House of Commons
Prayers
This information is provided by Parallel Parliament and does not comprise part of the offical record
Oral Answers to Questions
(2 years, 4 months ago)
Commons ChamberRead Full debate Read Hansard Text Watch Debate Read Debate Ministerial Extracts
Chris Evans (Islwyn) (Lab/Co-op)
The Minister for Crime and Policing (Kit Malthouse)
The probation service is committed to increasing recruitment to fill probation officer vacancies. The adequacy of staffing levels is monitored on an ongoing basis through operational management and plans around recruitment and retention.
Chris Evans
I recently spoke to a probation officer who is off work due to stress. They told me:
“We are losing no end of experienced officers and management doesn’t seem to care.”
With record levels of staff leaving the service and overworked officers fearful that any wrong decision could lead to tragedy, what specific actions will the Minister take to improve working conditions for probation officers?
Kit Malthouse
Although, obviously, people do leave the probation service from time to time, I hope the hon. Gentleman recognises the very vigorous recruitment campaign over the past three years. We have taken on: 1,007 new recruits in 2020-21; 1,518 in 2021-22; and 1,500 more this year. However, he is right that we need to work hard to make sure that we retain staff as well. There is a variety of strategies that we can put in place to make sure that that is the case, not least looking at the workload, which is often a cause of stress and strain. I am pleased to say that the latest numbers tell me that only 4% of probation officers have a workload above the recommended maximum, and there are obviously reasons why that may be the case. Having said that, there is, obviously, much more that we can do, and one of those things is to agree a productive and helpful pay settlement. We are in conversation with the unions and, indeed, with colleagues in the Treasury about reaching a conclusion on those discussions soon.
Ellie Reeves (Lewisham West and Penge) (Lab)
Dedicated probation officers are telling me that they cannot manage their workloads as it is. One said:
“I used to spend about an hour each week with my high risk cases, but that simply isn’t possible with my current caseload. I no longer have confidence I can manage my cases in a way that keeps the public safe”.
After the Prime Minister’s pledge to cut civil service numbers by a fifth, will the Minister now rule out any more cuts to the probation service?
Kit Malthouse
As I said in my previous answer, we are always reviewing case loads. I know the hon. Lady will recognise that the Inspectorate of Probation report on case loads, workloads and staffing numbers indicated that the recommended case load should not exceed 50, although it also said that there should not be a precise target. I am happy to tell her that 96% of probation officers and probation service officers hold fewer than 50 cases, with an average caseload of 34. Having said that, we recognise that the profession, which is valuable and does important work, presents particular stresses and strains. As part of the reunification process, and moving towards a target operating model, staff wellbeing and welfare will be a key element in our considerations.
Jason McCartney (Colne Valley) (Con)
Selaine Saxby (North Devon) (Con)
Sally-Ann Hart (Hastings and Rye) (Con)
The Lord Chancellor and Secretary of State for Justice (Dominic Raab)
Let me take the chance, on behalf of those on the Conservative Front Bench and, I believe, on all the Benches behind me, to offer our condolences to the shadow Justice Secretary on the passing of his father.
The overall reoffending rate has decreased by 5 percentage points from 31% in 2009-10 to 26% in 2019-20. Over that period, reoffending rates for robbery, criminal damage, arson, drug offences and sexual offences have all fallen.
Jason McCartney
I very much welcome the work that is being done to reduce reoffending rates. I vividly remember visiting Armley Jail and hearing about the work being done there. A big part of this work is transitioning ex-offenders into work. What role does my right hon. Friend see apprenticeships playing in that work?
Dominic Raab
My hon. Friend is right: the work that we are doing on skills and education right the way through to getting offenders into work is vital. I am very pleased, as he may know, that, working with the Department for Education, we are introducing a statutory instrument to introduce apprenticeships in prison. That SI will pass in September, and we will start the first apprenticeship straight away.
Selaine Saxby
The top 10 repeat offenders being dealt with by police in North Devon have committed 108 offences in April to June this year. As the police themselves say, many of these individuals have previously been in prison—some on multiple occasions—but the offending cycle continues. What more can be done to reduce repeat offending, as, locally, the current system is clearly not delivering that desired outcome?
Dominic Raab
By 2024-25, we will be investing £200 million a year, in dealing with skills and work, as I have already said, and also with drug rehabilitation, particularly sustainable absence-based drug rehabilitation. The further action that we are taking on resettlement passports will avoid that potential cliff edge when an offender leaves prison, and makes sure that the wraparound care is there as they transition.
Sally-Ann Hart
Sussex prisoners’ families have highlighted how important families of offenders, particularly prisoners, are in reducing offending. Prisoners’ families are often forgotten about in the criminal justice system, but research shows that if prisoners have a supportive family, they are less likely to offend. What steps is my right hon. Friend taking to support such families, thereby helping to make our communities stronger and safer?
Dominic Raab
My hon. Friend is absolutely right; research shows that the odds of reoffending are 39% higher for prisoners who did not have visits from family or friends while they were inside prison. That is why the new builds, Five Wells and the others, have not only in-cell technology that can facilitate dialogue and close family ties, but family centres to ensure that the ties that bind, and can cut crime by reducing reoffending, are strengthened and not weakened.
Kate Green (Stretford and Urmston) (Lab)
Careful parole decisions are important to minimise reoffending. Can the Justice Secretary explain why new Parole Board rules will mean that expert report writers will be forbidden to provide a view on suitability for release of the most serious offenders?
Dominic Raab
At the moment, when the vital question of risk is assessed, there is a risk that separate reports, whether from psychiatrists or probation officers and those who manage risk, may give conflicting recommendations. Therefore, in those serious cases that the hon. Lady refers to, there will be one overarching Ministry of Justice view, so that the Parole Board has a very clear steer and we make sure—the hon. Lady shakes her head, but I think she agrees with me—that the overriding focus is on public safety and protecting the public.
Steve Reed (Croydon North) (Lab/Co-op)
I thank you, Mr Speaker, the Secretary of State and other hon. Members for their condolences on the passing of my dad, Roy Reed, a few days ago. Everyone’s very kind words were a great comfort to our family at a very difficult time.
Community payback is vital for reducing reoffending and giving justice to victims, but the number of hours completed by offenders has been falling since 2017. It fell in 2018 and again in 2019, before anyone had heard of covid-19. Please can the Secretary of State explain why?
Dominic Raab
There is renewed investment going in to community payback. There has been a covid effect since the years the hon. Gentleman mentions; I know he has raised the issue of those obligations being discharged from home, but that will all be phased out by the autumn. This is a valuable scheme for restorative justice, so that the public see those who have committed crimes making recompense.
Mary Kelly Foy (City of Durham) (Lab)
The Minister of State, Ministry of Justice (Victoria Atkins)
The Government are committed to recognising the extraordinary public service carried out by our hard-working prison staff and officers, and to ensuring that we have a modern employment offer that attracts and retains the very best. I am listening to and working with officers, staff and trade unions on all employment matters.
Mary Kelly Foy
The Minister agreed more than six months ago in this place and on a number of other occasions to meet with the professional trades union for prison, correctional and secure psychiatric workers—the Prison Officers Association—to discuss prison officer pension age as a standalone issue. Yet I am informed that that meeting is yet to happen or even to be scheduled. Does the Minister understand that making promises to prison officers and then breaking them is an insult to hundreds of my constituents in Durham, but entirely consistent with the way this Government treat those brave and loyal workers?
Victoria Atkins
I thank the hon. Lady for raising this matter. I have in fact met the Prison Officers Association; indeed, I was delighted to attend its conference in Eastbourne a couple of months ago. I note in passing that sadly the Opposition were not able to accept the union’s kind invitation to attend that same conference. In terms of pensions, I am determined to have a good employment offer for all our officers. I will continue to meet the POA union and the other unions that work in our prison estate. I emphasise both to officers and to staff that we want to ensure that the hard work they put in to our prison service is reflected in the coming months in the offer we put to our staff.
Jim Shannon (Strangford) (DUP)
The Minister of State, Ministry of Justice (Victoria Atkins)
The Government are committed to supporting victims of rape and sexual violence. We have seen rape convictions increase by two thirds since 2020, but we are committed to doing much more and going further. Last year the Government announced our ambitious end-to-end rape review action plan, which includes quadrupling the funding for victim support from £41 million in 2009-10 to £192 million by 2024-25. More than half of all Crown courts are equipped to use pre-recorded cross-examination and re-examination for vulnerable witnesses, to make the experience of giving evidence to the courts less daunting. There is much more happening, and I know the hon. Gentleman takes a close interest in these matters.
Jim Shannon
I thank the Minister, who clearly has a very clear strategy to move forward. However, recent statistics from the charity Rape Crisis state that in 2021 only one in 100 victims of rape felt they could report it to the police, with some feeling completely unable to do so due to intense fear and angst about reprisals from the perpetrator. What steps will she take to ensure that victims feel that they can come forward and place their trust in the authorities, to find the closure they so very much want?
Victoria Atkins
The hon. Gentleman is right to identify the concerns that victims have from the very first moment of reaching out for support from the police in reporting these offences. As I say, we have conducted a forensic end-to-end review of the criminal justice system. Part of that includes ensuring that the police conduct so-called suspect-focused investigations whereby, rather than looking at the witness’s credibility, they focus on the suspect’s behaviour. We will be rolling this out nationally over the coming year, and I very much hope and expect that we will begin to see some real results from that.
Ellie Reeves (Lewisham West and Penge) (Lab)
Three years on from the Government’s end-to-end rape review, little has changed, with victims waiting three years for their case to get to court, section 28 rolled out in 37 out of 77 Crown courts, and specialist rape courts to be piloted in just three. When I raised the Conservatives’ appalling record in Parliament last week, the Minister accused me of
“false, damaging and intemperate language”,
but I make no apology for standing up for victims. Does she accept that it is her Government’s actions and not my words that are letting rape survivors down?
Victoria Atkins
I am extremely grateful to the shadow Minister for raising that matter. You know, Mr Speaker, that I wrote to you privately concerning conduct in this Chamber, because how we conduct ourselves in this Chamber matters: it has implications far beyond these walls for victims of crime. I raised this privately in a letter to you, Mr Speaker. I copied in the hon. Lady, as a professional courtesy, and it has mysteriously found its way into The Guardian newspaper; I know not how that could have happened. Just on a matter of House business, it is a very great shame that when colleagues express discreetly concerns about conduct in this Chamber, it becomes a matter for the national newspapers.
Turning to the hon. Lady’s allegations, we have more victims reporting their crimes to the police and the Crown Prosecution Service charging more perpetrators. We have timeliness in the Crown court improving by five weeks on last year. What is more, we have seen the conviction rate increase since last year, by two thirds. These are steps towards the targets that we want to meet. I do not for a moment claim that our work is done, but we must, for the sake of victims, ensure that we give them the reassurance and the support they need to bring these allegations to light.
Jonathan Gullis (Stoke-on-Trent North) (Con)
Simon Jupp (East Devon) (Con)
Dr Caroline Johnson (Sleaford and North Hykeham) (Con)
Mark Pawsey (Rugby) (Con)
The Parliamentary Under-Secretary of State for the Home Department (Tom Pursglove)
Our landmark victims Bill will improve support for victims and help to give them confidence that if they report a crime the criminal justice system will treat them in the way that they should expect. We have increased the funding for victim and witness support services to £192 million by 2024-25—quadruple the level in 2009-10. With this funding we are increasing the number of independent sexual and domestic violence advisers to over 1,000—a 43% increase over the next three years—and introducing a 24/7 support line for victims of rape and sexual violence.
Jonathan Gullis
Last June, a six-year-old girl was tragically killed when a car hit her and her father as they walked along a road in Stoke-on-Trent North. The victim’s mother has had to wait over a year, suffering in silence, because the defendant took so long to give permission for his blood sample to be tested. If a person has done nothing wrong they should have nothing to fear. That is why I am campaigning for an amendment to section 7 of the Road Traffic Act 1988 for blood testing to take place without permission, required where loss of life has occurred, to give victims the answers they deserve and need quicker. Would my hon. Friend support such a change?
Tom Pursglove
I am grateful to my hon. Friend for raising this terrible tragedy in the House today. The impact on the family is unthinkable and what has happened is just awful. He will recognise that the measures introduced in the Police, Crime, Sentencing and Courts Act 2022—with his support—came into force last week, tightening the offences and reflecting the culpability of offenders and the devastating harm that these crimes cause, as well as introducing a new offence of causing serious injury by careless driving. The Department for Transport is about to launch a call for evidence looking at motoring offences, and I know it is keen to engage with my hon. Friend on that.
Simon Jupp
The draft victims Bill is a huge step forward to help victims recover from the impact of crime. Does my hon. Friend agree that proper funding for victim support services in Devon and elsewhere is also essential?
Tom Pursglove
I hope that I can reassure my hon. Friend that the victims Bill focuses on delivering improvements to the quality and consistency of victim support services, backed up by more funding than ever before, with £192 million by 2024-25—a four times increase on 2009-10—as well as a multi-year commitment that gives victim support services confidence to plan for the future. That will benefit people in East Devon, and it is fair to say that this Government are committed to delivering on our promises.
Dr Johnson
With the victims Bill, a quadrupling of money for support services and the lengthening of sentences, it is clear that this Government are on the side of victims. One key expectation of victims is that justice will be served and prisoners will not escape, yet twice this year violent sexual offenders have escaped from a Lincolnshire prison, causing anxiety and danger to my constituents. What is the Minister doing to ensure that that does not happen again?
Tom Pursglove
I am hugely grateful to my hon. Friend for her support for the measures we are introducing through the victims Bill, and I know that the prisons Minister, my hon. Friend the Member for Louth and Horncastle (Victoria Atkins) would be willing to speak to her about the specific issue of absconding. What I can say is that we are tightening the rules governing open prisons with a tough three-step test and greater ministerial oversight, which I hope will give her confidence on this issue.
Mark Pawsey
I would also like to raise the case of a constituent, because in an act of outstanding bravery, Sheila Whitehouse went to the aid of a neighbour who was being viciously attacked by a dog. The owner had no insurance, and when the case came to court, Sheila was awarded just a token sum. She suffered life-changing injuries, but had no compensation through the Criminal Injuries Compensation Authority. Will the Minister review the eligibility for compensation for those injured in such circumstances as Sheila’s?
Tom Pursglove
I am very sorry to hear about this particular incident, and I commend, as my hon. Friend did so brilliantly, Sheila’s bravery in stepping in to help the individual affected. The criminal injuries compensation scheme exists to compensate for serious physical or mental injury attributable to being a direct victim of a crime of violence. The scheme is publicly funded, which means that there are strict eligibility criteria. An animal attack will amount to a crime of violence only where the animal was used deliberately to inflict injury. In 2020, we had a consultation on proposals to make claiming compensation simpler for victims of violent crime. We set out that expanding the definition of a crime of violence would go far beyond the original intention of the scheme, but we will be publishing a response in due course.
Karl Turner (Kingston upon Hull East) (Lab)
I am afraid to tell the Minister that victims of crime are being further let down by the Government’s terrible handling of the Criminal Bar Association dispute. I know that a Minister has now finally agreed to meet the Bar Council and the Criminal Bar Association, and I think that meeting is tabled for next week, but what they need to know at that meeting is when the Department will set a timetable for implementing the money that Sir Christopher Bellamy said was needed urgently. Incidentally, Sir Christopher Bellamy, who I have a great deal of respect for, is now a member of the House of Lords. When is that money coming?
Tom Pursglove
No doubt the Under-Secretary of State for Justice, my hon. Friend the Member for South Suffolk (James Cartlidge), will be answering questions on that from Members on both sides of the House. I have heard what the hon. Gentleman said, but I note that the Opposition backed the Bellamy review and its outcomes, which we are getting on with delivering.
Steve Reed (Croydon North) (Lab/Co-op)
As we have heard, Members on both sides of the House want victims’ needs to be put first, so why did the Secretary of State tour the TV studios to defend the Prime Minister for ignoring the victim of predatory sexual behaviour by a former Foreign Office Minister when he promoted him to Deputy Chief Whip, despite having been alerted to that behaviour by the permanent under-secretary and despite the Minister in question having admitted to the behaviour?
Tom Pursglove
My clear understanding is that the hon. Gentleman is wrong about that, but of course it is right that the processes that have been set out should be allowed to run their course. All hon. Members take a very dim view of people being ill-treated and it is right that due process can now be followed. What is not in question is the Government’s determination to ensure that outcomes for victims are better; the funding and the measures in the Bill are there, and we will get on and deliver that.
Andrew Lewer (Northampton South) (Con)
Craig Williams (Montgomeryshire) (Con)
The Parliamentary Under-Secretary of State for Justice (James Cartlidge)
We are investing £1.3 billion in transforming the justice system, including by introducing 21st-century technology and online services to modernise the courts. Digital reforms and simplified services are removing simple cases from court; cutting down on unnecessary paperwork; and helping some of the most vulnerable people, who are facing difficult situations, to get justice as quickly as possible. That is also critical to enable us to recover workloads in courts and tribunals, which are still experiencing the impacts of the pandemic.
Andrew Lewer
It takes private landlords an average of about nine months to repossess a property through the courts, and the end of section 21 repossessions will lead to more cases. The rental reform White Paper committed to improving the courts system. Will the Minister commit to those reforms being in place before the Government make changes to the way that private rented tenancies operate?
James Cartlidge
My hon. Friend asks an important question. I can confirm that on 16 June, the Government published their response to the “Considering the case for a Housing Court” call for evidence. Moreover, we are injecting more than £10 million a year into housing legal aid through our reforms to the housing possession court duty scheme. By 2023, we will modernise how the courts deal with possession claims as part of the Her Majesty’s Courts and Tribunals Service reform programme that I referred to. We will further streamline the court process to ensure that landlords can get possession in the most urgent circumstances. Finally, we will continue to make administrative efficiencies to maximise bailiff resource for enforcement activity, including the enforcement of possession orders.
Craig Williams
I thank the Minister for his substantive reply. Modernising the courts system is essential if we are to clear the covid backlog and get victims the justice they need. I ask him to update the House on video technology and remote hearings, and how they can help.
James Cartlidge
My hon. Friend raises an excellent point. We have to understand that when the pandemic hit, it presented the greatest challenge to collective access to justice for many decades. We cannot underestimate the way that technology in every jurisdiction, including Scotland and England and Wales, helped to ensure that we maintained access to justice as far as possible. To confirm, more than 70% of all courtrooms, including more than 90% of Crown courtrooms, are fitted with our video hearings platform, which enabled up to 20,000 cases to be virtually heard every week at the height of the pandemic. Of course, whether a specific hearing is heard remotely or in person is a matter for the independent judiciary, but I confirm that we work closely with it through HMCTS to look at what more we can do to increase throughput and output in our courts by the use of technology.
Valerie Vaz (Walsall South) (Lab)
What is the point of having a modernised courts system if we do not have the lawyers to go with it? On what date will the Minister meet members of the Criminal Bar Association to discuss pay and a modernised courts system?
James Cartlidge
I am grateful to the right hon. Lady. Further to the question of the hon. Member for Kingston upon Hull East (Karl Turner), I can confirm that I have met the chair of the Criminal Bar Association seven times since the publication of the independent review of criminal legal aid. My officials meet representatives of the CBA almost weekly, so there is lots of engagement going on. I meet frequently with the Bar Council and the Law Society, because we have to remember the criminal solicitors’ view in all this as well. I can clearly confirm that we have decided to increase most of the key criminal legal aid fees by 15% from the end of September. We think that is a generous offer, as I am sure most of our constituents would agree, in the light of what is happening with the economy. I urge those engaged in disruption to reconsider so that we can get back to reducing the backlog, instead of threatening to increase waiting times.
Andy Slaughter (Hammersmith) (Lab)
The courts system relies on litigants having access to appropriate advice and representation, so why are the Government cutting funding to the Support Through Court charity and extending fixed recoverable costs to housing cases that will prevent law centres and other providers from having the means to represent vulnerable tenants against bad landlords, including in disrepair and unlawful eviction cases?
James Cartlidge
On the hon. Member’s first point, I have provided a written answer, which I will happily forward to him—I cannot remember if the question was from him—in which the existing position on funding was clarified. I am confident that we have put in a huge funding package across the justice system, with £477 million to support court recovery in the spending review. That is a significant investment, but I am more than happy to look at what has happened to funding for specific charities.
Gareth Thomas (Harrow West) (Lab/Co-op)
As the Minister considers how to modernise the courts system further, he might want to reflect on the lessons learned—or not—from a court case in 1984, when 37 workers from the Cammell Laird shipyards were unjustly imprisoned at a maximum security prison, and as a result were sacked, blacklisted, and lost redundancy and pension rights. Will he commit today to examine what papers his Department and the rest of Government hold on this case so that such an injustice can never happen again?
James Cartlidge
If the hon. Member writes to me, I will be more than happy to get my officials to look into that historical case.
Sir Christopher Chope (Christchurch) (Con)
My hon. Friend talks about implementing the Bellamy review, but that recommended a 15% rise immediately. As I understand it, the Government are saying there will only be a 15% rise from September, and that will only be in respect of new cases. Why do the Government not commit themselves to implementing the Bellamy review, thereby ensuring that our courts are not blocked as they have been?
James Cartlidge
I am grateful to my hon. Friend, as ever. What the Bellamy review said was that the increases should be delivered as soon as is practicable, and I am 100% certain that we are doing so. We had to consult, which is a requirement under public law principles, and we have to legislate through a statutory instrument, which is the parliamentary procedure, but I am confident that we are delivering this as fast as we can. There have been calls for the increases to somehow be backdated to existing work, but there are huge legal questions about that and it is also very difficult practically. How practical would it be, politically, to start delivering backdated increases in public sector pay?
Patricia Gibson (North Ayrshire and Arran) (SNP)
The Lord Chancellor and Secretary of State for Justice (Dominic Raab)
We have offered the International Criminal Court a comprehensive package of financial and technical support to ensure that leaders under President Putin and those in the field can be held to account for any war crimes in Ukraine.
Patricia Gibson
The International Criminal Court celebrated its 20th anniversary last week, but it is striking that in that time the Court has managed only three war crime convictions. Does the Secretary of State agree that, if the Putin regime is to be held accountable, that will only happen with sustained international support and funding? Has he had discussions with international counterparts in Governments who are not members of the International Criminal Court to encourage them to join?
Dominic Raab
I thank the hon. Lady, and she is absolutely right that the Court can only do so much. It is not an overarching justice system with all the investigators, witness relocation schemes and enforcement powers that a domestic scheme or a domestic jurisdiction would have. We have provided financial support and a dedicated liaison officer from the Met, based in The Hague, to facilitate information co-operation. We have offered military analysis support and witness protection support. I have had discussions, and so has the Foreign Office, with other supportive states parties, including the US war crimes ambassador, about how they can support the ICC in ensuring that there is accountability for war crimes in Ukraine.
Robert Jenrick (Newark) (Con)
Does my right hon. Friend agree that the decision of Russia and its proxies to place on trial four British nationals—three of whom are serving members of the Ukrainian armed forces, and the other is a civilian—and subject them to a kangaroo court, sentencing two of them to death, amounts to a war crime? What support will he give to the Ukrainian authorities, specific to these cases, to help them amass the evidence they will need in due course to bring all those concerned to justice?
Dominic Raab
My right hon. Friend is absolutely right: this is another unlawful act, taking Russia further and further into pariah status. We have said that clearly, and our allies have too. On Ukraine, as well as the support that we are providing to the ICC, I have had meetings with the Ukrainian Minister of Justice and the Ukrainian Prosecutor General, to ensure that they have all the support that we can practically provide in relation to the domestic investigations they are conducting.
Kim Johnson (Liverpool, Riverside) (Lab)
Janet Daby (Lewisham East) (Lab)
The Parliamentary Under-Secretary of State for Justice (James Cartlidge)
The Legal Aid Agency keeps market capacity, including the number of duty solicitors on each local duty scheme, under constant review, to ensure that there is adequate provision of legal aid throughout England and Wales. The LAA is satisfied that there continues to be sufficient duty solicitor coverage across all duty schemes in England and Wales, and it moves quickly where issues arise to secure additional provision and ensure continuity of legal aid services. Provision under the duty scheme is demand led, so there may be variations in numbers across each local rota, or other fluctuations in numbers. A procurement exercise for new criminal legal aid contracts commenced on 1 October and is currently under way. The LAA will publish lists of providers and duty solicitors under those contracts, once the contract has commenced.
Kim Johnson
I send my solidarity and support to the barristers in Liverpool, and to those striking nationally over unsustainable cuts to pay and conditions and the failing justice system. Merseyside and Vauxhall law centres in my Liverpool, Riverside constituency do an excellent job providing legal support to people losing their homes. What steps is the Minister taking to review the shortages of duty solicitors at housing possession court, and what are his plans to improve that, because it is not a consistent approach?
James Cartlidge
The hon. Lady says that she stands in solidarity with the striking barristers. I remind her that back in February, before the publication of our response to the independent review of criminal legal aid, she attended a debate on legal aid in the north-west. Every Labour MP who spoke supported a 15% increase in fees, including three Labour MPs who would subsequently go out with the RMT. They supported 15% then, as did those on the Opposition Front Bench. Do they still support 15% now? If they do, they should not be supporting the strike action when we have that offer on the table. By the way, that 15% increase includes duty solicitors. It will increase the police station scheme funding. That is why it is good news for the criminal legal aid solicitors the hon. Lady is talking about.
Janet Daby
Last week I visited Boothroyd Solicitors, who provide legal aid services in my constituency. They told me that despite being very busy, the business costs of their work, mixed with cuts to criminal legal aid, mean that they and many other criminal duty solicitors are in financial difficulties. They are receiving promises from the Government, but no action. Boothroyd Solicitors warns that access to an availability of duty solicitors will be severely impacted in the years ahead, if it is not tackled now. Will the Government urgently address that?
James Cartlidge
We all want to see thriving duty rotas in our police stations, and it is incredibly important that we support funding for criminal legal aid for the police station scheme. That is why we are increasing those fees by 15%. Indeed, I confirm that in relation to police station fees, the actual increase overall is 18%, as that will include expected additional expenditure, including pre-charge engagement. In total it is an 18% increase for police station duty solicitors. In addition, we want to see a new generation coming through, so we will also be ensuring that those with Chartered Institute of Legal Executives qualifications can more easily participate in the duty solicitor scheme.
Sir Robert Neill (Bromley and Chislehurst) (Con)
The Minister knows that the Justice Committee welcomed the Government’s acceptance of Sir Christopher Bellamy’s review, which relates to fees for both barristers and solicitors in criminal work. We all want barristers and solicitors to return to accepting instructions in all forms of case. The Minister will also remember that Sir Christopher’s review stated that the £135 million that is being paid, I grant in tranches, and subject to certain reforms, was
“the minimum necessary as the first step in nursing the system of criminal legal aid back to health after years of neglect”.
The “minimum necessary” first step. Will the Minister reassure practitioners of both professions that he accepts it is a first step, and that the Government are willing, able and ready to engage with the professions on the second step? Reassuring that good faith would make it easier to resolve the current impasse.
James Cartlidge
I am grateful, as ever, to the Chair of the Justice Committee. He may have seen that on Friday I published an article in the Law Society Gazette where I said that now that we have confirmed we will be legislating to deliver 15% increases to most criminal legal aid fee schemes by the end of September, I am keen that we move on to the next phase of reform. I am keen to engage with all parties, including the Criminal Bar Association, on how we can deliver that next stage. Everybody, including the CBA and the Bar Council, wanted this to be done in stages so that we could get in the initial increases as fast as possible, and that is what we are committed to.
Kate Osamor (Edmonton) (Lab/Co-op)
The Parliamentary Under-Secretary of State for Justice (James Cartlidge)
We have implemented almost all the actions that we committed to in response to the Lammy review and our work continues on the longer-term recruitment targets for HMPPS. That work is firmly embedded in the HMPPS race action programme: a significant three-year investment to deliver long-term change in inequality. We recognise that the Lammy review was an important start, not a complete solution, and our work has evolved considerably. Central to that are our commitments in the inclusive Britain strategy.
Kate Osamor
The Government’s offensive Sewell report sought to dismiss evidence of institutional racism in Britain, yet we know that systematic discrimination remains rife in the criminal justice system, such as the proportion of prisoners from ethnic minority backgrounds on remand. Will the Minister commit to publishing further progress updates on the Lammy recommendations so that the Government’s progress can be publicly held to account?
James Cartlidge
The hon. Lady makes a fair point. We obviously want to be held to account, and I am more than happy to write to her with further details of the progress that we are making. To give just one example, in our inclusive Britain strategy, we committed to a special pilot in police stations that is ensuring that juveniles receive legal advice. As she knows, many juveniles—and, it must be said, particularly those from ethnic minority backgrounds—were not engaging with the system; in the pilot, they must proactively choose to opt out. I have personally been to Wembley police station and to Brixton, where the trial is happening, and I am pleased to say that so far the results are incredibly encouraging: they suggest less time in custody for those juveniles who are participating. Most importantly, some of them are more likely to have an out-of-court disposal. We are trying to break that chain of getting stuck in the criminal justice—[Interruption.]
James Cartlidge
It would appear that it happens whenever I am speaking, Mr Speaker. I do not know if it is personal.
I am grateful to the hon. Lady for that important question. As I said, I will write to her with further details and update her.
Bob Blackman (Harrow East) (Con)
The Minister of State, Ministry of Justice (Victoria Atkins)
I know that accessing timely support on release can be particularly challenging on a Friday and that that can increase the risk of reoffending. That is why the Government have committed to pursuing legislation when parliamentary time allows to enable the release of prisoners up to two days earlier when a release date falls on a Friday or before a bank holiday. I welcome the fact that my hon. Friend the Member for Workington (Mark Jenkinson) has introduced a private Member’s Bill on the issue. I look forward to that.
Bob Blackman
What is key is that if we release ex-criminals and ex-offenders on a Friday, they are likely to return to their former habitat, reconnect with individuals whom they committed crimes with and reoffend. Equally, if they are homeless, they will not get any service from the local authority. I therefore commend the moves to change the position so that we can encourage people to rebuild their lives after being in prison.
Victoria Atkins
I thank my hon. Friend, who has a long record of tackling homelessness. We are particularly conscious of the impact that homelessness can have on ex-offenders released from prison, so, in addition to our commitment to legislate on Friday releases, by 2024-25 we will invest an additional £200 million a year to transform our approach to rehabilitation, including expanding our transitional accommodation service across England and Wales. Ex-offenders need a home, a job and a support network, and we are determined to help them to gain all three.
Nadia Whittome (Nottingham East) (Lab)
The Parliamentary Under-Secretary of State for Justice (James Cartlidge)
The Government are committed to supporting the recovery of the courts for all court users, including those who face delays in accessing justice in serious sex cases. Of course, the listing of cases is a judicial function, and judges continue to work to prioritise cases involving vulnerable complainants and witnesses such as serious sex cases.
Timeliness is improving. The time that it takes for adult rape cases to be completed from charge continues to fall and is down by five weeks since the peak last year. I do not have the figures for child cases, which are not broken down on that basis. I confirm that we are increasing funding for victim support services to £192 million by 2024-25.
Nadia Whittome
I thank the Minister for his reply. In Nottinghamshire last year, for cases involving rape the average time between a case arriving at the Crown court and being completed was 470 days—more than a year and three months. I am sure he agrees that that is completely unacceptable. I welcome the pilot of specialist courts to prosecute rape cases in just three areas, but that will not tackle the root causes of the backlog, which was growing long before the pandemic and which the Victims’ Commissioner says is due to underinvestment. When will the Minister reverse the cuts and ensure that everybody receives the justice they deserve?
James Cartlidge
I am grateful to the hon. Lady. She talks about the backlog being a problem before the pandemic, but I have to point out to her that the backlog was lower going into the pandemic than it was when Labour was last in power. There is always a backlog of cases. There are always outstanding cases. The point is that when the pandemic hit there was a complete and total collapse in our courts, because they were closed, and then we had two-metre social distancing and they took a long time to recover. But they have recovered and the backlog is coming down. She talks—[Interruption.] I am answering the hon. Lady’s question. She talks about funding. I can confirm that we put in almost half a billion pounds of funding into the spending review. That will ensure, for example, that this year, for the second year on the trot, we are removing the ceiling on sitting days in the Crown court. Provided we reduce the disruption we are experiencing now, we should be able to continue to reduce the backlog and deliver swifter and better justice for our constituents.
Afzal Khan (Manchester, Gorton) (Lab)
The Lord Chancellor claims that protecting women and girls is his No. 1 priority, yet victims of domestic abuse face an invasive legal aid application that turns many women and girls away. The recent means test review is a step in the right direction, but it still does not go far enough and leaves many vulnerable women representing themselves in court. Will the Minister outline what steps he is taking to increase legal aid accessibility for victims of domestic abuse and violence?
James Cartlidge
I can confirm, as the hon. Gentleman is aware, that our consultation on the means test threshold would result in 2 million more people having access to legal aid in civil cases and more than 3 million people having access in the magistrates court. In both cases, that could of course include domestic abuse. An important point in that consultation is that we are proposing that where property assets are in dispute in a domestic abuse case in relation to the means test and the capital test for civil legal aid, they would be removed. That underlines again, not just in criminal legal aid but in civil legal aid too, that the Government are putting in significant investment and driving very positive reform.
Caroline Ansell (Eastbourne) (Con)
The Lord Chancellor and Secretary of State for Justice (Dominic Raab)
Since the last oral questions the Police, Crime, Sentencing and Courts Act 2022 has entered into force, I published the Bill of Rights and we submitted our victims Bill to pre-legislative scrutiny.
Caroline Ansell
I thank my right hon. Friend for his response. For as many years as I have served as Eastbourne’s Member of Parliament, Eastbourne residents have expressed to me their dismay, their outrage even, that foreign national offenders—dangerous criminals—have used the right to family life to frustrate their deportation, a deportation ordered for public safety. How will the Bill of Rights address that?
Dominic Raab
I thank my hon. Friend; she is absolutely right. The Bill of Rights is now published and she will see, explicitly and squarely in relation to article 8, clear guidance and prescription on interpretation to prevent the ever-elastic interpretations of the right to family life, the shifting goalposts, that allows those offenders to trump the overwhelming public interest in their deportation.
Anna McMorrin (Cardiff North) (Lab)
Seven years on, we do not have a victims Bill in statute. Thousands of victims are trapped in court backlogs and domestic abuse victims are still being cross-examined by their abuser in family courts, despite that being made illegal last year. Not only does the abuse continue, but the Government have facilitated it by deciding that that provision will not apply to domestic abuse victims who are already in the system. Will the Government ensure that that will apply to them and explain why victims should think that they are anything but an afterthought for the Government?
Dominic Raab
Again, an Opposition Front Bencher is denigrating the important—albeit incremental—reforms that we are making for victims. In fact, a victims law is currently subject to pre-legislative scrutiny and it will be introduced. We are increasing the victims surcharge by 20% and are changing the way that the Crown Prosecution Service communicates. Since the last Labour Government, we have quadrupled the amount of funding that goes to victims services, and we have rolled out section 28. She is right to say that we have prioritised rape and serious sexual violence. [Interruption.] We will get on to that. In fact, the reality is that the number of rape convictions has increased by two thirds over the past year. We have also taken action through the Police, Crime, Sentencing and Courts Act 2022 on domestic abuse, which the hon. Lady voted against.
Mr Gagan Mohindra (South West Hertfordshire) (Con)
Dominic Raab
I have fond memories of playing Sunday league football in my younger years in The Mount prison against the offenders. They won fairly convincingly—something tells me that they were not out on the Saturday night in the way that my team was.
My hon. Friend asks a serious question: what are we doing? In the past year, we have seen a 67% increase in offenders leaving prison being in work within six months. That is a big step change and we are restless to go further. We are doing that with the roll-out of employment advisory boards—I am very grateful to James Timpson for driving that forward—employment hubs in prison, and critically, the drugs strategy, which will stop offenders languishing on methadone, at which point they are no good for anything.
Mr Speaker
I call the Scottish National party spokesperson, Anne McLaughlin.
Anne McLaughlin (Glasgow North East) (SNP)
Last week, Russia followed the UK Government’s lead in ignoring a ruling from the European Court of Human Rights, telling the Court:
“Russia no longer complies with the prescriptions of the ECHR—that’s all there is to say”.
When the Lord Chancellor sees that kind of behaviour, does he ever have second thoughts about the type of company that he is taking the UK into as a result of his proposals? How does he think that will be viewed by the international community?
Dominic Raab
I am not sure what the hon. Lady thought she was referring to in the sense that we have ignored any rulings. We have one of the highest compliance records in the Council of Europe. Frankly, I think she has a problem with her moral compass if she is equating our approach with that of President Putin. [Interruption.]
Mr Speaker
Order. It is one thing for an hon. Member to come in to the Chamber very late, but it is another for them to start shouting. If they want to shout, shout outside.
Anne McLaughlin
Thank you, Mr Speaker. This really is a tale of two countries.
In Scotland, legislation passed by the Scottish Parliament is not law if it is incompatible with the rights defended in the Human Rights Act. That is also woven through the devolution settlement. If the UK removes the Human Rights Act, but the Scottish Parliament refuses consent, what will the Government do? What options exist, other than voting yes to independence, to retain our human rights protections in Scotland?
Dominic Raab
This always comes back round to independence rather than the bread-and-butter issues that the people of Scotland face. The hon. Lady should vote for our Bill of Rights because the people of Scotland are frustrated, as are people across the United Kingdom, when they hear of cases—such as those raised by my hon. Friend the Member for Eastbourne (Caroline Ansell)—of people committing serious offences, but who are not able to be deported because they claim ever-elastic interpretations of the right to family life.
Simon Baynes (Clwyd South) (Con)
The Parliamentary Under-Secretary of State for Justice (James Cartlidge)
My hon. Friend is absolutely right that magistrates are the backbone of our criminal justice system. When the pandemic hit, output completely collapsed in the magistrates courts, but individual magistrates, their legal advisers and staff in our magistrates courts have worked incredibly hard to recover the position. In March, we had the highest number of disposals in magistrates courts since before the pandemic.
We have taken two key measures to strengthen magistrates: we have increased their sentencing powers from six months to 12 months, and launched a £1 million recruitment campaign. I am pleased to say that we have had 33,000 expressions of interest so far, which bodes well for the next generation of our volunteer judiciary.
Liz Twist (Blaydon) (Lab)
The Minister of State, Ministry of Justice (Victoria Atkins)
A huge body of work is going on across every part of the criminal justice system, from the police to the Crown Prosecution Service and through to the courts. It involves the recruitment of more independent sexual violence advisers, who can make such a difference not only to victims’ recovery, but to their willingness and ability to continue with a prosecution. In particular, we are introducing enhanced measures for specialist support within three pilot courts to support victims who are taking forward these very difficult cases. We are working with the judiciary, the police and the CPS to ensure that we measure and identify what is working so that we can replicate it across the country.
Dame Caroline Dinenage (Gosport) (Con)
When it comes to female offenders, trauma-informed and gender-responsive programmes are the only way to break a cycle of crime and incarceration. Tomorrow, the brilliant charity One Small Thing will be here in Parliament to discuss the latest research on the intergenerational traumatic impact of maternal imprisonment. I would really love all Justice Ministers, but particularly my hon. Friend the Minister of State, to come along and hear how the justice system could better be formatted to support women and children.
Victoria Atkins
I thank my hon. Friend for that kind invitation; I would be delighted to attend. On the impact of intergenerational trauma, one of the many reasons we are piloting the first residential women’s centre in Wales is that we want to see how women who should not be receiving the very short sentences that can be imposed can benefit from an intensive residential course rather than prison. I will be watching the results with interest.
Lloyd Russell-Moyle (Brighton, Kemptown) (Lab/Co-op)
James Cartlidge
We are making a significant investment in additional funding for legal aid in immigration cases. I am happy to write to the hon. Gentleman with the full details of that important step change. On the wider issue of access to legal aid, I spoke earlier about our consultation on civil legal aid reform and the means test, which will enable 2 million more people to have access to civil legal aid and 3 million more people to have access to legal aid in the magistrates courts. Combined with the £135 million that we are investing in criminal legal aid in response to the Bellamy review, that is a significant investment, by any measure, in legal aid in all our constituencies.
