now is the Time to Act”, she highlights how for decades, successive Governments and employers have professed their commitment to racial equality, yet we see that vast inequalities still exist. We must ensure this does not happen with our commitment to environmental stability, and the amendment will help ensure that.
Racial equality, gender equality and environmental stability can never be achieved unless we understand the ways in which they are intricately linked. As Ruby says, the time for talking is over, and I am sure that all the young people participating in the mock COP as we speak agree. I know that I mentioned this earlier about young people, but they are important: they are our future, and we really need to take them into consideration. With 14% of the working-age population coming from a black or minority ethnic background, we know that employers have to take control and start making the most of our talent, whatever their background.
The point stands out when looking at the pay gap for disabled people in the UK. In 2018, the median pay for non-disabled employees was £12.21 an hour, while for disabled employees, it was £10.63. The Minister mentioned earlier that he sat on the asset management taskforce—
Abena Oppong-Asare
Chaired—apologies; I have bad hearing. He gave examples of shared actions and how to get better transparency, and mentioned that regulators are already committed to higher transparency. I am sure he agrees with me that businesses need to be held to account. The amendment will also help to create an environment that nourishes talent equality and protects our natural habitable environment.
The amendment basically brings huge financial, environmental and social rewards. Companies must realise they cannot ignore those issues anymore. However, we know that most companies will act only when they see a reason to do so. What we need is less talk and more action.
John Glen
I have listened carefully to the points made by the hon. Lady, who touches on a wide range of subjects, some of which I responded to in my response to the shadow Minister. I would just say that a number of initiatives are under way and intensifying. Just a few hours ago, I launched a piece of work with the Corporation of London on social diversity, a taskforce to bring people together to look at what we can do to improve access to financial services. That follows the work that we have been doing and that former Minister Mark Hoban is doing with the Financial Services Skills Commission. I mentioned the work of Women in Finance, but there are a lot of other pieces of work that my colleague the Exchequer Secretary is also looking at in her dual role as Equalities Minister.
I made clear in my response a few moments ago that I believe the provisions we have already give the regulators significant licence to operate in this area and, although I do not rule out any changes subsequently, I believe at this time that the amendments should be resisted.
Stella Creasy
The challenge that the Minister has with these instruments is exactly the issue around the gender pay gap. We were told that that did not need to be written into the legislation, because there would be a commitment. As we have seen this year, that commitment has not been absolute. It has been abandoned by the Government.
The Minister has said that he agrees with those commitments and the issues that the shadow Minister has raised, and that they might be put into legislation. Does he recognise that, for those of us who are committed to those high standards, the point of such amendments is to put it beyond doubt that they will actually happen? As we have seen, if we do not put them beyond doubt, it is tempting for future Administrations and future regulators to remove or weaken the protections.
John Glen
I thank the hon. Lady for those points. As public bodies, it is clear that the regulators are answerable and accountable to Parliament, and I have explained how that will be enhanced, but they are also subject to legal duties to publicly consult on the new rules and to how Parliament wishes to scrutinise them. I recognise the point that she is making, but I believe that putting that obligation into legislation in that way would not immediately lead to the outcome that she supports. Across those areas of completely legitimate aspiration, many of which I share in an identical form, this is something that we would need to look at in the round following the regulatory framework review.
Alison Thewliss
I appreciate the work that the Minister and other Ministers are doing in this area, but does he accept that he if puts it into the legislation, he might actually have less work to do, because everybody will then be obligated to do it, rather than him having to ask nicely?
John Glen
Unfortunately, I do not share that view. Given the arguments that I have made about the complications that it would bring, because of the overlap with existing provisions, I do not think that would be the right way to go. I am very sympathetic, however, to many elements of the speeches made concerning the aspirations that we should have to improve the overall quality of corporate governance and behaviour across the City.
Mr McFadden
I am sure that the Minister is completely genuine when he says that he supports this agenda and the aims behind the amendment, but anyone who has followed the issue over the years will realise that we have had taskforces galore on it in the City. We have had taskforces on women on boards and on diversity; now we have a new one on social mobility. I wish that well but, after all those taskforces, do those in the top jobs in this sector—the real pool of decision makers—reflect the country as it is today?
Mr McFadden
Of course they don’t. We cannot conclude that, for all the taskforces and all the well-meaning, great people who have been involved in them, they have made enough progress.
This is not just a British agenda by the way. I read in the news the other day that the upper echelons of German industry are having exactly the same debate about whether to mandate quotas on boards for so many women and about the broader equalities agenda that my hon. Friend the Member for Erith and Thamesmead referred to.
Stella Creasy
If we are recognising that, it is worth noting that other nations that we compete with have already put gender quotas into legislation and beyond doubt, so we are behind our economic competitors. Ultimately, as we all know, the point about such regulation is that it would also make us more competitive. Blasting through the discrimination that has stopped us doing it would help our economy as well as our society.
Mr McFadden
My hon. Friend is absolutely right. For those reasons, we made specific mention of equalities legislation in the amendment.
It comes down to one’s view of the difference between encouragement, taskforces and all that, and legislation. This amendment is not particularly prescriptive. It calls for high standards of social and corporate governance. Hon. Members might say, “How do you define ‘high’?” and so on, but it is no less defined that talking about the relative standing of the United Kingdom as a place for internationally active investment firms to do business.
Once we have been through two or three of these debates, we begin to see a pattern in the way that the Committee works. I find myself a bit unconvinced that voluntary action will do this. There is not just an opportunity but a duty on us to start to define the post-Brexit financial services sector and what its characteristics will be. I want to put a few teeth behind all the fine words we have heard about the commitment to high standards, having no race to the bottom and all the rest of it. I always remember the plea of the former Chancellor, George Osborne: anybody in politics should be able to count. I look around the room and I can count, but I still want to press the amendment to a vote.
Alison Thewliss
I beg to move amendment 38, page 63, line 5, in schedule 2, at end insert—
“(ba) the likely effect of the rules on trade frictions between the UK and EU, and”.
This amendment would ensure the likely effect of the rules on trade frictions between the UK and EU are considered before Part 9C rules are taken.
The Chair
With this it will be convenient to discuss amendment 41, page 79, line 29, in schedule 3, at end insert—
“(ca) the likely effect of the rules on trade frictions between the UK and EU, and”.
This amendment would ensure the likely effect of the rules on trade frictions between the UK and EU are considered before CRR rules are taken.
Alison Thewliss
One of the things that concerns us most about where we are going with Brexit is the risk of trade disputes. We need only look at how one dispute can overspill into another, such as the overspill from Airbus/Boeing into Scotch whisky and cashmere—it is not very wise to spill Scotch whisky on cashmere. Our amendments are therefore sensible. They strengthen what is already in the Bill.
Proposed new section 143G(2) to the 2000 Act states that
“the FCA must consider the United Kingdom’s standing in relation to the other countries and territories in which, in its opinion, internationally active investment firms are most likely to choose to be based or carry on activities.”
Proposed new section 143G(3) states that
“the FCA must consider, and consult the Treasury about, the likely effect of the rules on relevant equivalence decisions.”
That adds further consideration to the impact on trade frictions.
Mr McFadden
I will speak briefly in support of the amendment. I think it adds an interesting new angle to our considerations on the schedule. There is quite a lot in the schedule about the UK’s standing as a place to do business. Proposed new section 143G(1)(b) to the 2000 Act talks about the
“relative standing of the United Kingdom as a place for internationally active investment firms”.
Proposed new section 143G(2) says that
“the FCA must consider the United Kingdom’s standing in relation to the other countries and territories in which, in its opinion, internationally active investment firms are most likely to choose to be based or carry on activities.”
None of us has argued that those are not completely legitimate considerations. Of course we want to consider our standing in relation to other countries, but that is different from the trading aspect.
The amendment points out that decisions can be taken that are facilitated by the Bill, for example on divergence, which we have discussed and will discuss further, and those decisions can have one impact on competitiveness but a very different one on the ability to trade. That is particularly important when this equivalence decision is still on the table. I think these amendments on considering our trading position usefully add to the job description of the regulators, which should be about not just competitiveness, but market barriers, market access and our ability to trade into other countries. Considering both of these proposals would be a good addition to the “have regard to” list set out in schedule 2.
John Glen
It is a pleasure to respond to the hon. Member for Glasgow Central and the right hon. Member for Wolverhampton South East. The hon. Members for Glasgow Central and for Aberdeen South propose to introduce a new “have regard” for the FCA and PRA when making rules for the new investment firms prudential regime and implementing the Basel standards respectively. That would require the regulators to consider the likely effect of their rules on trade frictions between the UK and the EU, as the hon. Lady set out.
Again, I understand and share the ambitions for frictionless trade between the UK and one of our biggest trading partners, the EU, but, as I am sure the Committee will understand, I am not able to discuss the details of our ongoing negotiations. We want a free trade agreement outcome with the EU that supports our global ambitions for financial services, and we have engaged with the EU on the basis that the future relationship should recognise and be tailored to the deep interconnectedness of those relationships across financial markets. The EU has made it clear that it does not support such an approach. We remain open to future co-operation with the EU that reflects our wide, long-standing, positive financial services relationship, and we will continue to engage in a constructive manner.
The regulators do not have oversight beyond their financial services remit. It would therefore be highly disproportionate to require them to assess the impact of their rules on all trade matters, covering goods and services. Furthermore, trading partnerships with overseas jurisdictions are the Government’s responsibility, not the regulators’. We consider that regulators should not be asked to go beyond the scope of their capabilities and duties. We have already discussed the capacity of the regulators; the amendment would really go beyond that.
We agree that financial services firms care about the UK’s relationship with overseas jurisdictions, which has a real impact on them. That is why the accountability framework that the Bill will introduce already requires regulators to consider the likely effect of their rules on financial services equivalence granted by and for the UK. Financial services equivalence will be the main mechanism underpinning financial services relationships between the UK and overseas jurisdictions. I believe therefore that the accountability framework, as proposed, meets the aim of the hon. Member for Glasgow Central.
In addition, the amendments focus solely on the relationship between the UK and the EU. That is obviously a matter of enormous concern, but we need to make legislation that accounts for the future. Equivalence or trade in financial services considerations must relate to all jurisdictions. It is crucial that we recognise that in the context of financial services firms, which often have a global footprint and global operations. That also reflects the UK’s present and future ambitions.
The accountability framework recognises the importance to UK firms of our relationship with overseas jurisdictions in financial services matters, while upholding broader international obligations. The Bill already supports the intentions behind the amendment, and for that reason I ask the hon. Lady to withdraw it.
Alison Thewliss
I would prefer to press the amendment to a vote because it fits well with the other parts of the Bill. Asking the FCA to consider the UK’s international standing with other countries aligns with other areas in which it is taking on wider roles, and the amendment reflects that. Regulators should have regard to the wider impact of their decisions and to problems that their rules might cause to trade between the UK and the EU, which could be quite significant. It seems wise to put that in the Bill so that the regulators are mindful of it in the decisions that they make.
Question put, That the amendment be made.
Mr McFadden
I beg to move amendment 22, in schedule 2, page 63, line 10, at end insert—
‘(2A) The FCA must not make Part 9C rules unless—
(a) a draft of those rules has been submitted for scrutiny by a select committee of either House of Parliament which has a remit which includes responsibility for scrutiny of such rules, and
(b) any such committee has expressed a view on the draft of those rules.’.
This amendment is designed to enhance the accountability framework for the FCA by requiring it, prior to making Part 9C rules, to submit a draft of those rules for scrutiny by a relevant Parliamentary select committee before making any regulatory changes.
The Chair
With this it will be convenient to discuss amendment 26, in schedule 3, page 79, line 35, at end insert—
‘(2A) The PRA must not make CRR rules unless—
(a) a draft of those rules has been submitted for scrutiny by a select committee of either House of Parliament which has a remit which includes responsibility for scrutiny of such rules; and
(b) any such committee has expressed a view on the draft of those rules.’.
This amendment would enhance the accountability framework for the FCA by requiring it, prior to making CRR rules, to submit a draft of those rules for scrutiny by a relevant Parliamentary select committee before making any regulatory changes.
Mr McFadden
We slightly change tack with this amendment. We have had some discussion of the “have regard to” list in the schedule, but the amendment covers a different aspect, dealing with the relationship between the enhanced role that regulators are to be given under the Bill and the role of Parliament. There are two important aspects to the role. First, in which way should Parliament be involved? Secondly, when should Parliament be involved? By that I mean, at what point in the regulatory process is it appropriate to have parliamentary involvement?
On Second Reading and several times today, the Minister has encouraged us not to look at the Bill in isolation but to see it as part of a process of reform, possibly involving other such Bills in the future. This may be only the starter and, if hon. Members are really lucky, they could be invited back here next year for the main course—who knows? In particular, he has asked us to look at the Bill alongside the consultation document on the future regulatory framework review, which was published a month ago. That document, which is I think 30 to 40 pages long, has a whole chapter devoted to accountability, including parliamentary accountability.
To anticipate the Minister’s response to the amendments, of course the document does not yet reach conclusions because it is a consultation inviting responses. In the part about parliamentary accountability, the document sings the praises of the Select Committee system and the Treasury Committee in particular. My hon. Friend the Member for Wallasey had to pop out, but we have at least another three members of the Treasury Committee in the room, and I am a former member of it. There is no doubt that it is an esteemed Select Committee, which we all accept does a great job in this House, but the work of that Committee is very stretched. It has to cover a huge amount of business: not only banking and financial services more generally, but taxation, fiscal policy and everything else that the Treasury does.
I do not want to be unfair, but when I read that part on parliamentary accountability, I found it hard to escape the conclusion that it was written to give the impression that not a lot should change—the system we have at the moment is just tickety-boo; it is just fine. The underlying assumption seems to be that we can take this huge exercise in onshoring—this large-scale set of regulations, directives and all the rest of it—expand in a very significant way the role and remit of our regulators, and just tack that on to the present framework. I hope the Minister does not think I am being unfair, but that is the impression that I got when I read the future regulatory framework review.
Stella Creasy
As this is my first speech, let me say how fantastic it is to serve under your chairmanship, Dr Huq—none of us ever says anything other.
I rise partly to presage what I am sure the Minister knows is coming, given our previous correspondence on my concerns about existing financial regulation in this country and where the voice of the consumer is heard in that. I am sure he has looked avidly at some of the new clauses that I have tabled, which seek to get at that and which I note will come much later, in the shape of new clauses 15, 18, 21 and 23.
The shadow Minister has set out clearly how amendment 22 reflects those concerns. Again, where in the new financial regulatory regime being brought in by the Bill will the voices of our constituents be heard? The shadow Minister has focused on the consequences of leaving the European Union and the lacuna that will be created in terms of financial regulation by the Bill if we do not have that clear commitment with the Treasury or any other financial body to look at Select Committees and the role they might play. I want to focus on the other end of that telescope and what it has been like to seek to give consumers voices within the existing regulatory framework, what lessons that might offer us in the future regulatory framework and why involving Select Committees might be a way forward.
I am sure the Minister would say that working out how we make sure our constituents are heard is a work in progress. We talked this morning very strongly about the impact of financial regulation on people’s everyday lives, the financial crisis and what could be learned from that. Many of us will have seen among our constituents people whose lives were decimated when financial institutions were found wanting and how that has driven the concerns about consumer protection in the wider work of the FCA. My concern as a Member of Parliament who has long had an interest in personal debt in this country has been about how that conversation is part of those bigger questions.
As I mentioned this morning, often we look for specific issues when it comes to consumer voice and financial regulation. On the wider impact, it is almost a given that somehow regulators will think about consumers. The reality is that over the past six or seven years of having the Financial Conduct Authority that has not always been the case. The Bill gives those regulatory bodies more powers. As the shadow Minister has pointed out, it removes one of the mechanisms for consumer voice through the democratic process within the European Union. Therefore, it is right that we ask how we replace that and whether there are gaps in what has happened to date that mean it is even more important, when asking whether the financial regulators are living up to the issues we might want them to have regard to, that that consumer voice is being heard in that process.
Amendment 22 is an eminently sensible idea to say, “Hang on a minute, where there had been previous scrutiny and challenge from democratic institutions, we need to replicate that within the UK Parliament.” It comes from that perspective of saying that it is in everyone’s interest to have that check and balance because it has been of benefit under the previous regime and, under that regime, there has been too narrow a consumer voice. I am not going to prosecute that argument in full today, because I am going to save it for the Minister for the new clauses that I have put down and how I think he can do that. I can see his disappointment already. However, I argue that it is worth looking at where the Select Committee process can add value to financial regulation in this country because, so clearly, it is our constituents who have paid the price when financial regulation has not looked at consumer risk and has not been able to ask questions before a crisis happened.
Many of the issues that our Treasury Committee, for example, as one body that may be involved in this, has looked at have come from our constituents raising concerns and a recognition that something might be on its way. Many of us would argue, and I suspect the Minister would agree, that sometimes regulators have been slow to react because they have been trying to balance the needs of the industry with questions about whether interference might cause more harm. The amendment is a way of getting that right, of having a place where those conversations could take place around financial regulation with a regulator that now has much more extensive powers than previously. It is a way of making sure that, as a democracy, we have a space where we can raise those concerns before problems happen.
When we get to the new clauses I have tabled, one of the concerns I will raise is where we see other regulators—in particular, I think of the financial ombudsman having to intervene where our financial regulators have not been able to do their job around supporting and protecting consumers, and so the ombudsman has picked up the pieces. Under the model we have coming forward in this Bill, it is not clear to me, without the involvement of Select Committees, where those conversations could take place, apart from with the financial ombudsman. Again, we are waiting until institutions potentially fail and organisations can pick up the pieces for that consumer voice to be heard.
Alison Thewliss
I very much agree with the proposals brought forward by the official Opposition. I congratulate them on their drafting and having found a way to put these amendments forward. Our attempt at this comes in new clause 32, and I will discuss that a bit further when we eventually get to it.
I agree that it is vital that there is scrutiny of these institutions and these powers. It is surely unacceptable that the Government have made so much play of taking back control from the EU only to hive it off to regulators because it is far too terribly complicated for us parliamentarians to worry our sweet heads about. That is not acceptable. That is not the way that it works in the European Union, and it certainly should not be the way Westminster operates. We should trust ourselves and our colleagues slightly more to do that scrutiny. If European parliamentarians, some of whom are now in this place, can do it, we can certainly look at a way that this can be done and that accountability can be taken for these powers.
I agree with those who have said that the Treasury Committee is stretched in its business. Having had a brief discussion yesterday in our pre-meeting about the sessions to come in the weeks and months ahead, I can tell the Committee that those sessions are already very full, running at two sessions in most weeks. We are certainly being kept very busy with all the important things our constituents bring to us, the responsibility the Committee has to scrutinise the Government and all the other things the Committee wants to do. The logic of setting up a new Select Committee to examine these things is certainly very compelling to me, because it will need that specialist knowledge in addition to the heavy burden of work it might have.
I noted that the hon. Member for Hitchin and Harpenden (Bim Afolami) made a very good plug for this on Second Reading. I think his feeling is that it helps out the Government to have this additional scrutiny. It helps everybody see what is coming, prepares the ground and tries to make decision making better, which should be in the Government’s interest—trying to get to the right thing for all our constituents and for the financial services sector as a whole.
So that is important, and we should have no less of a role in all this than MPs currently have. I draw the Minister’s attention to the evidence given to the House of Lords EU Financial Affairs Sub-Committee, whose reports I am sure he is an avid reader of, for International Regulatory Strategy Group, which also recommends enhanced parliamentary accountability and scrutiny. Its suggestion is a new system of Committee oversight in not just the Commons but the Lords, as we suggest in new clause 32.
The group has a series of principles it thinks such oversight should stand to, such as it being cross-party and apolitical—those are the principles of Select Committees, but it is important that we look at this. It mentions the ethos of the Public Accounts Committee in the way it goes about its business in scrutinising regulatory authorities. It also believes that oversight needs to be authoritative and expert, building up expertise within Committees, that it needs to be risk-based and mainly ex-post, and that it should be open to stakeholder input, which is incredibly important. We all know Select Committees do that; they take evidence and they have good records of bringing in expertise and evidence from people, but they need to be able to use that evidence in a practical way to inform the best strategy and best way forward as we take these powers back.
I very much recommend to the Minister the evidence given by the IRSG. What is he doing to meet this challenge of the “accountability deficit”, as the Finance Innovation Lab put it? We cannot have a situation where more powers are coming back, yet we give them away. That is certainly not what was promised on the side of any Brexit bus, and it should not be the way we go forward. As the honourable grandee, the hon. Member for Walthamstow, said, it stores up a risk that we do not see something coming, that we have not identified a problem on the horizon and that we all end up in a bit of a crisis because we did not have the opportunity to scrutinise properly, to look at the regulations as they come forward and to ensure we do what is best for our constituents and the wider economy. There is logic in having some form of Committee to look at this, in whichever format the House wants to bring that forward. It is essential that that scrutiny exists and that it is at least as good as what was done in the European Parliament.
John Glen
I am very pleased to address the points raised by the right hon. Member for Wolverhampton South East, the hon. Member for Walthamstow and the hon. Member for Glasgow Central. I have listened carefully to what they had to say, and their remarks go to the heart of the distinction between the provisions of the Bill that we are scrutinising in Committee and the broader questions around the future scrutiny mechanism, and the necessity to ensure that we do not undermine the legitimate and appropriate scrutiny by Parliament of our regulators.
It is critical that we ensure sufficient accountability around the new rules of the UK’s financial sector. Capital requirements for firms are extremely detailed and technical. It is right that we seek to utilise the expertise of the regulators to update them in line with international standards.
In return for delegating responsibility to the Financial Conduct Authority, this Bill requires it, under proposed new clause 143G of the Financial Services and Markets Act 2000, to publish an explanation of the purpose of its draft rules and of how the matters to which it is obliged to have regard have influenced the drafting of the rules. The Bill introduces a similar requirement for the Prudential Regulation Authority, under proposed new clause 144D of the Financial Services and Markets Act.
These matters concern public policy priorities that we consider to be of particular interest to Parliament. I have looked carefully at the amendments proposed by the right hon. Gentleman, and the amendments envisage Select Committees reviewing all investment firms prudential regime and capital requirements regulation regulator rules before they can be made. Under that model, Parliament would need to routinely scrutinise a whole swathe of detailed new rules on an ongoing basis. That is very different from the model that this Parliament previously put in place for the regulators under the Financial Services and Markets Act, where it judged it appropriate for the regulators to take these detailed technical decisions—where they hold expertise—within a broader framework set by Parliament.
It should not go unnoticed that, if Parliament were to scrutinise each proposed rule, the amendment does not specify a definite time period in which any Committee must express its view on them. That could bring a great deal of uncertainty to firms on what the rules would look like and when they would be introduced. That makes it more difficult for these firms to prepare appropriately for these changes. Ultimately, there is currently nothing preventing a Select Committee, from either House, from reviewing the FCA’s rules at consultation, taking evidence on them and reporting with recommendations. That is a decision for the Committee.
My officials have discussed this amendment with the regulators, and they have agreed that they will send their consultation draft rules to the relevant Committee as soon as they are published. The FCA and the PRA both have statutory minimum time periods for consultation and will take time to factor in responses to consultation—so this is not a meaningless process—providing a more than reasonable window within which the Committee can engage the regulators on the substance of the rules, should it desire to.
The Government agree that Parliament should play an important strategic role in interrogating, debating and testing the overall direction of policy for financial services, while allowing the regulators to set the detailed rules for which they hold expertise.
Before I conclude, I would like to address the point the right hon. Gentleman made concerning the document that was published a month ago on the future regulatory framework, and to address the supposition he very courteously made that, somehow, the Government believed that everything was fine and little needed to change.
The purpose of this extensive consultation is to do what it says: to consult broadly to ensure that, through that process, the views of industry, regulators and all interested parties and consumer groups are fully involved, such that, when we then move to the next stage of that process—I would envisage making some more definitive proposals—it would meet expectations on a broader and enduring basis. This Bill is about some specific measures that, as I explained earlier this morning, we need to take with an accountability framework in place, but I do not rule out any outcome.
The right hon. Gentleman made some observations about the prerogative of Government over mandating Parliament and Select Committee creation. I think we are some way away from that. We want to do these things collaboratively and end up with something that is fit for purpose, and I recognise the comments he made about the resourcing of such Committees with respect to the role they would play.
I do believe that this scrutiny process, as set out in the Bill, is extensive, and, for the reasons I have given, I again regret that I must ask the right hon. Gentleman to withdraw this amendment.
Mr McFadden
I cannot resist the irony of pointing out that the Government are resisting what could be termed the “take back control” amendment and do not want to add it to the Bill. There are many illustrious Members of this House we could name this amendment after; they have been arguing to take back control for many years.
The Minister said that the amendment would cause a lot of uncertainty; that it might be too much work; that it might require a Committee—whichever Committee it was—to look in too much detail at rules, when it would probably be more concerned with the broad direction. He also pleaded with us to allow the consultation to play out.
There is a serious point at the heart of this about the sovereignty agenda. There will be some kind of consequence at some point, possibly a backlash, that will draw attention to how this is done and the new powers that the regulators have. At that point, people will ask, “What was Parliament doing? What role was Parliament playing?”
John Glen
I beg to move amendment 1, in schedule 2, page 76, line 31, leave out “143O(4), (6) or (8)” and insert “143O(3), (6) or (8)(b)”
This amendment corrects a cross-reference to new provisions inserted by Part 1 of Schedule 2.
This is a technical amendment that corrects a cross-reference from section 395 of the Financial Services and Markets Act 2000 to new section 143O, as proposed in schedule 2.
Amendment 1 agreed to.
Question proposed, That the schedule, as amended, be the Second schedule to the Bill.
John Glen
Investment firms have a significant role to play in enabling investors to access financial markets, but the current prudential framework that applies to FCA investment firms was made for banks, which is why we need a new bespoke investment firms prudential regime. Schedule 2 contains relevant provisions that enable the FCA to implement a tailor-made prudential regime for non-systemic investment firms.
The new regime will set out new capital and liquidity requirements that will ensure that firms can wind down in an orderly way without causing harm. The right hon. Member for Wolverhampton South East and the hon. Member for Walthamstow are rightly concerned about consumer harm, so I draw their attention to the fact that the FCA will have to set those requirements in relation to the risks that firms pose to consumers, as well as the integrity of the financial system.
The FCA will also be required to make rules for parent undertakings of investment firm groups, because appropriate regulation and supervision are as important at the group level as at the individual firm level. Parents, as heads of the group, should be held responsible for the prudent management of the group.
It is right that specific rule-making responsibilities should be delegated to the FCA as an independent expert regulator, but those responsibilities must come with enhanced accountability. Schedule 2 requires the FCA to have regard to a list of important public policy considerations when making its rules in relation to the new investment firms regime, including any relevant international standards and the relative standing of the UK as a place for internationally active investment firms to carry on activities. To support scrutiny, the FCA will need to report publicly on how its consideration of those matters has affected its decisions on the rules in relation to the IFPR.
The FCA will also have to consider the impact on financial services equivalence, both by and for the UK, and consult the Treasury on that. Consulting the Treasury ensures that the FCA has appropriate accountability for technical choices that might have an impact on firms, while recognising that the Government retain responsibility for international relations and therefore equivalence. These three considerations are those that we have deemed to be immediately pertinent to the new investment firms prudential regime today.
However, as I have mentioned previously, the accountability framework is meant to reflect the changing context. That is why the Treasury will have power to add additional considerations, which would be done following discussions with the regulators and industry, and following parliamentary scrutiny. That is the overall framework that will allow greater scrutiny and transparency, and provide the direction the FCA will take in implementing the new regime in the UK, while rightfully leaving the detail to the experts.
In the longer term, any wider deregulation will need greater debate and the proper scrutiny of Parliament. The Government intend to address that part through the future regulatory framework, as I have discussed, which is now out for consultation. I therefore recommend that that this schedule stand part of the Bill.
Question put and agreed to.
Schedule 2, as amended, accordingly agreed to.
Clause 3
Transfer of certain prudential regulation matters into PRA rules
Mr McFadden
I beg to move amendment 23, in clause 3, page 4, line 31, at end insert—
“(9A) The Treasury must, within six months of making any regulations under this section, prepare, publish and lay before Parliament a report setting out—
(a) the reasons for the revocation of the provisions of the Capital Requirements Regulations being made under the regulations;
(b) the Treasury’s assessment of the impact of the revocation on—
(i) consumers;
(ii) competitiveness;
(iii) the economy.”
This amendment is intended to ensure the Treasury reports to Parliament on the impact of divergence from CRR rules.
In debating this amendment and this clause, I am hoping the Minister will be able to explain the relationship between this clause and clause 1. Clause 1 specifies the certain type of investment firms to which CRR rules need not apply, and he was at pains to say that that was a specific, targeted approach, but clause 3 looks to range very widely on the Treasury’s powers to revoke aspects of the capital requirements regulation.
The list in clause 3(2), on page 2 of the Bill, has many different headings, including business lends such as mortgages, retail investments, equity exposures and so on. Without getting into the detail of the technicalities of the Basel rules, not all capital is treated as equal. A pound is not just a pound. It depends against which line of business it is weighted. For example, financial institutions will argue that mortgages pose a particular category of risk, probably quite low risk, compared with another line of business where they may be lending against business loans, commercial property or some other activity. The Basel rules do not judge all these activities equally and they apply what are known as risk weights to them.
The clause allows the Government pretty sweeping powers, as far as I can see, to depart from and to revoke aspects of the capital requirements regulation, against all these different types of business. I would be very interested for the Minister to set that out and clarify it.
Through this process, the capital ratios are allocated. Again, I draw the Committee’s attention to the important paragraph (m) at the bottom of page 3 of the Bill, the leverage ratio. That is described in the notes on clauses as the “backstop.” I hope that that term does not cause too much excitement in the Committee. Like all backstops, it is there in case the list from paragraph (a) to paragraph (l) does not prove sufficient.
This particular backstop of the leverage ratio casts aside all this stuff about risk ratings. It takes the whole lending book and the whole lending business, and says that a certain proportion of capital must be held against the whole thing. It is a bit of an insurance policy in case the risk ratings do not do the job. It is true that the risk ratings are where this is open to all kinds of lobbying, as people will say that one line of business is less risky than another.
At the core of this is a debate between regulators who must consider the safety and resilience of the system as a whole, and individuals who will argue that if only they did not have to hold all this capital, they could lend more, stimulate more economic activity, and so on. That is the debate that takes place. Without wanting to go over all the ground that we covered this morning, the amendment asks for a report on the degree to which the divergence—the leeway powers, as we might call them—will be used, and the Treasury’s assessment of the impact on the economy. As I said this morning, we believe it is important that such a report should consider the impact on consumers, because they do not want to be on the hook for decisions that allow capital levels to fall too much, thereby weakening the resilience of the financial institutions in question.
This is a “lessons learned” amendment. It is important that the debate about capital ratios does not take place altogether in the dark—that it is exposed to what my hon. Friend the Member for Erith and Thamesmead called the daylight of scrutiny—and that we do not hear just from financial trade bodies. If they all genuinely have no intention of lobbying for a less safe system, have no desire for a race to the bottom and want the highest possible global standards on regulation, they have absolutely nothing to fear from this amendment. It does no more than ensure that we have reports from the Treasury on what happens when these powers are passed to UK regulators, and what happens if the divergence that is facilitated in clause 3—in this long list on pages 2 and 3 of the Bill—takes place.
Alison Thewliss
I agree very much with what the right hon. Gentleman has said. It is important that we are kept up to date, in the absence of other scrutiny mechanisms. At the very least, within six months of Royal Assent, we should find out the impact of any revocations. The point was well made about consumers, because in many ways they are very far away from where this Bill is, and they may not see any issues that are coming up. It is important that we, as parliamentarians, are sighted on what those issues might be and have some degree of scrutiny over what happens with the regulations.
Stella Creasy
We are talking in quite abstract terms, but it is worth remembering that when Fannie Mae and Freddie Mac fell apart in America, consumers were the first to feel the repercussions that were felt around the world. This financial regulation comes in in the aftermath of that, because it is still going on. There are still people and families who are paying the price for what happened in the financial crisis. This is not about reheating and repeating the arguments about who caused the financial crisis. It is about recognising that consumers in all our constituencies paid the price, first and foremost.
As others have said, when we think about financial regulations, it can feel quite technical, distant and obscure because of the language we use, but let us remember back to those days. Many years ago, when I first came into Parliament, we were dealing in 2010 with the aftermath of the financial crisis, and it was a very painful crisis for many. Everybody asked why we did not see what was happening. Why did we not see it coming? How could we not have seen that banks were over-leveraged? How could we not have seen that mortgages were being resold in the subprime market? The truth was that it was a closed shop, so everybody was marking each other’s homework and saying, “I am sure this will be fine.” This seems to me the mildest of amendments, simply asking whether we have the information to ensure that such an occurrence could never happen again, when we are talking about something as simple as the capital requirements that banks and financial institutions should have. After all, that is exactly what happened in 2008: everybody leveraged each other, so the capital was gone, and when the roundabout stopped, it was our constituents who paid the price. I know by now, on the first day, that Ministers will think we are a broken record, but to ask the Treasury simply to provide that information and to look at it from a consumer perspective does not seem an unfair thing to do, given the history and the legacy of this that we have seen for so many in our constituencies.
John Glen
In addressing this amendment, I want to start by saying that the Government are fully committed to ensuring that this greater delegation of responsibility to the regulators is accompanied by robust accountability and scrutiny mechanisms. To pick up on the point made by right hon. Gentleman about clauses 1 and 3, they amend the existing banking framework for different reasons. Clause 1 only removes FCA investment firms from the CRR. Clause 3 enables the implementation of Basel standards for the remaining firms, credit institutions and PRA investment firms by enabling the Treasury to revoke parts of the CRR that relate to Basel. That is so that the PRA can fill the space with its rules.
Amendment 23 seeks to add a requirement for the Treasury to assess and report on the impact of its revocations of the capital requirements regulation on consumers, competitiveness and the economy. However, I would argue that the emphasis is in the wrong place. The Treasury will only make revocations to enable the introduction of the PRA’s rules. A stand-alone assessment of the provisions being deleted would not provide meaningful information for Parliament—it is unnecessary. Those revocations are to be subject to the draft affirmative procedure, so they will be explained to Parliament and Parliament will be able to debate their appropriateness before they are made.
I agree with the principle of scrutiny, but the emphasis should be placed on the PRA’s rule making, and that is what this Bill does. The Bill includes provisions requiring the PRA to publicly report on how it has had regard to upholding international standards and relative standing in the UK, as well as facilitating sustainable lending. Those are in addition to the PRA’s existing statutory objectives on safety and soundness of financial institutions and its secondary competition objective, so they overlap with the areas that the amendment attempts to address.
The provisions in this Bill sit alongside existing provisions in the Financial Services and Markets Act 2000, which require the PRA to publish a cost-benefit analysis alongside its consultation on rules. That will provide Parliament and the public with the information required to scrutinise the PRA’s actions. Therefore, the current provisions in the Bill, combined with those existing provisions in the Financial Services and Markets Act, already ensure that the information that Parliament is seeking will be in the public domain. The hon. Member for Walthamstow asked me to set out a vision, almost, for the conduct regulator with respect to the future operating environment. To some extent, that is deferred to the future regulatory review, but I will give her my view because this goes to the core of the future of financial services. We need an environment in which the regulator is accessible to consumer concerns. I recognise the work that she has done and the shortcomings that she perceives with the regulator’s current dynamic. We need Parliament to be at the heart of scrutinising its activities. The legislation would give it an obligation to report, but then we need meaningful scrutiny from Parliament.
The challenge is based on the work that the hon. Lady did after 2010—we came into Parliament at the same time—after which there was a rapid evolution in business models and new types of things. That is why I am delighted that Chris Woolard is doing a high-cost credit review and looking at some of the areas that she is engaged in, such as buy now, pay later. He is looking at that urgently so that we do not make the mistakes of the past and do not face some of the emerging challenges, in terms of behaviours—[Interruption.] She smiles. I suspect that she is not completely convinced by what I am saying about the provisions. We are resisting the amendment because in the narrow confines of what we need to achieve, with respect to the translation of these directives appropriately at the end of the transition period, that is distinct and different from an enduring solution. I look forward to her contribution to the regulatory framework review, because that will drive a meaningful discussion about how we achieve the sort of accountability that she and I want and think should be enhanced.
Stella Creasy
I am sure the Minister will have some delightful conversations about the regulatory framework that will keep many people wide awake for hours to come, but the two are not mutually exclusive. This amendment and this debate are about capital holdings.
Does the Minister recognise that what I said about what happened in 2008-09 is directly linked to this? We need to keep a tight eye on this, especially because of the global context in which it is happening. We cannot protect our economy and our constituents without some form of scrutiny and control. The Minister said that it is important to have parliamentary involvement, but he has just refused an amendment that would have brought the Select Committees into the process.
I am struggling to understand why in this instance, with this amendment and this requirement of the Bill, given the role of the FCA in overseeing capital requirements, the Minister feels that it would not be important to have the data, so that we are not in a position in which that subprime lending happens again in a different guise. If we have learned anything—this is not just about the high-cost industry—it is that these models evolve. It is like water: exploitation in the system will find a way through unless we have robust procedures. It is possible to have both this report and a regulatory framework; the two are not mutually exclusive. If there is not a reporting provision, the Minister leaves a gap until one is in place.
John Glen
This legislation provides the regulators with the responsibility and the reporting obligation to Parliament. What the hon. Lady has done is make an explicit relationship between conduct failure and capital requirement decisions. Decisions about the overall framework for accountability for the regulators are embedded within this Bill. The point of disagreement between us is whether there are sufficient obligations, in terms of reporting and scrutiny, for these narrow measures. We obviously disagree. I am trying to signal that, more broadly, on the wider issues of the future dynamic among Parliament, the Treasury and regulators, there is scope for significant review, and appropriately so given the changing nature of where these regulations are coming from. I do not have anything else to say.
Mr McFadden
The Minister said that he does not want to accept the amendment because he thinks it is in the wrong place. I would find that a little bit more convincing if I really thought he would accept it if he thought it were in the right place, but so far today, Members on the Government Benches have steadfastly voted against this kind of reporting back and reviewing of things to do with the capital rules, as well as the other amendments tabled. I am sure that the Minister has read the whole amendment paper, and will have seen that I have tried to come at the same issue from a number of different angles and different timetables. This morning, we pressed to a Division an amendment asking for a report after three years, which was defeated. I will not press this one, Dr Huq, but we will be coming to other, similar amendments very soon. I therefore ask leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Question proposed, That the clause stand part of the Bill.
John Glen
The 2008-09 financial crisis led to significant economic hardship. Since then, post-crisis regulatory reforms set by the Basel Committee on Banking Supervision have supported financial stability, which underpins our economic prosperity. We in the UK intend to uphold our international commitment to the full, timely and consistent implementation of these reforms, alongside other major jurisdictions, and clause 3 creates the space in legislation for the financial regulator—the Prudential Regulatory Authority—to implement the remaining Basel standards. Like our approach to investment firms, our intention is to delegate the responsibility of implementing these to the PRA with enhanced accountability, as I have described. This is the right thing to do: the PRA has the technical expertise and competence to implement these post-crisis reforms as they should be implemented.
However, in delegating this responsibility, this Bill ensures that checks and balances are in place. First, clause 3 ensures that we transfer only some elements of the capital requirements regulation, or CRR, to the PRA, and that the extent of the Treasury’s powers to delete will be constrained to those areas of the CRR that are necessary to implement the Basel standards and ensure the UK upholds its international commitments. Secondly, this clause ensures that the deletions the Treasury makes take place when it is clear that adequate provision has been made by the PRA to fill the space. Those deletions will also be subject to the draft affirmative procedure, providing the opportunity for Parliament to scrutinise the Treasury’s actions. The clause also allows the Treasury to make consequential, supplementary and incidental deletions to parts of the CRR. This is to ensure a coherent regime across the CRR and other PRA rules, amounting to a clear prudential rulebook that industry can follow.
Further, clause 3 enables the Treasury to make transitional and savings provisions to protect cliff edges from the deletion of certain provisions on the operations of a firm. This will allow the Treasury to save permissions already granted by the PRA, to modify capital requirements and avoid the need for firms to reapply for those permissions under new PRA rules where they are being replicated in the rulebook as a result of the Bill. This clause is essential to the delivery of our international commitments, and I therefore commend it to the Committee.
Mr McFadden
I do not want to force the Minister to go over the same ground again and again, but I am just trying to fully understand this. He used a phrase something like “the clause allows for departure from the CRR in order to implement Basel”, if I have understood him correctly. I am not trying to be obtuse, but I want him to explain fully to the Committee what that means. Why do we have to “depart” from the capital requirements regulation in order to implement the Basel rules? On the face of it, the list contained in clause 3 is a very wide list of things from the CRR that the Treasury is taking powers to revoke, and I am therefore trying to fully understand what the effect of this clause is. Is it just to implement Basel, or does it give a wider, ongoing power to the regulator to change capital ratios against these lines of business that are set out in the amendment? I genuinely want to understand that.
My second question is about the potential impact on risk weightings and how capital ratios can look. There is a potentially perverse effect here—almost a mathematical one. Because these things have risk weightings attached to them, if the regulator makes a decision to reduce that weighting—from 50% to 40%, for example, or whatever it is—but the bank still holds the same amount of capital against that stream of business, it has the effect of making the bank look more safe and secure, even though it does not have any more capital—even though nothing has changed.
John Glen
I thank the right hon. Gentleman for his points. On the first point about why we are deleting what we are deleting, we are deleting elements of the capital requirements regulation to the PRA so that it can implement the provisions of capital requirements II, which the EU is commencing, in the appropriate way for our firms—that is basically it. The EU is on a journey of implementing CRR II, and we need to do what is appropriate for our firms, as I have discussed.
