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Oral Answers to Questions
(4 years ago)
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Rosie Cooper (West Lancashire) (Lab)
The Minister of State, Department for Transport (Chris Heaton-Harris)
We will outline our plans for the railway in a White Paper when the course of the pandemic becomes clearer.
Rosie Cooper [V]
Even prior to this pandemic, disabled people reported that work opportunities were out of reach due to the lack of accessibility on transport. What is the Secretary of State doing to ensure that disabled people are not prevented from accessing and staying in employment because of the really pressing accessibility issues on our rail network?
Chris Heaton-Harris
The hon. Lady asks a very sensible question on a very important day, the United Nations-sponsored International Day of Persons with Disabilities. There is some good news, because 75% of all journeys—on what is a Victorian network that we are trying to upgrade—are now through step-free stations, compared with 50% only a few years ago.
Huw Merriman (Bexhill and Battle) (Con)
At the end of September, the Government put in place the second set of emergency contracts with the train operators to continue with train operations. It has now been two months and the Transport Committee has been trying desperately to get hold of copies of those contracts, but we still have not. May I urge the Minister to please ask his officials to get a shifty on? Will he also tell us when he will be able to give us an update from the Dispatch Box as to how the termination payment process is going, so that train operators that would have had to pay under the franchise system will have to pay back to the taxpayer?
Chris Heaton-Harris
I am not sure that my officials would ever do anything shifty whatever. I completely understand and appreciate that my hon. Friend’s Committee wishes to see the redacted emergency recovery measures agreements as soon as practicable, but in the second part of his question he outlined the reason why the redaction of the documents is so important: there are extremely sensitive commercial negotiations ongoing at this point. He has my commitment that as soon as practicable, as we did with the emergency measures agreements before them, we will publish these documents and give them to his Committee.
Steven Bonnar (Coatbridge, Chryston and Bellshill) (SNP)
Kenny MacAskill (East Lothian) (SNP)
The Secretary of State for Transport (Grant Shapps)
Our forthcoming transport decarbonisation plan will set out a credible pathway to achieving net zero emissions across transport by 2050.
Steven Bonnar [V]
One of the most effective and impactful ways of helping the UK to achieve its decarbonisation goal of net zero is the electrification of transport. Against a backdrop of austerity and a global pandemic, the Scottish Government have a proud record on delivering rail electrification across Scotland. The majority of such works in Scotland’s central belt are now complete, with work beginning on extending this programme both north and south. Does the Minister agree that the Department for Transport should be following the Scottish Government’s lead in this area if the UK’s long-term goal of net zero is to be realised?
Grant Shapps
The hon. Gentleman is absolutely right. It is probably worth the House reflecting that in the 13 years of the previous Labour Government, 63 miles of electrification took place, compared with 1,110 miles during our tenure.
Kenny MacAskill [V]
The energy from major offshore wind farms will flow ashore into my constituency, but few jobs will currently be created. Hydrogen schemes offer opportunities not just for transport, but for tackling global warming and creating employment in East Lothian. What resources will the Minister commit to ensuring that hydrogen schemes are part of Britain going forward, and that East Lothian gets its fair share of onshore employment?
Grant Shapps
The Government are committed to hydrogen as a technology. I recently announced the Tees valley as a hydrogen hub. We have invested £121 million into hydrogen innovation, including the hydrogen buses that are currently running in Glasgow.
Jim McMahon (Oldham West and Royton) (Lab/Co-op)
The pandemic has understandably dominated the headlines, but we cannot forget that we are still in a climate emergency and that green, efficient transport must be the future. Transport is now the largest contributing sector to UK emissions, and air pollution contributes to upwards of 36,000 deaths a year. How we move goods in and around the country—from international incoming freight moving around our national network, to local deliveries—is important, particularly as last mile deliveries have boomed during the pandemic. But even before the pandemic hit, the number of diesel vans had doubled over two decades. What is the Government’s plan, above what has already been announced, to get air pollution down and to address the growing impact of last mile deliveries?
Grant Shapps
The hon. Gentleman makes an excellent point, which is that 28% of all CO2 now comes from transport, and it is critical that we get it down. I thought he was going to go on to mention that since we last stood at these Dispatch Boxes, we have said that we are going to have a 2030 target for the end of sale of petrol and diesel cars, which will obviously help tremendously. That also includes diesel vans, which will be a very big contributor to assist in this, alongside the £2.8 billion we are putting in to help that switch take place.
Jim McMahon
With respect, that is just not ambitious enough. There are organisations that have really boomed in the pandemic. Online retailers—the big giants—are part of that, and they should be required to do far more to make sure that they bring down air pollution.
In a written parliamentary question to me, the Government admitted that the comprehensive spending review cut Network Rail’s enhancement budget by £1 billion—10%. At the same time, the order books for new greener aircraft have stalled. This all adds up to a very dismal approach as we get towards COP26 in Glasgow next year. Before that embarrassment comes, will the Secretary of State come forward with a comprehensive plan to decarbonise freight, which starts with reversing the cuts to Network Rail?
Grant Shapps
Right at the beginning of the pandemic—I can understand if the hon. Gentleman missed it—we published the document “Decarbonising Transport: Setting the Challenge”, which will lead into a transport decarbonisation plan that we will publish by the spring. In that, we will describe the many measures that we are taking to make the UK a global leader in cutting carbonisation and decarbonising the economy, not just through the 2030 pledge but through, for example, introducing 4,000 zero-emission buses, and much else besides.
Gavin Newlands (Paisley and Renfrewshire North) (SNP)
The Transport Secretary was right to reference COP26.
Last year, sales of ultra-low emission vehicles grew by 46% in Scotland—40% faster than in England—in large part due to the enhanced home charging point grant and the interest-free loans, both provided by the Scottish Government and unavailable in England. Does the Secretary of State agree that he too should adopt the success of Scotland’s electric vehicle strategy and learn the lessons that are needed to ensure that England is not being left behind?
Grant Shapps
The hon. Gentleman and I share a very keen interest in these matters. I remember that when I got my electric car, 1% of cars sold were electric. The figure now across the UK is 6.5%. There have been tremendous advances in the number of electric charging points available. The £2.8 billion that we pledged at the spending review will help that to happen, with more money going into charge points and into the infrastructure investment as well. I am pleased that Barnett consequentials are being sensibly spent to increase charging in Scotland.
Gavin Newlands
I am grateful for that response. I should say, for the record, that my household has come down from a two-car household to one car, and we are hoping to switch to an electric car in the new year as well. [Interruption.] It is a bit too far out for an e-bike.
The Prime Minister announced in February that £5 billion was being made available for 4,000 zero-emission buses, which the Secretary of State mentioned, but to date we have not seen much evidence of that money being spent, and jobs continue to haemorrhage in the bus production sector. So how many of the promised 4,000 zero-emission buses have actually been delivered thus far?
Grant Shapps
The hon. Gentleman is absolutely right to point that out, but he will recall that the pandemic in between has created problems not just for the bus sector but for the entire economy, which has, by necessity, meant that a huge amount of money—hundreds of millions of pounds—has gone into supporting buses operating at all. The pledge for 4,000 buses remains, and £120 million was announced at the spending review to get on with the first several hundred of them.
Peter Aldous (Waveney) (Con)
Caroline Ansell (Eastbourne) (Con)
The Parliamentary Under-Secretary of State for Transport (Robert Courts)
The Government have recently committed £20 million to support clean maritime technology, and further plans will be set out in the forthcoming transport decarbonisation plan.
Peter Aldous
The inclusion of clean maritime in the 10-point plan and the announcement of the £20 million demonstration project are extremely welcome. Can the Minister confirm that he is working with the Department for Business, Energy and Industrial Strategy and the Department for Environment, Food and Rural Affairs to produce a comprehensive strategy for investment in new green port infrastructure so that ports such as Lowestoft can make the most of the exciting opportunities emerging in renewable energy and sustainable fishing?
Robert Courts
My hon. Friend is absolutely right: there can be no clean maritime without clean ports. He is absolutely right to raise the opportunities that exist for our ports, and I thank him for his tireless, passionate advocacy for Lowestoft. I can confirm that my Department, DEFRA and BEIS meet regularly to ensure that our work is aligned and, in particular, that our work on renewable energy and maritime decarbonisation is complementary in approach, because providing the former is a big part of providing the latter.
Caroline Ansell
My beautiful coastal constituency of Eastbourne and Willingdon is susceptible to particulate matter emanating from the very busy channel shipping lanes. The maritime strategy and the Prime Minister’s 10-point plan are hugely important domestic policies, but this problem obviously demands an international response and international change. Will my hon. Friend assure the House that the Government are equally committed to working at the international level to see the improvements we need in air quality in my home town?
Robert Courts
I am glad to confirm that the Government are committed to international efforts to reduce pollution from ships, including through the London-based International Maritime Organisation. I am pleased to be able to inform my hon. Friend that from 1 January 2021, the channel and North sea, including the East Sussex coast, will be designated a nitrogen oxide emissions control area under international law. I thank her for her continued outstanding advocacy for clean air in her constituency and across the UK.
Rob Roberts (Delyn) (Con)
Sara Britcliffe (Hyndburn) (Con)
Andy Carter (Warrington South) (Con)
The Minister of State, Department for Transport (Andrew Stephenson)
Last week was the dawn of a new era for transport in the north of England. Loved by some, but hated by most, it was the end of the line for the much-hated Pacer trains—the final call as this rusty and knackered rolling stock is consigned to history, allowing passengers to enjoy a brand-new fleet of trains, creating a more reliable network across the north.
Rob Roberts
I thank the Minister for his answer. The north-west of England is massively important to north-east Wales in terms of cross-border trade and employment. I am as keen as anyone to see improvements to rail infrastructure in the north. Does my hon. Friend agree that it is vital we keep up the strong links through improvements at the main connecting stations of Chester and Crewe and, crucially, electrification of the north Wales coast line?
Andrew Stephenson
My hon. Friend makes a very important point. Earlier this year, we approved funding for the progression of a line speed enhancement scheme for the north Wales coast line. In addition to ongoing work to develop the Crewe hub, my officials are working closely with Cheshire West and Chester Council on developing the business case for improvements at Chester station.
Sara Britcliffe
Since being elected, I have been working with Ministers on the reopening of the Skipton to Colne railway line and the potential for a freight terminal in Huncoat. It is an essential line, well worth the investment, that will connect east Lancashire to Yorkshire. Will my hon. Friend meet me to discuss the progression of the railway line and freight terminal, and will he look again at supporting an engineering study for the project?
Andrew Stephenson
Indeed. I thank my hon. Friend for her continued and tireless campaigning on this matter. Given that my constituency of Pendle will, as you have identified, Mr Speaker, be one of those that most benefit from the reopening of the Colne-Skipton line, I will recuse myself from commenting directly on the scheme, but I know she has met my hon. Friend the rail Minister, who continues to consider the proposals carefully.
Andy Carter
Transport for the North has recently made recommendations to the Government to include Warrington on a new high-speed rail line between Manchester and Liverpool. Will my hon. Friend confirm that any route decisions will include an interchange at Warrington Bank Quay station, creating a hub site between Northern Powerhouse Rail and the west coast main line?
Andrew Stephenson
We are currently considering the formal advice from Transport for the North on its preferred way to proceed with Northern Powerhouse Rail following the board meeting last week, and we will respond shortly. We are also awaiting advice from the National Infrastructure Commission on rail investment across the north of England.
Mr Tanmanjeet Singh Dhesi (Slough) (Lab)
The east coast main line has upgrades scheduled over Christmas to help improve connectivity to the north, but many of those long-planned works now clash with the Government’s new Christmas guidance, which will clearly lead to many more people wanting to travel by train. The Government do not seem to have a plan, so perhaps I can help the Minister. Let us scrap peak rail fares, increase testing for our transport staff and delay non-essential works by a few days to help people to travel home. Can the Minister reassure the House that there will be no Christmas chaos on our railways?
Andrew Stephenson
This is something we are acutely aware of. We have already taken swift and decisive action to ensure that any disruption is kept to a minimum, and I and my fellow Ministers continue to work to ensure as smooth as possible a rail system during the festive period.
Chris Elmore (Ogmore) (Lab)
The Minister of State, Department for Transport (Chris Heaton-Harris)
Network Rail is responsible for the operational safety of level crossings on the network and for deciding whether they need to be closed.
Chris Elmore
I think the Minister knows what I am going to ask him. I thank him for his engagement in trying to find a holistic solution to the Pencoed level crossing in my constituency. Could he update me on what work he has been doing with his officials to ensure a long-term multi-funded solution, including with Bridgend County Borough Council and the Welsh Government?
Chris Heaton-Harris
I thank the hon. Gentleman for his engagement in such a positive way on an issue that I know is very important to him and his constituents. Since our meeting on 8 October, officials from my Department have readily engaged with the Pencoed steering group that he chairs. I am encouraged to hear that they have agreed how Network Rail would be involved in the development of a business case for closure of the crossing, including potential benefits and the costs that would apply to the relevant parties. The work is ongoing, and I will happily continue to engage with the hon. Gentleman to drive this forward.
Matt Western (Warwick and Leamington) (Lab)
Simon Baynes (Clwyd South) (Con)
Andrew Gwynne (Denton and Reddish) (Lab)
Mrs Pauline Latham (Mid Derbyshire) (Con)
The Minister of State, Department for Transport (Chris Heaton-Harris)
The Government are investing £2 billion in active travel over the next five years, which is the biggest ever boost for cycling and walking.
Matt Western
In the Government’s document “Gear change: a bold vision for cycling and walking”, they promised a trial scheme for boosting the use of electric bikes, yet they have only found £1 million for that so far. When will more funds be forthcoming, and may I urge the Minister to consider Warwick and Leamington as the perfect place to undertake trials?
Chris Heaton-Harris
Warwick and Leamington is a truly beautiful constituency, and I agree that it is almost perfect for an e-bike trial. We have £257 million of funding in 2021-22, which will enable key actions from the long-term plan, and we can look forward to more announcements on this shortly.
Simon Baynes
Will the Minister join me in praising Denbighshire and Wrexham councils and the Canal and River Trust for their work in encouraging walking and cycling by the Llangollen canal and for promoting those activities in the newly announced master plan for the Trevor basin and surrounding area, in our world heritage site in Clwyd South?
Chris Heaton-Harris
Cycling and walking policy is a devolved matter for the Welsh Government, but I am happy to congratulate those councils and the Canal and River Trust on their work in and around this globally significant site and the canal world heritage site. We will follow in the steps of Thomas Telford, who designed the beautiful aqueduct there, to deliver high-quality cycling and walking infrastructure for future generations with the £2 billion that I just mentioned.
Andrew Gwynne [V]
Active travel funding is one side of the equation, and a lot is starting to be achieved from that, but authorities in Greater Manchester also need to obtain powers to ensure that this new infrastructure and the roads generally can function well. One example is around moving traffic offences, giving Greater Manchester London-style enforcement powers to keep roads moving efficiently for all users. When will the Government commence the remaining elements of part 6 of the Traffic Management Act 2004, as set out in the Department’s “Gear change” publication in July?
Chris Heaton-Harris
I know that the hon. Gentleman is passionate about all things active travel. He will doubtless be pleased that the Greater Manchester Combined Authority has been allocated over £18 million in the two tranches of the active travel fund this year, and 143 “Fix Your Bike” vouchers have been given to his constituents, but the answer to his question is: shortly.
Mrs Latham [V]
In my constituency, the Derwent Valley Trust is trying to create a traffic-free cycleway along the beautiful Derwent valley, increasing tourism and enabling people to cycle to work safely. Will the Minister join me in commending their efforts and consider visiting the site with me to see the work that has been completed so far and how he can help to fund its continuation?
Chris Heaton-Harris
I commend the efforts of the Derwent Valley Trust and encourage it to work in partnership with Derbyshire County Council through the local cycling and walking infrastructure plan. As my hon. Friend knows well, Derbyshire has received more than £1.6 million in tranche two of the active travel fund, and decisions for the allocation of that are made locally, but I would be more than happy to meet her. I know that neck of the woods very well, and I know that her husband is a keen MAMIL—middle-aged man in Lycra—who uses the cycleways around there. I suppose I could don a bit of Lycra and join him and her on a ride.
Kerry McCarthy (Bristol East) (Lab)
I did not know MAMILs were a thing, but I have now been enlightened by my hon. Friend the Member for Wythenshawe and Sale East (Mike Kane).
As part of support for active travel, we ought to be supporting our UK bicycle manufacturers and retailers, but they have been hit by tariffs imposed as a result of the Boeing-Airbus dispute. I think the Minister will agree it is somewhat ironic that an aviation dispute leads to bicycle manufacturers being penalised. They are also facing the threat of anti-dumping duties being lifted and a flood of cheap Chinese imports. I know the Minister has written to his counterpart in the Department for International Trade about this. Was he as unhappy as I was with the reply, and can he release the figures showing that anti-dumping duties should not be lifted because they do represent more than 1% of the UK market?
Chris Heaton-Harris
As the hon. Lady knows, I am very concerned about this particular matter and have been engaged with it for quite some time. Fortunately, we are in a position in the United Kingdom—with the funding that the Government are putting in and, indeed, the actions that people themselves took during the first and second lockdowns—where the cycle market has never been as buoyant as it is. However, we can never be complacent, and I follow this very carefully indeed.
Felicity Buchan (Kensington) (Con)
Jo Gideon (Stoke-on-Trent Central) (Con)
The Parliamentary Under-Secretary of State for Transport (Rachel Maclean)
We are investing over £2.8 billion to help people buy zero emission vehicles and accelerate the roll-out of charging infrastructure.
Felicity Buchan
My constituents in Kensington are largely very supportive of electric cars, but they are concerned about the lack of charging infrastructure. Would my hon. Friend consider mandating all new builds to have charging points, and encouraging all petrol stations and car parks to have them too?
Rachel Maclean
I am delighted to hear the support of my hon. Friend’s constituents in Kensington, which is shared of course by people across the UK. As ever, my hon. Friend is actually one step ahead of the Government. We are launching a consultation to improve drivers’ experience of using public charge points, and we will soon respond to the consultation on requiring new homes and non-residential properties to be fitted with charging infrastructure.
Jo Gideon
I am delighted to hear that Stoke-on-Trent’s £29 million transforming cities fund proposal has now been approved, and I want to thank the Minister and the Secretary of State for all the hard work they have done to help me, other local MPs and the city council to get this across the line. As I have said on many occasions, this will be a real game changer for public transport in our city. As we look to revolutionise the way we move around our city, does the Minister agree that it is right to look for investment from the active travel fund to complement bus and train travel with an e-bike hire system and to build a sustainable local network for charging electric vehicles?
Rachel Maclean
I share my hon. Friend’s enthusiasm for e-bikes. I got one in the lockdown, and it is absolutely brilliant for the hills of Redditch. She will be pleased to hear that the Prime Minister’s cycling and walking plan includes a commitment to create a national e-cycle support programme. As part of this, we have launched a £1 million e-bike extension fund to enable the increased use of e-bikes, with a particular focus on those hard-to-reach groups, so I would encourage Stoke-on-Trent to consider making an application. As well as this, we are investing £1.3 billion across the country to accelerate the roll-out of charging infrastructure for her constituents.
David Morris (Morecambe and Lunesdale) (Con)
The Parliamentary Under-Secretary of State for Transport (Rachel Maclean)
The Department is running a haulier readiness communications campaign and outreach programme, launching 45 information and advice sites, and producing a detailed haulier handbook, which has been translated into 13 languages.
David Morris [V]
The application for the free port of Heysham seems to be shrouded in mystery. Could the Department for Transport give me some indication on its progress at this moment in time?
Rachel Maclean
I thank my hon. Friend for his consistent advocacy for this free port programme, which will be of great benefit, I have no doubt, to his constituents. Ports and local authorities are welcome to submit their bids for free ports, including for Heysham, until 5 February 2021, and specific locations will then be chosen according to a process, as set out in the bidding proposals, but I am sure that Ministers will be delighted to meet him to discuss this further.
Mrs Sharon Hodgson (Washington and Sunderland West) (Lab)
Mrs Emma Lewell-Buck (South Shields) (Lab)
Florence Eshalomi (Vauxhall) (Lab/Co-op)
Christine Jardine (Edinburgh West) (LD)
The Parliamentary Under-Secretary of State for Transport (Robert Courts)
The Government’s comprehensive support package includes the coronavirus job retention scheme, which will now run until the end of March 2021.
Mrs Hodgson [V]
Many hundreds of my constituents are reliant on jobs related to the aviation sector, so the Government’s financial support for businesses in this industry has been welcome. However, there are valid concerns surrounding the conditionality of that support, particularly among workers at Rolls-Royce, with their jobs at risk of being offshored. Will the Minister work to ensure that any financial support is translated into the protection of jobs here in the UK?
Robert Courts
The Government, of course, are acutely aware of the importance of the highly skilled, dedicated employees in aerospace in the hon. Lady’s constituency and across the UK. We are very much working to ensure that as many jobs as possible can be protected and, particularly through the release of the global travel taskforce, we are looking to see that demand increases and we get people flying as soon as is safely possible. It is in that way that we will most protect the industry, which means so much to all of us.
Mrs Lewell-Buck
This year, I have watched close friends and constituents lose their jobs as the aviation industry and its supply chain have collapsed, yet it took the Government until October to launch a taskforce. There is still no sector-specific support deal, and the Secretary of State sat silent while BA engaged in fire and rehire tactics, and is silent now as Heathrow is doing exactly the same. When are the Government going to start taking a real stand to save people’s jobs?
Robert Courts
In announcing the global travel taskforce and working at pace to deliver this complicated bit of policy, going live on 15 December, the Government have acted extremely fast in ensuring that we introduce a world-leading test and release system, which is what will support our aviation industry going forward.
Florence Eshalomi [V]
British Airways is a flagship airline; it is recognised across the world for its quality mark, and that is largely down to the professionalism of its staff, many of whom live in my Vauxhall constituency. Yet its actions during this pandemic, including firing and rehiring so many staff on reduced wages and incredibly bad terms, have been utterly disgraceful. Why have the Government not stepped in, done a sectoral deal and protected these jobs? What steps is the Minister taking to ensure that there are no more job losses in the aviation sector?
Robert Courts
I pay tribute to the dedicated employees in the hon. Lady’s constituency who work in the airline industry and the airports industry. Any redundancy that happens is a commercial decision, but none the less one that we regret. I would encourage all employers to engage with their employees sensitively and to sit down and talk to the unions in order to come to compromises wherever possible. The Government’s action has involved a great deal of cross-economy support, and the aviation sector itself will have received between £2.5 billion and £3 billion of support from the coronavirus job retention scheme and the covid corporate financing facility by the end of March 2021.
Christine Jardine [V]
The aviation sector, particularly the airline industry, is a major employer in my constituency, and there has been concern over employment practices. I recently supported the private Member’s Bill introduced by the hon. Member for Paisley and Renfrewshire North (Gavin Newlands), but in a Westminster Hall debate the Minister said that the absence of strict regulations about fire and rehire provided necessary flexibility. In those circumstances, what are the Government proposing to bring forward to protect workers in the aviation industries from the possibility of fire and rehire?
Robert Courts
As I say, these are matters that are profoundly regretted by the Government, but they remain commercial matters. We engage closely with all sector representatives, including the unions, to find a way forward if at all possible.
Mike Kane (Wythenshawe and Sale East) (Lab)
It is 50 years since my predecessor, Alf Morris, introduced the Chronically Sick and Disabled Persons Act 1970. It is why I came into politics. The Minister of State, Department for Transport, the hon. Member for Daventry (Chris Heaton-Harris), mentioned it, as it is World Disability Day today.
Minister, the global travel taskforce has hardly met at all and nobody in the aviation industry has recommended the test-to-release scheme, which he announced this week. The industry is shedding jobs at a rate of knots. The furlough announcement was too late for too many in the aviation industry—the jobs were already gone. We have to stop lurching from one announcement to the next. Will the Minister commit to setting a critical path, so we can restore confidence in our world-class aviation industry?
Robert Courts
I am slightly confused about the hon. Gentleman’s reference, because the global travel taskforce most certainly has met. I think there is an element of confusion there. There has been extensive engagement in workshops with the industry. That has led to the release of a substantial, detailed report with 14 recommendations, of which the test-to-release scheme is only one. That work continues, as he rightly urges. I agree with him that it absolutely should continue to bring on many of the other schemes we have in the GTT. That work very much continues.
Henry Smith (Crawley) (Con)
The Parliamentary Under-Secretary of State for Transport (Robert Courts)
The Government will be rolling out test to release for international travel from 15 December for arrivals into England.
Henry Smith [V]
I very much welcome the Secretary of State introducing covid-19 air passenger testing from 15 December. What discussions has he had with our right hon. Friend the Foreign Secretary about updating foreign travel advice?
Robert Courts
I thank my hon. Friend for raising this very important issue. It is important to distinguish between the testing regime which seeks to address incoming passengers who may be carrying the virus, and Foreign, Commonwealth and Development Office advice which deals with advising British nationals on the risks in other countries. From 5 November, FCDO stopped advising against all travel worldwide and reverted to country-based advice, which remains under constant review and considers both epidemiological and other risks in each destination. Where the FCDO no longer assesses the risks to British nationals to be unacceptably high, travel advice is updated accordingly.
David Simmonds (Ruislip, Northwood and Pinner) (Con)
The Minister of State, Department for Transport (Chris Heaton-Harris)
The Government recently made £350 million available to make accessibility improvements at a further 209 stations through the Access for All programme. We also require the industry to comply with current accessibility standards whenever they install, replace or renew station infrastructure.
David Simmonds
According to the London Assembly transport committee, only one third of stations in London provide step-free access. What pressure can my hon. Friend bring to bear on the Mayor of London to ensure that this is improved and that stations like West Ruislip in my constituency, which the Minister of State, Department for Transport, my hon. Friend the Member for Pendle (Andrew Stephenson), had the opportunity to visit recently, are brought up to standard?
Chris Heaton-Harris
As my hon. Friend rightly highlights, transport policy in London is devolved to the Mayor of London and delivered by Transport for London. It is therefore a matter for the Mayor to determine his accessibility policy. However, Ministers and officials in the Department for Transport hold regular discussions with the Mayor on a range of transport issues, including this issue, and I will make sure it is highlighted at the next one.
Karl Turner (Kingston upon Hull East) (Lab)
The Parliamentary Under-Secretary of State for Transport (Rachel Maclean)
First, may I put on record my thanks to all transport workers? They have done an incredible job throughout the pandemic. The UK maritime sector has worked tirelessly to keep freight moving and provide sufficient capacity throughout.
Karl Turner [V]
The loss of a critical element of UK freight capacity in P&O’s Hull to Zeebrugge route will not only be a devastating blow to jobs and trade in my constituency, but as it is one of the most direct routes between Pfizer’s Belgian factory and hard-hit areas in the north of England, that could have a severe impact on the rapid roll-out of the covid vaccine, which I am delighted to see has been approved for use this week. I wrote to the Secretary of State recently on this issue. What action are Ministers taking to ensure that P&O honours its commitments and that this vital route is maintained?
Rachel Maclean
The hon. Gentleman is a powerful advocate for jobs and his local economy, and rightly so. My hon. Friend the Member for Witney (Robert Courts), the maritime Minister, has recently written to P&O on this matter, reminding it of its responsibilities, but decisions on the long-term viability of any route are a commercial decision. The vaccine strategy is led by the Department of Health and Social Care, but I can assure the hon. Gentleman that alternative routes are available for the relatively limited volumes of traffic that will be required to bring in this much needed and life-saving vaccine.
Daniel Zeichner (Cambridge) (Lab)
The Parliamentary Under-Secretary of State for Transport (Robert Courts)
The Government continue to engage with the sector to understand the effects of the covid-19 outbreak. Several support measures are available to support them through this challenging time, such as the self-employment income support scheme.
Daniel Zeichner
With over 350,000 licensed taxi and private hire drivers, this is the biggest employment group in the transport sector. As we speak, in London, electric cabs, which we all welcome, are being handed back because of inflexible finance deals. In every constituency, there will be hundreds of drivers laying up their vehicles. There are private tragedies going on here. What impact assessment have the Government actually done and when are they going to act?
Robert Courts
I acknowledge that this is an exceptionally challenging time for the industry, and the hon. Gentleman is absolutely right to continue to raise that point. We continue to engage with the sector to understand how there may be some assistance. I particularly draw his attention to the fact that there is an online support finder tool that will assist those in the difficulty that he refers to.
Sir Roger Gale (North Thanet) (Con)
The Parliamentary Under-Secretary of State for Transport (Rachel Maclean)
The Prime Minister’s 10-point plan included ambitious new policies and investment in hydrogen, including in transport projects. This includes £20 million for freight trials to pioneer hydrogen and other zero-emission lorries, and £3 million for the groundbreaking and unique Tees Valley hydrogen transport hub.
Sir Roger Gale [V]
The nation’s bus fleet, coaches and double-decker buses are mostly operating on Euro 4 and Euro 5 standards before converting to Euro 6, but Euro 6 is still diesel. Will my hon. Friend look at ways, perhaps working with the Treasury, to achieve an economy of scale that allows us to cut out Euro 6 and move directly from diesel buses to hydrogen-powered buses?
Rachel Maclean
When we leave the transition period, EU vehicle emissions regulators will become part of our retained law in the UK and that does mean that only new vehicles meeting the latest standards can be placed on the market for cars, vans, buses and trucks. This is the Euro 6 standard, but I can reassure my right hon. Friend that this Government are committed to hydrogen production. The Prime Minister set out that we are going to be producing 5 gigawatts of low-carbon hydrogen by 2030, creating 8,000 jobs, and I very much hope some of them will be in Thanet.
Ian Lavery (Wansbeck) (Lab)
The Minister of State, Department for Transport (Chris Heaton-Harris)
Office for National Statistics data shows that rail workers’ earnings have risen at rates above RPI since 2011.
Ian Lavery [V]
It was the Transport Secretary himself who recently hailed the rail workers as “true heroes”—key workers who have done a phenomenal job during this pandemic. I think we all agree on that, but the private train companies that employ our rail workers are set to be paid a fee from the Government—taxpayers’ money—which will provide profit and shareholder dividends. If these taxpayer handouts are indeed acceptable, do the Minister and the Secretary of State not simply agree that these rail workers—true heroes, key workers—should be receiving a decent pay rise? And Minister, who makes these decisions? Who says whether they can have a pay rise or not? Is it the Government or the companies themselves?
Chris Heaton-Harris
I agree with what the Secretary of State said about rail workers, who, up and down the country, will no doubt have noticed how much support the Government have given the industry since the pandemic struck and how little revenue the passenger sector is generating. They would have noticed the public sector pay policy announced by the Chancellor in the spending review. The figures are simple. The average national earnings growth rate since 2011 for the average UK worker is 2.2%; for train and tram drivers, it is 3.4%; for rail transport operatives, 4.4%; and for rail and rolling stock builders and repairers, 4.6%. We truly value our rail workers.
Scott Benton (Blackpool South) (Con)
The Secretary of State for Transport (Grant Shapps)
With permission, I will set out briefly to the House the plans for Christmas travel. A lot of families will be getting together for the first time, with a maximum of three households mixing. Christmas journeys are likely to be more difficult than usual this year as a result, and passengers will want to plan their journeys carefully.
To help passengers prepare for travel, we are putting in place a number of different plans, including clearing 778 miles-worth of roadworks; ensuring that 95% of the rail network will be unaffected by engineering works, either by postponing or altering them; lengthening trains and adding additional rail services; trebling the number of coach services available; ensuring that lateral flow testing is available at six different sites for transport workers to ensure that they are available and healthy to work; and many rail companies, including Avanti, LNER, CrossCountry, EMR and others, relaxing their peak fares. I have also appointed Sir Peter Hendy to look after this period of time, to ensure that people can travel as smoothly as possible while it will be exceptionally busy.
Scott Benton
The funding announced in the spending review for a feasibility study on improving the South Fylde line was warmly welcomed by commuters in Blackpool. Creating a passing loop on the line will double the number of trains per hour into my constituency, helping to boost tourism and to deliver jobs and growth. Following the outcome of the next stage of the process, will my right hon. Friend meet me to discuss taking the project forward to completion?
Grant Shapps
I pay tribute to my hon. Friend for his relentless campaigning for things like the South Fylde loop. I, or my hon. Friend the Rail Minister, will be delighted to meet him to assist. We are putting in a lot of investment, including £10 million to tackle the Manchester bottleneck and, as the Minister with responsibility for the northern powerhouse, I intend to go much further.
Matt Rodda (Reading East) (Lab)
We face a climate emergency and urgent action is clearly needed to tackle greenhouse gas emissions. That is why the Prime Minister promised to invest in 4,000 zero-emission buses. Given the seriousness of the issue and, indeed, the Prime Minister’s promise, why has the Government’s own spending review reduced the number of buses to which they are committed to just 500?
Grant Shapps
We are absolutely committed to introducing those 4,000 green buses. The hon. Gentleman will have noticed that, because of the pandemic, a large part of the industry has had to come to a standstill while the passenger numbers have not been there. The money in the spending review is a welcome start on that programme. It does not in any way remove the intention to produce all 4,000 buses. To expand, we have to start somewhere, and that is what the new money will do.
Colleen Fletcher (Coventry North East) (Lab)
Grant Shapps
We are investing record amounts in better battery technology, including the Faraday Centre research, for example, and money to build a gigafactory in this country—£1 billion, including cash to go towards that. I have met recently with all the manufacturers as well, and they are very much signed up to the Government’s new 10-point plan.
Mark Jenkinson (Workington) (Con)
The Parliamentary Under-Secretary of State for Transport (Robert Courts)
This Department is always happy to support development in Cumbria and was pleased last month to announce £12 million of funding for the A595 Grizebeck scheme. This is in addition to the £146 million announced at the spending review to accelerate vital dualling work on the A66, slashing construction time from 10 to five years, and I understand that a further business case is in development for the A595. I know that my ministerial colleagues in road and rail would be glad to meet Members to discuss a broader Cumbrian strategy.
Neil Coyle (Bermondsey and Old Southwark) (Lab)
Grant Shapps
I certainly can. I have just approved the safeguarding of the land to ensure that it can happen.
Tom Hunt (Ipswich) (Con)
Grant Shapps
I know just how difficult the traffic is at the Thrasher’s roundabout on Nacton Road and how hard my hon. Friend has campaigned on this. The pinch point fund or, more likely, the levelling-up fund, would be the way to proceed with this. That is the new £4 billion fund to resolve problems exactly like the Thrasher’s roundabout.
Andy Slaughter (Hammersmith) (Lab)
Grant Shapps
This bridge belongs to Hammersmith and Fulham Council. It is the council’s responsibility. Secondly, it is TfL’s responsibility. But the hon. Gentleman is absolutely right: I had become fed up waiting for something to happen between the council and TfL, and when nothing was happening I wrote into the agreement with TfL for funding the other week that it must spend money both getting the ferry service going and starting the actual work. I am pleased to say that, despite the inactivity of his local authority, something is now happening thanks to our taskforce.
Jacob Young (Redcar) (Con)
Robert Courts
My hon. Friend is absolutely right to raise the case of Redcar train station. Stations such as Redcar are often at the heart of communities, and I encourage him to keep working, as he is, with the council and with industry to develop this idea. I would direct him to the new stations fund. We hope to open a new round of this within the next few months, and I am sure that the rail Minister would be pleased to meet him to discuss possibilities.
Matt Western (Warwick and Leamington) (Lab)
Grant Shapps
Yes, absolutely. It is crazy, the number of different cards people have to carry around and the membership schemes they have to join. It makes it very difficult. We have more charging locations than petrol stations, as I often say at this Dispatch Box, but people have to be able to drive up to any of them and use them. Contactless will be the way to do that, and we are acting on exactly that proposal.
Sir Christopher Chope (Christchurch) (Con)
Robert Courts
I thank my hon. Friend for raising this important point. The Department recognises that warm mix asphalt may provide environmental benefits, through energy saving, lowered emissions and providing increased durability. Authorities should use what they think is best to ensure that their roads are maintained and safe, while also addressing climate commitments.
Daniel Zeichner (Cambridge) (Lab)
Robert Courts
We are happy to look at any scheme in detail in order to be assured that it is delivered in the safest, speediest and most practical way possible.
Peter Aldous (Waveney) (Con)
Robert Courts
This issue is of enormous importance to all rural communities. I represent a rural area, so I understand the points my hon. Friend makes. The Government entirely understand the importance of sustainability of rural transport for communities across the UK. The national bus strategy we are developing will set out how national and local government, and the private sector, together, will meet the needs of these communities.
Patricia Gibson (North Ayrshire and Arran) (SNP)
Robert Courts
Taxation matters are, of course, a matter for the Treasury. We have encouraged the sector to keep feeding in the data and its experiences, because all taxation matters are always kept under review.
Dr Luke Evans (Bosworth) (Con)
The Secretary of State may know that last month, unfortunately, the bridge in Hinckley won the accolade of the most bashed bridge in Britain, having been hit 25 times in a year. This causes a huge problem, with delays of more than six hours, on average. Colleagues and I have raised this issue, and we are pleased to have received £20 million in road investment strategy 2—RIS2—funding in March. What can he do to expedite the improvements on the A5, solve problems such as the bridge and make sure that we jolly well do not win that accolade next year?
Grant Shapps
I am sorry that my hon. Friend has the most bashed bridge in Britain, and the Government want to take that accolade away from him. That bridge at Hinckley has benefited from the £20 million that he mentions. The office of the traffic commissioner has also written to all goods vehicle and public service vehicle operators warning them of regulatory action that will be taken if they fail to stop bashing into the bridge. I can also assure him that Highways England is working on measures to reduce the number of strikes to the most bashed bridge in Britain.
Suzanne Webb (Stourbridge) (Con)
The Clockfields estate in my constituency has long suffered from poorly maintained roads, owing to a complicated legal situation. Will my right hon. Friend join me in encouraging all parties involved to work harder and faster to bring a conclusion to this matter, which has caused my constituents to live with such poor road surfaces for so many years?
Grant Shapps
My hon. Friend is absolutely right to raise this issue. I am not sure whether this is one of those situations where the road has not yet been adopted and that is part of the problem.
Grant Shapps
My hon. Friend is nodding her head. I have had a similar constituency experience of that, where roads for estates built 15 years ago still have not been adopted. I do think that it is an issue, and I undertake to work on this complex legal issue with my right hon. Friend the Housing Secretary, because it is a joint transport and housing problem, and I have seen how much difficulty it can create for all of our constituents.
Rob Butler (Aylesbury) (Con)
Aylesbury has recently begun a trial of e-scooters, and I have been lucky enough to try one myself. However, at the same time that I was sticking to my cycle lane, others were trying to pull wheelies in the middle of the road, which is quite a feat, let me tell you. Will the Secretary of State consider requiring registration plates on all scooters, if legislation is introduced to permit them, so that irresponsible riders can be identified and punished?
Grant Shapps
My hon. Friend is absolutely right; while we are very keen to see the roll-out of e-scooters, and about 20 communities are already enjoying the benefits, it is also the case that we want to ensure that the regulation is right and that every single e-scooter is properly insured and built to the proper standards. That is why we are carrying out a very careful and cautious programme to roll them out, thanks to the Under-Secretary of State for Transport, my hon. Friend the Member for Redditch (Rachel Maclean), and we will be reporting back to the House what we learn from those trials and ensuring that the problems that my hon. Friend the Member for Aylesbury (Rob Butler) raises are not experienced elsewhere.
Jim McMahon
On a point of order, Mr Speaker. We have had—not for the first time—a statement being offered during topical questions on a matter that should have been brought forward as a statement to allow proper scrutiny, in particular on the plan for Christmas. Although it nods to many proposals that Labour has put forward, we have not seen the detail and we have not been given the opportunity to scrutinise. May I have your advice, Mr Speaker? Is it not more appropriate for the Government to bring forward a statement that we can have a proper debate around?
Mr Speaker
I do not know whether anyone on the Government Front Bench would like to answer that.
Grant Shapps
On a point of order, Further to that point of order, Mr Speaker. The hon. Member for Oldham West and Royton (Jim McMahon) will be pleased to hear that I am writing in considerable detail to all Members of the House. The letter should be released, but I did not want to release until I had made comments about it at the Dispatch Box.
Mr Speaker
We will leave it at that for today. In order to allow the safe exit of hon. Members participating in this item of business and the safe arrival of those participating in the next, I am suspending the House for three minutes.
Petition
David Linden (Glasgow East) (SNP)
I rise to present a petition regarding cuts to the aid budget. I am sure, Mr Deputy Speaker, that you are an avid reader of The National newspaper and that you will have read the piece today by Alistair Dutton of the Scottish Catholic International Aid Fund, who says:
“We have a moral duty and, currently, a legal obligation to help those in need.”
The petition states:
The petition of residents of the constituency of Glasgow East,
Declares that, although the COVID-19 pandemic has caused nations around the world to face tough challenges, both from a public health point of view and a financial point of view, it is absolutely vital that the pandemic does not lead the UK Government to forget the promises made to the public and its commitment to overseas aid; notes that in the Conservative 2019 general election manifesto, the aid budget remaining at 0.7% was a key promise; further declares that cutting the budget continues to break another promise by the Conservative party; further that the cut to the aid budget flies in the face of the UK Government’s promise of a Global Britain; further that this cut is another example of the UK Government’s path to becoming insular and isolated on the world stage; further that the cut in the aid budget will increase poverty and instability around the world, which will be increasingly devastating due to the COVID-19 pandemic; and further that the Government should urgently reverse this cut in the aid budget to avoid the devastating predicted impact.
The petitioners therefore request that the House of Commons urge the Government to consider committing to retaining the aid budget at 0.7%, and not reducing it to 0.5% as a result of the COVID-19 pandemic spending cuts.
And the petitioners remain, etc.
[P002635]
Exams and Accountability 2021
(4 years ago)
Commons ChamberRead Full debate Read Hansard Text Read Debate Ministerial Extracts
The Secretary of State for Education (Gavin Williamson)
With permission, Mr Speaker, I would like to make a statement regarding testing and examinations in schools and colleges next year.
The pandemic continues to cause disruption throughout our education communities and, once again, I pay tribute to all our teachers, school leaders and support staff for the enormous efforts that they are making to keep young people of all ages learning. I also pay tribute to the global teacher of the year award winner, which recognises the most outstanding teacher from around the world. Our very own Dr Jamie Frost, maths lead at Tiffin School in Kingston-upon-Thames, has been shortlisted for this after his tuition website went viral during lockdown, helping millions of pupils in the United Kingdom and around the world to continue their studies at home. He has already won the covid hero award, and I am sure that the whole House joins me in wishing him luck with the overall prize. [Hon. Members: “Hear, hear!”]
We will not let covid damage the life chances of an entire year of students by cancelling next year’s exams. Exams are the best form of assessment that we have, and we are therefore taking steps to ensure that any student preparing to sit them in 2021 has every chance possible to do their very, very best.
We support Ofqual’s decision that, in awarding next year’s GCSEs, AS and A-levels, grading will be as generous and will maintain a similar profile as those grades awarded this year. This is to recognise the exceptional circumstances under which students and teachers continue to work and to make sure that students are not at a disadvantage compared with previous years.
Ofqual is also working with the exam boards to make sure that students studying for vocational and technical qualifications and other general qualifications benefit from the same generous approach. I know that students and teachers are making enormous efforts to catch up with any lost learning. To support those most affected by the continuing disruption, at the end of January, students will be given advance notice of some of the topic areas that will be assessed in their GCSEs and A-levels. That means that they will be able to focus on these areas in more depth and target their revision accordingly. Students will also be given exam aids, such as formula sheets, in recognition of the time lost in the classroom and to give them more confidence and reduce the amount of information that they need to memorise in preparation for exams.
All these measures have been drawn up with the most affected in mind and we will be sharing the advance notice about what exactly the measures will entail with schools and colleges at the end of January. Students taking vocational and technical qualifications or other general qualifications can also expect a number of concessions, including a reduced number of units to be assessed. We want as many students as possible to be able to sit their exams and for that reason we have a contingency package to make sure that they can do so, including spacing exams more widely, as well as enabling vulnerable students to sit exams at home if they need to.
In the minority of cases where students cannot sit all their papers or where a very small number of pupils miss all of them, there will be means by which they can still be awarded a grade, including additional papers available after the main exam series.
The fundamental problem with this year’s exams is that we tried to award grades without actually holding exams. We will not be repeating that same mistake again. With the measures that I have outlined, we are confident that every student who is preparing to sit exams this summer will be awarded a qualification.[Official Report, 6 January 2021, Vol. 686, c. 4MC.] As the virus continues to be a fact of life for all of us, schools and colleges are making impressive efforts to ensure that education can continue for those students who must remain at home. We have reviewed and updated the guidance for remote education so that schools, parents and pupils all know exactly what to expect from it. Primary schools need to provide an absolute bare minimum of three hours a day on average of remote education, and secondary schools, an absolute minimum of at least four. Schools will also be expected to check and provide feedback on pupils’ work at least weekly as well as informing parents immediately where engagement is a concern. The Department will also ask schools to set out details of their remote provision on their websites so that parents can better understand their schools’ remote education offer.
As levels of covid infection continue to fluctuate, we know that different areas will experience varying levels of disruption to learning. We will therefore commission an expert group to assess any local variations and the impact the virus is having on students’ education.
I turn to the measures we are taking in respect of the school and college accountability framework for 2021. We need to ensure that the arrangements for inspection and performance measures are fair and reflect the current public health situation. They need to take into account the enormous challenges that schools and colleges have been facing, but, equally, we must continue to provide the information and reassurance that parents need about their children’s education. We will not be publishing the normal performance tables based on test, exam and assessment data next year. Instead, my Department will publish data on the subjects that students have taken, how well schools and colleges support their students to their next destination and attendance data, taking account of the impact of covid-19. We will also publish national and regional data on 2021 exams, tests and assessments. Importantly, we will make the exam data available to Ofsted and to schools, but we will not publish it in performance tables.
I will now let the House know how our plans for schools and colleges are affected by inspections. It is our intention that Ofsted’s routine graded inspections will remain suspended for the spring term but will resume in a carefully considered way from the summer term. In the meantime, Ofsted will carry out monitoring inspections in those schools and colleges most in need of support. That will include those currently judged inadequate and some in the “requires improvement” category. Inspectors will focus on areas that are particularly relevant at this time such as curriculum delivery, remote education and, importantly, attendance. There will also be a focus on those pupils who are particularly vulnerable. However, I stress that they will not make graded judgments and any inspection activity will be sensitive to be additional pressures that schools are working under at this time.
As in the autumn, Ofsted will also be able to inspect a school in response to any significant concerns about safeguarding but also about the delivery of remote education by that school. In both the early years sector and the independent schools sector, the intention is also that standard inspections will remain suspended for the spring, with assurance inspections in the early years and non-routine inspections in independent schools taking place in the meantime. I trust that provides the House with reassurance that we are providing the right balance in our accountability and inspection arrangements.
I will finish by outlining our proposal for the curriculum and testing in primary schools, recognising the particular challenges they face. Assessments in primary schools next summer will focus on phonics, mathematics and English reading and writing. That means that for 2021 only, we will remove all tests at key stage 1, the English grammar, punctuation and spelling tests at key stage 2, and science teacher assessments at both key stages. The introduction of a multiplication tables check will be postponed for a further year, but schools may use it if they want to. It is a resource available to all schools, and we encourage them to do so if they can.
We will also add more flexibility to the timetable, so if there is any disruption due to coronavirus in a school, pupils will be able to take the test when they return to the school. These measures will help us to address lost learning time and will give us a chance to support pupils in schools who need help. They will also provide vital information for parents and better help for pupils to make a successful step into the next stage of education—going to secondary school.
Everyone in all of our schools and colleges is working as hard as they can to make sure that no pupils lose out because of covid and that the future they are dreaming of is still very much within their reach. I am determined that the coronavirus will not jeopardise the life chances of this year’s pupils, and I am confident that the plan is the fairest way of doing this. I commend this statement to the House.
Kate Green (Stretford and Urmston) (Lab)
I thank the Secretary of State for his statement and for the advance copy of it. I also thank the Minister for School Standards for briefing my hon. Friend the Member for Ilford North (Wes Streeting) and me yesterday. I also join the Secretary of State in congratulating Dr Frost and wishing him well for the finals of the global teacher of the year awards.
I am glad that the Government have finally responded to the pleas of students, their parents and teachers who have been asking for months how next summer’s exams will be conducted fairly. While I welcome measures to help pupils be assessed on what they have learned and ensure that reserve papers will be in place for pupils who might miss out, that performance tables will be suspended and that routine Ofsted inspections will not resume in January—many of them measures that Labour called for —today’s announcement still bakes in fundamental inequities between students who have suffered different levels of disruption to their learning. The Government have known since September that an ongoing pandemic would create huge challenges in schools, and for months they will have heard school leaders, parents and Labour Members calling for a credible plan to address them. It has taken until December to provide one, so can the Secretary of State tell us what took him so long? Why did he leave students in a horrible and uncertain limbo?
The truth is that the delay has limited the Department’s options. Had it acted sooner, it could have done more to make the system fairer. I welcome the decision to make the distribution of grades similar to last year’s to ensure that pupils sitting their exams this year do not feel unfairly disadvantaged, but we know that last year while grades rose across the board, some pupils—particularly those in private schools—were more likely to see a sharp rise. How will the Secretary of State ensure this year that the distribution of grades is spread evenly across schools and postcodes to ensure that the most disadvantaged pupils are treated fairly? Is he not concerned that providing information in advance about subject content will at best benefit pupils at random, with those who happen to have already covered the assessed material benefiting at the expense of those who did not, and at worst in fact mean that pupils who faced the greatest disruption to their learning lose the most?
There is significant support for greater optionality in exams. Indeed, the Secretary of State’s Department has taken exactly that approach with some exams already. It allows pupils to be assessed on what they have learned, with fewer pupils losing out at random. If it works for some subjects, can the Secretary of State explain clearly why it is not part of today’s announcement?
What steps is the Secretary of State taking to address the fact that over a million pupils were out of school this week? He talked about regional disparity, and we know that exam classes in some regions have faced disproportionate levels of disruption. Can he tell us when the expert group will report, why it has been established so late—I understand just last week—and will it include representatives of school leaders and teachers?
On remote learning, I note the Secretary of State’s requirements, but how many laptops have been delivered to students who need them? Why are we continuing to hear reports of schools receiving laptops only after students isolate, wasting valuable time getting them set up and delivered? Why has the national tutoring programme now been stretched more thinly across two years? Can he even guarantee that all students on free school meals will have access to tutoring?
Many students sitting exams next summer want to go on to university or college. What discussions is the Secretary of State having with colleges and universities to ensure that any additional support these students may need will be in place for them next September? Does he believe that any changes will be needed to the timing of university admissions? Can he tell us when pupils taking vocational and technical qualifications will receive further clarity, and what steps is he taking to clear the logjam in the testing of apprentices’ functional skills in maths and English?
Does the Secretary of State acknowledge that there are likely to be more appeals than in a normal year? How will he ensure that all students can access a fair appeals process? Will he also ensure that there are the markers with the time and resources needed to grade papers in time, particularly in the second exam window?
I want students to have the chance to show what they have achieved in the most challenging of circumstances, but after months of silence these proposals fall short of the fair exams that the Secretary of State promised. At best, this is a “requires improvement”.
Gavin Williamson
I am glad that the hon. Member could bring herself to welcome the measures, albeit slightly grudgingly, at the start. It is no thanks to the Labour party that schools are back and children are in schools. It is no thanks to the Labour party that we were getting over 1.6 million children back into school before—
Mr Speaker
Order. Is it possible to face me a little bit as well, Secretary of State?
Gavin Williamson
I know that you always love Secretaries of State to look adoringly at you, Mr Speaker. I have been dutifully rebuked.
The Labour party has never championed pupils, because it has not fought to get students back into schools. It was actually the Mayor of Greater Manchester who wanted to send children out of school and back home. But the Conservative party stands for getting children back into school.
The shadow Secretary of State highlighted a number of issues. It is disappointing that the official Opposition have not engaged in a positive debate. They could not even be bothered to respond to the Ofqual consultation about exams. They seem to have missed the opportunity. Maybe it got lost in the post—or maybe, quite simply, they just could not be bothered. We do recognise that there are significant challenges in delivering education at this time, which is why we have put together a package of truly unprecedented measures to assist schools, teachers, and, most importantly, pupils themselves.
I am sure that the hon. Lady would grudgingly acknowledge that all academic studies have continuously highlighted that children from the most disadvantaged backgrounds, including children from black and ethnic minority communities, are the ones who always outperform predicted grades when they sit exams.
Gavin Williamson
It is good to see that we have a common view—I note the chuntering from the hon. Member for Ilford North (Wes Streeting), who is sat in the Opposition Chief Whip’s seat—on the importance of exams. We recognise that children will have missed out elements of the curriculum, but giving advance notice will give them and their teachers the opportunity to use that time to focus on the areas of the curriculum that they know they will be tested on. We are also recognising the importance of technical and vocational qualifications, and we will be looking at ensuring that information on those is shared at a similar time to information on GCSEs and A-levels.
The shadow Secretary of State highlighted some important issues, including the potential for extra appeals and ensuring that there are proper extra resources in place for that process; we will certainly be doing that. We recognise that there are challenges from giving extra learning time and moving most exams back by three weeks. For example, this will put added pressure on the exam boards. We are working closely with the exam boards to support them to get the right resources in place, and to deliver the grades as and when we would expect them—at the end of August.
Robert Halfon (Harlow) (Con) [V]
It is right that we have exams in some form next year, because that at least gives pupils much-needed structure. I thank the Secretary of State, because there is no easy or perfect option, but I have two questions that I would like to ask him. First, are we possibly baking grade inflation into the system, as we saw in 2020? Could we not ensure that grade boundaries are in line with 2019 results, or at least between 2019 and 2020 results, so that we can revert to the standards of 2019, while no one loses out, and start transitioning back to normality? From a social justice perspective, does inflating all the grades just move the goalposts, in that the difference between disadvantaged pupils and their better-off peers remains the same?
Secondly, we know from the DFE’s own data that 798,000 pupils in state-funded schools were not in school for covid-19-related reasons on Thursday 26 November. Is there a way that we could track every single child to assess the learning that he or she is getting from the school? Will my right hon. Friend give Ofsted a much stronger role to ensure that children are learning, and will he use the £143 million allocated to the catch-up programme to ensure that every pupil is prepared for this year’s exams, rather than rolling over that funding into next year?
Gavin Williamson
We have commissioned an Education Policy Institute study on the individual learning loss, and we are getting data into the Department on that. We will be asking the expert group to look at that and how best to address it. I take my right hon. Friend’s point: he would have preferred more of a middle ground in the grading between 2019 and 2020. I firmly believe that, for those children who have had to deal with so much in terms of the pandemic, it is really important that their exam grading is reflective of their work but recognises the fact that they have been through a tremendous amount this year. It would be unjust for them to have grades, having sat exams, that were substantially lower than the ones received in 2020.
Mr Speaker
Let us head up to Birmingham to see Jack Dromey. [Interruption.] He looks a lot younger! That was not Jack Dromey; we have not arrived in Birmingham yet, so we will head to North Thanet, to see Sir Roger Gale.
Sir Roger Gale (North Thanet) (Con) [V]
The work that my right hon. Friend does in connection with exams is likely to be considered wrong by some people, but I congratulate him on coming up with what is probably the least worst option available to him. He will remember that at Education questions a couple of weeks ago I raised the issue of SATs, which is of particular concern to primary schools this year. He touched on the testing regimes for primary school children and secondary school children. Could he expand on that and indicate precisely what he expects of teaching staff and whether he believes that, for this year only, assessment might be the way forward?
Gavin Williamson
My right hon. Friend is right that there is not an easy pathway, which I think the hon. Member for Stretford and Urmston (Kate Green) also recognises. Any route taken presents quite significant challenges in delivering assessments and examinations, but I believe that this is the fairest and most robust way of doing it. We have removed SATs from performance tables. That is an important measure, but SATs do present a really important way of measuring a child’s attainment and position, and they will be vital for schools in making that assessment and supporting children to catch up on lost learning. We hope that removing them from performance tables will remove a lot of the pressure that teachers sometimes feel and help with the delivery of SATs.
Daisy Cooper (St Albans) (LD) [V]
Securing fairness for all students will be absolutely key, so while I welcome some of the measures that have been announced today that go in the right direction, I am worried that the creation of an expert group is simply kicking the fairness can down the road. Given the huge variations in learning between individuals, schools and local education authorities, when, specifically, will the expert group report on its proposals, and when will the House be able to scrutinise them?
Gavin Williamson
The whole set of measures that we have put in place, whether in extra learning time, changes to assessment, advance notice or giving exam aids, is to support children who have suffered from lost learning. The expert group, which will report to me in the spring, will make a proper and thorough assessment of some of the challenges that students have faced.
Selaine Saxby (North Devon) (Con)
This year’s students, such as those at Petroc College in North Devon, have faced unprecedented disruption to their studies as a result of the pandemic. Those who are due to sit some of the most important exams of their lives so far have perhaps felt this disruption most acutely. Can my right hon. Friend assure me that the measures that his Department is taking will ensure that these students are treated as fairly as possible in both academic and vocational subjects?
Gavin Williamson
I assure my hon. Friend that the measures we are taking are truly exceptional—they are not measures that we would ever have expected to take in any normal year. The only reason we are taking them is to support students in her constituency to ensure that they achieve the very best grades that they possibly can and unlock their future life chances.
Jim Shannon (Strangford) (DUP)
I thank the Secretary of State for his statement. Will he outline the steps taken to ensure that devolved Administrations whose students carry out English board exams have all the relevant information to enable schools to truly lay out the pathway to exam attainment? Will this messaging be going to parents and children soon to ensure less stress for these young ones, who have more uncertainty on their shoulders than children have had for many, many generations?
Gavin Williamson
The hon. Gentleman makes an important point. The measures that we are taking are very much to reduce stress and pressure on students. Many pupils in Northern Ireland sit papers from English exam boards, and the measures that we are taking will obviously be replicated in Northern Ireland for them. Only yesterday, I spoke to Peter Weir, the Education Minister for Northern Ireland. At every stage, we are considering implications that may arise for Northern Irish students as a result of these changes. We are doing everything we can to accommodate any concerns that Peter Weir may have on behalf of pupils in Northern Ireland, and we hope that we can balance that off.
Bob Blackman (Harrow East) (Con) [V]
I warmly welcome my right hon. Friend’s statement, which will end the uncertainty that I am sure is experienced right across the country. Will he join me in thanking teachers and students across Harrow, who have been desperately trying to catch up with the learning that they have missed, and congratulating them on their hard work? Will he use the opportunity—now—of a revision to the process to ensure that exams are not just a test of knowledge, but far more a test of how that knowledge is applied, in assessing how students have performed across their time in school?
Gavin Williamson
We will always look at different options to improve our examination system and how we work with exam boards, and I am more than happy to meet my hon. Friend to discuss that in greater detail. In terms of catch-up, I pay tribute to the teachers and support staff not just in Harrow, but right across the country, who have done so much. They have been assisted by the £1 billion covid catch-up fund to give extra resources, so that extra teaching can take place at weekends and in the evenings, and children have the opportunity to catch up on work that they have missed.
Kerry McCarthy (Bristol East) (Lab)
Research from the Education Policy Institute, among others, on the performance of pupils with special educational needs and disabilities suggests that they can be particularly vulnerable to being underestimated in assessments. Given that some of those pupils might also, for health reasons and owing to shielding, have had more disruption to their education, how can we be confident that any new system introduced for next year will take their needs into account?
Gavin Williamson
The hon. Lady raises a really important point on which there is a lot of shared concern on both sides of the House. This was one reason that we particularly weighted the covid catch-up fund to deliver extra money for those schools supporting children with special educational needs. We recognise there are some acute and difficult challenges, and certainly I know that the Minister for School Standards would be happy to sit down with the hon. Lady, along with the children’s Minister, my hon. Friend the Member for Chelmsford (Vicky Ford), to discuss any extra support or intervention she thinks would be of use and benefit.
Rob Butler (Aylesbury) (Con)
May I congratulate my right hon. Friend on achieving a compromise that enables students in Aylesbury to sit exams that they have long worked towards and actually want to take, while ensuring that they have the best possible chance of receiving a fair result? Can he assure me that this strategy will be able to withstand any future shocks that might arise due to covid-19, so that teachers and pupils in Buckinghamshire can plan the next two terms with certainty?
Gavin Williamson
This is why we have taken the decision to make the announcement at this stage. I think the four nations in the United Kingdom believe this is the most comprehensive and detailed plan for how we are going to proceed with assessment, examinations and the awarding of grades. I hope this gives every school leader and every teacher, but most importantly children, a clear sense of what they are going to be assessed against, so that they can achieve the very best grade that they are capable of getting.
Matt Western (Warwick and Leamington) (Lab)
The Secretary of State rightly says that he wants to boost fairness and support students, but he will be aware that just last week a million students were not able to be in school. In one school in my constituency of Warwick and Leamington, only 63% were present, which is a massive disparity. On 21 October, he said he would deliver 500,000 laptops, but only 200,000 have so far been delivered. Does he accept that there is a massive gap in delivering the fairness he promises? Should priority be given to teachers to be vaccinated to ensure they can stay in school?
Gavin Williamson
I very much share the hon. Gentleman’s view on the important role that teachers, and also support staff, have been playing in the delivery of education. Obviously, right through this pandemic, there has been a national priority of putting education at the centre of the Government’s response, which is why schools have remained open, even during a national lockdown. There will be specific clinical needs that have to be met as part of a vaccination programme, but there has always been a priority put on education, and for teachers to be able to get into school and teach and for support staff to support them. We will obviously be looking at this in the next wave and the announcement on vaccinations.
David Johnston (Wantage) (Con)
I congratulate my right hon. Friend on the position regarding exams today, as someone who was keen to see them go ahead. More importantly, all the young people I have spoken to want to see them go ahead as well, so that they are in control of their own futures. Does he agree that, given the learning loss, particularly for disadvantaged young people, it will still be important for schools to have an effective system for young people to learn during the holidays between now and summer to give these exams their best shot?
Gavin Williamson
My hon. Friend raises an important point and identifies a great opportunity for many schools to take advantage of. I know so many schools have been putting on extra lessons after the school day has concluded, and so many schools have been looking at how they can use the holidays to deliver extra education and catch-up for those critical year 11 and year 13 pupils. That is a great idea and certainly something we very much encourage.
Andrew Gwynne (Denton and Reddish) (Lab) [V]
I welcome this announcement, but let us talk about regional disparities, because I share the concerns of my hon. Friend the Member for Warwick and Leamington (Matt Western). More than 12% of children in Greater Manchester were impacted by covid-19, meaning that they could not attend school. That compares with 5% nationally. Information technology poverty affects up to 18% of the student population, and the learning conditions at home affect many more. How will this announcement help mitigate the impact on those pupils? How do we make it fair for them?
Gavin Williamson
As I touched on in an earlier answer, obviously we expect schools to deliver a full curriculum, but some schools will have been impacted in such a way that they cannot deliver every aspect of it. However, giving advance notice of the topic areas means that over the coming months those schools and students can focus on those areas that need to be covered for exams, in the run-up to them.
Dr Caroline Johnson (Sleaford and North Hykeham) (Con) [V]
I welcome the Secretary of State’s statement. I know that he has considered very carefully how to make things fair, and students and staff will welcome the certainty. Students and teachers in Sleaford and North Hykeham are working really hard to catch up with any lost learning, but it is clear that some students, through no fault of their own, will have missed more days of school than others. Can my right hon. Friend tell me how the £1 billion catch-up fund will be targeted towards those students who need it the most?
Gavin Williamson
There is not only the general pot of the catch-up fund, but the specific national tutoring programme, targeting children from the most disadvantaged backgrounds. We have always believed that schools, with their intimate knowledge of their pupils and understanding of their learning needs, are best able to target how that money is spent, so that pupils are best able to catch up.
Sarah Owen (Luton North) (Lab)
I have heard from teachers, school leaders and young people across Luton North, all saying that we need alternatives to standard exams next year. Students from Luton sixth forms and the Luton youth council wrote to me with a comprehensive list of options last month, and I urge the Secretary of State to hear their concerns. The headteacher of the fantastic Lealands High School summed it up perfectly when he wrote to me sharing concerns not just for children’s future, but for their mental health:
“It has become apparent that the disparity in experience of Year 11 students across the country is vast and those who are suffering the most have not control over this... There are many ways to assess what young people know, understand and can do.”
Will the Secretary of State listen to teachers, parents and students and avoid any unnecessary unfairness of exams, or does he just think he knows better?
Gavin Williamson
We have spent a great deal of time working with stakeholders and listening to children, teachers and professional academics on how best we do this. That is why we have pulled together the proposal that we have, putting the interests of children very much at the heart of everything we do.
Jonathan Gullis (Stoke-on-Trent North) (Con)
I congratulate my right hon. Friend and his entire departmental team on today’s statement, which gives certainty and clarity to teachers, pupils and parents for exams in the summer. We know that schools, including those in Stoke-on-Trent North, Kidsgrove and Talke, have been hit hard financially this year due to covid-19. That will only be added to by the need to advertise for, train and hire additional exam invigilators, which is a challenge at the best of times, so will my right hon. Friend back my call for an army of volunteers, made up of former and retired teachers—please add my name to the list—to help the national effort and deliver exams next summer?
Gavin Williamson
I would be delighted to add my hon. Friend’s name to the list of that army of volunteers who will go out there and help in schools. However, we do not just need invigilators; we also need markers—people who have experience as teachers, who are maybe retired—to come forward and assist us in this significant effort to ensure that papers are marked punctually. This is a great opportunity for people to give something back to the next generation and to schools in their community by either volunteering as an invigilator or coming forward as a marker.
Mrs Emma Lewell-Buck (South Shields) (Lab)
We have had yet another statement from the Secretary of State that did not mention children in care or children with special educational needs and disability. That is not surprising, since just last week the Court of Appeal found that he acted unlawfully in scrapping critical safeguards for those very children. Will he apologise and outline what support he is providing to them so that they are as exam-ready as every other child?
Gavin Williamson
We have a very proud history, actually; we put the needs of the most vulnerable at the heart of our response, whether it was the covid catch-up funding—making sure that extra funding goes to those children who most need it—or the fact that this country took a global lead in making sure that schools and colleges remained open for children with special needs and those who are most vulnerable. We led the world in that, and we are very proud that we took that lead.
Lia Nici (Great Grimsby) (Con) [V]
Does my right hon. Friend agree that keeping schools open is a national priority? That is vital for our young people, especially those in my constituency of Great Grimsby, to ensure that the disruption to their education is kept to a minimum as much as possible. However, we cannot deny that, despite best efforts, many young people have had their teaching and learning disrupted more than others. Can he assure me that the measures will allow those students to catch up on their curriculum and make sure they achieve the best they can in their exams?
Gavin Williamson
My hon. Friend is absolutely spot on when she highlights the importance of keeping schools open and ensuring that as many pupils attend as possible, because school is the best place for children. As the chief medical officers for England, Scotland, Wales and Northern Ireland all highlighted, children are always better off in school. We are so pleased to see schools open and so many children back. She is right to highlight the need for children to be able to catch up, but also to be able to focus their attention and efforts on the key areas that will make a real difference to their grades in exams. That is why we have taken these unprecedented and significant measures to ensure that children in her constituency are able to get the best grade and achieve their absolute maximum potential.
Jeff Smith (Manchester, Withington) (Lab)
In Manchester, some year 11 pupils are now in their fifth period of isolation. Most have lost at least 10% of class time because of isolation and many of those pupils do not have decent digital access to enable home learning. The deputy head at my local high school told me this morning:
“The system he is putting in place will serve to widen the disadvantage gap. He repeats that exams are the fairest means of assessment and all the studies point to that; however those studies were not undertaken in a global pandemic.”
May I plead with the Secretary of State to think again about what more he can do to help those pupils who have been disproportionately affected by isolation? That does not need to include keeping all examinations, because, on exams, making the playing field slightly smaller for everybody is not creating a level playing field for those disadvantaged pupils.
Gavin Williamson
The measures we have introduced are very much designed to support the pupils the hon. Gentleman talks about. I know from personal experience—my own daughter has had to isolate and is facing her GCSE exams in this academic year—the impact it has on all children. That is why we have put these measures forward to assist all children. That is what we have done, and we believe they will make a significant difference to all children in his constituency and mine.
Jason McCartney (Colne Valley) (Con) [V]
I appreciate that there are no easy solutions here. I have been discussing these difficult issues with the principals of my local sixth form colleges—New College and Greenhead College. My area in West Yorkshire has had some of the highest covid rates in the country, with hundreds of students off with covid or self-isolating at any one time. How will the Secretary of State make it fair for students in my patch who have been disproportionately impacted by covid, and level up their life chances?
Gavin Williamson
This is what all the measures we are introducing are aimed at doing: making sure that children who have missed out on the opportunity to learn are able to focus their efforts, as they come to the crucial exam period, on the things that will matter most to them as they try to achieve the very best grade. This is on top of the action we have taken with the covid catch-up fund, which has already been initiated and is available to all students in my hon. Friend’s constituency.
Liz Twist (Blaydon) (Lab)
Last week, I met headteachers from across Gateshead who talked about this very issue of unfairness. Today’s statement covers the issue across the whole cohort, but, as many other colleagues have said, what measures will the Secretary of State take to ensure that those who have been through isolation—there are many of those in the north-east and in my constituency—and do not have access to technology are really able to make up that difference and are able to be tested fairly in that system?
Gavin Williamson
Again, not wishing to repeat myself, we recognise that there are children in that situation. That is why we think it is really important that teachers and pupils alike have a clear sense of where the testing will be applied so that, over the final months as they head to exams in summer 2021, they are able to focus that effort and those resources on ensuring that they cover all those key critical areas.
Elliot Colburn (Carshalton and Wallington) (Con)
I warmly welcome my right hon. Friend’s statement. The excellent teaching staff across Carshalton and Wallington are doing their best to prepare for the 2021 exams, but they have been telling me that when students have to self-isolate, there is obviously disruption. Can my right hon. Friend assure me that he will put education at the top of the priority list for vaccinations as they begin to roll out, so that we can return to some form of normal teaching before next year’s exams?
Gavin Williamson
My hon. Friend makes an important point about vaccination roll-out. We have also been doing testing pilots around the country to see how we can be in the best possible position so that, if a child does have covid, it does not mean that a large group of children will have to self-isolate. As we complete those pilots, we will look at how we can roll that out, especially into the areas that have been most affected. He makes an important point on vaccination, and we are certainly looking at how we can prioritise that, since teachers and support staff play such an important role in our national endeavour.
Rebecca Long Bailey (Salford and Eccles) (Lab) [V]
The Secretary of State’s statement sadly does little to address the disadvantage that pupils, particularly from northern schools, have faced compared with those in other areas less affected by the virus. Alarmingly, a survey of National Education Union members found that nearly 80% felt that they would not be able, in the time available and with repeated pupil absences, to teach the whole syllabus. At the very least, will he accept that to give pupils a real chance, he must release those topics that will be on exam papers now and not wait until the end of January?
Gavin Williamson
It is very nice to see the hon. Lady again. The reason for this focus and the advance notice for schools is so that, where there has been missed time, they are able to be in a position to focus on the areas that matter. I appreciate that she would want everything yesterday, as against in January, but the work will take a little bit of time for exam boards to pull together. It will be done swiftly—by the end of January—to give schools as much space as possible to focus their attention on those areas.
Greg Smith (Buckingham) (Con)
The stress and anxiety that has been faced by so many pupils, staff and parents due to covid restrictions cannot be denied, so I very much welcome my right hon. Friend’s statement today. It is the right thing to do. Can he give me an assurance that his Department will also do everything possible to ensure that this message goes out loud and clear to anyone who might seek to stigmatise the class of 2021 as having had some sort of easy pass, rather than these measures’ being rightly about fairness in the face of exceptional circumstances?
Gavin Williamson
My hon. Friend is absolutely spot on. The children who are facing exams this year have done so much, in quite extraordinary circumstances. The grades they will receive will be a real testament to their hard work, their dedication and their commitment to education, either in the 11 years in the run-up to their GCSEs or in the 13 years in the run-up to their A-levels and other vocational qualifications. I hope that employers in the future will recognise the amazing work that has gone into every single grade and every single achievement of all our children.
Dr Rupa Huq (Ealing Central and Acton) (Lab)
Around 80% of Ealing schools have had covid cases, leaving gaps in learning and holes in budgets. Some have demolished walls to accommodate distancing, and now they have huge staff absence bills—all at London prices. Can the Secretary of State compensate all those in full and prioritise vaccinating not just teaching staff, but the admin lot, who have worked non-stop throughout all this? The Chancellor seems to have given them all an effective pay cut last week.
Gavin Williamson
We have already set out details to support schools during this covid pandemic, not just in the run-up to summer, but during the current term.
David Simmonds (Ruislip, Northwood and Pinner) (Con)
It is always easy to criticise, but does my right hon. Friend agree that while, sadly, it appears that the dog ate Labour’s homework on this one, his statement provides headteachers in my constituency and others with certainty? Does he also share my admiration for the work being done by local authority virtual schools so that children who are in the care system are able to access the wide range of support provided by the Government to ensure that they continue to close the gap with their peers who are not in care?
Gavin Williamson
My hon. Friend highlights a really important area. The virtual school heads programme for local authorities and schools, has been a real success. We have seen a real impact for those children—some of the most vulnerable children in society, with some of the best attendance for them—by getting that tailored support. It is a scheme that I would deeply love to see rolled out more extensively, because the evidence points to the real impact and difference it makes to young people’s lives.
Stephanie Peacock (Barnsley East) (Lab)
The Secretary of State referred to remote provision in his statement, and yet last half-term school laptop allocations were cut by 80%. That decision affects the most disadvantaged pupils the greatest, so will he reconsider the decision and commit to delivering the laptop provision that schools were originally promised?
Gavin Williamson
We continue to deliver ever more laptops every single week. More than 0.5 million laptops will be going out, and we continue to do everything we can do to support schools with laptop provision.
Sir Christopher Chope (Christchurch) (Con)
Will my right hon. Friend congratulate St Joseph’s Catholic Primary School in Christchurch on being given an accolade by The Sunday Times for being one of the best primary schools in the country? Will he tell us what criteria will be available to enable the public to judge primary schools next year, if there are no tests at key stage 1 and very few at key stage 2, bearing in mind that the key stage 1 tests are the test against which future progress is gauged?
Gavin Williamson
I very much join my hon. Friend in congratulating St Joseph’s school in Christchurch on such an accolade. I am sure that he, the teachers, parents and, most importantly, pupils feel incredibly proud at receiving it.
We recognise that we have had to make some changes that we would not normally want to do, in order to facilitate the smooth functioning of schools. We will continue to publish data on schools, including attendance, so that parents are in the best possible position to make the best choice for their children in school.
Mr Tanmanjeet Singh Dhesi (Slough) (Lab)
Some regions of our country, including my constituency, have been especially hard hit by the pandemic. Slough schools have faced several outbreaks and huge disruption as a result. There is also the huge issue of the digital divide experienced by many of our more disadvantaged and less well-off communities. So, in addition to the Secretary of State’s announcement today on exam changes, surely he should consider regionally targeted measures to support those areas that have lost out the most.
Gavin Williamson
We believe that this is a comprehensive package. We will ask the expert group to look at some of the challenges that students will face in order to be able to progress to their next stages. We will look very closely at the evidence that is provided on lost learning.
Tim Loughton (East Worthing and Shoreham) (Con) [V]
I welcome the decision to retain exams, not as the best but as the least worse form of assessment. Having held a virtual roundtable with heads recently, I know that they will welcome this long-awaited clarity and the flexibility that will be given to schools that have been in areas of high covid infection, which has obviously impacted on classroom time.
May I ask the Secretary of State about A-levels and university applications? Unfortunately, other nations in the UK rushed ahead to scrap exams next year. Therefore, pupils from England applying to Scottish universities—as my son did—or to Welsh or Northern Irish ones, will be treated differently from pupils in those other nations, or from such pupils coming to English universities. How do we ensure that all will be treated equitably in this now divergent system?
Gavin Williamson
We been working very closely with UCAS and Universities UK on this issue. Universities have been used to different systems. The Scottish system, for example, is different from the English system in terms of its grading, its curriculum and its qualification at the end. There has been divergence between Scotland, Wales, Northern Ireland and England over the past few years. We are confident that, by giving clarity at this stage, including on the way that we will be grading and the generosity with which we will be grading, universities will best be able to adapt. We saw a record number of students going to university last year, and we will not be surprised to see a record number going to university next year as well.
Lucy Powell (Manchester Central) (Lab/Co-op) [V]
I still do not get how these proposals mitigate the effects of extended absence of teaching and learning. It is not just about the differential in lost schooling, which still is not resolved, but the differential impact that missing school has on some children—those unable to access learning, unable to cope, unable to engage and unable to thrive. The loss of six months and counting has massively widened the gap. Simply making the grades more generous for everyone equally does not deal with the widening and widened gap. Is it not the case that the Secretary of State’s dogmatic fixation with exams has blinkered him to solutions that would more effectively deal with the growing and widening gap and the impact of school absence?
Gavin Williamson
All the measures that we have undertaken have been aimed at supporting those children who have been most affected, but we have to understand that every child in this country has been affected by this pandemic, which is why we also need a national approach to support all children. We have created a system that supports those children who have suffered the most and makes sure that they are in the best position to focus their studies and their time on the areas that will deliver them the best results in terms of grading in August.
Sir David Evennett (Bexleyheath and Crayford) (Con) [V]
I welcome my right hon. Friend’s announcement of a package of measures to ensure fairness in next summer’s exams despite the many challenges. Can he assure me that, if the disruption caused by the pandemic continues into next year, the situation will be monitored and assessed and, if necessary, further measures will be introduced?
Gavin Williamson
We are absolutely certain that we can deliver a full exam series. Quite simply that is because, over the past number of weeks, we have delivered a full exam series for GCSEs and A-levels in which tens of thousands of students have taken part and they have gone safely and have been successful, so we are absolutely confident about being able to deliver that exam series in the summer of next year. My right hon. Friend highlights the issue of lost learning and differential learning, which is why we have set up the expert group to be able to advise us should we need to take any other interventions to ensure that students are in the best possible position to be able to progress to college, to university, into an apprenticeship or into the world of work.
Karl Turner (Kingston upon Hull East) (Lab) [V]
As you know, Mr Speaker, east Hull has been one of the hardest hit areas by the pandemic, and our schools have faced massive disruption. I thank my school leaders, teachers and support staff for performing what has been a near miracle in keeping schools going, but the support from the Government has been derisory up to now. What regionally targeted measures will the Secretary of State be implementing to make sure that areas such as mine are not left behind?
Gavin Williamson
At every stage, we want to support all those schools that have been impacted by the pandemic, whether they are in east Hull or east London, whether they are in the east of England, the south-west, the north-east or the north-west. We will continue to deliver that support not only to schools, but, most importantly, to children.
Sara Britcliffe (Hyndburn) (Con)
I have been on many calls with my local schools—Mr Speaker, as you represent a Lancashire seat, your schools will face the same difficulties—where our infection rate has meant that local pupils have had to isolate more than once and their education has been severely disrupted. Will my right hon. Friend reassure me that if the disruption caused by the pandemic continues into next year, it will be monitored and assessed and, if needs be, further measures could be introduced?
Gavin Williamson
That is why we established the expert group to look at some of the challenges, including the ongoing challenges, as it is not always possible to predict the course that the pandemic will take. There is a great deal of optimism and excitement about the future with the roll-out of a vaccine, but we need to continue to monitor the challenges we face as a result of the pandemic. If extra measures need to be added, we would certainly not be blinkered or ignore such other measures that were needed.
Holly Lynch (Halifax) (Lab)
I asked headteachers in my constituency for suggested questions to the Secretary of State and had to rule out at least one on the basis that it would have been unparliamentary. I stress again on behalf of all headteachers that the disparities in the disruption to schools are significant in areas like mine, where we have had higher than average infections and restrictions for much longer than other places. Communities with higher proportions of black, Asian and minority ethnic pupils have been particularly affected. How will the Secretary of State ensure that his proposals reflect those serious differences?
Gavin Williamson
We put together the package of proposals to deal with and support schools in the hon. Lady’s constituency of Halifax and many other areas across the country. We recognise that exceptional measures have to be put in place to support them, and that is why we have taken the steps that we have.
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 suspend the House for three minutes.
Business of the House
(4 years ago)
Commons ChamberRead Full debate Read Hansard Text Read Debate Ministerial Extracts
The Leader of the House of Commons (Mr Jacob Rees-Mogg)
The business for the week commencing 7 December will include:
Monday 7 December—Consideration of Lords amendments to the United Kingdom Internal Market Bill.
Tuesday 8 December—Motion to approve ways and means resolutions related to the Taxation (Post-Transition Period) Bill.
Wednesday 9 December—Consideration of a procedural motion, followed by Second Reading and Committee of the Taxation (Post-Transition Period) Bill.
Thursday 10 December—If necessary, consideration of Lords amendments followed by general debate on the future of the high street.
Friday 11 December—The House will not be sitting.
Valerie Vaz (Walsall South) (Lab)
I thank the Leader of the House for the business, but it is dummy business, because this is a dummy Bill next week. It has not even been published. I checked in the Vote Office this morning, and I checked online and it has not even been published. So could the Leader of the House try again when he responds? It is not actually a real Bill.
There is a very important day on 16 December, when the EU votes on a final deal. It is also the day that we come out of tiers. I just wonder if 17 December is an appropriate day for the House to be pencilled in to rise. They are two important debates. Could the Leader of the House say exactly when the House is likely to rise? We would like to know because we need to plan. If we are going into the following week, it would be important for us to know.
We have had the dummy Bill, but we have also had fake news. The approval of the vaccine has got absolutely nothing to do with Brexit, so I hope the Leader of the House will take back his tweet. It is great that the vaccine has been authorised and will be rolled out next week, and I want to pay tribute to all the scientists, the lab technicians and the volunteers who stuck their arms out to keep us safe. It is a reminder that certain things know no boundaries and that people can work together for the common good of humanity. I always think that the Opposition are very constructive, so I am pleased that the Government have taken up the suggestion of a Minister for vaccines. What I am concerned about is that he is doing two jobs. We had a Minister for snow, although I do not think many people will remember that, and a Minister for floods, and they just did that one job. Will the vaccines tsar now be accountable to the Minister and will the Minister be accountable to us? Could the Minister make a statement next week, so we know exactly where we are on the roll-out of the vaccine?