Sir Robert Buckland (South Swindon) (Con)
Further to the question that my hon. Friend the Member for Bromley and Chislehurst (Sir Robert Neill) asked, I commend the courts Minister for his announced intention to meet representatives of the criminal Bar. May I press him to do so at the earliest opportunity? Will he make the subject matter of that meeting the implementation of the rest of the Bellamy reforms, notably the reforms to the advocates’ graduated fee scheme and the composition and remit of the advisory board?
James Cartlidge
My right hon. and learned Friend has made an extremely good point. He is aware of the article to which I referred in my answer to my hon. Friend the Member for Bromley and Chislehurst—the Chairman of the Select Committee—in which I made clear my wish to engage with the Criminal Bar Association on the next stage of reform, which includes the advocates’ graduated fee scheme and some of its core elements that were not in the first phase. As I have said, we adopted that two-phase approach precisely in order to deliver the initial increase in fees as soon as practicable, and it will be introduced in September: a 15% increase for criminal barristers working in magistrates courts and police stations and for those in the AGFS. We think that that is a very generous offer, and we hope the members of the CBA will think about it and stop their disruption of our courts.
Grahame Morris (Easington) (Lab)
Dominic Raab
The hon. Gentleman has raised an important issue. I am considering the recommendations very carefully, and will respond shortly.
Kevin Hollinrake (Thirsk and Malton) (Con)
Given that 40% of crime is now economic crime, it is disappointing that the Law Commission has recommended restricting corporate criminal liability for failing to prevent economic crime to fraud, and leaving out key crimes such as money laundering and false accounting. Will my right hon. Friend agree to meet me to discuss the benefits of a review with a much wider scope?
Jeff Smith (Manchester, Withington) (Lab)
James Cartlidge
As I have just made absolutely clear, as a result of our consultation we will be increasing access to legal aid. Two million more people will have access to civil legal aid, 3 million more will have access to legal aid in the magistrates courts, and there will be £135 million of additional funds for criminal legal aid following the independent inquiry conducted by Sir Christopher Bellamy, now Lord Bellamy. We think that this is a significant and positive reform, which, incidentally, will help to drive wider reform of the criminal justice system and civil legal aid.
Theresa Villiers (Chipping Barnet) (Con)
The Government are consulting on SLAPPs—strategic lawsuits against public participation. How will this ensure that action is taken against candidates who seek to use litigation and threats of it in an oppressive way to shut down debate during elections?
Dominic Raab
We issued a call for evidence on a suite of proposals, and we are gathering the responses and formulating proposals to ensure that those with deep pockets—oligarchs and the like—who try to silence the voices of transparency cannot do so in this jurisdiction. I will be seeking a legislative vehicle to implement those proposals.
Dan Jarvis (Barnsley Central) (Lab)
The International Criminal Court has just issued arrest warrants for three men on suspicion of abduction, torture and other war crimes during Russia’s invasion not of Ukraine, but of Georgia. This is a reminder that Putin’s barbarity stretches back many years, and that prosecuting such barbarity also takes many years. Can the Secretary of State ensure that our commitment to delivering justice for those who have suffered in Ukraine will endure for the longer term?
Dominic Raab
The hon. Gentleman is right to raise this issue. We have been there at the outset supporting the ICC. I remember, as a young lawyer in The Hague, negotiating the UK-UN agreement on sentence enforcement, which, just last year, enabled us to take Radovan Karadžić into this country. That is exactly the kind of staying power that we will need in the case of Ukraine.
Rob Butler (Aylesbury) (Con)
An inspection report on Oakhill Secure Training Centre has been published today. The centre has a very poor recent record. I am pleased to see that there are signs of improvement, but much remains to be done to achieve a sustained high standard. Will the Minister commit herself to ensuring that both the Ministry of Justice and Her Majesty’s Prison and Probation Service continue to focus strongly on ensuring that Oakhill can enable children to truly turn their lives around?
Victoria Atkins
Very much so. As my hon. Friend knows from occasions when I have given evidence to the Justice Committee, we are keeping this under close review. We want the children who are held at Oakhill to be held in a way that is safe but also decent, and we want to rehabilitate those young people so that when they are released they can lead productive lives that are free from crime. I welcome my hon. Friend’s focus on this issue, and believe you me, it is absolutely mirrored in the Ministry.
Chris Bryant (Rhondda) (Lab)
The Justice Secretary said this morning on television and on the radio, on the basis of conversations that he had had with the Prime Minister in the last 24 hours, that Lord McDonald’s claim that the Prime Minister had been directly and personally informed and briefed, in person, on the allegations that were substantiated at the Foreign Office, while he was Foreign Secretary, against the right hon. Member for Tamworth (Christopher Pincher) was untrue. Has the Justice Secretary had further conversations with the Prime Minister, and is that still his position?
Jamie Stone (Caithness, Sutherland and Easter Ross) (LD)
Could I have a reassurance from Her Majesty’s Government that any proposal for an independence referendum coming forward from the Scottish Government, or indeed any proposed extrapolation of a general election result, will be closely examined within the context of United Kingdom law?
Dominic Raab
I can reassure the hon. Gentleman that the Government’s position has not changed. We do not think that now is the right time for a second referendum, given all the pressures and challenges and given the outcome of the first. I think what the people of Scotland want to see is both their Governments—in Edinburgh and in Westminster—working closely together.
Standards in Public Life
(2 years, 4 months ago)
Commons ChamberRead Full debate Read Hansard Text Watch Debate Read Debate Ministerial Extracts
Urgent Questions are proposed each morning by backbench MPs, and up to two may be selected each day by the Speaker. Chosen Urgent Questions are announced 30 minutes before Parliament sits each day.
Each Urgent Question requires a Government Minister to give a response on the debate topic.
This information is provided by Parallel Parliament and does not comprise part of the offical record
Angela Rayner (Ashton-under-Lyne) (Lab)
(Urgent Question): To ask the Chancellor of the Duchy of Lancaster if he will update the House on the mechanisms for upholding standards in public life.
The Minister for the Cabinet Office and Paymaster General (Michael Ellis)
Thank you very much, Mr Speaker. It is a pleasure to appear before you and the House on this important matter. We are fortunate in this country to have a sophisticated and robust system for upholding public standards. That system is multi-faceted; it is made up of interlocking and complementary elements. It is of course founded on the seven principles of public life, which have been in place for a quarter of a century and which provide the overarching qualities and standards of behaviour that are expected. I have some time to run through all the mechanisms that underpin the seven principles, but I will touch on something else first, which relates to the potential victims in any case where there are allegations of impropriety of any sort. I was a barrister in criminal practice for 17 years before being elected to this House, and I know how difficult it is for individuals to come forward. It is important that we do not prejudge any individual case. It is also right that the system that, after all, this House created relatively recently—namely the Independent Complaints and Grievance Scheme—is allowed to work its course.
There are additional rules and guidance to help to ensure consistency of approach—for example, in relation to public appointments, corporate governance and business appointments—when individuals move to roles outside Government, and there are independent bodies that provide a broad oversight of standards. The deputy leader of the Labour party, the right hon. Member for Ashton-under-Lyne (Angela Rayner), has asked about the mechanisms for upholding those standards, which exist as a result of the decisions of this House. There are bodies and officeholders with a role in overseeing specific aspects of public life, such as the Parliamentary Commissioner for Standards, the Civil Service Commission and the Commissioner for Public Appointments. Alongside them are regimes for the publication of Government transparency data and information on those who lobby Government.
We have a Parliament that upholds standards to cover all those in public life, but it is incumbent upon us not to prejudge these decisions. Ministers, public office holders and officials, in all their activities, must maintain the confidentiality of those who wish to make complaints across the lifetime of their involvement, but let me say that no system can replace the fundamental importance of personal responsibility. We all know this to be true. Codes, rules and oversight bodies are there to guide us, but all of us in public life must ultimately choose for ourselves how to act.
Angela Rayner
This constant charade just will not wash. These latest disturbing allegations about ministerial misconduct are all about abuse of power. There is one common fault with the system that the Minister spoke about, and that is the power that is granted by this Prime Minister.
The Minister spoke about personal responsibility. Well, he needs to remind the Prime Minister of his personal responsibility. Last week the Prime Minister said that he knew nothing of “specific” allegations about misconduct by the right hon. Member for Tamworth (Christopher Pincher). Then he claimed he had only been aware of “reports and speculation”. But the truth is out today, and that defence has been completely blown apart.
Lord McDonald says the Prime Minister was informed about a complaint, which was upheld, of inappropriate behaviour against the then Minister. Does the Minister for the Cabinet Office accept that Lord McDonald is telling the truth, or is he telling us that the Prime Minister was not aware of the complaint? What happened to the complaint, and why was nothing done at the time? A Minister of State at the Foreign Office has a deeply sensitive role in national security. Was this issue even brought up in the vetting process, and was the Prime Minister informed? Why was this conduct not considered a breach of the ministerial code? Why did the Prime Minister allow him to stay in post?
This goes to the heart of wider issues, and the public have had enough. Since the resignation of yet another of the Prime Minister’s ethics advisers last month, there has been an even bigger ethical vacuum in Downing Street, with no accountability in place. How can the Minister come here today and say that this simply would not happen again?
The Prime Minister was personally informed about these allegations, yet he was either negligent or complicit. What message does that send about the standards of this Government and those they set? What message does it send to the British people facing a cost of living crisis while their Government are paralysed by scandal? When will this Minister stop defending the indefensible and say, “Enough is enough”?
Michael Ellis
The matter of what happened with regard to the right hon. Member for Tamworth (Christopher Pincher) is now under investigation. It is possible that a police investigation may—may—follow, so it is clear that the sub judice rule should apply to individual cases, in the interests of justice for everyone concerned, both those accused and potential victims. The sub judice rule should apply very much to these proceedings.
With regard to the appointment to the Whips Office in February that the right hon. Lady mentioned, appointments in Government are subject, of course, to advice on matters of propriety—they are not subject to veto, but they are subject to advice. In addition, the usual reshuffle procedures were followed by the Government. I ask the House to accept that, bearing in mind that the Member in question had been reappointed to Government by a previous Prime Minister in 2018 and appointed in 2019 as a Foreign Office Minister, and that then, crucially, he was appointed for a third time in February, I doubt whether anyone with knowledge of those facts could say that this Prime Minister should have acted otherwise than he did.
It is the morally fair thing to do, in any case, to assess the situation based on evidence and not unsubstantiated rumour. It is incumbent on all of us in this House, as it is in society generally, to act fairly. If there is no evidence at the time—if there is no live complaint, no ongoing investigation—surely it is not unreasonable to consider making an appointment.
In the limited time available, I have made some initial inquiries. This is subject to further assessment, but my understanding is as follows: in October 2019, officials raised concerns with the then permanent secretary about the Member in question. The permanent secretary commissioned work to establish facts, and that work was undertaken on his behalf by the Cabinet Office. That exercise reported in due course to the permanent secretary, who had agreed its terms. It established that although the Minister meant no harm, what had occurred caused a high level of discomfort. [Interruption.] That is what the exercise established. The Minister apologised, and those who raised the concern accepted the resolution. The Prime Minister was made aware of the issue in late 2019; he was told that the permanent secretary had taken the necessary action, so no issue arose about the Minister remaining a Minister.
Last week, when fresh allegations arose, the Prime Minister did not immediately recall the conversation in late 2019 about this incident. As soon as he was reminded, the No. 10 press office corrected its public lines. The position is quite clear. Further inquiries will be made, but the position is that the Prime Minister acted with probity at all times. It is not appropriate, whether in private life or in public life, to act on unsubstantiated rumour.
Mr Speaker
We now come to the Chair of the Public Administration and Constitutional Affairs Committee, William Wragg.
Mr William Wragg (Hazel Grove) (Con)
Thank you, Mr Speaker. My right hon. and learned Friend mentions the sophisticated and robust systems for upholding standards in public life, but those systems are, on the whole, irrelevant if the participants have no regard to them. The Government and, I suggest, my right hon. and hon. Friends sat on the Front Bench—I notice there is a preponderance of Government Whips there, rather than other Ministers—should consider what they are being asked to say in public, which changes seemingly by the hour. I ask them to consider the common sense of decency that I know the vast majority of them have, and to ask themselves if they can any longer tolerate being part of a Government who, for better or worse, are widely regarded as having lost their sense of direction. It is for them to consider their position. This is not a question of systems; it is a question of political judgment, and that political judgment cannot be delegated.
Michael Ellis
My hon. Friend is quite wrong. The Government know their direction, and that is to serve the British people by dealing with the issues that matter to them, including the cost of living, the crisis in Ukraine and the pandemic, which this Prime Minister and this Government have dealt with in an exemplary fashion.
Brendan O'Hara (Argyll and Bute) (SNP)
Here we are again, Mr Speaker. Once again, the Minister for defending the indefensible is sent out to defend his boss, but even he must realise the frequency with which we reconvene in this place to question the veracity of the Prime Minister’s version of events; it is like being on a merry-go-round that gets faster and faster. Today, it is the turn of Lord McDonald, the former senior civil servant at the Foreign, Commonwealth and Development Office, to call out the Prime Minister’s claim that he was unaware of any specific allegations against the right hon. Member for Tamworth (Christopher Pincher) when he appointed him Deputy Chief Whip. In his letter to the Parliamentary Commissioner for Standards, Lord McDonald is unequivocal in saying that three years ago, in 2019, the Prime Minister
“was briefed in person about the initiation and outcome of the investigation.”
Lord McDonald’s letter absolutely demolishes the Prime Minister’s claims that he did not know and, once again, raises serious concerns and questions about whether he has broken the ministerial code. How much longer will we have to endure this seemingly endless merry-go-round? Will the Secretary of State now commit to holding a full and transparent investigation into this matter, and perhaps finally allow us and the people of the United Kingdom to get off this appalling merry-go-round?
Michael Ellis
I realise that the hon. Gentleman from Scotland wishes to make political hay out of this situation, but it really does not wash. It is not indefensible to defend natural justice. Natural justice means acting on evidence, not on gossip, rumour and innuendo. It is a fact that in this place, and in SW1 generally, there are rumours, gossip and innuendo about a multitude of issues and people. The reason journalists do not report it is that they cannot stand it up with evidence. The reason why others do not act is, in many cases, because they have not got evidence. It is not indefensible to defend the principles of natural justice and not expect people to act—to defenestrate individuals—without proof. That is the difference.
Sir Bernard Jenkin (Harwich and North Essex) (Con)
There is periodically much discussion in this place, and about this place, in respect of how we should address its culture, which seems to give permission for the wrong attitudes and wrong behaviours. How does it help if our political leaders, in all political parties, finish up promoting people with the wrong attitudes and the wrong behaviours? Is that not exactly what gives permission for the wrong attitudes and the wrong behaviours to persist?
Michael Ellis
My hon. Friend would be right if he were working under the assumption that those making the appointment knew that the individual in question had the wrong behaviours and the wrong attitudes. Submitting that it is a possibility, or that there are rumours, would not be sufficient; that is the crux of the difference.
Chris Bryant (Rhondda) (Lab)
I hope one day that the Minister plays these things back and listens to himself. I do not think he will be proud of himself in later days. I know that many decent Conservative MPs feel terribly ashamed of everything that has been happening in this sordid process. Is not this the real problem? If the boss is someone who has spent all his political career trying to get away with things, and finding himself innocent in the court of his own opinion; if he boasts to everybody, laughingly, that all the sex pests support him for the leadership; if, whenever he gets into trouble, he tries to destroy the system; then all his allies will endlessly take liberties. It does not then feel like a Government who are trying to serve the British people. It just feels like a Government who are trying to help themselves.
Michael Ellis
The hon. Gentleman takes a sanctimonious tone. When it comes to this Government, he wishes to set himself up as judge, jury and executioner, but the reality is that taking the moral high ground is not something that fits well. He should bear in mind that it is also moral to treat people fairly; that includes victims and the accused. That is what I have done, and what I seek to do.
John Penrose (Weston-super-Mare) (Con)
The Minister rightly pointed out in his introductory remarks that the seven Nolan principles of integrity in public life underpin and run all the way through the ministerial code, but it is clear from Lord McDonald’s letter today that No. 10 has not been honest in what it has said. That is what Lord McDonald says in terms. One of the seven Nolan principles is honesty. No. 10 was previously accused, without rebuttal, of lacking leadership by Sue Gray in her report on what went on over partygate. How many more of the seven principles have to be breached before my right hon. and learned Friend stands up and says, “Enough is enough”?
Michael Ellis
I do not accept the premise of my hon. Friend’s question. As I think he will note, when, after the exercise—the investigation that I referred to a few moments ago—the former Minister in question was appointed to the Department for Levelling Up, and then to the Whips Office, I am not aware that any further objection was made by the senior civil servant in question. That is something from which my hon. Friend can draw a note.
Wendy Chamberlain (North East Fife) (LD)
As many in this House know, I am a former police officer, and something that is important for every single one of us as MPs is our responsibility for safeguarding, both on the estate and in our constituency. If I received an unsubstantiated allegation, I would do my best to find out as much as I could about it, not just from curiosity, but to ensure that people were safe. What has failed here? Is it a failure of process, integrity or both?
Michael Ellis
No. As I have articulated, there was an exercise in the Foreign and Commonwealth Office on the matter, which I believe went on for several weeks. I need to confirm the details, because I had insufficient time to do so this morning, but as I say, there was an exercise, and it concluded to the satisfaction of all involved. That was within the Department and, it appears to me, before the Prime Minister was made aware.
Mr Peter Bone (Wellingborough) (Con)
Recently, at a Brexit opportunities debate here, there were no Liberal Democrats and virtually no Labour Members. The only time they turn up here is to bash Boris. Does my right hon. and learned Friend think that our constituents in Northamptonshire, which we both represent, are more concerned about an MP they have never heard about, or the biggest tax reduction in decades, which will happen tomorrow?
Michael Ellis
My hon. Friend hits the nail on the head, as usual. As he points out, Labour Members have made frequent requests for business in this House to be about not what our constituents primarily care about, but personalities. They do not raise the issue of policies, because when they do, they lose. Instead, they focus on personalities, and that has been the drive of the past six months.
Mr Ben Bradshaw (Exeter) (Lab)
Given the character and record of this Prime Minister and of this No. 10, and given that numerous Ministers have, in recent days, been sent out to spout different versions of events—which the BBC political editor this morning described as all having become “drivel”—how can any of us, including the Minister, have confidence that the latest version of events that he has given the House is true?
Michael Ellis
Well, in the first place, what I have set out to the House is a principle of natural justice that is true in every case. It would be true in the case of an allegation against anyone, in any circumstances. It is fair to complainants and those subject to allegations alike, and it applies all the time, so it is not a question of the individual facts that the right hon. Gentleman is alluding to. It is an overarching principle of fairness in life, which is to act on evidence, rather than gossip, innuendo and rumour. It may be that that gossip, innuendo and rumour later turn out to be true, but when persons in authority have to make decisions, they should do so properly and for good reason.
Jackie Doyle-Price (Thurrock) (Con)
I have listened to my right hon. and learned Friend very carefully, and I hear what he says about natural justice, but the Government Whips Office is meant to organise us to get the Government’s business done. That involves providing a safe space for discussions about policy issues, where there are differences on them, and a safe space for welfare. Notwithstanding what he said about natural justice, the very whiff of rumour and historical incident, which Simon McDonald referred to in his letter today, should have been enough to tell the Prime Minister that that appointment was not wise, and that he could have made use of the talents of the hon. Gentleman in question in a different Department, as he had done previously.
We have a real problem here. No. 10 has addressed the issue of its knowledge of these events with varying degrees of honesty; there has been, I think, half a dozen different variations in what it has said. I am very fond of my right hon. and learned Friend, and I think he is on a really sticky wicket today, but the way we move on from this is through a complete reset of standards, and a complete reboot of the ministerial code. What does he intend to do to convey to this House that the provisions of the ministerial code are taken seriously by this Government?
Michael Ellis
I can assure my hon. Friend that the codes of conduct—the codes of practice—are adhered to firmly by this Government and supported by this Prime Minister. She will know that any Prime Minister—in fact, any Secretary of State, Cabinet Minister, any Minister of the Crown—will regularly be dealing with a vast quantity of information. It is a question not of honesty or dishonesty, but of recalling every fact years after the event. If the circumstances were such that they were not firmly crystallised in any individual’s mind at the time they were being given that information, they can easily not be recollected. It does not necessarily immediately impugn dishonesty if someone does not recall something years after the event, so I ask her to bear that in mind.
Dame Meg Hillier (Hackney South and Shoreditch) (Lab/Co-op)
The Minister has danced on a pinhead here, but as the hon. Member for North East Fife (Wendy Chamberlain) says, we are not just MPs, Ministers or Whips; we also employ staff in this place. Staff, who are often alone in our offices with us, rely on a code and a proper workplace. We do not have that here and this just undermines the support that we should be providing to the many people who work here. We have to get away from the idea of MP exceptionalism and stop dancing on a pinhead. The Minister should heed the words of the hon. Member for Hazel Grove (Mr Wragg) and say, “Enough is enough.”
Michael Ellis
I agree with the hon. Lady in as much as she says that we need to have care for our employees here. That is something with which we would all agree. In fact, it is this Government who set up the independent complaints and grievance system for staffers from this place to do that. So I ask her to characterise it as something on which we are all on the same side. I urge anyone who has any complaints at any time to make those complaints known. That is how justice is done.
Dr Caroline Johnson (Sleaford and North Hykeham) (Con)
My right hon. and learned Friend says that all are innocent until proven guilty, and makes the point, which I agree with, that unsubstantiated allegations should not lead to people losing their jobs or not being appointed. What he has said is that the Prime Minister knew of the allegation in 2019. He said that discomfort was caused and he said that the right hon. Member for Tamworth (Christopher Pincher) apologised. The letter from Lord McDonald says:
“In substance, the allegations”—
at that time—
“were similar to those made about his behaviour at the Carlton Club.”
The allegations, as reported from the time at the Carlton Club, include sexual assault. Can he confirm whether the allegations made back in 2019 were of sexual assault? If they were and they were upheld and an apology was given, why were the police not involved and why was he not sacked at the time, never mind given another job?
Michael Ellis
I am unable to speak to that. But what I would say is that we must do everything we can to protect the confidentiality of those who make complaints. I am very concerned that the way in which this matter has been processed by some individuals means that it opens up a risk of a breach of confidentiality for those who have made complaints. That is paramount.
Clive Efford (Eltham) (Lab)
The Minister is increasingly looking like the boy who stands on the burning deck. His problem is that the Prime Minister is going to desert him as well. The trouble is that gossip and innuendo actually become facts, which is something that the Minister does not recognise. Minister after Minister has been humiliated, going out and giving a storyline that has been given to them by No.10, which subsequently changes. And the story has changed again today from the Minister’s own mouth. We have heard from the Secretary of State for Work and Pensions, the Under-Secretary of State for Education, the hon. Member for Colchester (Will Quince), and now we have the facts from Lord McDonald. The fact is that special advisers have been used to put out and peddle this misinformation. So what is going to be done to investigate them and the special advisers’ code of conduct because we cannot keep having No.10 just peddling lies?
Michael Ellis
I disagree with the hon. Gentleman. There is absolutely no evidence of what he speaks. The reality is that, when years-old allegations resurface, inquiries have to be made. It is not an immediate exercise; those have to be got right. Every effort is being made to give accurate information. I said in my opening remarks to this honourable House that, in the limited amount of time that I have had available, that is the information that I have received, but, clearly, there will be an exercise to be done.
Hywel Williams (Arfon) (PC)
Last week, my right hon. Friend the Member for Dwyfor Meirionnydd (Liz Saville Roberts) tabled a Bill that would make it an offence for politicians to wilfully mislead the public. Will the Minister press the Leader of the House for parliamentary time for a Second Reading debate of that Bill as a step towards restoring people’s faith in democracy?
Michael Ellis
The business of the House is not a matter for me.
Dame Diana Johnson (Kingston upon Hull North) (Lab)
I wondered whether the Minister was able to confirm whether anyone had personally raised with him concerns about the right hon. Member for Tamworth (Christopher Pincher).
Michael Ellis
That is not a matter for me. [Interruption.] I am not responsible for appointments, but there are mechanisms in place for complaints to be made.
Neale Hanvey (Kirkcaldy and Cowdenbeath) (Alba)
A few short weeks ago, at Lord Geidt’s resignation, I asked the Minister what fresh scandal was coming down the tracks. He assured me that there was none, yet here we are. The principle at stake here should resonate not just in this place, but in Parliaments across the UK and beyond, because accepting personal responsibility, lawfulness and truth telling are essential conditions of honourable conduct. As President Nixon discovered, it was the cover-up and the decision to lie that delivered his undoing. Misconduct in public office is a serious charge. Following the recent revelations from Lord McDonald, can the Minister tell the House: what did the Prime Minister know and when did he know it?
Michael Ellis
I have already dealt with that matter but I will say this. I do not think that any Member of this House from any of the Opposition political parties should take the moral high ground in this matter. I do not choose to reiterate why, but none of us should come to this House expecting all the criticism for any misconduct by any Member to be levelled against any one individual. What happens is that, when wrongdoing has been found to be done, it is properly dealt with in the interests of justice, whatever the political party. But Opposition Members wish to make party political points out of a serious matter.
Maria Eagle (Garston and Halewood) (Lab)
Over the past few days, Downing Street and the Prime Minister’s official spokesman have said different things at different times: first, that the Prime Minister was not aware of any allegations against the former Government Deputy Chief Whip; then that they were not aware of any specific allegations; then that they were not aware of any serious specific allegations; and then that they were not aware of any allegations that were substantiated. Yet the letter from Lord McDonald to the Parliamentary Commissioner for Standards, published today, shows that all those briefings appear to be untrue. So can the Minister tell the House whether the Cabinet Secretary is investigating these serial breaches of the special advisers’ code of conduct?
Michael Ellis
I do not accept the hon. Lady’s characterisation. What she obviously does not wish to recognise is that, as days pass during a heated episode, investigation and media inquiries, pictures become more crystallised. As I said in my opening remarks, when fresh allegations arose, the Prime Minister did not immediately recall the matter that had been raised with him in late 2019. As soon as he was reminded, the No.10 press office corrected the public line. So it is not a matter of anything other than recollection and due process.
Caroline Lucas (Brighton, Pavilion) (Green)
Just two months ago, the Prime Minister stood at the Dispatch Box at Prime Minister’s questions and told me:
“of course sexual harassment is grounds for dismissal.”—[Official Report, 27 April 2022; Vol. 712, c. 759.]
Yet in 2019 he kept the right hon. Member for Tamworth as Minister, and this year he gave him powers over MPs’ welfare as Deputy Chief Whip, despite knowing that a formal complaint had been upheld against him. Let us be very clear: Lord McDonald’s letter says in black and white:
“Mr Johnson was briefed in person about the…outcome of the investigation.”
This is not about rumour, innuendo or gossip. Does that not show that the mechanisms for upholding standards in public life are only as good as the independence and integrity of the person charged with enforcing them—and does that not show not just that we need radical systems reform, but that the Prime Minister himself just has to go?
Michael Ellis
What the hon. Lady wishes to do is to draw politics into this matter. I would respectfully suggest to her that her drive to remove the Prime Minister will fail. The reason is that she focuses on personalities rather than on politics and policies. If she wishes to change the Prime Minister, she needs to win a general election in order to do so. This mechanism is not suitable for the party politics that she wishes to play.
Jess Phillips (Birmingham, Yardley) (Lab)
I wonder if the Minister has seen his own Government’s “Enough” campaign about abuse and harassment, which literally has an image of a drunk in a pub groping someone. The line is that, “This is enough” and that people should step in and do what they can. It does not say, “Wait until a completely independent inquiry has gone on, while you’re in a pub with a gropey man— until you can try and do anything about it.” The Minister has stood in here today and sought to use the standards bodies in this House, which he was not in the meetings for—I was— and which were set up to protect people and to look after victims. Whether it is the Sue Gray report or the ICGS, there is always something that is meant to be for the standards for the public, but a Minister stands there and leans on that to try to get out of basically telling untruths to the public, allowing sycophancy rather than morality to be the reason why people are given their jobs. My question to the Minister is: if it had been me giving out those jobs, does he think the MP for Tamworth would have been able to get one?
Michael Ellis
I would expect of the hon. Lady perhaps more than she would expect of me. By that, I mean that I would expect her to act fairly. I hope that answers her question. If she was in that position of responsibility for making decisions about appointments, I would expect her to act fairly, full stop.
Lloyd Russell-Moyle (Brighton, Kemptown) (Lab/Co-op)
It seems that the problem we have is many processes, all of which lead back to the personal discretion of the Prime Minister. Is it not the case that we need a single, unified process, without the engagement of the Prime Minister or internal party documentation or machinations, where light is shone on this, and which protects the victims and the accusers rather than the abusers? Is it not the case that we need that now, away from the Prime Minister and independent of this place and himself?
Michael Ellis
I have already adumbrated that there was an exercise within the Foreign Office at the time. The reality of the matter is that there was a process that was undertaken.
Mr Alistair Carmichael (Orkney and Shetland) (LD)
In response to Sue Gray’s interim report, the Prime Minister announced that he would set up an office of the Prime Minister to address what she had identified as “fragmented and complicated” leadership structures that, in turn,
“led to the blurring of lines of accountability.”
Given the variety of conflicting accounts that we have heard in the past few days, how does the Minister think that has worked out?
Michael Ellis
If the right hon. Gentleman is asking me about machinery-of-Government processes and changes, that is not within my area of responsibility, but he knows what has been said about that. There is work going on all the time to look at machinery of Government and no doubt that will continue.
Sarah Jones (Croydon Central) (Lab)
We now seem to be in a position where No. 10 have just admitted that the Prime Minister was told about the upheld complaint, but he forgot. Has the Minister ever found himself in a position where he did not immediately recall being told of an upheld complaint of sexual harassment against a fellow Minister?
Michael Ellis
I would ask the hon. Lady to understand that a Prime Minister has myriad urgent and pressing responsibilities. He may be told literally hundreds of things in any one day. The reality of the matter is that I cannot speak exactly to somebody else’s mind, whoever that person may be. But if she says to the House that she has never forgotten anything, or asks whether I have ever forgotten or misremembered something, I do not accept that.
Luke Pollard (Plymouth, Sutton and Devonport) (Lab/Co-op)
There is real concern among staff and Members of Parliament about a culture within Westminster that protects abusers and does not encourage victims to come forward. We see here potentially the start of an unlocking of a type of abuse that has been common in Westminster for far too long, of men abusing other men, particularly young men. That is a scandal that will run for miles and miles, because it has been overlooked and deliberately hidden and those behind it have, in some cases, had the very highest people protecting them, through forgetting that things have happened. Will the Minister give us assurance now that he will treat a sexual abuse attack on a man in the same way as he would an attack on a woman, and make clear that there should not be a single Member of Parliament in this place, in any party, who is guilty of that?
Michael Ellis
The hon. Gentleman is completely wrong. There is no such culture either in this legislature or in the Executive. I have already said from this Dispatch Box that any victim should come forward about any incident at any time, and make themselves known and make their complaints. All are treated equally and will be treated equally. I have prosecuted personally cases in court. He asks me about that; there are a few barristers in this House who have been in criminal practice, and I am one of those who has prosecuted individuals for sexual assault and other criminal offences. So I am very alive to the issues generally, and I ask him to accept that we all come to this House in good faith to do the best we can, for our constituents and to look after those who work for us. Where there are failings, it is incumbent upon us to do the best we can to remedy and rectify those failings. That does not mean that we expect perfection in all cases, but it means that we should act fairly and reasonably at all times and do the very best we can.
Chi Onwurah (Newcastle upon Tyne Central) (Lab)
My constituents are facing a cost of living crisis made worse by underfunded, slashed public services. Does the Minister agree that, in the interests of the most efficient use of public funds and public service time, it would be best to open one commission to identify and investigate the occasions on which the Prime Minister has actually told the truth?
Michael Ellis
The hon. Lady mentions her constituents and mine and the focus on cost of living, but I am afraid that the Labour party has requested and been granted numerous hours in this House, which I have had the honour of responding to from this Dispatch Box, not to ask about or debate cost of living, but to debate personalities. I ask her to bear in mind, if she is asking about the time of this House, what her party has been focusing on—and it is not the global cost of living crisis.
Wayne David (Caerphilly) (Lab)
The events of the past week show that the Prime Minister is sadly lacking ethics. Will the Minister confirm that it is still the Prime Minister’s intention not to appoint an independent ethics adviser?
Michael Ellis
I have no idea what the hon. Gentleman is referring to. I do not recall at any point anyone’s saying that that would be the case. I cannot confirm something that I do not know to be the case. In fact, on the contrary, the Prime Minister is focused on ensuring that proper mechanisms are in place to uphold all standards in public life.
Catherine West (Hornsey and Wood Green) (Lab)
I give the Minister another opportunity: will there be another ethics lead appointed by this Government?
Michael Ellis
I think we have said that arrangements will be put in place. [Hon. Members: “When?”] In due course.
Catherine McKinnell (Newcastle upon Tyne North) (Lab)
Quite frankly, this stinks. The Minister does us all a disservice today, because standards in public life do matter, despite what anyone on the Government Benches might say. People need to be sure that the people who make decisions and work in organisations that work on their behalf can be trusted, and we no longer have an independent ethics adviser since he resigned. Does the Minister not believe that it is urgent that a new ethics adviser is found and put in place, because otherwise how can anyone trust this Government to uphold standards and investigate breaches effectively?
Michael Ellis
I have already said that the matter is being given the closest attention by the Prime Minister and by Downing Street. We do focus on standards in public life, as we do, as I have adumbrated before, in the list of matters that are available to those who seek to make complaints and wish to make complaints. In the interim period, people can make complaints to their permanent secretary, or the permanent secretary of the relevant Department, and that appears to be what happened in this case in 2019.
Andy Slaughter (Hammersmith) (Lab)
The Minister has stated that the Prime Minister’s current defence in this matter is, “I was told but I forgot.” The Minister mentioned his time in practice. If a client had produced that defence, what advice would he have given him, and would he have put him in the witness box?
Michael Ellis
If anyone should go into the witness box, it is those on the Labour Front Bench. The hon. Gentleman seeks to challenge this party, but it is this party that delivers what the people of this country want. It is this party that secured the largest majority since the 1980s at the last general election, and it is this Prime Minister who will go on to fight the next general election. It is about policies, not personalities, and the hon. Gentleman wishes to make political points out of a serious allegation.
Charlotte Nichols (Warrington North) (Lab)
Around one in three women and one in seven men are survivors of sexual violence. Many of them will work on the parliamentary estate, and whether we know it or not, they may be sitting in this very Chamber right now. What assurances can the Paymaster General give those survivors here and across the country that Parliament is a safe place to work and this Government are fit to govern, given the gaslighting that we have been subjected to today from the Dispatch Box, and the fact that Cabinet Ministers, including the Justice Secretary, are happy to go on national television and obfuscate and minimise the severity of allegations of this nature for as long as the alleged perpetrators are sufficiently loyal to the Prime Minister?
Michael Ellis
Obviously no one has, from this Dispatch Box or anywhere else, done what the hon. Lady alleges. The fact of the matter is that not everyone who disagrees with the hon. Lady is being dishonest. She needs to recognise that there is a version of events that every individual has. She wishes to make political points and claim that there is dishonesty involved. There is a difference of recollections in some cases—a difference of circumstances. That does not mean that the party that disagrees with her is dishonest.
Gerald Jones (Merthyr Tydfil and Rhymney) (Lab)
Over the past week, we have heard the Prime Minister talk about no allegations, no specific allegations and no serious specific allegations. The response is changing on an almost daily basis and we now know that none of those responses was true, and were ever-changing smoke and mirrors. Why do this PM and Government have such a problem with truth and honesty?
Michael Ellis
This Government do not have the problem that the hon. Gentleman particularises. In fact, it is the Labour party that needs to look to its own soul when it takes the sanctimonious position that it has done. I am sorry to say that there are examples in the Labour party and it takes a high moral tone that I do not think is fitting.
Rachael Maskell (York Central) (Lab/Co-op)
The Minister may enjoy being pedantic in defending the Prime Minister, but the cover-up he is defending has resulted in reports of sexual assault. Today we are witnessing the Minister obfuscating and misusing his power. Is it not time that withholding information about misconduct, including sexual assault, results in immediate suspension of those individuals and that this misuse of power and safeguarding is brought into sharp focus and immediately handed over for independent investigation?
Michael Ellis
Disagreeing with the hon. Lady is not dishonest. The fact of the matter is that she simply seeks to make political points, and the reality of the matter is that they will not work and they should not work, because this matter is too important for that.
Points of Order
(2 years, 4 months ago)
Commons ChamberRead Full debate Read Hansard Text Watch Debate
Chris Bryant (Rhondda) (Lab)
On a point of order, Mr Speaker. The Minister has said repeatedly that there is an investigation ongoing. He has absolutely no means of knowing that, because the ICGS process is entirely confidential, and indeed it is important that it is kept confidential. Even the fact that there is an investigation is confidential. I hope that you can confirm that, Mr Speaker, because it is so important to the victims, in particular.
Mr Speaker
I can concur that that is correct. It is on the record and it is there for others to note when we have further debates so that they take it into account.
Catherine West (Hornsey and Wood Green) (Lab)
On a point of order, Mr Speaker. Once again, it returns to the question of not getting answers. I would be very grateful for your guidance on how we as Members can secure satisfactory answers. On two occasions now, I have tabled written questions relating to the Department of Health’s links with the Beijing Genomics Institute, following its failure to answer properly a question tabled by my predecessor as shadow Asia Minister, my hon. Friend the Member for Aberavon (Stephen Kinnock). My first question, tabled on 13 January, was ignored until the House rose for Prorogation on 28 April. I subsequently tabled a follow-up on 18 May, and to date I have only received a holding response. These are vitally important questions relating to our national security and this is not good enough. Will you please advise, Mr Speaker, on how the Government should answer these questions?
Mr Speaker
I thank the hon. Member for giving me notice of the point of order. Of course, I am hoping that Ministers will have heard it. It is certainly on the record. The hon. Member might also consider raising it with the Procedure Committee, which monitors the performance of Government in answering questions. I say quite clearly to the Government that they have a duty to answer all Members of Parliament, whichever side of the House they come from. They should be diligent in making sure that questions are answered as promptly as possible.
Clive Efford (Eltham) (Lab)
On a point of order, Mr Speaker. I am concerned that the House may have been misled inadvertently, at least by omission. The Paymaster General asserted that the Prime Minister did not recall that he had been advised by a civil servant about the previous issues regarding the right hon. Member for Tamworth (Christopher Pincher) because he forgot, but my understanding is that meetings with civil servants are a matter of record, and his private office would have investigated that. So how do we get redress, because surely it was investigated? What was in that record and who told who about it?
Mr Speaker
I am not going to continue the debate; we have got through it. The hon. Member has certainly put his point on the record, and, knowing him, I do not think he will leave it at that; I am sure he will tickle out further answers we go on.
Mr Peter Bone (Wellingborough) (Con)
On a point of order, Mr Speaker. Could you give guidance to the House? The Opposition are apparently very cross with the Government at the moment. Is there any reason why the Opposition cannot move a vote of no confidence in the Government?
Mr Speaker
You know the answer; that is why you asked the question. I do not think it was just about one side. You were there, and you put up a good defence, but I think you are a lone batter today.
Kinship Care
Tuesday 5th July 2022
(2 years, 4 months ago)
Commons ChamberRead Full debate Kinship Care Bill 2022-23 View all Kinship Care Bill 2022-23 Debates Read Hansard Text Watch Debate
A Ten Minute Rule Bill is a First Reading of a Private Members Bill, but with the sponsor permitted to make a ten minute speech outlining the reasons for the proposed legislation.
There is little chance of the Bill proceeding further unless there is unanimous consent for the Bill or the Government elects to support the Bill directly.