John Glen
The future in terms of the evolving rulebook of the EU and other jurisdictions and how we seek to do that here will be subject to the future regulatory framework. We cannot anticipate the future evolving regulatory direction of new directives that have not yet been written elsewhere. What we have to do is to build the right framework for origination of rules in the Treasury and from the regulators, with the right accountability framework in place.
The problem we have conceptually in this discussion is that we are coming out of an embedded relationship in which we have auto-uploaded stuff that we have discussed, crudely, elsewhere. We have a legacy set of issues over which we have not had complete control this year that we are obliged to implement, but as we approach the end of the transition period, we have to make provision for things that actually make sense and we want to do anyway, in an appropriate way.
The driver of the right hon. Gentleman’s remarks— I understand why—is this desire to scrutinise the appetite for a sort of ad hoc, and I do not mean to be pejorative, but almost opportunistic, divergence, when what we are trying to do is to enable the regulator to do what is appropriate for a set of entities that will not naturally conform to the enduring direction of travel of the CRR II within the EU, because of the different nature of our firms and, as we have discussed, the different treatment of capital that is appropriate, given what they are actually doing vis-à-vis banks.
Secondly, he asked some detailed questions about risk weight.
Mr McFadden
Before the Minister moves on to the potentially perverse effects, does clause 3 simply give the regulators the powers to implement Basel 3.1, or does it give the regulator broader powers to change risk weightings against those lines of business in ways other than under Basel 3.1?
John Glen
My understanding is that the licence to operate given to the PRA is to make it consistent with Basel 3.1, in the context of the evolving rules that are being implemented elsewhere, but the notion that there is a single downloadable format of the Basel 3.1 rules in every single jurisdiction is a false proposition. Every regulator in different jurisdictions will do that in different ways. It is important, therefore, that whatever decisions they come to around the specific decisions on different entities will be published and scrutinised, such that it could be justified against the international standing and the other factors that we have put in place as a meaningful accountability framework.
I am probably close to the limit of my capacity to answer further on this point, but I am happy to reflect further and to write to the right hon. Gentleman and make it available for the Committee, to clarify anything that would be helpful to the Committee.
Question put and agreed to.
Clause 3 accordingly ordered to stand part of the Bill.
Clause 4 ordered to stand part of the Bill.
Clause 5
Prudential regulation of credit institutions etc by PRA rules
Question proposed, That the clause stand part of the Bill.
The Chair
With this it will be convenient to discuss the following:
New clause 1—Annual review of the CRR rules—
“(1) The Secretary of State must, once each financial year, prepare, publish and lay before Parliament a review of the changes to CRR rules made by the PRA in the relevant financial year.
(2) The review must include an assessment of the impact of any changes to CRR
rules on—
(a) consumers;
(b) competitiveness; and
(c) the wider economy.”
This new clause would require regular reviews of any departures from the current regime of capital requirements.
Mr McFadden
This is my third attempt to get the Government to commit to reporting on the impact of these measures. Clause 5 and the accompanying provisions in schedule 3 insert new part 9D into the Financial Services and Markets Act 2000. This new part 9D will empower the PRA to make changes to capital requirements regulation rules. Schedule 3 also sets out the accountability framework, which we have discussed quite a lot throughout the day.
New clause 1 is an attempt to understand and explain the effect of changing these rules. It calls for an annual review to be published of changes to the CRR rules and their impact on consumers, competitiveness and the wider economy. As with similar amendments, all of this is an attempt to ensure that we do not simply pass all these powers from the EU to UK regulators without having processes in place, making clear what the changes we are making do and giving Parliament a proper voice in debate over these matters.
As I have said in relation to other amendments that, as things stand, unless we strengthen the parliamentary side of this, we could end up having less input to these issues in the future than we do at present. All these capital rules are there for a reason. We have thrashed it out today. It is important that we have proper transparency and a full understanding of the consequences if we depart from these rules in a significant way in the future.
My hon. Friend the Member for Walthamstow described these amendments as mild. I think they are mild. None of them say even that we should not have any of these departures. They simply ask for some process to understand the effect of them, which is open to Parliament. That is what new clause 1 would do.
John Glen
I really respect the right hon. Gentleman’s approach to this. It is very constructive. I accept his frustration with what I am saying, but I do respect his patience with me through this process. Each time, I will try to justify what we are doing.
This Bill enables the implementation, as the right hon. Gentleman understands, of the Basel standards. That will be done by deletion of parts of the capital requirements regulation that need to be updated, so that the PRA can make those Basel updates in their rules. As a result, we will see a split in this prudential regime, perhaps temporarily, depending on the end result of the future regulatory framework across legislation and regulatory rules.
The regime is already split in this way to an extent, with some rules for firms set directly by regulators and others contained in retained EU law or law that has originated in this Parliament, and it will continue to work in this way. However, we will seek to ensure that this is done as effectively as possible through clause 5. Clause 5 ensures that cross-references between legislation and PRA rules work properly on an ongoing basis. It also requires the PRA to publish an explanatory document outlining how it all fits together. Finally, the clause introduces schedule 3, which contains further detail to ensure that the regime works. As the elements contained in the clause help to ensure a workable framework for the UK to remain Basel-compliant, I recommend that the clause stand part of the Bill.
New clause 1 seeks to add an annual reporting requirement, as the right hon. Member for Wolverhampton South East said, for the Government to carry out and publish a review of PRA rules that implement the Basel standards, including an assessment of the impact of changes to the rules on consumers, competitiveness and the wider economy. The Bill will require the PRA to demonstrate how it has regard to several considerations: the international standards that it seeks to implement, the relative standing of the UK and the ability to finance businesses and consumers sustainably.
However, I regret that the amendment has the potential to duplicate the PRA’s reporting duties. I respectfully contend that this additional annual reporting requirement is not necessary, because through the Bill the PRA will also be required to publish a summary of the purpose of the rules it makes when implementing the Basel standards and an explanation of how it has complied with its reporting duties. Furthermore, the Financial Services and Markets Act 2000 already requires the PRA to make an annual report to the Chancellor on its activities, including on the extent to which its objectives have been advanced and how it considered existing regulatory principles in discharging its functions. The Chancellor must lay that report before Parliament.
I therefore question whether the proposed review would really provide much more insight than what the current reporting arrangements already achieve. I have myself checked whether there are no reporting requirements and we are entering some sort of wild west environment, but I do not think that that is the case. The amendment duplicates efforts that are already in place. Ultimately, to require the Treasury to undertake such an assessment would undermine this delegation and the regulator’s independence. I therefore ask the right hon. Gentleman not to move the amendment.
Mr McFadden
The Minister has given a pot 3 defence. I apologise for using that in-joke from this morning’s session; I am happy to explain it to you later, Dr Huq. A pot 3 defence means that it is already covered. It is my pleasure not to move the amendment.
Question put and agreed to.
Clause 5 accordingly ordered to stand part of the Bill.
Schedule 3
Prudential regulation of credit institutions etc
Alison Thewliss
I beg to move amendment 40, in schedule 3, page 79, line 25, after “activities” insert
“in the UK and internationally”.
This amendment would ensure the likely effect of the rules on the relative standing of the United Kingdom as a place for internationally active credit institutions and investment firms to be based or to carry on activities are considered both in terms of their UK and international activities before Part CRR rules are taken.
This is quite a modest amendment. The Bill is supposed to ensure that Scotland, the City and the rest of the UK remain internationally competitive but robustly regulated, as the sector and everyone beyond a few marketeer ideologues are looking for. The amendment seeks simply to ensure that the FCA has regard to the standing of the UK as a base for financial firms that operate internationally. It is a kind of reflection amendment. It is common sense. It is really a drafting amendment. There is not terribly much more to it.
John Glen
As I have said, the UK is committed to maintaining its high standards. We heard during evidence sessions last week that these high standards will not hinder the UK’s ambition to remain an attractive place to carry out business. None the less, the Government want to ensure that our regulators have specific regard to these ambitions, particularly for international businesses, which bring jobs and innovation and, I believe, improve our economic prospects and prosperity.
The amendment aims to ensure that that is the case, and I welcome the intention, but I reassure the Committee that the Bill as drafted will deliver that. I highlight in particular to the hon. Member for Glasgow Central that subsections (1)(b) and (2) of proposed new section 144C to the 2000 Act requires the PRA to
“consider the United Kingdom’s standing in relation to the other countries and territories”
that could affect where international firms
“are most likely to choose to be based or carry on activities.”
I believe that that is adequate to address the concerns that have been raised.
Alison Thewliss
I beg to ask leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Mr McFadden
I beg to move amendment 27, in schedule 3, page 80, line 8, at end insert—
“(7) The PRA must, at least once every five years, review the provisions of this section.
(8) The Treasury must lay before Parliament a report setting out—
(a) the outcomes of this review; and
(b) any changes the Treasury proposes to make as a result of this review.
(9) The Treasury may by regulations make any changes identified in subsection (8)(b).
(10) Regulations under subsection (9) may not be made unless a draft has been laid before and approved by a resolution of each House of Parliament.”
This amendment would ensure there is a review of the accountability framework for regulators once in each Parliament and give it a role in approving subsequent changes to the accountability framework.
This will be my last attempt. I have tried to get reviews after six months, one year and three years; this is the attempt at once in every Parliament. Of all the mild amendments, this has to be the mildest. Once in every Parliament, we are asking for the PRA to review the provisions of proposed new section 144C in schedule 3, and for the Treasury to lay before Parliament a report setting out the outcomes of that review and any changes that it proposes to make as a result. I really think it reasonable to expect that as a minimum, given the sensitivity and potential combustibility of the provisions, which is why we have tabled the amendment.
John Glen
On a human level, I have found this process quite challenging, because my instincts are to try to accommodate the right hon. Gentleman when he sounds so reasonable and plausible. The amendment seeks to introduce a requirement to review the PRA’s accountability framework for Basel implementation and, as he said, it would require the PRA to conduct a review every five years, which is the least demanding of his requests today.
It is right to ensure that the accountability framework is fit for purpose and up to date. Indeed, that is one of the aims that we want to achieve through the Bill: flexible and agile regulation. The Bill’s purpose is to enable the implementation of the Basel standards, and the international deadline for Basel 3.1 reforms is 1 January 2023. By 1 January 2023, the bulk of Basel-related rules made as a result of the Bill should therefore already be published. The accountability framework that the Bill introduces for the PRA to make rules to meet Basel requirements relates only to the implementation of the specific so-called Basel 3.1 rules and does not relate to the ongoing prudential regulation of financial service firms that is being considered by the future regulatory framework review. The review is consulting on the important split of responsibilities between Parliament, Government and the regulators now that the UK has left the EU.
Reflecting the wisdom of the right hon. Gentleman with respect to the value of reviews, in that context a five-year review would clearly be appropriate. However, in the current context, it would be inappropriate to ask the PRA to report on an Act of Parliament given that the Bill already includes a more appropriate reporting requirement for the PRA, as set out in proposed new section 144D, that is adapted for the CRR rules. That requirement is to publish an explanation of how the matters in the accountability framework have impacted on the PRA’s rules whenever it consults on and publishes final rules to implement Basel. That will directly attend to the logic and rationale for what it has done.
The amendment would also add a new power for the Treasury in relation to the accountability framework. The Treasury already has a similar power in the Bill to add additional matters for the PRA to consider. The power proposed in the amendment goes further, allowing the Treasury to amend the list, including removing matters from it. It is not clear to me why the Treasury should ever remove, for example, the requirement for the PRA to have regard to the Basel standards. Such matters are immediately pertinent to the prudential regime and would have been agreed by Parliament through the Bill process. Therefore, the existing provisions in the accountability framework already appear to achieve the aims intended in the amendment in the best way possible and, as such, do not need to change. For those reasons, I regret to ask the right hon. Gentleman to withdraw the amendment.
Mr McFadden
Is the Minister saying that if there were a Basel 3.2 or a Basel IV process—that is quite likely, because at some point there will be a revision to the capital rules because things change and the system has to evolve—somehow the part 9D provisions cannot be used? Are they only for Basel 3.1? That is the implication of his response. I would have thought that giving the regulator powers over all those areas would be applicable to future Basel revisions and not just this one. In other words, we are not making a regulatory snapshot; we are creating a movie. This is a genuine question: the part 9D rules must be applicable to any future revisions of the Basel process, too. If so, there is a strong case for a once-in-a-Parliament review of how that is going.
John Glen
Those rules will have regard to future Basels. The reporting mechanism we have and the accountability to Parliament when those rules are published is more immediate and comprehensive. My contention is that a five-year provision would be out of date because we would have done it by then. That is why I am apprehensive about the right hon. Gentleman’s suggestion.
However, within the context of the future regulatory review—I cannot be bound on the outcome of that, because it is genuinely consultative—and what would be the appropriate reporting, there is a difference between short-term reporting on a particular measure or decision and a more fundamental review of the strategic dynamics of the relationship between the regulators, which we have seen evolve over decades. On the principle, there may be the need to have something like that. I am straining to be positive and constructive in my engagement with the right hon. Gentleman.
Mr McFadden
The truth is that there is no science about what is exactly the best timetable for reviewing these things. I am not pretending that one of the various timescales that we have mooted is perfect, and there is probably a legitimate debate to be had about that. However, as the Minister has just confirmed that we have given the regulator the power to make rule changes regarding future Basel changes on an ongoing basis—I am sure he is right about that—having a review and a report on this once every five years is a reasonable timescale to say what the impact of these things has been. I therefore wish to push the amendment to a Division.
Question put, That the amendment be made.
John Glen
I beg to move amendment 2, in schedule 3, page 84, line 19, leave out paragraph (b) and insert—
“(b) section 144D (explanation to accompany consultation on rules);
(c) section 144E(1) and (4) to (7) (exceptions from sections 144C and 144D).”
This amendment corrects the explanatory words in a list of provisions that apply to section 192XA rules that are not CRR rules.
This technical amendment corrects a reference to words contained in parentheses to make it clear that those words apply only to proposed new section 144D to the 2000 Act, and it adds the correct words in parentheses to the references in proposed new section 144E. The words in parentheses explain the scope of the clause.
Amendment 2 agreed to.
Schedule 3, as amended, agreed to.
Clause 6
Power to amend the Credit Rating Agencies Regulation
Question proposed, That the clause stand part of the Bill.
John Glen
The Basel standards include rules relating to credit assessments—also called external ratings—which some firms use to assign risk ratings. Risk ratings are used to determine the minimum amount of capital that must be maintained by a firm, and the right hon. Member for Wolverhampton South East has already drawn attention to this matter.
In the UK, credit ratings agencies, or CRAs, that issue credit assessments are regulated by the credit ratings agencies regulation, and the changes needed to the CRA regulation to implement Basel are minor. Consistent with the 1 January 2023 international deadline, however, the PRA has yet to issue its rules implementing the Basel 3.1 reforms, and it makes sense to consider changes to the CRA regulation as part of the wider 3.1 package of changes. Therefore, the clause gives the Treasury a power to amend the CRA regulation while requiring it to consider the Basel standards when that power is exercised. That confirms our intention to use the power only to implement changes stemming from Basel. The changes to the CRA regulation will help to ensure that the UK is fully Basel-compliant.
Mr McFadden
I have a couple of questions, because credit rating agencies did not cover themselves in glory in the financial crisis, so I want to be clear about what clause 6 does and does not do with regard to them. How does the credit rating agencies regulation regulate them at the moment, and how will that be altered by the provisions in clause 6? For example, does clause 6 deal with the situation where a credit rating agency charges a fee to those who are asking for a rating and with the potential conflicts of interest involved in that process? That played out in the financial crisis, as anyone who has watched the movie “The Big Short” will have seen. The clause does talk about the regulation of the credit rating agencies, so I wonder if the Minister could explain a bit more how they are regulated and how that would be altered by the clause.
John Glen
I am happy to do my best. In terms of the changes and why they are not set out in the Bill, the changes that need to be made to the CRA regulations stem from “Basel III: Finalising post-crisis reforms”—the Basel document—which is part of the most recent Basel 3.1 package of reforms. Most of those have not been legislated for in the UK or the EU, and it makes sense to consider changes to the regulation as part of the wider implementation of the 3.1 package, which will be done through the future rules. They will be consulted on prior to the deadline.
The power to amend the regulation will be used solely to implement Basel 3.1. There are a number of minor amendments contained in that “Basel III: Finalising post-crisis reforms” document of December 2017. The two eligibility criteria that credit rating agencies need to satisfy are added. The power in clause 6 safeguards that intent as it requires the Treasury to have regard to the standards rather than making other amendments for unrelated reasons.
In terms of the other limited changes made in schedule 4 as part of the implementation of the UK regime equivalent to the EU’s second capital requirements regulation, they again relate to earlier Basel III standards. I do not think I can answer with enough specificity to do justice to the right hon. Gentleman, so I think I will need to write to him on this matter.
In what I have said, I hope that I have explained the confines and drivers of the reform; the powers that we are giving to the regulator; and the consistency with which they will be exercised to the Basel 3.1 proposal. I have previously spoken about accountability for that. I need to write to the right hon. Gentleman to give more clarity, and I am happy to address the issue at further stages in the Bill’s passage.
Question put and agreed to.
Clause 6 accordingly ordered to stand part of the Bill.
Clause 7 ordered to stand part of the Bill.
Schedule 4
Amendments of the Capital Requirements Regulation
John Glen
I beg to move amendment 32, in schedule 4, page 89, line 11, at end insert—
“11A (1) Article 500d (temporary calculation of exposure value of regular-way purchases and sales awaiting settlement in view of COVID-19 pandemic) is amended as follows.
(2) In the heading, omit ‘Temporary’.
(3) In paragraph 1, omit ‘until 27 June 2021,’.”
This amendment removes the time limit on the availability of the derogation under Article 500d of the Capital Requirements Regulation.
This is a minor amendment. In 2017, as I mentioned, the Basel Committee on Banking Supervision introduced favourable treatment for firms in how they calculate the leverage ratio. The EU was due to introduce that treatment through its second capital requirements regulation on 28 June 2021. Given that the revised calculation will reflect the leverage of a transaction more appropriately, and at the same time increase the capacity of an institution to lend and to absorb losses amid the covid-19 pandemic, the EU brought this provision forward through a derogation to the first capital requirements regulation that is currently in effect. The UK supported that approach. This derogation is time-limited in the EU to 28 June 2021, as that is when the relevant EU CRR II comes into force, which will put in place the new permanent provisions on leverage ratio.
As the Committee will be aware, the European Union (Withdrawal) Act 2018 provides that EU law, as it is in effect at the end of the transition, will continue to apply in the UK. This means that the first capital requirements regulation as it exists on 31 December will remain in place in the UK until it is amended by this Bill. That means that the derogation would also cease to have effect in the UK on 28 June 2021, because we will have adopted it on the terms that it is now live in the EU. The UK has not legislated a date by which to update its prudential regime in this Bill, because it is most important that our regulators get the rules right and have enough time to consult and finalise them, and also to minimise disruption.
The UK is targeting 1 January 2022 for firms to have implemented the PRA CRR rules. This decision was made after introduction of the Bill, in response to industry concerns about the general volume of regulatory reform in 2021. I referred earlier to the future regulatory framework review. The first stage of that was a piece of work that the Treasury did with industry and the regulators following Chancellor Hammond’s work 18 months ago, which sought to rationalise and understand the range of regulatory interventions that were ongoing.
UK financial services providers would have to revert to the previous rules from June for a period of approximately six months, which would be costly for industry and inconsistent with the EU regime during that period. This amendment therefore removes the time limit on the derogation, so it will remain in place until the new permanent provisions are in place in the UK, giving clarity and certainty, and not seeking to cause disruption. That is why I ask hon. Members to accept this amendment.
Mr McFadden
Can I ask a question about this? The Minister said that the leverage ratio had been changed so that institutions could lend more. I assume that means it is being reduced as a temporary measure during the covid crisis. He then said that, while at EU level that was to be for six months, the UK had not decided when such a change should end. The implication is that we are allowing a reduction in the leverage ratio without an end date. That is potentially very significant in terms of the discussions that we have had about capital today.
I appreciate that it is late in the afternoon and all the rest, but having listened to the Minister, and given how sensitive this issue of leverage ratio is—how can I best put this?—I would be grateful if he could undertake to write to the Committee with more detail on how this will operate. A permanent or long-term reduction in the leverage ratio would be a very big regulatory decision and would be precisely the kind of thing that we have been talking about all day, and precisely the kind of thing that we have been saying should have proper reports back, which those on the Government Benches have been resisting all day. I would like to find out more about what exactly this means and how long it will last for.
John Glen
To the right hon. Gentleman’s point, the UK has not legislated a date by which to update the prudential regime in this Bill, because it is most important that our regulators get the rules right. On the amendment made for the covid crisis that we have aligned to, which essentially ends next year, he is asking about the potential for us not to end it and therefore to be at odds with the prevailing new situation in the EU after 28 June.
John Glen
Well, whatever the enduring reversion environment is in the EU following the end of this special measure. I will be happy to write to the right hon. Gentleman on that, but the key point is this: it would not be appropriate for the UK to determine where we would be beyond 28 June in advance of the regulator’s looking at those matters, when at the same time the EU’s definitive position at the end of June is not yet known. I will write to him, because I recognise that he is saying that he is apprehensive about the fact that we will have an apparent 18-month period from next June until January 2022 where we are at odds with the prevailing norms, and that is a risk. If I have understood him correctly, I am happy to address that point.
Mr McFadden
I am grateful to the Minister, but it is not an EU alignment point that I am making. He is right that, yes, this has arisen because of a disalignment with the EU, but my point is not that we have to always look at this through the lens of being aligned with the EU on capital requirements. I am talking about a public safety point; I am talking about a UK regulator taking a view on the leverage ratio, not necessarily in the light of what the EU is doing after June, but precisely because of all the points we have been making about the importance of capital after the financial crisis.
John Glen
I am happy to restate what I said. We have inherited an environment and indeed we have been obliged—quite reasonably—to absorb into law where the EU has got to at the end of the transition period. My point is that, in order to get the right enduring solution for our capital requirements for the UK, as it is in the UK, we have to allow a regulator to do that work.
The point the right hon. Gentleman is making is about the potential deviation of that enduring solution, and the gap between its implementation and the capital requirements that are normative globally, next June. I will undertake to clarify how we consider, in essence, the trade-off between that potential deviation and the disruption to firms. However, what I have tried to convey throughout today’s proceedings is that our desire is not to deregulate or to deviate from international norms, but to set out a UK framework that is necessary and appropriate for the institutions that exist in the UK.
Environment Bill (Twenty First sitting)
Tuesday 24th 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 24 November 2020 - (24 Nov 2020)
The Committee divided: - Ayes: 5 / Noes: 9 - Question accordingly negatived.
The Committee divided: - Ayes: 5 / Noes: 9 - Question accordingly negatived.
The Committee divided: - Ayes: 5 / Noes: 9 - Question accordingly negatived.
The Committee divided: - Ayes: 5 / Noes: 7 - Question accordingly negatived.
The Committee divided: - Ayes: 5 / Noes: 8 - Question accordingly negatived.
Fleur Anderson (Putney) (Lab)
I beg to move, That the clause be read a Second time.
I am honoured to be called to speak about this important new clause. Indeed, it is so reasonable that at this stage of this iteration of the Environment Bill Committee, the seventh day, this might be the new clause that is agreed by all its members. We are not setting specific targets; we only ask that targets be set. We are not saying how they should be measured; we are just saying that measurements should be done. It is a new clause, surely, that must be agreed by all.
The issue is not only of concern to constituents across the country and to members of the Committee, it is a huge concern to my constituents. More than 200 people have taken the additional time and effort to write to their MP about animal welfare issues, from testing to warfare experiments and sentencing. I have long believed that the UK should lead the world with high animal welfare standards. I am proud that the UK banned cosmetic testing on animals back in 1997 and extended that to cosmetic ingredients in 1998. I was one of those who had been campaigning since the 1980s for that. We have made some good progress and agreeing on the new clause and putting it into the legislation would entrench those gains and make sure we go further.
It is welcome that animal testing practices have improved and advanced greatly over recent years, and non-animal methods for research have also developed and improved over time. However, I remain concerned at the lack of transparency around animal testing project licence applications, as well as the continued permissibility of severe suffering as defined in UK law. Again, the new clause does not aim to be entirely prescriptive about the conclusions of that—it leaves that for secondary legislation—but it asks for it to be included and considered.
Animal testing is not the answer to protecting people and the planet from potentially harmful chemicals. Tests on animals are unreliable and their value is increasingly being questioned in scientific literature. It is a matter of corporate pride for many businesses to say that they have animal cruelty-free products, because that is increasingly what the public wants.
There are better ways to ensure chemical safety and better assess risks to environmental and human health while also reducing and eliminating the cruel suffering of animals in laboratories. Cruelty Free International estimates that since 2006 more than 2.6 million animals have been used in chemical tests across the EU, including the UK, with many more tests planned. The UK reports conducting more animal tests than any other country in Europe. EU chemical legislation—the REACH legislation—already discussed in Committee, has resulted in a huge increase in the use of animals in European and UK laboratories. Now is our chance to be better and to provide that world-leading legislation. We need a proactive plan to reduce and replace chemical tests on animals. If the UK is serious about its commitment to animal protection, the Government must adopt a forward-looking Environment Bill that moves away from cruel and ineffective animal testing and write into law a target-based, science-led strategy for reduction and replacement.
The Parliamentary Under-Secretary of State for Environment, Food and Rural Affairs (Rebecca Pow)
I agree with what the hon. Member for Putney wants to achieve in new clause 9. Just like her, I am an animal lover. As a former chair of the all-party parliamentary group for animal welfare, I think I speak for everyone on the Committee in terms of being animal lovers. The UK was consistently one of the strongest voices in the EU, applying downward pressure on animal testing—I am sure the hon. Lady is well aware of that—including changes to REACH to enforce the use of alternatives. The UK’s presidency of the European Council in the late 1990s was one of the driving forces behind the reform of the chemicals regulations and we referred to that in a previous session. We are continuing with that clear aim now that we have left the EU, and we are already enshrining the last resort principle as one of the protective provisions in the Bill. Under article 138(9) of REACH, the Secretary of State will also be under a duty to review the testing requirements on reproductive toxicity within 18 months of the end of the transition period. That review must be carried out in the light of the objective of reducing the use of animal testing.
In addition, the powers in schedule 19 of the Bill to amend REACH would enable us to build such targets into REACH, if that were felt to be appropriate. Any amendment would have to be consulted on and to be consistent with the aims and the principles of REACH as set out in article 1, including that we must maintain a high level of protection for human health and the environment, seek alternatives to animal testing, and that REACH is underpinned by the precautionary principle. I believe that would be the better route, if we conclude that targets are desirable. For those reasons, I hope that the hon. Lady will withdraw new clause 9.
Fleur Anderson
I thank the Minister for looking into the issue and for some assurances that targets could be included in future, and that we will be seeking alternatives. I note the concerns and considerations that we all want the same thing, which is stronger animal welfare. I am disappointed that we will not agree on this matter this afternoon, but I will not press it to a Division. I beg to ask leave to withdraw the clause.
Clause, by leave, withdrawn.
New Clause 10
OEP: Penalty notices
‘(1) If the OEP is satisfied that a public authority has failed to comply with a decision notice, the OEP may, by written notice (a “penalty notice”) require the public authority to pay to the OEP an amount in sterling specified in the notice.
(2) When deciding whether to give a penalty notice to a public authority and determining the amount of the penalty, the OEP must have regard to the matters listed in subsection (3).
(3) Those matters are—
(a) the nature, gravity and duration of the failure;
(b) the intentional or negligent character of the failure;
(c) any relevant previous failures by the public authority;
(d) the degree of co-operation with the Commissioner, in order to remedy the failure and mitigate the possible adverse effects of the failure;
(e) the manner in which the infringement became known to the OEP, including whether, and if so to what extent, the public authority notified the OEP of the failure;
(f) the extent to which the public authority has complied with previous enforcement notices or penalty notices;
(g) whether the penalty would be effective, proportionate and dissuasive.
(4) Once collected, penalties must be distributed to the NHS and local authorities to be used for pollution reduction measures.
(5) The Secretary of State must, by regulations, set the minimum and maximum amount of penalty.
(6) Regulations under this section are subject to the affirmative procedure.”—(Dr Whitehead.)
This new clause would allow the OEP to impose fines.
Brought up, and read the First time.
Dr Alan Whitehead (Southampton, Test) (Lab)
I beg to move, That the clause be read a Second time. This proposed new clause was originally put forward in the names of my hon. Friends the Member for Swansea West (Geraint Davies) and for Leeds North West (Alex Sobel), who no longer sit on the Committee. With our names added, we certainly support the sentiment.
The proposed new clause contains a simple proposition relating to the Office for Environmental Protection and its functions. Hon. Members will recall that we have had substantial discussions about the extent to which the OEP has powers to make its functions work well. It is a question of giving it not just general authority but enforcement powers, notices and so on, which we have debated. As the Bill stands, although the OEP would have a number of powers concerning notices and the ability to bring court proceedings, it would not have the power to levy fines.
That argument is sometimes raised where a no-fine outcome is concerned, when the question arises regarding the bodies on which the OEP would levy fines. That would, by and large, be public authorities. The argument then runs about what it would mean to levy a fine on public authorities. I remind hon. Members that that was not the case before we took powers over from the EU, in running our own environmental importance. Nor is it something that other agencies do not have as shots in their locker.
The clean air regime, for example, allowed the EU Commission the power to levy fines on infracting countries. In the case of clean air regulations, there was a suggestion that the fines that the EU authorities had the power to levy could be applied to infracting local authorities that were not adhering to clean air regulations. Indeed, there was quite a to-ing and fro-ing between the Department for Environment, Food and Rural Affairs and local authorities, because it was suggested that authorities that had been identified as infracting, and therefore needed to draw up clean air plans, would bear the brunt of the fines, rather than the UK Government. The UK Government were the public authority that was infracting, but they had passed on their infraction responsibilities to other public authorities, so those public authorities would be fined. That was a real issue with regards to clean air just a little while ago, but it has not been passed on to the Office for Environmental Protection, which would be the agency in that instance with UK powers.
Similarly, Ofgem has considerable powers to fine companies that do not undertake proper management of their customer bills or their responsibilities for energy supply. Indeed, a considerable number of fines have been levied, running to millions of pounds, on energy companies. Ofgem has that clear and workable power to levy fines, but the OEP does not.
We are saying that the OEP should have the power to fine. Indeed, the new clause would give it that power. The other part of the problem is what the agency would do with the fines once they have been collected—is it not just a circular process? The new clause states that, once collected, penalties must be distributed to the NHS and local authorities to be used for pollution reduction measures. The fines would be recycled, but in a positive way for environmental management and improvement.
Having that power to fine, and being able to publicly state that authorities had been fined, are potentially strong weapons in the OEP’s locker, not necessarily because the fines would be punitive in their own right, but because they would be a mark against that public authority and because, through the transfer of the fine payments, the sins of that public authority would be effectively transferred into positive action on environmental improvement in other areas.
We think the new clause is a sensible, straightforward measure that would generally improve the efficacy of the OEP. The fact that nothing like it was thought about emphasises the general theme that we have been talking about in Committee of the power, independence and force of the OEP being downgraded through a number of Government amendments that have been made as we have gone through the Bill. This would be one back for the OEP, so I hope the Committee will view it in a favourable light.
Rebecca Pow
I thank the hon. Member for the intention behind tabling the new clause. The Government completely agree that effective enforcement of public authorities’ compliance with environmental law is vital. That is why we are establishing the OEP to hold public authorities to account, as we have clearly talked about many times in Committee. However, in our domestic legal system it is unnecessary to make specific provisions for fines to achieve that.
Fines play an important role in the EU infraction process, as the hon. Member points out, but only because the Court of Justice of the European Union is unable to compel member states to take a specific course of action through a court order. It is the only penalty that it has in its armoury. It is therefore reliant on the significantly less effective approach of penalising the member state until they take some form of remedial action, although the UK has never been fined for an environmental infraction.
Richard Graham (Gloucester) (Con)
My hon. Friend is making a strong case as to why it is much more effective that the OEP works with public authorities to try to make the sort of environmental improvements that everybody here wants to see, rather than acting as a fining mechanism. Does she agree with me that on this occasion unfortunately the Opposition have confused trying to replicate a European measure with a much better way of doing things here in the UK?
Rebecca Pow
I thank my hon. Friend for making my case for me. A great deal of thought has gone into it, which I was going to come to at the end. The shadow Minister suggests that this has not been thought about; I think those were his exact words. To reiterate what my hon. Friend said, this has been thought about in great detail, to come up with a system that will be better at solving problems and improving the environment than the one the EU has on offer.
Furthermore, the Committee might wish to note that this new clause would give the OEP powers that even the European Commission does not have, so it cannot claim to be ensuring equivalence between the OEP and the European Commission. The European Commission cannot fine a member state government, only the Court of Justice of the European Union can do so, a point that really needs clarifying with the shadow Minister. As I have already mentioned, we have stronger remedies than the CJEU. It would be wholly inappropriate for the OEP to directly impose fines. Effectively that would mean the OEP could prematurely sanction public authorities, without reference to the courts, and with no appeals mechanism for the public authority to challenge the decision.
Ruth Jones (Newport West) (Lab)
Does the Minister agree that enabling the OEP to issue penalty notices would help to give its investigatory work a degree of clout, and serve as a meaningful contribution to efforts to improve public authorities’ compliance with environmental law?
Rebecca Pow
I do not think the OEP is going to have any problem at all operating its clout. We will have a new chairman and a supporting board, and that will be their raison d’être. They do not need fines. In fact, I wrote an exclamation mark as I thought it was a bit of a joke when I saw that the shadow Minister had suggested that the OEP should become a funding body. That would be a significant expansion in its scope, and not consistent with its role as a watchdog to hold Government to account.
In summary, the OEP’s enforcement framework has been designed to resolve cases as robustly, quickly and effectively as possible. The powers already available to the courts to grant and enforce remedies make a system of fines unnecessary. I therefore ask the hon. Member to withdraw the new clause.
Dr Whitehead
I thank the Minister for that response. There are arguable cases. What we want to see as an emphasis on enforcement is a matter of opinion as to what is most effective, rather than a fundamental discussion about having a power or not. I remind the Minister that we had a debate about the fact that OEP appears to be pushed further away from its ability to go through the courts by the debate on who should decide whether something was a serious breach, and the role of the OEP and the Minister in that. At the very least, this idea, that the OEP could introduce penalties in its own right, would be a step to rectify that particular problem.
I take what the Minister has to say about the extent to which there are, at least in principle, reasonable methods of enforcement as far as the OEP is concerned. It is not a wholly unreasonable point to make that that should not necessarily include fines. However, this is a route worth considering, and it may be that, as the OEP develops and we see how it manages to enforce things, the idea of fines might be revisited. I do not intend to press the clause to a vote this afternoon, so I beg to ask leave to withdraw the clause.
Clause, by leave, withdrawn.
New Clause 12
Duty to follow recommendations
(1) A “public authority” must follow the course of action set out in a recommendation made by the OEP in a report issued under sections 25 or 26 unless the public authority has determined that there are reasons of public interest demonstrating that it is not necessary for it to do so in order to comply with the law.
(2) If the authority does not follow a recommendation, it must publish a report setting out the reasons for not doing so and set out what alternative course of action it proposes to take.
(3) In this section public authority carries the same definition as in section 28(3). —(Dr Whitehead.)
This new clause requires a public authority to whom the OEP has issued a recommendation to normally follow that recommendation.
Brought up, and read the First time.
Dr Whitehead
I beg to move, That the clause be read a Second time.
Interestingly, this new clause comes at the same point from a slightly different direction. On the basis of what the Minister had to say just a moment ago, she might consider how this clause might work in enhancing the ability of the OEP to secure importance in an appropriate and robust manner.
The new clause—and I shall not dwell on it great length—requires a public authority to whom the OEP has issued a recommendation to normally follow that recommendation. That is an onus in law, on the public authority, to follow the course of action set out in the recommendation made by the OEP. There can, of course, be exceptions to that, and there may be circumstances in which an authority considers it does not have to follow a recommendation. However, if that is the case, the new clause provides that it should publish a report setting out the reasons for not doing so and, positively, what alternative course of action it proposes to take.
The new clause would considerably enhance the power of the recommendations of the OEP as the default position would be that an authority should follow its recommendation; it could not get away with saying “Well, we don’t particularly want to do that. There are reasons for this; trust us—don’t worry. We don’t have to do it”. Instead, it would have to go public on why it could not do it, and it would have to publicly say what alternative course of action it would take, rather than taking no action.
This does not go down the fine route, but it does go down the enforcement route in a different way—a potentially equally important way—and I would be interested to hear the Minister’s thoughts on this particular way of further enhancing the enforcement credibility and robustness of the OEP.
Richard Graham
I am slightly concerned about the trend of the hon. Gentleman’s line of thinking, which is very authoritarian and along the lines of “Let’s have the courts say as a default that the police are normally always right; that the county council are normally always right on issues of child welfare and so on.” That is not the way that this country operates; we believe fundamentally in freedom and an objective decision by the courts on the rights and wrongs of a particular case. Surely there is no reason why the OEP should be some sort of magical exception to that overriding rule.
Dr Whitehead
If the hon. Member for Gloucester were pursuing a principled position on that, he would have to undo the whole structure of regulation in this country to ensure the freedoms and the way of life that he suggests that we should follow, because that is what regulators by and large do—they quite often produce regulatory decisions and regulatory outcomes that apply to those who are being regulated. I gave the hon. Gentleman the example of Ofgem, which levies fines on bodies that appear to transgress what Ofgem has decided as a regulator. That is not a court action but relates to how the regulator works and how those who are supervised by that regulator are expected to behave. There is a direct relationship between those two, and that is the case with a range of other regulators in all sorts of other areas. For example, the hon. Gentleman will be aware of Ofcom’s regulatory activities on a number occasions, and those of Ofwat.
I am not suggesting an exceptionally authoritarian proposal that comes out of thin air in a desire to regulate people beyond what they can bear. It is based on the relationship between the regulator and the regulated and their respective actions. Normally, those who are regulated should do what the regulator suggests should happen. To me, that is not akin to the Stasi going in to everyone’s life and regulating their private thoughts out of existence. What is proposed is a reasonably standard regulatory process, as carried out on a agreed basis in this country.
Daniel Zeichner (Cambridge) (Lab)
As ever, my hon. Friend is developing an interesting argument. I suspect that in some ways it goes back to where our regulatory frameworks first emerged. He and I are probably of an age to remember those discussions, which originally arose around some of the privatisations of public authorities. A regulatory framework grew up and it was initially intended that it would melt away because the market would weave its magic. Of course it quickly became apparent that we did need regulatory authorities. Does he agree that, over the past 20 to 30 years, we have had an emerging regulatory structure that is quite different from how it was originally envisaged?
Dr Whitehead
Indeed, Mr Gray; I will not be too far tempted on to the history of regulation and privatised industries and how that has worked out, other than to say that the checks and balances of the regulator are an important part of the process. What the new clause proposes does not depart from that practice, and I really do not agree with the suggestion that it is somehow following an authoritarian course.
I have been tempted to make a lengthier speech on the new clause than I intended by the interventions from the hon. Member for Gloucester, so I will not say any more at this stage, but I hope that the Minister will react favourably to the new clause.
Rebecca Pow
I thank the hon. Member for Southampton, Test for tabling the new clause because it allows me to provide some detail on the OEP’s scrutiny function as well as its interactions with Government and public bodies.
The new clause refers to recommendations made under clauses 25 and 26, which cover the OEP’s scrutiny of the Government’s environmental improvement plans and targets, as well as the implementation of environmental law. Many of the OEP’s recommendations, if implemented, are likely to require changes to law and policy, and those changes need to be carefully assessed alongside many other considerations. The responsibility for making changes to policy as well as introducing changes to legislation lies firmly with the elected Government, not an independent body. That was highlighted in the interventions by my hon. Friend the Member for Gloucester.
I also want to use this opportunity to explain how the OEP will interact with Government and public authorities with regard to its scrutiny function. In terms of the OEP’s report issued under clause 25, it will be addressed to the Government, as the Government are ultimately responsible for delivery of the environmental improvement plan and targets. Clearly, public authorities will help Government meet their objective of improving the natural environment, but, when the OEP makes recommendations as to how progress could be improved, Government are best placed to determine how, and by whom, those recommendations should be implemented. That is particularly important because it is the Government, obviously, who have the statutory duty to respond to the OEP’s recommendations, and are therefore held accountable. The Government must respond to the OEP’s reports; they must publish the reports and lay their responses before Parliament. That means that the Government will be held to account for their actions by the OEP, Parliament and the public.
Ruth Jones
The Minister has talked about the OEP holding the Government to account. How will it do that, as it will be part of the Department for Environment, Food and Rural Affairs? It will be appointed by the Government, and will, surely, be hand in glove with the Department. It is very difficult to say that it will actually be able to hold the Government to account.
Rebecca Pow
I will not go into a huge amount of detail in my answer, as it was all covered in the early stages, but I could send the hon. Lady a page on how and why the OEP will remain independent. It will be an utterly independent body, and the Secretary of State has to be mindful of the independence of the OEP; that is a crucial part of some of the detail written into the Bill, and, if she wants to be referred to those sections, I am sure that we could clarify those with her.
Clause 26 enables the OEP to assess how environmental law is implemented; it is not simply about compliance with—or deviation from—the law, but will be more about whether the law is effective and delivering its intention. The OEP will seek information from public authorities to undertake this duty but, again, its findings will be addressed to Government, and only Government are required to respond.