Yesterday, the Joint Committee on Vaccinations and Immunisations published its criteria. Care UK has asked that unpaid carers be vaccinated immediately, and I do not know what the process is for feeding that into the Committee. Black and minority ethnic communities have also been hard hit by the virus, and we should also look at that, as well as multi-generational households.
The Government seemed to be fighting the rebellion this week rather than the virus, and almost 3 million people, despite the spending review, have been excluded from Government support. People are confused. In Walsall, we were in tier 2, infection rates came down, hospital admissions came down, but now we are in tier 3 and in with Birmingham. I know that the Leader of the House has got special dispensation for parts of north Somerset to be taken out of tier 3. I think they were linked with Bristol. I think the Secretary of State for Health has said he is going to look at that on 16 December, so that Somerset is all in one group. How do we do that in Walsall?
Can the Government now release all the data modelling of the sectoral impacts and potential job losses as a result of the tier lockdowns? Even Ministers do not know the difference between tiers—I think it is the Scotch egg test. But surely it cannot be right that details of contracts given under the pandemic will not be allowed to be published. A Minister in the other place, I think, said that they are not going to do that. It is like telling us all not to eat the sweets while the Government raids the sweetie jar behind our backs.
I know that the Secretary of State for Education has already been here, but on Friday he announced special funding for schools for the short-term covid workforce. That was put on the website on Friday, when the House was not sitting. Then there was a written statement on Monday. Could the Secretary of State come back and explain exactly why schools have not been compensated for everything from the time they were allowed to open in September? They have had to pay for heating—they have to keep schools ventilated, as well as keep up with the heating costs—and PPE, and some of them are putting food bags together for their children. But the key thing is that insurers are not even paying out. This is force majeure: this is a pandemic. Could the Secretary of State come and make an announcement on how schools will be supported?
I know we had Transport questions earlier, but may I ask the Leader of the House, given that there is going to be a border in the Irish sea, if he will take up the Irish Government’s suggestion that Father Christmas gets a travel corridor and is an essential worker?
Finally, let us remember people with disabilities. It is the International Day of People with Disabilities, and every day should be a day of disabilities, as we make this world more accessible for everyone.
Mr Rees-Mogg
Mr Speaker, I wonder, with your leave, if I may begin by saying a few short words of thanks to the Cabinet Office’s parliamentary adviser, Dr Farrah Bhatti, whose secondment to Government is coming to an end and who is returning to the House service as a Principal Clerk. Farrah Bhatti joined the Cabinet Office as parliamentary adviser in April 2018 on secondment to Government to advise Ministers on parliamentary procedure and handling. The period of her secondment has seen some unprecedented challenges and events in Parliament, including a number of meaningful votes and the response to the covid-19 pandemic. Throughout her time, Farrah has been a great servant both to the House and to the Government, bringing her invaluable wisdom and advice to successive business managers and Ministers. She is unbelievably knowledgeable, in the best traditions of the clerkly hierarchy. I try to ask her impossible questions, and she always—invariably —knows the answer. May I put on record that in the last 17 months, while I have been Leader of the House, any good procedural recommendations have come from her and any mistakes have been exclusively my own? I have a feeling that the right hon. Member for Walsall South (Valerie Vaz) will think there have been one or two of those. But may I finish by saying that Her Majesty’s Government’s loss is very much the gain of the House of Commons, and I am sure the whole House will want to wish her well in moving on to her new post?
To come to the right hon. Lady’s questions, I completely agree that we should recognise disability day, and we should ensure that we recognise and value everybody in this country as equal and of great importance to our society and to our nation. I can also reassure her that Father Christmas will be able to have a travel corridor. He will be able to come in, and he will not have to be vaccinated. I have six children who are waiting with bated breath, and who are filling out lists. The lists, Mr Speaker! You would not believe how long they are. Schleich is very popular with my infant daughter, and every possible item of Schleich seems to be on this list for Father Christmas, so I hope he can carry it all in his bag. [Interruption.] I see the Whip on duty, the hon. Member for Ogmore (Chris Elmore), is asking what Schleich is. They are these little toy horses and things like that, and they are very popular.
Now to the areas where we do not agree so much. First, it is a real Bill that will be coming forward—a real Bill—on the EU taxation provisions, once we have ended the transition period. We will be doing the Lords amendments on Monday, and we will be pushing back all the amendments that were made in the Lords, including the ones relating to clause 5, and ensuring that we can put the best interests of the whole United Kingdom first. These are really important pieces of legislation. The right hon. Lady also mentioned Brexit and the vaccine—
Mr Rees-Mogg
It will be published. Bills are published before we vote on them. Patience! It is coming, as is Christmas, of course. [Interruption.] Christmas is coming —because we are in Advent. Dear me, I would have thought that, as a former cleric, the hon. Member for Rhondda (Chris Bryant) would know the difference between Advent and Christmas, but there we go.
As regards Brexit and the vaccine, the UK should be really proud that our regulator got in first. We notice that the European regulator is a bit sniffy about it, wishes we had not done it, and that Germany and France and other European countries have not managed to do the same thing. We have, we are leaving—draw your own conclusions, Mr Speaker, as I am sure the British public will. We are now free of the dead hand of the European Union and will be even more free of it on 1 January. This is a huge British success that we should be proud of and pleased about.
The right hon. Lady talks about the Minister for vaccines. I remind her that Harold Wilson had a Minister for drought, so Ministers have had all sorts of responsibilities over the years. My hon. Friend the Minister will be doing a very important job in ensuring that the roll-out goes to the priority cases first, and the number of vaccines that has already been secured will ensure that we are able to have a very thorough programme. This is very good news because it is the beginning of the end. We should welcome that and be pleased about it.
In terms of tiers, the idea that Somerset is the same as Bristol is a ridiculous one. Somerset and Bristol are clearly different things. One is the great historic county of Somerset, and Bristol is a city important in its own right, but nothing like the same as the great historic county of Somerset. Bath and North East Somerset have a much, much lower number of cases per 100,000 than Bristol, South Gloucestershire and North Somerset. The whole county council area of Somerset is also in tier 2, along with Bath and North East Somerset, which is the right place for it to be.
The right hon. Lady mentioned support for businesses. I would just reiterate that £280 billion of taxpayers’ money has been spent to protect jobs, businesses and public services across the United Kingdom. This is an enormous package of support, including £1 billion of support for schools to help people catch up. If she has questions for the Secretary of State for Education, they should have come a little bit before me, during his statement, rather than afterwards.
Finally—Scotch eggs. We had better finish on Scotch eggs, because I know this is a matter of great interest. I refer to the elephant bird. Do you know, Mr Speaker, that the egg of the elephant bird, which is now extinct, could weigh up to 22 pounds? That is quite a big egg. If you turned that into a Scotch egg, it would unquestionably be a substantial meal. If, on the other hand, you were to take a quail’s egg and make that into a Scotch egg, it would be a mere snack. In between, the great British people will make their mind up, along with publicans up and down the country, as to whether it is a snack or a substantial meal.
Elliot Colburn (Carshalton and Wallington) (Con)
Statistically, Carshalton and Wallington is one of the safest areas in London. However, over the past few months there has been a worrying number of catalytic converter thefts and other vehicle-related crimes. Indeed, only this morning I heard the story of Saffron, who challenged four men who were attempting to steal a catalytic converter on her road, and was chased back to her home by those men, who were armed with scaffold poles. Could we therefore have a debate in this place about how we can support our brave police officers in bringing these perpetrators to justice?
Mr Rees-Mogg
My hon. Friend raises a genuinely important issue, and he is right to stand up for law and order. Catalytic converter theft has been a growing problem in recent years, and I know that it has been a considerable concern up and down the country. The police are indeed brave and heroic—they run towards danger and do everything within their power to keep our communities safe—and he is therefore right to pay credit to them. Thanks to the efforts of the Home Secretary and the Policing Minister, we have made good progress in hiring new police officers towards the target of 20,000, with over 5,000 new recruits in 2020 alone. He raises an important point, and we must always focus on law and order.
Tommy Sheppard (Edinburgh East) (SNP) [V]
On the timetable, can the Leader of the House now rule out Parliament having to debate the Brexit chaos between Christmas and Hogmanay?
Can we have a debate on the ministerial code and whether it should be strengthened to ensure that Ministers’ statements on social media are accurate and truthful? I ask because the Leader of the House claimed yesterday on Twitter that the accelerated licensing of vaccines in the UK was made possible by our leaving the European Union. In fact, as made clear by the regulator, the very opposite is the case and the licences were approved via a fast-track procedure provided for under EU regulations.
This applies in other areas too. Previously the Leader of the House was somewhat coy when I asked if he agreed with the Prime Minister that devolution had been a disaster, but recently he has been opining on social media that the so-called Blairite constitutional tinkering needs to be corrected. Given that the principal constitutional change of the Blair Government was devolution, I presume it is this that he has in his sights. If the UK Government are about to reverse a policy of more than two decades, surely this Parliament ought to debate the matter. The current Government have no UK mandate for this change, and it represents a total and absolute disrespect for Scottish public opinion.
It seems that at the coming Scottish general election, two alternative paths will be offered to the electorate: either the Government’s assault on devolution ends up with direct rule from Westminster, or the Scottish people defend their right to decide matters for themselves by demanding the choice of becoming an independent country. Yesterday, another opinion poll by Ipsos MORI recorded a 12-point lead for independence—the 15th in a row to record a yes majority. The question for this Parliament is whether it will respect the results of the election in Scotland or whether it will ignore them and aim to govern without the consent of the people. Does the Leader of the House agree that at some point we must have this debate?
Mr Rees-Mogg
The failure of the SNP is not something I would have thought the hon. Gentleman would wish to boast about. The SNP in government has failed on Scottish education, it has failed on Scottish health, it has failed on Scottish law and order; it is a shameful record in Scotland of the SNP. It has let the people of Scotland down.
The hon. Gentleman loathes genuine elections because in 2014 he lost—L-O-S-T, lost. He had an election, and it was going to be for a generation. The generation has hardly lasted six years before he quotes opinion polls. Opinion polls are not proper elections where people go out and put their cross and put it in a ballot box; they are a taster of opinion at a passing moment of fancy, whereas a genuine election is what was had in 2014, and that is the result supported by the people of the United Kingdom.
It is worth reminding the hon. Gentleman of the success of the United Kingdom. The UK taxpayer has provided £8.2 billion to help Scotland through the pandemic. It is of fundamental importance and shows the strength of this nation together. It is the SNP that has been the failure, not devolution. Devolution could work perfectly well if only the Conservatives were in charge in Scotland, which would make a triumphant success of it. If anyone does not believe me, they just have to look at how well London was run when it had a Conservative Mayor and what a hash is being made of it by a socialist Mayor.
To come to the issue of Brexit and the vaccine, why is it that the UK has managed to approve this vaccine and our friends in Germany, France, Italy, Spain and so on have not? Do you think it might just be because we are leaving the European Union and we are taking back control? We are able to crack on. Now we see the European regulator does not think we should have done it in the first place. It is a bit miffed. Why is it miffed? Because we got there first. That is absolutely splendid and we should be proud of United Kingdom achievements.
Mary Robinson (Cheadle) (Con) [V]
There is a saying, Mr Speaker, that you don’t know what you’ve got till it’s gone. It is no surprise, therefore, that the closure of retail during lockdown highlighted the value of our local shops. However, independent, family-run sports shops, such as Jim Hall Sports in Bramhall, are in danger of closing altogether, disappearing from our high streets, as major sports brands close their accounts, preferring big outlets, national chains and online shopping. While my call for a debate on the future of our high streets has been pre-empted, will my right hon. Friend join my campaign to save our independent sports shops, and does he agree that now is the time for big brands such as Nike, Adidas and Under Armour to get behind local communities and back our independent sports shops?
Mr Rees-Mogg
I commend my hon. Friend for campaigning for independent retailers in her constituency, and particularly for Jim Hall Sports. It is really important that the major suppliers help independent retailers. They should not use their quasi-monopolistic position to take away support from our high streets. I hope that point will be made in the debate on high streets next Thursday. The Government have provided a great deal of support during the pandemic, with £66 billion in loans and £11 billion in business grants, but really, this is going to be in the hands of consumers. We should all try to support our high streets where we can.
Madam Deputy Speaker (Dame Rosie Winterton)
We now go to the Chair of the Backbench Business Committee, Ian Mearns.
Ian Mearns (Gateshead) (Lab) [V]
I am afraid to say that I am very disappointed that the Backbench Business Committee has no time allocated for debates next week. We had a tasty morsel or two lined up. We have debate applications that would neatly fit into any time that might become available between now and Christmas, with many keen applicants trying to get slots before Christmas.
The Leader of the House is right that there was a Minister for Drought under Harold Wilson’s Government. That was the right hon. Denis Howell in 1976, although he subsequently—in a matter of weeks—became the Minister for Floods, which only goes to show that we have to be very careful what we wish for.
Mr Rees-Mogg
The hon. Gentleman is absolutely right. The right hon. Denis Howell did indeed become Minister for Drought, and the drought ended. Whether this was because of the power of the Government or the power of a higher authority is not, I think, a particular matter for debate, as it happens.
We are having Backbench Business debates later today, and we continue with a regular programme of Backbench Business debates. I reassure the hon. Gentleman that we try very seriously to ensure that the days’ debates are provided in accordance with the Standing Orders.
Dean Russell (Watford) (Con)
I am sure that children around the world, including my own special nieces, were very pleased earlier this week when the Prime Minister shared on Twitter that he had spoken to Father Christmas to confirm that he would be bringing joy to the world on his sleigh as he does every year. Will my right hon. Friend please confirm that Santa’s elves are also able to help in Santa’s workshop this year, so that we can further reassure children around the world not to worry, because Santa is coming this Christmas to bring cheer as he does every year?
Mr Rees-Mogg
I am sure that the elves are busily doing their magic work to ensure that Christmas stockings will be filled for children across the world. I think they count as key workers because they need to go into work to do their jobs. Whether they have to wear masks or not, I am not entirely sure; I have not yet found out. We should no doubt have an Adjournment debate on this important subject. We can be pleased that Christmas is coming, presents will be delivered and we will be able to see members of our families over Christmas. That is reassuring for one and all.
Liz Twist (Blaydon) (Lab)
I am sure that the House will join me in congratulating housing association Habinteg on its 50th anniversary. Accessible homes are vital for older and disabled people. With the Government consultation on accessible homes having just ended, will the Leader of the House arrange a debate on accessible housing in Government time, and can he say when the Government will respond to the consultation?
Mr Rees-Mogg
The hon. Lady raises a point that we should all celebrate—that is, that accessible housing is important and organisations that provide accessible housing should be congratulated, particularly on a 50th anniversary. As the hon. Lady says, the consultation has closed and a response will be produced in due course. I cannot promise a debate in Government time, but it is a subject that the House may well want to discuss. There are obviously slots in Westminster Hall and Adjournment debates that may prove suitable.
Felicity Buchan (Kensington) (Con)
I will be spending Small Business Saturday visiting small shops in Notting Hill and North Kensington. Does my right hon. Friend agree with me that we need a fundamental reform of business rates, or, indeed, as I would argue, a reduction in business rates—I know that he probably cannot comment—if we are to see high streets in Kensington and across the country continue to prosper?
Mr Rees-Mogg
First of all, I congratulate my hon. Friend on her determination to ensure that Small Business Saturday is marked properly and effectively, and on leading the way in her own constituency by visiting small businesses. It is really important that we back small businesses, which really underpin our whole economy. Job creation usually comes from small businesses, and my hon. Friend is right to support them and to support high streets. I cannot make promises about rates reform—that is a matter for the Chancellor—but I would say that we Conservatives believe in low taxation always and everywhere; it is a fundamental principle of being a Conservative. Through the pandemic, there has been considerable support for small businesses, including the waiving of rates, £11.7 billion of initial grants of up to £25,000 at the start of the outbreak and £1.1 billion to councils to support businesses more broadly. There is a fundamental review of business rates going on and responses to the call for evidence are being considered, so I hope there will be news in spring 2021, and we will see where that goes.
Chris Loder (West Dorset) (Con)
On Friday 23 October in this Chamber, I called on all Members of the House to support the Government’s commitment to ban live animal exports. I was delighted to hear this morning an announcement by the Government and the Secretary of State for Environment, Food and Rural Affairs that we would continue to do that, and I ask the Leader of the House to ensure that we bring that forward as soon as possible.
On a point that is more pertinent and closer to home right now, the coronavirus regulations that, as we all know, were passed earlier this week put rural West Dorset and vast swathes of rural England into tier 2. I very much support the Government’s refreshed approach to regional tiering, but I believe that a more localised approach should be possible. May I ask that, when the review comes in two weeks’ time, the House be able to give proper scrutiny to this issue?
Mr Rees-Mogg
I am grateful for my hon. Friend’s point on live animal exports; that is something we can do because we are leaving the European Union, so it is another advantage of being free to make our own laws. With regard to the placing of areas in each tier, that will be reviewed every fortnight, with the first review taking place on 16 December. The Government are keenly aware of the views of hon. Members across the House, and decisions will continue to be based on a range of indicators, including analysis of cases across age groups and the rate at which cases are rising or falling. There will certainly be plenty of opportunities to discuss those matters in the House. Indeed, there have been frequent oral statements, and more Government time has been made available for general debates on covid.
Madam Deputy Speaker (Dame Rosie Winterton)
Order. As well as business questions, we have another statement and two debates to get through, so I would ask for succinct questions and answers.
Dr Lisa Cameron (East Kilbride, Strathaven and Lesmahagow) (SNP) [V]
According to Open Doors, there are more than 93 million Christians in Nigeria at risk of persecution. I have also received a very worrying inquiry from a constituent regarding the burning down of six synagogues in Nigeria. Can we have a much needed statement on what can be done to ensure the protection of vulnerable religious minority groups from persecution in Nigeria?
Mr Rees-Mogg
This is a matter of considerable concern to the Government, and the Government have been raising it with the Nigerian authorities. I will pass on the details of the hon. Lady’s question, because we must do whatever we can to ensure religious toleration across the world.
Sir Christopher Chope (Christchurch) (Con)
Never has parliamentary scrutiny of Government become more important than it is now. In the light of that, will my right hon. Friend agree to allow the House to sit until Christmas Eve so that we can discuss all these important issues, not least the tiering process, and to enable the House to have a chance to consider an issue dear to Mr Speaker and the Deputy Speakers—namely, whether or not we should introduce a change to the Standing Orders relating to the length of speeches?
Mr Rees-Mogg
It is a matter of great concern that speeches are much too short. I know that Members of the House would like speeches to go on for many hours as they used to in the 19th century—particularly those of my hon. Friend, who has made some spectacularly long speeches in my period in this House and done so with great panache and verve. I agree with him that scrutiny is fundamental, but I can assure the House that we will not be sitting on Christmas Day.
Chris Elmore (Ogmore) (Lab)
That is a relief to hear. I am sure the Leader of the House is aware that this week is Welsh Electrical Safety Week and that a survey from Electrical Safety First has shown that 57% of Welsh consumers will use online platforms and marketplaces to purchase Christmas gifts. The concerning thing, as he will be aware, is that many platforms, including Amazon and Wish.com, will allow third parties to sell faulty goods with electrical concerns that people are unaware of, which can cause house fires. Could he find time for a debate to ensure that we can look at how the regulation of the marketplace in relation to the selling of electrical goods could be improved and fully regulated?
Mr Rees-Mogg
I have to admit to a shocking lacuna in my knowledge. I was unaware that it was Welsh Electrical Safety Week, but I am now better informed of this important week. I accept the hon. Gentleman’s point about the sale of electrical goods. Faulty goods ought not to be sold. I suggest that he raise the matter in an Adjournment debate in the first instance.
Matt Vickers (Stockton South) (Con)
I want to ask about an issue that affects every corner of the country and infuriates the nation, and on which every MP in this House will have emails: the small, irresponsible minority of people who wreak havoc on our green spaces, our footpaths and our footwear. Councils are trying everything to tackle dog fouling. Barking and Dagenham Council has even tried DNA testing dog mess. We need to give back councils the power to tackle this issue. Will my right hon. Friend grab me time to have a debate on the prevention of pooches pooping in public places?
Mr Rees-Mogg
Pooches pooping in public places should be attacked doggedly, particularly in Barking, obviously. It is very important that these issues are raised. Although they seem small, they cause disproportionate inconvenience and unpleasantness to people. It is a local council duty. I know my hon. Friend’s local council is a socialist local council, so it may be well worth him giving them a poke to encourage them to ensure that dog mess is removed from public spaces. There are methods of enforcement and fining people, but, by and large, I do not think that fines and aggressive enforcement are the way to proceed; the way is to encourage dog owners to be responsible, which I think increasing numbers are.
Ruth Jones (Newport West) (Lab) [V]
The collapse of the Arcadia Group and the threat to thousands of jobs has focused the minds of many, and I am so sorry for the stress and worry that has been caused to my constituents and all those across Newport West and the UK. Will the Leader of the House make time for a debate in Government time on what steps the Government are taking, or not taking, to level the playing field between the high street and online retailers?
Mr Rees-Mogg
The hon. Lady rightly raises the issue of Arcadia and the distress there must be for the people employed there, particularly as we are coming up to Christmas, who will be potentially losing their jobs. It is a horrible event for them. One has heard of people who have worked for those stores for many, many years who will be losing their jobs and that is very difficult. It is important that we understand the effects of this issue. There is a debate next week on the high street, which will be an opportunity to raise these issues on the competition between the high street and online retailers.
Bim Afolami (Hitchin and Harpenden) (Con)
In recent conversations, the Car Wash Association expressed to me its discomfort about the thousands of illegal car washes across the country. I wonder if the Leader of the House might advise on how best to progress that issue within Government. Secondly, in relation to the recent controversy at Eton College, I wonder whether the Leader of the House might use his good offices, through the usual channels and in discussion with Mr Speaker, to look favourably on a debate request that has been put in for Westminster Hall on the importance of freedom of expression? I wonder if he has any views on that matter.
Mr Rees-Mogg
Illegal car washes—that is an interesting subject. I am not quite sure how one can wash a car illegally, but there may be ways. As regards Eton, my and my hon. Friend’s old school, it would be wrong of me to interfere in, or express a view on, an internal disciplinary matter, other than to say that the panel will be chaired by Dr Andrew Gailey, who was probably there in both his time and mine, and who is a man of the utmost propriety and integrity. He is someone in whom I would personally have the fullest confidence. Freedom of speech as a general issue is one of the pillars of our constitution. I was very reassured that my noble Friend Lord Waldegrave of North Hill said that Eton would stand four-square in support of freedom of speech. That is something we should all encourage.
Alyn Smith (Stirling) (SNP) [V]
I recently surveyed my constituents across Stirling on fireworks. We have obviously just gone through the latest Guy Fawkes night season, which now extends beyond just one night of the year, and 89% of the people who responded were in favour of banning the private use of fireworks altogether. May we have a debate about how to regulate fireworks properly, because the obnoxious antisocial behaviours that we are increasingly seeing need to be limited?
Suzanne Webb (Stourbridge) (Con)
Ryan Passey, a constituent of mine, sadly lost his life at the hands of a knife, and the perpetrator was acquitted in an absurd verdict that shocked the whole town. We sometimes hear young adults say that they carry a knife for self-defence. We know that it is illegal to do so, so could the Leader of the House make time for a debate on further tightening of the law in this area so that self-defence cannot be abused as a legal defence in cases like Ryan’s, particularly when Ryan carried no weapon himself?
Mr Rees-Mogg
It is always very sad to hear of cases of this kind, and I thank my hon. Friend for raising this really serious matter with the House. Knife crime is a great scourge on our society, and it is truly dreadful to see people’s lives taken away and to sense that justice has not been done. I do not know the details of the case she mentions, and I therefore as a Minister ought not to go into the details. It is essential that our justice system is able to operate free from political interference, but we must bring violent criminals to justice as well. The Government are spending over £200 million of taxpayers’ money on early intervention projects to prevent young people from committing violent crime in the first place, and we will also be piloting new knife crime prevention orders, introduced through the Offensive Weapons Act 2019. These are preventive orders that will provide an additional tool for police to steer young people away from serious violence. My hon. Friend will have the opportunity to raise this issue specifically at Justice questions on Wednesday 8 December.
Rachel Hopkins (Luton South) (Lab)
I, too, want to raise the issue of the Arcadia collapse and the people in my constituency who work at Debenhams and Topshop and look like they are going to lose their jobs before Christmas. I am grateful to the Leader of the House for ensuring that there is a general debate on the future of the high street, but can I have his assurance that there will be sufficient time for this debate if any forthcoming Brexit legislation is published at the weekend, and that it will not be bumped?
Mr Rees-Mogg
The hon. Lady asks me a particularly difficult question, because although next Thursday is scheduled for Lords amendments, the guarantee I can never give is what may come along in terms of statements and urgent questions, which depends on the demand from this House to be kept updated about affairs that are going on. It is always a difficult balancing act, in that the House wishes and has the right to be informed of things first, but it also has its regular business to go through. That debate is scheduled for the whole of the day, and therefore I hope that there will be sufficient time. I will at least do my best to ensure that I am not too long-winded when making my own statement.
Marco Longhi (Dudley North) (Con)
The Leader of the House may be aware that Dudley borough now has a full complement of Conservative MPs. He may also know that Dudley borough is being run very robustly by a Conservative administration. So, much is happening in Dudley now, and with the allocation of the proposed £35 million to the towns fund, now is the time to redevelop the centre of the capital of the Black Country. Will the Leader of the House therefore request that the Ministry of Housing, Communities and Local Government ensures that the most robust amount of consultation is given so that local populations can own the redevelopment of their town?
Mr Rees-Mogg
I congratulate my hon. Friend on being a leading figure in this revolution that has turned Dudley blue. It is a great triumph of conservatism, and it is leading to better government in Dudley. We do indeed want to ensure that the towns fund, with its guidance, ensures that town centres and high streets that are facing particular challenges have the flexibility to prioritise investment across the town in a way that is agreed with the town and MHCLG, so there is flexibility. The town deal board is responsible for producing the final town investment plan, including putting forward suitable projects that align with the objectives of the towns fund, so it is going to be a case of local government working with national Government, but the local government views are of great importance.
Wera Hobhouse (Bath) (LD)
This week’s loss of Debenhams and 25,000 retail jobs is yet another blow to the sector. This Saturday is Small Business Saturday and, like the hon. Member for Kensington (Felicity Buchan) I will champion local businesses, in Bath, as many are already struggling. With permission, may I press the Leader of the House on this again? Does he not agree that the Chancellor should conclude the business rates review by substantially reducing that tax on retail at least until the sector has recovered sufficiently? May we have a full debate in Government time on this important issue of business rates, including how to create a level playing field with online retail giants?
Mr Rees-Mogg
The hon. Lady and I share a local authority. We therefore have a considerable joint interest in local businesses in our area doing well. We are well aware that the rates and indeed rents paid by businesses, particularly in her constituency, are fundamental to the finances of the local council that covers both our areas, so the importance and prosperity of local businesses are fundamental.
As I said earlier, the Government are undertaking a fundamental review of the business rates system, and are currently considering responses to the call for evidence. A final report setting out the full conclusions of the review will be published in spring 2021, so there will be an opportunity to consider that then. As I said, there will be an opportunity to debate it next Thursday, and I hope that the hon. Lady will participate in that debate.
Jonathan Gullis (Stoke-on-Trent North) (Con)
Price & Kensington teapot works in Longport, outside the mother town of Burslem, could be a catalyst for economic growth and regeneration but, sadly, an absentee and rogue landlord is allowing it to rot. My ten-minute rule Bill, the Planning (Proper Maintenance of Land) Bill, was inspired by that case and seeks to achieve more forceful action against those who would damage local communities in Stoke-on-Trent North, Kidsgrove and Talke and across the UK. Will my right hon. Friend be willing to commit parliamentary time to debating what further legal action can be taken against absentee and rogue landowners?
Mr Rees-Mogg
It is a very difficult issue. Property ownership is a fundamental part of our constitution, and the rights of property are of great importance. Landowners do not have to change their properties if they do not want to. On the other hand, seeking regeneration is an important objective of policy. I encourage my hon. Friend to work with the business, rather than thinking that there are necessarily legislative measures that would work.
Andy Slaughter (Hammersmith) (Lab)
May we have a debate on the duty of care that High Speed 2 has, or should have, to communities it will travel through? It is about to cause irreparable damage to Wormwood Scrubs, a unique and precious open space that provides much-needed ecology and recreation in the inner city. Having backed HS2, do the Government not have an obligation to see that it goes ahead without wantonly destroying local communities and community assets?
Mr Rees-Mogg
HS2 is an important infrastructure programme that will transform railway travel in this country. Of course, builders of all kinds need to be considerate builders. That ought to be part of HS2’s programme.
Scott Benton (Blackpool South) (Con)
The vast majority of people in Blackpool supported the Chancellor’s decision last week to reduce international aid. The public finances will come under considerable pressure in the years ahead, and the decision to spend the money here in the UK rather than abroad is without doubt the right one. Although we could spend that funding several times over in Blackpool—or indeed in Doncaster, Madam Deputy Speaker—there will be a wide variety of choices and views on where the money should go. Will my right hon. Friend therefore make time available in this House to discuss how best to spend the money here in the UK?
Mr Rees-Mogg
Madam Deputy Speaker, I think that was the most charming application to be called early in debates in future, by suggesting that many billions of pounds should be spent in your constituency. Yes, it is absolutely right in the financial circumstances we face that overseas aid is reduced. We have a responsibility to the public finances and to protect jobs and the NHS. There has been a huge additional expense, so we have to prioritise urgent domestic needs and keeping borrowing under control. I think that there will be opportunities to raise that in many debates in the House, but we must always be careful to remember that we can only spend the money once. Therefore, there are limits to what can be done.
Richard Burgon (Leeds East) (Lab) [V]
Decent sick pay is essential if we are to ensure that people testing positive for covid can self-isolate, but at just £96 a week, it leaves many having to choose between isolating for their health and putting food on the table. To put that in context, The Times has reported that the Leader of the House is set to receive an £800,000 dividend this year alone. It would take someone on sick pay salary levels over 150 years to earn that amount. I am sure the Leader of the House thinks no one can live off £96 a week, so will he allow an urgent debate on sick pay levels?
Mr Rees-Mogg
The Government have introduced a test and trace support payment of £500 in additional support to help people who have to remain away from work because they are being tested. There is also a £50 million discretionary fund for those facing hardship when self-isolating who are not eligible for the £500 payment. There has been £9 billion of additional welfare support. I think what the hon. Gentleman is asking for has been done by the Government providing this additional support.
Mr Ian Liddell-Grainger (Bridgwater and West Somerset) (Con) [V]
As my right hon. Friend already knows—we have heard it in these business questions—North Somerset has been unfairly lumped in with Bristol in the tiering system. Does my right hon. Friend remember—I am sure he does—that it was King Alfred who passed the law for everyone to take a break from Christmas day until twelfth night and then resume the defence of our borders with added vigour? Sadly, the county of Somerset is now under threat from a very dishonest county council dictator who wants to grab, loot and pillage the cash reserves of the districts and steal more power. These people are actually worse than the Vikings, if that is possible. Somerset needs to be reunited and strong. We owe it to King Alfred to make that happen. Therefore can we have time in Government time to debate a crucial question not only of our constitution, but of our history?
Mr Rees-Mogg
It is worth bearing in mind that were it not for Somerset, there would be no United Kingdom. The whole history of our nation is born out of our great county, because if Alfred had not defeated the Danes, we would never have seen the evolution of our country as it has happened. Alfred the Great was the founder of the Royal Navy, our pride and our security—
“an ornament and a safeguard”,
one might say, although that is actually the motto of the Scottish Crown. It is so important that we remember our history in our bureaucratic structures, because they bring a reality to them that underpins them and gives them support from the people who are governed. I am very sympathetic to what my hon. Friend says about the county being reunited after the vandalism of the late Sir Edward Heath.
Jim Shannon (Strangford) (DUP)
According to news reports, between Friday 6 November and Sunday 8 November, a Daesh-affiliated militant group attacked several villages in Mozambique and decapitated more than 50 people, including women and children. This armed group, which turned a local football pitch into the site of a brutal mass execution, has wreaked havoc in northern Mozambique since late 2017, killing hundreds, displacing communities and capturing towns. Will the Leader of the House agree to a statement or a debate on this pressing issue?
Mr Rees-Mogg
Her Majesty’s Government are deeply concerned by the deteriorating security situation in northern Mozambique and the increasing attacks by groups with links to Islamic extremism. On 10 November, the Foreign Secretary and the Under-Secretary of State for Foreign, Commonwealth and Development Affairs, my hon. Friend the Member for Rochford and Southend East (James Duddridge), publicly condemned the recent attacks. The Government are working with the Government of Mozambique to address the root drivers of this conflict and instability in northern Mozambique, including through engagement with the Government of Mozambique’s regional development authority in Cabo Delgado and by providing targeted technical assistance under the framework of a defence memorandum of understanding.
I am very grateful to the hon. Gentleman for his tireless campaigning on this issue. As with the issue raised earlier about the persecution of Christians in Nigeria, it is a matter that the Government take very seriously, and I encourage him and other Members to keep on raising it on the Floor of the House.
Darren Henry (Broxtowe) (Con)
I welcome the Government’s efforts to increase funding for mental health, but as we see the light at the end of the tunnel with the pandemic, it is critical that we do not have a new crisis. Mental health is a subject that many in Broxtowe have raised with me, and they are right to do so. We must consider a long-term and targeted approach to support those experiencing crisis.
Will my right hon. Friend find time for a debate on how this Government can ensure that those in need are not reduced to breaking point before they gain help, but that early intervention is there to support those who are experiencing crisis, not least our extraordinary medical staff who have seen inordinate pressure this year and the scores of people in my constituency who are experiencing loneliness, isolation and anxiety during the pandemic?
Mr Rees-Mogg
I am particularly grateful to my hon. Friend for raising this point, because all of us as constituency Members of Parliament see constituents who need help, and we try to get it for them. That is therefore a subject at the forefront of many Members’ minds. More money is being provided and more action taken on mental health. There is going to be an overall increase in funding to £13.3 billion in 2019-20, and there is a long-term NHS plan that has at its heart the largest expansion of mental health services in a generation, with further funding support to 380,000 more adults and 345,000 children. My hon. Friend is so right that this is ultimately about individuals and trying to get them support at the right time so that they can get through difficult periods in their lives. I will therefore pass his comments on to my hon. and right hon. Friends at the Department of Health and Social Care.
Jessica Morden (Newport East) (Lab) [V]
News from Tata Steel last month that it is looking to sell its Dutch operations is clearly causing uncertainty in the UK, particularly in steel communities in south Wales. That highlights just how important it is that the UK Government protect our steel industry. Please can we have an update from the steel Minister—the Under-Secretary of State for Business, Energy and Industrial Strategy, the hon. Member for Stratford-on-Avon (Nadhim Zahawi), who is now also responsible for the vaccination programme —on what steps the Government are taking now to help our industry at this critical time?
Mr Rees-Mogg
May I commend the hon. Lady on tirelessly supporting the British steel industry, which she has done for many years with great effectiveness? I will pass her comments on to my hon. Friend the Minister and get her a full answer on what is being done to support the British steel industry.
Shaun Bailey (West Bromwich West) (Con)
While my hon. Friend the Member for Dudley North (Marco Longhi) might purport to represent the capital of the Black Country, I certainly represent its beating heart—the communities of Wednesbury, Oldbury and Tipton. As the shadow Leader of the House, the right hon. Member for Walsall South (Valerie Vaz), pointed out, the Black Country has been placed under tier 3 restrictions. I—and, I am sure, many Members from the Black Country—have been inundated with messages from our hospitality industry and pubs looking for support. The Chancellor’s announcement of the £1,000 grant is welcome, but my constituents are also looking for a wider debate on supporting the hospitality industry and pubs. Will my right hon. Friend schedule a debate, perhaps in Government time, on how we support the pubs and hospitality industry post covid, and how we ensure that fantastic establishments such as the Port ‘N’ Ale in Horseley Heath in my constituency get that support and are able to survive and thrive post pandemic?
Mr Rees-Mogg
The Port ‘N’ Ale will best be supported by my hon. Friend going there and ordering lots of drinks once the pandemic is over and we are allowed to return to what are referred to in the jargon as “wet pubs”, which I think are better known as boozers. We will all need to support our local boozers when the restrictions are lifted, with or without scotch eggs. Indeed, by the time we are back we might be allowed a creme egg, because we will be heading towards Easter; I confess that I rather prefer them to scotch eggs.
The Government have been doing things to help during this difficult period and 27,000 businesses will be helped by the extra £1,000 each. There is also the £3,000 per month for pubs forced to close in tier 3, and the cut in VAT from 20% to 5%. We will all look forward to going out as the restrictions ease. Ultimately, businesses need our business, so we can enjoy pubs—in moderation—once they are reopened.
Hywel Williams (Arfon) (PC) [V]
May we have a debate on the incessant racket and howling over north-west Wales caused by the new RAF Texan training aircraft? Apparently, they are unsafe to be flown over the sea, hence their intensive use over land, including over our national park. One would have thought that this drawback might have occurred to those in the higher echelons of the Ministry of Defence before the aircraft were bought.
RAF Valley, where the Texans are based, is on Ynys Môn—literally, the island of Môn—and north-west Wales is, of course, surrounded by sea. That might have been a concern for the Chief of the Air Staff, given that he was educated at Friars School in Bangor. I have taken this matter up with the station commander at Valley and put questions to the MOD, as has my right hon. Friend the Member for Dwyfor Meirionnydd (Liz Saville Roberts), but despite reassurances that something is being done, the racket and the howling continue unabated. It is now the time for a Minister to come before the House to account for this failure.
Mr Rees-Mogg
If I may, I will make two points. One is that it is really important that our armed forces are able to train and practice and, therefore, they should have support in that, though it might sometimes create inconvenience. The other is that if the hon. Gentleman is not receiving responses in a timely manner from Ministers, I will of course do whatever I can to ensure that those responses are received. If he has been promised responses that he has not got, I will take that up immediately after this session.
Sara Britcliffe (Hyndburn) (Con)
Many supermarkets have seen a boost in sales during the pandemic and some, such as Tesco, Morrisons and Sainsbury’s, among others, have made the positive announcement that they will repay money received from the Government. I hope that others follow suit, but other businesses have struggled severely and are still struggling, particularly those in tier 3 areas in the hospitality sector whose doors are still closed, such as Grants and the Tinker & Budget, those in the supply chains and my brilliant independent businesses. Will the Leader of the House allow a debate in Government time on how best to use this money to support those businesses, such as mine in Hyndburn and Haslingden, that still face uncertainty?
Mr Rees-Mogg
I think the whole House will want to congratulate Tesco, Morrisons and Sainsbury’s on this fantastic gesture. It is absolutely brilliant, and we should be grateful to our supermarkets, which have done so much to improve the standard of living of the British people in recent decades. They are real models of good, healthy capitalism, and they have done something very impressive in handing back the tax rebates that they have received, which they were not under any legal obligation to do. As regards a debate on where the money will go, I am sorry to say to my hon. Friend that as £280 billion has been spent on supporting our businesses during the pandemic, this just reduces the figure to about £279 billion, so I am afraid the money has already gone.
Chris Bryant (Rhondda) (Lab)
Can we have a debate on inequality? I know the Leader of the House uses the word as though it is a kind of foul slur, but I am proud to be a socialist. I believe that we were all created equal. I do not believe that poverty is a mysterious dispensation that descends like manna from heaven. It has human causes and it must be susceptible to human remedies. If we are going to talk about inequality, would it not be good for us to recognise that we should not judge people according to the colour of their skin, their gender, their sexuality, what accent they speak with or, indeed, what school they went to? In that light, would it not be a good idea if girls as well as boys were allowed to go to Eton?
Mr Rees-Mogg
Everybody is equal before God, and if we are equal before God and every soul is valued by God equally, that must also be true between us all individually. That is, I think, a point of agreement between me as a Conservative and the hon. Gentleman as a proud socialist. He is entitled to be proud of being a socialist and I am entitled to think that “socialism” is a disagreeable word. I think that is part of freedom of speech. As regards girls going to Eton, much though I might like my own daughter to go there, I think it works very well as it is, thank you very much.
Sir David Amess (Southend West) (Con)
Will my right hon. Friend find time for a debate on the future role of local directors of public health? While I do not enjoy having needles stuck in me, the best Christmas present we could have been given was the announcement of the vaccine. During the coronavirus pandemic, these officials have come into their own, so it would be good if the House looked to their future enhancement.
Mr Rees-Mogg
I echo my hon. Friend’s comments on the critical role played by local directors of public health and their teams, working tirelessly to help to protect the health of local people. As we establish the new National Institute for Health Protection, with a focus on our capacity and capability to respond to health threats, we will pay close attention to developing the best possible relationship between our expanded national health protection capability and local directors of public health. My hon. Friend has placed his praise on the record, which is a good, parliamentary way to thank people.
Patricia Gibson (North Ayrshire and Arran) (SNP)
With household debt linked to covid soaring by 66%, the chief executive of the debt charity StepChange has urged a long-term vision for those financially affected by the pandemic to avoid the real danger of lasting economic and social damage, which will deepen inequality and act as a drag on economic recovery. Will the Leader of the House make a statement setting out the Government’s long-term vision to deal with this serious societal challenge, with 1.2 million people living with severe debt and 3 million people at risk of falling into arrears with their bills?
Mr Rees-Mogg
The hon. Lady raises an important point. One thing on which the Government and individual Members of Parliament can help is pointing people in the direction of assistance when they have a debt problem. Many organisations up and down the country help people to reschedule their debts so that they can get them under control and work out how to get their family finances back in order. Citizens advice bureaux are good at helping with that and with pointing people in the right direction. There is certainly a good local organisation in my constituency that is able to assist people in these difficult circumstances, and that is a role we all have as Members of Parliament.
Madam Deputy Speaker (Dame Rosie Winterton)
I shall suspend the House for three minutes.
Courts and Tribunals: Recovery
(4 years ago)
Commons ChamberRead Full debate Read Hansard Text Read Debate Ministerial Extracts
The Lord Chancellor and Secretary of State for Justice (Robert Buckland)
A well-functioning justice system is one of the cornerstones of a mature democracy such as ours. In fair and foul weather, it acts as an anchor for our success as a nation, keeping our citizens safe from harm, guaranteeing fairness in disputes and safeguarding freedoms in our society. It is precisely because of the vital role the system plays that the Government have done everything possible to support justice through the huge challenges posed by the coronavirus pandemic.
As Lord Chancellor, I have been mindful from the outset that justice must continue to be done and, in many instances, it simply cannot wait. In partnership with those who preside over and work in our courts and tribunals, as well as the public and the professionals who rely on and practise in them, my Department has worked at a rate of knots from the beginning of this crisis to keep the system moving, supporting the estate to maintain safety where physical proceedings were necessary and expanding the use of technology to enable many hearings to take place remotely.
As the House will recall, earlier this year I announced a major £142 million investment to support our courts and tribunals to speed up technological improvements and modernise their facilities, and in September, a further £83 million to make the estate covid-secure, recruit 1,600 additional staff and create more Nightingale courts, to add to the 10 that were already in operation.
This funding, the largest investment in justice for several decades, is enabling the system to turn a corner. As a result of the dedication of those who work in the system and this investment, the outstanding cases in magistrates courts have fallen dramatically, and we are now hearing more cases each week than are coming into the system. I pay tribute to the commitment of our magistracy and staff in achieving this. The Crown court is now hearing more cases each week than before the pandemic. The family court is on track to sit at a record number of days this year. To take just one aspect of its work, on average 150 domestic violence protection orders have been issued per week to keep victims and their children safe.
The investment in recovery rightly continues. My right hon. Friend the Chief Secretary to the Treasury last week approved a further investment of £30 million for this current financial year, which will allow us to open a further 40 Nightingale courtrooms and carry out the work needed to bring a further 40 Crown courtrooms safely into use for jury trials. Thanks to the extraordinary efforts of so many dedicated judges, HM Courts & Tribunals Service staff, legal professionals and the public, we were the very first jurisdiction in the world to resume jury trials when other countries had not even begun to contemplate how that might be possible. We have now seen large increases in the number of jury trials taking place across England and Wales, with the installation of plexiglass screens that enable us to open more than 260 jury trial courtrooms safely, in addition to a further 125 courtrooms being used for non-jury trial hearings. Our family courts were transformed overnight to start working almost entirely online by conducting cases remotely via video and audio technology. Now, combined with the opening of our courtrooms for more face-to-face hearings, the family court is dealing with the same amount of, and in some weeks more, work than it did before the pandemic struck.
In civil justice, we are making progress in returning final hearings and track claims to pre-covid levels. We have introduced new arrangements in possession hearings to respond to increased levels of demand, but we are also acting to protect public health by preventing people from being evicted from their homes until 11 January, except in the most serious cases.
Our tribunal system has also responded impressively to the challenges presented by the pandemic. Throughout the crisis, the mental health tribunal and the special educational needs and disability tribunal have continued to operate at or near pre-covid levels through remote video hearings. Employment tribunals have succeeded in returning to pre-covid levels of hearings, primarily through the use of online proceedings. I was fortunate recently to be able to observe a remote directions hearing in the family court. I saw at first hand how the reforms have helped the courts and tribunals continue to operate effectively during the pandemic to ensure access to justice for those who need it.
The quick execution and the continued effectiveness of our contingency planning is reaping particular rewards in the magistrates courts, as I have already mentioned, but the courts are of course a finely balanced ecosystem, flowing from one to the next, and many of the disposals from the magistrates court inevitably go to the Crown court, where there currently exists a larger accumulation of cases waiting to be heard than usual. We should be in no doubt of the gargantuan efforts of judges, staff and legal professionals in the Crown court throughout the pandemic and, in particular, their work in close partnership throughout it to address the build-up of cases.
Last week, my right hon. Friend the Chancellor of the Exchequer outlined further investment in the courts and tribunals system. The new money earmarked for criminal justice includes £337 million to bolster the Crown court further and to support victims as they make their way through the criminal justice system in what can so often be painful and traumatising circumstances. There is also additional funding to support the wider justice system’s response to covid-19, including £76 million to increase family and employment tribunal capacity and £43 million to ensure that our courts, and indeed our prisons, remain covid safe.
This new funding is both an important and an encouraging next step in terms of resourcing, but there is no better resource in the system than the people who make it what it is, day in and day out. The partnership between the Government, the judiciary, legal professionals and, of course, the public who rely on the justice system is the most important factor in the full recovery of our courts and tribunals. I am sure the whole House would want to join me in expressing our gratitude to everybody concerned.
The justice system is a vital public service. It is crucial to our success as a nation. We still have a long way to go, but at every step along the way during this global pandemic, we have made the resources available and worked with everyone in the system to keep it moving for the people who need it most. Throughout this pandemic and beyond, I will carry on doing all that I can to strengthen those vital working relationships right across the system so that we can restore and refresh our system of justice. I commend this statement to the House.
Mr David Lammy (Tottenham) (Lab)
I thank the Secretary of State for advance sight of his statement and for seeking to keep me and the shadow Attorney General up to date on his plans, on Privy Council terms.
However, the Secretary of State paints a rosy picture, and I wonder whether he is making the fatal mistake of believing his own hype. Let me remind the House of the state of the justice system under his watch. The backlog in the Crown court is now a staggering 51,000 cases, and in the magistrates court there are record numbers of outstanding cases—around half a million. He has just told the House that justice cannot wait, but jury trials are being listed in 2022 for offences committed years earlier. Lawyers have warned that victims and witnesses will avoid the justice system altogether because of the delays.
In June, the chief executive of Her Majesty’s Courts Service said that we need 200 Nightingale courts to fill the gap, but as of 23 November this year just 16 were up and running. The pandemic has played a role, of course, in bringing the Crown court backlog to 51,000 cases, but the truth is that it already stood at 39,000 before the pandemic, and that has left victims, witnesses and defendants in limbo for years.
If the Government are serious about resuscitating the justice system, does the Secretary of State recognise the importance of acknowledging that the main causes of the backlog were the cuts to sitting days and the court closures that his Government imposed? We have 27,000 fewer sitting days than we had in 2016. Between 2010 and 2019, more than half the courts across England and Wales were closed, and he is not finished: the Government plan to close a further 77 courts by 2026.
That the Secretary of State is announcing more Nightingale courts after so many closures exposes this Government’s record on justice as a complete farce. The Ministry of Justice suffered some of the deepest cuts under this Government’s austerity agenda. It was a false economy. The failure to tackle reoffending rates cost the economy more than £18 billion a year. Millions were wasted on outsourced prisons and maintenance contracts that had to be brought back in-house, and let us not forget the £467 million of taxpayers’ money that was squandered on the failed part-privatisation of the probation service, which the Opposition consistently warned against. Does he accept that today’s announcement is the result of a catalogue of errors that the Ministry of Justice, under his watch and that of previous Secretaries of State, previously imposed?
It is welcome that the Government have listened to the Opposition, made this U-turn and finally decided to put some cash into the justice system when it so desperately needs it, but this one-year plan does not provide the certainty we need. Courts, judges, lawyers and all parts of the justice system need long-term, sustained investment. I wholeheartedly agree with the Secretary of State that it is right to praise the extraordinary efforts of Her Majesty’s Courts and Tribunals Service staff—the justice system would have collapsed and our democracy would be under tremendous strain were it not for their hard effort—but how on earth does he have the cheek to praise them with one hand while freezing their pay with the other?
The backlog for individual cases in employment tribunals has already passed the post-2008 financial crash record, with 37,000 workers in the queue. Analysis by Citizens Advice suggests that if it continues to grow at the current rate, the number of outstanding claims could pass 500,000 by spring. Will the Secretary of State stop the Chancellor’s job crisis becoming a justice crisis by targeting support for employment tribunals? It is critical at this time, as he must appreciate.
We are now halfway through the 16 days of action against gender-based violence and it is clear to see that, despite the Lord Chancellor’s rhetoric, the Government are letting down victims on every front. Due to the enormous backlog of cases, victims of domestic abuse and harassment have been encouraged by the police to take civil action rather than a criminal prosecution because the system is so overwhelmed.
Despite a spike in calls to domestic violence hotlines over the pandemic and an increase in the number of cases reported to the police, the latest statistics show that domestic abuse prosecutions are down 19%. Rape and sexual violence prosecutions are at their lowest ever level in England and Wales. If the criminal justice system does not even have the capacity to get justice for victims of rape and domestic abuse, how can the Lord Chancellor say it is functioning well? Victims need to have faith that the criminal justice system will be there to support them throughout.
Today, the Lord Chancellor says he is delivering a recovery plan. He likes to pretend that all we are recovering from is the pandemic, but the truth is that we need to recover from 10 years of Conservative Government, which had left our justice system on the verge of collapse even before the pandemic began.
The Secretary of State has failed to provide any significant additional support to legal aid practitioners. The breaking point for many firms is likely to arrive in early 2021, especially as the volume of completions in the Crown courts remains low. Many legal aid firms and practitioners urgently need financial support to survive. We know that the Prime Minister and the Home Secretary are too busy attacking and insulting lawyers, but where is the Lord Chancellor’s recovery plan for legal aid in this country?
Since the start of the coronavirus crisis, the Ministry of Justice has broken the public’s trust. The Government dithered and delayed, failing to provide our courts, prisons, probation services, youth justice system and publicly funded legal aid lawyers with the support they need. After a decade of Conservative cuts and the Government’s mishandling of the pandemic, our justice system works for the wealthy and the powerful, but what about everybody else?
Robert Buckland
I listened very carefully to the right hon. Gentleman, and I am afraid that, as is sadly so often the case, his peroration was a direct contradiction of the reality of what is happening on the ground across the justice system. We acted from the outset to protect lives, to protect staff and to make sure that our prisons were safe, and the results are well-known. There has been considerable achievement in our prison system, and I know that he would want to acknowledge the work of staff; I am sure he would.
The same can be said about the work done in our courts. This was an unprecedented challenge. We were the first jurisdiction in the world to reopen jury trials, in late May. We are now rapidly reaching the position with regard to jury trials being heard, or guilty pleas being tendered at or just before trial, that we were in before the beginning of this pandemic.
The right hon. Gentleman is right to talk about the past in the justice system, which is why in July I announced the biggest increase in court maintenance in not 10 years, but 20 years; he can do the maths and work out the time that he had partial responsibility for the system. This is not a pure story of life since 2010; I have inherited a system that, frankly, needs a fundamental change, which is what I am doing.
The settlement that I have reached will hugely support the increase in sitting days in the year ahead. Already, before the pandemic hit, I had increased the number of sitting days, with the agreement of the Lord Chief Justice, from the year prior to my taking office. I was already acknowledging the pressure on the system. I remind the right hon. Gentleman that while 39,000 cases is of course a significant number, it is not the historic high that we have seen in the past. I am working to ensure that the number of trials in that particular statistic is dealt with as quickly as possible, together with all the other important hearings.
The right hon. Gentleman talked about victims. I am sure he would readily acknowledge not only the £25 million announced in the spending review for next year but the in-year funding of £15 million on victims’ services that we continue to roll out. The covid funding that has been administered on behalf of my Department by police and crime commissioners for local victims groups totals over £25 million. Indeed, the announcements I made last year rapidly and significantly increase funding for independent sexual violence advisers to levels that we have never seen before in our country. We have also introduced the revised and streamlined victims code. We are, at every step of the way, taking action to support the victims of crime. I can assure him that when it comes to domestic abuse and sexual violence, the courts are giving priority to those hearings and making sure that they are dealt with as quickly as possible.
On legal aid, again the right hon. Gentleman misses a hugely important development this year, which was the extra funding of up to £51 million for criminal legal aid lawyers via an improvement to the graduated fee scheme as part of the first stage of criminal legal aid review. We are going to embark on stage two very soon, and I will keep him fully apprised of that. He will, I am sure, note with interest that that will result in more investment in criminal legal aid in the year to come. [Interruption.] Oh yes, it certainly will. I know that it is sometimes difficult to accept positive news, but I am grateful to partners in the criminal justice system and those practising in the professions for having given an encouraging welcome to the news last week. I accept, with them, that there is a way to go, but we are now turning the corner, and I am confident that in the years ahead we can enhance, improve and build on the success of our justice system.
Sir Robert Neill (Bromley and Chislehurst) (Con) [V]
I thank the Lord Chancellor for his statement and welcome what he has said. I and the other members of the Justice Committee certainly wish to join in the tributes that have been paid to the hard work of all those involved in the Courts Service and the broader justice system in dealing with the necessary recovery from the pandemic.
Can the Lord Chancellor help me on a couple of points, though? First, does he accept that it will be necessary to have a multi-year settlement once this year is out of the way to maintain the progress that we need to achieve to get our courts system back to the levels of reform and improvement that we have ambitiously set out? Secondly, will he update the evidence that he helpfully gave to the Justice Committee on Tuesday as to where we are in reducing the backlog in the Crown court? Although there has been progress, he will know that the backlog prior to the pandemic was already at record levels, and that was increasing up until the latest management figures we had that went back to October. Will he give us the projection—and, in due course, the modelling behind it—as to when we will see that backlog start to reduce? None of us wants to see contested trials being listed out to 2022, as I am sure he would agree.
Robert Buckland
I am grateful to my hon. Friend. First, with regard to a multi-year settlement, it would not be right for me to prejudge what the decision of the Chancellor might be on that. The important decision had to be made this year to have a one-year settlement for the obvious reasons of the covid outbreak and the fact that, rightly, there was not a fiscal event—namely, a Budget. I will leave that decision ultimately to the Chancellor. However, my hon. Friend can be reassured that the work being done within the Department is indeed looking beyond one year only and coming up with evidence-based arguments and proposals that lead on to longer-term investment. For example, he will see in the capital programme not only a welcome £105 million extra for court maintenance but the multi-year prison capital programme, which will make a huge difference in terms of modern conditions in our prisons.
With regard to the Crown courts, my hon. Friend is right to draw attention to the figures. The figures for Crown court statistics are populated both manually and by automation. Therefore, they take some time to fully settle down. However, I am particularly encouraged by the figures relating to effective trials: trials that end up being “cracked”, as they say, with a guilty plea on the day; and trials brought into the court by the judge just before trial, or a week before trial, where guilty pleas have been tendered. The overall figures I am looking at now through November show a very encouraging increase in that overall number, getting us much closer to the pre-covid baseline. It is not there yet, but if those trends continue, we can get to that pre-covid baseline on trials, I think, in the new year. Of course, that allows us to start to make real progress on the rest of the case load.
Joanna Cherry (Edinburgh South West) (SNP) [V]
May I also thank the Lord Chancellor for advance sight of his statement?
These matters are, of course, largely devolved to Scotland, where the impact of the pandemic is being felt just as it is in jurisdictions across the world. My colleagues in the Scottish Government continue to work with partners, including the Scottish courts and prosecution services, victims’ groups and the legal profession, to identify the best possible way to deal with the problems that arise from the pandemic. To facilitate social distancing, remote jury trials are taking place across Scotland in the Sheriff courts as well as in the High Court. Additional funding for those was announced back in October. It was pleasing to hear Scotland’s second most senior judge, the Lord Justice Clerk Lady Dorrian, say that there has been an excellent collaborative effort across the justice sector in Scotland, which will increase court capacity in an environment that is safe for all participants.
May I ask the Lord Chancellor something about sexual offences? The European Court of Human Rights has held that the right to an effective remedy means that the state must ensure that sexual offences are investigated and prosecuted effectively, and that the state must also avoid undue delay in getting those cases to trial. Historically, Scotland has very strict time limits and I know that even during the pandemic this responsibility of effective remedy and speedy resolution is one that the Scottish Government take very seriously. Can he confirm that the UK Government take it equally seriously and are having regard to our obligations under the Strasbourg convention in this respect?
Turning to employment tribunals, they of course deal with reserved issues and are UK-wide. I want to raise with the Lord Chancellor the issue of the sharp rise in employment tribunal applications during the pandemic. This increase has gathered pace during lockdown, which tends to suggest that the impact of coronavirus has had a direct effect on the number of claims that are being made to employment tribunals. This has, of course, been an incredibly difficult time for business, but unfortunately there appears to be a trend of employers who are not following correct redundancy procedures, and this is only likely to result in more unfair dismissal claims. What can the Lord Chancellor do to address the increased strain on the tribunal system that this will create?
Finally, genuine mistakes around limitation periods for making an application to an employment tribunal can result in individuals being barred from seeking justice. That can happen in particular to claimants who are not entitled to legal representation or cannot afford it, and who may already have been involved in long and wearying internal grievance and disciplinary procedures. May I therefore ask the Lord Chancellor: is he still looking seriously at doubling the length of the time within which individuals can bring a claim to an employment tribunal from three to six months?
Robert Buckland
The hon. and learned Lady raised three distinct issues, which I will deal with in turn. First, with regard to obligations to victims of sexual offences, I reassure her that the way in which cases are prioritised in the courts in England and Wales very much bears in mind that important provision in terms of listing. I can give her the encouraging statistic for the most serious offences—sadly, many of them will be sexual offences—that just over 80% of those cases where someone has been remanded in custody have been listed for trial between now and spring 2021. Indeed, we keep a close eye on the progress or otherwise of other cases of a sexual nature. May I say to her that my officials and I have been watching the position in Scotland carefully and talking with colleagues in her jurisdiction about the approaches being taken? We are learning from each other in terms of development.
The position on employment tribunals is that, as I said, the number of cases being heard now has reached pre-covid levels as a result of the increased use of technology. That was an issue to begin with in the employment tribunal, but we are dealing with it. Of course, we have more money allocated next year for that further recovery.
If I may, I will come back to the hon. and learned Lady in correspondence on her specific point about limitation periods. I think I have dealt with all the matters. If I have not, I will write to her.
Shaun Bailey (West Bromwich West) (Con)
I thank my right hon. and learned Friend for his statement. As we come out of the pandemic, the challenges, difficulties and errors made along the way need to be reviewed. Will he assure me and colleagues in Her Majesty’s Courts and Tribunal Service in the Black Country that, as he looks at that, he will take an all-encompassing, lessons learned approach that reaches out to all stakeholders, including the profession and HMCTS staff?
Robert Buckland
I am grateful to my hon. Friend. He is right to say that, while covid has been a huge challenge for all of us, we have learned many things about the way in which the system works together, the way in which we use technology and the blend that we can achieve with regard to hearings being partially remote and partially in person. We will never go back to the position prior to the pandemic because, of course, we were already investing over £1 billion in our court reform programme, which was all about improving the technology on the court estate. He is right to make that important point.
Tony Lloyd (Rochdale) (Lab) [V]
I absolutely agree with the Lord Chancellor that an efficient court process is fundamental not simply for individual justice but for our democracy as we want to know it. However, cuts have had an impact on the courts service. He rightly refers to victims—particularly child victims—of sexual violence, and I welcome his words on that. Nothing can be more painful or traumatic than the long-drawn-out process we saw in the past, so I welcome his assurance that such trials are early-listed relative to others, but he knows that in some cases where trials are adjourned, they can still run on not simply for weeks and months but for years. That is painful and absolutely traumatic. Does he agree that we must set targets and ensure that we do not have repetition of delay on delay in those most traumatic and most human of cases?
Robert Buckland
I pay tribute to the hon. Gentleman. As a former police and crime commissioner, he knows the effects of that appalling crime on victims. He will be glad to know that final roll-out of section 28 cross-examination has now been completed in our criminal courts, which means that victims will be able not only to give their evidence in chief on video without having to come to court, as they have been able to do for a number of years—of course, they can do that at an earlier stage—but to be cross-examined on video as well before the trial hearing, saving them additional pain and difficulty when it comes to the court process. There is a lot of reform going on to improve the experience, but he is absolutely right to continue to press me for more and more improvement. I will work on that basis.
Bob Blackman (Harrow East) (Con) [V]
The biggest cause of homelessness is the end of a private sector tenancy, and the Government rightly took action to prevent anyone from being evicted from their home during the pandemic. The position was also, quite rightly, that the most egregious cases of antisocial behaviour could result in a possession order. However, the moratorium comes to an end on 11 January and there will be widespread concern among renters across the country—and, indeed, landlords—about the position with the courts once the moratorium ends, with a potentially huge rise in homelessness. Will my right hon. and learned Friend set out for the House the proposals for possession orders after 11 January?
Robert Buckland
My hon. Friend knows that, coupled with the action we took to deal with possession applications, we also dealt with enforcement matters to ensure that evictions could not take place. I can reassure him that the increase in the time period required to six months means that we will have, in effect, a long period before particular possession actions might be completed towards the latter end of 2021. I am grateful to the judiciary for having worked extremely hard to prepare a plan for how to deal with these cases. It involves, in any cases that are to be revived, a statement by the landlord as to the current position and the effect on the tenants. A lot of safeguards have been put in to ensure that the interests and rights of tenants are protected, that a balance is struck and that the caseload will be managed sensibly, sensitively and humanely by the courts in the year ahead.
Madam Deputy Speaker (Dame Rosie Winterton)
Just a gentle reminder that we have two further debates this afternoon that colleagues will have spent a lot of time preparing for, and we are anxious that they should have enough time to air their views during those debates, so concise questions and brisk answers would be welcome all round.
Holly Lynch (Halifax) (Lab)
As my right hon. Friend the Member for Tottenham (Mr Lammy) has already spelt out, Halifax county and family court and Calderdale magistrates court were two of the 86 courts that were closed under this Government in 2016 alone. We were promised video links and a technological revolution in access to justice, but four years later, we have had absolutely none of that. The pressures were just transferred to other regional courts, which now face intolerable backlogs because of the virus. Those court buildings are still standing empty, so why not reopen some of them to get the justice system moving again?
Robert Buckland
The hon. Lady will know that, in some instances, we have been able to do that. There are other instances where the buildings are no longer in the control or ownership of HMCTS, and some of them, having been looked at, were not in the right sort of condition to be used—hence the fact that we have been wide ranging in our approach to Nightingale courts, which we will be scaling up as part of phase 3. I am looking at over 60 courtrooms that can be developed across the country. The important point she makes is about technology. I can assure her that, during this crisis, cloud video technology has already been rolled out to every courtroom, and it is making a real difference to the lives of victims and witnesses. If there are local issues in Calderdale, I would be more than happy to talk to her about them in order to address any particular issues in her constituency.
Mike Wood (Dudley South) (Con)
The effective operation of our magistrates courts is at the centre of our criminal justice system. What progress has my right hon. and learned Friend made in bringing down the number of outstanding cases, and what further action is he taking to bring it down even further?
Robert Buckland
My hon. Friend is right to talk about the central importance of the magistrates courts. They are the first port of call with regard to all criminal cases. I am glad to tell him that since August the overall number of cases being dealt with has exceeded the number of cases coming into the courts, and we are working on the basis that we can return to pre-covid levels in the spring to middle of next year. That is remarkable progress, and I very much hope and believe that it will be maintained.
Sarah Owen (Luton North) (Lab)
Safety for security guards in courts was a massive concern well before the pandemic, but, as we try to clear the huge backlog, safety concerns have been raised with me around personal protective equipment and the ability to physically distance given the large numbers of people in courts. What is being done to ensure that covid safety guidance is actually enacted, and what does the Secretary of State have to say to the court staff who do not feel safe?
Robert Buckland
The hon. Lady is right to raise the vital role of court security staff, and indeed all staff who look after the interests of witnesses and victims of crime. She will be glad to know that in the spending review, a further £43 million was allocated for further covid safety measures in our courts and prisons. We have come a long way since the beginning of the pandemic, when there was, as a result of concerns, a ramping up of the cleaning programme throughout the court system. The reports that I am getting from many court users, including staff, are that systems are indeed much better and safer. The use of plexiglass and perspex to help with social distancing is a vital part of that programme, together with a redesign of buildings and the use of extra capacity to allow for social distancing. I have been keeping a very close eye on the PPE situation, and I am satisfied that there are absolutely the supplies to allow our staff to use them. If the hon. Lady wishes to raise specific issues with me, I would be more than happy to hear them.
Felicity Buchan (Kensington) (Con)
Several of my constituents have written to me concerned about delays to probate, which is clearly a very difficult time for families. Will my right hon. and learned Friend update the House on delays to probate?
Robert Buckland
My hon. Friend is right to raise an issue that causes real concern and pain to many families. She will be glad to know that waiting times have improved for each of the last few quarters since the middle of 2019, which was a particularly difficult time for the probate system—and that is despite the impact of covid-19. The waiting time for digital cases is currently between two and five weeks on average, whereas the average time for paper applications is between four and six weeks. I reassure her that individual cases are looked at by my officials. We are always anxious to try to ease the burden that is placed on those who are bereaved at such a difficult time.
Mr Clive Betts (Sheffield South East) (Lab) [V]
The ban on evictions of tenants was welcome, but it did include cases of antisocial behaviour. The Ministry of Housing, Communities and Local Government Ministry has indicated that now that the ban is being lifted, the courts would give priority to dealing with cases of antisocial behaviour. However, I have two very serious cases in my constituency, and we are told that it could be well into the new year before they are dealt with. What priority has the Lord Chancellor directed the courts to give to cases of antisocial behaviour? And if Members have particular cases in their constituency, what action can they take to ensure that they are dealt with expeditiously?
Robert Buckland
The hon. Gentleman will appreciate that, for clear constitutional reasons, it would not be right for me to direct the judiciary. I assure him, by repeating the answer that I gave to my hon. Friend the Member for Harrow East (Bob Blackman), that the judiciary have indeed created a sensible series of practice guidance about how to deal with such cases. Individual delay issues could be raised from Her Majesty’s Courts and Tribunals. I cannot go into the merits of any individual case, but I hear him loud and clear about the importance of dealing efficiently with antisocial behaviour cases.
Joy Morrissey (Beaconsfield) (Con)
I thank my right hon. and learned Friend for standing up for the victims of sexual violent crimes through additional funding for victim support, and an increase in funding for independent sexual violence advisers. Will he provide assurances that a proportion of this funding will be ring-fenced specifically to support children who are victims of sexual crimes, and will he meet me to discuss how we can further the issue of protecting child victims?
Robert Buckland
I would be happy to meet my hon. Friend. She will know that the range of support we give involves the child victims of sexual crime, whether male or female. In the past year, we awarded £12 million to 91 rape support centres in England and Wales. As I have said, we have increased, by an additional £4 million until March 2022, funding for 120 new independent sexual violence advisers across our jurisdiction, which will go in some great measure to address the concerns she rightly raises.
Chris Bryant (Rhondda) (Lab)
I do not know whether the Justice Secretary has ever had a family member who has been diagnosed with dementia and has then had to go to the Court of Protection to be able to take over their relative’s concerns, but thousands and thousands of families have had to do that this year. Covid has meant that more families have been brought into that circle, at a time when delays in the Court of Protection are quite extraordinary. When I rang earlier this year, I was told than an emergency case would not be heard until “next Easter” at the earliest. That is real pain and suffering for families that are already going through a tough time. If he has not got the figures now, will he write to me to tell us how we will get this backlog back down to normal?
Robert Buckland
I have not had the direct experience that I know the hon. Gentleman has, but I have indeed had family experience of the Court of Protection, and I feel acutely responsible to make sure it is working in the interests of vulnerable people. Of course, I will write to him with as much up-to-date information as I can muster. I am grateful to him for having raised this matter with me before. I know it is a real concern of his.
Mr Richard Holden (North West Durham) (Con)
I accept that delays are inevitable as a result of coronavirus. However, for cases related to Medomsley youth offenders institute, in my constituency, this means delays to justice of another year for so many people who have suffered for so long. Will the Lord Chancellor tell me what additional funding he is putting in place for the courts? Will he assure me that every effort will be made to expedite historical sex abuse cases such as those of the people who suffered at Medomsley as quickly as possible?
Robert Buckland
I am very grateful to my hon. Friend, who takes a great interest in Medomsley, in his constituency, and all those who work in it. He is right to press the Government for more action. I can reassure him that in the year ahead we will be spending £337 million on the criminal justice system, to address not only the covid pressure, but the other issues relating to criminal justice which will be welcome to hon. Members—the increase in police officers will inevitably have an effect on our criminal justice system. I look forward to engaging with him further on those important local issues in North West Durham.
Rachel Hopkins (Luton South) (Lab)
I am interested in the response regarding health and safety, and covid security, in the courts, because the level of covid infections among court staff and users is still rising, but the acting head of HMCTS told the Justice Committee,
“We have had to agree to disagree”
with unions on the approach to risk assessments. Does the Justice Secretary accept that HMCTS’s tendency to,
“Try to do everything from the centre and the top in a prescriptive way”—
those were his words—is simply not working? Can he explain why it is the only agency in the civil service that has not agreed a risk assessment template with the staff union, the Public and Commercial Services Union?
Robert Buckland
The hon. Lady is right to quote me, because I do believe in local initiative and I have seen it in action from HMCTS staff, who know the buildings, in which some of them have worked for many years, better than anybody. I take very much on board what she says. Of course, each court building is pretty different from the other; there is no set template and we all know they are pretty unique. The work that is done to make our courts safe is done in conjunction with Public Health England and Public Health Wales. I will consider the matter she raises further in more detail in order to satisfy myself that everything properly is being done.
Dr Caroline Johnson (Sleaford and North Hykeham) (Con)
I welcome the statement and the considerable investment, effort and energy that my right hon. and learned Friend has put into getting the courts up and running in a covid-safe environment. As a paediatrician, I am particularly concerned about the welfare of children, including in the justice system. Will he advise the House as to what he is doing to ensure that the youth justice system is prioritised and these cases are dealt with as quickly as possible?
Robert Buckland
I am grateful to my hon. Friend for her concern about children in the system. She will know that there are existing protocols applied by the courts to ensure that cases involving children are heard as early as possible, which is particularly important when it comes to the Crown court. The overall number of children in a secure setting, whether it is a young offenders institution or other secure accommodation, has continued to fall. It is now around 600. The numbers on remand remain about the same as they did before the pandemic but are proportionately higher because of the overall reduction in the sentenced population. We have been dealing as carefully as possible with the regime that is applied to ensure that young people are safe but that their frustrations when it comes to exercise and activity, which are natural, are dealt with. I am particularly interested in ensuring that education and skills training is improved during the pandemic, bearing in mind that in the first wave, apart from one institution, we were not able to run those programmes. I will keep her updated.
Kerry McCarthy (Bristol East) (Lab)
As I understand it, the independent review of administrative law panel was due to report this year. I hope the Secretary of State can give us an update on that and on whether it has looked at the fact that the number of successful environmental claims for judicial review fell by two thirds from 2016 to 2019, despite a tougher test for granted permission to proceed to the final stage. Does he agree that it is really important that access to judicial review is protected, even during difficult times like these?
Robert Buckland
I can assure the hon. Lady that, as set out in the terms of reference for the independent review of administrative law, the principle of judicial review and its importance in our system is something that we all believe in. The Aarhus convention will continue to apply with regard to environmental cases. The review is, as she would expect, independent. It has embarked on a large call for evidence, which has been completed. I anticipate a report soon. I will then consider the matter carefully and come back with a full response, and I will keep the House updated on progress once I receive the initial report.
Ruth Jones (Newport West) (Lab) [V]
The people of Newport West are concerned that the courts recovery plan comes alongside the Chancellor of the Exchequer’s public sector pay freeze—a freeze that will hit court and tribunal staff very hard in their pockets. Can the Lord Chancellor explain to the people of Newport West why he thinks it is okay for the hidden heroes working in our justice system to do their very best to clear the backlog of cases without being given the fair and decent pay rise that they need and deserve?
Robert Buckland
The hon. Lady will know that we have had to make some very difficult choices, bearing in mind the unprecedented recourse to public funds placed upon us as a result of the covid emergency. We have worked as hard as we can to ensure that people stay in employment and that our economy is saved as a result of the necessary decisions we have had to make to protect public health. She will be glad to know that the Chancellor is targeting help at people who are on lower pay. There is particular provision for those who are earning under £24,000 a year, which will see an increase in their salary. There are existing increments as well. I am looking carefully at the overall impact on HMCTS staff, and I will do everything I can to ensure that, within the parameters set by the Treasury of necessity, those in most need will receive an increase in pay next year.
Laura Farris (Newbury) (Con)
I thank my right hon. and learned Friend for all the work he has been doing to keep the justice system moving. I have two quick questions on employment tribunals. First, I know that the improvements in virtual proceedings have made a material difference to reducing the backlog, so what plans does he have to extend their roll-out? Secondly, I am hearing about a hidden problem, whereby a shortage of administrative staff in the tribunals is leading to applications and letters being processed very slowly, which is contributing to an overall delay. May I urge him to shine a spotlight on that issue when he looks at tribunals?
Madam Deputy Speaker (Dame Rosie Winterton)
Order. It is important that Members ask just one question, because there are two debates to follow, and I am anxious that they are getting squeezed at the moment.
Robert Buckland
I will not repeat what I said with regard to investment and case levels in employment tribunals, but I assure my hon. Friend that the extra funding we have had in year means that we can recruit 1,600 extra staff. We are allocating more resources to recruit up to 1,800 staff. So far we have recruited 800, with 200 or so of them in training, and I hope that we can use those extra resources in the employment tribunal and other jurisdictions.
Rachael Maskell (York Central) (Lab/Co-op)
The biggest crime of all, of course, is the scale we see of criminal cases committed in the first place, which the failure in the court system is just exposing. Delaying justice is delaying restitution to victims and their families and denying defendants access to rehabilitation. What additional resources is the Lord Chancellor bringing forward to support victims over this time, but also defendants, particularly with their mental health?
Robert Buckland
The hon. Lady will be glad to know that the increase in victims funding continues, with an in-year increase of £15 million, which was separate from the covid funding that we have already allocated to victims groups. Next year, there will be a further £25 million increase in victim support services funding. We are working very closely with the Victims’ Commissioner and others to make sure that we are absolutely hitting the right spot when it comes to support. The new victims code has been introduced, which I believe will make things simpler and clearer for victims to know their rights. When it comes to the mental health of defendants, we are working at pace at the moment in looking at further liaison and diversion services. We have rolled out liaison and diversion services across England and Wales, but I think there is more we can do with regard to how that works to make sure that those in genuine mental health need are not caught up in the criminal justice system unnecessarily, and that we can divert them into more appropriate services.
Andy Carter (Warrington South) (Con)
Can I join the Lord Chancellor in paying tribute to magistrate colleagues in court, particularly in Cheshire and Merseyside, who have continued to sit right through the pandemic? Could I ask my right hon. and learned Friend to give us an update on plans to extend the retirement age of magistrates, and also on the work that local advisory committees are doing to recruit new magistrates to the bench?
Robert Buckland
I am grateful to my hon. Friend, who I know takes a particular interest in this matter. He is right to pay tribute to the magistracy and, indeed, to highlight the recruitment campaign that is currently ongoing. I would urge members of the public who want to take part and to be part of the system to make such an application. On the retirement age, the consultation has now concluded. I am considering its findings, and I will report back to the House as soon as possible.
Selaine Saxby (North Devon) (Con)
Can I ask my right hon. and learned Friend when Her Majesty’s Courts and Tribunals Service plans to take on the operation of virtual remand hearings, as police forces return to their usual duties, and can I take this opportunity to thank Devon and Cornwall police for the exemplary job they have done over the course of this pandemic?
Robert Buckland
I readily join my hon. Friend in praising Devon and Cornwall police. She will be glad to know that the Home Secretary and I, who have joint responsibility for this, are working at pace to come up with practical solutions to allow the continuance of video remand hearings, particularly in court centres where there are a large number of people coming through the system and particular pressure. The ultimate problem will be solved by primary legislation, which I plan to introduce in the new year, but in the meantime we are working hard on practical solutions. I must stress to her that it is a joint solution between the Home Office and the Ministry of Justice.
Andrew Gwynne (Denton and Reddish) (Lab) [V]
I welcome the statement, but we have seen reports of trials being listed for 2023 and, in some cases, court dates not given indefinitely. Does the Lord Chancellor agree with me that justice delayed is justice denied, and will he commit to working to reduce the backlog so that no case must wait more than a year, let alone until 2023?
Robert Buckland
I am grateful to the hon. Gentleman. Can I reassure him that, having looked into that particular issue, , thankfully no cases are actually being listed in 2023? We have listings into 2022, yes, but the bulk of cases on remand, as I have said, are going to be heard between now and the spring. We have cases out on bail that are going out to late 2021 or 2022. It is my intention, and indeed the intention of the Lord Chief Justice, with the funding that we have secured, to reach a situation where, as a result of that, we can start to eat into the backlog in the year ahead and make a difference for witnesses and victims.
Sir Christopher Chope (Christchurch) (Con)
Following on from the answer that my right hon. and learned Friend gave to our hon. Friend the Member for Warrington South (Andy Carter), will he tell us when he is going to make his response? I have a private Member’s Bill down for 29 January and it would be useful to have had a response from the Government, preferably before the end of this year, so that we can draft a Bill appropriately.
May I also ask my right hon. and learned Friend about the attitude of the Bar? We have read reports that barristers are planning to go on strike, because they do not like the idea of having to work longer hours. Will he condemn any such behaviour?
Robert Buckland
I thank my hon. Friend for taking such an interest in the magistrates’ retirement age. I undertake that I will work in a way that means we may dovetail our separate efforts with regard to his private Member’s Bill. I will come back to him before then.
With regard to my colleagues and friends at the Bar, a consultation is going on about covid operating hours to allow the courts to sit for two sittings a day in some court centres. I will await the outcome of the consultation—it is only right for me to do that—but may I appeal to the better angels of our nature on court recovery? Those at the Bar are doing a tremendous job—let us stay positive and stick together, and we will get this sorted.
Clive Efford (Eltham) (Lab) [V]
We have 30% fewer criminal legal aid firms than in 2010, and a quarter of those have disappeared in the past year alone. The criminal legal aid review is not due to be published until the end of next year. How many firms is the right hon. and learned Gentleman prepared to see disappear before he acts?
Robert Buckland
We are acting. The second phase of the criminal legal aid review will be announced shortly, and the independent review can get on with its important work. I am acutely aware of the issues with regard to criminal defence solicitors—the problem predates 2010, I am afraid to tell the hon. Gentleman—but I want to ensure that we have a viable market and that solicitors and barristers are paid properly for the actual work that they are doing. That is why we need an update in the system.
Elliot Colburn (Carshalton and Wallington) (Con)
My right hon. and learned Friend will have heard me speak before about the Chris Donovan Trust and its amazing work in Carshalton and Wallington and elsewhere to encourage restorative justice, after Ray and Vi Donovan met their son Chris’s killers. Will my right hon. and learned Friend assure me that, as we tackle the backlog in cases, restorative justice is offered as a matter of routine throughout the justice process?
Robert Buckland
I pay tribute to the Donovan Trust and my hon. Friend’s work with it. I am a big supporter of restorative justice, but it needs to be victim-led. It is important that any decisions with regard to it very much involve the victims first, rather than it becoming some sort of pro forma, which would be a negation of what restorative justice should be about. It needs to be meaningful, and that is what I believe will continue to happen right through this crisis and beyond.
Marion Fellows (Motherwell and Wishaw) (SNP) [V]
The Istanbul convention on preventing and combating violence against women and domestic violence imposes obligations on the state to ensure that investigations and judicial proceedings on all forms of violence covered by the convention are carried out without undue delay and that they take into consideration the rights of the victim at all stages of the criminal proceedings. The Scottish Government are working hard to ensure that, despite the pandemic, those obligations are complied with. Will the right hon. and learned Gentleman assure me that the UK Government take the obligations equally seriously?
Robert Buckland
I refer the hon. Lady exactly to my response to the hon. and learned Member for Edinburgh South West (Joanna Cherry), who asked a question in very similar terms. The hon. Lady is right to ask that, and we do take that obligation extremely seriously indeed and are working to meet it at all times.
Madam Deputy Speaker (Dame Rosie Winterton)
We have now taken an hour on the statement. Although I will try to get everyone in, that absolutely depends on short answers and short questions.
Dr Kieran Mullan (Crewe and Nantwich) (Con)
One of the things that we have heard in the Justice Committee is of a reduction in violence in prisons as a result of the lockdown. Will my right hon. and learned Friend assure me that we will look at what we can learn from a positive point of view from that fall?
Robert Buckland
My hon. Friend takes a keen interest in such matters. He is absolutely right to talk about a reduction in violence. Clearly, we need to look maturely and carefully at the overall impact of what has happened in our prisons. It is clear to me that we are working hard in this second wave to ensure purposeful activity and meaningful exercise, as well as more educational opportunities. Looking to get the balance right and ensuring that prisoners feel safe is our No. 1 priority.
Mr Tanmanjeet Singh Dhesi (Slough) (Lab)
In 2016, the Conservatives pledged 10,000 extra prison places by 2020. They have managed only 200. Unsurprisingly, they recycled that old pledge last year by promising another 10,000, but the Ministry of Justice has informed us that the business case has not even been approved yet, so why should anyone believe this latest announcement that the Government will provide 18,000 new prison places?