For more information see: Ten Minute Bills
This information is provided by Parallel Parliament and does not comprise part of the offical record
Munira Wilson (Twickenham) (LD)
I beg to move,
That leave be given to bring in a Bill to provide for a statutory definition of kinship care; to make provision about allowances and parental leave for kinship carers who take on responsibility for children whose parents are unable to care for them; to make provision about education in relation to children who are looked after by a kinship carer; and for connected purposes.
April—not her real name—is a constituent of mine. When her sister, who had bladder cancer, died, she left behind five children, all boys. The youngest was aged just five. His birth father was estranged and his stepfather had left the family when his mum got the terminal cancer diagnosis, leaving April’s nephew traumatised and with developmental delays. Shortly before April’s sister passed away, she asked April and her partner if they would look after her youngest son. Of course, they said yes. They would do anything to protect him. Before social services got involved, she and her partner welcomed in a new member of their family, but this decision came at a huge financial and personal cost.
April was already contending with illness and disability in her family. She needed financial and practical support for her nephew, so she asked the council to pay for his therapy. The council officer said, “You did the right thing in taking in the child before you were asked to. This is the best place for your nephew to be, and you’ve saved us a lot of time and money. But this is a private family arrangement, so we have no legal duty to help you. There’s nothing we can do.” Had April not stepped up to look after her nephew, he would have ended up in local authority care. She has saved the taxpayer tens of thousands of pounds a year and likely ensured a more positive outlook for him. Yet because she did the right thing, she gets nothing in return for his living costs or to manage his mental ill health.
April is not the only one. Every year, thousands of grandparents, aunts, uncles, siblings and family friends step up to support a child whose parents are not able to care for them. Several kinship carers are watching in the Gallery today. They turn their lives upside down to provide children with a loving, stable home. For most of them, welcoming in a child is not a choice they make, but an instinctive reaction out of love to a dramatic, often overnight change in circumstances: a death in the family, domestic abuse or a similar situation. As the hon. Member for Denton and Reddish (Andrew Gwynne)—a kinship carer himself—described it to the all-party parliamentary group on kinship care, which he chairs, it is the “social services stork” that turns up unannounced at the door one night asking someone to take a child in.
Kinship carers do this even though their own financial situation may be unstable. Around half of kinship carers are grandparents, relying on their hard-earned pension savings. One in three kinship carers is non-white. Yet the benefits to children of living with friends and relatives they already know are immense. Compared with care leavers, they are more likely to have better mental health, to have better exam results and to hold down a job. It is why in Australia kinship care is the preferred option when a child cannot be looked after at home by their birth parents.
Kinship care is the Cinderella service of our children’s social care system—too often ignored. The Government have created a system full of unfairness and uncertainty, leaving some of the most vulnerable families without help. For carers such as Kim, another constituent of mine, who has a special guardianship order, the council has a duty to assess her financial needs. However, unlike for foster carers, any financial support is means-tested, discretionary and reviewed regularly. She told me:
“At the last review, we were told that we didn’t qualify for an allowance, even though our costs had increased and my income had reduced due to the pandemic. I challenged this and we now receive about half of what we used to get. It is a help, but it does not cover all the extra costs we need to find.”
However, others, such as April, are not legally entitled to anything. A survey published last week by the charity Kinship found that just 6% of kinship carers with an informal arrangement receive help. Those carers who do receive allowances are paid on average £40 a week less than the national minimum allowance for foster carers. That is bad enough, but the Government’s failure to tackle the cost of living crisis is only making the situation harder. Kinship’s survey this year found that 44% of kinship carers could not pay all their household bills. More than a quarter could not afford food for their families.
April’s partner, who was training to be a police officer, was told by the council that he should give up work. Studies show that between 30% and 40% of carers leave employment completely after taking on a child. Kinship carers do not get the same rights to employment leave as adoptive parents do. They must rely on the goodwill of their employers.
The unfairness is also reflected in our education system. If a child in kinship care was previously looked after by the council, their school receives pupil premium plus funding, but if a relative takes in a child to prevent them from becoming looked after in the first place, the school loses out. The relative’s generosity in stepping up at the earliest opportunity is punished by the state.
I fervently believe that every child should get the best start in life. The Bill I am introducing today includes four proposals to ensure that kinship carers get the financial and practical support their children need. First, all kinship carers should receive weekly payments equal to the national minimum weekly allowance that foster carers receive. Secondly, kinship carers should be entitled to paid employment leave when a child starts living with them, just as happens when a family adopts a child. Thirdly, children in kinship care should have the same support as looked-after children in our education system, such as pupil premium plus, virtual school heads and priority in the admissions process. Finally, those things should be underpinned by a statutory definition of kinship care that will act as a gateway for carers to access the rights I have just mentioned.
I am grateful to the Family Rights Group and to Kinship for their help with this Bill and their long-standing campaigns on these proposals. Voices from all sides of this House have recognised that the current situation is unsustainable. The Government’s own “Independent review of children’s social care” has called for change. We on the Liberal Democrat Benches will stand up for all carers in this country of all kinds. My right hon. Friend the Member for Kingston and Surbiton (Ed Davey) has spoken movingly in the past of his “amazing nana and granddad” who took him in after his mother passed away. We speak from the heart when we say that we want to be the voice of carers in this place.
I am glad to see the Under-Secretary of State for Education, the hon. Member for Colchester (Will Quince), in his place. When I raised the issue of kinship carer allowances with him in the Chamber in May, he told me that
“it can be advantageous…to invest in that family member to avoid the child going into care”.—[Official Report, 23 May 2022; Vol. 715, c. 42.]
I completely agree with him, but I know that his colleagues in the Treasury will be concerned about costs or providing a sufficiently watertight definition of who is a kinship carer. However, neither of these problems is insurmountable. On average, it costs about £72,500 a year to put a child in local authority care. If we provided every child in kinship care with a social worker and a weekly allowance, it would cost the taxpayer just over half that. We know that there are systems already in place in the Department for Work and Pensions to recognise kinship carers for the purposes of the two-child benefit cap.
For most kinship carers, welcoming in a child is an unexpected, life-changing decision, but one they would make again in a heartbeat. Ian, a constituent of my hon. Friend the Member for Oxford West and Abingdon (Layla Moran), said:
“Having my granddaughter in the house gave us a new lease of life. It’s great, we love it.”
However, he also recognised how much harder it would be for those in much more difficult circumstances. Surely we owe it to these children who have been through so much, and these carers who have sacrificed so much and have saved the taxpayer so much, to give them the financial and practical support they deserve and need to flourish. Let us step up for kinship carers and support every child to get a better start in life, no matter their background.
Question put and agreed to.
Ordered,
That Munira Wilson, Ed Davey, Robert Halfon, Stella Creasy, Tim Loughton, Sarah Olney, Layla Moran, Mrs Emma Lewell-Buck, Helen Morgan and Richard Foord present the Bill.
Munira Wilson accordingly presented the Bill.
Bill read the First time; to be read a Second time on Friday 17 March 2023, and to be printed (Bill 134).
Estimates Day
Cost of Living
(2 years, 4 months ago)
Commons ChamberRead Full debate Read Hansard Text Read Debate Ministerial Extracts
Sir Stephen Timms (East Ham) (Lab)
I am grateful that we have been granted this debate to discuss the spending of the Department for Work and Pensions. We are all familiar with the facts of the cost of living crisis: price rises are accelerating and inflation in May was the highest since 1982—the highest for 40 years—at 9.1%. In France, inflation was 5.8% and in the eurozone, it was 8.1% on average, so we have a particularly acute problem in the UK. The Bank of England Monetary Policy Committee said last month that it expects inflation to rise to slightly above 11% in October.
In the light of those rapidly increasing costs, the Chancellor announced measures to support households in February, March and May. I warmly welcome that support, which is valued at £37 billion. Two of the support measures that he announced are funded by the DWP and are therefore a focus of this debate: first, the £650 payment for households receiving means-tested benefits, and secondly, the £150 payment for people receiving disability benefits.
I understand that the DWP will pay the first £326 instalment of the £650 payment in the second half of this month. The qualifying day for that—the day on which someone had to have been claiming means-tested benefits—was 25 May. The qualifying day for the second instalment has not yet been announced, but I gather that it will be no later than 31 October. Those payments will be tax free and will not affect other benefit awards. I particularly welcome the fact that, as the Secretary of State confirmed to me in the debate on the recent legislation to enable the payments, they will not be constrained by the benefit cap.
The other measures that the Chancellor announced in May, which are not legislated for by the Social Security (Additional Payments) Act 2022, include two extensions of existing programmes for which DWP is responsible. First, pensioner households will receive a one-off £300 pensioner cost of living payment as a top-up to their winter fuel payment, which will cost in total £2.5 billion. Secondly, there will be an additional £500 million for the household support fund for local authorities to make discretionary payments to people in need—some £421 million for England and £79 million for the devolved Administrations through the Barnett formula. That will cover the period from October this year to March next year.
The household support fund was originally announced in September 2021 with £500 million for local authorities for the six months from October 2021 to March 2022. It was extended with another £500 million for the following six months from April to September this year. I will say more about that later as a relatively new feature of the estimates.
It is worth pausing to reflect on the fact that, although the Chancellor’s announcements are welcome, there are still some concerns. The Resolution Foundation estimates that the
“measures announced this year to support households will in effect offset 82 per cent of the rise in households’ energy costs in 2022-23, rising to over 90 per cent for poorer households.”
It is a substantial response to a substantial problem. The Treasury says that households with incomes among the lowest 10% of all households in England will gain just under £1,200 a year on average as a result of the package, while those among the top 10% will gain around £700 a year on average—significantly less. That strikes me as a broadly appropriate distributional impact.
There are some caveats—for example, the payments are per household. As Save the Children and others have pointed out, larger families will not get any more support than smaller ones, even though children in larger families are at much greater risk of being in poverty. Nearly half—47%—of all UK children in a family with three or more children were in poverty in 2020, so that has a big impact.
The Joseph Rowntree Foundation made the point that:
“One key group who has lost out are unpaid carers”.
We have just debated kinship carers. Only 59% of the 1 million people who claim carer’s allowance also claim means-tested benefits, so the other 41% will not get any additional support through the package. I applaud the Welsh Government’s initiative to provide an additional £500 payment for carers in Wales, and I think consideration should be given to comparable additional support elsewhere in the UK.
People waiting to be assessed for a personal independence payment cannot access the £150 payment. People wait on average five months to be assessed and receive a decision, and some 300,000 people are waiting at the moment. We might think that they ought to be getting some help, but they will not. People waiting for a work capability assessment will not get the payment either. The backlog for work capability assessments for universal credit is not published, so we do not know the size of it, but we know that there is one.
In April, as we all know, inflation-linked benefits were increased by 3.1% in line with the increase in the consumer prices index last September. When the uprating took effect, however, inflation was already over 7% and, as we have been reminded, it is now expected to rise to 11% this year. The Secretary of State previously told the Work and Pensions Committee that she does not favour one-off payments of the kind that the Chancellor announced in May. She is right: welcome though the Chancellor’s announcements are, I agree that it would be far better to have an uprating system that works properly, rather than having to resort to these stopgap measures to deal with the emergency.
Universal credit can be updated quickly, as we saw when lockdown hit, but the legacy benefits cannot be. The permanent secretary told the Select Committee last week that the problem is that uprating programs can only be run at weekends, when the computer systems are not doing other jobs, and that is apparently why it takes such a long time to implement the uprating of the legacy benefits. We have already called for those older systems to be improved urgently, and for the gap between assessing inflation and uprating benefits to be reduced. The need for that to happen is now even clearer, given the problems that we have run into this year.
The crisis is also exposing a much bigger and longer-term problem, which is the continued failure to keep the level of benefits in line with inflation. That is a consequence of successive policy decisions over the last 12 years. The chief executive of the Resolution Foundation said yesterday that the headline rate of benefit for someone who is unemployed is now 13% of average earnings, and that that is the lowest level it has ever been. That is lower, I think, than when Lloyd George introduced unemployment benefit for the first time in 1911.
Nobody should be surprised that so many are having such a hard time; there is no resilience in the support that is being provided, because the level is now so low. We have asked Ministers to explain the reason or thinking behind setting the benefits so low, and all we have been told is, “Well, we uprated it that year, we did not uprate it that year, and this is where we’ve ended up.” There is no rationale for the situation that we have found ourselves in where, in real terms, the level of benefits is at its lowest for more than 30 years.
Citizens Advice North Lancashire, one of the organisations that contacted the Select Committee, told us that
“one-off payments are not a solution to inadequate benefit levels.”
It is right about that. It went on:
“Our detailed research…on Universal Credit from across Lancashire…shows that Universal Credit is not enough to live on in Lancashire. Benefit payments urgently need uprating so that people who cannot work can afford to live off them.”
The Select Committee has agreed to look at the longer-term issue of benefit levels in an inquiry in the coming months, and we will be considering these issues carefully.
I want to comment today on two specific features of these estimates. The first is the household support fund. As I have said, the Chancellor’s package included an additional £500 million for the household support fund, bringing the total amount in that fund to £1.5 billion since October 2021. It is administered by local councils in England, and each council sets its own eligibility criteria.
The grant conditions set by the Government are, frankly, pretty vague. They specify that assistance can be issued by the authority itself or through a third party. One third of the grant is to support households that include a child, another third is to support households that include somebody of state pension age and the balance is for everybody else. It is for support with food, energy and other essential living needs. In a so-called exceptional circumstance, the household support fund can be used to support housing costs.
Local authorities have to submit a statement of grant usage to the Department with plans of how they are going to spend the money, and they are supposed to maintain an adequate audit trail for how they do in fact spend it. We asked the Secretary of State about that at the Select Committee last week, and she told us that local authorities have to make two returns a year to the Department about what happens to that money. I think that information is supposed to be published, but as far as I can see, no information has been published about how the household support fund has been used. The truth is that we know very little about what has happened to that £1.5 billion.
One thing that money could be used for is supporting families with no recourse to public funds, some of whom have been in a desperate situation in the last two years. When asked if the household support fund can he used for that, given that it is a public fund, Ministers—absurdly—say that local authorities should take their own legal advice to find out. At the very least, there must surely be clarity about what councils are allowed to do with this funding.
It may well be that the household support fund is playing a valuable role—I imagine it very likely is—but we just do not know, and we should. If there is to be continued use of discretionary funds such as this, instead of uprating benefits properly, the Department must at least work with councils and develop a clear reporting framework for the household support fund to provide assurance that it is being used effectively and that the support is getting to where it is most needed, because at the moment we just do not know. It would be far better to have an effective and reliable system for uprating the level of social security benefits, so that we do not have to resort to these stopgap measures in situations such as the one we are in at the moment.
The second point I want to pick out is about the benefit cap. The cap has not been changed since 2016, and in 2016 it was lowered. It continues to limit overall annual benefit support for a family to £23,000 in London and £20,000 across the rest of the UK, with comparable figures for a single person of £15,410 and £13,410 respectively. The new cost of living payments will not be constrained by the benefit cap, and I warmly welcome that. I think this sets an important and welcome precedent. It recognises that families up against the cap—and there are over 100,000 of them at the moment—are seeing their costs rising like everybody else.
Given the uprating expected next April, based on the rate of inflation expected in September, the Child Poverty Action Group has estimated that
“an additional 35,000 households will become capped overnight, resulting in a total of around 150,000 households capped in April 2023”.
The North East Child Poverty Commission also contacted the Select Committee, and it told us:
“The benefit cap impacts a relatively small number of households in the North East (fewer than 5,000)…almost all…are families with children…but they are being prevented by the cap from receiving all the support they have been assessed as needing. We urge the Government to lift the benefit cap.” The Government have a statutory duty to review the level of the benefit cap every five years. Until March this year, the obligation was to review it in every Parliament. The last published review of the benefit cap was in 2014, which was eight years ago. The cap was lowered in 2016. The Secretary of State, when we asked her about this last week, could not tell us when it was last reviewed. If it has been reviewed within the last five years, the review certainly has not been published, despite promises to the Select Committee that it would be—and of course it should be. The Government should be open about their thinking in this area.
When the benefit cap was introduced in 2013—my hon. Friend the Member for Westminster North (Ms Buck), who is on the Front Bench, and I were in the Committee that debated this before it took effect—the income threshold was set at median full-time earnings, which at that time was £26,000 a year. Since then, it has been reduced, and of course median full-time earnings are very different now from what they were in 2013 anyway. The level of the cap now bears no relation at all to any particular earnings level.
I warmly welcome that the cap will not apply to the additional payments announced by the Chancellor. That is an important precedent, recognising that families at the benefit cap will be hard hit too. However, with inflation at over 10%, it is imperative that the cap is reviewed ahead of next April’s uprating. It needs at least to reflect average household incomes, as it initially did—it needs to bear some relation to them, surely—and take account of increasing rent, energy and food costs. I urge the Minister to be open with the public and to publish the outcome of that review. The Chancellor’s package means relief from the benefit cap for tens of thousands of families this year, but next year the cap will be back and presumably there will not be any further additional payments from the Chancellor. The level of the cap must be raised before next April because if it is not, the consequences will be dire.
I am very grateful for this opportunity to debate the very important estimates that the Government have provided for us. They make such a big impact on millions of our fellow citizens, and it is vital that such decisions about them are the right ones.
Chris Stephens (Glasgow South West) (SNP)
It is a pleasure to follow my good friend, the Chair of the Work and Pensions Committee, the right hon. Member for East Ham (Sir Stephen Timms), and it is a pleasure to be a member of that Committee in holding the Government to account. I of course refer to my entry in the Register of Members’ Financial Interests, particularly my role as chair of the PCS parliamentary group, as I will have some things to say about the office closures issue.
I want to start with the Secretary of State’s appearance at the Work and Pensions Committee last week, when she said that, on Thursday, she was going to meet her officials to discuss a second remedial order on bereavement support benefits for cohabiting couples. This is a very important issue, and we have had many great campaigners, including my Glasgow South West constituent Ailsa MacKenzie, who has been in the vanguard of pushing this issue. I hope the Minister will update the House on that issue, because it affects many thousands of people. The quicker we get the remedial order laid down, the quicker people can start receiving those bereavement support payments, which will no doubt help them deal with the cost of living crisis.
Let me touch on what I think lies at the heart of the problems in the Department for Work and Pensions: the start of the claim, the five-week wait and the deductions that come with that. The Minister responded to a written question from me, and the figures are becoming increasingly alarming. Ever since, I have periodically tabled such questions, and the number of deductions and the amount deducted have increased over the past 18 months. A total of £11 million a month is now being taken off claimants as a result of deductions. In my view, that has become a poverty tax.
For example, figures show that in February this year, 189,000 households in Scotland—an increase of 9,000 in just three months—had an average of £60 deducted from their social security payments. That is mainly to pay back the loans issued by the Department to cover the five-week wait at the beginning of a new claim, but some of it is due to overpayments, which include the Department’s errors. I hope the Department will look at that issue, because there is already case law when it comes to pay. By law, if there has been a mistake and someone has been overpaid, the employer cannot take that back. I suggest that if the Department has made a genuine error, it should not be deducting payments from future claims. I hope the Government will look at that, because a number of organisations have said that a deduction should not be made if the Department for Work and Pensions is to blame.
Kirsty Blackman (Aberdeen North) (SNP)
Does my hon. Friend share my concern about the lack of reassurance regarding top-up payments, as announced by the Chancellor last week? We may end up in the same situation, because if DWP accidentally gives that money to someone, it might try to claw it back, putting people in an even worse state of poverty than they are in already.
Chris Stephens
I share that concern, and I hope the Department will respond positively to the concerns that hon. Members, including my hon. Friend the Member for Aberdeen North (Kirsty Blackman), have raised.
On departmental error, taking £60 a month from people who require state support can be the difference between whether they can buy food or not, or whether they can heat their homes. I am sometimes a bit concerned about the phrase “heat or eat”, because some people will now not be able to do either. That is the desperate situation that far too many people face across these islands, particularly with the cost of living being so high.
On the one-off payments, the Department appears to have conceded the point that grants are better than loans. I welcome that, but I hope it will now look seriously at the report by the Work and Pensions Committee about the five-week wait and introduce a non-repayable grant—a starter payment, as we call it—within two weeks of the claim. That would stop people getting into debt as a result of deductions, and I suggest that it would save money on administration, compared with paying people after five weeks and then deducting £60 a month from them. It seems a false economy to insist on continuing the five-week wait, and then going back and deducting money from people’s claims.
A good friend of mine, Andrew Forsey, director of the charity Feeding Britain, which is involved with Threehills community supermarket in Glasgow South West, recently said:
“Last year, figures like these prompted the DWP to lower the cap on deductions and double the length of time people had to repay those upfront loans. What these latest figures show is that there remains a lot more work to be done, to bring these deductions down still further, if people are to have the money they need each month to put food on the table.”
The Chair of the Work and Pensions Committee mentioned no recourse to public funds, and I agree with what he said. I hope the Department will look seriously, once again, at the Committee’s report that recommends extending child benefit to all children, irrespective of their parents’ immigration status. The right hon. Gentleman laid that out well, and, as someone who represents a city that has signed up to the Home Office’s asylum seeker dispersal scheme, I know this is a very real issue. In areas where asylum seekers have become refugees, it was certainly an issue during covid. I hope the Department will go back and look at that.
We need more resources to go into ensuring that those who are entitled to pension credit receive it. It is reckoned that between 65% and 70% of people who are entitled to pension credit receive it. I would like the Department to do more work on that, and I would like more resources to go into working with pensioners’ groups and various third-sector organisations to ensure that those who are entitled to pension credit get it. It seems to be a very real issue, and some of the statistics from the independent charity Age UK about the amount of unpaid claims for pension credit suggest that the figure is far too high; it is in the millions. Frankly, that pension credit could do a lot of good for pensioners who are dealing with increasing food and fuel costs.
Finally, let me raise my concern about office closures by the Department for Work and Pensions; I know that you also have a constituency interest in this subject, Madam Deputy Speaker. We have Government offices in areas of high economic deprivation, and the Department is one of the largest employers in some constituencies, but it wants to close those offices. That will not just impact on people employed by the Department, although of course it will do that, but have a wider effect on the economy. Many small businesses round and about those offices rely on custom from people who work in the Department, and I refer the Minister to my hon. Friend the Member for Glasgow North East (Anne McLaughlin), who has done a survey on this issue in relation to the proposed closure of the Springburn office.
The Department seems to want to take out far too many of the 91,000 jobs that the Government want to cut. The Department responsible for employment and helping people get into work really should not be laying off its own workers and throwing people into unemployment; that would send completely the wrong message and make no sense whatsoever. I will leave it there, Madam Deputy Speaker, and I hope—indeed, I am sure—that I will get a positive response from the Minister to all the points I have raised.
Debbie Abrahams (Oldham East and Saddleworth) (Lab)
It is a pleasure to follow the hon. Member for Glasgow South West (Chris Stephens), and I agree with all the points he made, as I did with those raised by the Chair of the Work and Pensions Committee, my right hon. Friend the Member for East Ham (Sir Stephen Timms). I want to focus on a few key things and pick up on the point that my right hon. Friend made about the context of the revised estimates for the Department for Work and Pensions.
We need to recognise—many Opposition Members certainly do—that the cuts associated with the two major reforms to the social security system in the last 12 years have shrunk the contributions that are being made, particularly to working-age people. We know from the Resolution Foundation’s work that by 2022, the spending cuts in the Department for Work and Pensions had reduced support to working-age people by up to 17%, compared with 2010. That is the equivalent of £33 billion.
We know from the data that by 2018, UK social security spending as a percentage of GDP was below both the EU27 and OECD averages. I think my right hon. Friend mentioned that out-of-work support in 1948 was about 25% of average earnings; it is currently less than half that. Even during the pandemic, with the £20-a-week uplift to universal credit, our support was the least generous in the OECD. We like to think that we are a generous country that looks after those who need support, but our support has been the least generous, and that shames us all. The amount of support available to somebody who is out of work is only slightly more than what is recognised as destitution.
In other analysis, the Institute for Fiscal Studies has confirmed that social security and tax changes mean that the poorest 10% of households have lost 11% of their income, equivalent to £1,200 a year. For families with children, it is even worse, with a 20% loss of income amounting to £4,000 a year. The Equality and Human Rights Commission confirmed the IFS’s analysis and exposed the impact of the reforms and cuts on disabled people. For households with at least one disabled adult and a disabled child, average annual cash losses since 2010 are just over £6,500, which is more than 13% of average net income. Disabled lone parents with at least one disabled child have fared even worse, losing almost £3 out of every £10 of income. In cash terms, their average losses are almost £10,000 a year.
The all-party parliamentary group on health in all policies, which I chair, looked at the impact of the Welfare Reform and Work Act 2016 on children and disabled people and found strong evidence of an association with poverty, inequality, homelessness, food security, poor health and premature death directly as a consequence of those welfare reforms and cuts.
David Linden (Glasgow East) (SNP)
The hon. Lady hits the nail on the head. She has rightly put the scale of the cuts into context, and there is a point for the Government to reflect on here. They will think, after making cuts, “Well, that’s no longer a problem for DWP,” but in many respects local authorities such as Glasgow City Council have to pick up the burden of the resulting destitution. My local social work office in Easterhouse has to deal with the homelessness, the debt, and all the other issues that ensue from Government policies.
Debbie Abrahams
I recognise what the hon. Member says. I visited Glasgow last week—the constituency of my friend the hon. Member for Glasgow South West is there—and it was interesting to see the reforms being introduced there, particularly those for disabled people.
Many hon. Members will not be aware of yesterday’s report from Deaths by Welfare, which provided even more evidence of the impact of the so-called reforms on premature deaths and suicides. It had a timeline that showed when there had been reforms and further cuts, and what they meant in terms of deaths of vulnerable social security claimants. Another recent report shows a detrimental impact on social cohesion. The University of Newcastle quantified that, between 2013 and 2015, for every £100 lost in income per working age adult, motivated hate crimes increased by about 6%. The effects are much wider than the Government recognise.
My second point is about the pandemic. We know that people on the lowest incomes, and particularly those reliant on social security support, were disproportionately and negatively affected by covid. They were more likely to be exposed to the virus and to be infected, and they were more likely to be seriously ill and die. Within that group are disabled people. After adjusting for a range of factors including health, the Office for National Statistics has estimated that disabled people were between 1.3 and 1.6 times more at risk of death from covid. The reasons for those disproportionate deaths must be investigated in the covid public inquiry, but given the context that I have just described—the inadequacy of our social security system—the contribution of the cuts in social security support cannot be ignored.
On the cost of living package and its impact on the DWP spending estimates, of course I welcome the package, but I have just spent the past few minutes describing the context and, much though the Government congratulate themselves on what they are doing, it just about scratches the surface of the cuts that they have made. I must, as others have done, highlight some of the gaps in the package. As support is on a household basis, larger families will not get the same support as smaller families. As the Resolution Foundation suggested, in the light of inflation, a 9.5% uplift to all social security support would have been more progressive than the 3.1% awarded at the beginning of the year, and would have taken us beyond the Chancellor’s stop-start, ad hoc approach.
My concern is that the cost of living will not just be an issue this year; it will carry on—and what will the Government do then? We need principles that ensure that all social security support is uplifted to account for inflation.
As my friend the hon. Member for Glasgow South West mentioned, there are huge issues with deductions. We asked the Secretary of State about that last week. The Joseph Rowntree Foundation, StepChange and many other charities have pointed out that 4.6 million households are in arrears on at least one bill, so what is handed out with one hand will be clawed back by another. I join those charities and hon. Members in their calls to reduce the amount that can be deducted from the universal credit standard allowance; it is now 25%. I would like it to be less than 15%. When the deductions are for debts to Government—figures indicate that the Government are the largest debt collector—it would only be reasonable to reduce it to 5%.
My final point is that given the cuts in spending and the culture in the Department, our social security system does not provide the safety net that everybody thinks it does. I really like the approach being introduced in Scotland, which is not about people proving that they are entitled to support; there is trust. We should try to make that the basis of the culture in England as well.
Chris Stephens
I thank the hon. Lady, my good friend, for giving way. She mentions culture; there is also the issue that sanctions are part of that culture. It had seemed that we were persuading the Government to introduce a system in which there were warnings before sanctions, but they seem to have rowed back on that. Does that not add to the concern that she rightly raised about the culture?
Debbie Abrahams
We have spoken many times about that. My hon. Friend is absolutely right. We have a system in which there is conditionality, but I believe that there are other ways of recognising that than by taking away somebody’s income and making things even harder for them.
Christian Matheson (City of Chester) (Lab)
My hon. Friend is absolutely right, as is my friend the hon. Member for Glasgow South West (Chris Stephens). One of my constituents immediately comes to mind: he has been sanctioned for two and a half years, with multiple sanctions building up. It is abundantly clear to me, and to anyone who looks, that the sanctions regime simply does not work, and that other methods should be tried. Does my hon. Friend agree that the system is frankly inhuman, demeaning and completely unimaginative?
Debbie Abrahams
Absolutely. In fact, I got involved in trying to shift the sanctions regime when a former soldier, David Clapson, died after he was sanctioned. He missed an appointment, and he died as a result of not being able to have electricity to keep the insulin that he relied on. It is absolutely inhuman.
The cost of living support announced will no doubt help people, as it should, but we need to do far more. The system is not fit for purpose, and needs root-and-branch reform. It needs to be dragged into the 21st century. There is a lot we can learn from the Scottish system. I have said this for a while: for me, the system should, like the NHS, be there for every single one of us in our time of need. It is not, and that must change.
Wendy Chamberlain (North East Fife) (LD)
I thank the right hon. Member for East Ham (Sir Stephen Timms) and the Backbench Business Committee for granting this estimates day debate on DWP spending on cost of living measures. It is an important topic for every MP in this place, because DWP matters make up a proportion of our constituency casework, and people come to us at a time of need.
The real elephant in the room is this: the Government talk about spending to help people deal with the cost of living crisis, but we have to acknowledge that they have put some people into the positions in which they find themselves. It is all well and good providing a £650 payment to those on benefits and £300 to pensioners—I welcome that—but many of those receiving those payments have been pushed into crisis as a result of Government policies that have pulled the rug out from under them.
The Government refused to uplift legacy benefits alongside universal credit in the response to the pandemic, as the right hon. Member for East Ham pointed out. The Government told us that it was too complex to do, but given that they seem to have given it very limited consideration, we conclude that that is a political decision. We know that it affected disabled people the most because the High Court said so. Of course, disabled people and the organisations who support them did not need to be told that. They knew that disabled people were disproportionately more likely to be shielding, and as a result relying on expensive services, such as food deliveries.
The reality is that it is generally more expensive to be disabled. When I think about the cost of living crisis and, in particular, the rise in energy costs, I think about disabled people in my constituency and elsewhere who are running electrical equipment, and who need to have the heating on at times of the day when people who do not have a disability and who are mobile do not. As a result, this crisis is hitting them more acutely than others.
Kirsty Blackman
On the additional costs faced by disabled people, does the hon. Lady share my concern about the additional costs associated with specialist diets? For those with a gluten-free diet, for example, prices have increased significantly in excess of inflation.
Wendy Chamberlain
Yes, I entirely agree. I recommend to anybody who has not read it last Sunday’s article in The Sunday Times about food banks. The journalist took the time to eat a diet of what is provided in the emergency packages. It is not particularly healthy, but it is food, and I am hugely grateful that it is there. I co-chair the all-party parliamentary group on ending the need for food banks, and I am hugely grateful for the work that food banks do, but trying to meet specialist needs and requirements is very difficult for a charity run by volunteers. We should ensure that people have what they need to meet their medical requirements.
I am sure that many Members will refer to this, but the refusal to keep the universal credit uplift has taken away £20 a week from people who were already struggling. No taper, and no additional grants, will make up for that. When the Chancellor introduced the uplift, he said it was to reinforce the safety net. To some extent, that worked. In research by the Trussell Trust, the secretariat for the APPG, 70% of people said the increase in universal credit made it easier for them to afford essentials. Very quickly—this is my last point on the APPG—our call for evidence on the different responses to the need for food closes on 8 July, so if anybody would like to contribute evidence, we would love to hear from them.
The decision to remove the universal credit uplift at the end of lockdown restrictions, when the economy reopened and there was an expectation that people could take on more work, revealed the Government’s true thinking. It was an implicit acknowledgement that it is impossible to live on the current rate of universal credit, and that that would become abundantly clear to voters who started claiming benefits for the first time during the pandemic. The Government’s taking away the uplift clearly shows that they think that poverty payments are acceptable for those who rely on universal credit in the long term, either because they do low-paid but vital work such as caring, or because they cannot work full time for any other reason—there are many other reasons, as we all know from our case loads. I would like to know why the Government think that a reinforced safety net is needed for some people in our society, but not others.
I want to mention, as others have, unpaid carers, who are another left-behind group. Carer’s allowance is £69.70 per week. We do not accept jobs that pay less than £2 per hour, so why do we think it is acceptable to ask unpaid carers to accept that? Earlier, when my hon. Friend the Member for Twickenham (Munira Wilson) spoke in support of her ten-minute rule Bill on kinship care, she talked about the instinct to want to help a family member in need. No matter how much we love our family, anyone who has ever been a carer will tell you that it is work. As a society, we rely on that good will, so we must support our unpaid carers. They are the backbone of our society. Where people can and want to work, they should be supported to do so. Members have mentioned no recourse to public funds, but the other side of the coin is that we do not allow people claiming asylum to work and contribute. We give them neither support nor the opportunity to support themselves.
With its earnings cap of £132, the carer’s allowance policy seems designed to keep carers in poverty. We have been waiting for two years for a report from the Government on the effect that carer’s allowance has on people’s ability to work. I hope the Minister can update the House on when we will receive that report, and will explain how Members are supposed to scrutinise Government policy properly when we do not receive the reports that would enable us to scrutinise them. I am pleased that while we are waiting for the report, there are practical steps we can take to support our unpaid carers with work and into work, and with managing their caring responsibilities. I am delighted to be bringing forward a private Member’s Bill this Session to give unpaid carers the right to take additional leave, which would help them to balance their caring and working commitments. It does not go as far as I would like, but I believe it would be the first stand-alone piece of legislation giving employment rights to carers. It would help millions of people. One thing that the Government have been trumpeting is the current low rates of unemployment, but they are not talking about the increasing numbers of economically inactive people. I argue that some of those will be carers who are unable to combine work with caring responsibilities. I hope that my Bill will give them the opportunity to do that, but—this is a big but—it is only part of the picture of supporting unpaid carers into work. I hope that the DWP will do other things to play its part.
I will briefly turn to two pensions issues, the first of which is a specific constituency matter. My constituent is being denied her full state pension because of a gap in her national insurance record. The gap exists because she worked in intelligence for the armed forces a number of years ago. When she became pregnant, she was immediately discharged from the Army, but she could not return home to Scotland because of the sensitive nature of her work. The gap is purely caused by the pregnancy discrimination that she experienced at the hands of the state. She is being told that, rather than paying her the small extra amount that she would be entitled to each year, the Government would arguably rather give it to lawyers and have us go to court. I really hope that the Government can recognise that she has experienced an injustice. I urge the Minister to meet me so that we can find a way forward for my constituent, who was serving her country.
On a much broader injustice, the WASPI—Women Against State Pension Inequality Campaign—women are still waiting to receive the money that has been denied them. As time ticks by, many will die before they receive what they deserve. Do the Government want that legacy—3.8 million women left to die, with far too many of them in poverty exacerbated by the cost of living? The ombudsman might still be reaching its conclusions on compensation, but it would be a huge comfort for the WASPI women to know that the Government plan to follow its recommendations. Will the Minister join me today in pledging to follow the ombudsman’s recommendations, when they are made, and to provide compensation to women who missed out because of Government error?
We could talk about lots in this estimates debate and Members have referred to other issues that I would want to raise. In conclusion, however, we are feeling the impact of the cost of living crisis more acutely in the UK. It is incumbent on the Government to stand up and help constituents, including those claiming benefits or who interact with the DWP, however they do so.
Madam Deputy Speaker (Dame Rosie Winterton)
I call the Scottish National party spokesperson, Kirsty Blackman.
Kirsty Blackman (Aberdeen North) (SNP)
It is a pleasure to take part in this estimates day debate. I do love estimates day; it is wonderful every time that this rolls around—I am not being sarcastic, I promise.
I will talk briefly about the shortcomings of the estimates process. We are discussing the DWP estimate today—which involves spending of £240 billion—under, I think, Standing Orders 53 and 54, which were written before I was born. We are unable to table meaningful amendments in relation to £240 billion of spending because of the way in which the Standing Orders are written. That is shocking. Has anyone here ever tried to explain the Budget process to people outside the House? Have they ever tried to explain the fact that we have to stand here and discuss hundreds of billions of pounds of expenditure without any meaningful way to amend that? It is absolutely ridiculous, flawed and deeply inadequate.
The DWP’s objectives in the main estimates book are, first,
“Maximising employment and in-work progression”;
secondly,
“Improving people’s quality of life”;
and thirdly,
“Delivering excellent services for citizens and taxpayers”.
Those are the Department’s aims for the next year. I suggest that the Government have failed and continue to fail in what they are doing. I make it clear that that is not, for a second, the fault of DWP staff, who are working incredibly hard to make the social security additional payments.
Chris Stephens
Is it not ironic that the DWP says in the main estimates book that it wants to maximise employment when it is threatening its staff with redundancy?
Kirsty Blackman
It is, and it is ironic that the DWP is asking staff to step up and deal with its creaking, unfortunate, flawed computer system. It is asking them to do all this additional work to make that happen while failing to make the investment where it should be making it, in the computer system and in the people. I am also seeing a reduction in DWP office staff in Aberdeen. I very much hope that the Government change their mind about the direction in which they are going.
We have heard from Members across these Benches about the issues affecting people’s quality of life as a result of the DWP’s failures and the failures of the Government’s policies. Loads of people have mentioned the safety net. The whole point of a safety net is that it catches people. The point is not to make the holes as big as possible so that as many people as possible fall through. I would rather have a social security system like the one that we are building in Scotland; a social security system that ensures that everybody is caught by the safety net, so that everybody gets what they are entitled to and people do not accidentally fall through. This Government’s policy seems to be to give social security payments to as few people as they possibly can and to try very hard to set the bar as high as possible so that people cannot meet the requirements.
We have heard about the Scottish social security system and its openness compared with the DWP’s system, where the report on food banks and the equalities impact assessment were buried. Audit Scotland recently audited the Scottish social security system. It said:
“The Scottish Government has continued to successfully deliver new and complex social security benefits in challenging circumstances. This is a significant achievement. There is a conscious focus on the needs of service users, building on the principles of dignity, fairness, and respect. People are positive about their experiences of engaging with Social Security Scotland.”
How different that is from the views that we are hearing down here, from what is in our inboxes, from the absolute intransigence and the issues that people face every day when simply trying to get what they are entitled to.
The social security uprating fails to get anything close to inflationary levels this year. We have seen an increase, but it is nothing close to the level of inflation. In fact, the £650 payment that the Chancellor announced does not even cover the £1,000 that was taken off people last year—never mind going any way to cover the increase in the cost of living. The Chancellor, the Minister and the Secretary of State have repeatedly said, “But people are getting more, with the £650, than they would have if we had uprated benefits”. We are asking them to do both. We are asking them to adequately uprate the benefits and backdate that to April as well as to make the additional payments. Only then can we get to a situation that is close to helping with the cost of living.
This is a tale of two Governments. We can see that another country is possible. We can see the failings, with the bedroom tax, the benefit cap and the two-child policy being carried on with. We have heard a lot about no recourse to public funds. When we discussed the Social Security (Additional Payments) Bill last week, I mentioned that children were literally starving and I was scoffed at by Government Members. If we look at reports, we see that junior doctors talk about children presenting with rickets because of the level of malnutrition, because they have no recourse to public funds, because they have been sanctioned, or because they otherwise cannot afford to eat a healthy diet. Comments have been made about the lack of variety and the lack of healthiness in the diets provided by food banks, which try incredibly hard but just cannot meet the requirements. In addition, they cannot provide food for people who cannot afford electricity. If people cannot afford electricity to boil something in a pan, it is difficult for them to cook adequately.