This will work as one big machine, and local authorities will clearly play an important part; that is not to say that public authorities cannot implement any of the OEP’s recommendations which are applicable to them, if appropriate. However, this is very different from the suggestion that public authorities must comply with the OEP’s recommendations unless they publish a report justifying an alternative approach.
For those reasons, I ask the hon. Member for Southampton, Test to withdraw the new clause.
Dr Whitehead
I thank the Minister for her reply. She will not be surprised to know that we do not entirely go along with all of it, but I appreciate what she has said. Indeed, it may be that her remarks are taken into account when we discuss the next new clause. On that basis, I have no intention of pressing this to a vote, and I beg to ask leave to withdraw the clause.
Clause, by leave, withdrawn.
New Clause 13
OEP register
“(1) The OEP must maintain a register of communications between it and Ministers (or government departments).
(2) The OEP may omit from the register communications which it considers trivial or otherwise unlikely to be of interest to the public.
(3) The OEP must publish the register.” .—(Dr Whitehead.)
This new clause requires the OEP to keep a public register of correspondence with the Government.
Brought up, and read the First time.
Dr Whitehead
I beg to move, That the clause be read a Second time.
This is an innocuous-looking new clause, but it is potentially quite important. Indeed, we think it should be an important part of the process, precisely because of what the Minister just said in response to the suggestion from my hon. Friend the Member for Newport West about the stated and apparent independence of the OEP, as far as the Department is concerned.
The new clause simply states that the OEP should maintain a register of communications between it and Ministers or Government Departments. Obviously, there is a statement in that clause to say that trivial things—such as the Minister ringing up to ask whether they had a spare sandwich—should not be included in the register, but significant communications between the OEP and Ministers should be recorded in the register, and that register should be published.
What that would mean, quite simply, is that there would be on the record a transparent adumbration of the occasions on which there has been conversation between Ministers and the OEP. While obviously it is not suggested that the record should go into detail on what the communication was—it is not a public record to that extent—it would show the extent to which the OEP was acting independently or the extent to which it might be under duress, shall we say, from ministerial quarters in its doings. If the Minister is serious in what she says about the independence of the OEP, despite some of the apparent constraints placed on its independence in the Bill, I would have thought she would welcome the new clause as a pretty good way of enabling us to see on the table what was going on and enabling the OEP, if it needed to, to show that it had been placed under pressure by Ministers. If, indeed, it was placed under pressure by Ministers, that pressure would be in a public place, it would be seen by all and it could therefore be remedied.
Rebecca Pow
I thank the hon. Member for the new clause. I share his interest in ensuring that the OEP acts transparently in the exercise of its functions. That is why we have created, in clause 22, a duty on the OEP to have regard to the need to act transparently. We have also required the OEP, in clause 38, to make public statements when it carries out various enforcement activities. In carrying out the duty in clause 22, the OEP would normally make information about its work publicly available—perhaps the shadow Minister has missed that element.
However, there may be certain situations where it is inappropriate and unhelpful for it to do so. There is a difference between what is in the public interest and what might be of interest to the public or to some members of the public. In particular, the OEP will need to communicate with public authorities, including Departments, in the exercise of its scrutiny and enforcement functions. Those communications will require a degree of confidentiality if the OEP is to engage effectively and productively on sensitive issues with public authorities, and avoid prejudicing possible enforcement action. The effect of the new clause might be to remove that necessary confidentiality from the OEP’s interactions.
The new clause would require the OEP to maintain a continuous running commentary on its communications with Ministers and their Departments, which would be administratively burdensome and a poor use of resources, given the other provisions we have included in the Bill on transparency, reporting and public statements. The hon. Member asked whether ringing up to order a sandwich should be recorded. That is a good point, because it is not at all clear in the new clause what exactly the register would have to contain. Is it the full text of the communication? Potentially, if one was having to record everything, one would have to record those things as well. It is just a small point.
Richard Graham
The Minister is making a very good case for the new clause being entirely redundant. I am surprised that the hon. Member for Southampton, Test, whose judgment is often very sensible, really considers that creating a register of communications, with all the arguments about what might be considered trivial or not trivial, is a good idea when setting up the very important Office for Environmental Protection. Does the Minister agree that this is another new clause that we should move on from swiftly?
Rebecca Pow
I could not agree more. I thank my hon. Friend for clarifying that point, because he is absolutely on the money—not that the OEP is a fundraising body, of course.
There is nothing in the Bill, of course, to prevent the OEP from setting up a register of significant communications should it choose to do so, but we do not believe that it should be required to do so as a legal obligation. It is, after all, an independent body. To clarify how independent it is, I should say that it will obviously be operationally independent from the Government and governed by the non-executive members appointed through the regulatory public appointments process.
On the question of the OEP potentially deciding it wants to set up a register, I should mention that the Office for Budget Responsibility has a register similar to that proposed by the hon. Member. That is not a statutory requirement; rather, the OBR produces it of its own accord, and we believe it must remain for the OEP to decide how to fulfil its duty to have regard to the need for transparency. The new clause is somewhat inappropriate and unnecessary, and I ask the shadow Minister to consider withdrawing it.
Dr Whitehead
I am not sure that I will any more, actually. The Government’s suggesting that the Committee should move swiftly on because they do not particularly like an Opposition new clause does not strike me as full participation in the spirit of what we are supposed to be doing—that is, we, the Opposition, get the opportunity to put amendments forward, they are discussed and answered properly, and then we move on. That is what I hope will happen with this new clause.
I am not sure whether the Minister is saying that, if the OEP thinks it would like to set up a register—sandwiches notwithstanding—of its communications with Ministers and to publish those communications, Ministers would be happy to go along with that and would not in any way seek to impede it. Alternatively, is the Minister saying that because she thinks the correspondence and communications between Ministers and the OEP must take place in an air of confidentiality, she would discourage the OEP from doing that if it wanted to?
The new clause would clear that up; it says there should be a register. Its subsection (2) states that the OEP does have discretion, and the word “may” creeps in:
“The OEP may omit from the register communications which it considers trivial or otherwise unlikely to be of interest to the public.”
That is what you might call a sandwich clause. It does not need to put that stuff in; it merely needs to maintain a register to indicate the general degree of communication that is going on and how that communication is working.
Rebecca Pow
To clarify, there is nothing in the Bill that prevents the OEP from setting up a register. I cannot reiterate any more than I already have that it is an independent body: if it decides it wants to set up a register, that is purely up to the OEP. I reiterate again that we do not believe that that should be a legal obligation on the OEP—after all, it is an independent body and it will think through these things for itself.
Dr Whitehead
That was not quite the question that I asked the Minister. What I asked was: if the OEP did decide to set up its own independent register, what would Ministers have to say about its being a transactional register—not a register of independent actors, but a register of things happening between people, including Ministers?
Would the OEP be encouraged to do that by Ministers? Would Ministers be happy to go along with that if the OEP did it? Alternatively—we would probably never find this out because we would not know what the communications were—would Ministers say, for the reasons the Minister has outlined, “That is a pretty bad idea, OEP. You don’t really want to be doing that. We might say, in theory, that you are able to set up your own register, but we as Ministers seriously discourage you from doing it.”
We would be considerably comforted if the Minister said this afternoon that not only could the OEP set up its own register, but she would positively encourage it to do so, in the interests of transparency and of ministerial communications being as public as possible.
Cherilyn Mackrory (Truro and Falmouth) (Con)
I am just trying to clarify something. We have had various debates on the independence of the OEP and now the hon. Gentleman is asking Ministers to give their pre-emptive influence as to whether the OEP should do one thing or another. It might just be me, but I find that the Opposition amendments and new clauses are trying to pre-empt the OEP’s own terms of reference, which it will decide for itself.
Dr Whitehead
What I was doing was engaging in a bit of what-iffery. The Minister came back to me and said that the OEP could set up its own register, if it wanted to do. That is not what we want to do in the new clause; we just want a register to be set up—that is quite clear and straightforward. The OEP would have some discretion over what it consisted of, but the register would be there on the table for public record. That system operates in a lot of other legislatures and jurisdictions, to a greater or lesser extent. It does not bring the world tumbling down; it brings transparency.
Rebecca Pow
To back up the strong point made by my hon. Friend the Member for Truro and Falmouth, would the hon. Gentleman agree that the whole point about the OEP is that it is an independent body and Ministers cannot encourage it? That is the whole point of its independence.
Dr Whitehead
That is indeed absolutely what we hope will happen and what the new clause is intended to underpin. The Minister, I think, has just made a further point in favour of the new clause—the effect of her words often goes considerably beyond what she thinks. That is very good and positive.
I do not wish to say too much more about the new clause. I have been tempted by interventions to go down particular routes, but I emphasise the simple, central point. This is about fresh air, light and transparency, and actions taken by public bodies, for the public good, being available to the public. It is as simple as that. The fact that there would be a requirement does not put any constraints on anybody’s actions; it simply makes sure that the light of transparency is properly shone, and is guaranteed to be shone. That is what the public would expect to happen in the case of an independent body that nevertheless appears to have close relations with the Government, in terms of its independence.
The Chair
I am unclear as to whether the hon. Gentleman is seeking to divide the Committee.
Dr Whitehead
Sorry, Mr Gray. I have been goaded beyond endurance in this particular debate, so I ask for a Division.
Question put, That the clause be read a Second time.
Dr Whitehead
I beg to move, That the clause be read a Second time.
Let us see how we get on with this one, Mr Gray. Again, this is a very simple new clause; I thought the last one was simple, but there we go. It places an environmental responsibility on Ofwat—in the same way, I talked a while ago about what does not happen at the moment, but I sincerely wish would happen, with Ofgem.
The new clause sets out that the director general of water services, who is mentioned in the Water Industry Act 1991, which was put in place before modern Ofwat came into being—the director general of water services now works closely with Ofwat on regulation of the water industry—and the Minister, which is effectively Ofwat,
“contribute to achievement of any relevant environmental targets set under the Environment Act 2020.”
It would mean that any targets for water companies would have an obligation attached to them: that Ofwat must work towards those targets.
This is an important point for water regulation and, indeed, any other form of industry regulation. What regulators do is based on a brief from the Government about their overall activities. Even though it is independent, the regulator will, to a considerable extent, ensure that what it does is guided by that overall requirement.
If, for example, the general direction is simply to go for value for money for customers, important though that is, and if that is the guiding light for that particular regulator, it will stick by that at the expense of other considerations that could balance it out in the interests of, for example, environmental targets.
The new clause seeks to balance what the regulator is doing on those targets. It is quite proper that it should have an interest in the targets. Surely that is one of the aims of the targets in the Bill—to ensure that we are working together to get them achieved. If important parts of the water industry are not bound into seeking to achieve those targets, that weakens the overall push forward.
The new clause is not authoritarian. It is not trying to get anything done that should not be done. It simply tries to make sure that everyone is bound together in making sure that the targets work well in the water industry.
Rebecca Pow
The Government recognise the hon. Member’s intention that the water industry should play its role in achieving targets set under the Bill, particularly in the priority area of water, but I do not believe that the new clause is necessary, given the legislative requirement to achieve long-term environmental targets.
Clause 4 will place the Secretary of State under a duty to ensure that the targets set under clause 1 are met. At least every five years, the Government must review their environmental improvement plan and, as part of that, must consider whether further measures are needed to achieve its targets. The Government must also periodically review its long-term targets set under the Bill, alongside other statutory environmental targets, to consider whether meeting them collectively would deliver significant environmental improvement in England.
In addition, both the Secretary of State and Ofwat are already placed under environmental duties by section 3 of the Water Industry Act 1991, which was referred to by the hon. Member. Section 2A of the Water Industry Act 1991 enables the Secretary of State to set out strategic priorities and objectives for Ofwat, which we have already heard about, as it relates to water companies, wholly or mainly in England, through a strategic policy statement. In preparing that statement, the Secretary of State must already have regard to environmental matters. In future statements, those matters could include targets set under the Environment Bill.
The existing legislative framework, together with provisions in the Bill, are therefore sufficient to ensure that targets, including water targets, will be achieved. While the duty to achieve targets rests with central Government, of course public authorities, including regulators, will have their role to play. As I have pointed out, the legislative framework already in place, plus the provisions in the Bill, should drive us towards ensuring that targets will be achieved. Therefore, I ask the hon. Member for Southampton, Test to withdraw the new clause.
Dr Whitehead
The new clause specifically talks about targets, and in the 1991 Act targets did not exist. While it is true that there are general environmental obligations in that Act, they do not relate to the Bill’s aims in terms of its targets. We have already discussed that. The Minister implies that it is more than conceivable that the general framework relating to environmental considerations could be nudged towards targets, when those are in. To some extent, it is a question of looking at whether Ofwat is doing the right thing, as those targets come in.
Rebecca Pow
There are other areas that will help towards this. We need a whole range of levers to meet the targets, but the targets will be set through the Environment Bill. Thinking is already going on about the relevant targets for water and they are priorities for me, so we are moving on that.
A river-based management planning process, which the Environment Agency is currently revising, will also be a key measure and stage in identifying some of the other levers that will be needed to complement the powers over the regulatory stuff, as well as the targets in the Bill. Does the hon. Gentleman agree?
Dr Whitehead
Since I have only just heard that, I am not sure I can completely agree with it. The Minister is suggesting that there is a mesh of things there already, which could lead towards moves unpinning the targets. I hope the Minister is right about that process. I am not absolutely sure that they are as strong as we might like them to be in terms of what the new clause suggests, but I am sure that the Minister would be able to review that position, if it turns out that, once those targets are set, the mesh is not strong enough to impel those regulators in the direction that should be taken.
On that basis, and with confidence in the Minister’s powers of persuasion for future arrangements, I beg to ask leave to withdraw the clause.
Clause, by leave, withdrawn.
New Clause 15
Reservoirs: flood risk
“(1) The Secretary of State must make regulations to grant the Environment Agency additional powers to require water companies and other connected agencies to manage reservoirs to mitigate flood risk.
(2) Regulations under this section are subject to the affirmative procedure.”—(Fleur Anderson.)
Brought up, and read the First time.
Fleur Anderson
I beg to move, That the clause be read a Second time.
I speak as a representative of a constituency that is no stranger to flooding. In Putney, we regularly have very high tides along the river. There is even a “high tide club” of car drivers who had not realised that the water was going to come, and found themselves water logged and stranded. People love to go and take photos of them, but it is not very good for the drivers.
I rise to speak in favour of the new clause, which has an unusual range of support—perhaps it will be the first that attracts the support of the whole Committee. I hope that all Committee members have noticed that it has the support of the Conservative hon. Members for Colne Valley (Jason McCartney), for Shipley (Philip Davies) and for Calder Valley (Craig Whittaker) and the SNP hon. Member for Falkirk (John Mc Nally), alongside my hon. Friends the Members for Bristol East (Kerry McCarthy), for Leeds North West and for Halifax (Holly Lynch). I pay tribute to my hon. Friend the Member for Halifax for all the work she has done championing the use of reservoirs and reservoirs management in mitigating flood risk for communities.
This Environment Bill will mean more collaboration between water companies to deliver the infrastructure we need and ensure that we have clean and plentiful water, now and for decades to come. That is in the bag. This new clause takes the Bill further in strengthening the powers of the Environment Agency to manage reservoirs to mitigate flood risks.
My hon. Friend the Member for Halifax introduced a private Member’s Bill on this issue last year, as a result of many years of conversations and learning between agencies, including the Environment Agency, water companies and local authorities for the area of Calderdale, about what will really help to stop communities being at risk from flooding.
Currently, the legislation that underpins water companies and their regulation has a focus on mitigating drought risk rather than flood risk.
The new clause seeks to redress the balance, as is only appropriate. Reservoir management is vital to mitigation of the damage and havoc that floods can wreak on communities such as those in Calderdale, and trials of flood management are already under way in such areas as Thirlmere in Cumbria and the reservoirs in the upper Don valley. We know that it will affect reservoirs across Wales and Scotland, as well as Wessex in England.
Ruth Jones
It is a pleasure to speak in support of new clause 15 and to follow my hon. Friend the Member for Putney, who made so many powerful points in her speech.
I want to start by paying tribute to my hon. Friend the Member for Halifax, who has long campaigned for action to protect communities vulnerable to flooding and for the Government to act to mitigate the risk of flooding in her constituency and across England.
She has been joined by a number of Members, including my hon. Friend the Member for Barnsley East (Stephanie Peacock), who I know supports the action to which the new clause would give effect.
On 1 May 2019, the Opposition forced the Government to agree to the UK Parliament becoming the first in the world to declare an environment and climate emergency. It was the right thing to do, and that declaration and the necessary action to tackle the emergency have underlined every word uttered by the Opposition in Committee and, importantly, influenced every single amendment and new clause. Earlier this year, we saw storms Cara, Dennis and Jorge demonstrate the reality of the climate crisis and showed that more extreme weather will happen more often and with devastating consequences for jobs, lives and communities. I saw the impact water damage can have on communities. Newport West itself had minimal damage, but we saw considerable flooding in our parks and green spaces. Sadly, other parts of south Wales were severely impacted—the Rhondda Cynon Taf area in south Wales was the scene of 25% of the UK total of homes damaged by the floods in early 2020—and there was also significant damage in places such as Shrewsbury and other small towns on the banks of the River Severn. So this is real. It is important that we get to grips with the dangers the water poses and look to adopt a policy of prevention, because that is better than cure.
I am deeply concerned by the deep, long-term cuts to Natural England and the Environment Agency that have seriously undermined their ability to tackle the environment crisis and deal with the impact of the climate emergency. That is important to note, because new clause 15 seeks to enhance the powers and reach of the Environment Agency, and we cannot do that without acknowledging the huge hit to its finances, abilities and reputation inflicted by the Government. The new clause is a focused, clear and coherent attempt at mitigating risk, but would also show that the House is determined to respond to the climate crisis, as well as to lead our way out of the many problems caused by water damage and flooding.
The amount of homes at risk of flooding has more than doubled since 2013, reaching an approximate total of 85,000 homes, so we need a joined-up approach across regional water authorities, local government and regulators to provide a single flood plan for an area to manage flood risk and better co-ordinate the response to flooding. That is why the new clause is important. It is about more than just preventing flooding from reservoirs: it should look to identify opportunities where existing and proposed reservoirs could be used to provide flood storage capacity and other benefits.
The damage caused by water has destroyed lines and, in some devastating situations, has taken lives too. This afternoon, we need to make sure that the new clause passes, because I am sure the Government share our ambition to ensure that this is enshrined in law.
Richard Graham
I rise very briefly, to my Whip’s dismay, to comment because the points raised by the hon. Member for Newport West have a lot of merit to them, as the Minister will agree. In particular, the hon. Member is not far away from the same river that has frequently flooded my own city of Gloucester, most notably in 2007. It is worth noting that we do have something called the Severn Partnership, which brings together the MPs the whole way along the river—around 40 of us—to work very closely with, for example, Shropshire County Council, the Environment Agency and other important stakeholders. Indeed, it is very important that it is a cross-border partnership, talking closely with colleagues in Wales and the authorities there.
The key point, which I am sure the Minister will touch on, is that I am not convinced the Secretary of State needs to make regulations granting the Environment Agency these additional powers. However, I do think that it is incredibly important for the Secretary of State, and his or her Ministers—the Minister in her place has already done this—to show huge commitment to encouraging and working with all those partners in order to resolve a fundamental problem in this country, which is that half of it has too much water and has floods, and the other half has too little and has droughts. If we could store water high up, in the Welsh or Shropshire hills, and avoid flooding in places such as Gloucester, we could then transfer it by pipe all the way down to Thames Water, and make a turn at the same time, which would be good news for all concerned. I am sure that the Minister will explain why she agrees with the principle but does not necessarily see the point of the amendment.
Rebecca Pow
I thank all hon. Members who have contributed to the debate, and particularly the hon. Member for Putney for sharing her experiences of flooding. Clearly, my sympathies lie with anyone who has experienced flooding. I saw it for myself at first hand when the Somerset levels flooded.
I want to reassure the Committee that flood risk management is a top priority for this Government. I fully recognise the desire to look at all the options, but this Bill is not the place for new flood management legislation. There are currently over 200 reservoirs operated by the Environment Agency that are used for flood risk management, and that are deliberately kept low in order to maximise the amount of rainwater they can store.
Water company reservoirs have a different purpose and play a significant role in ensuring that we have ready access to water whenever we want and need it. Indeed, water companies have statutory duties, enforceable by Ofwat and the Secretary of State, to maintain secure water supplies, under the Water Industry Act 1991. That is a key point to highlight, because the security of water is so essential. This primary purpose of water companies must be considered first, before any additional duties are placed on them, even if those duties would help with flood risk management.
However, there is nothing to stop a water company using its reservoirs for flood risk management purposes and as a risk management authority. Under the Flood and Water Management Act 2010, water companies have a duty to co-operate with all other risk management authorities, including the Environment Agency. I am aware that some water companies across the north of England have undertaken trials to explore how and where this approach might offer the most benefits. Those trials have shown some positive results, but they have also identified some risks, such as prolonged dry weather, which need to be fully understood.
We should not forget that not many months ago we were facing a potential drought in the north-west, and everyone was on the phone to the water Minister. That was exacerbated by unusually high demands for water, because of the hot weather and changes in people’s behaviour and routines during the pandemic, with more people using hosepipes to fill paddling pools, wash their cars and water their gardens. Similarly, in the summer of 2018 the country dealt with very dry and warm weather, with water companies experiencing high demand. We must pay as much attention to the problem of too little water as we do to too much. Indeed, as the hon. Member for Newport West highlighted, we should expect more frequent extremes of weather as a result of climate change, so that all impacts on this situation.
There is a formal agreement between the Environment Agency and Yorkshire Water in relation to Gorpley reservoir, which demonstrates that, through effective partnership working, such agreements between the different water bodies and organisations can be secured locally. I therefore believe that local agreements and partnership working form the most appropriate approach. My hon. Friend the Member for Gloucester highlighted the Severn Partnership, which involves a whole range of bodies working together, including local authorities and all the MPs representing constituencies up and down the valley. That is proving to be something of a model in driving forward the whole issue of water infrastructure, how to get water from A to B, and how to deal with the demand. That has been a voluntary arrangement.
As I have said, flood risk is a top priority for the Government. We have published our flood and coastal erosion risk management policy statement, which sets out our long-term ambition to create a nation that is more resilient to flood and coastal erosion risk.
The hon. Member for Newport West touched on funding. From 2021, the Government will double investment in flooding to £5.2 billion in the next six-year capital investment programme for flood defences. That investment will better protect 336,000 properties from flooding. Additional funding of £200 million over six years will help 25 local areas to take forward some much wider innovative approaches to improve flood resilience and coastal erosion. That touches on the whole issue of water supply.
Fleur Anderson
I thank the Minister for all those points and for her impassioned argument in favour of the new clause. The change in water use under covid has been recognised. It has been seen in London, where fewer people are working in the city and more are working at home. Better powers granted under the Bill, and local management plans, would make it possible to respond to those changes.
The Gorpley reservoir partnership is a great model of how to work together, as is the one in Calderdale that led to a private Member’s Bill last year and to this new clause. The new clause seeks only to put into legislation what is seen to be good practice. This is a top priority of the Government, so it should be in the Bill. Why would it not be? I absolutely agree that the security of water is very important, but we are asking for balance with flood mitigation.
The new clause would give specific powers to the Environment Agency and would provide joined-up legislation across the Government. The Minister has talked about the top priority of flood mitigation; the new clause balances that with the top priority of a world-leading Environment Bill. This is the right place for the new clause, so I seek to divide the Committee on the motion.
Ruth Jones
I beg to move, That the clause be read a Second time.
I rise to speak to new clause 16 in my name and those of my hon. Friends the Members for Southampton, Test, for Cambridge, for Erith and Thamesmead (Abena Oppong-Asare), for Bristol West (Thangam Debbonaire) and for Brighton, Kemptown (Lloyd Russell-Moyle). The new clause is a specific and targeted addition to the Bill, and I do not intend to speak on it for long.
As colleagues will know from our recent discussions on waste and recycling, it is important that we act as comprehensively as possible and that we show real leadership on these important issues. For us to take these matters seriously—actually and theoretically—we need the Bill, when it leaves Committee, to be made up of a comprehensive plan backed by a coherent agenda that will deliver real results now and into the future. I hope the Minister recognises that the new clause will do nothing other than enhance the scope and reach of the Bill, taking it a great deal closer to being fit for purpose.
The Minister and Government Back Benchers will know that we have not sought to divide the Committee for the sake of it in recent weeks. Truth be told, all our amendments are worthy of a vote and of being added to the Bill. Alas, the Minister and her loyal colleagues have put paid to any chance of those additions. I wish to press new clause 16 to a vote, however, for a number of reasons, the most important being that people out there need to know that although efforts to make recycling fit for purpose, to tackle waste and to fight the climate emergency head on in England were on the table, they were all rejected. I would be delighted if the Minister rose to inform the Committee that she will accept the new clause and, even at this late stage, I urge her to scrap her notes and do just that.
Rebecca Pow
The hon. Lady will be pleased to know that I will not be recycling my notes just yet. I thank her for tabling new clause 16, which seeks to ensure that the Secretary of State must take account of the requirements of the waste hierarchy when considering all matters relating to waste and resource efficiency. Organisations that produce or manage waste in England and Wales are already legally obliged to comply with the waste hierarchy duty, as set out in the Waste (England and Wales) Regulations 2011—the hon. Lady is perhaps not aware of that.
The Environment Agency is responsible for enforcing that in England. Government policy in this area has, for a long time, been developed with the principles of the waste hierarchy in mind, and that commitment was affirmed in our resources and waste strategy in 2018—an excellent strategy that I urge the hon. Lady to read—which sets out our plans to move away from an inefficient “take, make, use, throw away” model, to a more circular economy that keeps products and materials in use for as long as possible. We discussed that at length in many of the earlier waste clauses.
We intend to ensure that waste is prevented in the first place and that we recycle as much as possible once waste is created. Measures in the Bill have been developed with the waste hierarchy as our guiding light. At the top of the hierarchy, clause 50 and schedule 7 allow for regulations to be made about resource efficiency requirements, to drive a shift in the market towards products that last longer and can be reused and repaired more easily, as well as towards those that can be recycled. Those regulations would be used, for example, to require fitted furniture to be easy to disassemble and reassemble, or for parts to be easily repaired or replaced. The hon. Lady is absolutely right: the public are really welcoming of such measures.
Our producer responsibility powers in clause 47 and schedule 4 can be used to help to prevent products or materials from becoming waste. By imposing obligations on food producers, for example, we can hold them responsible for surplus food and food waste. That is a huge step forward: collecting food waste but also urging people not to create so much waste in the first place.
Our other producer responsibility powers in clause 48 and schedule 5 will also help prevent waste by making producers accountable for the full cost of managing their products at the end of life. I honestly believe that that will be a game-changer in terms of the amount of waste created. As I have mentioned before, that will encourage businesses to reduce the amount of packaging that they use and to use reusable and recyclable packaging, so that less waste is produced.
Clause 54 will ensure that we make recycling simpler for households, by stipulating a consistent set of materials that must be collected from all households and businesses in England, which, as I have just mentioned, will include food waste. I can therefore reassure the hon. Lady that we do not need the new clause, having touched on everything that she raised. She said that she intended to press the new clause to a vote, but surely I have convinced her that that really is not necessary.
Ruth Jones
I thank the Minister for those helpful comments and for raising the awareness of the importance of the 2011 legislation and the other relevant legislation which, of course, is compulsory bedtime reading on this side of the Committee.
We have discussed at length the importance of the cyclical nature of recycling, but it is so important that we begin to break it down. As the Minister rightly said, it is not just about the end product, but the starting point and how we ensure that products, when they are first created or built, are designed so that they can be fully recycled. My hon. Friend the Member for Southampton, Test spent a great deal of time explaining how car parts can be broken down and used again in different ways, and we all took that on board.
Rebecca Pow
Perhaps the hon. Lady did not register the producer responsibility, which will put the onus on the person who invents and designs the product in the first place. They will remain responsible for the cost of that product through its life and where it ends up, so that will make them think, “Goodness, I don’t want to be responsible for that, so I’ll think about how I design it in the first place,” and that will reduce waste. Maybe she missed that.
Ruth Jones
I did not miss it, and I am perfectly clear about the producer responsibility. However, I am also clear on the need for public co-operation, because all recycling and waste management begins at home. We must ensure that we have the public on board. Although we are talking about the waste hierarchy, we need to ensure that the public out there in the real world understand fully what is expected of them. We need to make it easy for them, which means that they must have clear instructions—hopefully universal instructions rather than different authorities doing different things, confusing people. On that basis, I am sorry to disappoint the Minister, but I am going to press this new clause to a vote.
Question put, That the clause be read a Second time.
The Chair
With this it will be convenient to discuss new clause 19—Duty to prepare a Tree Strategy for England—
“(1) The Government must prepare a Tree Strategy for England as set out in subsection (2) and (3).
(2) The strategy must set out the Government’s vision, objectives, priorities and policies for trees in England including individual trees, woodland and forestry, and may set out other matters with respect to the promotion of sustainable management of trees in these contexts.
(3) The Tree Strategy for England must include the Government’s targets and interim targets with respect to—
(a) the percentage of England under tree cover;
(b) hectares of new native woodland creation achieved by tree planting;
(c) hectares of new native woodland creation achieved by natural regeneration;
(d) the percentage of native woodland in favourable ecological condition; and
(e) hectares of Plantation on Ancient Woodland (PAWS) undergoing restoration.
(4) The Government must keep the Tree Strategy for England under review, and may, if they consider it appropriate to do so, revise the strategy.
(5) If the Government has not revised the Tree Strategy for England within the period of 10 years beginning with the day on which the strategy was last published, they must revise the strategy.”
The aim of this new clause is to ensure that the Government prepares a tree strategy for England. It will ensure that the Government has to produce targets for the protection, restoration and expansion of trees and woodland in England.
Dr Whitehead
Hon. Members will recall that we heralded the arrival of this debate on new clauses 17 and 19 a little while ago in our debates, when we drew attention to clause 100, which comes under the strange heading of “Tree felling and planting” because “planting” does not appear in the text of the clause. New clauses 17 and 19 are similar—new clause 17 has more detail in the numbers—and seek to ensure that a proper strategy for tree planting is in place and that that strategy bears some relation to the reality of the numbers that will be required if we are actually to have a real effect on this country’s emissions, particularly our net negative emissions as we go towards our net zero target, which the Minister and I have already mentioned in Committee on several occasions.
We all agreed that we were to move towards a net zero target for emissions by 2050, and trees play an incredibly important part in that net zero target, because they are nature’s almost perfect method of carbon sequestration. Particularly as trees grow from their sapling stage to their mature stage, they have a burst of sequestration. Fortunately for us, that burst of carbon sequestration as the new trees grow exactly coincides with the period ahead of us up to 2050, when we have to get to our net zero target.
Robbie Moore (Keighley) (Con)
Across the whole UK, there are about 17.6 million hectares of productive agricultural land. Does the hon. Gentleman therefore agree that it is about striking the correct balance? With the Prime Minister announcing 30,000 hectares for tree planting annually, does he agree that that will contribute towards reaching the target? It is about striking a balance.
Dr Whitehead
The hon. Gentleman is absolutely right and may well have anticipated my next comments. He referred to his miniature oracle—the mobile phone—to look up the number of hectares in productive use in the UK. In a tree strategy, it is important not to substitute productive land for tree cover if that can be avoided. We must ensure that marginal land, or land that is not in particularly productive use, can be afforested, and that land that is in productive use or has a high yield can continue to operate on that basis. We should not try to sequester land that could be used for other purposes to put trees on.
On the overall target, we must ask ourselves—indeed, the Committee on Climate Change has asked itself—whether it is possible to get that number of trees on the land in the UK, bearing in mind the constraints that the hon. Gentleman mentioned. The answer is yes, absolutely, it is possible. The Forestry Commission and Forest Research have done a lot of research on the amount of marginal land in the UK that could have forest cover without impinging on grade 1 agricultural land, national parks, areas of outstanding natural beauty and so on. The answer is that roughly 5 million hectares are available in England for that sort of activity. There is land available.
A tree strategy would have to take account of the point that the hon. Member for Keighley made about what land was available and how it might be afforested, as well as the incentives that might be needed to do that because a lot of that land is in private ownership and some might be purchased for forestation and made available to the public. Other land could be made available through covenants, which the Minister mentioned. But overall, the purpose would be to ensure forestation that increases overall forest cover while making room for the various things that need to be done on the land up to 2050.
I want to come to the 30,000 hectares, which the hon. Gentleman mentioned and which we have recently heard about in the press. One is not entirely clear what that figure means. A blog from the DEFRA press office on 12 June was headed—I am not sure about the grammar here—“Tree planting on the up in England”. Actually, it talked about tree planting not being particularly on the up in England, because not only have present targets been missed by up to 70% in recent years, but although total new planting in 2019-20 was indeed up, it was only up to 2,330 hectares, which is a tiny proportion of what is required annually to get anywhere near that figure by 2050.
Indeed, the figure very much squeezes the definition of what has been planted by taking into account the total number planted with Government support over the last three financial years and those hectares that the Department thinks have been planted without support—because people like planting trees. It suggests that total new planting, taking into account everything in the UK—Scotland and England as well—comes to about 13,000 hectares altogether. Therefore, even by squeezing the statistics as hard as we can, we still get a pretty low version of that tree planting figure.
Nor is it clear from that press release whether the 30,000 hectares of trees that we hear mentioned is an annual tree planting target or a target up to 2025. It states that
“tree planting in England increased last year but was below the rate needed to reach the manifesto commitment to plant 30,000 hectares of trees across the UK by 2025.”
That is very different from 30,000 a year. If the target is indeed 30,000 a year, that goes some way towards beginning to meet what the Committee on Climate Change has said is the imperative for planting up to 2050, but only halfway. We would probably need to plant about 50,000 to 60,000 hectares a year if we are to reach Committee on Climate Change target.
That is why the new clause sets out targets with particular percentages, because that is the key point: the percentage of land in the UK under woodland or forest cover, now and up to 2050. That is what the target effectively works around. We also need to understand clearly that the target has to be met between Governments, because half of the UK’s new trees were planted in Scotland last year and a substantial amount of the overall UK forest cover target would have to be met there. Therefore, not only would the target have to relate to English planting; it would have to relate to mutual action and discussions between the UK Government and the Scottish Government—and indeed the Welsh Government and the Northern Ireland Assembly—about what is to be done on tree planting in the UK as a whole. As a matter of interest, Wales comes somewhere between Scotland and England in terms of its percentage of forest cover. Northern Ireland is very bad in its forest cover, so there are further areas to be made up in that context.
Fleur Anderson
I feel as though this is the tree strategy support group part two. As my hon. Friend the shadow Minister said, we talked about it in our discussion of clause 100, which was very disappointing. For anyone reading this debate in Hansard, I recommend that they go back and discover the length and breadth of clause 100, which is headed “Tree felling and planting”, but talks only about tree felling.
New clause 19 is specifically about a tree strategy, tree planting and tree conservation. As I said last week, putting an English tree strategy on a statutory footing is key to delivering the commitments in the 25-year environment plan alongside which the Bill sits. My hon. Friend has been through the many reasons why we need this strategy. It is therefore hugely disappointing to those who have a stake in our woodlands—and knowing how much the Minister is a tree person—that the Bill fails to deliver one. There have been no new clauses from the Government to set right this gap in the Bill. In the previous sitting, I heard several Conservative Members rightly praising and waxing lyrical about the Woodland Trust’s work, about which they were very appreciative. Despite their admiration, however, they have seemingly ignored exactly what the Woodland Trust has called for, which is contained in new clause 19; the new clause has the Woodland Trust’s full support.
I note and appreciate what the Minister said last week, namely that the long-awaited and much talked-about tree strategy is under production and will be launched in the spring of 2021. Given how long this Bill Committee seems to be going on, that feels very close. The tree strategy contains what the Government believe are ambitious commitments, and we all look forward to it. I welcome that, and I hope that the Government will listen carefully to the submissions made to their consultation. However, by refusing to give an England tree strategy a statutory footing, the Government risk seriously undermining their progress.
We know that there is a long way to go. Without a provision such as new clause 19, there is no formal way in England to set targets for a tree strategy. The new clause offers the opportunity to correct this, and it will ensure that the England tree strategy has the status it needs to protect, restore and expand trees and woodland in England. It is amazing; there were almost 3,000 submissions to the Government’s consultation from Woodland Trust supporters, and many wanted an England tree strategy to be put on a statutory footing. Supporting the new clause would ensure that their voices were heard and make the strategy’s targets meaningful, binding and much more likely to achieve their effect. The Woodland Trust has said:
“The amendment is strongly consistent with the Environment Bill’s aims of restoring and enhancing green spaces. It also complements the existing tree clauses, and reflects recent legislation in Scotland, important given the UK wide focus on increasing tree cover as part of the UK’s global climate and biodiversity commitments.”
As my hon. Friend the Member for Southampton, Test has outlined, this really is a no-brainer.
We can learn from other countries that have put tree strategies into legislation and reaped the rewards. I have been careful, in looking at the Bill, to find out which other countries have brought in similar Bills. Have they introduced environmental legislation, and what have they learned from it? What good practice do we want to take from countries that have gone before us, with similar legislative and regulatory bodies, and what has not worked out very well for the environment? We do not have time for second chances when it comes to the environment.
I will take one example from Norway. We might think of Norway as a massively tree-covered country that does not need any help, but its 2005 Forestry Act was brought up to date to promote sustainable forest management, taking into consideration important environmental values, wildlife habitat, the storage of carbon and other essential functions of forests. Norway’s 2009 Nature Diversity Act ensured that forestry regulation complied with the legislation contained in that Act. Norway put forestry regulation on a statutory footing. It was probably littered with “musts”, and had hardly any “mays”—I can picture it now.
The success of Norway’s model and accompanying legislation speaks for itself. In 1920, Norwegian forests consisted of approximately 300 million cubic metres of standing timber. Today, the volume of standing timber is soon expected to exceed 1 billion cubic metres. It was on a downward trajectory, but it has tripled since the second world war, enhanced by the legislation that Norway has put in on a statutory footing.
New clause 19 is a “no regrets” commitment. I urge colleagues to reconsider their opposition to it, to stand up for trees and to stand up for the ambitious scale of tree planting and conservation that we need to meet our carbon targets, that we need for biodiversity and our own mental health, and that the public overwhelmingly want.
Rebecca Pow
I would like to think that the shadow Minister was going to branch out and not press this new clause to a Division.
I share everybody’s desire to deliver on a tree-planting commitment. The Government are mindful of that and are not wasting time. We are working to increase planting across the UK to 30,000 hectares per year by 2025—the figure which has been quoted and which is in line with the CCC recommendations. We are taking those recommendations extremely seriously. Forestry is devolved, so we are working closely with the devolved Administrations to meet that commitment. To increase planting in England, we have announced a £640 million nature for climate fund. In our England tree strategy, which will be published in early 2021, we will set out further plans for how a lot of the money will be used to fuel all the tree planting we need.
New clause 17 would set a UK-wide target, but as I just said, forestry is devolved, so the Bill is not the place to establish targets for the UK overall. The shadow Minister quoted some statistics—from a blog, I think—about 2,300 hectares of planting. That was an England-only figure for 2019; it was part of UK-wide planting of 13,400 hectares. Our manifesto commitment is to a UK goal, but the Bill is not the place to establish UK targets.
The new clause also proposes a specific England-only target, but significant woodland cover targets in legislation would have a major impact on land. Ours is a small island and therefore we have a limited resource for planting. It is not helpful to make comparisons with a country such as France, which is five times the size of the UK and has a much smaller population. I applaud what the Norwegians have done, but they have terrain that is much more suited to growing trees and, to take up the point made by my hon. Friend the Member for Keighley, they have fewer choices to make about prime agricultural land. We must and will strike a careful balance on where we put the trees.
Extending our 2025 commitment to 2050 would result in 17% tree cover, which is an enormous increase, but the new clause proposes 19%, which would require us to think seriously about the possible extent of woodland cover and how it would affect our prime agricultural land and land for housing and so on. I am sure the shadow Minister is completely aware of that. In a policy paper this summer, we set out our intention to explore whether legislative tree-planting targets would be appropriate under the target-setting procedure in the Bill. Before that process is complete, we should not set specific targets in legislation. Setting potentially unachievable targets, as proposed in the new clause, could lead to trees being planted in the wrong places for the wrong reasons, which could harm food production and sensitive habitats, or even increase carbon emissions. There are lots of things to consider.
New clause 19 proposes a duty to prepare a tree strategy for England and sub-sectoral targets. We know that a major increase in planting is needed—nobody denies that, and it is a manifesto commitment. That is why we have launched the consultation on a new England tree strategy. The strategy will be published in 2021; it will set out a clear vision, objectives and policies for trees in England, covering trees, woodlands and forests. There was great involvement in the consultation and some interesting ideas and proposals were advanced.
Daniel Zeichner
I appreciate the Minister’s great enthusiasm for trees. Will she join me in supporting and celebrating tree charter day, which is this Saturday, and congratulate the young plantscapers of Mayfield Primary School in Cambridge, who created a tree hanging especially for me to celebrate it?
Rebecca Pow
Of course I would like to celebrate that. I commend the school for its work. It is a brilliant thing to engage young people in nature and everything about trees, including ancient trees. That can only bring benefits to people’s lives. Well done to them for engaging.
Dr Whitehead
The Minister, as she has managed to do on several occasions, presents a powerful speech in favour of a proposition from the Opposition, and then says, “Well, it is not necessary and should not be supported.”