Robert Buckland
I urge the hon. Gentleman to look at the evidence. We have carried out the building of Wellingborough Prison on time and on budget, and despite covid work is beginning at Glen Parva. We have a very refined and standardised programme, which involves modern methods of construction. I am satisfying myself that those responsible are managing it in a professional way, and these numbers are additional numbers. It is the boldest and biggest prison building programme since Victorian times, and I am satisfied that we have the wherewithal to get this done, and that we can give confidence to those in the construction industry who want to get on with it and help us to build the prisons that we need for the future.
Marco Longhi (Dudley North) (Con)
I thank the Lord Chancellor and his team for all their efforts in dealing with the pressures that covid has brought on the system and with getting the system back up and running. May I reflect at this time, though, the great sense of frustration that my constituents in Dudley North feel when they see that, often, sentences do not seem to be fit for purpose? Quite often, sentences do not match the crime that has been committed. Will he look at reviewing some of the guidance issued to the judiciary, so that better informed decisions are made as and when it is appropriate?
Robert Buckland
I am grateful to my hon. Friend. Of course he knows that sentencing guidelines are a matter for the independent Sentencing Council, but he will be delighted to read the sentencing White Paper, which includes further measures to deal with the incarceration of serious violent sexual offenders for longer periods before release. The necessary legislation will follow in the new year to take a range of measures on serious crime, and I know that he and his constituents will be supporting them enthusiastically.
Andy Slaughter (Hammersmith) (Lab)
The statement had the air of the Lord Chancellor congratulating himself in case no one else remembered to, but that may be somewhat premature. The criminal courts recovery plan claimed that 266 trials a week would be completed in October, but the actual figure was 160. The Justice Committee was told this week that we will not be getting back to pre-covid backlog figures at any time soon, nor should we be. Does not that sound more like complacency than competence?
Robert Buckland
No, it certainly does not. The hon. Gentleman is, I am afraid, wrong when he talks about the figure of 266. What that was about was courtrooms. In fact, it was 250 courtrooms to deal with jury trials. We exceeded that target at the end of October. As I was explaining to my hon. Friend the Chair of the Justice Committee, the overall figure with regard to effective trials, cracked trials and trials that are vacated because of a guilty plea acceptable to the Crown or a plea to the indictment, is now well in excess of 300 a week and is coming back to pre-covid levels. I am not complacent, Madam Deputy Speaker. I have been working daily on this issue and I care as much as everybody else about our courts and prison system, hence the urgency that we have placed upon the work that we are doing.
Charlotte Nichols (Warrington North) (Lab)
Research from Her Majesty’s Courts and Tribunals Service shows that a disproportionately large number of cracked trials in the criminal courts are due to late guilty pleas, with many defendants relying on the fact that key witnesses may be unable or unwilling to testify the longer that the pre-trial process takes, With this being a particular issue in cases of domestic and sexual violence, where victims are overwhelmingly women, can the Lord Chancellor please tell the House what equality impact assessment has taken place on the impact of delays in cases being heard?
Robert Buckland
May I assure the hon. Lady that as a matter of day-to-day practice those issues are very much built in to the system, as is the need to prioritise those cases? She is absolutely right to talk about the problems about witnesses losing heart or victims themselves feeling let down by the system, and that is why we have continued to improve the way in which we use remote technology. The section 28 roll-out is a further measure that will support vulnerable witnesses and victims.
I have seen, not only over the past few years, but over many years in practice, a real sea change in how we deal with these sorts of cases. More needs to be done, and the hon. Lady will be glad to know about the increased investment in independent sexual violence advisers, which are a key element in supporting victims of crime right from the beginning of that early police investigation, because it is at that point that often things go horribly wrong for victims of sexual crime, and it is that work that we are going to be doing. We can talk further about this matter, and I would be happy to engage with her directly about it.
Madam Deputy Speaker (Dame Eleanor Laing)
I am going to suspend the House for a few minutes in order to allow the safe exit of Members who are here and the safe entry of those who are about to come in.
Backbench Business
Future of Coal in the UK
(4 years ago)
Commons ChamberRead Full debate Read Hansard Text Read Debate Ministerial Extracts
Mr Richard Holden (North West Durham) (Con)
I beg to move,
That this House has considered the future of coal in the UK.
Today’s debate is not about the past, nor is it really about the great traditions and solidarity of our mining communities, nor is it about the coaling stations that stretched around the world east of Suez powering an empire. An industry employing hundreds of thousands is long gone.
Britain has been a world leader in decarbonising our electricity sector. Emissions are down over 70% since 1990, despite usage being up. Renewables have transformed the mix, and I am proud to be part of a Government who are pressing forward with a real environmental agenda. We are going to end coal-powered electricity by the mid-2020s and are playing a leading role, alongside Canada, in that effort globally.
There is much more to be done on future technology. I commend the work of my hon. Friend the Member for Redcar (Jacob Young) and his all-party parliamentary group on hydrogen for what they are doing on turning theory into practice for steel manufacture, moving from coal to hydrogen. It is not there yet, and it is likely that it will take many years to come to fruition, but I welcome any further Government plans, as we have seen recently, to support technological change in this area.
While we search for the alternative to coal, we still need coal in the UK. Whether we dig it up here or someone else digs it up and ships it here, for the present and for the foreseeable future, we still need it. Although huge strides have been made in efficiency, we cannot operate blast furnaces for steel production without coking coal. Britain’s cement industry requires a massive amount, too. Both are critical to some of the large infrastructure projects that we are pushing ahead with at the moment. Even our heritage rail sector requires tens of thousands of tonnes every year.
Coal is not a trendy subject, but it is an important one. Too often in our history, coal and its production have been far too political. My fear is that the apparent drive against domestic coal production in the United Kingdom from Whitehall is unfair and unjust, and actually runs counter to reducing our carbon emissions, which we are all in favour of trying to do. Unfortunately, coal is again becoming a victim of politics. In making it so, we are making a mistake—economically, strategically and, crucially, environmentally.
Britain’s coalmining history needs a whistle-stop tour to take us up to the present. Few constituencies are more steeped in that history than mine of North West Durham and those of colleagues including the hon. Member for Easington (Grahame Morris), who sits across from me today.
Without two things, the industrial revolution that transformed the world from largely agrarian subsistence to the basis of what we see today would not have happened. Those two things were the agricultural revolution that immediately preceded it, and coal—the twin fuels for people and industry. That industrial heritage is present right across my stunning North West Durham constituency. Weardale, right up to Wearhead, had mine workings across it that stretch back to at least the 12th century, and it was ironstone and coal from other parts of the nearby north-east that initially set up Consett as an iron and steel hub.
It was the miners who formed one of the first mass unions and whose dispute in 1926 was the basis of the general strike. According to family legend, my great grandpa, who was a textile worker in Lancashire and active in his union, had been tasked with collecting the union’s funds to support the strike but, upon his return to Blackburn, was so terrified of the funds being stolen or of losing them that he had the cash, together with himself, locked up overnight in a cell in Blackburn police station.
The Bevin boys kept Britain working during the war. Wilson’s “white heat of technology” and the nuclear revolution saw a massive shift, with more pits closing than at any other time. The fantastic “A Year in the Life” of Craghead colliery, filmed from 1968 to 1969 in the constituency of the right hon. Member for North Durham (Mr Jones), which neighbours mine, is a superb documentary about that time, which I recommend to anyone.
The end of mass employment in coalmining came in the two decades that followed, with politicised disputes in which all but the most fanatical ideologues would admit great fault from both union leaders and some politicians alike. I am sure that my hon. Friend the Member for Ashfield (Lee Anderson) will speak about his own experiences of being a miner later in the debate.
Now on to the present. I cannot do any form of justice to the history of mining in the time I have today, but the context provided is an important basis for where we find ourselves today. I am sure that Members may wish to debate the history in much more detail at another time, but I turn to the facts of the present, and I will take them one by one: the economic, the strategic and the environmental.
On the economic, these figures come from written parliamentary questions, the Office for National Statistics and Her Majesty’s Revenue and Customs. First, tonnage: we import between 5 million and 10 million tonnes of coal a year. Money: that represents over £1 billion in net imports to the UK on an annual basis. That is multiples of many of our agricultural exports, and it is about the net value of the amount of cheese we import every year, which I am sure my right hon. Friend the Secretary of State for International Trade would agree is an absolute disgrace. The difference is in the bulk. Cheese is only 100,000 tonnes. We are talking about 10 million tonnes of coal that has to be shipped across the globe, and I will return to that point shortly.
Jobs: that is £1 billion a year that could be going into UK jobs as we look to transition from coal to other methods of fuelling industry over the next few years. I want to put that into context locally. After being sat on by the Ministry of Housing, Communities and Local Government for three years, the new planned mine at Highthorn in Northumberland was rejected. That scheme was supported by all political parties and the Planning Inspectorate locally. The decision means that 250 good, well-paid jobs will not happen. To give an idea of the impact that this will have, the salaries alone would be the equivalent of the eat out to help out scheme for the whole north-east every year for the next five years, which is how long the site was planned to last for.
That brings me on to my second point about the present, on strategy. The mine had outline contracts with Port Talbot—because this is UK-wide—which would have taken coal for steelmaking. Instead, that coal will be imported from across the world. Of our net imports, approximately 40% of our coal comes from Russia and 20% from Colombia. The blast furnaces at Port Talbot could have been burning with British coal, but now they will be burning with Russian coal. We are literally forcing one of our key strategic industries to send pounds to Putin rather than supporting good jobs as we bridge to future technologies that will see our strategic heavy industry decarbonised further.
That brings me to my third point, on the environment, and I am afraid that this is where the argument against domestic coal production collapses entirely. Britain has a proud environmental record, and our domestic coal production has some of the highest environmental standards in the world. Our open-cast mines are properly dealt with and re-landscaped afterwards. Does anyone truly believe that that is the case in Russia, Colombia or even the United States? That is before we get to the staggering quantities of CO2 emissions from shipping the bulk product halfway around the world. The Centre for Policy Studies recently estimated that transporting coal via either St Petersburg or Murmansk to the UK would emit between four and five times as much CO2 as moving it domestically within the UK. US, Colombian and Australian imports all face the same stark environmental transport costs, and this is a bulk product.
That is just in terms of CO2. One of the biggest environmental success stories of this Government has been our work to protect the world’s oceans, which I think all Conservative Members are incredibly proud of. Cargo ships shipping coal around the globe are not geared up to be the most environmentally friendly of beasts, and rusting hulks chugging oil and detritus across our oceans run totally counter to the great work that this Government have done to tackle microbeads, plastics and other pollution in our oceans. The thing about global warming is that it does not matter where CO2 is emitted from; it all goes into our atmosphere worldwide. This is not something that we should try to export, because even if we wanted to, we could not.
Finally, I turn to the future. I am very proud that the UK has been at the forefront of making real environmental changes for the better. The Prime Minister’s recent announcement that he wants to lead the world in jobs of the future and delivering sound environmental policies is incredibly welcome, particularly in my region, in Teesside and in the neighbouring counties of North Yorkshire and Durham. Levelling up has to be a big part of that, and some of that will be down to transport. At this point in my speech, I would like to reinforce my little bid to the Government Front Bench for any support the Minister can give for the Consett to the Tyne railway. On the national bus strategy, I would really like to see a pilot project in Crook and Willington in County Durham. If there is anything that can be done for cycling and walking routes, particularly for Weardale and along the Derwent Walk, I would also really appreciate that.
My constituency had the last open-cast coalmine, which stopped production just a few months ago. The decision not to allow its expansion was taken by the local council, and that is absolutely fine. However, when local councils make decisions, like Northumberland has done—or like Cumbria, as I am sure my hon. Friend the Member for Workington (Mark Jenkinson) will mention later—to allow planning to go through on a cross-party basis, I hope that Ministers will consider the environmental costs of it not happening, and will not get sidetracked by greenwash.
Let me turn to the impending ban on the domestic use of coal. I have asked many parliamentary questions about this issue, but it is particularly relevant to mention while we are talking about emissions. Some families in my constituency, especially in the more rural parts, do not have an option apart from some form of solid fuel heating. Their choice is between household coal and oil, which is largely imported—even more than coal at the moment. Oil emits about 25% more carbon dioxide per kilogram than coal. Furthermore, there has been a recent push against coal and wet wood for household fires. Household coal emits 8.7 grams per kilogram of PM2.5—the particulates in the atmosphere. Dry wood emits 7.2 grams per kilogram, so they are very close. Wet wood emits 28 grams per kilogram, which is at least three times as high. I cannot understand how we are banning coal but not dry wood. It is sensible to ban wet wood on the basis of emissions, but it does not make sense to ban household coal, especially when these figures only take into account combustion, not transport costs. We all know that both wet and dry wood are bulkier to transport, so it makes no sense for coal to be excluded.
It would be remiss of me not to mention some of the major issues raised with me by the president of the National Union of Mineworkers, who I spoke to recently. We have been working on these issues together, and I have asked some questions about them. The first is the concessionary fuel fund, which is very important. As we look to decarbonise that, I would like to speak to Ministers to ensure that any money saved goes back to the miners, not to the Government. The second issue is miners’ pensions. I know that there are massive ongoing conversations with Conservative Members and the Government, and we look forward very much to taking part in those.
Today’s debate is about the future of coal production. I do not want to see Britain doing stuff on the cheap, offshoring our carbon footprint elsewhere, and tainting our really fantastic record on cutting carbon emissions in the UK. I want us to be driving the global environmental agenda—an agenda that we can be proud of as a party, as a Government and as a country.
Madam Deputy Speaker (Dame Eleanor Laing)
It is very good that so many colleagues wish to participate in this debate on such an important subject, but unfortunately that means that I have to impose an immediate time limit of four minutes on Back-Bench speeches.
Grahame Morris (Easington) (Lab)
Thank you for calling me in this important debate, Madam Deputy Speaker. It is a debate that is very close to my heart, and to the hearts of many Members representing coalfield constituencies. I welcome the debate, congratulate the hon. Member for North West Durham (Mr Holden) on securing it, and thank the Backbench Business Committee for allocating the time.
My constituency of Easington has always been at the heart of UK coal, from peak coal production in the 1920s, to the role that my predecessor, Manny Shinwell, played as Minister of Fuel and Power in the post-war Labour Government, delivering the nationalisation of the industry on vesting day in January 1947 outside Murton colliery in my home village. But there was a cost to mining coal, and we suffered many tragedies; the most recent in my constituency, involving multiple fatalities, was the Easington Colliery pit disaster on 29 May 1951, when 83 men, including a number of members of the rescue team, lost their lives. I ask the hon. Member for North West Durham to reflect on the Hartley Colliery disaster in his own constituency, where 204 men and boys died. There are lessons to be learned about only having one means of egress—not just in mining terms, but more generally in how we run the economy.
The miners’ collective spirit and solidarity secured pay increases in 1972 and supported miners and their families throughout the miners’ strike of 1984-85 in a valiant battle to save jobs and communities. Sadly, the miners did not prevail in 1984. Industrial east Durham at that time had near full employment, and that is what we want to return to, but to do so we require investment in health, housing, education and employment.
This nation’s wealth was built on coal and on the toil of miners working in dark and dangerous conditions. Let us not forget that we owe a debt of honour as a nation to the miners and their communities, those men who mined the coal that fired the engines of industry in the last century that made Britain great. As coal is phased out of UK energy production, we should never forget the sacrifice in lives lost and shortened; I think of my late father, my grandfathers and a dear friend of my father’s, Jimmy Grogan, a staunch trade unionist who sadly passed away yesterday.
The legacy of coal in the UK should be a new, bright, clean and green future for former coalfield areas. We should be exploring technology by ground source heat exchange pumps that have enormous potential in former coal-mining areas. The future of coal and the debt we owe the former coal-mining communities must include settling the historic injustices that former miners in coalfield communities still encounter, 30 years after the pits closed. As we consider the future of coal in the UK, let us use this time as an opportunity to amend these historical injustices in relation to the Mineworkers’ Pension Scheme surplus, justice for Orgreave and investment in coalfield communities.
I am pleased that the Minister is familiar with this issue, and I remind him that in the general election Labour had a manifesto commitment to a 90-10 share of the surplus from the Mineworkers’ Pension Scheme, and I am hopeful that the Conservative Government will honour the commitment given by the Prime Minister to a coalfield community in Mansfield.
Mark Jenkinson (Workington) (Con)
First, let me declare my interest as a former British Steel employee some 20 years ago and having worked in the nuclear supply chain slightly more recently.
I represent a working constituency built on coal and steel. The title of this debate is the future of coal in the UK, but perhaps we should discuss the future of the UK without coal, because, frankly, it would look quite different from not only the world we live in now, but the world we need it to be. Economic growth and growth in demand for steel are undeniably linked. Our plan for growth will necessarily bring a demand for steel, and we should place a much heavier weight on the use of UK-produced steel. The low-carbon energy technologies we will rely on in the future are, without exception, underpinned by steel, and that steel production requires coking coal or metallurgical coal for the foreseeable future.
Any increase in UK steel consumption without domestic production of steel and its process components will result in increases in both our domestic and offshore carbon footprints. While I wholly welcome the phasing out of coal in power generation in the UK, and the UK should celebrate its world-leading record on that, we must not let coal become a catch-all dirty word. We must differentiate between the burning of coal when other widespread technologies exist for the same purpose, and the industrial use of coal as a chemical element.
The UK and Europe import 16.4 million tonnes of coking coal every year, with CO2 emissions from its transport five to seven times higher than if it were produced closer to the point of use, such as at the planned Woodhouse colliery next door to my Workington constituency. It would be the UK’s first new deep coal mine in 30 years, bringing with it 500 well-paid jobs, while contributing to a reduction in our carbon footprint. It is shameful that the Opposition in this House and in local government seek to frustrate the opening of that mine, despite it having had cross-party development panel approval three times and having had a previous call-in rejected by a previous Secretary of State.
There is no commercial technology currently that can replace our reliance on coking coal. Electric arc furnaces are often portrayed as the green saviour of steel production, but the primary feedstock for electric arc furnaces is recycled steel. While crude figures suggest that the UK is almost self-sufficient in scrap steel, the EU and world markets are not. It also fails to take into account the fact that scrap steel has to have exactly the right composition to make the requisite end product, so most electric arc furnaces produce steel with a mixture of scrap steel and sponge iron. Again, sponge iron is currently reliant on natural gas or thermal coal.
Without a doubt, the Government should focus on helping every industry in the UK to develop innovative, clean technologies to solve all these issues, but it does none of us any favours to think that it can happen overnight or that it comes cheaply. Trials such as those in Sweden to use hydrogen continue, and some point to the intention to have a commercial hybrid plant running by 2026. Without touching on the feasibility in the short to near term of replacing plants with such expensive energy-intensive replacements, hybrid is only for the production of sponge iron, and the problems in the process that follows remain. Coking coal is still necessary to encourage and enhance slag forming, which protects the furnace, makes the process more energy efficient and reduces nitrogen, which makes for brittle steel.
We have a significant opportunity to level up our constituencies across the UK if we can rejuvenate our UK manufacturing base. Growing our economy and revitalising our UK manufacturing base will necessarily bring carbon emissions, and we must work harder and smarter to reduce our impact. My plea to the Minister and to anyone else who shares our aim of net zero by 2050 is not to let the perfect be the enemy of the good. We cannot pat ourselves on the back for a job well done in 2050 if we have got there on the back of steel or its component parts, such as coal, imported from halfway around the world. Let us get there as the UK does best. We have our eye on the finish line: let us emerge as the clear winner but having won fairly and squarely. I urge the Minister to ensure that UK coal is used to make UK steel, which is used to help Britain build back better.
Lee Anderson (Ashfield) (Con)
I stand here as a proud ex-coal miner from a long line of coal miners stretching back over 100 years in Ashfield, but I am not here to take a trip down memory lane. I am here to talk about the future of coal in this country.
The coal industry has got a good future. As we come out of the covid crisis, our country will look to new infrastructure projects around the UK to level up the red wall left-behind areas such as Ashfield and Eastwood, where I am from. To deliver on those projects we will need steel, and lots of it. The UK consumed 7.9 million tonnes of coal in 2019, 3 million tonnes of that was used for the steel industry, and 6.8 million tonnes was imported. That cannot be right. If we are using coal in this country to make steel, we should be mining the coal in this country and not importing it from the US, Russia and Australia. This is not a debate on the rights and wrongs of using coal, because we are already using it, and we need it. This debate is about admitting that there is a significant demand for coal in the UK, not just for the steel industry but for making cement, heritage railways and domestic heating.
Importing coal comes at a massive cost. Once all the coal-fired power stations cease in 2024, we will still need about 5 million tonnes of coal a year. Therefore, I would argue for the general economic and environmental case to obtain the coal by mining it here at home. An estimated 2 million tonnes of steel will be needed for HS2, and to produce that amount of steel we will need 1.6 million tonnes of coal. That should be British-mined coal, and it would keep up to £200 million in the UK economy as we would not be importing it, as well as retaining supply chain contracts worth an estimated £48 million to local businesses.
Mining the coal in the UK massively cuts greenhouse gases and results in the saving of significant carbon emissions, as we do not have to import from abroad. But where can we mine the coal that is needed for our steel industry? Well, we have the Woodhouse colliery in Cumbria, which—if it opens—will extract metallurgical, high-quality coking coal, which will then be used to produce high-quality steel right on our doorstep. The irony of all this is the high-quality steel produced from that coal could be used not only for infrastructure projects but to produce the equipment that green energy providers need. Fossil fuel can be used to drive forward green energy production.
The new coal mine in west Cumbria will provide about 500 new jobs for the next generation of brave British coalminers, and it could create another 1,000 jobs in the region as employees will have more disposable income, which will impact on local spending. West Cumbria needs all the investment and jobs it can muster, and a thriving coal industry working alongside the nuclear industry in the region could help provide financial security for Cumbrian families for decades to come. Thus, if we do have to use coal, it should be from this country, providing jobs for our local working-class young people, offering an immediate boost to the levelling-up agenda that the Government pride themselves on.
None of us doubts that coalmining will end in the UK, but we have an opportunity to resurrect deep mining to help us deliver on the green agenda that we have promised the UK. Let us put things right by ending deep mining on a high, with a legacy of producing British coal to make British steel to make British products while creating British jobs.
Conor McGinn (St Helens North) (Lab)
It is a pleasure to follow the hon. Member for Ashfield (Lee Anderson). I congratulate the hon. Member for North West Durham (Mr Holden) not just on securing the debate but on the work he does for coal and coalfield communities. I am delighted to speak in the debate as chair of the all-party parliamentary group for the coalfield communities.
It is clear that the role of coal in providing our energy in Britain has changed dramatically over the last number of decades. While it has rightly been said that coal usage is necessary in areas such as the steel industry, with coking coal for blast furnaces, coal-fired power stations now account for only 2% of our power. The country now faces the dual challenges of an escalating jobs crisis and the climate emergency, but there is an opportunity for the UK to show decisive leadership and renew its commitment to continuing to diversify energy sources, particularly as we come to next year’s United Nations climate change summit, COP26, which will be vital for driving a global movement towards cleaner fuels and industries.
The Government have announced that the remaining coal power stations will cease operations in the UK by 2025. If that is the case, we need to ensure a just transition for the sector’s workers and ensure that no community or region is ever left behind again in terms of accessing the skills and opportunities needed to thrive in clean industries. We also need to do more to end the billions of pounds in funding given to fossil fuels abroad, which damages our international credibility and makes no sense when we could produce some of them here.
There is a clear way to achieve that. Labour has called for a bold and ambitious green recovery for our country, proudly building the drivers of it right here in Britain, creating hundreds of thousands of jobs, boosting industries, making use of our rich industrial heritage and, in turn, fostering a better quality of life for our constituents. We are living through an age of industrial and economic transition and, as we rightly tackle the challenges, we must not repeat the mistakes that caused such devastation to communities like mine in St Helens and right across the north of England in the 1980s. The legacy of that is not just in economic and societal deprivation but in the illnesses that still scar our people today. Their continuing fight to access rightful support, fair pensions and compensation for former mineworkers and their families has been further compounded by the covid-19 pandemic. I pay tribute to the National Union of Mineworkers for its continuing work on that and draw the Government’s attention to issues around recording deaths during the pandemic to ensure that covid-19 does not mask existing conditions and prevent families of deceased miners receiving the compensation and recognition to which they are entitled.
The history of coal will always be entwined in this country’s industrial tapestry and remains an integral part of the identity of communities like mine in St Helens North, where the pits in Billinge, Parr, Rainford and Haydock helped fire the heavy industries of the UK. As the industry contracted in the second half of the 20th century, Parkside colliery in Newton-le-Willows in my constituency was the last pit in east Lancashire to close.
The report “The State of the Coalfields” last year presented a comprehensive evidence base on the need for ongoing Government intervention in our communities, based on the scale of the challenges that remain. It illustrated, shockingly, that if coalfield communities were a region in their own right—we make up around 5.7 million people—we would be the most deprived region in the UK. We know that life chances across the UK in relation to education, jobs, health and income have all been hit hard over the past decade, but in coalfield areas that has been amplified.
There is a historic debt to coalfield communities for the contribution and the sacrifices they made for the national economy, but also to compensate for the failure to support their post-industrial transition. We have rich histories, but also huge potential. We are proud of our past and ambitious about our future. I believe we can flourish again.
Jacob Young (Redcar) (Con)
Thank you, Madam Deputy Speaker. You may know that before becoming a Member I worked in trade for nine years in Teesside’s chemical industry. As coalmining is to Durham, so our industry is to Teesside. Both my grandads worked in our steel industry and my grandad Matty actually helped in the construction of the Angel of the North. I remember he would tell us that his signature was on the left wing—I am sure there is a joke in there somewhere. My dad worked in our chemical industry, starting out as a plant cleaner for ICI—Imperial Chemical Industries—and then getting a job as a process operator. I followed in his footsteps as an apprentice and then as an operator myself.
That is not an unfamiliar story to many across Teesside and the north-east. Young lads would follow their dads into industry or down the pit. However, the decline in our industry and the closure of many of our coalmines has meant fewer and fewer people have that connection with previous generations. It is incredibly important that we have this debate on the future of coal as we embark on our green recovery, because we have an opportunity for a green industrial revolution that could mean jobs coming back to areas like mine. How we shape the transition to that and to net zero will determine whether jobs come back or whether industry will be forced overseas for good.
Redcar and Cleveland do not share the proud coalmining history of my hon. Friend the Member for North West Durham (Mr Holden). However, we do have a proud history of ironstone mining and steelmaking. Of course, coal and steel go hand in hand. The production of steel through a traditional blast furnace requires coal, specifically coking coal. Although Redcar no longer has a blast furnace, as a Government we must remain committed to the future of steel blast furnaces in the UK until electric arc furnaces can make the equivalent level of steel. I was incredibly grateful, as were my constituents who work at British Steel at Lackenby, that the Government stepped in and supported British Steel last year in the protection of its blast furnaces at Scunthorpe until a new buyer could be found. Obviously, we now face new concerns about the future of the steel industry in Wales and whether it will have blast furnaces in the long term. It is my belief, as it was in Redcar in 2015, that we should do all we can to help the industry to save our steel. Losing it will not only lead to many job losses; it would be to the detriment of our flexibility and independence. I also think it is important to have a sovereign capability in these foundation industries, were the worst to happen and we found ourselves defending our country.
As long as we have steelmaking in the UK, or rather as long as we have blast furnaces creating steel in the UK, we must have a plan for coal. That is to say nothing of glass manufacturing, cement or bricks. These crucial industries all rely on coal and we must look at ways of producing or obtaining coal with a more limited impact on the environment. In 2019, we imported 6.5 million tonnes of coal, mainly from Russia. That accounted for 73% of the UK’s supply. That proportion was already down by 36% compared to 2018. However, it is clear from what other hon. Members have said so far that there is more we can do to increase coal production in the UK. We should not shy away from that. Too much of our language focuses on eliminating the use of carbon-emitting fuels, rather than reducing their impact. The whole premise of net zero by 2050 is a journey to reduce our carbon emissions, not eliminate all carbon-emitting fuels. If we can open a new coalmine in the UK, far from being against our environmental goals it will aid them: first, through the quasi-elimination of pollution generated by transport—as I said, most of our coal currently arrives from Russia—and, secondly, through the higher environmental standards imposed on production in the UK.
That does not give us a free pass, however. As part of the transition to net zero, we must continue to phase out coal in the industries that do not depend on it. I am incredibly proud of the Government’s achievements on phasing out coal and implementing our long-lasting change to the energy industry.
Mary Kelly Foy (City of Durham) (Lab)
I thank the hon. Member for North West Durham (Mr Holden) for bringing this debate to the House. It is very important to be having it, in view of the crisis in the economy and the wider climate emergency.
As someone whose constituency office is located within the magnificent Redhills, the miners hall in Durham, I have the enormous honour of walking past the incredible large banners in the corridor on my way in. It is constant reminder of that proud history and what we owe to coal and the people who worked in the industry. That history is not just about the buildings, or even the gala, but runs through virtually every village in my constituency. So many families have mining in their blood. Being true to that heritage also means being truthful about that history, because the way the industry was shut down left huge scars right across the north-east. Many of the communities are still feeling the impact of the destruction wrought by Margaret Thatcher’s Governments. People will talk about the closure of pits under previous Labour Governments, and of course that did happen, but it was the reasoning behind Margaret Thatcher’s closures and the way it was done that really did the damage: remember that she called the miners “the enemy within”.
So far I have talked about the history of coal in the north-east rather than its future. There are two main reasons for this: first, we cannot plan a future without first understanding the past, especially the mistakes of the past; and secondly, I have to say honestly that I do not see coal as a fundamental part of Britain’s energy future. There are some interesting and worthwhile projects being pursued all over the country and in the north-east. Even in the steel industry, alternatives exist and could be developed if the investment was forthcoming. For instance, the electric arc process has much lower carbon emissions than the blast furnace process. Under development we have carbon capture technologies, the use of hydrogen to reduce iron ore, and using biomass instead of coal. Meanwhile, I have had fascinating discussions with researchers at Durham University about geothermal technologies. I am aware that none of these are definitive solutions, but we have to continue to invest in the research.
None of this is ever said to denigrate the past that I have spoken about, when coal seemed a beautiful thing that did not just power, cities, towns and villages, but fuelled our communities and gave energy to our movement. However, in 2020 we know that the future is not in the black gold—it is in the new green technologies that will protect our planet for centuries to come. Over the past few years, the Labour party has worked hard to develop a plan for a green industrial revolution that will transform our economy and energy infrastructure into one that places the planet and the worker at its heart while creating a million green jobs in the process.
The big issue is to provide a lasting foundation for a new energy economy, and we have to learn the lessons from the past. In the north-east, the biggest lesson is that we cannot decimate our old industries without anything to replace them. As a society, we did not invest in the north-east in those dark days after the closure of the pits, and we are still paying the price in the lack of investment now. While I acknowledge that there are very short-term needs for the steel industry and coal will still be used in the interim, we must look forward to develop new technologies, and fast, unless we are to fall back into fiddling while the planet burns—and that means genuine investment, not sticking plasters. Although I welcome this debate and the opportunity to discuss these issues, that is where our minds should be focused: it is the long-term solution and hope for our generation.
Brendan Clarke-Smith (Bassetlaw) (Con)
I thank my hon. Friend the Member for North West Durham (Mr Holden) for giving us this opportunity to discuss the future of coal in the UK.
Bassetlaw has a rich mining history, and historically Nottinghamshire was always a major supplier of coal for industry and home consumption, particularly during the 19th and early 20th centuries. Over the years, parts of Bassetlaw have suffered from the decline of the coalmining industries, including Worksop, Harworth, Bircotes, Carlton-in-Lindrick and Langold. The Harworth colliery closed as recently as 2006, bringing an end to 86 years of coalmining in Bassetlaw. Harworth coal was in great demand from railway companies such as LNER, and the Flying Scotsman locomotive, now on display in the National Railway Museum in York, was burning Harwood coal when it covered the 392 miles from London to Edinburgh in a record seven hours and 27 minutes in 1932. This is something we can be very proud of.
Today Harworth is an area truly proud of its mining history, parts of which can be found wherever you go, including the stained glass tribute at All Saints church. One of my first sporting events after becoming MP for Bassetlaw was to see Harworth Colliery football club, where I was also lucky enough to win the meat raffle at half-time. It was very refreshing that somebody was shouting “gammon” at me without it being an insult for once.
As a school teacher, I took many students to visit the National Coal Mining Museum in Wakefield. It is important that we give these generations a chance to learn about local history. While the past is important, it also gives us the chance to look towards the future. Yes, we want to move towards clean, efficient and renewable forms of energy, and the Government have set out an ambitious plan to achieve net zero by 2050. We want to see those 2 million green jobs by 2030 and be able to provide our constituents with highly skilled and well-paid forms of employment as a result. We want to be able to train our workers and help them to remain in our communities without feeling the need to move to big cities for work. We want to see a smooth transition to a new age of energy generation and realise that this cannot simply happen overnight. Keeping emissions down is key, but we must also consider the impact of importing coal when we still have the resources to supply this ourselves, as long as the proposal is environmentally acceptable or the national, local or community benefits outweigh its likely impacts.
There are other opportunities that the transition presents and legacies from the past that can form part of the solution. I have been highly encouraged by the potential of other schemes, such as exploring the possibility of geothermal energy from disused pits, which my hon. Friend the Member for Ashfield has been championing, along with the mineworkers’ pension scheme and reforms. The UK will host COP26 in Glasgow in 2021 and the future holds many opportunities for us all, so let us be thankful for the role that our coal industry has played and continues to play in that.
Lee Rowley (North East Derbyshire) (Con)
Thank you for the opportunity to speak in the debate, Madam Deputy Speaker. I congratulate my hon. Friend the Member for North West Durham (Mr Holden) on securing it, and it is a pleasure to follow my hon. Friend the Member for Bassetlaw (Brendan Clarke-Smith). Even in the year when our attention has rightly been focused mostly elsewhere, it is important to have opportunities like today to speak on important subjects such as this. If there is one subject, as the grandson of miners, that I feel I am always compelled to speak about, it is coal: the substance that both literally and metaphorically my constituency is built upon.
I will come to our transition away from coal as a country in a moment, but before I do, I hope the House will not mind if I, like others, dwell for a moment on the transition that my community has made away from coal. For North East Derbyshire, coal was and remains a huge part of all our lives and our history. It is an industry on which a predecessor of mine, Tom Swain, said 55 years ago yesterday from a Bench somewhere here, coal is only possible
“by dint of hard work and hard thinking. It is an industry which is dependent on very strong men battling every day of their lives with nature.”—[Official Report, 2 December 1965; Vol. 721, c. 1781.]
Even today, in North East Derbyshire, we mine. Hartington opencast in Staveley is, as far as I am aware, the last and largest opencast mine in England and will continue to produce coal until early 2021, when its regeneration is complete. I visited Hartington in the summer, by the kind invitation of John Wilson, and was enthralled and fascinated by it in equal measure. For a brief second, standing on the precipice of a canyon many metres deep, surrounded by this black gold, which has shaped our lives for generations, I felt a real link to my and our community’s past. When Hartington closes, it will be the closure of final chapter in a very long, illustrious and proud history.
While we remain proud of that heritage, life moves on and my constituency does, too. That is why we now must focus on the incredible challenge we have as a country to shape our new energy future. That all starts with agreeing a pathway to tread more lightly on this earth. The Prime Minister and the Government have inherited this commitment and have made a strong start towards achieving those aims and building on the progress already made, but in the short time I have left, I want to make three points on this hugely important area of policy. I know the Government understand those points and I am keen to see the wider public debate recognise and comprehend them, too.
First, I sometimes wonder if the gravity of what we are trying to do has really been fully comprehended. We are committed to basically re-engineering four centuries of our society’s foundations in a single generation; 2050 is the most incredibly ambitious timeframe and we cannot lose sight of that, as—I do not mean to be typically partisan—the Opposition Front-Bench team did last year in the general election by just plucking dates out of thin air. We have made much progress but we must not diminish the colossal nature of this endeavour.
Secondly, we cannot solve climate change through rationing and nor should we want to. The debate on the environment veers too often towards control and compulsion—it will not work. That is why I very much welcome the Government’s commitment to jet zero and green maritime, which are actual solutions to how we live today, not seeking to reduce that. If coronavirus teaches us nothing else, it teaches us what happens when activity is constrained, even for a short time. Degrowth is a nice debate to have in academic green circles, yet it has real-life implications. We should not exchange one forced retraction of our economy as a result of a pandemic for a debate on another one done voluntarily. Climate change will be solved by innovation, not impediments.
Thirdly, we should, like so many of my colleagues, recognise that this debate is nuanced. Steel and aluminium require coal on a temporary basis, and we should never forget that. Technology will solve this problem—give it time.
Shaun Bailey (West Bromwich West) (Con)
It is a pleasure to speak in this debate and to follow the fascinating speech from my hon. Friend the Member for North East Derbyshire (Lee Rowley). I also commend my hon. Friend the Member for North West Durham (Mr Holden) for a fantastic debate today.
In today’s debate on coal, we need to look not just at the substance itself, but at the economic and social factors that surround coal for the communities that have relied on it in the past and the potential we need to unleash as we go through this transition now. That is key to the comments we have heard today. The Black Country has a rich history of coal. At our peak, we had 441 pits, 181 blast furnaces, 189 works, 79 rolling mills and 1,500 puddling furnaces, all linked to coal. We have a proud industrial history. Our flag, designed in 2012 by Gracie Sheppard, reflects that and reflects the comments of the American diplomat Elihu Burrit that the Black Country is
“black by day and red by night”.
I am proud to wear this band here every day to remind me of the communities I was sent to here to serve and that interlink together in that history and in that fight.
Our last pit closed in 1968 and since then industrial decline has hit my communities in Wednesbury, Oldbury and Tipton the hardest. The Black Country employs about 500,00 people, but since 1970 we have lost about 200,000 jobs in heavy industry, particularly since the decline of our coal industry. We have seen an additional 95,000 jobs created, but that still leaves us with a net shortfall of some 100,000 jobs in our area. That is where the potential of the transition comes in for areas such as mine. We have a real opportunity to ensure that as we come through and start to look at transitioning to net zero and being as carbon neutral as we can be we, areas such as the Black Country and my local communities can benefit. For example, we can ensure that our output gap, which currently stands at £2.6 billion, is closed. We can make sure that the unemployment rates, skills rate and low rates of starting businesses are all bridged by utilising the opportunities presented.
I wish clearly to make this point: as we go through this, the midlands is its own area and cannot be pigeonholed into other areas. We have our own socioeconomic issues. I stand in solidarity with my colleagues from other areas, but we need to be sure that as we seize these opportunities we focus them down. Let me say: wim the Black Country, we are not Birmingham. As we take advantage of this, that needs to be understood as well, because we cannot be pigeonholed as we look at seizing these opportunities.
I was pleased that my right hon. Friend the Chancellor announced a £1 billion carbon capture and storage infrastructure fund, which will be crucial as we ensure that we take advantage of coal during the transition. This is about ensuring we can invest in low-carbon energy production, but, as right hon. and hon. Members have said today, that links to ensuring that the coal we still have here, which is not just going to be eradicated, is utilised. We have still got to ensure that the technology is there to be used in a way that aligns with our ambitions.
The midlands and the Black Country are ready for that challenge as we go through that transition. We have the universities in the area that specialise in green technology and green innovation. We have a fantastic Mayor in Andy Street who is passionate about ensuring that we get this right. We have companies such as Thomas Dudley in Tipton, which I know the Minister has had roundtables with, that are equally passionate about this. We have an energy waste plant in Dudley that is using exactly this type of technology to ensure that can use coal cleanly and focus on our carbon dioxide storage capability. In closing, let me say that we have the economic appetite, skills base, technology and drive. The challenge is there and the Black Country is ready to meet it.
Jonathan Gullis (Stoke-on-Trent North) (Con)
I congratulate my hon. Friend the Member for North West Durham (Mr Holden) on securing this debate. I let the Minister know he has my absolute full support for seeing that, where there is an opportunity for us to bring up British coal to help make British products in order to sell global Britain around the world—exactly what the 72% of people in Stoke-on-Trent North, Kidsgrove and Talke who voted for Brexit wanted to see—we must absolutely do it.
I am going to go down memory lane slightly. When the coal industry was nationalised in 1947, there were 59 collieries in Staffordshire. Now, sadly, there is none. Out of the five collieries that were operational in my constituency, the last pit to close was the mighty Chatterley Whitfield in 1977. It is a colliery equivalent to the Colosseum in Rome. When you visit, you can be under no illusion as to why this site is a scheduled ancient monument, a silent colossus—one that nature is quickly reclaiming.
Come 2040, no coal-powered stations will be left standing in this country. On the continent, wind, solar, hydro and bioenergy generated 40% of the EU’s electricity in the first half of this year, beating fossil fuels, which accounted for 34%. So is there a future for coal? I absolutely believe that there is. A site such as Chatterley Whitfield is a perfect example of how the future of coal lies within the tourism sector and the green agenda.
Working with Historic England, I hope to bring forward a vision for the county’s first national industrial heritage park at the site. Nature is reclaiming the vile structures, from ivy growing up the mine wheels to trees sprouting from the great boiler houses. The colliery offers a unique insight into how nature operates on our windustrial past. When coal mining left the Ruhr valley in Germany, the collieries were regenerated as natural parks with great success. Restored rivers and wetlands draw migratory birds, hikers and bikers to the former mining sites, along with euros for the local economy. They are once again humming, but with the sound of not mine shafts and workers, but birds and visitors.
I hope that one day the first national industrial heritage park will be based at the former Chatterley Whitfield colliery, the first colliery to produce 1 million tons within a year, in 1937, and it repeated that success in 1939. I give a special call-out to Councillor Dave Evans of Baddeley, Milton and Norton ward, who has a long history and, sadly, has family members who passed away and lost their lives during their time working as miners on that site.
In 2015, Stoke-on-Trent City Council was successful in securing £19.75 million in funding from the Government to help to deliver the infrastructure for a low-carbon district heating network, or DHN. It is a network of underground pipes to deliver heat via hot water between an energy centre and the buildings connected to the system. It harnesses heat from low-carbon sources such as deep geothermal energy, which is commonly found around former coalfields. Stoke-on-Trent and north Staffordshire is a hotbed of geothermal energy. The network also offers opportunities for young people, and Stoke-on-Trent is now home to an urban heat academy, which will be able to share the expertise we are generating in Stoke with other parts of the country. In a sense, that does bring back an element of mining. The source of hot water is more than 3 kilometres below the surface. Pipes are being mined downwards to access it. This carbon-free heat source removes the need for traditional boilers, in line with the Government’s aims to stop their installation from 2025, and has zero risk of carbon monoxide. I ask the Government to assist with this by asking Staffordshire University and Stoke-on-Trent Sixth-Form College, both located at the centre of the first phase of the network, to speed up their sign-ups to this sustainable energy source.
There may not be a future for coal mining long term, but the legacy of coal is not all bad. There are real green opportunities on offer in these former centres of mining.
Owen Thompson (Midlothian) (SNP)
I commend the hon. Member for North West Durham (Mr Holden) for securing the debate and I thank the Backbench Business Committee for granting the time for it.
The story of coal goes back a long way but, sadly, the future cannot continue like the past. It somewhat pains me to admit that, as I come from a coalmining community. Midlothian’s coalmining fabric is as entrenched in the community as the black strands in my Midlothian tartan tie, which I am wearing today. Dating back to the 12th century, the earliest extractions were by monks at Newbattle Abbey. The first Victorian super pit, the Lady Victoria colliery, still lives on as the National Mining Museum Scotland in Midlothian. Certainly, to anyone looking to visit, I would highly recommend Midlothian over Edinburgh, because Midlothian is clearly where the heart is.
Coal is no longer king, although realistically it will still have a limited role to play in the energy mix as we continue down the decarbonising pathway in a sensible and phased manner. It is currently still used in blast furnaces, domestic heat generation, food and drink production, chemical production and electricity generation, and 14.5 million tonnes of coal were needed to meet demand for energy generation alone in 2017. Like a veteran actor, the roles for coal are becoming fewer and fewer. Instead of frantically scraping the earth for more, it is better to gradually and graciously retire from the scene and hand the stage over to the players of the future.
Coal comprised just 2.8% of the UK’s primary energy demand in 2019, down from 16% in 2000. By comparison, we have seen more than a tenfold increase in renewable energy generation since 1998—particularly from offshore wind—driven by large, unforeseen cost reductions. That and other emerging technologies, including the potential role of hydrogen to help decarbonise heat, is where our energies should lie.
What there will not be under the Scottish SNP Government’s watch is any kind of fracking or any unabated new coal power generation. The last coal power station in Scotland closed in 2016. Should there be any new application, it would not be considered without having carbon capture and storage technology in place. Donald Trump liked to talk about trains loaded up with “beautiful clean coal”. It is a nostalgic image, and he certainly used it a lot when trying to win the votes of those in the industrial belt—understandably, those areas need optimism for future jobs—but the term is nebulous and it is unlikely his definition of clean coal included the trapping of carbon where it cannot do any harm. According to FactCheck.org, just 0.1% of American coal-fired capacity uses carbon capture technologies.
While they are not the key solution, some of the carbon capture and storage technologies could be needed to keep global warming below 1.5˚C. According to a report from the Intergovernmental Panel on Climate Change, Scotland could have a competitive advantage. The Scottish Government’s energy strategy committed to work with the industry to assess the opportunities for existing infrastructure we already have in Scotland’s industrial clusters. Depleted gas fields have vast carbon storage potential, and projects are well under way, although progress has been hampered in the past by poor investment from the UK Government. I hope that the Prime Minister’s new-found enthusiasm for a green revolution in UK energy priorities may more closely align with the Scottish Government’s priorities and that they can work together to support the carbon capture, utilisation and storage strategy.
As we work to cut emissions, I recognise the need to support our industrial bases and focus efforts on new jobs and economic opportunities that the green industries will bring, making sure that change is inclusive and we bring people with us. This is where the Government have gone wrong in the past. The proud coalmining communities of Midlothian were devastated during Thatcher’s era, and I am sure the motivation was not to clean up the environment. Pits were run down and closed with nothing but promises of the dole queue to replace them. Long and bitter disputes during the miners’ strikes and the poverty and suffering they caused were entirely avoidable. Instead, the Government at the time were itching for a fight, and they certainly got one.
In October this year, the Scottish Government announced pardons for miners who suffered from unfair convictions during the picket line disputes of 1984 and 1985. I have called for the UK Government to do their bit to close that chapter by finally agreeing to an inquiry into what happened during the policing of the strikes. They should help heal the wounds of the past.
The future of communities such as mine may not be built on coal, but it will be built on the backs of those miners and families, and their legacy lies in the grit, determination, warmth and comradeship of the people. Midlothian was forged in coal, and it makes us a fantastic workforce for the industries of the future.
Indeed, the old mines could still have a direct role to play in powering the economy, tackling fuel poverty and heating our homes, but in less conventional ways. For example, the HotScot project, developed by the University of Glasgow, is looking to tap into geothermal energy contained in disused flooded coal mines across the country. It is believed that heat trapped in the 600 cubic kilometres of disused mines throughout Scotland’s central belt could meet up to 8% of our domestic heating demands, and extracting it could create almost 10,000 jobs while slashing household bills.
Geothermal is a project that Midlothian has a long history of looking at, having commissioned a study into it in 2004, and the Scottish Government looked into it again in 2013. Unfortunately those projects were not viable at the time, although they were then exported to Spain and Holland, where they were adopted. I would encourage anyone who gets the chance to engage with a chap called Stevie Gillespie, who has an encyclopaedic knowledge of these things.
The transition from deep mining, a high carbon activity, was economically unjust for our coal communities, closing down not only the pits but the local economies, with enormous and long-lasting negative social impacts. The move to a low carbon economy could be a just one, if we choose to harness geothermal energy from the mine water that has flooded pits such as Bilston Glen and to tackle the industrial legacy that has left the surrounding communities behind. We can tackle the food and fuel poverty of our coal communities by tapping into this rich new source of energy, by installing district heating schemes in new and existing housing and by supporting local food production using heat to grow vegetables. Along the Forth estuary and the Clyde, we can capture and convert the heat to feed our people, producing food from the river banks instead of having people go to food banks. There are challenges to overcome, but exciting projects such as these could turn abandoned mines from liabilities into economic assets that could be an integral part of the green renaissance that we seek to build. We just need the commitment to make it happen.
Luke Pollard (Plymouth, Sutton and Devonport) (Lab/Co-op)
It is a privilege to help to sum up this debate before the Minister speaks. I thank and pay tribute to the hon. Member for North West Durham (Mr Holden) for the way he secured and introduced the debate. Coal matters. This is what we have heard from all hon. Members today. It matters not just to our heritage and history but to our industry and identity. Coal is not just a fuel. It is a social seam that runs through our communities and right throughout Britain. It runs through our families as well. My great-grandfather, Albert, was a coal miner in Allerton Bywater, as was his father, and his father before him. The darkness, the dirty air, the risk of death through explosion, flood and collapse, and the camaraderie, the solidarity and the community were hallmarks of their time down the mine. Coalfield communities are proud of their past, and they are also ambitious for their future. If we fast-forward to today, we see that as a nation we are ending the use of coal, but we must do much more to be a beacon nation and help our friends abroad to do the same. That is especially important as we get closer to COP26.
This has been a good debate, with some excellent contributions. I want to pay tribute to a number of the points that have been raised. My hon. Friend the Member for Easington (Grahame Morris) was right to highlight the need for justice for Orgreave and the continuing tragedy of the mineworkers’ pension scheme. My hon. Friend the Member for St Helens North (Conor McGinn) was right to highlight the errors of the Government in supporting fossil fuel use abroad, and the illnesses of many miners. My hon. Friend the Member for City of Durham (Mary Kelly Foy) put it very well when she said that we must learn the lessons of the past if we are to create a new energy economy.
The speeches from Conservative Members were also good. I thank the hon. Members for Workington (Mark Jenkinson), for Bassetlaw (Brendan Clarke-Smith), for West Bromwich West (Shaun Bailey), for Ashfield (Lee Anderson) and for Redcar (Jacob Young) in particular. The hon. Member for North East Derbyshire (Lee Rowley), despite chucking in a cheeky partisan point, which I forgive him for, offered the useful advice that we need to tread more lightly on the Earth. That has been a common theme throughout all the speeches that we have heard today.
On coal, Labour has led the way on many of the improvements that we have seen in our carbon reduction. In government, we started the closure of the coal-fired power stations and delivered much of the carbon savings that we are now seeing in the carbon budgets. Sadly, we have not seen the same heavy lifting since 2010 in decarbonising housing, transport, food production and wider energy generation. I am a 2030 kind of guy, rather than a 2050 kind of guy, but whatever date we choose, it is clear that we need to decarbonise faster, and the use of new technologies is a key part of that.
I am glad that so many hon. Members spoke about the opportunities not only around geothermal and hydrogen but around using the talent and skills of our coalfield communities that have been neglected for too long. The Government must not be lulled into a false sense of security by thinking that three-word soundbites and flashy oratory are a substitute for bold action to deliver net zero. It is clear that a yawning gap is emerging between the Government’s aspirations on net zero and their policy to deliver them. We have heard today that coalfield communities have a key part to play, and are keen to play their part, in helping the Government to meet that target.
There will be very little room for the continued mining and use of new coal in the world’s industries over the next 30 years. That has been made clear in speeches from both sides of the House.
COP26 must be a moment when, internationally, we drive down the use of coal right around the world if we are to achieve our target of keeping global warming below 1.5°. Countries abroad, though, are still largely dependent on coal for energy and they are clearly compounding a problem, but in making the case for that we must also recognise the historic legacy and responsibility that we have as a nation, because of the amount of coal and carbon that we have put into the atmosphere. We must also not be shy in bringing forward the technologies to create the green jobs of the future.
When I was a very small child at my primary school in Buckland Monachorum, just outside Plymouth, the teacher stopped our lesson and said, “Everyone look out the window now.” There was a coalman delivering coal, heaving huge bags of coal on his back. She said, “Remember that scene, because you won’t see those jobs in the future. You won’t be able to grow up and be one of those people.” That stuck with me. It is something about the just transition that we need to have. All hon. Members speaking in this debate have remarked on the need to create new jobs—good, decent, hard-working jobs—that are true to the values of those coalfield communities that we have seen.
I am pleased that, as a country, we are now driving down the use of coal in our energy production. It now accounts for around 2% of power, and between April and June this year that figure fell to just 0.6%, which is a huge and welcome achievement. We need to continue doing that. The carbon floor price of £18 per tonne for carbon gas emissions from plants and the restrictions on the emissions of CO2 per kilowatt hour that were introduced in recent energy legislation will help to achieve that and that is welcome.
When speaking about coal, we can talk about it as a fuel or as a community. Members on both sides of the House have spoken about it in terms of people, and not just of something in the ground. When it comes to coalfield regeneration, I hope that this Minister, and Ministers who follow him in this role, will stay true to their word about the long-term commitment that is necessary. The lesson from Labour’s investment in coalfield communities from our time in Government is that it is more than just a flashy headline. It needs to be sustained investment that gets to the very heart of that structural inequality that we need to look at.
The climate and ecological emergency will not go away and we need to make sure that we are handing a better world to our children than the one that we inherited from those before us. As a young man, I worked briefly in the coal health claims unit in the Department for Trade and Industry, which was many, many rebrands ago from the Department for Business, Energy and Industrial Strategy in which the Minister now operates. I helped to process some of the claims for vibration white finger and for chronic obstructive pulmonary disease for those former miners. It was settling a debt that our nation owed to them, but in settling that debt over their health claims, we must also now make sure that we do the same over former miners’ pensions as well. That was raised by a number of hon. Members on the Labour Benches, and, indeed, on the Government Benches as well. We must also go further and recognise that the legacy of our coal industry is not just the health impacts on those former miners, but the spoil tips that remain. My hon. Friend the Member for Rhondda (Chris Bryant) is fond of mentioning the unmapped coal tips. There are potentially 2,000 of them in south Wales alone. We do not have a map to identify where all of them are and we know that many of those spoil tips are unstable. We know that we have a responsibility to act and what we must all agree on in this House is that we must never ever have another Aberfan again. That is why action is so important.
As this chapter of Britain’s industrial history closes, we must make sure that the people and those communities that were so key to that industrial success—that engine that powered Britain—are not forgotten about. That means recognising their health, their pensions and the environmental responsibilities and remembering the people who went down the mines to power our country.
The Minister for Business, Energy and Clean Growth (Kwasi Kwarteng)
I congratulate the hon. Member for Plymouth, Sutton and Devonport (Luke Pollard) on filling in for his colleague at such short notice. I thought that he gave a very succinct and clear exposition, and I welcome him to his position if it is somewhat unusual for him.
Many people spoke about the history. It is very easy to pretend that the history does not matter or that it is somehow irrelevant to our new and shiny future, but actually the history of these mining communities, the history of Great Britain, and the history of economic development in this country are things that we should think about and debate in this House. I am very grateful to my hon. Friend the Member for North West Durham (Mr Holden) for bringing our attention to this issue and congratulate him on calling this debate.
I fully accept that we should not be making partisan points all the time from the Dispatch Box, but I found it very striking that, in a Backbench debate about the coal industry, we should have had eight Conservative speakers and only three Labour speakers. At any other time in the recent parliamentary history of this country, such a mismatch and such a large number of Conservatives speaking passionately and with great experience about this subject would have been extraordinary. I commend all my hon. Friends for speaking in this debate very passionately, and I also commend Opposition Members for doing so. I thought it was a very good debate.
As far as the substance is concerned, we know that we have come a very long way. I think most Members on both sides are conscious of the fact that we have really come a long way from the heady days when we mined—in 1913, which was the record year for coal production in this country—288 million tonnes of coal in a single year. That really staggers the imagination: 1 million tonnes of coal coming out every single working day. As Members on both sides have said, through family links and through representing their communities, there is still a very strong living sense of the incredible sacrifice that many workers underwent simply to keep the lights on and simply to keep economic progress flowing. Even in the 1950s—I have looked at the figures—we were mining more than 200 million tonnes of coal every year during the decade, so it is an incredible legacy. When one thinks of the lives lost, the limbs shattered and the many hours spent in very difficult and dark conditions, I think Members of this House are right to pay tribute to that legacy and to commend these great communities for the efforts and sacrifices they made.
However, we have to look forward. Acknowledging the past and recognising the huge efforts that have been made to build the communities and the life we enjoy today does not mean that we should not very much be looking forward in the future. In that vein, I am proud of what our Government are doing. I am surprised that the hon. Member for Plymouth, Sutton and Devonport is still committed to the 2030 target, which most industry specialists feel is completely unrealistic, but I would be very happy to debate that with him. We also have to recognise, as many of us have done, that there are going to be new jobs, new industries and new challenges. The 10-point plan that the Prime Minister outlined only a couple of weeks ago really pointed the way to some of those new technologies. We have carbon capture, usage and storage, to which we are committing £1 billion. We also have hydrogen, with the possibilities of low-carbon hydrogen. I am very pleased to be leading the work within the Department on trying to come up with a hydrogen strategy and see how we can decarbonise the industry.
As many of my hon. Friends mentioned, there is still a large role for decarbonisation in industry. They made the point, I think very ably, that still in our industrial processes—particularly in steel and also in construction—there is a dependence on coking coal. We have to distinguish between the coking coal used in industrial processes and the coal used to generate electricity, but all the same, Government Members were quite right to point out that it does not make any sense for us simply to export carbon emissions to other countries. That is precisely why the United Kingdom and Canada have set up the Powering Past Coal Alliance. Only this week, I have been speaking to Polish counterparts and other counterparts in eastern Europe to find ways in which we can actually remove coal from the equation, as it were, and seek decarbonised forms of industry, and that is very much our focus. My hon. Friend the Member for North West Durham mentioned the fact that we import 5 million to 10 million tonnes of coal a year, which is a considerable amount, but we will look to decarbonise further our industrial processes. When we contrast the 5 million to 10 million tonnes that we import with the 288 million tonnes that was mined in 1913, we can see the transition that we have made. I think that coal in industry will not disappear immediately, but we have to look at new ways of decarbonising that industry, which is precisely why we are looking at hydrogen and carbon capture to drive that decarbonisation process.
Finally, the net zero target, which has shaped all our energy policy in the last year, is vital for us to meet our aspirations for the kind of community and economy that we want to see. Everyone in the House today is in agreement on that, which is particularly significant. When we consider our position with respect to net zero, we have to look at the international context as well. Britain on its own will not be able to decarbonise the planet, but we can provide leadership. Many people around the world look to the United Kingdom and to our energy policy, and they feel that we are paving the way on this.
As we enter 2021, we can look forward to two events that will help us to shape the global debate. We will host COP26 in Glasgow in November next year, where we will forge a plan and show our friends how we think net zero can be achieved. We will also enjoy the presidency of the G7. Given what has happened in the United States over the last few weeks with the election, there are huge opportunities in the G7 to drive forward this decarbonisation and net zero agenda.
Mr Holden
I thank all Members on both sides of the House for their contributions to what has been a very good debate, and I thank the Backbench Business Committee for allowing it to go ahead. I thank the Minister for his words. He is right that we need to be ambitious for a decarbonised future, but in order to get there, coal still has a role to play in the interim.
Many Members on both sides of the House talked about coalfield communities. My hon. Friend the Member for Bassetlaw (Brendan Clarke-Smith) mentioned his colliery football club, which reminded me of Bearpark and Esh colliery band in my constituency, who are still going strong. The hon. Members for St Helens North (Conor McGinn) and for Easington (Grahame Morris) really rammed home the need to ensure that coalfield communities are looked after. The hon. Member for City of Durham (Mary Kelly Foy) made the point that this is a fundamental part of Britain’s past, but she welcomed the green industrial future, which my hon. Friend the Member for Redcar (Jacob Young) also touched on.
My hon. Friends the Members for North East Derbyshire (Lee Rowley), for West Bromwich West (Shaun Bailey) and for Ashfield (Lee Anderson) talked about the economic opportunity. That is particularly important, because as my hon. Friend the Member for North East Derbyshire said, we cannot go backwards in terms of economic growth; this has to build on something into the future. My hon. Friend the Member for Stoke-on-Trent North (Jonathan Gullis) made a particularly good point about how we can use our industrial heritage to do all sorts of innovative things, and I wish him success in that.
The hon. Member for Midlothian (Owen Thompson) said that this was like an actor leaving the stage. I agree with him on that, but it is not quite yet—we still have a bit of a way to go. My hon. Friend the Member for Workington (Mark Jenkinson) made an exceptional speech about how this is part of us not only levelling up but building back better for the future, and I wish him and his colleagues in Cumbria all the best with their application. Finally, the hon. Member for Plymouth, Sutton and Devonport (Luke Pollard) said that coalfield communities are ambitious for their future. That is probably why so many of them voted Conservative this time, and hopefully more will do so in the future.
Question put and agreed to.
Resolved,
That this House has considered the future of coal in the United Kingdom.
Digital Infrastructure, Connectivity and Accessibility
(4 years ago)
Commons ChamberRead Full debate Read Hansard Text Read Debate Ministerial Extracts
Esther McVey (Tatton) (Con)
I beg to move,
That this House notes that over one million households do not have an internet connection in the UK and 5.3 million people do not access the internet at all; further notes that repeated lockdowns as a measure against the spread of covid-19 have highlighted the urgency of achieving nationwide digital inclusion; notes that the Government’s decision to change its manifesto pledge from delivering world-class gigabit-capable broadband in 100 per cent of homes and businesses across the UK by 2025 to only 85 per cent will damage the economy and the levelling-up agenda; notes that any investment in superfast broadband without addressing the digital divide will damage social mobility; notes that digital exclusion has the biggest effect on lower-income households, increases the cost of living and widens health inequalities; believes that digital infrastructure is not a luxury resource but an essential requirement; and calls on the Government to invest in a digital catch-up scheme to support the post-covid economy, level up opportunity and lead to a fairer economy, stronger society and better lives.
I thank the Backbench Business Committee for allowing us to debate digital infrastructure, connectivity and accessibility today. Never has this debate been so important, so relevant and so timely—I say timely, because two days ago this House voted to extend the covid restrictions across the country. Some 99% will be in tiers 2 and 3, the strictest lockdown, and the restrictions are likely to continue for months. Having been in one form or another of covid lockdown since March, our lives have been quite literally turned online and are set to remain that way.
I also say timely because last week, among the small print of the Chancellor’s spending review, the commitment to 100% gigabit capability by 2025 was reduced, along with the financial support, which went from £5 billion to £2 billion. It is vital that today we get the original full-fibre gigabit capability manifesto commitment reinstated, because reliable online connection is not just nice to have; it is a necessity.
Even prior to the pandemic, the country’s digital infrastructure needed improving and upgrading. The National Audit Office reported that internet demand was growing at 40% a year and, according to the National Infrastructure Commission, growth would have resulted in demand’s outstripping supply for the part copper, part fibre section between 2030 and 2040. Added to that, as we all know, the coverage is very much dependent on where we live, and cities are much better than towns or rural areas. As it stands, the industry boasts that 96% of the country has at least 24-megabit capability, but that is a million miles away from where we need to be as a country, with so many people complaining that they have unreliable connectivity and slow speeds. That figure needs to be 1,000 megabits per second, not 24.
The real experience on the ground is this: in parts of Tatton and across Cheshire, constituents of mine have been informed by BT and Openreach that their properties simply do not qualify for commercial roll-out of broadband, because their homes are too far away from a cabinet and installation is too difficult and expensive to be delivered as part of the universal service offer. That means that across my constituency, broadband accessibility can vary from street to street, depending on the location of the box.
What we have seen developing in this country is a digital postcode lottery—a digital divide. Dr Helen Hosker, of Wilmslow, told me that she has “very slow broadband speeds” because her home is too far away from a cabinet. Dr Hosker, a retired general practitioner, is now struggling to work remotely for the covid clinical assessment service. As she rightly remarks:
“The current service is unlikely to support any developments with home working for myself and my neighbours. This situation will only worsen over time as reliance on technology increases. This is unacceptable when reliance on the internet has become a key part of everyday life”.
Stephen Chapman, of Knutsford, explained how over the past seven years he has had 64 visits from Openreach due to faulty broadband. Stephen highlighted the scale of the problem my constituents face when he explained that,
“there are 16 properties in our postcode that average 2MB or less,”
which has an impact on his business and his life. He says that,
“quality of life is now dependent on internet access.”
Another of my constituents, Tariq Marfani of Mobberley, an automotive and aerospace supplier, reports broadband speeds in Mobberley of, again, 2 megabits per second, which is a very long way off the gigabit connection—1,000 megabits—that the Government are striving towards. Tariq also points out that covid has brought about a shift in behaviour—not just going online, but people wanting to move out of cities to the countryside and to work remotely. Yet it is rural areas that most urgently need their digital infrastructure improved.
In fact, after I met BT last week, it revealed the latest figures, which show that only 6% of my constituents’ homes and businesses in Tatton currently have access to full-fibre broadband, and it is that full-fibre service that can provide that 1 gigabit capability and significantly improve reliability. The digital inclusion charity Good Things Foundation found that 80% of people considered digital connectivity to be a lifeline to them during lockdown. Yet, shockingly, more than 1 million households in the UK do not have an internet connection, and 5.3 million people do not have access to internet at all. Of those who do have an internet connection, Which? found that 30% said it did not meet their needs during lockdown, cutting them off from vital day-to-day services such as schooling, banking, shopping for food and getting health check-ups.
During covid and life in lockdown, as a nation we have all moved online. BT reported a 35% to 60% increase in daytime traffic. Even meetings that many of us assumed were face-to-face necessities moved online. The Health Foundation estimates that more than 700,000 patients are turning to phone and online video GP appointments. Some 1.62 million people now unemployed are using the universal credit online benefit system.
Education is increasingly delivered online; just last week, the National Education Union reported that there were 900,000 children being educated at home—one in five secondary school pupils, all needing the internet. However, with an estimated 2% of the 9 million UK households with children not having internet access, that is approximately 560,000 children whose ability to get a good education will have been disrupted during lockdown.
Being online is now crucial to everything we do—and yes, the NHS test and trace app relies on dependable broadband, too. Digital infrastructure has to be the No. 1 infrastructure project that this Government deliver, so today I am calling on them to reverse their decision to downgrade the full-fibre roll-out and instead to reprioritise it—rev it up, put the money back in the pot and deliver the full-fibre service this nation so desperately needs. The Government’s levelling-up agenda depends on nationwide digital inclusivity. If we give up on this manifesto commitment, fail to invest in our digital infrastructure and refuse to take the urgent action necessary to level up and fix the digital divide, we will be trying to deliver the levelling-up agenda with one hand held behind our back.
I applaud the Government’s commitment to a £4 billion levelling-up fund as part of the recent spending review, yet the roll-out of broadband would itself facilitate levelling up and drive forward social mobility. That money needs to go back in the broadband pot. As the Ministry of Housing, Communities and Local Government succinctly described:
“Digital equality matters because it can help mitigate some of the deep social inequalities derived from low incomes, poor health, limited skills or disabilities”.
With broadband taking on an ever more important role in our lives, it is high time it was elevated to the status of utility and that we removed any impediments to delivering this essential service to the country.
I fully support the Telecommunications Infrastructure (Leasehold Property) Bill, which recognises that broadband is as essential as water or electricity. Recognising broadband as a utility means that all new homes will automatically be built with superfast internet. Furthermore, telecoms providers will be permitted to install broadband in pre-existing premises in the same way that a water provider would be permitted to install water pipes.
As we recover from this pandemic, lifted by the news of a vaccine, we need to be lifted by the news of the reinstatement of the full-fibre roll-out, too, which will provide all sorts of desperately needed jobs as we seek to recover from the covid recession. More than 10,000 jobs could be created in delivering the infrastructure, and once it was rolled out, it could create 1.2 million skilled jobs by 2025, which could add more than £59 billion to the economy by 2025.
The UK has lagged behind European neighbours and much of the world in its fibre coverage. It is time to drive this agenda forward as the UK sets forth as an independent sovereign state. Digital connectivity is no longer a luxury or even a priority. Digital connectivity must be our No. 1 priority. I appreciate that money is tight, but this needs to be the country’s top infrastructure project. I can tell the Minister that my constituents would prioritise this over High Speed 2 any day of the week.
These are my questions for the Minister. Does he agree that this must be the country’s No. 1 infrastructure project? If not, what is? Can he confirm that digital infrastructure will obtain utility status? Will he meet me and the Blue Collar Conservativism group to ensure that the £3.8 billion removed from the full fibre delivery pot is put back in, so that the 2025 commitment can be reintroduced?
Several hon. Members rose—
Madam Deputy Speaker (Dame Eleanor Laing)
Order. We will begin with a time limit on speeches from the Back Benches of six minutes, but that will very soon reduce.
Julie Elliott (Sunderland Central) (Lab)
I thank the right hon. Member for Tatton (Esther McVey) for securing the debate, with support from me, on this absolutely crucial subject. Most unusually, I agree with almost everything she said.
When we talk about digital connectivity and accessibility, we must talk about the digital divide. This is the different experience of those who have suitable internet connections and those who do not: enough devices in the home for homework and education; enough internet capability, suitable broadband or enough phone data; and the skills to access such capabilities. The Good Things Foundation noted, in its blueprint for a 100% digitally included UK, that 9 million people cannot use the internet independently and that 23% of the poorest families do not have home access to broadband and a computer. Four out of 10 of those claiming social security lack all the essential digital skills. This is a regional issue, too. Some 49% of people in the south-east are using the internet fully, compared with 18% in the north-east and 31% in the north-west. That creates a massive divide in life chances and potential. Covid brought that sharply into focus, with families not having enough devices at home or data, and with people choosing between data, heating and food. The choices are stark and there have been months of lost education. Brilliant campaigns, such as DevicesDotNow headed by Liz Williams, were never given a penny of Government support to roll out the massive impact that could have been made in righting this digital divide.
We need a new focus on lifelong learning in digital skills, while ensuring our children get the best education they can with the digital skills that are applicable to the workplace, not necessarily a focus on coding. We also need support for teachers and adults to get the training they need, too.
Siobhain McDonagh (Mitcham and Morden) (Lab)
Is my hon. Friend aware that the price tag for our being undereducated in relation to the internet and tech is estimated to be £60 billion? At a time like this, that is money we need.
Julie Elliott
I absolutely agree with my hon. Friend.
It is estimated that those in work need to update their skills every five months. That needs a strategic and co-ordinated approach. People often need to retrain to get new jobs, but people already in employment also need to ensure that they constantly update their skills as the world of work constantly evolves. That has not been helped in recent weeks by the Government’s decision to scrap Unionlearn, which did amazing work in this arena.
There is a plan to combat this in Sunderland, the city I represent along with two other colleagues. The Sunderland Smart City plan is designed to leave no one behind. One year ago, Sunderland City Council delivered on its promise to install and begin the city-wide rollout of free superfast public wi-fi, using 5G digital technology. It is already delivering wi-fi to Hudson Road Primary School, two community rooms in local tower blocks in the city centre, and along a coastal stretch between Roker and Seaburn, with more to come later this year and in 2021. It supports individuals and businesses, and has had over 7.5 new instances of wi-fi use and a total of 18,500 connections to wi-fi from January to October 2020. We are one of the first cities in the UK to do this and the take-up is proof that it is working well.
The investment in skills must be combined with proper investment in infrastructure, as outlined by the right hon. Member for Tatton. This must be a combined approach. Investment in gigabit broadband infrastructure on its own only makes faster internet for those who can access it, furthering digital inequalities. It does not benefit those who have not had sufficient access to begin with. It makes inequalities worse.
As chair of the all-party parliamentary group on digital skills, I have heard from national and local organisations from around the country about what has worked and what has not. We wrote to the Chancellor before the spending review proposing a great digital catch-up, championed by Helen Milner and the Good Things Foundation, with Government investment in skills, co-ordinated nationally through existing national networks of trusted local organisations. The Secretary of State for Education has announced boot camps for digital skills, but that is not the answer to the problems we face.
In our report, we recommended investment in existing programmes for device distribution, such as DevicesDotNow, and in existing community groups that work in harder-to-reach communities, teaching digital literacy. More must be done to educate people about online fraud and equip them with the skills to identify fraud and report it. We need to invest in lifelong learning hubs in partnership with local authorities and businesses, and we need more cross-departmental collaboration. Those recommendations would benefit not just the individual, the learner, the worker, the jobseeker, the older generation or the young—all good things—but the economy, as clearly highlighted by my hon. Friend the Member for Mitcham and Morden (Siobhain McDonagh). As we move out of the restrictions that the covid crisis has brought to all our lives, we must ensure that all our citizens have the data, devices and digital skills we need for the future.
Madam Deputy Speaker (Dame Eleanor Laing)
I am now reducing the time limit to five minutes.
Julian Knight (Solihull) (Con)
I congratulate my right hon. Friend the Member for Tatton (Esther McVey) and the hon. Member for Sunderland Central (Julie Elliott) on securing this important debate. Having a good internet connection is a crucial part of life in the 21st century. Many of us take the ability for granted—to stream music, pay bills online, talk to loved ones or even download highly fictionalised TV programmes such as “The Crown”. But, by some estimates, one in five of us has internet that is so slow that it does not meet the Government’s definition of what is considered decent.
What is more, digital exclusion is rife. Millions simply do not have the money to pay for better broadband, and one in five adults lack the digital skills needed to work safely and effectively online. Only half of the homes that can have superfast broadband have taken it up. Is it because we do not know it is there or because it is simply unaffordable? More must be done to ensure that where we can, we get faster speeds. We must also ensure that the poorest in our society are not priced off the internet. It is not just about broadband affordability. There is also a question of devices as the hon. Member for Sunderland Central said. Laptops, smartphones and iPads do not come cheap, and are a significant upfront cost. Even universal credit needs an online application.
This year, I have heard from numerous companies during our present inquiry into broadband and 5G about the efforts they are making to tackle digital exclusion, whether by recycling used devices for those who cannot afford them, delivering digital skills training for young people on benefits, or innovating to roll out better broadband sooner. I fear, however, that despite the lessons of the pandemic, we are losing momentum.
The commitment to gigabit-capable broadband in every home by 2025 appears presently to be dead. My Committee repeatedly warned that the pledge was too ambitious, even with the commitment of £5 billion. I have questions for the Minister today. Which of the 20% harder-to-reach are to be prioritised? What are the parameters for that prioritisation with the smaller amount of cash that is now available? Our hardest-to-reach areas are already poorly served by existing infrastructure. Will that now mean that they have no hope of getting faster broadband? What will that mean for pricing and, crucially—as my right hon. Friend the Member for Tatton discussed in her speech—the levelling-up agenda? That is a crucial part of connectivity and making sure that economic prosperity is spread around the country. Ministers have told my Committee that they expect prices to rise as a result of the roll-out. If cost is already a barrier to uptake, what will the Government do to ensure that we buy gigabit-capable broadband and it does not just become a rich person’s right, thus once again baking in inequalities in society? Digital exclusion, whether by dint of location, affordability or skills, is not just an inconvenience—it is a significant barrier to participating in society, and it is no understatement to say that it is difficult to live a full and productive life without digital access.
I do not wish to pre-empt my Committee’s upcoming report on broadband and 5G, which is currently being written, but it is clear that there are significant barriers to getting online for millions of us, and many hurdles to jump before we can say that we are anything other than an also-ran in terms of our digital infrastructure. We need realistic, achievable goals and sustained funding to ensure that the Government and industry can work together to deliver a reliable infrastructure, no matter where we live across our islands.
Jamie Stone (Caithness, Sutherland and Easter Ross) (LD)
I thank the right hon. Member for Tatton (Esther McVey) for bringing this debate to the House today, because this issue is extremely important to me. Indeed, in my maiden speech, I gave due notice that I would be raising the issue of poor connectivity in my constituency. It is perhaps a sad fact that I have had to do so continuously ever since, because in the vast land mass of Caithness, Sutherland and Easter Ross, there are still some very bad spots indeed.
I want to touch on a couple of issues. First, I am sure that all of us who have been telephoning our constituents during the pandemic have come across the crippling issue of loneliness, particularly for single elderly people. One route out of loneliness—one aid to make it better—has been the ability to go online, and to FaceTime or whatever with loved ones and friends. When people do not have that connectivity, it doubles the difficulty of it all; in fact, I might say the horror of it all, because it is pretty desperate. I have had some really heart-rending appeals from people to help them in their loneliness. The Campaign to End Loneliness has pointed out that half people over 75 live by themselves. In Scotland, we have a new organisation called Scotland Cares, which aims to tackle loneliness, but it is not blind to the fact that the problem will be much exacerbated over Christmas, which is a sad fact of its own.
On a more positive note, where we do have connectivity, it has been—inversely—a godsend during the pandemic, because people have been in touch with their family and friends, and have made full use of it. As we come out of the pandemic and try to restore our economy, connectivity will be crucial. It will empower small businesses and enterprises in my constituency—where they have the connectivity—to punch at an equal weight and to compete on a level playing field, and that is crucial. For myself and the right hon. Member for Orkney and Shetland (Mr Carmichael), tourism is a vital industry. The ability to have equality of connectivity is crucial if the tourist product is to be sold in the most efficient way.
Let me turn to my next point. Maybe I am being a little bit ignorant—I do not know—but I have talked about bad connectivity in my constituency for over three years, and I hear conflicting answers. Some say it is the Scottish Government. Some say it is the UK Government. I do not know the middle way between all that. I ask the Minister whether Her Majesty’s Government would consider some sort of commission or inquiry into why connectivity has not been rolled out in the past in the way in which places such as my constituency would so much desire. I am sure that this would also be true of the west country and parts of Wales. At the end of the day, I am getting tired of going back to constituents and saying, “I’m sorry. I don’t know why this is. I have been making representations on your behalf, but here am I, three years on, still not an awful lot further forward.” There has been some improvement, but there are still some very poor patches. I do not mind who is responsible; I would just like us to get to the bottom of the problem and to put it right.
My final point is simply this: as we have all gone about our business as Members of Parliament, having Zoom meetings with Ministers, with civil servants in attendance and so on, we realise—this happened to me only a couple of days ago—that as often as not the Minister is in his or her home, and the civil servants are in their homes, wherever they are in the UK. There has been great talk over the years about decentralising civil service functions out of London and the home counties, and into the north of England, or, indeed, Scotland, Wales and Northern Ireland. It strikes me that the use of connectivity has demonstrated that this can work fantastically well. It is a bit of a tall order, but could I ask the Minister to look at the benefit that could arise from this terrible pandemic? We could actually do clever things with the civil service, and create jobs in areas where rentals and costs are cheaper, which would save money for the Exchequer. I make that suggestion from the bottom of my heart.
Jane Hunt (Loughborough) (Con)
For the purposes of total transparency, I declare that I used to work in the telecommunications industry. I congratulate my right hon. Friend the Member for Tatton (Esther McVey) and the hon. Member for Sunderland Central (Julie Elliott) on securing this vital debate.
In my maiden speech in January, I pledged to work to roll out gigabit broadband in my constituency as it would be a great asset to local businesses and those who work from home. As colleagues have mentioned, the importance of that has become increasingly apparent in recent months as we have seen a great shift in working patterns, with more people working from home than ever before to help stem the spread of covid-19. While it is not yet clear what long-term effects the virus will have on working patterns, with more services moving online the need for high-speed broadband will remain. That is particularly true of rural areas, many of which we know are still unable to receive decent broadband.
In my constituency, much of Loughborough town is in the best 10% of areas in the UK when it comes to lines receiving superfast speeds. When it comes to being able to receive even decent broadband, two of the nearby villages, Sileby and Wymeswold, are in the worst 30%, which is reflective of the countrywide divide between urban and rural areas. I therefore welcome the Government’s commitment in the recent national infrastructure strategy to work with industry to target a minimum of 85% gigabit-capable coverage by 2025 and seek to accelerate the roll-out further to get us as close to 100% as possible.
Crucially, I welcome the emphasis that the strategy places on continuing to implement an ambitious programme of work to remove barriers to broadband deployment and maximise coverage in the hardest-to-reach areas of the country, backed by £5 billion of funding. As part of that, it is right that legislation will be introduced to ensure that new build homes come with gigabit-capable connections. However, we need to go even further and apply that retrospectively so that housing developments built in the last decade benefit from superfast broadband. Over the last year, I have supported the residents of the relatively new housing estate built on the edge of Sileby to access full-fibre connection. Unfortunately, they were faced with the prospect of having to find a significant amount of money to fund the project either through existing Government-backed funding pots or out of their own pockets. I am grateful that, after much deliberation, Openreach has funded the project and made superfast available. However, that does not happen in all cases, and there are still residents who find themselves with a poor broadband connection despite having moved to a newly built property, where we would naturally think that such vital facilities would be available from day one.
Let me say publicly that I am keen to work with fibre suppliers to gain superfast connections for all my constituents, wherever they live in and around Loughborough. What steps can the Minister take to ensure that superfast connectivity—landline, fibre connectivity—is available to all constituents throughout Loughborough?
Wes Streeting (Ilford North) (Lab)
It is a pleasure to follow the hon. Member for Loughborough (Jane Hunt). I also congratulate the right hon. Member for Tatton (Esther McVey) and my hon. Friend the Member for Sunderland Central (Julie Elliott) on securing this important debate.
During the course of the pandemic, three things have become apparent. First, relationships really matter. The inability to connect with family, friends and co-workers is what we all miss most in the restrictions that most of the country is living under. Digital connectivity has helped those who are able to access online connections to keep those relationships going, even if it is not in reality a perfect substitute.
Secondly, the health of our economy and the health of our people go hand in hand. They are completely inseparable. If we want a strong and healthy economy, we need to invest in our people. Thirdly, the Conservative manifesto has gone out of the window. We heard powerfully from the right hon. Member for Tatton about how the commitment made in the manifesto only last December has been watered down in this crucial area of public investment. The choices and priorities of the Government risk entrenching inequality between rich and poor, deepening division between north and south and, as a result, and perhaps most appallingly of all, costing us as a country far more in the long run.
Excellent points have been made about the need to invest in our infrastructure—in cables and connections—but I want to talk about people: the 9 million people aged over 15 who cannot use the internet independently; the 23% of children in the poorest families who do not have access to broadband and a laptop, desktop or tablet; and the four in 10 claiming benefits who lack the essential digital life skills they need for everyday life and, crucially, for finding the employment opportunity they desperately want. Challenges have been writ large during the pandemic, but they were there before. One of the great lessons of the pandemic is that our failure to invest has left people more exposed to it than they would otherwise have been.