In the main estimates book, the Government talk about providing £5.6 billion—that is the initial spend—under the Social Security (Additional Payments) Bill. However, they mention providing £37 billion for increases in the cost of living. That £37 billion is made up of additional payments, as the Chancellor has stated, but can the Minister confirm that he is including things in it like the freeze on alcohol duty? It cannot be said that the freeze on alcohol duty relates to improving the cost of living for people who cannot afford to eat.
I am pleased to have been able to talk about the DWP estimates today. What is happening is woefully, woefully inadequate. Our constituents are coming to us and we just cannot provide them with the hope that they need and want, because the Conservatives are digging their heels in and refusing to offer adequate support.
Ms Karen Buck (Westminster North) (Lab)
This has been a short debate, but a very valuable one. As always, I pay tribute to the Chair of the Work and Pensions Committee, my right hon. Friend the Member for East Ham (Sir Stephen Timms), for framing it for us. In all the contributions, we have heard similar themes.
Notwithstanding the emergency cost of living payments in the Social Security (Additional Payments) Bill, which we debated a couple of weeks ago, and other help, we have to see the situation in the context that it has been 12 years in the making. We are now deep into a cost of living crisis that is fast eroding standards of living for almost everyone in the country, but as always, it is those with the least who are most seriously affected.
Several hon. Members have referred to research that has been brought to our attention over weeks and months. Only yesterday, new analysis by the Institute for Fiscal Studies revealed that poverty among lone parents, who are always most at risk of poverty, has risen spectacularly since 2010, reaching 49%—almost half of lone parent families are in poverty. Some 1.5 million children are being left behind their peers. Two out of three lone parents report skipping meals and going hungry. Even though parents will do anything to protect their children, including from the knowledge of the struggles that the family are going through, the children know. Children see, children understand and children are damaged by that experience. It is no wonder that the experience of living on an inadequate income, coupled as it so often is with all the shame, fear and anxiety of debt and arrears, contributes to poor mental health as well as to physical ill health and educational underachievement.
Poverty places a strain elsewhere on public services. It adds to the homelessness budget, it adds to the pressures on local authorities, it adds to the pressures on schools and it adds to the pressures on the national health service. It is also true, with a bitter irony, that it is almost invariably low-income households that are exposed to the additional costs of living in poverty.
It bears saying once more that none of these struggles is visited only on people who are not in work. Of course, people who are out of work—people who are too sick to work, people who have caring responsibilities, people who have disabilities, pensioners—deserve the support and dignity that society can offer them, but in-work poverty has soared to record levels. Despite the rhetoric, being in work is no guarantee of being out of poverty.
The Government’s response to the cost of living shock of 2022—the one-off payments that we have been debating—cannot be entirely separated from what came before. My hon. Friend the Member for Oldham East and Saddleworth (Debbie Abrahams) made that point very well. One-off payments in response to the current inflationary shock simply will not undo the erosion of benefits that has taken place as a matter of deliberate Government policy over the past 12 years.
Child benefit has been left to wither since 2010. The local housing allowance, which was designed to support people with the actual cost of housing, has been allowed to fall away from real-world rents since 2011; it was briefly restored to its normal value in response to the pandemic and has now been frozen again by the Government. More than half of households who need to turn to the Government for help with rent are above the maximum level of local housing allowance support, with an average shortfall of £100 a month. Several hon. Members have mentioned the impact of deductions arising from the five-week wait and from other sources, but the shortfall in rent is one of the principal ways in which people are driven below the minimum level on which families are meant to be able to live.
Most working-age benefits were frozen from 2016 to 2020. The four-year benefit freeze was a permanent real-terms reduction in the value of benefits, offset only temporarily by the pandemic universal credit uplift, which of course did not apply to legacy benefits. Benefits lost 7% of their real-terms value in those four years alone, and those losses have not been made good. Inflation matters all the time—not just now, when there is a sudden surge.
What does the stop-start history of benefit uprating tell us about the Government’s priorities? It tells us that they have no settled policy on social security and that they regard maintaining the real-terms value of benefits as an optional extra. It tells us that it takes an emergency—a pandemic or a cost of living crisis—before the Government will make any attempt to do what previous Governments have done as a matter of course: take account of inflation in social security policy.
Of course the emergency cost of living payments are welcome—anything that helps to offset this crisis is welcome—but coming after 12 years in which inflation was allowed to erode benefits, they cannot be seen as a comprehensive solution. The Government’s adamant refusal to bring forward next year’s benefit uprating to deal with this year’s cost of living crisis means that benefits face yet another real-terms cut in 2022-23. The Government are having to rely too much on one-off payments, which should be part of the solution but not the whole solution.
We have talked about working-age benefits, but pensioners have also taken a real-terms cut—the biggest in about half a century. There are 2 million pensioners in poverty, and the number is rising. Ministers have been promoting pension credit uprating, which is good, but that momentum needs to be maintained and expanded. With approximately 850,000 pensioners not claiming pension credit, a huge number are set to miss out. Failing to do more to increase pension credit uptake could mean that more than two thirds of the poorest pensioners will not get the additional means-tested benefit.
We need to be clear about the limitations of one-off payments. As we have heard, they do not reflect family size, so families with more than one child will get exactly the same as a single-person household. Entitlement depends on receipt of one of the means-tested benefits in the month leading up to one of the qualifying days, meaning that people’s circumstances in just two months of the year are taken into account. The problem is that people’s circumstances change all the time. The Government simply do not recognise that families and households move on and off benefits all the time. A one-off payment tied to just two dates in the year is inevitably a crude approach to matching funding to need. I am particularly concerned about how people with fluctuating incomes will fare. It seems inevitable that a large number of employed and self-employed people with low and irregular incomes will be arbitrarily denied help under the policy.
Had the Government acted earlier and brought forward next year’s benefit uprating, as the Opposition and so many others called for, they would have been less reliant on one-off payments. Had the Government not deliberately eroded the value of benefits for much of the past 12 years, we would have been in a much better position to weather this year’s inflation surge. The emergency package is welcome—any contribution to relieving the widespread hardship experienced by households across the country will be welcome—but it is deeply regrettable that the Government could not see their way to a more comprehensive, sustainable solution to the crisis of poverty that is now gripping us.
The Parliamentary Under-Secretary of State for Work and Pensions (David Rutley)
I am learning to share the joy that the hon. Member for Aberdeen North (Kirsty Blackman) takes in estimates day debates. I can feel the love and appreciation, predominantly from Opposition Members. It was good to see many hon. Members at the national prayer breakfast this morning, which I think we can all agree was a truly uplifting experience. I thank the right hon. Member for East Ham (Sir Stephen Timms) for opening this debate on behalf of the Work and Pensions Committee, which holds us regularly to account, as it should, and provides challenge. I thank members of the Committee and other right hon. and hon. Members for their contributions today.
The Government have provided and continue to provide help for households. Throughout the pandemic, the Government acted decisively to protect lives and livelihoods, continually supporting individuals and businesses. Our social security system had a key component—universal credit—which provided a vital safety net for about 6 million people during the pandemic, and stood up to those testing times. We were able to prove, in a real-life environment, how resilient the system was, and I am incredibly proud of the work that the Government did to keep the country going. Our support package was worth a total of £407 billion between 2020 and 2022, and constituted the biggest single fiscal intervention since world war two.
We are providing further support to help people with the cost of living. The current cost of living pressures have emerged from a series of economic shocks. We could understand and appreciate some of those shocks as demand increased while the effects of the pandemic receded, but what we clearly could not have anticipated were the sharp increases in energy costs that were driven by Russia’s absolutely unacceptable invasion of Ukraine. These global pressures are making it very difficult for households and businesses to absorb the rising cost of essentials in their budgets, which is why the Government are taking direct action to help the lowest-income households with the cost of living. However, fiscal responsibility is important to the country’s long-term prosperity, and Government intervention must therefore be timely, temporary and targeted to minimise the risk of further inflationary pressures.
Debbie Abrahams
I take on board some of the Minister’s points, but I must challenge him in one regard. He seems to have ignored what has been said about the inadequacy of the system before the pandemic and before the cost of living crisis. Would he care to comment on last week’s observation by the Institute for Fiscal Studies that if the Government had provided more targeted support for those in the greatest need, the national inflationary pressures would not have occurred?
David Rutley
We are having to deal with some challenging headwinds, as a result of the pandemic and now these inflationary pressures, but we have sought to take targeted measures. During the pandemic, especially the early stages, we focused particularly on those who were feeling the impact of changes in the employment market, which were immediate. Now we are focusing our efforts on targeted support for the people and households who will be most affected by inflationary pressures. The means of dealing with those are complex, and we are having to develop systems and processes to get the payments out quickly. Because of their nature they will never be 100% perfect, but we have taken other steps to support those who may not previously have been eligible for support. I shall say more about that shortly.
Our labour market policies are part of our plan to manage inflation, and that is a further reason for us to redouble our efforts to encourage more people to get into work and take advantage of the current buoyant labour market, with a record 1.3 million vacancies. Our multimillion-pound plan for jobs is helping many people into work with the kickstart scheme and the restart programme. Opposition Members do not always talk about the importance of work and the achievements that have been made in the labour market, so let me point out that last week our Way to Work campaign met its ambition of moving more than half a million people into work in under six months. That is an important achievement, not necessarily for the Government —although we welcome it—but in terms of the difference it will make to households throughout the country.
Moving into work and making work pay are core tenets of our strategy to build long-term growth and prosperity up and down the country, which is why we have introduced a number of work incentives. In particular, we have cut the universal credit taper rate from 63% to 55%, and have increased work allowances by £500 a year. Tomorrow, 6 July, we are cutting the national insurance threshold, a move that will be worth up to £330 a year for nearly 30 million working people.
Some Members have mentioned uprating, including the Select Committee Chair, the right hon. Member for East Ham. As part of the Department’s long-term approach, the Secretary of State completed her annual review of benefit and pension rates last year in the usual way, using well-worn, well-proven methods and processes. The state pension and the pension credit standard minimum guarantee were increased by 3.1%, the rate of inflation for the year to September 2021 as measured by the consumer prices index. As I think the right hon. Gentleman will know, we remain committed to implementing the state pension triple lock for the remainder of this Parliament, and on 26 May the Chancellor confirmed that it would be reinstated next year. All other benefits have also been increased this year in line with the consumer prices index of 3.1%. That approach has formed part of a long-standing convention. Since April 1987, all benefit uprating has been based on the increase in the relevant price inflation index in the 12 months to the previous September, helping claimants through the inflationary cycles.
Sir Stephen Timms
I am grateful to the Minister for setting out the commitment to uprating in line with inflation, but does he accept my earlier point about the need, in this very inflationary environment, to uprate the level of the benefit cap? Is he able to tell us whether it will be reviewed between now and next April?
David Rutley
I was going to come to that later, but as it is an important point, I will address it now.
As has been acknowledged today, none of the new one-off payments will be taken into account in the benefit cap, but there is a statutory duty to review the levels of the cap at least once every five years, and that will happen at the appropriate time. The current unusual economic period, with potentially counterintuitive and shifting trends, will need to be considered in the context of any decision about a review. The benefit cap provides a strong incentive and fairness for hard-working taxpayers and households, and encourages people to move into work. Last week, the Secretary of State told the Select Committee that she was taking advice on the exact timing and the approach. The statutory obligation to review the cap levels at least once a year in each Parliament changed on 24 March 2022, when the Fixed-term Parliaments Act 2011 was repealed, and the new obligation requiring the Secretary of State to review the levels at least once every five years means that the DWP now has until 2027 to complete a review. As I have said, however, she is seeking advice on that.
The annual review of benefits and pensions for the next tax year will begin in the autumn. To measure inflation, the Secretary of State will use the consumer prices index in the year to September. To measure earnings related to the pensions side of the equation, she will use average weekly earnings for the period from May to July. The uprated benefits and pensions will come into effect in April 2023.
Wendy Chamberlain
May I ask a very brief question? I am really thinking out loud. In that review, when looking at uprating, will the Government examine the implications of the energy price gap, which is clearly having a critical impact on people’s incomes?
David Rutley
As I have said, the Secretary of State will be looking at the wider economic environment when making these decisions.
Let me now pick up some other points that have been made today. The hon. Member for Glasgow South West (Chris Stephens), who is terrier-like in his tenacity, mentioned bereavement orders. The Secretary of State has met officials to discuss the proposed draft order, and they are now working on that as a priority. Others have referred to the five-week wait for universal credit payments. It is not possible to award payments as soon as a claim is made, because the assessment period must run its course before an award can be calculated, and it is not possible to determine accurately what the entitlement will be in the month ahead. Our measures will ensure that the correct entitlement is paid, and will prevent significant overpayments from being made.
David Rutley
I will give way, but this is the last time I shall do so, because I need to make some progress.
Chris Stephens
I thank the Minister for his generosity in giving way, and also for his generous comments. The Select Committee did not argue that a payment could be made straight away; we argued that within two weeks of a claim, a starter payment could be made. Has the Department considered that as a way of addressing the five-week wait?
David Rutley
I have set out our approach, which is to ensure that advances are made available to help people in those difficult circumstances to get the money that they need.
Another point that has been raised is about deductions. We have systematically reduced the amount that can be deducted from benefits from 40% to 30% and now to 25%. If claimants have issues, they can go to the debt management service for further advice and support. Others have mentioned the carers allowance. I want to highlight, as I did in the recent Second Reading debate on the Social Security (Additional Payments) Bill, that the carers allowance is not a means-tested benefit. Nearly 60% of working-age people who are carers will get the cost of living payments, as they are means-tested benefits, or disability benefits. Carers allowance is paid on an individual basis to people in households across the income scale, so they may live in a household that is able to receive the £650 payment or the disability payment as well, which will help them to pay the bills in their own households. We also talked about how larger families will be getting the same payment as individuals. This is because we needed to get the payment out fast to as many people as possible. We will be making the means-tested benefit-related cost of living payment from 14 July, and that is absolutely critical. We were not able to develop a system that would account for every single eventuality.
I conclude by saying that this Government have worked incredibly hard over recent years to ensure that we help people to get into work, that we make work pay and that we support people with the cost of essentials. The latest cost of living payments that have been made and the additions to the household support fund demonstrate that we are absolutely committed to providing this help for households. I would like once again to thank hon. and right hon. Members for their contributions to this important debate.
Madam Deputy Speaker (Dame Rosie Winterton)
With the leave of the House, I call Sir Stephen Timms to wind up briefly.
Sir Stephen Timms
I am grateful that we have been able to discuss these important issues, and I want to thank everyone who has contributed to the debate. I commend the hon. Member for Glasgow South West (Chris Stephens) for his long-standing campaign on bereavement benefits, and I hope we are reaching a successful conclusion on that. I am grateful to him for all his work on the Select Committee as well. He made an important point in his speech, which I had not thought of before: now that we have a new Government system for paying one-off grants, surely we could use it to make starter payments for universal credit, as the Select Committee recommended in its report on the five-week wait. As things stand, universal credit is not fit for purpose because of that five-week wait for the first regular benefit payment, and I am grateful to the hon. Member for his suggestion. I hope that we can take that up.
My hon. Friend the Member for Oldham East and Saddleworth (Debbie Abrahams) made some important points, and I thank her for her work on the Select Committee as well, not least her dogged advocacy for vulnerable claimants of disability benefits. We have heard far too many reports of tragic disasters and errors on the part of the DWP, and we are not yet convinced that those problems have been entirely overcome. She gave us some sobering figures on the extent to which social security has been cut over the last 12 years, and we need to do much better. The hon. Member for North East Fife (Wendy Chamberlain) was right to draw our attention to the position of carers and the need for us to do better on supporting them, as we are now doing in Wales and Scotland. I am grateful to everybody who has spoken today, including my hon. Friend the Member for Westminster North (Ms Buck) on the Front Bench and the hon. Member for Aberdeen North (Kirsty Blackman), who spoke for the SNP.
I think the Minister said, in answer to my intervention, that the Government were not required to review the benefit cap until 2027 because the five-year clock had gone back to square one. I do not think it was reviewed in the last Parliament and I have no information about it being reviewed in the Parliament before that, but whatever the statutory obligation, surely when inflation is 10%-plus the Government need to recognise that families on the benefit cap—there are now more than 100,000 of them—are facing rising prices like everybody else and that the benefit cap must be raised in time for next April.
Question deferred until tomorrow at Seven o’clock (Standing Order No. 54).
Office of the Secretary of State for Wales
Support for the Welsh Economy and Funding for the Devolved Institutions
(2 years, 4 months ago)
Commons ChamberRead Full debate Read Hansard Text Read Debate Ministerial Extracts
Madam Deputy Speaker (Dame Rosie Winterton)
The debate will be opened by the Chair of the Welsh Affairs Committee, Stephen Crabb.
Stephen Crabb (Preseli Pembrokeshire) (Con)
It is a pleasure to open this estimates day debate. We go from having debated one of the largest items of expenditure on the Government’s books in the previous debate to debating perhaps one of the smallest of the Whitehall estimates. I hope that today’s debate will provide a useful opportunity for a wide-ranging discussion about the current challenges facing all of our constituencies in Wales and the steps being taken by the UK Government and also in Wales by the Welsh Government to address them.
One of the things I have become more convinced about, the longer I am a Member of this place, is that we need to spend more time debating Welsh matters and not less. We have our annual St David’s day debate and we sporadically have the opportunity upstairs to have a Welsh Grand Committee, although that is perhaps a bit too knockabout for the taste of some Members, so using the estimates day route to secure a debate is useful and I am grateful to see other Welsh Members participating today. I am particularly grateful to those colleagues who supported the bid application.
Hywel Williams (Arfon) (PC)
Apart from the debates that the right hon. Gentleman has mentioned, there is also the work of the Welsh Affairs Committee, of which I was a member for many years. I understand that the Committee published its report on the benefit system in March. Has he had any response from the Government to that report?
Stephen Crabb
The Government have responded to the report, and we will be publishing our response to the Government’s response shortly. I would encourage the hon. Member to keep a lookout for that.
Our report into benefits in Wales is one of three of the Committee’s reports that has been flagged on today’s Order Paper as being relevant to this debate. We could have flagged other reports, as the Committee has done a lot of work that is relevant to the broad discussion that we want to have this afternoon. We continue to be a very busy Committee, and we cover a lot of ground. I am grateful to colleagues for their regular attendance at the Committee and for their spirit and enthusiasm. I think we do some good work as the Welsh Affairs Committee.
I should also say how grateful we are to the Wales Office Ministers, who give us a lot of their time providing oral evidence. We are also grateful to Welsh Government Ministers—not just the First Minister but other Members of the Welsh Government—who have no obligation to appear before our Committee but who nevertheless choose to do so. That all helps to make the inquiries that the Committee undertakes particularly useful.
Turning to the specific estimate in front of us, I would encourage Members to look at the very helpful House of Commons Library note that has been produced, which explains in much more detail, and far more effectively than I could, how the estimate has been compiled. It also outlines the factors underlying some of the changes, compared with last year’s spending plans. Clearly, we are continuing to go through an extraordinary period, economically, in the life of our nation, and that is very much the backdrop to today’s debate. If this debate had happened 18 months or two years ago, we would have been debating the impact of the pandemic. We are now in a new phase, and the cost of living is the No. 1 issue facing many of our constituents, as the previous debate highlighted. Personally, I am extremely supportive of the measures taken by the UK Government to support families through the cost of living crisis. The measures that the Chancellor of the Exchequer brought forward were broadly in line with what many of us had been calling for. They represented a major intervention that has been broadly welcomed by many poverty-fighting charities and campaign groups.
There are points that we could debate. I think the preceding debate covered those adequately, but I add my voice to that of the Chair of the Work and Pensions Committee, the right hon. Member for East Ham (Sir Stephen Timms), who has just left his place, on the need to do something to address the five-week wait for universal credit claimants. I attended the breakfast in Westminster Hall that was referenced earlier this afternoon as a guest of the Trussell Trust. I sat next to someone who had found themselves in financial crisis and having to make a claim for universal credit. The thing that she struggled with, alongside her mental health battles, was the five-week wait and falling immediately into debt. I encourage members of the UK Government to look at that to see how we can improve the system.
Beyond addressing the immediate cost of living crisis, I am particularly motivated by a desire to look at longer-term ambitions for improving the economy in Wales. That is why I support the UK Government’s levelling-up ambitions and their desire to see all parts of the country rise on a tide to be more in line with one another in the contribution that they make to the UK economy and the share of wealth and prosperity that people in different parts of the country enjoy.
Stephen Doughty (Cardiff South and Penarth) (Lab/Co-op)
The right hon. Gentleman mentions levelling up. I note what the Government are doing in terms of the funds that are coming to Wales, but there is a shortfall of nearly £1 billion compared with what Wales would have received. In 2019 the Government committed as a minimum to match what had been provided to Wales under EU structural and investment funds. That commitment has not been met; we have seen a shortfall in both rural funding and other funding. Does the right hon. Gentleman agree that that is a major problem when we look at Wales’s future challenges and structural needs?
Stephen Crabb
We have discussed that very point at the Select Committee; indeed, just a fortnight ago, the Secretary of State was questioned on it by colleagues on the Committee. We know from previous arguments that it is not always easy to pinpoint the exact details of the totality of spending in Wales, but the general argument that Wales does not receive a “fair share” of funding is a constant theme in Welsh politics. I imagine that will continue long after we have all moved on from this place.
Stephen Crabb
I will give way to the right hon. Lady and then to the hon. Gentleman—I am sure I have just opened the door to a whole host of problems.
Liz Saville Roberts
I am grateful to the right hon. Gentleman for his work on the Welsh Affairs Committee and for bringing the debate forward. We are talking about levelling up. One issue is that the Crown Estate is devolved in Scotland but not in Wales. Does he agree that, with the Celtic sea floating wind investment in south-west Wales in the offing, Wales needs the means to equip itself to grow and not just to be dependent on handouts from Westminster, which is one of the ways that levelling up is explained? Consistency between Wales and Scotland would enable Wales to grow its own economy and, most significantly, the local supply chains that would go alongside that sort of investment. Wales could manage that most effectively for Wales’s need.
Stephen Crabb
I do not agree that devolution of the Crown Estate in Wales is necessary to achieve the birth and success of a floating offshore wind industry, which so many of us want to see. We have a fabulous opportunity opening up in the Celtic sea, as confirmed by the Crown Estate today. There are lessons that can be learned from the ScotWind process, but for me, devolution of the Crown Estate is a red herring.
Chris Bryant
My bigger concern is that the way the Government have structured all these different funds that are supposedly for levelling up is based on a competition. I think that leads to project-itis, with people putting together projects to fit the schemes, rather than a strategic look at what is really needed across some of the poorest communities in south Wales. For my own money, the single most important thing that we could do is try to enable far more people in the valleys to build up their own businesses from scratch until they employ perhaps five or 10 people. That is the way we will really get people into meaningful work.
Stephen Crabb
I agree with the hon. Member, who pre-empts a point that I was going to make about levelling up. We want interventions that genuinely move the dial. If there was a weakness in the first round of funding, it was the very tight timescales, with local authorities told to get on with it very quickly. Indeed, the Public Accounts Committee recently drew attention to some of the weaknesses in that process.
We want projects that move the dial, but I say gently to the hon. Member that I remember my time as Welsh Secretary, and never a week went by without an Opposition Member knocking on the door of the Wales Office and asking whether there was not a pot of money somewhere in the UK Government to support a project in a constituency in the valleys or elsewhere in Wales. For the first time, the UK Government are making available pots of money that allow us to be involved in partnership with our local authorities on the ground, working to identify solutions to needs. That is tremendously exciting, and I encourage him to be an enthusiastic participant in that. However, he makes an important point about the broader economic context and things that genuinely move the dial.
If there is one part of the United Kingdom that is crying out for meaningful levelling up, it is Wales. I dislike very much the “older, sicker, poorer” narrative, which gets deployed time and again when we discuss the economy in Wales. Too often, it is used as an excuse for mediocrity, complacency and tolerance of poor performance, rather than as something that drives us in Wales to say that we are not going to carry on repeating the same old mistakes of the past. But there is truth behind the narrative. Look at economic output in Wales: in 2020, it was around 3.5% of all the economic output in the UK. That is lower than Wales’s share of the UK population, which is 4.7%. Wales is not punching its weight economically. Economic output per head in Wales is around £24,000, and the UK-wide average is more than £32,000. That is quite some gap.
During the decade from 2010 to 2020, annual economic growth in Wales averaged around 0.8%, similar to the UK average. We could be complacent and say, “Well, we’re in line with the UK average,” but that is not good enough. If we are going to close the economic gap in Wales, we need to grow significantly faster than the rest of the UK. For me, that is really what the objective of levelling up should be. What are the interventions that can move the dial and help the Welsh economy get to another level where we see more, better jobs created that pay more money and are more sustainable for our communities?
I draw Members’ attention to the Office for National Statistics population statistics that came out—
Liz Saville Roberts
The right hon. Gentleman is very kind to take a second intervention. I am sure that the Welsh Affairs Committee is considering the need for interventions and investment that would shift the dial. Does he agree that improvements to the National Grid—in particular, an interconnector between north and south Wales, as proposed by National Grid ESO—really would shift the dial? The potential to feed more into the grid, and the generation that we could then have in Wales, would make such a difference to the economy.
Stephen Crabb
I agree with the right hon. Lady’s point about infrastructure—the Committee is looking at that at this very moment—but there is a broader point. Right across different forms of infrastructure in Wales, we are decades behind other parts of the UK. In our rail network and parts of our road network, there is so much work to be done to create the basic infrastructure that can support a modern, 21st-century economy. We all want to protect our own little corners of Wales and keep them nice and quaint. The truth is that if we are happy to stay at that level, we will find that all the properties are bought up by second home owners and there are very few high-quality jobs and training opportunities to keep our young families living there.
That takes me to the point that I was going to make about the population data. There is a real problem when we see a significant drop in the population in places such as Ceredigion—those Welsh-speaking communities in western Wales. That does not bode well for the future. We have parts of Wales with declining populations; overlay the ageing demographic, and that points to some deep-seated underlying challenges. It should be the ambition of us all, whatever our political colours, to address that.
I will make one more point and then let other Members get in on the debate. I come back to the issue of floating offshore wind in the Celtic sea, so let me speak parochially for a moment. In my constituency, that represents one of the most important and valuable economic opportunities that is emerging, as was confirmed today in the statement by the Crown Estate. If we are to make the most of this opportunity in Wales and not look back on it as another missed chance to do something significant—if we are to capture its full economic value—some big things need to start happening. We need the port infrastructure in Wales, particularly in south Wales, that can handle these mammoth turbines that are going to be built. We need work on the design of the contract for difference scheme, because some of the developers have real concerns when they look at the Celtic sea opportunities and what is already being leased out in Scotland, and questions are being raised. Will the Scottish economic opportunity outmuscle what is available in Wales? There is a real issue associated with the design of the CfD scheme.
As for the supply chain, we need to ensure that we have jobs and training opportunities in Wales for Welsh people, and that all the manufacturing, servicing and maintenance of the gargantuan new turbines that will be floated off the coast is not done elsewhere. Let me leave that thought with the Secretary of State. He and I have talked about these issues a lot, and I know that we are very much on the same page, but I still think there is work to be done within the UK Government and the Department for Business, Energy and Industrial Strategy to make that happen.
Jonathan Edwards (Carmarthen East and Dinefwr) (Ind)
It is a pleasure to speak in this debate on the Welsh estimates. Let me start by congratulating the right hon. Member for Preseli Pembrokeshire (Stephen Crabb) on securing this debate and on making a fine speech, which seemed to be a damning indictment of the failures of Westminster economic policy as it applies to Wales—I hope he will be sending a copy of his speech to YesCymru.
When we have discussed regional economic policy over the years, I have often equated the scale of the challenge facing the British state to that which faced the German state following reunification. That is itself a damming indictment of the state of matters in this disunited kingdom. Germany, of course, had literally been split in two, and not only in terms of political entities and economic systems; there was a physical barrier between east and west. The Prime Minister mentioned the German example when launching his levelling-up mission.
What lessons can be learned from Germany? Although it has not fully managed to close the gap between east and west, the east of Germany now outperforms most of the geographical parts of the British state outside the south-east of England. The first lesson that all political parties need to learn is that levelling up will not be a one-term or one-Government policy agenda; such is the scale of the challenge that it will take decades, and Governments of different colours will have to be committed to the agenda. Secondly, it will not come cheap and will require considerably more funds than have been allocated to date. The flagship fund, the levelling-up fund, has an allocation of £4.8 billion. The Centre for Cities estimates that the federal German Government have invested €2 trillion between 1990 and 2014, equating to £71 billion per annum. Of course, a large part of that sum represented fiscal transfers in the shape of pensions and benefits, but 21% was deliberate financial equalisation, 13% was infrastructure investment and 9% was business support. Redistribution in the context of the British state is mostly based on welfare payments, which are largely required as a result of a failed macroeconomic policy. Without serious investment, there will not be serious levelling up. Infrastructure investment should be redirected to low-productivity areas.
Stephen Kinnock (Aberavon) (Lab)
I am interested in the hon. Gentleman’s comparison with Germany. Does he agree that one secret of the German success is a radical devolution model, held together in a federal state—but very much together? It is interesting that he is making the case for the German model, which is based, by definition, on a federal state, not on separating. If the German Länder had separated from each other, it probably would have ended in disaster.
Jonathan Edwards
I will get to the point about government structures later, but there is a definitely a debate to be had about the constitutional question. In my view, the constitutional question in Wales is very much an economic one, which is why I ultimately support independence for my country.
Finally, the post-reunification German constitution is underpinned by a coherent political structure based on powerful Länder and local governments, as the hon. Gentleman said in his intervention. Levelling up cannot be delivered from Westminster alone. What English politicians want to do with regional governance in England is a matter for them, but the Welsh, Scottish and Northern Ireland Governments must be empowered with a full portfolio of fiscal powers. I was no Brexiteer, but I will say that if the British Government were genuinely interested in maximizing their new freedoms to boost levelling up, Wales should have full powers over income, corporation tax and VAT. Of course, not only are this British Government anti-European, but they are anti-devolving powers from Westminster, and that is leading to complete economic and political stasis.
Talking about ironing out Brexit teething problems will not solve the crisis either. I often consider political discourse in this place to be outside the paradigm of reality, but the truth is that Wales and the UK are in a state of limbo. The UK is facing an inflationary spiral not witnessed in my lifetime, and it is running the worst current account deficit since records began, at a staggering 8.3% of GDP. As Will Hutton wrote in The Observer over the weekend, this is the sort of deficit
“recorded by banana republics before they collapse”.
As a direct result of post-Brexit trade policy, real export volumes are down 4.4% and import volumes are up a staggering 10.4%. Within the EU single market and customs union, the UK was the leading destination for foreign direct investment, but that is no longer the case.
All that is leading to reduced investor confidence and a slump in the value of sterling, adding fuel to the inflationary fire, which hurts every one of our constituents. The Bank of America warns that sterling is facing an existential crisis. This place should be in complete panic mode, yet Westminster plods along sticking its fingers in its ears and whistling to itself in a happy bliss of ignorance. If the British Government are unwilling to provide economic levers for Wales to solve its own problem, the only sensible solution is to rejoin the safe harbour of the European Union economic frameworks. That would boost exports, help investment and, critically, return some much-needed economic confidence and strengthen sterling.
In the time left to me, I turn to capital projects associated with the city deals. Jonathan Burnes, the director of the Swansea Bay city region deal, has warned that construction costs were high as a result of inflationary pressures, which might endanger some of its proposed projects. Furthermore, there are worries that the promised private sector investment that makes up the vast majority of the Swansea deal could fall if economic conditions worsen as expected. The key plank of the British Government’s economic policy for the communities I represent is therefore at “red” risk level. It would be helpful if Ministers could outline, in winding up, what they will do to make up the expected shortfalls.
Lastly, I highlight the challenges facing the Welsh Government’s budget, as day-to-day funding for Wales remains slightly below the 2010 level. Furthermore, the rate of real-terms reduction is currently greater than the British Government’s departmental average. When Unionists speak of the dividend that Wales gets from being part of the British state, it clearly does not apply to the funding we receive as a nation.
Robin Millar (Aberconwy) (Con)
It is a pleasure to follow the hon. Member for Carmarthen East and Dinefwr (Jonathan Edwards), and I will refer in my speech to some of the comments he made. The hon. Member for Rhondda (Chris Bryant) made an interesting comment about the strategic aspect, perhaps suggesting that there should be less competition within the funding arrangements. I may address that as I move through my speech.
This is a timely debate, given the concerns about rising prices and the strength of the economy. We must recover and adjust to a post-pandemic era. We must also deal with the distortion of global markets by the invasion of one of the world’s largest grain producers by one of the world’s largest exporters of hydrocarbons. These are rough seas for anyone to navigate, and I am unequivocal that Wales is better for doing so as part of, and within, the UK. To use the example of tourism, in Wales we have just 2% of all visitors to the UK. Wales can clearly benefit from attaching itself firmly to the UK’s global offer, and from attracting more visitors to come and see what is unique, special and distinctive about Wales.
Hywel Williams
I would be delighted to agree with the hon. Gentleman that Wales should hitch itself to the UK effort, if that UK effort was any good at all for Wales. My impression, after many years of examining the UK’s efforts to promote Wales, is that it is hopeless. Does he agree?
Robin Millar
I certainly agree that we can do better. To be clear, I speak in this debate as a proud Welshman—Cymro balch, if I am allowed to say that in the Chamber—born, raised and schooled near Bangor. I have the honour of representing Aberconwy, which is by any measure one of the most beautiful parts of Wales, and indeed the United Kingdom. It should be no surprise that my constituency attracts hundreds of thousands of visitors from throughout the UK and overseas. Llandudno, the queen of the Welsh resorts; the natural splendour of Eryri, Snowdonia national park; Conwy castle, one of several UNESCO world heritage sites that we enjoy in north Wales and are happy to host; and a thriving hospitality and culinary scene—these are just some of the attractions that make Aberconwy the visitor success that it is.
I share the pride felt by so many of my constituents in this thriving sector, but I also share the concern of many that we are so dependent on tourism, and the concern that, for so many young people, the only chance of pursuing a high-skilled, well-paid career lies in moving away from their community. This pattern has been detrimental for many and to the future of many, and not least also to the viability of our precious Welsh culture and language—a language that I, like so many in all parts of the Chamber, wish to see flourish.
I had to move away from north Wales to develop my interests and career, initially as an engineer. In many ways, it is a typical north Wales story, but it cannot be right that our young people have to think in those terms—that to see themselves working, living and settling in north Wales, they must first move away; but then I notice, when I look at Wales’s economic figures, that weekly income over the last 20 years has essentially just about kept up with inflation. There has been no net increase. Why is that? It is a frustration, because Aberconwy is home not just to many of the UK’s finest visitor attractions, but to talent and ingenuity.
Just last winter, an analysis of Companies House returns identified Llandudno, the queen of resorts, as the entrepreneurial capital of the UK. More new companies were filed there than anywhere else. That has to count for something, and it certainly reflects the conversations I have with many young and ambitious people in Aberconwy. Each and every week when I am home in my constituency, I visit businesses and community groups, and I am always impressed by the entrepreneurialism, and the commitment to growing, creating and strengthening things. Whether we are talking about business, people, groups or even our communities, there is huge ability and interest in improving what we have.
As we have heard, talent is distributed throughout the United Kingdom, but opportunity is not. Creating opportunities in communities in every corner of Wales, and indeed the whole UK, is at the heart of this Government’s levelling-up agenda. That is why I welcome the record amounts of funding and investment coming to Wales from the UK Government. However, there are three frustrations that I would like to set out, and they speak to why levelling up could not be more urgent for communities throughout north Wales. It is a tragic fact that, after 24 years of devolution and a consistently Labour Welsh Administration in Cardiff, despite all the promises, all the opportunities for devolution and our vast economic potential, Wales has the lowest economic output of anywhere in the UK apart from north-east England, a region with its own unique challenges.
Liz Saville Roberts
I am listening to the hon. Member with great interest, because he is making some persuasive arguments, but does he agree that devolution for Wales has not equipped Wales with the tools to make a significant difference? We have seen Labour managing poverty in Wales, rather than having the means to make a difference. He talked about tourism. Does he agree that if we are to play to our strengths, we should have a tax on people staying in Wales—what is known as a tourism tax? That would surely be a way of improving our skills base, which would lead to better jobs, better qualifications and a better experience all round for communities in which there is tourism. Does he agree that we should play to those strengths, and that we need the means of doing that?
Robin Millar
The right hon. Lady’s intervention gives me an opportunity to make a really important point. I think that we have a fundamentally different view of the world. Effectively, she is referring to a deficit model, in which the deficit from poverty and need is something that must be filled. I come from a different perspective. I hold to what I would call an asset-based model. Yes, there are problems, gaps and shortages, but the way to deal with them is not simply to try to fill the deficit; it is to engage with and use the assets that are there.
I have spoken against the tourism tax. I feel very strongly that a tax placed on visitors who stay in hotels does nothing to address problems, or the behaviours of those who come to the area and wild camp, or do not even stay overnight, and who do not spend money in the local economy. I understand the sentiment behind the tax, but its motive is to make the money to fill or fix the deficit. We should instead ask: how do we work with communities and businesses to change the behaviour of visitors, address their experience, and address inappropriate behaviours in our area?
Our frustration comes from seeing that we have talent, but limited opportunities. That is compounded by our having one of the lowest income outputs of anywhere in the UK. On top of that comes frustration with some of the responses of the Welsh Labour Government. I say that in all sincerity. In a recent letter to leaders of local authorities in Wales, the Welsh Government Minister for the Economy wrote that
“the Welsh Government is unable to endorse the approach that the UK Government is taking on the Shared Prosperity Fund. This means, as we have consistently stated to the UK Government, that the Welsh Government will not deploy our own resources to implement UK Government programmes in Wales which we consider to be flawed.”
I, like many others, am frustrated by this approach. Surely it is counterproductive to second-guess how a UK Government funding stream for parts of the UK will be handled.
Stephen Crabb
My intervention is in response to the right hon. Member for Dwyfor Meirionnydd (Liz Saville Roberts), who argued that Wales needs more tools. The tools that we have already given to the devolved Welsh Government have not been fully used. I give the example of income tax. Does my hon. Friend the Member for Aberconwy (Robin Millar) agree that one thing we could do in Wales is cut the top rate of income tax—that is something for which the Welsh Government have responsibility—and attract high-value tech entrepreneurs and their families to Wales, which would create more jobs and businesses?
Robin Millar
I thank my right hon. Friend for making that point. I could not agree more. Contrast that deficit view, which seeks to fill, with an asset-based view, which seeks to grow, encourage and stimulate that kind of economic activity.
Robin Millar
I would settle for not adding a tourism tax on top of VAT.
Contrast the Welsh Labour Government’s view that we should not implement UK Government programmes in Wales with the more enlightened view of the Welsh Local Government Association, which, in its manifesto for localism, said that
“greater fiscal autonomy and flexibility”
should be at the centre of its plan for recovery from the pandemic. That is what the levelling-up fund and the shared prosperity fund seek to do.
I said that I had three points. My third is to do with misunderstanding business. As my right hon. Friend the Member for Preseli Pembrokeshire (Stephen Crabb) mentioned, we in the Welsh Affairs Committee are very grateful to have Welsh Government Ministers in attendance at our Committee. Without a doubt, it enriches the evidence presented to us and our discussions. When the former Minister of the Economy, Mr Skates, attended, he was asked a question about the Welsh economic plan. This flagship project of the Welsh Government sought to sign up Welsh businesses to it. After some discussion, we established that the aim was for 3% of Welsh businesses—some 6,000—to sign up. I put it to him in our meeting that the reason for the low take-up was the unrealistic expectations placed on businesses in Wales. The time and financial commitment that it takes to sign up to making quite honourable and desirable—idealistic, I suppose, is too strong a word—steps towards decarbonising business and making it more sustainable are simply crushing for small businesses. After all, 95% of businesses in Wales have fewer than 10 employees.
In that context, I will make a comment on the question asked earlier about the amount of funding coming into Wales. Despite concerns about performance, and despite the frustration, and confusion or misunderstanding, about what businesses need, the reality is simple and irrefutable: there has never been more funding coming into Wales, if we perhaps except the blip that came through the consequentials around the covid pandemic.