We can all agree that the Minister is a powerful advocate of trees; she has been for a long time and I do not doubt for a minute that she will continue to be so. I hope she appreciates that that is how I characterise myself. However, she also said—we are to take this on trust—that the Government are undertaking a review of trees. I hope they are, and that they will in due course produce something that will, among other things, lead to a considerable increase in tree planting in the way that I have described and the way in which she would advocate. However, as my hon. Friend the Member for Putney said, none of that is statutory. Now is absolutely the right time to make sure that there is a statutory provision to frame the way forward.
I urge the Government to accept the provisions of new clause 17, which sets out the sort of targets we should adopt. They could be incorporated into a statutory strategy that the Government might produce. I think we are creeping towards agreement not only on how this should be done, but on the imperative to achieve or get close to those sorts of targets—the sort of thing the CCC was talking about—to ensure that we really make a difference as far as trees in the UK are concerned, subject to all the considerations that the Minister mentioned.
We want to ensure that any target is achieved in a sustainable way, without prejudice to other forms of land use in the UK, and in this case in England. Indeed, the Committee on Climate Change discussed in its report what sort of land uses should be maintained in the UK. It was very clear that we should not do something that undermines something else, but should try to move forward with a unified strategy that gives room for crop land, grassland, rough grazing and forestry, and that takes into account the fact that we are an densely populated country—one that, I would add, has succeeded in chopping down pretty much every tree in sight over the past 500 years. We have reflected on the change in land use that has come about as a result.
I recall mentioning a little while ago that the New Forest, which is near me, is a changed landscape. It is called the New Forest, but it is actually a substantially non-tree landscape that has been changed by humans over time, and the habitat has changed as a result. In and around the Minister’s constituency, there was a broad swathe of lowland forest and hilltops without trees on them. That is why a number of the dolmens, menhirs and standing stones are in their positions: they were ways of guiding people across forest areas to get to different places because the country was so heavily forested. We have wiped all that out over successive generations.
I do not think it is a case of trying to fit in a few trees to make enough progress on the margins while the rest of the country remains treeless. We need a wholesale project of restoring the tree heritage that Britain once had, while ensuring that that tree heritage can live alongside the other uses that we have brought about. That is a complicated thing to achieve.
Rebecca Pow
Given that the hon. Gentleman wants all this tree planting, does he welcome the great Northumberland forest, which is expanding forestry right across the landscape in the north-east, and the fact that we are kickstarting the planting of the new northern forest with a £5.7 million investment? I think he is agreeing with everything that I have said. We have said that we are ramping up tree planting to meet the advice of the Committee on Climate Change.
The Chair
Perhaps you can answer briefly, Dr Whitehead. It has been quite a long debate so far.
Dr Whitehead
Indeed. Yes, not only do I welcome those forests but I positively embrace the fact that they are being established. When we look at the older midlands forests that have arisen around Sherwood, we can see how more tree plantation can sit in the landscape alongside other uses. That is exactly what is being tried in the northern forest at the moment, so I understand and welcome that.
New clause 19, however, just says, “Get on with a tree strategy. You can put all these targets in it, but it has to be statutory so that we make sure it works properly.” I do not wish to press new clause 17 to a Division, because I accept that it includes targets that, although I think they are very important, the Minister may think might be mediated by other factors. However, it is important that we put on record that there should be a statutory tree target in the Bill and that we should get on with that strategy now. I will therefore put new clause 19 to a Division, to test whether the Committee agrees with that notion. I beg to ask leave to withdraw the motion.
Clause, by leave, withdrawn.
New Clause 18
Policy statement on environmental principles: effect
“When exercising any function of a public nature that could affect the achievement of—
(a) any targets set under sections 1 or 2;
(b) interim targets set under section 10; or
(c) any other targets that meet the conditions in section 6(8)
public authorities must act compatibly with and, where appropriate, contribute to the achievement of those targets and the implementation of the environmental improvement plan.”.—(Daniel Zeichner.)
Brought up, and read the First time.
Daniel Zeichner
I beg to move, That the clause be read a Second time.
After the drama and passion of the trees debate, I am happy to inform you, Mr Gray, that the next few new clauses are a touch drier and return to issues of environmental law and the philosophical underpinnings of the Bill. They are important none the less.
New clause 18 would introduce a new duty on all public authorities to ensure that all levels and arms of government play their part in achieving the environmental targets. The new clause would give the air quality, water, waste and biodiversity targets we established at the outset real relevance and meaningful drive from day one, and it would bolster the effects of clause 4. Our concern is that, as it stands, the Bill does not require or sufficiently clarify the need for action across all levels of government and other public bodies.
I will give one example, on air quality. Although part 4 of the Bill provides welcome new powers for local authorities and some useful clarification of their existing responsibilities, it does not do enough to ensure that a comprehensive approach is taken across all levels of public decision making; in fact, it rather risks putting the burden of responsibility solely on local authorities. As we know, air pollution does not respect boundaries, and action by local authorities alone will not be enough to tackle all the sources of air pollution. The new clause would help to spread that burden across central and local government and other significant public bodies in this space, requiring them to contribute to providing solutions on a national and regional scale. We fear that, without something like this, progress will be too slow. The same would be true of the other priority areas as well.
We will not push the new clause to a Division, you will be pleased to hear, Mr Gray, but we would like to hear what the Minister has to say about how those targets can be achieved, which we all want, without this kind of wider environmental duty.
Rebecca Pow
The legal obligation to achieve the long-term target set by central Government properly rests with central Government, and it is for central Government to create the right natural policy frameworks in which other public bodies can best contribute to our environmental goals alongside their own priorities and legal obligations. We will report annually on the implementation of the environmental improvement plan, on improvements in the natural environment and on progress towards the targets, which will provide an opportunity to identify how these national policy frameworks are contributing to environmental improvement. The Office for Environmental Protection will respond to the Government’s annual report with its own independent report. That covers everything that I have been pointing out from the beginning about the whole process of monitoring and reporting.
Where necessary, the Government could change these national policy frameworks, as we are doing through the Bill by making improvements to the local air quality management framework; the hon. Gentleman touched on air, but this measure, already outlined, will do exactly that. Changes would need to be made, following proper consultation with affected bodies, having due regard to the environmental principles policy statement. Local authorities, as I said, have an important role to play in delivering environmental improvement, including through some of the measures in the Bill. Long-term, legally binding targets will set the trajectory for driving long-term improvements in our natural environment.
Public authorities, in particular local authorities, have an important role to play in delivering these improvements, and measures in the Bill will help to drive that action on the ground. For example, the nature section of the Bill strengthens the existing biodiversity duty under the Natural Environment and Rural Communities Act 2006. Public authorities will have to act to conserve and enhance biodiversity, while taking account of local nature recovery strategies. We have covered all that in great detail. There will be a groundswell from the bottom up; local authorities will be hugely involved.
Clear accountability at central Government level provides clarity and avoids additional burdens on hard-working public bodies. Were the new clause to be accepted, the shadow Minister would be placing many more burdens on local authorities. We are at pains to make sure that we do not overburden them, but what they do is an essential part of the whole system, with the Government up there at the top, being held to account and playing their role. I think the hon. Member for Cambridge said he was not going to press the clause. If that is the case, I thank him for it.
Daniel Zeichner
The Minister is right; we are not going to press the motion, but I would say that I think we are repeating some of the arguments we had on earlier clauses. We are somewhat sceptical that the Minister’s noble hopes will be realised. I entirely agree that the Government are expecting a lot from local authorities, but we think that it is not only local authorities that will have to step up. I hear what the Minister says and we shall see how it plays out. I beg to ask leave to withdraw the motion.
Clause, by leave, withdrawn.
New Clause 19
Duty to prepare a Tree Strategy for England
“(1) The Government must prepare a Tree Strategy for England as set out in subsection (2) and (3).
(2) The strategy must set out the Government’s vision, objectives, priorities and policies for trees in England including individual trees, woodland and forestry, and may set out other matters with respect to the promotion of sustainable management of trees in these contexts.
(3) The Tree Strategy for England must include the Government’s targets and interim targets with respect to—
(a) the percentage of England under tree cover;
(b) hectares of new native woodland creation achieved by tree planting;
(c) hectares of new native woodland creation achieved by natural regeneration;
(d) the percentage of native woodland in favourable ecological condition; and
(e) hectares of Plantation on Ancient Woodland (PAWS) undergoing restoration.
(4) The Government must keep the Tree Strategy for England under review, and may, if they consider it appropriate to do so, revise the strategy.
(5) If the Government has not revised the Tree Strategy for England within the period of 10 years beginning with the day on which the strategy was last published, they must revise the strategy.”.—(Dr Whitehead.)
The aim of this new clause is to ensure that the Government prepares a tree strategy for England. It will ensure that the Government has to produce targets for the protection, restoration and expansion of trees and woodland in England.”
Brought up, and read the First time.
Question put, That the clause be read a Second time:—
Daniel Zeichner
I beg to move, That the clause be read a Second time.
After the Government’s majority was slashed at the last vote, I am hugely excited. If only there were a Liberal Democrat bar chart to hand, we could see the swing. I am quite excited about new clause 20 and I am glad the Committee has come back to life. I am so sorry that some hon. Members failed to witness the excitement.
The new clause brings us back to the discussions that the Minister and I had about the state of nature. We think that we need to turn the Government’s rhetoric into reality by setting out a target for reversing the decline of nature, in time to play a leadership role as we head to COP15. COP15 is delayed—it would have been happening about now—and is now set for late spring next year, in Kunming, China. The hope is for a new set of global goals for 2030 to replace the 2020 Aichi biodiversity targets, which, as we all know, the world has sadly not done too well on.
I think we can all agree it is vital that the next decade sees much more success than we have managed collectively to achieve in the recent past. As a driving force of the Leaders’ Pledge for Nature, which commits to reversing biodiversity loss by 2030, the UK is in a really good place to be a key advocate for leading on these matters. The Bill contains a framework for setting long-term legally binding targets, but it seems to us that the timeframe does not sit comfortably with the 2030 goal. New clause 20 would require the setting of a state-of-nature target that takes account of what needs to be done domestically to contribute to improving the global state of nature.
Looking back at the document on environmental targets from late August, we see that, interesting reading though much of it is, it seems almost like at discursive paper. In my city we are familiar with interesting, discursive papers, but this goes back to the may/must argument. There are plenty of fine intentions, such as:
“Natural England is currently working on a programme to improve monitoring of our protected sites”
That is great, but it is not necessarily mean that it is doing something.
The paper also states:
“A legally binding target for Marine Protected Areas could complement and bolster this on-going work.”
And, sadly:
“Trends show that overall, species populations have declined over the last 40 years. Whilst these losses have slowed down, there is still work to do.”
That simply describes a state of decline.
The document continues:
“Our most comprehensive species data is about the abundance of species. Using this, we could set a target”.
They could set a target, or they might not. It continues:
“It will be difficult to predict how species populations will change over time—including as a result of implementing new policies—as we consider whether to develop a target or targets for species.”
That is all worthy stuff, but it is not the stuff of leadership.
On habitat restoration, the paper states that
“the Environment Bill lays the foundation for the Nature Recovery Network that will complement plans for a new Environmental Land Management scheme.”
Again, that is a description of an aspiration. Frankly, we know how difficult it will be to do some of this stuff. The document states:
“We are currently developing an indicator to directly monitor.”
As I say, it is all aspirational stuff and, I am afraid, all too vague.
The section on nature finishes by saying:
“We are currently undertaking the following steps to increase planting in England”—
this goes back to trees—
“developing a new England Tree Strategy…developing plans to deploy the £640 million Nature for Climate Fund”.
That is all part of a wish list, but it really does not add up to a leadership strategy.
We think the strategy needs to be much stronger and more ambitious. New clause 20 would signal the intention to set a target in domestic legislation. That would allow us, in advance of next year’s very important international summit, to set a lead such that we would truly be able to say that we were world leading. Frankly, that section of the paper seems a bit fluffy to me.
Rebecca Pow
As the hon. Gentleman knows, the UK is committed to playing a leading role in developing an ambitious and transformative post-2020 framework for global biodiversity under the convention on biological diversity. The UK Government already support a global target to protect at least 30% of the global ocean by 2030, and 32 countries have joined our global ocean alliance in support of the target. We really are forging ahead on this issue. At the end of September, the Prime Minister committed to extend that commitment to land—indeed, the hon. Gentleman referred to that.
Together with the European Commission and Costa Rica, the UK was instrumental in crafting the leaders’ pledge for nature, a leader-level voluntary declaration that was launched at the United Nations General Assembly on 28 October. The pledge sets out 10 urgent actions to put biodiversity on a path to recovery by 2030. If that is not ambitious, I do not know what is.
Our international aims on biodiversity must be underpinned by credible action at home—the hon. Gentleman is absolutely right about that. Indeed, it is something that I keep saying as the Minister. Following agreement of the post-2020 framework, we will publish a new strategy for nature in England that will outline how we will implement the CBD’s new global targets domestically and meet our 25-year environmental goals for nature at the same time. We recognise the importance of setting legally binding targets to support our ambitions. As the hon. Gentleman knows, the Bill includes a requirement to set at least one long-term, legally binding target in relation to biodiversity, as well as targets for air quality, water and resource efficiency, and waste reduction. Our recently published policy paper on environmental targets sets out the areas under consideration for targets, including on species and habitats. So there could and will undoubtedly be myriad targets in future years that will affect the space of biodiversity to which he refers.
The Government will determine the specific areas in which targets will be set via the robust and transparent target-setting, monitoring and reporting process that the Bill sets in train. Advice from independent experts will be sought during the target-setting process, and stakeholders and the public will also have an opportunity to provide input as to what they think is the right level. Targets will be based on scientifically credible evidence, as well as economic analysis. We do not want to prejudge the specific targets that will emerge from this process. Indeed, scientists and academics very much support this thinking and way of operating. I have made it clear that there is enough in the Bill without the proposed new clause, so I ask the hon. Gentleman—who, as ever, makes an eloquent point—to withdraw it.
Daniel Zeichner
On this occasion, I am afraid I will have to disappoint. The Minister has wheeled out a veritable forest of aspirational opportunities, but we think that the Bill needs to be clearer in its ambition. If that were the case, we would be in a stronger position going into COP26 next year. I suspect this debate will continue over the coming months, but in the meantime we would like to put our position on the record by forcing a Division and—who knows?—perhaps a great victory.
Question put, That the clause be read a Second time.
Dr Whitehead
I beg to move, That the clause be read a Second time.
The proposed new clause concerns collaboration with the various devolved authorities and Governments of the UK. It sets out a number of things that need to be done, but I suspect the Minister will say that they are already in the Bill. I hope she will give us good reasons for why what is in the Bill allows for that co-operation to take place. If she can do that, I am sure this particular proposed new clause will not go to a vote.
Rebecca Pow
I thank the hon. Gentleman for giving me the opportunity to reiterate this Government’s strong commitment to a strong Union and to strong co-operation among the four nations in respect of the devolution settlements. How the OEP and equivalent bodies in the devolved Administrations co-operate will be a prime example of that. Co-operation between the OEP and equivalent devolved bodies is fundamental to ensuring that cross-border issues and matters that concern both devolved and reserved environmental law are dealt with effectively. However, the proposed new clause would not achieve this desirable objective.
First, the proposed new clause would place an absolute, unilateral duty on the OEP to co-operate with equivalent bodies in devolved Administrations. That would be an imbalanced and disproportionate approach, particularly as the specifics of environmental governance arrangements are yet to be confirmed across the Union. Secondly, effective co-operation requires flexibility and agency, something that the proposed new clause’s over-specific definition of co-operation would prevent. The Bill already requires the OEP to consult devolved environmental bodies on environmental governance matters that would be of relevance to them. That is covered and I hope the shadow Minister will welcome that.
Dr Whitehead
I am sure the Minister will thank us for giving her the opportunity to read out that pellucid note, which puts on the record the intention to, through the OEP, collaborate fully with the Governments of the UK. I therefore beg to ask leave to withdraw the motion.
Clause, by leave, withdrawn.
New Clause 22
Application of environmental principles
“(1) A public authority must apply the environmental principles in section 16 in the exercise of its functions.
(2) In this section ‘public authority’ has the same meaning as in section 28(3).”—(Daniel Zeichner.)
This new clause requires public authorities to apply the environmental principles.
Brought up, and read the First time.
Daniel Zeichner
I beg to move, That the clause be read a Second time.
New clause 22 takes us back almost to the beginning of our deliberations and to environmental principles. The December 2018 policy statement on environmental principles set out five important principles in law: integration, prevention, precaution, rectification and polluter pays. There has been wide discussion in this area, including a lot of work by the Environmental Audit Committee, which came up with about 55 recommendations. Here we are, at the tail end of our discussions about the Bill, going back to some of those points. Concerns have been raised by environmental lawyers through Greener UK. After all this discussion, their view is that the Bill
“does not yet provide an adequate route to ensuring that those important legal principles fully function to achieve”
the aims set out by the Bill.
This is important because, when matters are tested in court, this is what people will look at. Much more learned people than me have pored over these issues and these are some of the conclusions they have come to. They feel that clauses on environmental principles have not changed much since the December 2018 document. Despite discussions in pre-legislative scrutiny and on Select Committees, the expert conclusion is that the Bill
“does not maintain the legal status of environmental principles as they have come to apply through EU law.”
That is, of course, one of the crunch issues of the entire discussion around the Bill.
I will not go through in detail the fine points that they make, but they do say that
“environmental principles have been binding on all public authorities including in individual administrative decisions. This legal obligation on all public authorities to apply the principles, whenever relevant, will be undermined through the bill.”
That is a strong concern, which reflects our continuing worry that, despite the ambitions, rhetoric and optimism displayed by the Minister, when we dig down into the detail of the Bill, we see that it does not provide the same level of protection that we have enjoyed before. Sadly, that takes us back. I am sure the Minister will disagree, and we will listen to the reasons why, but we will not press this to a Division.
Rebecca Pow
The Government are fully committed to ensuring that environmental protection sits at the heart of the policies that we will bring forward. However, the new clause would place significant—I would say huge—burdens on Government and public authorities, without adding any additional environmental benefit. Moreover, the Government already implement these considerations in other ways. Central Government develop strategic environmental policies and set the strategy and approach for any key decisions taken by public bodies. It, therefore, makes sense for the new environmental principles duty to sit with Ministers.
To use the example of a planning application for a shed, it seems wholly unreasonable for a public authority to be obliged to prove the principles have been considered, when the strategic framework, in such case the national planning policy framework, should embed these expectations. To be clear, strategies set by central Government, such as the NPPF, will have been developed in line with the principles policy statement. Placing a legal duty on Ministers to
“have due regard to the policy statement”,
as we have done in clause 18, enables the provision of clear guidance to Departments to ensure an efficient policy-making process.
The policy statement will set out the details on the application and the interpretation of the principles. This would not be clear if the duty were directly on the principles themselves, as primary legislation cannot go into the necessary detail. In a similar vein, the proposal to alter the environmental principles duty from “have due regard” to “must apply” would be extremely burdensome and would have unintended consequences.
The new clause would also extend the scope of the principles duty from being limited to policy making to covering all functions administered by all public authorities, which would result in a massive, unnecessary burden. The new clause would create a significant additional and excessive burden on public services, while duplicating existing provisions, without any clear environmental benefit or purpose.
I think the hon. Member for Cambridge touched on the lowering of standards relating to the EU. The EU only has principles and it does not have a policy statement to explain how to use them. We have taken a big step further than that and it is much clearer, I would say. I hope that gives this complicated process a bit of clarity. I ask him to withdraw his amendment.
Daniel Zeichner
On this occasion, I am happy to oblige, not least because I suspect we will want to go away and look very carefully at the Minister’s words. I think there is quite an important set of issues here. We are not necessarily convinced that this strengthens our environmental protections. A planning application for a shed was a slightly unfortunate example to give, given that under the proposals in the planning White Paper, there will be whole swathes of the country where no planning application will be needed in future at all. That is exactly the force of our arguments. While we remain concerned, we will not pursue it any further this evening, because 20 minutes to 5 is not the time for this. I beg to ask leave to withdraw the clause.
Clause, by leave, withdrawn.
Ordered, That further consideration be now adjourned. —(Leo Docherty.)
Westminster Hall
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Charity-funded Medical Research
(4 years ago)
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Esther McVey (in the Chair)
I remind Members of the changes to normal practice to support the new call list system and ensure that social distancing can be respected. Before they use them, Members should sanitise their microphones using the cleaning materials provided, which they should dispose of as they leave the room. Members should respect the one-way system around the room.
Members may speak only from the horseshoe and only if they are on the call list. Even if debates are under-subscribed, Members cannot join the debate if they are not on the call list. They are not expected to remain for the winding-up speeches, and there is less expectation now that Members will stay for at least two speeches: once they have spoken, they may leave the room.
Dr James Davies (Vale of Clwyd) (Con)
I beg to move,
That this House has considered recognising and preserving the value of charity-funded medical research in the 2020 Spending Review.
It is a pleasure to serve under your chairship, Miss McVey. I should like to record my thanks to the Backbench Business Committee and the Chairman of Ways and Means for granting time for this important debate before tomorrow’s spending review. I also thank the British Heart Foundation for its assistance with preparations for this debate.
The UK Government website states that
“our world-class research and researchers play a vital role in delivering local and national economic prosperity but we recognise that some of that research is at risk from a range of income losses as a result of Covid-19.”
I agree wholeheartedly with that statement and emphasise that we acknowledge the extremely valuable scientific and medical contributions that they make.
As I hope to set out, charity-funded medical research has lost a great deal as a result of covid-19. If its contribution to the UK and, indeed, to the world is to continue, the Government must consider further support, particularly ahead of tomorrow’s spending review.
Life sciences research and development is funded through a broad partnership between Government, universities, the private sector and charities. In 2019, charities funded £1.9 billion in UK research and development. This year, medical charities have seen the closure of their charity shops, the cancellation of fundraising events and a drop in public donations.
The true value of charity-funded medical research is often under-appreciated, and to understand the gravity of the situation in which the sector finds itself we must first acknowledge the contributions it has made to society in a normal year. A 2017 report published by the Association of Medical Research Charities found that 397 unique medical products and interventions were produced further to charitable awards, most of which were drugs and diagnostic tools but the list includes a gas delivery ventilator system to help to protect long-term brain function in babies starved of oxygen at birth and new immunotherapies for cancer. These are practical benefits of research that save lives immediately, but in the medium to long term the development and sharing of knowledge is key.
Medical research charities have produced hundreds of models and more than 26,000 unique publications that go on to inform research for years to come. The production of such publications is not straightforward or free: it is largely unseen work that is essential to developing practical solutions to healthcare challenges. This knowledge, which has improved our understanding of diseases such as Alzheimer’s dementia, has also been used to inform policy making.
Throughout this pandemic the Government have outlined that their policy decisions have been guided by the science. I fully support that approach and I know that it extends to all medical and healthcare policies. The Association of Medical Research Charities reports that in 2017 there were 166 citations in policy documents which referred to research linked to medical research charities and 536 examples of researchers directly providing advice to Government. From clinical reviews to participation in advisory committees, the combined knowledge of medical research charities and their staff has critical value.
It is important to note that practical healthcare solutions and knowledge development are not exclusive to the research of major diseases. Thousands of people in the UK live with rare diseases and in 2018 alone medical research charities invested £142 million in 640 rare disease projects. Without ongoing research conducted by well-funded specialists, we risk declining health outcomes for many who suffer from all conditions, but particularly those that are less common.
Further to the expansive scientific and practical value of charity-funded medical research, there is a significant economic element. Last year, in Wales alone, 53 charities funded 289 active grants worth £89.7 million benefiting research institutions such as universities and NHS organisations. More than one third of charities associated with the AMRC projects that are being carried out are in Wales. At pre-pandemic levels, more than 17,000 highly skilled jobs were supported directly in the sector throughout the UK. It is thanks to the tireless work of these experts and their support teams that, for every £1 spent on research by public and charitable funders, there is a return of 25p per year in perpetuity. The financial value of the charitable sector is perfectly demonstrated by the British Heart Foundation, which made an investment of £476 million last year, leading to researchers leveraging £1.27 billion.
Unfortunately, as has been seen across the board, covid-19 has been catastrophic for medical research, posing immediate challenges as well as medium and long-term charity-funded uncertainties. The AMRC estimates that such charities lost 38% of their fundraising income between March and May 2020, leading to an immediate shortfall of £310 million this year. Predictions go on to warn of a 41% fall in research spend in this financial year, and reports from the Institute for Public Policy Research expect a shortfall of up to £7.8 billion in UK research and development spending between now and 2027. The British Heart Foundation alone lost £10 million in revenue during each month of the spring lockdown, and current restrictions will cost another £7 million. Because of this, the organisation has already halved its research budget for next year—a reduction of £50 million. Likewise, Cancer Research UK has been forced to cut £44 million from its research spending. Unfortunately, this approach has been necessary among many other charities, too. The current trajectory shows that it will be at least half a decade until we return to pre-pandemic levels and without a change there will be significant implications for jobs and health outcomes.
I know that many charities are grateful for the support that they have received from the UK Government through schemes such as the coronavirus job retention scheme, which has been extended to March next year, but with the overall reduction in income and consequently fewer research projects, many of those positions may not be sustainable. A survey of more than 500 charity-funded early career researchers in the UK found that four in 10 are considering leaving research due to funding concerns arising from the covid-19 pandemic. In total, half of researchers say that their funding will expire by the end of 2021. Of those, two thirds have been unable to secure funding to take them to the next stage in their careers. Cancer Research UK worries that, without support, it could be forced to lose 1,500 researchers—more than one third of its research workforce. It is worth putting on record that such jobs are highly skilled positions that require extensive research infrastructure and if we lose them, they may never return. Muscular Dystrophy UK notes that it funds new PhD students at each grant round, so without financial support not only are we damaging the industry now but there will be worrying implications for British research.
Medical research charities have, sadly, been unable to access the £750 million of additional funding made available in April to support charities providing essential services. This is despite many charities pivoting their research to support the national covid-19 effort, including Cancer Research UK labs providing testing kits and Asthma UK providing an essential post-covid hub and helpline for people left with breathing difficulties.
The number of patients entering Welsh research studies fell by 23.8% between 2018-19 and 2019-20. At the UK level, at the height of the first lockdown, the AMRC reports that 73% of clinical studies and trials funded by charities were paused or delayed. This number remained at 43% even in September. The expectation of some in the industry is that, unfortunately, some of these trials will never restart. We must do all that we can to reverse this trend.
So what action is required? It is vital that we fund research to better prevent, diagnose and treat illnesses, a view shared by my constituent Mandy Swift who sustained two heart attacks in her early 50s and spoke out recently about the need for women to better understand their risk of a heart attack and its symptoms. Preserving charity-funded medical research needs to be a priority for the Government. We now stand at a crossroads and decisions taken in the days and weeks ahead can influence the future of charity-funded medical research for the next decade. As we reach the end of the transition period and want to retain our status as a global leader in this sector, we must provide the support that is necessary.
The Government have already pledged money through the sustaining university research expertise—SURE—package. I am delighted that, by introducing this programme, the Government have publicly acknowledged the value of our unique research and development ecosystem. However, it is unclear how charities will be able to engage with this funding. The spending review and the Chancellor’s statement tomorrow is an ideal opportunity to bring forward the further support that is much needed. I know that the charity-funded medical research sector is one of the many sectors calling for a bespoke package of support and, indeed, I am sympathetic to calls from many other industries. However, the unique contribution of medical research to our health, wellbeing and economy is unmatched. Charities fund research in every region of the UK, contributing to regional growth and the Government’s levelling-up agenda. Ultimately, this research also leads to health improvements, particularly in areas of unmet health need and inequality.
Organisations, including the AMRC, the Royal College of Physicians, the British Heart Foundation, Cancer Research UK, Muscular Dystrophy UK and the Francis Crick Institute, have all been in touch with me in the run-up to this debate calling for a life sciences charity partnership fund. This proposal centres on the three-year settlement to provide a match-funding arrangement that would contribute £310 million in year one to protect and enhance our status as a science superpower. The parameters of such a scheme could be settled upon by the Treasury in consultation with the sector. The Royal College of Physicians specifically notes that funding should be targeted to support more research activity in rural areas, such as north Wales, that often carry the highest disease burden but the lowest research activity. Some 40% of those working in rural hospitals would like to be more involved in research, and that figure is 12% higher than for reported respondents in city hospitals.
The Royal College of Physicians has proposed that, in areas where research activity is low, a trial should be programmed whereby 20% of consultants have 20% of their time protected for research. Such potential approaches are important. As the AMRC points out, during the pandemic its members in Greater London have been twice as likely to have secured funding than those outside the capital, leading to a risk that a charity funding crisis may exacerbate regional divides. Without much-needed support, more than 50% of the AMRC’s members have indicated that the impact of covid-19 on their research portfolio will have implications for the UK’s ability to attract research talent and global research leadership.
As the Government publicly acknowledge, we have a world-class research system and researchers too but, as a result of covid-19, thousands of scientists and projects are at risk. That concerns me greatly as a GP. Charity-funded medical research has been an intrinsic part of our national R&D ecosystem for decades, contributing to major scientific breakthroughs, the advancement of knowledge and economic growth. Without action soon, we risk years of poor research outcomes and thousands of highly skilled jobs being lost. Although some support has thankfully been made available, I believe that the spending review provides the Government with the perfect opportunity to extend that, ideally through a life sciences charity fund. I hope that such a plan is already in the Chancellor’s mind. If not, I ask the Minister to make him aware of today’s debate.
As the UK Dementia Research Institute notes, charity-supported medical research has been prominent in national efforts to tackle the outbreak. As attention turns to long-term impacts, we must ensure that medical research is supported now and into the future.
Esther McVey (in the Chair)
I plan to call the Front-Bench spokespersons no later than 10.30 am. I hope that will allow colleagues to judge the length of their speeches.
Liz Twist (Blaydon) (Lab)
It is a pleasure to serve with you in the Chair, Ms McVey. I congratulate the hon. Members for Vale of Clwyd (Dr Davies) and for Bolton West (Chris Green) on securing this important debate.
Most of us will have put dignity to one side and “worn it pink” for Breast Cancer Now, piling on feather boas, hats and Elton John-style pink specs. It is a bit of fun, but it has a serious point. More than 150 MPs took part in 2019, and the charities Breast Cancer Care and Breast Cancer Now say that the Wear it Pink campaign has raised over £33 million in the last 17 years to fund breast cancer research and support. It is just one of the many activities helping charities to raise essential funds to support the cancer research that is so desperately needed, and it is helping to improve cancer survival rates.
This year is different, though. Understandably, covid-19 has meant that Wear it Pink and so many other events cannot take place. Although we might wear pink at home, it is not quite the same. Of course, such parliamentary events are just the tip of the iceberg in raising funds. Our charities have been hard-hit by the effects of covid-19. Their fundraising activities right across the sector have been hugely hit by the restrictions on holding events. Charity retail shops have had to close, resulting in a huge loss of income. It has made it more difficult for them to meet and engage with people, and to raise the money on which they rely to carry out their activities and to fund the research that makes such a positive difference to our knowledge of, and treatment for, the conditions that they work on.
I mentioned Breast Cancer Now. Most of us have been affected by breast cancer at some time in our life. In my case, no fewer than four of my aunties have been treated for breast cancer—thankfully, all successfully. It was only two weeks ago that we heard in the main Chamber from the hon. Member for Chatham and Aylesford (Tracey Crouch), who is undergoing treatment for breast cancer. Breast Cancer Now, which has provided a very helpful brief for the debate, has pointed out that 55,000 women and 370 men are diagnosed with breast cancer each year, that one in seven women in the UK will develop breast cancer, and that 35,000 people are living with incurable secondary breast cancer. It remains the case that almost 1,000 women die from breast cancer each month in the UK, with 600,000 living with or beyond breast cancer.
Covid-19 has had a severe impact on clinical trials. Breast Cancer Now points out that recruitment to many clinical trials was paused, and that the virus stopped new and ongoing trials, as healthcare professionals were asked to prioritise frontline care. I hope the Minister can say what the Government will be doing to improve the rate at which clinical trials will be restarting recruitment.
Members of the Association of Medical Research Charities have together invested £14 billion in research since 2008, with £1.9 billion spent on UK research and development in 2019 alone. That is more than was spent by the Medical Research Council and the National Institute for Health Research. It is half of publicly funded medical research nationally, and 66% of total research spend on cancer. Members of the Association of Medical Research are planning for an average 41% decrease in research spend in 2020-21. Many other charities are also facing difficult problems. The hon. Member for Vale of Clwyd (Dr Davies) mentioned the British Heart Foundation; many of my constituents have been in touch to talk about the importance of ensuring that its research continues.
I want to look briefly at two charities at opposite ends of the scale. Muscular Dystrophy UK supports people with neuromuscular conditions and the research that produces new treatments for those conditions, dealing with quite a small group of people as a percentage of the population. The charity points out that covid-19 has produced a shortfall of £310 million in charity research investment, and that although the Government have provided £750 million of support to charities, none of that was for charity research. Muscular Dystrophy UK estimates that it will take over four years for its charity research fund to recover, but a decade to rebuild what would be lost in terms of capacity and capability.
Muscular Dystrophy UK’s research relates to rare or ultra-rare conditions, supporting research, infrastructure and capability, and sustaining a diversity of funding approaches, including those that are high-profile and high-risk. It involves people with lived experiences of neuromuscular conditions to set research priorities through its lay research panel and its medical research committee. It has also supported research into gene therapy for Duchenne muscular dystrophy, cell-based screening for myotonic dystrophy and exome sequencing—all projects that have produced important outcomes, have led to further potential treatments that will make such a difference to those with neuromuscular life-limiting conditions. So those are really important issues, and the pandemic is limiting what can be done.
At the other end of the scale of numbers is Alzheimer’s Research UK. It works on behalf of a much wider group of people, who live with the impact of Alzheimer’s and dementia, sadly, another condition that most of us will be touched by in the course of our life—either in people we know or ourselves. Alzheimer’s UK points out that covid-19 is not the only health crisis that the UK is facing, and says that dementia is the only condition, of the top 10 leading causes of death in the UK, for which there is no treatment to prevent, cure or slow its progression; and that it is predicted that 1 million people will have dementia by 2025. There is an urgent need for medical research into Alzheimer’s, and that is largely funded by medical research charities such as Alzheimer’s Research UK.
Covid-19 has hit people with dementia hard. A quarter of people who have died from covid-19 also had dementia. Research is urgently needed, but it is facing delay due to the pandemic. Funding opportunities have been reduced and social distancing has slowed the pace at which researchers can work. We know, too, that dementia has a huge impact on too many people. It is vital that we support research into the causes of dementia urgently, even in these difficult times.
The medical research charities have come together to propose a way to ensure that that vital research for both rare and widespread conditions can continue. They point out that the current Government support for charities and Sustaining University Research Expertise—the SURE fund—is not a long-term solution, so they are calling for the Government to create a life sciences charity partnership fund over the next three years, starting with £310 million in year one, to meet that shortfall.
Our medical research charities play a huge part in developing future treatments for so many conditions. If we are to maintain that progress in cancer research, rare conditions, dementia and so many other things, the Government must help, so I ask the Government to commit, in tomorrow’s statement, to supporting that vital work.
Chris Green (Bolton West) (Con)
It is a pleasure to follow my hon. Friend the Member for Vale of Clwyd (Dr Davies) and the hon. Member for Blaydon (Liz Twist)—a couple of excellent speeches, capturing the key features of what we need to be thinking about in this debate, and what the Government ought to be redoubling their efforts to focus on. We only have a day before the spending review, so hopefully the Minister will be busy after the debate, pressing the case for that vital funding.
This debate on the importance of recognising and preserving the unique value of charity-funded medical research in the upcoming comprehensive spending review is incredibly timely and incredibly important. It represents an area that has not received much attention to date; covid and its associated lockdown have had an impact on so many other aspects of our society that this area has barely been looked at. However, the consequences of the impact on the sector are profound and will be realised over many years to come, not only in terms of what it does, what it achieves and the advances it creates, but also the people working in that sector and the treatments and medicines that come from it.
We should be cautious when the Government approach anything that has unforeseen consequences. They are pulling on strings, and we quickly realise how much is unravelling. We have seen other areas of society that are facing great difficulties get funding or other support. As the thread unravels further, we are coming to the charitable medical research sector.
We initially thought the national lockdown would be for three weeks, beginning in March. It seems that round every twist and turn of the road we see yet another deadline, yet another target being drawn out; the next target was expected to be November, and it has been pushed back to Easter. We will soon, after a fashion, be celebrating our first anniversary of national lockdown in one form or another, and the impact over that one-year period is profound.
We know that the direct impact, in terms of health, has already been about 5 million fewer hospital appointments, tens of millions fewer GP appointments and millions fewer cancer screenings. We know the impact on mental health as well. That is more cause for the charitable sector in medical research to redouble its efforts in terms of work and to gain the support it needs from the Government.
We have a sense of the economic impact, which is counted in the hundreds of billions of pounds. That is extraordinary—incomprehensible; but more locally it is affecting our high streets, of which charity shops are a key part. Many research charities gain a very significant amount of their income from high-street charity shops, as do many other charities, such as the hospice movement. So much of that income has been taken away.
We also see the terrible impact on education. Schoolchildren have lost about six months of the school experience. Many schools have done a great deal of good work to ensure that loss is not too great, but many others have not been able to do so. We know that those children have lost out significantly, and some children in my constituency—and I am sure those of other hon. Members—have already missed a couple of weeks, or perhaps two sets of missed weeks, of school when classes, or even year groups, have been sent home because of covid. Therefore many students have lost four weeks of education, and by Christmas it might be six weeks. This is going to carry on until Easter.
The impact on the university sector is enormous, disrupting education. Where will those children and young adults end up? Hopefully, many of them will end up as technicians, engineers or researchers in the charitable medical research sector. Their loss of education, of experience, will have an impact on that sector in the future, and it will have an impact on their ability to get those jobs—those skilled, brilliant jobs. Their ability to get such jobs will be hindered partly because the jobs will not exist if this situation continues, but also because they may not get the experience or qualifications they need.
We can see how this reverberates through our society. Yesterday, the hon. Member for Newcastle upon Tyne North (Catherine McKinnell) led a debate on the closure of sport and gyms, and the impact that their absence will have on health. In normal times, if we are told to jog on, or take a hike, that is seen as quite negative—at least, it always has been when I have heard it. However, for the medical research charity sector, jogging on and taking a hike—or doing sponsored walks or marathons—are a major source of income. That has gone. The London marathon this year was for élite athletes, and the Bolton marathon, which was to have been run for the first time in many years, was cancelled. Those opportunities—the core ways in which the charitable sector receives much of its income—have been taken away. Who would have thought that that would happen, when we were deciding in March to go down the route we did? I dare say none of us had any anticipation of where things would end up today.
It is important to understand the scale of the sector, which is enormous. For example, in 2018 the Association of Medical Research Charities invested £142 million into 640 rare disease projects. That is investment on a colossal scale. Probably tens of thousands of people overall are involved in clinical trials—particularly in the charitable medical research sector—so there is an impact on recruitment for clinical research, and although 3,203 or 49% of commercial and non-commercial studies are open to recruitment, only 26 have recruited a participant since 1 June. That is a huge loss of recruitment to clinical trials.
What does that mean? We have to think of the meaning and impact of those significant figures. It is about a treatment, in one form or another, that could and should be given to people for a clinical trial period. It might not be effective, but it might well be. A trial would give people hope of receiving treatment and support. That is particularly important in relation to rare diseases, where people often feel neglected because there is not the focus on those diseases that there is on higher-profile disease conditions. Medical trials give people hope that treatment for rare diseases is being focused on and supported and that, although it may take years, a treatment will arrive at some point. However, there is an impact on people and their families when clinical trials are closed down and that hope is taken away.
As the lockdown caused by covid rolls on, the period for restarting a clinical trial is pushed further and further back. That is not just because of the duration of the lockdown and difficulty in recruiting people to the trials, but because of funding. If there is no funding, the organisations cannot even start the process of clinical trials. The British Heart Foundation is funding more than 1,700 research staff, working on more than 800 research projects, and it also funds 440 early-career researchers. That is a huge number of people in the sector. The Francis Crick Institute in London has 1,500 scientists, students and support staff working across a variety of disciplines, and looking at illnesses such as cancer, heart disease, stroke, infections and neurodegenerative diseases.
Large organisations are often more resilient because they have better funding streams. Smaller organisations, perhaps more often looking at rare diseases, have less funding for what they are doing, so they are far less resilient. All of this, coming together, gives a clear and powerful reason why the Chancellor, the Minister and others need to act to ensure that this focus—this funding—is there on a sector of our society that is often neglected and not thought about but that, when our friends and our families are hit, is so highly valued and so highly prized.
I urge the Minister to ensure that life-saving medical research can continue throughout and beyond the pandemic lockdown. Government must establish a life sciences charity partnership fund commencing with a commitment in the spending review to an initial £310 million for 2021-22. That may have to continue into following years. It is estimated that, to recover, if Easter sees the end of the lockdown period, the challenge for the sector may carry on for another four years or more. The funding has to follow the sector for at least that period of time.
In conclusion, if we are—I do not like the phrase—to build back better and ensure value for money and the effectiveness of research, we must recognise that the north of England, and particularly Manchester and its surrounding areas, has great expertise in this area. When we are looking at value for money and cost-effectiveness, the golden triangle is magnificent in so many ways. However, when looking at investing in the future, the medical research sector and Government should be thinking about Manchester central, the city of Manchester and the wider area. I hope the hon. Member for Manchester Central (Lucy Powell) will press the Minister on that point as well.