Matt Rodda (Reading East) (Lab)
My hon. Friend is making a truly excellent speech highlighting a number of very important points, which, indeed, other hon. Members have also made. Does he agree that a crucial part of this is for there to be more enforcement and more action taken against poorly performing companies that fail to provide the high-quality service that customers now expect and demand in so many other walks of life?
Wes Streeting
I strongly agree. Most of my speech this afternoon will be challenging the Government on the steps that they need to take to get the very best service and life opportunities for our people, but there are things that many of these companies can do. Let us be honest: for all the challenges we see in our high streets and communities and the plight of the millions of people who have been excluded from any support from Government, there are a number of companies that have done pretty well, none the less, during the pandemic and which have operated not just with business as usual, but have profited enormously because of the opportunities that have been presented to them as a result of other people’s misery. Those companies should not be criticised for turning a profit or providing services, or for doing well, but it is reasonable to ask those that have done particularly well to play an active role in supporting others in our society and to live up to their corporate social responsibility.
Our failure to invest before the pandemic has left people more exposed than they would otherwise be. We have seen that with the situation in our care homes and the failure to grasp the nettle of social care reforms, which have left many people more dangerously exposed than they would otherwise have been. In this particular area, the failure to invest in the digital skills of our people has meant that disconnection and the digital divide have made some people’s experience of this pandemic even more miserable and hopeless than that of others. I really deplore the fact that education has been an afterthought during this recession, that it took so long for the Department for Education to pull its finger out and get laptops to pupils who need them, and that many schools and pupils are still waiting for laptops and had to go off before receiving any device. No thought has been given to their parents and the fact that many of them lack the digital skills to support their children. Adult education and adult skills barely get a mention from this Government, and we are scrapping really great programmes such as Unionlearn that provide basic skills to workers who desperately need them.
This is not just an issue of general fairness. Class inequality is built into this, in terms of the poorest households, as is the north-south divide. If the Government are serious about levelling up, they have to invest not just in infrastructure and places, but in people. I strongly endorse what the Good Things Foundation has said. A great digital catch-up is desperately needed, but I hope that the Minister will have something better to say than what the Chancellor said barely a week or two ago.
Joy Morrissey (Beaconsfield) (Con)
I thank my right hon. Friend the Member for Tatton (Esther McVey) for securing this debate and my hon. Friend the Member for North Devon (Selaine Saxby) for her work on the all-party group on broadband and digital communication.
In Beaconsfield, connectivity varies from less than 2 megabits per second to 50 megs. For those who are not savvy in that talk, that is slow—very slow. I have various cases in Beaconsfield where an area was on a programme to be upgraded to super-fast, which is still in the 70 meg range, then a cabinet was not upgraded so the house can achieve only 30 to 50 megs while the next-door neighbour, being served by another cabinet, has less than 2 megs. Forget about Netflix, online learning, a Zoom call or working from home effectively with internet speeds that slow. Not only in Beaconsfield but nationwide, this is an issue that many Members across the House are facing. Covid and the working from home scenario has brought to light a lot of the disparities in digital connectivity. I thank all Members for participating in this debate today.
Effectively, the term “the last mile”—the last leg of the connection to the customer—is what needs to be addressed. This needs to be done to offer as much technology equality as possible and aid in the levelling-up agenda across the country. Technology equality would help not only in the north or in Beaconsfield but in every part of the country where we are struggling to find the technology to work from home effectively. In some areas, this technology is non-existent. Constituents are unable to be competitive in today’s workforce. Not having fast broadband will impede those looking for work in the covid era. Applying for jobs online is more difficult and challenging with a lack of speed. A speed as low as 2 megs means that people cannot take part in a Zoom call, so they cannot interview for a job. This is not equal opportunities or equal access. Even in entertainment, they can forget about watching the current season of “The Crown” or anything else during covid, and cannot speak to their family and friends on Zoom. In education, as the hon. Member for Ilford North (Wes Streeting) said, digital connectivity and speed affect the ability to access educational materials, and this has really been demonstrated during the covid pandemic.
We need to be faster and better, and let us open up the market so that we can have more than one provider competing for each area’s interests. Let us get the boxes up and running, and then we can pay to plug in as and when. Post Brexit, we need to be competitive on both a personal level and a business level. We require connectivity for everyone. Estonia, for example, has this collectively everywhere across the entire country, even in its woodland areas. Everyone, from the oldest lady—the grandmother—to the youngest child, has access to digital connectivity. I hope that we will be doing the same post Brexit.
Siobhain McDonagh (Mitcham and Morden) (Lab)
Approximately 9% of children in the UK are without access to a laptop, desktop or tablet, and Ofcom estimates the number to be up to an extraordinary 1.78 million children. For those children in Mitcham and Morden, my community rallied, securing hundreds of devices packed with data, but how can it be right that their educational opportunity was dependent on a lottery of charitable giving?
Meanwhile, the Government’s attempted roll-out of remote support fell far short of the demand and took months to reach even the small number who benefited. While they promoted their online Oak National Academy, let us be clear that no number of online lessons could benefit those children unable to log in at home. Before lockdown, the children most likely to be on the wrong side of the digital divide were leaving school 18 months behind their classmates, and the gap was getting worse. Schools closed, and a quarter of children on free school meals did less than one hour’s schoolwork a day. They will all have returned even further behind, so the digital divide will manifest itself by giving those from the wealthiest backgrounds an advantage over other children. Whatever happened to levelling up?
Importantly, the Government do not seem to recognise that a device is only as effective as the internet connection it is used with. No matter how expensive, how smart or how modern the device distributed, it is rendered useless if it comes without the data or dongle needed to log in from home. That means that the poorest families turn to pay as you go. Just as they pay for their gas and electricity differently, and more expensively, those families streaming online academy lessons can expect to be charged up to an astronomical £37 a day. Why have the Government not engaged with all the mobile virtual network operators—the Lycamobiles, the Giffgaffs and the Tesco Mobiles? After all, these families are unlikely to have contracts with the biggest providers.
This is a practical issue for schools right now, with the law requiring teachers to provide remote education to isolating pupils—introduced in October as the Government’s support was simultaneously slashed. So I ask the Minister three specific questions that I hope his team can find an answer to when he sums up, because I have been unable to get a proper answer from written questions. First, how many devices were distributed or available to be distributed to schools before the remote education law changed in October? Secondly, how many devices have been distributed or are available to be distributed since the law changed? Thirdly, how many dongles have been distributed and how many are still in active use?
Digital exclusion did not result from the pandemic, nor will it subside with it, but coronavirus has shone a spotlight on this inequality. That is why I have introduced a Bill calling for all children entitled to free school meals to have internet access and an adequate device at home. It is a low-cost, tangible step to closing the educational inequality exposed by the pandemic, because surely, no matter in what corner of the Chamber we sit, we can all agree that no child’s education should depend on their internet connection.
Chris Loder (West Dorset) (Con)
Can I first congratulate my right hon. Friend the Member for Tatton (Esther McVey) on bringing this very important debate to the House today? I think she is not just a superstar for common sense and blue collar conservatism, but actually a rock star for levelling up too. I really want to thank her very much indeed.
Amidst the green and pleasant lands of rural Dorset and the rolling hills of West Dorset, I regret to tell the House there is a desert. I am afraid that is a broadband desert. Why? Because the most rural parts of Dorset have been falling further and further behind on digital connectivity for years. I think the Minister here today knows full well, probably to the digit, my own broadband speed, from our most recent correspondence. For the House’s record, it is 1.4 megabits per second, and he knows how I feel about the fact that, in London, it is in excess of 200 megabits per second download speed. What starker contrast can there be?
The telecoms industry has had a tendency, I am afraid, to focus on commercially attractive urban areas, perpetuating the digital divide in rural areas such as Dorset, and I am here not only to make the case to the Minister today for rural West Dorset, but for the whole of rural Britain—for levelling it up and making sure that we also get our fair share. We must also be more ambitious. It is not good enough just for the urban areas to be the benchmark. I want rural Britain to far exceed it, as I know we can do. We must look to full-fibre gigabit gadgets and all the other things that there are too—the next generation of connectivity—to unleash the full potential of Dorset’s innovative rural, agricultural and coastal economy. Today, I further seek the Minister’s assurance that rural West Dorset will be leading the way.
Coronavirus has clearly emphasised the geographical inequalities that exist for digital connectivity, as more people than ever have worked and learned to socialise virtually from their own homes. This wave of remote working presents an enormous opportunity for West Dorset, and I know rural Britain. It has shown that business and commerce does not have to revolve around London or other cities. In my own constituency, 97% of businesses are small or micro-sized. These local businesses depend on reliable fast broadband to their offices, factories and farms, and I am determined, as my hon. Friend the Minister well knows, that we will sort out digital connectivity for them.
Our absolute priority in Dorset is the construction of a full-fibre spine—critical to dealing with changing commercial conditions and enabling connectivity to the most digitally disadvantaged locations in Dorset. My colleagues in Dorset Council have done fantastic work to secure the bulk of funding for this project, too. I know the Minister knows that just a relatively small amount of Government support here can unlock bountiful opportunities for Dorset. I urge him to move with haste, ensuring that this project can be fully funded.
Yesterday, I met Network Rail and others to find some really new, innovative ideas as to how they can help us as well with this national challenge that we have. I want to put on record how grateful I am to the Minister for all he has done and, I hope, continues to do for us in Dorset. I see him as a knight in shining armour. I hope the rest of my constituents and rural Dorset do the same when he comes to sort out our issues.
Mr Alistair Carmichael (Orkney and Shetland) (LD)
It is a pleasure to follow the hon. Member for West Dorset (Chris Loder) because the situation that he describes in his constituency is one that is all too painfully familiar for me in mine. It is almost a cliché to say that the pandemic has opened our eyes to what is possible with good-quality connectivity. From the northern isles’ perspective, we see it rather differently. The pandemic has shown us what is possible for other people because so many people in my constituency are left bumping along on speeds that are less than 2 megabits per second.
I joined the 21st century just a couple of weeks ago, when I bought myself an iPhone 12, which has 5G capability. I speed tested it in Parliament yard as I was coming up for the debate today. I got a speed test of 227 megabits per second download and 39 megabits per second upload. So the Minister can surely see: we have spoken for years about a digital divide, but that divide is now a chasm.
For Orkney and Shetland, the idea that internet speeds and access to the internet should be more than 200 times greater in SW1 than in KW15, 16 and 17, and ZE1, 2 and 3—[Interruption.] I can still do it sometimes. That illustrates the nature of the problem we face. It speaks more eloquently than anything else I can think of about the failure of how we have gone about this as a country. Simply leaving it to the private sector, which will inevitably build from the big conurbations and go outwards, instead of building from the edge and coming inwards, is what has produced the situation today.
My hon. Friend the Member for Caithness, Sutherland and Easter Ross (Jamie Stone) spoke a few minutes ago. He asked in a tone of frustration and exasperation that I can well understand, “Who is responsible for this?” because we have this constantly in Scotland: on the one hand, there is the provision made by the Scottish Government; and, on the other, we have schemes funded by the UK Government. The difficulty is that neither of them gives us what we need.
Not that long ago, this House legislated for a universal service in broadband. Constituents of mine get quotes from BT for that and they hear of £50,000, £60,0000 or £70,000 for a broadband connection to get them to 10 megabits per second. If that is only available to people who have a spare £50,000, £60,0000 or £70,000 lying around the house, by definition it is hardly a universal service. However, my constituents are also frustrated at the lack of certainty and community consultation we see from the R100 scheme of the Scottish Government. We still do not know what they are going to deliver and when we are going to get it. All the signs are that the problems that we have had—a service to be deployed in the isles that is designed in Edinburgh; what people in Edinburgh think we can get and we need—are going to be there again. So the most remote and the most economically fragile communities in my constituency still risk being left behind. It should not be rocket science. Surely, with a bit of will, the Governments could speak to each other and do better than this.
Anthony Mangnall (Totnes) (Con)
It is always a privilege to follow the right hon. Member for Orkney and Shetland (Mr Carmichael). Last time, he was speaking about fish before I spoke, and this time we are speaking about the internet. While we might not be classed as a dynamic duo, we are at least a duo talking about the same issues with the same concerns.
I start by congratulating my right hon. Friend the Member for Tatton (Esther McVey) on bringing this debate to the House. She has raised with such fortitude and passion an issue that is of concern to many of us in this House. From the not-spots to the hard-to-reach areas, the fully fibred and the simply disconnected, all of which make up the patchwork of variable connectivity that criss-crosses our country, our network is in need of rapid modernisation.
We are all aware of the dramatic impact that covid has had on how we work, shop and interact. Such a reliance on technology has been borne out of necessity. In a short space of time—the past 10 months—we as individuals have become as digitally advanced and interlinked as we might have done over a decade, had such a crisis not evolved. Working from home has become so commonplace it is hard to predict when, if ever, we will return as a whole to condensed city centres or places of work.
The ease with which digital connectivity has facilitated this enormous societal shift means that whenever we do return to normality, it is unlikely that the digital genie will ever be put back in the bottle. We are therefore going to have to embrace this new reality of remote working and of using the mediums of Zoom, Skype and Microsoft Office.
As many have already mentioned, many have been locked out or have simply just not had access to digital connectivity across their areas. It should be a startling fact that 63% of young people rely more on mobile internet for work now than ever before. A new generation of “anywheres”, rather than “somewheres”, who are tech-literate and mobile, working from their phones, laptops and tablets, should be encouraged.
For those who can remember a time before Facebook, the speed at which adaptability is coming about is remarkable. There are benefits that come with it, from estate agents who have done virtual tours, to online medical health centres, pubs, local charities and centres of culture and art, all of which have embodied virtual reality. It is a positivity that we will have to embrace and enhance in the years to come.
But—there is a significant “but” here—according to Cable’s worldwide broadband speed league, the UK is 47th. Out of the top 50 digital-connected nations, the UK’s ranking at 47th should be a cause for concern. The Secretary of State for Education should be particularly concerned to learn that Belgium, France and Spain are all ahead of us on this one. A global Britain must be a connected one. We are quick to tout the amazing things that we do in this country—from FinTech to fibre optics to photonics—but if we want to see those industries and sectors thrive, we need to ensure that connectivity is widespread and across the whole United Kingdom.
Of course, one of the hard-to-reach areas is my constituency in the south-west. Out of 53,000 premises, 20% remain disconnected or completely unconnected at present. That stat is not as bad as the figure for the constituency of my hon. Friend the Member for North Devon (Selaine Saxby), but it must be addressed. I have lost count of the number of times the issue has been raised on the doorstep or in my inbox. It restricts opportunity and investment. Addressing it allows us to promise to generations and different parts of our community that we will level up. If we do so, I hope that we will recognise that if we put our money where our mouth is, it gives us the chance to provide opportunities in the south-west, the north-east and anywhere else in the United Kingdom, to provide a new generation with the tech literacy it needs and to attract new investment and opportunity across the whole United Kingdom.
Danny Kruger (Devizes) (Con)
I thank and congratulate my right hon. Friend the Member for Tatton (Esther McVey) on bringing this important debate to the House. I start by recognising what the Government have done in this space, where we have some very positive developments. I particularly honour them for the “outside-in” approach to extending broadband coverage, so that everywhere gets connected together, including the hardest-to-reach 20%. That is an important principle.
The Government are seeking not just the sugar rush of investment in the productivity sweet spots of our country, but long-term investment in the future of all our communities. I particularly congratulate the Government on issuing 40,000 vouchers under the rural gigabit broadband voucher scheme. Some 500,000 premises have been connected to gigabit broadband in the past year. That is a very positive development, but as we have heard, more is needed for rural areas.
The internet is the saviour of the countryside. If we want our towns and villages to prosper, which means more remote working, more start-ups and more young people staying in the countryside, nothing matters more than this, as my right hon. Friend the Member for Tatton said. We know that 30% of rural firms experience unreliable broadband, which is twice the rate of firms in urban areas. Levelling up means equalising the quality of broadband in rural and urban areas. It is not only the deserts of Dorset we need to worry about but the wastelands of Wiltshire, which are just as bad, and I urge the Minister to help us.
This is not just about geographies; it is about the people within our geographies as coverage expands. Investment in digital infrastructure on its own is not enough. The fact is that, on its own, that investment would widen inequalities and reduce social mobility. It would just further advantage the people with the capabilities to use that technology. The question for us is, how to address the digital divide as we build up our digital infrastructure? The answer is more social infrastructure, and I am pleased that this concept is becoming more and more recognised.
My right hon. Friend the Chancellor talked in his spending review statement last week about the infrastructure of everyday life. These are the institutions and the services that bring people together and spread opportunity. He particularly mentioned libraries when he talked about the levelling up fund. I pay tribute to the Good Things Foundation, which has a vision for the role of libraries as the digital hubs of our communities, with a central focus on digital skills. We need a great digital catch-up and a great national mission to get as many of those 9 million people who want and need it online, working through trusted local organisations. The Good Things Foundation estimates that for £135 million, we could halve the digital divide and get 4.5 million people online over four years at a cost of around £30 per person, or the cost of a GP appointment—just think of the gains to wellbeing and prosperity that that £30 per person will produce.
There is an even bigger prize, which is to get big tech on the side of our local communities. I know that this is a stretch. Culturally, after all, big tech is the incarnation of the idea that we do not belong anywhere. I regret to hear my hon. Friend the Member for Totnes (Anthony Mangnall) celebrating the “anywheres”; that was very off-message. Big tech incarnates the idea of the Californian-themed cyber-universe, but it does not have to be that way. I know that many of the big tech firms are thinking differently now, seeing how they can support local economic growth and focus less on the abstract global community of their users and more on the real-life local communities that their users live in.
I hope we can open a conversation with some of the big tech firms to see what they can do to create what we might call digital social infrastructure and improve the wiring of the social economy. Crucially, we must not empower tech giants with access to community data for them to exploit commercially. Any new systems that are built must be non-proprietary, and value created from community data must be owned and used by communities themselves. There is a good conversation to be had here, and I hope the Government will do that.
Selaine Saxby (North Devon) (Con)
If we have learnt anything from the pandemic, it is surely that broadband is an essential component of modern life, yet just over 10% of households in the UK have access to next-generation full-fibre broadband, compared with 80% in other developed countries. The UK’s average broadband speed places us 22nd out of 29 western European nations. My rural constituency languishes at 634th out of the 650 UK constituencies for its connectivity, and getting better broadband is a top priority for a huge number of my constituents and businesses.
Levelling up the UK is not just a north-south issue. It is also a rural-urban issue. Workers in the rural economy are at least 16% less productive than the national average. Only yesterday, I spoke in a debate on the issues in Devon and Somerset, where we do not have superfast broadband yet, let alone gigabit-capable broadband. As chair of the all-party parliamentary group on broadband and digital communication, I hear concerns from across the country and across the House about the plight of hard-to-reach rural communities in accessing a usable broadband connection.
While recognising that achieving 100% coverage by 2025 was ambitious, I think we can see through the pandemic how ambitious targets can drive great achievements, such as building testing capacity and securing a vaccine. I am disappointed that, while the industry continually advises that it could get very close to 100% gigabit-capable coverage by 2025 if some barrier-busting were to take place, the decision has been taken to reduce that target, which unfortunately will inevitably condemn many rural communities to being stuck with inadequate broadband and increase the urban-rural divide.
While I acknowledge that the full £5 billion we committed to has not been withdrawn, the significant reduction in that amount announced in last week’s spending review to just £1.2 billion has understandably rung alarm bells for the industry and my constituents about our commitment to ensuring that hard-to-reach rural communities are not left detached from the digital infrastructure that they desperately need to enable their children to access education, their businesses to thrive and them to work from home as far as possible. When we look to levelling up and building back better, are we not hoping to do it greener as well? In rural areas with limited public transport, surely improving broadband coverage will not just reduce the productivity gap of our beautiful rural communities, but enable them to reduce their carbon footprint.
I realise that the magic money tree cannot keep on giving indefinitely, but North Devon’s infrastructure asks do not include motorways or railways. We would like access to the same speed of broadband connectivity as other parts of the country. There are businesses ready to help deliver that if we can remove some of the obstacles in their path and let them begin to connect up our countryside and ensure that no community is left behind.
Andy Carter (Warrington South) (Con)
It is a pleasure to follow my barrier-busting hon. Friend the Member for North Devon (Selaine Saxby). I also want to thank my neighbour, my right hon. Friend the Member for Tatton (Esther McVey), and the hon. Member for Sunderland Central (Julie Elliott) for securing this important debate, because this is about our future—this nation’s future. Every part of our future is involved in what we do and how we spend our time online: most businesses today do not operate without engagement online; every one of our schools does not operate without being online; our justice system is online for remote courts; our health system is online for accessing medical records; and our usually booming entertainment sector is driven online. Increasingly, every part of our lives is relying on our digital infrastructure.
Let me take us back a few years, on a trip back into the annals of time, to when people had modems that they plugged into the phone line. They would press a button and hear whizzes, and occasionally the pizza wheel of doom would appeared and they would watch it—I am sure the Minister does not remember this, perhaps because he is not quite old enough to remember any of these things happening. I am afraid that that is not confined to history for every part of our communities today. The pizza wheel of doom occasionally appears for some of the rural residents in villages such as Higher Walton, just outside Warrington, where people are really not enjoying much faster speeds than when they had modems a few years ago.
I welcome some of the initiatives being introduced to connect in some of the hard-to-reach areas, such as the village of Lymm in my constituency, where we are seeing major extensions of the gigabit-capable fibre broadband into homes which previously were not included in the schemes. I am keen to explore further the opportunities to look at community fibre partnerships, with the help from government, to secure connectivity for villages across my constituency. Connecting every constituency and every home in the north-west of England to full fibre broadband by 2025 would create a £5.5 billion boost to the region’s economy; 54,000 people in the region could be brought back into the workforce through enhanced connectivity, including small businesses and helping entrepreneurs to drive their companies forward. To do that we need the Minister to confirm rapidly how much money will be available in the voucher scheme after March next year. The rural gigabit vouchers have helped hundreds of thousands of premises to be connected and have the potential to connect even more rapidly, but we need that commitment from the Minister.
I wish to finish by talking about some of the communities that are excluded even though they have superfast broadband. I held a number of roundtables last week with headteachers, who talked to me about some of the pupils in some of the most deprived areas of my constituency, who certainly could connect on to superfast broadband but did not have a laptop. They did not have parents who had the knowledge to be able to support and engage them digitally in lessons. There is a real challenge to tackle that digital divide—that must remain a priority for this Government. The future digital inclusion programme will support some of those hardest-to-reach groups in society, including many older residents who have never worked in an environment where computers were part of their life. We need to keep it in mind that, for them, accessing a GP via econsult is a bit like a foreign language.
To round off, I am really pleased to see that Openreach is partnering with the Good Things Foundation to support the network of digital skills centres from across the country, but let us drive this further and faster.
Duncan Baker (North Norfolk) (Con)
It is a real pleasure to speak in this debate and I really thank the right hon. Member for Tatton (Esther McVey) for bringing it to us. I cannot quite remember the pizza wheel of doom, but it is probably that I have not heard that expression since I last used Yahoo.
If I go onto doorsteps in North Norfolk, I can guarantee that one of the most common issues that my residents want to talk about is broadband or their mobile phone reception—or lack of it. In the 21st century, it is rather surprising that we continually talk about this issue; we do so time and again. It should be an absolute given than people are entitled to a decent mobile phone reception and decent broadband speed wherever they live. I fully recognise that the Government are making great strides to ensure that no area of the country is left behind to suffer from poor speeds, but in May, the Ofcom report revealed that the average home broadband speed was just 64 Mbps. In my constituency of North Norfolk, the average speed was just 35.7 Mbps, making it one of the slowest areas in the country. That is just about half the national average, which is just not good enough.
I regularly try to help my constituents with the universal service obligation offering. The problem is not that the coverage is lacking per se—actually it is pretty good. Around 95% of people get a connection in my constituency, but the last 5%, which we hear about so many times in this place, just seems not to be able to be helped at a reasonable cost. I regularly get costs coming back at around £50,000, which, as we know, our vouchers do not quite stretch to. I welcome the fact that the Minister is aware of this problem and is trying to solve it. If I can make a small ask, can some of that £5 billion—like the vaccine that I asked for the other week—come to North Norfolk?
Good broadband and mobile signal is fundamental in our post-covid recovery and we have heard that many times today. There are many people who want to move out of the cities and come to live in beautiful locations such as where I am from. What holds them back time and again is wanting to be able to run their business from home, get that speed and perhaps a service business and they need that reliable broadband. What is even more of a potential issue is a decent mobile reception. I would like to get a decent mobile reception before we even get 4G or 5G in North Norfolk please. As we have heard before, the shared rural network is absolutely imperative. We have got to have that. If we get it right, what that has the capacity to do is to supersede any fixed line broadband scenario.
If I had a top ask of the Minister, it would be just how do we get that very last 5% covered across all parts of the country, and particularly to rural areas such as mine, that need that adequate broadband connection. How do we make it cost-effective? For everybody back in my patch, I say, yes, we want 4G and 5G but we also want a reliable mobile signal that spans the entire area, and, certainly, we must bring forward the shared rural network as fast as we can in the next few years.
Jonathan Gullis (Stoke-on-Trent North) (Con)
May I also add my name to the long list of Members congratulating my right hon. Friend the Member for Tatton (Esther McVey) and the hon. Member for Sunderland Central (Julie Elliott) on securing this important debate? Getting online and having basic digital skills are now as important for getting a job as English and maths. Yet the fact that we have 9 million people struggling to use the internet independently and being locked out of the digital economy means that we are not levelling up, but leaving people behind. It is now the Government’s opportunity to turn the great digital divide into the great digital catch-up before it is too late and a whole generation of talent is lost for good. Regarding costs, the Minister might be interested in joining my campaign with CEO Alexander Fitzgerald from Cuckoo, asking for VAT to be reduced to 5% on broadband, as it is on other essential items. Regarding costs, the Minister might be interested in joining my campaign with CEO Alexander Fitzgerald from Cuckoo, asking for VAT to be reduced to 5% on broadband, as it is on other essential items, which would save on average £70 per household. Although that would come at a cost of £2 billion to the Treasury, I feel that that money would soon be returned.
Not wanting to be a negative Nelly, I will talk about Silicon Stoke, which I know has become ingrained in the Minister because of the amount of communication he hears about it. By April 2021, we will be one of the first cities in the country to have a full-fibre network, which will cover more than 104 km and be able to offer 100% of residents and businesses in the city a truly future-proof, point-to-point network, delivering gigabits to every house and premises. Full fibre is the foundation stone of Silicon Stoke, the plan to put Stoke-on-Trent, Kidsgrove and Talke at the centre of the digital tech revolution. If the Government are looking for a location to launch their full-fibre strategy for the country, it has to be Stoke-on-Trent.
Of course, Silicon Stoke and full fibre are not just about faster movie nights, virtual meetings and amazingly fast gigabit download speeds; this £25 million-plus network will unleash a staggering £625 million into the local economy over the next decade, as well as longer-term socioeconomic benefits. I thank the Minister and the Department for Digital, Culture, Media and Sport for the Department’s £9.2 million contribution towards the project.
Immersive learning is something I know a lot about as a former teacher. We have never been able to realise it, due to the technological constraints schools face, but in Stoke-on-Trent the world where teachers and students can access educational resources instantly and teach through virtual reality is literally just around the corner. To help to make that happen faster, I ask the Government to recognise the opportunity that such a connection would provide to the educational offer of the city and therefore the levelling-up agenda.
In Stoke-on-Trent we hope to produce a game school—a regional free school for 14 to 18-year-olds with partly selective entry, based on talent and commitment to developing specialist skills in different elements of game design, creation, production and marketing. I hope the Department for Education will capture the excitement of that vision and help us to create that school, with all the attention and profile it would bring to Stoke-on-Trent North, Kidsgrove and Talke. Backing the Silicon Stoke educational plan will help to level up Stoke-on-Trent at gigabit speed.
Silicon Stoke will also address the healthcare needs of my post-industrial city. Technology-enabled care services such as telehealth, telecare and self-care apps have the potential to transform the way people engage in and control their healthcare. The West Midlands Academic Health Science Network is already working alongside the Stoke-on-Trent clinical commissioning group to make that vision a reality. I hope the Department of Health and Social Care, along with NHS England and NHS Digital, will make Stoke-on-Trent the city to showcase digital-enabled health and care. The Department and the NHS can make full use of the open access, full-fibre network connectivity that we have to offer right now, today, in Stoke-on-Trent.
Richard Thomson (Gordon) (SNP)
Mr Deputy Speaker, allow me to begin by offering my own congratulations to the right hon. Member for Tatton (Esther McVey) on securing this debate. She makes an important point when she says that we should be treating broadband and connectivity as being every bit as important as any other utility that we take for granted in our home.
As many hon. Members have said, the importance of connectivity has never been brought home to us more than over the past few months. Whether for shopping, access to public or medical services or even, dare I say it, fulfilling our role as parliamentarians, without connectivity it would have been an exceptionally more difficult time than it already was.
What that has done is expose the yawning chasm of the digital divide between the haves and the have-nots—those who can access reliable high-speed connections and those who cannot, because they lack the personal financial means, the technical skills, proximity to a suitable wired or wireless connection or some combination of all three. The hon. Member for Ilford North (Wes Streeting) captured it well when he spoke about some of the data on the exclusion that people face, which is stark in terms of people’s socioeconomic status and who gets left behind in this. Speaking as a Member of Parliament covering parts of the city of Aberdeen as well as parts of rural Aberdeenshire, the contrast between areas of the city where there is a gigabit-fast enabled connection and parts of my constituency that struggle to get enough bandwidth to reliably download emails or even to make a mobile phone call is really quite stark.
Telecommunications is a power that is reserved to Westminster. Nevertheless, the Scottish Government, recognising the gulf between what the market will deliver by itself and what even the interventions of the UK Government can deliver, have made tremendous efforts to close that gap by making broadband investment themselves. The Digital Scotland superfast broadband programme has provided fibre broadband access to nearly 1 million premises the length and breadth of Scotland, taking fibre to the cabinet and in some cases to the premises that would not otherwise have been reached by infrastructure of that quality.
The right hon. Member for Orkney and Shetland (Mr Carmichael) spoke of the R100 programme. I share his frustration about the north package, which was mired in a legal dispute over the awarding of the contract. Now that that has been overcome, I look forward to seeing the details of how the £384 million that has been earmarked for the north will start to benefit the communities that we both represent. Even that will take us only so far, however. Vouchers will go only so far, and the UK Government’s universal service obligation is in many cases reliant on 4G broadband connections that simply do not exist. So, in terms of the roll-out and the additional resource that the UK Government have committed—which, sadly, has been cut back—yes, we need to build from the outside in, but we also need to ensure that all parts of the UK, even those with devolved Governments who are doing their bit to enhance the existing provision, receive their fair share.
In the remaining time available, let me speak up for the alternative providers known as altnets. For those who are unfamiliar with them, they are alternative internet service providers who rely on radio connections or even their own fibre to provide internet broadband services, but they rely on existing infrastructure from companies such as Openreach for the backhaul. Openreach recently made an announcement, aimed at those particular providers, that it would be levying a supplementary charge, and it is no exaggeration to describe that charge as punitive. I would almost go so far as to say that the charges it proposes to place on the leasing of those lines could in some cases be anti-competitive, and I hope to have a conversation with the Minister about that so that we can look into it further.
It is also important to say that, once the infrastructure is there, it must be accessible and safe. That means having the means to access it with the devices that are available, especially for those who cannot afford to purchase them themselves. It also means people having the skills to access these services. Too many people lack the necessary digital skills for work, even though they might have them for their daily lives. The drop-off in the socioeconomic standing of people at that skills level is absolutely stark, and we must ensure that we do not embed that generational inequality going forward.
We have been forced to go online to do more, and the longer the UK Government delay their online harms legislation, the more likely it is that people will come to harm. We are talking about risks to children, as well as the risk of criminal activity including fraud and crimes of acquisition and exploitation. We are also talking about misinformation and disinformation, particularly as we go into a process of vaccinating millions of people across the country against this dreadful virus. The bots, trolls and disinformation merchants will be out there working tirelessly to sow mistrust and distrust. We need to give people the means to access these services and the digital skills to use them, but we also need give them the life skills to differentiate between quality information and misinformation.
Mr Deputy Speaker, I can see that my own personal broadband in this debate is about to be choked fairly soon, but I would just say this. I cannot remember—perhaps someone will tell me afterwards—who said that markets are a bit like donkeys, in that they are useful for getting things done, but they occasionally need a prod in the right direction. Nowhere is that more true at the moment than in telecommunications and broadband. The UK Government have the regulatory and constitutional powers to act in this regard, and we are very keen to work with them at UK level to see how they can use those powers for good, to go further and faster.
Chi Onwurah (Newcastle upon Tyne Central) (Lab)
I would like to start by thanking the right hon. Member for Tatton (Esther McVey) and my hon. Friend the Member for Sunderland Central (Julie Elliott) for securing this important and excellent debate. When I first entered Parliament 10 years ago after 20 years as a telecoms engineer, I was somewhat disappointed by the lack of discussion on digital connectivity and digital opportunity. That has really changed in the past few months, although not significantly in Government time. Members have shown real knowledge, passion and understanding, and I hope that the Minister has been listening.
As several Members—most eloquently, I thought, my hon. Friend the Member for Mitcham and Morden (Siobhain McDonagh)—pointed out, the covid-19 pandemic has highlighted the significant role that online services play in supporting people’s social lives, education, workplaces and communities. We have seen a huge shift in people’s dependence on digital. The Office for National Statistics estimates that almost 50% of people are currently working from home, and 80% of people told it that they feel digital technology has been a vital support to them in lockdown, if they have access to it.
Several Members—in particular the hon. Members for Beaconsfield (Joy Morrissey) and for West Dorset (Chris Loder) and the right hon. Member for Orkney and Shetland (Mr Carmichael)—emphasised the economic importance of digital connectivity, but for it to play that role, we need it to be reliable and fast. The 2020 National Audit Office report “Improving Broadband” found that, at 14%, the UK has one of the lowest full-fibre coverage rates in Europe, as several Members observed.
The fact is that successive Tory Governments have presided over 10 wasted years for our telecoms infrastructure. The last Labour Government made great strides in building a digital economy. Our Communications Act 2003 set the strategy and vision, and our office of the internet was a world leader. We oversaw the roll-out of first-generation broadband to 50% of households by 2009 and were in the top 15% of global broadband speed tables, with competitive infrastructure positions.
Jane Hunt
I wonder whether the hon. Member agrees with me that, actually, it was the Labour Government who made telecommunications companies spend billions of pounds buying bandwidth that previously had been only a matter of hundreds of pounds. If they did not have that bandwidth, they did not have that network and they were not in the market.
Chi Onwurah
I am afraid that I do not have the time fully to go into the reasons why that intervention is wholly without value. First, we are talking about fixed networks here. Secondly, the huge improvement in the services that could be offered on spectrum meant that that spectrum was valuable, and it is in the public interest that valuable spectrum should have its value recognised.
This Government have flip-flopped and U-turned when it comes to our network infrastructure. As the right hon. Member for Tatton reflected, the Prime Minister initially promised full fibre to all by 2025. In their 2019 manifesto, the Government downgraded that pledge to universal gigabit-capable broadband to every home. Then, only last week, they sneaked out in the spending review plans to water down their broadband promises; instead of keeping to their manifesto promise, the Government are now aiming only to have a minimum of 85% coverage by that date. The budget for that plan remains the same, but now only £1.2 billion of the £5 billion will be made available up until 2024. We were promised roll-out; what we got was roll-back.
BT’s own analysis shows that at the current rate, full-fibre coverage will reach only 70% of UK premises by 2025 without the removal of key barriers, making even the revised target unrealistic. At the current rate, the Government’s 100% target will not be met until 2033, disappointing many Members, including the hon. Member for Stoke-on-Trent North (Jonathan Gullis).
The Local Government Association also has major concerns about the Government’s intention to centrally procure and manage the contracts for the delivery of gigabit-capable broadband infrastructure. I hope that the Minister will take this opportunity to reassure local authorities that they will be involved in the local delivery of both broadband and 5G infrastructure.
For many, access to fibre is but a dream. As the hon. Members for Totnes (Anthony Mangnall), for Devizes (Danny Kruger), for North Devon (Selaine Saxby) and for North Norfolk (Duncan Baker) set out, in the wastelands of Wiltshire and the deserts of Dorset they have no, or very little, broadband access. There are 1.9 million households without access to the internet and 155,000 UK properties are unable to get decent broadband. In rural areas, 50% of rural premises have patchy and unreliable mobile reception. Nearly half a million rural premises cannot get decent broadband. The broadband universal service obligation is no such thing, with rural residents potentially charged tens of thousands of pounds to connect to broadband, as the hon. Member for Loughborough (Jane Hunt) highlighted.
We need to provide network access to protect the most vulnerable in our society. FutureDotNow estimates that between 175,000 and 500,000 of those who received letters instructing them to shield during the pandemic had no internet access, yet because the letters were peppered with references to websites, those individuals would find it incredibly difficult to access the information they need. Yet the Government do not even have a target for digital inclusion. Could the Minister speak to that?
Many Members made the point—I pay tribute to the work of my hon. Friend the Member for Sunderland Central and her all-party group, and the passion of my hon. Friend the Member for Ilford North (Wes Streeting) in this area—that digital infrastructure is not enough. We need digital skills, which are economically key to keeping us safe online and unlocking the potential of digital. A lack of digital skills isolates people. To participate effectively online, individuals need devices on which to access the internet. Without them, individuals are excluded. What is the Minister doing to provide the digital skills and access that are needed?
I am aware that the Minister previously told the Select Committee on Digital, Culture, Media and Sport that although he wanted to do more to help those who are digitally excluded, there were limited resources. I think the Chair of the Select Committee dealt effectively with that point. I urge the Minister to find the political will and set out plans to ensure that nobody in the UK is left behind through a lack of digital literacy in this digital age, and that everyone can be an active participant in our increasingly digital world. Digital should be an enabler, not a divider.
The Parliamentary Under-Secretary of State for Digital, Culture, Media and Sport (Matt Warman)
I congratulate my right hon. Friend the Member for Tatton (Esther McVey) and the hon. Member for Sunderland Central (Julie Elliott) on securing the debate.
When I first came into this place, I set up the all-party group on broadband and digital communication. On 12 October 2015, I secured a debate on broadband. Today, I stand here as the Minister with responsibility for broadband. Mr Deputy Speaker, be careful what you wish for. I say that, because I honestly believe there is no more important infrastructure job that this Government are tackling. Connectivity is about so much more than cables: whether it is the fact that people who are online are more than £200 a year better off, can educate their children better, can see their doctors more effectively, can have the hospital appointments they need, can watch “The Crown”, fictional or otherwise, or can see their relatives at a time when, now more than ever, we all want to see our relatives. When I set up the all-party group, it was because I am passionate about this subject. I have spent the best part of two decades writing and talking about it. Connectivity is an engine of social justice. It is critical to the levelling-up agenda. It will make this country greener, more inclusive and more diverse.
I want to turn immediately to the first question that my right hon. Friend raised. We are committed to delivering nationwide gigabit connectivity as soon as possible. The 85% minimum coverage by 2025 is just that. If we can go faster by 2025, it will be with the help of the industry and we will do just that. The constraint is simply how fast we can dig up the roads and bust every barrier. Since this Government took office in 2019, gigabit-capable connectivity has risen from 9% to one third today. We will keep up that pace and, by the end of next year, I expect gigabit-capable connectivities to be half of all connections.
I would invite the hon. Lady to turn to the “National Infrastructure Strategy”—it may be on her bedside table: it is certainly on mine. Page 11 of the “National Infrastructure Strategy” has 15 bullet points. She asked how important this target is to the Government. Well, of those 15 bullet points, the ninth is HS2. The third bullet point is levelling up. to answer her question about how important broadband is, it is the very first bullet point. It is absolutely essential. I look forward to meeting her blue collar group—I pay tribute to its work—to discuss that in more detail. We will spend every bit of the money as fast as we possibly can to deliver that target as fast as we possibly can.
Several hon. Members raised the issue of education and devices. In the extraordinary circumstances of this pandemic, the Government delivered 340,000 laptops and tablets and 51,000 4G wireless routers, and spent £195 million trying to make sure that the children and families who needed it most had the connectivity that they needed when so many of the schools were closed. It is a testament to a programme in which we showed all the commitment we possibly could and got both the data and the devices to people who needed them most.
Matt Warman
The hon. Lady shakes her head. As one of the members of the ministerial group, I know that we strained every sinew to get all of that connectivity there and we will continue to do that to make sure that children are educated as best they can be. I pay tribute to the teachers who have converted their lessons to online, because it is a huge change in working patterns.
Siobhain McDonagh
The Minister will know that the Government introduced a requirement on schools to provide online learning on a Thursday at 6pm. On the Friday, the Government halved the number of laptops and computers available for children who had no such access at home. How does the Minister believe that that action helped schools to provide education to those children?
Matt Warman
The DFE is absolutely committed to targeting the laptops and the connectivity to where they are needed most. She is right to say that the allocation changed: it was because of that targeting, to get the devices to where they were most needed. She presents it as a cut, but it is inaccurate to do so.
The Chair of the Select Committee, my hon. Friend the Member for Solihull (Julian Knight), talked powerfully about the importance of making sure that we encourage people to take up broadband where it is offered. That is why the Government have set up the Gigabit Take-up Advisory Group—GigaTAG—with the FSB, Which? and the CBI, to make sure that where broadband is there it is taken up by businesses and consumers. We want to try to create that virtuous circle that demonstrates that there is demand and, therefore, greater reason for the private sector to invest. It is the private sector that will deliver 80%, if not more, of the market as a whole. Where the industry has the capacity and the capability to deliver more gigabit-capable coverage, we will do everything we can to drive that forward.
I turn to what we have already done and what we will continue to do when it comes to busting the barriers that various hon. Members have mentioned. We have taken legislative action to make it easier to install broadband in blocks of flats. We have committed to legislate to mandate gigabit connectivity in new builds. I pay tribute to the work of my hon. Friend the Member for Loughborough (Jane Hunt), who has already delivered for one estate and I know will deliver for many more. We expect gigabit-capable coverage in her constituency to reach 50% by the end of next year, which I know she will welcome. We are also preparing to consult on changes to the electronic communications code so that greater access is given to land in a way that works for landowners and the networks to roll out wireless networks, focusing in particular on 5G.
My hon. Friend the Member for Beaconsfield (Joy Morrissey) mentioned the importance of competition. I will use that as an opportunity to talk a little about the future of the gigabit programme. Before Christmas, we will be talking about the pipeline and the beginnings of the roll-out for the gigabit programme, which I hope will provide hon. Members with a greater sense of where we will focus our resources in the first instance. I say to those such as my hon. Friend the Member for North Norfolk (Duncan Baker), who pointed out areas with the worst connectivity, that they should not fear that they will be at the back of the queue. We are keen to focus our resources on areas that will see the greatest benefit from improvements. That is something good to hear from Norfolk to Dorset and Scotland as well.
The hon. Member for Mitcham and Morden (Siobhain McDonagh) asked about the smaller networks that are often those used by people on lower incomes. The Government’s package announced for vulnerable consumers included commitments not to disconnect people in financial distress not only from the larger networks but from those such as giffgaff, which she mentioned. We focused not just on large providers but on ensuring that there were protections for vulnerable consumers as well. In the same way, I point out to my right hon. Friend the Member for Tatton how, in the course of the pandemic, half a million NHS workers benefited from enhanced provision from the main telecoms providers, because we understand exactly how important it is to get the best connectivity to NHS workers who, in cases such as that of her constituent, came out of retirement—it sounded like she did—to help out with the pandemic. That is just a small number of examples of what the Government have done in the course of the pandemic, but it testifies to our commitment to a crucial agenda. Another example will be working with the Good Things Foundation, which my hon. Friend the Minister for Digital and Culture met recently. We are committed to working with the Good Things Foundation and we will continue to do that. The skills toolkit in April was very important.
I close by paying tribute to my right hon. Friend the Member for Tatton. In the Backbench Business debate I held in October 2015, there were some 54 contributors; today there were 20-odd. We are making progress on this agenda, but I am as impatient as she is to ensure that we get the job done. The Government’s commitment should not be doubted for a second.
Esther McVey
In the time I have left to me, I thank once again the Backbench Business Committee for allowing us to have the debate and the hon. Member for Sunderland Central (Julie Elliott) for working so closely with me to ensure that the debate happened. We can see from the number of Members who attended how important this issue is to everybody, for a whole host of reasons. We had excellent speeches about the differences between city and rural, about inclusion and about levelling up. It really was important that everybody was here today.
I mention in particular the Chair of the Select Committee, my hon. Friend the Member for Solihull (Julian Knight) and I hope that his being here and speaking will mean that this is a recurrent theme in that Committee until we get what we want. I thank the Minister, too, who I know is a champion for digital infrastructure and inclusion and an expert in this area. I am delighted that he said that digital infrastructure was high on the priorities—higher, much higher, than High Speed 2—so my only concern is that while the money tumbles for digital infrastructure, the money for High Speed 2 goes through the roof, and that must be changed.
I do hope that the Minister is strengthened—maybe even fortified—by the debate that we have had today, so that he will go back to the Chancellor with us all behind him and get that £5 billion back into this pot, where it deserves to be and to have it delivered by 2025—
Reversing Cuts to the Aid Budget
David Linden (Glasgow East) (SNP)
I rise to present a petition regarding cuts to the aid budget. I am sure, Mr Deputy Speaker, that you are an avid reader of The National newspaper and that you will have read the piece today by Alistair Dutton of the Scottish Catholic International Aid Fund, who says:
“We have a moral duty and, currently, a legal obligation to help those in need.”
The petition states:
The petition of residents of the constituency of Glasgow East,
Declares that, although the COVID-19 pandemic has caused nations around the world to face tough challenges, both from a public health point of view and a financial point of view, it is absolutely vital that the pandemic does not lead the UK Government to forget the promises made to the public and its commitment to overseas aid; notes that in the Conservative 2019 general election manifesto, the aid budget remaining at 0.7% was a key promise; further declares that cutting the budget continues to break another promise by the Conservative party; further that the cut to the aid budget flies in the face of the UK Government’s promise of a Global Britain; further that this cut is another example of the UK Government’s path to becoming insular and isolated on the world stage; further that the cut in the aid budget will increase poverty and instability around the world, which will be increasingly devastating due to the COVID-19 pandemic; and further that the Government should urgently reverse this cut in the aid budget to avoid the devastating predicted impact.
The petitioners therefore request that the House of Commons urge the Government to consider committing to retaining the aid budget at 0.7%, and not reducing it to 0.5% as a result of the COVID-19 pandemic spending cuts.
And the petitioners remain, etc.
[P002635]
Orwell Bridge Closures during High Winds
(4 years ago)
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Tom Hunt (Ipswich) (Con)
This is the second Adjournment debate that I have held since being elected as the Member of Parliament for Ipswich. The first time, I raised the issue of orthopaedic services at Ipswich Hospital. This time, I raise probably the No. 1 transport issue that faces our town and is of great importance to my constituents. I hope that this time around we can get a more positive outcome than we did after the first Adjournment debate.
The Orwell bridge, constructed between 1979 and 1982 and opened in December 1982, is architecturally a magnificent construction, iconic through the area and of great significance and importance. But the problem with the Orwell bridge has been the number of closures that have taken place, particularly since 2013. I remember vividly when I was shown around the former Odeon cinema in Ipswich, now the home of Hope church, and was guided up to the roof. It was quite a bleak winter’s day and it was quite windy. I went to the top of the roof and I thought, “Isn’t that a remarkable view of the Orwell bridge?” And then all of a sudden, this wonderful view turned to concern as we thought, “Does this mean the bridge needs to close because it’s windy?”
Since 2013, we have seen the Orwell bridge close approximately 20 times. Earlier today, I spoke to Ipswich Central, our local business improvement district, and it feels as though each day’s closure costs the local economy around £1 million. Approximately 6,000 of my constituents are either directly or indirectly employed by the port of Felixstowe, which, as the Minister will know, is the country’s busiest and most significant sea container port. Many of them work in businesses. Many of them run their own businesses to do with distribution and logistics, and they depend upon the Orwell bridge being open to survive and to thrive.
That is the problem that we have today: so often during the winter period, particularly between November and March, with January and February the worst two months, we have seen the bridge close, and the reality is that when the bridge closes, our town grinds to a halt. All the local traffic—whether it is a mum waking up in the morning to take her kids to school on the other side of town, someone looking to get to work on the other side of town, someone looking to get to a GP or dental appointment, or our very important freight traffic that needs to get across the bridge—instead goes through town centre. The economic impact of that, as well as the destruction of the day-to-day lives of my constituents, should not be underestimated.
Having spoken to many constituents who have lived with this issue for many years, it seems as though it has only really been for the past five to six years that the closures of Orwell bridge have been a significant issue. I imagine that that is probably because of a change in safety regulations, which are of course something that we need to take into account and to take very seriously. I am not being cavalier—clearly, there are concerns about traffic going across the Orwell bridge in high winds, and that is something that should be taken into consideration—but it is rather frustrating that it took until autumn 2018 for any serious attempt to be made to look into the devastating impact that bridge closures have been having on the local economy and the lives of many of my constituents.
This is where I turn to the national impact. Yes, this is a local issue—bridge closures impact my constituency; they impact the businesses in my constituency and my constituents—but, also, the Minister will be acutely aware of the importance of the port and the local infrastructure that serves the port to the national economy, which includes the north of England. Many of the exporters and importers rely upon goods coming into the port of Felixstowe and then travelling freely and efficiently to where they need to be.
This is a time when our local economy is looking to recover from the impact of covid-19, when we are leaving the European Union and when we are looking to have a positive future in which we can hopefully increase activity at the port of Felixstowe. On another occasion, I will talk about my support for the idea of the port of Felixstowe becoming a free port, in connection with the port in Harwich and the huge economic potential of the area and how it could be transformed by that free port. However, I will not be distracted by that important issue.
As we look to recover from covid and as we look to the winter months ahead, the last thing we need is another winter dominated by closures of the bridge. We do not want that. We believed that it would not be the case, but right now we are looking at another winter of experiencing more bridge closures. Highways England is responsible for managing and maintaining Orwell bridge, and my view is that it has taken far too long to take the issue seriously and has not treated it with the urgency required.
In autumn 2018, Highways England commissioned an aerodynamic study of the issue to come up with recommendations for what might be done to prevent the Orwell bridge closing when the wind speeds are over 50 mph. This report was meant to take nine months and it took 15 months. There was no explanation for why it took 15 months—there was no sense of urgency.
I remember sitting down with Highways England about a month after I was elected, in January in Portcullis House, and I was promised that a new 40 mph speed limit would be in place on the bridge before winter 2020-21. I was looked in the eye and told, “Your constituents will not have to experience another winter period with these closures”. Yet here we are, in December, and the speed limit has not been introduced and we are expecting it not to be introduced until the end of March—that is, the end of the winter period, not the start. The reality is that my constituents are looking at another winter with more bridge closures, more disruption and more damage to our local economy at exactly the point when we really do not need that added challenge.
When I was promised in January 2020 that these measures would be in place ahead of this winter, I understandably doubted whether this would be the case, after the delay with the production of the aerodynamics report. I was informed in the summer that Highways England had to carry out some wind tunnel validation work, to make sure that if it introduced a 40 mph speed limit on the bridge, it would be safe for traffic still to go across the bridge. Highways England had to work with City, University of London—using its wind tunnel—to complete the validation work.
I was told that the university had closed the wind tunnel, so I wrote to the vice-chancellor and said, “Will you reopen the wind tunnel, so that this work can go ahead?” and the wind tunnel reopened. The university explained to me that actually the delay was not caused by a decision not to reopen the wind tunnel, but by the delay in Highways England signing the agreement for this work to be carried out. At last, the tunnel was reopened and the work continued. I raised it in this place at Transport questions with the Secretary of State for Transport, who said he was expecting the wind tunnel validation work to be on his desk at the end of September. It was not on his desk at the end of September. It was delayed, just like everything else that Highways England has been involved in in relation to this vitally important issue.
So why do I stand here today? I stand here today to ask the Government to stress to Highways England the huge importance of resolving this issue as soon as possible and introducing the new speed limit to enable the bridge to stay open during periods of high winds, so that our economy can keep moving and the lives of my constituents are not disrupted to the extent that they have been time and time again.
Two weeks ago, I had the privilege of meeting the roads Minister, Baroness Vere, who will be communicating with Highways England. I urge the Minister of State, Department for Transport, my hon. Friend the Member for Pendle (Andrew Stephenson), to add his voice to that clarion call to get moving. There is a big difference between the start of the winter period and the end, and the reality is that my constituents are looking at another winter period of potentially multiple closures. We are where we are, and one way or another, this situation will be sorted out in the not-too-distant future. But if that speed limit could be introduced at the end of January or in early February, it could make all the difference. It might seem like only a couple of months, but it could be the difference between my constituents having to experience two or three extra bridge closures.
I bang on about this bridge quite a lot. In fact, a couple of my colleagues know me for this bridge. I published quite a dramatic video recently on social video, with music in the background and the bridge behind me—on a windy day, might I add, and a wet day. I did a survey over the summer. I knew that the Orwell bridge was the No. 1 transport issue facing the town that I have the honour of representing, but I was struck by the survey responses. In Ravenswood—a new development, and one of the areas most impacted by bridge closures—96% of those who responded to the survey, out of about 1,000 people, said that it severely impacts their lives when the bridge closes. In Chantry, the figure was 80%. What many of my constituents find most frustrating is the lack of accountability. They feel as though Highways England is ultimately a bureaucratic, distant organisation that does not answer to anyone and, frankly, does not care when the bridge closes. Perhaps that would explain the lack of urgency and importance that it has attached to this.
When we add the six-month delay in the aerodynamics report to the five-month delay in implementing the report’s recommendations, we are looking at a delay of about a year. What is the cost to UK plc and the local economy that I represent of that delay? The sad reality is that when the bridge has closed in the past and it is estimated that each day of closure costs the local economy £1 million, it is not Highways England that pays the price for bad performance. It has been my constituents who have paid the price for Highways England’s broken promises and bad performance, and local businesses that have paid the price for its broken promises and bad performance.
I urge the Government to work with me to challenge Highways England and ask it to be more ambitious, to approach this with the urgency required and to do better than the end of March, because every week, every month, can make a difference. We need the new speed limit in place, so we can turn our backs on the constant closures of the Orwell bridge.
The Minister of State, Department for Transport (Andrew Stephenson)
I am grateful to my hon. Friend the Member for Ipswich (Tom Hunt) for securing this important debate. The Minister for roads, Baroness Vere, is unable to take part in the debate and therefore it is my pleasure to respond on behalf of the Government.
My hon. Friend has raised this issue with the Minister for roads directly and I know that he is actively engaged with it, particularly through his involvement with the Ipswich transport taskforce. The issue of closures of the Orwell bridge in his constituency is not new and has been causing concern for his constituents for several years. As he pointed out, there have been 20 closures of this critical piece of infrastructure since 2013, with the average time that the bridge has been closed being four to five hours. In several instances, however, the closures have been well in excess of that average. The closures can and do cause havoc on the surrounding Ipswich roads, and the Government have, through Highways England, been pressing for the situation to be resolved.
My hon. Friend will be well aware of the work that has been undertaken by Highways England in recent months and I am pleased to say that progress is being made to change the speed restrictions on the bridge. This will allow the bridge to remain open in winds that would ordinarily have meant that it would shut. The work that Highways England has done, despite the difficulties of 2020, has meant that this issue, while still a problem today, is one that we expect to see improve significantly in the very near future.
I am aware that this has not been the swift, smooth ride that either Highways England or my hon. Friend expected when the process began. The closure of City University’s wind tunnel in response to the covid outbreak and the initial lockdown meant that there was an extension to the expected timetable. I acknowledge his concern that he will not see the speed restrictions implemented until early in the new year, having expected to see them in place for the winter season. Nevertheless, I am pleased that he was able to have a constructive meeting with the roads Minister and Highways England, and I am equally pleased that Highways England expects to be ready to introduce the new speed limit as soon as possible in 2021.
Highways England has always ensured that safety has remained, as my hon. Friend would agree it should, at the forefront of its work. It has engaged with a range of stakeholders, including the port of Felixstowe, the Met Office and Suffolk County Council. These engagements have helped to improve its forecasting for when the bridge will be closed as well as its communications with residents and businesses when the decision to close the bridge is being considered. Highways England has also made significant efforts to improve the diversion signage in the area. As well as that, Highways England has worked with academics to model options that would allow the bridge to remain open in higher winds than is currently the case.
My hon. Friend will be aware that Highways England is now engaged in taking forward the option to reduce speed limits from 60 mph to 40 mph for all vehicles using the bridge. In doing so, there are a number of steps that it needs to take. The first was the publication of the permanent traffic regulation order, which I am pleased to see was published on 13 November and will close in mid-December. This is a key part of the process in ensuring that all those affected by the change to the speed limit will have the chance to comment.
Following the closure of the permanent traffic regulation order, which Highways England does not expect to be contested, will be the delivery and installation of the new signs. Installation of the signs is a significant engineering undertaking. The weight and size of the signs is a significant factor to consider. They cannot compromise the structural integrity of what is a complex 40-year-old structure and they need to be able to withstand the weather conditions experienced on the bridge. Nevertheless, as my hon. Friend will be aware, this is an undertaking that Highways England is well prepared for. It expects, once design details and preparation works are complete, that the signs will be delivered and that installation will take place in January.
The last, essential step focuses on speed enforcement. There is no use having a speed limit if it is unenforceable, and Highways England has been closely engaged with the local police force to ensure that the right cameras are in place to enforce the new speed limit. My hon. Friend will be aware that this will be a new set of average speed cameras on the bridge.
What this means for my hon. Friend and his constituents is that the closures that have blighted the Orwell bridge and caused gridlock on the route and around Ipswich will be significantly reduced. Indeed, I am pleased to say that as a result of its work, Highways England expects to reduce the number of closures by as much as 80%. The work that it has done has been instrumental in getting us to a point where it will be possible to keep the Orwell bridge open in higher winds than has been the case in the past. The 20 closures since 2013 have been a real problem for the local community, as he explained, causing gridlock on surrounding roads, so I am pleased that the recent publication of the permanent traffic regulation order signals that an end is in sight.
None of this would have been possible without the tireless campaigning of my hon. Friend, who has been absolutely relentless in campaigning on this issue. More work is yet to be done. However, with the designs and the preparation work, as well as the delivery of the plans expected in January, I am confident that he and his constituents will rapidly see a huge reduction in the number of times the Orwell bridge is closed to traffic in the future.
Question put and agreed to.
Ministerial Corrections
Health and Social Care
(4 years ago)
Ministerial CorrectionsRead Full debate Read Hansard Text Read Debate Ministerial Extracts
Ms Dorries
Matthew Leahy took his own life while he was in the care of the NHS.
[Official Report, 30 November 2020, Vol. 685, c. 18WH.]
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 my response to the debate.
The correct response should have been:
Ms Dorries
Matthew Leahy died by hanging while he was in the care of the NHS.
Deaths in Mental Health Care
The following is an extract from the debate in Westminster Hall on deaths in mental health care on 30 November 2020.
Barbara Keeley
The point has been made that Melanie Leahy has campaigned on this for eight years and has done a wonderful job. I understand the reasons for trying to do this quickly, but it is too hasty for the Minister to move ahead and appoint a chair unless she is clear that the families, and particularly Melanie Leahy, are happy with that. The chair has to be seen to be independent. I am not sure that I am particularly happy with what the Minister is outlining.
Ms Dorries
We will go through the processes that we have been through within the Department of Health and Social Care. They are set in law and abided by during every inquiry; that has included all the past inquiries such as the Dixon inquiry, the Paterson inquiry and the Morecambe Bay inquiry. The same protocols and the same process will be adhered to.
[Official Report, 30 November 2020, Vol. 685, c. 20WH.]
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 my response to the hon. Member for Worsley and Eccles South (Barbara Keeley)
The correct response should have been:
Ms Dorries
We will go through the processes that we have been through within the Department of Health and Social Care. They are set in precedent and abided by during every inquiry; that has included all the past inquiries such as the Dixon inquiry, the Paterson inquiry and the Morecambe Bay inquiry. The same protocols and the same process will be adhered to.
National Security and Investment Bill (Seventh sitting)
Thursday 3rd December 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 3 December 2020 - (3 Dec 2020)
The Chair
Good morning, everyone. Before we begin, I have a few preliminary points. As usual, please switch your electronic devices to silent; I just remembered to do mine. The Hansard reporters would be grateful if Members could email any electronic copies of their speaking notes to hansardnotes@parliament.uk.
Clause 11
Exceptions relating to control of assets
Question proposed, That the clause stand part of the Bill.
The Parliamentary Under-Secretary of State for Business, Energy and Industrial Strategy (Nadhim Zahawi)
Clause 11 is intended to provide an exemption for certain asset acquisitions, which would otherwise be trigger events. The power to call in acquisitions of control over qualifying assets, as defined in clauses 7 and 9, will significantly expand the Government’s ability to protect our national security.
The clause ensures that these new powers will not extend to certain acquisitions made by individuals for purposes that are wholly or mainly outside the individual’s trade, business or craft. The Government do not believe, for example, that it would be right for the Secretary of State to be able to intervene in consumer purchases. Given their nature, such acquisitions cannot reasonably be expected to give rise to national security risks.
Moreover, a regime which could apply to such circumstances would quickly become impractical and could result in significant numbers of additional notifications for no national security gain whatsoever. As such, this clause explicitly limits the types of assets that the Secretary of State may scrutinise in line with the Government’s intention that the regime will primarily concern control of entities and only extend to assets as a precautionary backstop.
It would mean, for example, that sales of software products to consumers by a software company would not be caught by the regime, but—this is important—it would not prevent a transaction involving the software company selling the underlying code base supporting that software to a buyer acting in a professional capacity from the possibility of call-in under the regime, where that might give rise to a national security risk.
The Government have also carefully considered whether certain types of assets should remain outside this exemption clause. We have concluded that all assets that are either land or subject to export controls, as my hon. Friend the Member for Wyre Forest regularly reminds us, should not fall within the exemption. This approach, I believe, reflected in the clause, recognises the unique nature of the risks posed by land acquisitions and proximity risk to certain UK sites, as well as the particularly sensitive nature of items on the export control lists. The Government consider that this approach is proportionate and appropriately exempts acquisitions that do not give rise to national security risks, while ensuring flexibility exists to scrutinise hostile actors directly targeting the acquisition of sensitive assets.
Peter Grant (Glenrothes) (SNP)
I note that subsection (2) lists some exceptions, many of which are framed in terms of regulations of the European Parliament and the European Council. Let me ask the Minister two things. First, why is that the case, given that we will be completely out of the European Union in a matter of days? Secondly, and perhaps more importantly, if the European Parliament and the European Council were to amend those regulations, do the Government intend to amend this legislation to keep in step with what is happening in the rest of the European Union?
Nadhim Zahawi
I am happy to write to the hon. Gentleman on that detail.
Question put and agree to.
Clause 11 accordingly ordered to stand part of the Bill.
Clause 12
TRIGGER EVENTS: SUPPLEMENTARY
Chi Onwurah (Newcastle upon Tyne Central) (Lab)
I beg to move amendment 16, in clause 12, page 8, line 4, leave out from “does” to end of line 11 and insert
“establishes that arrangements are in progress or contemplation which, if carried into effect, would result in a trigger event taking place.”
This amendment would expand the scope of events to be considered trigger events.
Chi Onwurah
It is a pleasure to serve under your chairship, Mr Twigg, and to see the Committee reconvened to debate this important Bill. On Tuesday, we had a lively, informative and generally collegiate debate in which we learned a significant amount about the Bill and each other. We learned, for example, that the hon. Member for Arundel and South Downs has an interest in low pay, the hon. Member for South Ribble is a scientist, the hon. Member for Wyre Forest has a great interest in defending business investment, and my hon. Friend the Member for Southampton, Test knows well the difference between “may” and “shall”, and entered Parliament at the same time as yourself, Mr Twigg. We learnt that my hon. Friend the Member for Ilford South has a great interest in defending our national security through supply chains. We learnt that I have a tendency to mispronounce and misplace my hon. colleagues’ constituencies—something that I am working on. We also learnt that the Minister feels this Bill is perfect in every way, clause and subsection, such was his reluctance to accept the most constructive and helpful amendments—I would say—put forward by the Opposition. As we look at our amendments today, I gently point out to the Minister that that is not a view held by everyone across the House, even by Government Members. I note the letter sent yesterday by the Intelligence and Security Committee pointing out several aspects that we have raised, requiring clarification and significantly indicating its intention—or desire—to be a greater part of both the scrutiny of this Bill and its implementation. I hope that in today’s deliberations we will meet with more support from the Minister.
We had lively debates on Tuesday and some votes, which as I have indicated that we did not win. Amendment 16, in my name and those of my hon. Friends, is a probing amendment. We seek to understand that the Minister fully understands the provisions of his Bill. That is an absolutely appropriate thing to do, as hundreds of thousands of business and individuals will be impacted by it and will have to seek to understand it. It is appropriate that we test the impact of the Bill now, particularly as the Minister has many competing duties, and, as we understand, is taking on more onerous ones.
Clause 12 contains supplementary provisions in relation to determining when a trigger event that takes place over more than one day is to be treated as taking place, and determining whether a trigger event is in progress or contemplation in circumstances where a person has entered into an agreement or arrangement that enables them to do something in the future that would result in a trigger event taking place. The amendment, as we have framed it, would considerably expand the scope of events that could be considered trigger events. In effect, it would give the Secretary of State power to call in events under contemplation, by leaving out from “does” to the end of line 11 and inserting:
“establishes that arrangements are in progress or contemplation which, if carried into effect, would result in a trigger event taking place”.
As we have discussed, the Bill gives significant powers to the Secretary of State and the amendment would significantly expand notification volumes. There are many minor transactions where parties agree that someone might have the right to buy more shares in the future, and, in themselves, these transactions do not create direct influence and are unlikely to create a threat to national security. We recognise that the amendment would require all such minor transactions to be notified; it would seek to reflect the potential intention that these minor transactions may be part of a greater contemplation of something which would lead to a trigger event.
We recognise that Government would already have the power to intervene, through notification, once a trigger event takes place, so this amendment brings all possible future trigger events into scope, not just actual, or likely, future events.
Matt Western (Warwick and Leamington) (Lab)
It is a pleasure to serve under your chairmanship, Mr Twigg. On the point on these disguised elements, does my hon. Friend agree that the issue is about not simply shareholding, but, as we heard in the evidence sessions, membership of boards, and how voting rights might not necessarily be in line with shareholding percentages, and that they can be distorted at a future date?
Chi Onwurah
I am grateful to my hon. Friend for that intervention. He makes a good point, which reflects why we are proposing this amendment to test the Bill. As he says, influence can be exercised in a wide range of ways.
I will elaborate on this later, but we must recognise that hostile parties will not sit back and see the Bill, then say “Oh well, that’s fine; we won’t try anything against the United Kingdom’s security,” as a consequence. They will seek ways to game and effect an influence regardless. Changes to the relationships between voting rights and shareholdings, for example, might be one way where they could seek to bypass the Bill.
I recognise that this is a wide-ranging amendment, but I seek to understand how the Minister feels that the Bill, as it stands, can address the kinds of concerns that my hon. Friend has just raised. This also reflects—I emphasise this again—the approach that we are taking, as the Opposition, on the Bill. The first priority and central plank of that approach is to put our national security first, and to do everything that we can to secure the strategic and economic resources on which our security relies; that focus on putting national security first motivates this probing amendment.
As my hon. Friend indicated, there can be a number of contingent investment transactions where parties agree to future events that transfer controls or influence. For example, a buyer might buy a low share of a company today, but might acquire with it the right to influence its shareholding in the future to levels of material influence.
I think the Minister will agree that we must watch out for these disguised transactions. They can start with innocuous levels of shareholdings, but set the ground for harder-to-notice increases in influence. At the moment, the Bill leaves out these transactions from the scope of notification, so the Government could not intervene. The amendment is therefore intended to probe the Government’s approach.
Nadhim Zahawi
I thank the hon. Lady and share her reflections on the collegiate way the Committee has worked. I also thank her for her comments on the quality of the Bill. It is testament to the quality of the team that has worked on it—I place on record my thanks to the excellent civil servants who have worked on the Bill—and the level of consultation. We heard from the hon. Member for Aberavon, who is not in his place, that this has been a long time coming. There was the Green Paper in 2017, the White Paper in 2018 and then the consultation. There was, of course, deep consultation before the laying of the Bill as well.
Chi Onwurah
I thank the Minister for his comments. I want to make it clear that we are not in any way indicating any criticism of the civil servants who have worked hard, in extremely difficult conditions in the midst of a pandemic, to bring the Bill before us. I think we can all agree—we had some discussion on Tuesday about the nature of parliamentary scrutiny—that the objective of the process is that the Bill benefits.
Nadhim Zahawi
Hear, hear—I agree with every word.
For the benefit of the Committee, I will begin with clause stand part, before turning to the amendment. The Secretary of State’s power to call in trigger events that have taken place is limited to a maximum of five years after the trigger event takes place and six months after the Secretary of State becomes aware of the trigger event. It is important to bear that in mind when discussing the amendment. That means that the issue of timing as to when a trigger event actually takes place is incredibly important. Many trigger events will have a self-evident completion date, as supported by contractual or other legal agreements. However, some trigger events may be less clearcut. There could be terms agreed formally by the parties, followed by further documentation, leading to a formal completion, all spread out over a period of time.
The clause ensures that where a trigger event takes place over a period of more than one day, or if it is unclear when during a period of more than one day the event has taken place, the last day of that period is treated as the date the trigger event takes place. In addition, the clause seeks to provide clarity about when a trigger event may be considered to be in progress or contemplation, where a person enters into an agreement or arrangement enabling them to do something in the future that would result in a trigger event taking place. It makes clear that entering into such agreements or arrangements, including contingent ones, does not necessarily mean that a trigger event is in progress or contemplation at the time the agreement or arrangement is entered into.
Amendment 16 would ensure that a person entering into any agreement or arrangement that enables the person, contingently or not, to do something in the future that would result in a trigger event taking place would be deemed a trigger event in progress or contemplation for the purposes of the Bill. I welcome the intention to ensure that the Secretary of State can be notified about acquisitions before they take place and I understand the motivation behind that. That is very much the Government’s policy. Indeed, the inclusion of mandatory notification and clear requirements within the proposed 17 sectors illustrates that approach in the most sensitive parts of the economy.
The timing of any notification is clearly very important. It must contain sufficient information for the Secretary of State to decide whether to give a call-in notice. That means that a proposed acquisition must be at an advanced enough stage that all the key details are known: for example, the names of all the parties involved, the size of any equity stake in the entity or asset, and the specifics of any other rights—such as any board appointment rights, which the hon. Member for Warwick and Leamington cited in his intervention—being provided to the acquirer.
In some cases, however, such details may be known, but the likelihood of a trigger event actually taking place may still be low because the acquisition is conditional. For example, the striking of a futures contract or an options agreement may stipulate conditions that must be met before the acquirer is required to, or has the right to, acquire a holding in an entity or an asset. Such arrangements are common in the marketplace where, for example, a company’s future share price might be the basis of a conditional acquisition. Equally, lenders provide finance to many UK businesses on the basis of conditional agreements, often with collateral put up by the business as security in return for the loan. Those terms may, subject to certain conditions being met, allow the lender to seize collateral if repayments are not made as agreed.
Peter Grant
Can the Minister explain, first of all, why subsections (3) and (4) are included here as part of a supplementary clause when they clearly affect definitions, and as such go to the very heart of the Bill? The main clause is about defining the date on which something has happened for the purposes of calculating when later stages have to take place, but subsections (3) and (4) not only apply to those timings; they apply to everything in the Bill. I wonder whether the Minister could explain why those subsections are not included in one of the earlier clauses.
Secondly, I understand the Minister’s argument, but would it not be more prudent to work on the assumption that if somebody insists on some kind of contingent future rights being built into an agreement, they think there is a possibility that they will have to exercise them? Would it not therefore be prudent for the Government to work on the assumption that they are likely to be exercised? If not, is the Minister not concerned that we could have a situation where a whole series of small events, none of which looks particularly significant by itself, adds up to something that does become significant when taken in sequence, but there might never have been a stage during that process where the Bill, or the Act, allowed the Government to intervene?
Nadhim Zahawi
I am grateful for the hon. Gentleman’s intervention. I am just getting to the crux of the resistance to this amendment on the Government Benches, so if he will allow me, I will do that. As far as subsections (3) and (4) are concerned, we think they are exactly where they should be in the Bill.
In the loan scenario, obviously loans are routinely paid back by businesses as planned, so lenders do not have the option of enforcing any rights towards collateral. Indeed, even where businesses default on payments, lenders will often look for an alternative way to recoup their funds, such as restructuring the repayment amounts or repayment period. That is why the Secretary of State generally only expects to be notified about and, if the legal test is met, to call in acquisitions when they are genuinely in progress or contemplation, not just when they are optional or might take place in the future, as the amendment would effectively do. That could include where an option holder had resolved to exercise their option, or where a lender had decided to enforce their collateral.
None the less, the clause as drafted does provide the Secretary of State with the ability to call in at the time agreements or arrangements are entered into. That would be determined on a case-by-case basis and would, as per subsection (4), take into account how likely it is in practice that the person will do the thing that would result in a trigger event taking place. The amendment put forward by the hon. Member for Newcastle upon Tyne Central—she is right to probe on this—would mean that entry into any agreement or arrangement under which a trigger event could take place in future would be treated as a trigger event currently in progress or contemplation, allowing it to be notified and called in by the Secretary of State. We believe that this would—unintentionally, I am sure—have two significant negative implications.
Chi Onwurah
I thank the Minister for his response. I listened carefully to what he laid out. I have some considerations, which I do not feel he fully addressed.
In broad terms, he raised many points that I have raised about why the amendment is broad in scope and could lead to a huge increase in the number of potential trigger events. However, I think he said that hundreds of thousands of actions or contemplations would be considered trigger events. I think it is truer to say that they could be considered trigger events and that the power to consider them as trigger events or not, as in the wording of our amendment, would lie with the Secretary of State. It is a broadening of the Secretary of State’s powers to consider the contemplation of future acts as a trigger event. That is the aim, rather than necessarily bringing them all into scope.
I will not debate with the Minister whether we can trust the Secretary of State to exercise those powers in a proportionate way, but I think he is effectively saying that the concern is that the Secretary of State would not have the resources to do that. I still did not hear him address the gaming point—the idea that transactions would be deliberately set up in a way that escapes the remit of the Bill. The increased powers for the Secretary of State would address that.
I was also concerned that the Minister said that if an event was called in at this stage, it could not be called in again, even if there was material new information. Surely if a trigger event occurred in future, such as shareholding going above 25%, it could be called in, regardless of whether it had been called in earlier under the amendment. Would he like to respond to that question, particularly as to how this increases the powers of the Secretary of State, rather than necessarily significantly increasing the number of trigger events?
The Chair
Order. To be clear, you are asking the Minister to intervene, because he cannot come back afterwards.
Chi Onwurah
I am disappointed that the Minister chose not to address the genuine concern about the provisions in the Bill being gamed by hostile actors.
I share his concerns about increasing the powers of the Secretary of State at a time when, as we understand, there are many more calls on the Department’s responsibilities and it may not have the resources. We have already noted the conflict of interest that can occur between national security and the Department’s focus on increased investment.
As I said, this is a probing amendment, so I will not press it to a vote. I beg to ask leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Clause 12 ordered to stand part of the Bill.
Clause 13
Approval of notifiable acquisition
Chi Onwurah
I beg to move amendment 17, in clause 13, page 8, line 22, at end insert—
“(4) The Secretary of State must publish guidance that covers—
(a) consideration of the impact of a notifiable acquisition being deemed void under subsections (1) and (3), with particular regard to the impact on consequential obligations, liabilities and rights in completed events;
(b) who constitutes a “materially affected” person under Clause 16(1); and
(c) the informational and evidential standards that would underpin the requirement for completion “in accordance with the final order” at subsection (3).
(5) Guidance as set out under subsection (4) must be published within 3 months of this Bill becoming an Act and the Secretary of State shall review the guidance once every 12 months thereafter.”
This amendment would mandate the Secretary of State to publish guidance on the approval process of notifiable acquisitions.
Chi Onwurah
Amendment 17 addresses the unwinding of void transactions. Clause 13, which is the start of chapter 3 of the Bill, is concerned with the approval of notifiable acquisitions. It provides that:
“A notifiable acquisition that is completed without the approval of the Secretary of State is void.”
It is a short clause with only three subsections, of which that is the first. Subsection (2) says that the Secretary of State may approve a notifiable acquisition by giving a notification, making a final order, or giving a final notification under various clauses. Subsection (3) says:
“A notifiable acquisition, in relation to which a final order has been made, that is completed otherwise than in accordance with the final order, is void.”
I want to emphasise the consequences and impact of such a short clause. Our amendment adds a new subsection that says that the Secretary of State must publish guidance that covers
“consideration of the impact of a notifiable acquisition being deemed void…with particular regard to…consequential obligations, liabilities and rights in completed events;…who constitutes a ‘materially affected’ person…and…the informational and evidential standards that would underpin the requirement for completion ‘in accordance with the final order’ at subsection (3).”
The amendment effectively mandates the Secretary of State to publish guidance on how the mechanism of deeming non-compliant transactions void would work in practice. Once again, we tabled it genuinely in the spirit of improving the Bill, because this issue is potentially a hugely significant part of it. The two words “is void” have a huge impact, which needs to be unpacked. This is a constructive amendment; we want to ensure that there is clarity for small and medium-sized enterprises, and accountability to Parliament, on how the new powers will be exercised.
I know that the Minister rejected further new powers in the last amendment, but even without them these new powers are significant. We welcome the expanded powers to tackle national security concerns, but we need to ensure that they come with accountability and guidance. The ability for transactions to be deemed legally void where they have not been approved by the Secretary of State, or where they have not complied with the Secretary of State’s final order, has potentially huge repercussions. Again, it marks a radical shift from today’s regime under the Enterprise Act 2002 and from the Government’s White Paper.
Under the “legally void” provision, transactions that took place three to five years ago could now be immediately deemed void. If the first transaction in a chain were deemed void, that would leave the legal rights and entitlements of all subsequent transaction parties in total uncertainty. That is not just a theoretical concern that we are raising to test or probe the Bill, but a truly practical one. A number of investment transactions involve a change of shareholder parties over a three to five-year period. The automatic default of non-compliant transactions becoming void would mean an impossible series of rights, entitlements and changes having to be unwound. It may well be practically unworkable and legally uncertain.
Katherine Fletcher (South Ribble) (Con)
I appreciate the point that the hon. Lady is making, in that transactions over a period of three to five years could become complex, but surely if something is called in and deemed void in the overriding interest of national security there will be an extremely good reason for it. Although the complexity of downstream transactions is regrettable, we would be acting in the British interest if we had to trigger these powers.
Chi Onwurah
I thank the hon. Lady for her intervention, which by and large I agree with. That is why we are not seeking to remove the power, but to ensure that the Government and the Secretary of State explain how it would work in practice. She is right that if a bad or hostile actor has deliberately gone behind our national security framework, or the legislation as set out in the Bill, to undertake a transaction, the consequences will be on their head. However, there might be a series of other transactions as a consequence that were not made by bad or hostile actors—I will give some examples—and the impact on them should be set out, as far as possible, to give some clarity, because this is a huge area of uncertainty.
As has been stated on a number of occasions, we attract more foreign investment than any European Union country, and one reason why the UK is such an attractive location for foreign investment is that we have a robust legal framework that is trusted globally, but by giving rise to uncertainty the clause might impact that. We are not seeking to remove this power, but to have it properly explained, as far as possible.
Nadhim Zahawi
I thank the hon. Lady for her constructive engagement with the whole Bill, and especially with clause 13. She referred to the Intelligence and Security Committee, and this Committee will know that I have written to the Chairman of the Intelligence and Security Committee.
However, in answer to one of the questions raised in the letter that has been circulated to the Committee, which the hon. Lady referred to, it would clearly not be appropriate for me to speculate on individual cases, not least because decisions on past interventions have been taken by previous Ministers or Governments, who made their decisions based on the facts as they were known at the time. The Enterprise Act 2002 has provided a robust basis for nearly two decades to intervene on mergers that might have raised concern. However, it is also right that we modernise our powers, and that is exactly what this Bill will do.
The Bill provides—we had a similar discussion about that at Second Reading—that if an asset or company is deemed very valuable to the United Kingdom, it does not matter who the acquirer is, even if they are from a friendly nation, and an intervention can still be made by the Secretary State.
Clause 13 sets out the mechanisms by which the Secretary of State may approve a notifiable acquisition. After I have set out the rationale for the clause, I will speak to the amendment itself. As I have set out previously, notifiable acquisitions are acquisitions of certain shares or voting rights in specified qualifying entities active within 17 sensitive sectors of the economy. These acquisitions must be notified to, and require approval from, the Secretary of State before they may take place.
That approval can be given in three ways. First, when a mandatory notice is submitted by the acquirer, the Secretary of State may decide not to exercise the call-in power—for example, because he does not reasonably suspect that a national security risk may arise. In those circumstances, he is required to notify each relevant person, following the review period of up to 30 working days, that no further action will be taken under the Bill in relation to the proposed notifiable acquisition.
Secondly, when the Secretary of State exercises the call-in power in relation to the notifiable acquisition, he may make a final order at the end of the assessment process, which, in effect, gives approval to the notifiable acquisition, subject to conditions. Again, in that instance the notifiable acquisition is clear to proceed.
Thirdly, as an alternative to the previous scenarios, at the end of the full assessment process the Secretary of State may ultimately conclude that no remedies are required. In those circumstances, he is required to give a final notification that confirms that no further action will be taken under the Bill in relation to the call-in notice. Once more, that means that the acquisition is cleared to take place.
Chi Onwurah
I thank the Minister for eloquently setting out the clause. I have to suggest that he not place words into my mouth—certainly as we have such excellent reporting. Although I did not say that I thought it was an excellent deterrent, I did indicate that it could be an effective deterrent, were it considered workable.
Nadhim Zahawi
I am grateful for that clarification. I wrote down the hon. Lady’s words. She did say that it is an excellent deterrent, and went on to make her argument for the amendment.
To return to the substance, the provision means that the acquisition has no legal effect if it is void. It is not recognised by the law as having taken place. Clearly, voiding is a situation that it is in the interests of all parties to avoid, which should act as a powerful compliance incentive, if I can describe it as such. The Government’s view is that voiding is the logical result of a regime based on mandatory notification and clearance for acquisitions in the most sensitive sectors before they take place.