Let us start—and start we must, because this is a long list—with the spending review. In 2021, we set the largest annual block grants for the Welsh Government: £18.4 billion per year. That will increase to £20 billion between 2022 and 2023. If comparison is helpful, over the spending review period the UK Government are providing the Welsh Government with roughly £1,000 more per person than is spent in England. That block grant increase is in addition to £900 million for farmers and land managers over the next three years, and the £6 million for Welsh fisheries.
That is not all: there is also the first round of the levelling up fund—yes, there are more rounds to come—which is £121 million, and there is £46 million through the community renewal fund. Perhaps hon. Members can see a pattern here. That is in addition to the £460,000 in just the first round of the community ownership fund and, lest it feel left out, the £130 million of investment by the British Business Bank.
All that funding speaks to the points so helpfully made by the right hon. Member for Dwyfor Meirionnydd (Liz Saville Roberts), and highlights the difference between a deficit-based and an asset-based approach, because all that is also in addition to Wales’s 22% share per annum of the UK-wide £2.6 billion UK shared prosperity fund—a fund that ensures that EU funding is matched. Those are not my words; on 11 June, during an evidence session of the Senedd’s Finance Committee, Guto Ifan, a research associate at the Wales Governance Centre—an organisation that has never been slow to criticise this Government—stated:
“by 2024-25, the annual funding from the shared prosperity fund will match the average annual funding that Wales would have received”
from the European regional development fund and European structural fund, after inflation readjustments. All that long list comes on top of substantial legacy EU funding, which Wales will continue to receive as it tapers off.
I could speak at length—[Interruption.] I assure you that I will not, Madam Deputy Speaker; I would not deprive hon. Members of their time—but the money coming into Wales offers a huge opportunity to my Aberconwy constituency and north Wales. It is incredibly positive and forward-looking of the UK Government to act in this way. Local businesses are excited by it, and I see tremendous potential in the projects and bids we will submit to the levelling up fund bidding process.
In conclusion, we must ask what has happened in Wales in economic terms. It is not in a good place; it has not been in a good place, and there is no suggestion that that will improve as long as the Welsh Labour Government continue with their economic plans, which have, after all, been under their devolved capacity for the entirety of the Welsh Government’s existence.
Beth Winter (Cynon Valley) (Lab)
I congratulate the right hon. Member for Preseli Pembrokeshire (Stephen Crabb) on securing this debate, and thank the Clerks on the Welsh Affairs Committee, who do sterling work for us.
I do not really know where to begin; as I listened to the hon. Member for Aberconwy (Robin Millar), I felt as though I was living in an alternate universe. I could not disagree with him more, unsurprisingly, and I will outline why. I start by saying how proud I am, as I know other hon. Members in this Chamber are, of Wales, the Welsh Government and what we have achieved. We are the only country in the UK to have had a Labour Administration since the inception of devolution, and currently they are pursuing in Wales progressive, bold, socialist policies, including the extension of free school meals to all primary school children, the universal basic income pilot, the living wage for key workers, and a major cost of living crisis support package. Contrary to what Conservative Members have said, the UK Government have actually cut funding for Wales. Looking at this year’s main estimate for funding in the memorandum to the Welsh Affairs Committee, I see that the cuts are significant, indicating over £2 billion in comparison with the previous year. I have that document if anybody wants to see it. The budget is going to be worth £600 million less over the spending review period because of mismanaged inflation, and, contrary to what Conservative Members have suggested, EU funding will be £1 billion less by 2024-25.
That reduction in funding is a clear example of the UK Government holding back Wales on its ambitious policy agenda. They are not providing the funding and investment we require, particularly during this historic cost of living crisis—the worst in living memory. The UK Government are continuing to pursue their agenda of ideological austerity and recentralisation of power in Westminster, bypassing the democratically elected Government of Wales, as we are seeing with the levelling-up fund, the community funds associated with the post-Brexit agenda, the United Kingdom Internal Market Act 2020 and the Elections Act 2022. In all sorts of areas, the UK Government are riding roughshod over the democratically elected Government of Wales. This goes against Welsh Government priorities and, as I have said many a time, it is an affront to democracy. The people of Wales backed a Labour Government who champion devolution and progressive policies and look to protect public services and, indeed, public ownership.
The Welsh Government’s Finance Minister has condemned “clear gaps in funding” in the spending review and called the spring statement a “threadbare” one that exposed
“an out-of-touch Chancellor”.
I could not agree more. It is vital that the block grant allows the Welsh Government to lift incomes and investment, even if the UK Government will not. Earnings in Wales and the proportion of people on low incomes in Wales are worse than in the rest of the UK. In my constituency, I commissioned some research on the post-covid economy that was conducted by the Bevan Foundation, looking at community wealth-building approaches. The evidence was shocking. The median earnings of working residents are well below both the Welsh and the UK averages. Another piece of research that was recently conducted on the cost of living crisis exposed harrowing experiences. Over 30% of respondents had skipped meals over the past year to keep costs down—over 60% in the case of benefit claimants.
The central issue facing both the UK Government and the Welsh Government is how to deal with the impact of inflation by lifting incomes in real terms. There are key immediate actions that can and need to be taken. On trade unions, as the Welsh Government pursue their new Social Partnership Council, the UK Government must not undermine Welsh Government legislation on industrial relations. On pay, the UK Government must listen to Wales TUC and consult the Welsh Government in responding to trade union public sector pay demands. On social security, the UK Government must adopt the Welsh Affairs Committee’s recommendation to reintroduce the £20 universal credit uplift and extend it to legacy benefits, and, in addition, use near-term inflation forecasts to increase benefits.
On levelling up, the UK Government must allocate adequate funding from the shared prosperity fund to Wales, and it should go through the Welsh Government, which is the Government of Wales. On other revenue sources, the UK Government must begin a process of equalising the role of the Welsh Government over the Crown Estate with that of Scotland, as has already been mentioned.
We also have to look at the powers in the long term and at how funding is allocated to Wales. The Barnett formula is inadequate and does not work. The introduction of a floor to prevent underfunding of public services in Wales and a discussion about devolving corporation tax and capital gains tax merit UK-wide debate, as recommended by the Holtham commission.
To conclude, there is a lack of trust in the UK Government delivering the funding necessary to alleviate the cost of living crisis from the people of Wales and my constituency of Cynon Valley. Because of that lack of funding, the Welsh Government are severely constrained in how they can deal with that crisis and, as I said at the outset, how they can push forward their innovative ideas, which they are doing in co-operation with other parties, and I again put on record that I fully support the co-operation agreement. It is because of those constraints that I support the First Minister pursuing an agenda to strengthen the Senedd and to give Welsh politics greater clout to fight its corner and to fight for the funding it deserves. I am sure that in time we will secure it.
Simon Baynes (Clwyd South) (Con)
It is a pleasure to follow the hon. Member for Cynon Valley (Beth Winter), for whom I have the highest respect. We do not always agree on everything, but having served on the Welsh Affairs Committee with her and various other Members present here on both sides of the House, I echo her words in praising the staff who make the Welsh Affairs Committee run so well. We discussed this debate in the Committee and we all feel, whichever political party we represent, that this important event enables us to bring the affairs of Wales to the Floor of the House, which we all are keen to do.
My own upbringing was in the tourism industry—we have had much talk about it already in this debate—at the Lake Vyrnwy Hotel, which my father ran as a business. It is only a few miles south of my constituency of Clwyd South, which in itself has a wonderful tourism industry with the wonderful heritage, the canal, the steam railway, the beautiful countryside and so on. I will return to that theme later.
With all due respect to the hon. Member for Cynon Valley, I do not recognise her point about the spending review cutting money to Wales. Given the figures that my hon. Friend the Member for Aberconwy (Robin Millar) gave—I will not go back over all those—it seems self-evident that the block grant to the Welsh Government is rising year by year by a generous amount. I do not see how we can dispute that fact. At £18.4 billion rising to £20 billion in the coming year or two, it is the most generous spending review settlement since devolution.
There has also been mention of the fact that the amount of money coming from Europe to Wales will be cut. With all due respect, that simply is not the case. The shared prosperity fund will equalise, if not increase the amount of money that would otherwise have come from the European Union. The hon. Member for Rhondda (Chris Bryant) made the point about the levelling-up fund not being fair. As an MP for north-east Wales, I would argue that the European funding was not fair, because it was concentrated on west Wales and south Wales. North Wales, mid Wales and north-east Wales had little representation in that. My argument is that all parts of Wales need support. My constituency and my neighbouring constituencies have deprivation as well—deprivation is not exclusive to south Wales or west Wales. Therefore, the new shared prosperity fund, and the other funding that is coming through in the levelling-up fund and the community renewal fund, are spreading the money and investment across Wales, which strikes me as being much fairer.
Hywel Williams
Does the hon. Gentleman agree that the drawing up of the NUTS—nomenclature of territorial units for statistics—maps that identified west Wales and the valleys as targets of European intervention was an objective process, based on clear metrics? Does he think that the metrics for the levelling-up fund are equal or superior to those that led to the drawing up of those maps?
Simon Baynes
Actually, I do think that the way it is being done now is fairer. I could never understand that schematic system, which was rigid in its thought process and implementation, and which meant that areas of deprivation, particularly in north Wales, were simply not going to get the level of funding. I am not saying that there was no European funding—there was some—but it was not anything like the largesse that went to west and south Wales. That simply cannot be right. The new system is much fairer in its thought process and application.
Another point that I feel strongly about is devolution, about which we have heard from several Opposition Members. To my mind, if the granting of money is devolved from the UK Government to local authorities, that is devolution. Why should it go to the Welsh Government, who already get a huge block grant and have plenty of scope within their remit of government to spend that money? It seems that they like devolution if it comes into their coffers, but they do not like it when it goes into the coffers of the local authorities.
Christian Matheson (City of Chester) (Lab)
The Government’s form of devolution is different and does not work because it is a beauty parade. Councils are asked to bid and then some get the money and some do not. It is not a fair form of devolution, because it pits one council against another with an opaque mechanism for deciding how councils get the money. At least if it goes to the Welsh Government, it is clear how Wales is getting the money.
Simon Baynes
With all due respect, I have been part of that process. As the Member for Clwyd South, I sponsored a bid, which was granted. One point I would make—[Interruption.] Opposition Members can make their point, which I know and which I anticipated, but let us take the world heritage site at the Trevor basin in my constituency, which includes the wonderful Thomas Telford aqueduct. Hitherto, it has never had any public money invested in it by the Welsh or UK Governments. I think that the constituencies of Opposition Members have received money for so long that they do not understand how starved places such as my constituency have been over a long time.
The hon. Member for City of Chester (Christian Matheson) said that the process pitted councils against each other, but that is not how I see it. Let us look at the process, in which I have been involved. Every council can apply, although some Labour councils do not because of a political point of view, which seems a very strange approach when the money and availability are there. It is not really pitting people against each other; it is an application. The Welsh Government are themselves an opaque mechanism for distributing money to regions such as north Wales. Those of us who represent north Wales constituencies are fed up with north Wales being starved of investment and south Wales in particular getting the lion’s share. For us, it is a much fairer system.
The hon. Member for Carmarthen East and Dinefwr (Jonathan Edwards) referred to the financial problems that are besetting the country. I accept that we have high inflation and so on, but if Wales were independent, how would he get round the fact that its national net fiscal deficit—the gap between total public spending for Wales and public sector revenues from Wales—amounted to £25.91 billion at the financial year end in March 2021? This is about £8,200 per person compared with the UK average of about £4,700 per person. It seems to me that, if we went down the route suggested by Plaid Cymru Members, we would have a huge financial problem in Wales, and we never ever hear any cogent arguments to oppose that point of view. If they are going to vote for independence and to go for independence, they have to prove to the country how they would make the books balance.
Jonathan Edwards
I am grateful to the hon. Gentleman for taking an intervention and inviting me to respond to him. Does he not accept that the fiscal deficit is a damning indictment of failed Unionism? That is what it is: it is because of the failure of the Westminster system.
Simon Baynes
I and other Conservative Members refer to the fiscal deficit to make the point that England and the rest of the UK—the UK overall—is supporting Wales to a massive extent. On the hon. Member’s point about the fiscal deficit, Wales simply does not generate the funds for the public sector services we have; they are provided by the overall advantages of being in the United Kingdom, which are massively beneficial to Wales.
Robin Millar
I am grateful to my hon. Friend for opening the lid on this complex and important question of devolution. Does he agree that there is a difference between the instruments of devolution—the institutions of devolution that were democratically set up by a referendum—and their political operation, since they were set up, by the Welsh Labour Government? Does he see a distinction?
Simon Baynes
Yes, I certainly do. One question the Labour party must ask itself is whether, by going into collaboration with Plaid Cymru, it is actually supporting independence for Wales. How does it guard against that? The agenda is dragging it, day by day, closer to an independence agenda, which it is prepared to risk for the sake of its own political stability.
Liz Saville Roberts
One thing we need to consider is how the status quo results in Wales’s current financial position. Carrying on doing the same thing when it has led to failure in the past is the obvious statement—that is something else to be considered. Does the hon. Member agree that, in citing how much Wales receives, we must bear in mind that London receives more public spending per person than any other country of the United Kingdom or region of Wales at £15,490 per head, compared with Wales at £14,222 per head? When we use the argument that Wales receives more than England, we should look at the fact that London and its prioritisation affects the rest of the UK. We in Wales are trying to find a more effective way.
Simon Baynes
I thank the right hon. Lady for her intervention, and I have a degree of sympathy in that I believe we should support areas outside London, but the fact of the matter is that London generates the income that it spends. London, regardless of whether she or I like it, is the economic powerhouse. We represent adjoining constituencies in a very beautiful part of Wales, but the truth remains that a large proportion of Treasury finance is generated by London. Overall, the point I wish to make is that public spending in Wales is 20% more per person than it is in England, which shows, to my mind, that the UK Government are providing very strong support for Wales.
I have huge respect for the hon. Member for Cynon Valley and have seen how seriously she takes the cost of living issue, and learned a lot from listening to her in the Welsh Affairs Committee. I suggest that two things may be worth thinking about from the Labour party’s point of view. First, under Labour council tax bills in Wales have soared, while the UK Government have ensured that council tax has fallen in England in real terms by 1.1% since 2010. Over the same period, bills in Wales under Labour soared by 54%, or 17% in real terms. That really hits people in Wales in their pocket.
Secondly—my right hon. Friend the Member for Preseli Pembrokeshire (Stephen Crabb) made this point—the Welsh Government now have the capability to use income tax to raise more money, or indeed to reduce income tax, yet we never hear any word of that. I often wonder whether the Welsh Government are scared of using those powers. We see all the time that an easier way to handle things is to complain about the UK Government but take the money, rather than actually thinking about ways to ameliorate the situation through levers that have been put in the hands of the Welsh Government. I also wish to comment on infrastructure, because it seems crazy to me that the Labour-Plaid coalition has suspended all new road building projects, holding back vital infrastructure improvements. If we want to improve the economic performance of Wales, we must improve the infrastructure—everybody knows that—and I hope that the Labour Welsh Government will reconsider that position.
Finally—you will be relieved to hear that, Madam Deputy Speaker—the Labour-Plaid coalition must also think hard about adding 36 more politicians to the Senedd at a cost of over £100 million per Parliament. That is enough money to pay for 780 doctors, 800 nurses, or 740 teachers. Let us consider the Welsh health service performance—I think Opposition Members have also commented on this. For example, the number of people waiting more than two years in Wales is now 68,032—an increase of 887% in a year—and that is more than five times the English figure of 12,735, which is shrinking fast. All I would say is that the Labour-Plaid coalition should think about spending the money that they are going to spend on extra members of the Senedd on improving the health service, which would be to the benefit of everybody in Wales.
Ben Lake (Ceredigion) (PC)
It is a pleasure, as always, to follow the hon. Member for Clwyd South (Simon Baynes), and I join him and the hon. Member for Cynon Valley (Beth Winter) in thanking the staff of the Welsh Affairs Committee. A number of Committee members are present this afternoon, and we benefit from their hard work and diligence in preparing what I would argue is an impressive range of inquiries. We punch above our weight—very much like Wales, perhaps.
I congratulate and thank the right hon. Member for Preseli Pembrokeshire (Stephen Crabb) for securing this debate and for leading the Welsh Affairs Committee in the way that he does. His contribution, and those of my hon. Friend the Member for Carmarthen East and Dinefwr (Jonathan Edwards) and the hon. Member for Aberconwy (Robin Millar), have already caused us to discuss the structural long-term problems that Wales and its economy are facing, and the demographic consequences of those structural problems. Mention has already been made about recent census results in which Ceredigion reported a 5.8% fall in its population. I do not intend to pursue that line of inquiry in my remarks this afternoon, but it is an important area for us to consider and debate in future, because it is intertwined with the debate about levelling up and building a more prosperous economy, and indeed society. In many rural areas, and particularly areas such as Ceredigion, we are seeing a demographic trap in which some of our biggest and most valuable exports are our young people and skills. Yes, that has been happening for many years, but sadly the trend has been accelerating in recent decades. We need to get a handle on that.
I want to focus my remarks on the impact of the recent cost of living crisis on both households and businesses. Set against that backdrop, the debate is timely. As right hon. and hon. Members will be well aware, our constituents, whether households, businesses or community groups, are struggling under the weight of increased fuel and energy costs in particular. In anticipating some of the Secretary of State’s arguments and comments in summing up, I acknowledge that there has been a package of measures and support from the UK Government. As the Library’s briefing informs us, it amounts to some £37 billion and includes: £400 to help all households with energy bills; £650 for households receiving means-tested benefits, with an additional £300 for pensioners and £150 for people receiving disability payments; and a further £150 council tax rebate for households in council tax bands A to D.
Liz Saville Roberts
My hon. Friend is making an excellent speech. On that £400 household grant, does he share my concern that the residences of farmers count as businesses and therefore do not qualify? That is significant for us in Wales and would make a difference to an awful lot of people in rural areas.
Ben Lake
I am grateful to my right hon. Friend for raising that important point. Indeed, a number of hon. Members are concerned about that. There is still a lack of clarity arising from the technical consultation on the energy bills support scheme about whether farms—I am told that most of them will have a commercial electricity contract that also includes their household premises—will be able to receive that £400. It is important for the Government to look at that now before introducing the scheme in the coming months. She is right that it would not be appropriate or fair if farmers—many hon. Members in their places represent a great number of them—lost out due to a technicality. I am certain that the Government intend to support those individuals and households; it is just that the technical eligibility criteria need to be put right.
One thing that the useful House of Commons Library briefing tells us is that, despite that rather impressive package of measures, once we take into account changes to income tax and national insurance contributions, some of that support is offset, at least in net cost to the Treasury. If we were to take tax increases into account, net Government support stands at about £14 billion in the fiscal year 2022-23.
We need to consider whether the package of support is sufficient, given that we know that domestic gas prices increased by 95% between May 2021 and May 2022 and that domestic electricity prices rose by 54%. In nominal monetary terms, the April price cap saw an increase in the maximum for average bills from £1,277 a year to £1,971 and, in May, the chief executive of Ofgem mentioned that he expected the price cap to rise by potentially 40% in the autumn to a maximum of £2,800. That would be a doubling in less than 18 months, and that is why it is important that we consider the sufficiency of the measures already announced. Just after April’s price cap came in, the Welsh Government estimated that 45% of households in Wales could fall into real fuel poverty—and, of course, that does not take into account further increases that may come in the autumn.
As MPs representing rural areas know, the energy price cap offers solace only to households on the mains gas grid. Many off-grid properties have not been offered the same level of price protection and have been exposed to significant price increases in terms of heating oil and liquefied petroleum gas. It is particularly true in Ceredigion, I am sad to say. According to the Mid Wales Energy Strategy, as many as 72% of properties in Ceredigion are off the mains gas grid. I am sad to say that we have the accolade of being the constituency most dependent on heating oil of any in the UK Parliament. On average, the price of heating oil has risen by 150% in the last year. In some circumstances, the increases have been significantly higher.
There is a debate we need to have, perhaps not for today, on whether we need to change approach in how we tackle the price hikes. Are we certain that they are just one-off temporary increases? Some suggest that we have underestimated and under-costed the risks, and that some increases are here to stay. Indeed, we could see further price increases. I note just today turbulence in Norway that might cause a further increase in the price of wholesale gas. There are a lot of uncertainties at a time when wholesale prices are already at an elevated level.
Before drawing to a close, I should mention that we need to do more to support small businesses and community groups facing energy and fuel price increases. I have been speaking to many hospitality businesses in Ceredigion. One told me that its energy bills have increased by 450% and to such an extent that it had to really consider whether it could continue to operate. The situation is not unique to that business. I know a great number of many other businesses that are struggling in a similar manner. We cannot allow otherwise valuable and successful businesses to fall foul of the price hikes. I sincerely believe that the situation warrants further Government intervention.
To add to that, because I do not want to portray this as solely an economic problem, there is also a community or social impact of the current crisis. We will all have heard from community groups, halls and swimming pools—you name it—that are struggling at the moment with higher than average energy bills. We are currently in the summer months, so usage is a lot lower than it will be in the winter. If they are struggling now, I dread to think where they will be in autumn. For example, in my own constituency, Calon Tysul, a community-run swimming pool in Llandysul in the Teifi valley, is already spending about £1,500 a week just to heat the swimming pool. That does not include the dry side of its facilities. That is already forcing it to make very difficult decisions about the provision of swimming lessons for our young people.
Robin Millar
The hon. Gentleman is giving a typically thoughtful speech, as we have become accustomed to in the Welsh Affairs Committee, and I thank him for that. I am grateful, too, that he mentions the levels of grants that have been given on an individual basis. Does he agree that they cannot ever be enough to, for example, make up for inflation in house prices in our area, which drives some of the demographic change he referred to at the start of his speech, and that the only way to see that remedied is with higher wages and more skilled jobs in Wales? Does he share my frustration at the flatlining of the Welsh economy over the last two decades?
Ben Lake
I agree and I disagree. I agree in the sense that I would also very much like to see our economy develop to offer more high wage career opportunities. What I would say, however, is that we need to disconnect the short and medium term from the longer term. I agree with him that there are longer term measures that would entail greater investment. In the short term, perhaps some of the measures we need to look at, as well as direct support, are initiatives such as a social tariff for utility bills. As chair of the all-party parliamentary group on fuel poverty, I am very keen to see that.
To conclude, something plaguing a lot of families in rural areas is the cost of filling up the car. Sadly, Wales is a very car-dependent nation, with some 83% of commutes dependent on private car use. In the long term, we obviously want public transport infrastructure to allow us to wean ourselves from the car. At the moment, however, we are not in that situation. There is both a social and economic factor for rural areas like Ceredigion. The social factor is in terms of the provision of key essential services. District nurses and carers are telling me that they just cannot afford to travel the 400, 500 or 600 miles a week that they need to travel to care for our elderly and in-need residents.
There is a real case for us to re-evaluate the rural fuel relief scheme to encompass more rural areas. That would make sense in the immediate crisis, as there is a need for it, and in the longer term, we might be able to incorporate that into levelling-up objectives, whereby fuel duty could be linked in some way—I admit this would be complicated—to the levels of accessibility to public transport infrastructure. That would be a very good way of moving forward in order to help rural areas proceed and endure the storm.
Stephen Kinnock (Aberavon) (Lab)
It is a real pleasure to follow the hon. Member for Ceredigion (Ben Lake), and I congratulate the right hon. Member for Preseli Pembrokeshire (Stephen Crabb) on securing this important debate.
The people of Wales need answers from this Westminster Government about the cost of living crisis that they are facing right now, because the Conservative Government’s response to the crisis has been deeply disappointing. They are out of touch, out of ideas and out of excuses. They delayed bringing in the windfall tax on the energy giants; we in the Opposition had to drag that policy out of them. Meanwhile, they also refused to deliver an emergency Budget and they are the only Government in the G7 who are raising taxes during a cost of living crisis.
Hard-pressed households and businesses need support in these profoundly challenging times. Labour has a plan to tackle the cost of living crisis. We would cancel the national insurance contributions rise, which comes at the worst possible time and will do nothing to fix the Tory’s social care crisis. We would cut VAT on home energy bills. We would cut the red tape that has been created by the Prime Minister’s botched Brexit and we would implement policies to buy, make and sell more in Britain, particularly through commitments such as the £3 billion green steel fund to support our steel industry as it transitions to net zero.
For an object lesson in the difference that a Labour Government in Westminster would make, we need just to look at what the Welsh Government are delivering for Wales. Welsh Labour has delivered a £51 million household support fund, which was announced in December 2021. That package of support is targeted at people who need help the most. The Welsh Labour Government have doubled the winter fuel support payment to £200, which is already helping almost 150,000 people across Wales. Free prescriptions continue in Wales, helping households to keep more of their hard-earned money, whereas prescriptions in England currently cost £9.35 an item. The average band D council tax bill in England is £167 more than it is in Wales, totally undermining the argument made by the hon. Member for Clwyd South (Simon Baynes). Even with the UK Government’s council tax rebate, which was just announced, households in Wales still pay £17 less than in England. Wales already has the £244 million council tax reduction scheme, which helps more than 270,000 households with their council tax bills. Some 220,000 households in Wales pay no council tax at all, thanks to the Welsh Labour Government’s interventions. The Welsh Labour Government have committed to providing free school meals to all primary school pupils. An extra 196,000 primary schoolchildren will benefit from that offer.
All that has been underpinned by a Welsh labour market that is significantly stronger than the UK labour market. Welsh unemployment levels are lower than those in the UK at 3.5%.
Stephen Crabb
I will challenge the hon. Gentleman on his complacency about the labour market figures in Wales. Yes, in Wales, unemployment—in its narrow definition—is lower than the UK average, with 53,000 jobseekers in Wales, but more than 440,000 working-age people are economically inactive in Wales. That is the major employment and welfare challenge of our time, and the figure is worse than the UK average in a Welsh context.
Stephen Kinnock
Perhaps if the UK Government had a proper industrial strategy that would grow our manufacturing base, rather than having allowed it to go to the wall since 2010, we would be creating high-paid jobs and adding value to our economy and productivity. We face a productivity crisis in this country, created by successive Conservative Governments since 2010.
There has been a strong performance by the Welsh Government, who have made a commitment that
“no one would be held back or left behind…in a recovery that is built by all of us.”
We have seen the creation of the young person’s guarantee—the offer of work, education, training or business start-up help for all under-25s—and ReAct Plus, which will provide practical and bespoke employment support as unique as the person looking for work. The ReAct Plus programme will offer up to £1,500 for training, £4,500 to help with childcare costs and £300 for travel costs. Welsh Labour is also investing £8 million to continue employment services, helping people recovering from physical and mental ill-health and substance misuse to get back into work and, crucially, remain in work. Through the young person’s start-up grant, Welsh Labour will invest £5 million to support 1,200 young people to start their own business.
That is what Labour in power looks like: a Welsh Labour Government backing Welsh workers, Welsh families and Welsh businesses to thrive, protecting our people from the worst excesses and failures of this Tory Government, who are letting people down with their incompetence and indifference.
Simon Baynes
Notable by its absence from the hon. Gentleman’s list is the performance of the NHS in Wales. Without wanting to score cheap political points, I have to say that there is a major issue there. Waiting lists are massively higher in Wales, particularly north Wales, than in England. Perhaps the hon. Gentleman would like to comment.
Stephen Kinnock
Madam Deputy Speaker, I am sure that you would love to give me another 10 minutes to talk about the achievements of the Welsh NHS, but unfortunately I am not sure that I would get away with it. The fact is that there is a list of achievements. It has invested more in the recruitment of nurses, which is at record levels. The Welsh NHS vaccine roll-out programme was a tremendous success; I recognise that the roll-out has been a success across the United Kingdom, and I am absolutely delighted about that, but the Welsh NHS really stepped up and delivered. There are so many achievements that we do not have time to discuss today, so perhaps the right hon. Member for Preseli Pembrokeshire would like to secure another debate on the topic.
I feel for the people of England and Scotland, who have not had the support that we have had in Wales. The answer is clearly for them and their fellow British citizens across the UK to vote to replace this pitiful, debased and degraded UK Conservative Government with a Labour Government driven by purpose, patriotism and the national interest, rather than the self-interest and saving of their own skin that we are seeing from the current Government.
Liz Saville Roberts
Does the hon. Gentleman join me in welcoming the decision taken by Labour in Wales over the weekend to increase the size of the Senedd? Surely the point is that we need better scrutiny of the services carried out in Wales. Does he also join me in welcoming the major initiative, also agreed to in the vote over the weekend, to change the voting system, moving away from first past the post and towards a list system? It shows that in Wales we can bring about a different sort of politics by working together.
Stephen Kinnock
The reality is that the Senedd simply did not have enough Members to hold the Government to account. There were not enough Back Benchers on Committees. Scrutiny is a vital part of our democracy—the right hon. Lady is right about that point.
Wales faces a UK Government who have broken their promises to the people of Wales. It has become clear that when providing a replacement for EU farm funding, the UK Government are deducting EU receipts due to Wales for work that was part of the 2014 to 2020 rural development programme, meaning that Wales’s rural communities are £243 million worse off than they should be. That is a devastating blow to those communities.
The Parliamentary Under-Secretary of State for Wales (David T. C. Davies)
Does the hon. Gentleman agree that in the last year for which agricultural funding was calculated, £337 million was spent on agriculture—in 2019 before Brexit— and that in each year afterwards £337 million is being spent? If my figures are correct, Wales has not lost out by one penny as a result of leaving the European Union.
Stephen Kinnock
I thank the Minister for intervening, but these figures are from the House of Commons Library briefing, they have been checked and triple-checked, and the reality is that Wales’s rural communities are £243 million worse off than they should be. If the Minister wishes to contest that claim he is welcome to do so, but those are the facts of the matter.
The Government are also undertaking a game of smoke and mirrors around the pot of money being offered to Wales through the UK shared prosperity fund, which, of course, is replacing EU funding. What is absolutely clear is that over the coming decade and beyond—not just the next three years, which is the commitment that the Government have made, but the next three decades—the funding that Wales receives must match the amount that the EU would have given to Wales. Ahead of us now is a cliff edge. We need guarantees that when the £1.5 billion-a-year UK-wide commitment falls away, the £1.5 billion will continue, and I hope that the Secretary of State will confirm that from the Dispatch Box today. This is an issue of long-term planning that supersedes party politics and manifestos. It is about the key stakeholders who are on the coalface of delivering these shared prosperity fund projects. They need much more long-term planning capability than this three-year cliff edge is allowing them.
It is also essential that the Welsh Government are given a real and meaningful say in how these funds are administered. Devolution must be respected, and it is deeply disappointing that the UK Government are seeking to ride roughshod over fundamental constitutional principles, as manifested in the UK shared prosperity fund and the way in which it works.
It is time that the Conservative Government started to take levelling up seriously. Tory inflation and under-investment risk levelling down communities like mine in Aberavon. The decision not to support the Swansea Bay tidal lagoon, as well as the failure to implement the green steel deal that Labour is proposing, has shown a disregard for parts of our country that are desperately in need of investment and development. This must start with a fairer package of funding for Wales, less smoke and mirrors around budgets, and an emergency budget to meet the Tory cost of living crisis.
Let me end by saying that I agreed wholeheartedly with the right hon. Member for Preseli Pembrokeshire when he said he objected to the “older, sicker, poorer” narrative. We are a proud people: a proud, dynamic, entrepreneurial, innovative people. We are not victims and we are not looking for charity, but we need a level playing field, and that level playing field can only be delivered by a UK Government in Westminster—a Labour UK Government, delivering in partnership with the Welsh Labour Government for the people of Wales.
Several hon. Members rose—
Mr Deputy Speaker (Mr Nigel Evans)
Order. I remind Members that we have just two more speakers before the winding-up speeches, and that anyone who has taken part in the debate should come back for those. We also have two more bits of business after that, so I ask Members please to show some time restraint.
Jessica Morden (Newport East) (Lab)
It is a pleasure to follow my hon. Friend the Member for Aberavon (Stephen Kinnock), who made an excellent speech. I shall be speaking in a similar vein. I am also grateful to the right hon. Member for Preseli Pembrokeshire (Stephen Crabb) for securing the debate, along with the Welsh Affairs Committee, which pressed for it to take place. I greatly miss being a member of the Committee, which does valuable work, not least in sending us copies of the Library briefing for today’s debate. That briefing confirms the decrease in funding for Wales’s final budget, which was disputed earlier by some Members.
In fact, the Welsh Government’s budget over the next three years is likely to be worth at least £600 million less in real terms because of higher than expected inflation. With the outlook for inflation, economic growth and additional funding looking bleak, the spending power of the Welsh Government is likely to deteriorate further, which is why they have called on the UK to update its settlement. As other Members have pointed out, we are also set to lose more than £1 billion of vital EU funding, with the UK Government failing to honour their 2019 election pledge to replace and
“at a minimum match the size of”
EU structural and investment funds.
Against that backdrop, the Welsh Government face even more pressures in seeking to address the cost of living crisis, which should be a priority for all Governments in the UK. However, even in these hard times, the Welsh Government are trying their hardest with what they have at their disposal to help households that are struggling to get by—unlike the UK Government, who are out of ideas and out of touch with what people are really going through; refusing, as others have said, to bring in an emergency budget; and raising taxes during a cost of living crisis.
After Ofgem announced increases to the domestic energy cap, Rebecca Evans, the Welsh Finance Minister, set out a £330 million cost of living package of support, which goes beyond that announced by the UK Government. The Welsh Government provided the £150 cost of living payments to all households in council tax bands A to D and expanded the support to those in higher bands in receipt of council tax reduction. As other hon. Members have said, this included free school meals throughout the Whitsun and summer holidays, and additional funding for the winter fuel support scheme for 2022-23 will ensure that the scheme can once again provide people on low incomes with a non-repayable £200 cash payment towards their energy bills later in the year. That is on top of the Government’s £200 rebates on bills from October.
The average band D council tax bill in England is £167 more than it is in Wales. Even with the stuff that the Government have brought in recently, we pay £17 less in Wales. As has been said, we have a Labour Administration in Wales who are really serious about supporting the public through this perfect storm of rising costs. They stand in stark contrast to this Government and a Chancellor who had to be dragged kicking and screaming into introducing a windfall tax on oil and gas profits to partly fund cost of living support for households.
As the right hon. Member for Preseli Pembrokeshire mentioned, the cost of living crisis in Wales has been made worse by the shortcomings of the benefit system. In its March report, the Welsh Affairs Committee rightly identified that current benefit levels are inadequate and called for an urgent review of the Government’s cruel decision to end the £20-a-week universal credit uplift, as well as a re-evaluation of policies including the five-week wait, the benefit cap, the two-child limit, the bedroom tax, the shared accommodation rate of universal credit for under-35s and the freeze of the local housing allowance rate at March 2020 levels. Everything on that list is relevant to today’s debate, and I would add to it the lower rate of universal credit for under-25s. That has caused hardship for many constituents, with housing associations in Newport East reporting under-25s spending all their universal credit on utility bills and having nothing left for food. It is worth pointing out that cuts to universal credit and working tax credit will take around £286 million out of the Welsh economy, with more Welsh families being hit proportionally harder.
I mentioned the loss of EU funding earlier. The loss of £243 million in rural funding and the £772 million shortfall in EU funding is likely to mean the loss of £1 billion of vital funds. The Minister will be aware of the considerable scepticism that exists around the shared prosperity fund. The Welsh Government have also voiced concerns that the fund will redirect economic development funds away from areas where poverty is most concentrated. My hon. Friend the Member for Rhondda (Chris Bryant) also made that point. This is a missed opportunity to ensure that funding reflects the distinct needs of Welsh communities. The fact that the Welsh Government have been totally ignored in the decision-making functions around the fund appears to be a deliberate attempt to undermine the principles of devolution, as referenced by the Public Accounts Committee in its report.
There has also been frustration with how the levelling-up fund has operated in practice. Only three of the 10 successful Welsh bids for the first round of the fund came from south Wales, and none from Gwent. I urge the UK Government to put this right in the second round and to look carefully at bids such as the one for the regeneration of the town centre in Caldicot, which has cross-party support. Sixteen local authorities in Wales did not benefit from the fund at all in the first round, and it would be interesting to hear what Ministers are doing to address that.
On rail, Wales has 11% of the UK rail network but receives only 2% of rail enhancement funding from the Government. We are now set to miss out on billions of pounds of consequential funding from HS2.
On police funding, no area of the UK has been safe from damaging Tory cuts, but Ministers in this place have shown no recognition of the specific challenges facing Welsh police forces. For example, no Welsh force receives national and international capital city grant funding. That is relevant to Gwent police in my area and that of the Under-Secretary of State for Wales, the hon. Member for Monmouth (David T. C. Davies), which needs to draw on additional resources to support events in Cardiff in the neighbouring South Wales police area, as well as at the international convention centre and Celtic Manor in the constituency of my hon. Friend the Member for Newport West (Ruth Jones).
Similarly, Welsh forces have not been able to utilise their apprenticeship levy contributions in recent years, and they currently pay around £6 million a year more than their English counterparts towards the training of officers. That issue has been raised before in this place, including by my hon. Friend the Member for Merthyr Tydfil and Rhymney (Gerald Jones), but Ministers have—
Jessica Morden
I will not, on this occasion, because another Member wishes to speak and hon. Members have intervened many times during the debate.
As I was saying, Ministers have incorrectly attempted to pass the buck on to the Welsh Government for that issue. It is not a devolved issue, and it is time Ministers took some responsibility.
There are additional strains on finances that Welsh police forces just do not need, especially when we consider that the headline £5.2 million of extra grant funding for Gwent in the police grant report published earlier this year is effectively written off to fund the long-term costs of the final tranche of the police uplift programme and the 1.25% increase in national insurance contributions. The UK Government continue to leave police forces in Wales to fend for themselves rather than funding them properly.
Finally, it is worth remembering that Government Members have voted to cut the £20 universal credit uplift, voted against free school meals for children during school holidays, voted for an increase in NI contributions and voted against a windfall tax. That is the record they stand on as we debate this estimate.
Christian Matheson (City of Chester) (Lab)
May I say what a pleasure it is to follow my hon. Friend the Member for Newport East (Jessica Morden)? I also congratulate the right hon. Member for Preseli Pembrokeshire (Stephen Crabb) on securing and leading this debate.
When I rise to speak in any debate on Welsh affairs, I suspect that Members can predict straightaway what I will talk about. Sure enough, there are no surprises from me today: I will speak about Chester’s place at the heart of the transport links for all of north Wales. We are debating Welsh economic growth, and the railway network around Chester is central to what Members across the House hope to achieve in north Wales. The hon. Member for Clwyd South (Simon Baynes) spoke about the dislocation that north Wales sometimes feels from the south. That is something that I hear, too. By improving connectivity in north Wales through Chester, we could certainly minimise that.
Chester is the gateway to north Wales, with lines heading down to Shrewsbury through Chirk and Gobowen, down to Wrexham and further on that way, and along the beautiful north Wales coastline. I see the hon. Member for Aberconwy (Robin Millar) in his place. He spoke earlier about Conwy castle, which is a fantastic day out on the train from Chester. I went crab fishing on the quayside there as a child, and I took my children there when they were younger. That railway line is also an economic artery, linking up with the ferries coming in from the Republic of Ireland, and it absolutely needs upgrading.
The central element is the Growth Track 360 proposals that are being put together with the Mersey Dee Alliance, which covers the cross-border area, as well as the local authorities, the North Wales Economic Ambition Board and the local enterprise partnership on my side of the border. The proposals will increase signalling and platform capacity at Chester and allow for through services from north Wales to Manchester and Liverpool. The Government have a good story to tell on those Liverpool services, because they opened the Halton curve to allow through trains from Liverpool. However, because of the continuing restrictions on the north Wales coastline, the number of direct services from Liverpool through to north Wales is restricted. Can we please have some more oomph from Ministers in the Wales Office and the Department for Transport, working with Transport for Wales, so that we get confirmation that the work will go ahead in Chester and its station to increase capacity, and to increase train frequency along the north Wales coastline to five an hour, given the full benefits that that will bring to north Wales?