Wera Hobhouse (Bath) (LD)
It is a pleasure to speak in this debate with you in the Chair, Ms McVey. This is a timely debate ahead of tomorrow’s spending review. As the chair of the all-party parliamentary group for eating disorders, I will focus my short remarks today on eating disorders and research funding.
We have already heard that covid-19 has had a devastating effect on the charity sector more generally, with income from fundraising lost during lockdown. The value of the expertise of medical research charities has never been more stark, yet they were not included in the Government’s £750 million support package. The charities are a huge driver of medical research in the UK, and we have already heard some of the numbers, but they are worth repeating. Members of the Association of Medical Research Charities invested £1.9 billion in 2019 alone. That is 51% of publicly funded UK medical research. They face a shortfall of up to £7.8 billion between now and 2027, according to the Institute for Public Policy Research.
I want to draw some attention to the importance of charity-funded medical research to understanding and treating eating disorders. The impact of an eating disorder can be devastating, and there is a pressing need for more research. We have heard particularly about specialist and rare diseases, but eating disorders are widespread and have epidemic proportions in many ways. Eating disorders are especially prevalent among young women, affecting about 15% of that age group, but the truth is that eating disorders do not discriminate. That is an important factor. According to the charity Beat, up to 5% of the population will experience an eating disorder.
Eating disorders are all-consuming. They have an impact on social relationships, quality of life and physical health. Anorexia nervosa is one of the most common forms of eating disorders and has the highest mortality rate of any mental health condition. According to the Medical Research Foundation, up to half of people with an eating disorder have self-harmed. Despite all of that, there is still limited research focusing on the causes of eating disorders. There is a serious lack of investment for mental health research in general. In a study last year, the charity MQ: Transforming Mental Health found that eating disorders were among the mental health conditions that received the least research funding.
In recent years, medical research charities, including several members of the Association of Medical Research Charities, have played a hugely welcome role in funding and supporting eating disorder research. Often, the chances for early interventions for eating disorders are missed, and treatments may not always be effective, so many patients are admitted for expensive hospital treatments. Currently, less than half of individuals with an eating disorder reach full recovery. Again, that is an important statistic: half never reach full recovery. That means a large proportion of people in this country are affected by eating disorders.
Studies funded through medical research charities have included research into self-harm and eating disorders, as well as the treatment of adults with anorexia and autism. In February, the largest ever study of eating disorders, the Eating Disorder Genetics Initiative, was launched. This seeks to build on existing research, which shows that genetic factors are involved in eating disorders.
In conclusion, eating disorders are serious conditions and can be potentially life-threatening. These studies help us to understand more, about not just the treatment of eating disorders but the underlying causes and common risk factors; they may even prevent eating disorders from developing in the first place. It is crucial that these charities receive the financial support they need, so that they can continue to play this vital role.
I, too, add my voice to the many here today. Medical research funding is so important, and it needs support from the Government. I urge the Minister to make her voice heard in the spending review tomorrow.
Rachael Maskell (York Central) (Lab/Co-op)
It is pleasure to serve under you, Ms McVey. I congratulate the hon. Member for Vale of Clwyd (Dr Davies) on securing today’s timely debate and the Backbench Business Committee on granting such a debate.
“A statistic will never truly capture the devastating impact research cuts will have on all of us. Research is hope. Research is more time with your loved ones. Research is improved quality of life. Its value is immeasurable.”
Those are not my words, but those of Aisling Burnand, the chief executive of the Association of Medical Research Charities. We have heard much today about the investment the AMRC has put into lives of so many of our constituents. Some 151 charities, which have joined together with the public through their fundraising efforts, have spent £14 billion over the last decade in funding 17,000 research staff and driving 213 clinical trials, advancing the frontiers of medicine and enhancing lives as they go. As we have heard in today’s debate, they also bring resources back Not only does every £1 invested bring 25p back into the economy on a permanent basis, but charities save our NHS so much money through their early interventions and by advancing the frontiers of medicine.
However, covid-19 has disrupted the incredible story of how charities play a central role in advancing science and the UK’s global excellence in this field. That partnership really makes its mark in advances in medicine.
Chris Green
The hon. Lady is making some excellent points. Does she share the view that there is immense collaboration with the private sector, universities and research institutes, as well as the charity sector, and that that ecosystem, which is so often talked about, is key to our position in the world and our contribution to the world?
Rachael Maskell
I thank the hon. Gentleman for that intervention. The interdependence of the various sectors in coming together really puts the UK in a unique position in the way it advances so much medicine. Over recent months, in response to covid-19, we have also seen the incredible work of all the sectors, which have come together to try to beat this virus. Charities play that crucial role, and they are playing it today as they try to support individuals through this difficult time.
We know that a £310 million shortfall in funding will have significant consequences. Cuts always do. As we heard, it will take about four and a half years to recover from the downturn. Tragically, that will all be too late for some. This year alone, it is predicted that we will see a 41% decline in research spending. Many PhDs, fellowships and other opportunities will be denied, cutting vital skills in medical research. If postgraduate researchers do not have the opportunity to apply their skills and knowledge, we will be at risk of losing a generation of medical research. That is why significant investment is needed to save the sector.
With 34% of staff furloughed, clinical trials have been paused and delayed to protect research in the longer term. Without additional funding, there is little hope that those trials will restart. That means that families, such as that of a constituent who came to me, will never see the opportunity to extend their lives and to have a quality life for longer.
The sector is rightly calling for a life science charity partnership fund to fund the research part of its work. That would be built on a match funding principle and would start with a three-year programme of investment into research. The Medical Research Council is seeking a commitment of £310 million in its first year to match the funding it has lost this year due to the lack of funding resource. Not only will that research-driven approach help with economic recovery in the wider field and reduce unemployment, but it help us to continue to lead advances in medicine.
Like all charities, medical research charities have not been served well during this crisis. In fact, that has been a major oversight on the part of the Government. Medical research charities provide not just research but crucial support to their beneficiaries. Over the last six months, I have met many research charities, which have told me about the work they are undertaking, and that work has expanded during the pandemic.
Many organisations provide support services to the people and families who depend on them. The NHS is less accessible, so people have turned to the charities they know and trust for additional advice and support. Regular therapeutic interventions have often not been available on the NHS because of its focus on covid-19—we all understand that—and appointments have been cancelled. People have turned to the charities they know and the relationships they have to seek advice on issues such as where to get food, shielding, what protections they have for their health, and how to support relatives and family members at such a delicate time.
Other organisations, which would normally provide psychological support or respite support or perhaps fund parents to stay near their child as they receive treatment, have also been under great strain. Many of these organisations have described demand for their helpline more than doubling as people turn to them for support. However, they have not received additional support from the Government in response to covid.
Yes, the Government did provide £750 million to all charities, although we must remember that 168,000 charities have had to share that money. However, I must stress that that money was for additional support directly relating to covid-19. Of that money, £2 million went straight to the hospice movement, and rightly so, although that money is now spent, and more is needed. The rest is being divided between the larger charities, and there is a pot for smaller organisations. However, the majority of charities have not received anything over this time, and we have heard today that medical research charities certainly have not had their share.
This was all a direct response to covid, and we have seen more demands being placed on charities, as I have set out. That has also meant that more investment is needed by those organisations. Charities themselves may have direct funding for funded spend, but they are really struggling with their core costs. If their core costs are not met, the charities cannot deliver the specific outcomes we all know so much about from our constituents. It is vital, therefore, that the Government step up tomorrow with a package to address those core costs. Charities have already lost £10 billion in the last six months, and they predict they will lose 60,000 staff. Some 20% of charities will not be there if the Government do not make that investment. They say they value charities, but charities need valuing with resources, and without those resources, they will not continue.
We know that fundraising opportunities have all but dried up. We know that retail, which has been successful since its return, has now been locked down yet again, and therefore the income of organisations is in a perilous situation. That is why the Government need to step up at this point. Many charities did not qualify for the grants that were available, and of course have struggled and still have bills to pay. As the charity sector says itself, rightly and proudly, it has never been more needed, but I would add that it has never been more in need. That is why it is vital that, after today’s debate, the Minister goes back to the Treasury one more time to make the case for research charities and all charities, to make sure they have the research support, funding and investment they need.
Charities are not an optional extra. We know that because, as we have heard during today’s debate, the outcomes they deliver—in not only research but care support and civil society—transform people’s lives. Some 7 million people every year generously donate to medical research charities, often as the result of personal experience or the loss of a loved one. The paucity of the response compared with the public contribution needs to be addressed. Charities stretch their pound further than any other sector, and they provide the highest standards in research and care. They are essential, yet in just a few months’ time, they may no longer be there. We need a robust response from the Minister today, and we need a financial response from the Chancellor tomorrow.
Neale Hanvey (Kirkcaldy and Cowdenbeath) (SNP)
Thank you for chairing this debate, Ms McVey; it is a pleasure to speak in it. I thank the hon. Member for Vale of Clwyd (Dr Davies) for securing it and for his lucid and compelling presentation of his arguments.
For most of my career in the NHS, I was involved in the delivery and management of clinical trials, from surgical interventions, radiotherapy and chemotherapy to nursing and allied health professional research. This activity was conducted in the pursuit of improving cancer treatment and outcomes, but clinical trials are also essential in developing effective treatments for multiple sclerosis, myalgic encephalomyelitis, Alzheimer’s disease, arthritis, Parkinson’s disease, heart and lung disease, and many others. While we may all hope that we will not rely on this research at some point in the future, the progress that is so regularly made reassures us that we are often at the vanguard of effective treatments and care.
However, clinical trials do not appear out of thin air. They are underpinned by groundbreaking scientific discoveries that must translate from bench to bedside, where research initiated in the laboratory is safely developed for clinical use to provide direct benefits to patients. Such translational research evolves from basic experiments in the laboratory—at the bench—to pre-clinical research, before commencing study design, protocol development, and then starting the process of phased clinical trials.
I intend to focus my remarks on childhood cancer, but before I do, it is really important to me—I pay tribute to the words that have already been said on this topic—to mention other vital charities that have made enormous advances in care, but that have yet to receive any meaningful support during the pandemic. The worthiness of these charities—CLIC Sargent, Teenage Cancer Trust and of course Macmillan Cancer Support, to name but a few—is beyond question. Their specialised support is a lifeline to so many. Many other disease-specific charities are in a similar boat, so we must not forget them either.
Every single day across these islands, 12 families get the heartbreaking news that their child has cancer. Although I have participated in the breaking of such distressing news more times than I care to recall, as a parent I still cannot imagine how such news must feel. Despite the fact that much of my clinical and academic work focused on teenage cancer care, I still find the statistics shocking. About 4,500 children and young people are diagnosed with cancer each year, and although significant progress has been made in recent years in developing treatments—for leukaemia, for example—due to the often rare nature of cancer diagnoses at that age, it is still the most common cause of death in under-15s across the UK.
Covid-19 is having an unimaginable impact on charity fundraising—the lifeblood of the research process—and is putting vital treatment developments at risk. Medical research, development and innovation are an integral and vital part of the NHS and Scotland’s health strategy. Charities’ funding has been hit hard during the pandemic at a time when many of the causes they exist to support have come under additional pressures. It is therefore incumbent on the UK Government to ensure that the comprehensive spending review is not wasted on warfare but rewards the life sciences, which have been the only effective weapon in our armoury against covid. That must include supporting charity-funded medical research.
I recently spoke to Mark Brider, chief executive officer of Children with Cancer UK, an organisation that has raised more than £250 million since its creation in 1987 to support families and improve childhood cancer survival rates. The groundbreaking research it funds has led to the development of kinder, more effective treatments with fewer debilitating toxic effects. Childhood cancer survival rates for some cancers have subsequently increased from 64% in 1990 to 84% in 2017.
Children with Cancer UK has warned that it faces an income loss of about 40% as a result of the covid pandemic. It warns that, without additional support, much of its planned medical research will be cancelled, setting cancer research back by many years. It is not alone. A study this year revealed that charities in the UK are facing a £10 billion shortfall, and that as many as 10% face bankruptcy.
Members of the Association of Medical Research Charities are calling on the Government to commit to a life sciences charity partnership fund—a co-investment scheme that would provide a level of match funding from the Government for future research. AMRC charities play a vital and unique role in the UK’s research sector, funding 17,000 researchers’ salaries across universities, the NHS and other bodies. They invested £1.9 billion in medical research in the UK last year.
The covid-19 pandemic had an immediate impact of those charities, with a reported 38% loss in fundraising income, 34% of staff furloughed and 18% of spend on research in universities cut or cancelled as a result of the initial lockdown period. The long-term impact of covid-19 on AMRC charities looks to be just as devastating, with an estimated £310 million shortfall in UK medical research spend. It will take four and a half years to recover to pre-pandemic levels. Medical research charities did not benefit from the Government’s earlier package of support for charities, as medical research was considered outwith the remit of funding frontline services. It is vital that support for their work is included in the comprehensive spending review.
Charities have predicted that the shortfall could have a range of impacts, from preventing them from funding clinical trials and studies, to causing them to defer upcoming grant rounds and withdraw future funding. The British Heart Foundation has already announced that it has cut spending on new research awards by half this year, from £100 million to £50 million. Cancer Research UK has also reported cuts of £44 million in its research funding, and it says that 40% of charity-funded early-career scientists are considering leaving research as a result of funding concerns caused by covid. Without that support, CRUK could be forced to lose 1,500 researchers—more than a third of its research workforce. Already, 61% of charities have had to cut or cancel support for early-career researchers and skilled research roles.
Such a reduction in charity-funded research will have a major impact on the future skills pipeline of research and put early-career positions at serious risk. This means that the UK faces the creation of a lost generation of researchers and experts. Scotland and the other UK nations are world-renowned for research quality. Yet if medical research charities do not receive further financial help, the damage could be significant and, in concert with a hard Brexit, could cause irreparable damage to the sector.
Last month I wrote to the Treasury, supporting AMRC’s calls for the establishment of a life sciences charity partnership fund to support medical research charities. A total of 51 cross-party parliamentarians co-signed my letter, setting out the long-term consequences for the future of medical research and development without this urgent financial support.
We have called on the Government to provide at least £310 million in funding in the financial year 2021 to a life sciences charity partnership fund, to secure medical research for the next three years, thus preserving research charities’ vital and unique contribution to society and to the economy. That would be matched by funding from charities to secure the continuity of their research.
Establishing such a fund would not only safeguard medical research funding at this vital time, but ensure that the research institutions can continue to invest in talent and skills at a time when they are sorely needed. The fund would help contribute to a shared ambition to invest unprecedented levels in research and development across the four nations of the UK, and form a global hub for life sciences. Today’s medical research is tomorrow’s curative treatment. Collectively, medical research charities have saved millions of lives. Thanks to research, cancer survival in the UK has doubled since the 1970s, so that today two in four people survive their cancer.
In the pursuit of addressing the covid health crisis, we must be mindful that, in not delivering support in the form of the life sciences charity partnership fund, we inadvertently create a health crisis caused by stalling, or otherwise compromising, life-saving research from the bench to the bedside.
Lucy Powell (Manchester Central) (Lab/Co-op)
It is, as always, a pleasure to serve under your chairmanship, Ms McVey. I congratulate the hon. Members for Vale of Clwyd (Dr Davies) and for Bolton West (Chris Green), my near neighbour, on securing this extremely important and well-timed debate. We have heard some good and compelling speeches from across the board, from my hon. Friends the Members for Blaydon (Liz Twist) and for York Central (Rachael Maskell), and the hon. Members for Bath (Wera Hobhouse) and for Kirkcaldy and Cowdenbeath (Neale Hanvey). We are all making similar arguments.
By way of opening, we have heard many debates over recent weeks, both here and in the main Chamber, about the sectors and parts of our society that have been drastically hit by the consequences of the covid-19 crisis. I congratulate the hon. Member for Vale of Clwyd on bringing forward the debate because it is an area that has had a lot less attention than some others.
As others have said, as we are all making similar arguments, medical research charities carry out vital work that helps us to understand diseases and find new ways to treat, manage and prevent conditions. They provide that hope and support for many that would otherwise not be there. As the hon. Member for Vale of Clwyd clearly outlined, we have a world-class sector in the UK. From state-of-the-art brain imaging, which helps us learn more about the earlier stages in diseases such as Alzheimer’s, to the development of novel techniques to help revive and repair donor kidneys before transplantation, and to the study of data to help speed up cancer diagnosis, medical research is changing lives, especially with some of the rare diseases that we have discussed today.
During the covid crisis, charity funding has plummeted, which has had a stark and immediate knock-on impact on medical research, as we have heard. Charities are projecting that it will take more than four years for spend to return to pre-crisis levels. With a big chunk of around half of all medical research coming from charities, we must not underestimate the impact that will have and continue to have on the health and wellbeing of our country for many years to come.
The UK sector is facing an existential crisis, yet, like so many other sectors, it has unfortunately so far been excluded from specific Government support. Medical research charities predict a shortfall in spend over the next year of at least £310 million. Research by the IPPR reveals that medical research charities expect this year to lose 38% of fundraising income, and over 25% next year. The thinktank estimates that there will be a cumulative £7.8 billion shortfall in health research and development investment between now and 2027, or 10% of all UK health R&D.
What does that mean in practical terms? As we have heard in the debate, there is, first, the immediate impact on medical trials and research and on patients and all those affected by disease. Almost three quarters of clinical trials and studies funded by AMRC charities were either scrapped or mothballed during the first lockdown, and although some have been picked since, many have not. Medical studies to be cancelled or stalled include those tackling the UK’s biggest killers—dementia, coronary heart disease and cancer—which could have long-term consequences. The Stroke Association states that three quarters of its funded research projects have been suspended because of the pandemic.
In the long term, less money for medical research means fewer trials and studies and fewer patients able to participate in this life-changing work. Last year, 213,000 people took part in 1,200 clinical trials or studies funded by medical research charities. Medical research charities have played a key role in breakthroughs over the past century, and we heard about some of them today.
The second impact is on researchers and the skilled workforce. Medical research investment is used to fund PhD students, fellowships and other early career researchers. Last year, 17,000 researcher salaries were funded by AMRC charities. Less money simply means fewer of them; fewer of them means losing out on their skills and talents, and on the important scientific progress that they could make in the years ahead. It will also further accelerate the unemployment crisis we face. Sadly, a recent AMRC study found that four in 10 are considering leaving research altogether, owing to funding concerns. The same survey found that 61% of charities have had to cut or cancel support for early career researchers and the skilled research roles.
The third impact is on health R&D funding and the wider economy. Nosediving research and development will affect the whole economy. As we have heard, every £1 invested in medical research delivers a return equivalent to roughly an extra 25p on that investment.
Charity research funding stimulates investment from the private sector, as we have heard, and from universities, further boosting our economy and research sector. It is an ecosystem and it relies on all the system being able to play its part. As my hon. Friend the Member for Bolton West (Chris Green) said, it can and does play a key role in reducing some regional inequalities and, with more than half of medical research coming from charities outside London and the south-east, in the so-called levelling up agenda by contributing to regional economic growth. Charities have a better record in this respect than Government research funding, under which about 80% goes to the golden triangle. There is definitely an opportunity to switch that balance.
Despite the importance of medical research charities to scientific progress and to people’s lives, and despite the significant role they play in our economy, unfortunately the Government have not given them the support they needed during this difficult time. I understand that there are many pressures on the Government’s finances and many calls for help, but only 3% of the country’s medical research charities were eligible for the Government’s charity support package—just five out of the 152 medical research charities. More than 150 were ineligible, and that included those researching conditions such as motor neurone disease, Parkinson’s, breast cancer, hearing loss, bone cancer, liver disease, meningitis, Crohn’s, diabetes, multiple sclerosis and many more. This is a huge blow to patients who rely on breakthroughs in those treatments.
Fortunately, given the well-timed nature of this debate and where we are today, there is an opportunity tomorrow for the Government to rectify that. The Opposition hope that, in the spending review, the Government will consider the proposal for the life sciences charity partnership to help plug the funding gap. This is now critical and urgent, and in the week when the Oxford vaccine for coronavirus has made such brilliant progress, what better way to support the life sciences in this country and recognise their contribution than to support this partnership fund? It would be a partnership arrangement and there would be matched funding. In the grand scheme of things, £310 million would be an investment well made. It is not a huge amount of money.
Rachael Maskell
I am grateful for the powerful points that my hon. Friend is making. In the light of the amount that has been spent on covid-19 and the fact that people have not been able to access regular services in the NHS, does it not bring into scale how £310 million could make a significant difference?
Lucy Powell
It really does, and my hon. Friend makes a powerful point. I urge the Government to see it, not as day-to-day spend, but as an investment in the future health, resilience, wellbeing and economic viability of the country. I look forward to the Minister’s response and hope that we hear some good news from her today.
The Parliamentary Under-Secretary of State for Business, Energy and Industrial Strategy (Amanda Solloway)
It is a pleasure to serve under your chairmanship, Ms McVey, and I congratulate my hon. Friend the Member for Vale of Clwyd (James Davies) on securing this important debate and raising the issues currently affecting medical research charities. I thank all hon. Members for the quality of their contributions to the debate. My hon. Friend the Member for Vale of Clwyd spoke of how the work of the medical charities is invaluable—he mentioned the British Heart Foundation and Cancer Research UK—and of the practical benefits that those charities bring.
The hon. Member for Blaydon (Liz Twist)—who I am sure would look very dignified in a pink boa, as have I, in my time—commented on the work of life sciences charities, specifically in relation to breast cancer. We recognise that work, which affects so many lives. The Government’s research and delivery parties are committed to trying to get the clinical trials started as soon as we can. My hon. Friend the Member for Bolton West (Chris Green) talked about the varied work that is being done, and mentioned the marathon elite runners. I have run the marathon twice, although I am sad to say that this year I was not invited to join the elite runners. The work is incredibly important, and this medical research is constantly on my mind.
The hon. Member for York Central (Rachael Maskell) mentioned the work of the AMRC, also acknowledging what the charities do in giving advice. It is very important that we get that advice and I am sure that it has been welcomed.
The hon. Member for Kirkcaldy and Cowdenbeath (Neale Hanvey) mentioned the work of the Teenage Cancer Trust. We have been able to retain the research that is needed, and we absolutely acknowledge the vital work that it does. We have indicated in our R&D road map that we acknowledge the work of these charities.
The hon. Member for Manchester Central (Lucy Powell) mentioned the work of life science charities and their key role in medical breakthroughs, as well as the many medical research charities that are involved. I would like to acknowledge the work that is carried out by the thousands of charities, including medical research charities, across the UK. The people who work and volunteer for them demonstrate huge passion and a commitment to the incredibly important causes. I saw the passion at first hand during the time I was working at Help the Aged, which is now known as Age UK. I have also seen it in my time as a science Minister when working with the medical research charities over the last year. The research that they collectively support has a huge impact and improves our health and wellbeing, and the Government have been working with them over the past few months to see how the research can be best supported.
Science, research and innovation are central to the Government’s ambitions. As I have mentioned, we published our R&D road map in July to ensure the UK is the best place in the world for scientists, researchers and entrepreneurs to live and work. Although we recognise the challenging economic and fiscal climate, the Prime Minister only this month re-emphasised the importance of science and innovation to our future prosperity and our ambition to move towards investing 2.4% of GDP in research and development. The UK is a world-leading research base and has global expertise across a wide range of disciplines—not least in medical research, where we boast a vibrant ecosystem that brings together researchers in some of the world’s top universities to work collaboratively with their counterparts in leading pharmaceutical companies, clinical researchers in the NHS and those supported by medical research charities.
Charity-funded research has been a distinct part of the UK research system, and I am proud to say that the UK is home to many globally recognised medical research charities, which are an integral part of the world-leading life sciences sector. The health and wellbeing of millions of people in the UK and around the world depends on the medical advances that have come from research funded by charities. I want to take the opportunity to give thanks for the contributions made by research charities, both to the important areas of research that they fund and to the many brilliant researchers they support.
Additionally, the Government have provided significant support to research charities through investments in research infrastructure, such as Manchester Cancer Research Centre and the Institute for Cancer Research in London, which provided the facilities and expertise needed by Cancer Research UK to carry out its incredible work, and through collaborations such as the UK Age Research Forum, where UK Research and Innovation works with a range of charities, including the British Heart Foundation, Versus Arthritis and Alzheimer’s Research UK, to support research that makes a difference to the lives of older people. Through direct funding, Research England is providing £204 million this year to support charity-funded research in universities in England. Through the tax system, over £1.3 billion in tax relief on donations was received in 2018-19 through gift aid, benefiting all charities, including those carrying out vital medical research.
All that shows that we as a Government are committed to supporting research into diseases and conditions that affect so many people around the UK. I know the pandemic has been a challenging time for charities, and that all parts of society and the economy have been affected by the covid pandemic—medical research charities and the research that they support are no exception. We have heard during the debate that they have suffered a series of blows to their income. Many charity shops around the country have been unable to remain open. Fundraising events, which are so important for raising money for research and for raising the profile of these causes, have been cancelled or postponed. The impact of the loss of income has had an impact on the research programmes that charities are currently supporting; as we have heard, it will affect their plans for future research.
In response to the challenges, the Government have provided significant support both across the economy and to charities more specifically. The coronavirus job retention scheme has enabled charities to avoid making staff redundant and to continue their vital work. During these unprecedented times, however, the Government have depended on the expertise of our research base to respond to the enormous challenges we have faced. Our scientists and medics, including those supported by charity funding, have had a key role in taking forward our response to the pandemic. We established a vaccine taskforce to co-ordinate all the work going on across Government, academia and industry, and we accelerated the development and manufacture of covid-19 vaccines. Through the university research sustainability taskforce, we quickly gained a fuller understanding of the impact of covid-19 on research in universities, including that supported by charities.
Many hon. Members mentioned the SURE fund. As a result of the university research sustainability taskforce, we put in place the sustaining university research expertise fund to support university research that has been impacted by the pandemic and to secure researchers’ jobs in universities. The fund has now gone live, with expressions of interest from universities expected this week. Universities are required to pay particular attention to the medical research that charities have traditionally supported when allocating the funding. In addition, we have provided £60 million to support PhD students whose research has been affected or delayed by the pandemic, to give them the time they need to complete their work. We have also supported UKRI to commit more than £95 million to research to tackle covid-19 and we have repurposed research grants with a total value of £80 million to address the effects of the pandemic.
All of that sits alongside the road map we published in July, which sets out the Government’s long-term plan to bolster the UK’s world-class credentials in research and development and to deliver economic growth and societal benefits across the UK for decades to come.
Chris Green
For long-term research projects that take a great while to get off the ground and perhaps recruit people for clinical trials—including people studying at university at the moment—a £320 million commitment tomorrow would give a great deal of reassurance. Obviously the Minister cannot commit to that here and now, but will she reassure us that that is on her mind and that she will make her best endeavours with the Chancellor?
Amanda Solloway
I thank my hon. Friend for that point, which I will refer to in my remarks.
The Government’s goal is to further strengthen science research and innovation across the UK to ignite the UK’s economic recovery, boosting productivity, creating new jobs and improving people’s quality of life. Within that, we also have a commitment to the levelling up agenda. The road map sets out our wish to build on the UK’s strengths in the life sciences sector. I look forward to continuing that work with the medical research charities as we develop a more detailed plan for delivering the road map’s ambitions.
Medical research charities are an important part of the UK research landscape. As I have set out, the Government recognise that and already provide significant support through the tax system, the research funding system and the many measures introduced to counter the impacts of the pandemic. While it would not be appropriate to respond in detail at this stage about the spending review, I assure hon. Members that the issues they have raised have been noted and in the coming weeks we will continue to work with the Association of Medical Research Charities on how they can be addressed, how we can support this vital research and how we can maintain the UK’s excellent capabilities in medical research while recognising the challenging fiscal circumstances we face.
Dr James Davies
I thank the Minister very much for her response and colleagues in the Chamber for their contributions. We have heard powerfully from everyone about the challenges facing the sector. Numerous vaccines are on the way and we very much hope that by Easter we will have some return to normality. Even so, we have heard how the sector will struggle for many years to come, even in that apparently good scenario.
I thank the hon. Member for Blaydon (Liz Twist) for emphasising the good charitably-funded work she is aware of on breast cancer and muscular dystrophy and by the Alzheimer’s Society. My hon. Friend the Member for Bolton West (Chris Green) certainly took the opportunity to highlight the pandemic’s impact and the importance of supporting research in the north of the country. The hon. Member for Bath (Wera Hobhouse) referred to eating disorders and the hon. Member for York Central (Rachael Maskell) emphasised the difficulties that charities are under, in some cases because of their core costs. I also thank the Front Benchers for all their warm words in that regard.
The Minister kindly outlined some of the support already available to the sector. I know she has listened to the debate and will take back the comments she heard. In particular, regarding the SURE fund, I ask the Minister to take good note of feedback from the charity sector, because I know it has great concerns about how the fund will relate to it. Finally, I ask the Minister to go back to the Chancellor and emphasise the need for this sector to receive assistance, whether through a life sciences charity partnership fund or other means.
Question put and agreed to.
Resolved,
That this House has considered recognising and preserving the value of charity-funded medical research in the 2020 Spending Review.
Pectus Deformity Treatment: NHS Funding
(4 years ago)
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Mr Simon Clarke (Middlesbrough South and East Cleveland) (Con)
I beg to move,
That this House has considered NHS funding for treatment of pectus deformity.
It is a pleasure to serve under your chairmanship, Ms McVey. I will also discuss e-petition 329161 on the same subject, which I am delighted to say has been signed by more than 6,000 people, including 183 from Middlesbrough South and East Cleveland. I thank everyone who has taken the time to sign the petition, as well as its organisers.
The lack of treatment for pectus excavatum on the NHS is an issue by which I have been deeply moved and for which I am determined that we should deliver lasting change. The situation as it stands amounts to an injustice for a young girl in my constituency and many more like her across the country. It is, however, a matter that can be simply solved. The solution would not be particularly expensive and is not controversial, so I sincerely hope it attracts ministerial support.
About six weeks ago, I was contacted by the parents of Autumn Bradley, a 14-year-old girl from Guisborough who suffers from pectus excavatum. Caused by an overgrowth of cartilage, the condition means that as she grows, her breastbone is being pushed inwards towards her spine. In her case, that inward growth has advanced to the point where her sternum is now just 25 mm from meeting her spine.
For many people living with less severe forms of pectus, its impact is predominantly psychological, but for Autumn, the condition has been nothing short of life-changing. Her parents have watched the physical condition of their once active, energetic daughter deteriorate beyond recognition. Growing up, she excelled at athletics and competed at county level, but today she struggles to blow up a balloon. Complications of the condition have led to numerous hospitalisations, so her school attendance and academic performance are being increasingly affected. It now causes her pain even to hiccup.
Treatment for the condition is effective, routine and widely available across the developed world. It is available free of charge on the NHS in Scotland, Wales and Northern Ireland, but since early 2019, it has not been available to patients in England. Because about 90% of surgeries to treat pectus are deemed to be cosmetic, last year the decision was made that the treatment would no longer be funded by NHS England.
Ruling out treatment for psychological reasons is a debatable proposition, but it is not inherently unreasonable. What is unreasonable is that the 2019 NHS policy document is clear that treatment for pectus will not be available, irrespective of the seriousness of the symptoms. As a result, Autumn’s surgeon, Mr Dunning, has found it impossible to make the case for treatment on an exceptional basis, even in cases where the physical impact of pectus is as devastating as it is for Autumn.
Mr Dunning is based at the wonderful James Cook University Hospital in my constituency. He estimates that, as a result of this situation, about 50 patients a year in England—overwhelmingly teenagers—are left suffering life-limiting symptoms that could easily be fixed. The symptoms include shortness of breath, heart rhythm disturbances and even episodes of collapse.
Mr Dunning spoke recently on BBC Radio Tees about how the current NHS policies affect Autumn:
“I believe it is a complete disaster and a mistake that we cannot turn this around. We’ve found it impossible to change it. We’re looking for anything we possibly can to try and get this poor short-of-breath person an operation. I couldn’t be more confident in being able to fix this poor girl with an operation”.
He said that if he were allowed to carry out the procedure, Autumn would be in hospital for four days with three weeks to recover at home, and after that,
“she’ll be a new person for the rest of her life.”
The average cost of surgery to correct pectus deformity is between £7,000 and £16,000. Treating 50 such patients a year would therefore cost less than £1 million, which, in the context of the wider NHS budget, is a minute sum of money.
Mr Dunning’s passion for helping patients such as Autumn has led him to campaign extensively on the issue and to dedicate a significant amount of time to supporting those affected. His commitment to her care and that of her fellow pectus sufferers is beyond all praise. He represents the best of our national health service. I am equally grateful to BBC Radio Tees and campaigning newspapers such as TeessideLive and The Northern Echo for helping to raise the profile of the issue.
What, then, has gone wrong with the NHS commissioning process? The process, which began in 2015, resulted in a 2018 literature review that considered only six papers, all of which focused on the psychological benefits of surgery. It resulted in the following judgment:
“The evidence that was found is not sufficient to conclude that the physical, psychological, social and behavioural benefits of surgical treatment of pectus deformities are sufficient to justify its use.”
That is despite the fact that the final policy document acknowledged:
“The impact of a pectus deformity can vary substantially, ranging from mild and symptomless to severe and impacting on both lung…and heart…function.”
During the consultation process, the Society for Cardiothoracic Surgery submitted nine additional papers that it felt contained important evidence that should be considered. All nine were rejected, some for what seemed dubious reasons. One study of 168 patients from the United States was rejected on the grounds that a single surgeon performed all the operations, yet most of the papers included in the 2018 review are single-centre studies, and one included paper is explicitly a single-surgeon case series. A 2015 NHS England policy document stated, with reference to previous papers from 2007 and 2010:
“Leading US centres report inclusion criteria for surgery as severe pectus excavatum that fulfils two or more of the following: CT index greater than 3.25, evidence of cardiac or pulmonary compression on CT or echocardiogram, mitral valve prolapse, arrhythmia, or restrictive lung disease”.
For reasons that are unclear, those impacts were not considered by the 2018 literature review. I find it concerning that a submission was not corrected even when highlighted by thoracic surgeons.
The case for allowing surgery for more extreme cases of pectus seems clear, based on the expert reviews that I have seen, which show measurable improvements in cardiopulmonary function in patients with a Haller index of between 4.5 and 5. The Haller index is used to describe the severity of an individual’s pectus deformity. I will outline those reviews, and it is worth remembering that Autumn’s condition is far more severe: she has a Haller index of 9.7.
A 2011 French study of 120 severely affected patients with a mean Haller index of 4.5 showed that surgery delivered sharply improved heart function. Prior to surgery, the maximum rate of patients’ oxygen consumption was just 77% of their age-predicted maximum. One year after surgery, it had increased to 87% of their age-based prediction. A 2013 Danish study with 49 patients with a mean Haller index of 4.9 showed that patients with pectus had a 20% lower cardiac index than healthy control patients of the same age prior to surgery. Three years after surgery, the cardiac index of treated patients had normalised to be similar to the controls.
I am clear that the NHS commissioning process has failed on this occasion. It has excluded crucial evidence about the benefits of pectus surgery for those presenting severe physical symptoms, and it is written too prescriptively to allow any discretion for individual funding requests. Autumn has already been rejected for an IFR twice, despite her life being made an increasing misery by the condition. I defy anyone to explain how in severe cases such as Autumn’s a normal, healthy life is possible without surgical correction of the deformity.
I pay great tribute to Autumn and her mum Sarah. Until now, Autumn has been known publicly as Katie to protect her anonymity, but ahead of this debate she has bravely waived that anonymity for the first time. She has asked me to share with the House, in her own words, how her life has been affected by the condition. She said the following:
“For as long as I remember I have had pectus excavatum.
When I was younger I embraced it as it made me unique. It didn’t affect me massively.
I loved sports, I ran and did long jump for the County competitively, I surfed, climbed mountains, played football with friends, went to scouts and much more.
I spent free time caring for animals in a pet rescue. However as the years went on, my pectus has got progressively worse.
The dent deepened. I began to suffer with my health. Every cold I had went on my chest and needed antibiotics and steroids and I often ended up in hospital.
I began to miss massive amounts of school and all the things I loved.
Fast forward to now. I can’t do any sports, all the clubs I loved have gone. I feel so tired constantly, my ribs and back are in so much pain I take painkillers all the time, but it still hurts.
I can’t breathe.
I can’t take a deep breath—it feels restricted and like my chest is being crushed and I can feel my sternum touching my spine.
Climbing stairs leaves me breathless. I don’t even attend school now.
My dream was to be an athlete or a nurse, my chance of the first dream is gone.
I’m so worried about what the future holds for me as my school grades will start to suffer.
All I am asking is that you reconsider the decision not to offer pectus surgery as it would give not only me, but lots of teens like me, a chance of a normal life like those who are not born with this condition.”
What should be done? I am grateful to the Minister for his time and the consideration he has given the issue in the days leading up to the debate. He is an excellent Minister, and I am all the more grateful given the many other demands on his time because of the wider national situation. Likewise, I am thoroughly appreciative of the time that my right hon. Friend the Secretary of State for Health and Social Care gave me a fortnight ago. He could not have been more attentive, and he joined me and my hon. Friend the Member for Bury South (Christian Wakeford) in a good discussion about what we might do to move the situation forward. Last week he raised the matter personally with the NHS chief executive Simon Stevens.
My central request is that the NHS should be asked to reconsider its wider policy on the issue as a matter of urgency. While such a review is being conducted, and in the interim, it would be fantastic if a holding position could be established, by which there would be a facility for surgeons to appear in person to discuss the evidence for pectus surgery in the most severe individual cases—effectively a kind of extraordinary carve-out from the wider policy. That would reflect a suggestion made by four of the five stakeholders during the commissioning process. It would make sense to allow that subset of severe patients to be identified so that selected centres could perform the operation on the NHS and report their findings in a registry. That commissioning through evaluation would allow a continuation of surgery for that small subgroup, along with monitoring of the impact of the surgery, and the provision of valuable new data to inform a wider policy review.
That would offer both a short-term and a medium-term solution to the issue. No one expects a miracle solution overnight. The process of NHS commissioning is rightly complex and independent. None the less, we should try to kickstart the process today. I should be happy to meet further with the Minister or his officials, but the current policy on pectus excavatum is not right, and it should not continue. I agree with Autumn and her parents, and with experts in the field such as Mr Dunning, that there are cases where pectus surgery is anything but an aesthetic choice. For a small group of young people in this country, it is the only route to anything resembling a normal life, and we should restore the treatment free at the point of need at the earliest opportunity.
Christian Wakeford (Bury South) (Con)
It is a pleasure to serve under your chairmanship, Ms McVey. I thank my hon. Friend the Member for Middlesbrough South and East Cleveland (Mr Clarke) for bringing this important topic forward for debate. Similarly to him, I had a constituency case, which involved a 17-year-old girl. Using the Haller index, a value of 3.1 would normally be the threshold for requiring surgery. My constituent had a measurement of 9.6 and was told that her chest capacity was similar to that of someone aged over 100. Her chest capacity was so poor that she could not bend down to pick up the shopping, or go upstairs, without being out of breath. That cannot be right for a 17-year-old girl with her entire future ahead of her.
It is therefore a disappointment that the previous commissioning report suggested that pectus excavatum would not be covered by the NHS. I fully support continuing not to cover the more cosmetic procedures, but for the small cohort in question, which we estimate is fewer than 50, the surgery is a life-changing and potentially lifesaving procedure, especially when it is considered how small the cost is in comparison with most treatment.
I pay tribute to Dr Joel Dunning, to whom my hon. Friend the Member for Middlesbrough South and East Cleveland also referred. My constituent came across him purely by chance, while he was doing some great work during the first lockdown. Obviously elective procedures were cancelled, so he volunteered elsewhere in the NHS—as a nurse. My constituent was in the hospital seeking advice and treatment, and he overheard the conversation. Being an expert in the field he stepped forward and stepped up, and made a representation. My constituent has now had the surgery, as she and her family were in the fortunate position of being able to afford it. They should never have been in that position of having to do that, but her chest capacity has already improved dramatically and she is able to breathe and to walk without getting out of breath. She is still in a lot of pain and on morphine, but she is already feeling the improvements that she should have as a basic right.
It has been suggested that we carry out further studies and recommissioning, but because it is such a small cohort and there are so few experts in the field, it is very difficult to carry out individual studies. My hon. Friend’s proposal that we have a panel from which a surgeon can step forward and make representations on what procedure he thinks necessary and most likely to improve the lives of these young women is the best approach.
I have kept my comments extremely brief because I want to hear from the Minister about the great work that he is doing. I hope there will be more to offer. Again, I put on record my thanks to my constituent’s family, Dr Joel Dunning and to my right hon. Friend the Health Secretary for discussing this important topic for a small cohort of constituents in the middle of the second lockdown.
The Minister for Health (Edward Argar)
It is a pleasure to serve under your chairmanship, Ms McVey.
I am grateful to my hon. Friend the Member for Middlesbrough South and East Cleveland (Mr Clarke) for bringing to the attention of the House the issue of funding for the treatment of pectus deformity and the impact that that has on people with that condition. I also pay tribute to my hon. Friend the Member for Bury South (Christian Wakeford), who, in what is a week or two shy of being in the House for a year, has already made a huge impact on behalf of his constituents. I hope that, through him, I can wish his constituent well and a full and speedy recovery from her surgery.
Before I discuss the particular case and issue, I want to place on record my thanks and gratitude to the hard work of NHS staff across the country, who as always have gone above and beyond in supporting us all during the pandemic. We remain indebted to them for their service.
I also want to be clear that the Government have and always will support our NHS, providing it with the finance and resources it needs to continue to provide high-quality, life-changing care. As hon. Members will know, through the NHS long-term plan, we committed to and then legislated for increasing investment in the NHS by £33.9 billion in cash terms by 2023-24.