Although the Secretary of State, or the courts, may be in a position to punish non-compliance with criminal or civil sanctions, voiding is necessary to limit or prevent risks to national security that may otherwise arise where such acquisitions take place without approval. For example, there may be day one risks whereby hostile actors acquire control of an entity and seek to extract its intellectual property and other assets immediately. This is a reasonable and proportionate approach, and in arriving at this position we have carefully considered the precedent of other investment screening regimes. For example, France, Germany and Italy all have voiding provisions.
Amendment 17 would require the Secretary of State to publish guidance within three months of Royal Assent and then review it annually in relation to the approval process for notifiable acquisitions. I have listened carefully to the hon. Lady’s case for the amendment, and I hope that I can begin on common ground by saying that clearly voiding an acquisition is something that it is in the interests of all parties to avoid. That is why we are consulting on the sector definitions covered by mandatory notification and clearance, rather than simply presenting them to Parliament and external stakeholders like a fait accompli in the Bill.
That approach will allow experts from the sectors and the legal profession, and businesses and investors, to help us to refine the final definitions and tighten them up to ensure that the regime is targeted and provides legal certainty. Equally, mandatory notification applies only to the clearest acquisitions, focused on objective thresholds of shares and voting rights. Together, that will help acquirers to determine whether their acquisitions are in scope of mandatory notification, and therefore allow them to comply with their statutory obligation and avoid any voiding scenarios altogether.
Peter Grant
I agree that the sensible starting point is that, if a major transaction has not complied with legal requirements, it did not happen. As the shadow Minister outlined in her comments, however, it is easy to imagine situations in which the fact of a transaction such as this becoming void could have significant impacts on people who are completely innocent of any failure to comply with the law. Is the Minister comfortable with the fact that the Bill has almost literally nothing to say about those people and that there is not provision for any kind of redress? There is no statement as to what happens to people who may quite innocently find themselves facing significant detriment through the actions and failures of others.
Nadhim Zahawi
I am grateful for the hon. Gentleman’s intervention. As I was laying out, there is precedent from other screening legislation in Germany, France and elsewhere. Of course, the hon. Member for Newcastle upon Tyne Central is concerned about the hundreds of thousands of people who may be shareholders in a company. If the acquisition was a notifiable acquisition and completed without approval, it is void, regardless of the number of shareholders.
I return to the point I was making before the hon. Gentleman’s intervention. Together, this will help the acquirers determine whether their acquisitions are in scope of mandatory notification. None the less, the Bill sets out the various ways in which an acquisition may be retrospectively validated, both proactively by the Secretary of State and in response to a validation application, where non-compliance occurs. I believe the guidance that the amendment would require the Secretary of State to publish is well meaning but fraught with difficulties.
There are a number of reasons why the Government must reject the suggested approach. First, the amendment is an invitation to the Secretary of State to, in effect, legislate through guidance to set out the legal implications of acquisitions being voided pursuant to clause 13. In our view, it would not be appropriate for the Secretary of State to do so, as it is for Parliament to legislate, but ultimately for the courts to interpret and apply that legislation.
The hon. Member for Newcastle upon Tyne Central will be aware of the much-quoted report from the House of Lords Select Committee on the Constitution, which has emphasised the importance of avoiding guidance being used as a substitute for legislation. We have no intention to do so in respect of voiding.
Chi Onwurah
I confess that I am somewhat surprised by the Minister’s comments. Does he feel that all guidance is an invitation to the Secretary of State to effectively legislate through guidance? Is that something that the Minister feels is the case for all guidance? If that is the case, we will not be getting very much guidance for businesses at all. Does he not feel that, in terms of regulatory clarity, there should be effective help and guidance that is not legislation? He is right to say that it is for the legal system to interpret, but it is also right that we have clear laws to be interpreted. As the hon. Member for Glenrothes said, there is currently nothing in the Bill about what “voiding” means and what it could mean.
Nadhim Zahawi
Of course, not all guidance is guidance that the Lords Constitution Committee would have effectively considered to be a substitute for legislation. I will make some more headway, as I am conscious of the time.
Furthermore, the legal implications of voiding will depend on the particular facts of each case. It will ultimately be for the courts, as I said earlier, to resolve any disputes between parties.
Secondly, and for the same reasons, it would not be appropriate for the Secretary of State to publish guidance on who constitutes a “materially affected” person under clause 16(1). If it will assist the Committee, I will say that we consider these to be ordinary words of the English language and that whether a person has been materially affected by voiding will depend on the particular facts of each case. Ultimately, it will be for the courts to interpret this provision and to resolve any disputes between parties.
Thirdly, we do not consider guidance under paragraph (c) in the amendment to be necessary or appropriate. Final orders issued by the Secretary of State will need to be clear, and it is expected that in most instances they will follow extensive discussions with the parties so that all understand the conditions being imposed on the trigger event. That is equally true in relation to voided acquisitions scrutinised by the Secretary of State retrospectively. Where remedies imposed by the Secretary of State include restrictions on completion, it will be an objective question of fact, dependent on the circumstances of each case, whether the acquisition proceeds contrary to those conditions. This does not involve any determination by the Secretary of State, and it would ultimately be for the courts to resolve any disputes between parties, so it would not be appropriate for the Secretary of State to issue guidance setting out the “informational and evidential standards” that would apply. More generally, the value of any guidance would be limited, given that it would necessarily reflect the fact that retrospective validation will be dependent on the facts of an individual case.
The new regime understandably covers a broader range of acquisitions than is the case now. That is absolutely correct, as the hon. Lady stated. The combination of that fact with the reality that some voided acquisitions will come to light months or years after they take place and any number of events, involving numerous parties, may have occurred since then means that the Secretary of State must consider any validation application on a case-by-case basis. That is the right approach to keep this country safe, and this takes us back to the central issue that voiding is the logical result of a regime based on mandatory notification and clearance for acquisitions in the most sensitive sectors before they take place.
Chi Onwurah
I sense that the Minister’s speech is coming to a close. He makes the point that voiding is the logical consequence of the new regime, based on mandatory notification. I have said that we recognise that, but, further to the intervention by the hon. Member for Glenrothes, if it is the necessary consequence, why is it not included in the impact assessment?
Nadhim Zahawi
I thank the hon. Lady and the hon. Member for Glenrothes for their questions. It would be nigh on impossible to have an impact assessment as to what happened to a deal that should have been notified under the 17 sectors and then was voided. I believe that is something the Opposition should understand, in terms of the proportionality of the new regime, and I hope that it is something the hon. Lady and her colleagues can support. I hope that she will withdraw her amendment.
Chi Onwurah
I thank the Minister for his remarks. As I set out, we recognise the importance of this power. We were not seeking to remove the power to void—for transactions to be deemed void. But as I also set out, the two words “is void” have a huge impact, and it is of concern that neither the Bill nor the impact assessment addresses that. The Minister said that it would be impossible to assess the impact of voiding, but the impact assessment, where it looks at the number of affected businesses, estimates the number of investment decisions, notifications, security assessments and remedies. It makes estimates of all those, but has nothing to say on the number of potential voidings. That is a significant gap in the Bill and the impact assessment and, as a consequence, in the level of certainty and understanding about the Bill.
I have said a number of times that we are going from a standing start of 12 notifications in 18 years under the Enterprise Act 2002, which the Minister cited as having robust powers, to the almost 2,000 that we are expecting. Given his response, however, on which we see no likelihood of him moving, and given that we acknowledge the importance of the powers, I beg to ask leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Clause 13 ordered to stand part of the Bill.
Clause 14
Mandatory notification procedure
Sam Tarry (Ilford South) (Lab)
I beg to move amendment 18, in clause 14, page 8, line 36, leave out “may” and insert “shall”.
This amendment seeks to make the Secretary of State’s prescription of regulation of the form and content of a mandatory notice mandatory.
The Chair
With this it will be convenient to discuss the following:
Amendment 19, in clause 18, page 11, line 28, leave out “may” and insert “shall”.
This amendment seeks to make the Secretary of State’s prescription of regulation of the form and content of a voluntary notice mandatory.
Clause stand part.
Sam Tarry
It is an honour to serve under your chairmanship, Mr Twigg. These two amendments are simply about giving more direction. One issue that we have debated on every day of the Committee’s scrutiny so far is how the Bill will radically transform the merger control process and create an entirely new centre for that process within BEIS.
Small and medium-sized enterprises across the country will look at these changes with great interest and understanding that national security is important and imperative, but also with uncertainty as they consider the need to seek investment to grow and create jobs. We owe those businesses clarity, confidence and certainty in the new regime, which is why the amendment simply seeks to make the Secretary of State’s prescription of regulation of the form and content of a mandatory notice mandatory by deleting “may” and inserting “shall”.
The Bill gives some clarity on the assessment period and the review period under the new regime, but there is still major uncertainty about the first stage of the regime. It is unclear how long the Secretary of State can take to decide on rejecting a mandatory or voluntary notice. The Government’s consultation suggested that it would be as soon as reasonably practicable, but unfortunately that is of no assurance. For a new unit with major resourcing challenges, as soon as reasonably practicable could be far from soon.
My hon. Friend the Member for Southampton, Test spoke earlier in the week about his experience and the bad practice that could occur if the Secretary of State was left with so much discretion, rather than a little more compulsion. There are a number of examples, including the Energy Act 2013, where having “may” rather than “shall” meant that, in real terms, what was determined by the Bill never came into being.
Clause 66 of the Bill says that some clauses will immediately come into force, but it later says “may”. The Secretary of State could—hopefully he would not—wait for years or not do it at all. In both clauses referred to by the amendments, the regulations must be laid by the Secretary of State, and the term “may” creates some degree of uncertainty. It would be far better to take a more direct approach by inserting “shall”.
It is also unclear what specific form of content and information could be required in the mandatory or voluntary notices that firms and investors would have to provide. We could end that uncertainty. It is already an incredibly challenging time for firms to engage with a major new control process in the midst of a pandemic and, of course, while waiting to hear what our new relationship with the European Union will be.
Chi Onwurah
I thank my hon. Friend for the excellent remarks he is making. Is his experience of small and medium enterprises in Ilford South the same as mine in Newcastle, in that they generally do not have the time to fill out the multiple forms required to receive grants or to apply for support? To expect them not only to respond, but to design the form and decide what should go into it is really taking our small and medium enterprises for granted.
Sam Tarry
I agree. It is Small Business Saturday this weekend, and I imagine that many SMEs will be telling us when we are back in our constituencies about exactly these kinds of issues: the uncertainty, and the decisions they want to take about investment in staff, in technology and, of course, in equipment.
With this amendment we are trying to focus on ensuring that businesses have as much clarity as possible, so that they can begin to plan. If that uncertainty is ended, as we come out of the covid crisis and move forward from the debacle of Brexit, it will be better for businesses to have clarity, so that they can begin to take the positive decisions that will hopefully create jobs.
It is already challenging for firms to engage in such a tricky process. Remember that small and medium enterprises will not have the vast resources that are perhaps available to the multinationals or mergers-and-acquisitions-type companies from which we heard evidence. It will be far more frightening for SMEs to face such things given everything else they are dealing with at the moment.
The amendment would go a long way towards ending uncertainty for SMEs and ensuring that the Government act with clarity and, of course, with competence. It would require the Government to publish guidance on the form and content of the notices that firms will have to fill out. There will always be a degree of paperwork for businesses, but this is about ensuring that it can be filled in as quickly as possible. The recommendation is that guidance should create efficient forms and content requirements, and that it contains some indication of how long the Government will take to accept or reject a mandatory or voluntary notice,
Matt Western
My hon. Friend is making some important points. The issue here, as he is illustrating, is simply that the pressures that SMEs face in particular are about cash-flow and attracting inward investment. They do not have the resources or the capacity to cope with those sorts of approaches and will be under huge pressure. That is why the amendment is so important.
Sam Tarry
My hon. Friend makes a good point. Businesses are feeling huge pressure. SMEs will often experience a degree of fear at the moment about potentially having to grapple with a whole series of new regulations—not just under this important Bill, but under the spin-outs that come out of our ongoing negotiations with the European Union. Many businesses are, I think, holding back on investment and investment decisions—even inward investment into their own company—simply because of the uncertainty. It is incredibly important to remove those barriers and to get people back investing in both staff and technology and feeling that they have the ability to see forward far enough to keep staff on the books through such a difficult crisis.
Chi Onwurah
My hon. Friend is making an excellent point about Brexit, but I will not test the Committee’s patience on that. As for the changing forms and the requirements on SMEs, does my hon. Friend understand why the Minister is putting the onus for deciding what information is required on to small businesses, rather than on to his Department and the civil service, which could do that?
Sam Tarry
One of the things that we have probed a number of times, when taking evidence from witnesses and in our debates in Committee, is the idea that we need to give businesses clarity, because many are feeling uncertain. If they cannot make decisions about forward planning, clearly that will be detrimental as we move through the crisis.
Perhaps I should refer to some of the expert evidence we heard last week. Michael Leiter, who represents a very large, global limited liability partnership, told us:
“I think this is a rather seismic shift in the UK’s approach to review of investment… having some opportunity to make sure that both the private sector and the public sector are ready for that and understand the rules…is particularly important”.––[Official Report, National Security and Investment Public Bill Committee, 24 November 2020; c. 46, Q52.]
That was in our discussion about resourcing, and one of the questions that I and colleagues on both sides of the Committee raised was on the resourcing of BEIS. As my hon. Friend the Member for Newcastle upon Tyne Central suggested, rather than the burden falling on small and medium-sized enterprises, there should be a fully resourced and expanding new unit within BEIS. Given that the number of call-ins could rise from 12 to 1,800, as we have heard, we need a huge scaling up of BEIS’s ability to look at these, and obviously it does not have the same experience that the Competition and Markets Authority had previously.
I humbly point out that the Minister assured the House on Second Reading that:
“The investment security unit will ensure that clear guidance is available to support all businesses engaging with investment screening”.—[Official Report, 17 November 2020; Vol. 684, c. 277.]
The amendment is intended to secure that assurance in substance; not to tie the hands of the Secretary of State, but to give clarity to businesses by shifting from something that may happen to something that shall happen.
Peter Grant
It is a pleasure to serve under your chairmanship, Mr Twigg. I know that there was quite a bit of discussion in an earlier sitting, which I was unable to attend, about the different between “may” and “must”. In relation to clause 14—my comments apply also to clause 18—if we try to imagine the circumstances in which the Secretary of State would choose not to make those regulations, we realise that there are none. If no regulations have been made, most of subsection (6), which clearly is the meat of the clause, just does not make sense.
Subsection (6) states that the Secretary of State may reject the mandatory notice if
“it does not meet the requirements of this section”.
But the clause does not place any requirements on the notice. A letter that says, “Dear Secretary of State, this is a notice under section 14” would meet all the requirements of that subsection, so it cannot be rejected on those grounds. Clearly, it cannot be rejected on the grounds that
“it does not meet the requirements prescribed by the regulations”,
unless the Secretary of State has made the regulations. It can be rejected if
“it does not contain sufficient information to allow the Secretary of State to”
make a decision. How can it possibly be fair for a business to have a notice rejected on the grounds that it does not contain sufficient information to allow a decision to be made by somebody who has chosen not to state what information needs to be provided?
Therefore, two of the grounds on which the Secretary of State can reject the notice are meaningless. The third one has meaning, but it is surely not a reasonable way to treat any business. If there is information that the Secretary of State feels will be necessary to allow her or him to come to a decision on the notice, surely that information should be set out in regulations so that there can be no doubt.
It is perfectly in order for the statutory form of notice to require additional information that cannot be specified in advance. Clearly, the Bill will cover a wide range of transactions, and there will always be information that is needed for one transaction but maybe not for others, but surely we will need to know the name of the acquirer, the identity of the asset and the timing of the intent to acquire. It will be impossible to process any notice without those kinds of things, so surely the Secretary of State will at the very least make regulations requiring that information to be provided. If the Minister can persuade me that there are realistic circumstances in which the Secretary of State can choose not to make any regulations at all, perhaps I would not support the amendment, but the clause will simply not work if the regulations have not been made. For that reason, it should require the Secretary of State to make those regulations.
The Lord Commissioner of Her Majesty’s Treasury (Michael Tomlinson)
On a point of order, Mr Twigg. I beg to move—
Michael Tomlinson
I apologise to the hon. Member for Glenrothes; I will wait.
Peter Grant
It is easy to see that there will be circumstances where “as soon as reasonably practicable” becomes a very open-ended time limit—or non-time limit—indeed.
Given that so much of the rest of the Bill puts time limits on the Secretary of State to ensure that potentially beneficial transactions cannot be held up forever simply due to delays in the Department, the combination of the words “as soon as reasonably practicable” in subsection (5), right at the start of the process, and the massive uncertainty in the minds of businesses if the Secretary of State does not make regulations persuades me that the Bill should not allow the Secretary of State to make those regulations but should require the Secretary of State to make them, because the clause simply does not work or make sense if they are not made.
Ordered, That the debate be now adjourned.—(Michael Tomlinson.)
National Security and Investment Bill (Eighth sitting)
Thursday 3rd December 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 3 December 2020 - (3 Dec 2020)
The Committee divided: - Ayes: 5 / Noes: 9 - Question accordingly negatived.
The Committee divided: - Ayes: 5 / Noes: 10 - Question accordingly negatived.
The Chair
Order. I remind the Committee that interventions should be short. If Members wish to make wider points, they have an opportunity to make a speech, so they should seek to catch my eye while the lead amendment is being moved.
Clause 14
Mandatory notification procedure
Amendment proposed (this day): 18, in clause 14, page 8, line 36, leave out “may” and insert “shall”.—(Sam Tarry.)
This amendment seeks to make the Secretary of State’s prescription of regulation of the form and content of a mandatory notice mandatory.
Question again proposed, That the amendment be made.
The Chair
I remind the Committee that with this we are discussing the following:
Amendment 19, in clause 18, page 11, line 28, leave out “may” and insert “shall”.
This amendment seeks to make the Secretary of State’s prescription of regulation of the form and content of a voluntary notice mandatory.
Clause stand part.
Dr Alan Whitehead (Southampton, Test) (Lab)
I will not take up too much of the Committee’s time, but I wish to say a few words about the excellent contribution that my hon. Friend the Member for Ilford South has made to our continuing discussions about “may” and “must”. It is a particularly egregious case that he has highlighted. If we look at the number of “musts” that appear in clause 14—this point has been made by other Members—we see that the subsequent “musts” would fall immediately if the Secretary of State may not prescribe by regulation the form and content of a mandatory notice—so the “must” in subsection (5) is relevant only if the Secretary of State does that in the first place, as are the “musts” in subsections (7) and (8), as my hon. Friend pointed out earlier.
There is also an interesting “must” at the beginning of the clause, which relates to the mandatory notification procedure itself. Subsection (1) states that
“a person must give notice to the Secretary of State before the person, pursuant to a notifiable acquisition…gains control in circumstances”
and so on. So subsection (1) appears to stand whether or not, in subsection (4), the Secretary of State decides to prescribe by regulation the form and content of a mandatory notice. That means that a person must provide a mandatory notice, even if the Secretary of State has not prescribed any form or content of that notice. The person may therefore have no idea what is to be in that mandatory notice, because the Secretary of State has not put it in regulations, but still they must give notice because this subsection says “must”.
That does not seem to be particularly proportionate. It appears to be constructed in such a way that, regardless of whether the concept is completely unknown to the person giving the notice, it is entirely up to the Secretary of State whether he or she makes the mandatory notice in any way comprehensible. I think that is quite an odd juxtaposition in this instance of “mays” and “musts”.
The “may” in subsection (6) is perfectly acceptable, in as much as its states that:
“The Secretary of State may reject the mandatory notice on one or more of the following grounds”.
That “may” is absolutely appropriate. However, the positioning of “must” right at the beginning of the clause, and the positioning of “may” in subsection (4), does not look reasonable to me. That could easily be solved by using the word “shall”, so that the situation is proportionate between those circumstances. That is the essence of the amendment 18, as my hon. Friend the Member for Ilford South outlined earlier.
I accept that there have been a number of occasions when, although I have not particularly liked “may” going into a Bill, it has had some justification. However, the particular juxtaposition that we see here causes me to think that it is a rather important issue, as far as “may” and “shall” are concerned. I am interested to hear whether the Minister thinks that the wording could give rise to the sorts of problems that I have suggested, in the event that another Minister—not himself, of course—might be tempted not to produce such regulations when defining the form and content, because I think that could cause potential problems for reasonableness, as far as this clause is concerned.
Chi Onwurah (Newcastle upon Tyne Central) (Lab)
I rise to give some thoughts on clause 14 stand part, but will also refer to the amendment proposed by my hon. Friend the Member for Ilford South. Clause 14 is a critical part of this process, because it sets out the mandatory notification procedure. In some respects, it is the mandatory notification which places the greatest burden on those falling, or who might consider themselves to fall, within its remit. This is because it requires the person who is to make a notifiable acquisition to give a mandatory notice to the Secretary of State prior to the acquisition taking place.
The clause goes on to give the Secretary of State the option to set out the form and content of the mandatory notice. I shall come back to that. It then sets out the process by which the Secretary of State “must” decide whether to reject or accept that notice. If a mandatory notice is rejected, the Secretary of State must provide reasons in writing for that decision to be made. It also sets out the timescale elements and the persons to be notified. We recognise that mandatory notifications are an important part of making the Bill have the desired impact on our national security. It is absolutely right that in key areas the onus should be on those who will be aware that the transaction is taking place to notify the Secretary of State.
However, the amendment set out by hon. Friend is all about protecting and supporting the interests of small businesses. I am concerned that the Minister does not seem to be as vigilant about reducing the burden on and setting out the guidance for small businesses as we would like. All our constituencies have small businesses—it is often said that they are the lifeblood of the economy—yet in the Bill, and particularly in the clause, the Minister is not setting out the minimum support that they might require.
My hon. Friend the Member for Southampton, Test got to the nub of the matter in one of his very informative discussions about the difference between “must” and “may”. He observed that the “must” falls on the person who has to do the notifying. For example, it could be a small artificial intelligence start-up with a few members of staff, none of whom is a lawyer—remember that there are no de minimis provisions in the Bill for the size of the acquisition that must be notified—that is seeking investment from a foreign party. That start-up would be asked to indicate whether that investment would involve making a notification. Not only that, it must decide itself the form that the notification should take.
I really cannot understand why the Bill apparently seeks to give discretion to the Secretary of State to lighten his load, but not to our fantastic small businesses or to business generally. As my hon. Friend the Member for Ilford South said, why should a small business, the notifier, also have to set out the format in which its notification takes place? Given that the clause sets out,
“The Secretary of State may by regulations prescribe the form”,
why can we not simply turn that into “shall by regulation prescribe the form and content of a mandatory notice”?
Equally, when voluntary notices are considered, I hope the Minister has some ideas about what should be in the notification. If he does, is it not simple and desirable for him to share his ideas with our business community, which in less than a month’s time is facing a huge change in how it trades and does business with the European Union, our largest trading partner by value? That involves countless new forms to be filled out, as we have discussed in the Chamber, some of which are not yet designed. At the same time that that is happening, to require that they should decide for themselves what is involved in a notification seems wholly unacceptable.
On that basis, I ask the Minister to set out whether he intends to accept the amendment. If not, will he tell us what work has gone on in the Department to look at the kind of information might be required? How will the impact assessment assess the likely level of familiarisation required for this legislation—there is a phrase that says that there is not expected to be a huge amount of familiarisation required in it—while at the same time there is no guidance, assessment or inkling about the kind of information that will be required to be included in that notification?
The Parliamentary Under-Secretary of State for Business, Energy and Industrial Strategy (Nadhim Zahawi)
I am grateful to the hon. Members for Ilford South, for Southampton, Test, and for Glenrothes, as well as to the shadow Minister, the hon. Member for Newcastle upon Tyne Central, for their contributions on this set of amendments and clause 14. With the agreement of the Committee, I will begin with clause 14 stand part and then turn to the amendments.
Clause 14 provides a mechanism for proposed acquirers to notify the Secretary of State of notifiable acquisitions, which are those circumstances covered by clause 6. Contrary to what the hon. Member for Newcastle upon Tyne Central said, we on this side of the House really do care about small business; indeed, we will be celebrating Small Business Saturday by highlighting the great small businesses that are trying to recover from covid-19. To avoid duplication or unnecessary burden for businesses and investors, if the Secretary of State has already given a call-in notice in relation to the proposed notifiable acquisition, no notification is required. Otherwise the proposed acquirer must submit a mandatory notice containing the necessary information for the Secretary of State to make a decision about whether to exercise the call-in power.
The Government carefully considered which parties should be legally responsible for this notification. In many cases we expect this to be a collaborative process between parties that have an aligned aim for the acquisition to take place. However, there may be instances where an acquirer who is purchasing shares from a number of individual sellers is the only party aware that, in totality, they are carrying out a notifiable acquisition. For example, if an acquirer buys 10% equity in an entity specified under the mandatory regime from two separate sellers—20% in total—each seller may be operating under the assumption their transaction does not meet the threshold of a notifiable acquisition. Equally, the entity itself may be unaware of these acquisitions until after they have taken place. As such, only the acquirer can reasonably be expected to know that their activities constitute a notifiable acquisition and the responsibility to notify therefore rests with them.
The precise information that will be required and the form of the mandatory notice will be set out in regulations by the Secretary of State in accordance with subsection (4). For the convenience of the House, the Government have recently published a draft of the information that is likely to be required in a mandatory notice. As hon. Members might expect, this is likely to include all the pertinent details about the acquisition, including the target entity, the nature of its business, the assets it owns, the parties involved, the details of the equity stake and any other rights that form part of the acquisition—for example, any board appointment rights.
Following acceptance of a satisfactory notification—for example, conforming to the format and content prescribed —the Secretary of State then has up to 30 working days to decide whether to exercise the call-in power, or to take no further action under the Bill. The Secretary of State will be entitled to reject a mandatory notice where it does not meet the specified requirements, or where it does not contain sufficient information for him to decide whether to give a call-in notice.
The nature of the information required should mean that such instances are rare, but it is crucial that the requirements of the notice are met in order for the 30-working-day clock to start only at the point the Secretary of State is in a position to make an informed decision. By the end of the 30-working-days review period, the Secretary of State must either give a call-in notice or notify each relevant person that no further action will be taken under the Bill. In effect, the latter clears the acquisitions to take place unconditionally.
The power to specify in regulations the content and form of the mandatory notice is an important one, as the Secretary of State may need to change this over time in response to the operation of the regime in practice, and in response to the volume and quality of such notices given and rejected. I certainly believe that this approach ensures that Parliament can scrutinise any such changes. This clause is a procedural necessity to give effect to the mandatory notification regime once notifiable acquisition regulations have been made, and I trust that it will be supported by both sides of the Committee.
Amendments 18 and 19 are designed to require the Secretary of State to make regulations specifying the form and content of a mandatory or voluntary notice, ensuring that the parties have clarity on what information they need to provide in order to have properly notified. That is undeniably important—I share the focus of the hon. Member for Ilford South on that point—so this is an entirely sensible proposition. I suggest, however, that the amendments are unnecessary because the Bill as drafted already achieves that aim.
In practice, in order for the notification regime to operate, the Secretary of State will first need to make regulations specifying the form and content of a notification, regardless of whether clauses 14 and 18 say that he “may” or “shall”. I pay homage to the hon. Member for Southampton, Test for introducing that experience to the Committee. Regardless of whether clauses 14 and 18 say that the Secretary of State “may” or “shall” make such regulations, the notification regimes cannot operate without the notification forms being prescribed in the regulations.
Chi Onwurah
I am somewhat confused. The Minister is saying that clause 14(4) in its entirety is unnecessary, because those things are already prescribed. Will he set out in more detail where they are already prescribed? He argues that they are already prescribed, but where are they prescribed?
Nadhim Zahawi
Let me make clear to the hon. Lady what I actually said, which was that whether clauses 14 and 18 say that the Secretary of State “may” or “shall” make such regulations, the notification regimes cannot operate without the notification forms being prescribed in regulations. My point is that whether the clauses say “may” or “shall”, it makes no difference. I therefore hope that the hon. Member for Ilford South will withdraw the amendment.
Sam Tarry (Ilford South) (Lab)
I have listened carefully to the Minister, and I feel that several issues have not been fully explored. The whole point of the amendment is to compel the Secretary of State to be clear that those regulations will be forthcoming in a timely manner, along with the reassurances that small and medium-sized enterprises seek. The amendment would mean that it was not the Secretary of State’s choice when or whether that happened. The use of the word “shall” would allow us to move forward more directly, because the Secretary of State would be compelled to do that as quickly as possible. On that basis, I will press the amendment to a Division.
Question put, That the amendment be made.
Nadhim Zahawi
Clause 15 places a duty on the Secretary of State to consider whether to retrospectively validate a notifiable acquisition that was not approved by him before it took place. As I made clear in reference to clause 13, a notifiable acquisition that is completed without the approval of the Secretary of State is void. It is in the interests of all parties to avoid that situation, and voiding should act as a powerful incentive for compliance.
None the less, there may be instances where a notifiable acquisition takes place without approval and is therefore void, but the outcome is not a permanent necessity. This clause places a duty on the Secretary of State, following the point at which he becomes aware of the acquisition, to either exercise the call-in power in relation to the acquisition within six months or else issue a validation notice. A validation notice provided for by this Bill has the effect of treating the acquisition as having been completed without the approval of the Secretary of State, as though it were never void.
There are a number of circumstances in which the Secretary of State may decide not to issue a call-in notice in relation to a void acquisition. For example, as the Secretary of State may only call in trigger events, he may decide that the acquisition does not give rise to a trigger event—for instance, the acquisition of a 15% equity stake in a specified entity is a notifiable acquisition, but is not in and of itself a trigger event. A 15% stake may or may not, depending on the facts of the case, amount to or form part of a trigger event, namely the acquisition of material influence over the policy of the entity.
Alternatively, the Secretary of State may reasonably suspect that a trigger event has taken place but not reasonably suspect that it has given rise to, or may give rise to, a national security risk. In those situations, this clause requires the Secretary of State to give a validation notice in relation to the notifiable acquisition, which in effect provides the retrospective approval for the acquisition and means that it is no longer void. I should be clear that retrospective validation does not change the fact that the acquirer may have committed an offence by completing the acquisition without first obtaining approval. If an offence has been committed, criminal and civil sanctions will be available and may be used to punish that non-compliance.
As provided for by subsection (2)(a), where the Secretary of State decides, following consideration of a void acquisition, to exercise the call-in power in relation to it, he must give a call-in notice to the acquirer and such other persons as he considers appropriate. For the purposes of considering whether a trigger event has taken place under the Bill, including when deciding whether to exercise the call-in power, clause 1(2) provides that the effect of any voiding must be ignored, meaning that a notifiable acquisition that has been completed without approval can still amount to, or form part of, a trigger event even though it is of no legal effect.
This approach has been taken because a legally void acquisition may still result in a de facto exercise of the rights purportedly acquired and, consequently, a risk to national security. Where the call-in power is exercised in relation to a void acquisition, the case follows the conventional assessment process and is subject to the same statutory timelines and information-gathering powers. At the end of this process, the Secretary of State may decide to unconditionally clear the acquisition, resulting in a validation notice being issued and the acquisition no longer being void. Alternatively, he may impose remedies in a final order.
Dr Whitehead
I have a brief inquiry, following the Minister’s recent letter to me on a previous point raised in Committee, for which I thank him for his prompt attention. If a hostile company takes over another company, effectively puts it into liquidation and walks off with the intellectual property, patents and various other things, and those are out of the door by then, will it be necessary to provide a validation for the transaction, if it has not been previously notified or noticed, and to then pursue the consequences of that validation by subsequent means, given that the company was presumably in existence at the time of the validation, if not thereafter? Would that perhaps not be a cumbersome procedure?
Nadhim Zahawi
I am grateful to the hon. Gentleman for that question; I will write to him on that point, rather than attempting to go through our thinking on this. He raises an important point on what happens after the effect.
Where the final order has the effect of clearing the acquisition outright, subject to conditions, the Bill provides that the acquisition is no longer void. Where the final order has the effect of blocking all or part of the acquisition, the Bill provides that the acquisition remains void to that extent. Further provision on this particular situation is made in clause 17. The deadline of six months for giving either a validation notice or a call-in notice was chosen by the Government to align closely with the Secretary of State’s other requirements to act within certain timescales under the Bill.
Chi Onwurah
I thank the Minister for his promise to write to my hon. Friend the Member for Southampton, Test. The Minister mentioned on a number of occasions that a transaction is no longer void when a validation notice has been given. However, the transaction was void when completed, because it was completed without approval, so there will have been a period when it was void. What are the legal implications of that period?
Nadhim Zahawi
Is the hon. Lady is talking about a period when the Secretary of State was not aware of the transaction being void? If he is unaware of it, he is unable to act. It is only once he becomes aware, through a screening process or notification—
Chi Onwurah
I want to explain myself better. The question is not about what the Secretary of State can do, because I clearly understand that he cannot act on what he is not aware of. The fact of the transaction being deemed legally void for a period, which it will have been, may have some legal implications for the owners or the customers or whoever.
Nadhim Zahawi
Again, I am happy to write to the hon. Lady on that. Clearly, only when the Secretary of State is aware that a transaction is clearly in breach of the Bill is it then void. I am not clear as to what she is saying. Is she asking about before he is able to act?
Chi Onwurah
Let me clarify. Clause 13(1) states:
“A notifiable acquisition that is completed without the approval of the Secretary of State is void.”
It is void at the time it is completed, not at the time the Secretary of State becomes aware of it. Sometime later, the Secretary of State becomes aware of it and gives a retrospective clearing of it, but there will regardless have been a period where that transaction was void. What are the legal implications for the owners? It seems to me that having a transaction being void for a period would have some legal implications, regardless of whether the Secretary of State has cleared it.
Nadhim Zahawi
Again, I am happy to write to the hon. Lady on that point. Maybe I am being thick here, but the transaction only becomes void once the information is available to the Secretary of State. Is she talking about before that period?
Chi Onwurah
My understanding is that it becomes void at the point when the transaction is completed. At some point after that, the Secretary of State gives a retrospective validation, but there is nevertheless a period of one year, or however long it takes, when the transaction was void. Does that not have legal implications?
Nadhim Zahawi
I am happy to write to the hon. Lady on that point. What I think she is talking about is about the gap between the Secretary of State being aware and when the transaction actually took place, because the date where it is void is the date of the closing of that transaction, but I am very happy to write to her about that.
It is not in the interests of either the Government or the parties for the Secretary of State to have an unfettered ability to issue a call-in notice, perhaps long after he becomes aware of the notifiable acquisition. This approach provides a sensible mechanism for resolving the effects of automatic voiding arising from failures to receive clearance. I reassert my view that such situations should be rare, but it is only proper that the Bill provides such a mechanism for the Secretary of State to resolve them satisfactorily, should they arise. I hope hon. Members agree with that position.
Chi Onwurah
I thank all the hon. Members for their contributions, and the Minister for his remarks and his good humoured response to the interrogation on certain parts of this important clause. I recognise the importance of the clause and the importance of considering retrospective validations without application giving the all-consuming power through the voiding of notifiable acquisition without the approval of the Secretary of State. This debate has illustrated the need for greater clarity.
In the absence of the additional guidance that we were looking for in our earlier amendment, this has the possibility of becoming a legal goldmine for lawyers who are requested to give advice on what would or would not constitute a void transaction at what time. I raise that in the context of the requests of my hon. Friend the Member for Southampton, Test and myself for greater clarity about the period, which may represent some sort of legal limbo, between when a transaction takes place but before it is given retrospective approval. However, we do not oppose the clause.
Question put and agreed to.
Clause 15 accordingly ordered to stand part of the Bill.
Clause 16
Application for retrospective validation of notifiable acquisition
Question proposed, That the clause stand part of the Bill.
Nadhim Zahawi
Clause 16 provides a mechanism for any person materially affected by a notifiable acquisition being void to make an application to the Secretary of State to retrospectively validate the acquisition. Although there is a duty in clause 15 for the Secretary of State to give a validation notice or a call-in notice within six months of becoming aware of the acquisition, we recognise that in practice that is often likely to be a process driven by the parties themselves. It may be, for example, that a party realises that their transaction was a notifiable acquisition only after the event, and wishes to take proactive steps to resolve the situation. The clause allows them to make a formal application for retrospective validation, following a similar process to the conventional mandatory notification route.
Subsection (3) enables the Secretary of State to make regulations prescribing the form and the content of a validation application. It is likely that that will closely resemble the mandatory notification form, given all of that information remains pertinent to the Secretary of State’s decision on whether to give a call-in notice. The Secretary of State will be entitled to reject the application where it does not meet the specified requirements, or contain sufficient information for him to decide whether to give a call-in notice.
If the validation application is accepted, all relevant parties must be notified and a 30 working-day review period begins. By the end of the review period, the Secretary of State must issue either a call-in notice or a validation notice. Once again, if a validation notice is issued, the acquisition is no longer void and the Secretary of State must confirm that no further action under the Bill will be taken in relation to that acquisition. As is the case with clause 15, retrospective validation through that route does not provide immunity against criminal or civil sanctions being pursued.
Validation does not change the fact that a notifiable acquisition did not have the Secretary of State’s approval prior to taking place. This is simply about how the acquisition itself should be treated, following the screening of all pertinent details relating to the acquisition. I hope that hon. Members will be supportive of parties being able to apply to the Secretary of State for a validation notice, and that they will see clause 16 as part of our business-friendly approach to the investment screening regime.
Dr Whitehead
This is more of a slightly extended intervention than a speech. The Minister has set out very clearly what the clause means and how it is to be operated, but I am not sure that he completely covered what the opinion of the Secretary of State may consist of. I am looking at subsection (8), which refers to the Secretary of State’s opinion that
“there has been no material change in circumstances since a previous validation application in relation to the acquisition was made.”
My concern is that the words “material change” are potentially subjective. That may be overridden by the fact that it is
“in the opinion of the Secretary of State”,
but there is no definition of what a material change might be considered to be, and what the boundaries of a material change consist of.
The provision does not say “no change”; it says “no material change”. Does the Minister consider that that is safe enough, in terms of the Secretary of State’s opinion overriding the material change, or does he consider that the subjectivity of a material change is potentially actionable if the Secretary of State were to say that there has been no material change, but somebody decided that the Secretary of State’s opinion was not reasonable or proportionate in the context of what has happened to a particular company?
Nadhim Zahawi
I think the hon. Gentleman has answered his own question. Obviously, I do consider that the Secretary of State’s ability on the opinion is safe.
Question put and agreed to.
Clause 16 accordingly ordered to stand part of the Bill.
Clause 17
Retrospective validation of notifiable acquisition following call-in
Question proposed, That the clause stand part of the Bill.
Nadhim Zahawi
Clause 17 provides for the retrospective validation of notifiable acquisitions that have been completed without approval, following the giving of a call-in notice in either of the situations covered by clauses 15 and 16. The previous two clauses detail how the Secretary of State may give a call-in notice in relation to a notifiable acquisition that has been completed without approval and is therefore void, either on his own initiative after he becomes aware of the acquisition or following a validation application.
Following call-in, there is a national security assessment process. The Secretary of State has a period of 30 working days to either make a final order imposing remedies or give a final notification confirming that no further action will be taken under the Bill in relation to the call-in notice. The Secretary of State may extend the assessment period by an additional period of 45 working days where the legal test is met. If a further legal test is met, the Secretary of State may agree a further extension or extensions with the acquirer.
Where the Secretary of State gives a final notification, in effect giving unconditional clearance to the acquisition, subsection (2) requires him to also issue a validation notice, which means that the acquisition is no longer void. That is because voiding cannot be maintained if there is no national security justification for it. Copies of that validation notice must be given to each person who receives a copy of the final notification, any person who made a validation application and anyone else the Secretary of State considers appropriate.
Alternatively, where, following the assessment process, the Secretary of State makes a final order imposing remedies, subsections (4) and (5) provide for so much of the void acquisition as is compatible with the final order to be validated. It may be helpful if I explain what that means, with some specific examples.
Where a final order has the effect of clearing the acquisition outright, subject to conditions, it means that the entire acquisition is no longer void. Where a final order has the effect of blocking all or part of the acquisition, the acquisition remains void to that extent. That means, for example, that where the Secretary of State decides that it is necessary and proportionate, for the purpose of safeguarding national security, to block 51% of a void 100% acquisition of an entity through a final order, 49% of the acquisition will be validated and the remaining 51% will remain void.
The Bill does not seek to prescribe how such a decision is delivered by the various parties in all circumstances. The Government recognise that some acquisitions may involve a range of sellers and the Secretary of State may not wish to stipulate in every case which constituent parts of the notifiable acquisition should remain void and which should be validated. Rather, we expect the Secretary of State to set out the end state that the acquirer must arrive at and to consider proposals from them to meet these obligations as part of the assessment process before a final order is made.
Any dispute between the parties arising out of how the void or validated elements are chosen will be a private matter for the parties. The Bill does not attempt to limit or cut across any restitutive action taken by the parties against one another if they deem it necessary as a result of the notifiable acquisition, or a proportion of it, remaining void.
This overall approach absolutely fits with our desire for the regime to be as reasonable and proportionate as possible. We have incorporated requirements for notifiable acquisitions to be retrospectively validated where the call-in power is not exercised in relation to them: where they do not pose a risk to national security, for example, or where the call-in power is exercised but ultimately no further action is taken in relation to them after the assessment process. We have developed a tailored approach through this clause, which provides for so much of a void acquisition as is compatible with a final order, and therefore with national security, to be validated automatically.
This is the legislation of a Government seeking to balance the country’s national security and prosperity interests. I hope colleagues on both sides of the Committee will support that approach in the clause.
Question put and agreed to.
Clause 17 accordingly ordered to stand part of the Bill.
Clause 18
Voluntary notification procedure
Amendment proposed: 19, in clause 18, page 11, line 28, leave out “may” and insert “shall”.—(Sam Tarry.)
This amendment seeks to make the Secretary of State’s prescription of regulation of the form and content of a voluntary notice mandatory.
Question put, That the amendment be made.
Nadhim Zahawi
The Government are committed to providing as much certainty as possible for business. The clause therefore provides parties with a mechanism to require the Secretary of State to decide whether a trigger event outside the mandatory notification regime will be called in. If parties wish, they may notify the Secretary of State of such a trigger event when it is in progress or contemplation or, alternatively, after it has taken place. Any early notification will allow businesses to plan for, and mitigate, any issues that may subsequently arise.
Following the acceptance of a satisfactory notification—one that conforms to the prescribed format and content, for example—the Secretary of State has up to 30 working days to decide whether to exercise the call-in power or to take no further action under the Bill. Businesses can rest assured that where the Secretary of State decides to take no further action following assessment of a notification, that decision may not be revisited further down the line. The only exception is if the Secretary of State has been given false or misleading information in relation to the decision not to issue a call-in notice, but I expect such instances to be few and far between. On those rare occasions where the notified trigger event does require further action, early notification means that parties can also factor in a security assessment following a formal call-in early on in their commercial timelines.
I hope that the Committee will agree that that is a pragmatic approach that provides the Secretary of State with the time he requires to properly screen trigger events, while giving businesses as much certainty as possible about when they can expect decisions. I would go further and say that the Government would welcome informal discussions with parties before the notification stage begins. That would allow parties to prepare for a potential assessment, while also allowing the Secretary of State to better understand the trigger event.
This is part of our commitment to working with investors and businesses in as transparent a manner as possible while protecting national security. However, I stress that a formal notification procedure is still required to enable the Secretary of State to make an informed assessment of the trigger event based on a full suite of information. I hope that hon. Members recognise the length the Government are going to to put in place a robust regime that both protects national security and retains business and investor confidence. The voluntary notification procedure, alongside the mandatory notification part of the regime, helps to strike that balance and will, I believe, work in the interests of all parties.
Chi Onwurah
I thank the Minister for his remarks. He is aware of the Opposition’s concerns about the voluntary notification procedure. I shall not repeat what he has said, and we recognise the importance of the clause and of having such a procedure. As with the mandatory notification procedure, the Minister has rejected our request for a requirement to set out the form of that notification. I would like to press him on this and to ask whether he would perhaps write to me to set out formally where it is that the pre-existing requirement that he said exists says that the Secretary of State “must”, rather than “may”, set out the form for the voluntary notification. I am also not clear whether the voluntary notification form format and information requirements are the same as those for the mandatory notification, given the difference in one being voluntary and one mandatory. Clarification on that would be helpful.
We agree considerably that we want to minimise the burden on businesses and the chilling effect on investment, while securing national security. The clause is an important part of that, so we will not oppose it.
Nadhim Zahawi
I am very happy to write to the hon. Lady; I thought that I had touched on that in my earlier remarks. The forms should be very similar, because ultimately the decision-making process of the Secretary of State, whether the notification is voluntary or mandatory, will pretty much be the same thing. I am happy to clarify that in writing.
Chi Onwurah
I thank the Minister for that intervention, and we will not oppose clause stand part.
Question put and agreed to.
Clause 18 accordingly ordered to stand part of the Bill.
Clause 19
Power to require information
Dr Whitehead
I beg to move amendment 20, in clause 19, page 12, leave out lines 24 to 27.
This amendment seeks to broaden the Secretary of State’s powers to require information.
The Chair
With this it will be convenient to discuss amendment 21, in clause 20, page 13, leave out lines 17 to 20.
This amendment seeks to broaden the information gathering powers of the Secretary of State, in specific regard to witness attendance.
Dr Whitehead
I ought to explain to the Committee that the Opposition are under some multi-tasking pressures this afternoon, Mr Twigg. I should have been in the previous debate in the main Chamber on the future of coal, in my role as energy Front-Bench spokesperson for Labour. I managed to factor that job out to somebody else in order to be here in the Committee this afternoon, and I am sure that the Committee is delighted to hear that. Unfortunately, there was no such luck for the shadow Minister, my hon. Friend the Member for Newcastle upon Tyne Central.
Katherine Fletcher (South Ribble) (Con)
I thank the hon. Gentleman for highlighting that our time is precious in the House. I, too, was hoping to be in the future of coal debate, to highlight the importance of the West Lancashire light railway. I thank him for bringing it to the attention of the Committee.
Dr Whitehead
I just wanted to explain the musical chairs that have gone on this afternoon, Mr Twigg.
Dr Whitehead
The amendments relate to clauses 19 and 20. Amendment 20 might be regarded as slightly unusual, as it seeks to remove a number of sentences in the Bill: to be precise, lines 24 to 27 on page 12—it would remove clause 19(2), while amendment 21 would remove clause 20(2). The Minister might be saying to himself that Oppositions usually try to restrict Ministers’ powers, yet here we are trying to extend their powers through these amendments. I want to explain why we think that is important.
We want to hear from the Minister why he thinks those particular paragraphs should remain in the Bill, and how the restriction that they place on the Secretary of State’s activity is advantageous to the Bill’s main purpose. The paragraphs that the amendments would take out relate to the power to require information and the power to require the attendance of witnesses and seek evidence. I am sure that hon. Members can read clause 19 for themselves, but I will point out the key part:
“The Secretary of State is not to require the provision of information under this section except where the requirement to provide information is proportionate to the use to which the information is to be put in the carrying out of the Secretary of State’s functions under this Act.”
That is to say that unless it can be, or is, established that the requirement to provide information is proportionate to what the Secretary of State wants to do under the Act, the Secretary of State is not able to require the provision of information. That is effectively what the clause states.
We have already heard during evidence to the Committee that there may well be a complex web when it comes to getting information and working out what is and is not relevant, particularly if a hostile power or body is seeking to take over a company or gain access to its information and IP. The information may well not consist of what it appears to consist of, or there may be a number of paths by which that information can be obtained.
From our expert witnesses we heard some interesting examples of things they thought looked rather far from the central activity of information provision. For example, on academic projects, in his expert evidence, Charlie Parton from the Royal United Services Institute told us:
“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.”––[Official Report, National Security and Investment Public Bill Committee, 24 November 2020; c. 6.]
He was suggesting that, of a number of those postgraduate and PhD projects, there were some that he might have put a question mark against and others not, but he was not sure which were which. Nevertheless he seemed to think that some of those research projects—although they were cited within the ordinary parameters of whatever the research project might be, and who might be collaborating with whom, and who might get what information out of that—might ring alarm bells. That was in terms of who was collaborating, how the information might be used and where it might be going.
Peter Grant (Glenrothes) (SNP)
I think I understand what the amendment is intended to achieve, but is not the hon. Gentleman concerned about the danger of almost explicitly building in a recognition that the powers in the Bill do not have to be used proportionately?
Dr Whitehead
The hon. Gentleman raises an important point. I will come to the word “proportionate” in a moment, because that is an important part of this clause. I hope I can satisfy him about my concerns about the word “proportionate”. He may want to come back when we have that discussion.
We heard from Sir Richard Dearlove, who said 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”.––[Official Report, National Security and Investment Public Bill Committee, 24 November 2020; c. 19.]
Before we go any further, perhaps I should say that I have nothing against Chinese students coming to the UK. On the contrary, I think that in general, Chinese students in UK universities is a very positive thing, and spreads a very good element of international learning into the process. I also think we might be reasonably confident that those Chinese students are getting as much from us, in terms of our way of life and our way of organising things, as we are from them. I do not think Sir Richard Dearlove’s point was partial towards Chinese students, but he made the point that he thought that some of those students may have targeted, or have been targeted towards, particular subjects and areas in the UK and the United States. Again, that is extremely difficult to find out and go forward on.
I am citing those particular expert witnesses in the context of this area of information, particularly concerning somebody—a company, an organisation, or indeed a state actor—that has hostile, malevolent intent towards the information that they have. It is not very likely that they will simply present that information in a ring binder with coloured markers, specifying where the various bits are; it is a very different process indeed. The clause therefore appears to very much limit the extent to which the requirement to provide information can be carried out, and it does so by requiring the provision of information to be proportionate to the use to which the information is to be put.
The word “proportionate” is very important here, and is potentially a real problem in terms of ensuring that the search for information that may be necessary by diverse means can be carried out properly. On the surface, looking at the ordinary language, one might say that the use of the word “proportionate” is a thoroughly good idea. If we apply the ordinary language test—what is the opposite of proportionate?—the opposite would be unproportionate; we would not want the Secretary of State to go about this in an unproportionate way. However, in legal terms, the word “proportionate” has rather a different context,
Proportionality as a legal term is a relative newcomer to the legal lexicon. It entered the legal arena—I am not saying that it had not been used before, but it was put forward as a concept around which a lot of other matters might turn—with the civil litigation reforms introduced in April 2013, known as the Jackson reforms. They covered the concept of proportionality in legal terms as it relates to costs in legal cases, but the question of proportionality was discussed in a wider context. The concept of proportionality, which had not been a particular issue in legal matters before, stuck itself firmly into the legal lexicon. Since then, there have been a number of debates about whether ways of apportioning legal costs were proportionate, even if they might otherwise be seen as reasonable.
Up until that point, the guidance on the issue of proportionality came from Lord Woolf in the Court of Appeal in—I am sure hon. Members will remember the case well—Lownds v. Home Office, where he concluded that if the legal steps that had been taken had been reasonable and necessary, the other party could not object to the cost of these steps on the grounds of proportionality. The test of reasonability and necessity overrode the question of the grounds of proportionality.
That is what changed in 2013 with the civil litigation reforms. An interesting commentary was made in an article published on 12 March 2014 in The Law Society Gazette, entitled “Proportionality and legal costs”—I am saying all this because I am not sure I will get the article to Hansard easily.
The author had this to say about the meaning of proportionality:
“However, the meaning of proportionality is not straightforward and the new rules do not provide clear guidance on how proportionality should be applied. The suggestion seems to be that a body of law will develop on a case-by-case basis until gradually the meaning will become clear. Until that happens, litigants, legal advisers and judges will have to guess at what costs will be considered proportionate in particular circumstances.”
Dr Whitehead
Yes, it is. Only one Member has left the room, so we are still in good order.
Peter Grant
I fear that the hon. Gentleman is taking the definition of proportionality into a context very different from what is mentioned here in the Bill, because this is not about whether the costs of civil proceedings are justified by the likely outcome, or even how those costs should be divided among the parties.
My reading is that subsection (2) is there to prevent a future Secretary of State—obviously, no one in the present Government would ever do this—from imposing extremely onerous requirements on a business, when it was perfectly possible for the Secretary of State to do due diligence and do the checks he needed to do without that information’s being provided.
I have not heard anything from the hon. Gentleman that would explain why he wants that protection to be taken out. He has said a lot about Chinese students, who may or may not collectively be working against our national interest, but this clause does not protect against that. What does the hon. Gentleman have against the idea that the Secretary of State is not allowed to put unreasonable and onerous demands on businesses when there is no clear benefit to national security of those demands’ being made?
Dr Whitehead
I hope that the hon. Gentleman will bear with me a few moments longer. Having unpacked “proportionality” in legal rather than colloquial terms, I want to put it back into the clause and see how it works, as far as the concerns of the Secretary of State go.
Indeed, the hon. Member for Glenrothes has questioned what we want to do on this clause in terms of the colloquial understanding of “proportionality”. I have mentioned how “proportionality” has come into the legal arena, specifically in terms of costs. Nevertheless, “proportionality” is now loose in the legal arena, so there is an interesting area of debate about it in general in the legal arena. That is not necessarily solely attached to the question of costs and civil litigation.
The problem is that there is virtually nothing to define that wider issue of proportionality in case law at the moment. Placing that word back into this particular clause suggests to us that the Secretary of State is restricted considerably on how that information may be gathered. The hon. Member for Glenrothes talked about research projects and various other things listed to us by our expert witnesses. I emphasise that I do not want to undermine those research projects or the presence of Chinese students. All I want to underline from that is that, on occasions, the process of getting hold of information and requiring people to give evidence can be convoluted. Indeed, it may require seeking information by going down paths that are not immediately apparent. As I say, it is not a question of someone turning up with a ring binder of things that can be perused.
In this clause, it appears that the Secretary of State may well have denied him or herself the ability to get hold of information, because it states that it has to be
“proportionate to the use to which the information is to be put in the carrying out of the Secretary of State’s functions under this Act.”
But he or she will not know about that information until it has been obtained. If there are difficulties in getting hold of the information, he or she will never know whether it is useful for carrying out his or her functions, because there is already a limit on getting the information in the first place.
I have brought the rather wobbly legal status of proportionality into the debate because it is potentially actionable through an obfuscation or refusal to put information forward by those actors. An actor who was required to give information could say, “It appears to me, your honour, that this request for information is not proportionate.” Of course, the Secretary of State may have a different point of view about what is proportionate from the person who is required to give the information.
There is also a vagueness in the application of the term “proportionate”. Although we think we know what it means in common language, that is not the case in the courts. That could be an additional issue that affects the Secretary of State’s ability to get the required information to make a judgment, over and above the fact that he or she may not know that until the information has been collected. So there are two procedural problems in the clause.
The hon. Member for Glenrothes said to me, to put it bluntly, “What exactly are you driving at? Perhaps it is not a good idea to appear to enable the Secretary of State to act disproportionately.” Of course, that is not what we are saying. We know that the Bill is more or less a giant amendment to the Enterprise Act 2002. Indeed, if hon. Members look at the back of the Bill, they will see that that is the only Act amended by it. Several amendments are made to the 2002 Act, but that is it—it is still sited within that Act. That Act was drawn up before the civil litigation changes to proportionality were put in place. The test set out in that Act, which is not amended by the Bill, is one of reasonableness, which is well understood, widely commented on and pretty clear.
If hon. Members consult the 2002 Act, they will see in clause 55 that the Secretary of State, in terms of enforcement, shall take such action
“as he considers to be reasonable and practicable to remedy”.
Therefore, we are not saying that the Secretary of State by acting disproportionately should act unreasonably. We are suggesting that the test that should be carried out is one of reasonableness, and should be in this particular clause. As the Enterprise Act already does, that would indeed prevent the Secretary of State going on fishing expeditions and undertaking actions that are wholly disproportionate because they would be unreasonable in terms of the definition of the Act. Our suggestion is to stick by that definition, which would be good enough to restrict the Secretary of State under the different circumstance that we are in today, in terms of seeking information. At the same time, it would give the Secretary of State the ability to take a path—I have said it is often a convoluted one—to obtain information that can be judged and used for the purpose of this Bill. I hope that the Minister will be favourably inclined towards that slight, but constrained, addition to his powers under this legislation.
Nadhim Zahawi
I am very pleased to be able to respond to the hon. Member for Southampton, Test on these well-intentioned amendments. I assure him that the Government and the Secretary of State will not be relying on a ring binder with highlighted paragraphs, because we have some of the best security and intelligence agencies in the world that would input into that process. It is an absolute joy to see Her Majesty’s Opposition play such a constructive role in the scrutiny of legislation, and to hear such a thoughtful speech.
Amendment 20 would remove subsection (2) of clause 19, through which the Secretary of State will be able to request information only through an information notice, where such requirements to provide information are proportionate. I agree with the hon. Member for Glenrothes on the issue. We have debated the fact that it is actually up to the courts to interpret if a particular acquirer feels somehow hard done by as a result of the process, and that there is a process to go through. The requirement to provide information is proportionate to the use to which the information is to be put in carrying out the Secretary of State’s functions under the Bill.
Amendment 21 seeks to remove subsection (2) of clause 20. Clause 20 enables the Secretary to require the attendance of witnesses and the giving of evidence. Therefore, clause 20 is complementary to clause 19, as it provides, for example, for the Secretary of State to receive expert explanation in person from those involved in a trigger event where the information previously provided does not give sufficient clarity. Clause 20(2) has a similar effect to clause 19(2). It means that the Secretary of State will be able to request information only through an attendance notice where requirement to give evidence is proportionate to the use to which the evidence is to be put in the carrying out of his functions under the Bill.
In response to both amendments, and mindful of the time, I can say that it is our view that any power of the Secretary of State to require the provision of information under clause 19, or to require the attendance of witnesses under clause 20, must be proportionate—indeed, the information-gathering powers are already significant. The Secretary of State may require information from any person in relation to the exercise of his functions under the Bill, which includes various stages of the procedure both before and after the call-in power is exercised. This may include requiring the provision of personal and commercially sensitive information about the parties in relation to a trigger event. There is good reason to include the restriction that any information required by the Secretary of State is proportionate to the use to which it is to be put in carrying out his functions. It is important that there are the safeguards for business. I have to say that I did not expect to be in the position of arguing against greater powers for the Executive from the legislature. It is clear to me, though, that business confidence and our reputation for being open for investment require it.
I hope that I have provided sufficient points of reassurance on these matters, and encourage the hon. Gentleman to withdraw his amendment.
Dr Whitehead
I appreciate what the Minister has had to say. He is clearly confident that the fine print of this clause is not going to be a problem. I slightly beg to differ: I think it may be. I also wonder whether the Minister has considered the extent to which what is already there—or, should I say, what I think is already there—in the Enterprise Act 2002 effectively restricts the Minister in his actions, in much the same way as this clause does, except that the restriction is much clearer from a legal point of view. That is to say, by relying on the restrictions that are already in the Enterprise Act, the Minister would probably not act any differently from how he would under this particular clause, but by relying on that element of the 2002 Act, his actions would be far less potentially actionable.
Before the Minister gets carried away by the idea that the legislature, or in this instance the Opposition, is clamouring for the Secretary of State to have far more powers, that is not our case. Our case is that it would be rather wiser to restrict what the Secretary of State may do through clearer legal definitions, which are already there, than through the rather woolly definition that is in the Bill. Before the Minister goes home thinking, “I have free rein to do whatever I like now”, that is not so: it is not so according to the Enterprise Act 2002, and it is something we want to stand strongly by. We do not want to underscore the idea that the Minister can act unreasonably, especially since the phrase “acting unreasonably” has a long pedigree, both in terms of civil action and administrative law over a long period of time.
I am sorry that the Minister does not accept our case, with all the caveats on it, although it may be that he is less inclined to accept the case now that we have highlighted the fact that there are caveats on what the Minister can do. I do not think we want to press this amendment to a Division, but we do so rather more in sorrow than in anger, because we think this could have been a prudent way to proceed with this Bill.
Matt Western (Warwick and Leamington) (Lab)
As always, my hon. Friend is making important points. I was surprised to see the letter from the Chair of the Intelligence and Security Committee, which dates back to its 2013 report. Does my hon. Friend agree that if that Committee had been involved and consulted before this legislation was drawn up, some of the issues he is raising could have been brought out into the open and addressed better?
Dr Whitehead
My hon. Friend is right. I think that, because things have changed so substantially over the past decade or so, we tend to see things in a way that we may not have easily seen them just a few years ago. Indeed, the expert witnesses who were before us made considerable points on the question of how naive we had been on some previous occasions; we had not really taken into account some of the implications of what we were doing, because we did not have a clear picture of the consequences of those actions.
My hon. Friend is right—I suppose this is to some extent wisdom of the stairs—that if we could have considered things at that particular point the way we see them now, we would have expressed ourselves in much firmer and more watertight ways. However, I do not think the fact that we did not do so then is any particular excuse for continuing not to do so now. The idea that we may miss out on the ability to get proper information that can point us in the direction we want to go, albeit possibly by very roundabout means, and that we deny ourselves that particular possibility because we have written something in the legislation that stops us doing it does not seem to me to be fully learning the lessons that we might have done from 2013 onwards.
However, far be it from me to lecture the Minister or otherwise on the wisdom of these things; I am sure he is able to decide that subsequently for himself, just as I have challenged him about the wisdom of the Secretary of State’s investment agreements a little while ago concerning Bradwell. I am sure he knows in his heart that that is an appallingly naive thing to have done in those circumstances, and we might have thought differently had that taken place even today. That is the spirit in which we are moving this amendment. As I say, we do not wish to press it to a vote, but I hope the Minister will be able to consider those points and think about how this section might best be applied in the circumstances we have before us today. I beg to ask leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Question proposed, That the clause stand part of the Bill.
Nadhim Zahawi
Clause 19 gives the Secretary of State the power to require the provision of information in relation to the exercise of his functions under the Bill. The Bill provides for an investment screening regime for national security purposes—a purpose that we all agree merits appropriate tools. As such, it is essential that the Secretary of State is able to gain access to information to arrive at decisions that are fully informed. This clause provides for an information notice that the Secretary of State may issue to require any person to provide information that is proportionate to assisting the Secretary of State in carrying out his functions.
Any information notice may specify a time limit for providing the information and the manner in which the information must be provided. An information notice must specify the information sought, the purpose for which it is sought and the possible consequences of not complying with the notice. There is a range of scenarios in which the Secretary of State will need to require the provision of information, and I will provide some examples to illustrate them.
The first scenario is when the Secretary of State has reason to suspect that a trigger event that may give rise to a risk to national security is in progress or contemplation. That could be where an acquisition has not been notified but the Secretary of State becomes aware of it through market monitoring. In that situation, this clause enables the Secretary of State to require the provision of further information to inform a judgment on whether to call the acquisition in.
Secondly, when a party has submitted a voluntary or mandatory notification to the Secretary of State and that notification has been accepted, the Secretary of State may require additional information from the parties to decide whether to call in the trigger event. Thirdly, when a trigger event has been called in, the Secretary of State may need to require that parties provide further information to help to inform decision making. Information notices will allow the Secretary of State to gather evidence to support accurate and timely decision making. Hon. Members will agree that it is entirely proportionate for the Secretary of State to have recourse to this power as part of the investment screening process provided for in the Bill.
Question put and agreed to.
Clause 19 accordingly ordered to stand part of the Bill.
Clause 20
Attendance of witnesses
Question proposed, That the clause stand part of the Bill.
Nadhim Zahawi
The clause provides the Secretary of State with the power to require the attendance of witnesses.
The Government are acutely aware that many of the acquisitions considered by this regime will be complex and highly technical. In addition to clause 19, which enables the Secretary of State to require the provision of information, most likely in written form, this clause enables the Secretary of State to require the giving of evidence. A notice requiring a person to attend under this clause is called an “attendance notice”. The clause is complementary to clause 19, discussed previously, as it provides, for example, for the Secretary of State to be able to receive expert explanation, in person, from those involved in a trigger event, where the information previously provided does not provide sufficient clarity.
In responding to an attendance notice and providing evidence, a person is not required to give any evidence that they could not be compelled to give in civil proceedings before the court. That protects privileged information. In addition, the Secretary of State will only be able to request information through an attendance notice that is proportionate in assisting him in carrying out his functions under the regime.
We envisage a range of scenarios where the Secretary of State may require the attendance of a witness in order to gather further evidence to make an informed decision on the case. I will provide a few to illustrate. First, I expect that a number of cases will involve complex acquisitions, either because of the advanced nature of the technology in question, or due to their financial structuring. In those cases, the Secretary of State may require those who hold expert knowledge to provide him with an explanation. There may also be cases where it seems that parties are being deliberately non-compliant, or only partly compliant with information-gathering requests. I expect those to be rare but, again, it is only right that the Secretary of State has the power to require the attendance of those parties to provide further information.
The attendance of witnesses may also be a more efficient way to secure additional information in some circumstances, and limit the risk that further time will be needed to consider additional information. There will be criminal and civil sanctions available to punish non-compliance with the notices and the provision of false or misleading information. The attendance notice is provided under threat of such sanction as it is important that the Secretary of State receives the information he needs and can count on to come to a decision.
Peter Grant
A brief question: is it the Government’s intention to allow for witnesses to attend virtually, if it is unreasonable for them to attend physically at the Department, or the Minister’s office?
Nadhim Zahawi
I suspect that the Government will accommodate whichever way is secure and provides the evidence.
I am sure that hon. Members will agree that the clause is crucial in allowing the Secretary of State to consider the fullest range of information in order to make informed decisions under this regime.
Dr Whitehead
The Minister has given a good exposition of what the clause is about: the attendance of witnesses. I note that, as he said, the witnesses are required to give evidence on the equivalent level of civil proceedings before the court—as the clause states:
“A person is not required under this section to give any evidence which that person could not be compelled to give in civil proceedings before the court.”
Dr Whitehead
I wonder if the Minister might intervene briefly, just to put my mind at rest.
Nadhim Zahawi
I think I have made very clear how these notices will work. The judicial procedure is open to any party that feels hard done by in any way by this Bill.
Dr Whitehead
I thank the Minister for confirming what I thought, which is that this can be challenged post hoc but not at the point of giving evidence. That is what I understand the Minister to have just said—but hey, I could be wrong. That is the clarification we wanted. On the issue of witness attendance, it is important that the Secretary of State is able to specify a time and that the evidence is undertaken at a level commensurate with civil proceedings. We do not oppose the clause standing part of the Bill, given the Minister’s clarification on proceedings involving witnesses.
Question put and agreed to.
Clause 20 accordingly ordered to stand part of the Bill.
Clause 21
Information notices and attendance notices: persons outside the UK
Question proposed, That the clause stand part of the Bill.
Nadhim Zahawi
Clause 21 makes provision in respect of the persons on whom the Secretary of State may serve an information notice or an attendance notice outside the United Kingdom. The clause applies in relation to the two earlier clauses. Clause 19 provides the power for the Secretary of State to obtain information either before or after the call-in power is exercised. Clause 20 gives the Secretary of State the power to require the attendance of witnesses to assist him in carrying out his function under the Bill.
Those outside the United Kingdom to whom an information notice or attendance notice may be given are clearly set out in clause 21, which is technical in nature. The purpose is to ensure that certain categories of persons with a connection to the United Kingdom are caught by the information-gathering powers, even if they are outside the UK. These categories of persons are UK nationals, individuals ordinarily resident in the UK, bodies such as companies incorporated or constituted in the UK, and persons carrying on business in the UK. Perhaps more importantly, notices may also be served on persons outside the UK who have acquired, or who are in the process of or are contemplating acquiring, qualifying UK entities or qualifying assets that are either located in the UK or otherwise connected to the UK. In practice, this means that notices may be served on most parties from whom the Secretary of State may wish to require information or evidence.
Peter Grant
I certainly would not seek to oppose this clause, but will the Minister go into a bit more detail about how it works in practice? What if a notice is served on somebody who is not in the United Kingdom, who is not a UK citizen or UK national, who has never set foot in the United Kingdom and quite possibly never intends to, as might happen if a big multinational is seeking to acquire a business intertest in the United Kingdom? Is the intention to create an offence that can be committed by somebody with otherwise no connection with the United Kingdom under UK law? That would mean that the person had committed the offence in a different sovereign territory, not even by something they did, but by something they did not do—not responding to a notice and not attending when required.
I understand why the requirement has to apply to everybody, and I understand that there is no point in serving a statutory notice if there are no consequences to refusing to comply with it; I am just not sure about the practicalities. Has the Minister considered alternative sanctions in those circumstances? For example, the person could be disqualified from being a director or a shareholder in significant UK undertakings. That would potentially have the same effect.
It seems to me that, generally speaking, we would create a criminal offence for the conduct of somebody in a different sovereign territory only in specific circumstances. If somebody is serving with the UK armed forces, for example, they might be covered by UK law even when they are serving abroad. The other circumstance is if the crimes are so heinous as to be regarded as crimes against international law—crimes against humanity and war crimes, for example. I understand that the Education Secretary thinks that Britain is just the best country in the word and nobody else can touch us, but I doubt even he would think that failing to respond to a notice from the UK Secretary of State constitutes a crime against international law.
Is the Minister concerned about setting a precedent whereby we attempt to apply domestic law to the actions or non-actions of people who, in normal circumstances, are covered by the laws of the country they are in and not the criminal law of the United Kingdom? Given that this might create a difficult precedent, is he satisfied that the Government have looked at every possible alternative sanction? This could create a precedent, and other countries could start legislating to say that what UK citizens do in the United Kingdom is contrary to their laws, which would therefore make any of us subject to arrest and prosecution by the authorities of another country. I am a bit concerned about the reaction that might be provoked from Governments elsewhere if we get this part wrong.
Nadhim Zahawi
I think the hon. Gentleman is referring to parties that are abroad and have a business in the UK—what if notice is served on them and they are non-compliant? Obviously, under UK law that would be a problem for them. I certainly think that, if an information notice is served, the timeline for the Secretary of State’s assessment of a trigger event is paused until the information is provided from the individual in whatever jurisdiction they or the entity happen to be at the end of the time period provided for compliance in the information notice.
If a party does not comply during the assessment process, that may lead to more onerous and stricter remedies being imposed by the Secretary of State than would otherwise be the case, including the acquisition being blocked or unwound where appropriate. It will therefore plainly be in the interest of those involved directly in the trigger event to provide information in a timely manner to the Secretary of State in order that a speedy decision can be taken. That is where the leverage lies.
Peter Grant
I am grateful to the Minister for that clarification. As I say, I fully understand what the Government are attempting to achieve. I would expect that, in those circumstances, the Minister would block the acquisition if there was a serious failure to comply by anybody who was in practice beyond the reach of UK criminal prosecution. I would certainly hope that in those circumstances the Secretary of State would use the other powers to ensure that they could not become a controlling influence on any strategically important UK undertaking.
As I said, I do not want to divide the Committee. I did not even feel it was appropriate to table an amendment, partly because I could not think of a way of amending it that would make it any better. Having made those points, I am grateful for the Minister’s clarification, and we will leave it to future Secretaries of State to implement it as best they can.
Matt Western
I will pick up on one issue, which concerns subsection (3)(a). I would like some clarification from the Minister. I am trying to get my head around what is meant by
“a qualifying entity which is formed or recognised”.
Could he give an illustration of what is meant by “recognised”? I assume that this is about some takeover, merger or acquisition. Could it be some sort of shell company or some other form? Perhaps the Minister could clarify what is meant by recognition under the law.
Dr Whitehead
Briefly, we fully understand the purpose of the clause. It is obviously necessary to ensure that witnesses, wherever they are, if they have a relevant interest in these matters, should be made available to give evidence. I share some of the concerns of the hon. Member for Glenrothes about how workable it might be. I particularly wonder whether subsection (2) includes UK overseas nationals. That is particularly relevant to some of our discussions earlier today. I see in the previous clause that if someone is a UK citizen and domiciled in the UK, they get their bus fare paid if they live more than 10 miles away.
Dr Whitehead
But apparently there are no international flight payments as far as overseas witnesses are concerned. I do not know whether the Minister has that in mind, but I note a big difference between the two clauses. If such witnesses could get some payment towards their attendance in the UK, that might resolve some of the problems that the hon. Member for Glenrothes suggested—provided it is economy class, obviously.
Question put and agreed to.
Clause 21 accordingly ordered to stand part of the Bill.
Ordered, That further consideration be now adjourned. —(Michael Tomlinson.)
Financial Services Bill (Eleventh sitting)
Thursday 3rd December 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 3 December 2020 - (3 Dec 2020)
The Committee divided: - Ayes: 6 / Noes: 9 - Question accordingly negatived.
The Committee divided: - Ayes: 6 / Noes: 8 - Question accordingly negatived.
The Chair
Before we begin, I have a few reminders. Please switch electronic devices to silent, tea and coffee are not allowed in sittings, and I thank everybody for your respect of social distancing. The Hansard reporters will be grateful if Members could email any electronic copies of their speaking notes to hansardnotes@parliament.uk. If Members wish to press any of the new clauses that have already been debated to a Division, some prior indication would be helpful, although not compulsory.
Today, we continue line-by-line consideration of the Bill. New clause 1 has already been debated. Does Pat McFadden wish to press it to a Division?
Mr Pat McFadden (Wolverhampton South East) (Lab)
No.
New Clause 2
European Union regulatory equivalence for UK-based financial services businesses
‘(1) The Treasury must prepare and publish a report on progress towards regulatory equivalence recognition for UK-based financial services firms operating within the European Union.
(2) This report should include—
(a) the status of negotiations towards the recognition of regulatory equivalence for UK financial services firms operating within the European Union;
(b) a statement on areas in where equivalence recognition has been granted to UK based businesses on the same basis as which the UK has granted equivalence recognition to EU based businesses; and
(c) a statement on where such equivalence recognition has not been granted.”—(Mr McFadden.)
This new clause would require a report to be published on progress towards, or completion of, the equivalence recognition for UK firms which the Government hopes to see following the Chancellor’s statement on EU-based firms operating in the UK.
Brought up, and read the First time.
The Chair
With this it will be convenient to discuss the following:
New clause 28—Pre-commencement impact assessment of leaving the EU Customs Union—
‘(1) No Minister of the Crown or public authority may appoint a day for the commencement of any provision of this Act until a Minister of the Crown has laid before the House of Commons an impact assessment of—
(a) disapplying EU rules;
(b) applying rules different from those of the EU as a consequence of any provision of this Act.
(2) A review under this section must consider the effects of the changes on—
(a) business investment,
(b) employment,
(c) productivity,
(d) inflation,
(e) financial stability, and
(f) financial liquidity.
(3) A review under this section must consider the effects in the current and each of the subsequent ten financial years.
(4) The review must also estimate the effects on the changes in the event of each of the following—
(a) the UK leaves the EU withdrawal transition period without a negotiated comprehensive free trade agreement,
(b) the UK leaves the EU withdrawal transition period with a negotiated agreement, and remains in the single market and customs union, or
(c) the UK leaves the EU withdrawal transition period with a negotiated comprehensive free trade agreement, and does not remain in the single market and customs union.
(5) The review must also estimate the effects on the changes if the UK signs a free trade agreement with the United States.
(6) In this section—
“parts of the United Kingdom” means—
(a) England,
(b) Scotland,
(c) Wales, and
(d) Northern Ireland; and
“regions of England” has the same meaning as that used by the Office for National Statistics.”
This new clause would require the Government to produce an impact assessment before disapplying EU rules or applying those different to those of the EU; and comparing such with various scenarios of UK-EU relations.
New clause 36—Regulatory divergence from the EU in financial services: annual review—
‘(1) The Treasury must prepare, publish and lay before Parliament an annual review of the impact of regulatory divergence in financial services from the European Union.
(2) Each annual review must consider the estimated impact of regulatory divergence in financial services in the current financial year, and for the ten subsequent financial years, on the following matters—
(a) business investment,
(b) employment,
(c) productivity,
(d) inflation,
(e) financial stability, and
(f) financial liquidity,
in each English region, and in Scotland, Wales and Northern Ireland.
(3) Each report must compare the analysis in subsection (2) to an estimate based on the following hypothetical scenarios—
(a) that the UK leaves the EU withdrawal transition period without a negotiated comprehensive free trade agreement;
(b) that the UK leaves the EU withdrawal transition period with a negotiated agreement, and remains in the single market and customs union;
(c) that the UK leaves the EU withdrawal transition period with a negotiated comprehensive free trade agreement, and does not remain in the single market and customs union; and
(d) that the UK signs a comprehensive free trade agreement with the United States.
(4) The first annual report shall be published no later than 1 July 2021.”
This new clause requires a review of the impact of regulatory divergence from the European Union in financial services, which should make a comparison with various hypothetical trade deal scenarios.
Mr McFadden
Thank you for your chairmanship, Mr Davies. I rise to speak to new clause 2, in my name and the names of my hon. Friends. We discussed equivalence when we were debating clause 24 or 25, so it might relieve the Minister and the Committee to know that I will not repeat everything I said about how we got to this position, but let us look at what the current situation is.
First, we have withdrawn from the EU, and in so doing we have withdrawn from any joint decision-making process about mutual access to financial services. Secondly, a few weeks ago the Chancellor announced a unilateral move on the UK’s part to grant equivalence recognition to EU member states and their firms. Thirdly, there is a legislative mechanism to do that in the Bill. Fourthly, we now await decisions on equivalence from the EU. Finally, in terms of the regulatory picture, we have spent a lot of legislative time in this House—probably no one more than the Minister in the past two years or so—legislating to onshore various EU directives. That is where we are.
The aim of onshoring that vast body of legislation was to have a parallel position, or as near to one as we could reach, on day one of the end of the transition period. At the same time, though, we have given our regulators powers to diverge in various ways from the terms of these directives in future. We have discussed that quite a few times in Committee, and the Minister said that the Government are not interested in diverging for the sake of divergence, but of course there are many in the Government, and in his party, for whom divergence is the whole point of the exercise, because it is all about sovereignty. Although we may be almost totally in line on day one—new year’s day—what about day 100 or day 1,000?
Nothing in new clause 2 alters the power to diverge. If the package of onshoring and granting new powers to the regulators that the Minister is taking through is there, nothing in the new clause alters that, but it asks for a report on where we have reached in that process. We know that a positive outcome of this process could have a very significant bearing on the UK financial services industry. It would mean better access for our firms than without that process. It certainly would not give them what they have at the moment, but that is water under the bridge—we debated that earlier in Committee.
The converse is also true, of course: if we do not get equivalence recognition, it would have implications for jobs, tax revenue and how the UK is viewed as a home for inward investment in the financial services industries. All that the new clause does is to ask for a report on where we have got to in the process or, alternatively, a statement on who has refused to grant equivalence of recognition.
I hope the Economic Secretary does not mind if I point out that I cannot be the only one who is struck by the clamour, particularly on the Government Benches, for economic evidence to justify covid-protective measures. Everybody wants the exact detail of how that will affect their local economies. If that is the case, it is only right that the Government report on the economic consequences of the other major process that we are going through. That is the intention behind the new clause.
The sector is hugely important for the United Kingdom, as has been mentioned many times during our debates over the last couple of weeks. All that the new clause does is to ask for a report on where we are on market access. I very much hope that we have a positive outcome on that. Some of it may be about good will, and it might depend on what is agreed in the next week or two—we do not know. It is certainly in the interests of the sector to have a positive outcome. The least we can ask is that the Government report to the House on that.
Finally, if the outcome is positive, the Government will probably want to report back anyway. If the outcome is not positive, Parliament has a right to hear about that, too.
Stephen Flynn (Aberdeen South) (SNP)
Just to be clear, Mr Davies, do you wish me to speak to new clause 2 or to new clauses 28 and 36?
Stephen Flynn
Then I will do that—thank you. It is a pleasure to see you in the Chair once again, Mr Davies. It is probably accurate and correct that the new clauses are grouped together, because they are quite similar in scope, particularly when considering the wider issue of divergence. I will come back to that.
New clause 28 seeks to provide an impact assessment before disapplying European Union rules or applying rules different from those of the EU. That is incredibly important, because it goes to the core of what the Bill is about in relation to our leaving the European Union. Only a few day ago, the Governor of the Bank of England highlighted that a no-deal Brexit could of course lead to a worse economic situation than covid. We need to be in a position to assess the reality of what the Government seek to do. That should apply in the case of no-deal, a good deal—as far as the Government see it—a bad deal or a “Boris deal”.
We should compare what we could have had with what we get. We should be open and transparent with the public about that. The Government talk about wanting to take back control and parliamentary sovereignty; let us take that back to the people as well and show them that the Government are being open and transparent with everything that is put forward. That is particularly important in a Scottish context because—lest we forget—the people of Scotland did not vote for Brexit, and they do not want it to happen, so it is incumbent on the UK Government to provide that clarity to them, particularly on such important matters.
If the Government are proud of the actions that they are taking and seek to go down a different path, they should be willing to follow up on their actions and be open and transparent, not shy away from that.
That takes me on to new clause 36, which would do something very similar to new clause 28, but rather than looking at the potential impact of future decisions, it would provide for an annual review of the decisions that had been taken. That, as the right hon. Member for Wolverhampton South East said, is, in the context of equivalence, incredibly important, particularly if we are to see the UK diverge from the European Union in any way, shape or form. As we have heard, the Chancellor has guaranteed equivalence to the European Union, so it will have access to the UK markets, but of course there is not a similar agreement in place for us. Conservative Members would, understandably, argue that that is the EU’s fault and that the EU should be delivering that for us, but, as I said on Second Reading, who can blame it when this is a Government who simply cannot be trusted, a Government—lest we forget—who are willing to break international law?
Irrespective of that, we should all be concerned about the reality of not having equivalence in place and what that could lead to. We have made and heard suggestions that it could mean, ultimately, divergence in relation to MiFID—the markets in financial instruments directive. It could mean divergence in relation to the wider insurance regulatory framework. I appreciate that there are arguments both in favour and against in that regard, but we need always to be mindful of what we are seeking to diverge from in relation to our wider relationship with the European Union. I appreciate that it will ultimately be in the gift of the Government to do these things, but they should surely have some concerns about the actions that they will be taking.
I go back to the comments that I made about new clause 28. If the Government are proud of the actions that they take and have taken, they will be willing to accept both new clause 28 and new clause 36 and to put their money where their mouth is and be open and transparent with the people of Scotland and the people of the United Kingdom that their decisions have not been ones that have had disastrous consequences for the economy of the UK. I suggest that if they do not accept the new clauses, that is because they know the damage that they are going to do.
The Economic Secretary to the Treasury (John Glen)
What a pleasure it is to serve under your chairmanship once again, Mr Davies. These new clauses seek to place requirements on the Government to make various reports related to the UK’s withdrawal from the EU and the subsequent evolution of our financial services regulation.