That would tie in neatly with something I have been pushing for since I was first elected: the electrification of the line from Crewe to Chester. There is something of a bottleneck at Chester, and there are restrictions. We keep being promised that that last 20 or so miles will be electrified, but the promises seem to be disappearing further into the distance. This work is essential, particularly if we are to get the full benefits of High Speed 2 in Chester and on into north Wales. The Minister has been very supportive of the electrification, and I believe that the Secretary of State has visited the area and is aware of the issue. If north Wales is to get the full benefit of HS2, we need to get further forward with electrification.
A lot more immediate than HS2 is the issue of through services from north Wales to Chester and on to London Euston. We used to have 12 such services a day, but it was reduced to one a day. We are now supposed to be grateful for an increase to two a day—a doubling of the service. The railway companies are telling us that there will be an increase to 14 direct services a day between London and Chester, with a majority of those going on, along the north Wales coastline, to Bangor, Llandudno and Holyhead. We absolutely need the Government’s support, through the Department for Transport and the Wales Office, and that of Transport for Wales, to nail this down. We need those direct services, and I would be grateful if the Minister gave the issue attention.
The hon. Member for Clwyd South and I had an exchange about levelling-up bids. My constituency is not bidding in round two, not because the local authority, Cheshire West and Chester, lacks ambition—it absolutely does not—but because the bids take up a lot of officer time and office resources. There is something of a beauty contest here, and hard-pressed local authorities do not necessarily want to gamble on getting bids approved. However, I am pleased to support Flintshire County Council’s bid for the Borderlands line. That will benefit his constituency, as well as the constituencies of my right hon. Friend the Member for Alyn and Deeside (Mark Tami), and my hon. Friend the Member for Ellesmere Port and Neston (Justin Madders), as well as Chester.
Although it lies outside the boundaries of my constituency, a new station at Deeside will absolutely help the western side of my constituency. It will also help the Deeside industrial area, in which there are 26,000 jobs, to grow even further. It is immediately outside Chester, in north Wales. A station there would provide additional connectivity with Liverpool and Wrexham. If the bid is successful, it will also allow more trains on the Chester to Wrexham line, which will help Wrexham to grow, because it will allow for railway sidings at the Hanson cement works. The way trains are manoeuvred around at the moment requires space on that line, as there are limits on the number of trains that can pass. Again, the Government have a story to tell on this: I think I am right in suggesting that the track from Chester to Wrexham has been doubled since 2010, so the Government are not getting the full benefit of an investment for which they can claim credit. Let us allow this bid, which I support; let us get the developments on the Borderlands line sorted; and let us allow real regeneration in Chester and, of course, north Wales.
Richard Thomson (Gordon) (SNP)
It is a pleasure to speak in this debate on Welsh estimates, and to congratulate the right hon. Member for Preseli Pembrokeshire (Stephen Crabb) on a fine speech. I thought my good friend the hon. Member for Carmarthen East and Dinefwr (Jonathan Edwards) was slightly unkind to tease him by saying that Yes Cymru would put it on YouTube, but I am sure that the Secretary of State will provide more than enough ammunition on that front in his summing up—I hope he does not disappoint.
I have remarked before in debates about Wales on the ambitious policy programme of the Welsh Government, and the package of measures that they are taking forward to reinforce the foundations of society in Wales and create a modern, prosperous, socially just, confident and inclusive modern European nation. I noted the plea from the hon. Member for Aberavon (Stephen Kinnock) for everyone to plight their troth to the Labour party. We in Scotland are quite happy with where we are with our SNP-Green coalition in Holyrood, and with our contingent down here. In Cardiff, there is obviously a coalition of ideas, if not in Government. It seems to be only in Westminster, where there is a single-party Government with a thumping majority, that dysfunction reigns. If there is a coalition of chaos anywhere in these islands, it seems to be in the Conservative and Unionist party, as it tries to stagger forward coherently from one week to the next.
While I was preparing my speech, I saw the Welsh Government’s annual report for 2022; it came hot off the presses today, in fact. I hope to have a chance to browse it later. It is due to be debated in the Senedd later this month. It reports on the Government’s 10 objectives. Some of the themes that leapt out of it will not be surprising or indeed unfamiliar from the Scottish perspective, particularly the need to tackle post-pandemic issues in the health service, which are common; protecting, rebuilding and developing services, particularly for vulnerable people; the urgent need to build an economy based on the principles of fair work and sustainability; embedding a response to the climate emergency in all that we do; and leading the broader civic conversation about how we wish to be governed, what we want our institutions of government to look like and what our place in the world should be. None of those things, particularly the last, should be under-looked as key components of building back better, especially when it comes to ensuring that we take the right actions and, just as importantly, have the right tools to tackle the cost of living crisis.
At the beginning of 2022, Wales had the highest poverty rate of the four nations, with almost one in four people living in a measure of poverty and 14% of Welsh households—nearly 200,000—living in fuel poverty in October 2021, which was prior to the price cap increase. I pay tribute to the hon. Member for Ceredigion (Ben Lake) for all his work on this issue and on fuel oil. I tried my luck on the subject at Welsh questions, just minutes before the Chancellor made his spring statement; I asked the Secretary of State—very much in the hope of getting a sneak preview of what might be coming in a few minutes—what discussions he had had with the Chancellor about the Government’s plans in this area to tackle the cost of living crisis. I was told to wait and see. So I waited and I saw. The Secretary of State said that, as a heating oil customer himself, he also suffered from this problem. Indeed, I probably know more about the Secretary of State’s domestic heating arrangements than I do about how the Chancellor plans to tackle the issue for homeowners who are in that group.
However, it is not just homeowners who are under the cosh. Fuel poverty is a key driver of in-work poverty. Nearly 400,000 households in Wales are on universal credit or legacy benefits, and nearly 40% of those in receipt of those benefits are in employment. That problem is clearly not confined to Wales, but it is a depressing statistic, and one that is pretty damning of the UK Government’s policies over many years. In the St David’s day debate this year, I remarked that the UK was one of the most geographically divided countries in the OECD when it comes to economic performance. Beyond the political knockabout, there are some deep-rooted structural reasons for that. There is a history of de-industrialisation, and a real imbalance in research and development funding; London and the south-east hoover up 54% of the total R&D spend in the UK, whereas the equivalent figure in Wales is only 4%.
For a country where prosperity has traditionally been based on what it can manufacture and export, it has been a significant blow to Wales to be taken out of the single market. With Welsh exports to the EU accounting for some 60% of its total exports, compared with just over 49% for the UK, it is a particular blow that neither major UK party represented in this place now supports being in that market.
The Office for Budget Responsibility has calculated that under the trade and co-operation agreement, the trading arrangements between the UK and the EU are set to reduce UK productivity by 4% in the long run relative to where we would have been had Brexit not happened. With those headwinds, it is absolutely imperative that there is some kind of silver bullet—some dynamic initiatives—that might help us to overcome those disadvantages with which we have been saddled.
Jamie Stone (Caithness, Sutherland and Easter Ross) (LD)
The hon. Member’s contribution is very good, and it actually rings a bell with me. In years gone by, were not the sheer rurality and distance factors in both Scotland and Wales tackled by the European Community’s objective 1 structural funding, which was carefully calculated to assist those areas that had the biggest disadvantage? The challenge for the UK Government is to try to do something similar—if they ever will—to what the EC used to do for us.
Richard Thomson
The hon. Member makes an excellent point. I remember well the benefits that were brought to the highlands and islands, part of which he represents, through objective 1 funding. The fact that the money came direct, bypassing London, gave us an assurance that the money would actually be spent in those areas. I am not certain that we could have had the same confidence in the UK Government in office at the time. The hon. Member and I differ on certain things in politics, but I think we might be able to make common cause on that.
The hon. Member leads me neatly on to levelling up. The Welsh Economy Minister, Vaughan Gething, has stated that Wales is set to lose some £750 million over three years, compared with the situation that would have pertained had the UK remained in the EU. I heard the plea and the earnest hopes from the hon. Member for Aberconwy (Robin Millar) that, somehow, Wales might be able to do better with less when it comes to that funding shortfall. I certainly applaud the ambition, but surely there can now be no doubt that there is a deficit of funding, relative to what it would have been, and that will be problematic when it comes to delivering projects. I see that even in my area of Aberdeenshire in north-east Scotland.
We could look at freeports. There are opportunities there for sure, but Stena notes that in the ports of Holyhead, Fishguard and Pembroke, traffic is down 30% on the pre-pandemic period. It will take significant activity around our freeports to compensate for that loss of economic activity in the ports, and resulting from that reduced traffic.
I could go on to talk about fair funding and how HS2 has conveniently been placed outside the brackets for Barnettisation, but I come back to the points that the right hon. Member for Preseli Pembrokeshire was making about offshore wind. I welcome his comments about the benefit that ScotWind promises to bring to Scotland.
As the right hon. Member for Dwyfor Meirionnydd (Liz Saville Roberts) said, Crown Estate devolution can play a major role in making sure that all the pieces that the right hon. Member for Preseli Pembrokeshire talked about are brought together strategically, so that we get all the supply chain spin-offs. It is, I would say, a fairly conservative argument that the Government should bring policy and resources into alignment, so that we get the best possible outcome and transparency—not just transparency of Government, but transparency in how we spend public cash. I cleanse the palate by saying that, to me, true devolution is empowering Government to act in that way in Wales and Scotland. That is preferable to bypassing devolution, as the United Kingdom Internal Market Act 2020 did to get around the fact that the Conservative party does not seem able to win elections in Scotland or Wales. It instead seeks to allocate resources without going to the trouble of winning elections in those areas.
Jo Stevens (Cardiff Central) (Lab)
I thank the right hon. Member for Preseli Pembrokeshire (Stephen Crabb), Chair of the Welsh Affairs Committee, for securing this debate and for his excellent chairship of that Committee, which does valuable work for all of us in Wales. I also thank all Members who have contributed to the debate. We have had a number of wide-ranging contributions. This debate must be set in the context of the current economic climate. After 12 years of Conservative Government, with help from the Liberal Democrats for five of those years, we have a high-tax, low-growth economy, with the country suffering the biggest drop in living standards since records began and the highest tax burden since world war two.
The reality is that the Welsh Government’s budget over the spending review period we are discussing is, as has been mentioned, likely to be worth at least £600 million less than it was when it was first announced last autumn, because of that rocketing inflation. As my hon. Friend the Member for Newport East (Jessica Morden) said, the outlook for inflation, economic growth and any additional funding looks very bleak indeed. The spending power of the Welsh Government’s budget is therefore likely to deteriorate further. That is why the Welsh Labour Government have called on the UK Government to update their settlement to reflect the significant impact that inflation is having on important budgets being spent in Wales.
If we look at the UK Government’s record, leaving aside for the moment the squalid nature of the lawbreaking, the sleaze and the U-turns happening day after day, what stands out on spending is that they make many promises and deliver on very few of them. They have made promises to Wales and they have broken them.
Let us start with the explicit manifesto promise in 2019 that Wales would not be a penny worse off when it came to post EU membership replacement funding. We have heard a lot about that today. The Secretary of State and his colleagues have repeated that promise over and over again, but the facts are that Wales is set to lose more than £1 billion of vital funding.
My hon. Friend the Member for Aberavon (Stephen Kinnock), in a tour de force of a speech, went into detail about where the shortfall is placed; it is through the shared prosperity fund, the community renewal fund and the cut to Welsh rural communities. All of that adds up to more than £1 billion less than the Government promised. That is a broken promise to the people of Wales.
Jo Stevens
No, I think the hon. Gentleman has had plenty of interventions today. I will carry on because we are quite short of time.
As for the levelling-up fund, only six Welsh councils saw any benefit from the first round of the fund and just one of them was a Labour council. I will just leave that there, but I wonder why that was. The second round of applications to that fund has been delayed because the Government have not been able to get their application portal ready in time for the original deadline. They cannot even get the basics right on this.
The Government are using the UK Internal Market Act, as we have heard, to take decisions in devolved areas, excluding the Welsh Government from a transparent process of joint decision making for the shared prosperity fund. They are imposing a methodology on Wales for how those limited funds are decided on, which results in money being distributed away from the poorest areas in Wales. The Conservatives refused to countenance the Welsh Government’s alternative funding formula, which would have distributed money more fairly across Wales according to economic need. Let us be clear: this is a far cry from the rhetoric of levelling up and protecting the Union. It is this Prime Minister and this Government who are the greatest threat to the Union.
Turning now to infrastructure funding for Wales, I know the Secretary of State will not like this, but I am again going to raise the classification of HS2 as an England and Wales project by his Government. A £4.6 billion Barnett consequential is not going to Wales. I know he is tired of hearing about it, but it is not just me saying it, or even just Labour. The right hon. Member for Preseli Pembrokeshire, Chair of the Welsh Affairs Committee, agrees. His entire Select Committee agrees in its report. The leader of the Welsh Conservatives agrees—or is the Secretary of State the leader of the Welsh Conservatives? I do not think anybody is really sure.
The Treasury’s rules for evaluating infrastructure projects do not work in the interests of Wales, but have prioritised infrastructure projects in the south-east of England. Costs for HS2 and rail enhancement are allocated to Wales, but none of the benefits apply. In fact, HS2 explicitly disadvantages south Wales. The analysis of the Secretary of State’s own Treasury colleagues confirms that HS2 will result in an economic disadvantage to Wales of about £150 million every year. Because rail infrastructure is not devolved beyond the core valley lines, Wales, unlike Scotland and Northern Ireland, gets a double whammy: no £4.6 billion consequential and an annual economic hit. We have heard that there will be no mainline electrification in north Wales. Mainline electrification from Cardiff to Swansea was promised and then abandoned by the Conservatives. About 2 million tonnes of steel will be used across HS2, but Transport Ministers have confirmed that there is no target for the use of UK steel or Welsh steel in HS2 construction. This is such a missed opportunity for Wales, for Welsh steel jobs and for the people of our steel communities. The Government have got this all wrong and Wales is, literally, paying the price.
This does not just affect transport infrastructure. There are knock-on effects across climate change targets—the need for greater use of public transport and more active travel, with the consequential effects on health and wellbeing—and, critically, on narrowing the economic inequality that Wales suffers compared with other parts of the United Kingdom. As my hon. Friend the Member for Cynon Valley (Beth Winter) said, the truth is that this Government are holding Wales back. They are making decisions that take money from the people who can least afford it. The Conservatives voted to cut the £20 universal credit uplift, voted against free school meals, voted to increase tax during the cost of living crisis, and voted against a windfall tax, until they had to do a screeching U-turn forced by Labour. What is the Prime Minister’s response to the cost of living crisis? We hear today that he has invited the First Ministers of Wales and Scotland to a summit in the autumn—so more delay and more inaction while he focuses entirely on saving his own skin.
Contrast that with what the Welsh Labour Government have been doing, taking decisions that support households in greatest need to mitigate the worst impact of those Conservative Government decisions. The Welsh Government have invested more than double what they have received in consequential funding from the UK Government to support households with the cost of living crisis, and that support has been targeted at those who need it most. About 75% of households are expected to be supported in some way, and nearly twice as much will go to households in the bottom half of the income distribution compared with those in the top half. My hon. Friends the Members for Aberavon, for Newport East and for Cynon Valley spoke about all the measures that the Welsh Labour Government have been taking to help families and businesses in Wales. I would add these to the list: during the pandemic, businesses in Wales were able to access the most generous support package anywhere in the United Kingdom; and through Jobs Growth Wales Plus, over 19,000 young people have been helped into good-quality, meaningful employment across Wales. This is what a Labour Government in Wales deliver, solving the problems the Conservative Government have created.
A UK Labour Government will build a stronger, more secure economy, working hand-in-hand with the Welsh Labour Government for the benefit of everyone in Wales. We will get the cost of living crisis under control and make the whole of Britain more resilient, more secure and more prosperous, laying the foundations for a thriving, dynamic economy.
The Secretary of State for Wales (Simon Hart)
I join the chorus of compliments directed at my right hon. Friend, and neighbour, the Member for Preseli Pembrokeshire (Stephen Crabb) for his part in this debate and, indeed, in chairing the Welsh Affairs Committee, which he does with absolute skill and aplomb. I was struck by a few points he made. He referred to the inflationary pressures that are on the UK at the moment being a global phenomenon, rather than a UK-based or even a Wales-based one. He mentioned the Opposition’s claims about underspend or underfunding, which seemed to vary according to which speaker was on their feet, with one or two Labour Members referring to £1 billion and others from the SNP referring to £700,000. It seems that they cannot even agree among themselves exactly what their line of attack is.
I was particularly struck by my right hon. Friend’s comments about the Crown Estate and devolution. Having had many meetings with the Crown Estate, a number of stakeholders and potential investors who were floating offshore wind, I am as excited as he is by the prospect of some 10,000 of the 29,000 jobs that might be associated with this scheme coming to Wales. Of all the potential investors, and many of the local supply chain businesses that we will rely on, not a single one has ever mentioned to me that their opportunities would be enhanced by devolving the Crown Estate. [Interruption.] If the right hon. Member for Dwyfor Meirionnydd (Liz Saville Roberts) does not like what I say, perhaps she might trust some of the people who have real expertise and who are really optimistic about bringing well-paid, skilled jobs to Wales. It is they whom we should be listening to, rather than necessarily a separatist movement.
Simon Hart
I will keep pressing on, because we do not have a lot of time. My old friend and neighbour, the hon. Member for Carmarthen East and Dinefwr (Jonathan Edwards), and I have had this exchange about separatism versus Unionism many times, but until such time that he can explain to me why it is apparently essential for the future of Wales that we leave the UK, while simultaneously apparently just as essential that we rejoin the EU, I will never be able to take his economic lectures as seriously as I know he would like.
My hon. Friend the Member for Aberconwy (Robin Millar) made a telling contribution about tourism and hospitality, particularly along the north Wales coast, and demonstrated his strong advocacy as far as a low-tax economy is concerned.
If the ambition of the hon. Member for Cynon Valley (Beth Winter) is to wind me up, she does it remarkably well, whether in the Welsh Affairs Committee or here. In her praise for the performance of the Welsh Government, it was telling that there was no reference to health outcomes or educational outcomes in Wales. It was also telling, as I challenged her last time about this, that she never mentioned the fact that I would love to join her in a letter to the First Minister suggesting that the £96 million-worth of extra Members of the Senedd that she advocates for so passionately instead be spent on job creation in the Cynon Valley. My offer is still open to her. That would be a better use of the funds we are talking about.
My hon. Friend the Member for Clwyd South (Simon Baynes) made an interesting contribution about the geographical spread of the shared prosperity fund, referencing joint bids between local authorities and the new opportunity for MPs across the House to endorse or contribute to the bids. I thought his point about the Union relevance of infrastructure—we could quote any number of examples, whether road or rail—was telling and important.
Turning to the hon. Member for Ceredigion (Ben Lake), all I can say is that he made, as he often does, a measured and sensible contribution around the rural fuel relief scheme, and my pledge from the Dispatch Box is to talk to him and his colleagues further about how we can tackle that problem.
The hon. Member for Aberavon (Stephen Kinnock) put in a strong case for sycophantic speech of the year. That was a great effort. He went all-in on tax rises, but did not mention that the two most recent contributions of Labour in Wales on tax were introducing a tourism tax, which is widely considered to cripple tourism in Wales—that was not mentioned; I cannot think why—and the latest ruse about a deposit return tax, which would damage, for example, a number of vineyards in Wales. His long list of, basically, free stuff to anybody would not have been that long if the Welsh Government were responsible for raising that money, either by private taxes or by business taxes. He never mentioned that. I wonder whether this obsession with free stuff would be so easy if there was some accountability about raising the cash in the first place.
Nearly finally, there was more in the speech of the hon. Member for City of Chester (Christian Matheson) about which we agree than disagree—I am not sure how pleased he will be about that. We have a closely shared ambition on Union connectivity, and I absolutely agree with the significance he attaches to that. We might have a different means of reaching that particular objective, but I agree with him, and I would like to have further conversations with him and colleagues in the north Wales area to see where we can take that.
Finally, with the speech of the hon. Member for Gordon (Richard Thomson) from the SNP, I almost reached a new record, as it contained nothing upon which we agreed. That is not to be in any way critical. He illustrated to me how separatism and nationalism—whichever description he would care to attach to his particular political party—would be one of the most significant threats to Wales that I can think of, were it ever to be deployed in our country.
I want to finish, with huge thanks to you, Mr Deputy Speaker, my right hon. Friend the Member for Preseli Pembrokeshire and other contributors to the debate. We are in danger of painting a gloomier picture than we need to—of course, we have to be realistic—if we listen to the expectations for Wales of the hon. Member for Cardiff Central (Jo Stevens). As Airbus recently demonstrated, Wales is a fantastic place to invest vast sums of money and create hundreds of new highly skilled jobs—there are many such examples, large and small, across the whole country. People are looking to us in Government, and the hon. Lady in Opposition, to create the circumstances to make that possible. We can do that. It is not without its challenges—nobody, from the Chancellor down, is suggesting for one minute that it will be an easy ride—but I urge the hon. Lady to join us in our endeavour to make sure that levelling up is the success that it deserves to be.
Devolution in its truest sense is about involving the widest number of people with expertise across the whole geographical area of Wales. The great thing about the levelling-up fund is that, for the first time ever, it does exactly that. It reaches into local authorities and local communities across the length and breadth of Wales. That has never been done before, and it is revealing that the Welsh Government were advocates of devolution, as we heard from the hon. Member for Aberavon, until such time as we said, “Yes, that’s a good idea. Let’s involve some more people. Let’s involve people who have hands-on daily experience of the pressures facing their communities where deprivation is at its most acute”—that is what we are attempting to do.
It seems odd that Labour in Wales is so paranoid and disrespectful of local authorities, some of which wear the same political colours. For some inexplicable reason, Labour Members seem nervous of allowing devolution to extend beyond the Cardiff postcode. We do not believe that; we trust local authorities, stakeholders and universities—all those people who make our economy and our society tick. That is why levelling up will be a success. If it was simply a means of transferring a postcode from SW1 to CF16 or whatever it might be, it would be a failure. The Welsh Government need to stop being so paranoid and join the endeavour to level up Wales in the way that they have failed so spectacularly to do for 23 years.
Mr Deputy Speaker (Mr Nigel Evans)
With the leave of the House, I call Stephen Crabb to wind up.
Stephen Crabb
With the leave of the House. It is apt to see you in the Chair, Mr Deputy Speaker, given your Welsh heritage.
Again, I am grateful to the Backbench Business Committee—the Chair, the hon. Member for Gateshead (Ian Mearns), is in his place—for selecting this topic for debate this afternoon. I thank all the participants, who have made it a thoughtful, intelligent and engaging debate. We have covered a lot of ground and we have covered many different subjects well. We have disagreed well and we have exchanged some important ideas about the future of Wales. I hope that people watching the debate will have seen that one thing that unites Members on both sides of the House is that we are Members of Parliament for Welsh constituencies who share a love of Wales and a deep love and connection with our communities. We all want the best for our communities in Wales.
Finally, in the next Parliament, the number of MPs from Wales will be significantly reduced, so it will become even more important to have more opportunities on the Floor of the House to debate issues for Wales. Many other parts of the country are fighting hard for resources and we must do our bit in Wales to fight harder in future.
Very finally, I thank again the Clerks of the Welsh Affairs Committee and their team of staff who do a simply superb job to support the work of the Committee.
Mr Deputy Speaker
I love “finally” and “very finally”.
Question deferred until tomorrow at Seven o’clock (Standing Order No. 54).
Department for Business, Energy and Industrial Strategy
Action on Climate Change and Decarbonisation
(2 years, 4 months ago)
Commons ChamberRead Full debate Read Hansard Text Read Debate Ministerial Extracts
Mr Deputy Speaker (Mr Nigel Evans)
I call the Chair of the Environmental Audit Committee.
Philip Dunne (Ludlow) (Con)
I add my thanks to the Chair of the Backbench Business Committee, the hon. Member for Gateshead (Ian Mearns)—it is good to see him in his place—and the members of his Committee for agreeing to the proposal from me, the Chair of the Business, Energy and Industrial Strategy Committee, the hon. Member for Bristol North West (Darren Jones), together with my right hon. Friend the Member for Kingswood (Chris Skidmore) and my hon. Friend the Member for Hitchin and Harpenden (Bim Afolami), who respectively chair the all-party parliamentary groups on the environment and on renewable and sustainable energy. I thank them for supporting the opportunity to have this debate to discuss the Government’s spending plans for action on climate change and decarbonisation.
This is a timely day for the debate, not least given the publication last week of the Climate Change Committee’s annual progress report to Parliament for 2022. The Environmental Audit Committee—it is good to see members of my Committee in the Chamber, and I hope they will have an opportunity to catch your eye during this short debate, Mr Deputy Speaker—will be discussing the report in more detail with the chair of the CCC next week, but its headline message is unarguable. There are major gaps—some might say failures—in the programmes designed to deliver the UK’s climate goals, and I am sorry to have to say that.
I sympathise with my hon Friend the Minister who will be responding to this debate. Russian’s invasion of Ukraine has disrupted energy supplies and enormously exacerbated the demand pressures as economies recover from the pandemic. However, the scale of the current geopolitical crisis and the shock it has delivered to global energy markets clearly requires rapid recalibration of his Department’s strategy. That is not the topic of this debate, so I shall not refer to it in detail, but the cost of living crisis, to which the current price shock has contributed, is affecting us all, and the House will have an opportunity to discuss the Government’s legislative proposals on that issue later. This provides an important backdrop to the House’s consideration of the priorities for Government expenditure. There is a cost of living crisis that is making daily life extremely difficult for all of our constituents, including the most vulnerable.
Caroline Lucas (Brighton, Pavilion) (Green)
The right hon. Member is talking about the recalibration that is needed in the Department. Does he agree with me that one area where that is extremely true is the need for a proper home insulation programme? We have never seen this Government get that right, in spite of the £11.7 billion allocated to the energy bills support scheme, which is of course welcome. What we need is a proper home insulation programme—street by street, local authority-led—and we still do not have it.
Philip Dunne
The hon. Lady makes a very important point, and she made a strong contribution to our Committee’s report on the inquiry into the energy efficiency of existing homes. I will comment on that in my remarks, but I broadly agree with her.
It is right that the Government do what they can to align their spending priorities to support all those who are being squeezed, but as the CCC reminded us last week, we are also in a future of living crisis. Large-scale changes in climactic conditions are undeniable, and they have the potential to make parts of the globe uninhabitable, provoking a crisis of barely imaginable severity. So it is entirely appropriate, in Net Zero Week, that the House consider in a little more detail the spending that the lead Department on net zero is proposing in the current financial year to tackle climate change and to address decarbonisation of the economy.
In October 2021, just before the COP26 conference in Glasgow, the Government produced their net zero strategy. This is an ambitious document, ranging widely across all areas of Government. It presents the first wide-ranging plan across Government to build on the initial 10-point plan for the green industrial revolution, which the Prime Minister presented in November 2020. It demonstrates that the Government are in the business of climate mitigation and climate adaptation for the long term. I would argue that there is broad consensus across the parties in the House that this has to be the direction of travel. It also reflects the broad scientific consensus that the planet is under threat from climate change as never before in recorded history, and that our behaviour must change in certain ways if we are to be able to avoid the worst effects. However, my concern is that the Government’s strategy seems, in too many areas, to defer substantive action and to leave real expenditure to a future date—and, dare I say it, possibly to a future electoral cycle. The warning from the Committee on Climate Change last week surely demands that more immediate action is taken to achieve the Government’s priorities and net-zero ambition.
My Committee had an interesting exchange last week with my right hon. Friend the Secretary of State for Environment, Food and Rural Affairs. He disagreed with the thrust of the CCC’s conclusions, which he thought did not make sufficient allowance for the potential contribution of technology to mitigation of the climate crisis. That is a perfectly reasonable debating point. Indeed, our Committee has looked at a number of technologies that can play their part in achieving our net-zero ambition. However, I say gently to those on the Treasury Bench, that waiting for the right technology to turn up is not a strategy.
The Committee has been looking at potential solutions to help decarbonise the economy, from tidal power to offshore wind—there is significant emphasis on that in the Government’s strategy—and heat pumps, where there is ambition, but currently a significant gap in delivery. As the Secretary of State for Business, Energy and Industrial Strategy, and the Minister for Energy, Clean Growth and Climate Change will know—we wrote to them about this—the current state of development of negative emissions technologies does not promise a “silver bullet” from carbon capture and storage plants, which by 2050 will snatch carbon from the air and allow us all to go on as before. It is simply not there yet.
The Chancellor’s spending review last autumn gave a breakdown of the Government’s expected expenditure on net-zero measures in each year to 2024-25. In total, the Government plan to spend £25.6 billion on net-zero measures over that period, with £5.5 billion to be spent in the current financial year—subject, of course, to the House’s approval of these spending plans tomorrow. There are concerns about how effective that spending will be, and the Public Accounts Committee has recently been critical about the overall funding of the net-zero transition. The House is right to be concerned about the value for money of such approaches, and I commend the National Audit Office for its detailed and expert analysis of the Government’s plans.
The excellent briefing on the Department’s estimate, produced by the House of Commons Library for this debate, indicates that £21.8 billion—20% of the Department’s budget for this year—is dedicated to reducing UK greenhouse gas emissions to net zero. I do not include in that figure the £11.6 billion for the reduction in energy bills announced as part of the Government’s measures to address the cost of living crisis. Although the Government list that as a measure contributing to the net-zero target, I do not think that short-term energy bill reductions should be treated as a net-zero measure, unless somehow they are linked to fossil fuel reduction measures more directly.
I will focus the remainder of my brief remarks on the points that my Committee made last session in its report on the energy efficiency of existing homes, to which the hon. Member for Brighton, Pavilion (Caroline Lucas) referred. It seems that this is the area where greatest progress can be made towards the net-zero target, and in the shortest time. It was also the area that many witnesses before the Committee identified as a missing component from the recent energy security strategy.
I was pleased that late last month Ministers laid before Parliament the draft legislation needed to implement the fourth energy company obligation scheme. That hugely successful scheme has driven energy efficiency improvements in a great many domestic properties. Such improvements will reduce consumer bills. They will also reduce energy consumption, and thereby emissions from power generation. In the nine years of the scheme’s operation to date, it has supported cavity wall insulation in over 1 million properties. That is impressive, but there are still some 19 million homes that need upgrading to energy performance certificate band C. The cost estimate on which our Committee received evidence averaged £18,000 per property. Our Committee, I am afraid, found that the Government estimate for decarbonising Britain’s housing stock by 2050, at some £65 billion overall, was highly likely to be a significant underestimate. Welcome though the ECO is—last month, the chair of E.ON told the Committee about industry support for the scheme—it represents only a small fraction of what is genuinely necessary to achieve domestic energy efficiency. Will the Minister be in a position to elaborate further on the Department’s plans to drive energy efficiency in existing homes? It is not immediately apparent in the spending plans that the House is examining.
It is unlikely that the average householder will be able to afford a one-off payment of about £20,000 to upgrade their property without some incentive from the centre. I do not want to hark back to the green homes grant voucher scheme, but I hope that the Government have learned the lessons from its introduction. It was a well-meaning scheme that could have kick-started energy efficiency improvement, but it was strangled by red tape and ultimately abandoned in less than a year, having reached only a fraction of the homes that it was expected to improve.
Richard Fuller (North East Bedfordshire) (Con)
I wonder whether my right hon. Friend might address community-led schemes, which were the other thing that the hon. Member for Brighton, Pavilion (Caroline Lucas) mentioned. Is not one reason why costs are so high because the Government’s strategy is focused on individuals making a decision about their house, rather than being a more comprehensive approach that could achieve better economies of scale, certainly in service delivery?
Philip Dunne
The Government have been focusing on social housing, which is typically owned in relatively large unit blocks together in a street or an estate. In many cases, such schemes are community energy schemes. For example, I have seen geothermal being introduced across an entire estate in my constituency. The Committee is looking at the prospects for geothermal to provide community-based schemes. There is a big role for that to play, but it is a part of the whole that will not be suitable for every area or every housing type.
The Government are taking steps, but I see them as overly cautious. However, I strongly welcomed the Chancellor’s announcement in the spring statement that removed VAT on energy efficiency measures for domestic homes. I expect that Ministers will be measuring its impact in the expectation that it will be a pathfinder to extensively rolling out similar support—for example, on batteries for domestic energy storage, which, as I understand it, are currently excluded from the scheme.
It is clear that the current energy cost crisis is leading to soaring public interest in energy efficiency measures to cut bills. For a Government willing to invest wisely, that represents a real opportunity for substantial returns not just to the Exchequer, but to the householder through cut bills and to the planet in reducing emissions. I do not expect the public sector to pick up the bill for energy efficiency improvements, but, with the right support, the private sector can be properly incentivised to take the lead.
In closing, I will raise one further issue concerning the Government’s approach to energy efficiency and the funding of measures to improve it. I would like Ministers to undertake a thorough review of the impediments to introducing innovative schemes that encourage home improvements. Just last week, I was alerted to how an innovative domestic solar panel installer’s business model is being constrained by provisions in the Consumer Credit Act 1974 designed to protect both consumers and suppliers from theft or loan default on portable consumer goods, such as cars. It seems problematic that those provisions should also apply to home insulation schemes, which are not portable—or, if they are, they are very expensive to move—and therefore are not a good asset on which to lend subject to those provisions. I strongly ask Ministers to examine such issues with some urgency. It may well be appropriate to do so when the UK Infrastructure Bank Bill comes to this House, to ensure that the bank is not similarly hobbled in making investments in energy efficiency projects. Thanks to the Department, those are one of its core remits.
Several hon. Members rose—
Mr Deputy Speaker (Mr Nigel Evans)
Order. I anticipate that the wind-ups will come at about half-past 6, with eight minutes for the SNP, 10 minutes each for the other two Front Benchers and two minutes for Mr Dunne to sum up. If people keep their speeches to roughly 10 minutes, we should get everybody in equally.
Darren Jones (Bristol North West) (Lab)
Thank you, Mr Deputy Speaker. I intend to speak for less than 10 minutes, if that is helpful. I start by thanking the Environmental Audit Committee for securing the debate and for sharing with the Business, Energy and Industrial Strategy Committee, which I chair, the load of scrutinising net zero delivery across Government. I thank the Backbench Business Committee for granting this time on the Order Paper, and I thank the Clerks who support the work of our Select Committees day to day; without them, we would not be able to scrutinise the Government as effectively as we do. I welcome back to the shadow Front Bench my constituency neighbour, my hon. Friend the Member for Bristol East (Kerry McCarthy), in her new role as the shadow Minister for climate change. I look forward to her summing up later.
My focus today is primarily on delivery, because effective delivery ensures value for taxpayers’ money. The Conservative party generally believes that sending policy signals through targets or departmental strategies will be enough to ensure that the market does the heavy lifting as we transition to net zero by 2050. On this subject, it is wrong. Ministers will no doubt point to a long list of targets, strategy documents, incentives—for example, contracts for difference—and research funding allocations, all of which are admirable and welcome. But as the Climate Change Committee concluded last week in its annual report to Parliament, Ministers must think much more about the role of the state in ensuring the delivery of their net zero ambitions, be that from Whitehall or through partnerships of local authorities—and always, in my view, in partnership with the private sector and local communities.
Unfortunately, the Department for Business, Energy and Industrial Strategy is not very good at that. According to the National Audit Office’s review of the delivery of major projects in the Department, 11 of the 15 major projects were deemed to have significant issues that required management attention, or major risks that put the successful delivery of the project in doubt or, at worst, caused it to be deemed unachievable. They include amber warnings for the smart metering implementation programme, costing £20 billion; the social housing decarbonisation fund, costing £4.6 billion; the public sector decarbonisation scheme, costing £1.1 billion; the local authority delivery of the green homes grant, costing £500 million; the heat networks investment project, costing £376 million; and the home upgrade grant for energy efficiency and low-carbon heating work in low-income, off-gas grid homes. There were significant worries about each and every one of those major projects, and, of course, there was a big red warning against the now defunct green homes grant. In fact, the only major programme to receive a green rating from the National Audit Office was the geological disposal facility programme, costing some £12.7 billion, for the long-term management of radioactive waste. For that, I suppose we should be grateful.
In short, there is a delivery problem in Government at a time when the state needs to get more involved in delivery. That is why the Climate Change Committee has called for stronger coordination and delivery, not just in BEIS but through Downing Street and the Cabinet Office, and for contingency planning to be urgently put in place if the current strategies are not delivered as intended. From BEIS, we must see more detailed delivery plans and technology road maps for the delivery of net zero electricity by 2035—something my Committee has started to look at in a new major inquiry—as well for hydrogen production, carbon capture and storage, and industrial decarbonisation.
The No. 1 priority for the Department in relation to our net zero target requirement is, of course, the energy efficiency of our buildings. Buildings account for 20% of emissions in the UK, and the targets the Government have set themselves are very significant in terms of carbon emissions reductions by the mid-2020s. The Government will not hit their net zero target without insulating our buildings and reducing our need for energy, and they will not insulate our buildings without being more directly involved in delivery. This should be a national programme, street by street in every community, co-ordinated nationally in partnership with local councils. That will, of course, cost a lot of money, and public funds should be targeted at households that need it, whether they are on low incomes or require more expensive works to be done because of the nature of their homes.
The current plan from the Government is, unfortunately, to move the same amount of money around again, instead of properly funding a national insulation programme. The money allocated to the failed green homes grant was partly reallocated to the public sector decarbonisation scheme and to the gas boiler replacement voucher scheme. According to the Secretary of State’s evidence to my Committee last week, that is being re-reallocated back to a general energy efficiency programme to be announced in due course.
Richard Fuller
I hope the hon. Gentleman will indulge me if I take him back to the street-by-street proposal, which three hon. Members have mentioned. What if an individual does not want that change to their house? What will the public policy be? Will we force people to make the change or will we allow free riders? I wonder what his answers are to those intriguing questions.
Darren Jones
There are two points to make. On consumer awareness generally, although there is very significant support for action on climate change, polling shows that most consumers do not realise that that means replacing their gas boiler and insulating their homes. Part of the net zero strategy for Government should be to try to engage with homeowners, tenants and the public about the work that needs to be done, but they have failed to introduce any effective engagement programme with the public. The concern is that when people do not want to do the work, that will cause a lot of anger among the public, and that will undermine our ability to reach net zero.
The use of public funds is also very important, because the disposable income of an average household, once we take away rent or housing costs, is around £9,000 a year. As we have heard, however, we are asking people to spend £10,000 to £20,000 on their home. How on earth can we ask a family with an annual disposable income of £9,000 to spend £20,000, when there is no support from the state or councils and when the banks are not even offering low-cost energy-efficiency financial products to help people who want to make these investments? That is why the Government need to be more involved in thinking about delivery. I suggest having incentives and behaviours that nudge people in the right direction, so that the vast majority of people feel able to do what they want to do and support the national effort to tackle climate change.
Caroline Lucas
I certainly agree that incentives and greater financial support will be crucial. However, does the hon. Gentleman agree that another way of tackling the issue that the hon. Member for North East Bedfordshire (Richard Fuller) raised would be to make very sure that there was a requirement to up the energy performance certificate rating before the house next changed hands or was put on the rental market? In other words, if people wanted to sell their house, they would have to make sure that it was properly insulated. In a sense, we would have both the carrot and the stick.
Darren Jones
We may end up having to do that, but I think that we need to lead with the incentive and support for positive behaviour before getting to the stick. I also note that the obligation is on people who own a home that they rent out to make sure that their home has an EPC rating of C or above. That comes in much earlier than for homeowners. That is a good thing, but the Government have still not set out how they will help homeowners to do the work affordably.
Delivery is important for the Business Department, because, of course, we cannot do this without business. Remarkably, however, given that we are talking about the Business Department, the constant chopping and changing between policies, financing and the requirements for businesses to be able to get access to financing—through the green homes grant or other programmes—make it extremely difficult for businesses to have any certainty about what will happen. That also makes it very difficult for businesses to invest in their kit or workforce, in training and upskilling their staff, or in the expansion of their services in larger geographies across the country so that they can do this work. We have feedback time and again from business that they are ready and willing and want to do the work, but that the constant chopping and changing from Government makes it very difficult for them to scale up and provide the amount of work that needs to be done across the country.