A fundamental principle of the NHS is that, for people who live in the UK, treatment is free at the point of need regardless of an individual’s ability to pay. That is the basis on which our NHS is built. At the same time, however, clinical commissioning groups have a duty to commission responsibly and to use the funding they have to deliver the best service they can to meet the needs of the overall local population. As such, there will be some treatments or services that are not routinely commissioned locally. These decisions can be difficult but must be subject to rigorous assessment. Surgery for those patients with severe physical complications arising from pectus excavatum is one such area, as my hon. Friend the Member for Middlesbrough South and East Cleveland set out.
NHS England Improvement—which I will refer to as NHSEI for brevity—recognised that a small number of patients might benefit more from surgery and, as my hon. Friend, set out has explored this area in depth. He mentioned that in August 2018 NHSEI launched a clinical commissioning group policy consultation for surgery for pectus deformity and sought feedback on that proposition for surgery for pectus deformity for all ages. In developing its policy proposition, NHSEI commissioned two evidence reviews to ensure that evidence-based surgical outcomes and psychological benefits were considered. The reviews considered whether scientific research has shown treatments to be of benefit to patients and whether its use represents the best use of NHS resources. In that context, I hear very clearly the points made by my hon. Friend about, in his view, the limitations imposed on that by the nature of the process and the evidence base.
As my hon. Friend set out, the findings of the NHSEI findings review concluded, after careful consideration, that for the surgical correction of pectus deformity there was not sufficient evidence to routinely commission that intervention. He has clearly set out his counterpoint to that position. The study, published in February of last year, noted that in most cases, although surgery can correct the chest wall deformity, surgical intervention does not always take. That is because the majority of people experience only mild physical or psychological symptoms associated with having a pectus deformity, according to the evidence put forward by the review. I understand that the review also discovered areas where further evidence was required, and NHSEI has been working with clinicians and the National Institute for Health Research to further build the evidence, to support commissioning decisions.
I want to be clear that although, based on the existing evidence, the current evidence base, surgery for this condition is not currently routinely commissioned, that does not mean that patients cannot access it if it is deemed clinically necessary in particular circumstances, as my hon. Friend the Member for Bury South was able to set out in the case of his constituent. There are processes in place to ensure that, if it is deemed clinically appropriate, patients can still access the treatment even if it is not routinely commissioned by the individual CCG. The process is, as he set out, the individual funding request or IFR, which can be an alternative route, although as my hon. Friend the Member for Middlesbrough South and East Cleveland set out, this clearly has not worked for Autumn.
I turn now to the particular circumstances of my hon. Friend’s constituent’s case. I am incredibly sympathetic to the case that he raises. I understand both his concerns and the need for pace in finding a solution to help Autumn. I will at this point, if I may, pay tribute to my hon. Friend. He is a doughty fighter on behalf of his constituents, as we have seen in respect of this case. We in the House are incredibly lucky, as are his constituents, to have him representing them. I would say that he has made very good use of what I hope will be a very short period of freedom from ministerial office, allowing him to speak in debates such as this. He has used that freedom powerfully once again on behalf of his constituents in bringing Autumn’s case to the House. I hope that his constituents will not take it amiss if I say that although I know that that has been incredibly useful to them and he has been a powerful advocate, as he always is, I hope that his freedom will be short-lived and he will return to the bonds of ministerial office soon, because he was a fabulous Minister while he was fulfilling his various roles.
I also want to place on the record my recognition of and tribute to the courage that Autumn and her mother Sarah have shown. It takes incredible bravery, incredible courage, to speak out and, as Autumn has done through my hon. Friend, to speak out under her own name and her family’s and her mother’s name. That shows a courage that it is very rare to see in any walk of life and in anyone, and I think it deserves recognition by the House. I hope that my hon. Friend will pass on to her my words in respect of that. She is an incredibly brave young lady.
Let me turn to the specifics of the points that my hon. Friend made. Although he will know, and it is only right, that I will caution him that decisions and the response on this of course sit with NHSEI and are not within my gift as a Minister to give, he makes an incredibly powerful case, so what I will say to him is that I am very happy to convey very clearly, as my right hon. Friend the Secretary of State has done, to NHS England and NHS Improvement and to the chief executive, Sir Simon Stevens, his and his constituent’s very clear request that the position be reviewed once again, with additional evidence considered. I will also put to them his very sensible, or what seems to me very sensible, suggestion of an approach in the short term and then in the longer term. As I have said, I have to be honest with him; I cannot make a commitment on what the NHS response will be, because quite rightly it is independent and will make those decisions itself. But what I can promise him is that I will put his case to it very clearly.
I can also reassure my hon. Friend that I am of course always delighted to meet him, and if he feels that it would be useful, I will be very happy to meet him again. We may do that in the next few weeks, while he enjoys a few more weeks of freedom from the red boxes, but I am very happy to do that for him, because this is an incredibly moving case. He has put the case in very human and very moving terms, but I suspect that, if I may put it this way, Autumn in a sense represents probably many more cases, as my hon. Friend the Member for Bury South has set out. They may not have felt able to come forward and may not be publicly known, but there are others who are in Autumn’s position and will be listening to what my hon. Friend the Member for Middlesbrough South and East Cleveland said. I pay tribute to him, as always, for his eloquence, but I have to say I am afraid that although he put the case very powerfully, Autumn’s words put it even more powerfully to the House. There will be people listening to what she said and identifying with that and feeling the same things, so I am always happy to meet my hon. Friend if he feels that that would be helpful.
To conclude, I will reassure my hon. Friends that we will continue to work with clinicians and researchers to build the evidence base and understanding of this condition, to support future commissioning decisions but also, hopefully, within the confines of the clinical evidence base and decisions by NHSEI, to be able to better help people like Autumn in the future. I am grateful to the House.
Question put and agreed to.
Covid-19: Funding for Local Authorities
(4 years ago)
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Mr Philip Hollobone (in the Chair)
I remind hon. Members that there have been some changes to normal practice in order to support the new call list system and ensure that social distancing can be respected. Members should sanitise their microphones using the cleaning materials provided before they use them, and dispose of the cleaning materials as they leave the room. Members are also asked to respect the one-way system around the room.
Members should speak only from the horseshoe. Members can speak only if they are on the call list and cannot join the debate if they are not on the call list. Members are not expected to remain for the wind-ups. Members in the latter stages of the call list should use the seats in the Public Gallery and move to the horseshoe when seats become available.
I remind hon. Members that there is less of an expectation that Members stay for the next two speeches once they have spoken. This is to help manage attendance in the room. Members may wish to stay beyond their speech but should be aware that doing so may prevent Members in seats in the Public Gallery from moving to seats on the horseshoe. There are lots of Members attending this debate, so there will be a time limit, to be advised in due course.
Rushanara Ali (Bethnal Green and Bow) (Lab)
I beg to move,
That this House has considered the adequacy of funding for local authorities during the covid-19 outbreak.
It is a pleasure to serve under your chairmanship, Mr Hollobone. One day, there will be a public inquiry into the conduct of the Government during this pandemic and the decisions they have taken, particularly on the provision of finance to different parts of the country, and we will be able to learn what went well and what did not over the past few months. I hope that we will all support such an inquiry, so that further errors are not made in future.
Even before the pandemic, it would have been hard to argue that national Government were friends of local government and local services. Since the 2010 general election, the Government have reduced funding for local authorities by some £15 billion. The National Audit Office has found that Government funding for local authorities has fallen by 49% in real terms from 2010-11 to 2017-18, and that this equates to a 28.6% real-terms reduction. To put that in context, councils have lost 60p out of every pound they had a decade ago. The Institute for Fiscal Studies concurs, saying that local government spending has “fallen significantly”.
Let us never forget that this is not by accident: it was a decision made by Conservative Ministers and their Liberal Democrat coalition partners in the 2010-15 Government. National Government grants were gradually scaled back, so that poorer areas with great need were not provided with the additional funding they needed alongside local income generation. The cuts made in the name of austerity did not fall equally on the shoulders of people and local authorities: they hurt the poorest and most disadvantaged areas significantly, including areas such as Tower Hamlets, where my constituency is. The IFS says that deprived communities—those communities most reliant on public services—such as those in my constituency saw the greatest reduction in national Government funding.
There is another unfairness to the way in which funding was allocated, particularly Government grants, which have pretty much disappeared. That has made it very difficult for local authorities to deal with child poverty. Unfortunately, my borough, which includes two constituencies—Poplar and Limehouse and Bethnal Green and Bow—has the highest child poverty rate in the country. It is vital that the allocation of funding is fair and addresses the actual needs of communities. According to the Local Government Association, between March and June this year, councils have faced a bill of £4.8 billion because of extra costs and lower incomes due to the coronavirus pandemic. It estimates that the cost of the increased pressures on adult social care alone will be £533 million, and that the figure for public health will be £148 million. Future non-tax income losses due to covid will be about £634 million.
In summary, in terms of funding, the coronavirus pandemic has added even greater challenges to already pressurised local authorities up and down the country. And, of course, the worst challenges have been in poorer areas. I know that many other Members will want to speak of how their own councils have struggled with all those challenges while having to provide much-needed services during the pandemic.
In addition, local authorities have had to rise to the challenge of making up for the fact that the Test and Trace system has been inadequate. It is funded by the £12 billion provided to Serco and other private contractors, but local authorities have had to step in to serve their communities and make it work. They are taking on additional responsibilities because of the pandemic but not getting the necessary funding. The Government promised to provide that funding and it is falling short.
Although I welcome the £3.2 billion of emergency funding and the £300 million of funding for clinical commissioning groups, that still leaves a shortfall of billions of pounds, which is putting local authorities between a rock and a hard place. Labour, Lib Dem and even Conservative-run councils are struggling to balance the books. Some are going bankrupt or have declared bankruptcy. That is a big worry for communities, given that local authorities are on the frontline, cleaning the streets, looking after those who are vulnerable, dealing with the pandemic and providing support, including to the police service, which has experienced cuts, with 20,000 officers taken out of the system over the last decade. In reality, this means that communities such as mine in Tower Hamlets have faced £200 million of cuts over the last 10 years.
The extra costs of covid mean that a further £30 million will have to be found; otherwise services will have to undergo dramatic changes, which will have a damaging effect on people by 2024. At the same time, demand for services has grown. At the height of covid, my area also experienced the fourth highest age-standardised death rate in the country. The health inequalities and other factors that make people vulnerable mean that our local authority has to work closely with other agencies and their resources to protect people. Their actions have saved lives. There would have been an even greater number of deaths if local authorities and partners had not done that work, but they cannot continue to do it without support from national Government.
On education, schools are suffering and need support. Local authorities have worked closely with them to provide that support, but they need funding, as we saw in this summer’s debates about holiday hunger and child poverty. My local authority stepped in a long time ago to help keep children fed, but the food bank queues are astonishing. I would welcome the Minister visiting some of the food banks in my constituency. I joined others in visiting Bow food bank recently. The number of people using it has increased dramatically. They are not the usual suspects who need help because they are extremely vulnerable; middle-income families are also struggling because of covid, employment issues and lack of support. The need is greater, but the funding and resources are not there.
Other services under threat—and not just in my constituency but up and down the country—include those for young people with special educational needs and disabilities and those for young vulnerable children. It cannot be right that, in addition to the double whammy of the coronavirus pandemic and long-term funding cuts, the future life chances of the most vulnerable are being further damaged. We need the Government to act and use tomorrow’s spending review announcement to make sure that local authorities get the support they need to protect our communities.
I am sure that the Minister will say that there are limited resources. Of course there are, but the question is how the money is being used. We have to ask this. Is it right that, for instance, the towns fund—the NAO and others have pointed this out—which is more than £3 billion, is allocated in the way it has been rather than by focusing on indicators of need? That cannot be right. That kind of favouritism is what breeds distrust. It smacks of pork barrel politics and is absolutely unacceptable. How money is allocated and spent is crucial. Of course, there have also been scandals about personal protective equipment and other scandals.
It is right to say that the Government need to refocus their resources in a way that is fair and appropriate, because many local authorities and not just mine—Sunderland, Knowsley, Sheffield, Gateshead, South Tyneside, Oldham and many others—desperately need additional funding but are not getting it. I could go on, and I am sure other hon. Members will, about the number of local authorities that need support but are not getting it.
We need the Government to think quickly and act quickly to ensure that local authorities get the support that they need. If they do not, we will face, in the middle of a second wave of coronavirus—in the middle of a crisis like no other—more lives being put at risk not only by of the pandemic but by the failure to address the secondary effects of extreme vulnerability through local action and support, because local authorities will not have the capacity and resources to act.
I hope that the Minister will take on board my concerns and those of others about children and young people, adult social care and the wider issues of the underfunding and neglect of local government, which is at the frontline of delivering services and does not get the recognition and credit it deserves for the work it does. These are decent public servants who work very hard to deliver for our constituents. We need to back them up and support them, because if we are to fight and win the battle against the coronavirus pandemic, we are going to need them even more than ever before. We are also going to need a collaborative effort from the private and the public sphere to deliver implementation of the vaccine, as well as to improve testing and tracing, on top of all that they already do.
I hope that in today’s debate we can build consensus among Members of all parties to make the case for local government, because it is absolutely at the heart of addressing not only the challenges we face with the pandemic, but the long-term challenges of tackling inequality and genuinely fighting to level up. If the Government genuinely meant what they said in the election about levelling up, they need to put their money where their mouth is and deliver. I hope that the Minister will make that case later today to the Chancellor of the Exchequer, ahead of his statement.
Mr Philip Hollobone (in the Chair)
The debate can last until 4 pm. I am obliged to start calling the Front Benchers no later than 3.37 pm. The guideline limits are 10 minutes for Her Majesty’s Opposition and 10 minutes for the Minister, and then Rushanara Ali will have two or three minutes to sum up the debate at the end. There is a stellar cast of Back-Bench talent. Sixteen Back Benchers are seeking to contribute until 3.37, so if we have a time limit of three minutes, everybody should be able to contribute.
Imran Ahmad Khan (Wakefield) (Con)
It is a pleasure to serve under your chairmanship, Mr Hollobone. I thank the hon. Member for Bethnal Green and Bow (Rushanara Ali) for bringing to the House the issue of the adequacy of local government funding during the covid outbreak, as it facilitates a much-needed debate on both the role of local governments in the crisis effort and the broader interaction between local and national Government.
It was important that any central Government approach to crisis management throughout the pandemic was measured against three key performance indicators. The objectives were, first, to provide adequate financial support to ensure that crucial local government services could continue; secondly, to equip local governments with the tools and flexibility they required to adapt their services to provide targeted support in the relevant jurisdictions; and, finally, that any such support did not create a precedent that would serve to create a further burden on an already overloaded state apparatus.
The figures as of 23 October, without taking into consideration the latest round of business grants, highlight that in my constituency alone, Wakefield Council received an extra £41.52 million to support its efforts in tackling covid-19. This ensured that critical services could continue, despite decreased tax revenues and the higher costs incurred by the pandemic.
In April, £850 million of social care grants, for both children and adults, were paid up front to cover the period from April to June 2020. Although the figures provided by central Government may not have been delivered on a like-for-like basis, they have provided unprecedented sums of money to local authorities, facilitating their ability to use discretion in targeting the needs of their districts as they see fit.
In a crisis, ring-fencing funds for one service may not be appropriate when jobs are at risk and the landlord needs his rent paid, for example. Decisions were made on the best information available at one point in time, and further support was provided where required. One such example was the £617 million discretionary fund, which served as an addendum to the small business rate relief grant and retail, leisure and hospitality grants, and allowed local authorities to distribute further moneys as they saw fit to businesses in need. At the time, I suggested that any underspend from the small business rate relief grant and RHL grants should be combined with the discretionary grant, as a method through which individuals who had been defined as the economically excluded could receive much-needed support on a case-by-case basis.
Mick Whitley (Birkenhead) (Lab)
It is a pleasure to serve under your chairmanship, Mr Hollobone. I thank my hon. Friend the Member for Bethnal Green and Bow (Rushanara Ali) for securing this debate. I want to begin by paying tribute to Wirral Council for the incredible support it has provided to my constituents during the pandemic. This includes instituting a greatly deserved pay rise for care workers, helping homeless people off the streets and into appropriate accommodation, co-ordinating mutual aid efforts and providing much-needed financial support to residents whose livelihoods have been devastated by the lockdown restrictions.
Despite all the difficulties that council workers have faced themselves, their commitment to the poorest and most vulnerable people in our community has always shone through. As a matter of local pride, I would argue that Wirral Council is exceptional, but I note that its efforts are being replicated nationwide and all hon. Members will have similar stories to share.
After years of being underfunded, marginalised and overlooked, local authorities have risen to meet the challenges of covid-19 admirably. This year has shown what a vital role councils play, not just in the provision of services, but as powerful advocates for those people whose voices are too rarely listened to by central Government.
I commend the resolve shown by the metro Mayors, Steve Rotheram and Andy Burnham, when the Government plunged their regions into a tier 3 lockdown with only cut-price financial support, and I was deeply moved by the testimony of the newly elected leader of Wirral Council, Jeanette Williamson, as she opposed the Government’s callous decision to let children go hungry over the holidays. I was also very glad to work so closely with council leaders from across Merseyside in successfully lobbying for the reopening of gyms and leisure centres before the current lockdown was announced.
But now our councils face an uncertain future. Across the country, the threat of cuts to frontline services and even bankruptcy looms. Expenditures have soared while income in the form of business rates, council tax and parking charges has plummeted. Wirral Council faces a black hole of £60 million in its budget, and it is not alone. Last week, the County Councils Network warned that 60% of its members anticipate having to make a fundamental reduction in frontline services, while just one fifth are confident that they can set a balanced budget next year. At a time of spiralling unemployment and a public health crisis unlike any known in our lifetime, we simply cannot afford further cuts to already overstretched and underfunded frontline services. The human cost would be unthinkable.
In March, the Secretary of State for Housing, Communities and Local Government promised that the Government would support councils in doing whatever it would take to protect their communities. Now it is time to honour that promise. The Government should listen to the Local Government Association and provide a minimum of an additional £8.7 billion in core funding over the next financial year. Councils in areas as diverse as Wirral, Nottingham and Gloucestershire have also called for the cancellation of debt held by the Public Works Loans Board. That would massively increase the spending power of local authorities and allow them to make critically important investments in housing, adult social care and green development.
Danny Kruger (Devizes) (Con)
It is a pleasure to serve under your chairmanship, Mr Hollobone. I am grateful to the hon. Member for Bethnal Green and Bow (Rushanara Ali) for giving us the opportunity to pay tribute to council staff across the country.
The whole country has been knocked sideways by the pandemic, and frontline workers in all sectors and industries have stepped up in the most tremendous way, and that really does apply to councils and council workers. They have faced huge costs and huge reductions in their income because of the crisis, but the real effect is not financial. It is on the staff who deliver services for councils. I want to acknowledge that. When we were having the daily press conferences at 5 o’clock, the leader of Wiltshire Council, Philip Whitehead, said to me in despair one evening, “Can we please have the press conferences in the morning,” because all those announcements were coming out and his staff were having to work right through into the middle of the night to respond. That made me realise how hard council staff work, not only out in communities, but in council offices as well.
I want quickly to acknowledge the financial commitments that the Government have made to local authorities through the crisis: nearly £5 billion of non-ring-fenced money, specific grants for a range of special activities that councils have to perform, £6 billion in cash-flow facilities to help councils, and compensation for the loss of fees they have incurred. However, I acknowledge that councils are still out of pocket, and we need to think about how that gap will be met in the months and years to come.
In Wiltshire we have a prudent council that has balanced the books in recent years. It has received additional money from the Government—£15 million is due. That is still to be confirmed, but we trust that it will arrive. Also it has been possible to increase the council tax through the social care precept, which, again, is to be confirmed. We understand and hope that it will be allowed. The authority still faces a budget gap of nearly £30 million, and I recognise that it will be a long task to match and meet that. I hope more money can be found.
I want to finish with two more strategic solutions that all councils have to grapple with, and opportunities that they can take. The first is in reform of social care, which makes up the bulk of spending by local authorities—65% in the case of Wiltshire. I am not going to get into a debate on how to reform social care, but clearly our model is not working and we need to fix it and the financing of it. I support the call by the Health and Social Care Committee and the Housing, Communities and Local Government Committee in the last Parliament for a new model of social insurance to fund social care, which will enable us to get on top of costs.
Finally, I want to pay tribute to a Labour council, Wigan, which, over the last 10 years, has faced all the challenges of austerity, and coped with them by doing a deal with the community of Wigan—the people of Wigan. It kept frontline services open and cut its own back office. It kept the frontline services open by trusting communities and working properly in partnership. That is the model for all of us.
Alex Sobel (Leeds North West) (Lab/Co-op)
I want to begin by thanking all those on the frontline of the pandemic, working to care for the elderly and vulnerable, collect our refuse, look after our children, and much more. Our frontline local government staff are essential workers in every sense.
We all know that local government funding has been decimated since the coalition Government started a programme of cuts in 2010. Since then, we have been subject to a slash-and-burn austerity programme that has led to councils losing more than half their budget in the past decade. Overall, councils in England can spend £7.8 billion a year less on key services than they did in 2010. That is a cut of £150 million a week. Drastic cuts to local government funding have seen the UK’s most deprived areas shoulder the burden of austerity. Poor areas have faced a threefold impact. They have less money to start with, they have been hit hardest by the demands caused by austerity, and are the least able to meet the shortfall with council tax.
Covid-19 has added fuel to the fire. The financial pressures of meeting the costs of tackling covid include lost income from council tax and other revenues. The total is between £10 billion and £13 billion for councils. I would usually be quick to point out that more is being cut from poor Labour councils than wealthy Tory ones, but after 10 years of cuts and a lack of meaningful funding through the pandemic almost all councils are now at breaking point, including large Conservative-controlled councils.
Naturally, though, I want to talk about Leeds. Our situation is not unique. It represents the situation that many, if not most authorities, are facing, but still the figures create a grim picture. Following significant extra costs relating to covid-19, the council is currently projecting, after the application of Government support, an estimated funding gap of £52.5 million for this year. For the year after, 2021-22, the projected funding gap is £118 million. Leeds City Council may have to make more than £95 million of cuts in the coming months if no extra source of income is found.
Council staff are in the frontline in the battle against this disease. Bus drivers, social workers and public health officials are all vital to the proper functioning of cities—now more than ever. But at Leeds City Council jobs are being hit. The most recent figures put the projected job cuts at around 800 with the current funding gap. The council has done everything asked of it, including lending its chief executive officer to the Government to assist with track and trace and going door to door in areas talking with local communities.
Labour councils in this country have found new ways to help their citizens with the pressures they face. Labour councils make, and continue to make, a huge difference to people’s lives despite a Conservative Government whose policies have left gaping holes in their budgets. I would like to pay particular tribute to Leeds City Council administration, which has done great work in providing frontline services, including to black, Asian and minority ethnic and older people, who have been hit hardest by covid.
The Government must now honour their pledge, do whatever it takes and step up to help with Government underfunding in the future, including in tomorrow’s Chancellor’s statement, to help close fully the funding gap in Leeds of £118 million.
Peter Aldous (Waveney) (Con)
It is a pleasure to serve under your chairmanship, Mr Hollobone.
I start by thanking Suffolk County Council and East Suffolk Council for stepping up to the plate to meet the challenges posed by covid-19. I want to highlight the challenges that county councils face, taking into account my role chairing the county all-party parliamentary group. Councils have been on the frontline supporting communities during the pandemic. This has cost money, and the Government have met covid-related costs through four tranches of emergency funding. However, there is uncertainty about the potential costs of the current lockdown, which will not show on the latest local government returns to the Ministry of Housing, Communities and Local Government.
Covid-19 has starkly exposed the fault lines in the funding of county councils and will exacerbate the underlying financial challenges they face in areas such as adult and child social care, special educational needs, highways maintenance and school and bus transport. The County Councils Network’s budget survey of two weeks ago revealed that just one in five of their 35 council members was confident of delivering a balanced budget next year without dramatic reductions to services. In the following year, only one of those councils is confident of doing so.
In the immediate future, county councils are faced with an overbearing and seemingly insoluble dilemma. On the one hand, they will be expected to, and they will, play their role in the covid recovery. On the other hand, they will find that they have even less money to perform this vital task. Two thirds of the funding that county councils receive comes from council tax, and they will thus be exposed to the difficulties in collection that I fear will be inevitable.
The future is both bleak and intimidating for county councils. In the very short term, additional funds are urgently required both tomorrow and in the local government funding settlement that is due next month. Grants should be provided for three years, not one year, so that councils can plan strategically, and more money is needed for special educational needs. In the longer term, we must fix social care, and the Government must carry out the fair funding review.
Stephanie Peacock (Barnsley East) (Lab)
It is a pleasure to serve under your chairmanship, Mr Hollobone. I begin by thanking and paying tribute to my hon. Friend the Member for Bethnal Green and Bow (Rushanara Ali) for securing this important debate.
Day in, day out, our local authorities are on the frontline fighting the virus and providing essential services that we all rely on, from bin collections, street cleaning and libraries to children’s services, social care and homelessness support. I pay tribute to all council workers, especially those at Barnsley Council. During the pandemic, we have relied on them to rapidly reorient themselves in a way we could never have envisaged: being on the frontline of the fight against the pandemic as well as supporting their businesses and residents, all while continuing their everyday essential work.
For that, they were promised “whatever it takes”; they should do whatever was needed, and the Government would ensure that they were not left out of pocket. Sadly, the rhetoric has not been matched by reality, certainly not in Barnsley. Our council has done an exceptional job of supporting residents, but that has come at an expected cost at the end of March of £50 million, including around £34 million in support for the most vulnerable and social care and relief to support businesses. The council also estimates around £16 million of lost income from council tax, business rates and fees. The Government income compensation scheme is expected to provide only £2 million to cover that, with that shortfall leaving the council with a loss of £15 million. The Institute for Fiscal Studies estimated the figure nationally at £1.1 billion, and that was before the second national lockdown.
Of course, this follows a decade of austerity in which Barnsley received the biggest cut in Government support of any council in the country. My constituency cannot afford to be left behind by this Government for another decade.
Mr Philip Hollobone (in the Chair)
Because everyone has been so good in sticking to the time limit, we can increase it to three minutes and 30 seconds.
Aaron Bell (Newcastle-under-Lyme) (Con)
Thank you very much, Mr Hollobone. It is a pleasure to serve under your chairmanship, especially with such kind strictures on the time limits. I pay tribute to the hon. Member for Bethnal Green and Bow (Rushanara Ali) for securing the debate, and to all Members who have spoken so far, all of whom clearly care very much about their communities. This debate should be conducted in a cross-party spirit, and I am sure that the Minister will respond in those terms at the end.
These are extraordinary circumstances. There has actually been an extraordinary response from central Government in terms of the amount of money going to councils, but there has, more than ever, been some extraordinary leadership in local councils. I mean not only the leadership of the councils but the people carrying out their jobs, as my hon. Friend the Member for Devizes (Danny Kruger) mentioned. Everybody on the frontline has shown leadership in responding to the awful circumstances we are in.
To give the view from Staffordshire, Newcastle-under-Lyme Borough Council—a district council—and Staffordshire County Council told me that, by and large, they have had adequate funding from central Government to make up their covid-related losses. That funding has been timely, which they really praised. The Government acted quickly and allowed them to plan ahead, although I recognise what my hon. Friend says about those 5 pm press conferences, which definitely necessitated some late nights. It would be helpful if that was not repeated.
Simon Tagg, leader of Newcastle-under-Lyme Borough Council, says that the Government have listened and given funding to cover the shortfall across council budgets on homelessness, business support and leisure services. That is hugely welcome. Staffordshire County Council has had two leaders during this time, Councillor Philip Atkins and Councillor Alan White, both fine public servants. They estimate that, all in, they have received around £83 million this year in various grants from central Government. They reckon they will have an overall overspend of about £2 million, partly due to delayed cost savings, in addition to some lost income from council tax and business rates.
My councils of course have some asks of the Minister, and it would be remiss of me not to mention them. A lot are about collection fund losses. The Government have promised to bring forward proposals to share collection fund losses where councils will not get as much council tax and business rates in. I have been asked to ask the Minister to ensure that the Government will honour that promise and bring that forward as soon as possible, so that those councils can have some certainty in the year ahead. Newcastle-under-Lyme Borough Council would like more funding to cover the cost of council tax support for people claiming benefits. It expects a big increase in that bill when furlough finishes. Staffordshire County Council highlights long-term concerns around social care and the overall funding quantum for local government. It is essential that they have certainty, so that they can do all they can to help the economy get back on its feet and, of course, to level up.
North Staffordshire is one of the principal targets of levelling up in this country. We have had a lot of support from the Ministry of Housing, Communities and Local Government. I look forward to our future high streets fund announcement and our town deal bid, both of which are coming soon. Councils need certainty about their underlying funding; otherwise, they may be forced to make cuts to the universal services that many people rely on.
I again thank the hon. Member for Bethnal Green and Bow for securing this debate. I thank everybody in Staffordshire, including the leadership, the chief executives—Martin Hamilton and John Henderson—and everybody who has done their part to get us through this pandemic. I look forward to the Minister responding to my points.
Wera Hobhouse (Bath) (LD)
At the start of the pandemic, the message from Government to local authorities was clear: “Do whatever it takes to deal with the coronavirus, and we will cover your losses.” Councils across the country have been at the forefront of the coronavirus response. They are facing growing costs and increasing demands, and they have seen significant drops in income. At the time when local services are needed more than ever, our councils are being left to pick up the pieces.
I want to express my gratitude for the support that Bath and North East Somerset Council has provided to services such as the Community Wellbeing Hub and food clubs and pantries. However, despite the initial promises, council funding from central Government has been drip-fed and inconsistent. That creates a high degree of uncertainty about the long-term financial impact on council finances, and it means uncertainty for the core services for our communities.
Bath and North East Somerset Council is one of the hardest-hit by the pandemic. Over the past 10 years, it has done exactly what the Conservative Government asked of local authorities and created its own income stream, but its main funding stream—heritage and parking services—has effectively dried up. In normal times, the Roman bath and other heritage services would generate millions of pounds. At the height of the lockdown, however, the council was losing £91,000 a day from heritage and parking services. The council estimates that it will need to find £29 million of savings over the next five years.
Prior to covid, councils were already facing a big funding gap. According to MHCLG’s financial information service, the financial challenge facing councils in 2020-21 is now £11 billion. The delay in the comprehensive spending review has only created more uncertainty as councils try to set their budgets for next year. When will the Government make good on their promise to cover councils’ financial losses? For example, up and down the country councils such as BANES have outsourced their leisure services to companies such as GLL, a not-for-profit charitable social enterprise, which is already closing leisure centres and will close more unless the Government step in. We all know how important sports and activities are for people, especially for their mental health and wellbeing during the corona crisis.
Local businesses that are renting premises from the council in Bath are also suffering. The council cannot afford to give them more rent relief because it needs every penny to cover the cost of essential services such as street cleaning. Local councils have kept their promises to local people. When will the Government deliver on their promises to councils?
David Simmonds (Ruislip, Northwood and Pinner) (Con)
It is a pleasure to serve under your chairmanship, Mr Hollobone. It is clear that the countries that went local early are the ones that have had the most positive feedback about the way they responded to covid. My two local authorities, Hillingdon Council and Harrow Council, are no exception to that: they have redeployed huge numbers of staff from roles as diverse as working in our libraries and the councils’ contact centres to tasks such as delivering meals on wheels to vulnerable residents and back-filling other staff to enable them to be released—for example, to set up and run emergency mortuaries to serve London. There is no question but that council staff are on the frontline of the response to covid.
We have to consider the question of financing and what it means for local authorities in the future. Before this year of covid, local authority budgeted expenditure in England stood at about £99.2 billion. Within that, the official returns from local authorities show reserves of just over £25 billion, of which £23.6 is non-ring-fenced. I dare say that colleagues over at the Department of Health and Social Care will be looking enviously at MHCLG, because whereas DHSC has to bail out NHS authorities every year for the work they do, MHCLG is in a situation that many businesses would frankly be enormously envious of.
The challenge, however, is that we uniquely require local authorities to balance their budgets in year. Unlike central Government, they are not able to borrow to finance revenue expenditure. They have to make sure that those budgets balance every year, so if there is excess expenditure, cuts need to be made. When we begin to drill down into the national financial position, we find that revenue balances to cover the additional costs are not necessarily found in the authorities that have the biggest financial challenges.
The point made by my hon. Friend the Member for Waveney (Peter Aldous) goes to the heart of the issue. Social care authorities face a lot of demand. Certain London boroughs and county councils have the largest number of vulnerable people to support, but a significant proportion of the balance is in other types of local authorities that do not face the same day-to-day costs. I add my voice to the pleas to the Minister that we need to look at how the funding in the system is distributed if we are to do this better. When we drill down even further and look at the response of individual local authorities, it becomes clear that the covid impact is very different from place to place. Around two thirds of the average council’s expenditure is on social care for adults and children, which concerns less than one in five of the population.
The response to covid has brought all manner of new and additional costs, the vast majority of which—according to feedback from Hillingdon and Harrow councils—has been covered by the forthcoming additional funding from MHCLG. I might not be expected to say this as a serving vice-president and former Conservative group leader at the Local Government Association, but MHCLG has rightly been coming forward with that funding. With respect to the points about how expenditure has changed over time, it is important to recognise that many authorities have, of course, not historically benefited from additional funding based on deprivation. Many of the authorities that have been criticised never had the extra money to cut in the first place.
Navendu Mishra (Stockport) (Lab)
It is a pleasure to serve under your chairmanship, Mr Hollobone. I thank my hon. Friend the Member for Bethnal Green and Bow (Rushanara Ali) for securing this important debate.
As far back as May, I wrote to the Secretary of State for Housing, Communities and Local Government asking for a cast-iron guarantee that the Government would deliver on their promise to cover the costs of local authorities’ response to the pandemic. At the time, Stockport Metropolitan Borough Council in my constituency was facing a shortfall of £41 million, like other councils, and that shortfall has now increased considerably. Six months on, we are still awaiting an assurance from the Government, while local authorities continue to be pushed into the red as they struggle to stump up funds to safeguard the lives of their citizens during the latest wave. Faced with economic ruin, the council was pushed into the dark, as we saw most recently when the London Borough of Croydon was forced to file for bankruptcy after being unable to address a £66 million black hole.
Our councils continue to do the job of ensuring that everyone receives the support they need during this incredibly troubling period. I have enormous respect for them and am incredibly grateful for the work that they have continued to do in challenging circumstances. The deputy leader of my council in Stockport, Councillor Tom McGee, is a fine public servant and I thank him for ensuring that our local public office holders are updated at every stage of the pandemic and are aware of the challenges faced by our local administration.
Nobody expects the Government to have foreseen a global pandemic, but it is clear that a decade of austerity—an ideological choice, not an economic necessity—has ravaged local authority finances and left them weakened, forcing councils to delve into their reserves to redress the central Government shortfall. To put that in context, Stockport council went into the crisis with over £100 million already slashed from the town hall budget since 2010. The council has now been forced to step in to compensate for the Government’s insufficient funding, and local authority budgets are stretched even further. During the first wave alone, the funding black hole for Stockport council was £25 million. Failure to underwrite council expenditure will have dire consequences for my council and leave it with little alternative but to consider dramatic measures such as issuing section 114 notices to curtail all but essential spending, leading to wholesale reductions in services for all those living and working in Stockport.
The Government must urgently intervene to ensure that all councils are in a position to protect their citizens and prevent other services from going to the wall, including libraries, parks, museums and leisure services. Adult social care is one area that cannot be overlooked, and it is already under enormous pressure, as was mentioned by my hon. Friend the Member for Bethnal Green and Bow. The Government need to resolve the funding crisis in the adult social care sector. The Local Government Association recently estimated that social care services face an additional cost of over £6.5 billion to cover costs. The main three areas are PPE, increased staff costs, and increased cleaning and overheads.
In addition to the vast expenditure that local authorities are forced to cover during this period, many have seen their incomes cut dramatically. Every council in Greater Manchester, for example, has been hit by the drop in the dividends from Manchester airport on which it relies. For Stockport council, that means that more than £6 million has been lost, placing further strain on services and jobs—and that is even before we factor in the significant number of jobs lost in the aviation sector more widely, where many of my constituents work in the UK’s third-largest airport.
Apsana Begum (Poplar and Limehouse) (Lab)
It is a pleasure to serve under your chairmanship, Mr Hollobone. I thank my hon. Friend the Member for Bethnal Green and Bow (Rushanara Ali) for securing a debate on this topic, the impact of which is felt by our constituents deeply. As a Member in the London Borough of Tower Hamlets, she is right to highlight that the area has the highest rates of child poverty in the country.
The covid-19 crisis has emphasised starkly the importance of local services in making sure the essentials of life are never denied to people because of their circumstances. As has been argued by others, at the core of the issue is the need for sustainable core funding for local government—a need that is urgent and critical, and yet this year’s spending review will not be comprehensive. The multi-year review that we were originally promised is unlikely to deliver funding for local services at the level required, nor is it likely to recognise the role of Government investment, public ownership, in-sourcing and care in what must be a green sustainable recovery that delivers for people. On top of that, there is a public sector pay freeze looming for public sector workers who have kept the country running throughout the pandemic.
People all over the UK are being let down by patchy support measures that result in unfairness, injustice and hardship. That is despite people continuing to work hard, whether it is from home, in cramped conditions with limited equipment, balancing paid work with caring responsibilities; being forced to work in unsafe conditions without the protections needed; or supporting others around them unpaid. The challenges in my borough cannot be underestimated. We have the fastest-growing population in the country—it has doubled in the past 30 years and is projected to grow by a further 67,000 in the next 10. As demand increases, funding reduces.
Universal basic services, of which local services are a cornerstone, was an idea at the heart of the 2019 Labour party manifesto that I was elected on. It was not only about protecting the free services that we have; it was a vision to extend the services that we should all have access to, from free travel on buses for the under-25s and full-fibre broadband free for all, to free school meals for primary school children. In health, it filled the gaps in hospital car parking and dental care. In social care, it addressed the crisis by pledging free personal social care. Despite the barrage of criticisms by the right-wing media during the election, that never sounded like a wish list to me, but rather the foundation for a decent life for everybody in the 21st century. It is an idea that has underpinned our treasured public and local services ever since Beveridge argued for the state provision of national minimums for essentials.
Collectively provided services such as our schools, libraries and parks do not just bind us together as a society; they transform lives. Events this year have made that truth even more clear. Yet just today, a report by Victim Support further emphasised the need for victims of domestic abuse, who are in urgent need of additional support as the country looks ahead to months more of lockdown restrictions. It is overwhelmingly obvious that years of cuts and a failure to invest in services made the UK extremely ill prepared to deal with a large-scale health risk to our community. Further cuts on the horizon to services such as special educational needs support, adult social care, library services and leisure centres, to name just a few of the areas that I am being contacted about by constituents, will have a disastrous impact on local people and communities that were already vulnerable before the pandemic.
Rachel Hopkins (Luton South) (Lab)
It is a pleasure to serve under your chairmanship, Mr Hollobone. I congratulate my hon. Friend the Member for Bethnal Green and Bow (Rushanara Ali) on securing this important debate.
Speaking as a sitting councillor on Luton Borough Council and as a vice-president of the Local Government Association, I too thank all the officers and workers at Luton Borough Council, and all those working in councils across the country who have shown brilliant leadership and determination throughout our coronavirus response. Their local expertise has been critical to delivering services for our communities, from supporting the roll-out of testing to ensuring that the most vulnerable can access food. It is important to note that they have worked alongside NHS and other public service workers, including the fire and rescue service and the police.
Local authorities across the country have stepped up, as we know, delivering vital additional support at pace, despite suffering a £15 million cut in core local government funding since 2010. As was mentioned, the National Audit Office has calculated that local authorities have seen Government funding reduced in real terms by almost a half since 2010-11. Austerity has left many councils understaffed and underfunded, with demand for many services, such as adult social care and children’s services, increasing. The pandemic has compounded those existing difficulties through extra costs, lost income and cash-flow pressures.
Since 2010, Luton Borough Council has had £138 million cut from its budget. It tried to mitigate the impact by generating increased income from Luton airport, which it owns, to fund council services. However, covid-19 health restrictions affecting aviation have caused that income to dry up, meaning the council will not receive its forecast £20 million annual dividend and the £9 million donation to our local charity and voluntary sector is at risk.
Although the Government stated that councils would receive the support they need to get through the crisis, and have acknowledged Luton Borough Council’s exceptional circumstances due to the airport, there is a requirement for local councils to set balanced budgets in year, so in the absence of any specific and exceptional Government finance to compensate for loss of commercial income, Luton Borough Council has had no choice but to implement an emergency budget that has made £22 million of in-year cuts. This is affecting our non-statutory services, which are highly valued by local residents. At a time or rising unemployment, 400 jobs will potentially be lost.
I recognise that the Government have made some additional grant support to councils, but it barely scratches the surface of the problem. Without a funding package that considers years of underfunding under a decade of Tory austerity and the instability caused by the pandemic, services in adult social care, public health, homelessness support and children’s services are at risk. The Local Government Association is calling on the Government to provide an additional £8.7 billion in core funding in 2021-22. That consists of £4 billion for the current funding gap to sustain 2019-20 service levels, £1.8 billion to deal with other quantifiable pressures to stabilise the sector, and £2.9 billion for other core funding requirements to help councils improve their core service offer.
We also need a long-term council funding review that begins to rebuild local resilience, as local councils must be at the heart of building back better in our communities. For the sake of our communities across the country, I hope the Minister has been able to persuade the Chancellor to announce a package along those lines in tomorrow’s spending review.