New clause 2 deals with equivalence, which is an important mechanism for managing cross-border financial services activity. I can well understand hon. Members’ interest in that. However, the obligation that the new clause would impose on the Government—essentially, to report on the status of the EU’s considerations about UK equivalence—is beyond the Government’s power and therefore not something that the Government can agree to do.
The right hon. Member for Wolverhampton South East rightly referred to my right hon. Friend the Chancellor’s speech on 9 November, in which he made clear that we have made equivalence decisions—17 of the 30 that we have to make. We have co-operated very fully with the EU in terms of a timely response to the 17 questionnaires. Again, we cannot determine how it responds. Equivalence assessments are an autonomous process, managed separately from trade negotiations. That applies in the case of the EU, and where the EU chooses to grant the UK equivalence, that will be done in accordance with its own decision-making process. EU equivalence determinations are unilateral and do not require the UK’s agreement. Those decisions will be published and readily available to all, including UK parliamentarians.
I can reiterate today the Government’s commitment to operating an open and transparent approach to equivalence as the Chancellor explained in his speech on 9 November. Our overall approach is outlined in the recently published guidance document on the UK’s equivalence framework. That document makes it very clear that transparency will be one of the key principles of our equivalence framework.
As part of this, the Treasury will provide Parliament with appropriate information about the operation of the equivalence framework. After the end of the transition period, future equivalence decisions will be made by regulations laid before Parliament, giving Members the opportunity to consider and scrutinise the Treasury’s decisions as part of the UK’s normal legislative process.
As I said, the Chancellor recently announced a package of equivalence decisions following the completion of our assessment of the EU, where we took a thorough but proportionate outcomes-based assessment against the criteria in legislation. As the EU has confirmed publicly, there are many areas where it is not prepared to assess the UK at the current time. In the absence of clarity from the EU, we have made decisions to provide clarity and stability to industry, supporting the openness of the sector and to help to deliver our goal of open, well-regulated markets.
Mr McFadden
I want to respond to a couple of things that the Minister said. As I said when I moved the new clause, nothing in it stops divergence. There is no attempt to make sure that we are in lockstep with EU regulations for ever and a day. The new clause is completely silent on that.
Nor does the new clause pretend that the equivalence decisions that we seek can be within the gift of the Government. In fact, from the point of view of some of us, that is the problem. We would have a say over that at present, but we will no longer have a say in future. That is precisely why we are discussing this issue.
All that the new clause does is ask for a report on the outcome. What is the outcome for our financial services? It is like we are back on day one of our proceedings, when we talked about the different reasons for turning amendments down. The Minister has said that the Government will report regularly to Parliament, in which case the new clause would be entirely harmless. That is why we will press it to a vote.
Question put, That the clause be read a Second time.
Mr McFadden
I beg to move, That the clause be read a Second time.
We are by definition entering a new world for UK financial services. Whether it is a brave new world, I do not know, but it is a new world. The measures in the Bill are a small part of that. We are onshoring EU regulations and, although we will still be part of globally agreed standards such as the Basel regime, we will have to decide what future we want in this sector. As the Minister has advised us several times, we should not see the Bill as the totality of what the Government are doing in financial services. There will be a future regulatory review, and there might even be future Bills, so this is one part of the picture. That creates difficulty for the sector, and perhaps for us, in trying to divine where we are going.
That is important because the UK has possibly the most globally significant financial sector of any country in the world. We learned the hard way what the risks of that were in the financial crisis, when the sector ran into trouble. However, the converse is that if the sector is properly regulated, if it pays its way in terms of its taxation contribution, its contribution to innovation, its capacity to bring inward investment to the country and the employment it provides, and if it is properly run, it can also be a huge advantage for the UK. The new clause asks the Government to pull all of that together and take the pipeline of changes that they have in mind, together with the new context, and produce a strategy that gives clarity to the sector, the public and Parliament about where we are going.
That is not particularly unusual for the Government. They do that for other sectors. In the automotive sector, the Department for Business, Energy and Industrial Strategy has the Automotive Council UK, which brings together different players in the industry and looks at everything from supply chains and skills to inward investment. Over the years, it has played its part. The last couple of years have been pretty rocky, for reasons that we all know about, but up until then the UK had a growing, successful automotive industry. We were producing more and more cars each year, and we were very successful at winning inward investment.
If we take the parallel of financial services, there is plenty that such a strategy could cover. To name just a few obvious areas, we have a growing FinTech sector in the UK, which we want to succeed. It is doing more innovation, and we might hear more about that later. We have the development of cryptocurrencies, and it is in the public interest that we have a greater understanding of what that phenomenon is and what it means for investors, consumers and so on.
We have the green finance debate, which we have discussed a number of times over the past couple of weeks. If we really want the UK to be the leading force in green finance over the coming decades, what do we need to do to ensure that that is the case? We have also had an ongoing debate for some years about competition and about the challenges of getting new banking players into the UK market, which is, at the retail level, dominated by four or five high street names that account for the vast majority—90%-plus—of current accounts, deposits, savings and so on.
Then we have more difficult issues, which we have touched on, such as money laundering, fraud and so on. They are an ongoing challenge, and we will be talking more about them later this afternoon. There are probably a lot more, but those are the kinds of things that a financial services strategy might cover.
There is also the regulatory approach. Now that we are no longer going to be part of a common European rulebook, what is the philosophy behind the rulebook that we will have? What will it say to assure people that there will not be a race to the bottom? What will it say on capital to get the balance right between allowing innovation and protecting consumers from organisations that do not have enough resilience? Would there, for example, be a shift away from the traditional British strong focus on property investment to more investment in research, development, manufacturing technology and small business lending? That has been a constant theme. There is nothing partisan about it. There are many strong voices in the Conservative party as well as the Labour party speaking up for small businesses and raising the difficulties with lending and so on. That is also something that could be governed.
We spoke about the environmental, social and governance agenda. The Minister has been resistant to all our amendments on that. All the votes are on the record—we have had three or four of them. The Government do not want anything added to the Bill on environmental sustainability or anything like that. I have also said several times that the ESG agenda is really important for the UK, and the Government have said, at least in rhetorical terms, that they believe the same thing, so exactly how would it be advanced if not in the ways that we have tried to suggest—through the various amendments we have tabled to the Bill?
We have a lot of rebuilding to do as we recover from this pandemic. Many people have described it as a great acceleration in trends. There will be job losses, as the Chancellor tells us, and business closures. Many of the behavioural changes that we have seen in how people live, work and purchase things are likely to stay for a long time. A differently shaped day-to-day economy will emerge from this. Financial services will have a huge role to play in that, and Treasury Ministers will quite rightly want to say something about it.
Alison Thewliss (Glasgow Central) (SNP)
I very much support what the right hon. Member for Wolverhampton South East says. It is important that we look at this in the round, and particularly at the newer technologies coming into force that we will need as part of our economy going forward.
John Glen
I very much appreciate the sentiment behind the new clause. The right hon. Member for Wolverhampton South East set out all the different areas of focus involved in financial services, taking me through all our different calls for evidence and ongoing pieces of work—there are a number of others, too. However, the new clause is unnecessary.
Only a few weeks ago, the Chancellor made a statement to Parliament on the future of the UK financial services sector. Indeed, Miles Celic from TheCityUK described it as an “ambitious vision” for financial services. Across the range of different elements that the right hon. Gentleman set out, a lot of activity is ongoing. Indeed, a number of consultations are out at the moment. As the Chancellor stated, we are at the start of a new chapter for the industry, and our having an open, green and technologically advanced industry that serves the consumers, communities and citizens of this country and builds on our existing strengths, including our world-leading regulatory system and standards, was the essence of that vision. The UK will remain the most open and competitive place for financial services in the world by prioritising stability, openness and transparency.
The Chancellor set out new proposals to extend our leadership in green finance, including by taking the key step of introducing mandatory requirements for firms to disclose their climate-related risks within five years, making the UK the first country to go beyond the “comply or explain” principle. He also announced plans to implement a green taxonomy and, subject to market conditions, to issue the UK’s first ever sovereign green bond next year. He set out his intention that the UK will remain at the forefront of technological innovation, to provide better outcomes for consumers and businesses.
The UK’s position as a global and open financial services centre will be underpinned by a first-class regulatory system that works for UK markets. The Government already have several reviews under way, including the future regulatory framework review and the call for evidence on Solvency II, to highlight two. We also have the FinTech review, which will report early in the new year. That is the Government’s strategy for financial services now that we have left the European Union.
I hope that I could not be accused, as the City Minister, of being unwilling to come before the House to provide updates on the Government’s work relating to financial services, whether in the Chamber, Select Committees—I think I have made about 12 appearances now—or in Westminster Hall, or of doing that infrequently. The Chancellor and I will continue to provide updates at the appropriate times in the normal way.
Having considered the issue carefully, I ask the right hon. Gentleman to withdraw the new clause.
Mr McFadden
The Minister is right to refer to the Chancellor’s statement on 9 November, which was called a vision. While it touched on the green finance things the Minister mentioned, it did not touch on many of the things that I mentioned. He is also right to say that lots of reviews are going on. While it may be unfair to say that that is the problem, there is nothing that really brings them together with clarity about where we are going. I will not press the new clause to a vote today, but we may return to it, so I beg to ask leave to withdraw the clause.
Clause, by leave, withdrawn.
New Clause 5
Regulation of lead generators for debt advice and debt solution services
“(none) In section 22 of the Financial Services and Markets Act 2000 (regulated activities), after subsection 1A insert—
‘(1AA) An activity is also a regulated activity for the purposes of this Act if it is an activity of a specified kind which is carried on by way of business and relates to—
(a) effecting an introduction of an individual to a person carrying on debt advice and debt solution services, or
(b) effecting an introduction of an individual to a person who carries on an activity of the kind specified in paragraph (a) by way of business.’”—(Mr McFadden.)
This new clause would empower the FCA to regulate activities such as paid search and social media advertisements, including the impersonation of reputable debt management charities.
Brought up, and read the First time.
Mr McFadden
I beg to move, That the clause be read a Second time.
This new clause is directed at reducing harm to heavily indebted people by clamping down on imposter or clone websites that might direct people away from legitimate avenues of advice without their knowledge. It was suggested to us by the charity StepChange, which reports a serious, large-scale and ongoing problem with imposter or clone sites posing either as StepChange itself or as another reputable charity and preying on vulnerable people in debt. In fact, StepChange estimates that as many as one in 10 people searching for the organisation online are inadvertently led to someone else.
This is not just one of the traditional issues of having time-consuming and frustrating discussions with web providers to get them to take some responsibility for what is on their platforms; it is also a matter of regulation. The new clause proposes to close a regulatory loophole: the activity of introducing an individual to a credit provider is regulated by the FCA, but the activity of introducing an individual to a debt advice or debt solution service is not. That loophole represents a gap in the picture, and the new clause seeks to close that gap by bringing lead generators for debt advice and debt solution services clearly within the FCA’s remit.
The new clause is, perhaps, about quality control. It would protect consumers from clone sites and from unscrupulous operators who would prey on their financial problems. I argue that that becomes all the more important in the context of clause 32 and the establishment of statutory debt repayment plans, because the gateway to them will be through seeking advice from reputable debt advice and debt solution services. It would be entirely with the grain of the Bill, and the Government’s policy intent, to ensure that that gateway is properly regulated by the FCA.
The Minister has been consistent in resisting every amendment and new clause over the past couple of weeks, and I appreciate that he has probably come armed with advice not to accept any amendments, even if they look okay, because there may be a drafting issue or something. However, if there is some reason in his folder why he cannot accept this new clause today or—hopefully this is not the case—if the optics of doing so, because it has been suggested by the Opposition, are somehow too difficult to contemplate, will he at least take the matter away and consider introducing a provision either on Report or at a further stage in the Bill’s passage?
It is very much in the interests of the statutory debt repayment plans, for which he feels—I credit him for this—a big degree of personal ownership, that this regulatory loophole is closed, and that we do what we can to prevent people seeking that kind of help from being led away by unscrupulous operators on the internet. Instead, we must ensure that they are channelled to reputable advice organisations and solution providers—be it StepChange or somewhere else.
Alison Thewliss
I rise to support the new clause. It is typical of the eagle-eyed way that the right hon. Gentleman has approached this Bill that he found this particular loophole. I am not sure which of his pots he thinks the Government might think it falls into, but it is a sensible, minor change. The Government would do well to take it on now or bring it back at a later stage. We want to protect people who have fallen into that situation in every way we can. We all know that there are vultures on the internet who want to cut a share of that and exploit people. The new clause is a sensible and reasonable way of addressing that and I commend it to the Minister.
John Glen
I take this issue very seriously. I recognise the work of StepChange and I note the letter from Marlene Shiels, chief executive officer of the Capital Credit Union and her support for this. She makes a significant contribution to the Financial Inclusion Policy Forum that I chaired just last week.
The Government are taking strong steps to ensure that lead generators do not cause consumer harm. As the right hon. Member for Wolverhampton South East said, lead generators identify consumers in problem debt and refer them to debt advice firms and to insolvency practitioners. That can help consumers access appropriate debt solutions and support their recovery on to a stable financial footing. However, I readily recognise the risk that unscrupulous lead generators could act contrary to their clients’ interests. To mitigate that risk, debt advice firms and insolvency practitioners are already required to ensure that any lead generators they use are compliant with applicable rules to prevent consumer harm in the market.
Under Financial Conduct Authority rules, that includes ensuring that lead generators do not imitate charities or deliver unregulated debt advice, and that they are transparent with clients about their commercial interests. As such, the FCA, as the regulator of debt advice firms—and the Insolvency Service, as oversight regulator of insolvency practitioners—already influences lead generators’ impacts on consumers.
New clause 5 would not materially improve the FCA’s influence over lead generators. Its scope would be incomplete, applying only in respect of lead generators’ referrals to debt advice firms, not to insolvency practitioners. The Government have already issued a call for evidence on whether changes are needed to the regulatory framework for the insolvency profession and will publish a response next year. In the light of our recognition that the matter needs a focus and that work is being done on a response, I ask the right hon. Gentleman to withdraw the motion.
Mr McFadden
I am happy to do that. I just appeal to the Minister to try to find a way that he is comfortable with of closing the loophole. I beg to ask leave to withdraw the motion.
Clause, by leave, withdrawn.
New Clause 6
Duty of care for financial service providers
‘(1) The Financial Services and Markets Act 2000 is amended as follows.
(2) In section 1C, after subsection 2(e) insert—
“(ea) the general principle that firms should not profit from exploiting a consumer’s vulnerability, behavioural biases or constrained choices;”
(3) After section 137C insert—
“137CA FCA general rules: duty of care
(1) The power of the FCA to make general rules includes the power to introduce a duty of care owed by authorised persons to consumers in carrying out regulated activities under this Act.
(2) The FCA must make rules in accordance with subsection (1) which come into force no later than six months after the day on which this Act is passed.””—(Mr McFadden.)
This new clause would introduce a duty of care for the FCA which would strengthen the FCA’s consumer protection objective and empower the FCA to introduce rules for financial services firms informed by that duty of care.
Brought up, and read the First time.
The Chair
With this it will be convenient to discuss the following:
New clause 15—Financial Conduct Authority: regard to consumer detriment—
‘(1) The Financial Services and Markets Act 2000 shall be amended as follows.
(2) In section 1C(2), after paragraph (h), insert—
“(i) the prevention of consumer detriment, including but not limited to the promotion of unaffordable debt.”
This new clause would require the FCA to have regard to consumer detriment, including the promotion of unaffordable debt, when exercising its powers.
New clause 18—Duty of FCA to investigate and report on possible regulatory failure—
‘(1) Section 73 of the Financial Services Act 2012 shall be amended as follows.
(2) In subsection 1(b)(ii), at end insert—
(iii) a failure of the FCA to intervene earlier or otherwise act effectively to protect consumers.”.”
This new clause would require the FCA to carry out an investigation into the events and circumstances surrounding any significant failure to secure an appropriate degree of protection for consumers and make a report to the Treasury on the result of the investigation.
New clause 21—Assessment of risks of consumer detriment—
‘(1) Schedule 6 of the Financial Services and Markets Act (2000) is amended as follows.
(2) After paragraph 2D(2)(c) insert—
(d) the risks of consumer detriment associated with the firm’s business model and the likelihood for compensation claims from consumers.”
(3) After paragraph 2D(3), insert—
“(3ZA) When assessing whether the firm has appropriate financial resources to meet the risks of consumer detriment and the likelihood of compensation claims from consumers, the Financial Conduct Authority must ensure that, at all times, firms hold sufficient financial resources to meet any likely compensation claims from customers in full.””
This new clause would ensure that the FCA considers the likelihood of consumer detriment arising from the firm’s business model prior to, and following, authorisation, and that firm’s hold sufficient financial resources to meet potential compensation claims from customers in full.
New clause 23—Consumer redress schemes: FCA reporting requirements—
‘(1) In section 404A of the Financial Services and Markets Act 2000, at end insert—
“(10) Where the Financial Conduct Authority initiates a consumer redress scheme by virtue of the powers conferred in section 404 of this Act, and makes any provisions for its operation by virtue of this section, the Financial Conduct Authority must—
(a) provide an initial written report to the Secretary of State detailing its reasons for any of the provisions it has made for the redress scheme under section 404A;
(b) ensure that any instructions provided to an appointed ‘competent person’ under subsection (1)(k) are included in the above report; and
(c) provide a further written report to the Secretary of State detailing the outcomes from any consumer redress scheme, including copies of any “competent person” assessments relevant to the redress scheme.””
This new clause would require that the FCA provide written reports to the Secretary of State setting out the reasons for any decisions made regarding the parameters decided, and approaches taken, in designing, investigating, and implementing consumer redress schemes, and requires a report on the outcomes achieved for consumers to be made.
New clause 38—Duty of care specification—
‘(1) The Financial Services and Markets Act 2000 is amended as follows.
(2) After Section 1C insert—
“1CA Duty of care specification
(1) In securing an appropriate degree of protection for consumers, the FCA must ensure authorised persons carrying out regulated activities are acting with a Duty of Care to all consumers.
(2) Matters the FCA should consider when drafting Duty of Care rules include, but are not limited to—
(a) the duties of authorised persons to act honestly, fairly and professionally in accordance with the best interest of their consumers;
(b) the duties of authorised persons to manage conflicts of interest fairly, both between themselves and their clients, and between clients;
(c) the extent to which the duties of authorised persons entail an ethical commitment not merely compliance with rules;
(d) that the duties must be owned by senior managers who would be accountable for their individual firm’s approach.””
This new clause would mean that the FCA would need to ensure that financial services providers are acting with a duty of care to act in the best interests of all consumers.
New clause 39—Duty of care specification on all financial services providers—
‘(1) The Treasury must by regulations require all financial services providers to act within a duty of care overseen by the FCA.
(2) The FCA may make rules to ensure all financial services providers act within the duty of care.
(3) Matters the FCA should consider when making duty of care rules include but are not be limited to—
(a) the duties of authorised persons to act honestly, fairly and professionally in accordance with the best interest of their consumers;
(b) the duties of authorised persons to manage conflicts of interest fairly, both between themselves and their clients, and between clients;
(c) the extent to which the duties of authorised persons entail an ethical commitment not merely compliance with rules; and
(d) that the duties must be owned by senior managers who would be accountable for their individual firm’s approach.
(4) If before the end of December in any year the Secretary of State has not introduced a requirement for all financial services providers to act within a duty of care, the Treasury must—
(a) publish a report, by the end of December of that year, explaining why regulations have not been made and setting a timetable for making the regulations, and
(b) lay the report before each House of Parliament.”
New clause 40—Duty of care specification on all financial services providers (No. 2)—
‘(1) At least once a year, the Treasury must review the case for instructing the FCA by regulations to produce rules requiring all financial services providers to act within a duty of care.
(2) If, following the review, the Treasury decides not to introduce such regulations, the Treasury must publish and lay before Parliament a report setting out the reasons for its decision.”
New clause 41—Duty of care on all financial service providers—
‘(none) The Treasury must instruct the FCA to impose a duty of care on all authorised persons providing financial services activity regulated by the FCA by the end of 2021.”
New clause 42—Report on FCA’s progress on duty of care consultation—
‘(1) The Treasury must prepare and publish an annual report setting out the FCA’s assessment of the need for a duty of care and lay a copy of the report before Parliament.
(2) A Minister of the Crown must, not later than two months after the report has been laid before Parliament, make a motion in the House of Commons in relation to the report.”
Mr McFadden
New clause 6 is about a duty of care for financial service providers and several other new clauses push in the same direction. It is fair to say that this has been under discussion for some time. A private Member’s Bill was introduced on the subject in the other place about a year ago and the FCA has been involved in a long process of ongoing discussion about it for the past two or three years. The FCA produced a paper on it in 2018 and there was a response in April last year, although it did not reach a definitive conclusion.
Those who argue for a duty of care—I refer again to the charity StepChange—suggest that the current regulatory framework, even with the duty to treat customers fairly, which is part of the FCA’s current advice and regulations to providers, does not provide adequate protection for consumers. They seek to prompt the question from a financial service provider, “Is this right?” rather than just, “Is this legal?” That is a helpful way of considering what difference a duty of care might make.
The legal definition of a duty of care, as quoted in the FCA’s discussion document is,
“an obligation to exercise reasonable care and skill when providing a product or service.”
Those who favour it believe that it will help avoid conflicts of interest, too and oblige service providers to act in the customer’s best interests rather than, for example, putting the interests of the company above those of the customer it serves.
Stella Creasy (Walthamstow) (Lab/Co-op)
It is a pleasure to serve under your chairmanship, Mr Davies, as ever, for the last time on this Bill. Let us make it a good one. I will try to keep it lively and maybe capture the attention of everybody on the Committee about the things we can do.
The new clauses provide the moment to finally talk about the big beast in this Bill: the Financial Conduct Authority. I say “big beast”, because, as someone who has tracked not only high-cost credit, but credit companies—as I know the Minister has for many years—I sometimes feel like Bob Peck in “Jurassic Park”, who played the warden, Robert Muldoon, who tried to warn people about the velociraptors, but was also supremely impressed by the way in which they evolved to be able to kill. In this case it is about evolving to be able to exploit.
It matters that we take a careful look at what the FCA is doing, because the FCA is our constituents’ best defence against the velociraptors of the credit industries in this country. I use “credit industries” widely, because for me this is not just about the high-cost credit industry. However, in supporting the new clauses, I want to share with the Committee the experiences around the high-cost credit industry and, in particular, the pay-day loan sector, because I think they speak to the challenges with the Financial Conduct Authority and why we need to amend the Bill, to ensure that as we give the FCA more powers, it truly has our constituents’ interests at the forefront of its mind.
I do not doubt the impact that the FCA has had. I want to put that on record, because the Minister and I have talked for a long time about my concerns about the FCA. I acknowledge that it has made progress. My point is about the pace at which it has made progress, about cutting through the stand-off that we sometimes see, whereby people recognise that this is a problematic type of credit or, as my right hon. Friend the shadow Minister has talked about, where issues arise for our constituents—the people who come into our constituency offices and tell us about their ongoing battles—and about ensuring that we do not just give them protection, which means avenues for redress, but actually prevent those problems. I believe that the FCA was set up to prevent problems, but if we look at its track record in some of those problem areas, we see where delays in dealing with them has led to our constituents paying the price.
Bear with me, Committee; I think it is worth sharing that example, because it explains why these amendments make sense. Indeed, I believe the Minister agrees with me on this. A bit like earlier, with the lead generators, I am sure he already has a folder full of examples of where the FCA has done brilliant work in tackling consumer detriment. In fact, I can see all the paper—goodness me, all the trees that have gone into that! However, I know that he wants the FCA to be more agile and does not want to have people like me continually coming to him and him knowing that there is a problem, but seeing this trade-off, as this aspect is overthought almost, with too much emphasis on the unintended consequences of acting and no emphasis on the unintended consequences of not acting on some of these issues. In order to cut through that, these amendments would give a clear direction to the FCA about what consumer detriment is, why and how it needs to act, and the particular issue it needs to take into account when it comes to debt.
On Tuesday, we talked a lot in this Committee about the debts already in our communities and the debts to come, which is why this is an urgent issue that cannot really be dealt with in another review or consultation, which will go on for 18 months, because by then, in every one of our constituencies, too many people will have lost their jobs and possibly their homes, and will be in what we are calling problem debt for decades to come. Indeed, I believe this Committee is already having a positive impact on that conversation, because on Tuesday we talked about the importance of making problem debt as much of an issue for the sidebar of shame in the Daily Mail as Kim Kardashian’s derrière, and last night I saw that the Daily Mail had started talking about the horror of middle-class people having to go to food banks.
Clearly we are starting that conversation in our country, but we need to do much more. Why do we need to do much more? Because it took too long to deal with the payday lending industry. In 2010, when I was first elected, I already knew many colleagues in this place were seeing these companies on their high streets and the problems with the eye-watering interest rates, where people thought they had missed where the decimal point was. Yet nothing was done for years, and those companies exploded, not just in our high streets but online, and our constituents got into huge amounts of debt. I know that the Minister agrees with me that it took too long. I know, too, that the Minister is not his predecessor, who, when I first went to see him about payday lending, literally patted me on the back, congratulated me on finding an issue that I could issue a press release to my local community about and sent me on my way. I know he is not like that; he recognises when there is a problem. However, if he looks at the regulatory history of the FSA on this issue, he will also see that there was a problem.
Let me set that out with companies that people will have heard of. They will have heard of Wonga, QuickQuid and BrightHouse, all of which operate in constituencies across the country. All these companies have collapsed or are in financial difficulty because of the debts they owe to their customers, our constituents, because of the way in which they lent them money on credit. They have not collapsed as a result of the work of the FCA, but because of the work of the ombudsman. In 2014, when Wonga was clearly a problem for so many of our constituents, the FCA agreed a redress scheme for 375 customers and announced that it had appointed a skilled person to monitor the new lending decisions that Wonga was going to make, to ensure that the issue was sorted. In November 2015, the FCA agreed a redress scheme for 4,000 QuickQuid customers worth £1.7 million, and in October 2017 it agreed a £14.8 million redress scheme for 250,000 BrightHouse customers in respect of 384 agreements for lending that may not have been affordable.
That is the critical issue here. At every point, the FCA has acted to look at the affordability of the loans. However—given it is that time of year—it does not take a rocket scientist to work out that if we ask turkeys to decide what is on the menu for Christmas, they will often say that a nut roast is better, and that is what happens when we ask these companies whether a loan is affordable. They would tell their clients that they could afford these loans, because the way they made their money was to re-lend. It was not for someone to borrow from them and pay it all back—it was for that person to borrow from them and get into a cycle of continually borrowing from them, because they would make a lot more money. Once a person was hooked, they would borrow and borrow. That was the decision about affordability.
At various points the FCA has been brought into these companies to determine whether they were making good affordability decisions—whether, in layman’s terms, they were ripping off our constituents. At every point, that affordability decision did not meet the needs of those customers. How do we know that? Because the ombudsman then had to interfere to help people who were in debt. The result was the same: the lenders all fell into administration, not because of the action of the FCA but because the ombudsman was making them repay our constituents, who had been ripped off by them.
Alison Thewliss
I am very pleased to follow the hon. Member for Walthamstow, because she has been a force of nature on this issue, and I do not disagree with a single word she has said about high-cost credit. The Government really should be listening to her, given her expertise.
I want to speak to new clauses 38 to 42, which stand in my name and that of my hon. Friend the Member for Aberdeen South and focus on duty of care. I pay tribute to Ceri Finnegan from Macmillan Cancer Support, who got in touch when the Bill received its Second Reading and suggested a duty of care. I also pay tribute to the people on the ground in Glasgow who are doing amazing work through Glasgow libraries to support those with cancer and their families, intervening and supporting them when they face financial issues, so that they do not end up getting into greater debt and greater financial difficulties. That prevention aspect is incredibly important.
It is clear to me and to many in the sector that the current situation with the FCA is not working. The StepChange briefing states:
“It is notable that after 20 years of FSMA, the FCA is still talking about culture and has recently consulted on substantial new guidance to ensure firms treat their customers who are particularly vulnerable to detriment fairly. We strongly support this guidance but note that the FCA states that ‘the guidance itself is not legally binding’.”
The fact that it is not legally binding is the problem here, because if no one is being forced to do these things, they are not going to do them in a lot of cases. Some will, but that cannot be relied on, and customers cannot rely on that either. It could well be that one financial services organisation treats people fairly and another one does not, which, again, causes greater stress and confusion.
John Glen
I thank the hon. Ladies and the right hon. Gentleman for their speeches, to which I have listened carefully. I will try to address fully the 10 new clauses that have been tabled. In essence, they relate to the effectiveness of the FCA’s oversight; that is the substantive point behind them.
The lead new clause is new clause 6, which has two functions. Subsection (2) requires the FCA to have explicit regard for vulnerable consumers when discharging its consumer protection objective, and subsection (3) introduces a statutory requirement for the FCA to make rules requiring authorised persons to adhere to a duty of care when providing a product or service.
UK financial services firms’ treatment of their customers is governed by the FCA in its principles of business, as well as specific requirements in its handbook. The FCA’s principles for businesses require firms to conduct their business with due skill, care and diligence, and to pay due regard to the interests of their customers and treat them fairly. The FCA already has recourse to disciplinary action against firms that breach the principles.
The FCA has already announced that it will undertake work to address potential deficiencies in consumer protection, in particular by reference to its principles for businesses. Although the coronavirus pandemic has caused the FCA to reprioritise its resources and delay certain pieces of work, including the next formal stage of this work, delaying these initiatives has ensured that firms are able to focus on supporting their customers, including the most vulnerable, during this difficult period.
I draw attention to the second purpose of new clause 6, alongside new clauses 38 and 39, which require the FCA to introduce a duty of care. A number of other amendments here also relate to the duty of care.
The Government believe that, as the FCA is already taking steps to ensure that consumers are treated fairly and financial services firms are obliged to exercise due care and regard when offering products, services and advice, a statutory duty of care requirement is not necessary. I have already set out a number of actions that the FCA is taking to ensure that customers are properly protected.
On new clause 39 in particular, the Government believe that the scope, which applies to all financial services providers, is inappropriately broad. For example, it is unclear whether that would include persons exempt under the exemptions order, which includes entities ranging from central banks to any employer offering a cycle-to-work scheme. Furthermore, there is no indication of the territorial scope of the financial services provider. Assuming that the duty of care would apply only to actions being done within the UK, the vagueness is still likely to lead to enforcement difficulties if a provider is based outside the UK.
Finally, it is inappropriate to apply the provisions to all financial services providers as no assessment has been made, in relation to unauthorised firms, of the extent to which the existing common law and other consumer protection legislation is or is not sufficient to achieve the right level of consumer protection. For example, where providers are subject to supervision or oversight by other professional bodies, as is the case with professional firms, it is unclear how this proposal would interact with the remit of those bodies who may be better placed to assess matters relevant to duties of care.
New clause 40 would require the Treasury to review at least once a year the case for instructing the FCA to introduce a duty of care for all financial services providers. The Treasury will of course keep this question under consideration. However, it is disproportionate to set this requirement in statute. I have already set out the actions that the FCA is taking to ensure that customers are properly protected.
I want to pause here and note that I have enormous respect for the perspectives of the hon. Member for Walthamstow on this issue. I do not have her encyclopaedic knowledge of dinosaur names, but I do respect her engagement on the issue. I have engaged very closely with the FCA. I recognise that she is still dissatisfied with where things have got to and she makes some reasonable points, on which I am happy to continue the dialogue, but there have been significant changes in recent months with respect to the work that is going on—that is live at present. I suspect she will not be satisfied, but let me carry on and then we can see where we get to at the end of this.
On new clause 41, the Government believe that the FCA, as the independent conduct regulator for the financial services industry, is best placed to judge the merits of a duty of care for the financial services industry. It would therefore be inappropriate for the Treasury to instruct it to impose a duty of care on authorised firms, although that dialogue is ongoing.
On new clause 42, the FCA has already published a feedback statement following its discussion paper on duty of care last year. The FCA will also publicise the findings of its upcoming work on how to address potential deficiencies in consumer protection. Therefore, the Government view is that it would be unnecessary at this point for the Treasury to report on the FCA’s position on the need for a duty of care.
The Government believe that there are sufficient protections in place without expanding the FCA’s statutory consumer protection objective or introducing a statutory duty of care, but I reassure members of the Committee that we will continue to work closely with the FCA to keep this issue under review—I am not saying “No, never.”
New clause 15 would require the FCA to have explicit regard to the prevention of consumer detriment, including the promotion of unaffordable debt, when discharging its consumer protection objective. The Government believe that the FCA, as the UK’s independent conduct regulator, is best placed to judge how to protect financial services consumers from detriment, including that which arises from the promotion of unaffordable debt. The existing legislation accounts for the prevention of consumer detriment as a result of section 1C(2)(e), which outlines
“the general principle that those providing regulated financial services should be expected to provide consumers with a level of care that is appropriate having regard to the degree of risk involved…and the capabilities of the consumers in question”.
Stella Creasy
I am conscious of time, but approximately 1 million households that could ill afford it have lost out on about £1 billion of compensation from Wonga and QuickQuid. Does the Minister really believe that under the existing regime that he is defending, there has been sufficient recognition of what it means to consumers when it goes wrong, and that there is no need for change?
John Glen
There is ongoing work and ongoing evolving action by the FCA. The Government have taken strong steps to prevent problem debt from occurring and to support those who fall into it. We want to make sure that people have the guidance, confidence and skills to manage their finances. That is why we established the Money and Pensions Service last year to simplify the financial guidance landscape, to provide more holistic support for consumers, and to give free support and guidance on all aspects of people’s financial lives. I welcome the publication of its UK strategy for financial wellbeing, which will help everyone to make the most of their money and pensions.
I have already mentioned the role played by the FCA’s principles of business. Further to that, the FCA has recently concluded a consultation on guidance for firms on the fair treatment of vulnerable customers. The protection of vulnerable customers and consumers is a key priority for the FCA. Although many firms have made significant progress in how they treat vulnerable consumers, the Treasury and the FCA want the fair treatment of vulnerable consumers to be taken seriously by all firms so that vulnerable consumers consistently receive fair treatment. I think that was the key point made by the hon. Member for Walthamstow.
Despite those preventive measures, I recognise that many people still fall into problem debt. Professional debt advice plays a vital role in helping people to return to a stable financial footing. That is why in June the Government announced £37.8 million of extra support, which brings the budget for free debt advice to more than £100 million this year. From May, the Government are delivering the first part of the new breathing space scheme, as discussed in Committee, for problem debt. That gives eligible people a 60-day period in which fees, charges and certain interest are frozen and enforcement action is paused.
We discussed on Tuesday the importance of the statutory debt repayment plan, as part of the debate on clause 32. The Government believe that sufficient protections are in place without expanding the FCA’s statutory consumer protection objective. However, I reassure the hon. Lady that the Government will continue to work closely with the FCA to keep that issue under review.
New clause 18 would introduce a duty on the FCA to launch investigations in situations where there is suspected regulatory failure as a result of inaction or a lack of effective action by the FCA, but that is already covered by section 73 of the Financial Services Act 2012. That section imposes a duty on the FCA to investigate where it appears to the FCA that events have occurred that, among other things, indicate
“a significant failure to secure an appropriate degree of protection for consumers”
either by the FCA or otherwise, and where those events might not have occurred but for a serious failure in the regulatory system, or operation thereof, established by FSMA 2000.
Further, section 77 of the 2012 Act enables the Treasury to require the regulators to conduct investigations in cases of suspected regulatory failure in circumstances where it does not appear to the Treasury that the regulators are already doing so, for example under section 73. The section 77 powers are broader than those set out in section 73, in that the Treasury can require the regulators to conduct an investigation into relevant events where it considers that it is in the public interest to investigate them. In addition, section 77 investigations can consider aspects outside the regulatory system as established by FSMA, which allows a comprehensive review to be undertaken in the public interest. Those existing powers ensure that, in cases where section 73 does not apply, a mechanism remains to ensure that investigations can be conducted in the public interest.
If I understand new clause 21 correctly, it reflects the ongoing concerns of the hon. Member for Walthamstow that she has raised in Parliament previously, specifically about circumstances where a firm fails but compensation is owed to a consumer. While I am sympathetic to these concerns, the Government believe that the FCA, as the independent regulator, is best placed to judge the resources that authorised firms need to maintain in order to carry out regulated activities.
I should explain that the FCA is already required by schedule 6 of the Financial Services and Markets Act 2000 to consider whether a firm’s resources are appropriate to the activities it carries out. It is obliged to take into account the nature and scale of a firm’s business, as well as the risk to the continuity of the services it provides to consumers, and must consider whether the business is to be carried on in a sound and prudent manner, with particular regard to the interests of consumers. The legislation also already requires the FCA to consider how a firm’s potential liabilities might impact the resources it should hold. The Government therefore believe that this new clause does not add anything further to the FCA’s requirements that already exist in legislation.
Once again, I would mention the FCA’s principles for businesses, which already require firms to maintain adequate financial resources and organise their affairs with adequate risk management. The FCA has recourse to take disciplinary action against firms that breach these principles. Therefore, the Government believe that there are sufficient provisions in place to ensure consumers can access compensation where they have suffered detriment.
Finally, I turn to new clause 23. I should first note that the launching of any consumer redress scheme is a significant undertaking, and it is right and proper that the process be open and transparent. The new clause proposes making amendments under section 404A of the Financial Services and Markets Act 2000, referred to as FSMA, which provides the FCA with rule-making powers for consumer redress schemes.
However, the existing legislation already sets out a number of requirements governing the actions of the FCA, including provisions to ensure that its actions are transparent. Rules made under section 404 by the FCA are subject to a formal public consultation before a scheme is put in place. The FCA also publishes a policy statement explaining its decision and the rationale for the provisions in any proposed scheme. That consultation also includes any decision to appoint a competent person, and the scope of the competent person’s responsibilities, which are documented in the policy statement. Finally, it is right that any scheme is monitored and assessed, to ensure that it has delivered its intended outcomes. Given the importance and impact of consumer redress schemes as good regulatory practice, the FCA would as a matter of course monitor the progress of the scheme as it is implemented, which would include assessing the scheme against its stated objectives.
Introducing a statutory requirement for a process that the FCA already undertakes introduces an additional and unnecessary hurdle. I appreciate that there is a desire to ensure that the regulators are properly accountable to Parliament, and I reassure members of the Committee that such an accountability mechanism already exists. As part of the requirements under FSMA, the FCA must already provide an account of its activity to the Treasury on an annual basis, and that account is shared with Parliament.
I regret that I have spoken for some time, but this is an important set of questions, and some more will come up later this afternoon. I hope I have satisfied the Committee, and therefore I ask the right hon. Member for Wolverhampton South East to withdraw the new clause.
Mr McFadden
I want to press new clause 6 to a vote.
Question put, That the clause be read a Second time.
Financial Services Bill (Twelfth sitting)
Thursday 3rd December 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 3 December 2020 - (3 Dec 2020)
The Committee divided: - Ayes: 6 / Noes: 10 - Question accordingly negatived.
The Committee divided: - Ayes: 6 / Noes: 10 - Question accordingly negatived.
The Committee divided: - Ayes: 6 / Noes: 10 - Question accordingly negatived.
The Committee divided: - Ayes: 6 / Noes: 10 - Question accordingly negatived.
The Committee divided: - Ayes: 6 / Noes: 10 - Question accordingly negatived.
The Committee divided: - Ayes: 6 / Noes: 10 - Question accordingly negatived.
The Committee divided: - Ayes: 6 / Noes: 10 - Question accordingly negatived.
The Chair
Just a word of warning—we are a little bit behind time. There are still 11 groups of amendment on the selection paper to debate. We have the room until 5 pm, but I think there were some murmurings about moving that forward a bit. Hint hint: if we make progress, that would help.
Mr Pat McFadden (Wolverhampton South East) (Lab)
Forgive me, Dr Huq. I might have got this wrong, but I think there might be one more vote on the previous group before we move on.
The Chair
When we reach it on the amendment paper, so not quite yet.
New Clause 8
Money laundering: electronic money institutions
‘(1) The Proceeds of Crime Act 2002 is amended as follows.
(2) In section 303Z1(1) after “bank” insert “, authorised electronic money institution”.
(3) In section 303Z1(6) after “Building Societies Act 1986;” insert—
““authorised electronic money institution” has the same meaning as in the Electronic Money Regulations 2011.”
(4) In section 340(14)(b) after “Bank” insert “, or
(c) a business which engages in the activity of issuing electronic money”.’—(Abena Oppong-Asare.)
This new clause would update definitions in the Proceeds of Crime Act 2002 to reflect the growth of financial technology companies in the UK by equalising the treatment of fin tech companies with banks on money laundering and Account Freezing Orders.
Brought up, and read the First time.
Abena Oppong-Asare (Erith and Thamesmead) (Lab)
I beg to move, That the clause be read a Second time.
It is a pleasure to have you chairing this sitting, Dr Huq. I rise to speak in favour of new clause 8, which would be good for consumers. [Interruption.] I see that the Minister is agreeing with me—or, at least, he is smiling with me—so I think we are almost getting there.
This new clause would be good for Britain’s world-leading FinTech sector. At the same time, it will improve the ability of our crime prevention agencies to do the job that we all want them to do—that is, to crack down on criminal activity and, in this case, money laundering. It would achieve those objectives by updating definitions in the Proceeds of Crime Act 2002 to ensure that customers of FinTech are treated in the same way as customers of traditional banks with regard to anti-money laundering provisions and account freezing orders. These outcomes would help. We have tabled this new clause because this is an opportunity in the Bill to address the technical deficiencies in the anti-money laundering regime; it is not political in nature. We hope that the new clause will therefore receive cross-party support, as we believe that we are all united in our desire to clamp down on money laundering.
The need for this new clause has arisen because outdated definitions in the Proceeds of Crime Act 2002 are disadvantaging customers, placing unnecessary pressure on law enforcement, and could allow suspected criminals to avoid complying with law enforcement requirements to forfeit illicit funds. Simply put, this legislation was written before FinTechs existed, and we really need to look at updating the law now because so many people use them. I understand that there is considerable support from the sector and law enforcement for updating the relevant definitions in the Proceeds of Crime Act to reflect the growth of FinTechs, and the passage of the Bill provides the ideal opportunity to do so. We need to act now by amending the Bill, rather than waiting for dedicated legislation, because the problems for consumers, the sector and our crime agencies are getting worse due to the rapid growth of the FinTech sector. I hope that the Minister will therefore accept this simple, highly targeted and rather uncontroversial new clause.
Let me turn to the details. The new clause fixes two specific problems. First, it updates the legislation relating to the defence against money-laundering processes. The second problem relates to account-freezing orders. Under the existing legislation, when financial services firms suspect that someone is engaged in money laundering, it is normal practice for their account to be frozen and for an appropriate decision to be made as to what should be done with the funds, which might include, for example, returning them to source. However, in order legally to be able to return the funds to source, the regulated firm is required to request a legal defence from the National Crime Agency—the so-called defence against money laundering, or DAML—to carry out this activity. DAMLs take two weeks to process. During this period, firms cannot even communicate with customers or allow them to withdraw funds. As we know, the covid pandemic is a particularly difficult period for a lot of consumers.
For reasons of practicality, an exemption was introduced in 2005 such that banks do not request a DAML if the transaction they are to carry out is below £250, but the FinTech sector did not exist at that time so the exemption does not apply to it. Electronic money institutions—that is what most FinTechs are regulated as—are still required to request DAMLs for all transactions, even those of a low value. Low-value DAMLs do not provide useful intelligence to the NCA. I understand that when the UK Financial Intelligence Unit reviewed a sample of 2019-20 DAMLs, it found no refusals for requests under £250.
The rapid growth in the FinTech sector and its inability to use the £250 exemption means that the number of DAMLs has grown from 15,000 in 2015-16 to 34,000 in 2018-19 and 62,000 in 2019-20. According to the NCA’s recently published annual report, the most significant growth was seen from financial technology companies. The report says that such firms submitted 32,454 DAMLs and suspicious activity reports, which is up 247.36% from the previous year, when there were 9,343. The number of DAMLs will continue to grow rapidly until the threshold is extended to EMIs.
That rapid growth is placing significant pressures on FinTechs, customers and law enforcement. For example, a recent article in The Times showed that many customers have their accounts locked out for extended periods. More worryingly, the head of the UK Financial Intelligence Unit, Ian Mynot, told the Financial Times last week that unnecessary DAML reports are affecting the NCA’s ability to investigate criminals. I am sure the Committee will agree that that is really worrying. The article says:
“The…National Crime Agency has called for deeper reform of the system for flagging potential money laundering”
There are concerns out there; it is not just Opposition Members who are concerned.
I am concerned that FinTechs have to spend significant amounts of time and money sending requests to the NCA, which provides the agency with extra admin and work that it does not want to do. That time and money could be used to build new products and services that would benefit customers and businesses and therefore be more cost-effective.
Subsection (4) of the new clause would extend the DAML threshold eligibility to electronic money institutions. When the Minister replies, will he give his assessment of how many DAMLs have been submitted this year and, of those, how many have been for sums under £250? Are the numbers now in the tens of thousands? How many DAMLs for sums under £250 have been refused in the past year? Is it zero? If so, what was the associated cost to the economy of all that unnecessary paperwork, not to mention the diversion of law enforcement resources from proactive investigation to dealing with administration and the intangible costs and frustrations to customers who have had their accounts frozen with no reason given? What is the Minister’s estimate of the amount of time and money FinTechs have expended on submitting DAMLs that the NCA does not want? Does that put the UK FinTech sector at a competitive disadvantage? I realise I am asking a lot of questions, but I have just a few more. How many DAMLS does the Minister expect to be submitted in each of the next three years if the definition in POCA is not updated through the Bill?
Before moving on, Dr Huq, it is worth pointing out that the new clause does not affect the parallel requirement for regulated firms to submit suspicious activity reports to the NCA every time a firm knows or suspects that someone is engaged in money laundering, regardless of the sums involved. I reassure hon. Members that the new clause would not change the SAR process. Does the Minister think that DAMLs of under £250 provide any useful intelligence to the NCA, given that it already receives SARs and given the comments of Mr Mynot? Can the Minister address that in his response?
The second issue that the new clause addresses relates to account-freezing orders, or AFOs. The Proceeds of Crime Act includes provisions that enable law enforcement agencies to freeze and forfeit funds held in UK bank or building society accounts, where there are reasonable grounds for suspecting that those funds are the proceeds of crime. In order to freeze funds in an account, a senior law enforcement officer has to apply to the courts for an account freezing order. Under POCA, AFOs can only be used to freeze funds held in bank or building society accounts.
The Minister may be able to correct me on this, but I understand that AFOs cannot be used to freeze funds held in accounts of FinTechs, which are regulated as electronic money institutions. It seems to me that there is clearly a significant risk that criminals will exploit that loophole and run illicit activities through FinTech accounts to avoid having their funds frozen.
Subsections (2) and (3) of the new clause would update the necessary definitions in POCA, meaning that law enforcement could use AFOs to freeze funds held in FinTech accounts in the same way that they can in standard current accounts. In his response, can the Minister let the Committee know if his Department is aware of any suspected money launderers exploiting this AFO loophole? That is important if we are to move forward. What are the sums involved? Have any police forces or law enforcement agencies made representations to the Minister urging him to adopt the measure? If so, does he agree with us that the loophole needs to be closed as a matter of urgency, and that the change in definitions cannot wait any longer?
Dr Huq, we all want to make progress on this issue. I will therefore be listening very carefully to the Minister’s response to my questions. As I said at the outset, I hope that we can use the opportunity today to obtain a cross-party consensus to fix these issues during the passage of the Bill. That would be good for consumers, it would support our crime prevention agencies and send a strong message of support to our fast-growing FinTechs. If the Minister is unable to commit to looking at this issue during the passage of the Bill, we would welcome his bringing it up at a later stage. I look forward to the Minister’s response.
The Economic Secretary to the Treasury (John Glen)
It is a pleasure to serve under your chairmanship, Dr Huq. Before I respond to the hon. Member for Erith and Thamesmead, I would like to recognise her award last night as newcomer of the year by the Patchwork Foundation; I congratulate her on that success.
The hon. Lady asked a number of specific questions about suspicious activity reports, or SARs, and I have those answers for her. Before I come on to them, it is important that we contextualise this new clause in the great success that is the UK’s FinTech sector, with 600 propositions, 76,500 people working in the industry and £4.1 billion of venture capital money put into it just last year. The Government remain committed to supporting the sector, trying to maintain the UK’s leadership position in this market and making it the best place to start and grow a FinTech firm.
I am pleased to say that assessments have cited the UK’s strong Government support, access to skills, robust domestic demand and flexible regulator as particular strengths. It is a priority for the Government to maintain the UK’s strength as a FinTech destination and continue fostering innovation. That is why the Chancellor asked Ron Kalifa OBE to carry out an independent review of the sector. The review will make practical recommendations for Government, industry and regulators on how to support future growth and adoption of FinTech services.
The Government are conscious of the challenges that face the FinTech sector under the current suspicious activity reporting regime, in particular with respect to defence against money laundering SARs, sometimes known as DAML SARs. The volume of DAML SARs received by the NCA has grown substantially, with more than 60,000 received in 2020. Electronic money institutions—EMIs—are the largest contributor to that increase, with such companies accounting for four fifths of the increase in these requests. As the hon. Lady rightly pointed out, that has resulted in increased pressure on limited law enforcement resources. This year, £172 million was denied to suspected criminals as a result of DAML requests, up 31% on the previous year’s £132 million and more than three times the £52 million from 2017-18. It would be useful for the Committee to know that the Government are working closely with law enforcement to further resolve the current anomaly with regard to account freezing orders.
The Government are supportive of the objective to equalise treatment of banks and FinTech firms in the Proceeds of Crime Act 2002. Of course, that legislation could not take account of FinTechs. Under the economic crime plan, the Treasury and Home Office, along with law enforcement, have been working with the FinTech sector to identify and implement solutions to the challenges that the provisions of the Proceeds of Crime Act create. Progressing those solutions remains a priority, and we are committed to reforming the suspicious activity reporting regime as part of the wider programme of economic crime reform. It is a significant area in which banks and financial institutions urgently need to see reform, and it requires a collaborative effort between the Treasury, the Home Office and private sector actors.
While the Government agree with the intent behind new clause 8, it is drafted in such a way as to create inconsistencies with definitions set out within the wider statute book. Specifically, the insertion of references to electronic money institutions into the definition of “deposit taking body” in the Proceeds of Crime Act introduces scope for confusion as to the status of electronic money institutions in wider financial services legislation, such as the Financial Services and Markets Act 2000. Electronic money institutions are not classified as “authorised deposit takers” for the purposes of that Act.
The Government agree with the principle that the treatment of e-money institutions should be equalised with banks in those two specific areas. However, as the Committee will be aware, financial services legislation is complex, and it is important to work through these things carefully, to ensure that the legislation operates as intended and avoids any unintended outcomes. This new clause does not adequately consider interactions with other pieces of legislation. I recognise that that is a technical matter. The Government are aligned with the intent, so I have asked my officials to work—and, indeed, I have been working myself—with colleagues across Whitehall, particularly in the Home Office, to identify a way of addressing this issue that is consistent with the broader regulatory framework for these firms. I intend to provide the House with an update on Report. Given that commitment, I ask the hon. Lady to withdraw the new clause.
Abena Oppong-Asare
I beg to ask leave to withdraw the motion.
Clause, by leave, withdrawn.
New Clause 9
Public country-by-country reporting by financial services companies
‘(1) The Treasury must, every year, publish and lay before both Houses of Parliament a report on its progress in pursuit of international action on public country-by-country reporting by relevant bodies.
(2) The report must include an update on whether the Treasury intends to require the group tax strategies of relevant bodies to include a country-by-country report, pursuant to paragraph 17(6) of Schedule 19 to the Finance Act 2016.
(3) The first report must be laid before both Houses of Parliament within six months of this Act being passed.
(4) For the purposes of this section, a “relevant body” means a body authorised by or registered with the Financial Conduct Authority.’—(Abena Oppong-Asare.)
This new clause would require the Treasury to report on a regular basis to Parliament on its progress, for FCA-registered and authorised companies, towards international agreement on a model of public country-by-country reporting and whether it will use powers in the Finance Act 2016 to require public country-by-country reporting in the UK.
Brought up, and read the First time.
Abena Oppong-Asare
I beg to move, That the Clause be read a Second time.
If agreed to, new clause 9 would be good for the country and at the same time would tackle widespread concerns about multinational enterprises exploiting the way national systems interact in order to minimise the total amount of corporation tax they pay. It would help create greater transparency around the taxation of multinational companies, achieving those objectives by requiring the Treasury to report on a regular basis to Parliament on its progress in pursuit of international action on public country-by-country reporting by relevant bodies.
Let me say at the outset that those outcomes are what we want to see. Labour’s aim in tabling new clause 9 is to use the Bill as an opportunity to help make the UK a world leader in financial transparency. I appreciate, as the Minister mentioned earlier, that financial legislation is complex, but we hope that on this occasion we will be able to receive cross-party support, as I believe we are all united in our desire to have far greater transparency.
The Government currently have the power to require multinational enterprises to publicly report their tax payments on a country-by-country basis, but so far they have resisted using that power. As I mentioned earlier, there is widespread concern about how multinational enterprises successfully exploit the way national systems interact in order to minimise the total amount of corporation tax they pay. New clause 9 is one way of tackling that. It is quite simple: it just requires public country-by-country reporting of the amount of tax multinational enterprises pay in each country where they have operations.
Schedule 19 of the Finance Act 2016 introduced a requirement for UK-headed multinational enterprises, or UK sub-groups of multinational enterprises, to publish a tax strategy. Paragraph 17(6) gives the Treasury the power to require those tax strategies to include country-by-country reports of tax paid. However, while the Government do not appear to disagree with the principle of country-by-country reporting, we still have not seen the full use of powers to require that. They say they want international agreement on public reporting first.
I am sure the Minister agrees that there has been recent pressure on the Government to use the power in the Finance Act 2016 to introduce public country-by-country reporting. It was most recently discussed during the passage of the Finance Bill this year. On Report, on 1 July, the right hon. Member for Barking (Dame Margaret Hodge) tabled new clause 33, which would have required a tax strategy published by a group liable for the digital services tax to include any relevant country-by-country reports. At the time, new clause 33 received cross-party support, including from our own shadow Chief Secretary to the Treasury, my hon. Friend the Member for Houghton and Sunderland South (Bridget Phillipson), and Conservative Members such as the right hon. Member for Haltemprice and Howden (Mr Davis), the hon. Member for Thirsk and Malton (Kevin Hollinrake) and the right hon. Member for Sutton Coldfield (Mr Mitchell). I echo the comments made by the shadow Chief Secretary to the Treasury, who said:
“For years, the Opposition have urged the Government to commit to country-by-country reporting on a public basis…the way in which they have held up progress at an international level, has been a source of deep frustration to those of us who want to see far greater transparency around the taxation of multinational companies.”—[Official Report, 1 July 2020; Vol. 678, c. 367.]
The right hon. Member for Sutton Coldfield said:
“The new clause would allow Parliament, journalists, campaigners and civil society to see clearly whether these businesses are paying their fair share of taxation. If the Government accept the new clause, that would, as the hon. Member for Houghton and Sunderland South suggested, make the UK a world leader in financial transparency.”—[Official Report, 1 July 2020; Vol. 678, c. 369.]
There are companies already undertaking voluntary country-by-country reporting. For example, SSE—one of the largest electricity network companies in the UK—has been awarded the fair tax mark for the fourth year in the row. It provides a shining example of how this could be done. We are seeing companies doing this on a voluntary basis, and the new clause would ensure that all companies do it and that it is not a difficult process.
The Government have made quite a big deal about wanting to be a global leader next year—it is not just me saying that; those are the Government’s words—particularly post Brexit and with our presidency of the G7. If the Government genuinely want to show global leadership, should they not be at the forefront of pushing these kinds of measures, rather than passively waiting for an international agreement to be reached? This is a perfect time to implement this provision. It would be great if we could get just one amendment through on this occasion.
The new clause would require the Government to publish an annual report to Parliament on their progress towards the international agreement, including whether they intend to use the power in the Finance Act 2016 to require public country-by-country reporting and publish tax strategies. We would welcome the Minister taking this opportunity to give us the latest update on progress towards the international agreements on public country-by-country reporting, including what specific discussions the Government have had with international partners and whether the Government anticipate any progress on this matter in 2021.
John Glen
New clause 9 would require the Treasury to publish and lay before both Houses of Parliament an annual report that outlines its progress towards international action on public country-by-country reporting, and provides an update as to whether it intends to expand the existing tax strategy reporting requirement to include country-by-country reports of financial services companies. As the hon. Lady has acknowledged, the Government have championed tax transparency through initiatives at the international level, including tax authority country-by-country reporting and global standards for exchange of information, and through domestic action such as the requirement for groups to publish tax strategies.
In relation to public country-by-country reporting, the Government continue to believe that only a multilateral approach would be effective in achieving transparency objectives, and avoiding disproportionate impacts on the UK’s competitors or distortions regarding group structures. Different global initiatives to increase tax transparency and to help protect against multinational avoidance continue to be discussed in the international forums, such as the OECD, in which the UK is an active and leading participant. However, although the Government will continue to be clear and transparent about our broad objectives in this area, it would not be appropriate for the Treasury to provide a detailed report each year assessing the status and evaluating the progress of fast-moving, complex discussions that typically take place between countries on a confidential basis, nor do we think it appropriate to approach that from the narrow focus of financial services as the new clause suggests.
Although the Bill makes specific amendments to the scope of country-by-country reporting required in order to reflect the changes to the prudential regimes, the question of whether corporates should be required to publish country-by-country reports as part of their tax disclosures is a wider question that is relevant to large multinationals operating in all industry sectors, not just those in regulated financial services sectors. For those reasons, I ask the hon. Lady to withdraw the new clause.
Abena Oppong-Asare
I beg to ask leave to withdraw the clause.
Clause, by leave, withdrawn.
New Clause 10
FCA recommendation to remove a self-regulatory organisation: Ministerial statement
“(1) When the FCA makes a recommendation that a self-regulatory organisation be removed from Schedule 1 to the MLR pursuant to Paragraph 17 of the Oversight of Professional Body Anti-Money Laundering and Counter Terrorist Financing Supervision Regulations 2017, the Treasury must make a statement to Parliament.
(2) The statement must be made within four weeks of the recommendation being made.
(3) The statement to Parliament must set out—
(a) the Government’s response to the FCA’s recommendation;
(b) the likely impact on the sector of any action the Government is proposing to take, including—
(i) the impact of the organisation retaining its Anti-Money Laundering supervisory responsibilities if the Government decides not to remove the organisation from Schedule 1 to the MLR; and
(ii) where the Government intends to place an organisation’s Anti-Money Laundering supervisory responsibilities if it decides to remove the organisation from Schedule 1 to the MLR; and
(c) where applicable, a timescale for the removal of the self-regulatory organisation from Schedule 1 to the MLR.
(4) For the purposes of this section, “MLR” means the Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017.”—(Abena Oppong-Asare.)
This new clause would require the Treasury to report to Parliament on its response to any recommendation by the FCA that an organisation have its anti-money laundering supervisory responsibilities removed, including the impact of either accepting or rejecting any such recommendation.
Brought up, and read the First time.
Abena Oppong-Asare
I beg to move, That the clause be read a Second time.
New clause 10 would be good for consumers. At the same time, it would improve the ability of our crime prevention agencies to do the job that we all want them to do—namely, to crack down on criminal activity and, in this case, money laundering. Our aim in tabling the new clause was to take the opportunity offered by the Bill to address technical deficiencies in the anti-money laundering regime. Again, I hope that we will receive cross-party support for our proposal, as I believe we are all united in a desire to clamp down on money laundering.
Tackling money laundering has a strong international aspect, but the Government need to ensure that we have clear and effective anti-money laundering measures within the UK. The intergovernmental Financial Action Task Force was founded by the G7 in 1989 to design and promote policies to combat money laundering around the world. In the EU, FATF standards are implemented by way of money laundering directives, which are designed to establish a consistent regulatory environment across member states. As I said, there is clearly a strong international aspect to the work, but it is the responsibility of the UK Government to implement effective measures in this country. Implementing new clause 10 would certainly help to address that.
There are concerns about fragmentation. Indeed, that is a long-standing concern about the UK’s anti-money laundering supervisory regime. In the UK, there are, in the accountancy and legal sectors, 22 different professional bodies with responsibility for monitoring compliance by their members with anti-money laundering measures. The EU’s fourth money laundering directive made it clear that bodies that represent members of a profession may have a role in supervising and monitoring them. As I said, however, the supervisory landscape in the UK has been criticised for being highly fragmented.
In 2015, that was recognised by the Government in the “UK national risk assessment of money laundering and terrorist financing”, the first such assessment, which highlighted the challenge of having a large number of supervisory organisations. Advocacy organisations such as Transparency International, which gave evidence to our Committee a few weeks ago, have long criticised the fragmented nature of the UK’s anti-money laundering supervisory regime.
In 2018, the Government created a new office within the Financial Conduct Authority to improve standards among professional supervisory bodies—the Minister will probably mention that—but concerns have been raised about its effectiveness. For example, the Oversight of Professional Body Anti-Money Laundering and Counter Terrorist Financing Supervision Regulations 2017 gave the FCA the role of ensuring that the anti-money laundering work of the professional supervisory bodies was effective. That would be done through the new office within the FCA, the Office for Professional Body Anti-Money Laundering Supervision. The 22 professional bodies that OPBAS regulates are named in schedule 1 to the 2017 regulations.
However, a Treasury Committee report from last year, entitled “Economic Crime - Anti-money laundering supervision and sanctions implementation”, concluded that it was not clear how the Treasury would respond to an OPBAS recommendation to remove a professional body’s supervisory role. In particular, the Treasury Committee said that there was not an adequate indication of where the Treasury would move a body’s supervisory responsibilities if it was stripped of them. It concluded that the lack of preparation created a risk that a supervisor might become “too important to fail”. That is quite concerning to me. The Committee recommended that the Treasury publish within six months a detailed consideration of how it would respond to a recommendation from OPBAS.
In their “Economic Crime Plan 2019-22”, which was published in July last year, the Government committed to meeting the Treasury Committee’s recommendation by publishing
“a detailed consideration of the process for responding to an OPBAS recommendation to remove a professional body supervisor’s status as an AML/CTF supervisor, including managing changes in supervisory responsibilities, by September 2019.”
In a letter to the Chair of the Treasury Committee dated 17 October last year, the Economic Secretary to the Treasury set out in a few paragraphs the Treasury’s response to an OPBAS recommendation. The letter provided little extra information and cannot be taken to constitute the
“detailed consideration of the process”
promised in the economic crime plan.
In September this year, the Royal United Services Institute noted:
“OPBAS are working with HM Treasury on designing a process in the event that a supervisor is removed from the Schedule 1 list of approved supervisors. This work is nearing completion, but has been delayed to autumn 2020 by the Covid-19 situation.”
In short, the Government committed to publishing a detailed consideration by September last year but still have not done so. It is now December 2020, so it has been more than a year.
Labour’s new clause seeks to underline the importance of the Treasury having a clear and credible response to OPBAS recommendations. For OPBAS’s role to be as effective as possible, it is crucial that its ultimate sanction must have credibility, so the Treasury must be clear of its response to a recommendation from OPBAS to remove a professional body’s supervisory responsibilities. Our new clause attempts to formalise the process of a Treasury response by committing the Government to publishing their response within four weeks of an OPBAS recommendation to remove an organisation from schedule 1. The response must make clear what the Government intend to do and, crucially, the impact of their decision either to leave an organisation on schedule 1 or to remove it.
We would welcome a commitment from the Minster today—this is my third time trying, with a third new clause—on when the Government will finally publish their
“detailed consideration of the process”
for responding to OPBAS recommendations to remove a professional body supervisor from schedule 1. This is also an opportunity for the Minister to set out the Government’s intended approach to complying with the FATF standards after the end of the transition period, and whether the Government intend to meet or exceed future EU money laundering directives. For that reason, the new clause really must be added to the Bill to help the Treasury finally to meet its obligations.
John Glen
The Government are committed to ensuring consistently high standards across the UK’s anti-money laundering supervision system, and the FCA’s Office for Professional Body Anti-Money Laundering Supervision—known as OPBAS—is a key part of that. It works with the 22 professional body supervisors to address any weaknesses identified in their supervisory responsibilities. When OPBAS has identified deficiencies in professional body supervisor oversight arrangements or practices, it has taken robust action, including by using powers of direction. OPBAS will continue to take such action with supervisors when appropriate, to ensure that consistent high standards of supervision are achieved.
Regulation 17 of the regulations that establish the role of OPBAS ensures that there is a clear route to removal if OPBAS has significant concerns about a supervisor’s effectiveness. As the hon. Lady pointed out, following the Treasury Committee’s economic crime inquiry, I wrote to the Committee to set out the process by which the Treasury would respond to a recommendation from OPBAS for such a removal. That covers each of the points that have been included in subsection (3) of the proposed new clause.
The removal of a professional body supervisor would be a highly significant decision; the Treasury would carefully consider any recommendation and, if approved, would work with other professional body supervisors, OPBAS and the statutory supervisors to ensure the continuation of anti-money laundering supervision for the affected professional body supervisor’s members. That would also require the agreement of a transition period before the removal of the professional body supervisor from schedule 1 of the money laundering regulations. It could not just be done abruptly without due recourse to what interim measures or further successor measures would need to be put in place.
It is essential that any recommendation is given due consideration and planning before a decision is announced, and the introduction of a four-week statutory deadline from the issuance of a recommendation would place that at risk. If a decision has not been reached, any enactment or publication of details of the recommendation would be inconsistent with regulation 21(2) of the OPBAS regulations, which prohibits such publication.
While any recommendation for removal would be treated with urgency by the Treasury, the length of the process would be dependent on the circumstances. We therefore believe that it would be wrong for a statutory deadline to be placed on reaching an effective outcome. In the event of OPBAS’s recommending the removal of a professional body supervisor, a notice would be placed on gov.uk once a decision on removal had been reached and, if necessary, plans would be agreed for the transition of affected businesses. I therefore ask the right hon. Member for Wolverhampton South East and the hon. Members for Erith and Thamesmead and for Manchester, Withington not to press the new clause.
Abena Oppong-Asare
I beg to ask leave to withdraw the clause.
Clause, by leave, withdrawn.
New Clause 16
Consumer credit: extension of FCA rule-making duty
“(1) Section 137C of the Financial Services and Markets Act 2000 shall be amended as follows.
(2) In subsection (1A), substitute
‘one or more specified descriptions of regulated’
for ‘all forms of consumer’.”—(Stella Creasy.)
This new clause would extend the responsibility of the FCA to make rules with a view to securing an appropriate degree of protection for borrowers against excessive charges to all forms of consumer credit.
Brought up, and read the First time.
Stella Creasy (Walthamstow) (Lab/Co-op)
I beg to move, That the clause be read a Second time.
The Chair
With this it will be convenient to discuss the following:
New clause 17—Regulation of buy-now-pay-later firms—
“The Treasury must by regulations make provision for—
(a) buy-now-pay-later credit services, and
(b) other lending services that have non interest-bearing elements
to be regulated by the FCA.”
This new clause would bring the non interest-bearing elements of bring buy-now-pay-later lending and similar services under the regulatory ambit of the FCA.
New clause 22—Cost of credit: FCA assessment—
“In Schedule 6 of the Financial Services and Markets Act 2000 after paragraph 2F(3) insert—
‘(4) When considering the business model, the Financial Conduct Authority must have regard to the interests of consumers, in particular—
(a) the proportion of a firm’s revenues that are to be derived from re-lending, and
(b) whether customers are likely to be charged a total cost of credit in excess of one hundred percent of the amount borrowed both on the basis of the initial credit terms or following relending activities.
(5) Where the Financial Conduct Authority’s assessment concludes that a business model poses a significant risk that customers will be charged a total cost of credit in excess of one hundred percent of the amount borrowed, then the threshold condition will not be met.’”
This new clause would ensure that the Financial Conduct Authority assesses the business models of firms and does not allow excessive relending activity to take place, or for firms to be granted permission if there is a significant risk of customers paying more in interest, fees and charges, than the amount they have borrowed.
Stella Creasy
It is a pleasure to serve under your chairmanship this afternoon, Dr Huq—all of us who have one of those titles but never really use it probably ought to, not least with our bank managers on issues such as this.
The new clauses we discussed this morning were about when the FCA, having been involved with a company, has let down our constituents, and that is why we pushed new clause 21 to a vote: fundamentally, there are thousands of people in this country, many of them our constituents, who will be denied compensation because the companies that owe them compensation have gone into administration on the FCA’s watch.
These new clauses are about how we can get proper consumer protection so that we do not get into those positions at all, as well as taking on board what we have learned in the past seven years about what actually works to protect consumers, and the reality is that it is capping. Capping the costs of credit has been a very effective, cheap and clear form of regulation, which has benefited industry and consumer alike. These new clauses are about giving the FCA the power to use that evidence to help to protect our consumers, because, sadly, the detriment that made capping payday lending such an effective thing to do is now appearing in many other industries. That speaks to the whack-a-mole challenge that we have with credit in this country.
As I said this morning, the challenge is that the FCA moves very slowly, but this industry—credit in its broadest sense, not just high-cost credit—moves very quickly. We know that what has stopped consumer detriment is being able to cap what these companies can charge, and we know that most of all from the payday lending industry. The payday lending industry still exists in this country, but the reason we have not had people turning up to our surgeries, or seen these companies on our high streets or indeed in our inboxes, is that regulation has meant that people are not being exploited by them in the way that they were. The companies can still operate—those that want to lend to people in a short-term and effective way without exploiting them. However, the point at which people get into debt and cannot get out of it—that business model that was about hooking people in and keeping them paying—has ended, because of the cap.
In this country, if someone takes out a payday loan, they will never pay back more than double what they borrowed, including the interest fees and the charges. That is a really important point in these new clauses, because the whole point was capping not just interest rates, but the whole cost of a loan. As I said earlier, exploitation in the credit industry is like water: it finds the loopholes. These new clauses speak to other forms of loopholes.
Alison Thewliss (Glasgow Central) (SNP)
The hon. Lady is making a very good point. Is she aware that the Young Women’s Trust has suggested that 1.5 million young women have lost income during the pandemic?
Stella Creasy
Absolutely. We know who such companies are targeting, and they are doing so deliberately. I hate to say this, as I do want to win over the Committee, but we might not be their target audience at this point in our lives, because we might not be actively reading the social influencer media posts. I might be completely wrong—I am sure some Government Members are regularly on their Instagram accounts looking at posts by ASOS.
Some 20% of those young people say they have missed a payment in the last year—the figure has doubled in the last year—because they thought that a purchase would cost a certain amount and that they had an income, but that income has gone. The companies will say that they are very good to their customers because they do not lend more than people need and they do not charge interest—the companies’ interest is in people paying back the money—but those companies go silent on what they do when people do not pay back. What happens to people’s credit references? How do they chase money? Do they use debt collection agencies?
Those companies are growing rapidly, just as the payday lending industry did. We watched that happen and, in that Cassandra-like way, all tried to warn of it, but it took too long for us to act. In 2019 Klarna was boasting that it had signed a partnership with a new merchant every eight minutes in this country. By the end of 2019, 6 million people had used its product, and it said that 55,000 were using it weekly. Imagine what it is like now, with people having been stuck at home and stuck on their phones.
The Money and Mental Health Policy Institute found that more than 3 million people with mental health problems have found it harder during the pandemic to control their online spending, and two in five said the BNPL industry has been “harder to resist”. Because it is not regulated, it does not have to follow any of the rules we might want to point to that protect consumers. That is why we see all those adverts saying, “No interest, no fees—don’t worry about it.” The industry does not have to provide the normal financial information we see in other forms of credit because it is not regulated in that way.
Just as with the payday loan industry, as soon as we started talking about these companies, along came the offers of dinners and discussions and talks, where the industry says it is in fact a misunderstood new technology. Those of us who are not regularly on the internet have obviously missed them.
Stella Creasy
I am sure the shadow Minister is about to tell us about his Instagram account.
Mr McFadden
No, I am not, but I am interested to hear that my hon. Friend got an offer of dinner. All I got was an email.
Stella Creasy
Sadly, during the pandemic, none of us has been able to take up any of those offers to explain our concerns to these companies directly, as opposed to on Zoom. It is a simple concern: the way in which these products are marketed encourages people to spend money as a way of dealing with the emotional and social impacts of the pandemic. The adverts, using those social influencers, say, “When you’re feeling low, sat at home by yourself with nowhere to go, there is something to make you feel better.” Essentially, the message is, “Get into debt. Don’t worry about it. You can spread the payments. Don’t worry about whether you can afford it.” They get away with saying and doing that because they are not covered by the regulations.
I know the Minister is looking at this issue—he said so—and that the FCA is doing so. I have made a series of complaints to organisations such as the Advertising Standards Authority about these issues, because, just as with payday lending, we have seen the rapid expansion of these companies. My worry is that if we take 18 months it could be too late in terms of consumer detriment. I do not doubt these companies when they say they want to have a sustainable business model, but it is for us in this place, in crafting the Bill, to decide what sustainability is and how they make their money. Otherwise, we are handing them our young consumers, in particular, on a plate to be exploited. The new clauses speak to those issues.
New clause 16 would ensure that all forms of consumer credit are covered by regulation, because the gap that Klarna and company have fallen into is arguing that they are not a form of consumer credit so they do not need to be regulated. We should always apply a sniff test: if somebody is giving us money to buy things on tick, that is a form of credit. If it walks like a duck and talks like a duck, it should be regulated like ducks should—see, we have moved on from the dinosaurs to ducks.
New clause 17 would make rules explicitly about the buy now, pay later industry. I do not believe we can wait another year or so before we do something. It makes sense to bring the industry under the FCA’s umbrella so that the FCA can act. The new clause would ensure that Ministers could act based on the industry’s actions, given the risks that come from them. Unlike customers of Amigo Loans or indeed the remaining payday loan industry—or even the credit card industry—nobody who uses buy now, pay later can go to the ombudsman for redress, so what do they do if they get into difficulty? I pay tribute to Alice Tapper from Go Fund Yourself, who has been collecting the evidence about young people getting into debt from unaffordable forms of spending with such companies and not knowing how to get out of it.
John Glen
I would like to sincerely thank the hon. Member for Walthamstow for her tireless work in this area—she does not look too happy that I have said that, but I sincerely mean it. I recognise the contributions she has made to cap the cost of payday lending. That has made a significant difference, and although we differ on some elements, my vigilance is seriously minded towards these problems, and I will try to respond in full to the points she has made.
As the hon. Lady knows, the Government have given the FCA the power to cap all forms of regulated credit, and the FCA can do so if it thinks it is necessary to protect consumers. I note that her new clause seeks to require the FCA to use this power for all forms of consumer credit and that the retained reference to “high-cost short-term credit” appears to limit its application, but I will proceed on the basis of the intention behind the new clause.
Government legislation has previously required the FCA to use this power, leading to the 2015 cap on the cost of payday loans, and Government will consider further action as circumstances require. However, the Government do not encourage regulatory intervention where there is no clear case for doing so. That can increase the costs to business, which are usually passed to consumers, or lead to products and services being commercially unviable, reducing consumer choice.
While the Government imposed a requirement on the FCA in legislation to use its capping powers for payday loans, the context for that intervention was very different from the current consumer credit market. The Government legislated only after agreement between the FCA and Government that the cap was necessary, in response to the well-evidenced harm that was occurring in the payday lending market, which the hon. Member for Walthamstow has done a massive amount of work to promote awareness of. Introducing this duty on the regulator ensured that its efforts were focused on implementing the cap quickly, rather than spending time and resources on making the case for a cap in the first place. Following this successful intervention, the FCA independently implemented a similar price cap on rent-to-own products in March 2019 in response to the FCA finding evidence of consumer detriment as a result of excessive charges.
The FCA keeps the issue of capping the cost of other types of credit under constant review. There is not an equivalent case today that necessitates this action. Therefore, we should not legislate to force the FCA, as the independent and expert regulator, to implement a cap. As can be seen from the payday and rent-to-own markets, in some cases price caps can be effective in protecting consumers from the most egregious harm. However, a blanket cap would not take into account the idiosyncrasies of the breadth of consumer credit products on the market and could give rise to unintended consequences.
Let me turn to new clause 17. This amendment speaks to the exemption under article 60F of the Financial Services and Markets Act 2000 (Regulated Activities) Order 2001. That exemption covers interest-free loans, repayable in no more than 12 instalments, within no more than 12 months, used for the financing of specific goods and services. It allows businesses such as gyms and sports season-tickets providers to avoid the burden of FCA regulation for offering deferred payment terms for the goods and services they provide. It also catches many everyday transactions, where the supplier of goods or services issues an invoice and affords a period of time to pay.
The exemption is important in allowing low-risk day-to-day business activity to be undertaken without firms needing to be authorised by the FCA or to comply with consumer credit regulation. However, the Government are alert to the specific concerns about buy now, pay later products that utilise this exemption. I know that the hon. Member for Walthamstow is concerned about the way in which those products are advertised, as she set out this afternoon, and the risk of borrowers unknowingly building up problem debt.
An interest-free credit, unregulated, buy now, pay later product, as it is inherently lower risk than other forms of borrowing, can provide a lower-cost alternative to help people buy the products they need and can be a useful part of the toolkit for managing personal finances and tackling financial exclusion. However, despite the potential benefits and the fact that we are yet to see substantive evidence of widespread consumer harm, the Government and the FCA are aware that risks are associated with those products, as with any type of borrowing. Therefore, the former interim chief executive officer of the FCA, Chris Woolard, is urgently undertaking a review into change and innovation in the unsecured credit market.
The Government welcome the review. I have spoken with Chris Woolard about it, and he attended the financial inclusion forum in the past few weeks. A key focus of the review is on areas of growth from non-traditional providers of credit, which includes unregulated, buy now, pay later products, which the hon. Lady described. It will assess both the supply and the demand sides of the market, cover the customer journey and engage with the main providers to better understand business models and how customers interact with such firms. The FCA has also commissioned consumer research to help inform its understanding. I recognise that particularly vulnerable groups of consumers seem to be using such products more.
The review is due to present its conclusions early next year, in a few months. If it concludes that there is the potential for significant harm occurring as a result of those exempt products, the Government will assess the options for how to address that best, and whether they would be proportionate to counter such harm.
I will now turn to new clause 22. As I noted previously, the Government have fundamentally reformed regulation of the consumer credit market, giving control of the area to the FCA in 2014. That more robust regulatory system is helping to deliver the Government’s vision for a well-functioning and sustainable consumer credit market that can meet consumers’ needs. The Government have given the FCA strong powers to protect consumers, and the FCA assesses whether a firm’s business model is in a consumer’s interest as part of the authorisation process.
In 2017, the FCA confirmed that, in its assessment of firms’ business models, it considers how each firm makes money. That allows the FCA to identify any economic incentives that a firm might have to cause harm to consumers and to take appropriate mitigating actions.
In its August report on re-lending by high-cost lenders, the FCA set out clearly the potential issues around re-lending. The report identified ongoing concerns about the business practices of some of those lenders, which it deemed to be breach of FCA rules and principles for business. More importantly, the report reiterated the FCA’s expectations that firms should treat their customers fairly. It made it clear that it expects firms to review their re-lending practices so that they can properly assess affordability; further, that any re-lending firms undertake is sustainable and will not give rise to borrowers entering into problem debt; and, finally, that the customer’s full financial position should be taken into consideration when making those re-lending decisions.
While the hon. Member for Walthamstow is right that re-lending can cause consumer harm, it is clear that the FCA understands the issues and is acting where necessary to protect consumers’ interests. As I have set out, the FCA will consider consumer interest in relation to a firm’s business model during the authorisation process, and will monitor the market through its supervision process, reminding firms of their obligations and intervening where necessary. I therefore ask that the hon. Member for Walthamstow withdraw the new clause.
Stella Creasy
As well as winner of a Titmuss prize, I think you will find, Dr Huq. My father got excited that I meant Abi, and my mother thought I meant Fred—it was neither.
I listened to the Minister, and was all eerily familiar. It was like the conversations that we had on payday lending, when everyone mentioned the then Office of Fair Trading. I appreciate that that conversation was not with the Minister, but the outcome for our constituents will be the same. It is Christmas; does he think that Klarna, Clearpay and Laybuy will not be heavily pressing their product on our constituents?
We could vote to send a message that change will come in the next couple of months. We could sound the alarm that we did not sound on payday lending until millions of people were in debt. The Minister knows that the FCA has been, and will continue to be, timid about using capping, because it is looking for political leadership to say that capping is the right to do.
I am happy to withdraw new clause 16, but I will press new clause 17 to a vote because I think we should send a message that we are listening to the consumers who are already in debt with those buy-now-pay-later companies. It is an incredibly reasonable clause that says that we will regulate and not leave people hanging. The Minister has not given any succour to that idea. He has talked about a review and the possibility of some consideration later, but that is just too late. Too many people are already in debt with those companies. I hope, if the Minister will not listen to me, that he will at least listen to Martin Lewis and Alice Tapper, who have been trying to help people in financial difficulty because they cannot go to the ombudsman. I beg to ask leave to withdraw the motion.
Clause, by leave, withdrawn.
New Clause 17
Regulation of buy-now-pay-later firms
“The Treasury must by regulations make provision for—
(a) buy-now-pay-later credit services, and
(b) other lending services that have non interest-bearing elements
to be regulated by the FCA.”—(Stella Creasy.)
This new clause would bring the non interest-bearing elements of bring buy-now-pay-later lending and similar services under the regulatory ambit of the FCA.
Brought up, and read the First time.
Question proposed, That the clause be read a Second time.
Stella Creasy
I beg to move, That the clause be read a Second time.
I do not intend to speak to this new clause for very long because my case has already been made. This is a simple clause about the powers of the FCA to do investigations and about who has the power to require it to do them—currently, that is the Treasury. The new clause suggests that a Select Committee should be able to do that. It would most likely be the Treasury Committee, but the clause says “a relevant Select Committee”, because the issues may concern the Business, Energy and Industrial Strategy Committee.
The Minister will understand my disappointment and frustration that he has not offered any opportunity to look at whether amendments or investigations are needed. Change is likely to come to our credit industry in the time that this Bill is before Parliament. If the Treasury will not act, it falls to all of us in Parliament to ask where else we can scrutinise how our constituents are being lent to and whether they are being ripped off.