It is crucial that we get this right urgently. The CCC’s report to Parliament this week showed why, of all the issues, we must move more quickly on building decarbonisation, not just for consumers, homeowners and businesses, but for our ability fundamentally to hit net zero and protect the planet from the worst effects of climate change. I urge Ministers, when they are thinking about delivery and, as a consequence, about value for taxpayers’ money, to radically change their approach. I urge them to set out a policy direction and a well thought-through product design that businesses and homeowners understand they can take part in. It should be properly financed and go street by street across the country to ensure that we get on with this now, given the complete lack of progress over the past few years. I wonder whether the Minister, in summing up, will have any reflections on how the Department might improve its delivery of this important work.
Chris Skidmore (Kingswood) (Con)
I thank the Backbench Business Committee for agreeing to the debate. Hon. Members across the parties have signed up to it, including a large number of Select Committee Chairs and chairs of all-party parliamentary groups. I speak as chair of the all-party group on the environment.
Our debate comes at an opportune moment: this is Net Zero Week, and last week was the third anniversary of my signing net zero by 2050 into law as Energy Minister. The UK was the first G7 country to do so. If I had been told at the time that by COP26 in Glasgow, 90% of the world’s surface would have signed up to a net zero target, I simply would not have believed it—but I probably would not have believed that we would have a global pandemic, that Afghanistan would cede to the Taliban or that Russia would invade Ukraine.
Given all the strong headwinds, the day-to-day political events and the crises of the past three years, it is worth reflecting on the longevity of the net zero target and on what needs to be done. We need to be resilient and sustainable to achieve our greatest challenge: a green industrial revolution, with a move from petrochemicals towards a new materials economy. The challenge is massive, but the UK has shown international leadership in signing up to net zero. We were able to pass it in this Chamber because of the Climate Change Act 2008, which was enacted by the then Labour Government with the Conservative party in opposition demonstrating cross-party support for upping the target.
We need to be in a place where our financial commitments are shadowing the commitments to net zero that all political parties have made. We do not have a financial mechanism in place as we do for our carbon budgets, so I think we need to be more innovative in how we look at our budgets. Today we are discussing estimates and the budgetary cycles for our net zero commitments; I will come on to the details in a moment. Until we move to a longer-term cross-party funding solution, however, I think we will struggle, because we will be endlessly discussing the detail rather than the broader strategic approach needed to deliver energy efficiency.
Before I go into the costs in pounds and pence—the billions of pounds that are being spent—I want to make sure that we do not fall into the trap of thinking of net zero as a sunk cost. Actually, every pound spent is an investment. Net zero is a net benefit to our economy, so when we talk about the money invested by the Government, let us not fall into the trap of thinking that somehow it is going down the drain.
Richard Fuller
I hate to pick my right hon. Friend up on this point, because he is much more knowledgeable than I am, but how can net zero be a net benefit to the economy unless achieving net zero comes with economic benefits? What would those benefits be?
Chris Skidmore
The economic benefit of net zero is a wholesale transformation in our industries, our manufacturing processes and the way we think about our world. The same debates would have been had over the introduction of the car, the introduction of electricity or the introduction of gas boilers to replace log burners in every house. Going through those wholesale transformations has led not only to new jobs, but to growth.
If there was one mistake in signing up to net zero, it was using the term “net zero”. We should have called it net zero growth, because it is not about eco-warriors or extremists committing themselves to decarbonisation; it is a pathway that shows us doubling our energy use by 2050. Committing to net zero is a manageable path that will ensure that our economy continues to grow.
Richard Fuller
I do not want to deflect my right hon. Friend too far from the debate, but let me just pin this down. The automobile added to growth because it got people from A to B quicker than a horse and cart. The move to net zero essentially means taking certain off-balance sheet, off-profit and loss statement costs and putting them on the balance sheet or on the P&L. It will therefore act as a brake on growth unless the United Kingdom can expand our revenue opportunities, do things at a lower overall cost or shift behaviour patterns so that we can do things more efficiently. That is the piece that is missing from what has so far been said by my right hon. Friend and by the Committee on Climate Change. Those things are there, but should we not be honest with the public that without them, net zero harms growth rather than enhancing it?
Chris Skidmore
My hon. Friend is entirely right about one aspect of this. He mentioned efficiency and productivity. Obviously the UK faces a huge productivity challenge. We are speaking in Parliament and discussing the importance of politicians to making this energy transition, but it is already happening even without us. Private companies across the UK, and indeed the world, are saying that they would want to go to net zero even if there were not a climate crisis, because they recognise the opportunities for productivity, for disruption, for achieving better efficiencies, and for thinking differently. That is what makes net zero so important: the wholesale transformation, into the 21st century, which recognises that we cannot be dependent on unsustainable fossil fuels that will ultimately run out.
The Russian war against Ukraine has demonstrated that we cannot be held hostage by petrostates for the future. We must do something about that, and I think current messaging means that far more people support net zero. This is the year when climate change and net zero went mainstream. I think that all politicians, particularly certain politicians on my side of the Chamber, are at risk of not being on the public side of the argument. They need to understand that this has to happen, not just for the sake of the climate, but for the benefit of our economy.
Chris Skidmore
I will give way to the hon. Gentleman and then to the hon. Lady, but after that I must get on, because I do not want use up all my time with interventions.
Jim Shannon
I agree with what the hon. Gentleman is saying, but I live in an agricultural community. I live on a farm, and all my neighbours are farmers. Let me give an example of the current pressures. Last week I spoke to the farmer next door, who is not just a very big dairy farmer but also a contractor. He has, I think, eight or 10 tractors and trailers on the road, and he employs 12 people. He told me that the cost of diesel was up by at least 100%, and the price of fertiliser by 300%. When it comes to the financial equations, he is staring at stark reality. With respect, speaking as someone who agrees with the objectives put forward by the right hon. Gentleman and others in the Chamber, maybe we need a wee bit more time, because at the moment some farmers are under so much pressure to make ends meet. They are faced with costs that they have never seen before in all their life. Does the right hon. Gentleman agree?
Chris Skidmore
With respect, I do not. We do not have any more time. We have 28 years until 2050. It has been 30 years since we began these discussions and since the formation of the United Nations framework convention on climate change. We have seen the emission, since 1990, of 50% of all carbon dioxide emitted by the world in the entirety of human history. The argument that we need to go more slowly belies the fact that net zero is the slowest possible path on which we can travel while hopefully retaining a chance of hitting 1.5°. The consequences of not hitting 1.5°, or 2°, or even 4°, God forbid, will be more catastrophic for local businesses, and for farmers such as the hon. Gentleman’s friend.
The Po valley, normally one of the wettest areas of Italy, is now dry because seawater is flooding into the river. That is the reality of what is happening. Farmers throughout the world are, because of climate change, becoming less productive, and are becoming unable to produce the food that they once could. We need to be able to look them in the face. We, the industrialised nations that have this leadership, need to take action to ensure that all countries take this opportunity while we still have time—and that time is, sadly, ticking away.
Let me turn to the details of the estimates. My right hon. Friend the Member for Ludlow (Philip Dunne) referred to the estimate from the Department for Business, Energy and Industrial Strategy, which is on page 9 of the Library pack. It claims that
“£11.6 billion for the £400 energy bills reduction announced as part of the Cost-of-Living measures package”
contributes to the net zero target. That is simply not true. The £400 that is going out of the door to subsidise gas and other fossil fuel usage is exactly the same amount that a household would save every single year in a property that was in band C of the energy performance certificate rating. This is the economic reality of net zero. Once a capital cost investment is made, we are looking at savings, year in, year out, whether that is through the production of renewable wind or solar energy, or through energy efficiency. That is what we need to be talking about when we are discussing net zero measures, not the false creative accounting that we see in the estimates.
We should also look at the Treasury’s spending plans for net zero. My right hon. Friend the Member for Ludlow mentioned the period 2023-24, when the plan is for spending to rise to £8 billion a year, before it falls back to £7.7 billion in 2024-25, so actually we are going backwards. Of course we want to ensure that private sector uptake and investment continues; it cannot just be the state making these investments. We have to look at how we can draw in greater private sector investment, and I will come on to that in a moment. The reality is that if we have such balance sheets without having a longer-term sustainable programme for delivering net zero, we will always have these measures.
We need a coalescing target, just as net zero-ers have been able to coalesce around a single target. When I was Science and Research Minister, we had a target spend of 2.4% of both public and private gross domestic product on research and development by 2027, although we may fall short of that. Other countries such as China are going to hit 3.5%, and countries such as Israel are already about to hit 5% of GDP, both public and private, on R&D. Yesterday, the Prime Minister talked about spending 2.5% of GDP on defence by 2050. Where is the GDP target figure for net zero? We should set ourselves a far-reaching goal, and commit ourselves to that spending, both private and public, to demonstrate the investment that is needed for net zero.
There are far too many small pots of funding—we have talked about the green homes grant—and that creates a concertina effect, whereby people apply for a funding scheme, but we do not have the skills to deliver the product that is needed. As a result, these programmes ultimately do not achieve the targets they set out to achieve. I believe that moving away from small pots of funding to longer-term plans through which we can finance net zero should be the way forward. To deliver that, we should think about setting a net zero finance target for the UK every year, and on estimates day, we should talk about that, rather than using false figures in our accounting to claim that we have delivered an additional budgetary impact on net zero.
Jamie Stone (Caithness, Sutherland and Easter Ross) (LD)
I thank the right hon. Member for Ludlow (Philip Dunne) for his thoughtful contribution. Coming from the highlands in the far north of Scotland, I have seen with my own eyes what climate change is doing in my lifetime. As a child, I took a huge interest in butterflies and recorded every butterfly I ever saw. I did not kill them; I recorded what they were. Today, we have species of butterfly in the highlands that we never saw there in the 1950s and 1960s, including the speckled wood and the orange tip, which are now quite common, but we are also seeing some species disappearing, particularly moths. That is because of global warming. It is there; it is real.
As is my wont, I shall make three points that are connected with the needs and requirements of my constituency. In recent days and weeks, there has been quite a lot of press coverage of a suggestion that, as and when a new wind farm is built, perhaps in England somewhere, the nearby households that might be affected would be given a grant of £350 per household. In my constituency in the highlands, we already have a large number of onshore wind farms, so my first plea, which is a pretty obvious one, is that if the Government ever did consider some sort of grant like that, it should also be afforded retrospectively to homes in the highlands and other parts of the UK where there are already wind farms. My part of the highlands is one of the coldest parts of the UK—the village of Altnaharra in Sutherland always has record low temperatures—and average incomes are not large. Transport and getting about are expensive, and given the inflationary situation and the cost of living, a wind farm payment like that would help families who are struggling to make ends meet.
I conclude my first point by saying that I am a great believer in the United Kingdom, and I believe that a family in the highlands, in Wales or in south-west England has the same rights as a family anywhere else. Therefore, if such payments were made, I think that in the interest of fairness, all parts of the UK should be considered, as should my suggestion about making retrospective payments.
I warmly encourage all Members to come and have their holidays in the highlands, but as they drive up the A9, as James Bond did in “Skyfall”, now and again they will come across a vast articulated lorry carrying part of a turbine up to where a wind farm is being constructed. Having those lorries going through the narrow villages of Sutherland, such as Golspie, Brora and Helmsdale, and negotiating the twisting roads is a problem, both for getting parts of the turbine where they are intended to go and because it discourages the local people.
My second point is an old favourite of mine. Recently, a man called Mr Frank Roach, who is a tremendous fellow for developing the use of railways, got a very large consignment of timber moved from Sutherland to markets further south on a very large train. For global warming and net zero, moving by rail makes the most enormous sense; Godspeed the day it is all electrified. My second plea, therefore, is that, where planning consent has been granted for a new wind farm, we should look quite hard at moving parts of wind turbines by rail and not by articulated lorry, consuming vast amounts of diesel as it burns its way up and down our roads. I earnestly recommend that officials in the Government contact Mr Frank Roach and talk to him, because it is really quite extraordinary the way he is getting us all in the north of Scotland thinking about the use of the railway.
My third point is that offshore wind has been proved by the construction of the Beatrice wind farm off the coast of Sutherland and Caithness. It works—it really does. It generates a huge amount of electricity. But there has been sensible talk by the Government and others—it has already been referred to in the debate—about establishing floating offshore wind farms.
Let me make an unashamed plug for the Cromarty Firth in my constituency, which was the great anchorage for the fleet in the first and second world wars because it is such a large and deep anchorage, safe from the weather. It is no accident that some of the mightiest oil production platforms ever built were built there. I strongly advocate to the Government that offshore floating wind systems could be constructed in the area. They could be constructed in Wales and elsewhere, too, but the main thing is that it would be nice to see them built in the United Kingdom. I hope—I realise that I am really chancing my arm—that the Government will look favourably on the bid by the Cromarty Firth to become a green freeport.
In concluding, I want to make two small points. First, this debate is very much in keeping with what we all hear from young people in schools. To use a German word, it is the Zeitgeist—the spirit of the times. Young people are only too well aware of the urgent need to get to net zero. They know all about climate change, and I find that hugely encouraging.
Secondly, I want to pick up on what I think the right hon. Member for Kingswood (Chris Skidmore) was saying, if I understood him correctly. A good number of years ago, I was a member of Ross and Cromarty District Council. We went for a courageous money spending scheme called care and repair, which was deliberately targeted at some of the coastal villages of Wester Ross—Gairloch, Applecross and places like that. We threw what was known as block B capital allocation at doing up houses. That meant that people had their homes insulated.
This was quite a long time ago, but the point was that the money we spent, which was a lot, went into the local businesses—the joiners, the people who installed the solar panels, and so on. They then invested in more equipment and, in turn, bought locally. That money was pumped into the local economy of a remote rural area. That was a financial benefit that we saw in Wester Ross all those years ago. So the money that is spent is spent locally. It boosts the local economy. One could say that the Chancellor’s measures during the pandemic had the same effect; they boosted the local economy. All I am saying is that it is a mistake to think of it as being money down the drain. It is money spent in the UK, to the good of the UK, and that money is recycled, eventually supports the shops and helps to establish the businesses, which can go on to win bigger and better contracts.
I will conclude my remarks with that, other than to say that it is really good to hear a debate of this quality in this place. I know it will strike a chord with my younger constituents. I intend to send a copy of the Hansard record of this debate to my secondary schools as I think they will be interested.
Bim Afolami (Hitchin and Harpenden) (Con)
I rise in response to the challenge from the hon. Member for Caithness, Sutherland and Easter Ross (Jamie Stone): this debate has to be of such quality as he will send a copy of the Hansard to his young constituents. That puts me under pressure—
Bim Afolami
I hope so.
This debate comes at a time when there will be significant problems for millions of ordinary people up and down this country, and indeed all over the world, in heating their homes and getting around. It is an opportune time for us to have this debate about decarbonisation. I should start by saying that I strongly support not only the Minister on the Bench, the Under-Secretary of State for Business, Energy and Industrial Strategy, my hon. Friend the Member for North East Derbyshire (Lee Rowley), who I know is a highly capable and effective Minister, but the Secretary of State, who is also that. The Minister is smiling. I am being nice to you, Minister. Indeed, it is a very effective Department that has had a huge amount to do and, broadly speaking, it is doing a very good job.
However, the context of oil and gas prices rising is a very complicated one. If the House would indulge me, I think it requires not just the Government, or this House, but international markets and other countries to think about decarbonisation differently. Oil and gas prices may rise structurally over the coming years due to an increase in demand from emerging market countries in particular. Many in the City of London, and many investment banks and energy analysts, think that will occur. If it does happen, in the short term, there will be a significant problem for millions of people across the world, including in this country.
The way to deal with that is to increase the pace of decarbonisation, and the pace of getting renewable energy used and in the ground. Indeed, that helps our energy security as well. However, at the same time, we must not demonise the major oil and gas companies, which have the skills, wherewithal and capital to help us to achieve that. Therefore, subtle and effective Government policy is required, working internationally with our partners, to ensure that we can give these major energy companies the confidence to invest in decarbonisation. They have the engineers, the capital and the know-how all over the globe to help us achieve that aim. I speak as someone who does a lot of work on these issues, as the House knows. There is no point in our demonising anybody who holds shares in an energy company, gluing ourselves to famous paintings or doing that sort of thing. All that happens is the price of oil and gas continues to go up, which makes people’s lives harder. There may well be a backlash to the decarbonisation agenda if people perceive that it is not something that will ultimately help their lives and the economy, and help them to heat their home.
Chris Skidmore
Obviously we will discuss the Ways and Means motion on the Energy (Oil and Gas) Profits Levy Bill, or so-called windfall tax, later, but does my hon. Friend agree that companies such as BP and Shell that have agreed to become net zero companies should put their money where their mouth is and maybe establish a net zero fund? Such a fund could be tapped into over a long period to help to pay for some of the energy efficiency measures, demonstrating that it is not just green levies that will pay for additional net zero support mechanisms, and that we can leverage in private finance. Let us look to create a fund that could be financeable over a long period, given that we are holding these companies to account for their net zero commitments.
Bim Afolami
I thank my right hon. Friend for that typically well-made and excellent point. If the major energy companies established a long-term fund on that basis to make the investment that they say they are making—and which they are making, but which they say they want to make more of and which the Government want them to make more of—that would be helpful, not just as a signal to the market of where they were using their capital, but as a signal to the country that they were serious about putting their money where their mouth is.
Caroline Lucas
I am all in favour of fossil fuel companies creating funds, but would not another way of achieving that be for the Government not to give oil and gas companies such an extraordinary subsidy, as part of the windfall tax—the so-called 80% investment allowance, which incentivises precisely the opposite kind of behaviour that the hon. Gentleman is speaking so eloquently about?
Bim Afolami
I thank the hon. Lady for her point. The intention behind subsidies—or, to use another word, support—for energy companies is to try to achieve what we want them to achieve. The investment allowances—there are various other things—should be tweaked or changed to incentivise more directly the sort of behaviours that we are talking about. On that, I support her.
Bim Afolami
I would like to continue, as I am being nodded at by various people because of the time, so I will make a little progress if I may.
We have heard a lot today about buildings and the need for a big insulation plan, for want of a better description. I strongly support that, but micro-measures to help individuals are also important. As Ronald Reagan said, the scariest words in the English language are: “I’m from the Government, and I’m here to help.” We need big, macro ideas. We need the big plans, but at the same time we need to incentivise individuals and families who want to help with the transition, do the right thing and make their own decisions to decarbonise. We can use things such as smart household systems to allow users to manage when to charge their electric cars, optimise when their heating comes on, or when to turn their fridge up.
We could also use market reforms to allow small energy suppliers to supply local areas. When there is a proposal for something in my constituency and I say to the energy company or small supplier, “Can you do something for the local village or local community so that they can benefit from this?”—whatever the form of energy is nearby—they say, “Look, the market isn’t really structured to allow that to happen.” That is a big problem, because it means that we are not getting the support of the local community or tapping into the latent desire to decarbonise—yes, working with Government at a macro level, but also at a micro level.
Jamie Stone
The hon. Member need have no fears: I shall put a large red star beside his contribution when I send off the copies of Hansard. If I pick him up right, surely the point is that anyone who thinks that the Beatrice wind farm, which I mentioned in my contribution, came into being without the expertise of oil firms, which have installed mighty things in the North sea, would be very much mistaken. These same oil firms that he is referring to will be crucial if we are to establish large-scale floating offshore wind energy generation.
Bim Afolami
I thank the hon. Gentleman for that point; I could not agree more. It is a really difficult point to make, because it seems counter-intuitive, but we will need the major energy companies to do their bit and use what they have to achieve what we all agree we need to achieve, which is faster decarbonisation. We need macro measures from Government and we need to work much harder on buildings and insulation, but we also need micro measures to help individuals and small communities invest in decarbonisation and make those decisions themselves.
I commend these estimates. I am sure the money will be spent wisely, particularly if the Government have listened to the quality of this debate.
Richard Fuller (North East Bedfordshire) (Con)
It is a pleasure to follow my hon. friend and neighbour, the Member for Hitchin and Harpenden (Bim Afolami).
When Parliament agreed in June 2019 to achieve net zero by 2050, it was probably the most expensive, uncosted piece of legislation that has ever been passed by this country. It was a “Star Trek” piece of legislation, asking the country to boldly go where no one had gone before. These estimates start to frame how much the costs will be—costs for taxpayers, costs for individuals, and costs for business. As we look at those things, we need to be pragmatic and not dogmatic about achieving net zero. Too often we talk about the great opportunities of achieving net zero without really being honest about whether they are opportunities or just a shifting of resources, which, when it comes down to economics, has no net benefit at all.
As I was saying earlier, the contribution of net zero to this country’s growth is highly questionable. Essentially, we are taking a cost, which we ignored in the past, and saying that we now need to take it into account and eliminate it as a cost in our production. Growth does not arise from that. Growth arises when we can do the same thing for a lower cost—through productivity improvements. Growth can arise when we increase the revenues, particularly for our own country. That could be achieved through import substitution, or it could be achieved through the creation of new green technologies that we can export to other countries. However, it is not guaranteed just because we have passed a piece of legislation that says, “Let’s all achieve net zero by 2015.” It can be achieved by changing the ways that we do things into ways that are more productive. Finally, it can be achieved by reducing the costs of uncertainty, the most obvious of which when it comes to energy is hedging.
None of those things is guaranteed. As has been said, children and schools are enthusiastic about this, but that is because they are taught about net zero and because, quite naturally, young people have an interest in all things natural, such as the environment, diversity and the planet. Ultimately, though, the costs are what will matter in terms of whether and how we can achieve that ideological and scientifically justifiable goal.
From my point of view, the most important thing for us as a country is that we need to work with the pace of innovation and be cautious about trying to exceed the costs of innovation. That is because when we try to move more quickly for a policy goal, ahead of the way that innovation is enabling us to get there, it means additional cost burdens on households and on taxpayers.
In the estimates, it will be interesting to hear from the Minister about the extent to which he appreciates those goals and the extent to which the Government are trying to increase the pace of innovation. I am talking not just about providing subsidies and support for people to change the way they do things, but about the way the Government are providing incentives for innovation to move at a faster pace.
Chris Skidmore
The Government also need to set a number of targets for the production of hydrogen and for the capture of carbon dioxide as part of their 2030 plans and the net zero strategy Build Back Better. Talking to HyNet North West, it is clear that it believes that it can go further, and it wants to call on the Government to double its opportunities to capture carbon dioxide. It wants to increase the current allocation of hydrogen from 1 GW to 2 GW. It would also like to see a doubling of the megatonnes of carbon dioxide captured per annum.
Does my hon. Friend believe that the Government should give HyNet, which says that it has the companies ready to go, the opportunity to double the amount of hydrogen and double the amount of carbon dioxide that it can capture now, because it believes that it can do it? I agree with my hon. Friend that we should follow the innovation.
Richard Fuller
I appreciate my hon. Friend’s example of innovation, which could assist.
I wish to focus now on the particular issue of decarbonising home heating. We heard from my right hon. Friend the Member for Ludlow (Philip Dunne) in his opening speech that that is essentially a £20,000 cost for a household when it is combined with insulation. He quite rightly made the point that that is beyond almost every household. I think the hon. Member for Bristol North West (Darren Jones), the Chair of the Select Committee, also noted that it is beyond the expectation of the ability of households to pay for it.
We also know that the economies of scale when it comes to technologies for decarbonising home heat are challenging, because the technology is already established and therefore the production economies of scale are likely to be less than in other areas, and because a large part of the costs are in the service delivery, which is people. People efficiencies are harder to capture than production efficiencies.
Not only is the up-front cost high for everyone, but it means that, without Government action and direction, we would end up with certain households doing it that might not necessarily be those that make most sense for achieving our goal. I say this as a Conservative who believes in free choice, but if we want to achieve that goal, we have to own up to the fact that relying on individual choices by individual households to achieve the decarbonisation of home heating will mean that the overall cost to society of achieving that goal will be substantially greater than going through a process that has at least a very significant part of a community-based initiative.
Again, my right hon. Friend the Member for Ludlow was right to point to the issue of social housing. I am eager to see us move forward; we have a Bill coming and I think there is an opportunity to look at neighbourhood plans, which are about planning for our local communities. Maybe there is an opportunity there to put forward some of the suggestions for community decarbonisation of home heating. I hope that hon. Members who are interested in that will let me know, because I am thinking of tabling an amendment that would make that part of the way that we ask local communities, through the planning process, to start thinking about how they achieve the decarbonising of home heat on a community basis.
I must also urge the Government to come forward and say how they will harness patient capital to solve the economic equation of decarbonising home heat. The equation is that there is a big up-front cost and then the benefits accrue slowly each year, ideally through lower heating bills and certainly through less exposure to the volatility of carbon-based fuels. What are the Government going to do to structure a programme that can attract patient capital to do that? That is the sort of financial profile that pension funds invest in all the time.
Neighbourhood plans, a community-led approach and attracting patient capital into those community programmes seem to me to be one way in the estimates to try to get an approach to net zero, if I may coin a rather cheap phrase, at net profit to the British economy. Achieving net zero at net profit is a way to get a pragmatic answer to the idealistic but uncosted goals that this Parliament put in train in 2019.
Mr Deputy Speaker (Mr Nigel Evans)
We now come to the winding-up speeches. I call John Mc Nally.
John Mc Nally (Falkirk) (SNP)
I congratulate the right hon. Member for Ludlow (Philip Dunne) on securing this valuable debate.
Let me start by saying that I have here a reminder of why we are in this place debating our children’s future. It is a “Climate Comic”, produced by children in Windsor Park primary school in my constituency. I think the hon. Member for Caithness, Sutherland and Easter Ross (Jamie Stone) might be quite interested in having a look at it later on—I guarantee it will not go into Hansard. The children who helped to produce it all have sensory impairment problems; most of them are deaf, and they signed the presentation they made to us.
If we want to change the world, we must get busy in our own little corner, and that is exactly what those children have done. It is top-class work by the primary school. The children produced their climate-conscious comic as part of the Forth Valley Sensory Centre’s “Making Sense of Climate Change” project. I thank all who helped to produce the comic and raise awareness of the fact that time is not on our side. The narrative on climate change of, “We need to do this.”, will soon become, “We should have done that.”
Here is why: the energy and security strategy presented a prime opportunity for the UK Government to tackle the dual climate and cost of living crisis, and they failed on both fronts. Their lack of ambition in setting meaningful policy to tackle that crisis was exemplified by their energy and security strategy in April, a strategy that was widely criticised and deemed inadequate by stakeholders. In the aftermath of the strategy being announced, the former chief of Ofgem noted:
“One failure, that could’ve helped in the short to medium run, is a lack of focus on energy efficiency, on insulation, on improving the quality of people's homes—I think that is an opportunity missed.”
Simon Virley, KPMG’s vice-chair and head of energy and natural resources, no less, stated that
“this strategy won’t get us to Net Zero at least cost to consumers.”
Given the importance of tackling the cost of living crisis, that is a missed opportunity. Other European countries such as Holland, France and Germany are doing this as a matter of urgency. The strategy fails to set out measures focused on improving energy efficiency in buildings, which has been described as a silver bullet by industry experts.
I am a member of the Environmental Audit Committee. I pay tribute to our excellent Chair—the right hon. Member for Ludlow—my colleagues on the Committee and the excellent standard of work by its Clerks. On the sustainability of the built environment, our report stated:
“If the UK continues to drag its feet on embodied carbon, it will not meet net zero or its carbon budgets.”
The EAC also pointed to the lack of any evidence that the UK Government were taking action to prioritise retrofit or reuse of existing buildings. Furthermore, the chief executive of E.ON noted that
“our plea to the government has always been to push hard on energy efficiency because that is the proven way, if you like the only silver bullet for this crisis”.
Caroline Lucas
The hon. Gentleman is making a powerful case. Does he share my surprise that in a debate on energy costs there has been no reference yet to nuclear power, which is eye-wateringly expensive? We are just hearing that Hinkley Point is going to be a year late and cost yet another £3 billion. Does he agree that the money that is being sunk into nuclear could be much better spent in exactly the kinds of ways he is describing, such roll-out of energy efficiency in homes and renewable energy?
John Mc Nally
I absolutely agree. The money could be spent more quickly and efficiently, saving endless money that is wasted, is probably never going to be used properly, and is making someone somewhere very rich but certainly not putting energy efficiency into people’s homes or into businesses.
The UK Government’s failure to tackle the most basic measures that are crucial in helping to tackle the climate and energy crisis is emblematic of their broader failure to prioritise these issues. If Scotland is to stand any chance of meeting our ambitious climate targets, we simply cannot afford to be held back by inadequate Westminster policies for much longer. Scotland has the potential to become a global net zero energy hub. The UK Government’s lack of ambition cannot continue to jeopardise this. We have the perfect mix of skilled workers and natural resources to become a world leader in renewable energy. Our oil and gas workers have long been at the forefront of energy innovation. The Scottish Government are committed to a just transition that harnesses the expertise of these oil and gas workers and supports those currently employed in oil and gas to capitalise on the employment opportunities of net zero.
The Scottish Government’s national strategy for economic transformation sets out their ambition that by 2032 Scotland will be an international benchmark for how an economy can transform itself, decarbonise and rebuild natural capital. The Scottish Government’s climate emergency skills action plan sets out their ambitious approach to developing the current and future workforce to support the transition to net zero. The Economic Development Association Scotland has described the action plan as
“a leading example of planning for sustainable skills against climate change targets.”
The Scottish Government’s just transition fund, alongside their strong commitment to achieving net zero, shows that unlike the UK Government they are matching their climate promises with action. That is in stark contrast to the UK Government, who have refused to match the Scottish Government’s £500 million just transition fund despite the Treasury benefiting from £350 billion in revenue from North sea oil.
The Government in Scotland recognise that climate change is the priority. That priority, desired by the people, is being met as best as it can be by the Scottish Government, and with reasons matching desires in nearly equal measures. Give Scotland the competencies and we will surely match that desire.
Kerry McCarthy (Bristol East) (Lab)
I am mightily relieved to see that the Minister is still in his place. I hope he manages to hang on until 7 o’clock; he might find he is the last man standing on the Government Front Bench. If he does want to tell the House about his resignation when his time comes, rather than tweeting it, I am sure we would be delighted to be the first ones to know. There are times when we speak in this Chamber and we feel that the eyes of the world are upon us. I think it is fair to say that this is not one of those occasions, but it is an important debate, and I thank the right hon. Member for Ludlow (Philip Dunne), the Chair of the Environmental Audit Committee, for securing it.
I wish there was a bit more to discuss. As we have heard, last week the independent Climate Change Committee delivered its annual verdict on the Government’s climate strategy, or what there is of it. I think the Chair of the Select Committee let the Government off a little lightly in his quote from that report, which was an absolutely damning read. It talked about major failures in delivery programs and stated that
“we are not seeing the necessary progress”,
and
“the Government is failing in…its implementation”.
It also said that the current strategy will not deliver net zero. The committee concluded that the Government have credible plans for achieving only 39% of the emissions reductions required. This comes less than a year after COP, when we still hold the COP presidency and ought to be showing international leadership.
It is not just the Climate Change Committee saying that the Government have fallen short. The Public Accounts Committee report published at the beginning of March said that the Government still have
“no clear plan for how the transition to net Zero will be funded”,
or
“how it will…replace income from taxes such as fuel duty…and…has no reliable estimate of what the process of implementing the net zero policy is actually likely to cost British consumers, households, businesses and government itself.”
It went on to say that the Government have
“too often pursued stop-start strategies which undermine confidence for business, investors and consumers in committing to measures which would reduce carbon emissions, especially when some green alternatives are still significantly more expensive than current options.”
We heard that from a few speakers. I think the hon. Member for Hitchin and Harpenden (Bim Afolami) talked about how businesses need the confidence to be able to invest, how they need a sense of direction from the Government and how they need to know that they will be backed up.
We heard from the Chair of the Environmental Audit Committee that the global situation requires a rapid recalibration of the Government’s strategy, and that waiting for the right technology to turn up is not a strategy in itself. Again, that is a plea for a clearer sense of direction from the Government. He said—I hope I am quoting him right—that the Government prefer to delay substantive action to a future date, post election. We might find that comes a bit sooner than we were expecting when he made those comments, but let us see. I would certainly say that the time for action is now.
We have seen that day-to-day spending in BEIS has increased by 71% since the last supplementary estimate. That has mostly been driven by this increase of £11.6 billion for the energy bill support scheme. As has been said by several people, including the right hon. Member for Kingswood (Chris Skidmore) and the Chair of the Environmental Audit Committee, this is not a net zero measure unless it is linked to ending investment in fossil fuels, which we know it is not. I expect that we will shortly hear criticisms on that front. It was quite damning how the right hon. Member for Kingswood said that it was simply not true to say that this is a net zero measure. He talked about using false figures in our accounting; I thought those were strong words, but they are true. Once that figure is discounted, we see that little money is going on the most important measures that should be being put in place to deal with emissions. Several people mentioned the need to insulate and retrofit homes, which would simultaneously slash emissions and bring down energy bills. That should have been an urgent national priority as energy costs soared. As has been said, if we invested in that, it would bring down energy bills year on year.
Chris Skidmore
When it comes to future measures—I am conscious that some of these schemes were announced by a Chancellor who has resigned in the past half hour and is no longer here to defend them—we need to introduce the concept of conditionality. It has been done in France and other continental countries but not in the UK, and it means that an investment is made on the condition that it is seen through in future green investment.
I pointed out that the £11.6 billion is money out of the door with no consequential effect on delivering on net zero. That money—£400 a person—could have been delivered on the condition that it was later spent on green home improvement measures using a voucher scheme. We need to think carefully about how we deliver those schemes in future so that we can benefit people in a cost of gas crisis—it is not just a cost of living crisis—and see real change on the ground.
Kerry McCarthy
The right hon. Gentleman is correct. We should be looking at long-term solutions, not short-term fixes. When the next rise in energy bills comes in the autumn, people will quickly discount that money. They will obviously be grateful to have had some money to help towards their bills, but they will not feel as though they have benefited a lot. Insulation, however, would mean that they had something to see them through future years.
As I said, housing should have been a priority. Properly retrofitting homes would significantly reduce the 20% of UK emissions that come from buildings, as well as cutting bills. That is why Labour has pledged £6 billion a year to retrofit 90 million homes in a decade. My neighbour, my hon. Friend the Member for Bristol North West (Darren Jones), talked about a national street-by-street programme. I would welcome that, provided that it started in Bristol East rather than Bristol North West—we will work our way round to him eventually. If Bristol is getting some money for that, I want to be first in the queue.
There are other examples where the now ex-Chancellor seemed keen to claw back green spending wherever he could. The plug-in grant for electric vehicles was scrapped just weeks ago. The planned landscape recovery fund to rewild our countryside was recently gutted from £800 million a year to £50 million over three years. In these estimates, we see a £76.8 million reduction in funding for carbon capture and storage, despite the Climate Change Committee highlighting concerns last week about the Government’s support for the sector. As the Chair of the EAC said—I seem to be quoting him a lot, which is a tribute to his excellent speech—CCS is not a magic bullet. We are simply not there yet; there is huge potential, but we cannot magic it out of thin air. There has to be a strategy to get us into a position to make use of it.
There are many things that the Government could do if they were worried about the costs of going green. They could scrap the plans to provide a huge tax break for investment in fossil fuels in the upcoming Energy (Oil and Gas) Profits Levy Bill, which we will debate next. The way that that is envisaged at the moment means that the Government will provide 20 times more in taxpayer incentives for investment in fossil fuels than in renewables. Although we are flattered that the Government eventually saw sense and adopted our idea of a windfall tax, the way that they are going about it is all wrong.
The Government are simply not going far or fast enough to tackle the climate emergency. There has been no investment in the gigafactories that we desperately need to boost production of electric vehicles in the UK. That is about not just producing batteries here but ensuring that we retain the car manufacturing that is essential to many of our communities. That investment would also create 30,000 good green jobs in the process.
The installation of EV charging points is still moving at a snail’s pace, like some of the cars, with only 830 public chargers installed last month and the need for at least 270,000 more by 2030 to keep pace with demand. It is good that people are choosing to make the shift, but they need support from the Government to get from A to B; anyone who has an EV knows the perils of trying to find a public charging point when they need one. Energy intensive industries such as steel are still crying out for investment to help them to make the transition to low-carbon manufacturing.
The Government seem to be running scared of investing in climate action. They can only see the cost and they are blind to the opportunities. The Minister should remember that the Climate Change Committee estimates that even without factoring in the benefits of green growth or the impact on public health, reaching net zero will cost less than 1% of GDP. Another 0.5% of GDP could be saved by moving away from costly fossil fuels rather than fracking for more, as the Department appears determined to do. Wise investment would lead to lower bills for consumers, good green jobs and sustainable economic growth. It is not just right to tackle climate change; it will get us out of this cost of living crisis.
Labour will treat this issue with the seriousness it deserves by investing £28 billion a year to tackle the climate emergency, grow the green economy and get cheap green technologies into people’s hands. People want to upgrade their homes to bring down bills, they want to buy electric cars that will be cheaper to run as well as more environmentally friendly, and they want to make greener choices about what they consume, but the Government have to step up to support them in making this transition. That means recognising the urgency of the situation, putting climate action at the heart of every spending decision—on homes, energy, transport and more—and doing a lot better than the Government are doing now.
The Parliamentary Under-Secretary of State for Business, Energy and Industrial Strategy (Lee Rowley)
Thank you, Mr Deputy Speaker, for the opportunity to contribute to this debate. I congratulate my right hon. Friend the Member for Ludlow (Philip Dunne) on opening the debate so ably and posing the questions he rightly did, given his responsibilities as Chair of the Environmental Audit Committee.
Obviously, today is a quiet day in the eyes of the world, as the hon. Member for Bristol East (Kerry McCarthy) said. It may be correct that they are elsewhere, but we will none the less continue to discuss, debate and focus on the important issues that I think this Government have been serious about trying to address. We have been serious about trying to put frameworks in place and show a clear direction of travel, and we do that in the knowledge that net zero is a challenge. It is therefore right to ask the questions and undertake scrutiny, and that is why I want to focus today on the long term.
I think the important thing when we talk about net zero is to start from first principles. We often dive straight into this debate, and there have been some very good contributions today, but I think that first principles are a good place to begin. Most people in this place and across our country accept that human beings have had an impact on the world, and that that has changed over recent centuries. We all share the desire to tread more lightly on this earth and consider it appropriate that action is taken to do that.
The Government’s choice, and the choice of the centre right all around the world, is to seek to harness the immense power of capitalism, the immense ability of individuals and the immense ingenuity of human beings to find a way, in conjunction with Government, to achieve a resolution that ensures that we tread more lightly and get to the end point that we seek. That is on the basis of clear frameworks, of creating the conditions for investment—we are in the process of doing that—and of subsidy where that is reasonable and proportionate.
The first thing in a big task, which is what we have in front of us, is to have a plan, and the second thing is to execute that plan. Over the last year, we have now set out that plan—the net zero approach. Yes, it has assumptions in; yes, it is setting targets; and, yes, there will be challenges, but the whole point of a plan is to demonstrate direction. For those hon. Members who somewhat avoided this point in the debate, the plan has been lauded in the United Kingdom and elsewhere, and it was adopted early, demonstrating the commitment to trying to make progress. Now, the challenge is the execution of that plan.
I must remind hon. Members, particularly those who are extremely keen to see progress, as we all are, that we are nine months into a 29-year process. That means that there are issues, things will change and there will be progress reports; we will come back with a progress report in the usual way later in the year. It will be appropriate to look at the status, and some people will, of course, want to go further. However, we have the plan and we are executing it, and I think we are showing a consistent, calm and methodical approach to these very serious issues that recognises where we want to go and how we should get there.
I turn to some of the speeches and interventions. My right hon. Friend the Member for Ludlow introduced the debate, and I am grateful to him for his opening speech. He rightly holds us to account, and he is right that we live in challenging times—something that has to be considered in today’s discussion and in all our debates in this place. We have consensus about where we should move to. He is right to ask the question, but I hope he does not think that our attempts to move forward methodically, recognising that there are still challenges and that we still need to take time to work out how to approach things, can be described as waiting for something to turn up. I am sure he will not think that. Sector by sector, industry by industry, and element by element, we have to work out where the market or individuals will resolve the issues themselves, where it is reasonable and proportionate for the Government to subsidise the development and execution of solutions, and where other solutions may work.