Rachael Maskell (York Central) (Lab/Co-op)
It is a pleasure to serve under your chairmanship, Mr Hollobone. I congratulate my hon. Friend the Member for Bethnal Green and Bow (Rushanara Ali) on introducing this debate. I am increasingly concerned about the finances of City of York Council, in terms of both sufficiency and its investment choices.
Staff have been incredible in the way they have stepped up in this crisis, working in the most difficult circumstances and going above and beyond. Social care staff have put themselves at risk to meet demand. Social workers have found new ways to safeguard children. Refuse staff have continued to keep our streets clean and bins emptied. There are so many more I want to thank today. The increased demand on them must be recognised. More than claps and kind words, they must receive a proper pay rise this year. If the Chancellor reneges on that, it will never be forgotten.
In York, due to the high rateable values, need has not been met by grants. As offshore landlords have pocketed the benefits of these grants in their tax havens, businesses are vanishing from our high street. Labour wants councils to be able to support the local economy. In York, where 30,000 people work in hospitality, retail and tourism, we have the worst-hit high streets in the country and are one of the worst affected places in general. The 8 million visitors who normally come to our city just are not there.
I want to point to a few specific areas. We know there has been increased demand in domiciliary care, because families are not placing people in care homes for fear that they will not be able to visit and because of the risk of infection. The costs have increased significantly over the last few months and must be met. The same is true of charities. When it comes to the end of the financial year, many are fearful that they will not see their contracts renewed. Already £10 billion in debt, they need security in order to safeguard their futures. As the sector says, charities have never been needed more, but we must also recognise that they have never been more in need themselves.
On public health, it has been an incredible story in York. As we were heading into tier 3, we were able to turn the ship around, bucking national trends and reducing infection rates considerably. Contact tracing has been at the heart of that, yet we need more funding to do more to ensure that we lock down this virus in future, not people or the economy. I trust that the Minister will look at the resourcing of public health to ensure that it can do its job with sufficiency.
On the investments of City of York Council, at the heart of my constituency is York Central, the largest brownfield site in the country—I know that the Minister and I are going to discuss this. City of York Council has invested £35 million, which will turn out to be about £57 million. The other delivery partners, Network Rail and Homes England, will get their costs back plus 20% profit from the development, but City of York Council will not see such a return.
That needs scrutiny, not least in the light of the current situation, and because of its other poor investment choices, such as paying out £500,000 to a former chief executive, which the auditors are, rightly, not happy to sign off. There is something that needs investigation, and I trust that my discussions with the Minister will get to the bottom of those issues so that we can spend our money wisely in our city.
Stephen Timms (East Ham) (Lab)
Local authorities all over the country are the frontline in this public health crisis. As a recent all-party parliamentary group on faith and society report shows, councils have set up imaginative partnerships with faith groups to provide food and care to struggling families. I support the call made recently by the hon. Member for Devizes (Danny Kruger) in his report to the Prime Minister for a new deal for faith groups.
Covid-19 hit Newham, my very diverse borough, extremely hard. It is next door to Tower Hamlets, which we heard about from my hon. Friends the Members for Bethnal Green and Bow (Rushanara Ali) and for Poplar and Limehouse (Apsana Begum). As elsewhere, the council has been imaginative and effective. It recruited volunteer health champions to disseminate key health messages and to obtain feedback from the community. It set up Newham Food Alliance with faith and community groups. Bonny Downs Baptist church, Highway Vineyard church, Manor Park Christian Centre, Ibrahim mosque and the Newham Community Project have all done extraordinary work in East Ham.
The council has increased support for temporarily accommodated homeless families and it has extended support to rough sleepers and families with no recourse to public funds. It has spent £25.3 million extra on the pandemic this financial year. It has lost £13.3 million in income and has been unable to deliver £7.4 million in planned service cuts. That is a £59.5 million hit, but Government funding has been £36.8 million.
Some 3 million extra people have had to claim universal credit this year, but hard-working families, who work legally but have no recourse to public funds due to their immigration status, do not have that safety net. They can get council help under section 17 of the Children Act 1989 if they have children, and under the Care Act 2014 if they need additional care.
In March, local authorities were told by the Minister to support single homeless adults without care needs. I very much applaud his initiative—I wish the Home Office had shown a similar degree of enlightenment—but there was no clear legal basis for that instruction, so provision has varied immensely.
Local welfare assistance and £500 track and trace payments are available for families with no recourse to public funds only by discretion. Andy Jolly of the University of Wolverhampton reports that many families were refused council help during the pandemic. We need new funding for basic council support for families with no recourse to public funds. Will the Minister commit to providing it?
Zarah Sultana (Coventry South) (Lab)
It is a pleasure to serve under your chairmanship, Mr Hollobone. I thank my hon. Friend the Member for Bethnal Green and Bow (Rushanara Ali) for securing this important debate. I also thank and pay tribute to everyone at Coventry City Council who has worked tirelessly through the pandemic, as they did before it hit, to care for the city’s residents and keep services going, even as workloads have been stretched and budgets have been pushed harder.
The truth is that local authority budgets were in crisis way before the pandemic. They have faced a decade of brutal Tory cuts. In Coventry, that has meant a cut of £120 million to the central Government grant every single year since 2010, meaning a total reduction of funding of £1.2 billion to date. That amounts to nearly £350,000 in lost funding every single day.
It is a similar story across the country. The National Audit Office estimated that between 2010 and 2018 central Government funding for councils was slashed by nearly 50% in real terms. Those cuts have meant a decade of youth club closures and children’s centres having to shut down, and domestic violence refuges and homeless shelters being forced to close their doors. My inbox is inundated with people struggling on the housing waiting list, which now stands at 14,000 people in Coventry. That is what a decade of Tory cuts looks like.
Local authorities have now been rocked by the impact of the pandemic. Councils have been forced to spend more to meet rising needs, and their budgets have been hit by a loss of income in tax receipts and business activity. When we take into account the effects of austerity and covid on local authorities, we see how utterly inadequate the Government’s funding announcements truly are. Councils do not just need eight months of funding to be plugged; they need 10 years of cuts to be reversed.
The crisis has highlighted how fundamental our local authorities are and it has shown who our key workers really are, too. They are not the hedge fund managers or the City bankers, who have had it so good for so long. They are the carers looking after our older residents in Coventry, the refuse collectors and the street cleaners, and the working people who have kept our country going. I will finish by placing on the record my thanks to them.
I call on the Government not only to compensate local authorities for temporary funding shortfalls, but to give them the funding and the powers they need to tackle everything from the housing crisis to the social care crisis, to give low-paid staff the pay rise they deserve, and to truly meet the needs of our communities.
Tim Farron (Westmorland and Lonsdale) (LD)
It is a pleasure to serve under your chairmanship, Mr Hollobone. I pay tribute and give my thanks to the hon. Member for Bethnal Green and Bow (Rushanara Ali) for securing this important debate.
I will focus my few remarks on the support that local authorities have given, and continue to give, to businesses. Thanks to Government support, South Lakeland District Council provided the largest single number of grants to local businesses of any shire district anywhere in the country, and it is not hard to understand why that would be the case. We are the tourism epicentre of the United Kingdom and, after London, the biggest visitor destination in the country. The largest single employer is hospitality and tourism, and at the worst part of the crisis 40% of the entire workforce of my constituency was on furlough. We have seen a sixfold increase in unemployment.
The diversity of employment is significant as well. One in four people in my constituency work for themselves. At the beginning, after initial grants and furlough, which were very welcome, were correctly provided by the Chancellor, there were some gaps in support. Discretionary awards were then made through local authorities and delivered expertly, fleet of foot, by local authorities, including my own in South Lakeland, to people such as small bed and breakfast owners, those who ran businesses from their own home or shared space with others, or those who did not get any support in the first tranche. Thanks to the campaigns of many and the Government listening, on that occasion, district councils such as mine were able to provide support, and they have done so well.
That gives us a clue as to how the Government should behave towards the remaining 3 million people who have still received no support. I am thinking about many people on maternity leave; people who have been self-employed for less than 18 months; those who are running small, limited companies, such as taxi drivers, hairdressers, personal trainers and the like; and those who just missed the cut-off date for the payroll, at just the wrong moment in March.Those people have been left with zero support since March and are struggling to pay their rent or mortgage and feed their kids. I pay tribute to them for their campaigning. I beg the Government to allow councils to do for those people what they did for the first set of excluded people back in March and April.
I thank councils for all they do at the forefront, providing social care, schools, special educational needs provision and child protection, and looking after the homeless and those in housing need. I am confident that in Cumbria we had the most effective localised Test and Trace system in the country, with public health being run incredibly well at a local government level in my community.
I will just say, on top of all that, how odd it is that the Government think this is somehow a bright period in which to force top-down reorganisation of local government in Cumbria, North Yorkshire and Somerset. Even if a Government thought there was some wisdom in changing the balance of local government in those places, how crackers—how out of touch—would they have to be to think now is the moment to do it? I urge the Minister to provide funds for local authorities to support those who have been excluded from support so far, and to not distract our social care home managers, our carers, our teachers, those people caring for the homeless, and those leading the economic recovery in our communities. Do not divert them from their vital task by a pointless act of navel contemplation—a top-down reorganisation.
Naz Shah (Bradford West) (Lab)
It is a pleasure to serve under your chairmanship, Mr Hollobone, and I congratulate my hon. Friend the Member for Bethnal Green and Bow (Rushanara Ali) on securing such an important debate.
I will start by paying tribute to the council staff across England who have worked so hard to keep our communities safe in difficult circumstances throughout this pandemic. I have seen at first hand the efforts of council staff workers in Bradford West from the very outset of this virus—the hard work they do to minimise and prevent the spread of infection, get help to the vulnerable and support the care sector, work to sustain our businesses and the economy, keep essential services such as refuse collection and bereavement going, and much more, including setting up local Test and Trace services before there was any commitment or financial support from the Government. That has been the case for councils up and down the nation.
However, local government is at a crossroads. A decade that saw £15 billion cut from local authority budgets has ended with the impact of covid-19 driving up costs and cutting income, leaving councils across the country facing huge challenges to set a balanced budget. Many of my colleagues have mentioned those budget cuts, particularly my hon. Friends the Members for Leeds North West (Alex Sobel), for Barnsley East (Stephanie Peacock), for Stockport (Navendu Mishra) and for Poplar and Limehouse (Apsana Begum). The numbers do not look good for any of those constituencies.
Without proper funding, there is a real risk that councils will not be able to balance their budget, as they are legally required to do. Councils do not want to have to make those hard choices, but they have been left with little choice by the Government. Vulnerable people across the country will suffer the most if councils are forced to stop delivering the crucial services they rely upon. The tragedy of this is that after a decade of austerity, councils will be forced to cut back on funding again. Additionally, it has been reported that the Chancellor is considering a public sector pay freeze. Can the Minister clarify whether he feels comfortable clapping public sector workers as we entered the pandemic, and cutting their futures as we start to come out of it?
Since the beginning of the pandemic, councils have sent detailed financial returns to MHCLG each month, so this time around, the Government cannot feign ignorance. Ministers know exactly how much local government is out of pocket by. Despite the fact that at the Government’s daily press conference in May, the Communities Secretary said he would “stand behind councils”, it is clear to leaders of those councils that that promise will not be kept. Nor is this a short-term issue that will go away after covid; these funding pressures are cumulative. Councils are losing out on fees and charges from sources such as leisure centres and car parking: as my hon. Friend the Member for York Central (Rachael Maskell) said, York has lost 8 million visitors due to covid-19.
There is no guarantee that there will be a return to normal next year, either, and it is not just me saying that. According to analysis by the cross-party Local Government Association, councils in England will face a funding gap of more than £5 billion by 2024 just to maintain services at current levels. The present national lockdown has no doubt made the funding crisis more acute. The same concerns have been raised by the Conservative-led County Councils Network, and the evidence from witnesses at the Select Committee on Housing, Communities and Local Government has been equally concerning. I also agree with the concerns that the chair of the all-party parliamentary group, the hon. Member for Waveney (Peter Aldous), mentioned earlier.
I hope that the Minister can provide some clarity about how the Government intend to deal with the huge challenges facing local government, and that he will be able to answer some questions. However, before I get to those questions, I want to talk about places of worship. My right hon. Friend the Member for East Ham (Stephen Timms) highlighted the role of mosques. I have seen at first hand the role of mosques in my constituency, but ahead of the spending review, I have also had some conversations with local churches. The churches, mosques and all places of worship in my constituency have already been picking up the pieces of 10 years of austerity from Government cuts, including through food banks; across the country, each church equates to £300,000. There has been no commitment to help where churches or mosques are picking up the council pieces. Can the Minister highlight what is going on with the funding allocated to places of faith?
I understand that the Prime Minister’s adviser, Sir Edward Lister, wrote to councils under tier 3 restrictions to advise that they would not be asked to set a balanced budget this financial year. Will the Minister clarify how that will work and whether it will apply to those councils that are subject to increased restrictions after 2 December? Will he also clarify how much has been paid to local government to date, through his Department’s scheme to replace lost income and fee charges? Will he say whether his Department is considering further financial support for councils returning to the higher tiers of local restrictions after 2 December? Can he confirm whether that will be based on need or per head of population?
The Transport Secretary highlighted today that the Government would not engage with regional Mayors as we enter the new tiered system. Have the Government abandoned their pledges on devolution, and should we expect further Whitehall rules for the future of this Government? Finally, will the Minister clarify when the local government financial settlement for 2021 or 2022 will be published? My hon. Friend the Member for Bethnal Green and Bow (Rushanara Ali), who secured this debate, laid out very eloquently the challenges that are faced. Councils have to make a choice: will they cut library services, refuge services, frontline workers, bin collections—what will face the axe next? Councils are between a rock and a hard place when making these decisions.
We have already seen the fiasco where the Government took the decision to centralise Test and Trace and give the contracts to Serco. My understanding is that Serco did not even have any penalties in its contracts. In my constituency, and others I have seen with a high prevalence of covid-19, people have been door-knocking and managing to test, isolate and track people locally. They have managed to isolate outbreaks, but the Government are not putting their money where their mouth is. That is an added pressure to those that councils already face.
We have had 10 years of austerity, followed by covid and a Government who have gone into national lockdown instead of taking a circuit breaker, which we advocated. That has had even more of an impact on our councils. They really need certainty. In Bradford, our councils have already had so many cuts, as have the councils of every Member on both sides of the House. Nobody is denying that we have had cuts for the last 10 years. Will the Minister confirm that the Government will be putting their money where their mouth is? Did they mean it when they said, “We will do whatever it takes”? Will he give the councils that reassurance?
Mr Philip Hollobone (in the Chair)
If the Minister could finish his remarks no later than 3.57 pm, Rushanara Ali will have time to sum up the debate.
The Minister for Regional Growth and Local Government (Luke Hall)
It is a pleasure to serve under your chairmanship, Mr Hollobone, and to be back in Westminster Hall after such an absence. It is an important Chamber in which to hold debates such as this one, to raise issues such as local government finance and so on. I am hugely grateful to the hon. Member for Bethnal Green and Bow (Rushanara Ali) for securing the debate and for opening it in such a pragmatic, sensible, level way, which highlighted some of the issues facing local government. I thank her for the tone in which she opened the debate and I thank hon. Members for their contributions. I will do my best to address all the points that have been raised.
First, may I place on the record my thanks to local government? The work that those who serve in local government have done in these extraordinary times has been remarkable. They have risen to help us as a country respond to the incredible challenges we are facing and worked tirelessly to help us through the pandemic. From their incredible work protecting rough sleepers, offering over 90% of them accommodation within just a few days of the start of the pandemic, to the work they have done on testing, alongside NHS staff, to keep our parks, public spaces and schools open, and helping vulnerable people, including victims of domestic abuse, the response has been truly remarkable. I know that if the Secretary of State and the Prime Minister were able to attend, they would put on the record their thanks for the remarkable work of councils, councillors and officers around the country who have done so much to support their communities, their businesses and vulnerable people.
Much of today’s debate has been about the response to the pandemic, so I will start my remarks there. In responding to the pandemic, we have built on what was a good local government finance settlement for this financial year: a 4.4% real-terms rise in core spending power for councils. We were genuinely grateful for the Opposition’s support for that finance settlement and hope to have their support again. Clearly, they will look at the detail carefully when the Chancellor makes his statement tomorrow and when the settlement is published, but we were grateful for the cross-party support this year, which we hope will be forthcoming again.
We have been determined that no local authority should face unmanageable spending pressures because of coronavirus, and we will continue to deliver on that commitment. That is why, following the announcement of the winter plan this week, we have allocated up to £8 billion this financial year to support councils throughout the pandemic. Crucially, that includes £4.6 billion of non-ring-fenced spending so that councils can make decisions at a local level about how that money is spent and how resources should be deployed, because councils know their communities best and are best placed to make those decisions.
A number of hon. Members mentioned the financial returns that we have asked councils to submit throughout the pandemic. I am grateful to councils for doing that so diligently. Our information shows that councils spent £3.6 billion from March through to the end of September on covid-related pressures, so we hope and expect that £4.6 billion of non-ring-fenced money has helped councils with those expenditure pressures.
It is worth putting on the record the other support that local government has received from Departments across Whitehall since the start of the pandemic. That has included: £1.1 billion for the infection control fund, which has helped support adult social care providers to reduce the rate of transmission both in and between care homes, and to support the wider workforce, which has been vital; £300 million of support for councils’ Test and Trace activities; £485 million to support implementation of the national restrictions, which has been extended to the end of the financial year; £91.5 million for councils to ensure that rough sleepers do not return to the streets, as announced in September; £170 million for the winter grant scheme to support families and children; and over £22 billion in grants and reliefs for businesses at this challenging time. We believe that funding package is unprecedented.
Hon. Members commented on what extra financial support will be available now. I reiterate the point made yesterday by the Prime Minister, who confirmed further support for councils as we return to the tiered system of local restrictions with the extension of the contain outbreak management fund for the rest of the year. That will mean a payment from the Department of Health and Social Care to upper-tier local authorities of £4 per person per month in areas with very high restrictions for the rest of the financial year.
Hon. Members made points about the distribution of funding throughout the four tranches of local government finance support since the start of covid. We have distributed non-ring-fenced funding using a covid relative needs formula. It is important to state that the formula accounts for the main drivers of covid-related expenditure. Yes, of course that includes population, but it also includes deprivation, which is crucial, as well as the various cost adjusters for delivering services in different parts of the country. We think that was the right system when considering how to distribute money between councils.
Members also pointed out that it is not only additional covid spending pressure that councils have faced; many have also had to deal with tax and income losses. That is why, alongside the funding we have put into local authorities, we have introduced measures to help them manage the loss of income from tax and transactional services, sales, fees and charges. That is a substantial scheme. It compensates councils for lost income from key services, such as car parks and libraries, which are normally funded through sales, fees and charges but clearly have been largely closed or underused during the pandemic. Alongside that, we have given councils the flexibility to spread their tax losses over multiple years, rather than the usual one year. We have committed to set out further details at the spending review—we do not have too long to wait—on how we will apportion the lost tax income between central and local government. I know that councils are keen for clarity on that point, and it will be provided shortly.
There were a number of representations about the spending review itself. I understand that this is a perfect time for that conversation to happen, and those points have been made. I will answer some of the points specifically, but the representations about spending for local authorities, an increase in core spending power, social care funding and the share of the council tax burden and grant have certainly been heard. Those points were well made.
The hon. Member for Poplar and Limehouse (Apsana Begum) mentioned the one-year spending review and how it would have been more suitable to have a longer-term settlement. I understand that point, but unfortunately we are in a place now where long-term planning is difficult to pursue, so we think it is right to concentrate on the covid-19 response. However, we absolutely share councils’ desire to return to longer-term financial planning. That has been a key ask of councils, and once we are through the pandemic we aim to hold a multi-year spending review settlement.
The hon. Member for Bradford West (Naz Shah) asked a number of questions, which I will try to address. She asked about engagement with regional Mayors. That is a really important point. The Secretary of State and I spoke to all regional Mayors across the country last night. We have an open offer of conversation and continued engagement with them. We also had a webinar with local authorities yesterday, which every leader and chief executive was invited to. Hundreds of councils joined that call, and that engagement is hugely important to us as we progress through this period. We actually continue to have regular webinars and discussions with council leaders across the country, answering their questions on an almost weekly basis, which has been hugely informative.
I hope that I have answered part of the point that the hon. Member for Bradford West raised about the £4 per head in new funding. If she wants more detail on that after tomorrow, I am happy to set it out for her in writing. She asked about lost income and how much of that is being paid out. Most councils have now been informed about the first tranche of payment that is being paid out—millions of pounds. I am happy to share the details with her if that is desirable. She also mentioned public sector pay in local authorities. It is important to note that local authorities, working with unions and other employer bodies, take these decisions externally of Government, but she is absolutely right to put that on the record.
My hon. Friend the Member for Ruislip, Northwood and Pinner (David Simmonds) made sensible and important points about the long-term sustainability of funding and about funding reform. We would have liked to come forward with the fair funding review this year. Clearly, that is not possible in the current circumstances, but we continue to have that conversation. My hon. Friend the Member for Waveney (Peter Aldous) talked about the funding challenges facing counties and made important points about the spending review and the settlements. Those representations have absolutely been heard.
My neighbour, the hon. Member for Bath (Wera Hobhouse), who has understandably left the Chamber, made important points about the specific circumstances facing her local authority, which is unique in a lot of respects. I point her towards the sales, fees and charges scheme, which compensates councils for 75% their losses beyond the first 5% of planned income. I am always happy to meet her to discuss those unique circumstances. She also asked for certainty about leisure centres. The Department for Digital, Culture, Media and Sport will shortly set out more detail about the £100 million scheme for leisure centres. She makes an important point about the importance of those institutions for people’s physical and mental health. She is quite right to raise that.
The hon. Member for Luton South (Rachel Hopkins) talked about the genuinely unique circumstances that face her council. I hope she feels that we are working with her constructively. It is a unique situation and I am always happy to meet her and her council leader to discuss it, if that would be of use. I absolutely recognise the point she raises.
The hon. Member for York Central (Rachael Maskell) also raised the unique circumstances facing her local authority. I know that we are planning to speak soon, and I look forward to addressing the issues then. She also mentioned the spending review and local government pay, which I hope I have covered in my remarks.
The right hon. Member for East Ham (Stephen Timms) raised a number of issues. I join him in putting on the record my thanks to the incredible organisations in his constituency and his local authority for the work they have done on rough sleeping, which I know is a huge challenge. I know how committed they are to that issue and to supporting people. I thank them for the work they have done in the “Everybody In” campaign. He also made passionate points about those with no recourse to public funds. I think we have made changes on that issue during the course of the pandemic, including extending the derogations to ensure that everybody can receive that basic safety net of support, further than the areas it had already been extended to.
The hon. Member for Westmorland and Lonsdale (Tim Farron) talked about some of the excellent work that his council has done, paying out grants and supporting businesses, and I commend it for that work. He also had passionate views about local government reform and the timings. He will be able to make that argument through the process in the right way. I know he feels strongly about the matter.
I want to thank again the hon. Member for Bethnal Green and Bow, who made a number of hugely important points. She talked about targeted funding. I hope she feels that we are doing that through the equalisation we did last year, to ensure that the local authorities affected most by the social care precept are seeking that extra support. I thank her and I am at her disposal, if she needs to talk about that further. I would like once again to thank all local authorities up and down the country. I believe that this unprecedented package of support is supporting those councils and I thank them for their work.
Rushanara Ali
I thank the Minister for his response and the shadow Minister for her contribution. I want to reiterate my gratitude to local council leaders and officials up and down the country, and to all those working with them. Others have talked about interfaith organisations and I pay tribute to the interfaith groups in my constituency, who acted weeks in advance of the lockdown, which I know saved a lot of lives. That is credit to the local authority and its co-ordination efforts.
I also want to pay tribute to the mayor, deputy mayor and councillors in my constituency, and the chief executive of Tower Hamlets Council, Will Tuckley, and his officials for all that they have done. As I said earlier, we have faced unprecedented challenges in Tower Hamlets.
I am heartened by what we have heard today, because we have been able to build a broader consensus across parties in those contributions, focusing on the quiet heroism of local council officials, leaders and councillors. Whichever party they belong to, the pandemic has shown that they have gone beyond the call of duty in protecting people and addressing some of the systemic problems and funding issues that they have all faced to varying degrees. They have got people off the streets, kept our libraries and leisure services open when possible and closed them when needed. As many have said, local authorities not only lack sufficient funds for covid, but have lost income as a result of the pandemic. There is still a shortfall of more than £7 billion. I hope the Government will address that in the announcement tomorrow.
Hon. Members have talked about funding for SEND children, adult social care and the need for longer-term funding, which is crucial for budgeting. Many issues have rightly been raised. What we need, however, is a collective effort, perhaps starting with this group of Members of Parliament, to speak to the Chancellor and the Prime Minister. I know that some hon. Members have closer ties than others. I appeal to all colleagues to use their influence to get the funding that local authorities desperately need, not only to face the crisis and defeat the virus, but to protect our communities.
The hon. Member for Devizes (Danny Kruger) talked about the shortfall of about £30 million in his constituency—he represents a much more affluent seat than mine. Whether they are affluent or poorer areas, we have seen the impacts, so we need to address those issues rapidly.
Motion lapsed (Standing Order No. 10(6)).
Covid-19: Acquired Brain Injury
(4 years ago)
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Chris Bryant (Rhondda) (Lab)
I beg to move,
That this House has considered acquired brain injury and covid-19.
It is a great delight to serve under your chairmanship, Ms Eagle, as I have never done so before, as far as I can remember. Some have greatness thrust upon them and I have always waited for this moment.
As hon. Members will know, the issue of how brain injury is treated and dealt with in society has been close to my heart for some considerable time. My hon. Friend the Member for Blaydon (Liz Twist) and I have been running the all-party parliamentary group for acquired brain injury for the past few years. It is frustrating that we have not been able to hold as many meetings this year as we would like to, but I am determined that we are going to move forward on this.
Most hon. Members will have had moments when they have visited a Headway group, a local hospital, a local trauma centre, or perhaps one of the day care centres run by their local authority, and met individuals who have had traumatic brain injuries—perhaps people who have suffered carbon monoxide poisoning, or who have had a stroke, or any one of the many different ways in which the brain can be injured. They will know of the great joy that many families feel that somebody’s life has been saved, and of the great sadness that their quality of life is not what they would want it to be.
I praise the Government for setting up the major trauma centres, because in the last few years, despite lots of controversy locally in many parts of the country, those centres have undoubtedly saved many lives. Probably in the region of 800 to 900 lives are saved every year because of those centres. However, many of those people come out with brain injuries, and the pain for the individual and the family surrounding them can be phenomenal.
I want to say up front to the Minister the things that I want out of this, just to be absolutely clear. I want a national neurorehabilitation strategy, because there is not one at the moment—there are lots of bits and pieces of strategies, but no national neurorehabilitation strategy. I want a national neurorehabilitation lead—a single person who is in charge. I have heard rumours that somebody might have been put in charge, but I am not sure, so I hope the Minister will be able to respond to that.
I want a mandatory system, not a casually achieved system, for commissioning neurorehabilitation, particularly within the community. It is far too patchy up and down the country, and I am not even referring to the differences between England, Wales, Scotland and Northern Ireland; even within England, it is far too patchy and insecure. I have a real fear that, after covid, we will not reinstate all the neurorehabilitation services that we had before covid came to these shores. I have a real fear of that, so I want a guarantee from the Government that all those services and more will be reinstated, and that all the posts that have been furloughed, suspended or not appointed throughout this year will be kept and will be restored.
Liz Twist (Blaydon) (Lab)
Does my hon. Friend agree that our report, “Time for Change”, which was produced by the APPG with the help of the United Kingdom Acquired Brain Injury Forum, actually demonstrates the importance of neurorehabilitation, both in acute settings and in community-based cases?
Chris Bryant
My hon. Friend is absolutely right, and I pay tribute to her for the work that she has done on this issue in lots of different debates, particularly on the relationship between neurorehabilitation and education. It is about the individual in the acute setting, perhaps after a traumatic brain injury in a car crash or something like that, and then it is about that person being given enough neurorehabilitation so that they do not need an enormous care package when they go out into the community, but it is also making sure that there is enough ongoing neurorehabilitation in the community so that they do not fall back on requiring even more of a care package—not because I want to deny care packages, but because I want people to live independently and have the freedom that we would all want for every individual.
I will add two other things that I really want. I am sorry that I am sounding like a popular beat combo from a previous generation—my husband will be proud of me. Neurorehab should be one of the 12 specialities protected during covid. I have made a similar argument about cancer, and cancer has quite rightly had lots of coverage in the country. I hope that very soon we will see the cancer recovery plan, which we have been awaiting for some time, but we also need one for neurorehabilitation. I will come to some of the reasons for that.
The final thing that I really want is a coherent, consistent and tidy arrangement of community neurorehabilitation across the whole country, so that whether someone is in Wells, in Winchester or in the middle of Manchester, they and their family or loved ones have the same right to access ongoing community rehabilitation. Otherwise, it just seems terribly unfair. One of the things that so many families have said to me time and again is that they feel as if they are pushed from pillar to post. They hear a story of somebody getting rehabilitation sorted in one part of the country, and then they find that it is simply not available in their part.
I therefore reiterate that I really want a single coherent approach towards brain injury, and not just in neurorehabilitation—although, as I said earlier, we also need a national neurorehabilitation strategy. We also have to bring together all the different elements. I have spoken to the Minister for the Cabinet Office, the right hon. Member for Surrey Heath (Michael Gove), about the need to bring together all the different departmental Ministers into a single committee to look at the interaction between the work of the Department for Work and Pensions, the Ministry of Defence—it deals with many veterans who have had brain injuries during active service—the Departments for Education and for Health and Social Care, the Treasury, the Ministry of Housing, Communities and Local Government, because it looks at the provision in local communities, and, for that matter, the Department for Digital, Culture, Media and Sport. One of the most depressing and upsetting things this year has been hearing the family of Bobby Charlton say that they reckon that the dementia from which he suffers is a result of his experience playing football, and particularly heading the ball. I am not an England supporter, being a Welshman, but how depressing is it that so many of the players in the 1966 team have subsequently been found to have had dementia, depression and anxiety, which were almost certainly related to their playing of football? We put these people on a pedestal, but we are not prepared to protect them. I am still extremely critical of the way the Football Association has behaved around this.
The problem this year, in particular, is that during the first lockdown, a lot of people with brain injuries were discharged early. I understand why it happened, because hospitals had to make beds available for people with covid, but lots of units were closed in the east of England and in the midlands, which are the two areas that have done the most research into this. Between 50% and 100% of the beds that are normally allocated for neurorehabilitation were closed down and simply not available, and people were very swiftly discharged into their community.
The Chartered Society of Physiotherapy has found that 80% of NHS services in this field have not yet resumed—80%. The number of people acquiring brain injuries during this time, in all the different ways that I have mentioned, has not slowed down; if anything, it has sped up. We have always said in our all-party parliamentary group that brain injury is a hidden epidemic. The person standing in front of us in a queue may be slurring their words and we might think that they are doing so because they have been drinking, but it may be because they have a brain injury. Of course, it is not written on their forehead. Lots of the problems associated with brain injury are not visible, so it is all the more important that we dig down into these issues.
The waiting list for community neurorehabilitation is now four to six months. That is a phenomenal length of time for families to be providing care, particularly when covid means that they sometimes cannot even visit the person concerned. There are major comorbidity questions as well. Patients have been discharged into adult social care with no neurorehabilitation at all. We now know that covid itself is causing neurocognitive problems for many people—not just people with long covid, but those with other symptoms as well. I guess that as covid develops and we get more understanding of the disease—and, incidentally, as we are able to treat more people and keep them alive—it is likely that there will be more, not fewer, people who need neurorehabilitation.
Chris Bryant
Absolutely. This is one of the difficulties in this field. We have worked with the United Kingdom Acquired Brain Injury Forum, and Chloe Hayward is wonderful. Headway is also a wonderful organisation, although like many charities in this field, it is having a really difficult time this year. Despite that, the truth is that because there are many different routes to a brain injury, it does not always acquire the same currency as cancer or other medical conditions, and yet it affects at least 1.4 million people in the United Kingdom. That is one of the things we need to tackle.
Specialist early supported discharge and community neurorehabilitation teams were redeployed in large numbers during the first lockdown earlier this year, and many were furloughed. In some cases, they have still not been brought back, and in lots of parts of the country there simply are no services available in this situation. What happens is that the person with the acute condition—the acute set of problems—is not treated but sent out of hospital, because the bed is needed in this second lockdown. That person is sent directly into adult social care, with a phenomenally expensive care package. I am not against the expensive care package—that is what we have to provide—but the point is that neurorehabilitation would be far more cost-effective; there would be far better outcomes for the individual patient; and it would be far more sensible for Government if we could get the system sorted out. In the second lockdown—who knows whether we are having a third lockdown, or a tier situation, or whatever it is?—the truth is that lots of neuro patients are being discharged early. That is just a fact, and I think that it will give us a long problem, not only for the individuals and their families but in lots of local authorities and community services.
What am I talking about here? What is the real issue? I will end in a moment, Ms Eagle. As I have said, brain injury comes in many forms. Young brains are often particularly affected. Kids under the age of five from poorer families are four times more likely to have a significant brain injury—as are teenage kids from poorer backgrounds—than those from wealthier backgrounds. There is a knock-on implication for the Ministry of Justice, and so on. Sometimes it is the executive function that is affected, so people may find it difficult to inhibit some of their immediate instincts. Sometimes it is memory that does not work, or it may be language or elements of personality. For some people, the issue is phenomenal fatigue—not just the kind of thing where someone had a big night out the night before and cannot really be bothered to come into a Westminster Hall debate, but a real fatigue that brings people to the point of absolute despair and an inability to feel like living. For many children in particular, sometimes nine or 12 months after the event, there is neurocognitive stall—basically, the brain seems to go on strike and refuse to work as anybody would want it to.
The thing is that neurorehabilitation works. I do not mean just any old rehabilitation; I mean neurorehabilitation, which uses specialist staff who deal with these issues all the time and know about how the brain and the mind work together and how people can be rehabilitated. That works when it is there from the beginning, when it is available consistently for a sustained period and when the connections between acute and community services are absolutely clear. When it works at its best, it is such a joy, because we see kids who were completely dependent on their parents, and on a whole team of people from social services, suddenly able to smile again and able to discover their own freedom and ability to get on with their lives independently of others. We see older people who are able to regain many of the physical and mental skills that they had before, and to regain some of their personality. That is such a beautiful and rewarding thing to behold, and it is why I hope that the Minister will be able to give me everything that I want.
The Minister for Care (Helen Whately)
It is a pleasure to serve under your chairmanship, Ms Eagle. I congratulate the hon. Member for Rhondda (Chris Bryant) and thank him for securing a debate on this important matter. I give him so much credit and pay tribute to his passion and his huge knowledge of this subject—I know that he has debated it at length with other Ministers—which he has brought to this debate and other debates on the matter. I also pay tribute to his commitment to this cause and the tireless work that he does. Of course, I know that he speaks on this subject from direct personal experience. I pay a huge tribute to him for all that he brings to these debates.
It is also good to have the hon. Member for Blaydon (Liz Twist) here. I thank her for the work she is doing with the APPG and the hon. Member for Rhondda to campaign for those with acquired brain injury.
I recognise the vital work of charitable organisations such as Headway, the United Kingdom Acquired Brain Injury Forum and the Disabilities Trust. Their work is invaluable not only in raising awareness but in providing hands-on help and support to patients, families and carers. I am aware that acquired brain injury affects not only an individual’s health but their family, work, relationships and education, in the case of children, so it has a huge impact on people’s lives.
I have met people with brain injuries. Shortly after I was elected, I visited Kent and Canterbury Hospital, which has a neurorehabilitation unit, and I spoke to staff and patients and saw the really impressive work that they were doing. I appreciate the points that the hon. Gentleman makes about the importance of effective neurorehabilitation.
As the hon. Gentleman set out, the pandemic has had a real impact on the care and treatment of people with acquired brain injuries. As he said, staff have been redeployed on to frontline covid work, and that has affected people’s care. For instance, some consultations have been moved online, and services are not what we would want them to be. Face-to-face neurology rehabilitation services are being restarted as quickly as possible. Guidance has gone out from NHS England and NHS Improvement and the Association of British Neurologists, and every effort is being made to catch up on delayed care. I will look into the point that the hon. Gentleman made about his concern that services are not yet up and running. I recognise that the pandemic has been a really difficult time for those affected by ABI across a range of areas, not simply access to healthcare services.
This debate and previous debates owe a debt to the all-party parliamentary group and the hon. Gentleman’s leadership. I want to flag the wide-ranging inquiry into the causes, impact and treatment of ABI, culminating in the report published in October 2018, which set out a host of things that we need to address across Government. As he knows, my Department worked with officials across Whitehall to give a response in February 2019. I welcome the fact that the APPG, along with UKABIF, continues to drive the “Time for Change” agenda, most recently in an online summit held on 16 November.
One of the key issues highlighted in the report, as the hon. Gentleman said, is the importance of better Government co-ordination. I absolutely take his point. He mentioned a conversation with the Chancellor of the Duchy of Lancaster. I speak directly for Health, but I am very aware that brain injury cuts across almost all aspects of an individual’s life, from education to work and welfare, and sadly sometimes the justice system, so we need to work on this across Government. I will work with my officials to drive stronger co-ordination for ABI across Government.
On the services available to patients with ABI, the hon. Gentleman will know that since 2012 we have had 22 regional trauma networks across England, and those major trauma centres can provide the specialist care needed by patients with major trauma, including brain injury. Alongside that, timely and appropriate neurorehabilitation is a critical part of care. As the hon. Gentleman set out, that is absolutely crucial for improving the outcomes for people with brain injury. For patients with the most complex need, NHS England commissions specialised rehabilitation services nationally. Trauma unit teams then work to assess and develop a rehabilitation prescription for brain injured patients. RPs are rightly regarded as very important for rehabilitation, as they reflect an assessment of the needs of the patient in the round. That approach is showing results. As the hon. Gentleman knows, the latest data shows that 94% of patients accessing specialist rehabilitation have evidence of functional improvement.
The hon. Gentleman spoke about local commissioning and the differences across the country. The majority of rehabilitation is commissioned locally. To support that, NHS England has produced guidance setting out what good rehabilitation looks like and what services people should expect. Community services clearly play a crucial role.
Chris Bryant
I am grateful for the nice comments that the Minister has made, but one of the problems with the guidance is that it does not feel very enforceable, and until the money goes with the guidance, as it were, I think it is unlikely that people will invest in this. It feels sometimes—not to use a cliché—a bit too Cinderella-like. I just wonder whether there is a means of twisting it into enforceability.
Helen Whately
I absolutely take the hon. Gentleman’s point, and I have heard the argument made about the service we are discussing and other services that are commissioned locally. There is the holy grail—people want a locally responsive health service to respond to what the community needs, but on the other hand they want consistency. Achieving both of those is hard and, arguably, not entirely possible, because the mere fact of having something locally responsive will involve some variation. However, I will also take away the hon. Gentleman’s point that there are ways to try to achieve a higher overall standard and more consistency without necessarily going all the way and saying that it must be done in exactly that way everywhere. Oversight is one way of doing that, so I shall see whether there is further we can go with regard to the point that he made.
I want to pick up on the list of questions—or the wish list, as we are approaching Christmas—
Helen Whately
In that case, demands: I shall see which of them I can answer. One was about a national neurorehabilitation lead. During the period of covid-19 there is indeed a national lead. Suzanne Rastrick has been designated the national clinical director for rehabilitation, co-ordinating clinical advice and leadership in that area. That is for the period of covid. I appreciate that the hon. Gentleman’s demand is that it should go beyond the period of the covid pandemic.
As to whether all neurorehabilitation services will be restored after covid, I have no reason to believe that they will not, but I shall, again, take the matter away, and make sure that we see that happening. The hon. Gentleman asked whether neurorehabilitation is one of the 12 specialties that are protected during covid, and I can broadly answer yes. NHS England has made a specific provision for a subset of services, to ensure that they are protected, and complex rehabilitation services are included in that. I hope that answers the hon. Gentleman, at least on that issue. I shall look at his ask on a national neurorehabilitation strategy and consider whether it is something we can do. It is a clear request.
Helen Whately
I was just about to conclude, and I believe that the hon. Gentleman has a couple of minutes at the end.
Chris Bryant
I am grateful. I fully get that one of the dangers of having a postcode lottery is that trying to overturn it can mean ending up with no freedom locally, and all the rest of it; but I just say again that the Chancellor of the Duchy of Lancaster really needs to get everyone together. There are real benefits that we could deliver to people, as well as financial savings across the piece.
Helen Whately
The hon. Gentleman makes a good point, and I shall, as I say, take that matter away, as the Chancellor of the Duchy of Lancaster has done as well. In conclusion, I take the matter absolutely seriously. Clearly, covid has put huge pressure on the Department, Ministers and the whole health service, but the hon. Gentleman raises a really important point about how seriously we must take the care, treatment and rehabilitation of those with acquired brain injuries. I thank him again for all that he is doing to campaign on it, and for the impact that he has in doing so.
Question put and agreed to.