John Glen
The change proposed under this new clause to allow Select Committees to require the FCA to launch investigations in situations where there is suspected regulatory failure would mirror powers that are already available to the Treasury. As I set out earlier, section 77 of the Financial Services Act 2012 enables the Treasury to require the regulators to conduct investigations in cases of suspected regulatory failure in circumstances where it does not appear to the Treasury that the regulators are already doing so under, for example, the regulators’ power in section 73 of that Act.
The Treasury has used those powers to require the PRA and FCA to launch investigations where it considers that appropriate. As Members are aware, the Treasury Committee had the opportunity to scrutinise the investigation that was carried out into the Co-operative Bank in 2018, and it made a number of recommendations that were accepted by the PRA.
I am therefore confident that investigations under existing section 77 powers are useful in holding regulators to account, ensuring proper scrutiny of them and conducting investigators in the public interest. In determining whether an investigation is in the public interest, the Treasury will also consider the views of the relevant Select Committee in reaching its decision.
The Government agree that Parliament should play an important strategic role in interrogating, debating and testing the overall direction of policy for financial services. The Treasury is confident that proper mechanisms exist to allow the Treasury Committee to scrutinise and comment on investigations, as is right and proper. Ultimately, there is nothing to stop a relevant Select Committee launching its own investigation into an issue, calling witnesses, gathering evidence and making recommendations. That is a decision for the Committee.
Stella Creasy
Earlier today, we talked about the fact that the Treasury instructed the FCA to get involved in the debate around payday lending. Indeed, it went into companies such as Wonga and QuickQuid and set out redress schemes. We know that they were ineffective because it ended up with the ombudsman getting involved, and it was only then that those companies went into administration because it was revealed how much they owed to our constituents. In circumstances such as that, where no doubt there would be difficult conversations about what role the Treasury and the FCA played in the process, who watches the watchmen? Who would instruct that inquiry? At the moment, that inquiry has not happened, so we do not know why that redress scheme did not work. There is no sign that the FCA wants that. Is the Minister saying that he would instruct that so that we can get to the bottom of why the redress scheme did not work? If it did not, it seems rather apposite to have an independent third party that could look at issues such as that on behalf of consumers.
John Glen
I am very happy to look at that particular case. The point I am making is that there is a mechanism to compel the FCA to investigate, and the Treasury does not do that in isolation from the its wider accountability to Parliament, individual Members of Parliament and the Treasury Committee. I am very happy to examine the point that the hon. Lady has made and I will look at it carefully, but that provision exists. Frankly, I cannot and would never expect to act in isolation and without accountability to Parliament. Given the powers available to the Treasury, which can be used in that context, and the opportunity for scrutiny by Select Committees, I ask that this new clause be withdrawn.
Stella Creasy
If the Minister is saying that he is going to instruct a redress investigation, I will happily withdraw the new clause. I beg to ask leave to withdraw the motion.
Clause, by leave, withdrawn.
New Clause 21
Assessment of risks of consumer detriment
“(1) Schedule 6 of the Financial Services and Markets Act (2000) is amended as follows.
(2) After paragraph 2D(2)(c) insert—
‘(d) the risks of consumer detriment associated with the firm’s business model and the likelihood for compensation claims from consumers.’
(3) After paragraph 2D(3), insert—
‘(3ZA) When assessing whether the firm has appropriate financial resources to meet the risks of consumer detriment and the likelihood of compensation claims from consumers, the Financial Conduct Authority must ensure that, at all times, firms hold sufficient financial resources to meet any likely compensation claims from customers in full.’”—(Stella Creasy.)
This new clause would ensure that the FCA considers the likelihood of consumer detriment arising from the firm’s business model prior to, and following, authorisation, and that firm’s hold sufficient financial resources to meet potential compensation claims from customers in full.
Brought up, and read the First time.
Question put, That the clause be read a Second time.
Mr McFadden
I beg to move, That the clause be read a Second time.
Although it is late in our proceedings, this is the first chance I have had to say what a pleasure it is to serve under your chairmanship, Ms Huq. New clause 24 introduces an offence of failing to prevent economic crime. I should make it clear that it is a corporate offence for companies.
The Committee will know that we have received written evidence on this issue from Spotlight on Corruption. In previous debates, we have all agreed that money laundering and fraud are big problems for the UK, although they are difficult to quantify. As I have said, I appreciate that the Minister has very likely been advised not to accept any amendments to the Bill. When a party has been in power for 10 years, that tends to reinforce itself, because it can become more difficult to admit that things are wrong. I should say in all candour that I am not suggesting that fraud or money laundering only started in 2010.
These are big, difficult and long-term issues for all Governments, so this is not a game of gotcha. It has been a problem for a long time, and Governments and regulators have to adapt constantly to deal with it. As we have been discussing this afternoon, as the pattern of business, trade and company ownership changes, so must the law and the regulatory rulebook. There is no embarrassment in acknowledging that we have a problem with money laundering or fraud, or, indeed, in introducing changes. Doing so is a strength.
The problem that the new clause deals with is twofold. First, there is the straightforward issue of fraud or crime—positive acts of wrongdoing—being committed. Secondly, there is the situation where breaches of the law take place in a company and it is impossible to hold the company to account because there is no duty on the company to prevent such acts in the first place. We saw that kind of thing graphically during the LIBOR scandal, which we have discussed in our proceedings. One chief executive after another—some of the highest-paid people in the world, it should be said—professed their profound shock at what their traders were doing. They knew nothing about it until they read about it in the newspapers, and they were absolutely dumbfounded at what was going on several floors below them in the same company. It worked for them: there were no corporate prosecutions in the UK.
I have already spoken to the Committee about the incentive to look the other way that this situation entails. It is better for a senior director of a financial institution to appear to be a fool than a knave, because the defence that they did not know what was going on is usually better for them than saying that they did know what was going on, but they did nothing about it. Not only that, but further down the chain it creates a disincentive to report wrongdoing further up the hierarchy, because doing so may mean that the ignorance defence is not available to those at the top of the hierarchy. That creates a mismatch between how small companies and large companies are treated, because small companies are assumed to have a directing mind, so that, if wrongdoing is identified, professing ignorance is not a defence for senior managers.
What would creating an offence of failure to prevent economic crime do? It would create a level playing field between small and large companies; it would send out a strong signal about the kind of financial sector that we want as we come to the end of the transition period; and it would equalise how different kinds of economic crimes are treated, because such a liability—I stress that it would be a corporate liability—already exists when it comes to, for example, bribery or tax evasion. Why should the ignorance defence be available for some offences but not for bribery or tax evasion? The Treasury would never accept it if senior members of a company said, “Oh, we didn’t know we were supposed to pay those taxes.” That would not be a legitimate defence, and yet it can be used for some other kinds of wrongdoing.
Let me return to the point about the signal that we want to send. A lot of the Bill is about onshoring EU directives. The sixth anti-money laundering directive requires EU member states to have corporate criminal liability for money laundering. Under the directive, corporate liability must include an offence that occurs owing to a lack of supervision or control by a person in a leading position in a company. We do not have that at the moment. The Bill is an opportunity to correct that. Remember, we are waiting for an equivalence decision. Do we really want our first big signal on divergence to be a departure from the rules on money laundering? Is that really the message that we want to send?
However, we should not do this only because the EU is doing it. We should do it on its own merits. The Treasury Committee reported last year on how difficult it is to prosecute multinational companies, saying that
“multi-national firms appear beyond the scope of legislation designed to counter economic crime. That is wrong, potentially dangerous and weakens the deterrent effect a more stringent corporate liability regime may bring.”
I anticipate the Minister’s response—that he thinks there are a lot of strong points here, and that he is sympathetic to the argument, but that he wants to wait for the Law Commission consultation. I cannot remember which pot we would put that in. [Interruption.] If it is pot three, I will take his word for it.
The focus of the Law Commission’s consultation is what is known as the identification doctrine, or what we might call the question of a directing mind. However, nothing in that consultation should prevent the Government from introducing a “failure to prevent” offence that could apply to small and large companies alike. Indeed, it is already implicit in the way that small companies are treated. Why should larger companies continue to be able to wield an excuse that is not available to smaller firms? When it comes to the treatment of small firms, I suspect that the Minister will hear that argument in the Chamber, if not in the Committee, from Members on his side of the House as well as on ours.
Furthermore, the Law Commission may take some time. We heard oral evidence that the pace on this has been glacial. However, our transition period ends in less than a month. It is not as though we do not have an ongoing problem with money laundering and financial crime, so what are the advantages of waiting? Corporate liability is not a new or revolutionary idea; it already exists for bribery and tax evasion. HMRC has said that it
“does not radically alter what is criminal, it simply focuses on who is held to account for acts contrary to the current criminal law.”
The lack of such an offence was also pointed out in the Financial Action Task Force 2018 UK evaluation, which pointed out the difficulties in proving criminal intent.
There are a number of reasons to act: the size of the problem, the unfairness between small and large companies, consistency in the way we treat tax evasion, our desire for equivalence recognition, the signals that we want to send about the character of our post-Brexit financial regulatory system and, perhaps most of all, because it is a good thing to do. For those reasons, I hope the Minister will consider the proposals in the new clause.
John Glen
The new clause proposes to create a new criminal offence, for FCA-regulated persons only, of facilitating economic crime and of failing to prevent economic crime.
In recent years, the Government have taken significant action to improve corporate governance and culture in the financial services industry. Following the financial crisis we introduced the new senior managers and certification regime. The regime is now in place for all FCA-regulated firms, and it requires firms to allocate to a specific senior person a senior management function for overseeing the firm’s efforts to counter financial crime. If there is a failure in a firm’s financial crime systems and controls, the FCA can take action against the responsible senior manager where it is appropriate to do so. That enforcement action includes fines and prohibition from undertaking regulated activities.
As well as creating the senior managers regime, through the Money Laundering Regulations 2017 and subsequent amendments, the Government have recently strengthened the anti-money laundering requirements that financial services firms must adhere to. Failure to comply with these requirements can be sanctioned through either civil or criminal means. Recent FCA regulatory penalties related to firms’ anti-money laundering weaknesses include a £102 million fine for Standard Chartered in April 2019 and a £96.6 million fine for Goldman Sachs in October 2020.
I hope that recent action demonstrates to the Committee that the Government are committed to upholding a robust framework that deters and sanctions any corporate criminal activity in the financial services industry. It is only right that we challenge ourselves on whether we need to go further, and I listened very carefully to the right hon. Gentleman. Regardless of our tenure, the Government must always take that responsibility seriously.
In 2017, the Government issued a call for evidence on whether corporate liability law for economic crime needed to be reformed. It is fair to say that the findings of the call for evidence were inconclusive. As such, the Government’s response to the call for evidence determined that a more comprehensive understanding of the potential options and implications of reform was needed. As the right hon. Gentleman acknowledged, the Government have therefore tasked the Law Commission to conduct an expert review on this issue.
Through the Bribery Act 2010 and the Criminal Finances Act 2017, the Government have demonstrated we are open to new “failure to prevent” offences. These offences, however, were legislated for because there was clear evidence of gaps in the relevant legal frameworks, which were limiting the bringing of effective and dissuasive enforcement proceedings.
Before any broader new “failure to prevent” offence for economic crime is introduced, there needs to be strong evidence to support it. It will also be important that any new offence is designed rigorously, with specific consideration given to how it sits alongside associated criminal and regulatory regimes and to the potential impacts on business. The scope of who a new offence applies to must also be holistically worked through.
The Law Commission’s work will take some time, but it is clear that we are zoning in on that aspect of the problem. In the light of that response, I ask the right hon. Gentleman to withdraw the new clause.
Mr McFadden
I am happy to withdraw the new clause today, but I suspect the Minister might meet a very similar amendment later in proceedings on the Bill. I beg to ask leave to withdraw the clause.
Clause, by leave, withdrawn.
New Clause 26
Legal protections for retail clients against the mis-selling of financial services
‘(1) Regulation 3 (Private Person) of the Financial Services and Markets Act 2000 (Rights of Action) Regulations 2001 is amended as follows.
(2) In paragraph 1(a), after “individual”, insert “, partnership or body corporate that is or would be classified as a retail client”.
(3) In paragraph 1(b), leave out “who is not an individual”, and insert “not within the definition of paragraph 1(a)”.
(4) For the purposes of this regulation, a “retail client” means a client who is not a professional client within the meaning set out in Annex II of Directive 2014/65/EU of the European Parliament and of the Council of 15 May 2014 on markets in financial instruments and amending Directive 2002/92/EC and Directive 2011/61/EU.’—(Stephen Flynn.)
This new clause seeks to give retail clients greater legal protections against the mis-selling of financial services products.
Brought up, and read the First time.
Stephen Flynn (Aberdeen South) (SNP)
I beg to move, That the clause be read a Second time.
The Chair
With this it will be convenient to discuss the following:
New clause 27—Legal protections for small businesses against the mis-selling of financial services—
‘(1) Regulation 3 (Private Person) of the Financial Services and Markets Act 2000 (Rights of Action) Regulations 2001 is amended as follows.
(2) In sub-paragraph (1)(a), leave out “individual” and insert “relevant person”.
(3) In sub-paragraph (1)(b), leave out “individual” and insert “relevant person”.
(4) After paragraph 1, insert—
“(1A) For the purposes of this regulation, a “relevant person” means—
(a) any individual;
(b) any body corporate which meets the qualifying conditions for a small company under sections 382 and 383 Companies Act 2006 in the financial year in which the cause of action arises;
(c) any partnership which would, if it were a body corporate, meet the qualifying conditions for a small company under section 382 Companies Act 2006 in the financial year in which the cause of action arises.”’
This new clause seeks to give small businesses greater legal protections against the mis-selling of financial services products.
Stephen Flynn
New clause 26 seeks to give retail clients greater legal protection against the mis-selling of financial services products, and new clause 27 seeks to give small businesses greater legal protections against the mis-selling of financial services products. I want to make a couple of quick remarks on that matter.
I do not need to tell hon. Members how important small businesses are. They make up three fifths of employment, and half the turnover in the UK private sector goes through small businesses. Those are telling figures. What is more, just 36% of small businesses use external finance; indeed, seven in 10 would rather forgo any growth than take on external finance. That is an important point that the Government must reflect on.
As they deliberate on why that may be the case, I will provide some additional information. There is a history of mis-selling, which causes small businesses a great deal of concern. Although regulation has been tightened, gaps remain. For example, small businesses complained earlier this year about the mis-selling of interest rate swaps. The FCA found that 90% of those businesses did not have a clue what that meant in reality, and it went on to talk about the dialogue between sophisticated and unsophisticated businesses in that regard.
The ultimate issue is that small businesses did not know what they were getting themselves into, and I think that is telling. No one wants that situation to arise, now or in the future. I encourage the Government to take heed of that and, therefore, agree to both new clauses.
John Glen
The Government are committed to ensuring that the interests of individuals and businesses that use financial services are protected. With the creation of the conduct-focused Financial Conduct Authority in 2013, we have ensured that those interests continue to be placed at the heart of our regulatory system and given the priority that they deserve.
The Government have given the FCA a strong mandate to stop inappropriate behaviour in financial services, and it has a wide range of enforcement powers—criminal, civil and regulatory—to protect consumers and businesses alike. That means taking action against firms and individuals that do not meet appropriate standards.
These new clauses, which have been tabled by the hon. Members for Glasgow Central and for Aberdeen South, seek to broaden the scope of parties that can seek action for damages related to mis-selling of financial services. The changes are unnecessary, however, because businesses already have robust avenues for pursuing financial services complaints. The Government are committed to ensuring that we do not unnecessarily push up the cost of borrowing for small businesses by creating additional legislative burdens.
In April 2019, the remit of the Financial Ombudsman Service was expanded to allow more SMEs to put forward complaints, and that covers 97% of SMEs in the UK. An enterprise that employs fewer than 50 people and has a turnover that does not exceed £6.5 million is entitled to bring a complaint to the FOS. If that complaint is upheld, the FOS can make an award of up to £350,000 in relation to acts or omissions that took place on or after 1 April 2019.
Moreover, SMEs will also have access to the business banking resolution service, an independent non-governmental body, which will provide dispute resolution for businesses. It will serve two purposes. First, it will address historical cases from 2000, which would now be eligible for the FOS but which were not at the time, and which have not been through another independent redress scheme. Secondly, it will address future complaints from businesses with a turnover of between £6.5 million and £10 million.
Given the robust avenues that are available to businesses for pursuing financial services complaints, I hope the Committee will agree that the new clauses are not necessary, and I respectfully ask the hon. Members not to press them.
Stephen Flynn
I beg to ask leave to withdraw the clause.
Clause, by leave, withdrawn.
New Clause 29
Review of Impact of Scottish National Investment Bank Powers
“(1) The Chancellor of the Exchequer must review the effect of the use of the powers in this Act in Scotland and lay a report of that review before the House of Commons within six months of the date on which this Act receives Royal Assent.
(2) A review under this section must consider the effects of the changes on—
(a) business investment,
(b) employment,
(c) productivity,
(d) inflation,
(e) financial stability, and
(f) financial liquidity.
(3) The review must also estimate the effects on the changes in the event of each of the following—
(a) the Scottish Government is given no new financial powers with respect to carrying over reserves between financial years,
(b) the Scottish Government is able to carry over greater reserves between financial years for use by the Scottish National Investment Bank.
(4) The review must under subsection 3(b) consider the effect of raising the reserve limit by—
(a) £100 million,
(b) £250 million,
(c) £500 million, and
(d) £1,000 million.” —(Alison Thewliss.)
This new clause requires a review of the impact of providing Scottish Government powers to allow the SNIB to carry over reserves between financial years beyond its current £100m limit.
Brought up, and read the First time.
Alison Thewliss
I beg to move, That the Clause be read a Second time.
New clause 29 would require a review of the impact of providing the Scottish Government with powers to allow the Scottish National Investment Bank to carry over reserves between financial years beyond its current £100 million limit. As Members may know, the Scottish National Investment Bank has been firmly established as a public limited company and has a proposed mission to focus the bank’s activities on addressing key challenges and creating inclusive long-term growth, including
“supporting Scotland’s transition to net zero, extending equality of opportunity through improving places, and harnessing innovation to enable Scotland to flourish.
It will provide patient capital—a form of long-term investment—for businesses and projects in Scotland, and catalyse further private sector investment.”
The bank’s first investment, announced the other week, was £12.5 million to the Glasgow-based laser and quantum technology company, M Squared, to support the company’s further growth in Scotland, which speaks to the bank’s proposed core missions.
The Scottish National Investment Bank will help to tackle some of the biggest challenges we face in the years to come, delivering economic, social and environmental returns, but currently there is a slight barrier, in that the Scottish Government can only roll over £100 million of their annual reserves. We are asking for the UK to look at increasing that to allow the Scottish National Investment Bank to get on with the job that it is set up to do.
As the Committee can see, the new clause asks the Government to introduce an impact assessment—because that is what we can do in this Committee; we can ask for reports and impact assessments—looking at increasing the Scottish Government’s reserves by £100 million, £250 million, £500 million or £1 billion for business investment, employment, productivity, inflation, financial stability and financial liquidity. We need the Government to come on board with that and provide some help to us. It is a huge and important project, so much so that the UK Government seem to be copying it by having an investment bank.
We would like to have an infrastructure bank for Scotland that can meet Scotland’s needs and priorities. It is desperately important that we do that. The bank will learn from banks such as KfW in Germany, which was set up after the war by the UK, and then we learned nothing from it ourselves. We want to be able to get on and do this and invest in Scotland’s future, but unfortunately we need the Government’s co-operation at this point to do that.
John Glen
The UK Government are committed to supporting investment across the whole of the United Kingdom. Indeed, at the spending review, we confirmed our intention to establish a new infrastructure bank in the UK that will help to support infrastructure projects across the whole of the UK, including in Scotland. I was therefore pleased to see the Scottish Government launch their Scottish National Investment Bank on 23 November.
The new clause seeks to establish a review process for considering whether the Scottish Government’s reserve flexibility should be increased and expanded for use by the Scottish National Investment Bank. We have already agreed significant financial flexibilities with the Scottish Government as part of the Scotland Act 2016 and their fiscal framework, which provide unprecedented policy levers to shape Scotland’s economy, including a £700 million Scottish reserve. The Scottish Government are able to manage the Scottish National Investment Bank through those existing arrangements if they choose to prioritise that.
Furthermore, we have agreed to undertake a review of the Scottish Government’s fiscal framework. That will include an independent report, jointly commissioned with the Scottish Government, next year in 2021, followed by a renegotiation of the fiscal framework in 2022. I therefore think in light of that information that the hon. Member might consider withdrawing the new clause.
Alison Thewliss
I am not going to withdraw it. The Minister has an absolute cheek, and he knows it. We were working on the bank for quite some time, and it has opened its doors and is already lending money while the UK Government are still only talking about their bank. Help us do the job and help us make sure that we can make this work for Scotland’s future, because, frankly, we do not trust the UK Government to do that for us, and we have good grounds for that.
When the UK Government invested in things in Scotland before, we ended up with things such as the Skye bridge, for which we were paying well over the odds. When Scotland is able to invest in things, we build bridges such as the Forth replacement crossing—sorry, the Queensferry crossing—which is an excellent bridge for us all to use in the future. I will press the new clause to a vote.
The Chair
With this it will be convenient to discuss
New clause 32—Scrutiny of FCA Powers by committees—
“(1) No provision may be made by the Financial Conduct Authority under this Act unless the conditions in subsection (2) are satisfied.
(2) The conditions in are that—
(a) a new statutory committee comprising Members of the House of Commons has been established to scrutinise financial regulation, and
(b) a new statutory committee comprising Members of the House of Lords has been established to scrutinise financial regulation.
(3) The Treasury must, by regulations, make provision for and about those committees.
(4) Those regulations must provide that the committees have at least as much power as the relevant committees of the European Union.”
This new clause requires statutory financial regulation scrutiny committees to be established before the FCA can make provisions under this Bill.
Stephen Flynn
I will be incredibly brief. Again, both new clauses 31 and 32 are about oversight and scrutiny. I have absolutely no doubt that Conservative Members will want to take back parliamentary sovereignty and ensure that this place has oversight of the Government’s actions.
John Glen
I think I have previously detailed my response to new clauses 22 and 26 why it would not be appropriate for Parliament to scrutinise all regulator rules made in relation to those two specific measures. These new clauses go further, and would require all rules made by the Financial Conduct Authority in relation to anything within this Bill to be approved by Parliament before the rules can be made, and would prevent the FCA from exercising its powers effectively. New clause 31 would make the FCA’s rule making subject to parliamentary approval. New clause 32 prevents the FCA from making rules under the Bill until two new parliamentary Committees are established. The same arguments that I made previously are relevant here: new clause 31 would apply a higher level of parliamentary scrutiny—to the FCA only—when making rules in areas covered by the Bill. That would mean that those areas were inconsistent with other areas of financial services regulation not covered by this Bill or within the remit of the Prudential Regulation Authority, which will retain the existing scrutiny requirements.
Parliament would need routinely to scrutinise a large number of detailed new rules on an ongoing basis. That is very different from the model that Parliament has previously put in place for the regulators under the Financial Services and Markets Act 2000, where it has judged it appropriate for the regulators to take these detailed technical decisions where they hold expertise.
Turning briefly to new clause 32, although I note that Select Committees of both Houses already have the option to scrutinise the regulators as they see fit, it is naturally for Parliament to decide how best it wishes to scrutinise financial services regulation. However, I do not believe that it is appropriate to make the introduction of an investment firms prudential regime, or any of the other changes enabled by this Bill, subject to the establishment of new parliamentary Committees. Nor do I believe it is for the Treasury to make regulations related to the establishment or functioning of parliamentary Committees. As the right hon. Member for Wolverhampton South East pointed out in an earlier sitting, that is a matter for the House to decide.
I would like to reassure the Committee that I am committed to ensuring appropriate accountability and scrutiny around new rules for our financial sector. That is why I recently published a consultation document on the review of the future regulatory framework for financial services. This review seeks to achieve the right split of responsibilities between Parliament, Government, and the regulators now that we have left the EU. It seeks views, including those of all parliamentarians, on how we can best scrutinise and hold the regulators to account, while respecting and safeguarding their independence. I look forward to engaging with hon. Members on that subject but, given what I have said, I suggest that they might consider withdrawing the new clause.
Stephen Flynn
I am not surprised, but I am disappointed. I would like press new clause 31 to a vote.
Question put, That the clause be read a Second time.
Alison Thewliss (Glasgow Central) (SNP)
I beg to move, That the clause be read a Second time.
The Chair
With this it will be convenient to discuss new clause 34—Review of impact of Act on UK meeting UN Sustainable Development Goals—
“The Chancellor of the Exchequer must conduct an assessment of the impact of this Act on the UK meeting the UN Sustainable Development Goals, and lay it before the House of Commons within six months of the day on which this Act receives Royal Assent.”
This new clause would require the Chancellor of the Exchequer to review the impact of the Bill on the UK meeting the UN Sustainable Development Goals.
Alison Thewliss
I will be brief. It is important that the Government take their obligations under the Paris climate change commitments and the UN sustainable development goals seriously. I did not know when we tabled these new clauses that my son would be studying the sustainable development goals at his school this week. It would be very good if the Government took the sustainable development goals quite as seriously as the primary 6 pupils I know.
John Glen
It is clear that this new clause is similar to other amendments. We have discussed the issues in relation to Basel and PRIIPs measures, and new clauses 33 and 34 would mean that they would apply to a Bill as a whole. As I have set out in previous responses, we are committed to meeting international obligations and strongly support the aims of the Paris agreement and the sustainable development goals. That will mean a combined effort across the whole economy, especially with the involvement of financial services. As the Chancellor set out in his statement, they will be at the heart of that effort. We are pursuing world-leading standards, and ahead of COP26 the Prime Minister’s COP26 finance adviser, Mark Carney, will advise the Government on embedding climate considerations into every financial decision.
These new clauses would require the provision of an assessment of the impact of the Bill, specifically on the UK’s ability to meet its commitments to the Paris agreement and sustainable development goals. We published in June 2019 a voluntary national review, setting out in detail our progress towards those goals, and a comprehensive account of the further action to be taken, and we remain committed to supporting the implementation of those goals. We therefore cannot support these new clauses, as we believe that we are held to account through other mechanisms. That is probably all I need to say. I suggest that the clause may be able to be withdrawn on that basis.
Alison Thewliss
I am happy to do so. I beg to ask leave to withdraw the clause.
Clause, by leave, withdrawn.
New Clause 35
Money laundering and overseas trustees: review
“(1) The Treasury must, within six months of this Act being passed, prepare, publish and lay before Parliament a report on the effects on money laundering of the provisions in section 31 of this Act.
(2) The report must address—
(a) the anticipated change to the volume of money laundering attributable to the provisions of section 31; and
(b) alleged money laundering involving overseas trusts by the owners and employees of Scottish Limited Partnerships.”—(Alison Thewliss.)
This new clause would require the Treasury to review the effects on money laundering of the provisions in section 31 of this Act, and in particular on the use of overseas trusts for the purposes of money laundering by owners and employees of Scottish Limited Partnerships.
Brought up, and read the First time.
Question put, That the clause be read a Second time.
Stella Creasy
I beg to move, That the clause be read a Second time.
This is the final new clause for the final bit of the Bill, so I am hoping that this time round, given the season, the Minister will withdraw his Scrooge-like refusal to amend the Bill, not least because I genuinely think that on this new clause and this area of policy he probably agrees and recognises that there has been an oversight in its consideration. I also hope that Government Members will support the new clause, because it is surely what they came into office to do—to remove the red tape and bureaucracy that holds back enterprising, entrepreneurial people in our local communities.
I speak as a proud Co-op as well as Labour MP, and this new clause is about co-operative banking—perhaps not what people might first think of when they talk about co-operative banking, but it is about how mutual banks are set up. Local mission-led mutual banks are common in other parts of the world, but not so much here in the UK. They are, however, something that people are increasingly looking at and trying to support, particularly around Greater Manchester and elsewhere, and local leaders in Liverpool and Preston have plans to establish such institutions as well.
As people would understand, is quite difficult to start a bank: there are often requirements, even for a standard for-profit shareholder-controlled model. Much of the difficulty boils down to the challenges involved in raising the amount of equity capital that regulators require for institutions before they will issue an operating licence. That is what we are talking about today. Frankly, someone would need to raise millions in equity to get a banking licence.
The problem for mutual banks is that many investors struggle to understand what a mutual is. Ultimately, the mutual might offer good long-term returns, but there are no opportunities for those bumper dividends or speculative gains that people might traditionally associate with banking. That is part of a model that invests in communities, supports people and has people as part of the process. People think about credit unions; this is about what the 21st century co-operative banking models might be.
One of the challenges holding back the co-op movement is an antiquated piece of legislation. Let me be clear: the passage of the Co-operative and Community Benefit Societies Act 2014 was very welcome and helped to level the playing field. The capital requirements regulations are a hangover from Disraeli’s time. Those provisions can be traced back to the Industrial and Provident Societies Act 1876. I am talking about simply removing them from the legislation, because the requirements that they make are already covered for co-operative banks by other forms of prudential regulation in the Bill. Their existence creates an artificial level of complexity for the setting up of co-operative banks.
I do not want to go into too much detail, but the law currently prevents co-operative societies from being banks if they have what is called withdrawable share capital. That restriction was imposed in 1876; things have moved on. First, we now separate and have strong regulation of banks’ capital adequacies, as we discussed earlier in the Bill process. Furthermore, we have clear and specific regulation setting out how co-operative withdrawable share capital can safely be used to help to capitalise banks. It is firmly established today that societies retain the absolute right to suspend share withdrawals, giving their capital the essential features of equity under international and UK accounting standards.
If mutual banks were able to add withdrawable share capital to their mix, that would help to enable them to diversify their offer to investors and therefore broaden the range of investors to whom they could be marketed. It would open up significant opportunities for co-operative banks to get off the ground, because they would have the ability to raise the equity that they need to get a banking licence. Surely, Members from all parties can agree, in good Christmas cheer, that such competition in our banking sector would be a good thing, so it would also be a good thing to remove this archaic piece of legislation on capital equity from the legislation book.
The Bill is about financial services, and the co-operatives throughout the country want to offer financial services. The Minister may still be drawing on pot 3, on the Ghosts of Christmas past and present, but on the Ghost of Christmas future, in the Lords or on Report, might he give us a glimmer of hope, Tiny Tim-style, that he will listen to the co-operative banking sector? They have written to him in support of this amendment and I know he has met representatives from the sector to look at what more he can do to support them. I hope he will remove these pieces of red tape and take back control of the mutual sector this Christmas.
John Glen
I am grateful for the enticement to be generous, but I was quite generous on new clause 8. I gave some positive indications about the intentions of the Government, and I look carefully at everything that is said by Members from across the Committee. I am very engaged with the mutual banks and with the co-operative sector generally, which I will say more about in a moment.
This amendment aims to remove the restriction which prevents co-operative societies holding withdrawable share capital from carrying out the business of banking. I share the interest of the hon. Member for Walthamstow in how the mutual model of financial services can add much-needed diversity and competition to the sector. Treasury officials and I have had constructive conversations with individuals seeking to set up regional mutual banks, and I look forward to continuing those. I will not mention their names, because they are going through different regulatory processes, and I am told that that is sensitive and so I should not do so. I try to help them.
Ensuring that banks hold the appropriate capital is critical to a stable and functioning financial system. It is therefore important that we consider any legislative changes in this area. I have thought about the amendment, and there are several immediate concerns about the potential risks to financial stability and consumer protection, which the Government have a duty to consider.
I will set out our most pressing concerns. As the global financial crisis highlighted, sufficient regulatory capital is needed by financial institutions as a source of resilience and to ensure losses can be effectively absorbed. To ensure capital fulfils this function, capital held by banks must always be readily available to absorb losses, which cannot be the case where investors can withdraw capital. Enabling co-operative banks to hold withdrawable share capital, as this amendment intends, could place consumer deposits at risk, create an inconsistent regulatory regime between co-operative and non-co-operative banks, and cause risks to the stability of the financial system, if it led to banks being inadequately or inappropriately capitalised.
I have had representations from the prospective regional mutual banks sector that they would seek to use this amendment to issue additional tier 1 capital instruments, or contingent convertible bonds. These are complex instruments that would need further thought to ensure they fulfilled their purpose within the legislative framework for co-operatives. It is also unlikely that the ability to raise additional tier 1 capital would be very beneficial to regional mutual banks currently, given they are at the early stages of their development where raising core equity capital is the priority.
I also note that the activity of deposit taking, in the form of withdrawable share capital that co-operatives and community benefit societies carry out under the present legislation, is subject to certain exemptions from regulatory requirements, which are applicable to other institutions carrying out business activities. These may no longer be appropriate if they were generally allowed to carry out the business of banking.
In conclusion, the Government believe that the fundamental issue is that it is not appropriate for deposit takers to rely on withdrawable share capital. In any case, certainly a measure like this would need further consideration of the legislative and regulatory implications rather than being introduced by way of amendment. I will continue to look carefully at these matters with the sector, but in the context of what I have said I ask the hon. Member for Walthamstow to withdraw her amendment.
Stella Creasy
I am so sorry to hear that the Minister is still listening to Marley rather than Bob Cratchit about the true spirit of Christmas. This is legislation from the 1800s. It is about £400 worth of share capital. It is outdated and needs a little more Christmas cheer. The Minister said that he would commit to working with the sector to get this amendment right, and if amended this Bill could be great. I think I will push the new clause to a vote—if nothing else, to put on the record that there are those of us who understand that co-ops want to move into the 21st century—and wish everyone a merry Christmas at the same time.
Question put, That the clause be read a Second time.
Mr McFadden
On a point of order, Dr Huq, I would like to thank you and Mr Davies for your chairmanship during the proceedings, and the Clerks from the Public Bill Office for helping all of us with our amendments in recent weeks. I would like to thank my colleagues on the Opposition side of the Chamber; I believe we approached this in the right spirit. We set out at the beginning the way we would approach it and I think that is the way that we have carried through: trying to improve the Bill, to give it proper scrutiny and to try to point to some kind of future direction for UK financial services as we come to the end of the transition period. Some of us here are Front-Bench Members and this is part of our terms of appointment, so, with their indulgence, I would particularly like to thank my hon. Friends the Members for Wallasey and for Walthamstow, who I believe both brought considerable experience and value to our proceedings.
I would like to thank the Minister for his patience and forbearance. We did not set out to torture him, I promise, but I appreciate that for him, taking through a Bill like this is a substantial piece of work, and I am grateful to him for the spirit in which he responded to amendments, questions and so on as we went through. Finally, I thank the Back Benchers on the Government side. For the most part they took a rather passive approach to the proceedings. There is a mixture of experience and new MPs on that side. To the new MPs in particular I will say that I hope the last three weeks have been an important part of their learning about what it means to be a Government Back Bencher.
John Glen
Further to that point of order, Dr Huq, I thank the right hon. Member for Wolverhampton South East for the courteous and constructive way in which he led the Opposition scrutiny of the Bill. I thank all members of the Committee for their contributions. I looked carefully at all amendments, and I did not categorise them in buckets. I thank you, Dr Huq, and your colleague Philip Davies, and the team of Clerks, as well as my officials from the Treasury, who sit silently at the end and do a great deal to support me and the much wider team back in the Treasury who have helped to prepare the Bill. Clearly, we shall now move on to its further stages, and there is more work to do. I thank my hon. Friend the Member for Macclesfield for his support, in particular, as well as my hon. Friend the Member for Montgomeryshire, who has given me enormous support throughout.
Alison Thewliss
Further to that point of order, Dr Huq, I thank you for your time in the Chair, and Philip Davies as well. I want to thank colleagues for their contributions, the Clerks for all their assistance, and the Treasury officials, who were good about meeting us ahead of the proceedings. That was really useful. I thank our team of researchers, Scott Taylor and Linda Nagy, who have been great in providing support to us. I also thank those who sent evidence to the Committee. That was extremely useful for briefings, and we were grateful.
The Minister said earlier that he was not saying no or never; I live in hope that some time he will say mibbes aye. We might get there, yet. I said on Second Reading that we would bring forward constructive amendments and the Government would ignore them, and that turned out to be what happened, but we hope that on Report perhaps some of the good Opposition suggestions, made with the best intentions to make things better for all our constituents, will be taken on board. I thank the Minister for his work on the issue.
The Chair
Yes, it has been epic, and we have had the Oscar-type speeches that everyone makes at the end. I am sure that all right hon. and hon. Members were actively engaged in their own way, whether they were trying out the financial products on their screens, or whatever. A few letters are on their way, I believe, from the Minister about some points of detail raised by Members.
Bill, as amended, to be reported.
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Covid-19: Access to and Acceptance of Cash
(4 years ago)
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David Mundell (in the Chair)
I remind hon. Members that there have been some changes to normal practice to support the new call list system and ensure that social distancing can be respected. Before they use their microphones, Members should sanitise them using the cleaning materials provided, which they should dispose of as they leave the room. Members are asked to respect the one-way system around the room. They should speak only from the horseshoe, and they can speak only if they are on the call list. That applies even if debates are undersubscribed. Members cannot join the debate if they are not on the call list. I remind Members that they must arrive for the start of debates in Westminster Hall, but they are not expected to remain for the wind-ups.
Paul Maynard (Blackpool North and Cleveleys) (Con)
I beg to move,
That this House has considered access to and acceptance of cash during the covid-19 outbreak.
It is a pleasure to serve under your chairmanship, Mr Mundell, however unexpectedly. I am a great believer in innovation in the Standing Orders, so it is good to see it happening in real time. I thank all hon. Members for attending this debate. I draw the House’s attention to my entry in the Register of Members’ Financial Interest. I have been a member of the LINK Consumer Council for all of three days, but I should make everyone aware of it none the less.
It is strange. A year ago, we were all debating who should appear on banknotes—which famous historical figure deserved the right to appear on our currency. Now, 12 months on, we are debating whether banknotes even have a future. I open my wallet and the moths fly out, not because I am stingy in any way but because I now use banknotes only to pay my window cleaner or my drycleaner.
Members will know that this topic is twofold, being about acceptance of cash and access to cash. The two are closely interlinked. Members have been arguing for some time about the preservation of ATMs to preserve access to cash, and I pay tribute to the hon. Member for North Ayrshire and Arran (Patricia Gibson), who has done a lot on that in the past. We are now seeing a growing trend towards as cashless society that affects all ATMs by reducing the consumer’s need for hard cash and making that infrastructure unviable. The key question becomes: what is the point of preserving access to cash if there is nowhere to spend it in the first place?
The trend has affected us all, but particularly the most elderly and vulnerable. Some may be nervous about using technology, or they may to struggle to remember a personal identification number or manage their personal finances. They may be among the 1.8 million people who are still unbanked and rely on a jam-jar approach to monitoring pots of money for bills, which cannot be done with a card. Recently published research from the consumer organisation Which? showed that two in five people reported being unable to pay with cash at a shop and did not have another payment method at the point of purchase. Indeed, two in 10 could not then buy medicine that they needed.
We see regional differences. London clearly leads the way: 75% of card usage there is now cashless, compared with 50% in my region of the north-west. I am also conscious that, as Members representing the highland fastnesses of the far north of Scotland can attest, there are many remote rural areas with very poor broadband, so it is not possible simply to install an iZettle—a little handheld device that permits cashless transactions.
Even in the three years up to lockdown, there was a drop of 20% to 30% in ATM withdrawals. Of course, when lockdown hit, that usage fell off a cliff. It has now recovered to some three quarters of what it was, but I very much suspect that the remaining quarter is unlikely to come back. We are turning cashless almost without noticing it, and certainly without discussing it. The trend is accelerating. LINK predicts that as few as one in 30 transactions will involve cash within the next five years or so.
There are many regulators in this field. One of them, the Payment Systems Regulator, has delayed its consumer tracker due to covid, even though it is more needed than ever. The PSR is rightly now focusing on access based on deprivation, rather than just on geographical area. We have indeed seen, just as in my constituency, a much sharper reduction in free-to-use ATMs in the more deprived areas.
A key noticeable feature of the initial lockdown was the sudden drop-off in the number of shops accepting cash. I saw that in my constituency. A fruit and veg shop suddenly went cashless—something that never would have occurred to me as likely to happen. Part of the trend of shops stopping taking cash was the fear of the virus remaining on banknote and coin surfaces. In the past week, I have noticed that the Bank of England has sought to clear up that myth, and I hope that shop workers and customers will start to feel more confident that using banknotes and cash does not put them at greater risk of contracting the virus.
Which? said that the reduction is also due to the underlying challenge of handling cash. Perhaps it means driving further to deposit a day’s takings at the bank, given the number of bank closures, or queuing for up to half an hour to make a deposit in a post office, which means that the working day is extended. Each time they have to go, the unit cost goes up, as fewer use cash. That drives more businesses cashless for simple economic reasons.
We have seen innovation from ATM providers and FinTech. LINK continues to have the role of ensuring that protected ATMs are replaced when needed and subsidising low-volume ATMs. It pioneered other approaches such as a community right to request an ATM as well as a range of schemes focused on promoting local cash recycling and more use of cashback without purchase in shops. However, even if the cashback without purchase pilots prove successful, it still requires the Government to renew the regulations concerning what is called PSR 2 for them to continue. That is critical because the pilots end soon. Will the Minister confirm that the regulations will be tabled in due time so that the industry can make sure it continues that good work? Will he also extend them to include deposits, so that local businesses have more options for where to take their cash at the end of the working day? In case he thinks this is a rather obscure point, he might wish to be aware that there is one pilot at a SPAR in Castle Street, Hereford, which is one of the trialled pilots. Perhaps he is more likely to be found in the Waitrose by the football ground rather than in SPAR on Castle Street, but he might wish to visit to see how it is working in practice.
I know the Government have promised an access to cash Bill. The Treasury is starting a review of access to cash as well, but can the Minister comment on the timing of the Bill? I am very concerned because we need a Bill sooner rather than later. The changes are happening now. Cash is disappearing now. Even if we do not get the Bill soon, I hope that some of the structural changes needed in the sector that do not require legislation can be accelerated by the Treasury.
The Government have set up so many institutional bodies. The Joint Authorities Cash Strategy is a key one, which is trying to reduce the cost of the hidden cash infrastructure that distributes notes and coins by consolidation and removes duplication. We do no talk about this often enough; we just look at what the consumer does, not at what happens behind the cash machine or cash register, which is just as important. In addition, the Payment Services Regulator now has a steering group for consumer working groups, each meeting weekly and coming up with solutions to immediate and medium-term problems. One might argue that there is far too much going on. The National Audit Office report, “The production and distribution of cash”, published in September, made that point and highlighted five separate bodies with an oversight role in cash infrastructure. This surely needs rationalising to make it more effective. Many bodies recommend that the Financial Conduct Authority takes on responsibility for protecting access to cash.
Serious thought is being given to the public utility model for cash infrastructure by another group that the Government set up, the Wholesale Distribution Steering Group. I would support that model, as the minutes from the steering group’s meeting on 18 November stated,
“without some action being taken the current wholesale cash distribution system would not remain efficient or effective against the backdrop of declining cash volumes.”
That puts it in a nutshell. We must not allow vested commercial interests to veto much-needed reform, particularly if all we end up discussing is interbank rates, so will the Government accelerate the proposal for a public utility model so that we can reduce the £5 billion cost of the hidden wiring that makes up the infrastructure?
We also need a long-term solution. We cannot pretend that we are not heading for an almost wholly cashless society at some point in the future. The question surely is: how do we get there? I very much hope the Government’s access to cash Bill will include a commitment to set up a body a bit like Digital UK, which managed the transition from analogue to digital TV. It is perfectly possible to create a guiding hand that knits together all the different interest groups, working with both the infrastructure providers and the charities that work on debt advice or support the elderly. They could manage that transition and make sure that those at greatest risk of being marginalised are helped through the process. I confess that is not my idea. I cannot claim the credit. That goes to Natalie Ceeney, who chaired the initial access to cash review.
I would also like the Government to probe into whether we should enshrine a legal right to pay cash for bills up to £100, as Denmark has done. It could perhaps be time limited until such point as the transition is completed. A more radical idea still might be a short-term legal requirement for shops to continue to accept cash as a primary way to protect both the acceptance of cash and by extension the cash infrastructure, including ATMs. That might be controversial if unit costs continue to increase for businesses, but I want to know the Minister’s views before I start planning my amendments to the Bill when it finally appears.
The sector is innovating, even though it is hamstrung by competing commercial pressures and some arcane internal debates. The Government have at least identified the problem and have raised the sense of urgency, and not just because I have started pestering the Economic Secretary to the Treasury whenever I pass him on the street. He now crosses the road very quickly when he sees me coming, and I do not blame him! I still think we need to have a wider national conversation and a much greater sense of urgency about how we manage the process. The transition is happening as we speak and not many people are noticing it. There will rapidly come a time when people ask, “Why did we not think about this more clearly at the time it was happening?” As the deputy chairman of the Swedish Riksbank, Cecilia Skingsley, said:
“If we don’t do anything we are looking at a future where money is spontaneously privatised.”
I do not think any of us in this House want to see that. We all have constituents who fall into the potentially vulnerable categories. We want to make sure that their interests are cared for as technology forges ahead. The Government have made a good start, but they need to follow through and much more speedily than is currently the case.
I look forward to hearing what other hon. Members have to say.
David Mundell (in the Chair)
Thank you for that excellent start to the debate, Mr Maynard. I call Yvonne Fovargue to contribute next.
Yvonne Fovargue (Makerfield) (Lab)
Thank you, Mr Mundell. It is a pleasure to serve under your chairmanship. I congratulate the hon. Member for Blackpool North and Cleveleys (Paul Maynard) on securing this debate. We have worked together on this issue for a number of years.
There is no doubt that the covid-19 crisis has hastened the move to a cashless society. Before the restrictions, people were talking about a timescale of years; it is now months, even weeks away. Cash does not seem to be king anymore. As my honourable colleague mentioned, it is coming back and is now at 75% of pre-covid levels—more in some areas—but surveys are being done at the moment to measure the use of cash and I worry that that will skew the results.
For many people, not having cash is a good thing. For an increasing number of people shopping online, using contactless payments and digital transfers, internet shopping is a boon, but it can increase the opportunity to scammers and fraudsters, and there are people who worry about using digital methods of payment and would prefer to keep cash. Many people have no bank account or credit card. They find budgeting far easier with notes and coins—after all, with cash, you cannot spend more than you have in your purse or wallet.
Many of my constituents are going back to those days. I can remember my mother having a little pocket for each bill—that is the way not to get into an overdraft. It has always been thus for people on lower incomes. Even with covid-19, people in deprived areas continue to rely on cash more than those in wealthier areas. LINK research shows a clear connection between deprivation and cash usage. Cash usage has dropped 70% year on year in the wealthiest areas, but only 35% in more deprived areas. That is the case in my constituency. Many people either choose to or have no option but to use cash. It is becoming harder and harder to pay using cash—in fact, we may well be at a tipping point, where the cash services once gone will not come back. Tipping point is a good way of putting it; I have difficulty in paying tips now. I do not really trust putting a tip on to my card. I would rather give the person giving the service the cash, and that is getting more and more difficult.
ATMs are being shut down throughout the country. In some cases, it is a response to falling demand, but once they have gone, it is much more expensive to restore them. It will be harder to get shops to accept cash again after they have insisted on contactless payments and cards for the best part of a year. Cash has been portrayed as somehow dirty and able to pass on the virus. That has not helped.
Research conducted for Money Mail suggests that half of all retailers plan to go cashless or have already done so due to the virus. I do not want to be in a situation where we find that because people choose to or have to use cash, their choice of where to shop is extremely limited. They might be taken advantage of in that situation.
LINK suggests that a cashless society presents a serious problem for 2 million people who still rely solely on cash and Natalie Ceeney, who chaired the access to cash review, says that as many as 8 million people would struggle to cope in a cashless society. These people need cash and they need confidence that the shops they use will accept cash for the goods they want to buy.
We must look at innovative and flexible ways of ensuring people have access to cash—for example, cashback without purchase, where people can go into local shops without buying anything. I welcome the extension of cashback, but it has to be part of a strategy. Things are happening piecemeal at the moment. Bank branches are shutting, ATMs are closing, and increasing numbers of shops are going cashless. We may need to look at making it mandatory for shops to have to accept cash, particularly those providing essentials such as food, medicine and so on. Do we need to look at a universal service obligation, so that banks are required to ensure cash access across the whole country, as happens in Sweden?
We also need to look at deposits. Post offices are almost seen as the silver bullet, but the postmaster in my constituency, who was quite elderly, had to self-isolate, and the post office has now been shut for nine months. People have no access to their cash now in that area. Three post offices in my constituency have also closed, with nobody able to take them over. These are in small pockets of community where to get cash is a journey.
There has been a 23% increase in the number of pay-to-use ATMs in the most deprived areas and that statistic worries me more than any other. If people have to pay to take out their cash, the £1.50 they pay to access their cash can be the difference between topping up their meter and having heat, and not being able to. Perhaps we should be looking at reforming the interchange fees to provide a bigger subsidy for provision in certain areas. It would be good to hear the Minister’s views on that.
I agree that vested interests should not accelerate the decline of cash. There is a case for reducing the number of ATMs in the face of decreasing use, but not the distribution and geographical reach. We need to maintain the footprint as we move forward, and we have to move forward. We need a Bill that deals with the issues and we need it very soon. We also need co-ordination of all the interested parties so that we can have a joined-up approach. Covid-19 has pushed an already fragile cash system to the brink of collapse. Unless the Government act now, we will sleepwalk into a cashless society and millions will be left behind.
Jamie Stone (Caithness, Sutherland and Easter Ross) (LD)
It is a pleasure to serve under your chairmanship, Mr Mundell, which I think is a first in the 21 years that we have known each other.
I will dwell briefly on cash machines, because excellent reference has already been made by the two previous speakers. I commend the hon. Members for Blackpool North and Cleveleys (Paul Maynard) and for Makerfield (Yvonne Fovargue) for two very fine speeches, which will mean a lot to my constituents in the far north of Scotland.
There is a village called Durness in north-west Sutherland, which is the northernmost and westernmost inhabited community on the British mainland. Every year, they have a tremendous Highland games and tourists come from far and wide. I remember my predecessor bar one, Robert Maclennan, the late Lord Maclennan of Rogart, being chieftain of the games some years ago, resplendent in kilt and everything else. He greeted me very warmly and said he had had six glasses of whisky. He was in extremely good form.
There was a cash machine in Durness, run by the Bank of Ireland, part of Robbie and Fiona Mackay’s shop. They used to tell me that the amount of money that came out of that machine the day before the games and during the games was absolutely staggering—tens of thousands of pounds. That was, of course, then spent on whisky or on whatever else at the highland games and it went straight back into the local economy. Then the machine was taken away. As Robbie Mackay said, “They can get cashback in the shop, but I can’t stay open until the wee small hours; I can’t be open at 6 in the morning.” That was the problem and it became a huge cause célèbre in that part of Sutherland.At the end of the day we did get a cash machine back in, but as the hon. Member for Makerfield said, getting them back again once they have been closed is a near-impossible task. I can tell Members that it is: I have the T-shirt. For every one we win, we lose a lot of others.
The second anecdote—just to colour in the cash machine issue—is that some years ago, maybe even 10 years ago, there were huge gales in the north of Scotland and the electricity went out—not for a few hours, not for a day, but for three, four or even five days in some communities in my present constituency. That meant, of course, that the cash machine did not work, and neither did contactless, so it is worth remembering that the present electronic regime is vulnerable to an electricity failure.
That is as much as I want to say about cash machines, except that they absolutely underpin my constituency. Of course we can withdraw cash from bank branches, but as I have said an awful lot of times during my three years in this place, we now only have one bank branch in the entire county of Sutherland. That is 2,028 square miles; it is a vast county, with one bank branch, in Golspie. That means that people have to make a 150-mile round trip to go to a bank branch, which is causing huge difficulties for my constituents.
As all colleagues here today know—I have mentioned this many times in this House—it seems as if there is a sickening liturgy of closures, one after the other, which we are unable to do anything about. Of course I am told, “You can use the post office.” That is not the silver bullet, because—as has already been alluded to—many is the post office that has already shut, or is shutting, in the relevant town, and the distances to get to the nearest post office are impossible. In no way do I denigrate what the Post Office does: it is a splendid institution, dating from the 19th century, and it is something that we can be very proud of as a British innovation.
I apologise for repeating myself, but one thing that I and others have been advocating is a joint banking hub approach, whereby the clearing banks work together to form a joint hub that would be owned in Scotland by the main clearing banks. That would mean a human face or faces behind the counter, who can advise. I bank electronically—I do it through my mobile—but I got a fright quite recently when I saw a debit coming off my account that I did not know anything about, and it was actually a banking fraud. Now, by dialling various numbers and taking a long time over it I got to the bottom of it, but had I been older than I am, or had I been a vulnerable person, that would have been very frightening. What better than to be able to go into a bank branch and ask, “What is happening here?” and be told, “Ah, this is a fraud we know about. We will kill it right now and get the money returned to you”?
I am not having a go at the Government, because the Government have actually been helpful. Before the pandemic, I had a constructive meeting with the Economic Secretary to the Treasury, and I was very grateful to him for that. He thought that there was possibly some mileage in the Government looking at the concept of a jointly owned banking hub, and indeed, on the business front, that concept has already been established—not for the north of Scotland, but nearer London, I think. Before the covid outbreak, I had hoped that I could have a look at it and see how it worked, and whether we could apply the same principle to the clearing bank idea, tweaking it suitably.
The other thing about having a human face behind a counter, or in a building that really exists and is reasonably accessible to people, is the issue of depositing money. We can take money out of a cash machine, but we cannot stick it back through the slot, and during the covid pandemic I have heard from businesses that, by the very nature of what they do, have had to travel a considerable distance to bank their weekly takings. That, I suggest, is not terribly safe, not only because of the security risk—a person travelling with that amount of money on them, in their car—but, sadly, because of the likelihood of transmitting the disease. We can learn lessons from the pandemic about this.
When it comes to the idea of a hub, where there is a will, there is a way. It could be done, and what I try to say to the banks of Scotland is that it would benefit them in so many ways. I am digressing from taking cash out of machines, so I will be very brief, but I have constituents who tell me that they have a brilliant idea to start a little business, but that whereas their father or grandfather would have talked through the sums with the bank manager and the bank would have supported them to the tune of, perhaps, £20,000, my constituents cannot do that because it is not so easy now. They may have to travel somewhere far away, which, because of covid, is not so good.
I started with a light-hearted point about the Durness highland games; I conclude on the splendid galas that we have in our highlands. Wick gala is famous, and it is excellent, with great entertainment. There are lots of different acts on the backs of lorries. I remember, on one lorry, an excellent take-off of my immediate predecessor Viscount Thurso, which was very humorous; indeed, his lordship enjoyed it enormously. The way to contribute to the Wick gala is to throw money at the floats, which is caught in little nets. A lot of things that are good for civic society involve cash being given. In my hometown of Tain, people go around with buckets which money is thrown into. That is how it is done; it cannot be done with a card or contactless.
With that light-hearted point, I congratulate the hon. Member for Blackpool North and Cleveleys on securing the debate. It is super to see a constructive debate such as this taking place. I look forward with great interest to the Minister’s reply.
David Mundell (in the Chair)
Thank you, Mr Stone, for that—as ever—entertaining tour of your constituency. I will call Sarah Owen to speak next, and in the course of her contribution the Chair will transition to Yvonne Fovargue.
Sarah Owen (Luton North) (Lab)
It is a pleasure to serve under your chairship, Mr Mundell, and shortly under the chairship of my hon. Friend the Member for Makerfield (Yvonne Fovargue). I thank the Backbench Business Committee for finding the time to put this issue on the parliamentary agenda. This is a 90-minute debate, but for me and, I think, the public the issue is really straightforward: people should not be charged to access their own money. It really is as simple as that.
Data from the GMB union—I declare an interest as a member—found that access to free cash in my constituency had fallen by 46% since 2018, one of the top five biggest falls in free cash machines across the UK. Let us call that what it is—a stealth tax on the most vulnerable and those on the lowest incomes. Low income is the biggest indicator of cash dependence. Lower-income households are less likely to have access to digital infrastructure and more likely to use cash, for budgeting reasons. Older constituents contacted me during the pandemic, concerned that they could not pay with cash. We know that older people are less likely to be able to access banking digitally. Those people literally cannot afford to be left behind.
[Yvonne Fovargue in the Chair]
From an accessibility standpoint, a range of health problems may make it more difficult to use digital payments. Cognitive difficulties may make it challenging to remember a PIN—particularly if my child has kept me up all night and I really struggle to remember which PIN is which. Those with certain visual impairments may prefer the tactile nature of cash. Those with mental health problems may not trust digital payments, or may find it more difficult to control compulsive spending, affecting some people living with bipolar disorder or with gambling addiction, for example.
The pandemic has changed everyone’s way of life completely, and I entirely understand that, for now, we need to do everything we can to slow the spread of the virus. However, as businesses adjust to the new normal I will be pleading to allow the safe return of cash payments, because so many people would still like that option, and so many depend on it. Like many industries right now, the cash industry has been hit hard, as the number of cash withdrawals halved during the initial weeks of the covid crisis. However, this crisis was long in the making, with figures from Which? from February 2020 showing that 1,200 bank branches and 9,500 free-to-use ATMs were lost in 2018. That is having a real impact in Luton North. We are losing bank branches, with Barclays—around the corner from me, on Marsh Road—the latest to announce plans to go. When I went there last week, the queues were 15 people deep, 2 metres apart. That bank branch is well used and needs to be saved.
The industry is now on a knife edge. G4S, which operates some cash-handling services, is threatening more than 1,000 jobs with restructuring plans, and Loomis has announced 300 redundancies. When do the Government plan to bring forward the legislation promised in March to protect the cash industry? Will it include protections not only for accessing cash but for accessing free cash? My constituents are already some of the most overcharged in the country for getting at their own money. My constituents need the legislation to offer a legal right to pay for goods and services in cash, especially essential goods and services. Can the Government pledge that any legislation will ensure the availability of cashback from medium and large retailers? I ask the Minister to ensure the Government keep their promise and do more to back this vital industry and make progress towards ending this stealth tax on low incomes.
David Mundell (Dumfriesshire, Clydesdale and Tweeddale) (Con)
It is a real pleasure to serve under your unexpected chairmanship, Ms Fovargue. I am grateful to my hon. Friend the Member for Blackpool North and Cleveleys (Paul Maynard) not only for securing time in Westminster Hall to debate access to cash and acceptance of cash during the covid-19 pandemic, but for his continuing work on this subject, as highlighted in his very thoughtful opening speech. I am also grateful to the other participants so far—including you, Ms Fovargue—for raising a series of important points, some of which I will repeat.
This debate is urgent, because I fear that, accelerated by covid-19, we are sleepwalking quickly to a cashless society in a totally unmanaged and unprepared way, with potentially disastrous consequences for many of our constituents. I know there will be people who advocate the benefits of a cashless society, but even if that is the case, we must not proceed in this unplanned and ad hoc way. We know from research that some 17% of adults in the UK—around 8 million—would struggle in a cashless society, and those struggling the most would be the elderly, the vulnerable, the economically excluded and those in rural communities such as my Dumfriesshire, Clydesdale and Tweeddale constituency.
Shockingly, the National Audit Office’s recent report on cash found a fragmented system of oversight, with the Financial Conduct Authority regulating banks and the Payment Systems Regulator regulating payment systems identified by the Treasury. Coherence and co-ordination is urgently needed in this regard, along with clear, robust messaging from the Government on the importance of being able to use cash, at least for the time being. In my view, the Government’s promised legislation should not just address access to cash, but make the Financial Conduct Authority responsible for regulating a well-functioning retail cash system.
When I have previously raised this issue, the ability to access cash and the cost of doing so was the primary concern, along with the need for small businesses, charities and local organisations of the type that the hon. Member for Caithness, Sutherland and Easter Ross (Jamie Stone) mentioned, to be able to deposit cash. Now, however, the immediate focus has to be on cash acceptance. It is pointless to access cash if people cannot use it, yet cash is increasingly refused as a means of exchange. The Bank of England noted in its quarterly bulletin that 42% of people had recently visited a store that did not accept cash. More worryingly, Which?, to which my hon. Friend the Member for Blackpool North and Cleveleys referred, conducted a survey that found that four in 10 of those who had experienced difficulties paying with cash had been left empty-handed when trying to buy groceries, and almost two in 10 had been unable to buy medicine. Indeed, I learned only yesterday of another pharmacy that has gone cashless.
Industry-collated data suggests a 71% decline in cash use between early March and mid-April of this year. Conversely, my experience is of the importance of cash to people who have relied on it during the pandemic. Cash has been the means by which local communities have supported themselves, with neighbours, friends and family buying essentials for one another. Short of handing over one’s PIN and bank card, cash was the only option for many of those who needed others to help them when faced with domestic emergencies, given that such people were mostly older or vulnerable and were certainly not users of apps, credit cards or digital banking services. Indeed, many are part of the so-called unbanked community.
As others have touched on, there is no doubt that part of the issue is the false perception that cash has not been safe to use during the pandemic. In my view, some have seized on that perception as an excuse to go cashless for their own purposes. In any event, it is just not true: as far back as April, the Bank for International Settlements advised that the risk of transmitting covid-19 via banknotes was low when compared with credit card terminals or pin pads. That view is shared by the Bank of England, which found that,
“the survival of virus on banknotes is no greater—indeed appears potentially less—than on reference surfaces representative of the many surfaces that people may come into contact with in their routine life.”
Cash is safer still if users follow the routine guidance on washing their hands regularly and on social distancing.
The Government now have a major role to play in making it absolutely clear that people should be able to use cash in routine transactions. If that is not possible on a voluntary basis among retailers and other service providers, legislation should be considered—at least for a fixed period—to support those who are least able to manage without cash in transitioning to a cashless economy. My hon. Friend the Member for Blackpool North and Cleveleys drew a useful comparison with the transition to digital television.
Amid the pushback on the use of cash, accessing and depositing cash has become increasingly difficult, with bank branch closures and the decline of free-to-use cash machines. Since 2015 there has been a 17% reduction in the number of free-to-use cash machines, and since 2010, 39% of the bank and building society branch network has closed. That has been acutely felt by local communities in my constituency, which have seen seven Royal Bank of Scotland branch closures in recent years, as well as the closure of the West Linton branch of the Bank of Scotland. Covid-19 has only added to the impetus of that trend: three other local cash machines have been lost, and the TSB in Peebles is scheduled to be shut. In your speech, Ms Fovargue, you made an important point about post offices, as did other hon. Members. Post offices in my constituency have been closed the next day because the postmaster was ill, meaning that people could not gain access to the post office.
Jamie Stone
The right hon. Gentleman is making an excellent contribution. Does he agree that the closure of local bank branches and post offices is all part of the downward spiral of Scottish high streets?
David Mundell
Indeed. The challenge of the high street is a considerable one.
Although our local post offices do a good and worthwhile job where they are still in the community, they are not a silver bullet. It is sometimes suggested that everything will be sorted out by the post office. The challenge is not only in having post offices in every community in the first place, but in the considerable issues that post offices face in providing those services and, very often, operating a retail outlet. That is why we need the joined-up approach to the whole cash system, as I have said.
As my hon. Friend the Member for Blackpool North and Cleveleys mentioned, there has been a rise in the number of cash machines that charge for use. Most cash withdrawals from machines are relatively small, so the charges mean that users effectively face a 10% to 30% tax on each transaction. Generic figures on the number of free-to-use cash machines mask the scarcity of such machines in rural and deprived areas.
When I last counted, there were fewer free-to-use cash machines in the almost 1,700 square miles of my Dumfriesshire, Clydesdale and Tweeddale constituency than can be found on or just off Victoria Street, a few moments from here. That imbalance is plain wrong and the industry must correct that. I welcome the fact that the banks, LINK and the card operators, which have come forward with innovative proposals about the interchange rate that applies to cash transactions, are all contributing to the thoughtful work that the Financial Conduct Authority and Payment Systems Regulator are undertaking, about which my hon. Friend the Member for Blackpool North and Cleveleys spoke in detail.
I was pleased to have the opportunity to discuss these issues recently with the Economic Secretary to the Treasury. I welcome his commitment to legislation and other initiatives on access to cash, but, as I have said, I hope they will go beyond access to cash and cover the entire cash system and responsibility for it. That legislation is needed now, along with the Government’s robust advocacy of our ability to use cash. Without action, our cash system is in danger of collapsing, leaving the elderly and most vulnerable to pay the price. I hope that the Minister can promise that action today as a matter of urgency.
Jim Shannon (Strangford) (DUP)
I congratulate the hon. Member for Blackpool North and Cleveleys (Paul Maynard) on securing this debate. This is not the first time we have debated this subject in Westminster Hall; I understand that the hon. Member for North Ayrshire and Arran (Patricia Gibson) and probably numerous other Scottish MPs have had previously had a similar debate. We are back to rehearse the issues, in a nice way. It was a pleasure to hear the opening speech from the hon. Member for Blackpool North and Cleveleys.
I do not feel particularly old—some days I do, but other days I do not—but I am one of those old-school people when it comes to cash and cheques. People can still get cheque books, by the way; I get one almost every month. By and large, the people from whom I buy stuff have been more than happy to receive a cheque. Unfortunately, that has changed, and I will give a few examples to illustrate the issues to which the hon. Gentleman and other hon. Members have referred. I understand the rationale behind shops asking people to use contactless payment if possible at this time, but that is not and cannot be sustainable. A number of businesses in Belfast and Northern Ireland have refused to take cash during the coronavirus pandemic and have lost business for life.
I digress slightly, but flights from Northern Ireland to here are quite restricted. I have to go over first thing in the morning and come back last thing at night, because there are not many options. British Airways has put a flight on in the last week. It informed us this week that we could not get a boarding pass online, but we had to present ourselves at the airport where a person would hand it over face to face. That is totally contrary to the coronavirus rules, and it is hard to understand how some have changed their methodology while others have not. Incidentally, there is not the same problem with Aer Lingus and other airlines.
I will give an example of the problems with contactless payment. My parliamentary aide, who was determined to shop in the local high street for her Christmas gifts, went to the local Menarys department store in the main town of Newtownards to buy Christmas gifts for her children’s teachers. When she came to pay, an issue with the card machine meant that she could not. That seems to be a recurring problem, although I do not know why. She has told me that she will make every effort to go back and select the merchandise and pay for it, because she knows that coronavirus and the lockdown could be the death knell for the high street. Next week, there will be a debate about the high street, not in Westminster Hall, but in the main Chamber. It will probably be oversubscribed, because every hon. Member present will want to make a contribution if possible. The fact that my aide does not bother to carry money and has her card on her phone meant the loss of that sale, as it would for many people.
I requested a breakdown of access to cash in Strangford and received some interesting results. In total, the constituency lost 13 free-to-use ATMs from January 2018 to September 2020, according to the latest data at that time, despite the fact that the number of pay-to-use ATMs increased by four. There was also a reduction of two ATMs from the start of lockdown in March to May 2020. By the end of 2021, my constituency will have lost seven bank branches since 2015. That figure includes the proposed closure of a TSB branch that was announced earlier this year.
Access to cash is declining and our reliance on contactless is growing, but the technology and security are not keeping pace with that. A chat with local merchants will tell of the unreliability of card machines, or of being caught out when a customer unintentionally leaves before it is realised that their card has been declined. I have seen that happen in the Members’ Dining Room. Let me be clear that that is nobody’s fault; nobody is doing that intentionally, and they have put their card on the reader. Of course, in the Members’ Dining Room, people do not go too far away—they only go to wherever they are going to sit to have a cup of tea, or whatever they are having—and the staff come up and say, “Look, that didn’t go through. Will you go back and do it again?” That can happen, and it underlines some of the issues.
I have been contacted by the Association of Convenience Stores, which represents some 33,500 local shops and petrol forecourts across the whole of the United Kingdom of Great Britain and Northern Ireland, many of which trade as independents under brands such as Spar, Nisa and Costcutter. I support their calls to restore the independent setting of LINK interchange fees for ATMs and to require bank participation in LINK; to enable cashback without a purchase, but without any obligation for retailers to offer that service and with guaranteed fair remuneration; and to develop an access to cash guarantee to ensure that access is maintained where exceptional circumstances lead to a lack of coverage. The hon. Member for Luton North (Sarah Owen) referred to that as well. We do need some help from the Minister, who is here to respond to our requests.
As Which? put it,
“The pandemic has accelerated the decline in cash use and demand: ATM withdrawals fell significantly during the first national lockdown, and with an increasing number of shops encouraging non-cash payments, we anticipate this reduction in cash to persist long after restrictions have been lifted. This is putting immense pressure on the UK’s already fragile cash infrastructure, leaving it at a high risk of collapse.
However, while overall use has fallen, our research has found that cash remains a fundamental payment method for many, often vulnerable, people.”
The right hon. Member for Dumfriesshire, Clydesdale and Tweeddale (David Mundell) talked about that just before I rose to speak. We are here to speak for vulnerable people. Every one of us will mention them, we all know them and we know what the issues are for them. I am sure that the hon. Member for North Ayrshire and Arran, who will follow me, will underline that with real understanding and with lots of examples of where the system falls down for them.
In a survey in May, less than half of all consumers said that they were accessing or using cash in the same way as before the pandemic, while almost a third said that coronavirus would not affect their cash use in the next six months. Although the Government pledged to protect access to cash in March, just before coronavirus came online, legislation is needed urgently to prevent people from losing access to their only payment method. We have all said that, but I will say it again. I know that others, including the shadow Minister, will say the same thing.
I believe the Government must set out a clear timetable for introducing a Bill to Parliament, with detail on the scope and contents of the proposed legislation, highlighting how it will build on and complement current work being done to protect consumers’ ability to access cash. Can the Minister set that out?
My constituents have, by and large, supported the coronavirus rules and regulations, and they have understood the need not to use cash, but they also understand the predicament and the problems that come with having a cashless society. We need to make sure that the vulnerable are looked after. Quite clearly, at the moment, they are not.
Patricia Gibson (North Ayrshire and Arran) (SNP)
I am delighted to speak in the debate, and I echo the congratulations that have been offered to the hon. Member for Blackpool North and Cleveleys (Paul Maynard) on securing it, and on his clear exposition of the scope of the challenges that we and our communities face in access to and use of cash.
I want to express my good cheer at the fact that there is such a level of common purpose in the Chamber today. That does not happen as often as we might like, but there is clear agreement here. I want to pick up on something that the hon. Member for Strangford (Jim Shannon) said. He described himself as old school, because he still uses cheques. I cannot speak for anyone else in the Chamber, but I also use them. I can go one better, because recently, having forgotten my cheque book, I had cause to buy that quaint old relic called a postal order, which is very unfashionable. I was quite surprised; I had not bought one for about 35 years, and they look really quite sexy now—far different from how they used to look.
There was a debate similar to this one at the end of May last year, covering many of the same issues; again, that was referred to by the hon. Member for Strangford. All the issues we would expect were debated: how for some of us cash is convenient but for others it is a vital budgeting tool; the level of control that it offers, which digital transactions do not; and the fact that there is a sensible reason why debt charities always advise those living with damaging levels of debt to cut up their cards as a first step to regaining some financial control. Members around the Chamber have repeatedly referred to the way our cash machines are disappearing from our high streets—faster than snow off a dyke. Some businesses do not accept cash payments at all, and some 1.3 million people in the UK do not have a bank account and already suffer financial exclusion. Those problems were highlighted even before covid-19 and the need to factor in the effect of cash not being accepted in the current climate. The same arguments and concerns have rightly been repeated today.
How different the world looks now, only 19 short months after that debate in May last year. Now we are living with covid-19. We live in a world where the cash network has been placed under increasing strain, pushing it ever closer to collapse. Alongside that, as we have heard from many Members today, there is a continuing trend for considerable shrinkage in the availability of free-to-use cash links in communities; 9,500 have been lost since 2017, and it is feared that further losses are on the way. More than a third of bank branches have been lost in less than five years, and we can all guess that there will be further bank closures to come. That is extremely worrying, because for many of our constituents cash is not just the preferred way of payment—although for many that is the case; for many, cash is the only purchasing method at their disposal, as you said, Ms Fovargue.
The hon. Member for Strangford also reminded us that cash is something that we all sometimes need to rely on, whether we like it or not, because of technical glitches with card machines, and even some high-profile IT glitches in the banking world. I thank the hon. Gentleman for reminding us of that.
The Chancellor committed to introducing legislation to protect access to cash in March 2020; however, the pandemic has dramatically shortened the timeframe needed for intervention, and unless it is introduced urgently the ability to get access to cash and spend it could be permanently lost to many consumers, causing significant harm and financial exclusion.
The speed of the stampede away from cash and towards digital payments is fine for some people, and good luck to them. However, the price of that speed is that many are left behind. The consumer body Which?—many have referred to its excellent work on the matter—revealed that 85% of us would find it difficult to live our lives without the ability to withdraw cash. That makes the 23% rise in pay-to-use cash machines, particularly concentrated in socially deprived areas, all the more worrying. I share the concerns highlighted by the hon. Member for Luton North (Sarah Owen).
This speeding towards digital payments, which were taking hold before covid, has accelerated at an astonishing rate in the current climate, and that has quickened the decline of our high street cash machines and bank branches. The loss of bank branches has affected my constituency of North Ayrshire and Arran. I believe it is one of the worst hit in the UK when we consider the distance to the next bank, although I take on board the challenges that the hon. Member for Caithness, Sutherland and Easter Ross (Jamie Stone) talked about in his rural constituency. These matters have been repeatedly raised in the Commons by me and other Members. I echo the hon. Gentleman’s comments about the pressing need for banking hubs. It is really important that they are expedited in all our communities that have suffered.
[Rushanara Ali in the Chair]
Covid has made the situation of our cash infrastructure all the more perilous. As we have heard, many retailers are simply refusing to accept cash. During the global pandemic, when there is already no end of serious matters to contend with, too many of our constituents have to contend with their lives being made unnecessarily difficult because they cannot pay for the goods and services they need with cash, as the right hon. Member for Dumfriesshire, Clydesdale and Tweeddale (David Mundell) set out.
Research by Which? showed that in May, one in 10 people had been unable to pay for items with cash during lockdown because they were refused by the retailer. Of that number, 26% were unable to purchase the items that they needed as they had no alternative to cash. In October, Which? found that four out of 10 of those who responded to its survey left a shop empty handed when they tried to pay for groceries with cash. The right hon. Gentleman also highlighted that. As we have heard, action on access to cash is utterly meaningless if the widespread acceptance of cash is lost in our shops. We urgently need the Financial Conduct Authority to publish a UK-wide tracker of levels of cash acceptance.
I echo the calls for the Minister to set out what interventions his Government will take to ensure that people, especially those who rely on cash, can continue to use it to pay for essential goods and services. There is currently an absence of legislation to protect such access to cash. Alongside that, we need an impact assessment of the effect of cash refusal on consumers, to consider the relationship between the acceptance of cash and consumer access to it.
The genuine fear that we have heard today is that cash payment options have been fatally and profoundly—but, I hope, not irreversibly—affected to the point where the post-covid use of cash in our society is on its death bed. I suppose we are here today to see whether it can be resuscitated. The UK Government have a duty to ensure that access to cash does not disappear, for the sake of our rural and socioeconomically challenged communities, which particularly rely on that medium.
Following the UK Government’s legislative proposals to protect access to cash, the proposal to give the Financial Conduct Authority the responsibility for overseeing access to cash is to be welcomed. Alongside that, it is important that the Financial Conduct Authority is given proper teeth. It needs comprehensive powers to ensure strategic and comprehensive regulation.
It seems clear that expediting those proposals has become ever more urgent, given that the diminishing of the cash infrastructure has been accelerated in recent months. The Financial Conduct Authority should be given a statutory duty to protect our cash infrastructure. It should be responsible for monitoring and reporting on levels of cash access, as well as designing and implementing a framework funded by the industry by which a minimum level of access to cash can be maintained. Our cash infrastructure will not be sustainable without that level of intervention from the Government. We can already see it crumbling before our eyes at a shocking rate, as every single participant in the debate has mentioned.
In addition, the Government should set out a clear timetable—others have also called for this—for introducing a Bill to Parliament as soon as possible. That should include the detail, scope and contents of the proposed legislation, with a clear exposition of how it will build on and complement current work being done to protect consumers’ ability to access cash. I know that Conservative Governments are often reluctant to have such direct intervention on such matters, but when direct intervention is required, the Government must be brave enough to make that intervention.
Bridget Phillipson (Houghton and Sunderland South) (Lab)
It is a pleasure to serve under you in the Chair, Ms Ali, and to have had revolving Chairs this afternoon. My hon. Friend the Member for Makerfield (Yvonne Fovargue) and the right hon. Member for Dumfriesshire, Clydesdale and Tweeddale (David Mundell) also did fine work in the Chair.
I am very grateful to the hon. Member for Blackpool North and Cleveleys (Paul Maynard) for securing this important debate and for his excellent contribution. I should just draw the House’s attention to the fact that my husband is employed by the Bank of England. I will refer to the Bank later.
As many hon. Members have set out, the use of cash in this country has been declining for some time and the decline has been accelerated by the pandemic. Many consumers today are turning towards digital payment methods. However, as we have heard, that change in behaviour does not fall evenly across society.
According to the Treasury Committee report on increasing financial inclusion, there are still about 1 million people in the UK without a bank account and some older, lower-income households that rely on cash to budget or because of a lack of access to online banking. Many communities and many people, especially older and more vulnerable ones, still rely on cash. As we have heard, the Access to Cash review carried out by Natalie Ceeney estimated that that was the case for some 17% of the population.
We have been seeing a shift away from using cash and towards digital for some time, but that has clearly been accelerated by the pandemic. Data from LINK suggests that ATM cash withdrawals were down by 60% between March and April this year, compared with the same period in the previous year. Although ATM withdrawals have increased since that period earlier this year, the change in behaviour is likely to be long-lasting.
Many people are able to adapt to the changes and welcome them, but an unmanaged drift towards a cashless society risks seriously disadvantaging many of the people we represent. We have heard in many contributions today what that might mean for communities and individuals in regions and nations of the UK.
My hon. Friend the Member for Makerfield, who brings to the House real experience in these matters, talked about the pressures faced by families on lower incomes and described how many people find it easier to budget using cash. Like my hon. Friend the Member for Luton North (Sarah Owen), I am a GMB member. I was very pleased to hear her raise its concerns about job losses. She is a passionate advocate on behalf of her constituents, and I know she will keep pressing Government on this issue.
It is clear that we need to find ways to manage and protect access to cash. Otherwise, we risk exacerbating inequality and shutting people out from access to various services. We know that a failure to manage the transition and a sudden inability to access cash will cause problems for many of our constituents. I saw that in my own constituency last year, following the decision by Barclays to opt out of the Post Office cash withdrawal scheme. That followed a bank closure not long before in a community in my constituency. There was significant worry about what this would mean for my constituents in Hetton-le-Hole and how they would adjust. We should not underestimate the anxieties that such developments can cause and what they mean for the local high street.
I welcomed at the time Barclays’ decision to reverse the plans, but notwithstanding the wonderful news on the vaccine that we have seen, the reality is that the future of our society may well mean reduced reliance on face-to-face everyday services for some time to come, and the Government should be thinking about how we protect those services for those in our communities who would otherwise be left isolated.
In the light of that, I welcome the commitment from the Government in the March Budget to legislate on cash access, and I congratulate organisations such as Which? that have been tireless campaigners in this area. However, I am worried that if we do not get to grips with this task quickly, the cost of inaction or, indeed, slow action will only make the inequalities that we see even more severe.
Without clear legislation, we risk the creation of cash deserts. We must not allow the financial exclusion of those who rely on cash purchases. I recognise that Ministers have previously recommitted to bringing forward that legislation, and that the call for evidence ended only last week, but can the Minister set out today a rough timescale for legislating on this matter? Does he agree that the longer the current situation goes on, the more severe the consequences may be, and that uncertainty is damaging? We know that an unmanaged transition to a cashless society would not just affect families who rely on cash, but could have a significant impact on jobs and businesses. As the GMB has rightly pointed out, many small and medium-sized enterprises rely on cash transactions. Many thousands of people work within the cash transit and ATM service industry, too.
Has the Minister considered the implications that this trend will have on jobs and livelihoods? If so, what are the Government doing to ensure that businesses can adapt and plan for the future?
We know that the infrastructure around cash is a critical element in this debate, as we have heard from Members of different parties. Joint research by the FCA and the University of Bristol found that the number of free-to-use ATMs fell 19% between March 2018 and March 2020, and that number is likely to continue falling. It should worry all of us that the conversion from free-to-use to pay-to-use ATMs appears to be concentrated in deprived communities where there is much greater reliance on cash.
There is also an obvious need to protect ATMs in rural communities, as we have heard this afternoon. Across the country, the Post Office plays a vital role for those who need access to cash. In 60% of rural settings, post offices are the nearest cash access point, yet thousands of post offices remain worried about the future. Of course, that concern is not limited to rural communities. Can the Minister tell us what work his Department is doing with the banks and ATM providers to review these matters and to ensure that people who depend on cash have good geographical, and free, access to it?
The Minister will doubtless be aware of the recommendations made in the 2019 Access to Cash review about how we maintain the infrastructure. It called on the Bank of England to redesign the high cost of the infrastructure we have today so that it is tenable for banks to provide free access to cash. The review also highlighted the role that the FCA can play in ensuring that the cost of handling cash is kept on a par with digital.
The pace of technological change in the past 60 years has been extraordinary, and it is important in any area of our lives where technology has transformed the questions of who can exercise power over us and how, that as a society we keep under anxious review the question of whether we have struck the right balance between enabling commercial success and ensuring public benefit. The GMB submission to the Government’s call for evidence highlights the importance of getting the regulation right. As the GMB says, there is
“an urgent and compelling need for regulation to ensure the sustainability of the ATM network.”
We have the Payment Systems Regulator, of course, but there is a wider strategic question about the relationship between the work that it does and the availability of cash. The GMB’s view is that
“a single regulator with overall statutory responsibility”
would be the preferred outcome, and it recommends the FCA for that role. The GMB also notes, however, that it would need proper support from Government to ensure it can perform its functions effectively, given the scale of the challenge. Will the Minister set out the Government’s current thinking on how the system will be regulated in future and how we might bring costs down?
There should be a focus on ensuring alternative access to cash. We have seen a number of pilots recently across the country—I particularly note the work of LINK and PayPoint—but can the Minister tell us whether any efforts are being made to promote pilots and to look at new, innovative solutions around the issue of access to cash?
At the heart of this issue is a transition to digital forms of payment, and no one must be left behind by this transition. Of course, one of the most significant factors is the level of deprivation in an area. We must ensure that deprived communities are not left behind, so can the Minister outline what more the Government intend to communicate throughout the transition? How will they support communities in all parts of our country through this process?