Let us take aviation, which was considered by my right hon. Friend’s Committee a few weeks ago. We are still relatively early in the curve of knowing exactly what technology we will use. Working that out will allow us to quantify the cost of that technology, and to work with individual aerospace companies on how to approach the subject. Using a framework, a strong approach and collaboration, we must work through how to get to the end point that we want in aviation.
Caroline Lucas
The issue is not just that the Government are not bringing forward good stuff fast enough—in other words, the delivery gap that the Committee on Climate Change referenced. The Government are also doing bad stuff. The Committee on Climate Change said that the Government’s plans for more new oil and gas projects in the North sea did not make economic sense. Will the Minister listen to that committee, which is there to give him advice, and look again at the reckless idea of extracting yet more oil and gas from the North sea? That will not get our prices down, and it will not help with the cost of living crisis.
Lee Rowley
The hon. Lady and I have spoken about this before, and I know she has discussed the issue with my colleagues. We recognise that we are in a transition, and that fossil fuels are required to get us to the end. The aim of the transition is to get us to net zero, and a requirement of net zero will mean that for certain processes, we will still have to use a much smaller amount of fossil fuels, accompanied by capture technology.
Lee Rowley
The hon. Lady shakes her head, but the alternative is closing down large swathes of industry. If she wants to make that case to the electorate, she can do so and see whether they agree. There would be a lot of people unemployed or without livelihoods, and a lot of industries that would close down. It would not benefit the world as a whole, because those industries would just move elsewhere and offshore. Those are exactly the kinds of unintended consequences that the centre left in this country need to think through, understand and work through before they suggest—as they do, incorrectly, regularly—that they have a viable solution to climate change.
The hon. Member for Bristol North West (Darren Jones) is rightly keen on delivery, as am I. Having sat on the Public Accounts Committee for 18 months in the previous Parliament, I know that delivery is at the core of what we should all seek to do in this place. Policies are one thing, but making sure they are implemented can be very different. I hope the hon. Gentleman will accept that we are in the relatively early phases of some elements of the net-zero plan, and that he will give us time to develop the propositions, as we have done over the last year. We must ensure a strong delivery focus, just as my colleagues in the Department for Business, Energy and Industrial Strategy have done, and I am sure that will continue to be the case in the months and years ahead.
I have the greatest respect for the hon. Gentleman. We have worked closely together on other areas, and we share a similar corporate background. He will know from our time in corporate life about the importance in project management of sending signals and ensuring that clarity about where we are going. The combination of those signals, our track record, and the road maps that we have published for carbon capture, utilisation and storage, for hydrogen, for auto, and for other things will provide some comfort that we are making progress. We obviously have a disagreement about the level of state intervention in certain areas, and I am sure we will continue to debate that in forums such as this Chamber.
My right hon. Friend the Member for Kingswood (Chris Skidmore) makes a number of important points about ensuring that we have a long-term approach. To take aviation as the example again, the challenge is in ensuring that we understand exactly what that will look like and where it will go. However, I accept and acknowledge his point. He also rightly made a point about the importance of dependency, in this instance on fossil fuel producers. He and I have had discussions about not wanting to switch from dependency on fossil fuels to dependency on critical minerals. That is why the Government will introduce a strategy on critical minerals in short order.
I am grateful to the hon. Member for Caithness, Sutherland and Easter Ross (Jamie Stone) for his comments, in particular on onshore wind, which I will certainly pass on to my right hon. Friend the Minister for Energy, Clean Growth and Climate Change. He made an incredibly important point about the importance of having local supply chains where possible. On Thursday, I visited Siemens in Goole, and it was heartening to see that much of the supply chain for the amazing new facility coming to the East Riding is made up of local businesses and local people from across Yorkshire. They are ensuring that we have a fantastic train factory that will allow us to support net zero.
My hon. Friend the Member for Hitchin and Harpenden (Bim Afolami) was right to highlight the importance of transition within net zero, which I have covered, and of not demonising but working with industry. My hon. Friend the Member for North East Bedfordshire (Richard Fuller) made an incredibly important point about individual agency. He spoke about the importance of taking people with us, and of ensuring that we undertake this massive task of treading very lightly on the Earth by 2050 with the consent of the people we represent. We do that by calmly and methodically setting frameworks and defining approaches.
The hon. Member for Falkirk (John Mc Nally), in summing up for the Scottish National party, talked about mechanisms for demand in the British energy security supply strategy. That should be looked at in concert with other strategies, documents and frameworks that have been brought forward. I encourage him to do that. The Labour spokesperson, the hon. Member for Bristol East, extensively referenced the Climate Change Committee report. As I said, we will respond on that in due course. We welcome all outside organisations’ comments, but it is important that there be recognition in the committee’s document of what the UK has achieved, that it is a world leader, and that it has set the right course. It is important that we provide all of that in the round.
I am grateful for all the contributions to what has been one of our better debates in this place. This is a hugely important issue. We recognise, as did most of the contributions, that this is a long-term issue. In some places, we have made huge progress—there has been a 40% reduction in carbon emissions in the last 30 years—but we have some way to go. That is the entire point of net zero, and of the Government working with business to harness the fantastic ingenuity of capitalism, so that we can make progress. I look forward to more of it being achieved, so that we can ensure that the objective of treading lightly on the Earth by 2050 is achieved.
Philip Dunne
Thank you, Mr Deputy Speaker; I certainly shall wind up briefly. I will not take time congratulating hon. Members on their contributions to the debate, all of which exhibited consistency in recognising that while this country is a leader in responding to climate change, we have a great deal further to go. There is a broad understanding across the House, as was reflected in everyone’s contributions, that there is an opportunity before us, which is enhanced by the energy crisis and the changes to the energy markets in the last 12 months or so, and we need to grasp it. We need to add pace to the frameworks and the delivery of the strategies that the Minister ably evidenced.
I appreciate that we have been through a difficult period; the last two years of covid undoubtedly interrupted many plans that were in germination, and it has taken time to get them out, but now is the time. Last week’s report by the CCC, which several hon. Members referred to, made that crystal clear. I mention in particular the hon. Member for Bristol North West (Darren Jones), and the role that his Committee plays in holding the Department to account.
The time is now. We need to get on with these strategies. It may not be possible to do that in the next 24 hours or seven days, but certainly this year we must take greater strides in getting the plans out there, so that the industries that implement them—it will be mostly the private sector that does the heavy lifting—understand the environment in which they are delivering our net zero ambitions, which everybody across the House shares.
Question deferred until tomorrow at Seven o’clock (Standing Order No. 54).
Ways and Means
Energy (Oil and Gas) Profits
(2 years, 4 months ago)
Commons ChamberRead Full debate Read Hansard Text Watch Debate Read Debate Ministerial Extracts
Mr Deputy Speaker (Mr Nigel Evans)
None of the amendments has been selected, so I call the Minister to move the motion.
The Financial Secretary to the Treasury (Lucy Frazer)
I beg to move,
That provision may be made for, and in connection with, imposing a charge on ring fence profits of companies (within the meaning of Part 8 of the Corporation Tax Act 2010).
This Bill deals with the taxation of extraordinary profits in the oil and gas sector, but it is important to remember that its effect is to allow us to focus on supporting families up and down the country at this difficult economic time. The Bill will help us to raise revenues and support families while continuing to encourage investment in North sea oil and gas.
Darren Jones (Bristol North West) (Lab)
I wonder whether the Treasury has made any assessment yet of how much money will be raised by this windfall tax, given the debt that will need to be taken on as a result of the tax cut for those drilling for fossil fuels. Is there an estimate of how much the Minister intends to raise by these means?
Lucy Frazer
The estimate of the amount that the measure will raise is £5 billion over the course of the first year. I start by highlighting the context for our introducing the Bill. The oil and gas sector is making extraordinary profits. Those profits are not the result of recent changes to risk-taking, innovation or efficiencies; they are the result of surging global commodity prices, driven in part by Russia’s war. The profits are over and above what analysts and businesses in the sector could have expected to earn. Indeed, since early last year, oil prices have nearly doubled and gas prices have more than doubled. The Bill is being introduced at a time when many of our constituents are struggling with the cost of living, and at a time when we have said that the Government will support the most vulnerable and the least well off in getting the support that they need.
I would like to touch on how the Bill ensures that we tax extraordinary profits fairly while incentivising investment. To do that, we are introducing the energy profits levy, a new 25% surcharge on the extraordinary profits that the oil and gas sector is making. At the same time, the new 80% investment allowance will mean that businesses will, overall, get a 91p tax saving for every £1 they invest. This provides them with an additional immediate incentive to invest. That nearly doubles the tax relief available and means that the more investment a firm makes, the less they will pay. As set out in the energy security strategy, the north will still be a foundation of our energy security, so it is right that we continue to encourage investment in oil and gas. The Government expect the energy profits levy, with the investment allowance, to lead to an overall increase in investment.
I want to make clear what the investment allowance will apply to. First, the allowance will be calculated in the same way as the investment allowance for the existing supplementary charge. Therefore, if capital or operating expenditure qualifies for the supplementary charge allowance, it will qualify for the energy profits levy allowance, but unlike the supplementary charge, it will be available to companies at the point of investment. This makes it both more immediate and more generous. As the levy is targeted at the extraordinary profits from oil and gas upstream activities, it makes sense that any relief for investment must also be related to oil and gas upstream activities. Such spending can be used to decarbonise oil and gas production—for example, through electrification—so any capital expenditure on electrification, as long as it relates to specific oil activities within the ringfence, will qualify for the allowance. Examples of activity that may be carried out for specific oil activities include expenditure on plant and machinery such as generators, which includes wind turbines, transformers and wiring.
We have also been listening closely to feedback from industry. We published draft legislation for the Bill on 21 June to seek technical feedback. Two weeks ago, the former Chancellor met industry stakeholders in Aberdeen to discuss the levy—not just to communicate the aims of the levy and how it will fund vital support for families, but to ensure that the levy works as the Government intended. That is why I can confirm that the Government are making a change to the legislation. I confirm that tax repayments that oil and gas companies received for petroleum revenue tax related to losses generated by decommissioning expenditure will not be taxed under the levy. Since wider decommissioning expenditure is also left out of account for the levy, that change is consistent and fair. We are very grateful for the engagement that we have had with industry on the matter. When the Bill is published, this will be made clear. To reassure the House, with this change, the Government still expect the levy to raise about £5 billion over the next year.
Finally, let me turn to how long the levy will be in place. It will take effect from 26 May this year and it will be phased out when oil and gas prices return to historically more normal levels. A sunset clause will also be written into the legislation so that, by the end of 2025, the levy will automatically cease to be in place. The energy profits levy is temporary, with a set lifespan that raises about £5 billion revenue over the next year, so that we can help families with the cost of living in the shape of significant, targeted support to millions of the most vulnerable.
James Murray (Ealing North) (Lab/Co-op)
We have been waiting for many months for this day to come, but here we finally are: I am referring not to the news that has broken within the last hour outside this Chamber, but to the fact that the Government are finally implementing a windfall tax, even if the Minister absolutely refused to say those words in her remarks.
The Conservatives are finally introducing a windfall tax on oil and gas producers’ profits more than seven months after the shadow Chancellor, my hon. Friend the Member for Leeds West (Rachel Reeves), first set out Labour’s plans for one. In the seven months since Labour first called for a windfall tax, the cost of living pressures facing people across the country have grown relentlessly and oil producers’ profits have soared.
Since the start of the year, energy bills have spiralled by £700 for a typical household. Inflation has risen to 9.1%, the highest level in 40 years, and taxes on working people’s pay have jumped thanks to the Government’s decision to hike national insurance contributions. This year has seen the cost of living rise unremittingly, while oil and gas producers’ profits have in some cases tripled.
A fair solution has been staring the Government in the face: levy a one-off windfall tax on North sea oil and gas producers’ extraordinary profits and use that money to help to cut people’s energy bills at home. Yet when, on 9 January this year, the shadow Chancellor first called on the Government to levy such a tax, Conservative MPs were falling over themselves to oppose it. The Education Secretary—as it happens, a former oil industry executive—came out firmly opposing a windfall tax on oil and gas producers on the ground that they, the oil producers, were already “struggling.” The Business Secretary said:
“I’ve never been a supporter of windfall taxes.”
The Northern Ireland Secretary said that he thought that a windfall tax
“sounds attractive but doesn’t work”.
The Deputy Prime Minister claimed that it would be “disastrous”.
Ministers and their Back-Bench Conservative colleagues then went on to vote against our plan for a windfall tax on three separate occasions. So, despite our common-sense plan for a windfall tax receiving wide support across the country—with even some oil producer bosses backing its logic—Conservative Ministers simply refused to get on board until 26 May, the day after the Sue Gray report was published, when the Prime Minister and the former Chancellor suddenly changed their minds. It seems clear that what finally caused the Conservative leadership to change course and back a windfall tax was the need for a different set of headlines in that week’s news. Whatever it took to get the Prime Minister and the former Chancellor over the line, we were relieved that they finally agreed to back a windfall tax. We were relieved that some help with soaring energy bills was finally on its way.
But that is no way to run the country—and what a cost those months of delay have had. For every day that Conservative Ministers refused to act, £53 million has been added to Britain’s household bills during this cost of living crisis. Next Monday, when we consider the Bill that will follow the resolution, the Opposition will urge Ministers to make right their delay in introducing the windfall tax. Otherwise, their months of delay will leave the public finances missing out on billions of pounds of tax revenue that could have supported further help for people with the cost of living.
We know from the draft Bill and from what the Minister said that the Government are planning to introduce a brand-new tax break for oil and gas producers. That will give money back to the same firms that are supposed to be paying their fair share through the windfall tax. The Minister was unable to answer when my hon. Friend the Member for Bristol North West (Darren Jones) intervened, but our analysis shows that that tax break could lead to a third or more of any revenue from the new levy being handed straight back to the oil and gas producers.
It is a subsidy that even oil executives do not seem to think necessary. It will subsidise projects that would almost certainly have happened anyway, and it will see 20 times more being given in taxpayer incentives to oil and gas producers than to firms investing in the renewable energy of the future, yet the Government seem determined to push ahead with their tax break. When we consider the Bill next Monday, we will urge Ministers to think again about that unnecessary tax break for oil producers, which will undermine both the impact of the windfall tax and our country’s wider efforts to tackle the climate crisis.
We are relieved that the Government are finally proceeding with a windfall tax, and we will support the motion, but the Conservatives’ whole approach has shown so much of what is wrong with the way they conduct themselves in power. When we called for a windfall tax, they spent months opposing it as strongly as they could. They dismissed a fair and common-sense way, which was staring them straight in the face, to help people who face soaring energy bills. Then they changed course, not because it was the right thing to do, but because they needed a new headline to take attention away from the Prime Minister’s lack of integrity in office. Now, as they finally reveal the detail of their windfall tax proposals, they immediately undermine its effectiveness, and any wider efforts to tackle climate change, with a new tax break for oil producers. Their instincts are wrong. Their priorities are wrong. The way they run our country is wrong. With the windfall tax, we have shown that Labour is winning the battle of ideas in Britain, and that Labour will provide the leadership that our country needs.
Sir Robert Syms (Poole) (Con)
As the motion relates to a Treasury matter, may I pay tribute to the former Chancellor, my right hon. Friend the Member for Richmond (Yorks) (Rishi Sunak)? He had to get the country through a difficult period in the pandemic. He produced a number of interesting schemes, such as the furlough and the self-employment income support scheme, where the software worked and where people were helped. I think he was very creative in the way he handled a difficult situation. I know that it is not always easy for senior politicians to take decisions such as the one that he has taken today. I wish him well, along with the former Secretary of State for Health and Social Care, my right hon. Friend the Member for Bromsgrove (Sajid Javid). We will see how events unfold.
Let me start by taking a traditional Conservative position and saying that I do not like windfall taxes. The North sea is a tremendous British success story. We have got oil out of deep seas using technology, investment and British initiative over decades and we have benefited the nation in doing so. We are a nation that has oil and gas all the way around its coast, as Professor Peter Odell used to say in the 1970s. It is just a question of whether it is viable to get it out, and whether the tax and investment regime is good enough.
The North sea is quite mature now. Although the rise in prices is unwelcome for motorists, it certainly gives the opportunity to extend the life of some fields and makes other oil fields with more marginal prospects more viable. If we are looking for a resilient future for our country, getting the best out of our natural resources in the transition to net zero, I think we ought to have a stable tax network, not act like a Venezuelan junta by jumping in and trying to take money away from oil companies. And what are oil companies? They are normally vehicles for pension funds for lots of elderly people living up and down the country who rely on that income to pay their cost of living bills. There is no such thing as a painless tax rise. There is no magic money tree if we go and punch the oil and gas companies in the mouth. I think this is a very short-sighted policy. It may raise money, but the consequences are long term, and it may have an impact on investment.
Apart from the creation of an oil industry, there are thousands of jobs in oil services in and around Aberdeen, in many other parts of the United Kingdom and, now, worldwide. I think we ought to be proud of what this country has achieved, and we ought to be doing what we can to support those well-paid and important jobs as we go towards net zero.
I am not going to divide the House today. I do not think I would get a seconder, as I am probably the only person who is against the windfall tax at the moment, but we will see how this transpires. I think that a stable tax system in which people in the oil and gas industry can look decades ahead—because investment decisions sometimes take decades—is a much better way of dealing with the situation.
Kerry McCarthy (Bristol East) (Lab)
I understand the hon. Gentleman’s arguments, although I do not agree with them, but has he an alternative proposal for helping people to bring down their energy bills? I am sure that many of his constituents are deeply worried about how they will make ends meet, particularly with the next increase in bills coming this autumn. How does he suggest we help them?
Sir Robert Syms
I am not sure that the £5 billion raised from the oil companies will find its way into the pockets of people who are worried about their energy bills. As far as I know, it is going into the Treasury.
I return to my original simple point. The Government have already undertaken a number of measures to help with bills; the problem is the lag between the decision making and the assistance that they are giving. So there is always more pressure to do more. I am hopeful that, as we proceed, people will suddenly see some of the bail-out help with bills that the Government have already factored in. But I think that a stable tax system is a better way of proceeding than adding a higher levy on top of corporation tax rates, which are already higher than the rates for most other companies. Let us not forget that many of these oil companies were losing money 18 months ago when we were in lockdown.
I am unhappy with this policy. I will find it interesting to see how the Government bring the positives forward. I am pleased that they have listened to representations—and the former Chancellor was talking to the oil industry—but I think that in the long term this is bound to have a negative effect on investment in the sector, and that what we should be doing is cherishing and encouraging the sector so that we import less from other countries and give ourselves more resilience and security of supply.
That is really all that I wanted to say. I wanted to make my reactionary right-wing comments about windfall taxes, and I did not want the motion to go through without my putting them on the record.
Alison Thewliss (Glasgow Central) (SNP)
It is a pleasure to see you in the Chair, Mr Deputy Speaker. What a strange evening for us to be making speeches in the House. While the Minister did a good job of putting forward the policy, we have to ask who the Chancellor will be by the time the Bill comes to the House next week and, indeed, whether it will still stand when it does come.
The Tories have come here today with a “temporary refund adjustment”, an “energy profits levy”, a windfall tax by any other name. It is a tax that Tory Members were vehemently against all the way up to the point when the now former Chancellor announced it, yet he still came to the Treasury Committee to tell us that he did not believe in windfall taxes. So I can only speculate that this may be one of the reasons why he chose to resign this evening—one of the areas in which he and the Prime Minister apparently disagreed in private—and one of the reasons why he was no longer prepared to give a speech on the economy with the Prime Minister next week, as planned.
Today we see the UK Government finally getting round to doing something about these excess profits; as always, at the coo’s tail. They have the full suite of economic powers to act, but they continue, again and again, to lack the will or the imagination to do so—to support people through a cost of living crisis that they helped to create.
The SNP has been consistent in calling for a windfall tax on excess profits since June 2020, in response to the soaring profits then being made by Amazon and other online retailers during the pandemic. My colleague in the Scottish Parliament and evangelist for Paisley, George Adam MSP, raised that issue and the Scottish Government Finance Secretary Kate Forbes certainly agreed with the principle. It is disappointing that this UK Government, and indeed the official Opposition, have looked only narrowly and in a limited fashion at oil and gas and ignored all the other areas where super-extraordinary profits have been soaring during this pandemic.
Today we see Scotland’s oil and gas resources being used yet again to bail out the UK Treasury. The Tories have made a very specific choice to focus their raids on super-profits not just on Scotland but on one particular part of Scotland: the north-east. Aberdeen and the towns around it have contributed significantly—over £300 billion—to the UK balance sheet, yet when it comes to carbon capture and storage or the Scottish cluster, that area is left on the subs bench, waiting on a list instead of leading a just transition. The UK Government will not even match the Scottish Government’s commitment to the just transition fund.
I have listened carefully to those in the oil and gas industry, and the lack of predictability and consistency in the taxation regime comes up again and again. When the industry expert Nathan Piper gave evidence to the Treasury Committee back in March, he spoke powerfully about the impact this has on confidence and investment. Yes, we know that oil and gas can be volatile, but when we look just across the water to Norway, we see a reliable stewardship of resources and the world’s largest sovereign wealth fund. Scotland, look at what you could have won, had it not been for the squandering and mismanagement of our natural resources by each and every UK Government since the first drop of oil was extracted. Schrödinger’s Scotland: a country too poor to be independent but simultaneously so rich that the UK Government can use Scotland’s North sea as a £5 billion cash machine.
In the early years of North sea oil and gas, revenues were used to pay for Thatcher’s mass unemployment. Gordon Brown’s raid in the early 2000s was used to pay for cuts to fuel duty, and the current Tory Government are now zoning in on oil and gas to tackle their own Brexit cost of living crisis when other options are available to them. This comes at a time when the Treasury is raking it in from additional tax receipts from the soaring prices of fuel, energy and goods, giving the former Chancellor an extra £30 billion of fiscal headroom in his budget.
What of the environment and the promises made at COP26? The new investment allowance is, in the Treasury’s own words, an
“incentive for the oil and gas sector to invest in UK extraction”.
It is as though the Treasury has forgotten that COP26 happened at all. This is clearly contrary to the Scottish and UK Governments’ climate objectives and to the commitments they made to the world last November. The UK Committee on Climate Change has stated:
“An end to UK exploration would send a clear signal to investors and consumers that the UK is committed to the 1.5°C global temperature goal.”
Where stands that commitment now? We on the SNP Benches welcome investment, but any incentives must be balanced across sectors and encourage sustainable investment towards a just transition and into renewables, rather than the short-term, carbon heavy investment that the former Chancellor was encouraging. We also know that any investments from this are unlikely to have an impact on our household energy bills anytime soon, but that is where this crisis lies.
A further source of worry to those not in the oil and gas sector is the now former Chancellor’s plans for a further raid on other energy producers, putting at risk Scotland’s key renewables sector. The former Chancellor refused to tell me in the Treasury Committee whether he had even picked up the phone to the Scottish Government to discuss these plans with them. He talked about extraordinary profits, but could not define what they were and who was making them. The Secretary of State for Business, Energy and Industrial Strategy seems to know little of the plans, passing the buck back to the Treasury. All of this is undermining confidence in a sector that could not be more crucial to the future of our planet.
What happens now? When will we hear further details of those plans? The Chancellor claimed a month ago that it would be in “weeks”. Will the plans for other energy producers come forward before the recess? Will the Minister put a date on it? Will there be more tax breaks for renewable development, or is it only oil and gas exploration that get the tax breaks? Will these measures be spliced into the Bill next week? Will we even see a Bill next week? This is more short-termism, more inconsistency and more poor stewardship of Scotland’s resources by a Government we did not elect. Scotland is a renewables powerhouse, and we on these Benches will resist any attempt to stifle that industry and to raid the profits. It used to be said that it is Scotland’s oil. We can now say that it is Scotland’s wind, Scotland’s waves, Scotland’s tides, Scotland’s solar and Scotland’s hydrogen. Westminster lies in chaos. It is Scotland’s opportunity on 19 October 2023. Let us put the power in our own hands.
Christine Jardine (Edinburgh West) (LD)
This is a strange evening indeed to be discussing the motion before us, which is in the name of the now former Chancellor.
The Liberal Democrats first called for a windfall tax back in October last year. If a windfall tax had been brought in then, £3 billion more would already have been raised for the Exchequer. That is £3 billion that could have been used to offset the hardship faced by families and pensioners up and down the country who are struggling to cope with the cost of living crisis.
There are many more things that need to be taken into account, and I hope that the new Chancellor, whoever he or she may be, listens to the people of this country who have been taken for granted for far too long. However, I must admit that I find it strange to hear the SNP talking about the chaos created by Westminster when those of us who live in Scotland know about the chaos that is being created there—in the NHS, with its longest waiting times; in our education system, which is failing; and with record drug deaths.
Briefly—because this is an important night—I remind the Government that there was something they could have done earlier for the people of this country to alleviate the hardship of the cost of living crisis. There is more that they can still do: they can cut VAT. I hope that between now and Monday they might change the windfall tax to help it raise more money, and they might reconsider the money that will go into fossil fuels rather than green technologies.
Caroline Lucas (Brighton, Pavilion) (Green)
The Government are introducing this Bill in response to the extraordinary profits being made by the oil and gas sector—profits that are not earned but are a consequence of high global gas prices, fuelled by Russia’s illegal invasion of Ukraine. As families across the country are struggling to make ends meet, faced with rising energy bills and a cost of living scandal, energy companies operating in the UK are predicted to make an eye-watering £11.6 billion of unexpected windfall profits this year from oil and gas extracted from the North sea. Not only is it right that those windfall profits are taxed and redistributed to provide vital support to households, some 6.5 million of which are now living in fuel poverty, but, frankly, it would be morally reprehensible to do anything else.
I therefore welcome the fact that the Government are finally introducing a windfall tax—or an “energy profits levy”, as Ministers prefer to call it. That is something that I, too, called for a very long time ago. However, I am extremely concerned that it is being rushed through, with the consultation open for just five working days and the Bill receiving only one day of full scrutiny in this House. That is patently insufficient time to consider legislation of this complexity and importance.
We must consider first whether the tax is set at a level that constitutes an adequate response to the ongoing energy crisis. In the sixth richest country in the world, April saw more than 2 million adults not eat for a whole day because they could not afford or access food. The energy levy is one of the tools we have to tackle this social scandal. We have a deep responsibility to use it to full effect and to ensure that this is the beginning of the end for such grotesque levels of poverty and inequality.
Secondly, we must consider the impact of the proposed investment allowance on not just domestic but global emissions. I know that the Treasury does not even recognise the idea of subsidies in the fossil fuel sector, but that does not change the reality. Make no mistake: this is a subsidy. It is reckless, and its climate impacts make a mockery of the Government’s claim to global climate leadership.
I understand the Government’s desire to give certainty to companies and bring forward this tax with urgency, but the draft explanatory note makes it clear that the levy
“will have effect for profits arising on or after 26 May 2022.”
In other words, it is already backdated. That means that allowing more time for proper consultation and scrutiny would not materially affect the outcomes of imposing the levy.
I support going further than the Government intend to by imposing a permanent tax on companies, to be levied at a rate of at least 30%, bringing the total level of tax on oil and gas company profit to 70%. That 30% increase is a small one on the Government’s proposed 25% levy, yet it would bring the UK in line with the global average, joining countries such as Angola and Trinidad. It has been estimated that a tax of that level would generate an additional £13.4 billion for the Exchequer. I made this point in my submission to the Government’s consultation, and I very much hope that Ministers will judge that it warrants serious consideration and will revise their Bill accordingly before it is presented to the House next week.
On the permanency of the tax, I know that Ministers will point to the fact that this Bill is intended to address the windfall profits of oil and gas companies, and that there will come a time again when gas prices are lower and profits are not so high. But as the Treasury team know, the UK currently has the lowest tax take in the world from an offshore oil and gas regime. That is not a badge of honour; it is a badge of shame. In Norway, the Government get $22 per barrel of oil in tax, whereas here in the UK we are talking about just $2. So we should use this opportunity to bring the UK in line with the permanent tax rate of other countries, regardless of the scale of profits
One other change is crucial: preventing this Bill from including the 80% so-called “investment allowance”. That outrageous proposal would, according to the Government’s own factsheet, mean that for every £1 that businesses invest in North sea oil and gas they will
“overall get a 91p tax saving”.
First, let us consider the fact that this relief will come at a huge cost to the taxpayer. Analysis by the New Economics Foundation showed that the investment allowance would cost £1.9 billion a year, because any subsidised oil and gas projects will not start to return a profit until after 2025, the date of the sunset clause laid out in the draft Bill. The E3G think tank estimates that lost revenue from the investment allowance over the next three years could have insulated 2 million homes over the same period, saving households £342 a year, on average. I struggle to believe that anyone thinks that handing money back to oil and gas companies is better than kick-starting the street-by-street nationwide home insultation programme that so many of us have been speaking about at such length this evening.
Secondly, this allowance dangerously undermines our climate targets by actively encouraging new fossil fuel projects. Indeed, up to 39 fossil fuel projects are eligible for this “super-deduction” and could be developed in the next three years. Together, those could emit as much as 899 million tonnes of greenhouse gases, which is more than double the UK’s estimated net emissions in 2020. The International Energy Agency and the Intergovernmental Panel on Climate Change are clear that new fossil fuel developments are simply not compatible with limiting global temperatures to 1.5°. The most recent IPCC report in April was unequivocal that
“further installation of unabated fossil fuel infrastructure will ‘lock in’ GHG emissions and put 1.5°C out of reach”.
It could not be clearer. Alignment with 1.5° is not just some kind of “nice to have” benefit; it is literally critical to avoiding climate catastrophe.
Thirdly, this investment allowance will not help to address domestic energy security, because, as the Treasury team know, 70% of the remaining reserves in the North Sea are oil and are not the kind suitable for use in UK refineries, meaning that we currently export about 80% of it. I therefore urge the Government to reconsider this aspect of the proposal, which is not just bad for the public purse, but potentially disastrous for our planet and will not deliver the benefits that the Government may claim.
To conclude, at the World Economic Forum in Davos, Fatih Birol, the IEA’s executive director, was clear that decision makers should not use
“the current situation as an excuse”
to invest in projects that are incompatible with net zero. I very much hope that the new Chancellor, whoever they may be, will heed that warning and reform this Bill before it comes to Parliament next week.
Lucy Frazer
It is a pleasure to respond to many of the interesting points that have been made, and I wish to touch on a few of them. The hon. Member for Ealing North (James Murray) suggested that this was his proposal for a windfall tax that we have adopted, but he will know that this is not Labour’s proposal, because it is significantly different. Not only does it bring in further revenues, but it introduces an investment incentive, to ensure that we get more from our oil and gas sectors.
The hon. Member also mentioned the cost of living. He will know that we are spending £37 billion on supporting people when they most need it, but the most important point is about fiscal responsibility. We on this side of the House believe in fiscal responsibility. That is why, unlike Labour, we have not made £100 billion-worth of unfunded spending proposals, which no amount of taxation would fund.
I understand the points that my hon. Friend the Member for Poole (Sir Robert Syms) makes. No Conservative Government is keen on additional taxes, but, as he will know, this is a temporary, short-term, focused additional tax that has a sunset clause and might well be brought to an end—there are provisions to allow that—when revenues return to normal.
I remind the House that the hon. Member for Glasgow Central (Alison Thewliss) called for more windfall taxes on other industries. That is obviously something that we would oppose, but the interesting point she made was about what she said was the mismanagement of resources. I remind the House of the mismanagement of the SNP Government in Scotland, whose health, education and justice budgets are growing more slowly in real terms than UK spending, and that the reason for that is the 50% increase in their welfare budget.
The hon. Member for Edinburgh West (Christine Jardine) suggested that her proposal would have delivered £3 billion more if this tax had been introduced earlier, but she forgets that the Lib Dem proposal was significantly less than what we have proposed in terms of revenues. The Lib Dems were proposing a 10% increase in the supplementary charge. She will know that our proposal is for a 25% increase.
Finally, I understand the perspective of the hon. Member for Brighton, Pavilion (Caroline Lucas), given where she comes from on these issues, but I am grateful that she has indicated that she welcomes the levy, although of course she would like it to be broader. With those comments, and with the leave of the House, I commend the Bill to the House.
Question put and agreed to.
Resolved,
That provision may be made for, and in connection with, imposing a charge on ring fence profits of companies (within the meaning of Part 8 of the Corporation Tax Act 2010).
Ordered, That a Bill be brought in on the foregoing Resolution;
That the Chairman of Ways and Means, the Prime Minister, Secretary Kwasi Kwarteng, Secretary Alister Jack, Chris Heaton-Harris, Greg Hands, Mr Simon Clarke, John Glen, Helen Whately and Lucy Frazer introduce the Bill.
Energy (Oil and Gas) Profits Bill
Lucy Frazer accordingly presented a Bill to make provision for, and in connection with, imposing a charge on ring fence profits of companies.
Bill read the First time; to be read a Second time tomorrow, and to be printed (Bill 135) with explanatory notes (Bill 135-EN).
Business without Debate
Eligibility Period for the Cost of Living Payment
Northern Ireland Act 1998: Northern Ireland Assembly and Executive
(2 years, 4 months ago)
Commons ChamberRead Full debate Read Hansard Text Read Debate Ministerial Extracts
The Minister of State, Northern Ireland Office (Conor Burns)
It is a pleasure to respond to this Adjournment debate. Towards the end of a turbulent day, it seems fitting that we gather in the Chamber tonight to talk about big issues and serious challenges facing part of our United Kingdom. When the Prime Minister asked me to serve as Minister of State in the Northern Ireland Office last September, I became only the second Minister in the 50-year history of the Northern Ireland Office who is from Northern Ireland. As someone who is a Catholic, a supporter of the Union and from Belfast, I feel passionately about Northern Ireland and her wonderful people.
I express tonight my enduring gratitude to the Prime Minister for that opportunity to serve. As has often been said in the past, the best way to keep a secret is to say something on the Floor of the House of Commons, so from this Dispatch Box tonight, I use this opportunity to express my ongoing and full support to my right hon. Friend the Prime Minister as he helps us move to a position where we restore the power-sharing institutions that the people of Northern Ireland need so much.
The Northern Ireland Assembly and Executive were established under strand 1 of the Belfast/Good Friday agreement, and are underpinned by the Northern Ireland Act 1998. It is vital that all the institutions set up by the agreement are operating fully and effectively, given their interdependence and interlocking nature, to realise the full vision of the Belfast/Good Friday agreement. It has been 151 days since the First Minister resigned, and since then there has been no one to lead the Northern Ireland Executive. It has been 61 days since the people of Northern Ireland voted in an Assembly election, and since then the parties have failed to come together to even elect a Speaker, let alone form a Government. It has been 36 days since the Assembly last met, and since then there has been no serious attempt to show the necessary leadership to address the real issues facing households in Northern Ireland—issues that they care about as much as those who live in my constituency of Bournemouth West.
At the commencement of his speech, the hon. Member for North Down (Stephen Farry) made brief reference to the protocol in the context of restoring the institutions of devolved government, and I use the opportunity at the Dispatch Box today to make it clear that the position of Her Majesty’s Government is that there is no reason why there should not be restored devolved government in Northern Ireland, and power-sharing back up and running. Our message has been consistently clear to the Democratic Unionist party: the protocol is for the Government of the United Kingdom to resolve, either through primary legislation, or our preferred route of a negotiated conclusion to this with the European Union, which would require movement on the mandate that Vice-President Šefčovič has been given by the European Commission. We do not see those as interlocking measures. We will deal with the protocol, as we have been clear to the people of Northern Ireland, but we believe that they deserve a functioning devolved Government straightaway.
Meanwhile, Members of the Assembly in Northern Ireland continue to draw a salary, even while unable to conduct Assembly business, and the frustration about that is widely shared across communities in Northern Ireland. The passage of the Northern Ireland (Ministers, Elections and Petitions of Concern) Bill into law grants the parties a maximum of 24 weeks to form an Executive, and allows existing departmental Ministers to retain their posts during that period, meaning that they may still be in place up until 28 October this year. That provides a degree of stability in Northern Ireland, mitigating the worst effects of the current impasse, but it remains the Government’s view that the leaders of Northern Ireland need to come together and agree a way forward to deliver a stable and accountable devolved Government to the people of Northern Ireland. My sense in my visits across all the six counties in recent months is that that view is widely shared across the whole of Northern Ireland.
While we recognise the existing current impasse, it is worth looking at the amazing progress that Northern Ireland has made over the past 24 years since the signing of the Belfast/Good Friday agreement. Those successes are a credit to a generation of foresighted and courageous individuals who had the vision to put reconciliation before division. It was my privilege to be present recently at Queen’s University Belfast to witness the unveiling of a portrait of David Trimble, alongside his wonderful wife Daphne, to acknowledge his immense role in that contentious but courageous agreement. We also fondly remembered the late John Hume and the late Seamus Mallon, both of whom were former Members of this House.
Above all, peace and success in Northern Ireland are a credit to the people of Northern Ireland, whose endurance, kindness and warmth continue to fuel progress. If the politicians and political leaders in Northern Ireland looked to the example of the people, we could make genuine progress in restoring the institutions of devolved government.
In January 2020, the New Decade, New Approach deal provided the foundations for the Northern Ireland parties to come together and form a new Government after a three-year hiatus. That deal is a living monument, against which we regularly check the commitments and progress in achieving them, to what can be realised if people put differences aside, make compromises and forge a path ahead in the interests of everyone, rather than the interests of one group alone.
The hon. Gentleman made a number of specific suggestions in his well-crafted and thoughtful speech about the reform of the institutions and of the mechanisms for sharing power between the parties and between designations. I say to him that we have to tread incredibly carefully in this space. The agreement that was reached 24 years ago was carefully balanced to get the level of cross-community support that it had in the subsequent referendum.
Some of the hon. Gentleman’s suggestions were debated at the margins here and in the other place during the passage of the Northern Ireland (Ministers, Elections and Petitions of Concern) Bill last year. In response to some of the probing amendments that were tabled, I remember saying to him and others that we, and certainly I, had significant sympathy with the intent behind them—for example, an obvious one is that the posts of First Minister and Deputy First Minister are legally indistinguishable; it is a co-office. The reason that the Government did not decide to legislate or innovate in that space at that time was that, in our view, any recalibration or update of the agreements, and of the institutions and mechanisms that flow from them, is best achieved through cross-party agreement and, obviously, the involvement of the Governments in Ireland and the United Kingdom as the co-guarantors of those agreements.
The hon. Gentleman highlighted many of the ideas contained in the detailed policy paper that his party leader Naomi Long recently sent to Ministers. I studied it carefully on a flight to Belfast last week and read it again this afternoon. We are committed to restoring the institutions of devolved government as they stand today—as they sprang from the Belfast/Good Friday agreement—but as we saw in St Andrews, that agreement can change and be updated.
The hon. Gentleman spoke with knowledge and understanding of the changing political, societal and demographic positions within Northern Ireland. I think it is right that we start using the post-restoration of power sharing and the significant 25th anniversary coming up next year—in partnership with Queen’s University, Ulster University, societal groups, think-tanks and others—to think about how those institutions could be updated and those agreements recalibrated, in parts where we could achieve cross-community consent, to achieve improvements to the delivery of devolved government in Northern Ireland and accountability from locally elected politicians in Northern Ireland directly to the communities they serve.
The final point I would make is that I have been overwhelmingly struck—I say this as a Minister who is accountable for Northern Ireland matters at this Dispatch Box, but also as someone who is very deeply accountable to family members across kitchen tables in Northern Ireland—by how the people of Northern Ireland deserve the best possible opportunities. When I visit schools, businesses, charity groups or the teeming third sector across Northern Ireland, their concerns are very much the same concerns that we would find in any other constituency across the United Kingdom and indeed, I suspect, across these islands in their totality. They deserve that we keep a watching brief on the institutions born of the Belfast/Good Friday agreement and the rulebook that governs them to make sure that at all times they are doing the central thing they were set up to do, which is to serve the people of Northern Ireland to the very best of our ability.
Question put and agreed to.