5G Network
(4 years ago)
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Ms Angela Eagle (in the Chair)
I remind Members that there have been some changes to normal practice in order to support the new call list system and to ensure that social distancing can be respected. Members should sanitise their microphones using the cleaning materials provided before they use them, and should dispose of the materials as they leave the room. Members are also asked to respect the one-way system around the room. They should speak only from the horseshoe—although it does not look like that will be a problem for our debate today. Members are not expected to remain for wind-ups. There is less expectation for them to stay for the next two speeches once they have spoken. That is to help to manage attendance in the room. Members may wish to stay beyond their speech but should be aware that, in doing so, they might prevent Members in the seats in the Public Gallery from moving to seats in the horseshoe. Again, I do not think that will impinge on our concern this afternoon.
Alun Cairns (Vale of Glamorgan) (Con)
I beg to move,
That this House has considered business and economic opportunities after Huawei’s exclusion from the 5G network.
It is a privilege to serve under your chairmanship, Ms Eagle. I am grateful to the Members present for their interest; I am sure that there will be cross-party support for my objective. I want to use the UK’s excellence in areas of new technology as an opportunity to help to grow the UK economy and to support the Government’s levelling-up agenda across the UK.
Some time has passed since the decision was taken to exclude Huawei from the UK’s 5G network. Governments around the world faced challenges over Huawei’s dominance in this field. Concerns around security contradicted the will or demand to roll out the technology as quickly as possible. A tension between the two was created. We all know the difficult decision that the Government took to exclude Huawei’s influence, and we look forward to the Telecommunications (Security) Bill, which will be presented shortly.
Alternative providers need to be found and developed, and that is an opportunity for the UK to step up in specific areas. As a free marketeer, my instinct is to let the market decide, and that remains true, but with the UK having considerable expertise in the field, the Government can play an active part in setting the direction, creating the parameters and providing the greatest certainty to allow for private investment, particularly in the fields where as a nation we are in a leading position. Announcements on open standards such as Open RAN—radio access network—highlight that the Government understand that, and their focus should be recognised. It will diversify the market, improve resilience and innovation and facilitate the UK to play a leading position in a field recently dominated by the Chinese.
The reach and influence of 5G technology will extend much further than previous generations of communication. Its capacity to carry much larger volumes of data at very high speeds means that our connected lives will be taken to a new plane, from the internet of things to connected vehicles and smart cities, and many more areas that we have not even thought of yet.
There are several fundamental elements needed to achieve that, including a range of areas, such as radio frequency and satellite communications, 5G and base station capabilities, backhaul technologies and cyber-resilient networks among others. I highlight those elements, because I believe the UK already has specific expertise there, which can be developed further, as I will comment on later. All of them come together using compound semiconductors. These very high capacity chips enable more data to be managed effectively.
It was once described to me that if a silicon chip is a country lane, a compound semiconductor is a great big highway. That encapsulates the opportunity and possibilities 5G will create. Interestingly, they also minimise energy consumption and will play a big part in our net zero target. It is with great pleasure that I can say that the world’s first cluster of compound semiconductor technology is in south Wales, developed from companies such as IQE, SPTS Technologies and Newport Wafer Fab. Many others have followed since. All are supported by the Compound Semiconductor Applications Catapult.
I want to pay particular tribute to the work of Dr Andy Sellars from the Catapult, who first sparked my interest in this field when I was the Secretary of State. Government investment has been significant through the Department for Business, Energy and Industrial Strategy, UK Research and Innovation and the Cardiff capital region city deal. It was a privilege to play an active part in supporting the projects and to see Swansea University and Cardiff University research play its part, along with other universities from Bristol to Cambridge and many more. I also had to ensure that the Department for International Trade was also aware of their expertise. It was good to see Andy Sellars in a prominent position at the GREAT Festival of Innovation in Hong Kong, highlighting the possibilities and seeking to attract interest and investment globally. It was an extremely impressive show, as recognised by everyone. It was a privilege to be there to see it in action.
The fundamental elements I have highlighted, however, are also areas where the UK has specific expertise that can be developed with an appropriate framework. The high-speed radiofrequency technology along with satellite communications needed to maximise coverage is one example. The UK’s investment in OneWeb shows that the Government understand the opportunity. There is also a cluster of complementary technology companies in the north east, such as VIPER RF, Diamond Microwave and aXenic. These are all supported by the Satellite Applications Catapult in the region. Elsewhere in the UK, iconicRF has a very strong reputation internationally.
I pay tribute to the Minister for his active interest in this area, which has given a lot of support to the industry and encouraged further investment, but there is more to do. As part of the network improvements, there will be a need to upgrade base stations with the specific need to develop small cell technology. Blu Wireless in Bristol is an example of the UK’s expertise that also benefits from the compound semiconductor cluster that I have already referred to, which also forms part of the western gateway region. Also in the western gateway economic region lies the UK’s strength in cyber-resilience, including Airbus, Thales, GCHQ and Bristol University’s quantum optical network strength, among others.
Another essential element is backhaul, which takes data from the cellular base stations and feeds into the network. The introduction of 5G applications will mean a need to develop from its strength beyond 400 gigabits per second. Filtronic in Durham and Cambridge Broadband Networks are forerunners in this area, too. The final piece of the jigsaw is test and validation. This is critical to guarantee the interoperability between the vital elements that I have already referred to. The world’s leading test and validation company, Spirent, has its headquarters in the UK. It also operates in the United States. Bringing all those together highlights our expertise in discrete areas of 5G apparatus—a technology and infrastructure project for which demand will grow exponentially. We have an opportunity to develop a plan to ensure that those companies and others are well positioned to benefit from that opportunity, but how do we do that?
There are examples of support across Government, such as for the automotive sector, that offer a model of how to engage with the industry to develop the necessary clusters of consortia. For example, the Advanced Propulsion Centre plays a role in facilitating the shift to electric vehicles. Its modest budget has attracted significant private sector investment in the field. In one case, the APC supports a consortium of 13 companies that work with the Compound Semiconductor Applications Catapult in south-east Wales, to which I have already referred, to create the UK semiconductor supply chain to power McLaren’s electric sports car.
On the back of that project, further consortia have been formed with BMW and Mini to benefit from UK technology. In total, the catapult is working on approximately £100 million-worth of projects, 50% of which have been funded by the private sector. I suspect that the private sector proportion will continue to grow because of the cluster of excellence that has been created.
Another model, in a different field, is the ventilator challenge that the Government set up in response to covid-19 to encourage manufacturers to innovate to meet the global shortages of ventilators. A consortia of companies brought together by the High Value Manufacturing Catapult built more than 15,000 ventilators, which represents five years of production, in just three months. That was pulled together in the national interest and would not have happened if the Government had not played a facilitating role.
A third example is the development of energy generation projects, which have received similar support. The certainty that the Government gave to offshore wind energy installation has allowed the UK to dominate the engineering field in that sector. Similarly, the commitment to small modular nuclear reactors is leading to a world-first in the UK that has the potential to be a major export. Again, I pay tribute to the Department for Business, Energy and Industrial Strategy, the DIT and the Wales Office, when I had a personal interest in it, because Wales has a strong presence in the opportunity.
The Minister will be pleased that I am not calling for a new agency or for identical models to be used, but I am asking for the same principles to be applied that were established for electric vehicles, ventilators, offshore wind and SMRs to prompt further investment from the private sector. The Government have a part to play in providing certainty on policy. The Department for Digital, Culture, Media and Sport is playing a significant part, but it also needs to act as a facilitator to bring some of those excellent companies together and to work with BEIS because of the cross-departmental agenda.
I also gently say to the Minister, and other hon. Members, that not all Government Departments are as joined-up as we would like them to be. Sometimes there needs to be an able Minister with a great pedigree who has the opportunity to bring people together, such as the Minister before us. The market potential is significant and would be a welcome boost to many parts of the United Kingdom.
Companies have a part to play too. If I have any criticism of them, it is that they do not shout loud enough about their expertise or their potential. I deliberately stated where most of those companies are based, because their siting is relevant to the Government’s levelling-up agenda. The western gateway that I referred to is sited in some of the most deprived parts of the UK, but there is the excellence in that region to bring together complementary expertise that does not exist anywhere else in the world. Similarly, the north-east has a leading position in radio frequency and satellite technology, as I have highlighted, and we all know about the Government’s ambitions to grow the economy in that part of the country.
The Government’s decision on Huawei could be a pivot to develop our expertise further and to scale up research in manufacturing, which would lead to a major increase in UK components for our 5G network and a huge export market. At the same time, that would remove the security risks that many hon. Members were concerned about. I look forward to the Minister’s response.
Imran Ahmad Khan (Wakefield) (Con)
It is a pleasure to serve under your chairmanship, Ms Eagle.
In this interconnected world, we are all utterly reliant on telecom services and digital infrastructure. It not only ensures that we can communicate with one another; it allows businesses to operate and provides people with new ways to socially interact—increasingly crucial during this pandemic and subsequent lockdowns.
There are no absolutes in cyber-security; it is not a binary subject. We can never envisage an entirely secure system. During the covid-19 pandemic, cyber and digital security have become ever more important. There is a growing mountain of evidence that hostile actors have used the pandemic as an opportunity to carry out malicious cyber-activity. The pandemic has revealed the importance of ensuring that our digital infrastructure and telecoms services are as secure as possible.
It is precisely for this reason that I strongly commend Her Majesty’s Government’s decision to remove Huawei entirely from the UK’s 5G network by the end of 2027. The Foreign Secretary has already outlined concerns with Chinese involvement in our networks and that China is worryingly engaged in pernicious cyber-attacks against our commercial, academic and—even during this pandemic—medical institutions.
China, or more precisely the Chinese Communist party, is irrefutably a threat to our cyber infrastructure. Huawei is, in effect, a state-owned structure under the control of the Chinese Communist party. The company’s trade union committee is registered with and pays dues to the Shenzhen Federation, an all-China federation of trade unions, which in turn is controlled by the CCP.
Through a combination of a prolonged poverty of western strategic thinking and Chinese Communist party subsidies, intellectual property theft and entering low-income markets with low-cost products, Huawei has become a market leader in 5G. To some, Huawei’s exclusion may well be seen as a risk. However, in reality, it provides the United Kingdom with numerous opportunities—and benefits—to build a safe and secure 5G network.
As stated, Huawei, like every major Chinese firm, is not truly independent of the Chinese state. The very real risk of this is the Chinese Communist party utilising Huawei’s infrastructure to access, spy upon, disrupt and even sabotage critical UK interests via our communications, which would undermine the security of our allies and ourselves.
Secondly, the strength and durability of Huawei’s systems are questionable. While Huawei has gained success with low-cost products, its ability to withstand cyber-attacks is questionable. The BBC’s security correspondent, Gordon Corera, reported that UK security services have been highly critical of the company’s engineering standards. The UK must seize this opportunity and pave its own path in developing and maintaining its 5G network with minimal interference from Huawei and its communist overlords.
The benefits of using British cyber and telecommunications companies should not be underestimated, boosting the success of our firms and simultaneously providing a strong foundation for our digital economy. Naturally, this does not only have to include British firms. Companies such as Japan’s NEC Corporation or South Korea’s Samsung could also be brought in to assist in creating the UK’s 5G network. Our close trading relationship with Japan and the signing of the UK-Japan free trade deal only weeks ago mean that such partnerships would make commercial, political and economic sense. While Huawei does present a cheap and quick option to create a 5G network in the UK, it would forever be compromised by the Chinese Communist party while, additionally, further denying opportunities for UK businesses and wider economy. The economic, commercial and political case for Huawei’s exclusion is overwhelming.
Stephen Flynn (Aberdeen South) (SNP)
It is a pleasure to serve under your chairmanship, Ms Eagle. It is important to congratulate the right hon. Member for Vale of Glamorgan (Alun Cairns) on bringing forward this debate. It is clearly a matter that he knows a significant amount about, and he spoke incredibly passionately, particularly about what could be achieved in and around Wales and the north-east. In silicon chips and, I think, semiconductors, he used turns of phrase that I had not heard before. He certainly educated me in that regard, which I will definitely take away from this debate, if nothing else. I am sure that my dad, an engineer, will be delighted about that. He spent many years trying to educate me on these things when I was younger, to no success whatsoever. The hon. Member for Wakefield (Imran Ahmad Khan) raised some incredibly important matters, which I will come to in due course.
First, on interconnectivity, we have all been particularly reliant on the ability to contact people virtually during the pandemic, and a great deal of this House at this moment in time operates virtually, albeit not enough. This has shown us the reliance that we now have on technology. We should be willing to embrace the further betterment of technology, be that with 5G or otherwise, to improve all our standards of living.
I was quite surprised by the number of people here to talk about Huawei, because it is usually a matter that garners much attention, particularly in the Chamber, but there we are none the less. The points raised were incredibly important. The best way to sum them up is the fact that it was a particularly sorry episode for the Government. The to-ing and fro-ing that took place was not necessary, particularly when we were all aware that Huawei was deemed to be a high-risk vendor. I am sure that, if the Government had their time back, they would probably do things differently. That is one of the pitfalls of government, I suppose. I see a wry smile on the Minister’s face.
Obviously, the debate relates to the potential of 5G, particularly for business. That potential is enormous, be that for health, transport or climate change. We are not talking only about better connectivity on our mobile phones, as some may believe. I will briefly reflect on climate change. There are two sides to that debate. There are those who believe that 5G working in the manner in which it should will ultimately increase energy usage, because we will do more and see more much more quickly. On the contrary, we can also seek to combat climate change by doing things in a more efficient and effective manner, a goal that we all must aim for, particularly when looking at 5G moving forward and how we can tie that into the climate change challenges that face us in Scotland, the UK or across the globe. That should really be at the heart of most of the things that we seek to do going forward.
Ultimately, when it comes to 5G, telecommunications is a reserved matter. I wish, like all policy matters, that it sat in the remit of the Scottish Parliament. We have not quite reached that stage yet—“yet” being the operative word—but we will get there. [Interruption.] I hear some sniggering at the back, but we will get there. However, until that moment, telecommunications is reserved, and from Scotland’s perspective we are very much at the behest of the UK Government and the avenues that they seek to go down.
As the UK Government progress with this matter, it is incredibly important that we take into account the specific geography of Scotland. As the Minister’s parliamentary private secretary, the hon. Member for Berwickshire, Roxburgh and Selkirk (John Lamont), will be acutely aware, 42% of Scotland does not even have access to 4G. On my way to the Aberdeen airport today, I lost 5G signal on numerous occasions while going round the city—although not when going through the city; I believe that there is some 5G enablement within the city. We need to be mindful of the geographical challenges across the entire UK as we move forward with this matter.
It is important that investment—be it from the Government or the private sector—seeks to benefit everyone and that nobody misses out. Climate change will be key, but those rural communities across Scotland and the rest of the United Kingdom must also get the connectivity that they so badly deserve. Ultimately, while we need to ensure that nobody misses out, we also need to make sure that security and resilience are at the forefront of everything that we do when it comes to 5G and ensuring better interconnectivity within Scotland and the UK.
Chi Onwurah (Newcastle upon Tyne Central) (Lab)
It is a great pleasure to be here to serve under your chairship for the first time, Ms Eagle. I thank the right hon. Member for Vale of Glamorgan (Alun Cairns) for securing this really important debate, and it is a pleasure to have the opportunity to talk about such an important subject. I am very grateful to him for that, and for his opening comments: rarely have I heard a speech from the opposing ranks with which I agreed so fully, and almost entirely. I appreciate his comments about the importance of 5G and its opportunities; I also appreciated his reference to Dr Andy Sellars, who is making important advances in this area, and his comments on photonics in the north-east of England. There has always been closeness between the north-east and Wales, and leading in the diversification of the telecoms supply chain would simply be another example of that.
I should also declare an interest: as some Members may know, I worked as a telecoms engineer for 23 years before coming into Parliament, and my very first job was with a telecoms equipment supplier called Nortel—Northern Telecom—who, when I joined it, had just bought one of the last two British telecoms suppliers, that being STC; Marconi stayed around a little bit longer. It is a real shame that having worked for Nortel, and having spent my entire career in telecoms, I never went on to work for a British telecoms supplier. That was a consequence of the industrial strategies pursued under the then Government, Thatcher’s Conservative Government, and under the current Conservative Government, with not enough having been done in the intervening Labour years.
I agree with both the right hon. Member for Vale of Glamorgan and the hon. Member for Wakefield (Imran Ahmad Khan) in their characterisation of the opportunities presented by 5G, which we hope can transform and bring broadband to every corner of our country—which is so much lacking now—and allow us to have real on-the-go mobile broadband, together with the opportunities presented by the internet of things and the vast increase in connected devices that we will see. That is why it is such a shame that the Government find themselves in such a 5G mess. I understand that they are happy to pass the cost of their mistakes, indecision and poor planning on to the operators, stating, for example, that the costs of removing Huawei are
“commercial decisions that are for the mobile operators to make”—
costs that the sector worries could top £7 billion and cause delays of up to three years to 5G roll-out, harming growth and innovation. We should not accept such a delay, which harms UK productivity and sends a message to innovators that they should look elsewhere. Can the Minister confirm that there will be no delay to the target of rolling out 5G to the majority of the country by 2027?
The right hon. Member for Vale of Glamorgan and the hon. Member for Wakefield were right to emphasise the opportunities of an effective diversification strategy. I have put many questions to the Minister on this point, and he has confirmed that the Government plan to prioritise open source and Open RAN technologies, which the right hon. Member mentioned, as part of their plan to build market resilience. However, we still lack any clear strategy for the diversification of our telecoms infrastructure. Yes, we have the names of those on the telecoms taskforce, but no telecoms systems developers are among them. The Minister said that was because the focus was on cyber-security; I should say that while we are taking steps to hopefully secure our network, we need a network that is innovative, effective and resilient as well as secure. The absence of any telecoms systems developers on the telecoms taskforce is a real loss, as is the lack of any representation for any organisation or person from north of Bristol. Can the Minister set out how he intends to ensure that we have a truly representative task force, able to make use of the talents and innovation throughout the relevant sectors and throughout the country?
The Telecommunications (Security) Bill was published this afternoon. I have not had time to assess all its clauses in full, but it does not seem to refer to the diversification strategy that we are promised. The official Opposition welcome the measures taken to secure our network, but without the diversification strategy, our network will not be secure because we will be so dependent on perhaps two vendors. We have to have a diversification strategy, not only to ensure the opportunities in different sectors and different parts of our country in terms of economic development, but to make that network secure. Where is the diversification strategy? How can we have a Bill that does one thing, which is to secure the network, that is so dependent on a strategy that does not appear to be mentioned?
I turn to the opportunities in Open RAN defence and international collaboration. I thank the right hon. Member for Vale of Glamorgan for the explanation of Open RAN. The market is estimated to be worth £47 billion by 2026 and the UK can gain a significant amount of that if we build on our existing strengths, such as compound semiconductors, radios and software for disaggregated networks.
The decision to remove Huawei from the network was based on national security, exhibiting one of the many synergies between telecoms and defence, with many UK companies supplying both the telecoms and defence markets. For example, semiconductor fabricators II-VI, a north-east company based in County Durham, or INEX Microtechnology, in Sedgefield, provide critical infrastructure to both the telecoms and defence markets.
We will see immediate action from operators to replace high-risk vendors and a long-term replacement strategy in UK 5G infrastructure, opening doors for businesses. Japanese firms such as NEC, which the hon. Member for Wakefield mentioned, have already agreed to set up a UK telecommunications centre to help provide immediate alternatives to high-risk vendors, providing NEC with a springboard into the European market. This is a good opportunity for many smaller UK firms, but it cannot be a one-off. What is the Government’s strategy to ensure that UK firms can forge strong partnerships with international firms?
It takes investment as well as strategic vision to diversify our supply chain after so many years. I am afraid that both of those seem to be sadly lacking. Will the Minister take the chance to tell us today how much additional funding the Government will provide for telecoms research, development and innovation? At the same time, can he say how much will be going to the north?
We have excellent science-based and technological opportunities to be found. Indeed, in March, as a constructive Opposition, I offered the Minister a five-point plan to help diversify our supply chain. I called for a communications Catapult centre, and for next-generation research and development projects. BT used to have a major lab, developing and looking far ahead at new telecommunications technology. Is the Minister considering something like that? Can he give us more details? I also called for support for standards development, to support interoperability. We have heard nothing about that. He needs to look at non-5G wireless technologies. What is the Minister doing to support those in all the regions of the UK?
The UK has an opportunity to build a highly resilient, secure and diversified 5G network, unlocking opportunities for business and innovation across the country. Further- more, when we think about the next generations—6G and 7G—the UK has the opportunity to lay the foundations to make us a leading telecommunications country once again. Let us remember that we invented both fibre and the web in the UK. I urge the Minister to obtain the political will and set out the plan that ensures our diverse telecoms sector has the confidence and the investment that it needs to grow and to lead the world.
The Parliamentary Under-Secretary of State for Digital, Culture, Media and Sport (Matt Warman)
It is a pleasure to serve with you in the Chair, Ms Eagle. I pay tribute to my right hon. Friend the Member for Vale of Glamorgan (Alun Cairns) for securing a debate on a genuinely important topic, which would have perhaps attracted a significantly bigger crowd on other days—I take that as a sign that the Government are going in the right direction in lots of ways. It is none the less a critical topic for the Government, and it has been my focus for the last few months, to say the least.
I begin by paying tribute to the work of the Catapult and Dr Andy Sellars, already mentioned by my right hon. Friend and others. It is a £43.5 million Government project supported by UKRI, and it is important to say that £12 million from the Welsh Government is an important contribution. Some 1,500 people are already employed as part of the project and, as my right hon. Friend said, we expect thousands more to come as part of that investment. It is as though he read some of my speech, because he mentioned that we are already seeing clusters forming from the clusters. The close collaboration with the private sector in the north-east, Cambridge, Bristol and elsewhere shows that Britain is beginning to take the opportunity by the horns and make the best of it that we can. We do that in collaboration with our other international partners, but ultimately the opportunity is due to a wealth of expertise in this country, as the hon. Member for Newcastle upon Tyne Central (Chi Onwurah) highlighted. That private sector collaboration will only continue to grow.
As my right hon. Friend highlighted, we have plenty more work to do. One of the things that we will seek to do through our diversification strategy is to shape the market and set the direction in a way that works genuinely with our private sector partners, because he is right to say that although there is much that we should leave to the market, we have to work collaboratively in the interests of national security, and we have to do it in way that ensures that we do not repeat the mistakes of the past. Ultimately, we are in the position that we are in with Huawei because of decades of wrong decisions, albeit with the best intentions.
My right hon. Friend also observed that not every Government project is as joined up as it could be. I can tell him that the diversification strategy will be one of the most joined-up Government projects he has yet seen—I do not know where that sets the bar in his expectations.
I am glad that we are having the debate, but I rather wish we were having it at this time tomorrow, because I will be able to say significantly more after the Chancellor has made his statement. To some extent, that will also tie in with the diversification strategy. As the Secretary of State has said, we will publish the diversification strategy alongside the Bill that so many colleagues have referred to. As the hon. Member for Newcastle upon Tyne Central knows, we have published the Bill today, so she will not have to wait long for her salvation. She mentioned the international angle, the need to put money behind it, the need to focus on standards and the need to focus on a specific institution, if not specifically a lab. In some form or another, those things will all be of great interest to her when she reads the diversification strategy, which she will be able to do in due course.
Chi Onwurah
I appreciate the Minister’s comments and look forward, as always, to the publication of the Bill. Will the diversification strategy have the same legislative structure, content and meaning as the Telecommunications (Security) Bill? Will it have legislative power that is binding on the Government?
Matt Warman
It is a crucial complement to the Bill introduced by us today. We will be putting in place all the right incentives to ensure that the requirements being imposed by us through primary and secondary legislation can be met, or even beaten, within the timescale that we will be laying out. We cannot impose requirements on individual companies to make specific procurement decisions through legislation, but we can make sure that they are as secure as they need to be, and that the programme fits in a way that works for the market and for our national security. I know that the hon. Lady will take a close interest in both the primary and the secondary legislation, which will fill in some of that picture.
My right hon. Friend the Member for Vale of Glamorgan was right to imply that while we are now more dependent as we move away from Huawei, we have an opportunity to work both with the existing incumbents—primarily Nokia and Ericsson—and new incumbents. We are already working towards increasing the presence in our markets of those incumbents and, crucially, towards that Open RAN future of interoperability and far greater opportunities for our companies to thrive.
Alun Cairns
I underline my point that many of the component businesses to which I referred will have the opportunity to work with Ericsson and Nokia, as well as with other leaders in the field that are alternatives to Huawei, so the UK can play a prominent role even if it is not the headline, first-tier organisation.
Matt Warman
My right hon. Friend is absolutely right. That is why the Government have been working as fast as they can on the 5G supply chain diversification strategy, which not only meets our short-term needs but prioritises the bold and ambitious approach that, as we both agree, makes it possible for our companies to make the most of their place in a global market, not just the UK. To reiterate what has already been said, that approach is built around supporting incumbents and attracting new suppliers, and also around accelerating the development and adoption of the Open RAN interoperable standards. They are all major opportunities, both nationally and internationally.
As discussed, the decision taken on high-risk vendors means that the UK is more resilient in respect of Nokia and Ericsson, and although 5G is now available in over 90 towns and cities with the support of those two companies, we need to seize the emerging opportunities to grow that number as rapidly as we can. That is why the Government are looking through a series of R&D interventions of the sort that the catapult has been so pivotal in accelerating.
Of course, we also want to bring new suppliers into the UK market. It is worth saying, as the hon. Member for Newcastle upon Tyne Central did, that the presence of the NEC global centre of excellence in the UK is not just an important sign of what is already there, but an important signal of the esteem in which the global supply chain holds the UK’s enthusiasm for adopting 5G.
I will take the opportunity to say that we have no intention whatsoever to delay the 2027 target for the majority of the UK population to be covered by 5G. It is already in 100 towns and cities, and the figure is increasing all the time. I also take the opportunity to point out that the chair of the taskforce mentioned by the hon. Lady, which is expert in both commercial and academic senses, is Lord Livingston of Parkhead. I am sure she knows that Parkhead is a part of Glasgow and is some way north of Bristol, but we are keen to focus on the diversity and expertise of that taskforce. Ultimately, we have prioritised expertise in the taskforce rather than the geographic location. She makes a fair point but, as I say, Glasgow is consistently north of Bristol.
Matt Warman
I think we have covered the geography of Glasgow.
We are working to remove the barriers for new market entrants, and the taskforce is a crucial part of that, but our ambition will not stop there. We will be keen to make sure that our global ambitions are a part of the work of both the taskforce and the diversification strategy, and that will persist well beyond the process that we go through with the Telecommunications (Security) Bill and with the diversification strategy.
My right hon. Friend the Member for Vale of Glamorgan noted our existing expertise and mentioned Open RAN, which will be hugely important in future. He will know that Vodafone has already launched a trial in Wales. That is the first, we think, of a significant improvement in the percentage of Open RAN, and we will seek to ensure that that persists. He also mentioned the potential of the low earth orbit satellite and OneWeb. It is important that we are open-minded when it comes to what technologies can be developed both through the Catapult and elsewhere. As the hon. Member for Newcastle upon Tyne Central said, we should not simply look at 5G when it comes to making sure we connect as much of the country as we possibly can.
I will address the comments made on behalf of the Scottish National party. The hon. Member for Aberdeen South (Stephen Flynn) is completely right that when we talk about 5G, it is important not to forget that significant parts of the country need a step change in their connectivity. The shared rural network, a £1 billion partnership between the UK Government and the mobile networks, will see 4G connectivity, particularly in Scotland, accelerate rapidly between now and 2025. That is hugely welcome, as he and others in this Chamber are keenly aware. Scotland is challenging geography to wire up, but it is crucial that we do so as rapidly as we can.
My hon. Friend the Member for Wakefield (Imran Ahmad Khan) was absolutely right to mention the opportunities for us in this project. We should see the next few years as a crucial opportunity to grow a really important UK market. The hon. Member for Newcastle upon Tyne Central said that she had never had the opportunity to work for a major British telecoms company. I say to her that the night is young.
If we get this right, opportunities will come in Britain and elsewhere. All of this will require investment, and the Government will put forward an initial funding package, to be set out in the spending review tomorrow, along with a boost to the Ofcom budget to reflect its enhanced security role under the Bill that we have laid today. The funding package will drive early progress and ensure that our diversification strategy not only bolsters the resilience and security of our digital infrastructure, but creates opportunities for competition, innovation and prosperity in all four nations. It is a huge opportunity that I hope we will be able to seize rapidly over the next few years, not just in 5G but through the UK’s gigabit programme as well.
This country already benefits hugely from the digital economy. This programme and this debate are part of doing that better. They are part of building back better, and I am confident that we will look back and say that we took a decision about Huawei that improved our national security and drove our ability to seize economic opportunities. I thank my right hon. Friend the Member for Vale of Glamorgan for securing the debate.
Alun Cairns
It is a privilege to have the opportunity to respond to a debate in which everyone has been in agreement. I pay tribute to the Minister and the shadow Minister for the healthy banter between them.
We recognise the real economic opportunity in parts of the UK where there are specific economic challenges. This is a great opportunity for the levelling-up agenda and for making great advances in technology in the UK—in the 5G network in the UK and globally. They come together, and the UK can play a prominent part.
I am also grateful to the hon. Member for Aberdeen South (Stephen Flynn) and my hon. Friend the Member for Wakefield (Imran Ahmad Khan) for their contributions. They recognise the challenges that the Government have faced and the opportunities ahead of us.
We need to move away from the headline, first-tier organisations, because most of the expertise lies in a diversified supply chain. We have named some of the organisations in the supply chain, but there will be many more that we are not aware of, such as start-ups that have broken through in some of these fields. Ministers in DCMS, BEIS and beyond need to play a facilitating role in responding to the latest emerging technology and in creating a framework where companies can come together to further enhance the research and excellence in the field. They must take this opportunity for the UK to play a prominent part not only through its own network, but in the exports sought by those nations around the world that do not have that base level of excellence and research.
Question put and agreed to.
Resolved,
That this House has considered business and economic opportunities after Huawei’s exclusion from the 5G network.
Written Statements
London Capital and Finance: FCA Investigation
(4 years ago)
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The Economic Secretary to the Treasury (John Glen)
On 23 May 2019, I laid a direction before Parliament using the powers conferred by sections 77(1) and (2) and 78(5) and (6) of the Financial Services Act 2012 (“the Act”) and set this out in a written ministerial statement (HCWS1584). I formally directed the Financial Conduct Authority (“the FCA”) to launch an independent investigation into the events relating to the regulation of London Capital and Finance plc (“LCF”). Paragraph 3 of the direction required that the investigation focus on whether the FCA discharged its functions properly (“in a manner which enabled it to effectively fulfil its statutory objectives”) and with a particular focus on matters listed in the direction. The direction required that the FCA appoint an independent person to undertake the review and that the review should be completed within one year. The FCA appointed Dame Elizabeth Gloster, who has had a distinguished career as a barrister and as a judge on the High Court and the Court of Appeal, to lead the investigation. I also approved this appointment.
The direction also set out that if the investigator considered that it would not be possible to complete the investigation within one year the FCA must inform the Treasury of the reasons for the delay and set a revised target date for its conclusion. The FCA wrote to me in May setting out that the delivery of the report would have to be delayed to 30 September 2020, and again in August setting out that the target date for conclusion would have to be delayed to the 23 November 2020, which reflected capacity constraints as a result of covid-19 and delays in the FCA providing key documents to Dame Elizabeth. I also received correspondence from Dame Elizabeth on both occasions. Further information can be found on the Government website https://www. gov.uk/government/collections/independent-investigation-into-the-failure-of-london-capital-and-finance.
On 23 November 2020, Dame Elizabeth, in accordance with the revised timeline, delivered her final written report to the FCA. In line with the direction, the FCA will now consider the report, the recommendations and any lessons learnt. Section 82 of the Act requires the Government to lay before Parliament the FCA’s written response to the investigation which will include the investigator’s findings and recommendations.
I recognise that it continues to be a very difficult and uncertain time for all LCF bondholders. I can confirm today that I have asked the FCA to work with the Treasury so that the Government can lay before Parliament—and publish online—Dame Elizabeth’s report and the FCA’s response before the December recess. This independent investigation is separate to criminal and regulatory investigations into the failure of LCF by the Serious Fraud Office (SFO) and FCA which are still ongoing.
[HCWS595]
Historic England Tailored Review
(4 years ago)
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The Secretary of State for Digital, Culture, Media and Sport (Oliver Dowden)
The tailored review of the Historic Buildings and Monuments Commission for England (more commonly known as Historic England) is published today.
As a non-departmental public body, Historic England is required to undergo a tailored review at least once in each Parliament. This review also examines the 2015 decision to split Historic England into two separate, though related organisations: one an arm’s length body operating under the name “Historic England”, and the second a charity called the English Heritage Trust (trading as “English Heritage”) that manages the national heritage collection of historic sites and monuments on behalf of the nation.
The review received evidence from a public consultation and roundtable discussions and from in-depth interviews with a wide range of heritage stakeholders. The review concluded that Historic England is a highly regarded and well run organisation with a strong reputation for its heritage and planning expertise and advice. Historic England is seen as one of the leaders in the heritage sector, providing high quality expert advice in England and undertaking world-leading conservation research.
The review made 31 separate recommendations that, once implemented, will complement and enhance the high regard in which Historic England is currently held.
The review concluded there are two significant areas in which Historic England can do more. First, in order for it to ensure first-class, long-term management of the national heritage collection, Historic England must improve its oversight of the English Heritage Trust’s performance and make it more publicly accountable.
Secondly, the review identified opportunities for Historic England to strengthen its leadership role within the wider heritage sector, especially in relation to diversity, by making heritage more relatable to wider audiences. This report comes at a time when our shared values are under close scrutiny, with the role of heritage at the forefront of this debate. Embracing the ambition for a more representative and inclusive sector must include reinforcing the primary role of heritage: preserving our history in its place and presenting it properly and accurately in its time and context. Rather than seeking to destroy, we should be enhancing and promoting our shared history so that its complexity can be fully understood. Historic England has a central role in delivering this for us all.
Copies of the Historic England tailored review have been sent to the Chair of the DCMS Select Committee and copies are available in the Libraries of both Houses of Parliament.
The attachment can be viewed online at: http://www. parliament.uk/business/publications/written-questions-answers-statements/written-statement/Commons/2020-11-24/HCWS598/.
[HCWS598]
Firearms Safety: Public Consultation
(4 years ago)
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The Minister for Crime and Policing (Kit Malthouse)
I have today launched a public consultation to seek views on a range of firearms safety issues.
The firearms laws in this country are among the toughest in the world and the Government keep them under constant review to ensure they continue to safeguard the public.
While lawful shooting is well regulated and generally safe, there remains a risk of firearms falling into the hands of criminals, or in the case of air weapons, being misused. The Government are therefore consulting on how to reduce these risks in certain areas of firearms control where concerns have been raised with us by law enforcement and others.
This consultation looks at how we might address the potential threat posed by high muzzle energy rifles through enhanced security arrangements to reduce the risk of them falling into the wrong hands.
We are seeking views on improving the controls on air weapons, including safe storage. This follows on from a Home Office review of the regulation of air weapons initiated after the tragic death of 13-year-old Benjamin Wragge, who was killed accidentally with an air weapon in 2016.
Views are also sought on how we might address vulnerabilities presented by the current exemption from licensing that applies to miniature rifle ranges, and whether to make it an offence to possess component parts of ammunition with intent to unlawfully manufacture complete rounds
The consultation will end on 16 February 2021.
A copy of the consultation paper will be placed in the Libraries of both Houses and is available on the Government’s website at gov.uk.
[HCWS596]
Covid-19: Global Travel Taskforce
(4 years ago)
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The Parliamentary Under-Secretary of State for Transport (Robert Courts)
On 7 October, at the request of the Prime Minister, the Government announced the launch of our global travel taskforce. Co-chaired by the Secretary of State for Transport and the Secretary of State for Health and Social Care, the aim of the taskforce was to consider steps that Government could take to encourage the safe recovery of domestic and overseas travel and tourism while reducing the risk of imported cases.
The taskforce was to report back to the Prime Minister in November; a commitment we met last week after a period of constructive consultation with the travel sector.
The message we received during those consultations was clear. The global covid-19 pandemic remains an existential threat to the aviation and maritime sectors, as for all travel and tourism businesses, and we need to act now to help these industries get back on a trajectory towards strong economic growth.
That is precisely what the global travel taskforce report aims to achieve, making 14 recommendations following three broad principles:
First, to ensure that journeys are safe.
Secondly, to increase demand for travel without compromising safety.
Thirdly, to position the UK so we can take a leading role in driving the global standards required to support recovery.
The most fundamental priority in all this work is safeguarding public health. That is why we are introducing, as the first initiative resulting from the global travel taskforce’s work, a new regime “Test to release” for international arrivals from countries that are not on the travel corridor list.
Following extensive work by officials from the Department for Transport and Department of Health and Social Care, this will be rolled out in England from 15 December in time for Christmas.
Travellers will have the option of booking and paying for a test from a list of private sector providers. They can take the test five full days after they left a destination not on the travel corridors list, which for most international arrivals will be after five full days of self-isolation. If the test result is negative, they will be free to go about their daily lives. A test on day five of self-isolation provides a strong level of protection for the UK population from transmission of covid-19 acquired abroad. It also provides much more freedom for people seeking to travel.
Individuals who opt in will be required to self-isolate until they receive a negative test result. Compliance checks are carried out by Public Health England’s isolation assurance service (IAS) who contact randomly sampled international arrivals to ensure that they are self-isolating. Details of those found not to be isolating will be passed to the Home Office, who in turn pass relevant details on to the police for targeted follow-up enforcement activity.
Anyone who does not comply with this requirement could be fined £1,000 for the first offence and up to £10,000 for repeat breaches. Only a negative test result from a provider on the gov.uk list will enable a traveller to cease self-isolating early.
If a traveller tests positive for covid-19, they will move into the UK’s existing system for positive cases, meaning that they will self-isolate for a further 10 days from the day of the test and their contacts will be traced and notified as normal. Minimum standards have been set by clinicians to ensure that the tests give accurate results, but we are not specifying exactly what type of test must be used. This is to allow for innovation in the testing market. Tests will either be taken at a private testing site, or using a privately provided home testing kit, meaning the scheme will be accessible to the widest section of the community and across England.
As we emerge from this latest period of restrictions, the new testing scheme will allow people to see family, go away on business, or book holidays with the option of taking a test to shorten any self-isolation period in the UK and reduce disruption to their lives.
In addition to “Test to release for international travel”, we will of course remain open to new testing technologies and other approaches that help people travel overseas in safety. For example, mass testing may help more people to travel with fewer restrictions in the future. As our knowledge and capacity for testing develops, so will our policy.
However, we have always known that testing alone is not a silver bullet, nor a comprehensive solution to the challenges we face. The taskforce has made further recommendations, including:
to advocate the development of a global framework for the validation of tests and vaccination records;
to assess the feasibility of short stay exemptions for businesses and tour groups;
to publish the criteria for when cruises can restart and implement a phased return for cruising when the public health advice makes clear it is safe to do so;
to boost consumer confidence about inbound and outbound travel through targeted communications and marketing campaigns; and
to provide assurance to passengers, we will work with our world-leading aviation regulator, the CAA, to ensure that the aviation industry is doing everything it can to make air travel as low risk as possible, as well as continuing to work with the maritime sector to ensure that it operates safely and that industry guidance remains in line with best practice.
As soon as the time is right, we want to encourage people to travel with confidence. That means British people being able to go abroad safely, and welcoming back overseas visitors to our country to do business, and enjoy our hospitality, entertainment and world-famous tourist sites. The recommendations outlined above provide a springboard to ensure the safe and viable recovery of the sector.
However, while the taskforce’s work has concluded, ours does not end here. The collapse of the market this year has not just affected airlines but airports, ground handlers and other airport services too. The Government have already made available an unprecedented package of economic measures to companies across the aviation industry. This includes schemes to raise capital and flexibilities with tax bills, as well as financial support for employees.
We have worked closely with the sector during the course of the pandemic and listened to its concerns. Airports have highlighted specific challenges arising from a lack of passengers, and the relatively high fixed costs they face. Therefore, we will shortly be making available a support scheme providing financial assistance to commercial airports and ground handlers in England to help with business rates.
These businesses will be able to apply from the new year for the equivalent of their business rates costs in this financial year, up to a maximum of £8 million per eligible site, subject to certain conditions which the Department of Transport will take into account when considering applications.
The Government are committed to giving people the freedom to travel with confidence and supporting the wider travel industry. I will publish this statement on gov.uk and will place a copy in the Libraries of both Houses.
[HCWS597]
Command Paper for the High Speed Rail (West Midlands to Crewe) Bill: Statement Reasons Command Paper
(4 years ago)
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The Minister of State, Department for Transport (Andrew Stephenson)
My noble Friend, the Parliamentary Under-Secretary of State for Transport (Baroness Vere of Norbiton) has made the following written ministerial statement.
I am today, 24 November 2020, publishing the statement of Reasons Command Paper for the High Speed Rail (West Midlands to Crewe) Bill. The Command Paper is titled the “Government overview of the case for HS2 Phase 2a and its environmental impacts—Update for the House of Lords”. This is required by Parliamentary Standing Order 83A(9) to assist the House during the third reading of the High Speed Rail (West Midlands to Crewe) Bill. This document summarises the work that has already been done to assess, control and mitigate the environmental impacts of HS2 Phase 2a, and explains why the Government continue to take the view that the HS2 Phase 2a project is worthy of their support.
Copies of the Statement of Reasons will be placed in the Libraries of both Houses.
Attachments:
Command Paper (CP 325 HS2 Phase 2a Lords Statement of Reasons)
Attachments can be viewed online at: http://www. parliament.uk/business/publications/written-questions-answers-statements/written-statement/Commons/2020-11-24/HCWS594/.
[HCWS5943]