It is quite right that we focus on the impact on individuals, but we must not forget the security implications of an unmanaged transition to a cashless society. The Minister will doubtless be aware of the example of Sweden, a country that is much closer to becoming cashless, and where concerns have been raised about the risk of cyber-attacks or foreign interference in a totally digital system. Consumer privacy is clearly an issue too, given the traceability of digital transactions and how so much information is stored and used. What consideration has the Minister made of these matters, and will he address the potential vulnerabilities of a cashless society in legislation?
I want to close by saying that we all recognise that an unmanaged drift to a cashless society would do significant harm to millions of people right across our country. Once infrastructure has gone or communities have been harmed, rebuilding is very hard. I urge the Minister not to delay work on this important issue and to work with all of us across the House to get the response to this issue right.
The Financial Secretary to the Treasury (Jesse Norman)
It is a delight to see you in the Chair, Ms Ali. I am sure all colleagues will join me in taking my hat off to the genius of improvisation and quick thinking that allowed our colleagues, my hon. Friend the Member for Dumfriesshire, Clydesdale and Tweeddale (David Mundell) and the hon. Member for Makerfield (Yvonne Fovargue), to take the Chair—the vital element. Thank you, Ms Ali, for coming in at the end and allowing us all to take our positions in the Chamber.
This has been a very good debate—very thoughtful, very constructive, very well informed and on a very important topic—and I thank everyone who has made contributions to it. I am sure everyone present will join me in thanking in particular my hon. Friend the Member for Blackpool North and Cleveleys (Paul Maynard) for securing the debate, and also for his excellent and very thoughtful speech. He picked up on themes that he and many other hon. Members have been pressing over the previous years and months. His knowledge of and engagement in the issue of cash access and the use of cash are well known, and I thank him and everyone else for their contributions.
As colleagues will be aware, I am not the Economic Secretary to the Treasury. He, tragically, is unavoidably detained with the trivial matter of the Financial Services Bill—he sends his apologies and thanks. It has been mentioned by several colleagues in this debate that he has been very accessible to them in discussing these issues; his style is a very open and friendly one. We try to do that in the Treasury and he has been an exemplar. I am sure that colleagues will continue to engage with him. I am afraid that, compared to his grandmastery and immense skill, I am very much a novice chess player in this area.
It is clear that digital payments are, as colleagues have mentioned, playing more and more of a role in the lives of people across the country and in the activities of business. In many ways, this is to be profoundly welcomed; it allows for faster, cheaper payments and for easier management of household and business finances—those are the forces that in large part have powered the change hitherto.
The statistics are clear: in 2009, some 58% of payments were made using cash; just a decade later in 2019, it was 23%. That astonishing rate of change has now been accelerated by covid-19, as colleagues have said.
It is important to say that cash has not, by any means, had its day; it is still the second most popular form of payment in this country. According to figures published last year, a reported 2.1 million people mainly use cash for everyday payments, many of whom may be vulnerable, elderly or on low incomes. However, the pandemic has clearly had a marked impact on cash usage. We recognise that and, as I think colleagues have noticed, the Government have not been slow to press forward on the issue. That, of course, creates the impetus and energy that they have shown in bringing attention to these issues in the debate.
I reassure colleagues that the Treasury has been working very closely with regulators and industry to try to ensure that people have access to essential banking services, and to cash in particular. As colleagues will be aware, the Joint Authorities Cash Strategy group only launched in May 2019, but it is very much engaged in facilitating co-ordination and seeking to ensure comprehensive oversight of the UK’s cash infrastructure. If I may, I will talk a little more about the wider picture, then I will come to specific comments and questions that have been raised by colleagues in the debate.
The JACS group is chaired by the Treasury, and brings together the Payment Systems Regulator, the Financial Conduct Authority and the Bank of England. The group has continued to try to coordinate efforts throughout the pandemic and, as Members will be aware, it published an update on the actions of its members in July 2020. Also in the summer, the FCA and the PSR published a statement setting out their approach to addressing issues in relation to access to cash, including local-level areas that have lost access to cash. In September, the FCA introduced new guidance for banks, building societies and credit unions when they are considering closing branches or ATMs.
I think it fair to say that throughout the pandemic, the regulators on the one side and the industry on the other have taken steps to support customers who are reliant on cash. Those have included more proactive communications, cash deliveries to people’s homes, and issuing carer cards to trusted third parties. As a result, the vast majority of people have continued to have access to cash during the pandemic. That, of course, does not address those who may have been struggling, whose position has been highlighted by many of the individual stories told in the debate.
There is the question not merely of cash access, but of cash acceptance, as my hon. Friend the Member for Blackpool North and Cleveleys highlighted. The one is as essential as the other. Of course, to help to control the virus, businesses and individuals have been encouraged to follow the latest Government advice, which involves a range of measures to protect personal health, but also to minimise contact in transactions. However, it does remain the choice of an individual retailor whether to accept a particular form of payment, be that cash or card. What is interesting is how different groups, including the FCA, the PSR and the Bank of England, as I have mentioned, are joining forces to improve data collection and, therefore, gain a better understanding.
My hon. Friend the Member for Blackpool North and Cleveleys raised the question of mandation. The Government do not believe that mandating cash acceptance is the answer, but exploring means to incentivise the acceptance of cash is high on the agenda and was a key issue raised in the call for evidence. If protecting access to cash is a complex issue, requiring a long-term and collaborative effort, it is no less important that that work continues across industry regulators and the Government.
The ATM network has been mentioned by colleagues. LINK, which is the largest network of ATMs, has taken action to ensure that remote and deprived areas continue to have access to free-to-use machines. The Government are working to bring legislation to protect access to cash to ensure that the nation’s cash infrastructure is sustainable over the longer-term, as the hon. Lady for Houghton and Sunderland South (Bridget Phillipson) highlighted, and as was prefigured in the March 2020 Budget.
Jim Shannon
As I said in my contribution, the Association of Convenience Stores has put forward ideas for helping the ATM system. I realise this is not the Minister’s responsibility to be honest, but has the Department had the opportunity to talk to those people to see how we could work together?
Jesse Norman
I thank the hon. Member very much. I do not know whether the Department has had the opportunity to talk to the Association of Convenience Stores specifically, but I do know that the issue is very much on the agenda—it is certainly on the agenda of the Economic Secretary. It is important to realise, and to remind everyone, that the call for evidence on access to cash only closed last week. The timeliness of this debate rams home that point, and rightly so, but it is merely a week. It says more than I could for the high esteem in which colleagues across the House must hold the Government, if they think we can make a decision without having published a response and having only closed the call for evidence last week.
Nevertheless, the call for evidence is an important aspect. It set out the Government’s view that cash has the potential to continue to play an important role—and cashback within the cash infrastructure—and also asked for views on how that can be achieved. We will publish a summary of responses to the call for evidence and set out steps alongside that in due course. As colleagues will know, the call for evidence asked for views on key considerations associated with cash access, including deposit and withdrawal facilities, cash acceptance and regulatory oversight of the system.
The call for evidence also set out the Government’s views on the aims of legislation: that it should be proportionate, flexible, cost-effective, efficient and sustainable. The Government’s view, and we should be perfectly clear about this, is that legislation will need to ensure that business and people can have access to cash withdrawal and depositing facilities within a reasonable travel distance, as is needed in their day to day lives. I remind colleagues of that central point.
Yvonne Fovargue
I accept that the purpose is to have reasonable access to cash within a travelling distance. Is that to free cash machines, because that is a key point?
Jesse Norman
The Government absolutely recognise—I am not going to comment on the shape of what is to come, because I do not think that would be appropriate—the concern about free access to cash. As the hon. Lady will know, a lot of work has been done on trying to preserve inclusivity in the face of markets and pandemic-induced change that may be prejudicing that access.
Jesse Norman
I really do not have much time, and I want to respond to the comments and to give my hon. Friend the Member for Blackpool North and Cleveleys the chance to wind up, so let me press on with a couple of key things.
It is worth mentioning that the industry is already taking action to support cashback. Mastercard and Visa have already announced incentives, and of course we have the community access to cash pilots.
The set of authorities that govern this area has been raised. It is important to say that the Government’s view is that the FCA may well be best positioned to take on the function of co-ordinating in an overall responsible way, while we also intend for the PSR and the Bank of England to continue their existing functions. As colleagues will know, the FCA already has a statutory objective to secure an appropriate degree of protection for consumers and existing regulatory relationships with industry.
My hon. Friend asked about wholesale cash distribution. As I think he knows, there was a previous consultation paper by the Bank of England on the future of the wholesale cash distribution model, which set out a high-level road map. A lot of work is being done between the Treasury and the Bank to address those issues.
The hon. Member for Makerfield will be aware that there are existing policies within the LINK ATM network, in particular, to protect the distribution of free cash through ATMs. The Treasury is supporting the Bank of England in trying to enable a sustainable model—sustainability is important—to permit effective wholesale cash distribution.
I ought to sit down now. I thank colleagues very much indeed for their interesting and constructive contributions to the debate.
Paul Maynard
I thank the Backbench Business Committee for enabling what I thought was an excellent debate. We are at our best in this place when we find consensus and agreement in the search for common solutions to common problems, so I consider the debate quite a success, unlike many other debates that I have sat through.
I particularly thank the hon. Members for Makerfield (Yvonne Fovargue) and for Luton North (Sarah Owen) and the shadow Minister, the hon. Member for Houghton and Sunderland South (Bridget Phillipson), for raising the interplay between free-to-use and pay-to-use ATMs in deprived areas. That is a particular problem in my constituency, where the poorest areas are nearest the town centre, so geographical proximity actually does not help constituents living there to access free-to-use ATMs.
My constituency is also just 8 miles by 2 miles, so hearing from Members for much larger rural areas in Scotland was particularly helpful in understanding the broader picture of access to cash. I say to the hon. Member for North Ayrshire and Arran (Patricia Gibson) that I am too young to even know what a postal order used to look like, let alone what it now looks like. I am grateful that the hon. Member for Strangford (Jim Shannon) chose to grace us with his presence; it may be because Strangford has no track record of coal mining that he could draw on to speak on that issue in the main Chamber. His points on the high street were well made.
I am grateful to the Minister for his response. I may have to write to the Economic Secretary to the Treasury on the tabling of regulations to enable the cashback pilots to continue, which is an urgent matter that the Government need to address. They have weeks to do that. It cannot wait for a Bill, or even the consideration of a consultation. I love Government consultations. As a Minister, I would take them home over the Christmas holidays and read them over the turkey, and then come back and rewrite what was going on, so I hope the Minister will request that the Economic Secretary, in this time of lockdown Christmas, locks himself away with all the consultation responses, which I know will be of very high quality.
I once again thank all Members who participated in what has been an excellent debate. I am sure that it will not be the last time that we come back to this issue. Thank you, Ms Ali.
Question put and agreed to.
Resolved,
That this House has considered access to and acceptance of cash during the covid-19 outbreak.
Nurseries and Early Years Settings
(4 years ago)
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Rushanara Ali (in the Chair)
I remind hon. Members that there have been some changes to normal practice to support the new call list system and to ensure that social distancing is respected. Hon. Members should sanitise their microphones using the cleansing materials provided before they use them, and dispose of those materials when they leave the room. Hon. Members are also asked to respect the one-way system around the room, so please exit by the door on the left. Apologies if hon. Members are already familiar with this, but for those who are not, we need to do it. Please speak only from the horseshoe. I do not think we have too many hon. Members today, but otherwise people would need to wait. I remind hon. Members to arrive at the start of the debate. I know one hon. Member may need to pull out; please let me know if that is the case.
Steve Brine (Winchester) (Con)
I beg to move,
That this House has considered the future of nurseries and early years settings.
I thank the Backbench Business Committee for granting this debate, which is a coming together of the all-party parliamentary group for childcare and early education, which I chair and which fights for the private, voluntary and independent sector—PVI—and the APPG on nursery schools, nursery and reception classes, which does good work campaigning for the maintained nursery sector. We will hear shortly from one of its vice-chairs, my right hon. Friend the Member for Chipping Barnet (Theresa Villiers). The hon. Member for Birmingham, Erdington (Jack Dromey) cannot take part today but is also very much involved in that group and was a co-sponsor of the debate.
The two parts of the sector are distinct, but they share the same grave concern about what the future holds. As a constituency MP, I am fortunate to represent both. There is a mature but, it must be said, struggling PVI sector with providers such as Kings Worthy, St Paul’s, Colden Common, and Compton and Shawford to name a few. There are many others. I thank them all for making me properly aware of the sector and its challenges in the first place, alongside my brilliant wife, who is a qualified at level 3 practitioner, so I hear it very clearly. I also have Lanterns, a maintained nursery school, in my patch; I thank its headteacher, Lynsay Falkingham, for her persistent and focused contact with me.
I will start with some positives. We all welcome the fact that the Government committed to an increase in early years education investment in last week’s spending review. That is another example of the Government recognising the crucial role that early education has in improving future attainment and economic success for the wider economy. As one of my constituency providers put it in an email to me this morning:
“I hope that in your debate, you are able to put across to the House the importance of sound Early Years Care and Education. The future of our country, our leaders, our doctors, engineers, teachers, key workers…rests in the hands of Early Years teachers and practitioners.”
I shall do my best.
I think I speak for many when I say that our childcare providers have really been the fourth emergency service during the pandemic, caring for the carers and helping the helpers. That has been so important to keep the show on the road, and it shows how important it is that we support the sector going forward. As the National Day Nurseries Association says in its excellent recent report:
“A plan for jobs needs a plan for childcare.”
To stick with the good news, it is very good that the Government are implementing our manifesto promise to provide 30 hours of funded childcare each week for parents of three and four-year-olds, which should increase the availability of affordable early education provision. Just because that is the right policy, however, it is not without unintended consequence.
I really appreciate that the Chancellor recently met me and representatives from the APPG for childcare and early education in Downing Street to discuss making childcare more accessible and affordable across the PVI sector. We did that because we cannot duck the fact that there remains a serious underfunding issue that has, unfortunately, been exacerbated by the covid-19 pandemic.
I have previously described to the House that the sector is experiencing a form of market failure—I stand by that—but that could also be a social failure if we get this wrong. In reality, the financial implications have often meant closures in the most disadvantaged areas, as providers have been forced to cross-subsidise their income—often unsuccessfully—with parental fees. The sector has struggled to make ends meet for years, and many providers feel that they have reach the end of the road as we reach the end of 2020.
By September last year—well before the pandemic hit—there had been a 153% increase in nursery closures since the 30 hours’ free childcare policy was introduced. In essence, we have delivered one part of sustainability for the future, but we now need to finish the job by increasing funding for settings to a sustainable level. Many of the providers that I speak to discuss market failure with me. It is little wonder when 25% of providers across the country could face permanent closure within the year. Recent research found that 72% of maintained nursery schools expect to end the year in deficit, raising the risk of further closures in the maintained sector, too.
The whole sector faces a real challenge, not only because of the effects of the pandemic but, more importantly, because of an unsustainable position at the heart of the sector’s funding, which we have to rectify. The issue affects every Member of the House—it is good to see such turnout on a cold and wet Thursday afternoon—because the impact across our country will be stark if we get it wrong. I would argue that we need a complete overhaul of the current system to ensure long-term sustainability in the sector and value for taxpayers’ money.
Prior to covid, the funding gap in the early years sector was estimated to be £824 million. At that point, there was already a 37% funding deficit between the hourly costs of delivering a funded childcare place for a two-year-old and the rate paid to providers, and a 20% funding deficit for places for three and four-year-olds. That is not a sustainable long-term position. Those figures are based on pre-covid occupancy rates. Settings are still struggling despite now being allowed to remain open to care for and educate our children. The funding gap has had a cumulative effect as the years have gone by. I passionately believe that addressing that gap would go some way towards reversing that market failure and the pattern of closures that we see all too often.
In short, I would like a funding mechanism to increase funding rates in line with the rising costs of delivering childcare. Statutory wage rises, increases in pension contributions and inflation rates all erode the balance that providers must maintain to remain financially viable. The £66 million increase in early years spending in this financial year, which was announced at the 2019 spending round, was obviously a welcome cash injection. Sadly, many settings saw it as a real-terms funding cut once inflation rates and the minimum wage rise in April had been taken into account, and I have heard that over and over again. Financial constraints also mean that nursery owners are largely unable to offer their staff long-term career progression and incentives for upskilling and gaining qualifications. We heard very powerfully about this at a recent meeting of our APPG.
Of course, covid has had a particularly savage impact on the sector, with increased costs and decreased revenues for many settings. There has been a decline in occupancy rates and child places, as well as increased costs to make the settings that are open safe through the personal protective equipment and additional cleaning that is obviously necessary. With just a quarter of providers saying that they expect to make a profit between now and March 2021, we have to take action to protect them for the future.
Last week’s spending review included a pledge from the Chancellor of £44 million of additional spending on early education, on top of the money confirmed in 2019. This is good news, of course: those vital funds will increase the hourly rate paid to providers for the Government’s free hours offer, and are also a step towards sustainability for the sector. However, the underlying problems with structural funding and distribution by local authorities remain acute, and will remain so unless they are properly addressed. An independent, meaningful review into the current system for childcare and early years funding will give us the chance to address the underlying, systemic problems with the early years national funding formula, to ensure some long-term sustainability.
Four years after the introduction of the early years national funding formula I mentioned, the maintained nursery sector is still waiting for stop-gap funding to be replaced with a long-term formula that addresses the historical discrepancies and funds all nursery schools viably. The announcement of £60 million in supplementary funding for maintained nursery schools in 2021-22 is hugely welcome, but there are some crucial next steps. First, funding should become a permanent part of the early years funding settlement, not a year-by-year add-on. Being in such uncertain terrain is adding huge stress to the people who run these settings. Secondly, this funding should be distributed on an equitable basis across the country, not on the basis of historical precedent, as is presently the case.
It is crucial that future funding arrangements for maintained nursery schools adequately provide for them to meet their statutory obligations as schools, which they are: for example, funding for additional costs such as the well-deserved teachers’ pay award. While that extra £60 million in funding is welcome, it is clear that here, too, a long-term sustainable financial solution must be found for the sector as a whole.
For all providers, the early years national funding formula can be—if we are being polite—something of a minefield. Requirements and entitlement distributions differ greatly across different national authorities, which creates a complex funding context for providers operating in one region, let alone several. It is complex, bureaucratic and incoherent, and we are often told that it makes a tough job even harder. The current system must work better for settings and parents, but also for taxpayers—our constituents.
Cash for funded entitlement places relies on local authorities estimating demand, and then on them making corrections to this rough draft partway through the financial and academic years. This has created an unhelpful culture of large contingency funds and underspends of taxpayers’ money that is neither providing the childcare provision it is meant to, nor supporting the settings it is meant for. Millions of pounds intended to deliver funded childcare places is often either redirected into other parts of local authority education budgets, or held in reserve to cover the inconsistencies that emerge throughout the year as they try to flatten things out.
A freedom of information request to all English local authorities found that three quarters of councils had underspent their early years allocation, which amounts to more than £65 million failing to reach providers for eligible children. It showed that contingency budgets of up to £32 million were being held to allow for funding corrections this year. This is taxpayers’ money, and we have to do better. Urgent reform to safeguard the future of nurseries and early years settings across the PVI and maintained sectors is desperately needed, for all the reasons I have set out. That will ensure better value for money for the taxpayer, maintain this vital early education—particularly for disadvantaged children, who need it most—and protect the jobs of 360,000 people who work in the sector, the vast majority of whom are women, while also enhancing their career development prospects.
For me, this is an issue of social justice. I am very pleased that Ministers are working with us to do all that they can. I know the Minister here today will take on board the concerns I have highlighted. We have shown we can work together to protect health throughout the pandemic. It is time we worked together to protect the long-term future of our education system. That needs to start with early education, so let us get it right from the very start.
Rushanara Ali (in the Chair)
May I ask Members to keep their remarks to four minutes so that we do not need a formal time limit?
Stephen Timms (East Ham) (Lab)
I congratulate the hon. Member for Winchester (Steve Brine) on securing this debate and on the powerful and effective speech that he made. I am delighted to see you in the Chair, Ms Ali.
We have an early years crisis. Ofsted reports that there were 14,000 fewer childcare providers last March than in March 2015, because of the market failure that the hon. Member for Winchester described. We all recognise that the pandemic has made things much worse. Provider numbers fell by another 500 in just three months this year. It is a fragile sector. Striking research that the Department commissioned from NatCen and Frontier Economics, published in October, stated that 45% of open group-based providers and 55% of open childminders
“reported that they believe it will be financially sustainable to continue for another year or longer”.
In other words, more than half of group-based providers expect to close within a year.
Even maintaining current provision will be a big challenge, and policy announcements so far are nowhere near enough. Like the hon. Member for Winchester, I welcomed the additional funding for maintained nurseries in the spending review, and I was pleased that the Minister said she will soon announce a long-term settlement for maintained nurseries. I hope that we might hear something about that this afternoon. Last year’s Frontier Economics report on maintained nurseries pointed out that they do a great job in supporting children with special educational needs, as the hon. Member for Winchester reminded us, and supporting parents and families as well.
The Minister for School Standards, the right hon. Member for Bognor Regis and Littlehampton (Nick Gibb), visited Sheringham Nursery in my constituency in October last year. It works brilliantly with disadvantaged children—for example, supporting their parents to teach them when they are not at nursery. I pay tribute to the head, Dr Julian Grenier, for all his work and the work of his team, which has a really big, positive impact in the local community.
Maintained nurseries have more children than average with special educational needs and disabilities. Sheringham has 40 out of a roll of 200. It runs the Newham early years hub, supporting 100 private nurseries and childminders to improve education quality and inclusion, and increasing workforce standards and workforce numbers. It also runs the East London Research School along with a primary and a secondary school to improve the quality and impact of professional development. Those are all valuable and positive contributions.
Funding for maintained nurseries must recognise the greater contribution that they make. I am particularly keen to hear from the Minister about the longer-term funding settlement that she is planning.
Caroline Nokes (Romsey and Southampton North) (Con)
It is a pleasure to serve under your chairmanship for the first time, Ms Ali. I add my congratulations to my neighbour, my hon. Friend the Member for Winchester (Steve Brine), on securing this important debate this afternoon.
Hampshire is reasonably well represented here this afternoon, but I do not want colleagues to think that that is because there is a particular problem in Hampshire with early years provision. I can assure everybody that there is not. Indeed, we have some of the highest quality early years provision in the entire country.
Over the last eight months or so, providers have been keen to emphasise to me the challenges that they have faced during the pandemic, and the challenges that they have risen to: making their premises covid-secure and ensuring that they are open for the children of key workers. In the regular Zoom calls that I have had with providers, they have been keen to emphasise the significant financial impact on the sector.
I was struck by the comments that I heard from one provider, who said that each and every month, with the number of reduced places that he could provide allowing for social distancing, he would be running his premises at a loss of £1,000 per month, which is simply unsustainable. When faced with those sorts of economics, providers take very difficult decisions and decide to no longer open their doors, which causes a reduction in the overall spaces available.
I do not intend to do a march around every childcare provider in my constituency this afternoon, but it is fair to say that they are very varied. As constituency Members of Parliament and, in many instances, as parents, we want to make sure that there is variety, whether it be the small village pre-school of the type I attended back in the 1970s or the larger more formal childcare settings, the individual childminders, those attached to schools or the maintained sector. It is absolutely right that there is variety, so that there is choice for parents and so that those facilities can be conveniently located.
I want to pay particular tribute to Lou Simmons of Abbotswood Day Nursery, who has provided me not only with the facts and figures about her business and the challenge it faces, but also a commentary on the wider sector. As she pointed out to me, the costs faced by her setting will not be identical to every setting, precisely because there is such a variety; but they are probably not atypical.
The stark reality is that with staff costs, pension costs, increases in utility costs and personal protective equipment costs all going up, the funding for childcare has not kept pace with the pressures faced. The £4.55 per funded hour per child over the age of three does not meet her operating costs of £6.80, and they have no choice but to make a charge for consumables, which parents do not necessarily understand, having listened very clearly to the Government’s mantra that it is 30 free hours per week. She will still run at a loss for every hour, every child. I know that my hon. Friend the Minister, who is working hard on this, is going to talk about the £44 million early years injection, but that is simply not enough to begin to cover the 75p per child per hour average loss made by providers such as Lou.
There is a stark reality to this. Just like the village pre-schools that have already closed, we will see the loss of childcare provision at a time when we know that women need to be able to access quality childcare to make sure that they do not lose out further in the employment market. Statistics provided by Mumsnet earlier this week, from a survey it conducted post pandemic, show that a significant proportion of mothers who use childcare—70%—were emphasising that they were struggling to balance the requirements of work and childcare at home.
These businesses, as we have heard, are run by women, employing women and providing opportunities for other women to go out to work. As my hon. Friend the Member for Winchester said, there is a social cost, which my hon. Friend Minister needs to step up and address.
Theresa Villiers (Chipping Barnet) (Con)
The first few years of life have a crucial impact on a person’s prospects for happiness, success and opportunity in adulthood, so providing the best learning opportunities in the early years is one of the most effective long-term means to tackle serious social problems, such as antisocial behaviour, drug abuse and crime. Early-years education can truly be an engine for social mobility, and I welcome the commitment and investment in this crucial sector by successive Conservative Governments since 2010.
I particularly want to speak up today for the maintained nursery schools, of which I have three in my constituency —St Margaret’s, Hampden Way and Brookhill, which are grouped together in the Barnet Early Years Alliance. I pay tribute to the outstanding work that they do.
As we have heard today, maintained nursery schools have been kept afloat since the introduction of the national funding formula by transitional supplementary funding. In providing that money, the Government have recognised the additional requirements placed on these schools and the fact that they reflect additional costs, but the allocation of supplementary funding is based on historic discrepancies, reflecting school budgets as they happened to be in 2016. That has left Barnet schools and schools in other areas without any supplementary funding at all and they are in serious financial difficulties as a result.
I welcome the extra £60 million in the spending review. I thank the Minister and her Treasury colleagues for listening to representations from me, my hon. Friend the Member for Finchley and Golders Green (Mike Freer), many in this room and, of course, the two all-party parliamentary groups, but we must reform the way the money is allocated to deliver a fairer distribution based on need, rather than historical accident.
Schools in Barnet and other boroughs in the same position such as Harrow and Camden simply cannot hold out much longer. The situation is becoming desperate. The whole sector, of course, has been waiting for over three years for the long-term settlement promised by the Government. For us in Barnet, that is three years without even the supplementary funding that others have received.
I urge the Minister today to make a commitment, right here and right now, to reform the allocation of supplementary funding and bring forward proposals for consultation to do that as soon as possible. I urge her also to secure the long-term funding settlement that the Department for Education promised back in 2017 but has still not been able to deliver. That is a funding settlement that reflects the level of resource needed to run a maintained nursery school—so, more than the hand-to-mouth levels of supplementary funding that the sector has had to survive on for the past few years.
There are dedicated professionals in maintained nursery schools throughout the country who are ready and waiting for that new system leader role, centres of excellence and specialists in SEND provision. They are enthusiastic about the challenge, so let us seize the opportunity to save those schools and empower them to continue their inspirational work, providing a brighter and better future for the children in their care.
Sarah Owen (Luton North) (Lab)
It is a pleasure to serve under your chairship, Ms Ali, and I thank the hon. Member for Winchester (Steve Brine) for bringing this important debate to Westminster Hall. I would love to spend my time talking about the long-term future of nursery provision, because we have all agreed that a child’s start in life is vital, but covid-19 means that we have to deal with the immediate crisis facing nursery schools if we are to have any nursery provision in the future.
Nurseries and nursery workers have been absolute champions throughout the crisis, having stayed open throughout the pandemic to care for the children of key workers—and what thanks have they got for it? It is difficult, at times, to hear members of the Government get to their feet, thank nurseries and say how important the workers are, but not reimburse them for their covid costs—personal protective equipment and adjustments to buildings and schools. All that has come out of their existing, dwindling budgets.
On the issue of budgets, I want to raise the local situation in Luton, where Flying Start children’s centres sadly face closure. Over the summer, our council was backed into a corner by the Government and forced to find savings of £22 million after passenger numbers at Luton airport, one of our biggest revenue raisers, collapsed because of the pandemic. Along with my hon. Friend the Member for Luton South (Rachel Hopkins), I have pleaded with the Government to listen, spelling out what even more cuts would mean to the people of Luton—even more difficult decisions forced on the council by the Government from Westminster, including cuts to children’s services.
I am here to plead with the Minister: meet us and work with us, and give Luton Borough Council the resources it needs to save Flying Start, which are vital for children, parents, families and our town. Nearly 2,000 local people signed a petition to save Flying Start over the summer and 500 parents have joined the Facebook group that is organising to save the centres. If the Government do not act, there will be a devastating impact on families and young people in the community who rely on the services—the pregnancy club, antenatal education, feeding classes, breastfeeding café, baby massage, baby talk, stay and play, messy play, and sing and sign. All those courses will be gone.
Flying Start provides a support network for parents—particularly mothers—many of whom do not have access to other local support or guidance. We have seen throughout the pandemic how important it is that new parents should be supported after the birth of a baby. I know that from personal experience. In particular, some new mums suffer from isolation, depression, anxiety or domestic violence. We need to make sure that they have access to support in the children’s centres.
After 10 years of austerity and cuts to such vital services, we know what we are losing when those services go. We have seen it play out already. Inequalities grow further. Child poverty in Luton will rise. The support that people depend on will be pulled away. People in Luton have grown used to that indifference, and that is incredibly sad. The Government promised the country, and people in Luton, that they would do whatever it takes to get us through the pandemic; but, with cuts like these handed down from Westminster, we are making Luton pay the price for their broken promise. In finding alternative sources of money, as we did with th/e airport to fill the gaps left over the last years, people in Luton and our council did everything asked of us. All we ask is that the Government keep their promise.
Whether it is cuts such as those in Luton, the loss of more than 3,000 health visitors nationally or billions cut from public health budgets and children’s services, the Government really have a blind spot when it comes to early years. I hope they listen to examples such as what is happening to constituents in Luton, give us the resources we need to save those services and act to support parents and families.
Joy Morrissey (Beaconsfield) (Con)
I thank my hon. Friend the Member for Winchester (Steve Brine) for securing this debate, and I thank the Minister for all she has done to campaign for better opportunities for early childhood education and intervention, and for understanding how great an impact that has on the overall levelling-up agenda.
Children in low-income households tend to experience poor home learning environments; a substantial gap in academic attainment between the poorest and richest children is clear by the time they begin school. The 2010 review by Frank Field, a former Member of this House, on poverty and life chances found that 55% of children in the bottom 20% of attainment in school at the age of seven will remain at the bottom until the age of 16. However, if a parent shows a sustained interest in a child’s early education, their chances of living in poverty as an adult decrease by 25 percentage points.
Early intervention is key to reducing poverty and creating the levelling-up agenda in the long term. Estimates of savings to the public purse as a result of better early years intervention during the first 1,000 days of a child’s life predict that the Government could save approximately £15 billion annually.
A recent report published by King’s College London found that young people who had secure attachments in early childhood had lower levels of antisocial behaviour than those with insecure attachment. The study found that young people securely attached to their mother cost the public purse an average of £6,743, and those who were insecurely attached cost more than £10,000. It is an interesting study.
Family and parental challenges have presented themselves through covid. A Centre for Social Justice report found that parents, especially fathers, face a wide range of challenges with regard to family units, especially during pregnancy and the early years. Six in 10 fathers told the CSJ that they had no conversations at all with midwives about their role. For health visitors, it was approaching half—44% of all fathers told the CSJ that they received little or no advice from them about their role as a father. More than four in 10—41%—of fathers who have a nearby children’s centre have never been invited to or attended any children’s centre activity, despite a legal requirement for children’s centres to engage with fathers as a hard-to-reach group.
Children’s centres and family hubs are vital in tackling the issue of attainment through early intervention. Family hubs are local one-stop shops offering families with children and young people aged zero to 19 early help to overcome difficulties and build stronger relationships. Children’s centres do the same thing in many of our communities, including my constituency of Beaconsfield. Such provision is typically co-located with superb early years help and support. The Ivers Family Centre is in my constituency, and many local residents, including one of our councillors, Wendy Mallen, campaigned tirelessly to save it. It is vital for helping children close the attainment gap and make sure they have every opportunity to succeed in life.
The purpose of family hubs is to co-locate and co-ordinate all family services available in a community and provide a visible and welcoming access point for any parent—mother and father—to appropriate support services or information about family-related matters. The CSJ set out in its 2014 report why family hubs and children’s centres are so important. They strengthen families regardless of their structure, with a focus on children’s development and parental relationships. They prevent family breakdown through relationship support at key points and support families in difficulty with conflict resolution and support for separated families. That could save the state millions of pounds in the long term, because if there is early intervention not only in the child’s life, but in the lives of the parents to give them support, it could make all the difference.
As we come out of covid, I hope the Minister will consider this type of funding, so that we can help those who have suffered the most during lockdown and we can help get everyone in the country back on track.
Damian Hinds (East Hampshire) (Con)
It is very good to see you in the Chair, Mr Hollobone. I congratulate my hon. Friend the Member for Winchester (Steve Brine) on securing this important debate.
I acknowledge the important work of nurseries and early years settings in my constituency; they have been core social infrastructure in the area. They are at the heart of child development, but also support parents in their work and ease family budgets. I particularly mention a maintained nursery school in Alton, in my constituency, called Bushy Leaze, which does high value work with children with special needs, supporting parents, doing outreach in the community and partnering local schools.
I also acknowledge the commitment of the Government to early years education and childcare, with no fewer than five extensions to early years and childcare entitlements since 2010: the 15 hours’, then 30 hours’ tax-free childcare; the 85% reimbursement under universal credit; and, crucially for this debate, the offer of 15 hours for two-year-olds.
Finances in this sector are difficult—they were hard even before the pandemic, and they have become worse. Like others, I welcome the £44 million. I know that the Department does regular analysis of cost structures in this sector, but that clearly still remains difficult to manage in some cases. I hope the Minister will keep that under review, make sure that the process is transparent, and, as time goes on, peg that to cost increases, particularly when it comes to the national living wage.
In the longer term, there is more that we can do to ease cost pressures on the sector, particularly with trying to spread out the demand on the offers for three and four-year-olds, when there are more children in the summer term than in the autumn term, but there have to be staff for the whole year.
Maintained nurseries are more costly, partly because they do more. Like others, I welcome the continuation of the supplemental funding, but the sector really needs long-term visibility and security in its funding. I welcome the fact that the Minister has said that there will be more to say on that soon. I hope it is possible to tie that in with a wider look at the sector and how all parts of it fit together.
I do not have the time to give most of my speech, in the circumstances. Others have said how important early years education is. It is fundamental for social mobility and for dealing with some of the most entrenched disadvantages in our society.
We have seen an increased prevalence of children presenting with high needs. That is because of a combination of greater diagnosis and awareness, and perhaps some greater underlying prevalence as well. Whatever the reason, we know that the earlier we can help and support those children and their families, the better for them and, later on, the more it will ease the pressure on the school system.
In that wider look at how the sector works and how it all fits together, ideally there would be a geographically distributed network of maintained nursery schools with a defined set of core services, one of which would be to support the private, voluntary and independent sector nurseries in the area. There is also more opportunity to use primary school settings. A couple of years ago, we put in place a capital fund to allow more of that, but there is far more potential. It is important that those nurseries include some year-round provision as well.
We need a people plan, because this is all about the wonderful people who work in our nurseries. I welcome the fact that in the T-levels programme, early years and childcare is one of the first T-Levels to come on stream.
There are one or two other very important people in a child’s life: mum and dad. The home situation may be becoming more complex in the current time, partly because of the developments in electronics and so on, but we know that about a fifth of the difference in the development of cognitive ability is to do with parental engagement. It is very difficult for public policy to start getting involved in that arena, but nursery schools and others working in early years can play an important part in supporting parents with the support they are looking for.
I hope the Government will continue with and grow the Hungry Little Minds campaign, which uses ambient opportunities for people on the bus or train, eating their breakfast cereal or about to go to bed, to help to promote early literacy. The BBC has an important role to play, too.
If the erstwhile right hon. Member for Birkenhead, Lord Field, was still in this House, he would remind us of the time he was talking to some 15-year-olds at a secondary school in Birkenhead. They said there were two things they really wanted to learn more about at school—how to make lifelong friendships and how to be good parents. Everybody has a huge part to play. We need to work out how the social infrastructure that we have been talking about can best support all this important work.
Laura Farris (Newbury) (Con)
It is a pleasure to serve under your chairmanship, Mr Hollobone. I congratulate my hon. Friend the Member for Winchester (Steve Brine) on securing the debate.
When we and the Government talk about childcare provision, it is usually in the context of enabling parents to go to work, and secondarily as a development tool in getting children ready for school. We say less about the critical impact of the early years education system on reducing inequality. That point was powerfully made by Dr Laura Jana when she presented to the all-party parliamentary group on women and work a week or so ago. She found that the primary determinants of a person’s life outcomes as an adult were linked to whether they completed school, formed a loving relationship, held down secure employment and avoided the criminal justice system.
All the childcare providers in my constituency would agree with that, and would say that, to deliver that, they need high-quality, qualified staff. It has struck me in my nearly one year as an MP how difficult they have found it to deliver that. I have done some quite granular work, which time will not allow me to elaborate on. In essence, even when taking into account the money that they are allocated through the free hours programme and the top-up that they receive from West Berkshire Council, those providers struggle to meet an appropriate wage rate for qualified staff, taking into account national minimum wage obligations, a desire to provide good resources, and inflationary pressures. The point was illustrated by one nursery’s saying that a qualified member of staff retired and it could only afford to replace them with a zero hours contract.
The other huge driver on the finances of nurseries, and the reason why they entered the covid crisis in such a serious deficit position, is the lack of certainty—not knowing, term by term, what funds would be available. I regret to say that I speak on behalf of nurseries such as Ladybirds in Newbury, a PVI nursery that is literally on the brink. If it closes the doors—I sincerely hope that it will not—it will follow another three that have de-registered in the past six months. It tells me that it has been hit hard by the covid crisis, particularly by parents withdrawing children unexpectedly, and that projected profits for the year have turned into a loss of somewhere around £12,000. Hungerford Nursery School and Victoria Park Nursery School, two maintained nurseries, report a decline in income of £35,000 and £57,000 respectively. Taken together with the extra cost of making their premises covid-secure, the implications for their future are serious.
What are the solutions? Every MP always requests more money. I am so grateful to the Minister for the work that she has done with the Treasury in getting more money in the spending review. However, I looked into the funding system—the tax-free entitlement, the 15 free hours, the 30 free hours, the tax credits and universal credits—and it is fair to say that different thresholds and entitlements have added up to a fragmented and piecemeal system. Some form of streamlining would be the best way of getting the money to staff.
I will make one other point, which I make in my capacity as chair of the all-party parliamentary group on women and work. We are on the brink of a bloodbath in terms of female employment. We know what is happening in hospitality and retail, and we know that those jobs are predominantly occupied by women. If childcare providers go out of business, there will be such an incentive for women to remain at home, looking after the kids, not finding new work. The Chancellor’s guiding principle has been to avoid long-term structural unemployment, but without a childcare solution we risk that.
Rachel Hopkins (Luton South) (Lab)
It is a pleasure to serve under your chairship, Mr Hollobone. I start by thanking the hard-working early years staff in Luton and across the country for the dedicated support that they have provided to children and their families throughout the pandemic.
In Luton, across my constituency and that of my hon. Friend the Member for Luton North (Sarah Owen), there are six maintained nursery schools, which work together to provide comprehensive nursery education and care to our local community. Gill Blowers Nursery School, Grasmere Nursery School and Pastures Way Nursery in Luton North, as well as Chapel Street Nursery School, Rothesay Nursery School and Hart Hill Nursery School in Luton South, have stepped up to the challenges posed over the last year, despite the overarching financial uncertainty in the early years sector.
When I visited Hart Hill maintained nursery school and met the fantastic headteacher, Mrs Thompson, and her staff team, I saw at first hand the brilliant work that they do, and heard about how they have remained open throughout the pandemic to continue providing education and care to children from some of the most deprived areas of Luton. They have also supplied key resources and food to families.
Maintained nursery schools offer a bespoke package of education and care by using skilled staff and research-focused routines, environments and ethos, and by working in conjunction with external health and SEND professionals. A bespoke approach enables them to focus on children’s needs and wellbeing by understanding their responses and behaviour and then adapting provision to provide a safe, responsive space. The maintained nurseries in Luton have resourced provision for children who have significant special educational needs and severe medical or health needs. Last year, they successfully completed 53 education, health and care plans for children who have gone on to transition into specialised primary schools. The maintained nursery schools have ensured that between them they have resources to support 96 children with severe or complex needs, many of whom have been transferred from private early years settings. Their dedication and commitment to Luton ensures that our most vulnerable children have the care that they need and deserve.
Despite all the essential support that maintained nurseries provide our communities, the Government chose not to introduce a long-term funding plan in the recent spending review, about which we have already heard a lot. I am aware that there was the one-year settlement in the summer, but short-term funding plugs will not safeguard the future of maintained nurseries. Yearly funding does not provide sufficient certainty for maintained nurseries to plan ahead by employing staff and allocating resources, or for parents, who worry that the services on which they rely may not exist in a year’s time.
The Department for Education’s own statistics show that the percentage of maintained nursery schools in deficit has risen from 3.5% in 2009-10 to 17.7% in 2018-19. Unlike schools, many maintained nurseries have not received funding to cover additional covid costs, and are ineligible for the covid catch-up fund. Luton Borough Council consulted with DFE representatives on whether increased costs would be reimbursed, and the DFE indicated that they would be. However, all applications for costs reimbursement by maintained nurseries in Luton have been rejected, as they have been deemed ineligible. Will the Minister meet me and my hon. Friend the Member for Luton North to further discuss how Luton’s maintained nurseries can get crucial additional funding to cover those costs?
If maintained nurseries close, the cost of looking after vulnerable children will fall on other services, which have suffered the economic impact of austerity and the pandemic. I urge the Government to introduce a long-term funding settlement as soon as possible.
Mr Philip Hollobone (in the Chair)
No Westminster Hall debate would be complete without Jim Shannon.
Jim Shannon (Strangford) (DUP)
Thank you, Mr Hollobone. It is always a pleasure to make a contribution in Westminster Hall, but especially on such an important issue. I congratulate the hon. Member for Winchester (Steve Brine) on setting the scene, as he so often does in these debates. I was involved in many of the debates in which he was Minister. Today, he is asking the questions and making constituency-based requests, and I am very happy to support him and others. I put on the record my thanks to the Library for the briefing on this topic. We do not often say so, but the Library briefing for this debate was quite good. Its opening statement says:
“The Institute for Fiscal Studies (IFS) has estimated, for example, that ‘a quarter of private nurseries might have been operating at a significant deficit’ during the national lockdown, compared to 11% before the pandemic. With regards to the impact of lower attendance, the IFS has estimated that ‘for every 5 percentage point drop in fee income between 5% and 25% compared with pre-crisis levels, an additional 3–4 percentage points of providers are likely to face a significant deficit.’”
Over the years, my constituency has seen large growth in nursery provision, based on the high employment opportunities and the need for nursery provision—it was a growth market. Since the coronavirus outbreak in March, however, there has been a real sea change, and nursery care and childcare providers have contacted me regularly. I understand the severe difficulties for a sector that is essential for the proper functioning of the working economy. I was reminded of the essential nature of childcare during lockdown when inundated with requests for help to allow people to go to work. I repeat the valid point raised by the right hon. Member for East Hampshire (Damian Hinds) about the problem of taking away grandparents’ ability to mind children, as has been the norm for generations, by forcing them to work into their late 60s. There is a lack of childcare that was once a given. The opportunity for aunts, uncles, siblings or grandparents to help out is not happening. Life is changing.
Nursery providers need investment to deal with the high level of provision that is expected of them. If they are to provide wraparound childcare, they need transportation to and from school, workers who are equipped to deal with the needs presented, and to be able to pay them a living wage. Sometimes people in nursing provision and childcare do not get the living wage, but they should and must. That is not possible with the funding that they receive.
Covid-19 has simply exacerbated and accelerated the issue that needs to be resolved for the future of nurseries. Nurseries, which are absolutely essential, will be a casualty not of coronavirus but of not being recognised as a vital component in the cogs of education. An Early Years Alliance statement points to the fact that only a quarter of providers surveyed said that they expected to make a profit between now and March 2021. Some 51% said that they would need emergency funding to stay open for the next six months. Two-thirds or 65% said that the Government had not done enough to support providers during the covid-19 pandemic. The survey found that one in six early years providers could close by Christmas 2020 without additional funding. On behalf of others, we must make the plea to the Government to step up. If nurseries were to close due to financial restrictions and problems, there would be an impact on people’s ability to work.
I will finish with some of the good things. The Duchess of Cambridge highlighted the essential nature of early years intervention and the impact of the first five years of life. She referred to five big insights, which included a visit to a farm in my constituency, which is why I wanted to mention it; we are pleased to have royalty in Strangford any time. That leaves no doubt as to the value of good nursery provision. It is time for the Government to stand with the Duchess of Cambridge, to fund the sector properly and to make the changes to keep businesses open.
Early years intervention by trained professionals makes a difference to individual children and, as Duchess Catherine has said, makes a difference across generations in our community. Let us show today that we in this House are prepared to support the nursery sector for our future generations.
Dr Kieran Mullan (Crewe and Nantwich) (Con)
It is a pleasure to serve under your chairmanship, Mr Hollobone. I congratulate my hon. Friend the Member for Winchester (Steve Brine) on securing this important debate. Nursery and early years providers are vital, not just to allow parents to work, but to support the development of the children in their care. We saw how vital they were in allowing our key workers—nurses, doctors, supermarket staff, police officers and many others—to keep doing their vital jobs during the lockdown. More than ever before, they were literally a necessity, as the Government advised against informal childcare arrangements with at-risk grandparents. Without them, many people would not have been able to carry on going to work as the nation needed them to.
For many providers it was an incredibly stressful time financially, because although we needed them to stay open to help key workers they lost huge chunks of their income, and their costs increased due to things such as using more agency staff and extra cleaning measures. It is welcome that the Government continued to pay for Government-funded hours, but that still left shortfalls for many. Nurseries in my area, such as Little Angels, which I visited a few months ago, really struggled. I am pleased to say that it has survived, but others locally and across the country have not.
On the importance of early years settings, it is helpful to remind hon. Members of the 2019 Education Committee report, which found that early years education for children below the age of four had a positive impact on the life chances of disadvantaged children. Maintained nursery schools in particular are extremely successful in ensuring excellent outcomes for disadvantaged children.
I was lucky to recently visit the grant-maintained Westminster Nursery School—appropriately named—in the heart of Crewe. As a maintained nursery, its catchment area includes very significant deprivation and the children who come to it often require significant levels of additional support. The headteacher, Elizabeth Hulse, her staff team and the chair, Donna Reed, have worked incredibly hard to keep the doors open and manage and minimise the risks of covid. I put on record my thanks to them. When I visited them in October, however, they still did not know what their funding would be. That uncertainty does not make it easy for any business or organisation to plan.
Thankfully, Ministers have now confirmed that supplementary funding, worth up to £23 million, for maintained nursery schools will be continued for the summer term of 2021 to enable local authorities to support them. That will provide maintained nursery schools, such as Westminster Nursery School, with some reassurance about funding for the 2021 academic year. However, although it is very welcome, it does not take us past the 2021 academic year and does not address all the financial shortfalls that nurseries experience, and there is still no long-term funding solution. Those nurseries need to be given security and stability for the years ahead.
Currently, the local authority, Cheshire East, provides additional funding to the nursery to which I have been referring, but there are no guarantees about that and there is not an agreed approach for deciding what funding should be made available. We need to develop an agreed framework, so that the funding for maintained nursery schools can be standardised and so that the funding formula is up to scratch for the whole sector. The criteria used to allocate the funding should reflect the actual levels of need locally and the challenges that different nurseries face, so that they can deliver the best possible outcomes for their children.
I want to see maintained nurseries such as Westminster Nursery School, private providers such as Little Angels, school-based providers and the entire sector prosper and, hopefully, do more. Their success is our success. For the most disadvantaged in our society, they are just about managing to be a vital stepping-stone, when I want to see them become a fully fledged escalator of opportunity. I ask my hon. Friend the Minister to listen very carefully to the representations made today, and to help build that brighter future for a very important sector for so many young people in this country.
David Simmonds (Ruislip, Northwood and Pinner) (Con)
It is a pleasure to serve under your chairmanship, Mr Hollobone, and I reiterate the congratulations to my hon. Friend the Member for Winchester (Steve Brine) on bringing this important topic to Westminster Hall this afternoon.
I declare an interest, as a father of two young children who were at nursery throughout the previous lockdown. I would like to pay a personal tribute, and one on behalf of many other mums and dads in my constituency, to the early years teams at Hillingdon and Harrow Councils, and particularly to Hillingdon, which not only kept my children’s nursery open but ensured that other mums and dads, whose children’s nurseries closed their doors during the lockdown, were able to access childcare as key workers during that period.
The research clearly demonstrates that the money that we spend on a child during childhood gains the most value when it is spent in the early years, but that is not where most of that funding is distributed. When we look at the way in which we fund different parts of a child’s journey through life, we see that most of the money goes into secondary education and relatively less is spent early on.
I would like to focus my brief contribution today on three aspects of this challenge that it is important to get right if we are to bring about sustained change. The first aspect is about looking at the market as it is. Many hon. Members have made the powerful point that without effective early years provision, our economy is held back. The Government should be proud of the work that has been done with tax-free childcare—an enormously successful policy, appreciated by many working parents—but also the funded hours. However, as we go into a debate that is very much focused on funding gaps in the early years, we also need sometimes to challenge the behaviour of some providers.
It has caused great concern in the sector in my constituency that some nursery providers made much of the fact that they were closing their doors, taking furlough money for the staff who were placed on furlough during that period, taking the full entitlement of payment from the local authority for the funded hours, telling parents that unless they paid the full fees, there would be no place for their child when the nursery eventually reopened, and quite proudly telling other nursery providers that that meant that when those providers went out of business, they would be able to take over their premises and behave in a predatory commercial way afterwards. Therefore, although much good work has been done in the sector, I think that we also need to be prepared sometimes to challenge the behaviour of some providers, whose actions have not reflected the wider move of trying to get behind communities, parents and key workers at this difficult time.
My second point, which builds on what my hon. Friend the Member for Winchester said, is about the complexity of the sector. For the early years we have children’s centres, which are not childcare venues but which are a provider of key services for that time of life. We have nurseries; we have nursery schools. We have, of course, childminders, who are a significant part of many children’s journey through the early years. All of them, in my view, need to be seen as part of that bigger picture of the support around a child and their family. We know that, when we look at attachment, when we look at intergenerational relationships, when we look at a child’s start in life, all those things need to be taken into account. Although it is right that we are hearing the voices of providers of settings such as nurseries, it is also important to recognise that childminders are a crucial part of the picture, and they too need the skills, the ability and the capacity to support children and be part of the market response.
The final point, and the most important one, is the need for our country to have a longer term plan for the early years. A lot of the political debate has been focused on funding. Those with long memories will recall the neighbourhood nurseries initiative, which was started in 2004 and axed in 2007, to much national angst. There has been a pattern of frequent changes in the Government’s response.
We can see the numbers of children coming through the system. We know when there is a baby boom that we need to plan ahead, and we know that when the demographics go the other way we may need to reduce capacity in the system. A number of hon. Members have mentioned the need for effective workforce planning. I invite Ministers, building on work that I know is already done, to set out what that long-term plan is beginning to look like, so the children of this country, particularly in the early years, have some certainty over the medium to long term.
Mr Steve Baker (Wycombe) (Con)
It is a pleasure to serve under your chairmanship, Mr Hollobone. I congratulate my hon. Friend the Member for Winchester (Steve Brine) on securing what has been a really interesting debate with some expert colleagues. It is a pleasure to follow my hon. Friend the Member for Ruislip, Northwood and Pinner (David Simmonds).
First, I begin by paying tribute to some excellent nursery schools in my constituency. Wycombe does not correspond with the Buckinghamshire stereotype, and Micklefield Pre-School and Bowerdean and Mapledean Nursery School serve areas with some real difficulties. They make an enormous contribution to our community, and have done especially during this difficult year. Micklefield Pre-School supports children from disadvantaged backgrounds, and many of its families are key worker families. Bowerdean and Mapledean Nursery School works closely with families to help children academically and socially in a happy and supportive environment. Both schools are very proud to be crucial parts of our community and we are very proud of them.
Some 247 of my constituents in Wycombe signed the relevant petition to give UK nurseries emergency funding. My staff have spoken with local managers and it is a very real concern; I know the Minister will be aware of that.
As I listened to the previous speakers, I was reminded that the first thing I did when I got into politics was not in connection to Brexit—I know hon. Members will be surprised to hear that—but was in fact that I got involved with the Centre for Social Justice, which had at the time done a joint paper with the Smith Institute on early years. Although I got involved to do a voluntary consulting engagement on how their policies might be implemented, I remember being very struck by that paper, which showed the crucial importance to children’s development and lifelong prospects of love and care in their early years.
As a Conservative, I would like lower taxes, but I have realised in the course of my time here that if we want lower taxes in the future, we had better invest in early years today. I think many hon. Friends and perhaps Opposition Members—we do not know—may have realised that, too. We need to invest for the very long term if we are to properly serve our society.
Finally, I want to pick up on a point made by my hon. Friend the Member for Newbury (Laura Farris) about how hard this crisis has hit women. She made the point much more articulately than I can. She is absolutely right and has my full support. I am not going to lecture the Minister, but I am very clear that, when we have a very difficult Parliament on spending, the Minister is going to need all our support in saying that early years education has to be a priority for funding, much as many of us would like to balance the books.
Tulip Siddiq (Hampstead and Kilburn) (Lab)
It is a pleasure to serve under your chairmanship, Mr Hollobone. I thank the hon. Member for Winchester (Steve Brine), the right hon. Member for Chipping Barnet (Theresa Villiers) and my hon. Friend the Member for Birmingham, Erdington (Jack Dromey) for securing this important debate and for being officers of the all-party parliamentary group for childcare and early education. I was proud to be the first chair of the APPG when it started three years ago, and I have just about forgiven the hon. Member for Winchester for upstaging me at every opportunity as the new chair, because the APPG has gone from strength to strength. It has played a vital role in the pandemic and I thank its members for all the work they have done.
There have been some really important contributions in the debate today from all sides. It has been a very sophisticated debate, which is not always the case in politics. Not only did I learn a lot, but I was reminded how important the early years sector is for our country, for our economy, and for women—a point that was made by the hon. Member for Wycombe (Mr Baker) and others. I will highlight some of the contributions that will stay with me.
My right hon. Friend the Member for East Ham (Stephen Timms) spoke powerfully about how fragile the sector is. I think everyone recognises that it has been very fragile since long before this pandemic hit. I have first-hand knowledge of that, both from having small children of my own and because of all of the work I have done in my constituency with early years providers. He also spoke passionately about how the group-based providers are at threat of closure. That has certainly been my experience as well, and we need to take some dramatic action if we want to stop that threat of closure. I pay tribute to Sheringham Nursery School, which is in my right hon. Friend’s patch, and the work it does to help families who have children with special educational needs. I know Sheringham well, and my family friends have benefited greatly from it, so I join him in paying tribute to it. I understand how anxious its staff are feeling about what is happening during the pandemic.
My hon. Friend the Member for Luton North (Sarah Owen), who told me that she had to leave before the end of the debate, spoke passionately about her constituency, and about the role of early years providers in this pandemic and their exclusion from covid funding. That is one of the things I will be picking up on in this debate, because I feel very strongly that those providers have been left behind during the pandemic. She spoke about the baby groups, which were a lifeline for both of us. We both have first-hand experience of them. Their significance is often overlooked, but they are important for those who have a small child and have not been in that situation before. I see some Members nodding; such groups were probably important for them as well.
My hon. Friend the Member for Luton South (Rachel Hopkins) talked about maintained nurseries and Hart Hill Nursery School in her constituency. She highlighted not just the educational benefits of those nurseries, but the health benefits—I have seen that at first hand—and the safe environment they provide for all our young children. The hon. Member for Wycombe spoke about lower taxes if we invest in education. That is probably not the first thing I would go to, but investment in early education is something I passionately believe in, and I believe that Members who have spoken today have made some very powerful cases for how important that investment is.
My hon. Friend also talked about the necessity of long-term planning for maintained nurseries and the long-term funding settlement, both of which I agree with. I know that the Minister’s door is open to me when it comes to discussing policies, which I really appreciate. I hope she also meets with my hon. Friends the Members for Luton North and for Luton South. I think we can agree that they have made a powerful case for their area today, and I hope the Minister will find some time to engage with them and listen to them about what is going on in their area.
One of the things I wanted to talk about is the lack of support for early years providers and all the things they have missed out on due to not being schools. Back in March, as everyone knows, childcare providers were asked to stay open for vulnerable children and the children of key workers. They were assured that they would be able to access the furlough scheme in full, even when they received local authority funding. But just three days before the scheme opened, that position was reversed, forcing providers to tear up their plans and suffer huge losses. Ever since then, early years providers have been overlooked for support, and I wanted to highlight just some of the struggles they have had to put up with during this pandemic.
For a start, early years providers have never been able to claim any of the funding for the additional costs of making their settings covid-secure that schools have been able to claim, which strikes me as ridiculous considering that when we go into a nursery, we see small children running around everywhere. I am not quite sure why they did not qualify for that.
Rachel Hopkins
On that point about nursery schools not receiving additional funding for covid security, for the very reason that little ones do not know how to socially distance, Park Hill Nursery School has had to divide up its classrooms. It has created a new classroom in its library area to maintain smaller groups in order to deal with that, which puts added pressure on staffing.
Tulip Siddiq
I absolutely agree with my hon. Friend, and I have seen exactly what she is describing at first hand in my son’s nursery.
I am also worried that nurseries with rateable values of over £15,000 were not allowed to access the larger covid grants for retail hospitality or leisure businesses. I hope the Minister will look into that. The Chancellor agreed to give nurseries business rates relief only after intense lobbying from all sides, but, sadly, that support is due to come to an end in April next year, and maintained nursery schools, which have been mentioned repeatedly in this debate, are not able to access it. Many part-time or recently started childminders have been excluded from help through the self-employment income support scheme, and the early years providers did not qualify for the £1 billion covid catch-up funding. Last week, they were excluded from the covid workforce fund to help with the cost of staff absences, despite huge staff pressures.
In essence, throughout this crisis, early years providers have been asked to take on the responsibilities of schools but the liabilities of businesses, and with nowhere near the same level of financial support that has been given to other businesses. Of course I welcome the £44 million increase in new childcare funding in the spending review, but I do not feel it is enough to plug the gap, which stood at £662 million last year. It will only come in April, by which time many providers will certainly have closed. A chain of three nurseries in Essex I spoke to recently spent £6.10 per hour providing a Government-funded childcare place, yet only got £4.32 per hour from the Government to do so, so the 6p per hour increase to funding in the spending review is a drop in the ocean.
I want to work constructively with the Government because the early years sector is important. I also give credit where it is due. One positive step was the Government’s commitment to funding providers at pre-covid occupancy levels, both when they were forced to closed to most children from March to June, and in the autumn term when it was clear that childcare demand would be suppressed by fear of covid, furlough, job losses and working from home. That prediction was correct: occupancy in early years settings is currently just above 60% of normal term-time levels. However, although there is no reason to think demand will not continue to be low for some time, the Government are planning to go back to funding providers based on current occupancy from January. I realise it may sound like a technical point, but that will be devastating for over a quarter of providers, according to a recent survey by the Early Years Alliance.
One could argue that that made sense when the Chancellor was planning to withdraw the furlough scheme and get everyone back to work from October, but it does not make sense to extend the furlough and impose lockdown and severe restrictions while pretending that everything is back to normal for childcare, just because the Government do not want to foot the bill. I ask the Minster to take heed of this. It is hard to estimate the overall impact on the sector, but to take the example of the small nursery chain in Essex I mentioned, the owner estimates that the chain would have lost £12,000 of income this autumn term if funding was based on the current, reduced occupancy, and expects the shortfall to be much bigger in the spring term when funding is set to be calculated as the Government intend.
Mass closure of childcare settings would be devastating for over 300,00 people working in early years, the majority of them women, which is a point already made by hon. Members. Childcare workers are paid badly anyway—I am sure people are aware of that—with one in eight receiving less than £5 an hour. We should be working to tackle low pay and improve career progression in the sector. We have duty to make sure we do not bring about the demise of these jobs by slashing funding.
To remind everyone, this debate is about the future of nurseries and early years settings. The reality is that without better support, and a new approach, thousands of them may not have a future at all. Most hon. Members have made that point today. Survey after survey shows that the early years sector is on the brink of collapse. One in six providers expect to close by Christmas, rising to one in four in the most deprived areas. Recent research from the Department for Education shows around half of all nurseries, pre-schools and childminders were unlikely to be sustainable for more than a year. These are shocking statistics, and I hope the Minister will take account of this. There has been a net loss of 14,000 childcare providers in the last five years as a result of the chronic underfunding of early years entitlements. We could lose at least that many again within this year if fears are not allayed, and action is not taken immediately. I ask the Minister to consider how devastating this would be for working families who rely on childcare, and the young children whose life chances are shaped by the power of early education—that point has been made over and over again—not to mention the impact on our economy and recovery if working parents are forced to stay at home. The brilliant early years workforce will suffer large-scale redundancies.
David Simmonds
It is a technical point, rather than a political one, but does the hon. Lady agree that one of the ways that we could address this challenge is by taking the funding cycle through which early years receives its resources out of the same funding cycle where it sits with schools, as there is always a powerful incentive for schools forums to ensure that resources are underspent, in order that they may be redistributed to other causes in the local area? Instead, we should have a much more flexible, local and sustainable means of directing the same money, so that these issues can be addressed.
Tulip Siddiq
I agree with the hon. Member that we should have a flexible funding settlement, but I also think that we need to change our approach and attitude to early years settings, because we often see them as looking after children but not quite providing education. It is as much a cultural and attitudinal change as it is a funding change, so I somewhat agree with the hon. Member. We now have an opportunity to look at the childcare sector in this country as a whole, because the pandemic has shone such a bright light on the very big failures in the childcare system due to the lack of funding and the rules around early years settings, and also because they do not qualify for funding in the same way that schools do. I agree with him—that is what I am trying to say, in a very long-winded way.
I will end with a plea to the Government: please do not ignore the cries for help from a sector as important as early years. I urge the Minister, who I said has an open-door policy when it comes to discussions and constructive criticism, to rethink the plan to slash early entitlement funding from January—that is very soon—to give the early years sector the targeted support that it so badly needs, and to commit to working across the House to give our fantastic nurseries, pre-schools and childminders a sustainable future. I really feel that early years providers are an essential part of the social and economic fabric of our country. Therefore, to coin a phrase, let us build back better from the pandemic, rather than let this vital infrastructure come tumbling down when we need it most.
The Parliamentary Under-Secretary of State for Education (Vicky Ford)
It is a pleasure to serve under your chairmanship, Mr Hollobone. I congratulate my hon. Friend the Member for Winchester (Steve Brine) on securing this really important debate, and I thank all colleagues for taking part; it shows how much we care about the early years.
I love the early years. When my children were little, I gave my time as a volunteer to help run our local pre-school. The days were always busy. I admit that they were sometimes quite tiring, but they were always deeply fulfilling and packed with joy. I have huge admiration for people who work in the early years sector and dedicate their time, skills and love to helping to provide high-quality early years education and childcare. They do an excellent job in helping our youngest children to learn and grow, and families across the country rely on them. I thank them all.
We should be so proud of our early years providers. Some 96% of early education settings are now rated good or outstanding by Ofsted—an increase from 74% back in 2012. A child’s early years are absolutely crucial for their development, and we are doing more than any previous Government have done to ensure that as many families as possible can access high-quality, affordable childcare. That has made a difference for children. The latest early years foundation stage profile results show that the proportion of all children reaching a good level of development is really improving. Back in 2013, only 52% of five-year-olds, or about one in two, had a good level of development. The figure is now 72%—nearly three out of four children. Since 2013, the attainment gap at age five has also narrowed, so disadvantaged children are catching up with those from better-off backgrounds.
That is partly due to the increased and unprecedented investment that the Government have put into early years childcare. This year, we are planning an unprecedented investment of £3.6 billion in free childcare places. That includes the universal 15 hours of childcare for all three and four-year-olds, regardless of whether their parents are working. Take-up is high: 91% of three-year-olds and 94% of four-year-olds back in January of this year. That investment also includes the 15 hours of free childcare for the most disadvantaged two-year-olds. That gives them a great start in life and helps to close the attainment gap. More than 1 million disadvantaged two-year-olds have benefited from it since the programme began in 2013.
More recently, an extra 15 hours for working parents with three and four-year-olds was introduced in 2017 by the Conservative Government. An estimated 345,700 children took up those 30 hours places in 2020. Funding for those places provided an average of 56% of income for group or school-based early years settings last year.
During the pandemic, the Government have acted to support nurseries and provide security to them and childcare. At the peak of the pandemic, early years settings did an amazing job by remaining open for the children of critical workers and for vulnerable children. Many hon. Members mentioned how that made a difference to their own personal lives, as well as to their constituents. I thank those early years settings.
We prioritised childcare settings for reopening on 1 June, and we have supported early years providers by continuing to pay local authorities for the free childcare places at pre-covid levels since March, even if providers had to close due to the pandemic. Providers were eligible for the coronavirus job retention scheme for the proportion of the business that comes from private income. Childminders could also use the self-employment income support scheme, and many settings have benefited from business rate holidays and business loans. We froze Ofsted fees for 2020-21, and early years staff have been prioritised for coronavirus tests throughout this period when they have booked them through the online portal. In addition, since 17 September, if a staff member or a child has tested positive for coronavirus, the settings have been able to access the dedicated advice service provided by the DFE.
We know that at the beginning of the summer term, attendance levels were much lower than they were before covid, and providers were of course concerned about sustainability going into the autumn term. On 20 July, we announced that we would continue to fund childcare at the pre-coronavirus level through to the end of the term. That has given nurseries and childminders an extra term of secure income, regardless of whether or not children are attending. Currently, at least 80% of early years settings are open, and attendance has been consistently increasing during the autumn term. We estimate that, last week, 826,000 children attended an early years setting.[Official Report, 8 December 2020, Vol. 685, c. 8MC.]
The arrangements for the spring term funding are really important, and I am very sorry that we have not been able to set out this position sooner. I know that we must finalise it quickly because, after all, it is just for next term. I assure the House that I am pressing everyone very hard to do so. Understandably, my colleagues at Her Majesty’s Treasury have been very focused on the spending review, but I am pleased that during it they also gave great focus to early years, and the position was announced by my right hon. Friend the Chancellor.
As I said earlier, early years settings will continue to benefit from a planned £3.6 billion of funding for this financial year, but for the next financial year colleagues should understand that there will be a demographic change, and as a result of falling birth rates there will be fewer children in the early years age group. Therefore, the total early years entitlement spend in 2021-22 may be less than in 2020-21. However, for 2021-22 the Chancellor has announced a further £44 million, which means that local authorities will be able to increase hourly rates paid to childcare providers for the Government’s free childcare offers. That will pay for a rate increase that is higher than the cost that nurseries may face from the uplift to the national living wage in April. I wanted to put that important fact on the record. Further details and information on how the money will be distributed will be made available as soon as possible.
We understand that increased levels of attendance in early years settings does not necessarily mean that parental demand for childcare has yet returned to the levels seen before the pandemic. Providers have told us that they have seen a reduction in the number of additional hours that parents pay for. This month we will support providers and local authorities to help improve sustainability in their own local markets. Two national webinars will be delivered to the sector by our partner, Hempsall’s, which will promote strategies for improving provider sustainability, sharing good market practice across early years providers and building confidence in local authorities to have business support conversations with providers in their local markets. We are also considering making reactive expert support available to local authorities to address any immediate sufficiency issues.
Many right hon. and hon. Members have spoken about maintained nursery schools. I know that my right hon. Friend the Member for Chipping Barnet (Theresa Villiers) is keen to understand the plans for future funding for maintained nursery schools. There are 389 such schools across the country—I have two in my constituency. They do an excellent job, but they have extra costs, such as carrying a headteacher and more qualified teachers in the governing body. That is why the Government have provided £60 million in supplementary funding this year, and the Chancellor announced in the spending review that that money is secured for the coming financial year. The Government’s commitment to the long-term funding of maintained nursery schools is unchanged. We continue to consider what is required to ensure a clear long-term picture of funding for all maintained nursery schools. We will say more about that soon
I note the request from the hon. Member for Luton South (Rachel Hopkins) for a meeting about children’s services. She need only write to me to get a meeting. I have written to the hon. Member for Luton North (Sarah Owen) about maintained nursery schools; I am sure that she was pleased about the extra money. DFE is supporting Luton with a specialist adviser at this time, and I will happily facilitate a meeting to update them.
We are in frequent contact with local authorities and early years sector organisations, through regular meetings and working groups. I would like to say a big thank you to the organisations that represent the views of the sector, including NDNA, PACEY and the Early Years Alliance. They work continually with us, hand in hand, on these matters.
My hon. Friend the Member for Wycombe (Mr Baker) spoke wisely about the need for strong support and strong supportive voices for the early years sector. He is spot on. I thank him for agreeing that he will be with me all the way.
Supporting families and children is at the heart of all that the Government do, especially at this challenging time. Ensuring access to childcare to educate children and enable parents and carers to work is crucial to providing support for children. I am deeply honoured to be responsible for this extremely important part of the Government’s agenda, and I will always champion early years.
Steve Brine
In summary, we have heard some committed speeches about the maintained sector and the PVI sector. The fragile sector comment was very well made by the right hon. Member for East Ham (Stephen Timms). My neighbour, my right hon. Friend the Member for Romsey and Southampton North (Caroline Nokes), talked about the high-quality provision in her constituency and across Hampshire. Across the whole country, the Minister reminded us of the Ofsted figures, and that is all true.
My right hon. Friend the Member for Chipping Barnet (Theresa Villiers) called for the long-term settlement, echoing what I had said in my opening remarks. I was struck by what my other neighbour, my right hon. Friend the Member for East Hampshire (Damian Hinds) and former Secretary of State, said about social infrastructure and the need for a people plan. That is absolutely spot on. I was struck by the comment made by my hon. Friend the Member for Newbury (Laura Farris), who said that we are on the brink of a bloodbath in terms of female employment. My hon. Friend the Member for Wycombe (Mr Baker) was absolutely right to say that early years is about the building blocks of a successful society and economy.
We have heard speeches that cover every aspect of the sector, from the 389 maintained nurseries to the 20,000 or so in the PVI sector, and then there are childminders and our children’s centres. My message is that we need to see the sector as a whole. All providers across the sector look after SEND children. All understand that a plan for jobs needs a plan for childcare. The consistent theme has been that we have to close the gap between what it costs to provide the childcare and what providers receive to provide it. Unless we close that gap, we will continue to have this discussion.
Written Statements
Election Spending Limits Uprating
(4 years ago)
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The Minister for the Constitution and Devolution (Chloe Smith)
Elections rely upon political parties and candidates’ ability to communicate their views and commitments so that voters can make an informed decision. To this end, it is right that registered parties and nominated candidates can incur campaign expenditure, but it is also right that there are limits on this expenditure to ensure a level playing field. Many of the current statutory spending limits have not been changed since they were set out 20 years ago, with a small number raised more recently in 2014. This is a significant length of time, and has the effect of reducing the ability to campaign given inflationary costs of printing and communication.
With elections scheduled for 6 May 2021, I am making this statement to outline the Government’s intention to raise the spending limits by inflation for candidates at local council elections in England in time for those May elections. This uplift would take into account the change in the value of money since these amounts were last changed and ensure that limits remain consistent with the initial intent of spending limits when considered by previous Parliaments. It makes no other substantive or real-terms change. I am keen to ensure that, where possible, parties are given notice of potential updates to electoral law well in advance of those elections. The Government are also mindful that the backdrop of the covid-19 pandemic may result in a greater emphasis on postal and digital campaigning ahead of May’s elections; this adds to the case for limits to be updated and uprated.
It is the Government’s intention to review party and candidate spending limits for all other polls (within the legislative competence of the UK Government) next year, with a view to uprating them in line with inflation since they were originally set. This will create a baseline for regular and consistent reviews of all limits in future. We will work with stakeholders, including the Electoral Commission and the Parliamentary Parties Panel, on this process.
[HCWS618]
Loan Charge: Sir Amyas Morse Report Recommendations
(4 years ago)
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The Financial Secretary to the Treasury (Jesse Norman)
The loan charge was announced at Budget 2016 to tackle disguised remuneration tax avoidance schemes, which paid income in the form of loans that were not taxed or subject to national insurance contributions.
In September 2019, the Government asked the former Comptroller and Auditor General, Sir Amyas Morse to lead an independent review of the loan charge policy and its implementation. Sir Amyas Morse presented his conclusions in a report published in December 2019 and made 20 recommendations for change. In response the Government accepted all but one of the recommendations (HCWS14).
The Government accepted Sir Amyas’s recommendation that HMRC should report to Parliament on their implementation of the loan charge once the changes had been implemented and before the end of 2020.
HMRC have today published their report setting out the actions they have taken to deliver the recommendations: https://www.gov.uk/government/publications/independent-loan-charge-review-hmrc-report-on-implementation.
This has been published together with their review of HMRC’s future policy on interest rates: https://www.gov. uk/government/publications/interest-rate-review.
A copy of the report has been shared with the Treasury Committee, Public Accounts Committee and Lords Economic Affairs Committee. The report will also be deposited in the Libraries of both Houses.
[HCWS621]
Mali Deployment
(4 years ago)
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The Secretary of State for Defence (Mr Ben Wallace)
I would like to provide an update to the statement made by my predecessor, my right hon. Friend the Member for Portsmouth North (Penny Mordaunt), on 22 July 2019 (HCWS1779) in which we announced the Government’s intention to deploy a contribution from our armed forces to the United Nations multidimensional integrated stabilisation mission in Mali (MINUSMA).
I can confirm that 300 UK personnel will have deployed to MINUSMA and completed required in-country quarantine by 22 December. The deployment comprises 250 troops from the Light Dragoons, the Royal Anglian Regiment and other attached personnel, and a further 50 forming a national support element.
The UK has committed to a three-year deployment to MINUSMA, with a review to be held at the 18-month point. UK personnel will deploy on six-month operational tours with a two-week rest and recuperation break. Accordingly, the first deployment of Light Dragoons will be replaced by a second contingent led by the Royal Anglian Regiment and Queens Dragoon Guards in summer 2021.
As the Foreign Secretary recently said, working alongside our development and diplomatic efforts, the UK’s military contribution to UN peacekeeping is a clear illustration of how our defence and security capabilities can contribute to the UK’s role as a force for good in the world. This deployment reflects our continued commitment to multilateralism and international peace and security, a responsibility we take seriously as a permanent member of the UN Security Council. It is part of a wider Government response in support of progress towards long-term and sustainable stability in Mali and the Sahel. It will help to minimise the impact of violent conflict on UK interests and strengthen partnerships between the international community and Sahel Governments to improve the overall response to the crisis.
Mali is at the forefront of countries in west Africa affected by instability, with terrorist violence and conflict between communities sharply on the rise. The violence is costing lives, hindering development across one of the poorest countries in the world, and spreading to the wider region. Our contribution will provide critical capabilities to the UN mission at a vital time. We can have genuine impact on the mission’s overall approach, to help reduce the spread of conflict and insecurity, contribute to the protection of civilians, and build a sustainable peace.
Led by the Swedish UN mission force commander, Lieutenant General Dennis Gyllensporre, we will be working alongside over 60 nations all contributing to MINUSMA. It is a truly global collaboration with contributions being made by west African nations in the region and our traditional western allies including Sweden, Germany, Canada, France and Ireland. The largest contingents of solders on MINUSMA will be coming from Guinea, Chad, Bangladesh, Burkina Faso, and Egypt.
The UK taskforce will be under the command of the Light Dragoons’ Commanding Officer, Lieutenant Colonel Thomas Robinson. The taskforce is configured for reconnaissance with their initial objective to understand the operating environment in the area around Gao so that they are well placed to support the UN mission. This will allow MINUSMA to better plan operations and deter and respond to threats.
Our MINUSMA commitment complements existing distinct and separate commitments we have in the region, including helicopter support to the Operation Barkhane (the French-led counter-terrorism initiative in Africa’s Sahel region), and sits within wider UK Government seeking to build stability, and support the most vulnerable populations in the region.
This is a dangerous mission. We have done all we can to mitigate the risk. Our forces are among the best in the world and they have the right training, equipment and preparation to succeed. I am confident that they will have a strong impact on the ground in Mali, will bolster our standing in the United Nations and will help us in our endeavours to make the UN and its peacekeeping missions as effective as possible.
[HCWS622]
Cyber and Electromagnetic Activities: Call-out Order
(4 years ago)
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The Minister for the Armed Forces (James Heappey)
A new order has been made under section 56(1B) of the Reserve Forces Act 1996 to enable reservists to be called into permanent service to support HM Forces in connection to HMG’s cyber and electromagnetic activities (CEMA).
CEMA involves the carrying out, synchronisation and co-ordination of offensive, defensive, inform and enabling activities, across the electromagnetic environment and cyberspace. Defence is committed to assisting HMG by the provision of experts in these domains from HM Forces.
As part of this support, reserve forces will be on standby, as part of a whole force approach with regular forces and partners across Government, to deliver a range of defence outputs such as (but not limited to): the reinforcement of regular units by providing specialist and rare knowledge, skills and experience.
The order shall take effect from the day on which it is made and shall cease to have effect 12 months from the date on which it is made.
[HCWS619]
Covid-19: Higher Education in Spring Term
(4 years ago)
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The Minister for Universities (Michelle Donelan)
As a Government we made the commitment that students living at university will be able to go home at the end of term if they need or choose to do so. We also recognise the importance of ensuring that students are able to return to university for the spring term. We understand that students, staff and providers need to be aware of the arrangements that will be in place for the spring term before students travel home so it has been our priority to communicate these plans as early as possible. Today, I am announcing those measures which we are putting in place to enable students to return to higher education following the winter break as safely as possible.
Government, students, staff and our wider communities greatly value the vital work of universities. That is why we are committed to ensuring that in-person teaching and university life can continue as far as possible during these unprecedented times. Universities have remained open throughout this pandemic, continuing to deliver high quality education through a blended learning approach.
The Government have prioritised education, including higher education, so we have worked to create a plan that supports the safe return of all students who left for the winter break and the resumption of blended learning. We remain committed to ensuring that in-person teaching and university life can continue as far as possible during these unprecedented times. We also recognise the huge amount of work that higher education providers have undertaken to set up asymptomatic test sites, provide covid-secure teaching and learning to students, and carefully manage any outbreaks, and we welcome the early successes of the asymptomatic testing programme.
That said, the large numbers of students planning to travel in the new year has been identified by public health experts as a possible risk factor for transmission of infection. The January term start dates are naturally staggered but this staggering is much more compressed than at the start of the autumn term, so we are asking providers to plan for students to return over a longer, five-week period. This will enable universities and higher education providers to test every student upon their return.
HE providers should first plan to welcome back those students on practical courses and placements, with these students returning to campus in line with their planned start dates from 4 January. We expect providers to make assessments of the courses and students that should be brought back first, based on the requirements of the curriculum, taking into account elements of clinical, practical and specialist teaching and learning as well as the needs of their students and staff. Providers may accommodate some other students to return to campus earlier but should only do so where there is a genuine need or extenuating circumstances. These students should be able to access campus facilities but should not commence in-person lessons until face-to-face teaching of their course formally restarts.
Students who do not have a clearly defined practical element to their course will still be able to continue their studies from the start of term remotely but providers should plan for students to return gradually from 25 January 2021 and staggered over a two-week period.
Staggering the return of students to campus over five weeks has three primary purposes:
to provide more time and capacity for universities in partnership with national health service test and trace to continue their rapid work to roll out asymptomatic test sites within university campuses;
to help manage the flow of students so that as many students and staff as possible can be tested immediately upon arrival at university; and
to help ensure that students who have practical/assessment elements to their learning in the early part of the term can physically return to campus.
In recent months there have been developments on testing which we plan to use to facilitate the safe return of all students. We will work with higher education providers to put in place asymptomatic testing arrangements for all students on arrival to university. However, individual institutions may choose to offer tests using different testing technologies (e.g. polymerase chain reaction, known as a PCR test), or to partner with neighbouring providers.
We also realise that this year has been incredibly difficult for students and we recognise that in these exceptional circumstances some may face financial hardship. I have now announced that we will be making available up to £20 million on a one-off basis to support those that need it most, particularly disadvantaged students. We will work with the Office for Students to do this, and further detail will be set out in due course.
I want to assure students, staff and their families that their welfare is our top priority. I want to thank universities for their tireless dedication in seeking to ensure safe environments for students and staff. The hard work of university staff has meant we are able to keep students and staff as safe as possible during term. We are pleased we can now announce how students can return to university for the spring term, while keeping themselves, their families, and their communities, as safe as possible.
As with all advice, this will be kept under review in light of scientific evidence, and the Government will provide further advice if necessary.
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Housing Adaptations
(4 years ago)
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The Parliamentary Under-Secretary of State for Housing, Communities and Local Government (Kelly Tolhurst)
I am delighted to announce that the Government are releasing an additional £68 million for the disabled facilities grant in England. This funding boost for 2020-21 will help local authorities to provide more home adaptations and bolsters the £505 million that the Government already paid to local authorities for the disabled facilities grant in May, raising the headline total for the grant to £573 million this financial year.
I recognise that following the outbreak of covid-19, local authorities have continued to display excellence, innovation, and resilience in maintaining the delivery of essential services under very challenging circumstances. The disabled facilities grant can play a critical role in both preventing hospital and care home admissions and supporting smoother discharge from hospital. This additional £68 million in disabled facilities grant funding will enable local authorities to deliver more home adaptations for those people with disabilities who qualify.
I am pleased to confirm that spending review 2020 includes an investment of £573 million in disabled facilities grant funding for 2021-22, bringing the Government’s investment in the disabled facilities grant to over £4 billion since 2010. This further outlines our continued commitment to help older and disabled people to live independently and safely, and will provide some welcome certainty to local authorities as they plan their budgets for the coming financial year.
The additional funding for 2020-21 is being provided by the Department of Health and Social Care as part of the better care fund and will be paid by my Department to London boroughs, unitary authorities, and county councils on 9 December. In two-tier areas, counties must pass the appropriate disabled facilities grant funding to their district councils.
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